##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    Commission File Number
    001-16857
 HORIZON OFFSHORE,
    INC.
 (Exact name of registrant as
    specified in its charter)
   Delaware(State or other
    jurisdiction
    of incorporation or organization)

76-0487309(I.R.S. Employer
    Identification No.)2500 CityWest Boulevard,
    Suite 2200
    Houston, Texas(Address of principal
    executive offices)

77042(Zip Code)    (713) 361-2600 (Registrants
    telephone number, including area code)
   þ o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ




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##### 



HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  QUARTERLY
    REPORT ON
    FORM 10-Q
 For the
    Quarter Ended March 31, 2007
  
  Description



PagePART I.
    FINANCIAL INFORMATIONItem 1.


Financial
    Statements


3Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


20Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


28Item 4.


Controls and
    Procedures


29PART II.
    OTHER INFORMATIONItem 1A.


Risk
    Factors


29Item 6.


Exhibits


30Signatures


31Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906   2




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  March 31,


December 31,2007


2006(Unaudited)(In thousands, except share data)ASSETSCURRENT ASSETS:Cash and cash equivalents

$
73,471


$
96,890Short-term investments


15,208



Restricted cash


9,432



9,325Accounts receivable Contract receivables


48,583



72,231Costs in excess of billings


130,336



112,836Other


2,971



2,773Income tax receivable


1,040



5,040Other current assets


3,490



8,140Total current assets


284,531



307,235PROPERTY AND EQUIPMENT, net


197,958



197,409CONTRACT RECEIVABLES, long-term


13,346



OTHER ASSETS, net


16,270



18,375$
512,105


$
523,019LIABILITIES AND
    STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable

$
13,384


$
15,160Accrued liabilities


8,347



8,130Accrued job costs


39,957



56,782Billings in excess of costs


10,634



2,632Current maturities of long-term
    debt


15,618



14,813Current taxes payable


6,559



5,195Total current liabilities


94,499



102,712LONG-TERM DEBT, net of current
    maturities


80,839



85,495SUBORDINATED NOTES


14,182



13,904OTHER LIABILITIES


893



924DEFERRED INCOME TAXES


21,680



22,649Total liabilities


212,093



225,684COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $0.00001 par
    value, 5,000,000 shares authorized, none issued and
    outstanding






Common stock, $0.00001 par
    value, 100,000,000 shares authorized, 32,680,703 and
    32,395,258 shares issued and outstanding, respectively






Additional paid-in capital


419,846



419,392Accumulated deficit


(119,497
)


(121,766
)Accumulated other comprehensive
    loss


(337
)


(291
)Total stockholders equity


300,012



297,335$
512,105


$
523,019    3




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##### Table of Contents



HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Three Months EndedMarch 31,2007


2006(Unaudited)(In thousands, except shareand per share data)CONTRACT REVENUES

$
86,715


$
129,945COST OF CONTRACT REVENUES


73,529



91,554Gross profit


13,186



38,391SELLING, GENERAL AND
    ADMINISTRATIVE EXPENSES


7,829



8,258Operating income


5,357



30,133OTHER:Interest expense


(2,696
)


(4,085
)Interest income


886



393Loss on debt extinguishment






(2,402
)Other income (expense), net


(259
)


(25
)NET INCOME BEFORE INCOME TAXES


3,288



24,014INCOME TAX PROVISION


1,019



8,543NET INCOME

$
2,269


$
15,471EARNINGS PER SHARE 
    BASIC AND DILUTED:Net income per share 
    basic

$
0.07


$
0.52Net income per share 
    diluted

$
0.07


$
0.51WEIGHTED AVERAGE SHARES USED
    IN COMPUTING EARNINGS
    PER SHARE:BASIC


31,856,906



29,559,869DILUTED


32,446,006



30,375,132    4




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##### Table of Contents



HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Three Months EndedMarch 31,2007


2006(Unaudited)(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

$
2,269


$
15,471Adjustments to reconcile net income
    to net cash used in operating activities Depreciation and amortization


5,602



6,326Net gain on sale of assets






(15
)Deferred income taxes


(944
)


1,512Paid in-kind interest on
    subordinated notes and related party term debt


278



580Amortization of deferred loan fees
    recorded as interest expense


139



351Stock-based compensation expense


1,140



2,049Loss on debt extinguishment






2,402Changes in operating assets and
    liabilities Restricted cash


(107
)


2,435Accounts receivable


14,104



(43,205
)Costs in excess of billings


(17,500
)


11,759Billings in excess of costs


8,002



(972
)Other assets


4,401



(5,855
)Accounts payable


(1,776
)


3,857Accrued and other liabilities


(1,025
)


(1,524
)Accrued job costs


(16,825
)


(4,525
)Current taxes payable


1,364



6,052Net cash used in operating
    activities


(878
)


(3,302
)CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases and additions to property
    and equipment


(3,982
)


(13,740
)Proceeds from sale of assets


500



15(Purchases) sales of short-term
    investments, net


(15,208
)


Net cash used in investing
    activities


(18,690
)


(13,725
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Principal payments on term debt


(3,851
)


(3,550
)Stock issuance costs






(12
)Deferred loan fees






(1
)Stock option transactions






8Net cash used in financing
    activities


(3,851
)


(3,555
)NET DECREASE IN CASH AND CASH
    EQUIVALENTS


(23,419
)


(20,582
)CASH AND CASH EQUIVALENTS AT
    BEGINNING OF PERIOD


96,890



42,960CASH AND CASH EQUIVALENTS AT END OF
    PERIOD

$
73,471


$
22,378SUPPLEMENTAL DISCLOSURES:Cash paid for interest

$
2,501


$
3,445Cash paid for income taxes

$
599


$
980Cash refund for income taxes

$
4,000


$
NON-CASH INVESTING AND FINANCING
    ACTIVITIES:Capital expenditures for property
    and equipment included in accrued liabilities

$
1,321


$
2,238Repayment of debt and accrued
    interest with proceeds of additional debt

$



$
74,679Purchase of vessel with long-term
    debt

$



$
11,000Payment of deferred loan fees,
    closing costs and fees through issuance of term debt

$



$
2,721    5




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    ORGANIZATION
    AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  Organization
    and Basis of Presentation
  hook-up
  Form 10-K
  Segment
    Information and Significant Customers
    Three Months EndedMarch 31,Customer

2007


2006Customer A


52
%


8
%Customer B


20
%


Customer C


7
%


33
%Customer D






17
%Customer E






13
%Customer F


1
%


12
%    6




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##### Table of Contents



HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Concentration
    of Credit Risk
    Principles
    of Consolidation
    Use of
    Estimates
    Revenue
    Recognition
  percentage-of-completion percentage-of-completion 81-1, Accounting for Performance
 7




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  percentage-of-completion
  Interest
    Expense
      Cash
    and Cash Equivalents
    Short-Term
    Investments
  available-for-sale
  Restricted
    Cash
   8




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounts
    Receivable
  percentage-of-completion
      case-by-case
 9




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Other
    Long-Term Assets
    March 31,


December 31,2007


2006Capitalized dry-dock costs

$
13,524


$
15,441Deferred loan fees


2,246



2,386Deposits


202



311Other


298



237$
16,270


$
18,375   Texas Horizon Pecos Horizon
      Stock-Based
    Compensation
  Share-Based Payment, Accounting for Stock-Based
    Compensation, Accounting for Stock Issued to Employees,
   10




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Federal
    Income Taxes
  Accounting for Income
    Taxes,
    Accounting
    for Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109
  Foreign
    Currency
   11




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Financial Instruments
      Earnings
    Per Share
  Earnings Per
    Share
  Other
    Comprehensive Income (Loss)
  Reporting Comprehensive
    Income
  Interest Rate Swap Accounting for Derivative Instruments and Hedging
    Activities
  Reclassifications
   12




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Recent
    Accounting Pronouncements
    Fair Value Measurements
  The Fair Value Option for Financial Assets and
    Financial Liabilities, including an amendment of FASB Statement
    No. 115
  2.
    PROPERTY
    AND EQUIPMENT:    March 31,


December 31,2007


2006Barges, vessels, and related
    equipment

$
257,183


$
253,585Land and buildings


18,830



18,613Machinery and equipment


245



245Office furniture and equipment


7,278



7,175Leasehold improvements


4,339



4,192287,875



283,810Less  accumulated
    depreciation


(89,917
)


(86,401
)Property and equipment, net

$
197,958


$
197,409   Atlantic Horizon
   13




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   units-of-production
    Buildings


15 yearsMachinery and equipment


8-15 yearsOffice furniture and equipment


3-5 yearsLeasehold improvements


3-10 years     Three Months Ended March 31,2007


2006Cost of contract revenues

$
3,263


$
4,270Selling, general and
    administrative expenses


252



282$
3,515


$
4,552   units-of-production
  Accounting for the
    Impairment or Disposal of Long-Lived Assets,
 14




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    STOCKHOLDERS
    EQUITY:  Earnings
    Per Share
    Three Months Ended March 31,2007


2006Net income

$
2,269


$
15,471Average common shares outstanding


31,857



29,560Basic earnings per share

$
0.07


$
0.52Average common and dilutive
    potential common shares outstanding:Average common shares outstanding


31,857



29,560Unvested restricted stock


589



81532,446



30,375Diluted earnings per share

$
0.07


$
0.51     Stock-Based
    Compensation
    Stock
    Plans
     15




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options
        Restricted
    Stock
        4.
    RELATED
    PARTY TRANSACTIONS:      5.
    NOTES PAYABLE:   16




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pecos Horizon
  Sea Horizon
        6.
    LOSS ON
    DEBT EXTINGUISHMENT:   17




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.
    COMMITMENTS
    AND CONTINGENCIES:  Contractual
    Disputes and Litigation
    Tax
    Assessment
    Letters
    of Credit
    Capital
    Expenditures
    Warranties
   18




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HORIZON
    OFFSHORE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    GEOGRAPHIC
    INFORMATION:    Three Months Ended March 31,2007


2006Revenues:Domestic

$
23.3


$
73.1Latin America


51.9



10.2West Africa


6.2



42.7Southeast Asia/Mediterranean


5.3



3.9Total

$
86.7


$
129.9Gross Profit:Domestic

$
4.5


$
27.4Latin America


15.6



West Africa


(8.7
)


8.6Southeast Asia/Mediterranean


1.8



2.4Total

$
13.2


$
38.4   As ofMarch 31,


December 31,2007


2006Property and Equipment(1):Domestic

$
108.9


$
121.1Latin America


52.6



39.4West Africa


0.3



0.3Southeast Asia/Mediterranean


36.2



36.6Total

$
198.0


$
197.4     (1)
    
    Property and equipment includes vessels, property and related
    marine equipment. Amounts reflect the location of the assets at
    March 31, 2007 and December 31, 2006. Equipment
    location changes as necessary to meet working requirements.
    Other identifiable assets include inventory and other long-term
    assets, and are primarily located in the domestic region. 19




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##### Table of Contents



Item 2.
    Managements
    Discussion And Analysis Of Financial Condition And Results Of
    Operations  Form 10-K.
  General
      
    laying, burying or repairing marine pipelines;
    providing
    hook-up and
    commissioning services;
    installing production platforms and other structures; and
    disassembling and salvaging production platforms and other
    structures.    
    expectations and perception about future demand and the price of
    oil and gas;
    the ability of the oil and gas industry to access capital;
    the cost of exploring for, producing and developing oil and gas
    reserves;
    discovery rates of new oil and gas reserves in offshore areas;
    sale and expiration dates of offshore leases in the United
    States and abroad;
    local and international political and economic conditions;
    governmental regulations;
    the availability and cost of capital; and
    damage to structures and pipelines caused by hurricanes and
    severe weather conditions in the U.S. Gulf of Mexico and
    other areas.       20




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Overview
        Sea Horizon
   21




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##### Table of Contents



Results
    of Operations
    Three Months Ended March 31,2007


2006Revenues:Domestic

$
23.3


$
73.1Latin America


51.9



10.2West Africa


6.2



42.7Southeast Asia/Mediterranean


5.3



3.9Total

$
86.7


$
129.9Gross Profit:Domestic

$
4.5


$
27.4Latin America


15.6



West Africa


(8.7
)


8.6Southeast Asia/Mediterranean


1.8



2.4Total

$
13.2


$
38.4   Quarter
    Ended March 31, 2007 Compared to the Quarter Ended
    March 31, 2006
  Contract Revenues.
        Sea Horizon
  Gross Profit.
 22




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##### Table of Contents



Selling, General and Administrative
    Expenses.
  Interest Expense.
  Three Months Ended March 31,2007


2006Cash paid for interest

$
2.5


$
3.4Interest paid in-kind


0.2



0.6Other non-cash charges, net






0.1$
2.7


$
4.1     Interest Income.
  Loss on Debt Extinguishment.
  Other Income (Expense), Net.
 23




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Income Taxes.
  Net Income.
  Liquidity
    and Capital Resources
  General
    start-up start-up start-up
  Cash
    Flows
       24




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Working
    Capital
  case-by-case
  Indebtedness
      Pecos Horizon
  Sea Horizon
     25




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##### Table of Contents



Claims
    and Litigation
      Off-Balance
    Sheet Arrangements
      Contractual
    Obligations and Capital Expenditures
    Remainderof 2007


2008


2009


2010


2011


Thereafter


TotalPrincipal and interest payments on
    debt

$
19,073


$
19,609


$
18,177


$
35,354


$
48,170


$
653


$
141,036Operating leases


1,981



2,337



757



1,879



1,838



7,017



15,809$
21,054


$
21,946


$
18,934


$
37,233


$
50,008


$
7,670


$
156,845  26




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Forward-Looking
    Statements
    
    our business is highly cyclical;
    oil and gas prices are volatile and price declines may affect us;
    the highly competitive nature of the marine construction
    business;
    seasonality of the offshore construction industry in the
    U.S. Gulf of Mexico;
    operating hazards, including the unpredictable effect of natural
    occurrences on operations, such as hurricanes and other hazards
    associated with maritime activities, and the significant
    possibility of accidents resulting in personal injury and
    property damage;
    risks involved in the expansion of our operations into
    international offshore oil and gas producing areas;
    our ability to obtain and retain highly skilled personnel;
    extreme weather conditions may adversely impact our operations;
    contract bidding risks, including those involved in performing
    projects on a fixed-price basis and extra work performed outside
    the original scope of work, and the successful negotiation and
    collection of contract claims for such extra work;
    our dependence on continued strong working relationships with
    significant customers operating in the Gulf of Mexico;
    percentage-of-completion
    accounting;
    estimates and assumptions that we use to prepare our financial
    statements;
    the continued active participation of our executive officers and
    key operating personnel;
    the effect on our performance from regulatory programs and
    environmental matters;
    our international operations are subject to the
    U.S. Foreign Corrupt Practices Act;
    our ability to fund working capital requirements;
    limitations on our operating and financial flexibility because
    of restrictive covenants in our debt instruments;
    our ability to obtain performance bonds and letters of credit if
    required to secure our performance under new international
    contracts;
    the potential impairment of our assets in the future; and
    a possible terrorist attack or armed conflict.  Form 10-K.
 27




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Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk    Interest
    Rate Risk
      Concentration
    of Credit Risk
   28




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##### Table of Contents



Foreign
    Currency Risk
    Item 4.
    Controls
    and Procedures  Rule 13a-15(b) Rule 13a-15(e)
   PART II.
    OTHER INFORMATION  Item 1A.
    Risk
    Factors  Form 10-K, Form 10-K.
 29




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##### Table of Contents



Item 6.
    Exhibits  Exhibits3
.1

Amended and Restated Certificate
    of Incorporation of the Company (Incorporated by reference to
    the Companys Current Report on
    Form 8-K
    filed September 19, 2005)3
.2

Certificate of Amendment to the
    Amended and Restated Certificate of Incorporation of the Company
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed April 18, 2006)3
.3

Bylaws of the Company
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed September 19, 2005)4
.1

Specimen of Common Stock
    Certificate (Incorporated by reference to the Companys
    Current Report on
    Form 8-K
    filed April 18, 2006)10
.1

Fourth Amendment to Revolving
    Credit and Security Agreement, dated and effective as of
    April 4, 2007, by and between Horizon Offshore, Inc.,
    Horizon Offshore Contractors, Inc., HOC Offshore, S. de R.L. de
    C.V., Horizon Marine Contractors (Malaysia) Sdn. Bhd., PT
    Horizon Offshore Indonesia, Horizon Marine Construction
    (Mauritius) Ltd., Horizon Marine Construction Ltd. and PNC Bank,
    National Association, as agent and lender (Incorporated by
    reference to Exhibit 10.1 of the Companys Current
    Report on
    Form 8-K
    filed April 5, 2007)31
.1

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)31
.2

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)32
.1

Certification Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)32
.2

Certification Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)  30




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SIGNATURES      By:
    /s/  Ronald
    D. Mogel      31




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INDEX TO
    EXHIBITS
  Exhibit

Description3
.1

Amended and Restated Certificate
    of Incorporation of the Company (Incorporated by reference to
    the Companys Current Report on
    Form 8-K
    filed September 19, 2005)3
.2

Certificate of Amendment to the
    Amended and Restated Certificate of Incorporation of the Company
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed April 18, 2006)3
.3

Bylaws of the Company
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed September 19, 2005)4
.1

Specimen of Common Stock
    Certificate (Incorporated by reference to the Companys
    Current Report on
    Form 8-K
    filed April 18, 2006)10
.1

Fourth Amendment to Revolving
    Credit and Security Agreement, dated and effective as of
    April 4, 2007, by and between Horizon Offshore, Inc.,
    Horizon Offshore Contractors, Inc., HOC Offshore, S. de R.L. de
    C.V., Horizon Marine Contractors (Malaysia) Sdn. Bhd., PT
    Horizon Offshore Indonesia, Horizon Marine Construction
    (Mauritius) Ltd., Horizon Marine Construction Ltd. and PNC Bank,
    National Association, as agent and lender (Incorporated by
    reference to Exhibit 10.1 of the Companys Current
    Report on
    Form 8-K
    filed April 5, 2007)31
.1

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)31
.2

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)32
.1

Certification Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)32
.2

Certification Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (Filed
    herewith)  32