(6) EMPLOYEE RETIREMENT PLANS

U.S. Defined Benefit Pension Plan

The company has a defined benefit pension plan (pension plan) that covers certain U.S. citizen employees and other employees who are permanent residents of the United States. Benefits are based on years of service and employee compensation. In December 2009, the Board of Directors amended the pension plan to discontinue the accrual of benefits once the plan was frozen on December 31, 2010. On that date, previously accrued pension benefits under the pension plan were frozen for the approximately 60 active employees who participated in the plan. As of March 31, 2016, approximately 37 active employees are covered by this plan. This change did not affect benefits earned by participants prior to January 1, 2011. Active employees who previously accrued benefits under the pension plan continue to accrue benefits as participants in the company’s defined contribution retirement plan effective January 1, 2011. The transfer of employee benefits from a defined benefit pension plan to a defined contribution plan provided the company with more predictable retirement plan costs and cash flows. The company’s future benefit obligations and requirements for cash contributions for the frozen pension plan have also been reduced. Losses associated with the curtailment of the pension plan were immaterial. No amounts were contributed to the defined benefit pension plan during fiscal 2016 and 2015. Management is working with its actuary to determine if a contribution will be necessary during fiscal 2017.

Supplemental Executive Retirement Plan

The company also offers a non-contributory, defined benefit supplemental executive retirement plan (supplemental plan) that provides pension benefits to certain employees in excess of those allowed under the company’s tax-qualified pension plan. A Rabbi Trust has been established for the benefit of participants in the supplemental plan. The Rabbi Trust assets, which are invested in a variety of marketable securities (but not Tidewater stock) are recorded at fair value with unrealized gains or losses included in other comprehensive income. Effective March 4, 2010, the supplemental plan was closed to new participation. The supplemental plan is a non-qualified plan and, as such, the company is not required to make contributions to the supplemental plan. The company contributed $0.2 million to the supplemental plan during fiscal 2016 and did not contribute to the plan during 2015.

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

(In thousands)	2016			2015
Investments held in Rabbi Trust	$	8,811			9,915
Unrealized (loss) gains in carrying value of trust assets		(208	)		235
Unrealized (loss) gains in carrying value of trust assets are net of income tax expense of		(168	)		126
Obligations under the supplemental plan		25,072			25,510

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

Postretirement Benefit Plan

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

Effective November 20, 2015, the company eliminated its post-65 medical coverage for all current and future retirees effective January 1, 2017. The plan amendment resulted in an additional net periodic postretirement benefit of $1.4 million for the year ended March 31, 2016. The medical coverage remains unchanged for participants under age 65.

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

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

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

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

Supplemental Plan

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

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

Whereas fluctuating rates of return are characteristic of the securities markets, the investment objective of the supplemental plan is to achieve investment returns sufficient to meet the actuarial assumptions. This is defined as an investment return greater than the current actuarial discount rate assumption of 4.15%, which is subject to annual upward or downward revisions.

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

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

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

U.S. Pension and Supplemental Plan Asset Allocations

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

	Target			Actual as of 2016			Actual as of 2015
U.S. Pension plan:
Equity securities		—			—			—
Debt securities		100	%		95	%		95	%
Cash and other		—			5	%		5	%
Total		100	%		100	%		100	%
Supplemental plan:
Equity securities		65	%		58	%		58	%
Debt securities		35	%		39	%		39	%
Cash and other		—			3	%		3	%
Total		100	%		100	%		100	%

Significant Concentration Risks

U.S. Plans

The pension plan and the supplemental plan assets are periodically evaluated for concentration risks. As of March 31, 2016, the company did not have any individual asset investments that comprised 10% or more of each plan’s overall assets.

The pension plan assets are primarily invested in debt securities. In the event that plan assets exceed the estimated plan liabilities for the pension plan, up to two times the difference between the plan assets and plan liabilities may be invested in equity securities, and so long as equities do not exceed 15% of the market value of the assets. Investments in foreign securities are restricted to American Depository Receipts (ADR) and stocks listed on the U.S. stock exchanges and may not exceed 10% of the equity portfolio.

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

Fair Value of Pension Plans and Supplemental Plan 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 fair value hierarchy for the pension plans and supplemental plan assets measured at fair value as of March 31, 2016, are as follows:

(In thousands)	Fair Value		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)			Significant unobservable inputs (Level 3)		Measured at Net Asset Value
Pension plan measured at fair value:
Debt securities:
Government securities	$	3,104		3,104		—			—		—
Collateralized mortgage securities		47		—		47			—		—
Corporate debt securities		48,378		—		48,378			—		—
Foreign debt securities		1,499		—		1,499			—		—
Cash and cash equivalents		2,247		346		1,901			—		—
Other		1,077		64		1,013			—		—
Total	$	56,352		3,514		52,838			—		—
Accrued income		822		822		—			—		—
Total fair value of plan assets	$	57,174		4,336		52,838			—		—
Supplemental plan measured at fair value:
Equity securities:
Common stock	$	3,290		3,290		—			—		—
Foreign stock		159		159		—			—		—
American depository receipts		1,311		1,311		—			—		—
Preferred American depository receipts		13		13		—			—		—
Real estate investment trusts		61		61		—			—		—
Debt securities:
Government debt securities		1,711		972		739			—		—
Open ended mutual funds		1,663		—		—			—		1,663
Cash and cash equivalents		343		13		282			—		48
Total	$	8,551		5,819		1,021			—		1,711
Other pending transactions		260		291		(49	)		—		18
Total fair value of plan assets	$	8,811		6,110		972			—		1,729

The following table provides the fair value hierarchy for the pension plans and supplemental plan assets measured at fair value as of March 31, 2015:

(In thousands)	Fair Value			Quoted prices in active markets (Level 1)			Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Measured at Net Asset Value
Pension plan measured at fair value:
Debt securities:
Government securities	$	3,116			3,116			—		—		—
Collateralized mortgage securities		400			—			400		—		—
Corporate debt securities		51,758			—			51,758		—		—
Foreign debt securities		1,529			—			1,529		—		—
Cash and cash equivalents		1,816			—			1,816		—		—
Total	$	58,619			3,116			55,503		—		—
Accrued income		866			866			—		—		—
Total fair value of plan assets	$	59,485			3,982			55,503		—		—
Supplemental plan measured at fair value:
Equity securities:
Common stock	$	3,859			3,859			—		—		—
Foreign stock		201			201			—		—		—
American depository receipts		1,685			1,685			—		—		—
Preferred American depository receipts		15			15			—		—		—
Real estate investment trusts		59			59			—		—		—
Debt securities:
Government debt securities		1,926			1,377			549		—		—
Open ended mutual funds		1,916			—			—		—		1,916
Cash and cash equivalents		377			72			261		—		44
Total	$	10,038			7,268			810		—		1,960
Other pending transactions		(123	)		(123	)		—		—		—
Total fair value of plan assets	$	9,915			7,145			810		—		1,960

Plan Assets and Obligations

Changes in plan assets and obligations during the years ended March 31, 2016 and 2015 and the funded status of the U.S. defined benefit pension plan, Norway’s defined benefit pension plan, and the supplemental plan (referred to collectively as “Pension Benefits”) and the postretirement health care and life insurance plan (referred to as “Other Benefits”) at March 31, are as follows:

	Pension Benefits						Other Benefits
(In thousands)	2016			2015			2016			2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	98,490			84,067			23,926			24,114
Service cost		1,372			825			212			273
Interest cost		3,781			3,873			584			904
Participant contributions		—			—			447			430
Acquisition		(440	)		—			—			—
Plan amendment		—			—			(15,961	)		—
Plan settlement		—			—			—			—
Benefits paid		(4,726	)		(4,405	)		(1,043	)		(863	)
Actuarial (gain) loss		(2,583	)		11,948			(2,592	)		(932	)
Foreign currency exchange rate changes		(64	)		—			—			—
Benefit obligation at end of year		95,830			96,308			5,573			23,926
Change in plan assets:
Fair value of plan assets at beginning of year	$	60,854			56,896			—			—
Actual return		(6	)		6,069			—			—
Expected return		43			—			—			—
Actuarial loss		(134	)		—			—			—
Administrative expenses		(36	)		—			—			—
Acquisition		(225	)		—			—			—
Employer contributions		1,445			925			596			433
Participant contributions		—			—			447			430
Plan settlement		—			—			—			—
Benefits paid		(4,727	)		(4,405	)		(1,043	)		(863	)
Foreign currency exchange rate changes		(40	)		—			—			—
Fair value of plan assets at end of year		57,174			59,485			—			—
Payroll tax unrecognized in benefit obligation at end of year		84			—			—			—
Unfunded status at end of year	$	(38,740	)	$	(36,823	)	$	(5,573	)	$	(23,926	)
Net amount recognized in the balance sheet consists of:
Current liabilities	$	(993	)		(1,306	)		(818	)		(908	)
Noncurrent liabilities		(37,747	)		(35,517	)		(4,755	)		(23,018	)
Net amount recognized	$	(38,740	)		(36,823	)		(5,573	)		(23,926	)

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

(In thousands)	2016		2015
Projected benefit obligation	$	95,830		96,308
Accumulated benefit obligation		91,388		92,808

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

(In thousands)	2016		2015
Projected benefit obligation	$	95,830		96,308
Accumulated benefit obligation		91,388		92,808
Fair value of plan assets		57,174		59,485

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

(In thousands)	2016			2015			2014
Service cost	$	1,371			825			790
Interest cost		3,781			3,873			3,581
Expected return on plan assets		(2,163	)		(2,741	)		(2,871	)
Administrational expenses		36			—			—
Payroll tax of net pension costs		66			—			—
Amortization of prior service cost		36			50			50
Amortization of net actuarial losses		24			—			—
Recognized actuarial loss		2,269			988			1,103
Settlement (gain)		(245	)		—			—
Net periodic pension cost	$	5,175			2,995			2,653

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

(In thousands)	2016			2015			2014
Service cost	$	212			273			405
Interest cost		584			904			1,048
Amortization of prior service cost		(2,996	)		(2,032	)		(2,032	)
Recognized actuarial (gain)		(1,040	)		(1,299	)		(396	)
Net periodic postretirement benefit	$	(3,240	)		(2,154	)		(975	)

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

	Pension Benefits						Other Benefits
(In thousands)	2016			2015			2016			2015
Change in benefit obligation
Net (gain) loss	$	(343	)		8,621			(2,592	)		(932	)
Settlement loss		—			—			—			—
Amortization of prior service (cost) credit		(36	)		(50	)		2,996			2,032
Amortization of net (loss) gain		(2,269	)		(988	)		1,040			1,299
Prior service (cost) credit arising during period		—			—			(15,961	)		—
Total recognized in other comprehensive (income) loss, before tax	$	(2,648	)		7,583			(14,517	)		2,399
Net of tax		(1,721	)		7,583			(9,436	)		1,559

Amounts recognized as a component of accumulated other comprehensive income (loss) as of March 31, 2016 are as follows:

(In thousands)	Pension Benefits			Other Benefits
Unrecognized actuarial (loss) gain	$	(19,169	)		8,172
Unrecognized prior service credit (cost)		—			17,553
Pre-tax amount included in accumulated other comprehensive (loss) income	$	(19,169	)		25,725

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

(In thousands)	Pension Benefits			Other Benefits
Unrecognized actuarial (loss) gain	$	(1,821	)		1,072
Unrecognized prior service credit (cost)		—			4,346

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

	Pension Benefits						Other Benefits
	2016			2015			2016			2015
Discount rate		4.15	%		4.00	%		4.00	%		4.00	%
Rates of annual increase in compensation levels		3.00	%		3.00	%	N/A			N/A

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

	Pension Benefits									Other Benefits
	2016			2015			2014			2016			2015			2014
Discount rate		4.00	%		4.75	%		4.25	%		4.00	%		4.75	%		4.25	%
Expected long-term rate of return on assets		3.70	%		5.00	%		5.00	%	N/A			N/A			N/A
Rates of annual increase in compensation levels		3.00	%		3.00	%		3.00	%	N/A			N/A			N/A

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

Based upon the assumptions used to measure the company’s qualified pension and postretirement benefit obligations at March 31, 2016, including pension and postretirement benefits attributable to estimated future employee service, the company expects that benefits to be paid over the next ten years will be as follows:

	(In thousands)
Year ending March 31,	Pension Benefits		Other Benefits
2017	$	5,944		818
2018		6,991		410
2019		6,733		416
2020		7,683		435
2021		7,050		421
2022 – 2026		36,480		1,928
Total 10-year estimated future benefit payments	$	70,881		4,428

Health Care Cost Trends

The following table discloses the assumed health care cost trends used in measuring the accumulated postretirement benefit obligation and net periodic postretirement benefit cost at March 31, 2016 for pre-65 medical and prescription drug coverage and for post-65 medical coverage, including expected future trend rates.

	Pre-65			Post-65
Year ending March 31, 2016:
Accumulated postretirement benefit obligation		7.75	%		6.90	%
Net periodic postretirement benefit obligation		7.90	%		6.90	%
Ultimate health care cost trend		4.54	%		4.50	%
Ultimate year health care cost trend rate is achieved		2038			2029
Year ending March 31, 2017:
Net periodic postretirement benefit obligation		7.75	%		6.90	%

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

(In thousands)

Increase

Decrease

Accumulated postretirement benefit obligation

250

(227

)

Aggregate service and interest cost

119

(95

)

Defined Contribution Plans

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

Retirement Contributions

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

401(k) Savings Contribution

Upon meeting various citizenship, age and service requirements, employees are eligible to participate in a defined contribution savings plan and can contribute from 2% to 75% of their base salary to an employee benefit trust. Effective January 1, 2016, the company matches, in cash, 50% of the first 8% of eligible compensation deferred by the employee. Prior to January 1, 2016, the company matched, with company stock, 50% of the first 8% of eligible compensation deferred by the employee. Company contributions vest over five years.

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

		2016				2015
Number of shares of Tidewater common stock held by 401(k) plan			351,675				299,256

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

(In thousands)	2016		2015		2014
Defined contribution plans expense, net of forfeitures	$	3,443		4,216		3,854
Defined contribution plans forfeitures		202		52		82

Other Plans

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

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

The company also provides retirement benefits to its eligible non-U.S. citizen employees working outside their respective country of origin.

Effective December 1, 2015, the company amended its existing multinational savings plan to a self-directed multinational defined contribution retirement plan (multinational retirement plan). The company subsequently removed approximately $6.4 million of plan assets and liabilities from the other assets and other liabilities and deferred credits section of the condensed consolidated balance sheets. Non-U.S. citizen shore-based and certain offshore employees working outside their respective country of origin are eligible to participate in the multinational retirement plan provided the employees are not enrolled in any home country pension or retirement program. Participants of the multinational retirement plan may contribute 1% to 50% of their base salary after the first month following hire or transfer to eligible positions. The company matches, in cash, 50% of the first 6% of eligible compensation deferred by the employee which vests over five years. The company does not anticipate its contribution expense for the multinational retirement plan will increase due to the amendment.

Prior to the amendment of this plan, participants could contribute 1% to 15% of their base salary and the company matched, in cash, 50% of the first 6% of eligible compensation deferred by the employee. This former plan’s company contributions vested over six years.

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

(In thousands)		2016				2015				2014
Multinational plan expense		$	596				494				465

The company also has a defined benefit pension plan that covers certain Norway citizen employees and other employees who are permanent residents of Norway. Benefits are based on years of service and employee compensation. As of March 31, 2016, approximately 146 active employees are covered by this plan. The company contributed a respective 3.8 million NOK and 4.8 million NOK (approximately $0.5 million and $0.6 million, respectively) to the defined benefit pension plan during fiscal 2016 and 2015. Management is working with its actuary to determine if a contribution will be necessary during fiscal 2017. The preceding fair value hierarchy tables and pension plan assets and obligations tables include the Norway pension plan.

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