UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172020
☐ | 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 of incorporation) |
| (I.R.S. Employer Identification No.) |
601 Poydras St.,6002 Rogerdale Road, Suite 1500600
New Orleans, Louisiana 70130Houston, Texas 77072
(Address of principal executive offices) (zip(Zip code)
Registrant’s telephone number, including area code: (504) 568-1010(713) 470-5300
Former Fiscal Year: March 31Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $0.001 par value per share | TDW | New York Stock Exchange |
Series A Warrants to purchase shares of common stock | TDW.WS.A | New York Stock Exchange |
Series B Warrants to purchase shares of common stock | TDW.WS.B | New York Stock Exchange |
Warrants to purchase shares of common stock | TDW.WS | NYSE American |
Preferred stock purchase rights | N/A | New York Stock Exchange |
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 such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
|
|
|
|
| Accelerated filer ☐ |
Non-accelerated filer ☐ Emerging Growth Company ☐ | Smaller reporting company ☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documentdocuments and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
21,915,43940,362,158 shares of Tidewater Inc. common stock $.001$0.001 par value per share were outstanding on October 27, 2017. Registrant has no other class of common stock outstanding.
July 24, 2020.
ITEM 1. FINANCIAL STATEMENTS |
|
TIDEWATER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and par value data)
|
| Successor |
|
|
| Predecessor |
| ||||||||||
|
| September 30, |
|
|
| March 31, |
|
| June 30, |
|
| December 31, |
| ||||
ASSETS |
| 2017 |
|
|
| 2017 |
|
| 2020 |
|
| 2019 |
| ||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 459,978 |
|
|
|
| 706,404 |
| $ |
| 203,119 |
| $ |
| 218,290 |
|
Trade and other receivables, less allowance for doubtful accounts of $200 and $16,165 as of September 30, 2017 and March 31, 2017, respectively |
|
| 120,271 |
|
|
|
| 123,262 |
| ||||||||
Due from affiliate |
|
| 245,056 |
|
|
|
| 262,652 |
| ||||||||
Restricted cash |
|
| 19,880 |
|
|
| 5,755 |
| |||||||||
Trade and other receivables, less allowance for credit losses of $556 as of June 30, 2020 and less allowance for doubtful accounts of $70 as of December 31, 2019. |
|
| 115,008 |
|
|
| 110,180 |
| |||||||||
Due from affiliate less allowance for credit losses of $71,959 as of June 30, 2020 and less due from affiliate allowance of $20,083 as of December 31, 2019 |
|
| 65,766 |
|
|
| 125,972 |
| |||||||||
Marine operating supplies |
|
| 31,083 |
|
|
|
| 30,560 |
|
|
| 20,580 |
|
|
| 21,856 |
|
Other current assets |
|
| 14,813 |
|
|
|
| 18,409 |
| ||||||||
Assets held for sale |
|
| 29,064 |
|
|
| 39,287 |
| |||||||||
Prepaid expenses and other current assets |
|
| 20,350 |
|
|
| 15,956 |
| |||||||||
Total current assets |
|
| 871,201 |
|
|
|
| 1,141,287 |
|
|
| 473,767 |
|
|
| 537,296 |
|
Investments in, at equity, and advances to unconsolidated companies |
|
| 25,729 |
|
|
|
| 45,115 |
| ||||||||
Net properties and equipment |
|
| 868,689 |
|
|
|
| 2,864,762 |
|
|
| 839,912 |
|
|
| 938,961 |
|
Deferred drydocking and survey costs |
|
| 388 |
|
|
|
| — |
| ||||||||
Net deferred drydocking and survey costs |
|
| 74,585 |
|
|
| 66,936 |
| |||||||||
Other assets |
|
| 46,845 |
|
|
|
| 139,535 |
|
|
| 27,411 |
|
|
| 36,335 |
|
Total assets |
| $ | 1,812,852 |
|
|
|
| 4,190,699 |
| $ |
| 1,415,675 |
| $ |
| 1,579,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 39,439 |
|
|
|
| 31,599 |
| $ |
| 17,111 |
| $ |
| 27,501 |
|
Accrued expenses |
|
| 61,115 |
|
|
|
| 78,121 |
| ||||||||
Due to affiliate |
|
| 112,642 |
|
|
|
| 132,857 |
| ||||||||
Accrued property and liability losses |
|
| 2,774 |
|
|
|
| 3,583 |
| ||||||||
Accrued costs and expenses |
|
| 60,993 |
|
|
| 74,000 |
| |||||||||
Due to affiliates |
|
| 48,803 |
|
|
| 50,186 |
| |||||||||
Current portion of long-term debt |
|
| 5,174 |
|
|
|
| 2,034,124 |
|
|
| 9,437 |
|
|
| 9,890 |
|
Other current liabilities |
|
| 38,041 |
|
|
|
| 48,429 |
|
|
| 25,815 |
|
|
| 24,100 |
|
Total current liabilities |
|
| 259,185 |
|
|
|
| 2,328,713 |
|
|
| 162,159 |
|
|
| 185,677 |
|
Long-term debt |
|
| 445,677 |
|
|
|
| — |
|
|
| 273,215 |
|
|
| 279,044 |
|
Deferred income taxes |
|
| — |
|
|
|
| 46,013 |
| ||||||||
Accrued property and liability losses |
|
| 2,607 |
|
|
|
| 10,209 |
| ||||||||
Other liabilities and deferred credits |
|
| 62,569 |
|
|
|
| 154,705 |
| ||||||||
Other liabilities |
|
| 90,301 |
|
|
| 98,397 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 10) |
|
|
|
|
|
|
|
|
| ||||||||
Contingencies (Note 10) |
|
|
|
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| |||||||||
|
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Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor Common stock of $0.10 par value, 125,000,000 shares authorized, 47,121,304 shares issued and outstanding at March 31, 2017 |
|
| — |
|
|
|
| 4,712 |
| ||||||||
Predecessor Additional paid-in capital |
|
| — |
|
|
|
| 165,221 |
| ||||||||
Successor Common stock of $0.001 par value, 125,000,000 shares authorized 20,738,076 shares issued and outstanding at September 30, 2017 |
|
| 21 |
|
|
|
| — |
| ||||||||
Successor Additional paid-in capital |
|
| 1,056,563 |
|
|
|
| — |
| ||||||||
Retained earnings |
|
| (15,693 | ) |
|
|
| 1,475,329 |
| ||||||||
Accumulated other comprehensive loss |
|
| 82 |
|
|
|
| (10,344 | ) | ||||||||
Common stock of $0.001 par value, 125,000,000 shares authorized, 40,335,963 and 39,941,327 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively |
|
| 40 |
|
|
| 40 |
| |||||||||
Additional paid-in capital |
|
| 1,369,645 |
|
|
| 1,367,521 |
| |||||||||
Accumulated deficit |
|
| (481,757 | ) |
|
| (352,526 | ) | |||||||||
Accumulated other comprehensive income (loss) |
|
| 581 |
|
|
| (236 | ) | |||||||||
Total stockholders’ equity |
|
| 1,040,973 |
|
|
|
| 1,634,918 |
|
|
| 888,509 |
|
|
| 1,014,799 |
|
Noncontrolling interests |
|
| 1,841 |
|
|
|
| 16,141 |
|
|
| 1,491 |
|
|
| 1,611 |
|
Total equity |
|
| 1,042,814 |
|
|
|
| 1,651,059 |
|
|
| 890,000 |
|
|
| 1,016,410 |
|
Total liabilities and equity |
| $ | 1,812,852 |
|
|
|
| 4,190,699 |
| $ |
| 1,415,675 |
| $ |
| 1,579,528 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||||||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| through |
|
|
| through |
|
| Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| |||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenues |
| $ | 70,571 |
|
|
|
| 34,340 |
|
|
| 139,361 |
|
| $ | 100,975 |
|
| $ | 123,641 |
|
| $ | 212,949 |
|
| $ | 243,303 |
|
Other operating revenues |
|
| 3,729 |
|
|
|
| 1,923 |
|
|
| 4,361 |
|
|
| 1,369 |
|
|
| 2,218 |
|
|
| 5,763 |
|
|
| 4,705 |
|
|
|
| 74,300 |
|
|
|
| 36,263 |
|
|
| 143,722 |
|
|
| 102,344 |
|
|
| 125,859 |
|
|
| 218,712 |
|
|
| 248,008 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating costs |
|
| 52,301 |
|
|
|
| 32,665 |
|
|
| 87,094 |
|
|
| 64,774 |
|
|
| 80,439 |
|
|
| 143,599 |
|
|
| 162,642 |
|
Costs of other operating revenues |
|
| 2,273 |
|
|
|
| 763 |
|
|
| 3,423 |
|
|
| 171 |
|
|
| 586 |
|
|
| 2,844 |
|
|
| 1,350 |
|
General and administrative |
|
| 16,246 |
|
|
|
| 8,773 |
|
|
| 32,954 |
|
|
| 17,597 |
|
|
| 23,696 |
|
|
| 39,017 |
|
|
| 50,836 |
|
Vessel operating leases |
|
| 1,124 |
|
|
|
| 623 |
|
|
| 8,441 |
| ||||||||||||||||
Depreciation and amortization |
|
| 8,142 |
|
|
|
| 11,160 |
|
|
| 43,845 |
|
|
| 28,144 |
|
|
| 25,038 |
|
|
| 55,251 |
|
|
| 47,970 |
|
Gain on asset dispositions, net |
|
| (4 | ) |
|
|
| (372 | ) |
|
| (6,253 | ) | ||||||||||||||||
Asset impairments |
|
| — |
|
|
|
| 21,325 |
|
|
| 129,562 |
| ||||||||||||||||
Long-lived asset impairments |
|
| 55,482 |
|
|
| — |
|
|
| 65,689 |
|
|
| — |
| |||||||||||||
Affiliate credit loss impairment expense |
|
| 53,581 |
|
|
| — |
|
|
| 53,581 |
|
|
| — |
| |||||||||||||
Affiliate guarantee obligation |
|
| 2,000 |
|
|
| — |
|
|
| 2,000 |
|
|
| — |
| |||||||||||||
(Gain) loss on asset dispositions, net |
|
| (1,660 | ) |
|
| 494 |
|
|
| (6,991 | ) |
|
| (776 | ) | |||||||||||||
|
|
| 80,082 |
|
|
|
| 74,937 |
|
|
| 299,066 |
|
|
| 220,089 |
|
|
| 130,253 |
|
|
| 354,990 |
|
|
| 262,022 |
|
Operating loss |
|
| (5,782 | ) |
|
|
| (38,674 | ) |
|
| (155,344 | ) |
|
| (117,745 | ) |
|
| (4,394 | ) |
|
| (136,278 | ) |
|
| (14,014 | ) |
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Foreign exchange loss |
|
| (58 | ) |
|
|
| (2,024 | ) |
|
| (2,539 | ) | ||||||||||||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Foreign exchange gain (loss) |
|
| (2,076 | ) |
|
| 11 |
|
|
| (1,212 | ) |
|
| (497 | ) | |||||||||||||
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
|
| 269 |
|
|
| 1,313 |
|
|
| — |
|
|
| 95 |
|
|
| — |
|
|
| 33 |
|
Interest income and other |
|
| 873 |
|
|
|
| 704 |
|
|
| 992 |
| ||||||||||||||||
Reorganization items |
|
| (1,880 | ) |
|
|
| (1,083,729 | ) |
|
| — |
| ||||||||||||||||
Interest and other debt costs |
|
| (5,240 | ) |
|
|
| (574 | ) |
|
| (18,477 | ) | ||||||||||||||||
Dividend income from unconsolidated company |
|
| 17,150 |
|
|
| — |
|
|
| 17,150 |
|
|
| — |
| |||||||||||||
Interest income and other, net |
|
| 696 |
|
|
| 1,859 |
|
|
| 812 |
|
|
| 4,329 |
| |||||||||||||
Interest and other debt costs, net |
|
| (5,959 | ) |
|
| (7,582 | ) |
|
| (12,101 | ) |
|
| (15,318 | ) | |||||||||||||
|
|
| (5,000 | ) |
|
|
| (1,085,354 | ) |
|
| (18,711 | ) |
|
| 9,811 |
|
|
| (5,617 | ) |
|
| 4,649 |
|
|
| (11,453 | ) |
Loss before income taxes |
|
| (10,782 | ) |
|
|
| (1,124,028 | ) |
|
| (174,055 | ) |
|
| (107,934 | ) |
|
| (10,011 | ) |
|
| (131,629 | ) |
|
| (25,467 | ) |
Income tax (benefit) expense |
|
| 4,745 |
|
|
|
| (1,529 | ) |
|
| 3,568 |
|
|
| 2,730 |
|
|
| 5,542 |
|
|
| (2,441 | ) |
|
| 11,372 |
|
Net loss |
| $ | (15,527 | ) |
|
|
| (1,122,499 | ) |
|
| (177,623 | ) |
| $ | (110,664 | ) |
| $ | (15,553 | ) |
| $ | (129,188 | ) |
| $ | (36,839 | ) |
Less: Net income (loss) attributable to noncontrolling interests |
|
| 166 |
|
|
|
| (24 | ) |
|
| 867 |
| ||||||||||||||||
Net income (loss) attributable to noncontrolling interests |
|
| (41 | ) |
|
| 406 |
|
|
| (120 | ) |
|
| 851 |
| |||||||||||||
Net loss attributable to Tidewater Inc. |
| $ | (15,693 | ) |
|
|
| (1,122,475 | ) |
|
| (178,490 | ) |
| $ | (110,623 | ) |
| $ | (15,959 | ) |
| $ | (129,068 | ) |
| $ | (37,690 | ) |
Basic loss per common share |
| $ | (0.81 | ) |
|
|
| (23.82 | ) |
|
| (3.79 | ) |
| $ | (2.74 | ) |
| $ | (0.42 | ) |
| $ | (3.21 | ) |
| $ | (1.01 | ) |
Diluted loss per common share |
| $ | (0.81 | ) |
|
|
| (23.82 | ) |
|
| (3.79 | ) |
| $ | (2.74 | ) |
| $ | (0.42 | ) |
| $ | (3.21 | ) |
| $ | (1.01 | ) |
Weighted average common shares outstanding |
|
| 19,389,031 |
|
|
|
| 47,121,407 |
|
|
| 47,067,864 |
|
|
| 40,306 |
|
|
| 37,571 |
|
|
| 40,203 |
|
|
| 37,369 |
|
Dilutive effect of stock options and restricted stock |
|
| — |
|
|
|
| — |
|
|
| — |
| ||||||||||||||||
Adjusted weighted average common shares |
|
| 19,389,031 |
|
|
|
| 47,121,407 |
|
|
| 47,067,864 |
|
|
| 40,306 |
|
|
| 37,571 |
|
|
| 40,203 |
|
|
| 37,369 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenues |
| $ | 70,571 |
|
|
|
| 146,597 |
|
|
| 301,791 |
|
Other operating revenues |
|
| 3,729 |
|
|
|
| 4,772 |
|
|
| 9,856 |
|
|
|
| 74,300 |
|
|
|
| 151,369 |
|
|
| 311,647 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating costs |
|
| 52,301 |
|
|
|
| 116,438 |
|
|
| 195,968 |
|
Costs of other operating revenues |
|
| 2,273 |
|
|
|
| 2,348 |
|
|
| 7,326 |
|
General and administrative |
|
| 16,246 |
|
|
|
| 41,832 |
|
|
| 70,001 |
|
Vessel operating leases |
|
| 1,124 |
|
|
|
| 6,165 |
|
|
| 16,882 |
|
Depreciation and amortization |
|
| 8,142 |
|
|
|
| 47,447 |
|
|
| 88,397 |
|
Gain on asset dispositions, net |
|
| (4 | ) |
|
|
| (3,561 | ) |
|
| (11,896 | ) |
Asset impairments |
|
| — |
|
|
|
| 184,748 |
|
|
| 166,448 |
|
|
|
| 80,082 |
|
|
|
| 395,417 |
|
|
| 533,126 |
|
Operating loss |
|
| (5,782 | ) |
|
|
| (244,048 | ) |
|
| (221,479 | ) |
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss |
|
| (58 | ) |
|
|
| (3,181 | ) |
|
| (5,272 | ) |
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
|
| 4,786 |
|
|
| 1,312 |
|
Interest income and other |
|
| 873 |
|
|
|
| 2,384 |
|
|
| 2,168 |
|
Reorganization items |
|
| (1,880 | ) |
|
|
| (1,396,905 | ) |
|
| — |
|
Interest and other debt costs |
|
| (5,240 | ) |
|
|
| (11,179 | ) |
|
| (35,431 | ) |
|
|
| (5,000 | ) |
|
|
| (1,404,095 | ) |
|
| (37,223 | ) |
Loss before income taxes |
|
| (10,782 | ) |
|
|
| (1,648,143 | ) |
|
| (258,702 | ) |
Income tax (benefit) expense |
|
| 4,745 |
|
|
|
| (1,234 | ) |
|
| 7,564 |
|
Net loss |
| $ | (15,527 | ) |
|
|
| (1,646,909 | ) |
|
| (266,266 | ) |
Less: Net income attributable to noncontrolling interests |
|
| 166 |
|
|
|
| — |
|
|
| 1,321 |
|
Net loss attributable to Tidewater Inc. |
| $ | (15,693 | ) |
|
|
| (1,646,909 | ) |
|
| (267,587 | ) |
Basic loss per common share |
| $ | (0.81 | ) |
|
|
| (34.95 | ) |
|
| (5.69 | ) |
Diluted loss per common share |
| $ | (0.81 | ) |
|
|
| (34.95 | ) |
|
| (5.69 | ) |
Weighted average common shares outstanding |
|
| 19,389,031 |
|
|
|
| 47,121,330 |
|
|
| 47,067,790 |
|
Dilutive effect of stock options and restricted stock |
|
| — |
|
|
|
| — |
|
|
| — |
|
Adjusted weighted average common shares |
|
| 19,389,031 |
|
|
|
| 47,121,330 |
|
|
| 47,067,790 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Net loss |
| $ | (15,527 | ) |
|
|
| (1,122,499 | ) |
|
| (177,623 | ) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on available for sale securities, net of tax of $0, $0 and $0 |
|
| 82 |
|
|
|
| 77 |
|
|
| 119 |
|
Change in loss on derivative contract, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| — |
|
|
| 72 |
|
Changes in supplemental executive retirement plan liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (536 | ) |
|
| — |
|
Changes in minimum pension liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (594 | ) |
|
| — |
|
Change in other benefit plan minimum liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (1,468 | ) |
|
| — |
|
Total comprehensive loss |
| $ | (15,445 | ) |
|
|
| (1,125,020 | ) |
|
| (177,432 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
Net loss |
| $ | (110,664 | ) |
| $ | (15,553 | ) |
| $ | (129,188 | ) |
| $ | (36,839 | ) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in pension plan and supplemental pension plan liability, net of tax of $0.2 million and $0.2 million, respectively |
|
| 448 |
|
|
| — |
|
| $ | 817 |
|
|
| — |
|
Total comprehensive loss |
| $ | (110,216 | ) |
| $ | (15,553 | ) |
| $ | (128,371 | ) |
| $ | (36,839 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Net loss |
| $ | (15,527 | ) |
|
|
| (1,646,909 | ) |
|
| (266,266 | ) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on available for sale securities, net of tax of $0, $0 and $0 |
|
| 82 |
|
|
|
| 163 |
|
|
| 280 |
|
Change in loss on derivative contract, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| — |
|
|
| 143 |
|
Changes in supplemental executive retirement plan liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (536 | ) |
|
| — |
|
Changes in minimum pension liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (594 | ) |
|
| — |
|
Change in other benefit plan minimum liability, net of tax of $0, $0 and $0 |
|
| — |
|
|
|
| (1,468 | ) |
|
|
|
|
Total comprehensive loss |
| $ | (15,445 | ) |
|
|
| (1,649,344 | ) |
|
| (265,843 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
|
| Six Months |
|
| Six Months |
| |||||
|
| through |
|
|
| through |
|
| Ended |
|
| Ended |
|
| Ended |
| |||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| |||||
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (15,527 | ) |
|
|
| (1,646,909 | ) |
|
| (266,266 | ) | $ |
| (129,188 | ) |
| $ | (36,839 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Reorganization items |
|
| — |
|
|
|
| 1,368,882 |
|
|
| — |
| ||||||||
Depreciation and amortization |
|
| 8,138 |
|
|
|
| 47,447 |
|
|
| 88,397 |
| ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
| |||||||||||||
Depreciation |
|
| 34,271 |
|
|
| 38,582 |
| |||||||||||||
Amortization of deferred drydocking and survey costs |
|
| 4 |
|
|
|
| — |
|
|
| — |
|
|
| 20,980 |
|
|
| 9,388 |
|
Amortization of debt premiums and discounts |
|
| (281 | ) |
|
|
| — |
|
|
| — |
| ||||||||
Amortization of debt premium and discounts |
|
| 1,357 |
|
|
| (1,019 | ) | |||||||||||||
Provision for deferred income taxes |
|
| — |
|
|
|
| (5,543 | ) |
|
| — |
|
|
| 206 |
|
|
| 6 |
|
Gain on asset dispositions, net |
|
| (4 | ) |
|
|
| (3,561 | ) |
|
| (11,896 | ) |
|
| (6,991 | ) |
|
| (776 | ) |
Asset impairments |
|
| — |
|
|
|
| 184,748 |
|
|
| 166,448 |
| ||||||||
Equity in earnings of unconsolidated companies, less dividends |
|
| (1,044 | ) |
|
|
| (4,252 | ) |
|
| (1,659 | ) | ||||||||
Affiliate credit loss impairment expense |
|
| 53,581 |
|
|
| — |
| |||||||||||||
Affiliate guarantee obligation |
|
| 2,000 |
|
|
| — |
| |||||||||||||
Long-lived asset impairments |
|
| 65,689 |
|
|
| — |
| |||||||||||||
Changes in investments in unconsolidated companies |
|
| — |
|
|
| 381 |
| |||||||||||||
Compensation expense - stock-based |
|
| 1,173 |
|
|
|
| 1,707 |
|
|
| 2,628 |
|
|
| 2,736 |
|
|
| 9,215 |
|
Changes in assets and liabilities, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
Trade and other receivables |
|
| (3,775 | ) |
|
|
| 6,286 |
|
|
| 18,263 |
|
|
| (4,991 | ) |
|
| (10,921 | ) |
Changes in due to/from affiliate, net |
|
| (3,920 | ) |
|
|
| 1,301 |
|
|
| 25,792 |
|
|
| 3,242 |
|
|
| 15,080 |
|
Marine operating supplies |
|
| 1,005 |
|
|
|
| 88 |
|
|
| 2,289 |
| ||||||||
Other current assets |
|
| 5,714 |
|
|
|
| (1,840 | ) |
|
| (1,827 | ) | ||||||||
Accounts payable |
|
| (317 | ) |
|
|
| 8,157 |
|
|
| 9,671 |
|
|
| (10,390 | ) |
|
| (7,769 | ) |
Accrued expenses |
|
| (10,555 | ) |
|
|
| 17,245 |
|
|
| (16,386 | ) | ||||||||
Accrued property and liability losses |
|
| 13 |
|
|
|
| (822 | ) |
|
| 281 |
| ||||||||
Other current liabilities |
|
| 3,753 |
|
|
|
| (2,337 | ) |
|
| (9,716 | ) | ||||||||
Other liabilities and deferred credits |
|
| (847 | ) |
|
|
| 2,884 |
|
|
| (5,173 | ) | ||||||||
Accrued costs and expenses |
|
| (13,007 | ) |
|
| (4,977 | ) | |||||||||||||
Cash paid for deferred drydocking and survey costs |
|
| (28,964 | ) |
|
| (28,688 | ) | |||||||||||||
Other, net |
|
| (1,339 | ) |
|
|
| 4,932 |
|
|
| (1,448 | ) |
|
| (3,354 | ) |
|
| (2,386 | ) |
Net cash used in operating activities |
|
| (17,809 | ) |
|
|
| (21,587 | ) |
|
| (602 | ) |
|
| (12,823 | ) |
|
| (20,723 | ) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of assets |
|
| 4,875 |
|
|
|
| 2,172 |
|
|
| 1,839 |
|
|
| 20,906 |
|
|
| 20,566 |
|
Additions to properties and equipment |
|
| (589 | ) |
|
|
| (2,265 | ) |
|
| (9,509 | ) |
|
| (4,075 | ) |
|
| (8,873 | ) |
Payments related to novated vessel construction contract |
|
| — |
|
|
|
| 5,272 |
|
|
| — |
| ||||||||
Refunds from cancelled vessel construction contracts |
|
| — |
|
|
|
| — |
|
|
| 11,515 |
| ||||||||
Net cash provided by investing activities |
|
| 4,286 |
|
|
|
| 5,179 |
|
|
| 3,845 |
|
|
| 16,831 |
|
|
| 11,693 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payment on long-term debt |
|
| — |
|
|
|
| (5,124 | ) |
|
| (5,036 | ) | ||||||||
Cash payments to General Unsecured Creditors |
|
| (87,366 | ) |
|
|
| (122,806 | ) |
|
| — |
| ||||||||
Cash received for issuance of common stock |
|
| 1 |
|
|
|
| — |
|
|
| — |
| ||||||||
Principal payments on long-term debt |
|
| (4,742 | ) |
|
| (3,792 | ) | |||||||||||||
Taxes on share based awards |
|
| (612 | ) |
|
| (1,760 | ) | |||||||||||||
Other |
|
| — |
|
|
|
| (1,200 | ) |
|
| (1,722 | ) |
|
| — |
|
|
| 1 |
|
Net cash used in financing activities |
|
| (87,365 | ) |
|
|
| (129,130 | ) |
|
| (6,758 | ) |
|
| (5,354 | ) |
|
| (5,551 | ) |
Net change in cash and cash equivalents |
|
| (100,888 | ) |
|
|
| (145,538 | ) |
|
| (3,515 | ) | ||||||||
Cash and cash equivalents at beginning of period |
|
| 560,866 |
|
|
|
| 706,404 |
|
|
| 678,438 |
| ||||||||
Cash and cash equivalents at end of period |
| $ | 459,978 |
|
|
|
| 560,866 |
|
|
| 674,923 |
| ||||||||
Net change in cash, cash equivalents and restricted cash |
|
| (1,346 | ) |
|
| (14,581 | ) | |||||||||||||
Cash, cash equivalents and restricted cash at beginning of period |
|
| 227,608 |
|
|
| 397,744 |
| |||||||||||||
Cash, cash equivalents and restricted cash at end of period (A) | $ |
| 226,262 |
|
| $ | 383,163 |
| |||||||||||||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized |
| $ | 59 |
|
|
|
| 1,577 |
|
|
| 34,209 |
| $ |
| 10,734 |
|
|
| 16,293 |
|
Income taxes |
| $ | 1,392 |
|
|
|
| 4,740 |
|
|
| 16,790 |
| $ |
| 6,461 |
|
|
| 7,754 |
|
Supplemental disclosure of non-cash investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Additions to properties and equipment |
| $ | — |
|
|
|
| — |
|
|
| 10,477 |
|
(A) | Cash, cash equivalents and restricted cash at June 30, 2020 includes $3.3 million in long-term restricted cash. |
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
|
|
|
| Three Months Ended |
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
|
|
|
| other |
|
|
|
| Non |
|
|
|
|
|
|
| |||
|
|
|
| Common |
|
|
|
| paid-in |
|
|
|
| Accumulated |
|
|
|
| comprehensive |
|
|
|
| controlling |
|
|
|
|
|
|
| |||||
|
|
|
| stock |
|
|
|
| capital |
|
|
|
| deficit |
|
|
|
| income (loss) |
|
|
|
| interest |
|
|
|
| Total |
| ||||||
Balance at March 31, 2020 |
|
|
| $ | 40 |
|
|
|
|
| 1,368,325 |
|
|
|
|
| (371,134 | ) |
|
|
|
| 133 |
|
|
|
|
| 1,532 |
|
|
|
|
| 998,896 |
|
Total comprehensive loss |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (110,623 | ) |
|
|
|
| 448 |
|
|
|
|
| (41 | ) |
|
|
|
| (110,216 | ) |
Amortization/cancellation of restricted stock units |
|
|
|
| — |
|
|
|
|
| 1,320 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1,320 |
|
Balance at June 30, 2020 |
|
|
| $ | 40 |
|
|
|
|
| 1,369,645 |
|
|
|
|
| (481,757 | ) |
|
|
|
| 581 |
|
|
|
|
| 1,491 |
|
|
|
|
| 890,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019 |
|
|
| $ | 37 |
|
|
|
|
| 1,356,436 |
|
|
|
|
| (232,514 | ) |
|
|
|
| 2,194 |
|
|
|
|
| 1,532 |
|
|
|
|
| 1,127,685 |
|
Total comprehensive loss |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (15,959 | ) |
|
|
|
| — |
|
|
|
|
| 406 |
|
|
|
|
| (15,553 | ) |
Issuance of common stock from exercise of warrants |
|
|
|
| 1 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 1 |
|
Amortization/cancellation of restricted stock units |
|
|
|
| — |
|
|
|
|
| 3,406 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 3,406 |
|
Balance at June 30, 2019 |
|
|
| $ | 38 |
|
|
|
|
| 1,359,842 |
|
|
|
|
| (248,473 | ) |
|
|
|
| 2,194 |
|
|
|
|
| 1,938 |
|
|
|
|
| 1,115,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
|
|
|
| other |
|
|
|
| Non |
|
|
|
|
|
|
| |||
|
|
|
| Common |
|
|
|
| paid-in |
|
|
|
| Accumulated |
|
|
|
| comprehensive |
|
|
|
| controlling |
|
|
|
|
|
|
| |||||
|
|
|
| stock |
|
|
|
| capital |
|
|
|
| deficit |
|
|
|
| income (loss) |
|
|
|
| interest |
|
|
|
| Total |
| ||||||
Balance at December 31, 2019 |
|
|
| $ | 40 |
|
|
|
|
| 1,367,521 |
|
|
|
|
| (352,526 | ) |
|
|
|
| (236 | ) |
|
|
|
| 1,611 |
|
|
|
|
| 1,016,410 |
|
Total comprehensive loss |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (129,068 | ) |
|
|
|
| 817 |
|
|
|
|
| (120 | ) |
|
|
|
| (128,371 | ) |
Adoption of credit loss accounting standard |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (163 | ) |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (163 | ) |
Amortization/cancellation of restricted stock units |
|
|
|
| — |
|
|
|
|
| 2,124 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 2,124 |
|
Balance at June 30, 2020 |
|
|
| $ | 40 |
|
|
|
|
| 1,369,645 |
|
|
|
|
| (481,757 | ) |
|
|
|
| 581 |
|
|
|
|
| 1,491 |
|
|
|
|
| 890,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018 |
|
|
| $ | 37 |
|
|
|
|
| 1,352,388 |
|
|
|
|
| (210,783 | ) |
|
|
|
| 2,194 |
|
|
|
|
| 1,087 |
|
|
|
|
| 1,144,923 |
|
Total comprehensive loss |
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| (37,690 | ) |
|
|
|
| — |
|
|
|
|
| 851 |
|
|
|
|
| (36,839 | ) |
Issuance of common stock from exercise of warrants |
|
|
|
| 1 |
|
|
|
|
| 1 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
| �� |
| — |
|
|
|
|
| 2 |
|
Amortization/cancellation of restricted stock units |
|
|
|
| — |
|
|
|
|
| 7,453 |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| 7,453 |
|
Balance at June 30, 2019 |
|
|
| $ | 38 |
|
|
|
|
| 1,359,842 |
|
|
|
|
| (248,473 | ) |
|
|
|
| 2,194 |
|
|
|
|
| 1,938 |
|
|
|
|
| 1,115,539 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Additional |
|
|
|
|
|
| other |
|
| Non |
|
|
|
|
| |||
|
| Common |
|
| paid-in |
|
| Retained |
|
| comprehensive |
|
| controlling |
|
|
|
|
| |||||
|
| stock |
|
| capital |
|
| earnings |
|
| loss |
|
| interest |
|
| Total |
| ||||||
Balance at March 31, 2017 (Predecessor) |
| $ | 4,712 |
|
|
| 165,221 |
|
|
| 1,475,329 |
|
|
| (10,344 | ) |
|
| 16,141 |
|
|
| 1,651,059 |
|
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| (1,646,909 | ) |
|
| (2,435 | ) |
|
| — |
|
|
| (1,649,344 | ) |
Stock option expense |
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 390 |
|
Cancellation/forfeiture or restricted stock units |
|
| — |
|
|
| 1,254 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,254 |
|
Amortization of restricted stock units |
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
Cash paid to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,200 | ) |
|
| (1,200 | ) |
Balance at July 31, 2017 (Predecessor) |
| $ | 4,712 |
|
|
| 166,867 |
|
|
| (171,580 | ) |
|
| (12,779 | ) |
|
| 14,941 |
|
|
| 2,161 |
|
Cancellation of Predecessor equity |
|
| (4,712 | ) |
|
| (166,867 | ) |
|
| 171,580 |
|
|
| 12,779 |
|
|
| (13,266 | ) |
|
| (486 | ) |
Balance at July 31, 2017 (Predecessor) |
| $ | — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,675 |
|
|
| 1,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Successor common stock and warrants |
| $ | 18 |
|
|
| 1,055,391 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,055,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 1, 2017 (Successor) |
| $ | 18 |
|
|
| 1,055,391 |
|
|
| — |
|
|
| — |
|
|
| 1,675 |
|
|
| 1,057,084 |
|
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| (15,693 | ) |
|
| 82 |
|
|
| 166 |
|
|
| (15,445 | ) |
Issuance of common stock |
|
| 3 |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
Amortization of restricted stock units |
|
| — |
|
|
| 1,173 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,173 |
|
Balance at September 30, 2017 (Successor) |
| $ | 21 |
|
|
| 1,056,563 |
|
|
| (15,693 | ) |
|
| 82 |
|
|
| 1,841 |
|
|
| 1,042,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2016 (Predecessor) |
| $ | 4,707 |
|
|
| 166,604 |
|
|
| 2,135,075 |
|
|
| (6,866 | ) |
|
| 6,034 |
|
|
| 2,305,554 |
|
Total comprehensive loss |
|
| — |
|
|
| — |
|
|
| (267,587 | ) |
|
| 423 |
|
|
| 1,321 |
|
|
| (265,843 | ) |
Stock option activity |
|
| — |
|
|
| 577 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 577 |
|
Cancellation of restricted stock awards |
|
| — |
|
|
| — |
|
|
| 213 |
|
|
| — |
|
|
| — |
|
|
| 213 |
|
Amortization/cancellation of restricted stock units |
|
| — |
|
|
| 2,262 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,262 |
|
Balance at September 30, 2016 (Predecessor) |
| $ | 4,707 |
|
|
| 169,443 |
|
|
| 1,867,701 |
|
|
| (6,443 | ) |
|
| 7,355 |
|
|
| 2,042,763 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Condensed Consolidated Financial Statements.
The unaudited condensed consolidated financial statements for the interim periods presented herein have been prepared in conformity with United States generally accepted accounting principles and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the unaudited condensed consolidated financial statements at the dates and for the periods indicated as required by Rule 10-01 of Regulation S‑X of the Securities and Exchange Commission (SEC). Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the company’sour Annual Report on Form 10-K for the year ended MarchDecember 31, 2017,2019, filed with the SEC on June 12, 2017.March 2, 2020.
The unaudited condensed consolidated financial statements include the accounts of Tidewater Inc. and its subsidiaries. Intercompany balances and transactions are eliminated in consolidation. The company usesWe use the equity method to account for equity investments over which the company exerciseswe exercise significant influence but doesdo not exercise control and isare not the primary beneficiary. Unless otherwise specified, all per share information included in this document is on a diluted earnings per share basis.
As previously reported, on July 17, 2017, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) issued its written order confirming the company’s consensual prepackaged Plan of Reorganization that had been filed with the Bankruptcy Court on May 17, 2017 (the “Petition Date”) in connection with the filing by the company and certain of its subsidiaries (the “Debtors”) of a petition with the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code. On July 31, 2017, the company and its affiliated Chapter 11 Debtors emerged from bankruptcy after successfully completing its reorganization pursuant to the Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization of Tidewater and its Affiliated Debtors (the “Plan”), that was confirmed on July 17, 2017 by the Bankruptcy Court. Refer to Note (2) for further details on the company's Chapter 11 bankruptcy and emergence.
(2) | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED |
Upon emergence from the chapter 11 bankruptcy, the company adopted fresh-start accounting in accordance with provisions ofIn December 2019, the Financial Accounting Standards Board'sBoard (FASB) issued Accounting Standards Codification (ASC) No. 852, "Reorganizations" (ASC 852),Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which resultedsimplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance to simplify the company becoming a new entityaccounting for financial reporting purposes on July 31, 2017 (the “Effective Date”). Uponincome taxes. The guidance is effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. We are currently evaluating the adoption of fresh-start accounting,effect the company's assets and liabilities were recorded at their fair values as of July 31, 2017. As a result of the adoption of fresh-start accounting, the company's unaudited condensed consolidated financial statements subsequent to July 31, 2017 are not comparable to its unaudited condensed consolidated financial statements on and prior to July 31, 2017. Refer to Note 3, "Fresh-start Accounting," for further details on the impact of fresh-start accounting on the company's unaudited condensedstandard may have in our consolidated financial statements.
References to "Successor"In August 2018 the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General, which modifies the disclosure requirements for employers that sponsor defined benefit plans or "Successor Company" relate toother postretirement plans. This ASU removes certain disclosures that no longer are considered cost beneficial, clarifies the financial position and results of operations of the reorganized company subsequent to July 31, 2017. References to "Predecessor" or "Predecessor Company" relate to the financial position and results of operations of the company through July 31, 2017.
The company made certain reclassifications to predecessor amounts to conform to the successor presentation related to a modification to the company’s reportable segments (refer to Note 14). These reclassifications did not have a material effect on the condensed consolidated statements of earnings, balance sheets or cash flows.
Concurrent with emergence from the Chapter 11 bankruptcy, the Successor Company adopted a new policy for the recognition of the costs of planned major maintenance activities incurred to ensure compliance with applicable regulations and maintain certifications for vessels with classification societies. These costs include drydocking and survey costs necessary to maintain certifications and generally occur twice in every five year period. These recertification costs are typically incurred while the vessel is in drydock and may be concurrent with other vessel maintenance and improvement activities. Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking which are not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements which either extend the vessel’s useful life or increase the vessels functionality are capitalized and depreciated. The company’s previous policy (Predecessor) was to expense vessel recertification costs in the period incurred.
Upon emergence from the Chapter 11 bankruptcy the Successor Company, to better reflect the current offshore supply vessel market, changed the estimated useful lives for vessels having 25 year useful lives to 20 years. Additionally, assumed salvage values for vessels at the end of such vessels’ estimated useful life were changed from 10% of original cost at year 25 to not more than 7.5% of original cost at year 20.
(2)CHAPTER 11 PROCEEDINGS AND EMERGENCE
During the bankruptcy proceedings from the Petition Date to the Effective Date, the Debtors operated as "debtors-in-possession" in accordance with applicable provisions of the Bankruptcy Code. The company operated in the ordinary course of business pursuant to motions filed by the Debtors and granted by the Bankruptcy Court.
Upon emergence of the company from bankruptcy:
The lenders under the company’s Fourth Amended and Restated Revolving Credit Agreement, dated as of June 21, 2013 (the “Credit Agreement”), the holders of senior notes, and the lessors from whom the company leased 16 vessels (the “Sale Leaseback Parties”) (collectively, the “General Unsecured Creditors” and the claims thereof, the “General Unsecured Claims”) received their pro rata share of (a) $225 million of cash, (b) subject to the limitations discussed below, common stock and, if applicable, warrants (the “New Creditor Warrants”) to purchase common stock, representing 95% of the common equity in the reorganized company (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the Plan as described below); and (c) new 8% fixed rate secured notes due in 2022 in the aggregate principal amount of $350 million (the “New Secured Notes”).
The company’s existing shares of common stock were cancelled. Existing common stockholders of the company received their pro rata share of common stock representing 5% of the common equity in the reorganized company (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the Plan) and six year warrants to purchase additional shares of common stock of the reorganized company. These warrants were issued in two tranches, with the first tranche (the “Series A Warrants”) being exercisable immediately, at an exercise price of $57.06 per share, and the second tranche (the “Series B Warrants”) being exercisable immediately, at an exercise price of $62.28 per share. The Series A Warrants are exercisable for 2.4 million shares of common stockwhile the Series B Warrants are exercisable for 2.6 million shares of common stock. The Series A Warrants and the Series B Warrants do not grant the holder thereof any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the company’s business and are subject to the restrictions in the company’s new certificate of incorporation that prohibits the exercise of such warrants where such exercise would cause the total number of shares held by non-U.S. citizens to exceed 24%. If, during the six-month period immediately preceding the Series A and Series B Warrants’ termination date, a non-U.S. Citizen is precluded from exercising the warrant because of the foreign ownership limitations, then the holder thereof may exercise and receive, in lieu of shares of common stock, warrants identical in all material respects to the New Creditor Warrants, with one such warrant being issued for each share of common stock that the Series A or Series B Warrants were otherwise convertible into.
To assure the continuing abilityspecific requirements of certain vessels owned byother disclosures, and adds disclosure requirements identified as relevant. The guidance is effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. We are currently evaluating the company’s subsidiaries to engage in U.S. coastwise trade,effect the number of shares of the company’s common stock that was otherwise issuable to the allowed General Unsecured Creditors was adjusted to assure that the foreign ownership limitations of the United States Jones Act are not exceeded. The Jones Act requires any corporation that engages in coastwise trade be a U.S. citizen within the meaning of that law, which requires, among other things, that the aggregate ownership of common stock by non-U.S. citizens within the meaning of the Jones Act be not more than 25% of its outstanding common stock. The Plan required that, at the time the company emerged from bankruptcy, not more than 22% of the common stock will be held by non-U.S. citizens. To that end, the Plan provided for the issuance of a combination of common stock of the reorganized company and the New Creditor Warrants to purchase common stock of the reorganized companystandard may have on a pro rata basis to any non-U.S. citizen among the allowed General Unsecured Creditors whose ownership of common stock, when combined with the shares to be issued to existing Tidewater stockholders that are non-U.S. citizens, would otherwise cause the 22% threshold to be exceeded. The New Creditor Warrants do not grant the holder thereof any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the company’s business. Generally, the New Creditor Warrants are exercisable immediately at a nominal exercise price, subject to restrictions contained in the Warrant Agreement between the company and the warrant agent regarding the New Creditor Warrants designed to assure the company’s continuing eligibility to engage in coastwise trade under the Jones Act that prohibit the exercise of such warrants where such exercise would cause the total number of shares held by non-U.S. citizens to exceed 22%. The company has established, under its charter and through Depository Trust Corporation (DTC), appropriate measures to assure compliance with these ownership limitations.our consolidated financial statement disclosures.
|
|
|
As of the Effective Date, the company and the Sale Leaseback Parties had not reached agreement with respect to the amount of the Sale Leaseback Claims. Accordingly, on the Effective Date, a portion of the above consideration in cash, New Creditor Warrants, and New Secured Notes in an amount that the company believes represents the maximum possible distributions owing on account of the Sale Leaseback Claims was withheld from the cash, New Creditor Warrants and New Secured Notes distributed to holders of allowed General Unsecured Claims on account of such disputed Sale Leaseback Claims until they are resolved. To the extent the Sale Leaseback Claims were resolved for less than the amount withheld, the remainder was distributed to holders of allowed General Unsecured Claims pro rata. Included in liabilities subject to compromise as of July 31, 2017 (Predecessor) is $260.2 million related to the claims of the Sale Leaseback Parties. As of September 30, 2017 (Successor), five claims had been settled for an aggregate $166.1 million and one claim, which had been reserved for at a maximum amount of $94.1 million, remained outstanding.
(3) |
|
UponOn August 28, 2018, the company's emergence from Chapter 11 bankruptcy, the company qualifiedFASB issued ASU 2018-13, Fair Value Measurement: - Changes to The Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and adopted fresh-start accounting in accordance with the provisions set forth in ASC 852modifies certain disclosure requirements for fair value measurements as(i) holders of existing shares of the Predecessor immediately before the Plan Effective Date received less than 50 percent of the voting shares of the Successor entity and (ii) the reorganization value of the Successor was less than its post-petition liabilities and estimated allowed claims immediately before the Plan Effective Date.
Refer to Note 2, "Chapter 11 Proceedings and Emergence" for the terms of the Plan. Fresh-start accounting requires the company to present its assets, liabilities, and equity as if it were a new entity upon emergence from bankruptcy. The new entity is referred to as "Successor”. The implementation of the Plan and the application of fresh-start accounting materially changed the carrying amounts and classifications reported in the company’s consolidated financial statements and resulted in the company becoming a new entity for financial reporting purposes. As a result of the application of fresh-start accounting and the effects of the implementation of the Plan, the financial statements after July 31, 2017 are not comparable with the financial statements prior to July 31, 2017. Therefore, "black-line" financial statements are presented to distinguish between the Predecessor and Successor companies.
As part of fresh-start accounting, the company wasits disclosure framework project. Entities will no longer be required to determinedisclose the Reorganization Valueamount of the Successor upon emergence from the Chapter 11 proceedings. Reorganization Value approximatesand reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. We adopted this standard on January 1, 2020 and it did not have any impact on our financial position, net earnings or cash flow. However, we have incorporated the modified disclosure requirements of ASU 2018-13 into note 15 of our financial statements.
On June 16, 2016, the entity, before considering liabilities,FASB issued ASU 2016-13, Financial Instruments–Credit Losses, which introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This model applies to: (i) loans, accounts receivable, trade receivables, and approximatesother financial assets measured at amortized cost, (ii) loan commitments and certain other off-balance sheet credit exposures, (iii) debt securities and other financial assets measured at fair value through other comprehensive income and (iv) beneficial interests in securitized financial assets.
Expected credit losses are recognized on the amountinitial recognition of our trade accounts receivable and contract assets. In each subsequent reporting period, even if a willing buyer would payloss has not yet been incurred, credit losses are recognized based on the history of credit losses and current conditions, as well as reasonable and supportable forecasts affecting collectability. We developed an expected credit loss model applicable to our trade accounts receivable and contract assets that considers our historical performance and the economic environment, as well as the credit risk and its expected development for each group of customers that share similar risk characteristics. We segmented our trade accounts receivable and contract assets by type of client, except for individual account balances that have deteriorated in credit quality, which are evaluated individually. We then determined, for each of these client asset groups, the assets ofaverage expected credit loss utilizing our actual credit loss experience over the entity immediately after the restructuring. The fair values of the Successor’s assets were determined with the assistance of a third party valuation expert. The Reorganization Valuelast five years, which was allocatedadjusted as discussed above, and was applied to the company's individual assetsbalance attributable to each segment in our trade accounts receivable and liabilities based on their estimated fair values.contract asset balances. This standard was adopted through a cumulative-effect adjustment to the accumulated deficit as of January 1,
Enterprise value,2020, which is the basis for deriving Reorganization Value, represents the estimated fair value of an entity’s capital structure which generally consists of long term debt and shareholders’ equity. The Successor’s enterprise value was $1.050 billion, which is the mid-pointbeginning of the range includedfirst period in which this guidance is effective. Periods prior to the adoption date that are presented for comparative purposes are not adjusted. Adopting this standard on January 1, 2020 increased the allowance for expected credit losses by approximately $0.2 million.
Activity in the disclosure statement of the Plan of $850 million to $1.250 billion. This enterprise value was the basisallowance for deriving equity value of $1.055 billion, which is within the range of $743 million to $1.143 billion also included in the disclosure statement of the Plan. Fair values are inherently subject to significant uncertainties and contingencies beyond the company’s control. Accordingly, there can be no assurance that the estimates, assumptions, valuations, appraisals and financial projections will be realized, and actual results could vary materially. Moreover, the market value of the company’s common stock subsequent to its emergence from bankruptcy may differ materially from the equity valuation derived for accounting purposes.
For purposes of estimating the fair value of the company's vessels the company used a combination of the discounted cash flow method (income approach) using a weighted average cost of capital of 12%, the guideline public company method (market approach) and vessel specific liquidation value analyses. In estimating the fair value of the other property and equipment, the company used a combination of asset, income, and market-based approaches.
See further discussion below in the "Fresh-start accounting adjustments"credit losses for the specific assumptions used in the valuation of the company's various other assets and liabilities.
Although the company believes the assumptions and estimates used to develop Enterprise Value and Reorganization Value are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and resulting conclusions. The assumptions used in estimating these values are inherently uncertain and require judgment.
The following table reconciles the company’s Enterprise Value to the estimated fair value of the Successor’s common stocksix months ended June 30, 2020 is as of July 31, 2017:follows:
(In thousands) |
| July 31, 2017 |
| |
Enterprise Value |
| $ | 1,050,000 |
|
Add: Cash and cash equivalents |
|
| 560,866 |
|
Less: Amounts due to General Unsecured Creditors |
|
| (102,193 | ) |
Less: Fair value of debt |
|
| (451,589 | ) |
Less: Fair value of New Creditor, Series A and B warrants |
|
| (299,045 | ) |
Less: Fair value of noncontrolling interests |
|
| (1,675 | ) |
Fair Value of Successor common stock |
| $ | 756,364 |
|
The following table reconciles the company’s Enterprise Value to its Reorganization Value as of July 31, 2017:
|
| July 31, 2017 |
| |
Enterprise Value |
| $ | 1,050,000 |
|
Add: Cash and cash equivalents |
|
| 560,866 |
|
Less: Amounts payable to General Unsecured Creditors |
|
| (102,193 | ) |
Add: Other working capital liabilities |
|
| 425,962 |
|
Reorganization value of Successor assets |
| $ | 1,934,635 |
|
Condensed Consolidated Balance Sheet
The following presents the effects on the company's unaudited condensed consolidated balance sheet due to the reorganization and fresh-start accounting adjustments. The explanatory notes following the table below provide further details on the adjustments, including the company's assumptions and methods used to determine fair value for its assets and liabilities.
(Unaudited, In thousands) | As of July 31, 2017 |
| ||||||||||||||||||||||||
| Predecessor Company |
|
|
| Reorganization Adjustments |
|
|
|
|
| Fresh-Start Adjustments |
|
|
|
|
| Successor Company |
| ||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents | $ |
| 683,673 |
|
|
|
|
| (122,807 | ) |
| (1 | ) |
|
|
| - |
|
|
|
|
|
|
| 560,866 |
|
Trade and other receivables, net |
|
| 116,976 |
|
|
|
|
| - |
|
|
|
|
|
|
| (480 | ) |
| (10 | ) |
|
|
| 116,496 |
|
Due from affiliate |
|
| 252,393 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 252,393 |
|
Marine operating supplies |
|
| 30,495 |
|
|
|
|
| - |
|
|
|
|
|
|
| 1,594 |
|
| (11 | ) |
|
|
| 32,089 |
|
Other current assets |
|
| 33,243 |
|
|
|
|
| (12,438 | ) |
| (2 | ) |
|
|
| (278 | ) |
| (12 | ) |
|
|
| 20,527 |
|
Total current assets |
|
| 1,116,780 |
|
|
|
|
| (135,245 | ) |
|
|
|
|
|
| 836 |
|
|
|
|
|
|
| 982,371 |
|
Investments in, at equity, and advances to unconsolidated companies |
|
| 49,367 |
|
|
|
|
| - |
|
|
|
|
|
|
| (24,683 | ) |
| (13 | ) |
|
|
| 24,684 |
|
Net properties and equipment |
|
| 2,625,848 |
|
|
|
|
| - |
|
|
|
|
|
|
| (1,744,672 | ) |
| (14 | ) |
|
|
| 881,176 |
|
Other assets |
|
| 92,674 |
|
|
|
|
| - |
|
|
|
|
|
|
| (46,270 | ) |
| (15 | ) |
|
|
| 46,404 |
|
Total assets | $ |
| 3,884,669 |
|
|
|
|
| (135,245 | ) |
|
|
|
|
|
| (1,814,789 | ) |
|
|
|
|
|
| 1,934,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable | $ |
| 39,757 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 39,757 |
|
Accrued expenses |
|
| 71,824 |
|
|
|
|
| - |
|
|
|
|
|
|
| (160 | ) |
| (16 | ) |
|
|
| 71,664 |
|
Due to affiliate |
|
| 123,899 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 123,899 |
|
Accrued property and liability losses |
|
| 2,761 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 2,761 |
|
Current portion of long-term debt |
|
| 10,409 |
|
|
|
|
| (5,204 | ) |
| (3 | ) |
|
|
| - |
|
|
|
|
|
|
| 5,205 |
|
Other current liabilities |
|
| 20,483 |
|
|
|
|
| 102,193 |
|
| (4 | ) |
|
|
| (963 | ) |
| (17 | ) |
|
|
| 121,713 |
|
Total current liabilities |
|
| 269,133 |
|
|
|
|
| 96,989 |
|
|
|
|
|
|
| (1,123 | ) |
|
|
|
|
|
| 364,999 |
|
Long-term debt |
|
| 80,233 |
|
|
|
|
| 355,204 |
|
| (5 | ) |
|
|
| 10,946 |
|
| (18 | ) |
|
|
| 446,383 |
|
Deferred income taxes |
|
| - |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
Accrued property and liability losses |
|
| 2,789 |
|
|
|
|
| - |
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| 2,789 |
|
Other liabilities and deferred credits |
|
| 67,487 |
|
|
|
|
| - |
|
|
|
|
|
|
| (4,107 | ) |
| (17 | ) |
|
|
| 63,380 |
|
Liabilities subject to compromise |
|
| 2,326,122 |
|
|
|
|
| (2,326,122 | ) |
| (6 | ) |
|
|
| - |
|
|
|
|
|
|
| - |
|
Total liabilities |
|
| 2,745,764 |
|
|
|
|
| (1,873,929 | ) |
|
|
|
|
|
| 5,716 |
|
|
|
|
|
|
| 877,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
Common stock (Predecessor) |
|
| 4,712 |
|
|
|
|
| (4,712 | ) |
| (7 | ) |
|
|
| - |
|
|
|
|
|
|
| - |
|
Additional paid-in capital (Predecessor) |
|
| 166,867 |
|
|
|
|
| (166,867 | ) |
| (7 | ) |
|
|
| - |
|
|
|
|
|
|
| - |
|
Common stock (Successor) |
|
| - |
|
|
|
|
| 18 |
|
| (8 | ) |
|
|
| - |
|
|
|
|
|
|
| 18 |
|
Additional paid-in capital (Successor) |
|
| - |
|
|
|
|
| 1,055,391 |
|
| (8 | ) |
|
|
| - |
|
|
|
|
|
|
| 1,055,391 |
|
Retained earnings |
|
| 965,164 |
|
|
|
|
| 854,854 |
|
| (9 | ) |
|
|
| (1,820,018 | ) |
| (19 | ) |
|
|
| - |
|
Accumulated other comprehensive loss |
|
| (12,779 | ) |
|
|
|
| - |
|
|
|
|
|
|
| 12,779 |
|
| (20 | ) |
|
|
| - |
|
Total stockholders' equity |
|
| 1,123,964 |
|
|
|
|
| 1,738,684 |
|
|
|
|
|
|
| (1,807,239 | ) |
|
|
|
|
|
| 1,055,409 |
|
Noncontrolling interests |
|
| 14,941 |
|
|
|
|
| - |
|
|
|
|
|
|
| (13,266 | ) |
| (21 | ) |
|
|
| 1,675 |
|
Total equity |
|
| 1,138,905 |
|
|
|
|
| 1,738,684 |
|
|
|
|
|
|
| (1,820,505 | ) |
|
|
|
|
|
| 1,057,084 |
|
Total liabilities and equity | $ |
| 3,884,669 |
|
|
|
|
| (135,245 | ) |
|
|
|
|
|
| (1,814,789 | ) |
|
|
|
|
|
| 1,934,635 |
|
|
|
| ||||
|
|
| ||
|
| |||
|
|
|
Based on the terms contemplated in the Plan, the company would have had $458.7 million of cash million upon emergence subsequent to the full payment of the $225 million.
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| |
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
| |
|
| |||
|
| |||
|
| |||
|
| |||
|
|
|
|
|
|
|
|
The table below reflects the components of Additional paid-in capital (Successor) upon emergence:
(In thousands) |
|
|
|
|
Additional paid-in capital attributable to common shares |
| $ | 756,346 |
|
Series A Warrants (2,432,432 Warrants at $1.88 per warrant) |
|
| 5,510 |
|
Series B Warrants (2,629,657 Warrants at $2.27 per warrant) |
|
| 4,945 |
|
Issued Creditor Warrants (7,684,453 Warrants at $25 per warrant) |
|
| 192,108 |
|
Reserved Creditor Warrants (3,859,361 Warrants at $25 per warrant) |
|
| 96,482 |
|
Fair Value of Successor additional paid-in capital |
| $ | 1,055,391 |
|
|
| Trade |
|
| Due |
| ||
|
| and |
|
| from |
| ||
(In thousands) |
| Other Receivables |
|
| Affiliate |
| ||
Balance at January 1, 2020 |
| $ | 70 |
|
| $ | 20,083 |
|
Cumulative effect adjustment upon adoption of standard |
|
| 163 |
|
|
| — |
|
Current period provision for expected credit losses |
|
| 323 |
|
|
| 53,581 |
|
Other |
|
| — |
|
|
| (1,705 | ) |
Balance at June 30, 2020 |
| $ | 556 |
|
| $ | 71,959 |
|
(4) |
|
|
Fresh-start Accounting AdjustmentsRefer to Note (13) for the amount of revenue by segment and in total for the worldwide fleet.
Contract Balances
At June 30, 2020, we had $5.7 million and $0.6 million of deferred mobilization costs included within other current assets and other assets, respectively.
At June 30, 2020 we have $0.5 million of deferred mobilization revenue, included within other current liabilities, related to unsatisfied performance obligations of which $0.1 million will be recognized during the remainder of 2020, $0.2 million will be recognized during 2021 and the remainder recognized during 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASC 852 requires that transactions and events directly associated with the reorganization be distinguished from the ongoing operations of the business. The company uses “Reorganization items” on its condensed consolidated statements of earnings (loss) to reflect the revenues, expenses, gains and losses that are the direct result of the reorganization of the business. The following tables summarize the components included in “Reorganization items”:
|
| Successor |
|
|
| Predecessor |
| ||
|
| Period from |
|
|
| Period from |
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
| ||
|
| through |
|
|
| through |
| ||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
| ||
Gain on settlement of liabilities subject to compromise |
| $ | — |
|
|
|
| (767,640 | ) |
Fresh start adjustments |
|
| — |
|
|
|
| 1,820,018 |
|
Debt, sale leaseback and other reorganization items |
|
| 1,244 |
|
|
|
| 8,493 |
|
Reorganization-related professional fees |
|
| 636 |
|
|
|
| 22,858 |
|
(Gain) loss on reorganization items |
| $ | 1,880 |
|
|
|
| 1,083,729 |
|
|
| Successor |
|
|
| Predecessor |
| ||
|
| Period from |
|
|
| Period from |
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
| ||
|
| through |
|
|
| through |
| ||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
| ||
Gain on settlement of liabilities subject to compromise |
| $ | — |
|
|
|
| (767,640 | ) |
Fresh start adjustments |
|
| — |
|
|
|
| 1,820,018 |
|
Debt, sale leaseback and other reorganization items |
|
| 1,244 |
|
|
|
| 316,504 |
|
Reorganization-related professional fees |
|
| 636 |
|
|
|
| 28,023 |
|
(Gain) loss on reorganization items |
| $ | 1,880 |
|
|
|
| 1,396,905 |
|
|
|
|
|
|
|
|
|
|
|
(5) | STOCKHOLDERS' EQUITY AND DILUTIVE EQUITY INSTRUMENTS |
Common Stock and Warrants
In connection with the Plan of Reorganization, Successor issued approximately 18.5 million shares of New Common Stock (approximately 17.0 million shares to General Unsecured Creditors and 1.5 million shares to holders of Predecessor stock), 7.7 million New Creditor Warrants (to General Unsecured Creditors), 2.4 million Series A Warrants (to holders of Predecessor stock), and 2.6 million Series B Warrants (to holders of Predecessor stock). The Successor also reserved for future issuance approximately 3.9 million New Creditor Warrants in respect of the unresolved sale/leaseback claims, with the remaining balance, if any, of such New Creditor Warrants following the resolution of such sale/leaseback claims to be distributed to holders of allowed General Unsecured Claims pro rata.
The shares of New Common Stock have a par value of $0.001 and are subject to dilution by (i) issuance of up to 3.9 million shares of New Common Stock upon exercise of New Creditor Warrants (with an exercise price of $0.001 per share), (ii) issuance of up to 3.0 million shares of New Common Stock reserved for issuance under the management incentive plan, (iii) issuance of up to 2.4 million shares of New Common Stock upon exercise of the Series A Warrants (with an exercise price of $57.06 per share) and (iv) issuance of up to 2.6 million shares of New Common Stock upon exercise of the Series B Warrants (with an exercise price of $62.28 per share). New Creditor Warrants are exercisable for up to 25 years from the issuance date. The Series A Warrants and Series B Warrants are each exercisable for up to six years from the issuance date.
Based on a Black-Scholes-Merton valuation and an estimated value of the underlying New Common Stock of $25 per share, the value of each New Creditor Warrant was estimated at $25, the value of each Series A Warrant was estimated at $2.27 and the value of each Series B Warrant was estimated at $1.88.
The company allocated $288.6 million, $5.5 million and $4.9 million of Enterprise Value to the New Creditor Warrants, Series A and Series B warrants, respectively.
Accumulated Other Comprehensive LossIncome (Loss) (OCI)
The changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and six months ended June 30, 2020 and 2019 are as follows:
|
| Successor | |||||||||||||||||||
|
| Period from August 1, 2017 through September 30, 2017 |
|
| |||||||||||||||||
|
| Balance |
|
| Gains/(losses) |
|
| Reclasses |
|
| Net |
|
| Remaining |
|
| |||||
|
| at |
|
| recognized |
|
| from OCI to |
|
| period |
|
| balance |
|
| |||||
(in thousands) |
| 7/31/17 |
|
| in OCI |
|
| net income |
|
| OCI |
|
| 9/30/17 |
|
| |||||
Available for sale securities | $ |
| — |
|
|
| 7 |
|
|
| 75 |
|
|
| 82 |
|
|
| 82 |
|
|
Total | $ |
| — |
|
|
| 7 |
|
|
| 75 |
|
|
| 82 |
|
|
| 82 |
|
|
|
| Three months ended June 30, 2020 |
|
| Three months ended June 30, 2019 |
| |||||||||||||||||||||
|
| Balance |
|
| Gains/(losses) |
|
|
|
| Remaining |
|
| Balance |
|
| Gains/(losses) |
|
|
| Remaining |
| ||||||
|
| at |
|
| recognized |
|
|
|
| balance |
|
| at |
|
| recognized |
|
|
| balance |
| ||||||
(In thousands) |
| 3/31/20 |
|
| in OCI |
|
|
|
| 6/30/20 |
|
| 3/31/2019 |
|
| in OCI |
|
|
| 6/30/19 |
| ||||||
Pension benefits |
| $ | 133 |
|
|
| 448 |
|
|
|
|
| 581 |
|
| $ | 2,194 |
|
|
| — |
|
|
|
| 2,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the six months ended June 30, 2020 |
|
| For the six months ended June 30, 2019 |
| |||||||||||||||||||||
|
| Balance |
|
| Gains/(losses) |
|
|
|
| Remaining |
|
| Balance |
|
| Gains/(losses) |
|
|
| Remaining |
| ||||||
|
| at |
|
| recognized |
|
|
|
| balance |
|
| at |
|
| recognized |
|
|
| balance |
| ||||||
(In thousands) |
| 12/31/19 |
|
| in OCI |
|
|
|
| 6/30/20 |
|
| 12/31/18 |
|
| in OCI |
|
|
| 6/30/19 |
| ||||||
Pension benefits |
|
| (236 | ) |
|
| 817 |
|
|
|
|
| 581 |
|
|
| 2,194 |
|
|
| — |
|
|
|
| 2,194 |
|
|
| Predecessor |
| |||||||||||||||||||||||||||||||||||||
|
| Period from July 1, 2017 through July 31, 2017 |
|
| Period from April 1, 2017 through July 31, 2017 |
| ||||||||||||||||||||||||||||||||||
|
| Balance |
|
| Gains/(losses) |
|
| Reclasses |
|
| Net |
|
| Remaining |
|
| Balance |
|
| Gains/(losses) |
|
| Reclasses |
|
| Net |
|
| Remaining |
| ||||||||||
|
| at |
|
| recognized |
|
| from OCI to |
|
| period |
|
| balance |
|
| at |
|
| recognized |
|
| from OCI to |
|
| period |
|
| balance |
| ||||||||||
(in thousands) |
| 6/30/17 |
|
| in OCI |
|
| net income |
|
| OCI |
|
| 7/31/17 |
|
| 3/31/17 |
|
| in OCI |
|
| net income |
|
| OCI |
|
| 7/31/17 |
| ||||||||||
Available for sale securities | $ |
| (9 | ) |
|
| 51 |
|
|
| 26 |
|
|
| 77 |
|
|
| 68 |
|
|
| (95 | ) |
|
| 57 |
|
|
| 106 |
|
|
| 163 |
|
|
| 68 |
|
Currency translation adjustment |
|
| (9,811 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,811 | ) |
|
| (9,811 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,811 | ) |
Pension/Post- retirement benefits |
|
| (438 | ) |
|
| (2,598 | ) |
|
| — |
|
|
| (2,598 | ) |
|
| (3,036 | ) |
|
| (438 | ) |
|
| (2,598 | ) |
|
| — |
|
|
| (2,598 | ) |
|
| (3,036 | ) |
Total | $ |
| (10,258 | ) |
|
| (2,547 | ) |
|
| 26 |
|
|
| (2,521 | ) |
|
| (12,779 | ) |
|
| (10,344 | ) |
|
| (2,541 | ) |
|
| 106 |
|
|
| (2,435 | ) |
|
| (12,779 | ) |
|
| Predecessor |
| |||||||||||||||||||||||||||||||||||||
|
| For the three months ended September 30, 2016 |
|
| For the six months ended September 30, 2016 |
| ||||||||||||||||||||||||||||||||||
|
| Balance |
|
| Gains/(losses) |
|
| Reclasses |
|
| Net |
|
| Remaining |
|
| Balance |
|
| Gains/(losses) |
|
| Reclasses |
|
| Net |
|
| Remaining |
| ||||||||||
|
| at |
|
| recognized |
|
| from OCI to |
|
| period |
|
| balance |
|
| at |
|
| recognized |
|
| from OCI to |
|
| period |
|
| balance |
| ||||||||||
(in thousands) |
| 6/30/16 |
|
| in OCI |
|
| net income |
|
| OCI |
|
| 9/30/16 |
|
| 3/31/16 |
|
| in OCI |
|
| net income |
|
| OCI |
|
| 9/30/16 |
| ||||||||||
Available for sale securities | $ |
| (47 | ) |
|
| 79 |
|
|
| 40 |
|
|
| 119 |
|
|
| 72 |
|
|
| (208 | ) |
|
| 138 |
|
|
| 142 |
|
|
| 280 |
|
|
| 72 |
|
Currency translation adjustment |
|
| (9,811 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,811 | ) |
|
| (9,811 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,811 | ) |
Pension/Post- retirement benefits |
|
| 4,683 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,683 |
|
|
| 4,683 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,683 |
|
Interest rate swaps |
|
| (1,459 | ) |
|
| — |
|
|
| 72 |
|
|
| 72 |
|
|
| (1,387 | ) |
|
| (1,530 | ) |
|
| — |
|
|
| 143 |
|
|
| 143 |
|
|
| (1,387 | ) |
Total | $ |
| (6,634 | ) |
|
| 79 |
|
|
| 112 |
|
|
| 191 |
|
|
| (6,443 | ) |
|
| (6,866 | ) |
|
| 138 |
|
|
| 285 |
|
|
| 423 |
|
|
| (6,443 | ) |
The following tables summarize the reclassifications from accumulated other comprehensive income (loss) to the condensed consolidated statement of income:Dilutive Equity Instruments
We had 2,402,241 and 3,997,084 incremental "in-the-money" warrants and restricted stock units at June 30, 2020 and 2019, respectively, which are as follows:
|
| Successor |
|
|
| Predecessor |
|
|
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
|
|
| |||
|
| through |
|
|
| through |
|
| Ended |
|
| Affected line item in the condensed | |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| consolidated statements of income | |||
Realized gains on available for sale securities |
| $ | 75 |
|
|
|
| 26 |
|
|
| 40 |
|
| Interest income and other, net |
Interest rate swap |
|
| — |
|
|
|
| — |
|
|
| 72 |
|
| Interest and other debt costs |
Total pre-tax amounts |
|
| 75 |
|
|
|
| 26 |
|
|
| 112 |
|
|
|
Tax effect |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
Total gains for the period, net of tax |
| $ | 75 |
|
|
|
| 26 |
|
|
| 112 |
|
|
|
Total shares outstanding including warrants and restricted stock units |
| June 30, 2020 |
|
| June 30, 2019 |
| ||
Common shares outstanding |
|
| 40,335,963 |
|
|
| 37,845,158 |
|
New creditor warrants (strike price $0.001 per common share) |
|
| 817,742 |
|
|
| 2,034,235 |
|
GulfMark creditor warrants (strike price $0.01 per common share) |
|
| 952,154 |
|
|
| 1,683,147 |
|
Restricted stock units |
|
| 632,345 |
|
|
| 279,702 |
|
Total |
|
| 42,738,204 |
|
|
| 41,842,242 |
|
We also had 5,923,399 shares of “out-of-the-money” warrants outstanding at June 30, 2020 and 2019, respectively. Included in these “out-of-the-money” warrants are Series A Warrants, Series B Warrants and GLF Equity Warrants which have exercise prices of $57.06, $62.28, and $100.00, respectively.
| Successor |
|
|
| Predecessor |
|
|
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
|
|
| |||
|
| through |
|
|
| through |
|
| Ended |
|
| Affected line item in the condensed | |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| consolidated statements of income | |||
Realized gains on available for sale securities |
| $ | 75 |
|
|
|
| 106 |
|
|
| 142 |
|
| Interest income and other, net |
Interest rate swap |
|
| — |
|
|
|
| — |
|
|
| 143 |
|
| Interest and other debt costs |
Total pre-tax amounts |
|
| 75 |
|
|
|
| 106 |
|
|
| 285 |
|
|
|
Tax effect |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
Total gains for the period, net of tax |
| $ | 75 |
|
|
|
| 106 |
|
|
| 285 |
|
|
|
Tax Benefits Preservation Plan
On April 13, 2020, we adopted a Tax Benefits Preservation Plan (the “Plan”) as a measure to protect our existing net operating loss carryforwards and foreign tax credits (“Tax Attributes”) and to reduce our potential future tax liabilities. Use of our Tax Attributes will be substantially limited if we experience an “ownership change” as defined in Section 382 of the Internal Revenue Code (“Section 382”).
While the Plan is in effect, any person or group that acquires beneficial ownership of 4.99% or more of our common stock then outstanding without approval from our Board of Directors (the Board) or without meeting certain customary exceptions would be subject to significant dilution in their ownership interest in our company. Stockholders who currently own 4.99% or more of our outstanding common stock will not trigger the Plan unless they acquire 0.5% or more additional shares of common stock.
Pursuant to the Plan, one right will be distributed to our stockholders for each share of our common stock owned of record at the close of business on April 24, 2020. Each right would initially represent the right to purchase from the Company one 1-thousandth of a share of our Series A Junior Participating Preferred Stock, no par value (the “Preferred Stock”) at a purchase price of $38.00 per one one-thousandth of a share. The preferred stock will entitle the holder to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of preferred stock. The Board may redeem the rights in whole, but not in part, for $0.001 per right (subject to adjustment) at any time prior to the close of business on the tenth business day after the first date of public announcement that any person or group has triggered the Plan.
The rights will expire on the earliest of (i) the close of business on April 13, 2023, (ii) the time at which the rights are redeemed or exchanged, or (iii) the time at which the Board determines that the Tax Attributes are fully utilized, expired, no longer necessary or become limited under Section 382.
(6) | INCOME TAXES |
For all periods prior to March 31, 2015, we calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Beginning in the quarter ended June 30, 2015, we
We use a discrete effective tax rate method to calculate taxes for interim periods. We determined that since small changes in estimated “ordinary” income would result in significant changes inperiods instead of applying the estimated annual effective tax rate to an estimate of the historical method would not provide a reliable estimate forfull fiscal year due to the periodlevel of August 1, 2017 through September 30, 2017 (Successor)volatility and period April 1, 2017 through July 31, 2017 (Predecessor).unpredictability of earnings in our industry, both overall and by jurisdiction.
Income tax expense for the period of August 1, 2017 through Septemberquarter and six months ended June 30, 2017 (Successor) and period April 1, 2017 through July 31, 2017 (Predecessor) reflect2020, reflects tax liabilities in various jurisdictions that are either based on revenue (deemed profit regimes) rather thanor pre-tax profits.
The company’s balance sheet at September 30, 2017 reflects the following in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes:
|
| Successor |
| |
|
| September 30, |
| |
(In thousands) |
| 2017 |
| |
Tax liabilities for uncertain tax positions |
| $ | 21,058 |
|
Income tax payable |
|
| 11,573 |
|
The tax liabilities for uncertain tax positions are primarily attributable to permanent establishment issueissues related to a foreign joint venture.venture, subpart F income inclusions and withholding taxes on foreign services. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.
Unrecognized tax benefits, which would lower the effective tax rate if realized at September 30, 2017, are as follows:
|
| Successor |
| |
|
| September 30, |
| |
(In thousands) |
| 2017 |
| |
Unrecognized tax benefit related to state tax issues |
| $ | 12,367 |
|
Interest receivable on unrecognized tax benefit related to state tax issues |
|
| 52 |
|
As of MarchDecember 31, 2017, the company’s2019, our balance sheet reflected approximately $5.5$101.3 million of net deferred tax liabilities. At Septemberassets with a valuation allowance of $103.5 million. As of June 30, 2017, the company2020, we had net deferred tax assets of approximately $39.9$105.7 million prior to a valuation allowance analysis.
Management assesses all available positive and negative evidence to estimate the company’s ability to generate sufficient future taxable income of the appropriate character, and in the appropriate taxing jurisdictions, to permit use of existing deferred tax assets. A significant piece of objective negative evidence is a cumulative loss incurred over a three-year period
in a taxing jurisdiction. Prevailing accounting practice is that such objective evidence would limit the ability to consider other subjective evidence, such as projections for future growth.
On the basis of this evaluation, a valuation allowance of $39.9$108.1 million has been recorded against net deferred tax assets which are more likely than not to be unrealized. The amount of deferred tax assets considered realizable could be adjusted if future estimates of U.S. taxable income change, or if objective negative evidence in the form of cumulative losses is no
longer present and subjective evidence, such as financial projections for future growth and tax planning strategies, are given additional weight.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act includes several significant business tax provisions, that are available to the Company, that, among other things, would allow businesses to carry back net operating losses arising after 2017 to the five prior tax years. Considering the available carryback, we have recorded a tax benefit of $6.9 million related to the realization of net operating loss deferred tax assets on which a valuation allowance was previously recorded.
With limited exceptions, the company iswe are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to 2010. The company has2014. We are subject to ongoing examinations by various U.S. federal, state and foreign tax authorities and doesdo not believe that the results of these examinations will have a material adverse effect on the company’sour financial position, results of operations, or cash flows.
(7) | AFFILIATES BALANCES |
We maintained the following balances with our unconsolidated affiliates:
(In thousands) |
| June 30, 2020 |
|
| December 31, 2019 |
| ||
Due from related parties: |
|
|
|
|
|
|
|
|
Sonatide (Angola) |
| $ | 47,353 |
|
| $ | 89,246 |
|
DTDW (Nigeria) |
|
| 18,413 |
|
|
| 36,726 |
|
|
|
| 65,766 |
|
|
| 125,972 |
|
Due to related parties: |
|
|
|
|
|
|
|
|
Sonatide (Angola) |
| $ | 30,390 |
|
| $ | 31,475 |
|
DTDW (Nigeria) |
|
| 18,413 |
|
|
| 18,711 |
|
|
|
| 48,803 |
|
|
| 50,186 |
|
Due from related parties, net of due to related parties |
| $ | 16,963 |
|
| $ | 75,786 |
|
Amounts due from Sonatide
Amounts due from Sonatide represent cash received by Sonatide from customers and due to us, amounts due from customers that are expected to be remitted to us by Sonatide and costs incurred by us on behalf of Sonatide.
| Six Months | |||
Ended | ||||
(In thousands) | June 30, 2020 | |||
Due from Sonatide at December 31, 2019 | $ | 89,246 | ||
Revenue earned by the company through Sonatide | 23,910 | |||
Less amounts received from Sonatide | (16,501 | ) | ||
Less amounts used to offset due to Sonatide obligations (A) | (8,145 | ) | ||
Affiliate credit loss impairment expense | (41,500 | ) | ||
Other | 343 | |||
Total due from Sonatide at June 30, 2020 | $ | 47,353 |
(A) | We reduced the respective due from affiliates and due to affiliates balances each period through netting transactions based on agreement with the joint venture. |
The amounts due from Sonatide are denominated in U.S. dollars; however, the underlying third-party customer payments to Sonatide were satisfied, in part, in Angolan kwanzas. In late 2019, we were informed that, as part of a broad privatization program, Sonangol, our partner in Sonatide, intends to seek to divest itself from the Sonatide joint venture.
In the second quarter of 2020 Sonatide declared a $35.0 million dividend. On June 22, 2020, Sonangol received $17.9 million and we received $17.1 million. All of our share of the dividend is reflected as dividend income from unconsolidated company in the consolidated statement of operations because (i) our investment in the Sonatide joint venture had previously been written down to 0, (ii) the distributions are not refundable and (iii) we are not liable for the obligations of or committed to provide financial support to the Sonatide joint venture. In addition, as a result of the aforementioned dividend payment, the cash balances of the joint venture were significantly reduced and we determined that, as a result, a significant portion of our net due from Sonatide balance was compromised.
After offsetting the amounts due to Sonatide, the net amount due from Sonatide at June 30, 2020 was approximately $17.0 million. Sonatide had approximately $6.9 million of cash on hand (approximately $1.2 million denominated in Angolan kwanzas) at June 30, 2020 plus approximately $18.6 million of net trade accounts receivable to satisfy the net due from Sonatide. Given prior discussions with our partner regarding how the net losses from the devaluation of certain Angolan kwanza denominated accounts should be shared, we continue to evaluate our net due from Sonatide balance for possible additional impairment in future periods based in part on available liquidity held by Sonatide. On June 30, 2020, we recorded a $41.5 million credit loss impairment expense.
Amounts due to Sonatide
Amounts due to Sonatide represent commissions payable and other costs paid by Sonatide on our behalf.
Six Months | ||||
Ended | ||||
(In thousands) | June 30, 2020 | |||
Due to Sonatide at December 31, 2019 | $ | 31,475 | ||
Plus additional commissions payable to Sonatide | 2,265 | |||
Plus amounts paid by Sonatide on behalf of the company | 4,843 | |||
Less amounts used to offset due from Sonatide obligations (A) | (8,145 | ) | ||
Other | (48 | ) | ||
Total due to Sonatide at June 30, 2020 | $ | 30,390 |
(A) | We reduced the respective due from affiliates and due to affiliates balances each period through netting transactions based on agreement with the joint venture. |
Sonatide Operations
Sonatide’s principal earnings are from the commissions paid by us to the joint venture for company vessels chartered in Angola. In addition, Sonatide owns 2 vessels that may generate operating income and cash flow.
Company operations in Angola
Vessel revenues generated by our Angolan operations, percent of consolidated vessel revenues, average number of company owned vessels and average number of stacked company owned vessels of our Angolan operations for the periods indicated were as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
Revenues of Angolan operations (in thousands) |
| $ | 12,289 |
|
| $ | 14,272 |
|
| $ | 24,426 |
|
| $ | 29,670 |
|
Percent of consolidated vessel revenues |
|
| 12 | % |
|
| 12 | % |
|
| 11 | % |
|
| 12 | % |
Number of company owned vessels in Angola |
|
| 26 |
|
|
| 32 |
|
|
| 27 |
|
|
| 34 |
|
Number of stacked company owned vessels in Angola |
|
| 9 |
|
|
| 13 |
|
|
| 10 |
|
|
| 14 |
|
Amounts due from DTDW (Nigeria)
We own 40% of the DTDW joint venture in Nigeria. Our partner, who owns 60%, is a Nigerian national. DTDW owns 1 offshore service vessel and has long term debt of $5.6 million which is secured by the vessel and guarantees from the DTDW partners. We also operate company owned vessels in Nigeria for which our partner receives a commission. As of
June 30, 2020, we had only one company owned vessel operating in Nigeria and the DTDW owned vessel was not employed. At the beginning of 2020 we had expected that we would be operating numerous vessels in Nigeria, but in the second quarter of 2020 the Covid pandemic and resulting oil price reduction caused our primary customer in Nigeria to eliminate all planned operations for 2020. As a result, the near term cash flow projections indicate that DTDW does not have sufficient funds to meet its obligations to us or to the holder of its long term debt. In the June 2020 DTDW board meeting neither of the DTDW partners indicated willingness to contribute additional funds to DTDW to meet its obligations. Therefore, we have recorded affiliate credit loss impairment expense for the entire net due from DTDW balance as of June 30, 2020 totaling $12.1 million. In addition, based on our analysis we have determined that DTDW will be unable to pay its debt obligation and the debt will not be satisfied by liquidating the vessel and, as a result, we recorded additional impairment expense of $2.0 million for our expected share of the obligation guarantee.
(8) | EMPLOYEE BENEFIT PLANS |
U.S. Defined Benefit Pension Plan
The company hasWe have a defined benefit pension plan (pension plan) that covers certain U.S. citizen employees and other employees who are permanent residents of the United States. Effective April 1, 1996, theThe pension plan was closed to new participation. In December 2009, the Board of Directors amended the pension plan to discontinue the accrual of benefits once the plan was frozen on December 31,during 2010. This changeWe did not affect benefits earned by participants prior to January 1, 2011. The company did not0t contribute to the pension plan duringduring the period from August 1, 2017 through Septemberthree and six months ended June 30, 2017 (Successor)2020 and the period from April 1, 2017 through July 31, 2017 (Predecessor). The company currently does2019, and we are not expectrequired to contribute to the pension plan during the period October 1, 2017 to December 31, 2017. The company contributed $3.0 millionremaining quarters of calendar year 2020; however, we may, at our discretion, make contributions to the pension plan duringin order to manage our plan expenses. Actuarial valuations are performed annually and an assessment of the quarterfuture pension obligations and six-month period ended September 30, 2016.market value of the assets will determine if contributions are made in the future.
Supplemental Executive Retirement Plan
In 1991, the company adoptedWe also support a Supplemental Executive Retirement Plan (“SERP”) for certain employees. The SERP provides fornon-contributory and non-qualified defined benefit supplemental executive retirement benefits payable in the form of a joint and survivor annuity, equivalent installments, or a lump sum. In general, the SERP provides pension benefits determined based on the average of the participant’s highest compensation for any consecutive five year period during the ten years immediately preceding retirement multiplied by the participant’s benefit service. The annuity is reduced by benefits paid orplan (supplemental plan) which would have been paid under the pension plan, or if not eligible for the pension plan, a hypothetical retirement benefit plan. A rabbi trust has been established to hold assets for the benefit of participants in the SERP. The rabbi trust assets are invested in a variety of marketable securities (but not the company’s stock) and recorded at fair value with unrealized gains or losses included in accumulated other comprehensive income (loss). Effective March 4, 2010, the SERP was closed to new participants. The SERP is a non-qualified planparticipants during 2010, that provided pension benefits to certain employees in excess of those allowed under our tax-qualified pension plan. We contributed $0.4 million and as such, the company is not required to make contributions to the SERP. The company contributed $0.1$0.8 million to the supplemental plan during the period from August 1, 2017 through September 30, 2017 (Successor) and did not contribute to the plan during the period from April 1, 2017 through July 31, 2017 (Predecessor). The company does not three and six months ended June 30, 2020 and the three and six months ended June 30, 2019, respectively. We expect to contribute $0.8 millionto the supplemental plan during the period October 1, 2017 to December 31, 2017. The company contributed approximately $0.1 million to the supplemental plan during the quarter and six-month period ended September 30, 2016,
On October 16, 2017, Tidewater Inc. (the “Company”) announced that Jeffrey M. Platt had resigned from his position as the Company’s President and Chief Executive Officer and as a memberremainder of the Company’s board of directors (the “Board”), effective October 15, 2017. Larry T. Rigdon, one of the Company’s directors, will serve as the Company’s President and Chief Executive Officer on an interim basis, effective October 16, 2017.
As a result of Mr. Platt’s retirement, he is expected to receive in April 2018 an approximate $9.6 million lump sum distribution in settlement of his supplemental executive retirement plan obligation. A settlement loss, which is currently estimated to be $0.5 million, will be recorded at the time of distribution.
Investments held in a Rabbi Trust are included in other assets at fair value. The following table summarizes the carrying value of the trust assets, including unrealized gains or losses at September 30, 2017 and March 31, 2017:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Investments held in Rabbi Trust |
| $ | 8,846 |
|
|
|
| 8,759 |
|
Unrealized gain (losses) in fair value of trust assets |
|
| 82 |
|
|
|
| (95 | ) |
Unrealized losses in fair value of trust assets are net of income tax expense of |
|
| — |
|
|
|
| (223 | ) |
Obligations under the supplemental plan |
|
| 30,631 |
|
|
|
| 29,108 |
|
To the extent that trust assets are liquidated to fund benefit payments, gains or losses, if any, will be recognized at that time. The company’s2020. Our obligations under the supplemental plan were $21.2 million and $21.4 million as of June 30, 2020 and December 31, 2019, respectively, and are included in ‘accrued expenses’“accrued costs and ‘other liabilitiesexpenses” and deferred credits’“other liabilities” on the consolidated balance sheet.
Postretirement
Other Defined Benefit Plan
The company provides limited post-retirement health care and life insurance benefits for certain U.S. employees. Costs of the plan 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 funded through payments by the company as benefits are required.Pension Plans
Effective November 20, 2015, the company eliminated its post-65 medical coverage for all current and future retirees effective January 1, 2017. The medical coverage remains unchanged for participants under age 65.
Net Periodic Benefit Costs
The net periodic benefit cost for the company’sWe also have defined benefit pension plans and supplemental plan (referred to collectively as “Pension Benefits”) and the postretirement health care and life insurance plan (referred to collectively as “Other Benefits”) is comprised of the following components:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Pension Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 203 |
|
|
|
| 99 |
|
|
| 254 |
|
Interest cost |
|
| 624 |
|
|
|
| 328 |
|
|
| 941 |
|
Expected return on plan assets |
|
| (332 | ) |
|
|
| (173 | ) |
|
| (548 | ) |
Administrative expenses |
|
| 2 |
|
|
|
| 1 |
|
|
| 2 |
|
Amortization of prior service cost |
|
| — |
|
|
|
| — |
|
|
| — |
|
Recognized actuarial loss |
|
| — |
|
|
|
| 187 |
|
|
| 446 |
|
Net periodic benefit cost |
| $ | 497 |
|
|
|
| 442 |
|
|
| 1,095 |
|
Other Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 12 |
|
|
|
| 6 |
|
|
| 20 |
|
Interest cost |
|
| 30 |
|
|
|
| 16 |
|
|
| 50 |
|
Amortization of prior service cost |
|
| — |
|
|
|
| (232 | ) |
|
| (1,086 | ) |
Recognized actuarial benefit |
|
| — |
|
|
|
| (83 | ) |
|
| (285 | ) |
Net periodic benefit cost |
| $ | 42 |
|
|
|
| (293 | ) |
|
| (1,301 | ) |
| Successor |
|
|
| Predecessor |
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Pension Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 203 |
|
|
|
| 393 |
|
|
| 506 |
|
Interest cost |
|
| 624 |
|
|
|
| 1,313 |
|
|
| 1,882 |
|
Expected return on plan assets |
|
| (332 | ) |
|
|
| (691 | ) |
|
| (1,097 | ) |
Administrative expenses |
|
| 2 |
|
|
|
| 3 |
|
|
| 4 |
|
Amortization of prior service cost |
|
| — |
|
|
|
| — |
|
|
| — |
|
Recognized actuarial loss |
|
| — |
|
|
|
| 748 |
|
|
| 892 |
|
Net periodic benefit cost |
| $ | 497 |
|
|
|
| 1,766 |
|
|
| 2,187 |
|
Other Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 12 |
|
|
|
| 23 |
|
|
| 40 |
|
Interest cost |
|
| 30 |
|
|
|
| 64 |
|
|
| 100 |
|
Amortization of prior service cost |
|
| — |
|
|
|
| (927 | ) |
|
| (2,172 | ) |
Recognized actuarial benefit |
|
| — |
|
|
|
| (335 | ) |
|
| (570 | ) |
Net periodic benefit cost |
| $ | 42 |
|
|
|
| (1,175 | ) |
|
| (2,602 | ) |
The company also has a defined benefit pension plan that coverscover certain NorwayNorwegian citizen employees and other employees who are permanent residents of Norway. Benefits are based on years of service and employee compensation. The company contributed approximately 3.0 million NOK (approximately $0.4 million)Our contributions to the NorwayNorwegian defined benefit pension plan plans during 2020 and 2019, were immaterial and we expect that any contributions for the periodremainder of calendar year 2020 will be immaterial. Substantially, all of our Norwegian employees were transferred from April1,2017 through July31,2017 (Predecessor) and did not contribute to theour defined benefit pension plans into a defined contribution plan during the period from August1,2017 through September30,2017 (Successor).first quarter of 2020.
Net Periodic Benefit Costs
The company contributed approximately 3.4 million NOK (approximately $0.5 million) to the Norway defined benefit pension plan during the six-month period ended September 30, 2016. The company currently does not expect to contribute to the Norway pension plan during the period October 1, 2017 to December 31, 2017. The preceding net periodic benefit cost table includesfor our defined benefit pension plans and supplemental plan (referred to collectively as “Pension Benefits”) is comprised of the Norway pension plan. following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
(In thousands) |
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
Pension Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost | $ |
| (26 | ) | $ |
| (44 | ) | $ |
| 14 |
| $ |
| 12 |
|
Interest cost |
|
| 2,273 |
|
|
| 914 |
|
|
| 2,498 |
|
|
| 1,847 |
|
Expected return on plan assets |
|
| (2,058 | ) |
|
| (513 | ) |
|
| (2,094 | ) |
|
| (1,076 | ) |
Administrative expenses |
|
| (11 | ) |
|
| (3 | ) |
|
| 12 |
|
|
| 7 |
|
Settlement loss |
|
| 323 |
|
|
| 21 |
|
|
| 831 |
|
|
| 92 |
|
Amortization of net actuarial losses |
|
| 35 |
|
|
| — |
|
|
| (9 | ) |
|
| — |
|
Net periodic pension cost | $ |
| 536 |
| $ |
| 375 |
| $ |
| 1,252 |
| $ |
| 882 |
|
(9) | DEBT |
The following is a summary of all debt outstanding at September 30, 2017 and March 31, 2017:outstanding:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Term loan (A) |
| $ | — |
|
|
|
| 300,000 |
|
Revolving line of credit (A) (B) |
|
| — |
|
|
|
| 600,000 |
|
September 2013 senior unsecured notes (A) |
|
| �� |
|
|
|
| 500,000 |
|
August 2011 senior unsecured notes (A) |
|
| — |
|
|
|
| 165,000 |
|
September 2010 senior unsecured notes (A) |
|
| — |
|
|
|
| 382,500 |
|
New secured notes (A) |
|
| 350,000 |
|
|
|
| — |
|
New secured notes - premium |
|
| 14,987 |
|
|
|
| — |
|
Troms Offshore borrowings: |
|
|
|
|
|
|
|
|
|
May 2015 notes (C) |
|
| 26,115 |
|
|
|
| 27,421 |
|
May 2015 notes - discount |
|
| (1,927 | ) |
|
|
| — |
|
March 2015 notes (C) |
|
| 23,345 |
|
|
|
| 24,573 |
|
March 2015 notes - discount |
|
| (1,755 | ) |
|
|
| — |
|
January 2014 notes (C) (D) |
|
| 26,687 |
|
|
|
| 26,167 |
|
January 2014 notes - discount |
|
| (1,707 | ) |
|
|
| — |
|
May 2012 notes (C) (D) |
|
| 14,980 |
|
|
|
| 14,864 |
|
May 2012 notes - premium |
|
| 126 |
|
|
|
| — |
|
|
|
| 450,851 |
|
|
|
| 2,040,525 |
|
Less: Deferred debt issue costs |
|
| — |
|
|
|
| 6,401 |
|
Less: Current portion of long-term debt |
|
| 5,174 |
|
|
|
| 2,034,124 |
|
Total long-term debt |
| $ | 445,677 |
|
|
|
| — |
|
|
| June 30, |
|
| December 31, |
| ||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Secured notes: |
|
|
|
|
|
|
|
|
8.00% Senior secured notes due August 2022 (A) (B) |
| $ | 224,793 |
|
| $ | 224,793 |
|
Troms Offshore borrowings (C): |
|
|
|
|
|
|
|
|
NOK denominated notes due May 2024 |
|
| 8,410 |
|
|
| 10,260 |
|
NOK denominated notes due January 2026 |
|
| 17,533 |
|
|
| 20,788 |
|
USD denominated notes due January 2027 |
|
| 19,044 |
|
|
| 20,273 |
|
USD denominated notes due April 2027 |
|
| 20,239 |
|
|
| 21,545 |
|
|
| $ | 290,019 |
|
| $ | 297,659 |
|
Debt premiums and discounts, net |
|
| (7,367 | ) |
|
| (8,725 | ) |
Less: Current portion of long-term debt |
|
| (9,437 | ) |
|
| (9,890 | ) |
Total long-term debt |
| $ | 273,215 |
|
| $ | 279,044 |
|
(A) | As of |
(B) | The |
|
| We pay principal and interest |
|
|
New Secured Notes
On July 31, 2017, pursuantWe may from time to the terms of the Plan, the company entered into an indenture (the “Indenture”) by and among the company, the wholly-owned subsidiaries named as guarantors therein (the “Guarantors”), and Wilmington Trust, National Association, as trustee and collateral agent (the “Trustee”), and issued $350 million aggregate principal amount of the company’s new 8.00% Senior Secured Notes due 2022 (the “New Secured Notes”).
The New Secured Notestime seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions, one or more additional offers, or otherwise. Such repurchases or exchanges, if any, will maturedepend on August 1, 2022. Interest on the New Secured Notes will accrue at a rate of 8.00% per annum payable quarterly in arrears on February 1, May 1, August 1, and November 1 of each year in cash, beginning November 1, 2017. The New Secured Notes are secured by substantially all of the assets of the company and its Guarantors.
The New Secured Notes have minimum interest coverage requirement (EBITDA/Interest), for which compliance will first be measured for the twelve months ending June 30, 2019. Minimumprevailing market conditions, our liquidity requirements, contractual restrictions and other covenants are set forth in the Indenture.factors. The Indenture also contains certain customary events of default.
Until terminated under the circumstances described in this paragraph, the New Secured Notes and the guarantees by the Guarantors willamounts involved may be secured by the Collateral (as defined in the Indenture) pursuant to the terms of the Indenture and the related security documents. The Trustee’s liens upon the Collateral and the right of the holders of the New Secured Notes to the benefits and proceeds of the Trustee’s liens on the Collateral will terminate and be discharged in certain circumstances described in the Indenture, including: (i) upon satisfaction and discharge of the Indenture in accordance with the terms thereof; or (ii) as to any Collateral of the company or the Guarantors that is sold, transferred or otherwise disposed of by the company or the Guarantors in a transaction or other circumstance that complies with the terms of the Indenture, at the time of such sale, transfer or other disposition.
The company is obligated to offer to holders of the New Secured Notes under the Indenture to repurchase the New Secured Notes at par in amounts of up to 100% of asset sale proceeds depending upon the types of assets sold as defined in the Indenture.
Modifications to Troms Offshore Borrowings
Concurrent with the July 31, 2017 Effective Date of the Plan, the Troms Offshore credit agreement was amended and restated to (i) reduce by 50% the required principal payments due from the Effective Date through March 31, 2019, (ii) modestly increase the interest rates on amounts outstanding through April 2023, and (iii) provide for security and additional guarantees, including (a) mortgages on six vessels and related assignments of earnings and insurances, (b) share pledges by Troms Offshore and certain subsidiaries of Troms Offshore, and (c) guarantees by certain subsidiaries of Troms Offshore.
The Troms Offshore borrowings continue to require semi-annual principal payments and bear interest at fixed rates based, in part, on Tidewater Inc.’s consolidated funded indebtedness to total capitalization ratio. As of September 30, 2017, the weighted average interest rate of the four tranches of Troms Offshore borrowings was 5.01%.
Debt Costs
The company capitalizes a portion of its interest costs incurred on borrowed funds used to construct vessels. The following is a summary of interest and debt costs incurred, net of interest capitalized:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Interest and debt costs incurred, net of interest capitalized |
| $ | 5,240 |
|
|
|
| 574 |
|
|
| 18,477 |
|
Interest costs capitalized |
|
| — |
|
|
|
| — |
|
|
| 1,101 |
|
Total interest and debt costs |
| $ | 5,240 |
|
|
|
| 574 |
|
|
| 19,578 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Interest and debt costs incurred, net of interest capitalized |
| $ | 5,240 |
|
|
|
| 11,179 |
|
|
| 35,431 |
|
Interest costs capitalized |
|
| — |
|
|
|
| — |
|
|
| 2,494 |
|
Total interest and debt costs |
| $ | 5,240 |
|
|
|
| 11,179 |
|
|
| 37,925 |
|
The company recognized interest expense incurred subsequent to its Chapter 11 filing date only to the extent that such interest was paid during the proceedings or that it was an allowed claim. Accrued interest on the term loan, revolving line of credit and senior notes subsequent to the Petition Date was not an allowed claim in the Plan; therefore, the company did not record interest expense subsequent to that date. Had the term loan, revolving line of credit and senior notes not been compromised by the Plan, interest expense from April 1, 2017 through the Effective Date of July 31, 2017 would have been approximately $27 million.
The components of basic and diluted loss per share are as follows:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands, except share and per share data) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Net loss available to common shareholders |
| $ | (15,693 | ) |
|
|
| (1,122,475 | ) |
|
| (178,490 | ) |
Weighted average outstanding shares of common stock, basic (A) |
|
| 19,389,031 |
|
|
|
| 47,121,407 |
|
|
| 47,067,864 |
|
Dilutive effect of options, warrants and restricted stock awards and units |
|
| — |
|
|
|
| — |
|
|
| — |
|
Weighted average shares of common stock and equivalents |
|
| 19,389,031 |
|
|
|
| 47,121,407 |
|
|
| 47,067,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic (B) |
| $ | (0.81 | ) |
|
|
| (23.82 | ) |
|
| (3.79 | ) |
Loss per share, diluted (C) |
| $ | (0.81 | ) |
|
|
| (23.82 | ) |
|
| (3.79 | ) |
Additional information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive incremental options, warrants, and restricted stock awards and units |
|
| 15,513,573 |
|
|
|
| — |
|
|
| 525,161 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands, except share and per share data) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Net loss available to common shareholders |
| $ | (15,693 | ) |
|
|
| (1,646,909 | ) |
|
| (267,587 | ) |
Weighted average outstanding shares of common stock, basic (A) |
|
| 19,389,031 |
|
|
|
| 47,121,330 |
|
|
| 47,067,790 |
|
Dilutive effect of options, warrants and restricted stock awards and units |
|
| — |
|
|
|
| — |
|
|
| — |
|
Weighted average shares of common stock and equivalents |
|
| 19,389,031 |
|
|
|
| 47,121,330 |
|
|
| 47,067,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic (B) |
| $ | (0.81 | ) |
|
|
| (34.95 | ) |
|
| (5.69 | ) |
Loss per share, diluted (C) |
| $ | (0.81 | ) |
|
|
| (34.95 | ) |
|
| (5.69 | ) |
Additional information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive incremental options, warrants, and restricted stock awards and units |
|
| 15,513,573 |
|
|
|
| — |
|
|
| 508,989 |
|
material.
(10) |
|
|
|
|
|
|
The company’s common stock and antidilutive options and restricted stock awards and units were cancelled on
July 31, 2017 in connection with emergence from bankruptcy.
Vessel and Other Commitments
The company has $5.5 million in unfunded capital commitments associated with the one 5,400 deadweight ton (DWT) deepwater platform supply vessel (PSV) under construction at September 30, 2017. The total cost of the new-build vessel includes contract costs and other incidental costs.
During the quarter ended March 31, 2017, the company rejected the delivery of a PSV under construction and withheld the final contractual milestone payment for failure of the vessel to meet certain significant contract specifications. Thereafter, the company delivered a formal notice of default to the shipyard demanding a cure of the deficiencies, after which the shipyard declared the company in default for refusing to accept delivery. Subsequently, the company submitted a demand to the shipyard seeking a refund of all amounts paid by the company to date, totaling approximately $43 million plus accrued contractual interest. In March 2017, the shipyard filed a notice of arbitration alleging breach of contract with respect to the company’s rejection of the PSV and anticipatory breach of contract based on the company’s anticipated rejection of a second PSV under construction. Through this arbitration, the shipyard is seeking an order requiring the company to take delivery of both vessels and to reimburse the shipyard for certain costs incurred by the shipyard. The company, on the other hand, is seeking the full refund referenced above or, in the alternative, a substantial reduction in the price of the rejected vessel. Approximately $48.7 million of accumulated costs for the rejected vessel have been reclassified from construction in progress to other assets and it is not included in our vessel count. The shipyard has also informed the company that the construction of a second PSV has been suspended and may not be tendered for delivery given the ongoing dispute. Accordingly, the expected delivery date is not known. Subsequent to September 30, 2017, the parties have engaged in settlement negotiations to resolve all outstanding disputes related to both vessels. Given that these negotiations are ongoing, however, it is not known at this time whether the disputes will be ultimately resolved. Pending these negotiations, the parties have asked a newly appointed arbitration panel to suspend its activities. In conjunction with the company’s bankruptcy emergence and application of fresh-start accounting as of July 31, 2017, a valuation analysis was performed on these vessels in their current state. As of September 30, 2017 these vessels are valued at $ 7.0 million each.
The company has experienced substantial delay with one fast supply boat under construction in Brazil that was originally scheduled to be delivered in September 2009. On April 5, 2011, pursuant to the vessel construction contract, the company sent the subject shipyard a letter initiating arbitration in order to resolve disputes of such matters as the shipyard’s failure to achieve payment milestones, its failure to follow the construction schedule, and its failure to timely deliver the vessel. The company has suspended construction on the vessel and both parties continue to pursue arbitration. During 2016 the company reclassified the remaining accumulated costs of $5.6 million from construction in progress to other assets as an insurance receivable. In conjunction with the company’s bankruptcy emergence and application of fresh-start accounting as of July 31, 2017 a valuation analysis was performed to assess the likelihood and extent of the recovery of the disputed amount and as a result, the remaining insurance receivable has been valued at $1.8 million as of July 31, 2017 and September 30, 2017.
The company generally requires shipyards to provide third party credit support in the event that vessels are not completed and delivered timely and in accordance with the terms of the shipbuilding contracts. That third party credit support typically guarantees the return of amounts paid by the company and generally takes the form of refundment guarantees or standby letters of credit issued by major financial institutions generally located in the country of the shipyard. While the company seeks to minimize its shipyard credit risk by requiring these instruments, the ultimate return of amounts paid by the company in the event of shipyard default is still subject to the creditworthiness of the shipyard and the provider of the credit support, as well as the company’s ability to successfully pursue legal action to compel payment of these instruments. When third party credit support that is acceptable to the company is not available or cost effective, the company endeavors to limit its credit risk by minimizing pre-delivery payments and through other contract terms with the shipyard.
Sonatide Joint Venture
The company has previously disclosed the significant financial and operational challenges that it confronts with respect to its substantial operations in Angola, as well as steps that the company has taken to address or mitigate those risks. Most of the company’s attention has been focused in three areas: reducing the net receivable balance due the company from Sonatide, its Angolan joint venture with Sonangol, for vessel services; reducing the foreign currency risk created by virtue of provisions of Angolan law that require that payment for a significant portion of the services provided by Sonatide be paid in Angolan kwanza; and optimizing opportunities, consistent with Angolan law, for services provided by the company to be paid for directly in U.S. dollars. The company’s efforts to respond to these challenges continue.
Amounts due from Sonatide (due from affiliate in the consolidated balance sheets) at September 30, 2017 and March 31, 2017 of approximately $245 million and $263 million, respectively, represent cash received by Sonatide from customers and due to the company, amounts due from customers that are expected to be remitted to the company through Sonatide and costs incurred by the company on behalf of Sonatide that are reimbursable by Sonatide or offsettable against costs incurred by Sonatide on behalf of the Company. Approximately $39 million of the balance at September 30, 2017 represents invoiced but unpaid vessel revenue related to services performed by the company through the Sonatide joint venture. Remaining amounts due to the company from Sonatide are, in part, supported by (i) approximately $91 million of cash (primarily denominated in Angolan kwanzas) held by Sonatide that is pending conversion into U.S. dollars and the subsequent expatriation of such funds and (ii) approximately $113 million of amounts due from the company to Sonatide, including $34 million in commissions payable by the company to Sonatide, with the balance related to costs incurred by Sonatide on behalf of the company.
For the period from April 1, 2017 through July 31, 2017, the company collected (primarily through Sonatide) approximately $22 million from its Angolan operations. Of the $22 million collected, approximately $19 million were U.S. dollars received by Sonatide on behalf of the company or U.S. dollars received directly by the company from customers. The balance of $3 million collected reflects Sonatide’s conversion of Angolan kwanza into U.S. dollars and the subsequent expatriation of the dollars and payment to the company. The company also reduced the net due from affiliate and due to affiliate balances by approximately $21 million during the period from April 1, 2017 through July 31, 2017 through netting transactions based on an agreement with the joint venture.
For the period from August 1, 2017 through September 30, 2017, the company collected (primarily through Sonatide) approximately $9 million from its Angolan operations. Of the $9 million collected, approximately $8 million were U.S. dollars received by Sonatide on behalf of the company or U.S. dollars received directly by the company from customers. The balance of $1 million collected reflects Sonatide’s conversion of Angolan kwanza into U.S. dollars and the subsequent expatriation of the dollars and payment to the company. The company also reduced the net due from affiliate and due to affiliate balances by approximately $12 million during the period from August 1, 2017 through September 30, 2017 through netting transactions based on an agreement with the joint venture.
Amounts due to Sonatide (Due to affiliate in the consolidated balance sheets) at September 30, 2017 and March 31, 2017 of approximately $113 million and $133 million, respectively, represent amounts due to Sonatide for commissions payable and other costs paid by Sonatide on behalf of the company.
The company believes that the process for converting Angolan kwanzas continues to function, but the tight U.S. dollar liquidity situation continues in Angola. Sonatide continues to press the commercial banks with which it has relationships to increase the amount of U.S. dollars that are made available to Sonatide.
For the period from April 1, 2017 through July 31, 2017, the company’s Angolan operations generated vessel revenues of approximately $34 million, or 23%, of its consolidated vessel revenue, from an average of approximately 50 company-owned vessels that are marketed through the Sonatide joint venture (21 of which were stacked on average during the period from April 1, 2017 through July 31, 2017). For the period from August 1, 2017 through September 30, 2017, the company’s Angolan operations generated vessel revenues of approximately $14 million, or 20%, of its consolidated vessel revenue, from an average of approximately 44 company-owned vessels that are marketed through the Sonatide joint venture (16 of which were stacked on average during the period from August 1, 2017 through September 30, 2017). For the six months ended September 30, 2016, the company’s Angolan operations generated vessel revenues of approximately $71.4 million, or 24%, of consolidated vessel revenue, from an average of approximately 59 company-owned vessels (17 of which were stacked on average during the six months ended September 30, 2016).
Sonatide owns seven vessels (four of which are currently stacked) and certain other assets, in addition to earning commission from company-owned vessels marketed through the Sonatide joint venture (owned 49% by the company). As of September 30, 2017 and March 31, 2017, the carrying value of the company’s investment in the Sonatide joint venture, which is included in “Investments in, at equity, and advances to unconsolidated companies,” was approximately $24 million and $45 million, respectively. As a result of fresh-start accounting the company’s investment in Sonatide was assigned a fair value based on the discounted cash flows of Sonatide’s operations. This resulted in a difference between the carrying value of the company’s investment balance and the company’s share of the net assets of the joint venture companies as of July 31, 2017 of $27.9 million which will be amortized over ten years.
Management continues to explore ways to profitably participate in the Angolan market while evaluating opportunities to reduce the overall level of exposure to the increased risks that the company believes characterize the Angolan market. Included among mitigating measures taken by the company to address these risks is the redeployment of vessels from time
to time to other markets. Redeployment of vessels to and from Angola during the period from April 1, 2017 through July 31, 2017, during the period from August 1, 2017 through September 30, 2017, and year ended March 31, 2017 has resulted in a net four, one and 22 vessels transferred out of Angola, respectively.
Brazilian Customs
In April 2011, two Brazilian subsidiaries of Tidewater were notified by the Customs Office in Macae, Brazil that they were jointly and severally being assessed fines of 155 million Brazilian reais (approximately $49 million as of September 30, 2017). The assessment of these fines is for the alleged failure of these subsidiaries to obtain import licenses with respect to 17 company vessels that provided Brazilian offshore vessel services to Petrobras, the Brazilian national oil company, over a three-year period ended December 2009. After consultation with its Brazilian tax advisors, the company and its Brazilian subsidiaries believe that vessels that provide services under contract to the Brazilian offshore oil and gas industry are deemed, under applicable law and regulations, to be temporarily imported into Brazil, and thus exempt from the import license requirement. The Macae Customs Office has, without a change in the underlying applicable law or regulations, taken the position that the temporary importation exemption is only available to new, and not used, goods imported into Brazil and therefore it was improper for the company to deem its vessels as being temporarily imported. The fines have been assessed based on this new interpretation of Brazilian customs law taken by the Macae Customs Office.
After consultation with its Brazilian tax advisors, the company believes that the assessment is without legal justification and that the Macae Customs Office has misinterpreted applicable Brazilian law on duties and customs. The company is vigorously contesting these fines (which it has neither paid nor accrued). Based on the advice of its Brazilian counsel, the company believes that it has a high probability of success with respect to overturning the entire amount of the fines, either at the administrative appeal level or, if necessary, in Brazilian courts. In May 2016, a final administrative appeal allowed fines totaling 3 million Brazilian reais (approximately $0.9 million as of September 30, 2017). The company intends to appeal this 3 million Brazilian reais administrative award to the appropriate Brazilian court and deposited 6 million Brazilian reais (approximately $1.9 million as of September 30, 2017) with the court. The 6 million Brazilian reais deposit represents the amount of the award and the substantial interest that would be due if the company did not prevail in this court action. The court action is in its initial stages. Fines totaling 30 million Brazilian reais (approximately $9.5 million as of September 30, 2017) are still subject to additional administrative appeals board hearings, but the company believes that previous administrative appeals board decisions will be helpful in those upcoming hearings for the vast majority of amounts still claimed by the Macae Customs Office. The remaining fines totaling 122 million (approximately $38.6 million as of September 30, 2017) of the original 155 million Brazilian reais of fines are now formally resolved in favor of the company and are no longer at issue. The company believes that the ultimate resolution of this matter will not have a material effect on the company’s financial position, results of operations or cash flows.
Repairs to U.S. Flagged Vessels Operating Abroad
In early 2015, the company became aware that it may have had compliance deficiencies in documenting and declaring upon re-entry to the U.S. certain foreign purchases for or repairs to U.S. flagged vessels while they were working outside of the U.S. When a U.S. flagged vessel operates abroad, certain foreign purchases for or repairs made to the U.S. flagged vessel while it is outside of the U.S. are subject to declaration with U.S. Customs and Border Protection (CBP) upon re-entry to the U.S. and are subject to 50% vessel repair duty. During our examination of our filings made in or prior to 2015 with CBP, we determined that it was necessary to file amended forms with CBP to supplement previous filings. We have amended several vessel repair entries with CBP and have paid additional vessel repair duties and interest associated with these amended forms. With respect to certain of our amended vessel repair entries, CBP has advised us that it is contemplating the assessment of civil penalties and interest for alleged violations of the vessel repair statute. In accordance with CBP regulations, we are protesting the assessment of civil penalties and interest and are requesting mitigation of those civil penalties. We anticipate that CBP will seek to impose additional vessel repair duty, civil penalties and interest pending its review of our other amended filings, and we will continue to protest any such determinations in accordance with CBP’s guidelines. Therefore, the final amount of vessel repair duty and/or civil penalties and interest associated with amending various vessel repair entries is not known at this time.
Currency Devaluation and Fluctuation Risk
Due to the company’s globalour international operations, the company iswe are exposed to foreign currency exchange rate fluctuations and exchange rate risks on charter hire contracts denominated in foreign currencies.against the U.S. dollar. For some of our non-U.S.international contracts, a portion of the revenue and local expenses are incurred in local currencies with the result that the company iswe are at risk offor changes in the exchange rates between the U.S. dollar and foreign currencies. We generally do not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of business, which exposes us to the risk of exchange rate losses. To minimize the financial impact of these items, the company attemptswe attempt to contract a significant majority of itsour services in U.S. dollars. In addition, the company attemptswe attempt to minimize the financial impact of these risks by matching the currency of the company’sour operating costs with the currency of theour revenue streams when considered appropriate. The companyWe continually monitorsmonitor the currency exchange risks associated with all contracts not denominated in U.S. dollars.
Legal Proceedings
Arbitral Award for the Taking of the Company’s Venezuelan Operations
On December 27, 2016, the annulment committee formed under the rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) issued a decision on the Bolivarian Republic of Venezuela’s (“Venezuela”) application to annul the award rendered by an ICSID tribunal on March 13, 2015. As previously reported, the award granted two subsidiaries of the Company (the “Claimants”) compensation for Venezuela’s expropriation of their investments in that country. The nature of the investments expropriated and the progress of the ICSID proceeding were previously reported by the company in prior filings. The annulment committee’s decision reduced the total compensation awarded to the Claimants to $36.4 million. That compensation is accruing interest at an annual rate of 4.5% compounded quarterly from May 8, 2009 to the date of payment of that amount ($16.6 million as of September 30, 2017). The annulment committee also left undisturbed the portion of the award that granted the Claimants $2.5 million in legal fees and other costs related to the arbitration. The reduction of $10 million in compensation from the earlier award of $46.4 million represents that portion of the tribunal’s award that the annulment committee determined had not been properly explained by the tribunal’s analysis. The final aggregate award is therefore $55.5 million as of September 30, 2017. The award for that amount is immediately enforceable and not subject to any further stay of enforcement. The annulment committee’s decision is not subject to any further ICSID review, appeal or other substantive proceeding.
The company is committed to taking appropriate steps to enforce and collect the award, which is enforceable in any of the 150 member states that are party to the ICSID Convention. As an initial step, the company was successful in having the award recognized and entered in March 2015 as a final judgment by the United States District Court for the Southern District of New York. In addition, the company was successful in having the award recognized and entered in November 2016 as a final judgment of the High Court of Justice of England and Wales. Even with the recognition of the award in the United States and United Kingdom courts, the company recognizes that collection of the award may present significant practical challenges. The company is accounting for this matter as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450 Contingencies.
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 material adverse effect on the company'sour financial position, results of operations, or cash flows.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The company’s plan assets are accounted for at fair value and are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement, with the exception of investments for which fair value is measured using the net asset value (NAV) per share expedient.
The following table provides the fair value hierarchy for the SERP assets measured at fair value as of September 30, 2017:
|
| Successor |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
| Significant |
|
| Significant |
|
|
|
|
| ||
|
|
|
|
|
| Quoted prices in |
|
| observable |
|
| unobservable |
|
| Measured at |
| ||||
|
|
|
|
|
| active markets |
|
| inputs |
|
| inputs |
|
| Net Asset |
| ||||
(In thousands) |
| Total |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
|
| Value |
| |||||
Equity securities |
| $ | 5,181 |
|
|
| 5,181 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Debt securities |
|
| 3,404 |
|
|
| 851 |
|
|
| 853 |
|
|
| — |
|
|
| 1,700 |
|
Cash and cash equivalents |
|
| 221 |
|
|
| 15 |
|
|
| 152 |
|
|
| — |
|
|
| 54 |
|
Total |
| $ | 8,806 |
|
|
| 6,047 |
|
|
| 1,005 |
|
|
| — |
|
|
| 1,754 |
|
Other pending transactions |
|
| 39 |
|
|
| 39 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total fair value of plan assets |
| $ | 8,845 |
|
|
| 6,086 |
|
|
| 1,005 |
|
|
| — |
|
|
| 1,754 |
|
The following table provides the fair value hierarchy for the plan assets measured at fair value as of March 31, 2017:
|
| Predecessor |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
| Significant |
|
| Significant |
|
|
|
|
| ||
|
|
|
|
|
| Quoted prices in |
|
| observable |
|
| unobservable |
|
| Measured at |
| ||||
|
|
|
|
|
| active markets |
|
| inputs |
|
| inputs |
|
| Net Asset |
| ||||
(In thousands) |
| Total |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
|
| Value |
| |||||
Equity securities |
| $ | 5,176 |
|
|
| 5,176 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Debt securities |
|
| 3,261 |
|
|
| 832 |
|
|
| 781 |
|
|
| — |
|
|
| 1,648 |
|
Cash and cash equivalents |
|
| 323 |
|
|
| 15 |
|
|
| 236 |
|
|
| — |
|
|
| 72 |
|
Total |
| $ | 8,760 |
|
|
| 6,023 |
|
|
| 1,017 |
|
|
| — |
|
|
| 1,720 |
|
Other pending transactions |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total fair value of plan assets |
| $ | 8,760 |
|
|
| 6,023 |
|
|
| 1,017 |
|
|
| — |
|
|
| 1,720 |
|
Other Financial Instruments
The company’sOur primary financial instruments consist of cash and cash equivalents, restricted cash, trade receivables and trade payables with book values that are considered to be representative of their respective fair values. The company periodically utilizes derivative financial instruments to hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. These transactions are generally spot or forward currency contracts or interest rate swaps that are entered into with major financial institutions. Derivative financial instruments are intended to reduce the company’s exposure to foreign currency exchange risk and interest rate risk. The company does not use derivative contracts for speculative purposes. The derivative instruments are recorded at fair value using quoted prices and quotes obtainable from the counterparties to the derivative instruments.
Cash Equivalents. The company’sOur cash equivalents, which are securities with maturities less than 90 days, are held in money market funds, commercial paper or time deposit accounts with highly rated financial institutions. The carrying value for cash equivalents is considered to be representative of its fair value due to the short duration and conservative nature of the cash equivalent investment portfolio.
Spot Derivatives. Spot derivative financial instruments are short-term in nature As of June 30, 2020 and generally settle within two business days. The fair valueDecember 31, 2019, we had $226.3 and $227.6 million of spot derivatives approximates the carrying value due to the short-term nature of this instrument, and as a result, no gains or losses are recognized.
The company had 44 outstanding spot contracts at September 30, 2017, which had a notional value of $1.9 million and settled October 2, 2017. The company had six foreign exchange spot contracts outstanding at March 31, 2017, which had a notional value of $1.5 million and settled April 4, 2017.
The following table provides the fair value hierarchy for the company’s other financial instruments measured as of September 30, 2017:
|
| Successor |
| |||||||||||||
|
|
|
|
|
|
|
|
|
| Significant |
|
| Significant |
| ||
|
|
|
|
|
| Quoted prices in |
|
| observable |
|
| unobservable |
| |||
|
|
|
|
|
| active markets |
|
| inputs |
|
| inputs |
| |||
(In thousands) |
| Total |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Cash equivalents |
| $ | 416,002 |
|
|
| 416,002 |
|
|
| — |
|
|
| — |
|
Total fair value of assets |
| $ | 416,002 |
|
|
| 416,002 |
|
|
| — |
|
|
| — |
|
The following table provides the fair value hierarchy for the company’s other financial instruments measured as of March 31, 2017:
|
| Predecessor |
| |||||||||||||
|
|
|
|
|
|
|
|
|
| Significant |
|
| Significant |
| ||
|
|
|
|
|
| Quoted prices in |
|
| observable |
|
| unobservable |
| |||
|
|
|
|
|
| active markets |
|
| inputs |
|
| inputs |
| |||
(In thousands) |
| Total |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Cash equivalents |
| $ | 664,412 |
|
|
| 664,412 |
|
|
| — |
|
|
| — |
|
Total fair value of assets |
| $ | 664,412 |
|
|
| 664,412 |
|
|
| — |
|
|
| — |
|
For disclosures related to assets and liabilities measured at fair value on a nonrecurring basis refer to Note (16).
cash equivalents.
(12) |
|
Our property and equipment consist primarily of 146 active vessels, which excludes the 46 vessels we have classified as held for sale, located around the world.
A summary of other current assetsproperties and equipment at SeptemberJune 30, 20172020 and MarchDecember 31, 20172019 is as follows:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Deposits |
| $ | 1,944 |
|
|
|
| 3,057 |
|
Reorganization related retainer payments |
|
| 1,028 |
|
|
|
| 3,938 |
|
Prepaid expenses |
|
| 11,841 |
|
|
|
| 11,414 |
|
|
| $ | 14,813 |
|
|
|
| 18,409 |
|
|
| June 30, |
|
| December 31, |
| ||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Properties and equipment: |
|
|
|
|
|
|
|
|
Vessels and related equipment |
| $ | 969,360 |
|
| $ | 1,051,558 |
|
Other properties and equipment |
|
| 16,234 |
|
|
| 13,119 |
|
|
|
| 985,594 |
|
|
| 1,064,677 |
|
Less accumulated depreciation and amortization |
|
| 145,682 |
|
|
| 125,716 |
|
Properties and equipment, net |
| $ | 839,912 |
|
| $ | 938,961 |
|
A summary of net propertiesaccrued cost and equipment at September 30, 2017 and March 31, 2017expenses is as follows:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Properties and equipment: |
|
|
|
|
|
|
|
|
|
Vessels and related equipment |
| $ | 854,403 |
|
|
|
| 3,407,760 |
|
Other properties and equipment |
|
| 22,424 |
|
|
|
| 69,670 |
|
|
|
| 876,827 |
|
|
|
| 3,477,430 |
|
Less accumulated depreciation and amortization |
|
| 8,138 |
|
|
|
| 612,668 |
|
Net properties and equipment |
| $ | 868,689 |
|
|
|
| 2,864,762 |
|
A summary of other assets at September 30, 2017 and March 31, 2017 is as follows:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Recoverable insurance losses |
| $ | 2,540 |
|
|
|
| 10,142 |
|
Deferred income tax assets |
|
| — |
|
|
|
| 39,134 |
|
Savings plans and SERP |
|
| 15,174 |
|
|
|
| 14,835 |
|
Accumulated costs of rejected vessel (A) |
|
| 7,007 |
|
|
|
| 48,382 |
|
Restricted cash and long-term deposits |
|
| 15,761 |
|
|
|
| 15,162 |
|
Other |
|
| 6,363 |
|
|
|
| 11,880 |
|
|
| $ | 46,845 |
|
|
|
| 139,535 |
|
|
| June 30, |
|
| December 31, |
| ||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Payroll and related payables |
| $ | 16,229 |
|
| $ | 16,351 |
|
Accrued vessel expenses |
|
| 22,462 |
|
|
| 38,383 |
|
Accrued interest expense |
|
| 4,485 |
|
|
| 4,570 |
|
Other accrued expenses |
|
| 17,817 |
|
|
| 14,696 |
|
|
| $ | 60,993 |
|
| $ | 74,000 |
|
|
|
A summary of accrued expenses at September 30, 2017 and March 31, 2017 is as follows:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Payroll and related payables |
| $ | 10,079 |
|
|
|
| 10,465 |
|
Commissions payable (B) |
|
| 2,139 |
|
|
|
| 2,143 |
|
Accrued vessel expenses |
|
| 41,251 |
|
|
|
| 41,580 |
|
Accrued interest expense (C) |
|
| 6,008 |
|
|
|
| 15,021 |
|
Other accrued expenses |
|
| 1,638 |
|
|
|
| 8,912 |
|
|
| $ | 61,115 |
|
|
|
| 78,121 |
|
|
|
|
|
A summary of other current liabilities at SeptemberJune 30, 20172020 and MarchDecember 31, 20172019 is as follows: add undistributed cash
|
| Successor |
|
|
| Predecessor |
| ||||||||||
|
| September 30, |
|
|
| March 31, |
|
| June 30, |
|
| December 31, |
| ||||
(In thousands) |
| 2017 |
|
|
| 2017 |
|
| 2020 |
|
| 2019 |
| ||||
Taxes payable |
| $ | 22,080 |
|
|
|
| 23,497 |
|
| $ | 19,498 |
|
| $ | 18,661 |
|
Deferred gain on vessel sales - current (D) |
|
| — |
|
|
|
| 23,798 |
| ||||||||
Amounts payable to holders of General Unsecured Claims (E) |
|
| 14,828 |
|
|
|
| — |
| ||||||||
Other |
|
| 1,133 |
|
|
|
| 1,134 |
|
|
| 6,317 |
|
|
| 5,439 |
|
|
| $ | 38,041 |
|
|
|
| 48,429 |
|
| $ | 25,815 |
|
| $ | 24,100 |
|
|
|
|
|
A summary of other liabilities at June 30, 2020 and deferred credits at September 30, 2017 and MarchDecember 31, 20172019 is as follows:
|
| Successor |
|
|
| Predecessor |
| ||||||||||
|
| September 30, |
|
|
| March 31, |
|
| June 30, |
|
| December 31, |
| ||||
(In thousands) |
| 2017 |
|
|
| 2017 |
|
| 2020 |
|
| 2019 |
| ||||
Postretirement benefits liability |
| $ | 4,290 |
|
|
|
| 4,394 |
| ||||||||
Pension liabilities |
|
| 42,981 |
|
|
|
| 40,339 |
|
| $ | 30,688 |
|
| $ | 32,545 |
|
Deferred gain on vessel sales (F) |
|
| — |
|
|
|
| 88,923 |
| ||||||||
Liability for uncertain tax positions |
|
| 44,377 |
|
|
| 48,577 |
| |||||||||
Deferred tax liability |
|
| 2,791 |
|
|
| 2,571 |
| |||||||||
Other |
|
| 15,298 |
|
|
|
| 21,049 |
|
|
| 12,445 |
|
|
| 14,704 |
|
|
| $ | 62,569 |
|
|
|
| 154,705 |
|
| $ | 90,301 |
|
| $ | 98,397 |
|
|
|
|
|
From time to time new accounting pronouncements are issued by the FASB that are adopted by the company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the company’s consolidated financial statements upon adoption.
In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Postretirement Benefit Costs.This new guidance amends the requirements related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is permitted. The company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which amends ASC 230 to add or clarify guidance on the classification of certain specific types of cash receipts in the statement of cash flows with the intent of reducing diversity in practice. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is permitted. The company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this new guidance an entity recognizes all excess tax benefits and deficiencies as income tax expense or benefit in the income statement. The company adopted this new guidance in the quarter ended June 30, 2017. The adoption of this guidance did not have a material effect on the company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases, which amended guidance for lease arrangements in order to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance requires additional disclosures and reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. Additionally, the company’s vessel contracts may contain a lease component and if so the company would then recognize a portion of its revenue related to that contract as lease revenue. Non-lease components will be recognized in accordance with ASU 2014-09. For public business entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and early adoption is permitted. The company expects to use the modified retrospective approach for adoption and is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes and requires that deferred tax assets and liabilities be classified as non-current on the balance sheet. No prior periods would be retrospectively adjusted. The company adopted this new guidance in the quarter ended June 30, 2017. Prior periods were not retrospectively adjusted. The adoption of this guidance did not have a material effect on the company’s consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 supersedes prior revenue recognition guidance and provides a five step recognition framework that will require entities to recognize the amount of revenue to which it expects to be entitled for the transfer of goods and services. This new revenue standard will be effective for the company beginning on January 1, 2018. Based on the criteria of ASU 2016-02, the company’s vessel charter contracts may contain a lease component and if so, revenue recognition of that portion of the contract would be accounted for as lease revenue while any service components of the contract would be accounted for under ASU 2014-09. The standard requires additional disclosures and the company plans to use the modified retrospective approach for adopting this standard and will recognize a cumulative catch up adjustment to retained earnings for open contracts as of January 1, 2018. Under this new standard the company plans to account for integrated services as a single performance obligation and does not anticipate any significant changes in the pattern of revenue recognition as dayrate-based revenue will continue to be recognized when services are performed. The company is evaluating the impact of the implementation of this new guidance on its consolidated financial statements and disclosures.
| SEGMENT AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS |
The following tables providetable provides a comparison of segment revenues, vessel operating profit (loss), depreciation and amortization, and additions to properties and equipment.equipment for the three and six months ended June 30, 2020 and 2019. Vessel revenues and operating costs relate to vessels owned and operated by the companyus while other operating revenues relate to the activities of the remotely operated vehicles (ROVs), brokered vessels and other miscellaneous marine-related businesses.
In conjunction with the company’s emergence from bankruptcy on July 31, 2017 the company combined operations in its legacy Middle East and Asia/Pacific segments into a single Middle East/Asia Pacific segment. The company’s Americas and Africa/Europe segments are not affected by this change. This new segment alignment is consistent with how the company’s chief operating decision maker reviews operating results for the purposes of allocating resources and assessing performance. The Predecessor period from April 1, 2017 through July 31, 2017, and the three and six month periods ended September 30, 2016 have been recast to conform to the new segment alignment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
(In thousands) |
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 34,044 |
|
| $ | 35,199 |
|
| $ | 65,903 |
|
| $ | 70,477 |
|
Middle East/Asia Pacific |
|
| 23,983 |
|
|
| 20,449 |
|
|
| 48,811 |
|
|
| 40,905 |
|
Europe/Mediterranean |
|
| 20,620 |
|
|
| 35,027 |
|
|
| 50,111 |
|
|
| 63,585 |
|
West Africa |
|
| 22,328 |
|
|
| 32,966 |
|
|
| 48,124 |
|
|
| 68,336 |
|
Other operating revenues |
|
| 1,369 |
|
|
| 2,218 |
|
|
| 5,763 |
|
|
| 4,705 |
|
|
| $ | 102,344 |
|
| $ | 125,859 |
|
| $ | 218,712 |
|
| $ | 248,008 |
|
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 4,505 |
|
| $ | 2,900 |
|
| $ | 3,341 |
|
| $ | 1,870 |
|
Middle East/Asia Pacific |
|
| 599 |
|
|
| (2,127 | ) |
|
| (257 | ) |
|
| (3,289 | ) |
Europe/Mediterranean |
|
| (1,750 | ) |
|
| 2,824 |
|
|
| (203 | ) |
|
| (493 | ) |
West Africa |
|
| (3,984 | ) |
|
| 3,099 |
|
|
| (8,847 | ) |
|
| 11,214 |
|
Other operating profit |
|
| 1,198 |
|
|
| 1,625 |
|
|
| 2,919 |
|
|
| 3,330 |
|
|
| $ | 568 |
|
| $ | 8,321 |
|
| $ | (3,047 | ) |
| $ | 12,632 |
|
Corporate expenses |
|
| (8,910 | ) |
|
| (12,221 | ) |
|
| (18,952 | ) |
|
| (27,422 | ) |
Long-lived asset impairments |
|
| (55,482 | ) |
|
| (494 | ) |
|
| (65,689 | ) |
|
| 776 |
|
Affiliate credit loss impairment expense |
|
| (53,581 | ) |
|
| — |
|
|
| (53,581 | ) |
|
| — |
|
Affiliate guarantee obligation |
|
| (2,000 | ) |
|
| — |
|
|
| (2,000 | ) |
|
| — |
|
Gain on asset dispositions, net |
|
| 1,660 |
|
|
| — |
|
|
| 6,991 |
|
|
| — |
|
Operating loss |
| $ | (117,745 | ) |
| $ | (4,394 | ) |
| $ | (136,278 | ) |
| $ | (14,014 | ) |
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 8,073 |
|
| $ | 6,515 |
|
| $ | 15,569 |
|
| $ | 12,776 |
|
Middle East/Asia Pacific |
|
| 5,645 |
|
|
| 5,319 |
|
|
| 11,172 |
|
|
| 9,769 |
|
Europe/Mediterranean |
|
| 6,793 |
|
|
| 7,741 |
|
|
| 13,612 |
|
|
| 15,187 |
|
West Africa |
|
| 6,750 |
|
|
| 5,100 |
|
|
| 13,154 |
|
|
| 9,543 |
|
Corporate |
|
| 883 |
|
|
| 363 |
|
|
| 1,744 |
|
|
| 695 |
|
|
| $ | 28,144 |
|
| $ | 25,038 |
|
| $ | 55,251 |
|
| $ | 47,970 |
|
Additions to properties and equipment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | — |
|
| $ | 206 |
|
| $ | — |
|
| $ | 604 |
|
Middle East/Asia Pacific |
|
| 503 |
|
|
| 2,180 |
|
|
| 1,183 |
|
|
| 3,639 |
|
Europe/Mediterranean |
|
| 486 |
|
|
| 601 |
|
|
| 926 |
|
|
| 722 |
|
West Africa |
|
| (73 | ) |
|
| 1,340 |
|
|
| 678 |
|
|
| 1,583 |
|
Corporate |
|
| 710 |
|
|
| 1,430 |
|
|
| 1,288 |
|
|
| 2,325 |
|
|
| $ | 1,626 |
|
| $ | 5,757 |
|
| $ | 4,075 |
|
| $ | 8,873 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 17,449 |
|
|
|
| 8,961 |
|
|
| 53,125 |
|
Middle East/Asia Pacific |
|
| 16,669 |
|
|
|
| 8,547 |
|
|
| 29,584 |
|
Africa/Europe |
|
| 36,453 |
|
|
|
| 16,832 |
|
|
| 56,652 |
|
|
|
| 70,571 |
|
|
|
| 34,340 |
|
|
| 139,361 |
|
Other operating revenues |
|
| 3,729 |
|
|
|
| 1,923 |
|
|
| 4,361 |
|
|
| $ | 74,300 |
|
|
|
| 36,263 |
|
|
| 143,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | (2,651 | ) |
|
|
| (6,850 | ) |
|
| (1,177 | ) |
Middle East/Asia Pacific |
|
| 944 |
|
|
|
| (118 | ) |
|
| (5,171 | ) |
Africa/Europe |
|
| (24 | ) |
|
|
| (8,571 | ) |
|
| (14,072 | ) |
|
|
| (1,731 | ) |
|
|
| (15,539 | ) |
|
| (20,420 | ) |
Other operating profit (loss) |
|
| 809 |
|
|
|
| 821 |
|
|
| (1,012 | ) |
|
|
| (922 | ) |
|
|
| (14,718 | ) |
|
| (21,432 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate general and administrative expenses |
|
| (4,797 | ) |
|
|
| (2,840 | ) |
|
| (10,006 | ) |
Corporate depreciation |
|
| (67 | ) |
|
|
| (163 | ) |
|
| (597 | ) |
Corporate expenses |
|
| (4,864 | ) |
|
|
| (3,003 | ) |
|
| (10,603 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on asset dispositions, net |
|
| 4 |
|
|
|
| 372 |
|
|
| 6,253 |
|
Asset impairments (A) |
|
| — |
|
|
|
| (21,325 | ) |
|
| (129,562 | ) |
Operating loss |
| $ | (5,782 | ) |
|
|
| (38,674 | ) |
|
| (155,344 | ) |
Foreign exchange loss |
|
| (58 | ) |
|
|
| (2,024 | ) |
|
| (2,539 | ) |
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
|
| 269 |
|
|
| 1,313 |
|
Interest income and other |
|
| 873 |
|
|
|
| 704 |
|
|
| 992 |
|
Reorganization items (B) |
|
| (1,880 | ) |
|
|
| (1,083,729 | ) |
|
| — |
|
Interest and other debt costs |
|
| (5,240 | ) |
|
|
| (574 | ) |
|
| (18,477 | ) |
Loss before income taxes |
| $ | (10,782 | ) |
|
|
| (1,124,028 | ) |
|
| (174,055 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 2,295 |
|
|
|
| 3,197 |
|
|
| 12,700 |
|
Middle East/Asia Pacific |
|
| 1,807 |
|
|
|
| 2,221 |
|
|
| 10,779 |
|
Africa/Europe |
|
| 3,561 |
|
|
|
| 5,294 |
|
|
| 18,430 |
|
|
|
| 7,663 |
|
|
|
| 10,712 |
|
|
| 41,909 |
|
Other |
|
| 412 |
|
|
|
| 285 |
|
|
| 1,339 |
|
Corporate |
|
| 67 |
|
|
|
| 163 |
|
|
| 597 |
|
|
| $ | 8,142 |
|
|
|
| 11,160 |
|
|
| 43,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to properties and equipment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | — |
|
|
|
| — |
|
|
| — |
|
Middle East/Asia Pacific |
|
| 377 |
|
|
|
| 394 |
|
|
| 34 |
|
Africa/Europe |
|
| 159 |
|
|
|
| 101 |
|
|
| 392 |
|
|
|
| 536 |
|
|
|
| 495 |
|
|
| 426 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Corporate (C) |
|
| 53 |
|
|
|
| 143 |
|
|
| 9,445 |
|
|
| $ | 589 |
|
|
|
| 638 |
|
|
| 9,871 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 17,449 |
|
|
|
| 40,848 |
|
|
| 113,733 |
|
Middle East/Asia Pacific |
|
| 16,669 |
|
|
|
| 36,313 |
|
|
| 61,707 |
|
Africa/Europe |
|
| 36,453 |
|
|
|
| 69,436 |
|
|
| 126,351 |
|
|
|
| 70,571 |
|
|
|
| 146,597 |
|
|
| 301,791 |
|
Other operating revenues |
|
| 3,729 |
|
|
|
| 4,772 |
|
|
| 9,856 |
|
|
| $ | 74,300 |
|
|
|
| 151,369 |
|
|
| 311,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | (2,651 | ) |
|
|
| (22,549 | ) |
|
| (5,503 | ) |
Middle East/Asia Pacific |
|
| 944 |
|
|
|
| (1,434 | ) |
|
| (10,778 | ) |
Africa/Europe |
|
| (24 | ) |
|
|
| (21,508 | ) |
|
| (27,381 | ) |
|
|
| (1,731 | ) |
|
|
| (45,491 | ) |
|
| (43,662 | ) |
Other operating profit (loss) |
|
| 809 |
|
|
|
| 876 |
|
|
| (1,439 | ) |
|
|
| (922 | ) |
|
|
| (44,615 | ) |
|
| (45,101 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate general and administrative expenses |
|
| (4,797 | ) |
|
|
| (17,542 | ) |
|
| (20,499 | ) |
Corporate depreciation |
|
| (67 | ) |
|
|
| (704 | ) |
|
| (1,327 | ) |
Corporate expenses |
|
| (4,864 | ) |
|
|
| (18,246 | ) |
|
| (21,826 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on asset dispositions, net |
|
| 4 |
|
|
|
| 3,561 |
|
|
| 11,896 |
|
Asset impairments (A) |
|
| — |
|
|
|
| (184,748 | ) |
|
| (166,448 | ) |
Operating loss |
| $ | (5,782 | ) |
|
|
| (244,048 | ) |
|
| (221,479 | ) |
Foreign exchange loss |
|
| (58 | ) |
|
|
| (3,181 | ) |
|
| (5,272 | ) |
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
|
| 4,786 |
|
|
| 1,312 |
|
Interest income and other |
|
| 873 |
|
|
|
| 2,384 |
|
|
| 2,168 |
|
Reorganization items (B) |
|
| (1,880 | ) |
|
|
| (1,396,905 | ) |
|
| — |
|
Interest and other debt costs |
|
| (5,240 | ) |
|
|
| (11,179 | ) |
|
| (35,431 | ) |
Loss before income taxes |
| $ | (10,782 | ) |
|
|
| (1,648,143 | ) |
|
| (258,702 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 2,295 |
|
|
|
| 13,945 |
|
|
| 25,478 |
|
Middle East/Asia Pacific |
|
| 1,807 |
|
|
|
| 9,967 |
|
|
| 21,673 |
|
Africa/Europe |
|
| 3,561 |
|
|
|
| 21,692 |
|
|
| 37,199 |
|
|
|
| 7,663 |
|
|
|
| 45,604 |
|
|
| 84,350 |
|
Other |
|
| 412 |
|
|
|
| 1,139 |
|
|
| 2,720 |
|
Corporate |
|
| 67 |
|
|
|
| 704 |
|
|
| 1,327 |
|
|
| $ | 8,142 |
|
|
|
| 47,447 |
|
|
| 88,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to properties and equipment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | — |
|
|
|
| 27 |
|
|
| 75 |
|
Middle East/Asia Pacific |
|
| 377 |
|
|
|
| 1,042 |
|
|
| 314 |
|
Africa/Europe |
|
| 159 |
|
|
|
| 375 |
|
|
| 459 |
|
|
|
| 536 |
|
|
|
| 1,444 |
|
|
| 848 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Corporate (C) |
|
| 53 |
|
|
|
| 821 |
|
|
| 19,138 |
|
|
| $ | 589 |
|
|
|
| 2,265 |
|
|
| 19,986 |
|
|
|
|
|
|
|
The following table provides a comparison of total assets at SeptemberJune 30, 20172020 and MarchDecember 31, 2017:2019:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Total assets: |
|
|
|
|
|
|
|
|
|
Americas |
| $ | 189,908 |
|
|
|
| 779,778 |
|
Middle East/Asia Pacific |
|
| 67,491 |
|
|
|
| 583,385 |
|
Africa/Europe |
|
| 1,035,109 |
|
|
|
| 1,897,355 |
|
|
|
| 1,292,508 |
|
|
|
| 3,260,518 |
|
Other |
|
| 19,026 |
|
|
|
| 21,580 |
|
|
|
| 1,311,534 |
|
|
|
| 3,282,098 |
|
Investments in, at equity, and advances to unconsolidated companies |
|
| 25,729 |
|
|
|
| 45,115 |
|
|
|
| 1,337,263 |
|
|
|
| 3,327,213 |
|
Corporate (A) |
|
| 475,589 |
|
|
|
| 863,486 |
|
|
| $ | 1,812,852 |
|
|
|
| 4,190,699 |
|
|
|
The following tables disclose the amount of revenue by segment, and in total for the worldwide fleet, along with the respective percentage of total vessel revenue:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
Revenue by vessel class |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % of Vessel Revenue |
|
|
|
|
|
|
| % of Vessel Revenue |
|
|
|
|
|
| % of Vessel Revenue |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,798 |
|
|
| 14 | % |
|
|
| 4,304 |
|
|
| 12 | % |
|
| 37,270 |
|
|
| 27 | % |
Towing-supply |
|
| 5,572 |
|
|
| 8 | % |
|
|
| 3,747 |
|
|
| 11 | % |
|
| 13,039 |
|
|
| 9 | % |
Other |
|
| 2,079 |
|
|
| 3 | % |
|
|
| 910 |
|
|
| 3 | % |
|
| 2,816 |
|
|
| 2 | % |
Total |
| $ | 17,449 |
|
|
| 25 | % |
|
|
| 8,961 |
|
|
| 26 | % |
|
| 53,125 |
|
|
| 38 | % |
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 5,726 |
|
|
| 8 | % |
|
|
| 2,667 |
|
|
| 8 | % |
|
| 8,860 |
|
|
| 6 | % |
Towing-supply |
|
| 10,943 |
|
|
| 16 | % |
|
|
| 5,880 |
|
|
| 17 | % |
|
| 20,724 |
|
|
| 15 | % |
Other |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 16,669 |
|
|
| 24 | % |
|
|
| 8,547 |
|
|
| 25 | % |
|
| 29,584 |
|
|
| 21 | % |
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 17,582 |
|
|
| 25 | % |
|
|
| 7,588 |
|
|
| 22 | % |
|
| 24,305 |
|
|
| 17 | % |
Towing-supply |
|
| 15,049 |
|
|
| 21 | % |
|
|
| 8,124 |
|
|
| 24 | % |
|
| 25,934 |
|
|
| 19 | % |
Other |
|
| 3,822 |
|
|
| 5 | % |
|
|
| 1,120 |
|
|
| 3 | % |
|
| 6,413 |
|
|
| 5 | % |
Total |
| $ | 36,453 |
|
|
| 51 | % |
|
|
| 16,832 |
|
|
| 49 | % |
|
| 56,652 |
|
|
| 41 | % |
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 33,106 |
|
|
| 47 | % |
|
|
| 14,559 |
|
|
| 42 | % |
|
| 70,435 |
|
|
| 50 | % |
Towing-supply |
|
| 31,564 |
|
|
| 45 | % |
|
|
| 17,751 |
|
|
| 52 | % |
|
| 59,697 |
|
|
| 43 | % |
Other |
|
| 5,901 |
|
|
| 8 | % |
|
|
| 2,030 |
|
|
| 6 | % |
|
| 9,229 |
|
|
| 7 | % |
Total |
| $ | 70,571 |
|
|
| 100 | % |
|
|
| 34,340 |
|
|
| 100 | % |
|
| 139,361 |
|
|
| 100 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
Revenue by vessel class |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % of Vessel Revenue |
|
|
|
|
|
|
| % of Vessel Revenue |
|
|
|
|
|
| % of Vessel Revenue |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,798 |
|
|
| 14 | % |
|
|
| 21,617 |
|
|
| 15 | % |
|
| 77,657 |
|
|
| 26 | % |
Towing-supply |
|
| 5,572 |
|
|
| 8 | % |
|
|
| 15,021 |
|
|
| 10 | % |
|
| 29,918 |
|
|
| 10 | % |
Other |
|
| 2,079 |
|
|
| 3 | % |
|
|
| 4,210 |
|
|
| 3 | % |
|
| 6,158 |
|
|
| 2 | % |
Total |
| $ | 17,449 |
|
|
| 25 | % |
|
|
| 40,848 |
|
|
| 28 | % |
|
| 113,733 |
|
|
| 38 | % |
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 5,726 |
|
|
| 8 | % |
|
|
| 13,368 |
|
|
| 9 | % |
|
| 17,488 |
|
|
| 6 | % |
Towing-supply |
|
| 10,943 |
|
|
| 16 | % |
|
|
| 22,945 |
|
|
| 16 | % |
|
| 44,219 |
|
|
| 14 | % |
Other |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 16,669 |
|
|
| 24 | % |
|
|
| 36,313 |
|
|
| 25 | % |
|
| 61,707 |
|
|
| 20 | % |
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 17,582 |
|
|
| 25 | % |
|
|
| 29,746 |
|
|
| 20 | % |
|
| 57,594 |
|
|
| 19 | % |
Towing-supply |
|
| 15,049 |
|
|
| 21 | % |
|
|
| 35,143 |
|
|
| 24 | % |
|
| 53,851 |
|
|
| 18 | % |
Other |
|
| 3,822 |
|
|
| 5 | % |
|
|
| 4,547 |
|
|
| 3 | % |
|
| 14,906 |
|
|
| 5 | % |
Total |
| $ | 36,453 |
|
|
| 51 | % |
|
|
| 69,436 |
|
|
| 47 | % |
|
| 126,351 |
|
|
| 42 | % |
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 33,106 |
|
|
| 47 | % |
|
|
| 64,731 |
|
|
| 44 | % |
|
| 152,739 |
|
|
| 51 | % |
Towing-supply |
|
| 31,564 |
|
|
| 45 | % |
|
|
| 73,109 |
|
|
| 50 | % |
|
| 127,988 |
|
|
| 42 | % |
Other |
|
| 5,901 |
|
|
| 8 | % |
|
|
| 8,757 |
|
|
| 6 | % |
|
| 21,064 |
|
|
| 7 | % |
Total |
| $ | 70,571 |
|
|
| 100 | % |
|
|
| 146,597 |
|
|
| 100 | % |
|
| 301,791 |
|
|
| 100 | % |
|
|
In connection with the restructuring contemplated by the Plan, the Debtors filed a motion seeking to reject all Sale Leaseback Agreements (the rejection damage claims related thereto, the “Sale Leaseback Claims”). Pursuant to an order by the Bankruptcy Court in May 2017, the Sale Leaseback Agreements for all 16 leased vessels were rejected. Included in liabilities subject to compromise as of July 31, 2017 (Predecessor) was $260.2 million related to the claims of the Sale Leaseback Parties. As of September 30, 2017 (Successor), five claims had been settled for an aggregate $166.1 million and one claim, which had been reserved for at a maximum amount of $94.1 million, remained outstanding.
At the Petition Date, six of the sixteen leased vessels were operating throughout the world. Costs incurred subsequent to the Petition Date to mobilize those vessels and prepare them for re-delivery to the lessors has been included in reorganization items for the period August 1, 2017 through September 30, 2017 (Successor).
Included in gain on asset dispositions, net for the period April 1, 2017 through July 31, 2017 (Predecessor), are $3 million of deferred gains from sale leaseback transactions which reflects gains recognized through the Petition Date of May 17, 2017. Unamortized deferred gains as of the Petition Date of $105.9 million were credited to reorganization items as a result of the lease rejections.
Management estimates the fair value of each vessel not expected to return to active service (considered Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures) by considering items such as the vessel’s age, length of time stacked, likelihood of a return to active service, and actual recent sales of similar vessels, among others. For vessels with more significant carrying values, we obtain an estimate of the fair value of the stacked vessel from third-party appraisers or brokers for use in our determination of fair value estimates.
Due in part to the modernization of the company’s fleet, more vessels that are being stacked are newer vessels that are expected to return to active service. Stacked vessels expected to return to active service are generally newer vessels, have similar capabilities and likelihood of future active service as other currently operating vessels, are generally current with classification societies in regards to their regulatory certification status, and are being actively marketed. Stacked vessels expected to return to service are evaluated for impairment as part of their assigned active asset group and not individually.
The company reviews the vessels in its active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. If an asset group fails the undiscounted cash flow test, the company estimates the fair value of each asset group and compares such estimated fair value, considered Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures, to the carrying value of each asset group in order to determine if impairment exists. Similar to stacked vessels, management obtains estimates of the fair values of the active vessels from third party appraisers or brokers for use in determining fair value estimates.
During the period from April 1, 2017 through July 31, 2017 (Predecessor), the company recognized $157.8 million of impairment charges on 73 vessels that were stacked. The fair value of vessels in the stacked fleet incurring impairment during the period from April 1, 2017 through July 31, 2017 (Predecessor) was $505.6 million (after having recorded impairment charges).
During the period from April 1, 2017 through July 31, 2017 (Predecessor) the company recognized $26.9 million of impairments on six vessels in the active fleet. The fair value of vessels in the active fleet incurring impairment during the period from April 1, 2017 through July 31, 2017 (Predecessor) was $66.2 million (after having recorded impairment charges).
As of the company’s emergence from Chapter 11 bankruptcy on July 31, 2017 the company significantly reduced the carrying values of it vessels and other assets and did not incur asset impairments during the period from August 1, 2017 to September 30, 2017.
The below tables summarize the combined fair value of the assets that incurred impairments, along with the amount of impairment.
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Number of vessels impaired in the period |
|
| — |
|
|
|
| 8 |
|
|
| 42 |
|
Number of ROVs impaired during the period |
|
| — |
|
|
|
| — |
|
|
| 8 |
|
Amount of impairment incurred | $ |
| — |
|
|
|
| 21,325 |
|
|
| 129,562 |
|
Combined fair value of assets incurring impairment |
|
| — |
|
|
|
| 29,339 |
|
|
| 322,550 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Number of vessels impaired in the period |
|
| — |
|
|
|
| 79 |
|
|
| 54 |
|
Number of ROVs impaired during the period |
|
| — |
|
|
|
| — |
|
|
| 8 |
|
Amount of impairment incurred | $ |
| — |
|
|
|
| 184,748 |
|
|
| 166,448 |
|
Combined fair value of assets incurring impairment |
|
| — |
|
|
|
| 571,821 |
|
|
| 477,950 |
|
|
| June 30, |
|
| December 31, |
| ||
(In thousands) |
| 2020 |
|
| 2019 |
| ||
Total assets: |
|
|
|
|
|
|
|
|
Americas |
| $ | 350,376 |
|
| $ | 375,297 |
|
Middle East/Asia Pacific |
|
| 243,519 |
|
|
| 270,413 |
|
Europe/Mediterranean |
|
| 327,827 |
|
|
| 358,943 |
|
West Africa |
|
| 280,018 |
|
|
| 376,087 |
|
Corporate |
|
| 213,935 |
|
|
| 198,788 |
|
|
| $ | 1,415,675 |
|
| $ | 1,579,528 |
|
On September 12, 2017,In the Boardfourth quarter of Directors approved changing2018, we finalized plans and made accruals of expected costs to abandon the company’s fiscal yearduplicate office facilities in St. Rose and New Orleans, Louisiana, Houston, Texas and Aberdeen, Scotland with the final lease agreement ending in October 2026. Activity for the lease exit and severance liabilities for the six months ended June 30, 2020 and 2019 was as follows:
|
| Lease |
|
|
|
|
|
|
|
|
| |
(In thousands) |
| Exit Costs |
|
| Severance |
|
| Total |
| |||
Balance at December 31, 2019 |
| $ | 4,109 |
|
| $ | 272 |
|
| $ | 4,381 |
|
General and administrative charges |
|
| 135 |
|
|
| 250 |
|
|
| 385 |
|
Cash payments |
|
| (459 | ) |
|
| (416 | ) |
|
| (875 | ) |
Balance at June 30, 2020 |
| $ | 3,785 |
|
| $ | 106 |
|
| $ | 3,891 |
|
Activity for the lease exit and severance liabilities for the six months ended June 30, 2019 was as follows:
|
| Lease |
|
|
|
|
|
|
|
|
| |
(In thousands) |
| Exit Costs |
|
| Severance |
|
| Total |
| |||
Balance at December 31, 2018 |
| $ | 6,468 |
|
| $ | 285 |
|
| $ | 6,753 |
|
General and administrative charges |
|
| 109 |
|
|
| 3,836 |
|
|
| 3,945 |
|
Cash payments |
|
| (1,426 | ) |
|
| (3,916 | ) |
|
| (5,342 | ) |
Balance at June 30, 2019 |
| $ | 5,151 |
|
| $ | 205 |
|
| $ | 5,356 |
|
(15)ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS
In the fourth quarter of 2019, we evaluated our fleet for vessels to be considered for disposal and identified 46 vessels to be classified as held for sale. In the second quarter of 2020, we identified 22 additional vessels to be sold. The second quarter determination was largely a result of a worldwide downturn in the oil and gas industry precipitated by a global pandemic. In the first quarter of 2020, we sold 8 vessels that were held for sale and revalued the remaining 38 vessels to estimated net realizable value recording additional impairment expense of $10.2 million. In the second quarter of 2020, we sold 14 vessels that were held for sale and revalued the remaining 24 vessels to net realizable value recording additional impairment expense of $5.6 million. At June 30, 2020, when we identified the additional 22 vessels to be reclassified as assets held for sale, we recognized impairment expense of $49.9 million associated with those vessels. See the following table for activity in our assets held for sale account:
(in thousands, except for number of vessels data) | Number of Vessels |
| Three Months Ended March 31, 2020 |
|
| Number of Vessels |
| Three Months Ended June 30, 2020 |
|
| Number of Vessels |
| Six Months Ended June 30, 2020 |
| ||||||
Beginning balance |
| 46 |
| $ | 39,287 |
|
|
| 38 |
| $ | 26,142 |
|
|
| 46 |
| $ | 39,287 |
|
Additions |
| — |
|
|
|
|
|
| 22 |
|
| 15,930 |
|
|
| 22 |
|
| 15,930 |
|
Sales |
| (8 | ) |
| (2,938 | ) |
|
| (14 | ) |
| (7,407 | ) |
|
| (22 | ) |
| (10,345 | ) |
Additional impairment |
| — |
|
| (10,207 | ) |
|
| — |
|
| (5,601 | ) |
|
| — |
|
| (15,808 | ) |
Ending balance |
| 38 |
| $ | 26,142 |
|
|
| 46 |
| $ | 29,064 |
|
|
| 46 |
| $ | 29,064 |
|
We consider the valuation approach for our assets held for sale to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be scrapped or sold. We determined the fair value of the vessels held for sale using three methodologies depending on the vessel and on our planned method of disposition. We designated certain vessels to be scrapped and valued those vessels using scrap yard pricing schedules based on dollars per ton. Other vessels were valued based on sales agreements or using comparative sales in the marketplace reduced by 10% to factor in the effects of completing a quick sale within the next twelve months. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments.
In 2020, we have sold 25 vessels, 22 of which were classified as assets held for sale and 3 of which were sold from the active fleet. We recognized gains on the asset sales of $5.3 million in the first quarter, $1.7 million in the second quarter and $7.0 million combined for the six months ended June 30, 2020.
In early 2020, it became evident that a fiscal year endingnovel coronavirus originating in Asia (COVID-19) could become a pandemic with worldwide reach. By mid-March, when the World Health Organization declared the outbreak to be a pandemic (the “COVID-19 pandemic”), much of the industrialized world had initiated severe measures to lessen its impact. The ongoing COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption during the first quarter of 2020. With respect to our particular sector, the COVID-19 pandemic has resulted in a much lower demand for oil as national, regional,
and local governments impose travel restrictions, border closings, restrictions on public gatherings, stay at home orders, and limitations on business operations in order to contain its spread. During this same time period, oil-producing countries have struggled to reach consensus on worldwide production levels, resulting in both a market oversupply of oil and a precipitous fall in oil prices. Combined, these conditions have adversely affected our operations and business beginning in the latter part of the first quarter of 2020 and continuing throughout the second quarter of 2020. We expect our operations and business in the remainder of 2020 to continue to be negatively impacted. The reduction in demand for hydrocarbons together with an unprecedented decline in the price of oil has resulted in our primary customers, the oil and gas companies, making material reductions to their planned spending on offshore projects, compounding the effect of the virus on offshore operations. Further, these conditions, separately or together, are expected to continue to impact the demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general.
We consider these events to be indicators that the value of our active offshore vessel fleet may be impaired. As a result, as of March 31, 2020 and June 30, 2020, we performed Step 1 evaluations of our active offshore fleet under FASB Accounting Standards Codification 360, which governs the methodology for identifying and recording impairment of long-lived assets to a fiscal year ending on December 31, beginning withdetermine if any of our asset groups have net book value in excess of undiscounted future net cash flows. Our evaluations did not indicate impairment of any of our asset groups. We will continue to monitor the period ending December 31, 2017. The company will file a transition report on Form 10-K covering the transition period from April 1, 2017 to December 31, 2017, which is the period between the closing of the company’s most recent fiscal yearexpected future cash flows and the opening datefair market value of the company’s newly selected fiscal year.our asset groups for impairment.
|
|
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Change in Chief Executive Officer
On October 16, 2017, the company announced that Jeffrey M. Platt has resigned from his position as the company’s President and Chief Executive Officer and as a member of the company’s board of directors (the “Board”), effective October 15, 2017. Larry T. Rigdon, one of the company’s directors, will serve as the company’s President and Chief Executive Officer on an interim basis, effective October 16, 2017.
In addition to Mr. Platt’s $1.22 million payment in connection with his separation as previously disclosed, as a result of Mr. Platt’s retirement, he is expected to receive in April 2018 a $9.6 million lump sum distribution in settlement of his supplemental executive retirement plan obligation and an estimated $1.1 million distribution in settlement of his supplemental savings plan obligation. A settlement loss, which is currently estimated to be $0.5 million, will be recorded at the time of distribution.
FORWARD-LOOKING STATEMENT
In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that this Quarterly Report on Form 10-Q and the information incorporated herein by reference contain certain forward-looking statements which reflect the company’sour current view with respect to future events and future financial performance. Forward-looking statements are all statements other than statements of historical fact. All such forward-looking statements are subject to risks and uncertainties, many of which are beyond the control of the Company, and the company’sour future results of operations could differ materially from itsour historical results or current expectations reflected by such forward-looking statements. Some of these risks are discussed in this Quarterly Report on Form 10-Q and uncertainties include, without limitation, volatilitythe risks related to fluctuations in worldwide energy demand and oil and natural gas prices, and continuing depressed levels of oil and natural gas prices without a clear indication of if, or when, prices will recover to a level to support renewed offshore exploration activities; fleet additions by competitors and industry overcapacity; our views with respectlimited capital resources available to the need for and timing of the replenishment ofreplenish our asset base as needed, including through acquisitions or vessel construction;construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel construction and maintenance; the continued availability of qualified personnel;personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; uncertainty of global financial market conditions and difficulty in accessing capital or credit if and when needed with favorable terms, if at all; the potential need to sell certain assets to raise additional capital; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; enforcement of laws related to the environment, labor and foreign corrupt practices; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; and the resolution of pending legal proceedings.proceedings.
Forward-looking statements, which can generally be identified by the use of such terminology as “may,” “can,” “potential,” “expect,” “project,” “target,” “anticipate,” “estimate,” “forecast,” “believe,” “think,” “could,” “continue,” “intend,” “seek,” “plan,” and similar expressions contained in this Quarterly Report on Form 10-Q, are not guarantees or assurances of future performance or events. Any forward-looking statements are based on the company’sour assessment of current industry, financial and economic information, which by its nature is dynamic and subject to rapid and possibly abrupt changes, which the companywe may or may not be able to control. Further, the companywe may make changes to itsour business plans that could or will affect itsour results. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments that affect us will be those that we anticipate and have identified. The forward-looking statements should be considered in the context of the risk factors listed above, discussed in this Quarterly Report on Form 10-Q, and discussed in Item 1A included in the company’sour Annual Report on Form 10-K for the year ended MarchDecember 31, 2017,2019, filed with the Securities and Exchange Commission (SEC)SEC on June 12, 2017,March 2, 2020, as updated by subsequent filings with the SEC. Investors and prospective investors are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events or developments.
In certain places in this Quarterly Report on Form 10-Q, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity. The company does so for the convenience of our investorsactivity and potential investors and in an effort to provide information available in the market that will lead to a better understanding of the market environment in which the company operates. The companywe specifically disclaimsdisclaim any responsibility for the accuracy and completeness of such information reports and undertakeshave undertaken no obligationsteps to update or independently verify such information.
The following information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part 1, Item 1 of this Quarterly Report on Form 10-Q and related disclosures and the company’sour Annual Report on Form 10-K for the year ended MarchDecember 31, 2017, filed2019, filed with the SEC on June 12, 2017.March 2, 2020.
Our vessels and associated vessel services provide support for all phases of offshore oil and natural gas exploration, field development and production. These services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction remotely operated vehicle (ROV) operations, and seismic and subsea support; and a variety of specialized services such as pipe and cable laying. Our offshore support vessel fleet includes vessels that are operated under joint ventures, as well as vessels that have been stacked or withdrawn from service. At September 30, 2017,In addition, we owned or chartered 237 vessels (excluding eight joint venture vessels, but including 91 stacked vessels and 3 leased vessels) and eight ROVs available to serve the global energy industry.
We have one of the broadest geographic operating footprints in the offshore energy industry with operations in most of the world's significant offshore crude oil and natural gas exploration and production regions.vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to respondbe responsive to the changing requirements of the many customers with which we believe we have strong relationships. We are also one of the most experienced international operators in the offshore energy industry with a history spanning over five decades60 years.
At June 30, 2020, we owned 192 vessels (excluding 3 joint venture vessels), 146 of international experience.
Bankruptcy Proceedingswhich are available to serve the global energy industry and Emergence
As previously reported, on July 17, 2017, the United States Bankruptcy Court46 of which are available for the District of Delaware (the “Bankruptcy Court”) issued its written order confirming the company’s consensual prepackaged Plan of Reorganization that had been filed with the Bankruptcy Court on May 17, 2017 (the “Petition Date”) in connection with the filing by the company and certain of its subsidiaries (the “Debtors”) of a petition with the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code. On July 31, 2017, the company and its affiliated Chapter 11 Debtors emerged from bankruptcy after successfully completing its reorganization pursuant to the Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization of Tidewater and its Affiliated Debtors (the “Plan”), that was confirmed on July 17, 2017 by the Bankruptcy Court. Refer to Note (2) for further details on the company's Chapter 11 bankruptcy and emergence.
During the bankruptcy proceedings from the Petition Date to the Effective Date, the Debtors operated as "debtors-in-possession" in accordance with applicable provisions of the Bankruptcy Code.immediate sale. The company operated in the ordinary course of business pursuant to motions filed by the Debtors and granted by the Bankruptcy Court.
Upon emergence of the Company from bankruptcy:
The lenders under the company’s Fourth Amended and Restated Revolving Credit Agreement, dated as of June 21, 2013 (the “Credit Agreement”), the holders of senior notes, and the lessors from whom the company leased 16 vessels (the “Sale Leaseback Parties”) (collectively, the “General Unsecured Creditors” and the claims thereof, the “General Unsecured Claims”) received their pro rata share of (a) $225 million of cash, (b) subject to the limitations discussed below, common stock and, if applicable, warrants (the “New Creditor Warrants”) to purchase common stock, representing 95% of the common equity in the reorganized company (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the Plan as described below); and (c) new 8% fixed rate secured notes due in 2022 in the aggregate principal amount of $350 million (the “New Secured Notes”).
The company’s existing shares of common stock were cancelled. Existing common stockholders of the company received their pro rata share of common stock representing 5% of the common equity in the reorganized company (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the Plan) and six year warrants to purchase additional shares of common stock of the reorganized company. These warrants were issued in two tranches, with the first tranche (the “Series A Warrants”) being exercisable immediately, at an exercise price of $57.06 per share, and the second tranche (the “Series B Warrants”) being exercisable immediately, at an exercise price of $62.28 per share. The Series A Warrants are exercisable for 2.4 million shares of common stockwhile the Series B Warrants are exercisable for 2.6 million shares of common stock. The Series A Warrants and the Series B Warrants do not grant the holder thereof any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the company’s business and are subject to the restrictions in the company’s new certificate of incorporation that prohibits the exercise of such warrants where such exercise would cause the total number of shares held by non-U.S. citizens to exceed 24%. If, during the six-month period immediately preceding the Series A and Series B Warrants’ termination date, a non-U.S. Citizen is precluded from exercising the warrant because of the foreign
ownership limitations, then the holder thereof may exercise and receive, in lieu of shares of common stock, warrants identical in all material respects to the New Creditor Warrants, with one such warrant being issued for each share of common stock that the Series A or Series B Warrants were otherwise convertible into.
To assure the continuing ability of certain vessels owned by the company’s subsidiaries to engage in U.S. coastwise trade, the number of shares of the company’s common stock that was otherwise issuable to the allowed General Unsecured Creditors was adjusted to assure that the foreign ownership limitations of the United States Jones Act are not exceeded. The Jones Act requires any corporation that engages in coastwise trade be a U.S. citizen within the meaning of that law, which requires, among other things, that the aggregate ownership of common stock by non-U.S. citizens within the meaning of the Jones Act be not more than 25% of its outstanding common stock. The Plan required that, at the time the company emerged from bankruptcy, not more than 22% of the common stock will be held by non-U.S. citizens. To that end, the Plan provided for the issuance of a combination of common stock of the reorganized company and the New Creditor Warrants to purchase common stock of the reorganized company on a pro rata basis to any non-U.S. citizen among the allowed General Unsecured Creditors whose ownership of common stock, when combined with the shares to be issued to existing Tidewater stockholders that are non-U.S. citizens, would otherwise cause the 22% threshold to be exceeded. The New Creditor Warrants do not grant the holder thereof any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the company’s business. Generally, the New Creditor Warrants are exercisable immediately at a nominal exercise price, subject to restrictions contained in the Warrant Agreement between the company and the warrant agent regarding the New Creditor Warrants designed to assure the company’s continuing eligibility to engage in coastwise trade under the Jones Act that prohibit the exercise of such warrants where such exercise would cause the total number of shares held by non-U.S. citizens to exceed 22%. The company has established, under its charter and through Depository Trust Corporation (DTC), appropriate measures to assure compliance with these ownership limitations.
The undisputed claims of other unsecured creditors such as customers, employees, and vendors, were paid in full in the ordinary course of business (except as otherwise agreed among the parties).
As of the Effective Date, the company and the Sale Leaseback Parties had not reached agreement with respect to the amount of the Sale Leaseback Claims. Accordingly, on the Effective Date, a portion of the above consideration in cash, New Creditor Warrants, and New Secured Notes in an amount that the company believes represents the maximum possible distributions owing on account of the Sale Leaseback Claims was withheld from the cash, New Creditor Warrants and New Secured Notes distributed to holders of allowed General Unsecured Claims on account of such disputed Sale Leaseback Claims until they are resolved. To the extent the Sale Leaseback Claims were resolved for less than the amount withheld, the remainder was distributed to holders of allowed General Unsecured Claims pro rata. Included in liabilities subject to compromise as of July 31, 2017 (Predecessor) is $260.2 million related to the claims of the Sale Leaseback Parties. As of September 30, 2017 (Successor), five claims had been settled for an aggregate $166.1 million and one claim, which had been reserved for at a maximum amount of $94.1 million, remained outstanding.
The company’s emergence from Chapter 11 bankruptcy has resolved the significant risks and uncertainties which previously raised substantial doubt about the company’s ability to continue as a going concern.
Upon our emergence from Chapter 11 bankruptcy, on July 31, 2017, we adopted fresh-start accounting in accordance with the provisions set forth in ASC 852, Reorganizations, as (i) the Reorganization Valueaverage age of our assets immediately prior to the date of confirmation was less than the post-petition liabilities and allowed claims and (ii) the holders of our existing voting shares of the Predecessor entity received less than 50% of the voting shares of the emerging entity.
Adopting fresh-start accounting results in a new financial reporting entity with no beginning retained earnings or deficit balance as of the fresh-start reporting date. Upon the adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the fresh-start reporting date. Our adoption of fresh-start accounting may materially affect our results of operations following the fresh-start reporting date, as we will have a new basis in our assets and liabilities. As a result of the adoption of fresh-start reporting and the effects of the implementation of the Plan, our unaudited condensed consolidated financial statements subsequent to July 31, 2017 may not be comparable to our unaudited condensed consolidated financial statements prior to July 31, 2017, and as such, "black-line" financial statements are presented to distinguish between the Predecessor and Successor companies.
n conjunction with the company’s emergence from bankruptcy on July 31, 2017 the company combined operations in its legacy Middle East and Asia/Pacific segments into a single Middle East/Asia Pacific segment. The company’s Americas and Africa/Europe segments are not affected by this change. This new segment alignment is consistent with how the company’s chief operating decision maker reviews operating results for the purposes of allocating resources and assessing performance. The Predecessor period from April 1, 2017 through July 31, 2017, and the three and six month periods ended September 30, 2016 have been recast to conform to the new segment alignment.
Concurrent with emergence from the Chapter 11 bankruptcy, the Successor Company adopted a new policy for the recognition of the costs of planned major maintenance activities incurred to ensure compliance with applicable regulations and maintain certifications for vessels with classification societies. These costs include drydocking and survey costs necessary to maintain certifications and generally occur twice in every five year period. These recertification costs are typically incurred while the vessel is in drydock and may be concurrent with other vessel maintenance and improvement activities. Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking which are not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements which either extend the vessel’s useful life or increase the vessels functionality are capitalized and depreciated. The company’s previous policy (Predecessor) was to expense vessel recertification costs in the period incurred.
Upon emergence from the Chapter 11 bankruptcy, the Successor Company, to better reflect the current offshore supply vessel market, changed the estimated useful lives for vessels having 25 year useful lives to 20 years. Additionally, assumed salvage values for146 active vessels at the end of such vessels’ estimated useful life were changed from 10% of original cost at year 25 to not more than 7.5% of original cost at year 20.
Change in Fiscal Year End
On September 12, 2017, the Board of Directors approved changing the company’s fiscal year from a fiscal year ending on March 31 to a fiscal year ending on December 31, beginning with the period ending December 31, 2017. The Company will file a transition report on Form 10-K covering the transition period from April 1, 2017 to December 31, 2017, whichJune 30, 2020 is the period between the closing of the Company’s most recent fiscal year and the opening date of the Company’s newly selected fiscal year.10.1 years.
Principal Factors That Drive Our RevenuesResults
The company’sOur revenues, net earnings and cash flows from operations are largely dependent upon the activity level of itsour offshore marine vessel fleet. As is the case with the manynumerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves.
The company’sOur revenues in all segments are driven primarily by the company’sour fleet size, vessel utilization and day rates. Because a sizeable portion of the company’sour operating and depreciation costs and its depreciation doesdo not change proportionally with changes in revenue, the company’sour operating profit is largely dependent on revenue levels.
Principal Factors That Drive Our Operating Costs
Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, and loss reserves, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors which affect overall crew costs in all segments. In addition, the company’sour newer, more technologically sophisticated PSVs and AHTS vessels generally require a greater number of specially trained, more highly compensated fleet personnel than the company’sour older, smaller and less sophisticated vessels. The delivery of new-build offshore rigs and support vessels currently under construction may further increase the number of technologically sophisticated offshore rigs and support vessels operating worldwide. Crew costs may continue to increase asif competition for skilled personnel intensifies, though a weaker offshore energy market should somewhat mitigate the upward trend inany potential inflation of crew costs experienced in recent years. Overall labor costs may also be impacted by the company’s operation of remotely operated vehicles (ROVs), which generally require more highly compensated personnel than the company’s existing fleet.costs.
The timingCosts related to the recertification of vessels are deferred and amountamortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of repair and maintenance coststhe recertification drydocking that are influenced by expectations of future customer demand for our vessels, as well as vessel age and drydockings and other major repairs and maintenance mandated by regulatory agencies. A certain number of periodic drydockings are required to meet regulatory requirements. As noted earlier, the Successor company accounting policy defers and amortizes drydocking and survey costs necessary to maintain certification, while routine repair and maintenance costs not related to the recertification of the vessel are expensed as incurred. The company will generally incur drydocking and other major repairs and maintenance costs only if economically justified, taking into considerationCosts related to vessel improvements that either extend the vessel’s age, physical condition, contractual obligations, current customer requirementsuseful life or increase the vessel’s functionality are capitalized and future marketability. When the company elects to forego a required regulatory drydock or major repairs and maintenance, it stacks and occasionally sells the vessel because it is not permitted to work without valid regulatory certifications. When the company drydocks a productive vessel, the company not only foregoes vessel revenues and incurs drydocking and other major repairs and maintenance costs, but it also generally continues to incur vessel operating costs and depreciation. depreciated.
Insurance and loss reserves costs are dependent on a variety of factors, including the company’sour safety record and pricing in the insurance markets, and can fluctuate over time. The company’sOur vessels are generally insured for up to their estimated fair market value in order to cover damage or loss resulting from marine casualties, adverse weather conditions, mechanical failure, collisions, and property losses to the vessel. The companyloss. We also purchasespurchase coverage for potential liabilities stemming from third-party losses with limits that it believeswe believe are reasonable for its operations.our operations, but do not generally purchase business interruption insurance or similar coverage. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.
Fuel and lube costs can also fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off charter, drydockings, and changes in fuel prices. The companyWe also incursincur vessel operating costs that are aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, including commissions paid to unconsolidated joint venture companies, training costs, satellite communication fees, agent fees, port fees and other miscellaneous costs. Brokers’ commissions are incurred primarily in the company’sour non-United States operations where brokers
sometimes assist in obtaining work for the company’s vessels.work. Brokers generally are paid a percentage of day rates and, accordingly, commissions paid to brokers generally fluctuate in accordance with vessel revenue. Other costs include, but are not limited to, satellite communication fees, agent fees, port fees, canal transit fees, vessel certification fees, temporary vessel importation fees, and any fines or penalties.
Sonatide Joint Venture (Angola)
The company hasWe previously disclosed the significant financial and operational challenges that it confrontswe confront with respect to its substantial operations in Angola, as well as steps that the company haswe have taken to address or mitigate those risks. Most of the company’sour attention has been focused in three areas: (i) reducing the net receivable balance due the company from Sonatide, itsour Angolan joint venture with Sonangol, for vessel services; (ii) reducing the foreign currency risk created by virtue of provisions of Angolan law that require that payment for a significant portion of the services provided by Sonatide be paid in Angolan kwanza; and (iii) optimizing opportunities, consistent with Angolan law, for services provided by the companyus to be paid for directly in U.S. dollars. The company’s efforts to respond to these challenges continue.
Amountsamounts due from Sonatide (dueare denominated in U.S. dollars; however, the underlying third-party customer payments to Sonatide were satisfied, in part, in Angolan kwanzas. We and Sonangol, our partner in Sonatide, have had discussions regarding how the net losses from affiliatethe devaluation of certain Angolan kwanza denominated accounts should be shared. In late 2019, we were informed that, as part of a broad privatization program, Sonangol intends to seek to divest itself from the Sonatide joint venture.
In the second quarter of 2020, Sonatide declared a $35.0 million dividend. On June 22, 2020, Sonangol received $17.9 million and we received $17.1 million. All of our share of the dividend is reflected as dividend income from unconsolidated company in the consolidated balance sheets) at September 30, 2017 and March 31, 2017statement of approximately $245 million and $263 million, respectively, represent cash received by Sonatide from customers and due to the company, amounts due from customers that are expected to be remitted to the company through Sonatide and costs incurred by the company on behalf of Sonatide that are reimbursable by Sonatide or offsettable against costs incurred by Sonatide on behalf of the Company. Approximately $39 million of the balance at September 30, 2017 represents invoiced but unpaid vessel revenue related to services performed by the company through the Sonatide joint venture. Remaining amounts due to the company from Sonatide are, in part, supported byoperations because (i) approximately $91 million of cash (primarily denominated in Angolan kwanzas) held by Sonatide that is pending conversion into U.S. dollars and the subsequent expatriation of such funds and (ii) approximately $113 million of amounts due from the company to Sonatide, including $34 million in commissions payable by the company to Sonatide, with the balance related to costs incurred by Sonatide on behalf of the company.
For the period from April 1, 2017 through July 31, 2017, the company collected (primarily through Sonatide) approximately $22 million from its Angolan operations. Of the $22 million collected, approximately $19 million were U.S. dollars received by Sonatide on behalf of the company or U.S. dollars received directly by the company from customers. The balance of $3 million collected reflects Sonatide’s conversion of Angolan kwanza into U.S. dollars and the subsequent expatriation of the dollars and payment to the company. The company also reduced the net due from affiliate and due to affiliate balances by approximately $21 million during the period from April 1, 2017 through July 31, 2017 through netting transactions based on an agreement with the joint venture.
For the period from August 1, 2017 through September 30, 2017, the company collected (primarily through Sonatide) approximately $9 million from its Angolan operations. Of the $9 million collected, approximately $8 million were U.S. dollars received by Sonatide on behalf of the company or U.S. dollars received directly by the company from customers. The balance of $1 million collected reflects Sonatide’s conversion of Angolan kwanza into U.S. dollars and the subsequent expatriation of the dollars and payment to the company. The company also reduced the net due from affiliate and due to affiliate balances by approximately $12 million during the period from August 1, 2017 through September 30, 2017 through netting transactions based on an agreement with the joint venture.
Amounts due to Sonatide (Due to affiliate in the consolidated balance sheets) at September 30, 2017 and March 31, 2017 of approximately $113 million and $133 million, respectively, represent amounts due to Sonatide for commissions payable and other costs paid by Sonatide on behalf of the company.
The company believes that the process for converting Angolan kwanzas continues to function, but the tight U.S. dollar liquidity situation continues in Angola. Sonatide continues to press the commercial banks with which it has relationships to increase the amount of U.S. dollars that are made available to Sonatide.
For the period from April 1, 2017 through July 31, 2017, the company’s Angolan operations generated vessel revenues of approximately $34 million, or 23%, of its consolidated vessel revenue, from an average of approximately 50 company-owned vessels that are marketed through the Sonatide joint venture (21 of which were stacked on average during the period from April 1, 2017 through July 31, 2017). For the period from August 1, 2017 through September 30, 2017, the company’s Angolan operations generated vessel revenues of approximately $14 million, or 20%, of its consolidated vessel revenue, from an average of approximately 44 company-owned vessels that are marketed through the Sonatide joint venture (16 of which were stacked on average during the period from August 1, 2017 through September 30, 2017). For the six months ended September 30, 2016, the company’s Angolan operations generated vessel revenues of approximately $71.4 million, or 24%, of consolidated vessel revenue, from an average of approximately 59 company-owned vessels (17 of which were stacked on average during the six months ended September 30, 2016).
Sonatide owns seven vessels (four of which are currently stacked) and certain other assets, in addition to earning commission from company-owned vessels marketed through the Sonatide joint venture (owned 49% by the company). As of September 30, 2017 and March 31, 2017, the carrying value of the company’sour investment in the Sonatide joint venture which is included in “Investments in, at equity,had previously been written down to zero, (ii) the distributions are not refundable and advances(iii) we are not liable for the obligations of or committed to unconsolidated companies,” was approximately $24 million and $45 million, respectively. Asprovide financial support to the Sonatide joint venture. In addition, as a result of fresh-start accounting the company’s investment in Sonatide was assigned a fair value based onaforementioned dividend payment, the discounted cash flows of Sonatide’s operations. This resulted in a difference between the carrying value of the company’s investment balance and the company’s share of the net assetsbalances of the joint venture companieswere significantly reduced and we determined that, as a result, a significant portion of our net due from Sonatide balance was compromised. On June 30, 2020, we recorded a $41.5 million affiliate credit loss impairment expense.
Refer to Note (7) of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on the Sonatide joint venture.
DTDW Joint Venture (Nigeria)
We own 40% of the DTDW joint venture in Nigeria. Our partner, who owns 60%, is a Nigerian national. DTDW owns one offshore service vessel and has long term debt of $5.6 million which is secured by the vessel and guarantees from the DTDW partners. We also operate company owned vessels in Nigeria for which our partner receives a commission. As of June 30, 2020, we had only one company owned vessel operating in Nigeria and the DTDW owned vessel was not employed. At the beginning of 2020 we had expected that we would be operating numerous vessels in Nigeria, but in the second quarter of 2020 the Covid pandemic and resulting oil price reduction caused our primary customer in Nigeria to eliminate all planned operations for 2020. As a result, the near term cash flow projections indicate that DTDW does not have sufficient funds to meet its obligations to us or to the holder of its long term debt. In the June 2020 DTDW board meeting neither of the DTDW partners indicated willingness to contribute additional funds to DTDW to meet its obligations. Therefore, we have recorded an affiliate credit loss impairment expense for the entire net due from DTDW balance as of July 31, 2017 of $27.9 million whichJune 30, 2020 totaling $12.1 million. In addition, based on our analysis we have determined that DTDW will be amortized over ten years. unable to pay its debt obligation and the debt will not be satisfied by liquidating the vessel and, as a result, we recorded additional impairment expense of $2.0 million for our expected share of the obligation guarantee.
Management continuesRefer to explore waysNote (7) of Notes to profitably participateUnaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on the Angolan market while evaluating opportunities to reduce the overall level of exposure to the increased risks that the company believes characterize the Angolan market. Included among mitigating measures taken by the company to address these risks is the redeployment of vessels from time to time to other markets. Redeployment of vessels toNigeria joint venture.
Industry Conditions and from Angola during the period from April 1, 2017 through July 31, 2017, during the period from August 1, 2017 through September 30, 2017, and year ended March 31, 2017 has resulted in a net four, one and 22 vessels transferred out of Angola, respectively.Outlook
International Labour Organization’s Maritime Labour Convention
The International Labour Organization's Maritime Labour Convention, 2006 (the "Convention") mandates globally, among other things, seafarer living and working conditions (accommodations, wages, conditions of employment, health and other benefits) aboard ships that are engaged in commercial activities. Since its initial entry into force on August 20, 2013, 84 countries have now ratified the Convention.
The company continues to prioritize certification of its vessels to Convention requirements based on the dates of enforcementOur business is directly impacted by countries in which the company has operations, performs maintenance and repairs at shipyards, or may make port calls during ocean voyages. Once obtained, vessel certifications are maintained for active vessels in the fleet, regardless of the area of operation. Vessels stacked for more than 6 months are recertified upon their return to service. Additionally, where possible, the company continues to work with its operationally identified flag states to seek substantial equivalencies to comparable national and industry laws that meet the intent of the Convention and allow the company to standardize operational protocols among its fleet of vessels that work in various areas around the world.
Macroeconomic Environment and Outlook
The primary driver of our business (and revenues) is the level of our customers’ capital and operating expenditures foractivity in worldwide offshore oil and natural gas exploration, field development and production. These expenditures,production, which in turn generally reflect our customers’ expectations for futureis influenced by trends in oil and natural gas prices. In addition, oil and natural gas prices are affected by a host of geopolitical and economic growth, hydrocarbonforces, including the fundamental principles of supply and demand. In particular, the oil price is significantly influenced by actions of the Organization of Petroleum Exporting Countries, or OPEC. Prices are subject to significant uncertainty and, as a result, are extremely volatile. The industry experienced a severe downturn beginning in late 2014 that lasted through 2018 with prices falling into the high $20’s per barrel before recovering to average between $50.00 and $65.00 per barrel in 2019. We had expected to begin to experience consistent operating cash flow in 2020.
In early 2020, it became evident that a novel coronavirus originating in Asia (COVID-19) could become a pandemic with worldwide reach. By mid-March, when the World Health Organization declared the outbreak to be a pandemic (the “COVID-19 pandemic”), much of the industrialized world had initiated severe measures to lessen its impact. The ongoing COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption during the first half of 2020.
With respect to our particular sector, the COVID-19 pandemic has resulted in a much lower demand estimatesfor oil as national, regional, and local governments impose travel restrictions, border closings, restrictions on public gatherings, stay at home orders, and limitations on business operations in order to contain its spread. During this same time period, oil-producing countries have struggled to reach consensus on worldwide production levels, resulting in both a market oversupply of current and future oil and natural gas production,a precipitous fall in oil prices.
Combined, these conditions adversely affected our operations and business beginning in late March 2020 and continuing through the relative costsecond quarter of exploring, developing2020 and producing onshorewe expect our operations and offshore oil and natural gas, and our customers’ abilitybusiness during the remainder of 2020 to access exploitable oil and natural gas resources. Current and future estimated prices of crude oil and natural gas are critical factorsbe negatively impacted. The reduction in our customers’ investment and spending decisions, including their decisions to contract drilling rigs and offshore support vessels in support of offshore exploration, field development and production activities in the various global geographic markets, in most of which the company already operates.
After a significant decreasedemand for hydrocarbons together with an unprecedented decline in the price of oil duringhas resulted in our primary customers, the twelve months ended March 31, 2016, largely due to an increase in global supply without a commensurate increase in worldwide demand, the price of crude oil, though volatile, increased during the twelve months ended March 31, 2017 and has continued to increase slightly during the six months ended September 30, 2017. Our longer-term utilization and average day rate trends for our vessels will generally correlate with demand for, and the price of, crude oil, which at the end of September 2017 was trading around $52 per barrel for West Texas Intermediate (WTI) crude and $57 per barrel for Intercontinental Exchange (ICE) Brent crude, up from $48 per barrel for both WTI and ICE Brent at the end of September 2016. A number of analysts have projected further strengthening of oil and gas prices through calendar years 2018 and 2019 if current forecastscompanies, making material reductions to their planned spending on offshore projects, compounding the effect of global economic growth materialize and if Organization of Petroleum Exporting Countries (OPEC) member nationsthe virus on offshore operations. Further, these conditions, separately or together, are expected to continue to abide by production cuts announced in calendar year 2016 and 2017.
A recovery in onshore exploration, development and production activity and spending, and in North American onshore activity and spending in particular, has already begun and is expected to continue. However, a recovery in offshore activity and spending, much of which takes place in the international markets, is expected to lag increases in onshore exploration, development and production activity and spending. Some analysts expect that a further decrease in offshore spending is likely during calendar year 2017 versus calendar year 2016 offshore spending and that any improvements in offshore E&P activity would likely not occur until calendar year 2018, the timing of which is generally consistent with the trend of the projected global working offshore rig count according to recent IHS Markit reports.
The production of unconventional gas resources in North America and the commissioning of a number of Liquefied Natural Gas (LNG) export facilities around the world have contributed to an oversupplied natural gas market. The oversupplied nature of the natural gas markets has, however, recently begun to unwind as lower natural gas reserves and increased use of natural gas for electrical generation have caused natural gas prices to somewhat rebound from lower prices in early calendar 2016 which have since stabilized. At the end of September 2017, natural gas was trading in the U.S. at approximately $2.98 per Mcf, comparable to $2.99 per Mcf as reported by the U.S. Energy Information Administration at the end of September 2016. Generally, high levels of onshore gas production and the prolonged downturn in natural gas prices experienced over the previous several years have had a negative impact on the offshore exploration and development plans of energy companies and the demand for offshore support vessel services.our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general.
Deepwater activity is a significant segmentAs the pandemic has spread throughout the world, its impact on one or more of the global offshore crude oil and natural gas markets, and development typically involves significant capital investment and multi-year development plans. Such projects are generally underwritten by the participating exploration, field development and production companies using relatively conservative crude oil and natural gas pricing assumptions. Although these projects are generally less susceptible to short-term fluctuations in the price of crude oil and natural gas, deepwater exploration and development projects can be more costly relative to otherour locations, including our vessels, has affected our operations. We have implemented various protocols for both onshore and offshore exploration and development. As a result, generally depressed crude oil prices have caused, andpersonnel in efforts to limit this impact, but there is no assurance that those efforts will be fully successful. The spread of COVID-19 to our onshore workforce could prevent us from supporting our offshore operations, we may experience reduced productivity as our onshore personnel continue to cause, many E&P companieswork remotely, and any spread to reevaluate their future capital expenditures in regards to deepwater projects.
Reports published by IHS Markit at the end of September 2017 state that the worldwide movable offshore drilling rig count is estimated at approximately 890 rigs, of which approximately 440 offshore rigs were working at the end of September 2017, which is comparable to the number of working rigs at the end of September 2016, and a decrease of approximately 24%, or 140 working rigs, from the number of working rigs at the end of September 2015. While the supply of, and demand for, offshore drilling rigs that meet the technical requirements of end user exploration and development companiesour key management personnel may be key drivers of pricing for contract drilling services, the company believes that the number of rigs working offshore rather than the total population of moveable offshore drilling rigs is a better indicator of overall offshore activity levels and the demand for offshore support vessel services.
Of the estimated 890 movable offshore rigs worldwide, approximately 30%, or approximately 265 rigs, are designed to operate in deeper waters. Of the approximately 440 working offshore rigs at the end of September 2017, approximately 125 rigs, or 28%, are designed to operate in deeper waters. As of September 2017, the number of working deepwater rigs was approximately 7%, or 10 rigs, less than the number of working deepwater rigs at the end of September 2016, and a decrease of approximately 35%, or 65 working deepwater rigs, from the number of working deepwater rigs at the end of September 2015. It is also estimated that approximately 30% of the approximate 150 total offshore rigs currently under construction, or approximately 45 rigs, are being built to operate in deeper waters, suggesting that new build deepwater rigs represent approximately 36% of the approximately 125 deepwater rigs working in September 2017. As such, there is some uncertainty as to whether the deepwater rigs currently under construction will, at leastdisrupt our business. Any outbreak on our vessels may result in the near-vessel, or some or all of a vessel crew, being quarantined and therefore impede the vessel’s ability to intermediate-term, increase the working fleet generate revenue. We have experienced challenges in connection with our offshore crew changes due to health and travel restrictions related to COVID-19, and those challenges and/or merely replace older, less productive drilling units. As a result, it is not clear what impact the delivery of additional rigs (deepwater and otherwise) within the next several years will have on the working rig count, especially in an environment of reduced E&P spending.
In the floating production unit market, approximately 55 new floating production unitsrestrictions are under construction and expected to be delivered primarily overcontinue despite our efforts at mitigating them. To the next eighteen months to supplementextent the approximately 360 floating production units currently operating worldwide. Given the current economic environment, the risk of cancellation of some new build contracts or the stacking of operating but underutilized floating production units continues to be significant.
Worldwide shallow-water explorationCOVID-19 pandemic adversely affects our operations and production activity has increased during the last twelve months. According to IHS Markit, there were approximately 290 working jack-up rigs at the end of September 2017 (66% of the 440 working offshore rigs), which is an increase of approximately 5%, or 15 rigs, from the number of jack-up rigs working at the end of September 2016, but a decrease of approximately 18%, or 65 working rigs, from the number of working rigs at the end of September 2015. The construction backlog for new jack-up rigs at the end of September 2017 (100 rigs) has been reduced from the jack-up construction backlog at the end of September 2016 of approximately 110 rigs, nearly all of which are scheduled for delivery in the next 24 months, although the timing of such deliveries as scheduled remains uncertain given the depressed offshore rig market that currently exists. As discussed above with regards to the deepwater rig market and recognizing that 100 new build jack-up rigs represent 34% of the approximately 290 jack up rigs working in September 2017, there isbusiness, it may also uncertainty as to how many of the jack-up rigs currently under construction, if delivered, will either increase the working fleet or replace older, less productive jack-up rigs.
Also, according to IHS Markit, there are approximately 290 new-build offshore support vessels (deepwater PSVs, deepwater AHTS vessels and towing-supply vessels only) either under construction, on order or planned at the end of September 2017. The majority of the vessels under construction are scheduled to be delivered within the next 12 months; however, the company does not anticipate that all, or even a majority, of these vessels will ultimately be completed based on current and expected future offshore E&P market conditions. Further increases in worldwide vessel capacity would tend to have the effect of lowering charter rates, particularly whenheightening many of the other risks set forth in our SEC filings.
The effect on our business includes lockdowns of shipyards where we have vessels performing drydocks which will delay vessels returning to service and the cancellation and/or temporary delay of certain revenue vessel contracts allowed either under the contract provisions or by mutual agreement with our customers. These cancellations and delays affect approximately 19% of our 2020 contracts with durations in excess of three months which typically comprise over 90% of our contractual revenue. It is possible that there are lower levels of exploration, field development and production activity.will be additional cancellations or delays.
AtAs a company, we have undertaken the endfollowing temporary measures to assist us in weathering the COVID 19 pandemic and allow us to recover as soon as possible:
• | Planned capital and dry dock expenditures tied to contracts referenced above will be temporarily delayed or cancelled. As a result of the ongoing contract cancellations and delays we have postponed drydocks expected to cost approximately $28.0 million in 2020. It is possible that additional planned drydocks will be cancelled or delayed due to contract cancellations or delays. We cannot predict the number or cost of any additional cancellations or delays. |
• | We have the ability to rapidly respond to contract cancellations and delays. We have or will remove the crews and shut down all operations, depending on contract terms, on vessels associated with cancelled or delayed contracts. We are also in the process of evaluating our general and administrative costs to reflect the current demand for our offshore support vessels. |
The full impact of September 2017, the worldwideCOVID-19 pandemic is unknown and is rapidly evolving. The extent to which it impacts our business and operations will depend on the severity, location, and duration of the effects and spread of the pandemic itself, the actions undertaken by national, regional, and local governments and health officials to contain the virus or treat its effects, and how quickly and to what extent economic conditions improve and normal business and operating conditions resume. As we cannot predict the duration or scope of this pandemic, the anticipated negative financial impact to our operating results cannot be reasonably estimated but could be both material and long-lasting.
We consider these events to be indicators that the value of our offshore vessel fleet of these classes of offshore support vessels (deepwater PSVs, deepwater AHTS vessels and towing-supply vessels only) is estimated at approximately 3,495 vessels which include approximately 590 vessels, or approximately 17%, that are at least 25 years old and exceeding original expectations of their estimated economic lives. These older vessels, of which we estimate the majority are already stacked or not actively marketed by the vessels’ owners, could potentiallymay be removed from the marketimpaired. As a result, in the nearfirst quarter of 2020 we performed a Step 1 evaluation of our offshore fleet under FASB Accounting Standards Codification 360, which governs the methodology for identifying and recording impairment of long-lived assets to determine if any of our asset groups have net book value in excess of undiscounted future ifnet cash flows. Our evaluation did not indicate impairment of any of our asset groups. Our evaluation did, however, identify one asset group with a net book value of approximately $40.0 million where the cost of extending the vessels’ lives is not economical, especially in light of recent market conditions and the excess capacity of newer vessels available in the market. Excluding the 590 vessels that are at least 25 years old from the overall population, the company estimates that the number of offshore support vessels under construction represents approximatelyundiscounted future net cash flows total was within 10% of the remaining worldwidenet book value of that asset group as of March 31, 2020. In the second quarter of 2020, we identified 22 vessels in our active fleet that were designated as assets held for sale. Several of approximately 2,910 offshore support vessels.
the identified vessels were in the asset group that had indications of potential impairment at March 31, 2020. In conjunction with reclassifying the vessels to assets held for sale and revaluing the vessels’ carrying value to net realizable value, we recorded $49.9 million of impairment expense. In addition, at June 30, 2020, we performed another Step 1 impairment evaluation of our offshore fleet and other offshore support vessel owners have selectively stacked more recently constructed vessels as a resultdid not identify any asset groups that had carrying values in excess of undiscounted future net cash flows. We also did not identify any asset group that had undiscounted future net cash flows within 10% of the significant reduction in our customers’ offshore oil and gas-related activity and the resulting more challenging offshore support vessel marketnet book value of that has existed since late 2014. Should market conditions continue to deteriorate, the stacking or underutilization of additional, more recently constructed vessels by the offshore supply vessel industry is likely.
Although the future attrition rate of the 590 older offshore support vessels cannot be determined with certainty, we believe that the retirement and/or sale to owners outsideasset group. The eventual impact of the oil price reduction and gasthe COVID 19 pandemic on our future operations is not known. Depending on the severity of the impact, our expected cash flows in future periods could indicate impairment of one or more asset groups in our vessel fleet. We will continue to monitor the expected future cash flows and the fair market value of a vast majorityour asset groups for impairment.
Results of these agedOperations – Three Months Ended June 30, 2020 compared to June 30, 2019
Revenues for the quarters ended June 30, 2020 and 2019, were $102.3 million and $125.9 million, respectively. The decrease in revenue is primarily due to decreases in our West Africa segment, with 8 less active vessels (a majority of which the company believes have already been stacked or are not being actively marketed to oil and gas development-focused customersour Europe/Mediterranean segment, with 14 less active vessels. Both segments were significantly affected by the vessels’ owners) could mitigatedecrease in demand caused by the potential negative effects on vesselpandemic. Overall, we had 25 less average active vessels in the second quarter of 2020 than in the second quarter of 2019. Active utilization and vessel pricing of (i) additional offshore support vessel supply resultingdecreased from the delivery of additional new-build vessels and (ii) reduced demand for offshore support vessels resulting from reduced E&P spending. Similarly, the cancellation or
deferral of delivery of some portion of the offshore support vessels that are under construction according79.3% in 2019 compared to IHS Markit would also mitigate the potential negative effects on vessel utilization and vessel pricing of reduced demand for offshore support vessels resulting from reduced E&P spending.74.5% in 2020.
As discussed above, additional vessel demand, which also could mitigateVessel operating costs for the possible negative effects of the new-build vessels being added to the offshore support vessel fleet, could be created by the delivery of new drilling rigsquarters ended June 30, 2020 and floating production units to the extent such new drilling rigs and/or floating production units both become operational2019, were $64.8 million and are not offset by the idling or retirement of existing active drilling rigs and floating production units.
Although investment in additional rigs, especially those capable of operating in deeper waters, could indicate offshore rig owners’ longer-term expectation for higher levels of activity, the general decline in crude oil and natural gas prices over the past three years, the reduction in offshore spending expectations among E&P companies and the number of new-build vessels which may be delivered within the next 12 months indicates that there may be, at least in the short-to intermediate-term, a period of potential greater overcapacity in the worldwide offshore support vessel fleet, which may lead to lower utilization and average day rates across the offshore support vessel industry.
Business Highlights
During the six months ended September 30, 2017, we continued to focus on identifying and implementing cost saving measures given the sharp reduction in revenues$80.4 million, respectively. The decrease is primarily due to a continued challenging operating environment of lower crude oil prices and reduced E&P spending (and reduced offshore spendingdecrease in particular). Key elements of our response to these conditions during the six months ended September 30, 2017, included sustaining our offshore support vessel fleet and its global operating footprint, working with our lenders and noteholders to restructure our debt and strengthen our balance sheet and maintaining adequate liquidity to fund operations. During the period, operating management was focused on safe, compliant operations, minimizing unscheduled vessel downtime, improving the oversight over major repairs and maintenance projects and drydockings, and maintaining disciplined cost control.
At September 30, 2017,activity, as we had 237 owned or charteredhave 25 less active vessels in our fleet with an average age of 9.3 years. The average age of 146 active vessels at September 30, 2017 was 8.1 years.
Revenues earned forin the period of August 1, 2017 through September 30, 2017 (Successor),first quarter 2020 largely due to the period of July 1, 2017 through July 31, 2017 (Predecessor) anddownturn caused by the three months ended September 30, 2016 (Predecessor) were $74.3 million, $36.3 million and $143.7 million respectively. Revenues earned for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $74.3 million, $151.4 million and $311.6 million respectively. Revenues have decreased as compared to prior year primarily as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
We have responded to reductions in revenue by reducing vessel operating costs. During the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) vessel operating costs were $52.3 million, $32.7 million and $87.1 million respectively. During the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) vessel operating costs were $52.3 million, $116.4 million and $196.0 million, respectively.pandemic.
Depreciation and amortization expense for the periodquarters ended June 30, 2020 and 2019, was $28.1 million and $25.0 million, respectively. The decrease in depreciation from the sale in 2019 of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor)over 40 vessels and the three months ended September 30, 2016 (Predecessor) were $8.1 million, $11.2 millionreclassification of an additional 46 vessels at year end 2019 from property and $43.8 million respectively. Depreciationequipment to assets held for sale was more than offset by the increase in amortization expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $8.1 million, $47.4 million and $88.4 million, respectively. Depreciation expense for Successor periods is substantially lower than that of Predecessor periods as a result of the application of fresh-start accounting upon emergence from bankruptcy, which significantly reduced the carrying value of properties and equipment.related to deferred drydock expenditures.
General and administrative expenses for the periodquarters ended June 30, 2020 and 2019, were $17.6 million and $23.7 million, respectively. The decrease is primarily due to decreased personnel and benefit costs related to the significant restructuring of August 1, 2017 through Septemberour executive management and corporate administrative functions in 2019 and cost cutting measures being implemented due to the current downturn.
Included in gain on asset dispositions, net for the quarter ended June 30, 2017 (Successor),2020, are $1.7 million of net gains from the perioddisposal of July 1, 2017 through July16 vessels and other assets. During the quarter ended June 31, 2017 (Predecessor)2019, we recognized losses of $0.5 million related to the disposal of 18 vessels and other assets.
In the three months ended SeptemberJune 30, 2016 (Predecessor) were $16.22020 we recorded $55.5 million $8.8of impairment expense related to valuation of our assets held for sale, $53.6 million affiliate credit loss impairment expense relating to the valuation of our net receivables from our joint ventures in Africa and $2.0 million of impairment related to a guarantee of long term debt of one of our African joint ventures.
We recorded $17.1 million of dividend income from one of our African joint ventures in the three months ended June 30, 2020.
In November 2019, we paid down $125.0 million of our Senior Notes. This reduced our interest expense by $1.6 million for the three months ended June 30. 2020 compared to the three months ended June 30, 2019. In addition, the reduction in cash plus a reduction in interest rates received on our cash balances reduced our interest income by $1.2 million for the same period.
During the quarter ended June 30, 2020 we recognized foreign exchange losses of $2.0 million and $33during the quarter ended June 30, 2019 we recognized de minimis foreign exchange gains.
The tax expense for the three months ending June 30, 2020 was $2.7 million compared to $5.5 million for the three months ending June 30,2019. The decrease is due to lower income.
Results of Operations – Six Months Ended June 30, 2020 compared to June 30, 2019
Revenues for the six months ended June 30, 2020 and 2019, were $218.7 million and $248.0 million, respectively. The decrease in revenue is primarily due to decreases in our West Africa segment, with 9 less active vessels and our Europe/Mediterranean segment, with 10 less active vessels. Both segments were significantly affected by the decrease in demand caused by the pandemic. Overall, we had 20 less average active vessels in the six months ended June 30, 2020 than in the six months ended June 30, 2019. Active utilization decreased from 79.9% in 2019 compared to 76.6% in 2020.
Vessel operating costs for the six months ended June 30, 2020 and 2019, were $143.6 million and $162.6 million, respectively. decrease is primarily due to a decrease in vessel activity, as we have 20 less active vessels in our fleet in the six months of 2020.
Depreciation and amortization expense for the six months ended June 30, 2020 and 2019, was $55.3 million and $48.0 million, respectively. The decrease in depreciation from the sale in 2019 of over 40 vessels and the reclassification at year end 2019 of an additional 46 vessels from property and equipment to assets held for sale was more than offset by the increase in amortization expense related to deferred drydock expenditures.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six
months ended SeptemberJune 30, 2016 (Predecessor)2020 and 2019, were $16.2 million, $41.8$39.0 million and $70$50.8 million, respectively. GeneralThe decrease is primarily due to decreased personnel and benefit costs related to the significant restructuring of our executive management and corporate administrative expenses have decreased as compared to prior year primarily as a result of the company’s continuing efforts to reduce overhead costsfunctions in 2019 and cost cutting measures being implemented due to the downturn in the offshore services market. current downturn.
Asset impairmentsIncluded in gain on asset dispositions, net for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $0 million, $21.3 million and $129.6 million, respectively. Asset impairments for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $02020, are $7.0 million $184.7 million and $166.4 million, respectively. Asset impairments have increased as compared to prior year primarily due toof net gains from the continued stackingdisposal of underutilized vessels (as a result of the decrease in the volume of oil and gas exploration, field development and production spending by our customers) and a decline in offshore support vessel values. As of the company’s emergence from Chapter 11 bankruptcy on July 31, 2017 the company significantly reduced the carrying values of it25 vessels and other assets and did not incur asset impairments during the period from August 1, 2017 to September 30, 2017.
Interest and other debt expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $5.2 million, $0.6 million and $18.5 million, respectively. Interest and other debt expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) andassets. During the six months ended SeptemberJune 31, 2019, we recognized net gains of $0.8 million related to the disposal of 34 vessels and other assets.
In the six months ended June 30, 2016 (Predecessor) were $5.22020 we recorded $65.7 million $11.2 million and $35.4 million, respectively. The filingof impairment expense related to valuation of our bankruptcy petition on May 17, 2017 resultedassets held for sale, $53.6 million affiliate credit loss impairment expense relating to the valuation of our net receivables from our joint ventures in the cessationAfrica and $2.0 million of the accrualimpairment related to a guarantee of interest expense on ourlong term loan, revolver and senior notes as of the Petition Date. Interest and other debt costs from the period August 1, 2017 through September 30, 2017 reflect our post-restructuring capital structure which included debt of $451 million at September 30, 2017.one of our African joint ventures.
We incurred reorganization itemsrecorded $17.1 million of $1.9dividend income from one of our African joint ventures in the six months ended June 30, 2020.
In November 2019, we paid down $125.0 million of our Senior Notes. This reduced our interest expense by $3.2 million for the six months ended June 30. 2020 compared to the six months ended June 30, 2019. In addition, the reduction in cash plus a reduction in interest rates received on our cash balances reduced our interest income by $3.5 million for the same period.
During the six months ended June 30, 2020 we recognized foreign exchange losses of $1.2 million and $1.4 billion forduring the periodsix months ended June 30, 2019 we recognized foreign exchange losses of August 1, 2017 through September 30, 2017 (Successor) and the period of April 1, 2017 through July 31, 2017 (Predecessor), respectively. Successor reorganization items included the cost of delivering vessels operating under sale leaseback agreements to the respective lessors and bankruptcy related professional fees. Predecessor reorganization items included (i) fresh-start adjustments of $1.8 billion to record the values of assets and liabilities on our books at their fair values, (ii) $316.5 million related to liabilities associated with settled sale leaseback claims and make-whole claims on our debt, partially offset by deferred gains recognized on sale leaseback transactions and other items and (iii) professional fees of $28 million incurred subsequent to the Petition Date. Offsetting these reorganization charges is a gain on settlement of liabilities subject to compromise of $767.6$0.5 million.
For additional information onThe tax benefit for the highlights by segment please refersix months ending June 30, 2020 was $2.4 million compared to a tax expense of $11.4 million for the “Results of Operations” section below.six months ending June 30,2019. The decrease in expense is related to changes in tax laws (primarily Cares Act refund) and also change in income.
We manage and measure our business performance primarily based on three distinct geographic operating segments: Americas, Middle East/Asia Pacific and Africa/Europe. The following tables comparetable compares vessel revenues and vessel operating costs (excluding general and administrative expenses, depreciation expense, vessel operating leases and gains on asset dispositions, net)by geographic segment for the company’sour owned and operated vessel fleet and the related percentage of vessel revenue. Note that Successorrevenue for the periods reflect the deferral and amortization of drydocking and survey costs while Predecessor periods expense such costs as incurred. Refer to “Bankruptcy Proceedings and Emergence” in Management’s Discussion and Analysis for more information on this new accounting policy.
indicated:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
|
| Three Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
|
| Six Months Ended |
| |||||||||||||||||||||||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| |||||||||||||||||||||||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||||||
Vessel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 17,449 |
|
|
| 25 | % |
|
|
| 8,961 |
|
|
| 26 | % |
|
| 53,125 |
|
|
| 38 | % |
| $ | 34,044 |
|
|
| 34 | % |
| $ | 35,199 |
|
|
| 28 | % |
| $ | 65,903 |
|
|
| 31 | % |
| $ | 70,477 |
|
|
| 29 | % |
Middle East/Asia Pacific |
|
| 16,669 |
|
|
| 24 | % |
|
|
| 8,547 |
|
|
| 25 | % |
|
| 29,584 |
|
|
| 21 | % |
|
| 23,983 |
|
|
| 24 | % |
|
| 20,449 |
|
|
| 17 | % |
|
| 48,811 |
|
|
| 23 | % |
|
| 40,905 |
|
|
| 17 | % |
Africa/Europe |
|
| 36,453 |
|
|
| 51 | % |
|
|
| 16,832 |
|
|
| 49 | % |
|
| 56,652 |
|
|
| 41 | % | ||||||||||||||||||||||||||||||||
Europe/Mediterranean |
|
| 20,620 |
|
|
| 20 | % |
|
| 35,027 |
|
|
| 28 | % |
|
| 50,111 |
|
|
| 24 | % |
|
| 63,585 |
|
|
| 26 | % | |||||||||||||||||||||||||
West Africa |
|
| 22,328 |
|
|
| 22 | % |
|
| 32,966 |
|
|
| 27 | % |
|
| 48,124 |
|
|
| 23 | % |
|
| 68,336 |
|
|
| 28 | % | |||||||||||||||||||||||||
Total vessel revenues |
| $ | 70,571 |
|
|
| 100 | % |
|
|
| 34,340 |
|
|
| 100 | % |
|
| 139,361 |
|
|
| 100 | % |
| $ | 100,975 |
|
|
| 100 | % |
| $ | 123,641 |
|
|
| 100 | % |
| $ | 212,949 |
|
|
| 100 | % |
| $ | 243,303 |
|
|
| 100 | % |
Vessel operating costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Crew costs |
| $ | 13,138 |
|
|
| 39 | % |
| $ | 16,008 |
|
|
| 45 | % |
| $ | 27,324 |
|
|
| 41 | % |
| $ | 33,107 |
|
|
| 47 | % | |||||||||||||||||||||||||
Repair and maintenance |
|
| 1,703 |
|
|
| 5 | % |
|
| 2,328 |
|
|
| 7 | % |
|
| 3,874 |
|
|
| 6 | % |
|
| 5,948 |
|
|
| 8 | % | |||||||||||||||||||||||||
Insurance |
|
| 427 |
|
|
| 1 | % |
|
| (1,118 | ) |
|
| (3 | )% |
|
| 844 |
|
|
| 1 | % |
|
| (378 | ) |
|
| (1 | )% | |||||||||||||||||||||||||
Fuel, lube and supplies |
|
| 1,373 |
|
|
| 4 | % |
|
| 2,115 |
|
|
| 6 | % |
|
| 3,988 |
|
|
| 6 | % |
|
| 4,561 |
|
|
| 7 | % | |||||||||||||||||||||||||
Other |
|
| 1,956 |
|
|
| 6 | % |
|
| 2,772 |
|
|
| 8 | % |
|
| 4,629 |
|
|
| 7 | % |
|
| 5,543 |
|
|
| 8 | % | |||||||||||||||||||||||||
|
| $ | 18,597 |
|
|
| 55 | % |
| $ | 22,105 |
|
|
| 63 | % |
| $ | 40,659 |
|
|
| 62 | % |
| $ | 48,781 |
|
|
| 69 | % | |||||||||||||||||||||||||
Middle East/Asia Pacific: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Crew costs |
| $ | 8,726 |
|
|
| 36 | % |
| $ | 8,986 |
|
|
| 44 | % |
| $ | 18,811 |
|
|
| 39 | % |
| $ | 17,613 |
|
|
| 43 | % | |||||||||||||||||||||||||
Repair and maintenance |
|
| 2,196 |
|
|
| 9 | % |
|
| 1,673 |
|
|
| 8 | % |
|
| 4,782 |
|
|
| 10 | % |
|
| 3,254 |
|
|
| 8 | % | |||||||||||||||||||||||||
Insurance |
|
| 739 |
|
|
| 3 | % |
|
| 186 |
|
|
| 1 | % |
|
| 1,330 |
|
|
| 3 | % |
|
| 776 |
|
|
| 2 | % | |||||||||||||||||||||||||
Fuel, lube and supplies |
|
| 1,405 |
|
|
| 6 | % |
|
| 2,350 |
|
|
| 12 | % |
|
| 4,070 |
|
|
| 8 | % |
|
| 4,685 |
|
|
| 11 | % | |||||||||||||||||||||||||
Other |
|
| 2,412 |
|
|
| 10 | % |
|
| 1,844 |
|
|
| 9 | % |
|
| 4,108 |
|
|
| 8 | % |
|
| 3,577 |
|
|
| 9 | % | |||||||||||||||||||||||||
|
| $ | 15,478 |
|
|
| 55 | % |
| $ | 15,039 |
|
|
| 74 | % |
| $ | 33,101 |
|
|
| 68 | % |
| $ | 29,905 |
|
|
| 73 | % | |||||||||||||||||||||||||
Europe/Mediterranean : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Crew costs |
| $ | 9,707 |
|
|
| 47 | % |
| $ | 13,001 |
|
|
| 37 | % |
| $ | 21,403 |
|
|
| 43 | % |
| $ | 26,060 |
|
|
| 41 | % | |||||||||||||||||||||||||
Repair and maintenance |
|
| 1,278 |
|
|
| 6 | % |
|
| 3,914 |
|
|
| 11 | % |
|
| 4,419 |
|
|
| 9 | % |
|
| 6,491 |
|
|
| 10 | % | |||||||||||||||||||||||||
Insurance |
|
| 420 |
|
|
| 2 | % |
|
| 693 |
|
|
| 2 | % |
|
| 851 |
|
|
| 2 | % |
|
| 1,253 |
|
|
| 2 | % | |||||||||||||||||||||||||
Fuel, lube and supplies |
|
| 924 |
|
|
| 4 | % |
|
| 1,314 |
|
|
| 4 | % |
|
| 2,022 |
|
|
| 4 | % |
|
| 3,205 |
|
|
| 5 | % | |||||||||||||||||||||||||
Other |
|
| 1,547 |
|
|
| 8 | % |
|
| 2,902 |
|
|
| 8 | % |
|
| 4,069 |
|
|
| 8 | % |
|
| 5,897 |
|
|
| 9 | % | |||||||||||||||||||||||||
|
| $ | 13,876 |
|
|
| 67 | % |
| $ | 21,824 |
|
|
| 62 | % |
| $ | 32,764 |
|
|
| 65 | % |
| $ | 42,906 |
|
|
| 67 | % | |||||||||||||||||||||||||
West Africa: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Crew costs |
| $ | 7,120 |
|
|
| 32 | % |
| $ | 9,196 |
|
|
| 28 | % |
| $ | 15,640 |
|
|
| 32 | % |
| $ | 18,555 |
|
|
| 27 | % | |||||||||||||||||||||||||
Repair and maintenance |
|
| 1,479 |
|
|
| 7 | % |
|
| 2,996 |
|
|
| 9 | % |
|
| 4,179 |
|
|
| 9 | % |
|
| 4,919 |
|
|
| 7 | % | |||||||||||||||||||||||||
Insurance |
|
| 424 |
|
|
| 2 | % |
|
| 989 |
|
|
| 3 | % |
|
| 770 |
|
|
| 2 | % |
|
| 1,277 |
|
|
| 2 | % | |||||||||||||||||||||||||
Fuel, lube and supplies |
|
| 2,681 |
|
|
| 12 | % |
|
| 2,672 |
|
|
| 8 | % |
|
| 6,055 |
|
|
| 13 | % |
|
| 5,346 |
|
|
| 8 | % | |||||||||||||||||||||||||
Other |
|
| 5,119 |
|
|
| 23 | % |
|
| 5,618 |
|
|
| 17 | % |
|
| 10,431 |
|
|
| 22 | % |
|
| 10,953 |
|
|
| 16 | % | |||||||||||||||||||||||||
|
| $ | 16,823 |
|
|
| 75 | % |
| $ | 21,471 |
|
|
| 65 | % |
| $ | 37,075 |
|
|
| 77 | % |
| $ | 41,050 |
|
|
| 60 | % | |||||||||||||||||||||||||
Vessel operating costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 27,705 |
|
|
| 39 | % |
|
|
| 14,443 |
|
|
| 42 | % |
|
| 49,370 |
|
|
| 35 | % |
| $ | 38,691 |
|
|
| 38 | % |
| $ | 47,191 |
|
|
| 38 | % |
| $ | 83,178 |
|
|
| 39 | % |
| $ | 95,335 |
|
|
| 39 | % |
Repair and maintenance |
|
| 6,373 |
|
|
| 9 | % |
|
|
| 9,196 |
|
|
| 27 | % |
|
| 13,440 |
|
|
| 10 | % |
|
| 6,656 |
|
|
| 7 | % |
|
| 10,911 |
|
|
| 9 | % |
|
| 17,254 |
|
|
| 8 | % |
|
| 20,612 |
|
|
| 9 | % |
Insurance and loss reserves |
|
| 1,679 |
|
|
| 2 | % |
|
|
| 825 |
|
|
| 2 | % |
|
| 2,637 |
|
|
| 2 | % | ||||||||||||||||||||||||||||||||
Insurance |
|
| 2,010 |
|
|
| 2 | % |
|
| 750 |
|
|
| 1 | % |
|
| 3,795 |
|
|
| 2 | % |
|
| 2,928 |
|
|
| 1 | % | |||||||||||||||||||||||||
Fuel, lube and supplies |
|
| 6,990 |
|
|
| 10 | % |
|
|
| 2,851 |
|
|
| 8 | % |
|
| 10,176 |
|
|
| 7 | % |
|
| 6,383 |
|
|
| 6 | % |
|
| 8,451 |
|
|
| 7 | % |
|
| 16,135 |
|
|
| 8 | % |
|
| 17,797 |
|
|
| 7 | % |
Other |
|
| 9,554 |
|
|
| 14 | % |
|
|
| 5,350 |
|
|
| 16 | % |
|
| 11,471 |
|
|
| 8 | % |
|
| 11,034 |
|
|
| 11 | % |
|
| 13,136 |
|
|
| 10 | % |
|
| 23,237 |
|
|
| 11 | % |
|
| 25,970 |
|
|
| 11 | % |
Total vessel operating costs |
| $ | 52,301 |
|
|
| 74 | % |
|
|
| 32,665 |
|
|
| 95 | % |
|
| 87,094 |
|
|
| 62 | % |
| $ | 64,774 |
|
|
| 64 | % |
| $ | 80,439 |
|
|
| 65 | % |
| $ | 143,599 |
|
|
| 67 | % |
| $ | 162,642 |
|
|
| 67 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 17,449 |
|
|
| 25 | % |
|
|
| 40,848 |
|
|
| 28 | % |
|
| 113,733 |
|
|
| 38 | % |
Middle East/Asia Pacific |
|
| 16,669 |
|
|
| 24 | % |
|
|
| 36,313 |
|
|
| 25 | % |
|
| 61,707 |
|
|
| 20 | % |
Africa/Europe |
|
| 36,453 |
|
|
| 51 | % |
|
|
| 69,436 |
|
|
| 47 | % |
|
| 126,351 |
|
|
| 42 | % |
Total vessel revenues |
| $ | 70,571 |
|
|
| 100 | % |
|
|
| 146,597 |
|
|
| 100 | % |
|
| 301,791 |
|
|
| 100 | % |
Vessel operating costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 27,705 |
|
|
| 39 | % |
|
|
| 56,653 |
|
|
| 39 | % |
|
| 105,258 |
|
|
| 35 | % |
Repair and maintenance |
|
| 6,373 |
|
|
| 9 | % |
|
|
| 23,040 |
|
|
| 16 | % |
|
| 29,969 |
|
|
| 10 | % |
Insurance and loss reserves |
|
| 1,679 |
|
|
| 2 | % |
|
|
| 3,949 |
|
|
| 3 | % |
|
| 9,633 |
|
|
| 3 | % |
Fuel, lube and supplies |
|
| 6,990 |
|
|
| 10 | % |
|
|
| 12,279 |
|
|
| 8 | % |
|
| 20,948 |
|
|
| 7 | % |
Other |
|
| 9,554 |
|
|
| 14 | % |
|
|
| 20,517 |
|
|
| 14 | % |
|
| 30,160 |
|
|
| 10 | % |
Total vessel operating costs |
| $ | 52,301 |
|
|
| 74 | % |
|
|
| 116,438 |
|
|
| 80 | % |
|
| 195,968 |
|
|
| 65 | % |
The following tables compare other operating revenues and costs related to brokered vessels, ROVs and other miscellaneous marine-related activities:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Other operating revenues |
| $ | 3,729 |
|
|
|
| 1,923 |
|
|
| 4,361 |
|
Costs of other operating revenues |
|
| 2,273 |
|
|
|
| 763 |
|
|
| 3,423 |
|
| Successor |
|
|
| Predecessor |
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Other operating revenues |
| $ | 3,729 |
|
|
|
| 4,772 |
|
|
| 9,856 |
|
Costs of other operating revenues |
|
| 2,273 |
|
|
|
| 2,348 |
|
|
| 7,326 |
|
The following tables present vessel operating costs by our three geographic segments, the related segment vessel operating costs as a percentage of segment vessel revenues, total vessel operating costs, and the related total vessel operating costs as a percentage of total vessel revenues:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 8,402 |
|
|
| 48 | % |
|
|
| 4,250 |
|
|
| 47 | % |
|
| 17,970 |
|
|
| 34 | % |
Repair and maintenance |
|
| 1,471 |
|
|
| 9 | % |
|
|
| 4,906 |
|
|
| 55 | % |
|
| 5,306 |
|
|
| 10 | % |
Insurance and loss reserves |
|
| 404 |
|
|
| 2 | % |
|
|
| 201 |
|
|
| 2 | % |
|
| 826 |
|
|
| 2 | % |
Fuel, lube and supplies |
|
| 2,175 |
|
|
| 13 | % |
|
|
| 760 |
|
|
| 9 | % |
|
| 3,168 |
|
|
| 6 | % |
Other |
|
| 1,771 |
|
|
| 10 | % |
|
|
| 536 |
|
|
| 6 | % |
|
| 1,158 |
|
|
| 2 | % |
|
|
| 14,223 |
|
|
| 82 | % |
|
|
| 10,653 |
|
|
| 119 | % |
|
| 28,428 |
|
|
| 54 | % |
Middle East/Asia Pacific: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 5,962 |
|
|
| 36 | % |
|
|
| 3,139 |
|
|
| 37 | % |
|
| 9,818 |
|
|
| 33 | % |
Repair and maintenance |
|
| 2,127 |
|
|
| 13 | % |
|
|
| 580 |
|
|
| 7 | % |
|
| 3,569 |
|
|
| 12 | % |
Insurance and loss reserves |
|
| 376 |
|
|
| 2 | % |
|
|
| 250 |
|
|
| 3 | % |
|
| 874 |
|
|
| 3 | % |
Fuel, lube and supplies |
|
| 1,268 |
|
|
| 7 | % |
|
|
| 457 |
|
|
| 5 | % |
|
| 2,066 |
|
|
| 7 | % |
Other |
|
| 2,001 |
|
|
| 12 | % |
|
|
| 976 |
|
|
| 11 | % |
|
| 3,250 |
|
|
| 11 | % |
|
|
| 11,734 |
|
|
| 70 | % |
|
|
| 5,402 |
|
|
| 63 | % |
|
| 19,577 |
|
|
| 66 | % |
Africa/Europe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 13,341 |
|
|
| 37 | % |
|
|
| 7,054 |
|
|
| 42 | % |
|
| 21,582 |
|
|
| 38 | % |
Repair and maintenance |
|
| 2,775 |
|
|
| 7 | % |
|
|
| 3,710 |
|
|
| 22 | % |
|
| 4,565 |
|
|
| 8 | % |
Insurance and loss reserves |
|
| 899 |
|
|
| 2 | % |
|
|
| 374 |
|
|
| 2 | % |
|
| 937 |
|
|
| 2 | % |
Fuel, lube and supplies |
|
| 3,547 |
|
|
| 10 | % |
|
|
| 1,634 |
|
|
| 10 | % |
|
| 4,942 |
|
|
| 9 | % |
Other |
|
| 5,782 |
|
|
| 16 | % |
|
|
| 3,838 |
|
|
| 23 | % |
|
| 7,063 |
|
|
| 12 | % |
|
|
| 26,344 |
|
|
| 72 | % |
|
|
| 16,610 |
|
|
| 99 | % |
|
| 39,089 |
|
|
| 69 | % |
Total vessel operating costs |
| $ | 52,301 |
|
|
| 74 | % |
|
|
| 32,665 |
|
|
| 95 | % |
|
| 87,094 |
|
|
| 62 | % |
| Successor |
|
|
| Predecessor |
| |||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 8,402 |
|
|
| 48 | % |
|
|
| 18,707 |
|
|
| 46 | % |
|
| 37,501 |
|
|
| 33 | % |
Repair and maintenance |
|
| 1,471 |
|
|
| 9 | % |
|
|
| 8,747 |
|
|
| 21 | % |
|
| 12,908 |
|
|
| 11 | % |
Insurance and loss reserves |
|
| 404 |
|
|
| 2 | % |
|
|
| 1,134 |
|
|
| 3 | % |
|
| 3,091 |
|
|
| 3 | % |
Fuel, lube and supplies |
|
| 2,175 |
|
|
| 13 | % |
|
|
| 4,154 |
|
|
| 10 | % |
|
| 7,356 |
|
|
| 7 | % |
Other |
|
| 1,771 |
|
|
| 10 | % |
|
|
| 5,191 |
|
|
| 13 | % |
|
| 5,798 |
|
|
| 5 | % |
|
|
| 14,223 |
|
|
| 82 | % |
|
|
| 37,933 |
|
|
| 93 | % |
|
| 66,654 |
|
|
| 59 | % |
Middle East/Asia Pacific: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 5,962 |
|
|
| 36 | % |
|
|
| 12,934 |
|
|
| 36 | % |
|
| 20,329 |
|
|
| 33 | % |
Repair and maintenance |
|
| 2,127 |
|
|
| 13 | % |
|
|
| 3,255 |
|
|
| 9 | % |
|
| 7,822 |
|
|
| 13 | % |
Insurance and loss reserves |
|
| 376 |
|
|
| 2 | % |
|
|
| 931 |
|
|
| 2 | % |
|
| 2,629 |
|
|
| 4 | % |
Fuel, lube and supplies |
|
| 1,268 |
|
|
| 7 | % |
|
|
| 1,996 |
|
|
| 5 | % |
|
| 4,324 |
|
|
| 7 | % |
Other |
|
| 2,001 |
|
|
| 12 | % |
|
|
| 3,884 |
|
|
| 11 | % |
|
| 6,508 |
|
|
| 10 | % |
|
|
| 11,734 |
|
|
| 70 | % |
|
|
| 23,000 |
|
|
| 63 | % |
|
| 41,612 |
|
|
| 67 | % |
Africa/Europe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs |
| $ | 13,341 |
|
|
| 37 | % |
|
|
| 25,012 |
|
|
| 36 | % |
|
| 47,428 |
|
|
| 38 | % |
Repair and maintenance |
|
| 2,775 |
|
|
| 7 | % |
|
|
| 11,038 |
|
|
| 16 | % |
|
| 9,239 |
|
|
| 7 | % |
Insurance and loss reserves |
|
| 899 |
|
|
| 2 | % |
|
|
| 1,884 |
|
|
| 3 | % |
|
| 3,913 |
|
|
| 3 | % |
Fuel, lube and supplies |
|
| 3,547 |
|
|
| 10 | % |
|
|
| 6,129 |
|
|
| 9 | % |
|
| 9,268 |
|
|
| 7 | % |
Other |
|
| 5,782 |
|
|
| 16 | % |
|
|
| 11,442 |
|
|
| 16 | % |
|
| 17,854 |
|
|
| 14 | % |
|
|
| 26,344 |
|
|
| 72 | % |
|
|
| 55,505 |
|
|
| 80 | % |
|
| 87,702 |
|
|
| 69 | % |
Total vessel operating costs |
| $ | 52,301 |
|
|
| 74 | % |
|
|
| 116,438 |
|
|
| 79 | % |
|
| 195,968 |
|
|
| 65 | % |
The following tables present vessel operationstable presents general and administrative expenses byin our threefour geographic segments both individually and in total and the related segment vessel operations general and administrative expenses as a percentage of segmentthe vessel revenues of each segment and in total vessel operations generalfor the three and administrative expenses,six months ended June 30, 2020 and the related total vessel operations general and administrative expenses as a percentage of total vessel revenues:2019:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||||||||||||||||||||||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||||||||||||||||||||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| |||||||||||||||||||||||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||||||
Vessel operations general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
Segment general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Americas |
| $ | 3,582 |
|
|
| 21 | % |
|
|
| 1,899 |
|
|
| 21 | % |
|
| 6,548 |
|
|
| 12 | % |
| $ | 2,869 |
|
|
| 8 | % |
| $ | 3,679 |
|
|
| 10 | % |
| $ | 6,334 |
|
|
| 10 | % |
| $ | 7,051 |
|
|
| 10 | % |
Middle East/Asia Pacific |
|
| 2,184 |
|
|
| 13 | % |
|
|
| 1,042 |
|
|
| 12 | % |
|
| 4,399 |
|
|
| 15 | % |
|
| 2,261 |
|
|
| 9 | % |
|
| 2,218 |
|
|
| 11 | % |
|
| 4,795 |
|
|
| 10 | % |
|
| 4,521 |
|
|
| 11 | % |
Africa/Europe |
|
| 5,448 |
|
|
| 15 | % |
|
|
| 2,938 |
|
|
| 17 | % |
|
| 11,390 |
|
|
| 20 | % | ||||||||||||||||||||||||||||||||
Total vessel operations general and administrative expenses |
| $ | 11,214 |
|
|
| 16 | % |
|
|
| 5,879 |
|
|
| 17 | % |
|
| 22,337 |
|
|
| 16 | % | ||||||||||||||||||||||||||||||||
Europe/Mediterranean |
|
| 1,700 |
|
|
| 8 | % |
|
| 2,638 |
|
|
| 8 | % |
|
| 3,938 |
|
|
| 8 | % |
|
| 5,984 |
|
|
| 9 | % | |||||||||||||||||||||||||
West Africa |
|
| 2,741 |
|
|
| 12 | % |
|
| 3,297 |
|
|
| 10 | % |
|
| 6,742 |
|
|
| 14 | % |
|
| 6,529 |
|
|
| 10 | % | |||||||||||||||||||||||||
Total segment general and administrative expenses |
| $ | 9,571 |
|
|
| 9 | % |
| $ | 11,832 |
|
|
| 10 | % |
| $ | 21,809 |
|
|
| 10 | % |
| $ | 24,085 |
|
|
| 10 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operations general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 3,582 |
|
|
| 21 | % |
|
|
| 7,670 |
|
|
| 19 | % |
|
| 13,852 |
|
|
| 12 | % |
Middle East/Asia Pacific |
|
| 2,184 |
|
|
| 13 | % |
|
|
| 4,780 |
|
|
| 13 | % |
|
| 9,200 |
|
|
| 15 | % |
Africa/Europe |
|
| 5,448 |
|
|
| 15 | % |
|
|
| 11,431 |
|
|
| 16 | % |
|
| 25,201 |
|
|
| 20 | % |
Total vessel operations general and administrative expenses |
| $ | 11,214 |
|
|
| 16 | % |
|
|
| 23,881 |
|
|
| 16 | % |
|
| 48,253 |
|
|
| 16 | % |
The following tables present vessel operating leasetable presents segment depreciation and amortization expense by our threefour geographic segments, the related segment vessel operating leasedepreciation and amortization expense as a percentage of segment vessel revenues, total vessel operating leases,segment depreciation and amortization expense and the related total vessel operating leasesegment depreciation and amortization expense as a percentage of total vessel revenues:revenues for the three and six months ended June 30, 2020 and 2019:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating leases (A): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | — |
|
|
| — |
|
|
|
| 62 |
|
|
| 1 | % |
|
| 6,626 |
|
|
| 12 | % |
Middle East/Asia Pacific |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Africa/Europe |
|
| 1,124 |
|
|
| 3 | % |
|
|
| 561 |
|
|
| 3 | % |
|
| 1,815 |
|
|
| 3 | % |
Total vessel operating leases |
| $ | 1,124 |
|
|
| 2 | % |
|
|
| 623 |
|
|
| 2 | % |
|
| 8,441 |
|
|
| 6 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating leases (A): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | — |
|
|
| — |
|
|
|
| 3,849 |
|
|
| 9 | % |
|
| 13,252 |
|
|
| 12 | % |
Middle East/Asia Pacific |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Africa/Europe |
|
| 1,124 |
|
|
| 3 | % |
|
|
| 2,316 |
|
|
| 3 | % |
|
| 3,630 |
|
|
| 3 | % |
Total vessel operating leases |
| $ | 1,124 |
|
|
| 2 | % |
|
|
| 6,165 |
|
|
| 4 | % |
|
| 16,882 |
|
|
| 6 | % |
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||||||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| ||||
Segment depreciation and amortization expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 8,073 |
|
|
| 24 | % |
| $ | 6,515 |
|
|
| 19 | % |
| $ | 15,569 |
|
|
| 24 | % |
| $ | 12,776 |
|
|
| 18 | % |
Middle East/Asia Pacific |
|
| 5,645 |
|
|
| 24 | % |
|
| 5,319 |
|
|
| 26 | % |
|
| 11,172 |
|
|
| 23 | % |
|
| 9,769 |
|
|
| 24 | % |
Europe/Mediterranean |
|
| 6,793 |
|
|
| 38 | % |
|
| 7,741 |
|
|
| 22 | % |
|
| 13,612 |
|
|
| 27 | % |
|
| 15,187 |
|
|
| 24 | % |
West Africa |
|
| 6,750 |
|
|
| 24 | % |
|
| 5,100 |
|
|
| 15 | % |
|
| 13,154 |
|
|
| 27 | % |
|
| 9,543 |
|
|
| 14 | % |
Total segment depreciation and amortization expense |
| $ | 27,261 |
|
|
| 27 | % |
| $ | 24,675 |
|
|
| 20 | % |
| $ | 53,507 |
|
|
| 25 | % |
| $ | 47,275 |
|
|
| 19 | % |
The following tables comparetable compares operating loss and other components of loss before income taxes and its related percentage of total revenue:revenue for the three and six months ended June 30, 2020 and 2019:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | (2,651 | ) |
|
| (4 | %) |
|
|
| (6,850 | ) |
|
| (19 | %) |
|
| (1,177 | ) |
|
| (1 | %) |
Middle East/Asia Pacific |
|
| 944 |
|
|
| 1 | % |
|
|
| (118 | ) |
|
| (<1 | %) |
|
| (5,171 | ) |
|
| (3 | %) |
Africa/Europe |
|
| (24 | ) |
|
| (<1 | %) |
|
|
| (8,571 | ) |
|
| (24 | %) |
|
| (14,072 | ) |
|
| (10 | %) |
|
|
| (1,731 | ) |
|
| (3 | %) |
|
|
| (15,539 | ) |
|
| (43 | %) |
|
| (20,420 | ) |
|
| (14 | %) |
Other operating profit (loss) |
|
| 809 |
|
|
| 1 | % |
|
|
| 821 |
|
|
| 2 | % |
|
| (1,012 | ) |
|
| (1 | %) |
|
|
| (922 | ) |
|
| (2 | %) |
|
|
| (14,718 | ) |
|
| (41 | %) |
|
| (21,432 | ) |
|
| (15 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate general and administrative expenses |
|
| (4,797 | ) |
|
| (7 | %) |
|
|
| (2,840 | ) |
|
| (8 | %) |
|
| (10,006 | ) |
|
| (7 | %) |
Corporate depreciation |
|
| (67 | ) |
|
| (<1 | %) |
|
|
| (163 | ) |
|
| (<1 | %) |
|
| (597 | ) |
|
| (<1 | %) |
Corporate expenses |
|
| (4,864 | ) |
|
| (7 | %) |
|
|
| (3,003 | ) |
|
| (8 | %) |
|
| (10,603 | ) |
|
| (7 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on asset dispositions, net |
|
| 4 |
|
|
| <1 | % |
|
|
| 372 |
|
|
| 1 | % |
|
| 6,253 |
|
|
| 4 | % |
Asset impairments |
|
| — |
|
|
| — |
|
|
|
| (21,325 | ) |
|
| (59 | %) |
|
| (129,562 | ) |
|
| (90 | %) |
Operating loss |
| $ | (5,782 | ) |
|
| (9 | %) |
|
|
| (38,674 | ) |
|
| (107 | %) |
|
| (155,344 | ) |
|
| (108 | %) |
Foreign exchange loss |
|
| (58 | ) |
|
| (<1 | %) |
|
|
| (2,024 | ) |
|
| (5 | %) |
|
| (2,539 | ) |
|
| (2 | %) |
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
| 2 | % |
|
|
| 269 |
|
|
| 1 | % |
|
| 1,313 |
|
|
| 1 | % |
Interest income and other |
|
| 873 |
|
|
| 1 | % |
|
|
| 704 |
|
|
| 2 | % |
|
| 992 |
|
|
| 1 | % |
Reorganization items |
|
| (1,880 | ) |
|
| (2 | %) |
|
|
| (1,083,729 | ) |
|
| (2989 | %) |
|
| — |
|
|
| — |
|
Interest and other debt costs |
|
| (5,240 | ) |
|
| (7 | %) |
|
|
| (574 | ) |
|
| (2 | %) |
|
| (18,477 | ) |
|
| (13 | %) |
Loss before income taxes |
| $ | (10,782 | ) |
|
| (15 | %) |
|
|
| (1,124,028 | ) |
|
| (3100 | %) |
|
| (174,055 | ) |
|
| (121 | %) |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||||||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| ||||
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | 4,505 |
|
|
| 4 | % |
| $ | 2,900 |
|
|
| 2 | % |
| $ | 3,341 |
|
|
| 2 | % |
| $ | 1,870 |
|
|
| 1 | % |
Middle East/Asia Pacific |
|
| 599 |
|
|
| 1 | % |
|
| (2,127 | ) |
|
| (1 | )% |
|
| (257 | ) |
|
| 0 | % |
|
| (3,289 | ) |
|
| (1 | )% |
Europe/Mediterranean |
|
| (1,750 | ) |
|
| (2 | %) |
|
| 2,824 |
|
|
| 2 | % |
|
| (203 | ) |
|
| 0 | % |
|
| (493 | ) |
|
| 0 | % |
West Africa |
|
| (3,984 | ) |
|
| (4 | %) |
|
| 3,099 |
|
|
| 3 | % |
|
| (8,847 | ) |
|
| (4 | %) |
|
| 11,214 |
|
|
| 5 | % |
Other operating profit |
|
| 1,198 |
|
|
| 1 | % |
|
| 1,625 |
|
|
| 1 | % |
|
| 2,919 |
|
|
| 1 | % |
|
| 3,330 |
|
|
| 1 | % |
|
|
| 568 |
|
|
| 1 | % |
|
| 8,321 |
|
|
| 7 | % |
|
| (3,047 | ) |
|
| (1 | %) |
|
| 12,632 |
|
|
| 5 | % |
Corporate expenses |
|
| (8,910 | ) |
|
| (9 | %) |
|
| (12,221 | ) |
|
| (10 | )% |
|
| (18,952 | ) |
|
| (9 | %) |
|
| (27,422 | ) |
|
| (11 | )% |
Gain on asset dispositions, net |
|
| 1,660 |
|
|
| 2 | % |
|
| (494 | ) |
|
| 0 | % |
|
| 6,991 |
|
|
| 3 | % |
|
| 776 |
|
|
| 0 | % |
Affiliate credit loss impairment expense |
|
| (53,581 | ) |
|
| (52 | %) |
|
| — |
|
|
| 0 | % |
|
| (53,581 | ) |
|
| (24 | %) |
|
| — |
|
|
| 0 | % |
Affiliate guarantee obligation |
|
| (2,000 | ) |
|
| (2 | %) |
|
| — |
|
|
| 0 | % |
|
| (2,000 | ) |
|
| (1 | %) |
|
| — |
|
|
| 0 | % |
Long-lived asset impairments |
|
| (55,482 | ) |
|
| (54 | %) |
|
| — |
|
|
| 0 | % |
|
| (65,689 | ) |
|
| (30 | %) |
|
| — |
|
|
| 0 | % |
Operating loss |
| $ | (117,745 | ) |
|
| (115 | %) |
| $ | (4,394 | ) |
|
| (3 | %) |
| $ | (136,278 | ) |
|
| (62 | %) |
| $ | (14,014 | ) |
|
| (6 | %) |
Results for three months ended June 30, 2020 compared to June 30, 2019
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
| $ | (2,651 | ) |
|
| (4 | %) |
|
|
| (22,549 | ) |
|
| (15 | %) |
|
| (5,503 | ) |
|
| (2 | %) |
Middle East/Asia Pacific |
|
| 944 |
|
|
| 1 | % |
|
|
| (1,434 | ) |
|
| (1 | %) |
|
| (10,778 | ) |
|
| (3 | %) |
Africa/Europe |
|
| (24 | ) |
|
| (<1 | %) |
|
|
| (21,508 | ) |
|
| (14 | %) |
|
| (27,381 | ) |
|
| (9 | %) |
|
|
| (1,731 | ) |
|
| (3 | %) |
|
|
| (45,491 | ) |
|
| (30 | %) |
|
| (43,662 | ) |
|
| (14 | %) |
Other operating profit (loss) |
|
| 809 |
|
|
| 1 | % |
|
|
| 876 |
|
|
| 1 | % |
|
| (1,439 | ) |
|
| (<1 | %) |
|
|
| (922 | ) |
|
| (2 | %) |
|
|
| (44,615 | ) |
|
| (29 | %) |
|
| (45,101 | ) |
|
| (14 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate general and administrative expenses |
|
| (4,797 | ) |
|
| (7 | %) |
|
|
| (17,542 | ) |
|
| (12 | %) |
|
| (20,499 | ) |
|
| (7 | %) |
Corporate depreciation |
|
| (67 | ) |
|
| (<1 | %) |
|
|
| (704 | ) |
|
| (<1 | %) |
|
| (1,327 | ) |
|
| (<1 | %) |
Corporate expenses |
|
| (4,864 | ) |
|
| (7 | %) |
|
|
| (18,246 | ) |
|
| (12 | %) |
|
| (21,826 | ) |
|
| (7 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on asset dispositions, net |
|
| 4 |
|
|
| <1 | % |
|
|
| 3,561 |
|
|
| 2 | % |
|
| 11,896 |
|
|
| 4 | % |
Asset impairments |
|
| — |
|
|
| — |
|
|
|
| (184,748 | ) |
|
| (122 | %) |
|
| (166,448 | ) |
|
| (54 | %) |
Operating loss |
| $ | (5,782 | ) |
|
| (9 | %) |
|
|
| (244,048 | ) |
|
| (161 | %) |
|
| (221,479 | ) |
|
| (71 | %) |
Foreign exchange loss |
|
| (58 | ) |
|
| (<1 | %) |
|
|
| (3,181 | ) |
|
| (2 | %) |
|
| (5,272 | ) |
|
| (2 | %) |
Equity in net earnings of unconsolidated companies |
|
| 1,305 |
|
|
| 2 | % |
|
|
| 4,786 |
|
|
| 3 | % |
|
| 1,312 |
|
|
| <1 | % |
Interest income and other |
|
| 873 |
|
|
| 1 | % |
|
|
| 2,384 |
|
|
| 2 | % |
|
| 2,168 |
|
|
| 1 | % |
Reorganization items |
|
| (1,880 | ) |
|
| (2 | %) |
|
|
| (1,396,905 | ) |
|
| (923 | %) |
|
| — |
|
|
| — |
|
Interest and other debt costs |
|
| (5,240 | ) |
|
| (7 | %) |
|
|
| (11,179 | ) |
|
| (8 | %) |
|
| (35,431 | ) |
|
| (11 | %) |
Loss before income taxes |
| $ | (10,782 | ) |
|
| (15 | %) |
|
|
| (1,648,143 | ) |
|
| (1089 | %) |
|
| (258,702 | ) |
|
| (83 | %) |
|
|
Three Months Ended September 30, 2017 and 2016
Americas Segment Operations. Vessel revenues earned in the Americas segment fordecreased 3%, or $1.2 million, during the period of August 1, 2017 through Septemberquarter ended June 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $17.4 million, $9 million and $53.1 million, respectively.
Further reductions in Americas segment utilization and average day rates have caused decreases in revenue2020, as compared to prior year and arethe quarter ended June 30, 2019. This decrease is primarily the result of a significant industry downturn which occurred duringless demand due to the latter half of calendar 2014 and has continued through September 30, 2017.pandemic. We had 5 less active vessels in the quarter ended March 31, 2020 than the comparable prior year period.
On July 1, 2017, we had 42 stacked Americas-based vessels. During the period July 1, 2017 through July 31, 2017 (Predecessor), we sold two vessels and returned one previously stacked vessel to service, resulting in a total of 39 stacked Americas-based vessels, or approximately 58% of the Americas-based fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successor), we stacked two additional vessels, returned 10 leased vessels to their respective owners and returned two previously stacked vessels to service, resulting in a total of 29 stacked Americas-based vessels, or approximately 52% of the Americas-based fleet, as of September 30, 2017.
Operating lossVessel operating profit for the Americas segment for the period of August 1, 2017 through Septemberquarter ended June 30, 2017 (Successor),2020 was $4.5 million, which was $1.6 million more than the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $2.7 million, $6.9 million and $1.2 million, respectively.
Vessel operating costs profit for the period of August 1, 2017 through Septemberquarter ended June 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $14.2 million, $10.7 million and $28.4 million, respectively. Overall vessel2019. The higher operating costs have decreased in the current fiscal year as compared to the prior year due to the reduction of operating activities in the segment in the current year which is primarilyprofit was due to a $3.5 million decrease in operating expenses, resulting from intensive cost saving measures taken in the second quarter of 2020 in response to the effect of the pandemic and a $0.8 million reduction in crew costs. During the period July 1, 2017 through July 31, 2017 (Predecessor) the Americas segment did experience elevated repairgeneral and maintenanceadministrative costs primarily due to an increase inour ongoing cost saving initiatives as we react to the number of drydockings performed
during July. Subsequent to July 31, 2017, the company operates under a new planned major maintenance policy whereby the costs of drydockings and surveys associated with regulatory compliance are capitalized and amortized.current downturn.
The Americas segment did not incur any vessel operating lease expense for the period of August 1, 2017 through September 30, 2017 (Successor). Vessel operating lease expense for the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) was $0.1 million and $6.6 million, respectively. Vessel operating lease expense has decreased as compared to prior year primarily as a result of the termination of lease contracts in conjunction with the company’s Plan of Reorganization.
Depreciation expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $2.3 million, $3.2 million and $12.7 million, respectively. Depreciation expense has decreased as compared to prior year primarily due to a significant reduction in vessel carrying values recognized as of July 31, 2017 resulting from the application of fresh-start accounting.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $3.6 million, $1.9 million and $6.5 million, respectively.
General and administrative expenses have decreased as compared to prior year primarily as a result of cost reduction initiatives that the company has undertaken as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
Middle East/Asia Pacific Segment Operations.Vessel revenues earned in the Middle East/Asia Pacific segment increased 17%, or $3.5 million, during the quarter ended June 30, 2020, as compared to the quarter ended June 30, 2019. Active utilization for the period of August 1, 2017 through Septemberquarter ended June 30, 2017 (Successor)2020 increased to 75.9% from 74.7%, the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $16.7 million, $8.5 million and $29.6 million, respectively.
Although the segment has experienced a modest increase in utilization for deepwater vessels and comparable utilization for towing supply vessels, reductions to average day rates increased almost 10% and average active vessels in the segment increased by two vessels.
The Middle East/Asia Pacific segment reported an operating profit of $0.6 million for deepwater and towing supply vesselsthe quarter ended June 30, 2020, compared to an operating loss of $2.1 million for the quarter ended June 30, 2019 primarily due to increased revenue. The current downturn to this point has caused an overall decreasenot impacted this segment’s results.
Europe/Mediterranean Segment Operations. Vessel revenues in revenuesthe Europe/Mediterranean segment decreased 41%, or $14.4 million, during the quarter ended June 30, 2020, as compared to prior year.the quarter ended June 30, 2019. The decreased revenue was primarily attributable to 14 less active vessels. Average day rates during these same periods decreased 2% because of decreased demand, effected by the pandemic, for vessels in the North Sea and Mediterranean. Active utilization increased two percentage points during the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019.
On July 1, 2017, we had 26 stacked The Europe/Mediterranean segment reported an operating loss of $1.8 million for the quarter ended June 30, 2020, compared to an operating profit of $2.8 million for the quarter ended June 30, 2019 due to decreased revenue partially offset by $7.9 million in decreased operating costs, primarily due to lower personnel and repair and maintenance costs.
West Africa Segment Operations. Vessel revenues in the West Africa segment decreased 32% or $10.6 million, during the quarter ended June 30, 2020, as compared to the quarter ended June 30, 2019. The West Africa active vessel fleet decreased by 8 vessels during the comparative periods. West Africa segment active utilization decreased as well from 76% during the second quarter of 2019 to 55% during the second quarter of 2020. Average day rates increased 13 percent due to the change in the mix of remaining contracts. The decreases in revenue are almost entirely the result of lower demand caused by the effect of the pandemic.
Vessel operating profit for the West Africa segment decreasedfrom $3.1 million for the quarter ended June 30, 2019 to an operating loss of $4.0 million in the quarter ended June 30, 2020 primarily due to decreased revenue, partially offset by lower operating costs.
Results for six months ended June 30, 2020 compared to June 30, 2019
Americas Segment Operations. Vessel revenues in the Americas segment decreased 6%, or $4.6 million, during the six months ended June 30, 2020, as compared to the six months ended June 30, 2019. This decrease is primarily the result of lower demand caused by the effect of the pandemic. The segment has four less vessels operating in the first six months of 2020 compared to the same period in 2019.
Vessel operating profit for the Americas segment for the six months ended June 30, 2020 was $3.3 million, which was $1.5 million more than the operating profit for the six months ended June 30, 2019. This was primarily due to $8.1 million less operating costs resulting from the decrease in vessel activity due to the pandemic and $0.7 million lower general and administrative costs due to ongoing cost saving efforts.
Middle East/Asia Pacific-based vessels. During the period July 1, 2017 through July 31, 2017 (Predecessor), we stacked one additional vessel, resultingPacific Segment Operations. Vessel revenues in a total of 27 stacked Middle East/Asia Pacific-based vessels, or approximately 41% of the Middle East/Asia Pacific-based fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successsor), we sold three vessels and returned two previously stacked vessels to service, resulting in a total of 22 stacked Middle East/Asia Pacific-based vessels, or approximately 35% of the Middle East/Asia Pacific-based fleet, as of September 30, 2017.
Operating profit for the Middle East/Asia Pacific segment for the period of August 1, 2017 through September 30, 2017 (Successor) was $0.9 million. Operating loss for the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $0.1increased 19%, or $7.9 million, and $5.2 million, respectively.
Vessel operating costs for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $11.7 million, $5.4 million and $19.6 million, respectively.
Depreciation expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $1.8. million, $2.2 million and $10.8 million, respectively.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $2.2 million, $1 million and $4.4 million, respectively.
Africa/Europe Segment Operations. Vessel revenues earned in the Africa/Europe segment for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $36.5 million, $16.8 million and $56.7 million, respectively.
Although the segment has experienced modest increases in utilization, average day rates have decreased which has resulted in reductions to revenues as compared to prior year for deepwater, towing supply and other vessel classes due primarily to the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
On July 1, 2017, we had 47 stacked Africa/Europe-based vessels. During the period July 1, 2017 through July 31, 2017 (Predecessor), we sold three vessels and returned one previously stacked vessels to service, resulting in a total of 43 stacked Africa/Europe-based vessels, or approximately 36% of the Africa/Europe-based fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successor), we stacked one additional vessel, sold two vessels, and returned two previously stacked vessels to service, resulting in a total of 40 stacked Africa/Europe-based vessels, or approximately 34% of the Africa/Europe-based fleet, as of September 30, 2017.
Operating loss for the Africa/Europe segment for the period of August 1, 2017 through September 30, 2017 (Successor) was zero. Operating loss for the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $6.5 million and $14.1 million, respectively.
Vessel operating costs for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $26.3 million, $16.6 million and $39.1 million, respectively. Included in the period July 1, 2017 through July 31, 2017 (Predecessor) were higher levels of repair and maintenance due to increased drydockings. Included in the period August 1, 2017 through September 30, 2017 (Successor) were additional taxes incurred in West Africa which were reflected in other vessel costs.
Vessel operating lease expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $1.1 million, $0.6 million and $1.8 million, respectively. Vessel operating lease expense has decreased as compared to prior year primarily as a result of the termination of lease contracts in conjunction with the company’s Prepackaged Plan of Reorganization. The company does not expect to incur additional lease expense beyond September 30, 2017.
Depreciation expensefor the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $3.6 million, $5.3 million and $18.4 million, respectively. Depreciation expense has decreased as compared to prior year primarily due to a significant reduction in vessel carrying values recognized as of July 31, 2017 resulting from the application of fresh-start accounting.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of July 1, 2017 through July 31, 2017 (Predecessor) and the three months ended September 30, 2016 (Predecessor) were $5.4 million, $2.9 million and $11.4 million, respectively. General and administrative expenses have decreased as compared to prior year primarily as a result of cost reduction initiatives that the company has undertaken as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
Six Months Ended September 30, 2017 and 2016
Americas Segment Operations. Revenues earned for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) andduring the six months ended SeptemberJune 30, 2016 (Predecessor) were $17.4 million, $40.8 million and $113.7 million respectively.
On April 1, 2017, we had 34 stacked Americas-based vessels. During the period April 1, 2017 through July 31, 2017 (Predecessor), we stacked 13 additional vessels, sold two vessels and returned six previously stacked vessels2020, as compared to service, resulting in a total of 39 stacked Americas-based vessels, or approximately 58% of the Americas-based fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successor), we stacked two additional vessels, returned 10 leased vessels to their respective owners and returned two previously stacked vessels to service, resulting in a total of 29 stacked Americas-based vessels, or approximately 52% of the Americas-based fleet, as of September 30, 2017.
Operating loss for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $2.7 million, $22.5 million and $5.5 million, respectively. Operating losses2019. This segment had three more vessels operating in the current year have increased asfirst six months of 2020 compared to prior year primarily as a result of declining revenues which are partially offset by the company’s ongoing cost reduction initiatives.
Vessel operating costs for thesame period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) andin 2019. Active
utilization for the six months ended SeptemberJune 30, 2016 (Predecessor) were $14.22020 increased from 75.6% to 76.8%, and average day rates increased by nine percent.
The Middle East/Asia Pacific segment reported an operating loss of $0.3 million $37.9for the six months ended June 30, 2020, compared to an operating loss of $3.3 million and $66.7 million respectively. Overall vessel operating costs have decreasedfor the six months ended June 30, 2019 primarily due to increased revenue.
Europe/Mediterranean Segment Operations. Vessel revenues in the current fiscal yearEurope/Mediterranean segment decreased 21%, or $13.5 million, during the six months ended June 30, 2020, as compared to the prior year duesix months ended June 30, 2019. The segment has 10 less vessels operating in the first six months of 2020 compared to the same period in 2019. The reduction is due mainly to the effects of operating activities in the segment in the current year which is primarily due to a reduction in crew costs.
The Americas segment did not incur any vessel operating lease expense for the period of August 1, 2017 through September 30, 2017 (Successor). Vessel operating lease expense for the period of April 1, 2017 through July 31, 2017 (Predecessor)pandemic. Average day rates during these same periods increased 5% and active utilization increased three percentage points during the six months ended SeptemberJune 30, 2016 (Predecessor) was $3.8 million and $13.3 million respectively. Vessel operating lease expense has decreased as2020 compared to prior year primarily as a result of the termination of lease contracts in conjunction with the company’s Plan of Reorganization.
Depreciation expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $2.3 million, $13.9 million and $25.5 million, respectively. Depreciation expense has decreased as compared to prior year primarily due to a significant reduction in vessel carrying values recognized as of July 31, 2017 resulting from the application of fresh-start accounting.2019.
General and administrative expensesThe Europe/Mediterranean segment reported an operating loss of $0.2 million for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $3.62020, compared to an operating loss of $0.5 million $7.7 million and $13.9 million, respectively.
Middle East/Asia Pacific Segment Operations. Revenues earned for the period of August 1, 2017 through the six months ended
September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) andSeptemberJune 30, 2016 (Predecessor) were $16.7 million, $36.3 million2019. This is due mainly to the lower revenue offset somewhat with lower operating costs associated with the lower vessel activity and $61.7 million, respectively.lower general and administrative costs resulting from our ongoing cost reduction efforts.
On April 1, 2017, we had 25 stacked Middle East/Asia Pacific-based vessels. DuringWest Africa Segment Operations. Vessel revenues in the period April 1, 2017 through July 31, 2017 (Predecessor), we stacked four additional vessels and returned two previously stacked vessels to service, resulting in a total of 27 stacked Middle East/Asia Pacific-based vessels,West Africa segment decreased 30% or approximately 41% of the Middle East/Asia Pacific-based
fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successor), we sold three vessels and returned two previously stacked vessels to service, resulting in a total of 22 stacked Middle East/Asia Pacific-based vessels, or approximately 35% of the Middle East/Asia Pacific-based fleet, as of September 30, 2017.
Operating profit for the Middle East/Asia Pacific segment for the period of August 1, 2017 through September 30, 2017 (Successor) was $0.9 million. Operating loss for the period of April 1, 2017 through July 31, 2017 (Predecessor) and$20.2 million, during the six months ended SeptemberJune 30, 2016 (Predecessor) were $1.4 million and $10.8 million, respectively. Operating loss has decreased2020, as compared to prior year primarily as a result of the company’s efforts to reduce costs and, more recently, the reduction of depreciation expense in the current year.
Vessel operating costs for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $11.7 million, $23 million and $41.6 million, respectively. Vessel operating costs have2019. The West Africa active vessel fleet decreased by 9 vessels during the comparative periods. West Africa segment active utilization decreased as comparedwell from 76.4% to prior year61.5% primarily as a resultdue to the effects of the cost reduction initiatives undertaken as a resultpandemic, but day rates increased by five percent due to the change in the mix of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.contracts.
Depreciation expenseThe West Africa segment reported an operating loss of $8.8 million for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $1.8 million, $10 million and $21.7 million, respectively. Depreciation expense has decreased as2020 compared to prior year primarily due to a significant reductionan operating profit of $11.2 million in vessel carrying values recognized as of July 31, 2017 resulting from the application of fresh-start accounting.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended SeptemberJune 30, 2016 (Predecessor) were $2.2 million, $4.8 million and $9.2 million, respectively. General and administrative expenses have2019 primarily due to decreased as comparedrevenue. This segment had the most negative impact from the pandemic due to prior year primarily as a result of cost reduction initiatives that the company has undertaken as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
Africa/Europe Segment Operations. Revenues earned for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $36.5 million, $69.4 million and $126.4 million, respectively.
On April 1, 2017, we had 52 stacked Africa/Europe-based vessels. During the period April 1, 2017 through July 31, 2017 (Predecessor), we sold five vessels and returned four previously stacked vessels to service, resulting in a total of 43 stacked Africa/Europe-based vessels, or approximately 36% of the Africa/Europe-based fleet, as of July 31, 2017. During the period August 1, 2017 through September 30, 2017 (Successor), we stacked one additional vessel, sold two vessels, and returned two previously stacked vessels to service, resulting in a total of 40 stacked Africa/Europe-based vessels, or approximately 34% of the Africa/Europe-based fleet, as of September 30, 2017.
Operating profit for the period of August 1, 2017 through September 30, 2017 (Successor) was zero. Operating loss for the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $19.4 million and $27.4 million, respectively. Operating loss has decreased as compared to prior year primarily as a result of the company’s efforts to reduce costs and, more recently, the reduction of depreciation expense and vessel operating lease expense in the current year.contract cancellations.
Vessel operating costs for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor)Utilization and the six months ended September 30, 2016 (Predecessor) were $26.3 million, $55.5 million and $87.7 million, respectively. Overall vessel operating costs have decreased, primarily as a result of reductions in crew cost as compared to prior year primarily as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017. During the period the period of April 1, 2017 through July 31, 2017 (Predecessor) we experienced higher levels of repair and maintenance expense due to increased drydockings. Subsequent to July 31, 2017, the company operated under a new planned major maintenance policy whereAverage Day Rates by the costs of drydocking and surveys associated with regulatory compliance were capitalized and amortized.Segment
Vessel operating lease expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $1.1 million, $2.3 million and $3.6 million, respectively. Vessel operating lease expense has decreased as compared to prior year primarily as a result of the termination of lease contracts in conjunction with the company’s Prepackaged Plan of Reorganization. The company does not expect to incur additional lease expense beyond September 30, 2017.
Depreciation expense for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $3.6 million, $21.7 million and $37.2 million, respectively. Depreciation expense has decreased as compared to prior year primarily due to a significant reduction in vessel carrying values recognized as of July 31, 2017 resulting from the application of fresh-start accounting.
General and administrative expenses for the period of August 1, 2017 through September 30, 2017 (Successor), the period of April 1, 2017 through July 31, 2017 (Predecessor) and the six months ended September 30, 2016 (Predecessor) were $5.5 million, $11.4 million and $25.2 million, respectively. General and administrative expenses have decreased as compared to prior year primarily as a result of cost reduction initiatives that the company has undertaken as a result of the significant industry downturn which occurred over the latter half of calendar 2014 and has continued through September 30, 2017.
Other Items
Asset Impairments. Due in part to the modernization of the company’s fleet more vessels that are being stacked are newer vessels that are expected to return to active service. Stacked vessels expected to return to active service are generally newer vessels, have similar capabilities and likelihood of future active service as other currently operating vessels, are generally current with classification societies in regards to their regulatory certification status, and are being actively marketed. Stacked vessels expected to return to service are evaluated for impairment as part of their assigned active asset group and not individually.
The company reviews the vessels in its active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. If an asset group fails the undiscounted cash flow test, the company estimates the fair value of each asset group and compares such estimated fair value, considered Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures, to the carrying value of each asset group in order to determine if impairment exists. Similar to stacked vessels, management obtains estimates of the fair values of the active vessels from third party appraisers or brokers for use in determining fair value estimates.
During the period from April 1, 2017 through July 31, 2017 (Predecessor), the company recognized $157.8 million of impairment charges on 73 vessels that were stacked. The fair value of vessels in the stacked fleet incurring impairment during the period from April 1, 2017 through July 31, 2017 (Predecessor) was $505.6 million (after having recorded impairment charges).
During the period from April 1, 2017 through July 31, 2017 (Predecessor), the company recognized $26.9 million of impairments on six vessels in the active fleet. The fair value of vessels in the active fleet incurring impairment during the period from April 1, 2017 through July 31, 2017 (Predecessor) was $66.2 million (after having recorded impairment charges).
As of the company’s emergence from Chapter 11 bankruptcy on July 31, 2017 the company significantly reduced the carrying values of it vessels and other assets and did not incur asset impairments during the period from August 1, 2017 to September 30, 2017.
The below tables summarize the combined fair value of the assets that incurred impairments, along with the amount of impairment.
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Number of vessels impaired in the period |
|
| — |
|
|
|
| 8 |
|
|
| 42 |
|
Number of ROVs impaired in the period |
|
| — |
|
|
|
| — |
|
|
| 8 |
|
Amount of impairment incurred | $ |
| — |
|
|
|
| 21,325 |
|
|
| 129,562 |
|
Combined fair value of assets incurring impairment |
|
| — |
|
|
|
| 29,339 |
|
|
| 322,550 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Number of vessels impaired in the period |
|
| — |
|
|
|
| 79 |
|
|
| 54 |
|
Number of ROVs impaired in the period |
|
| — |
|
|
|
| — |
|
|
| 8 |
|
Amount of impairment incurred | $ |
| — |
|
|
|
| 184,748 |
|
|
| 166,448 |
|
Combined fair value of assets incurring impairment |
|
| — |
|
|
|
| 571,821 |
|
|
| 477,950 |
|
Insurance and Loss Reserves. Insurance and loss reserves expense was $1.8 million during the period from August 1, 2017 through September 30, 2017 (Successor) and $0.8 million during the period from July 1, 2017 through July 31, 2017 (Predecessor). Insurance and loss reserves expense in the current year reflect decreases in premiums and claims as a result of lower levels of vessel activity.
Gains on Asset Dispositions, Net. During the period from August 1, 2017 through September 30, 2017 (Successor), the company did not have material gains on asset dispositions, net. Included in gain on asset dispositions, net for the period from July, 1 2017 through July 31, 2017 (Predecessor), was $0.4 million related to the sale of four vessels. During the quarter ended September 30, 2016 (Predecessor), the company recognized deferred gains related to sale leaseback transactions of $5.8 million.
During the period from August 1, 2017 through September 30, 2017 (Successor), the company did not have material gains on asset dispositions, net. Included in gain on asset dispositions, net for the period from April 1, 2017 through July 31, 2017 (Predecessor), were $3 million of deferred gains from sale leaseback transactions and $0.5 million related to the sale of seven vessels. During the six months ended September 30, 2016 (Predecessor), the company recognized deferred gains related to sale leaseback transactions of $11.7 million.
All remaining deferred gains related to the company’s sale leaseback vessels were recognized as reorganization items in the quarter ended June 30, 2017 due to the company’s rejection of all 16 sale leaseback agreements during the Chapter 11 proceedings.
Foreign Exchange Losses. During the period from August 1, 2017 through September 30, 2017 (Successor), we recognized a foreign exchange loss of $0.1 million and during the period from April 1, 2017 through July 31, 2017 (Predecessor), we recognized a foreign exchange loss of $3.2 million. These foreign exchange losses were primarily the result of the revaluation our Norwegian kroner-denominated debt to our U.S. dollar reporting currency.
Interest and Other Debt Costs. Interest and other debt costs for the period from August 1, 2017 through September 30, 2017 (Successor) was $5.2 million and reflects interest expense on the New Secured Notes and Troms debt as well as the amortization of premiums and discounts associated with the respective loans. Interest and other debt costs for the period from April 1, 2017 through July 31, 2017 (Predecessor) was $11.2 million and reflected interest expense on the Predecessor company’s term loan, revolver, senior notes and Troms debt. The filing of our bankruptcy petition on May 17, 2017 resulted in the cessation of the accrual of interest on our term loan, revolving line of credit and senior notes through our Emergence Date of July 31, 2017. Had the term loan, revolving line of credit and senior notes not been compromised by the Plan, interest expense from April 1, 2017 through the Effective Date of July 31, 2017 (Predecessor) would have been approximately $27 million.
Reorganization Items. We incurred reorganization items of $1.9 million and $1.4 billion for the period of August 1, 2017 through September 30, 2017 (Successor) and the period of April 1, 2017 through July 31, 2017 (Predecessor), respectively. Successor reorganization items included the cost of delivering vessels operating under sale leaseback agreements to the respective lessors and bankruptcy related professional fees. Predecessor reorganization items included (i) fresh-start adjustments of $1.8 billion to record the values of assets and liabilities on our books at their fair values, (ii) $316.5 million related to liabilities associated with settled sale leaseback claims and make-whole claims on our debt, partially offset by deferred gains recognized on sale leaseback transactions and other items and (iii) professional fees of $28 million incurred subsequent to the Petition Date. Offsetting these reorganization charges is a gain on settlement of liabilities subject to compromise of $767.6 million.
Vessel Class Revenue and Statistics by Segment
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 largely through the level of offshore exploration, field development and production spending by energy companies relative to the supply of offshore servicesupport vessels. SuitabilitySpecifications of available equipment and the qualityscope of service provided may also influence vessel day rates. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. StackedAs such, stacked vessels depress utilization rates because stacked vessels are considered available to work and as such, are included in the calculation of utilization rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period.
VesselTotal vessel utilization and average day rates areis calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock) but do not include vessels owned by joint ventures (eight(3 and 4 vessels at SeptemberJune 30, 2017)2020 and 2019, respectively). Active utilization is calculated on active vessels (which excludes vessels held for sale). Average day rates are calculated based on total vessel days worked.
The following tables compare revenues, day-based utilization percentages, and average day rates and average total, active and stacked vessels by vessel classsegment for the three and in total:six months ended June 30, 2020 and 2019:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
REVENUE BY VESSEL CLASS (In thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,798 |
|
|
|
| 4,304 |
|
|
| 37,270 |
|
Towing-supply |
|
| 5,572 |
|
|
|
| 3,747 |
|
|
| 13,039 |
|
Other |
|
| 2,079 |
|
|
|
| 910 |
|
|
| 2,816 |
|
Total |
| $ | 17,449 |
|
|
|
| 8,961 |
|
|
| 53,125 |
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 5,726 |
|
|
|
| 2,667 |
|
|
| 8,860 |
|
Towing-supply |
|
| 10,943 |
|
|
|
| 5,880 |
|
|
| 20,724 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 16,669 |
|
|
|
| 8,547 |
|
|
| 29,584 |
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 17,582 |
|
|
|
| 7,588 |
|
|
| 24,305 |
|
Towing-supply |
|
| 15,049 |
|
|
|
| 8,124 |
|
|
| 25,934 |
|
Other |
|
| 3,822 |
|
|
|
| 1,120 |
|
|
| 6,413 |
|
Total |
| $ | 36,453 |
|
|
|
| 16,832 |
|
|
| 56,652 |
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 33,106 |
|
|
|
| 14,559 |
|
|
| 70,435 |
|
Towing-supply |
|
| 31,564 |
|
|
|
| 17,751 |
|
|
| 59,697 |
|
Other |
|
| 5,901 |
|
|
|
| 2,030 |
|
|
| 9,229 |
|
Total |
| $ | 70,571 |
|
|
|
| 34,340 |
|
|
| 139,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, 2020 |
|
| June 30, 2019 |
|
| June 30, 2020 |
|
| June 30, 2019 |
| ||||
SEGMENT STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
| 58.3 | % |
|
| 54.5 | % |
|
| 57.7 | % |
|
| 51.1 | % |
Active utilization |
|
| 88.6 | % |
|
| 82.3 | % |
|
| 87.1 | % |
|
| 84.8 | % |
Average vessel day rates |
|
| 12,865 |
|
|
| 12,341 |
|
|
| 12,355 |
|
|
| 11,871 |
|
Average total vessels |
|
| 50 |
|
|
| 58 |
|
|
| 51 |
|
|
| 64 |
|
Average stacked vessels |
|
| (17 | ) |
|
| (20 | ) |
|
| (17 | ) |
|
| (26 | ) |
Average active vessels |
|
| 33 |
|
|
| 38 |
|
|
| 34 |
|
|
| 38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
| 63.0 | % |
|
| 61.6 | % |
|
| 63.0 | % |
|
| 61.5 | % |
Active utilization |
|
| 75.9 | % |
|
| 74.7 | % |
|
| 76.8 | % |
|
| 75.6 | % |
Average vessel day rates |
|
| 8,009 |
|
|
| 7,293 |
|
|
| 7,934 |
|
|
| 7,249 |
|
Average total vessels |
|
| 52 |
|
|
| 50 |
|
|
| 54 |
|
|
| 51 |
|
Average stacked vessels |
|
| (9 | ) |
|
| (9 | ) |
|
| (10 | ) |
|
| (10 | ) |
Average active vessels |
|
| 43 |
|
|
| 41 |
|
|
| 44 |
|
|
| 41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe/Mediterranean fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
| 48.6 | % |
|
| 62.7 | % |
|
| 56.5 | % |
|
| 61.4 | % |
Active utilization |
|
| 88.6 | % |
|
| 86.5 | % |
|
| 87.8 | % |
|
| 85.3 | % |
Average vessel day rates |
|
| 12,689 |
|
|
| 13,010 |
|
|
| 12,586 |
|
|
| 12,004 |
|
Average total vessels |
|
| 37 |
|
|
| 47 |
|
|
| 39 |
|
|
| 48 |
|
Average stacked vessels |
|
| (17 | ) |
|
| (13 | ) |
|
| (14 | ) |
|
| (13 | ) |
Average active vessels |
|
| 20 |
|
|
| 34 |
|
|
| 25 |
|
|
| 35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Africa fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
| 36.5 | % |
|
| 52.3 | % |
|
| 41.2 | % |
|
| 50.8 | % |
Active utilization |
|
| 55.0 | % |
|
| 76.0 | % |
|
| 61.5 | % |
|
| 76.4 | % |
Average vessel day rates |
|
| 10,711 |
|
|
| 9,439 |
|
|
| 10,049 |
|
|
| 9,535 |
|
Average total vessels |
|
| 63 |
|
|
| 73 |
|
|
| 64 |
|
|
| 78 |
|
Average stacked vessels |
|
| (21 | ) |
|
| (23 | ) |
|
| (21 | ) |
|
| (26 | ) |
Average active vessels |
|
| 42 |
|
|
| 50 |
|
|
| 43 |
|
|
| 52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
| 50.9 | % |
|
| 57.0 | % |
|
| 53.7 | % |
|
| 55.2 | % |
Active utilization |
|
| 74.5 | % |
|
| 79.3 | % |
|
| 76.6 | % |
|
| 79.9 | % |
Average vessel day rates |
|
| 10,799 |
|
|
| 10,442 |
|
|
| 10,513 |
|
|
| 10,119 |
|
Average total vessels |
|
| 202 |
|
|
| 228 |
|
|
| 208 |
|
|
| 241 |
|
Average stacked vessels |
|
| (64 | ) |
|
| (65 | ) |
|
| (62 | ) |
|
| (75 | ) |
Average active vessels |
|
| 138 |
|
|
| 163 |
|
|
| 146 |
|
|
| 166 |
|
| Successor |
|
|
| Predecessor |
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
REVENUE BY VESSEL CLASS (In thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,798 |
|
|
|
| 21,617 |
|
|
| 77,657 |
|
Towing-supply |
|
| 5,572 |
|
|
|
| 15,021 |
|
|
| 29,918 |
|
Other |
|
| 2,079 |
|
|
|
| 4,210 |
|
|
| 6,158 |
|
Total |
| $ | 17,449 |
|
|
|
| 40,848 |
|
|
| 113,733 |
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 5,726 |
|
|
|
| 13,368 |
|
|
| 17,488 |
|
Towing-supply |
|
| 10,943 |
|
|
|
| 22,945 |
|
|
| 44,219 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 16,669 |
|
|
|
| 36,313 |
|
|
| 61,707 |
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 17,582 |
|
|
|
| 29,746 |
|
|
| 57,594 |
|
Towing-supply |
|
| 15,049 |
|
|
|
| 35,143 |
|
|
| 53,851 |
|
Other |
|
| 3,822 |
|
|
|
| 4,547 |
|
|
| 14,906 |
|
Total |
| $ | 36,453 |
|
|
|
| 69,436 |
|
|
| 126,351 |
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 33,106 |
|
|
|
| 64,731 |
|
|
| 152,739 |
|
Towing-supply |
|
| 31,564 |
|
|
|
| 73,109 |
|
|
| 127,988 |
|
Other |
|
| 5,901 |
|
|
|
| 8,757 |
|
|
| 21,064 |
|
Total |
| $ | 70,571 |
|
|
|
| 146,597 |
|
|
| 301,791 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
UTILIZATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 21.8 | % |
|
|
| 18.1 | % |
|
| 38.1 | % |
Towing-supply |
|
| 35.6 |
|
|
|
| 37.0 |
|
|
| 37.5 |
|
Other |
|
| 46.1 |
|
|
|
| 43.8 |
|
|
| 34.1 |
|
Total |
|
| 28.9 | % |
|
|
| 26.6 | % |
|
| 37.5 | % |
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 45.6 | % |
|
|
| 40.8 | % |
|
| 35.0 | % |
Towing-supply |
|
| 57.1 |
|
|
|
| 57.2 |
|
|
| 54.7 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
|
| 52.5 | % |
|
|
| 51.1 | % |
|
| 47.7 | % |
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 61.3 | % |
|
|
| 53.0 | % |
|
| 44.0 | % |
Towing-supply |
|
| 45.0 |
|
|
|
| 49.1 |
|
|
| 42.7 |
|
Other |
|
| 47.8 |
|
|
|
| 32.8 |
|
|
| 42.8 |
|
Total |
|
| 51.7 | % |
|
|
| 45.8 | % |
|
| 43.2 | % |
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 43.6 | % |
|
|
| 36.9 | % |
|
| 39.8 | % |
Towing-supply |
|
| 48.2 |
|
|
|
| 50.1 |
|
|
| 46.6 |
|
Other |
|
| 46.3 |
|
|
|
| 34.1 |
|
|
| 40.3 |
|
Total |
|
| 46.0 | % |
|
|
| 42.0 | % |
|
| 42.8 | % |
| Successor |
|
|
| Predecessor |
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
UTILIZATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 21.8 | % |
|
|
| 22.0 | % |
|
| 40.0 | % |
Towing-supply |
|
| 35.6 |
|
|
|
| 36.5 |
|
|
| 39.7 |
|
Other |
|
| 46.1 |
|
|
|
| 48.4 |
|
|
| 41.1 |
|
Total |
|
| 28.9 | % |
|
|
| 29.4 | % |
|
| 40.0 | % |
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 45.6 | % |
|
|
| 51.1 | % |
|
| 31.7 | % |
Towing-supply |
|
| 57.1 |
|
|
|
| 57.2 |
|
|
| 58.5 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
|
| 52.5 | % |
|
|
| 54.3 | % |
|
| 49.4 | % |
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 61.3 | % |
|
|
| 52.0 | % |
|
| 49.4 | % |
Towing-supply |
|
| 45.0 |
|
|
|
| 51.1 |
|
|
| 44.6 |
|
Other |
|
| 47.8 |
|
|
|
| 31.7 |
|
|
| 47.4 |
|
Total |
|
| 51.7 | % |
|
|
| 45.6 | % |
|
| 47.1 | % |
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 43.6 | % |
|
|
| 40.0 | % |
|
| 42.1 | % |
Towing-supply |
|
| 48.2 |
|
|
|
| 50.7 |
|
|
| 49.1 |
|
Other |
|
| 46.3 |
|
|
|
| 33.9 |
|
|
| 45.3 |
|
Total |
|
| 46.0 | % |
|
|
| 43.5 | % |
|
| 45.7 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
AVERAGE VESSEL DAY RATES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 19,698 |
|
|
|
| 18,845 |
|
|
| 25,302 |
|
Towing-supply |
|
| 13,547 |
|
|
|
| 16,435 |
|
|
| 16,401 |
|
Other |
|
| 9,250 |
|
|
|
| 8,384 |
|
|
| 10,246 |
|
Total |
| $ | 15,394 |
|
|
|
| 15,863 |
|
|
| 20,892 |
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,805 |
|
|
|
| 10,054 |
|
|
| 12,687 |
|
Towing-supply |
|
| 7,325 |
|
|
|
| 7,537 |
|
|
| 8,954 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 8,022 |
|
|
|
| 8,175 |
|
|
| 9,819 |
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 10,687 |
|
|
|
| 10,908 |
|
|
| 14,416 |
|
Towing-supply |
|
| 12,464 |
|
|
|
| 12,139 |
|
|
| 15,339 |
|
Other |
|
| 4,068 |
|
|
|
| 3,234 |
|
|
| 4,288 |
|
Total |
| $ | 9,613 |
|
|
|
| 9,837 |
|
|
| 11,627 |
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 12,142 |
|
|
|
| 12,242 |
|
|
| 18,260 |
|
Towing-supply |
|
| 10,141 |
|
|
|
| 10,583 |
|
|
| 12,436 |
|
Other |
|
| 5,068 |
|
|
|
| 4,463 |
|
|
| 5,213 |
|
Total |
| $ | 10,077 |
|
|
|
| 10,339 |
|
|
| 13,364 |
|
| Successor |
|
|
| Predecessor |
| |||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
AVERAGE VESSEL DAY RATES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 19,698 |
|
|
|
| 19,656 |
|
|
| 25,395 |
|
Towing-supply |
|
| 13,547 |
|
|
|
| 16,075 |
|
|
| 16,688 |
|
Other |
|
| 9,250 |
|
|
|
| 8,914 |
|
|
| 9,223 |
|
Total |
| $ | 15,394 |
|
|
|
| 16,297 |
|
|
| 20,610 |
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 9,805 |
|
|
|
| 9,870 |
|
|
| 14,498 |
|
Towing-supply |
|
| 7,325 |
|
|
|
| 7,518 |
|
|
| 9,007 |
|
Other |
|
| — |
|
|
|
| — |
|
|
| — |
|
Total |
| $ | 8,022 |
|
|
|
| 8,241 |
|
|
| 10,090 |
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 10,687 |
|
|
|
| 11,330 |
|
|
| 15,206 |
|
Towing-supply |
|
| 12,464 |
|
|
|
| 12,820 |
|
|
| 15,206 |
|
Other |
|
| 4,068 |
|
|
|
| 3,257 |
|
|
| 4,520 |
|
Total |
| $ | 9,613 |
|
|
|
| 10,268 |
|
|
| 11,890 |
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
| $ | 12,142 |
|
|
|
| 12,743 |
|
|
| 18,969 |
|
Towing-supply |
|
| 10,141 |
|
|
|
| 10,867 |
|
|
| 12,494 |
|
Other |
|
| 5,068 |
|
|
|
| 4,687 |
|
|
| 5,312 |
|
Total |
| $ | 10,077 |
|
|
|
| 10,719 |
|
|
| 13,557 |
|
Vessel Count, Dispositions, Acquisitions and Construction Programs
The following tables compare the average number ofAverage active vessels by class and geographic distribution:
|
| Successor |
|
|
|
|
|
|
| Predecessor |
|
| ||||
|
| Period from |
|
| Period from |
|
| |||||||||
|
| August 1, 2017 |
|
| July 1, 2017 |
| Three Months | |||||||||
|
| through |
|
| through |
| Ended | |||||||||
|
| September 30, 2017 |
|
| July 31, 2017 |
| September 30, 2016 | |||||||||
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 37 |
|
|
|
|
| 41 |
|
|
|
| 41 |
|
|
Towing-supply |
|
| 19 |
|
|
|
|
| 20 |
|
|
|
| 23 |
|
|
Other |
|
| 8 |
|
|
|
|
| 8 |
|
|
|
| 9 |
|
|
Total |
|
| 64 |
|
|
|
|
| 69 |
|
|
|
| 73 |
|
|
Stacked vessels |
|
| (38 | ) |
|
|
|
| (41 | ) |
|
|
| (34 | ) |
|
Active vessels |
|
| 26 |
|
|
|
|
| 28 |
|
|
|
| 39 |
|
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 21 |
|
|
|
|
| 21 |
|
|
|
| 22 |
|
|
Towing-supply |
|
| 43 |
|
|
|
|
| 44 |
|
|
|
| 46 |
|
|
Other |
|
| 1 |
|
|
|
|
| 1 |
|
|
|
| 1 |
|
|
Total |
|
| 65 |
|
|
|
|
| 66 |
|
|
|
| 69 |
|
|
Stacked vessels |
|
| (24 | ) |
|
|
|
| (26 | ) |
|
|
| (26 | ) |
|
Active vessels |
|
| 41 |
|
|
|
|
| 40 |
|
|
|
| 43 |
|
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 44 |
|
|
|
|
| 42 |
|
|
|
| 42 |
|
|
Towing-supply |
|
| 44 |
|
|
|
|
| 44 |
|
|
|
| 43 |
|
|
Other |
|
| 32 |
|
|
|
|
| 34 |
|
|
|
| 38 |
|
|
Total |
|
| 120 |
|
|
|
|
| 120 |
|
|
|
| 123 |
|
|
Stacked vessels |
|
| (41 | ) |
|
|
|
| (45 | ) |
|
|
| (41 | ) |
|
Active vessels |
|
| 79 |
|
|
|
|
| 75 |
|
|
|
| 82 |
|
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 102 |
|
|
|
|
| 104 |
|
|
|
| 105 |
|
|
Towing-supply |
|
| 106 |
|
|
|
|
| 108 |
|
|
|
| 112 |
|
|
Other |
|
| 41 |
|
|
|
|
| 43 |
|
|
|
| 48 |
|
|
Total |
|
| 249 |
|
|
|
|
| 255 |
|
|
|
| 265 |
|
|
Stacked vessels |
|
| (103 | ) |
|
|
|
| (112 | ) |
|
|
| (101 | ) |
|
Active vessels |
|
| 146 |
|
|
|
|
| 143 |
|
|
|
| 164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total active |
|
| 146 |
|
|
|
|
| 143 |
|
|
|
| 164 |
|
|
Total stacked |
|
| 103 |
|
|
|
|
| 112 |
|
|
|
| 101 |
|
|
Total joint venture and other vessels |
|
| 8 |
|
|
|
|
| 8 |
|
|
|
| 8 |
|
|
Total |
|
| 257 |
|
|
|
|
| 263 |
|
|
|
| 273 |
|
|
| Successor |
|
|
|
|
|
|
| Predecessor |
|
| |||||
|
| Period from |
|
| Period from |
|
| |||||||||
|
| August 1, 2017 |
|
| April 1, 2017 |
| Six Months | |||||||||
|
| through |
|
| through |
| Ended | |||||||||
|
| September 30, 2017 |
|
| July 31, 2017 |
| September 30, 2016 | |||||||||
Americas fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 37 |
|
|
|
|
| 41 |
|
|
|
| 41 |
|
|
Towing-supply |
|
| 19 |
|
|
|
|
| 21 |
|
|
|
| 25 |
|
|
Other |
|
| 8 |
|
|
|
|
| 8 |
|
|
|
| 9 |
|
|
Total |
|
| 64 |
|
|
|
|
| 70 |
|
|
|
| 75 |
|
|
Stacked vessels |
|
| (38 | ) |
|
|
|
| (37 | ) |
|
|
| (33 | ) |
|
Active vessels |
|
| 26 |
|
|
|
|
| 33 |
|
|
|
| 42 |
|
|
Middle East/Asia Pacific fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 21 |
|
|
|
|
| 22 |
|
|
|
| 21 |
|
|
Towing-supply |
|
| 43 |
|
|
|
|
| 44 |
|
|
|
| 46 |
|
|
Other |
|
| 1 |
|
|
|
|
| 1 |
|
|
|
| 1 |
|
|
Total |
|
| 65 |
|
|
|
|
| 67 |
|
|
|
| 68 |
|
|
Stacked vessels |
|
| (24 | ) |
|
|
|
| (25 | ) |
|
|
| (24 | ) |
|
Active vessels |
|
| 41 |
|
|
|
|
| 42 |
|
|
|
| 44 |
|
|
Africa/Europe fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 44 |
|
|
|
|
| 41 |
|
|
|
| 42 |
|
|
Towing-supply |
|
| 44 |
|
|
|
|
| 44 |
|
|
|
| 43 |
|
|
Other |
|
| 32 |
|
|
|
|
| 36 |
|
|
|
| 38 |
|
|
Total |
|
| 120 |
|
|
|
|
| 121 |
|
|
|
| 123 |
|
|
Stacked vessels |
|
| (41 | ) |
|
|
|
| (48 | ) |
|
|
| (38 | ) |
|
Active vessels |
|
| 79 |
|
|
|
|
| 73 |
|
|
|
| 85 |
|
|
Worldwide fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater |
|
| 102 |
|
|
|
|
| 104 |
|
|
|
| 104 |
|
|
Towing-supply |
|
| 106 |
|
|
|
|
| 109 |
|
|
|
| 114 |
|
|
Other |
|
| 41 |
|
|
|
|
| 45 |
|
|
|
| 48 |
|
|
Total |
|
| 249 |
|
|
|
|
| 258 |
|
|
|
| 266 |
|
|
Stacked vessels |
|
| (103 | ) |
|
|
|
| (110 | ) |
|
|
| (95 | ) |
|
Active vessels |
|
| 146 |
|
|
|
|
| 148 |
|
|
|
| 171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total active |
|
| 146 |
|
|
|
|
| 148 |
|
|
|
| 171 |
|
|
Total stacked |
|
| 103 |
|
|
|
|
| 110 |
|
|
|
| 95 |
|
|
Total joint venture and other vessels |
|
| 8 |
|
|
|
|
| 8 |
|
|
|
| 9 |
|
|
Total |
|
| 257 |
|
|
|
|
| 266 |
|
|
|
| 275 |
|
|
Owned or chartered vessels include ourexclude stacked vessels. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is being performed on the vessel. We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and they are no longer considered stacked when they are returned to active service, sold or otherwise disposed. When economically practical charteringmarketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are considered to be in service and are included in the calculation
of our utilization statistics. The companyWe had 91, 10963 and 11560 stacked vessels at SeptemberJune 30, 2017, July 31, 20172020 and September2019, respectively. Total stacking costs for the three and six months ended June 30, 2016,2020 were $4.8 million and $8.7 million, respectively. The above average vessel count at September 30, 2017, July 31, 2017 and September 30, 2016 also included 14, 16 and 16 leased vessels, respectively, for which the company has terminated its lease agreements in accordance with the Plan of Reorganization.
The following is a summary of net properties and equipment at September 30, 2017 and March 31, 2017:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Properties and equipment: |
|
|
|
|
|
|
|
|
|
Vessels and related equipment |
| $ | 854,403 |
|
|
|
| 3,407,760 |
|
Other properties and equipment |
|
| 22,424 |
|
|
|
| 69,670 |
|
|
|
| 876,827 |
|
|
|
| 3,477,430 |
|
Less accumulated depreciation and amortization |
|
| 8,138 |
|
|
|
| 612,668 |
|
Net properties and equipment |
| $ | 868,689 |
|
|
|
| 2,864,762 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||||||
|
| September 30, 2017 |
|
|
| March 31, 2017 |
| ||||||||||
|
| Number |
|
| Carrying |
|
|
| Number |
|
| Carrying |
| ||||
|
| Of Vessels (B) |
|
| Value |
|
|
| of Vessels |
|
| Value |
| ||||
|
|
|
|
|
| (In thousands) |
|
|
|
|
|
|
| (In thousands) |
| ||
Owned vessels in active service |
|
| 143 |
|
| $ | 634,069 |
|
|
|
| 143 |
|
| $ | 1,990,049 |
|
Stacked vessels |
|
| 89 |
|
|
| 202,948 |
|
|
|
| 101 |
|
|
| 793,606 |
|
Marine equipment and other assets under construction |
|
|
|
|
|
| 9,736 |
|
|
|
|
|
|
|
| 53,611 |
|
Other property and equipment (A) |
|
|
|
|
|
| 21,936 |
|
|
|
|
|
|
|
| 27,496 |
|
Totals |
|
| 232 |
|
| $ | 868,689 |
|
|
|
| 244 |
|
| $ | 2,864,762 |
|
|
|
|
|
Vessel Dispositions
The company seeksWe seek opportunities to sell and/or scrap itsour older vessels when market conditions warrant and opportunities arise. The majority of our vessels are sold to buyers who do not compete with the companyus in the offshore energy industry. The following is a summary of the number ofVessels sales in 2020 included 22 vessels disposed of by vessel type and segment:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Number of vessels disposed by vessel type: (A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater PSVs |
|
| — |
|
|
|
| — |
|
|
| 1 |
|
Towing-supply vessels |
|
| 3 |
|
|
|
| 2 |
|
|
| 5 |
|
Other |
|
| 2 |
|
|
|
| 5 |
|
|
| 1 |
|
Total |
|
| 5 |
|
|
|
| 7 |
|
|
| 7 |
|
Number of vessels disposed by segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
| — |
|
|
|
| 2 |
|
|
| 6 |
|
Middle East/Asia Pacific |
|
| 3 |
|
|
|
| — |
|
|
| — |
|
Africa/Europe |
|
| 2 |
|
|
|
| 5 |
|
|
| 1 |
|
Total |
|
| 5 |
|
|
|
| 7 |
|
|
| 7 |
|
(A) Vessel dispositions exclude the return of leased vessels to their respective owners.
Vessel Commitments at September 30, 2017
During the quarter ended March 31, 2017, the company rejected the delivery of a PSV under construction and withheld the final contractual milestone payment for failure of the vessel to meet certain significant contract specifications. Thereafter, the company delivered a formal notice of default to the shipyard demanding a cure of the deficiencies, after which the shipyard declared the company in default for refusing to accept delivery. Subsequently, the company submitted a demand to the shipyard seeking a refund of all amounts paid by the company to date, totaling approximately $43 million plus accrued contractual interest. In March 2017, the shipyard filed a notice of arbitration alleging breach of contract with respect to the company’s rejection of the PSV and anticipatory breach of contract based on the company’s anticipated rejection of a second PSV under construction. Through this arbitration, the shipyard is seeking an order requiring the company to take delivery of both vessels and to reimburse the shipyard for certain costs incurred by the shipyard. The company, on the other hand, is seeking the full refund referenced above or, in the alternative, a substantial reduction in the price of the rejected vessel. Approximately $48.7 million of accumulated costs for the rejected vessel have been reclassified from construction in progress to other assets and it is not included in our vessel count. The shipyard has also informed the company that the construction of a second PSV has been suspended and may not be tendered for delivery given the ongoing dispute. Accordingly, the expected delivery date is not known. Subsequent to September 30, 2017, the parties have engaged in settlement negotiations to resolve all outstanding disputes related to both vessels. Given that these negotiations are ongoing, however, it is not known at this time whether the disputes will be ultimately resolved. Pending these negotiations, the parties have asked a newly appointed arbitration panel to suspend its activities. In conjunction with the company’s bankruptcy emergence and application of fresh-start accounting as of July 31, 2017, a valuation analysis was performed on these vessels in their current state. As of September 30, 2017 these vessels are valued at $ 7.0 million each.
The company has experienced substantial delay with one fast supply boat under construction in Brazil that was originally scheduled to be delivered in September 2009. On April 5, 2011, pursuant to the vessel construction contract, the company sent the subject shipyard a letter initiating arbitration in order to resolve disputes of such matters as the shipyard’s failure to achieve payment milestones, its failure to follow the construction schedule, and its failure to timely deliver the vessel. The company has suspended construction on the vessel and both parties continue to pursue arbitration. During 2016 the company reclassified the remaining accumulated costs of $5.6 million from construction in progress to other assets as an insurance receivable. In conjunction with the company’s bankruptcy emergence and application of fresh-start accounting as of July 31, 2017 a valuation analysis was performed to assess the likelihood and extent of the recovery of the disputed amount and as a result, the remaining insurance receivable has been valued at $1.8 million as of July 31, 2017 and September 30, 2017.
The company generally requires shipyards to provide third party credit support in the event that vessels are not completed and delivered timely and in accordance with the terms of the shipbuilding contracts. That third party credit support typically guarantees the return of amounts paid by the company and generally takes the form of refundment guarantees or standby letters of credit issued by major financial institutions generally located in the country of the shipyard. While the company seeks to minimize its shipyard credit risk by requiring these instruments, the ultimate return of amounts paid by the company in the event of shipyard default is still subject to the creditworthiness of the shipyard and the provider of the credit support, as well as the company’s ability to successfully pursue legal action to compel payment of these instruments. When third party credit support that is acceptable to the company is not available or cost effective, the company endeavors to limit its credit risk by minimizing pre-delivery payments and through other contract terms with the shipyard.
We believe we have sufficient liquidity and financial capacity to support the continued investment in the remaining vessel under construction. In recent years, we have funded vessel additions with available cash, operating cash flow, proceeds from the disposition of (generally older) vessels, revolving bank credit facility borrowings, a bank term loan, various leasing arrangements, and funds provided by the sale of senior unsecured notes. See “Liquidity, Capital Resources and Other” below and “Indebtedness – New Secured Notes” below for additional information on limitations for certain of these funding sources going forward. We have approximately $5.5 million in unfunded capital commitments associated with the vessel under construction at September 30, 2017.
General and Administrative Expenses
Consolidated general and administrative expenses and the related percentage of total, consist of the following components:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Personnel |
| $ | 10,129 |
|
|
| 14 | % |
|
|
| 4,662 |
|
|
| 13 | % |
|
| 17,829 |
|
|
| 12 | % |
Office and property |
|
| 2,488 |
|
|
| 3 | % |
|
|
| 1,210 |
|
|
| 3 | % |
|
| 4,394 |
|
|
| 3 | % |
Sales and marketing |
|
| 354 |
|
|
| 1 | % |
|
|
| 196 |
|
|
| 1 | % |
|
| 1,022 |
|
|
| 1 | % |
Professional services |
|
| 2,348 |
|
|
| 3 | % |
|
|
| 597 |
|
|
| 1 | % |
|
| 6,892 |
|
|
| 5 | % |
Other |
|
| 927 |
|
|
| 1 | % |
|
|
| 2,108 |
|
|
| 6 | % |
|
| 2,817 |
|
|
| 2 | % |
Total |
| $ | 16,246 |
|
|
| 22 | % |
|
|
| 8,773 |
|
|
| 24 | % |
|
| 32,954 |
|
|
| 23 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Personnel |
| $ | 10,129 |
|
|
| 14 | % |
|
|
| 20,919 |
|
|
| 14 | % |
|
| 37,220 |
|
|
| 12 | % |
Office and property |
|
| 2,488 |
|
|
| 3 | % |
|
|
| 5,109 |
|
|
| 3 | % |
|
| 9,298 |
|
|
| 3 | % |
Sales and marketing |
|
| 354 |
|
|
| 1 | % |
|
|
| 844 |
|
|
| 1 | % |
|
| 2,334 |
|
|
| 1 | % |
Professional services |
|
| 2,348 |
|
|
| 3 | % |
|
|
| 10,757 |
|
|
| 7 | % |
|
| 16,303 |
|
|
| 5 | % |
Other |
|
| 927 |
|
|
| 1 | % |
|
|
| 4,203 |
|
|
| 3 | % |
|
| 4,846 |
|
|
| 1 | % |
Total |
| $ | 16,246 |
|
|
| 22 | % |
|
|
| 41,832 |
|
|
| 28 | % |
|
| 70,001 |
|
|
| 22 | % |
Segment and corporate general and administrative expenses and the related percentage of total general and administrative expenses were as follows:
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operations |
| $ | 11,214 |
|
|
| 69 | % |
|
|
| 5,879 |
|
|
| 67 | % |
|
| 22,337 |
|
|
| 68 | % |
Other operating activities |
|
| 235 |
|
|
| 1 | % |
|
|
| 54 |
|
|
| 1 | % |
|
| 611 |
|
|
| 2 | % |
Corporate |
|
| 4,797 |
|
|
| 30 | % |
|
|
| 2,840 |
|
|
| 32 | % |
|
| 10,006 |
|
|
| 30 | % |
Total |
| $ | 16,246 |
|
|
| 100 | % |
|
|
| 8,773 |
|
|
| 100 | % |
|
| 32,954 |
|
|
| 100 | % |
|
| Successor |
|
|
| Predecessor |
| ||||||||||||||||||
|
| Period from |
|
|
| Period from |
|
|
|
| |||||||||||||||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||||||||||||||
|
| through |
|
|
| through |
|
| Ended |
| |||||||||||||||
|
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||||||||||||||
(In thousands) |
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
|
|
|
| % |
| |||
Vessel operations |
| $ | 11,214 |
|
|
| 69 | % |
|
|
| 23,881 |
|
|
| 57 | % |
|
| 48,253 |
|
|
| 69 | % |
Other operating activities |
|
| 235 |
|
|
| 1 | % |
|
|
| 409 |
|
|
| 1 | % |
|
| 1,249 |
|
|
| 2 | % |
Corporate |
|
| 4,797 |
|
|
| 30 | % |
|
|
| 17,542 |
|
|
| 42 | % |
|
| 20,499 |
|
|
| 29 | % |
Total |
| $ | 16,246 |
|
|
| 100 | % |
|
|
| 41,832 |
|
|
| 100 | % |
|
| 70,001 |
|
|
| 100 | % |
The company has continued its efforts to reduce overhead costs due to the downturn in the offshore oil services market. Such efforts have included wage and headcount reductions, shore-based office consolidations and reductions in compensation and benefits for shore-based staff. These cost reductions have been partially offset by an increase in professional services expenses primarily related to our efforts to renegotiate the terms of various debt arrangements and related consulting services which are classified as corporate generalassets held for sale and administrative expenses up until3 vessels from our Petition Date of May 17, 2017. During the period from April 1, 2017 through July 31, 2017 (Predecessor), the company recognized $6.7 million of professional services expenses related to debt negotiations as general and administrative expenses. During the quarter and six-month ended September 30, 2016 (Predecessor) the company recognized $3.1 million and $7.0 million, respectively, of professional services expenses related to debt negotiations as general and administrative expenses.active fleet.
During the period from August 1, 2017 through September 30, 2017 (Successor) and the period from July 1, 2017 through July 31, 2017 (Predecessor), the company recognized $0.6 million and $22.8 million, respectively, of professional services expenses related to debt negotiations as reorganization items, respectively. During the period from April 1, 2017 through July 31, 2017 (Predecessor), the company recognized $28.0 million of such professional services expenses as reorganization items.
Liquidity, Capital Resources and Other Matters
At September 30, 2017, we had $460 million of cash and cash equivalents. As of our Emergence Date, we no longer have a revolving line of credit. Cash and cash equivalents and future net cash provided by operating activities provide us, in our opinion, with sufficient liquidity to meet our liquidity requirements, including repayment of debt based on stated maturities and required payments on remaining vessel construction commitments.
With the Effective Date of the Plan on July 31, 2017, $225 million of cash was, or will be, paid to impaired creditors pursuant to the Plan and approximately $1.6 billion of debt, net, was eliminated, leaving approximately $440 million of total debt outstanding. Total debt outstanding on July 31, 2017 includes $350 million of newly issued, 5-year, senior secured notes, which bear interest at 8.00% per annum. See “Bankruptcy Proceedings and Emergence” above and “Indebtedness – New Secured Notes” below for additional information.
Availability of Cash
At SeptemberJune 30, 2017,2020, we had $460$206.4 million in cash and cash equivalents (excluding $19.9 million of which $120.8 million wasrestricted cash), including amounts held by foreign subsidiaries, the majority of which is available to the companyus without adverse tax consequences. Included in foreign subsidiary cash are balances held in U.S. dollars and foreign currencies that await repatriation due to various currency conversion and repatriation constraints, or partner andor tax related matters, prior to the cash being made available for remittance to the company’sour domestic accounts. We currently intend that earnings by foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions in order to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay debt (both third-party and intercompany) of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the United StatesU. S. because cash generated from our domestic businesses and the repayment of intercompany liabilities from foreign subsidiaries are currently deemed to be sufficient to fund the cash needs of our operations in the United States. The $225U. S. Restricted cash of $19.9 million represents the portion of proceeds from vessel sales reserved for a cash paid to creditors pursuant to the termstender of the RSA was funded by foreign subsidiaries through the repayment of intercompany liabilities. If,Senior Notes that may be required if certain conditions in the future, cashunderlying indenture are satisfied.
During the first quarter of 2020, the industry was impacted by a world-wide pandemic that had the effect of isolating people across the world and cash equivalents held by foreign subsidiaries are needed to fundsignificantly reducing the demand and price for crude oil. See a detailed discussion under “Industry Conditions and Outlook” above. The reduced oil price will impact our operationsindustry in the United States,near term and if it is prolonged could impact us beyond this year. We have significant cash on hand and the repatriationsubstantial portion of such amountsour debt is not due until 2022. As a company, we have undertaken the following temporary measures to assist us in weathering the United States could result in a significant incremental tax liability in the period in which the decisionpandemic and allow us to repatriate occurs. Payment of any incremental tax liability would reduce our available cash to fund our operations by the amount of taxes paid.recover as soon as possible:
The following is a summary of all debt outstanding at September 30, 2017 and March 31, 2017:
|
| Successor |
|
|
| Predecessor |
| ||
|
| September 30, |
|
|
| March 31, |
| ||
(In thousands) |
| 2017 |
|
|
| 2017 |
| ||
Term loan (A) |
| $ | — |
|
|
|
| 300,000 |
|
Revolving line of credit (A) (B) |
|
| — |
|
|
|
| 600,000 |
|
September 2013 senior unsecured notes (A) |
|
| — |
|
|
|
| 500,000 |
|
August 2011 senior unsecured notes (A) |
|
| — |
|
|
|
| 165,000 |
|
September 2010 senior unsecured notes (A) |
|
| — |
|
|
|
| 382,500 |
|
New secured notes (A) |
|
| 350,000 |
|
|
|
| — |
|
New secured notes - premium |
|
| 14,987 |
|
|
|
| — |
|
Troms Offshore borrowings: |
|
|
|
|
|
|
|
|
|
May 2015 notes (C) |
|
| 26,115 |
|
|
|
| 27,421 |
|
May 2015 notes - discount |
|
| (1,927 | ) |
|
|
| — |
|
March 2015 notes (C) |
|
| 23,345 |
|
|
|
| 24,573 |
|
March 2015 notes - discount |
|
| (1,755 | ) |
|
|
| — |
|
January 2014 notes (C) (D) |
|
| 26,687 |
|
|
|
| 26,167 |
|
January 2014 notes - discount |
|
| (1,707 | ) |
|
|
| — |
|
May 2012 notes (C) (D) |
|
| 14,980 |
|
|
|
| 14,864 |
|
May 2012 notes - premium |
|
| 126 |
|
|
|
| — |
|
|
|
| 450,851 |
|
|
|
| 2,040,525 |
|
Less: Deferred debt issue costs |
|
| — |
|
|
|
| 6,401 |
|
Less: Current portion of long-term debt |
|
| 5,174 |
|
|
|
| 2,034,124 |
|
Total long-term debt |
| $ | 445,677 |
|
|
|
| — |
|
| • | Planned capital and dry dock expenditures tied to contracts referenced in “Industry Conditions and Outlook” above will be temporarily delayed or cancelled. As |
|
|
|
|
|
|
New Secured Notes
On July 31, 2017, pursuantOur objective in financing our business is to the termsmaintain adequate financial resources and access to sufficient levels of the Plan, the company entered into an indenture (the “Indenture”)liquidity. We do not have a revolving credit facility. Cash and cash equivalents and net cash provided by and among the company, the wholly-owned subsidiaries named as guarantors therein (the “Guarantors”), and Wilmington Trust, National Association, as trustee and collateral agent (the “Trustee”), and issued $350 million aggregate principal amount of the company’s new 8.00% Senior Secured Notes due 2022 (the “New Secured Notes”).
The New Secured Notes will mature on August 1, 2022. Interest on the New Secured Notes will accrue at a rate of 8.00% per annum payable quarterlyoperating activities provide us, in arrears on February 1, May 1, August 1, and November 1 of each year in cash, beginning November 1, 2017. The New Secured Notes are secured by substantially all of the assets of the company and its Guarantors.
The New Secured Notes have minimum interest coverage requirement (EBITDA/Interest), for which compliance will first be measured for the twelve months ending June 30, 2019. Minimumour opinion, with sufficient liquidity requirements and other covenants are set forth in the Indenture. The Indenture also contains certain customary events of default.
Until terminated under the circumstances described in this paragraph, the New Secured Notes and the guarantees by the Guarantors will be secured by the Collateral (as defined in the Indenture) pursuant to the terms of the Indenture and the related security documents. The Trustee’s liens upon the Collateral and the right of the holders of the New Secured Notes to the benefits and proceeds of the Trustee’s liens on the Collateral will terminate and be discharged in certain circumstances described in the Indenture, including: (i) upon satisfaction and discharge of the Indenture in accordance with the terms thereof; or (ii) as to any Collateral of the company or the Guarantors that is sold, transferred or otherwise disposed of by the company or the Guarantors in a transaction or other circumstance that complies with the terms of the Indenture, at the time of such sale, transfer or other disposition.meet our liquidity requirements.
The company is obligated to offer to holders of the New Secured Notes under the Indenture to repurchase the New Secured Notes at par in amounts up to 100% or less of asset sale proceeds depending upon the types of assets sold as defined in the Indenture.
Modifications to Troms Offshore Borrowings
Concurrent with the July 31, 2017 Effective Date of the Plan, the Troms Offshore credit agreement was amended and restated to (i) reduce by 50% the required principal payments due from the Effective Date through March 31, 2019, (ii) modestly increase the interest rates on amounts outstanding through April 2023, and (iii) provide for security and additional guarantees, including (a) mortgages on six vessels and related assignments of earnings and insurances, (b) share pledges by Troms Offshore and certain subsidiaries of Troms Offshore, and (c) guarantees by certain subsidiaries of Troms Offshore.
The Troms Offshore borrowings continue to require semi-annual principal payments and bear interest at fixed rates based on Tidewater Inc.’s consolidated funded indebtedness to total capitalization ratio. As of September 30, 2017, the weighted average interest rate of the four tranches of Troms Offshore borrowings was 5.01%.
Debt Costs
The company capitalizes a portion of its interest costs incurred on borrowed funds used to construct vessels. The following is a summary of interest and debt costs incurred, net of interest capitalized:
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| July 1, 2017 |
|
| Three Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Interest and debt costs incurred, net of interest capitalized |
| $ | 5,240 |
|
|
|
| 574 |
|
|
| 18,477 |
|
Interest costs capitalized |
|
| — |
|
|
|
| — |
|
|
| 1,101 |
|
Total interest and debt costs |
| $ | 5,240 |
|
|
|
| 574 |
|
|
| 19,578 |
|
|
| Successor |
|
|
| Predecessor |
| ||||||
|
| Period from |
|
|
| Period from |
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
| April 1, 2017 |
|
| Six Months |
| |||
|
| through |
|
|
| through |
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
| July 31, 2017 |
|
| September 30, 2016 |
| |||
Interest and debt costs incurred, net of interest capitalized |
| $ | 5,240 |
|
|
|
| 11,179 |
|
|
| 35,431 |
|
Interest costs capitalized |
|
| — |
|
|
|
| — |
|
|
| 2,494 |
|
Total interest and debt costs |
| $ | 5,240 |
|
|
|
| 11,179 |
|
|
| 37,925 |
|
Debt
The company recognized interest expense incurred subsequentRefer to its Petition Date date onlyNote (9) of Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on our indebtedness.
We may from time to the extent that such interest was paid during the proceedingstime seek to retire or that it is probable that it would be an allowed claim. Accrued interest on the term loan, revolving line of credit and senior notes subsequent to the Petition Date was not an allowed claimpurchase our outstanding debt through cash purchases and/or exchanges for equity securities, in the Plan; therefore, the company did not record interest expense subsequent to that date. Had the term loan, revolving line of credit and senior notes not been compromised by the Plan, interest expense through the Effective Date of July 31, 2017 would have been approximately $27 million.open market purchases, privately negotiated transactions or otherwise. Such repurchases or
exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Operating Activities
Net cash used in operating activities for any period will fluctuate according to the level of business activity for the applicable period.six months ended June 30, 2020 and 2019, was $12.8 million and $20.7 million, respectively.
Net cash used in operating activities, is as follows:
|
| Successor |
|
| Predecessor |
| |||||||||
|
| Period from |
|
|
|
| Period from |
|
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
|
| April 1, 2017 |
|
|
| Six Months |
| |||
|
| through |
|
|
|
| through |
|
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
|
| July 31, 2017 |
|
|
| September 30, 2016 |
| |||
Net loss |
| $ | (15,527 | ) |
|
|
|
| (1,646,909 | ) |
|
|
| (266,266 | ) |
Reorganization items |
|
| — |
|
|
|
|
| 1,368,882 |
|
|
|
| — |
|
Depreciation and amortization |
|
| 8,138 |
|
|
|
|
| 47,447 |
|
|
|
| 88,397 |
|
Amortization of deferred drydocking and survey costs |
|
| 4 |
|
|
|
|
| — |
|
|
|
| — |
|
Amortization of debt premiums and discounts |
|
| (281 | ) |
|
|
|
| — |
|
|
|
| — |
|
Provision for deferred income taxes |
|
| — |
|
|
|
|
| (5,543 | ) |
|
|
| — |
|
Gain on asset dispositions, net |
|
| (4 | ) |
|
|
|
| (3,560 | ) |
|
|
| (11,896 | ) |
Asset impairments |
|
| — |
|
|
|
|
| 184,748 |
|
|
|
| 166,448 |
|
Changes in operating assets and liabilities |
|
| (6,348 | ) |
|
|
|
| 34,592 |
|
|
|
| (4,046 | ) |
Changes in due to/from affiliate, net |
|
| (3,920 | ) |
|
|
|
| 1,301 |
|
|
|
| 25,792 |
|
Other non-cash items |
|
| 129 |
|
|
|
|
| (2,545 | ) |
|
|
| 969 |
|
Net cash used in operating activities |
| $ | (17,809 | ) |
|
|
|
| (21,587 | ) |
|
|
| (602 | ) |
Cash flows used in operations for the period August 1, 2017 through Septembersix months ended June 30, 2017 was $17.8 million and2020, reflects a net loss of $15.5$129.4 million, which includes non-cash depreciation and amortization of $8.1$55.3 million, net gains on asset dispositions of $7.0 million, an affiliate credit loss impairment expense of $53.6 million and long-lived asset impairments of $65.7 million. Combined changes in operating assets and liabilities and in amounts due to/due from affiliate, net used $10.1$28.3 million of netin cash primarily due to decreases in accrued expenses and commission payments made to the Sonatide joint venture.cash paid for deferred drydocking and survey costs was $29.0 million.
Cash flows used in operations for the period April 1, 2017 through July 31, 2017 was $21.6 million and reflects a net loss of $1.6 billion, which included non-cash reorganization items of $1.4 billion, asset impairments of $184.7 million and depreciation and amortization of $47.4 million. Changes in operating assets and liabilities provided $34.6 million of netNet cash and included increases in trade payables of $8.2 million and increases to accrued expenses of payable of $17.2 million (of which an increase of $7.9 million was related to reorganization-related professional fees) and a reduction in accounts receivables of $6.4 million. Changes in due to/from affiliate provided $1.3 million of cash primarily as a result of more modest cash repatriations from our Sonatide joint venture.
Cash flows used in operations for the six months ended SeptemberJune 30, 2017 was $0.6 million and2019 reflects a net loss of $266.3$36.8 million, which includedincludes non-cash asset impairment charges of $166.5 million and depreciation and amortization of $88.4$48.0 million, which were partially offset by gainsgain on asset dispositions, net of $11.9$0.8 million and stock-based compensation expense of $9.2 million. ChangesCombined charges in our netoperating assets and liabilities and in amounts due to/from affiliate, which provided $25.8net, used $11.0 million was the result of cash repatriated from our Sonatide joint venture and were partially offset by changes in our operating assetscash paid for deferred drydock and liabilities which used net cashsurvey costs of $4$28.7 million.
Investing Activities
Net cash provided by in investing activities for the six months ended June 30, 2020 and 2019, was $16.8 million and $11.7 million, respectively. Net cash provided by investing activities is as follows:
|
| Successor |
|
| Predecessor |
| |||||||||
|
| Period from |
|
|
|
| Period from |
|
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
|
| April 1, 2017 |
|
|
| Six Months |
| |||
|
| through |
|
|
|
| through |
|
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
|
| July 31, 2017 |
|
|
| September 30, 2016 |
| |||
Proceeds from the sale of assets |
| $ | 4,875 |
|
|
|
|
| 2,172 |
|
|
|
| 1,839 |
|
Additions to properties and equipment |
|
| (589 | ) |
|
|
|
| (2,265 | ) |
|
|
| (9,509 | ) |
Payments related to novated vessel construction contract |
|
| — |
|
|
|
|
| 5,272 |
|
|
|
| — |
|
Refunds from cancelled vessel construction contracts |
|
| — |
|
|
|
|
| — |
|
|
|
| 11,515 |
|
Net cash provided by investing activities |
| $ | 4,286 |
|
|
|
|
| 5,179 |
|
|
|
| 3,845 |
|
Investing activities for the period August 1, 2017 through Septembersix months ended June 30, 2017 provided $4.32020 primarily reflects the receipt of $20.9 million of net cash, reflecting proceeds fromrelated to the sale or scrapping of assets of $4.9 million, which was partially offset by an increase to properties and equipment of $0.6 million.25 vessels. Additions to properties and equipment for the period August 1, 2017 through September 30, 2017 were comprised of approximately $0.5$2.8 million in capitalized upgrades to existing vessels and equipment and $0.1$1.3 million for the construction of offshore support vessels. other property and equipment purchases.
InvestingNet cash provided by investing activities for the period April 1, 2017 through July 31, 2017 provided $5.2 million of net cash, reflectingsix months ended June 30, 2019 primarily reflects the receipt of $5.3$20.6 million from an unaffiliated entity in connection with that entity’s assumption of the company’s obligations related to a vessel under construction at an international shipyard and proceeds received from the sale or scrapping of seven vessels and other assets of $2.2 million.34 vessels. Additions to properties and equipment for the period April 1, 2017 through July 31, 2017 were comprised of approximately $1.3$8.0 million in capitalized upgrades to existing vessels and equipment and $0.9$0.8 million for the construction of offshore support vessels.
Investing activities for the six months ended September 30, 2016 provided $3.8 million of cash which is the result of the receipt of $11.5 million from a shipyard related to vessel contracts which were cancelled due to late delivery and proceeds received related to the sale of assets of $1.8 million. Cash used in the additions to properties and equipment were comprised of approximately $0.4 million in capitalized upgrades to existing vessels and equipment, $9 million for the construction of offshore support vessels and $0.1 million in other propertiesproperty and equipment purchases.
Financing Activities
Net cash used in financing activities is as follows:
|
| Successor |
|
| Predecessor |
| |||||||||
|
| Period from |
|
|
|
| Period from |
|
|
|
|
|
| ||
|
| August 1, 2017 |
|
|
|
| April 1, 2017 |
|
|
| Six Months |
| |||
|
| through |
|
|
|
| through |
|
|
| Ended |
| |||
(In thousands) |
| September 30, 2017 |
|
|
|
| July 31, 2017 |
|
|
| September 30, 2016 |
| |||
Principal payment on long-term debt |
| $ | — |
|
|
|
|
| (5,124 | ) |
|
|
| (5,036 | ) |
Cash payments to General Unsecured Creditors |
|
| (87,366 | ) |
|
|
|
| (122,806 | ) |
|
|
| — |
|
Cash received for issuance of common stock |
|
| 1 |
|
|
|
|
| — |
|
|
|
| — |
|
Other |
|
| — |
|
|
|
|
| (1,200 | ) |
|
|
| (1,722 | ) |
Net cash used in financing activities |
| $ | (87,365 | ) |
|
|
|
| (129,130 | ) |
|
|
| (6,758 | ) |
Financingfor the six months ended June 30, 2020 and 2019, was $5.4 million and $5.6 million, respectively. Net cash usedin financing activities for the period August 1, 2017 through Septembersix months ended June 30, 2017 used $87.4 million of net cash, as a result of payments made to creditors pursuant to the Plan of Reorganization of $87.4 million. Financing activities for the period April 1, 2017 through July 31, 2017 used $129.1 million of cash as a result of payments made to creditors pursuant to the Plan of Reorganization of $122.8 million, $5.12020 included $4.7 million of scheduled semiannual principal payments on Troms offshore debt and $1.2$0.6 million of commissionstaxes paid to a non-controlling owner of a consolidated joint venture entity. related share-based compensation.
FinancingNet cash used in financing activities for the six months ended SeptemberJune 30, 2016 used $6.8 million of cash, primarily due to $52019 included $3.6 million of scheduled semiannual principal payments on Troms debt.offshore debt, $1.8 million of taxes paid to related share-based compensation and the repurchase of $0.2 million of New Secured Notes resulting from a tender offer.
Other Liquidity Matters
Vessel Construction. We have successfully replaced the vast majority of the older vessels in our fleet with a smaller number of newer, larger and more efficient vessels that have a more extensive range of capabilities and have one remaining vessel currently under construction. We anticipate that we will use available cash in order to fund the remaining $5.5 million due on this remaining vessel. Refer to the “Vessel Commitments at September 30, 2017” section of Management’s Discussion and Analysis for more information on the status of vessels currently under construction.
We generally require shipyards to provide third party credit support in the event that vessels are not completed and delivered timely and in accordance with the terms of the shipbuilding contracts. That third party credit support typically guarantees the return of amounts paid by us and generally takes the form of refundment guarantees or standby letters of credit issued by major financial institutions generally located in the country of the shipyard. While we seek to minimize our shipyard credit risk by requiring these instruments, the ultimate return of amounts paid by the company in the event of shipyard default is still subject to the creditworthiness of the shipyard and the provider of the credit support, as well as our
ability to pursue successfully legal action to compel payment of these instruments. When third party credit support that is acceptable to us is not available or cost effective, we endeavor to limit our credit risk by minimizing pre-delivery payments and through other contract terms with the shipyard.
Brazilian Customs. In April 2011, two Brazilian subsidiaries of Tidewater were notified by the Customs Office in Macae, Brazil that they were jointly and severally being assessed fines of 155 million Brazilian reais (approximately $49 million as of September 30, 2017). The assessment of these fines is for the alleged failure of these subsidiaries to obtain import licenses with respect to 17 company vessels that provided Brazilian offshore vessel services to Petrobras, the Brazilian national oil company, over a three-year period ended December 2009. After consultation with its Brazilian tax advisors, the company and its Brazilian subsidiaries believe that vessels that provide services under contract to the Brazilian offshore oil and gas industry are deemed, under applicable law and regulations, to be temporarily imported into Brazil, and thus exempt from the import license requirement. The Macae Customs Office has, without a change in the underlying applicable law or regulations, taken the position that the temporary importation exemption is only available to new, and not used, goods imported into Brazil and therefore it was improper for the company to deem its vessels as being temporarily imported. The fines have been assessed based on this new interpretation of Brazilian customs law taken by the Macae Customs Office.
After consultation with its Brazilian tax advisors, the company believes that the assessment is without legal justification and that the Macae Customs Office has misinterpreted applicable Brazilian law on duties and customs. The company is vigorously contesting these fines (which it has neither paid nor accrued). Based on the advice of its Brazilian counsel, the company believes that it has a high probability of success with respect to overturning the entire amount of the fines, either at the administrative appeal level or, if necessary, in Brazilian courts. In May 2016, a final administrative appeal allowed fines totaling 3 million Brazilian reais (approximately $0.9 million as of September 30, 2017). The company intends to appeal this 3 million Brazilian reais administrative award to the appropriate Brazilian court and deposited 6 million Brazilian reais (approximately $1.9 million as of September 30, 2017) with the court. The 6 million Brazilian reais deposit represents the amount of the award and the substantial interest that would be due if the company did not prevail in this court action. The court action is in its initial stages. Fines totaling 30 million Brazilian reais (approximately $9.5 million as of September 30, 2017) are still subject to additional administrative appeals board hearings, but the company believes that previous administrative appeals board decisions will be helpful in those upcoming hearings for the vast majority of amounts still claimed by the Macae Customs Office. The remaining fines totaling 122 million (approximately $38.6 million as of September 30, 2017) of the original 155 million Brazilian reais of fines are now formally resolved in favor of the company and are no longer at issue. The company believes that the ultimate resolution of this matter will not have a material effect on the company’s financial position, results of operations or cash flows.
Repairs to U.S. Flagged Vessels Operating Abroad. In early 2015 the company became aware that it may have had compliance deficiencies in documenting and declaring upon re-entry to the U.S. certain foreign purchases for or repairs to U.S. flagged vessels while they were working outside of the U.S. When a U.S. flagged vessel operates abroad, certain foreign purchases for or repairs made to the U.S. flagged vessel while it is outside of the U.S. are subject to declaration with U.S. Customs and Border Protection (CBP) upon re-entry to the U.S. and are subject to 50% vessel repair duty. During our examination of our filings made in or prior to calendar 2015 with CBP, we determined that it was necessary to file amended forms with CBP to supplement previous filings. We have amended several vessel repair entries with CBP and have paid additional vessel repair duties and interest associated with these amended forms. With respect to certain of our amended vessel repair entries, CBP has advised us that it is contemplating the assessment of civil penalties and interest for alleged violations of the vessel repair statute. In accordance with CBP regulations, we are protesting the assessment of civil penalties and interest and are requesting mitigation of those civil penalties. We anticipate that CBP will seek to impose additional vessel repair duty, civil penalties and interest pending its review of our other amended filings and we will continue to protest any such determinations in accordance with CBP’s guidelines. Therefore, the final amount of vessel repair duty and/or civil penalties and interest associated with amending various vessel repair entries is not known at this time.
Legal Proceedings.
Arbitral Award for the Taking of the Company’s Venezuelan Operations. On December 27, 2016, the annulment committee formed under the rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) issued a decision on the Bolivarian Republic of Venezuela’s (“Venezuela”) application to annul the award rendered by an ICSID tribunal on March 13, 2015. As previously reported, the award granted two subsidiaries of the Company (the “Claimants”) compensation for Venezuela’s expropriation of their investments in that country. The nature of the investments expropriated and the progress of the ICSID proceeding were previously reported by the company in prior filings. The annulment committee’s decision reduced the total compensation awarded to the Claimants to $36.4 million. That compensation is accruing interest at an annual rate of 4.5% compounded quarterly from May 8, 2009 to the date of payment
of that amount ($16.6 million as of September 30, 2017). The annulment committee also left undisturbed the portion of the award that granted the Claimants $2.5 million in legal fees and other costs related to the arbitration. The reduction of $10 million in compensation from the earlier award of $46.4 million represents that portion of the tribunal’s award that the annulment committee determined had not been properly explained by the tribunal’s analysis. The final aggregate award is therefore $55.5 million as of September 30, 2017. The award for that amount is immediately enforceable and not subject to any further stay of enforcement. The annulment committee’s decision is not subject to any further ICSID review, appeal or other substantive proceeding.
The company is committed to taking appropriate steps to enforce and collect the award, which is enforceable in any of the 150 member states that are party to the ICSID Convention. As an initial step, the company was successful in having the award recognized and entered in March 2015 as a final judgment by the United States District Court for the Southern District of New York. In addition, the company was successful in having the award recognized and entered in November 2016 as a final judgment of the High Court of Justice of England and Wales. Even with the recognition of the award in the United States and United Kingdom courts, the company recognizes that collection of the award may present significant practical challenges. The company is accounting for this matter as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450 Contingencies.
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 material adverse effect on the company's financial position, results of operations, or cash flows.
Contractual Obligations and Other CommercialContingent Commitments
A discussion regarding our vessel construction commitments is disclosed in the “Vessel Count, Dispositions, Acquisitions and Construction Programs” section above.
We did not have any other material changes in our contractual obligations and commercial commitments other than insince the ordinary courseend of business since March 31, 2017, except as noted below. The following table and discussion summarizes the changes to our consolidated contractual obligations as of September 30, 2017 through December 31, 2017, and the next four years and thereafter, and the effect such obligations, inclusive of interest costs, are expected to have on the company’s liquidity and cash flows in future periods:
(In thousands) |
| Payments Due by Year |
| |||||||||||||||||||||||||
|
| Total |
|
| Oct 1 through Dec 31, 2017 |
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| More Than 5 Years |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New secured notes – principal |
| $ | 350,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 350,000 |
|
New secured notes – interest |
|
| 137,667 |
|
|
| 7,000 |
|
|
| 28,000 |
|
|
| 28,000 |
|
|
| 28,000 |
|
|
| 28,000 |
|
|
| 18,667 |
|
Troms Offshore debt – principal |
|
| 91,127 |
|
|
| 1,188 |
|
|
| 5,174 |
|
|
| 8,949 |
|
|
| 10,349 |
|
|
| 10,349 |
|
|
| 55,118 |
|
Troms Offshore debt – interest |
|
| 21,661 |
|
|
| 1,156 |
|
|
| 4,355 |
|
|
| 4,013 |
|
|
| 3,493 |
|
|
| 2,969 |
|
|
| 5,675 |
|
Total obligations |
| $ | 600,455 |
|
|
| 9,344 |
|
|
| 37,529 |
|
|
| 40,962 |
|
|
| 41,842 |
|
|
| 41,318 |
|
|
| 429,460 |
|
fiscal year 2019. Refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended MarchDecember 31, 20172019, for additional information regarding the company’sour contractual obligations and commercialother contingent commitments.
Off-Balance Sheet Arrangements
Sale/Leasebacks
In connection with the restructuring contemplated by the Plan, the Debtors filed a motion seeking to reject all Sale Leaseback Agreements (the rejection damage claims related thereto, the “Sale Leaseback Claims”). Pursuant to an order by the Bankruptcy Court in May 2017, the Sale Leaseback Agreements for all 16 leased vessels were rejected. Included in liabilities subject to compromise as of July 31, 2017 (Predecessor) was $260.2 million related to the claims of the Sale Leaseback Parties. As of September 30, 2017 (Successor), five claims had been settled for an aggregate $166.1 million and one claim, which had been reserved for at a maximum amount of $94.1 million, remained outstanding.
At the Petition Date, six of the sixteen leased vessels were operating throughout the world. Costs incurred subsequent to the Petition Date to mobilize those six vessels and prepare them for re-delivery to the lessors has been included in reorganization items for the period August 1, 2017 through September 30, 2017 (Successor).
Included in gain on asset dispositions, net for the period April 1, 2017 through July 31, 2017 (Predecessor), are $3 million of deferred gains from sale leaseback transactions which reflects gains recognized through the Petition Date of May 17, 2017. Unamortized deferred gains as of the Petition Date of $105.9 million were credited to reorganization items as a result of the lease rejections.
Application of Critical Accounting Policies and Estimates
Our Annual Report on Form 10-K for the year ended MarchDecember 31, 2017,2019, filed with the Securities and Exchange CommissionSEC on June 12, 2017,March 2, 2020, describes the accounting policies that are critical to reporting our financial position and operating results and that require management’s most difficult, subjective or complex judgments. This Quarterly Report on Form 10-Q should be read in conjunction with the discussion contained in the company’s Annual Report on Form 10-K for the year ended March 31, 2017, regarding these critical accounting policies. There have been no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended MarchDecember 31, 2017 except as described below:2019, regarding these critical accounting policies.
Upon emergence from Chapter 11 bankruptcy, the company adopted fresh-start accounting in accordance with provisions of the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) No. 852, "Reorganizations" (ASC 852) which resulted in the company becoming a new entity for financial reporting purposes on July 31, 2017 (the “Effective Date”). Upon the adoption of fresh-start accounting, the company's assets and liabilities were recorded at their fair values as of July 31, 2017. As a result of the adoption of fresh-start accounting, the company's unaudited condensed consolidated financial statements subsequent to July 31, 2017 may not be comparable to its unaudited condensed consolidated financial statements prior to July 31, 2017. Refer to Note 3, "Fresh-start Accounting," for further details on the impact of fresh-start accounting on the company's unaudited condensed consolidated financial statements.
Concurrent with emergence from the Chapter 11 bankruptcy, the Successor Company adopted a new policy for the recognition of the costs of planned major maintenance activities incurred to ensure compliance with applicable regulations and maintain certifications for vessels with classification societies. These costs include drydocking and survey costs necessary to maintain certifications and generally occur twice in every five year period. These recertification costs are typically incurred while the vessel is in drydock and may be concurrent with other vessel maintenance and improvement activities. Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking which are not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements which either extend the vessel’s useful life or increase the vessels functionality are capitalized and depreciated. The company’s previous policy (Predecessor) was to expense vessel recertification costs in the period incurred.
Upon emergence from Chapter 11 bankruptcy the Successor Company, to better reflect the current offshore supply vessel market, changed the estimated useful lives for vessels having 25 year useful lives to 20 years. Additionally, salvage values for vessels were changed from 10% to 7.5%.
New Accounting Pronouncements
For information regarding the effect of new accounting pronouncements, refer to Note (13)Notes (2) and (3) of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Effects of Inflation
Day-to-day operating costs are generally affected by inflation. 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, field development and production spending by energy exploration and production companies. As 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.
During the ordinary course of business, our operations are subject to a wide variety of environmental laws and regulations that govern the discharge of oil and pollutants into navigable waters. Violations of these laws may result in civil and criminal penalties, fines, injunction and other sanctions. Compliance with the existing governmental regulations that 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 us. Environmental laws and regulations are subject to change however, and may impose increasingly strict requirements and, as such, the company cannot estimate the ultimate cost of complying with such potential changes to environmental laws and regulations.
We are also involved in various legal proceedings that relate to asbestos and other environmental matters. The amount of ultimate liability, if any, with respect to these proceedings is not expected to have a material adverse effect on the company’s financial position, results of operations, or cash flows. We are proactive in establishing policies and operating procedures for safeguarding the environment against any hazardous materials aboard our vessels and at shore-based locations. Whenever possible, hazardous materials are maintained or transferred in confined areas in an attempt to ensure containment if an accident were to occur.
In addition, we have established operating policies that are intended to increase awareness of actions that may harm the environment.
Market risk refers to the potential losses arising from changes in interest rates, foreign currency fluctuations and exchange rates, equity prices and commodity prices including the correlation among these factors and their volatility. The company is primarily exposed to interest rate risk and foreign currency fluctuations and exchange risk. The company enters into derivative instruments only to the extent considered necessary to meet its risk management objectives and does not use derivative contracts for speculative purposes.ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk and Indebtedness
Changes in interest rates may result inThere were no material changes in the fair market value of the company’s financial instruments, interest income and interest expense. The company’s financial instruments that are exposed to interest rate risk are its cash equivalents and long-term borrowings. Duequarter ended June 30, 2020 to the short duration and conservative nature of the cash equivalent investment portfolio, the company does not expect any material loss with respect to its investments. The book value for cash equivalents is considered to be representative of its fair value.
New Secured Notes
The New Secured Notes bear interest at fixed rates; therefore, interest expense would not be impacted by changesmarket risk disclosures contained in market interest rates. The following table discloses how the estimated fair value ofItem 7A in our New Secured Notes, as of
September 30, 2017, would change with a 100 basis-point increase or decrease in market interest rates.
|
| Successor |
| |||||||||||||
(In thousands) |
| Outstanding Value |
|
| Estimated Fair Value |
|
| 100 Basis Point Increase |
|
| 100 Basis Point Decrease |
| ||||
Total |
| $ | 350,000 |
|
|
| 357,700 |
|
|
| 337,577 |
|
|
| 365,486 |
|
Troms Offshore Debt
Troms Offshore had 331.8 million NOK, or $41.7 million, as well as $49.5 million of U.S. denominated outstanding fixed rate debt at September 30, 2017. The following table discloses how the estimated fair value of the fixed rate Troms Offshore notes, as of September 30, 2017, would change with a 100 basis-point increase or decrease in market interest rates:
|
| Successor |
| |||||||||||||
(In thousands) |
| Outstanding Value |
|
| Estimated Fair Value |
|
| 100 Basis Point Increase |
|
| 100 Basis Point Decrease |
| ||||
Total |
| $ | 91,127 |
|
|
| 90,893 |
|
|
| 87,171 |
|
|
| 94,849 |
|
Foreign Exchange Risk
The company’s financial instruments that can be affected by foreign currency fluctuations and exchange risks consist primarily of cash and cash equivalents, trade receivables and trade payables denominated in currencies other than the U.S. dollar. The company periodically enters into spot and forward derivative financial instruments as a hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. Spot derivative financial instruments are short-term in nature and settle within two business days. The fair value of spot derivatives approximates the carrying value due to the short-term nature of this instrument, and as a result, no gains or losses are recognized. Forward derivative financial instruments are generally longer-term in nature but generally do not exceed one year. The accounting for gains or losses on forward contracts is dependent on the nature of the risk being hedged and the effectiveness of the hedge.
As of September 30, 2017, Sonatide maintained the equivalent of approximately $91 million of Angolan kwanza-denominated deposits in Angolan banks, largely related to customer receipts that had not yet been converted to U.S. dollars, expatriated and then remitted to the company. Any devaluation in the Angolan kwanza relative to the U.S. dollar would result in foreign exchange losses for Sonatide to the extent the Angolan kwanza-denominated asset balances were in excess of kwanza-denominated liabilities, 49% of which will be borne by the company. A hypothetical ten percent devaluation of the kwanza relative to the U.S. dollar on a net kwanza-denominated asset balance of $100 million would cause our equity in net earnings of unconsolidated companies to be reduced by $4.9 million.
The company had 44 outstanding spot contracts at September 30, 2017, which had a notional value of $1.9 million and settled October 2, 2017. The company had six foreign exchange spot contracts outstanding at March 31, 2017, which had a notional value of $1.5 million and settled April 4, 2017.
Other
Due to the company’s international operations, the company is exposed to foreign currency exchange rate fluctuations and exchange rate risks on all charter hire contracts denominated in foreign currencies. For some of our international contracts, a portion of the revenue and local expenses are incurred in local currencies with the result that the company is at risk of changes in the exchange rates between the U.S. dollar and foreign currencies. We generally do not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of business, which exposes us to the risk of exchange rate losses. To minimize the financial impact of these items the company attempts to contract a significant majority of its services in U.S. dollars. In addition, the company attempts to minimize its financial impact of these risks by matching the currency of the company’s operating costs with the currency of the revenue streams when considered appropriate. The company continually monitors the currency exchange risks associated with all contracts not denominated in U.S. dollars.
CEO and CFO Certificates
Included as exhibits to this QuarterlyAnnual Report on Form 10-Q are “Certifications” of10-K for the Chief Executive Officer and the Chief Financial Officer. The first form of certification is required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. This section of the Quarterly Report contains the information concerning the controls evaluation referred to in the Section 302 Certifications, and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.year ended December 31, 2019.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with the objective of ensuring that all information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, ("Exchange Act')as amended (Exchange Act), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange CommissionSEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its chiefprincipal executive officer and chiefprincipal financial officers,officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. However, any control system, no matter how well conceived and followed, can provide only reasonable, and not absolute, assurance that the objectives of the control system are met.
The companyWe evaluated, under the supervision and with the participation of the company’sour management, including the company’sour Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the company’sour disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, as amended)Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the company’sour Chief Executive Officer along with the company’sand Chief Financial Officer concluded that the company’sour disclosure controls and procedures are effective.were effective as of June 30, 2020.
Changes in Internal Control Over Financial Reporting
There washas been no change in the company’sour internal control over financial reporting that occurred during the quarter ended SeptemberJune 30, 2017,2020, that has materially affected, or is reasonably likely to materially affect, the company’sour internal control over financial reporting.
Arbitral Award for the Taking of the Company’s Venezuelan Operations
On December 27, 2016, the annulment committee formed under the rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) issued a decision on the Bolivarian Republic of Venezuela’s (“Venezuela”) application to annul the award rendered by an ICSID tribunal on March 13, 2015. As previously reported, the award granted two subsidiaries of the Company (the “Claimants”) compensation for Venezuela’s expropriation of their investments in that country. The nature of the investments expropriated and the progress of the ICSID proceeding were previously reported by the company in prior filings. The annulment committee’s decision reduced the total compensation awarded to the Claimants to $36.4 million. That compensation is accruing interest at an annual rate of 4.5% compounded quarterly from May 8, 2009 to the date of payment of that amount ($16.6 million as of September 30, 2017). The annulment committee also left undisturbed the portion of the award that granted the Claimants $2.5 million in legal fees and other costs related to the arbitration. The reduction of $10 million in compensation from the earlier award of $46.4 million represents that portion of the tribunal’s award that the annulment committee determined had not been properly explained by the tribunal’s analysis. The final aggregate award is therefore $55.5 million as of September 30, 2017. The award for that amount is immediately enforceable and not subject to any further stay of enforcement. The annulment committee’s decision is not subject to any further ICSID review, appeal or other substantive proceeding.
The company is committed to taking appropriate steps to enforce and collect the award, which is enforceable in any of the 150 member states that are party to the ICSID Convention. As an initial step, the company was successful in having the award recognized and entered in March 2015 as a final judgment by the United States District Court for the Southern District of New York. In addition, the company was successful in having the award recognized and entered in November 2016 as a final judgment of the High Court of Justice of England and Wales. Even with the recognition of the award in the United States and United Kingdom courts, the company recognizes that collection of the award may present significant practical challenges. The company is accounting for this matter as a gain contingency and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450 Contingencies.ITEM 1. LEGAL PROCEEDINGS
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 material adverse effect on the company'sour financial position, results of operations, or cash flows. Information related to various commitments and contingencies, including legal proceedings, is disclosed in Note (10) of Notes to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.Quarterly Report on Form 10-Q.
There have been no material changesThe significant factors known to the risk factors as previously disclosedus that could materially adversely affect our business, financial condition, or operating results are described in Item 2 of Part I of this Quarterly Report on Form 10-Q and in Item 1A in the company’sof Part I of our Annual Report on Form 10-K for the year ended MarchDecember 31, 2017,2019, filed with the Securities and Exchange CommissionSEC on June 12, 2017.March 2, 2020, except for the addition of the following risk factors.
None.
None.
|
|
None.
On November 7, 2017 Joseph M .Bennett, Executive Vice-President and Chief Investor Relations Officer of Tidewater Inc. (the “Company”) notified the Company of his intentRisks Related to retire from all positions with the Company effective December 31, 2017.
our Business
The information required by this Item 6COVID-19 pandemic has adversely affected and may, in the future, have a material negative impact on our operations and business. In early 2020, it became evident that a novel coronavirus originating in Asia (COVID-19) could become a pandemic with worldwide reach. By mid-March, when the World Health Organization declared the outbreak to be a pandemic (the “COVID-19 pandemic”), much of the industrialized world had taken severe measures to lessen its impact. The ongoing COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption during the first six months of 2020.
The spread of COVID-19 to one or more of our locations, including our vessels, could significantly impact our operations. While we have implemented various protocols for both onshore and offshore personnel in efforts to limit the impact of COVID-19, there is no assurance that those efforts will be fully successful. The spread of COVID-19 to our onshore workforce could prevent us from supporting our offshore operations, we may experience reduced productivity as our onshore personnel works remotely, and any spread to our key management personnel may disrupt our business. Any outbreak on our vessels may result in the vessel, or some or all of a vessel crew, being quarantined and therefore impede the vessel’s ability to generate revenue. We have experienced challenges in connection with our offshore crew changes due to health and travel restrictions related to COVID-19, and those challenges and/or restrictions may continue or worsen despite our efforts at mitigating them. To the extent the COVID-19 pandemic adversely affects our operations and business, it may also have the effect of heightening many of the other risks set forth in our SEC filings, such as those relating to our financial performance and debt obligations.
The full impact of the IndexCOVID-19 pandemic is unknown and is rapidly evolving. The extent to Exhibits accompanyingwhich it impacts our business and operations and ability to preserve our liquidity will depend on the severity, location, and duration of the effects and spread of the pandemic itself, the actions undertaken by national, regional, and local governments and health officials to contain the virus or treat its effects, and how quickly and to what extent economic conditions improve and normal business and operating conditions resume. As we cannot predict the duration or scope of this quarterly reportpandemic, the anticipated negative financial impact to our operating results cannot be reasonably estimated but could be both material and long-lasting.
Recent disruptions in the global market for oil and natural gas, which have led to market oversupply and depressed commodity prices, have adversely affected our operations and may, in the future, materially disrupt our operations and adversely impact our business and financial results.With respect to our particular sector, the COVID-19 pandemic has resulted in a much lower demand for oil as national, regional, and local governments impose travel restrictions, border closings, restrictions on Form 10-Q.public gatherings, stay at home orders, and limitations on business operations in order to contain its spread. During this same time period, oil-producing countries have struggled to reach consensus on worldwide production levels, resulting in both a market oversupply of oil and a precipitous fall in oil prices.
Combined, these conditions have adversely affected our operations and business beginning with the latter part of the first fiscal quarter of 2020 and we do expect our operations and business in 2020 to be negatively impacted. The reduction in demand for hydrocarbons together with an unprecedented decline in the price of oil has resulted in our primary customers, the oil and gas companies, making material reductions to their planned spending on offshore projects, compounding the effect of the virus on offshore operations. Further, these conditions, separately or together, may
EXHIBIT INDEXcontinue to impact the demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general. Although, as of the date of this filing, oil-producing countries have reached a tentative agreement regarding future output, oil prices will remain depressed as long as the market is oversupplied and demand will remain depressed until global economic conditions improve.
ITEM 6. EXHIBITS
Exhibit Number |
| Description |
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2.1 |
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2.2 |
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2.3 |
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2.4 | ||
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3.1 |
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3.2 |
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3.3 | ||
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4.1 |
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4.2 | ||
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10.1 |
| |
10.2 | ||
10.3 | ||
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Number | Description | |
10.4 |
| |
| ||
| ||
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10.5 |
| |
10.6 | ||
10.7 | ||
10.8 | ||
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|
|
31.1* |
| |
| ||
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|
|
32.1** |
| |
|
|
|
101.INS* |
| Inline XBRL Instance |
|
|
|
101.SCH* |
| Inline XBRL Taxonomy Extension Schema. |
|
|
|
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase. |
|
|
|
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase. |
|
|
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101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase. |
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101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase. |
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
* | Filed with this quarterly report on Form 10-Q. |
** | Furnished with the quarterly report on Form 10-Q. |
+ | Indicates a management contract or compensatory plan or arrangement |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
| TIDEWATER INC. |
| (Registrant) |
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Date: |
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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.
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| Vice President, |
| (Principal Accounting |
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