FOOL CONFERENCE CALL SYNOPSIS*
By Greg Markus (TMF Boring)

Tidewater Inc.
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1140 Canal St.
New Orleans, LA 70112
(504) 568-1010

ANN ARBOR, Mich. (July 23, 1997) /FOOLWIRE/ -- Tidewater Inc. owns and operates approximately 750 vessels worldwide, the largest fleet serving the international offshore energy industry. The company also owns and operates one of the world's largest rental fleets of natural gas compressors. On July 22, Tidewater announced net earnings for its first quarter of fiscal 1998 ending June 30, 1997 of $50.8 million, or $0.83 per share, versus net earnings of $24.4 million, or $0.39 per share, for the same period in fiscal 1997, a 113% increase in per share earnings. Revenues were $256.6 million as compared to $175.9 million for the corresponding quarter in fiscal 1997 and $220.8 million in the March 1997 quarter.

OPENING REMARKS. William C. O'Malley, chairman, president, and CEO, opened the call by saying that he had just returned from an around-the-world trip to visit Tidewater's global operations and that he sees healthy and improving markets worldwide, especially in the U.S. Gulf of Mexico and off the coasts of West Africa, South America, and Southeast Asia. Day rates have been increasing globally, and management foresees this trend continuing.

RECENT ACQUISITIONS. Tidewater's acquisition of O.I.L. Ltd. and its 100 vessels closed midway through the quarter and added to results for the last 45 days of the period. During the quarter Tidewater also acquired from a former partner the remaining 50% interest partner in a nine-vessel joint venture in Australia and purchased five safety standby vessels that added to Tidewater's existing fleet in the North Sea. Tidewater anticipates increased efficiencies as it integrates these acquisitions fully into its fleet.

FINANCIAL DETAILS. Largely because of those acquisitions, total assets at the end of the quarter totaled $1.7 billion as compared with $1.0 billion in the immediately preceding quarter (ending March 1997). Cash at the end of the June quarter stood at approximately $27 million and total debt was $487 million, of which $423 million is long-term debt. Depreciation expense was $25.1 million and general and administrative expense was $18.8 million, which includes costs associated with the O.I.L. acquisition. Interest expense was $4.5 million. Gains on asset sales were about $3.5 million, the same as in the March quarter. The company's effective income tax rate was 34% and taxes were $26.1 million.

MARINE SEGMENT OVERVIEW. Revenue from the vessels Tidewater owns and operates was $216 million in the June quarter, versus $188 million in the March quarter. The international portion of that revenue was 51% as compared with 46% in the March quarter, and management expects that to rise to around 55% for the September quarter. With the increased fleet size relative to the prior quarter, crewing costs rose $5 million sequentially, to $52.7 million, and repair and maintenance costs rose to $34.0 million from $24.9 million. Insurance, fuel, and other costs were roughly flat versus the prior quarter, bringing the cash operating margin to 48.7% as compared with 48.6% in the March quarter.

DOMESTIC FLEET. Tidewater operated an average of 144 domestic supply and towing supply vessels during the quarter, with an average day rate of $6986, an increase of $600 over the March quarter. Crew and utilization costs averaged $1976 per day. Offshore towing day rates averaged $6443. The overall utilization rate was 84.8% versus 84.0% for the March quarter.

INTERNATIONAL FLEET. The company operated an average of 192 supply and towing supply vessels internationally, with an average day rate of $4806. At the end of June the fleet count was 231 (reflecting the acquisitions) and the average day rate was $4950. The average number of crew and utility vessels in operation was 50. At the end of June the number of these vessels was 57 and the average day rate was $2000. The offshore towing fleet averaged 54 vessels in operation over the quarter and stood at 56 at the end of June. The average day rate was $3413 and stood at $3300 at quarter's end. Operating safety and standby vessels averaged 26 over the quarter and 31 at the end of June. The average day rate for the quarter was $6002 and was $6090 at the end of June. The overall average utilization rate was 86.0% for the quarter and 85.0% at the end of June, including the O.I.L. vessels. The average utilization rate was 87.8% in the March quarter, so there was very little change in utilization.

COMPRESSION SEGMENT. Rental revenue increased to $19.9 million as compared with $19.4 for the March quarter. Operating costs were down slightly, to $8.7 million versus $9.0 million, and cash operating margin for rental activity increased to 56.5% versus 53.7% for the March quarter. On a horsepower basis, utilization averaged 80.8% against 79.4% for the preceding quarter, and the average rate was $16.69 per month versus $16.62 per month. Compression sales totaled $6.2 million, down from $9.4 million in the March quarter. Profit was about flat, however, at $1.7 million versus $1.8 million for the March quarter.

MARKET OUTLOOK. Markets virtually everywhere are very strong. Effective July 15, rates rose an average of $800 in the U.S. market, to around $8000 to $9000 per day. Tidewater expects very strong domestic results for the September quarter. On the international side, the company is coming off of contracts that were signed as long as two years ago, and the newly contracted rates are substantially higher. In Australia, for example, one contract established a new rate of $11,500 as compared with the old rate of $7,400. Another rate went from $5,000 to $12,000, and a third from $9,300 to $10,000. In the Bangladesh and Indonesia markets, examples of increases are from $7400 to $8500 now, from $3800 to a new rate of $4700, from $6200 formerly to $8300 now, and so on. Rates in Malaysia, Dubai, Egypt, Trinidad, Mexico, Venezuela, West Africa, and other areas are showing comparable trends.

MARKET SHARE. The O.I.L. acquisition brings Tidewater's market share in West Africa to 57%. In the North Sea, Tidewater has gone from almost zero market share to 15% of the towing and towing supply market. Comparable towing and towing supply market share statistics for other regions are: Southeast Asia, 24% (and 50% of the higher-tonnage market); Mideast, 33%; Mexico, 55%; South America, 9% (and closer to 25%-30% of the higher-tonnage market); Alaska, 100%; California, approximately 67%; and U.S. Gulf of Mexico, 43%.

NEW VESSEL CONSTRUCTION. Tidewater has no intention of launching a new building program. Someday the company will need to do that, but not now. The total rig count is more important than the price of oil, and the number of new rigs does not justify building new vessels. Tidewater is 50% larger than it was 14 months ago, and it has accomplished that without building anything new. Tidewater projects no appreciable attrition in its fleet to occur over the next couple of years. Tidewater has a prototype vessel under construction that it expects to receive around the end of 1997 or early 1998.

PROJECTIONS. For the September quarter, Tidewater's marine operating costs should be in the range of $120 million to $122 million. Consolidated amortization for compression and marine segments will be about $31 million. Consolidated general and administrative expenses for the September quarter are estimated to be about $21 million.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.