<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Quarterly Period Ended June 30, 1998
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.
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(Exact name of registrant as specified in its charter)
DELAWARE 72-0487776
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification 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
---- ----
58,229,856 shares of Tidewater Inc. common stock $.10 par value per share were
outstanding on July 20, 1998. Registrant has no other class of common stock
outstanding.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
- ---------------------------------------------------------------------------------------------------
June 30, March 31,
ASSETS 1998 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 44,689 24,977
Trade and other receivables 253,504 258,517
Marine operating supplies 33,462 31,498
Other current assets 4,383 4,122
- ---------------------------------------------------------------------------------------------------
Total current assets 336,038 319,114
- ---------------------------------------------------------------------------------------------------
Investments in, at equity, and advances to
unconsolidated companies 23,055 21,825
Properties and equipment:
Vessels and related equipment 1,538,831 1,534,948
Other properties and equipment 34,904 33,887
- ---------------------------------------------------------------------------------------------------
1,573,735 1,568,835
Less accumulated depreciation 880,954 863,209
- ---------------------------------------------------------------------------------------------------
Net properties and equipment 692,781 705,626
- ---------------------------------------------------------------------------------------------------
Goodwill, net 354,104 356,394
Other assets 95,225 89,880
- ---------------------------------------------------------------------------------------------------
$1,501,203 1,492,839
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt 6,466 6,466
Accounts payable and accrued expenses 102,001 105,914
Accrued property and liability losses 8,342 12,156
Income taxes 30,076 79,671
- ---------------------------------------------------------------------------------------------------
Total current liabilities 146,885 204,207
- ---------------------------------------------------------------------------------------------------
Long-term debt 40,000 25,000
Deferred income taxes 163,957 158,540
Accrued property and liability losses 63,242 57,289
Other liabilities and deferred credits 49,975 49,027
Stockholders' equity:
Common stock of $.10 par value, 125,000,000 shares
authorized, issued 59,052,940
shares at June and 59,482,769 shares at March 5,905 5,948
Additional paid-in capital 279,411 295,153
Retained earnings 766,324 712,463
- ---------------------------------------------------------------------------------------------------
1,051,640 1,013,564
Less:
Deferred compensation - restricted stock 3,914 4,206
Cumulative foreign currency translation adjustment 10,582 10,582
- ---------------------------------------------------------------------------------------------------
Total stockholders' equity 1,037,144 998,776
- ---------------------------------------------------------------------------------------------------
$1,501,203 1,492,839
===================================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share and per share data)
- --------------------------------------------------------------------------------------
Three Months Ended
June 30,
-------------------------
1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Vessel revenues $ 267,633 215,996
Other marine revenues 17,244 14,444
- --------------------------------------------------------------------------------------
284,877 230,440
- --------------------------------------------------------------------------------------
Costs and expenses:
Vessel operating costs 136,069 110,848
Costs of other marine revenues 13,657 12,336
Depreciation and amortization 23,822 18,554
General and administrative 18,741 16,360
- --------------------------------------------------------------------------------------
192,289 158,098
- --------------------------------------------------------------------------------------
92,588 72,342
Other income (expenses):
Foreign exchange gain (loss) 14 (59)
Gain on sales of assets 1,653 3,308
Equity in net earnings of unconsolidated companies 1,762 1,024
Minority interests (615) (295)
Interest and miscellaneous income 893 944
Interest and other debt costs (460) (4,504)
- --------------------------------------------------------------------------------------
3,247 418
- --------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 95,835 72,760
Income taxes 33,063 24,624
- --------------------------------------------------------------------------------------
Earnings from continuing operations 62,772 48,136
Earnings from discontinued operations --- 2,625
- --------------------------------------------------------------------------------------
Net earnings $ 62,772 50,761
======================================================================================
Earnings per common share:
- --------------------------
Earnings from continuing operations $ 1.06 .80
Earnings from discontinued operations --- .04
- --------------------------------------------------------------------------------------
Earnings per common share $ 1.06 .84
======================================================================================
Diluted earnings per common share:
- ----------------------------------
Earnings from continuing operations $ 1.05 .80
Earnings from discontinued operations --- .04
- --------------------------------------------------------------------------------------
Diluted earnings per common share $ 1.05 .84
======================================================================================
Weighted average common shares outstanding 59,359,546 60,350,547
Incremental common shares from stock options 156,993 378,819
- --------------------------------------------------------------------------------------
Adjusted weighted average common shares 59,516,539 60,729,366
======================================================================================
Cash dividends declared per common share $ .15 .15
======================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
- ------------------------------------------------------------------------------------
Three Months Ended
June 30,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net cash provided by continuing operations $104,409 90,116
Net cash (used in) provided by discontinued operations (67,810) 7,856
- ------------------------------------------------------------------------------------
Net cash provided by operating activities 36,599 97,972
- ------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of assets 2,923 10,557
Additions to properties and equipment (9,991) (20,117)
Acquisitions, net of cash acquired --- (555,392)
Increase in other assets (118) (3,433)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (7,186) (568,385)
- ------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (25,000) (35,253)
Credit facility borrowings 40,000 500,000
Proceeds from issuance of common stock 405 676
Common stock purchased (16,195) ---
Dividends paid (8,911) (9,053)
- ------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (9,701) 456,370
- ------------------------------------------------------------------------------------
Net change in cash and cash equivalents 19,712 (14,043)
Cash and cash equivalents at beginning of period 24,977 41,166
- ------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 44,689 27,123
====================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 181 640
Income taxes $ 75,713 5,567
====================================================================================
Supplemental noncash investing activity:
Acquisitions:
Fair value of assets acquired $ --- 702,812
Fair value of liabilities assumed --- (147,420)
- ------------------------------------------------------------------------------------
Net cash payment $ --- 555,392
====================================================================================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<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) COMPREHENSIVE INCOME
Effective April 1, 1998 the company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income," which established
standards for reporting and display of comprehensive income and its components.
Comprehensive income includes all changes in equity during a period except those
resulting from investment by owners or distribution to owners. A reconciliation
of net earnings to comprehensive income for the quarters ended June 30 are as
follows:
<TABLE>
<CAPTION>
Quarter Ended
June 30,
-----------------
(in thousands) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net earnings $62,772 50,761
Change in cumulative foreign currency translation adjustment --- (94)
- ----------------------------------------------------------------------------------
Comprehensive income $62,772 50,667
==================================================================================
</TABLE>
(3) 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 applicable to pre-
tax earnings from continuing operations was 34.5% and 33.8% for the quarters
ended June 30, 1998 and 1997, respectively.
(4) MARINE ACQUISITIONS
On May 16, 1997 the company acquired all of the shares of O.I.L. Ltd. (O.I.L.).
The total cost of the acquisition of $626 million, which includes $65.6 million
of deferred income tax liability, was allocated under the purchase method of
accounting based on the fair value of the assets acquired and liabilities
assumed, plus amounts for professional fees, severance and other transaction
costs and the related deferred tax effect of the acquisition.
The results of O.I.L.'s operations have been consolidated with the company's
effective May 16, 1997. Pro forma combined results of continuing operations of
the company and of O.I.L. including appropriate purchase accounting adjustments
for the quarter ended June 30, 1997 as though the acquisition had taken place on
April 1, 1997 were not significantly different than actual results.
-5-
<PAGE>
(5) BUSINESS DISPOSITION
On February 20, 1998 the company completed the sale of its compression division
for approximately $348 million. The discontinued compression division's
operating results for the three-month period ended June 30, 1997 were as
follows:
Three Months Ended
(in thousands) June 30, 1997
- -----------------------------------------------------------
Revenues $26,157
Operating costs 13,166
Depreciation and amortization 6,554
General and administrative 2,509
- -----------------------------------------------------------
3,928
Other income 223
- -----------------------------------------------------------
Earnings before income taxes 4,151
Income taxes 1,526
- -----------------------------------------------------------
Earnings from discontinued operations $ 2,625
===========================================================
-6-
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------
The Board of Directors and Shareholders
of Tidewater Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Tidewater Inc. and subsidiaries as of June 30, 1998 and the related condensed
consolidated statements of earnings and cash flows for the three-month periods
ended June 30, 1998 and 1997. These financial statements are the responsibility
of the company's management.
We conducted our reviews 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, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying 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. and subsidiaries as
of March 31, 1998, 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 April 27, 1998, 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, 1998, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
Ernst & Young LLP
New Orleans, Louisiana
July 17, 1998
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
The company provides services and equipment to the international offshore energy
industry through the operation of a diversified fleet of marine service vessels.
Revenues, net earnings and cash flows from operations are dependent upon the
activity level of the vessel fleet which is ultimately dependent upon oil and
natural gas prices which, in turn, are determined by the supply/demand
relationship for oil and natural gas. The following discussion should be read
in conjunction with the unaudited condensed consolidated financial statements
and related disclosures.
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the company notes that certain statements set
forth in this Quarterly Report on Form 10-Q which provide other than historical
information and which are forward looking, involve risks and uncertainties that
may impact the company's actual results of operations. The company faces many
risks and uncertainties, many of which are beyond the control of the company,
including fluctuations in oil and gas prices; changes in capital spending by
customers in the energy industry for exploration, development and production;
unsettled political conditions, civil unrest and governmental actions,
especially in higher risk countries of operations; foreign currency controls and
environmental and labor laws. Readers should consider all of these risk factors
as well as other information contained in this report.
MARINE OPERATIONS
- -----------------
Offshore service vessels provide a diverse range of services and equipment to
the energy 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 when revenue changes. Operating
costs principally consist of crew costs, repair and maintenance, insurance,
fuel, lube and supplies. Fleet size is the major factor which affects 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 mandated 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 company's vessels are subject to various statutes and regulations governing
their operation. The laws of the United States provide that once a vessel is
registered under a flag other than the United States, it cannot thereafter
engage in U.S. coastwise trade. Therefore, the company's non-U.S. flag vessels
must continue to be operated abroad, and if the company were not able to secure
charters abroad for them, and work would otherwise have been available for them
in the United States, its operations would be adversely affected. Of the total
697 vessels owned or operated by the company during the quarter ended June 30,
1998, approximately 372 were registered under flags other than the United States
and 325 were registered under the U.S. flag.
-8-
<PAGE>
The following table compares revenues and operating expenses (excluding general
and administrative expense and depreciation expense) for the quarters ended June
30 and March 31. Vessel revenues and operating costs relate to vessels owned
and operated by the company while other marine services relate to the activities
of the company's shipyards, brokered vessels and other miscellaneous marine-
related businesses.
Quarter Ended Quarter
June 30, Ended
------------------ March 31,
(in thousands) 1998 1997 1998
- -------------------------------------------------------------------
Revenues:
Vessel revenues:
United States $110,009 105,956 119,657
International 157,624 110,040 146,419
- -------------------------------------------------------------------
267,633 215,996 266,076
Other marine revenues 17,244 14,444 12,535
- -------------------------------------------------------------------
$284,877 230,440 278,611
===================================================================
Operating costs:
Vessel operating costs:
Crew costs $ 67,929 52,748 67,150
Repair and maintenance 43,126 34,003 38,266
Insurance 5,833 8,450 7,763
Fuel, lube and supplies 9,997 8,137 10,797
Other 9,184 7,510 8,756
- -------------------------------------------------------------------
136,069 110,848 132,732
Costs of other marine revenues 13,657 12,336 10,509
- -------------------------------------------------------------------
$149,726 123,184 143,241
===================================================================
Marine support services are conducted worldwide with assets that are highly
mobile. Revenues are principally derived from offshore service vessels, which
regularly and routinely move from one operating area to another, often to and
from offshore operating areas in different continents. Because of this asset
mobility, revenues and long-lived assets attributable to the company's
international marine operations in any one country are not "material" as that
term is defined by SFAS No. 131.
Marine operating profit for the quarters ended June 30 and March 31 consist of
the following:
Quarter Ended Quarter
June 30, Ended
---------------- March 31,
(in thousands) 1998 1997 1998
- --------------------------------------------------------
Vessel activity:
United States $53,487 47,251 59,377
International 39,052 26,292 33,596
- --------------------------------------------------------
92,539 73,543 92,973
Gains from asset sales 1,653 3,308 419
Other marine services 3,392 1,923 1,801
- --------------------------------------------------------
Operating profit $97,584 78,774 95,193
========================================================
Fiscal 1999 first quarter operating profit was significantly greater than the
corresponding period for fiscal 1998 as a result of higher day rates for the
worldwide fleet. The effect of these higher day rates and the expansion of the
international-based fleet through the O.I.L. acquisition were somewhat offset by
higher operating costs resulting from the expansion of the fleet, increased
costs associated
-9-
<PAGE>
with attracting, training and retaining qualified personnel and a greater number
of drydockings resulting in increased repair and maintenance cost and a decline
in worldwide vessel utilization.
Current quarter operating profit was only slightly greater than the preceding
quarter's amount. The prolonged drop in oil price over the past three quarters
has resulted in cutbacks in drilling programs primarily in the U.S. Gulf of
Mexico market. As the duration of vessel contracts in the Gulf of Mexico
normally range from one to three months, the effects of any change in drilling
programs are seen quickly. U.S.-based vessel operating profit for the quarter
ended June 30, 1998 was approximately 10% less than the preceding quarter as the
softening in vessel demand resulted in lower vessel utilization and lower
average day rates. This softening in domestic activity is likely to continue
with the decline in the number of working drilling rigs. In addition the
expected delivery of a number of newly-constructed supply vessels to various
industry competitors throughout the remainder of this year may create even
further imbalance in the Gulf of Mexico supply vessel market thereby putting
additional pressure on vessel utilization and day rates.
The international-based vessel operating profit increased approximately 16% from
the preceding quarter as a result of the continued strength of certain
international markets where average day rates continue to improve. Vessel
utilization for the international-based fleet was slightly lower than the
preceding quarter due primarily to a higher number of drydockings performed
during the current quarter. This increased level of drydockings accounted for
most of the higher marine operating costs in the current quarter versus the
preceding quarter. The duration of vessel contracts in most international
markets is considerably longer than in the U.S. market. As such, the decline
in oil price has not had the immediate impact on the company's international
activity that it has had on the domestic activity. If oil prices continue at
the low level currently being experienced, future international activity could
be adversely affected.
Vessel utilization is determined primarily by market conditions and to a lesser
extent by drydocking requirements. Vessel day rates are determined by the
demand created through the level of offshore exploration, development and
production spending by energy exploration and production companies relative to
the supply of offshore service vessels. Suitability of equipment and the degree
of service provided also influence vessel day rates. The following tables
compare day-based utilization percentages and average day rates by vessel class
and in total for the quarters ended June 30 and March 31:
-10-
<PAGE>
Quarter Ended Quarter
June 30, Ended
---------------- March 31,
1998 1997 1998
- -----------------------------------------------------------------------
UTILIZATION:
- ------------
Domestic-based fleet :
- ----------------------
Towing-supply/supply 85.4% 91.0 91.9
Crew/utility 88.8 90.9 90.7
Offshore tugs 61.1 63.1 53.1
Other 45.7 59.5 40.6
Total 79.9% 84.8 83.0
International-based fleet :
- ---------------------------
Towing-supply/supply 86.3% 89.4 88.3
Crew/utility 80.2 82.4 90.2
Offshore tugs 76.1 83.1 76.6
Safety/standby 80.7 78.1 70.1
Other 67.9 83.0 68.2
Total 82.2% 86.0 83.8
Worldwide fleet:
- ----------------
Towing-supply/supply 85.9% 90.1 89.7
Crew/utility 83.6 86.1 90.4
Offshore tugs 69.6 74.7 66.3
Safety/standby 80.7 78.1 70.1
Other 62.7 77.7 62.4
Total 81.4% 85.5 83.5
=====================================================================
AVERAGE VESSEL DAY RATES:
- -------------------------
Domestic-based fleet:
- ---------------------
Towing-supply/supply $7,709 6,986 7,877
Crew/utility 2,280 1,976 2,219
Offshore tugs 7,649 6,443 8,465
Other 3,449 2,626 3,611
Total $6,658 5,876 6,837
International-based fleet:
- --------------------------
Towing-supply/supply $6,523 4,806 6,069
Crew/utility 2,447 1,982 2,375
Offshore tugs 4,273 3,413 4,160
Safety/standby 6,541 6,002 6,229
Other 876 873 938
Total $5,330 3,909 4,976
Worldwide fleet:
- ----------------
Towing-supply/supply $6,975 5,750 6,798
Crew/utility 2,376 1,979 2,306
Offshore tugs 5,558 4,492 5,667
Safety/standby 6,541 6,002 6,229
Other 1,313 1,173 1,299
Total $5,806 4,677 5,670
=====================================================================
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<PAGE>
The following table compares the average number of vessels by class and
geographic distribution for the quarters ended June 30 and March 31:
<TABLE>
<CAPTION>
Quarter Ended Quarter
June 30, Ended
--------------- March 31,
1998 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic-based fleet:
- ---------------------
Towing-supply/supply 142 144 146
Crew/utility 35 39 39
Offshore tugs 40 39 41
Other 10 11 9
- -------------------------------------------------------------------------------------------------------------------
Total 227 233 235
- -------------------------------------------------------------------------------------------------------------------
International-based fleet:
- -------------------------
Towing-supply/supply 228 192 224
Crew/utility 54 49 49
Offshore tugs 53 54 52
Safety/standby 29 26 30
Other 32 38 34
- -------------------------------------------------------------------------------------------------------------------
Total 396 359 389
- -------------------------------------------------------------------------------------------------------------------
Owned or chartered vessels included in marine revenues 623 592 624
Vessels withdrawn from active service 26 14 27
Joint-venture and other 48 67 49
- -------------------------------------------------------------------------------------------------------------------
Total 697 673 700
===================================================================================================================
</TABLE>
General and administrative expenses for the quarters ended June 30 and March 31
consist of the following components:
<TABLE>
<CAPTION>
Quarter Ended Quarter
June 30, Ended
--------------- March 31,
1998 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personnel $11,125 9,981 11,024
Office and property 3,309 3,070 3,829
Sales and marketing 1,471 1,141 1,394
Professional services 1,625 1,218 1,269
Other 1,211 912 1,389
- -------------------------------------------------------------------------------------------------------------------
$18,741 16,322 18,905
===================================================================================================================
</TABLE>
Increase in general and administrative expenses above fiscal 1998's first
quarter is primarily the result of the O.I.L. acquisition effective May 16,
1997.
LIQUIDITY, CAPITAL RESOURCES AND OTHER MATTERS
- ----------------------------------------------
The company's current ratio, level of working capital and amount of cash flows
from continuing operations for any year are directly related to fleet activity
and vessel day rates. Fleet activity and vessel day rates are ultimately
determined by the supply/demand relationship for oil and natural gas.
Variations from year-to-year in these items are primarily the result of market
conditions. Cash from ongoing operations in combination with available lines of
credit provide the company, in management's opinion, with adequate resources to
satisfy financing requirements. At June 30, 1998, $160 million of the company's
$200 million revolving line of credit was available to satisfy financing needs.
Continued payment of dividends, currently $.15 per quarter per common share, is
subject to declaration by the Board of Directors.
-12-
<PAGE>
Excluding the O.I.L. acquisition included in fiscal 1998's first quarter,
investing activities for the current quarter consumed less cash as the result of
smaller cash outlays for vessel modifications and capitalized repairs.
Financing activities for the quarter ended June 30, 1998 used $9.7 million of
cash which included a $25 million prepayment on the credit facility and
quarterly cash dividends of $.15 per share. In addition $40 million was
borrowed primarily for income tax payments of approximately $68 million relating
to the sale of the compression division. The company also purchased 450,000
shares of common stock during the current quarter at an average cost per share
of $35.99.
INFLATION AND CURRENCY FLUCTUATIONS
- -----------------------------------
Because of its significant international 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, development and production 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 may shield 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
any related environmental damage.
YEAR 2000
- ---------
In fiscal 1997 the company began modifying its existing software applications to
be year 2000 compliant. As of June 30, 1998, the company is still reviewing and
modifying all affected software applications and the computerized operating
systems of company vessels. The company expects this process to be complete in
advance of year 2000 with the costs of such modifications being immaterial with
respect to the company's results of operations and financial position.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. At page 16 of this report is the index for those exhibits required to be
filed as a part of this report.
B. The company did not file any reports during the quarter for which this
report is filed.
-14-
<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: July 20, 1998 /s/ William C. O'Malley
-------------------------------------------
William C. O'Malley
Chairman of the Board, President and
Chief Executive Officer
Date: July 20, 1998 /s/ Ken C. Tamblyn
-------------------------------------------
Ken C. Tamblyn
Executive Vice President and
Chief Financial Officer (Principal Accounting
Officer)
-15-
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- ------
15 Letter re Unaudited Interim Financial Information
27 Financial Data Schedule
-16-
<PAGE>
EXHIBIT 15
The Board of Directors and Shareholders
Tidewater Inc.
We are aware of the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-63094, No. 33-38240, No. 333-32729 and No. 333-47687) of
Tidewater Inc. of our report dated July 17, 1998 relating to the unaudited
condensed consolidated interim financial statements of Tidewater Inc. that are
included in its Form 10-Q for the quarter ended June 30, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part
of the registration statements prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
Ernst & Young LLP
New Orleans, Louisiana
July 17, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheets 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
<S> <C>
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