SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the Quarterly Period Ended December 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. --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 72-0487776 --------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 601 Poydras Street, Suite 1900, New Orleans, Louisiana 70130 --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (604) 568-1010 ------------------------ NOT APPLICABLE --------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or of such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __________ ------- 55,638,153 shares of Tidewater Inc. common stock $.10 par value per share were outstanding on January 17, 2000. Excluded from the calculation of shares outstanding at January 17, 2000 are 4,926,741 shares held by the Registrant's Grantor Stock Ownership Trust. Registrant has no other class of common stock outstanding. -1-
PART I. FINANCIAL INFORMATION <TABLE> <CAPTION> Item 1. Financial Statements -------------------- TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) - -------------------------------------------------------------------------------------- December 31, March 31, ASSETS 1999 1999 - -------------------------------------------------------------------------------------- <S> <C> <C> Current assets: Cash and cash equivalents $ 159,129 10,422 Trade and other receivables 166,347 238,002 Marine operating supplies 24,702 27,971 Other current assets 2,614 4,483 - -------------------------------------------------------------------------------------- Total current assets 352,792 280,878 - -------------------------------------------------------------------------------------- Investments in, at equity, and advances to unconsolidated companies 17,859 17,307 Properties and equipment: Vessels and related equipment 1,377,897 1,505,441 Other properties and equipment 42,580 42,744 - -------------------------------------------------------------------------------------- 1,420,477 1,548,185 Less accumulated depreciation 845,883 910,005 - -------------------------------------------------------------------------------------- Net properties and equipment 574,594 638,180 - -------------------------------------------------------------------------------------- Goodwill, net 340,298 347,176 Other assets 119,007 110,917 - -------------------------------------------------------------------------------------- $1,404,550 1,394,458 ====================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------- Current liabilities: Accounts payable and accrued expenses 57,000 71,256 Accrued property and liability losses 4,474 6,605 Income taxes 1,446 4,485 - -------------------------------------------------------------------------------------- Total current liabilities 62,920 82,346 - -------------------------------------------------------------------------------------- Deferred income taxes 133,979 128,826 Accrued property and liability losses 51,312 66,052 Other liabilities and deferred credits 52,635 49,527 Stockholders' equity: Common stock of $.10 par value, 125,000,000 shares authorized, issued 60,564,894 shares at December and 60,566,857 shares at March 6,056 6,057 Other stockholders' equity 1,097,648 1,061,650 - -------------------------------------------------------------------------------------- Total stockholders' equity 1,103,704 1,067,707 - -------------------------------------------------------------------------------------- $1,404,550 1,394,458 ====================================================================================== </TABLE> See Notes to Unaudited Condensed Consolidated Financial Statements. -2-
<TABLE> <CAPTION> TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except share and per share data) - ------------------------------------------------------------------------------------------------------------- Quarter Ended Nine Months Ended December 31, December 31, ------------------------- ------------------------- 1999 1998 1999 1998 - ------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Revenues: Vessel revenues $ 128,655 217,393 406,667 727,938 Other marine revenues 13,115 15,591 28,579 44,158 - ------------------------------------------------------------------------------------------------------------- 141,770 232,984 435,246 772,096 - ------------------------------------------------------------------------------------------------------------- Costs and expenses: Vessel operating costs 77,743 123,598 247,066 383,559 Costs of other marine revenues 11,821 12,023 23,610 34,350 Depreciation and amortization 19,780 23,635 63,057 71,434 General and administrative 14,934 20,019 48,527 57,211 - ------------------------------------------------------------------------------------------------------------- 124,278 179,275 382,260 546,554 - ------------------------------------------------------------------------------------------------------------- 17,492 53,709 52,986 225,542 Other income (expenses): Foreign exchange gain (loss) (87) (141) 116 228 Gain on sales of assets 2,074 5,108 11,038 7,748 Equity in net earnings of unconsolidated companies 2,583 1,748 6,469 5,277 Minority interests (189) (268) (480) (1,236) Interest and miscellaneous income 3,630 691 7,644 2,718 Interest and other debt costs (160) (575) (449) (2,050) - ------------------------------------------------------------------------------------------------------------- 7,851 6,563 24,338 12,685 - ------------------------------------------------------------------------------------------------------------- Earnings before income taxes 25,343 60,272 77,324 238,227 Income taxes 3,110 20,492 19,744 78,997 - ------------------------------------------------------------------------------------------------------------- Net earnings $ 22,233 39,780 57,580 159,230 ============================================================================================================= Earnings per common share $ .40 .71 1.04 2.76 ============================================================================================================= Diluted earnings per common share $ .40 .71 1.03 2.75 ============================================================================================================= Weighted average common shares outstanding 55,538,001 56,200,393 55,518,963 57,748,891 Incremental common shares from stock options 275,781 46,233 249,401 94,008 - ------------------------------------------------------------------------------------------------------------- Adjusted weighted average common shares 55,813,782 56,246,626 55,768,364 57,842,899 ============================================================================================================= Cash dividends declared per common share $ .15 .15 .45 .45 ============================================================================================================= </TABLE> See Notes to Unaudited Condensed Consolidated Financial Statements. -3-
TIDEWATER INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) - -------------------------------------------------------------------------------- <TABLE> <CAPTION> Quarter Ended Nine Months Ended December 31, December 31, ------------------ ----------------- 1999 1998 1999 1998 ------------------- ----------------- <S> <C> <C> <C> <C> Net cash provided by operating activities 32,235 71,234 164,081 250,629 - -------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from sales of assets 7,088 11,268 60,414 17,603 Additions to properties and equipment (8,710) (21,581) (51,149) (38,399) Income tax payments related to sale of compression operations --- (236) --- (68,347) Other 80 135 142 195 - -------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (1,542) (10,178) 9,407 (20,601) - -------------------------------------------------------------------------------------------- Cash flows from financing activities: Principal payments on long-term debt --- (25,000) --- (108,172) Credit facility borrowings --- --- --- 80,000 Proceeds from issuance of common stock 55 59 243 496 Common stock purchased --- (36,364) --- (109,312) Dividends paid (8,344) (8,436) (25,024) (26,059) - -------------------------------------------------------------------------------------------- Net cash used in financing activities (8,289) (69,741) (24,781) (163,047) - -------------------------------------------------------------------------------------------- Net change in cash and cash equivalents 22,404 (8,921) 148,707 (1,366) Cash and cash equivalents at beginning of period 136,725 32,532 10,422 24,977 - -------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $159,129 23,611 159,129 23,611 ============================================================================================ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 2 673 328 2,026 Income taxes $ 2,428 22,368 19,776 148,492 ============================================================================================ </TABLE> See Notes to Unaudited Condensed Consolidated Financial Statements. -4-
TIDEWATER INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------- (1) Interim Financial Statements The consolidated financial information for the interim periods presented herein has not been audited by independent accountants, but in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated balance sheets and the condensed consolidated statements of earnings and cash flows at the dates and for the periods indicated have been made. Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years. (2) Stockholders' Equity At December 31, 1999 and March 31, 1999, 4,928,583 and 4,985,860 shares, respectively, of common stock were held in a grantor stock ownership plan trust for the benefit of stock-based employee benefits programs. These shares are not included in common shares outstanding for earnings per share calculations and transactions between the company and the trust, including dividends paid on the company's common stock, are eliminated in consolidating the accounts of the trust and the company. (3) Income Taxes Income tax expense for interim periods is based on estimates of the effective tax rate for the entire fiscal year. The effective tax rate was 32% for the quarter and nine-month periods ended December 31, 1999, excluding a $5 million (or $.09 per share) reduction in previously provided taxes resulting from the company's settlement in the current quarter of open income tax audits which had the effect of reducing the effective tax rate for the quarter and nine-month periods ended December 31, 1999 to 12.3% and 25.5%, respectively. The effective tax rate was 34% for the quarter and nine-month periods ended December 31, 1998, excluding a $2 million (or $.03 per share) second quarter reduction in deferred taxes resulting from the lowering of United Kingdom corporate income tax rates which had the effect of reducing the effective tax rate for the nine-month period ended December 31, 1998 to 33.2%. -5-
INDEPENDENT ACCOUNTANTS' REVIEW REPORT -------------------------------------- The Board of Directors and Shareholders Tidewater Inc. We have reviewed the accompanying condensed consolidated balance sheet of Tidewater Inc. as of December 31, 1999, and the related condensed consolidated statements of earnings and cash flows for the three-month and nine-month periods ended December 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Tidewater Inc. as of March 31, 1999, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year then ended, not presented herein, and in our report dated April 27, 1999, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 1999, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Ernst & Young LLP New Orleans, Louisiana January 17, 2000 -6-
Item 2. Management's Discussion and Analysis ------------------------------------ The company provides services to the international offshore energy industry through the operation of a diversified fleet of marine service vessels. Revenues, net earnings and cash flows from operations are dependent upon the activity level of the vessel fleet which is ultimately dependent upon oil and natural gas prices which, in turn, are determined by the supply/demand relationship for oil and natural gas. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related disclosures. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that certain statements set forth in this Quarterly Report on Form 10-Q which provide other than historical information and which are forward looking, involve risks and uncertainties that may impact the company's actual results of operations. The company faces many risks and uncertainties, many of which are beyond the control of the company, including: fluctuations in oil and gas prices; changes in capital spending by customers in the energy industry for exploration, development and production; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency controls; and environmental and labor laws. Readers should consider all of these risk factors as well as other information contained in this report. MARINE OPERATIONS - ----------------- Offshore service vessels provide a diverse range of services to the energy industry. Fleet size, utilization and vessel day rates primarily determine the amount of revenues and operating profit because operating costs and depreciation do not change proportionally when revenue changes. Operating costs principally consist of crew costs, repair and maintenance, insurance, fuel, lube 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 the impact on vessel operations and are only done if economically justified, given the vessel's age and physical condition. -7-
The following table compares revenues and operating costs (excluding general and administrative expense and depreciation expense) for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 1999. 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. <TABLE> <CAPTION> Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ----------------- ----------------- -------- (In thousands) 1999 1998 1999 1998 1999 - --------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Revenues: Vessel revenues: United States $ 36,444 61,440 104,120 252,530 34,918 International 92,211 155,953 302,547 475,408 94,817 - --------------------------------------------------------------------------------- 128,655 217,393 406,667 727,938 129,735 Other marine revenues 13,115 15,591 28,579 44,158 9,211 - --------------------------------------------------------------------------------- $141,770 232,984 435,246 772,096 138,946 ================================================================================= Operating costs: Vessel operating costs: Crew costs $ 45,103 67,594 142,647 201,932 44,135 Repair and maintenance 13,819 30,339 47,215 106,338 16,334 Insurance 5,168 6,478 14,729 18,538 4,264 Fuel, lube and supplies 6,174 8,974 18,666 27,868 5,508 Other 7,479 10,213 23,809 28,883 7,190 - --------------------------------------------------------------------------------- 77,743 123,598 247,066 383,559 77,431 Costs of other marine revenues 11,821 12,023 23,610 34,350 7,434 - --------------------------------------------------------------------------------- $ 89,564 135,621 270,676 417,909 84,865 ================================================================================= </TABLE> 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. As a result of the uncertainty of certain customers to make payment of vessel charter hire, the company has deferred the recognition of approximately $11.5 million of billings as of December 31, 1999 ($9.7 million of billings as of March 31, 1999), which would otherwise have been recognized as revenue. The company will recognize the amounts as revenue when the uncertainty has been reduced. -8-
Marine operating profit and other components of earnings before income taxes for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 1999 consist of the following: <TABLE> <CAPTION> Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, ----------------- ------------------- -------- (In thousands) 1999 1998 1999 1998 1999 - ---------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Vessel activity: United States $ 379 13,043 381 95,411 399 International 18,617 41,270 58,297 132,188 18,633 - ---------------------------------------------------------------------------------------- 18,996 54,313 58,678 227,599 19,032 Gain on sales of assets 2,074 5,108 11,029 7,748 6,598 Other marine services 1,162 3,346 4,487 9,205 1,661 - ---------------------------------------------------------------------------------------- Operating profit 22,232 62,767 74,194 244,552 27,291 - ---------------------------------------------------------------------------------------- Equity in net earnings of unconsolidated companies 2,583 1,748 6,469 5,277 1,900 Interest and other debt costs (160) (575) (449) (2,050) (163) Corporate general and administrative (2,481) (3,685) (8,546) (10,192) (3,120) Other income 3,169 17 5,656 640 1,864 - ---------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes $25,343 60,272 77,324 238,227 27,772 ======================================================================================== </TABLE> Operating profit for the quarter and nine-month periods ended December 31, 1999 decreased from the comparative periods in fiscal 1999 due to declines in utilization, average day rates and the number of active vessels for the worldwide fleet. Declines in utilization and average day rates are directly related to the current oil industry downturn. This downturn in activity and spending in the oil industry commenced with the drop in the price of oil in the fall of 1997 due primarily to worldwide oil surpluses. Cutbacks in customer drilling programs resulted, thus, negatively affecting the U.S. Gulf of Mexico vessel market first as the duration of vessel contracts in this region normally range from one to three months. Significant increases in the pricing of oil over the past nine months combined with a tightening of crude oil inventory levels have increased the demand for working drilling rigs and services. Despite the significant improvement in the price of oil and active rig count, the oil industry has not yet rebounded in full from the sharp decline experienced during fiscal year 1999. In response to the oil industry downturn the following actions have been taken. During the last quarter of fiscal 1999 the company began stacking those vessels that cannot find gainful employment. Drydockings associated with the stacked vessels have been deferred thus substantially reducing repair and maintenance costs for the current quarter and nine-month period versus the same periods in fiscal 1999. Reductions in crew personnel have also been made. The personnel reductions lowered crew costs for the quarter and nine-month periods ended December 31, 1999 versus these same periods in fiscal year 1999. During the current quarter 32 older, little-used vessels were withdrawn from active service at which time they were removed from the utilization statistics. Thirteen of the vessels were withdrawn from the domestic market and 19 were withdrawn from the international market. Vessel utilization rates are a function of vessel days worked and vessel days available for active vessels only. U.S.-based vessel revenues for the quarter and nine-month periods ended December 31, 1999 have decreased by approximately 41% and 59%, respectively, as compared to the same periods in fiscal 1999 resulting in a marginal operating profit for the current quarter and nine-month period. Average day rates for the towing supply/supply vessels, the company's major income producing assets in the domestic market, decreased by approximately 20% and 42% for the current quarter and nine-month periods, respectively, as compared to the same periods in fiscal 1999. The upward trend in the number of working drilling rigs in the U.S. Gulf of Mexico continues as oil prices increase; however, vessel demand is expected to increase moderately until further improvements in rig utilization occurs. -9-
In addition, the delivery of several newly-constructed supply vessels to various industry competitors has negatively affected the supply and demand balance in the Gulf of Mexico supply vessel market, thereby putting continued downward pressure on vessel utilization and day rates. Current quarter operating profit for the U.S.-based vessels was consistent with the prior quarter. A modest increase in U.S.-based vessel utilization combined with a slight increase in the average day rates resulted in an increase in revenue that was offset by higher operating costs, primarily wages. Increases in domestic oil prices and demand for working drilling rigs are gradually reversing the declining vessel demand in the U.S. Gulf of Mexico. International-based vessel operating profit for the quarter and nine-month periods ended December 31, 1999 decreased by approximately 41% and 36%, respectively, as compared to the same periods in fiscal 1999. International- based average day rates continued their decline, which began in the first quarter of fiscal 2000, while vessel utilization rates have increased slightly in the current quarter due to a decrease in the number of vessel days available. Vessel utilization rates are a function of vessel days worked and vessel days available for active vessels only. The removal of several vessels from active service during the quarter decreased the vessel days available count which consequently increased the vessel utilization rates. Up until nine-months ago, international activity had not been as dramatically affected by the oil industry downturn as the U.S. Gulf of Mexico due primarily to the longer-term nature of international vessel contracts. Depressed oil prices up until the beginning of this fiscal year have resulted in curtailments of customer projects, thus lowering international vessel demand. Lower international vessel demand will likely continue for the remainder of fiscal year 2000. Current quarter international-based vessel operating profit was also consistent with the prior quarter. Average day rates continued to decline during the quarter as international activity continues to be negatively affected by the depressed oil prices experienced throughout calendar year 1998. Gains on sales of assets decreased in the current quarter due to fewer vessel sales. Interest and other debt costs were negligible as the company had no outstanding debt during the current nine-month period. Other income increased during the current nine-month period as the result of interest earned on an increased cash balance. 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 two tables compare day-based utilization percentages and average day rates by vessel class and in total for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 1999: -10-
<TABLE> <CAPTION> Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, --------------- -------------------- --------- 1999 1998 1999 1998 1999 - -------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> UTILIZATION: - ----------- Domestic-based fleet -------------------- Towing-supply/supply 58.7% 74.1 52.7 77.6 52.3 Crew/utility 77.1 79.8 76.2 85.2 74.1 Offshore tugs 42.8 50.7 42.8 56.0 46.8 Other 44.7 49.7 55.7 47.9 76.8 Total 57.8% 69.6 54.1 73.6 55.2 International-based fleet ------------------------- Towing-supply/supply 74.0% 81.0 70.9 83.7 67.0 Crew/utility 83.3 89.3 87.7 85.9 90.4 Offshore tugs 66.3 74.9 60.7 74.2 51.2 Safety/standby --- 78.6 77.5 81.3 --- Other 48.5 69.2 49.7 68.9 48.3 Total 71.9% 80.2 70.1 81.4 66.3 Worldwide fleet --------------- Towing-supply/supply 68.1% 78.4 64.0 81.4 61.6 Crew/utility 81.2 85.9 83.8 85.7 84.9 Offshore tugs 56.3 64.8 53.1 66.5 49.4 Safety/standby --- 78.6 77.5 81.3 --- Other 47.7 64.6 51.0 63.9 54.4 Total 66.6% 76.5 64.3 78.6 62.3 ================================================================================ AVERAGE VESSEL DAY RATES: - ------------------------ Domestic-based fleet -------------------- Towing-supply/supply $3,646 4,545 3,619 6,284 3,484 Crew/utility 1,871 2,021 1,823 2,150 1,790 Offshore tugs 5,751 7,643 5,901 7,614 5,922 Other 1,188 2,073 1,262 2,835 1,250 Total $3,512 4,450 3,501 5,646 3,427 International-based fleet ------------------------- Towing-supply/supply $5,189 6,562 5,472 6,576 5,522 Crew/utility 2,188 2,428 2,204 2,426 2,172 Offshore tugs 3,827 4,303 3,905 4,240 3,818 Safety/standby --- 6,201 6,087 6,366 --- Other 1,358 891 1,333 877 1,383 Total $4,247 5,225 4,452 5,285 4,401 Worldwide fleet ---------------- Towing-supply/supply $4,677 5,860 4,897 6,472 4,878 Crew/utility 2,084 2,293 2,086 2,323 2,059 Offshore tugs 4,456 5,396 4,584 5,434 4,638 Safety/standby --- 6,201 6,087 6,366 --- Other 1,322 1,104 1,316 1,222 1,343 Total $4,009 4,980 4,162 5,405 4,088 ================================================================================ </TABLE> -11-
The following table compares the average number of vessels by class and geographic distribution for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 1999: <TABLE> <CAPTION> Quarter Actual Vessel Quarter Ended Nine Months Ended Ended Count At December 31, December 31, Sept 30, ------------- ----------------- Dec. 31, 1999 1999 1998 1999 1998 1999 - ------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> <C> <C> Domestic-based fleet: - -------------------- Towing-supply/supply 124 127 136 129 139 129 Crew/utility 24 26 31 26 33 26 Offshore tugs 32 33 38 36 39 36 Other 9 9 10 9 10 9 - ------------------------------------------------------------------------------------------ Total 189 195 215 200 221 200 - ------------------------------------------------------------------------------------------ International-based fleet: - ------------------------- Towing-supply/supply 202 203 233 213 232 219 Crew/utility 50 49 56 50 55 50 Offshore tugs 43 44 54 49 54 52 Safety/standby --- --- 29 8 29 --- Other 32 32 33 33 33 33 - ------------------------------------------------------------------------------------------ Total 327 328 405 353 403 354 - ------------------------------------------------------------------------------------------ Owned or chartered vessels included in marine revenues 516 523 620 553 624 554 Vessels withdrawn from active service 64 62 27 52 26 43 Joint-venture and other: 44 44 49 44 49 44 - ------------------------------------------------------------------------------------------ Total 624 629 696 649 699 641 ========================================================================================== </TABLE> The average count of both the domestic and international-based fleet decreased from the prior quarter due primarily to withdrawing vessels from active service as mentioned previously and to vessel sales. During the previous quarter the company acquired six new-build vessels for an aggregate price of approximately $22 million. The package of vessels included one supply vessel, two offshore tugs and three crew boats. Two of the vessels were delivered in the previous quarter. The remaining four vessels were still under construction and not included in the quarter ended September 30, 1999 vessel count, but were completed and delivered in the current quarter. The company sold all of its safety/standby vessels for approximately $40 million in an all cash transaction during the second quarter of fiscal year 2000. This specialized fleet was sold because it did not conform to the company's long- range strategies. -12-
General and administrative expenses for the quarters and nine-month periods ended December 31 and for the quarter ended September 30, 1999: Quarter Quarter Ended Nine Months Ended Ended December 31, December 31, Sept 30, --------------- ----------------- (In thousands) 1999 1998 1999 1998 1999 - --------------------------------------------------------------------- Personnel $ 9,396 11,916 28,763 34,151 9,916 Office and property 2,576 3,196 8,227 9,832 2,752 Sales and marketing 997 1,430 3,165 4,110 1,058 Professional services 1,416 1,346 4,001 4,054 1,353 Other 549 2,131 4,371 5,064 1,568 - --------------------------------------------------------------------- $14,934 20,019 48,527 57,211 16,647 ===================================================================== General and administrative expenses for the quarter and nine-month periods ended December 31, 1999 decreased approximately 25% and 15%, respectively, as compared to the same periods in fiscal 1999 due primarily to personnel reductions resulting from the sale of the safety/standby vessel fleet and the declining business environment. 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 present financing requirements. At December 31, 1999, all of the company's $200 million revolving line of credit was available to satisfy financing needs. Continued payment of dividends, currently $.15 per quarter per common share, is subject to declaration by the Board of Directors. Investing activities for the nine months ended December 31, 1999 provided $9.4 million of cash which included $60.4 million from proceeds from sales of assets, primarily the safety/standby fleet for approximately $40 million during the second quarter. Sale proceeds were offset by additions to properties and equipment totaling $51.1 million comprised of approximately $6.3 million in capitalized repairs and maintenance and approximately $42.6 million in new construction. The new construction includes approximately $22 million for the purchase of six new-build vessels as previously discussed. Financing activities include quarterly cash dividends of $.15 per share. INFLATION AND CURRENCY FLUCTUATIONS - ----------------------------------- Because of its significant international operations, the company is exposed to currency fluctuations and exchange risks. To minimize the financial impact of these items the company attempts to contract a majority of its services in United States dollars. Day-to-day operating costs are generally affected by inflation. However, because the energy services industry requires specialized goods and services, general economic inflationary trends may not affect the company's operating costs. The major impact on operating costs is the level of offshore exploration, development and production spending by energy exploration and production companies. As this spending increases, prices of goods and services used by the energy industry and the energy services industry will increase. Future increases in vessel day rates may mitigate the effects on the company from the inflationary effects on operating costs. -13-
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. The company is proactive in establishing policies and operating procedures for safeguarding the environment against any environmentally hazardous material aboard its vessels and at shore base locations. Whenever possible, hazardous materials are maintained or transferred in confined areas to ensure containment if accidents occur. In addition the company has established operating policies that are intended to increase awareness of actions that may harm the environment. Item 3. Quantitative and Qualitative Disclosure About Market Risk --------------------------------------------------------- No change from 1999 annual report disclosure. -14-
PART II. OTHER INFORMATION Item 4. Exhibits and Reports on Form 8-K -------------------------------- A. At page 17 of this report is the index for those exhibits required to be filed as a part of this report. B. The company did not file any reports during the quarter for which this report is filed. -15-
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIDEWATER INC. ------------------------------------------------------ (Registrant) Date: January 19, 2000 /s/ William C. O'Malley ______________________________________________________ William C. O'Malley Chairman of the Board, President and Chief Executive Officer Date: January 19, 2000 /s/ Ken C. Tamblyn ______________________________________________________ Ken C. Tamblyn Executive Vice President and Chief Financial Officer (Principal Accounting Officer) -16-
EXHIBIT INDEX Exhibit Number - ------ 10(a) Amendment No. 1 to Employment Agreement dated October 1, 1999 between Tidewater Inc. and William C. O'Malley. 10(b) Amended and Restated Change of Control Agreement dated October 1, 1999 between Tidewater and William C. O'Malley. 10(c) Form of Amended and Restated Change of Control Agreement dated October 1, 1999 with three executive officers of Tidewater Inc. 10(d) Second Amended and Restated Employees' Supplemental Savings Plan of Tidewater Inc. dated October 1, 1999. 10(e) Restated Non-Qualified Deferred Compensation Plan and Trust Agreement as Restated October 1, 1999 between Tidewater Inc. and Merrill Lynch Trust Company of America. 10(f) Tidewater Inc. Second Amended and Restated Supplemental Executive Retirement Plan dated October 1, 1999. 10(g) Restated Tidewater Inc. 1997 Stock Incentive Plan, effective October 1, 1999. 10(h) Restated Non-Qualified Pension Plan for Outside Directors of Tidewater Inc., effective October 1, 1999. 10(i) Amended and Restated Deferred Compensation Plan for Outside Directors of Tidewater Inc., effective October 1, 1999. 10(j) Seconded Restated Executives Supplemental Retirement Trust as Restated October 1, 1999 between Tidewater Inc. and Hibernia National Bank. 15 Letter re Unaudited Interim Financial Information 27 Financial Data Schedule -17-