XML 33 R18.htm IDEA: XBRL DOCUMENT v3.20.4
Note 9 - Employee Retirement Plans
 12 Months Ended
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.