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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) - For the Fiscal Year Ended March 31, 1994
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) - For the Transition Period From
___________________________ to ___________________________
Commission file number 1-6311
TIDEWATER INC.
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(Exact name of registrant as specified in its Charter)
Delaware 72-0487776
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1440 Canal Street, New Orleans, Louisiana 70112
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(Address of principal executive offices) (Zip Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
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Common Stock, par value $0.10 New York Stock Exchange, Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange, Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
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As of May 2, 1994, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $982,195,105.
53,072,749 shares of Tidewater Inc. common stock $0.10 par value per
share were outstanding on May 2, 1994. Registrant has no other class of common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PART I
Page
Item Number
---- ------
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 11
4A. Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . 31
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 31
PART III
10. Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . 32
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . 45
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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PART I
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
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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,
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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.
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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:
Year Ended March 31,
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1994 1993 1992
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Towing-supply and supply vessels . . . . . . . . . . . . . . . . . . . . 67% 68% 71%
Crew and utility vessels . . . . . . . . . . . . . . . . . . . . . . . . 9% 8% 7%
Offshore tugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 19% 16%
Other vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4% 5% 6%
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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
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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
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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.
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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. 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.
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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. 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.
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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:
Name Age Position
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John P. Laborde . . . . . . . . . 70 Chairman of the Board of Directors,
President and Chief Executive Officer
Richard M. Currence . . . . . . . 55 Executive Vice President
Ken C. Tamblyn . . . . . . . . . . 51 Executive Vice President and Chief
Financial Officer
William C. Hightower . . . . . . . 52 Senior Vice President
Victor I. Koock . . . . . . . . . 54 Senior Vice President, Secretary, and
Co-General Counsel
Cliffe F. Laborde . . . . . . . . 42 Senior Vice President and Co-General
Counsel
Stephen A. Snider . . . . . . . . 46 Senior Vice President
Michael L. Goldblatt . . . . . . . 45 Vice President and Assistant Secretary
J. Keith Lousteau . . . . . . . . 47 Vice President and Treasurer
Thomas E. Hartford . . . . . . . . 44 Vice President
Gary D. Pope . . . . . . . . . . . 59 Vice President
Larry T. Rigdon . . . . . . . . . 46 Vice President
Robert D. Ryan . . . . . . . . . . 39 Vice President
Joseph C. Sarne . . . . . . . . . 50 Vice President
Joseph M. Bennett . . . . . . . . 38 Controller
In addition to its executive officers, the officers of the Company also
include the following:
Alvin A. Arcemont . . . . . . . . 49 Vice President
Van C. DeWitt . . . . . . . . . . 42 Vice President
Stephen W. Dick . . . . . . . . . 44 Vice President
Peter F. Fortier . . . . . . . . . 41 Vice President
J. Peter Laborde, Jr. . . . . . . 39 Vice President
Dean E. Taylor . . . . . . . . . . 45 Vice President
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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.
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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.
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PART II
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.
- ---------------------------------------------------------------------------------------------------------
Fiscal Year Quarter High Low Dividend
- ---------------------------------------------------------------------------------------------------------
1994 First $26-3/8 $21-1/8 ---
Second 23-1/4 19 $0.100
Third 25-3/4 19-1/2 0.100
Fourth 23-1/8 19-1/2 0.100
1993 First 17-1/8 12 0.075
Second 19-1/2 14-7/8 0.075
Third 21 17-1/4 0.075
Fourth 24-3/4 16-3/8 0.100
- ---------------------------------------------------------------------------------------------------------
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.
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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)
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
Revenues:
Marine operations $ 466,601 413,439 430,681 394,325 322,401
Compression operations 55,471 62,099 54,561 61,479 52,151
- ----------------------------------------------------------------------------------------------------------------
$ 522,072 475,538 485,242 455,804 374,552
================================================================================================================
Earnings (loss) from
continuing operations $ 36,130 27,809 25,904 36,904 (14,054)
Discontinued operations (1) --- 3,099 357 (2,258) (1,371)
Extraordinary loss on early
debt retirement (2) (11,970) --- --- --- ---
Accounting change (3) --- (6,640) --- --- ---
- ----------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 24,160 24,268 26,261 34,646 (15,425)
================================================================================================================
Per common share:
Earnings (loss) from continuing
operations $ .67 .53 .49 .70 (.30)
Discontinued operations (1) --- .06 .01 (.04) (.03)
Extraordinary loss on early
debt retirement (2) (.22) --- --- --- ---
Accounting change (3) --- (.13) --- --- ---
- ----------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ .45 .46 .50 .66 (.33)
================================================================================================================
Total assets $ 809,886 838,748 867,573 896,420 883,799
================================================================================================================
Long-term debt $ 1,952 95,722 123,896 181,622 233,322
================================================================================================================
Working capital $ 156,126 201,399 171,231 140,066 119,927
================================================================================================================
Current ratio 2.20 3.10 2.43 2.04 2.05
================================================================================================================
Cash dividends declared per
common share (4) $ .30 .325 -- -- --
================================================================================================================
(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.
-15-
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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.
- ---------------------------------------------------------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------
Cash to long-term debt 5,471% 114% 92%
Long-term debt to total capitalization 0.3% 15% 19%
Equity to total assets 69% 65% 62%
================================================================================================================
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.
-16-
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(in thousands)
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
Marine $ 177,665 161,012 176,751
Compression 25,133 25,816 25,372
- ------------------------------------------------------------------------------------------------------------
$ 202,798 186,828 202,123
============================================================================================================
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:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Additions to Properties and Equipment:
- -------------------------------------
Marine:
- ------
Additional equipment $ 11,761 27,055 3,800
Modifications/additions to existing equipment 18,936 17,518 24,460
Other 1,697 1,530 2,124
- -----------------------------------------------------------------------------------------------------------
32,394 46,103 30,384
- -----------------------------------------------------------------------------------------------------------
Compression:
- -----------
Additional equipment 15,976 3,579 6,687
Modifications/additions to existing equipment 3,729 1,177 1,368
Other 840 869 335
- -----------------------------------------------------------------------------------------------------------
20,545 5,625 8,390
General Corporate 380 638 572
- -----------------------------------------------------------------------------------------------------------
$ 53,319 52,366 39,346
===========================================================================================================
Proceeds from sales of assets:
- -----------------------------
Marine equipment $ 8,107 3,890 8,654
Compression equipment 3,376 4,215 2,036
- -----------------------------------------------------------------------------------------------------------
$ 11,483 8,105 10,690
===========================================================================================================
-17-
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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,
-18-
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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.
-19-
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RESULTS OF OPERATIONS
Revenues, operating profits and certain other information by business segment
and geographic distribution for the years ended March 31 are:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Revenues:
Marine:
United States $ 197,262 131,229 149,425
Foreign (A) 269,339 282,210 281,256
- -----------------------------------------------------------------------------------------------------------
466,601 413,439 430,681
Compression - United States 55,471 62,099 54,561
- -----------------------------------------------------------------------------------------------------------
$ 522,072 475,538 485,242
===========================================================================================================
Operating profit:
Marine:
United States 35,018 912 3,236
Foreign (A) 30,765 52,085 55,353
- -----------------------------------------------------------------------------------------------------------
65,783 52,997 58,589
- -----------------------------------------------------------------------------------------------------------
Compression - United States 6,895 10,177 10,380
Equity in net earnings of unconsolidated companies 2,686 2,525 2,225
Other income 1,034 367 4,374
Other expense --- (3,771) ---
Gain on settlement of litigation --- --- 14,160
Merger expenses --- --- (22,014)
General corporate expenses (10,806) (9,797) (6,144)
Interest expense (7,939) (12,323) (18,600)
- -----------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes $ 57,653 40,175 42,970
===========================================================================================================
Identifiable assets:
Marine:
United States 271,040 295,008 292,167
Foreign (A) 327,975 348,767 367,886
- -----------------------------------------------------------------------------------------------------------
599,015 643,775 660,053
Compression - United States 68,285 57,143 62,447
- -----------------------------------------------------------------------------------------------------------
Total operating segments 667,300 700,918 722,500
Investments in and advances to unconsolidated companies:
Marine (A) 21,843 23,103 23,712
Other --- 1,321 1,581
Disposed businesses and discontinued segments 284 2,258 9,691
Corporate 120,459 111,148 110,089
- -----------------------------------------------------------------------------------------------------------
Total $ 809,886 838,748 867,573
===========================================================================================================
Depreciation:
Marine 74,343 71,673 70,820
Compression 9,144 8,352 8,730
- -----------------------------------------------------------------------------------------------------------
Total operating segments 83,487 80,025 79,550
Corporate 165 292 286
- -----------------------------------------------------------------------------------------------------------
Total $ 83,652 80,317 79,836
===========================================================================================================
-20-
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(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.
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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:
(in thousands)
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
Type:
- ----
Personnel $ 37,518 36,058 36,365
Office and property 10,363 9,947 10,499
Sales and marketing 4,190 4,254 4,932
Professional services 4,580 3,741 4,085
Taxes other than income taxes 2,392 1,926 2,147
Insurance 1,750 1,197 1,003
Other 2,303 1,356 2,140
- -------------------------------------------------------------------------------------------------------------
$ 63,096 58,479 61,171
=============================================================================================================
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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:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Owned or chartered vessels:
Domestic $ 178,726 132,496 139,098
Foreign 269,169 281,983 279,872
- -----------------------------------------------------------------------------------------------------------
447,895 414,479 418,970
Brokered vessels 10,083 7,081 11,905
Shipyard sales 8,623 3,014 10,206
Intercompany eliminations (A) --- (11,135) (10,400)
- -----------------------------------------------------------------------------------------------------------
$ 466,601 413,439 430,681
===========================================================================================================
(A) Revenues earned from the charter of equipment to the discontinued
Container Shipping segment.
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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:
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
UTILIZATION:
- -----------
Domestic-based fleet:
--------------------
Towing Supply/Supply 90.2% 83.8% 85.2%
Crew/Utility 92.0% 88.3% 83.4%
Offshore tugs 64.4% 69.3% 66.1%
Other 67.4% 69.8% 75.5%
Total 82.2% 79.6% 79.1%
Foreign-based fleet:
-------------------
Towing Supply/Supply 77.7% 82.9% 87.9%
Crew/Utility 72.6% 81.9% 86.8%
Offshore Tugs 78.7% 80.3% 78.9%
Other 72.2% 86.9% 85.3%
Total 76.2% 83.2% 86.3%
Worldwide fleet:
---------------
Towing Supply/Supply 81.6% 83.1% 87.1%
Crew/Utility 82.5% 85.2% 85.5%
Offshore Tugs 71.6% 74.5% 72.5%
Other 71.0% 82.1% 81.3%
Total 78.4% 81.9% 83.6%
===========================================================================================================
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-
-24-
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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:
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
AVERAGE VESSEL DAY RATES:
- ------------------------
Domestic-based fleet:
--------------------
Towing Supply/Supply $ 3,551 2,696 3,082
Crew/Utility 1,230 1,121 1,004
Offshore tugs 4,259 3,850 4,342
Other 1,826 1,598 906
Total $ 2,934 2,412 2,507
Foreign-based fleet:
-------------------
Towing Supply/Supply $ 3,660 3,592 3,461
Crew/Utility 1,727 1,610 1,549
Offshore Tugs 2,923 2,906 2,298
Other 567 572 853
Total $ 2,793 2,701 2,618
Worldwide fleet:
---------------
Towing Supply/Supply $ 3,622 3,339 3,350
Crew/Utility 1,445 1,349 1,341
Offshore Tugs 3,516 3,365 3,230
Other 875 816 873
Total $ 2,848 2,601 2,580
===========================================================================================================
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.
-25-
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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:
Actual
vessel Average number of
count at vessels during year
March 31, ended March 31,
- ----------------------------------------------------------------------------------------------------------------
1994 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Domestic-based fleet:
- --------------------
Towing Supply/Supply 98 88 78 83
Crew/Utility 48 47 42 27
Offshore Tugs 46 47 44 38
Other 13 21 25 44
- ----------------------------------------------------------------------------------------------------------------
Total 205 203 189 192
- ----------------------------------------------------------------------------------------------------------------
Foreign-based fleet:
- -------------------
Towing Supply/Supply 174 191 200 196
Crew/Utility 41 45 40 42
Offshore Tugs 50 49 40 38
Other 61 61 64 64
- ----------------------------------------------------------------------------------------------------------------
Total 326 346 344 340
- ----------------------------------------------------------------------------------------------------------------
Owned or chartered vessels included in marine revenues 531 549 533 532
Vessels withdrawn from active service 20 15 13 12
Joint venture owned vessels 43 43 43 43
- ----------------------------------------------------------------------------------------------------------------
Total 594 607 589 587
================================================================================================================
Worldwide fleet:
- ---------------
Towing Supply/Supply 311 313 308 307
Crew/Utility 96 99 92 92
Offshore Tugs 98 98 87 89
Other 89 97 102 99
- ----------------------------------------------------------------------------------------------------------------
Total 594 607 589 587
================================================================================================================
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
-26-
27
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:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Crew costs $ 135,374 122,244 119,871
Repair and maintenance 68,625 63,440 69,817
Vessel insurance 24,918 24,969 18,897
Fuel, lube and supplies 22,296 20,631 18,846
Charter fees, mobilization/demobilization 8,113 8,835 11,115
Other 12,094 14,910 7,365
- -----------------------------------------------------------------------------------------------------------
Total operating costs of owned and chartered vessels 271,420 255,029 245,911
Brokered vessels' costs 9,274 6,248 10,810
Shipyard costs 8,242 2,116 7,609
Intercompany eliminations (A) --- (10,966) (10,400)
- -----------------------------------------------------------------------------------------------------------
$ 288,936 252,427 253,930
===========================================================================================================
For owned and chartered vessels:
- -------------------------------
Overall percentage increase in operating costs 6.4% 3.7% 18.8%
===========================================================================================================
Operating costs as a percentage of related revenues 60.6% 61.5% 58.7%
===========================================================================================================
(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
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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:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Rentals:
Gas compressors $ 30,868 26,653 29,465
Air compressors 4,115 4,947 4,336
- -----------------------------------------------------------------------------------------------------------
Total rental revenues 34,983 31,600 33,801
Equipment and parts sales 18,385 28,662 18,955
Repair and service 2,103 1,837 1,805
- -----------------------------------------------------------------------------------------------------------
$ 55,471 62,099 54,561
===========================================================================================================
As a percentage of total Compression revenues:
Rental revenues 63% 51% 62%
Equipment and parts sales 33% 46% 35%
Repair and service 4% 3% 3%
- -----------------------------------------------------------------------------------------------------------
100% 100% 100%
===========================================================================================================
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-
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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:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Gas Compressors (Horsepower based statistics):
Utilization 86% 78% 84%
Average monthly rental rate $ 16.74 16.49 17.04
Average fleet size 179,725 172,711 171,494
===========================================================================================================
Air Compressors (Cubic feet per minute based statistics):
Utilization 34% 40% 37%
Average daily rental rate $ .21 .22 .21
Average fleet size 157,500 154,000 156,000
===========================================================================================================
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.
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Operating costs of the Compression segment consist of the following:
(in thousands)
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Field operating expenses:
Wages and benefits $ 6,209 5,672 5,851
Repairs and maintenance 6,043 5,833 5,431
Other 3,109 2,635 3,499
- -----------------------------------------------------------------------------------------------------------
15,361 14,140 14,781
Costs of sales 14,977 22,143 14,408
- -----------------------------------------------------------------------------------------------------------
$ 30,338 36,283 29,189
===========================================================================================================
Field operating costs as a percentage of
rental and repair and service revenues 41% 42% 42%
===========================================================================================================
Costs of sales as a percentage of
related revenues 81% 77% 76%
===========================================================================================================
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
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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. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
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:
Term
Name Age Expiring
---- --- --------
Robert H. Boh . . . . . . . . . . . . . . . . . . . . . . . . 63 1996
Donald T. Bollinger . . . . . . . . . . . . . . . . . . . . . 44 1996
Arthur R. Carlson . . . . . . . . . . . . . . . . . . . . . . 53 1994
Hugh J. Kelly . . . . . . . . . . . . . . . . . . . . . . . . 69 1996
John P. Laborde . . . . . . . . . . . . . . . . . . . . . . . 70 1994
Paul W. Murrill . . . . . . . . . . . . . . . . . . . . . . . 59 1994
Lester Pollack . . . . . . . . . . . . . . . . . . . . . . . . 60 1995
J. Hugh Roff, Jr. . . . . . . . . . . . . . . . . . . . . . . 62 1994
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.
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33
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.
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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
Annual Compensation Long Term Compensation
===========================================================================================================
Restricted No. of All
Name and Fiscal Stock Options Other
Principal Position Year Salary Bonus Other Awards (1) Awarded Compensation
- -----------------------------------------------------------------------------------------------------------
John P. Laborde, 1994 $600,000 $450,000 -0- -0- $ 20,976
Chairman of the 1993 560,000 275,000 $3,800,000 (2) -0- 2,231,260 (3)(4)
Board, President, 1992 440,000 300,000 -0- -0- 15,519 (4)
and Chief
Executive Officer
- -----------------------------------------------------------------------------------------------------------
Richard M. 1994 $232,500 $140,000 $43,607 (5) 20,000 $9,951
Currence 1993 218,750 90,000 -0- 30,000 9,538 (4)
Executive Vice 1992 200,000 100,000 -0- -0- 8,319 (4)
President
- -----------------------------------------------------------------------------------------------------------
Ken C. Tamblyn 1994 $222,500 $135,000 $43,607 (5) 20,000 $9,649
Executive Vice 1993 205,000 80,000 -0- 29,600 9,126 (4)
President and 1992 175,000 90,000 -0- -0- 7,569 (4)
Chief Financial
Officer
- -----------------------------------------------------------------------------------------------------------
Cliffe F. Laborde (6) 1994 $186,250 $90,000 $32,715 (5) 15,000 $8,563
Senior Vice 1993 175,000 50,000 -0- 13,600 2,976 (4)
President and Co- 1992 32,532 0 -0- 20,000 387 (4)
General Counsel
- -----------------------------------------------------------------------------------------------------------
Victor I. Koock 1994 $143,000 $50,000 $21,803 (5) 10,000 $7,266
Senior Vice 1993 133,750 40,000 -0- 8,000 6,639 (4)
President, 1992 115,000 50,000 -0- -0- 5,852 (4)
Secretary and Co-
General Counsel
===========================================================================================================
(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.
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35
- ---------------------------------------------------------------------------------------------------------
AMOUNTS CONTRIBUTED BY THE COMPANY
PURSUANT TO SAVINGS PLAN AND SUPPLEMENTAL SAVINGS PLAN
AND HEALTH CARE PREMIUMS PAID BY THE COMPANY
UNDER TIDEWATER EXECUTIVE MEDICAL PLAN
Contributions Premiums Paid
Under Under Executive
Year Savings Plans Medical Plan
---- ------------- ------------
John P. Laborde . . . . . . . . . . . . . 1993-1994 $18,000 $2,976
1992-1993 16,053 2,976
1991-1992 13,200 2,319
Richard M. Currence . . . . . . . . . . . 1993-1994 6,975 2,976
1992-1993 6,562 2,976
1991-1992 6,000 2,319
Ken C. Tamblyn . . . . . . . . . . . . . 1993-1994 6,673 2,976
1992-1993 6,150 2,976
1991-1992 5,250 2,319
Cliffe F. Laborde . . . . . . . . . . . . 1993-1994 5,587 2,976
1992-1993 0 2,976
1991-1992 0 387
Victor I. Koock . . . . . . . . . . . . . 1993-1994 4,290 2,976
1992-1993 3,663 2,976
1991-1992 3,533 2,319
- ---------------------------------------------------------------------------------------------------------
(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.
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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:
- -----------------------------------------------------------------------------------------------------------
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 1994
INDIVIDUAL GRANTS
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of
Number Granted to Stock Price Appreciation
of Employees for Option Term
Options in Last Exercise Expiration -------------------
Name Granted(1) Fiscal Year Price Date 5% 10%
- -----------------------------------------------------------------------------------------------------------
John P. Laborde -0- 0% --- --- --- ---
Richard M. Currence 20,000 10.5% $19.625 09/17/03 $246,841 $625,544
Ken C. Tamblyn 20,000 10.5% $19.625 09/17/03 $246,841 $625,544
Cliffe F. Laborde 15,000 7.9% $19.625 09/17/03 $185,131 $469,158
Victor I. Koock 10,000 5.3% $19.625 09/17/03 $123,421 $312,772
- -----------------------------------------------------------------------------------------------------------
(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:
- -------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXCERCISES IN FISCAL YEAR ENDED MARCH 31, 1994
AND OPTION VALUES AS OF MARCH 31, 1994
Number of Value of Unexercised
Unexercised In-the-Money
Number of Options at Options at
Shares March 31, 1994 March 31, 1994 (2)
Acquired Value ---------------------- ---------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
John P. Laborde 7,547 $66,036.25 25,786 -0- $161,163 -0-
Richard M. Currence -0- -0- 43,875 48,750 $289,484 $153,719
Ken C. Tamblyn 2,500 $40,937.50 37,866 45,234 $244,756 $105,107
Cliffe F. Laborde -0- -0- 11,200 30,734 $54,269 $59,370
Victor I. Koock 3,585 $55,149.37 22,291 18,459 $165,468 $52,845
- -------------------------------------------------------------------------------------------------------------
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37
(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
-37-
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persons in the remuneration and years-of-service classifications specified.
Benefits are not subject to any deduction for Social Security or other offset
amounts.
- -----------------------------------------------------------------------------------------------------------
PENSION PLANS TABLE
Five-Year
Final Average
Earnings Years of Credited Service at Retirement
-------------- ---------------------------------------
15 20 25 30 35
-- -- -- -- --
$150,000 $42,630 $56,839 $71,049 $ 85,259 $ 99,469
$175,000 50,130 66,839 83,549 100,259 116,969
$200,000 57,630 76,839 96,049 115,259 134,469
$225,000 65,130 86,839 108,549 130,259 151,969
$250,000 72,630 96,839 121,049 145,259 169,469
$300,000 87,630 116,839 146,049 175,259 204,469
$400,000 117,630 156,839 196,049 235,259 274,469
- -----------------------------------------------------------------------------------------------------------
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
-38-
39
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.
-39-
40
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
-40-
41
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.
-41-
42
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:
Amount and Nature of Percent
Name Beneficial Ownership* of Class
---- --------------------- --------
Robert H. Boh . . . . . . . . . . . . . . . . . . . . . 8,000 (1) **
Donald T. Bollinger . . . . . . . . . . . . . . . . . . 18,644 (1)(2) **
Arthur R. Carlson . . . . . . . . . . . . . . . . . . . 4,100 (1) **
Richard M. Currence . . . . . . . . . . . . . . . . . . 65,783 (3) **
Hugh J. Kelly . . . . . . . . . . . . . . . . . . . . . 5,000 (1) **
Victor I. Koock . . . . . . . . . . . . . . . . . . . . 31,790 (4) **
Cliffe F. Laborde . . . . . . . . . . . . . . . . . . . 29,713 (5) **
John P. Laborde . . . . . . . . . . . . . . . . . . . . 232,604 (6) **
Paul W. Murrill . . . . . . . . . . . . . . . . . . . . 4,100 (1) **
Lester Pollack . . . . . . . . . . . . . . . . . . . . 3,994,999 (7)(8) 7.5% (9)
J. Hugh Roff, Jr. . . . . . . . . . . . . . . . . . . . 5,000 (10) **
Ken C. Tamblyn . . . . . . . . . . . . . . . . . . . . 52,824 (11) **
All Directors and Executive Officers
as a group (22 persons) . . . . . . . . . . . . . . 4,569,287 (12) 8.6% (13)
- --------------
* 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.
-42-
43
(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.
-43-
44
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:
Name and Address Amount and Nature Percent
of of of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- -------
Common Stock
- ------------
Bessemer Capital Partners, L.P. 3,992,999 (1) 7.5% (7)
630 Fifth Avenue
New York, New York 10111
Corporate Partners Group 3,992,999 (2) 7.5% (7)
One Rockefeller Plaza
New York, New York 10020
FMR Corporation 6,889,000 (3) 13.0% (7)
82 Devonshire Street
Boston, Massachusetts 02109
NationsBank Corporation, et al. 3,275,000 (4) 6.2% (7)
NationsBank Plaza
Charlotte, North Carolina 28255
Chieftain Capital Management, Inc. 3,227,000 (5) 6.1% (7)
12 East 49th Street
New York, New York 10017
Neuberger & Berman 2,930,300 (6) 5.5% (7)
605 Third Avenue
New York, New York 10158
- ---------------
(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
-44-
45
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. 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.
-45-
46
PART IV
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 F-1)
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).
-46-
47
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).
-47-
48
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.
-48-
49
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
-49-
50
/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.
-50-
51
TIDEWATER INC.
ANNUAL REPORT ON FORM 10-K
ITEMS 8, 14(A), AND 14(D)
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENTS Page
----
1. Independent Auditors' Report F- 2
2. Consolidated Balance Sheets, March 31, 1994 and 1993 F- 3
3. Consolidated Statements of Earnings, three years ended March 31, 1994 F- 4
4. Consolidated Statements of Stockholders' Equity, three years ended March 31, 1994 F- 5
5. Consolidated Statements of Cash Flows, three years ended March 31, 1994 F- 6
6. Statement of Significant Accounting Policies F- 7
7. Notes to Consolidated Financial Statements F- 9
FINANCIAL STATEMENT SCHEDULES
I - Tidewater Inc. and Subsidiaries Marketable Securities F-22
V - Tidewater Inc. and Subsidiaries Properties and Equipment F-23
VI - Tidewater Inc. and Subsidiaries Accumulated Depreciation of Properties and Equipment F-25
VIII - Tidewater Inc. and Subsidiaries Valuation and Qualifying Accounts F-26
X - Tidewater Inc. and Subsidiaries Supplementary Income Statement Information F-27
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or the related notes.
F-1
52
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
F-2
53
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------
March 31, 1994 and 1993
(in thousands)
ASSETS 1994 1993
- --------------------------------------------------------------------------------------------------------------------
Current assets:
Cash, including temporary cash investments $ 106,788 108,969
Trade and other receivables, less allowance for doubtful accounts
of $6,744 in 1994 and $6,218 in 1993 140,627 149,010
Inventories 34,561 34,376
Other current assets 4,440 4,817
- --------------------------------------------------------------------------------------------------------------------
Total current assets 286,416 297,172
- --------------------------------------------------------------------------------------------------------------------
Investments in, at equity, and advances to unconsolidated companies 21,843 24,424
Properties and equipment:
Marine equipment 1,122,617 1,133,361
Compression equipment 122,314 110,285
Other 41,314 43,919
- --------------------------------------------------------------------------------------------------------------------
1,286,245 1,287,565
Less accumulated depreciation 838,067 802,744
- --------------------------------------------------------------------------------------------------------------------
Net properties and equipment 448,178 484,821
Other assets 53,449 32,331
- --------------------------------------------------------------------------------------------------------------------
$ 809,886 838,748
====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------
Current liabilities:
Convertible Subordinated Debentures redeemed on April 18, 1994 47,526 ---
Current maturities of other long-term debt 2,730 8,755
Accounts payable and accrued expenses 62,047 63,297
Accrued property and liability losses 7,757 8,637
Dividends payable --- 5,289
Income taxes 10,230 9,795
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 130,290 95,773
- --------------------------------------------------------------------------------------------------------------------
Deferred income taxes 45,099 44,045
Long-term debt 1,952 95,722
Accrued property and liability losses 36,163 20,594
Other liabilities and deferred credits 39,421 34,940
Stockholders' equity:
Common stock, issued 53,022,955 shares in 1994
and 53,495,491 shares in 1993 5,302 5,350
Additional paid-in capital 331,690 341,550
Retained earnings 231,001 222,730
- --------------------------------------------------------------------------------------------------------------------
567,993 569,630
Less:
Cumulative foreign currency translation adjustment 11,032 11,112
Treasury stock, at cost; 611,661 common shares in 1993 --- 10,844
- --------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 556,961 547,674
Commitments and other matters
- --------------------------------------------------------------------------------------------------------------------
$ 809,886 838,748
====================================================================================================================
See accompanying Statement of Significant Accounting Policies and Notes to
Consolidated Financial Statements.
F-3
54
CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------------------------------------------
Years Ended March 31, 1994, 1993 and 1992
(in thousands, except share and per share data)
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
Revenues:
Marine operations $ 466,601 413,439 430,681
Compression operations 55,471 62,099 54,561
- -------------------------------------------------------------------------------------------------------------------
522,072 475,538 485,242
- -------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Marine operations 288,936 252,427 253,930
Compression operations 30,338 36,283 29,189
Depreciation 83,652 80,317 79,836
General and administrative 63,096 58,479 61,171
- -------------------------------------------------------------------------------------------------------------------
466,022 427,506 424,126
- -------------------------------------------------------------------------------------------------------------------
56,050 48,032 61,116
Other income (expenses):
Foreign exchange loss (557) (1,788) (1,610)
Gain on sales of assets 4,579 3,408 2,472
Equity in net earnings of unconsolidated companies 2,686 2,525 2,225
Minority interests (2,022) (2,544) (2,064)
Gain on settlement of litigation --- --- 14,160
Merger expenses --- --- (22,014)
Interest and miscellaneous income 6,109 6,636 7,285
Other expense (1,253) (3,771) ---
Interest expense (7,939) (12,323) (18,600)
- -------------------------------------------------------------------------------------------------------------------
1,603 (7,857) (18,146)
- -------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes 57,653 40,175 42,970
Income taxes:
On current earnings 19,602 12,366 17,066
Effect of 1993 tax law change 1,921 --- ---
- -------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 36,130 27,809 25,904
Discontinued operations --- 3,099 357
- -------------------------------------------------------------------------------------------------------------------
Earnings before extraordinary item and cumulative
effect of accounting change 36,130 30,908 26,261
Extraordinary loss on early debt retirement (11,970) --- ---
Cumulative effect of accounting change --- (6,640) ---
- -------------------------------------------------------------------------------------------------------------------
Net earnings $ 24,160 24,268 26,261
===================================================================================================================
Primary and fully-diluted earnings per common share:
Continuing operations $ .67 .53 .49
Discontinued operations --- .06 .01
- -------------------------------------------------------------------------------------------------------------------
Earnings before extraordinary item and cumulative
effect of accounting change .67 .59 .50
Extraordinary loss on early debt retirement (.22) --- ---
Cumulative effect of accounting change --- (.13) ---
- -------------------------------------------------------------------------------------------------------------------
Net earnings $ .45 .46 .50
===================================================================================================================
Weighted average common shares and equivalents 53,317,501 53,073,573 52,681,442
===================================================================================================================
Cash dividends declared per common share $ .30 .325 ---
===================================================================================================================
See accompanying Statement of Significant Accounting Policies and Notes to
Consolidated Financial Statements.
F-4
55
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
Years Ended March 31, 1994, 1993 and 1992
(in thousands)
Cumulative
foreign
Additional currency
Common paid-in Retained translation Treasury
stock capital earnings adjustment stock Total
- ------------------------------------------------------------------------------------------------------------
1994
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1993 $ 5,350 341,550 222,730 (11,112) (10,844) 547,674
Net earnings --- --- 24,160 --- --- 24,160
Treasury stock changes (Note 9) (63) (10,781) --- --- 10,844 ---
Exercise of stock options 15 1,195 --- --- --- 1,210
Cash dividends declared --- (15,889) --- --- (15,889)
Other --- (274) --- 80 --- (194)
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1994 $ 5,302 331,690 231,001 (11,032) -0- 556,961
============================================================================================================
1993
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1992 5,293 332,597 215,604 (10,478) (6,692) 536,324
Net earnings --- --- 24,268 --- --- 24,268
Contribution of treasury stock
to employee benefit plans --- 157 --- --- 935 1,092
Treasury stock additions --- --- --- --- (5,087) (5,087)
Exercise of stock options and
issuance of restricted stock 57 7,440 --- --- --- 7,497
Cash dividends declared --- --- (17,142) --- --- (17,142)
Other --- 1,356 --- (634) --- 722
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1993 $ 5,350 341,550 222,730 (11,112) (10,844) 547,674
============================================================================================================
1992
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1991 26,393 307,806 189,343 (10,460) (7,462) 505,620
Net earnings --- --- 26,261 --- --- 26,261
Contribution of treasury stock
to employee benefit plans --- 44 --- --- 790 834
Reduction of par value of
common stock (Note 9) (21,153) 21,153 --- --- --- ---
Other 53 3,594 --- (18) (20) 3,609
- ------------------------------------------------------------------------------------------------------------
Amount at March 31, 1992 $ 5,293 332,597 215,604 (10,478) (6,692) 536,324
============================================================================================================
See accompanying Statement of Significant Accounting Policies and Notes to
Consolidated Financial Statements.
F-5
56
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
Years Ended March 31, 1994, 1993 and 1992
(in thousands)
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 24,160 24,268 26,261
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Extraordinary loss on early debt retirement 11,970 --- ---
Earnings and gain on sale of discontinued operations --- (3,099) (357)
Cumulative effect of accounting change --- 6,640 ---
Depreciation 83,652 80,317 79,836
Provision for deferred income taxes 4,801 4,960 8,049
Gain on sales of assets (4,579) (3,408) (2,472)
Equity in net earnings of unconsolidated companies (2,686) (2,525) (2,225)
Minority interests 2,022 2,544 2,064
Compensation expense - restricted stock --- 3,800 ---
Decrease (increase) in trade and other receivables 8,383 (12,364) (1,195)
Decrease (increase) in inventories (238) 1,824 (180)
Decrease (increase) in other current assets 1,058 244 (601)
Increase (decrease) in accounts payable and accrued expenses (832) (11,190) 6,747
Increase (decrease) in accrued property and liability losses (880) 3,360 (573)
Increase (decrease) in income taxes 2,845 (4,054) 833
Other, net 5,994 4,631 1,920
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 135,670 95,948 118,107
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of assets 11,483 8,105 10,690
Additions to properties and equipment (53,319) (52,366) (39,346)
Investments in unconsolidated companies, net of dividends received (877) 2,768 493
Investment from minority interests, net of dividends paid (3,094) (1,602) 1,374
Other --- --- 498
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (45,807) (43,095) (26,291)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (65,328) (46,614) (149,713)
Prepayment penalties on early debt retirement (6,473) --- ---
Proceeds from the issuance of long-term debt --- --- 70,000
Cash dividends (21,178) (11,853) ---
Other 935 1,203 2,780
- -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (92,044) (57,264) (76,933)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash, including temporary cash investments (2,181) (4,411) 14,883
- -------------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments at beginning of year 108,969 113,380 98,497
- -------------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments at end of year $ 106,788 108,969 113,380
===================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 8,330 11,635 18,108
Income taxes 15,779 10,733 7,725
===================================================================================================================
See accompanying Statement of Significant Accounting Policies and Notes to
Consolidated Financial Statements.
F-6
57
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:
Years
- ------------------------------------------------------------------------------
Marine equipment (from date of construction) 10 - 20
Compression equipment 8 - 12
Other properties and equipment 3 - 30
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
F-7
58
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.
F-8
59
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:
(in thousands)
1993 1992
- ------------------------------------------------------------------------------------------------------------
Revenues $ 66,576 61,265
Operating expenses (60,229) (55,352)
Depreciation (117) (98)
General and administrative expenses (6,344) (5,481)
Other income 11 23
- ------------------------------------------------------------------------------------------------------------
Earnings (loss) from operations before income taxes (103) 357
Income taxes --- ---
- ------------------------------------------------------------------------------------------------------------
Earnings (loss) from operations (103) 357
Gain on sale of segment (net of income tax benefits of $.9 million) 3,202 ---
- ------------------------------------------------------------------------------------------------------------
$ 3,099 357
============================================================================================================
F-9
60
(3) INVENTORIES
A summary of inventories at March 31 follows:
(in thousands)
1994 1993
- -----------------------------------------------------------------------------------------------------------
Marine operating supplies $ 27,476 28,630
Compression supplies and merchandise held for sale 7,085 5,746
- -----------------------------------------------------------------------------------------------------------
$ 34,561 34,376
===========================================================================================================
(4) UNCONSOLIDATED COMPANIES
Investments in, at equity, and advances to unconsolidated joint-venture
companies at March 31 were as follows:
Percentage (in thousands)
ownership 1994 1993
- -------------------------------------------------------------------------------------------------------------
Tidewater Place Joint Venture 50% $ --- 1,321
Marine joint ventures:
National Marine Service (Abu Dhabi-UAE) 40% 11,506 11,829
Tidewater Port Jackson (Australia) 50% 6,805 6,275
Provident Marine, Ltd. (Mexico) 50% 2,135 2,450
Others 20%-50% 1,397 2,549
- -------------------------------------------------------------------------------------------------------------
$ 21,843 24,424
=============================================================================================================
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:
(in thousands)
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
United States $ 26,083 (13,238) (14,536)
Foreign 31,570 53,413 57,506
- ------------------------------------------------------------------------------------------------------------
$ 57,653 40,175 42,970
============================================================================================================
F-10
61
Total income tax expense for the years ended March 31, 1994 and 1993 was
allocated as follows:
(in thousands)
1994 1993
- ------------------------------------------------------------------------------------------------------------
Income from continuing operations:
On current earnings $ 19,602 12,366
Effect of 1993 tax law change 1,921 ---
Gain on sale of Container Shipping segment --- (869)
Extraordinary loss on early debt retirement (6,470) ---
Cumulative effect of accounting change --- (3,421)
Stockholders' equity (for compensation expense for income tax purposes
in excess of amounts recognized for financial reporting purposes) --- (1,356)
- ------------------------------------------------------------------------------------------------------------
$ 15,053 6,720
============================================================================================================
Income tax expense attributable to income from continuing operations for the
years ended March 31 consists of the following:
(in thousands)
U.S.
---------------------------
Federal State Foreign Total
- ----------------------------------------------------------------------------------------------------------------
1994
- ----------------------------------------------------------------------------------------------------------------
Current $ 8,290 1,248 7,184 16,722
Deferred 4,801 --- --- 4,801
- ----------------------------------------------------------------------------------------------------------------
$ 13,091 1,248 7,184 21,523
================================================================================================================
1993
- ----------------------------------------------------------------------------------------------------------------
Current 1,081 680 5,645 7,406
Deferred 4,960 --- --- 4,960
- ----------------------------------------------------------------------------------------------------------------
$ 6,041 680 5,645 12,366
================================================================================================================
1992
- ----------------------------------------------------------------------------------------------------------------
Current 1,934 788 6,295 9,017
Deferred 8,049 --- --- 8,049
- ----------------------------------------------------------------------------------------------------------------
$ 9,983 788 6,295 17,066
================================================================================================================
F-11
62
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:
(in thousands)
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
Computed "expected" tax expense $ 20,179 13,659 14,610
Increase (reduction) resulting from:
Effect of 1993 tax law change 1,921 --- ---
Foreign earnings not includable in U.S. tax return (24) (463) (361)
Foreign taxes not creditable against U.S. taxes --- --- 2,559
Utilization of net operating loss carryforwards (183) (782) (3,474)
Expenses which are not deductible for tax purposes 248 60 3,091
Other, net (618) (108) 641
- ------------------------------------------------------------------------------------------------------------
$ 21,523 12,366 17,066
============================================================================================================
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:
(in thousands)
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
Application of net operating loss carryforwards $ 1,478 18,330 10,203
Foreign tax credits 874 (4,105) (814)
Accelerated depreciation of properties and equipment for tax purposes 4,145 (14,498) 522
Differences in gain or loss on sales of assets --- --- (797)
Taxes on unremitted foreign earnings (3,133) 625 1,609
Deferred charges --- 6,087 ---
Effect of 1993 tax law change 1,921 --- ---
Other (484) (1,479) (2,674)
- ------------------------------------------------------------------------------------------------------------
Subtotal 4,801 4,960 8,049
- ------------------------------------------------------------------------------------------------------------
Extraordinary loss on early debt retirement (3,747) --- ---
Accounting change --- (3,421) ---
- ------------------------------------------------------------------------------------------------------------
$ 1,054 1,539 8,049
============================================================================================================
F-12
63
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:
(in thousands)
1994 1993
- ------------------------------------------------------------------------------------------------------------
Deferred tax assets:
Insurance loss reserves not deducted for tax purposes $ 12,410 11,518
U.S. net operating loss carryforwards --- 1,478
Foreign net operating loss carryforwards 4,171 3,987
Foreign tax credit carryforwards 3,231 4,105
Investment tax credit carryforwards 11,911 16,607
Alternative minimum tax credit carryforwards 2,206 2,561
Other 1,745 449
- ------------------------------------------------------------------------------------------------------------
Gross deferred tax assets 35,674 40,705
Less valuation allowance 4,171 3,987
- ------------------------------------------------------------------------------------------------------------
$ 31,503 36,718
- ------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation differences on properties and equipment (73,431) (70,382)
Undistributed income of unconsolidated joint-venture companies (3,171) (6,012)
Other --- (4,369)
- ------------------------------------------------------------------------------------------------------------
Gross deferred tax liabilities (76,602) (80,763)
- ------------------------------------------------------------------------------------------------------------
Net deferred tax liability $ (45,099) (44,045)
============================================================================================================
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.
F-13
64
(6) LONG-TERM DEBT
A summary of long-term debt at March 31 follows:
(in thousands)
1994 1993
- ------------------------------------------------------------------------------------------------------------
9.17% and 10.0% notes due in quarterly installments through 1999 $ --- 52,450
- ------------------------------------------------------------------------------------------------------------
7% convertible subordinated debentures due 2010 47,779 47,135
Unamortized discount (253) (11,283)
- ------------------------------------------------------------------------------------------------------------
47,526 35,852
- ------------------------------------------------------------------------------------------------------------
Capitalized lease obligations:
Total lease payments 5,438 20,628
Interest (756) (4,453)
- ------------------------------------------------------------------------------------------------------------
4,682 16,175
- ------------------------------------------------------------------------------------------------------------
Total long-term debt 52,208 104,477
Less:
7% convertible subordinated debentures redeemed on April 18, 1994 47,526 ---
Current maturities of other long-term debt 2,730 8,755
- ------------------------------------------------------------------------------------------------------------
Net long-term debt $ 1,952 95,722
============================================================================================================
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
F-14
65
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:
(in thousands)
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
Service cost-benefit earned during the period $ 2,118 1,723 1,420
Interest cost on projected benefit obligation 1,715 1,617 1,112
Actual return on assets (1,398) (726) (2,134)
Net amortization and deferral 590 219 1,830
- ------------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 3,025 2,833 2,228
============================================================================================================
Assumptions used in the accounting are:
Discount rates 7.25% 8.5% 8.5%
Rates of annual increase in compensation levels 5% 5% 5%-5.5%
Expected long-term rate of return on assets 9.5% 9.5% 9.5%
============================================================================================================
F-15
66
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:
(in thousands)
Plan with Plan with
Accumulated Benefit Accumulated Benefit
Obligations Less Obligations in
Than Assets Excess of Assets
------------------------- ------------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------
Actuarial present value of vested
benefit obligation $ 14,429 10,422 1,657 804
=============================================================================================================
Accumulated benefit obligation $ 16,221 11,542 1,779 804
=============================================================================================================
Projected benefit obligation $ 23,344 18,183 2,879 1,748
Plan assets at fair value, primarily
bonds and common stock 17,946 13,716 --- ---
- -------------------------------------------------------------------------------------------------------------
Projected benefit obligation in
excess of plan assets 5,398 4,467 2,879 1,748
Unrecognized net transitional
obligation amortized over 15 years (728) (843) --- ---
Unrecognized actuarial gain (loss) (3,422) (767) (1,626) (1,134)
Unrecognized prior service cost (1,665) (1,750) (871) (1,044)
Adjustment required to recognize
minimum liability --- --- 1,397 1,234
- -------------------------------------------------------------------------------------------------------------
Net accrued pension (asset) liability $ (417) 1,107 1,779 804
=============================================================================================================
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.
F-16
67
Net periodic postretirement health care and life insurance costs for 1994 and
1993 include the following components:
(in thousands)
1994 1993
- -----------------------------------------------------------------------------------------------------------
Service cost - benefit earned during the period $ 801 691
Interest cost on accumulated postretirement benefit obligation 964 847
Other amortization and deferral (28) ---
- -----------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 1,737 1,538
===========================================================================================================
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:
(in thousands)
1994 1993
- ------------------------------------------------------------------------------------------------------------
Actuarial present value of accumulated postretirement benefit obligation:
Current retirees $ 1,967 3,625
Current employees eligible for benefits 634 3,318
Current employees not yet eligible for benefits 5,854 4,461
- ------------------------------------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation 8,455 11,404
Unrecognized prior service cost 290 317
Unrecognized net gain (loss) 4,228 (355)
- ------------------------------------------------------------------------------------------------------------
Accrued postretirement benefit cost $ 12,973 11,366
============================================================================================================
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:
(in thousands)
1994 1993
- -----------------------------------------------------------------------------------------------------------
Postretirement benefit liability $ 12,973 11,366
Minority interests in net assets of subsidiaries 10,678 11,730
Noncurrent foreign and domestic taxes 6,957 6,957
Deferred gain on sale/leaseback transaction 1,723 2,811
Other 7,090 2,076
- -----------------------------------------------------------------------------------------------------------
$ 39,421 34,940
===========================================================================================================
F-17
68
(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:
Price range
per share Shares
- ----------------------------------------------------------------------------------------------------------
Outstanding March 31, 1991 $ 4.38 - 21.50 1,271,035
Options granted 12.13 26,000
Options exercised 4.38 - 13.25 (143,854)
Options expired or cancelled 4.38 - 13.25 (49,837)
- ----------------------------------------------------------------------------------------------------------
Outstanding March 31, 1992 4.38 - 21.50 1,103,344
Options granted 15.00 - 19.00 177,200
Options exercised 4.38 - 13.25 (367,638)
Options expired or cancelled 4.38 - 15.00 (19,917)
- ----------------------------------------------------------------------------------------------------------
Outstanding March 31, 1993 4.38 - 21.50 892,989
Options granted 19.63 - 20.13 198,900
Options exercised 4.38 - 15.00 (160,323)
Options expired or cancelled 4.38 - 19.63 (35,830)
- ----------------------------------------------------------------------------------------------------------
Outstanding March 31, 1994 $ 4.38 - 21.50 895,736
==========================================================================================================
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
F-18
69
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
F-19
70
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.
F-20
71
(13) SUPPLEMENTARY INFORMATION--QUARTERLY FINANCIAL DATA (UNAUDITED)
Years Ended March 31, 1994 and 1993
(in thousands, except per share data)
1994 First Second Third Fourth
- -------------------------------------------------------------------------------------------------------------
Revenues:
Marine operations $ 116,225 119,750 118,971 111,655
Compression operations 12,932 14,419 14,002 14,118
- -------------------------------------------------------------------------------------------------------------
$ 129,157 134,169 132,973 125,773
=============================================================================================================
Operating profit:
Marine operations $ 15,334 18,718 21,886 9,845
Compression operations 1,132 2,366 1,951 1,446
- -------------------------------------------------------------------------------------------------------------
$ 16,466 21,084 23,837 11,291
=============================================================================================================
Earnings before extraordinary item $ 8,214 9,142 13,542 5,232
=============================================================================================================
Net earnings (loss) $ 8,214 4,692 13,542 (2,288)
=============================================================================================================
Primary and fully diluted earnings
per common share:
Earnings before extraordinary item $ 0.15 0.17 0.25 .10
=============================================================================================================
Net earnings (loss) $ 0.15 0.09 0.25 (.04)
=============================================================================================================
1993
- -------------------------------------------------------------------------------------------------------------
Revenues:
Marine operations $ 96,440 105,865 107,149 103,985
Compression operations 14,202 14,397 17,363 16,137
- -------------------------------------------------------------------------------------------------------------
$ 110,642 120,262 124,512 120,122
=============================================================================================================
Operating profit:
Marine operations $ 12,024 18,456 13,687 8,830
Compression operations 3,014 2,117 2,895 2,151
- -------------------------------------------------------------------------------------------------------------
$ 15,038 20,573 16,582 10,981
=============================================================================================================
Earnings from continuing operations $ 6,672 11,365 7,317 2,455
=============================================================================================================
Earnings before cumulative effect
of accounting change $ 6,959 11,901 7,780 4,268
=============================================================================================================
Net earnings $ 319 11,901 7,780 4,268
=============================================================================================================
Primary and fully diluted earnings
per common share:
Earnings from continuing operations $ 0.13 0.21 0.14 0.05
=============================================================================================================
Earnings before cumulative effect
of accounting change $ 0.14 0.22 0.15 0.08
=============================================================================================================
Net earnings $ 0.01 0.22 0.15 0.08
=============================================================================================================
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.
F-21
72
SCHEDULE I
TIDEWATER INC. AND SUBSIDIARIES
MARKETABLE SECURITIES
YEARS ENDED MARCH 31, 1994 AND 1993
(IN THOUSANDS)
Column A Column B Column C Column D Column E
Amount at
Which Shown
Issuer of Number of Market In the
Securities Units Cost Value Balance Sheet
------------ ------------- ------------ ------------- -------------
1994
United States
Treasury Bills 19 $ 92,523 $ 92,841 $ 92,841
========= ========== ========== ===========
1993
United States
Treasury Bills 20 $ 93,815 $ 94,173 $ 94,173
========= ========== ========== ===========
F-22
73
SCHEDULE V
TIDEWATER INC. AND SUBSIDIARIES
PROPERTIES AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993, AND 1992
(IN THOUSANDS)
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Other Balance
Balance at Changes at
Beginning Additions Add End of
Classifications of period at Cost Retirements (Deduct) Period
--------------- ------------- ----------- ----------- --------- --------
1994
Vessels and marine equipment $ 1,133,361 30,697 7,733 (33,708) 1,122,617
(A,C,D,G)
Land 2,924 29 --- --- 2,953
Buildings 13,767 554 39 (103) 14,179
(A)
Dock facilities and shop
machinery and equipment 9,073 439 90 (53) 9,369
(A)
Compressors and other
rental equipment 110,285 19,705 6,182 (1,494) 122,314
(H)
Furniture and fixtures 7,891 818 1,355 (44) 7,310
Autos and trucks 6,899 1,077 612 (11) 7,353
Domestic oil and gas properties 3,365 --- 3,215 --- 150
- -------------------------------------------------------------------------------------------------------------
$ 1,287,565 53,319 19,226 (35,413) 1,286,245
=============================================================================================================
1993
Vessels and marine equipment 1,128,021 44,573 5,566 (33,667) 1,133,361
(A,C,D,E,F)
Land 2,925 --- --- (1) 2,924
Buildings 13,476 702 384 (27) 13,767
(A)
Dock facilities and shop
machinery and equipment 9,572 437 595 (341) 9,073
Compressors and other (A)
rental equipment 110,298 4,756 4,840 71 110,285
Furniture and fixtures 7,252 978 314 (25) 7,891
Autos and trucks 6,891 920 761 (151) 6,899
Domestic oil and gas properties 3,365 --- --- --- 3,365
- -------------------------------------------------------------------------------------------------------------
$ 1,281,800 52,366 12,460 (34,141) 1,287,565
=============================================================================================================
1992
Vessels and marine equipment 1,118,942 28,258 4,874 (14,305) 1,128,021
(A,B,C)
Land 2,925 --- --- --- 2,925
Buildings 13,403 132 26 (33) 13,476
(A)
Dock facilities and shop
machinery and equipment 8,639 1,163 36 (194) 9,572
(A)
Compressors and other
rental equipment 107,067 8,055 4,824 --- 110,298
Furniture and fixtures 6,788 732 256 (12) 7,252
Autos and trucks 6,709 1,006 817 (7) 6,891
Domestic oil and gas properties 3,365 --- --- --- 3,365
- -------------------------------------------------------------------------------------------------------------
$ 1,267,838 39,346 10,833 (14,551) 1,281,800
=============================================================================================================
F-23
74
(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.
F-24
75
SCHEDULE VI
TIDEWATER INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTIES AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993, AND 1992
(IN THOUSANDS)
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Other Balance
Balance at Changes at
Beginning Additions Add End of
Classifications of period at Cost Retirements (Deduct) Period
--------------- ----------- ----------- ----------- ---------- --------
1994
Vessels and marine equipment $ 704,994 61,445 4,463 (20,724) 741,252
(A,B,E)
Buildings 7,837 452 38 (5) 8,246
Dock facilities and shop
machinery and equipment 5,753 623 90 143 6,429
Compressors and other
rental equipment 69,323 8,432 5,377 (1,494) 70,884
(F)
Furniture and fixtures 6,035 626 1,297 (14) 5,350
Autos and trucks 5,286 1,067 593 (4) 5,756
Domestic oil and gas properties 3,516 --- 3,366 --- 150
- -------------------------------------------------------------------------------------------------------------
$ 802,744 72,645 15,224 (22,098) 838,067
=============================================================================================================
1993
Vessels and marine equipment 672,003 60,098 4,850 (22,257) 704,994
(A,B,C,D)
Buildings 7,723 525 349 (62) 7,837
Dock facilities and shop
machinery and equipment 5,213 628 144 56 5,753
Compressors and other
rental equipment 64,045 7,638 2,433 73 69,323
Furniture and fixtures 5,661 563 188 (1) 6,035
Autos and trucks 5,027 1,186 754 (173) 5,286
Domestic oil and gas properties 3,449 67 --- --- 3,516
- -------------------------------------------------------------------------------------------------------------
$ 763,121 70,705 8,718 (22,364) 802,744
=============================================================================================================
1992
Vessels and marine equipment 616,324 61,584 974 (4,931) 672,003
(A)
Buildings 6,981 770 24 (4) 7,723
Dock facilities and shop
machinery and equipment 4,683 569 25 (14) 5,213
Compressors and other
rental equipment 59,814 7,818 3,587 --- 64,045
Furniture and fixtures 5,276 634 242 (7) 5,661
Autos and trucks 4,407 1,304 780 96 5,027
Domestic oil and gas properties 3,365 84 --- --- 3,449
- -------------------------------------------------------------------------------------------------------------
$ 700,850 72,763 5,632 (4,860) 763,121
=============================================================================================================
(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.
F-25
76
SCHEDULE VIII
TIDEWATER INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MARCH 31, 1994, 1993, AND 1992
(IN THOUSANDS)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance
Balance at at
Beginning Additions End of
Description of period at Cost Deductions Period
----------- ----------- ----------- ---------- --------
1994
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 6,218 1,741 1,215 (B) 6,744
========== ======== ======== ========
Deducted in balance sheet from
other assets:
Amortization of goodwill and
debt issuance costs $ 1,479 321 860 (D) 940
========== ======== ======== ========
1993
Deducted in balance sheet from
trade accounts receivable:
Allowance for doubtful accounts $ 7,442 533 1,757 (B,C) 6,218
========== ===== ===== =====
Deducted in balance sheet from
other assets:
Amortization of goodwill and
debt issuance costs $ 1,055 424 --- 1,479
========== ===== ====== =====
1992
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 6,038 1,919 515 (A,B) 7,442
========== ===== ===== =====
Deducted in balance sheet from
other assets:
Amortization of goodwill and
debt issuance costs $ 621 434 --- 1,055
========== ===== ====== =====
(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.
F-26
77
SCHEDULE X
TIDEWATER INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
Column A Column B
-------- --------
Charged to Costs and Expenses
(in thousands)
Item 1994 1993 1992
---- ---- ---- ----
Maintenance and repair $ 76,903 71,133 73,229
========== ====== ======
Depreciation and amortization $ 83,652 80,317 79,836
========== ====== ======
Reconciliation:
Amortization - Schedule V $ 11,007 9,167 6,719
Depreciation - Schedule VI 72,645 70,705 72,763
Write-down of Vessels (A) --- 445 354
---------- ------ ------
$ 83,652 80,317 79,836
========== ====== ======
(A) Amounts are for write-down of Marine vessels withdrawn from service
pending disposition and included in other non-current assets.
F-27
78
TIDEWATER INC.
EXHIBITS FOR THE
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED MARCH 31, 1994
79
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).
80
*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.