<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - For the Quarterly Period Ended September 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Transition Period From
_________________________________ to ___________________________________
Commission file number 1-6311
TIDEWATER INC.
--------------
(Exact name of registrant as specified in its charter)
DELAWARE 72-0487776
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
1440 Canal Street, Suite 2100, New Orleans, Louisiana 70112
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 568-1010
NOT APPLICABLE
--------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or of such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- --------
53,331,714 shares of Tidewater Inc. common stock $.10 par value per share were
outstanding on October 23, 1995. Registrant has no other class of common stock
outstanding.
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, March 31,
ASSETS 1995 1995
---------- ---------
<S> <C> <C>
Current assets:
Cash, including temporary cash investments $ 13,761 14,702
Trade and other receivables 140,295 145,805
Inventories 34,957 36,311
Other current assets 5,805 4,355
---------- ---------
Total current assets 194,818 201,173
---------- ---------
Investments in, at equity, and advances to
unconsolidated companies 23,323 21,527
Properties and equipment 1,451,686 1,464,196
Less accumulated depreciation 874,279 858,297
---------- ---------
Net properties and equipment 577,407 605,899
Other assets 77,095 73,586
---------- ---------
$ 872,643 902,185
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt --- 12,000
Accounts payable and accrued expenses 72,887 79,909
Income taxes 11,716 9,571
---------- ---------
Total current liabilities 84,603 101,480
---------- ---------
Deferred income taxes 55,642 49,510
Long-term debt 48,000 100,000
Accrued property and liability losses 35,636 28,921
Other liabilities and deferred credits 41,892 42,056
Stockholders' equity:
Common stock of $.10 par value; issued
53,328,243 shares at September and
53,237,839 shares at March 5,333 5,324
Additional paid-in capital 335,534 334,809
Retained earnings 278,128 252,374
---------- ---------
618,995 592,507
Less:
Cumulative foreign currency translation
adjustment 10,691 10,745
Deferred compensation - restricted stock 1,434 1,544
---------- ---------
Total stockholders' equity 606,870 580,218
---------- ---------
$ 872,643 902,185
========== =========
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
2
<PAGE>
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
------------------------ -----------------------
1995 1994 1995 1994
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Marine operations $ 118,123 115,648 232,120 234,066
Compression operations 28,034 15,599 55,073 30,512
----------- ---------- ---------- ----------
146,157 131,247 287,193 264,578
----------- ---------- ---------- ----------
Costs and expenses:
Marine operations 69,933 71,967 142,805 144,376
Compression operations 14,870 8,882 28,777 17,509
Depreciation 18,428 20,210 36,725 40,775
General and administrative 13,350 14,711 26,728 29,982
----------- ---------- ---------- ----------
116,581 115,770 235,035 232,642
----------- ---------- ---------- ----------
29,576 15,477 52,158 31,936
Other income (expenses):
Foreign exchange gain (loss) (3) 116 (157) (516)
Gains on sales of assets 1,165 2,147 4,127 4,471
Equity in net earnings of
unconsolidated companies 1,717 1,008 3,040 1,944
Minority interests (298) (127) (765) (692)
Interest and miscellaneous income 905 1,114 1,289 4,253
Interest expense (1,350) (241) (3,363) (648)
----------- ---------- ---------- ----------
2,136 4,017 4,171 8,812
----------- ---------- ---------- ----------
Earnings before income taxes 31,712 19,494 56,329 40,748
Income taxes 10,464 7,167 18,588 14,980
----------- ---------- ---------- ----------
Net earnings $ 21,248 12,327 37,741 25,768
=========== ========== ========== ==========
Primary and fully-diluted
earnings per common share: $.39 .23 .70 .48
=========== ========== ========== ==========
Weighted average common
shares and equivalents 53,713,761 53,421,828 53,676,201 53,404,653
=========== ========== ========== ==========
Cash dividends declared per common share $.125 .10 .225 .20
=========== ========== ========== ==========
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
3
<PAGE>
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net cash provided by operating
activities $ 37,111 30,816 77,220 62,048
-------- ------- ------- -------
Cash flows from investing activities:
Proceeds from sales of assets 4,526 4,281 10,453 8,518
Additions to properties and equipment (10,410) (8,184) (15,938) (20,300)
Acquisition of Compression assets --- (35,000) --- (35,000)
Dividends from unconsolidated
companies, net of additional
investments 2,113 551 3,199 2,868
Dividends paid to minority interests (73) (26) (899) (1,655)
-------- ------- ------- -------
Net cash used in investing
activities (3,844) (38,378) (3,185) (45,569)
-------- ------- ------- -------
Cash flows from financing activities:
Principal payments on long-term debt (24,000) (830) (64,000) (47,904)
Cash dividends paid (6,663) (5,309) (11,987) (10,616)
Other 699 203 1,011 208
-------- ------- ------- -------
Net cash used in financing
activities (29,964) (5,936) (74,976) (58,312)
-------- ------- ------- -------
Net increase (decrease) in cash,
including temporary cash investments 3,303 (13,498) (941) (41,833)
-------- ------- ------- -------
Cash, including temporary cash
investments at beginning of period 10,458 78,453 14,702 106,788
-------- ------- ------- -------
Cash, including temporary cash
investments at end of period $ 13,761 64,955 13,761 64,955
======== ======= ======= =======
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 1,287 318 3,736 1,658
Income taxes $ 8,927 11,961 10,831 12,773
======== ======= ======= =======
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
4
<PAGE>
TIDEWATER INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------
(1) Interim Financial Statements
The consolidated financial information for the interim periods presented
herein has not been audited by independent accountants, but in the opinion
of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the condensed consolidated
balance sheets and the condensed consolidated statements of earnings and
cash flows at the dates and for the periods indicated have been made.
Results of operations for interim periods are not necessarily indicative of
results of operations for the respective full years.
(2) Earnings Per Share
Primary and fully diluted earnings per share are computed on the weighted
average number of shares and dilutive equivalent shares of common stock
(stock options and restricted stock grants) outstanding during each period
using the treasury stock method.
(3) Increase in Useful Lives of Marine Vessels
Effective April 1, 1995 the estimated useful lives of the company's Marine
vessels were increased from 10-20 years to 15-25 years. For the quarter and
six-month period ended September 30, 1995, the effect of this change in
accounting estimate lowered depreciation expense by $6.5 million and $12.6
million, respectively. Concurrent with this change $2.0 million for the
quarter ended September 30, 1995 and $4.5 million for the six months ended
September 30, 1995 of repair and maintenance costs, that would have been
capitalized had the previous estimated useful lives been used, were
expensed.
(4) Acquisition of Compression Assets
On September 30, 1994, the company purchased for $35 million in cash the
assets of Brazos Gas Compressing Company, a subsidiary of Mitchell Energy &
Development Corporation. On November 30, 1994, the company purchased the
natural gas compression assets of Halliburton Company using $55 million of
available cash and borrowings of $150 million. The costs of these
acquisitions were allocated under the purchase method of accounting based on
the fair value of the assets acquired. In connection with the purchase of
the natural gas compression assets of Halliburton Company, goodwill of
approximately $25 million was recorded as other assets in the Consolidated
Balance Sheet and is being amortized in equal charges to earnings over a 15-
year period.
The results of Brazos' and Halliburton's operations have been consolidated
with the company's effective October 1, 1994 and December 1, 1994,
respectively. Pro forma combined results of operations of the company and
of Brazos and Halliburton, including appropriate purchase accounting
adjustments for the quarter and six-month periods ended September 30, 1994,
as though the acquisitions had taken place on April 1, 1994 follows:
5
<PAGE>
<TABLE>
<CAPTION>
(In thousands, except per share data)
-------------------------------------
Quarter ended Six months ended
------------------- ----------------
September 30, 1994
-------------------------------------
<S> <C> <C>
Revenues $146,789 294,952
======== =======
Net earnings $ 10,048 21,056
======== =======
Primary and fully diluted earnings
per common share $ .19 .40
======== =======
</TABLE>
(5) Income Taxes
Income tax expense for interim periods is based on estimates of the
effective tax rate for the entire fiscal year. The effective tax rate was
33% for the quarter and six-month period ended September 30, 1995. For the
quarter and six-month period ended September 30, 1994 the effective tax rate
was 37%.
(6) Segment Information
Revenues and operating profits for the company's business segments are as
follows:
<TABLE>
<CAPTION>
(In thousands)
-----------------------------------
Quarter Ended Six Months Ended
September 30, September 30,
----------------- ----------------
1995 1994 1995 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Marine $118,123 115,648 232,120 234,066
Compression 28,034 15,599 55,073 30,512
-------- ------- ------- -------
$146,157 131,247 287,193 264,578
======== ======= ======= =======
Operating profit:
Marine:
From operations $ 28,582 16,544 49,557 33,754
Gains on sales of assets 1,112 1,517 3,801 3,794
Unusual item --- --- --- 1,700
-------- ------- ------- -------
Marine operating profit $ 29,694 18,061 53,358 39,248
======== ======= ======= =======
Compression:
From operations 3,913 2,027 7,717 3,762
Gains on sales of assets 77 630 350 677
-------- ------- ------- -------
Compression operating profit $ 3,990 2,657 8,067 4,439
======== ======= ======= =======
</TABLE>
The unusual item is related to refunds received from the settlement of prior
years' property tax disputes. The settlement amount is included in interest
and miscellaneous income in the Condensed Consolidated Statement of Earnings
for the six-month period ended September 30, 1994.
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Tidewater Inc.:
We have reviewed the condensed consolidated balance sheet of Tidewater Inc. and
subsidiaries as of September 30, 1995 and the related condensed consolidated
statements of earnings and cash flows for the three-month and six-month periods
ended September 30, 1995 and 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Tidewater Inc. as of March 31,
1995, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated May 1, 1995 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion the information set forth in the
accompanying condensed consolidated balance sheet as of March 31, 1995 is fairly
presented, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
KPMG Peat Marwick LLP
New Orleans, Louisiana
October 20, 1995
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis of financial position and results of operations
should be read in conjunction with the unaudited condensed consolidated
financial statements and the related disclosures.
Fiscal 1996 second quarter and six-month net earnings rose significantly above
prior year levels due to better market conditions for offshore Marine services
and a considerably larger Compression rental fleet. Net earnings were also
higher than the preceding quarter due to increased utilization of the worldwide
Marine vessel fleet.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 1996 second quarter and six-month operating activities generated higher
cash than fiscal 1995's corresponding periods. The increase is attributable to
a significantly larger natural gas compressor fleet and higher utilization and
day rates for the Marine vessel fleet. Operating activities continue to
generate cash in excess of normal operating requirements. Anticipated
utilization levels for the Marine vessel fleet and Compression rental fleet for
the remainder of fiscal 1996 should maintain this condition.
Cash used in investing activities for the three-month and six-month periods
ended September 30, 1995 was significantly lower than the amounts for the
corresponding periods of fiscal 1995. Investing activities for the quarter and
six-month period ended September 30, 1994 include the purchase of the assets of
Brazos Gas Compressing Company, a subsidiary of Mitchell Energy & Development
Corporation, for $35 million in cash on September 30, 1994. Excluding
acquisitions, additions to properties and equipment and proceeds from asset
sales determine the overall amount of cash used in investing activities. The
following tables compare these two items, by business segment, for the quarters
and six-month periods ended September 30 and for the quarter ended June 30,
1995:
<TABLE>
<CAPTION>
(In thousands)
------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
-------------- ---------------- --------
1995 1994 1995 1994 1995
------- ----- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Additions to Properties
and Equipment:
Marine $ 9,453 7,324 14,768 17,654 5,315
Compression 948 782 1,156 2,428 208
General corporate 9 78 14 218 5
------- ----- ------ ------ -----
$10,410 8,184 15,938 20,300 5,528
======= ===== ====== ====== =====
Proceeds from sales of assets:
Marine equipment $ 2,870 3,072 6,645 7,212 3,775
Compression equipment 1,656 1,209 3,808 1,306 2,152
------- ----- ------ ------ -----
$ 4,526 4,281 10,453 8,518 5,927
======= ===== ====== ====== =====
</TABLE>
Marine additions for the current quarter include the $6.1 million purchase of
five offshore tugs and a utility vessel previously operated under long-term
lease. Current economic conditions
8
<PAGE>
generally do not favor the construction of Marine vessels; therefore, future
expansion of the Marine fleet will continue to come primarily from existing
industry supplies provided appropriate rates of return can be achieved.
Cash used in fiscal 1996 second quarter and six-month financing activities was
significantly higher than fiscal 1995's second quarter and six-month period
because of $21 million and $58 million, respectively, of prepayments on long-
term debt borrowed in connection with the purchase of Halliburton's natural gas
compression assets on November 30, 1994. As of September 30, 1995 existing
long-term debt of $48 million was borrowed under the revolving credit facility
of the company's revolving credit and term loan agreement. Principal payments on
long-term debt for the six months ended September 30, 1994 include the
redemption of 7% convertible subordinated debentures for $46.0 million.
Continued dividend payments are subject to declaration by the Board of Directors
and are limited by the company's revolving credit and term loan agreement.
RESULTS OF OPERATIONS
Revenues and operating profits, by business segment, for the quarters and six-
month periods ended September 30 and for the quarter ended June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
(In thousands)
--------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
------------------- ------------------ ---------
1995 1994 1995 1994 1995
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Marine $118,123 115,648 232,120 234,066 113,997
Compression 28,034 15,599 55,073 30,512 27,039
-------- ------- ------- ------- -------
$146,157 131,247 287,193 264,578 141,036
======== ======= ======= ======= =======
Operating profit (loss):
Marine $ 29,694 18,061 53,358 39,248 23,664
Compression 3,990 2,657 8,067 4,439 4,077
Other income 1,602 1,637 2,647 2,634 1,045
Corporate expenses (2,224) (2,620) (4,380) (4,925) (2,156)
Interest expense (1,350) (241) (3,363) (648) (2,013)
Income tax expense (10,464) (7,167) (18,588) (14,980) (8,124)
-------- ------- ------- ------- -------
Net earnings $ 21,248 12,327 37,741 25,768 16,493
======== ======= ======= ======= =======
</TABLE>
Consolidated revenues and pre-tax earnings for the quarter ended September 30,
1995 climbed 11.4% and 62.7%, respectively, above fiscal 1995's second quarter.
Fiscal 1996 six-month consolidated revenues and pre-tax earnings rose 8.5% and
38.2%, respectively, above fiscal 1995's corresponding six-month amounts. The
increases in pre-tax earnings for the current quarter and six-month period are
because of higher Marine and Compression operating profits partially offset by
higher interest expense. Higher Marine operating profit is due to higher
utilization and day rates for the vessel fleet, the net positive effect of lower
depreciation expense due to the increase in vessel useful lives effective April
1, 1995, and lower general and administrative expenses as a result of the
company's restructuring of worldwide Marine operations in fiscal 1995's fourth
quarter. Fiscal 1995's six-month Marine operating profit also includes $1.7
million of refunds received from the settlement of prior years' property tax
disputes. Higher Compression operating profit and higher interest expense are
the result of the expansion
9
<PAGE>
of the natural gas compressor rental fleet and associated debt borrowings during
the second half of fiscal 1995.
Consolidated revenues and pre-tax earnings for the current quarter rose 3.6% and
28.8%, respectively, above the preceding quarter's amounts. The increase in
pre-tax earnings is the result of higher Marine operating profit and lower
interest expense. Higher current quarter Marine operating profit is due to
higher fleet utilization. Lower interest expense is the result of substantial
prepayments of long-term debt during fiscal 1996's first quarter.
General and administrative expenses by type for the quarters and six-month
periods ended September 30 and for the quarter ended June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
(In thousands)
-------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
--------------- ---------------- --------
1995 1994 1995 1994 1995
------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
Personnel $ 7,700 9,446 15,543 18,493 7,843
Office and property 2,363 2,217 4,631 4,579 2,268
Sales and marketing 682 885 1,515 1,938 833
Professional services 952 733 1,846 1,559 894
Other 1,653 1,430 3,193 3,413 1,540
------- ------ ------ ------ ------
$13,350 14,711 26,728 29,982 13,378
======= ====== ====== ====== ======
</TABLE>
MARINE SEGMENT
The marine segment provides a diverse range of services and equipment to the
offshore oil and gas industry. Fleet size, utilization and vessel day rates
primarily determine the amount of revenues and operating profit because
operating costs and depreciation do not change proportionally with changes in
revenues. Operating costs principally consist of crew costs, repair and
maintenance, insurance, fuel/lube and supplies. Fleet size and utilization are
the major factors which affect crew costs. The timing and amount of repair and
maintenance costs are influenced by vessel age and scheduled drydockings to
satisfy safety and inspection requirements dictated by regulatory agencies.
Whenever possible, vessel drydockings are done during seasonally slow periods to
minimize any impact on vessel operations and are only done if economically
justified given the vessel's age, and physical condition. The following tables
compare revenues, operating expenses (excluding general and administrative
expense and depreciation expense) and operating margins of the Marine segment
and provide a breakdown of Marine operating profit for the quarters and six-
month periods ended September 30, and for the quarter ended June 30, 1995:
10
<PAGE>
<TABLE>
<CAPTION>
(In thousands)
----------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
-------------------- ------------------- ---------
1995 1994 1995 1994 1995
--------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Owned and chartered vessels:
United States $ 45,095 45,205 87,858 90,741 42,763
Foreign 66,550 62,224 129,727 126,514 63,177
-------- ------- ------- ------- -------
111,645 107,429 217,585 217,255 105,940
Shipyard and other 2,468 4,948 7,219 10,671 4,751
Brokered vessels 4,010 3,271 7,316 6,140 3,306
-------- ------- ------- ------- -------
118,123 115,648 232,120 234,066 113,997
-------- ------- ------- ------- -------
Expenses:
Owned and chartered vessels:
Crew costs 33,553 32,576 64,636 64,557 31,083
Repair and maintenance 15,237 15,200 34,260 30,892 19,023
Insurance 6,839 7,300 13,575 14,954 6,736
Fuel, lube and supplies 5,616 5,188 11,056 9,966 5,440
Other 3,812 4,464 7,777 8,677 3,965
-------- ------- ------- ------- -------
65,057 64,728 131,304 129,046 66,247
Shipyard and other 1,179 4,164 4,748 9,718 3,569
Brokered vessels 3,697 3,075 6,753 5,612 3,056
-------- ------- ------- ------- -------
69,933 71,967 142,805 144,376 72,872
-------- ------- ------- ------- -------
Operating margins $ 48,190 43,681 89,315 89,690 41,125
======== ======= ======= ======= =======
For owned and chartered vessels:
Operating margins as a percent
of revenues 41.7% 39.7% 39.7% 40.6% 37.5%
Percentage rise (drop) in operating
costs compared to same period of
prior fiscal year 0.5% (6.2%) 1.8% (6.9%) 3.8%
======== ======= ======= ======= =======
Marine operating profit:
Owned and chartered vessels:
United States $ 11,002 6,952 17,876 16,808 6,874
Foreign 15,995 8,467 28,820 17,088 12,825
-------- ------- ------- ------- -------
26,997 15,419 46,696 33,896 19,699
Gains from asset sales 1,112 1,517 3,801 3,794 2,689
Brokered vessels 313 196 564 528 250
Shipyard and other 1,272 929 2,297 1,030 1,026
-------- ------- ------- ------- -------
$ 29,694 18,061 53,358 39,248 23,664
======== ======= ======= ======= =======
</TABLE>
Fiscal 1996 second quarter operating margin rose 10.3% above fiscal 1995's
second quarter and 17.2% above the preceding quarter. The increase from fiscal
1995's second quarter to fiscal 1996's second quarter is the result of
significantly higher utilization and higher average day rates for a smaller
worldwide vessel fleet. The increase in the current quarter over the prior
quarter is due to substantially higher utilization of the domestic-based
offshore towing fleet.
Fiscal 1996 six-month operating margin was consistent with the prior year six-
month period as slightly higher utilization and higher average day rates for the
fleet were offset by higher repair and maintenance expense. The increase in
repair and maintenance is partially due to the increase
11
<PAGE>
in vessel useful lives which became effective at the beginning of the current
fiscal year and had the effect of expensing drydocking costs, which under the
old vessel useful lives, would have been capitalized.
Marine fleet utilization is determined primarily by market conditions and to a
lesser extent by drydockings to satisfy safety and inspection requirements. The
following table compares day-based Marine fleet utilization percentages by
vessel class and in total for the quarters and six-month periods ended September
30 and for the quarter ended June 30, 1995:
<TABLE>
<CAPTION>
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
--------------- ------------------ ---------
1995 1994 1995 1994 1995
------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C>
UTILIZATION:
Domestic-based fleet:
Towing Supply/Supply 87.7% 86.3% 88.3% 85.5% 89.0%
Crew/Utility 79.5% 92.9% 80.4% 92.0% 81.3%
Offshore Tugs 64.8% 63.9% 56.2% 64.9% 47.9%
Other 64.8% 50.9% 54.7% 51.2% 44.9%
Total 79.2% 80.0% 77.1% 79.9% 75.0%
Foreign-based fleet:
Towing Supply/Supply 88.2% 81.7% 87.4% 81.9% 86.7%
Crew/Utility 85.0% 74.5% 85.8% 74.0% 86.6%
Offshore Tugs 71.2% 71.3% 71.7% 76.0% 72.2%
Other 48.3% 42.0% 42.9% 49.0% 37.3%
Total 78.4% 72.2% 77.2% 74.0% 76.1%
Worldwide fleet:
Towing Supply/Supply 88.0% 83.3% 87.8% 83.1% 87.5%
Crew/Utility 81.7% 84.8% 82.6% 83.8% 83.5%
Offshore Tugs 68.4% 67.5% 64.6% 70.5% 60.6%
Other 51.6% 43.8% 45.3% 49.4% 38.9%
Total 78.7% 75.2% 77.2% 76.3% 75.7%
</TABLE>
The domestic fleet consists of vessels operating in U.S. waters while the
foreign fleet consists of vessels operating outside U.S. waters.
Utilization for all periods presented reflect demand trends for offshore marine
services. Higher fiscal 1996 second quarter utilization of the domestic-based
vessel fleet above the preceding quarter is due to higher construction activity
for the offshore towing fleet. Higher utilization of the foreign-based vessel
fleet in the current quarter compared to the corresponding quarter of fiscal
1995 and the preceding quarter is attributed to greater demand for offshore
marine services which is generally the result of stable oil prices. Fiscal 1996
six-month fleet utilization rose slightly above fiscal 1995's six-month level
as higher demand for towing supply/supply and crew/utility marine services in
foreign markets outweighed the drop in demand for marine services provided by
crew/utility vessels and offshore tugs in the U.S. Gulf of Mexico due to
uncertainties affecting the price of U.S. natural gas.
12
<PAGE>
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 vessel
day rates by class and in total for the quarters and six-month periods ended
September 30 and for the quarter ended June 30, 1995:
<TABLE>
<CAPTION>
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
-------------- ---------------- --------
1995 1994 1995 1994 1995
------- ----- ------- ------- --------
<S> <C> <C> <C> <C> <C>
AVERAGE VESSEL DAY RATES:
Domestic-based fleet:
Towing Supply/Supply $3,621 3,458 3,570 3,599 3,520
Crew/Utility 1,352 1,250 1,350 1,261 1,349
Offshore Tugs 4,584 4,486 4,859 4,310 5,220
Other 2,868 2,971 2,969 2,946 3,112
Total $3,164 3,014 3,160 3,062 3,155
Foreign-based fleet:
Towing Supply/Supply $3,670 3,616 3,658 3,611 3,645
Crew/Utility 1,766 1,752 1,825 1,752 1,884
Offshore Tugs 2,705 2,416 2,671 2,606 2,635
Other 906 789 828 738 726
Total $3,005 2,917 3,013 2,879 3,023
Worldwide fleet:
Towing Supply/Supply $3,653 3,560 3,627 3,607 3,600
Crew/Utility 1,529 1,445 1,552 1,459 1,576
Offshore Tugs 3,497 3,421 3,549 3,385 3,609
Other 1,398 1,313 1,355 1,178 1,297
Total $3,067 2,957 3,071 2,953 3,075
</TABLE>
The domestic fleet consists of vessels operating in U.S. waters while the
foreign fleet consists of vessels operating outside U.S. waters.
Higher average day rates in the current quarter and six-month period compared to
the prior year's corresponding quarter and six-month period is attributed to a
more favorable supply/demand relationship for offshore marine services in
foreign markets and to the mix of vessels working in the domestic-based vessel
fleet. Current quarter average day rates were generally consistent with the
preceding quarter reflecting stable demand for offshore marine services.
13
<PAGE>
The following tables compare the average number of vessels by class and by
geographic location during the quarters and six-month periods ended September 30
and for the quarter ended June 30, 1995 and the actual September 30, 1995 vessel
count:
<TABLE>
<CAPTION>
Average number of vessels during
--------------------------------------
Actual vessel Quarter Six Months Quarter
count at Ended Ended Ended
September 30, September 30, September 30, June 30,
------------- ------------- ------------- --------
1995 1995 1994 1995 1994 1995
------------- ---- ------- ----- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Domestic-based fleet:
Towing Supply/Supply 91 91 91 91 94 92
Crew/Utility 49 50 49 50 48 50
Offshore Tugs 41 42 49 43 47 44
Other 12 13 15 13 14 12
---- ---- ---- ---- ---- ----
Total 193 196 204 197 203 198
==== ==== ==== ==== ==== ====
Foreign-based fleet:
Towing Supply/Supply 171 169 179 169 176 169
Crew/Utility 35 35 39 35 41 34
Offshore Tugs 54 52 46 50 48 48
Other 50 51 57 51 59 51
---- ---- ---- ---- ---- ----
Total 310 307 321 305 324 302
==== ==== ==== ==== ==== ====
Owned or chartered
vessels included in
marine revenues 503 503 525 502 527 500
Vessels withdrawn from
active service 15 15 17 17 18 18
Joint venture owned
vessels 47 47 43 47 43 47
---- ---- ---- ---- ---- ----
Total 565 565 585 566 588 565
==== ==== ==== ==== ==== ====
Worldwide fleet:
Towing Supply/Supply 299 297 309 297 309 299
Crew/Utility 93 94 93 94 94 93
Offshore Tugs 98 97 97 97 99 95
Other 75 77 86 78 86 78
---- ---- ---- ---- ---- ----
Total 565 565 585 566 588 565
==== ==== ==== ==== ==== ====
</TABLE>
The drop in the average number of vessels in the foreign-based vessel fleet from
324 for the six-month period ended September 30, 1994 to 305 for the six-month
period ended September 30, 1995 is due to older vessels being withdrawn from
active service due to age and high repair and maintenance costs. Vessels will
continue to be withdrawn from active service as they become uneconomical to
operate.
COMPRESSION SEGMENT
The Compression segment provides natural gas compression services and equipment
for a variety of applications primarily in the energy industry. Rental revenues
are determined, for the most part, by utilization and fleet size. Utilization is
affected by natural gas storage levels and by the number and age of producing
oil and gas wells which, in turn, are dependent upon the price levels of oil and
natural gas. Quality of service, availability and rental rates for equipment
are also major factors which affect utilization. Operating expenses are
generally consistent from period-to-period and usually vary in the short-term
due to fluctuations in the amount of repair and maintenance expense. Long-term
growth in operating expenses will occur primarily as a result of increased
14
<PAGE>
fleet size and general inflationary factors. Compression segment operating
profit is primarily determined by operating margins from rental gas compression
operations. The following tables compare revenues, operating expenses (excluding
general and adminstrative expense and depreciation expense), operating margins
and related statistics for gas compression operations for the quarters and six-
month periods ended September 30 and for the quarter ended June 30, 1995.
<TABLE>
<CAPTION>
(In thousands, except statistics)
-----------------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
-------------------- ------------------ -----------
1995 1994 1995 1994 1995
--------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rentals $ 18,193 8,150 36,685 16,176 18,492
Repair, service and other 1,633 1,578 3,205 2,841 1,572
-------- ------- ------- ------- -------
19,826 9,728 39,890 19,017 20,064
-------- ------- ------- ------- -------
Expenses:
Wages and benefits 3,042 1,641 6,095 3,202 3,053
Repairs and maintenance 3,106 1,422 6,391 3,116 3,285
Other 2,082 964 4,130 1,790 2,048
-------- ------- ------- ------- -------
8,230 4,027 16,616 8,108 8,386
-------- ------- ------- ------- -------
Operating margins $ 11,596 5,701 23,274 10,909 11,678
======== ======= ======= ======= =======
Operating margins as a percent
of revenues 58.5% 58.6% 58.3% 57.4% 58.2%
======== ======= ======= ======= =======
Horsepower based statistics:
Utilization 71.9% 87.0% 72.1% 86.4% 72.3%
Average monthly rental rate $ 17.79 16.70 17.86 16.73 17.92
Average fleet size 473,887 187,105 474,853 186,464 475,757
======== ======= ======= ======= =======
</TABLE>
Higher revenues and operating margins for the quarter and six-month period ended
September 30, 1995 compared to the corresponding amounts for the same periods of
fiscal 1995 are the result of the considerable expansion of the gas compression
rental fleet which occurred during the second half of fiscal 1995. Fiscal 1996
second quarter and six-month utilization fell below the respective levels for
the corresponding periods of fiscal 1995 due to a combination of the expansion
of the rental fleet noted above and to lower demand for compression services.
The natural gas compressor fleets which were purchased during fiscal 1995
historically experienced lower levels of utilization than the original Tidewater
fleet. Lower demand for compression services in the current quarter and six-
month period is the result of lower U. S. natural gas prices. Slightly lower
utilization in the current quarter compared to the preceding quarter is a result
of normal seasonal factors and lower U.S. natural gas prices.
15
<PAGE>
The Compression segment also designs, fabricates and installs engineered
compressor systems and sells, primarily to its customers, related parts and
equipment. The following table compares revenues, costs of sales and sales
margins for equipment and parts sales for the quarters and six-month periods
ended September 30 and for the quarter ended June 30, 1995:
<TABLE>
<CAPTION>
(In thousands)
-------------------------------------------
Quarter
Quarter Ended Six Months Ended Ended
September 30, September 30, June 30,
-------------- ----------------- --------
1995 1994 1995 1994 1995
------- ----- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Revenues $8,208 5,871 15,183 11,495 6,975
Costs of sales 6,640 4,855 12,161 9,401 5,521
------ ----- ------ ------ -----
Operating margins $1,568 1,016 3,022 2,094 1,454
====== ===== ====== ====== =====
Operating margins as a percent
of revenues 19.1% 17.3% 19.9% 18.2% 20.8%
====== ===== ====== ====== =====
</TABLE>
Fluctuations in the level of equipment and parts sales for the periods presented
are due to the timing of sales of engineered products. Fluctuations in
operating margin percentages are the result of competitive market forces. Costs
of sales consist primarily of wages and benefits and material costs associated
with the design, fabrication and installation of packaged compressor systems.
Gains from sales of assets have contributed nominally to segment profits for the
quarters and six-month periods ended September 30, 1995 and 1994 and for the
quarter ended June 30, 1995.
INFLATION AND CURRENCY FLUCTUATIONS
Because of its significant foreign operations, the company is exposed to
currency fluctuations and exchange risks. To minimize the financial impact of
these items the company attempts to contract a majority of its services in
United States dollars.
Day-to-day operating costs are generally affected by inflation. However,
because the energy services industry requires specialized goods and services,
general economic inflationary trends may not affect the company's operating
costs. The major impact on operating costs is the level of offshore exploration
and development spending by energy exploration and production companies. As
this spending increases, prices of goods and services used by the oil and gas
industry and the energy services industry will increase. Future improvements in
vessel day rates and compressor rental rates may buffer the company from the
inflationary effects on operating costs.
ENVIRONMENTAL MATTERS
During the ordinary course of business the company's operations are subject to a
wide variety of environmental laws and regulations. The company attempts to
comply with these laws and regulations in order to avoid costly accidents and
related environmental damage. The company is currently involved in litigation
with the Environmental Protection Agency concerning the disposal of oilfield
wastes. In the opinion of management, the ultimate liability with respect to
the litigation will not have a material adverse effect on the company's
financial position.
16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. At page 19 of this report is the index for those exhibits required to be
filed as part of this report.
B. The Company did not file any reports on Form 8-K during the quarter for which
this report is filed.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TIDEWATER INC.
--------------------------------
(Registrant)
Date: October 23, 1995 /s/ William C. O'Malley
--------------------------
William C. O'Malley
Chairman of the Board, President
and Chief Executive Officer
Date: October 23, 1995 /s/ Ken C. Tamblyn
-----------------------
Ken C. Tamblyn
Executive Vice President and
Chief Financial Officer
18
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- ------
11 Statement - Computation of Per Share Earnings
27 Financial Data Schedule
19
<PAGE>
EXHIBIT 11
TIDEWATER INC.
COMPUTATION OF EARNINGS AND SHARES USED IN ARRIVING AT
PRIMARY AND FULLY-DILUTED EARNINGS PER SHARE FOR THE
QUARTER AND SIX-MONTH PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
September 30, 1995 September 30, 1995
------------------ ------------------
<S> <C> <C>
Net Earnings (in thousands) $ 21,248 $ 37,741
=========== ===========
Computation of weighted
average number of shares
outstanding:
Issued: 53,328,243 shares
Weighted average shares
outstanding 53,301,589 53,276,563
Add: Incremental shares
applicable to stock
options 412,172 399,638
----------- -----------
Weighted average common
shares and equivalents 53,713,761 53,676,201
=========== ===========
Primary and fully diluted
earnings per common share $ .39 $ .70
=========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
condensed consolidated balance sheet and the condensed consolidated statements
of earnings at the date and for the period indicated and is qualified in its
entirety by reference to such financial statements. All amounts shown are in
thousands of dollars, except per share data.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 13,761
<SECURITIES> 0
<RECEIVABLES> 150,294
<ALLOWANCES> 9,999
<INVENTORY> 34,957
<CURRENT-ASSETS> 194,818
<PP&E> 1,451,686
<DEPRECIATION> 874,279
<TOTAL-ASSETS> 872,643
<CURRENT-LIABILITIES> 84,603
<BONDS> 48,000
<COMMON> 5,333
0
0
<OTHER-SE> 601,537
<TOTAL-LIABILITY-AND-EQUITY> 872,643
<SALES> 287,193
<TOTAL-REVENUES> 287,193
<CGS> 235,035
<TOTAL-COSTS> 235,035
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,363
<INCOME-PRETAX> 56,329
<INCOME-TAX> 18,588
<INCOME-CONTINUING> 37,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,741
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
