<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 16, 1997
-------------------------------
TIDEWATER INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-6311 72-0487776
- --------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
Incorporation) 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.
<PAGE> 2
On May 30, 1997 Tidewater Inc. ("the Company") filed a Form 8-K dated
May 16, 1997 containing a description of the Company's acquisition of O.I.L.
Limited. This Form 8-K/A-1 amends and restates the disclosure in Item 7(a) and
(b) of the Company's Form 8-K filed on May 30, 1997 to include the financial
statements of the business acquired and pro forma financial information.
Item 2. Acquisition or Disposition of Assets.
Acquisition of the O.I.L. Group of Companies
On May 16, 1997, the registrant, Tidewater Inc. (the "Company"),
acquired all of the ordinary shares of O.I.L. Limited and its related
international marine operating companies (the "O.I.L. Group") from Ocean Group
plc and its affiliates (collectively the "Ocean Group") in exchange for a cash
payment of 328 million pounds sterling (approximately U.S. $534 million). In
addition, a 3 million pound sterling (approximately U.S.$5 million) advance
payment was made for the net working capital of O.I.L. Group, with the final
purchase price to be adjusted for the final net working capital of O.I.L. Group
as of the May 16, 1997 closing date. The consideration paid Ocean Group was
determined through arm's length negotiations between the Company and Ocean
Group. The Company used approximately $39 million of its cash to fund the
purchase price, with the remainder provided by borrowings under a bank credit
facility.
Prior to consummation of this acquisition, the O.I.L. Group was
principally engaged in the business of operating approximately 100 marine
vessels, primarily platform supply and anchor handling towing supply vessels,
in several international offshore oil and gas exploration areas outside of the
United States. The Company intends for the foreseeable future to continue to
engage in such operations.
The acquisition was completed on May 16, 1997, as announced in the press
release which has been filed as an exhibit to this report. Additional
information relating to the acquisition is set forth in the Agreement for the
Acquisition of Share Capital of the O.I.L. Group of Companies, a copy of which
has also been filed as an exhibit to this report.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial statements of businesses acquired.
(1) Audited combined balance sheets of O.I.L. Group as of
December 31, 1996 and 1995, and the related combined
statements of profit, cash flows and total recognized
gains and losses for each of the years in the three year
period ended December 31, 1996, including the notes
thereto and the related report of Price Waterhouse.
(b) Pro Forma financial information.
(1) Unaudited Pro Forma Condensed Combined Balance Sheet of
Tidewater Inc. (the "Company") as of March 31, 1997,
including the notes thereto.
(2) Unaudited Pro Forma Condensed Combined Statement of
Earnings of the Company for the year ended March 31, 1997,
including the notes thereto.
<PAGE> 3
(c) Exhibits.
2.0 Agreement for the Acquisition of the Share Capital of the
O.I.L. Group of Companies, dated March 20, 1997, between
the Company and Ocean Group plc. [1]
23. Consent of Independent Public Accountants
99.1 Press Release issued May 16, 1997 disclosing completion of
the Company's acquisition of the O.I.L. Group of
companies.
**FOOTNOTES**
[1]: Exhibit 2.0 includes a list briefly identifying the contents of
all schedules omitted therefrom. The Company will furnish supplementally a
copy of any omitted schedule to the Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ Ken C. Tamblyn
------------------------------------------
Ken C. Tamblyn
Executive Vice President and
Chief Financial Officer
Dated: July 21, 1997
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
FINANCIAL STATEMENTS.
(1) Audited combined balance sheets of O.I.L. Group as of December
31, 1996 and 1995, and the related combined statements of profit,
cash flows and total recognized gains and losses for each of the
years in the three year period ended December 31, 1996, including
the notes thereto and the related report of Price Waterhouse.
PRO FORMA FINANCIAL INFORMATION.
(1) Unaudited Pro Forma Condensed Combined Balance Sheet of Tidewater
Inc. (the "Company") as of March 31, 1997, including the notes
thereto.
(2) Unaudited Pro Forma Condensed Combined Statement of Earnings of
the Company for the year ended March 31, 1997, including the
notes thereto.
EXHIBITS.
Exhibit
Number Description
- ------- -----------
2.0 Agreement for the Acquisition of the Share Capital of the O.I.L.
Group of Companies, dated March 20, 1997 between the Company and
Ocean Group plc.
23. Consent of Independent Public Accountants
99.1 Press release issued May 16, 1997 disclosing completion of the
Company's acquisition of the O.I.L. Group of Companies.
<PAGE> 5
TIDEWATER INC.
Unaudited Pro Forma Condensed Combined Financial Statements
INTRODUCTION
The following unaudited pro forma condensed combined financial
statements give effect to the May 16, 1997 acquisition (the "Acquisition") of
all of the ordinary shares of O.I.L. Limited and its related international
marine operating companies (the "O.I.L. Group") from Ocean Group plc and its
affiliates.
The unaudited pro forma condensed combined financial statements should
be read in conjunction with the historical financial statements of Tidewater
Inc. and subsidiaries and O.I.L. Group and notes thereto. This pro forma
information is presented for illustrative purposes only and is not necessarily
indicative of the results which actually would have been obtained if the
Acquisition had been effected on the pro forma dates, nor is it necessarily
indicative of future results.
The unaudited pro forma condensed combined financial statements are
based upon the purchase method of accounting for the Acquisition. The
Unaudited Pro Forma Condensed Combined Statement of Earnings for the year ended
March 31, 1997 assumes that the Acquisition was effected on April 1, 1996. The
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1997
assumes that the Acquisition was effected on that date.
The Unaudited Pro Forma Condensed Combined Statements of Earnings have
been compiled from the Tidewater Inc. audited Consolidated Statement of
Earnings for the year ended March 31, 1997 and the O.I.L. Group audited
Statement of Profit for the year ended December 31, 1996. Tidewater's fiscal
year end is March 31, while O.I.L. Group's is December 31. The Unaudited Pro
Forma Condensed Combined Statement of Earnings for the year ended March 31,
1997 includes O.I.L. Group's audited financial information for the 12 months
ended December 31, 1996. During the period from January 1, 1997 through March
31, 1997, revenues of O.I.L. Group amounted to approximately $38 million. The
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1997
includes O.I.L. Group's audited financial information as of December 31, 1996.
PURCHASE PRICE
The cash purchase price of the Acquisition was approximately $539
million, inclusive of a $5 million advance payment for the net working capital
of O.I.L. Group, which is subject to adjustment based upon a final balance
sheet prepared as of the May 16, 1997 closing date. The source of the funds
used for the Acquisition consisted of $39 million from cash balances with the
remainder from borrowings under a Revolving Credit and Term Loan Agreement with
a group of banks.
<PAGE> 6
TIDEWATER INC.
PRO FORMA CONDENSED COMBINED BALANCE
SHEET MARCH 31, 1997 -
UNAUDITED
<TABLE>
<CAPTION>
O.I.L. PRO FORMA PRO FORMA
TIDEWATER GROUP ADJUSTMENTS COMBINED
----------- ---------- ---------- ----------
(in thousands, except share and per share data)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash, including temporary cash
investments $ 41,114 2,280 (39,000) (a) 4,394
Trade and other receivables, less
allowance 187,612 26,905 214,517
Inventories 36,016 1,445 37,461
Other current assets 3,984 4,082 8,066
----------- ---------- ---------- ----------
Total current assets 268,726 34,712 (39,000) 264,438
----------- ---------- ---------- ----------
Investments in, at equity, and advances to
unconsolidated companies 20,556 135 20,691
Properties and equipment, net 681,091 129,431 126,780 (b) 937,302
Other assets 68,627 0 356,475 (e) 425,102
----------- ---------- ---------- ----------
$1,039,000 164,278 444,255 1,647,533
=========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt 0 1,719 57,143 (a) 58,862
Accounts payable and accrued expenses 81,500 82,253 21,020 (c) 111,236
(73,538) (d)
Accrued property and liability losses 13,248 0 13,248
----------- ---------- ---------- ----------
Total current liabilities 94,748 83,972 4,625 183,346
----------- ---------- ---------- ----------
Deferred income taxes 95,595 23,577 46,423 (f) 165,595
Long-term debt 0 7,015 442,857 (a) 449,872
Accrued property and liability losses 32,146 0 32,146
Other liabilities and deferred credits 46,847 63 46,910
Stockholders' equity 769,664 49,650 (49,650) (d) 769,664
----------- ---------- ---------- ----------
$1,039,000 164,278 444,255 1,647,533
=========== ========== ========== ==========
</TABLE>
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet:
(a) Adjustment to record the payment of cash and issuance of debt to acquire
the ordinary shares of the O.I.L. Group from Ocean Group.
(b) Adjustment to record the step-up in the basis of fixed assets of O.I.L.
Group to estimated fair value at acquisition date.
(c) Adjustment to record the accrual for estimated transaction costs and
additional purchase price based upon estimated working capital of O.I.L.
Group as of the May 16, 1997 closing date. The final amounts to be used
for the adjustment of the initial purchase price have not yet been
determined.
(d) Adjustment to eliminate the stockholders' equity accounts of O.I.L. Group,
including the elimination of the payable balance from O.I.L. Group to
Ocean Group which was excluded as part of the acquisition.
(e) Adjustment to record the excess of acquisition cost over the fair value of
net assets acquired (goodwill).
(f) Adjustment to record the related deferred tax effect of the acquisition.
<PAGE> 7
TIDEWATER INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED MARCH 31, 1997 - UNAUDITED
<TABLE>
<CAPTION>
O.I.L. PRO FORMA PRO FORMA
TIDEWATER GROUP ADJUSTMENTS COMBINED
----------- ---------- ---------- -----------
(in thousands, except share and per share data)
<S> <C> <C> <C> <C>
Revenues:
Marine operations $690,426 138,378 828,804
Compression operations 112,584 0 112,584
----------- ---------- ---------- -----------
803,010 138,378 941,388
----------- ---------- ---------- -----------
Costs and expenses:
Marine operations 385,656 75,882 461,538
Compression operations 64,153 0 64,153
Depreciation and amortization 82,272 14,525 20,375 (d) 117,172
General and administrative 64,855 16,960 81,815
----------- ---------- ---------- -----------
596,936 107,367 20,375 724,678
----------- ---------- ---------- -----------
206,074 31,011 (20,375) 216,710
Other income (expenses):
Foreign exchange gain (loss) (397) (858) (1,255)
Gain on sales of assets 6,443 3,936 10,379
Equity in net earnings of
unconsolidated companies 4,901 0 4,901
Minority interests (1,311) (44) (1,355)
Interest and miscellaneous income 4,641 558 (1,950) (c) 3,249
Other expense (2,800) 0 (2,800)
Interest and other debt costs (1,017) (5,965) (33,458) (a) (35,167)
5,273 (b)
----------- ---------- ---------- -----------
10,460 (2,373) (30,135) (22,048)
----------- ---------- ---------- -----------
Earnings before income taxes 216,534 28,638 (50,510) 194,662
Income taxes 70,523 8,422 (21,346) (e) 57,599
----------- ---------- --------- -----------
Net earnings $146,011 20,216 (29,164) 137,063
=========== ========== ========== ===========
Primary and fully diluted earnings
per share $ 2.34 N/A N/A 2.20
=========== ========== ========== ===========
Weighted average common shares and
equivalents 62,280,281 N/A N/A 62,280,281
========== ========== ========== ===========
</TABLE>
Notes to Unaudited Pro Forma Condensed Combined Statements of Earnings:
(a) To adjust interest expense to reflect the $500 million of debt incurred as
a result of the O.I.L. Group acquisition. In accordance with terms of the
Company's debt agreement, principal payments are assumed to be
approximately $14.3 million per quarter and the interest rate is assumed
to be 6.85%. The adjustment also includes amortization of financing costs
associated with the debt (amortized primarily over seven years).
(b) To adjust interest expense incurred by O.I.L. Group on indebtedness to
Ocean Group which, by agreement, is excluded from the acquisition.
(c) To adjust interest income to reflect the assumed beginning-of-the-year
usage of $39 million of cash in the O.I.L. Group acquisition. Interest
yield on cash investments is assumed to be 5%.
(d) To adjust for additional depreciation on the new basis of properties and
equipment acquired in the O.I.L. Group acquisition. Adjustment also
includes amortization of $356 million of cost in excess of fair value of
the net assets acquired in the transaction (amortized over 40 years).
(e) To adjust income taxes of the pro forma combined group to Tidewater's
historical effective income tax rate, as adjusted for tax effects related
to the acquisition.
(f) The pro forma combined information does not include the operating and
general and administrative cost savings anticipated as a result of the
consolidation of marine operations.
(g) The historical results of operations of O.I.L. Group were reported in
British pounds sterling and converted for purposes of the pro forma
financial information at the average currency exchange rate applicable
during the reporting period.
<PAGE> 8
O.I.L. GROUP
COMBINED FINANCIAL STATEMENTS
31 December 1996, 1995 and 1994
1
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of O.I.L.:
We have audited the accompanying combined balance sheets of O.I.L. Group, a
former division of Ocean Group plc (Ocean Group), as of December 31, 1996 and
1995 and the related combined statements of profit, cash flows and total
recognised gains and losses for each of the years in the three year period
ended December 31, 1996 all expressed in British pounds sterling. These
combined financial statements are the responsibility of the O.I.L. Group
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom, which do not differ in any significant respect
from auditing standards generally accepted in the United States. 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 combined financial statements audited by us present fairly,
in all material respects, the financial position of O.I.L. Group at December
31, 1996 and 1995, and the results of its operations and cash flows for each of
the years in the three year period ended December 31, 1996 in conformity with
accounting principles generally accepted in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the
United States. The application of the latter would have affected the
determination of results of operations expressed in British pounds sterling for
each of the two years in the period ended December 31, 1996 and the
determination of combined invested equity also expressed in British pounds
sterling at December 31, 1996 and 1995 to the extent summarised in Note 28 to
the combined financial statements.
O.I.L. Group is a division of Ocean Group and, as disclosed in the combined
financial statements, has transactions and relationships with Ocean Group and
its affiliates.
Price Waterhouse
London, England
July 17, 1997
2
<PAGE> 10
O.I.L. GROUP
COMBINED PROFIT AND LOSS ACCOUNTS
for the years ended 31 December 1996, 1995 and 1994
Continuing Operations
<TABLE>
<CAPTION>
Notes 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C> <C>
1 Turnover 88,704 81,531 79,698
Cost of sales
Marine operations (48,642) (46,242) (45,828)
Depreciation (8,908) (8,373) (9,524)
Exchange losses (447) (158) (994)
------- ------- -------
(57,997) (54,773) (56,346)
------- ------- -------
Gross profit 30,707 26,758 23,352
Other income/(expenses)
General and administrative (10,872) (10,864) (10,892)
Depreciation (403) (422) (444)
Profit on sale of vessels 2,523 3,585 1,746
Exchange gains/(losses) (103) 14 (13)
------- ------- -------
(8,855) (7,687) (9,603)
------- ------- -------
2 PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST AND TAXATION 21,852 19,071 13,749
4 Interest receivable 358 369 134
5 Interest payable (3,824) (3,048) (2,464)
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION
18,386 16,392 11,419
6 Taxation on profit on ordinary
activities (4,268) (2,859) (2,780)
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION 14,118 13,533 8,639
Minority Interests (28) (17) (27)
------- ------- -------
PROFIT FOR THE FINANCIAL YEAR 14,090 13,516 8,612
7 Dividends (19,435) (11,856) (8,382)
------- ------- -------
RETAINED (L0SS)/PROFIT FOR THE YEAR (5,345) 1,660 230
======= ======= =======
STATEMENT OF TOTAL RECOGNISED GAINS
AND LOSSES
Profit for the financial year attributable
to shareholders 14,090 13,516 8,612
Exchange differences on translation of
net assets (68) 78 281
------- ------- -------
Total gains recognised 14,022 13,594 8,893
======= ======= =======
</TABLE>
3
<PAGE> 11
O.I.L. GROUP
COMBINED BALANCE SHEETS
as at 31 December 1996 and 1995
<TABLE>
<CAPTION>
Notes 1996 1995
L.'000 L.'000
<S> <C> <C> <C>
FIXED ASSETS
8 Tangible fixed assets 79,650 77,083
9 Investments in associated undertakings 83 140
------- -------
79,733 77,223
CURRENT ASSETS
10 Stocks 889 631
11 Debtors 39,003 36,457
Cash at bank and in hand 4,209 8,829
------- -------
44,101 45,917
CURRENT LIABILITIES
12 Creditors: amounts falling due within
one year (93,850) (88,400)
------- -------
NET CURRENT LIABILITIES (49,749) (42,483)
------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES 29,984 34,740
13 Creditors: amounts falling due after
more than one year (4,317) (3,668)
------- -------
25,667 31,072
======= =======
15 Invested equity 25,628 31,041
Minority Interests 39 31
------- -------
25,667 31,072
======= =======
</TABLE>
4
<PAGE> 12
O.I.L. GROUP
COMBINED STATEMENTS OF CASH FLOWS
for the years ended 31 December 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
L.'000 L.'000 L.'000
------- ------- -------
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES (NOTE 23) 28,225 23,552 23,501
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 361 130 134
Interest paid (3,447) (3,229) (2,362)
Dividends paid to minority shareholders - (8) (5)
------- ------- -------
NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
(3,086) (3,107) (2,233)
OVERSEAS TAXATION PAID (1,464) (1,704) (954)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (18,244) (18,473) (13,715)
Sale of vessels 3,369 4,367 2,729
Sale of other tangible fixed assets 85 70 160
------- ------- -------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
(14,790) (14,036) (10,826)
FINANCING
Debt due within one year:
New loans 273 - 10,249
Repayment of loans (273) (9,064) (10,238)
Debt due after more than one year:
New loans 2,044 - 32,634
Repayment of loans (1,094) (33,796) (33,409)
Intercompany hedging loans:
New loans 14,101 46,800 -
Repayment of loans (2,792) - -
Other parent company transactions, net (Note 26) (28,782) (1,161) (19,738)
------- ------- -------
NET CASH (OUTFLOW)/INFLOW FROM FINANCING (16,523) 2,779 (20,502)
------- ------- -------
(DECREASE)/INCREASE IN CASH IN THE YEAR (NOTE 24) (7,638) 7,484 (11,014)
======= ======= =======
</TABLE>
5
<PAGE> 13
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The accounting policies adopted by the O.I.L. Group are set out below, and have
been consistently applied throughout the period.
(a) ACCOUNTING CONVENTION
The accounts are prepared under the going concern concept and the
historical cost convention and in accordance with applicable
accounting standards.
(b) BASIS OF PREPARATION
For the period covered by these combined financial statements,
O.I.L. Group ("The Group") was a division of Ocean Group plc
("Ocean Group"). O.I.L. Group comprises O.I.L. Limited, its
direct subsidiaries and other Ocean Group subsidiaries providing
marine and other services to the offshore oil industries (see
note (d) below). Each of the companies is a legal entity and
prepares single company statutory accounts according to the
legislation requirements of its country of registration or
incorporation.
The operations of this division have been reported as a separate
segment within the financial statements of Ocean Group.
Under the terms of the acquisition of O.I.L. Group (see Note 27),
Tidewater Inc has acquired the whole of Ocean Group's holdings of
the issued share capital of the companies comprising the O.I.L.
Group. However, the operations of O.I.L. Limited's supply base in
Lerwick (the Shetland division) were excluded from the sale. For
the purposes of these combined financial statements, the results
and net assets of the Shetland division have been excluded for
all periods.
These combined financial statements present information about the
O.I.L. Group on a combined basis. All material intercompany
accounts and transactions have been eliminated in arriving at the
combined financial statements.
The combined cash flow statement presented above has been drawn
up for the purposes of these combined financial statements under
Financial Reporting Standard No 1 (Revised 1996).
Subsidiary Undertakings
An undertaking is considered to be a subsidiary where the Group
exercises dominant influence over the operations of the
undertaking. The accounts of subsidiary undertakings acquired
during the year are included in Group figures from the effective
dates of acquisition.
Goodwill
No goodwill was incurred on the acquisition of any of the
subsidiaries included within these combined financial statements.
6
<PAGE> 14
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(c) INVESTMENTS IN ASSOCIATED UNDERTAKINGS
Associated undertakings are undertakings in which the Group has a
long term participating interest and over which it exercises
significant influence.
The Group combined profit and loss account includes the Group's
share of the results of its associated undertakings as shown by
their audited accounts or unaudited management accounts. The
Group's investment in associated undertakings is its interest in
their tangible net assets.
(d) NATURE OF BUSINESS
Nature of operations
The O.I.L. Group provides marine and other services to the
offshore oil industries on the UK Continental Shelf, in Africa,
Asia Pacific and South America. These services include
transporting supplies, material and personnel; towing mobile rigs
and construction barges; positioning and handling anchors of
mobile drilling rigs and construction and pipe laying barges;
diving and maintenance support; oil terminal support operations;
steel fabrication work for small-scale repair and modification of
fixed drilling installations; and related marine consultancy
services. O.I.L. Group's main customers are among the major
international oil exploration and production companies or their
immediate service contractors.
Related party transactions
As a division of Ocean Group, O.I.L. Group received a number of
administrative and support services from Ocean Group and
participated in the Ocean Group pension schemes, insurance and
banking arrangements and employee share ownership plans.
Further information about such relationships and transactions is
given in Note 17.
(e) FOREIGN CURRENCY RISK MANAGEMENT
O.I.L Group has utilised the central treasury functions of the
Ocean Group in managing its cash and borrowings and in hedging
its asset and transaction foreign exchange exposures as part of
the Ocean Group's overall treasury management strategy.
For the purposes of these combined financial statements, where
this hedging strategy has generated profits or losses within the
records of Ocean Group which relate to O.I.L. Group exposures,
these have been pushed down and included in the results of O.I.L.
Group. The impact on the net assets of the O.I.L.Group has been
adjusted through the intercompany account with Ocean Group.
7
<PAGE> 15
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(f) TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at cost less depreciation. Cost
includes interest incurred on the financing of the construction
of major vessels. Depreciation of fixed assets is provided evenly
over their estimated useful lives after taking account of
estimated residual values. Useful lives are assessed as follows:
Vessels 5 to 25 years
Plant and equipment 3 to 5 years
Motor vehicles 4 years
Short leasehold property period of lease
Long leasehold property 20 years
Buildings 10 to 25 years
Depreciation is not charged in respect of freehold land.
Change of asset lives:
In 1995 the estimated maximum useful life of vessels was
reassessed and extended from 20 to 25 years and the estimated
residual value decreased from 10% to nil. This decreased the
depreciation charge for 1995 by L.1,701,000.
(g) PROFIT ON SALE OF VESSELS
Profit on the sale of vessels, which represents the total profits
made on sale of vessels to third parties, is recognised when the
consideration is realised. Any losses on the sale of vessels are
recognised at the time of disposal.
(h) TAXATION
Historically, Ocean Group has undertaken to discharge the
liabilities to UK Corporation Tax of the UK entities included in
the O.I.L. Group and as a result no charges or obligations for UK
corporation tax have been recorded in the individual companies'
statutory accounts.
This financial information presents the O.I.L. Group's UK
corporation tax charge on a stand alone basis. No benefit has
been assumed from corporation tax losses or Advanced Corporation
Tax arising in other Ocean Group undertakings.
UK Corporation Tax obligations are included within balances
payable to Ocean Group as Ocean Group have been responsible for
their payment.
Overseas tax payable represents amounts outstanding on
assessments received and payable by O.I.L. Group without recourse
to Ocean Group.
(i) DEFERRED TAX
Provision for deferred taxation is made using the liability
method, on the excess of capital allowances over depreciation and
other timing differences, to the extent that it is probable that
a liability will crystallize in the foreseeable future.
8
<PAGE> 16
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)
(j) FOREIGN CURRENCIES
The trading results of foreign operations are translated into
sterling at average rates of exchange ruling through the relevant
period. The net assets of foreign operations are expressed in
sterling at the rates of exchange ruling at the balance sheet
date.
Differences on exchange arising from the retranslation of both
the opening net assets of foreign operations and of the trading
results of foreign operations to closing rates of exchange are
taken to reserves.
Other assets and liabilities denominated in foreign currencies
are expressed at the rates of exchange ruling at the balance
sheet date. Profits or losses due to currency fluctuations,
including those arising on the settlement of day to day
transactions, are dealt with through the profit and loss account.
(k) PENSIONS
Certain O.I.L. Group employees are members of an Ocean Group
pension scheme (a defined benefit plan) contributions to which
are assessed by a qualified actuary based on the cost of
providing pensions across all participating Ocean Group
companies.
Contributions on behalf of those O.I.L. Group employees who are
members of the Merchant Navy Officers and Ratings Pension Funds
(defined contribution plans) are charged to the profit and loss
account as incurred. These schemes are operated independently on
behalf of the UK Merchant shipping industry and the contribution
rates required are determined by actuarial review.
(l) STOCKS
Stocks are stated at the lower of cost and net realisable value.
(m) LEASES
The rental costs arising from operating leases are charged
against profit before interest as they arise.
9
<PAGE> 17
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
1 SEGMENTAL ANALYSIS
<TABLE>
<CAPTION>
(a) Turnover 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Turnover represents total revenue receivable from marine and
other services to the offshore oil industries
An analysis of turnover by geographical market is as follows:
United Kingdom 28,121 23,330 20,050
Americas 4,876 4,155 8,617
Africa, Middle East, Australasia and Far East 55,705 53,999 50,814
Rest of Europe 2 47 217
------ ------ ------
88,704 81,531 79,698
====== ====== ======
</TABLE>
Turnover by geographical destination is not materially different to
the analysis by geographical origin.
The Directors consider that the whole of the activities of the Group
constitute a single class of business. All activities are of a
continuing nature as defined under Financial Reporting Standard No 3.
<TABLE>
<CAPTION>
(b) Profit on ordinary activities before interest and taxation 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
United Kingdom 5,725 6,671 6,048
Americas 864 150 1,121
Africa, Middle East, Australasia and Far East 15,279 12,228 6,470
Rest of Europe (16) 22 110
------ ------ ------
21,852 19,071 13,749
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
(c) Net Assets 1996 1995
L.'000 L.'000
<S> <C> <C>
United Kingdom 24,212 29,425
Americas 2,767 2,981
Africa, Middle East, Australasia and Far East 65,050 60,515
Rest of Europe (16) (7)
------- -------
92,013 92,914
Net borrowings, tax and intercompany balances (66,346) (61,842)
------- -------
25,667 31,072
======= =======
</TABLE>
10
<PAGE> 18
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
2 PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
The following amounts have been charged in arriving at profit
on ordinary activities before interest and taxation:
Depreciation 9,311 8,795 9,968
Other operating lease rentals 474 443 557
Auditors' remuneration - audit work 82 66 51
- non audit work 5 21 27
Net exchange losses on foreign currency deposits less borrowings 204 6 74
Profit on sale of other fixed assets (52) (36) (48)
</TABLE>
3 EMPLOYEE COSTS AND DIRECTORS' EMOLUMENTS
<TABLE>
<CAPTION>
(a) Employee costs: 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Wages and salaries 23,148 22,266 21,630
Social security costs 765 963 1,037
Pension costs (Note 21) 10 29 171
------ ------ ------
23,923 23,258 22,838
====== ====== ======
Average number of employees 1,372 1,439 1,598
====== ====== ======
</TABLE>
Average number of employees includes individuals contracted to third
parties which supply labour to the O.I.L. Group. The labour costs of
such employees is included in wages and salaries.
(b) Directors' emoluments:
The Directors of O.I.L. Limited are responsible for the
management and operations of the O.I.L. Group as a whole.
The information set out below comprises the emoluments
of the directors of O.I.L Limited only.
<TABLE>
<CAPTION>
1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Emoluments 392 314 335
Performance related payments 80 94 96
------ ------ ------
472 408 431
====== ====== ======
O.I.L. allocation of the emoluments of the highest paid
Director (allocated between O.I.L. Ltd (65%) and its
fellow subsidiary Cory Towage Ltd (35%)). 138 120 111
====== ====== ======
</TABLE>
No pension contributions were paid on behalf of any director during
the period.
11
<PAGE> 19
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
The emoluments of the Directors fell in the following bands: 1996 1995 1994
<S> <C> <C> <C>
0 - L.5,000 1 - -
L.10,001 -L.15,000 - 1 -
L.15,001 -L.20,000 - 1 -
L.30,001 -L.35,000 1 1 -
L.50,001 -L.55,000 - 1 -
L.60,001 -L.65,000 - - 1
L.75,001 -L.80,000 - 1 1
L.85,001 -L.90,000 1 - 1
L.90,001 -L.95,000 - 1 1
L.100,001 -L.105,000 1 - -
L.105,001 -L.110,000 1 - -
L.110,001 -L.115,000 - - 1
L.115,001 -L.120,000 - 1 -
L.135,001 -L.140,000 1 - -
</TABLE>
<TABLE>
<CAPTION>
4 INTEREST RECEIVABLE 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Bank deposits and short term loans 146 94 94
Group and subsidiary undertakings 212 275 40
------ ------ -----
358 369 134
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
5 INTEREST PAYABLE 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Loans and bank overdrafts repayable after 5 years 236 244 420
Loans and bank overdrafts wholly repayable within 5 years 208 2,744 1,977
Group and subsidiary undertakings 3,380 60 67
------ ------ -----
3,824 3,048 2,464
====== ====== =====
</TABLE>
12
<PAGE> 20
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL ACCOUNTS (continued)
<TABLE>
<CAPTION>
6 TAXATION 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
United Kingdom taxation:
Corporation tax at 33% 3,765 2,639 2,351
Relief for overseas taxation (1,109) (1,258) (595)
------ ------ -----
2,656 1,381 1,756
Overseas taxation 1,604 1,474 1,015
Associated undertakings 8 4 9
------ ------ -----
4,268 2,859 2,780
====== ====== =====
</TABLE>
UK Corporation Tax payable is included in creditors falling due within
one year in amounts owed to group undertakings.
UK Corporation Tax is assessed on the profits of O.I.L. Limited arising
on its worldwide income less an allowance for double taxation relief
where these profits are subject to overseas tax. No relief is available
for any interest or penalties suffered. Exposures may exist in relation
to the O.I.L. Group's overseas operations arising from the late payment
of overseas tax . No provision has been made in these financial
statements for any additional overseas tax or penalties which may
become payable but which are not quantifiable at this time within a
reasonable range of outcomes. Under the terms of the acquisition (Note
27), O.I.L. Group is not liable for any further charges for overseas
taxation and associated interest or penalties for any periods up to and
including 31 December 1996.
The effective rate of tax is lower than the statutory UK Corporation
Tax rate of 33% primarily because of the availability of tax relief for
capital expenditure for which no deferred tax charge is considered
necessary under UK GAAP.
7 DIVIDENDS
Dividends payable in 1996 by O.I.L. Limited, O.I.L. Engineering Limited
and Fairway Personnel Services Limited reduced profit and loss reserves
of these companies to L.nil.
Dividends declared and payable by the O.I.L. Group to Ocean Group
disclosed within these combined financial statements represent the
aggregated amounts reflected in the underlying statutory accounts, as
approved by the respective Boards of Directors subsequent to each year
end.
13
<PAGE> 21
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
8 TANGIBLE ASSETS
<TABLE>
<CAPTION>
Land and Buildings Plant & Total
Fleet Short Freehold Equipment
(Owned) Leasehold & Motor
Vehicles
L.'000 L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C> <C>
COST
At 1 January 1996 125,739 1,040 638 4,014 131,431
Additions 17,817 - - 427 18,244
Disposals (2,536) (9) - (588) (3,133)
Exchange adjustment (8,588) (2) - (42) (8,632)
------- ------- ------- ------- -------
At 31 December 1996 132,432 1,029 638 3,811 137,910
======= ======= ======= ======= =======
ACCUMULATED DEPRECIATION
At 1 January 1996 50,406 728 355 2,859 54,348
Depreciation for year 8,472 67 30 742 9,311
Disposals (1,766) (202) - (286) (2,254)
Exchange adjustment (3,123) (2) - (20) (3,145)
------- ------- ------- ------- -------
At 31 December 1996 53,989 591 385 3,295 58,260
======= ======= ======= ======= =======
NET BOOK AMOUNT
At 31 December 1996 78,443 438 253 516 79,650
======= ======= ======= ======= =======
At 31 December 1995 75,333 312 283 1,155 77,083
======= ======= ======= ======= =======
</TABLE>
The cost of Fleet assets includes L.437,000, (1995 : L.437,000) of
capitalised interest in relation to new build vessels constructed in 1992 and
1993.
14
<PAGE> 22
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Land and Buildings Plant & Total
Fleet Short Freehold Equipment
(Owned) Leasehold & Motor
Vehicles
L.'000 L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C> <C>
COST
At 1 January 1995 111,250 983 638 3,860 116,731
Additions 17,708 61 - 704 18,473
Disposals (4,315) - - (553) (4,868)
Exchange adjustment 1,096 (4) - 3 1,095
------- ------- ------- ------- -------
At 31 December 1995 125,739 1,040 638 4,014 131,431
======= ======= ======= ======= =======
ACCUMULATED DEPRECIATION
At 1 January 1995 45,753 486 325 2,461 49,025
Depreciation for year 7,601 245 30 919 8,795
Disposals (3,532) - - (520) (4,052)
Exchange adjustment 584 (3) - (1) 580
------- ------- ------- ------- -------
At 31 December 1995 50,406 728 355 2,859 54,348
======= ======= ======= ======= =======
NET BOOK AMOUNT
At 31 December 1995 75,333 312 283 1,155 77,083
======= ======= ======= ======= =======
At 31 December 1994 65,497 497 313 1,399 67,706
======= ======= ======= ======= =======
</TABLE>
The cost of Fleet assets includes L.437,000, (1994 : L.437,000) of
capitalised interest in relation to new build vessels constructed in 1992 and
1993.
15
<PAGE> 23
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
9 INVESTMENTS IN ASSOCIATED UNDERTAKINGS 1996 1995
L.'000 L.'000
<S> <C> <C>
At l January 140 78
Share of retained profit (14) 62
Exchange adjustment (43) -
------ ------
At 31 December 83 140
====== ======
</TABLE>
The investments in the associated undertakings are unlisted. Details of
associated undertakings are given in Note 16.
In the opinion of the Directors, the aggregate value of the investments
in associated undertakings is not less than the aggregate of the amounts
at which the investments are stated in the balance sheet.
<TABLE>
<CAPTION>
10 STOCKS 1996 1995
L.'000 L.'000
<S> <C> <C>
Raw materials and consumables 889 631
====== ======
</TABLE>
<TABLE>
<CAPTION>
11 DEBTORS 1996 1995
L.'000 L.'000
<S> <C> <C>
Trade debtors 15,203 14,004
Amounts owed by group undertakings (Note 14) 19,934 17,524
Other debtors 1,354 2,623
Prepayments and accrued income 2,512 2,306
------ ------
39,003 36,457
====== ======
</TABLE>
L.224,000 (1995 : L.nil) of other debtors is due in more than one year.
<TABLE>
<CAPTION>
12 CREDITORS : AMOUNTS FALLING DUE WITHIN
ONE YEAR 1996 1995
L.'000 L.'000
<S> <C> <C>
Bank overdraft 2,806 13
Trade creditors 2,602 2,319
Amounts owed to group undertakings (Note 14) 79,013 77,003
Other creditors 1,909 712
Overseas tax payable 913 773
Other taxation and social security 847 955
Accruals and deferred income 4,702 5,850
Finance debt (Note 13) 1,058 775
------ ------
93,850 88,400
====== ======
</TABLE>
Amounts owed to group undertakings include proposed dividends of
L.19,435,000 (1995 : L.11,856,000)
16
<PAGE> 24
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR 1996 1995
L.'000 L.'000
<S> <C> <C>
Finance Debt:
Wholly repayable within 5 years 3,623 1,416
Not wholly repayable within 5 years 1,752 3,027
------ ------
5,375 4,443
====== ======
Amounts repayable within 5 years 5,217 3,807
Amounts repayable after 5 years 158 636
------ ------
5,375 4,443
Included in creditors: amounts falling due
within one year (1,058) (775)
------ ------
4,317 3,668
====== ======
</TABLE>
Finance debt comprises:
a) seven fixed term loans secured against specific vessels totalling
L.3,349,000 (1995: L.4,443,000) with Ship Mortgage Finance Corporation,
with repayment terms in accordance with the loan contracts. Interest is
charged at 7.5% of outstanding balances.
b) two fixed term third party loans totalling L.2,026,000 (1995 :
L.nil), ultimately secured by a guarantee given by Ocean Group, to
finance vessels owned by Ocean Fleet Sdn Bhd and Ocean Fleet 2 Sdn Bhd.
The Ocean Group guarantee is secured against the underlying vessels.
Subsequent to the acquisition of the O.I.L. Group by Tidewater Inc (Note
27) the Ocean Group guarantee has been assumed by Tidewater Inc. The
loans carry interest at 0.25% over SIBOR (Singapore Inter-Bank Offer
Rate) and are repayable in nineteen equal quarterly instalments.
<TABLE>
<CAPTION>
14 AMOUNTS OWED TO/BY GROUP UNDERTAKINGS 1996 1995
L.'000 L.'000
<S> <C> <C>
Amounts owing from group undertakings:-
Loan accounts - non interest bearing 19,809 16,798
Trading/other accounts - non interest bearing 125 726
------ ------
19,934 17,524
====== ======
Amounts owed to group undertakings:-
Loan accounts - non interest bearing 25,332 28,972
- interest bearing 53,150 46,800
------ ------
78,482 75,772
Trading accounts - non interest bearing 531 1,231
------ ------
79,013 77,003
====== ======
</TABLE>
The interest bearing loan account carries interest at US Dollar LIBOR
plus 0.3% per annum.
17
<PAGE> 25
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
15 RECONCILIATION OF MOVEMENTS IN INVESTED EQUITY 1996 1995
L.'000 L.'000
<S> <C> <C>
Profit for the financial year 14,090 13,516
Dividends (19,435) (11,856)
Exchange differences on retranslation of net assets (68) 78
------- -------
Net (decrease) / increase in invested equity (5,413) 1,738
Opening invested equity 31,041 29,303
------- -------
Closing invested equity 25,628 31,041
======= =======
</TABLE>
16 UNDERTAKINGS INCLUDED IN THE COMBINED FINANCIAL STATEMENTS
The following undertakings are included in the combined financial
statements for each of the three years ended 31 December 1996, except
as noted below:
<TABLE>
<CAPTION>
Principal Country of Percentage of
Activity registration or ordinary
incorporation share capital
<S> <C> <C> <C>
O.I.L. Limited Marine Services England 100%
Direct subsidiaries of OIL Limited:
O.I.L. (Nigeria) Ltd. Marine Services Nigeria 60%
Fairway Personnel Services Ltd (1995 and Marine Services England 100%
1996)
OIL Engineering Ltd Engineering and Scotland 100%
related services
OTTTO Limited Holding Company England 100%
Subsidiaries of other Ocean Group
Companies:
OSA Marine Services Asia Pte Marine Services Singapore 100%
OSA Marine Services GmbH Marine Services Germany 100%
Ocean Fleets Sdn Bhd Marine Services Malaysia 49%
Ocean Fleets 2 Sdn Bhd Marine Services Malaysia 49%
Parktor Shipping NV Flag company Netherlands 100%
Antilles
VTG Supply Boat Liberia Flag company Liberia 100%
Hansa Shipping Inc Flag company Panama 100%
Inter Oceanic Nav. Co Flag company Panama 100%
OSA do Brasil Agency Services Brazil 40%
</TABLE>
Ocean Fleets Snd Bhd and Ocean Fleets 2 Snd Bhd have been
consolidated as subsidiaries as the Group exercises dominant
influence over their operations and strategy. Further details of
transactions with these subsidiaries are given in Note 17.
18
<PAGE> 26
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Principal Country of Percentage of
Activity registration or ordinary
incorporation share capital
<S> <C> <C> <C>
Associated undertakings:-
Thabet & O.I.L. Ltd Marine Services Yemen 33%
Thai OSA Marine Services Thailand 49%
</TABLE>
17 RELATED PARTY TRANSACTIONS
(a) Group services
As a division of Ocean Group, O.I.L. Group received a number of
administrative and support services from Ocean Group. These include
taxation, treasury, internal audit and company secretarial and are
recharged by Ocean Group on the basis of usage. The total amounts
included within the profit and loss account of the O.I.L. Group in
relation to these costs were 1996 - L.140,000; 1995 -
L.150,000; 1994 - L.169,000; Details of treasury services
provided are given in Note 18.
(b) Provision of payroll services
The O.I.L. Group provides payroll services to certain other members
of the Ocean Group. These services are charged to these related
parties at cost.
(c) Malaysian subsidiaries
During 1996, O.I.L. Limited sold one vessel to each of Ocean Fleets
Sdn Bhd and Ocean Fleets 2 Sdn Bhd at arms length valuations
generating a profit of L.768,000 and L.797,000
respectively. This profit has been eliminated on consolidation.
Third party loans held by Ocean Fleets Sdn Bhd and Ocean Fleets 2 Sdn
Bhd for the purchase of these vessels are guaranteed by Ocean Group.
The vessels are chartered back to O.I.L. Limited on bare boat charter
at arms length rates.
(d) O.I.L. (Nigeria) Limited
O.I.L. (Nigeria) Limited, a 60% subsidiary of the O.I.L. Group
provides marine and terminal services to O.I.L. Limited in Nigeria.
These services are charged at uplifted rates as determined by
contract.
19
<PAGE> 27
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
18 FOREIGN CURRENCY RISK MANAGEMENT
The O.I.L. Group hedges its exposure to currency risk through foreign
exchange loans and forward contracts to purchase and sell foreign
currencies.
Hedging of Foreign currency debtors:
During 1994 and 1995, O.I.L. Limited held an external loan of US$14
million to hedge the company's exposure to US dollar denominated
trade debtors. Interest was paid on this loan at market rates.
Exchange movements recorded in the profit and loss account in
relation to this loan were L.520,000 gain in 1994 and
L.110,000 loss in 1995. On 29 December 1995, this loan was
repaid in full. At that date, this hedge was replaced by notional US
dollar forward contracts with Ocean Group, adjusted on a monthly
basis to reflect the projected value of US dollar debtors. Within
Ocean Group, specific forward contracts were taken out to hedge this
US dollar exposure. These combined financial statements reflect the
push down of the gain recorded by Ocean Group in relation to
forward contracts in 1996 which amounted to L.844,000.
Hedging of Foreign currency transactions:
During 1994 and 1995, the O.I.L. Group exposure to foreign currency
transaction flows was hedged against the exposure to foreign currency
transaction flows in other Ocean Group divisions. This hedging was
reflected by O.I.L. Group as notional forward contracts taken out
with Ocean Group. The notional gains arising from these notional
forward contract hedges during 1994 and 1995 of L.815,000 and
L.395,000 respectively have not been pushed down into the
results of the O.I.L. Group. During 1996, formal forward intergroup
contracts were executed between O.I.L. Limited and Ocean Group plc
and accounted for within the results of O.I.L. Group, giving rise to
a net result of L.nil.
<TABLE>
<CAPTION>
19 CAPITAL COMMITMENTS 1996 1995
L.'000 L.'000
<S> <C> <C>
Capital expenditure for which contracts have been placed
which is not otherwise provided for in these accounts. 1,159 45
====== ======
</TABLE>
<TABLE>
<CAPTION>
20 CONTINGENT LIABILITIES AND OTHER COMMITMENTS 1996 1995
L.'000 L.'000
<S> <C> <C>
(a) Annual commitments under non cancellable operating
leases expiring:
Within one year 339 147
Between one and five years 92 253
Five years and over 43 43
------ ------
474 443
====== ======
Comprising:
Land and buildings 420 420
Other 54 23
------ ------
474 443
====== ======
</TABLE>
20
<PAGE> 28
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(b) Guarantees:
O.I.L. Limited together with other subsidiary undertakings of Ocean
Group plc are guarantors to a revolving credit facility available to
Ocean Group plc and nominated subsidiary undertakings. The
outstanding joint liability at 31 December 1996 was L.10,000,000
(1995 : L.20,024,000). Subsequent to the acquisition of O.I.L. Group
by Tidewater Inc (Note 27), O.I.L. Group is no longer a party to this
guarantee.
(c) Forward exchange contracts
The O.I.L. Group had no outstanding forward exchange contracts at 31
December 1996 or 31 December 1995.
21 PENSION COSTS
The Ocean Group participates in the Ocean Nestor Pension Scheme. This
scheme is of the defined benefit type providing benefits to certain
employees within the Ocean Group. The assets of this scheme are
administered by an independent external trustee and are held
separately from the Ocean Group's assets.
The pension cost of this scheme has been assessed with the advice of
an independent qualified actuary using the projected unit method. The
last full actuarial valuation of this scheme was carried out as at 31
March 1995. As a result of this valuation, the actuary has been able
to recommend the continued suspension of Ocean Group's contributions
to this scheme. This payment holiday has been in operation throughout
the three years to 31 December 1996.
No charge is recorded for this scheme in these combined financial
statements. No adjustment has been made to recognise a share of the
overall scheme surplus as no ongoing benefit will accrue to O.I.L.
Group. Pursuant to the sale agreement, Tidewater is to contribute to
the Ocean Nestor Pension Scheme at a rate of 10% of pensionable
salary for all contribution members for a period of up to six months
from the date of sale. The maximum liability for pension
contributions anticipated to be made by Tidewater over this period
amounts to L.120,000.
Pension costs paid by O.I.L. Group comprise contributions to the
Merchant Navy Pension Funds defined contribution schemes. The charge
included within the profit and loss account in relation to these
schemes was 1996 - L.10,000; 1995 - L.29,000; 1994 -
L.171,000.
<TABLE>
<CAPTION>
22 DEFERRED TAXATION Amount Provided Full potential liability
1996 1995 1996 1995
L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C>
Accelerated capital allowances - - 15,026 14,318
Other timing differences - - (517) (940)
------ ------ ------ ------
- - 14,509 13,378
====== ====== ====== ======
</TABLE>
No account has been taken of surplus Advance Corporation Tax ("ACT")
held by Ocean Group as this will not be available to the O.I.L. Group
on an ongoing basis. Dividends paid by the O.I.L. Group to Ocean
Group were paid under a group income election and therefore were not
subject to ACT.
Capital gains arising on the disposal of vessels have been offset
against available capital losses within Ocean Group. No deferred tax
liability has been assessed in respect of such gains for which
rollover relief might have been claimed on an O.I.L. Group stand
alone basis.
21
<PAGE> 29
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
23 NET CASH INFLOW FROM OPERATING ACTIVITIES 1996 1995 1994
L.'000 L.'000 L.'000
<S> <C> <C> <C>
Profit on ordinary activities before
interest and taxation 21,852 19,071 13,749
Depreciation 9,311 8,795 9,968
Profit on sale of vessels (2,523) (3,585) (1,746)
Profit on sale of other fixed assets (52) (36) (48)
Income from associated undertakings (10) (66) (29)
(Increase)/decrease in stocks (258) (225) 175
(Increase)/decrease in debtors 465 (1,577) 2,488
(Decrease)/increase in creditors (560) 1,175 (1,056)
------ ------ ------
Net cash inflow from operating activities 28,225 23,552 23,501
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
24 RECONCILIATION OF NET CASH FLOW TO 1996 1995 1994
MOVEMENTS IN NET DEBT L.'000 L.'000 L.'000
<S> <C> <C> <C>
(Decrease)/increase in cash in the year (7,638) 7,484 (11,014)
Cash (inflow)/outflow from (increase)/
decrease in debt (950) 42,860 764
------ ------ -------
Change in net debt resulting from cash
flows (8,588) 50,344 (10,250)
Non-cash movements 243 (508) 2,448
------ ------ -------
Movement in net debt in the year (8,345) 49,836 (7,802)
Net debt at start of year 4,373 45,463) (37,661)
------ ------ -------
Net debt at end of year (3,972) 4,373 (45,463)
====== ====== =======
</TABLE>
25 ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
At Other At
l Jan non-cash Exchange 31 Dec
1996 Cashflow changes movements 1996
L.'000 L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C> <C>
Net cash and bank balances and overdrafts 8,816 (7,638) - 225 1,403
Finance debts due after more than one year (3,668) (950) 283 18 (4,317)
Finance debts due within one year (775) - (283) - (1,058)
------ ------ ------ ------ ------
4,373 (8,588) - 243 (3,972)
====== ====== ====== ====== ======
</TABLE>
22
<PAGE> 30
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
At Other At
l Jan non-cash Exchange 31 Dec
1995 Cashflow changes movements 1995
L.'000 L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C> <C>
Net cash and bank balances and overdrafts 1,326 7,484 - 6 8,816
Finance debts due after more than one year (37,060) 33,796 - (404) (3,668)
Finance debts due within one year (9,729) 9,064 - (110) (775)
------- ------ ------ ------ ------
Total (45,463) 50,344 - (508) 4,373
======= ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
At Other At
l Jan non-cash Exchange 31 Dec
1994 Cashflow changes movements 1994
L.'000 L.'000 L.'000 L.'000 L.'000
<S> <C> <C> <C> <C> <C>
Net cash and bank balances and overdrafts 12,266 (11,014) - 74 1,326
Finance debts due after more than one year (39,689) 775 - 1,854 (37,060)
Finance debts due within one year (10,238) (11) - 520 (9,729)
------- ------- ------ ------ -------
Total (37,661) (10,250) - 2,448 (45,463)
======= ======= ====== ====== =======
</TABLE>
26 INTERCOMPANY TRANSACTIONS
The cash flow impact of the movement in intercompany balances
excluding hedging loans and trading balances includes movements in
relation to UK corporation tax, dividend payments and movements of
funds between O.I.L. Group and Ocean Group.
Movements in current account balances which arise from trading are
included within the reconciliation of net cash inflow from operating
activities.
27 SUBSEQUENT EVENT
On 20 March 1997 Ocean Group entered into an agreement with Tidewater
Inc for the sale of the O.I.L. Group. The sale was completed on 16
May 1997.
23
<PAGE> 31
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
28 DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The O.I.L. Group's combined financial statements have been prepared
in accordance with generally accepted accounting principles in the
United Kingdom ("UK GAAP") which differ in certain respects from
generally accepted accounting principles in the United States ("US
GAAP"). The material differences as they apply to the Group are
summarised below.
(a) Deferred taxation
Under UK GAAP, deferred taxation is only accounted for to the extent
that it is probable that a liability or asset will arise in the
foreseeable future. Under US GAAP, deferred taxation is accounted for
on all timing differences, and a valuation allowance is established
in respect of those deferred taxation assets where it is more likely
than not that some portion will not be realised.
(b) Dividends
Under UK GAAP, dividends proposed are provided for in the year in
respect of which they are recommended by the Boards of Directors.
Under US GAAP, such dividends are provided for in the period they are
declared by the Boards of Directors.
(c) Current assets and liabilities
Current assets under UK GAAP include amounts which fall due after
more than one year. Under US GAAP such assets would be reclassified
as non-current assets.
(d) Combined statement of cash flows
The Group's combined cash flow statement is prepared in accordance
with Financial Reporting Standard No 1 (Revised 1996) and presents
substantially the same information as that required under US GAAP.
However, there are certain differences in classification of items
within the cash flow statements and with regard to the definition of
cash and cash equivalents between UK and US GAAP.
Cash flows from (i) operating activities; (ii) returns on investments
and servicing of finance; (iii) taxation; (iv) capital expenditure
and financial investment; and (v) financing activities are presented
separately under UK GAAP, However, US GAAP only requires presentation
of cash flows from three activities; operating, investing and
financing.
Cash flows from taxation and returns on investments and servicing of
finance are, with the exception of dividends paid and interest paid
but capitalised, included as operating activities under US GAAP. The
payment of dividends is included under financing activities and
capitalised interest is included under capital expenditure and
financial investment for US GAAP purposes.
Cash and cash equivalents under UK GAAP include bank loans and
overdrafts repayable within three months from the date of the
advance. Under US GAAP all short-term borrowings and overdrafts are
included in financing activities.
24
<PAGE> 32
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(e) Stock compensation plans
Ocean Group operates a number of stock based compensation plans.
Under UK GAAP, O.I.L. Group has not recognised any cost in respect of
these plans, since the O.I.L. Group portion of the total Ocean Group
costs in relation to these plans is immaterial.
Under US GAAP, the application of Accounting Principles Board Opinion
No 25 "Accounting for Stock Issued to Employees" results in a charge
in respect of O.I.L. Group employees which is immaterial and
accordingly has not been included in the reconciliations of net
income and invested equity.
(f) Effect on net income of differences between UK GAAP and US GAAP
<TABLE>
<CAPTION>
Year to Year to
3l December 31 December
1996 1995
L.'000 L.'000
<S> <C> <C>
Profit for the financial year in
accordance with UK GAAP 14,090 13,516
US GAAP adjustments:
Deferred taxation - full provisioning (1,131) (2,654)
------ ------
Net income in accordance with US GAAP 12,959 10,862
====== ======
</TABLE>
(g) Effect on invested equity of differences between UK GAAP and US GAAP
<TABLE>
<CAPTION>
3l December 31 December
1996 1995
L.'000 L.'000
<S> <C> <C>
Invested equity in accordance with UK GAAP 25,628 31,041
US GAAP adjustments:
Deferred taxation - Full provisioning (14,509) (13,378)
Dividends 19,435 11,856
------- -------
Invested equity in accordance with US GAAP 30,554 29,519
======= =======
</TABLE>
<TABLE>
<CAPTION>
Changes in US GAAP invested equity for the year 1996
ended 31 December 1996 are as follows: L.'000
<S> <C>
Invested equity at l January 29,519
Net income for the period 12,959
Dividends (11,856)
Exchange (68)
--------
Invested equity at 31 December 30,554
========
</TABLE>
25
<PAGE> 33
O.I.L. GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
29 COMPANIES ACT 1985
These combined financial statements do not constitute "statutory
accounts" within the meaning of the Companies Act 1985 for any of the
periods presented. Separate single company statutory accounts for
each of the individual companies included within O.I.L. Group have
been prepared in accordance with local legal requirements.
These combined financial statements exclude certain parent company
statements and other information required by the Companies Act 1985.
However, they include all material disclosures required by generally
accepted accounting principles in the United Kingdom including those
Companies Act 1985 disclosures relating to the profit and loss
account and balance sheet items.
26
<PAGE> 34
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.0 Agreement for the Acquisition of the Share Capital of the
O.I.L. Group of Companies, dated March 20, 1997, between
the Company and Ocean Group plc. [1]
23. Consent of Independent Public Accountants
99.1 Press Release issued May 16, 1997 disclosing completion of
the Company's acquisition of the O.I.L. Group of
companies.
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos 2-69356 and 33-38240) of Tidewater Inc of our
report dated July 17, 1997 on the combined financial statements of O.I.L. Group
as of December 31, 1996 and 1995 and each of the three years in the period
ended December 31, 1996, included in this Form 8-K/A-1 of Tidewater Inc.
Price Waterhouse
London, England July 18, 1997
