ITEM 1. BUSINESS
GENERAL
Tidewater Inc. (the "Company") was incorporated in Delaware in 1956. The Company's principal executive offices are located at 1440 Canal Street, New Orleans, Louisiana 70112, and its telephone number is (504) 568-1010. Unless otherwise required by the context, the term "Company" as used herein refers to Tidewater Inc. and its consolidated subsidiaries.
The Company's two principal divisions are Tidewater Marine and Tidewater Compression. Tidewater Marine principally provides support services to the international offshore petroleum industry. Tidewater Compression principally provides natural gas and air compression equipment and services, primarily to the oil and gas and petrochemical industries.
The Company pioneered the offshore marine services industry in the mid-1950's with the construction of the first forward pilothouse vessels designed exclusively for use in the support of the offshore oil and gas industry. Operating in all major offshore exploration and production areas of the world, Tidewater Marine principally offers support services for the entire cycle of the offshore exploration and production process, including: towing and anchor handling of mobile drilling rigs and equipment; transporting supplies necessary to sustain drilling, workover and production activities; and supporting offshore pipelaying and construction activities. At March 31, 1994, approximately 35% of Tidewater Marine's vessels operated in the U.S. Gulf of Mexico and off the East and West Coasts of the United States. The remainder of Tidewater Marine's fleet operated internationally in areas such as offshore Australia, Brazil, Egypt, India, Indonesia, Malaysia, Mexico, New Zealand, Taiwan, Trinidad, Venezuela, and West Africa and in the North Sea and the Persian Gulf.
On January 15, 1992, the Company significantly expanded its marine equipment operations through the acquisition of Zapata Gulf Marine Corporation ("Zapata Gulf") pursuant to a merger of a wholly-owned subsidiary of the Company into Zapata Gulf (the "Zapata Gulf Merger"). The Zapata Gulf Merger was completed pursuant to an Agreement and Plan of Merger dated June 19, 1991 between the Company, Zapata Gulf, and each of the shareholders of Zapata Gulf. On the date of the Zapata Gulf Merger, the shareholders of Zapata Gulf received 23,786,000 shares of the Company's common stock in exchange for all of the issued and outstanding capital stock of Zapata Gulf. Information concerning the Zapata Gulf Merger appears in Note 1 to the Consolidated Financial Statements included herein.
Tidewater Compression is one of the leading suppliers of compression services in the United States. Tidewater Compression provides, mainly on a rental basis, natural gas and air compression equipment and services for a variety of applications, including all phases of
natural gas and oil production. Natural gas compressor demand is more closely related to the number of producing natural gas wells than to the level of natural gas exploration. Air compression units are used in a variety of industries, including petrochemical, refining, pulp/paper, pipeline, and electronics, as well as in oil and gas production. Tidewater Compression also provides the international energy industry with a broad range of engineered products and technical services used primarily in natural gas processing and the production, enhanced recovery, and transmission of natural gas.
Information concerning revenues, operating profits and assets for each of the Company's business segments and the geographic distribution of its operations is set forth in Item 7 of this report.
TIDEWATER MARINE
Tidewater Marine is the world's largest provider of offshore supply vessels and marine support services. With a fleet of approximately 600 vessels, Tidewater Marine operates, and has a leading market share, in most of the world's significant oil and gas exploration and production markets. Tidewater Marine provides services supporting all phases of offshore exploration, development and production, including: towing of and anchor-handling of mobile drilling rigs and equipment; transporting supplies and personnel necessary to sustain drilling, workover and production activities; and supporting pipelaying and other offshore construction activities.
United States Operations. The Company's domestic activities are primarily conducted in the U.S. Gulf of Mexico. In addition, the Company has vessels on the East and West Coasts of the United States, including Alaska. For information concerning revenues derived from domestic marine operations, see "Marine Segment" in Item 7 of this report.
Foreign Operations. The Company's principal areas of foreign marine equipment operations, which are primarily conducted through wholly-owned subsidiaries, currently include areas offshore Brazil, Egypt, India, Indonesia, Malaysia, Mexico, Taiwan, Trinidad, Venezuela, and West Africa and in the North Sea and the Persian Gulf. In addition, the Company conducts marine equipment operations in Abu Dhabi, Australia, Brunei, Egypt, Malaysia, Mexico, New Zealand, Nigeria, Saudi Arabia and Venezuela through joint ventures. For information concerning revenues derived from foreign marine operations, see "Marine Segment" in Item 7 of this report.
The Company's foreign marine equipment operations are subject to the usual risks inherent in doing business in foreign countries. Such risks include political changes, possible vessel seizure, company nationalization or other governmental actions, currency restrictions and revaluations, and import/export restrictions, all of which are beyond the control of the Company. Although it is impossible to predict the likelihood of such occurrences or their effect on the Company, the Company believes these risks to be within acceptable limits, and,
in view of the mobile nature of the Company's principal revenue producing assets, does not consider them to constitute a factor materially adverse to the conduct of its foreign marine equipment operations as a whole.
Marine Services Equipment. Tables comparing the number of vessels in the Company's marine fleet by class and geographic distribution appear under "Marine Segment" in Item 7 of this report.
Towing-Supply and Supply Vessels. The Company charters its towing-supply and supply vessels to customers for use principally in transporting supplies and equipment from shore bases to offshore drilling rigs, platforms and other installations. Towing-supply vessels (from 180 to 218 feet in length and up to 8,000 horsepower) and supply vessels (from 165 to 194 feet in length) carry drill pipe, drilling mud, drilling water, fuel and miscellaneous equipment to offshore locations. In addition, vessels of the towing- supply class are equipped for and are capable of towing drilling rigs and other marine equipment and setting anchors for positioning and mooring drilling rigs.
Crew and Utility Vessels. Crew and utility vessels are chartered to customers for use principally in transporting supplies and personnel from shore bases to offshore drilling rigs, platforms and other installations. Crewboats (25 to 120 feet in length) transport personnel, food and supplies, while utility vessels (100 to 120 feet in length) perform a variety of oilfield support functions.
Offshore Tugs. Offshore tugs are engaged in towing floating drilling rigs to and from drilling locations in the Gulf of Mexico and foreign operating areas. Offshore tugs also dock tankers, tow barges, including Company barges, and assist pipelaying and construction barges. Additionally, the Company's offshore tugs are used in a variety of other commercial towing operations, including towing barges carrying bulk cargo, rail cars, and containerized cargo. The Company generally operates such tugs with its own personnel and charges for their operation primarily on an hourly or daily basis.
Other Vessels. The Company's other vessels include inshore tugs and both inshore and offshore barges, production, line- handling, and various special purpose vessels. Inshore tugs, which are operated principally within inland waters, tow drilling rigs to and from their locations, tow barges carrying equipment and materials for use principally in inland water drilling and production operations. Inshore towing vessels are generally operated by the Company's personnel and the Company charges for these operations primarily on a daily or hourly basis. Barges are either used in conjunction with Company tugs or are bareboat chartered to others.
Recent Vessel Acquisitions. In fiscal 1994, the Company acquired 5 used vessels, including 2 towing supply vessels, 1 crewboat, and 2 other vessels.
Contributions of Main Classes of Vessels. Of the Company's revenues from marine vessel equipment operations, the following percentages were contributed by the main classes of vessels:
Risks of Operation and Insurance. The operation of any marine equipment involves an inherent risk of catastrophic marine disaster, adverse weather conditions, mechanical failure, collisions, property losses to the vessel and business interruption due to political action in foreign countries. Any such event may result in a reduction in revenues or increased costs. The Company's vessels are insured for estimated market value against damage or loss, including war and pollution risks. The Company also carries workers compensation, maritime employer's liability, general liability (including third party pollution), and other insurance customary in the industry.
Competition and Customers. The principal competitive factors for the offshore vessel service industry are suitability and availability of equipment, price, and service. The Company has numerous competitors in virtually all areas in which it operates. Certain customers of the Company own and operate vessels to service certain of their offshore activities.
Although one customer accounted for 6% and the five largest customers accounted for approximately 24% of its marine revenues during the year ended March 31, 1994, the Company does not consider its marine operations dependent on any single customer.
Contractual arrangements with customers vary widely depending on the type of vessel and on the needs of the customer.
Government Regulations. The Company's vessels are subject to various statutes and regulations governing their operation and maintenance.
Under the Merchant Marine Act of 1936 and the Shipping Act, 1916, if persons other than U.S. citizens should in the aggregate own in excess of 25% of the Company's outstanding stock, the Company would lose the privilege of engaging in the transportation of passengers or merchandise in U.S. coastwise trade.
Through an amendment to its Restated Certificate of Incorporation, the Company has instituted a dual stock certificate system to prevent non-U.S. citizens from owning more than 25% of the outstanding shares of the Company's common stock. In addition, the Company's
Restated Certificate of Incorporation provides that any transfer or purported transfer of shares of the Company's common stock that would result in the ownership by non-U.S. citizens of more than 24% of the then outstanding common stock will not be effective against the Company except for purposes of effecting certain remedies. Based on information supplied to the Company by its transfer agent, approximately 10.1% of the Company's common stock outstanding was owned by non-citizens as of May 2, 1994.
At March 31, 1994, 187 vessels wholly owned by the Company were registered under flags other than the United States. In addition, all of the Company's 43 joint venture owned vessels were registered under non-U.S. flags at March 31, 1994. The laws of the United States provide that once a vessel is registered under a flag other than the United States, it cannot thereafter engage in U.S. coastwise trade. Therefore, the Company's non-U.S. flag vessels must continue to be operated abroad, and if the Company were not able to secure charters abroad for them, and work would otherwise have been available for them in the United States, its operations would be adversely affected.
All of the Company's offshore vessels are subject to international safety and classification standards. U.S. flag towing- supply and supply vessels are required to undergo periodic inspections and to be recertified under drydock examination at least twice every five years. Non-U.S. flag vessels are also subject to various similar regulations.
TIDEWATER COMPRESSION
Tidewater Compression provides natural gas and air compression equipment and services principally to the energy industry, primarily in the United States.
Gas Compression. The Company provides gas compressors to the oil and gas and petrochemical industries. The compressors are used primarily to boost the pressure of natural gas from the wellhead into gas gathering systems, into nearby gas processing plants, or into high pressure pipelines. Gas compression equipment and services offered by the Company are also used in the production of coalbed methane and in enhanced recovery projects such as fire-flooding, gas lift, or gas injection, with the objective of increasing the recovery of oil or condensate that can be recovered from a reservoir. Compressors are often rented rather than sold because the required compressor horsepower and stage configuration can change several times in the lifetime of a project. The primary market served is natural gas production activities in the United States, although the Company is actively seeking to establish markets outside the United States. A table setting forth utilization, rental rates, and fleet size of the Tidewater Compression gas rental fleet appears in "Compression Segment" in Item 7 of this report.
Air Compression. The Company sells and rents industrial and portable air compressors, coolers, dryers, vacuum pumps, and other related equipment to the oil and gas and petrochemical industries and to manufacturing and other concerns that use compressed air to
operate machinery, for instrumentation, and in manufacturing processes. A table setting forth utilization, rental rates, and fleet size of the Tidewater Compression air rental fleet appears in "Compression Segment" in Item 7 of this report.
Engineered Products. The Company's compression operations include a fabrication facility at which the Company designs and fabricates gas and air compression packages for sale. The highly-specialized compression packages consist of skid-mounted compressors designed to meet complex customer specifications for specialized applications.
Distributorships. The Company holds distributorships for various manufacturers of air and gas compressors, related equipment and a wide range of accessories. These manufacturers are the source for equipment and accessories sold by the Company.
Competition and Customers. The compression equipment market is highly competitive, with the principal competitive factors being price, service, and availability. The Company competes with a large number of companies, some of which have larger compression operations than the Company.
Although one customer accounted for 6% and the five largest customers accounted for approximately 14% of its compression revenues during the year ended March 31, 1994, the Company does not consider itself dependent on any one customer.
OTHER OPERATIONS
Shipyards. Quality Shipyards, Inc., a wholly-owned subsidiary of the Company, operates two shipyards in Houma, Louisiana, which build, repair, modify, and drydock vessels. Approximately 49% of the shipyards' business for the year ended March 31, 1994 related to repairs, modifications, and drydockings of the Company's vessels. The results of shipyard operations are included in marine equipment operations.
DISCONTINUED OPERATIONS
On March 31, 1993, a 70%-owned subsidiary of the Company, Marine Transportation Services Sea-Barge Group, Inc. ("Sea-Barge") sold substantially all of its assets and liabilities to Sea-Barge, Inc., an entity controlled by the Company's joint venture partner, S.E.L. Maduro (Florida), Inc. Prior to the sale, Sea-Barge provided ocean transportation services of containers with cargo principally using tugs and barges owned by the Company between the continental United States and Puerto Rico and countries in the Caribbean basin. Since the sale, Sea-Barge, Inc. has continued to use tugs and barges furnished by the Company. See Note 2 of the Notes to Consolidated Financial Statements included in this report.
SEASONALITY
Tidewater Marine generally has its highest utilization rates in the warmer weather months when the weather is more favorable for offshore exploration, development and construction work. Tidewater Compression generally has its best results in the winter months when natural gas is in greater demand. However, business volume for both Tidewater Marine and Tidewater Compression is more dependent on oil and gas prices and the global supply and demand conditions for the Company's services than any seasonal variation.
EMPLOYEES
As of March 31, 1994, the Company had approximately 6,900 employees. The Company considers relations with employees to be satisfactory. The Company is not a party to any union contracts in the United States but through several subsidiaries is a party to union agreements covering local nationals in several foreign countries.
ITEM 2.
ITEM 2. PROPERTIES
MARINE SERVICES
At March 31, 1994, there were 594 vessels in the Company's marine fleet, including vessels operated by joint ventures in which the Company is a participant, of which 38 vessels were leased under operating and capitalized leases and the remaining vessels were owned. The Company's marine operations are conducted worldwide. The Company's vessels regularly and routinely move from one operating area to another, often to and from offshore operating areas of different continents. At March 31, 1994, approximately 35% of the Company's vessels operated in the U.S. Gulf of Mexico and off the East and West Coasts of the United States, including Alaska. The remainder of the Company's marine fleet operated internationally. For a description of the Company's marine vessels, see "Tidewater Marine" in Item 1 of this report.
COMPRESSION SERVICES
At March 31, 1994, the gas compression rental fleet of the Company was comprised of 988 units ranging from 25 to 2,250 horsepower and the air compression fleet consisted of 126 units ranging from 900 to 2,400 cubic feet per minute. These units are available for employment on an international basis, but are primarily rented only in the United States. At March 31, 1994, the Company owned all such units, except for 14 units that were leased under capitalized leases. For a description of the Company's compression fleet, see "Tidewater Compression" in Item 1 of this report.
REAL ESTATE
The Company's shipyard operations are conducted in Houma, Louisiana and include approximately 189 acres of land owned by the Company, of which about 44 acres are developed. The Company's Compression division is headquartered in Houston, Texas and is situated on an approximately 30-acre industrial site owned by the Company, of which about 13 acres are developed. The Company owns or leases various other properties incidental to its operations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
During the ordinary course of business, the company's operations are subject to a wide variety of environmental laws and regulations. The company attempts to comply with these laws and regulations in order to avoid costly accidents and related damage. The company is currently involved in litigation with the Environmental Protection Agency (EPA) concerning the legal disposal of oilfield wastes from drilling sites it previously operated, as well as from the disposal of other fluids used in the marine operations.
In August of 1989, the EPA notified a subsidiary of the company, Hilliard Oil and Gas, Inc. ("Hilliard"), that it was a PRP for cleanup costs at a National Priorities List site. EPA later nominated Hilliard a de minimis participant for this site, i.e., EPA determined that Hilliard's involvement in the site was minimal, and that the toxicity and amount of substance contributed by Hilliard was minimal in comparison to the other hazardous substances found at the site. EPA alleges that residue from trucks transporting Hilliard's saltwater (a non-hazardous substance) to a third party site, was subsequently washed out of the trucks' tanks at the subject site, thus making Hilliard a PRP for cleanup of the subject site. Hilliard believes that this is an insufficient nexus to establish liability, and has chosen to challenge EPA on this theory. Based upon the facts as Hilliard currently understands them, it is the company's belief that the ultimate resolution of this litigation will not have a material adverse effect on the company's financial position.
In 1983, the United States Environmental Protection Agency (the "EPA") notified two subsidiaries of the Company, Zapata Gulf Marine Operators, Inc. ("Zapata Gulf") and Gulf Fleet Supply Vessels, Inc. ("Gulf Fleet") that they were potentially responsible parties ("PRPs") for cleanup costs at the Western Sand and Gravel site in Rhode Island. Zapata Gulf and Gulf Fleet are among 53 PRPs. At this time, Tidewater does not believe that the potential liability of Zapata Gulf and Gulf Fleet associated with these sites would be materially adverse to Tidewater's financial condition.
The Company is not a party to any other litigation which, in the opinion of management, is likely to have a material adverse effect on the Company's financial position or results of operations.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 1994.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
In addition to its executive officers, the officers of the Company also include the following:
There are no family relationships between the officers of the Company, except that Cliffe F. Laborde and J. Peter Laborde, Jr. are the sons of John P. Laborde. The Company's officers are elected annually by the Board of Directors and serve for one-year terms or until their successors are elected. The following describes the business experience of the Company's officers.
John P. Laborde - Chief Executive Officer and Chairman of the Board of Directors since 1956. President of the Company from 1956 to 1981 and since June 1988.
Richard M. Currence - Elected Executive Vice President in March 1992 and prior thereto served as Senior Vice President since 1986. Mr. Currence joined the Company in 1966 and had a break in service from 1973 to 1985.
Ken C. Tamblyn - Elected Executive Vice President in March 1992 and prior thereto served as Senior Vice President since 1986. Mr. Tamblyn joined the Company in March 1986.
William C. Hightower - Elected Senior Vice President in June 1992 and prior thereto served as Vice President since February 1985. Mr. Hightower joined the Company in 1975.
Victor I. Koock - Elected Senior Vice President in October 1986, elected Secretary in February 1986, and appointed General Counsel in 1984. Mr. Koock joined the Company in 1968.
Cliffe F. Laborde - Joined the Company in January 1992 as a Senior Vice President and Co-General Counsel. Mr. Cliffe F. Laborde was previously a shareholder in Gelpi, Sullivan, Carroll & Laborde, a professional law corporation, from 1979 through 1992.
Stephen A. Snider - Joined the Company in September 1991 as a Senior Vice President. Prior thereto Mr. Snider joined the Company in 1975 and had a break in service from 1983 to 1991. During his break in service, Mr. Snider owned and operated Learning Associates, Inc.
Michael L. Goldblatt - Elected Vice President in October 1992 and prior thereto served as Associate General Counsel and Assistant Secretary since March 1986. Mr. Goldblatt joined the Company in 1974 and had breaks in service from 1974 to 1976 and 1984 to 1986.
J. Keith Lousteau - Elected Vice President in 1985 and elected Treasurer in 1987. Mr. Lousteau joined the Company in 1977.
Thomas E. Hartford - Elected Vice President in April 1994. Mr. Hartford joined the company in 1982.
Gary D. Pope - Elected Vice President of the Company in January 1992. Prior thereto he was employed by Zapata Gulf Marine Corporation where he served as Vice President since 1984.
Larry T. Rigdon - Elected Vice President of the Company in January 1992. Prior thereto he was employed by Zapata Gulf Marine Corporation where he served as Vice President since 1984.
Robert D. Ryan - Elected Vice President in April 1994. Mr. Ryan joined the Company in 1980.
Joseph C. Sarne - Elected Vice President of the Company in January 1992. Prior thereto he was employed by Zapata Gulf Marine Corporation where he served as Executive Vice President since 1984.
Joseph M. Bennett - Joined the Company in 1990. He was elected to the office of Controller in May 1992. Mr. Bennett was previously employed by KPMG Peat Marwick from January 1978 through March 1990.
Alvin A. Arcemont - Elected Vice President in April 1990. Mr. Arcemont joined the Company in 1972.
Van C. DeWitt - Elected Vice President in October 1993. Mr. DeWitt joined the Company in 1987.
Stephen W. Dick - Elected Vice President in April 1990. Mr. Dick has been Manager of the Company's towing division since 1985. Mr. Dick joined the Company in 1971 and had a break in service from 1983 to 1985.
Peter F. Fortier - Elected Vice President in October 1993. Mr. Fortier joined the Company in 1980.
J. Peter Laborde, Jr. - Elected Vice President in October 1993. Mr. Laborde joined the Company in 1980.
Dean E. Taylor - Elected Vice President in 1991. Mr. Taylor joined the Company in 1978.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the symbol TDW. At March 31, 1994, there were approximately 2,600 record holders of the Company's common stock, based upon the record holder list maintained by the Company's stock transfer agent. The following table sets forth the high and low closing sales price of the Company's common stock as reported on the New York Stock Exchange Composite Tape and the amount of cash dividends per share declared on the common stock for the periods indicated.
The payment of dividends on common and preferred stock are subject to limitations under the Company's revolving credit and term loan agreement, although no preferred stock is currently outstanding. A further discussion of this matter is contained in Note 6 to the Consolidated Financial Statements included in this report.
As a result of the timing of the fiscal 1994 Board of Directors meetings, only three quarterly dividends of $.10 per common share each were declared during fiscal 1994.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of selected financial data for each of the last five fiscal years. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements of the Company included in this report.
Years Ended March 31 (in thousands, except ratio and per share amounts)
(1) See Note (2) of Notes to Consolidated Financial Statements for further information concerning the disposal of the Container Shipping segment. (2) For further details concerning the early debt retirement see Note (6) of Notes to Consolidated Financial Statements. (3) For further details concerning the accounting change see Note (7) of Notes to Consolidated Financial Statements. (4) As a result of the timing of the fiscal 1994 Board of Directors meetings, only three quarterly dividends of $.10 per common share each were declared during fiscal 1994.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements, the related disclosures and the selected financial data.
Fiscal 1994 earnings from continuing operations grew 30% and 40% above the fiscal 1993 and fiscal 1992 levels, respectively. The growth in earnings from continuing operations over the prior fiscal years is directly attributable to higher levels of utilization and day rates for the domestic-based vessel fleet which resulted from higher natural gas exploration and production activity in the U.S. Gulf of Mexico. Demand for offshore marine services in foreign markets throughout fiscal 1994 was generally weaker than in fiscal 1993 and fiscal 1992. Although the decline in demand for foreign offshore marine services appears to have stabilized, the future supply and price of oil are uncertain and could adversely impact demand and future operating results.
As had been the case in fiscal years 1993 and 1992, the Company's overall financial condition was again significantly improved during fiscal 1994 as a result of strong cash flows and the substantial reduction in long-term debt. With the early retirement of $51.1 million of long-term debt in September 1993 and the early redemption of the Company's convertible subordinated debentures in April 1994, Tidewater is essentially debt-free.
Even though the early debt retirements had an adverse impact on fiscal 1994 net earnings, future net earnings will benefit from lower interest costs. Improved financial condition over the past three fiscal years has and should continue to provide the necessary foundation to withstand cyclical fluctuations of the energy services industry.
LIQUIDITY AND CAPITAL RESOURCES
Selected financial ratios at March 31 are compared in the following table and illustrate the substantial improvement in financial condition achieved during fiscal 1994.
Fiscal 1994 operating activities generated a substantially higher level of cash than the corresponding amounts for fiscal 1993 and fiscal 1992. Marine operating margins primarily determine the overall level of net cash generated from operating activities. The following table compares operating margins for the Company's business segments.
Operating margin is defined as revenues less operating expenses, excluding depreciation.
Fluctuations in the level of Marine operating margins over the past three fiscal years were attributable primarily to increased levels of utilization and average day rates for the domestic-based vessel fleet from fiscal 1993 to fiscal 1994 and lower average day rates for the same vessel fleet from fiscal 1992 to fiscal 1993. Fiscal 1994 Compression operating margins were down slightly from fiscal 1993 due to an anticipated drop in sales of engineered products. For the past three fiscal years operating activities have generated cash in excess of the amount required to satisfy current obligations. Anticipated fiscal 1995 utilization levels and day/rental rates for the Marine vessel fleet and Compression rental equipment should maintain this condition.
Investing activities for fiscal 1994 consumed a slightly greater amount of cash compared with fiscal 1993. The principal components that determine the level of cash used in investing activities are additions to properties and equipment and proceeds from asset sales. The following tables compare these two items by business segment for the years ended March 31:
During fiscal 1994 the Marine segment added only 5 used vessels to the fleet consisting of 2 towing-supply vessels, a crewboat, an inland tug and an offshore barge whereas fiscal 1993 additions of 42 used vessels to the Marine fleet consisted of 10 towing-supply and supply vessels, 15 offshore tugs, 16 crew and utility vessels, and an offshore barge. Fiscal 1994 Compression additions consisted primarily of 191 gas compressors. Fiscal 1993 Compression additions included the purchase of several oil-free air compressors. Over the past several years expansion of the Marine vessel fleet and Compression rental fleet has come primarily from existing, excess industry supplies. Because current economic circumstances do not generate an adequate return on investment relative to the costs of new construction, major new construction of Marine vessels or Compression rental equipment is not anticipated during the next fiscal year.
Financing activities conducted during fiscal 1994 required a much higher level of cash than was consumed for fiscal years 1993 and 1992. The increase is primarily the result of higher principal payments on long-term debt. During fiscal 1994 approximately $57.6 million of available cash was used to retire, prior to maturity, $51.1 million of notes bearing interest rates ranging from 9.17% to 10%. The remainder of the cash used to retire the notes was for associated prepayment penalties. Fiscal 1994 principal payments also include approximately $9.0 million for termination of capitalized lease obligations and the related purchase of five marine vessels. Fiscal 1993 cash used in financing activities includes approximately $38.0 million of long-term debt retired prior to maturity of which approximately $3.0 million was used to redeem, at par value plus accrued interest, the 7-3/4% convertible subordinated debentures. Fiscal 1992 cash used in financing activities includes the January 15, 1992 retirement of approximately $86.5 million of Zapata Gulf indebtedness using available cash and $70.0 million in proceeds from borrowings under credit agreements.
On March 16, 1994 the Company called for redemption all of the approximately $47.2 million of 7% convertible subordinated debentures due 2010. Holders converted $1,113,000 of debentures into 44,520 shares of the Company's common stock at a conversion price of $25.00 per share. The remainder of the debentures were redeemed at 101.4% of par value plus accrued interest on April 18, 1994. An extraordinary charge to earnings of approximately $7.5 million (net of income taxes), or $.14 per common share, was recorded in the fourth quarter of fiscal 1994. The extraordinary charge consisted of $.6 million of prepayment premium and $11.0 million of unamortized original issue discount and deferred financing costs, less $4.1 million of income tax benefits.
A $60.0 million revolving credit and term loan agreement was expanded to $130.0 million during fiscal 1994 in order to provide additional resources to finance future cash needs.
Prior to fiscal 1993, dividend payments on common stock had been suspended since the first quarter of fiscal 1987. During fiscal 1993 dividends of $.075 per common share were declared and paid in each of the first three quarters and a $.10 per common share dividend was declared in the fourth quarter. Due to the timing of the meetings of the Board of Directors,
three quarterly dividends were declared in fiscal 1994, each at $.10 per common share. Continued dividend payments are subject to declaration by the Board of Directors and are subject to limitation by the Company's revolving credit and term loan agreement.
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," prescribes the accounting for the estimated costs of benefits provided to former or inactive employees after employment but before retirement. Because of the very limited nature of postemployment benefits offered to employees by the Company, the impact of Statement No. 112 is not material with respect to financial condition or results of operations.
In fiscal 1993 the Company adopted the methods of accounting for reinsuring of insurance contracts, for income taxes, and for postretirement benefits other than pensions prescribed by Statements of Financial Accounting Standards Nos. 113, 109, and 106, respectively. Adoption of Statement No. 113 resulted in the restatement of gross assets and gross liabilities for fiscal years prior to fiscal 1993. There was no cumulative effect of adopting Statement No. 109 and adoption of Statement No. 106 resulted in a cumulative charge to earnings, net of income taxes, of $6.6 million.
RESULTS OF OPERATIONS
Revenues, operating profits and certain other information by business segment and geographic distribution for the years ended March 31 are:
(A) Marine equipment operations are conducted worldwide with assets that are highly mobile. Revenues and identifiable assets attributable to these operations in any one country are not "significant" as that term is defined by Financial Accounting Standards No. 14. Further, most identifiable assets in each country are comprised of offshore service vessels, which regularly and routinely move from one operating area to another, often to and from offshore operating areas of different continents. Equity in net assets of foreign subsidiaries is $192,038,000, $224,905,000, and $184,228,000 at March 31, 1994, 1993 and 1992, respectively. Other foreign identifiable assets include accounts receivable and other balances denominated in foreign currencies aggregating approximately $7,295,000, $8,837,000, $10,104,000 at March 31, 1994, 1993 and 1992, respectively. These amounts are subject to the usual risks of fluctuating exchange rates and government-imposed exchange controls.
Fiscal 1994 consolidated revenues and earnings from continuing operations before income taxes rose 9.7% and 43.5%, respectively, above the corresponding amounts for the prior fiscal year primarily because of higher utilization and substantially higher average vessel day rates for the domestic-based vessel fleet. Fiscal 1994 revenues and operating profits for the foreign- based vessel fleet reflect weaker demand in certain foreign markets resulting from uncertainties associated with the future supply and price of oil. Fiscal 1994 foreign operating profits also include a higher level of repair and maintenance costs resulting from the timing of vessel drydockings. Lower fiscal 1994 Compression revenues and operating profits compared with the corresponding amounts for the prior fiscal year are primarily the result of a lower level of engineered product sales. Fiscal 1994 Marine and Compression operating profits also include approximately $.3 million and $1.0 million, respectively, of severance costs associated with the early retirement of several employees.
Fiscal 1993 consolidated revenues fell 2% below the fiscal 1992 amount primarily because the market for energy-related services in fiscal 1993 was not as strong as in fiscal 1992. Increased domestic offshore activity in the third and fourth quarters of fiscal 1993 resulted from renewed interest in offshore drilling and exploration for natural gas in the U.S. Gulf of Mexico. Foreign offshore activity was fairly stable throughout fiscal 1993 although certain foreign markets experienced slight reductions. Fiscal 1993 earnings from continuing operations before income taxes fell below the prior year's amount principally due to lower demand for offshore marine services discussed above, significantly higher vessel insurance costs and a continued high level of repair and maintenance expense. General corporate expenses for fiscal 1993 were higher than in fiscal 1992 principally due to charges related to a new incentive plan, compensation expense associated with the restricted stock plan and additional costs from expanded legal, personnel and safety programs. Fiscal 1993 other income dropped significantly below the fiscal 1992 amount primarily as a result of considerably lower interest income, reflective of lower interest rates, and provisions booked relating to potential losses from the financial instability of certain reinsurance companies. Considerably lower fiscal 1993 interest expense compared with fiscal 1992 resulted from scheduled repayments and significant prepayments of long-term debt in fiscal 1993 and fiscal 1992.
Fiscal 1993 non-recurring charges totaling $3.8 million relate to an amendment of an employment and consulting agreement with the Company's chairman of the board, president and chief executive officer. For its benefit, the Company elected to amend the agreement in view of the possible changes to tax laws then under consideration by the Clinton administration and Congress. The amendment accelerated the vesting of all outstanding shares of restricted stock such that these shares became fully vested and freely transferable immediately. The original terms of the restricted stock shares included restrictions during the employment term of the agreement. Due to the acceleration of the vesting of the restricted stock shares on March 31, 1993, the remaining deferred compensation associated with the restricted stock of $2,850,000 was charged to other expense in the Consolidated Statements of Earnings in fiscal 1993.
The amendment also provided for an immediate lump-sum distribution of the present value of benefits under the Company's supplemental retirement plan, including the additional benefits that would have accrued assuming he remained employed by the Company through September 24, 1994. The lump sum distribution amounted to $2,212,000 and included $921,000 for unaccrued benefits which was charged to other expense in the Consolidated Statements of Earnings in fiscal 1993.
Fiscal 1992 consolidated revenues grew 6% over the preceding fiscal year. Earnings before income taxes for fiscal 1992 were below the preceding fiscal year's level due primarily to significant merger expenses and additional Marine operating costs, offset partially by a gain on settlement of litigation. The additional Marine operating costs consisted of a $5 million loss provision established to recognize estimated underinsured losses related to a Zapata Gulf insurance program which existed prior to fiscal 1992. Repair and maintenance costs were also higher in fiscal 1992 due to the scheduling of drydockings on certain vessels. Certain other vessels had their maintenance schedules accelerated to prepare them for new contracts.
Consolidated general and administrative expenses for the years ended March 31 consist of the following components:
General and administrative expenses in fiscal 1994 were approximately 7.9% higher than the preceding fiscal year due primarily to higher personnel costs, higher professional service costs, and higher insurance costs. Fiscal 1994 personnel costs include approximately $700,000 of severance payments to former Zapata Gulf employees in Nigeria and payments to settle former Zapata Gulf employee union claims in Nigeria. The remainder of the increase over fiscal 1993 is principally the result of higher incentive plan expenses. Fiscal 1994 professional service costs include approximately $600,000 of expenses associated with two secondary stock offerings. Higher fiscal 1994 insurance costs are primarily the result of higher premiums for worker's compensation and certain other liability coverages.
General and administrative expenses for fiscal 1993 fell 4.4% below the preceding year's amount due principally to savings resulting from the consolidation of worldwide marine operations following the fiscal 1992 merger with Zapata Gulf. Additions to the Company's legal and personnel staffs and new expanded safety programs during fiscal 1993 partially offset the merger savings.
MARINE SEGMENT
The Marine segment provides a diverse range of services and equipment to the offshore oil and gas industry. Because operating costs and depreciation do not change proportionally with changes in revenues, the amount of operating profit for the Marine segment is primarily determined by vessel fleet utilization and day rates.
Marine segment revenues for the years ended March 31 consist of the following:
(A) Revenues earned from the charter of equipment to the discontinued Container Shipping segment.
Marine fleet utilization is affected primarily by market conditions. It is also influenced to a lesser degree by drydockings to satisfy safety and inspection requirements. Marine vessels must undergo periodic inspections to remain properly classified and certified. These inspections, whenever possible, are done during seasonally slow periods to minimize the impact on vessel operations and are only done if the vessel is considered to have continuing economic viability. The following table compares day- based Marine fleet utilization percentages by vessel class and in total for the years ended March 31:
The domestic fleet is comprised of vessels operating in U.S. waters while the foreign fleet is comprised of vessels operating outside U.S. waters.
Marine vessel utilization for all periods presented reflects demand trends for offshore marine services. Higher fiscal 1994 utilization compared with fiscal 1993 and slightly higher fiscal 1993 utilization compared with fiscal 1992 of the domestic-based vessel fleet reflects increasing demand for offshore marine services in the U.S. Gulf of Mexico. Higher demand resulted from increased natural gas exploration and drilling activity which began late in the third quarter and continued through the fourth quarter of fiscal 1993 and throughout most of fiscal 1994. Towards the end of the fourth quarter of fiscal 1994, the normal seasonal slowdown of offshore activity caused a slight drop in utilization. However, utilization of the domestic-based vessel fleet should rebound in fiscal 1995 if the anticipated resumption of offshore activity occurs. Fiscal 1994 utilization of the foreign- based vessel fleet below the fiscal 1993 level results primarily from softening demand for offshore marine services in certain foreign markets, principally the West African market. Lower utilization of the foreign-
based vessel fleet in fiscal 1993 compared with fiscal 1992 resulted from a combination of a higher level of vessel drydockings and decreases in demand for offshore marine services in certain foreign areas.
Marine vessel day rates are primarily determined by the demand created through the level of offshore exploration, development and production spending by energy exploration and production companies. Suitability of equipment, the degree of service provided and the overall supply of marine service vessels also influence vessel day rates. The following table provides a comparison of average day rates by vessel class and in total for the years ended March 31:
The domestic fleet is comprised of vessels operating in U.S. waters while the foreign fleet is comprised of vessels operating outside U.S. waters.
In fiscal 1994 a higher average day rate for a larger domestic-based vessel fleet was the principal factor contributing to the growth in Marine revenues and operating profits. During fiscal 1994 average day rates for the domestic-based vessel fleet rose steadily in contrast to fiscal 1993 when average day rates for a smaller vessel fleet declined. The average day rate for the foreign-based vessel fleet for fiscal 1994, although higher than the fiscal 1993 average day rate, did not significantly change compared with the ending fiscal 1993 level. The fiscal 1994 increase in the average day rate for the foreign-based vessel fleet is primarily a result of a favorable shift in the mix of vessels working in certain foreign locations.
As the global supply of Marine service vessels continues to decline, prospects for higher average vessel day rates should improve. However, given the volatile nature of demand for offshore marine services any sustained improvement in vessel day rates is not assured.
The following table compares the average number of vessels by class and geographic distribution during the years ended March 31 and the actual March 31, 1994 vessel count:
Near the end of fiscal 1994 several vessels were withdrawn from active service because of their age and anticipated high repair and maintenance costs. Additional vessels in the Marine fleet may be withdrawn in the future as they become uneconomical to operate.
Oil and gas industry analysts predict that future spending for offshore exploration, development and production of natural gas in the U.S. Gulf of Mexico should continue to favorably affect demand for offshore marine services. Anticipated expenditures for offshore exploration, development and production activity in foreign markets is expected to continue declining for the first half of fiscal 1995 and then rebound to a level slightly below the current level of activity. Subject to certain regulatory restrictions, the Marine segment is able to
relocate vessels to markets which offer better opportunities. If future offshore activity in the U.S. Gulf of Mexico exceeds current forecasts, the Marine segment is well positioned to capitalize on any additional opportunities because it owns the majority of the vessels within the industry which are able to return to the U.S. Gulf of Mexico.
The following table compares major components of Marine operating costs and compares selected statistics for owned and chartered vessels:
(A) Costs incurred from the charter of equipment to the discontinued Container Shipping segment.
Changes in fleet size and utilization are the principal factors which cause fluctuations in the amount of crew costs. Higher fiscal 1994 crew costs compared with fiscal 1993 is principally the result of the higher activity level of the domestic-based vessel fleet, which generally has higher crewing costs than the foreign-based vessel fleet, and the addition of 19 vessels purchased on March 15, 1993. Higher activity for the domestic-based vessel fleet during the third and fourth quarters of fiscal 1993 is primarily responsible for the growth in fiscal 1993 crew costs above the fiscal 1992 level. The absence of significant new vessel construction within the energy services industry over the past 10 to 12 years has caused the average age of the Company's Marine vessel fleet to rise. Currently the average age of the Company's Marine vessel fleet is approximately 15 years. The increase in average age of the fleet combined with normal inflationary effects has, in turn, resulted in higher levels of repair and maintenance costs. Though primarily dictated by regulatory agencies, the scheduling of vessel drydockings affects the amount of repair and maintenance expense in any year. Vessel drydockings, whenever possible, are also done to minimize any impact on vessel revenues. Higher fiscal 1994 and fiscal 1993 insurance costs compared with the respective prior period are partially the result of a much tougher insurance market which is unwilling to provide past
levels of coverage at the same rates enjoyed in prior periods. In an effort to control future insurance costs, new and expanded vessel safety programs were added in fiscal 1993. These programs, while designed to maximize vessel safety and, in turn, control future insurance costs, cannot totally prevent future cost increases. Fiscal 1993 vessel insurance costs also include a $2.0 million provision to record estimated underinsured marine losses related to Zapata Gulf insurance programs. Lower mobilization costs were incurred in fiscal 1993 compared to fiscal 1992 as approximately the same number of vessels were moved, but over shorter distances. Other vessel costs for fiscal 1993 include approximately $2 million of write-offs which resulted from a comprehensive review of marine inventories and a significantly higher amount of broker commissions.
Gains on asset sales contributed $3.3 million, $2.9 million and $1.7 million for the fiscal years ended March 31, 1994, 1993 and 1992, respectively. Operating margins from brokered vessel and shipyard activities generally contribute nominally to Marine operating profits.
COMPRESSION SEGMENT
The Compression segment provides natural gas and air compression services and equipment for a variety of applications primarily in the oil and gas and petrochemical industries. It also designs, fabricates and installs engineered compressor systems. Compression segment operating profit is significantly affected by the mix of sales and rental revenues. Gross profit on sales are generally less than operating margins for rental revenues.
Compression segment revenues are compared in the following table on a dollar basis and as a percentage of total Compression revenues for the years ended March 31:
Gas compressor utilization is affected primarily by oil and natural gas storage levels and by the number and age of producing oil and gas wells which, in turn, are dependent upon the price level of oil and natural gas. Air compressor utilization is heavily dependent upon short-
term customer needs. Suitability, availability and rental rates for equipment are also major factors which affect utilization of both gas and air compression equipment. Gas compressor rentals are generally for a longer term than are air compressor rentals. The following table compares utilization, average rental rates and average fleet size for gas and air compressors for the years ended March 31:
Higher fiscal 1994 gas compressor utilization and higher average monthly rental rates are a direct result of greater demand for natural gas compressor services as a result of higher U.S. natural gas prices. Fiscal 1994 gas compressor rental revenues also rose as a result of a larger compression fleet. Fiscal 1993 gas compressor utilization and rental rates decreased below prior year levels primarily because weak U.S. natural gas prices depressed demand for natural gas compression services.
Fiscal 1994 air compression utilization and average daily rental rates fell below prior year levels due to weakened demand for air compression services. During fiscal 1994 the air compression market has generally suffered from stagnant demand and any significant near-term improvement is not anticipated.
Fluctuations in the level of revenues generated from equipment and parts sales over the past three fiscal years are primarily the result of changes in the sales volume of engineered products.
Operating costs of the Compression segment consist of the following:
Field operating expenses relate to gas and air compressor rental operations. Field operating expenses are generally consistent from period-to-period and usually vary in the short-term due to fluctuations in the level of repairs and maintenance expense. Long-term growth in field operating expenses will occur primarily as a result of increased fleet size and general inflationary factors. Costs of sales consist primarily of wages and benefits and material costs associated with the design, fabrication and installation of packaged compressor systems. Increases in costs of sales as a percentage of the related revenues over the past three years is primarily the result of reduced demand and, in turn, more competitive pricing.
Gain on sales of equipment over the past three years contributed $1.3 million, $1.4 million, and $.8 million for the fiscal years ended March 31, 1994, 1993 and 1992, respectively.
CURRENCY FLUCTUATIONS AND INFLATION
Because of its significant foreign operations, the Company is exposed to currency fluctuations and exchange risks. To minimize the financial impact of these items the Company attempts to contract a majority of its services in United States dollars.
Day-to-day operating costs are generally affected by inflation. However, because the energy services industry requires specialized goods and services, general economic inflationary trends may not affect the Company's operating costs. The major impact on operating costs is the level of offshore exploration and development spending by energy exploration and production companies. As this spending increases, prices of goods and services used by the oil and gas industry and the energy services industry will increase. Future improvements in
vessel day rates and compressor rental rates may buffer the Company from the inflationary effects on operating costs.
ENVIRONMENTAL MATTERS
During the ordinary course of business the Company's operations are subject to a wide variety of environmental laws and regulations. The Company attempts to comply with these laws and regulations in order to avoid costly accidents and related environmental damage. The Company is currently involved in litigation with the Environmental Protection Agency (EPA) concerning the disposal of oilfield wastes.
In 1983, the EPA notified two subsidiaries of the Company that they were among 53 potentially responsible parties (PRP's) for cleanup costs at the Western Sand and Gravel site in Rhode Island.
In 1989, the EPA notified another subsidiary of the Company that it was a PRP for cleanup costs at a National Priorities List site. EPA later nominated the subsidiary a de minimis participant for this site.
In the opinion of management, the ultimate liability with respect to these matters will not have a material adverse effect on the Company's financial position.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV of this report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS OF THE COMPANY
The Company's Restated Certificate of Incorporation and Bylaws (i) provide that the number of directors shall not be less than five nor more than ten as may be fixed by the Board of Directors, and (ii) classify the Board of Directors into three classes, as nearly equal in number as possible, with each class serving for a three year term. There are currently eight directors. The term of office of one class of directors expires each year in rotation so that one class is elected at each annual meeting for a full three-year term. Because of the resignation of two directors, both of whom had terms expiring in 1995, thereby reducing the size of the Board from 10 directors to eight, the Board of Directors expects that the eight remaining directors will be reallocated among the classes in advance of the next annual meeting of stockholders. As of May 2, 1994, the directors of the Company were as follows:
Robert H. Boh has been the President and Chief Executive Officer of Boh Bros. Construction Co., Inc. since 1967. He is Chairman of Hibernia Corporation and Hibernia National Bank. He has been a director of the Company since 1978.
Donald T. Bollinger has been Chairman of Bollinger Machine Shop & Shipyard, Inc. since 1989 and its Chief Executive Officer since 1985. He is a director of Premier Bancorp, Inc. and Premier Bank N.A. - South Louisiana. He has been a director of the Company since 1990.
Arthur R. Carlson has been a Managing Director of The Trust Company of the West since March 1982. He has been a director of the Company since 1982.
Hugh J. Kelly has been an oil and gas consultant since 1989. He was Chief Executive Officer of Ocean Drilling and Exploration Company from 1977 to 1989. He is Vice Chairman of Hibernia Corporation and a director of Chieftan International, Inc. (oil and gas producer) and Central Louisiana Electric Co. (utility). He has been a director of the Company since 1990.
John P. Laborde is Chairman of the Board, President, and Chief Executive Officer of the Company. He is a director of Hibernia Corporation, Hibernia National Bank, American Bankers Insurance Group, Stolt Comex Seaway S.A., Stone Energy Corporation, and American Bureau of Shipping. He has been a director of the Company since 1956.
Paul W. Murrill, professional engineer, served as Special Advisor to the Chairman of Gulf States Utilities Co. from 1987 to 1989, its Chairman of the Board from 1982 to 1987, and its Chief Executive Officer from 1982 to 1986. He is a director of Entergy Corporation, Howell Corporation, Pavilion Technologies, Inc., Piccadilly Cafeterias, Inc., ZYGO Corp., First Mississippi Corporation (chemicals and fertilizer) and FirstMiss Gold Inc. (gold mining). He has been a director of the Company since 1981.
Lester Pollack has been Senior Managing Director of Corporate Advisors, L.P. since 1988, a general partner of Lazard Freres & Co. and Chief Executive Officer of Centre Partners, L.P. (an investment partnership affiliated with Lazard) since 1986. Mr. Pollack also serves as a director of Continental Cablevision, Inc, Kaufman & Broad Home Corporation, Loews Corporation, Parlex Corp., Polaroid Corporation, and SunAmerica, Inc. He became a director of the Company in January 1992.
J. Hugh Roff, Jr. has been Chairman of the Board of PetroUnited Terminals, Inc. since November 1986. He is a director of Texas Commerce Bancshares, Inc. He has been a director of the Company since 1986.
EXECUTIVE OFFICERS
Information with respect to the Company's executive officers is contained in Item 4A of this report.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years ended March 31, 1992, 1993 and 1994, the compensation of the Company's Chief Executive Officer and each of the next four most highly compensated executive officers of the Company in all capacities in which they served:
SUMMARY COMPENSATION TABLE
(1) Reflects the number of shares of restricted stock awarded multiplied by the closing market price of the Company's common stock on the date of grant.
(2) These Restricted Shares vested on March 31, 1993.
(3) Includes $2,212,321 in an accelerated lump sum payment of benefits under the Company's Supplemental Executive Retirement Plan.
(4) Consists of amounts contributed by the Company on behalf of the named executive officer pursuant to the Company's Savings Plan and Supplemental Savings Plan and health care premiums paid by the Company under the Tidewater Executive Medical Plan. See following table.
(5) Reflects the value of shares of restricted stock (the "Restricted Shares") that the executive officer has the right to receive upon the exercise of related stock options. Once issued, the Restricted Shares will be restricted for the period of five years and will be forfeited if, except under certain permitted circumstances, the executive officer sells the related option shares or ceases to perform substantial services for the Company and competes with the Company. Once the Restricted Shares are issued, the holders of the Restricted Shares will be entitled to receive any dividends paid to the holders of common stock of the Company.
(6) Cliffe F. Laborde joined the Company in January 1992.
STOCK OPTIONS
The following table contains certain information concerning the grant of stock options to the named executive officers during the fiscal year ended March 31, 1994:
(1) These options become fully exercisable within three years after the date of grant. Exercisability is accelerated upon a change of control.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the exercise of options during the fiscal year ended March 31, 1994 and unexercised options held on March 31, 1994:
(1) Reflects the difference between the closing sale price of the Company's common stock on the exercise date and the exercise price of the options.
(2) Reflects the difference between the closing sale price of the Company's common stock on March 31, 1994 and the exercise price of the options.
PENSION PLANS
Defined Benefit Pension Plan. The Company and its participating subsidiaries sponsor a defined benefit pension plan ("Pension Plan") covering eligible employees. Upon normal retirement at age 65, the Pension Plan provides a monthly benefit equal to the sum of (i) 1.5% of five-year final average earnings above Social Security covered compensation times years of credited service to a maximum of 35, plus (ii) 0.85% of five-year final average earnings of Social Security covered compensation times years of credited service to a maximum of 35, plus (iii) 1% of five-year final average earnings times credited service in excess of 35 years.
Early retirement benefits are available upon attainment of age 55 and completion of 10 years of credited service and are payable on a reduced basis. There is no reduction for benefits payable at age 62 or later. For employees retiring between age 55 and 62, the reduction is 5% per year for each year prior to age 62. A retiring employee may select a life annuity or one of several optional forms of settlement.
Employees completing five years of credited service are 100% vested in their pension benefits. Messrs. John Laborde, Currence, Tamblyn, Cliffe Laborde, and Koock have 38, 9, 8, 2, and 26 years of credited service, respectively, under the Company's Pension Plan.
Supplemental Executive Retirement Plan. Under federal law, an employee's benefits under a qualified pension plan are limited to certain maximum amounts. The Company has adopted a supplemental executive retirement plan ("SERP") to supplement the benefits received by the Company's officers participating in the Pension Plan. The supplemental benefits consist of an amount equal to the excess of the participant's benefits calculated under the Pension Plan over the maximum benefit permitted by law. The SERP also gives credit for prior service by the SERP participants without regard to any break in service. As a consequence, under the SERP Mr. Currence was given credit for prior service without regard to his break in service. The SERP also provides that upon normal retirement at age 65 officers shall receive a monthly benefit equal to the sum of (i) 2.0% of five-year final average earnings above Social Security covered compensation times years of credited service to a maximum of 35 years, plus (ii) 1.35% of five-year final average earnings below Social Security covered compensation times years of credited service to a maximum of 35 years.
The following table sets forth estimated aggregate combined annual benefits payable in the form of a straight life annuity under the Pension Plan and the SERP upon retirement to
persons in the remuneration and years-of-service classifications specified. Benefits are not subject to any deduction for Social Security or other offset amounts.
Mr. Laborde received a lump-sum distribution of his SERP benefits during fiscal 1993 which is subject to adjustment at retirement based on final average earnings. As of March 31, 1994, Mr. Laborde's covered compensation under the Pension Plan is $150,000 and the aggregate annual benefit payable in the form of a straight life annuity, assuming retirement in 1994 as provided in the Employment Contract, is $155,952. See "Employment Contract" below.
DIRECTOR COMPENSATION
Non-Employee Directors of the Company receive an annual retainer fee of $20,000 and a fee of $1,500 for attendance at each meeting of the Board of Directors. Directors also receive a fee of $1,000 for attendance at each meeting of any committee of the Board of Directors. The chairmen of committees of the Board of Directors receive a fee of $1,400 for attendance at those committee meetings they chair. Directors are also reimbursed for any direct expense incurred by them in attending any such meetings of the Board of Directors or its committees. Non-employee Directors also automatically receive a non-qualified stock option to purchase 1,000 shares of common stock after each Annual Meeting of Stockholders of the Company. The exercise price of the stock options is equal to the closing price for the common stock reported on the New York Stock Exchange consolidated tape on the date of the Annual Meeting of Stockholders or, if not reported on that day, on the first day thereafter that it is reported. Non-Employee Director options may not be exercised until six months after the date of grant and then may not be exercised if such exercise constitutes a triggering event under the Company's Shareholder Rights Plan. The options lapse 10 years from the date of grant or one
year after termination of the director's services as a director of the Company, whichever occurs first.
The Company provides a Deferred Compensation Plan pursuant to which a Non-Employee Director may elect to defer all fees which are payable to him from the Company. Deferred amounts are credited to an account in the name of the participant as a cash credit or a phantom common stock credit of the Company's common stock. During fiscal 1994, cash credit accounts are credited quarterly with interest at a rate based upon a 90-day certificate of deposit rate. Commencing April 1, 1994, cash credit accounts are credited quarterly with interest at a rate based upon the one year U.S. Treasury Bill rate. The phantom share accounts are credited with a common stock dividend equivalent at the time dividends are paid on common stock. Upon the earlier of termination of Board service with the Company or the Director's attainment of age 65, amounts accrued under this Plan are payable either in a lump sum or over a period of two to ten years, at the election of the participant. Directors participate at their election in this Plan on a year-to- year basis. One Director participated in the Deferred Compensation Plan during fiscal 1994.
The Company also provides a Retirement Plan for the benefit of Non-Employee Directors age 65 or over or who have completed five or more years of service on the Board. Under the Retirement Plan, an eligible Director will be entitled to an annual benefit equal to the annual retainer fee for a Board member at the time of his retirement. The benefit is payable for a term equal to the number of years the retired Director served as a Non-Employee Director. If a Director dies prior to payment of his benefit, a death benefit is payable to his beneficiaries equal to the then present value of the unpaid benefit.
The Deferred Compensation Plan and the Retirement Plan both provide for the acceleration of the payment of benefits in the event of a change of control in the Company. In such event, any unpaid benefits deferred under the Deferred Compensation Plan as a cash credit only and any Retirement Plan benefits are payable upon the Company's receipt of a request for payment by a Director.
EMPLOYMENT CONTRACTS
Effective July 1, 1992, the Company entered into an employment and consulting contract with John P. Laborde. The terms of the contract provide for Mr. Laborde's continued service as the President and Chief Executive Officer of the Company until the later of the Company's 1994 Annual Meeting of Stockholders or September 24, 1994 (the "Employment Term"). Thereafter, Mr. Laborde will be retained as a consultant by the Company for an additional three-year term (the "Consultant Term"). The Compensation Committee of the Board of Directors is currently conducting a search for a replacement for Mr. Laborde upon his retirement as President and Chief Executive Officer.
Under the terms of the contract, Mr. Laborde will be paid an annual salary or annual consulting fee of $600,000. While serving as President and Chief Executive Officer, Mr. Laborde may also be paid an annual incentive bonus in the discretion of the Board of Directors. During the Employment Term, Mr. Laborde is entitled to all benefits provided to senior executives of the Company. During the Consultant Term, Mr. Laborde is entitled to all benefits that he is eligible to receive as a retiree from the Company, plus payment by the Company of certain additional perquisites. Mr. Laborde is also entitled to be provided medical coverage by the Company for life.
If Mr. Laborde's employment as an employee or consultant is terminated other than under the conditions permitted in the contract, including termination at the option of Mr. Laborde following a change in control of the Company, Mr. Laborde will be paid the aggregate amount of his annual salary through the last day of the Consultant Term. In the case of disability or death, Mr. Laborde or his heirs will receive a payment equal to 50% of Mr. Laborde's annual salary from the date of termination through the last day of the Consultant Term. In the case of disability, Mr. Laborde will be entitled to receive disability and other benefits at least equal to the most favorable of those generally provided by the Company to executive officers.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with 18 executive officers and key employees, including Messrs. Currence, Tamblyn, Cliffe Laborde, and Koock (the "Severance Agreements").
The Severance Agreements provide for a lump sum payment by the Company to each executive in the event the executive's employment with the Company is terminated (other than for death, retirement, disability or cause as defined in the Severance Agreements), or the executive terminates his employment for good reason as defined in the Severance Agreements, following a change in control of the Company.
Under the Severance Agreements, upon a termination for which a severance payment is required, an amount shall be paid to the executive equal to two times the executive's average annual base salary for the three years prior to termination, as well as any incentive compensation which has been allocated or awarded to the executive prior to the date of termination but has not been paid. In addition, the Severance Agreements provide for: (a) continuation of Company welfare benefits until the earlier of two years after termination or until normal retirement age would have been reached or until replacement of the benefits as a result of the executive's employment with others; (b) a payment equal to the employer contributions to the Company's Savings Plan that would have been made for the two years following the date of termination or until normal retirement age would have been reached, whichever comes earlier; (c) a payment equal to the present value of the additional retirement benefit which would have been earned under the Company's Pension Plan if employment had continued until the earlier of two years following date of termination or until normal retirement
age would have been reached; and (d) a cash payment equal to the difference between the option price and the higher of market value on date of termination or the highest price paid in connection with the change in control, for all stock options exercisable during the next two years. Any payment or benefit to be received by the executive in connection with a change in control or the termination of employment will be reduced to the extent necessary to preserve the deductibility of payments made to the executive pursuant to Section 280G of the Internal Revenue Code.
In view of (i) the uncertainties to the implementation of the Company's merger with Zapata Gulf, (ii) the expected addition of certain members of the Zapata Gulf management group when the merger was consummated, and (iii) the benefits that would be conferred on such persons by virtue of the merger, the Company's Board of Directors believed it was important to assure the retention of the Company's executive officers in the future and to recognize their significant past contributions. To that end, in 1991 the Company's Board of Directors approved amendments to the Severance Agreements with the effect that each executive officer became entitled to the lump sum payment provided for in his Severance Agreement if his employment was terminated without cause or he left for good reason prior to January 1, 1995. During the last fiscal year the employment of Paul Angelle, an executive officer of the Company, terminated and Mr. Angelle received a lump-sum payment under his Severance Agreement of $300,945. The Severance Agreements with the other executive officers and key employees have since been amended to provide that the benefits provided in the Severance Agreements will only be paid if termination of employment follows a change of control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Robert H. Boh, Hugh J. Kelly, and J. Hugh Roff, Jr. None of the members of the Compensation Committee have been officers or employees of the Company or any of its subsidiaries. No executive officer of the Company served in the last fiscal year as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or on the Compensation Committee of the Company.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the common stock as of May 2, 1994 with respect to each executive officer named in the Summary Compensation Table and by all directors and executive officers as a group:
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* Unless otherwise indicated by footnote, all shares are held by the named individuals with sole voting and investment powers.
** Less than 1.0%.
(1) Includes 4,000 shares of common stock that such person has the right to acquire within 60 days upon exercise of a non-employee director stock option.
(2) Includes 103 shares held by Mr. Bollinger's son, as to which Mr. Bollinger disclaims beneficial ownership.
(3) Includes 43,875 shares which Mr. Currence has the right to acquire within 60 days through the exercise of employee stock options, such right being deemed beneficial ownership under Rule 13d-3 of the Commission, and 3,656 shares of common stock attributable to Mr. Currence's account in the Company's Savings Plan, as to which shares Mr. Currence has sole voting power.
(4) Includes 22,291 shares which Mr. Koock has the right to acquire within 60 days through the exercise of employee stock options, such right being deemed beneficial ownership under Rule 13d-3 of the Commission, 3,510 shares of common stock attributable to Mr. Koock's account in the Company's Savings Plan, as to which shares Mr. Koock has sole voting power, and 100 shares owned by Mr. Koock's wife, beneficial ownership of which is disclaimed.
(5) Includes 11,200 shares which Mr. Laborde has the right to acquire within 60 days through the exercise of employee stock options, such right being deemed beneficial ownership under Rule 13d-3 of the Commission, 5,241 shares held in trusts for Mr. Laborde's minor children, beneficial ownership of which is disclaimed, and 249 shares of common stock attributable to Mr. Laborde's account in the Company Savings Plan, as to which shares Mr. Laborde has sole voting power.
(6) Includes 25,786 shares which Mr. Laborde has the right to acquire within 60 days through the exercise of employee stock options, such right being deemed beneficial ownership under Rule 13d-3 of the Commission, and 6,636 shares of common stock attributable to Mr. Laborde's account in the Company's Savings Plan, as to which shares Mr. Laborde has sole voting power only.
(7) Includes 3,992,999 shares owned by the Corporate Partners Group, as to which Mr. Pollack disclaims beneficial ownership. See "Security Ownership of Certain Beneficial Owners" in this Item.
(8) Includes 2,000 shares of common stock which such person has the right to acquire within 60 days upon exercise of a non- employee director stock option.
(9) Calculated on the basis of 53,072,749 shares of common stock outstanding at May 2, 1994, plus the number of shares such person has the right to acquire within 60 days.
(10) Includes 3,000 shares of common stock which such person has the right to acquire within 60 days upon exercise of a non- employee director stock option.
(11) Includes 37,866 shares which Mr. Tamblyn has the right to acquire within 60 days through the exercise of employee stock options, such right being deemed beneficial ownership under Rule 13d-3 of the Commission, and 2,458 shares of common stock attributable to Mr. Tamblyn's account in the Company's Savings Plan, as to which shares Mr. Tamblyn has sole voting power.
(12) Includes 265,902 shares of common stock that such persons have the right to acquire within 60 days through the exercise of options; 3,999,118 shares for which directors and executive officers reported indirect ownership and disclaim beneficial ownership; and 22,728 shares of common stock attributable to such persons' accounts in the Company's Savings Plan, as to which shares such persons have sole voting power only.
(13) Calculated on the basis of 53,072,749 shares of common stock outstanding at May 2, 1994 and the 265,902 shares that all directors and executive officers as a group have the right to acquire within 60 days.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes thereto indicate the name, address and stock ownership of each person or persons known by the Company to own beneficially more than 5% of the Company's voting securities as of May 2, 1994:
- ---------------
(1) Based on Schedule 13D dated December 28, 1993 filed by Bessemer Capital Partners, L.P. ("BCP") with the Securities and Exchange Commission. BCP is a privately owned investment partnership, the primary limited partner of which is Bessemer Securities Corporation, a private investment company.
(2) Based on Schedule 13D dated June 23, 1993 filed by Corporate Partners Group with the Securities and Exchange Commission. The common stock owned by the Corporate Partners Group is allocated as follows: Corporate Partners, L.P., 3,394,683 shares; Corporate Offshore Partners, L.P., 243,316 shares; and The State Board of Administration of Florida ("SBAF"), 355,000 shares. Corporate Partners and Corporate Offshore Partners are privately owned investment partnerships, the general partner of each of which is controlled by
Lazard Freres & Co. and the limited partners of which are private institutional and individual investors. SBAF is a body corporate organized under the constitution of the state of Florida.
(3) Based on amended Schedule 13G dated February 11, 1994 filed with the Commission reporting the beneficial ownership position of FMR Corporation.
(4) Based on Schedule 13G dated February 10, 1994 filed with the Commission reporting the beneficial ownership position of NationsBank Corporation.
(5) Based on Schedule 13G dated February 10, 1994 filed with the Commission reporting the beneficial ownership position of Chieftain Capital Management, Inc.
(6) Based on Schedule 13G dated January 31, 1994 filed with the Commission reporting the beneficial ownership position of Neuberger & Berman.
(7) Based on 53,072,749 shares of common stock outstanding on May 2, 1994.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY TRANSACTIONS
During fiscal year 1994, the Company contracted with Bollinger Machine Shop & Shipyard, Inc. ("Bollinger Shipyard") for repair services in the amount of approximately $982,500 for vessels owned by the Company. The contracts were awarded to Bollinger Shipyard on the basis of competitive bidding and/or drydock availability. Donald T. Bollinger is the Chairman and Chief Executive Officer of Bollinger Shipyard and a director of the Company.
Bollinger Shipyard received approximately $25,000 during fiscal 1994 for dockage provided for the Company's vessels that had been taken out of service. The vessels were docked at the Bollinger Shipyard facility in LaRose, Louisiana pending sale and/or return to service.
Bollinger Shipyard paid the Company approximately $27,600 during fiscal 1994 for charter of the M/V Greenhead.
In the opinion of management, all of the Company's transactions with Bollinger Shipyard were provided on terms that were usual, customary, and no less favorable to the Company than would be available from unaffiliated parties.
See "Item 11. Executive Compensation - Severance Agreement" for a description of payments made to an executive officer of the Company.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Financial Statements and Schedules
The Consolidated Financial Statements and Schedules of the Company listed on the accompanying Index to Financial Statements and Schedules (see page) are filed as part of this report.
B. Reports on Form 8-K
1. The Company's report on Form 8-K for February 23, 1994 reported that the Company increased its bank borrowing facility to $130 million from $60 million by amending a revolving credit and term loan agreement.
2. The Company's report on Form 8-K dated March 16, 1994 reported that the Company had called for redemption on April 18, 1994 all of the Company's outstanding 7% Convertible Subordinated Debentures due 2010.
C. Exhibits
The index below describes each exhibit filed as a part of this report. Exhibits not incorporated by reference to a prior filing are designated by an asterisk; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with the Commission as Exhibit 3(a) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993).
4(a) - Restated Rights Agreement dated as of December 17, 1993 between Tidewater Inc. and The First National Bank of Boston (filed with the Commission as Exhibit 4 to the Company's quarterly report on Form 10-Q for the quarter ended December 31, 1993).
10(a) - Letter of Credit Agreement dated as of September 7, 1990 (filed with the Commission as Exhibit 10(a) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1990).
10(b) - $130,000,000 Revolving Credit and Term Loan Agreement dated February 23, 1993 (filed with the Commission as Exhibit 10 to the Company's report on Form 8-K for February 23, 1994).
10(c) - Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended in 1990 (filed with the Commission as Exhibit 10(c) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1991).
10(d) - Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed with the Commission as Exhibit 10(f) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(e) - Tidewater Inc. Amended and Restated Supplemental Executive Retirement Plan (filed with the Commission as Exhibit 10(g) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(f) - Tidewater Inc. Amended and Restated Employees' Supplemental Savings Plan (filed with the Commission as Exhibit 10(h) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(g) - Supplemental Health Plan for Executive Officers of Tidewater Inc. (filed with the Commission as Exhibit 10(i) to a Registration Statement on September 12, 1989, Registration No. 33-31016).
*10(h) - Tidewater Inc. Deferred Compensation Plan for Directors.
10(i) - Tidewater Inc. Retirement Plan for Directors as adopted on March 22, 1990 (filed with the Commission as Exhibit 10(k) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1990).
10(j) - Employment and Consulting Agreement dated as of March 31, 1993 between Tidewater Inc. and John P. Laborde as amended (filed with the Commission as Exhibit 10(l) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(k) - Form of Severance Agreement entered into as of August 1, 1985 with eleven executive officers and key employees, as amended (filed with the Commission as Exhibit 10(j) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
10(l) - Form of Severance Agreement entered into as of February 18, 1992 with three executive officers, as amended (filed with the Commission as Exhibit 10(k) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
10(m) - Standstill Agreement dated as of November 11, 1992 between Tidewater Inc. and Zapata Corporation (filed with the Commission as Exhibit 10(o) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
*10(n) - First Amendment to Standstill Agreement dated January 24, 1994 between Tidewater Inc. and Zapata Corporation.
10(o) - Agreement, dated August 11, 1989, by and among the Company and Irwin L. Jacobs, Daniel T. Lindsay, Gerald A. Schwalbach, TR Holdings, Inc. and Minstar, Inc. (filed with the Commission as Exhibit 1 to the Company's report on Form 8-K for August 11, 1989).
10(p) - Form of Stockholder Agreement entered into by and between the Company and each of the stockholders of Zapata Gulf Marine Corporation (filed with the Commission as Exhibit 10(r) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
*11 - Earnings per share Computation Information.
*22 - Subsidiaries of the Company.
*24 - Consent of Independent Accountants.
Certain instruments respecting long-term debt of Tidewater have been omitted pursuant to Regulation S-K, Item 601. Tidewater hereby agrees to furnish a copy of any such instrument to the Commission upon request.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TIDEWATER INC. (Registrant)
By: /s/ Victor I. Koock Victor I. Koock Senior Vice President and Secretary
Date: May 6, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 6th day of May, 1994.
Chairman of the Board of Directors, President, and Chief /s/ John P. Laborde Executive Officer John P. Laborde
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting /s/ Ken C. Tamblyn Officer) Ken C. Tamblyn
/s/ Robert H. Boh Director Robert H. Boh
/s/ Donald T. Bollinger Director Donald T. Bollinger
/s/ Arthur R. Carlson Director Arthur R. Carlson
/s/ Hugh J. Kelly Director Hugh J. Kelly
/s/ Paul W. Murrill Director Paul W. Murrill
/s/ J. Hugh Roff, Jr. Director J. Hugh Roff, Jr.
TIDEWATER INC. ANNUAL REPORT ON FORM 10-K ITEMS 8, 14(A), AND 14(D)
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or the related notes.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Tidewater Inc.:
We have audited the accompanying consolidated financial statements of Tidewater Inc. and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedules as listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tidewater Inc. and subsidiaries as of March 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 1994, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in Note 7 to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits other than pensions in fiscal 1993.
KPMG PEAT MARWICK
New Orleans, Louisiana May 5, 1994
See accompanying Statement of Significant Accounting Policies and Notes to Consolidated Financial Statements.
See accompanying Statement of Significant Accounting Policies and Notes to Consolidated Financial Statements.
See accompanying Statement of Significant Accounting Policies and Notes to Consolidated Financial Statements.
See accompanying Statement of Significant Accounting Policies and Notes to Consolidated Financial Statements.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of Tidewater Inc. and its subsidiaries. Significant intercompany balances and transactions are eliminated in consolidation.
INVENTORIES
Inventories are stated at average cost for operating supplies and at the lower of cost (FIFO) or market (net realizable value) for merchandise held for resale.
PROPERTIES AND EQUIPMENT
Properties and equipment are carried at cost. Depreciation for financial reporting purposes is computed primarily on the straight- line basis beginning with the first charter/rental, with salvage values of 5%-10% for marine equipment and 12-1/2% for compression equipment, using estimated useful lives of:
Used equipment is depreciated in accordance with the above schedule; however, no life less than six years is used for marine equipment regardless of the date constructed. Leased equipment, principally marine equipment, is depreciated on the straight-line basis over the initial term of the lease.
Maintenance and repairs are charged to operations as incurred during the asset's original estimated useful life. Major repair costs incurred after the original estimated useful life that also have the effect of extending the useful life of the asset are capitalized and amortized over three years. Major modifications to equipment are capitalized and amortized over the remaining life of the equipment.
ACCRUED PROPERTY AND LIABILITY LOSSES
The Company's insurance subsidiary establishes case basis reserves for estimates of reported losses on direct business written, estimates received from ceding reinsurers, and reserves based on past experience of unreported losses. Such losses principally relate to the Company's marine operations and are included as a component of costs of marine operations in the Consolidated Statements of Earnings. The liability for such losses and the related reimbursement receivable from reinsurance companies are classified in the Consolidated Balance Sheet into current and noncurrent amounts based upon estimates of when the liabilities will be settled and when the receivables will be collected.
POSTEMPLOYMENT, PENSION AND OTHER POSTRETIREMENT BENEFITS
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," prescribes the accounting for the estimated costs of benefits provided to former or inactive employees after employment but before retirement. Because the Company offers only limited postemployment benefits to employees, Statement No. 112 does not have a material effect on the Company's financial position or results of operations. Pension costs are accounted for in accordance with the provisions of Statement of Financial Accounting Standards No. 87 and are funded as required by law. Prior service costs are amortized on the straight-line basis over the average remaining service period of employees expected to receive pension benefits. Effective
April 1, 1992, postretirement benefits other than pensions are accounted for in accordance with Statement of Financial Accounting Standards No. 106. The estimated cost of postretirement benefits other than pensions are accrued during the employees' active service period. Postemployment and postretirement benefits other than pensions are funded as claims are submitted.
INCOME TAXES
Income taxes are accounted for in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under the asset and liability method of Statement No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average number of shares and dilutive equivalent shares of common stock (stock options, restricted stock grants and shares issuable on conversion of the convertible subordinated debentures) outstanding during each year using the treasury stock method.
FOREIGN CURRENCY TRANSLATION
The functional currency for certain foreign subsidiaries and unconsolidated companies is the applicable local currency. The translation of the applicable local currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using weighted average exchange rates during the period. The gains and losses resulting from the balance sheet account translations, net of deferred income taxes, are included in stockholders' equity.
Some transactions of the Company and its subsidiaries are made in currencies different from their own. Gains and losses from these transactions are included in the Consolidated Statements of Earnings as they occur.
CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, all highly liquid investments purchased with original maturities of approximately three months or less are considered to be cash equivalents. Some items of compression equipment are acquired and placed in inventories for subsequent sale or rent to others. Acquisitions of these assets are considered operating activities in the Consolidated Statements of Cash Flows, although they later may be transferred to the compression equipment rental fleet.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994, 1993 and 1992
(1) BUSINESS COMBINATION
On January 15, 1992 Tidewater Inc. issued 23,786,000 shares of common stock in exchange for all of the outstanding common stock of Zapata Gulf Marine Corporation (Zapata Gulf). Zapata Gulf owned and operated a fleet of 272 marine service vessels and a container shipping business which operated principally from the U.S. East Coast to Puerto Rico. The business combination was accounted for as a pooling-of-interests and, accordingly, the consolidated financial statements for all periods presented include the accounts and results of operations of Zapata Gulf.
Merger expenses incurred during fiscal 1992 (primarily during the fourth quarter) included legal, investment banking, and accounting fees related to the business combination. Also included in merger expenses are payments under severance and employment agreements and payments to certain officers and a director of Zapata Gulf under an equity incentive plan.
(2) SALE OF CONTAINER SHIPPING SEGMENT
In March 1993 the Company sold its 70% interest in the net assets of the Container Shipping segment to the minority-interest owner. The Consolidated Statements of Earnings for the periods ended March 31, 1993 and 1992 report separately the results of continuing operations and the discontinued Container Shipping segment. The results of the discontinued Container Shipping segment for the years ended March 31, 1993 and 1992, which are presented as a net amount in the Consolidated Statements of Earnings, are as follows:
(3) INVENTORIES
A summary of inventories at March 31 follows:
(4) UNCONSOLIDATED COMPANIES
Investments in, at equity, and advances to unconsolidated joint-venture companies at March 31 were as follows:
During fiscal 1994 the Company's 50% interest in Tidewater Place Joint Venture, which owned an office building which houses the Company's corporate headquarters, was donated to a local university. The transfer provides the Company with rent-free occupancy for a period of 10 years. The investment in Tidewater Place Joint Venture at the date of transfer has been reclassified from investment in unconsolidated subsidiaries to prepaid rent and is being amortized in equal monthly charges to expense over 10 years. The aggregate amount of undistributed earnings of all unconsolidated joint-venture companies included in consolidated stockholders' equity at March 31, 1994 is approximately $12,713,000.
(5) INCOME TAXES
Earnings (loss) from continuing operations before income taxes derived from United States and foreign operations for the years ended March 31 are as follows:
Total income tax expense for the years ended March 31, 1994 and 1993 was allocated as follows:
Income tax expense attributable to income from continuing operations for the years ended March 31 consists of the following:
The actual income tax expense attributable to earnings from continuing operations for the years ended March 31, 1994, 1993 and 1992 differed from the amounts computed by applying the U.S. federal tax rate of 35% in fiscal 1994 and 34% in fiscal 1993 and fiscal 1992 to pre-tax earnings from continuing operations as a result of the following:
Expenses which are not deductible for tax purposes in fiscal 1992 related to certain costs incurred in connection with the merger with Zapata Gulf.
The significant components of deferred income tax expense for the years ended March 31 are as follows:
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 1994 and 1993 are as follows:
At March 31, 1994 the Company had investment tax credit carryforwards for federal income tax purposes of approximately $11,911,000, which are available to reduce future federal income tax through 2002. In addition, the Company has alternative minimum tax credit carryforwards of approximately $2,206,000, which are available to reduce future federal regular income taxes over an indefinite period.
The Company has not recognized a deferred tax liability of approximately $30,100,000 for the undistributed earnings of certain foreign subsidiaries that arose in prior years because the Company currently does not expect those unremitted earnings to reverse and become taxable to the Company in the foreseeable future. A deferred tax liability will be recognized when the Company expects that it will realize those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of investments. As of March 31, 1994 the undistributed earnings of these subsidiaries were approximately $86,000,000.
(6) LONG-TERM DEBT
A summary of long-term debt at March 31 follows:
During fiscal 1994 the 9.17% and 10.0% notes were retired prior to maturity using available cash. The retirement resulted in an after-tax extraordinary charge to earnings of approximately $4,450,000, or $.08 per common share. The extraordinary charge to earnings consisted of a $6,500,000 prepayment penalty and the write-off of deferred finance costs of $370,000, less $2,420,000 of income tax benefits associated with the retired debt.
On March 16, 1994 the Company called for redemption of the 7% convertible subordinated debentures due 2010. Holders converted $1,113,000 of debentures into 44,520 shares of the Company's common stock at a conversion price of $25.00 per share. The remainder of the debentures were redeemed at 101.4% of par value plus accrued interest on April 18, 1994. The debentures, along with the prepayment premium, are included in current liabilities at March 31, 1994. The redemption resulted in an extraordinary charge to earnings of approximately $7,520,000 (net of income taxes), or $.14 per common share in the fourth quarter of fiscal 1994. The extraordinary charge to earnings consisted of a $644,000 prepayment premium and the write-off of unamortized original issue discount and deferred finance costs of $10,926,000, less $4,050,000 of income tax benefits.
Future lease payments under capitalized leases in effect at March 31, 1994 for the next five fiscal years are: 1995 - $3,071,000; 1996 - $1,506,000; 1997 - $300,000; 1998 - $63,000; and 1999 - $63,000.
Based on current interest rates offered to the Company for borrowings with maturities similar to the remainder of long-term debt, excluding the debentures redeemed on April 18, 1994, total long-term debt at March 31, 1994 approximates the fair value of the debt.
A revolving credit and term loan agreement with banks was expanded from $60 million to $130 million during fiscal 1994. The agreement bears interest, at the Company's option, at prime rates plus .50% or LIBO rates plus 1.50% or 1.75% (5.19% at March 31, 1994). The lower LIBO rate will be used as long as the Company maintains an investment grade senior debt rating from Moody's Investor Services, Inc. and Standard & Poor's. The revolving credit commitment of $130 million expires on September 30, 1995 at which time the then outstanding balance may be converted to a term loan repayable in 16 quarterly installments beginning December 31, 1995. The agreement requires an annual fee of from .250% to .375% depending upon the undrawn amount. Under the terms of the agreement, the Company has agreed to certain requirements and limitations, including: limitations on the payment of dividends on common stock, investments, and aggregate indebtedness; a minimum level of tangible net worth of $425 million plus 30% of cumulative net earnings, as defined, after
March 31, 1993 (total $432,348,000 at March 31, 1994); and a minimum ratio of current assets to current liabilities of 1.5 to 1. The agreement also prohibits the Company from encumbering its assets, other than assets already encumbered at February 23, 1994, for the benefit of others.
Certain items of leased equipment are classified as assets held under capital leases with the related liabilities recorded as capitalized lease obligations. Leased equipment, before depreciation, included in properties and equipment consists primarily of Marine equipment and approximated $17,732,000 at March 31, 1994 and $29,561,000 at March 31, 1993. Accumulated depreciation related to leased equipment approximated $13,017,000 and $16,090,000 at March 31, 1994 and 1993, respectively. Depreciation expense for leased equipment for the years ended March 31, 1994, 1993 and 1992 was $3,119,000, $3,152,000, and $2,879,000, respectively. During fiscal 1994 capitalized lease obligations on five marine service vessels were terminated by purchasing the vessels for approximately $9.0 million.
(7) BENEFIT PLANS
Upon meeting various citizenship, age and service requirements, employees are eligible to participate in a defined contribution savings plan. The plan held 537,525 shares and 516,175 shares of the Company's common stock at March 31, 1994 and 1993, respectively. Amounts charged to expense for the plan for 1994, 1993 and 1992 were $1,282,000, $1,193,000, and $1,196,000, respectively.
A defined benefit pension plan covers substantially all U.S. citizen employees and employees who are permanent residents of the U.S. Benefits are based on years of service and employee compensation. The Company also has a supplemental retirement plan (Supplemental Plan) that provides pension benefits to certain employees in excess of those allowed under the Company's tax qualified pension plan. Certain benefits programs are maintained in several other countries which provide retirement income for covered employees.
Net periodic pension cost for the U.S. defined benefit pension plan and the Supplemental Plan for 1994, 1993 and 1992 include the following components:
The following table sets forth the assets and liabilities of the U.S. defined benefit pension plan and the Supplemental Plan and the amount of the net pension asset or liability in the Consolidated Balance Sheets at March 31:
Qualified retired employees are currently covered by a program which provides limited health care and life insurance benefits. Costs of the program are based on actuarially determined amounts and are accrued over the period from the date of hire to the full eligibility date of employees who are expected to qualify for these benefits.
Pursuant to the April 1, 1992 adoption of Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," the Company recognized during fiscal 1993 the full amount of its accumulated postretirement benefit obligation of $10,061,000 less income tax benefits of $3,421,000, which amounts are included in the fiscal 1993 Consolidated Statement of Earnings as the cumulative effect of an accounting change. The accumulated postretirement benefit obligation amount represents the present value at April 1, 1992 of the estimated future benefits payable to current retirees and a pro rata portion of the estimated benefits payable to active employees after retirement. This change in accounting resulted in an after-tax incremental cost for such benefits of $900,000 ($.02 per share) in fiscal 1993.
Net periodic postretirement health care and life insurance costs for 1994 and 1993 include the following components:
In fiscal 1992 the cost of the postretirement benefit program was expensed as paid and amounted to approximately $100,000.
The unfunded actuarially-determined liabilities for postretirement benefits at March 31 are as follows:
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation will be 14% in 1995, gradually declining to 6.5% in the year 2002 and thereafter. A 1% change in the assumed health care cost trend rates for each year would change the accumulated postretirement benefit obligation by approximately $1,516,000 at March 31, 1994 and change the cost for the year ended March 31, 1994 by $276,000. The assumed discount rates used in determining the accumulated postretirement benefit obligation were 7.25% in 1994 and 8.5% in 1993.
(8) OTHER LIABILITIES AND DEFERRED CREDITS
A summary of other liabilities and deferred credits at March 31 follows:
(9) CAPITAL STOCK
In fiscal 1992 stockholders approved an increase in the authorized shares of Tidewater common stock from 80 million to 125 million shares and a reduction of par value of the common stock from $.50 to $.10. Common stock and additional paid-in capital were adjusted by $21,153,000 in fiscal 1992 to reflect the change in par value.
Under the Company's stock option and restricted stock plans, the Compensation Committee of the Board of Directors has authority to grant stock options and restricted shares of the Company's stock to officers and other key employees. At March 31, 1994, 3,001,300 shares of common stock are reserved for issuance under the plans. The stock option price and exercise period are set by the grant, with the price equal to the market price of the stock on the date of grant.
Transactions in the stock option plans during 1994, 1993 and 1992 were as follows:
At March 31, 1994 and 1993, 522,205 shares and 406,423 shares, respectively, were exercisable under the stock option plans.
During the years ended March 31, 1994 and 1993, approximately 17,460 shares and 215,500 shares, respectively, of Company common stock held by Company employees were surrendered to the Company in order to exercise stock options and in satisfaction of mandatory federal and state income tax withholding requirements. Approximately 8,300 shares of Company common stock held by oddlot shareholders were purchased by the Company pursuant to a commission-free stock buyback program offered during fiscal 1994. Shares surrendered during fiscal 1993 are included in the Company's treasury stock at March 31, 1993. Shares surrendered during fiscal 1994 together with the shares purchased and the remainder of existing treasury shares were canceled in fiscal 1994. Accordingly, the amount of treasury shares has been reclassified to common stock and additional paid-in capital.
The restricted stock plan permits the grant of Company shares restricted as to transferability and subject to a substantial risk of forfeiture. The vesting restrictions and period during which the transferability restrictions are applicable are determined on a case-by-case basis. During the restricted period, the restricted shares may not be transferred or encumbered but the recipient has the right to vote and receive dividends on the restricted shares. At March 31, 1994, a contingent award totalling 19,320 restricted Company shares was outstanding, to be issued in conjunction with and as a result of the exercise of certain stock options. No restricted shares were issued as of March 31, 1994 or 1993. Once the restricted shares are issued, they would be forfeited if, during the five years after issuance, a disposition was made of the option shares, except for dispositions specifically permitted by the
grant. The ownership of the restricted shares will vest at the end of the five year period in which they are subject to forfeiture.
At March 31, 1994 and 1993, 3,000,000 shares of no par value preferred stock were authorized and unissued.
Under a Shareholder Rights Plan, one preferred stock purchase right has been distributed as a dividend for each outstanding common share. Each right entitles the holder to purchase, under certain conditions, one two-hundredth of a share of Series A Participating Preferred Stock at an exercise price of $50, subject to adjustment. The rights will not be exercisable unless a person (as defined in the plan) acquires beneficial ownership of 16% or more of the outstanding common shares, or a person commences a tender offer or exchange offer, which upon its consummation such person would beneficially own 16% or more of the outstanding common shares.
If after the rights become exercisable a person becomes the beneficial owner of 16% or more of the outstanding common shares (except pursuant to an offer for all shares approved by the Board of Directors), each holder (other than the acquirer) will be entitled to receive, upon exercise, common shares having a market value of twice the exercise price. In addition, if the Company is involved in a merger (other than a merger which follows an offer for all shares approved by the Board of Directors), major sale of assets or other business combination, each holder of a right (other than the acquirer) will be entitled to receive, upon exercise, common stock of the acquiring company having a market value of twice the exercise price.
The rights may be redeemed for $.01 per right at any time prior to ten days following the acquisition by a person of 16% or more of the outstanding common shares. The rights expire on May 1, 2000.
(10) FOREIGN CURRENCY TRANSLATION
Foreign exchange gains (losses) included in the Consolidated Statements of Earnings primarily relate to the revenue generating and purchasing activities in Brazil, Venezuela, United Kingdom, Singapore, Trinidad and Nigeria.
A cumulative foreign currency translation adjustment has been recorded relative to investments in Venezuelan subsidiaries and in the Company's Marine joint-venture, Tidewater Port Jackson.
(11) COMMITMENTS AND OTHER MATTERS
An employment and consulting agreement exists with the Company's chairman of the board, president and chief executive officer whereby he will continue as an employee until September 1994 and thereafter for a period of three years will serve as a consultant to the Company. The terms of the agreement provide, among other things, for an annual salary/consulting fee and certain other benefits. Provisions are also contained in the agreement pertaining to termination, including certain events related to a change in control of the company. Compensation continuation agreements exist with all other officers of Tidewater Inc. whereby each receives compensation and benefits in the event that his or her employment is terminated following certain events relating to a change in control of the company. The maximum amount of compensation that could be paid under the agreements, based on present salary levels, is approximately $5,323,000. The amount that could be paid for certain benefits is not presently determinable.
In March 1993 the Company requested that the Company's chairman of the board, president and chief executive officer amend his then existing employment and consulting agreement. For its benefit, the Company elected to amend the agreement in view of possible changes to tax laws then under consideration by the Clinton administration and Congress. The amendment accelerated the vesting of all outstanding shares of restricted stock such that these shares became fully vested and freely transferable immediately. The original terms of the restricted stock shares included restrictions during the employment term of the agreement. Due to the acceleration
of the vesting of the restricted stock shares on March 31, 1993, the then remaining deferred compensation of $2,850,000 was charged to other expenses in the Consolidated Statements of Earnings in fiscal 1993.
The Amendment also provided for an immediate lump-sum distribution of the present value of benefits under the Company's supplemental retirement plan, including the additional benefits that would have accrued assuming he remained employed by the Company through September 24, 1994. The lump-sum distribution amounted to $2,212,000 and included $921,000 for unaccrued benefits which was charged to other expenses in the Consolidated Statements of Earnings in fiscal 1993.
Zapata Gulf participated in insurance programs with a shareholder and other entities which include maximum amounts of coverage for the participants as a group. Included in marine operating costs and expenses for the years ended March 31, 1993 and 1992 are provisions of $2,000,000 and $5,000,000, respectively, for estimated losses in excess of the maximum amount of coverage for policy periods ended September 30, 1992 and March 31, 1991.
In 1983, the EPA notified two subsidiaries of the Company that they were among 53 potentially responsible parties (PRP's) for cleanup costs at the Western Sand and Gravel site in Rhode Island.
In 1989, the EPA notified another subsidiary of the Company that it was a PRP for cleanup costs at a National Priorities List site. EPA later nominated the subsidiary a de minimis participant for this site.
In the opinion of management, the ultimate liability with respect to these matters will not have a material adverse effect on the Company's financial position.
Various other legal proceedings and claims are outstanding which arose in the ordinary course of business. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a materially adverse effect on the Company's financial position.
(12) BUSINESS SEGMENTS AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS
The Company operates principally in two business segments. Tidewater Marine provides support services to the offshore oil and gas industry, and Tidewater Compression provides the energy industry with engineered products and services used primarily in oil and gas production, enhanced recovery, natural gas transmission, and natural gas processing. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for disclosures of additions to properties and equipment, identifiable assets, revenues, operating profit and depreciation for each business segment.
(13) SUPPLEMENTARY INFORMATION--QUARTERLY FINANCIAL DATA (UNAUDITED)
Years Ended March 31, 1994 and 1993 (in thousands, except per share data)
Operating profit consists of revenues less operating costs and expenses, depreciation, general and administrative expenses and other income and expenses of the Marine and Compression segments.
See notes (2), (6), (7) and (11) for detailed information regarding transactions which affect fiscal 1994 and 1993 quarterly amounts.
SCHEDULE I
TIDEWATER INC. AND SUBSIDIARIES MARKETABLE SECURITIES YEARS ENDED MARCH 31, 1994 AND 1993 (IN THOUSANDS)
SCHEDULE V
TIDEWATER INC. AND SUBSIDIARIES PROPERTIES AND EQUIPMENT YEARS ENDED MARCH 31, 1994, 1993, AND 1992 (IN THOUSANDS)
(A) Amortization of major repairs to fully depreciated vessels, leasehold improvements and excess cost of investment is charged directly to the related asset account and amounted to $11,007,000 in 1994, $9,167,000 in 1993, and $6,719,000 in 1992. (B) Reclassification of vessel equipment of $94,000 in 1992. (C) Vessels withdrawn from service pending disposition and transferred to other non-current assets were $17,887,000 in 1994, $11,427,000 in 1993, and $7,718,000 in 1992. (D) Transfer of vessels from unconsolidated marine joint ventures in 1994 of $1,930,000 and transfer of vessels to unconsolidated marine joint ventures in 1993 of $3,952,000. (E) Exchange of two towing supply vessels for three supply vessels and one utility vessel in 1993 of $8,576,000. (F) Reclassification of accumulated amortization in 1993 of $813,000. (G) Reclassification of accumulated depreciation of $6,988,000 on five marine service vessels pursuant to cancellation of capitalized lease obligations. (H) Write-off of fully depreciated obsolete equipment.
SCHEDULE VI TIDEWATER INC. AND SUBSIDIARIES ACCUMULATED DEPRECIATION OF PROPERTIES AND EQUIPMENT YEARS ENDED MARCH 31, 1994, 1993, AND 1992 (IN THOUSANDS)
(A) Accumulated depreciation on vessels withdrawn from service pending disposition and transferred to other non-current assets was $14,776,000 in 1994, $9,650,000 in 1993, and $4,911,000 in 1992. (B) Transfer of vessels from unconsolidated marine joint ventures in 1994 of $1,130,000 and transfer of vessels to unconsolidated marine joint ventures in 1993 of $3,153,000. (C) Exchange of two towing supply vessels for three supply vessels and one utility vessel in 1993 of $8,576,000. (D) Reclassification of accumulated amortization in 1993 of $813,000. (E) Reclassification of accumulated depreciation of $6,988,000 on five marine service vessels pursuant to cancellation of capitalized lease \ obligations. (F) Write-off of fully depreciated obsolete equipment.
SCHEDULE VIII TIDEWATER INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED MARCH 31, 1994, 1993, AND 1992 (IN THOUSANDS)
(A) Recovery of accounts receivable for which an allowance had been previously provided. (B) Accounts receivable amounts considered uncollectible and removed from accounts receivable by reducing allowance for doubtful accounts. (C) Includes reclass of Sea-Barge balance of $1,388,000 to other current assets due to sale of the Container Shipping segment. (D) Write-off of patent, deferred debt costs and underwriting commissions.
SCHEDULE X
TIDEWATER INC. AND SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(A) Amounts are for write-down of Marine vessels withdrawn from service pending disposition and included in other non-current assets.
TIDEWATER INC.
EXHIBITS FOR THE
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED MARCH 31, 1994 EXHIBIT INDEX
The index below describes each exhibit filed as a part of this report. Exhibits not incorporated by reference to a prior filing are designated by an asterisk; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with the Commission as Exhibit 3(a) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993).
4(a) - Restated Rights Agreement dated as of December 17, 1993 between Tidewater Inc. and The First National Bank of Boston (filed with the Commission as Exhibit 4 to the Company's quarterly report on Form 10-Q for the quarter ended December 31, 1993).
10(a) - Letter of Credit Agreement dated as of September 7, 1990 (filed with the Commission as Exhibit 10(a) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1990).
10(b) - $130,000,000 Revolving Credit and Term Loan Agreement dated February 23, 1993 (filed with the Commission as Exhibit 10 to the Company's report on Form 8-K for February 23, 1994).
10(c) - Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended in 1990 (filed with the Commission as Exhibit 10(c) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1991).
10(d) - Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed with the Commission as Exhibit 10(f) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(e) - Tidewater Inc. Amended and Restated Supplemental Executive Retirement Plan (filed with the Commission as Exhibit 10(g) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(f) - Tidewater Inc. Amended and Restated Employees' Supplemental Savings Plan (filed with the Commission as Exhibit 10(h) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993). 10(g) - Supplemental Health Plan for Executive Officers of Tidewater Inc. (filed with the Commission as Exhibit 10(i) to a Registration Statement on September 12, 1989, Registration No. 33-31016).
*10(h) - Tidewater Inc. Deferred Compensation Plan for Directors.
10(i) - Tidewater Inc. Retirement Plan for Directors as adopted on March 22, 1990 (filed with the Commission as Exhibit 10(k) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1990).
10(j) - Employment and Consulting Agreement dated as of March 31, 1993 between Tidewater Inc. and John P. Laborde as amended (filed with the Commission as Exhibit 10(l) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
10(k) - Form of Severance Agreement entered into as of August 1, 1985 with eleven executive officers and key employees, as amended (filed with the Commission as Exhibit 10(j) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
10(l) - Form of Severance Agreement entered into as of February 18, 1992 with three executive officers, as amended (filed with the Commission as Exhibit 10(k) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
10(m) - Standstill Agreement dated as of November 11, 1992 between Tidewater Inc. and Zapata Corporation (filed with the Commission as Exhibit 10(o) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1993).
*10(n) - First Amendment to Standstill Agreement dated January 24, 1994 between Tidewater Inc. and Zapata Corporation.
10(o) - Agreement, dated August 11, 1989, by and among the Company and Irwin L. Jacobs, Daniel T. Lindsay, Gerald A. Schwalbach, TR Holdings, Inc. and Minstar, Inc. (filed with the Commission as Exhibit 1 to the Company's report on Form 8-K for August 11, 1989).
10(p) - Form of Stockholder Agreement entered into by and between the Company and each of the stockholders of Zapata Gulf Marine Corporation (filed with the Commission as Exhibit 10(r) to the Company's annual report on Form 10-K for the fiscal year ended March 31, 1992).
*11 - Earnings per share Computation Information.
*22 - Subsidiaries of the Company.
*24 - Consent of Independent Accountants.