TIDEWATER INC (TDW)

CIK: 0000098222. SIC: 4400 Water Transportation. Latest 10-K as of: 2026-03-02.

SIC breadcrumb: Transportation, Communications, Electric, Gas, And Sanitary Services > SIC Major Group 44 > SIC 4400 Water Transportation

SEC company page: https://www.sec.gov/edgar/browse/?CIK=98222. Latest filing source: 0001437749-26-006391.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-02. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000098222.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000098222.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001437749-26-014662.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-04. Report date: 2026-03-31.

ITEM 2.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain of the statements included in this Form 10-Q constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which includes any statements that are not historical facts. Such statements often contain words such as “expect,” “believe,” “think,” “anticipate,” “predict,” “plan,” “assume,” “estimate,” “forecast,” “goal,” “target,” “projections,” “intend,” “should,” “will,” “shall” and other similar words. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Tidewater Inc. and its subsidiaries. There can be no assurance that future developments affecting Tidewater Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and natural gas prices; fluctuations in macroeconomic and market conditions (including risks related to recession, inflation, supply chain constraints or disruptions, interest rates, and exchange rates); global trade trends, including evolving impacts from implementation of new tariffs and potential retaliatory measures; industry overcapacity; limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; uncertainty around the use and impacts of artificial intelligence (AI) applications; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, including expropriation or enforcement of customs or other laws that are not well developed or consistently enforced, the conflict between Russia and Ukraine, the ongoing conflict in the Middle East and the global response to these hostilities; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; the resolution of pending legal proceedings; and other risks and uncertainties detailed in this Quarterly Report on Form 10-Q (Form 10-Q) and other filings we make with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans, goals or activities are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards still developing, internal controls and processes that will continue to evolve, and assumptions subject to change in the future. Statements in this Form 10-Q are made as of the date of this filing, and Tidewater disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. In addition, see “Risk Factors” included in our Annual Report on Form 10-K, filed with the SEC on March 2. 2026 (2025 Annual Report) and in this Form 10-Q for a discussion of certain risks relating to our business and investment in our securities.

25

In certain places in this Form 10-Q, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information.

The forward-looking statements should be considered in the context of the risk factors listed above, discussed in this Form 10-Q, and discussed in our 2025 Annual Report as updated by subsequent filings with the SEC. Investors and prospective investors are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events, or developments.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto included in “Item 1. Financial Statements” and with our 2025 Annual Report. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A of our 2025 Annual Report and elsewhere in this Form-10Q.

EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK

Tidewater

We are one of the most experienced international operators in the offshore energy industry with a history spanning 70 years. Our vessels and associated services support all phases of offshore crude oil and natural gas (also referred to as oil and gas) exploration activities, field development, production and maintenance, as well as windfarm development and maintenance. Our services include towing and anchor handling for mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; providing offshore construction and seismic and subsea support; delivering geotechnical survey support for windfarm construction, and offering a variety of other specialized services such as pipe laying and cable laying. In addition, we believe we have the broadest geographic operating footprint in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have strong relationships.

On February 22, 2026, we entered into a definitive agreement to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The Wilson Companies own 22 platform supply vessels operating in Brazil. We will pay the Wilson Sellers an aggregate cash purchase price of $500.0 million on a debt free, cash free basis, subject to adjustments, including a reduction for the assumption of the Wilson Companies’ debt which was approximately $239.7 million as of March 31, 2026. The final debt amount will be determined upon completion of this transaction. The transaction is subject to customary closing conditions, including approval from the Brazilian Antitrust Authority and the consent of the lenders to the Wilson Companies, and is expected to close late second quarter of 2026.

At March 31, 2026, we owned 206 vessels with an average age of 13.4 years available to serve the global offshore energy industry.

26

MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity

Our MD&A is designed to provide information about our financial condition and results of operations from management’s perspective.

Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. Our business activity is largely dependent on the level of exploration, field development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves. Our objective throughout the MD&A is to discuss how these factors affected our historical results and where applicable, how we expect these factors to impact our future results and future liquidity.

Our revenues in all segments are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our vessel operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.

Operating costs consist primarily of crew costs; repair and maintenance costs; insurance costs; fuel, lube oil and supplies costs; and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors impacting overall crew costs in all segments. In addition, the more technologically sophisticated vessels generally require a greater number of specially trained and more highly compensated fleet personnel. Crew costs may increase if competition for skilled personnel intensifies.

Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking not related to the recertification of the vessel are expensed as incurred. Costs related to vesse

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-03-02. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying Consolidated Financial Statements included in Item 8 of this Form 10-K. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Our future results of operations could differ materially from our historical results or those anticipated in our forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A and elsewhere in this Form 10-K. With respect to this section, the cautionary language applicable to such forward-looking statements described under “Forward-Looking Statements” found before Item 1 of this Form 10-K is incorporated by reference into this Item 7.

EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK

Tidewater 

We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years. Our vessels and associated vessel services provide support for all phases of offshore oil and gas exploration, development and production as well as windfarm development and maintenance. These services include towing and anchor handling for mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; providing offshore construction and seismic and subsea support; delivering geotechnical survey support for windfarm construction, and offering a variety of other specialized services such as pipe laying and cable laying. In addition, we believe we have the broadest geographic operating footprint in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have strong relationships.

On February 22, 2026, we entered into a definitive agreement to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The Wilson Companies own 22 platform supply vessels operating in Brazil. We will pay the Wilson Sellers an aggregate cash purchase price of $500.0 million on a debt free, cash free basis, subject to adjustments, including a reduction for the assumption of the Wilson Companies’ debt which was approximately $261.0 million as of September 30, 2025. The final debt amount will be determined upon completion of this transaction. The transaction is subject to customary closing conditions, including approval from the Brazilian Antitrust Authority and the consent of the lenders to the Wilson Companies, and is expected to close late in the second quarter of 2026.

In the fourth quarter of 2025, we completed a strategic internal restructuring of our vessel ownership (Vessel Realignment) to consolidate a significant portion of the fleet into a single, wholly owned U.S. entity. As a result, we recognized a one-time, non-cash deferred tax benefit in the Consolidated Income Statement for the year ended December 31, 2025.

On July 7, 2025, we issued $650.0 million in 9.125% Senior Notes that mature in July 2030 (2030 Notes). With the proceeds of the offering, we redeemed most of our outstanding debt as of June 30, 2025, including accrued interest and early redemption premiums. Also on July 7, 2025, we executed the $250.0 million Revolving Credit Facility that replaced our previous $25.0 million credit facility. As of the date of this filing, no amounts have been drawn under the Revolving Credit Facility.

On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets, which was amended on June 30, 2023 (the Acquisition Agreement), with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the Sellers), pursuant to which we agreed to acquire from the Sellers (the Solstad Acquisition): (i) 37 platform supply vessels owned by the Sellers (the Solstad Vessels); and (ii) the charter parties governing certain of the Solstad Vessels. At closing, these vessels operated primarily in the North Sea, Australia and Brazil. On July 5, 2023, we completed the Solstad Acquisition for an aggregate cash purchase price of approximately $594.2 million, consisting of the $577.0 million base purchase price plus an initial $3.0 million purchase price adjustment; $3.2 million for working capital items comprised of fuel and lubricants; and $11.0 million in estimated transaction costs, consisting primarily of advisory and legal fees. The purchase price was funded through a combination of cash on hand and net proceeds from both the Senior Secured Term Loan and the 10.375% Senior Unsecured Notes due July 2028.

Prior to August 1, 2023, we had outstanding Series A Warrants, with an exercise price of $57.06 and Series B Warrants, with an exercise price of $62.28, both with an expiration date of July 31, 2023. During July 2023, an aggregate of approximately 2.0 million Series A Warrants and Series B Warrants were exercised, and we issued 1.9 million shares of common stock in exchange for $111.5 million in cash proceeds. All remaining unexercised Series A Warrants and Series B Warrants, approximately 3.1 million in the aggregate, expired according to their terms on July 31, 2023.

41

Table of Contents

At December 31, 2025, we owned 208 vessels with an average age of 13.1 years available to serve the global offshore energy industry.

MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity

Our MD&A is designed to provide information about our financial condition and results of operations from management’s perspective.

Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. Our business activity is largely dependent on the level of oil and gas exploration, development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected oil and gas prices, which fluctuate depending on expected future levels of supply and demand for oil and gas, and on estimates of the cost to find, develop and produce oil and gas reserves. Our objective throughout MD&A is to discuss how these factors affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.

Our revenues are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.

Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors impacting overall crew costs in all segments. In addition, our newer, more technologically sophisticated vessels generally require a greater number of specially trained, more highly compensated fleet personnel than our older, smaller and less sophisticated vessels. Crew costs may increase if competition for skilled personnel intensifies.

Costs related to the recertification of vessels are deferred and amortized over a 30-month period on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements that either extend the vessel’s useful life or increase the vessel’s functionality are capitalized and depreciated. 

Insurance costs are dependent on a variety of factors, including our safety record and pricing in the insurance markets, and can fluctuate over time. Our vessels are generally insured for up to their estimated fair market value in order to cover damage or loss. We also purchase coverage for potential liabilities stemming from third-party losses and cybersecurity breaches with limits that we believe are reasonable for our business and operations, but do not generally purchase business interruption insurance or similar coverage. During the past three years, we have not incurred any material costs, fines or penalties due to a direct or third-party vendor cybersecurity breach. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.

Fuel and lube costs can fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off-hire, drydockings, and changes in fuel prices. Generally, our customers are responsible for fuel costs when our vessels are on-hire, and we are responsible for fuel costs when our vessels are off-hire or in drydock. We also incur vessel operating costs aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, training costs, satellite communication fees, agent fees, port fees, freight and other miscellaneous costs.

We discuss our liquidity in terms of cash on hand and cash flow that we generate from our operations. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. From time to time, we also issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions.

Industry Conditions and Outlook

Our business is exposed to numerous macro factors that influence our outlook and expectations. Our outlook and expectations described herein are based solely on the market as we see it today, and therefore, subject to various changing conditions that impact the oil and gas industry.

42

Table of Contents

Our outlook is largely driven by expectations for the worldwide demand for hydrocarbons, and expectations surrounding the demand for and the global supply of vessels that support the offshore energy industry. Our business is directly impacted by the level of activity in worldwide offshore oil and gas exploration, development and production, which in turn is influenced by trends in oil and gas prices and the condition of the energy markets, and in particular, the willingness of energy companies to spend on offshore operational activities and capital projects. This activity includes demand for offshore drilling rigs, which also directly impacts our industry. Oil and gas prices are affected by geopolitical and economic forces, including the fundamental principles of supply and demand. Offshore oil and gas exploration and development activities generally require higher oil or gas prices to justify the expenditure levels of offshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile.

Over the past several years, oil and gas commodity pricing and the overall supply of and demand for oil and gas have been affected by (i) a global pandemic, which included lock downs by major oil consuming nations; (ii) ongoing global conflicts, notably in eastern Europe between Russia and Ukraine, in Venezuela, and numerous conflicts in the Middle East; (iii) Organization of Petroleum Exporting Countries Plus (OPEC+) production quotas, market share expectations and pricing considerations; (iv) resource growth in non-OPEC+ nations; (v) a capital allocation focus on returning capital to shareholders within the major oil and gas companies, thereby limiting funds previously available for resource development; (vi) economies of and monetary policies in major consuming nations; (vii) increased activism related to the perceived responsibility of the oil and gas sector for climate change; and (viii) U.S. trade policies that include substantial tariffs, causing increased market uncertainty and volatility. These factors have at various times caused or exacerbated significant swings in oil and gas pricing, which in turn has affected the capital budgets of oil and gas companies. Despite the volatility in spot oil prices seen in recent years, our customers tend to consider less volatile medium and long-term prices in making offshore investment decisions. In the medium term, we continue to see positive upstream investment momentum in both the international and domestic markets. We believe these markets are driven by resilient long-cycle offshore developments, production capacity expansions and increased resource exploitation activities. However, sustained oil prices in the low $60s per barrel may delay some drilling projects initially expected to commence in 2026.

Results of Operations

Each of our five operating segments is led by senior management, the results are reviewed and resources are allocated by our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.

Total vessel utilization is calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock or down for repair). Active utilization is calculated on all owned and bareboat chartered vessels except vessels held for sale and stacked vessels. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is performed on the vessel. Although not currently fulfilling charters, stacked vessels are considered in service and included in the calculation of our utilization statistics but excluded in the calculation of our active utilization statistics. We had eight stacked vessels at December 31, 2025 and one stacked vessel at December 31, 2024.

Vessel day rates are determined by the demand created largely through the level of offshore exploration, development and production spending by energy companies relative to the supply of offshore support vessels. Specifications of available equipment and the scope of service provided may also influence vessel day rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period. Vessel operating cost per active days is calculated based on total available days less stacked days.

Total vessels in service may also include vessels not owned by us and under bareboat charter agreements. We had three in 2023, 2024 and at the beginning of 2025, but one of the vessels was purchased by us in the third quarter of 2025 and is included in our owned vessel count. We gave notice to acquire both of the remaining vessels under bareboat charter, reclassifying them as finance leases, also now included in our owned vessel count. These vessels were included in all vessel statistics whether or not owned.

This section of this Form 10-K generally discusses activity in the years 2025, 2024 and 2023 and year-to-year comparisons between 2025 and 2024 and between 2024 and 2023. 

The results of operations tables included below for the total company and the individual segments disclose financial results supplemented with vessel utilization and average day rates.

43

Table of Contents

Years Ended December 31, 2025 and 2024

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Total revenue

$

1,352,786

$

1,345,835

$

6,951

1

%

Costs and expenses:

Vessel operating costs:

Crew costs

402,290

416,276

13,986

3

%

Repair and maintenance

103,903

98,376

(5,527

)

(6

)%

Insurance

10,389

11,027

638

6

%

Fuel, lube and supplies

61,153

65,371

4,218

6

%

Other

102,847

102,057

(790

)

(1

)%

Total vessel operating costs

680,582

693,107

12,525

2

%

Costs of other operating revenues

6,420

3,555

(2,865

)

(81

)%

General and administrative

134,531

110,817

(23,714

)

(21

)%

Depreciation and amortization

262,339

242,770

(19,569

)

(8

)%

Gain on asset dispositions, net

(13,682

)

(15,762

)

(2,080

)

(13

)%

Total costs and expenses

1,070,190

1,034,487

(35,703

)

(3

)%

Other income (expense):

Foreign exchange gain (loss)

22,683

(15,276

)

37,959

248

%

Interest income and other, net

8,169

6,383

1,786

28

%

Loss on early extinguishment of debt

(27,113

)

—

(27,113

)

100

%

Interest and other debt costs, net

(66,090

)

(72,967

)

6,877

9

%

Total other expense

(62,351

)

(81,860

)

19,509

24

%

Income before income taxes

220,245

229,488

(9,243

)

(4

)%

Income tax expense (benefit)

(113,208

)

50,216

163,424

325

%

Net income

$

333,453

$

179,272

$

154,181

86

%

Select operating statistics:

Utilization

76.1

%

79.0

%

(2.9

)%

Active utilization

78.7

%

79.2

%

(0.5

)%

Average vessel day rates

$

22,573

$

21,273

$

1,300

6.1

%

Vessel operating cost per active day

$

9,002

$

8,760

$

(242

)

(2.8

)%

Average total vessels

213

217

(4

)

Average stacked vessels

(7

)

(1

)

(6

)

Average active vessels

206

216

(10

)

Revenue:

o

Increase primarily driven by higher average day rates partially offset by lower utilization and lower vessel count.

o

Slight decrease in active utilization primarily due to higher idle time between contracts offset by reduced drydock and repair days.

Vessel operating costs:

o

Decrease primarily due to lower crew costs in Asia Pacific and Americas segments; and lower fuel and supplies costs in Americas and Europe/Mediterranean segments. These cost reductions were partially offset by higher repair costs in the West Africa segment.

General and administrative:

o

Increase primarily due to higher personnel costs, higher stock compensation and charges associated with a transition and separation agreement. We also incurred higher professional fees in 2025 compared to 2024. In 2024, we had a significant recovery of bad debt expense that did not recur in 2025.

44

Table of Contents

Depreciation and amortization:

o

Increase primarily due to higher amortization of drydock costs.

Gain on asset dispositions, net:

o

During 2025, we sold 12 vessels for approximately $17.6 million in proceeds and recognized a net gain of $13.6 million on the dispositions. During 2024, we sold or recycled six vessels and other assets. 

Interest income and other, net:

o

Increase primarily due to a Brazil legal case recovery, which included an interest component.

Loss on early extinguishment of debt:

o

Increase primarily due to the early redemption premiums incurred and the write off of unamortized debt issuance costs in conjunction with the redemption of the Senior Secured Term Loan, the 10.375% Senior Unsecured Notes due July 2028 and the 8.5% Senior Secured Notes due November 2026.

Interest expense:

o

Decrease primarily due to lower average debt levels and interest rates in 2025 compared to 2024 as a result of significant principal payments made in the latter part of 2024 and during the first six months of 2025.

Foreign exchange gains/losses:

o

Our foreign exchange gains in 2025 and losses in 2024 were primarily the result of the settlement and revaluation of various foreign currency balances due to a weakening/strengthening of the U.S. Dollar against the Central African CFA Franc, West African CFA Franc, Norwegian Kroner, Brazilian Real, Angola Kwanza, British Pound and Euro.

Income tax expense:

o

We are subject to taxes on our income in many jurisdictions worldwide and our actual tax expense can vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax jurisdictions. Our tax benefit for 2025 is primarily related to the effect of the Vessel Realignment and release of valuation allowance against certain U.S. deferred tax assets, reduced by the impact from Pillar Two taxes and taxes on our operations in foreign countries. Tax expense for 2024 is mainly attributable to taxes on our operations in foreign countries.

45

Table of Contents

Americas Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Vessel revenues:

$

270,229

$

261,929

$

8,300

3

%

Vessel operating costs:

Crew costs

82,155

87,545

5,390

6

%

Repair and maintenance

20,732

20,677

(55

)

(0

)%

Insurance

2,032

2,034

2

0

%

Fuel, lube and supplies

10,035

13,635

3,600

26

%

Other

26,567

24,391

(2,176

)

(9

)%

Total vessel operating costs

141,521

148,282

6,761

5

%

General and administrative expense

14,927

14,046

(881

)

(6

)%

Depreciation and amortization

48,506

44,822

(3,684

)

(8

)%

Vessel operating profit

$

65,275

$

54,779

$

10,496

19

%

Select operating statistics:

Utilization

72.6

%

76.3

%

(3.7

)%

Active utilization

77.8

%

76.9

%

0.9

%

Average vessel day rates

$

29,839

$

27,128

$

2,711

10.0

%

Vessel operating cost per active day

$

12,134

$

11,846

$

(288

)

(2.4

)%

Average total vessels

34

34

—

Average stacked vessels

(2

)

—

(2

)

Average active vessels

32

34

(2

)

Vessel revenue:

o

Increase primarily driven by higher average day rates and the almost 1% increase in active utilization.

o

Active vessels decreased primarily due to stacking two vessels in 2025.

Vessel operating costs:

o

Decrease primarily due to lower crew costs associated with lower activity in Mexico, reduced manning levels resulting from higher idle and stacked days, and the sale of a vessel in 2025. We also experienced lower fuel costs in 2025 due to lower drydock days. These decreases were partially offset by an increase due to a legal claim accrual.

General and administrative expense:

o

Increase primarily due to a credit to bad debt expense in 2024.

Depreciation and amortization expense:

o

Increase primarily due to higher amortization of drydock costs.

46

Table of Contents

Asia Pacific Segment Operations.

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Vessel revenues

$

189,747

$

210,328

$

(20,581

)

(10

)%

Vessel operating costs:

Crew costs

74,040

88,968

14,928

17

%

Repair and maintenance

12,904

13,999

1,095

8

%

Insurance

1,161

1,197

36

3

%

Fuel, lube and supplies

7,889

8,834

945

11

%

Other

9,572

10,311

739

7

%

Total vessel operating costs

105,566

123,309

17,743

14

%

General and administrative expense

9,080

8,544

(536

)

(6

)%

Depreciation and amortization

21,894

18,606

(3,288

)

(18

)%

Vessel operating profit

$

53,207

$

59,869

$

(6,662

)

(11

)%

Select operating statistics:

Utilization

72.9

%

79.8

%

(6.9

)%

Active utilization

72.9

%

79.8

%

(6.9

)%

Average vessel day rates

$

37,102

$

34,646

$

2,456

7.1

%

Vessel operating cost per active day

$

15,089

$

16,299

$

1,210

7.4

%

Average total vessels

19

21

(2

)

Average stacked vessels

—

—

—

Average active vessels

19

21

(2

)

Vessel revenue:

o

Decrease primarily driven by a lower vessel count in Australia and lower utilization, partially offset by higher average day rates.

o

Active utilization decreased primarily due to higher idle days between contracts.

Vessel operating costs:

o

Decrease primarily due to lower crew costs resulting from a lower proportion of vessels working in Australia where operating costs are significantly higher.

General and administrative expense:

o

Increase primarily due to higher personnel costs.

Depreciation and amortization expense:

o

Increase primarily due to higher amortization due to increased drydock activity partially offset by a decrease in depreciation due to fewer vessels operating in the segment.

47

Table of Contents

Middle East Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Vessel revenues

$

172,573

$

152,187

$

20,386

13

%

Vessel operating costs:

Crew costs

54,330

53,390

(940

)

(2

)%

Repair and maintenance

19,070

17,595

(1,475

)

(8

)%

Insurance

1,819

1,882

63

3

%

Fuel, lube and supplies

10,995

10,019

(976

)

(10

)%

Other

18,061

24,076

6,015

25

%

Total vessel operating costs

104,275

106,962

2,687

3

%

General and administrative expense

11,208

11,320

112

1

%

Depreciation and amortization

33,174

30,135

(3,039

)

(10

)%

Vessel operating profit

$

23,916

$

3,770

$

20,146

534

%

Select operating statistics:

Utilization

81.8

%

83.7

%

(1.9

)%

Active utilization

81.8

%

83.7

%

(1.9

)%

Average vessel day rates

$

13,316

$

11,527

$

1,789

15.5

%

Vessel operating cost per active day

$

6,585

$

6,783

$

198

2.9

%

Average total vessels

43

43

—

Average stacked vessels

—

—

—

Average active vessels

43

43

—

Vessel revenue:

o

Increase primarily driven by higher day rates, partially offset by lower utilization.

o

Utilization decreased primarily due to higher drydock days.

Vessel operating costs:

o

Decrease primarily due to lower mobilization and training costs partially offset by higher repair costs.

General and administrative expense:

o

No significant variances.

Depreciation and amortization expense:

o

Increase primarily due to higher amortization of drydock costs in 2025.

48

Table of Contents

Europe/Mediterranean Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Vessel revenues

$

343,627

$

333,081

$

10,546

3

%

Vessel operating costs:

Crew costs

116,489

109,178

(7,311

)

(7

)%

Repair and maintenance

27,195

28,288

1,093

4

%

Insurance

2,868

3,171

303

10

%

Fuel, lube and supplies

12,020

14,650

2,630

18

%

Other

20,988

18,864

(2,124

)

(11

)%

Total vessel operating costs

179,560

174,151

(5,409

)

(3

)%

General and administrative expense

14,259

12,726

(1,533

)

(12

)%

Depreciation and amortization

92,114

92,331

217

0

%

Vessel operating profit

$

57,694

$

53,873

$

3,821

7

%

Select operating statistics:

Utilization

88.2

%

85.5

%

2.7

%

Active utilization

88.2

%

85.5

%

2.7

%

Average vessel day rates

$

21,188

$

20,855

$

333

1.6

%

Vessel operating cost per active day

$

9,790

$

9,411

$

(379

)

(4.0

)%

Average total vessels

50

51

(1

)

Average stacked vessels

—

—

—

Average active vessels

50

51

(1

)

Vessel revenue:

o

Increase primarily driven by higher utilization and higher average day rates that was partially offset by a lower vessel count.

o

Active utilization increased due to lower drydock and repair days.

Vessel operating costs:

o

Increase primarily due to higher crew costs associated with higher payroll tax expense. We also incurred higher other costs resulting from unplanned charges incidental to vessels being down for repair and higher training costs. Fuel costs decreased due to lower drydock and repair days.

General and administrative expense:

o

Increase primarily due to higher personnel costs and professional fees.

Depreciation and amortization expense:

o

Increase due to higher amortization of drydock costs.

49

Table of Contents

West Africa Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2025

2024

Change

% Change

Vessel revenues

$

362,755

$

380,112

$

(17,357

)

(5

)%

Vessel operating costs:

Crew costs

75,276

77,195

1,919

2

%

Repair and maintenance

24,002

17,817

(6,185

)

(35

)%

Insurance

2,509

2,743

234

9

%

Fuel, lube and supplies

20,214

18,233

(1,981

)

(11

)%

Other

27,659

24,415

(3,244

)

(13

)%

Total vessel operating costs

149,660

140,403

(9,257

)

(7

)%

General and administrative expense

11,528

9,495

(2,033

)

(21

)%

Depreciation and amortization

62,894

53,782

(9,112

)

(17

)%

Vessel operating profit

$

138,673

$

176,432

$

(37,759

)

(21

)%

Select operating statistics:

Utilization

65.9

%

72.2

%

(6.3

)%

Active utilization

71.1

%

72.6

%

(1.5

)%

Average vessel day rates

$

22,723

$

21,173

$

1,550

7.3

%

Vessel operating cost per active day

$

6,543

$

5,664

$

(879

)

(15.5

)%

Average total vessels

66

68

(2

)

Average stacked vessels

(5

)

(1

)

(4

)

Average active vessels

61

67

(6

)

Vessel revenue:

o

Decrease primarily driven by a lower vessel count and lower utilization because of increased idle and stacked days partially offset by higher average day rates.

o

We took delivery of six new crew boats in 2025 and stacked some older crew boats, nine of which were sold.

Vessel operating costs:

o

Increase primarily due to higher repair costs and increased repair days; higher fuel costs associated with increased idle and stacked days; and higher other costs associated with a relief vessel engaged as a substitute for another vessel in drydock.

General and administrative expense:

o

Increase due to higher personnel costs and professional fees and a credit to bad debt expense in 2024.

Depreciation and amortization expense:

o

Increase primarily due to higher amortization of drydock costs.

50

Table of Contents

Years Ended December 31, 2024 and 2023

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Total revenue

$

1,345,835

$

1,009,985

$

335,850

33

%

Costs and expenses:

Vessel operating costs:

Crew costs

416,276

329,473

(86,803

)

(26

)%

Repair and maintenance

98,376

78,716

(19,660

)

(25

)%

Insurance

11,027

9,297

(1,730

)

(19

)%

Fuel, lube and supplies

65,371

60,548

(4,823

)

(8

)%

Other

102,057

78,481

(23,576

)

(30

)%

Total vessel operating costs

693,107

556,515

(136,592

)

(25

)%

Costs of other operating revenues

3,555

4,342

787

18

%

General and administrative

110,817

95,283

(15,534

)

(16

)%

Depreciation and amortization

242,770

180,331

(62,439

)

(35

)%

Gain on asset dispositions, net

(15,762

)

(8,701

)

7,061

81

%

Total costs and expenses

1,034,487

827,770

(206,717

)

(25

)%

Other income (expense):

Foreign exchange loss

(15,276

)

(1,370

)

(13,906

)

(1015

)%

Equity in net earnings of unconsolidated companies

—

39

(39

)

100

%

Interest income and other, net

6,383

6,517

(134

)

(2

)%

Interest and other debt costs, net

(72,967

)

(48,472

)

(24,495

)

(51

)%

Total other expense

(81,860

)

(43,286

)

(38,574

)

(89

)%

Income before income taxes

229,488

138,929

90,559

(65

)%

Income tax expense

50,216

43,308

(6,908

)

(16

)%

Net income

$

179,272

$

95,621

$

83,651

(87

)%

Select operating statistics:

Utilization

79.0

%

79.1

%

(0.1

)%

Active utilization

79.2

%

81.2

%

(2.0

)%

Average vessel day rates

$

21,273

$

16,802

$

4,471

26.6

%

Vessel operating cost per active day

$

8,760

$

7,615

$

(1,145

)

(15.0

)%

Average total vessels

217

205

12

Average stacked vessels

(1

)

(5

)

4

Average active vessels

216

200

16

Revenue:

o

Increase primarily driven by higher average day rates and the full year effect of the Solstad Acquisition, which added 37 vessels to our fleet on July 5, 2023.

o

The Solstad vessels added $269.3 million to revenue in 2024 and $115.1 million in 2023, contributing $154.2 million to the revenue variance.

o

Slight decrease in active utilization due to higher idle time between contracts and increased drydock days.

Vessel operating costs:

o

Increase primarily due to the additional active vessels in our fleet from the Solstad Acquisition, coupled with higher overall crew costs and higher repair costs associated with slightly higher repair days. In addition, there was higher other operating costs associated with increased brokerage commissions due to higher revenues; higher contract fines and penalties due to extended delayed drydocks; higher training costs; and increased amortization of mobilization costs.

51

Table of Contents

General and administrative:

o

Increase primarily due to higher salaries and benefits due to additions in corporate and segment personnel and higher professional fees. This increase was partially offset by lower bad debt and transaction costs.

Depreciation and amortization:

o

Increase primarily due to depreciation and amortization of drydock costs related to the additional vessels acquired in the Solstad Acquisition.

Gain on asset dispositions, net:

o

During 2024, we sold or recycled six vessels and other assets. During 2023, we sold or recycled 15 vessels and other assets. We recognized significantly higher gains per vessel sold in 2024 due to a more favorable market for vessel sales.

Interest expense:

o

Increase primarily due to the addition of $575.0 million in long term debt, bearing interest of approximately 10.0%, to fund the Solstad vessel acquisition effective July 5, 2023.

Interest income and other, net:

o

Interest income and other consists primarily of interest received on invested balances.

o

During 2023, we recorded a $1.1 million charge resulting from a reduction in certain indemnification assets related to assumed tax liabilities acquired from Swire Pacific Offshore Holdings Limited (SPO) that were adjusted to reflect the expiration of the statute of limitations. This charge was offset by a corresponding decrease in income tax expense, which resulted in no impact on net income.

o

During 2023, we recognized a $2.3 million settlement gain from our pension plan as we significantly reduced the number of plan participants and related pension liabilities.

Foreign exchange losses:

o

In 2024 and 2023, we experienced foreign currency exchange losses. The 2024 losses were significant due to a strengthening of the U.S. Dollar against the Mexican Peso, Norwegian Kroner, Brazilian Real, Australian Dollar and certain African currencies.

Income tax expense:

o

We are subject to taxes on our income in many jurisdictions worldwide and our actual tax expense can vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax jurisdictions. Our tax expense for 2024 and 2023 is mainly attributable to taxes on our operations in foreign countries.

52

Table of Contents

Americas Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Vessel revenues

$

261,929

$

237,205

$

24,724

10

%

Vessel operating costs:

Crew costs

87,545

86,328

(1,217

)

(1

)%

Repair and maintenance

20,677

17,295

(3,382

)

(20

)%

Insurance

2,034

1,891

(143

)

(8

)%

Fuel, lube and supplies

13,635

13,175

(460

)

(3

)%

Other

24,391

19,232

(5,159

)

(27

)%

Total vessel operating costs

148,282

137,921

(10,361

)

(8

)%

General and administrative expense

14,046

15,105

1,059

7

%

Depreciation and amortization

44,822

41,215

(3,607

)

(9

)%

Vessel operating profit

$

54,779

$

42,964

$

11,815

27

%

Select operating statistics:

Utilization

76.3

%

82.0

%

(5.7

)%

Active utilization

76.9

%

84.4

%

(7.5

)%

Average vessel day rates

$

27,128

$

22,174

$

4,954

22.3

%

Vessel operating cost per active day

$

11,846

$

10,916

$

(930

)

(8.5

)%

Average total vessels

34

36

(2

)

Average stacked vessels

—

(1

)

1

Average active vessels

34

35

(1

)

Vessel revenue:

o

Increase primarily driven by higher average day rates that was partially offset by lower utilization largely resulting from substantially higher drydock days.

o

Solstad Acquisition added four vessels in 2024 and six vessels during the last six months in 2023 and contributed $19.2 million to the revenue variance.

o

Active vessels decreased primarily due to vessel transfers to other segments.

Vessel operating costs:

o

Increase primarily due to higher repairs from substantially higher routine repairs performed while the vessels were in drydock. Crew costs increased due to the addition of Solstad Acquisition vessels. Certain contract fines and penalties related to delayed drydocks increased other operating costs.

General and administrative expense:

o

Decrease primarily due to higher bad debt expense in 2023.

Depreciation and amortization expense:

o

Increase primarily due to higher drydock activity that was partially offset by lower depreciation resulting from the lower vessel count.

53

Table of Contents

Asia Pacific Segment Operations.

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Vessel revenues

$

210,328

$

122,235

$

88,093

72

%

Vessel operating costs:

Crew costs

88,968

41,940

(47,028

)

(112

)%

Repair and maintenance

13,999

9,212

(4,787

)

(52

)%

Insurance

1,197

794

(403

)

(51

)%

Fuel, lube and supplies

8,834

5,251

(3,583

)

(68

)%

Other

10,311

7,751

(2,560

)

(33

)%

Total vessel operating costs

123,309

64,948

(58,361

)

(90

)%

General and administrative expense

8,544

8,147

(397

)

(5

)%

Depreciation and amortization

18,606

10,669

(7,937

)

(74

)%

Vessel operating profit

$

59,869

$

38,471

$

21,398

56

%

Select operating statistics:

Utilization

79.8

%

82.3

%

(2.5

)%

Active utilization

79.8

%

83.0

%

(3.2

)%

Average vessel day rates

$

34,646

$

24,968

$

9,678

38.8

%

Vessel operating cost per active day

$

16,299

$

11,057

$

(5,242

)

(47.4

)%

Average total vessels

21

16

5

Average stacked vessels

—

—

—

Average active vessels

21

16

5

Vessel revenue:

o

Increase primarily driven by higher average day rates; the full year effect of the Solstad Acquisition; and the larger proportion of vessels working in Australia where average day rates are higher.

o

Solstad Acquisition added four vessels in 2024 and during the last six months of 2023 and contributed $18.7 million to the revenue variance.

o

Active utilization decreased due to higher drydock days and higher idle days between contracts.

o

Active vessels increased primarily due to the Solstad vessel acquisitions.

Vessel operating costs:

o

Increase primarily due to the additional active vessels and by the increased proportion of vessels working in Australia where crew costs are higher.

General and administrative expense:

o

Increase primarily due to higher personnel costs.

Depreciation and amortization expense:

o

Increase primarily due to additional vessels and higher drydock activity.

54

Table of Contents

Middle East Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Vessel revenues

$

152,187

$

135,375

$

16,812

12

%

Vessel operating costs:

Crew costs

53,390

53,416

26

0

%

Repair and maintenance

17,595

16,187

(1,408

)

(9

)%

Insurance

1,882

1,784

(98

)

(5

)%

Fuel, lube and supplies

10,019

12,092

2,073

17

%

Other

24,076

17,127

(6,949

)

(41

)%

Total vessel operating costs

106,962

100,606

(6,356

)

(6

)%

General and administrative expense

11,320

9,254

(2,066

)

(22

)%

Depreciation and amortization

30,135

26,566

(3,569

)

(13

)%

Vessel operating profit (loss)

$

3,770

$

(1,051

)

$

4,821

459

%

Select operating statistics:

Utilization

83.7

%

80.9

%

2.8

%

Active utilization

83.7

%

80.9

%

2.8

%

Average vessel day rates

$

11,527

$

10,394

$

1,133

10.9

%

Vessel operating cost per active day

$

6,783

$

6,253

$

(530

)

(8.5

)%

Average total vessels

43

44

(1

)

Average stacked vessels

—

—

—

Average active vessels

43

44

(1

)

Vessel revenue:

o

Increase primarily driven by higher average day rates and higher active utilization largely due to substantially fewer mobilization days in 2024.

Vessel operating costs:

o

Increase primarily due to the accelerated amortization of deferred mobilization costs due to cancelled contracts; higher repair costs due to an increase in vessel repair days; and increased training costs.

General and administrative expense:

o

Increase primarily due to higher personnel costs.

Depreciation and amortization expense:

o

Increase primarily due to higher drydock activity and higher depreciation due to additional equipment on several vessels.

55

Table of Contents

Europe/Mediterranean Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Vessel revenues

$

333,081

$

230,217

$

102,864

45

%

Vessel operating costs:

Crew costs

109,178

78,613

(30,565

)

(39

)%

Repair and maintenance

28,288

17,029

(11,259

)

(66

)%

Insurance

3,171

2,218

(953

)

(43

)%

Fuel, lube and supplies

14,650

11,697

(2,953

)

(25

)%

Other

18,864

13,758

(5,106

)

(37

)%

Total vessel operating costs

174,151

123,315

(50,836

)

(41

)%

General and administrative expense

12,726

10,063

(2,663

)

(26

)%

Depreciation and amortization

92,331

63,152

(29,179

)

(46

)%

Vessel operating profit

$

53,873

$

33,687

$

20,186

60

%

Select operating statistics:

Utilization

85.5

%

87.4

%

(1.9

)%

Active utilization

85.5

%

87.4

%

(1.9

)%

Average vessel day rates

$

20,855

$

18,514

$

2,341

12.6

%

Vessel operating cost per active day

$

9,411

$

8,758

$

(653

)

(7.5

)%

Average total vessels

51

38

13

Average stacked vessels

—

—

—

Average active vessels

51

38

13

Vessel revenue:

o

Increase primarily driven by higher average day rates and an increase in active vessels in the area resulting primarily from the Solstad Acquisition.

o

Solstad Acquisition added 26 vessels in 2024 and 24 vessels during the last six months of 2023 and contributed $86.4 million to the revenue variance.

o

Active utilization decreased due to higher drydock days and increased idle time between contracts.

o

Active vessels increased primarily due to the Solstad vessel acquisition.

Vessel operating costs:

o

Increase primarily due to the additional vessels in the segment.

o

Solstad Vessels added $86.7 million and $37.8 million to operating costs in 2024 and 2023, respectively.

General and administrative expense:

o

Increase primarily due to higher personnel costs as a result of the addition of onshore personnel from the Solstad Acquisition.

Depreciation and amortization expense:

o

Increase primarily due to the significant depreciation associated with the additional vessels acquired from Solstad plus higher amortization related to an increase in drydock activity.

56

Table of Contents

West Africa Segment Operations. 

Year Ended December 31,

(In Thousands except for statistics)

2024

2023

Change

% Change

Vessel revenues

$

380,112

$

273,961

$

106,151

39

%

Vessel operating costs:

Crew costs

77,195

69,176

(8,019

)

(12

)%

Repair and maintenance

17,817

18,993

1,176

6

%

Insurance

2,743

2,610

(133

)

(5

)%

Fuel, lube and supplies

18,233

18,333

100

1

%

Other

24,415

20,613

(3,802

)

(18

)%

Total vessel operating costs

140,403

129,725

(10,678

)

(8

)%

General and administrative expense

9,495

9,281

(214

)

(2

)%

Depreciation and amortization

53,782

36,508

(17,274

)

(47

)%

Vessel operating profit

$

176,432

$

98,447

$

77,985

79

%

Select operating statistics:

Utilization

72.2

%

71.1

%

1.1

%

Active utilization

72.6

%

75.8

%

(3.2

)%

Average vessel day rates

$

21,173

$

14,917

$

6,256

41.9

%

Vessel operating cost per active day

$

5,664

$

5,302

$

(362

)

(6.8

)%

Average total vessels

68

71

(3

)

Average stacked vessels

(1

)

(4

)

3

Average active vessels

67

67

—

Vessel revenue:

o

Increase primarily driven by the increase in average day rates.

o

Solstad Acquisition added three vessels in 2024 and 2023, respectively, and contributed $29.3 million to the revenue increase.

o

Active utilization decreased due to higher idle time between contracts.

Vessel operating costs:

o

Increase primarily due to higher crew wages and a nonrecurring customs duty settlement in the second quarter of 2024.

o

Solstad Vessels added $8.7 million and $4.4 million to operating costs for 2024 and 2023, respectively.

General and administrative expense:

o

No significant variances.

Depreciation and amortization expense:

o

Increase primarily due to significantly increased drydock activity and higher depreciation.

57

Table of Contents

Vessel Dispositions

We seek opportunities to sell and/or recycle our older vessels when market conditions warrant and opportunities arise. Most of our vessels are sold to buyers who do not compete with us in the offshore energy industry. During 2025, we sold 12 vessels from our active fleet, nine of which were crew vessels. During 2024, we sold six vessels from our active fleet. During 2023, we sold or recycled eight vessels designated as held for sale and sold seven vessels from our active fleet. The number of vessel dispositions by segment were as follows:

Year Ended

Year Ended

Year Ended

December 31, 2025

December 31, 2024

December 31, 2023

Number of vessel dispositions by segment:

Americas

1

1

1

Asia Pacific

1

—

1

Middle East

—

—

1

Europe/Mediterranean

—

1

—

West Africa

10

4

12

Total

12

6

15

General and Administrative Expenses

Consolidated general and administrative expenses and the related percentage of each component to total revenues are as follows:

(In Thousands)

Year Ended

Year Ended

Year Ended

December 31, 2025

December 31, 2024

December 31, 2023

Personnel

$

75,995

5

%

$

67,156

5

%

$

50,343

5

%

Office and property

19,126

1

%

17,480

1

%

20,998

2

%

Professional services

24,188

2

%

19,264

1

%

16,498

2

%

Transaction or restructuring charges (A)

8,345

1

%

716

0

%

1,090

0

%

Other

6,877

1

%

6,201

1

%

6,354

1

%

$

134,531

10

%

$

110,817

8

%

$

95,283

10

%

General and administrative expenses for all segments and corporate, including their respective percentage of total general and administrative expenses, were as follows:

(In Thousands)

Year Ended

Year Ended

Year Ended

December 31, 2025

December 31, 2024

December 31, 2023

Vessel operations:

Continuing operations

$

61,002

45

%

$

55,492

50

%

$

50,785

53

%

Transaction or restructuring charges (A)

—

0

%

639

1

%

1,065

1

%

Total vessel operations

61,002

45

%

56,131

51

%

51,850

54

%

Corporate:

Continuing operations

65,184

49

%

54,609

49

%

43,408

46

%

Transaction or restructuring charges (A)

8,345

6

%

77

0

%

25

0

%

Total corporate

73,529

55

%

54,686

49

%

43,433

46

%

Total

$

134,531

100

%

$

110,817

100

%

$

95,283

100

%

(A)

Transaction or restructuring charges for the years ended December 31, 2025, 2024 and 2023 include $8.3 million, $0.7 million and $1.1 million, respectively, of transaction or severance and termination benefits.

58

Table of Contents

General and administrative expenses for the year ended December 31, 2025 increased compared to the year ended December 31, 2024 primarily due to higher compensation costs and professional fees. General and administrative expenses for the year ended December 31, 2024 increased compared to the year ended December 31, 2023 primarily due to higher compensation costs and professional fees.

Liquidity, Capital Resources and Other Matters

Our objective in financing our business is to maintain and preserve adequate financial resources and sufficient levels of liquidity. As of December 31, 2025, we had $581.6 million in cash and cash equivalents, and a borrowing capacity under our Revolving Credit Facility of $250.0 million for which any future borrowings would be due April 2030. On July 7, 2025, we issued $650.0 million in 9.125% Senior Notes that mature in July 2030 (2030 Notes). With the proceeds of the offering, we redeemed most of our outstanding debt as of June 30, 2025, including accrued interest and early redemption premiums. Also on July 7, 2025, we executed the $250.0 million Revolving Credit Facility that replaced our previous $25.0 million credit facility. As of the date of this filing, no amounts have been drawn under the Revolving Credit Facility.

In addition, on February 22, 2026, we entered into a definitive agreement to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The Wilson Companies own 22 platform supply vessels operating in Brazil. We will pay the Wilson Sellers an aggregate cash purchase price of $500.0 million on a debt free, cash free basis, subject to adjustments, including a reduction for the assumption of the Wilson Companies’ debt which was approximately $261.0 million as of September 30, 2025. The final debt amount will be determined upon completion of this transaction. The transaction is subject to customary closing conditions, including approval from the Brazilian Antitrust Authority and the consent of the lenders to the Wilson Companies, and is expected to close late in the second quarter of 2026.

We believe cash and cash equivalents and net cash provided by operating activities, supplemented with our revolving credit capacity, provides us with sufficient liquidity to fund our obligations and meet our liquidity requirements, including the acquisition of the Wilson Companies.

Our cash and cash equivalents include restricted cash and other amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences. As of December 31, 2025 approximately 24% of our cash balance held in foreign subsidiaries is awaiting U.S. dollar conversion.

We currently expect earnings by our foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay intercompany liabilities of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the U.S. because cash generated from our domestic businesses and the repayment of intercompany liabilities from foreign subsidiaries are currently sufficient to fund the cash needs of our U.S. operations.

A key component of our growth strategy is expanding our business and fleet through acquisitions, joint ventures and other strategic transactions. We would expect to finance any strategic transactions through the sale of our securities or through debt financing.

Working capital, which includes cash on hand, was $598.9 million at December 31, 2025, and included $5.8 million of current maturities on long term debt. During the year ended December 31, 2025, we reported $333.5 million in net income and generated $379.1 million in cash flows from operating activities, which includes our interest payments and drydock costs.

During the fourth quarter of 2025, we received several overdue payments aggregating approximately $54.0 million from our primary customer in Mexico, which reduced its outstanding receivable balance to $12.4 million as of December 31, 2025. We have not historically had, and we do not expect to have, any material write-offs due to the non-collectability of our receivables.

The Revolving Credit Facility contains customary affirmative and negative covenants, representations and warranties, and events of default, along with the following three financial covenants: (i) a minimum liquidity test that the sum of consolidated cash and available commitments under the Revolving Credit Facility shall not be less than the greater of $20.0 million or 10% of net interest-bearing debt as defined in the agreement; (ii) the ratio of net interest bearing debt to consolidated earnings before depreciation and amortization, interest and other debt costs, net and income tax expense shall be equal to or less than 3 to 1; and (iii) the aggregate fair market value of the collateral vessels divided by the total outstanding debt shall be at least 2.5 to 1. We are currently in compliance and anticipate maintaining ongoing compliance with these financial covenants.

59

Table of Contents

We signed agreements for the construction of two ocean going tugs and eight crew boats, all of which have been delivered as of December 31, 2025. We entered into Facility Agreements to finance a portion of the construction and delivery costs for approximately EUR 24.9 million ($26.7 million). Each of the ten Facility Agreements bears interest at fixed rates ranging from 2.7% to 6.3% and are payable in ten equal principal semi-annual installments, with the first installment commencing approximately six months following delivery of the respective vessel. Each Facility Agreement is secured by the respective vessel, guaranteed by Tidewater as parent guarantor and has no financial covenants.

Please refer to Note (4) - “Debt” to the accompanying Consolidated Financial Statements for further details on our indebtedness.

Share Repurchases

On February 27, 2025, our Board of Directors (Board) approved a $90.3 million share repurchase program, and then on August 1, 2025, our Board approved a new $500.0 million share repurchase program. During the year ended December 31, 2025, we repurchased and retired 2,290,204 shares for approximately $90.0 million, excluding commissions and a 1% excise tax. During 2024, our Board approved several share repurchase programs aggregating $90.7 million. During the year ended December 31, 2024, we repurchased and retired 1,384,186 shares for approximately $90.7 million, excluding commissions and a 1% excise tax. On November 5, 2023, our Board approved a $35.0 million share repurchase program, pursuant to which we repurchased and retired 590,499 shares for approximately $35.0 million, excluding commissions and a 1% excise tax, during the fourth quarter of 2023. Please refer to Item 5 of this Form 10-K - Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities for additional information regarding repurchases of our common stock. Also refer to Note (10) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.

Dividends

We declared no dividends during the years ended December 31, 2025, 2024 and 2023. Please refer to Note (10) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.

Operating Activities

Net cash provided by operating activities for any period will fluctuate according to the level of business activity for the applicable period. Net cash provided by operating activities is as follows:

(In Thousands)

Year Ended

Year Ended

December 31, 2025

December 31, 2024

Net income

$

333,453

$

179,272

Depreciation and amortization

151,095

156,166

Amortization of deferred drydocking and survey costs

111,244

86,604

Amortization of debt premiums and discounts

5,379

6,741

Amortization of below market contracts

(1,200

)

(5,000

)

Unrealized foreign exchange loss (gain)

(23,398

)

14,275

Deferred income taxes benefit

(195,816

)

(2,807

)

Gain on asset dispositions, net

(13,682

)

(15,762

)

Loss on debt extinguishment

27,113

—

Stock based compensation expense

14,483

13,681

Deferred drydocking and survey costs

(98,575

)

(133,258

)

Changes in operating assets and liabilities

69,012

(17,440

)

Net cash provided by operating activities

$

379,108

$

282,472

Net cash provided by operating activities for the year ended December 31, 2025 was $379.1 million reflecting net income of $333.5 million, non-cash depreciation and amortization of $262.3 million, loss on extinguishment of debt of $27.1 million, unrealized foreign exchange gain of $23.4 million, a deferred income tax benefit of $195.8 million and stock-based compensation expense of $14.5 million. Changes in operating assets and liabilities provided $69.0 million in cash, reflecting improved receivable collections including from our primary customer in Mexico. We paid $98.6 million for regulatory drydocks in 2025.

60

Table of Contents

Net cash provided by operating activities for the year ended December 31, 2024 was $282.5 million reflecting net income of $179.3 million, non-cash depreciation and amortization of $242.8 million, unrealized foreign exchange loss of $14.3 million and stock-based compensation expense of $13.7 million. Changes in operating assets and liabilities used $17.4 million in cash, reflecting additional investments in working capital due to an increase in business activity relating to the Solstad Acquisition. We paid $133.3 million for regulatory drydocks in 2024.

Investing Activities

Net cash used in investing activities is as follows:

(In Thousands)

Year Ended

Year Ended

December 31, 2025

December 31, 2024

Proceeds from asset dispositions

$

17,619

$

19,338

Proceeds from sale of notes

660

8,054

Additions to properties and equipment

(25,761

)

(27,580

)

Net cash used in investing activities

$

(7,482

)

$

(188

)

Net cash used in investing activities for the year ended December 31, 2025 was $7.5 million, reflecting proceeds of $17.6 million related to the disposal of 12 vessels and $0.7 million related to the sale of a PEMEX note receivable. Additions to property and equipment was $25.8 million and primarily included upgrades to our existing fleet and continued enhancements to our current enterprise software system.

Net cash used in investing activities for the year ended December 31, 2024 was $0.2 million, reflecting proceeds of $19.3 million related to the disposal of six vessels and $8.1 million related to the sale of a PEMEX note receivable. Additions to property and equipment was $27.6 million and primarily included upgrades to our existing fleet and continued enhancements to our current enterprise software system.

Financing Activities

Net cash used in financing activities is as follows:

(In Thousands)

Year Ended

Year Ended

December 31, 2025

December 31, 2024

Exercise of warrants

$

—

$

4

Issuance of long-term debt

650,000

—

Principal payments on long-term debt

(641,942

)

(103,030

)

Purchase of common stock

(90,089

)

(90,742

)

Payments on finance leases

(6,432

)

—

Debt extinguishment premium

(19,601

)

—

Debt issuance costs

(19,829

)

(213

)

Share based awards reacquired to pay taxes

(8,066

)

(28,614

)

Net cash used in financing activities

$

(135,959

)

$

(222,595

)

Financing activities for the year ended December 31, 2025 used $136.0 million of cash. We received proceeds of $650.0 million from the issuance of long-term debt, made $641.9 million in principal payments on long-term debt and paid $19.6 million in debt extinguishment premiums while incurring $19.8 million of debt issuance costs. In addition, we purchased 2,290,204 shares of our common stock for $90.1 million and paid $8.1 million in taxes on behalf of our employees related to the vesting of share-based awards.

Financing activities for the year ended December 31, 2024 used $222.6 million of cash. We made $103.0 million in principal payments on long-term debt while incurring $0.2 million of debt issuance costs. In addition, we purchased 1,384,186 shares of our common stock for $90.7 million and paid $28.6 million in taxes on behalf of our employees related to the vesting of share-based awards.

61

Table of Contents

Legal Proceedings

We are named defendants or parties in certain lawsuits, claims or proceedings incidental to or arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results and cash flows. Please refer to Note (11) - “Commitments and Contingencies” to the accompanying Consolidated Financial Statements.

Application of Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures and disclosures of any contingent assets and liabilities at the date of the financial statements. We evaluate the reasonableness of these estimates and assumptions continually based on a combination of historical experience and other assumptions and information that comes to our attention that may vary the outlook for the future. Estimates and assumptions about future events and their effects are subject to uncertainty, and accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the business environment in which we operate changes. As a result, actual results may differ from estimates under different assumptions.

The significant accounting policies as described in Note (1) - “Nature of Operations and Summary of Significant Accounting Policies” to the Consolidated Financial Statements, should be read in conjunction with this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have defined a critical accounting estimate as one that is important to the portrayal of our financial condition or results of operations and requires us to make difficult, subjective or complex judgments or estimates about matters that are uncertain. We believe the following critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements are described below. There are other items within our consolidated financial statements that require estimation and judgment, but they are not deemed critical as defined above.

Receivables and Allowance for Credit Losses

In the normal course of business, we extend credit to our customers on a short-term basis. Our principal customers are major oil and gas exploration, field development and production companies. We routinely review and evaluate our accounts receivable balances for collectability. The determination of the collectability of amounts due from our customers requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current credit worthiness to determine that collectability is reasonably assured, as well as consideration of the overall business climate in which our customers operate. Expected credit losses are recorded on the initial recognition of our primary financial assets, which are trade accounts receivable and contract assets. We believe that our allowance for credit losses is adequate to cover potential bad debt losses under current conditions; however, uncertainties regarding changes in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any additional provisions for credit losses that may be required.

Impairment of Long-Lived Assets

We review the vessels in our active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. We group vessels with similar operating and marketing characteristics together for impairment testing purpose.

We estimate future cash flows based upon historical data adjusted for our best estimate of expected future market performance, which, in turn, is based on industry trends. The primary estimates and assumptions used in reviewing active vessel groups for impairment and estimating undiscounted cash flows include utilization rates, average day rates and average daily operating expenses. These estimates are based on recent actual trends in utilization, day rates and operating costs and reflect management’s best estimate of expected market conditions during the period of future cash flows. These assumptions and estimates have changed considerably in the past as market conditions have changed, and they are reasonably likely to continue to change if and when market conditions change in the future. Although we believe our assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce materially different results. Management estimates may vary considerably from actual outcomes due to future adverse market conditions or poor operating results that could result in the inability to recover the current carrying value of an asset group, thereby possibly requiring an impairment charge in the future.

62

Table of Contents

As our fleet continues to age, management closely monitors the estimates and assumptions used in the impairment analysis in order to properly identify evolving trends and changes in market conditions that could impact the results of the impairment evaluation.

If an asset group fails the undiscounted cash flow test, we estimate the fair value of each asset group and compare such estimated fair value to the carrying value of each asset group in order to determine if impairment exists.

We record an impairment charge when the carrying value of an asset group exceeds its estimated fair value. We often dispose of our older vessels when market conditions warrant and opportunities arise. As a result, vessel dispositions vary from year to year, and gains (losses) on sales of assets fluctuate significantly from period to period. Most of our vessels are sold to buyers with whom we do not compete in the offshore energy industry. When circumstances warrant, we review our fleet and make decisions to remove assets that are not considered to be part of our long-term plans. In these circumstances, we will reclassify the identified vessels as held for sale and, if necessary, we will revalue these vessels to net realizable value. Management estimates the fair value of each vessel in an asset group by considering items such as the vessel’s age, length of time stacked, likelihood of a return to active service and actual recent sales of similar vessels, among others. We consider the valuation approach for our vessels to be Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures, fair value measurements due to the level of estimation involved in valuing vessels for impairment purposes or for consideration for sale or recycling. We estimate the net realizable value for assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and recycle yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions. Our value ranges depend on our expectation of the ultimate disposition of the vessel.

We will, in all circumstances, attempt to achieve maximum value for our vessels, but we also recognize that certain vessels are more likely to be recycled, especially given the time and effort required to achieve a sale and the costs incurred to maintain a vessel while searching for a buyer. We establish ranges that in many cases have scrap value as the low end of the range and an expected open market sale value at the top of the range. When there is no expectation within the range that is considered more likely than any other, we apply equal probability weighting to the low and high ends of the valuation range.

Income Taxes

The asset-liability method is used for determining our income tax provisions, under which current and deferred tax liabilities and assets are recorded in accordance with enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. In addition, we determine our effective tax rate by estimating our permanent differences resulting from differing treatment of items for tax and accounting purposes.

As a global company, we are subject to the jurisdiction of taxing authorities in the United States and by the respective tax agencies in the countries in which we operate internationally, as well as to tax agreements and treaties among these governments. Our operations in these different jurisdictions are taxed on various bases: actual income before taxes, deemed profits (which are generally determined using a percentage of revenue rather than profits) and withholding taxes based on revenue. Determination of taxable income in any tax jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of deductions, permissible revenue recognition methods under the tax law and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year. We are periodically audited by various 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 our effective tax rate.

The carrying value of our net deferred tax assets is based on our present belief in our ability to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets, based on current estimates and assumptions. If these estimates and related assumptions change in the future, we may be required to adjust valuation allowances against our deferred tax assets resulting in additional income tax expense or benefit in our Consolidated Income Statements. Management evaluates the realizability of the deferred tax assets and assesses the need for changes to valuation allowances on a quarterly basis. Should we determine that we would not be able to realize all or part of our 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.

63

Table of Contents

Deferred taxes are not provided on undistributed earnings of certain non-U.S. subsidiaries and business ventures because we consider those earnings to be permanently invested abroad.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions would be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that was more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The recognition and measurement of tax liabilities for uncertain tax positions in any tax jurisdiction requires the interpretation of the related tax laws and regulations as well as the use of estimates and assumptions regarding significant future events. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes during any given year.

New Accounting Pronouncements

For information regarding the effect of new accounting pronouncements, please refer to Note (1) - “Nature of Operations and Summary of Significant Accounting Policies” to the accompanying Consolidated Financial Statements.

64

Table of Contents