(6)

EMPLOYEE RETIREMENT PLANS

U.S. Defined Benefit Pension Plan

The company has a defined benefit pension plan (pension plan) that covers certain U.S. citizen employees and other employees who are permanent residents of the United States. Benefits are based on years of service and employee compensation. In December 2009, the Board of Directors amended the pension plan to discontinue the accrual of benefits once the plan was frozen on December 31, 2010. On that date, previously accrued pension benefits under the pension plan were frozen for the approximately 60 active employees who participated in the plan. As of March 31, 2015, approximately 45 employees are covered by this plan. This change did not affect benefits earned by participants prior to January 1, 2011. Active employees who previously accrued benefits under the pension plan continue to accrue benefits as participants in the company’s defined contribution retirement plan effective January 1, 2011. The transfer of employee benefits from a defined benefit pension plan to a defined contribution plan have provided the company with more predictable retirement plan costs and cash flows. The company’s future benefit obligations and requirements for cash contributions for the frozen pension plan have also been reduced. Losses associated with the curtailment of the pension plan were immaterial. No amounts were contributed to the defined benefit pension plan during fiscal 2015 and 2014. Management is working with its actuary to determine if a contribution will be necessary during fiscal 2016.

Supplemental Executive Retirement Plan

The company also offers a non-contributory, defined benefit supplemental executive retirement plan (supplemental plan) that provides pension benefits to certain employees in excess of those allowed under the company’s tax-qualified pension plan. A Rabbi Trust has been established for the benefit of participants in the supplemental plan. The Rabbi Trust assets, which are invested in a variety of marketable securities (but not Tidewater stock) are recorded at fair value with unrealized gains or losses included in other comprehensive income. Effective March 4, 2010, the supplemental plan was closed to new participation. The supplemental plan is a non-qualified plan and, as such, the company is not required to make contributions to the supplemental plan. The company did not contribute to the supplemental plan during fiscal 2015 and 2014. Management has not made any decision on funding the plan during fiscal 2016.

As a result of the May 31, 2012 retirement of Dean E. Taylor, former President and Chief Executive Officer of Tidewater Inc., Mr. Taylor received in December 2012 a $13 million lump sum distribution in full settlement and discharge of his supplemental executive retirement plan benefit. A settlement loss of $5.2 million related to this distribution was recorded in general and administrative expenses during the quarter ended December 31, 2012. The settlement loss is the result of the recognition of previously unrecognized actuarial losses that were being amortized over time from accumulated other comprehensive income to pension expense. As a result of the December 2012 lump sum distribution, a portion of the previously unrecognized actuarial losses was required to be recognized in earnings in the current quarter in accordance with ASC 715.

Investments held in a Rabbi Trust in the supplemental plan are included in other assets at fair value. The following table summarizes the carrying value of the trust assets, including unrealized gains or losses at March 31:


(In thousands)	2015		2014
Investments held in Rabbi Trust	$	9,915		10,285
Unrealized (loss) gains in carrying value of trust assets		235		92
Unrealized (loss) gains in carrying value of trust assets are net of income tax expense of		126		49
Obligations under the supplemental plan		25,510		21,918

The unrealized gains or losses in the carrying value of the trust assets, net of income tax expense, are included in accumulated other comprehensive income (other stockholders’ equity). To the extent that trust assets are liquidated to fund benefit payments, gains or losses, if any, will be recognized at that time. The company’s obligations under the supplemental plan are included in ‘accrued expenses’ and ‘other liabilities and deferred credits’ on the consolidated balance sheet.

Postretirement Benefit Plan

Qualified retired employees currently are covered by a program which provides limited health care and life insurance benefits. Costs of the program are based on actuarially determined amounts and are accrued over the period from the date of hire to the full eligibility date of employees who are expected to qualify for these benefits. This plan is funded through payments as benefits are required.

Investment Strategies

Pension Plan

The obligations of our pension plan are supported by assets held in a trust for the payment of future benefits. The company is obligated to adequately fund the trust. For the pension plan assets, the company has the following primary investment objectives: (1) closely match the cash flows from the plan’s investments from interest payments and maturities with the payment obligations from the plan’s liabilities; (2) closely match the duration of plan assets with the duration of plan liabilities and (3) enhance the plan’s investment returns without taking on undue risk by industries, maturities or geographies of the underlying investment holdings.

If the plan assets are less than the plan liabilities, the pension plan assets will be invested exclusively in fixed income debt securities. Any investments in corporate bonds shall be at least investment grade, while mortgage and asset-backed securities must be rated “A” or better. If an investment is placed on credit watch, or is downgraded to a level below the investment grade, the holding will be liquidated, even at a loss, in a reasonable time period. The plan will only hold investments in equity securities if the plan assets exceed the estimated plan liabilities.

The cash flow requirements of the pension plan will be analyzed at least annually. Portfolio repositioning will be required when material changes to the plan liabilities are identified and when opportunities arise to better match cash flows with the known liabilities. Additionally, trades will occur when opportunities arise to improve the yield-to-maturity or credit quality of the portfolio.

The company’s policy for the pension plan is to contribute no less than the minimum required contribution by law and no more than the maximum deductible amount. The plan does not invest in Tidewater stock.

Supplemental Plan

The investment policy of the supplemental plan is to assess the historical returns and risk associated with alternative investment strategies to achieve an expected rate of return on plan assets. The objectives of the plan are designed to maximize total returns within prudent parameters of risk for a retirement plan of this type. The below table summarizes the supplemental plan’s minimum and maximum rate of return objectives for plan assets:


	Minimum Expected Rate of Return on Plan Assets	Maximum Expected Rate of Return on Plan Assets
Equity securities	5%	7%
Debt securities	1%	3%
Cash and cash equivalents	0%	1%

Whereas fluctuating rates of return are characteristic of the securities markets, the investment objective of the supplemental plan is to achieve investment returns sufficient to meet the actuarial assumptions. This is defined as an investment return greater than the current actuarial discount rate assumption of 4.00%, which is subject to annual upward or downward revisions.

The below table summarizes the supplemental plan’s minimum and maximum market value objectives for plan assets, which are based upon a five to ten year investment horizon:


	Minimum Market Value Objective for Plan Assets	Maximum Market Value Objective for Plan Assets
Equity securities	55%	75%
Debt securities	25%	45%
Percentage of debt securities allowed in below investment grade bonds	0%	20%
Cash and cash equivalents	0%	10%

Equity holdings shall be restricted to issues of corporations that are actively traded on the major U.S. exchanges and NASDAQ. Debt security investments may include all securities issued by the U.S. Treasury or other federal agencies and investment grade corporate bonds. When a particular asset class exceeds its minimum or maximum allocation ranges, rebalancing will be addressed upon review of the quarterly performance reports and as cash contributions and withdrawals are made.

Pension and Supplemental Plan Asset Allocations

The following table provides the target and actual asset allocations for the pension plan and the supplemental plan:


	Target			Actual as of 2015			Actual as of 2014
Pension plan:
Equity securities		—			—			—
Debt securities		100	%		95	%		96	%
Cash and other		—			5	%		4	%
Total		100	%		100	%		100	%

Supplemental plan:
Equity securities		65	%		58	%		60	%
Debt securities		35	%		39	%		37	%
Cash and other		—			3	%		3	%
Total		100	%		100	%		100	%

Significant Concentration Risks

The pension plan and the supplemental plan assets are periodically evaluated for concentration risks. As of March 31, 2015, the company did not have any individual asset investments that comprised 10% or more of each plan’s overall assets.

The pension plan assets are primarily invested in debt securities with no more than the greater of 5% of the fixed income portfolio or $2.5 million being invested in the securities of a single issuer, except investments in U.S. Treasury and other federal agency obligations. In the event that plan assets exceed the estimated plan liabilities for the pension plan, up to two times the difference between the plan assets and plan liabilities may be invested in equity securities, and so long as equities do not exceed 15% of the market value of the assets. The investment policy sets forth that the maximum single investment of the equity portfolio is 5% of the portfolio market value. Further, investments in foreign securities are restricted to American Depository Receipts (ADR) and stocks listed on the U.S. stock exchanges and may not exceed 10% of the equity portfolio.

The current diversification policy for the supplemental plan sets forth that equity securities in any single industry sector shall not exceed 25% of the equity portfolio market value and shall not exceed 10% market value of the equity portfolio for equity holdings in any single corporation. Additionally, debt securities should be diversified between issuers within each sector with no one issuer comprising more than 10% of the aggregate fixed income portfolio, excluding issues of the U.S. Treasury or other federal agencies.

Fair Value of Pension Plan and Supplemental Plan Assets

The fair value hierarchy for the pension plan and supplemental plan assets measured at fair value as of March 31, 2015, are as follows:


(In thousands)	Fair Value			Quoted prices in active markets (Level 1)			Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Pension plan measured at fair value:
Debt securities:
Government securities	$	3,116			3,116			—		—
Collateralized mortgage securities		400			—			400		—
Corporate debt securities		51,758			—			51,758		—
Foreign debt securities		1,529			—			1,529		—
Cash and cash equivalents		1,816			—			1,816		—
Total	$	58,619			3,116			55,503		—
Accrued income		866			866			—		—
Total fair value of plan assets	$	59,485			3,982			55,503		—

Supplemental plan measured at fair value:
Equity securities:
Common stock	$	3,859			3,859			—		—
Preferred stock		—			—			—		—
Foreign stock		201			201			—		—
American depository receipts		1,685			1,685			—		—
Preferred American depository receipts		15			15			—		—
Real estate investment trusts		59			59			—		—
Debt securities:
Government debt securities		1,926			1,377			549		—
Open ended mutual funds		1,916			1,916			—		—
Cash and cash equivalents		377			72			305		—
Total	$	10,038			9,184			854		—
Other pending transactions		(123	)		(123	)		—		—
Total fair value of plan assets	$	9,915			9,061			854		—

The following table provides the fair value hierarchy for the pension plan and supplemental plan assets measured at fair value as of March 31, 2014:


(In thousands)	Fair Value			Quoted prices in active markets (Level 1)			Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Pension plan measured at fair value:
Debt securities:
Government securities	$	2,935			2,935			—		—
Corporate debt securities		50,113			—			50,113		—
Foreign debt securities		1,443			—			1,443		—
Cash and cash equivalents		1,511			—			1,511		—
Total	$	56,002			2,935			53,067		—
Accrued income		894			894			—		—
Total fair value of plan assets	$	56,896			3,829			53,067		—

Supplemental plan measured at fair value:
Equity securities:
Common stock	$	4,141			4,141			—		—
Preferred stock		—			—			—		—
Foreign stock		231			231			—		—
American depository receipts		1,809			1,809			—		—
Preferred American depository receipts		15			15			—		—
Real estate investment trusts		38			38			—		—
Debt securities:
Government debt securities		1,975			1,363			612		—
Open ended mutual funds		1,797			1,797			—		—
Cash and cash equivalents		369			57			312		—
Total	$	10,375			9,451			924		—
Other pending transactions		(90	)		(90	)		—		—
Total fair value of plan assets	$	10,285			9,361			924		—

Plan Assets and Obligations

Changes in plan assets and obligations during the years ended March 31, 2015 and 2014 and the funded status of the U.S. defined benefit pension plan and the supplemental plan (referred to collectively as “Pension Benefits”) and the postretirement health care and life insurance plan (referred to as “Other Benefits”) at March 31, are as follows:


	Pension Benefits						Other Benefits
(In thousands)	2015			2014			2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	84,067			88,238			24,114			29,006
Service cost		825			790			273			405
Interest cost		3,873			3,581			904			1,048
Participant contributions		—			—			430			436
ERRP reimbursement		—			—			—			(26	)
Plan settlement		—			—			—			—
Benefits paid		(4,405	)		(4,250	)		(863	)		(962	)
Actuarial (gain) loss		11,948			(4,292	)		(932	)		(5,793	)
Benefit obligation at end of year		96,308			84,067			23,926			24,114

Change in plan assets:
Fair value of plan assets at beginning of year	$	56,896			59,431			—			—
Actual return		6,069			776			—			—
Employer contributions		925			939			433			552
Participant contributions		—			—			430			436
ERRP reimbursement		—			—			—			(26	)
Plan settlement		—			—			—			—
Benefits paid		(4,405	)		(4,250	)		(863	)		(962	)
Fair value of plan assets at end of year		59,485			56,896			—			—


Reconciliation of funded status:
Fair value of plan assets	$	59,485			56,896			—			—
Benefit obligation		96,308			84,067			23,926			24,114
Unfunded status	$	(36,823	)		(27,171	)		(23,926	)		(24,114	)


Net amount recognized in the balance sheet consists of:
Current liabilities	$	(1,306	)		(1,162	)		(908	)		(1,129	)
Noncurrent liabilities		(35,517	)		(26,009	)		(23,018	)		(22,985	)
Net amount recognized	$	(36,823	)		(27,171	)		(23,926	)		(24,114	)

The following table provides the projected benefit obligation and accumulated benefit obligation for the pension plans:


(In thousands)	2015		2014
Projected benefit obligation	$	96,308		84,067
Accumulated benefit obligation		92,808		81,223

The following table provides information for pension plans with an accumulated benefit obligation in excess of plan assets (includes both the pension plan and supplemental plan):


(In thousands)	2015		2014
Projected benefit obligation	$	96,308		84,067
Accumulated benefit obligation		92,808		81,223
Fair value of plan assets		59,485		56,896

Net periodic benefit cost for the pension plan and the supplemental plan for the fiscal years ended March 31 include the following components:


(In thousands)	2015			2014			2013
Service cost	$	825			790			983
Interest cost		3,873			3,581			4,098
Expected return on plan assets		(2,741	)		(2,871	)		(2,748	)
Amortization of prior service cost		50			50			50
Recognized actuarial loss		988			1,103			1,648
Settlement loss		—			—			5,161
Net periodic pension cost	$	2,995			2,653			9,192

Net periodic benefit cost for the postretirement health care and life insurance plan for the fiscal years ended March 31 include the following components:


(In thousands)	2015			2014			2013
Service cost	$	273			405			475
Interest cost		904			1,048			1,235
Amortization of prior service cost		(2,032	)		(2,032	)		(2,032	)
Recognized actuarial loss		(1,299	)		(396	)		—
Net periodic postretirement benefit	$	(2,154	)		(975	)		(322	)

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the fiscal years ended March 31 include the following components:


	Pension Benefits						Other Benefits
(In thousands)	2015			2014			2015			2014
Change in benefit obligation
Net loss (gain)		$ 8,621			(2,196	)		(932	)		(5,793	)
Settlement loss		—			—			—			—
Amortization of prior service cost		(50	)		(50	)		2,032			2,032
Amortization of net (loss) gain		(988	)		(1,103	)		1,299			395
Other		—			—			—			197
Total recognized in other comprehensive income (loss)		$ 7,583			(3,349	)		2,399			(3,169	)
Net of tax		7,583			(2,177	)		1,559			(2,060	)

Amounts recognized as a component of accumulated other comprehensive (income) loss as of March 31, 2015 are as follows:


(In thousands)	Pension Benefits		Other Benefits
Unrecognized actuarial (gain) loss		$ 21,781		(6,620	)
Unrecognized prior service cost (benefit)		36		(4,588	)
Pre-tax amount included in accumulated other comprehensive loss (income)		$ 21,817		(11,208	)

The company expects to recognize the following amounts as a component of net periodic benefit costs during the next fiscal year:


(In thousands)	Pension Benefits		Other Benefits
Unrecognized actuarial loss		$ (2,213)		582
Unrecognized prior service cost (benefit)		(36)		2,041

Assumptions used to determine net benefit obligations for the fiscal years ended March 31, are as follows:


	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Discount rate		4.00%		4.75%		4.00%		4.75%
Rates of annual increase in compensation levels		3.00%		3.00%		N/A		N/A

Assumptions used to determine net periodic benefit costs for the fiscal years ended March 31, are as follows:


	Pension Benefits						Other Benefits
	2015		2014		2013		2015		2014		2013
Discount rate		4.75%		4.25%		4.75%		4.75%		4.25%		4.75%
Expected long-term rate of return on assets		5.00%		5.00%		5.00%		N/A		N/A		N/A
Rates of annual increase in compensation levels		3.00%		3.00%		3.00%		N/A		N/A		N/A

To develop the expected long-term rate of return on assets assumption, the company considered the current level of expected returns on various asset classes. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected return on plan assets assumption for the portfolio.

Based upon the assumptions used to measure the company’s qualified pension and postretirement benefit obligations at March 31, 2015, including pension and postretirement benefits attributable to estimated future employee service, the company expects that benefits to be paid over the next ten years will be as follows:


	(In thousands)
Year ending March 31,	Pension Benefits		Other Benefits
2016		$ 5,578		908
2017		5,818		982
2018		6,077		1,046
2019		6,343		1,128
2020		7,419		1,187
2021 – 2025		33,918		6,501
Total 10-year estimated future benefit payments		$ 65,153		11,752

Health Care Cost Trends

The following table discloses the assumed health care cost trends used in measuring the accumulated postretirement benefit obligation and net periodic postretirement benefit cost at March 31, 2015 for pre-65 medical and prescription drug coverage and for post-65 medical coverage, including expected future trend rates.


	Pre-65			Post-65
Year ending March 31, 2015
Accumulated postretirement benefit obligation		7.9	%		6.9	%
Net periodic postretirement benefit obligation		8.2	%		6.9	%
Ultimate health care cost trend		4.5	%		4.5	%
Ultimate year health care cost trend rate is achieved		2029			2029
Year ending March 31, 2016
Net periodic postretirement benefit obligation		7.9	%		6.9	%

A one-percentage rate increase (decrease) in the assumed health care cost trend rates has the following effects on the accumulated postretirement benefit obligation as of March 31:


(In thousands)	1% Increase		1% Decrease
Accumulated postretirement benefit obligation	$	3,702		2,978
Aggregate service and interest cost		170		138

Defined Contribution Plans

Prior to February 2013, the company maintained the below two defined contribution plans. The plans were merged in February 2013 to provide administrative efficiencies, potential savings on service provider fees and to simplify the participant experience. Following the merger, the provisions of the two plans remained substantially similar with the exception of cost neutral changes that were approved to simplify the administration of the combined plan.

Retirement Contributions

All eligible U.S. fleet personnel, along with all new eligible employees of the company hired after December 31, 1995 are eligible to receive retirement contributions. Effective January 1, 2011, the active employees who participated in the now frozen defined benefit pension plan also became eligible for retirement contributions. This benefit is noncontributory by the employee, but the company contributes, in cash, 3% of an eligible employee’s compensation to a trust on behalf of the employees. The active employees who participated in the now frozen defined benefit pension plan may receive an additional 1% to 8% depending on age and years of service. Company contributions vest over five years.

401(k) Savings Contribution

Upon meeting various citizenship, age and service requirements, employees are eligible to participate in a defined contribution savings plan and can contribute from 2% to 75% of their base salary to an employee benefit trust. The company matches with company common stock 50% of the first 8% of eligible compensation deferred by the employee. Company contributions vest over five years.

The plan held the following number of shares of Tidewater common stock as of March 31:


	2015		2014
Number of shares of Tidewater common stock held by 401(k) plan		299,256		273,662

The amounts charged to expense related to the above defined contribution plans, for the fiscal years ended March 31, are as follows:


(In thousands)	2015		2014		2013
Defined contribution plans expense, net of forfeitures		$ 4,216		3,854		3,356
Defined contribution plans forfeitures		52		82		115

Other Plans

A non-qualified supplemental savings plan is provided to executive officers who have the opportunity to defer up to 50% of their eligible compensation that cannot be deferred under the existing 401(k) plan due to IRS limitations. A company match may be provided on these contributions equal to 50% of the first 8% of eligible compensation deferred by the employee to the extent the employee is not able to receive the full amount of company match to the 401(k) plan due to IRS limitations. The plan also allows participants to defer up to 100% of their bonuses. In addition, an amount equal to any refunds that must be made due to the failure of the 401(k) nondiscrimination test may be deferred into this plan.

Effective March 4, 2010, the non-qualified supplemental savings plan was modified to allow the company to contribute restoration benefits to eligible employees. Employees who do not accrue a benefit in the supplemental executive retirement plan and who are eligible for a contribution in the defined contribution retirement plan automatically become eligible for the restoration benefit when the employee’s eligible retirement compensation exceeds the section 401(a)(17) limit. The restoration benefit is noncontributory by the employee, but the company contributes, in cash, 3% of an eligible employee’s compensation above the 401(a)(17) limit to a trust on behalf of the employees. The active employees who participated in the now frozen defined benefit pension plan may receive an additional 1% to 8% depending on age and years of service.

The company also provides a multinational savings plan to eligible non-U.S. citizen employees working outside their respective country of origin and who have been employed for one year of continuous service with the company. Participants of the plan may contribute 1% to 15% of their base salary. The company matches, in cash, 50% of the first 6% of eligible compensation deferred by the employee. Company contributions vest over six years.

The amounts charged to expense related to the multinational pension savings plan contributions, for the fiscal years ended March 31, are as follows:


(In thousands)	2015		2014		2013
Multinational pension savings plan expense	$	494		465		420

The company also provides certain benefits programs which are maintained in several other countries that provide retirement income for covered employees.