Edgar Filing: SEACOR HOLDINGS INC /NEW/

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011 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 x 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 x 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,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller

reporting company)

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act). Yes ¨ No x

The total number of shares of common stock, par value $.01 per share, outstanding as of October 21, 2011 was 21,714,704. The Registrant has no other class of common stock outstanding.

SEACOR HOLDINGS INC.

Table of Contents


Part I.	Financial Information		3

	Item 1.	Financial Statements (Unaudited)	3

		Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010	3

		Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2011 and 2010	4

		Condensed Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2011	5

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

	Item 4.	Controls and Procedures	57

Part II.	Other Information		58

	Item 1A.	Risk Factors	58

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

	Item 6.	Exhibits	58

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SEACOR HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)


	September 30, 2011			December 31, 2010
ASSETS
Current Assets:
Cash and cash equivalents	$	306,465		$	370,028
Restricted cash		19,474			12,651
Marketable securities		82,978			147,409
Receivables:
Trade, net of allowance for doubtful accounts of $3,343 and $4,212 in 2011 and 2010, respectively		316,633			450,912
Other		52,719			72,448
Inventories		75,906			67,498
Deferred income taxes		5,442			5,442
Prepaid expenses and other		14,637			18,414

Total current assets		874,254			1,144,802

Property and Equipment		2,985,583			2,803,754
Accumulated depreciation		(918,914	)		(835,032	)

Net property and equipment		2,066,669			1,968,722

Investments, at Equity, and Advances to 50% or Less Owned Companies		245,885			182,387
Construction Reserve Funds & Title XI Reserve Funds		298,345			323,885
Goodwill		62,424			61,779
Intangible Assets, net		16,427			21,169
Other Assets, net of allowance for doubtful accounts of $1,830 in 2010		98,314			57,645

	$	3,662,318		$	3,760,389

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	23,138		$	14,618
Current portion of capital lease obligations		1,081			1,030
Accounts payable and accrued expenses		208,432			322,785
Other current liabilities		208,816			197,080

Total current liabilities		441,467			535,513

Long-Term Debt		669,573			697,427
Capital Lease Obligations		4,598			5,493
Deferred Income Taxes		565,078			567,880
Deferred Gains and Other Liabilities		138,969			156,711

Total liabilities		1,819,685			1,963,024

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; 36,380,547 and 36,110,719 shares issued in 2011 and 2010, respectively		364			361
Additional paid-in capital		1,245,436			1,225,296
Retained earnings		1,495,639			1,471,623
Shares held in treasury of 14,665,843 and 14,711,211 in 2011 and 2010, respectively, at cost		(900,225	)		(903,004	)
Accumulated other comprehensive loss:
Cumulative translation adjustments, net of tax		(5,305	)		(3,995	)
Derivative losses on cash flow hedges, net of tax		(4,228	)		(2,933	)
Other, net of tax		(111	)		(111	)

		1,831,570			1,787,237
Noncontrolling interests in subsidiaries		11,063			10,128

Total equity		1,842,633			1,797,365

	$	3,662,318		$	3,760,389

The accompanying notes are an integral part of these condensed consolidated financial statements

and should be read in conjunction herewith.

SEACOR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data, unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Operating Revenues	$	571,424		$	979,833		$	1,580,134		$	2,068,984

Costs and Expenses:
Operating		475,173			683,219			1,274,855			1,480,266
Administrative and general		40,117			50,627			132,448			137,626
Depreciation and amortization		38,678			41,312			119,807			124,317

		553,968			775,158			1,527,110			1,742,209

Gains on Asset Dispositions and Impairments, Net		10,982			23,896			28,519			41,953

Operating Income		28,438			228,571			81,543			368,728

Other Income (Expense):
Interest income		5,554			2,562			12,599			5,788
Interest expense		(10,712	)		(10,274	)		(31,218	)		(33,862	)
Debt extinguishment losses, net		(51	)		—			(99	)		(368	)
Marketable security gains (losses), net		130			(54	)		(3,090	)		(3,499	)
Derivative gains (losses), net		(25,954	)		1,648			(35,873	)		(297	)
Foreign currency gains (losses), net		(3,218	)		7,585			3,361			(2,616	)
Other, net		(39	)		10			(273	)		656

		(34,290	)		1,477			(54,593	)		(34,198	)

Income (Loss) Before Income Tax Expense (Benefit) and Equity in Earnings of 50% or Less Owned Companies		(5,852	)		230,048			26,950			334,530
Income Tax Expense (Benefit)		(352	)		87,709			12,652			127,424

Income (Loss) Before Equity in Earnings of 50% or Less Owned Companies		(5,500	)		142,339			14,298			207,106
Equity in Earnings of 50% or Less Owned Companies, Net of Tax		9,562			7,933			10,600			11,678

Net Income		4,062			150,272			24,898			218,784
Net Income attributable to Noncontrolling Interests in Subsidiaries		247			334			882			1,163

Net Income attributable to SEACOR Holdings Inc.	$	3,815		$	149,938		$	24,016		$	217,621

Basic Earnings Per Common Share of SEACOR Holdings Inc.	$	0.18		$	7.21		$	1.14		$	10.08
Diluted Earnings Per Common Share of SEACOR Holdings Inc.	$	0.18		$	7.14		$	1.12		$	9.99
Weighted Average Common Shares Outstanding:
Basic		21,202,480			20,786,721			21,158,110			21,590,917
Diluted		21,565,149			21,000,565			21,508,457			21,785,292

The accompanying notes are an integral part of these condensed consolidated financial statements

and should be read in conjunction herewith.

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			Comprehensive Income
	Common Stock		Additional Paid-In Capital			Retained Earnings		Shares Held In Treasury			Accumulated Other Comprehensive Loss			Non- Controlling Interests In Subsidiaries			Total Equity			Comprehensive Income
December 31, 2010	$	361	$	1,225,296		$	1,471,623	$	(903,004	)	$	(7,039	)	$	10,128		$	1,797,365
Issuance of common stock:
Employee Stock Purchase Plan		—		—			—		2,971			—			—			2,971
Exercise of stock options		1		5,586			—		—			—			—			5,587
Director stock awards		—		273			—		—			—			—			273
Restricted stock and restricted stock units		2		104			—		1			—			—			107
Amortization of share awards		—		14,398			—		—			—			—			14,398
Cancellation of restricted stock		—		193			—		(193	)		—			—
Dividends paid to noncontrolling interests		—		—			—		—			—			(1,957	)		(1,957	)
Cash received from noncontrolling interests		—		—			—		—			—			1,705			1,705
Acquisition of subsidiary with noncontrolling interests		—		—			—		—			—			2,322			2,322
Purchase of subsidiary shares from noncontrolling interests		—		(414	)		—		—			—			(2,092	)		(2,506	)
Sale of subsidiary shares to noncontrolling interests		—		—			—		—			—			124			124
Other		—		—			—		—			—			(49	)		(49	)
Comprehensive income:
Net income		—		—			24,016		—			—			882			24,898		$	24,898
Other comprehensive loss		—		—			—		—			(2,605	)		—			(2,605	)		(2,605	)

Nine months ended September 30, 2011	$	364	$	1,245,436		$	1,495,639	$	(900,225	)	$	(9,644	)	$	11,063		$	1,842,633		$	22,293

The accompanying notes are an integral part of these consolidated financial statements

and should be read in conjunction herewith.

SEACOR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)


	Nine Months Ended September 30,
	2011			2010
Net Cash Provided by Operating Activities	$	196,242		$	416,060

Cash Flows from Investing Activities:
Purchases of property and equipment		(212,428	)		(173,729	)
Proceeds from disposition of property and equipment		50,573			172,993
Cash settlements on derivative transactions, net		7,000			(1,585	)
Investments in and advances to 50% or less owned companies		(52,309	)		(28,362	)
Return of investments and advances from 50% or less owned companies		20,184			13,557
Net advances on revolving credit line to 50% or less owned companies		(8,233	)		(4,332	)
Principal payments (advances) on third party notes receivable, net		(33,585	)		1,367
Net decrease (increase) in restricted cash		(6,823	)		19,191
Net decrease in construction reserve funds and title XI reserve funds		25,540			17,491
Net increase in escrow deposits on like-kind exchanges		(5,046	)		(738	)
Repayments on (investments in) leases, net		7,888			(16,366	)
Business acquisitions, net of cash acquired		(40,924	)		1,203

Net cash provided by (used in) investing activities		(248,163	)		690

Cash Flows from Financing Activities:
Payments on long-term debt and capital lease obligations		(33,689	)		(72,166	)
Net borrowings (payments) on inventory financing arrangements		10,196			(19,613	)
Proceeds from issuance of long term debt, net of offering costs		375			—
Common stock acquired for treasury		—			(125,982	)
Proceeds and tax benefits from share award plans		8,684			4,776
Purchase of subsidiary shares from noncontrolling interests		(1,149	)		(39	)
Dividends paid to noncontrolling interests, net of cash received		(252	)		(40	)

Net cash used in financing activities		(15,835	)		(213,064	)

Effects of Exchange Rate Changes on Cash and Cash Equivalents		4,193			(7,312	)

Net Increase (Decrease) in Cash and Cash Equivalents		(63,563	)		196,374
Cash and Cash Equivalents, Beginning of Period		370,028			465,904

Cash and Cash Equivalents, End of Period	$	306,465		$	662,278

The accompanying notes are an integral part of these condensed consolidated financial statements

and should be read in conjunction herewith.

SEACOR HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.	Basis of Presentation and Accounting Policy

The condensed consolidated financial information for the three and nine months ended September 30, 2011 and 2010 has been prepared by the Company and has not been audited by its independent registered 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, 2011, its results of operations for the three and nine months ended September 30, 2011 and 2010, its changes in equity for the nine months ended September 30, 2011, and its cash flows for the nine months ended September 30, 2011 and 2010. 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, 2010.

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.

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, for the nine months ended September 30 were as follows (in thousands):


	2011			2010
Balance at beginning of period	$	29,322		$	15,015
Revenues deferred during the period		6,191			18,949
Revenues recognized during the period		(15,236	)		(4,587	)
Write-off of previously deferred revenues		(16	)		(278	)

Balance at end of period	$	20,261		$	29,099

As of September 30, 2011, deferred revenues included $12.7 million relating to the time charter of several offshore support vessels operating in the U.S. Gulf of Mexico that are scheduled to be paid through the conveyance of a limited net profit interest in developmental oil and gas producing properties owned by a customer. Payments from the conveyance of the limited net profit interest, and the timing of such payments, are contingent upon production and energy sale prices. Based on the current production payout estimate, the deferred revenues are expected to be paid through mid-2012. The Company expects to defer an additional $2.7 million of vessel charter hire under this arrangement through December 2011. The Company will continue to recognize revenues as cash is received or earlier should future payments become determinable. All costs and expenses related to these charters were recognized as incurred.

As of September 30, 2011, deferred revenues also included $6.1 million related to audit provisions in certain Environmental Services’ response service contracts. The amount of revenues ultimately recognized following the completion of the billing audits or the expiration of the audit period could differ from the amounts billed and those differences may be material.

Reclassifications. Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. These reclassifications had no effect on net income as previously reported.

2.	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.

The Company’s financial assets and liabilities as of September 30, 2011 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⁾	$	45,471	$	37,507	$	—
Derivative instruments (included in other receivables)		2,415		4,235		—
Construction reserve funds and Title XI reserve funds		298,345		—		—
LIABILITIES
Short sale of marketable securities (included in other current liabilities)		32,176		—		—
Derivative instruments (included in other current liabilities)		11,550		12,617		—

(1)

Marketable security gains (losses), net include losses of $5.2 million and gains of $1.0 million for the three months ended September 30, 2011 and 2010, respectively, related to marketable security positions held by the Company as of September 30, 2011. Marketable security losses, net include losses of $12.9 million and $0.1 million for the nine months ended September 30, 2011 and 2010, respectively, related to marketable security positions held by the Company as of September 30, 2011.

The estimated fair value of the Company’s other financial assets and liabilities as of September 30, 2011 were as follows (in thousands):


	Carrying Amount		Estimated Fair Value
ASSETS
Cash, cash equivalents and restricted cash	$	325,939	$	325,939
Investments, at cost, in 50% or less owned companies (included in other assets)		8,315		see below
Notes receivable from other business ventures (included in other receivables and other assets)		53,159		see below
LIABILITIES
Long-term debt, including current portion		692,711		717,900

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 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 other business ventures because the timing of settlement of these notes is not certain. 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 non-financial assets and liabilities that were measured at fair value during the nine months ended September 30, 2011 were as follows (in thousands):


	Level 1		Level 2		Level 3
ASSETS
Investment in Avion Logistics Limited (included in Investments, at Equity, and Advances to 50% or Less Owned Companies)⁽¹⁾	$	—	$	1,000	$	—
Investment in Soylutions LLC (included in Investments, at Equity, and Advances to 50% or Less Owned Companies)⁽¹⁾		—		11,992		—
Investment in Mantenimiento Express Maritimo, S.A.P.I. De C.V. (included in Investments, at Equity, and Advances to 50% or Less Owned Companies)⁽²⁾		—		16,415		—
LIABILITIES
Lease Obligations for Helicopters (included in other current liabilities)⁽³⁾		—		—		395

(1)

During the nine months ended September 30, 2011, the Company marked its investment in its Avion Logistics Limited joint venture and its investment in its Soylutions LLC joint venture to fair value following the acquisition of controlling interests (see Note 6). The investments’ fair values were determined based on the Company’s purchase prices of the acquired interests.

(2)

During the nine months ended September 30, 2011, the Company marked its investment in its Mantenimiento Express Maritimo S.A.P.I. de C.V. joint venture to fair value following the joint venture’s sale of an additional equity interest to an unrelated third party (see Note 6). The investment’s fair value was determined based on the third party’s purchase price of the acquired interest.

(3)	During the nine months ended September 30, 2011, the Company recorded a gain of $0.2 million to decrease the carrying value of its exit obligations for three leased-in helicopters.

3.	Derivative Instruments and Hedging Strategies

Derivative instruments are classified as either assets or liabilities based on their individual fair values. Derivative assets and liabilities are included in other receivables and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. The fair values of the Company’s derivative instruments as of September 30, 2011 were as follows (in thousands):


	Derivative Asset		Derivative Liability
Derivatives designated as hedging instruments:
Interest rate swap agreements (cash flow hedges)	$	—	$	5,873

		—		5,873

Derivatives not designated as hedging instruments:
Options on equities and equity indices		1,127		958
Forward currency exchange, option and future contracts		635		1,765
Interest rate swap agreements		—		3,766
Commodity swap, option and future contracts:
Exchange traded		1,774		2,147
Non-exchange traded		3,114		1,403
U.S. treasury notes, rate-locks and bond future and option contracts		—		8,255

		6,650		18,294

	$	6,650	$	24,167

Fair Value Hedges. During the nine months ended September 30, 2011, the Company utilized forward currency exchange contracts designated as fair value hedges to fix a portion of its euro denominated capital commitments in U.S. dollars to protect against currency fluctuations. As of September 30, 2011, there were no forward currency exchange contracts designated as fair value hedges. During the nine months ended September 30, 2011, the Company designated €55.1 million notional value of its forward currency exchange contracts as fair value hedges, in addition to €56.0 million previously so designated as of December 31, 2010. During the nine months ended September 30, 2011, the Company dedesignated and liquidated €51.5 million notional value of these contracts and €59.6 million notional value matured.

The Company recognized gains (losses) on derivative instruments designated as fair value hedges for the nine months ended September 30 as follows (in thousands):


	Derivative gains (losses), net
	2011			2010
Forward currency exchange contracts, effective and ineffective portions	$	6,517		$	(1,103	)
Increase (decrease) in fair value of hedged items included in property and equipment corresponding to effective portion of derivative (gains) losses		(6,557	)		1,012

	$	(40	)	$	(91	)

Cash Flow Hedges. As of September 30, 2011, the Company is a party to various interest rate swap agreements, with maturities ranging from 2013 to 2014, which have been designated as cash flow hedges. These agreements call for the Company to pay fixed interest rates ranging from 2.25% to 2.85% on aggregate notional values of $125.0 million and receive a variable interest rate based on London Interbank Offered Rate (“LIBOR”) on these notional values. As of September 30, 2011, one of the Company’s Offshore Marine Services 50% or less

owned companies had an interest rate swap agreement maturing in 2015 that has been designated as a cash flow hedge. This instrument calls for the joint venture to pay a fixed interest rate of 1.48% on the amortized notional value of $19.9 million and receive a variable interest rate based on LIBOR on the amortized notional value. In addition, as of September 30, 2011, one of the Company’s Inland River Services 50% or less owned companies had four interest rate swap agreements with maturities ranging from 2013 to 2015 that have been designated as cash flow hedges. These instruments call for the joint venture to pay fixed rates of interest ranging from 1.53% to 4.16% on the aggregate amortized notional value of $55.0 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. By entering into these interest rate swap agreements, the Company and its joint ventures have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate.

The Company recognized gains (losses) on derivative instruments designated as cash flow hedges for the nine months ended September 30 as follows (in thousands):


	Other comprehensive loss						Derivative gains (losses), net
	2011			2010			2011			2010
Interest rate swap agreements, effective portion	$	(3,447	)	$	(8,323	)	$	—		$	—
Interest rate swap agreements, ineffective portion		—			—			(108	)		24
Reclassification of derivative losses to interest expense or equity in earnings of 50% or less owned companies		1,455			2,251			—			—

	$	(1,992	)	$	(6,072	)	$	(108	)	$	24

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):


	Derivative gains (losses), net
	2011			2010
Options on equities and equity indices	$	2,725		$	1,434
Forward currency exchange, option and future contracts		990			505
Interest rate swap agreements		(2,489	)		(4,035	)
Commodity swap, option and future contracts:
Exchange traded		(8,818	)		898
Non-exchange traded		1,293			3,048
U.S. treasury notes, rate-locks and bond future and option contracts		(29,426	)		(2,080	)

	$	(35,725	)	$	(230	)

The Company holds positions in publicly traded equity options that convey the right or obligation to engage in a future transaction on 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 of.

The Company has entered into and settled forward currency exchange, option and future contracts with respect to various foreign currencies. As of September 30, 2011, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $53.0 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 has entered into various interest rate swap agreements with maturities ranging from 2012 through 2015 that call for the Company to pay fixed interest rates ranging from 1.67% to 2.59% on aggregate amortized notional values of $97.2 million and receive a variable interest rate based on LIBOR on these notional values. In addition, one of the Company’s Offshore Marine Services 50% or less owned companies has entered into an interest rate swap agreement maturing in 2014 that calls for the joint venture to pay a fixed interest rate of 3.05% on the amortized notional value of $26.0 million and receive a variable interest rate based on LIBOR on the notional value. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company or its joint venture.

The Company has entered into and settled positions in various exchange and non-exchange traded commodity swap, option and future contracts. In the Company’s commodity trading and logistics business, fixed price future purchase and sale contracts for ethanol and sugar are included in the Company’s non-exchange traded derivative positions. The Company enters into exchange traded positions to protect these purchase and sale contracts as well as its inventory balances from market changes. As of September 30, 2011, the net market exposure to ethanol and sugar under these contracts was not material. The Company also enters into exchange traded positions (primarily natural gas, heating oil, crude oil, gasoline, ethanol and sugar) to provide value to the Company should there be a sustained decline in the price of commodities that could lead to a reduction in the market values and cash flows of the Company’s offshore marine, inland river and commodity trading and logistics businesses. As of September 30, 2011, these positions were not material.

The Company has entered into and settled various positions in U.S. treasury notes and bonds through rate locks, futures or options on futures tied to U.S. treasury notes. The general purpose of these transactions is to provide value to the Company should the price of U.S. treasury notes and bonds decline, leading to generally higher interest rates, which might lead to higher interest costs for the Company. As of September 30, 2011, this position consisted of a one-year rate-lock agreement with a notional value of $100.0 million. The treasury rate-lock agreement settled in October 2011 for a net cash payment of $7.1 million based on the then current rate on the ten-year U.S. Treasury Note versus the agreement rate of 2.845%.

4.	Business Acquisitions

Soylutions Acquisition. On July 29, 2011, the Company obtained a 100% controlling interest in Soylutions LLC (“Soylutions”) through its acquisition of its partner’s interest for $11.9 million in cash (see Note 6). The Company performed a fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values resulting in no goodwill being recorded. The fair value analysis was finalized in July 2011.

G&G Shipping Acquisition. On April 13, 2011, the Company acquired certain real property, eight foreign flag Roll-on/Roll-off (“RORO”) vessels and a 70% interest in an operating company engaged in the shipping trade between the United States, the Bahamas and the Caribbean. The operating company leases-in the real property and the RORO vessels from the Company. The Company’s purchase price of $33.5 million included cash consideration of $30.3 million and the contribution of a $3.2 million note receivable. The Company performed a fair value analysis and the purchase price was allocated to the acquired assets and liabilities based on their fair values, resulting in $0.6 million of goodwill being recorded. The fair value analysis was finalized in April 2011.

SES Kazakhstan Acquisition. On August 31, 2010, the Company obtained a 100% controlling interest in SES-Borkit LLP through its acquisition of its partner’s interest for $1.0 million (cash of $0.6 million and contingent consideration of $0.4 million). Upon acquisition, SES-Borkit LLP was renamed SES Kazakhstan LLP (“SES Kazakhstan”). The selling partner has the opportunity to receive additional consideration of up to $0.4 million based on certain performance measures over the period from the date of acquisition through August 2013. The Company performed a fair value analysis and the purchase price was allocated to the acquired assets

and liabilities based on their fair values resulting in no goodwill being recorded. The fair value analysis was finalized in August 2011. No additional consideration has been earned by the selling partner through September 30, 2011.

PIER Acquisition. On December 1, 2009, the Company acquired all of the issued and outstanding shares of PIER Systems Inc. (“PIER”), a provider of crisis communication consulting services and software in the United States and abroad. The selling stockholders of PIER had the opportunity to receive additional consideration of up to $1.3 million, of which $0.7 million was accrued at acquisition, based upon certain performance measures over the period from the date of acquisition through May 2011. During the nine months ended September 30, 2011, the Company paid $0.5 million of additional consideration and accrued additional contingent consideration of $0.2 million as general and administrative expenses in the accompanying condensed consolidated financial statements. As of September 30, 2011, the Company had paid $0.8 million, in the aggregate, of additional consideration.

Rivers Edge Acquisition. On November 15, 2007, the Company acquired all of the issued and outstanding shares of Rivers Edge Services, Inc. and Kemp’s Rivers Edge Vactor Services, Inc. (collectively referred to as “Rivers Edge”), providers of remediation, demolition, and environmental services in the pacific northwestern United States. The selling stockholder of Rivers Edge has the opportunity to receive additional consideration of up to $4.8 million based upon certain performance measures over the period from the date of acquisition through December 31, 2011, which will be recognized by the Company as compensation expense in the period earned. As of September 30, 2011, no additional consideration had been earned by the selling stockholder.

SRI Acquisition. On September 7, 2007, the Company acquired all of the issued and outstanding shares of Solid Resources, Inc. and Solid Resources, LLC (collectively referred to as “SRI”), providers of environmental services in the southeastern United States. The selling stockholder of SRI had the opportunity to receive additional consideration of up to $39.5 million based upon certain performance measures over the period from the date of acquisition through September 30, 2011, which will be recognized by the Company as additional cost of the acquisition when the contingency is resolved and when any additional consideration is distributable. During the nine months ended September 30, 2011, no additional consideration was earned by the selling stockholder. As of September 30, 2011, the Company had paid $6.0 million, in the aggregate, of additional consideration, which was recorded as additional goodwill.

Purchase Price Allocation. The following table summarizes the allocation of the purchase price for the Company’s business acquisitions during the nine months ended September 30, 2011 (in thousands):


Trade and other receivables	$	(2,656	)
Investments, at Equity, and Advances to 50% or Less Owned Companies		(11,920	)
Property and Equipment		59,390
Goodwill		621
Other Assets		211
Accounts payable		(127	)
Other current liabilities		(44	)
Long-Term Debt		(2,229	)
Noncontrolling interests in subsidiaries		(2,322	)

Purchase price⁽¹⁾	$	40,924

(1)	Purchase price is net of cash acquired of $1.8 million.

5.	Equipment Acquisitions, Dispositions and Depreciation and Impairment Policies

During the nine months ended September 30, 2011, capital expenditures were $212.4 million. Equipment deliveries during the period included three offshore support vessels, 55 inland river dry cargo barges, two liquid tank barges, nine helicopters and one harbor tug. In addition, the Company acquired a controlling interest in an offshore support vessel.

During the nine months ended September 30, 2011, the Company sold nine offshore support vessels, eight helicopters, one inland river towboat, six inland river deck barges, two harbor tugs and other equipment for net proceeds of $50.6 million and gains of $31.7 million of which $25.1 million was recognized currently and $6.6 million was deferred.

From time to time, the Company enters into vessel sale-leaseback transactions with finance companies, provides seller financing on sales of its vessels to third parties and sells vessels, helicopters and barges to its 50% or less owned companies. A portion of the gains realized from these transactions was not immediately recognized in income and has been recorded in the accompanying condensed consolidated balance sheets in deferred gains and other liabilities. Deferred gain activity related to these transactions for the nine months ended September 30 was as follows (in thousands):


	2011			2010
Balance at beginning of period	$	131,836		$	93,231
Deferred gains arising from asset sales		6,587			8,530
Amortization of deferred gains included in operating expenses as a reduction to rental expense		(16,773	)		(12,440	)
Amortization of deferred gains included in gains on asset dispositions and impairments, net		(3,407	)		(20,626	)

Balance at end of period	$	118,243		$	68,695

The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to fair value. 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, 2011, impairment charges recognized by the Company related to long-lived assets held for use were not material.

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 point at 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.

As of September 30, 2011, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:


Offshore support vessels			20
Helicopters⁽¹⁾			15
Inland river dry cargo and deck barges			20
Inland river liquid tank barges			25
Inland river towboats			25
U.S.-flag tankers⁽²⁾			25
RORO vessels			20
Harbor and offshore tugs			25
Ocean liquid tank barges			25

(1)

Effective July 1, 2011, the Company changed its estimated useful life and salvage value for helicopters from 12 to 15 years and 30% to 40%, respectively, due to improvements in new aircraft models that continue to increase their long-term value and make them viable for operation over a longer period of time. For the three and nine months ended September 30, 2011, the change in estimate increased operating income by $3.7 million, net income by $2.4 million and basic and diluted earnings per share by $0.11.

(2)	Subject to Oil Pollution Act of 1990 (“OPA 90”) requirements.

6.	Investments, at Equity, and Advances to 50% or Less Owned Companies

Soylutions. On July 29, 2011, the Company obtained a 100% controlling interest in Soylutions through its acquisition of its 50% partner’s interest for $11.9 million in cash (see Note 4). Upon the acquisition, the Company adjusted its investment in Soylutions to fair value resulting in the recognition of a gain of $2.3 million, net of tax, which is included in equity in earnings in 50% or less owned companies in the accompanying condensed consolidated statements of income.

MexMar. On July 1, 2011, Mantenimiento Express Maritimo, S.A.P.I. de C.V. (“MexMar”), a Mexican joint venture that operates six offshore support vessels in Mexico, executed a business reorganization plan and issued an additional equity interest to an unrelated third party for $17.1 million in cash. Subsequent to the reorganization and issuance of the additional equity interest, the Company recognized an $8.4 million gain, net of tax, which is included in equity in earnings in 50% or less owned companies in the accompanying condensed consolidated statements of income, and received $14.9 million on the net repayment of outstanding advances from MexMar. The Company has a 49% interest in MexMar after the reorganization.

Aeroleo. On July 1, 2011, the Company acquired a 50% economic interest and a 20% voting interest in Aeroleo Taxi Aereo S/A (“Aeroleo”), a Brazilian entity that provides helicopter transport services to the Brazilian offshore oil and gas industry, for $4.8 million in cash. The Company and its partner also each loaned Aeroleo $6.0 million at an interest rate of 6% per annum. The note requires monthly interest payments and matures in June 2013.

Era do Brazil. On July 1, 2011, the Company and its partner each contributed $4.8 million in cash to Era do Brazil LLC (“Era do Brazil”), a 50-50 joint venture. Era do Brazil immediately acquired a helicopter, subject to a lease to Aeroleo, from the Company for $11.5 million ($9.5 million in cash and a $2.0 million note payable). The note payable bears an interest rate of 7.0% per annum, requires 60 monthly principal and interest payments, and is secured by the helicopter and the Aeroleo lease.

Avion Logistics Limited. On June 1, 2011, the Company acquired a 100% controlling interest in Avion Logistics Limited (“ALL”) through its acquisition of its partner’s 50% interest for $1.0 million in cash. Upon acquisition, the Company adjusted its investment in ALL to fair value resulting in the recognition of a gain of

$0.3 million, net of tax, which is included in equity in earnings of 50% or less owned companies. Following this change in control, the Company contributed its ownership interest in ALL to Hawker Pacific Airservices Limited (“Hawker Pacific”) for an additional 1.7% interest in Hawker Pacific.

Dynamic Offshore Drilling. On April 4, 2011, the Company acquired a 20% interest in Dynamic Offshore Drilling Ltd. (“Dynamic”), a company established to construct and operate jack-up drilling rigs, for $10.0 million. The first jack-up drilling rig is currently under construction in Singapore and is scheduled for delivery in the first quarter of 2013.

Dart. On February 28, 2011, the Company made an additional investment of $5.0 million in Dart Helicopter Services LLC (“Dart”), a sales, marketing and parts manufacturing organization based in North America that engineers and manufactures after-market parts and equipment for sale to helicopter manufacturers and operators. On July 31, 2011, the Company contributed its ownership in Dart into Dart Holding Company Ltd. in exchange for a 50% interest and a note receivable of $5.1 million. The note receivable bears interest at a rate of 4.0% per annum, requires quarterly principal and interest payments and matures July 31, 2023.

Hawker Pacific. On December 15, 2010, the Company acquired a 32.5% interest in Hawker Pacific, an aviation sales and support organization and a distributor of aviation components, for $25.0 million in cash. In June 2011, the Company contributed its ownership in ALL, valued at $2.0 million, to Hawker Pacific for an additional 1.7% ownership interest bringing its total ownership percentage to 34.2%. The Company has performed a preliminary fair value analysis of Hawker Pacific as of the acquisition date and the date of its additional contribution of ALL. The excess of the purchase price over the Company’s interest in Hawker Pacific’s net assets has been initially allocated to intangible assets in the amount of $7.8 million. Finalization of the preliminary fair value analysis may result in revisions to this allocation.

Bunge-SCF Grain. On September 29, 2010, the Company and a global agribusiness and food company formed Bunge-SCF Gain, LLC (“Bunge-SCF Grain”), a 50-50 joint venture to construct and own a river grain terminal on the Mississippi River in Illinois, which is expected to be completed in 2012. During the nine months ended September 30, 2011, the Company and its partner each made cash contributions of $11.3 million to the joint venture to fund construction costs.

Illinois Corn Processing. Illinois Corn Processing LLC (“ICP”) is a 50-50 joint venture that owns and operates an alcohol manufacturing facility dedicated to the production of alcohol for beverage, industrial and fuel applications. Upon ICP’s formation, the Company provided a $10.0 million term loan with a maturity in November 2014 and a $20.0 million revolving line of credit with a maturity in November 2012 subject to certain borrowing restrictions. During the nine months ended September 30, 2011, the Company made net advances of $8.2 million under the revolving line of credit and received repayments of $0.8 million on the term loan. As of September 30, 2011, the outstanding balances under the term loan and revolving line of credit were $6.8 million and $17.6 million, respectively, inclusive of unpaid and accrued interest.

Avion Pacific Limited. Avion Pacific Limited (“Avion”) is a joint venture that distributes aircraft and aircraft-related parts in the Far East and China. During the nine months ended September 30, 2011, the Company made advances of $6.5 million to Avion and received repayments of $4.6 million. As of September 30, 2011, the Company had outstanding loans to Avion totaling $6.7 million.

Era Training Center. Era Training Center LLC (“ETC”) is a joint venture that operates flight training devices and provides training services to the Company and third party customers. During the nine months ended September 30, 2011, the Company made advances of $1.2 million to ETC. As of September 30, 2011, the Company had outstanding loans to ETC totaling $4.5 million.

7.	Third Party Notes Receivable

From time to time, the Company engages in lending and leasing activities involving various types of equipment. During the nine months ended September, 30, 2011, these activities included advances of $22.2 million for two notes receivable secured by fixed wing aircraft and certain spare parts. Both notes receivable are for five years, one of which requires 59 monthly principal and interest payments and a final balloon payment, and the other requires quarterly payments of principal and interest, subject to certain prepayment provisions based on the sale of spare parts. These activities also included an advance of $14.5 million for a note receivable secured by an offshore support vessel that is managed by the Company. This note receivable requires monthly payments of principal and interest and a final balloon payment.

8.	Commitments and Contingencies

As of September 30, 2011, the Company’s unfunded capital commitments consisted primarily of offshore support vessels, helicopters, inland river tank barges, an interest in a dry-bulk articulated tug-barge, an interest in a river grain terminal and other property and equipment. These commitments totaled $302.0 million, of which $102.0 million is payable during the remainder of 2011 with the balance payable through 2013. Of the total unfunded capital commitments, $45.7 million may be terminated without further liability other than the payment of liquidated damages of $1.4 million. Subsequent to September 30, 2011, the Company committed to purchase additional equipment for $30.0 million.

The Company has guaranteed the payment of amounts owed by one of its joint ventures under a vessel charter agreement that expires in 2012. In addition, the Company has guaranteed amounts owed under banking facilities by certain of its joint ventures. As of September 30, 2011, the total amount guaranteed by the Company under these arrangements was $24.9 million. In addition, as of September 30, 2011, the Company had uncalled capital commitments to two of its joint ventures for a total of $2.6 million.

On August 19, 2011, the Company granted two fixed price purchase options to an unrelated third party to acquire up to 25% of the outstanding common stock of a certain Environmental Services’ subsidiary of the Company. The first option to acquire a 12.5% interest may be exercised beginning August 19, 2012 through August 19, 2014. If the first option is exercised, the second option to acquire an additional 12.5% may be exercised beginning August 19, 2013 through August 19, 2015.

Certain subsidiaries of the Company are participating employers in an industry-wide, multi-employer, defined benefit pension fund, the United Kingdom Merchant Navy Officers Pension Fund (“MNOPF”). Under the direction of a court order, any deficit of the MNOPF is to be remedied through funding contributions from all participating employers. The Company’s participation relates to officers employed between 1978 and 2002 by SEACOR’s Stirling group of companies (which had been acquired by SEACOR in 2001) and its predecessors. Based on an actuarial valuation of the MNOPF in 2003, the Company was invoiced and expensed $4.4 million in 2005, representing the Company’s allocated share of a total funding deficit of $412.0 million. Subsequent to this invoice, the pension fund trustees determined that $49.0 million of the $412.0 million deficit was deemed uncollectible due to the non-existence or liquidation of certain participating employers and the Company was invoiced and expensed $0.6 million in 2007 for its allocated share of the uncollectible deficit. Based on an actuarial valuation of the MNOPF in 2006, the Company was invoiced and expensed $3.9 million in 2007, representing the Company’s allocated share of an additional funding deficit of $332.6 million. Based on an actuarial valuation of the MNOPF in 2009, the Company was invoiced and expensed $7.8 million in 2010, representing the Company’s allocated share of an additional funding deficit of $636.9 million. Depending on the results of future actuarial valuations, it is possible that the MNOPF will experience further funding deficits, requiring the Company to recognize payroll related operating expenses in the periods invoices are received.

(which had been acquired by SEACOR in 2001) and its predecessors. Based on an actuarial valuation in March 2008, the Company was advised that its share of a $281.0 million (£175.0 million) accumulated funding deficit was $1.0 million (£0.6 million). The accumulated funding deficit is being recovered by additional annual contributions from current employers and is subject to adjustment following the results of future tri-annual actuarial valuations. As of September 30, 2011, $0.4 million, in the aggregate, of the Company’s funding deficit had been invoiced and expensed. Depending on the results of the future actuarial valuations, it is possible that the MNRPF will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received.

Certain subsidiaries of the Company are participating employers in an industry-wide, multi-employer defined benefit pension plan, the American Maritime Officers Pension Plan (“the AMOPP”). Under federal pension law, the AMOPP was deemed in critical status for the 2009 and 2010 plan years as the funded percentage of the AMOPP was less than 65% of the pension liability. The AMOPP was frozen in January 2010 and a ten year rehabilitation plan was adopted by the AMOPP trustees in February 2010 whereby benefit changes and increased contributions by participating employers are expected to improve the funded status of the AMOPP. Based on an actuarial valuation performed as of September 30, 2010, the Company was advised that if it chose to withdraw from the AMOPP, its withdrawal liability would have been $29.5 million. As of September 30, 2011, 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.

On June 12, 2009, a purported civil class action was filed against the Company, Era Group Inc., Era Helicopters LLC and three other defendants (collectively, the “Defendants”) in the U.S. District Court for the District of Delaware, Superior Offshore International, Inc. v. Bristow Group Inc., et al., No. 09-CV-438 (D. Del.). The Complaint alleges that the Defendants violated federal antitrust law by conspiring with each other to raise, fix, maintain or stabilize prices for offshore helicopter services in the U.S. Gulf of Mexico during the period January 2001 to December 2005. The purported class of plaintiffs includes all direct purchasers of such services and the relief sought includes compensatory damages and treble damages. The Company believes that the claims set forth in the Complaint are without merit and intends to vigorously defend the action. On September 4, 2009, the Defendants filed a motion to dismiss the Complaint. On September 14, 2010, the Court entered an order dismissing the Complaint. On September 28, 2010, the plaintiffs filed a motion for reconsideration and amendment and a motion for re-argument (the “Motions”). On November 30, 2010, the Court granted the Motions, amended the Court’s September 14, 2010 Order to clarify that the dismissal was without prejudice, permitted the filing of an Amended Complaint, and authorized limited discovery with respect to the new allegations in the Amended Complaint. Following the completion of such limited discovery, on February 11, 2011, the Defendants filed a motion for summary judgment to dismiss the Amended Complaint with prejudice. On June 23, 2011, the Court granted summary judgment for the Defendants. On July 22, 2011, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Third Circuit. The Company is unable to estimate the potential exposure, if any, resulting from these claims but believes they are without merit and will continue to vigorously defend the action.

Act, those petitions imposed an automatic stay on the Robin Case, and the court set a deadline of April 20, 2011 for individual claimants to assert claims in the limitation cases. Approximately 66 claims were submitted by the deadline in all of the limitation actions. On June 8, 2011, the Company moved to dismiss these claims (with the exception of one claim filed by a Company employee) on various legal grounds. On October 12, 2011, the Court granted the Company’s motion to dismiss in its entirety, dismissing with prejudice all claims that had been filed against the Company in the limitation actions (with the exception of one claim filed by a Company employee that was not subject to the motion to dismiss). The Court has asked the Company to prepare final judgments to be entered in each of the limitation actions and in the Robin Case and the Company expects those judgments to be entered in the coming weeks.

On July 20, 2010, two individuals purporting to represent a class commenced a civil action in the Civil District Court for the Parish of Orleans in the State of Louisiana, John Wunstell, Jr. and Kelly Blanchard v. BP, et al., No. 2010-7437 (Division K) (the “Wunstell Action”), in which they assert, among other theories, that Mr. Wunstell suffered injuries as a result of his exposure to certain noxious fumes and chemicals in connection with the provision of remediation, containment and response services by O’Brien’s Response Management Inc. (“O’Brien’s), a subsidiary of SEACOR. The action now is part of the overall MDL. The complaint also seeks to establish a “class-wide court-supervised medical monitoring program” for all individuals “participating in BP’s Deepwater Horizon Vessels of Opportunity Program and/or Horizon Response Program” who allegedly experience injuries similar to Mr. Wunstell. The Company believes this lawsuit has no merit and will seek its dismissal. Pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitations, to indemnify and defend O’Brien’s in connection with the Wunstell Action and claims asserted in the MDL.

On December 15, 2010, SEACOR subsidiaries O’Brien’s and National Response Corporation (“NRC”) were named as defendants in one of the several consolidated “master complaints” that have been filed in the overall MDL. The master complaint naming O’Brien’s 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. By court order, the Wunstell Action has been stayed as a result of the filing of the referenced master complaint. The Company believes that the claims asserted against its subsidiaries in the master complaint have no merit and on February 28, 2011, O’Brien’s and NRC moved to dismiss all claims against them in the master complaint on legal grounds. On September 30, 2011, the Court granted in part and denied in part the motion to dismiss that O’Brien’s and NRC had filed (an amended decision was issued on October 4, 2011 that corrected several grammatical errors and non-substantive oversights in the original order). Although the Court refused to dismiss the referenced master complaint in its entirety at that time, the Court did recognize the validity of the “derivative immunity” and “implied preemption” arguments that O’Brien’s and NRC advanced and has directed O’Brien’s and NRC to (i) conduct limited discovery to develop evidence to support those arguments and (ii) then re-assert the arguments. A schedule for such limited discovery and future motion practice is currently being discussed with the Court. The Court did, however, dismiss all state-law claims and certain other claims that had been asserted in the referenced master complaint, and dismissed the claims of all plaintiffs that have failed to allege a legally-sufficient injury. Finally, the Court stated that the plaintiffs could file an amended master complaint and the plaintiffs have indicated that they intend to do so. In addition to the indemnity provided to O’Brien’s, pursuant to contractual agreements with the responsible party, the responsible party has agreed, subject to certain potential limitation, to indemnify and defend O’Brien’s and NRC in connection with these claims in the MDL.

Production, Inc., et al., No. 2:11-cv-00863 (E.D. La.), which is a suit by a husband and wife, who allegedly participated in the clean-up effort and are seeking damages for personal injury, property damage to their boat, and amounts allegedly due under contract. On April 15, 2011, O’Brien’s and NRC were named as defendants in Thomas Edward Black v. BP Exploration & Production, Inc., et al., No. 2:11-cv-00867 (E.D. La.), which is a suit by an individual who is seeking damages for lost income because he allegedly could not find work in the fishing industry after the oil spill. On April 20, 2011, a complaint was filed in Darnell Alexander, et al. v. BP, PLC, et al., No. 2:11-cv-00951 (E.D. La.) on behalf of 117 individual plaintiffs that seek to adopt the allegations made in the referenced master complaint against O’Brien’s and NRC (and the other defendants). By court order, all four of these additional individual cases have been stayed as a result of the filing of the referenced master complaint.

On February 18, 2011, Triton Asset Leasing GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., and Transocean Deepwater Inc. (collectively “Transocean”) named O’Brien’s 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 O’Brien’s and NRC the claims in the referenced master complaint that have already been asserted against O’Brien’s and NRC. Transocean, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P., and Weatherford International, Inc. have also filed cross-claims against O’Brien’s and NRC for contribution and tort indemnity should they be found liable for any damages in Transocean’s Limitation of Liability Act action and O’Brien’s and NRC have asserted counterclaims against those same parties for identical relief.

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 such exposure could occur, but the Company does not expect that any change in estimated exposure would have a material effect on the Company’s consolidated financial position or its results of operations.

During the year ended December 31, 2010, the Company received notice from the Internal Revenue Service of $12.6 million in proposed penalties regarding Marine Transportation Services’ informational excise tax filings for prior years. The Company intends to vigorously defend its position that the proposed penalties are erroneous and believes the resolution of this matter will not have a material effect on the Company’s consolidated financial position or its results of operations.

During the nine months ended September 30, 2011, the Company received a Notice of Infringement (the “Notice”) from the Brazilian Federal Revenue Office. The Notice alleged the Company had imported a number of vessels into Brazil without properly completing the required importation documents and levied an assessment of $25.7 million. The Company intends to vigorously defend its position that the proposed assessment is erroneous and believes the resolution of this matter will not have a material effect on the Company’s consolidated financial position or its results of operations. Of the levied assessment, $19.3 million relates to managed vessels whose owner would be responsible to reimburse any potential payment.

9.	Long-Term Debt and Capital Lease Obligations

As of September 30, 2011, the Company had $125.0 million of outstanding borrowings under its revolving credit facility. The remaining availability under this facility was $323.5 million, net of issued letters of credit of $1.5 million. In addition, the Company had other outstanding letters of credit totaling $52.8 million with various expiration dates through 2014.

On July 15, 2011, one of the Company’s Marine Transportation subsidiaries obtained a $1.0 million revolving credit facility. The facility bears interest at prime plus 50 basis points with a floor of 4.5% and is

secured by all of the assets of the subsidiary. During the nine months ended September 30, 2011, the Company drew $0.4 million on the revolving credit facility and, as of September 30, 2011, had outstanding borrowings of $0.4 million and remaining availability of $0.6 million.

During the nine months ended September 30, 2011, the Company made scheduled payments on long-term debt and capital lease obligations of $8.6 million, repaid $22.8 million for the redemption of a facility financing, and made net borrowings on inventory financing arrangements of $10.2 million.

SEACOR’s Board of Directors has previously authorized the Company to purchase any or all of its 5.875% Senior Notes due 2012 and its 7.375% Senior Notes due 2019, which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the nine months ended September 30, 2011, the Company purchased $2.2 million, in principal amount, of its 5.875% Senior Notes due 2012, for an aggregate purchase price of $2.3 million.

10.

Stock Repurchases

SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire shares of SEACOR common stock, par value $0.01 per share (“Common Stock”), which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. During the nine months ended September 30, 2011, the Company did not acquire any Common Stock for treasury. As of September 30, 2011, the remaining authority under the repurchase plan was $113.0 million.

11.

Earnings Per Common Share of SEACOR

Basic earnings per common share of SEACOR are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of SEACOR are 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 method. Dilutive securities for this purpose assumes restricted stock grants have vested and common shares have been issued pursuant to the exercise of outstanding stock options. For the three and nine months ended September 30, 2011, diluted earnings per common share of SEACOR excluded 389,536 and 302,521, respectively, of certain share awards as the effect of their inclusion in the computation would have been antidilutive. For the three and nine months ended September 30, 2010, diluted earnings per common share of SEACOR excluded 939,071 and 872,748, respectively, of certain share awards as the effect of their inclusion in the computation would have been antidilutive.

A reconciliation of basic and diluted weighted average outstanding common shares of SEACOR was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Basic Weighted Average Common Shares Outstanding		21,202,480		20,786,721		21,158,110		21,590,917
Effect of Dilutive Share Awards:
Options and Restricted Stock		362,669		213,844		350,347		194,375

Diluted Weighted Average Common Shares Outstanding		21,565,149		21,000,565		21,508,457		21,785,292

12.

Comprehensive Income

For the three months ended September 30, 2011 and 2010, total comprehensive income was $1.3 million and $150.5 million, respectively. For the nine months ended September 30, 2011 and 2010, total comprehensive income was $22.3 million and $214.5 million, respectively. The components of other comprehensive income (loss) and allocated income tax (expense) benefit for the three and nine months ended September 30 were as follows (in thousands):


	Three Months Ended									Nine Months Ended
	Before-Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit		Net-of-Tax Amount
2011
Foreign currency translation adjustments	$	(3,760	)		1,316		$	(2,444	)	$	(2,015	)	$	705	$	(1,310	)
Derivative losses on cash flow hedges (see Note 3)		(549	)		192			(357	)		(1,992	)		697		(1,295	)

Other comprehensive loss	$	(4,309	)	$	1,508		$	(2,801	)	$	(4,007	)	$	1,402	$	(2,605	)

2010
Foreign currency translation adjustments	$	2,506		$	(877	)	$	1,629		$	(556	)	$	195	$	(361	)
Derivative losses on cash flow hedges (see Note 3)		(2,089	)		731			(1,358	)		(6,072	)		2,125		(3,947	)

Other comprehensive income (loss)	$	417		$	(146	)	$	271		$	(6,628	)	$	2,320	$	(4,308	)

13.

Share Based Compensation

Transactions in connection with the Company’s share based compensation plans during the nine months ended September 30, 2011 were as follows:


Director stock awards granted	3,000

Employee Stock Purchase Plan (“ESPP”) shares issued	47,376

Restricted stock awards granted	183,500

Restricted stock awards cancelled	2,020

Shares released from Deferred Compensation Plan	63

Restricted Stock Unit Activities:
Outstanding as of December 31, 2010	531
Granted	650
Converted to shares and issued to Deferred Compensation Plan	(51	)

Outstanding as of September 30, 2011	1,130

Stock Option Activities:
Outstanding as of December 31, 2010	1,130,356
Granted	225,590
Exercised	(83,277	)
Forfeited	(1,120	)
Expired	—

Outstanding as of September 30, 2011	1,271,549

Shares available for future grants and ESPP purchases as of September 30, 2011	600,742

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. An operating business segment has been defined as a component 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. The Company’s basis of measurement of segment profit or loss is as previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

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


	Offshore Marine Services $’000			Aviation Services $’000			Inland River Services $’000		Marine Transportation Services $’000			Environmental Services $’000			Commodity Trading and Logistics $’000			Other $’000			Corporate and Eliminations $’000			Total $’000
For the three months ended September 30, 2011
Operating Revenues:
External customers		93,256			71,804			45,349		24,696			40,415			279,178			16,726			—			571,424
Intersegment		21			—			2,526		87			—			—			15			(2,649	)		—

		93,277			71,804			47,875		24,783			40,415			279,178			16,741			(2,649	)		571,424

Costs and Expenses:
Operating		68,457			45,701			31,196		15,194			28,872			279,180			9,117			(2,544	)		475,173
Administrative and general		10,687			6,841			2,206		2,044			7,691			1,944			2,523			6,181			40,117
Depreciation and amortization		11,785			9,093			6,464		5,833			2,896			12			2,129			466			38,678

		90,929			61,635			39,866		23,071			39,459			281,136			13,769			4,103			553,968

Gains (Losses) on Asset Dispositions and Impairments, Net		5,241			4,894			1,303		—			3			—			(315	)		(144	)		10,982

Operating Income (Loss)		7,589			15,063			9,312		1,712			959			(1,958	)		2,657			(6,896	)		28,438

Other Income (Expense):
Derivative losses, net		—			(807	)		—		—			—			(3,063	)		—			(22,084	)		(25,954	)
Foreign currency gains (losses), net		(2,129	)		(95	)		—		(18	)		(75	)		153			(75	)		(979	)		(3,218	)
Other, net		6			—			—		131			—			—			(1	)		(175	)		(39	)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax		8,754			106			2,771		—			(93	)		(2,267	)		291			—			9,562

Segment Profit (Loss)		14,220			14,267			12,083		1,825			791			(7,135	)		2,872

Other Income (Expense) not included in Segment Profit																									(5,079	)
Less Equity Earnings included in Segment Profit																									(9,562	)

Loss Before Taxes and Equity Earnings																									(5,852	)


	Offshore Marine Services $’000			Aviation Services $’000			Inland River Services $’000		Marine Transportation Services $’000		Environmental Services $’000			Commodity Trading and Logistics $’000			Other $’000			Corporate and Eliminations $’000			Total $’000
For the nine months ended September 30, 2011
Operating Revenues:
External customers		266,915			196,434			127,959		66,169		151,963			718,511			52,183			—			1,580,134
Intersegment		92			18			7,827		262		4			—			15			(8,218	)		—

		267,007			196,452			135,786		66,431		151,967			718,511			52,198			(8,218	)		1,580,134

Costs and Expenses:
Operating		199,719			121,623			87,797		37,757		104,578			703,842			27,417			(7,878	)		1,274,855
Administrative and general		33,535			20,090			8,069		5,607		25,564			6,806			8,353			24,424			132,448
Depreciation and amortization		36,523			33,402			17,877		16,539		7,365			37			6,655			1,409			119,807

		269,777			175,115			113,743		59,903		137,507			710,685			42,425			17,955			1,527,110

Gains (Losses) on Asset Dispositions and Impairments, Net		13,212			13,260			1,978		—		(16	)		—			229			(144	)		28,519

Operating Income (Loss)		10,442			34,597			24,021		6,528		14,444			7,826			10,002			(26,317	)		81,543

Other Income (Expense):
Derivative losses, net		—			(1,308	)		—		—		—			(6,985	)		—			(27,580	)		(35,873	)
Foreign currency gains (losses), net		(1,812	)		596			—		4		(29	)		132			(98	)		4,568			3,361
Other, net		6			—			4		187		2			—			(2	)		(470	)		(273	)
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax		9,689			1,061			3,181		—		31			(3,267	)		(95	)		—			10,600

Segment Profit (Loss)		18,325			34,946			27,206		6,719		14,448			(2,294	)		9,807

Other Income (Expense) not included in Segment Profit																								(21,808	)
Less Equity Earnings included in Segment Profit																								(10,600	)

Income Before Taxes and Equity Earnings																								26,950


Capital Expenditures		50,096			88,894			40,786		10,460		5,853			60			13,253			3,026			212,428

As of September 30, 2011
Property and Equipment		610,056			650,750			361,515		233,892		35,617			178			154,081			20,580			2,066,669
Investments, at Equity, and Advances to 50% or Less Owned Companies		69,272			51,395			42,870		12,340		2,207			9,441			58,360			—			245,885
Goodwill		13,367			352			1,743		606		45,054			—			1,302			—			62,424
Intangible Assets		6,482			—			815		1,630		7,055			—			445			—			16,427
Other current and long-term assets, excluding cash and near cash assets⁽¹⁾		121,486			93,087			56,266		5,528		63,720			127,089			69,124			27,351			563,651

Segment Assets		820,663			795,584			463,209		253,996		153,653			136,708			283,312

Cash and near cash assets⁽¹⁾																								707,262

Total Assets																								3,662,318

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


	Offshore Marine Services $’000		Aviation Services $’000			Inland River Services $’000		Marine Transportation Services $’000			Environmental Services $’000		Commodity Trading and Logistics $’000			Other $’000			Corporate and Eliminations $’000			Total $’000
For the three months ended September 30, 2010
Operating Revenues:
External customers		150,981		67,117			38,148		18,540			468,226		216,896			19,925			—			979,833
Intersegment		9,935		19			3,233		—			—		—			106			(13,293	)		—

		160,916		67,136			41,381		18,540			468,226		216,896			20,031			(13,293	)		979,833

Costs and Expenses:
Operating		79,205		37,492			26,535		8,754			329,497		204,467			10,559			(13,290	)		683,219
Administrative and general		12,378		7,274			2,898		1,087			11,508		3,716			2,803			8,963			50,627
Depreciation and amortization		12,758		10,889			5,415		7,320			2,249		13			2,224			444			41,312

		104,341		55,655			34,848		17,161			343,254		208,196			15,586			(3,883	)		775,158

Gains (Losses) on Asset Dispositions and Impairments, Net		12,717		412			29,445		(18,677	)		—		—			—			(1	)		23,896

Operating Income (Loss)		69,292		11,893			35,978		(17,298	)		124,972		8,700			4,445			(9,411	)		228,571

Other Income (Expense):
Derivative gains (losses), net		—		(29	)		—		—			—		(5,307	)		—			6,984			1,648
Foreign currency gains (losses), net		977		(81	)		—		61			3		190			34			6,401			7,585
Other, net		—		50			—		—			—		—			—			(40	)		10
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax		2,300		663			3,522		—			533		1,042			(127	)		—			7,933

Segment Profit (Loss)		72,569		12,496			39,500		(17,237	)		125,508		4,625			4,352

Other Income (Expense) not included in Segment Profit																							(7,766	)
Less Equity Earnings included in Segment Profit																							(7,933	)

Income Before Taxes and Equity Earnings																							230,048


	Offshore Marine Services $’000		Aviation Services $’000			Inland River Services $’000		Marine Transportation Services $’000			Environmental Services $’000			Commodity Trading and Logistics $’000			Other $’000		Corporate and Eliminations $’000			Total $’000
For the nine months ended September 30, 2010
Operating Revenues:
External customers		400,035		179,873			99,827		59,255			711,013			562,952			56,029		—			2,068,984
Intersegment		15,190		(29	)		9,586		—			—			—			411		(25,158	)		—

		415,225		179,844			109,413		59,255			711,013			562,952			56,440		(25,158	)		2,068,984

Costs and Expenses:
Operating		232,980		110,059			67,636		31,101			476,942			555,213			31,493		(25,158	)		1,480,266
Administrative and general		37,758		18,756			7,577		2,962			24,070			10,251			8,441		27,811			137,626
Depreciation and amortization		39,481		32,064			15,249		23,336			6,331			48			6,514		1,294			124,317

		310,219		160,879			90,462		57,399			507,343			565,512			46,448		3,947			1,742,209

Gains (Losses) on Asset Dispositions and Impairments, Net		27,332		881			31,231		(18,688	)		(53	)		—			1,203		47			41,953

Operating Income (Loss)		132,338		19,846			50,182		(16,832	)		203,617			(2,560	)		11,195		(29,058	)		368,728

Other Income (Expense):
Derivative gains (losses), net		—		(91	)		—		—			—			3,612			—		(3,818	)		(297	)
Foreign currency gains (losses), net		1,776		(1,677	)		—		35			10			(557	)		1		(2,204	)		(2,616	)
Other, net		—		50			10		—			—			6			34		556			656
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax		6,264		(54	)		4,229		—			625			7			607		—			11,678

Segment Profit (Loss)		140,378		18,074			54,421		(16,797	)		204,252			508			11,837

Other Income (Expense) not included in Segment Profit																							(31,941	)
Less Equity Earnings included in Segment Profit																							(11,678	)

Income Before Taxes and Equity Earnings																							334,530


Capital Expenditures		31,909		86,079			20,547		4,233			4,176			—			12,602		14,183			173,729

As of September 30, 2010
Property and Equipment		610,088		577,880			317,214		333,462			35,331			168			155,221		19,358			2,048,722
Investments, at Equity, and Advances to 50% or Less Owned Companies		40,029		26,367			40,390		—			2,071			15,577			23,900		—			148,334
Goodwill		13,367		353			1,743		—			37,999			—			1,302		—			54,764
Intangible Assets		8,566		—			1,186		2,036			9,282			—			557		—			21,627
Other current and long-term assets, excluding cash and near cash assets⁽¹⁾		169,112		78,415			47,770		3,152			248,497			80,821			43,439		25,269			696,475

Segment Assets		841,162		683,015			408,303		338,650			333,180			96,566			224,419

Cash and near cash assets⁽¹⁾																							1,052,510

Total Assets																							4,022,432

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

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: decreased demand and loss of revenues as a result of U.S. government implemented moratoriums directing operators to cease certain drilling activities and any extension of such moratoriums (the “Moratoriums”), weakening demand for the Company’s services as a result of unplanned customer suspensions, cancellations, rate reductions or non-renewals of vessel charters and aviation equipment or failures to finalize commitments to charter vessels and aviation equipment in response to Moratoriums, increased government legislation and regulation of the Company’s businesses could increase cost of operations, increased competition if the Jones Act is repealed, liability, legal fees and costs in connection with providing spill and emergency response services, including the Company’s involvement in response to the oil spill as a result of the sinking of the Deepwater Horizon in April 2010, decreased demand for the Company’s services as a result of declines in the global economy, declines in valuations in the global financial markets and illiquidity in the credit sectors, including, interest rate fluctuations, availability of credit, inflation rates, change in laws, trade barriers, commodity prices and currency exchange fluctuations, the cyclical nature of the oil and gas industry, activity in foreign countries and changes in foreign political, military and economic conditions, changes in foreign and domestic oil and gas exploration and production activity, safety record requirements related to Offshore Marine Services, Marine Transportation Services and Aviation Services, decreased demand for Marine Transportation Services and Harbor and Offshore Towing Services due to construction of additional refined petroleum products, natural gas or crude oil pipelines or due to decreased demand for refined petroleum products, crude oil or chemical products or a change in existing methods of delivery, compliance with U.S. and foreign government laws and regulations, including environmental laws and regulations, the dependence of Offshore Marine Services, Marine Transportation Services and Aviation Services on several customers, consolidation of the Company’s customer base, safety issues experienced by a particular helicopter model that could result in customers refusing to use that helicopter model or a regulatory body grounding that helicopter model, which could also permanently devalue that helicopter model, the ongoing need to replace aging vessels and aircraft, industry fleet capacity, restrictions imposed by the Shipping Acts and Aviation Acts on the amount of foreign ownership of the Company’s Common Stock, operational risks of Offshore Marine Services, Marine Transportation Services, Harbor and Offshore Towing Services and Aviation Services, effects of adverse weather conditions and seasonality, future phase-out of Marine Transportation Services’ double-bottom tanker, dependence of spill response revenue on the number and size of spills and upon continuing government regulation in this area and Environmental Services’ ability to comply with such regulation and other governmental regulation, changes in National Response Corporation’s Oil Spill Removal Organization classification, liability in connection with providing spill response services, the level of grain export volume, the effect of fuel prices on barge towing costs, variability in freight rates for inland river barges, the effect of international economic and political factors in Inland River Services’ operations, adequacy of insurance coverage, the attraction and retention of qualified personnel by the Company and various other matters and factors, many of which are beyond the Company’s control. In addition, these statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors. Consequently, the following should not be considered a complete discussion of all potential risks or uncertainties. The words “estimate,” “project,” “intend,” “believe,” “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Form 10-Q should be evaluated together with the many uncertainties that

affect the Company’s businesses, particularly those mentioned under “Forward-Looking Statements” in Item 7 on the Company’s Form 10-K and SEACOR’s periodic reporting on Form 8-K (if any), which are incorporated by reference.

Overview

The Company’s operations are divided into six main business segments – Offshore Marine Services, Aviation Services, Inland River Services, Marine Transportation Services, Environmental Services and Commodity Trading and Logistics. The Company also has activities that are referred to and described under Other that primarily includes Harbor and Offshore Towing Services, various other investments in joint ventures and lending and leasing activities.

Consolidated Results of Operations

The sections below provide an analysis of the Company’s operations by business segment for the three months (“Current Year Quarter”) and nine months (“Current Nine Months”) ended September 30, 2011, as compared with the three months (“Prior Year Quarter”) and nine months (“Prior Nine Months”) ended September 30, 2010. See “Item 1. Financial Statements—Note 14. Segment Information” included in Part I for consolidating segment tables for each period presented.

Offshore Marine Services


	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2011						2010				2011						2010
	$’000			%			$’000		%		$’000			%			$’000		%
Operating Revenues:
United States, primarily U.S. Gulf of Mexico		26,360			28			90,722		56		78,363			29			209,733		51

Africa, primarily West Africa		15,651			17			19,541		12		48,372			18			58,125		14
Middle East		11,142			12			13,326		8		33,570			13			39,727		9
Mexico, Central and South America		15,107			16			12,396		8		41,353			15			38,110		9
United Kingdom, primarily North Sea		19,514			21			17,447		11		55,044			21			48,782		12
Asia		5,503			6			7,484		5		10,305			4			20,748		5

Total Foreign		66,917			72			70,194		44		188,644			71			205,492		49

		93,277			100			160,916		100		267,007			100			415,225		100

Costs and Expenses:
Operating
Personnel		34,978			37			36,959		23		101,645			38			109,918		26
Repairs and maintenance		10,118			11			12,539		8		28,803			11			36,243		9
Drydocking		2,686			3			4,341		3		12,654			5			18,183		4
Insurance and loss reserves		3,285			3			3,761		2		9,518			3			10,742		3
Fuel, lubes and supplies		6,308			7			5,824		4		17,683			7			18,659		4
Leased-in equipment		5,660			6			4,018		2		12,819			5			11,145		3
Brokered vessel activity		243			—			3,307		2		2,987			1			9,040		2
Other		5,179			6			8,456		5		13,610			5			19,050		5

		68,457			73			79,205		49		199,719			75			232,980		56
Administrative and general		10,687			11			12,378		8		33,535			13			37,758		9
Depreciation and amortization		11,785			13			12,758		8		36,523			13			39,481		10

		90,929			97			104,341		65		269,777			101			310,219		75

Gains on Asset Dispositions		5,241			5			12,717		8		13,212			5			27,332		7

Operating Income		7,589			8			69,292		43		10,442			4			132,338		32

Other Income (Expense):
Foreign currency gains (losses), net		(2,129	)		(2	)		977		1		(1,812	)		(1	)		1,776		—
Other, net		6			—			—		—		6			—			—		—
Equity in Earnings of 50% or Less Owned Companies, Net of Tax		8,754			9			2,300		1		9,689			4			6,264		2

Segment Profit		14,220			15			72,569		45		18,325			7			140,378		34

Operating Revenues by Type. The table below sets forth, for the periods indicated, the amount of operating revenues earned by type.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2011				2010				2011				2010
	$’000		%		$’000		%		$’000		%		$’000		%
Operating Revenues:
Time charter:
United States, primarily U.S. Gulf of Mexico		24,111		26		81,004		50		71,643		27		193,050		46
Africa, primarily West Africa		15,047		16		14,667		9		43,543		16		47,683		11
Middle East		8,557		9		10,755		7		26,794		10		31,611		8
Mexico, Central and South America		13,942		15		10,096		6		37,211		14		32,125		8
United Kingdom, primarily North Sea		19,518		21		17,445		11		54,949		21		48,712		12
Asia		4,674		5		4,235		3		9,541		3		15,890		4

Total time charter		85,849		92		138,202		86		243,681		91		369,071		89

Bareboat charter		212		—		3,277		2		628		—		4,771		1
Brokered vessel activity		256		—		4,488		3		3,925		2		11,912		3
Other marine services		6,960		8		14,949		9		18,773		7		29,471		7

		93,277		100		160,916		100		267,007		100		415,225		100

Time Charter Operating Data. The table below sets forth the average rates per day worked, utilization and available days data for each group of Offshore Marine Services’ vessels operating under time charters for the periods indicated. The rate per day worked is the ratio of total time charter revenues to the aggregate number of days worked. Utilization is the ratio of aggregate number of days worked to total calendar days available for work. Available days represents the total calendar days during which owned and chartered-in vessels are operated by the Company.


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
Rates Per Day Worked:
Anchor handling towing supply	$	27,287		$	41,619		$	29,729		$	38,291
Crew		6,728			6,522			6,559			6,592
Mini-supply		7,535			9,850			7,563			9,051
Standby safety		9,302			8,574			9,126			8,250
Supply		15,459			16,337			14,143			14,698
Towing supply		8,809			10,798			9,575			11,137
Specialty		16,172			7,330			9,829			7,258
Overall Average Rates Per Day Worked		11,318			13,667			10,880			13,028
Utilization:
Anchor handling towing supply		52	%		82	%		46	%		78	%
Crew		75	%		80	%		70	%		73	%
Mini-supply		87	%		90	%		75	%		69	%
Standby safety		88	%		88	%		87	%		88	%
Supply		70	%		86	%		69	%		81	%
Towing supply		43	%		73	%		49	%		77	%
Specialty		48	%		88	%		62	%		72	%
Overall Fleet Utilization		72	%		83	%		69	%		77	%
Available Days:
Anchor handling towing supply		1,564			1,675			4,641			5,114
Crew		3,487			4,542			11,291			13,569
Mini-supply		644			1,012			2,151			3,003
Standby safety		2,392			2,300			6,933			6,682
Supply		1,748			1,748			4,887			5,187
Towing supply		368			560			1,402			2,059
Specialty		276			275			988			969

Overall Fleet Available Days		10,479			12,112			32,293			36,583

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Operating revenues decreased by $67.6 million in the Current Year Quarter compared with the Prior Year Quarter.

Time charter revenues were $52.4 million lower. Overall fleet utilization was 72% compared with 83%. The number of days available for charter was 10,479 compared with 12,112, a 1,633 day or 13% reduction. Overall average day rates were $11,318 per day compared with $13,667 per day, a decrease of $2,349 per day or 17%.

Lower utilization decreased time charter revenues by $23.1 million. Net fleet dispositions, the impact of vessels mobilizing between geographic regions and other changes in fleet mix reduced time charter revenues by $11.8 million. In overall terms, lower average day rates decreased time charter revenues by $18.2 million while the impact of favorable changes in currency exchange rates increased time charter revenues by $0.7 million.

In the U.S. Gulf of Mexico, time charter revenues were $56.9 million lower due to softer market conditions attributable to the ongoing slowdown in the issuance of drilling permits by the Bureau of Ocean Energy Management, Regulation and Enforcement in the aftermath of the Deepwater Horizon oil spill. During the Current Year Quarter, lower utilization and lower average day rates reduced time charter revenues by $11.4 million and $17.0 million, respectively. Vessels that mobilized out of the region, other changes in fleet mix and net fleet dispositions decreased time charter revenues by $18.3 million and more out-of-service time for cold-stacked vessels during the period further decreased time charter revenues by $10.2 million. As of September 30, 2011 and 2010, the Company had seven vessels cold-stacked in this region.

In the Middle East, time charter revenues were $2.2 million lower primarily due to the impact of vessels mobilizing to other geographic regions and fleet dispositions.

In Mexico, Central and South America, time charter revenues were $3.8 million higher, of which $1.9 million was due to incremental time charter revenues from a vessel that mobilized into the region, $2.4 million was due to net fleet additions and $0.9 million was due to higher average day rates. Lower utilization decreased time charter revenues by $1.4 million.

In the United Kingdom, time charter revenues were $2.1 million higher, of which $1.3 million was due to improved average day rates and favorable changes in currency exchange rates and $1.0 million was due to incremental time charter revenues from a vessel that mobilized into the region and was converted from a towing supply to a standby safety vessel configuration.

Bareboat charter revenues were $3.1 million lower due to the change in contract status of one vessel in Asia. Revenues from brokered vessel activity were $4.2 million lower due to reduced activity in West Africa and the Middle East. Other marine services revenues were $7.9 million lower primarily due to $7.7 million of technical services provided in connection with the Deepwater Horizon oil spill response in the Prior Year Quarter.

Operating Expenses. Operating expenses decreased by $10.7 million in the Current Year Quarter compared with the Prior Year Quarter. Operating expenses were $3.5 million lower due to net fleet dispositions, $2.2 million lower due to more out-of-service days for cold-stacked vessels, $3.1 million lower due to reduced brokered vessel activity in West Africa and the Middle East, and $4.8 million lower due to the provision of technical services provided in connection with the Deepwater Horizon oil spill response during the Prior Year Quarter. The charter-in of several vessels into Mexico, Central and South America resulted in additional operating expense of $1.9 million.

Personnel costs were $2.0 million lower primarily due to net fleet dispositions and more out-of-service days for cold-stacked vessels. Repair and maintenance expenses were $2.4 million lower due to net fleet dispositions, more out-of-service days for cold-stacked vessels and the impact of expenditures incurred in the Prior Year Quarter related to technical services provided in support of the Deepwater Horizon oil spill response. Drydocking expenses were $1.7 million lower primarily due to reduced activity in Mexico, Central and South America, and West Africa. Brokered Vessel Activity expense was $3.1 million lower due to reduced activity in West Africa and the Middle East. Other operating expenses were $3.3 million lower primarily due to the impact of expenditures incurred in the Prior Year Quarter related to technical services provided in support of the Deepwater Horizon oil spill response.

Gains on Asset Dispositions. During the Current Year Quarter, the Company sold three offshore support vessels and other equipment for net proceeds of $6.7 million and gains of $5.1 million. In addition, the Company recognized previously deferred gains of $0.1 million. During the Prior Year Quarter, the Company sold four

offshore support vessels for net proceeds of $84.3 million and gains of $19.2 million of which $11.9 million was recognized currently and $7.3 million was deferred. In addition, the Company recognized previously deferred gains of $0.8 million.

Equity in Earnings of 50% or Less Owned Companies, Net of Tax. During the Current Year Quarter, Offshore Marine Services’ Mexican joint venture executed a business reorganization plan and issued an additional equity interest to an unrelated third party. Subsequent to the reorganization and issuance of the additional equity interest, the Company recognized an $8.4 million gain, net of tax.

Current Nine Months compared with Prior Nine Months

Operating Revenues. Operating revenues decreased by $148.2 million in the Current Nine Months compared with the Prior Nine Months.

Time charter revenues were $125.4 million lower. Overall fleet utilization was 69% compared with 77%. The number of days available for charter was 32,293 compared with 36,583, a 4,290 day or 12% reduction. Overall average day rates were $10,880 per day compared with $13,028 per day, a decrease of $2,148 per day or 16%. Lower utilization decreased time charter revenues by $56.9 million. Net fleet dispositions, the impact of vessels mobilizing between geographic regions and other changes in fleet mix reduced time charter revenues by $39.3 million. In overall terms, lower average day rates decreased time charter revenues by $31.8 million while the impact of favorable changes in currency exchange rates increased time charter revenues by $2.6 million.

In the U.S. Gulf of Mexico, time charter revenues were $121.4 million lower due to softer market conditions attributable to the ongoing slowdown in the issuance of drilling permits by the Bureau of Ocean Energy Management, Regulation and Enforcement in the aftermath of the Deepwater Horizon oil spill. Time charter revenues were lower for all classes of vessels. During the Current Nine Months, lower utilization and lower average day rates reduced time charter revenues by $30.6 million and $26.0 million, respectively. Net fleet dispositions, vessels that mobilized out of the region and other changes in fleet mix decreased time charter revenues by $43.1 million and more out-of-service days for cold-stacked vessels further decreased time charter revenues by $21.7 million.

In West Africa, time charter revenues were $4.2 million lower, of which $5.5 million was due to reduced utilization and $0.8 million was due to lower average day rates. The impact of vessels mobilizing from other geographic regions, net fleet dispositions, and other changes in fleet mix increased time charter revenues by $2.1 million.

In the Middle East, time charter revenues were $4.8 million lower, of which $3.2 million was due to net fleet dispositions and the impact of vessels mobilizing out of the region, $1.5 million was due to reduced utilization and $0.1 million was due to lower average day rates.

In Mexico, Central and South America, time charter revenues were $5.1 million higher. Net fleet additions and the impact of vessels mobilizing out of the region increased time charter revenues by $5.1 million, and higher average day rates further increased time charter revenues by $0.7 million. Lower utilization decreased time charter revenues by $0.7 million.

In the United Kingdom, time charter revenues were $6.2 million higher, of which $4.5 million was due to improved average day rates and favorable changes in currency exchange rates, and $3.0 million was due to the impact of a vessel that mobilized into the region and was converted from a towing supply to standby safety vessel configuration. These increases were partially offset by a $1.3 million decrease due to reduced fleet utilization.

In Asia, time charter revenues were $6.3 million lower, of which $3.2 million was due to fleet dispositions, the impact of vessels mobilizing out of the region and other changes in fleet mix, $1.8 million was due to reduced utilization and $1.3 million was due to lower average day rates.

Bareboat charter revenues were $4.1 million lower due to the change in contract status of one vessel in Asia. Revenues from brokered vessel activity were $8.0 million lower due to reduced activity in West Africa and the Middle East. Other marine services revenues were $10.7 million lower primarily due to the impact in the Prior Nine Months of technical services provided in connection with the Deepwater Horizon oil spill response, which generated revenues of $11.4 million.

Operating Expenses. Operating expenses decreased by $33.3 million in the Current Nine Months compared with the Prior Nine Months. Operating expenses were $10.5 million lower due to net fleet dispositions and other changes in fleet mix, $3.8 million lower due to the effect of vessels mobilizing between regions, $9.0 million lower due to more out-of-service days for cold-stacked vessels, $6.1 million lower due to reduced brokered vessel activity in West Africa and the Middle East, and $6.8 million lower due to the provision of technical services provided in connection with the Deepwater Horizon oil spill response during the Prior Nine Months. The charter-in of several vessels into Mexico, Central and South America resulted in additional operating expenses of $2.3 million during the Current Nine Months.

Personnel costs were $8.3 million lower primarily due to net fleet dispositions and more out-of-service days for cold-stacked vessels. Repair and maintenance expenses were $7.4 million lower due to net fleet dispositions, more out-of-service days for cold-stacked vessels and expenditures incurred in the Prior Nine Months related to technical services provided in support of the Deepwater Horizon oil spill response. Drydocking expense was $5.5 million lower primarily due to reduced activity in the U.S. Gulf of Mexico, West Africa and Mexico, Central and South America. Insurance expense was $1.2 million lower primarily due to net fleet dispositions. Leased-in equipment expense was $1.7 higher primarily due to the charter-in of several vessels into Mexico, Central and South America during the Current Nine Months. Brokered Vessel Activity expense was $6.1 million lower due to reduced activity in West Africa and the Middle East. Other operating expenses were $5.4 million lower primarily due to the impact of expenditures incurred in the Prior Nine Months related to technical services provided in support of the Deepwater Horizon oil spill response.

Gains on Asset Dispositions. During the Current Nine Months, the Company sold nine offshore support vessels and other equipment for net proceeds of $19.2 million and gains of $16.9 million of which $12.3 million was recognized currently and $4.6 million was deferred. In addition, the Company recognized previously deferred gains of $0.9 million. During the Prior Nine Months, the Company sold six offshore support vessels. In addition, the Company received insurance proceeds related to the nationalization of one of its offshore support vessels and the total constructive loss of another offshore support vessel under construction. The Company received net proceeds of $134.9 million on the disposition of these assets, including the insurance proceeds, and had gains of $30.4 million of which $21.9 million was recognized currently and $8.5 million was deferred. In addition, the Company recognized previously deferred gains of $5.4 million.

Equity in Earnings of 50% or Less Owned Companies, Net of Tax. During the Current Nine Months, Offshore Marine Services’ Mexican joint venture executed a business reorganization plan and issued an additional equity interest to an unrelated third party. Subsequent to the reorganization and issuance of the additional equity interest, the Company recognized an $8.4 million gain, net of tax. The gain was partially offset by lower results from another joint venture due to its vessel being cold-stacked.

Fleet Count

The composition of Offshore Marine Services’ fleet as of September 30 was as follows:


	Owned		Joint Ventured		Leased-in		Pooled or Managed		Total
2011
Anchor handling towing supply		15		2		2		—		19
Crew		33		7		7		3		50
Mini-supply		5		1		2		—		8
Standby safety		26		1		—		—		27
Supply		10		—		9		10		29
Towing supply		2		1		2		—		5
Specialty		3		5		—		3		11

		94		17		22		16		149

2010
Anchor handling towing supply		16		2		2		—		20
Crew		40		2		10		2		54
Mini-supply		6		1		5		—		12
Standby safety		25		1		—		—		26
Supply		11		—		8		8		27
Towing supply		4		1		2		1		8
Specialty		4		5		—		3		12

		106		12		27		14		159

Aviation Services


	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
	2011						2010					2011						2010
	$’000			%			$’000			%		$’000			%			$’000			%
Operating Revenues:
United States		52,863			74			52,339			78		140,728			72			138,863			77
Foreign		18,941			26			14,797			22		55,724			28			40,981			23

		71,804			100			67,136			100		196,452			100			179,844			100

Costs and Expenses:
Operating
Personnel		15,774			22			15,249			23		45,790			23			43,652			24
Repairs and maintenance		14,550			20			10,240			15		37,091			19			33,103			18
Insurance and loss reserves		2,454			4			2,404			3		6,598			3			6,835			4
Fuel and supplies		6,442			9			4,465			7		17,399			9			13,351			7
Leased-in equipment		505			1			556			1		1,470			1			1,558			1
Other		5,976			8			4,578			7		13,275			7			11,560			7

		45,701			64			37,492			56		121,623			62			110,059			61
Administrative and general		6,841			9			7,274			11		20,090			10			18,756			10
Depreciation and amortization		9,093			13			10,889			16		33,402			17			32,064			18

		61,635			86			55,655			83		175,115			89			160,879			89

Gains on Asset Dispositions and Impairments, Net		4,894			7			412			1		13,260			7			881			—

Operating Income		15,063			21			11,893			18		34,597			18			19,846			11

Other Income (Expense):
Derivative losses, net		(807	)		(1	)		(29	)		—		(1,308	)		(1	)		(91	)		—
Foreign currency gains (losses), net		(95	)		—			(81	)		—		596			—			(1,677	)		(1	)
Other, net		—			—			50			—		—			—			50			—
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax		106			—			663			1		1,061			1			(54	)		—

Segment Profit		14,267			20			12,496			19		34,946			18			18,074			10

Operating Revenues by Service Line. The table below sets forth, for the periods indicated, the amount of operating revenues earned by service line.


	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2011					2010					2011					2010
	$’000			%		$’000			%		$’000			%		$’000			%
Operating Revenues:
U.S. Gulf of Mexico, primarily from oil and gas services		30,891			43		30,172			45		88,114			45		86,201			48
Alaska, primarily from oil and gas services		7,730			11		9,904			15		19,149			10		22,547			12
Contract-leasing		18,941			26		14,972			22		55,724			28		41,645			23
Air Medical Services		7,524			10		5,994			9		19,018			10		16,523			9
Flightseeing		4,121			6		4,133			6		6,868			3		6,438			4
FBO		2,688			4		2,049			3		7,889			4		6,774			4
Eliminations		(91	)		—		(88	)		—		(310	)		—		(284	)		—

		71,804			100		67,136			100		196,452			100		179,844			100

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Operating revenues increased by $4.7 million in the Current Year Quarter compared with the Prior Year Quarter. Operating revenues from contract-leasing activities were $4.0 million higher primarily due to additional helicopters being placed on long-term contract-leases in foreign jurisdictions. As of September 30, 2011, 45 helicopters were engaged in contract-leasing activities compared with 38 as of September 30, 2010. Operating revenues in the U.S. Gulf of Mexico were $0.7 million higher primarily due to a $5.4 million increase in oil and gas related activities and a $1.7 million increase in search and rescue activities. These increases were offset by a $6.4 million decrease in operating revenues generated in support of the Deepwater Horizon oil spill response. Operating revenues from Alaska were $2.2 million lower primarily due to a reduced number of helicopters on contract with a major oil and gas customer after the completion of certain drilling activity in the fourth quarter of 2010. Air medical services increased by $1.5 million primarily due to $0.5 million in revenues generated from a new hospital contract and $1.0 million in increased activity in support of existing customers.

Operating Expenses. Operating expenses increased by $8.2 million in the Current Year Quarter compared with the Prior Year Quarter. Repair and maintenance expenses were $4.3 million higher primarily as a result of a $2.4 million increase in helicopter repairs due to the timing of major maintenance and a $2.2 million increase as additional helicopters were placed in power-by-hour maintenance programs. Fuel expenses were $2.0 million higher primarily due to higher prices. Other operating expenses were $1.4 million higher primarily due to a $0.4 million increase in the cost of contract medical support personnel assigned to search and rescue helicopters based in the U.S. Gulf of Mexico and a $0.7 million increase in services provided in support of helicopters on contract-leases.

Depreciation and Amortization. Depreciation and amortization expenses were lower by $1.8 million primarily due to a change in estimate of the useful life and salvage value of helicopters that resulted in a reduction of $3.7 million partially offset by the addition of new helicopters to the fleet. Effective July 1, 2011, the Company changed its estimated useful life and salvage value for helicopters from 12 to 15 years and 30% to 40%, respectively, due to improvements in new aircraft models that continue to increase their long-term value and make them viable for operation over a longer period of time.

Gains on Asset Dispositions and Impairments, Net. During the Current Year Quarter, the Company sold equipment for proceeds of $13.1 million and gains of $6.7 million of which $4.7 million was recognized

currently and $2.0 million was deferred. In addition, the Company recognized previously deferred gains of $0.2 million. During the Prior Year Quarter, the Company sold equipment for net proceeds of $0.5 million and gains of $0.3 million. In addition, the Company recognized previously deferred gains of $0.1 million.

Current Nine Months compared with Prior Nine Months

Operating Revenues. Operating revenues increased by $16.6 million in the Current Nine Months compared with Prior Nine Months. Operating revenues from contract-leasing activities were $14.1 million higher primarily due to additional helicopters being placed on long-term contract-leases in foreign jurisdictions. Operating revenues in the U.S. Gulf of Mexico were $1.9 million higher primarily due to a $5.1 million increase in oil and gas related activities and a $5.8 million increase in search and rescue activities. These increases were partially offset by a $9.1 million decrease in revenues in support of the Deepwater Horizon oil spill response. Operating revenues from Alaska were $3.4 million lower primarily due to a reduced number of helicopters on contract with a major oil and gas customer after the completion of certain drilling activity in the fourth quarter of 2010. Operating revenues from Air Medical Services increased by $2.5 million primarily due to $0.5 million in revenues generated from a new hospital contract and $2.0 million from increased activity on existing contracts.

Operating Expenses. Operating expenses increased by $11.6 million in the Current Nine Months compared with the Prior Nine Months. Personnel expenses were $2.1 million higher primarily due to a $1.0 million increase attributable to pilot pay scale adjustments implemented in June 2010 and a $0.9 million increase in air medical services related to staffing due to increased activity. Repair and maintenance expenses were $4.0 million higher primarily due to the placement of additional helicopters in power-by-hour maintenance programs. Fuel expenses were $4.0 million higher primarily due to higher prices. Other operating expenses were $1.7 million higher primarily due to a $1.5 million increase in the cost of contract medical support personnel assigned to search and rescue helicopters based in the U.S. Gulf of Mexico, $1.1 million of expenses related to an increase in parts sold to customers and a $1.4 million increase in services provided in support of helicopters on contract-leases. These increases were partially offset by the first quarter receipt of insurance proceeds of $1.9 million related to hurricane damages sustained in 2005 and a $0.6 million helicopter insurance premium adjustment as a result of good experience.

Administrative and General. Administrative and general expenses were $1.3 million higher primarily due to higher wage and benefit costs.

Depreciation and Amortization. Depreciation and amortization expenses were higher by $1.3 million primarily due to the addition of new helicopters to the fleet partially offset by a change in estimate of the useful life and salvage value of helicopters that resulted in a $3.7 million reduction.

Gains on Asset Dispositions and Impairments, Net. During the Current Nine Months, the Company sold equipment for proceeds of $22.1 million and gains of $14.8 million of which $12.8 million was recognized currently and $2.0 million was deferred. In addition, the Company recognized previously deferred gains of $0.4 million. During the Prior Nine Months, the Company sold equipment for net proceeds of $0.8 million and gains of $0.5 million. In addition, the Company recognized previously deferred gains of $0.4 million.

Fleet Count

The composition of Aviation Services’ fleet as of September 30 was as follows:


	Owned⁽¹⁾		Joint Ventured		Leased-in		Managed		Total
2011
Light helicopters – single engine		51		3		6		—		60
Light helicopters – twin engine		30		6		—		9		45
Medium helicopters		59		2		1		3		65
Heavy helicopters		7		—		—		—		7

		147		11		7		12		177

2010
Light helicopters – single engine		51		6		3		—		60
Light helicopters – twin engine		35		—		6		9		50
Medium helicopters		52		—		3		3		58
Heavy helicopters		8		—		1		—		9

		146		6		13		12		177

(1)	Excludes one light-twin engine helicopter removed from service as of September 30, 2011.

Inland River Services


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2011				2010				2011				2010
	$’000		%		$’000		%		$’000		%		$’000		%
Operating Revenues:
United States		47,875		100		41,381		100		135,786		100		109,413		100

Costs and Expenses:
Operating
Barge logistics		21,545		45		14,889		36		59,122		44		38,490		35
Personnel		2,967		6		3,437		8		9,647		7		9,720		9
Repairs and maintenance		1,095		2		1,430		4		3,231		3		3,745		3
Insurance and loss reserves		603		1		867		2		1,748		1		2,073		2
Fuel, lubes and supplies		611		1		1,135		3		2,261		2		3,034		3
Leased-in equipment		2,718		6		3,002		7		7,232		5		6,696		6
Other		1,657		4		1,775		4		4,556		3		3,878		4

		31,196		65		26,535		64		87,797		65		67,636		62
Administrative and general		2,206		5		2,898		7		8,069		6		7,577		7
Depreciation and amortization		6,464		13		5,415		13		17,877		13		15,249		14

		39,866		83		34,848		84		113,743		84		90,462		83

Gains on Asset Dispositions		1,303		2		29,445		71		1,978		2		31,231		29

Operating Income		9,312		19		35,978		87		24,021		18		50,182		46

Other Income (Expense):
Other, net		—				—		—		4		—		10		—
Equity in Earnings of 50% or Less Owned Companies, Net of Tax		2,771		6		3,522		8		3,181		2		4,229		4

Segment Profit		12,083		25		39,500		95		27,206		20		54,421		50

Operating Revenues by Service Line. The table below sets forth, for the periods indicated, operating revenues earned by service line.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2011				2010				2011				2010
	$’000		%		$’000		%		$’000		%		$’000		%
Operating Revenues:
Dry cargo barge pool participation		27,459		57		22,711		55		78,797		58		56,700		52
Liquid unit tow operations		6,873		15		7,297		18		19,870		15		22,491		21
Charter-out of dry cargo barges		2,444		5		2,124		5		6,727		5		6,491		6
10,000 barrel liquid tank barge operations		4,317		9		2,919		7		11,681		8		6,801		6
Inland river towboat operations and other activities		6,782		14		6,330		15		18,711		14		16,930		15

		47,875		100		41,381		100		135,786		100		109,413		100

Dry Cargo Barge Pool Operating Data. The following table presents, for the periods indicated, Inland River Services’ interest in tons moved and its available barge days in the dry cargo barge pools. Available barge days represents the total calendar days during which the Company’s owned and chartered-in barges were in the pool.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2011				2010				2011				2010
	Tons		%		Tons		%		Tons		%		Tons		%
Tons Moved (in thousands):
Grain		1,019		80		811		76		2,862		73		2,179		69
Non-Grain		258		20		257		24		1,084		27		978		31

		1,277		100		1,068		100		3,946		100		3,157		100


	Days				Days				Days				Days
Available barge days		49,914				42,743				146,954				123,071

Operating Revenues. Operating revenues increased by $6.5 million in the Current Year Quarter compared with the Prior Year Quarter and increased by $26.4 million in the Current Nine Months compared with the Prior Nine Months primarily due to a larger fleet following the addition of newly constructed dry cargo barges and the addition of dry cargo and 10,000 barrel liquid tank barges previously included in the Seaspraie joint venture. These increases were partially offset by lower operating revenues in the liquid unit tow operation primarily due to lower contract rates and reduced utilization of towboats in the spot dry cargo market and a delay in the commencement of the grain harvest in the Current Year Quarter. Operating revenues from inland river towboat operations and other activities were $1.8 million higher in the Current Nine Months compared with the Prior Nine Months primarily due to the commencement of towboat repair operations.

Operating Expenses. Operating expenses increased by $4.7 million in the Current Year Quarter compared with the Prior Year Quarter and increased by $20.2 million in the Current Nine Months compared with the Prior Nine Months. The increase in the Current Year Quarter and Current Nine Months was primarily due to increased barge logistic expenses as a result of the larger fleet, higher fuel prices and high-water towing escalators as a result of difficult operating conditions in the first half of the year and higher repositioning costs due to a delay in the commencement of the grain harvest in the Current Year Quarter.

Gains on Asset Dispositions. During the Current Year Quarter, the Company sold six deck barges for proceeds of $4.1 million and gains of $0.6 million. In addition, the Company recognized previously deferred gains of $0.7 million. During the Current Nine Months, the Company sold one towboat and six deck barges for proceeds of $4.1 million and losses of $0.1 million. In addition, the Company recognized previously deferred gains of $2.1 million. During the Prior Year Quarter and the Prior Nine Months, the Company sold 60 inland river covered hopper barges for proceeds of $25.8 million and gains of $16.5 million. In addition, the Company recognized previously deferred gains of $12.9 million and $14.7 million in the Prior Year Quarter and Prior Nine Months, respectively, of which $12.2 million related to the Company’s acquisition of a controlling interest in its Seaspraie joint venture.

Equity in Earnings of 50% or Less Owned Companies, Net of Tax. During the Current Year Quarter, the Company obtained a 100% controlling interest in Soylutions LLC through the acquisition of its partner’s 50% interest. Upon the acquisition, the Company adjusted its investment in Soylutions to fair value resulting in the recognition of a gain of $2.3 million, net of tax. During the Prior Year Quarter, the Company obtained a 100% controlling interest in Seaspraie LLC through the acquisition of its partner’s 50% interest. Upon the acquisition, the Company adjusted its investment in Seaspraie to fair value resulting in the recognition of a gain of $2.5 million, net of tax.

Fleet Count

The composition of Inland River Services’ fleet as of September 30 was as follows:


	Owned		Joint Ventured		Leased-in		Pooled or Managed		Total
2011
Inland river dry cargo barges		689		172		2		626		1,489
Inland river liquid tank barges		70		—		—		9		79
Inland river deck barges		20		—		—		—		20
Inland river towboats		16		15		—		—		31
Dry cargo vessel⁽¹⁾		—		1		—		—		1

		795		188		2		635		1,620

2010
Inland river dry cargo barges		634		172		2		586		1,394
Inland river liquid tank barges		68		—		2		16		86
Inland river deck barges		26		—		—		—		26
Inland river towboats		17		15		—		—		32
Dry cargo vessel⁽¹⁾		—		1		—		—		1

		745		188		4		602		1,539

(1)	Argentine-flag.

Marine Transportation Services


	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
	2011					2010						2011				2010
	$’000			%		$’000			%			$’000		%		$’000			%
Operating Revenues:
United States		24,783			100		18,540			100			66,431		100		59,255			100
Costs and Expenses:
Operating
Personnel		4,287			17		4,859			26			12,344		19		16,548			28
Repairs and maintenance		222			1		487			3			1,843		3		1,698			3
Drydocking		1,030			4		875			5			1,489		2		5,407			9
Insurance and loss reserves		641			3		606			3			1,197		2		1,761			3
Fuel, lubes and supplies		2,007			8		1,014			5			4,510		7		3,504			6
Leased-in equipment		2,319			9		—			—			8,985		13		—			—
Other		4,688			19		913			5			7,389		11		2,183			4

		15,194			61		8,754			47			37,757		57		31,101			53
Administrative and general		2,044			8		1,087			6			5,607		8		2,962			5
Depreciation and amortization		5,833			24		7,320			39			16,539		25		23,336			39

		23,071			93		17,161			92			59,903		90		57,339			97

Losses on Asset Dispositions and Impairments		—			—		(18,677	)		(101	)		—		—		(18,688	)		(31	)

Operating Income (Loss)		1,712			7		(17,298	)		(93	)		6,528		10		(16,832	)		(28	)

Other Income (Expense):
Foreign currency gains (losses), net		(18	)		—		61			—			4		—		35			—
Other, net		131			—		—			—			187		—		—			—

Segment Profit (Loss)		1,825			7		(17,237	)		(93	)		6,719		10		(16,797	)		(28	)

Operating Revenues by Charter Arrangement. The table below sets forth, for the periods indicated, the amount of operating revenues earned from charter arrangements.


	For the Three Months Ended September 30,									For the Nine Months Ended September 30,
	2011					2010				2011					2010
	$’000			%		$’000		%		$’000			%		$’000		%
Operating Revenues:
Time charter		8,969			36		10,206		55		26,538			40		35,487		60
Bareboat charter		8,832			36		7,594		41		26,208			39		20,136		34
Contract of affreightment and other		(63	)		—		740		4		(181	)		—		3,632		6
G&G Shipping		7,045			28		—		—		13,866			21		—		—

		24,783			100		18,540		100		66,431			100		59,255		100

G&G Shipping Acquisition. In April 2011, Marine Transportation Services acquired real property, eight foreign flag Roll-on/Roll-off (“RORO”) vessels and a 70% interest in an operating company engaged in the shipping trade between the United States, the Bahamas and the Caribbean. The operating company leases-in the real property and the RORO vessels from the Company. In the Current Year Quarter and Current Nine Months, this operation contributed an operating loss of $0.9 million and $1.3 million, respectively. The operating losses were primarily due to drydocking costs for one RORO vessel and charter-in expenses to cover that vessel’s out-of-service time, and operational issues and the impact of Hurricane Irene in the Current Year Quarter.

Operating Revenues. Operating revenues increased by $6.2 million in the Current Year Quarter compared with the Prior Year Quarter and increased by $7.2 million in the Current Nine Months compared with the Prior Nine Months. Time charter revenues were $1.2 million lower in the Current Year Quarter and $8.9 million lower in the Current Nine Months and bareboat charter revenues were $1.2 million higher in the Current Year Quarter and $6.1 million higher in the Current Nine Months primarily due to the change in contract status from time charter to long-term bareboat charter for one vessel effective August 2010. Contract of affreightment and other revenues were $0.8 million lower in the Current Year Quarter and $3.8 million lower in the Current Nine Months primarily due to the lay-up of the Seabulk America in August 2010.

Operating Expenses. Operating expenses increased by $6.4 million in the Current Year Quarter compared with the Prior Year Quarter and increased by $6.7 million in the Current Nine Months compared with the Prior Nine Months. The increases in the Current Year Quarter and Current Nine Months were primarily due to the G&G Shipping acquisition and the sale-leaseback of two vessels in the fourth quarter of 2010. The Current Nine Month increases were partially offset by the change in contract status of two time charter vessels to long-term bareboat charter, one effective January 2010 and the other effective August 2010, and lower drydocking costs due to the drydocking of the Seabulk Challenge and Seabulk Trader in the first quarter of 2010.

Depreciation and Amortization. Depreciation and amortization expenses were $1.5 million lower in the Current Year Quarter and $6.8 million lower in the Current Nine Months primarily due to the sale-leaseback of two vessels during the fourth quarter of 2010 and the write-down of the Seabulk America to fair value in the third quarter of 2010, partially offset by $0.9 million and $1.6 million of depreciation expense in the Current Year Quarter and Current Nine Months, respectively, resulting from the G&G Shipping acquisition.

Administrative and General. General and administrative expenses were $1.0 million higher in the Current Year Quarter and $2.6 million higher in the Current Nine Months primarily due to the G&G Shipping acquisition.

Losses on Asset Dispositions and Impairments. The Seabulk America had been scheduled to undergo a regulatory drydocking in the Prior Year Quarter, a requirement for continued operation. Given the prevailing market conditions, the Company deferred the drydocking, laid-up the vessel and recognized an impairment charge of $18.7 million in the Prior Year Quarter reducing its carrying value to its fair value of $5.0 million.

Fleet Count

As of September 30, 2011 and 2010, Marine Transportation Services’ fleet included eight U.S.-flag product tankers operating in the domestic coastwise trade. As of September 30, 2011, six of the U.S.-flag product tankers were owned and two were leased-in, of which four were operating under long-term bareboat charters, three were operating under time charters and one was laid-up. As of September 30, 2011, Marine Transportation Services’ fleet also included eight owned foreign flag RORO vessels operating in the shipping trade between the United States, the Bahamas and the Caribbean.

Environmental Services


	For the Three Months Ended September 30,									For the Nine Months Ended September 30,
	2011					2010				2011					2010
	$’000			%		$’000		%		$’000			%		$’000			%
Operating Revenues:
United States		6,134			15		462,160		99		135,769			89		692,921			97
Foreign		34,281			85		6,066		1		16,198			11		18,092			3

		40,415			100		468,226		100		151,967			100		711,013			100

Costs and Expenses:
Operating
Subcontractors		11,779			29		311,444		67		54,713			36		430,831			61
Personnel		10,360			26		12,542		3		31,356			21		31,163			4
Repairs and maintenance		1,631			4		873		—		3,894			3		2,641			—
Insurance and loss reserves		447			1		661		—		1,849			1		1,892			—
Fuel, lubes and supplies		2,022			5		1,930		—		5,863			4		5,144			1
Other		2,633			7		2,047		—		6,903			4		5,271			1

		28,872			72		329,497		70		104,578			69		476,942			67
Administrative and general		7,691			19		11,508		2		25,564			17		24,070			3
Depreciation and amortization		2,896			7		2,249		1		7,365			5		6,331			1

		39,459			98		343,254		73		137,507			91		507,343			71

Gains (Losses) on Asset Dispositions		3			—		—		—		(16	)		—		(53	)		—

Operating Income		959			2		124,972		27		14,444			9		203,617			29

Other Income (Expense):
Foreign currency gains (losses), net		(75	)		—		3		—		(29	)		—		10			—
Other, net		—			—		—		—		2			—		—			—
Equity in Earnings of 50% or Less Owned Companies, Net of Tax		(93	)		—		533		—		31			—		625			—

Segment Profit		791			2		125,508		27		14,448			9		204,252			29

Operating Revenues by Service Line. The table below sets forth, for the periods indicated, the amount of operating revenues earned by service line.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2011				2010				2011				2010
	$’000		%		$’000		%		$’000		%		$’000		%
Operating Revenues:
Response Services		10,644		26		426,758		91		68,883		45		616,102		87
Retainer Services		7,807		19		7,552		2		22,013		15		20,632		3
Standby Services		4,046		10		3,088		1		10,623		7		6,785		1
Professional Services		4,692		12		4,576		1		12,462		8		11,503		2
Software Services		97		—		1,426		—		471		—		2,216		—
Project Management		11,764		29		21,684		4		33,448		22		47,375		6
Equipment Sales and Leasing		1,365		4		3,142		1		4,067		3		6,400		1

		40,415		100		468,226		100		151,967		100		711,013		100

Deepwater Horizon Oil Spill Response. Operating revenues and operating margins for Environmental Services can vary materially between comparable periods depending upon the number and magnitude of emergency responses. Environmental Services’ operating results in the Prior Year Quarter and Prior Year Nine Months were impacted by oil spill response activities relating to the BP Macondo well incident in the U.S. Gulf of Mexico following the sinking of the semi-submersible drilling rig Deepwater Horizon in April 2010 (the “Oil Spill Response”). Environmental Services provided vessels, equipment and people to support clean-up activities, both on shore and at sea, professional assistance, consulting services and software systems in support of incident management activities.

Commodity Trading and Logistics


	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2011						2010						2011						2010
	$’000			%			$’000			%			$’000			%			$’000			%
Operating Revenues:
United States		185,615			66			204,945			94			537,236			75			515,090			91
Foreign		93,563			34			11,951			6			181,275			25			47,862			9

		279,178			100			216,896			100			718,511			100			562,952			100

Costs and Expenses:
Operating		279,180			100			204,467			94			703,842			98			555,213			99
Administrative and general		1,944			1			3,716			2			6,806			1			10,251			2
Depreciation		12			—			13			—			37			—			48			—

		281,136			101			208,196			96			710,685			99			565,512			101

Operating Income (Loss)		(1,958	)		(1	)		8,700			4			7,826			1			(2,560	)		(1	)

Other Income (Expense):
Derivative gains (losses), net⁽¹⁾		(3,063	)		(1	)		(5,307	)		(2	)		(6,985	)		(1	)		3,612			1
Foreign currency gains (losses), net		153			—			190			—			132			—			(557	)		—
Other, net		—			—			—			—			—			—			6			—
Equity in Losses of 50% or Less Owned Companies, Net of Tax		(2,267	)		(1	)		1,042			—			(3,267	)		—			7			—

Segment Profit (Loss)		(7,135	)		(3	)		4,625			2			(2,294	)		—			508			—

⁽¹⁾

In the Company’s energy and sugar trading businesses, fixed price future purchase and sale contracts for ethanol and sugar are included in derivative positions at fair value. The Company routinely enters into exchange traded derivative positions to offset its net commodity market exposure on these purchase and sale contracts as well as its inventory balances. As a result, derivative gains (losses), net recognized during any period are predominately offset by fair value adjustments included in operating revenues and expenses on completed transactions, subject to certain timing differences on the delivery of physical inventories. As of September 30, 2011 and 2010, the net market exposure to ethanol and sugar under its contracts and inventory balances was not material.

Operating Revenues and Segment Profit (Loss) by Commodity. The table below sets forth, for the periods indicated, the amount of operating revenues earned and segment profit (loss) by commodity.


	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2011						2010						2011						2010
	$’000			%			$’000			%			$’000			%			$’000			%
Operating Revenues:
Energy Trading		189,419			68			165,966			77			554,234			77			426,270			76
Sugar Trading		84,880			30			38,979			18			156,312			22			85,373			15
Rice Trading		4,879			2			11,951			5			7,965			1			51,309			9

		279,178			100			216,896			100			718,511			100			562,952			100

Segment Profit (Loss):
Energy Trading		(6,566	)		92			5,831			126			(2,020	)		88			8,036			1,582
Sugar Trading		307			(4	)		10			—			1,006			(44	)		1,387			273
Rice Trading		(876	)		12			(1,216	)		(26	)		(1,280	)		56			(8,915	)		(1,755	)

		(7,135	)		100			4,625			100			(2,294	)		100			508			100

Segment Profit (Loss). Segment losses for energy trading in the Current Year Quarter and in the Current Nine Months were primarily due to volatile commodity prices and equity losses from the Company’s alcohol manufacturing joint venture. Segment losses for rice trading in the Current Year Quarter and Current Nine Months were primarily due to the liquidation of remaining rice inventories in Haiti.

Other Segment Profit


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
	$’000			$’000			$’000			$’000
Harbor and Offshore Towing Services		2,960			4,296			10,944			11,951
Other Activities		(379	)		183			(1,042	)		(721	)
Equity in Earnings (Losses) of 50% or Less Owned Companies		291			(127	)		(95	)		607

Segment Profit		2,872			4,352			9,807			11,837

Harbor and Offshore Towing Services. Segment profit decreased by $1.3 million in the Current Year Quarter compared with the Prior Year Quarter and decreased by $1.0 million in the Current Nine Months compared with the Prior Nine Months primarily due to lower contract revenues from the Oil Spill Response and fewer harbor jobs.

Corporate and Eliminations


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
	$’000			$’000			$’000			$’000
Corporate Expenses		(6,897	)		(9,408	)		(26,318	)		(29,058	)
Eliminations		1			(3	)		1			—

Operating Loss		(6,896	)		(9,411	)		(26,317	)		(29,058	)

Other Income (Expense):
Derivative gains (losses), net		(22,084	)		6,984			(27,580	)		(3,818	)
Foreign currency gains (losses), net		(979	)		6,401			4,568			(2,204	)
Other, net		(175	)		(40	)		(470	)		556

Corporate Expenses. Corporate expenses decreased by $2.5 million in the Current Year Quarter compared with the Prior Year Quarter and by $2.7 million in the Current Nine Months compared with the Prior Nine Months primarily due to lower compensation expenses and lower legal and professional fees.

Derivative gains (losses), net. Derivative gains (losses), net of $22.1 million in the Current Year Quarter and $27.6 million in the Current Nine Months were primarily due to losses on U.S. treasury notes, rate-locks and bond future and option contracts.

Foreign currency gains (losses), net. Foreign currency losses, net of $1.0 million in the Current Year Quarter were primarily due to the weakening of the euro against the U.S. dollar. Foreign currency gains, net of $4.6 million in the Current Nine Months were primarily due to the strengthening of the euro against the U.S. dollar.

Other Income (Expense) not included in Segment Profit (Loss)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2011			2010			2011			2010
	$’000			$’000			$’000			$’000
Interest income		5,554			2,562			12,599			5,788
Interest expense		(10,712	)		(10,274	)		(31,218	)		(33,862	)
Debt extinguishment gains, net		(51	)		—			(99	)		(368	)
Marketable security gains (losses), net		130			(54	)		(3,090	)		(3,499	)

		(5,079	)		(7,766	)		(21,808	)		(31,941	)

Interest Income. Interest income increased by $3.0 million in the Current Year Quarter compared with the Prior Year Quarter and increased by $6.8 million in the Current Nine Months compared with the Prior Nine Months primarily due to an increase in the Company’s lending and leasing activities.

Liquidity and Capital Resources

General

The Company’s ongoing liquidity requirements arise primarily from working capital needs, meeting its capital commitments and the repayment of debt obligations. In addition, the Company may use its liquidity to fund acquisitions, repurchase shares of SEACOR common stock, par value $0.01 per share (“Common Stock”), for treasury or to make other investments. Sources of liquidity are cash balances, marketable securities, construction reserve funds, Title XI reserve funds, cash flows from operations and borrowings under the Company’s revolving credit facility. From time to time, the Company may secure additional liquidity through the issuance of debt, shares of its Common Stock, preferred stock, subsidiary stock or a combination thereof.

As of September 30, 2011, construction reserve funds of $288.7 million were classified as non-current assets in the accompanying condensed consolidated balance sheets as the Company has the intent and ability to use the funds to acquire equipment.

SEACOR’s Board of Directors previously approved a securities repurchase plan that authorizes the Company to acquire Common Stock, which may be acquired through open market purchases, privately negotiated transactions or otherwise, depending on market conditions. As of September 30, 2011, the remaining authority under the repurchase plan was $113.0 million.

As of September 30, 2011, the Company had $125.0 million of outstanding borrowings under its revolving credit facility. The remaining availability under this facility as of September 30, 2011 was $323.5 million, net of issued letters of credit of $1.5 million. On November 3, 2011, the maximum committed amount under the revolving credit facility will be reduced by $45.0 million. In addition, the Company had other outstanding letters of credit totaling $52.8 million with various expiration dates through 2014.

Summary of Cash Flows


	For the Nine Months Ended September 30,
	2011			2010
	$’000			$’000
Cash flows provided by or (used in):
Operating Activities		196,242			416,060
Investing Activities		(248,163	)		690
Financing Activities		(15,835	)		(213,064	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		4,193			(7,312	)

Net Increase (Decrease) in Cash and Cash Equivalents		(63,563	)		196,374

Operating Activities

Cash flows provided by operating activities decreased by $219.8 million in the Current Nine Months compared with the Prior Nine Months. The components of cash flows provided by (used in) operating activities during the Current Nine Months and Prior Nine Months were as follows:


	For the Nine Months Ended September 30,
	2011			2010
	$’000			$’000
Operating income before depreciation and gains on asset dispositions and impairments, net		172,831			451,092
Changes in operating assets and liabilities before interest and income taxes		(3,304	)		55,516
Purchases of marketable securities		(96,363	)		(66,865	)
Proceeds from sale of marketable securities		155,866			29,849
Cash settlements on derivative transactions, net		(22,610	)		(3,450	)
Dividends received from 50% or less owned companies		7,663			17,125
Interest paid, excluding capitalized interest		(21,543	)		(38,981	)
Income taxes paid, net		(5,679	)		(33,287	)
Other		9,381			5,061

Total cash flows provided by operating activities		196,242			416,060

Operating income before depreciation and gains on asset dispositions and impairments, net was $278.3 million lower in the Current Nine Months compared with the Prior Nine Months primarily due to higher operating results in the Prior Nine Months from Oil Spill Response activities. See “Consolidated Results of Operations” included above for a discussion of the results of each of the Company’s business segments.

During the Current Nine Months, changes in operating assets and liabilities before interest and income taxes used cash flows of $3.3 million. Increases in working capital employed by Commodity Trading and Logistics due to higher trading activities were offset by decreases by Environmental Services due to the timing of collections and payments associated with the Oil Spill Response. During the Prior Nine Months, changes in operating assets and liabilities before interest and income taxes generated cash flows of $55.5 million primarily due to the timing of collections and payments associated with the Oil Spill Response and the liquidation of rice inventories in Commodity Trading and Logistics.

During the Current Nine Months, cash used in operating activities included $23.8 million to purchase marketable security long positions and $72.6 million to cover marketable security short positions. During the Current Nine Months, cash provided by operating activities included $77.3 million received from the sale of marketable security long positions and $78.6 million received upon entering into marketable security short positions.

During the Prior Nine Months, cash used in operating activities included $61.7 million to purchase marketable security long positions and $5.2 million to cover marketable security short positions. During the Prior Nine Months, cash provided by operating activities included $25.0 million received from the sale of marketable security long positions and $4.8 million received upon entering into marketable security short positions.

Investing Activities

During the Current Nine Months, net cash used in investing activities was $248.2 million primarily as follows:

•

Capital expenditures were $212.4 million. Equipment deliveries included three offshore support vessels, 55 inland river dry cargo barges, two liquid tank barges, nine helicopters and one harbor tug. In addition, the Company acquired a controlling interest in an offshore support vessel.

•

Proceeds from the disposition of property and equipment were $50.6 million. The Company sold nine offshore support vessels, eight helicopters, one inland river towboat, six inland river deck barges, two harbor tugs and other equipment.

•

The Company made net investments in its 50% or less owned companies of $40.4 million.

•

The Company made net advances on third party notes receivable of $33.6 million.

•

Construction reserve fund account transactions included withdrawals of $37.4 million and deposits of $11.8 million.

•

The Company acquired certain real property, eight foreign flag RORO vessels and a 70% interest in an operating company engaged in the shipping trade between the United States, the Bahamas and the Caribbean for $33.5 million, which included cash consideration of $30.3 million and the contribution of a $3.2 million note receivable. The acquired company had $1.6 million in cash at the time of acquisition.

•

The Company obtained a 100% controlling interest in Soylutions LLC (“Soylutions”) through its acquisition of its partner’s interest for $11.9 million in cash. The acquired company had $0.2 million in cash at the time of acquisition.

During the Prior Nine Months, net cash provided by investing activities was $0.7 million primarily as follows:

•

Capital expenditures were $173.7 million. Equipment deliveries included one offshore support vessel, 113 inland river dry cargo barges, 17 liquid tank barges, three helicopters and one tractor tug.

•

Proceeds from the disposition of property and equipment were $173.0 million. The Company sold six offshore support vessels, two helicopters, one ocean liquid tank barge, 60 dry cargo barges and other equipment. In addition, the Company received insurance proceeds related to the nationalization of one of its offshore support vessels and the total constructive loss of another offshore support vessel under construction.

•

The Company made net investments in its 50% or less owned companies of $19.1 million.

•

The Company released $19.2 million of restricted cash and $7.0 million of Title XI reserve funds into general purpose funds primarily due to the redemption of all of the outstanding Title XI Bonds on two of the Company’s double-hull product tankers (as noted below).

•

Construction reserve fund account transactions included withdrawals of $56.7 million and deposits of $46.2 million.

•

The Company made net investments in leases of $16.4 million.

Financing Activities

During the Current Nine Months, net cash used in financing activities was $15.8 million. The Company:

•

purchased $2.2 million, in principal amount, of its 5.875% Senior Notes due 2012 for an aggregate purchase price of $2.3 million;

•

repaid $22.8 million for the redemption of facility financing;

•

made scheduled payments on long-term debt and capital lease obligations of $8.6 million;

•

had net borrowings on inventory financing arrangements of $10.2 million; and

•

received $8.7 million for share award plans.

During the Prior Nine Months, net cash used in financing activities was $213.1 million. The Company:

•

redeemed all of the outstanding bonds on two of the Company’s double hull product tankers, in principal amount of $61.9 million, for an aggregate purchase price of $63.0 million, including a make whole premium;

•

purchased $2.4 million, in principal amount, of its 5.875% Senior Notes due 2012 for an aggregate purchase price of $2.5 million;

•

made scheduled payments on long-term debt and capital lease obligations of $6.7 million;

•

made net payments on inventory financing arrangements of $19.6 million;

•

received $4.8 million from share award plans; and

•

acquired for Treasury 1,693,100 shares of Common Stock for an aggregate purchase price of $126.0 million.

Effect of Exchange Rate Changes on Cash and Cash Equivalents

During the Current Nine Months, the effect of exchange rate changes increased cash and cash equivalents by $4.2 million, primarily due to the strengthening of the U.S. dollar against the euro and pound sterling.

Short and Long-Term Liquidity Requirements

The recent economic conditions have created an unprecedented disruption in the credit and capital markets. To date, the Company’s liquidity has not been materially impacted and management does not expect that it will be materially impacted in the near future. The Company anticipates it will continue to generate positive cash flows from operations and that these cash flows will be adequate to meet the Company’s working capital requirements. In support of the Company’s capital expenditure program or other liquidity requirements, the Company may use its cash balances, sell securities, utilize construction reserve funds, sell additional vessels or other equipment, enter into sale and leaseback transactions for equipment, and borrow under its revolving credit facility, issue debt or a combination thereof.

The Company’s long-term liquidity is dependent upon its ability to generate operating profits sufficient to meet its requirements for working capital, capital expenditures and a reasonable return on shareholders’ investment. The Company believes that earning such operating profits will permit it to maintain its access to favorably priced debt, equity or off-balance sheet financing arrangements. Management will continue to closely monitor the Company’s liquidity and the credit and capital markets.

Contingencies

invoiced and expensed $0.6 million in 2007 for its allocated share of the uncollectible deficit. Based on an actuarial valuation of the MNOPF in 2006, the Company was invoiced and expensed $3.9 million in 2007, representing the Company’s allocated share of an additional funding deficit of $332.6 million. Based on an actuarial valuation of the MNOPF in 2009, the Company was invoiced and expensed $7.8 million in 2010, representing the Company’s allocated share of an additional funding deficit of $636.9 million. Depending on the results of future actuarial valuations, it is possible that the MNOPF will experience further funding deficits, requiring the Company to recognize payroll related operating expenses in the periods invoices are received.

A subsidiary of the Company is a participating employer in an industry-wide, multi-employer, defined benefit pension fund, the United Kingdom Merchant Navy Ratings Pension Fund (“MNRPF”). The Company’s participation relates to ratings employed between 1978 and 2001 by SEACOR’s Stirling group of companies (which had been acquired by SEACOR in 2001) and its predecessors. Based on an actuarial valuation in March 2008, the Company was advised that its share of a $281.0 million (£175.0 million) accumulated funding deficit was $1.0 million (£0.6 million). The accumulated funding deficit is being recovered by additional annual contributions from current employers and is subject to adjustment following the results of future tri-annual actuarial valuations. As of September 30, 2011, $0.4 million, in the aggregate, of the Company’s funding deficit had been invoiced and expensed. Depending on the results of the future actuarial valuations, it is possible that the MNRPF will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received.

Certain subsidiaries of the Company are participating employers in an industry-wide, multi-employer defined benefit pension plan, the American Maritime Officers Pension Plan (“the AMOPP”). Under federal pension law, the AMOPP was deemed in critical status for the 2009 and 2010 plan years as the funded percentage of the AMOPP was less than 65% of the pension liability. The AMOPP was frozen in January 2010 and a ten year rehabilitation plan was adopted by the AMOPP trustees in February 2010 whereby benefit changes and increased contributions by participating employers are expected to improve the funded status of the AMOPP. Based on an actuarial valuation performed as of September 31, 2010, the Company was advised that if it chose to withdraw from the AMOPP its withdrawal liability would have been $29.5 million. As of September 30, 2011, 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.

On July 14, 2010, a group of individuals and entities purporting to represent a class commenced a civil action in the U.S. District Court for the Eastern District of Louisiana, Terry G. Robin, et al. v. Seacor Marine, L.L.C., et al., No. 2:10-cv-01986 (E.D. La.) (the “Robin Case”), in which they assert that support vessels, including vessels owned by the Company, responding to the explosion and resulting fire that occurred aboard the semi-submersible drilling rig, the Deepwater Horizon, were negligent in their efforts to save lives and put out the fire and contributed to the sinking of the Deepwater Horizon and subsequent oil spill. The action now is part of the overall multi-district litigation, In re Oil Spill by the Oil Rig “Deepwater Horizon”, MDL No. 2179 (“MDL”). The complaint seeks compensatory, punitive, exemplary, and other damages. In response to this lawsuit, the Company filed petitions seeking exoneration from, or limitation of liability in relation to, any actions that may have been taken by vessels owned by the Company to extinguish the fire. Pursuant to the Limitation of Liability Act, those petitions imposed an automatic stay on the Robin Case, and the court set a deadline of April 20, 2011 for individual claimants to assert claims in the limitation cases. Approximately 66 claims were submitted by the deadline in all of the limitation actions. On June 8, 2011, the Company moved to dismiss these claims (with the exception of one claim filed by a Company employee) on various legal grounds. On October 12, 2011, the Court granted the Company’s motion to dismiss in its entirety, dismissing with prejudice all claims that had been filed against the Company in the limitation actions (with the exception of one claim filed by a Company employee that was not subject to the motion to dismiss). The Court has asked the Company to prepare final judgments to be entered in each of the limitation actions and in the Robin Case and the Company expects those judgments to be entered in the coming weeks.

Subsequent to the filing of the referenced master complaint, four additional individual civil actions have been filed in the U.S. District Court for the Eastern District of Louisiana concerning the clean-up activities generally, which name the Company, O’Brien’s and/or NRC as defendants and are part of the overall MDL. On April 8, 2011, O’Brien’s was named as a defendant in Johnson Bros. Corporation of Louisiana v. BP, PLC, et al., No. 2:11-cv-00781 (E.D. La.), which is a suit by an individual business seeking damages allegedly caused by a delay on a construction project alleged to have resulted from the clean-up operations. On April 15, 2011, O’Brien’s and NRC were named as defendants in James and Krista Pearson v. BP Exploration & Production, Inc., et al., No. 2:11-cv-00863 (E.D. La.), which is a suit by a husband and wife, who allegedly participated in the clean-up effort and are seeking damages for personal injury, property damage to their boat, and amounts allegedly due under contract. On April 15, 2011, O’Brien’s and NRC were named as defendants in Thomas Edward Black v. BP Exploration & Production, Inc., et al., No. 2:11-cv-00867 (E.D. La.), which is a suit by an individual who is seeking damages for lost income because he allegedly could not find work in the fishing industry after the oil spill. On April 20, 2011, a complaint was filed in Darnell Alexander, et al. v. BP, PLC, et al., No. 2:11-cv-00951 (E.D. La.) on behalf of 117 individual plaintiffs that seek to adopt the allegations made in the referenced master complaint against O’Brien’s and NRC (and the other defendants). By court order, all four of these additional individual cases have been stayed as a result of the filing of the referenced master complaint.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For discussion of the Company’s exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. There has been no significant change in the Company’s exposure to market risk during the Current Nine Months, except as described below.

As of September 30, 2011, the Company maintained cash balances of €11.9 million. An adverse change of 10% in the underlying foreign currency exchange rate on euro denominated cash balances would reduce net income by $1.1 million, net of tax.

The Company entered into and settled positions in euro based forward currency exchange contracts designated as fair value hedges for capital purchase commitments in U.S. dollars. As of September 30, 2011, there were no forward currency exchange contracts designated as fair value hedges as all of the contracts matured or were dedesignated and liquidated during the Current Nine Months. As of September 30, 2011, the Company had capital purchase commitments of €116.1 million ($157.9 million). An adverse change of 10% in the underlying foreign currency exchange rate would increase the U.S. dollar equivalent of these non-hedged purchase commitments by $15.7 million.

As of September 30, 2011, the Company held marketable securities with a fair value of $83.0 million, including $60.8 million in fixed income investments consisting of corporate debt securities, municipal bonds, and foreign government bonds, and $22.2 million in equity securities. As of September 30, 2011, a 10% decline in the value of the Company’s investments in marketable securities would reduce income by $5.4 million, net of tax.

As of September, 2011, the Company held positions in short sales of marketable equity securities with a fair value of $32.2 million. The Company’s short sales of marketable equity securities primarily include positions in energy, marine, transportation and other related businesses. A 10% increase in the value of equity securities underlying the short sale positions of the Company as of September 30, 2011 would reduce income by $2.1 million, net of tax.

The Company has entered into and settled various positions in U.S. treasury notes and bonds through rate locks, futures or options on futures tied to U.S. treasury notes. As of September 30, 2011, this position consisted of a one-year rate lock agreement with a notional value of $100.0 million. The treasury rate lock agreement provides for a net cash settlement in October 2011 based on the then current rate on the ten-year U.S. Treasury Note versus the agreement rate of 2.845%. As of September 30, 2011, the fair value of the rate lock agreement was a recorded liability of $8.3 million. On October 11, 2011, the treasury rate lock agreement was settled for a net cash payment of $7.1 million.

ITEM 4.

CONTROLS AND PROCEDURES

With the participation of the Company’s principal executive officer and principal financial officer, management evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 30, 2011. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2011.

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Current Year Quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1A.

RISK FACTORS

Operational risks including, but not limited to, safety issues with respect to a helicopter model and equipment failure could adversely impact results of operations and in some instances, expose the Company to liability. The operation of helicopters is subject to various risks, including mechanical failures. If the Company or other operators experience incidents with helicopter models that we operate or contract-lease, obligating the Company to take such helicopters out of service until the cause of the incidents is rectified, the Company would lose revenue and might lose customers. In addition, safety issues experienced by a particular model of helicopter could result in customers refusing to use a particular helicopter model or a regulatory body grounding that particular helicopter model. The value of the helicopter model might also be permanently reduced in the market if the model were to be considered less desirable for future service.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)	This table provides information with respect to purchases by the Company of shares of its Common Stock during the Current Year Quarter:


Period	Total Number Of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Value of Shares that may Yet be Purchased under the Plans or Programs⁽¹⁾
July 1 – 31, 2011		—	$	—		—	$	113,024,228
August 1 – 31, 2011		—	$	—		—	$	113,024,228
September 1 – 30, 2011		—	$	—		—	$	113,024,228

⁽¹⁾	Since February 1997, SEACOR’s Board of Directors authorized the repurchase of Common Stock, certain debt or a combination thereof and, from time to time thereafter, increased such authority.

ITEM 6.

EXHIBITS


31.1		Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase

101.DEF**		XBRL Taxonomy Extension Definition Linkbase

101.LAB**		XBRL Taxonomy Extension Label Linkbase

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		SEACOR Holdings Inc. (Registrant)

DATE: October 28, 2011	By:	/S/ CHARLES FABRIKANT
		Charles Fabrikant, Executive Chairman of the Board (Principal Executive Officer)


DATE: October 28, 2011	By:	/S/ RICHARD RYAN
		Richard Ryan, Senior Vice President and Chief Financial Officer (Principal Financial Officer)

EXHIBIT INDEX


31.1		Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase

101.DEF**		XBRL Taxonomy Extension Definition Linkbase

101.LAB**		XBRL Taxonomy Extension Label Linkbase

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase