-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7D0kCBwEenc/x9JojYmrLuXMQRNqXa8ikNvF26mFoi7/lGFn158zmDYa/O0qQ8K TwHi41S3SPWFXhbEWZOZjA== 0000073756-97-000006.txt : 19970626 0000073756-97-000006.hdr.sgml : 19970626 ACCESSION NUMBER: 0000073756-97-000006 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970625 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEANEERING INTERNATIONAL INC CENTRAL INDEX KEY: 0000073756 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 952628227 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10945 FILM NUMBER: 97629208 BUSINESS ADDRESS: STREET 1: 16001 PARK TEN PL STE 600 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 7135788868 10-K405 1 FISCAL 1997 10K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________ to __________ Commission file number 1-10945 OCEANEERING INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 95-2628227 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 16001 Park Ten Place, Suite 600 Houston, Texas 77084 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (281) 578-8868 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, $0.25 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X, No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes X, No . Aggregate market value of the voting stock held by non-affiliates of the registrant at May 30, 1997, based upon the closing sale price of the Common Stock on the New York Stock Exchange $381,067,597 Number of shares of Common Stock outstanding at May 30, 1997 23,094,327 Documents Incorporated by Reference: Portions of the proxy statement to be filed on or before July 29, 1997, pursuant to Regulation 14A of the Securities and Exchange Act of 1934 to the extent set forth in Part III, Items 10-13 of this report. OCEANEERING INTERNATIONAL, INC. Annual Report on Form 10-K INDEX PART I Item 1 Business Item 2 Properties Item 3 Legal Proceedings Item 4 Submission of Matters to a Vote of Security Holders Item 4a Executive Officers of the Registrant PART II Item 5 Market for the Registrant's Common Equity and Related Shareholder Matters Item 6 Selected Financial Data Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations * Item 8 Financial Statements and Supplementary Data Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure PART III Item 10 Directors and Executive Officers of the Registrant Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Management Item 13 Certain Relationships and Related Transactions PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K SIGNATURES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES * Refers the reader to Part IV, Item 14. PART I Item 1. BUSINESS. General Development of Business Oceaneering International, Inc., (together with its subsidiaries, "Oceaneering" or the "Company") is an advanced applied technology company that provides engineered services and hardware to customers who operate in marine, space and other harsh environments. The Company supplies a comprehensive range of integrated technical services to a wide array of industries and is one of the world's largest underwater services contractors. Principal services are provided to the oil and gas industry and include drilling support, subsea construction, production systems, facilities maintenance and repair, survey and positioning and specialized onshore and offshore engineering and inspection. Oceaneering was organized in 1969 out of the combination of three diving service companies founded in the early 1960s. Since its establishment, the Company has concentrated on the development and marketing of underwater services requiring the use of advanced deepwater technology. The Company conducts operations in the United States and 28 other countries. The Company's international operations, principally in the North Sea, Africa and Far East, accounted for approximately 58% of its 1997 revenues, or $214 million. Since 1990, the Company has concentrated on expanding its capabilities to provide technical solutions to customers operating in harsh environments. It has accomplished this through acquisitions and internal growth. In January 1990, the Company acquired all of the outstanding capital stock of Sonsub Limited, a United Kingdom company, whose principal assets were ten work class Remotely Operated Vehicles ("ROVs"). ROVs are unmanned submersible vehicles operated from the surface that are used widely in the offshore oil and gas industry. In December 1990, the Company was awarded a contract by a major oil company to provide and maintain a Floating Production, Storage and Offloading system ("FPSO"). This represented the first major project for the Company's Offshore Production Systems division ("OPS") which was formed to develop economical production alternatives for offshore oil and gas fields. A 78,000 deadweight ton ("dwt") tanker was purchased and converted into an FPSO, the OCEAN PRODUCER, for this project. The unit was delivered to its first location in December 1991 and is currently under contract for operations offshore West Africa. In August 1992, the Company acquired Eastport International, Inc., ("Eastport"), a designer, developer and operator of advanced robotic systems and ROVs specializing in the non-oilfield market, in a transaction accounted for as a pooling of interests. Eastport's assets included two specialized ROVs, one of which is rated for water depths to 25,000 feet, a deep tow sonar system and two other work class ROVs. In May 1993, the Company purchased the business and assets of the Space Systems Division of ILC Dover, Inc., ("ILC") which were consolidated with the Company's Oceaneering Space Systems division. This business designs, develops and fabricates spacecraft hardware and high temperature insulation products. In July 1993, the Company purchased Oil Industry Engineering, Inc., a designer and fabricator of subsea control systems, which now operates as the Oceaneering Intervention Engineering division ("OIE"). In March 1994, the Company purchased the operating subsidiaries of Multiflex International Inc., a manufacturer of subsea control umbilical cables, which now operates as the Oceaneering Multiflex division ("Multiflex"). Together with the Company's existing OPS division, these acquisitions form the basis of the Company's continuing expansion in the offshore field development business. In November 1995, the Company was awarded a contract with a major oil company for the provision of an FPSO. The Company converted a 268,000 dwt tanker and delivered the unit to its first operational location offshore West Africa in August 1996. The customer exercised an option to purchase the unit in December 1996 and the Company is currently continuing to manage the vessel and to supervise major modifications to increase the production capacity of the unit. The Company intends to continue its strategy of acquiring, as opportunities arise, additional assets or businesses, either directly through merger, consolidation or purchase, or indirectly through joint ventures. The Company is also applying its skills and technology in further developing business unrelated to the oil and gas industry and performing services for government agencies and firms in the telecommunications, aerospace, and civil engineering and construction industries. The Company is continually seeking opportunities for business combinations to improve its market position or expand into related service lines. Financial Information about Industry Segments The Company's business segments are Oilfield Marine Services, Offshore Field Development and Advanced Technologies. The table containing revenues, operating income, identifiable assets, capital expenditures, and depreciation and amortization by business segment for the years ended March 31, 1997, 1996 and 1995 is incorporated herein by reference from Note 6 of the Notes to Consolidated Financial Statements. Description of Business OILFIELD MARINE SERVICES The Company's Oilfield Marine Services business consists of underwater intervention and above-water inspection, maintenance and repair. All of these services are frequently provided to customers on an integrated basis. Underwater Intervention Services. The Company provides underwater support services for all phases of offshore oil and gas operations - exploration, development and production. During the exploration phase, the Company provides positioning, placement and monitoring of subsea exploration equipment, collects data on seafloor characteristics at proposed drilling sites and assists with the navigational positioning of drilling rigs. During the development phase, the Company assists with the installation of production platforms and the connection of subsea pipelines. During the production phase, the Company inspects, maintains and repairs offshore platforms, pipelines and subsea equipment. Underwater intervention services are performed by ROVs or divers. ROVs are used at depths or in situations in which diving would be uneconomical or infeasible. The Company believes that it operates the most technically advanced fleet of work class ROVs in the world, with about a 25% market share, and is the industry leader in providing ROV services on deepwater wells which are the most technically demanding. ROVs are used for a variety of underwater tasks including drill support, installation and construction support, pipeline inspections and surveys, and subsea production facility installation, operation and maintenance. An ROV may be outfitted with manipulators, sonar, television cameras, specialized tooling packages and other equipment or features to facilitate the performance of specific underwater tasks. The Company currently owns more than 75 work class and inspection class ROVs. When a project requires manned intervention, the Company uses divers or Atmospheric Diving Systems ("ADS") technology. An ADS encloses the operator in a one-atmosphere (surface pressure) diving suit and is suitable for use in water depths to 2,300 feet. The Company does not use divers (as distinguished from ADS operators) to perform functions in water depths greater than 1,000 feet. The Company also provides a range of survey and navigational positioning services for the oil and gas industry, as well as ocean search and recovery projects. Applications include surface positioning for rig moves and the installation of pipelines and platforms, subsea positioning and acoustics, geophysical surveys, deep tow surveys and pipeline surveys. Underwater services using all of these techniques are performed from drilling rigs, platforms, barges and vessels. Above-Water Inspection Services. Through its Solus Schall division ("Solus Schall"), the Company offers a wide range of inspection services to customers required to obtain third party inspections to satisfy contractual structural specifications and requirements, internal safety standards or regulatory requirements. Historically, the Company has focused on the inspection of pipelines and onshore fabrication of offshore facilities for the oil and gas industry. The Company also conducts inspections of other industrial equipment. Certain of Solus Schall's pipeline inspection activities are performed through the use of specialized X-ray crawlers, which travel independently inside pipelines, stopping to perform radiographic inspection of welds. Solus Schall derives the majority of its revenues from foreign operations. In connection with Solus Schall's inspection services (both onshore and offshore), the Company developed a computer-aided method of managing inspection data, which consists of a software package that provides a standardized format for the storage, retrieval and analysis of multi-year inspection data. Originally developed for platform inspections, the software has been expanded for use in the inspection of pipelines, vessels and refinery piping. OFFSHORE FIELD DEVELOPMENT Mobile Offshore Production Systems. The Company established OPS as a division during 1989 to provide subsea intervention services and the engineering, procurement, construction, installation and operation of mobile offshore production systems ("MOPS") to customers for marginal and remote field production and extended well testing. The Company has been awarded several contracts pertaining to MOPS activities and subsea workover and maintenance needs, including deepwater extended well testing in the Gulf of Mexico and has served as prime contractor on an extended well testing project in the North Sea. The Company's first FPSO, the OCEAN PRODUCER, has been operating offshore West Africa since December 1991. The Company's second FPSO, the ZAFIRO PRODUCER, was delivered to its first location offshore West Africa in August 1996 to begin operations under a three-year contract with a major oil company. The customer had an option to purchase the unit and exercised this option in December 1996. The Company is continuing to operate the vessel under a management agreement and is managing a major upgrade of the vessel. Additionally, at May 30, 1997, the Company owned four offshore rigs capable of conversion to MOPS units. Subsea Products. OIE, Multiflex and the Pipeline Repair Systems unit of the Company comprise the Subsea Products division which complements the activities of OPS. OIE provides subsea intervention services, design and fabrication of ROV interface tooling, including ROV replaceable and ROV operable valves, and design and fabrication of subsea control systems. Multiflex, with facilities in Houston, Texas and Edinburgh, Scotland, produces subsea control umbilical cables which are used for the remote operation of subsea installations and equipment and typically incorporate both electrical and hydraulic control lines. ADVANCED TECHNOLOGIES The Company provides project management, engineering services and equipment to non-oilfield customers for applications in harsh environments. The Company's Advanced Technologies ("ADTECH") segment serves government agencies and firms in the telecommunications, aerospace, and civil engineering and construction industries. This is accomplished in part by extending the use of existing assets and technology developed in oilfield operations to new applications. ADTECH performs work for customers having specialized requirements underwater or in other harsh environments. ADTECH provides deep ocean search and recovery services for governmental bodies, including the U.S. Navy and the National Aeronautics and Space Administration ("NASA"). In other services for the Navy, ADTECH provides various engineering and underwater services ranging from aircraft salvage and recovery operations to inspection and maintenance of the Navy's fleet of surface ships and submarines. The Company also maintains and operates deepwater cable lay and maintenance vehicles for AT&T Corp. ADTECH designs and operates ROVs that are rated for work in water depths to 25,000 feet. The more advanced ROVs owned by the Company are equipped with lighter umbilical cords containing optic fibers which allow for improved communications with the surface. Other specialized equipment owned by the Company includes ROV cable lay and maintenance equipment rated to 5,000 feet and deep tow, side scan sonar systems rated for use in 20,000 feet. The Company's deep tow systems have been used to locate downed aircraft in water depths to 14,700 feet. ADTECH also designs and develops specialized tools and builds ROV systems to customer specifications for use in deepwater and hazardous environments. As part of ADTECH, Oceaneering Space Systems ("OSS") directs the Company's efforts towards applying undersea technology and experience in the space industry. The Company has worked with NASA and NASA subcontractors on a variety of projects including portable life-support systems, decompression techniques, tools and robotic systems, and standards and guidelines to ensure robotic compatibility for space station equipment and payloads. OSS is developing cryogenic life-support system technology for neutral buoyancy testing and future space missions. Related life-support technology has been developed for future use by environmental remediation workers and fire fighters. OSS was expanded in 1994 by the purchase of the assets of ILC. ILC had supported NASA by producing space shuttle crew support equipment, including the design, development and fabrication of spacecraft extravehicular and intravehicular hardware and soft goods, air crew life-support equipment, mechanical and electromechanical devices and high temperature insulation. These activities have continued. The activities of OSS are substantially dependent on continued government funding for space programs. MARKETING Oilfield Marine Services. The Company markets its services primarily to international and foreign national oil and gas companies. It also provides services as a subcontractor to companies operating as prime contractors. Contracts are typically awarded on a competitive bid basis and are for the most part short-term. Offshore Field Development. The Company markets both its mobile offshore production systems and subsea products primarily to international and foreign national oil and gas companies, utilizing the Company's existing administrative structure to identify potential business opportunities. MOPS are offered for extended well testing, early production and development of marginal fields and prospects in areas lacking pipelines and processing infrastructure. Contracts are typically awarded on a competitive basis, generally for periods of one or more years. The Company owns one MOPS unit and operates a second, both of which have long-term contracts. The Company also owns equipment which is capable of conversion to MOPS. Further equipment will be added as profitable opportunities arise. The Company believes that Multiflex enables it to identify market opportunities at an earlier stage as umbilical design is typically part of the initial planning phase in field development. The Company is able to offer an integrated service consisting of design, engineering, project management and provision of hardware. Advanced Technologies. The Company markets its marine services and related engineering services to government agencies, major defense contractors, NASA subcontractors and to telecommunications, construction and other industrial customers outside the energy sector. The Company also markets to insurance companies, salvage associations and other customers who have requirements for specialized operations in deep water. Major Customers. Five principal customers of the Company accounted for approximately 33%, 29% and 34% of the Company's consolidated revenues in 1997, 1996 and 1995, respectively. The Mobil Corporation group of companies accounted for more than 10% of the Company's revenues in fiscal 1997. No single customer accounted for more than 10% of the Company's consolidated revenues in 1996. The Royal Dutch Shell group of companies accounted for more than 10% of the Company's consolidated revenues in 1995. Also see Note 6 of the Notes to Consolidated Financial Statements. COMPETITION The Company's businesses are highly competitive. Oilfield Marine Services. The Company believes that it is one of five companies that provides underwater services on a worldwide basis. The Company competes for contracts with the other four worldwide companies and with numerous companies operating locally in various areas. Competition for underwater services historically has been based on the type of underwater equipment available, location of or ability to deploy such equipment, quality of service and price. In recent years, price has been the most important factor in obtaining contracts; however, the ability to develop improved equipment and techniques and to attract and retain skilled personnel is also an important competitive factor in the Company's markets. The number of the Company's competitors is inversely correlated with water depth, as less sophisticated equipment and technology is required in shallow water. With respect to projects that require less sophisticated equipment or diving techniques, small companies have sometimes been able to bid for contracts at prices uneconomic to the Company. The Company believes that its ability to provide a wide range of underwater services, including technological applications in deeper water on a worldwide basis, should enable it to compete effectively in the oilfield exploration and development market. Oil and gas exploration and development expenditures fluctuate from year to year. In particular, budgetary approval for more expensive drilling and production in deeper water or harsh environments, areas in which the Company believes it has a competitive advantage, may be postponed or suspended. In some areas, the ability of the Company to obtain contracts depends upon its ability to charter vessels for use as work platforms. On occasion, the Company will bid jointly with vessel owners for contracts, and it endeavors to develop ongoing relations with various vessel owners. The worldwide inspection market consists of a wide range of inspection and certification requirements in many industries. Solus Schall competes in only selected portions of this market. The Company believes that its broad geographic sales and operational coverage, long history of operations, technical reputation, application of X-ray crawler pipeline radiography and accreditation to international quality standards enable it to compete effectively in its selected inspection services market segments. In the North Sea and, to a lesser extent, in other areas, oil and gas companies utilize prequalification procedures that reduce the number of prospective bidders for their projects. In certain countries political considerations tend to favor local contractors. Offshore Field Development. The Company believes that it is well positioned to compete in the offshore field development market through its ability to identify and offer optimum solutions, supply equipment, provide capital on a limited basis and utilize the expertise in associated subsea technology and offshore construction and operations gained through its extensive operational experience worldwide. The Company is one of many companies that offer leased MOPS units. Potential competitors include companies having underutilized assets such as drilling rigs and tankers, although access to the capital needed to convert units to MOPS may be a limiting factor. Although there are several competitors offering either specialized products or operating in limited geographic areas, the Company believes that it is one of two companies that compete on a worldwide basis for the provision of subsea control umbilical cables. Advanced Technologies. The Company believes that its specialized ROV assets and experience in deep water operations give it a competitive advantage in obtaining contracts in water depths greater than 5,000 feet. The number of the Company's competitors is inversely correlated with water depth, due to the advanced technical knowledge and sophisticated equipment required for deep water operations. Engineering services is a very broad market with a large number of competitors. The Company competes in specialized areas in which it can combine its extensive program management experience, engineering services and the capability to continue the development of conceptual project designs into the manufacture of prototype equipment. The Company also utilizes the administrative structure of the Oilfield Marine Services business to identify opportunities in foreign countries and to provide additional local support for non-oil and gas customers. SEASONALITY, BACKLOG AND RESEARCH AND DEVELOPMENT A material amount of the Company's revenues is generated by contracts for marine services in the Gulf of Mexico and North Sea, which are usually seasonal from April through November. However, the Company's exit from the diving sector in the North Sea in early fiscal 1998 and the substantial number of multi-year ROV contracts which were entered into during 1997 should reduce the seasonality of the Company's Oilfield Marine Services operations. Revenues in the Offshore Field Development and Advanced Technologies segments are generally not seasonal. The amounts of backlog orders believed to be firm for Oilfield Marine Services as of March 31, 1997 and 1996 were $154 million and $100 million, respectively. Of these amounts, $65 million and $26 million, respectively, were not expected to be performed within the year following such respective dates. At March 31, 1997 and 1996, the Company had approximately $64 million and $144 million, respectively, in backlog for Offshore Field Development. Of these amounts, $33 million and $100 million, respectively, were not expected to be performed within the year following such respective dates. At March 31, 1997 and 1996, the Company had approximately $31 million and $41 million, respectively, in backlog for Advanced Technologies. Of these amounts, none and $4 million, respectively, were not expected to be performed within the year following such respective dates. No material portion of the Company's business is subject to renegotiation of profits or termination of contracts by the United States government. The Company's research and development expenditures were approximately $4 million, $6 million and $4 million during 1997, 1996 and 1995, respectively. These amounts do not include, nor is the Company able to determine, the expenditures by others in connection with joint research activities in which the Company participated or expenditures by the Company in connection with research conducted during the course of performing field operations. REGULATION The Company's operations are subject to various types of governmental regulation. The Company's operations are affected from time to time and in varying degrees by foreign and domestic political developments and foreign, federal and local laws and regulations. In particular, oil and gas production operations and economics are affected by tax, environmental and other laws relating to the petroleum industry, by changes in such laws and by constantly changing administrative regulations. Such developments may directly or indirectly affect the Company's operations and those of its customers. Compliance with federal, state and local provisions regulating the discharge of materials into the environment or relating to the protection of the environment has not had a material impact on the Company's capital expenditures, earnings or competitive position. In connection with its foreign operations, the Company is required in some countries to obtain licenses or permits in order to bid on contracts or otherwise to conduct business operations. Some foreign countries require that the Company enter into a joint venture or similar business arrangement with local individuals or businesses in order to conduct business. While not a formal requirement, Oceaneering's quality management systems covering the full range of subsea and topside services offered in the United Kingdom are certified to the British Standard BS EN ISO 9001:1994 and the Norwegian office is certified to the Norwegian Standard NS EN ISO 9001:1994, both of which are the equivalent of ISO 9001. The quality management systems of both the OIE and Multiflex units of the Subsea Products Group are certified to ISO 9001 for their products and services. RISKS AND INSURANCE The Company's operations are subject to all the risks normally incident to offshore exploration, development and production, including claims under U.S. maritime laws. These risks could result in damage to or loss of property, suspension of operations and injury to or death of personnel. The Company insures its real and personal property and equipment. The Company's vessels are insured against damage or loss, including war and pollution risks. The Company also carries workers' compensation, maritime employer's liability, general liability, including third party pollution, and other insurance customary in its businesses. All insurance is carried at levels of coverage and deductibles which the Company considers financially prudent. On some contracts, the Company may have certain exposures for loss or damage to the customer's facilities or for unexpected weather delays, which the Company may cover by special insurance when it deems advisable. Due to the costs for limited coverage and, in the Company's opinion, limited exposure, the Company does not ordinarily carry professional liability insurance. In some jurisdictions, legal pleadings in personal injury actions may include a claim for an amount of punitive damages which may not be covered by insurance. The primary industry that the Company serves, oil and gas, is a cyclical industry and remains volatile, resulting in potentially large fluctuations in demand for the Company's primary services, which could result in significant changes in the Company's revenues and profits. Although the oil and gas industry continues to be the Company's principal market, the Company also performs services for government agencies, and firms in the telecommunications, aerospace, and civil engineering and construction industries. The Company operates primarily as a services company under dayrate contracts. However, the Company also owns certain specialized capital assets, which if not fully utilized could have a negative effect on cash resources as a result of continuing fixed operating costs and reduced revenues. A significant part of the Company's operations is conducted outside the United States. For the years ended March 31, 1997, 1996 and 1995, foreign operations accounted for 58%, 58% and 51% of the Company's revenues, respectively. Foreign operations are subject to additional political and economic uncertainties, including the possibility of repudiation of contracts and confiscation of property, fluctuations in currency exchange rates, limitations on repatriation of earnings and foreign exchange controls. Typically, the Company is able to limit the currency risks by arranging compensation in United States dollars or freely convertible currency and, to the extent possible, limiting acceptance of blocked currency to amounts which match its expense requirements in local currencies. Certain of the countries in which the Company operates have enacted exchange controls to regulate foreign currency exchange. Exchange controls in some of the countries in which the Company operates provide for conversion of local currency into foreign currency for payment of debts, equipment rentals, technology transfer, technical assistance and other fees or repatriation of capital. Transfers of profits and dividends can be restricted or limited by exchange controls. EMPLOYEES As of March 31, 1997, the Company had approximately 2,300 employees. The Company's work force varies seasonally and peaks during the summer months. Approximately 5% of the Company's employees are represented by unions. The Company considers its relations with its employees to be satisfactory. Foreign and Domestic Operations and Export Sales The table presenting revenues, profitability and assets attributable to each of Oceaneering's geographic areas for the years 1997, 1996 and 1995 is incorporated herein by reference from Note 6 of the Notes to Consolidated Financial Statements. Item 2. PROPERTIES. See Item 1 - "Business - Description of Business - Oilfield Marine Services, Offshore Field Development and Advanced Technologies" for a description of equipment used in providing the Company's services. Oceaneering maintains office, shop and yard facilities in various parts of the world. In these locations, the Company typically leases office facilities to house its administrative and engineering staff, shops equipped for fabrication, testing, repair and maintenance activities and warehouses and yard areas for storage and mobilization of equipment to work sites. The largest facilities are located in Morgan City, Louisiana and consist of 364,000 total square feet of open and covered storage space and offices, of which 243,000 square feet are owned by the Company and the remainder is leased. The Company owns and leases property in Singapore of approximately 28,700 square feet, of which 16,200 square feet are owned. The Company leases 31,000 square feet of office space and 42,800 square feet of yard area in Aberdeen, Scotland. Other major leased properties include approximately 24,600 square feet in Dubai, United Arab Emirates, and 37,000 square feet in Port Harcourt, Nigeria. These properties are used primarily by the Oilfield Marine Services business segment of the Company. Leased properties utilized primarily by the Offshore Field Development segment consist of 53,500 square feet of workshop and office space in Houston, Texas and manufacturing facilities in Houston, Texas and Edinburgh, Scotland, of 96,000 square feet and 70,000 square feet, respectively. In addition, the Company owns manufacturing facilities in Magnolia, Texas of 65,000 square feet. The Advanced Technologies business segment leases approximately 116,000 square feet in Upper Marlboro, Maryland, which includes 86,000 square feet of offices and workshops, and approximately 50,000 square feet of offices and workshops in Houston, Texas. Item 3. LEGAL PROCEEDINGS. In the ordinary course of business, Oceaneering encounters actions for damages alleging personal injury under the general maritime laws of the United States, including the Jones Act, for alleged negligence. The Company reports actions for personal injury to its insurance carriers and believes that the settlement or disposition of such suits will not have a material effect on its financial position or results of operations. The information set forth under "Commitments and Contingencies - Litigation" in Note 5 of the Notes to Consolidated Financial Statements is incorporated herein by reference. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the year ended March 31, 1997. Item 4a. EXECUTIVE OFFICERS OF THE REGISTRANT. Executive Officers. The following is information with respect to the executive officers of Oceaneering International, Inc., as of June 1, 1997: OFFICER EMPLOYEE NAME AGE POSITIONS SINCE SINCE John R. Huff 51 Chairman of the Board, 1986 1986 President and Chief Executive Officer T. Jay Collins 50 Executive Vice President - 1993 1993 Oilfield Marine Services Marvin J. Migura 46 Senior Vice President and 1995 1995 Chief Financial Officer F. Richard Frisbie 54 Senior Vice President - 1981 1974 Deepwater Technology George R. 49 Vice President, General 1988 1988 Haubenreich, Jr. Counsel and Secretary Richard V. Chidlow 53 Controller and Chief 1990 1987 Accounting Officer Each executive officer serves at the discretion of the Chief Executive Officer and the Board of Directors and is subject to reelection or reappointment each year after the annual meeting of shareholders. Oceaneering does not know of any arrangement or understanding between any of the above persons and any other person or persons pursuant to which he was selected or appointed as an officer. Family Relationships. There are no family relationships between any director or executive officer. Business Experience. John R. Huff has been a director, President and Chief Executive Officer of the Company since 1986. He was elected Chairman of the Board in August 1990. Prior to joining the Company in 1986, he served from 1980 until 1986 as Chairman and President of Western Oceanic Inc., the offshore drilling subsidiary of The Western Company of North America ("Western Oceanic"). He is a director of BJ Services Company, Triton Energy Limited and Homegate Hospitality, Inc. T. Jay Collins, Executive Vice President, joined the Company in October 1993 as Senior Vice President and Chief Financial Officer. In May 1995, he was appointed Executive Vice President of the Company's Oilfield Marine Services business. From 1986 to 1992 he was with Teleco Oilfield Services, Inc., most recently as Executive Vice President of Finance and Administration and previously as Senior Vice President of Operations. Prior to Teleco, he spent twelve years with Sonat, Inc., serving as Senior Vice President of Finance at Sonat Offshore Drilling and President of Houston Systems Manufacturing. His operational experience with Sonat Offshore Drilling includes international management in Venezuela, Singapore, Egypt and Ivory Coast. Marvin J. Migura, Senior Vice President and Chief Financial Officer, joined the Company in May 1995. From 1975 to 1994 he held various financial positions with Zapata Corporation, then a diversified energy services company, most recently as Senior Vice President and Chief Financial Officer from 1987 to 1994. F. Richard Frisbie, Senior Vice President - Deepwater Technology, joined the Company in 1984 when Solus Ocean Systems, Inc., ("SOSI") was acquired. From 1974 to 1984, he held various engineering and management positions with SOSI and its predecessors. Over the past 20 years, he has been responsible for various technical developments in remotely operated underwater vehicle designs and the use of robotics and remotely operated devices for applications in harsh environments, including nuclear power plants. He also has previous experience in the aerospace industry. George R. Haubenreich, Jr., Vice President, General Counsel and Secretary, joined the Company in 1988. From 1979 until joining the Company, he held various legal positions with The Coastal Corporation, a diversified energy company, his last being Senior Staff Counsel. From 1974 until 1979, he was an attorney with Exxon Company, U.S.A. Richard V. Chidlow, Controller and Chief Accounting Officer, joined the Company in 1987 as Controller for the Americas Region. From 1988 until 1990, he was Controller for the Europe, Africa and Asia group in Aberdeen, and was appointed to his present position in 1990. From 1975 until joining the Company he held various positions with Western Oceanic, his last being Manager of Accounting. PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS. Oceaneering's Common Stock is listed on the New York Stock Exchange (symbol OII). The following table sets forth, for the periods indicated, the high and low closing sales prices for Oceaneering's Common Stock as reported on the New York Stock Exchange (consolidated transaction reporting system): Fiscal 1997 Fiscal 1996 High Low High Low For the quarter ended: June 30 $17 $ 13-5/8 $10-5/8 $ 8-7/8 September 30 18-3/8 14-1/2 12-1/8 8-1/2 December 31 19-1/4 13-3/4 13 8-3/4 March 31 18-1/2 15 14-1/2 10-7/8 On May 30, 1997, Oceaneering had 646 holders of record of its Common Stock, par value $0.25. On that date, the closing sales price of the shares, as quoted on the New York Stock Exchange, was $17. Oceaneering has made no Common Stock dividend payments since 1977. Its present bank credit agreement restricts aggregate dividends to 50% of cumulative net earnings from December 31, 1994. Item 6. SELECTED FINANCIAL DATA. Results of Operations: Years Ended March 31, 1997 1996 1995 1994 1993 (in thousands, except per share figures) Revenues $368,773 $289,506 $239,936 $229,760 $215,603 Cost of services 290,801(a) 234,731 190,772 177,199 157,048 Gross margin 77,972 54,775 49,164 52,561 58,555 Selling, general and administrative expenses 36,363 34,589 36,410 31,631 32,903 Income from operations $ 41,609 $ 20,186 $ 12,754 $ 20,930 $ 25,652 Net income applicable to common stock $ 19,445 $ 12,357 $ 5,496 $ 14,931 $ 19,401 Net income per common share equivalent 0.81 0.53 0.23 0.62 0.82 Depreciation and amortization 32,687(b) 20,567 16,232 12,196 11,528 Capital expenditures 79,599 57,171 32,057 36,730 11,996 Other Financial Data: As of March 31, 1997 1996 1995 1994 1993 (in thousands, except ratios) Working capital ratio 1.55 1.62 1.44 1.74 1.92 Cash and cash equivalents $ 23,034 $ 9,351 $ 12,865 $ 26,486 $33,973 Working capital 52,962 42,427 23,106 34,425 42,492 Total assets 268,255 256,096 187,752 171,993 154,524 Short-term debt -- 183 118 124 96 Long-term debt -- 48,000 9,472 171 235 Total debt -- 48,183 9,590 295 331 Shareholders' equity 156,334 127,098 115,140 113,353 98,331 (a) Includes $25,047 gain on disposition of FPSO, $7,980 impairment adjustment and $7,980 provision for special drydocking. (b) Includes $7,980 impairment adjustment. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. All statements in this Form 10-K, other than statements of historical facts, including, without limitation, statements regarding the Company's business strategy, plans for future operations, and industry conditions, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company utilizes a variety of internal and external data and management judgment in order to develop such forward-looking information. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, because of the inherent limitations in the forecasting process, as well as the relatively volatile nature of the industry in which the Company operates, it can give no assurance that such expectations will prove to have been correct. Accordingly, evaluation of future prospects of the Company must be made with caution when relying on forward-looking information. Liquidity and Capital Resources The Company considers its liquidity and capital resources adequate to continue its growth initiatives. At March 31, 1997, the Company had working capital of $53 million, including $21 million of unrestricted cash. Additionally, the Company had all of its $80 million credit facility available and $38 million was unused under uncommitted lines of credit. The Company expects to meet its ongoing annual cash requirements from existing cash on hand, operating cash flow, and available credit facilities. Net income plus depreciation and amortization (commonly referred to as Cash Flow from Operations) of $52 million for 1997 represented a substantial increase from the $33 million and the $22 million for 1996 and 1995, respectively. In November 1995, the Company announced that it had been awarded a contract by a major oil company to provide an FPSO. The contract was a dayrate lease arrangement with an initial term of three years which commenced on delivery of the FPSO in August 1996. The Company purchased and converted an existing 268,000 dwt crude oil tanker into the FPSO ZAFIRO PRODUCER at a capital cost of $68 million. To facilitate the funding of the capital expenditures required for this project, the Company expanded its committed credit facility from $75 million to $120 million. The contract provided the customer with the options to either extend the contract at reduced rates or purchase the vessel and terminate the lease at any time during the initial three-year period. The customer exercised its purchase option in December 1996 and the Company utilized part of the proceeds to repay the debt which had been incurred in conversion of the vessel. To lower commitment fees, the Company subsequently reduced its committed credit facility to $80 million, none of which was used at the end of 1997. Working capital at the end of 1997 was $53 million which compared to $42 million at the end of 1996 and $23 million at the end of 1995. The increase in working capital in 1997 was a result of the disposition of the FPSO ZAFIRO PRODUCER. The higher working capital in 1996 compared to 1995 was primarily attributable to the receivable generated by a large MOPS conversion project completed for a customer during 1996. Subsequent to the year-end, the receivable, which was not due until 1998, was paid in full by the customer and was therefore treated as a current asset. Capital expenditures for the years ended March 31, 1997, 1996 and 1995 were $80 million, $57 million and $32 million, respectively. Capital expenditures in 1997 included $38 million to complete the conversion of the ZAFIRO PRODUCER. Other expenditures consisted of additions to the Company's fleet of ROVs and two support vessels. Capital expenditures for 1996 included $30 million of acquisition and conversion costs of the FPSO ZAFIRO PRODUCER, completion of upgrades on two dynamically-positioned ("DP") vessels and additions to the Company's fleet of ROVs. Capital expenditures for 1995 included the purchase and upgrade of a DP offshore support vessel, acquisition of the remainder of the capital stock of a jointly owned company which owned an offshore support vessel, upgrades to ROVs and the acquisition of environmental services equipment. There were no material commitments for capital expenditures at the close of 1997. During 1995 the Company completed the purchase of 1,000,000 shares of its Common Stock pursuant to a plan approved in June 1994. The purchases were financed primarily by bank borrowings. After re-issue of shares to meet the Company's regular obligations to the Oceaneering Retirement Investment Plan and Restricted Stock plan, and to satisfy share option exercises, there were 110,017 shares of treasury stock remaining at March 31, 1997. In April 1997, the Company approved a new plan to purchase up to a maximum of 3,000,000 shares of its Common Stock. The Company expects to fund such purchases from existing resources and operating cash flows. As a result of the disposition of the FPSO ZAFIRO PRODUCER, the Company fully repaid its long-term debt in December 1996. The ratio of the Company's debt to total capitalization will vary from time to time depending primarily upon the level of capital spending. Because of its significant foreign operations, the Company is exposed to currency fluctuations and exchange risks. The Company minimizes these risks primarily through matching, to the extent possible, revenues and expenses in the various currencies in which it operates. Cumulative translation adjustments as of March 31, 1997, relate primarily to the Company's permanent investment in and loans to its United Kingdom subsidiary. Inflation has not had a material effect on the Company in the past two years and no such effect is expected in the near future. See Item 1 - "Business - Description of Business - Risks and Insurance." Results of Operations Revenues of $369 million for 1997 represented a substantial increase from revenues of $290 million and $240 million for 1996 and 1995, respectively. Gross margin of $78 million also compared favorably to $55 million and $49 million for the prior two years. As a percentage of revenue, gross margin of 21% for 1997 represented a slight increase from the 19% margin for 1996 and compared to a 20% margin for 1995. Gross margins as a percentage of revenues vary depending upon the mix of the type of contracts (for example, subcontractor cost components) and may not be indicative of business trends. Net income of $19.4 million in 1997 was over 50% higher than the $12.4 million reported for 1996, which was more than double the $5.5 million earned during 1995. Information on the Company's business segments is shown in Note 6 of the Notes to Consolidated Financial Statements. Oilfield Marine Services. During 1997, Oilfield Marine Services segment revenues increased to $176 million compared to $132 million in 1996 and $106 million in 1995. Income from operations was $1.9 million in 1997 compared to a loss of $400,000 in 1996 and a loss of $2.5 million in 1995. Operating cash flow (defined as operating income plus depreciation and amortization) of $23 million for 1997 represented a significant increase from the $11 million and $5 million for 1996 and 1995, respectively. During 1997, in response to continued increasing demand to support deepwater drilling and identified future construction and production maintenance work, the Company extended its ROV fleet expansion program begun in 1996 by announcing plans for a further 23 new ROVs. These new vehicles are designed for use around the world in water depths to 10,000 feet and in severe weather conditions. Based on a review of actual and expected operating results, the Company decided to discontinue offering diving services in the North Sea and in March 1997 reached an agreement to sell its North Sea diving assets, including a diving support vessel ("DSV"). The sale closed in April 1997 and the sales proceeds approximated the net book value of the assets sold. The Company believes that there will be a greater return in focusing on other business lines in the North Sea area; diving services continue to be offered by the Company in other areas. The table below sets out revenues and profitability for the Oilfield Marine Services segment for 1997, 1996 and 1995. For the Years Ended March 31, 1997 1996 1995 (in thousands, except percentages) Revenues $176,395 $132,064 $106,294 Gross Margin 24,139 21,154 19,872 Gross Margin % 14% 16% 19% Operating Income (loss) 1,853 (369) (2,485) Operating Income (loss) % 1% 0% (2)% Revenues increased 34% in 1997 compared to 1996, reflecting increased activity in all operating areas. Revenues and gross margin contribution from the ROV fleet increased as requirements for vehicles to support exploration and development drilling activities from floating drilling rigs increased and units were added to the fleet. Diving revenues increased but gross margins were reduced by an impairment adjustment of $8.0 million which was made in the third quarter of 1997 to reduce the carrying value of a DSV. Excluding the impairment adjustment, gross margin was 18% in 1997. The vessel was subsequently sold at approximately its written-down book value together with the Company's North Sea diving assets. Revenues increased 24% in 1996 compared to 1995, reflecting increased activity in all operating areas. The segment benefitted from higher revenues and gross margins contribution from the ROV fleet as requirements for vehicles to support exploration and development drilling activities from floating drilling rigs increased. However, these gains were partially offset by lower demand for diving services with correspondingly lower gross margin. In addition, operating results in the North Sea and Gulf of Mexico areas were negatively impacted by delays in the commissioning of support vessels which had undergone extensive refurbishment and upgrade during the year. Revenues and gross margin for 1996 benefited by $1.1 million from the settlement of a contract dispute which had been provided for in 1995. This adjustment increased gross margin percentage in 1996 by 1%. Gross margin was negatively impacted in 1995 by an unfavorable arbitration ruling relating to a contract executed in 1991 and difficulties experienced in collecting amounts due under a foreign contract. The provision for the arbitration ruling decreased gross margin by $1.6 million (1%). The provision relating to the difficulty in collecting amounts due under a foreign contract decreased gross margin by $1.1 million (1%). Oilfield Marine Services gross margin was 21% before the provisions. Offshore Field Development. This segment includes FPSO ownership and operations, engineering, design and project management services for other MOPS-related work, and subsea products. The table below sets out revenues and profitability for this segment for 1997, 1996 and 1995. For the Years Ended March 31, 1997 1996 1995 (in thousands, except percentages) Revenues $101,028 $80,855 $62,918 Gain on disposition of FPSO 25,047 -- -- Gross Margin 36,861 21,758 13,726 Gross Margin % 36% 27% 22% Operating Income 30,242 15,567 6,676 Operating Income % 30% 19% 11% During 1997 the Company completed conversion of a 268,000 dwt tanker into an FPSO, the ZAFIRO PRODUCER, which was delivered to a customer offshore West Africa in August 1996 under a three-year contract. The customer had an option to purchase the vessel at any time during the three-year contract period and elected to do so in December 1996. The Company recognized a gain of $25.0 million on the disposition of this asset. Revenues and margins for 1997 include the results of operations for the ZAFIRO PRODUCER prior to its purchase by the customer. The Company is continuing to operate the vessel under a management agreement. The Company's first FPSO, OCEAN PRODUCER, continued to work offshore West Africa under a four-year contract expiring in January 2000. During the third quarter of fiscal 1997, the Company determined that substantial repairs would be necessary to maintain the unit in operating condition in compliance with regulatory requirements. These repairs will require a special drydocking and are expected to be performed in fiscal 1998. The Company recorded an $8.0 million provision in fiscal 1997 which reduced gross margin by 8%. Revenues and gross margin for 1996 were higher than for 1995 as a result of a large MOPS conversion project which was completed during the year and improved results in the subsea products business. The large MOPS project consisted of the conversion of a jackup drilling rig into production service for a customer. Results for 1996 also included a $2.7 million gain on the involuntary conversion of the semisubmersible rig, OCEAN DEVELOPER, which sank in August 1995 while under tow. The Company expects to continue to invest in other MOPS assets as profitable opportunities arise. Advanced Technologies. The table below sets out revenues and profitability for this segment for 1997, 1996 and 1995. For the Years Ended March 31, 1997 1996 1995 (in thousands, except percentages) Revenues $91,350 $76,587 $70,724 Gross Margin 16,972 11,863 15,566 Gross Margin % 19% 15% 22% Operating Income 9,514 4,988 8,563 Operating Income % 10% 7% 12% Revenues for search and recovery operations for 1997 were higher than for 1996 as a result of increased activity in U.S. Navy support although gross margin percentage was lower as a result of a higher component of reimbursable costs. Subsea telecommunications cable burial activities had higher revenues than for 1996 and improved gross margins. Revenues for 1996 increased over 1995 as a result of an increase in subsea telecommunication cable burial activities, space-related product sales and marine civil engineering and construction work. Gross margin declined in 1996 compared to 1995 due to reduced utilization of the Company's deep ocean search and recovery equipment, lower service requirements by the U.S. Navy and complications experienced on a cable burial project completed in the fourth quarter. Other. Interest income and interest expense for 1997 did not change significantly from 1996. Interest income increased by $1.2 million in 1996 compared to 1995 as a result of interest earned on the receivable related to the MOPS conversion project. Interest expense increased by $1.6 million in 1996 compared to 1995 as a result of increased borrowings to finance the MOPS conversion project and continuing capital expenditures in oilfield marine services. Interest expense is net of capitalized interest of $1.1 million for 1997 and $300,000 for 1996. The Company's effective tax rate increased to 53% in 1997 compared to 38% in 1996 as a result of provisions made for asset impairment and a special drydocking in its United Kingdom subsidiary, where the Company derives no tax benefit as it already has net operating loss carryforwards ("NOLs"). The Company's effective tax rate decreased during 1996 compared to 1995 as a result of decreased losses in areas, primarily in the United Kingdom tax jurisdiction, where the Company derives no tax benefit as it already has NOLs. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. In this report, the consolidated financial statements and supplementary data of the Company appear in Part IV, Item 14 and are hereby incorporated by reference. See Index to Financial Statements and Schedules. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information with respect to the directors and nominees for election to the Board of Directors of Oceaneering International, Inc., is incorporated by reference from Oceaneering International, Inc.'s definitive proxy statement to be filed on or before July 29, 1997, pursuant to Regulation 14A under the Securities Exchange Act of 1934. The information with respect to the executive officers of Oceaneering International, Inc., is provided under Item 4a of Part I of this Annual Report on Form 10-K. Item 11. EXECUTIVE COMPENSATION. The information required by Item 11 is incorporated by reference from the proxy statement described in Item 10 above. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by Item 12 is incorporated by reference from the proxy statement described in Item 10 above. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by Item 13 is incorporated by reference from the proxy statement described in Item 10 above. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Documents filed as part of this report. 1. Financial Statements. (i) Report of Independent Public Accountants (ii) Consolidated Balance Sheets (iii) Consolidated Statements of Income (iv) Consolidated Statements of Cash Flows (v) Consolidated Statements of Shareholders' Equity (vi) Notes to Consolidated Financial Statements 2. Exhibits: Registration or File Form or Exhibit Exhibit Number Report Date Number 3 Articles of Incorporation and By-laws *3.01 Certificate of Incorporation, as amended 0-8418 10-K March 1988 3(a) *3.02 By-laws, as amended 0-8418 10-K March 1987 3(b) *3.03 Amendment to Certificate of Incorporation 33-36872 S-8 Sept. 1990 4(b) *3.04 Amendment to By-laws 0-8418 10-K March 1991 3(d) *3.05 Amendment to By-laws 1-10945 8-K Nov. 1992 2 4 Instruments defining the rights of security holders, including indentures *4.01 Specimen of Common Stock Certificate 1-10945 10-K March 1993 4(a) *4.02 Shareholder Rights Agreement dated November 20, 1992 1-10945 8-K Nov. 1992 1 *4.03 Bank Credit Agreement dated April 12, 1995 1-10945 10-K March 1995 4.04 *4.04 Amended and Restated Bank Credit Agreement dated June 12, 1996 1-10945 10-K March 1996 4.05 10 Material contracts *10.01 1981 Incentive Stock Option Plan, as amended 2-80506 S-8 Sept. 1987 28(e) *10.02 Oceaneering Retirement Investment Plan, as amended 1-10945 10-K March 1996 10.02 *10.03 Employment Agreement dated August 15, 1986 between John R. Huff and Registrant 0-8418 10-K March 1987 10(l) *10.04 Addendum to Employment Agreement dated February 22, 1996 between John R. Huff and Registrant 1-10945 10-K March 1997 10.04 *10.05 1987 Incentive and Non- Qualified Stock Option Plan 33-16469 S-1 Sept. 1987 10(o) *10.06 Oceaneering International, Inc. Special Incentive Plan 33-16469 S-1 Sept. 1987 10(n) *10.07 Senior Executive Severance Plan, as amended 0-8418 10-K March 1989 10(k) *10.08 Supplemental Senior Executive Severance Agreements, as amended 0-8418 10-K March 1989 10(l) *10.09 Oceaneering International, Inc. Executive Retirement Plan, as amended 1-10945 10-K March 1995 10.08 *10.10 1990 Long-Term Incentive Plan 33-36872 S-8 Sept. 1990 4(f) *10.11 1990 Nonemployee Directors Stock Option Plan 33-36872 S-8 Sept. 1990 4(g) *10.12 Indemnification Agreement between Registrant and its Directors 0-8418 10-Q Sept. 1991 10(a) *10.13 1991 Executive Incentive Agreements 0-8418 10-K March 1992 10(p) *10.14 1993 Restricted Stock Award Incentive Agreements 1-10945 10-K March 1994 10(q) *10.15 1993 Restricted Stock Award Incentive Agreement 1-10945 10-K March 1996 10.16 10.16 1997 Bonus Award Plan *10.17 Amendment No. 1 to the Oceaneering Retirement Investment Plan 1-10945 10-Q Sept. 1996 10.01 *10.18 1996 Incentive Plan of Oceaneering International, Inc. 1-10945 10-Q Sept. 1996 10.02 *10.19 1996 Restricted Stock Award Incentive Agreements between Registrant and Executive Officers dated August 23, 1996. 1-10945 10-Q Sept. 1996 10.03 10.20 1997 Bonus Restricted Stock Award Agreements between Registrant and Executive Officers dated April 22, 1997. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 24 Powers of Attorney 27 Financial Data Schedule * Indicates exhibit previously filed with the Securities and Exchange Commission as indicated and incorporated herein by reference. (b) Reports on Form 8-K. The registrant filed no reports on Form 8-K during the last quarter of the period covered by this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OCEANEERING INTERNATIONAL, INC. Date: June 23, 1997 By: //s//JOHN R. HUFF John R. Huff President and Chief Executive Officer 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 and on the dates indicated. Signature Title Date //s// JOHN R. HUFF President, Principal June 23, 1997 John R. Huff Executive Officer, Director //s// MARVIN J. MIGURA Senior Vice President, June 23, 1997 Marvin J. Migura Principal Financial Officer //s// RICHARD V. CHIDLOW Controller, Principal June 23, 1997 Richard V. Chidlow Accounting Officer CHARLES B. EVANS* Director DAVID S. HOOKER* Director D. MICHAEL HUGHES* Director HARRIS J. PAPPAS* Director *By: //s// GEORGE R. HAUBENREICH, JR. June 23, 1997 George R. Haubenreich, Jr. Attorney-in-Fact OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Index to Financial Statements Report of Independent Public Accountants Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Cash Flows Consolidated Statements of Shareholders' Equity Notes to Consolidated Financial Statements Selected Quarterly Financial Data Index to Schedules The schedules have been omitted because of the absence of the condition under which they are required or because the required information is included in the financial statements or related footnotes thereto. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Oceaneering International, Inc.: We have audited the accompanying consolidated balance sheets of Oceaneering International, Inc. (a Delaware corporation) and subsidiaries as of March 31, 1997 and 1996, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oceaneering International, Inc. and subsidiaries as of March 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1997 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Houston, Texas May 14, 1997 OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) ASSETS March 31, 1997 March 31, 1996 CURRENT ASSETS: Cash and cash equivalents $ 23,034 $ 9,351 Accounts receivable, net of allowances for doubtful accounts of $962 and $1,201 120,095 96,391 Prepaid expenses and other 5,678 4,733 ------- ------- Total current assets 148,807 110,475 ------- ------- PROPERTY AND EQUIPMENT, at cost: Marine services equipment 198,798 187,337 Mobile offshore production equipment 31,231 56,607 Other 32,915 29,438 ------- ------- 262,944 273,382 Less accumulated depreciation 161,053 145,105 ------- ------- Net property and equipment 101,891 128,277 ------- ------- INVESTMENTS AND OTHER ASSETS: Goodwill, net of amortization of $3,502 and $2,515 11,402 12,082 Other 6,155 5,262 -------- -------- TOTAL ASSETS $268,255 $256,096 ======== ======== See Notes to Consolidated Financial Statements OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 1997 March 31, 1996 CURRENT LIABILITIES: Accounts payable $27,432 $25,607 Accrued liabilities 58,183 35,823 Income taxes payable 10,230 6,618 ------- ------- Total current liabilities 95,845 68,048 ------- ------- LONG-TERM DEBT -- 48,000 OTHER LONG-TERM LIABILITIES 15,814 11,921 MINORITY INTERESTS 262 1,029 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common Stock, par value $0.25; 90,000,000 shares authorized; 24,017,046 shares issued 6,004 6,004 Additional paid-in capital 81,153 81,921 Treasury stock; 110,017 and 793,170 shares at cost (986) (6,976) Retained earnings 76,001 56,556 Cumulative translation adjustments (5,838) (10,407) ------- ------- Total shareholders' equity 156,334 127,098 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $268,255 $256,096 ======== ======== See Notes to Consolidated Financial Statements OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) For the Years Ended March 31, 1997 1996 1995 REVENUES $368,773 $289,506 $239,936 GAIN ON DISPOSITION OF FPSO 25,047 -- -- COST OF SERVICES 299,888 234,731 190,772 IMPAIRMENT ADJUSTMENT AND PROVISION FOR SPECIAL DRYDOCKING 15,960 -- -- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 36,363 34,589 36,410 ------- ------- ------- Income from operations 41,609 20,186 12,754 INTEREST INCOME 1,358 1,774 547 INTEREST EXPENSE (2,048) (2,286) (695) OTHER INCOME (EXPENSE), NET (15) 286 (383) MINORITY INTERESTS 390 (108) 287 ------- ------- ------- Income before income taxes 41,294 19,852 12,510 PROVISION FOR INCOME TAXES (21,849) (7,495) (7,014) ------- ------- ------- NET INCOME $ 19,445 $12,357 $ 5,496 ======= ======= ======= NET INCOME PER COMMON SHARE EQUIVALENT $ 0.81 $ 0.53 $ 0.23 ======= ======= ======= See Notes to Consolidated Financial Statements OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Years Ended March 31, 1997 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $19,445 $12,357 $ 5,496 Adjustments to reconcile net income to net cash provided by operating activities: Gain on dispositions of property and equipment (29,605) -- -- Depreciation and amortization 24,707 20,567 16,232 Impairment adjustment 7,980 -- -- Currency translation adjustments and other 1,718 1,308 1,855 Increase in accounts receivable (23,704) (38,031) (6,797) Increase in prepaid expenses and other current assets (945) (120) (1,849) Increase in other assets (271) (512) (1,986) Increase in accounts payable 1,825 10,379 1,331 Increase in accrued liabilities 22,360 6,023 4,062 Increase (decrease) in income taxes payable 3,826 (1,125) 951 Increase (decrease) in other long-term liabilities 3,126 2,542 (1,673) ------ ------ ------ Total adjustments to net income 11,017 1,031 12,126 ------ ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES 30,462 13,388 17,622 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (79,599) (57,171) (32,057) Dispositions of property and equipment 108,253 -- -- Increase in investments (926) -- -- NET CASH (USED IN) PROVIDED BY ------- ------ ------- INVESTING ACTIVITIES 27,728 (57,171) (32,057) ------- ------ ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term bank borrowings 33,000 38,600 9,400 Payments on long-term debt (81,000) (72) (99) Proceeds from issuance of common stock 3,493 1,741 109 Purchases of treasury stock -- -- (8,596) ------ ------ ------ NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (44,507) 40,269 814 ------ ------ ------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,683 (3,514) (13,621) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 9,351 12,865 26,486 ------ ------ ------ CASH AND CASH EQUIVALENTS - END OF YEAR $23,034 $ 9,351 $12,865 ====== ====== ======= See Notes to Consolidated Financial Statements
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Years Ended March 31, 1997, 1996 and 1995 (in thousands) Common Stock Issued Additional Treasury Retained Cumulative Total Shares Amount Paid-in Stock Earnings Translation Capital Adjustment -------------------- --------- --------- --------- ---------- -------- Balance, March 31, 1994 23,996 $ 5,999 $80,062 $ - $38,703 $(11,411) $113,353 Net Income - - - - 5,496 - 5,496 Translation adjustments - - - - - 4,144 4,144 Stock options exercised 21 5 104 - - - 109 Restricted Stock plan compensation expense - - 634 - - - 634 Treasury stock purchase of 977 shares, at cost - - - (8,596) - - (8,596) ------ ------ ------ ------ ------ ------ ------- Balance, March 31, 1995 24,017 6,004 80,800 (8,596) 44,199 (7,267) 115,140 Net Income - - - - 12,357 - 12,357 Translation adjustments - - - - - (3,140) (3,140) Stock options exercised - - 113 497 - - 610 Restricted Stock plan compensation expense - - 1,008 62 - - 1,070 Treasury stock issued to Company Benefit Plan, at average cost - - - 1,061 - - 1,061 ------ ------ ------ ------ ------ ------- ------- Balance, March 31, 1996 24,017 6,004 81,921 (6,976) 56,556 (10,407) 127,098 Net Income - - - - 19,445 - 19,445 Translation adjustments - - - - - 4,569 4,569 Restricted Stock issued - - (2,797) 2,797 - - - Stock options exercised - - 577 2,264 - - 2,841 Restricted Stock plan compensation expense - - 1,452 - - - 1,452 Treasury stock issued to Company Benefit Plan, at average cost - - - 929 - - 929 ------- ------- ------- -------- ------- -------- -------- Balance, March 31, 1997 24,017 $ 6,004 $81,153 $ (986) $76,001 $ (5,838) $156,334 ------- ------- ------- -------- ------- -------- -------- See Notes to Consolidated Financial Statements
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF MAJOR ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Oceaneering International, Inc., and its 50% or more owned and controlled subsidiaries (the "Company"). The Company accounts for its investments in unconsolidated affiliated companies under the equity method. All significant intercompany accounts and transactions have been eliminated. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or fewer from the date of the investment. Approximately $1.5 million and $1.4 million of the Company's cash at March 31, 1997 and 1996, respectively, was restricted and is deposited in interest bearing accounts as security in connection with legal proceedings. Depreciation and Amortization The Company provides for depreciation of Property and Equipment primarily on the straight-line method over estimated useful lives of 3 to 12 years for marine services equipment, 10 years for mobile offshore production equipment and 3 to 25 years for buildings, improvements and other equipment. The costs of repair and maintenance of Property and Equipment are charged to operations as incurred, while the costs of improvements are capitalized. Upon the disposition of property and equipment, the related cost and accumulated depreciation accounts are relieved and the resulting gain or loss is included as an adjustment to cost of sales. Goodwill arising from business acquisitions is amortized on the straight- line method over 15 years. Management periodically and upon the occurrence of a triggering event, reviews the realizability of goodwill and other long-term assets and makes any appropriate impairment adjustments and disclosures required by generally accepted accounting principles. Effective April 1, 1996, the Company adopted Statement of Financial Accounting Standards Board standard number ("SFAS") 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as required. SFAS 121 requires that certain long-lived assets be reviewed for impairment whenever events indicate that the carrying amount of an asset may not be recoverable and that an impairment loss be recognized under certain circumstances in the amount by which the carrying value exceeds the fair value of the asset. Initially, the adoption did not have a material effect on the Company's results of operations or financial position. During the third quarter of fiscal 1997 it became apparent that operating results for the Company's diving support vessel ("DSV") operating in the North Sea were below expectations. The vessel was originally acquired as a construction support vessel but changing market conditions necessitated utilizing the vessel in an inspection and maintenance mode at lower margins. After review of the first full work season the Company concluded that the manner in which the vessel was being used had changed significantly from its originally intended purpose and the recoverability of the carrying amount of the asset should be assessed. The Company determined that an impairment loss of $8.0 million should be recorded. The amount was determined by comparing the carrying value of the vessel with the net present value of the expected cash flows from the vessel over its remaining life. The impairment adjustment was recorded and included in the Company's Oilfield Marine Services business segment. Subsequently, the vessel along with the other assets used in the North Sea diving operations were sold and the sales proceeds approximated net book value. Revenue Recognition The Company's revenues are primarily derived from billings under contracts that provide for specific time, material and equipment charges, which are accrued daily and billed monthly. Significant lump-sum contracts are accounted for using the percentage-of-completion method. Revenues on contracts with a substantial element of research and development are recognized to the extent of cost until such time as the probable final profitability can be determined. Anticipated losses on contracts, if any, are recorded in the period that such losses are first determinable. Income Taxes The Company accounts for income taxes according to SFAS 109, "Accounting for Income Taxes". Foreign Currency Translation All balance sheet asset and liability accounts of foreign subsidiaries are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Adjustments arising from these translations are accumulated in a separate account within Shareholders' Equity. All income statement accounts are translated at average exchange rates during the year. Net Income Per Common Share Equivalent Net income per common share equivalent ("EPS") has been computed on the basis of the weighted average number of shares of common stock and common share equivalents outstanding in each year (24,014,000, 23,258,000 and 24,047,000 in 1997, 1996 and 1995, respectively). The Financial Accounting Standards Board has issued SFAS 128, "Earnings Per Share", which establishes standards for computing and presenting earnings per share. The Company will adopt SFAS 128 in 1998, as required, and believes that diluted EPS, as defined in SFAS 128, will approximate EPS as shown in these financial statements. Other Long-Term Liabilities At March 31, 1997 and 1996, other long-term liabilities include $8.0 million and $8.3 million, respectively, for self-insurance reserves not expected to be paid out in the following year and $7.8 and $3.7 million, respectively, for deferred income taxes. Reclassifications Certain amounts from prior years have been reclassified to conform with the current year presentation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment In 1997, a major oil company customer exercised its option to purchase the Floating Production, Storage and Offloading system ("FPSO"), ZAFIRO PRODUCER. Upon disposition, the related property and equipment cost and accumulated depreciation accounts were relieved and the resulting gain of $25 million was included in the Company's consolidated statement of income as Gain on Disposition of FPSO. During the fourth quarter of 1997, the Company reached an agreement to sell the assets of its North Sea diving business. The sale included its DSV operating in the North Sea, various saturation and air diving systems and related equipment. Proceeds of $15 million, which were received after the year end, are included in accounts receivable. Sales proceeds approximated net book value and impact on net income was not material. 2. INCOME TAXES The Company and its domestic subsidiaries, including acquired companies from the respective dates of acquisition, file a consolidated federal income tax return. The Company conducts its operations in a number of foreign locations which have varying codes and regulations with regard to income and other taxes, some of which are subject to interpretation. Foreign income taxes are provided at the appropriate tax rates in accordance with the Company's interpretation of the respective tax regulations after review and consultation with its internal tax department, tax consultants and, in some cases, legal counsel in the various foreign locations. Management believes that adequate provisions have been made for all taxes which will ultimately be payable. Deferred income taxes are provided for temporary differences in the recognition of income and expenses for financial and tax reporting purposes. The Company's policy is to provide for deferred U.S. income taxes on unrepatriated foreign income only to the extent such income is not to be invested indefinitely in the related foreign entity. The provisions for income taxes for the years ended March 31, 1997, 1996 and 1995 were as follows: 1997 1996 1995 (in thousands) U.S. federal and state $15,886 $5,443 $5,080 Foreign 5,963 2,052 1,934 ------ ----- ----- Total provision $21,849 $7,495 $7,014 ------ ----- ----- Current $17,731 $6,448 $9,021 Deferred 4,118 1,047 (2,007) ------ ----- ----- Total provision $21,849 $7,495 $7,014 ------ ----- ----- Cash taxes paid $14,119 $7,465 $8,070 ------ ----- ----- As of March 31, 1997, the Company had net operating loss carryforwards ("NOLs") of approximately $28 million which are available to reduce future United Kingdom Corporation Tax which would otherwise be payable. As of March 31, 1997 and 1996, the Company's worldwide deferred tax assets and liabilities and related valuation reserves were as follows: March 31, 1997 1996 (in thousands) Gross deferred tax assets $14,302 $14,166 Valuation allowance (10,319) (10,183) ------ ------ Net deferred tax assets $ 3,983 $ 3,983 ------ ------ Deferred tax liabilities $ 7,784 $ 3,666 ------ ------ The Company's deferred tax assets consist primarily of NOLs in its United Kingdom subsidiary; these NOLs have no expiration date. Deferred tax liabilities consist of depreciation and amortization and provisions for income of foreign subsidiaries expected to be repatriated. The Company has established a valuation allowance for deferred tax assets after taking into account factors that are likely to affect the Company's ability to utilize the tax assets. In particular, the Company conducts its business through several foreign subsidiaries and, although the Company expects its consolidated operations to be profitable, there is no assurance that profits will be earned in entities or jurisdictions which have NOLs available. Since April 1, 1994, changes in the valuation allowance primarily relate to the expected utilization of foreign NOLs and realization of foreign tax credits. Income taxes, computed by applying the federal statutory income tax rate to income before income taxes and minority interests, are reconciled to the actual provisions for income taxes as follows: For the Years Ended March 31, 1997 1996 1995 (in thousands) Computed U.S. statutory expense $ 14,316 $ 6,986 $ 4,278 Change in valuation allowances 136 1,039 2,475 Withholding taxes and foreign earnings taxed at rates different from U.S. statutory rates 5,696 -- -- State and local taxes and other, net 1,701 (530) 261 ------ ------ ------ Total provision for income taxes $ 21,849 $ 7,495 $ 7,014 ------ ------ ------ The provision for 1997 includes the effect of provisions made for asset impairment and special drydocking in its United Kingdom subsidiary, where the Company derives no tax benefit as it already has NOLs. 3. DEBT Credit Agreement On April 12, 1995, the Company and a group of banks signed a credit agreement in the amount of $75 million (the "Credit Agreement"). As a result of amendments, the present amount of and availability under this agreement is $80 million. There is a commitment fee of 0.225% per annum on the unused portion of the banks' commitment. At March 31, 1997 and 1996, there was $0 and $48 million, respectively, of debt outstanding under this agreement. Under the Credit Agreement, the Company has the option to borrow dollars through Euro-Dollar loans at the London Interbank Offered Rate ("LIBOR") plus 5/8%, certificate of deposit loans at the reserve adjusted certificate of deposit rate plus 3/4%, or base rate loans at the agent bank's prime rate. The agreement contains certain restrictive covenants relative to consolidated debt, tangible net worth and fixed charge coverage. Loans under the agreement are unsecured. Under the agreement, dividends may not exceed 50% of cumulative consolidated net income from December 31, 1994. The Company has uncommitted credit agreements with banks totaling $45 million for use for borrowings and letters of credit. As of March 31, 1997, the Company had approximately $7 million in letters of credit outstanding under these agreements. Cash interest payments of $3.6 million, $2.2 million and $900,000 were made in 1997, 1996 and 1995, respectively. Interest charges of $1.1 million in 1997 and $300,000 in 1996 were capitalized as part of construction in progress. 4. EMPLOYEE BENEFIT PLANS AND STOCKHOLDER RIGHTS PLAN Retirement Investment Plans The Company has four separate employee retirement investment plans which cover its full-time employees. The Oceaneering Retirement Investment Plan is a deferred compensation plan in which domestic employees may participate by deferring a portion of their gross monthly salary and directing the Company to contribute the deferred amount to the plan. The Company matches a portion of the deferred compensation. The Company's contributions to the plan were $1,780,000, $1,294,000 and $992,000 for the plan years ended December 31, 1996, 1995 and 1994, respectively. The second plan is the Oceaneering International Services Pension Scheme for employees in the United Kingdom. The Company provides funding for this plan based on actuarial calculations. The plan assets exceed vested benefits and are not material to the assets of the Company. Company contributions were $67,000, $57,000 and $67,000 for the years ended March 31, 1997, 1996 and 1995, respectively. There have been no new participants in this plan since March 1990. The third plan is the Personal Pension Plan for employees in the United Kingdom. Under this plan, which became effective May 1991, employees may contribute a portion of their gross monthly salary. The Company also contributes a portion of the participants' gross monthly salary. Company contributions to this plan for the years ended March 31, 1997, 1996 and 1995, were $135,000, $115,000 and $108,000, respectively. The fourth plan, the Oceaneering International, Inc. Executive Retirement Plan, covers selected key management employees and executives of the Company as approved by the Compensation Committee of the Company's Board of Directors ("Compensation Committee"). The participants in this plan may contribute a portion of their gross monthly salary and the Company matches 100% of that contribution. Company expense related to this plan during the years ended March 31, 1997, 1996 and 1995, was $457,000, $362,000 and $287,000, respectively. Incentive and Stock Option Plans The Company has in effect shareholder approved nonemployee director stock option and incentive plans. Under the 1990 Nonemployee Director Stock Option Plan ("Nonemployee Director Plan"), options to purchase up to an aggregate of 100,000 shares of the Company's Common Stock may be granted to nonemployee directors of the Company. Each director of the Company is automatically granted an option to purchase 2,000 shares of Common Stock on the date the director becomes a nonemployee director of the Company and each year thereafter at an exercise price per share equal to 50% of the fair market value of a share of Common Stock on the date the option is granted. The options granted are not exercisable until the later to occur of six months from the date of grant or the date the optionee has completed two years of service as a director of the Company. Expense is recorded related to these options which have an exercise price less than fair market value on the date the option is granted. Expense in 1997, 1996 and 1995 was not material. In August 1996 the shareholders of the Company approved a 1996 Incentive Plan under which a total of 1,165,000 shares of Common Stock of the Company are available for awards to employees and other persons (excluding nonemployee directors) having an important business relationship or affiliation with the Company. The 1996 Incentive Plan and a similar shareholder approved 1990 Incentive Plan ("Incentive Plans") are administered by the Compensation Committee, which determines the type or types of award(s) to be made to each participant and sets forth in the related award agreement the terms, conditions and limitations applicable to each award. The Compensation Committee may grant stock options, stock appreciation rights, stock and cash awards. Options are normally granted at not less than fair market value of the optioned shares at the date of grant. Options outstanding are exercisable over a period up to ten years after the date of grant or five years after the date of vesting at the rate of 20% per year for three years beginning one year after grant and 40% at the end of the fourth year. The Company also has in effect three other stock plans under which options to purchase have been issued to employees and other persons affiliated with the Company. Since approval of the 1990 Incentive Plan, no further grants or awards under these three stock plans have been made or can be made or granted. These stock plans are also administered by the Compensation Committee. Options were normally granted at not less than the fair market value of the optioned shares at the date of grant. Options outstanding under these three plans which were granted periodically from 1988 to 1992, are normally exercisable over a ten-year term with vesting at the rate of 20% per year for three years beginning one year after the date of grant and 40% at the end of the fourth year. During 1996 and 1997, the Compensation Committee granted to certain key executives of the Company restricted Common Stock of the Company designed (i) to make a material portion of their potential future compensation contingent on performance of the Company's Common Stock and (ii) to retain their employ with the Company. These grants are subject to earning requirements on the basis of a percentage change between the price of the Common Stock of the Company versus the average of the Common Stock price of a peer group of companies over a three-year time period. Up to one-third of the total grant made in 1997 may be earned each year depending upon the Company's cumulative Common Stock performance, with any amount earned subject to vesting in four equal installments over a three or four year period conditional upon continued employment. At the time of each vesting, a participant receives a tax assistance payment which the participant must reimburse the Company if the vested Common Stock is sold by the participant within three years after the vesting date. As of March 31, 1997, the entire grant made in 1996 has been earned, subject to vesting requirements, and none of the grant made in 1997 was earned. As of March 31, 1997, a total of 477,750 shares of restricted stock was outstanding under these and former, similar, grants, of which 174,750 shares were earned, subject to vesting requirements. Subsequent to March 31, 1997 certain key executives also elected to receive restricted Common Stock of the Company totaling 44,968 shares subject to similar vesting requirements and tax assistance payments in lieu of cash for all or part of their 1997 bonus award. The numbers and weighted average grant date fair value of restricted stock granted during 1997 and 1996 were 312,000 and $17.00, and 7,000 and $10.38, respectively. No restricted stock grants were made in 1995. The Company accounts for stock options issued under plans under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for these stock options been determined consistent with SFAS 123 "Accounting for Stock-Based Compensation", the Company's pro forma net income and earnings per share for 1997 and 1996 would have been $19,170 and $12,357, respectively, and $0.80 and $0.53, respectively. Because the SFAS 123 method of accounting has not been applied to options issued prior to April 1 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. Information regarding these option plans for 1997, 1996 and 1995 is as follows: Shares under Weighted Average Option Exercise Price Balance at March 31, 1994 1,083,180 $10.43 Granted 399,900 11.81 Exercised (29,150) 5.35 Forfeited (31,850) 11.95 Balance at March 31, 1995 1,422,080 12.07 Granted 68,500 9.63 Exercised (66,500) 8.17 Forfeited (69,250) 11.88 Balance at March 31, 1996 1,354,830 10.82 Granted 304,300 15.60 Exercised (270,950) 8.84 Forfeited (40,800) 11.29 Balance at March 31, 1997 1,347,380 12.23 The weighted average fair value of options granted in 1997 was $8.73. No significant grants were made in 1996. The fair value of the stock options granted in 1997 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 6.67%; expected dividend yield of 0%; expected life of six years; and expected volatility 47.97%. Options outstanding at March 31, 1997 is composed of the following: Outstanding Exercisable -------------------------------------- --------------------- Range of Number of Weighted Weighted Number of Weighted Exercise shares at Average Average Shares at Average Prices March 31, Remaining Exercise March 31, Exercise 1997 Contractual Price 1997 Price Life (years) - -------- --------- ------------ -------- --------- --------- $4.00- 11.37 351,150 4.52 $ 7.84 303,350 $ 7.57 $11.94- 15.75 697,530 6.23 12.94 386,830 13.37 $15.81- 16.94 298,700 7.26 15.83 3,000 16.00 At March 31, 1997, there were 862,600 shares under these plans available for grant, of which 812,600 could be used for awarding stock options, stock appreciation rights, stock and cash awards to employees. Stockholder Rights Plan On November 20, 1992, the Company's Board of Directors adopted a Stockholder Rights Plan and, in accordance with such Plan, declared a dividend of one preferred share purchase right for each outstanding share of Company common stock. The Plan will cause substantial dilution to a party that attempts to acquire the Company in a manner or on terms not approved by the Board of Directors, except pursuant to an offer conditioned on a substantial number of rights being acquired. The rights, which do not have voting rights and are not entitled to dividends until such time as they become exercisable, expire in December 2002. 5. COMMITMENTS AND CONTINGENCIES Lease Commitments At March 31, 1997, the Company occupied several facilities under noncancellable operating leases expiring at various dates through 2065. Future minimum rentals under these leases are as follows: (in thousands) 1998 $2,879 1999 1,988 2000 1,435 2001 1,084 2002 413 Thereafter 2,237 ------ Total Lease Commitments $10,036 ------ Rental expense, which includes hire of vessels, specialized equipment and real estate rental, was approximately $25 million, $19 million and $13 million for the years ended March 31, 1997, 1996 and 1995, respectively. Special drydocking expense During the third quarter of fiscal 1997, the Company determined that substantial repairs would be necessary to maintain the FPSO OCEAN PRODUCER in operating condition in compliance with regulatory requirements. The unit is currently contracted to work offshore West Africa until January 2000. These repairs will require a special drydocking and are expected to be performed in fiscal 1998. The Company recorded an $8.0 million provision in the third quarter of fiscal 1997. Insurance The Company self-insures for workers' compensation, maritime employer's liability and comprehensive general liability claims to levels it considers financially prudent and carries insurance after the initial claim levels, which can be by occurrence or in the aggregate, are met by the Company. The Company determines the level of accruals by reviewing its historical experience and current year claim activity; accruals are not recorded on a present value basis. Each claim is reviewed with insurance adjusters and specific reserves established for all known liabilities. An additional reserve for incidents incurred but not reported to the Company is established for each year using management estimates and based on prior experience. Management believes that adequate accruals have been established for expected liabilities arising from such obligations. Litigation Various actions and claims are pending against the Company, most of which are covered by insurance. In the opinion of management, the ultimate liability, if any, which may result from these actions and claims will not materially affect the financial position or results of operations of the Company. Letters of Credit The Company had $7.3 million and $7.8 million in letters of credit outstanding as of March 31, 1997 and 1996, respectively, as guarantees in force for various performance and bid bonds which are usually for a period of one year or the duration of the contract. Financial Instruments and Risk Concentration Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, bank borrowings and accounts receivable. The carrying value of cash and cash equivalents and bank borrowings approximates fair value due to the short maturity of those instruments. Accounts receivable are generated from a broad and diverse group of customers primarily from within the energy industry, which is the Company's major source of revenues. The Company maintains an allowance for doubtful accounts based upon expected collectibility. 6. OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHIC AREA Business Segment Information The Company supplies a comprehensive range of integrated technical services to a wide array of industries and is one of the world's largest underwater services contractors. The Company's Oilfield Marine Services business consists of underwater intervention and above-water inspection, maintenance and repair. The Company's Offshore Field Development business includes the engineering, procurement, construction and installation of mobile offshore production systems, subsea intervention services and the production of subsea control umbilical cables. The Company's Advanced Technologies business provides project management, engineering services and equipment for applications in harsh environments, primarily in non-oilfield markets. The following summarizes certain financial data by business segment: For the Years Ended March 31, 1997 1996 1995 (in thousands) Revenues Oilfield Marine Services $176,395 $132,064 $106,294 Offshore Field Development 101,028 80,855 62,918 Advanced Technologies 91,350 76,587 70,724 Total $368,773 $289,506 $239,936 Income from Operations Oilfield Marine Services $ 1,853 $ (369) $ (2,485) Offshore Field Development 30,242 15,567 6,676 Advanced Technologies 9,514 4,988 8,563 Total $ 41,609 $ 20,186 $ 12,754 Identifiable Assets Oilfield Marine Services $135,375 $102,776 $ 86,422 Offshore Field Development 74,455 103,538 53,124 Advanced Technologies 28,135 32,466 28,520 Total $237,965 $238,780 $168,066 Capital Expenditures Oilfield Marine Services $ 32,951 $ 21,868 $ 25,916 Offshore Field Development 42,696 32,531 1,263 Advanced Technologies 3,952 2,772 4,878 Total $ 79,599 $ 57,171 $ 32,057 Depreciation and Amortization Expenses Oilfield Marine Services $ 20,682 $ 10,996 $ 7,861 Offshore Field Development 7,510 5,127 4,690 Advanced Technologies 4,495 4,444 3,681 Total $ 32,687 $ 20,567 $ 16,232 Income from operations for each business segment is determined before interest income or expense, other expense, minority interests and the provision for income taxes. An allocation of these items is not considered practical. All assets specifically identified with a particular business segment have been segregated. Cash and cash equivalents, prepaid expenses and other current assets, investments and certain other assets have not been allocated to particular business segments. Income from operations for 1997 for Oilfield Marine Services is after charging an impairment adjustment of $7,980 which is included in depreciation and amortization expense. Income from operations for Offshore Field Development for 1997 includes a $25,047 gain on disposition of an FPSO and an $7,980 provision for a special drydocking. Revenues of approximately $44 million in 1997 were from the Mobil Corporation group of companies and revenues of $34 million in 1995 were from the Royal Dutch Shell group of companies. No other individual customer accounted for more than 10% of revenues in 1997, 1996 or 1995. Geographic Operating Areas Financial data by geographic area is summarized as follows: For the Years Ended March 31, 1997 1996 1995 (in thousands) Revenues United States $154,613 $122,561 $117,630 North Sea 72,937 53,289 48,934 Africa 62,863 39,747 36,361 Far East 44,620 38,084 22,924 Other 33,740 35,825 14,087 TOTAL $368,773 $289,506 $239,936 Income before Income Taxes and Minority Interests United States $ 3,327 $ 1,756 $ 2,856 North Sea (4,997) (164) 188 Africa 29,922 9,519 6,582 Far East 5,163 1,342 353 Other 7,489 7,507 2,244 TOTAL $ 40,904 $ 19,960 $12,223 Total Assets United States $133,728 $152,859 $ 87,405 North Sea 68,512 51,521 52,449 Africa 39,589 29,733 33,374 Far East 17,429 12,185 9,386 Other 8,997 9,798 5,138 TOTAL $268,255 $256,096 $187,752 7. ACCRUED LIABILITIES Accrued liabilities consisted of the following: March 31, 1997 1996 (in thousands) Payroll and related costs $17,831 $14,271 Accrued job costs 28,886 12,651 Other 11,466 8,901 TOTAL ACCRUED LIABILITIES $58,183 $35,823 SELECTED QUARTERLY FINANCIAL DATA (in thousands, except per share data) (unaudited) Year Ended March 31, 1997 Quarter Ended June 30 Sept. 30 Dec. 31 Mar. 31 Total Revenues $80,535 $96,764 $94,117 $97,357 $368,773 Gain on disposition of FPSO -- -- 25,047 -- 25,047 Gross profit 14,850 16,824 30,364 15,934 77,972 Income from operations 5,942 8,508 21,440 5,719 41,609 Net income 3,747 5,080 6,740 3,878 19,445 Earnings per common share equivalent $ 0.16 $ 0.21 $ 0.28 $ 0.16 $ 0.81 Weighted average number of shares outstanding 23,591 23,863 24,138 24,463 24,014 Year Ended March 31, 1996 Quarter Ended June 30 Sept. 30 Dec. 31 Mar. 31 Total Revenues $71,541 $77,088 $74,236 $66,641 $289,506 Gross profit 13,309 15,964 14,453 11,049 54,775 Income from operations 5,000 7,312 5,661 2,213 20,186 Net income 2,787 4,573 3,528 1,469 12,357 Earnings per common share equivalent $ 0.12 $ 0.20 $ 0.15 $ 0.06 $ 0.53 Weighted average number of shares outstanding 23,158 23,224 23,267 23,383 23,258 EXHIBIT INDEX Registration or File Form or Exhibit Exhibit Number Report Date Number 3 Articles of Incorporation and By-laws *3.01 Certificate of Incorporation, as amended 0-8418 10-K March 1988 3(a) *3.02 By-laws, as amended 0-8418 10-K March 1987 3(b) *3.03 Amendment to Certificate of Incorporation 33-36872 S-8 Sept. 1990 4(b) *3.04 Amendment to By-laws 0-8418 10-K March 1991 3(d) *3.05 Amendment to By-laws 1-10945 8-K Nov. 1992 2 4 Instruments defining the rights of security holders, including indentures *4.01 Specimen of Common Stock Certificate 1-10945 10-K March 1993 4(a) *4.02 Shareholder Rights Agreement dated November 20, 1992 1-10945 8-K Nov. 1992 1 *4.03 Bank Credit Agreement dated April 12, 1995 1-10945 10-K March 1995 4.04 *4.04 Amended and Restated Bank Credit Agreement dated June 12, 1996 1-10945 10-K March 1996 4.05 10 Material contracts *10.01 1981 Incentive Stock Option Plan, as amended 2-80506 S-8 Sept. 1987 28(e) *10.02 Oceaneering Retirement Investment Plan, as amended 1-10945 10-K March 1996 10.02 *10.03 Employment Agreement dated August 15, 1986 between John R. Huff and Registrant 0-8418 10-K March 1987 10(l) *10.04 Addendum to Employment Agreement dated February 22, 1996 between John R. Huff and Registrant 1-10945 10-K March 1997 10.04 *10.05 1987 Incentive and Non- Qualified Stock Option Plan 33-16469 S-1 Sept. 1987 10(o) *10.06 Oceaneering International, Inc. Special Incentive Plan 33-16469 S-1 Sept. 1987 10(n) *10.07 Senior Executive Severance Plan, as amended 0-8418 10-K March 1989 10(k) *10.08 Supplemental Senior Executive Severance Agreements, as amended 0-8418 10-K March 1989 10(l) *10.09 Oceaneering International, Inc. Executive Retirement Plan, as amended 1-10945 10-K March 1995 10.08 *10.10 1990 Long-Term Incentive Plan 33-36872 S-8 Sept. 1990 4(f) *10.11 1990 Nonemployee Directors Stock Option Plan 33-36872 S-8 Sept. 1990 4(g) *10.12 Indemnification Agreement between Registrant and its Directors 0-8418 10-Q Sept. 1991 10(a) *10.13 1991 Executive Incentive Agreements 0-8418 10-K March 1992 10(p) *10.14 1993 Restricted Stock Award Incentive Agreements 1-10945 10-K March 1994 10(q) *10.15 1993 Restricted Stock Award Incentive Agreement 1-10945 10-K March 1996 10.16 10.16 1997 Bonus Award Plan *10.17 Amendment No. 1 to the Oceaneering Retirement Investment Plan 1-10945 10-Q Sept. 1996 10.01 *10.18 1996 Incentive Plan of Oceaneering International, Inc. 1-10945 10-Q Sept. 1996 10.02 *10.19 1996 Restricted Stock Award Incentive Agreements between Registrant and Executive Officers dated August 23, 1996. 1-10945 10-Q Sept. 1996 10.03 10.20 1997 Bonus Restricted Stock Award Agreements between Registrant and Executive Officers dated April 22, 1997. 21 Subsidiaries of the Registrant 23 Consent of Independent Public Accountants 24 Powers of Attorney 27 Financial Data Schedule * Indicates exhibit previously filed with the Securities and Exchange Commission as indicated and incorporated herein by reference. EX-10.16 2 EXHIBIT 10.16 OCEANEERING INTERNATIONAL, INC. 1997 BONUS AWARD PLAN The 1997 Bonus Award Plan is approved by the Company's Board of Directors and administered by its Compensation Committee. Individuals who are nominated and approved for inclusion in the Plan will be reviewed after final year end results are completed. Recommendations for cash bonus awards will be based on the accomplishment of results (Individual, Profit Center and Total Company) in order to determine the amount of award, if any, to be made. People must be amongst the nominated group for eligibility, and be employed by the Company at the time of funding. Bonuses will be earned when paid. Individuals, as designated, will be subject to a maximum bonus eligibility of 10% - 100% of current base salary. The 1997 Bonus Award Plan is based on achieving specific results by the Individual, his Profit Center and the Total Company. In order to integrate each of these performances in a fashion that benefits the Shareholders and Employees, each item is interrelated. The amount of award recommendation will be based on the following methodology: Individual Coefficient The Individual Coefficient is determined by taking the individual's weighted average evaluation of objectives achieved times the individual's salary maximum. This is the beginning step in determining the final award. An individual's performance must meet certain minimum criteria or he is eliminated from bonus award consideration. Profit Center Results Contribution The Profit Center Contribution is determined by comparing the Profit Center Net Income Objective with the results achieved and determining the Contribution to the Individual Coefficient. Should the Profit Center results be below a specified amount, all the individuals in that Profit Center may be eliminated from the Award Program. The President may review the performance of areas within the region on a case-by-case basis and take appropriate action. Should the actual results be equal to or greater than such specified amount, the individual becomes eligible for an award. Oceaneering International, Inc. Results Contribution The Company Results Contribution is determined by comparing the Company's FY97 Net Income Result with the Objective planned. The results achieved determine the multiplier that will be used. Thus, an individual may, subject to the determined maximum, be recommended for an award equal to the Individual Coefficient times the Profit Center Contribution times the Company Results Contribution times current base salary. Participants in the 1996 Restrictive Stock Incentive Program have the option to receive any bonus subsequently awarded by the Compensation Committee under the 1997 Bonus Award Plan in cash, cash and restricted stock or restricted stock. Any restricted stock would be awarded pursuant to all terms and conditions, including vesting and tax assistance payments of the 1996 Restricted Stock Incentive Program, except that one-quarter of such restricted amount would vest at the time of the bonus award and the remainder would rest in equal installments at the end of each of the following three years in accordance with agreement. The 1997 Bonus Award Plan is in effect FY97. A similar plan may or may not be approved for FY98. It is extremely important that the Company continue improved results in FY97. All participants must be committed to a reward system based on achieving results. The Company is entrepreneurially oriented and must use its maximum creativity, effort and determination in achieving individual results that collectively increases its Shareholders' Net Wealth. The 1997 Bonus Award Plan is structured to foster that position. August 23, 1996 EX-10.20 3 EXHIBIT 10.20 Award No. B-101 16,400 Shares OCEANEERING INTERNATIONAL, INC. FY97 BONUS RESTRICTED STOCK AWARD AGREEMENT THIS AGREEMENT is made as of the date set forth on the signature page hereof, between Oceaneering International, Inc., a Delaware corporation (the "Company"), and JOHN R. HUFF (the "Participant"). Except as defined herein, capitalized terms shall have the same meaning ascribed to them under the 1996 Incentive Plan of Oceaneering International, Inc., as from time to time amended, a copy of which is attached hereto and made a part hereof for all purposes (the "Plan"). To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be hereby deemed amended so as to carry out the purpose and intent of the Plan. 1. Definitions. As used herein, the terms set forth below shall have the following respective meanings: (a) "Change in Control" means, with respect to the Company, if (i) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Company having 30 percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or of any successor to the Company. Without limiting the foregoing, no "Change of Control" shall be deemed to have taken place for the purposes of this Agreement, if a person or persons is appointed or elected as a member(s) of the Board as a result of or in connection with a Transaction or other event unless item (i) or (ii) above shall also have occurred. (b) "Closing Stock Price" means, with respect to common stock on a particular date, (i) if the shares of common stock are listed on a national securities exchange, the last sale price per share of common stock on any such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported and, (ii) if the shares of Common Stock are not so listed but are quoted in the NASDAQ National Market System, the last sale price per share of shares of common stock reported on the NASDAQ National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. (c) "Disability" means a physical or mental impairment of sufficient severity that, in the opinion of a physician selected by the Company, the Participant is unable to fulfill his duties. 2. Award. As an FY97 Bonus Award and in consideration of the covenants and promises of the Participant herein contained, pursuant to action taken by the Committee on April 22, 1997 (the "Date of Grant"), the Company hereby awards to the Participant as of the Date of Grant a total of 16,400 shares of Common Stock, pursuant to the Plan, subject to the conditions and restrictions set forth below and in the Plan (the "Restricted Stock"). 3. Restrictions on Transfer. The shares of Restricted Stock granted hereunder to the Participant may not be sold, assigned, transferred, pledged or otherwise encumbered from the Date of Grant until said shares shall have become vested and not otherwise subject to forfeiture (and restrictions terminated thereon) in accordance with the provisions of this Paragraph 3. (The period of time between the Date of Grant and the vesting of shares of Restricted Stock shall be referred to herein as the "Restricted Period" as to those shares of stock.) The shares of Restricted Stock shall be treated as described below for purposes of vesting and other terms and conditions of this Agreement: (a) Vesting of Common Stock: The shares of the Restricted Stock shall vest 25% on June 20, 1997, 25% on June 26, 1998, 25% on June 25, 1999, and 25% on June 23, 2000. Upon termination of a Participant's employment (with or without cause, voluntary, involuntary or for any reason whatsoever except as provided in Sections 3(c) and 3(d)), all Restricted Stock for which the conditions of the applicable provisions of this paragraph (a) have not been satisfied as of the date of such termination of employment shall be forfeited. (b) Tax Reimbursement: Within 10 days after the expiration of the Restricted Period with respect to a particular share of Restricted Stock, the Company shall pay to the Participant an amount sufficient to provide for the payment of all United States federal income taxes imposed with respect to Participant's acquisition of such share, as well as an amount sufficient to reimburse Participant for the tax obligation on such amounts so that Participant is paid an amount as a tax assistance payment by the Company sufficient to fund all of his income taxes on both the share of Restricted Stock and the tax assistance payment. In the event the Participant is not at the time a tax assistance payment is to be made subject to United States income tax, such tax assistance payment shall be computed by reference to the income tax of the laws of the country to which the participant is subject; provided, however, that such tax assistance payment shall not exceed the amount that would have been payable if the Participant were subject solely to United States income tax. No United States state (or equivalent foreign) income taxes will be considered in determining tax assistance payments. The Committee shall have sole and complete discretion in the calculation of tax assistance payments, and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. In computing the tax assistance payment, it shall be assumed that the Participant is at the maximum marginal tax rate for individual taxpayers. Subject to Section 3(c), in the event a Participant sells any share of Restricted Stock within three years after expiration of the Restricted Period with respect to such Restricted Stock, the Participant shall immediately pay to the Company the amount of the tax assistance payment previously received by the Participant from the Company with respect to such share. (c) Effect of Change in Control: In the event a Change in Control occurs prior to the time that the conditions of paragraph (b) above have been satisfied with respect to a share of Restricted Stock, and upon such Change in Control, the requirements of paragraph (b) above shall be deemed to have been satisfied on the date of such Change of Control, and tax assistance payments shall be made with respect to such shares within 10 days thereafter. (d) Effect of Death or Disability. In the event of the death or Disability of the Participant while employed by the Company, the conditions of paragraph (b) above shall be deemed immediately satisfied and tax assistance payments shall be made by Company to the Participants with respect to such event within 30 days thereafter. (e) Dividends: Dividends (other than dividends in capital stock) with respect to shares of Restricted Stock shall be paid to the Participant without regard to the restrictions otherwise applicable to such shares. Dividends in capital stock of the Company shall accumulate and be associated with the Restricted Stock to which they relate and shall vest at the time such Restricted Stock vests. (f) Voting of Common Stock: A Participant shall have the right to exercise any voting rights appurtenant to Restricted Stock without regard to any restrictions otherwise imposed by reason of this Agreement. 4. Code Section 83(b) Election. The Participant shall not make an election, under Code Section 83(b), to include in income the fair market value of the Restricted Stock in respect of this award of Restricted Stock on the Date of Grant. 5. Sale of Restricted Stock. The Participant shall not sell Restricted Stock except pursuant to an effective registration statement under the Securities Act of 1933 (or pursuant to an exemption from registration under such act), and the Participant hereby represents that he is acquiring the Restricted Stock for his own account and not with a view to the distribution thereof. 6. Escrow of Certificates. The certificates representing shares of Restricted Stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed by the Participant in blank, with the Corporate Secretary of the Company during the Restricted Period. Each such certificate shall bear a legend as provided by the Company, conspicuously referring to the terms, conditions and restrictions described in the Plan and in this Agreement. Subject to the provisions of Section 7 below, upon termination of the Restricted Period with respect to shares of Restricted Stock, a certificate representing such shares shall be delivered to the Participant as promptly as practicable following such termination. 7. Withholding of Taxes. No certificates representing the shares of Restricted Stock shall be delivered to the Participant by the Company unless the Participant (or Beneficiary, as defined in Section 8 below) remits to the Company the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company with respect to the issuance of such shares or unless provisions to so pay such withholding requirements have been made to the satisfaction of the Committee. 8. Beneficiary Designations. The Participant may file with the Corporate Secretary of the Company a designation of one or more beneficiaries (each a "Beneficiary") to whom shares otherwise due the Participant shall be distributed in the event of the death of the Participant while in the employ of the Company. The Participant shall have the right to change the Beneficiary or Beneficiaries from time to time; provided, however, that any change shall not become effective until received in writing by the Corporate Secretary of the Company. If any designated Beneficiary survives the Participant but dies before receiving all of his benefits hereunder, any remaining benefits due him shall be distributed to the deceased Beneficiary's estate. If there is no effective Beneficiary designation on file at the time of the Participant's death, or if the designated Beneficiary or Beneficiaries have all predeceased such Participant, the payment of any remaining benefits shall be made to the Participant's estate. In the event of any dispute, the Company shall be fully protected and discharged of its obligations under this Agreement if it delivers the shares otherwise due a Participant to the probate court administering his estate. 9. Limitation of Rights. Nothing in this Agreement or the Plan shall be construed to: (a) give the Participant any right to be awarded any Restricted Stock other than in the sole discretion of the Committee; (b) give the Participant or any other person any interest in any fund or in any specified asset or assets of the Company or any affiliate of the Company; or (c) confer upon the Participant the right to continue in the employment or service of the Company or any affiliate of the Company, or affect the right of the Company or any affiliate of the Company to terminate the employment or service of the Participant at any time or for any reason. The Committee shall have the discretion to make determinations under this Agreement and Plan, and such determinations shall be final and binding on the Participant except in the case of bad faith and willful misconduct. 10. Nonalienation of Benefits. Except as contemplated by Section 8 above, no right or benefit under this Agreement shall be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, or by operation of law, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or his Beneficiary hereunder shall become bankrupt or attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or charge any right or benefit hereunder, other than as contemplated by Section 8 above, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall cease and terminate. 11. Prerequisites to Benefits. Neither the Participant, nor any person claiming through the Participant, shall have any right or interest in the Restricted Stock awarded hereunder, unless and until all the terms, conditions and provisions of this Agreement and the Plan which affect the Participant or such other person shall have been complied with as specified herein. 12. Rights as a Stockholder. Subject to the limitations and restrictions contained herein, the Participant (or Beneficiary) shall have all rights as a stockholder with respect to the shares of Restricted Stock once such shares have been registered in his name hereunder. 13. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors and assigns (including personal representatives, heirs and legatees), except that the Participant may not assign any rights or obligations under this Agreement except to the extent and in the manner expressly permitted herein. 14. The Committee shall have sole and complete discretion in the interpretation of this Agreement and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. 15. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware. 16. Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. This Agreement is executed and delivered, in duplicate, pursuant to the Plan, the provisions of which are incorporated herein by reference. Dated: April 22, 1997. OCEANEERING INTERNATIONAL, INC. By //s// George R. Haubenreich, Jr. Vice President, General Counsel and Secretary The undersigned Participant accepts the Restricted Stock subject to all the terms of this Agreement. //s// JOHN R. HUFF Award No. B-102 8,204 Shares OCEANEERING INTERNATIONAL, INC. FY97 BONUS RESTRICTED STOCK AWARD AGREEMENT THIS AGREEMENT is made as of the date set forth on the signature page hereof, between Oceaneering International, Inc., a Delaware corporation (the "Company"), and T. JAY COLLINS (the "Participant"). Except as defined herein, capitalized terms shall have the same meaning ascribed to them under the 1996 Incentive Plan of Oceaneering International, Inc., as from time to time amended, a copy of which is attached hereto and made a part hereof for all purposes (the "Plan"). To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be hereby deemed amended so as to carry out the purpose and intent of the Plan. 1. Definitions. As used herein, the terms set forth below shall have the following respective meanings: (a) "Change in Control" means, with respect to the Company, if (i) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Company having 30 percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or of any successor to the Company. Without limiting the foregoing, no "Change of Control" shall be deemed to have taken place for the purposes of this Agreement, if a person or persons is appointed or elected as a member(s) of the Board as a result of or in connection with a Transaction or other event unless item (i) or (ii) above shall also have occurred. (b) "Closing Stock Price" means, with respect to common stock on a particular date, (i) if the shares of common stock are listed on a national securities exchange, the last sale price per share of common stock on any such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported and, (ii) if the shares of Common Stock are not so listed but are quoted in the NASDAQ National Market System, the last sale price per share of shares of common stock reported on the NASDAQ National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. (c) "Disability" means a physical or mental impairment of sufficient severity that, in the opinion of a physician selected by the Company, the Participant is unable to fulfill his duties. 2. Award. As an FY97 Bonus Award and in consideration of the covenants and promises of the Participant herein contained, pursuant to action taken by the Committee on April 22, 1997 (the "Date of Grant"), the Company hereby awards to the Participant as of the Date of Grant a total of 8,204 shares of Common Stock, pursuant to the Plan, subject to the conditions and restrictions set forth below and in the Plan (the "Restricted Stock"). 3. Restrictions on Transfer. The shares of Restricted Stock granted hereunder to the Participant may not be sold, assigned, transferred, pledged or otherwise encumbered from the Date of Grant until said shares shall have become vested and not otherwise subject to forfeiture (and restrictions terminated thereon) in accordance with the provisions of this Paragraph 3. (The period of time between the Date of Grant and the vesting of shares of Restricted Stock shall be referred to herein as the "Restricted Period" as to those shares of stock.) The shares of Restricted Stock shall be treated as described below for purposes of vesting and other terms and conditions of this Agreement: (a) Vesting of Common Stock: The shares of the Restricted Stock shall vest 25% on June 20, 1997, 25% on June 26, 1998, 25% on June 25, 1999, and 25% on June 23, 2000. Upon termination of a Participant's employment (with or without cause, voluntary, involuntary or for any reason whatsoever except as provided in Sections 3(c) and 3(d)), all Restricted Stock for which the conditions of the applicable provisions of this paragraph (a) have not been satisfied as of the date of such termination of employment shall be forfeited. (b) Tax Reimbursement: Within 10 days after the expiration of the Restricted Period with respect to a particular share of Restricted Stock, the Company shall pay to the Participant an amount sufficient to provide for the payment of all United States federal income taxes imposed with respect to Participant's acquisition of such share, as well as an amount sufficient to reimburse Participant for the tax obligation on such amounts so that Participant is paid an amount as a tax assistance payment by the Company sufficient to fund all of his income taxes on both the share of Restricted Stock and the tax assistance payment. In the event the Participant is not at the time a tax assistance payment is to be made subject to United States income tax, such tax assistance payment shall be computed by reference to the income tax of the laws of the country to which the participant is subject; provided, however, that such tax assistance payment shall not exceed the amount that would have been payable if the Participant were subject solely to United States income tax. No United States state (or equivalent foreign) income taxes will be considered in determining tax assistance payments. The Committee shall have sole and complete discretion in the calculation of tax assistance payments, and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. In computing the tax assistance payment, it shall be assumed that the Participant is at the maximum marginal tax rate for individual taxpayers. Subject to Section 3(c), in the event a Participant sells any share of Restricted Stock within three years after expiration of the Restricted Period with respect to such Restricted Stock, the Participant shall immediately pay to the Company the amount of the tax assistance payment previously received by the Participant from the Company with respect to such share. (c) Effect of Change in Control: In the event a Change in Control occurs prior to the time that the conditions of paragraph (b) above have been satisfied with respect to a share of Restricted Stock, and upon such Change in Control, the requirements of paragraph (b) above shall be deemed to have been satisfied on the the date of such Change of Control, and tax assistance payments shall be made with respect to such shares within 10 days thereafter. (d) Effect of Death or Disability. In the event of the death or Disability of the Participant while employed by the Company, the conditions of paragraph (b) above shall be deemed immediately satisfied and tax assistance payments shall be made by Company to the Participants with respect to such event within 30 days thereafter. (e) Dividends: Dividends (other than dividends in capital stock) with respect to shares of Restricted Stock shall be paid to the Participant without regard to the restrictions otherwise applicable to such shares. Dividends in capital stock of the Company shall accumulate and be associated with the Restricted Stock to which they relate and shall vest at the time such Restricted Stock vests. (f) Voting of Common Stock: A Participant shall have the right to exercise any voting rights appurtenant to Restricted Stock without regard to any restrictions otherwise imposed by reason of this Agreement. 4. Code Section 83(b) Election. The Participant shall not make an election, under Code Section 83(b), to include in income the fair market value of the Restricted Stock in respect of this award of Restricted Stock on the Date of Grant. 5. Sale of Restricted Stock. The Participant shall not sell Restricted Stock except pursuant to an effective registration statement under the Securities Act of 1933 (or pursuant to an exemption from registration under such act), and the Participant hereby represents that he is acquiring the Restricted Stock for his own account and not with a view to the distribution thereof. 6. Escrow of Certificates. The certificates representing shares of Restricted Stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed by the Participant in blank, with the Corporate Secretary of the Company during the Restricted Period. Each such certificate shall bear a legend as provided by the Company, conspicuously referring to the terms, conditions and restrictions described in the Plan and in this Agreement. Subject to the provisions of Section 7 below, upon termination of the Restricted Period with respect to shares of Restricted Stock, a certificate representing such shares shall be delivered to the Participant as promptly as practicable following such termination. 7. Withholding of Taxes. No certificates representing the shares of Restricted Stock shall be delivered to the Participant by the Company unless the Participant (or Beneficiary, as defined in Section 8 below) remits to the Company the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company with respect to the issuance of such shares or unless provisions to so pay such withholding requirements have been made to the satisfaction of the Committee. 8. Beneficiary Designations. The Participant may file with the Corporate Secretary of the Company a designation of one or more beneficiaries (each a "Beneficiary") to whom shares otherwise due the Participant shall be distributed in the event of the death of the Participant while in the employ of the Company. The Participant shall have the right to change the Beneficiary or Beneficiaries from time to time; provided, however, that any change shall not become effective until received in writing by the Corporate Secretary of the Company. If any designated Beneficiary survives the Participant but dies before receiving all of his benefits hereunder, any remaining benefits due him shall be distributed to the deceased Beneficiary's estate. If there is no effective Beneficiary designation on file at the time of the Participant's death, or if the designated Beneficiary or Beneficiaries have all predeceased such Participant, the payment of any remaining benefits shall be made to the Participant's estate. In the event of any dispute, the Company shall be fully protected and discharged of its obligations under this Agreement if it delivers the shares otherwise due a Participant to the probate court administering his estate. 9. Limitation of Rights. Nothing in this Agreement or the Plan shall be construed to: (a) give the Participant any right to be awarded any Restricted Stock other than in the sole discretion of the Committee; (b) give the Participant or any other person any interest in any fund or in any specified asset or assets of the Company or any affiliate of the Company; or (c) confer upon the Participant the right to continue in the employment or service of the Company or any affiliate of the Company, or affect the right of the Company or any affiliate of the Company to terminate the employment or service of the Participant at any time or for any reason. The Committee shall have the discretion to make determinations under this Agreement and Plan, and such determinations shall be final and binding on the Participant except in the case of bad faith and willful misconduct. 10. Nonalienation of Benefits. Except as contemplated by Section 8 above, no right or benefit under this Agreement shall be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, or by operation of law, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or his Beneficiary hereunder shall become bankrupt or attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or charge any right or benefit hereunder, other than as contemplated by Section 8 above, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall cease and terminate. 11. Prerequisites to Benefits. Neither the Participant, nor any person claiming through the Participant, shall have any right or interest in the Restricted Stock awarded hereunder, unless and until all the terms, conditions and provisions of this Agreement and the Plan which affect the Participant or such other person shall have been complied with as specified herein. 12. Rights as a Stockholder. Subject to the limitations and restrictions contained herein, the Participant (or Beneficiary) shall have all rights as a stockholder with respect to the shares of Restricted Stock once such shares have been registered in his name hereunder. 13. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors and assigns (including personal representatives, heirs and legatees), except that the Participant may not assign any rights or obligations under this Agreement except to the extent and in the manner expressly permitted herein. 14. The Committee shall have sole and complete discretion in the interpretation of this Agreement and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. 15. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware. 16. Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. This Agreement is executed and delivered, in duplicate, pursuant to the Plan, the provisions of which are incorporated herein by reference. Dated: April 22, 1997. OCEANEERING INTERNATIONAL, INC. By //s// George R. Haubenreich, Jr. Vice President, General Counsel and Secretary The undersigned Participant accepts the Restricted Stock subject to all the terms of this Agreement. //s// T. JAY COLLINS Award No. B-103 4,000 Shares OCEANEERING INTERNATIONAL, INC. FY97 BONUS RESTRICTED STOCK AWARD AGREEMENT THIS AGREEMENT is made as of the date set forth on the signature page hereof, between Oceaneering International, Inc., a Delaware corporation (the "Company"), and MARVIN J. MIGURA (the "Participant"). Except as defined herein, capitalized terms shall have the same meaning ascribed to them under the 1996 Incentive Plan of Oceaneering International, Inc., as from time to time amended, a copy of which is attached hereto and made a part hereof for all purposes (the "Plan"). To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be hereby deemed amended so as to carry out the purpose and intent of the Plan. 1. Definitions. As used herein, the terms set forth below shall have the following respective meanings: (a) "Change in Control" means, with respect to the Company, if (i) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Company having 30 percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or of any successor to the Company. Without limiting the foregoing, no "Change of Control" shall be deemed to have taken place for the purposes of this Agreement, if a person or persons is appointed or elected as a member(s) of the Board as a result of or in connection with a Transaction or other event unless item (i) or (ii) above shall also have occurred. (b) "Closing Stock Price" means, with respect to common stock on a particular date, (i) if the shares of common stock are listed on a national securities exchange, the last sale price per share of common stock on any such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported and, (ii) if the shares of Common Stock are not so listed but are quoted in the NASDAQ National Market System, the last sale price per share of shares of common stock reported on the NASDAQ National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. (c) "Disability" means a physical or mental impairment of sufficient severity that, in the opinion of a physician selected by the Company, the Participant is unable to fulfill his duties. 2. Award. As an FY97 Bonus Award and in consideration of the covenants and promises of the Participant herein contained, pursuant to action taken by the Committee on April 22, 1997 (the "Date of Grant"), the Company hereby awards to the Participant as of the Date of Grant a total of 4,000 shares of Common Stock, pursuant to the Plan, subject to the conditions and restrictions set forth below and in the Plan (the "Restricted Stock"). 3. Restrictions on Transfer. The shares of Restricted Stock granted hereunder to the Participant may not be sold, assigned, transferred, pledged or otherwise encumbered from the Date of Grant until said shares shall have become vested and not otherwise subject to forfeiture (and restrictions terminated thereon) in accordance with the provisions of this Paragraph 3. (The period of time between the Date of Grant and the vesting of shares of Restricted Stock shall be referred to herein as the "Restricted Period" as to those shares of stock.) The shares of Restricted Stock shall be treated as described below for purposes of vesting and other terms and conditions of this Agreement: (a) Vesting of Common Stock: The shares of the Restricted Stock shall vest 25% on June 20, 1997, 25% on June 26, 1998, 25% on June 25, 1999, and 25% on June 23, 2000. Upon termination of a Participant's employment (with or without cause, voluntary, involuntary or for any reason whatsoever except as provided in Sections 3(c) and 3(d)), all Restricted Stock for which the conditions of the applicable provisions of this paragraph (a) have not been satisfied as of the date of such termination of employment shall be forfeited. (b) Tax Reimbursement: Within 10 days after the expiration of the Restricted Period with respect to a particular share of Restricted Stock, the Company shall pay to the Participant an amount sufficient to provide for the payment of all United States federal income taxes imposed with respect to Participant's acquisition of such share, as well as an amount sufficient to reimburse Participant for the tax obligation on such amounts so that Participant is paid an amount as a tax assistance payment by the Company sufficient to fund all of his income taxes on both the share of Restricted Stock and the tax assistance payment. In the event the Participant is not at the time a tax assistance payment is to be made subject to United States income tax, such tax assistance payment shall be computed by reference to the income tax of the laws of the country to which the participant is subject; provided, however, that such tax assistance payment shall not exceed the amount that would have been payable if the Participant were subject solely to United States income tax. No United States state (or equivalent foreign) income taxes will be considered in determining tax assistance payments. The Committee shall have sole and complete discretion in the calculation of tax assistance payments, and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. In computing the tax assistance payment, it shall be assumed that the Participant is at the maximum marginal tax rate for individual taxpayers. Subject to Section 3(c), in the event a Participant sells any share of Restricted Stock within three years after expiration of the Restricted Period with respect to such Restricted Stock, the Participant shall immediately pay to the Company the amount of the tax assistance payment previously received by the Participant from the Company with respect to such share. (c) Effect of Change in Control: In the event a Change in Control occurs prior to the time that the conditions of paragraph (b) above have been satisfied with respect to a share of Restricted Stock, and upon such Change in Control, the requirements of paragraph (b) above shall be deemed to have been satisfied on the the date of such Change of Control, and tax assistance payments shall be made with respect to such shares within 10 days thereafter. (d) Effect of Death or Disability. In the event of the death or Disability of the Participant while employed by the Company, the conditions of paragraph (b) above shall be deemed immediately satisfied and tax assistance payments shall be made by Company to the Participants with respect to such event within 30 days thereafter. (e) Dividends: Dividends (other than dividends in capital stock) with respect to shares of Restricted Stock shall be paid to the Participant without regard to the restrictions otherwise applicable to such shares. Dividends in capital stock of the Company shall accumulate and be associated with the Restricted Stock to which they relate and shall vest at the time such Restricted Stock vests. (f) Voting of Common Stock: A Participant shall have the right to exercise any voting rights appurtenant to Restricted Stock without regard to any restrictions otherwise imposed by reason of this Agreement. 4. Code Section 83(b) Election. The Participant shall not make an election, under Code Section 83(b), to include in income the fair market value of the Restricted Stock in respect of this award of Restricted Stock on the Date of Grant. 5. Sale of Restricted Stock. The Participant shall not sell Restricted Stock except pursuant to an effective registration statement under the Securities Act of 1933 (or pursuant to an exemption from registration under such act), and the Participant hereby represents that he is acquiring the Restricted Stock for his own account and not with a view to the distribution thereof. 6. Escrow of Certificates. The certificates representing shares of Restricted Stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed by the Participant in blank, with the Corporate Secretary of the Company during the Restricted Period. Each such certificate shall bear a legend as provided by the Company, conspicuously referring to the terms, conditions and restrictions described in the Plan and in this Agreement. Subject to the provisions of Section 7 below, upon termination of the Restricted Period with respect to shares of Restricted Stock, a certificate representing such shares shall be delivered to the Participant as promptly as practicable following such termination. 7. Withholding of Taxes. No certificates representing the shares of Restricted Stock shall be delivered to the Participant by the Company unless the Participant (or Beneficiary, as defined in Section 8 below) remits to the Company the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company with respect to the issuance of such shares or unless provisions to so pay such withholding requirements have been made to the satisfaction of the Committee. 8. Beneficiary Designations. The Participant may file with the Corporate Secretary of the Company a designation of one or more beneficiaries (each a "Beneficiary") to whom shares otherwise due the Participant shall be distributed in the event of the death of the Participant while in the employ of the Company. The Participant shall have the right to change the Beneficiary or Beneficiaries from time to time; provided, however, that any change shall not become effective until received in writing by the Corporate Secretary of the Company. If any designated Beneficiary survives the Participant but dies before receiving all of his benefits hereunder, any remaining benefits due him shall be distributed to the deceased Beneficiary's estate. If there is no effective Beneficiary designation on file at the time of the Participant's death, or if the designated Beneficiary or Beneficiaries have all predeceased such Participant, the payment of any remaining benefits shall be made to the Participant's estate. In the event of any dispute, the Company shall be fully protected and discharged of its obligations under this Agreement if it delivers the shares otherwise due a Participant to the probate court administering his estate. 9. Limitation of Rights. Nothing in this Agreement or the Plan shall be construed to: (a) give the Participant any right to be awarded any Restricted Stock other than in the sole discretion of the Committee; (b) give the Participant or any other person any interest in any fund or in any specified asset or assets of the Company or any affiliate of the Company; or (c) confer upon the Participant the right to continue in the employment or service of the Company or any affiliate of the Company, or affect the right of the Company or any affiliate of the Company to terminate the employment or service of the Participant at any time or for any reason. The Committee shall have the discretion to make determinations under this Agreement and Plan, and such determinations shall be final and binding on the Participant except in the case of bad faith and willful misconduct. 10. Nonalienation of Benefits. Except as contemplated by Section 8 above, no right or benefit under this Agreement shall be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, or by operation of law, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or his Beneficiary hereunder shall become bankrupt or attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or charge any right or benefit hereunder, other than as contemplated by Section 8 above, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall cease and terminate. 11. Prerequisites to Benefits. Neither the Participant, nor any person claiming through the Participant, shall have any right or interest in the Restricted Stock awarded hereunder, unless and until all the terms, conditions and provisions of this Agreement and the Plan which affect the Participant or such other person shall have been complied with as specified herein. 12. Rights as a Stockholder. Subject to the limitations and restrictions contained herein, the Participant (or Beneficiary) shall have all rights as a stockholder with respect to the shares of Restricted Stock once such shares have been registered in his name hereunder. 13. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors and assigns (including personal representatives, heirs and legatees), except that the Participant may not assign any rights or obligations under this Agreement except to the extent and in the manner expressly permitted herein. 14. The Committee shall have sole and complete discretion in the interpretation of this Agreement and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. 15. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware. 16. Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. This Agreement is executed and delivered, in duplicate, pursuant to the Plan, the provisions of which are incorporated herein by reference. Dated: April 22, 1997. OCEANEERING INTERNATIONAL, INC. By //s// George R. Haubenreich, Jr. Vice President, General Counsel and Secretary The undersigned Participant accepts the Restricted Stock subject to all the terms of this Agreement. //s// MARVIN J. MIGURA Award No. B-105 6,152 Shares OCEANEERING INTERNATIONAL, INC. FY97 BONUS RESTRICTED STOCK AWARD AGREEMENT THIS AGREEMENT is made as of the date set forth on the signature page hereof, between Oceaneering International, Inc., a Delaware corporation (the "Company"), and GEORGE R. HAUBENREICH, JR. (the "Participant"). Except as defined herein, capitalized terms shall have the same meaning ascribed to them under the 1996 Incentive Plan of Oceaneering International, Inc., as from time to time amended, a copy of which is attached hereto and made a part hereof for all purposes (the "Plan"). To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be hereby deemed amended so as to carry out the purpose and intent of the Plan. 1. Definitions. As used herein, the terms set forth below shall have the following respective meanings: (a) "Change in Control" means, with respect to the Company, if (i) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Company having 30 percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or of any successor to the Company. Without limiting the foregoing, no "Change of Control" shall be deemed to have taken place for the purposes of this Agreement, if a person or persons is appointed or elected as a member(s) of the Board as a result of or in connection with a Transaction or other event unless item (i) or (ii) above shall also have occurred. (b) "Closing Stock Price" means, with respect to common stock on a particular date, (i) if the shares of common stock are listed on a national securities exchange, the last sale price per share of common stock on any such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported and, (ii) if the shares of Common Stock are not so listed but are quoted in the NASDAQ National Market System, the last sale price per share of shares of common stock reported on the NASDAQ National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. (c) "Disability" means a physical or mental impairment of sufficient severity that, in the opinion of a physician selected by the Company, the Participant is unable to fulfill his duties. 2. Award. As an FY97 Bonus Award and in consideration of the covenants and promises of the Participant herein contained, pursuant to action taken by the Committee on April 22, 1997 (the "Date of Grant"), the Company hereby awards to the Participant as of the Date of Grant a total of 6,152 shares of Common Stock, pursuant to the Plan, subject to the conditions and restrictions set forth below and in the Plan (the "Restricted Stock"). 3. Restrictions on Transfer. The shares of Restricted Stock granted hereunder to the Participant may not be sold, assigned, transferred, pledged or otherwise encumbered from the Date of Grant until said shares shall have become vested and not otherwise subject to forfeiture (and restrictions terminated thereon) in accordance with the provisions of this Paragraph 3. (The period of time between the Date of Grant and the vesting of shares of Restricted Stock shall be referred to herein as the "Restricted Period" as to those shares of stock.) The shares of Restricted Stock shall be treated as described below for purposes of vesting and other terms and conditions of this Agreement: (a) Vesting of Common Stock: The shares of the Restricted Stock shall vest 25% on June 20, 1997, 25% on June 26, 1998, 25% on June 25, 1999, and 25% on June 23, 2000. Upon termination of a Participant's employment (with or without cause, voluntary, involuntary or for any reason whatsoever except as provided in Sections 3(c) and 3(d)), all Restricted Stock for which the conditions of the applicable provisions of this paragraph (a) have not been satisfied as of the date of such termination of employment shall be forfeited. (b) Tax Reimbursement: Within 10 days after the expiration of the Restricted Period with respect to a particular share of Restricted Stock, the Company shall pay to the Participant an amount sufficient to provide for the payment of all United States federal income taxes imposed with respect to Participant's acquisition of such share, as well as an amount sufficient to reimburse Participant for the tax obligation on such amounts so that Participant is paid an amount as a tax assistance payment by the Company sufficient to fund all of his income taxes on both the share of Restricted Stock and the tax assistance payment. In the event the Participant is not at the time a tax assistance payment is to be made subject to United States income tax, such tax assistance payment shall be computed by reference to the income tax of the laws of the country to which the participant is subject; provided, however, that such tax assistance payment shall not exceed the amount that would have been payable if the Participant were subject solely to United States income tax. No United States state (or equivalent foreign) income taxes will be considered in determining tax assistance payments. The Committee shall have sole and complete discretion in the calculation of tax assistance payments, and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. In computing the tax assistance payment, it shall be assumed that the Participant is at the maximum marginal tax rate for individual taxpayers. Subject to Section 3(c), in the event a Participant sells any share of Restricted Stock within three years after expiration of the Restricted Period with respect to such Restricted Stock, the Participant shall immediately pay to the Company the amount of the tax assistance payment previously received by the Participant from the Company with respect to such share. (c) Effect of Change in Control: In the event a Change in Control occurs prior to the time that the conditions of paragraph (b) above have been satisfied with respect to a share of Restricted Stock, and upon such Change in Control, the requirements of paragraph (b) above shall be deemed to have been satisfied on the the date of such Change of Control, and tax assistance payments shall be made with respect to such shares within 10 days thereafter. (d) Effect of Death or Disability. In the event of the death or Disability of the Participant while employed by the Company, the conditions of paragraph (b) above shall be deemed immediately satisfied and tax assistance payments shall be made by Company to the Participants with respect to such event within 30 days thereafter. (e) Dividends: Dividends (other than dividends in capital stock) with respect to shares of Restricted Stock shall be paid to the Participant without regard to the restrictions otherwise applicable to such shares. Dividends in capital stock of the Company shall accumulate and be associated with the Restricted Stock to which they relate and shall vest at the time such Restricted Stock vests. (f) Voting of Common Stock: A Participant shall have the right to exercise any voting rights appurtenant to Restricted Stock without regard to any restrictions otherwise imposed by reason of this Agreement. 4. Code Section 83(b) Election. The Participant shall not make an election, under Code Section 83(b), to include in income the fair market value of the Restricted Stock in respect of this award of Restricted Stock on the Date of Grant. 5. Sale of Restricted Stock. The Participant shall not sell Restricted Stock except pursuant to an effective registration statement under the Securities Act of 1933 (or pursuant to an exemption from registration under such act), and the Participant hereby represents that he is acquiring the Restricted Stock for his own account and not with a view to the distribution thereof. 6. Escrow of Certificates. The certificates representing shares of Restricted Stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed by the Participant in blank, with the Corporate Secretary of the Company during the Restricted Period. Each such certificate shall bear a legend as provided by the Company, conspicuously referring to the terms, conditions and restrictions described in the Plan and in this Agreement. Subject to the provisions of Section 7 below, upon termination of the Restricted Period with respect to shares of Restricted Stock, a certificate representing such shares shall be delivered to the Participant as promptly as practicable following such termination. 7. Withholding of Taxes. No certificates representing the shares of Restricted Stock shall be delivered to the Participant by the Company unless the Participant (or Beneficiary, as defined in Section 8 below) remits to the Company the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company with respect to the issuance of such shares or unless provisions to so pay such withholding requirements have been made to the satisfaction of the Committee. 8. Beneficiary Designations. The Participant may file with the Corporate Secretary of the Company a designation of one or more beneficiaries (each a "Beneficiary") to whom shares otherwise due the Participant shall be distributed in the event of the death of the Participant while in the employ of the Company. The Participant shall have the right to change the Beneficiary or Beneficiaries from time to time; provided, however, that any change shall not become effective until received in writing by the Corporate Secretary of the Company. If any designated Beneficiary survives the Participant but dies before receiving all of his benefits hereunder, any remaining benefits due him shall be distributed to the deceased Beneficiary's estate. If there is no effective Beneficiary designation on file at the time of the Participant's death, or if the designated Beneficiary or Beneficiaries have all predeceased such Participant, the payment of any remaining benefits shall be made to the Participant's estate. In the event of any dispute, the Company shall be fully protected and discharged of its obligations under this Agreement if it delivers the shares otherwise due a Participant to the probate court administering his estate. 9. Limitation of Rights. Nothing in this Agreement or the Plan shall be construed to: (a) give the Participant any right to be awarded any Restricted Stock other than in the sole discretion of the Committee; (b) give the Participant or any other person any interest in any fund or in any specified asset or assets of the Company or any affiliate of the Company; or (c) confer upon the Participant the right to continue in the employment or service of the Company or any affiliate of the Company, or affect the right of the Company or any affiliate of the Company to terminate the employment or service of the Participant at any time or for any reason. The Committee shall have the discretion to make determinations under this Agreement and Plan, and such determinations shall be final and binding on the Participant except in the case of bad faith and willful misconduct. 10. Nonalienation of Benefits. Except as contemplated by Section 8 above, no right or benefit under this Agreement shall be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, or by operation of law, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or his Beneficiary hereunder shall become bankrupt or attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or charge any right or benefit hereunder, other than as contemplated by Section 8 above, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall cease and terminate. 11. Prerequisites to Benefits. Neither the Participant, nor any person claiming through the Participant, shall have any right or interest in the Restricted Stock awarded hereunder, unless and until all the terms, conditions and provisions of this Agreement and the Plan which affect the Participant or such other person shall have been complied with as specified herein. 12. Rights as a Stockholder. Subject to the limitations and restrictions contained herein, the Participant (or Beneficiary) shall have all rights as a stockholder with respect to the shares of Restricted Stock once such shares have been registered in his name hereunder. 13. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors and assigns (including personal representatives, heirs and legatees), except that the Participant may not assign any rights or obligations under this Agreement except to the extent and in the manner expressly permitted herein. 14. The Committee shall have sole and complete discretion in the interpretation of this Agreement and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. 15. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware. 16. Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. This Agreement is executed and delivered, in duplicate, pursuant to the Plan, the provisions of which are incorporated herein by reference. Dated: April 22, 1997. OCEANEERING INTERNATIONAL, INC. By //s// John R. Huff, President The undersigned Participant accepts the Restricted Stock subject to all the terms of this Agreement. //s// GEORGE R. HAUBENREICH, JR. Award No. B-106 1,000 Shares OCEANEERING INTERNATIONAL, INC. FY97 BONUS RESTRICTED STOCK AWARD AGREEMENT THIS AGREEMENT is made as of the date set forth on the signature page hereof, between Oceaneering International, Inc., a Delaware corporation (the "Company"), and RICHARD V. CHIDLOW (the "Participant"). Except as defined herein, capitalized terms shall have the same meaning ascribed to them under the 1996 Incentive Plan of Oceaneering International, Inc., as from time to time amended, a copy of which is attached hereto and made a part hereof for all purposes (the "Plan"). To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be hereby deemed amended so as to carry out the purpose and intent of the Plan. 1. Definitions. As used herein, the terms set forth below shall have the following respective meanings: (a) "Change in Control" means, with respect to the Company, if (i) a third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Company having 30 percent or more of the total number of votes that may be cast for the election of directors of the Company, or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or of any successor to the Company. Without limiting the foregoing, no "Change of Control" shall be deemed to have taken place for the purposes of this Agreement, if a person or persons is appointed or elected as a member(s) of the Board as a result of or in connection with a Transaction or other event unless item (i) or (ii) above shall also have occurred. (b) "Closing Stock Price" means, with respect to common stock on a particular date, (i) if the shares of common stock are listed on a national securities exchange, the last sale price per share of common stock on any such national securities exchange on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported and, (ii) if the shares of Common Stock are not so listed but are quoted in the NASDAQ National Market System, the last sale price per share of shares of common stock reported on the NASDAQ National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported. (c) "Disability" means a physical or mental impairment of sufficient severity that, in the opinion of a physician selected by the Company, the Participant is unable to fulfill his duties. 2. Award. As an FY97 Bonus Award and in consideration of the covenants and promises of the Participant herein contained, pursuant to action taken by the Committee on April 22, 1997 (the "Date of Grant"), the Company hereby awards to the Participant as of the Date of Grant a total of 1,000 shares of Common Stock, pursuant to the Plan, subject to the conditions and restrictions set forth below and in the Plan (the "Restricted Stock"). 3. Restrictions on Transfer. The shares of Restricted Stock granted hereunder to the Participant may not be sold, assigned, transferred, pledged or otherwise encumbered from the Date of Grant until said shares shall have become vested and not otherwise subject to forfeiture (and restrictions terminated thereon) in accordance with the provisions of this Paragraph 3. (The period of time between the Date of Grant and the vesting of shares of Restricted Stock shall be referred to herein as the "Restricted Period" as to those shares of stock.) The shares of Restricted Stock shall be treated as described below for purposes of vesting and other terms and conditions of this Agreement: (a) Vesting of Common Stock: The shares of the Restricted Stock shall vest 25% on June 20, 1997, 25% on June 26, 1998, 25% on June 25, 1999, and 25% on June 23, 2000. Upon termination of a Participant's employment (with or without cause, voluntary, involuntary or for any reason whatsoever except as provided in Sections 3(c) and 3(d)), all Restricted Stock for which the conditions of the applicable provisions of this paragraph (a) have not been satisfied as of the date of such termination of employment shall be forfeited. (b) Tax Reimbursement: Within 10 days after the expiration of the Restricted Period with respect to a particular share of Restricted Stock, the Company shall pay to the Participant an amount sufficient to provide for the payment of all United States federal income taxes imposed with respect to Participant's acquisition of such share, as well as an amount sufficient to reimburse Participant for the tax obligation on such amounts so that Participant is paid an amount as a tax assistance payment by the Company sufficient to fund all of his income taxes on both the share of Restricted Stock and the tax assistance payment. In the event the Participant is not at the time a tax assistance payment is to be made subject to United States income tax, such tax assistance payment shall be computed by reference to the income tax of the laws of the country to which the participant is subject; provided, however, that such tax assistance payment shall not exceed the amount that would have been payable if the Participant were subject solely to United States income tax. No United States state (or equivalent foreign) income taxes will be considered in determining tax assistance payments. The Committee shall have sole and complete discretion in the calculation of tax assistance payments, and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. In computing the tax assistance payment, it shall be assumed that the Participant is at the maximum marginal tax rate for individual taxpayers. Subject to Section 3(c), in the event a Participant sells any share of Restricted Stock within three years after expiration of the Restricted Period with respect to such Restricted Stock, the Participant shall immediately pay to the Company the amount of the tax assistance payment previously received by the Participant from the Company with respect to such share. (c) Effect of Change in Control: In the event a Change in Control occurs prior to the time that the conditions of paragraph (b) above have been satisfied with respect to a share of Restricted Stock, and upon such Change in Control, the requirements of paragraph (b) above shall be deemed to have been satisfied on the the date of such Change of Control, and tax assistance payments shall be made with respect to such shares within 10 days thereafter. (d) Effect of Death or Disability. In the event of the death or Disability of the Participant while employed by the Company, the conditions of paragraph (b) above shall be deemed immediately satisfied and tax assistance payments shall be made by Company to the Participants with respect to such event within 30 days thereafter. (e) Dividends: Dividends (other than dividends in capital stock) with respect to shares of Restricted Stock shall be paid to the Participant without regard to the restrictions otherwise applicable to such shares. Dividends in capital stock of the Company shall accumulate and be associated with the Restricted Stock to which they relate and shall vest at the time such Restricted Stock vests. (f) Voting of Common Stock: A Participant shall have the right to exercise any voting rights appurtenant to Restricted Stock without regard to any restrictions otherwise imposed by reason of this Agreement. 4. Code Section 83(b) Election. The Participant shall not make an election, under Code Section 83(b), to include in income the fair market value of the Restricted Stock in respect of this award of Restricted Stock on the Date of Grant. 5. Sale of Restricted Stock. The Participant shall not sell Restricted Stock except pursuant to an effective registration statement under the Securities Act of 1933 (or pursuant to an exemption from registration under such act), and the Participant hereby represents that he is acquiring the Restricted Stock for his own account and not with a view to the distribution thereof. 6. Escrow of Certificates. The certificates representing shares of Restricted Stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed by the Participant in blank, with the Corporate Secretary of the Company during the Restricted Period. Each such certificate shall bear a legend as provided by the Company, conspicuously referring to the terms, conditions and restrictions described in the Plan and in this Agreement. Subject to the provisions of Section 7 below, upon termination of the Restricted Period with respect to shares of Restricted Stock, a certificate representing such shares shall be delivered to the Participant as promptly as practicable following such termination. 7. Withholding of Taxes. No certificates representing the shares of Restricted Stock shall be delivered to the Participant by the Company unless the Participant (or Beneficiary, as defined in Section 8 below) remits to the Company the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company with respect to the issuance of such shares or unless provisions to so pay such withholding requirements have been made to the satisfaction of the Committee. 8. Beneficiary Designations. The Participant may file with the Corporate Secretary of the Company a designation of one or more beneficiaries (each a "Beneficiary") to whom shares otherwise due the Participant shall be distributed in the event of the death of the Participant while in the employ of the Company. The Participant shall have the right to change the Beneficiary or Beneficiaries from time to time; provided, however, that any change shall not become effective until received in writing by the Corporate Secretary of the Company. If any designated Beneficiary survives the Participant but dies before receiving all of his benefits hereunder, any remaining benefits due him shall be distributed to the deceased Beneficiary's estate. If there is no effective Beneficiary designation on file at the time of the Participant's death, or if the designated Beneficiary or Beneficiaries have all predeceased such Participant, the payment of any remaining benefits shall be made to the Participant's estate. In the event of any dispute, the Company shall be fully protected and discharged of its obligations under this Agreement if it delivers the shares otherwise due a Participant to the probate court administering his estate. 9. Limitation of Rights. Nothing in this Agreement or the Plan shall be construed to: (a) give the Participant any right to be awarded any Restricted Stock other than in the sole discretion of the Committee; (b) give the Participant or any other person any interest in any fund or in any specified asset or assets of the Company or any affiliate of the Company; or (c) confer upon the Participant the right to continue in the employment or service of the Company or any affiliate of the Company, or affect the right of the Company or any affiliate of the Company to terminate the employment or service of the Participant at any time or for any reason. The Committee shall have the discretion to make determinations under this Agreement and Plan, and such determinations shall be final and binding on the Participant except in the case of bad faith and willful misconduct. 10. Nonalienation of Benefits. Except as contemplated by Section 8 above, no right or benefit under this Agreement shall be subject to transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, or by operation of law, and any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. If the Participant or his Beneficiary hereunder shall become bankrupt or attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or charge any right or benefit hereunder, other than as contemplated by Section 8 above, or if any creditor shall attempt to subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form of process or involuntary lien or seizure, then such right or benefit shall cease and terminate. 11. Prerequisites to Benefits. Neither the Participant, nor any person claiming through the Participant, shall have any right or interest in the Restricted Stock awarded hereunder, unless and until all the terms, conditions and provisions of this Agreement and the Plan which affect the Participant or such other person shall have been complied with as specified herein. 12. Rights as a Stockholder. Subject to the limitations and restrictions contained herein, the Participant (or Beneficiary) shall have all rights as a stockholder with respect to the shares of Restricted Stock once such shares have been registered in his name hereunder. 13. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Participant, the Company and their respective permitted successors and assigns (including personal representatives, heirs and legatees), except that the Participant may not assign any rights or obligations under this Agreement except to the extent and in the manner expressly permitted herein. 14. The Committee shall have sole and complete discretion in the interpretation of this Agreement and the determination of the Committee shall be final and binding on the Participant except in the case of bad faith or willful misconduct. 15. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware. 16. Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. This Agreement is executed and delivered, in duplicate, pursuant to the Plan, the provisions of which are incorporated herein by reference. Dated: April 22, 1997. OCEANEERING INTERNATIONAL, INC. By //s// George R. Haubenreich, Jr. Vice President, General Counsel and Secretary The undersigned Participant accepts the Restricted Stock subject to all the terms of this Agreement. //s// RICHARD V. CHIDLOW EX-21 4 EXHIBIT 21 SUBSIDIARIES OF OCEANEERING INTERNATIONAL, INC. Percentage of Ownership Jurisdiction by Oceaneering of Subsidiary International, Inc. Organization Eastport International, Inc. 100% Delaware Monocean Oceaneering Engenharia Submarina Ltda. 100% Brazil Multiflex, Inc. 100% Texas Multiflex Limited 100% Scotland Multiflex U.K., Inc. 100% Texas Norsk Subsea Cable A/S 49% Norway Ocean Barge Limited Partnership 75% Texas Ocean Systems Do Brasil Servicos Subaquaticos Ltda. 100% Brazil Ocean Systems Engineering, Inc. 100% Texas Ocean Systems Engineering Limited 100% England Oceaneering Arabia Ltd. 50% Saudi Arabia Oceaneering A/S 100% Norway Oceaneering Australia Pty. Limited 100% Australia Oceaneering do Brasil Servicos Submarinos Ltda. 100% Brazil Oceaneering FSC, Inc. 100% Barbados Oceaneering International AG 100% Switzerland Oceaneering International (Ireland) Limited 100% Ireland Oceaneering International (M) Sdn. Bhd. 100% Malaysia Oceaneering International (Netherlands) B.V. 100% Netherlands Oceaneering International Pte Ltd 100% Singapore Oceaneering International, S.A. de C.V. 100% Mexico Oceaneering International Services Limited 100% England Oceaneering International (Sharjah) Limited 100% Sharjah Oceaneering Limited 100% Canada Oceaneering Space Systems, Inc. 100% Delaware Oceaneering Survey, Inc. 100% Delaware Oceaneering Technologies, Inc. 100% Delaware Oceaneering Underwater GmbH 100% Switzerland Oceanteam A/S 50% Norway Oceanteam UK Limited 100% Scotland Oil Industry Engineering, Inc. 100% Texas P. T. Calmarine 50% Indonesia QAF-Solus Offshore Sdn Bhd 50% Brunei Servicios Marinos Oceaneering Chile Limitada 100% Chile Solus Emirates 49% U.A.E. Solus Ocean Systems, Inc. 100% Delaware Solus Oceaneering (Malaysia) Sdn. Bhd. 49% Malaysia Solus Offshore Ltd. 100% Cayman Islands Solus Schall Limited 100% England Solus Schall (Nigeria) Limited 50% Nigeria Specialty Wire and Cable Company, Inc. 100% Texas Steadfast Oceaneering, Inc. 100% Virginia Stolt-Comex Seaway Tecnologia Submarina S.A. 20% Brazil EX-23 5 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report included in this Form 10-K, into the Company's previously filed Form S-8 Registration Statements filed on May 11, 1982 (Reg. No. 2-77451), November 22, 1982 (Reg. No. 2-80506), July 13, 1988 (Reg. No. 33-23059), June 12, 1989 (Reg. No. 33-29277), and September 24, 1990 (Reg. No. 33-36872). ARTHUR ANDERSEN LLP Houston, Texas June 20, 1997 EX-24 6 EXHIBIT 24 POWER OF ATTORNEY WHEREAS, OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("Company"), intends to file with the Securities and Exchange Commission ("Commission") under the Securities Exchange Act of 1934, as amended ("Act"), an Annual Report on Form 10-K for the fiscal year ended March 31, 1997 ("10-K"), with any and all exhibits and/or amendments to such 10-K, and other documents in connection therewith. NOW, THEREFORE, the undersigned in his capacity as a director or officer or both, as the case may be, of the Company, does hereby appoint JOHN R. HUFF, MARVIN J. MIGURA and GEORGE R. HAUBENREICH, JR. and each of them severally, his true and lawful attorney or attorneys with power to act with or without the other and with full power of substitution and resubstitution, to execute in his name, place and stead in his capacity as a director, officer or both, as the case may be, of the Company, said 10-K and any and all amendments thereto and all instruments necessary or incidental in connection therewith and to file the same with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned in any and all capacities every act whatsoever necessary or desirable to be done in the premises as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 22nd day of April, 1997. //s// D. Michael Hughes POWER OF ATTORNEY WHEREAS, OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("Company"), intends to file with the Securities and Exchange Commission ("Commission") under the Securities Exchange Act of 1934, as amended ("Act"), an Annual Report on Form 10-K for the fiscal year ended March 31, 1997 ("10-K"), with any and all exhibits and/or amendments to such 10-K, and other documents in connection therewith. NOW, THEREFORE, the undersigned in his capacity as a director or officer or both, as the case may be, of the Company, does hereby appoint JOHN R. HUFF, MARVIN J. MIGURA and GEORGE R. HAUBENREICH, JR. and each of them severally, his true and lawful attorney or attorneys with power to act with or without the other and with full power of substitution and resubstitution, to execute in his name, place and stead in his capacity as a director, officer or both, as the case may be, of the Company, said 10-K and any and all amendments thereto and all instruments necessary or incidental in connection therewith and to file the same with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned in any and all capacities every act whatsoever necessary or desirable to be done in the premises as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 22nd day of April, 1997. //s// Charles B. Evans POWER OF ATTORNEY WHEREAS, OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("Company"), intends to file with the Securities and Exchange Commission ("Commission") under the Securities Exchange Act of 1934, as amended ("Act"), an Annual Report on Form 10-K for the fiscal year ended March 31, 1997 ("10-K"), with any and all exhibits and/or amendments to such 10-K, and other documents in connection therewith. NOW, THEREFORE, the undersigned in his capacity as a director or officer or both, as the case may be, of the Company, does hereby appoint JOHN R. HUFF, MARVIN J. MIGURA and GEORGE R. HAUBENREICH, JR. and each of them severally, his true and lawful attorney or attorneys with power to act with or without the other and with full power of substitution and resubstitution, to execute in his name, place and stead in his capacity as a director, officer or both, as the case may be, of the Company, said 10-K and any and all amendments thereto and all instruments necessary or incidental in connection therewith and to file the same with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned in any and all capacities every act whatsoever necessary or desirable to be done in the premises as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 22nd day of April, 1997. //s// David S. Hooker POWER OF ATTORNEY WHEREAS, OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("Company"), intends to file with the Securities and Exchange Commission ("Commission") under the Securities Exchange Act of 1934, as amended ("Act"), an Annual Report on Form 10-K for the fiscal year ended March 31, 1997 ("10-K"), with any and all exhibits and/or amendments to such 10-K, and other documents in connection therewith. NOW, THEREFORE, the undersigned in his capacity as a director or officer or both, as the case may be, of the Company, does hereby appoint JOHN R. HUFF, MARVIN J. MIGURA and GEORGE R. HAUBENREICH, JR. and each of them severally, his true and lawful attorney or attorneys with power to act with or without the other and with full power of substitution and resubstitution, to execute in his name, place and stead in his capacity as a director, officer or both, as the case may be, of the Company, said 10-K and any and all amendments thereto and all instruments necessary or incidental in connection therewith and to file the same with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned in any and all capacities every act whatsoever necessary or desirable to be done in the premises as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 22nd day of April, 1997. //s// John R. Huff POWER OF ATTORNEY WHEREAS, OCEANEERING INTERNATIONAL, INC., a Delaware corporation ("Company"), intends to file with the Securities and Exchange Commission ("Commission") under the Securities Exchange Act of 1934, as amended ("Act"), an Annual Report on Form 10-K for the fiscal year ended March 31, 1997 ("10-K"), with any and all exhibits and/or amendments to such 10-K, and other documents in connection therewith. NOW, THEREFORE, the undersigned in his capacity as a director or officer or both, as the case may be, of the Company, does hereby appoint JOHN R. HUFF, MARVIN J. MIGURA and GEORGE R. HAUBENREICH, JR. and each of them severally, his true and lawful attorney or attorneys with power to act with or without the other and with full power of substitution and resubstitution, to execute in his name, place and stead in his capacity as a director, officer or both, as the case may be, of the Company, said 10-K and any and all amendments thereto and all instruments necessary or incidental in connection therewith and to file the same with the Commission. Each of said attorneys shall have full power and authority to do and perform in the name and on behalf of the undersigned in any and all capacities every act whatsoever necessary or desirable to be done in the premises as fully and to all intents and purposes as the undersigned might or could do in person, the undersigned hereby ratifying and approving the acts of said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has executed this instrument on this 22nd day of April, 1997. //s// Harris J. Pappas EX-27 7
5 This schedule contains summary financial information extracted from the financial statements filed as part of the Company's 10-K and is qualified in its entirety by reference to such financial statements. 1,000 YEAR MAR-31-1997 MAR-31-1997 23,034 0 121,057 962 0 148,807 262,944 161,053 268,255 95,845 0 0 0 6,004 150,330 268,255 368,773 368,773 290,801 290,801 0 0 2,048 41,294 21,849 19,445 0 0 0 19,445 .81 .81
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