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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, 1999
[_] 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.)
601 Poydras Street, New Orleans, Louisiana 70130
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(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
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Common Stock, par value $0.10 New York Stock Exchange, Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange, Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.
Yes [X] No [_]
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 22, 1999, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $1,444,000,000. Excluded from
the calculation of market value are 4,985,860 shares held by the Registrant's
grantor stock ownership trust.
55,580,997 shares of Tidewater Inc. common stock $0.10 par value per share
were outstanding on April 22, 1999. Excluded from the calculation of shares
outstanding at April 22, 1999 are 4,985,860 shares held by the Registrant's
grantor stock ownership trust. Registrant has no other class of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 1999 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................. 6
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
7A. Quantitative and Qualitative Disclosures About Market Risk.......... 17
8. Financial Statements and Supplementary Data......................... 17
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................... 17
PART III
10. Directors and Executive Officers of the Registrant.................. 18
11. Executive Compensation.............................................. 18
12. Security Ownership of Certain Beneficial Owners and Management...... 18
13. Certain Relationships and Related Transactions...................... 18
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 18
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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 601 Poydras Street, New
Orleans, Louisiana 70130, 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.
On February 20, 1998 the company completed the all cash sale of its compression
division for approximately $348 million. 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.). 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. 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. Approximate 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. 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 685 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)
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1999 1998 1997
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Revenues:
Vessel operations:
United States $ 296,161 463,914 338,823
International 614,887 537,737 322,401
Other marine operations 57,944 58,510 29,202
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$ 968,992 1,060,161 690,426
==============================================================
Operating profit:
Vessel operations:
United States $ 96,376 225,599 120,275
International 171,213 141,133 82,591
Other marine operations 12,526 10,663 4,186
Gain on sales of assets 2,949 16,592 5,352
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$ 283,064 393,987 212,404
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Identifiable assets:
United States $ 315,509 380,043 376,380
International 990,062 1,064,681 354,561
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Total marine assets $1,305,571 1,444,724 730,941
==============================================================
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,
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1999 1998 1997
---- ---- ----
Towing-supply/Supply... 73.3% 75.7% 70.2%
Offshore Tugs.......... 12.7% 11.9% 15.3%
Crew/Utility........... 6.9% 6.3% 6.5%
Safety/Standby......... 5.7% 4.6% 5.3%
Other.................. 1.4% 1.5% 2.7%
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Shipyards. Quality Shipyards, Inc., a wholly-owned subsidiary of the
company, operates two shipyards in Houma, Louisiana, which construct, modify and
repair vessels. Approximately 48% of the shipyards' business for the year ended
March 31, 1999 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. Fiscal year 1999 company activity has been significantly
affected by the downturn in activity and spending in the oil industry resulting
from the drop in the price of oil which began in the Fall of 1997. A discussion
of current market conditions appears under "Business Overview" in Item 7 of this
report.
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 8% and the five largest customers
accounted for approximately 24% of its revenues during the year ended March 31,
1999, the company does not consider its operations dependent on any single
customer.
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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 3.9% of
the company's outstanding common stock was owned by non-U.S. citizens as of
March 31, 1999.
The company's vessels are subject to various statutes and regulations
governing their operation. The laws of the United States provide that once a
vessel is registered under a flag other than the United States, it cannot
thereafter engage in U.S. coastwise trade. Therefore, the company's non-U.S.
flag vessels must continue to be operated abroad, and if the company were not
able to secure charters abroad for them, and work would otherwise have been
available for them in the United States, its operations would be adversely
affected. Of the total 685 vessels owned or operated by the company at March 31,
1999, 379 were registered under flags other than the United States and 306 were
registered under the U.S. flag.
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 adverse effect on the company.
EMPLOYEES
As of March 31, 1999, the company had approximately 8,100 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.
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 1999.
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
---- --- --------
William C. O'Malley....... 62 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....... 60 Executive Vice President since 1992.
Ken C. Tamblyn............ 55 Executive Vice President since 1992.
Cliffe F. Laborde......... 47 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, 1999, there were
approximately 2,356 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
- --------------------------------------------------------
1999 First $44.375 $31.875 $.15
Second 33.813 20.750 .15
Third 30.188 17.563 .15
Fourth 26.563 18.688 .15
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
- --------------------------------------------------------
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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.
<TABLE>
<CAPTION>
Years Ended March 31
(in thousands, except ratio and per share amounts)
1999 1998(2) 1997(2) 1996 1995
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<S> <C> <C> <C> <C> <C>
Revenues:
Vessel revenues $ 911,048 1,001,651 661,224 506,180 469,751
Other marine revenues 57,944 58,510 29,202 26,022 31,367
- --------------------------------------------------------------------------------------------------------------------
$ 968,992 1,060,161 690,426 532,202 501,118
====================================================================================================================
Earnings from continuing operations $ 210,719 243,038 138,235 69,503 44,868
Earnings from discontinued operations --- 10,723 7,776 6,674 6,319
Gain on sale of discontinued operations --- 61,738 --- --- ---
- --------------------------------------------------------------------------------------------------------------------
Net earnings $ 210,719 315,499 146,011 76,177 51,187
====================================================================================================================
Per common share(1):
Earnings from continuing operations $ 3.68 3.99 2.23 1.12 .73
Earnings from discontinued operations --- .18 .12 .11 .10
Gain on sale of discontinued operations --- 1.01 --- --- ---
- --------------------------------------------------------------------------------------------------------------------
Net earnings $ 3.68 5.18 2.35 1.23 .83
====================================================================================================================
Total assets $1,394,458 1,492,839 1,061,280 974,410 926,276
====================================================================================================================
Long-term debt $ --- 25,000 --- --- 20,802
====================================================================================================================
Working capital $ 198,532 114,907 159,607 106,904 107,849
====================================================================================================================
Current ratio 3.41 1.56 2.77 2.31 2.20
====================================================================================================================
Cash dividends declared per common share $ .60 .60 .575 .475 .40
====================================================================================================================
</TABLE>
(1) 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 and 1997.
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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.). 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. 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. Goodwill of approximately
$355 million was recorded in the Consolidated Balance Sheet and is being
amortized over 40 years.
To finance the O.I.L. acquisition $500 million of debt was incurred 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 was discounted to yield interest at 7%
and has been repaid in full as of March 31, 1999. 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 was recorded in the Consolidated Balance Sheet and is
being amortized over 40 years.
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.
During fiscal 1997 the company purchased 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. The acquisition
of these vessels was accounted for using the purchase method.
The prolonged drop in oil prices over the past year and a half has resulted
in cutbacks in drilling programs adversely affecting U.S.-based vessels
throughout fiscal year 1999 and has recently begun weakening international
activity. Toward the latter part of fiscal 1998 U.S.-based vessel utilization
and day rates were the highest in company history led by the towing-
supply/supply vessels which were experiencing 90% utilization and average day
rates close to $8,000 per day. As fiscal 1999 began, oil prices were falling due
primarily to worldwide oil surpluses. Cutbacks in customer drilling programs
resulted, quickly affecting the U.S. Gulf of Mexico vessel market as the
duration of vessel contracts in this region normally range from one to three
months. U.S.-based vessel revenues for the current fiscal year have declined
approximately 36% as compared to the prior fiscal year. As of March 31, 1999,
the towing-supply/supply vessels operating in the Gulf of Mexico are
experiencing approximately 50% utilization and average day rates of
approximately $3,100 per day. This softening in domestic activity is likely to
continue for some time with the decline in the
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number of working drilling rigs. In addition the expected delivery of a number
of newly-constructed supply vessels to various industry competitors may create
an even further imbalance and/or delay a recovery in the Gulf of Mexico supply
vessel market thereby putting continued downward pressure on vessel utilization
and day rates.
International activity was not affected as dramatically during fiscal year
1999 due primarily to the long-term nature of international vessel contracts.
Utilization and day rates for international-based vessels at March 31, 1998
averaged approximately 84% and $5,100 per day, respectively. At March 31, 1999
average utilization and day rates for international-based vessels have declined
to 77% and $4,800 per day, respectively. International vessel revenues for
fiscal 1999 increased 14% over fiscal 1998 due to higher average day rates for
fiscal 1999. However, with continued weakness in oil prices, curtailments of
customer projects will likely result in lower demand for internationally-based
vessels throughout fiscal 2000.
In response to the industry downturn the following actions have been taken.
During the fourth quarter of fiscal 1999, the company began stacking and
removing from the active fleet those vessels that cannot find gainful
employment. Drydockings associated with the stacked vessels have been deferred.
Reductions in crew personnel were made and may continue throughout fiscal year
2000 as necessary.
Due to the oil industry downturn and having stacked and removed several
vessels from the active fleet during the fourth quarter, the company conducted a
review of the recoverability of the values of certain vessels. In March 1999,
the company recorded a write-down of $7.8 million to reduce the carrying value
of certain vessels.
Earnings from continuing operations fell 22% below the preceding fiscal
year's amount after eliminating the effects of unusual items in both fiscal 1999
and fiscal 1998. Fiscal 1999 earnings from continuing operations included the
following unusual items: a $5.1 million, or $.09 per common share, after-tax
write-down on certain vessels as previously discussed; and a $30 million, or
$.52 per common share, reduction in income tax expense. The reduction in income
tax expense consisted of a $2 million reduction of deferred income taxes
resulting from the lowering of United Kingdom corporate income tax rates and a
$28 million realization of foreign tax credits not previously recognized
resulting from a tax planning strategy of selling certain vessels from one
taxing jurisdiction to another through intercompany sales. The result of such
sales was to pay foreign taxes which are fully creditable on a current basis
against U.S. income taxes and the release of previously accrued deferred foreign
tax credits. Fiscal 1998 earnings from continuing operations included the
following unusual items: 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 contested U.S.
income tax issues.
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MARINE OPERATIONS
Offshore service vessels provide a diverse range of services and equipment
to the energy industry. Fleet size, utilization and vessel day rates primarily
determine the amount of revenues and operating profit because operating costs
and depreciation do not change proportionally when revenue changes. Operating
costs 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. Vessel revenues and operating costs relate to vessels owned and operated by
the company, while other marine services relate to third-party activities of the
company's shipyards, brokered vessels and other miscellaneous marine-related
activities.
(in thousands) 1999 1998 1997
- -------------------------------------------------------------------
Revenues (A):
Vessel revenues:
United States $296,161 463,914 338,823
International 614,887 537,737 322,401
- -------------------------------------------------------------------
911,048 1,001,651 661,224
Other marine revenues 57,944 58,510 29,202
- -------------------------------------------------------------------
Total revenues $968,992 1,060,161 690,426
===================================================================
Operating costs:
Vessel operating costs:
Crew costs $262,014 245,515 176,406
Repair and maintenance 132,109 140,515 96,815
Insurance 24,216 31,076 32,817
Fuel, lube and supplies 35,228 36,133 31,875
Other 38,833 32,804 23,582
- -------------------------------------------------------------------
492,400 486,043 361,495
Costs of other marine revenues 44,672 47,065 24,161
- -------------------------------------------------------------------
Total operating costs $537,072 533,108 385,656
===================================================================
(A) For fiscal 1999, fiscal 1998 and fiscal 1997 one Marine customer accounted
for 8%, 11% and 11%, respectively, of revenues.
Marine operating profit and other components of earnings from continuing
operations before income taxes for the years ended March 31 consists of the
following:
(In thousands) 1999 1998 1997
- -------------------------------------------------------------------------
Vessel activity:
United States $ 96,376 225,599 120,275
International 171,213 141,133 82,591
- -------------------------------------------------------------------------
267,589 366,732 202,866
Gain on sales of assets 2,949 16,592 5,352
Other marine services 12,526 10,663 4,186
- -------------------------------------------------------------------------
Operating profit 283,064 393,987 212,404
- -------------------------------------------------------------------------
Other income 8,439 7,079 6,705
Other expense --- (6,847) (2,800)
Corporate expenses (12,317) (13,074) (11,235)
Interest and other debt costs (2,445) (24,677) (1,000)
- -------------------------------------------------------------------------
Earnings from continuing operations
before income taxes $276,741 356,468 204,074
=========================================================================
Operating profit for fiscal year 1999 decreased as compared with the prior
year due to a decline in utilization and average day rates for U.S.-based
vessels, a decrease in the number of U.S.-based vessels and lower gains on asset
sales. These decreases were somewhat offset by an increase in average day rates
for international-based vessels. The number of U.S.-based vessels decreased
primarily because of vessels being withdrawn from active service along with some
movement of vessels to international locations. Utilization and average day
rates for U.S.-based vessels declined for the current fiscal year as the result
of reductions in customer drilling programs consequently decreasing U.S.-based
vessel operating profit by approximately 57%. Better market conditions in
certain international locations throughout most of the current
-11-
<PAGE>
fiscal year resulted in higher average day rates for international-based vessels
for the current fiscal year as compared to the preceding fiscal year. While the
average day rates for international-based vessels in the current fiscal year
have exceeded prior year day rates, utilization and day rates for both the U.S.
and international-based fleets have declined steadily throughout fiscal year
1999 as a result of the oil industry downturn. The U.S.-based fleet incurred the
most dramatic reduction. Included in gain on sales of assets is a fourth quarter
write-down of $7.8 million to reduce the carrying value of certain vessels. The
write-down resulted from a review of the recoverability of the values of certain
vessels. The review was performed due to industry conditions and having stacked
and withdrawn from the active fleet several vessels at March 31, 1999.
As a result of the uncertainty of certain customers to make payment of
vessel charter hire, the company has deferred the recognition of approximately
$9.7 million of billings as of March 31, 1999, which would otherwise have been
recognized as revenue in fiscal 1999. The company will recognize the amounts as
revenue when the uncertainty has been reduced.
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.
Fiscal 1998 other expense of $6.8 million consists of an $8 million
provision for litigation costs resulting 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. At March 31,
1999 $7.5 million has been paid in settlements relating to these alleged labor-
law pay violations. Other expense of $2.8 million for fiscal 1997 is a charge
for possible losses resulting from one of the company's insurers filing for
liquidation.
Vessel utilization is determined primarily by market conditions and to a
lesser extent by drydocking requirements. Vessel day rates are determined by the
demand created through the level of offshore exploration, development and
production spending by energy companies relative to the supply of offshore
service vessels. Suitability of equipment and the degree of service provided
also influence vessel day rates. The following tables compare day-based
utilization percentages and average day rates by vessel class and in total for
each of the quarters in the years ended March 31:
-12-
<PAGE>
UTILIZATION:
- -----------
1999 First Second Third Fourth Year
- -----------------------------------------------------------------------
Domestic-based fleet:
Towing-supply/Supply 85.4% 73.2 74.1 60.1 73.4
Crew/Utility 88.8 86.5 79.8 84.1 85.0
Offshore Tugs 61.1 55.8 50.7 38.1 51.7
Other 45.7 48.2 49.7 35.2 44.8
Total 79.9% 71.0 69.6 58.3 70.0
International-based fleet:
Towing-supply/Supply 86.3% 84.0 81.0 79.2 82.6
Crew/Utility 80.2 88.0 89.3 89.6 86.8
Offshore Tugs 76.1 71.7 74.9 70.1 73.2
Safety/Standby 80.7 84.6 78.6 75.2 79.9
Other 67.9 69.8 69.2 72.1 69.7
Total 82.2% 81.8 80.2 78.5 80.7
Worldwide fleet:
Towing-supply/Supply 85.9% 80.0 78.4 72.2 79.2
Crew/Utility 83.6 87.5 85.9 87.7 86.1
Offshore Tugs 69.6 65.2 64.8 56.8 64.2
Safety/Standby 80.7 84.6 78.6 75.2 79.9
Other 62.7 64.4 64.6 63.5 63.8
Total 81.4% 78.0 76.5 71.5 76.9
=======================================================================
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
=======================================================================
-13-
<PAGE>
AVERAGE DAY RATES:
- -----------------
1999 First Second Third Fourth Year
- ------------------------------------------------------------------------
Domestic-based fleet:
Towing-supply/Supply $7,709 6,331 4,545 4,043 5,844
Crew/Utility 2,280 2,121 2,021 2,014 2,121
Offshore Tugs 7,649 7,543 7,643 7,311 7,561
Other 3,449 3,053 2,073 2,006 2,674
Total $6,658 5,631 4,450 3,968 5,315
International-based fleet:
Towing-supply/Supply $6,523 6,643 6,562 6,229 6,495
Crew/Utility 2,447 2,406 2,428 2,399 2,419
Offshore Tugs 4,273 4,141 4,303 4,411 4,280
Safety/standby 6,541 6,351 6,201 6,014 6,291
Other 876 918 891 1,250 973
Total $5,330 5,320 5,225 5,024 5,223
Worldwide fleet:
Towing-supply/Supply $6,975 6,536 5,860 5,555 6,269
Crew/Utility 2,376 2,303 2,293 2,270 2,311
Offshore Tugs 5,558 5,341 5,396 5,218 5,388
Safety/standby 6,541 6,351 6,201 6,014 6,291
Other 1,313 1,317 1,104 1,347 1,253
Total $5,806 5,420 4,980 4,725 5,253
=========================================================================
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
=========================================================================
-14-
<PAGE>
The average age of the company's owned or chartered 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 and
the actual March 31, 1999 vessel count:
<TABLE>
<CAPTION>
Actual Vessel Average Number
Count at of Vessels During
March 31, Year Ended March 31,
- ----------------------------------------------------------------------------------------------
1999 1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic-based fleet:
Towing-supply/supply 132 137 146 140
Crew/utility 27 32 39 42
Offshore tugs 37 39 40 43
Other 10 10 10 15
- ----------------------------------------------------------------------------------------------
Total 206 218 235 240
- ----------------------------------------------------------------------------------------------
International-based fleet:
Towing-supply/supply 225 231 218 166
Crew/utility 50 55 53 37
Offshore tugs 51 53 53 52
Safety/standby 25 28 29 22
Other 33 33 35 46
- ----------------------------------------------------------------------------------------------
Total 384 400 388 323
- ----------------------------------------------------------------------------------------------
Owned or chartered vessels
included in marine revenues 590 618 623 563
Vessels withdrawn from active service 49 29 17 21
Joint-venture and other 46 48 56 52
- ----------------------------------------------------------------------------------------------
Total 685 695 696 636
- ----------------------------------------------------------------------------------------------
</TABLE>
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.
Consolidated general and administrative expenses for the years ended March
31 consists of the following components:
(In thousands) 1999 1998 1997
- ---------------------------------------------------
Personnel $44,666 43,797 32,515
Office and property 13,193 13,726 10,260
Sales and marketing 5,405 5,213 3,496
Professional service 5,587 5,065 4,548
Other 4,617 5,125 3,031
- ---------------------------------------------------
$73,468 72,926 53,850
===================================================
Higher fiscal 1998 general and administrative expenses are the result of the
O.I.L. and Australian acquisitions and higher costs associated with incentive
pay 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, 1999, all of the company's $200
million revolving line of credit was available for future 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
acquisitions, investing activities in fiscal year 1998 used cash of
approximately $45 million. Proceeds from sales of assets were higher in fiscal
year 1998 versus fiscal years 1999 and 1997 due to a greater number of vessels
being sold in that year. Additions to properties and equipment were higher in
fiscal year 1998 versus fiscal years 1999 and 1997 as a result of a greater
number of vessel acquisitions and capitalized vessel repairs and modifications
during that year.
-15-
<PAGE>
Fiscal year 1999 financing activities used $175 million of cash which
included $105 million prepayment on the credit facility and repayment of $6.5
million of debt incurred from the Australian acquisitions. In addition $80
million was borrowed primarily for income tax payments of which approximately
$68 million related to the sale of the compression division. The company
purchased 3,950,000 shares of common stock during fiscal year 1999 at an
aggregate cost of $109.3 million including broker commissions and fees.
Fiscal 1998 financing activities included scheduled principal payments on
long-term debt of $34.1 million, $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 aggregate cost of $65.2 million.
During fiscal year 1997, the company purchased 1,788,100 shares of common stock
at an aggregate cost of $84.8 million.
YEAR 2000
The Year 2000 (Y2K) issue is the result of computer programs written using
two digits rather than four to define the applicable year. In response to the
Y2K issue, the company began a program in fiscal 1997 designed to identify,
assess and address significant Y2K issues in its information technology (IT)
systems and non-IT systems. As of March 31, 1999, the company believes that it
is on schedule to successfully implement any required systems and equipment
modifications that might be necessary to make the company's critical systems Y2K
compliant before December 31, 1999.
The company's critical IT systems are comprised primarily of the company's
mainframe computer and the software programs used on the mainframe, including
general ledger accounting and financial reporting software programs and related
application modules, personnel and payroll systems, and an insurance claims and
accounting system. The assessment of the company's IT systems found that some of
the IT systems were not Y2K compliant. Approximately 90% of the changes
necessary to make these systems Y2K compliant have been completed, with the
remaining changes expected to be completed by mid-1999. Because many of the
company's computer systems have been upgraded or replaced in recent years as
part of the company's ongoing upgrade program, specific Y2K compliance costs
have been insignificant to date (believed to be less than $100,000). Remaining
compliance costs related to the IT systems are also expected to be insignificant
(probably less than $100,000) because the company will continue to utilize
existing personnel resources to assist in the implementation of its Y2K
compliance initiative.
Non-IT systems are comprised primarily of computer-controlled equipment and
electronic devices, including equipment with embedded microprocessors that are
used to operate equipment on the company's vessels. Telephone systems and other
office-based electronic equipment systems are also being considered in the
assessment of non-IT systems. The company has substantially completed the
process of identifying the components that are likely to have a Y2K problem and
is in the process of communicating with the appropriate vendors to assess what,
if any, changes are necessary to make the component Y2K compliant. The company
believes that this assessment will be completed well in advance of December 31,
1999 and does not expect the costs of any required modifications or upgrades to
be material with respect to the company's results of operations and financial
position.
The company has contacted its key vendors and financial services providers
to assess their progress with their own Y2K issues and to anticipate potential
risks associated with those third parties. Although there is currently no
indication that these parties will not achieve their Y2K compliance plans, there
can be no guarantee that the systems of other companies with whom the company
transacts business will be timely converted. Additionally, there can be no
guarantee that the company will not experience Y2K problems. Despite efforts to
address all significant Y2K issues in advance, the company could potentially
experience disruptions to some aspects of its activities or operations,
including, but not limited to, delays in payments to the company from customers
or payments by the company to suppliers and disruptions in shipments of
equipment and supplies required to operate the company's vessels.
Based upon the company's current assessment of its IT systems and non-IT
systems and based upon communications to date with vendors, the company has not
determined a need to develop a
-16-
<PAGE>
contingency plan for Y2K issues. The company will continue to monitor its
decision on contingency planning and such a plan will be developed if and when
it is considered necessary to do so.
NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1999 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement is effective for all fiscal
years beginning after June 15, 1999. The company does not anticipate that the
adoption of the new statement will have a material financial impact.
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 increases 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At March 31, 1999 the company had no debt or derivative financial
instruments outstanding. The company is exposed to foreign currency fluctuations
and exchange risks but attempts to minimize the financial impact of these items
by contracting the majority of its services in United States dollars. In
addition, the company attempts to maintain a balance in its foreign currency
assets and liabilities in order to minimize its exposure to foreign currency
fluctuations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
-17-
<PAGE>
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,
1999. 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.
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 January 29, 1999 to
disclose that the company had established a Grantor Trust Stock Ownership
Program.
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).
-18-
<PAGE>
*10(a) - $200,000,000 Revolving Credit and Term Loan Agreement dated February
18, 1999.
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) - 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(j) - Form of Change in Control Agreement entered into as of September 30,
1996 with three 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(k) - 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(l) - 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(m) - Tidewater Inc. 1997 Stock Incentive Plan filed with the Commission as
Exhibit 10(o) to the company's annual report on Form 10-K for the
fiscal year ended March 31, 1998.
*21 - Subsidiaries of the Company.
*23 - Consents of Independent Auditors.
*27 - Financial Data Schedule.
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.
-19-
<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 April 29, 1999.
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 April 29, 1999.
/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.
/s/ Donald G. Russell
---------------------------
Donald G. Russell
-20-
<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> <C>
Reports of Independent Auditors F-2
Consolidated Balance Sheets, March 31, 1999 and 1998 F-4
Consolidated Statements of Earnings, three years ended March 31, 1999 F-5
Consolidated Statements of Stockholders' Equity, three years ended March 31, 1999 F-6
Consolidated Statements of Cash Flows, three years ended March 31, 1999 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 sheets of Tidewater Inc.
as of March 31, 1999 and 1998, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for the years then ended. Our
audits also included the financial statement schedule listed in the accompanying
Index to Financial Statements and Schedule for the years ended March 31, 1999
and 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 audits. The consolidated
financial statements and schedule of Tidewater Inc. for the year 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 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 1999 and 1998 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Tidewater Inc. at March 31, 1999 and 1998 and the consolidated
results of its operations and its cash flows for the years 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, 1999
F-2
<PAGE>
The Board of Directors and Shareholders
Tidewater Inc.
We have audited the consolidated statements of earnings, stockholders' equity,
and cash flows of Tidewater Inc. for the year ended March 31, 1997. In
connection with our audit of the consolidated financial statements, we also have
audited the financial statement schedule for the year ended March 31, 1997, 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 audit.
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 consolidated financial statements referred to above present
fairly, in all material respects, the results of Tidewater Inc.'s operations and
their cash flows for the year ended March 31, 1997 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 LLP
New Orleans, Louisiana
April 30, 1997
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------------
March 31, 1999 and 1998
(in thousands)
<S> <C> <C>
ASSETS 1999 1998
- ----------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 10,422 24,977
Trade and other receivables, less allowance for doubtful accounts
of $11,125 in 1999 and $14,078 in 1998 238,002 258,517
Marine operating supplies 27,971 31,498
Other current assets 4,483 4,122
- ----------------------------------------------------------------------------------------------
Total current assets 280,878 319,114
- ----------------------------------------------------------------------------------------------
Investments in, at equity, and advances to unconsolidated companies 17,307 21,825
Properties and equipment:
Vessels and related equipment 1,505,441 1,534,948
Other properties and equipment 42,744 33,887
- ----------------------------------------------------------------------------------------------
1,548,185 1,568,835
Less accumulated depreciation 910,005 863,209
- ----------------------------------------------------------------------------------------------
Net properties and equipment 638,180 705,626
- ----------------------------------------------------------------------------------------------
Goodwill, net of accumulated amortization of $17,172 in
1999 and $8,002 in 1998 347,176 356,394
Other assets 110,917 89,880
- ----------------------------------------------------------------------------------------------
$1,394,458 1,492,839
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt --- 6,466
Accounts payable and accrued expenses 71,256 105,914
Accrued property and liability losses 6,605 12,156
Income taxes 4,485 79,671
- ----------------------------------------------------------------------------------------------
Total current liabilities 82,346 204,207
- ----------------------------------------------------------------------------------------------
Deferred income taxes 128,826 158,540
Long-term debt --- 25,000
Accrued property and liability losses 66,052 57,289
Other liabilities and deferred credits 49,527 49,027
Stockholders' equity 1,067,707 998,776
Commitments and contingencies
- ----------------------------------------------------------------------------------------------
$1,394,458 1,492,839
==============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
- ----------------------------------------------------------------------------------------------------
Years Ended March 31, 1999, 1998 and 1997
(in thousands, except share and per share data)
<S> <C> <C> <C>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------
Revenues:
Vessel revenues $ 911,048 1,001,651 661,224
Other marine revenues 57,944 58,510 29,202
- ----------------------------------------------------------------------------------------------------
968,992 1,060,161 690,426
- ----------------------------------------------------------------------------------------------------
Costs and expenses:
Vessel operating costs 492,400 486,043 361,495
Costs of other marine revenues 44,672 47,065 24,161
Depreciation and amortization 94,783 91,410 55,937
General and administrative 73,468 72,926 53,850
- ----------------------------------------------------------------------------------------------------
705,323 697,444 495,443
- ----------------------------------------------------------------------------------------------------
263,669 362,717 194,983
Other income (expenses):
Foreign exchange loss (12) (635) (382)
Gain on sales of assets 2,949 16,531 5,320
Equity in net earnings of unconsolidated companies 7,505 6,381 4,901
Minority interests (1,601) (1,258) (1,311)
Interest and miscellaneous income 6,676 4,256 4,363
Other expense --- (6,847) (2,800)
Interest and other debt costs (2,445) (24,677) (1,000)
- ----------------------------------------------------------------------------------------------------
13,072 (6,249) 9,091
- ----------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 276,741 356,468 204,074
Income taxes 66,022 113,430 65,839
- ----------------------------------------------------------------------------------------------------
Earnings from continuing operations 210,719 243,038 138,235
Earnings from discontinued Compression operations --- 10,723 7,776
Gain on sale of discontinued Compression operations --- 61,738 ---
- ----------------------------------------------------------------------------------------------------
Net earnings $ 210,719 315,499 146,011
====================================================================================================
Earnings per common share:
Earnings from continuing operations $ 3.68 4.01 2.24
Earnings from discontinued Compression operations --- .18 .13
Gain on sale of discontinued Compression operations --- 1.02 ---
- ----------------------------------------------------------------------------------------------------
Earnings per common share $ 3.68 5.21 2.37
====================================================================================================
Diluted earnings per common share:
Earnings from continuing operations $ 3.68 3.99 2.23
Earnings from discontinued Compression operations --- .18 .12
Gain on sale of discontinued Compression operations --- 1.01 ---
- ----------------------------------------------------------------------------------------------------
Diluted earnings per common share $ 3.68 5.18 2.35
====================================================================================================
Weighted average common shares outstanding 57,189,946 60,552,315 61,606,144
Incremental common shares from stock options 78,579 341,329 438,188
- ----------------------------------------------------------------------------------------------------
Adjusted weighted average common shares 57,268,525 60,893,644 62,044,332
====================================================================================================
Cash dividends declared per common share $ .60 .60 .575
====================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended March 31, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
Accumulated Grantor
foreign Deferred Trust Stock
Additional currency compensation- Ownership
Common paid-in Retained translation restricted Program
stock capital earnings adjustment stock (GSOP) Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
Net earnings --- --- 210,719 --- --- --- 210,719
Exercise of stock options 4 788 --- --- --- --- 792
Cash dividends declared --- --- (34,394) --- --- --- (34,394)
Common stock purchased (395) (108,917) --- --- --- --- (109,312)
Establishment of GSOP 500 106,688 --- --- --- (107,188) ---
Issuance of common shares --- (27) --- --- --- 304 277
Other --- (127) --- --- 976 --- 849
- ------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 $ 6,057 293,558 888,788 (10,582) (3,230) (106,884) 1,067,707
========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended March 31, 1999, 1998 and 1997
(in thousands)
1999 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Earnings from continuing operations $ 210,719 243,038 138,235
Adjustments to reconcile earnings from continuing
operations to net cash provided by continuing
operating activities:
Depreciation and amortization 94,783 91,410 55,937
Provision for deferred income taxes (29,910) (1,604) 12,117
Gain on sales of assets (2,949) (16,531) (5,320)
Equity in earnings of unconsolidated companies,
less dividends (2,512) (2,330) 250
Minority interests, less dividends 918 (1,050) 556
Compensation expense - restricted stocck 976 750 603
Changes in assets and liabilities, net:
Trade and other receivables 19,558 (34,879) (36,129)
Marine operating supplies 3,527 (1,720) (4,471)
Other current assets (204) 1,897 (236)
Accounts payable and accrued expenses (39,822) 28,095 2,579
Accrued property and liability losses (5,792) (1,092) 2,404
Other, net 5,072 5,994 1,396
- ---------------------------------------------------------------------------------------------------
Net cash provided by continuing operating activities 254,364 311,978 167,921
Net cash provided by discontinued operating activities --- 34,108 42,025
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 254,364 346,086 209,946
- ---------------------------------------------------------------------------------------------------
Investing activities:
Proceeds from sales of assets 21,396 41,944 22,737
Proceeds from sale of Compression operations (68,442) 340,001 ---
Additions to properties and equipment (48,283) (82,501) (58,002)
Acquisitions, net of cash acquired --- (581,099) (3,435)
Other 950 (4,853) ---
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities (94,379) (286,508) (38,700)
- ---------------------------------------------------------------------------------------------------
Financing activities:
Common stock purchased (109,312) (65,182) (84,786)
Principal payments on long-term debt (111,466) (526,281) (58,019)
Debt borrowings 80,000 544,035 15,000
Proceeds from issuance of common stock 632 8,044 4,391
Cash dividends (34,394) (36,383) (35,400)
- ---------------------------------------------------------------------------------------------------
Net cash used in financing activities (174,540) (75,767) (158,814)
- ---------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (14,555) (16,189) 12,432
Cash and cash equivalents at beginning of year 24,977 41,166 28,734
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 10,422 24,977 41,166
===================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 2,360 23,937 702
Income taxes $ 203,354 111,427 56,249
===================================================================================================
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, 1999, 1998 and 1997
(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 judgements 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, 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.
IMPAIRMENT OF LONG-LIVED ASSETS
Impairment losses are recorded on long-lived assets used in operations or to
be disposed of when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by these assets or through their sale are
less than the assets' carrying amount. In March 1999 the company recorded a
charge to earnings of $7.8 million, included in gain on sales of assets, to
reduce the carrying amount of certain vessels. The write-down of these vessels
was determined based on internally developed valuations.
F-8
<PAGE>
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.
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 at
least 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.
The company has adopted SFAS No. 132, "Employers' Disclosures about Pension
and Other Postretirement Benefits," which standardizes the disclosures for
pensions and other postretirement benefit plans and requires additional
information to be disclosed related to changes in benefit obligations and the
fair value of plan assets. Information for prior years has been included.
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 reporting of both 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 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
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.
F-9
<PAGE>
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 adverse 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.
COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, "Reporting Comprehensive Income," which
requires companies to display comprehensive income and its components as part of
the basic financial statements. All comprehensive income amounts other than net
earnings in fiscal years 1999, 1998 and 1997 were de minimis.
NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1999 the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement is effective for all fiscal years beginning after June 15, 1999. The
company does not anticipate that the adoption of the new statement will have a
material financial impact.
(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. Results of operations of the compression division are set forth
below:
<TABLE>
<CAPTION>
(in thousands)
Eleven Months Ended Twelve Months Ended
February 20, 1998 March 31, 1997
------------------- -------------------
<S> <C> <C>
Revenues $94,438 112,584
Operating costs 46,679 64,153
Depreciation and amortization 23,462 26,335
General and administration 8,615 11,005
- ------------------------------------------------------------------------------------
15,682 11,091
Other income 1,275 1,369
- ------------------------------------------------------------------------------------
Earnings before income taxes 16,957 12,460
Income taxes 6,234 4,684
- ------------------------------------------------------------------------------------
Earnings from discontinued operations $10,723 7,776
====================================================================================
</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.
F-10
<PAGE>
(3) BUSINESS COMBINATIONS
On May 16, 1997 the company acquired all of the shares of O.I.L. Ltd.
(O.I.L.). The total cost of the acquisition of $626 million, which includes
$65.6 million of deferred income tax liability, was allocated under the purchase
method of accounting based on the fair value of the assets acquired and
liabilities assumed, plus amounts for professional fees, severance and other
transaction costs and the related deferred tax effect of the acquisition. 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 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 year ended March 31, 1998 as though the acquisition had taken place on
April 1, 1997 were not significantly different than actual results.
To finance the O.I.L. acquisition, $500 million of debt was incurred
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 was discounted to yield interest at 7%
and has been repaid in full as of March 31, 1999. 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 purchased 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. The acquisition was
accounted for by the purchase method.
(4) UNCONSOLIDATED COMPANIES
Investments in, at equity, and advances to unconsolidated marine joint-
venture companies at March 31 were as follows:
Percentage (in thousands)
ownership 1999 1998
- ---------------------------------------------------------------------------
National Marine Service (Abu Dhabi-UAE) 40% $12,847 12,317
Others 20%-50% 4,460 9,508
- ---------------------------------------------------------------------------
$17,307 21,825
===========================================================================
The aggregate amount of undistributed earnings of all unconsolidated joint-
venture companies included in consolidated stockholders' equity at March 31,
1999 is approximately $19.2 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:
(in thousands)
1999 1998 1997
- ------------------------------------------------
United States $ 96,421 192,788 114,942
International 180,320 163,680 89,132
- ------------------------------------------------
$276,741 356,468 204,074
================================================
F-11
<PAGE>
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
- ---------------------------------------------------------
1999
- ---------------------------------------------------------
Current $ (386) 8,333 87,985 95,932
Deferred 5,710 --- (35,620) (29,910)
- ---------------------------------------------------------
$ 5,324 8,333 52,365 66,022
=========================================================
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
=========================================================
The actual income tax expense attributable to earnings from continuing
operations for the years ended March 31, 1999, 1998 and 1997 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:
(in thousands)
1999 1998 1997
- -------------------------------------------------------------------------------
Computed "expected" tax expense $ 96,859 124,764 71,426
Increase (reduction) resulting from:
Effect of United Kingdom tax rate change (2,000) (4,000) ---
Overaccrual of income tax expense in prior years --- (3,300) ---
Foreign tax credits not previously recognized (35,620) --- (1,303)
Utilization of net operating loss carryforwards (792) (620) (386)
Expenses which are not deductible for tax purposes 833 611 45
State taxes 5,416 704 365
Other, net 1,326 (4,729) (4,308)
- -------------------------------------------------------------------------------
$ 66,022 113,430 65,839
===============================================================================
During the fourth quarter of the year ended March 31, 1999 approximately $28
million of foreign tax credits not previously recognized were realized as the
result of a tax planning strategy of selling certain vessels from one taxing
jurisdiction to another through intercompany sales. The result of such sales
was to pay foreign taxes which are fully creditable on a current basis against
U.S. income taxes and to accelerate the release of previously accrued deferred
foreign tax credits.
The reversal of taxes overaccrued in prior years for the year ended
March 31, 1998 is the result of the company's settlement 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)
1999 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred income tax expense (benefit) (exclusive of the effects of
other components listed below) $ 12,719 2,396 3,628
Investment, foreign and minimum tax credits (5,009) --- 8,489
Foreign tax credits not previously recognized (35,620) --- ---
Effect of United Kingdom tax rate charges (2,000) (4,000) ---
- ----------------------------------------------------------------------------------------------------
$(29,910) (1,604) 12,117
====================================================================================================
</TABLE>
F-12
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1999 and 1998 are as follows:
(in thousands)
1999 1998
- ------------------------------------------------------------------------------
Deferred tax assets:
Financial provisions not deducted for tax purposes $ 11,243 16,520
Foreign net operating loss carryforwards 9,043 13,887
Tax credit carryforwards 8,860 3,851
Other 3,088 234
- ------------------------------------------------------------------------------
Gross deferred tax assets 32,234 34,492
Less valuation allowance (14,302) (16,756)
- ------------------------------------------------------------------------------
Net deferred tax assets 17,932 17,736
- ------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation and amortization (119,668) (155,339)
Other (9,158) (3,201)
- ------------------------------------------------------------------------------
Gross deferred tax liabilities (128,826) (158,540)
- ------------------------------------------------------------------------------
Net deferred tax liabilities $(110,894) (140,804)
==============================================================================
The net changes in the valuation allowance for the years ended March 31,
1999 and 1998 were a decrease of $2.5 million and an increase of $14.8 million,
respectively. The valuation allowance is the result of a 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 investments. As of
March 31, 1999, the undistributed earnings of these subsidiaries were
approximately $90 million.
(6) LONG-TERM DEBT
At March 31, 1999, the company has a $200 million revolving credit facility
with a group of banks and at that date there were no borrowings outstanding
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
.75% based on the company's funded debt to total capitalization ratio. The
revolving credit commitment expires on April 30, 2001, at which time the then
outstanding balance will convert to a term loan payable in 16 quarterly
installments beginning July 31, 2001. 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, and maintenance of
certain debt to capitalization ratios and also debt to earnings ratios. The
agreement also prohibits the company from encumbering its assets for the benefit
of others.
(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
429,835 shares and 487,571
F-13
<PAGE>
shares of the company's common stock at March 31, 1999 and 1998, respectively.
Amounts charged to expense for the plan for 1999, 1998 and 1997 were $1.8
million, $1.8 million and $1.7 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.
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.
The company has adopted Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pension and Other Postretirement Benefits," which
revises the required disclosures about pension and other postretirement benefit
plans. Changes in plan assets and obligations during the years ended March 31,
1999 and 1998 and the funded status of the U.S. defined benefit pension plan and
the supplemental plan (referred to collectively as "Pension Benefits") and the
postretirement health care and life insurance plan (referred to as "Other
Benefits") at March 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
(in thousands)
Pension Benefits Other Benefits
---------------- --------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $29,636 35,445 13,082 14,559
Service cost 848 987 1,068 1,255
Interest cost 2,189 2,230 961 1,132
Participant contributions --- --- 223 261
Plan amendments --- 1,147 --- 721
Curtailments --- (1,121) --- (1,781)
Settlements --- (8,319) --- ---
Benefits paid (1,034) (950) (628) (409)
Actuarial (gain) loss 3,159 217 820 (2,656)
- --------------------------------------------------------------------------------------------
Benefit obligation at end of year $34,798 29,636 15,526 13,082
- --------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $28,772 29,847 --- ---
Actual return 1,290 7,202 --- ---
Employer contributions 74 992 405 148
Participant contributions --- --- 223 261
Benefits paid (1,034) (950) (628) (409)
Settlements --- (8,319) --- ---
- --------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $29,102 28,772 --- ---
- --------------------------------------------------------------------------------------------
Funded (unfunded) status (5,696) (864) (15,526) (13,082)
Unrecognized actuarial (gain) loss 2,083 (2,538) (3,395) (4,454)
Unrecognized prior service cost 908 1,206 880 914
- --------------------------------------------------------------------------------------------
Net accrued benefit cost $(2,705) (2,196) (18,041) (16,622)
============================================================================================
NET ACCRUED BENEFIT COST CONSISTS OF:
Prepaid benefit cost $ 1,536 807 --- ---
Accrued benefit liability (6,762) (4,902) (18,041) (16,622)
Intangible asset 2,521 1,899 --- ---
- --------------------------------------------------------------------------------------------
Net accrued benefit cost $(2,705) (2,196) (18,041) (16,622)
============================================================================================
</TABLE>
For pension plans with benefit obligations in excess of plan assets, the
projected benefit obligation at March 31, 1999 and 1998 was $9.6 million and
$6.6 million, respectively. The accumulated benefit obligation
F-14
<PAGE>
for pension plans with benefit obligations in excess of plan assets was $6.8
million and $4.9 million at March 31, 1999 and 1998, respectively.
Net periodic pension cost for the U.S. defined benefit pension plan and the
supplemental plan for 1999, 1998 and 1997 include the following components:
(in thousands)
1999 1998 1997
- -------------------------------------------------------------------
Service cost $ 848 987 844
Interest cost 2,189 2,230 2,258
Expected return on plan assets (2,693) (2,465) (1,875)
Amortization of prior service cost 269 279 158
Recognized actuarial (gain) loss (29) 120 138
- -------------------------------------------------------------------
Net periodic pension cost $ 584 1,151 1,523
===================================================================
Net periodic postretirement health care and life insurance costs for 1999,
1998 and 1997 include the following components:
(in thousands)
1999 1998 1997
- -------------------------------------------------------------------
Service cost $1,068 1,255 928
Interest cost 961 1,132 874
Other amortization and deferral (205) (28) (207)
- -------------------------------------------------------------------
Net periodic postretirement benefit cost $1,824 2,359 1,595
===================================================================
Assumptions used in actuarial calculations were as follows:
1999 1998 1997
- ----------------------------------------------------------------------------
Discount rate 7.0% 7.5% 7.5%
Expected long-term rate of return on assets 9.5% 9.5% 9.5%
Rates of annual increase in compensation levels 4.0% 5.0% 5.2%
============================================================================
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation will be 6.5% in 2000, gradually declining to
4% in the year 2005 and thereafter. A 1% increase in the assumed health care
cost trend rates for each year would increase the accumulated postretirement
benefit obligation by approximately $2.2 million at March 31, 1999 and increase
the cost for the year ended March 31, 1999 by $.3 million. A 1% decrease in the
assumed health care cost trend rates for each year would decrease the
accumulated postretirement benefit obligation by approximately $1.8 million at
March 31, 1999 and decrease the cost for the year ended March 31, 1999 by $.3
million.
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 those 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 1999, 1998 and 1997 was
$1.7 million, $2.7 million and $2.3 million, respectively. Fiscal 1999 cost of
the plan has been reduced by $.9 million of forfeitures due to employee
severances.
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 plan and the post-retirement
health care and life insurance plan.
F-15
<PAGE>
(8) OTHER ASSETS, OTHER LIABILITIES AND DEFERRED CREDITS
A summary of other assets at March 31 follows:
(in thousands)
1999 1998
- -------------------------------------------------------------------
Recoverable insurance losses $ 66,052 57,289
Assets held for sale 14,589 4,086
Deferred income tax assets 17,932 17,736
Other 12,344 10,769
- -------------------------------------------------------------------
$110,917 89,880
===================================================================
A summary of other liabilities and deferred credits at March 31 follows:
(in thousands)
1999 1998
- -------------------------------------------------------------------
Postretirement benefits liability $ 18,041 16,622
Pension liability 5,226 4,095
Minority interests in net assets of subsidiaries 4,665 7,481
Deferred vessel income 10,264 6,071
Provision for litigation and claims costs 427 7,889
Other 10,904 6,869
- -------------------------------------------------------------------
$ 49,527 49,027
===================================================================
(9) CAPITAL STOCK
The company has 125 million shares of $.10 par value common stock
authorized. At March 31, 1999 and 1998, 60,566,857 shares and 59,482,769 shares
were issued, respectively. At March 31, 1999, 4,985,860 shares were held by the
Grantor Trust Stock Ownership Program, which are not included in common shares
outstanding for earnings per share calculations. At March 31, 1999 and 1998,
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, 1999, 4,349,483 shares of common stock are reserved for
issuance under the plans of which 1,329,800 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 outstanding 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 1999, 1998 and 1997 were $8.37, $17.69 and $15.46, respectively, on
the dates of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions:
1999 1998 1997
- -------------------------------------------------------------------
Risk-free interest rate 5.15% 5.75% 6.40%
Expected dividend yield 2.50% 1.25% 1.25%
Expected stock price volatility 42.79% 34.93% 32.57%
Expected stock option life 5 years 5 years 5 years
===================================================================
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
F-16
<PAGE>
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:
1999 1998 1997
- --------------------------------------------------------------------
Net earnings (in thousands):
As reported $210,719 315,499 146,011
Pro forma $204,778 312,215 145,032
Earnings per common share:
As reported $ 3.68 5.21 2.37
Pro forma $ 3.58 5.16 2.35
Diluted earnings per common share:
As reported $ 3.68 5.18 2.35
Pro forma $ 3.58 5.13 2.34
====================================================================
Pro forma net earnings and diluted earnings per common share reflect only
options granted during fiscal years 1999, 1998 and 1997. 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 1999, 1998 and 1997 was as follows:
Weighted-average Number
Exercise Price of Shares
- ------------------------------------------------------------------------
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
Granted 23.18 1,121,000
Exercised 19.78 (33,061)
Expired or cancelled 42.04 (38,998)
- ------------------------------------------------------------------------
Balance at March 31, 1999 $ 33.21 3,009,006
========================================================================
The 3,009,006 options outstanding at March 31, 1999 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, 1999 207,348 1,363,630 1,438,028
Weighted average exercise price $17.35 $22.83 $45.33
Weighted average remaining contractual life 4.3 years 8.9 years 8.4 years
Options exercisable at March 31, 1999 207,348 307,630 787,675
Weighted average exercise price of options exercisable
at March 31, 1999 $17.35 $23.10 $43.42
================================================================================================================
</TABLE>
At March 31, 1999, 1998 and 1997, the number of options exercisable under
the stock option plans was 1,302,653, 865,383 and 940,579, respectively; and the
weighted average exercise price of those options was $34.47, $28.47 and $21.51,
respectively.
During fiscal years 1998 and 1999, 37,200 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 the grants totaled
approximately $1.6 million and was classified in stockholders' equity as
deferred compensation
F-17
<PAGE>
- - 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.
By March 31, 1998, the total 70,000 shares had vested due to the attainment of
the price levels applicable to those shares and the total deferred amount of
$1.6 million 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.
The company's Board of Directors has authorized three separate share
repurchase programs during fiscal years 1999, 1998 and 1997 whereby the company
could purchase shares of company common stock in the open market or through
privately negotiated transactions. Stock repurchase activity during fiscal
years 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of shares repurchased 3,950,000 1,481,000 1,788,100
Total cost, including broker commissions and fees (in thousands) $ 109,300 65,200 84,800
Average cost per share $ 27.67 44.02 47.42
</TABLE>
A share repurchase program, authorized in March 1999, allows the company to
purchase up to $50 million of company common stock through March 31, 2000. No
shares had been purchased under this program as of March 31, 1999.
On January 29, 1999 the company established a Grantor Trust Stock Ownership
Program in connection with which the company entered into a trust agreement with
a bank providing for the establishment of the related trust (the "trust"). The
trust is designed to acquire, hold and distribute shares of the common stock of
the company to provide for the payment of benefits and compensation under the
company's employee benefit plans, including its stock option plans and 401(k)
plan. The trust will not increase or alter the amount of benefits or
compensation that will be paid under these plans.
On January 29, 1999 the company sold at market value 5,000,000 shares (the
"acquired shares") of common stock to the trust for $107,187,500, or $21.4375
per share. In payment for the acquired shares, the trust paid $500,000 in cash
and issued a promissory note payable to the company for the remaining balance.
Acquired shares will be released to satisfy the company's obligations to pay
benefits under company benefit plans as the promissory note is paid down or
forgiven.
For financial reporting purposes the trust is consolidated with the company.
Any dividend transactions between the company and the trust are eliminated.
Acquired shares held by the trust remain valued at the market price at the date
of purchase and are shown as a reduction to stockholders' equity in the
company's consolidated balance sheet. The difference between the trust share
value and the fair market value on the date shares are released from the trust
is included in additional paid-in capital. Common stock held in the trust is
not considered outstanding in the computation of earnings per share. The trust
held 4,985,860 shares of common stock at March 31, 1999. The trustee will vote
or tender shares held by the trust in accordance with the confidential
instructions of participants in the company's stock option plans and 401(k)
plan.
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
F-18
<PAGE>
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.
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 cash compensation that could be paid under the
agreements, based on present salary levels, is approximately $10.7 million.
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 second quarter of
fiscal 1998, the company provided $8 million for the possible adverse outcome of
these labor-law matters. Pursuant to a court-approved settlement, as of
March 31, 1999 the company has paid $7.5 million in settlements relating to
certain of these alleged labor-law pay violations. 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
The company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." 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. Vessel revenues and
operating costs relate to vessels owned and operated by the company while other
marine services relate to the activities of the company's shipyards, brokered
vessels and other miscellaneous marine-related businesses.
<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Marine revenues (A):
Vessel revenues:
United States $ 296,161 463,914 338,823
International (B) 614,887 537,737 322,401
- ----------------------------------------------------------------------------------------------------------------
911,048 1,001,651 661,224
Other marine services 57,944 58,510 29,202
- ----------------------------------------------------------------------------------------------------------------
$ 968,992 1,060,161 690,426
================================================================================================================
Marine operating profit:
Vessel activity:
United States $ 96,376 225,599 120,275
International 171,213 141,133 82,591
- ----------------------------------------------------------------------------------------------------------------
267,589 366,732 202,866
Gains on sales of assets 2,949 16,592 5,352
Other marine services 12,526 10,663 4,186
- ----------------------------------------------------------------------------------------------------------------
283,064 393,987 212,404
Other income 8,439 7,079 6,705
Other expense --- (6,847) (2,800)
Corporate expenses (12,317) (13,074) (11,235)
Interest and other debt costs (2,445) (24,677) (1,000)
- ----------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes $ 276,741 356,468 204,074
================================================================================================================
Identifiable assets:
Marine:
United States $ 317,411 379,118 376,380
International (B) 970,853 1,043,781 334,005
- ----------------------------------------------------------------------------------------------------------------
1,288,264 1,422,899 710,385
Investments in and advances to unconsolidated Marine companies 17,307 21,825 20,556
- ----------------------------------------------------------------------------------------------------------------
1,305,571 1,444,724 730,941
Net assets of discontinued Compression operations --- --- 253,305
General corporate 88,887 48,115 77,034
- ----------------------------------------------------------------------------------------------------------------
$1,394,458 1,492,839 1,061,280
================================================================================================================
Depreciation and amortization:
Marine equipment depreciation $ 84,823 83,002 55,569
General corporate depreciation 790 406 368
Goodwill amortization 9,170 8,002 ---
- ----------------------------------------------------------------------------------------------------------------
$ 94,783 91,410 55,937
================================================================================================================
Additions to properties and equipment:
Marine equipment operations $ 40,959 62,555 40,003
Discontinued Compression operations --- 17,597 17,949
General corporate 7,324 2,349 50
- ----------------------------------------------------------------------------------------------------------------
$ 48,283 82,501 58,002
================================================================================================================
</TABLE>
(A) One marine customer accounted for 8%, 11% and 11% of revenues for the fiscal
years ended March 31, 1999, 1998 and 1997, respectively.
(B) Marine support services are conducted worldwide with assets that are highly
mobile. Revenues are principally derived from offshore service vessels,
which regularly and routinely move from one operating area to another, often
to and from offshore operating areas in different continents. Because of
this asset mobility, revenues and long-lived assets attributable to the
company's international marine operations in any one country are not
"material" as that term is defined by SFAS No. 131. Equity in net assets of
non-U.S. subsidiaries is $674.5 million, $795.1 million and $211.5 million
at March 31, 1999, 1998 and 1997, respectively. Other international
identifiable assets include accounts receivable and other balances
denominated in currencies other than the U.S. dollar which aggregate
approximately $12.9 million, $19.1 million and $6.7 million at March 31,
1999, 1998 and 1997, 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, 1999 and 1998
(in thousands, except per share data)
1999 First Second Third Fourth
- -------------------------------------------------------------------------------
Marine revenues $284,877 254,235 232,984 196,896
===============================================================================
Marine operating profit $ 97,584 84,201 62,767 38,512
===============================================================================
Net earnings $ 62,772 56,678 39,780 51,489
===============================================================================
Earnings per share $ 1.06 .98 .71 .93
===============================================================================
Diluted earnings per share $ 1.05 .98 .71 .93
===============================================================================
1998 First Second Third Fourth
- -------------------------------------------------------------------------------
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 Compression
operations 2,625 3,276 3,661 1,161
Gain on sale of discontinued Compression
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 Compression operations 0.04 0.05 0.06 .02
Gain on sale of discontinued Compression
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 Compression operations 0.04 0.05 0.06 .02
Gain on sale of discontinued Compression
operations --- --- --- 1.01
- -------------------------------------------------------------------------------
Net earnings $ 0.84 1.06 1.21 2.08
===============================================================================
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 1, 2, 3, 5, 7 and 10 for detailed information regarding transactions
which affect fiscal 1999 and 1998 quarterly amounts. Fiscal year 1999 company
activity has been significantly affected by the downturn in activity and
spending in the oil industry resulting from the drop in the price of oil which
began in the Fall of 1997. A discussion of current market conditions appears in
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" of the company's 1999 annual report.
F-21
<PAGE>
SCHEDULE II
TIDEWATER INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MARCH 31, 1999, 1998, AND 1997
(IN THOUSANDS)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance
Balance at at
Beginning Additions End of
Description of period at Cost Deductions Period
----------- --------- ------- ---------- ------
1999
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $14,078 685 3,638 (A) 11,125
======= ====== ===== ======
Deducted in balance sheet from
other assets:
Amortization of goodwill, prepaid
rent and debt issuance costs $12,219 10,092 --- 22,311
======= ====== ===== ======
1998
Deducted in balance sheet from
trade accounts receivable:
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 receivables:
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
======= ====== ===== ======
(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, 1999
<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) - $200,000,000 Revolving Credit and Term Loan Agreement dated February
18, 1999.
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) - 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(j) - Form of Change in Control Agreement entered into as of September 30,
1996 with three 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).
<PAGE>
10(k) - 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(l) - 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(m) - Tidewater Inc. 1997 Stock Incentive Plan filed with the Commission as
Exhibit 10(o) to the company's annual report on Form 10-K for the
fiscal year ended March 31, 1998.
*21 - Subsidiaries of the Company.
*23 - Consents of Independent Auditors.
*27 - Financial Data Schedule.
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(a)
REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMONG
TIDEWATER INC., ET AL
(as Companies)
BANKBOSTON, N.A.
(as Administrative Agent)
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
(as Documentation Agent)
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(as Syndication Agent)
BANKBOSTON, N.A.
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(as Agents)
and
CERTAIN BANKS
(as Lenders)
----------
$200,000,000.00
----------
Dated: as of February 18, 1999
<PAGE>
TABLE OF CONTENTS
Page No.
Introduction........................................................... 1
Section 1. Commitment of Lenders...................................... 1
1.1 Line of Credit; Term Loan...................................... 2
1.2 Borrowing Procedure Under the Credit Facility.................. 2
1.3 Use of Proceeds................................................ 2
1.4 Liability of the Companies; Additional Domestic Subsidiaries... 3
1.5 Termination of the Prior Credit Facility....................... 3
Section 2. Promissory Notes........................................... 3
2.1 Line of Credit Notes........................................... 3
2.2 Term Notes..................................................... 3
2.3 Principal Payment Dates........................................ 3
Section 3. Interest and Fees.......................................... 4
3.1 Interest....................................................... 4
3.2 Administrative Agent's Determination........................... 4
3.3 Interest Payment Dates; Late Payment and Default Rate.......... 8
3.4 Facility Fee; Agents' Fee...................................... 8
3.5 Method of Calculating Interest and Fees........................ 8
Section 4. Payments, Reduction or Termination of the Credit
Facility and Prepayments.................................. 8
4.1 Place of Payment............................................... 9
4.2 Reduction of Facility Credit; Prepayments...................... 9
4.3 Prepayments of Term Notes...................................... 9
4.4 Pro Rata Payments.............................................. 10
Section 5. Representations and Warranties of the Companies............ 10
5.1 Corporate Existence............................................ 10
5.2 Authorization; Validity........................................ 10
5.3 Conflicting Agreements and Other Matters....................... 10
5.4 Financial Statements........................................... 11
5.5 Litigation and Contingent Liabilities.......................... 11
5.6 Outstanding Debt............................................... 12
5.7 Title to Properties............................................ 12
5.8 Purpose........................................................ 12
ii
<PAGE>
5.9 Margin Stock................................................... 12
5.10 ERISA.......................................................... 12
5.11 Consents....................................................... 13
5.12 Tax Returns; Taxes............................................. 13
5.13 Compliance with Laws........................................... 13
5.14 Foreign Assets Control Regulations............................. 13
5.15 Disclosure..................................................... 13
5.16 Environmental Matters.......................................... 14
5.17 Year 2000 Compliance........................................... 14
5.18 Special Provisions............................................. 14
Section 6. Covenants of the Companies................................. 15
6.1 Financial Statements........................................... 15
6.2 Inspection of Property and Books and Records................... 18
6.3 Covenant to Secure Notes Equally............................... 18
6.4 Guaranteed or Collateralized Obligations....................... 18
6.5 Maintenance of Insurance....................................... 19
6.6 Maintenance of Corporate Existence/Compliance with Law/
Preservation of Property...................................... 19
6.7 Compliance with Environmental Laws............................. 19
6.8 Liens.......................................................... 20
6.9 Investments.................................................... 21
6.10 Dispositions of Stock and Debt................................. 22
6.11 Mergers and Consolidations..................................... 23
6.12 Minimum EBITDA to Fixed Charge Ratio........................... 23
6.13 Maximum Debt to EBITDA Ratio................................... 23
6.14 Maximum Debt to Total Capitalization Ration.................... 23
6.15 Transactions with Related Party................................ 23
6.16 Stock Transactions by Subsidiaries............................. 24
6.17 ERISA.......................................................... 24
6.18 Federal Reserve Regulations, etc............................... 24
6.19 Environmental Matters.......................................... 24
6.20 Taxes.......................................................... 25
Section 7A. Conditions Precedent to the Funding of the Initial Advance
under the Credit Facility.................................. 25
7A.1 Resolutions of the Companies.................................... 25
7A.2 Organization Documents; Good Standing........................... 25
7A.3 Incumbency...................................................... 25
7A.4 Notes........................................................... 25
7A.5 Officer's Certificate........................................... 25
iii
<PAGE>
7A.6 Opinion......................................................... 26
7A.7 Payment of Fees and Expenses.................................... 26
7A.8 Termination of Prior Credit Facility............................ 26
Section 7B. Conditions Precedent to the Funding of the Term Loan....... 26
7B.1 Notes........................................................... 26
7B.2 Officer's Certificate........................................... 26
Section 8. Conditions Precedent to Subsequent Advances Under the Line
of Credit and Funding of the Term Loan..................... 27
8.1 Default......................................................... 27
8.2 Representations and Warranties.................................. 27
Section 9. Events of Default; Remedies; Set Offs....................... 27
9.1 Events of Default............................................... 27
9.2 Remedies........................................................ 29
9.3 Waiver of Set-Offs.............................................. 30
Section 10. The Agents.................................................. 30
10.1 Appointment and Authorization................................... 30
10.2 Agents' Reliance................................................ 30
10.3 Acts by Administrative Agent after Default, etc................. 31
10.4 Lender Credit Decision.......................................... 31
10.5 Agents.......................................................... 32
10.6 Assignments and Participations.................................. 32
10.7 Indemnification of the Agents................................... 33
Section 11. General.................................................... 34
11.1 Definitions..................................................... 34
11.2 Financial Terms................................................. 44
11.3 Delay........................................................... 44
11.4 Notices......................................................... 44
11.5 Costs, Expenses and Taxes; Indemnification...................... 45
11.6 Foreign Lenders................................................. 46
11.7 Severability.................................................... 48
11.8 Counterparts.................................................... 48
11.9 Law............................................................. 48
11.10 Successors...................................................... 48
11.11 Singular and Plural............................................. 48
11.12 Amendments....................................................... 48
11.13 Entire Agreement................................................. 49
iv
<PAGE>
Signatures.............................................................. 50
Exhibit A List of Domestic Subsidiaries................................ 61
Exhibit B Commitments of Lenders....................................... 62
Exhibit C Form of Line of Credit Note.................................. 66
Exhibit D Form of Term Note............................................ 70
Exhibit E Form of Assignment and Acceptance............................ 74
Schedule 5.6 Outstanding Debt
Schedule 5.16 Environmental Matters
v
<PAGE>
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "Agreement") dated as of
February 18, 1999 (the "Effective Date"), by and among Tidewater Inc., a
Delaware corporation (the "Company"), the Domestic Subsidiaries (as hereinafter
defined) of the Company named on Exhibit "A", attached hereto and made a part
hereof, the respective state of incorporation of each of which Domestic
Subsidiaries being set forth opposite its name and which Domestic Subsidiaries
constitute all of the Domestic Subsidiaries of the Company (herein together with
the Company called the "Companies"), and BankBoston, N.A., a national banking
association, as administrative agent (the "Administrative Agent"), Bank One,
Louisiana, National Association, a national banking association, as
documentation agent (the "Documentation Agent") and Chase Bank of Texas,
National Association, as Syndication Agent (the "Syndication Agent")(the
Administrative Agent, the Documentation Agent and the Syndication Agent,
collectively, the "Agents"), and the banks listed on the signature pages hereof
(the "Lenders").
RECITALS
A. Subject to the terms and conditions of this Agreement, the Lenders have
severally agreed to make a $200,000,000 revolving line of credit available to
the Companies, and the Companies have agreed to accept the line of credit from
the Lenders.
B. The Companies, Agents and Lenders desire to set forth the terms and
conditions of the line of credit herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and undertakings herein contained, the Agents, Lenders and the
Companies hereby agree as follows:
Section 1. Commitment of Lenders. Subject to the terms and conditions
hereof, each Lender severally agrees to make a line of credit and loan to the
Companies, on the terms and conditions set forth in this Agreement, in the
aggregate principal amounts set forth on Exhibit B hereto:
<PAGE>
1.1 Line of Credit; Term Loan. The Lenders shall severally establish a
revolving line of credit (the "Line of Credit") which may be drawn upon by the
Companies on any Business Day during the period from the date hereof until and
including the Drawdown Termination Date, in such amounts (but not less than
$5,000,000 per Advance and above $5,000,000 in even multiples of $1,000,000) as
the Companies may from time to time request (individually, an "Advance" and,
collectively, the "Advances"), but not exceeding the Commitments for the Line of
Credit set forth on Exhibit B hereto (the "Line of Credit Commitments"). The
amount outstanding under said Line of Credit as of the close of business on the
Drawdown Termination Date shall then convert on the following day to a four (4)
year term loan (the "Term Loan") with principal payable quarterly on a four (4)
year amortization schedule. The credit available to the Companies from time to
time under the Line of Credit shall be reduced by the aggregate of the face
amount of any and all unpaid Advances made by the Lenders to the Companies
pursuant to this Agreement and shall constitute the "Available Credit."
1.2 Borrowing Procedure Under the Credit Facility. Advances shall be made
as follows: (i) in the case of a Base Rate Advance, on notice from the Company
to the Administrative Agent received by the Administrative Agent no later than
10:00 A.M. (Eastern time) on the date of such proposed Advance, specifying the
amount thereof; and (ii) in the case of a Eurodollar Rate Advance, on notice
from the Company to the Administrative Agent at least three (3) Business Days
prior to the date of such proposed Advance. The Administrative Agent will use
its best efforts to give telephone notice of a proposed Advance on the same day
such notice is received by the Administrative Agent from the Company. Not later
than 2:00 P.M. (Eastern time) on the date of such Advance and upon fulfillment
of the applicable conditions set forth in Section 7A(in the case of the initial
Advance under the Line of Credit) and Section 8 (in the case of subsequent
Advances under the Line of Credit and/or funding of the Term Loan), the Lenders
will make such Advance available to the Administrative Agent, which shall make
such total Advance available to the Company in same day funds at the
Administrative Agent's office at 100 Federal Street, Boston, Massachusetts. The
request for an Advance under the Line of Credit shall constitute a certification
by the Companies that all of the representations and warranties contained in
Section 5 are true and correct as of the date of such request. The Lenders
shall be obligated to fund Advances in proportion to their respective
Commitments. The obligations of the Lenders under this Agreement shall be
separate and several and not joint and several or solidary; none of the Lenders
shall be responsible or liable for the acts or omissions of any of the other
Lenders.
1.3 Use of Proceeds. The Companies shall use the proceeds of the Line of
Credit only (i) for the refinancing of any existing indebtedness of the
Companies pursuant to the Revolving Credit and Term Loan Agreement among the
Companies, the Agents and certain other lenders, dated as of March 19, 1997, as
amended, and (ii) for general corporate purposes not inconsistent with the
provisions of this Agreement.
2
<PAGE>
1.4 Liability of the Companies; Additional Domestic Subsidiaries.
Irrespective of the Company or Companies who directly or indirectly receive the
amounts funded on Advances, each of the Companies shall be liable jointly and
severally and solidarily to the Lenders for all amounts outstanding from time to
time under the Credit Facility. The Company shall promptly notify the
Documentation Agent of the creation or acquisition of any company that becomes a
Domestic Subsidiary after the Effective Date and shall sign such instruments as
the Documentation Agent prepares (which shall be reasonably consistent with
instruments executed in connection with the execution of this Agreement) to make
such new Domestic Subsidiary a party thereto.
1.5 Termination of the Prior Credit Facility. Not later than the Business
Day following the Effective Date, the Companies shall give notice to the
administrative agent pursuant to the Revolving Credit and Term Loan Agreement,
dated as of March 19, 1997, as amended (the "Prior Credit Facility"), of the
Companies' termination of said agreement and the credit facility available
thereunder. The Companies agree (i) that they will not obtain any advances
under the Prior Credit Facility on or after the Effective Date of this
Agreement, and (ii) that if there are any advances outstanding under the Prior
Credit Facility as of the Effective Date of this Agreement, the Companies shall
repay said advances in full (either with their own funds or with Advances under
this Credit Facility or a combination of both) prior to or simultaneously with
obtaining Advances under this Credit Facility for any other purpose.
Section 2. Promissory Notes.
2.1 Line of Credit Notes. The Line of Credit shall be evidenced by
promissory notes of the Companies, each in the form of Exhibit "C" hereto, dated
the Effective Date, and payable to each Lender respectively (together with any
and all renewals, extensions, rearrangements and/or modifications thereof, the
"Line of Credit Notes"), in the amount of the Lenders' respective Line of Credit
Commitments, with appropriate insertions, and payable in full on the Drawdown
Termination Date.
2.2 Term Notes. The Term Loan shall be evidenced by promissory notes of
the Companies in the form of Exhibit "D" hereto, dated the day following the
Drawdown Termination Date, payable to the order of each Lender respectively
(together with any and all renewals, extensions, rearrangements and/or
modifications thereof, the "Term Notes"), in the Lenders' respective
proportionate amount of the Term Loan, with appropriate insertions. The Term
Notes shall provide for payment of 16 quarterly installments of principal in an
amount equal to one-sixteenth (1/16th) of the initial principal balance thereof,
and shall be payable in full on the fourth anniversary of the Drawdown
Termination Date. Once the Term Loan is initially funded, the Lenders shall not
fund any additional Advances under the Term Loan.
2.3 Principal Payment Dates. Principal payments under each respective
Loan shall be allocated first to Base Rate Tranches, then to Eurodollar Rate
Tranches having a Eurodollar
3
<PAGE>
Rate Interest Period ending on the quarterly installment payment date, and then
to Eurodollar Rate Tranches having a Eurodollar Rate Interest Period ending
subsequent to the quarterly installment payment date (in which case the
Companies shall pay any loss or expense incurred or sustained by the Lenders as
specified in Section 3.2(e) hereof).
Section 3. Interest and Fees.
3.1 Interest. The unpaid principal of the Credit Facility shall bear
interest at one (or both) of the following interest rates, at the Company's
option: (i) Base Rate plus the Applicable Base Rate Margin or (ii) Eurodollar
Rate plus the Applicable Eurodollar Rate Margin. The Company shall select the
interest rate applicable to each Tranche at the time of funding each Advance,
and the selected interest rate shall continue as to said Tranche until changed
in accordance with the following. The Company shall notify the Administrative
Agent of the Company's desire to change the interest rate on Advances (or any
portion thereof) not less than three (3) Business Days prior to the date on
which such change shall be effective. The Company may change from Base Rate
Advances to Eurodollar Rate Advances at any time without payment of premium or
penalty, but the Company may change from Eurodollar Rate Advances to Base Rate
Advances only as of the last day of a Eurodollar Rate Interest Period without
payment of premium or penalty. In the absence of any specific rate election by
the Company, the Credit Facility shall bear interest at the Base Rate. Not more
than twelve (12) Line of Credit Eurodollar Rate Tranches shall be permitted at
any time, and not more than two (2) Term Loan Eurodollar Rate Tranches shall be
permitted at any time. No Credit Facility Tranche may have a principal amount
of less than $5,000,000, and each Tranche shall be proportionately the same on
each Note.
3.2 Administrative Agent's Determination. (a) The Administrative Agent
shall determine the amount of interest payable on each Tranche, and its
determination shall be conclusive in the absence of manifest error. The
Administrative Agent shall endeavor to notify the Company of the amount of any
interest payment prior to the date on which an interest payment is due: provided
that the failure of the Administrative Agent to provide such notice shall not
affect the Companies' obligation to pay interest on such date.
(b) If the Administrative Agent gives notice to the Company that no
Eurodollar Rate is quoted to the Administrative Agent for the applicable
Eurodollar Rate Interest Period or in the applicable amounts, then (i) the
obligation of the Lenders to make a Eurodollar Rate Advance and the ability of
the Company to select the Eurodollar Rate for a Tranche shall be suspended, and
(ii) the Companies shall either prepay all Eurodollar Rate Tranches for which an
interest rate is to be determined on such date or the Notes shall thereafter
bear interest at the Base Rate plus the Applicable Base Rate Margin.
(c) If any applicable domestic or foreign law, treaty, rule or regulation
(whether
4
<PAGE>
now in effect or hereinafter enacted or promulgated, including Regulation D of
the Board of Governors of the Federal Reserve System) or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law):
(i) changes the basis of taxation of payments to the Lenders of any
principal, interest, or other amounts attributable to any Eurodollar Rate
Tranche (other than taxes imposed on the overall net income of the Lenders
or any lending office of the Lenders by any jurisdiction in which the
Lenders or any such lending office is located);
(ii) changes, imposes, modifies, applies or deems applicable any
reserve, special deposit, insurance assessments or similar requirements in
respect of any such Eurodollar Rate Tranche (excluding those for which the
Lenders are fully compensated pursuant to adjustments made in the
definition of Eurodollar Rate) or against assets of, deposits with or for
the account of, or credit extended by, the Lenders; or
(iii) imposes on the Lenders or the interbank eurocurrency deposit
and transfer market any other condition affecting any such Eurodollar Rate
Tranche,
and the result of any of the foregoing is to increase the cost to the Lenders of
funding or maintaining any such Eurodollar Rate Tranche (other than costs for
which the Lenders are fully compensated pursuant to adjustments made in the
definition of Eurodollar Rate) or to reduce the amount of any sum receivable by
the Lenders in respect of any such Eurodollar Rate Tranche by an amount deemed
by the Lenders to be material, then the Administrative Agent shall promptly
notify the Companies in writing (such writing including the necessary
calculations in reasonable detail) of the happening of such event and the
Companies shall upon demand pay to the Lenders such additional amount or amounts
as will compensate the Lenders for such additional cost or reduction accrued as
of the time of such notice and thereafter, the Companies may either continue to
pay to the Lenders such additional amount as will compensate the Lenders for the
additional cost or reduction of Eurodollar Rate Tranches, or the Companies may
elect, by giving to the Administrative Agent not less than three Business Days'
notice, to change the interest rate applicable to such Tranche from the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin to the Base Rate plus
the Applicable Base Rate Margin.
(d) Notwithstanding any other provision hereof, if any change in applicable
laws, treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make it
unlawful or impracticable for the Lenders to maintain Eurodollar Rate Tranches
bearing interest at the Eurodollar Rate plus the Applicable Eurodollar Rate
Margin, or shall materially restrict the authority of the Lenders to
5
<PAGE>
purchase, sell or take certificates of deposit or offshore deposits of dollars,
then all Eurodollar Rate Tranches which are then outstanding and which cannot
lawfully or practicably be maintained shall immediately cease to bear interest
at the Eurodollar Rate plus the Applicable Eurodollar Rate Margin and shall
commence to bear interest at the Base Rate plus the Applicable Base Rate Margin.
The Companies agree to indemnify the Lenders and hold them harmless against all
costs, expenses, claims, penalties, liabilities and damages which may result
from any such change in law, treaty, rule, regulation, interpretation or
administration, arising out of or in connection with this Agreement and the
Loans.
(e) The Companies will indemnify the Lenders against, and reimburse each
Lender on demand for, any loss or expense incurred or sustained by the Lenders
(including without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Lenders
to fund or maintain Eurodollar Rate Tranches) as a result of (i) any payment or
prepayment (whether authorized or required hereunder or otherwise) of all or a
portion of any such Tranche on a day other than the day on which the applicable
Eurodollar Rate Interest Period ends, (ii) any payment or prepayment, whether
required hereunder or otherwise, of Eurodollar Rate Tranches made after the
delivery, but before the effective date, of an election to have the Eurodollar
Rate plus the Applicable Eurodollar Rate Margin apply to a Eurodollar Rate
Tranche, if such payment or prepayment prevents such election from becoming
fully effective, (iii) the failure of any Eurodollar Rate Tranche to be made by
the Lenders or of any such election to become effective due to any condition
precedent to a Eurodollar Rate Tranche not being satisfied or due to any other
action or inaction of the Companies, (iv) the Companies' election to change the
interest rate from the Eurodollar Rate plus the Applicable Eurodollar Rate
Margin to the Base Rate plus the Applicable Base Rate Margin pursuant to Section
3.2(f)(iv) hereof, or (v) the occurrence of a Default or the non-payment of the
Notes at maturity of the Notes for any reason as set forth in Section 3.3
hereof. For purposes of this Subsection, funding losses arising by reason of
liquidation or reemployment of deposits or other funds acquired by the Lenders
to fund or maintain Eurodollar Rate Tranches shall be calculated as (A) the
remainder, if a positive number, obtained by subtracting (1) the yield
(reflecting both stated interest rate and discount, if any) to maturity of
obligations of the United States Treasury as determined by the Administrative
Agent in an amount equal or comparable to such advance for the period of time
commencing on the date of the payment, prepayment or change of rate as provided
above and ending on the last day of the subject Eurodollar Rate Interest Period,
from (2) the Eurodollar Rate plus the Applicable Eurodollar Rate Margin of the
subject Eurodollar Rate Interest Period, (B) times the number of days from the
date of payment, prepayment or change of rate to the last day of the Eurodollar
Rate Interest Period, divided by 360, (C) times the amount of the applicable
Eurodollar Rate Tranche. Any payment due under this section will be paid to the
Administrative Agent within five days after the Administrative Agent delivers to
the Company a certificate setting forth in reasonable detail the amount of such
payment, which certificate shall be conclusive in the absence of manifest error.
6
<PAGE>
(f) The Companies covenant and agree that:
(i) The Companies will pay, when due and on an after-tax basis, all
present and future stamp and other taxes, levies, costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of any
Eurodollar Rate Tranche (other than taxes, levies, costs or charges imposed
on or measured by the overall net income of the Lenders, or any lending
office of the Lenders by any jurisdiction in which the Lenders or any such
lending office is located) (all such non-excluded taxes, levies, costs and
charges being collectively called "Reimbursable Taxes"). Promptly after
the date on which payment of any Reimbursable Taxes is due pursuant to
applicable law, the Companies will, at the request of the Administrative
Agent, furnish to the Lenders evidence in form and substance satisfactory
to the Lenders that the Companies have met their obligation under this
subsection.
(ii) The Companies will indemnify the Administrative Agent and the
Lenders against, and reimburse the Administrative Agent and the Lenders on
demand for, any Reimbursable Taxes paid by the Administrative Agent and the
Lenders and any loss, liability, claim or expense, including interest,
penalties and legal fees, that the Administrative Agent and the Lenders may
incur at any time arising out of or in connection with the failure of the
Companies to make any payment of Reimbursable Taxes when due. Any payment
due under this subsection will be paid to the Administrative Agent within
five days after demand therefor by the Administrative Agent.
(iii) All payments on account of the principal of, and interest on,
Eurodollar Rate Tranches and all other amounts payable by the Companies to
the Lenders hereunder shall be made free and clear of and without reduction
by reason of any Reimbursable Taxes.
(iv) If the Companies are ever required to pay any Reimbursable Taxes
with respect to any Eurodollar Rate Tranches, the Companies may elect, by
giving to the Administrative Agent not less than three (3) Business Days'
notice, to change the interest rate applicable to any such advance from the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin to the Base Rate
plus the Applicable Base Rate Margin, but such election shall not diminish
the Companies' obligation to pay all Reimbursable Taxes theretofore
imposed, assessed, levied or collected.
(g) If any applicable law or regulation, or the action of any applicable
regulatory requirement increases the reserves or capital required for the
Credit Facility, the Administrative Agent shall promptly deliver a certificate
to the Company specifying in reasonable detail the additional amount as will
compensate the Lenders for the additional costs,
7
<PAGE>
which certificate shall be conclusive in the absence of manifest error. The
Companies shall pay the amount specified in such certificate promptly upon
receipt.
3.3 Interest Payment Dates; Late Payment and Default Rate. Interest on
Base Rate Advances under any of the Loans shall be payable quarterly in arrears
on the last day of each March, June, September and December, beginning March 31,
1999; interest on Eurodollar Rate Advances shall be payable on the last day of
each Eurodollar Rate Interest Period (1 month, 2 months, 3 months or 6 months),
and in the case of 6-month Eurodollar Rate Interest Periods, also at the end of
the first 3 months thereof. Upon the occurrence of a Default and for so long as
such Default remains uncured, the interest rate on the Notes shall be increased
to the Base Rate plus the Applicable Base Rate Margin plus two percent (2%).
Interest after maturity of the Notes for any reason whatsoever (including
acceleration following the occurrence of an Event of Default) shall be increased
to the Base Rate plus the Applicable Base Rate Margin plus two percent (2%) and
shall be payable on demand.
3.4 Facility Fee; Agents' Fee.
(a) A facility fee equal to the Applicable Facility Fee Rate on the daily
average Available Credit shall begin to accrue on the Effective Date of this
Credit Facility, and shall be payable by the Companies quarterly in arrears on
the last day of each March, June, September and December, beginning March 31,
1999, through and including the Drawdown Termination Date.
(b) A commitment fee for the Credit Facility in the amount of $150,000
(being 0.075% of the Commitments) shall be payable by the Companies to the
Administrative Agent to be shared pro rata among the Lenders based on their
respective commitments.
(c) An Agents' fee for the Credit Facility in the amount set forth in the
Agents' Fee Agreement shall be payable by the Companies to the Agents in
accordance with the Agents' Fee Agreement.
3.5 Method of Calculating Interest and Fees. Interest at the Base Rate
(based on the Prime Rate) shall be computed on the basis of a year consisting of
365 days (366 days in a leap year) and paid for the actual days elapsed.
Interest at the Base Rate (based on the Federal Funds Rate) shall be computed on
the basis of a year consisting of 360 days and a month consisting of 30 days and
paid for the actual days elapsed. Interest at the Eurodollar Rate shall be
computed on the basis of a year consisting of 360 days and a month consisting of
30 days and paid for the actual days elapsed. Interest at the Applicable
Facility Fee Rate shall be computed on the basis of a year consisting of 360
days and a month consisting of 30 days and paid for the actual days elapsed.
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Section 4. Payments, Reduction or Termination of the Credit Facility and
Prepayments.
4.1 Place of Payment. All payments hereunder (including payments of
interest, principal and fees) with respect to the Notes shall be made by the
Companies to the Administrative Agent in immediately available funds, prior to
1:00 p.m. (Eastern time) at its offices at 100 Federal Street, Boston,
Massachusetts, or at such other place as may be designated by Administrative
Agent to the Companies in writing. Any payment received after 1:00 p.m.
(Eastern time) shall be deemed received on the next Business Day. Whenever any
payment to be made hereunder or under the Notes fall on a date other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall be included in the computation of payment of
interest or any fees.
4.2 Reduction of Credit Facility; Prepayments. (a) The Companies may from
time to time (in the case of Base Rate Tranches) or at the end of any Eurodollar
Rate Interest Period (in the case of Eurodollar Rate Tranches), upon at least
three (3) Business Days prior telephonic notice (confirmed in writing) to
Administrative Agent, permanently reduce the amount of the Commitments available
under the Line of Credit (which Commitments shall be reduced proportionately by
the Lenders), but only upon payment of the outstanding principal amount of the
Line of Credit Notes in excess of the then reduced amount of the Commitments
available under the Line of Credit. Any such reduction shall be in an amount of
$10,000,000.00 or an integral multiple thereof. The Companies may at any time
(in the case of Base Rate Tranches) or at the end of any Eurodollar Rate
Interest Period (in the case of Eurodollar Rate Tranches), on like notice,
terminate the Commitments available under the Line of Credit upon payment in
full of the Line of Credit Notes and other liabilities of the Companies
hereunder. In the case of either a reduction or termination of the Commitments,
the Companies shall thereafter have no right to increase or restore the
Commitments.
(b) The Companies may from time to time (in the case of Base Rate Tranches)
or at the end of any Eurodollar Rate Interest Period (in the case of Eurodollar
Rate Tranches) prepay the principal of the Line of Credit Notes in whole or in
part without premium; provided, however, any partial prepayment of principal
shall be in an amount of $1,000,000.00 or any integral multiple thereof. Any
prepayment of the principal of the Line of Credit Note shall include accrued
interest to the date of prepayment on the principal amount being prepaid.
4.3 Prepayments of Term Notes. The Companies may from time to time (in
the case of Base Rate Tranches) or at the end of any Eurodollar Rate Interest
Period (in the case of Eurodollar Rate Tranches), upon at least three Business
Day's prior telephonic notice (confirmed in writing) to the Administrative
Agent, prepay the principal of the Term Notes in whole or in part without
premium; provided, however, any partial prepayment of principal shall be in an
amount not less than $20,000,000.00. Any prepayment of the principal of the
Term Notes shall include accrued interest to the date of prepayment on the
principal amount
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being prepaid. All prepayments when made shall be applied pro rata to unpaid
installments of principal, and shall not relieve the Companies from the
obligation to pay scheduled installments of principal (as reduced by the pro
rata application of the prepayment) in accordance with the Term Notes.
4.4 Pro Rata Payments. All payments and prepayments of principal,
interest, fees (except the fees payable to the Agents pursuant to the Agents'
Fee Agreement), and other amounts paid by the Companies to the Administrative
Agent from time to time under this Agreement shall be promptly wired by the
Administrative Agent to the Lenders in proportion to their respective
Commitments.
Section 5. Representations and Warranties of the Companies.
The Companies represent and warrant to the Lenders that as of the Effective
Date and any date thereafter:
5.1 Corporate Existence. Each of the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and is duly qualified and in good
standing in all jurisdictions wherein the property it owns or the business it
transacts make such qualification necessary as a foreign corporation, except
where the failure to so qualify would not materially impair the ability of the
Company or any of its Subsidiaries to operate its business or own its assets;
and each of the Companies has and will continue to have (i) all necessary
corporate power and authority and (ii) all necessary material permits, licenses,
patents, trademarks and other intangibles, to acquire, own and hold the property
and all other properties it purports to own and hold and to carry on its
business as now conducted. The Domestic Subsidiaries listed on Exhibit "A"
attached hereto constitute all of the Domestic Subsidiaries of the Company.
5.2 Authorization; Validity. Each of the Companies is and/or has been
duly authorized to execute and deliver this Agreement and the Notes, and is and
will continue to be duly authorized to borrow monies hereunder and to perform
its obligations under this Agreement and the Notes. This Agreement and the
Notes, as executed and when delivered, shall constitute the legal, valid and
binding obligations of each of the Companies, enforceable in accordance with
their respective terms.
5.3 Conflicting Agreements and Other Matters. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
the business, property, assets, or financial condition of the Company and its
Subsidiaries, taken as a whole. Neither the execution nor delivery of this
Agreement or the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, the
charter or by-laws of the Company or any of its Subsidiaries, any award of any
arbitrator or any agreement (including
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any agreement with stockholders) or instrument to which the Company or any of
its Subsidiaries is now a party, or result in the creation of any Lien on any
property or assets of the Company or any of its Subsidiaries, or constitute a
violation of any law, statute, rule, regulation, order, judgment or decree to
which the Company or any of its Subsidiaries is subject. Neither the Company nor
any of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other contract or agreement
(including its charter) which (i) limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Companies of the type to be
evidenced by the Credit Facility, or (ii) which imposes restrictions on the
granting of Liens by the Companies on otherwise unencumbered assets of the
Companies as security for the Credit Facility.
5.4 Financial Statements. The Company has furnished the Lenders with the
consolidated balance sheets of the Company and its Subsidiaries as at fiscal
year end in each of the years 1996 through 1998, inclusive, and for the nine-
month period ending December 31, 1998, and a consolidated statement of income
and statement of cash flows for each such fiscal year and such nine-month
period, all identified by a principal financial officer of such Company and all
(other than any financial information for such nine-month period) certified by
KPMG Peat Marwick LLP with respect to the fiscal years ending March 31, 1996 and
March 31, 1997 and by Ernst & Young, LLP with respect to the fiscal year ending
March 31, 1998. Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and normal year-end
adjustments) and have been prepared in accordance with generally accepted
accounting principles, and, unless otherwise set forth therein, consistently
followed throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its Subsidiaries required to be shown in
accordance with such principles. The balance sheets fairly present the
condition of the Company and its Subsidiaries as at the dates thereof, and the
related statements of earnings, stockholders' equity and cash flows fairly
present the results of the operations of the Company and its Subsidiaries for
the periods indicated. As of the date of this Agreement, there has been no
material adverse change in the business, condition or operations (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, since December
31, 1998.
5.5 Litigation and Contingent Liabilities. No litigation or governmental
proceedings are pending or threatened against the Company or any of its
Subsidiaries, the results of which are likely to materially adversely affect the
financial condition or operations of the Company and its Subsidiaries on a
consolidated basis, except as provided for or disclosed in the financial
statements referred to in Section 5.4 hereof. Other than any liability incident
to such litigation or proceedings provided for or disclosed in the financial
statements referred to in Section 5.4 hereof, or any other material contingent
liabilities provided for or disclosed in the financial statements referred to in
Section 5.4 hereof, the Company and its Subsidiaries, on a consolidated basis,
do not have any material contingent liabilities.
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5.6 Outstanding Funded Debt. Neither the Company nor any of its
Subsidiaries has outstanding any Funded Debt except as set forth on Schedule 5.6
attached hereto and made a part hereof. There exists no default under the
provisions of any instrument evidencing Debt or of any agreement relating
thereto.
5.7 Title to Properties. Except for assets which are the subject of
Capitalized Lease Obligations, the Company and its Subsidiaries each have and
will continue to have good and marketable title to their respective properties
and assets, including the properties and assets reflected in the financial
statements described in Section 5.4 hereof, subject to no Lien of any kind
except Liens permitted by Section 6.8 hereof. All leases necessary in any
material respect for the conduct of the respective businesses of the Company and
its Subsidiaries are valid and subsisting and are in full force and effect.
5.8 Purpose. The proceeds of the Loan will be used by the Companies only
for the purposes specified in Section 1.3 hereof.
5.9 Margin Stock. Neither the Company nor any of its Subsidiaries is
engaged in the business of purchasing or selling margin stock (as defined in any
regulation of the Board of Governors of the Federal Reserve System) or extending
credit to others for the purpose of purchasing or carrying margin stock and no
part of the proceeds of any borrowing hereunder will be used to purchase or
carry any margin stock or for any other purpose which would violate any of the
margin regulations of such Board of Governors.
5.10 ERISA. No accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC
has been or is expected by the Company to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company or any of its Subsidiaries
which is or would be materially adverse to the Company and its Subsidiaries
taken as a whole. Neither the Company nor any of its Subsidiaries has incurred
or presently expects to incur any withdrawal of liability under Title IV of
ERISA with respect to any Multiemployer Plan which is or would be materially
adverse to the Company and its Subsidiaries taken as a whole. The execution and
delivery of this Agreement will not, and the delivery of the Notes will not,
involve any transaction which is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended; the term "Plan" shall mean an "employee pension benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
by any trade or business, whether or not incorporated, which, together with the
Company, is under common control, as described in Section 414(b) or (c) of the
Code; and the term "Multiemployer Plan" shall mean any plan which is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
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5.11 Consents. No consent, approval or authorization of, or registration
or declaration with, any federal or state governmental authority or other
regulatory agent for the validity of the execution and delivery or for the
performance by any of the Companies of this Agreement and the Notes or any
agreement or instrument executed in connection herewith, is or will be required.
5.12 Tax Returns; Taxes. The Company has and each of its Subsidiaries
have filed all federal, state, foreign and other income tax returns which, to
the knowledge of the officers of the Company, are required to be filed by any
jurisdiction, and each has paid and will pay all taxes which have or
subsequently become due pursuant to said returns or pursuant to any assessments,
except those contested in good faith by appropriate proceedings and for which
sufficient reserves have been or will be established.
5.13 Compliance with Laws. The Company and each of its Subsidiaries is in
substantial compliance with all laws and regulations applicable to the Companies
and the businesses conducted by them (including without limitation, laws and
regulations relating to pollution and environmental control, equal employment
opportunity and employer safety) in all jurisdictions in which the Company and
each of its Subsidiaries is presently doing business, and the Company will
substantially comply and cause each of its Subsidiaries to substantially comply
with all such laws and regulations which may be legally imposed in the future in
jurisdictions in which the Company or any Subsidiary may then be doing business.
5.14 Foreign Assets Control Regulations. Neither the borrowing by the
Companies hereunder nor their use of the proceeds thereof will violate the
Foreign Assets Control Regulations, the Burmese Sanctions Regulations, the Cuban
Assets Control Regulations, the Iranian Assets Control Regulations, the Libyan
Sanctions Regulations, the Iranian Transactions Regulations, Iraqi Sanctions
Regulations, the Sudanese Sanctions Regulations, the UNITA (Angola) Sanctions
Regulations or the Federal Republic of Yugoslavia (Serbia and Montenegro)
Sanctions Regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V), or the Comprehensive Anti-Apartheid Act of 1986 (P.L. 99-440), or
any similar asset control regulations now existing or hereafter promulgated by
the United States Treasury Department.
5.15 Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Lenders by or on behalf of the Company
and the Subsidiaries in connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Company can now foresee) materially
adversely affect the business, property or assets, or financial condition, of
the Company and any of its Subsidiaries, taken as a whole, and which has not
been set forth in this Agreement or in the
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other documents, certificates and statements furnished to the Lenders by or on
behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby.
5.16 Environmental Matters. (i) Neither the Company nor any Subsidiary is
subject to any Environmental Liability or Environmental Requirement which could
reasonably be expected to have a material adverse effect on the business,
financial condition, operations or prospects of the Company and its
Subsidiaries, taken as a whole.
(ii) Except as set forth on Schedule 5.16, neither the Company nor any
Subsidiary has been designated as a potentially responsible party under CERCLA
or under any state statute similar to CERCLA. None of the Properties has been
identified on any current or proposed National Priorities List under 40 C.F.R.
(S)300 or any list arising from a state statute similar to CERCLA. None of the
Properties has been identified on any CERCLIS list.
(iii) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, released, managed at or
shipped or transported to or from the Properties or are otherwise present at,
on, in or under the Properties or, to the best knowledge of the Companies, at or
from any adjacent site or facility, except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of, released and
managed in the ordinary course of business in compliance with all applicable
Environmental Requirements, except where failure to comply could not reasonably
be expected to have a material adverse affect on the business, operations, or
financial condition of the Company and its Subsidiaries, taken as a whole.
(iv) Except as set forth in Schedule 5.16, the Company and each of its
Subsidiaries has procured all permits, licenses or authorizations (or any
variances or waivers) necessary under Environmental Requirements for the conduct
of its business.
5.17 Year 2000 Compliance. The Company represents and warrants as follows
to Lenders that all devices, systems, machinery, information technology,
computer software and hardware, and other date sensitive technology
(collectively, the "Systems") necessary for the Company and its Subsidiaries to
carry on its business as presently conducted are Year 2000 Compliant or will be
Year 2000 Compliant within a period of time calculated to result in no material
disruption of any of the Companies' business operations. For the purposes
hereof, "Year 2000 Compliant" means that such Systems are designed to be used
prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without material error relating to date
data, specifically including any error relating to, or the product of, date data
which represents or references different centuries or more than one century.
5.18 Special Provisions. The foregoing representations and warranties
shall be true and correct as of the Effective Date, and shall remain true and
correct from and after the Effective Date.
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Section 6. Covenants of the Companies.
From the date of this Agreement and thereafter until the expiration or
termination of the Credit Facility and until the Notes and other liabilities of
the Companies hereunder are paid in full:
6.1 Financial Statements: The Company agrees that it will furnish to the
Documentation Agent one copy for each of the Lenders of the following:
(a) as soon as practicable and in any event within forty-five (45) days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly period
and the related statement of earnings and cash flows for the period
from the beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and certified by an authorized financial officer
of the Company, subject to changes resulting from year end
adjustments; provided, however, that delivery pursuant to clause (c)
below of copies of the Quarterly Report on Form 10-Q of the Company
for such quarterly period filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this clause
(a);
(b) as soon as practicable and in any event within ninety (90) days after
the end of each fiscal year, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the
related statements of earnings, stockholders' equity and cash flow for
such year, setting forth in each case in comparative form
corresponding consolidated figures from the preceding annual audit,
all in accordance with generally accepted accounting principles and
unrestricted in audit scope and certified as to consolidated
statements of the Company by independent public accountants of
recognized standing selected by the Company whose certificate shall be
in scope and substance satisfactory to Lenders; provided, however,
that delivery pursuant to clause (c) below of copies of the Annual
Report on Form 10-K of the Company for such fiscal year filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (b);
(c) promptly upon transmission thereof, copies of all such financial
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statements, proxy statements, notices and reports as the Company shall
send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which the Company files
with the Securities and Exchange Commission (or any governmental body
or agency succeeding to the functions of the Securities and Exchange
Commission);
(d) promptly upon receipt thereof, a copy of each other report submitted
to the Company or any of its Subsidiaries by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company or any of its Subsidiaries and which the
Company or any of its Subsidiaries shares with the audit committee of
the Board of Directors of the Company;
(e) with reasonable promptness, such other financial data as Lenders may
reasonably request; and
(f) as soon as practicable but in any event not later than ninety (90)
days after the beginning of each fiscal year, a consolidated budget of
the Company and its Subsidiaries for the ensuing fiscal year.
Together with each delivery of financial statements required by clauses (a) and
(b) above, the Company will deliver to the Documentation Agent an original of an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance with Sections 6.12, 6.13 and 6.14, stating that there exists no Event
of Default or Default, or, if any such Event of Default or Default exists,
specifying the nature thereof, the period of existence thereof and what action
the Company proposes to take with respect thereto. Together with each delivery
of financial statements required by clause (b) above, the Company will also
deliver to the Documentation Agent an original of a certificate of said
accountants stating that, in making the audit necessary to the certification of
such financial statements, they have obtained no knowledge of any Default or any
Event of Default, or, if any such Event of Default or Default exists, specifying
the nature and period of existence thereof. Such accountants, however, shall
not be liable to anyone by reason of their failure to obtain knowledge of any
such Event of Default or Default which would not be disclosed in the course of
an audit conducted in accordance with generally accepted auditing standards.
The Companies also agree that forthwith upon the chief executive officer,
principal financial officer or principal accounting officer of the Company
obtaining knowledge of:
(i) an Event of Default or Default;
(ii) a material adverse change in the financial condition, business or
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operations of the Company and its Subsidiaries, taken as a whole;
(iii) the institution of legal proceedings against the Company and/or
any Subsidiary, which is likely to materially adversely affect
the financial condition, business or operations of the Company
and its Subsidiaries, taken as a whole, or which in any manner
draws into question the validity of or is likely to impair the
ability of the Companies to perform their obligations under this
Agreement or the Notes;
(iv) the occurrence of any default (after the passage of any grace
period) by a Company under any agreement or note evidencing
borrowed money for an aggregate initial principal amount equal to
or greater than $1,000,000;
(v) any (A) Environmental Liability which is likely to materially
adversely affect the financial condition, business or operations
of the Company and its Subsidiaries, taken as a whole, (B)
pending, threatened or anticipated Environmental Proceedings,
which is likely to materially adversely affect the financial
condition, business or operations of the Company and its
Subsidiaries, taken as a whole, (C) Environmental Notice which is
likely to materially adversely affect the financial condition,
business or operations of the Company and its Subsidiaries, taken
as a whole, (D) Environmental Judgment or Order which is likely
to materially adversely affect the financial condition, business
or operations of the Company and its Subsidiaries, taken as a
whole, or (E) Environmental Releases at, on, in, under or in any
way materially affecting the Properties;
(vi) any violation of the provisions of Section 6.17 hereto relating
to ERISA compliance; or
(vii) the occurrence of any other event that is likely to impair the
ability of the Companies to meet their obligations hereunder.
the Company will deliver to the Documentation Agent an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company has taken, is taking or proposes to take with respect thereto.
The Documentation Agent will promptly distribute to the Lenders, originals
(to the extent available) or copies of the financial statements and reports, the
Officer's Certificates and all other documents received by the Documentation
Agent from the Borrower pursuant to this Section 6.1.
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6.2 Inspection of Property and Books and Records. The Companies agree
that they will permit the Agents, each Lender (with prior notice to the Agents)
and any Person designated by the Agents in writing, at Agents' (or Lender's)
expense, to visit and inspect any of the properties of the Company and its
Subsidiaries, to examine the corporate books and financial records of the
Companies and make copies thereof or extracts therefrom, and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of each of the Companies and their respective independent public
accountants, all at such reasonable times and as often as Agents or the Lenders
may reasonably request.
6.3 Covenant to Secure Notes Equally. (a) The Companies agree that if the
Company or any Subsidiary shall create or assume any Lien of any kind upon any
of its property or assets, whether now owned or hereafter acquired, other than
Liens permitted by the provisions of Section 6.8 (unless prior written consent
to the creation or assumption thereof shall have been obtained), they will make
or cause to be made effective provisions whereby the Notes will be secured by
such Lien equally and ratably with any and all other Debt thereby secured, as
long as any such other Debt shall be so secured.
(b) The Companies agree not to become a party to, or otherwise be subject
to, any provision contained in any instrument evidencing indebtedness of any of
the Companies which imposes restrictions on the granting of Liens by the
Companies on otherwise unencumbered assets of the Companies as security for the
Notes, except as set forth herein.
6.4 Guaranteed or Collateralized Obligations. The Company agrees that if
it or any of its Subsidiaries incurs or permits to exist any Debt in any event
in excess of an aggregate principal amount equal to $10,000,000 guaranteed or
collateralized (except as permitted by Sections 6.8(v) and 6.8(ix) hereof) in
any other manner by any other Person (other than any governmental entity, or
other than in connection with (y) bonds, letters of credit, letters of
undertaking, or other instruments related to litigation, or the avoidance
thereof, involving the Company or its Subsidiaries, including the release of
assets of the Company or its Subsidiaries in connection with such litigation, or
(z) performance bonds, surety bonds, letters of credit, bank guaranties, and
other instruments related to the conduct of the business of the Company or its
Subsidiaries, excluding any obligation for borrowed money), it will
simultaneously cause such Person to execute and deliver to the Lenders a
guaranty agreement or collateral agreement, as the case may be, in form and
substance satisfactory to the Lenders either (i) guaranteeing payment of the
principal amount of the Notes and any premium and interest thereon, which bears
the same ratio to the total unpaid principal amount of the Notes as the amount
of such other obligation which is guaranteed bears to the total unpaid principal
amount of such other obligation or (ii) collateralizing the Notes equally and
ratably with such other obligation, as the case may be. Nothing contained in
the foregoing shall be deemed to permit the Companies to incur Liens to Persons
other than the Lenders in excess of those permitted by Section 6.8 hereof.
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6.5 Maintenance of Insurance. Each Company agrees that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation, pollution and war risks) and in such amounts as is
customary in the case of similarly situated corporations engaged in the same or
similar businesses.
6.6 Maintenance of Corporate Existence/Compliance with Law/Preservation of
Property. Except as allowed under Sections 6.10 and 6.11, each Company
covenants that it and each Subsidiary will do or cause to be done all things
necessary to preserve, renew and keep in full force and effect the corporate
existence of such Company and its Subsidiaries and comply in all material
respects with all laws and regulations (including, without limitation, laws and
regulations relating to equal employment opportunity and employee safety)
applicable to it and its Subsidiaries, the failure with which to comply is
likely to materially adversely affect the business, operations or financial
condition of such Company and its Subsidiaries, taken as a whole; at all times
maintain, preserve and protect all material intellectual property of such
Company and its Subsidiaries, and preserve all the remainder of its material
property used or useful in the conduct of its business and keep the same in good
repair, working order and condition. The Companies shall not enter into
business activities materially different from the nature of the business
activities of the Companies as of the date of this Agreement.
6.7 Compliance with Environmental Laws. Each of the Companies will, and
the Company will cause each of its Subsidiaries to, comply in a timely fashion
with, or operate pursuant to valid waivers of the provisions of, all
Environmental Requirements including, without limitation, requirements with
respect to the emission of wastewater effluent, solid and hazardous waste and
air pollution, and any other applicable requirements for conducting, on a
timely basis, periodic tests and monitoring for contamination of ground water,
surface water, air and land and for biological toxicity of the aforesaid, and
comply with any applicable regulations (except to the extent such regulations
are waived by appropriate governmental authorities) of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, except where the failure to do so is not likely to materially
adversely affect the business, operations or financial condition of the Company
and the Subsidiaries, taken as a whole. To the fullest extent permitted by
applicable law, each Company agrees to indemnify and hold the Agents, the
Lenders, their officers, agents and employees harmless from any loss, liability,
claim or expense that they may incur or suffer as a result of a breach by the
Company or any of the Subsidiaries, as the case may be, of this covenant. No
Company shall be deemed to have breached or violated this Section 6.7 if such
Company or Subsidiary is challenging in good faith by appropriate proceedings
diligently pursued the application or enforcement of such Environmental
Requirements for which adequate reserves have been established in accordance
with generally accepted accounting principles.
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6.8 Liens. The Companies agree that they will not and will not permit any
Subsidiary to create, assume or suffer to exist any Lien upon any of their
respective property or assets, whether now owned or hereafter acquired (whether
or not provision is made for the equal and ratable securing of the Credit
Facility in accordance with the provisions of Section 6.3) except:
(i) Liens for taxes (including ad valorem and property taxes) not yet
due or which are being contested in good faith by appropriate
proceedings;
(ii) Liens incidental to the conduct of their businesses or the
ownership of their property and assets which were not incurred in
connection with the borrowing of money or the obtaining of
advances of credit, and which do not in the aggregate materially
detract from the value of their property or assets or materially
impair the use thereof in the operation of their business;
(iii) presently existing Liens on property or assets of any of the
Subsidiaries to secure obligations of any of such Subsidiaries to
the Company or another Subsidiary;
(iv) presently existing Liens on property or assets of any Foreign
Subsidiary consisting of marine mortgages on new vessels under
construction or on vessels already constructed, which Liens were
required as a condition of new vessel financing from non-United
States sources, all of which Liens (other than Liens which are
incidental and do not materially affect such property or assets)
are set forth on Schedule 2-Part 1 attached hereto and made a
part hereof;
(v) any presently existing Lien which existed on any real or personal
property of any corporation at the time it became a Subsidiary,
or which existed prior to the time of acquisition upon any real
or personal property acquired by the Company or any Subsidiary
through purchase, merger or consolidation or otherwise, whether
or not assumed by the Company or any Subsidiary, or placed upon
real or personal property acquired by the Company or any
Subsidiary, in connection with the purchase thereof, all of which
Liens (other than Liens which are incidental and do not
materially affect such property) are set forth on Schedule 2-Part
2 attached hereto and made a part hereof, provided that any such
Lien shall not encumber any other property of the Company or any
Subsidiary;
(vi) any Lien renewing, extending or refunding any Lien permitted by
clause
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(v) above, provided that the principal amount secured is not
increased and the Lien is not extended to other property;
(vii) Liens to secure up to $20,000,000 of letters of credit
obligations of the Company;
(viii) any common law right of set off or banker's lien arising in
the ordinary course of business in connection with deposit
arrangements maintained by the Company and its Subsidiaries with
its banks or other financial institution, other than a Lender in
connection with this Agreement (which such rights have been
waived pursuant to Section 9.3 hereof); and
(ix) Liens on assets covered by financing arrangements, including
lease financing arrangements which would be characterized as
capitalized leases in accordance with generally accepted
accounting principles, if the indebtedness for all such
agreements does not in the aggregate exceed ten percent (10%) of
Consolidated Stockholders' Equity.
6.9 Investments. The Companies agree that they will not and will not
permit any Subsidiary to make any investment in, or any loan or advance to, or
own, purchase or acquire (other than as allowed in Section 6.11) any stock or
securities of, any Person (all of the foregoing being herein called "Restricted
Investments"), except that:
(i) the Company or any of its Subsidiaries may own, purchase or
acquire (A) direct obligations of the United States of America or
any of its agencies or obligations guaranteed by the United
States of America or any of its agencies and having maturities
not in excess of two years from the date of purchase or
acquisition, (B) prime commercial paper rated A1 or P1 and having
maturities not in excess of two years from the date of purchase
or acquisition, (C) certificates of deposit issued by any banks
with a net worth of at least $100,000,000 and a rating by either
Moody's Investor Services, Inc. or Standard & Poors of at least A
or better and having maturities not in excess of two years from
the date of purchase or acquisition; provided, however, that in
the case of any Lender or Lenders whose rating is less than A,
the maximum amount of the certificates of deposit issued by such
Lender or Lenders shall not exceed $3,000,000 individually or
$12,000,000 in the aggregate;
(ii) any Canadian Subsidiary may own, purchase or acquire direct
obligations of the Canadian Government having maturities not in
excess of two years from the date of purchase or acquisition;
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(iii) the Company or any of its Subsidiaries may (A) make or permit
to remain outstanding loans or advances to the Company or any
Subsidiary, (B) own, purchase or acquire stock or securities of a
Subsidiary or of a corporation which immediately after such
purchase or acquisition will be a Subsidiary, or (C) acquire and
own stock or securities received in a settlement of debts created
in the ordinary course of business and owed to the Company or any
Subsidiary;
(iv) any Foreign Subsidiary may own, purchase or acquire certificates
of deposit having maturities not in excess of two years from the
date of purchase or acquisition and issued by foreign banks or by
the foreign branches of United States banks if each such foreign
bank or foreign branch has a net worth of at least $100,000,000
and a rating by either Moody's Investor Services, Inc. or
Standard & Poors of at least A or better; and
(v) the Company or any Subsidiary may make loans or advances to or
own, purchase or acquire stock or securities or an interest in
any joint venture entity; provided, however, that the aggregate
amount of all such loans, advances and investments in joint
venture entities at any time outstanding shall not exceed
$100,000,000.
The foregoing restrictions on investments by the Companies shall not apply to
funds maintained in rabbi trusts established by the Companies for supplemental
executive retirement plans and early retirement incentive programs.
Furthermore, the foregoing restrictions on investments by the Company shall not
apply to purchases by the Company of its own stock or securities.
6.10 Dispositions of Stock and Debt. The Companies agree that they will
not and will not permit any Subsidiary to sell or otherwise dispose of any
shares of stock or Debt of any Subsidiary, except (i) to the Company or another
Subsidiary, (ii) a sale of shares of a Subsidiary in connection with the
creation of a joint venture (subject to the limitations on investments set forth
in Subsections 6.9(v), and (iii) except that all shares of stock and Debt of any
Subsidiary at the time owned by or owed to the Company or any of its
Subsidiaries may be sold as an entirety for a cash consideration which
represents the fair value (as determined in good faith by the Board of Directors
of the Company) at the time of sale of the shares and Debt so sold; provided
that the assets of such Subsidiary do not constitute a substantial part of the
consolidated assets of the Company and its Subsidiaries; and provided further
that, at the time of such sale, such Subsidiary shall not own, directly or
indirectly, any Debt of the Company or any shares of stock or Debt of any other
Subsidiary (unless all of the shares of stock and Debt of such other Subsidiary
owned, directly or indirectly by the Company and all Subsidiaries are
simultaneously being sold as permitted by this Section 6.10; and provided,
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further, that the Company may sell 70% of the stock of Tidewater (Malaysia)
Sdn.Bhd. to citizens of Malaysia.
6.11 Mergers and Consolidations. The Companies agree that they will not
and will not permit any Subsidiary to merge or consolidate with any other
corporation or sell, lease or transfer or otherwise dispose of all or a
substantial part of its assets to any Person, except that provided no Default
has occurred and is continuing and further provided that no Default will occur
as a result thereof:
(i) any Subsidiary may merge or consolidate with the Company
(provided that the Company shall be the continuing or surviving
corporation) or with any one or more other Subsidiaries;
(ii) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to the Company or another Subsidiary;
(iii) any Subsidiary may sell or otherwise dispose of all or
substantially all of its assets subject to the conditions
specified in Section 6.11 with respect to a sale of the stock of
such Subsidiary;
(iv) the Company may merge or consolidate with any corporation
provided that the Company shall be the continuing or surviving
corporation; and
(v) any Subsidiary may merge or consolidate with any corporation
provided such continuing or surviving corporation shall remain or
become a Subsidiary of the Company.
6.12 Minimum EBITDA to Fixed Charge Ratio. The Company agrees that it
will not permit its EBITDA to Fixed Charge Ratio to be less than 2.00 to 1.00.
6.13 Maximum Funded Debt to EBITDA Ratio. The Company agrees that it will
not permit its Funded Debt to EBITDA Ratio to be greater than 3.00 to 1.00.
6.14 Maximum Funded Debt to Total Capitalization Ratio. The Company
agrees that it will not permit its Funded Debt to Total Capitalization Ratio to
be greater than 0.40 to 1.00.
6.15 Transactions with Related Party. The Companies agree that they will
not and will not permit any Subsidiary to effect any transaction with any
Affiliate or Subsidiary by which any asset or services of a Company or a
Subsidiary is transferred to such Affiliate or Subsidiary, or from such
Affiliate or Subsidiary or enter into any other transaction with an Affiliate or
Subsidiary, on terms less favorable to such Company or such Subsidiary than
would be reasonably expected to be given in a similar transaction with an
unrelated entity.
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The foregoing restrictions shall not apply to transactions between the Company
and a Subsidiary or a Subsidiary and another Subsidiary.
6.16 Stock Transactions by Subsidiaries. The Company agrees that it will
not permit any Subsidiary to issue, sell or dispose of any shares of any class
of its stock (other than directors' qualifying shares or shares which are
effectively controlled by the Company) except to the Company or another
Subsidiary or as permitted by Section 6.11.
6.17 ERISA. The Company agrees that it will not, and will not permit any
Subsidiary to:
(i) terminate or withdraw from any Plan so as to result in any
material liability to the PBGC;
(ii) engage in or permit any Person to engage in any prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan (other
than a Multiemployer Plan) which would subject the Company or any Subsidiary to
any material tax, penalty or other Liability;
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, involving any Plan (other than a Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition, which presents a
material risk of incurring a material liability to the PBGC.
6.18 Federal Reserve Regulations, etc. The Company agrees that it will
not, and will not permit any Subsidiary or any agent acting on behalf of the
Company or any Subsidiary, to take any action which might cause this Agreement
or the Notes to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934, as amended, in each case as in effect now or as the same may
hereafter be in effect.
6.19 Environmental Matters. Each of the Companies agrees that it will
not, and will not permit any Third Party to, use, produce, manufacture, process,
generate, store, dispose of, manage at, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of, released or
managed in the ordinary course of business in compliance with all applicable
Environmental Requirements and except for Hazardous Materials released in
amounts which do not require remediation pursuant to applicable law or
regulation, and which do not present any danger to health, safety or the
environment, or unless any liability resulting from such remediation is not
likely to materially adversely affect the business, operations or financial
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condition of the Company and its Subsidiaries, taken as a whole.
6.20 Taxes. The Company agrees that it will pay when due, and cause each
of its Subsidiaries to pay when due, all taxes, assessments, and other
liabilities, other than for borrowed money, except and so long as contested in
good faith.
Section 7A. Conditions Precedent to the Funding of the Initial Advance
under the Credit Facility. The obligation of the Lenders to make the initial
Advance under the Line of Credit to the Companies under this Agreement are
subject to the receipt by the Documentation Agent of the following:
7A.1 Resolutions of the Companies. Copies, duly certified by the
secretary or assistant secretary of each of the Companies, of (a) the
resolutions of the Board of Directors of each of the Companies authorizing the
borrowings hereunder and the execution and delivery of this Agreement and the
Notes, (b) all documents evidencing other necessary corporate action, and (c)
all approvals, or consents, if any, necessary with respect to this Agreement and
the Notes.
7A.2 Organization Documents; Good Standing. Copies of (a) the certificate
of incorporation of the Company (certified as of a recent date by the Secretary
of State of Delaware), (b) the by-laws of the Company, certified by the
secretary or assistant secretary of the Company, (c) the certificate of
incorporation and by-laws of each Identified Subsidiary, certified by the
secretary or assistant secretary of such Identified Subsidiary, in each case as
in effect on the Effective Date, (d) certificates of good standing for the
Company and each of the Identified Subsidiaries, issued by the Secretary of
State of their respective states of incorporation, (e) certificate of
qualification to do business of the Company issued by the Secretary of State of
the State of Louisiana.
7A.3 Incumbency. Certificates of the secretary or assistant secretary of
each of the Companies, certifying the name of the officers of each of the
Companies, respectively, authorized to execute this Agreement and the Notes, and
all other documents or certificates to be delivered hereunder, together with the
true signatures of such officers.
7A.4 Notes. The duly executed Line of Credit Notes payable to the
respective Lenders.
7A.5 Officer's Certificate. A certificate of the president or chief
financial officer of the Company, dated as of the Effective Date, certifying
that as of the Effective Date (i) the representations and warranties of the
Companies set forth in Section 5 hereof are true and correct, (ii) no Event of
Default has occurred, and (iii) no material adverse change in the financial
condition, business, operations or prospects of the Company or its Subsidiaries
has occurred since December 31, 1998.
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7A.6 Opinion. The opinion of Jones, Walker, Waechter, Poitevent, Carrere
& Denegre, L.L.P., special counsel to the Company, addressed to the Lenders, to
the effect that (a) each of the Company and the Identified Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified and in good
standing as a foreign corporation in all jurisdictions wherein the property it
owns or the business it transacts makes such qualification necessary, except
where the failure to so qualify would not impair the ability of Company or any
of the Identified Subsidiaries to operate its business or own its assets; (b)
each of the Companies has full power to execute, deliver and perform its
obligations under this Agreement, the Line of Credit Notes and the Term Notes;
(c) such actions have been duly authorized by all necessary corporate action,
and are not in conflict with any provision of law or of the charter or by-laws
of any of the Companies, nor in conflict with any agreement binding upon the
Company or any of the Identified Subsidiaries; (d) this Agreement and the Line
of Credit Notes, when executed and delivered, are the legal and binding
obligations of the Companies, enforceable in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
reorganization, moratorium or similar laws; and (e) no consent or approval of
the shareholders of the Company or of any governmental authority is required as
a condition to the validity or enforceability of this Agreement or the Notes.
7A.7 Payment of Fees and Expenses. Evidence that the Company has paid (i)
all underwriting fees due the Administrative Agent pursuant to the Agents' Fee
Agreement, and (ii) all other fees and expenses of the Agents and their counsel
as described in Section 11.5 hereof.
7A.8 Termination of Prior Credit Facility. Copy of the irrevocable notice
of termination given by the Company pursuant to Section 1.5 hereof, to fully
terminate the credit facility pursuant to the Revolving Credit and Term Loan
Agreement, dated as of March 19, 1997, as amended, together with a certification
by the Company that all amounts due thereunder have been paid in full or will be
paid in full simultaneously with the initial Advance under this Credit Facility.
Section 7B. Conditions Precedent to the Funding of the Term Loan. In
addition to the conditions precedent set forth in Section 7A above, the
obligation of the Lenders to make the Term Loan to the Companies, are subject to
the receipt by the Documentation Agent on the Drawdown Termination Date of the
following:
7B.1 Notes. The duly executed Term Notes payable to the respective
Lenders.
7B.2 Officer's Certificate. A certificate of the president or chief
financial officer of the Company, dated as of the Drawdown Termination Date,
certifying that as of the Drawdown Termination Date (i) the representations and
warranties of the Companies set forth
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in Section 5 hereof are true and correct, (ii) no Event of Default has occurred,
and (iii) no material adverse change in the financial condition, business,
operations or prospects of the Company or its Subsidiaries has occurred since
the date of the most recent financial statements timely furnished by the Company
to the Documentation Agent.
Section 8. Conditions Precedent to Subsequent Advances Under the Line of
Credit and Funding of the Term. In addition to the applicable conditions
precedent set forth in Section 7A or Section 7B above, the obligation of the
Lenders to make any subsequent Advances under the Line of Credit, and the
obligation of the Lenders to fund the Term Loan, are subject to the satisfaction
of each of the following conditions precedent:
8.1 Default. Before and after giving effect to such Advance or funding of
the Term Loan, no Default shall have occurred and be continuing.
8.2 Representations and Warranties. Before and after giving effect to
such Advance or funding of the Term Loan, the representations and warranties in
Section 5 hereof shall be true and correct as though made on the date of such
Advance or funding of the Term Loan, except (i) for such changes as are
specifically permitted hereunder and (ii) that the representations and
warranties contained in the last sentence of Section 5.4 hereof (relating to no
material adverse change) shall refer to changes from the most recently timely
submitted financial statements of the Company.
Section 9. Events of Default; Remedies; Set Offs.
9.1 Events of Default. Any one of the following events shall constitute
Events of Default hereunder and under the Credit Facility and the Notes,
individually and collectively:
(a) The Companies default in the payment of any principal on any Note when
the same shall become due, either by the terms thereof or otherwise as herein
provided.
(b) The Companies default in the payment of any interest on any Note or any
other amount due hereunder for more than 5 days after the date due.
(c) The Company or any Subsidiary defaults in any payment of principal or
of interest on any other obligation for borrowed money (including, but not
limited to, any Capitalized Lease Obligation, any obligation under a conditional
sale or other title retention agreement, any obligation issued or assumed as
full or partial payment for property whether or not secured by a purchase money
mortgage or any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect thereto,
or in the performance or observance of any other agreement, term or condition
contained in any agreement under which any such obligation is created if the
effect of such
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default is to cause, or permit the holder or holders of such obligation (or a
trustee on behalf of such holder or holders) to cause, such obligation to become
due (or to be defeased or repurchased by the Company or any Subsidiary) prior to
its stated maturity, provided that the aggregate amount of all obligations as to
which such payment default shall occur and be continuing or such failure (or
defeasance or resale) or other event causing or permitting acceleration shall
occur and be continuing exceeds $1,000,000, individually or in the aggregate.
(d) Any representation or warranty made by the Companies herein or in any
writing furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made or deemed made.
(e) The Companies default in the performance or observance of any agreement
or covenant contained in Sections 6.8 through 6.20 of this Agreement.
(f) The Companies default in the performance or observance of any other
agreement, covenant, term or condition contained herein and such default shall
not have been remedied within 30 days after the earlier to occur of (i) the date
on which the President, the Treasurer or the Chief Financial Officer of the
Company obtains actual knowledge thereof or (ii) the date on which written
notice thereof shall have been received by the Company from the Administrative
Agent.
(g) The Company or any Subsidiary makes an assignment for the benefit of
creditors or is generally not paying its debts as such debts become due.
(h) Any decree or order for relief in respect of the Company or any
Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereinafter in effect (herein called "Bankruptcy
Law"), of any jurisdiction.
(i) The Company or any Subsidiary petitions or applies to any tribunal for,
or consents to the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official, of the Company or any Subsidiary, or
of any substantial part of the assets of the Company or any Subsidiary, or
commences a voluntary case under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any Subsidiary under the
Bankruptcy Law of any other jurisdiction.
(j) Any such petition or application described in Section 9.1(i) is filed,
or any such proceedings are commenced, against the Company or any Subsidiary,
and the Company or such Subsidiary by any act indicates its approval thereof,
consent thereto, or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver,
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custodian, liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in effect
for more than 60 days.
(k) Any order, judgment or decree is entered in any proceedings against the
Company decreeing the dissolution of the Company and such order remains in
effect for more than 60 days.
(l) Any order, judgment or decree is entered in any proceedings against the
Company or any Subsidiary, as the case may be, decreeing a split-up of the
Company or such Subsidiary which requires the divestiture of assets representing
a substantial part, or the divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the assets of the Company and its Subsidiaries
or which requires the divestiture of assets, or stock of a Subsidiary, which
shall have contributed a substantial part of the Consolidated Net Income of the
Company and its Subsidiaries for any of the three (3) fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and in
effect for more than 60 days.
(m) A final judgment in an amount in excess of $1,000,000 is rendered
against the Company or any Subsidiary and, within 60 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged.
9.2 Remedies. (a) If any Event of Default specified in Subsections
9.1(h), 9.1(i) or 9.1(j) occurs, the Credit Facility shall automatically be
deemed terminated and the outstanding Notes shall automatically become
immediately due and payable, all without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Companies. If any Event of
Default occurs under any other subsection of Section 9.1, the Required Lenders
may, at their option, and in addition to any right, power or remedy provided by
law or equity, by notice in writing to the Company, declare the Credit Facility
to be terminated and the outstanding Notes to be immediately due and payable,
whereupon the Credit Facility shall be terminated and the outstanding Notes
shall become immediately due and payable, all without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Companies.
(b) In furtherance to the remedies specified above, the Documentation Agent
(with the direction of the Required Lenders) may proceed to protect and enforce
the Lenders' rights under this Agreement and the outstanding Notes by exercising
such remedies as are available to the Documentation Agent or the Lenders in
respect thereof under applicable law (except to the extent waived by Section 9.3
hereof), either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid for the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the Documentation Agent or the Lenders
is intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall
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be in addition to every other remedy conferred herein or now or hereafter
existing at law or in equity or by statute or otherwise, except to the extent
waived by Section 9.3 hereof.
9.3 Waiver of Set-Offs. The Administrative Agent, each Agent and each
Lender hereby specifically waive (i) the right to set-off any funds of any of
the Companies in possession of the Administrative Agent, each Agent or any
Lender against the obligation of the Companies to the Administrative Agent, each
Agent or any Lender pursuant to this Agreement, or (ii) any counterclaim
against, security interest in or banker's or other lien on, any of such funds or
accounts of the Companies.
Section 10. The Agents.
10.1 Appointment and Authorization. (a) Each Lender appoints and
authorizes the Administrative Agent to receive all payments of principal,
interest, fees and other amounts payable by the Companies under this Agreement
and to remit same immediately to the Lenders, to disburse the Advances from the
Lenders, and to take such action and to exercise such powers under this
Agreement and the Notes as are delegated to the Administrative Agent by the
Lenders from time to time. The Administrative Agent shall promptly distribute
to the Lenders upon receipt all payments and prepayments of principal, interest,
fees and other amounts paid by the Companies under this Agreement, in proportion
to the Lenders' Commitments. Similarly, the Lenders shall be obligated to fund
Advances in proportion to their Commitments. The Administrative Agent shall
promptly distribute to the Agents the fees payable by the Companies pursuant to
the Agents' Fee Agreement. The Administrative Agent may resign at any time by
written notice to the Lenders; the successor Administrative Agent shall be
selected by the Required Lenders from between the remaining Agents.
(b) Each Lender appoints and authorizes the Documentation Agent to hold
this Agreement and all other documentation in connection herewith (except for
the Notes which will be held by the respective Lenders), and to take such action
and exercise such powers under this Agreement and the Notes as are delegated to
the Documentation Agent by the Lenders from time to time. Any requests by the
Company for consent by the Lenders or waiver or amendment of provisions of the
Agreement shall be delivered by the Company to the Documentation Agent (with
copies to the other Agents), but favorable action on such requests shall require
the approval of the Required Lenders.
(c) Each Lender appoints and authorizes the Syndication Agent to supervise
the syndication of the Credit Facility to a group of financial institutions
identified by the Syndication Agent in consultation with the Administrative
Agent, the Documentation Agent and the Company in accordance with the provisions
of Section 10.6 hereof.
10.2 Agents' Reliance. Neither the Agents nor any of their directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or
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in connection with this Agreement and the Notes, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Agents: (i) may treat the payee of any of the Notes as the
holder thereof until the Documentation Agent receives written notice of the
assignment or transfer thereof, signed by such payee and in form satisfactory to
the Documentation Agent; (ii) may consult with legal counsel (including counsel
for the Company), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement and the Notes; (iv) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement and the Notes or to
inspect any property (including the books and records) of the Companies; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
and the Notes or any other instrument or document furnished pursuant thereto;
and (vi) shall incur no liability under or in respect to this Agreement and the
Notes by acting upon any notice, consent, certificate or other instrument or
writing (which may be by facsimile, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
10.3 Acts by Administrative Agent after Default, etc. In the event that
the Administrative Agent shall have been notified in writing by any of the
Companies or the Lenders of any Event of Default (or in the event that the
officer of the Administrative Agent responsible for the Borrower's account
obtains actual knowledge of an Event of Default), the Administrative Agent (a)
shall immediately notify the Lenders; (b) shall take such action and assert
such rights under this Agreement as it is expressly required to do pursuant to
the terms of this Agreement with the consent of the Required Lenders; (c) may
take such other actions and assert such other rights as it deems advisable, in
its discretion, for the protection of the interests of the Lenders pursuant to
applicable laws with the consent of the Required Lenders; and (d) shall inform
all the Lenders of the taking of action or assertion of rights pursuant to this
Section. Each Lender agrees with the Administrative Agent and the other Lenders
that the decisions and determinations of the Required Lenders in enforcing this
Agreement and the Notes and guiding the Administrative Agent in those matters
shall be binding upon all the Lenders, including, without limitation,
authorizing the Administrative Agent at the pro rata expense of all the Lenders
(to the extent not reimbursed by the Companies) to retain attorneys to seek
judgment on this Agreement and the Notes. Each Lender agrees with the other
Lenders that it will not, without the consent of the other Lenders, separately
seek to institute any legal action with respect to the Loan; provided that
following the maturity of the Notes (whether by acceleration or at stated
maturity), each Lender may, without the concurrence of the other Lenders,
separately seek to institute any legal action with respect to the Loan.
10.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently
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and without reliance upon the Agents or any other Lender and based on the
financial statements referred to in Section 5.4 hereof and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the Notes.
10.5 Agents. Agents shall have the same rights and powers under this
Agreement and the Notes as any other Lender and may exercise the same as though
it were not the Agents; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Agents in its individual capacity.
Agents may accept deposits from, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with the Company as if Agents
were not the Agents and without any duty to account therefor to the Lenders.
10.6 Assignments and Participations. (a) No Lender may assign to any
other Person any portion of its interests, rights and obligations under this
Agreement (including, without limitation, any portion of its Commitment or the
Loan at the time owing to it and Note held by it) unless each of the following
conditions is or has been satisfied: (i) each of the Documentation Agent and
Administrative Agent have given its prior written consent (which consent will
not be unreasonably withheld), (ii) the Company has given its prior written
consent (which consent will not be unreasonably withheld), (iii) each such
assignment is of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (iv) the assignment is for
a Commitment of $10,000,000 or more, (v) the parties to such assignment have
executed and delivered to the Documentation Agent an Assignment and Acceptance,
substantially in the form of Exhibit "E" hereto (the "Assignment and
Acceptance"), together with any Note subject to such assignment, one or more
signature pages to this Agreement containing the signature of the assignee, and
(following the Effective Date) payment by the assignee to the Documentation
Agent for its own account of an assignment administration fee in the amount of
$3,500, (vi) the Documentation Agent shall have delivered to the Company a copy
of such fully-executed Assignment and Acceptance, and (vii) the assignee is (A)
a state or national commercial bank located in the United States or (B) a bank
organized under a jurisdiction other than the United States, provided that such
foreign bank has provided the Documentation Agent and the Company with the tax
forms prescribed in Section 11.6(c) hereof, and provided further that such
foreign bank shall not transfer its interests, rights and obligations under this
Agreement to any Affiliate of such foreign bank unless such Affiliate provides
the Documentation Agent and the Company with the aforesaid tax forms. Upon
satisfaction of each of the foregoing conditions and upon acceptance and
notation by the Documentation Agent, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (x) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender, and
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(y) the assigning Lender shall, to the extent provided in such assignment, be
released from its obligations under this Agreement. Notwithstanding the
foregoing, the restrictions contained above in this Section 10.6(a) shall not
apply to assignments to any Federal Reserve Bank, and the conditions set forth
in clauses (i) and (ii) above shall not apply to assignments by any Lender to
any Person which controls, is controlled by, or is under common control with, or
is otherwise substantially affiliated with that Lender.
(b) Upon its receipt of an Assignment and Acceptance executed by the
parties to such assignment together with any Note or Notes subject to such
assignment and the written consent of the Documentation Agent, Administrative
Agent and the Company to such assignment, the Documentation Agent shall give
prompt notice thereof to the Company and the Lenders. Within five (5) Business
Days after receipt of such notice, the Companies at their own expense, shall
execute and deliver to the Documentation Agent, in exchange for the surrendered
Note, a new Note or Notes to the order of such assignee(s) in an amount equal to
the amount assumed by such assignee(s) pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note or Notes to the order of the assigning Lender
in an amount equal to the amount retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of the surrendered Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in the form of the assigned
Note. The surrendered Note shall be cancelled and returned to the Company. The
Documentation Agent shall have the right to substitute a revised Exhibit B
hereto to reflect the respective commitments following each such assignment.
(c) Each Lender, without the consent of the Company or the Agents, may sell
participations to one or more banks in all or a portion of its Loans (including
its Commitment) under this Agreement, provided that the selling Lender shall
retain the sole right and responsibility to enforce the obligations of the
Companies relating to such Loans and that the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments or modifications of this Agreement shall be the right to approve
waivers, amendments, or modifications which require the consent of all of the
Lenders as provided in Section 11.12 hereof.
Section 10.7 Indemnification of the Agents. The Lenders ratably (computed
by reference to each Lender's respective Commitment) shall indemnify each Agent,
their respective affiliates and the respective shareholders, directors,
officers, employees, agents and counsel of the foregoing (each an " Agent
Indemnitee") and hold each Agent Indemnitee harmless from and against any and
all claims (whether groundless or otherwise), liabilities, losses, damages,
costs and expenses of any kind, including, without limitation, (i) the
reasonable fees and disbursements of counsel and (ii) any expenses for which the
Agents have not been reimbursed by the Companies as required by this Agreement),
which may be incurred by such Agent Indemnitee arising out of or related to this
Agreement or the transactions
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contemplated hereby, or the Agents' actions taken hereunder; provided that no
Agent Indemnitee shall have the right to be indemnified hereunder for such Agent
Indemnitee's own gross negligence or willful misconduct, as determined by a
court of competent jurisdiction, or to the extent that such claim relates to the
breach by such Agent Indemnitee of its obligations under this Agreement.
Section 11. General.
11.1 Definitions. As used in this Agreement, terms used herein with
initial capital letters shall have the following meanings, unless defined
elsewhere in this Agreement or unless the context clearly indicates otherwise:
"Administrative Agent" shall mean BankBoston, N.A., or its successor
selected pursuant to Section 10.1 hereof.
"Agent Indemnitee" shall have the meaning specified in Section 10.7 hereof.
"Advances" shall have the meaning specified in Section 1.1 hereof.
"Affiliate" shall mean, as to any Person, any Subsidiary of such Person and
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person. For purposes of this definition,
"control" shall mean the possession of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise, and an Affiliate of
any of the Companies includes, without limitation, any officer or director of
such corporation and any Person who beneficially owns, directly or indirectly,
10% or more of the issued outstanding capital stock of such corporation.
"Agents" shall mean BankBoston, N.A., Bank One, Louisiana, National
Association and Chase Bank of Texas, National Association.
"Agents Fee Agreement" shall mean any agreement among the Agents and the
Company from time to time relating to the compensation of the Agents in
connection with the preparation, negotiation, syndication and administration of
the Credit Facility.
"Agreement" shall mean this Revolving Credit and Term Loan Agreement, as it
may be amended and restated, modified and/or supplemented from time to time.
"Applicable Base Rate Margin" shall mean the following per annum interest
rate applicable to Base Rate Advances from time to time depending on the Funded
Debt to Total Capitalization Ratio Level of the Company:
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Level Applicable Base Rate Margin
----- ---------------------------
Level I 0.000%
Level II 0.000%
Level III 0.000%
The Applicable Base Rate Margin for any fiscal quarter shall be determined by
reference to the Funded Debt to Total Capitalization Ratio as of the last day of
the second fiscal quarter prior to the quarter for which the Applicable Base
Rate Margin is determined. For example, the Applicable Base Rate Margin for the
fiscal quarter beginning April 1, 1999 shall be determined on the basis of the
Funded Debt to Total Capitalization Ratio of the Company as of December 31,
1998.
"Applicable Eurodollar Rate Margin" shall mean the following per annum
interest rate applicable to Eurodollar Rate Advances from time to time depending
on the Funded Debt to Total Capitalization Ratio Level of the Company:
Level Applicable Eurodollar Rate Margin
----- ---------------------------------
Level I 0.500%
Level II 0.625%
Level III 0.750%
The Applicable Eurodollar Rate Margin for any fiscal quarter shall be determined
by reference to the Funded Debt to Total Capitalization Ratio as of the last day
of the second fiscal quarter prior to the quarter for which the Applicable
Eurodollar Rate Margin is determined. For example, the Applicable Eurodollar
Rate Margin for the fiscal quarter beginning April 1, 1999 shall be determined
on the basis of the Funded Debt to Total Capitalization Ratio of the Company as
of December 31, 1998.
"Applicable Facility Fee Rate" shall mean the following per annum facility
fee interest rate applicable to the Available Credit from time to time depending
on the Funded Debt to Total Capitalization Ratio Level of the Company:
Level Applicable Facility Fee Rate
----- ----------------------------
Level I 0.250%
Level II 0.250%
Level III 0.250%
The Applicable Facility Fee Rate for any fiscal quarter shall be determined by
reference to the Funded Debt to Total Capitalization Ratio as of the last day of
the second fiscal quarter prior to the quarter prior to the quarter for which
the Applicable Facility Fee Rate is determined. For example, the Applicable
Facility Fee Rate for the fiscal quarter beginning April 1, 1999 shall
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be determined on the basis of the Funded Debt to Total Capitalization Ratio of
the Company as of December 31, 1998.
"Assignment and Acceptance" shall have the meaning specified in Section
10.6 hereof.
"Available Credit" shall have the meaning specified in Section 1.1 hereof.
"Bankruptcy Law" shall have the meaning specified in Section 9.1(h) hereof.
"Base Rate" shall mean the greater of (i) the Prime Rate or (ii) the
Federal Funds Rate plus 0.5%.
"Base Rate Advances" shall mean advances bearing interest at the Base Rate
plus the Applicable Base Rate Margin.
"Base Rate Tranche" shall mean any part of the principal amount of the
Loans that constitutes Base Rate Advances.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks in New Orleans, Louisiana (or London, England in the
case of Eurodollar Rate Advances or payments) are required or authorized to be
closed.
"Canadian Subsidiary" shall mean any Subsidiary organized under the laws of
Canada or any province thereof.
"Capital Asset" shall mean any asset other than a current asset (as
determined in accordance with generally accepted accounting principles).
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles, on a consolidated basis.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act, as amended.
"CERCLIS" shall mean the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Code" shall have the meaning specified in Section 5.10.
"Commitments" shall mean the Line of Credit Commitments.
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"Company" shall mean Tidewater Inc.
"Companies" shall mean the Company and the Domestic Subsidiaries.
"Consolidated EBITDA" shall mean Consolidated Net Income of the Company and
its Subsidiaries, plus (i) interest expense, (ii) tax expense and (iii)
depreciation and amortization expense, to the extent that any of such items are
deducted from consolidated gross revenues of the Company and its Subsidiaries
for the purpose of determining Consolidated Net Income.
"Consolidated Fixed Charge" shall mean the sum of all scheduled payments of
principal and interest due (and whether or not paid) on all Funded Debt of the
Company and its Subsidiaries for the preceding 12 months, under which the
Company or any of its Subsidiaries is the obligor, on a consolidated basis.
"Consolidated Funded Debt" shall mean the sum of (i) the aggregate
principal amounts outstanding on all indebtedness of the Companies for borrowed
money and all obligations of the Companies evidenced by notes, debentures, bonds
or similar instruments; and (ii) all Capitalized Lease Obligations (excluding
any obligation to purchase any asset at the end of a lease term until such asset
is so purchased), all determined in accordance with generally accepted
accounting principles on a consolidated basis.
"Consolidated Net Income" shall mean, for any period, the consolidated net
income of the Company and its Subsidiaries (excluding unusual, extraordinary
and/or non-recurring income and/or losses) determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Consolidated Stockholders' Equity" shall mean total stockholders' equity
of the Company, on a consolidated basis, as shown on the Company's financial
statements prepared in accordance with generally accepted accounting principles
determined as of the last day of each fiscal quarter.
"Credit Facility" shall mean the Line of Credit and the Term Loan.
"Debt" shall mean, without duplication, (a) any obligation for borrowed
money (and any notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money); (b) any
obligation secured by a Lien on, or payable out of the proceeds of production
from, property of the Company or any Subsidiary (even though such obligation
shall not be assumed by the Company or such Subsidiary); and (c) any obligation,
which under generally accepted accounting principles is shown on the balance
sheet as a liability (including, without limitation, Capitalized Lease
Obligations and excluding reserves for deferred income taxes and for foreign
employee service indemnities and
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other reserves to the extent that such reserves do not constitute an
obligation); (d) amounts equal to the aggregate net rentals (after making
allowance for any interest, taxes or other expenses included therein) under any
lease (whether or not such rentals accrue and become payable only on an annual
or other periodic basis) which lease (i) constitutes the substantial equivalent
of a purchase of the property subject to such lease, (ii) has an initial term
materially less than the useful life of such property and provides that the
lessee has the option to renew such lease for the remaining useful life of such
property at a rental which at the inception of such lease appears to be
substantially less than the fair rental value of such property, or (iii)
provides an option to the lessee to acquire the property subject to such lease
at a price which, at the inception of such lease, appears to be substantially
less than the probable fair value of such property at the time or times of
permitted acquisition by the lessee; (e) guarantees, endorsements (other than
endorsements of negotiable instruments for collection in the ordinary course of
business) and other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock or dividends of any Person; (f)
obligations under any contract providing for the making of loans, advances or
capital contributions to any Person, or for the purchase of any property from
any Person, in each case in order to enable such Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay debts,
dividends or expenses; (g) obligations under any contract for the purchase of
materials, supplies or other property if such contract (or any related document)
requires that payment for such materials, supplies or other property shall be
made regardless of whether or not delivery of such materials, supplies or other
property is ever made or tendered; (h) obligations under any contract to rent or
lease (as lessee) any real or personal property if such contract (or any related
document) provides that the obligation to make payments thereunder is absolute
and unconditional under conditions not customarily found in commercial leases
then in general use or requires that the lessee purchase or otherwise acquire
securities or obligations of the lessor; (i) obligations under any contract for
the sale or use of materials, supplies or other property if such contract (or
any related document) requires that payment for such materials, supplies or
other property, or the use thereof, shall be subordinated to any indebtedness
(of the purchaser or user of such materials, supplies or other property) owed or
to be owed to any Person; and (j) obligations under any other contract which, in
economic effect, is substantially equivalent to a guarantee; all as determined
in accordance with generally accepted accounting principles.
"Default" shall have the meaning specified in the definition of Event of
Default hereinafter.
"Domestic Subsidiary" shall mean any Subsidiary organized under the laws of
any State of the United States.
"Drawdown Termination Date" shall mean April 30, 2001, or such later date
as the Agents, Lenders and the Companies agree to in writing.
"EBITDA to Fixed Charge Ratio" shall mean the ratio of (i) Consolidated
EBITDA for
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the immediately preceding four consecutive fiscal quarters, less the tax expense
for taxes actually paid during such period to (ii) Consolidated Fixed Charge for
such period.
"Effective Date" shall mean the date on which this Agreement is executed by
the Companies and the Agents.
"Environmental Authority" shall mean any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" shall mean all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" shall mean any liabilities, whether accrued or
contingent, arising from or relating in any way to any Environmental
Requirements.
"Environmental Notices" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also means
(i) any written communication from any private Person threatening litigation or
administrative proceedings against or involving any Company relating to an
alleged violation of any Environmental Requirements and (ii) any complaint,
petition or similar documents filed by any private Person commencing litigation
or administrative proceedings against or involving any Company relating to
alleged violation of any Environmental Requirements.
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" shall mean releases (as defined in CERCLA or under
any applicable state or local environmental law or regulation) of Hazardous
Materials. Environmental Releases do not include releases for which no
remediation or reporting is required by applicable Environmental Requirements
and which do not present a danger to health, safety or the environment.
"Environmental Requirements" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to the protection of
human health or the environment.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Rate" means during any Eurodollar Rate Interest Period for any
Tranche, an interest rate per annum equal to the quotient (converted to a
percentage) of (i) the rate per annum as determined by the Administrative Agent
at or about 9:00 o'clock A.M. (Eastern time) (or as soon thereafter as
practicable) on the second Business Day prior to the first day of each
Eurodollar Rate Interest Period, as being the rate at which deposits of United
States Dollars are offered to the Administrative Agent in the London inter-bank
market by the Reference Banks, at the time of determination and in accordance
with the normal practice in such market, for delivery on the first day of such
Eurodollar Rate Interest Period and for the number of days comprised therein,
in amounts equal (as nearly as may be) to the amount of the Tranche as of the
first day of such Eurodollar Rate Interest Period, divided by (ii) 1.00 minus
the Eurodollar Rate Reserve Requirement (as defined below), expressed as a
decimal, for such Eurodollar Rate Interest Period. "Eurodollar Rate Reserve
Requirement" shall mean for any day during a Eurodollar Rate Interest Period for
any Eurodollar Rate Tranche, that percentage which is specified by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any marginal reserve
requirement) for the Lenders with respect to liabilities consisting of or
including "Eurocurrency liabilities" (as defined in Regulation D of the Board of
Governors of the Federal Reserve System) with a maturity equal to such
Eurodollar Rate Interest Period. In determining the percentage, the
Administrative Agent may use any reasonable averaging and attribution methods.
"Reference Banks" shall mean (i) the principal London offices of the banks shown
on page 16 of the Telerate screen (or such other page as may replace the
Eurodollar page on that service for the purpose of displaying London interbank
offered rates of major banks), in the case of Eurodollar Rate Interest Periods
of 1 month, 2 months, 3 months or 6 months. "Eurodollar Rate Interest Period"
shall be the period between the Business Day on which the Eurodollar Rate plus
the Applicable Eurodollar Rate Margin shall begin and the day on which the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin shall end. The
duration of each Eurodollar Rate Interest Period for a Eurodollar Rate Advance
shall be 1 month, 2 months, 3 months or 6 months as the Company may select,
subject to the following: (i) no Eurodollar Rate Interest Period shall extend
past the maturity date of either the Line of Credit Notes or the Term Notes;
(ii) whenever the last day of any Eurodollar Rate Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Eurodollar Rate Interest Period shall be extended to occur on the next
succeeding Business Day, except that if the next succeeding Business Day would
occur in the next following calendar month, the last day of such Eurodollar Rate
Interest Period shall be shortened to occur on the next preceding Business Day;
and (iii) Eurodollar Rate Tranches outstanding under each Term Loan may not at
any time exceed the aggregate principal amount outstanding on such respective
Term Loan.
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"Eurodollar Rate Advances" shall mean Advances bearing interest at the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
"Eurodollar Rate Interest Period" shall have the meaning specified in the
definition of Eurodollar Rate.
"Eurodollar Rate Tranche" shall mean any part of the principal amount of
the Loans that constitutes Eurodollar Rate Advances for a specific Eurodollar
Rate Interest Period.
"Event of Default" shall mean any of the events specified in Section 9,
provided that there has been satisfied any requirements in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"Federal Funds Rate" shall mean the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to BankBoston, N.A., Boston, Massachusetts on such day on such
transactions as determined by the Administrative Agent.
"Foreign Subsidiary" shall mean any Subsidiary other than a Domestic
Subsidiary.
"Funded Debt to EBITDA Ratio" shall mean the ratio of (i) Consolidated
Funded Debt determined as of the last day of each fiscal quarter, to (ii)
Consolidated EBITDA for the immediately preceding four consecutive fiscal
quarters.
"Funded Debt to Total Capitalization Ratio" shall mean the ratio of (i)
Consolidated Funded Debt to (ii) the sum of Consolidated Funded Debt plus
Consolidated Stockholders' Equity.
"Hazardous Materials" includes, without limitation (a) hazardous waste as
defined in the Resource Conservation and Recovery Act of 1976, or in any
applicable state or local law or regulation, (b) hazardous substances, as
defined in CERCLA, or in any applicable state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product, (d) toxic substances, as
defined in the Toxic Substances Control Act of 1976, or in any applicable state
or local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such Act, statute or
regulation may be amended from time to time.
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"Identified Subsidiaries" shall mean each of Tidewater Marine, Inc.;
Tidewater Marine Alaska, Inc.; and Zapata Gulf Marine Corporation.
"Lease Rental Expenses" shall mean lease rentals payable by the Company or
any Subsidiary pursuant to any agreements to rent or lease any real or personal
property (excluding rentals or leases of data processing equipment and sales
offices, rentals treated as Debt and rentals of real property which have been
subleased to others by the Company or any Subsidiary for the remaining term of
such leases at rents at least equal to those payable by the Company or any
Subsidiary).
"Lender Indemnitee" shall have the meaning specified in Section 11.5(b)
hereof.
"Lenders" shall have the meaning specified in the first introductory
paragraph hereof, together with any other financial institutions which become a
party to this Agreement and the holder of a Note, from time to time.
"Level" shall mean the following levels based on the Funded Debt to Total
Capitalization Ratio indicated:
Funded Debt to Total
Capitalization Ratio Level
---------------------- -----
Less than 25% I
25% through 32.49% II
32.5% through 39.99% III
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of any
financing statement under the Uniform Commercial Code of any jurisdiction) or
any other type of preferential arrangement for the purpose of, or having the
effect of protecting a creditor against loss or securing the payment or
preference of any obligation. "Liens" shall not include unsecured guarantees.
"Line of Credit" shall have the meaning specified in Section 1.1 hereof.
"Line of Credit Commitment" shall have the meaning specified in Section 1.1
hereof.
"Line of Credit Notes" shall have the meaning specified in Section 2.1
hereof.
"Loan" shall mean the loans under the Credit Facility (including the Term
Loan).
"Multiemployer Plan" shall have the meaning specified in Section 5.10.
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"Notes" shall mean the Line of Credit Notes and the Term Notes,
collectively, and any and all modifications, amendments, supplements, renewals,
rearrangements and/or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall have the meaning specified in Section 5.10 hereof.
"Persons" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Prime Rate" shall mean the rate of interest announced publicly by
BankBoston, N.A. from time to time as its prime or base rate.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Company or any Subsidiary, wherever located.
"Reimbursable Taxes" shall have the meaning specified in Section 3.2(f)
hereof.
"Required Lenders" shall mean Lenders holding at least 66-2/3rds of the
aggregate principal amount of the Notes.
"Restricted Investments" shall have the meaning set forth in Section 6.10
hereof.
"Subsidiary" shall mean any corporation all of the stock of every class of
which, except directors' qualifying shares, shall, at the time as of which any
determination is being made, be beneficially owned or effectively controlled by
the Company, either directly or through Subsidiaries.
"Taxes" shall have the meaning set forth in Section 11.6.
"Term Loan" shall have the meaning specified in Section 1.1 hereof.
"Term Notes" shall have the meaning specified in Section 2.2 hereof.
"Third Party" shall mean all lessees, sublessees, licensees and other users
of the Properties, excluding those users of the Properties in the ordinary
course of the Company's business (consistent with its practices on the date of
this Agreement) and on a temporary basis.
"Tranche" shall mean a part of the Loans that bears interest at a
particular rate
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depending on whether such tranche is a Eurodollar Rate Tranche or Base Rate
Tranche.
11.2 Financial Terms. Unless otherwise defined or the context otherwise
requires, all financial and accounting terms shall be defined under generally
accepted accounting principles.
11.3 Delay. No delay on the part of the Lenders or any holder of the
Notes, in the exercise of any power or right shall operate as a waiver thereof,
nor shall any single or partial exercise of any power or right preclude other or
further exercise thereof, or the exercise of any other power or right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law (except to the extent waived by Section 9.3 hereof).
11.4 Notices. Any notice or demand which, by any provision of this
Agreement, is required or permitted to be given or served by any Agent or
Lenders to or on the Companies shall be deemed to have been sufficiently given
and served for all purposes (if mailed) three calendar days after being
deposited, postage prepaid, in the United States mail, registered or certified
mail, or (if delivered by express courier) one calendar day after being
delivered to such courier, or (if delivered in person) the same day as delivery,
in each case addressed (until another address or addresses are given in writing
by the Companies to Documentation Agent and Administrative Agent or Lenders) as
follows:
Tidewater Inc.
Pan American Life Center - Suite 1900
601 Poydras Street
New Orleans, Louisiana 70130
Attention: Chief Financial Officer
With a copy to:
Tidewater Inc.
Pan American Life Center - Suite 1900
601 Poydras Street
New Orleans, Louisiana 70130
Attention: General Counsel
Any notice or demand which, by any provision of this Agreement, is required
or permitted to be given or served by the Companies to or on Administrative
Agent or Documentation Agent shall be deemed to have been sufficiently given and
served for all purposes (if mailed) three calendar days after being deposited,
postage prepaid, in the United States mail, registered or certified mail, or (if
delivered by express courier) one calendar day after being delivered to such
courier, or (if delivered in person) the same day as delivery, in each case
addressed (until another address or addresses are given in writing by
Administrative
44
<PAGE>
Agent or Documentation Agent to the Companies) as follows:
Administrative Agent:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attention: Transportation Division
(Mail Stop 01-08-01)
Documentation Agent:
Bank One, Louisiana, National Association
201 St. Charles Avenue, 29th Floor
New Orleans, LA 70170
Attention: Energy Group
J. Charles Freel, Jr.
Senior Vice President
With a copy to:
Philip deV. Claverie, Esq.
Phelps Dunbar, L.L.P.
Texaco Center - 30th Floor
400 Poydras Street
New Orleans, Louisiana 70130
Any notice or demand which, by any provision of this Agreement, is required
or permitted to be given or served by the Companies to or on Lenders shall be
deemed to have been sufficiently given and served for all purposes (if mailed)
three calendar days after being deposited, postage prepaid, in the United States
mail, registered or certified mail, or (if delivered by express courier) one
calendar day after being delivered to such courier, or (if delivered in person)
the same day as delivery, in each case addressed (until another address or
addresses are given in writing by Lenders to the Companies) to the Lenders at
the addresses set forth on Exhibit B hereto.
11.5 Costs, Expenses and Taxes; Indemnification. (a) The Companies shall
pay on demand the reasonable out-of-pocket costs and expenses of the Agents in
connection with the negotiation, syndication, preparation, execution and
delivery of this Agreement and any amendments thereto or waivers thereof which
may be requested by the Companies, including the reasonable fees and out-of-
pocket expenses of legal counsel to Agents. The Companies shall pay on demand
the reasonable out-of-pocket costs and expenses of the Agents and each of
45
<PAGE>
the Lenders in connection with the enforcement of this Agreement and/or the
Notes and in connection with any amendments thereto or waivers thereof which may
be requested by the Companies during the continuance of, or to avoid, a Default
or Event of Default, including any amendments or waivers tantamount to a
refinancing, restructuring, or reorganization (whether or not under any
Bankruptcy Law). The out-of-pocket costs and expenses referred to in the
previous sentence shall include the reasonable fees and out-of-pocket expenses
of any legal counsel retained by the Agents or by any Lender, and the reasonable
fees and out-of-pocket expenses of any independent public accountants and other
outside experts retained by the Agents on behalf of the Lenders. The Lenders
agree that, with respect to the retention of separate legal counsel for each
Lender under such circumstances, each will consider in good faith whether
separate legal counsel is reasonably appropriate under the policies of that
Lender and, in any event, endeavor to avoid unreasonable duplication of work
effort by such legal counsel. The Companies shall pay any and all documentary
and other taxes (other than income or gross receipts taxes generally applicable
to banks) and shall reimburse, hold harmless, and indemnify the Agents and each
Lender from and against any and all loss, liability, or legal or other expense
with respect to or resulting from any delay in paying or failure to pay any tax,
cost, expense, fee, or charge or that any of them may suffer or incur by reason
of the failure of the Companies to perform any of its obligations under this
Agreement or the Notes. Any amount payable to the Agents or any Lender under
this Section shall bear interest from the date of receipt of demand for payment
at the Base Rate plus one percent (1%).
(b) The Companies shall indemnify each Agent and Lender, their respective
affiliates and the respective shareholders, directors, officers, employees,
agents and counsel of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind, including, without limitation, the reasonable
fees and disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of the Credit Facility or any actual or
proposed use of proceeds of the Loans hereunder; provided that no Indemnitee
shall have the right to be indemnified hereunder for such Indemnitee's own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction, or to the extent that such claim relates to the breach by such
Lender Indemnitee of its obligations under this Agreement.
11.6 Foreign Lenders. (a) All payments by the Company under the Credit
Facility shall be made free and clear of and without deduction for or on account
of any present or future income, stamp, or other taxes, fees, duties,
withholding or other charges of any nature whatsoever imposed by any taxing
authority, excluding in the case of each Lender taxes imposed on or measured by
its net income or franchise taxes imposed in lieu of net income taxes by the
jurisdiction in which it is organized or through which it acts for purposes of
this Agreement.
46
<PAGE>
(b) If as a result of any change in law (or the interpretation thereof)
after the Effective Date, any withholding or deduction from any payment to be
made to, or for the account of, a Lender by the Companies hereunder is required
in respect of any non-excluded taxes referred to in Subsection (a) above
pursuant to any applicable law, rule, or regulation, then the Company will (i)
pay to the relevant authority the full amount required to be so withheld or
deducted; (ii) to the extent available, promptly forward to the Agent an
official receipt or other documentation satisfactory to the Documentation Agent
evidencing such payment to such authority; and (iii) pay to the Administrative
Agent, for the account of each affected Lender, such additional amount or
amounts as are necessary to ensure that the net amount actually received by such
Lender will equal the full amount such Lender would have received had no such
withholding or deduction been required. Each Lender shall determine such
additional amount or amounts payable to it (which determination shall, in the
absence of manifest error, be conclusive and binding on the Company). If a
Lender becomes aware that any such withholding or deduction from any payment to
be made by the Company under the Credit Facility is required, then such Lender
shall promptly notify the Documentation Agent and the Company thereof stating
the reasons therefor and the additional amount required to be paid under this
Section, and such Lender shall execute and deliver to the Documentation Agent
and the Company such forms as it may be required to execute and deliver pursuant
to Subsection (c) hereof. To the extent that any such withholding or deduction
results from the failure of a Lender to provide a form required by Subsection
(c) hereof, the Company shall have no obligation to pay the additional amount
required by clause (iii) above. Anything in this Section notwithstanding, if
any Lender elects to require payment by the Company of any material amount under
this Section, the Company may, within 60 days after the date of receiving notice
thereof and so long as no Default shall have occurred and be continuing, elect
to terminate such Lender as a party to this Agreement; provided that,
concurrently with such termination, the Company shall (i) if the Documentation
Agent and each of the other Lenders shall consent, pay that Lender all
principal, interest and fees and other amounts owed to such Lender through such
date of termination or (ii) have arranged for another financial institution
approved by the Documentation Agent (such approval not to be unreasonably
withheld) as of such date, to become a substitute Lender for all purposes under
this Agreement in the manner provided for herein; provided further that, prior
to substitution for any Lender, the Company shall have given written notice to
the Documentation Agent of such intention and the Lenders shall have the option,
but not the obligation, for a period of 60 days after receipt of such notice, to
increase their Commitments in order to replace the affected Lender in lieu of
such substitution.
(c) With respect to each Lender which is organized under the laws of a
jurisdiction outside the United States, on the day of the initial borrowing from
each such Lender hereunder and from time to time thereafter if requested by the
Company or the Documentation Agent, such Lender shall provide the Documentation
Agent and the Company with the forms prescribed by the Internal Revenue Service
of the United States certifying as to such Lender's status for purposes of
determining exemption from United States withholding taxes with
47
<PAGE>
respect to all payments to be made to such Lender hereunder or other documents
satisfactory to such Lender and Documentation Agent indicating that all payments
to be made to such Lender hereunder are not subject to United States withholding
tax. Unless the Documentation Agent and the Company shall have received such
forms or such documents indicating that payments hereunder are not subject to
United States withholding tax, the Administrative Agent and the Company shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or for any Lender organized under the laws of a jurisdiction
outside the United States.
11.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.8 Counterparts. This Agreement may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
instrument.
11.9 Law. This Agreement and the Notes shall be contracts made under and
governed by the laws of the State of Louisiana.
11.10 Successors. This Agreement shall be binding upon the Companies and
Lenders, and their respective successors and assigns, and shall inure to the
benefit of the Companies and Lenders, and the successors and assigns of Lenders.
The Companies shall not assign their rights or duties hereunder without the
consent of Lenders.
11.11 Singular and Plural. Words used herein in the singular, where the
context so permits, shall be deemed to include the plural and vice versa. The
definition of words in the singular herein shall apply to such words when used
in the plural where the context so permits and vice versa.
11.12 Amendments. No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by the Companies or Lenders
shall be effective unless the same shall be in writing and signed by the
Companies, the Agents and the Required Lenders, provided that, without the
written consent of all of the Lenders, no amendment to this Agreement shall (i)
change the maturity of any Note, or (ii) change the principal of or the rate or
time of payment of interest or any premium payable with respect to any Note, or
(iii) change the principal payment date of any installment of the Term Notes, or
(iv) increase the Commitments, or (v) release any of the Companies, or affect
the time, amount or allocation of any required prepayments, or (vi) reduce the
proportion of the Required Lenders required with respect to any consent, or
(vii) change the definition of Required Lenders or amend this
48
<PAGE>
Section 11.12. No course of dealing between any of the Companies and the Lenders
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any of the Lenders. In the case of a waiver or
consent, such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
11.13 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any and all prior agreements with respect to
the transactions contemplated hereby.
[Signatures on Following Pages]
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
TIDEWATER INC.
By: /s/ Ken C. Tamblyn
----------------------
Name: Ken C. Tamblyn
Title: Executive Vice President
and Chief Financial Officer
GULF FLEET SUPPLY VESSELS, INC.
HILLIARD OIL & GAS, INC.
JACKSON MARINE CORPORATION
JAVA BOAT CORPORATION
QUALITY SHIPYARDS, INC.
S.O.P., INC.
SEAFARER BOAT CORPORATION
POINT MARINE, INC.
T. BENETEE CORPORATION
TIDEWATER OFFSHORE (GP-1984), INC.
TIDEWATER MARINE, INC.
TIDEWATER MARINE ALASKA, INC.
TIDEWATER MARINE SERVICE, INC.
TIDEWATER MARINE WESTERN, INC.
TT BOAT CORPORATION
TWENTY GRAND MARINE SERVICE, INC.
TWENTY GRAND OFFSHORE, INC.
ZAPATA GULF MARINE CORPORATION
ZAPATA GULF MARINE OPERATORS, INC.
ZAPATA GULF PACIFIC, INC.
By: /s/ Ken C. Tamblyn
-----------------------
Name: Ken C. Tamblyn
Title: Authorized Officer
50
<PAGE>
BANKBOSTON, N.A.
Agent and Lender
By: /s/ Victor M. Garcia
------------------------
Name: Victor M. Garcia
Title: Director
BANK ONE, LOUISIANA, NATIONAL
ASSOCIATION, Agent and Lender
By: /s/ J. Charles Freel, Jr.
--------------------------
Name: J. Charles Freel, Jr.
Title: Senior Vice President
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, Agent and Lender
By: /s/ Mona M. Foch
--------------------------
Name: Mona M. Foch
Title: Managing Director
AMSOUTH BANK, Lender
By: /s/ Donald M. Sinclair
--------------------------
Name: Donald M. Sinclair
Title: Vice President
51
<PAGE>
DEPOSIT GUARANTY NATIONAL BANK,
Lender
By: /s/ Bill Hinrichs
------------------------
Name: Bill Hinrichs
Title: Senior Vice President
SUNTRUST BANK, ATLANTA, Lender
By: /s/ Deborah S. Armstrong
--------------------------
Name: Deborah S. Armstrong
Title: First Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
Lender
By: /s/ Steven M. Takei
----------------------
Name: Steven M. Takei
Title: Senior Vice President
FIRST UNION NATIONAL BANK, Lender
By: /s/ Michael J. Labrum
------------------------
Name: Michael J. Labrum
Title: Vice President
HIBERNIA NATIONAL BANK, Lender
By: /s/ Bruce L. Ross
------------------------
Name: Bruce L. Ross
Title: Vice President
52
<PAGE>
WHITNEY NATIONAL BANK, Lender
By: /s/ Donald J. Zornman
-------------------------
Name: Donald J. Zornman
Title: Vice President
53
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF THE COMPANY
<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 & 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 49%
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, L.L.C....................................... Louisiana 100%
Hilliard Oil & Gas, Inc................................................ Nevada 100%
Hornbeck Shipping Limited.............................................. Isle of Man 100%
Jackson Marine, L.L.C.................................................. Louisiana 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%
Neatearn Limited....................................................... England 100%
Nuigini Energy Services (unincorporated)............................... New Guinea 50%
Offshore Pacific Pty. Ltd.............................................. Vanuatu 100%
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%
Pacific Tidewater Pty. Ltd............................................. Australia 100%
Pan-Marine do Brasil Transportes Ltda.................................. Brazil 100%
Pan Marine International, Inc.......................................... Cayman Islands 100%
Parktor Shipping NV.................................................... Netherlands Antilles 100%
Pental Insurance Co. Ltd............................................... Bermuda 100%
Point Marine, L.L.C.................................................... Louisiana 100%
Provident Marine Ltd................................................... Turks & Caicos Islands 50%
Quality Shipyards, L.L.C............................................... 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%
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
---- --------------- ----------
<S> <C> <C>
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%
T. Benetee L.L.C....................................................... Louisiana 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 Cyprus Limited............................................... Cyprus 49.9%
Tidewater Foreign Sales Corporation.................................... Barbados 100%
Tidewater Marine Alaska, Inc........................................... Alaska 100%
Tidewater Marine, L.L.C................................................ 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%
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, L.L.C..................................... Louisiana 100%
Twenty Grand Offshore, Inc............................................. Louisiana 100%
VTG Supply Boat Liberia Inc............................................ Liberia 100%
Zapata Gulf Crews, Inc................................................. Panama 100%
Zapata Gulf Indonesia Limited.......................................... Vanuatu 80%
Zapata Gulf Marine L.L.C............................................... Louisiana 100%
Zapata Gulf Marine International Limited............................... Vanuatu 100%
Zapata Gulf Marine Operators, L.L.C.................................... Louisiana 100%
Zapata Gulf Pacific, Inc............................................... Delaware 100%
Zapata Marine Service (Nigeria) Limited................................ Nigeria 100%
Zapata Servicos Maritimos Ltda......................................... Brazil 100%
Zhong Chang Offshore Marine Service Company Ltd........................ China 50%
</TABLE>
-2-
<PAGE>
EXHIBIT 23
<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, 1999, 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, 1999.
Ernst & Young LLP
New Orleans, Louisiana
April 27, 1999
<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 statements of
earnings, stockholders' equity, and cash flows of Tidewater Inc. for the year
ended March 31, 1997, and related schedule, which report appears in the March
31, 1999, annual report on Form 10-K of Tidewater Inc.
KPMG LLP
New Orleans, Louisiana
April 27, 1999
<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.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 10,422
<SECURITIES> 0
<RECEIVABLES> 249,127
<ALLOWANCES> 11,125
<INVENTORY> 27,971
<CURRENT-ASSETS> 280,878
<PP&E> 1,548,185
<DEPRECIATION> 910,005
<TOTAL-ASSETS> 1,394,458
<CURRENT-LIABILITIES> 82,346
<BONDS> 0
0
0
<COMMON> 6,057
<OTHER-SE> 1,061,650
<TOTAL-LIABILITY-AND-EQUITY> 1,394,458
<SALES> 968,992
<TOTAL-REVENUES> 968,992
<CGS> 705,323
<TOTAL-COSTS> 705,323
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,445
<INCOME-PRETAX> 276,741
<INCOME-TAX> 66,022
<INCOME-CONTINUING> 210,719
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210,719
<EPS-PRIMARY> 3.68
<EPS-DILUTED> 3.68
</TABLE>
