-----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, T+IciLvHkIQdJvdvlqVowKh2v5VNRQTCJHPOsx+ru2pgzAdIsMTIG+p1BX/2qB7N LiqQJqnbcN/mUlX1grjN1A== 0000950134-97-005407.txt : 19970722 0000950134-97-005407.hdr.sgml : 19970722 ACCESSION NUMBER: 0000950134-97-005407 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970516 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970721 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIDEWATER INC CENTRAL INDEX KEY: 0000098222 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 720487776 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06311 FILM NUMBER: 97643165 BUSINESS ADDRESS: STREET 1: 1440 CANAL ST STE 2100 CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045681010 MAIL ADDRESS: STREET 1: 1440 CANAL STREET STREET 2: STE 2100 CITY: NEW ORLEANS STATE: LA ZIP: 70112 FORMER COMPANY: FORMER CONFORMED NAME: TIDEWATER MARINE SERVICE INC DATE OF NAME CHANGE: 19780724 8-K/A 1 AMENDMENT TO FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A-1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) May 16, 1997 ------------------------------- TIDEWATER INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 1-6311 72-0487776 - -------------------------------------------------------------------------------- (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification Incorporation) Number) 1440 Canal Street, Suite 2100, New Orleans, Louisiana 70112 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (504) 568-1010 -------------------------- NOT APPLICABLE - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 2 On May 30, 1997 Tidewater Inc. ("the Company") filed a Form 8-K dated May 16, 1997 containing a description of the Company's acquisition of O.I.L. Limited. This Form 8-K/A-1 amends and restates the disclosure in Item 7(a) and (b) of the Company's Form 8-K filed on May 30, 1997 to include the financial statements of the business acquired and pro forma financial information. Item 2. Acquisition or Disposition of Assets. Acquisition of the O.I.L. Group of Companies On May 16, 1997, the registrant, Tidewater Inc. (the "Company"), acquired all of the ordinary shares of O.I.L. Limited and its related international marine operating companies (the "O.I.L. Group") from Ocean Group plc and its affiliates (collectively the "Ocean Group") in exchange for a cash payment of 328 million pounds sterling (approximately U.S. $534 million). In addition, a 3 million pound sterling (approximately U.S.$5 million) advance payment was made for the net working capital of O.I.L. Group, with the final purchase price to be adjusted for the final net working capital of O.I.L. Group as of the May 16, 1997 closing date. The consideration paid Ocean Group was determined through arm's length negotiations between the Company and Ocean Group. The Company used approximately $39 million of its cash to fund the purchase price, with the remainder provided by borrowings under a bank credit facility. Prior to consummation of this acquisition, the O.I.L. Group was principally engaged in the business of operating approximately 100 marine vessels, primarily platform supply and anchor handling towing supply vessels, in several international offshore oil and gas exploration areas outside of the United States. The Company intends for the foreseeable future to continue to engage in such operations. The acquisition was completed on May 16, 1997, as announced in the press release which has been filed as an exhibit to this report. Additional information relating to the acquisition is set forth in the Agreement for the Acquisition of Share Capital of the O.I.L. Group of Companies, a copy of which has also been filed as an exhibit to this report. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial statements of businesses acquired. (1) Audited combined balance sheets of O.I.L. Group as of December 31, 1996 and 1995, and the related combined statements of profit, cash flows and total recognized gains and losses for each of the years in the three year period ended December 31, 1996, including the notes thereto and the related report of Price Waterhouse. (b) Pro Forma financial information. (1) Unaudited Pro Forma Condensed Combined Balance Sheet of Tidewater Inc. (the "Company") as of March 31, 1997, including the notes thereto. (2) Unaudited Pro Forma Condensed Combined Statement of Earnings of the Company for the year ended March 31, 1997, including the notes thereto. 3 (c) Exhibits. 2.0 Agreement for the Acquisition of the Share Capital of the O.I.L. Group of Companies, dated March 20, 1997, between the Company and Ocean Group plc. [1] 23. Consent of Independent Public Accountants 99.1 Press Release issued May 16, 1997 disclosing completion of the Company's acquisition of the O.I.L. Group of companies. **FOOTNOTES** [1]: Exhibit 2.0 includes a list briefly identifying the contents of all schedules omitted therefrom. The Company will furnish supplementally a copy of any omitted schedule to the Commission upon request. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. By: /s/ Ken C. Tamblyn ------------------------------------------ Ken C. Tamblyn Executive Vice President and Chief Financial Officer Dated: July 21, 1997 4 INDEX TO FINANCIAL STATEMENTS PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS FINANCIAL STATEMENTS. (1) Audited combined balance sheets of O.I.L. Group as of December 31, 1996 and 1995, and the related combined statements of profit, cash flows and total recognized gains and losses for each of the years in the three year period ended December 31, 1996, including the notes thereto and the related report of Price Waterhouse. PRO FORMA FINANCIAL INFORMATION. (1) Unaudited Pro Forma Condensed Combined Balance Sheet of Tidewater Inc. (the "Company") as of March 31, 1997, including the notes thereto. (2) Unaudited Pro Forma Condensed Combined Statement of Earnings of the Company for the year ended March 31, 1997, including the notes thereto. EXHIBITS. Exhibit Number Description - ------- ----------- 2.0 Agreement for the Acquisition of the Share Capital of the O.I.L. Group of Companies, dated March 20, 1997 between the Company and Ocean Group plc. 23. Consent of Independent Public Accountants 99.1 Press release issued May 16, 1997 disclosing completion of the Company's acquisition of the O.I.L. Group of Companies. 5 TIDEWATER INC. Unaudited Pro Forma Condensed Combined Financial Statements INTRODUCTION The following unaudited pro forma condensed combined financial statements give effect to the May 16, 1997 acquisition (the "Acquisition") of all of the ordinary shares of O.I.L. Limited and its related international marine operating companies (the "O.I.L. Group") from Ocean Group plc and its affiliates. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of Tidewater Inc. and subsidiaries and O.I.L. Group and notes thereto. This pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results which actually would have been obtained if the Acquisition had been effected on the pro forma dates, nor is it necessarily indicative of future results. The unaudited pro forma condensed combined financial statements are based upon the purchase method of accounting for the Acquisition. The Unaudited Pro Forma Condensed Combined Statement of Earnings for the year ended March 31, 1997 assumes that the Acquisition was effected on April 1, 1996. The Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1997 assumes that the Acquisition was effected on that date. The Unaudited Pro Forma Condensed Combined Statements of Earnings have been compiled from the Tidewater Inc. audited Consolidated Statement of Earnings for the year ended March 31, 1997 and the O.I.L. Group audited Statement of Profit for the year ended December 31, 1996. Tidewater's fiscal year end is March 31, while O.I.L. Group's is December 31. The Unaudited Pro Forma Condensed Combined Statement of Earnings for the year ended March 31, 1997 includes O.I.L. Group's audited financial information for the 12 months ended December 31, 1996. During the period from January 1, 1997 through March 31, 1997, revenues of O.I.L. Group amounted to approximately $38 million. The Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1997 includes O.I.L. Group's audited financial information as of December 31, 1996. PURCHASE PRICE The cash purchase price of the Acquisition was approximately $539 million, inclusive of a $5 million advance payment for the net working capital of O.I.L. Group, which is subject to adjustment based upon a final balance sheet prepared as of the May 16, 1997 closing date. The source of the funds used for the Acquisition consisted of $39 million from cash balances with the remainder from borrowings under a Revolving Credit and Term Loan Agreement with a group of banks. 6 TIDEWATER INC. PRO FORMA CONDENSED COMBINED BALANCE SHEET MARCH 31, 1997 - UNAUDITED
O.I.L. PRO FORMA PRO FORMA TIDEWATER GROUP ADJUSTMENTS COMBINED ----------- ---------- ---------- ---------- (in thousands, except share and per share data) ASSETS Current assets: Cash, including temporary cash investments $ 41,114 2,280 (39,000) (a) 4,394 Trade and other receivables, less allowance 187,612 26,905 214,517 Inventories 36,016 1,445 37,461 Other current assets 3,984 4,082 8,066 ----------- ---------- ---------- ---------- Total current assets 268,726 34,712 (39,000) 264,438 ----------- ---------- ---------- ---------- Investments in, at equity, and advances to unconsolidated companies 20,556 135 20,691 Properties and equipment, net 681,091 129,431 126,780 (b) 937,302 Other assets 68,627 0 356,475 (e) 425,102 ----------- ---------- ---------- ---------- $1,039,000 164,278 444,255 1,647,533 =========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt 0 1,719 57,143 (a) 58,862 Accounts payable and accrued expenses 81,500 82,253 21,020 (c) 111,236 (73,538) (d) Accrued property and liability losses 13,248 0 13,248 ----------- ---------- ---------- ---------- Total current liabilities 94,748 83,972 4,625 183,346 ----------- ---------- ---------- ---------- Deferred income taxes 95,595 23,577 46,423 (f) 165,595 Long-term debt 0 7,015 442,857 (a) 449,872 Accrued property and liability losses 32,146 0 32,146 Other liabilities and deferred credits 46,847 63 46,910 Stockholders' equity 769,664 49,650 (49,650) (d) 769,664 ----------- ---------- ---------- ---------- $1,039,000 164,278 444,255 1,647,533 =========== ========== ========== ==========
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet: (a) Adjustment to record the payment of cash and issuance of debt to acquire the ordinary shares of the O.I.L. Group from Ocean Group. (b) Adjustment to record the step-up in the basis of fixed assets of O.I.L. Group to estimated fair value at acquisition date. (c) Adjustment to record the accrual for estimated transaction costs and additional purchase price based upon estimated working capital of O.I.L. Group as of the May 16, 1997 closing date. The final amounts to be used for the adjustment of the initial purchase price have not yet been determined. (d) Adjustment to eliminate the stockholders' equity accounts of O.I.L. Group, including the elimination of the payable balance from O.I.L. Group to Ocean Group which was excluded as part of the acquisition. (e) Adjustment to record the excess of acquisition cost over the fair value of net assets acquired (goodwill). (f) Adjustment to record the related deferred tax effect of the acquisition. 7 TIDEWATER INC. PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS YEAR ENDED MARCH 31, 1997 - UNAUDITED
O.I.L. PRO FORMA PRO FORMA TIDEWATER GROUP ADJUSTMENTS COMBINED ----------- ---------- ---------- ----------- (in thousands, except share and per share data) Revenues: Marine operations $690,426 138,378 828,804 Compression operations 112,584 0 112,584 ----------- ---------- ---------- ----------- 803,010 138,378 941,388 ----------- ---------- ---------- ----------- Costs and expenses: Marine operations 385,656 75,882 461,538 Compression operations 64,153 0 64,153 Depreciation and amortization 82,272 14,525 20,375 (d) 117,172 General and administrative 64,855 16,960 81,815 ----------- ---------- ---------- ----------- 596,936 107,367 20,375 724,678 ----------- ---------- ---------- ----------- 206,074 31,011 (20,375) 216,710 Other income (expenses): Foreign exchange gain (loss) (397) (858) (1,255) Gain on sales of assets 6,443 3,936 10,379 Equity in net earnings of unconsolidated companies 4,901 0 4,901 Minority interests (1,311) (44) (1,355) Interest and miscellaneous income 4,641 558 (1,950) (c) 3,249 Other expense (2,800) 0 (2,800) Interest and other debt costs (1,017) (5,965) (33,458) (a) (35,167) 5,273 (b) ----------- ---------- ---------- ----------- 10,460 (2,373) (30,135) (22,048) ----------- ---------- ---------- ----------- Earnings before income taxes 216,534 28,638 (50,510) 194,662 Income taxes 70,523 8,422 (21,346) (e) 57,599 ----------- ---------- --------- ----------- Net earnings $146,011 20,216 (29,164) 137,063 =========== ========== ========== =========== Primary and fully diluted earnings per share $ 2.34 N/A N/A 2.20 =========== ========== ========== =========== Weighted average common shares and equivalents 62,280,281 N/A N/A 62,280,281 ========== ========== ========== ===========
Notes to Unaudited Pro Forma Condensed Combined Statements of Earnings: (a) To adjust interest expense to reflect the $500 million of debt incurred as a result of the O.I.L. Group acquisition. In accordance with terms of the Company's debt agreement, principal payments are assumed to be approximately $14.3 million per quarter and the interest rate is assumed to be 6.85%. The adjustment also includes amortization of financing costs associated with the debt (amortized primarily over seven years). (b) To adjust interest expense incurred by O.I.L. Group on indebtedness to Ocean Group which, by agreement, is excluded from the acquisition. (c) To adjust interest income to reflect the assumed beginning-of-the-year usage of $39 million of cash in the O.I.L. Group acquisition. Interest yield on cash investments is assumed to be 5%. (d) To adjust for additional depreciation on the new basis of properties and equipment acquired in the O.I.L. Group acquisition. Adjustment also includes amortization of $356 million of cost in excess of fair value of the net assets acquired in the transaction (amortized over 40 years). (e) To adjust income taxes of the pro forma combined group to Tidewater's historical effective income tax rate, as adjusted for tax effects related to the acquisition. (f) The pro forma combined information does not include the operating and general and administrative cost savings anticipated as a result of the consolidation of marine operations. (g) The historical results of operations of O.I.L. Group were reported in British pounds sterling and converted for purposes of the pro forma financial information at the average currency exchange rate applicable during the reporting period. 8 O.I.L. GROUP COMBINED FINANCIAL STATEMENTS 31 December 1996, 1995 and 1994 1 9 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of O.I.L.: We have audited the accompanying combined balance sheets of O.I.L. Group, a former division of Ocean Group plc (Ocean Group), as of December 31, 1996 and 1995 and the related combined statements of profit, cash flows and total recognised gains and losses for each of the years in the three year period ended December 31, 1996 all expressed in British pounds sterling. These combined financial statements are the responsibility of the O.I.L. Group management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United Kingdom, which do not differ in any significant respect from auditing standards generally accepted in the United States. 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 combined financial statements audited by us present fairly, in all material respects, the financial position of O.I.L. Group at December 31, 1996 and 1995, and the results of its operations and cash flows for each of the years in the three year period ended December 31, 1996 in conformity with accounting principles generally accepted in the United Kingdom. Accounting principles generally accepted in the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States. The application of the latter would have affected the determination of results of operations expressed in British pounds sterling for each of the two years in the period ended December 31, 1996 and the determination of combined invested equity also expressed in British pounds sterling at December 31, 1996 and 1995 to the extent summarised in Note 28 to the combined financial statements. O.I.L. Group is a division of Ocean Group and, as disclosed in the combined financial statements, has transactions and relationships with Ocean Group and its affiliates. Price Waterhouse London, England July 17, 1997 2 10 O.I.L. GROUP COMBINED PROFIT AND LOSS ACCOUNTS for the years ended 31 December 1996, 1995 and 1994 Continuing Operations
Notes 1996 1995 1994 L.'000 L.'000 L.'000 1 Turnover 88,704 81,531 79,698 Cost of sales Marine operations (48,642) (46,242) (45,828) Depreciation (8,908) (8,373) (9,524) Exchange losses (447) (158) (994) ------- ------- ------- (57,997) (54,773) (56,346) ------- ------- ------- Gross profit 30,707 26,758 23,352 Other income/(expenses) General and administrative (10,872) (10,864) (10,892) Depreciation (403) (422) (444) Profit on sale of vessels 2,523 3,585 1,746 Exchange gains/(losses) (103) 14 (13) ------- ------- ------- (8,855) (7,687) (9,603) ------- ------- ------- 2 PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 21,852 19,071 13,749 4 Interest receivable 358 369 134 5 Interest payable (3,824) (3,048) (2,464) ------- ------- ------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 18,386 16,392 11,419 6 Taxation on profit on ordinary activities (4,268) (2,859) (2,780) ------- ------- ------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 14,118 13,533 8,639 Minority Interests (28) (17) (27) ------- ------- ------- PROFIT FOR THE FINANCIAL YEAR 14,090 13,516 8,612 7 Dividends (19,435) (11,856) (8,382) ------- ------- ------- RETAINED (L0SS)/PROFIT FOR THE YEAR (5,345) 1,660 230 ======= ======= ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Profit for the financial year attributable to shareholders 14,090 13,516 8,612 Exchange differences on translation of net assets (68) 78 281 ------- ------- ------- Total gains recognised 14,022 13,594 8,893 ======= ======= =======
3 11 O.I.L. GROUP COMBINED BALANCE SHEETS as at 31 December 1996 and 1995
Notes 1996 1995 L.'000 L.'000 FIXED ASSETS 8 Tangible fixed assets 79,650 77,083 9 Investments in associated undertakings 83 140 ------- ------- 79,733 77,223 CURRENT ASSETS 10 Stocks 889 631 11 Debtors 39,003 36,457 Cash at bank and in hand 4,209 8,829 ------- ------- 44,101 45,917 CURRENT LIABILITIES 12 Creditors: amounts falling due within one year (93,850) (88,400) ------- ------- NET CURRENT LIABILITIES (49,749) (42,483) ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 29,984 34,740 13 Creditors: amounts falling due after more than one year (4,317) (3,668) ------- ------- 25,667 31,072 ======= ======= 15 Invested equity 25,628 31,041 Minority Interests 39 31 ------- ------- 25,667 31,072 ======= =======
4 12 O.I.L. GROUP COMBINED STATEMENTS OF CASH FLOWS for the years ended 31 December 1996, 1995 and 1994
1996 1995 1994 L.'000 L.'000 L.'000 ------- ------- ------- NET CASH INFLOW FROM OPERATING ACTIVITIES (NOTE 23) 28,225 23,552 23,501 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 361 130 134 Interest paid (3,447) (3,229) (2,362) Dividends paid to minority shareholders - (8) (5) ------- ------- ------- NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (3,086) (3,107) (2,233) OVERSEAS TAXATION PAID (1,464) (1,704) (954) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (18,244) (18,473) (13,715) Sale of vessels 3,369 4,367 2,729 Sale of other tangible fixed assets 85 70 160 ------- ------- ------- NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (14,790) (14,036) (10,826) FINANCING Debt due within one year: New loans 273 - 10,249 Repayment of loans (273) (9,064) (10,238) Debt due after more than one year: New loans 2,044 - 32,634 Repayment of loans (1,094) (33,796) (33,409) Intercompany hedging loans: New loans 14,101 46,800 - Repayment of loans (2,792) - - Other parent company transactions, net (Note 26) (28,782) (1,161) (19,738) ------- ------- ------- NET CASH (OUTFLOW)/INFLOW FROM FINANCING (16,523) 2,779 (20,502) ------- ------- ------- (DECREASE)/INCREASE IN CASH IN THE YEAR (NOTE 24) (7,638) 7,484 (11,014) ======= ======= =======
5 13 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS ACCOUNTING POLICIES The accounting policies adopted by the O.I.L. Group are set out below, and have been consistently applied throughout the period. (a) ACCOUNTING CONVENTION The accounts are prepared under the going concern concept and the historical cost convention and in accordance with applicable accounting standards. (b) BASIS OF PREPARATION For the period covered by these combined financial statements, O.I.L. Group ("The Group") was a division of Ocean Group plc ("Ocean Group"). O.I.L. Group comprises O.I.L. Limited, its direct subsidiaries and other Ocean Group subsidiaries providing marine and other services to the offshore oil industries (see note (d) below). Each of the companies is a legal entity and prepares single company statutory accounts according to the legislation requirements of its country of registration or incorporation. The operations of this division have been reported as a separate segment within the financial statements of Ocean Group. Under the terms of the acquisition of O.I.L. Group (see Note 27), Tidewater Inc has acquired the whole of Ocean Group's holdings of the issued share capital of the companies comprising the O.I.L. Group. However, the operations of O.I.L. Limited's supply base in Lerwick (the Shetland division) were excluded from the sale. For the purposes of these combined financial statements, the results and net assets of the Shetland division have been excluded for all periods. These combined financial statements present information about the O.I.L. Group on a combined basis. All material intercompany accounts and transactions have been eliminated in arriving at the combined financial statements. The combined cash flow statement presented above has been drawn up for the purposes of these combined financial statements under Financial Reporting Standard No 1 (Revised 1996). Subsidiary Undertakings An undertaking is considered to be a subsidiary where the Group exercises dominant influence over the operations of the undertaking. The accounts of subsidiary undertakings acquired during the year are included in Group figures from the effective dates of acquisition. Goodwill No goodwill was incurred on the acquisition of any of the subsidiaries included within these combined financial statements. 6 14 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) (c) INVESTMENTS IN ASSOCIATED UNDERTAKINGS Associated undertakings are undertakings in which the Group has a long term participating interest and over which it exercises significant influence. The Group combined profit and loss account includes the Group's share of the results of its associated undertakings as shown by their audited accounts or unaudited management accounts. The Group's investment in associated undertakings is its interest in their tangible net assets. (d) NATURE OF BUSINESS Nature of operations The O.I.L. Group provides marine and other services to the offshore oil industries on the UK Continental Shelf, in Africa, Asia Pacific and South America. These services include transporting supplies, material and personnel; towing mobile rigs and construction barges; positioning and handling anchors of mobile drilling rigs and construction and pipe laying barges; diving and maintenance support; oil terminal support operations; steel fabrication work for small-scale repair and modification of fixed drilling installations; and related marine consultancy services. O.I.L. Group's main customers are among the major international oil exploration and production companies or their immediate service contractors. Related party transactions As a division of Ocean Group, O.I.L. Group received a number of administrative and support services from Ocean Group and participated in the Ocean Group pension schemes, insurance and banking arrangements and employee share ownership plans. Further information about such relationships and transactions is given in Note 17. (e) FOREIGN CURRENCY RISK MANAGEMENT O.I.L Group has utilised the central treasury functions of the Ocean Group in managing its cash and borrowings and in hedging its asset and transaction foreign exchange exposures as part of the Ocean Group's overall treasury management strategy. For the purposes of these combined financial statements, where this hedging strategy has generated profits or losses within the records of Ocean Group which relate to O.I.L. Group exposures, these have been pushed down and included in the results of O.I.L. Group. The impact on the net assets of the O.I.L.Group has been adjusted through the intercompany account with Ocean Group. 7 15 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) (f) TANGIBLE FIXED ASSETS Tangible fixed assets are stated at cost less depreciation. Cost includes interest incurred on the financing of the construction of major vessels. Depreciation of fixed assets is provided evenly over their estimated useful lives after taking account of estimated residual values. Useful lives are assessed as follows: Vessels 5 to 25 years Plant and equipment 3 to 5 years Motor vehicles 4 years Short leasehold property period of lease Long leasehold property 20 years Buildings 10 to 25 years Depreciation is not charged in respect of freehold land. Change of asset lives: In 1995 the estimated maximum useful life of vessels was reassessed and extended from 20 to 25 years and the estimated residual value decreased from 10% to nil. This decreased the depreciation charge for 1995 by L.1,701,000. (g) PROFIT ON SALE OF VESSELS Profit on the sale of vessels, which represents the total profits made on sale of vessels to third parties, is recognised when the consideration is realised. Any losses on the sale of vessels are recognised at the time of disposal. (h) TAXATION Historically, Ocean Group has undertaken to discharge the liabilities to UK Corporation Tax of the UK entities included in the O.I.L. Group and as a result no charges or obligations for UK corporation tax have been recorded in the individual companies' statutory accounts. This financial information presents the O.I.L. Group's UK corporation tax charge on a stand alone basis. No benefit has been assumed from corporation tax losses or Advanced Corporation Tax arising in other Ocean Group undertakings. UK Corporation Tax obligations are included within balances payable to Ocean Group as Ocean Group have been responsible for their payment. Overseas tax payable represents amounts outstanding on assessments received and payable by O.I.L. Group without recourse to Ocean Group. (i) DEFERRED TAX Provision for deferred taxation is made using the liability method, on the excess of capital allowances over depreciation and other timing differences, to the extent that it is probable that a liability will crystallize in the foreseeable future. 8 16 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued) (j) FOREIGN CURRENCIES The trading results of foreign operations are translated into sterling at average rates of exchange ruling through the relevant period. The net assets of foreign operations are expressed in sterling at the rates of exchange ruling at the balance sheet date. Differences on exchange arising from the retranslation of both the opening net assets of foreign operations and of the trading results of foreign operations to closing rates of exchange are taken to reserves. Other assets and liabilities denominated in foreign currencies are expressed at the rates of exchange ruling at the balance sheet date. Profits or losses due to currency fluctuations, including those arising on the settlement of day to day transactions, are dealt with through the profit and loss account. (k) PENSIONS Certain O.I.L. Group employees are members of an Ocean Group pension scheme (a defined benefit plan) contributions to which are assessed by a qualified actuary based on the cost of providing pensions across all participating Ocean Group companies. Contributions on behalf of those O.I.L. Group employees who are members of the Merchant Navy Officers and Ratings Pension Funds (defined contribution plans) are charged to the profit and loss account as incurred. These schemes are operated independently on behalf of the UK Merchant shipping industry and the contribution rates required are determined by actuarial review. (l) STOCKS Stocks are stated at the lower of cost and net realisable value. (m) LEASES The rental costs arising from operating leases are charged against profit before interest as they arise. 9 17 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 1 SEGMENTAL ANALYSIS
(a) Turnover 1996 1995 1994 L.'000 L.'000 L.'000 Turnover represents total revenue receivable from marine and other services to the offshore oil industries An analysis of turnover by geographical market is as follows: United Kingdom 28,121 23,330 20,050 Americas 4,876 4,155 8,617 Africa, Middle East, Australasia and Far East 55,705 53,999 50,814 Rest of Europe 2 47 217 ------ ------ ------ 88,704 81,531 79,698 ====== ====== ======
Turnover by geographical destination is not materially different to the analysis by geographical origin. The Directors consider that the whole of the activities of the Group constitute a single class of business. All activities are of a continuing nature as defined under Financial Reporting Standard No 3.
(b) Profit on ordinary activities before interest and taxation 1996 1995 1994 L.'000 L.'000 L.'000 United Kingdom 5,725 6,671 6,048 Americas 864 150 1,121 Africa, Middle East, Australasia and Far East 15,279 12,228 6,470 Rest of Europe (16) 22 110 ------ ------ ------ 21,852 19,071 13,749 ====== ====== ======
(c) Net Assets 1996 1995 L.'000 L.'000 United Kingdom 24,212 29,425 Americas 2,767 2,981 Africa, Middle East, Australasia and Far East 65,050 60,515 Rest of Europe (16) (7) ------- ------- 92,013 92,914 Net borrowings, tax and intercompany balances (66,346) (61,842) ------- ------- 25,667 31,072 ======= =======
10 18 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
2 PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION 1996 1995 1994 L.'000 L.'000 L.'000 The following amounts have been charged in arriving at profit on ordinary activities before interest and taxation: Depreciation 9,311 8,795 9,968 Other operating lease rentals 474 443 557 Auditors' remuneration - audit work 82 66 51 - non audit work 5 21 27 Net exchange losses on foreign currency deposits less borrowings 204 6 74 Profit on sale of other fixed assets (52) (36) (48)
3 EMPLOYEE COSTS AND DIRECTORS' EMOLUMENTS
(a) Employee costs: 1996 1995 1994 L.'000 L.'000 L.'000 Wages and salaries 23,148 22,266 21,630 Social security costs 765 963 1,037 Pension costs (Note 21) 10 29 171 ------ ------ ------ 23,923 23,258 22,838 ====== ====== ====== Average number of employees 1,372 1,439 1,598 ====== ====== ======
Average number of employees includes individuals contracted to third parties which supply labour to the O.I.L. Group. The labour costs of such employees is included in wages and salaries. (b) Directors' emoluments: The Directors of O.I.L. Limited are responsible for the management and operations of the O.I.L. Group as a whole. The information set out below comprises the emoluments of the directors of O.I.L Limited only.
1996 1995 1994 L.'000 L.'000 L.'000 Emoluments 392 314 335 Performance related payments 80 94 96 ------ ------ ------ 472 408 431 ====== ====== ====== O.I.L. allocation of the emoluments of the highest paid Director (allocated between O.I.L. Ltd (65%) and its fellow subsidiary Cory Towage Ltd (35%)). 138 120 111 ====== ====== ======
No pension contributions were paid on behalf of any director during the period. 11 19 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
The emoluments of the Directors fell in the following bands: 1996 1995 1994 0 - L.5,000 1 - - L.10,001 -L.15,000 - 1 - L.15,001 -L.20,000 - 1 - L.30,001 -L.35,000 1 1 - L.50,001 -L.55,000 - 1 - L.60,001 -L.65,000 - - 1 L.75,001 -L.80,000 - 1 1 L.85,001 -L.90,000 1 - 1 L.90,001 -L.95,000 - 1 1 L.100,001 -L.105,000 1 - - L.105,001 -L.110,000 1 - - L.110,001 -L.115,000 - - 1 L.115,001 -L.120,000 - 1 - L.135,001 -L.140,000 1 - -
4 INTEREST RECEIVABLE 1996 1995 1994 L.'000 L.'000 L.'000 Bank deposits and short term loans 146 94 94 Group and subsidiary undertakings 212 275 40 ------ ------ ----- 358 369 134 ====== ====== =====
5 INTEREST PAYABLE 1996 1995 1994 L.'000 L.'000 L.'000 Loans and bank overdrafts repayable after 5 years 236 244 420 Loans and bank overdrafts wholly repayable within 5 years 208 2,744 1,977 Group and subsidiary undertakings 3,380 60 67 ------ ------ ----- 3,824 3,048 2,464 ====== ====== =====
12 20 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL ACCOUNTS (continued)
6 TAXATION 1996 1995 1994 L.'000 L.'000 L.'000 United Kingdom taxation: Corporation tax at 33% 3,765 2,639 2,351 Relief for overseas taxation (1,109) (1,258) (595) ------ ------ ----- 2,656 1,381 1,756 Overseas taxation 1,604 1,474 1,015 Associated undertakings 8 4 9 ------ ------ ----- 4,268 2,859 2,780 ====== ====== =====
UK Corporation Tax payable is included in creditors falling due within one year in amounts owed to group undertakings. UK Corporation Tax is assessed on the profits of O.I.L. Limited arising on its worldwide income less an allowance for double taxation relief where these profits are subject to overseas tax. No relief is available for any interest or penalties suffered. Exposures may exist in relation to the O.I.L. Group's overseas operations arising from the late payment of overseas tax . No provision has been made in these financial statements for any additional overseas tax or penalties which may become payable but which are not quantifiable at this time within a reasonable range of outcomes. Under the terms of the acquisition (Note 27), O.I.L. Group is not liable for any further charges for overseas taxation and associated interest or penalties for any periods up to and including 31 December 1996. The effective rate of tax is lower than the statutory UK Corporation Tax rate of 33% primarily because of the availability of tax relief for capital expenditure for which no deferred tax charge is considered necessary under UK GAAP. 7 DIVIDENDS Dividends payable in 1996 by O.I.L. Limited, O.I.L. Engineering Limited and Fairway Personnel Services Limited reduced profit and loss reserves of these companies to L.nil. Dividends declared and payable by the O.I.L. Group to Ocean Group disclosed within these combined financial statements represent the aggregated amounts reflected in the underlying statutory accounts, as approved by the respective Boards of Directors subsequent to each year end. 13 21 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 8 TANGIBLE ASSETS
Land and Buildings Plant & Total Fleet Short Freehold Equipment (Owned) Leasehold & Motor Vehicles L.'000 L.'000 L.'000 L.'000 L.'000 COST At 1 January 1996 125,739 1,040 638 4,014 131,431 Additions 17,817 - - 427 18,244 Disposals (2,536) (9) - (588) (3,133) Exchange adjustment (8,588) (2) - (42) (8,632) ------- ------- ------- ------- ------- At 31 December 1996 132,432 1,029 638 3,811 137,910 ======= ======= ======= ======= ======= ACCUMULATED DEPRECIATION At 1 January 1996 50,406 728 355 2,859 54,348 Depreciation for year 8,472 67 30 742 9,311 Disposals (1,766) (202) - (286) (2,254) Exchange adjustment (3,123) (2) - (20) (3,145) ------- ------- ------- ------- ------- At 31 December 1996 53,989 591 385 3,295 58,260 ======= ======= ======= ======= ======= NET BOOK AMOUNT At 31 December 1996 78,443 438 253 516 79,650 ======= ======= ======= ======= ======= At 31 December 1995 75,333 312 283 1,155 77,083 ======= ======= ======= ======= =======
The cost of Fleet assets includes L.437,000, (1995 : L.437,000) of capitalised interest in relation to new build vessels constructed in 1992 and 1993. 14 22 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
Land and Buildings Plant & Total Fleet Short Freehold Equipment (Owned) Leasehold & Motor Vehicles L.'000 L.'000 L.'000 L.'000 L.'000 COST At 1 January 1995 111,250 983 638 3,860 116,731 Additions 17,708 61 - 704 18,473 Disposals (4,315) - - (553) (4,868) Exchange adjustment 1,096 (4) - 3 1,095 ------- ------- ------- ------- ------- At 31 December 1995 125,739 1,040 638 4,014 131,431 ======= ======= ======= ======= ======= ACCUMULATED DEPRECIATION At 1 January 1995 45,753 486 325 2,461 49,025 Depreciation for year 7,601 245 30 919 8,795 Disposals (3,532) - - (520) (4,052) Exchange adjustment 584 (3) - (1) 580 ------- ------- ------- ------- ------- At 31 December 1995 50,406 728 355 2,859 54,348 ======= ======= ======= ======= ======= NET BOOK AMOUNT At 31 December 1995 75,333 312 283 1,155 77,083 ======= ======= ======= ======= ======= At 31 December 1994 65,497 497 313 1,399 67,706 ======= ======= ======= ======= =======
The cost of Fleet assets includes L.437,000, (1994 : L.437,000) of capitalised interest in relation to new build vessels constructed in 1992 and 1993. 15 23 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
9 INVESTMENTS IN ASSOCIATED UNDERTAKINGS 1996 1995 L.'000 L.'000 At l January 140 78 Share of retained profit (14) 62 Exchange adjustment (43) - ------ ------ At 31 December 83 140 ====== ======
The investments in the associated undertakings are unlisted. Details of associated undertakings are given in Note 16. In the opinion of the Directors, the aggregate value of the investments in associated undertakings is not less than the aggregate of the amounts at which the investments are stated in the balance sheet.
10 STOCKS 1996 1995 L.'000 L.'000 Raw materials and consumables 889 631 ====== ======
11 DEBTORS 1996 1995 L.'000 L.'000 Trade debtors 15,203 14,004 Amounts owed by group undertakings (Note 14) 19,934 17,524 Other debtors 1,354 2,623 Prepayments and accrued income 2,512 2,306 ------ ------ 39,003 36,457 ====== ======
L.224,000 (1995 : L.nil) of other debtors is due in more than one year.
12 CREDITORS : AMOUNTS FALLING DUE WITHIN ONE YEAR 1996 1995 L.'000 L.'000 Bank overdraft 2,806 13 Trade creditors 2,602 2,319 Amounts owed to group undertakings (Note 14) 79,013 77,003 Other creditors 1,909 712 Overseas tax payable 913 773 Other taxation and social security 847 955 Accruals and deferred income 4,702 5,850 Finance debt (Note 13) 1,058 775 ------ ------ 93,850 88,400 ====== ======
Amounts owed to group undertakings include proposed dividends of L.19,435,000 (1995 : L.11,856,000) 16 24 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
13 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1996 1995 L.'000 L.'000 Finance Debt: Wholly repayable within 5 years 3,623 1,416 Not wholly repayable within 5 years 1,752 3,027 ------ ------ 5,375 4,443 ====== ====== Amounts repayable within 5 years 5,217 3,807 Amounts repayable after 5 years 158 636 ------ ------ 5,375 4,443 Included in creditors: amounts falling due within one year (1,058) (775) ------ ------ 4,317 3,668 ====== ======
Finance debt comprises: a) seven fixed term loans secured against specific vessels totalling L.3,349,000 (1995: L.4,443,000) with Ship Mortgage Finance Corporation, with repayment terms in accordance with the loan contracts. Interest is charged at 7.5% of outstanding balances. b) two fixed term third party loans totalling L.2,026,000 (1995 : L.nil), ultimately secured by a guarantee given by Ocean Group, to finance vessels owned by Ocean Fleet Sdn Bhd and Ocean Fleet 2 Sdn Bhd. The Ocean Group guarantee is secured against the underlying vessels. Subsequent to the acquisition of the O.I.L. Group by Tidewater Inc (Note 27) the Ocean Group guarantee has been assumed by Tidewater Inc. The loans carry interest at 0.25% over SIBOR (Singapore Inter-Bank Offer Rate) and are repayable in nineteen equal quarterly instalments.
14 AMOUNTS OWED TO/BY GROUP UNDERTAKINGS 1996 1995 L.'000 L.'000 Amounts owing from group undertakings:- Loan accounts - non interest bearing 19,809 16,798 Trading/other accounts - non interest bearing 125 726 ------ ------ 19,934 17,524 ====== ====== Amounts owed to group undertakings:- Loan accounts - non interest bearing 25,332 28,972 - interest bearing 53,150 46,800 ------ ------ 78,482 75,772 Trading accounts - non interest bearing 531 1,231 ------ ------ 79,013 77,003 ====== ======
The interest bearing loan account carries interest at US Dollar LIBOR plus 0.3% per annum. 17 25 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
15 RECONCILIATION OF MOVEMENTS IN INVESTED EQUITY 1996 1995 L.'000 L.'000 Profit for the financial year 14,090 13,516 Dividends (19,435) (11,856) Exchange differences on retranslation of net assets (68) 78 ------- ------- Net (decrease) / increase in invested equity (5,413) 1,738 Opening invested equity 31,041 29,303 ------- ------- Closing invested equity 25,628 31,041 ======= =======
16 UNDERTAKINGS INCLUDED IN THE COMBINED FINANCIAL STATEMENTS The following undertakings are included in the combined financial statements for each of the three years ended 31 December 1996, except as noted below:
Principal Country of Percentage of Activity registration or ordinary incorporation share capital O.I.L. Limited Marine Services England 100% Direct subsidiaries of OIL Limited: O.I.L. (Nigeria) Ltd. Marine Services Nigeria 60% Fairway Personnel Services Ltd (1995 and Marine Services England 100% 1996) OIL Engineering Ltd Engineering and Scotland 100% related services OTTTO Limited Holding Company England 100% Subsidiaries of other Ocean Group Companies: OSA Marine Services Asia Pte Marine Services Singapore 100% OSA Marine Services GmbH Marine Services Germany 100% Ocean Fleets Sdn Bhd Marine Services Malaysia 49% Ocean Fleets 2 Sdn Bhd Marine Services Malaysia 49% Parktor Shipping NV Flag company Netherlands 100% Antilles VTG Supply Boat Liberia Flag company Liberia 100% Hansa Shipping Inc Flag company Panama 100% Inter Oceanic Nav. Co Flag company Panama 100% OSA do Brasil Agency Services Brazil 40%
Ocean Fleets Snd Bhd and Ocean Fleets 2 Snd Bhd have been consolidated as subsidiaries as the Group exercises dominant influence over their operations and strategy. Further details of transactions with these subsidiaries are given in Note 17. 18 26 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
Principal Country of Percentage of Activity registration or ordinary incorporation share capital Associated undertakings:- Thabet & O.I.L. Ltd Marine Services Yemen 33% Thai OSA Marine Services Thailand 49%
17 RELATED PARTY TRANSACTIONS (a) Group services As a division of Ocean Group, O.I.L. Group received a number of administrative and support services from Ocean Group. These include taxation, treasury, internal audit and company secretarial and are recharged by Ocean Group on the basis of usage. The total amounts included within the profit and loss account of the O.I.L. Group in relation to these costs were 1996 - L.140,000; 1995 - L.150,000; 1994 - L.169,000; Details of treasury services provided are given in Note 18. (b) Provision of payroll services The O.I.L. Group provides payroll services to certain other members of the Ocean Group. These services are charged to these related parties at cost. (c) Malaysian subsidiaries During 1996, O.I.L. Limited sold one vessel to each of Ocean Fleets Sdn Bhd and Ocean Fleets 2 Sdn Bhd at arms length valuations generating a profit of L.768,000 and L.797,000 respectively. This profit has been eliminated on consolidation. Third party loans held by Ocean Fleets Sdn Bhd and Ocean Fleets 2 Sdn Bhd for the purchase of these vessels are guaranteed by Ocean Group. The vessels are chartered back to O.I.L. Limited on bare boat charter at arms length rates. (d) O.I.L. (Nigeria) Limited O.I.L. (Nigeria) Limited, a 60% subsidiary of the O.I.L. Group provides marine and terminal services to O.I.L. Limited in Nigeria. These services are charged at uplifted rates as determined by contract. 19 27 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 18 FOREIGN CURRENCY RISK MANAGEMENT The O.I.L. Group hedges its exposure to currency risk through foreign exchange loans and forward contracts to purchase and sell foreign currencies. Hedging of Foreign currency debtors: During 1994 and 1995, O.I.L. Limited held an external loan of US$14 million to hedge the company's exposure to US dollar denominated trade debtors. Interest was paid on this loan at market rates. Exchange movements recorded in the profit and loss account in relation to this loan were L.520,000 gain in 1994 and L.110,000 loss in 1995. On 29 December 1995, this loan was repaid in full. At that date, this hedge was replaced by notional US dollar forward contracts with Ocean Group, adjusted on a monthly basis to reflect the projected value of US dollar debtors. Within Ocean Group, specific forward contracts were taken out to hedge this US dollar exposure. These combined financial statements reflect the push down of the gain recorded by Ocean Group in relation to forward contracts in 1996 which amounted to L.844,000. Hedging of Foreign currency transactions: During 1994 and 1995, the O.I.L. Group exposure to foreign currency transaction flows was hedged against the exposure to foreign currency transaction flows in other Ocean Group divisions. This hedging was reflected by O.I.L. Group as notional forward contracts taken out with Ocean Group. The notional gains arising from these notional forward contract hedges during 1994 and 1995 of L.815,000 and L.395,000 respectively have not been pushed down into the results of the O.I.L. Group. During 1996, formal forward intergroup contracts were executed between O.I.L. Limited and Ocean Group plc and accounted for within the results of O.I.L. Group, giving rise to a net result of L.nil.
19 CAPITAL COMMITMENTS 1996 1995 L.'000 L.'000 Capital expenditure for which contracts have been placed which is not otherwise provided for in these accounts. 1,159 45 ====== ======
20 CONTINGENT LIABILITIES AND OTHER COMMITMENTS 1996 1995 L.'000 L.'000 (a) Annual commitments under non cancellable operating leases expiring: Within one year 339 147 Between one and five years 92 253 Five years and over 43 43 ------ ------ 474 443 ====== ====== Comprising: Land and buildings 420 420 Other 54 23 ------ ------ 474 443 ====== ======
20 28 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) (b) Guarantees: O.I.L. Limited together with other subsidiary undertakings of Ocean Group plc are guarantors to a revolving credit facility available to Ocean Group plc and nominated subsidiary undertakings. The outstanding joint liability at 31 December 1996 was L.10,000,000 (1995 : L.20,024,000). Subsequent to the acquisition of O.I.L. Group by Tidewater Inc (Note 27), O.I.L. Group is no longer a party to this guarantee. (c) Forward exchange contracts The O.I.L. Group had no outstanding forward exchange contracts at 31 December 1996 or 31 December 1995. 21 PENSION COSTS The Ocean Group participates in the Ocean Nestor Pension Scheme. This scheme is of the defined benefit type providing benefits to certain employees within the Ocean Group. The assets of this scheme are administered by an independent external trustee and are held separately from the Ocean Group's assets. The pension cost of this scheme has been assessed with the advice of an independent qualified actuary using the projected unit method. The last full actuarial valuation of this scheme was carried out as at 31 March 1995. As a result of this valuation, the actuary has been able to recommend the continued suspension of Ocean Group's contributions to this scheme. This payment holiday has been in operation throughout the three years to 31 December 1996. No charge is recorded for this scheme in these combined financial statements. No adjustment has been made to recognise a share of the overall scheme surplus as no ongoing benefit will accrue to O.I.L. Group. Pursuant to the sale agreement, Tidewater is to contribute to the Ocean Nestor Pension Scheme at a rate of 10% of pensionable salary for all contribution members for a period of up to six months from the date of sale. The maximum liability for pension contributions anticipated to be made by Tidewater over this period amounts to L.120,000. Pension costs paid by O.I.L. Group comprise contributions to the Merchant Navy Pension Funds defined contribution schemes. The charge included within the profit and loss account in relation to these schemes was 1996 - L.10,000; 1995 - L.29,000; 1994 - L.171,000.
22 DEFERRED TAXATION Amount Provided Full potential liability 1996 1995 1996 1995 L.'000 L.'000 L.'000 L.'000 Accelerated capital allowances - - 15,026 14,318 Other timing differences - - (517) (940) ------ ------ ------ ------ - - 14,509 13,378 ====== ====== ====== ======
No account has been taken of surplus Advance Corporation Tax ("ACT") held by Ocean Group as this will not be available to the O.I.L. Group on an ongoing basis. Dividends paid by the O.I.L. Group to Ocean Group were paid under a group income election and therefore were not subject to ACT. Capital gains arising on the disposal of vessels have been offset against available capital losses within Ocean Group. No deferred tax liability has been assessed in respect of such gains for which rollover relief might have been claimed on an O.I.L. Group stand alone basis. 21 29 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
23 NET CASH INFLOW FROM OPERATING ACTIVITIES 1996 1995 1994 L.'000 L.'000 L.'000 Profit on ordinary activities before interest and taxation 21,852 19,071 13,749 Depreciation 9,311 8,795 9,968 Profit on sale of vessels (2,523) (3,585) (1,746) Profit on sale of other fixed assets (52) (36) (48) Income from associated undertakings (10) (66) (29) (Increase)/decrease in stocks (258) (225) 175 (Increase)/decrease in debtors 465 (1,577) 2,488 (Decrease)/increase in creditors (560) 1,175 (1,056) ------ ------ ------ Net cash inflow from operating activities 28,225 23,552 23,501 ====== ====== ======
24 RECONCILIATION OF NET CASH FLOW TO 1996 1995 1994 MOVEMENTS IN NET DEBT L.'000 L.'000 L.'000 (Decrease)/increase in cash in the year (7,638) 7,484 (11,014) Cash (inflow)/outflow from (increase)/ decrease in debt (950) 42,860 764 ------ ------ ------- Change in net debt resulting from cash flows (8,588) 50,344 (10,250) Non-cash movements 243 (508) 2,448 ------ ------ ------- Movement in net debt in the year (8,345) 49,836 (7,802) Net debt at start of year 4,373 45,463) (37,661) ------ ------ ------- Net debt at end of year (3,972) 4,373 (45,463) ====== ====== =======
25 ANALYSIS OF NET DEBT
At Other At l Jan non-cash Exchange 31 Dec 1996 Cashflow changes movements 1996 L.'000 L.'000 L.'000 L.'000 L.'000 Net cash and bank balances and overdrafts 8,816 (7,638) - 225 1,403 Finance debts due after more than one year (3,668) (950) 283 18 (4,317) Finance debts due within one year (775) - (283) - (1,058) ------ ------ ------ ------ ------ 4,373 (8,588) - 243 (3,972) ====== ====== ====== ====== ======
22 30 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
At Other At l Jan non-cash Exchange 31 Dec 1995 Cashflow changes movements 1995 L.'000 L.'000 L.'000 L.'000 L.'000 Net cash and bank balances and overdrafts 1,326 7,484 - 6 8,816 Finance debts due after more than one year (37,060) 33,796 - (404) (3,668) Finance debts due within one year (9,729) 9,064 - (110) (775) ------- ------ ------ ------ ------ Total (45,463) 50,344 - (508) 4,373 ======= ====== ====== ====== ======
At Other At l Jan non-cash Exchange 31 Dec 1994 Cashflow changes movements 1994 L.'000 L.'000 L.'000 L.'000 L.'000 Net cash and bank balances and overdrafts 12,266 (11,014) - 74 1,326 Finance debts due after more than one year (39,689) 775 - 1,854 (37,060) Finance debts due within one year (10,238) (11) - 520 (9,729) ------- ------- ------ ------ ------- Total (37,661) (10,250) - 2,448 (45,463) ======= ======= ====== ====== =======
26 INTERCOMPANY TRANSACTIONS The cash flow impact of the movement in intercompany balances excluding hedging loans and trading balances includes movements in relation to UK corporation tax, dividend payments and movements of funds between O.I.L. Group and Ocean Group. Movements in current account balances which arise from trading are included within the reconciliation of net cash inflow from operating activities. 27 SUBSEQUENT EVENT On 20 March 1997 Ocean Group entered into an agreement with Tidewater Inc for the sale of the O.I.L. Group. The sale was completed on 16 May 1997. 23 31 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 28 DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The O.I.L. Group's combined financial statements have been prepared in accordance with generally accepted accounting principles in the United Kingdom ("UK GAAP") which differ in certain respects from generally accepted accounting principles in the United States ("US GAAP"). The material differences as they apply to the Group are summarised below. (a) Deferred taxation Under UK GAAP, deferred taxation is only accounted for to the extent that it is probable that a liability or asset will arise in the foreseeable future. Under US GAAP, deferred taxation is accounted for on all timing differences, and a valuation allowance is established in respect of those deferred taxation assets where it is more likely than not that some portion will not be realised. (b) Dividends Under UK GAAP, dividends proposed are provided for in the year in respect of which they are recommended by the Boards of Directors. Under US GAAP, such dividends are provided for in the period they are declared by the Boards of Directors. (c) Current assets and liabilities Current assets under UK GAAP include amounts which fall due after more than one year. Under US GAAP such assets would be reclassified as non-current assets. (d) Combined statement of cash flows The Group's combined cash flow statement is prepared in accordance with Financial Reporting Standard No 1 (Revised 1996) and presents substantially the same information as that required under US GAAP. However, there are certain differences in classification of items within the cash flow statements and with regard to the definition of cash and cash equivalents between UK and US GAAP. Cash flows from (i) operating activities; (ii) returns on investments and servicing of finance; (iii) taxation; (iv) capital expenditure and financial investment; and (v) financing activities are presented separately under UK GAAP, However, US GAAP only requires presentation of cash flows from three activities; operating, investing and financing. Cash flows from taxation and returns on investments and servicing of finance are, with the exception of dividends paid and interest paid but capitalised, included as operating activities under US GAAP. The payment of dividends is included under financing activities and capitalised interest is included under capital expenditure and financial investment for US GAAP purposes. Cash and cash equivalents under UK GAAP include bank loans and overdrafts repayable within three months from the date of the advance. Under US GAAP all short-term borrowings and overdrafts are included in financing activities. 24 32 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) (e) Stock compensation plans Ocean Group operates a number of stock based compensation plans. Under UK GAAP, O.I.L. Group has not recognised any cost in respect of these plans, since the O.I.L. Group portion of the total Ocean Group costs in relation to these plans is immaterial. Under US GAAP, the application of Accounting Principles Board Opinion No 25 "Accounting for Stock Issued to Employees" results in a charge in respect of O.I.L. Group employees which is immaterial and accordingly has not been included in the reconciliations of net income and invested equity. (f) Effect on net income of differences between UK GAAP and US GAAP
Year to Year to 3l December 31 December 1996 1995 L.'000 L.'000 Profit for the financial year in accordance with UK GAAP 14,090 13,516 US GAAP adjustments: Deferred taxation - full provisioning (1,131) (2,654) ------ ------ Net income in accordance with US GAAP 12,959 10,862 ====== ======
(g) Effect on invested equity of differences between UK GAAP and US GAAP
3l December 31 December 1996 1995 L.'000 L.'000 Invested equity in accordance with UK GAAP 25,628 31,041 US GAAP adjustments: Deferred taxation - Full provisioning (14,509) (13,378) Dividends 19,435 11,856 ------- ------- Invested equity in accordance with US GAAP 30,554 29,519 ======= =======
Changes in US GAAP invested equity for the year 1996 ended 31 December 1996 are as follows: L.'000 Invested equity at l January 29,519 Net income for the period 12,959 Dividends (11,856) Exchange (68) -------- Invested equity at 31 December 30,554 ========
25 33 O.I.L. GROUP NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 29 COMPANIES ACT 1985 These combined financial statements do not constitute "statutory accounts" within the meaning of the Companies Act 1985 for any of the periods presented. Separate single company statutory accounts for each of the individual companies included within O.I.L. Group have been prepared in accordance with local legal requirements. These combined financial statements exclude certain parent company statements and other information required by the Companies Act 1985. However, they include all material disclosures required by generally accepted accounting principles in the United Kingdom including those Companies Act 1985 disclosures relating to the profit and loss account and balance sheet items. 26 34 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.0 Agreement for the Acquisition of the Share Capital of the O.I.L. Group of Companies, dated March 20, 1997, between the Company and Ocean Group plc. [1] 23. Consent of Independent Public Accountants 99.1 Press Release issued May 16, 1997 disclosing completion of the Company's acquisition of the O.I.L. Group of companies.
EX-23 2 CONSENT OF PRICE WATERHOUSE LLP 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos 2-69356 and 33-38240) of Tidewater Inc of our report dated July 17, 1997 on the combined financial statements of O.I.L. Group as of December 31, 1996 and 1995 and each of the three years in the period ended December 31, 1996, included in this Form 8-K/A-1 of Tidewater Inc. Price Waterhouse London, England July 18, 1997 -----END PRIVACY-ENHANCED MESSAGE-----