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Note 9 - Employee Retirement Plans | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Retirement Benefits [Text Block] |
(9) | EMPLOYEE RETIREMENT PLANS
Defined Benefit Pension Plan We have a defined benefit pension plan (pension plan) that covers certain U.S. employees that are citizens or permanent residents of the United States. Benefits are based on years of service and employee compensation. On December 31, 2010, the pension plan was frozen and accrual of benefits was discontinued. We contributed $1.1 million to the plan during the year ended December 31, 2019. We did not contribute to the plan during the years ended December 31, 2020 and 2018, respectively. We may contribute to this plan in 2021, but the amount, if any, has not been determined. We had defined benefit pension plans that covered a small number of current and former Norwegian employees. Benefits were based on years of service and employee compensation. All of our Norwegian plan participants were transferred from our defined benefit plans primarily into a defined contribution plan during 2020. Amounts contributed to these defined benefit plans were immaterial during the three years ended December 31, 2020. Supplemental Executive Retirement Plan We also offer a non-contributory, defined benefit supplemental executive retirement plan (supplemental plan) that provides pension benefits to certain employees in excess of those allowed under our tax-qualified pension plan. The supplemental plan was closed to new participation in 2010 and was amended to freeze all previously accrued pension benefits and discontinue the accrual of future benefits and any other contributions effective January 1, 2018. We contributed $1.6 million, $3.2 million and $0.9 million during the years ended December 31, 2020, 2019 and 2018, respectively. Any future accrual of benefits under the supplemental plan or other contributions to the supplemental plan will be determined at our sole discretion. A Rabbi Trust was established to provide us with a vehicle to invest in a variety of marketable securities. In April 2018, a lump sum distribution of $8.9 million was paid to our retiring President and Chief Executive Officer in settlement of his supplemental executive retirement plan obligation, resulting in a settlement loss of $0.3 million. This distribution was funded by substantially all of the investments held by the Rabbi Trust which was liquidated in 2019. Postretirement Benefit Plan Qualified retired employees were covered by a program which provided limited health care and life insurance benefits. This plan terminated on January 1, 2019 resulting in a gain of $4.0 million that we recorded in the year ended December 31, 2018. Costs of the program were based on actuarially determined amounts and were accrued over the period from the date of hire to the full eligibility date of employees who were expected to qualify for these benefits. This plan was funded as benefits were paid. Investment Strategies U.S. Pension Plan The obligations of our pension plan are supported by assets held in a trust for the payment of benefits. We are obligated to adequately fund the trust. For the pension plan assets, we have the following primary investment objectives: (1) closely match the cash flows from the plan’s investments from interest payments and maturities with the long-term financial obligations from the plan’s liabilities; and (2) enhance the plan’s investment returns without taking on undue risk by industries, maturities or geographies of the underlying investment holdings. The plan has historically invested in a fixed income only strategy, however because interest rates are forecasted by the United States (U.S.) Federal Reserve to remain low through 2023, it was determined in 2020 that the portfolio should be more broadly diversified. The pension plan’s current target rate of return is 150 basis points above the simple average of the Bloomberg Barclays US Aggregate Bond Index return and the total return of the S&P 500 including dividends. The fixed income portion of the pension plan investment portfolio will be approximately 50% and is comprised primarily of US Government bonds. The remainder of the portfolio will include a well-diversified structure that will include a wide array of asset classes comprised of domestic equities with a small percentage allocated to foreign markets. Alternative investments are allowed but may not exceed 25% of the market value of the portfolio. Illiquid equity holdings, private placements or restricted equities are not permissible investments for the plan. The cash flow requirements of the pension plan are analyzed at least annually. The plan does not invest in Tidewater stock. Our 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 pension plan assets are periodically evaluated for concentration risks. As of December 31, 2020, we did not have any individual asset investments that comprised 10% or more of each plan’s overall assets. U.S. Pension Plan Asset Allocations The following table provides the target and actual asset allocations for the pension plan:
|  |  |  |  |  | Actual as of |  |  | Actual as of |
|  | Target |  |  | December 31, 2020 |  |  | December 31, 2019 |
U.S. Pension plan: |  |  |  |  |  |  |  |  |  |  |  |
Cash |  |  | — | % |  |  | 3 | % |  |  | — | %
Debt securities |  |  | 50 | % |  |  | 53 | % |  |  | 96 | %
Equity securities |  |  | 50 | % |  |  | 44 | % |  |  | 4 | %
Total |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
Fair Value of Pension Plans Assets Tidewater’s plan assets are accounted for at fair value and are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement, with the exception of investments for which fair value is measured using the net asset value per share expedient. The following table provides the fair value hierarchy for our domestic pension plan measured at fair value as of December 31, 2020:
|  |  |  |  |  | Quoted prices in |  |  | Significant |  |  | Significant |  |  |  |  |
|  |  |  |  |  | active |  |  | observable |  |  | unobservable |  |  | Measured at |
|  |  |  |  |  | markets |  |  | inputs |  |  | inputs |  |  | Net Asset |
(In thousands) |  | Fair Value |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Value |
Pension plan measured at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities, primarily exchange traded funds |  | $ | 24,947 |  |  |  | 21,780 |  |  |  | — |  |  |  | — |  |  |  | 3,167 |
Debt securities, primarily exchange traded funds |  |  | 29,922 |  |  |  | 17,925 |  |  |  | — |  |  |  | — |  |  |  | 11,997 |
Cash and cash equivalents |  |  | 1,626 |  |  |  | — |  |  |  | 1,626 |  |  |  | — |  |  |  | — |
Total fair value of plan assets |  | $ | 56,495 |  |  |  | 39,705 |  |  |  | 1,626 |  |  |  | — |  |  |  | 15,164 |
The fair value hierarchy for the pension plans assets measured at fair value as of December 31, 2019, are as follows:
|  |  |  |  |  | Quoted prices in |  |  | Significant |  |  | Significant |  |  |  |  |
|  |  |  |  |  | active |  |  | observable |  |  | unobservable |  |  | Measured at |
|  |  |  |  |  | markets |  |  | inputs |  |  | inputs |  |  | Net Asset |
(In thousands) |  | Fair Value |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Value |
Pension plan measured at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities: |  | $ | 699 |  |  |  | 699 |  |  |  | — |  |  |  | — |  |  |  | — |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government securities |  |  | 5,870 |  |  |  | 5,870 |  |  |  | — |  |  |  | — |  |  |  | — |
Collateralized mortgage securities |  |  | 765 |  |  |  | — |  |  |  | 765 |  |  |  | — |  |  |  | — |
Corporate debt securities |  |  | 47,839 |  |  |  | — |  |  |  | 47,839 |  |  |  | — |  |  |  | — |
Cash and cash equivalents |  |  | 2,526 |  |  |  | — |  |  |  | 2,526 |  |  |  | — |  |  |  | — |
Other |  |  | 1,396 |  |  |  | — |  |  |  | 1,396 |  |  |  | — |  |  |  | — |
Total |  | $ | 59,095 |  |  |  | 6,569 |  |  |  | 52,526 |  |  |  | — |  |  |  | — |
Accrued income |  |  | 530 |  |  |  | 530 |  |  |  | — |  |  |  | — |  |  |  | — |
Total fair value of plan assets |  | $ | 59,625 |  |  |  | 7,099 |  |  |  | 52,526 |  |  |  | — |  |  |  | — |
Plan Assets and Obligations Changes in combined plan assets and obligations and the funded status of the U.S. defined benefit pension plan, Norway’s defined benefit pension plan (discontinued in the fourth quarter of 2020), and the supplemental plan (Pension Benefits) and the postretirement health care and life insurance plan (Other Benefits), which was discontinued as of January 1, 2019, are as follows:
|  | Year Ended December 31, |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of the period |  | $ | 91,654 |  |  | $ | 90,247 |  |  | $ | 103,443 |
Increase in benefit obligation due to business combination |  |  | — |  |  |  | — |  |  |  | 5,474 |
Service cost |  |  | 112 |  |  |  | 427 |  |  |  | 294 |
Interest cost |  |  | 2,907 |  |  |  | 3,751 |  |  |  | 3,605 |
Benefits paid |  |  | (5,990 | ) |  |  | (5,967 | ) |  |  | (5,467 | )
Actuarial (gain) loss (A) |  |  | 5,277 |  |  |  | 8,198 |  |  |  | (8,105 | )
Settlement |  |  | (4,407 | ) |  |  | (4,978 | ) |  |  | (8,885 | )
Foreign currency exchange rate changes |  |  | (593 | ) |  |  | (24 | ) |  |  | (112 | )
Benefit obligation at end of the period |  | $ | 88,960 |  |  | $ | 91,654 |  |  | $ | 90,247 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of the period |  | $ | 59,625 |  |  | $ | 56,790 |  |  | $ | 57,536 |
Increase in plan assets due to business combination |  |  | — |  |  |  | — |  |  |  | 5,463 |
Actual return |  |  | 6,890 |  |  |  | 7,498 |  |  |  | (2,128 | )
Expected return |  |  | — |  |  |  | — |  |  |  | 112 |
Actuarial loss |  |  | 18 |  |  |  | 983 |  |  |  | (275 | )
Administrative expenses |  |  | (49 | ) |  |  | (68 | ) |  |  | (36 | )
Employer contributions |  |  | 1,615 |  |  |  | 5,027 |  |  |  | 10,546 |
Benefits paid |  |  | (5,990 | ) |  |  | (5,967 | ) |  |  | (5,467 | )
Settlement |  |  | (5,000 | ) |  |  | (4,638 | ) |  |  | (8,885 | )
Foreign currency exchange rate changes |  |  | (614 | ) |  |  | — |  |  |  | (76 | )
Fair value of plan assets at end of the period |  |  | 56,495 |  |  |  | 59,625 |  |  |  | 56,790 |
Payroll tax unrecognized in benefit obligation at end of the period |  |  | — |  |  |  | — |  |  |  | 84 |
Unfunded status at end of the period |  | $ | (32,465 | ) |  | $ | (32,029 | ) |  | $ | (33,541 | )
Net amount recognized in the balance sheet consists of: |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  | $ | (1,524 | ) |  | $ | (1,422 | ) |  | $ | (1,380 | )
Noncurrent liabilities |  |  | (30,941 | ) |  |  | (30,607 | ) |  |  | (32,161 | )
Net amount recognized |  | $ | (32,465 | ) |  | $ | (32,029 | ) |  | $ | (33,541 | )
(A) The change in the actuarial (gain) loss for the three years ended December 31, 2020 was primarily attributable to changes in the discount rate.
|  | Other Benefits |
|  | Year Ended |
(In thousands) |  | December 31, 2018 |
Change in benefit obligation: |  |  |  |
Benefit obligation at beginning of the period |  | $ | 2,924 |
Service cost |  |  | 61 |
Interest cost |  |  | 117 |
Participant contributions |  |  | 218 |
Plan amendment |  |  | (2,954 | )
Benefits paid |  |  | (595 | )
Actuarial loss |  |  | 229 |
Benefit obligation at end of the period |  | $ | — |
Change in plan assets: |  |  |  |
Fair value of plan assets at beginning of the period |  | $ | — |
Employer contributions |  |  | 377 |
Participant contributions |  |  | 218 |
Benefits paid |  |  | (595 | )
Fair value of plan assets at end of the period |  |  | — |
Unfunded status at end of the period |  | $ | — |
The following table provides combined information for pension plans with an accumulated benefit obligation in excess of plan assets (includes both the pension plans and supplemental plan):
|  | December 31, |  |  | December 31, |
(In thousands) |  | 2020 |  |  | 2019 |
Projected benefit obligation |  | $ | 88,960 |  |  | $ | 91,654 |
Accumulated benefit obligation |  |  | 88,960 |  |  |  | 91,109 |
Fair value of plan assets |  |  | 56,495 |  |  |  | 59,625 |
Net periodic combined benefit cost for the pension plans and the supplemental plan include the following components:
|  | Year Ended December 31, |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Service cost |  | $ | 109 |  |  | $ | 427 |  |  |  | 294 |
Interest cost |  |  | 2,907 |  |  |  | 3,751 |  |  |  | 3,605 |
Expected return on plan assets |  |  | (2,191 | ) |  |  | (2,375 | ) |  |  | (2,042 | )
Administrational expenses |  |  | 49 |  |  |  | 71 |  |  |  | 36 |
Payroll tax of net pension costs |  |  | 14 |  |  |  | 55 |  |  |  | 42 |
Amortization of net actuarial losses |  |  | (5 | ) |  |  | (592 | ) |  |  | 30 |
Recognized actuarial loss |  |  | — |  |  |  | — |  |  |  | — |
Settlement/Curtailment (gain) loss |  |  | 738 |  |  |  | (219 | ) |  |  | 335 |
Net periodic pension cost |  | $ | 1,621 |  |  | $ | 1,118 |  |  |  | 2,300 |
Net periodic benefit cost for the postretirement health care and life insurance plan, which was discontinued as of January 1, 2019, includes the following components:
|  | Year Ended |
(In thousands) |  | December 31, 2018 |
Service cost |  | $ | 61 |
Interest cost |  |  | 117 |
Amortization of prior service cost |  |  | (299 | )
Recognized actuarial loss |  |  | 42 |
Net curtailment gain |  |  | (4,005 | )
Net periodic postretirement benefit |  | $ | (4,084 | )
The components of the net periodic combined pension cost and the net periodic combined postretirement benefit, except for the service costs are included in the caption “Interest income and other, net.” Service costs are included in the caption “Vessel operating costs.” Other changes in combined plan assets and benefit obligations recognized in other comprehensive (income) loss include the following components:
|  | Pension Benefits |
|  | Year Ended December 31, |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Net (gain) loss |  | $ | (568 | ) |  | $ | 2,612 |  |  |  | (3,441 | )
Settlement recognized |  |  | — |  |  |  | (182 | ) |  |  | (335 | )
Total recognized in other comprehensive (income) loss, before tax and net of tax |  | $ | (568 | ) |  | $ | 2,430 |  |  |  | (3,776 | )
|  | Other Benefits |
|  | Year |
|  | Ended |
|  | December 31, |
(In thousands) |  | 2018 |
Net (gain) loss |  | $ | 229 |
Amortization of prior service (cost) credit |  |  | 1,861 |
Amortization of net (loss) gain |  |  | (554 | )
Total recognized in other comprehensive (income) loss, before tax and net of tax |  | $ | 1,536 |
We do not expect to recognize any unrecognized actuarial (loss) gain or unrecognized prior service credit (cost) as a component of net periodic benefit costs during the next year. Discount rates of 2.5% and 3.5% were used to determine net benefit obligations as of December 2020 and 2019, respectively. Assumptions used to determine net periodic benefit costs are as follows:
|  | Pension Benefits |
|  | 2020 |  |  | 2019 |
Discount rate |  |  | 3.5 | % |  |  | 4.5 | %
Expected long-term rate of return on assets |  |  | 4.0 | % |  |  | 4.0 | %
Rates of annual increase in compensation levels |  |  | 2.3 | % |  |  | 2.8 | %
To develop the expected long-term rate of return on assets assumption, we 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 our qualified pension benefit obligations at December 31, 2020, we expect that combined benefits to be paid over the next ten years will be as follows:
|  | Pension |
Year ending December 31, (In thousands) |  | Benefits |
2021 |  | $ | 5,860 |
2022 |  |  | 5,833 |
2023 |  |  | 5,777 |
2024 |  |  | 5,762 |
2025 |  |  | 5,686 |
2026 – 2030 |  |  | 26,605 |
Total 10-year estimated future benefit payments |  | $ | 55,523 |
Defined Contribution Plans We have two defined contribution plans described below. Retirement Contributions Prior to 2019, all eligible U.S. fleet personnel received retirement contributions. This benefit was noncontributory by the employee, but we contributed, in cash, 3% of an eligible employee’s compensation to a trust on behalf of the employees. Our contributions vested over five years. We ceased contributing to the employee retirement plan effective January 1, 2018. Any future employer contributions to this plan will be determined at our discretion. 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. Prior to January 1, 2018, we matched, in cash, 50% of the first 8% of eligible compensation deferred by the employee. Company contributions vest over five years. Any future employer contributions to this plan will be determined at our discretion. The plan held no shares of Tidewater common stock for the years ended December 31, 2020 and 2019, respectively, but held 7,075 shares Tidewater Common Stock for the year ended December 31, 2018. Other Plans A non-qualified supplemental savings plan is provided to executive officers who have the opportunity to defer additional eligible compensation that cannot be deferred under the existing 401(k) plan due to IRS limitations. An optional company match or contribution of restoration benefits was ceased effective January 1, 2018. We also provided retirement benefits to our eligible non-U.S. citizen employees working outside their respective country of origin pursuant to a self-directed multinational defined contribution retirement plan (multinational retirement plan). Non-U.S. citizen shore-based and certain offshore employees working outside their respective country of origin were eligible to participate in the multinational retirement plan provided the employees were not enrolled in any home country pension or retirement program. Participants of the multinational retirement plan could contribute 1% to 50% of their base salary. Prior to January 1, 2018 when we ceased contributing to this plan, we matched, in cash, 50% of the first 6% of eligible compensation deferred by the employee which vests over five years. Multi-employer Pension Obligations Certain of our current and former U.K. subsidiaries are participating in two multi-employer retirement funds known as the Merchant Navy Officers Pension Fund, or MNOPF and the Merchant Navy Ratings Pension Fund or MNRPF. At December 31, 2020 and 2019, we had recorded $0.7 million and $1.0 million, respectively, related to these liabilities. The status of the funds is calculated by an actuarial firm approximately every three years. The last assessment was completed in March 2018 for the MNOPF Plan and March 2017 for the MNRPF Plan. We expense $0.2 million per annum for these plans.

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