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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - For the Fiscal Year Ended March 31, 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 No.)
1440 Canal Street, New Orleans, Louisiana 70112
----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code (504) 568-1010
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, New York Stock Exchange, Pacific Stock Exchange
par value $0.10
Preferred Stock Purchase New York Stock Exchange, Pacific Stock Exchange
Rights
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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As of April 28, 1998, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $2,243,000,000.
59,494,695 shares of Tidewater Inc. common stock $0.10 par value per share
were outstanding on April 28, 1998. Registrant has no other class of common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 1998 Annual Meeting of
Stockholders are incorporated into Part III of this report.
TABLE OF CONTENTS
PART I
Page
Item Number
- ---- ------
1 & 2. Business and Properties............................ 3
3. Legal Proceedings.................................. 6
4. Submission of Matters to a Vote of Security Holders 7
4A. Executive Officers of the Registrant............... 7
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters.................................... 7
6. Selected Financial Data................................ 8
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 9
8. Financial Statements and Supplementary Data............ 16
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 16
PART III
10. Directors and Executive Officers of the Registrant.... 16
11. Executive Compensation................................ 16
12. Security Ownership of Certain Beneficial Owners and
Management............................................ 17
13. Certain Relationships and Related Transactions......... 17
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................... 17
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PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
Tidewater Inc. (the "company") was incorporated in Delaware in 1956. The
company's principal executive offices are located at 1440 Canal Street, New
Orleans, Louisiana 70112, and its telephone number is (504) 568-1010. Unless
otherwise required by the context, the term "company" as used herein refers to
Tidewater Inc. and its consolidated subsidiaries.
The company provides services and equipment to the offshore energy industry
through the operation of the world's largest fleet of offshore service vessels.
The company's compression division, which was sold on February 20, 1998, owned
and operated one of the largest rental fleets of natural gas compressors in the
United States. Please refer to Note 2 of Notes to Consolidated Financial
Statements for further discussion of the sale of Compression operations.
On May 16, 1997 the company acquired all of the shares of O.I.L. Ltd.
(O.I.L.) in exchange for a cash payment of 328 million pounds sterling, or
approximately $534 million. In addition, a 9 million pound sterling, or
approximately $14.4 million, payment was made for the net working capital of
O.I.L. Available cash of $48.4 million and borrowings of $500 million were used
to fund the purchase. Prior to the purchase O.I.L. was principally engaged in
the business of operating approximately 100 marine vessels, primarily platform
supply and anchor handling towing-supply vessels, in several offshore oil and
gas exploration areas outside of the United States. On June 30, 1997 the
company acquired the remaining 50% equity interest in nine towing-supply and
supply vessels previously owned and operated by joint-venture companies in
Australia for a cash payment of $13.2 million and issuance of debt totaling
$14.0 million. Please refer to Note 3 of Notes to Consolidated Financial
Statements for further discussion of the purchases of O.I.L. Ltd. and the
Australian equity interest.
FORWARD LOOKING INFORMATION
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 Items 1 and 7 and elsewhere in this report, 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. Other risk factors are discussed
elsewhere in this Form 10-K. Readers should consider all of these risk factors,
as well as other information contained in this report.
MARINE OPERATIONS
The company is the world's largest provider of offshore supply vessels and
marine support services serving the energy industry. With a fleet of
approximately 700 vessels, the company operates, and has a leading market
share, in most of the world's significant oil and gas exploration and production
markets and provides services supporting all phases of offshore exploration,
development and production, including: towing of and anchor-handling of mobile
drilling rigs and equipment; transporting supplies and personnel necessary to
sustain drilling, workover and production activities; and supporting pipelaying
and other offshore construction activities.
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The company's fleet is deployed in the major offshore oil and gas areas of
the world. The principal areas of the company's operations include the U.S. Gulf
of Mexico, areas offshore Australia, Brazil, Egypt, India, Indonesia, Malaysia,
Mexico, Trinidad, Venezuela and West Africa and in the North Sea and the Persian
Gulf. The company conducts its operations through wholly-owned subsidiaries and
joint ventures. Information concerning revenues and operating profit derived
from domestic and international marine operations and domestic and international
marine identifiable assets for each of the fiscal years ended March 31 are
summarized below:
(in thousands)
----------------------------
1998 1997 1996
---------- ------- -------
Revenues:
Vessel operations:
United States $ 463,914 338,823 241,436
International 537,737 322,401 264,744
Other marine operations 58,510 29,202 26,022
---------- ------- -------
$1,060,161 690,426 532,202
========== ======= =======
Operating profit:
Vessel operations:
United States $ 225,599 120,275 46,839
International 141,133 82,591 60,291
Other marine operations 10,663 4,186 4,849
Gains on asset sales 16,592 5,352 6,930
---------- ------- -------
$ 393,987 212,404 118,909
========== ======= =======
Identifiable assets:
United States $ 380,043 376,380 349,554
International 1,064,681 354,561 305,565
---------- ------- -------
Total marine assets $1,444,724 730,941 655,119
========== ======= =======
Please refer to Item 7 of this report and Note 11 of Notes to Consolidated
Financial Statements for further discussion of revenues, operating profit and
identifiable assets.
Marine Vessel Operations. The company's vessels regularly and routinely move
from one operating area to another, often to and from offshore operating areas
of different continents. Tables comparing the average size of the company's
marine fleet by class and geographic distribution for the last three fiscal
years are included in Item 7 of this report.
The company's largest class of vessels consists of towing-supply and supply
vessels that are chartered to customers for use in transporting supplies and
equipment from shore bases to offshore drilling rigs, platforms and other
installations. In addition, vessels of the towing-supply class are equipped for
and are capable of towing drilling rigs and other marine equipment and setting
anchors for positioning and mooring drilling rigs.
The company's other major classes of vessels include crew and utility vessels
that are chartered to customers for use in transporting small quantities of
supplies and personnel from shore bases to offshore drilling rigs, platforms and
other installations; offshore tugs that tow floating drilling rigs, dock
tankers, tow barges, assist pipelaying and construction barges and are used in a
variety of other commercial towing operations, including towing barges carrying
a variety of bulk cargoes and containerized cargo; and safety/standby vessels
which provide fire fighting and rescue services.
The company's vessels also include inshore tugs; inshore barges; offshore
barges; and production, line-handling and various other special purpose vessels.
Inshore tugs, which are operated principally within inland waters, tow drilling
rigs to and from their locations, and tow barges carrying equipment and
materials for use principally in inland waters for drilling and production
operations. Barges are either used in conjunction with company tugs or are
chartered to others.
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Contributions of Main Classes of Vessels. Revenues from vessel operations
were derived from the main classes of vessels in the following percentages:
Year Ended March 31,
--------------------
1998 1997 1996
---- ---- ----
Towing-supply/Supply.. 75.7% 70.2% 72.8%
Offshore Tugs......... 11.9% 15.3% 16.6%
Crew/Utility.......... 6.3% 6.5% 7.8%
Safety/Standby........ 4.6% 5.3% --
Other................. 1.5% 2.7% 2.8%
---- ---- ----
Shipyards. Quality Shipyards, Inc., a wholly-owned subsidiary of the
company, operates two shipyards in Houma, Louisiana, which construct, modify and
repair vessels. Approximately 71% of the shipyards' business for the year ended
March 31, 1998 related to repairs and modifications of the company's vessels.
Risks of Operation and Insurance. The operation of any marine vessel
involves an inherent risk of catastrophic marine disaster, adverse weather
conditions, mechanical failure, collisions, property losses to the vessel and
business interruption due to political action in countries other than the United
States. Any such event may result in a reduction in revenues or increased
costs. The company's vessels are insured for their estimated market value
against damage or loss, including war and pollution risks. The company also
carries workers' compensation, maritime employer's liability, general liability
(including third party pollution) and other insurance customary in the industry.
The company's international marine vessel operations are subject to the usual
risks inherent in doing business in countries other than the United States.
Such risks include political changes, possible vessel seizure, company
nationalization or other governmental actions, currency restrictions and
revaluations, and import/export restrictions, all of which are beyond the
control of the company. Although it is impossible to predict the likelihood of
such occurrences or their effect on the company, the company believes these
risks to be within acceptable limits and, in view of the mobile nature of the
company's principal revenue producing assets, does not consider them to
constitute a factor materially adverse to the conduct of its international
marine vessel operations as a whole.
Industry Conditions, Competition and Customers. The company's operations are
materially dependent upon the levels of activity in offshore oil and natural gas
exploration, development and production throughout the world. Such activity
levels are affected both by short-term and long-term trends in world oil and
natural gas prices. Given the recent drop in the price of oil coupled with the
announcement during fiscal 1998 of new vessel building programs by competitors,
management is concerned that an overcapacity of vessels in the U.S. Gulf of
Mexico market could occur and could result in weakened demand for the company's
services during fiscal 1999. Should demand for the company's services in the
U.S. Gulf of Mexico weaken during fiscal 1999, the results of the company's
domestic operations would be adversely affected.
The principal competitive factors for the offshore vessel service industry
are suitability and availability of equipment, price and quality of service.
The company has numerous competitors in virtually all areas in which it
operates. Certain customers of the company own and operate vessels to service
certain of their offshore activities.
The company's diverse, mobile asset base and geographic distribution allow it
to respond to changes in market conditions and provide a broad range of vessel
services to its customers throughout the world. Management believes that the
company has a significant competitive advantage because of the size, diversity
and geographic distribution of its vessel fleet, the company's financial
condition and economies of scale.
Although one customer accounted for 11% and the five largest customers
accounted for approximately
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28% of its revenues during the year ended March 31, 1998, the company does not
consider its operations dependent on any single customer.
Government Regulations. The company's vessels are subject to various
statutes and regulations governing their operation and maintenance.
Under the Merchant Marine Act of 1936 and the Shipping Act, 1916, the company
would lose the privilege of engaging in U.S. coastwise trade if more than 25% of
the company's outstanding stock was owned by non-U.S. citizens. The company has
a dual stock certificate system to prevent non-U.S. citizens from owning more
than 25% of its common stock. In addition, the company's charter permits the
company certain remedies with respect to any transfer or purported transfer of
shares of the company's common stock that would result in the ownership by non-
U.S. citizens of more than 24% of its common stock. Based on information
supplied to the company by its transfer agent, approximately 2.5% of the
company's outstanding common stock was owned by non-U.S. citizens as of March
31, 1998.
At March 31, 1998, 330 vessels wholly owned by the company were registered
under flags other than the United States. In addition, most of the company's 36
joint venture owned vessels were registered under non-U.S. flags at March 31,
1998. The laws of the United States provide that once a vessel is registered
under a flag other than the United States, it cannot thereafter engage in U.S.
coastwise trade. Therefore, the company's non-U.S. flag vessels must continue
to be operated abroad, and if the company were not able to secure charters
abroad for them, and work would otherwise have been available for them in the
United States, its operations would be adversely affected.
All of the company's offshore vessels are subject to international safety and
classification standards. U.S. flag towing-supply and supply vessels are
required to undergo periodic inspections and to be recertified under drydock
examination at least twice every five years. Non-U.S. flag vessels are also
subject to similar regulations.
SEASONALITY
The company's vessel fleet generally has its highest utilization rates in the
warmer temperature months when the weather is more favorable for offshore
exploration, development and construction work. However, business volume for
the company is more dependent on oil and natural gas prices and the global
supply and demand conditions for the company's services than any seasonal
variation.
ENVIRONMENTAL COMPLIANCE
Compliance with existing governmental regulations which have been enacted or
adopted regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had, nor is expected to
have, a material effect on the company.
EMPLOYEES
As of March 31, 1998, the company had approximately 8,500 employees. The
company considers relations with employees to be satisfactory. The company is
not a party to any union contract in the United States but through several
subsidiaries is a party to union agreements covering local nationals in several
countries other than the United States.
ITEM 3. LEGAL PROCEEDINGS
The company is not a party to any litigation which, in the opinion of
management, is likely to have a material adverse effect on the company's
financial position or results of operations. Please refer to Item 7 and Note 10
of Notes to Consolidated Financial Statements for further discussion of these
matters.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1998.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
---- --- --------
William C. O'Malley 61 Chairman, President and Chief Executive Officer since
October, 1994. Chairman of the Board from 1987 to
1994 and Chief Executive Officer from 1990 to 1994 of
Sonat Offshore Drilling, Inc. Employed 1994.
Richard M. Currence 59 Executive Vice President since 1992.
Ken C. Tamblyn 54 Executive Vice President since 1992.
Cliffe F. Laborde 46 Senior Vice President and General Counsel since 1992.
There are no family relationships between the directors or executive officers
of the company except that Cliffe F. Laborde, senior vice president and general
counsel, is the son of John P. Laborde, a director of the company. The
company's officers are elected annually by the Board of Directors and serve for
one-year terms or until their successors are elected.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The company's common stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol TDW. At March 31, 1998, there were
approximately 2,200 record holders of the company's common stock, based upon the
record holder list maintained by the company's stock transfer agent. The
following table sets forth the high and low closing sale prices of the company's
common stock as reported on the New York Stock Exchange Composite Tape and the
amount of cash dividends per share declared on Tidewater common stock for the
periods indicated.
Fiscal Year Quarter High Low Dividend
- ------------- ------- -------- ------- --------
1998 First $48.875 $35.875 $ .15
Second 60.250 44.000 .15
Third 70.500 47.250 .15
Fourth 55.188 40.000 .15
1997 First $44.625 $36.250 $0.125
Second 50.000 32.750 0.15
Third 47.250 36.500 0.15
Fourth 52.500 41.000 0.15
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of selected financial data for each
of the last five fiscal years. This information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the company included in
this report.
Years Ended March 31
(in thousands, except ratio and per share amounts)
<TABLE>
<CAPTION>
1998(2) 1997(2) 1996(2) 1995 1994
-------------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Vessel revenues $1,001,651 661,224 506,180 469,751 495,082
Other marine revenues 58,510 29,202 26,022 31,367 18,810
---------- --------- ------- ------- -------
$1,060,161 690,426 532,202 501,118 513,892
========== ========= ======= ======= =======
Earnings from continuing operations $ 243,038 138,235 69,503 44,868 40,779
Earnings from discontinued operations 10,723 7,776 6,674 6,319 3,881
Gain on sale of discontinued operations 61,738 --- --- --- ---
Extraordinary loss on early debt retirement --- --- --- --- (12,250)
---------- --------- ------- ------- -------
Net earnings $ 315,499 146,011 76,177 51,187 32,410
========== ========= ======= ======= =======
Per common share(1):
Earnings from continuing operations $ 3.99 2.23 1.12 .73 .66
Earnings from discontinued operations .18 .12 .11 .10 .07
Gain on sale of discontinued operations 1.01 --- --- --- ---
Extraordinary loss on early debt
retirement --- --- --- --- (.20)
---------- --------- ------- ------- -------
Net earnings $ 5.18 2.35 1.23 .83 .53
========== ========= ======= ======= =======
Total assets $1,492,839 1,061,280 974,410 926,276 925,264
========== ========= ======= ======= =======
Long-term debt $ 25,000 --- --- 20,802 7,405
========== ========= ======= ======= =======
Working capital $ 114,907 159,607 106,904 107,849 188,352
========== ========= ======= ======= =======
Current ratio 1.56 2.77 2.31 2.20 2.41
========== ========= ======= ======= =======
Cash dividends declared per
common share $ .60 .575 .475 .40 .30
========== ========= ======= ======= =======
</TABLE>
(1) Per share amounts for fiscal 1997 through fiscal 1994 have been restated in
accordance with the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share." All per share amounts were
computed on a diluted basis.
(2) See Notes 2 and 3 of Notes to Consolidated Financial Statements for
information regarding business dispositions and business combinations during
fiscal years 1998, 1997 and 1996.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 Selected Financial Data and the Consolidated Financial
Statements and related disclosures.
BUSINESS OVERVIEW
During the quarter ended June 30, 1997 the company acquired all of the shares
of O.I.L. Ltd. (O.I.L.) in exchange for a cash payment of 328 million pounds
sterling, or approximately $534 million. In addition a 9 million pound
sterling, or approximately $14.4 million, payment was made for the net working
capital of O.I.L. Available cash of $48.4 million and borrowings of $500 million
were used to fund the purchase. Prior to the purchase O.I.L. was principally
engaged in the business of operating approximately 100 marine vessels, primarily
platform supply and anchor handling towing-supply vessels, in several offshore
oil and gas exploration areas outside of the United States. 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. Goodwill of approximately $355 million
has been recorded in the Consolidated Balance Sheet.
The $500 million of debt incurred to finance the O.I.L. acquisition was
borrowed pursuant to a $600 million Revolving Credit and Term Loan agreement
with several banks and consists of a $400 million term loan and $100 million
borrowed under the $200 million revolving credit facility of the agreement. As
of March 31, 1998 all debt borrowed for the O.I.L. acquisition had been repaid
and the $400 million term loan facility was canceled.
On June 30, 1997 the company acquired the remaining 50% equity interest in
nine towing-supply and supply vessels previously owned and operated by joint-
venture companies in Australia for a cash payment of $13.2 million and issuance
of debt totaling $14.0 million. The debt has been discounted to yield interest
at 7% and is to be repaid in semi-annual installments. The total estimated cost
of the acquisition of $30 million 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. Goodwill of
approximately $12 million has been recorded in the Consolidated Balance Sheet.
On February 20, 1998 the company completed the sale of its compression
division. In consideration of the sale, the company received cash of
approximately $348 million; $326 million of which was used to retire the then
remaining balance of debt borrowed for the O.I.L. acquisition.
During fiscal 1997 the company purchased for $12.4 million in cash the
remaining equity interests in 22 of 29 safety/standby vessels previously owned
and operated by joint-venture companies in the North Sea. The acquisition of
these vessels was accounted for using the purchase method.
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In fiscal 1996 the company expanded its domestic operations by merging with
Hornbeck Offshore Services, Inc. (Hornbeck). Hornbeck's fleet consisted of 61
towing-supply and supply vessels operating in the U.S. Gulf of Mexico and an
equity interest in 29 safety/standby vessels operating in the North Sea. The
merger was accounted for as a pooling-of-interests and accordingly, the
consolidated financial statements and the related disclosures and the selected
financial data for fiscal 1996 and prior years were restated to include the
operations of Hornbeck.
Improved market conditions for company services during fiscal 1998 and an
expanded international vessel fleet pushed operating performance above the prior
year level as fiscal 1998 earnings from continuing operations climbed 71% above
the preceding fiscal year's amount. The improvement in fiscal 1998 earnings
from continuing operations was after eliminating the effects of unusual items in
both fiscal 1998 and fiscal 1997. Fiscal 1998 earnings from continuing
operations included a $5.3 million, or $.09 per common share, after-tax
provision for possible litigation expenses, a $.8 million, or $.01 per common
share, after-tax gain from the settlement of obligations resulting from the
fiscal 1996 curtailment of the company's pension plan and a $7.3 million, or
$.12 per common share, reduction in income tax expense. The reduction in income
tax expense consisted of a $4 million reduction of deferred income taxes
resulting from the lowering of United Kingdom corporate income tax rates and a
$3.3 million reduction in a previously established liability for outstanding
U.S. income tax issues. Fiscal 1997 earnings from continuing operations
included an after-tax charge of $1.9 million, or $.03 per common share, to
establish a provision for possible losses resulting from one of the company's
insurers filing for liquidation. Future operating performance should remain
positive given the near-term outlook for services provided by the company both
domestically and internationally. However, long-term domestic operations
performance could be adversely affected if significant building of new supply
vessels continues and the resulting supply/demand relationship for company
services weakens.
MARINE OPERATIONS
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 primarily consist
of crew costs, repair and maintenance, insurance, fuel, lube oil and supplies.
Fleet size and utilization are the major factors which affect crew costs. The
timing and amount of repair and maintenance costs are influenced by vessel age
and scheduled drydockings to satisfy safety and inspection requirements 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 following table compares revenues and operating expenses (excluding general
and administrative expenses and depreciation expense) for the company's vessel
fleet for the years ended March 31:
(in thousands) 1998 1997 1996
- -------------- ---------- ------- -------
Revenues (A):
Owned and operated vessel fleet:
United States $ 463,914 338,823 241,436
International 537,737 322,401 264,744
---------- ------- -------
1,001,651 661,224 506,180
Brokered vessels, shipyard and other 58,510 29,202 26,022
---------- ------- -------
Total revenues 1,060,161 690,426 532,202
========== ======= =======
Operating costs:
Owned and operated vessel fleet:
Crew costs $ 245,515 176,406 145,018
Repair and maintenance 140,515 96,815 84,567
Insurance 31,076 32,817 33,999
Fuel, lube and supplies 36,133 31,875 24,422
Other 32,804 23,582 19,909
---------- ------- -------
486,043 361,495 307,915
Brokered vessels, shipyard and other 47,065 24,161 20,391
---------- ------- -------
Total operating costs $ 533,108 385,656 328,306
========== ======= =======
(A) For fiscal 1998, fiscal 1997 and fiscal 1996 one Marine customer accounted
for 11%, 11% and 12%, respectively, of revenues.
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Marine operating profit for the years ended March 31 consists of the
following:
(In thousands) 1998 1997 1996
- -------------- --------- ------- ---------
Owned and operated vessel fleet:
United States $225,599 120,275 46,839
International 141,133 82,591 60,291
-------- ------- -------
366,732 202,866 107,130
Gains from asset sales 16,592 5,352 6,930
Brokered vessels, shipyard and other 10,663 4,186 4,849
-------- ------- -------
Operating profit $393,987 212,404 118,909
======== ======= =======
The significant growth in fiscal 1998 operating profit compared with the
preceding fiscal year resulted from higher average day rates for the worldwide
vessel fleet, a larger international-based vessel fleet and higher gains from
assets sales, partially offset by higher operating costs. Higher average day
rates for the worldwide vessel fleet resulted from a more favorable
supply/demand relationship for company services both in the U.S. Gulf of Mexico
and internationally. Higher fiscal 1998 operating costs resulted from the
expansion of the international-based vessel fleet through the purchase of the
O.I.L. and Australian vessels, increased costs associated with attracting,
training and retaining qualified vessel personnel and a greater number of vessel
drydockings. Higher gains on asset sales in fiscal 1998 resulted from the
disposal of several vessels, most of which had previously been withdrawn from
active service due to obsolescence and prohibitive repair costs.
The substantial growth in fiscal 1997 operating profit above the prior year
level was the result of higher utilization of the worldwide fleet, a larger
international-based fleet and significantly higher day rates for the domestic-
based fleet partially offset by higher operating expenses. Higher utilization
of the worldwide fleet in fiscal 1997 is attributable to greater demand for
offshore marine services. A larger international-based fleet is the result of
the fiscal 1997 first quarter purchase of the remaining 50.1% equity interest in
several safety/standby vessels previously operated by joint-venture companies in
the North Sea. Significantly higher day rates for the domestic-based fleet is
the result of a much more favorable supply/demand relationship for offshore
marine services in the U.S. Gulf of Mexico. Fiscal 1997 operating expenses rose
above fiscal 1996's amount due to the expansion of the North Sea fleet,
increased costs associated with attracting, training and retaining vessel
personnel, higher activity for the domestic-based offshore towing fleet, and a
greater number of vessel drydockings.
Marine fleet utilization is determined primarily by market conditions and to
a lesser extent by drydocking requirements. Utilization of the domestic-based
fleet, which operates in U.S. waters, is primarily influenced by offshore
activity related to the exploration, development and production of natural gas
in the U.S. Gulf of Mexico; whereas, utilization of the international-based
fleet, which operates in waters other than the United States, is primarily
influenced by offshore activity related to the exploration, development and
production of oil. 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 Marine fleet utilization percentages and average day rates by vessel class
and in total for each of the quarters in the years ended March 31:
-11-
<PAGE>
UTILIZATION:
- ------------
1998 First Second Third Fourth Year
- ---- ----- ------ ----- ------ ----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply 91.0% 91.1 91.8 91.9 91.5
Crew/Utility 90.9 88.9 92.1 90.7 90.7
Offshore Tugs 63.1 64.3 61.8 53.1 60.6
Other 59.5 60.5 53.3 40.6 54.1
Total 84.8% 84.8 85.0 83.0 84.4
International-based fleet:
- --------------------------
Towing-supply/Supply 89.4% 88.0 88.9 88.3 88.6
Crew/Utility 82.4 80.9 80.7 90.2 83.4
Offshore Tugs 83.1 80.3 79.7 76.6 80.0
Safety/Standby 78.1 71.3 65.6 70.1 71.0
Other 83.0 78.1 67.2 68.2 74.4
Total 86.0% 83.9 82.9 83.8 84.1
Worldwide fleet:
- ----------------
Towing-supply/Supply 90.1% 89.2 90.1 89.7 89.8
Crew/Utility 86.1 84.2 85.4 90.4 86.5
Offshore Tugs 74.7 73.6 71.9 66.3 71.7
Safety/Standby 78.1 71.3 65.6 70.1 71.0
Other 77.7 73.9 63.9 62.4 69.8
Total 85.5% 84.2 83.7 83.5 84.2
==== ==== ==== ==== ====
1997 First Second Third Fourth Year
- ---- ----- ------ ----- ------ ----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply 91.3% 90.2 90.0 93.3 91.2
Crew/Utility 90.9 94.1 88.6 86.7 90.1
Offshore Tugs 62.4 67.0 62.9 63.9 64.1
Other 48.8 61.9 50.2 45.1 51.3
Total 83.6% 85.1 82.4 84.0 83.7
International-based fleet:
- --------------------------
Towing-supply/Supply 87.5% 88.1 90.9 92.1 89.7
Crew/Utility 90.5 85.4 80.9 83.6 84.9
Offshore Tugs 75.4 70.3 79.3 85.9 77.6
Safety/Standby 84.4 78.2 83.9 80.1 80.8
Other 76.2 74.4 84.4 82.0 79.0
Total 84.0% 82.1 86.4 87.8 85.1
Worldwide fleet:
- ----------------
Towing-supply/Supply 89.2% 89.1 90.5 92.7 90.4
Crew/Utility 90.7 90.1 85.0 85.2 87.7
Offshore Tugs 69.7 68.8 71.8 75.9 71.5
Safety/Standby 84.4 78.2 83.9 80.1 80.8
Other 69.7 71.7 75.9 72.1 72.3
Total 83.8% 83.3 84.7 86.2 84.5
==== ==== ==== ==== ====
1996 First Second Third Fourth Year
- ---- ----- ------ ----- ------ ----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply 86.8% 85.6 89.9 91.1 88.3
Crew/Utility 81.7 79.5 83.7 80.1 81.2
Offshore Tugs 47.9 64.8 67.5 58.4 59.5
Other 44.9 64.8 51.3 43.3 50.9
Total 77.0% 79.9 83.1 81.0 80.2
International-based fleet:
- --------------------------
Towing-supply/Supply 86.7% 87.9 85.6 85.3 86.4
Crew/Utility 86.6 85.0 81.5 86.6 84.9
Offshore Tugs 72.2 71.2 77.4 76.1 74.4
Other 37.3 48.3 56.8 77.5 54.7
Total 76.1% 78.2 79.1 82.6 79.0
Worldwide fleet:
- ----------------
Towing-supply/Supply 86.8% 86.9 87.6 87.9 87.3
Crew/Utility 83.6 81.7 82.8 82.8 82.7
Offshore Tugs 60.6 68.4 73.4 69.0 67.9
Other 38.9 51.6 55.7 69.9 53.9
Total 76.5% 79.0 80.9 81.9 79.6
==== ==== ==== ==== ====
-12-
<PAGE>
AVERAGE DAY RATES:
- ------------------
1998 First Second Third Fourth Year
- ---- ----- ------ ----- ------ ----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply $6,986 7,532 7,853 7,877 7,566
Crew/Utility 1,976 2,142 2,216 2,219 2,138
Offshore Tugs 6,443 6,558 6,617 8,465 6,960
Other 2,626 2,757 3,167 3,611 2,959
Total $5,876 6,308 6,569 6,837 6,395
International-based fleet:
- --------------------------
Towing-supply/Supply $4,806 5,440 5,655 6,069 5,515
Crew/Utility 1,982 2,190 2,213 2,375 2,194
Offshore Tugs 3,413 3,494 3,752 4,160 3,691
Safety/Standby 6,002 6,138 6,087 6,229 6,116
Other 873 935 953 938 921
Total $3,909 4,438 4,653 4,976 4,501
Worldwide fleet:
- ----------------
Towing-supply/Supply $5,750 6,267 6,539 6,798 6,351
Crew/Utility 1,979 2,169 2,215 2,306 2,169
Offshore Tugs 4,492 4,621 4,832 5,667 4,878
Safety/Standby 6,002 6,138 6,087 6,229 6,116
Other 1,173 1,291 1,387 1,299 1,280
Total $4,677 5,127 5,380 5,670 5,216
====== ===== ===== ===== =====
1997 First Second Third Fourth Year
- ---- ------ ----- ----- ----- -----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply $4,278 5,049 5,842 6,382 5,401
Crew/Utility 1,424 1,512 1,664 1,800 1,594
Offshore Tugs 4,994 5,355 5,651 6,355 5,592
Other 3,158 3,050 3,505 3,224 3,231
Total $3,773 4,317 4,948 5,470 4,630
International-based fleet:
- --------------------------
Towing-supply/Supply $3,695 3,838 3,965 4,116 3,903
Crew/Utility 1,728 1,735 1,916 1,958 1,834
Offshore Tugs 2,708 2,916 3,290 3,299 3,063
Safety/Standby 5,194 4,907 5,290 5,906 5,331
Other 719 662 705 812 722
Total $2,939 3,144 3,296 3,475 3,218
Worldwide fleet:
- ----------------
Towing-supply/Supply $3,965 4,387 4,833 5,177 4,596
Crew/Utility 1,562 1,610 1,776 1,875 1,703
Offshore Tugs 3,602 3,971 4,237 4,468 4,079
Safety/Standby 5,194 4,907 5,290 5,906 5,331
Other 1,123 1,109 1,168 1,213 1,152
Total $3,298 3,639 3,988 4,310 3,814
====== ===== ===== ===== =====
1996 First Second Third Fourth Year
- ---- ------ ----- ----- ----- -----
Domestic-based fleet:
- ---------------------
Towing-supply/Supply $3,351 3,495 3,610 3,880 3,585
Crew/Utility 1,343 1,354 1,344 1,357 1,349
Offshore Tugs 5,220 4,584 4,909 5,162 4,943
Other 3,118 2,868 3,155 2,762 2,970
Total $3,115 3,178 3,309 3,492 3,273
International-based fleet:
- --------------------------
Towing-supply/Supply $3,644 3,670 3,651 3,713 3,670
Crew/Utility 1,884 1,767 1,646 1,712 1,752
Offshore Tugs 2,635 2,705 2,710 2,906 2,746
Other 726 727 674 631 680
Total $3,025 2,987 2,909 2,895 2,952
Worldwide fleet:
- ----------------
Towing-supply/Supply $3,507 3,590 3,632 3,791 3,630
Crew/Utility 1,567 1,526 1,470 1,514 1,519
Offshore Tugs 3,609 3,498 3,538 3,674 3,578
Other 1,298 1,265 1,138 923 1,130
Total $3,067 3,075 3,090 3,153 3,097
====== ===== ===== ===== =====
-13-
<PAGE>
The average age of the owned and operated vessel fleet is approximately 19
years. The following table compares the average number of vessels by class and
geographic distribution during the years ended March 31:
1998 1997 1996
---- ---- ----
Domestic-based fleet:
Towing-supply/supply 146 140 147
Crew/utility 39 42 51
Offshore tugs 40 43 41
Other 10 15 13
---- ---- ----
Total 235 240 252
---- ---- ----
International-based fleet:
Towing-supply/supply 218 166 171
Crew/utility 53 37 35
Offshore tugs 53 52 54
Safety/standby 29 22 ---
Other 35 46 50
---- ---- ----
Total 388 323 310
---- ---- ----
Owned or chartered vessels
included in marine revenues 623 563 562
Vessels withdrawn from active service 17 21 18
Joint-venture and other 56 52 74
---- ---- ----
Total 696 636 654
==== ==== ====
The drop in the average size of the worldwide fleet from fiscal 1996 to
fiscal 1997 is the result of the return of previously leased vessels to their
owners and the disposition of obsolete vessels. From fiscal 1997 to fiscal 1998
the net increase in the average number of vessels is the result of the addition
of O.I.L. vessels and the disposition of obsolete vessels.
CORPORATE
Earnings from continuing operations before income taxes for the company
consists of the following items for the years ended March 31:
(In thousands) 1998 1997 1996
- -------------- ---------- -------- --------
Marine operating profit $393,987 212,404 118,909
Other income 7,079 6,705 5,436
Other expense (6,847) (2,800) (12,600)
Corporate expenses (13,074) (11,235) (9,541)
Interest and other debt costs (24,677) (1,000) (2,176)
-------- ------- -------
Earnings from continuing operations
before income taxes $356,468 204,074 100,028
======== ======= =======
Fiscal 1998 other expense of $6.8 million consists of an $8 million provision
for possible litigation costs which could result from certain alleged labor-law
pay violations in various areas of the world where marine vessel operations are
conducted, and a $1.2 million gain from the settlement of obligations resulting
from the fiscal 1996 curtailment of the company's pension plan.
Other expense for fiscal 1997 is a charge for possible losses resulting from
one of the company's insurers filing for liquidation. Fiscal 1996 other expense
consisted of $9.6 million of costs resulting from the merger with Hornbeck
Offshore Services, Inc. and a $3.0 million charge as a result of the removal of
fleet personnel from the company's defined benefit pension plan. On April 1,
1996 these employees, along with all new employees of the company who are
eligible for pension plan membership, were enrolled in a new defined
contribution retirement plan.
-14-
<PAGE>
Consolidated general and administrative expenses for the years ended March 31
consists of the following components:
(In thousands) 1998 1997 1996
- ---------------------- ------- ------ ------
Personnel $43,797 32,515 28,743
Office and property 13,726 10,260 8,744
Sales and marketing 5,213 3,496 2,734
Professional service 5,065 4,548 3,909
Other 5,125 3,031 4,710
------- ------ ------
$72,926 53,850 48,840
======= ====== ======
Higher fiscal 1998 general and administrative expenses are the result of the
O.I.L. and Australian acquisitions and higher costs associated with incentive
bonus and restricted stock plans.
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 March 31, 1998, $175 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.
Excluding the sale of compression operations and the O.I.L. and Australian
acquisition, fiscal 1998 investing activities consumed more cash than in prior
years as a result of the increased level of additional investments in the fleet.
Additional investments in the fleet included $20.2 million for the purchase of
six safety/standby vessels, two towing-supply/supply vessels, a utility vessel
and a crewboat. The remaining amount invested in the fleet during fiscal 1998
was for additions and/or modifications to existing vessels to meet customer
requirements.
Fiscal 1998 financing activities consumed less cash than in prior years.
Fiscal 1998 principal payments on long-term debt included $34.1 million of
scheduled payments, $477.4 million of prepayments on the credit facility and the
repayment of $14.8 million of debt assumed from the O.I.L. and Australian
acquisitions. The company purchased 1,481,000 shares of common stock during the
quarter ended March 31, 1998 at an average cost per share of $44.01 including
broker commissions and fees.
YEAR 2000
In fiscal 1997 the company began modifying its existing software applications
to be year 2000 compliant. As of the end of fiscal 1998, the company is still
reviewing and modifying all affected software applications, including the
computerized operating systems of company vessels. The company expects this
process to be complete well 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.
NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1998 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" and SFAS No. 132, "Employer's Disclosures about Pension and Other
Postretirement Benefits." The additional disclosure requirements of each of
these SFAS's are effective during the company's fiscal year ending March 31,
1999. Management believes the adoption of these pronouncements will result in
additional financial statement disclosures only and will not have a material
impact on its fiscal 1999 consolidated financial statements.
-15-
<PAGE>
CURRENCY FLUCTUATIONS AND INFLATION
Because of its significant international operations, the company is exposed
to currency fluctuations and exchange risk. 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 energy 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
related environmental damage. Compliance with existing governmental regulations
which have been enacted or adopted regulating the discharge of materials into
the environment, or otherwise relating to the protection of the environment, has
not had, nor is expected to have, a material effect on the company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On Form 8-K dated May 16, 1997, the company reported a change in its
certifying accountants from KPMG Peat Marwick LLP to Ernst & Young LLP. There
were no disagreements with the company's certifying accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning directors of the company is incorporated by reference
from the company's definitive proxy statement to be filed on or before July 29,
1998. For information regarding executive officers of the company, see Item 4A
of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is incorporated by reference
from the proxy statement described in Item 10 of this report.
-16-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is incorporated by reference from the proxy statement described in
Item 10 of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
incorporated by reference from the proxy statement described in Item 10 of this
report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Financial Statements and Schedules
The Consolidated Financial Statements and Schedule of the company listed on
the accompanying Index to Financial Statements and Schedule (see page F-1) are
filed as part of this report.
B. Reports on Form 8-K
The company filed a current report on Form 8-K dated February 20, 1998 to
disclose that the company had completed the sale of Tidewater Compression
Service, Inc.
C. Exhibits
The index below describes each exhibit filed as a part of this report.
Exhibits not incorporated by reference to a prior filing are designated by an
asterisk; all exhibits not so designated are incorporated herein by reference to
a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with the
Commission as Exhibit 3(a) to the company's quarterly report on Form
10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to the
company's quarterly report on Form 10-Q for the quarter ended September
30, 1993).
4(a) - Restated Rights Agreement dated as of September 19, 1996 between
Tidewater Inc. and The First National Bank of Boston (filed with the
Commission as Exhibit 1 to Form 8-A on September 30, 1996).
10(a)- $600,000,000 Revolving Credit and Term Loan Agreement dated March 19,
1997 (filed with the Commission as Exhibit 10(a) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1997).
10(b)- Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended in
1990 (filed with the Commission as Exhibit 10(c) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1991).
10(c)- Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed with
the Commission as Exhibit 10(f) to the company's annual report on Form
10-K for the fiscal year ended March 31, 1993).
10(d)- Tidewater Inc. Amended and Restated Supplemental Executive Retirement
Plan (filed with the Commission as Exhibit 10(g) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1993).
-17-
<PAGE>
10(e) - Tidewater Inc. Amended and Restated Employees' Supplemental Savings
Plan (filed with the Commission as Exhibit 10(h) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1993).
10(f) - Supplemental Health Plan for Executive Officers of Tidewater Inc.
(filed with the Commission as Exhibit 10(i) to a Registration Statement
on September 12, 1989, Registration No. 33-31016).
10(g) - Tidewater Inc. Deferred Compensation Plan for Directors (filed with the
Commission as Exhibit 10(h) to the company's annual report on Form 10-K
for the fiscal year ended March 31, 1994).
10(h) - Tidewater Inc. Retirement Plan for Directors as adopted on March 22,
1990 (filed with the Commission as Exhibit 10(k) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1990).
10(i) - Employment and Consulting Agreement dated as of March 31, 1993 between
Tidewater Inc. and John P. Laborde as amended (filed with the Commission
as Exhibit 10(l) to the company's annual report on Form 10-K for the
fiscal year ended March 31, 1993).
10(j) - Consulting Agreement dated as of March 13, 1996 between Tidewater Inc.
and Larry D. Hornbeck (filed with the Commission as Exhibit 10(j) to the
company's annual report on Form 10-K for the fiscal year ended March 31,
1996).
10(k) - Change in Control Agreement dated September 30, 1996 between Tidewater
Inc. and William C. O'Malley (filed with the Commission as Exhibit 10(k)
to the company's annual report on Form 10-K for the fiscal year ended
March 31, 1997).
10(l) - Form of Change in Control Agreement entered into as of September 30,
1996 with four executive officers (filed with the Commission as Exhibit
10(l) to the company's annual report on Form 10-K for the fiscal year
ended March 31, 1997).
10(m) - Tidewater Inc. 1996 Annual Incentive Plan (filed with the Commission
as Exhibit 10(m) to the company's annual report on Form 10-K for the
fiscal year ended March 31, 1997).
10(n) - Employment Agreement dated September 25, 1997 between Tidewater Inc. and
William C. O'Malley (filed with the Commission as Exhibit 10 to the
company's report on Form 10-Q for the quarter ended September 30, 1997).
*10(o)- Tidewater Inc. 1997 Stock Incentive Plan.
*21 - Subsidiaries of the company.
*23 - Consents of Independent Auditors.
*27 - Financial Data Schedules.
Certain instruments respecting long-term debt of Tidewater have been omitted
pursuant to Regulation S-K, Item 601. Tidewater hereby agrees to furnish a copy
of any such instrument to the Commission upon request.
-18-
<PAGE>
SIGNATURES OF REGISTRANT
------------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on May 1, 1998.
TIDEWATER INC.
(Registrant)
By: /s/ William C. O'Malley
-------------------------
William C. O'Malley
Chairman of the Board of Directors, President,
and Chief Executive Officer
By: /s/ Ken C. Tamblyn
--------------------------
Ken C. Tamblyn
Executive Vice President, Chief Financial
Officer and
Principal Accounting Officer
SIGNATURES OF DIRECTORS
-----------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on May 1, 1998.
/s/ Robert H. Boh /s/ Larry D. Hornbeck
- ------------------- ----------------------
Robert H. Boh Larry D. Hornbeck
/s/ Donald T. Bollinger /s/ Paul W. Murrill
- ------------------------ --------------------
Donald T. Bollinger Paul W. Murrill
/s/ Arthur R. Carlson /s/ William C. O'Malley
- ---------------------- ---------------------
Arthur R. Carlson William C. O'Malley
/s/ Hugh J. Kelly /s/ Lester Pollack
- ------------------- ---------------------
Hugh J. Kelly Lester Pollack
/s/ John P. Laborde /s/ J. Hugh Roff, Jr.
- --------------------- -------------------------
John P. Laborde J. Hugh Roff, Jr.
-19-
<PAGE>
TIDEWATER INC.
ANNUAL REPORT ON FORM 10-K
ITEMS 8, 14(A), AND 14(D)
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS Page
----
<S> <C>
Reports of Independent Auditors F-2
Consolidated Balance Sheets, March 31, 1998 and 1997 F-4
Consolidated Statements of Earnings, three years ended March 31, 1998 F-5
Consolidated Statements of Stockholders' Equity, three years ended March 31, 1998 F-6
Consolidated Statements of Cash Flows, three years ended March 31, 1998 F-7
Notes to Consolidated Financial Statements F-8
FINANCIAL STATEMENT SCHEDULE
II. Tidewater Inc. and Subsidiaries Valuation and Qualifying Accounts F-22
</TABLE>
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or the related notes.
F-1
<PAGE>
REPORTS OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Tidewater Inc.
We have audited the accompanying consolidated balance sheet of Tidewater Inc. as
of March 31, 1998 and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended. Our audit also
included the financial statement schedule listed in the accompanying Index to
Financial Statements and Schedule for the year ended March 31, 1998. These
financial statements and schedule are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audit. The consolidated financial
statements and schedule of Tidewater Inc. as of March 31, 1997, and for each of
the two years in the period ended March 31, 1997, were audited by other auditors
whose report dated April 30, 1997, expressed an unqualified opinion on those
statements and schedule.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1998 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tidewater Inc.
at March 31, 1998 and the consolidated results of its operations and cash flows
for the year then ended in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New Orleans, Louisiana
April 27, 1998
F-2
<PAGE>
The Board of Directors and Shareholders
Tidewater Inc.:
We have audited the consolidated balance sheet of Tidewater Inc. and
subsidiaries as of March 31, 1997, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for the years ended March 31,
1997 and 1996. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule for the years
ended March 31, 1997 and 1996, as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tidewater Inc. and
subsidiaries as of March 31, 1997, and the results of their operations and their
cash flows for the years ended March 31, 1997 and 1996, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
April 30, 1997
F-3
<PAGE>
CONSOLIDATED BALANCE SHEETS
- ---------------------------
March 31, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
ASSETS 1998 1997
- ----------------------------------------------------------------- ---------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 24,977 41,166
Trade and other receivables, less allowance for doubtful
accounts
of $14,078 in 1998 and $10,330 in 1997 258,517 176,513
Marine operating supplies 31,498 28,171
Other current assets 4,122 3,803
--------- ---------
Total current assets 319,114 249,653
---------- ---------
Investments in, at equity, and advances to unconsolidated
companies 21,825 20,556
Net assets of discontinued Compression operations --- 253,305
Properties and equipment:
Vessels and related equipment 1,534,948 1,265,633
Other properties and equipment 33,887 25,220
---------- ---------
1,568,835 1,290,853
Less accumulated depreciation 863,209 827,710
---------- ---------
Net properties and equipment 705,626 463,143
---------- ---------
Goodwill, net of accumulated amortization of $8,002 in 1998 356,394 ---
Other assets 89,880 74,623
---------- ---------
$1,492,839 1,061,280
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current maturities of long-term debt 6,466 ---
Accounts payable and accrued expenses 105,914 72,725
Accrued property and liability losses 12,156 13,248
Income taxes 79,671 4,073
---------- ---------
Total current liabilities 204,207 90,046
---------- ---------
Deferred income taxes 158,540 122,577
Long-term debt 25,000 ---
Accrued property and liability losses 57,289 32,146
Other liabilities and deferred credits 49,027 46,847
Stockholders' equity 998,776 769,664
Commitments and contingencies
---------- ---------
$1,492,839 1,061,280
========== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
- -----------------------------------
Years Ended March 31, 1998, 1997 and 1996
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Revenues:
Vessel revenues $ 1,001,651 661,224 506,180
Other marine revenues 58,510 29,202 26,022
----------- ---------- ----------
1,060,161 690,426 532,202
----------- ---------- ----------
Costs and expenses:
Vessel operating costs 486,043 361,495 307,915
Costs of other marine revenues 47,065 24,161 20,391
Depreciation and amortization 91,410 55,937 55,361
General and administrative 72,926 53,850 48,840
----------- ---------- ----------
697,444 495,443 432,507
----------- ---------- ----------
362,717 194,983 99,695
Other income (expenses):
Foreign exchange loss (635) (382) (455)
Gain on sales of assets 16,531 5,320 6,906
Equity in net earnings of unconsolidated companies 6,381 4,901 5,901
Minority interests (1,258) (1,311) (1,385)
Interest and miscellaneous income 4,256 4,363 4,142
Other expense (6,847) (2,800) (12,600)
Interest and other debt costs (24,677) (1,000) (2,176)
----------- ---------- ----------
(6,249) 9,091 333
----------- ---------- ----------
Earnings from continuing operations before income taxes 356,468 204,074 100,028
Income taxes 113,430 65,839 30,525
----------- ---------- ----------
Earnings from continuing operations 243,038 138,235 69,503
Earnings from discontinued operations 10,723 7,776 6,674
Gain on sale of discontinued Compression operations 61,738 --- ---
----------- ---------- ----------
Net earnings $ 315,499 146,011 76,177
=========== ========== ==========
Earnings per common share:
- --------------------------
Earnings from continuing operations $ 4.01 2.24 1.13
Earnings from discontinued operations .18 .13 .11
Gain on sale of discontinued Compression operations 1.02 --- ---
----------- ---------- ----------
Earnings per common share $ 5.21 2.37 1.24
=========== ========== ==========
Diluted earnings per common share:
- ----------------------------------
Earnings from continuing operations $ 3.99 2.23 1.12
Earnings from discontinued operations .18 .12 .11
Gain on sale of discontinued Compression operations 1.01 --- ---
----------- ---------- ----------
Diluted earnings per common share $ 5.18 2.35 1.23
=========== ========== ==========
Weighted average common shares outstanding 60,552,315 61,606,144 61,675,360
Incremental common shares from stock options 341,329 438,188 485,618
----------- ---------- ----------
Adjusted weighted average common shares 60,893,644 62,044,332 62,160,978
=========== ========== ==========
Cash dividends declared per common share $ .60 .575 .475
=========== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- -----------------------------------------------
Years Ended March 31, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
Cumulative
foreign Deferred
Additional currency compensation-
Common paid-in Retained translation restricted
stock capital earnings adjustment stock Total
--------- ---------- -------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1995 $6,155 418,941 271,452 (10,745) (1,544) 684,259
Net earnings --- --- 76,177 --- --- 76,177
Exercise of stock options 33 2,950 --- --- --- 2,983
Cash dividends declared --- --- (25,327) --- --- (25,327)
Other --- (236) 434 (26) 486 658
------ ------- ------- ----------- ---------- -------
Balance at March 31, 1996 6,188 421,655 322,736 (10,771) (1,058) 738,750
Net earnings --- --- 146,011 --- --- 146,011
Exercise of stock options 23 4,368 --- --- --- 4,391
Cash dividends declared --- --- (35,400) --- --- (35,400)
Common stock purchased (178) (84,608) --- --- --- (84,786)
Other --- --- --- 95 603 698
------ ------- ------- ----------- ---------- -------
Balance at March 31, 1997 6,033 341,415 433,347 (10,676) (455) 769,664
Net earnings --- --- 315,499 --- --- 315,499
Issuance of restricted stock 9 4,492 --- --- (4,501) ---
Exercise of stock options 54 14,280 --- --- --- 14,334
Cash dividends declared --- --- (36,383) --- --- (36,383)
Common stock purchased (148) (65,034) --- --- --- (65,182)
Other --- --- --- 94 750 844
------ ------- ------- ----------- ---------- -------
Balance at March 31, 1998 $5,948 295,153 712,463 (10,582) (4,206) 998,776
====== ======= ======= =========== ========== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
Years Ended March 31, 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Operating activities:
Earnings from continuing operations $ 243,038 138,235 69,503
Adjustments to reconcile earnings from continuing operations
to net cash provided by continuing operating activities:
Depreciation and amortization 91,410 55,937 55,361
Provision for deferred income taxes (1,604) 12,117 4,023
Gain on sales of assets (16,531) (5,320) (6,906)
Equity in earnings of unconsolidated companies, less dividends (2,330) 250 3,201
Minority interests, less dividends (1,050) 556 321
Compensation expense - restricted stock 750 603 595
Changes in assets and liabilities, net:
Trade and other receivables (34,879) (36,129) 6,046
Marine operating supplies (1,720) (4,471) 1,943
Other current assets 1,897 (236) 1,178
Accounts payable and accrued expenses 28,095 2,579 (8,290)
Accrued property and liability losses (1,092) 2,404 (689)
Other, net 5,994 1,396 6,128
--------- -------- --------
Net cash provided by continuing operating activities 311,978 167,921 132,414
Net cash provided by discontinued operating activities 34,108 42,025 48,239
--------- -------- --------
Net cash provided by operating activities 346,086 209,946 180,653
--------- -------- --------
Investing activities:
Proceeds from sales of assets 41,944 22,737 18,044
Proceeds from sale of Compression operations 340,001 --- ---
Additions to properties and equipment (82,501) (58,002) (46,116)
Acquisitions net of cash acquired (581,099) (3,435) ---
Other (4,853) --- (592)
--------- -------- --------
Net cash used in investing activities (286,508) (38,700) (28,664)
--------- -------- --------
Financing activities:
Common stock purchased (65,182) (84,786) ---
Principal payments on long-term debt (526,281) (58,019) (145,395)
Debt borrowings 544,035 15,000 13,400
Proceeds from issuance of common stock 8,044 4,391 4,212
Cash dividends (36,383) (35,400) (25,327)
Other --- --- 40
--------- -------- --------
Net cash used in financing activities (75,767) (158,814) (153,070)
--------- -------- --------
Net (decrease) increase in cash and cash equivalents (16,189) 12,432 (1,081)
Net increase in cash for Hornbeck Offshore Services, Inc.
for the quarter ended March 31, 1995 --- --- 4,980
Cash and cash equivalents at beginning of year 41,166 28,734 24,835
--------- -------- --------
Cash and cash equivalents at end of year $ 24,977 41,166 28,734
========= ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 23,937 702 5,944
Income taxes $ 111,427 56,249 27,721
========= ======== ========
Supplemental noncash investing activity:
Acquisitions:
Fair value of assets acquired $ 693,672 51,305 ---
Fair value of liabilities assumed (112,573) (47,870) ---
--------- -------- --------
Net cash payment $ 581,099 3,435 ---
========= ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
March 31, 1998, 1997 and 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The company provides services and equipment to the offshore energy industry
through the operation of the world's largest fleet of offshore service vessels.
Revenues, net earnings and cash flows from operations are dependent upon the
activity level for 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.
USE OF ESTIMATES
In preparing the company's financial statements, management makes informed
estimates and assumptions that affect the amounts reported in the financial
statements and related disclosures. Actual results may differ from these
estimates.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of Tidewater Inc.
and its subsidiaries. Significant intercompany balances and transactions are
eliminated in consolidation.
PROPERTIES AND EQUIPMENT
Properties and equipment are carried at cost. Depreciation for financial
reporting purposes is computed primarily on the straight-line basis beginning
with the first charter/rental, with salvage values of 5%-10% for marine
equipment, using estimated useful lives of:
Years
-------
Marine equipment (from date of construction) 15 - 25
Other properties and equipment 3 - 30
Used equipment is depreciated in accordance with the above schedule; however,
no life less than six years is used for marine equipment regardless of the date
constructed.
Maintenance and repairs are charged to operations as incurred during the
asset's original estimated useful life. Major repair costs incurred after the
original estimated useful life that also have the effect of extending the useful
life of the asset are capitalized and amortized over three years. Major
modifications to equipment are capitalized and amortized over the remaining life
of the equipment.
GOODWILL
Goodwill primarily relates to the O.I.L. acquisition made during fiscal 1998
and is being amortized over 40 years. Management periodically reviews goodwill
to access recoverability, and impairments would be recognized in operating
results if a permanent diminution in value were to occur.
ACCRUED PROPERTY AND LIABILITY LOSSES
The company's insurance subsidiary establishes case based reserves for
estimates of reported losses on direct business written, estimates received from
ceding reinsurers, and reserves based on past experience of unreported losses.
Such losses principally relate to the company's marine operations and are
included as a component of costs of marine operations in the Consolidated
Statements of Earnings. The liability for such losses and the related
reimbursement receivable from reinsurance companies are classified in the
Consolidated Balance Sheet into current and noncurrent amounts based upon
estimates of when the liabilities will be settled and when the receivables will
be collected.
F-8
<PAGE>
PENSION AND OTHER POSTRETIREMENT BENEFITS
Pension costs are accounted for in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 87 and are funded to meet
the minimum funding requirements as required by law. Prior service costs are
amortized on the straight-line basis over the average remaining service period
of employees expected to receive pension benefits. Postretirement benefits
other than pensions are accounted for in accordance with SFAS No. 106. The
estimated cost of postretirement benefits other than pensions are accrued during
the employees' active service period.
INCOME TAXES
Income taxes are accounted for in accordance with the provisions of SFAS No.
109. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
EARNINGS PER SHARE
Earnings per share are computed in accordance with SFAS No. 128. SFAS No.
128 requires the replacement of previously reported primary and fully diluted
earnings per share required by Accounting Principles Board Opinion No. 15 with
earnings per share and diluted earnings per share. The calculation of earnings
per share excludes any dilutive effect of stock options, while diluted earnings
per share includes the dilutive effect of stock options. Per share amounts for
all periods presented have been restated to conform to the requirements of SFAS
No. 128. Per share amounts disclosed in these Notes to Consolidated Financial
Statements are on a diluted basis.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of international operations, other than international
operations in highly inflationary economies, are translated into U.S. dollars
using current exchange rates in effect at the balance sheet date and for revenue
and expense accounts using weighted average exchange rates during the period.
Adjustments resulting from the balance sheet account translations, net of
deferred income taxes, are included in stockholders' equity as foreign currency
translation adjustments.
CASH EQUIVALENTS
For purposes of the Consolidated Statements of Cash Flows the company
considers all highly liquid investments with maturities of three months or less
when purchased to be cash equivalents.
REVENUE RECOGNITION
Marine services are generally contracted for on a rate per day of service
basis; therefore, marine vessel revenues are recognized on a daily basis
throughout the contract period.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the company to concentrations
of credit risk consist principally of trade and other receivables. These
receivables are with a variety of domestic, international and national energy
companies and also include reinsurance companies for recoverable insurance
losses. The company manages its exposure to risk through ongoing credit
evaluations of its customers and generally does not require collateral. The
company maintains an allowance for doubtful accounts for potential losses and
does not believe it is exposed to concentrations of credit risk that are likely
to have a material impact on the company's financial position or results of
operations.
STOCK-BASED COMPENSATION
The company uses the intrinsic value method of accounting for stock-based
compensation prescribed by Accounting Principles Board Opinion No. 25 and,
accordingly, adopted the disclosure provisions of SFAS No. 123.
NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1998 the Financial Accounting Standards Board issued SFAS No.
130, "Reporting
F-9
<PAGE>
Comprehensive Income," SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information" and SFAS No. 132, "Employer's Disclosures about Pension
and Other Postretirement Benefits." The additional disclosure requirements of
each of these SFAS's are effective during the company's fiscal year ending March
31, 1999. Management believes the adoption of these pronouncements will result
in additional financial statement disclosure only and will not have a material
impact on its fiscal 1999 consolidated financial statements.
RECLASSIFICATIONS
Certain amounts from prior years have been reclassified to conform with
current year classifications.
(2) BUSINESS DISPOSITION
On February 20, 1998 the company completed the sale of its compression
division. The compression division provided natural gas and air compression
equipment and services, principally to the energy industry. In consideration of
the sale the company received cash of approximately $348 million. Accordingly,
the company's consolidated financial statements for all periods have been
reclassified to report separately financial position, results of operations, and
operating cash flows from continuing operations and the discontinued compression
operation.
Compression net assets at March 31, 1997 and Compression operating results
for the 11 months ended February 20, 1998 and for the 12-month periods ended
March 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Compression Net Assets:
- -----------------------
(in thousands)
At March 31, 1997
-----------------
<S> <C>
Current assets................................................. $ 19,073
Net properties and equipment................................... 217,983
Goodwill....................................................... 20,951
Accounts payable and accrued expenses.......................... (4,702)
--------
$253,305
========
</TABLE>
Compression Operating Results:
- ------------------------------
<TABLE>
<CAPTION>
(in thousands)
Eleven Months Ended Twelve Months Ended March 31,
February 20,1998 1997 1996
------------------- ----------- -----------
<S> <C> <C> <C>
Revenues............................... $ 94,438 112,584 111,245
Operating costs........................ 46,679 64,153 59,536
Depreciation and amortization.......... 23,462 26,335 27,069
General and administration............. 8,615 11,005 10,508
-------- --------- ---------
15,682 11,091 14,132
Other income (expense)................ 1,275 1,369 (3,273)
-------- -------- ---------
Earnings before income taxes........... 16,957 12,460 10,859
Income taxes........................... 6,234 4,684 4,185
-------- -------- ---------
Earnings from discontinued operations.. $ 10,723 7,776 6,674
======== ======== =========
</TABLE>
The gain from the sale of Compression operations of $98.0 million, less
applicable income taxes of $36.3 million, is net of legal, accounting and
investment banking fees, severance and other costs associated with the sale.
(3) BUSINESS COMBINATIONS
On May 16, 1997 the company acquired all of the shares of O.I.L. Ltd.
(O.I.L.) in exchange for a cash payment of 328 million pounds sterling, or
approximately $534 million. In addition a 9 million pound sterling, or
approximately $14.4 million, payment was made for the net working capital of
O.I.L. Available cash of $48.4 million and borrowings of $500 million were used
to fund the purchase. Prior to the purchase O.I.L. was principally engaged in
the business of operating approximately 100 marine vessels, primarily platform
supply and anchor handling towing-supply vessels, in several offshore oil and
gas exploration areas outside of the United States. 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
F-10
<PAGE>
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 years ended March 31, 1998 and 1997 as though the acquisition had taken
place on April 1 of the respective fiscal years are as follows:
<TABLE>
<CAPTION>
(in thousands, except per share amounts)
Year Ended March 31,
--------------------
1998 1997
---------- -------
<S> <C> <C>
Revenues.................... $1,080,606 828,804
Net earnings................ $ 314,842 137,063
Earnings per share.......... $ 5.20 2.22
Diluted earnings per share.. $ 5.17 2.21
</TABLE>
The $500 million of debt incurred to finance the O.I.L.. acquisition was
borrowed pursuant to a $600 million Revolving Credit and Term Loan agreement
with several banks and consisted of a $400 million term loan and $100 million
borrowed under the $200 million revolving credit facility of the agreement. At
March 31, 1998 all debt borrowed to finance the O.I.L. acquisition had been
repaid and the $400 million term loan facility canceled.
On June 30, 1997 the company acquired the remaining 50% equity interest in
nine towing-supply and supply vessels previously owned and operated by joint-
venture companies in Australia for a cash payment of $13.2 million and issuance
of debt totaling $14.0 million. The debt has been discounted to yield interest
at 7% and is to be repaid in semi-annual installments. The total estimated cost
of the acquisition of $30 million 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.
On May 31, 1996 the company acquired for $12.4 million cash the remaining
50.1% equity interest in 22 of 29 safety/standby vessels previously owned and
operated by joint-venture companies in the North Sea. At the same time the
company granted to the seller a call option on its 49.9% equity interest in the
remaining seven safety/standby vessels for 1 pound sterling, which option was
exercised during fiscal 1998. The acquisition was accounted for by the purchase
method and accordingly, the fair value of the assets acquired and liabilities
assumed and results of operations have been included in the consolidated
financial statements effective June 1, 1996.
On March 13, 1996 Tidewater Inc. issued 8,475,214 shares of its common stock
in exchange for all of the outstanding common stock of Hornbeck Offshore
Services, Inc. (Hornbeck). Hornbeck owned and operated a fleet of 61 marine
service vessels operating in the U.S. Gulf of Mexico and had a 49.9% interest in
29 safety/standby vessels operating in the North Sea. This business combination
has been accounted for as a pooling-of-interests and, accordingly, the
consolidated financial statements for periods prior to the combination have been
restated to include the accounts and results of operations of Hornbeck. Fiscal
1996 merger expenses of $9.6 million, which are classified as other expense in
the Consolidated Statements of Earnings, include legal, investment banking and
accounting fees, severance and other costs related to the business combination
with Hornbeck.
F-11
<PAGE>
(4) UNCONSOLIDATED COMPANIES
Investments in, at equity, and advances to unconsolidated marine joint-
venture companies at March 31 were as follows:
<TABLE>
<CAPTION>
Percentage (in thousands)
ownership 1998 1997
---------- ------- ------
<S> <C> <C> <C>
National Marine Service (Abu Dhabi-UAE) 40% $12,317 12,107
Tidewater Port Jackson (Australia) 50% --- 3,789
Provident Marine, Ltd. (Mexico) 50% 1,574 1,841
Lamnalco (UAE) 50% 2,979 1,434
Sonatide (Angola) 49% 2,602 ---
Four Star Marine, Inc. (United States) 49% 925 ---
Others 20%-50% 1,428 1,385
------ ------- ------
$21,825 20,556
======= ======
</TABLE>
The aggregate amount of undistributed earnings of all unconsolidated joint-
venture companies included in consolidated stockholders' equity at March 31,
1998 is approximately $15.2 million.
(5) Income Taxes
Earnings from continuing operations before income taxes derived from United
States and international operations for the years ended March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C> <C>
1998 1997 1996
-------- ------- -------
United States $192,788 114,942 32,995
International 163,680 89,132 67,033
-------- ------- -------
$356,468 204,074 100,028
======== ======= =======
</TABLE>
Income tax expense attributable to earnings from continuing operations for
the years ended March 31 consists of the following:
(in thousands)
U.S.
---------------
Federal State International Total
------- ------ ------------- --------
1998
- ----
Current $96,336 1,083 17,615 115,034
Deferred (1,604) --- --- (1,604)
------- ----- ------ -------
$94,732 1,083 17,615 113,430
======= ===== ====== =======
1997
- ----
Current $41,628 562 11,532 53,722
Deferred 12,117 --- --- 12,117
------- ----- ------ -------
$53,745 562 11,532 65,839
======= ===== ====== =======
1996
- ----
Current $16,663 (237) 10,076 26,502
Deferred 4,023 --- --- 4,023
------- ----- ------ -------
$20,686 (237) 10,076 30,525
======= ===== ====== =======
F-12
<PAGE>
The actual income tax expense attributable to earnings from continuing
operations for the years ended March 31, 1998, 1997 and 1996 differs from the
amounts computed by applying the U.S. federal tax rate of 35% to pre-tax
earnings as a result of the following:
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C> <C>
1998 1997 1996
-------- ------ ------
Computed "expected" tax expense $124,764 71,426 35,010
Increase (reduction) resulting from:
Effect of 1997 United Kingdom tax rate change (4,000) --- ---
Overaccrual of income tax expense in prior years (3,300) --- ---
Foreign tax credits not previously recognized --- (1,303) (7,440)
Utilization of net operating loss carryforwards (620) (386) (2,181)
Expenses which are not deductible for tax purposes 611 45 1,418
Other, net (4,025) (3,943) 3,718
-------- ------ ------
$113,430 65,839 30,525
======== ====== ======
</TABLE>
The reversal of taxes overaccrued in prior years is the result of the
company's settlement in the fourth quarter of fiscal 1998 of open income tax
audits with the Internal Revenue Service for fiscal years 1993, 1994 and 1995.
The significant components of deferred income tax expense for the years ended
March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Deferred income tax expense (benefit) (exclusive of the effects of
other components listed below) $(1,604) 3,628 (4,732)
Investment, foreign and minimum tax credits --- 8,489 8,755
------- ------ ------
$(1,604) 12,117 4,023
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1998 1997
--------- --------
<S> <C> <C>
Deferred tax assets:
Financial provisions not deducted for tax purposes $ 16,520 19,605
Foreign net operating loss carryforwards 13,887 5,182
Tax credit carryforwards 3,851 3,851
Other 234 259
--------- --------
Gross deferred tax assets 34,492 28,897
Less valuation allowance 16,756 1,915
--------- --------
Net deferred tax assets 17,736 26,982
--------- --------
Deferred tax liabilities:
Depreciation and amortization (155,339) (122,577)
Other (3,201) ---
--------- --------
Gross deferred tax liabilities (158,540) (122,577)
--------- --------
Net deferred tax liabilities $(140,804) (95,595)
========= ========
</TABLE>
The net changes in the valuation allowance for the years ended March 31, 1998
and 1997 were an increase of $14.8 million and a decrease of $3.2 million,
respectively. The additional fiscal 1998 valuation allowance is a result of
increased doubt over the ultimate realization of benefits from certain foreign
net operating losses. The remaining balance of the deferred tax assets is
expected to be realized through future operating results and the reversal of
taxable temporary differences.
The company has not recognized a deferred tax liability of approximately
$31.5 million for the undistributed earnings of certain non-U.S. subsidiaries
that arose in prior years because the company currently does not expect those
unremitted earnings to reverse and become taxable to the company in the
foreseeable future. A deferred tax liability will be recognized when the
company expects that it will realize those undistributed earnings in a taxable
manner, such as through receipt of dividends or sale of
F-13
<PAGE>
investments. As of March 31, 1998, the undistributed earnings of these
subsidiaries were approximately $90 million.
(6) LONG-TERM DEBT
At March 31, 1998, the company has a $200 million revolving credit facility
with a group of banks and at that date there were $25 million of borrowings
under the facility. Borrowings bear interest, at the company's option, at prime
or Federal Funds rates plus .5% or Eurodollar rates plus margins from .5% to 1%
based on the company's debt to capitalization ratio. The revolving credit
commitment expires on April 30, 1999, at which time the then outstanding balance
will convert to a term loan repayable in 16 quarterly installments beginning
July 31, 1999. All of the borrowings under the agreement are unsecured and the
company pays an annual fee of .25% on the unused portion of the facility.
Under the terms of the agreement, the company has agreed to limitations on
future levels of investments and aggregate indebtedness, a minimum level of
tangible net worth and maintenance of certain debt to capitalization ratios.
The agreement also prohibits the company from encumbering its assets, other than
assets already encumbered at March 19, 1997 for the benefit of others.
Current maturities of long-term debt at March 31, 1998 of $6.5 million
consist of the remaining debt associated with the Australian joint-ventures'
acquisition made during fiscal 1998.
(7) BENEFIT PLANS
Upon meeting various citizenship, age and service requirements, employees are
eligible to participate in a defined contribution savings plan and can
contribute from 2% to 15% of their base salary to an employee benefit trust.
The company matches with company common stock 50% of the employee's contribution
to the plan up to a maximum of 6% of the employee's base salary. The plan held
487,571 shares and 510,772 shares of the company's common stock at March 31,
1998 and 1997, respectively. Amounts charged to expense for the plan for 1998,
1997 and 1996 were $1.8 million, $1.7 million and $1.0 million, respectively.
A defined benefit pension plan covers certain U.S. citizen employees and
employees who are permanent residents of the United States. Benefits are based
on years of service and employee compensation. The company's policy is to fund
the plan based upon minimum funding requirements of the Employee Retirement
Income Security Act of 1974. The company also has a supplemental retirement
plan (Supplemental Plan) that provides pension benefits to certain employees in
excess of those allowed under the company's tax-qualified pension plan. Certain
benefits programs are maintained in several other countries which provide
retirement income for covered employees.
Net periodic pension cost for the U.S. defined benefit pension plan and the
Supplemental Plan for 1998, 1997 and 1996 include the following components:
<TABLE>
<CAPTION>
(in thousands)
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Service cost-benefit earned during the period..... $ 986 844 1,843
Interest cost on projected benefit obligation..... 2,230 2,258 2,208
Actual return on assets........................... (7,870) (3,170) (4,700)
Net amortization and deferral 5,805 1,591 3,530
------- ------ ------
Net periodic pension cost $ 1,151 1,523 2,881
======= ====== ======
Assumptions used in the accounting are:
Discount rates 7.5% 7.5% 7.5%
Rates of annual increase in compensation levels 5.0% 5.2% 5.2%
Expected long-term rate of return on assets 9.5% 9.5% 9.5%
======= ====== ======
</TABLE>
F-14
<PAGE>
The following table sets forth the assets and liabilities of the U.S. defined
benefit pension plan and the Supplemental Retirement Plan and the amount of the
net pension liability in the Consolidated Balance Sheets at March 31:
<TABLE>
<CAPTION>
(in thousands)
U.S. Defined Benefit Supplemental
Pension Plan Retirement Plan
------------------- ---------------
1998 1997 1998 1997
------- ------ ------ ------
<S> <C> <C> <C> <C>
Actuarial present value of vested benefit obligation $20,883 28,431 4,894 2,759
======= ====== ===== =====
Accumulated benefit obligation $21,086 28,715 4,902 2,932
======= ====== ===== =====
Projected benefit obligation $23,042 31,463 6,594 3,982
Plan assets at fair value, primarily bonds and common stock 28,772 29,847 --- ---
------- ------ ------ ------
Projected benefit obligation in excess of (less than) plan assets (5,730) 1,616 6,594 3,982
Unrecognized net transitional obligation amortized over 15 years (39) (87) --- ---
Unrecognized actuarial gain (loss) 5,376 680 (2,838) (1,672)
Unrecognized prior service cost (414) (364) (753) (296)
Adjustment required to recognize minimum liability --- --- 1,899 918
------- ------ ------ ------
Net accrued pension liability (asset) $ (807) 1,845 4,902 2,932
======= ====== ====== ======
</TABLE>
During the fourth quarter of fiscal 1996 the company recorded as other
expense an estimated curtailment charge of $3 million as a result of the removal
of fleet personnel from the company's U.S. defined benefit pension plan. During
the third quarter of fiscal 1998, the obligations related to the curtailment of
the plan were settled and a gain on settlement of $1.2 million was recorded as
other income. Beginning April 1, 1996 these employees removed from this defined
benefit pension plan, along with all new employees of the company who are
eligible for pension plan membership, were enrolled in a new defined
contribution retirement plan. This plan is noncontributory by the employee, but
the company contributes in cash 3% of an eligible employee's compensation to an
employee benefit trust. The cost of the plan for fiscal 1998 and 1997 was $2.7
million and $2.3 million, respectively.
During the fourth quarter of fiscal 1998, as a result of the sale of the
company's compression division, the company recorded as part of the gain on sale
of discontinued compression operations a pre-tax curtailment gain of $2.4
million resulting from the removal of all compression personnel from the U.S.
defined benefit pension plan, the Supplemental Retirement Plan and the post-
retirement health care and life insurance plan.
Qualified retired employees currently are covered by a program which provides
limited health care and life insurance benefits. Costs of the program are based
on actuarially determined amounts and are accrued over the period from the date
of hire to the full eligibility date of employees who are expected to qualify
for these benefits. This plan is not funded.
Net periodic postretirement health care and life insurance costs for 1998,
1997 and 1996 include the following components:
<TABLE>
<CAPTION>
(in thousands)
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Service cost - benefit earned during the period $1,255 928 743
Interest cost on accumulated postretirement benefit obligation 1,132 874 798
Other amortization and deferral (28) (207) (296)
------ ----- -----
Net periodic postretirement benefit cost $2,359 1,595 1,245
====== ===== =====
</TABLE>
F-15
<PAGE>
The unfunded actuarially-determined liabilities for postretirement benefits
at March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1998 1997
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit obligation:
Current retirees $ 5,483 5,110
Current employees eligible for benefits 1,124 1,274
Current employees not yet eligible for benefits 6,474 8,175
------- ------
Total accumulated postretirement benefit obligation 13,081 14,559
Unrecognized prior service cost (914) (197)
Unrecognized net gain 4,454 1,798
------- ------
Accrued postretirement benefit cost $16,621 16,160
======= ======
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation will be 7% in 1999, gradually declining to 4%
in the year 2005 and thereafter. A 1% change in the assumed health care cost
trend rates for each year would change the accumulated postretirement benefit
obligation by approximately $1.7 million at March 31, 1998 and change the cost
for the year ended March 31, 1998 by $.4 million. The assumed discount rate
used in determining the accumulated postretirement benefit obligation was 7.5%
in 1998 and 1997.
(8) OTHER ASSETS, OTHER LIABILITIES AND DEFERRED CREDITS
A summary of other assets at March 31 follows:
<TABLE>
<CAPTION>
(in thousands)
1998 1997
------- ------
<S> <C> <C>
Recoverable insurance losses $57,289 32,146
Assets held for sale 4,086 5,817
Deferred income tax assets 17,736 26,982
Other 10,769 9,678
------- ------
$89,880 74,623
======= ======
</TABLE>
A summary of other liabilities and deferred credits at March 31 follows:
<TABLE>
<CAPTION>
(in thousands)
1998 1997
------- ------
<S> <C> <C>
Postretirement benefit liability $16,621 16,160
Pension liability 4,095 4,777
Minority interests in net assets of subsidiaries 7,481 7,864
Noncurrent international and domestic taxes --- 8,313
Deferred vessel income 6,071 4,518
Provision for litigation and claims costs 7,889 ---
Other 6,870 5,215
------- ------
$49,027 46,847
======= ======
</TABLE>
(9) CAPITAL STOCK
At March 31, 1998 and 1997, 125 million shares of $.10 par value common stock
were authorized and 59,482,769 shares and 60,334,889 shares were issued and
outstanding, respectively. At March 31, 1998 and 1997, three million shares of
no par value preferred stock were authorized and unissued.
Under the company's stock option and restricted stock plans, the Compensation
Committee of the Board of Directors has authority to grant stock options and
restricted shares of the company's stock to officers and other key employees. At
March 31, 1998, 4,423,105 shares of common stock are reserved for issuance under
the plans of which 2,451,500 shares are available for future grants. Stock
options are granted with an exercise price equal to the stock's fair market
value at the date of grant. All stock options have ten-year terms and most of
the outstanding options vest and become exercisable in equal installments over a
three-year period from the grant date.
The per share weighted-average fair values of stock options granted during
fiscal years 1998, 1997 and
F-16
<PAGE>
1996 were $17.69, $15.46 and $13.38, respectively, on the dates of grant using
the Black Scholes option-pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Risk-free interest rate 5.75% 6.4% 6.2%
Expected dividend yield 1.25% 1.25% 1.25%
Expected stock price volatility 34.93% 32.57% 31.75%
Expected stock option life 5 years 5 years 5 years
======= ======= =======
</TABLE>
The company applies APB Opinion No. 25 in accounting for its plans and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
No. 123, the company's net earnings would have been reduced to the pro forma
amounts as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- ------
<S> <C> <C> <C>
Net earnings (in thousands):
As reported $315,499 146,011 76,177
Pro forma $312,215 145,032 76,115
Earnings per common share:
As reported $ 5.21 2.37 1.24
Pro forma $ 5.16 2.35 1.23
Diluted earnings per common share:
As reported $ 5.18 2.35 1.23
Pro forma $ 5.13 2.34 1.22
======== ======= ======
</TABLE>
Pro forma net earnings and diluted earnings per common share reflect only
options granted during fiscal years 1998, 1997 and 1996. Therefore, the full
impact of calculating compensation cost for stock options under SFAS No. 123 is
not reflected in the pro forma amounts presented above because compensation cost
is reflected over the options' vesting period of three years and compensation
cost for options granted prior to April 1, 1995 is not considered.
Stock option activity during 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
Weighted-average Number
Exercise Price of Shares
---------------- ----------
<S> <C> <C>
Balance at March 31, 1995 $18.29 1,593,298
Granted 38.61 284,000
Exercised 12.67 (182,967)
Expired or cancelled 18.12 (27,826)
------ ---------
Balance at March 31, 1996 22.38 1,666,505
Granted 43.49 520,000
Exercised 15.36 (269,177)
Expired or cancelled 19.14 (4,225)
------ ---------
Balance at March 31, 1997 29.11 1,913,103
Granted 49.19 762,000
Exercised 20.97 (620,054)
Expired or cancelled 41.60 (94,984)
------ ---------
Balance at March 31, 1998 $38.89 1,960,065
====== =========
</TABLE>
The 1,960,065 options outstanding at March 31, 1998 fall into three general
exercise-price ranges as follows:
<TABLE>
<CAPTION>
Exercise Price Range
-----------------------------------------------
$10.00 - $19.63 $20.13 - $25.13 $35.75-$59.00
--------------- --------------- -------------
<S> <C> <C> <C>
Options outstanding at March 31, 1998 231,950 316,089 1,412,026
Weighted average exercise price $ 17.52 $ 23.08 $ 45.94
Weighted average remaining contractual life 5.5 years 6.5 years 9.3 years
Options exercisable at March 31, 1998 231,950 316,089 317,344
Weighted average exercise price of options exercisable
at March 31, 1998 $ 17.52 $ 23.08 $ 41.84
=============== =============== =============
</TABLE>
At March 31, 1998, 1997 and 1996, the number of options exercisable under the
stock option plans was
F-17
<PAGE>
865,383, 940,579 and 771,125, respectively; and the weighted average exercise
price of those options was $28.47, $21.51 and $17.43, respectively.
In March 1998, 36,500 shares of restricted common stock of the company were
granted to certain key employees. These restricted shares vest and become
freely transferable over a four-year period provided the employee remains
employed by the company during the vesting period. During the restricted
period, the restricted shares may not be transferred or encumbered, but the
recipient has the right to vote and receive dividends on the restricted shares.
The fair market value of the stock at the time of grant totaled approximately
$1.6 million and was classified in stockholders' equity as deferred compensation
restricted stock. The deferred amount is being amortized by equal monthly
charges to earnings over the four-year vesting period.
In accordance with a June 13, 1994 employment agreement with the company's
chairman of the board, 70,000 shares of restricted common stock of the company
were granted to him on October 20, 1994. The restricted stock agreement
contained provisions for vesting of the shares at varying intervals when the
average market price of the common stock reaches certain predetermined levels.
During the years ended March 31, 1998, 1997 and 1996, 20,000, 25,000 and 25,000
shares, respectively, vested due to the attainment of the three price levels
applicable to those shares. The fair market value of the stock at the time of
grant totaling approximately $1.6 million was classified in stockholders' equity
as deferred compensation restricted stock. As a result of the vesting of the
70,000 shares over the last three fiscal years, by March 31, 1998 the total
deferred amount had been charged to earnings.
In accordance with a new employment agreement with the company's chairman of
the board entered into on September 25, 1997, 50,000 shares of restricted common
stock were granted on that date. These restricted shares also vest at varying
intervals when the average market price of the common stock reaches certain
predetermined levels. The fair market value of the stock at the time of grant
totaling approximately $3 million was deferred and is being amortized by equal
monthly charges to earnings over five years.
During the third quarter of fiscal 1997 the Board of Directors authorized a
share repurchase program whereby the company could purchase in the open market
or through privately negotiated transactions up to $200 million of company
common stock through March 31, 1998. The company expended during fiscal 1998
and 1997 a total of $150 million for the purchase of 3,269,100 common shares at
an average cost of $45.88 per share, including broker commissions and fees.
Fiscal 1998 purchases totaled $65.2 million for 1,481,000 shares and fiscal 1997
purchases totaled $84.8 million for 1,788,100 shares.
During the fourth quarter of fiscal 1998 the Board of Directors authorized a
new share repurchase program whereby the company may purchase up to an
additional $200 million of company common stock through March 31, 1999. No
shares had been purchased under this program as of March 31, 1998.
Under a Shareholder Rights Plan, one preferred stock purchase right has been
distributed as a dividend for each outstanding common share. Each right
entitles the holder to purchase, under certain conditions, one one-hundredth of
a share of Series A Participating Preferred Stock at an exercise price of $160,
subject to adjustment. The rights will not be exercisable unless a person (as
defined in the plan) acquires beneficial ownership of 15% or more of the
outstanding common shares, or a person commences a tender offer or exchange
offer, which upon its consummation such person would beneficially own 15% or
more of the outstanding common shares. The Board of Directors is authorized in
certain circumstances to lower the beneficial ownership percentage to not less
than 10%.
If after the rights become exercisable a person becomes the beneficial owner
of 15% or more of the outstanding common shares (except pursuant to an offer for
all shares approved by the Board of Directors), each holder (other than the
acquirer) will be entitled to receive, upon exercise, common shares having a
market value of twice the exercise price. In addition, if the company is
involved in a merger (other than a merger which follows an offer for all shares
approved by the Board of Directors), major sale of assets or other business
combination after a person becomes the beneficial owner of 15% or more of the
outstanding common shares, each holder of a right (other than the acquirer) will
be entitled to receive, upon exercise, common stock of the acquiring company
having a market value of twice the exercise price.
F-18
<PAGE>
The rights may be redeemed for $.01 per right at any time prior to ten days
following the acquisition by a person of 15% or more of the outstanding common
shares. The rights expire on November 1, 2006.
(10) COMMITMENTS AND CONTINGENCIES
An employment agreement exists with the company's chairman of the board
whereby he will serve in such capacity as well as president and chief executive
officer through September 19, 2000. The terms of the employment agreement
provide for an annual base salary and certain other benefits. Compensation
continuation agreements exist with all other officers of Tidewater Inc. whereby
each receives compensation and benefits in the event that their employment is
terminated following certain events relating to a change in control of the
company. The maximum amount of compensation that could be paid under the
agreements, based on present salary levels, is approximately $10.2 million. The
amount that could be paid for certain benefits is not presently determinable.
During fiscal 1997 the Internal Revenue Service (IRS) notified the company of
proposed deficiencies aggregating approximately $17.5 million of additional
income taxes resulting from audits of the company's income tax returns for the
years ended March 31, 1993, 1994 and 1995. During the fourth quarter of fiscal
1998 the company and the IRS settled all outstanding issues regarding these
audits with no additional taxes due. As a result of the settlement, the company
reduced previously provided for income taxes in the amount of $3.3 million.
The company is the defendant to several alleged labor-law pay violations
claimed by certain current and former employees in various areas of the world
where its marine vessel operations are conducted. During the fourth quarter of
fiscal 1998 the company entered into an agreement to settle a majority of these
claims, although such settlement is subject to court approval and other
conditions. During the third quarter of fiscal 1998, the company provided $8
million for the possible adverse outcome of these labor-law matters. In
management's opinion, the amount of the company's liability in excess of amounts
provided in the financial statements for these labor-law matters, if any, will
not have a material adverse effect on the company's financial position or the
results of its ongoing operations.
During the fourth quarter of fiscal 1997 the company recorded as other
expense a charge of $2.8 million ($1.9 million after tax, or $.03 per common
share) to establish a provision for loss resulting from one of the company's
insurers filing for liquidation.
Various legal proceedings and claims are outstanding which arose in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability, if any, with respect to these actions will not have a
materially adverse effect on the company's financial position or results of its
ongoing operations.
F-19
<PAGE>
(11) SEGMENT AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS
With the sale of the company's Compression business as explained in Note 2,
the company operates in only one business segment.
The following table provides a comparison of revenues, operating profit,
identifiable assets, and depreciation and amortization and additions to
properties and equipment for the years ended March 31.
<TABLE>
<CAPTION>
1998 1997 1996
------------ ---------- --------
<S> <C> <C> <C>
Marine revenues (A):
Owned and operated vessel fleet:
United States $ 463,914 338,823 241,436
International (B) 537,737 322,401 264,744
---------- --------- -------
1,001,651 661,224 506,180
Brokered vessels, shipyard and other 58,510 29,202 26,022
---------- --------- -------
$1,060,161 690,426 532,202
========== ========= =======
Marine operating profit (loss):
Owned and operated vessel fleet:
United States $ 225,599 120,275 46,839
International 141,133 82,591 60,291
---------- --------- -------
366,732 202,866 107,130
Gains from asset sales 16,592 5,352 6,930
Brokered vessels, shipyard and other 10,663 4,186 4,849
---------- --------- -------
393,987 212,404 118,909
Other income 7,079 6,705 5,436
Other expense (6,847) (2,800) (12,600)
Corporate expenses (13,074) (11,235) (9,541)
Interest and other debt costs (24,677) (1,000) (2,176)
---------- --------- -------
Earnings from continuing operations before income taxes $ 356,468 204,074 100,028
========== ========= =======
Identifiable assets:
Marine:
United States $ 379,118 376,380 349,554
International (B) 1,043,781 334,005 269,704
---------- --------- -------
1,422,899 710,385 619,258
Investments in and advances to unconsolidated Marine companies 21,825 20,556 35,861
---------- --------- -------
1,444,724 730,941 655,119
Net assets of discontinued Compression operations --- 253,305 271,664
General corporate 48,115 77,034 47,627
---------- --------- -------
$1,492,839 1,061,280 974,410
========== ========= =======
Depreciation and amortization:
Marine equipment depreciation $ 83,002 55,569 54,961
General corporate depreciation 406 368 400
Goodwill amortization 8,002 --- ---
---------- --------- -------
$ 91,410 55,937 55,361
========== ========= =======
Additions to properties and equipment:
Marine equipment operations $ 62,555 40,003 40,994
Discontinued Compression operations 17,597 17,949 5,108
General corporate 2,349 50 14
---------- --------- -------
$ 82,501 58,002 46,116
========== ========= =======
</TABLE>
(A) One marine customer accounted for 11%, 11% and 12% of revenues for the
fiscal years ended March 31, 1998, 1997 and 1996, respectively.
(B) Marine support services are conducted worldwide with assets that are highly
mobile. Revenues and identifiable assets attributable to these operations
in any one country are not "significant" as that term is defined by SFAS No.
14. Further, most identifiable assets in each country are comprised of
offshore service vessels, which regularly and routinely move from one
operating area to another, often to and from offshore operating areas of
different continents. Equity in net assets of non-U.S. subsidiaries is
$795.1 million, $211.5 million and $148.0 million at March 31, 1998, 1997
and 1996, respectively. Other international identifiable assets include
accounts receivable and other balances denominated in currencies other than
the U.S. dollar which aggregate approximately $19.1 million, $6.7 million
and $8.5 million at March 31, 1998, 1997 and 1996, respectively. These
amounts are subject to the usual risks of fluctuating exchange rates and
government-imposed exchange controls.
F-20
<PAGE>
(12) SUPPLEMENTARY INFORMATION--QUARTERLY FINANCIAL DATA (UNAUDITED)
Years Ended March 31, 1998 and 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
1998 First Second Third Fourth
- ---- ------- -------- ------- -------
<S> <C> <C> <C> <C>
Marine revenues $230,440 270,413 280,697 278,611
======== ======= ======= =======
Marine operating profit $ 78,774 104,382 115,638 95,193
======== ======= ======= =======
Earnings from continuing operations $ 48,136 61,053 70,298 63,551
Earnings from discontinued operations 2,625 3,276 3,661 1,161
Gain on sale of discontinued operations --- --- --- 61,738
-------- ------- ------- -------
Net earnings $ 50,761 64,329 73,959 126,450
======== ======= ======= =======
Earnings per share:
Continuing operations $ 0.80 1.01 1.15 1.05
Discontinued operations 0.04 0.05 0.06 .02
Gain on sale of discontinued operations --- --- --- 1.02
-------- ------- ------- -------
Net earnings $ 0.84 1.06 1.21 2.09
======== ======= ======= =======
Diluted earnings per share:
Continuing operations $ 0.80 1.01 1.15 1.05
Discontinued operations 0.04 0.05 0.06 .02
Gain on sale of discontinued operations --- --- --- 1.01
-------- ------- ------- -------
Net earnings $ 0.84 1.06 1.21 2.08
======== ======= ======= =======
1997
- ----
Marine revenues $146,639 167,691 184,133 191,963
======== ======= ======= =======
Marine operating profit $ 34,045 46,338 62,312 69,709
======== ======= ======= =======
Earnings from continuing operations $ 22,164 31,239 41,132 43,700
Earnings from discontinued operations 2,206 1,713 2,038 1,819
-------- ------- ------- -------
Net earnings $ 24,370 32,952 43,170 45,519
======== ======= ======= =======
Earnings per share:
Continuing operations $ 0.36 0.50 0.66 0.72
Discontinued operations 0.03 0.03 0.04 0.03
-------- ------- ------- -------
Net earnings $ 0.39 0.53 0.70 0.75
======== ======= ======= =======
Diluted earnings per share:
Continuing operations $ 0.36 0.50 0.66 0.71
Discontinued operations 0.03 0.03 0.03 0.03
-------- ------- ------- -------
Net earnings $ 0.39 0.53 0.69 0.74
======== ======= ======= =======
</TABLE>
Operating profit consists of revenues less operating costs and expenses,
depreciation, general and administrative expenses and other income and expenses
of the Marine division.
See Notes 2, 3, 7 and 10 for detailed information regarding transactions which
affect fiscal 1998 and 1997 quarterly amounts.
F-21
<PAGE>
SCHEDULE II
TIDEWATER INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MARCH 31, 1998, 1997, AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Balance
Balance at at
Beginning Additions End of
Description of period at Cost Deductions Period
----------- ----------- --------- ---------- --------
<S> <C> <C> <C> <C>
1998
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $10,330 3,992 244 (A) 14,078
======= ===== ==== ======
Deducted in balance sheet from
other assets:
Amortization of goodwill, prepaid rent
and debt issuance costs $ 3,028 9,191 --- 12,219
======= ===== ==== ======
1997
Deducted in balance sheet from
trade accounts receivable:
Allowance for doubtful accounts $ 7,866 3,148 684 (A) 10,330
======= ===== ==== ======
Deducted in balance sheet from
other assets:
Amortization of prepaid rent
and debt issuance costs $ 2,292 736 --- 3,028
======= ===== ==== ======
1996
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 8,934 --- 1,068 (A) 7,866
======= ===== ===== ======
Deducted in balance sheet from
other assets:
Amortization of prepaid rent and
debt issuance costs $ 1,580 712 --- 2,292
======= ===== ==== ======
</TABLE>
(A) Accounts receivable amounts considered uncollectible and removed from
accounts receivable by reducing allowance for doubtful accounts.
F-22
<PAGE>
TIDEWATER INC.
EXHIBITS FOR THE
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED MARCH 31, 1998
<PAGE>
EXHIBIT INDEX
The index below describes each exhibit filed as a part of this report.
Exhibits not incorporated by reference to a prior filing are designated by an
asterisk; all exhibits not so designated are incorporated herein by reference to
a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with the
Commission as Exhibit 3(a) to the company's quarterly report on Form
10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to the
company's quarterly report on Form 10-Q for the quarter ended September
30, 1993).
4(a) - Restated Rights Agreement dated as of September 19, 1996 between
Tidewater Inc. and The First National Bank of Boston (filed with the
Commission as Exhibit 1 to Form 8-A on September 30, 1996).
10(a)- $600,000,000 Revolving Credit and Term Loan Agreement dated March 19,
1997 (filed with the Commission as Exhibit 10(a) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1997).
10(b)- Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended in
1990 (filed with the Commission as Exhibit 10(c) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1991).
10(c)- Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed with
the Commission as Exhibit 10(f) to the company's annual report on Form
10-K for the fiscal year ended March 31, 1993).
10(d)- Tidewater Inc. Amended and Restated Supplemental Executive Retirement
Plan (filed with the Commission as Exhibit 10(g) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1993).
10(e)- Tidewater Inc. Amended and Restated Employees' Supplemental Savings
Plan (filed with the Commission as Exhibit 10(h) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1993).
10(f)- Supplemental Health Plan for Executive Officers of Tidewater Inc. (filed
with the Commission as Exhibit 10(i) to a Registration Statement on
September 12, 1989, Registration No. 33-31016).
10(g)- Tidewater Inc. Deferred Compensation Plan for Directors (filed with
the Commission as Exhibit 10(h) to the company's annual report on Form
10-K for the fiscal year ended March 31, 1994).
10(h)- Tidewater Inc. Retirement Plan for Directors as adopted on March 22,
1990 (filed with the Commission as Exhibit 10(k) to the company's annual
report on Form 10-K for the fiscal year ended March 31, 1990).
10(i)- Employment and Consulting Agreement dated as of March 31, 1993 between
Tidewater Inc. and John P. Laborde as amended (filed with the Commission
as Exhibit 10(l) to the company's annual report on Form 10-K for the
fiscal year ended March 31, 1993).
10(j)- Consulting Agreement dated as of March 13, 1996 between Tidewater Inc.
and Larry D. Hornbeck (filed with the Commission as Exhibit 10(j) to the
company's annual report on Form 10-K for the fiscal year ended March 31,
1996).
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10(k)- Change in Control Agreement dated September 30, 1996 between Tidewater
Inc. and William C. O'Malley (filed with the Commission as Exhibit 10(k)
to the company's annual report on Form 10-K for the fiscal year ended
March 31, 1997).
10(l)- Form of Change in Control Agreement entered into as of September 30,
1996 with four executive officers (filed with the Commission as Exhibit
10(l) to the company's annual report on Form 10-K for the fiscal year
ended March 31, 1997).
10(m)- Tidewater Inc. 1996 Annual Incentive Plan (filed with the Commission
as Exhibit 10(m) to the company annual report on Form 10-K for the fiscal
year ended March 31, 1997).
10(n)- Employment Agreement dated September 25, 1997 between Tidewater Inc. and
William C. O'Malley (filed with the Commission as Exhibit 10 to the
company's report on Form 10-Q for the quarter ended September 30, 1997).
*10(o)-Tidewater Inc. 1997 Stock Incentive Plan.
*21- Subsidiaries of the company.
*23- Consents of Independent Auditors.
*27- Financial Data Schedules.
Certain instruments respecting long-term debt of Tidewater have been omitted
pursuant to Regulation S-K, Item 601. Tidewater hereby agrees to furnish a copy
of any such instrument to the Commission upon request.
<PAGE>
Exhibit 10(o)
TIDEWATER INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 1997 Stock Incentive Plan (the "Plan") of
Tidewater Inc. ("Tidewater") is to increase shareholder value and to advance the
interests of Tidewater and its subsidiaries (collectively, the "Company") by
furnishing stock-based economic incentives (the "Incentives") designed to
attract, retain and motivate key employees, officers and directors and to
strengthen the mutuality of interests between such employees, officers and
directors and Tidewater's shareholders. Incentives consist of opportunities to
purchase or receive shares of common stock, $.10 par value per share, of
Tidewater (the "Common Stock"), on terms determined under the Plan. As used in
the Plan, the term "subsidiary" means any corporation of which Tidewater owns
(directly or indirectly) within the meaning of Section 425(f) of the Internal
Revenue Code of 1986, as amended (the "Code"), 50% or more of the total combined
voting power of all classes of stock.
2. ADMINISTRATION.
2.1. COMPOSITION. The Plan shall be administered by the Compensation
Committee of the Board of Directors of Tidewater or by a subcommittee
thereof (the "Committee"). The Committee shall consist of not fewer than
two members of the Board of Directors, each of whom shall (a) qualify as a
"non-employee director" under Rule 16b-3 under the Securities Exchange Act
of 1934 (the "1934 Act") or any successor rule, and (b) qualify as an
"outside director" under Section 162(m) of the Code.
2.2. AUTHORITY. The Committee shall have plenary authority to award
Incentives under the Plan, to interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to be appropriate, to
enter into agreements with participants as to the terms of the Incentives
(the "Incentive Agreements") and to make any other determination that it
believes necessary or advisable for the proper administration of the Plan.
Its decisions in matters relating to the Plan shall be final and conclusive
on the Company and participants. The Committee may delegate its authority
hereunder to the extent provided in Section 3 hereof. The Committee shall
not have authority to award Incentives under the Plan to directors who are
not also employees of the Company ("Outside Directors"). Outside Directors
may receive awards under the Plan only as specifically provided in Section
8 hereof.
3. ELIGIBLE PARTICIPANTS. Key employees and officers of the Company
(including officers who also serve as directors of the Company) shall become
eligible to receive Incentives under the Plan when designated by the Committee.
Employees may be designated individually or by groups or categories, as the
Committee deems appropriate. With respect to participants not subject to
Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may
delegate to appropriate personnel of the Company its authority to designate
participants, to determine the size and type of Incentives to be received by
those participants and to determine or modify performance objectives for those
participants. Outside Directors may participate in the Plan only as
specifically provided in Section 8 hereof.
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4. TYPES OF INCENTIVES. Incentives may be granted under the Plan to
eligible participants in the forms of (a) incentive stock options; (b) non-
qualified stock options; and (c) restricted stock.
5. SHARES SUBJECT TO THE PLAN.
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
9.5, a total of 3,000,000 shares of Common Stock are authorized to be
issued under the Plan. Incentives with respect to no more than 500,000
shares of Common Stock may be granted through the Plan to a single
participant in one calendar year. In the event that a stock option granted
hereunder expires or is terminated or cancelled prior to exercise, any
shares of Common Stock that were issuable thereunder may again be issued
under the Plan. In the event that shares of restricted stock are issued as
Incentives under the Plan and thereafter are forfeited such forfeited
shares may again be issued under the Plan. Additional rules for
determining the number of shares granted under the Plan may be made by the
Committee, as it deems necessary or appropriate.
5.2. TYPE OF COMMON STOCK. Common Stock issued under the Plan may be
authorized and unissued shares or issued shares held as treasury shares.
6. STOCK OPTIONS. A stock option is a right to purchase shares of Common
Stock from Tidewater. Stock options granted under this Plan may be incentive
stock options or non-qualified stock options. Any option that is designated as
a non-qualified stock option shall not be treated as an incentive stock option.
Each stock option granted by the Committee under this Plan shall be subject to
the following terms and conditions:
6.1. PRICE. The exercise price per share shall be determined by the
Committee, subject to adjustment under Section 9.5; provided that in no
event shall the exercise price be less than the Fair Market Value of a
share of Common Stock on the date of grant, except that in connection with
an acquisition, consolidation, merger or other extraordinary transaction,
options may be granted at less than the then Fair Market Value in order to
replace options previously granted by one or more parties to such
transaction (or their affiliates) so long as the aggregate spread on such
replacement options for any recipient of such options is equal to or less
than the aggregate spread on the options being replaced.
6.2. NUMBER. The number of shares of Common Stock subject to the
option shall be determined by the Committee, subject to Section 5.1 and
subject to adjustment as provided in Section 9.5.
6.3. DURATION AND TIME FOR EXERCISE. The term of each stock option
shall be determined by the Committee. Each stock option shall become
exercisable at such time or times during its term as shall be determined by
the Committee. Notwithstanding the foregoing, the Committee may accelerate
the exercisability of any stock option at any time, in addition to the
automatic acceleration of stock options under Section 9.11.
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6.4. MANNER OF EXERCISE. A stock option may be exercised, in whole
or in part, by giving written notice to the Company, specifying the number
of shares of Common Stock to be purchased. The exercise notice shall be
accompanied by the full purchase price for such shares. The option price
shall be payable in United States dollars and may be paid by (a) cash; (b)
uncertified or certified check; (c) unless otherwise determined by the
Committee, by delivery of shares of Common Stock held by the optionee for
at least six months, which shares shall be valued for this purpose at the
Fair Market Value on the business day immediately preceding the date such
option is exercised; (d) unless otherwise determined by the Committee,
through arrangements with a brokerage firm under which such firm, on behalf
of the optionee, will pay the exercise price to the Company and the Company
will promptly deliver to such firm the number of shares of Common Stock
subject to the option so that the firm may sell such shares, or a portion
thereof, for the account of the optionee, or (e) in such other manner as
may be authorized from time to time by the Committee.
6.5. INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan
to the contrary, the following additional provisions shall apply to the
grant of stock options that are intended to qualify as Incentive Stock
Options (as such term is defined in Section 422 of the Code):
A. Any Incentive Stock Option agreement authorized under the
Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain or
be deemed to contain all provisions required in order to qualify the
options as Incentive Stock Options.
B. All Incentive Stock Options must be granted within ten years
from the date on which this Plan is adopted by the Board of Directors.
C. Unless sooner exercised, all Incentive Stock Options shall
expire no later than ten years after the date of grant.
D. No Incentive Stock Options shall be granted to any
participant who, at the time such option is granted, would own (within
the meaning of Section 422 of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of the
employer corporation or of its parent or subsidiary corporation.
E. The aggregate Fair Market Value (determined with respect to
each Incentive Stock Option as of the time such Incentive Stock Option
is granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a participant during any
calendar year (under the Plan or any other plan of Tidewater or any of
its subsidiaries) shall not exceed $100,000. To the extent that such
limitation is exceeded, such options shall not be treated, for federal
income tax purposes, as Incentive Stock Options.
7. RESTRICTED STOCK.
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7.1. GRANT OF RESTRICTED STOCK. The Committee may award shares of
restricted stock to such officers and key employees as the Committee
determines pursuant to the terms of Section 3. An award of restricted
stock shall be subject to such restrictions on transfer and forfeitability
provisions and such other terms and conditions as the Committee may
determine, subject to the provisions of the Plan. An award of restricted
stock may also be subject to the attainment of specified performance goals
or targets. To the extent restricted stock is intended to qualify as
performance-based compensation under Section 162(m) of the Code, it must be
granted subject to the attainment of performance goals as described in
Section 7.2 below and meet the additional requirements imposed by Section
162(m).
7.2 PERFORMANCE-BASED RESTRICTED STOCK. To the extent that
restricted stock granted under the Plan is intended to vest based upon the
achievement of pre-established performance goals rather than solely upon
continued employment over a period of time, the performance goals pursuant
to which the restricted stock shall vest shall be any or a combination of
the following performance measures: earnings per share, return on assets,
an economic value added measure, shareholder return, earnings, stock price,
return on equity, return on total capital, safety performance, reduction of
expenses or increase in cash flow of Tidewater, a division of Tidewater or
a subsidiary. For any performance period, such performance objectives may
be measured on an absolute basis or relative to a group of peer companies
selected by the Committee, relative to internal goals or relative to
levels attained in prior years. The Committee may not waive any of the
pre-established performance goal objectives, except that such objectives
shall be waived as provided in Section 9.11 hereof, or as may be provided
by the Committee in the event of death, disability or retirement.
7.3. THE RESTRICTED PERIOD. At the time an award of restricted stock
is made, the Committee shall establish a period of time during which the
transfer of the shares of restricted stock shall be restricted (the
"Restricted Period"). The Restricted Period shall be a minimum of three
years, except that if the vesting of the shares of restricted stock is
based upon the attainment of performance goals, a minimum Restricted Period
of one year is permitted. Each award of restricted stock may have a
different Restricted Period. The expiration of the Restricted Period shall
also occur as provided under Section 9.3 and under the conditions described
in Section 9.11 hereof.
7.4. ESCROW. The participant receiving restricted stock shall enter
into an Incentive Agreement with the Company setting forth the conditions
of the grant. Certificates representing shares of restricted stock shall
be registered in the name of the participant and deposited with the
Company, together with a stock power endorsed in blank by the participant.
Each such certificate shall bear a legend in substantially the following
form:
The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including
conditions of forfeiture) contained in the Tidewater Inc. 1997 Stock
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Incentive Plan (the "Plan"), and an agreement entered into between the
registered owner and Tidewater Inc. thereunder. Copies of the Plan
and the agreement are on file at the principal office of the Company.
7.5. DIVIDENDS ON RESTRICTED STOCK. Any and all cash and stock
dividends paid with respect to the shares of restricted stock shall be
subject to any restrictions on transfer, forfeitability provisions or
reinvestment requirements as the Committee may, in its discretion,
prescribe in the Incentive Agreement.
7.6. FORFEITURE. In the event of the forfeiture of any shares of
restricted stock under the terms provided in the Incentive Agreement
(including any additional shares of restricted stock that may result from
the reinvestment of cash and stock dividends, if so provided in the
Incentive Agreement), such forfeited shares shall be surrendered and the
certificates cancelled. The participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions, with respect
to any additional shares received pursuant to Section 9.5 due to a
recapitalization, merger or other change in capitalization.
7.7. EXPIRATION OF RESTRICTED PERIOD. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to the
restricted stock shall lapse and a stock certificate for the number of
shares of restricted stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions and legends,
except any that may be imposed by law, to the participant or the
participant's estate, as the case may be.
7.8. RIGHTS AS A SHAREHOLDER. Subject to the terms and conditions of
the Plan and subject to any restrictions on the receipt of dividends that
may be imposed in the Incentive Agreement, each participant receiving
restricted stock shall have all the rights of a shareholder with respect to
shares of stock during the Restricted Period, including without limitation,
the right to vote any shares of Common Stock.
8. STOCK OPTIONS FOR OUTSIDE DIRECTORS.
8.1 GRANT OF OPTIONS. Beginning with the 1997 annual meeting of
stockholders and for as long as the Plan remains in effect and shares of
Common Stock remain available for issuance hereunder, each Outside Director
shall be automatically granted a non-qualified stock option on the day of
the annual meeting of stockholders of Tidewater, provided such Outside
Director continues to serve as a director following such annual meeting.
An option to purchase no more than 5,000 shares shall be granted to each
Outside Director each year, the exact number of which shall be set by the
Committee.
8.2 EXERCISABILITY OF STOCK OPTIONS. The stock options granted to
Outside Directors under this Section 8 shall become exercisable six months
following the date of grant and shall expire ten years following the date
of grant.
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8.3 EXERCISE PRICE. The Exercise Price of the Stock Options granted
to Outside Directors shall be equal to the Fair Market Value, as defined in
the Plan, of a share of Common Stock on the date of grant. The Exercise
Price may be paid as provided in Section 6.4 hereof.
8.4 EXERCISE AFTER TERMINATION OF BOARD SERVICE. In the event an
Outside Director ceases to serve on the Board, the stock options granted
hereunder must be exercised, to the extent otherwise exercisable at the
time of termination of Board service, within one year from termination of
Board service; provided, however, that in the event of termination of Board
service as a result of retirement on or after reaching age 65, death or
disability, the stock options must be exercised within two years from the
date of termination of Board service; and further provided, that no stock
options may be exercised later than ten years after the date of grant.
9. GENERAL.
9.1. DURATION. Subject to Section 9.10, the Plan shall remain in
effect until all Incentives granted under the Plan have either been
satisfied by the issuance of shares of Common Stock or the payment of cash
or been terminated under the terms of the Plan and all restrictions imposed
on shares of Common Stock in connection with their issuance under the Plan
have lapsed.
9.2. TRANSFERABILITY. No Incentives granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a participant
except: (a) by will; (b) by the laws of descent and distribution; (c)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Incentive Agreement or an
amendment thereto; or (d) as to options only, if permitted by the Committee
and so provided in the Incentive Agreement or an amendment thereto, (i) to
Immediate Family Members, (ii) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the sole owners,
members or beneficiaries, as appropriate, are the sole partners, (iii) to a
limited liability company in which Immediate Family Members, or entities in
which Immediate Family Members are the sole owners, members or
beneficiaries, as appropriate, are the sole members, or (iv) to a trust for
the sole benefit of Immediate Family Members. "Immediate Family Members"
shall be defined as the spouse and natural or adopted children or
grandchildren of the participant and their spouses. To the extent that an
Incentive Stock Option is permitted to be transferred during the lifetime
of the participant, it shall be treated thereafter as a nonqualified stock
option. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Incentives, or levy of attachment or similar process upon
Incentives not specifically permitted herein, shall be null and void and
without effect.
9.3. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. Except as provided
in Section 8.4 with respect to Outside Directors, in the event that a
participant ceases to be an employee of the Company for any reason,
including death, disability, early retirement or normal retirement, any
Incentives may be exercised, shall vest or shall expire at such times as
may be determined by the Committee in the Incentive Agreement. The
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Committee has complete authority to modify the treatment of an Incentive in
the event of termination of employment of a participant by means of an
amendment to the Incentive Agreement. Consent of the participant to the
modification is required only if the modification materially impairs the
rights previously provided to the participant in the Incentive Agreement.
9.4. ADDITIONAL CONDITION. Anything in this Plan to the contrary
notwithstanding: (a) the Company may, if it shall determine it necessary
or desirable for any reason, at the time of award of any Incentive or the
issuance of any shares of Common Stock pursuant to any Incentive, require
the recipient of the Incentive, as a condition to the receipt thereof or to
the receipt of shares of Common Stock issued pursuant thereto, to deliver
to the Company a written representation of present intention to acquire the
Incentive or the shares of Common Stock issued pursuant thereto for his own
account for investment and not for distribution; and (b) if at any time the
Company further determines, in its sole discretion, that the listing,
registration or qualification (or any updating of any such document) of any
Incentive or the shares of Common Stock issuable pursuant thereto is
necessary on any securities exchange or under any federal or state
securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions imposed
on such shares, such Incentive shall not be awarded or such shares of
Common Stock shall not be issued or such restrictions shall not be removed,
as the case may be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
9.5. ADJUSTMENT. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations,
there shall be substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to restrictions, options or
achievement of performance objectives, the number and kind of shares of
stock or other securities to which the holders of the shares of Common
Stock will be entitled pursuant to the transaction. In the event of any
recapitalization, stock dividend, stock split, combination of shares or
other change in the Common Stock, the number of shares of Common Stock then
subject to the Plan, including shares subject to outstanding Incentives,
shall be adjusted in proportion to the change in outstanding shares of
Common Stock. In the event of any such adjustments, the purchase price of
any option, the performance objectives of any Incentive, and the shares of
Common Stock issuable pursuant to any Incentive shall be adjusted as and to
the extent appropriate, in the reasonable discretion of the Committee, to
provide participants with the same relative rights before and after such
adjustment. No substitution or adjustment shall require the Company to
issue a fractional share under this Plan and the substitution or adjustment
shall be limited by deleting any fractional share.
9.6. INCENTIVE AGREEMENTS. The terms of each Incentive shall be
stated in an agreement approved by the Committee.
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9.7. WITHHOLDING.
A. The Company shall have the right to withhold from any
payments made under the Plan or to collect as a condition of payment,
any taxes required by law to be withheld. At any time that a
participant is required to pay to the Company an amount required to be
withheld under applicable income tax laws in connection with the
issuance of Common Stock, the lapse of restrictions on Common Stock or
the exercise of an option, the participant may, subject to disapproval
by the Committee, satisfy this obligation in whole or in part by
electing (the "Election") to have the Company withhold shares of
Common Stock having a value equal to the amount required to be
withheld. The value of the shares to be withheld shall be based on
the Fair Market Value of the Common Stock on the date that the amount
of tax to be withheld shall be determined ("Tax Date").
B. Each Election must be made prior to the Tax Date. The
Committee may disapprove of any Election, may suspend or terminate the
right to make Elections, or may provide with respect to any Incentive
that the right to make Elections shall not apply to such Incentive.
If a participant makes an election under Section 83(b) of the Internal
Revenue Code with respect to shares of restricted stock, an Election
is not permitted to be made.
9.8. NO CONTINUED EMPLOYMENT. No participant under the Plan shall
have any right, because of his or her participation, to continue in the
employ of the Company for any period of time or to any right to continue
his or her present or any other rate of compensation.
9.9. DEFERRAL PERMITTED. Payment of cash or distribution of any
shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive Agreement. Payment
may be deferred at the option of the participant if provided in the
Incentive Agreement.
9.10. AMENDMENTS TO OR TERMINATION OF THE PLAN.
A. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that no amendment shall be made
without stockholder approval if such approval is necessary to comply
with any tax or regulatory requirement, including any approval
necessary to qualify Incentives as "performance-based" compensation
under Section 162(m) or any successor provision, if such qualification
is deemed necessary or advisable by the Committee.
B. Any provision of this Plan or any Incentive Agreement to the
contrary notwithstanding, the Committee may cause any Incentive
granted hereunder to be cancelled in consideration of a cash payment
or alternative Incentive made to the holder of such cancelled
Incentive equal in value to such
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cancelled Incentive. The determinations of value under this
subparagraph shall be made by the Committee in its sole discretion.
9.11. CHANGE OF CONTROL; TENDER OFFER OR EXCHANGE OFFER.
A. "Change of Control" shall mean:
1. the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934
Act of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than 30% of the
outstanding shares of the Common Stock; provided, however, that
for purposes of this subsection 1., the following shall not
constitute a Change of Control:
(a) any acquisition of Common Stock directly from
Tidewater,
(b) any acquisition of Common Stock by Tidewater,
(c) any acquisition of Common Stock by any employee
benefit plan (or related trust) sponsored or maintained by
Tidewater or any corporation controlled by Tidewater, or
(d) any acquisition of Common Stock by any corporation
pursuant to a transaction that complies with clauses (a),
(b) and (c) of subsection (A)(3) of this Section 9.11; or
2. individuals who, as of the date of adoption of the Plan
by the Board of Directors of Tidewater (the "Adoption Date"),
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the Adoption Date whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Incumbent Board; or
3. approval by the stockholders of Tidewater of a
reorganization, merger or consolidation, or sale or other
disposition of all of substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination,
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(a) all or substantially all of the individuals and
entities who were the beneficial owners of Tidewater's
outstanding common stock and Tidewater's voting securities
entitled to vote generally in the election of directors
immediately prior to such Business Combination have direct
or indirect beneficial ownership, respectively, of more than
50% of the then outstanding shares of common stock, and more
than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, of the corporation resulting from
such Business Combination (which, for purposes of this
paragraph (a) and paragraphs (b) and (c), shall include a
corporation which as a result of such transaction controls
the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries),
and
(b) except to the extent that such ownership existed
prior to the Business Combination, no person (excluding any
corporation resulting from such Business Combination or any
employee benefit plan or related trust of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of
the then outstanding shares of common stock of the
corporation resulting from such Business Combination or 30%
or more of the combined voting power of the then outstanding
voting securities of such corporation, and
(c) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
4. approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
B. Upon a Change of Control, all outstanding options shall
automatically become fully exercisable, all restrictions or
limitations on any Incentives shall lapse and all performance criteria
and other conditions relating to the payment of Incentives shall be
deemed to be achieved or waived by the Company, without the necessity
of any action by any person.
C. If any corporation, person or other entity (other than the
Company) makes a tender offer or exchange offer for shares of the
Common Stock pursuant to which purchases are made (an "Offer"), then
from and after the date of the first purchase of the Common Stock
pursuant to the Offer (the "Acceleration Date"), all outstanding
options shall automatically become fully exercisable, all
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restrictions or limitations on any Incentives shall lapse and all
performance criteria and other conditions relating to the payment of
Incentives shall be deemed to be achieved or waived by the Company,
without the necessity of any action by any person, for a period of 30
calendar days following the Acceleration Date. Subject to the other
provisions of this Section 9.11, following the expiration of the 30-
day period, any options not exercised and any shares of Common Stock
issued hereunder not tendered or exchanged shall again be subject to
the terms and conditions applicable prior to the Offer.
9.12. DEFINITION OF FAIR MARKET VALUE. Whenever "Fair Market Value"
of Common Stock shall be determined for purposes of this Plan, it shall be
the closing sale price on the consolidated transaction reporting system for
New York Stock Exchange issues on the date of reference for a share of the
Common Stock, or if no sale of the Common Stock shall have been made on
that day, on the next preceding day on which there was a sale of the Common
Stock.
9.13 LOANS TO OPTIONEES. In the event of a Change of Control of the
Company, as defined in Section 9.11, in connection with which a
participant's employment with the Company will be terminated and the
participant is precluded for any reason from selling shares of Common
Stock, the Company shall, in connection with the exercise of an option, if
requested by the participant, extend a loan to the participant in the
maximum amount of the exercise price of the options to be exercised, plus
the maximum tax liability that may be incurred in connection with the
option exercise. Any such loan shall be unsecured, shall be on market
terms and shall be payable in full no later than thirty days after the
termination of the period during which the participant is precluded from
selling shares of Common Stock. Any participant to whom a loan is extended
hereunder shall, if requested by the Company, agree in writing not to sell
shares of Common Stock for such period as shall be requested, it being
understood that the Company's request that the participant not sell shares
of Common Stock shall only be invoked to the extent necessary to preserve
or recognize pooling-of-interests accounting treatment, tax-free
reorganization status, or comparable corporate benefits from making such a
request.
-11-
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
------ ----------------- ------------
<S> <C> <C>
Al Wasl Marine LLC....................................................... Dubai 49%
Antilles Marine Service Limited.......................................... Trinidad and Tobago 50%
Asie Zapata Marine Service Sdn. Bhd...................................... Malaysia 49%
BESSA Cash Backed PLC.................................................... England 100%
BESSA Cash Backed II PLC................................................. England 100%
BESSA Cash Backed III PLC................................................ England 100%
Compania Maritima de Magallanes Limitada................................. Chile 100%
Divetide Limited......................................................... Thailand 100%
Equipo Mara, C.A......................................................... Venezuela 19.9%
Equipo Zulia, C.A........................................................ Venezuela 100%
Fairway Personnel Services Limited....................................... England 100%
Four Star Marine, Inc.................................................... Louisiana 49%
Gulf Fleet Abu Dhabi..................................................... Abu Dhabi 49%
Gulf Fleet Middle East, Inc.............................................. Panama 100%
Gulf Fleet N.V........................................................... Netherlands Antilles 100%
Gulf Fleet Supply Vessels, Inc........................................... Louisiana 100%
Hansa Shipping, Inc...................................................... Panama 100%
Hilliard Oil & Gas, Inc.................................................. Nevada 100%
Hornbeck Shipping Limited................................................ Isle of Man 100%
International Oceanic Navigation Company, Inc............................ Panama 100%
Jackson Marine Corporation............................................... Delaware 100%
Jackson Marine, S.A...................................................... Panama 100%
Java Boat Corporation.................................................... Louisiana 100%
Lamnalco-Tidewater Marine Service Limited................................ Vanuatu 50%
Maritide Offshore Oil Services Company S.A.E............................. Egypt 49%
Mashhor Marine Sdn. Bhd.................................................. Brunei 70%
Matchmobile Limited...................................................... England 100%
Mightmethod Limited...................................................... England 100%
Neatern Limited.......................................................... England 100%
Nuigini Energy Services (unincorporated)................................. New Guinea 50%
Offshore Pacific Pty. Ltd................................................ Vanuatu 50%
O.I.L. Limited........................................................... England 100%
O.I.L. (Nigeria) Limited................................................. Nigeria 82.1%
OSA do Brasil Representacoes Ltda........................................ Brazil 100%
OSA Marine Services (Asia) Pte. Limited.................................. Singapore 100%
OSA Marine Services GmbH................................................. Germany 100%
OTTTO Limited............................................................ England 100%
Pacific Tidewater Pty. Ltd............................................... Australia 100%
Pan-Marine do Brasil Transportes Ltda.................................... Brazil 100%
Pan Marine International, Inc............................................ Cayman Islands 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
------ ----------------- ------------
<S> <C> <C>
Parktor Shipping NV...................................................... Netherlands Antilles 100%
Pental Insurance Co. Ltd................................................. Bermuda 100%
Point Marine, Inc........................................................ Louisiana 100%
Provident Marine Ltd..................................................... Turks & Caicos Islands 50%
Quality Shipyards, Inc................................................... Louisiana 100%
Remolcadores y Gabarras Remigasa, S.A.................................... Venezuela 19.9%
Seafarer Boat Corporation................................................ Louisiana 100%
Servicios de Abastecimientos Mexicanos, S. de R.L. de C.V................ Mexico 100%
Servicios Maritimos del Carmen, S.A. de C.V.............................. Mexico 100%
Servicios Maritimos Ves, S. de R.L. de C.V............................... Mexico 100%
Servicios y Representaciones Maritimas Mexicanas, S.A. de C.V. Mexico 100%
Sin-Hai Offshore Co. Pte. Ltd............................................ Singapore 97.5%
Solo Fleet Sdn. Bhd...................................................... Malaysia 49%
Solo Fleet Two Sdn. Bhd.................................................. Malaysia 49%
Solo Support Services Sdn. Bhd........................................... Malaysia 30%
Sonatide Marine, Ltd..................................................... Cayman Islands 49%
S.O.P., Inc.............................................................. Louisiana 100%
Southern Ocean Services Pte. Ltd......................................... Singapore 100%
Sunset Personnel Services Limited........................................ Cyprus 49.9%
T. Benetee Corporation................................................... Delaware 100%
Thabet and O.I.L. Co. Ltd................................................ Yemen 30%
Thai OSA Services Limited................................................ Thailand 49%
The National Marine Services Company..................................... Abu Dhabi 40%
Tidewater Australia Pte. Ltd............................................. Australia 100%
Tidewater Caribe, C.A.................................................... Venezuela 100%
Tidewater Crewing Limited................................................ Cayman Islands 100%
Tidewater Foreign Sales Corporation...................................... Barbados 100%
Tidewater Marine Alaska, Inc............................................. Alaska 100%
Tidewater Marine, Inc.................................................... Louisiana 100%
Tidewater Marine International, Inc...................................... Panama 100%
Tidewater Marine International Pte. Ltd.................................. Singapore 100%
Tidewater Marine (IOM) Limited........................................... Isle of Man 100%
Tidewater Marine (Malaysia) Sdn. Bhd..................................... Malaysia 100%
Tidewater Marine North Sea Limited....................................... England 100%
Tidewater Marine Service, C.A. (SEMARCA)................................. Venezuela 100%
Tidewater Marine Service, Inc............................................ Louisiana 100%
Tidewater Marine West Indies Limited..................................... Bahama Islands 100%
Tidewater Marine Western, Inc............................................ Texas 100%
Tidewater Offshore (GP-1984), Inc........................................ Delaware 100%
Tidewater Offshore Limited............................................... Scotland 100%
Tidewater Port Jackson Marine Pty. Limited............................... Australia 100%
Tidewater Venezuela, C.A................................................. Venezuela 100%
Tidex (Malaysia) Sdn. Bhd................................................ Malaysia 100%
Tidex Nigeria Limited.................................................... Nigeria 60%
Tidex/OTS Nigeria Limited (unincorporated)............................... Nigeria 50%
TT Boat Corporation...................................................... Louisiana 100%
Twenty Grand Marine Service, Inc......................................... Louisiana 100%
Twenty Grand Offshore, Inc............................................... Louisiana 100%
VTG Supply Boat Liberia Inc.............................................. Liberia 100%
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
------ ----------------- ------------
<S> <C> <C>
Zapata Gulf Crews, Inc................................................... Panama 100%
Zapata Gulf Indonesia Limited............................................ Vanuatu 80%
Zapata Gulf Marine Corporation........................................... Delaware 100%
Zapata Gulf Marine International Limited................................. Vanuatu 100%
Zapata Gulf Marine Operators, Inc........................................ Delaware 100%
Zapata Gulf Pacific, Inc................................................. Delaware 100%
Zapata Marine Service (Nigeria) Limited.................................. Nigeria 100%
Zapata Servicos Maritimos Ltda........................................... Brazil 100%(1)
Zhong Chang Offshore Marine Service Company Ltd.......................... China 50%
</TABLE>
(1) Includes Zapata Gulf Marine Corporation's ownership of 15% of the capital
stock and Gulf Fleet Supply Vessels, Inc.'s ownership of 3% of the capital
stock.
-3-
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to 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 April 27, 1998, with respect to the
consolidated financial statements and schedule of Tidewater Inc. included in
this Annual Report (Form 10-K) for the year ended March 31, 1998.
Ernst & Young LLP
New Orleans, Louisiana
May 1, 1998
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Tidewater Inc.:
We consent to the incorporation by reference in the Registration Statements (No.
33-63094, 33-38240, 333-32729, and 333-47687) on Form S-8 of Tidewater Inc. of
our report dated April 30, 1997, relating to the consolidated balance sheet of
Tidewater Inc. and subsidiaries as of March 31, 1997, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the years in the two-year period ended March 31, 1997, and all related
schedules, which report appears in the March 31, 1998, annual report on Form 10-
K of Tidewater Inc.
KPMG Peat Marwick LLP
New Orleans, Louisiana
May 1, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets and the 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. Financial information for the years ended March 31, 1997
and 1996 has been restated to conform to the requirements of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." In addition, as a
result of the sale of the company's compression division on February 20, 1998,
the financial information for the years ended March 31, 1997 and 1996 has been
reclassified to report separately financial position and results of operations
from continuing operations and the discontinued compression operations.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1996 MAR-31-1997 MAR-31-1998
<PERIOD-START> APR-1-1995 APR-1-1996 APR-1-1997
<PERIOD-END> MAR-31-1996 MAR-31-1997 MAR-31-1998
<EXCHANGE-RATE> 1.00 1.00 1.00
<CASH> 28,734 41,166 24,977
<SECURITIES> 0 0 0
<RECEIVABLES> 140,931 186,843 272,595
<ALLOWANCES> 7,866 10,330 14,078
<INVENTORY> 23,428 28,171 31,498
<CURRENT-ASSETS> 188,794 249,653 319,114
<PP&E> 1,236,591 1,290,853 1,568,835
<DEPRECIATION> 808,027 827,710 863,209
<TOTAL-ASSETS> 974,410 1,061,280 1,492,839
<CURRENT-LIABILITIES> 81,890 90,046 204,207
<BONDS> 0 0 25,000
0 0 0
0 0 0
<COMMON> 6,188 6,033 5,948
<OTHER-SE> 732,562 763,631 992,828
<TOTAL-LIABILITY-AND-EQUITY> 974,410 1,061,280 1,492,839
<SALES> 532,202 690,426 1,060,161
<TOTAL-REVENUES> 532,202 690,426 1,060,161
<CGS> 432,507 495,443 697,444
<TOTAL-COSTS> 432,507 495,443 697,444
<OTHER-EXPENSES> 12,600 2,800 6,847
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 2,176 1,000 24,677
<INCOME-PRETAX> 100,028 204,074 356,468
<INCOME-TAX> 30,525 65,839 113,430
<INCOME-CONTINUING> 69,503 138,235 243,038
<DISCONTINUED> 6,674 7,776 72,461
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 76,177 146,011 315,499
<EPS-PRIMARY> 1.24 2.37 5.21
<EPS-DILUTED> 1.23 2.35 5.18
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets and the 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. Financial information for the periods presented has been
restated to conform to the requirements of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." In addition, as a result of the sale of
the company's compression division on February 20, 1998, the financial
information for all periods presented has been reclassified to report separately
financial position and results of operations from continuing operations and the
discontinued compression operations.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> 1.00
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1998
<PERIOD-START> APR-01-1997 APR-01-1997
<PERIOD-END> JUN-30-1997 SEP-30-1997
<EXCHANGE-RATE> 1.00 1.00
<CASH> 27,123 33,079
<SECURITIES> 0 0
<RECEIVABLES> 245,402 254,032
<ALLOWANCES> 10,564 11,717
<INVENTORY> 29,463 29,907
<CURRENT-ASSETS> 298,396 310,891
<PP&E> 1,563,636 1,582,098
<DEPRECIATION> 832,433 844,124
<TOTAL-ASSETS> 1,722,819 1,736,110
<CURRENT-LIABILITIES> 227,158 205,256
<BONDS> 422,690 387,083
0 0
0 0
<COMMON> 6,038 6,075
<OTHER-SE> 806,127 869,757
<TOTAL-LIABILITY-AND-EQUITY> 1,722,819 1,736,110
<SALES> 230,440 500,853
<TOTAL-REVENUES> 230,440 500,853
<CGS> 158,098 331,479
<TOTAL-COSTS> 158,098 331,479
<OTHER-EXPENSES> 0 8,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,504 13,195
<INCOME-PRETAX> 72,760 158,986
<INCOME-TAX> 24,624 49,797
<INCOME-CONTINUING> 48,136 109,189
<DISCONTINUED> 2,625 5,901
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 50,761 115,090
<EPS-PRIMARY> .84 1.90
<EPS-DILUTED> .84 1.90
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets and the 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. Financial information for the periods presented has been
restated to conform to the requirements of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." In addition, as a result of the sale of
the company's compression division on February 20, 1998, the financial
information for all periods presented has been reclassified to report separately
financial position and results of operations from continuing operations and the
discontinued compression operations.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997 MAR-31-1997
<PERIOD-START> APR-01-1996 APR-01-1996 APR-01-1996
<PERIOD-END> JUN-30-1996 SEP-30-1996 DEC-31-1996
<EXCHANGE-RATE> 1.00 1.00 1.00
<CASH> 34,326 28,561 12,207
<SECURITIES> 0 6,188 41,687
<RECEIVABLES> 162,231 166,206 178,267
<ALLOWANCES> 7,787 7,663 7,483
<INVENTORY> 24,553 24,749 27,303
<CURRENT-ASSETS> 216,932 221,267 255,180
<PP&E> 1,289,004 1,296,931 1,295,029
<DEPRECIATION> 808,222 815,206 823,665
<TOTAL-ASSETS> 1,028,293 1,032,987 1,054,468
<CURRENT-LIABILITIES> 117,620 91,300 96,470
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 6,200 6,202 6,140
<OTHER-SE> 751,347 775,432 780,725
<TOTAL-LIABILITY-AND-EQUITY> 1,028,293 1,032,987 1,054,468
<SALES> 146,639 314,330 498,463
<TOTAL-REVENUES> 146,639 314,330 498,463
<CGS> 116,683 240,657 366,542
<TOTAL-COSTS> 116,683 240,657 366,542
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 409 526 648
<INCOME-PRETAX> 32,303 77,990 139,332
<INCOME-TAX> 10,139 24,587 44,797
<INCOME-CONTINUING> 22,164 53,403 94,535
<DISCONTINUED> 2,206 3,919 5,957
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 24,370 57,322 100,492
<EPS-PRIMARY> .39 .92 1.62
<EPS-DILUTED> .39 .92 1.61
</TABLE>
