TIDEWATER INC - 10-Q Quarterly 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.

56,336,261 shares of Tidewater Inc. common stock $.10 par value per share were outstanding on July 12, 2002. Excluded from the calculation of shares outstanding at July 12, 2002 are 4,244,100 shares held by the Registrant’s Grantor Stock Ownership Trust. Registrant has no other class of common stock outstanding.

ASSETS	June 30, 2002		March 31, 2002
Current assets:
Cash and cash equivalents	$	17,309	11,882
Trade and other receivables		156,178	182,592
Marine operating supplies		27,989	28,071
Other current assets		3,633	4,036

Total current assets		205,109	226,581

Investments in, at equity, and advances to unconsolidated companies		29,106	13,722
Properties and equipment:
Vessels and related equipment		1,931,838	1,855,182
Other properties and equipment		42,526	41,860

		1,974,364	1,897,042
Less accumulated depreciation		911,962	898,631

Net properties and equipment		1,062,402	998,411

Goodwill, net		328,754	328,754
Other assets		112,478	101,902

Total assets	$	1,737,849	1,669,370

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		54,211	61,809
Accrued property and liability losses		10,080	9,737
Income taxes		3,830	2,144

Total current liabilities		68,121	73,690

Long-term debt		99,000	54,000
Deferred income taxes		180,530	173,422
Accrued property and liability losses		37,273	34,025
Other liabilities and deferred credits		48,725	48,415
Stockholders’ equity:
Common stock of $.10 par value, 125,000,000 shares authorized, issued 60,580,361 shares at June and 60,580,671 shares at March		6,058	6,058
Other stockholders’ equity		1,298,142	1,279,760

Total stockholders’ equity		1,304,200	1,285,818

Total liabilities and stockholders’ equity	$	1,737,849	1,669,370

	Three Months Ended June 30,
	2002			2001
Revenues:
Vessel revenues	$	156,764		187,814
Other marine revenues		3,546		2,749

		160,310		190,563

Costs and expenses:
Vessel operating costs		90,930		96,826
Costs of other marine revenues		2,005		1,532
Depreciation and amortization		19,920		19,181
General and administrative		15,609		15,752

		128,464		133,291

		31,846		57,272
Other income (expenses):
Foreign exchange gain (loss)		(852	)	(652	)
Gain on sales of assets		1,557		54
Equity in net earnings of unconsolidated companies		1,227		1,499
Minority interests		(33	)	176
Interest and miscellaneous income		518		989
Interest and other debt costs		(125	)	(200	)

		2,292		1,866

Earnings before income taxes		34,138		59,138
Income taxes		11,095		20,107

Net earnings	$	23,043		39,031

Earnings per common share	$	.41		.70

Diluted earnings per common share	$	.41		69

Weighted average common shares outstanding		56,258,224		55,998,396
Incremental common shares from stock options		404,209		530,510

Adjusted weighted average common shares		56,662,433		56,528,906

Cash dividends declared per common share	$	.15		.15

	Three Months Ended June 30,
	2002			2001
Net cash provided by operating activities	$	63,480		34,695

Cash flows from investing activities:
Proceeds from sales of assets		1,141		1,237
Additions to properties and equipment		(99,023	)	(109,625	)
Other		—		195

Net cash used in investing activities		(97,882	)	(108,193	)

Cash flows from financing activities:
Credit facility borrowings		55,000		—
Principal payments on debt		(10,000	)	—
Proceeds from issuance of common stock		3,279		815
Cash dividends		(8,450	)	(8,410	)
Other		—		(1	)

Net cash provided by (used in) financing activities		39,829		(7,596	)

Net change in cash and cash equivalents		5,427		(81,094	)
Cash and cash equivalents at beginning of period		11,882		95,153

Cash and cash equivalents at end of period	$	17,309		14,059

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	17		111
Income taxes	$	6,957		12,014

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.

At June 30, 2002 and March 31, 2002, 4,246,211 and 4,359,728 shares, respectively, of common stock were held in a grantor stock ownership plan trust for the benefit of stock-based employee benefits programs. These shares are not included in common shares outstanding for earnings per share calculations and transactions between the company and the trust, including dividends paid on the company’s common stock, are eliminated in consolidating the accounts of the trust and the company.

Effective April 1, 2002 the company elected to adopt Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations” which requires companies to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The adoption of SFAS No. 143 did not have a material impact on the company’s financial statements.

Effective April 1, 2002 the company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets to Be Disposed Of” and the accounting and reporting provisions of APB Opinion No. 30. The adoption of SFAS No. 144 did not have a material impact on the company’s financial statements.

We have reviewed the accompanying condensed consolidated balance sheet of Tidewater Inc. and subsidiaries as of June 30, 2002, and the related condensed consolidated statements of earnings and cash flows for the three-month periods ended June 30, 2002 and 2001. These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of Tidewater Inc. and subsidiaries as of March 31, 2002, and the related consolidated statements of earnings, stockholders’ equity and cash flows for the year then ended, not presented herein, and in our report dated April 22, 2002, 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, 2002, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

The company provides services to the global offshore energy industry through the operation of a diversified fleet of marine service vessels. Revenues, net earnings and cash flows from operations are dependent upon the activity level of the vessel fleet which is ultimately dependent upon oil and natural gas prices which, in turn, are determined by the supply/demand relationship for oil and natural gas. The following information contained in this Form 10-Q should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report and related disclosures.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that certain statements set forth in this Quarterly Report on Form 10-Q which provide other than historical information and which are forward looking, involve risks and uncertainties that may impact the company’s actual results of operations. The company faces many risks and uncertainties, many of which are beyond the control of the company, including: fluctuations in oil and gas prices; level of fleet additions by competitors; changes in capital spending by customers in the energy industry for exploration, development and production; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; and environmental and labor laws. Readers should consider all of these risk factors as well as other information contained in this report.

Forward-looking statements, which can generally be identified by the use of such terminology as “may,” “expect,” “anticipate,” “estimate,” “forecast,” “believe,” “think,” “could,” “will,” “continue,” “intend,” “seek,” “plan,” “should,” “would” and similar expressions contained in this report, are predictions and not guarantees of future performance or events. The forward-looking statements are based on current industry, financial and economic information, which the company has assessed but which by its nature is dynamic and subject to rapid and possibly abrupt changes. The company’s actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. The forward-looking statements should be considered in the context of the risk factors listed above and discussed in Items 1, 2 and 7 included in the company’s Annual Report on Form 10-K for the year ended March 31, 2002, filed with the Securities and Exchange Commission on April 25, 2002 and elsewhere in this Form 10-Q. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. Management disclaims any obligation to update or revise the forward-looking statements contained herein to reflect new information, future events or developments.

Offshore service vessels provide a diverse range of services and equipment to the energy industry. Fleet size, utilization and vessel day rates primarily determine the amount of revenues and operating profit because operating costs and depreciation do not change proportionally when revenue changes. Operating costs primarily consist of crew costs, repair and maintenance, insurance, fuel, lube oil and supplies. Fleet size and utilization are the major factors which affect crew costs. The timing and amount of repair and maintenance costs are influenced by customer demands, vessel age and scheduled drydockings to satisfy safety and inspection requirements mandated by regulatory agencies. Whenever possible, vessel drydockings are done during seasonally slow periods to minimize any impact on vessel operations and are only done if economically justified, given the vessel’s age and physical condition.

The following table compares revenues and operating expenses (excluding general and administrative expense and depreciation expense) for the company’s vessel fleet for the quarters ended June 30 and March 31. Vessel revenues and operating costs relate to vessels owned and operated by the company while other marine services relate to third-party activities of the company’s shipyards, brokered vessels and other miscellaneous marine-related activities.

	Quarter Ended June 30,			Quarter Ended March 31,
(in thousands)	2002		2001	2002
Revenues:
Vessel revenues:
United States	$	25,159	69,002	31,066
International		131,605	118,812	133,769

		156,764	187,814	164,835
Other marine revenues		3,546	2,749	4,540

	$	160,310	190,563	169,375

Operating costs:
Vessel operating costs:
Crew costs	$	49,529	50,525	48,956
Repair and maintenance		18,235	24,638	18,775
Insurance		5,759	4,693	5,043
Fuel, lube and supplies		7,872	7,771	8,682
Other		9,535	9,199	11,209

		90,930	96,826	92,665
Costs of other marine revenues		2,005	1,532	3,589

	$	92,935	98,358	96,254

DELAWARE		72-0487776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

601 Poydras Street, Suite 1900, New Orleans, Louisiana		70130
(Address of principal executive offices)		(Zip Code	)