1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Quarterly Period EndedJune 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the Transition Period From
_______________________________ to ________________________________
Commission file number 1-6311
TIDEWATER INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 72-0487776
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1440 Canal Street, Suite 2100, New Orleans, Louisiana 70112
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 568-1010
NOT APPLICABLE
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or of such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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53,271,255 shares of Tidewater Inc. common stock $.10 par value per share were
outstanding on July 21, 1995. Registrant has no other class of common stock
outstanding.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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June 30, March 31,
ASSETS 1995 1995
- --------------------------------------------------------------------------------------------------------------
Current assets:
Cash, including temporary cash investments $ 10,458 14,702
Trade and other receivables 137,621 145,805
Inventories 35,810 36,311
Other current assets 4,378 4,355
- --------------------------------------------------------------------------------------------------------------
Total current assets 188,267 201,173
- --------------------------------------------------------------------------------------------------------------
Investments in, at equity, and advances to
unconsolidated companies 23,436 21,527
Properties and equipment 1,448,637 1,464,196
Less accumulated depreciation 860,534 858,297
- --------------------------------------------------------------------------------------------------------------
Net properties and equipment 588,103 605,899
Other assets 72,915 73,586
- --------------------------------------------------------------------------------------------------------------
$ 872,721 902,185
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt 12,000 12,000
Accounts payable and accrued expenses 72,331 79,909
Income taxes 11,842 9,571
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 96,173 101,480
- --------------------------------------------------------------------------------------------------------------
Deferred income taxes 53,496 49,510
Long-term debt 60,000 100,000
Accrued property and liability losses 30,346 28,921
Other liabilities and deferred credits 41,457 42,056
Stockholders' equity:
Common stock of $.10 par value; issued
53,270,130 shares at June and 53,237,839
shares at March 5,327 5,324
Additional paid-in capital 334,841 334,809
Retained earnings 263,543 252,374
- --------------------------------------------------------------------------------------------------------------
603,711 592,507
Less:
Cumulative foreign currency translation adjustment 10,973 10,745
Deferred compensation - restricted stock 1,489 1,544
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity 591,249 580,218
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$ 872,721 902,185
==============================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements.
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TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share and per share data)
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Three Months Ended
June 30,
------------------------------------
1995 1994
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Revenues:
Marine operations $ 113,997 118,418
Compression operations 27,039 14,913
- --------------------------------------------------------------------------------------------------------------
141,036 133,331
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Costs and expenses:
Marine operations 72,872 72,409
Compression operations 13,907 8,627
Depreciation 18,297 20,565
General and administrative 13,378 15,271
- --------------------------------------------------------------------------------------------------------------
118,454 116,872
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22,582 16,459
Other income (expenses):
Foreign exchange loss (154) (632)
Gain on sales of assets 2,962 2,324
Equity in net earnings of unconsolidated
companies 1,323 936
Minority interests (467) (565)
Interest and miscellaneous income 384 3,139
Interest expense (2,013) (407)
- --------------------------------------------------------------------------------------------------------------
2,035 4,795
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Earnings before income taxes 24,617 21,254
Income taxes 8,124 7,813
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Net earnings $ 16,493 13,441
==============================================================================================================
Primary and fully-diluted net earnings per
common share $ .31 .25
==============================================================================================================
Weighted average common shares and equivalents 53,638,366 53,387,343
==============================================================================================================
Cash dividends declared per common share $ .10 .10
==============================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements.
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TIDEWATER INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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Three Months Ended
June 30,
------------------------------------
1995 1994
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Net cash provided by operating activities $ 40,109 31,232
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Cash flows from investing activities:
Proceeds from sales of assets 5,927 4,237
Additions to properties and equipment (5,528) (12,116)
Dividends from unconsolidated companies, net of
additional investments 1,086 2,317
Dividends paid to minority interests (826) (1,629)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 659 (7,191)
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Cash flows from financing activities:
Principal payments on long-term debt (40,000) (47,074)
Cash dividends paid (5,324) (5,307)
Other 312 5
- --------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (45,012) (52,376)
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Net increase (decrease) in cash, including
temporary cash investments (4,244) (28,335)
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Cash, including temporary cash investments at
beginning of period 14,702 106,788
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Cash, including temporary cash investments at
end of period $ 10,458 78,453
==============================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 2,449 1,340
Income taxes $ 1,904 812
==============================================================================================================
See Notes to Unaudited Condensed Consolidated Financial Statements.
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TIDEWATER INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Interim Financial Statements
The consolidated financial information for the interim periods
presented herein has not been audited by independent accountants, but
in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
condensed consolidated balance sheets and the condensed consolidated
statements of earnings and cash flows at the dates and for the periods
indicated have been made. Results of operations for interim periods
are not necessarily indicative of results of operations for the
respective full years.
(2) Earnings per Share Data
Primary and fully diluted earnings per share data are computed on the
weighted average number of shares and dilutive equivalent shares of
common stock (stock options and restricted stock grants) outstanding
during each period using the treasury stock method.
(3) Increase in Useful Lives of Marine Vessels
Effective April 1, 1995 the estimated useful lives of the company's
Marine vessels were increased from 10-20 years to 15-25 years. For the
quarter ended June 30, 1995, the effect of this change in accounting
estimate lowered depreciation expense by $6.1 million. Concurrent with
this change $2.5 million of repair and maintenance costs, that would
have been capitalized had the previous estimated useful lives been
used, was expensed.
(4) Acquisition of Compression Assets
On September 30, 1994, the company purchased for $35 million in cash
the assets of Brazos Gas Compressing Company, a subsidiary of Mitchell
Energy & Development Corporation. On November 30, 1994, the company
purchased the natural gas compression assets of Halliburton Company
using $55 million of available cash and borrowings of $150 million.
The costs of these acquisitions were allocated under the purchase
method of accounting based on the fair value of the assets acquired.
In connection with the purchase of the natural gas compression assets
of Halliburton Company, goodwill of approximately $25 million was
recorded as other assets in the Consolidated Balance Sheet and is being
amortized in equal charges to earnings over a 15-year period.
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The results of Brazos' and Halliburton's operations have been
consolidated with the company's effective October 1, 1994 and December
1, 1994, respectively. Pro forma combined results of operations of the
company and of Brazos and Halliburton, including appropriate purchase
accounting adjustments for the quarter ended June 30, 1994, as though
the acquisitions had taken place on April 1, 1994 follows:
(In thousands, except per share data)
-------------------------------------
Quarter ended June 30, 1994
---------------------------
Revenues $148,163
=================================================================================================================
Net earnings $ 11,009
=================================================================================================================
Primary and fully diluted earnings
per common share $ .21
=================================================================================================================
(5) Income Taxes
Income tax expense for interim periods is based on estimates of the
effective tax rate for the entire fiscal year. The effective tax rate
was 33% and 37% for the quarters ended June 30, 1995 and 1994,
respectively.
(6) Segment Information
Revenues and operating profits for the company's business segments are:
(In thousands)
Three Months Ended
June 30,
----------------------------------
1995 1994
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Revenues:
Marine $ 113,997 118,418
Compression 27,039 14,913
- --------------------------------------------------------------------------------------------------------------
$ 141,036 133,331
==============================================================================================================
Operating profit:
Marine:
From operations $ 20,975 17,210
Gain on sales of assets 2,689 2,277
Other unusual item --- 1,700
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Total Marine operating profit $ 23,664 21,187
==============================================================================================================
Compression:
From operations $ 3,804 1,735
Gain on sales of assets 273 47
- --------------------------------------------------------------------------------------------------------------
Total Compression operating profit $ 4,077 1,782
==============================================================================================================
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The $1.7 million other unusual item is related to refunds received from
the settlement of property tax disputes related to prior years. The
settlement amount is included in interest and miscellaneous income in
the Condensed Consolidated Statement of Earnings for the period ended
June 30, 1994.
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INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
of Tidewater Inc.:
We have reviewed the condensed consolidated balance sheet of Tidewater Inc. and
subsidiaries as of June 30, 1995 and the related condensed consolidated
statements of earnings and cash flows for the three-month periods ended June
30, 1995 and 1994. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Tidewater Inc. and subsidiaries as
of March 31, 1995, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated May 1, 1995 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion the
information set forth in the accompanying condensed consolidated balance sheet
as of March 31, 1995 is fairly presented, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
July 19, 1995
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis of financial position and results of operations
should be read in conjunction with the unaudited condensed consolidated
financial statements and the related disclosures.
Improved first quarter fiscal 1996 operating performance above the first and
fourth quarters of fiscal 1995 resulted from a considerably larger natural gas
compressor fleet and higher average day rates for the Marine vessel fleet. Net
earnings for the quarter also benefited from lower general and administrative
expenses and lower depreciation expense.
LIQUIDITY AND CAPITAL RESOURCES
Fiscal 1996 first quarter operating activities generated a higher level of cash
than the preceding quarter and for the corresponding quarter of fiscal 1995.
The increase in cash flow over the corresponding quarter of fiscal 1995 is the
result of higher Compression operating margins due to the substantial expansion
of the natural gas compressor rental fleet during the second half of fiscal
1995. The increase in cash flow over the preceding quarter is the result of
higher activity for towing supply and supply vessels and higher average day
rates for the Marine vessel fleet. Operating activities have continued to
generate cash in excess of normal operating requirements and anticipated
utilization levels for the Marine vessel fleet and the Compression rental fleet
for the remainder of fiscal 1996 should maintain this condition.
Investing activities for the quarter ended June 30, 1995 provided a small
amount of cash compared with the preceding quarter and the first quarter of
fiscal 1995 which consumed cash. The decrease for the current quarter is due
to a sizable reduction in additions to properties and equipment. The following
tables compare additions to properties and equipment and proceeds from asset
sales by business segment for the quarters ended June 30 and March 31:
(In thousands)
- ---------------------------------------------------------------------------------------------------------------
June March
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1995 1994 1995
- ---------------------------------------------------------------------------------------------------------------
Additions to Properties and Equipment:
- -------------------------------------
Marine $ 5,315 10,330 14,826
Compression 208 1,646 3,580
General Corporate 5 140 21
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$ 5,528 12,116 18,427
==============================================================================================================
Proceeds from sales of assets:
- -----------------------------
Marine equipment $ 3,775 4,140 3,583
Compression equipment 2,152 97 2,163
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$ 5,927 4,237 5,746
==============================================================================================================
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10
Marine additions include the acquisition of ten vessels for $3.6 million, five
vessels for $5.7 million and four vessels for $8.4 million for the quarters
ended June 30, 1995 and 1994 and March 31, 1995, respectively. All but three
of the vessels acquired during these periods were previously operated under
long-term lease. Current economic conditions generally do not favor the
construction of Marine vessels; therefore, future expansion of the Marine fleet
will continue to come primarily from existing industry supplies provided
appropriate rates of return can be achieved.
Cash used in financing activities for the quarter ended June 30, 1995 was lower
than the level used for the corresponding period of fiscal 1995. The decrease
is the result of lower principal payments on long-term debt. Fiscal 1996 first
quarter principal payments on long-term debt included prepayments of $37
million. Fiscal 1995 first quarter principal payments on long-term debt were
primarily for the redemption of 7% convertible subordinated debentures. For
the first quarter of fiscal 1996 a dividend of $.10 per common share was
declared and paid. At the Board of Directors meeting on July 20, 1995 the
quarterly dividend was increased 25% to 12.5 cents per common share. Continued
dividend payments are subject to declaration by the Board of Directors and are
subject to limitation by the company's revolving credit and term loan
agreement.
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RESULTS OF OPERATIONS
Revenues and operating profit by business segment and geographic distribution
for the quarters ended June 30 and March 31 are:
(In thousands)
- ---------------------------------------------------------------------------------------------------------------
June March
-------------------------------- ---------
1995 1994 1995
- ---------------------------------------------------------------------------------------------------------------
Revenues:
Marine:
United States $ 49,737 53,670 45,711
Foreign 64,260 64,748 61,125
- --------------------------------------------------------------------------------------------------------------
113,997 118,418 106,836
Compression 27,039 14,913 31,419
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$ 141,036 133,331 138,255
==============================================================================================================
Operating profit (loss):
Marine:
United States 10,333 12,535 9,529
Foreign 13,331 8,652 3,264
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23,664 21,187 12,793
- --------------------------------------------------------------------------------------------------------------
Compression 4,077 1,782 5,790
Equity in net earnings of unconsolidated
companies 1,323 936 648
Other expense --- --- (5,850)
Other income (expense) (278) 61 (117)
General corporate expenses (2,156) (2,305) (2,232)
Interest expense (2,013) (407) (2,868)
Income taxes (8,124) (7,813) (3,002)
- ---------------------------------------------------------------------------------------------------------------
Net earnings $ 16,493 13,441 5,162
==============================================================================================================
Revenues for the first quarter of fiscal 1996 rose 6% above fiscal 1995's first
quarter, but were essentially unchanged from the prior quarter. Fiscal 1996
first quarter pre-tax earnings rose 16% above fiscal 1995's first quarter due
to higher Marine and Compression operating profits partially offset by higher
interest expense. Higher current quarter Marine operating profits are due to
higher average day rates for the Marine fleet. Higher current quarter
Compression operating profits and higher interest expense are both the result
of the expansion of the natural gas compressor fleet during the second half of
fiscal 1995. The 16% increase noted above is after allowing for the net
positive effect of $3.6 million on current quarter pre-tax earnings due to the
extension of useful lives of the company's Marine vessel fleet and the
beneficial effect of $1.7 million of other income in fiscal 1995's first
quarter due to refunds from the settlement of property tax disputes.
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Current quarter pre-tax earnings rose significantly above the preceding quarter
due to higher Marine operating profits resulting from higher activity for the
towing supply and supply vessel fleet and higher average day rates for the
Marine fleet. The significant increase in the current quarter was also
achieved due to the net positive effect of the increase in vessel useful lives
noted above and the negative effect on fourth quarter fiscal 1995 pre-tax
earnings of $5.9 million resulting from the restructuring of the company's
worldwide Marine operations and its headquarters office.
General and administrative expenses for the quarters ended June 30 and March 31
consist of the following components:
(In thousands)
- --------------------------------------------------------------------------------------------------------------
June March
------------------------------- -------
1995 1994 1995
- --------------------------------------------------------------------------------------------------------------
Type:
Personnel $ 7,843 9,047 8,344
Office and property 2,268 2,362 2,721
Sales and marketing 833 1,053 1,009
Professional services 894 826 1,003
Other 1,540 1,983 1,735
- --------------------------------------------------------------------------------------------------------------
$13,378 15,271 14,812
==============================================================================================================
MARINE SEGMENT
The Marine segment provides a diverse range of services and equipment to the
offshore oil and gas industry. Because operating costs and depreciation do not
change proportionally with changes in revenues, the amount of operating profit
for the Marine segment is primarily determined by vessel fleet utilization and
day rates.
Revenues for the Marine segment for the quarters ended June 30 and March 31
consist of the following:
(In thousands)
- --------------------------------------------------------------------------------------------------------------
June March
------------------------------- -------
1995 1994 1995
- --------------------------------------------------------------------------------------------------------------
Owned or chartered vessels:
United States $ 42,793 45,536 40,126
Foreign 64,252 64,290 61,046
- --------------------------------------------------------------------------------------------------------------
107,045 109,826 101,172
Brokered vessels 3,306 2,869 1,117
Shipyard sales 3,646 5,723 4,547
- --------------------------------------------------------------------------------------------------------------
$113,997 118,418 106,836
==============================================================================================================
Marine fleet utilization is affected principally by market conditions. To a
lesser degree it is also influenced by drydockings to satisfy safety and
inspection requirements because marine vessels must undergo periodic
inspections to remain properly
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classified and certified. Whenever possible, these inspections are done during
seasonally slow periods to minimize the impact on vessel operations and are
only done if the vessel is considered to have continuing economic viability.
The following table compares day-based Marine fleet utilization percentages by
vessel class and in total for the quarters ended June 30 and March 31:
June March
------------------------------- -------
1995 1994 1995
- ---------------------------------------------------------------------------------------------------------------
UTILIZATION:
- -----------
Domestic-based fleet:
--------------------
Towing supply/supply 89.0% 84.6% 84.8%
Crew/utility 81.3% 91.0% 84.7%
Offshore tugs 47.9% 66.0% 40.5%
Other 44.9% 51.6% 26.2%
Total 75.0% 79.8% 70.7%
Foreign-based fleet:
-------------------
Towing supply/supply 86.7% 82.2% 81.4%
Crew/utility 86.6% 73.5% 85.1%
Offshore tugs 72.2% 80.4% 80.8%
Other 37.3% 55.7% 44.0%
Total 76.1% 75.9% 75.5%
Worldwide fleet:
---------------
Towing supply/supply 87.5% 83.0% 82.6%
Crew/utility 83.5% 82.7% 84.9%
Offshore tugs 60.6% 73.5% 61.2%
Other 38.9% 55.0% 40.2%
Total 75.7% 77.3% 73.6%
==============================================================================================================
The domestic fleet consists of vessels operating in U.S. waters while the
foreign fleet consists of vessels operating outside U.S. waters.
Utilization of the domestic-based vessel fleet for the current quarter fell
below the first quarter of fiscal 1995 because higher demand for towing supply
and supply vessel services was entirely offset by lower offshore construction
and ocean towing activity for the offshore towing fleet. Higher current
quarter utilization of the domestic-based vessel fleet above the prior quarter
is attributable to the normal seasonal resumption of offshore activity combined
with greater demand for towing supply and supply vessel services. Utilization
of the foreign-based vessel fleet was up modestly above the fiscal 1995 first
and fourth quarters and is attributable to higher demand for towing supply and
supply vessel services due to relatively stable oil prices in conjunction with
the normal seasonal resumption of offshore activity.
Marine vessel day rates are primarily determined by the demand created through
the level of offshore exploration, development and production spending by
energy
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exploration and production companies. Suitability of equipment, the degree of
service provided and the overall supply of marine service vessels also
influence vessel day rates. The following table compares average vessel day
rates by class and in total for the quarters ended June 30 and March 31:
June March
------------------------------- -------
1995 1994 1995
- ---------------------------------------------------------------------------------------------------------------
AVERAGE VESSEL DAY RATES:
- ------------------------
Domestic-based fleet:
--------------------
Towing supply/supply $3,520 3,738 3,677
Crew/utility 1,349 1,272 1,281
Offshore tugs 5,220 4,126 4,935
Other 3,170 2,918 3,841
Total 3,157 3,111 3,133
Foreign-based fleet:
-------------------
Towing supply/supply 3,645 3,606 3,494
Crew/utility 1,884 1,752 1,675
Offshore tugs 2,635 2,766 2,702
Other 1,349 701 1,479
Total 3,074 2,843 2,916
Worldwide fleet:
---------------
Towing supply/supply 3,600 3,653 3,559
Crew/utility 1,576 1,473 1,451
Offshore tugs 3,609 3,353 3,422
Other 1,785 1,071 1,808
Total 3,107 2,949 2,998
==============================================================================================================
The domestic fleet consists of vessels operating in U.S. waters while the
foreign fleet consists of vessels operating outside U.S. waters.
Average vessel day rates for the domestic-based vessel fleet for the first
quarter of fiscal 1996 were up slightly from the fiscal 1995 first and fourth
quarters. Although average day rates for towing supply and supply vessels were
lower in the current quarter than in the preceding quarter and were lower than
the first quarter of fiscal 1995, current rates appear to be trending upward as
compared to a year ago when rates were generally weakening. Higher fiscal 1996
first quarter average day rates for the foreign-based vessel fleet compared
with the fiscal 1995 first and fourth quarters is attributable to a
significantly lower level of activity for the inland towing fleet in Nigeria
coupled with a more favorable supply/demand relationship for services provided
by towing supply and supply vessels. Because the inshore towing fleet in
Nigeria generates a lower average day rate than other classes of vessels, the
overall foreign-based fleet average day rate is positively affected when these
vessels are not highly utilized.
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The following tables compare the average number of vessels by class and
geographic distribution during the quarters ended June 30 and March 31 and the
actual June 30, 1995 vessel count:
Actual
Vessel Average Number of Vessels
Count at During Quarter Ended
June 30, June 30, March 31,
- -------------------------------------------------------------------------------------------------------------
1995 1995 1994 1995
---- ---- ---- ----
Domestic-based fleet:
--------------------
Towing supply/supply 92 92 95 92
Crew/utility 50 50 48 50
Offshore tugs 42 44 46 45
Other 13 12 13 14
- -------------------------------------------------------------------------------------------------------------
Total 197 198 202 201
- -------------------------------------------------------------------------------------------------------------
Foreign-based fleet:
-------------------
Towing supply/supply 169 169 175 171
Crew/utility 35 34 42 38
Offshore tugs 49 48 49 48
Other 51 51 61 51
- -------------------------------------------------------------------------------------------------------------
Total 304 302 327 308
- -------------------------------------------------------------------------------------------------------------
Owned or chartered vessels
included in marine revenues 501 500 529 509
Vessels withdrawn from
active service 16 18 18 19
Joint venture owned vessels 47 47 43 43
- -------------------------------------------------------------------------------------------------------------
Total 564 565 590 571
=============================================================================================================
Worldwide fleet:
---------------
Towing supply/supply 299 299 309 305
Crew/utility 94 93 97 94
Offshore tugs 94 95 97 94
Other 77 78 87 78
- -------------------------------------------------------------------------------------------------------------
Total 564 565 590 571
=============================================================================================================
The drop in average size of the foreign-based vessel fleet from 327 for the
first quarter of fiscal 1995 to 302 for the current quarter is due to several
vessels being withdrawn from active service due to age and anticipated high
repair and maintenance costs and the transfer of vessels to the domestic-based
vessel fleet. Additional vessels in the Marine fleet may be withdrawn in the
future as they become uneconomical to operate.
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The following table compares major components of Marine operating costs and
compares selected statistics for owned and chartered vessels for the quarters
ended June 30 and March 31:
(In thousands)
- -------------------------------------------------------------------------------------------------------------
June March
------------------------------- -------
1995 1994 1995
- -------------------------------------------------------------------------------------------------------------
Crew costs $ 31,682 31,981 31,717
Repair and maintenance 19,051 15,692 15,596
Vessel insurance 6,737 7,654 7,863
Fuel, lube and supplies 5,475 4,778 5,562
Other 3,816 4,213 3,917
- -------------------------------------------------------------------------------------------------------------
Total operating costs of owned and
chartered vessels 66,761 64,318 64,655
Brokered vessels' costs 3,056 2,537 996
Shipyard costs 3,055 5,554 3,017
- -------------------------------------------------------------------------------------------------------------
$ 72,872 72,409 68,668
=============================================================================================================
For owned and chartered vessels:
- -------------------------------
Overall percentage increase (decrease)
in operating costs from same quarter
of prior fiscal year 3.8% (7.7%) (3.1%)
=============================================================================================================
Operating costs as a percentage of
related revenues 62.4% 58.6% 63.9%
=============================================================================================================
Changes in fleet size and utilization are the principal factors which cause
fluctuations in the amount of crew costs. The absence of significant new
vessel construction within the energy services industry over the past 12 to 14
years has caused the average age of the company's Marine vessel fleet to rise.
Currently the average age of the company's Marine vessel fleet is approximately
17 years. Though primarily dictated by regulatory agencies, the scheduling of
vessel drydockings affects the amount of repair and maintenance expense in any
period. Vessel drydockings, whenever possible, are scheduled to minimize any
impact on vessel revenues. During the quarter, the company increased the
estimated useful lives of Marine vessels from 10-20 years to 15-25 years which
lowered depreciation expense by $6.1 million. Concurrent with this change $2.5
million of repair and maintenance costs, that would have been capitalized had
the previous estimated useful lives been used, was expensed.
Gains from sales of assets contributed $2.7 million, $2.3 million and $2.7
million to Marine operating profits for the quarters ended June 30, 1995 and
1994 and March 31, 1995, respectively.
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COMPRESSION SEGMENT
The Compression segment provides natural gas compression services and equipment
for a variety of applications primarily in the energy industry. It also
designs, fabricates and installs engineered compressor systems. Compression
operating profit is primarily determined by operating margins from natural gas
compressor operations.
Compression segment revenues for the quarters ended June 30 and March 31
consist of the following:
(In thousands)
- ------------------------------------------------------------------------------------------------------------
June March
------------------------------- -------
1995 1994 1995
- ------------------------------------------------------------------------------------------------------------
Gas compressor rentals $18,492 8,026 19,542
Equipment and parts sales 6,975 5,624 10,106
Repair, service and other 1,572 1,263 1,771
- -------------------------------------------------------------------------------------------------------------
$27,039 14,913 31,419
=============================================================================================================
Gas compressor utilization is affected primarily by natural gas storage levels
and by the number and age of producing oil and gas wells which, in turn, are
dependent upon the price levels of oil and natural gas. Quality of service,
availability and rental rates for gas compression equipment are also major
factors which affect utilization. The following table compares utilization,
average rental rates and average fleet size for natural gas compressors for the
quarters ended June 30 and March 31:
June March
------------------------------- -------
(Horsepower based statistics) 1995 1994 1995
- -------------------------------------------------------------------------------------------------------------
Utilization 72.9% 85.8% 75.7%
Average monthly rental rate $17.20 16.77 17.92
Average fleet size 491,592 185,951 480,326
=============================================================================================================
Higher fiscal 1996 first quarter natural gas compressor rental revenues and
rental rates and lower utilization compared with the first quarter of fiscal
1995 is attributable to the substantial expansion of the rental fleet which
occurred in the second half of last year. The natural gas compressor fleets
which were purchased in fiscal 1995 historically experienced lower levels of
utilization than the original Tidewater fleet. Lower utilization of the
natural gas compressor fleet during the first quarter of the current fiscal
year compared to the preceding quarter is attributable to lower demand for
compression services due to lower U.S. natural gas prices and the uncertainties
affecting the near- term future price of U.S. natural gas.
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Fluctuations in the level of equipment and parts sales for the periods presented
are due to the timing of sales of engineered products.
Operating costs of the Compression segment consist of the following for the
quarters ended June 30 and March 31:
(In thousands)
- -------------------------------------------------------------------------------------------------------------
June March
------------------------------- --------
1995 1994 1995
- -------------------------------------------------------------------------------------------------------------
Field operating expenses:
Wages and benefits $ 3,053 1,561 3,138
Repairs and maintenance 3,285 1,694 3,020
Other 2,048 826 2,148
- -------------------------------------------------------------------------------------------------------------
8,386 4,081 8,306
Cost of sales 5,521 4,546 8,754
- -------------------------------------------------------------------------------------------------------------
$13,907 8,627 17,060
=============================================================================================================
Field operating costs as a percentage
of rental, repair, and service revenues 41.8% 43.9% 39.0%
=============================================================================================================
Costs of sales as a percentage of
related revenues 79.2% 80.8% 86.6%
=============================================================================================================
Field operating expenses relate to gas compressor rental, repair and service
operations. Field operating expenses are generally consistent from
period-to-period and usually vary in the short-term due to fluctuations in the
level of repairs and maintenance expense. Long-term growth in field operating
expenses will occur primarily as a result of increased fleet size and general
inflationary factors. Higher fiscal 1996 first quarter field operating
expenses compared with the corresponding period of fiscal 1995 is the result of
the substantial expansion of the natural gas compressor fleet during the second
half of last year. Costs of sales consist primarily of wages and benefits and
material costs associated with the design, fabrication and installation of
packaged compressor systems.
Gains from sales of assets have contributed nominally to segment profits for
the quarters ended June 30, 1995 and 1994 and March 31, 1995.
INFLATION AND CURRENCY FLUCTUATIONS
Because of its significant foreign operations, the company is exposed to
currency fluctuations and exchange risks. To minimize the financial impact of
these items the company attempts to contract a majority of its services in
United States dollars.
Day-to-day operating costs are generally affected by inflation. However,
because the energy services industry requires specialized goods and services,
general economic inflationary trends may not affect the company's operating
costs. The major impact
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on operating costs is the level of offshore exploration and development
spending by energy exploration and production companies. As this spending
increases, prices of goods and services used by the oil and gas industry and
the energy services industry will increase. Future improvements in vessel day
rates and compressor rental rates may buffer the company from the inflationary
effects on operating costs.
ENVIRONMENTAL MATTERS
During the ordinary course of business the company's operations are subject to
a wide variety of environmental laws and regulations. The company attempts to
comply with these laws and regulations in order to avoid costly accidents and
any related environmental damage. The company is currently involved in
litigation with the Environmental Protection Agency concerning the disposal of
oilfield wastes. In the opinion of management, the ultimate liability with
respect to the litigation will not have a material adverse effect on the
company's financial position.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A. The Annual Meeting of Stockholders of the Company was held in New
Orleans, Louisiana on July 20, 1995.
B. Listed below are the nominees who were elected directors at the Annual
Meeting and the name of each other director whose term of office
continued after the Meeting.
Nominee or Director
Name Continuing in Office
---- --------------------
Paul W. Murrill Nominee
Lester Pollack Nominee
J. Hugh Roff, Jr. Nominee
Robert H. Boh Director Continuing in Office
Donald T. Bollinger Director Continuing in Office
Arthur R. Carlson Director Continuing in Office
Hugh J. Kelly Director Continuing in Office
John P. Laborde Director Continuing in Office
William C. O'Malley Director Continuing in Office
C. The Company's Stockholders voted as follows with respect to the proposals
presented at the meeting:
1. Paul W. Murrill was elected director with 47,345,975 votes cast for
and 143,131 votes withheld;
2. Lester Pollack was elected director with 47,361,878 votes cast for
and 127,228 votes withheld;
3. J. Hugh Roff, Jr. was elected director with 47,350,712 votes cast
for and 138,393 votes withheld; and
4. The selection of KPMG Peat Marwick LLP as the Company's independent
auditors for the fiscal year ending March 31, 1996 was ratified
with 47,389,439 votes cast for, 44,325 votes against and 55,341
abstentions.
Item 6. Exhibits and Reports on Form 8-K
A. At page 22 of this report is the index for those exhibits required to be
filed as a part of this report.
B. The Company did not file any reports on Form 8-K during the quarter for
which this report is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TIDEWATER INC.
--------------------------------
(Registrant)
Date: July 21, 1995 /s/ William C. O'Malley
--------------------------------
William C. O'Malley
Chairman of the Board, President
and Chief Executive Officer
Date: July 21, 1995 /s/ Ken C. Tamblyn
--------------------------------
Ken C. Tamblyn
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number
- --------
11 Statement - Computation of Per Share Earnings
27 Financial Data Schedule
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