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Marine Log

April 24, 2008

AHTS drydockings hit Seacor earnings

Seacor Holdings Inc. (NYSE:CKH) reports that operating income from its offshore marine services activities fell by $10.2 million in the first quarter, mainly due to the start of regulatory repairs and upgrades of its large AHTS vessels.

Overall, the company reported net income for the first quarter ended March 31, 2008 of $37.9 million, or $1.50 per diluted share, on operating revenues of $354.5 million. For the quarter ended March 31, 2007, net income was $38.2 million, or $1.40 per diluted share, on operating revenues of $310.8 million. For the preceding quarter ended December 31, 2007, net income was $67.9 million, or $2.62 per diluted share, on operating revenues of $363.1 million. Comparison of results for the first quarter ended March 31, 2008 with the preceding quarter ended December 31, 2007 is included in the discussion below.

Offshore Marine Services -- Operating income in the first quarter was $40.6 million on operating revenues of $154.6 million compared with operating income of $66.1 million on operating revenues of $170.4 million in the preceding quarter. First quarter results included $7.1 million in gains on asset dispositions compared with $22.5 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $10.2 million lower than in the preceding quarter. The decrease was primarily due to the start of the regulatory repair and upgrade program of the company's large AHTS vessels scheduled for the first half of the year. In the first quarter, this resulted in 87 days of out-of-service time as well as the costs of repairs. In addition, five vessels mobilized between geographic regions incurring mobilization expenses and off-hire time.

The number of days available for charter in the first quarter decreased by 648 or 3.8% as a result of a net decrease in fleet count and a shorter quarter. Overall utilization increased from 75.8% to 76.7% and overall average day rates were lower at $11,783 per day compared with $12,262 per day in the preceding quarter.

One supply vessel and one fast support vessel were delivered in the first quarter and both were mobilizing to term contracts internationally at the end of the quarter. The fast support vessel is the first of the company's new Crewzer class, the Seacor Cheetah.

Marine Transportation Services -- Marine Transportation Services reported operating income in the first quarter of $6.9 million on operating revenues of $29.0 million, compared with an operating loss of $6.5 million on operating revenues of $31.8 million in the preceding quarter.

Operating results were positively impacted by a one-time payment of $1.5 million related to the early termination of a charter party agreement and fewer out-of-service days for regulatory drydockings. In addition, the Seabulk Power and Seabulk Magnachem completed contracts to transport grain under the World Food Program in the first quarter and were subsequently sold for scrapping. Gains of $3.6 million realized from the sales of these vessels were partially offset by net voyage expenses of $0.6 million.

The Seabulk America, operating under a contract of affreightment, reported an operating loss of $0.8 million in the quarter as a result of a reduction in cargo volumes from the Gulf of Mexico to the West Coast. The Seabulk Challenge reported an operating loss of $2.3 million due to being off-hire for 21 days while undergoing repairs.

Inland River Services -- Operating income in the first quarter was $8.0 million on operating revenues of $30.1 million compared with operating income of $34.4 million on operating revenues of $33.9 million in the preceding quarter. First quarter results included $0.7 million in gains on asset dispositions compared with $22.7 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $4.4 million lower in the first quarter primarily due to lower spot rates for grain and non-grain cargoes, unfavorable operating conditions and higher operating costs. Early in the quarter, activity in the upper river systems was restricted by ice and later in the quarter, heavy rainfall in the Midwest created high water conditions and restrictions throughout the entire river system.

Aviation Services -- Operating income in the first quarter was $1.9 million on operating revenues of $53.8 million compared with operating income of $2.0 million on operating revenues of $51.3 million in the preceding quarter. First quarter results included $0.4 million in gains on asset dispositions compared to $2.0 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $1.5 million higher in the first quarter primarily due to improved performance of the air medical services business. Operating expenses in the Gulf of Mexico were higher primarily due to the timing of fleet repairs and maintenance, partially offset by additional hurricane related insurance recoveries.

Environmental Services -- Operating income in the first quarter was $4.8 million on operating revenues of $42.5 million compared with operating income of $10.0 million on operating revenues of $55.9 million in the preceding quarter. The decrease in operating income was largely due to a reduction in spill response activity compared with the preceding quarter.

Other -- During the first quarter, Seacor's commodity merchandising group, which focuses on renewable fuels and rice, contributed operating income of $1.2 million on operating revenues of $28.7 million compared with an operating loss of $0.9 million on operating revenues of $6.3 million in the preceding quarter. Operating income from Harbor and Offshore Towing Services in the first quarter was $1.1 million on operating revenues of $16.3 million compared with operating income of $1.8 million on operating revenues of $13.5 million in the preceding quarter. Operating results in the first quarter were affected by higher drydocking and fuel costs and the cost of providing third-party equipment to support the start-up of a new terminal operation in St. Eustatius.

Derivatives -- Derivative gains were $6.5 million in the first quarter compared with gains of $5.7 million in the preceding quarter.

Foreign Currencies -- Foreign currency gains of $2.6 million in the current quarter were primarily due to the translation of certain Euro denominated investments.

Marketable Securities -- Marketable security losses were $5.7 million in the first quarter compared with losses of $1.2 million in the preceding quarter.

Equity in Earnings of 50% or Less Owned Companies -- Equity in earnings from joint ventures was $4.6 million in the first quarter compared with equity in earnings of $8.6 million in the preceding quarter. During the first quarter, the company realized a gain of $1.9 million, net of tax, arising from the sale of a vessel in one of its offshore marine services joint ventures. During the preceding quarter, the company disposed of its interest in certain South American offshore marine services joint ventures, resulting in earnings of $5.0 million, net of tax.

Stock and Debt Repurchases -- The company also announced today that its Board of Directors has increased its authorization for repurchases of Seacor's common stock and its 2.875% convertible senior debentures due 2024 by $70.9 million for a total authorized expenditure of up to $150 million for the purchase of such securities. In addition, Seacor may purchase, separate from such authorization, any or all of its 7.2% senior notes due 2009, its 5 7/8% senior notes due 2012, and the 9 1/2% senior notes due 2013 of Seabulk International, Inc., a wholly-owned subsidiary. The repurchase of securities may be conducted from time to time through open market purchases, privately negotiated transactions or otherwise depending on market conditions.

During the first quarter, the company purchased 545,400 shares of its common stock at an average price of $84.16 per share. At the end of the quarter, 22,222,989 shares of Seacor's common stock remained outstanding.

Capital Commitments -- The company's unfunded capital commitments as of March 31, 2008, consisted primarily of marine service vessels, harbor tugs, helicopters, and barges and totaled $410.5 million, of which $273.5 million is payable during the remainder of 2008 and the balance payable through 2010. Of these commitments, approximately $65.1 million may be terminated without further liability other than the payment of liquidated damages of $5.2 million in the aggregate. As of March 31, 2008, the company held balances of Cash, Cash Equivalents, Restricted Cash, Securities, Construction Reserve Funds and Title XI Reserve Funds totaling $973.3 million.


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