SEACOR Marine - 10-Q quarterly report FY2019 Q2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2019 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 1-37966

SEACOR Marine Holdings Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		47-2564547
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

12121 Wickchester Suite 500
Houston, TX		77079
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (346) 980-1700

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SMHI	New York Stock Exchange (“NYSE”)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

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

The total number of shares of common stock, par value $.01 per share, outstanding as of July 31, 2019 was 21,765,331. The Registrant has no other class of common stock outstanding.

Table of Contents

SEACOR MARINE HOLDINGS INC.

Table of Contents


Part I.	Financial Information		1

	Item 1.	Financial Statements (Unaudited)	1

		Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	1

		Condensed Consolidated Statements of Loss for the Three and Six Months Ended June 30, 2019 and 2018	2

		Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018	3

		Condensed Consolidated Statement of Changes in Equity for the Three and Six Months Ended June 30, 2019 and 2018	4

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

	Item 4.	Controls and Procedures	48

Part II.	Other Information		50

	Item 1.	Legal Proceedings	50

	Item 1A.	Risk Factors	50

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

	Item 3.	Default Upon Senior Securities	50

	Item 4.	Mine Safety Disclosures	50

	Item 5.	Other Information	51

	Item 6.	Exhibits	52

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PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30, 2019			December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	58,772		$	95,195
Restricted cash		2,240			1,657
Receivables:
Trade, net of allowance for doubtful accounts of $455 and $860 in 2019 and 2018, respectively		69,117			64,125
Other		10,410			12,082
Inventories		2,995			3,443
Prepaid expenses and other		4,123			2,530
Total current assets		147,657			179,032
Property and Equipment:
Historical cost		1,222,820			1,242,733
Accumulated depreciation		(525,556	)		(561,272	)
		697,264			681,461
Construction in progress		68,228			88,918
Net property and equipment		765,492			770,379
Right-of-Use Asset - Operating Leases		27,390			—
Investments, at Equity, and Advances to 50% or Less Owned Companies		112,418			121,773
Construction Reserve Funds		20,112			28,061
Other Assets		3,627			3,690
	$	1,076,696		$	1,102,935
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of operating lease liabilities	$	16,552		$	—
Current portion of long-term debt		20,651			16,812
Accounts payable and accrued expenses		33,909			19,370
Due to SEACOR Holdings		74			452
Accrued wages and benefits		4,625			5,025
Accrued income taxes		3,216			1,917
Deferred revenue		3,171			1,327
Accrued capital, repair and maintenance expenditures		21,805			18,886
Other current liabilities		15,776			19,828
Total current liabilities		119,779			83,617
Long-Term Operating Lease Liabilities		16,775			—
Long-Term Debt		379,075			387,854
Conversion Option Liability on Convertible Senior Notes		7,599			5,276
Deferred Income Taxes		37,063			44,682
Deferred Gains and Other Liabilities		5,165			26,571
Total liabilities		565,456			548,000
Equity:
SEACOR Marine Holdings Inc. stockholders’ equity:
Common stock, $.01 par value, 60,000,000 shares authorized; 21,790,974 and 20,443,215 shares issued in 2019 and 2018, respectively		218			204
Additional paid-in capital		424,549			415,372
Retained earnings		83,312			126,834
Shares held in treasury of 25,643 and 4,007, respectively, at cost		(374	)		(91	)
Accumulated other comprehensive loss, net of tax		(19,156	)		(16,788	)
		488,549			525,531
Noncontrolling interests in subsidiaries		22,691			29,404
Total equity		511,240			554,935
	$	1,076,696		$	1,102,935

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

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SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(in thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Operating Revenues	$	64,345		$	60,701		$	120,594		$	112,422
Costs and Expenses:
Operating		43,525			46,001			87,802			84,349
Administrative and general		11,639			15,041			23,639			27,415
Lease expense		4,317			3,310			8,465			6,568
Depreciation and amortization		17,494			18,406			34,687			37,918
		76,975			82,758			154,593			156,250
(Losses) Gains on Asset Dispositions and Impairments, Net		(3,848	)		1,055			(3,489	)		(1,588	)
Operating Loss		(16,478	)		(21,002	)		(37,488	)		(45,416	)
Other Income (Expense):
Interest income		222			352			579			568
Interest expense		(7,691	)		(6,489	)		(15,426	)		(12,622	)
SEACOR Holdings guarantee fees		(32	)		(7	)		(61	)		(19	)
Derivative losses, net		(1,398	)		(2,668	)		(2,323	)		(14,184	)
Foreign currency gains, net		(929	)		(818	)		(294	)		(679	)
		(9,828	)		(9,630	)		(17,525	)		(26,936	)
Loss Before Income Tax Benefit and Equity in Earnings of 50% or Less Owned Companies		(26,306	)		(30,632	)		(55,013	)		(72,352	)
Income Tax Benefit		(3,048	)		(4,724	)		(6,879	)		(14,548	)
Loss Before Equity in Earnings of 50% or Less Owned Companies		(23,258	)		(25,908	)		(48,134	)		(57,804	)
Equity in Losses of 50% or Less Owned Companies		(7,006	)		(721	)		(10,403	)		(513	)
Net Loss		(30,264	)		(26,629	)		(58,537	)		(58,317	)
Net Loss attributable to Noncontrolling Interests in Subsidiaries		(1,875	)		(1,605	)		(4,599	)		(4,460	)
Net Loss attributable to SEACOR Marine Holdings Inc.	$	(28,389	)	$	(25,024	)		(53,938	)	$	(53,857	)

Basic and Diluted Loss Per Common Share and Warrants of SEACOR Marine Holdings Inc.	$	(1.21	)	$	(1.19	)	$	(2.32	)	$	(2.79	)
Weighted Average Common Shares and Warrants Outstanding:
Basic and Diluted		23,382,272			21,035,214			23,237,012		$	19,312,923

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

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SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net Loss	$	(30,264	)	$	(26,629	)	$	(58,537	)	$	(58,317	)
Other Comprehensive Loss:
Foreign currency translation losses		(1,151	)		(2,785	)		(276	)		(873	)
Derivative (losses) gains on cash flow hedges		(1,224	)		(63	)		(1,934	)		68
Reclassification of derivative gains (losses) on cash flow hedges to interest expense		128			(1	)		199			—
Reclassification of derivative (losses) gains on cash flow hedges to equity in earnings of 50% or less owned companies		(270	)		42			(530	)		171
		(2,517	)		(2,807	)		(2,541	)		(634	)
Income tax benefit (expense)		173			(8	)	173				(35	)
		(2,344	)		(2,815	)		(2,368	)		(669	)
Comprehensive Loss		(32,608	)		(29,444	)	$	(60,905	)		(58,986	)
Comprehensive Loss attributable to Noncontrolling Interests in Subsidiaries		(1,875	)		(1,715	)		(4,599	)		(4,493	)
Comprehensive Loss attributable to SEACOR Marine Holdings Inc.	$	(30,733	)	$	(27,729	)	$	(56,306	)	$	(54,493	)

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

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SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands)

	Shares of Common Stock Outstanding			Common Stock		Additional Paid-In Capital			Shares Held in Treasury		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- Controlling Interests In Subsidiaries			Total Equity
For the six months ended June 30, 2019
December 31, 2018		20,439,208		$	204	$	415,372			4,007		(91	)	$	126,834		$	(16,788	)	$	29,404		$	554,935
Impact of adoption of new accounting standard for leases		—			—		—			—		—			10,416			—			—			10,416
December 31, 2018		20,439,208			204		415,372			4,007		(91	)		137,250			(16,788	)		29,404			565,351
Issuance of Common Stock		653,872			7		6,589			—		—			—			—			—			6,596
Restricted stock grants		211,500			2		—			—		—			—			—			—			2
Amortization of employee share awards		—			—		1,589			—		—			—			—			—			1,589
Exercise of options		8,750			—		108			—		—			—			—			—			108
Exercise of Warrants		444,391			4		—			49		(1	)		—			—			—			3
Restricted stock vesting		(21,587	)		—		(2	)		21,587		(282	)		—			—			—			(284	)
Director share awards		30,197			1		893			—		—			—			—			—			894
Cancellation of employee share awards		(1,000	)		—		—			—		—			—			—			—			—
Acquisition of consolidated joint venture		—			—		—			—		—			—			—			(2,114	)		(2,114	)
Net loss		—			—		—			—		—			(53,938	)		—			(4,599	)		(58,537	)
Other comprehensive loss		—			—		—			—		—			—			(2,368	)		—			(2,368	)
June 30, 2019		21,765,331			218		424,549			25,643		(374	)		83,312			(19,156	)		22,691			511,240

For the three months ended June 30, 2019
March 31, 2019		21,079,279		$	211	$	422,830			25,558	$	(373	)	$	111,701		$	(16,812	)	$	24,566		$	542,123
Restricted stock grants		211,500			2		—			—		—			—			—			—			2
Amortization of employee share awards		—			—		813			—		—			—			—			—			813
Exercise of Warrants		444,391			4		—			49		(1	)		—			—			—			3
Restricted stock vesting		(36	)		—		(2	)		36		—			—			—			—			(2	)
Director share awards		30,197			1		893			—		—			—			—			—			894
Cancellation of employee share awards		—			—		15			—		—			—			—			—			15
Net loss		—			—		—			—		—			(28,389	)		—			(1,875	)		(30,264	)
Other comprehensive loss		—			—		—			—		—			—			(2,344	)		—			(2,344	)
June 30, 2019		21,765,331			218		424,549			25,643		(374	)		83,312			(19,156	)		22,691			511,240

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

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SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands)

	Shares of Common Stock Outstanding			Common Stock		Additional Paid-In Capital		Shares Held in Treasury		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Non- Controlling Interests In Subsidiaries			Total Equity
For the six months ended June 30, 2018
December 31, 2017		17,675,356		$	177	$	303,996		—		—		$	216,511		$	(12,493	)	$	14,975		$	523,166
Impact of adoption of new accounting standard for income tax effects		—			—		—		—		—			(12,069	)		—			—			(12,069	)
December 31, 2017		17,675,356			177		303,996		—		—			204,442			(12,493	)		14,975			511,097
Issuance of Common Stock		2,271,799			22		42,973		—		—			—			—			—			42,995
Restricted stock grants		120,600			1		—		—		—			—			—			—			1
Issuance of Warrants		—			—		62,809		—		—			—			—			—			62,809
Amortization of employee share awards		—			—		1,896		—		—			—			—			—			1,896
Exercise of options		65,000			1		812		—		—			—			—			—			813
Exercise of Warrants		289,442			3		—		108		(3	)		—			—			—			—
Restricted stock vesting		(2,242	)		—		—		2,242		(51	)		—			—			—			(51	)
Director share awards		19,285			—		893		—		—			—			—			—			893
Acquisition of consolidated joint venture		—			—		—		—		—			—			—			(12,037	)		(12,037	)
Issuance of noncontrolling interests		—			—		375		—		—			—			—			31,010			31,385
Net loss		—			—		—		—		—			(53,857	)		—			(4,460	)		(58,317	)
Other comprehensive loss		—			—		—		—		—			—			(636	)		(33	)		(669	)
June 30, 2018		20,439,240		$	204	$	413,754		2,350	$	(54	)	$	150,585		$	(13,129	)	$	29,455		$	580,815

For the three months ended June 30, 2018
March 31, 2018		17,786,569			178		306,639		—		—			175,609			(10,424	)		31,170			503,172
Issuance of Common Stock		2,168,586			21		41,181		—		—			—			—			—			41,202
Restricted stock grants		112,600			1		—		—		—			—			—			—			1
Issuance of Warrants		—			—		62,809		—		—			—			—			—			62,809
Amortization of employee share awards		—			—		1,420		—		—			—			—			—			1,420
Exercise of options		65,000			1		812		—		—			—			—			—			813
Exercise of Warrants		289,442			3		—		108		(3	)		—			—			—			—
Restricted stock vesting		(2,242	)		—		—		2,242		(51	)		—			—			—			(51	)
Director share awards		19,285			—		893		—		—			—			—			—			893
Net loss		—			—		—		—		—			(25,024	)		—			(1,605	)		(26,629	)
Other comprehensive loss		—			—		—		—		—			—			(2,705	)		(110	)		(2,815	)
June 30, 2018		20,439,240		$	204	$	413,754		2,350	$	(54	)	$	150,585		$	(13,129	)	$	29,455		$	580,815

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

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SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended June 30,
	2019			2018
Cash Flows from Operating Activities:
Net Loss	$	(58,537	)	$	(58,317	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		34,687			37,918
Deferred financing costs amortization		593			501
Restricted stock amortization		1,589		1896
Restricted stock vesting		(282	)		(51	)
Director share awards		894			893
Debt discount amortization		2,762			2,719
Amortization of deferred gains against charter expense		—			(4,019	)
Bad debt (recovery) expense		(404	)		10
Loss from equipment sales, retirements or impairments		3,489			1,588
Derivative losses		2,323			14,184
Cash settlement on derivative transactions, net		200			(150	)
Currency losses		294			679
Deferred income taxes		(9,726	)		(17,395	)
Equity losses		10,403			513
Dividends received from equity investees		400			1,324
Changes in Operating Assets and Liabilities:
Accounts receivables		(5,760	)		(15,414	)
Other assets		(569	)		(466	)
Accounts payable and accrued liabilities		18,092			(99	)
Net cash provided by (used in) operating activities		448			(33,686	)
Cash Flows from Investing Activities:
Purchases of property and equipment		(41,184	)		(15,548	)
Proceeds from disposition of property and equipment		9,820			3,526
Net change in construction reserve fund		7,949			7,209
Investments in and advances to 50% or less owned companies		(2,669	)		(25,560	)
Return of investments and advances from 50% or less owned companies		—			99
Net cash (used in) investing activities		(26,084	)		(30,274	)
Cash Flows from Financing Activities:
Payments on long-term debt		(8,099	)		(35,202	)
Proceeds from issuance of long-term debt, net of issue costs		—			18,471
Purchase of subsidiary shares from noncontrolling interests		(3,392	)		—
Proceeds from exercise of stock options and Warrants		111			813
Issuance of stock		—			42,996
Issuance of Warrants		—			12,809
Net cash (used in) provided by financing activities		(11,380	)		39,887
Effects of Exchange Rate Changes on Cash and Cash Equivalents		1,176			(288	)
Net Decrease in Cash, Cash Equivalents and Restricted Cash		(35,840	)		(24,361	)
Cash, Restricted Cash and Cash Equivalents, Beginning of Period		96,852			112,551
Cash, Restricted Cash and Cash Equivalents, End of Period	$	61,012		$	88,190

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

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SEACOR MARINE HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of SEACOR Marine Holdings Inc. and its consolidated subsidiaries (the “Company”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the unaudited condensed consolidated financial statements for the periods indicated. 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 Company’s financial statements and related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to SEACOR Marine Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “SEACOR Marine” refers to SEACOR Marine Holdings Inc. without its consolidated subsidiaries.

Recently Adopted Accounting Standards.

On February 25, 2016, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new leasing standard, ASC 842, meant to improve transparency and comparability among companies by requiring lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company adopted the new standard on January 1, 2019 and applied the transition provisions of the new standard with recognition of a cumulative-effect adjustment to the opening balance of retained earnings and therefore the Company was not required to recast previously issued financial statements. The Company elected the available practical expedients permitted under the guidance including the ability to carry forward the existing lease classification, the option to not separate lease and non-lease components in calculating the right-of-use assets and corresponding lease liabilities and to not apply the recognition requirements of Topic 842 to short-term leases (leases that have a duration of twelve months or less at lease inception). For some leases, it was not possible for the Company to determine the interest rate implicit in each of its operating leases and therefore used the Company’s incremental borrowing rate in calculating operating lease right-of-use assets and lease liabilities. The Company included renewal options that were reasonably certain of being exercised in determining the lease term. Upon adoption, the Company recorded $33.7 million of right-of-use assets, $31.9 million in lease liabilities, and a cumulative-effect adjustment to the opening balance of retained earnings of $1.7 million for certain of the Company’s equipment, office and land leases. In addition, unamortized deferred gains for four vessels previously accounted for under sale-leaseback arrangements of $8.7 million, ($11.0 million deferred gains net of $2.3 million deferred taxes), were fully recognized as an adjustment to the opening balance of retained earnings.

In February 2018, the FASB issued ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”). The amendments in ASU 2018-02 permit a reclassification from Accumulated Other Comprehensive Income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts & Jobs Act (“TCJA”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for the Company for annual and interim reporting periods beginning after December 15, 2018. For the period ending June 30, 2019, an election has not been made to reclassify the income tax effects of the TCJA from AOCI to retained earnings.

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In June 2018, the FASB issued ASU 2018-07, a new accounting standard which addresses aspects of the accounting for nonemployee share-based payment transactions. The standard is effective for interim and annual periods beginning after December 15, 2018. The adoption of the new standard by the Company did not have a material impact on its consolidated financial position or its results of operations and cash flows.

Critical Accounting Policies.

Revenue Recognition. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

Lease Revenues. The Company’s lease revenues are primarily from time charters and bareboat charters that are recognized ratably over the lease term as services are provided, typically on a per day basis. The charterer will take the vessel on hire for a specific period of time, use the vessel to move cargo, people or equipment and will pay the Company the agreed upon rate per day. Under a time charter the Company provides a vessel to a customer for a set term and the Company is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, the Company provides a vessel to a customer for a set term and the customer assumes responsibility for all operating expenses, including fuel, and the risk of operation (see Note 14).

Revenues from Customers of Management Services. The Company contracts with various customers to carry out management services for vessels as agents for and on behalf of ship owners. These services include crew management, technical management, commercial management, insurance arrangements, sale and purchase of vessel, provisions and bunkering. As manager, the Company undertakes to use its best endeavors to provide the agreed management services as agents for, and on behalf of the ship owners in accordance with sound ship management practice and to protect and promote the interest of the owners in all matters relating to the provision of the agreed upon management services. The Company also contracts with various customers to carry out management services regarding engineering for vessel construction and vessel conversions. The majority of the ship management agreements have a duration of one to three years and are typically billed monthly. The Company satisfies its performance obligation over the term of the contract, and therefore recognizes revenue over the term of the contract while related costs are expensed as incurred (see Note 14).

Revenue that does not meet the aforementioned criteria is deferred until the criteria is met and are considered contract liabilities. Contract liabilities which are included in other current liabilities in the accompanying condensed consolidated balance sheets, for the six months ended June 30 were as follows (in thousands):

	2019			2018
Balance at beginning of period	$	1,327		$	10,104
Revenues deferred during the period		4,211			1,673
Revenues recognized during the period		(2,367	)		(1,550	)
Balance at end of period	$	3,171		$	10,227

As of June 30, 2019, contract liabilities include $1.6 million related to the time charter of an offshore support vessel to a customer for which collection was not reasonably assured. The Company will recognize revenues when collected or when collection is reasonably assured. All costs and expenses related to this charter were recognized as incurred.

As of June 30, 2019, the Company has deferred $1.4 million received as reimbursement for upgrades of a vessel and deferred reservation fees. The amount will be recognized in revenues over time, commencing with the start of the new time charter agreement for the vessel.

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The remaining balance of $0.2 million as of June 30, 2019 is comprised of contract liabilities to two customers for which collection is not reasonably assured.

Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

As of June 30, 2019, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:

Offshore Support Vessels:
Crew transfer vessels		10
All other offshore support vessels (excluding crew transfer vessels)		20

Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.

Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. During the six months ended June 30, 2019, capitalized interest totaled $0.7 million.

Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. These indicators may include a significant decrease in the market price of a long-lived asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If the carrying values of the assets are not recoverable, as determined by the estimated undiscounted cash flows, the estimated fair value of the assets or asset groups are compared to their current carrying values and impairment charges are recorded if the carrying value exceeds fair value. The Company performs its testing on an asset or asset group basis. Generally, fair value is determined using valuation techniques, such as expected undiscounted cash flows or appraisals, as appropriate. During the six months ended June 30, 2019, the Company recognized $5.9 million of impairment charges primarily related to two anchor-handling towing supply (“AHTS”) vessels previously removed from service, two AHTS vessels and four fast support vessels (“FSV”) which have all been adjusted to indicative sales price. During the six months ended June 30, 2018, the Company recognized $3.0 million of impairment charges primarily related to four AHTS vessels removed from service and adjusted to scrap value.

Impairment of 50% or Less Owned Companies. Investments in 50% or less owned companies are reviewed periodically to assess whether there is an other-than-temporary decline in the carrying value of the investment. In its evaluation, the Company considers, among other items, recent and expected financial performance and returns, impairments recorded by the investee and the capital structure of the investee. When the Company determines the estimated fair value of an investment is below carrying value and the decline is other-than-temporary, the investment is written down to its estimated fair value. Actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance, the severity and expected duration of declines in value and the available liquidity in the capital markets to support the continuing operations of the investee, among other factors. Although the Company believes its assumptions and estimates are reasonable, the investee’s actual performance compared with the estimates could produce different results and lead to additional impairment charges in future periods. During the six months ended June 30, 2019, the Company did not recognize any impairment charges related to its 50% or less owned companies. During the six months ended June 30, 2018, the Company recognized impairment charges of $1.2 million related to one of its 50% or less owned companies which the Company believed was unable to meet all of its liabilities.

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Income Taxes. During the six months ended June 30, 2019, the Company's effective income tax rate of 12.5% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, and foreign taxes not creditable against U.S. income taxes. During the six months ended June 30, 2018, the Company’s effective income tax rate of 20.1% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, foreign taxes not creditable against U.S. income taxes, and a reversal of an unrecognized tax benefit.

Deferred Gains. The Company has sold certain equipment to its 50% or less owned companies, entered into vessel sale-leaseback transactions with finance companies and provided seller financing on sales of its equipment to third parties and its 50% or less owned companies. In 2018, a portion of the gains realized from these transactions were deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets and were amortized in operating expenses as a reduction to rental expense. The new lease accounting pronouncement which was adopted on January 1, 2019 required the recognition of unamortized gains as a cumulative-effect adjustment to the opening balance of retained earnings.

Deferred gain activity related to these transactions for the six months ended June 30 was as follows (in thousands):

	2019			2018
Balance at beginning of period	$	11,819		$	25,006
Amortization of deferred gains included in operating expenses as a reduction to rental expense		—			(4,019	)
Impact of adoption of new accounting standard		(11,026	)		—
Other adjustments		—			(250	)
Balance at end of period	$	793		$	20,737

Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive loss were as follows (in thousands):

	SEACOR Marine Holdings Inc. Stockholders’ Equity									Noncontrolling Interests
	Foreign Currency Translation Adjustments			Derivative Income (Losses) on Cash Flow Hedges, net			Total			Foreign Currency Translation Adjustments			Derivative Income (Losses) on Cash Flow Hedges, net			Other Comprehensive Income (Loss)
December 31, 2018	$	(15,472	)	$	(1,316	)	$	(16,788	)	$	(1,445	)	$	(11	)		—
Other comprehensive loss		(276	)		(2,092	)		(2,368	)		—			—		$	(2,368	)
Six Months Ended June 30, 2019	$	(15,748	)	$	(3,408	)	$	(19,156	)	$	(1,445	)	$	(11	)	$	(2,368	)

Leases. The Company determines if an arrangement contains a lease at the inception of a contract. Leases with contractual terms less than twelve months are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the term of the short-term lease. Leases with contractual terms longer than twelve months are categorized as either operating or finance, with corresponding right-of-use asset and lease liability recorded on the balance sheet. Finance leases are generally those leases that substantially utilize or pay for the entire asset over its estimated life. All other leases are categorized as operating leases.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the present value of the fixed lease payments, using an implicit discount rate if available, or if not readily available, the Company’s incremental borrowing rate. Right-of-use assets are recognized based on the initial present value of the fixed lease payments and are tested for impairment in the same manner as long-lived assets used in operations. When options exist to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that these options will be exercised, the options are considered in determining the classification and measurement of the lease.

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Loss Per Share. Basic loss per common share of the Company is computed based on the weighted average number of common shares and warrants to purchase common shares at an exercise price of $0.01 per share (“Warrants”) issued and outstanding during the relevant periods. The Warrants are included in the basic loss per common share because the shares issuable upon exercise of the Warrants are issuable for de minimis cash consideration and therefore not anti-dilutive. Diluted loss per common share of the Company is computed based on the weighted average number of common shares and Warrants issued and outstanding plus the effect of other potentially dilutive securities through the application of the treasury stock method and the if-converted method that assumes all common shares have been issued and outstanding during the relevant periods pursuant to the conversion of the Convertible Senior Notes. For the six months ended June 30, 2019 and 2018, diluted earnings per common share of the Company excluded 2,183,708 common shares, respectively, issuable pursuant to the Company’s Convertible Senior Notes (see Note 4) as the effect of their inclusion in the computation would be anti-dilutive. In addition, for the six months ended June 30, 2019 and 2018, diluted loss per common share of the Company excluded 340,459 and 196,338 shares of restricted stock, respectively, and 705,078 and 694,691 shares of stock, respectively, issuable upon exercise of outstanding stock options as the effect of their inclusion in the computation would be anti-dilutive.

New Accounting Pronouncements. In August 2018, the FASB issued ASU 2018-13, a new accounting standard which modifies the disclosure requirements related to fair value measurement. The new guidance is effective for fiscal years beginning after December 15, 2019. The effects of this standard on our financial position or reporting is not expected to be material.

In August 2018, the FASB issued ASU 2018-15, a new accounting standard which provided guidance regarding the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement). The guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The standard is effective for interim and annual periods beginning after December 15, 2019. The Company is evaluating the provisions of the standard but does not expect the adoption of the new standard to have a material impact on its consolidated financial position or its results of operations and cash flows.

In June 2016, the FASB issued ASU 2016-13, an amendment to the accounting standards which replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. The new standard is effective for interim periods beginning after December 15, 2019. Early adoption is permitted for annual periods beginning after December 15, 2018. The Company has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial position, results of operations or cash flows.

Reclassification. Certain amounts in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current year presentation. The reclassification had no impact on total assets, liabilities, or net loss.

2.	EQUIPMENT ACQUISITIONS AND DISPOSITIONS

During the six months ended June 30, 2019, capital acquisitions were $41.2 million. Equipment deliveries during the six months ended June 30, 2019 include two FSVs, one crew transfer vessel (“CTV”), and one platform supply vessel (“PSV”).

During the six months ended June 30, 2019, the Company sold three AHTS vessels and one specialty vessel previously retired and removed from service, one emergency response and rescue vessel (“ERRV”), two

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FSVs, two supply vessels and other equipment for $9.8 million cash and one vessel under construction for $4.3 million (all of which was a previously received deposit) and gains of $2.4 million.

3.	INVESTMENTS, AT EQUITY AND ADVANCES TO 50% OR LESS OWNED COMPANIES

SEACOSCO. The Company, through SEACOR Offshore Asia LLC, an indirectly wholly owned subsidiary of SEACOR Marine (“SEACOR Offshore Asia”), owns an unconsolidated 50% interest in SEACOSCO Offshore LLC (“SEACOSCO”). China Shipping Fan Tai Limited (“CSFT”) and China Shipping Industry (Hong Kong) Co., Limited (“CSIHK”) own the other 50% interest in SEACOSCO. During the six months ended June 30, 2019, SEACOSCO took delivery of three PSVs and title to one PSV, and the Company contributed $2.0 million in capital to SEACOSCO for the payment of construction costs. In the year ended December 31, 2018, SEACOSCO took delivery of two PSVs and title to another five of the PSVs, and the Company contributed $29.6 million in capital to SEACOSCO.

During the current quarter, SEACOSCO was advised by COSCO Shipping Heavy Industry (Guangdong) Co., Ltd. (the “Shipyard”), the shipbuilder and lender under deferred payment agreements (“DPAs”) that are secured by the PSVs acquired by SEACOSCO, that SEACOSCO was in default under such agreements for two of the PSVs acquired by SEACOSCO for failure to make certain principal and interest payments in a timely manner. The Shipyard agreed to defer any action on this default pending a meeting of the board of managers of SEACOSCO to discuss capital contributions by each of the members of SEACOSCO and the settlement of the default under the DPAs.

In connection with these events, SEACOR Offshore Asia, CSFT, CSIHK and the Shipyard entered into a Memorandum of Understanding (“MOU”) effective May 31, 2019 pursuant to which (i) the Shipyard agreed to not take any action with respect to any existing defaults under the DPAs until August 31, 2019, (ii) SEACOR Offshore Asia was authorized to provide, in its sole discretion, shareholder loans to SEACOSCO and/or its subsidiaries in respect of working capital or other payment obligations at an interest rate of 15% per annum and, subject to the priority of the indebtedness under the DPAs, the shareholder loans will have senior priority to any and all other debts of SEACOSCO and/or its subsidiaries, (iii) the parties set out the non-binding principal terms and conditions for SEACOR Offshore Asia’s potential acquisition of the 50% interest in SEACOSCO owned by CSFT and CSIHK and (iv) in connection with such acquisition, SEACOR Offshore Asia or its nominee may acquire from the Shipyard two additional PSVs that had been under options held by SEACOSCO. Management remains in discussions with the Shipyard, CSFT and CSIHK with respect to the transactions contemplated by the MOU.

Mexmar Offshore International. On December 19, 2018, the Company acquired a 49% interest in Mexmar Offshore International for consideration of $4.9 million. The joint venture owns 14 vessels servicing the energy industry in Brazil. For the six months ended June 30, 2019, the joint venture has incurred losses in excess of the initial investment, and the equity investment on the Company’s books has been reduced to zero. The Company has not provided any guarantees or capital commitments with respect to this investment.

FRS Windcat Offshore Logistics GmbH. During the six months ended June 30, 2019, the Company concluded the sale of one vessel under construction for $4.3 million to a wholly owned subsidiary of FRS Windcat Offshore Logistics GmbH, an unconsolidated joint venture.

Guarantees. Two of the Company's 50% or less owned companies have bank debt secured by, among other things, a first preferred mortgage on the 50% or less owned companies’ vessels. The banks also have the authority to require the Company and its partners to fund uncalled capital commitments, as defined in the partnership agreements governing the companies. In such event, the Company would be required to contribute its allocable share of uncalled capital, which was, as of June 30, 2019, $0.8 million in the aggregate. This liability is included in other long-term liabilities.

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4.	LONG-TERM DEBT

The Company’s long-term debt obligations as of June 30, 2019 and December 31, 2018 were as follows (in thousands):

	June 30, 2019			December 31, 2018
Convertible Senior Notes	$	125,000		$	125,000
SEACOR Marine Foreign Holdings Syndicated Credit Facility		120,250			126,750
Falcon Global USA Term Loan Facility		109,099			109,099
Sea-Cat Crewzer III Term Loan Facility		25,366			25,989
Windcat Workboats Facilities		24,647			24,850
Falcon Global USA Revolver		15,000			15,000
SEACOR 88/888 Term Loan		11,000			11,000
BNDES Equipment Construction Finance Notes		4,308			5,284
	$	434,670		$	442,972
Portion due within one year		(20,651	)		(16,812	)
Debt discount		(29,243	)		(32,005	)
Issue costs		(5,701	)		(6,301	)
	$	379,075		$	387,854

As of June 30, 2019, the Company is in compliance with all debt covenants and lender requirements.

On August 6, 2019, SEACOR Marine, SEACOR Marine Foreign Holdings Inc., a wholly owned subsidiary of SEACOR Marine (“SMFH”), and certain vessel-owning subsidiaries of SEACOR Marine, entered into an amendment (the “Amendment”) to that certain $130.0 million loan facility, dated as of September 26, 2018, with a syndicate of lenders administered by DNB Bank ASA, New York Branch (the “Credit Facility” ) and the related guaranty by SEACOR Marine with respect to the obligations of SMFH under the Credit Facility (the “Guaranty”).

The Amendment provides for, among other things, (i) the release of one vessel from a mortgage securing the Credit Facility and the substitution of mortgages over two other vessels owned by vessel-owning subsidiaries of SEACOR Marine, and (ii) the modification of certain financial maintenance and restrictive covenants contained in the Credit Facility or the Guaranty, including with respect to asset maintenance, vessel collateral releases, EBTIDA coverage ratios and the payment of dividends and distributions.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.3 hereto and the terms of which are incorporated herein by reference.

Letters of Credit. As of June 30, 2019, the Company had outstanding letters of credit of $4.3 million securing one long-term debt obligation, $0.3 million securing one lease obligation and $2.6 million for labor and performance guarantees.

LEASES

As of June 30, 2019, the Company leases in four AHTS vessels, two liftboats, one FSV, one supply vessel and certain facilities and other equipment. The leases typically contain purchase and renewal options or rights of first refusal with respect to the sale or lease of the equipment. As of June 30, 2019, the remaining lease terms of the vessels have remaining durations from five to 29 months. The lease terms of the other equipment range in duration from seven to 330 months.

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As of June 30, 2019, future minimum payments for operating leases for the remainder of 2019 and the years ended December 31 were as follows (in thousands):

Remainder of 2019	$	9,800
2020		14,049
2021		7,101
2022		651
2023		622
Years subsequent to 2023		4,851
		37,074
Interest component		(3,747	)
		33,327
Current portion of long-term operating lease liabilities		16,552
Long-term operating lease liabilities	$	16,775

For the six months ended June 30, 2019, the components of lease expense were as follows (in thousands):

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense	$	3,611	$	7,224
Short-term lease expense (lease duration of twelve months or less at lease commencement)		706		1,241
	$	4,317	$	8,465

For the six months ended June 30, 2019, other information related to operating leases were as follows (in thousands except weighted average data):

	2019
Operating cash flows from operating leases	$	9,782
Right-of-use assets obtained for operating lease liabilities	$	33,928
Weighted average remaining lease term, in years		4.7
Weighted average discount rate		4.1	%

6.	INCOME TAXES

The following table reconciles the difference between the statutory federal income tax rate for the Company and the effective income tax rate on continuing operations for the six months ended June 30, 2019:

Statutory rate	21.0		%
Foreign taxes not creditable against U.S. income tax	(4.5	)
Foreign earnings not subject to U.S. income tax	(3.7	)
Noncontrolling interests	(2.2	)
State taxes	1.8
Other	0.1
	12.5		%

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7.	DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. The fair values of the Company’s derivative instruments were as follows (in thousands):

	June 30, 2019				December 31, 2018
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives designated as hedging instruments:
Interest rate swap agreements (cash flow hedges)	$	—	$	3,394	$	—	$	1,659	⁽¹⁾
		—		3,394		—		1,659
Derivatives not designated as hedging instruments:
Conversion option liability on Convertible Senior Notes		—		7,599		—		5,276
	$	—	$	10,993	$	—	$	6,935

(1)	Included in other current liabilities in the accompanying condensed consolidated balance sheets.

Cash Flow Hedges. The Company and certain of its 50% or less owned companies have interest rate swap agreements designated as cash flow hedges. By entering into these interest rate swap agreements, the Company and its 50% or less owned companies have converted the variable LIBOR or EURIBOR component of certain of their outstanding borrowings to a fixed interest rate. The Company recognized immaterial losses on derivative instruments designated as cash flow hedges during the six months ended June 30, 2019. As of June 30, 2019, the interest rate swaps held by the Company and its 50% or less owned companies were as follows:

•

Windcat Workboats Holdings Ltd. (“Windcat Workboats”) has two interest rate swap agreements maturing in 2021 that call for the Company to pay a fixed rate of interest of (0.03%) per annum on the aggregate notional value of €15.0 million (approximately $17.0 million) and receive a variable interest rate based on EURIBOR on the aggregate notional value;

•

SEACOR Marine Foreign Holdings Inc. (“SMFH”) has an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.32% per annum on the amortized notional value of $9.3 million and receive a variable interest rate based on LIBOR on the amortized notional value;

•

SMFH has an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.195% per annum on the amortized notional value of $51.3 million and receive a variable interest rate based on LIBOR on the amortized notional value;

•

SEACOR 88 LLC and SEACOR 888 LLC (collectively, “SEACOR 88/888”) have an interest rate swap agreement maturing in 2023 that calls for SEACOR 88/888 to pay a fixed rate of interest of 3.2% per annum on the amortized notional value of $5.5 million and receive a variable interest rate based on LIBOR on the amortized notional value; and

•

MexMar has five interest rate swap agreements with maturities in 2023 that call for MexMar to pay a fixed rate of interest ranging from 1.71% to 2.10% per annum on the aggregate amortized notional value of $91.0 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.

Other Derivative Instruments. The Company recognized (losses) gains on derivative instruments not designated as hedging instruments for the six months ended June 30 as follows (in thousands):

	2019			2018
Conversion option liability on Convertible Senior Notes	$	(2,323	)	$	(15,054	)
Interest rate swap agreements		—			870
	$	(2,323	)	$	(14,184	)

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The conversion option liability relates to the bifurcated embedded conversion option in the Convertible Senior Notes issued to investment funds managed and controlled by the Carlyle Group (“Carlyle”). See Note 8, Fair Value Measurements.

The Company and certain of its 50% or less owned companies have entered into interest rate swap agreements that did not qualify as cash flow hedges for the general purpose of providing protection against increases in interest rates, which might lead to higher interest costs. As of June 30, 2019, these interest rate swaps held by the Company or its 50% or less owned companies were as follows:

•

SEACOR OSV Partners I LP (“OSV Partners”) has two interest rate swap agreements with maturities in 2020 that call for OSV Partners to pay a fixed rate of interest ranging from 1.89% to 2.27% per annum on the aggregate amortized notional value of $25.4 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.

8.	FAIR VALUE MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that 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 June 30, 2019 that are measured at fair value on a recurring basis were as follows (in thousands):

	Level 1		Level 2		Level 3
June 30, 2019
ASSETS
Construction reserve funds	$	20,112	$	—	$	—
LIABILITIES
Derivative instruments		—		3,394		—
Conversion Option Liability on Convertible Senior Notes		—		—		7,599
December 31, 2018
ASSETS
Construction reserve funds	$	28,221	$	—	$	—
LIABILITIES
Derivative instruments		—		1,659		—
Conversion Option Liability on Convertible Senior Notes		—		—		5,276

Level 3 Measurement. The fair value of the conversion option liability on the Convertible Senior Notes is estimated with significant inputs that are both observable and unobservable in the market and therefore is considered a Level 3 fair value measurement. The Company used a binomial lattice model that assumes the holders will maximize their value by finding the optimal decision between redeeming at the redemption price or converting into shares of Common Stock. This model estimates the fair value of the conversion option as the differential in the fair value of the notes including the conversion option compared with the fair value of the notes excluding the conversion option. The significant observable inputs used in the fair value measurement include the price of Common Stock and the risk-free interest rate. The significant unobservable inputs are the estimated Company credit spread and Common Stock volatility, which were based on comparable companies in the transportation and energy industries.

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The estimated fair values of the Company’s other financial assets and liabilities as of June 30, 2019 were as follows (in thousands):

			Estimated Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
June 30, 2019
ASSETS
Cash, cash equivalents and restricted cash	$	61,012	$	61,012	$	—	$	—
Investments, at cost, in 50% or less owned companies (included in other assets)		132	see below
LIABILITIES
Long-term debt, including current portion		399,726		—		384,310		—
December 31, 2018
ASSETS
Cash, cash equivalents and restricted cash	$	96,852	$	96,852	$	—	$	—
Investments, at cost, in 50% or less owned companies (included in other assets)		132	see below
LIABILITIES
Long-term debt, including current portion		404,666		—		388,949		—

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 analysis based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of certain of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The Company’s other assets and liabilities that were measured at fair value during the six months ended June 30, 2019 were as follows (in thousands);

	Level 1		Level 2		Level 3
ASSETS
Property and equipment:
AHTS	$	—	$	1,210	$	—
FSVs		—		2,490		—

Property and equipment. During the six months ended June 30, 2019, the Company recognized impairment charges of $5.9 million primarily associated with certain vessels (see Note 1). The Level 2 fair values were determined based on the sales prices of similar property and equipment as scrap value.

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WARRANTS

On April 26, 2018, the Company closed a private placement of its Common Stock and Warrants to purchase its Common Stock (which were issued to certain investors in place of Common Stock to facilitate compliance with Jones Act restrictions) for aggregate gross proceeds of $56,855,000 (the “PIPE Private Placement”) with certain qualified institutional buyers and other accredited investors. The PIPE Private Placement included the issuance of 2,168,586 shares of Common Stock and Warrants to purchase 674,164 shares of the Common Stock at an exercise price of $0.01 per share (the “PIPE Warrants”). The PIPE Warrants were issued to Proyectos Globales de Energía y Servicios CME, S.A. de C.V. a variable capital corporation (sociedad anónima de capital variable) incorporated and existing under the laws of the United Mexican States (“CME”) on April 26, 2018, have a 25-year term and an exercise price of $0.01 per share. On May 2, 2018, the Company and Carlyle entered into an amendment and exchange agreement pursuant to which Carlyle exchanged $50.0 million in principal amount of the Convertible Senior Notes for warrants to purchase 1,886,292 shares of common stock at an exercise price of $0.01 per share (the “Exchange Warrants” and, together with the PIPE Warrants, the “Warrants”). The Exchange Warrants have a 25-year term, which commenced May 2, 2018. On May 31, 2018, June 8, 2018, May 28, 2019 and June 14, 2019, 250,693, 38,857, 380,000 and 64,440 of the PIPE Warrants were exercised, respectively for $0.01 per share, which left 1,826,966 Warrants outstanding as of June 30, 2019. In conjunction with the exercise of Warrants on June 14, 2019, 49 shares of Common Stock were withheld as payment for the exercise price of the Warrants.

10.	STOCKHOLDERS' EQUITY

The impact of adopting ASC 842 resulted in an increase of $10.4 million, net of tax, to the Company’s opening retained earnings for the current period.

On January 9, 2019, certain indirect wholly-owned subsidiaries of SEACOR Marine acquired three FSVs in exchange for the private placement of 603,872 shares of its Common Stock to domestic U.S. holders affiliated with the McCall family of Louisiana. The value of the vessels and the Common Stock was $7.8 million based on the closing price of a share of Common Stock on the NYSE on the day of the exchange. The Common Stock was issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company has operated the acquired vessels for the past ten years under a revenue sharing pooling agreement that included four of its owned FSVs of similar specification. In accordance with its terms, this pooling agreement was terminated.

On January 25, 2019, Seabulk Overseas Transport, Inc. (“Seabulk Overseas”), a wholly-owned subsidiary of SEACOR Marine, acquired a 6.25% minority interest in Windcat Workboats that it did not previously own upon the exercise of certain put options by one of the two minority owners pursuant to the terms of a subscription and shareholders agreement, as amended (the “Subscription and Shareholders Agreement”), in exchange for consideration of £1.5 million (approximately $2.0 million) in cash. The Company acquired the other 6.25% minority interest in Windcat Workboats that the Company did not already own on March 15, 2019 in exchange for consideration of 50,000 shares of Common Stock and €1.2 million (approximately $1.4 million) in cash. The Common Stock was issued in a private placement in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act. The two acquisitions resulted in Seabulk Overseas owning (and SEACOR Marine indirectly owning) 100% of Windcat Workboats.

11.	NONCONTROLLING INTERESTS IN SUBSIDIARIES

Noncontrolling interests in the Company’s consolidated subsidiaries were as follows (in thousands):

	Noncontrolling Interests		June 30, 2019		December 31, 2018
Falcon Global Holdings	28%		$	22,386	$	26,989
Windcat Workboats	0%	⁽¹⁾		—		2,115
Other	1.8%			305		300
			$	22,691	$	29,404

(1)	As of June 30, 2019; at December 31, 2018, noncontrolling interest was 12.5%.

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Falcon Global Holdings. The Company consolidates Falcon Global Holdings LLC (“FGH”) as the Company holds 72% of the equity interest in FGH and is entitled to appoint a majority of the board of managers of FGH. During the six months ended June 30, 2019 and 2018, the net loss of FGH was $16.6 million and $14.4 million, respectively, of which $4.6 million and $4.0 million, respectively, was attributable to noncontrolling interests.

Windcat Workboats. Prior to January 25, 2019, Seabulk Overseas, a wholly owned subsidiary of the Company, owned 87% of Windcat Workboats. On January 25, 2019, Seabulk Overseas acquired a 6.25% minority interest in Windcat Workboats that it did not previously own. Seabulk Overseas acquired the remaining 6.25% interest in Windcat Workboats that the Company did not already own on March 15, 2019. For the six months ended June 30, 2018, the net loss of Windcat Workboats was $3.3 million and $0.4 million was attributed to noncontrolling interests.

12.	COMMITMENTS AND CONTINGENCIES

As of June 30, 2019, the Company’s unfunded capital commitments were $58.9 million for one FSV, two CTVs and five PSVs. Of the amount of unfunded capital commitments, $23.6 million is payable during the remainder of 2019 and $35.3 million is payable during 2020. The Company has indefinitely deferred an additional $20.6 million of orders with respect to two FSVs for which the Company had previously reported unfunded capital commitments.

As of June 30, 2019, the Company has guaranteed certain performance contracts of one of its subsidiaries by setting aside £0.9 million from its available borrowing under an unsecured line of credit. If the contract were not fulfilled, the line of credit would be drawn to fund the guarantee.

As of June 30, 2019, SEACOR Holdings Inc. (“SEACOR Holdings”) has guaranteed $32.1 million on behalf of the Company for various obligations including: performance obligations under sale-leaseback arrangements and invoiced amounts for funding deficits under the U.K. Merchant Navy Officers Pension Fund (“MNOPF”). Pursuant to a Distribution Agreement with SEACOR Holdings, SEACOR Holdings charges the Company a fee of 0.5% on outstanding guaranteed amounts, which declines as the obligations are settled by the Company.

In the normal course of its business, the Company becomes involved in various other litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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13.	STOCK BASED COMPENSATION

Transactions in connection with the Company's 2017 Equity Incentive Plan during the six months ended June 30, 2019 were as follows:

Restricted Stock Activity:
Outstanding as of December 31, 2018			192,346
Granted			321,100
Vested			62,387
Forfeited			1,000
Outstanding as of June 30, 2019			450,059

Stock Option Activity:
Outstanding as of December 31, 2018			805,566
Granted			149,253
Exercised			8,750
Forfeited			5,000
Outstanding as of June 30, 2019			941,069

For the six months ended June 30, 2019, the Company acquired for treasury 21,587 shares of Common Stock for an aggregate purchase price of $0.3 million from its employees to cover their tax withholding obligations upon the lapsing of restrictions on share awards. These shares were purchased in accordance with the terms of the Company's 2017 Equity Incentive Plan.

14.	SEGMENT INFORMATION

The Company’s segment presentation and basis of measurement of segment profit or loss are as previously described in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2018. The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments for the periods indicated (in thousands):

	United States (primarily Gulf of Mexico)		Africa (primarily West Africa)			Middle East and Asia		Latin America			Europe (primarily North Sea)		Total
For the Three Months Ended June 30, 2019
Operating Revenues:
Time charter	$	12,628	$	10,400		$	13,175	$	2,046		$	20,524	$	58,773
Bareboat charter		233		—			—		1,156			—		1,389
Other marine services		1,320		753			349		273			1,488		4,183
		14,181		11,153			13,524		3,475			22,012		64,345
Direct Costs and Expenses:
Operating:
Personnel		5,203		3,428			4,292		976			10,062		23,961
Repairs and maintenance		2,515		952			2,629		481			2,099		8,676
Drydocking		1,801		(48	)		275		(32	)		78		2,074
Insurance and loss reserves		841		239			381		66			365		1,892
Fuel, lubes and supplies		1,107		939			725		314			807		3,892
Other		113		773			793		560			791		3,030
		11,580		6,283			9,095		2,365			14,202		43,525
Direct Vessel Profit	$	2,601	$	4,870		$	4,429	$	1,110		$	7,810		20,820
Other Costs and Expenses:
Lease expense	$	2,942	$	787		$	42	$	—		$	546		4,317
Administrative and general														11,639
Depreciation and amortization		5,341		2,759			4,274		1,659			3,461		17,494
														33,450
Loss on Asset Dispositions, Net														(3,848	)
Operating Loss													$	(16,478	)

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	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Six Months Ended June 30, 2019
Operating Revenues:
Time charter	$	20,633		$	21,173		$	25,674		$	6,968		$	36,452		$	110,900
Bareboat charter		233			—			—			2,299			—			2,532
Other marine services		2,452			116			577			908			3,109			7,162
		23,318			21,289			26,251			10,175			39,561			120,594
Direct Costs and Expenses:
Operating:
Personnel		9,706			7,295			8,546			2,532			18,638			46,717
Repairs and maintenance		5,293			2,136			4,822			816			4,615			17,682
Drydocking		3,795			290			434			47			387			4,953
Insurance and loss reserves		1,433			452			708			201			572			3,366
Fuel, lubes and supplies		1,790			1,693			1,434			742			1,986			7,645
Other		203			2,879			1,893			1,081			1,383			7,439
		22,220			14,745			17,837			5,419			27,581			87,802
Direct Vessel Profit	$	1,098		$	6,544		$	8,414		$	4,756		$	11,980			32,792
Other Costs and Expenses:
Lease expense	$	5,853		$	1,572		$	88		$	1		$	951			8,465
Administrative and general																	23,639
Depreciation and amortization		10,839			5,115			8,523			3,595			6,615			34,687
																	66,791
Loss on Asset Dispositions, Net																	(3,489	)
Operating Loss																$	(37,488	)
As of June 30, 2019
Property and Equipment:
Historical cost	$	364,501		$	220,855		$	288,677		$	108,068		$	240,719		$	1,222,820
Accumulated depreciation		(189,602	)		(62,061	)		(74,815	)		(49,393	)		(149,685	)		(525,556	)
	$	174,899		$	158,794		$	213,862		$	58,675		$	91,034		$	697,264
Total Assets ⁽¹⁾	$	312,465		$	171,084		$	252,926		$	123,513		$	133,437		$	993,425

⁽¹⁾	Total assets by region does not include corporate assets of $83,271 as of June 30, 2019.

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	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Three Months Ended June 30, 2018
Time Charter Statistics:
Average Rates Per Day	$	10,503		$	9,509		$	8,226		$	19,127		$	4,823		$	7,324
Fleet Utilization		23	%		88	%		82	%		57	%		76	%		62	%
Fleet Available Days		3,710			1,331			2,005			416			5,066			12,528
Operating Revenues:
Time charter	$	9,052		$	11,122		$	13,591		$	4,556		$	18,505		$	56,826
Bareboat charter		—			—			—			1,156			—			1,156
Other		1,676			350			(792	)		845			640			2,719
		10,728			11,472			12,799			6,557			19,145			60,701
Direct Costs and Expenses:
Operating:
Personnel		4,636			4,314			4,069			1,219			10,495			24,733
Repairs and maintenance		1,529			1,663			3,576			32			2,270			9,070
Drydocking		910			910			72			11			1,209			3,112
Insurance and loss reserves		902			248			361			169			254			1,934
Fuel, lubes and supplies		900			900			922			349			1,051			4,122
Other		29			1,402			836			488			254			3,009
		8,906			9,437			9,836			2,268			15,533			45,980
Direct Vessel Profit	$	1,822		$	2,035		$	2,963		$	4,289		$	3,612			14,721
Other Costs and Expenses:
Lease expense	$	2,065		$	1,092		$	59		$	2		$	113			3,331
Administrative and general																	15,041
Depreciation and amortization		5,915			2,924			4,311			2,280			2,976			18,406
																	36,778
Gain on Asset Dispositions and Impairments, Net																	1,055
Operating Loss																$	(21,002	)

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	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Six Months Ended June 30, 2018 2018
Operating Revenues:
Time charter	$	15,034		$	21,916		$	24,965		$	5,930		$	36,123		$	103,968
Bareboat charter		—			—			—			2,299			—			2,299
Other marine services		3,331			1,637			(922	)		955			1,154			6,155
		18,365			23,553			24,043			9,184			37,277			112,422
Direct Costs and Expenses:
Operating:
Personnel		8,628			8,387			8,091			1,595			19,708			46,409
Repairs and maintenance		2,223			3,019			6,004			337			4,560			16,143
Drydocking		1,435			912			61			11			2,950			5,369
Insurance and loss reserves		1,336			466			597			236			489			3,124
Fuel, lubes and supplies		1,393			1,569			1,956			414			2,335			7,667
Other		54			2,438			2,044			548			532			5,616
		15,069			16,791			18,753			3,141			30,574			84,328
Direct Vessel Profit	$	3,296		$	6,762		$	5,290		$	6,043		$	6,703			28,094
Other Costs and Expenses:
Leased expense	$	4,109		$	2,161		$	118		$	3		$	198			6,589
Administrative and general																	27,415
Depreciation and amortization	$	12,450		$	5,731		$	10,401		$	3,499		$	5,837			37,918
																	71,922
Loss on Asset Dispositions and Impairment																	(1,588	)
Operating Loss																$	(45,416	)
As of June 30, 2018
Property and Equipment:
Historical cost	$	439,026		$	184,037		$	317,536		$	165,145		$	182,111		$	1,287,855
Accumulated depreciation		(225,116	)		(57,909	)		(86,239	)		(58,078	)		(137,135	)		(564,477	)
	$	213,910		$	126,128		$	231,297		$	107,067		$	44,976		$	723,378
Total Assets ⁽¹⁾	$	351,718		$	130,930		$	265,451		$	176,473		$	53,539		$	978,111

⁽¹⁾ Total assets by region does not include corporate assets of $154,427 as of June 30, 2018.

The Company’s investments in 50% or less owned companies, which are accounted for under the equity method, also contribute to its consolidated results of operations. As of June 30, 2019 and 2018, the Company’s investments, at equity and advances to 50% or less owned companies in its other 50% or less owned companies were $112.4 million and $115.4 million, respectively. Equity in (losses) earnings of 50% or less owned companies for the six months ended June 30, 2019 and 2018 were ($10.4) million and ($0.5) million, respectively.

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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 concern management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters and involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. [Certain of these risks, uncertainties and other important factors are discussed in Item 1A. (Risk Factors) and Item 7. (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of the Company’s 2018 Annual Report]. However, it should be understood that it is not possible to identify or predict all such risks, uncertainties and factors, and others may arise from time to time. All of these forward-looking statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements Forward looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.

Overview

The following analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”).

The Company provides global marine and support transportation services to offshore oil, natural gas exploration and windfarm development and production facilities worldwide. As of June 30, 2019, the Company and its joint ventures operate a diverse fleet of 177 support and specialty vessels, of which 127 were owned or leased-in, 46 were joint ventured and four were managed on behalf of unaffiliated third parties. The primary users of the Company’s services are major integrated oil companies, large independent oil and natural gas exploration and production companies and emerging independent companies, as well as windfarm operations and installation contractors.

The Company’s fleet features offshore support and specialty vessels that deliver cargo and personnel to offshore installations; handle anchors and mooring equipment required to tether rigs to the seabed; tow rigs and assist in placing them on location and moving them between regions; provide construction, well workover and decommissioning support; carry and launch equipment used underwater in drilling and well installation, maintenance and repair; and provide windfarm installation, maintenance and repair support. Additionally, the Company’s vessels provide accommodations for technicians and specialists, safety support and emergency response services. The Company’s fleet also features crew transfer vessels used primarily in windfarm operations.

The Company operates its fleet in five principal geographic regions: the United States, primarily in the Gulf of Mexico; Africa, primarily in West Africa; the Middle East and Asia; Brazil, Mexico, Central and South America (“Latin America”); and Europe, primarily in the North Sea. The Company’s vessels are highly mobile and regularly and routinely move between countries within a geographic region. In addition, the Company’s vessels are redeployed among its geographic regions, subject to flag restrictions, as changes in market conditions dictate. The number and type of vessels operated, their rates per day worked and their utilization levels are the key determinants of the Company’s operating results and cash flows. Unless a vessel is cold-stacked, there is little reduction in daily running costs for the vessels and, consequently, operating margins are most sensitive to changes in rates per day worked and utilization. The Company manages its fleet utilizing a global network of shore side support, administrative and finance personnel.

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Offshore oil and natural gas market conditions deteriorated beginning in the second half of 2014 and continued to deteriorate when oil prices hit a thirteen-year low of less than $27 per barrel (on the New York Mercantile Exchange) in February 2016. As of June 30, 2019, oil prices had increased from the February 2016 lows to a price of approximately $60 per barrel. While the Company has experienced what it believes is a beginning of a recovery, it continued to experience difficult market conditions through the first half of 2019.

Low oil prices and the subsequent decline in offshore exploration have forced many operators in the industry to restructure or liquidate assets in addition to cold-stacking and laying up vessels. The Company continues to closely monitor the reactivation of existing offshore support vessels as well as the delivery of newly built offshore support vessels to the industry-wide fleet, which is creating situations of oversupply, thereby further lowering the demand for the Company’s existing offshore support vessel fleet. A continuation of (i) low customer exploration and drilling activity levels and (ii) the increasing size of the global offshore support vessel fleet as vessels are reactivated and newly built vessels are placed into service could, in isolation or together, have a material adverse effect on the Company’s results of operations, financial position and cash flows.

As shipyards, finance parties and industry operators have been forced to restructure or liquidate assets, the Company has reviewed discreet opportunities to acquire or takeover the management of certain assets. In this industry context, the Company may from time to time deploy capital in connection with transactions that it determines enhance market coverage and/or represent a substantial discount to replacement value.

Recent Events

SEACOSCO

In connection with these events, SEACOR Offshore Asia, CSFT, CSIHK and the Shipyard entered into a Memorandum of Understanding (“MOU”) effective May 31, 2019 pursuant to which (i) the Shipyard agreed not take any action with respect to any existing defaults under the DPAs until August 31, 2019, (ii) SEACOR Offshore Asia was authorized to provide, in its sole discretion, shareholder loans to SEACOSCO and/or its subsidiaries in respect of working capital or other payment obligations at an interest rate of 15% per annum and, subject to the priority of the indebtedness under the DPAs, the shareholder loans will have senior priority to any and all other debts of SEACOSCO and/or its subsidiaries, (iii) the parties set out the non-binding principal terms and conditions for SEACOR Offshore Asia’s potential acquisition of the 50% interest in SEACOSCO owned by CSFT and CSIHK and (iv) in connection with such acquisition, SEACOR Offshore Asia or its nominee may acquire from the Shipyard two additional PSVs that had been under options held by SEACOSCO. Management remains in discussions with the Shipyard, CSFT and CSIHK with respect to the transactions contemplated by the MOU.

Cost Savings Initiatives

During the third quarter of 2019, the Company initiated certain cost reduction initiatives to better align its operating expenses with the current state of its business and the offshore marine industry, including a reduction of workforce, reorganization of the management structure, closure and/or consolidation of certain facilities and streamlining of operations. The Company expects these initiatives, which will impact all of its reportable segments, to be completed by the second quarter of 2020 and to realize annualized recurring savings of at least $8.0 million once completed. The Company anticipates incurring one-time restructuring charges in the third quarter of 2019 arising from these restructuring activities. Management continues to focus on optimizing the cost structure and regional footprint of the business to help maintain the Company’s competitiveness in the industry, improve its operating leverage and position itself to take advantage of market opportunities.

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SEACOR Marine Foreign Holdings Credit Agreement Amendment

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Consolidated Results of Operations

The sections below provide an analysis of the Company's results of operations for the three months (“Current Year Quarter”) and six months (“Current Six Months”) ended June 30, 2019 compared with the three months (“Prior Year Quarter”) and six months (“Prior Six Months”) ended June 30, 2018. For the periods indicated, the Company’s consolidated results of operations were as follows (in thousands, except statistics):

	Three Months Ended June 30,										Six Months Ended June 30,
	2019					2018					2019					2018
Time Charter Statistics:
Average Rates Per Day Worked (excluding crew transfer)	$	9,913				$	9,742				$	9,686				$	9,425
Average Rates Per Day	$	7,122				$	7,324				$	7,237				$	7,174
Fleet Utilization (excluding crew transfer)		64	%				58	%				63	%				54	%
Fleet Utilization		72	%				62	%				66	%				58	%
Fleet Available Days (excluding crew transfer)		8,038					9,071					16,153					18,342
Fleet Available Days		11,537					12,528					23,072					25,129
Operating Revenues:
Time charter	$	58,773		91	%	$	56,826		94	%	$	110,900		92	%	$	103,968		93	%
Bareboat charter		1,389		2	%		1,156		2	%		2,532		2	%		2,299		2	%
Other marine services		4,183		7	%		2,719		4	%		7,162		6	%		6,155		5	%
		64,345		100	%		60,701		100	%		120,594		100	%		112,422		100	%
Costs and Expenses:
Operating:
Personnel		23,961		37	%		24,733		41	%		46,717		39	%		46,409		41	%
Repairs and maintenance		8,676		14	%		9,070		15	%		17,682		15	%		16,143		14	%
Drydocking		2,074		3	%		3,112		5	%		4,953		4	%		5,369		5	%
Insurance and loss reserves		1,892		3	%		1,934		3	%		3,366		3	%		3,124		3	%
Fuel, lubes and supplies		3,892		6	%		4,122		7	%		7,645		6	%		7,667		7	%
Other		3,030		5	%		3,009		5	%		7,439		6	%		5,616		5	%
		43,525		68	%		45,980		76	%		87,802		73	%		84,328		75	%
Administrative and general		11,639		18	%		15,041		25	%		23,639		19	%		27,415		24	%
Depreciation and amortization		17,494		27	%		18,406		30	%		34,687		29	%		37,918		34	%
Lease expense - operating		4,317		7	%		3,331		6	%		8,465		7	%		6,589		6	%
		76,975		120	%		82,758		137	%		154,593		128	%		156,250		139	%
(Losses) Gains on Asset Dispositions and Impairments, Net		(3,848	)	(6	)%		1,055		2	%		(3,489	)	(3	)%		(1,588	)	(1	)%
Operating Loss		(16,478	)	(26	)%		(21,002	)	(35	)%		(37,488	)	(31	)%		(45,416	)	(40	)%
Other (Expense) Income, Net		(9,828	)	(15	)%		(9,630	)	(16	)%		(17,525	)	(15	)%		(26,936	)	(24	)%
Loss Before Income Tax Benefit and Equity in Earnings (Losses) of 50% or Less Owned Companies		(26,306	)	(41	)%		(30,632	)	(51	)%		(55,013	)	(46	)%		(72,352	)	(64	)%
Income Tax Benefit		(3,048	)	(5	)%		(4,724	)	(8	)%		(6,879	)	(6	)%		(14,548	)	(13	)%
Loss Before Equity in Earnings (Losses) of 50% or Less Owned Companies		(23,258	)	(36	)%		(25,908	)	(43	)%		(48,134	)	(40	)%		(57,804	)	(51	)%
Equity in (Losses) Earnings of 50% or Less Owned Companies		(7,006	)	(11	)%		(721	)	(1	)%		(10,403	)	(9	)%		(513	)	(1	)%
Net Loss		(30,264	)	(47	)%		(26,629	)	(44	)%		(58,537	)	(49	)%		(58,317	)	(52	)%
Net Loss attributable to Noncontrolling Interests in Subsidiaries		(1,875	)	(3	)%		(1,605	)	(3	)%		(4,599	)	(4	)%		(4,460	)	(4	)%
Net Loss attributable to SEACOR Marine Holdings Inc.	$	(28,389	)	(44	)%	$	(25,024	)	(41	)%	$	(53,938	)	(45	)%	$	(53,857	)	(48	)%

Direct Vessel Profit. Direct vessel profit (defined as operating revenues less operating expenses excluding leased-in equipment, “DVP”) is the Company's measure of segment profitability when applied to reportable segments and a non-GAAP measure when applied to individual vessels, fleet categories or the combined fleet. DVP is a critical financial measure used by the Company to analyze and compare the operating performance of its individual vessels, fleet categories, regions and combined fleet, without regard to financing decisions (depreciation for owned vessel vs. leased expense for leased-in vessels). DVP is also useful when comparing the Company's fleet's performance against those of its competitors who may have differing fleet financing structures.

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DVP by region and by vessel class has material limitations as an analytical tool in that it does not reflect all of the costs associated with the operation of the Company’s fleet and it should not be considered in isolation or used as a substitute for the Company’s results as reported under GAAP. A reconciliation of DVP by region and by vessel class to operating loss, its most comparable GAAP measure, is included in the tables below.

The following tables summarize the operating results and property and equipment for the Company’s reportable segments for the periods indicated (in thousands, except statistics):

	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Three Months Ended June 30, 2019
Time Charter Statistics:
Average Rates Per Day	$	14,058		$	9,365		$	8,182		$	8,074		$	4,686		$	7,122
Fleet Utilization		34	%		81	%		79	%		63	%		86	%		72	%
Fleet Available Days		2,669			1,365			2,026			400			5,077			11,537
Operating Revenues:
Time charter	$	12,628		$	10,400		$	13,175		$	2,046		$	20,524		$	58,773
Bareboat charter		233			—			—			1,156			—			1,389
Other marine services		1,320			753			349			273			1,488			4,183
		14,181			11,153			13,524			3,475			22,012			64,345
Direct Costs and Expenses:
Operating:
Personnel		5,203			3,428			4,292			976			10,062			23,961
Repairs and maintenance		2,515			952			2,629			481			2,099			8,676
Drydocking		1,801			(48	)		275			(32	)		78			2,074
Insurance and loss reserves		841			239			381			66			365			1,892
Fuel, lubes and supplies		1,107			939			725			314			807			3,892
Other		113			773			793			560			791			3,030
		11,580			6,283			9,095			2,365			14,202			43,525
Direct Vessel Profit	$	2,601		$	4,870		$	4,429		$	1,110		$	7,810			20,820
Other Costs and Expenses:
Lease expense	$	2,942		$	787		$	42		$	—		$	546			4,317
Administrative and general																	11,639
Depreciation and amortization		5,341			2,759			4,274			1,659			3,461			17,494
																	33,450
Loss on Asset Dispositions and Impairments																	(3,848	)
Operating Loss																$	(16,478	)

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	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Six Months Ended June 30, 2019
Time Charter Statistics:
Average Rates Per Day	$	12,472		$	9,414		$	8,280		$	10,974		$	4,743		$	7,237
Fleet Utilization		31	%		84	%		76	%		67	%		77	%		66	%
Fleet Available Days		5,367			2,678			4,087			941			10,000			23,073
Operating Revenues:
Time charter	$	20,633		$	21,173		$	25,674		$	6,968		$	36,452		$	110,900
Bareboat charter		233			—			—			2,299			—			2,532
Other marine services		2,452			116			577			908			3,109			7,162
		23,318			21,289			26,251			10,175			39,561			120,594
Direct Costs and Expenses:
Operating:
Personnel		9,706			7,295			8,546			2,532			18,638			46,717
Repairs and maintenance		5,293			2,136			4,822			816			4,615			17,682
Drydocking		3,795			290			434			47			387			4,953
Insurance and loss reserves		1,433			452			708			201			572			3,366
Fuel, lubes and supplies		1,790			1,693			1,434			742			1,986			7,645
Other		203			2,879			1,893			1,081			1,383			7,439
		22,220			14,745			17,837			5,419			27,581			87,802
Direct Vessel Profit	$	1,098		$	6,544		$	8,414		$	4,756		$	11,980			32,792
Other Costs and Expenses:
Lease expense	$	5,853		$	1,572		$	88		$	1		$	951			8,465
Administrative and general																	23,639
Depreciation and amortization		10,839			5,115			8,523			3,595			6,615			34,687
																	66,791
Loss on Asset Dispositions and Impairments																	(3,489	)
Operating Loss																$	(37,488	)
As of June 30, 2019
Property and Equipment:
Historical cost	$	364,501		$	220,855		$	288,677		$	108,068		$	240,719		$	1,222,820
Accumulated depreciation		(189,602	)		(62,061	)		(74,815	)		(49,393	)		(149,685	)		(525,556	)
	$	174,899		$	158,794		$	213,862		$	58,675		$	91,034		$	697,264
Total Assets ⁽¹⁾	$	312,465		$	171,084		$	252,926		$	123,513		$	133,437		$	993,425

⁽¹⁾	Total assets by region does not include corporate assets, which are $83,271 as of June 30,2019.

Table of Contents

	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Three Months Ended June 30, 2018
Time Charter Statistics:
Average Rates Per Day	$	10,503		$	9,509		$	8,226		$	19,127		$	4,823		$	7,324
Fleet Utilization		23	%		88	%		82	%		57	%		76	%		62	%
Fleet Available Days		3,710			1,331			2,005			416			5,066			12,528
Operating Revenues:
Time charter	$	9,052		$	11,122		$	13,591		$	4,556		$	18,505		$	56,826
Bareboat charter		—			—			—			1,156			—			1,156
Other		1,676			350			(792	)		845			640			2,719
		10,728			11,472			12,799			6,557			19,145			60,701
Direct Costs and Expenses:
Operating:
Personnel		4,636			4,314			4,069			1,219			10,495			24,733
Repairs and maintenance		1,529			1,663			3,576			32			2,270			9,070
Drydocking		910			910			72			11			1,209			3,112
Insurance and loss reserves		902			248			361			169			254			1,934
Fuel, lubes and supplies		900			900			922			349			1,051			4,122
Other		29			1,402			836			488			254			3,009
		8,906			9,437			9,836			2,268			15,533			45,980
Direct Vessel Profit	$	1,822		$	2,035		$	2,963		$	4,289		$	3,612			14,721
Other Costs and Expenses:
Lease expense	$	2,065		$	1,092		$	59		$	2		$	113			3,331
Administrative and general																	15,041
Depreciation and amortization		5,915			2,924			4,311			2,280			2,976			18,406
																	36,778
Gain on Asset Dispositions and Impairments, Net																	1,055
Operating Loss																$	(21,002	)

Table of Contents

	United States (primarily Gulf of Mexico)			Africa (primarily West Africa)			Middle East and Asia			Latin America			Europe (primarily North Sea)			Total
For the Six Months Ended June 30, 2018
Time Charter Statistics:
Average Rates Per Day	$	9,740		$	9,482		$	8,155		$	18,069		$	4,984		$	7,174
Fleet Utilization		20	%		89	%		74	%		52	%		72	%		58	%
Fleet Available Days		7,760			2,591			4,137			635			10,006			25,129
Operating Revenues:
Time charter	$	15,034		$	21,916		$	24,965		$	5,930		$	36,123		$	103,968
Bareboat charter		—			—			—			2,299			—			2,299
Other		3,331			1,637			(922	)		955			1,154			6,155
		18,365			23,553			24,043			9,184			37,277			112,422
Direct Costs and Expenses:
Operating:
Personnel		8,628			8,387			8,091			1,595			19,708			46,409
Repairs and maintenance		2,223			3,019			6,004			337			4,560			16,143
Drydocking		1,435			912			61			11			2,950			5,369
Insurance and loss reserves		1,336			466			597			236			489			3,124
Fuel, lubes and supplies		1,393			1,569			1,956			414			2,335			7,667
Other		54			2,438			2,044			548			532			5,616
		15,069			16,791			18,753			3,141			30,574			84,328
Direct Vessel Profit	$	3,296		$	6,762		$	5,290		$	6,043		$	6,703			28,094
Other Costs and Expenses:
Lease expense	$	4,109		$	2,161		$	118		$	3		$	198			6,589
Administrative and general																	27,415
Depreciation and amortization		12,450			5,731			10,401			3,499			5,837			37,918
																	71,922
Loss on Asset Dispositions and Impairments, Net																	(1,588	)
Operating Loss																$	(45,416	)
As of June 30, 2018
Property and Equipment:
Historical cost	$	439,026		$	184,037		$	317,536		$	165,145		$	182,111		$	1,287,855
Accumulated depreciation		(225,116	)		(57,909	)		(86,239	)		(58,078	)		(137,135	)		(564,477	)
	$	213,910		$	126,128		$	231,297		$	107,067		$	44,976		$	723,378
Total Assets ⁽¹⁾	$	351,718		$	130,930		$	265,451		$	176,473		$	53,539		$	978,111

⁽¹⁾	Total assets by region does not include corporate assets, which are $154,427 as of June 30, 2018.

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For additional information, the following tables summarize the world-wide operating results and property and equipment for each of the Company’s vessel classes for the periods indicated (in thousands, except statistics):

	Anchor handling towing supply			Fast support			Supply			Emergency Response and Rescue			Specialty			Liftboats			Crew Transfer			Other activity			Total
For the Three Months Ended June 30, 2019
Time Charter Statistics:
Average Rates Per Day	$	7,597		$	7,624		$	6,906		$	8,562		$	—		$	20,993		$	2,431		$	—		$	7,122
Fleet Utilization		49	%		71	%		53	%		87	%		—	%		47	%		88	%		—	%		72	%
Fleet Available Days		910			3,275			486			1,547			91			1,729			3,499			—			11,537
Operating Revenues:
Time charter	$	3,360		$	17,709		$	1,787		$	11,503		$	—		$	16,932		$	7,482		$	—		$	58,773
Bareboat charter		—			233			1,156			—			—			—			—			—			1,389
Other marine services		869			(179	)		799			30			—			1,481			499			684			4,183
		4,229			17,763			3,742			11,533			—			18,413			7,981			684			64,345
Direct Costs and Expenses:
Operating:
Personnel		2,001			5,796			1,617			6,047			23			5,360			2,665			452			23,961
Repairs and maintenance		632			2,682			1,085			1,069			3			2,189			933			83			8,676
Drydocking		96			136			82			77			—			1,683			—			—			2,074
Insurance and loss reserves		266			385			78			129			20			921			93			—			1,892
Fuel, lubes and supplies		262			1,602			98			690			(24	)		1,076			167			21			3,892
Other		411			1,713			842			143			77			251			113			(520	)		3,030
		3,668			12,314			3,802			8,155			99			11,480			3,971			36			43,525
Direct Vessel Profit (Loss)	$	561		$	5,449		$	(60	)	$	3,378		$	(99	)	$	6,933		$	4,010		$	648		$	20,820
Other Costs and Expenses:
Lease expense	$	1,527		$	352		$	433		$	—		$	—		$	1,497		$	—		$	508		$	4,317
Administrative and general																										11,639
Depreciation and amortization		575			5,929			1,223			1,082			127			6,055			1,920			583			17,494
																										33,450
Loss on Asset Dispositions and Impairments																										(3,848	)
Operating Loss																									$	(16,478	)

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	Anchor handling towing supply			Fast support			Supply			Emergency Response and Rescue			Specialty			Liftboats			Crew transfer			Other activity			Total
For the Six Months Ended June 30, 2019
Time Charter Statistics:
Average Rates Per Day	$	7,989		$	7,616		$	6,958		$	8,531		$	—		$	19,397		$	2,389		$	—		$	7,237
Fleet Utilization		43	%		70	%		58	%		84	%		—	%		46	%		74	%		—	%		66	%
Fleet Available Days		1,810			6,569			987			3,167			181			3,439			6,919			—			23,072
Operating Revenues:
Time charter	$	6,235		$	34,792		$	3,969		$	22,811		$	—		$	30,809		$	12,284		$	—		$	110,900
Bareboat charter		—			233			2,299			—			—			—			—			—			2,532
Other marine services		211			(430	)		1,580			61			—			3,561			821			1,358			7,162
		6,446			34,595			7,848			22,872			—			34,370			13,105			1,358			120,594
Direct Costs and Expenses:
Operating:
Personnel		3,391			11,307			3,295			12,180			88			10,457			4,974			1,025			46,717
Repairs and maintenance		1,262			5,019			1,704			2,491			7			5,017			2,029			153			17,682
Drydocking		171			486			244			386			—			3,666			—			—			4,953
Insurance and loss reserves		388			711			183			189			28			1,805			197			(135	)		3,366
Fuel, lubes and supplies		324			2,704			497			1,637			7			2,081			356			39			7,645
Other		1,003			4,177			1,986			383			172			695			226			(1,203	)		7,439
		6,539			24,404			7,909			17,266			302			23,721			7,782			(121	)		87,802
Direct Vessel (Loss) Profit	$	(93	)	$	10,191		$	(61	)	$	5,606		$	(302	)	$	10,649		$	5,323		$	1,479		$	32,792
Other Costs and Expenses:
Lease expense	$	3,066		$	704		$	751		$	—		$	—		$	2,995		$	—		$	949		$	8,465
Administrative and general																										23,639
Depreciation and amortization		1,150			11,873			2,259			2,178			255			12,108			3,951			913			34,687
																										66,791
Loss on Asset Dispositions and Impairments																										(3,489	)
Operating Loss																									$	(37,488	)
As of June 30, 2019
Property and Equipment:
Historical cost	$	143,339		$	430,077		$	77,924		$	121,190		$	14,806		$	329,746		$	77,380		$	28,358		$	1,222,820
Accumulated depreciation		(118,166	)		(105,665	)		(38,999	)		(97,755	)		(10,211	)		(83,994	)		(50,284	)		(20,482	)		(525,556	)
	$	25,173		$	324,412		$	38,925		$	23,435		$	4,595		$	245,752		$	27,096		$	7,876		$	697,264

Table of Contents

	Anchor handling towing supply			Fast support			Supply			Emergency Response and Rescue			Specialty			Liftboats			Crew Transfer			Other activity			Total
For the Three Months Ended June 30, 2018
Time Charter Statistics:
Average Rates Per Day	$	13,381		$	6,963		$	7,174		$	9,157		$	—		$	19,225		$	2,330		$	—		$	7,324
Fleet Utilization		23	%		62	%		69	%		80	%		—	%		43	%		73	%		—	%		62	%
Fleet Available Days		866			3,820			637			1,746			91			1,911			3,457			—			12,528
Operating Revenues:
Time charter	$	2,712		$	16,488		$	3,149		$	12,791		$	—		$	15,788		$	5,898		$	—		$	56,826
Bareboat charter		—			—			1,156			—			—			—			—			—			1,156
Other marine services		(91	)		(505	)		39			39			—			1,569			563			1,105			2,719
		2,621			15,983			4,344			12,830			—			17,357			6,461			1,105			60,701
Direct Costs and Expenses:
Operating:
Personnel		1,593			5,258			1,999			8,148			79			4,671			2,295			690			24,733
Repairs and maintenance		1,281			3,406			259			1,464			13			1,553			987			107			9,070
Drydocking		945			115			585			624			—			842			1			—			3,112
Insurance and loss reserves		265			314			134			143			25			889			93			71			1,934
Fuel, lubes and supplies		586			1,015			317			843			(29	)		1,153			219			18			4,122
Other		689			1,466			1,048			144			93			336			173			(940	)		3,009
		5,359			11,574			4,342			11,366			181			9,444			3,768			(54	)		45,980
Direct Vessel (Loss) Profit	$	(2,738	)	$	4,409		$	2		$	1,464		$	(181	)	$	7,913		$	2,693		$	1,159			14,721
Other Costs and Expenses:
Leased-in equipment	$	1,855		$	342		$	—		$	—		$	—		$	644		$	22		$	468			3,331
Administrative and general																										15,041
Depreciation and amortization		532			6,585			1,394			681			283			6,333			2,380			218			18,406
																										36,778
Gain on Asset Dispositions and Impairments																										1,055
Operating Loss																									$	(21,002	)

Table of Contents

	Anchor handling towing supply			Fast support			Supply			Emergency Response and Rescue			Specialty			Liftboats			Crew Transfer			Other activity			Total
For the Six Months Ended June 30, 2018
Time Charter Statistics:
Average Rates Per Day	$	11,634		$	7,321		$	6,803		$	9,107		$	—		$	18,022		$	2,319		$	—		$	7,174
Fleet Utilization		22	%		57	%		71	%		79	%		—	%		37	%		68	%		—	%		58	%
Fleet Available Days		2,126			7,600			1,270			3,595			181			3,570			6,787			—			25,129
Operating Revenues:
Time charter	$	5,499		$	31,915		$	6,151		$	25,842		$	—		$	23,914		$	10,647		$	—		$	103,968
Bareboat charter		—			—			2,299			—			—			—			—			—			2,299
Other		1,347			(1,161	)		21			79			—			2,325			992			2,552			6,155
		6,846			30,754			8,471			25,921			—			26,239			11,639			2,552			112,422
Direct Costs and Expenses:
Operating:
Personnel		2,990			10,014			3,955			15,086			243			8,132			4,517			1,472			46,409
Repairs and maintenance		1,675			5,950			704			3,018			50			2,687			1,812			247			16,143
Drydocking		1,425			106			585			2,365			(6	)		893			1			—			5,369
Insurance and loss reserves		356			638			236			281			35			1,540			196			(158	)		3,124
Fuel, lubes and supplies		739			1,810			1,011			1,834			54			1,821			363			35			7,667
Other		1,141			2,926			1,767			305			197			753			269			(1,742	)		5,616
		8,326			21,444			8,258			22,889			573			15,826			7,158			(146	)		84,328
Direct Vessel (Loss) Profit	$	(1,480	)	$	9,310		$	213		$	3,032		$	(573	)	$	10,413		$	4,481		$	2,698			28,094
Other Costs and Expenses:
Leased-in equipment	$	3,713		$	684		$	—		$	—		$	—		$	1,282		$	22		$	888			6,589
Administrative and general																										27,415
Depreciation and amortization		2,022			13,170			4,137			1,375			565			11,358			4,808			483			37,918
																										71,922
Loss on Asset Dispositions and Impairments, Net																										(1,588	)
Operating Loss																									$	(45,416	)
As of June 30, 2018
Property and Equipment:
Historical cost	$	188,507		$	420,776		$	95,088		$	112,869		$	30,529		$	337,239		$	71,575		$	31,272		$	1,287,855
Accumulated depreciation		(168,841	)		(99,020	)		(45,759	)		(93,736	)		(19,869	)		(65,900	)		(44,483	)		(26,869	)		(564,477	)
	$	19,666		$	321,756		$	49,329		$	19,133		$	10,660		$	271,339		$	27,092		$	4,403		$	723,378

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Fleet Counts. The Company's fleet count as of June 30, 2019 and December 31, 2018 was as follows:

	Owned		Joint Ventured		Leased-in		Managed		Total
June 30, 2019
AHTS		5		—		4		—	9
FSV		35		4		1		—	40
Supply		6		33		—		2	41
ERRV		17		1		—		—	18
Specialty		1		3		—		2	6
Liftboats		17		—		2		—	19
Crew transfer		39		5		—		—	44
	120		46		7		4		177
December 31, 2018
AHTS		8		—		4		—		12
FSV		32		5		1		3		41
Supply		7		30		—		2		39
ERRV		18		1		—		—		19
Specialty		1		4		—		2		7
Liftboats		17		—		2		—		19
Crew transfer		38		4		—		—		42
		121		44		7		7		179

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Operating Income (Loss)

United States, primarily Gulf of Mexico. For the three and six months ended June 30, the Company’s time charter statistics and direct vessel profit (loss) in the United States was as follows (in thousands, except statistics):

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2019				2018				2019				2018
Time Charter Statistics:
Rates Per Day Worked:
Anchor handling towing supply	$	7,155			$	27,326			$	7,155			$	27,326
Fast support		8,284				6,594				7,939				6,894
Supply		—				6,953				—				6,953
Liftboats		18,855				12,955				16,377				11,992
Overall		14,058				10,503				12,472				9,740
Utilization:
Anchor handling towing supply			20	%			3	%			11	%			1	%
Fast support			40	%			23	%			39	%			23	%
Supply			—	%			40	%			—	%			11	%
Liftboats			37	%			31	%			34	%			27	%
Overall			34	%			23	%			31	%			20	%
Available Days:
Anchor handling towing supply		455				546				905				1,446
Fast support		773				1,507				1,656				3,088
Supply		—				34				—				124
Specialty		91				91				181				181
Liftboats		1,350				1,532				2,625				2,921
Overall		2,669				3,710				5,367				7,760
Operating revenues:
Time charter	$	12,628	89	%	$	9,052	84	%	$	20,633	88	%	$	15,034	82	%
Bareboat charter		233	2	%		—	—	%		233	1	%		—	—	%
Other marine services		1,320	9	%		1,676	16	%		2,452	11	%		3,331	18	%
		14,181	100	%		10,728	100	%		23,318	100	%		18,365	100	%
Direct operating expenses:
Personnel		5,203	37	%		4,636	43	%		9,706	41	%		8,628	47	%
Repairs and maintenance		2,515	18	%		1,529	14	%		5,293	23	%		2,223	12	%
Drydocking		1,801	13	%		910	9	%		3,795	16	%		1,435	8	%
Insurance and loss reserves		841	6	%		902	9	%		1,433	6	%		1,336	7	%
Fuel, lubes and supplies		1,107	8	%		900	8	%		1,790	8	%		1,393	8	%
Other		113	1	%		29	—	%		203	1	%		54	—	%
		11,580	82	%		8,906	83	%		22,220	95	%		15,069	82	%
Direct Vessel Profit	$	2,601	18	%	$	1,822	17	%	$	1,098	5	%	$	3,296	18	%

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Time charter revenues were $3.6 million higher in the Current Year Quarter compared with the Prior Year Quarter primarily due to the addition of six liftboats associated with the Falcon Global Holdings joint venture. Time charter revenues were $3.2 million higher for the liftboat fleet, $0.2 million higher for FSVs and $0.2 million higher for AHTS vessels. As of June 30, 2019, the Company had 12 of 27 owned and leased-in vessels (two AHTS vessels, four FSVs, five liftboats, and one specialty vessel) cold-stacked in this region compared with 25 of 38 vessels as of June 30, 2018. As of June 30, 2019, the Company had retired and removed from service five vessels (four AHTS vessels and one supply) in this region.

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Direct Operating Expenses. Direct operating expenses were $2.7 million higher in the Current Year Quarter compared with the Prior Year Quarter primarily due to the addition of six liftboats associated with the Falcon Global Holdings Joint Venture and the reactivation of vessels from cold-stack. Repairs and maintenance costs were $1.0 million higher, and drydocking expenses were $0.9 million higher, primarily associated with increased costs for the liftboat fleet.

Current Six Months compared with Prior Six Months

Operating Revenues. Time charter revenues were $5.6 million higher in the Current Six Months compared with the Prior Six Months primarily due to the addition of six liftboats associated with the Falcon Global Holdings joint venture. Time charter revenues were $5.1 million higher for the liftboat fleet, $0.2 million higher for FSVs and $0.2 million higher for AHTS vessels.

Direct Operating Expenses. Direct operating expenses were $7.2 million higher in the Current Six Months compared with the Prior Six Months primarily due to the addition of six liftboats associated with the Falcon Global Holdings Joint Venture, and increased repairs and maintenance costs. Repairs and maintenance costs were $3.1 million higher and drydocking expenses were $2.4 million higher, primarily for the liftboat fleet.

Africa, primarily West Africa. For the three and six months ended June 30, the Company’s time charter statistics and direct vessel profit in Africa was as follows (in thousands, except statistics):

	For the Three Months Ended June 30,									For the Six Months Ended June 30,
	2019					2018				2019				2018
Time Charter Statistics:
Rates Per Day Worked:
Anchor handling towing supply	$	8,437				$	13,014			$	8,875			$	12,301
Fast support		9,923					9,841				10,057				9,877
Supply		8,500					7,464				7,875				7,425
Overall		9,365					9,509				9,414				9,482
Utilization:
Anchor handling towing supply				95	%			88	%			95	%			94	%
Fast support				75	%			87	%			80	%			87	%
Supply				90	%			90	%			84	%			91	%
Overall				81	%			88	%			84	%			89	%
Available Days:
Anchor handling towing supply		273					182				543				362
Fast support		910					728				1,678				1,448
Supply		182					421				456				781
Overall		1,365					1,331				2,677				2,591
Operating revenues:
Time charter	$	10,400		93	%	$	11,122	97	%	$	21,173	99	%	$	21,916	93	%
Other marine services		753		7	%		350	3	%		116	1	%		1,637	7	%
		11,153		100	%		11,472	100	%		21,289	100	%		23,553	100	%
Direct operating expenses:
Personnel		3,428		31	%		4,314	38	%		7,295	34	%		8,387	36	%
Repairs and maintenance		952		8	%		1,663	14	%		2,136	10	%		3,019	13	%
Drydocking		(48	)	—	%		910	8	%		290	1	%		912	4	%
Insurance and loss reserves		239		2	%		248	2	%		452	2	%		466	2	%
Fuel, lubes and supplies		939		8	%		900	8	%		1,693	8	%		1,569	6	%
Other		773		7	%		1,402	12	%		2,879	14	%		2,438	10	%
		6,283		56	%		9,437	82	%		14,745	69	%		16,791	71	%
Direct Vessel Profit	$	4,870		44	%	$	2,035	18	%	$	6,544	31	%	$	6,762	29	%

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Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Time charter revenues were $0.7 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to the repositioning of vessels between geographic regions. As of June 30, 2019, the Company had one specialty vessel retired and removed from service in this region.

Direct Operating Expenses. Direct operating expenses were $3.2 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to repositioning of vessels between geographic regions and the timing of dry dockings and certain repair expenditures.

Current Six Months compared with Prior Six Months

Operating Revenues. Time charter revenues were $0.7 million lower in the Current Six Months compared with the Prior Six Months, primarily due to the repositioning of vessels between geographic regions. Other marine services were $1.5 million lower primarily due to the recognition in the Prior Six Months of previously deferred revenue, following receipt of cash, due to collection concerns with regard to one customer.

Direct Operating Expenses. Direct operating expenses were $2.0 million lower in the Current Six Months compared with the Prior Six Months, primarily due to the repositioning of vessels between geographic regions and the timing of dry dockings and certain repair expenditures.

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Middle East and Asia. For the three and six months ended June 30, the Company’s time charter statistics and direct vessel profit in the Middle East and Asia was as follows (in thousands, except statistics):

	For the Three Months Ended June 30,									For the Six Months Ended June 30,
	2019				2018					2019				2018
Time Charter Statistics:
Rates Per Day Worked:
Anchor handling towing supply	$	5,634			$	8,135				$	5,749			$	7,750
Fast support		6,203				5,683					6,159				6,073
Supply		4,166				4,989					5,049				4,372
Liftboats		27,150				31,998					27,150				33,311
Crew transfer		2,025				2,025					2,025				2,025
Overall		8,182				8,226					8,280				8,155
Utilization:
Anchor handling towing supply			50	%				20	%			46	%				37	%
Fast support			89	%				96	%			84	%				85	%
Supply			52	%				53	%			51	%				66	%
Liftboats			100	%				94	%			100	%				73	%
Crew transfer			50	%				40	%			50	%				39	%
Overall			79	%				82	%			76	%				74	%
Available Days:
Anchor handling towing supply		182				138					362				318
Fast support		1,298				1,365					2,639				2,715
Supply		182				91					362				274
Liftboats		182				182					362				362
Crew transfer		182				229					362				468
Overall		2,026				2,005					4,087				4,137
Operating revenues:
Time charter	$	13,175	97	%	$	13,591		106	%	$	25,674	98	%	$	24,965		104	%
Other marine services		349	3	%		(792	)	(6	)%		577	2	%		(922	)	(4	)%
		13,524	100	%		12,799		100	%		26,251	100	%		24,043		100	%
Direct operating expenses:
Personnel		4,292	32	%		4,069		32	%		8,546	33	%		8,091		34	%
Repairs and maintenance		2,629	19	%		3,576		28	%		4,822	18	%		6,004		25	%
Drydocking		275	2	%		72		1	%		434	2	%		61		—	%
Insurance and loss reserves		381	3	%		361		3	%		708	3	%		597		2	%
Fuel, lubes and supplies		725	5	%		922		7	%		1,434	5	%		1,956		8	%
Other		793	6	%		836		6	%		1,893	7	%		2,044		9	%
		9,095	67	%		9,836		77	%		17,837	68	%		18,753		78	%
Direct Vessel Profit	$	4,429	33	%	$	2,963		23	%	$	8,414	32	%	$	5,290		22	%

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Time charter revenues were $0.4 million lower in the Current Year Quarter compared with the Prior Year Quarter primarily due to lower average day rates. Other marine services were $1.1 million higher due the termination of a revenue pooling arrangement. As of June 30, 2019, the Company had one of 22 owned and leased-in vessels cold-stacked in this region (one AHTS vessel) compared with one of 22 vessels as of June 30, 2018.

Direct Operating Expenses. Direct operating expenses were $0.8 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to the Prior Year Quarter including engine overhaul costs for two FSVs.

Current Six Months compared with Prior Six Months

Operating Revenues. Time charter revenues were $0.7 million higher in the Current Six Months compared with the Prior Six Months primarily due to higher utilization of the core fleet, and net fleet additions. Other marine services were $1.5 million higher due the termination of a revenue pooling arrangement.

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Direct Operating Expenses. Direct operating expenses were $0.9 million lower in the Current Six Months compared with the Prior Six Months, primarily due to the Prior Six Months including engine overhaul costs for two FSVs.

Latin America (Brazil, Mexico, Central and South America). For the three and six months ended June 30, the Company’s time charter statistics and direct vessel profit in Latin America was as follows (in thousands, except statistics):

	For the Three Months Ended June 30,									For the Six Months Ended June 30,
	2019					2018				2019					2018
Time Charter Statistics:
Rates Per Day Worked:
Fast support		6,800					6,800				6,800					68,000
Liftboats		11,110					24,113				16,304					21,047
Overall		8,074					19,127				10,974					18,069
Utilization:
Fast support				61	%			31	%			60					20	%
Liftboats				71	%			86	%			81					91	%
Overall				63	%			57	%			67					52	%
Available Days:
Fast support		294					220				596					348
Liftboats		106					197				345					287
Overall		400					417				941					635
Operating revenues:
Time charter	$	2,046		59	%	$	4,556	69	%	$	6,968		68	%	$	5,930	65	%
Bareboat charter		1,156		33	%		1,156	18	%		2,299		23	%		2,299	25	%
Other marine services		273		8	%		845	13	%		908		9	%		955	10	%
		3,475		100	%		6,557	100	%		10,175		100	%		9,184	100	%
Direct operating expenses:
Personnel		976		28	%		1,219	19	%		2,532		25	%		1,595	17	%
Repairs and maintenance		481		14	%		32	—	%		816		8	%		337	4	%
Drydocking		(32	)	(1	)%		11	—	%		47		—	%		11	—	%
Insurance and loss reserves		66		2	%		169	3	%		201		2	%		236	2	%
Fuel, lubes and supplies		314		9	%		349	5	%		742		7	%		414	5	%
Other		560		16	%		488	8	%		1,081		11	%		548	6	%
		2,365		68	%		2,268	35	%		5,419		53	%		3,141	34	%
Direct Vessel Profit	$	1,110		32	%	$	4,289	65	%	$	4,756		47	%	$	6,043	66	%

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Time charter revenues were $2.5 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to reduced average day rates due to changes in fleet mix, offset by increased revenues due to the repositioning of vessels between geographic regions. As of June 30, 2019, the Company had one of seven owned and leased-in vessels cold-stacked in this region (one FSV) compared with one of eight vessels as of June 30, 2018.

Direct Operating Expenses. Direct operating expenses were $0.1 million higher in the Current Year Quarter compared with the Prior Year Quarter, primarily due to increased repair and maintenance expenses for the FSV fleet, offset by reduced personnel costs due to changes in fleet mix.

Current Six Months compared with Prior Six Months

Operating Revenues. Time charter revenues were $1.0 million higher in the Current Six Months compared with the Prior Six Months, primarily due to the repositioning of vessels between geographic regions.

Direct Operating Expenses. Direct operating expenses were $2.3 million higher in the Current Six Months compared with the Prior Six Months, primarily due to the repositioning of vessels between geographic regions and increased repair and maintenance costs.

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Europe, primarily North Sea. For the three and six months ended June 30, the Company’s time charter statistics and direct vessel profit in Europe was as follows (in thousands, except statistics):

	For the Three Months ended June 30,								For the Six Months Ended June 30,
	2019				2018				2019				2018
Time Charter Statistics:
Rates Per Day Worked:
Emergency Response and Rescue		8,562				9,157				8,531				9,107
Liftboats		35,003				—				35,003				—
Crew Transfer		2,443				2,342				2,402				2,331
Overall		4,686				4,823				4,743				4,984
Utilization:
Emergency Response and Rescue			87	%			80	%			84	%			79	%
Crew Transfer			54	%			76	%			46	%			70	%
Liftboats			90	%			—	%			76	%			—	%
Overall			86	%			76	%			77	%			72	%
Available Days:
Supply		122				91				169				91
Emergency Response and Rescue		1,547				1,746				3,167				3,595
Liftboats		91				—				107				—
Crew Transfer		3,317				3,228				6,557				6,319
Overall		5,077				5,065				10,000				10,005
Operating revenues:
Time charter	$	20,524	93	%	$	18,505	97	%	$	36,452	92	%	$	36,123	97	%
Other marine services		1,488	7	%		640	3	%		3,109	8	%		1,154	3	%
		22,012	100	%		19,145	100	%		39,561	100	%		37,277	100	%
Direct operating expenses:
Personnel		10,062	46	%		10,495	55	%		18,638	47	%		19,708	53	%
Repairs and maintenance		2,099	9	%		2,270	12	%		4,615	12	%		4,560	12	%
Drydocking		78	—	%		1,209	6	%		387	1	%		2,950	8	%
Insurance and loss reserves		365	2	%		254	1	%		572	1	%		489	1	%
Fuel, lubes and supplies		807	4	%		1,051	6	%		1,986	5	%		2,335	6	%
Other		791	4	%		254	1	%		1,383	3	%		532	2	%
		14,202	65	%		15,533	81	%		27,581	69	%		30,574	82	%
Direct Vessel Profit	$	7,810	35	%	$	3,612	19	%	$	11,980	31	%	$	6,703	18	%

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. For ERRVs, time charter revenues were $1.3 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to net dispositions

For CTVs, time charter revenues were $1.6 million higher in the Current Year Quarter compared to the Prior Year Quarter, primarily due to improved utilization of the core fleet and the repositioning of vessels between geographic regions.

For liftboats, time charter revenues were $1.7 million higher in the Current Year Quarter compared with the Prior Year Quarter due to the repositioning of vessels between geographic regions.

Direct Operating Expenses. Direct operating expenses were $1.3 million lower in the Current Year Quarter compared to the Prior Year Quarter, primarily due to the timing of drydockings

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Current Six Months compared with Prior Six Months

Operating Revenues. For ERRVs, time charter revenues were $3.0 million lower in the Current Six Months compared with the Prior Six Months, primarily due to net dispositions.

For liftboats, time charter revenues were $1.7 million higher in the Current Year Quarter compared with the Prior Year Quarter due to the repositioning of vessels between geographic regions.

Direct Operating Expenses. Direct operating expenses were $3.0 million lower in the Current Six Months compared to the Prior Six Months, primarily due to the timing of drydockings, and net dispositions offset by increased costs associated with the repositioning of one liftboat between geographic regions.

Leased Expense. Leased-in equipment expenses for the Current Year Quarter and Current Six Months were $1.0 million and $1.9 million higher compared with the Prior Year Quarter and Prior Six Months, respectively, primarily due to the implementation of the new lease accounting standard, which removed the $2.0 million prior year per quarter benefit of amortization of deferred gains on sale-leaseback vessels. The benefit would have been partially reduced by the impairment and removal from service of two leased-in vessels during 2018.

Administrative and general. Administrative and general expenses were $3.5 million and $3.8 million lower for the Current Year Quarter and Current Six Months compared with the Prior Year Quarter and Prior Six Months, respectively, primarily due to lower shared service fees and lower legal and professional services.

Depreciation and amortization. Depreciation and amortization expense for the Current Year Quarter and Current Six Months was $0.9 million and $3.2 million lower compared with the Prior Year Quarter and Prior Six Months, respectively, primarily due to net fleet dispositions.

Gains (Losses) on Asset Dispositions and Impairments, Net. During the Current Year Quarter, the Company sold three AHTS vessels and one specialty vessel previously retired and removed from service, two FSVs, and two supply vessels and other equipment for net proceeds of $9.7 million and a gain of $2.1 million, all of which was recognized currently. In addition, the Company recorded impairment charges of $5.9 million related to two AHTS vessels previously removed from service, two AHTS vessels and four FSVs which were all adjusted to indicative sales price. During the Prior Year Quarter, the Company sold one offshore support vessel and two supply vessels previously retired and removed from service, one ERRV, one FSV and other equipment for net proceeds of $2.2 million and a gain of $1.2 million, all of which was recognized currently.

During the Current Six Months, the Company sold three AHTS vessels and one specialty vessel previously retired and removed from service, one ERRV, two FSVs, one vessel under construction and two supply vessels and other equipment for net proceeds of $14.1 million ($9.8 million in cash and $4.3 million of previously received deposits) and a gain of $2.4 million, all of which was recognized currently. In addition, the Company recorded impairment charges of $5.9 million related to two AHTS vessels previously removed from service, two AHTS vessels and four FSVs which were all adjusted to indicative sales price. During the Prior Six Months, the Company recorded impairment charges of $3.0 million primarily related to the Company’s AHTS vessels. In addition, the Company sold one FSV and two supply vessels previously retired and removed from service, one FSV, one AHTS vessel, one ERRV and other equipment for net proceeds of $2.6 million and a gain of $1.4 million, all of which was recognized currently.

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Other Income (Expense), Net

For the periods ended June 30, the Company’s other income (expense) was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Other Income (Expense):
Interest income	$	222		$	352		$	579		$	568
Interest expense		(7,691	)		(6,489	)		(15,426	)		(12,622	)
SEACOR Holdings guarantee fees		(32	)		(7	)		(61	)		(19	)
Derivative losses, net		(1,398	)		(2,668	)		(2,323	)		(14,184	)
Foreign currency gains, net		(929	)		(818	)		(294	)		(679	)
	$	(9,828	)	$	(9,630	)	$	(17,525	)	$	(26,936	)

Interest expense. Interest expense in the Current Year Quarter and Current Six Months compared with the Prior Year Quarter and Prior Six Months was higher primarily due to additional interest incurred on the debt facilities of SEACOR Marine Foreign Holdings and SEACOR 88/888, along with higher interest as a result of the variable nature of interest rates on debt facilities.

Derivative losses, net. Net derivative losses during the Current Year Quarter and Current Six Months and Prior Year Quarter and Prior Six Months were primarily due to increases in the fair value of the Company’s conversion option liability embedded in the Company’s Convertible Senior Notes. The increase in the conversion option liability was primarily the result of increases in the Company’s share price and estimated credit spread.

Foreign currency gains, net. Foreign currency gains for the Current Six Months were primarily due to the weakening of the pound sterling in relation to the euro underlying certain of the Company’s debt balances.

Income Tax Benefit

For the six months ended June 30, 2019, the Company's effective income tax rate of 12.5% was primarily due to taxes provided on income attributable to noncontrolling interest, foreign sourced income not subject to U.S. income taxes, and foreign taxes not creditable against U.S. income taxes. For the six months ended June 30, 2018, the Company’s effective income tax rate of 20.1% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, foreign taxes not creditable against U.S. income taxes, and a reversal of an unrecognized benefit.

Equity in Earnings (Losses) of 50% or Less Owned Companies

Equity in losses of 50% or less owned companies for the Current Year Quarter and Current Six Months compared with the Prior Year Quarter and Prior Six Months were $6.3 million and $9.9 million lower, respectively, due to the following changes in equity earnings (losses) (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
MexMar	$	(120	)	$	1,076		$	(11	)	$	2,508
OSV Partners		(425	)		(356	)		(888	)		(1,043	)
SEACOR Grant DIS		—			—			—			(1,056	)
Dynamic Offshore Drilling		(935	)		(915	)		(1,676	)		(707	)
SEACOSCO		(1,760	)		(1,323	)		(3,402	)		(1,491	)
Mexmar Offshore International		(3,796	)		—			(4,901	)		—
Timsah		(326	)		200			(379	)		444
Other		356			597			854			832
	$	(7,006	)	$	(721	)	$	(10,403	)	$	(513	)

MexMar. During the Current Year Quarter and Current Six Months, decrease in equity earnings of $1.2 million and $2.5 million, respectively, was primarily due to reduced utilization and day rates.

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Seacor Grant DIS. During the Prior Six Months equity losses of $1.1 million were primarily due to an impairment charge of $1.1 million, net of taxes, for an other-than-temporary decline in the fair value of the Company’s investment in Seacor Grant DIS.

SEACOSCO. During the Current Six Months equity losses of $3.4 million included a $0.7 million non-cash adjustment to prior year interest expense on the long-term debt of the joint venture.

Mexmar Offshore International. During the Current Year Quarter and Current Six Months, the equity losses resulting from high reactivation, mobilization and dry-dock expenses have exceeded the Company’s initial investment in the joint venture of $4.9 million.

Liquidity and Capital Resources

General

The Company’s ongoing liquidity requirements arise primarily from working capital needs, capital commitments and its obligations to service outstanding debt. The Company may use its liquidity to fund capital expenditures, make acquisitions or to make other investments. Sources of liquidity are cash balances, construction reserve funds and cash flows from operations. From time to time, the Company may secure additional liquidity through asset sales or the issuance of debt, shares of SEACOR Marine Common Stock or common stock of its subsidiaries, preferred stock or a combination thereof.

As of June 30, 2019, the Company had unfunded capital commitments of $58.9 million that included one FSV, two CTVs and five PSVs. The Company’s capital commitments by year of expected payment are as follows (in thousands):

Remainder of 2019	$	23,604
2020		35,332
	$	58,936

The Company has indefinitely deferred an additional $20.6 million of orders with respect to two FSVs for which the Company had previously reported unfunded capital commitments.

As of June 30, 2019, the Company had outstanding debt of $399.7 million, net of debt discount and issue costs. The Company’s contractual long-term debt maturities as of June 30, 2019, are as follows:

	Actual
Remainder 2019	$	8,713
2020		25,489
2021		51,178
2022		25,150
Years subsequent to 2022		324,140
	$	434,670

As of June 30, 2019, the Company held balances of cash, cash equivalents, restricted cash and construction reserve funds totaling $81.1 million. As of June 30, 2019, construction reserve funds of $20.1 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. Additionally, the Company had $2.5 million available under subsidiary credit facilities.

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Summary of Cash Flows

For the six months ended June 30, the following is a summary of the Company's cash flows (in thousands):

	Six Months Ended June 30,
	2019			2018
Cash flows provided by or (used in):
Operating Activities	$	448		$	(33,686	)
Investing Activities		(26,084	)		(30,274	)
Financing Activities		(11,380	)		39,887
Effects of Exchange Rate Changes on Cash and Cash Equivalents		1,176			(288	)
Decrease in Cash and Cash Equivalents	$	(35,840	)	$	(24,361	)

Operating Activities

Cash flows used in operating activities increased by $34.1 million in the Current Six Months compared with the Prior Six Months. The components of cash flows used in operating activities during the Current Six Months and Prior Six Months were as follows:

	Six Months Ended June 30,
	2019			2018
DVP:
United States, primarily Gulf of Mexico	$	1,098		$	3,296
Africa, primarily West Africa		6,544			6,762
Middle East and Asia		8,414			5,290
Brazil, Mexico, Central and South America		4,756			6,043
Europe, primarily North Sea		11,980			6,703
Operating, leased-in equipment (excluding amortization of deferred gains)		(9,782	)		(10,608	)
Administrative and general (excluding provisions for bad debts and amortization of share awards)		(22,454	)		(25,509	)
SEACOR Holdings management and guarantee fees		(61	)		(19	)
Dividends received from 50% or less owned companies		400			1,324
		895			(6,718	)
Changes in operating assets and liabilities before interest and income taxes		8,462			(19,513	)
Director share awards		894			893
Restricted stock vested		(282	)		(51	)
Cash settlements on derivative transactions, net		200			(150	)
Interest paid, excluding capitalized interest ⁽¹⁾		(12,355	)		(8,703	)
Interest received		579			568
Income taxes refunded, net		2,055			(12	)
Total cash flows provided by (used in) operating activities	$	448		$	(33,686	)

(1)	During the Current Six Months and the Prior Six Months, capitalized interest paid and included in purchases of property and equipment was $0.7 million and $1.0 million, respectively.

For a detailed discussion of the Company's financial results for the reported periods, see “Consolidated Results of Operations” included above. Changes in operating assets and liabilities before interest and income taxes are the result of the Company's working capital requirements.

Investing Activities

During the Current Six Months, net cash used in investing activities was $26.1 million, primarily for the following:

•

capital expenditures were $41.2 million;

•

the Company sold three AHTS vessels and one specialty vessel previously retired and removed from service, one ERRV, two FSVs, two supply vessels and one vessel under construction for net proceeds of $14.1 million ($9.8 million cash plus $4.3 million previously received deposit);

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•

construction reserve funds account transactions included withdrawals of $7.9 million; and

•

the Company made investments in, and advances to, its 50% or less owned companies of $2.7 million, comprised primarily of its capital contribution in the SEACOSCO joint venture.

During the Prior Six Months, net cash used in investing activities was $30.3 million, primarily as a result of the following:

•

capital expenditures were $15.5 million;

•

the Company sold one FSV and two supply vessels previously retired and removed from service, one FSV, one supply vessel, one ERRV and other equipment for net proceeds of $2.6 million ($2.5 million in cash and $0.1 million of previously received deposits) and received a $1.0 million deposit for the future sale of one specialty vessel;

•

construction reserve funds account transactions included withdrawals of $7.2 million; and

•

the Company made investments in and advances to, its 50% or less owned companies of $25.6 million for the new SEACOSCO joint venture.

Financing Activities

During the Current Six Months, net cash used in financing activities was $11.4 million. The Company:

•

made scheduled payments on long-term debt and offer obligations of $8.1 million;

•

purchased subsidiary shares from a joint venture in which it had a noncontrolling interest for $3.4 million; and

•

issued Common Stock for proceeds of $0.1 million.

During the Prior Six Months, net cash provided by financing activities was $39.9 million. The Company:

•

borrowed $10.0 million under the Revolving Loan Facility of FGUSA;

•

paid $15.0 million in debtor-in-possession obligations assumed from MOI.;

•

converted €6.0 million of denominated debt into pound sterling debt, paying $7.5 million in euro debt and borrowing $8.5 million in pound sterling debt, resulting in a net increase in USD borrowings of $1.0 million;

•

made scheduled payments on long-term debt and capital lease obligations of $12.7 million;

•

issued Common Stock for proceeds of $43.0 million in a private placement; and

•

issued Warrants to purchase Common Stock for proceeds of $12.8 million in a private placement.

Short and Long-Term Liquidity Requirements

The Company believes that a combination of cash balances on hand, construction reserve funds, cash generated from operating activities, availability under existing subsidiary financing arrangements and access to the credit and capital markets will provide sufficient liquidity to meet its obligations, including to support its capital expenditures program, working capital and debt service requirements. The Company continually evaluates possible acquisitions and dispositions of certain businesses and assets. The Company’s sources of liquidity may be impacted by the general condition of the markets in which it operates and the broader economy as a whole, which may limit its access to the credit and capital markets on acceptable terms. Management will continue to closely monitor the Company’s performance and liquidity, as well as the credit and capital markets.

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Off-Balance Sheet Arrangements

For a discussion of the Company’s off-balance sheet arrangements, refer to Liquidity and Capital Resources included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. There has been no material change in the Company’s off-balance sheet arrangements during the six months ended June 30, 2019.

Debt Securities and Credit Agreements

For a discussion of the Company’s debt securities and credit agreements, see “Note 4. Long-Term Debt” in the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and in “Note 7. Long-Term Debt” in the Company's audited consolidated financial statements included in its Annual Report on Form 10-K.

Contractual Obligations and Commercial Commitments

For a discussion of the Company’s contractual obligations and commercial commitments, refer to Liquidity and Capital Resources included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. There has been no material change in the Company’s contractual obligations and commercial commitments other than the adoption of ASC 842 during the six months ended June 30, 2019, see “Note 1. Basis of Presentation and Accounting Policies” and “Note 10. Stockholder Equity” in the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Contingencies

As of June 30, 2019, SEACOR Holdings has guaranteed $32.1 million on behalf of the Company for various obligations including: performance obligations under sale-leaseback arrangements and invoiced amounts for funding deficits under the MNOPF. Pursuant to a Distribution Agreement with SEACOR Holdings, SEACOR Holdings charges the Company a fee of 0.5% per annum on outstanding guaranteed amounts, which declines as the obligations are settled by the Company.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company’s exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. There has been no material change in the Company’s exposure to market risk during the Current Six Months.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure 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 June 30, 2019. 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 June 30, 2019.

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The Company’s disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosures. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effective can provide only a level of reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting

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 quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

For a description of developments with respect to pending legal proceedings described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, see “Note 11. Commitments and Contingencies” included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q.

ITEM 1A.

RISK FACTORS

For a discussion of the Company’s risk factors, refer to “Risk Factors” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes in the Company’s risk factors during the Current Six Months.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a), (b) On May 28, 2019, CME exercised 380,000 Warrants and paid an aggregate cash exercise price of $0.01 per share to purchase a total of 380,000 shares of Common Stock (the “CME Warrant Exercise”). Following the CME Warrant Exercise, CME holds Warrants to purchase 255,307 shares of Common Stock at an exercise price of $0.01 per share. The Common Stock issued in the CME Warrant Exercise was issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.

On June 14, 2019, Carlyle exercised 64,440 Warrants to purchase a total of 64,391 shares of Common Stock after giving effect to the withholding of 49 shares of Common Stock as payment for the exercise price of the Warrants (the “Carlyle Warrant Exercise”). Following the Carlyle Warrant Exercise, Carlyle holds Warrants to purchase 1,571,659 shares of Common Stock at an exercise price of $0.01 per share. The Common Stock issued in the Carlyle Warrant Exercise was issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.

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

Total Number of

Shares Withheld⁽¹⁾

Average Price per

Total Number of

Shares Purchased

as Part of a Publicly

Announced Plan

Maximum Number

of Shares that may

be Purchased Under

the Plan

April 1, 2019 to June 30, 2019

13.89

—

(1)

(i) For the month ended May 31, 2019, the Company acquired for treasury 36 shares of Common Stock for an aggregate purchase price of $502 from its employees to cover their tax withholding obligations upon the lapsing of restrictions on share awards, and such shares were purchased in accordance with the terms of the Company’s 2017 Equity Incentive Plan and (ii) for the month ended June 30, 2019, the Company acquired 49 shares of Common Stock for an aggregate purchase price of $678.16 from Carlyle to satisfy the exercise price of the Warrants exercised in the Carlyle Warrant Exercise.

ITEM 3.

DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5.

OTHER INFORMATION

SEACOR Marine Foreign Holdings Credit Agreement Amendment

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ITEM 6.

EXHIBITS

10.1		Third Amended and Restated Certificate of Incorporation of SEACOR Marine Holdings Inc., dated June 11, 2019.

10.2		Separation and Consulting Agreement, dated July 12, 2019, by and between Robert Clemons and SEACOR Marine Holdings Inc.

10.3		Amendment No. 1 to Credit Agreement and Parent Guaranty, dated as of August 6, 2019, by and among SEACOR Marine Foreign Holdings Inc., SEACOR Marine Holdings Inc., DNB Bank ASA, New York Branch, DNB Markets Inc., Clifford Capital Pte. Ltd, NIBC Bank N.V. and entities identified on schedules to the Amendment No. 1.

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		Certification by the Principal Executive Officer and Chief 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.

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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 Marine Holdings Inc. (Registrant)

DATE:	August 7, 2019	By:	/s/ John Gellert
			John Gellert, President, Chief Executive Officer (Principal Executive Officer)

DATE:	August 7, 2019	By:	/s/ Jesús Llorca
			Jesús Llorca, Executive Vice President and Chief Financial Officer (Principal Financial Officer)
DATE:	August 7, 2019	By:	/s/ Gregory S. Rossmiller
			Gregory S. Rossmiller, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

SEACOR Marine - 10-Q quarterly report FY2019 Q2

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