Tidewater - 10-K annual report

Commission file number 1-6311

(Exact name of registrant as specified in its Charter)

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 the filing requirements for the past 90 days.

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.    x

As of April 15, 2002, the aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $2,239,177,461. Excluded from the calculation of market value are 4,349,454 shares held by the Registrant’s grantor stock ownership trust.

56,231,217 shares of Tidewater Inc. common stock $0.10 par value per share were outstanding on April 15, 2002. Excluded from the calculation of shares outstanding at April 15, 2002 are 4,349,454 shares held by the Registrant’s grantor stock ownership trust. Registrant has no other class of common stock outstanding.

Portions of the Proxy Statement for Registrant’s 2002 Annual Meeting of Stockholders are incorporated into Part III of this report.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that certain statements set forth in Items 1 and 7 and elsewhere in this report, which provide other than historical information and which are forward looking, involve risks and uncertainties that may impact the company’s actual results of operations. The company faces many risks and uncertainties, many of which are beyond the control of the company, including: fluctuations in oil and gas prices; level of fleet additions by competitors; changes in capital spending by customers in the energy industry for exploration, development and production; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; and environmental and labor laws. Other risk factors are discussed elsewhere in this Form 10-K.

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

Tidewater Inc. (the “company”), a Delaware corporation, provides offshore supply vessels and marine support services to the offshore energy industry through the operation of the world’s largest fleet of offshore marine service vessels. The company’s worldwide headquarters and principal executive offices are located at 601 Poydras Street, New Orleans, Louisiana 70130, and its telephone number is (504) 568-1010. The company was incorporated in 1956. Unless otherwise required by the context, the term “company” as used herein refers to Tidewater Inc. and its consolidated subsidiaries.

With a fleet of over 550 vessels, the company operates (either through its consolidated entities or joint-ventures in which it participates), and has a leading market share, in most of the world’s significant oil and gas exploration and production markets and provides services supporting all phases of offshore exploration, development and production, including: towing of and anchor handling of mobile drilling rigs and equipment; transporting supplies and personnel necessary to sustain drilling, workover and production activities; assisting in offshore construction activities; and a variety of specialized services including pipe laying, cable laying and 3-D seismic work.

For the past two fiscal years the company has been engaged in an aggressive deepwater new-build vessel construction and deepwater vessel acquisition program to facilitate the company’s entrance into the deepwater markets of the world. The company has committed $711 million for the purchase and construction of 32 large deepwater vessels of which 19 vessels have been delivered, crewed and signed into contracts of varied terms. The company initiated a fleet replacement program concurrent with its deepwater vessel program and has committed through March 31, 2002, $71 million for the construction of six supply vessels, which are expected to be delivered to the market beginning in October 2002. In order

The company also entered into a crewboat expansion program during fiscal 2002 by acquiring 11 existing crewboats and committing to the construction of 11 additional crewboats of which three were delivered during fiscal 2002. Eighteen of the vessels are large traditional crewboats, with the balance of the program committed to the construction of four, state-of-the-art, fast, crew/supply vessels. The acquisition of these crewboats has allowed the company to meet its customers’ demand for crewboats—a fast-growing segment of the offshore marine service market, and expand the company’s market share in the U.S. Gulf of Mexico. Crewboats typically maintain higher utilization rates and have lower maintenance costs compared to supply vessels. In addition, the crewboat market has fewer competitors as compared to the supply vessel market.

During fiscal 2001, the company sold four vessels to one of its 49%-owned unconsolidated marine joint ventures, Sonatide Marine, Ltd., and sold its 40% holding in another unconsolidated joint venture, National Marine Service. During fiscal 2000 the company acquired six new-build vessels from an industry competitor. The package of vessels included one supply vessel, two offshore tugs and three crewboats.

The company has been financing all of its vessel commitment programs from current cash balances, operating cash flow and its revolving credit facility. At March 31, 2002, the company had 27 vessels under construction with a total capital commitment of $468.3 million, of which the company has already expended $182.5 million. A full discussion of each event including capital commitments and scheduled delivery dates is disclosed in the “Vessel Acquisition and Construction Programs” and “Vessel Dispositions” section of Item 7 and Note 8 of Notes to Consolidated Financial Statements.

The company’s fleet is deployed in the major offshore oil and gas areas of the world. The principal areas of the company’s operations include the U.S. Gulf of Mexico, the North Sea, the Persian Gulf, and areas offshore Australia, Brazil, Egypt, India, Indonesia, Malaysia, Mexico, Trinidad, Venezuela and West Africa. The company conducts its operations through wholly-owned subsidiaries and joint ventures. Information concerning revenues and operating profit derived from domestic and international marine operations and domestic and international marine identifiable assets for each of the fiscal years ended March 31 are summarized below:

Please refer to Item 7 of this report and Note 10 of Notes to Consolidated Financial Statements for further discussion of revenues, operating profit and identifiable assets.

The company’s vessels regularly and routinely move from one operating area to another, often to and from offshore operating areas of different continents. Tables comparing the average size of the company’s marine fleet by class and geographic distribution for the last three fiscal years are included in Item 7 of this report. The company discloses its vessel statistical information, such as utilization and average day rates, by vessel class. Listed below are the company’s five vessel classes along with a description of the type of vessels categorized in each class and the services the respective vessels perform.

Deepwater Vessels.    The company’s newest class of vessel is its deepwater vessel class, which is often categorized as North Sea-type vessels. Included in this class are large platform supply vessels and large, high-horsepower (averaging around 15,000 horsepower) anchor handling towing supply vessels. This vessel class is chartered to customers for use in transporting supplies and equipment from shore bases to deepwater and intermediate offshore drilling rigs, platforms and other installations. Platform supply vessels, characterized with large cargo handling capabilities, serve drilling and production facilities and support offshore construction and maintenance work. The anchor handling towing supply vessels are equipped for and are capable of towing drilling rigs and other marine equipment along with setting anchors for positioning and mooring drilling rigs.

Towing Supply and Supply Vessels.    This is the company’s fleet class that has the largest number of vessels. Included in this class are anchor handling towing supply vessels and supply vessels with average horsepower below 10,000 BHP, and platform supply vessels that are generally less than 220 feet. The respective vessels in this class perform the same functions and services their deepwater vessel class counterparts perform except this class of vessels is chartered to customers for use in the intermediate and shallow water offshore drilling rigs, platforms and other installations.

Crewboats and Utility Vessels.    Crewboats and utility vessels are chartered to customers for use in transporting personnel and small quantities of supplies from shore bases to offshore drilling rigs, platforms and other installations.

Offshore Tugs.    Offshore tugs tow floating drilling rigs; dock tankers; tow barges; assist pipe laying, cable laying and construction barges; and are used in a variety of other commercial towing operations, including towing barges carrying a variety of bulk cargoes and containerized cargo.

Other Vessels.    The company’s vessels also include inshore tugs; inshore barges; offshore barges; and production, line-handling and various other special purpose vessels. Inshore tugs, which are operated principally within inland waters, tow drilling rigs to and from their locations, and tow barges carrying equipment and materials for use principally in inland waters for drilling and production operations. Barges are either used in conjunction with company tugs or are chartered to others.

Revenues from vessel operations were derived from the main classes of vessels. The table below includes the new vessel class category for the deepwater vessel fleet. The deepwater vessel revenues for the prior periods were included in the towing-supply/supply vessel class revenues. Accordingly, the prior fiscal years’ revenue contribution percentages for the towing-supply/supply vessel class have been restated to exclude the revenues of the deepwater vessels for those periods.

Quality Shipyards, LLC, a wholly-owned subsidiary of the company, operates two shipyards in Houma, Louisiana, which construct, modify and repair vessels. While the shipyard performs some work for outside customers, the majority of its business relates to the construction, repair and modification of the company’s vessels. On January 10, 2001, the company awarded Quality Shipyards, LLC four contracts for the construction of four large platform supply vessels, the first of which was delivered to the market during the fourth quarter of fiscal 2002. Also, during the fourth quarter of fiscal 2002, Quality Shipyards was awarded two replacement fleet construction contracts, which call for the construction of two 220-foot next generation supply vessels for a total cost of approximately $22.2 million. Scheduled delivery for the two vessels is expected between April and July 2003.

The operation of any marine vessel involves an inherent risk of catastrophic marine disaster, adverse weather conditions, mechanical failure, collisions, and property losses to the vessel and business interruption due to political action in countries other than the United States. Any such event may result in a reduction in revenues or increased costs. The company’s vessels are insured for their estimated market value 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 the industry.

The terrorist attacks on the United States on September 11, 2001 and the United States-led military response to counter terrorism and the continued threat of terrorist activity and other acts of war or hostility have created uncertainty in the insurance markets and have significantly increased the political, economic and social instability in some of the geographic areas in which the company operates. It is possible that further acts of terrorism may be directed against the United States domestically or abroad and such acts of terrorism could be directed against properties and personnel of U.S.-owned companies such as ours. The attacks and the resulting economic and political uncertainties, including the potential for further terrorist acts, have caused the premiums charged for our insurance coverage to increase, some dramatically. After the events of September 11, 2001 occurred, the company’s insurance underwriters imposed higher premiums for war risk coverage on the company’s vessels. The company currently maintains war risk coverage on its entire fleet. To date, the company has not experienced any property losses as a result of the political, economic and social instability resulting from the terrorist attacks.

Management believes that the company’s insurance coverage is adequate. The company has not experienced a loss in excess of insurance policy limits; however, there is no assurance that the company’s liability coverage will be adequate to cover all potential claims that may arise nor can the company claim that it will be able to maintain adequate insurance in the future at rates considered reasonable especially with the current level of uncertainty in the market resulting from the terrorist attacks on the United States on September 11, 2001.

The company’s international marine vessel operations are subject to the usual risks inherent in doing business in countries other than the United States. Such risks include changing political conditions, possible vessel seizure, company nationalization or other governmental actions, currency restrictions and revaluations, import/export restrictions and terrorist attacks, all of which are beyond the control of the company. Recently, there has been a higher than usual level of anti-Western hostility and protests in the Middle East and Southeast Asia, where the company has substantial operations. Also, Venezuela recently experienced a military coup and then a counter-revolt, and the political outlook and stability in that country remains uncertain. Although it is impossible to predict the effect of any of these developments on the company, the company believes these risks to be within acceptable limits and, in view of the mobile nature of the company’s principal revenue producing assets, does not consider them to constitute a factor materially adverse to the conduct of its international marine vessel operations as a whole.

The company’s operations are materially dependent upon the levels of activity in offshore oil and natural gas exploration, development and production throughout the world. Such activity levels are affected by the trends in worldwide crude oil and natural gas prices that are ultimately influenced by the supply and demand relationship for the natural resources. A discussion of current market conditions appears under “General Market Conditions and Results of Operations” in Item 7 of this report.

The principal competitive factors for the offshore vessel service industry are suitability and availability of equipment, price and quality of service. The company has numerous competitors in virtually all areas in which it operates. Certain customers of the company own and operate vessels to service certain of their offshore activities.

The company’s diverse, mobile asset base and geographic distribution allow it to respond to changes in market conditions and provide a broad range of vessel services to its customers throughout the world. Management believes that the company has a significant competitive advantage because of the size, diversity and geographic distribution of its vessel fleet, the company’s financial condition and economies of scale.

The company’s principal customers are major oil and natural gas exploration, development and production companies, foreign government-owned or controlled organizations and companies that explore and produce oil and natural gas, and companies that provide other services to the offshore energy industry. Although one customer accounted for 10% and the five largest customers accounted for approximately 27% of its revenues during the year ended March 31, 2002, the company does not consider its operations dependent on any single customer.

The company’s vessels are subject to various statutes and regulations governing their operation and maintenance. Under the citizenship provisions of the Merchant Marine Act of 1920 and the Shipping Act, 1916, the company would lose the privilege of engaging in U.S. coastwise trade if more than 25% of the company’s outstanding stock was owned by non-U.S. citizens. The company has a dual stock certificate system to prevent non-U.S. citizens from owning more than 25% of its common stock. In addition, the company’s charter permits the company certain remedies with respect to any transfer or purported transfer of shares of the company’s common stock that would result in the ownership by non-U.S. citizens of more than 24% of its common stock. Based on information supplied to the company by its transfer agent, approximately 3.6% of the company’s outstanding common stock was owned by non-U.S. citizens as of March 31, 2002.

The company’s vessels are subject to various statutes and regulations governing their operation. The laws of the United States provide that once a vessel is registered under a flag other than the United States, it cannot thereafter engage in U.S. coastwise trade. Therefore, the company’s non-U.S. flag vessels must continue to be operated abroad, and if the company was not able to secure charters abroad for them, and work would otherwise have been available for them in the United States, its operations would be adversely affected. Of the total 555 vessels owned or operated by the company at March 31, 2002, 298 were registered under flags other than the United States and 257 were registered under the U.S. flag.

All of the company’s offshore vessels are subject to international safety and classification standards. U.S. flag towing supply and supply vessels are required to undergo periodic inspections and to be recertified under drydock examination at least twice every five years. Vessels registered under flags other than the United States are subject to similar regulations as governed by the laws of the applicable jurisdictions.

The company’s vessel fleet generally has its highest utilization rates in the warmer temperature months when the weather is more favorable for offshore exploration, development and construction work. However,

During the ordinary course of business the company’s operations are subject to a wide variety of environmental laws and regulations. The company attempts to comply in all material respects with these laws and regulations in order to avoid costly accidents and related environmental damage. Compliance with existing governmental regulations that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had, nor is expected to have, a material effect on the company. The company is proactive in establishing policies and operating procedures for safeguarding the environment against any environmentally hazardous material aboard its vessels and at shore base locations. Whenever possible, hazardous materials are maintained or transferred in confined areas to ensure containment if accidents occur. In addition the company has established operating policies that are intended to increase awareness of actions that may harm the environment.

As of March 31, 2002, the company had approximately 6,800 employees worldwide. The company considers relations with its employees to be satisfactory. The company is not a party to any union contract in the United States but through several subsidiaries is a party to union agreements covering local nationals in several countries other than the United States. For the past few years, the company has been the target of a union organizing campaign for the U.S. Gulf of Mexico employees by maritime labor unions. These union efforts are still ongoing; however, activity has recently abated. If the Gulf employees were to unionize, the company’s flexibility in managing industry changes in the domestic market could be adversely affected.

The company operates in a business environment that has many risks. Listed below are some of the most critical risk factors that affect the company and the offshore marine service industry and should be considered when evaluating any forward-looking statement. The effect of any one risk factor or a combination of several risk factors could materially affect the company’s results of operations and financial condition and the accuracy of any forward looking statement made in this Form 10-K.

Oil and Gas Prices Are Highly Volatile.    Commodity prices for crude oil and natural gas are highly volatile. Prices are extremely sensitive to the supply/demand relationship for the respective natural resources. High demand for crude oil and natural gas and/or low inventory levels for the resources as well as any perceptions about future supply interruptions can cause commodity prices for crude oil and natural gas to rise, while generally, low demand for natural resources and/or increases in crude oil and natural gas supplies cause commodity prices for the respective natural resources to decrease.

Factors that affect the supply of crude oil and natural gas include but are not limited to the following: the Organization of Petroleum Exporting Countries’ (OPEC) ability to control crude oil production levels and pricing, as well as, the level of production by non-OPEC countries; political and economic uncertainties; advances in exploration and development technology; worldwide demand for natural resources; and governmental restrictions placed on exploration and production of natural resources.

Changes in the Level of Capital Spending by Our Customers.    The company’s principal customers are major oil and natural gas exploration, development and production companies. The company’s results of operations are highly dependent on the level of capital spending by the energy industry. The energy industry’s level of capital spending is substantially related to the prevailing commodity price of natural gas and crude oil. Low commodity prices have the potential to reduce the amount of crude oil and natural gas that the company’s customers can produce economically. When this market dynamic occurs the company’s customers generally reduce their capital spending budgets for offshore drilling, exploration and development until commodity prices for natural resources increase to levels that can support increases in production and development and sustain growth.

The Offshore Marine Service Industry is Highly Competitive.    The company operates in a highly competitive environment. Competitive factors include price and quality of service by vessel operators and the quality and availability of vessels. Decreases in the level of offshore drilling and development activity by the energy industry can negatively affect the demand for the company’s vessels subsequently applying downward pressure on day rates. Extended periods of low vessel demand and/or low day rates will reduce the company’s revenues. Day rates for marine support vessels also depend on the supply of vessels. Generally, excess marine service capacity puts downward pressure on day rates. Excess capacity can occur when newly constructed vessels enter the market and when vessels are mobilized between market areas. While the company has committed to the construction of several vessels, it has also sold and/or scrapped a significant number of vessels over the last few years. A discussion about the company’s new build and new vessel construction programs appears in Item 7 of this report.

Failure to Attract and Retain Key Management and Technical Personnel.    The company’s success depends upon the continued service of its executive officers and other key management and technical personnel, particularly the company’s area managers and fleet personnel, and our ability to attract, retain, and motivate highly qualified personnel. The loss of the services of a number of the company’s executive officers, area managers, fleet personnel or other key employees, or our ability to recruit replacements for such personnel or to otherwise attract, retain and motivate highly qualified personnel could harm the company. The company currently does not carry key employee life insurance payable to the company with respect to any of its management employees.

Risks Associated with Operating Internationally.    For the fiscal years ended March 31, 2002, 2001 and 2000, 70.2%, 62.6% and 69.3%, respectively, of the company’s total revenues were generated by international operations. The company is vulnerable to the risks associated with operating in foreign countries including political and economic instability, currency fluctuations and revaluations, the ability to recruit and retain management of overseas operations, company nationalization and other government actions, and vessel seizures—all or many of which are beyond the control of the company.

The terrorist attacks on the United States on September 11, 2001 and the United States-led military response to counter terrorism and the continued threat of terrorist activity and other acts of war or hostility have created uncertainty in the financial and insurance markets and may have significantly increased the political, economic and social instability in some of the geographic areas in which the company operates. It is possible that further acts of terrorism may be directed against the United States domestically or abroad and such acts of terrorism could be directed against properties and personnel of U.S.-owned companies such as ours. The attacks and the resulting economic and political uncertainties, including the potential for further terrorist acts, have caused the premiums charged for our insurance coverage to increase, some dramatically. To date, the company has not experienced any property losses or material adverse effects on its results of operations and financial condition as a result of the political, economic and social instability resulting from the terrorist attacks.

In addition to the foregoing general risks associated with its international operations, the company currently bears specific risks associated with its substantial offshore operations in the Middle East, Southeast Asia and Venezuela. Political and social unrest continues to be present throughout many regions of the Middle East and in Indonesia. Much of this turmoil can be traced to regional reaction to the United States military and political response to the terrorist attacks on the United States on September 11, 2001. Although, this reaction has not been as destabilizing as was initially feared, there continues to be a higher than normal level of unrest throughout the region. More recently, the potential for political instability has been exacerbated in the Middle East, including in countries with extensive oil and gas operations, with the escalation of hostilities between Israel and the Palestinians. At this time, it is not possible to assess at what time in the future political and social conditions in this region will return to normal. Although the escalated tensions have not adversely affected the company’s operations in this region, the company, like other American companies engaged in business in the region, could be subject to the interruption of its operations, or other adverse developments, if the situation continues to deteriorate. Also, in early April 2002, Venezuela experienced a military coup of its elected President, which was followed almost immediately by a counter-revolt restoring the elected President to power. The political situation in Venezuela continues to be unstable. To date, the

The company is not a party to any litigation that, in the opinion of management, is likely to have a material adverse effect on the company’s financial position or results of operations.

There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 2002.

There are no family relationships between the directors or executive officers of the company. The company’s officers are elected annually by the Board of Directors and serve for one-year terms or until their successors are elected.

The company’s common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the symbol TDW. At March 31, 2002, there were approximately 1,779 record holders of the company’s common stock, based upon the record holder list maintained by the company’s stock transfer agent. The following table sets forth the high and low closing sale prices of the company’s common stock as reported on the New York Stock Exchange Composite Tape and the amount of cash dividends per share declared on Tidewater common stock for the periods indicated.

The following table sets forth a summary of selected financial data for each of the last five fiscal years. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements of the company included in this report.

The company provides services and equipment to the global offshore energy industry through the operation of a diversified fleet of marine service vessels. Revenues, net earnings and cash flows from operations are dependent upon the activity level of the vessel fleet that is ultimately dependent upon oil and natural gas prices that, in turn, are determined by the supply/demand relationship for oil and natural gas. The following discussion should be read in conjunction with the Selected Financial Data and the Consolidated Financial Statements and related disclosures.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the company notes that certain statements set forth in Item 7 and elsewhere in this report, which provide other than historical information and which are forward looking, involve risks and uncertainties that may impact the company’s actual results of operations. The company faces many risks and uncertainties, many of which are beyond the control of the company, including: fluctuations in oil and gas prices; level of fleet additions by competitors; changes in capital spending by customers in the energy industry for exploration, development and production; unsettled political conditions, civil unrest and governmental actions, especially in higher risk countries of operations; foreign currency fluctuations; and environmental and labor laws. Other risk factors are discussed elsewhere in this Form 10-K.

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

The preparation of financial statements in accordance with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The company evaluates its estimates and assumptions including those related to deferred expenses, bad debts, impairment of long-lived assets, goodwill, income taxes, and contingencies on an ongoing basis based on a combination of historical information and various other assumptions that are considered reasonable under the particular circumstances. Actual results may differ from these estimates under different assumptions.

Management suggests that the company’s Summary of Significant Accounting Policies, as described in Note 1 of the Notes to Consolidated Financial Statements, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. The company believes the critical accounting policies that most impact the company’s consolidated financial statements are described below.

Revenue Recognition. The company earns revenue primarily from the time charter contracts of its vessels based on a rate per day of service basis. The majority of contracts are term contracts whose terms range from three months to two years. The company also provides time charter contracts of its vessels on a “spot” basis. In a term contract, the base rate of hire generally remains constant; however, contracts often include escalating clauses to recover specific costs. A spot contract is a short-term agreement to provide offshore marine services to a customer for a specific short-term job. Spot contract terms generally range from one day to one week. Marine vessel revenues are recognized on a daily basis throughout the contract period.

Receivables. In the normal course of business, the company extends credit to its customers on a short-term basis. The company’s principal customers are major oil and natural gas exploration, development and production companies. Although credit risks associated with our customers are considered minimal, the company routinely reviews its accounts receivable balances and makes adequate provisions for probable doubtful accounts.

The company self-insures potential hull damage and personal injury claims that may arise in the normal course of business. The company is exposed to insurance risk related to the company’s contracts with various insurance entities through the use of reinsurance contracts. The reinsurance recoverable amount can vary depending on the size of a loss. The exact amount of the reinsurance recoverable is not known until all losses are settled. The company estimates the reinsurance recoverable amount it expects to receive and also estimates losses for claims that have occurred but have not been reported. The company also monitors its reinsurance recoverable balances regularly for possible reinsurance exposure and makes adequate provisions for probable doubtful reinsurance receivables. It is the company’s opinion that its accounts and reinsurance receivables have no impairment other than that for which provisions have been made.

Goodwill. At March 31, 2002, the company’s goodwill balance represented 20% of total assets and 26% of stockholders’ equity. Goodwill primarily relates to the fiscal 1998 acquisition of O.I.L., Ltd., a British company. The company elected to adopt, as of April 1, 2001, Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” which establishes a new method of testing goodwill for impairment using a fair value-based approach and does not permit amortization of goodwill as previously required by Accounting Principles Board (APB) Opinion No. 17, “Intangible Assets.” An impairment loss would be recorded if the recorded goodwill amount exceeds its implied fair value. As the company adopted SFAS No. 142 as of April 1, 2001, goodwill amortization was ceased at that time.

The company tests goodwill impairment annually at a reporting unit level, as required, using carrying amounts as of December 31. The company considers its reporting units to be its domestic and international operations. The implied fair value of the reporting unit is determined by discounting the projected future operating cash flows for the remaining average useful life of the assets within the reporting units by the company’s related cost of capital. Impairment is deemed to exist if the implied fair value of the reporting unit is less than recorded goodwill for the reporting unit, and in such case, an impairment loss would be recognized equal to the excess. There are many assumptions and estimates underlying the determination of the implied fair value of each reporting unit, such as, utilization and average day rates for the vessels, vessel additions and attrition, operating expenses and tax rates. Although the company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

The company performed its annual impairment test as of December 31, 2001, and the test determined there was no goodwill impairment. Interim testing will be performed when events occur or circumstances indicate that the carrying amount of goodwill may be impaired. Examples of events or circumstances that might give rise to interim goodwill impairment testing include significant adverse industry or economic changes, unanticipated competition that has the potential to dramatically reduce the company’s earning potential, legal issues, or the loss of key personnel. Goodwill amortization on a pre-tax basis for the year ended March 31, 2002 would have been $9.1 million, or $.11 per share after tax, had the company not adopted SFAS No. 142. For both fiscal years ended March 31, 2001 and 2000, pre-tax goodwill amortization amounted to $9.2 million, or $.11 per share after tax.

For the fiscal years 2001 and 2000, the company amortized goodwill as previously required by APB Opinion No. 17, “Intangible Assets.” For the fiscal years 2001 and 2000, the company had goodwill, net of accumulated amortization, which represented 22% and 24%, respectively, of total assets, and 28% and 30%, respectively, of stockholders’ equity. The goodwill amount was amortized over 40 years. The company considered many factors in assigning such amortization period including the projected future cash flows of the acquired business and the effects of obsolescence, demand, competition and other economic factors that may reduce a useful life. Management periodically evaluated whether subsequent events or circumstances had occurred that indicated the remaining useful life of goodwill may warrant revision or that the remaining goodwill balance may not have been recoverable. If an evaluation were necessary, projected undiscounted future operating cash flows of the net assets acquired would have been compared to the carrying amount in order to determine if impairment existed. If goodwill was considered to be impaired, the impairment that would have been recognized was measured based upon projected discounted future operating cash flows using the company’s average cost of funds for the discount rate. For fiscal 2001 and 2000, management determined that there was no persuasive evidence that any material portion of goodwill dissipated over a shorter period than the amortization period used.

Impairment of Long-Lived Assets. The company reviews long-lived assets for impairment whenever events occur or changes in circumstances indicate that the carrying amount of assets may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by the asset are compared with the amount recorded for the asset to determine if a write-down may be required. The company estimates cash flow based upon historical data adjusted for the company’s best estimate of future market performance that is based on industry trends. If impairment exists, the carrying value of the long-lived asset is reduced to the estimated fair value of the asset, based upon its estimated future discounted cash flows. Although the company believes its assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce a materially different result.

Income Taxes. The company determines its effective tax rate by estimating its permanent differences resulting from differing treatment of items for tax and accounting purposes. The company is periodically audited by taxing authorities in the United States and by the respective tax agencies in the countries in which we operate internationally. The tax audits generally include questions regarding the calculation of taxable income. Audit adjustments affecting permanent differences could have an impact on the company’s effective tax rate.

The carrying value of the company’s net deferred tax assets assumes that the company will be able to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets, based on estimates and assumptions. If these estimates and related assumptions change in the future, the company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in the company’s consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowances quarterly. While the company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Should the company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

On January 10, 2001, the company entered into agreements with three shipyards for the construction of seven large platform supply and five large anchor handling towing supply vessels. All of these vessels are capable of working in most deepwater markets of the world. The total estimated cost for the vessels is approximately $346.1 million, which includes shipyard commitments and other incidental costs such as spare parts, management and supervision, and outfitting costs. The new-build program was initiated in order to better service the needs of the company’s customers in the deepwater markets of the world. Four of the platform supply vessels contracts were awarded to the company’s shipyard, Quality Shipyards, LLC, while the remaining eight vessels are being built at two Far East shipyards. All four platform supply vessels constructed at Quality Shipyards, LLC will be built to full Jones Act compliance.

Eleven of the 12 vessels under contract have not yet been delivered. Quality Shipyards, LLC has completed the construction of one large platform supply vessel for an approximate cost of $28.5 million. The vessel was delivered to the market during the fourth quarter of fiscal 2002. Scheduled delivery for the 11 remaining vessels is expected to begin in July 2002 with final delivery of the last vessel in September 2003.

During fiscal 2002 the company also committed to the construction of two large, North Sea-type platform supply vessels and six 220-foot next generation supply vessels for approximately $105.1 million. One of the large platform supply vessels is being built in Norway and one in Brazil, and both are designed and equipped for deepwater work. The company’s shipyard, Quality Shipyard, LLC, will construct two of the 220-foot platform supply vessels while a different U.S. shipyard will construct the remaining four. The six vessels are intermediate in size and are technically capable of working in certain deepwater markets; however, these vessels are being constructed in order to replace older supply vessels. Scheduled delivery of the eight vessels is expected to commence in July 2002 with final delivery in July 2003. As of March 31, 2002, $19.5 million has been expended on these vessels.

In fiscal 2002 the company took delivery of three large platform supply vessels built in Norway for a total cost of $46.6 million. During the first quarter of fiscal 2002 the company finalized the cash purchase of two anchor handling towing supply vessels for $48 million. The three large platform supply vessels and two anchor handling towing supply vessels are specifically designed and equipped for deepwater work.

During the second quarter of fiscal 2002, the company announced that it was expanding its crewboat fleet. The company purchased 10 existing crewboats and assumed four new-build contracts from Crewboats, Inc., a privately held, leading independent provider of crewboat services in the Gulf of Mexico, for approximately $59.8 million. The scheduled delivery dates for the four crewboats is expected to commence in May 2002 with final delivery in September 2003. No amounts have been expended on the four crewboats of the total $20.1 million commitment, as the individual vessels’ purchase prices are due upon delivery of the respective vessels.

In addition, during the second quarter of fiscal 2002, the company committed $25.5 million to the construction of four, 175-foot, state-of-the-art, fast, crew/supply boats that blend the speed of a crewboat with the capabilities of a supply vessel. The four crewboats are being constructed at a U.S. shipyard and scheduled delivery of the four crewboats is expected to commence in November 2002, with final delivery in October 2003. As of March 31, 2002, $1.6 million has been expended on these vessels. Throughout fiscal 2002 the company constructed and took delivery of four large traditional crewboats that were built at U.S. shipyards for approximately $14.2 million.

The table below summarizes the number of company vessels that have been added to its fleet during fiscal 2002 by vessel class and vessel type:

The table below summarizes the various vessel commitments by vessel class and type as of March 31, 2002:

The company has been financing all the vessel commitment programs from its current cash balances, its operating cash flow and its revolving credit facility. Of the total $468.3 million of capital commitments the company has expended $182.5 million as of March 31, 2002.

On November 21, 2000 the company purchased eight vessels from The Sanko Steamship Co., Ltd. for $160 million in cash. Four of the vessels are large anchor handling towing supply vessels and four are large North Sea-type platform supply vessels. In addition, throughout fiscal 2001, the company purchased three large platform supply vessels for approximately $53.8 million.

During fiscal 2000, the company acquired six new-build vessels, which included one supply vessel, two offshore tugs and three crew boats, for an aggregate cash payment of approximately $22 million from an industry competitor. All six vessels were delivered to the market during fiscal 2000. Also during fiscal 2000, the company purchased two large, platform supply vessels for approximately $22.7 million – both vessels are specifically designed and equipped for deepwater work.

During the second quarter of fiscal 2002 the company sold its 49% holding in its consolidated marine joint venture, Maritide Offshore Oil Services Company S.A.E., for approximately $3.5 million, resulting in a $1.6 million gain. As a result of the sale, the international towing-supply/supply vessel count decreased by five vessels.

During the third quarter of fiscal 2001 the company sold four vessels (two offshore tugs and two crewboats) to one of its 49%-owned unconsolidated joint ventures for $17 million, of which $9 million was financed by the company. The transaction resulted in a gain on asset sale of $1 million. During the second quarter of fiscal 2001 the company sold its 40% holding in its unconsolidated marine joint venture, National Marine Service (NMS), for approximately $31 million, resulting in a $16.8 million gain. The after-tax effect of the gain on the sale was $10.9 million, or $.19 per share. As a result of the sale, the joint venture vessel count decreased by 24 vessels.

In order to avoid potential overcapacity in our markets that could be created through the addition of the new vessels discussed in the “Vessel Acquisition and Construction Programs” section above, the company has sold and/or scrapped 180 vessels between April 1999 and March 2002. The mix of vessels disposed of includes 66 towing-supply/supply vessels, 35 crew/utility vessels, 32 offshore tugs, 27 safety/standby vessels and 20 other vessels, primarily barges. Included in the vessel disposition count are the NMS and Maritide vessels discussed above.

Fiscal 2002 results of operations surpassed those achieved in fiscal 2001 due to strengthened world crude oil commodity prices. Throughout fiscal 2002, OPEC adjusted crude oil production levels and successfully negotiated with several non-OPEC oil producing countries to adjust their respective production levels in order to help stabilize and maintain crude oil commodity prices at levels that would sustain growth. The higher crude oil prices resulted in international offshore drilling, exploration and production companies increasing their capital spending budgets. International vessel demand, which is primarily driven by crude oil production, increased throughout fiscal 2002 as a result of the improved international market conditions and is expected to remain solid during fiscal 2003. Domestic vessel demand, which is primarily driven by natural gas production, declined steadily throughout fiscal 2002 as exploration and production companies operating in the U.S. Gulf of Mexico reduced their capital investments in the Gulf. The high offshore rig fleet utilization rates achieved during fiscal 2001 began to steadily decrease during the second quarter of fiscal 2002 and continued to decrease throughout the remainder of fiscal 2002 on the news that inventory levels for natural gas were increasing as a result of unseasonably moderate weather and economic slowdowns in the United States and globally. It is unknown how much further domestic-based vessel demand will be affected by the downward trend in

International-based vessel revenues increased 32% as compared to fiscal 2001 due to higher average day rates, utilization, and an increase in the number of active vessels in the international-based fleet. The number of active vessels in the international fleet increased as a result of an aggressive deepwater vessel acquisition and construction program that began during fiscal 2001. Seventeen deepwater vessels have been added to the company’s fleet since the beginning of fiscal 2001, seven of which are fulfilling bareboat contractual obligations that existed at the time the vessels were purchased. The bareboat charter agreements on four of the seven vessels will expire at various times over the next two years while the bareboat charter agreements on the remaining three vessels will expire at various times over the next two years with the option to extend certain contracts for another two years. In a bareboat charter agreement, the bareboat charterer leases a vessel for a pre-arranged fee and is able to market the vessel and is also responsible for providing the crew and all other operating costs related to the vessel. For the vessels that Tidewater has under bareboat contracts, only revenue and depreciation expense is recorded related to the vessels’ activity. As Tidewater incurs no operating costs related to the vessels, the related bareboat day rates are less than comparable vessels operating under normal charter hire agreements. For both fiscal years ended March 31, 2002 and 2001 the seven bareboat chartered deepwater vessels experienced 100% utilization and average day rates of $6,150. The international-based deepwater vessel fleet, excluding the bareboat chartered vessels discussed above, experienced approximately 89% utilization and average day rates of approximately $13,300 for the year ended March 31, 2002.

Domestic-based vessel revenues increased slightly as compared to fiscal 2001 as a result of higher average day rates. Average day rates increased due to strong demand for the company’s vessels in the U.S. Gulf of Mexico during the first quarter of fiscal 2002 that continued from fiscal 2001. However, during the second quarter of fiscal 2002, vessel demand began to decrease and continued to decrease throughout the remainder of the fiscal year as offshore drilling and exploration in the U.S. Gulf of Mexico waned. The company was able to achieve solid average day rates throughout fiscal 2002, although it did experience deterioration in vessel utilization throughout fiscal 2002. At March 31, 2002, the towing-supply/supply vessels, the company’s largest major income producing asset in the U.S. Gulf of Mexico, experienced approximately 25% utilization and average day rates of approximately $6,500.

Fiscal 2001 results of operations improved as compared to fiscal 2000 because of a stronger energy sector. Oil and natural gas commodity prices appreciated significantly between calendar year 1999 and the first quarter of 2001. The strong price of oil and natural gas combined with severely tight inventory levels for both crude oil and natural gas increased the demand for working drilling rigs and services in the U.S. Gulf of Mexico and globally. Strong worldwide demand for natural resources prompted the oil and gas exploration and production companies to increase their capital spending budgets in order to take advantage of improving industry conditions. U.S.-based vessel demand increased throughout fiscal 2001 as market conditions and drilling rig utilization rates increased in the U.S. Gulf of Mexico. International drilling expenditures did not increase as significantly as in the U.S. Gulf of Mexico. International drilling activity began increasing in the latter half of calendar year 2000 and continued to increase gradually throughout 2001. Fiscal 2001 witnessed worldwide offshore drilling rig utilization rates increase to levels not seen since the latter part of calendar year 1998.

Fiscal 2001 U.S.-based vessel revenues increased approximately 41% as compared to fiscal 2000 due to higher utilization and average day rates. Improved market conditions and vessel demand in the U.S. Gulf of Mexico helped to increase the average day rates for the U.S.-based towing-supply/supply vessels, the company’s major income producing asset. At March 31, 2001, the towing-supply/supply vessels operating in the U.S. Gulf of Mexico experienced approximately 69% utilization and average day rates of approximately $6,990 per day.

Fiscal 2001 international-based vessel revenues decreased approximately 3% as compared to fiscal 2000 due to a decrease in the number of active vessels in the international-based fleet. International average day rates for the years ended March 31, 2001 and 2000 were basically unchanged. The number of

Fiscal 2000 results of operations reflect the continued impact of the curtailment in capital spending in the oil industry as a result of the drop in oil prices that commenced in the fall of 1997. Although oil prices had increased substantially throughout fiscal 2000, the capital spending levels of oil and gas exploration and production companies continued to be below 1997 levels. The oil industry downturn affected the U.S. Gulf of Mexico vessel market most sharply as the duration of vessel contracts in this region normally range from one to three months. Further depressing the market was the delivery of a number of newly constructed supply vessels to various industry competitors which negatively affected the supply and demand balance for supply vessels in the Gulf of Mexico and some international markets, thereby putting continued downward pressure on vessel utilization and day rates. U.S.-based vessel activity stabilized during the early part of fiscal 2000 and recovered gradually throughout the remainder of fiscal 2000. Fiscal 2000 international activity was not as dramatically affected by the downturn in the oil industry due primarily to the longer-term nature of international vessel contracts. International-based vessel demand, which weakened sharply during the fourth quarter of fiscal 1999 and declined throughout the first and second quarter of fiscal 2000, stabilized during the third quarter of fiscal 2000. At March 31, 2000, the towing-supply/supply vessels operating in the U.S. Gulf of Mexico experienced approximately 54% utilization and average day rates of approximately $3,660 per day. At March 31, 2000, the international-based vessels fleet experienced 76% utilization and average day rates of approximately $4,425 per day.

The company withdraws from active service older, little-used vessels at which time the vessels are removed from the utilization statistics. Vessel utilization rates are a function of vessel days worked and vessel days available for active vessels only. During the second quarter of fiscal 2002, the company withdrew 20 vessels, primarily towing supply/supply vessels, from active service. Eight vessels were withdrawn from active service during fiscal 2001. During fiscal 2000, the company withdrew 49 vessels, the majority of which were withdrawn from service during the latter half of the fiscal year. Thirty-two of the vessels withdrawn from service during fiscal 2000 were towing-supply/supply vessels, 11 were crewboats and six were barges. Vessels that are withdrawn from active service are intended to be sold. The company continues to dispose of its older vessels out of the active fleet and the withdrawn fleet that are not marketable due to obsolescence or are economically prohibitive to operate due to high repair costs.

Offshore service vessels provide a diverse range of services and equipment to the energy industry. Fleet size, utilization and vessel day rates primarily determine the amount of revenues and operating profit because operating costs and depreciation do not change proportionally when revenue changes. Operating costs primarily consist of crew costs, repair and maintenance, insurance, fuel, lube oil and supplies. Fleet size and utilization are the major factors which affect crew costs. The timing and amount of repair and maintenance costs are influenced by customer demands, vessel age and scheduled drydockings to satisfy safety and inspection requirements mandated by regulatory agencies. Whenever possible, vessel drydockings are done during seasonally slow periods to minimize any impact on vessel operations and are only done if economically justified, given the vessel’s age and physical condition. The following table compares revenues and operating expenses (excluding general and administrative expenses and depreciation expense) for the company’s vessel fleet for the years ended March 31. Vessel revenues and operating costs relate to vessels owned and operated by the company, while other marine

Marine operating profit and other components of earnings before income taxes for the years ended March 31 consists of the following:

As a result of the uncertainty of a certain customer to make payment of vessel charter hire, the company has deferred the recognition of approximately $4.9 million of billings as of March 31, 2002, $7.0 million of billings as of March 31, 2001 and $10.7 million of billings as of March 31, 2000 which would otherwise have been recognized as revenue. The company will recognize the amounts as revenue as cash is collected or at such time as the uncertainty has been reduced. The reduction in the balance of deferred billings over the last three fiscal years is a result of increased cash collections and a reduction in the level of operating activity with the customer.

Vessel utilization is determined primarily by market conditions and to a lesser extent by drydocking requirements. Vessel day rates are determined by the demand created through the level of offshore exploration, development and production spending by energy companies relative to the supply of offshore service vessels. Suitability of equipment and the degree of service provided also influence vessel day rates.

The day-based utilization percentages and average day rates tables include a new vessel class category for the deepwater vessel fleet. Included in this class are large platform supply vessels and large, high-horsepowered anchor handling towing supply vessels that are capable of operating in deepwater markets globally. The deepwater vessel fleet statistics for the prior years were included in the towing-supply/supply vessel class statistics. Accordingly, the prior two fiscal years’ towing-supply/supply vessel class statistics have been restated to exclude the effect of the deepwater vessels. The following tables compare day-based utilization percentages and average day rates by vessel class and in total for each of the quarters in the years ended March 31:

The average age of the company’s owned or chartered vessel fleet is approximately 20 years. The following table compares the average number of vessels by class and geographic distribution during the years ended March 31 and the actual March 31, 2002 vessel count:

The above table includes a new vessel class for the deepwater vessel fleet. The prior two fiscal years’ vessel averages for the deepwater vessel fleet were reported with the towing-supply/supply class; and accordingly, the average number of vessels for the towing-supply/supply class has been restated to exclude the effect of the deepwater vessel fleet.

Included in the domestic-based crew/utility vessel count for fiscal 2002 are 10 crewboat vessels purchased in September 2001 from Crewboats, Inc. Three of the four large, traditional crewboats that the company constructed and took delivery of at various times throughout fiscal 2002 are included in the international-based crew/utility vessel count.

During fiscal 2002, the company took delivery of four large platform supply vessels and finalized the purchase of two anchor handling towing supply vessels. During fiscal 2001, the company purchased four anchor handling towing supply vessels and four large platform supply vessels from the Sanko Steamship Co., Ltd. and also purchased an additional three large platform supply vessels.

During the second quarter of fiscal 2002, the company sold its 49% holding in its consolidated marine joint venture, Maritide Offshore Oil Services Company S.A.E. As a result of the sale, the international towing-supply/supply vessel count decreased by five vessels. During the second quarter of fiscal 2002, the company withdrew from active service 20 older, little-used vessels, primarily towing-supply/supply vessels. Nine vessels were withdrawn from the domestic market and 11 were withdrawn from the international market. The company sold and/or scrapped 31 vessels throughout fiscal 2002. The mix of vessels disposed of includes nine towing-supply/supply vessels, four crew/utility vessels, seven offshore tugs and 11 other vessels, primarily barges.

During the second quarter of fiscal 2001, the company sold its 40% holding in its unconsolidated marine joint venture, National Marine Service. As a result of the sale, the joint venture vessel count decreased by 24 vessels. During the third quarter of fiscal 2001, the company sold four vessels (two offshore tugs and two crew boats) to its 40%-owned unconsolidated joint venture, Sonatide Marine, Ltd. The company withdrew from active service eight vessels during fiscal 2001. In addition, the company sold and/or scrapped 37 vessels throughout fiscal 2001. The mix of vessels disposed of includes 14 towing-supply/supply vessels, 16 crew/utility vessels, three offshore tugs and four other vessels, primarily barges.

During fiscal 2000, the company withdrew from active service, 49 older, little-used vessels. Sixteen of the vessels were withdrawn from the domestic-based fleet and 33 were withdrawn from the international-based fleet. The company sold and/or scrapped 83 vessels throughout fiscal 2000. The mix of vessels disposed of includes 20 towing-supply/supply vessels, 11 crew/utility vessels, 20 offshore tugs, 27 safety/standby vessels and five other vessels, primarily barges.

Consolidated general and administrative expenses for the years ended March 31 consists of the following components:

General and administrative expenses for fiscal 2002 increased 2% as compared to fiscal 2001 due to an improving business environment in the international market. Fiscal 2001 general and administrative costs were comparable to fiscal 2000.

The company’s current ratio, level of working capital and amount of cash flows from operations for any year are directly related to fleet activity and vessel day rates. Variations from year-to-year in these items are primarily the result of market conditions. As a result of recent vessel purchases and vessel construction programs, the company’s cash balances at March 31, 2002 are considerably less than at recent fiscal year ends. Cash from operations, in combination with an available line of credit, provide the company, in management’s opinion, with adequate resources to satisfy its current financing requirements. At March 31, 2002, $146 million of the company’s $200 million revolving line of credit was available for future financing needs. Continued payment of dividends, currently at $.15 per quarter per common share, is subject to declaration by the Board of Directors.

Net cash provided by operating activities for any fiscal year will fluctuate according to the level of business activity for the applicable year. Fiscal year 2002 net cash provided by operating activities was higher than the previous fiscal year due to higher net earnings as a result of increased business activity in the international market.

Investing activities for fiscal 2002 used approximately $300.2 million of cash. Proceeds from the sale of assets totaling $17.5 million decreased as compared to fiscal 2001 due to fewer vessels sales. Sale proceeds were offset by additions to properties and equipment totaling $317.9 million which was comprised of approximately $17.2 million in capitalized repairs and maintenance and $300.7 million for the construction of offshore marine vessels and the acquisition of two deepwater anchor handling towing supply vessels and 11 large crewboats. Additions to properties and equipment were higher in fiscal 2002 as compared to fiscal 2001 primarily because of the continuation in capital spending for various vessel construction programs and due to the purchase of several crewboat vessels as disclosed in the “Vessel Acquisition and Construction Programs” section of Item 7.

Investing activities for fiscal 2001 used approximately $258.9 million of cash. Proceeds from the sale of assets totaling $46.6 million decreased as compared to fiscal 2000 primarily due to fewer vessels being sold. Included in fiscal 2001 proceeds on the sale of assets is approximately $31 million from the sale of the company’s 40% interest in its unconsolidated marine joint venture company, National Marine Service, and $15.6 million from the sale and/or scrapping of 37 vessels during the year. Sale proceeds were offset by additions to properties and equipment totaling $302.8 million which was comprised of approximately $13.6 million of capitalized repairs and maintenance and $286.4 million for the construction of offshore marine vessels and the acquisition of 11 vessels. Additions to properties and equipment were

Investing activities for fiscal 2000 provided cash of approximately $14.4 million. Proceeds from the sale of assets totaling $71.6 million, primarily the safety/standby vessels, which were sold in July 1999 for approximately $40 million in an all cash transaction. Additions to properties and equipment in fiscal 2000 totaled $57.4 million of which $7.6 million related to capitalized repairs and maintenance and $47.3 million for the construction of vessels. The new construction includes approximately $22 million for the purchase of six new-build vessels from an industry competitor.

Fiscal 2002 financing activities provided $23.0 million of cash. The company had $74 million of debt borrowings to help finance the company’s various vessel construction programs and vessel acquisitions. Twenty million of this debt has been repaid during the fiscal year. The company also used $33.7 million of cash for the payment of quarterly common stock dividends. Fiscal 2001 financing activities used $23.8 million of cash primarily for payment of quarterly common stock dividends. Fiscal 2000 financing activities used $33.4 million of cash for payment of quarterly common stock dividends.

The company is capitalizing the interest costs incurred on borrowed funds used to construct vessels. Interest and debt costs incurred, net of $1 million interest capitalized, for fiscal 2002 was approximately $.8 million. Interest and debt costs for fiscal 2001 and 2000 was approximately $1.2 million and $.7 million, respectively.

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for Asset Retirement Obligations” which requires companies to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The company does not anticipate any financial statement impact with the adoption of this statement.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets to Be Disposed Of” and the accounting and reporting provisions of APB Opinion No. 30. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The company does not anticipate any financial statement impact with the adoption of this statement.

Day-to-day operating costs are generally affected by inflation. However, because the energy services industry requires specialized goods and services, general economic inflationary trends may not affect the company’s operating costs. The major impact on operating costs is the level of offshore exploration, development and production spending by energy exploration and production companies. As the spending increases, prices of goods and services used by the energy industry and the energy services industry will increase. Future increases in vessel day rates may shield the company from the inflationary effects on operating costs.

During the ordinary course of business the company’s operations are subject to a wide variety of environmental laws and regulations. The company attempts to comply with these laws and regulations in order to avoid costly accidents and related environmental damage. Compliance with existing governmental regulations that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had, nor is expected to have, a material effect

Market risk refers to the potential losses arising from changes in interest rates, foreign currency fluctuations and exchange rates, equity prices and commodity prices including the correlation among these factors and their volatility. The company is primarily exposed to interest rate risk and foreign currency fluctuations and exchange risk.            

Interest Rate Risk.    Changes in interest rates may result in changes in the fair market value of the company’s financial instruments, interest income and interest expense. The company’s financial instruments that are exposed to interest rate risk are its cash equivalents and long-term borrowings. Due to the short duration and conservative nature of the cash equivalent investment portfolio, the company does not expect any material loss with respect to its investments. The book value for cash equivalents is considered to be representative of its fair value.

At March 31, 2002 the company had $54 million of debt outstanding. The outstanding debt represents unsecured borrowings from the company’s revolving credit facility. The fair value of this debt approximates the carrying value because the borrowings bear interest at variable market rates, which currently range from 2.44 to 2.85 percent. Monies were borrowed under the revolving credit facility to finance the company’s new-build program previously disclosed. Interest expense associated with the borrowings is being capitalized.

Foreign Exchange Risk.    The company’s financial instruments that can be affected by foreign currency fluctuations and exchange risks consist primarily of cash and cash equivalents, trade receivables and trade payables denominated in currencies other than the U.S. dollar. The company periodically enters into spot and forward derivative financial instruments as a hedge against foreign currency denominated assets and liabilities and currency commitments.

Spot derivative financial instruments are short-term in nature and settle within two business days. The fair value approximates the carrying value due to the short-term nature of this instrument, and as a result, no gains or losses are recognized. Forward derivative financial instruments are generally longer-term in nature but generally do not exceed one year. The accounting for gains or losses on forward contracts is dependant on the nature of the risk being hedged and the effectiveness of the hedge. The company enters into derivative instruments only to the extent considered necessary to meet its risk management objectives and does not use derivative contracts for speculative purposes.

The company had no spot contracts outstanding at March 31, 2002, 2001 and 2000. The company is exposed to possible currency fluctuations related to its commitment to construct three of its new-build platform supply vessels at a Singapore shipyard. The company is required, per the construction agreements, to make all payments in Singapore dollars and is currently exposed to possible currency fluctuations on the remaining commitment which totals a current U.S. dollar equivalent of approximately $12.9 million. At March 31, 2002 the company had five forward currency derivative contracts outstanding totaling $11.5 million that hedged the company’s foreign exchange exposure relating to the Singapore shipyard commitments, which qualified as a foreign currency hedge instrument. At March 31, 2001 the company had one forward contract outstanding totaling $11 million that qualified as a hedge instrument. The company had no outstanding derivative financial instruments at March 31, 2000. For full disclosure on the company’s derivative financial instruments see Note 9 of the Notes to the Consolidated Financial Statements.

Because of its significant international operations, the company is exposed to currency fluctuations and exchange risk on all contracts in foreign currencies. The company does not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of

The information required by this Item is included in Part IV of this report.

None

Information concerning directors of the company is incorporated by reference from the company’s definitive proxy statement to be filed on or before July 25, 2002. For information regarding executive officers of the company, see Item 4A of this report.

Information concerning executive compensation is incorporated by reference from the proxy statement described in Item 10 of this report.

Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the proxy statement described in Item 10 of this report.

The following table provides information as of March 31, 2002 about equity compensation plans of the company under which shares of common stock of the company are authorized for issuance:

Information concerning certain relationships and related transactions is incorporated by reference from the proxy statement described in Item 10 of this report.

The Consolidated Financial Statements and Schedule of the company listed on the accompanying Index to Financial Statements and Schedule (see page F-1) are filed as part of this report.

The company’s report on Form 8-K dated March 28, 2002 reports that William C. O’Malley, the company’s Chairman, President and Chief Executive Officer, retired as Chief Executive Officer of the company and that Dean E. Taylor was named the new Chief Executive Officer. Mr. Taylor has served as President of Tidewater and a member of its Board of Directors since October 2001.

The index below describes each exhibit filed as a part of this report. Exhibits not incorporated by reference to a prior filing are designated by an asterisk; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1933, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 25, 2002.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on April 25, 2002.