##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
    
   Pre-Effective Amendment
    No. 2
 
 to
 Form S-1
  REGISTRATION
    STATEMENT
 UNDER
 THE SECURITIES ACT OF
    1933
      ORION MARINE GROUP,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

1600

26-0097459(State or other jurisdiction
    of
    incorporation or organization)

(Primary Standard Industrial
    Classification Code)

(I.R.S. Employer
    Identification Number)   12550 Fuqua
 Houston, Texas 77034
 (713) 852-6500
 (Address, including zip code,
    and telephone number,
 including area code, of
    Registrants principal executive officers)
  J. Michael Pearson
 President and Chief Executive
    Officer
 12550 Fuqua, Houston, Texas
    77034
 (713) 852-6500
 (Name, address, including zip
    code, and telephone number,
 including area code, of agent
    for service)
      Copies Requested
    to:
  Kyle K. Fox, Esq.
 
 Vinson & Elkins
    LLP
 
 The Terrace 7
 2801 Via Fortuna,
    Suite 100
 Austin, Texas 78746
 Telephone:
    (512) 542-8539
 Fax:
    (512) 236-3340
      Approximate date of commencement of proposed sale to the
    public:
  þ
  o
  o
  o
  The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the Registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act or until the Registration Statement shall
    become effective on such date as the Commission, acting pursuant
    to said Section 8(a), may determine.




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The
information in this prospectus is not complete and may be
changed. These securities many not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.  SUBJECT TO
    COMPLETION, DATED NOVEMBER 13, 2007
 
  PROSPECTUS
  
  20,949,196 Shares
    Common Stock
         
   
    Investing in our common stock involves risks. You should
    read the section entitled Risk Factors beginning on
    page 10 for a discussion of certain risk factors that you
    should consider before investing in our common stock.
    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.




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NOTICE
    TO INVESTORS
  Restrictions
    on Foreign Ownership
  non-U.S. citizens.
  
    limit ownership by
    non-U.S. citizens
    of any class or series of our capital stock (including our
    common stock) to 23%;
    permit us to withhold dividends and suspend voting rights with
    respect to any shares held by
    non-U.S. citizens;
    permit us to establish and maintain a dual stock certificate
    system under which different forms of certificates may be used
    to reflect whether the owner is a U.S. citizen;
    permit us to redeem any shares held by
    non-U.S. citizens
    so that our foreign ownership is less than 23%; and
    permit us to take measures to ascertain ownership of our stock.  non-U.S. citizens
  MARKET
    DATA
   i




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PROSPECTUS
    SUMMARY
  This summary highlights information contained elsewhere in
    this prospectus, but it does not contain all of the information
    that you may consider important in making your investment
    decision. Therefore, you should read the entire prospectus
    carefully, including, in particular, the Risk
    Factors section beginning on page 10 of this
    prospectus and the financial statements and related notes
    included elsewhere in this prospectus. As used in this
    prospectus, unless the context otherwise requires or indicates,
    references to Orion, the company,
    we, our, and us refer to
    Orion Marine Group, Inc. and its subsidiaries taken as a
    whole.
  About
    Orion
            
    increasing North American freight capacity / port and
    channel expansion and maintenance;
    deteriorating conditions of U.S. intracoastal waterways and
    bridges;
    historic federal transportation funding bill;
    robust cruise industry activity;
    continuing U.S. base realignment and closure program;
    strong oil and gas capital expenditures;
    ongoing U.S. coastal and wetland restoration and
    reclamation; and
    recurring hurricane restoration and repair.
 1




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non-U.S. persons
 
  History
 2




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Competitive
    Strengths
    Breadth of Capabilities.
  Experienced Management Team.
  High Quality Fleet and Marine Maintenance
    Facilities.
    Financial Strength /Conservative Balance
    Sheet.
  Self-Performance of Contracts.
  Project Selection and Bidding
    Expertise.
 3




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Strong Regional Presence.
  Growth
    Strategy
    Expand and Fill in Our Service
    Territory.
  Pursue Strategic Acquisitions.
  Continue to Capitalize on Favorable Long-Term Industry
    Trends.
  Continue to Enhance Our Operating
    Capabilities.
 4




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Risk
    Factors
   
  Third
    quarter
 
 
   
 
   
  Corporate
    Information
  (713) 852-6500.
 5




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THE
    OFFERING
    Common stock offered by selling shareholders(1)
    
    20,949,196 sharesCommon stock outstanding after the offering
    
    21,565,324 sharesDividend policy
    
    We do not anticipate paying cash dividends on shares of our
    common stock for the foreseeable future.Use of proceeds
    
    We will not receive any of the proceeds from the sale of the
    shares of common stock by the selling shareholders. 
  Listing and Trading
    
    We have applied to list our common stock on the Nasdaq Global
    Market under the symbol OMGI. 
  Risk factors
    
    For a discussion of factors you should consider in making an
    investment, see Risk Factors beginning on
    page 10.    (1)
    
    See Selling Shareholders for more information on the
    selling shareholders. Currently represents all outstanding
    shares of our common stock except for 26,426 shares of our
    common stock granted to certain of our executive officers and
    key employees in May 2007 and 589,702 shares of our common
    stock granted to certain of our executive officers and key
    employees pursuant to our 2005 Stock Incentive Plan.
 6




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SUMMARY
    CONSOLIDATED FINANCIAL DATA
 7




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Predecessor


SuccessorJanuary 1


October 14Year Ended


to


to


Year Ended


Nine Months EndedDecember 31,


October 13


December 31,


December 31,


September 30,2002


2003


2004


2004


2005


2006


2006


2007(Unaudited)


(Unaudited)(In thousands, except for share and per share data)Statement of Operations Data:Contract revenues

$
106,793


$
101,369


$
97,989


$
32,570


$
167,315


$
183,278


$
129,917


$
149,771Cost of contract revenues


80,149



77,354



79,185



30,065



145,740



144,741



105,565



114,850Gross profit


26,644



24,015



18,804



2,505



21,575



38,537



24,352



34,921Selling, general and administrative expenses


15,478



16,376



7,752



1,611



10,685



18,225



9,550



16,649Operating income


11,166



7,639



11,052



894



10,890



20,312



14,802



18,272Interest expense, net


310



282



24



446



2,179



1,755



1,368



136Other (income) loss, net


(605
)


(1,030
)


(52
)


(237
)


(405
)


(886
)


32



(27
)Income before income taxes


11,461



8,387



11,080



685



9,116



19,443



13,402



18,163Income tax expense


4,621



3,508



4,378



266



3,805



7,040



4,874



6,834Net income


6,840



4,879



6,702



419



5,311



12,403



8,528



11,329Preferred dividends














460



2,100



2,100



1,571



777Income (loss) available to common shareholders

$
6,840


$
4,879


$
6,702


$
(41
)

$
3,211


$
10,303


$
6,957


$
10,552Adjusted Per Common Share Data(2):Net income per shareBasic

$
74.35


$
50.25


$
69.02


$



$
0.20


$
0.65


$
0.44


$
0.57Diluted

$
74.35


$
50.25


$
69.02






$
0.20


$
0.63


$
0.42


$
0,55Weighted average shares outstandingBasic


92,000



97,100



97,100



15,695,067



15,706,960



15,872,360



15,832,362



18,631,171Diluted


92,000



97,100



97,100



15,695,067



16,135,211



16,407,250



16,432,013



19,271,091Other Financial Data:EBITDA(1)

$
17,550


$
15,318


$
16,544


$
3,091


$
22,331


$
33,003


$
23,504


$
27,791Capital expenditures


5,003



7,044



8,407



2,383



9,149



11,931



9,849



7,939Cash interest expense


325



282



150



263



2,146



3,453



1,876



926Depreciation and deferred financing cost amortization


5,779



6,649



5,440



1,960



11,036



11,805



8,734



9,492Net cash provided by operating activities


11,900



15,591



8,193



3,262



11,618



32,475



25,406



6,328Net cash (used in) investing activities


(14,273
)


(6,809
)


(6,634
)


(61,654
)


(5,431
)


(11,987
)


(10,097
)


(6,054
)Net cash provided by (used in) financing activities


4,682



(5,476
)


(1,055
)


66,094



(6,244
)


(9,572
)


(3,630
)


(4,415
)  
  
 Predecessor


SuccessorAs of December 31,


As of September 30,2002


2003


2004


2005


2006


2007(Unaudited)(In thousands)Balance Sheet Data:Cash and cash equivalents

$
5,114


$
8,420


$
7,701


$
7,645


$
18,561


$
14,420Working capital


6,478



7,775



11,475



14,729



12,970



28,254Total assets


54,448



53,711



113,739



114,626



125,072



129,677Total debt


11,556



5,965



40,489



34,548



25,000



1,643Total stockholders equity


27,045



32,039



35,419



40,730



53,239



84,372
 8




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(1)
    
    For an explanation of EBITDA and a reconciliation of EBITDA to
    net income calculated and presented in accordance with generally
    accepted accounting principles, or GAAP, please see
     Non-GAAP Financial Measures.(2)
    
    The share and per share financial data presented for successor
    periods have been adjusted to give effect to the 2.23 for one
    reverse split of our common stock that we effected on
    May 17, 2007 in connection with the 2007 Private Placement.
    The substantial difference in weighted average shares between
    the Predecessor and Successor Periods results from the
    acquisition of our company by our former principal stockholders.  Non-GAAP Financial
    Measures
    
    the financial performance of our assets without regard to
    financing methods, capital structure or historical cost basis;
    the ability of our assets to generate cash sufficient to pay
    interest costs and support our indebtedness;
    our operating performance and return on capital as compared to
    those of other companies in our industry, without regard to
    financing or capital structure; and
    the viability of acquisitions and capital expenditure projects
    and the overall rates of return on alternative investment
    opportunities.      
 Predecessor


SuccessorJanuary 1


October 14Year Ended


to


to


Year Ended


Nine Months EndedDecember 31,


October 13


December 31,


December 31,


September 30,2002


2003


2004


2004


2005


2006


2006


2007(Unaudited)


(Unaudited)(In thousands)Net income

$
6,840


$
4,879


$
6,702


$
419


$
5,311


$
12,403


$
8,528


$
11,329Income tax expense


4,621



3,508



4,378



266



3,805



7,040



4,874



6,834Interest expense, net


310



282



24



446



2,179



1,755



1,368



136Deferred financing cost










24



41



171



171



129



150Depreciation and amortization


5,779



6,649



5,416



1,919



10,865



11,634



8,605



9,342EBITDA

$
17,550


$
15,318


$
16,544


$
3,091


$
22,331


$
33,003


$
23,504


$
27,791
 9




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RISK
    FACTORS
  You should carefully consider each of the following risk
    factors and all of the other information set forth in this
    prospectus before deciding to invest in our common stock. If any
    of the following risks actually occur, our business, financial
    condition and results of operations could be harmed and we may
    not be able to achieve our goals. If that occurs, the value of
    our common stock could decline and you could lose some or all of
    your investment.
  Risk
    Factors Relating to Our Business
  We may be unable to obtain sufficient bonding capacity for
    our contracts and the need for performance and surety bonds may
    adversely affect our business.
    Our business depends on key customer relationships and our
    reputation in the heavy civil marine infrastructure market,
    which is developed and maintained by our key project managers.
    Loss of any of our relationships, reputation or key project
    managers would materially reduce our revenues and
    profits.
  project-by-project
  To be successful, we need to attract and retain qualified
    personnel, and any inability to do so would adversely affect our
    business.
   10




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We could lose money if we fail to accurately estimate our
    costs or fail to execute within our cost estimates on
    fixed-price, lump-sum contracts.
  and/or
  
    failure to properly estimate costs of engineering, material,
    equipment or labor;
    unanticipated technical problems with the structures or services
    being supplied by us, which may require that we spend our own
    money to remedy the problem;
    project modifications creating unanticipated costs;
    changes in the costs of equipment, materials, labor or
    subcontractors;
    our suppliers or subcontractors failure to perform;
    difficulties in our customers obtaining required governmental
    permits or approvals;
    changes in local laws and regulations;
    delays caused by local weather conditions; and
    exacerbation of any one or more of these factors as projects
    grow in size and complexity.    We may incur higher costs to acquire, manufacture and
    maintain equipment necessary for our operations.
     11




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The timing of new contracts may result in unpredictable
    fluctuations in our cash flow and profitability. These factors
    as well as others that may cause our actual financial results to
    vary from any publicly disclosed earnings guidance and forecasts
    are outside of our control.
    We depend on continued federal, state and local government
    funding for marine infrastructure. A reduction in government
    funding for marine construction or maintenance contracts can
    materially reduce our results of operations.
    A significant portion of our business is based on
    government contracts. Our operating results may be adversely
    affected by the terms of the government contracts or our failure
    to comply with applicable terms.
   12




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We derive a significant portion of our revenues from a
    small group of customers. The loss of one or more of these
    customers could negatively impact our business, operating
    results and financial condition.
      We may not be able to fully realize the revenue value
    reported in our backlog.
 
   
  Our business is subject to significant operating risks and
    hazards that could result in damage or destruction to persons or
    property, which could result in losses or liabilities to
    us.
      Our current insurance coverage may not be adequate, and we
    may not be able to obtain insurance at acceptable rates, or at
    all.
   13




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Our
    employees are covered by federal laws that may provide seagoing
    employees remedies for job-related claims in addition to those
    provided by state laws.
      Many
    of our contracts have penalties for late
    completion.
  agreed-upon
  We
    may choose, or be required, to pay our suppliers and
    subcontractors even if our customers do not pay, or delay
    paying, us for the related services.
    We
    extend credit to customers for purchases of our services, and in
    the past we have had, and in the future we may have, difficulty
    collecting receivables from major customers that have filed
    bankruptcy or are otherwise experiencing financial
    difficulties.
   14




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Our
    strategy of growing through strategic acquisitions may not be
    successful.
    
    difficulties in the integration of operations, systems, policies
    and procedures;
    enhancements in our controls and procedures including those
    necessary for a public company may make it more difficult to
    integrate operations and systems;
    failure to implement proper overall business controls, including
    those required to support our growth, resulting in inconsistent
    operating and financial practices at companies we acquire or
    have acquired;
    termination of relationships by the key personnel and customers
    of an acquired company;
    additional financial and accounting challenges and complexities
    in areas such as tax planning, treasury management, financial
    reporting and internal controls;
    the incurrence of environmental and other liabilities, including
    liabilities arising from the operation of an acquired business
    or asset prior to our acquisition for which we are not
    indemnified or for which the indemnity is inadequate;
    disruption of our ongoing business or receipt of insufficient
    management attention; and
    inability to realize the cost savings or other financial
    benefits that we anticipate.    The
    anticipated investment in port and marine infrastructure may not
    be as large as expected, which may result in periods of low
    demand for our services.
    Any
    adverse change to the economy or business environment in the
    regions in which we operate could significantly affect our
    operations, which would lead to lower revenues and reduced
    profitability.
   15




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During
    the ordinary course of our business, we may become subject to
    lawsuits or indemnity claims, which could materially and
    adversely affect our business, operating results and financial
    condition.
        Our
    operations are subject to environmental laws and regulations
    that may expose us to significant costs and
    liabilities.
     16




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Our
    operations are susceptible to adverse weather conditions in our
    regions of operation.
    
    evacuation of personnel and curtailment of services;
    weather-related damage to our equipment, facilities and project
    work sites resulting in suspension of operations;
    inability to deliver materials to jobsites in accordance with
    contract schedules; and
    loss of productivity.  Our
    dependence on petroleum-based products could increase our costs
    which would adversely affect our business, operating results and
    financial condition.
    Terrorist
    attacks at port facilities could negatively impact the markets
    in which we operate.
    We may
    be subject to unionization, work stoppages, slowdowns or
    increased labor costs.
   17




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We
    may be unable to sustain our historical revenue growth
    rate.
    We
    are subject to risks related to our international
    operations.
    
    uncertainties concerning import and export license requirements,
    tariffs and other trade barriers;
    restrictions on repatriating foreign profits back to the U.S.;
    changes in foreign policies and regulatory requirements;
    difficulties in staffing and managing international operations;
    taxation issues;
    currency fluctuations; and
    political, cultural and economic uncertainties.    Restrictions
    on foreign ownership of our vessels could limit our ability to
    sell off any portion of our business or result in the forfeiture
    of our vessels or in our inability to continue our operations in
    U.S. navigable waters.
  non-U.S. citizens,
  Risk
    Factors Related to our Accounting, Financial Results and
    Financing Plans
  Actual
    results could differ from the estimates and assumptions that we
    use to prepare our financial statements.
   18




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Our
    use of the percentage-of-completion method of accounting could
    result in a reduction or reversal of previously recorded revenue
    and profit.
  81-1, Accounting for Performance of Construction-Type and Certain
    Production-Type Contracts
  Failure
    to establish and maintain effective internal control over
    financial reporting could have a material adverse effect on our
    business, operating results and stock value.
  Form 10-K
   19




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Once
    we become a public company, we will incur significant increased
    operating costs and our management will be required to devote
    substantial time to new compliance initiatives.
  ®
    Our
    bonding requirements may limit our ability to incur
    indebtedness.
    New
    accounting pronouncements including SFAS 123R may
    significantly impact our future operating results and earnings
    per share.
  Accounting for Stock Issued to
    Employees Share-Based Payment
   20




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Risks
    Related to this Offering and Our Common Stock
  There
    has been no public market for our common stock, we do not know
    if one will develop that will provide you with adequate
    liquidity, and following the completion of this offering, the
    trading price for our common stock may be volatile and could be
    subject to wide fluctuations.
 
   
 
   
  
    the number of shareholders;
    our operating performance and financial condition;
    the market for similar securities;
    the extent of coverage of us by securities or industry
    analysts; and
    the interest of securities dealers in making a market in the
    shares of our common stock.      
    actual or anticipated variations in our quarterly operating
    results;
    changes in our earnings estimates;
    publication of misleading or unfavorable research reports about
    us;
    increases in market interest rates, which may increase our cost
    of capital;
    changes in applicable laws or regulations, court rulings,
    enforcement and legal actions;
    changes in market valuations of similar companies;
    adverse market reaction to any increased indebtedness we incur
    in the future;
    additions or departures of key management personnel;
    actions by our shareholders;
    speculation in the press or investment community; and
    general market and economic conditions. 21




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We
    do not anticipate paying any dividends on our common stock in
    the foreseeable future.
    Our
    common stock is subject to restrictions on foreign
    ownership.
 
  U.S.-citizen
 
  You
    may experience dilution of your ownership interests if we issue
    additional shares of our common stock in the
    future.
 
   
  Future
    sales of our common stock may have an adverse effect on the
    price of our common stock.
  lock-up lock-up
 22




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Provisions
    in our organizational documents and under Delaware law could
    delay or prevent a change in control of our company, which could
    adversely affect the price of our common stock.
   23




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SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
   
  
    our ability to obtain sufficient bonding capacity for our
    contracts;
    our ability to develop and maintain key customer relationships
    and our reputation in the heavy civil marine infrastructure
    market;
    our ability to attract and retain qualified personnel;
    failure to accurately estimate our costs or execute within our
    cost estimates or by the scheduled date for completion on fixed
    price, lump-sum contracts;
    increased costs to acquire, manufacture and maintain the
    equipment necessary for our operations;
    fluctuations in our cash flow and profitability due to the
    timing of new contracts;
    reductions in government funding for heavy civil marine
    infrastructure or maintenance contracts;
    failure to comply with applicable terms of the government
    contracts to which we are a party;
    loss of one or more of our significant customers;
    our ability to fully realize the revenue value reported in our
    backlog; 
  
    significant operating risks and hazards that could result in
    injury to persons or damage or destruction of property; 
  
    failure to maintain adequate amounts of insurance coverage and
    inability to obtain additional amounts of insurance coverage;
    federal laws that may provide our employees with remedies for
    job-related claims in addition to those provided by state laws;
    potential penalties for late completion of contracts; 
  
    our obligation or decision to pay our suppliers and
    subcontractors even if our customers do not pay or delay paying
    us; 
  
    difficulty in collecting receivables from major customers;
    risks inherent in acquisitions, including our ability to obtain
    financing for proposed acquisitions and to integrate and
    successfully operate acquired businesses; 24




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
    decrease in the anticipated investment in port and heavy civil
    marine infrastructure;
    adverse change to the economy or business environment in the
    regions in which we operate; 
  
    adverse outcomes of pending claims or litigation and new claims
    or litigation and the potential effect on our business,
    financial condition and results of operations; 
 
  
    environmental risks, laws and regulations applicable to our
    operations that may expose us to significant costs and
    liabilities; 
 
  
    adverse impacts from weather affecting our performance and
    timeliness of completion, which could lead to increased costs
    and affect the costs and availability of, or delivery schedule
    for, equipment, components, materials, labor or subcontractors; 
  
    increased costs
    and/or
    decreased supplies of petroleum-based products utilized to
    operate the equipment used in our construction contracts; 
  
    terrorist attacks at port or other facilities where we operate; 
  
    unionization, work stoppages, slowdowns or increased labor costs; 
  
    our inability to sustain our historical revenue growth rate; 
  
    risks inherent in international operations; and
    foreign ownership restrictions with respect to our vessels,
    which could limit our ability to sell off any portion of our
    business or result in the forfeiture of our vessels or in our
    inability to continue our operations in U.S. navigable
    waters. 25




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USE
    OF PROCEEDS
    DIVIDEND
    POLICY
 
   
  CAPITALIZATION
 
   
  
 As of September 30, 2007(Unaudited)Cash and cash equivalents

$
14,420Total debt


1,643Stockholders equity:Common stock  par value $0.01 per share,
    50,000,000 shares authorized, 21,565,324 shares issued


216Additional paid-in capital


54,694Retained earnings


29,462Total stockholders equity


84,372Total capitalization

$
86,015  
  MARKET
    FOR COMMON STOCK
 
   
 
   
 26




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##### Table of Contents



SELECTED
    CONSOLIDATED FINANCIAL DATA
          
 Predecessor


SuccessorYear Ended


January 1 to


October 14 to


Year Ended


Nine Months EndedDecember 31,


October 13


December 31,


December 31,


September 30,2002


2003


2004


2004


2005


2006


2006


2007(Unaudited)


(Unaudited)(In thousands, except for share and per share data)Statement of Operations Data:Contract revenues

$
106,793


$
101,369


$
97,989


$
32,570


$
167,315


$
183,278


$
129,917


$
149,771Cost of contract revenues


80,149



77,354



79,185



30,065



145,740



144,741



105,565



114,850Gross profit


26,644



24,015



18,804



2,505



21,575



38,537



24,352



34,921Selling, general and administrative expenses


15,478



16,376



7,752



1,611



10,685



18,225



9,550



16,649Operating income


11,166



7,639



11,052



894



10,890



20,312



14,802



18,272Interest expense, net


310



282



24



446



2,179



1,755



1,368



136Other (income) loss, net


(605
)


(1,030
)


(52
)


(237
)


(405
)


(886
)


32



(27
)Income before income taxes


11,461



8,387



11,080



685



9,116



19,443



13,402



18,163Income tax expense


4,621



3,508



4,378



266



3,805



7,040



4,874



6,834Net income


6,840



4,879



6,702



419



5,311



12,403



8,528



11,329Preferred dividends














460



2,100



2,100



1,571



777Income (loss) available to common shareholders

$
6,840


$
4,879


$
6,702


$
(41
)

$
3,211


$
10,303


$
6,957


$
10,552 
 27




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##### Table of Contents



Predecessor


SuccessorYear Ended


January 1 to


October 14 to


Year Ended


Nine Months EndedDecember 31,


October 13


December 31,


December 31,


September 30,2002


2003


2004


2004


2005


2006


2006


2007(Unaudited)


(Unaudited)(In thousands, except for share and per share data)Adjusted Per Common Share Data(2):Net income per shareBasic

$
74.35


$
50.25


$
69.02


$



$
0.20


$
0.65


$
0.44


$
0.57Diluted

$
74.35


$
50.25


$
69.02






$
0.20


$
0.63


$
0.42


$
0.55Weighted average shares outstandingBasic


92,000



97,100



97,100



15,695,067



15,706,960



15,872,360



15,832,362



18,631,171Diluted


92,000



97,100



97,100



15,695,067



16,135,211



16,407,250



16,432,013



19,271,091Other Financial Data:EBITDA(1)

$
17,550


$
15,318


$
16,544


$
3,091


$
22,331


$
33,003


$
23,504


$
27,791Capital expenditures


5,003



7,044



8,407



2,383



9,149



11,931



9,849



7,939Cash interest expense


325



282



150



263



2,146



3,453



1,876



926Depreciation and deferred financing cost amortization


5,779



6,649



5,440



1,960



11,036



11,805



8,734



9,492Net cash provided by operating activities


11,900



15,591



8,193



3,262



11,618



32,475



25,406



6,328Net cash (used in) investing activities


(14,273
)


(6,809
)


(6,634
)


(61,654
)


(5,431
)


(11,987
)


(10,097
)


(6,054
)Net cash provided by (used in) financing activities


4,682



(5,476
)


(1,055
)


66,094



(6,244
)


(9,572
)


(3,630
)


(4,415
)  
  
 Predecessor


SuccessorAs of December 31,


As of September 30,2002


2003


2004


2005


2006


2007(Unaudited)(In thousands)Balance Sheet Data:Cash and cash equivalents

$
5,114


$
8,420


$
7,701


$
7,645


$
18,561


$
14,420Working capital


6,478



7,775



11,475



14,729



12,970



28,254Total assets


54,448



53,711



113,739



114,626



125,072



129,677Total debt


11,556



5,965



40,489



34,548



25,000



1,643Total stockholders equity


27,045



32,039



35,419



40,730



53,239



84,372  
    (1)
    
    For an explanation of EBITDA and a reconciliation of EBITDA to
    net income calculated and presented in accordance with GAAP,
    please see Summary Consolidated Financial Data 
    Non-GAAP Financial Measures.(2)
    
    The share and per share financial data presented for Successor
    periods have been adjusted to give effect to the 2.23 for one
    reverse split of our common stock that we effected on
    May 17, 2007 in connection with the 2007 Private Placement.
    The substantial difference in weighted average shares between
    the Predecessor and Successor periods results from the
    acquisition of our company by our former principal stockholders. 28




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##### Table of Contents



MANAGEMENTS
    DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  The following discussion and analysis of our financial
    condition and results of operations should be read in
    conjunction with Selected Consolidated Financial
    Data and our financial statements and related notes
    appearing elsewhere in this prospectus. Our actual results may
    differ materially from those anticipated in these
    forward-looking statements as a result of a variety of risks and
    uncertainties, including those described in this prospectus
    under Special Note Regarding Forward-Looking
    Statements and Risk Factors. We assume no
    obligation to update any of these forward-looking statements.
  Overview
 
   
      
    completeness and accuracy of the original bid;
    increases in commodity prices such as concrete, steel and fuel;
    customer delays and work stoppages due to weather and
    environmental restrictions;
    availability and skill level of workers; and
    a change in availability and proximity of equipment and
    materials.    Business
    Drivers and Measures
    Industry Trends.
  
    increasing North American freight capacity, which results in the
    need for port and channel expansion and maintenance;
    deteriorating condition of intracoastal waterways and bridges;
    the historic $286.0 billion federal transportation funding
    bill of 2005;
    robust demand in the cruise industry;
    the continuing U.S. base realignment and closure program
    (BRAC); 29




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##### Table of Contents




    strong oil and gas capital expenditures;
    ongoing U.S. coastal wetlands restoration and
    reclamation; and
    recurring hurricane restoration and repair; and 
  
    the $23 billion federal water resources development funding
    bill of 2007 enacted on November 7, 2007. 
 
   
 
  Bidding.
 
   
   
 
  Utilization.
 
  Backlog.
 30




---



##### Table of Contents



Revenue.
  Cost of Revenue. project-by-project
    General and Administrative
    Expenses.
  Other Factors.
  Seasonality.
 31




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##### Table of Contents



Surety Bonding.
 
 
  Outlook.
 
  Significant
    Changes in Ownership
 
  2004 Acquisition.
 
 
  2007 Private Placement. non-U.S. persons
 
 32




---



##### Table of Contents



Critical
    Accounting Policies
    Revenue Recognition. 81-1, Accounting for Performance of Construction-Type and Certain
    Production-Type Contracts.
 
   
 
  Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets,
 
   
  Goodwill. Goodwill and Other Intangible Assets.
 
 33




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##### Table of Contents



Income Taxes.
 
  Accounting for Uncertainty in Income Taxes
  Self-Insurance.
   
   
   
   
 34




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##### Table of Contents



Consolidated
    Results of Operations
 
 
  Nine
    Months Ended September 30, 2007 Compared with nine months
    ended September 30, 2006
 
  
 Nine Months


Nine MonthsSeptember 30,


September 30,2007


2006Amount


Percent


Amount


PercentContract revenues

$
149,771



100.0
%

$
129,917



100.0
%Cost of contract revenues


114,850



76.7



105,565



81.3Gross profit


34,921



23.3



24,352



18.7Selling, general and administrative expenses


16,649



11.1



9,550



7.4Operating income


18,272



12.2



14,802



11.3Other (income) expenseInterest expense, net


136



0.1



1,368



1.1Other (income) expense, net


(27
)






32



Other expense, net


109



0.1



1,400



1.1Income before income taxes


18,163



12.1



13,402



10.2Income tax expense


6,834



4.6



4,874



3.8Net income

$
11,329



7.5
%

$
8,528



6.4
%  
 
  Contract Revenues.
 
 
  Gross Profit.
 
 
 
 
  Selling, General and Administrative
    Expense.
 
 
  Other (Income) Expense, Net.
 
 
  Income Tax Expense.
 
 35




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##### Table of Contents



Year
    Ended December 31, 2005 Compared with December 31,
    2006
    Twelve Months Ended December 31,2005


2006Amount


Percent


Amount


Percent(Dollars in thousands)Contract revenues

$
167,315



100.0
%

$
183,278



100.0
%Cost of contract revenues


145,740



87.1



144,741



79.0Gross profit


21,575



12.9



38,537



21.0Selling, general and administrative expenses


10,685



6.4



17,425



9.5Operating income


10,890



6.5



21,112



11.5Other (income) expenseInterest expense, net


2,179



1.3



1,755



1.0Other (income) expense, net


(405
)


(0.2
)


(86
)


0.0Other expense, net


1,774



1.1



1,669



0.9Income before income taxes


9,116



5.4



19,443



10.6Income tax expense


3,805



2.3



7,040



3.8Net income

$
5,311



3.2
%

$
12,403



6.8
%   Contract Revenues.
 
  Gross Profit.
 
  Selling, General and Administrative
    Expense.
  Other Expense, Net.
  Income Tax Expense.
 36




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##### Table of Contents



Year
    Ended December 31, 2004 Compared with December 31,
    2005
  Business Combinations
  wrote-up write-up
    Predecessor


SuccessorJanuary 1


October 14


Combined


Successorthrough


through


Year Ended


Year EndedOctober 13,


December 31,


December 31, 2004


December 31, 20052004


2004


Amount


Percent


Amount


Percent(Dollars in thousandsContract revenues

$
97,989


$
32,570


$
130,559



100.0
%

$
167,315



100.0
%Costs of contract revenues


79,185



30,065



109,250



83.7
%


145,740



87.1
%Gross profit


18,804



2,505



21,309



16.3
%


21,575



12.9
%Selling, general and administrative expenses


7,752



1,611



9,363



7.2
%


10,685



6.4
%11,052



894



11,946



9.1
%


10,890



6.5
%Other (income) expenseInterest expense, net


24



446



470



0.4
%


2,179



1.3
%Other income


(52
)


(237
)


(289
)


(0.3
)%


(405
)


(0.2
)%Other (income) expense, net


(28
)


209



181



0.1
%


1,774



1.1
%Income before income taxes


11,080



685



11,765



9.0
%


9,116



5.4
%Income tax expense


4,378



266



4,644



3.6
%


3,805



2.3
%Net income

$
6,702


$
419


$
7,121



5.4
%

$
5,311



3.2
%   Contract Revenues.
  Gross Profit.
  Selling, General and Administrative
    Expense.
 37




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##### Table of Contents



Other (Income) Expense, Net.
  Income Tax Expense.
  Liquidity
    and Capital Resources
 
   
 
   
 
   
  
 Year Ended


Nine Months EndedDecember 31,


September 30,2004*


2005


2006


2006


2007(In thousands)Cash provided by (used in):Operating activities

$
3,262


$
11,618


$
32,475


$
25,406


$
6,328Investing activities


(61,654
)


(5,431
)


(11,987
)


(10,097
)


(6,054
)Financing activities


66,094



(6,244
)


(9,572
)


(3,630
)


(4,415
)Capital expenditures (included in investing
    activities above)


2,383



9,149



11,931



9,849



7,939  
    *
    
    represents the period from October 14 to December 31,
    2004 
  Operating Activities.
 
 38




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##### Table of Contents



Investing Activities.
 
 
  Financing Activities.
 
 
 
 
  Sources
    of Capital
 
 
   
 
   
 
   
 
   
 
  Bonding
    Capacity
 
 
   
 39




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##### Table of Contents



Effect of
    Inflation
    Off
    Balance Sheet Arrangements
    Contractual
    Obligations
 
   
  
 Payment Due by PeriodTotal


<1 Year


1-3 Years


3-5 Years


>5 Years(In thousands)Long-term debt obligations

$
1,643


$
1,643


$



$



$
Operating lease obligations


3,189



1,181



1,163



259



586Purchase obligations(1)


67



67











Total

$
4,899


$
2,891


$
1,163


$
259


$
586  
   
  (1)
    
    Purchase obligations include future cash payments pursuant to an
    outstanding licensing agreement for certain software.
    Commitments pursuant to other purchase orders and subcontracts
    related to construction contracts are not included since such
    amounts are expected to be funded under contract billings. 
 
   
 
   
  New
    Accounting Pronouncements
  Accounting for Uncertainty in Income
    Taxes.
  Fair Value
    Measurements
  The Fair Value Option
    for Financial Assets and Financial Liabilities
 40




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##### Table of Contents



EITF 06-11 Accounting for the Income Tax Benefits of Dividends on
    Share-Based Payment Awards EITF 06-11 EITF 06-11
 
  Considering the Effects of Prior Year Misstatements
    when Quantifying Misstatements in Current Year Financial
    Statements
  Quantitative
    and Qualitative Disclosures about Market Risk
 
   
 
   
  Related
    Party Transactions
           41




---



##### Table of Contents



fathers-in-law, daughters-in-law, sisters-in-law)
 
   
   
 42




---



##### Table of Contents



BUSINESS
  Our
    Business
          Industry Drivers

Representative CustomersIncreasing North American Freight Capacity /Port and Channel
    Expansion and Maintenance

Port of Houston, Tampa Port Authority, Port of Lake Charles,
    South Basin Development, Houston Cement, North Point Properties,
    Alcoa, The Haskell Company, Manatee County Port Authority, Port
    of BrownsvilleDeteriorating Condition of U.S. Intracoastal Waterways and
    Bridges

Corps of Engineers, Texas Department of Transportation
    (TXDOT), Florida Department of Transportation
    (FDOT), City of Tampa, City of St. PetersburgHistoric Federal Transportation Funding Bill

TXDOT, FDOT, Louisiana Department of Transportation &
    DevelopmentRobust Cruise Industry Activity

St. Lucia Air & Sea Port Authority, Ambergris Cay, Dominica
    Port Authority, Bahamas Marine, Port of Canaveral, Grand Turks
    Cruise Terminal, Carnival Cruise Lines, Port Authority of Cayman
    IslandsContinuing U.S. Base Realignment and Closure Program Strong Oil
    and Gas Capital Expenditures

U.S. Navy, Corps of Engineers
    Kinder Morgan, Shell Oil, ITC, Valero, Bahamas Oil Refining,
    Gulfterra, Esso, Teppco, Oiltanking, ExxonMobilOngoing U.S. Coastal and Wetlands Restoration and Reclamation

Federal, State and Local Agencies, City of Myrtle Beach, Corps
    of EngineersRecurring Hurricane Restoration and Repair

Federal Emergency Management Agency, U.S. Department of
    Agriculture, State Agencies and Private CompaniesThe Water Resources Development Act of 2007

Federal, State and Local Agencies  43




---



##### Table of Contents



non-U.S. persons
 
  History
      44




---



##### Table of Contents



Target/Acquisition Year

Strategic Rationale /DescriptionMid Gulf Industrial (now Orion Construction)  1997

   Established Texas Gulf Coast operating
    base   Full service specialty marine contractor
    serving Houston ship channel; founded in 1954King Fisher Marine  1998

   Established dredging capabilities on
    Texas Gulf Coast   Strength in pipeline construction;
    founded in 1940Inter-Bay Marine (now part of Misener Marine
    Construction)  2001)

   Established Florida Gulf Coast operating
    base   Founded in 1962Misener Marine  2002

   Strengthened Florida operating base and
    enhanced Caribbean infrastructure expertise   Strong transportation/bridge contractor;
    founded in 1945     
    implementing stock based compensation;
    transitioning senior leadership;
    establishing standard bidding, project estimation, project
    controls and other operating systems, including expanding
    support personnel; and
    implementing scalable internal software systems.      Industry
    Overview
 
   
   45




---



##### Table of Contents



North American Freight Capacity /Port and Channel
    Expansion and Maintenance.
    
   Deteriorating Condition of U.S. Intracoastal
    Waterways and Bridges.
 46




---



##### Table of Contents



Federal Transportation Funding
    Bill.
  
    Texas is ranked as the number one state for construction
    spending on highways and bridges. The anticipated Texas
    allocation from SAFETEA-LU 2005 of approximately
    $14.5 billion from 2005 to 2009 reflects a 37% increase
    from the prior spending bill.
    Florida has experienced substantial population growth and
    requires significant spending to improve its transportation
    infrastructure. Florida also has the largest stretch of
    coastline of any state in the continental U.S., the area in
    which most of its population resides, increasing the need for
    coastal highway and bridge infrastructure. SAFETEA-LU
    2005s allocation for Florida is approximately
    $8.7 billion from 2005 to 2009, which reflects a 33%
    increase from the prior spending bill.
    The remaining states into which we have expanded or plan to
    expand our operations include Louisiana, Mississippi, Alabama,
    Georgia, South Carolina, North Carolina and Virginia. The
    allocation from SAFETEA-LU 2005 for these states is
    approximately $27.8 billion in the aggregate from 2005 to
    2009, reflecting a 30% increase from the prior spending bill.  Cruise Industry.
    U.S. Base Realignment and Closure Program
    (BRAC).
 47




---



##### Table of Contents



Oil and Gas Capital Expenditures.
    U.S. Coastal and Wetland Restoration and
    Reclamation.
    Hurricane Restoration and
    Repair.
 
  Water Resources Development Act of
    2007.
 
  Competitive
    Strengths
    Breadth of Capabilities.
 48




---



##### Table of Contents



Experienced Management Team.
  High Quality Fleet and Marine Maintenance
    Facilities.
  
    over 260 vessels of various sizes and capabilities,
    including 55 spud barges and material barges, and five major
    cutter suction dredges and three portable dredges, 49 tug boats
    and push boats;
    over 215 cranes and other large pieces of equipment, including
    48 crawler cranes and hydraulic cranes; and
    numerous pieces of smaller equipment.    Financial Strength /Conservative Balance
    Sheet.
  Self-Performance of Contracts.
  Project Selection and Bidding
    Expertise.
  Strong Regional Presence.
 49




---



##### Table of Contents



Growth
    Strategy
    Expand and Fill in Our Service
    Territory.
  
  Pursue Strategic Acquisitions.
 
  Continue to Capitalize on Favorable Long-Term Industry
    Trends.
 
 50




---



##### Table of Contents



Continue to Enhance Our Operating
    Capabilities.
  Services
    Marine Construction Services.
 
  Marine Transportation Facilities.
 
  
    public port facilities for container ship loading and unloading;
    cruise ship port facilities;
    private terminals;
    special-use Navy terminals; and
    recreational use marinas and docks.   
  Marine Pipeline Services.
 
 
  
    installing and removing underwater buried pipeline transmission
    lines; 
 
  
    installing pipeline intakes and outfalls for industrial
    facilities; 
  
    constructing pipeline outfalls for wastewater and industrial
    discharge;
    performing river crossing and directional drilling;
    creating hot taps and tie-ins; and 
  
    conducting inspection, maintenance and repairs. 
  Bridge and Causeway Construction.
 51




---



##### Table of Contents



Marine Environmental Structures.
  
    installing concrete mattresses to ensure erosion protection;
    constructing levees to contain environmental mitigation
    projects; and
    installing geotubes for wetlands and island creation.  Specialty Services.
  Dredging Services.
  
    providing maintenance dredging for previously deepened waterways
    and harbors to remove silt, sand and other accumulated sediments;
    constructing breakwaters, jetties, canals and other marine
    structures;
    deepening ship channels and wharves to allow access to larger,
    deeper draft ships;
    containing erosion of wetlands and coastal marshes;
    conducting land reclamation;
    assisting in beach nourishment; and
    creating wildlife refuges.    Customers
 
   
   52




---



##### Table of Contents



2005


2006Revenue


Percent


Revenue


Percent(Dollars in thousands)Federal Government

$
28,214



16.9
%

$
43,682



23.8
%State Governments


40,990



24.5



29,172



15.9Local Municipalities


37,237



22.2



59,159



32.3Private Companies


60,874



36.4



51,265



28.0Total

$
167,315



100.0
%

$
183,278



100.0
%     Bidding
    Process
        Contract
    Provisions and Independent Contractors
   53




---



##### Table of Contents



Competition
    Bonding
   54




---



##### Table of Contents



Backlog
 
   
  Trade
    Names
    Equipment
 
   
  
    Barges  Spud barges, material barges,
    deck barges, anchor barges and fuel barges are used to provide
    work platforms for cranes and other equipment, to transport
    materials to the project site and to provide support for the
    project at the project site.
    Dayboats  Small pushboats, dredge
    tenders and skiffs are used to shift barges at the project site,
    to move personnel and to provide general support to the project
    site.
    Tugs  Larger pushboats and tug boats
    are used to transport barges and other support equipment to and
    from project site. 
  
    Dredges  20 cutter head suction
    dredge (diesel/electric), 20 cutter head suction dredges
    (diesel), and 12 portable cutter head suction dredges are
    used to provide dredging service at the project site. 
  
    Cranes  Crawler lattice boom cranes
    with lift capability from 50 tons to 250 tons and hydraulic
    rough terrain cranes with lift capability from 15 tons to 60
    tons are used to provide lifting and pile driving capabilities
    on the project site, and to provide bucket work, including
    mechanical dredging and dragline work, to the project site.   55




---



##### Table of Contents



Equipment
    Certification
    Properties
 
   
  Location

Type of Facility

Size

Leased or Owned

Expiration of Lease159 Highway 316 Port Lavaca, Texas

Waterfront maintenance and dock facilities, equipment yard and
    dry dock; regional office

17.5 acres

Owned

N/A17140 Market Street Channelview, Texas

Waterfront maintenance and dock facilities, and equipment yard

23.7 acres

Owned

N/A5600 West Commerce Street Tampa, Florida

Waterfront maintenance and dock facilities, equipment yard and
    dry dock; regional office

9.1 acres

Owned

N/A5121 Highway 90 East Lake Charles, Louisiana

Land based equipment yard and maintenance facility; regional
    office

8.9 acres

Leased

August 31, 2008, with 4 one-year extensions at our option6821 Southpoint Drive North Suite 221 Jacksonville, Florida

Regional office

1,152 square feet

Leased

September 30, 2007, renewable for 6-month intervalsCity of Port Lavaca Port Commission Port Lavaca, Texas

Safe Harbor

6.6 acres

Leased

March 31, 20121500 Main Street Ingleside, Texas

Regional office

4 acres

Leased

May 1, 20095440 W. Tyson Avenue
    Tampa, Florida 33611

Regional office

6,160 square feet

Leased

May 31, 2010     Training,
    Quality Assurance and Safety
   56




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##### Table of Contents



Risk
    Management and Insurance
 
   
     
   
       57




---



##### Table of Contents



Government
    Regulations
    
    regulations concerning workplace safety, labor relations and
    disadvantaged businesses;
    licensing requirements applicable to shipping and
    dredging; and
    permitting and inspection requirements applicable to marine
    construction projects.  and/or
  U.S.-citizen
  Environmental
    Matters
  General. and/or
    Waste Management.
 58




---



##### Table of Contents



Site Remediation.
 
   
  Water Discharges. and/or
   
  Air Emissions.
 
   59




---



##### Table of Contents



and/or Massachusetts, et al. v. EPA e.g.
  Endangered Species.
  Employees
 
   
  Legal
    Proceedings
   
  In
    re Canal Breaches Consolidation Litigation No. 05-4182,
 
 
  In re Canal Breaches Consolidation
    Litigation 05-4182, Order and Reasons,
 
 60




---



##### Table of Contents



61




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##### Table of Contents



MANAGEMENT
  Directors
    
 Year First ElectedName

Age

Class(1)

or Appointed

Position with the CompanyJ. Michael Pearson


60


II


2006


President, Chief Executive Officer and Director,Thomas N. Amonett


63


I


2007


DirectorRichard L. Daerr, Jr.


63


II


2007


Chairman of the Board of DirectorsAustin J. Shanfelter


50


III


2007


DirectorGene Stoever


69


III


2007


Director  
    (1)
    
    Class I term expires in 2008; Class II term expires in
    2009; and Class III term expires in 2010.    J. Michael Pearson
 
  Thomas N. Amonett
 
 62




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##### Table of Contents



Richard L. Daerr, Jr.
 
  Austin J. Shanfelter
 
  Gene Stoever 32-year
  Executive
    Officers
    
 Name

Age

Position with the Company/SubsidiaryJ. Michael Pearson


60


President, Chief Executive Officer and Director,Mark R. Stauffer


45


Vice President and Chief Financial OfficerElliott J. Kennedy


53


Vice PresidentJames L. Rose


42


President  Misener Marine Construction, Inc.J. Cabell Acree, III


48


Vice President, General Counsel and Secretary  
   
  Mark R. Stauffer
 
 
  Elliott J. Kennedy
 
 63




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##### Table of Contents



James L. Rose
 
  J. Cabell Acree, III
 
  Board of
    Directors
   
   
    Code of
    Conduct
 
   
    
    engage in honest and ethical conduct, including the ethical
    handling of actual or apparent conflicts of interest;
    avoid conflicts of interest, including disclosure of any
    material transaction or relationship that reasonably could be
    expected to give rise to such a conflict;
    ensure that the disclosure in reports and documents that we file
    with the SEC and in our other public communications is full,
    fair, accurate, timely, and understandable; 64




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##### Table of Contents




    comply with applicable governmental laws, rules, and regulations;
    promptly report internally all violations of the Code of Conduct;
    deter wrongdoing; and
    promote accountability for adherence to the Code of Conduct.  Code of
    Ethics for Financial Employees
    
    act with honesty, integrity and in an ethical manner;
    promptly disclose to the chief legal officer, General Counsel or
    the board of directors, any material transaction or relationship
    that reasonably could be expected to give rise to a conflict of
    interest between such officers personal and professional
    relationships;
    respect and maintain the confidentiality of information acquired
    in the course of his or her work, except when authorized or
    otherwise legally obligated to disclose such information, and
    not use confidential information acquired in the course of his
    or her work for personal advantage;
    promote ethical behavior in the work environment;
    responsibly use and control all assets and resources employed by
    or entrusted to him or her;
    ensure that accounting entries are promptly and accurately
    recorded and properly documented and that no accounting entry
    intentionally distorts or disguises the true nature of any
    business transaction;
    prohibit the establishment of any undisclosed or unrecorded
    funds or assets for any purpose and provide for the proper and
    prompt recording of all disbursements of funds and all receipts;
    maintain books and records that fairly and accurately reflect
    our business transactions;
    devise, implement, maintain and monitor internal controls
    sufficient to assure that financial record-keeping objectives
    are met;
    comply with generally accepted accounting standards and
    practices, rules, regulations and controls;
    perform responsibilities with a view to causing our public
    communications, including periodic and other reports we file
    with the SEC, to be made on a timely basis with appropriate
    disclosures;
    sign only those reports and other documents, including filings
    with the SEC, that he or she believes to be accurate and
    truthful;
    not make, or tolerate to be made, false statements or entries
    for any purpose in our books and records or in any internal or
    external correspondence, memoranda or communication of any type,
    including telephone or electronic communications;
    comply, as appropriate and with the advice of counsel (as
    necessary), with rules, laws, and regulations of federal, state
    and local governments;
    not knowingly be a party to any illegal activity or engage in
    any act that will discredit his or her profession or us; and
    promptly report to the chief legal officer, General Counsel or
    the audit committee any situation where this Code of Ethics or
    any of our other policies or conduct codes, or any law
    applicable to us or our employees, is being violated. 65




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##### Table of Contents



Committees
    of the Board
    Audit Committee.
  
    to select the independent auditor to audit our annual financial
    statements;
    to approve the overall scope of and oversee the annual audit and
    any non-audit service; 
  
    to assist management in monitoring the integrity of our
    financial statements, the independent auditors
    qualifications and independence, the performance of the
    independent auditor, our internal audit function and our
    compliance with legal and regulatory requirements; 
  
    to discuss the annual audited financial and quarterly statements
    with management and the independent auditor;
    to discuss policies with respect to risk assessment and risk
    management; and
    to review with the independent auditor any audit problems or
    difficulties and managements responses.   
  http://www.orionmarinegroup.com.
 
  Compensation Committee.
  
    to develop an overall executive compensation philosophy,
    strategy and framework consistent with corporate objectives and
    stockholder interests;
    to review, approve and recommend all actions relating to
    compensation, promotion and employment-related arrangements for
    senior management, including severance arrangements;
    to approve incentive and bonus plans applicable to senior
    management and administer awards under incentive compensation
    and equity-based plans;
    to review and recommend major changes to and take administrative
    actions associated with any other forms of non-salary
    compensation; and
    to review and approve or recommend to the entire board for its
    approval, any transaction in our equity securities between us
    and any of our officers or directors subject to Section 16
    of the Securities Exchange Act of 1934. 
  http://www.orionmarinegroup.com.
 
 
  Nominating and Governance Committee.
 
 66




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##### Table of Contents



Compensation
    Committee Interlocks and Insider Participation
    Stockholder
    Communications
 
   
  Director
    Compensation
    
    Mr. Pearson, who is also our Chief Executive Officer, does
    not receive any separate compensation for his services as a
    member of our board of directors.
    We reimburse our directors for travel and lodging expenses in
    connection with their attendance at board and committee meetings.
    Our non-employee directors receive an annual retainer of $30,000
    and $1,000 for each regularly scheduled meeting attended and our
    chairman receives an additional annual retainer of $15,000.
    In addition, each director who is a member of our audit
    committee receives an annual retainer fee of $7,000 and each
    director who is a member of any other committee receives an
    annual retainer fee of $5,000. The chairman of our audit
    committee receives an additional annual retainer fee of $10,000
    per year.
    The board compensation package also provides for equity
    compensation for each non-employee director consisting of an
    option for 6,726 shares of our common stock. All option
    awards are nonqualified stock options and will be issued
    pursuant to our equity compensation plans in effect at the time
    of the award. The options vest 33% on the first anniversary of
    the grant date and
    1/36
    of the total award each month of continuous service thereafter.
    No compensation was paid to our directors in 2006.  Indemnification
   67




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##### Table of Contents



COMPENSATION
    DISCUSSION AND ANALYSIS
  The following compensation discussion and analysis contains
    statements regarding future individual and company performance
    measures, targets and other goals. These goals are disclosed in
    the limited context of our executive compensation program and
    should not be understood to be statements of managements
    expectations or estimates of results or other guidance. We
    specifically caution investors not to apply these statements to
    other contexts.
  Overview
    of Compensation Program
   
   
  Compensation
    Philosophy and Objectives
        
    Compensation levels should be sufficiently competitive to
    attract and retain key executives.  The
    compensation committee aims to ensure that our executive
    compensation program attracts, motivates and retains high
    performance talent and rewards them for our achieving and
    maintaining a competitive position in our industry. Total
    compensation (i.e., maximum achievable compensation)
    should increase with position and responsibility.
    Compensation should relate directly to performance, and
    incentive compensation should constitute a substantial portion
    of total compensation.  We aim to foster a
    pay-for-performance culture, with a significant portion of total
    compensation being at risk. Accordingly, a
    substantial portion of total compensation should be tied to and
    vary with our financial, operational and strategic performance,
    as well as individual performance. Executives with greater roles
    and the ability to directly impact our strategic goals and
    long-term results should bear a greater proportion of the risk
    if these goals and results are not achieved.
    Long-term incentive compensation should align
    executives interests with our
    stockholders.  Awards of equity-based
    compensation encourage executives to focus on our long-term
    growth and prospects and 68




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##### Table of Contents



incentivize executives to manage the company from the
    perspective of stockholders with a meaningful stake in us, as
    well as to focus on long-term career orientation. 
   
  
    attracting and retaining the most talented and dedicated
    executives possible;
    motivating and exhibiting leadership that aligns employees
    interests with that of our stockholders;
    developing and maintaining a profound and dynamic grasp of the
    competitive environment and positioning us as a competitive
    force within our industry;
    developing business models and systems that seek out strategic
    opportunities, which benefit us and our stockholders;
    implementing a culture of compliance and unwavering commitment
    to operating our business with the highest standards of
    professional conduct and compliance; and
    achieving accountability for performance by linking annual cash
    awards to the achievement of revenue, Net Cash Flow (defined as
    EBITDA less net capital expenditures) and individual performance
    objectives.  Role of
    Executive Officers in Compensation Decisions
 
   
      Determining
    Compensation Levels
    Elements
    of Compensation
    
    base salary; 69




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##### Table of Contents




    performance-based incentive compensation, including cash bonuses
    and long-term equity incentive compensation; and
    retirement and other benefits.  Base Salary.
    Performance-Based
    Incentive Compensation
  2006 Bonuses.
 
   
   70




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##### Table of Contents



,
     
  2007 Bonuses.
 
   
   
 
  Calculation of 2007 Bonus Pool Amounts.
 
 
  (actual Net Cash
    Flow  (80% of target Net Cash
    Flow))
 
 
  
 
   
 71




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##### Table of Contents



($32 million  $25
    million)
   
  plus
 
 
  (actual Net Cash
    Flow  (110% of target Net Cash
    Flow))
 
 
  
 
  plus plus
 
 
  ($40
    million  $34.4 million)
 
 
  
 
  Example Calculations of 2007 Bonus Pool Amounts for Our
    President.
 
    Percent of Target

Bonus AwardName

Net Cash Flow

AmountJ. Michael Pearson


90.0
%

$
75,000100.0



150,000125.0



506,250Mark R. Stauffer


75.0



55,000100.0



110,000125.0



371,250Elliott J. Kennedy


90.0



50,000100.0



100,000125.0



337,500James L. Rose


90.0



38,750100.0



77,500125.0



261,563  72




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##### Table of Contents



2007 Bonus Plan for
    Mr. Acree.
 
 
   
 
  (actual Net Cash
    Flow  (80% of target Net Cash Flow))
 
 
  
 
   
 
  ($28
    million  $25 million)
 
 
  
 
   
 
   
  Transaction Bonus Agreements with Officers.
  Name

Cash Bonus


Common Stock


OptionsJ. Michael Pearson

$
1,000,000



18,519



44,844Mark R. Stauffer


750,000







44,844Elliott J. Kennedy


26,250



3,611



33,633James L. Rose


75,000







26,906All others (9 Persons), in the aggregate


292,000



4,296



179,369     Long-Term Incentive Compensation.
 73




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##### Table of Contents



i.e.
  Other Awards.
  Performance Awards.
 
   
  ,
  Retirement and Other
    Benefits.
   74




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##### Table of Contents



Employment
    Agreements, Severance Benefits and Change in Control
    Provisions
    Stock
    Ownership Guidelines
    Tax and
    Accounting Implications
      COMPENSATION
    COMMITTEE REPORT
        75




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##### Table of Contents



EXECUTIVE
    COMPENSATION
    SUMMARY
    COMPENSATION TABLE FOR FISCAL YEAR ENDED 2006
  Stock


Option


All OtherAwards


Awards


CompensationName and Principal Position

Year


Salary ($)


Bonus ($)


($)(2)


($)(3)


($)


Total ($)J. Michael Pearson


2006


$
202,884


$
840,973


$



$
52,800


$
14,058
(5)

$
1,110,715President and Chief
    Executive OfficerMark R. Stauffer


2006



199,423



770,427







9,900



6,772
(6)


986,522Chief Financial OfficerElliott J. Kennedy


2006



179,424



900,000
(4)










4,701
(6)


1,084,125Vice PresidentRussell B. Inserra(1)


2006



299,038



1,248,973







33,000



5,520
(6)


1,586,531Former Chairman of the Board and PresidentJames L. Rose


2006



131,779



91,100







9,900



184
(6)


232,963President  Misener Marine Construction, Inc.     (1)
    
    Mr. Inserra resigned as Chairman of the board and President
    effective as of November 1, 2006, but remained as one of
    our employees up until July 31, 2007 when his employment
    agreement expired.(2)
    
    On May 3, 2005, Messrs. Stauffer, Kennedy, Inserra,
    and Rose received awards of 123,319, 168,162, 336,323, and
    11,211 shares of restricted stock, respectively. These
    awards had a grant date fair value of $2,750, $3,750, $7,500,
    and $250, respectively. We recognized the full cost of these
    awards at the time of grant.(3)
    
    Amounts reflect the dollar amount recognized for financial
    statement reporting purposes for the year ended
    December 31, 2006, in accordance with FAS 123R, of
    awards of stock options under the 2005 Stock Incentive Plan.
    Assumptions used in the calculation of this amount are included
    in Note 13, Stock Based Compensation in the Notes to the
    Consolidated Financial Statements contained elsewhere in this
    prospectus.(4)
    
    Mr. Kennedy received $100,000 of his bonus in February
    2007. The remaining $800,000 will be paid to him at some point
    during the fourth quarter of 2007.(5)
    
    The amount reflects an automobile allowance provided to
    Mr. Pearson in the amount of $12,298, and our matching
    contributions to his account under our 401(k) Plan in the amount
    of $1,760.(6)
    
    The amounts reported reflect the value of the named executive
    officers personal use of a company automobile and, with
    the exception of Mr. Rose, our matching contributions to
    the named executive officers account under our 401(k) Plan. 76




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##### Table of Contents



GRANTS OF
    PLAN-BASED AWARDS FOR FISCAL YEAR ENDED 2006
    All Other





Grant DateOption Awards:





Fair ValueNumber of


Exercise or


of StockSecurities


Base Price


andUnderlying


of Option


OptionsOptions


Awards


AwardsName

Grant Date


(#)(1)


($/Sh)


($/Sh)(2)J. Michael Pearson


August 2, 2006



179,373


$
1.96


$
152,000Mark R. Stauffer


August 2, 2006



33,633



1.96



28,500Elliott J. Kennedy


August 2, 2006











Russell B. Inserra


August 2, 2006



112,108
(3)


1.96



95,000James L. Rose


August 2, 2006



33,633



1.96



28,500     (1)
    
    The option awards were issued under the 2005 Stock Incentive
    Plan. Provided the named executive officer remains continuously
    employed with us (or a parent or subsidiary of ours), the option
    awards (a) have vested with respect to one-fifth of the
    underlying shares on March 21, 2007, and (b) will vest
    with respect to one-sixtieth of the underlying shares upon the
    completion of each full month following March 21, 2007.(2)
    
    The amounts shown reflect the grant date fair value of the
    applicable option awards computed in accordance with
    FAS 123R.(3)
    
    Pursuant to the employment agreement we entered into with
    Mr. Inserra on March 27, 2007, Mr. Inserra agreed
    to forfeit 89,686 of the 112,108 options awarded to him on
    March 2, 2006. The remaining 22,422 options vested on
    March 21, 2007.  Employment
    Agreements
  Employment Agreements with Certain
    Officers.
       77




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##### Table of Contents



Employment Agreement with Russell B.
    Inserra.
  
    a weekly base salary equal to $5,770 for each week during the
    term of his agreement;
    the accelerated vesting of 213,004 shares of our common
    stock, which were part of the 336,323 shares granted to
    Mr. Inserra in 2005 under our 2005 Stock Incentive Plan;
    the vesting of options to acquire 22,422 shares of our
    common stock on March 31, 2007; and
    certain other perquisites specified in his employment agreement.  Stock
    Incentive Plans
  2005 Stock Incentive Plan.
    Restricted Stock.
  Stock Options.
 78




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##### Table of Contents



Long Term Incentive Plan.
    Shares Available.
  Eligibility.
  Administration. Rule 16b-3
  Terms of Options.
  Terms of SARs.
 79




---



##### Table of Contents



Restricted Stock Awards.
  Restricted Stock Units.
  Other Awards.
  Performance Awards.
 80




---



##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number ofSecurities to be


Weighted


Number ofIssued Upon


Average Exercise


SecuritiesExercise of


Price of


RemainingOutstanding


Outstanding


Available forOptions


Options


Future IssuanceEquity compensation plans approved by security holders(1)


354,272


$
1.96



1,663,677Equity compensation plans not approved by security holders










Total


354,272


$
1.96



1,663,677     (1)
    
    Consists of the 2005 Stock Incentive Plan and the LTIP.  OUTSTANDING
    EQUITY AWARDS AT FISCAL YEAR END 2006
    Option Awards


Stock AwardsNumber of








Number of


MarketSecurities








Shares


ValueUnderlying








or Units of


of Shares orUnexercised


Option


Option


Stock That


Units of StockOptions (#)


Exercise


Expiration


Have Not


That Have NotName

Unexercisable(1)


Price ($)


Date


Vested (#)(2)


Vested ($)(3)J. Michael Pearson


179,373


$
1.96



8/2/16






$
Mark R. Stauffer


33,633



1.96



8/2/16



84,268



165,164Elliott J. Kennedy














114,910



225,224Russell B. Inserra


112,108
(4)


1.96



8/2/16



229,821
(5)


450,448
(5)James L. Rose


33,633



1.96



8/2/16



7,661



15,015     (1)
    
    The option awards were issued under the 2005 Stock Incentive
    Plan. Provided the named executive officer remains continuously
    employed with us (or a parent or subsidiary of ours), the option
    awards (a) have vested with respect to one-fifth of the
    underlying shares on March 21, 2007, and (b) will vest
    with respect to one-sixtieth of the underlying shares upon the
    completion of each full month following March 21, 2007.
    Notwithstanding, pursuant to the terms of a transaction bonus
    agreement entered into with each of Mr. Pearson and
    Mr. Stauffer effective as of April 2, 2007, as
    amended, their stock vested in full upon the consummation of the
    2007 Private Placement. The share numbers provided do not
    include option awards granted to our named executive officers
    upon consummation of the 2007 Private Placement.(2)
    
    On May 3, 2005, Messrs. Stauffer, Kennedy, Inserra,
    and Rose received awards of 123,319, 168,162, 336,323, and
    11,211 shares of restricted stock, respectively. The shares
    of restricted stock were issued under the 2005 Stock Incentive
    Plan. Provided the named executive officer remains continuously
    employed with us (or a parent or subsidiary of ours), the
    restricted stock will vest (or, as applicable, vested) as
    follows: (a) one-fifth of the restricted stock became
    vested on May 3, 2006, and (b) one-sixtieth of the
    restricted stock will vest (or, as applicable, vested) upon the
    completion of each full month following May 3, 2006.
    Notwithstanding, pursuant to the terms of a transaction bonus
    agreement entered into with each of Mr. Stauffer and
    Mr. Kennedy effective as of April 2, 2007, as amended,
    their stock vested in full upon the consummation of the 2007
    Private 81




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##### Table of Contents



Placement. The share numbers provided do not include option
    awards granted to our named executive officers upon consummation
    of the 2007 Private Placement.(3)
    
    The amounts provided equal the product of (a) the number of
    unvested shares of restricted stock and (b) $1.96, the
    amount determined by an independent third-party valuation firm
    to be the fair market value of a share of our common stock as of
    March 31, 2006. The March 31, 2006 valuation is our
    most recent valuation.(4)
    
    Pursuant to the employment agreement we entered into with
    Mr. Inserra on March 27, 2007, Mr. Inserra agreed
    to forfeit 89,686 of the 112,108 options awarded to him on
    March 2, 2006. The remaining 22,422 options vested on
    March 21, 2007.(5)
    
    Pursuant to the employment agreement we entered into with
    Mr. Inserra on March 27, 2007, all of his restricted
    stock vested in full upon the consummation of the 2007 Private
    Placement.  OPTION
    EXERCISES AND STOCK VESTED IN FISCAL YEAR ENDED 2006
    Stock AwardsNumber ofShares


ValueAcquired on


Realized onName

Vesting (#)


Vesting ($)(1)J. Michael Pearson





$
Mark R. Stauffer


39,051



76,540Elliott J. Kennedy


53,251



104,372Russell B. Inserra


106,502
(2)


208,744
(2)James L. Rose


3,550



6,958     (1)
    
    The amounts provided equal the product of (a) the number of
    shares of restricted stock that vested during 2006 and
    (b) $1.96, the amount determined by an independent
    third-party valuation firm to be the fair market value of a
    share of our common stock as of March 31, 2006. The
    March 31, 2006 valuation is the most recent valuation.(2)
    
    Pursuant to the employment agreement we entered into with
    Mr. Inserra on March 27, 2007, all of his restricted
    stock vested in full upon the consummation of the 2007 Private
    Placement.  Potential
    Payments Upon Termination or Change in Control
  J.
    Michael Pearson
  Stock Option Agreement.
    nolo contendere
 82




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##### Table of Contents



2007 Employment Agreement.
        12-month
 83




---



##### Table of Contents



nolo
    contendere
    Mark
    R. Stauffer
  Stock Option and Restricted Stock
    Agreements.
  2007 Employment Agreement.
      Elliot
    J. Kennedy
  Restricted Stock Agreement.
 84




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##### Table of Contents



2007 Employment Agreement.
      James
    L. Rose
  Stock Option and Restricted Stock
    Agreements.
  2007 Employment Agreement.
      J. Cabell
    Acree, III
  2007 Employment Agreement.
 85




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##### Table of Contents



86




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##### Table of Contents



SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      Beneficial OwnershipAmount of


Percent ofCommon


CommonName of Beneficial Owner

Stock(1)


Stock(2)5% Stockholders:JANA Piranha Master Fund, Ltd.(3)(4)


1,500,000



6.96
%Bear, Stearns & Co. Inc.(3)(5)


1,488,458



6.90
%Directors and Executive Officers:(6)Richard L. Daerr, Jr.


2,000




*J. Michael Pearson(7)


197,892




*Mark R. Stauffer(8)


156,952




*Elliott J. Kennedy


171,773




*James L. Rose(9)


22,421




*Directors and Executive Officers as a group (5 persons)(10)


551,038



2.53
%     *
    
    Less than 1%.(1)
    
    Includes shares that may be acquired within 60 days of
    September 30, 2007 by exercising vested stock options but
    does not include any unvested stock options.(2)
    
    For each individual, this percentage is determined by assuming
    the named stockholder exercises all options which the
    stockholder has the right to acquire within 60 days of
    September 30, 2007, but that no other person exercises any
    options.(3)
    
    Based on information furnished to us by the holder as of
    September 30, 2007. 
  (4)
    
    The shares held by JANA Piranha Master Fund, Ltd. are indirectly
    beneficially owned by JANA Partners LLC, a Delaware limited
    liability company and a private money management firm which
    holds its common stock in various accounts under its management
    and control. The principals of JANA Partners LLC are Barry
    Rosenstein and Gary Claar. Address: 200 Park Avenue,
    Suite 3300, New York, New York, 10166 
  (5)
    
    Bear, Stearns & Co. Inc. is owned by The Bear Stearns
    Companies Inc., a publicly traded company that is listed on the
    New York Stock Exchange. Address: 383 Madison Avenue, New York,
    New York, 10179(6)
    
    Other than Richard L. Daerr, Jr. and J. Michael Pearson, none of
    our current directors have beneficial ownership of our common
    stock.(7)
    
    Includes 179,373 shares Mr. Pearson could acquire
    within 60 days of September 30, 2007 by exercising
    vested stock options.(8)
    
    Includes 33,633 shares Mr. Stauffer could acquire
    within 60 days of September 30, 2007 by exercising
    vested stock options.(9)
    
    Includes 11,210 shares Mr. Rose could acquire within
    60 days of September 30, 2007 by exercising vested
    stock options.(10)
    
    Includes (a) 179,373 shares Mr. Pearson could
    acquire within 60 days of September 30, 2007 by
    exercising vested stock options; (b) 33,633 shares
    Mr. Stauffer could acquire within 60 days of
    September 30, 2007 by exercising vested stock options; and
    (c) 11,210 shares Mr. Rose could acquire within
    60 days of September 30, 2007 by exercising vested
    stock options. 87




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##### Table of Contents



CERTAIN
    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
        I-QUIP,
   
  fathers-in-law, daughters-in-law, sisters-in-law),
 
   
   
 88




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##### Table of Contents



SELLING
    SHAREHOLDERS
 
  non-U.S. persons
 
   
   
    
 Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedE.N. Investment Company(63)


740,741



740,741One East Partners, L.P. (onshore)(61)


979,333



979,333One East Duration Master, L.P.(61)


233,001



233,001Plainfield Direct Inc.(40)


750,000



750,000Drake Associates L.P.(49)


30,000



30,000Triple Crown Investments LLP(36)


25,000



25,000United Capital Management, Inc.(37)


18,518



18,518The William K. Warren Foundation(47)


30,000



30,000Cetus Capital, LLC(51)


40,000



40,000Forest Hill Select Fund LP(39)


254,445



254,445Calm Waters Partnership(18)


74,074



74,074Third Point Partners Qualified L.P.(52)


696,373



696,373Third Point Partners L.P. (52)


785,108



785,108Clough Investment Partners I, LP(50)


97,500



97,500Clough Offshore Fund, Ltd.(50)


52,500



52,500Kenmont Special Opportunities Master
    Fund, L.P.(38)


52,500



52,500Man Mac Miesque IOB Ltd.(38)


22,500



22,500 
 89




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedTrust D(5)


225,000



225,000LibertyView Funds, LP(5)


95,370



95,370LibertyView Special Opportunities Fund, LP(5)


74,074



74,074LibertyView Socially Responsible Fund, LP(5)


37,037



37,037LibertyView Convertible Arbitrage Fund, LP(5)


18,519



18,519Fort Mason Master, LP(6)


76,067



76,067Fort Mason Partners, LP(6)


4,933



4,933Kensico Partners, LP(16)


212,400



212,400Kensico Associates, LP(16)


287,600



287,600JP Morgan Securities, Inc.(35)


370,370



370,370RMK Select High Income Fund(3)


48,600



48,600RMK High Income Fund(3)


45,800



45,800RMK Strategic Income Fund(3)


53,900



53,900RMK Advantage Income Fund(3)


61,800



61,800RMK Multi-Sector High Income Fund(3)


69,600



69,600Douglas H. Manuel & Gail D. Manuel JTWROS


5,555



5,555Douglas H. McCorkindale


7,407



7,407James A. Syme & Phyllis K. Syme JTWROS


3,333



3,333Steuart Investment Company(26)


37,037



37,037Joseph H. Szymanski


5,555



5,555Stuckey Timberland, Inc.(29)


11,111



11,111John Whalen and Linda D. Rabbitt, JTWROS


3,555



3,555Wiegers & Co. LLC(54)


75,000



75,000Howard C. Bluver IRA R/O


1,851



1,851Sean Coleman


3,703



3,703Edward A. Fox


11,111



11,111Geddes and Company(25)


18,518



18,518Georgetown Preparatory School, Inc.(55)


7,417



7,417Harvard Investments, Inc.(42)


14,814



14,814Michael F. Horn Sr. IRA


3,703



3,703Patrick J. Keeley(10)


20,000



20,000Patrick McGinley and Shelley McGinley JTWROS


3,704



3,704Francis F. OConnor and Cynthia OConnor JTWROS(11)


2,000



2,000James Matthew Varay(8)


4,000



4,000Jay Weiss


7,407



7,407John C. York


4,000



4,000Thomas P. Gies and Lucy G. Gies JTWROS


3,704



3,704Christopher Ryan TTEE Article Fourth Tr U/W/O B. Ryan
    FBO Mary E. Ryan Credit Shelter U/A DTD 5/1/2006(58)


5,000



5,000JAM Investments, LLC(30)


5,555



5,555YA Global Investments, L.P.(56)


148,148



148,148Prism Partners III Leveraged L.P.(48)


213,000



213,000Prism Partners I, L.P.(48)


87,000



87,000 
 90




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedCharles H. Miller


5,000



5,000Terry P. Murphy Trustee of Terry P. Murphy Trust(24)


1,481



1,481Steven J. Swain(15)


800



800Reuven M. Sacher, MD(15)


3,800



3,800Nancy L. Winton(15)


700



700Laboratory Medical Associates, PA 401K FBO
    L. Zinterhofer(15)


1,900



1,900Steven W. & Sheryl Kaplan Papish(15)


500



500Pacific Partners LP(15)


7,000



7,000Jane I. Schaefer Trust, Rudolph J. Schaefer, III, TTEE,
    Lauriston Castleman, Jr., TTEE(15)


13,900



13,900Samuel P. Peabody(15)


1,044



1,044Peter J. Spengler IRA Rollover(15)


2,300



2,300Douglas L. Brown IRA Rollover(15)


1,400



1,400Lawrence D. & Jane A. Sperling JTWROS(15)


5,500



5,500Anthony J. Landi & Patricia Landi JTWROS(15)


1,100



1,100Anthony J. Landi(15)


500



500Patricia Landi(15)


500



500Patricia Landi TTEE Revocable Trust Agreement FBO Patricia
    Landi(15)


2,500



2,500Jacqueline Fowler(15)


3,800



3,800Schaefer 2000 Trust, Jane I. Schaefer, Lauriston Castleman, Jr.,
    TTEE(15)


800



800Mrs. Jane Schaefer-Combined(15)


500



500Martha H. Schaefer 1986 Trust, Lauriston Castleman, Jr., TTEE(15)


1,700



1,700Lucia S. Chase 1986 Trust, Lauriston Castleman Jr., TTEE(15)


1,700



1,700Rudolph J. Schaefer IV 1986 Trust, Lauriston Castleman Jr.,
    TTEE(15)


1,700



1,700Greta J. Schaefer 1986 Trust, Lauriston Castleman Jr.,
    TTEE(15)


1,700



1,700Edmee S. Zahringer 1986 Trust, Lauriston Castleman Jr., TTEE(15)


1,700



1,700Trust FBO John A. Berol u/w Kenneth Berrol(15)


15,000



15,000Trust FBO David N. Berol u/w Kenneth Berrol(15)


15,000



15,000Berol Family Trust FBO Margaret Beattle(15)


15,000



15,000Arturo DePena(14)(15)


1,900



1,900Elizabeth Sexworth IRA Rollover


1,113



1,113Rajnikant R. Shah and Dilroza R. Shah Joint Tenants with Rights
    of Survivorship


7,407



7,407Felix Harke SEP-IRA


2,222



2,222Blue Ridge Investments(41)


1,481



1,481Spring Point Partners, L.P.(33)


27,200



27,200Spring Point Institutional Partners, L.P.(33)


14,800



14,800Spring Point Special Situations Master
    Fund, L.P.(32)


59,300



59,300Spring Point Offshore Master Fund, L.P.(33)


60,900



60,900Spring Point Opportunity Master Fund, L.P.(33)


297,678



297,678Ridgecrest Partners QP, L.P.(45)


59,000



59,000Ambrosio Blanco


2,222



2,222 
 91




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedDaryll Marshall-Inman SEP-IRA


2,222



2,222Brad Marshall-Inman SEP-IRA


2,222



2,222Michael Heijer IRA Rollover


2,222



2,222Forest Hill Select Offshore, Ltd.(39)


189,999



189,999FBR Capital Markets Corporation(44)


398,247



398,247Alexandra P. Tumbleston(4)


1,620



1,620Alexis Ann Shehata(4)


1,260



1,260Alice F. Chernesky(4)


2,340



2,340Andrea L. Kilian TTEE, Andrea L. Kilian Trust U/A DTD
    09/25/1997(4)


710



710Anita L. Rankin TTEE, Anita L. Rankin Rev. Trust U/A DTD
    04/28/1995(4)


540



540Ann C. Karter(4)


10,450



10,450Ann K. Miller(4)


9,850



9,850Anne-Marie Romer Trustee, Anne-Marie Romer Rev. Living
    Trust U/A DTD 02/08/2007(4)


1,480



1,480Anthony L. Kremer, Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,420



1,420Anthony L. Kremer TTEE, Anthony L. Kremer Rev. Living
    Trust U/A DTD 01/27/1998(4)


1,020



1,020Baker Hazel Funeral Home, Inc.(4)


340



340Barbara A. Muth, Charles Schwab & Co Inc Cust IRA
    Contributory(4)


320



320Barbara A. Muth TTEE Barbara A. Muth Revocable Living U/A DTD
    10/31/1996 FBO B Muth(4)


1,550



1,550Beverly R. Guterman Charles Schwab & Co Inc Cust IRA
    Rollover(4)


600



600Billy A. West TTEE Billy A West Trust U/A DTD 01/23/1992(4)


4,340



4,340BLT Enterprises LLLP A Partnership(4)


1,620



1,620MLPF & S Cust FPO Bradley J. Hausfeld IRRA FBP
    Bradley J. Hausfeld(4)


870



870Brian Louis McMurray(4)


1,700



1,700Carl William Goeckel Charles Schwab & Co Inc Cust
    SEP-IRA(4)


2,440



2,440Carl William Goeckel Designated Bene Plan/TOD(4)


340



340Charles L Bechtel & Miriam L Bechtel JTTEN(4)


590



590Charles T Walsh TTEE The Charles T Walsh Trust U/A DTD
    12/06/2000(4)


3,600



3,600Charles V. Simms TTEE Charles V. Simms Trust U/A DTD
    12/28/1994(4)


1,400



1,400Cheryl Coleman Charles Schwab & Co Inc Cust IRA
    Rollover(4)


340



340Chris H Kapolas & Linda Kapolas JTTEN(4)


1,140



1,140Christine F. Lindeman Thomas Charles Schwab & Co Inc
    Cust IRA Rollover(4)


1,080



1,080Christine F Lindeman Thomas Thomas Revocable Trust U/A DTD
    08/22/1991(4)


3,120



3,120Christopher M. Ruff Charles Schwab & Co Inc Cust IRA
    Rollover(4)


280



280Cindy Ernst(4)


13,050



13,050Craig Paul Sanford & Mary Jo Sanford JTTEN(4)


6,390



6,390CTBB Family Limited Partnership(4)


4,380



4,380Cynthia A Hackett(4)


2,350



2,350 
 92




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedCynthia J Crotty TTEE C/O Van Dyne Crotty Attn: Dave Senseman(4)


3,310



3,310D Kremer & R Kremer TTEE David R Kremer Rev Living Tr
    U/A DTD 05/07/1996(4)


1,730



1,730D MacCubbin & L MacCubbin TTEE Don A
    MacCubbin & Linda B Macc U/A DTD 05/04/1993(4)


2,110



2,110Najwa Tabrah Trustee Najwa Tabrah Revocable Trust U/A DTD
    01/06/1987(4)


290



290Daniel J Roach Charles Schwab & Co Inc Cust IRA
    Rollover(4)


580



580Daniel W Crotty TTEE C/O Van Dyne Crotty Attn: Dave Senseman(4)


35,640



35,640David K Ray Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,440



1,440David L Roer(4)


340



340David M Gray TTEE David M Gray Revocable Trust U/A DTD
    07/19/1996(4)


440



440David M Morad Jr Charles Schwab & Co Inc.Cust IRA
    Rollover(4)


4,620



4,620David R Ernst & Renee M Ernst JT TEN(4)


3,160



3,160David Ross TTEE The David Ross Trust U/A DTD 11/04/2000(4)


1,470



1,470David S Senseman TTEE David S Senseman Trust U/A DTD
    10/18/1995(4)


580



580David S. Senseman Trustee Crotty Escrow Trust U/A DTD
    02/10/2006(4)


2,010



2,010De Ette Rae Hart TTEE U/A DTD 05/17/1999 FBO De Ette Rae Hart(4)


820



820Deanne W. Joseph Charles Schwab & Co Inc Cust IRA
    Rollover(4)


540



540Diana M Best Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


3,130



3,130Diane E Senseman TTEE Diane E Senseman Trust 10/18/1995 FBO
    D Senseman(4)


570



570Diane W Colaizzi Charles Schwab & Co Inc Cust IRA
    Rollover(4)


230



230Dina E Crnkovich Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,360



1,360Don A Keasel IRA Rollover(4)


1,120



1,120Don Aubrey MacCubbin Charles Schwab & Co Inc Cust IRA
    Contributory(4)


580



580Donald A Porter Charles Schwab & Co Inc Cust IRA
    Contributory(4)


1,260



1,260Donald G Tekamp TTEE Donald G Tekamp Revocable Trust U/A
    DTD 08/16/2000(4)


1,240



1,240Donald Huu Nguyen & Lynn Ann Buffington JT TEN(4)


1,010



1,010Donald Huu Nguyen Charles Schwab & Co Inc Cust IRA
    Rollover(4)


210



210Donna G Dahm Charles Schwab & Co Inc Cust IRA
    Contributory(4)


570



570Douglas A Marchal & Melissa K Marchal JT TEN(4)


330



330EBS Microcap Partners LP A Partnership(4)


20,610



20,610EBS Partners LP Primary Acct A Partnership(4)


72,760



72,760Edward W Eppley Charles Schwab & Co Inc Cust IRA
    Rollover(4)


820



820Eric Graham TTEE Eric A Grahm Trust DTD 02/11/2004(4)


780



780Farouk Tabrah Charles Schwab & Co Inc Cust IRA
    Contributory(4)


170



170Farouk Tabrah TTEE Tabrah Qualified Personal Residence
    Trust U/A 5/11/92(4)


560



560Felice M Kantor TTEE Felice M Kantor Trust U/A DTD
    06/23/1993(4)


6,910



6,910 
 93




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedForney M Hoke III(4)


2,360



2,360Found-MOR LLC(4)


5,620



5,620Francis J Seiler Charles Schwab & Co Inc Cust IRA
    Rollover(4)


470



470G Harmon & T Harmon & H Wall Lawrence J
    Harmon Trust A U/A DTD 01/29/2001(4)


580



580Gary M Youra Charles Schwab & Co Inc.Cust IRA
    Rollover(4)


2,860



2,860George W Hicks(4)


1,190



1,190George W Ledford Charles Schwab & Co Inc Cust IRA
    Rollover(4)


3,250



3,250Gerald E Joseph & Deanne W Joseph JT TEN(4)


1,590



1,590Gerald J Allen TTEE Gerald J. Allen Trust U/A DTD 07/05/2001(4)


3,420



3,420Gerald J Allen Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,440



1,440Gregory Alan Reber & Bibi Ann Hazel-Reber JT TEN(4)


800



800Gregory J Thomas Sep-IRA C/O TK Harris Commercial(4)


540



540Gregory J Thomas TTEE Trust U/A DTD 08/22/91(4)


760



760Gwendolyn D Harmon TTEE Gwendolyn D Harmon Trust U/A DTD
    08/30/2001(4)


2,640



2,640H Joseph Wood Charles Schwab & Co Inc Cust Spousal IRA
    Rollover(4)


930



930Harold Allen Ferguson Jr & Lois Marie Ferguson JT
    TEN(4)


1,480



1,480Hazel B Kidd(4)


1,280



1,280Helen G Moody TTEE Helen G Moody Trust U/A DTD 01/17/2002(4)


1,300



1,300Howard Smith(4)


2,340



2,340Hsien Ming Meng Charles Schwab & Co Inc Cust IRA
    Rollover(4)


690



690Industrial Grinding Inc. Profit Sharing Plan
    Trust Segregated Account(4)


2,290



2,290J Ernst & D Ernst TTEE John C Ernst Rev Lt U/A DTD
    11/11/1911(4)


7,860



7,860Jack E Brady(4)


380



380Jacqueline J Slyman(4)


2,000



2,000Jacqueline Michelle Evans Charles Schwab & Co. Inc
    Cust IRA Rollover(4)


310



310James A Broering Charles Schwab & Co Inc Cust IRA
    Rollover(4)


4,800



4,800James N Marten TTEE James N Marten Revocable Trust U/A DTD
    08/29/2001(4)


2,190



2,190James Robert Goldstein(4)


790



790James T Lehner Charles Schwab & Co Inc Cust IRA
    Rollover(4)


2,100



2,100Jane Hughes TTEE Giacomo Irrevocable Trust U/A DTD
    11/30/2000 FBO L Giaco(4)


2,000



2,000Janet Rosemary Seiler TTEE Janet R Seiler Trust U/A DTD
    05/18/2005(4)


1,270



1,270Jean C Marten(4)


730



730Jeannine E Phlipot(4)


1,180



1,180Jeannine E Phlipot Charles Schwab & Co Inc. Cust IRA
    Contributory(4)


1,020



1,020Jeffrey M Grieco TTEE Jeffrey M Grieco Rev Liv Trust U/A
    DTD 07/19/2001(4)


1,230



1,230Jeffrey T Wood TTEE Revocable Trust Agreement U/A DTD
    10/29/2003(4)


1,330



1,330Jeffrey W Davis & Laura K Davis JT TEN(4)


1,000



1,000 
 94




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedJennifer A Roer UTA Charles Schwab & Co Inc IRA
    Contributory Dtd 04/24/98(4)


500



500Jennifer Roach(4)


370



370Jennifer Roach Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


810



810Jerome E Muth Charles Schwab & Co Inc. Cust Roth
    Contributory IRA(4)


3,030



3,030Jerome E Muth TTEE Trust U/A DTD 10/31/96 FBO Jerome E
    Muth(4)


380



380Joan M Welsh TTEE A&R Agreement Of Trust For Joan M
    Welsh DTD 08/31/1990(4)


1,280



1,280John A Barron(4)


560



560John A Barron(4)


690



690John A ONeil & Lisa D ONeil JT TEN(4)


1,570



1,570John B Maynard Sr TTEE John B Maynard Sr Rev Liv Trust U/A
    DTD 10/05/1993(4)


9,100



9,100John C Kunesh & Sarah L Kunesh JT TEN(4)


1,170



1,170John Carl Eiting(4)


5,500



5,500John Eubel Charles Schwab & Co Inc Cust IRA Rollover(4)


4,280



4,280John M Walsh Jr Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,360



1,360John OMeara Charles Schwab & Co Inc Cust IRA
    Rollover(4)


340



340John Robert Scharf Charles Schwab & Co Inc Cust IRA
    Contributory(4)


2,260



2,260John T Dahm Charles Schwab & Co Inc Cust IRA
    Contributory(4)


3,040



3,040John T Dahm Charles Schwab & Co Inc Cust IRA
    Rollover(4)


920



920John Thomas Paas & Julia Marie Paas JT TEN(4)


690



690Jon Richard Yenor & Caroline Leutze Brecker JT TEN(4)


1,060



1,060Jon Richard Yenor Charles Schwab & Co Inc Cust IRA
    Rollover(4)


780



780Joseph D Maloney(4)


1,210



1,210Joseph F Scullion Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,010



1,010Joyce Ann Porter TTEE Joyce Ann Porter Trust U/A DTD
    12/01/2000(4)


920



920Juan M Palomar Charles Schwab & Co Inc Cust IRA
    Rollover(4)


2,070



2,070Judith A Keasel IRA Rollover(4)


460



460K Shelton Charles Schwab & Co Inc Cust IRA Rollover(4)


1,130



1,130Kandythe J Miller(4)


1,150



1,150Karen Ann Beach TTEE Karen A Beach Trust U/A DTD
    05/25/2002(4)


3,480



3,480Karen S Crotty TTEE Karen S Crotty Trust U/A DTD
    06/13/1995(4)


1,710



1,710Kathryn A Leeper TTEE Kathryn Ann Leeper Trust U/A DTD
    06/29/95(4)


710



710Keith T Lins Charles Schwab & Co In Cust IRA
    Rollover(4)


1,020



1,020Kenneth M Fisher Charles Schwab & Co Inc Cust IRA
    Rollover(4)


570



570Kenneth Michael Fisher & Alice Anne Fisher JT TEN(4)


1,390



1,390Kevin M Crotty TTEE Kevin M Crotty Trust U/A DTD
    06/13/1995(4)


43,940



43,940Keybank National Association Custodian For Medamerica Health
    Systems Corp Other Board Designated Funds Eubel
    Brady & Sutton Asset Mgmt(4)


14,880



14,880Kirby Charles Leeper Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,080



1,080L Peck & D Vockell & S Brinn & O
    Fernandez TTEE Sharonville PED PSC 401 FBO O Fernandez(4)


1,500



1,500 
 95




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedLarry J Lehman Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,410



1,410Lauren Peck Beneficiary Charles Schwab & Co Inc Cust
    Inherited IRA(4)


1,150



1,150Lawrence K Jackson Charles Schwab & Co Inc Cust IRA
    Contributory(4)


470



470Leo K Wingate & Katherine H Wingate JT TEN(4)


860



860Linda Marie Meister(4)


1,220



1,220Linda Marie Meister Charles Schwab & Co Inc Cust IRA
    Contrib DTD 03/31/2000(4)


210



210M Brady & R Eubel TTEE EBS Asset Mgmt Inc PSP U/A DTD
    01/01/1994(4)


4,820



4,820M Demange & T Demange TTEE Mary J Demange Rev Living
    Tr U/A DTD 12/30/1992(4)


400



400Marcia M ORourke(4)


3,920



3,920Margaret Saunders Adam TTEE Margaret S Adam Revocable
    Trust U/A DTD 04/10/2002(4)


590



590Mark Louis Orlandini(4)


800



800Martha S Senkiw TTEE Martha S Senkiw Revoc Lvng Tru U/A DTD
    11/02/1998(4)


680



680Martin J Grunder Jr Charles Schwab & Co Inc Cust
    SEP-IRA(4)


650



650Mary Ellen Kremer TTEE Mary Ellen Kremer U/A DTD 01/27/1998(4)


1,320



1,320Mary Lou R Baggott(4)


1,460



1,460Mary M Kunesh TTEE Charles T Kunesh Irrev Trust U/A DTD
    06/28/1995(4)


6,670



6,670Melinda Laureen Eubel UTA Charles Schwab & Co Inc IRA
    Rollover DTD 08/21/95(4)


900



900Melodee A Ruffo(4)


980



980Michael A Houser & H Stephen Wargo JT TEN(4)


370



370Michael F Dakin Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


1,380



1,380Michael G Lunsford(4)


420



420Michael G. Lunsford Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


890



890Michael Glenn Bradshaw Charles Schwab & Co Inc. Cust
    IRA Rollover(4)


2,520



2,520Michael J McQuiston Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,690



1,690Michael J Suttman(4)


870



870Michael Lipson & Marilyn E Lipson JT TEN(4)


390



390Michael Lipson Charles Schwab & Co Inc Cust IRA
    Contributory(4)


260



260Michael Mathile Rev Tr(4)


2,960



2,960Michael T Kunesh TTEE Trust Agreement U/A DTD 02/10/1995(4)


2,510



2,510Michelle L Tagliamonte Charles Schwab & Co Inc Cust
    IRA Rollover(4)


890



890Mike Joseph Evans & Jacke M Evans JT TEN(4)


680



680Milo Noble(4)


6,340



6,340MLPF & S Cust FPO William R Brunner IRA FBO William R
    Brunner(4)


1,230



1,230Najwa Tabrah Charles Schwab & Co Inc Cust IRA
    Contributory(4)


580



580Nayann B Pazyniak Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


450



450Neal L Miller & Kandythe J Miller JT TEN(4)


530



530Neal L Miller Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


230



230 
 96




---



##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedNeil Kantor Charles Schwab & Co Inc Cust IRA
    Rollover(4)


3,160



3,160Neil W Hazel & Jeanne K Hazel JT TEN(4)


780



780Neil W Hazel TTEE Neil W Hazel Trust U/A DTD 08/25/92(4)


1,220



1,220Northern Trust As Custodian For Upnorth Investments,
    Ltd  EBS(4)


14,330



14,330Pamela S Graeser(4)


360



360Parma Heights Investment Co A Partnership(4)


460



460Patricia Meyer Dorn Designated Bene Plan/TOD(4)


5,630



5,630Patrick A Mickley & Amy Jo Mickley JT TEN(4)


460



460Patrick J Coleman Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,860



1,860Patrick L McGohan & Jackie L McGohan JT TEN(4)


1,350



1,350Paul J Routh Charles Schwab & Co Inc Cust IRA
    Contributory(4)


660



660Paul R Crnkovich & Dina E Crnkovich JT TEN(4)


3,640



3,640Paul R Crnkovich Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,000



1,000Paul S Guthrie & Cynthia J Guthrie JT TEN(4)


4,050



4,050Paul Strausbaugh & Joan Strausbaugh Ten/Com(4)


1,760



1,760Peck Family Investments Ltd A Partnership(4)


1,550



1,550Peck Investments LLC(4)


2,220



2,220Peter D Senkiw TTEE Peter D Senkiw Rev Living Tr U/A DTD
    11/02/1998(4)


690



690Peter McInnes & Noreen McInnes Ten/Com(4)


6,980



6,980Philip E Gallagher TTEE Philip E Gallagher DDS PSP DTD
    12/31/1984 FBO P Gallagher(4)


1,540



1,540Philip H Wagner TTEE Philip H Wagner Revocable Trus U/A DTD
    11/01/2000(4)


18,720



18,720Philip M Haisley Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


450



450R Kremer & D Kremer TTEE Ruth E Kremer Rev Living Tr
    U/A DTD 05/07/1996(4)


1,190



1,190R&D Investment Partnership LLP A Partnership C/O Betty
    Eubel(4)


22,180



22,180Rawa Ltd Partnership A Partnership(4)


4,400



4,400Raymond W Lane(4)


2,370



2,370Richard Dewey Smith(4)


1,440



1,440Richard Dewey Smith Charles Schwab & Co Inc Cust IRA
    Contributory(4)


330



330Richard E Holmes Charles Schwab & Co Inc Cust IRA
    Contributory(4)


1,240



1,240Richard E Holmes TTEE Richard E Holmes Revocable Liv U/A DTD
    08/25/1994(4)


4,230



4,230Richard G Snider TTEE Baker-Hazel & Snider Funeral
    Home Inc U/A DTD 06/01/2002(4)


520



520Richard H Lesourd Jr C/O Lesourd & Co(4)


1,750



1,750Richard N Kappel & Alicia L Kappel JT TEN(4)


4,830



4,830Rick J Penwell TTEE Aviation Sales Inc 401k Plan U/A DTD
    02/08/1994(4)


1,480



1,480Robert A Colaizzi Jr Charles Schwab & Co Inc Cust IRA
    Rollover(4)


2,660



2,660Robert A Weisman Charles Schwab & Co Inc Cust IRA
    Rollover(4)


600



600Robert F Mays TTEE Robert F Mays Trust U/A DTD 12/07/1995(4)


1,290



1,290 
 97




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##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedRobert H Meixner Jr.(4)


9,280



9,280Robert L Kilian Charles Schwab & Co Inc Cust IRA
    Rollover(4)


600



600Robert L Kilian TTEE Robert L Kilian Trust U/A DTD
    09/25/1997(4)


1,100



1,100Robert N Sturwold Designated Bene Plan/TOD(4)


740



740Robert S Crotty TTEE Brooke Caroline Crotty Trust U/A DTD
    04/04/2006(4)


1,090



1,090Robert S Crotty TTEE Robert S Crotty Trust U/A DTD
    02/25/1996(4)


22,230



22,230Roland J Anderson Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,470



1,470Ruth D Scharf TTEE Ruth D Scharf Trust U/A DTD 12/06/1995(4)


180



180S Miller & C Liesner TTEE Steven A Miller Living
    Trust U/A DTD 06/05/1998(4)


2,770



2,770Samuel W Lumby TTEE Samuel W Lumby Trust U/A DTD
    05/04/1995(4)


1,650



1,650Sandra E Nischwitz(4)


2,810



2,810Sean Robert Convery(4)


450



450Semele Foundas Charles Schwab & Co Inc. Cust IRA
    Contributory(4)


260



260Sherrie L Crotty TTEE Sherrie L Crotty Trust U/A DTD
    04/04/2006(4)


2,160



2,160Sonja K Kasch TTEE Sonja K Kasch Trust U/A DTD 10/26/2004(4)


1,730



1,730Stanley H Rainey Jr Charles Schwab & Co Inc Cust IRA
    Rollover(4)


2,510



2,510Stanley J Katz Charles Schwab & Co Inc Cust IRA
    Contributory(4)


490



490Stephen A Delong(4)


2,060



2,060Stephen L Hopf & Cynthia K Hopf JT TEN(4)


880



880Steven E Ross & Mary J Ross JT TEN(4)


10,140



10,140Steven K Suttman Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


700



700Steven M. Nelson Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,690



1,690Steven R Conover & Victoria L Conover JT TEN(4)


640



640Susan J Gagnon TTEE Susan J Gagnon Revocable Living U/A
    08/30/1995(4)


3,040



3,040T Anderson & J Anderson TTEE Anderson Family Rev Tr
    U/A DTD 09/23/2002(4)


2,460



2,460T Demange & M Demange TTEE Thomas M Demange Rev.
    Living Tr U/A DTD 12/30/1992(4)


1,340



1,340Tanya H Pavlina TTEE Trust U/A DTD 11/21/95(4)


1,650



1,650The Fifth Third Bank Successor Co-Trustee Under Agreement With
    George H. Welsh Tr B(4)


3,960



3,960Thomas A Miller IRA Rollover(4)


740



740Thomas Holton TTEE Marjorie G Kasch Irrev Trust U/A DTD
    03/21/1980(4)


970



970Thomas J Maio & Susan J Maio JT TEN(4)


1,670



1,670Thomas J Mlinac TTEE Mazer Corporation PSP & 401(K)
    U/A DTD 11/30/66 FBO T Mlinac(4)


1,000



1,000Thomas L Falvey & Mary Leslie Falvey JT TEN(4)


2,160



2,160MLPF & S Cust FPO Thomas L Hausfeld IRRA FBO
    Thomas L Hausfeld(4)


670



670Thomas V Moon & Moon Family Trust U/A DTD
    10/14/91(4)


950



950 
 98




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##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedTimothy A Pazyniak Charles Schwab & Co Inc. Cust IRA
    Rollover(4)


3,920



3,920Timothy Jon Beach TTEE Timothy J Beach Trust U/A DTD
    04/22/2002(4)


3,970



3,970Timothy M. Black Charles Schwab & Co Inc Cust IRA
    Rollover(4)


1,710



1,710TNM Investments Ltd A Partnership(4)


430



430Toby G Weber TTEE Toby G Weber Rev Mgmt Tr U/A DTD 06/13/2002(4)


3,160



3,160Verle McGillivray Charles Schwab & Co Inc Cust IRA
    Rollover(4)


570



570Vivian D Bichsel TTEE Vivian D Bichsel Rev Liv Trust U/A
    DTD 11/18/1993(4)


1,760



1,760Wilbur L Brown & Evilina A Brown JT TEN All Cap(4)


5,410



5,410Wilbur L Brown & Evilina A Brown JT TEN Small Cap(4)


620



620William I Gharst TTEE Jonell L Gharst Rev Liv Trust U/A DTD
    03/18/1997(4)


3,320



3,320William J Turner TTEE William J Turner Revocable Living
    Trust DTD 05/20/1998(4)


790



790William M Thornton Charles Schwab & Co Inc Cust IRA
    Rollover(4)


4,290



4,290Yvonne Grieco TTEE Trust U/A DTD 07/19/2001(4)


1,140



1,140JMB Capital Partners Master Fund, L.P.(60)


726,000



726,000GLG North American Opportunity Fund(21)


736,800



736,800GLG US MAP Fund(21)


13,200



13,200Retail Employees Superannuation Trust(2)


65,400



65,400Australian Retirement Fund(2)


55,700



55,700Telstra Superannuation Scheme(2)


47,700



47,700Stichting Bedrijtstak Pensionefonds voor Het Vereepsvervoer Over
    De Weg(2)


39,200



39,200Maritime Life Discovery Fund(2)


25,400



25,400TELUS Foreign Equity Active Alpha Pool(2)


19,300



19,300New Zealand Administration Services Limited  Global
    Equity Small Companies Pooled(2)


13,400



13,400TELUS Foreign Equity Active Beta Pool(2)


9,300



9,300Richard S. Bodman Revocable Trust, dated 9/1/1998(57)


6,507



6,507John M. Coleman and Patricia D. Coleman JTWROS


5,555



5,555CNF Investments II, LLC(43)


18,519



18,519Timothy Michael Donahue and Jayne N. Donahue JTWROS


25,925



25,925Le Roy Eakin III and Lindsay Eakin, JTBE


7,407



7,407Gerhard Erdelji(7)


740



740Joel Goozh and Karen Goozh TBE


3,703



3,703Chris Glubka(13)


500



500Green Earth Investments LLC(28)


11,111



11,111Wallace F. Holladay, Jr.


5,555



5,555Daniel W. Huthwaite and Constance Huthwaite JTWROS


3,703



3,703Evan Jones


7,407



7,407Thomas E. Lee and Nancy C. Lee JTWROS


3,703



3,703James Locke and Susan Locke TBE


18,518



18,518 
 99




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##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedFountainhead Special Value Fund(53)


34,000



34,000King Investment Advisors, Inc. Profit Sharing Plan(53)


1,600



1,600Charles O. Requadt and Julie K. Requadt


1,500



1,500E. Holt Williams, IRA Rollover


1,100



1,100Alford Turman


900



900Ryan McCleary


1,100



1,100Dale McCleary


4,000



4,000Roger E. King


7,400



7,400New York State Nurses Association Pension Plan(2)


53,300



53,300Seligman Global Smaller Companies Fund(2)


69,700



69,700Retirement Plan for Employees of Union Carbide Corporation and
    its Participating Subsidiary Companies(2)


81,300



81,300SEI Institutional Investments Trust  Small/Mid Cap
    Fund(2)


116,900



116,900The Robert Wood Johnson Foundation(2)


120,000



120,000SEI Institutional Investments Trust  Small Cap Fund(2)


136,100



136,100Dow Employees Pension Plan(2)


148,600



148,600Wellington Management Portfolios (Dublin)  Global
    Smaller Companies Equity Portfolio(2)


33,700



33,700Stichting Bedrijfstakpensionefunds voor de Media PNO(2)


50,000



50,000JBWere Global Small Companies Pooled Fund(2)


58,200



58,200SEI Institutional Managed Trust  Small Cap Growth
    Fund(2)


164,700



164,700Goldman Sachs JBWere Small Companies Pooled Fund(2)


241,100



241,100Public Sector Pension Investment Board(2)


243,500



243,500The Central States, Southeast and Southwest Areas Pension Fund(2)


158,500



158,500Oregon Public Employees Retirement Fund(2)


199,900



199,900Small/Mid Cap Diversified Alpha Fund(2)


10,300



10,300Radian Group Inc.(2)


28,100



28,100Wellington Trust Company, National Association Multiple
    Collective Investment Funds Trust, Emerging Companies
    Portfolio(2)


292,100



292,100JANA Piranha Master Fund, Ltd.(12)


500,000



500,000Paulson & Co. Inc(59)


511,542



511,542Bear Stearns & Co. Inc.(17)


1,488,458



1,488,458Talvest Global Small Cap(2)


15,600



15,600The SEI U.S. Small Companies Fund(2)


23,500



23,500AMP Enhanced Index International Share Fund(22)


32,167



32,167Henderson North American Multi-Strategy Equity Fund(22)


23,827



23,827Henderson Global Multi-Strategy Equity Fund(22)


94,006



94,006Goldman Sachs Global Manager Strategies(2)


42,700



42,700Wellington Trust Company, National Association Multiple
    Common Trust Funds Trust, Smaller Companies Portfolio(2)


38,700



38,700Wellington Trust Company, National Association Multiple
    Common Trust Funds Trust, Emerging Companies Portfolio(2)


150,400



150,400Kensico Partners, LP(16)


96,600



96,600 
 100




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##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedKensico Associates, LP(16)


130,900



130,900David H. Dornsife Revocable Trust(31)


42,000



42,000C. R. Bard Inc., Master Trust(31)


20,000



20,000Peninsula Catalyst Fund, L.P.(46)


48,000



48,000Peninsula Catalyst Fund (QP), L.P.(46)


102,000



102,000BSSC FBO J. Steven Emerson Roth IRA


100,000



100,000BSSC FBO J. Steven Emerson IRA R/O II


300,000



300,000Lisa and Joseph Nardini(20)


1,852



1,852Joseph Nardini(20)


1,852



1,852Ascend Partners Fund II LP(19)


144,775



144,775Guggenheim Portfolio Co. XXIII LLC(19)


105,225



105,225JANA Piranha Fund, LP(12)


1,500,000



1,500,000Prides Capital Fund I, LP(34)


341,570



341,570Talkot Fund, LP(23)


96,900



96,900Tom D. Bengard, Roth Conversion IRA(31)


5,000



5,000Higashi Farms Inc. Profit Sharing Plan and Trust(31)


9,500



9,500Higashi Capital, A Partnership(31)


2,000



2,000Kenneth & Lyn Higashi Revocable Trust(31)


1,000



1,000E. West Whittaker Jr., IRA Contributory(31)


1,500



1,500Major Farms Inc. PSP and Trust(31)


4,000



4,000David E. Lombardi, IRA Rollover(31)


3,500



3,500Keyhole Investors, A Partnership(31)


5,500



5,500T. Rognald Dankmeyer IRA(31)


4,000



4,000Perault Family Trust(31)


2,500



2,500Congregation of the Sisters of Mercy(31)


5,000



5,000Spain Family Trust(31)


3,500



3,500Warren Yu Family Trust(31)


4,000



4,000Martin & Lillian Platsko Marital Trust(31)


6,000



6,000Bohn Living Trust(31)


4,000



4,000Ausonio Profit Sharing Plan(31)


3,500



3,500Mary Bonnie Brooks Charitable Remainder Trust(31)


1,200



1,200Mary Bonnie Brooks Trust(31)


3,000



3,000Nancy Callahan Revocable Trust(31)


2,600



2,600Gronner Family Trust(31)


11,100



11,100Friedman, Billings, Ramsey & Co., Inc.(44)


26,402



26,402Banque Privee Edmond de Rothschild Europe(62)


20,000



20,000Richard L. Daerr, Jr. (1)


2,000



2,000Donald Wood IRA Contributory(31)


2,300



2,300Gaver Family Trust(31)


2,800



2,800Frances Gaver Hugh M. Sympson Trust(31)


3,800



3,800Antonia Louise Nicklaus(31)


1,400



1,400Eckmann Foundation(31)


500



500 
 101




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##### Table of Contents



Number of Shares ofCommon Stock Held


Number ofPrior to the


SharesSelling Shareholder

Offering


OfferedJames C. Lawson & Jacqueline C. Lawson 1993 TR(31)


2,400



2,400Margie Denner, IRA Contributory(31)


4,900



4,900Newland Master Fund, Ltd.(27)


27,000



27,000Alexandra Global Master Fund LTD(9)


109,800



109,800The Central States, Southeast and Southwest Areas Pension Fund(2)


4,000



4,000SEI Institutional Investments Trust Small Cap Fund(2)


3,500



3,500SEI Institutional Managed Trust  Small Cap Growth
    Fund(2)


4,500



4,500Small/Mid Cap Diversified Alpha Fund(2)


2,700



2,700Jane Schaefer(5)


500



500James T. McDonald TTEE, James T. McDonald U/A DTD 4/8/02 Equity
    Acct(4)


4,280



4,280William E. York & Carrie E. York, JT TEN(4)


1,760



1,760WTC CTF, Smaller Companies Portfolio(2)


7,000



7,000James Eckmann(31)


4,000



4,000John Jenks, IRA Rollover(31)


4,100



4,100Menko Rose Trust(31)


1,400



1,400George Tarleton, IRA Rollover(31)


1,600



1,600Louise Tarleton, IRA Rollover(31)


3,900



3,900Total


20,954,554



20,954,554  
    (1)
    
    Mr. Daerr serves on our board of directors. 
  (2)
    
    We have been advised that these accounts are managed by
    Wellington Management Company, LLP (Wellington).
    Wellington is an investment adviser registered under the
    Investment Advisers Act of 1940, as amended. Wellington, in such
    capacity, may be deemed to share beneficial ownership over the
    shares held by its client accounts. 
 
  (3)
    
    The beneficial owner of the selling shareholders, Morgan Asset
    Management, is affiliated with Morgan Keegan & Company,
    Inc., a broker-dealer. The selling shareholders have advised us
    that they purchased the shares in the ordinary course of
    business and, at the time of the purchase of the securities,
    they did not have any agreements or understandings, directly or
    indirectly, with any person to distribute the securities. We
    have also been advised that Chris Fieischmann and Jim Kelsoe
    exercise voting and dispositive power with respect to the shares
    held by these selling shareholders. 
 
  (4)
    
    We have been advised that Eubel Brady & Suttman Asset
    Management, Inc. (EBS) has voting and investment
    power over the shares that these selling stockholders, EBS
    advisory clients, beneficially own. However, the selling
    stockholders are not precluded from directly exercising voting
    or dispositive authority over the shares they directly own.
    EBS Investment Policy Committee (IPC) sets
    investment policy and guidelines. The Research Group
    (RG) acts as the portfolio manager, determining
    individual security selections for client accounts. The
    individuals on these committees are: Mark E. Brady (IPC, RG),
    Ronald L. Eubel (IPC, RG), Robert J. Suttman II
    (IPC), Bernard J. Holtgreive (IPC, RG), William E. Hazel (IPC),
    Paul D. Crichton (IPC, RG), Kenneth E. Leist (IPC, RG) and Aaron
    Hillman, Research Analyst (RG). 
 
  (5)
    
    We have been advised that LibertyView Funds, L.P., LibertyView
    Special Opportunities Fund, LP, LibertyView Socially Responsible
    Fund, LP, LibertyView Convertible Arbitrage Fund, LP (the
    LibertyView Funds) and Trust D have a common
    investment advisor, Neuberger Berman, LLC, that has voting and
    dispositive power over the shares held by them, which is
    exercised by Richard A. Meckler. Since they have hired a common
    investment adviser, these entities are likely to vote together.
    Additionally, there may be common investors within the different
    accounts managed by the same investment adviser. The General
    Partner of LibertyView Funds is Neuberger Berman Asset
    Management, LLC, which is affiliated with Neuberger Berman,
    LLC, a registered 
 102




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##### Table of Contents



broker-dealer. The shares were purchased for investment in the
    ordinary course of business and at the time of purchase, there
    were no agreements or understandings, directly or indirectly,
    with any person to distribute the shares. Trust D (for a
    Portion of the Assets of the Kodak Retirement Income Plan) is
    not in any way affiliated with a broker-dealer. 
 
  (6)
    
    We have been advised that Fort Mason Capital, LLC serves as
    the general partner of this selling shareholder and, in such
    capacity, exercises sole voting and investment authority with
    respect to such shares. Mr. Daniel German serves as
    the sole managing member of Fort Mason Capital, LLC.
    Fort Mason Capital, LLC and Mr. German each disclaim
    beneficial ownership of such shares, except to the extent of its
    or his pecuniary interest therein, if any. 
 
  (7)
    
    We have been advised that Mr. Erdelji is an employee of
    Friedman Billings Ramsey & Co., Inc., the placement
    agent involved in the 2007 Private Placement. 
 
  (8)
    
    We have been advised that Mr. Varay is an employee of
    Friedman Billings Ramsey & Co., Inc., the placement
    agent involved in the 2007 Private Placement. 
 
  (9)
    
    We have been advised that Alexandra Investment Management, LLC,
    a Delaware limited liability company (Alexandra)
    serves as investment adviser to the selling shareholder. By
    reason of such relationship, Alexandra may be deemed to share
    dispositive power or investment control over the shares of
    common stock stated as beneficially owned by the selling
    shareholder. Alexandra disclaims beneficial ownership of such
    shares of common stock. Mikhail A. Filimonov is a managing
    member of Alexandra. By reason of such relationship,
    Mr. Filimonov may be deemed to share dispositive power or
    investment control over the shares of common stock stated as
    beneficially owned by the selling shareholder.
    Mr. Filimonov disclaims beneficial ownership of such shares
    of common stock. 
 
  (10)
    
    We have been advised that the selling shareholder is the
    Executive Vice President of Friedman Billings Ramsey &
    Co, Inc., the placement agent involved in the 2007 Private
    Placement. 
 
  (11)
    
    We have been advised that Mr. OConnor is an employee
    of Friedman Billings Ramsey & Co, Inc., the placement
    agent involved in the 2007 Private Placement. 
 
  (12)
    
    We have been advised that JANA Partners LLC is the investment
    manager of JANA Piranha Master Fund, Ltd. And JANA Piranha Fund,
    LP and that Barry Rosenstein and Gary Claar exercise voting and
    dispositive power with respect to the shares held by the selling
    shareholder. 
 
  (13)
    
    We have been advised that Mr. Glubka is an employee of
    Friedman Billings Ramsey & Co., Inc., the placement
    agent involved in the 2007 Private Placement. 
 
  (14)
    
    We have been advised that Mr. DePena is a member of FINRA
    and is therefore an underwriter. 
 
  (15)
    
    We have been advised that First Republic Investment Management
    manages assets for the selling shareholders. Laurence E. Ach,
    Managing Director of First Republic Investment Management, has
    complete investment authority over all of these selling
    shareholders, including any voting of shares. First Republic
    Investment Management is an affiliate of Merrill Lynch, a
    registered broker-dealer. The purchase of the securities held by
    these selling shareholders was made in the ordinary course of
    business, and at the time the purchase was made, there were no
    agreements or understandings, directly or indirectly, with any
    person to distribute the securities. 
 
  (16)
    
    We have been advised that Kensico Capital Management has voting
    and dispositive power for all shares held by the selling
    shareholders. 
 
  (17)
    
    We have been advised that the selling shareholder is a
    wholly-owned subsidiary of The Bear Stearns Companies Inc., a
    New York Stock Exchange listed company. The selling shareholder
    is a broker-dealer and is an underwriter. 
 
  (18)
    
    We have been advised that Richard S. Strong, as Managing Partner
    of Calm Waters Partnership, exercises sole voting and
    dispositive power with respect to the shares held by the selling
    shareholder. 
 
  (19)
    
    We have been advised that Ascend Capital Limited Partnership,
    serves as investment adviser to the selling shareholders, and
    that Malcolm Fairbairn, as Portfolio Manager of Ascend Capital
    LLC, general partner of Ascend Capital Limited Partnership,
    exercises sole voting and investment power with respect to the
    shares held by the selling shareholders. 
 103




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##### Table of Contents



(20)
    
    We have been advised that Mr. Nardini is an employee of
    Friedman Billings Ramsey & Co., Inc., the placement
    agent involved in the 2007 Private Placement. 
 
  (21)
    
    We have been advised that GLG Partners LP (GLG
    Partners), which serves as the investment manager to GLG
    North American Opportunity Fund and GLG US Map Fund (the
    GLG Funds), may be deemed to be the beneficial owner
    of all shares owned by the GLG Funds. Each of Noam Gottesman,
    Emmanuel Roman and Pierre Lagrange, who are Managing Directors
    of the general partner of GLG Partners, may be deemed to be the
    beneficial owner of all shares owned by the GLG Funds. Each of
    GLG Partners, the general partner, and Messrs. Gottesman,
    Roman, and Lagrange hereby disclaims any beneficial ownership of
    any such shares, except for their pecuniary interest therein. 
 
  (22)
    
    We have been advised that Robert Villiers of Henderson Global
    Investors exercises sole voting and dispositive power over the
    shares held by this selling shareholder. 
 
  (23)
    
    We have been advised that Thomas B. Akin holds the sole voting
    and dispositive powers with respect to the shares owned by
    Talkot Fund, L.P. 
 
  (24)
    
    We have been advised that Terry P. Murphy, as trustee, has sole
    voting and dispositive power over the shares held by this
    selling shareholder. 
 
  (25)
    
    We have been advised that F. Michael Geddes and C. Richard
    Childress have shared voting and dispositive power over the
    shares held by this selling shareholder. 
 
  (26)
    
    We have been advised that shared voting and dispositive power
    with respect to the shares held by this selling shareholder is
    exercised by Guy T. Steuart II, Leonard P. Steuart and Frank T.
    Steuart. 
 
  (27)
    
    We have been advised that voting and dispositive power with
    respect to the shares held by this selling shareholder is
    exercised by Newland Capital Management, LLC, whose members are
    Ken Brodkowitz and Mike Vermut. 
 
  (28)
    
    We have been advised that the shares held by this selling
    shareholder are beneficially owned by Thomson M. Hirst, who
    exercises sole voting and dispositive powers with respect to
    these shares. 
 
  (29)
    
    We have been advised that sole voting and dispositive power with
    respect to the shares held by this selling shareholder is
    exercised by Wade B. Hall, President of Stuckey Timberland, Inc. 
 
  (30)
    
    We have been advised that voting and dispositive power with
    respect to the shares held by this selling shareholder is
    exercised by Joe Galli, Adam Bernstein and Marc Duber. 
 
  (31)
    
    We have been advised that voting and dispositive power with
    respect to the shares held by these selling shareholders is
    exercised by West D. Whittaker, President and Portfolio Manager
    of Carmel Capital Management, LLC. 
 
  (32)
    
    We have been advised that the general partner of the selling
    shareholder is Botti Brown Asset Management and that voting and
    dispositive power with respect to the shares held by this
    selling shareholder is exercised by William Charters. 
 
  (33)
    
    We have been advised that the general partner of the selling
    shareholder is Botti Brown Asset Management and that voting and
    dispositive power with respect to the shares held by this
    selling shareholder is exercised by Stephen Ravel. 
 
  (34)
    
    We have been advised that voting and dispositive power with
    respect to the shares held by this selling shareholder is
    exercised by Hank Lawler, Managing Member of Prides Capital
    Partners LLC, the general partner of the selling shareholder. 
 
  (35)
    
    We have been advised that this selling shareholder is a
    broker-dealer, and the selling shareholder is an underwriter
    with respect to this offering. We have also been advised that
    the parent company of this selling shareholder, J.P. Morgan
    Chase & Co., is a publicly traded company. The selling
    shareholder has advised us that one of its affiliates,
    J.P. Morgan Whitefriars, Inc. may be regarded as the
    beneficial owner of 74,074 of the shares held by it. 
 
  (36)
    
    We have been advised that Leonard B. Zelin, the general partner
    of the selling shareholder, exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (37)
    
    We have been advised that James A. Lustig, President of the
    selling shareholder, exercises sole voting and dispositive power
    with respect to the shares held by this selling shareholder. 
 104




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##### Table of Contents



(38)
    
    We have been advised that Donald R. Kendall, Jr. exercises sole
    voting and dispositive power with respect to the shares held by
    this selling shareholder. 
 
  (39)
    
    We have been advised that Mark A. Lee exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (40)
    
    We have been advised that Plainfield Asset Management LLC is
    investment manager of this selling shareholder. Max Holmes, as
    Chief Investment Officer of Plainfield Asset Management LLC,
    exercises voting and dispositive power with respect to the
    shares held by this selling shareholder. We have also been
    advised that the selling shareholder is an affiliate of a
    broker-dealer. The selling shareholder has advised us that it
    acquired the shares in the ordinary course of business and that,
    at the time the shares were purchased, it had no agreements or
    understandings, directly or indirectly, with any person to
    distribute the shares. 
 
  (41)
    
    We have been advised that David Stevenson exercises sole voting
    and dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (42)
    
    We have been advised that Craig Krumwiede, President of the
    selling shareholder, exercises sole voting and dispositive power
    with respect to the shares held by this selling shareholder. 
 
  (43)
    
    We have been advised that Robert J. Flanagan, Manager of the
    selling shareholder, exercises sole voting and dispositive power
    with respect to the shares held by this selling shareholder. 
 
  (44)
    
    We have been advised that Friedman, Billings, Ramsey &
    Co., Inc. is a wholly-owned subsidiary of FBR Capital Markets
    Corporation. FBR Capital Markets Corporation may act as a broker
    and/or market maker in connection with purchases and sales of
    our stock. Friedman, Billings, Ramsey & Co., Inc. is a
    broker-dealer, and is therefore an underwriter. Friedman,
    Billings, Ramsey & Co., Inc. also acted as our initial
    purchase/placement agent in connection with the 2007 Private
    Placement and has an investment banking relationship with us. 
 
  (45)
    
    We have been advised that Sanford B. Prater exercises sole
    voting and dispositive power with respect to the shares held by
    this selling shareholder. 
 
  (46)
    
    We have been advised that Scott Bedford and Michael Ogborne,
    General Partners of the selling shareholder, exercise voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (47)
    
    We have been advised that Mark A. Buntz, Chief Financial Officer
    of the selling shareholder, exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (48)
    
    Weintraub Capital Management is the general partner of these
    selling shareholders. We have been advised that Jerald M.
    Weintraub, President of Weintraub Capital Management, exercises
    sole voting and dispositive power with respect to the shares
    held by these selling shareholders. 
 
  (49)
    
    We have been advised that Alexander W. Rutherfurd, Portfolio
    Manager of the selling shareholder, exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (50)
    
    We have been advised that James E. Canty exercises sole voting
    and dispositive power with respect to the shares held by these
    selling shareholders. 
 
  (51)
    
    We have been advised that Richard E. Maybaum and Robert E. Davis
    exercise voting and dispositive power with respect to the shares
    held by this selling shareholder. 
 
  (52)
    
    We have been advised that Third Point LLC acts as investment
    advisor to this selling shareholder and that Daniel S. Loeb, as
    chief executive officer of Third Point LLC, exercises sole
    voting and dispositive power with respect to the shares held by
    this selling shareholder. 
 
  (53)
    
    We have been advised that Roger E. King, president of King
    Investment Advisors, Inc., exercises sole voting and dispositive
    power with respect to the shares held by this selling
    shareholder. 
 
  (54)
    
    We have been advised that Deane Kreitler, portfolio manager of
    the selling shareholder, exercises sole voting and dispositive
    power with respect to the shares held by this selling
    shareholder. 
 
  (55)
    
    We have been advised that Robert W. Posniewski, Chief Financial
    Officer of the selling shareholder, exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (56)
    
    We have been advised that Mark Angelo exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 105




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##### Table of Contents



(57)
    
    We have been advised that Richard S. Bodman, as trustee,
    exercises sole voting and dispositive power with respect to the
    shares held by this selling shareholder. 
 
  (58)
    
    We have been advised that Christopher Ryan, as trustee,
    exercises sole voting and dispositive power with respect to the
    shares held by this selling shareholder. 
 
  (59)
    
    We have been advised that Stuart Merzer, Senior Vice President
    of the selling shareholder, exercises sole voting and
    dispositive power with respect to the shares held by this
    selling shareholder. We have also been advised that the selling
    shareholder is affiliated with Plus Securities LLC, a broker;
    dealer. The selling shareholder has  advised us that it acquired
    the shares in the ordinary course of business and that, at the
    time of the purchase of the shares, it did not have any
    agreements or understandings, directly or indirectly, with any
    person to distribute the shares. 
 
  (60)
    
    We have been advised that Smithwood Partners LLC, the General
    Partner of the selling shareholder, beneficially owns the shares
    held by this selling shareholder. The selling shareholder has
    also advised us that Jonathan Brooks, managing member of
    Smithwood Partners LLC, exercises sole voting and dispositive
    power with respect to the shares held by this selling
    shareholder. 
 
  (61)
    
    We have been advised that James Cacioppo, Nat Klipper, Nate
    Storch, Sina Toussi and Amit Malhotra share voting and
    dispositive power with respect to the shares held by this
    selling shareholder. 
 
  (62)
    
    We have been advised that David Goedert, Luigi Stefanetti and
    Eric Guerrier exercise voting and dispositive power with respect
    to the shares held by this selling shareholder. 
 
  (63)
    
    We have been advised that voting and dispositive power with
    respect to the shares held by this selling stockholder is
    exercised by Scott T. Carpenter (President), Craig D. Slater
    (Vice President), Richard M. Jones (Vice President and
    Secretary), Thomas G. Kundert (Treasurer and Assistant
    Secretary) and Cannon Y. Harvey (Chairman of the Board). 
 106




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##### Table of Contents



DESCRIPTION
    OF CAPITAL STOCK
    General
    Common
    Stock
    Voting Rights.
  Dividends.
  Liquidation.
  Fully Paid.
  Other Rights.
  Preferred
    Stock
      Liability
    and Indemnification of Officers, Directors and Certain
    Affiliates
    
    for any breach of the directors duty of loyalty to us or
    our stockholders;
    for acts or omissions not in good faith or which involve
    intentional misconduct or a knowing violation of law; 107




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
    under Section 174 of the Delaware General Corporation Law
    relating to unlawful stock repurchases, redemptions or
    dividends; or
    for any transaction from which the director derives an improper
    personal benefit.            Anti-Takeover
    Effects of Provisions of Delaware Law, Our Certificate of
    Incorporation and Bylaws
    Delaware Anti-Takeover Statute.
 108




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##### Table of Contents



Charter
    and Bylaw Provisions
  Classified Board.
  Authorized But Unissued Shares.
  Filling Board of Directors Vacancies;
    Removal.
  No Cumulative Voting.
  Election of Directors.
  Advance Notice Requirement for Stockholder Proposals and
    Director Nominations.
  Amendments to our Certificate of Incorporation and
    Bylaws.
 109




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No Stockholder Action by Written Consent; Special
    Meeting.
  Restrictions
    on Ownership
  Restrictions on Foreign
    Ownership. non-U.S. citizens.
  
    limits ownership by
    non-U.S. citizens
    of any class or series of our capital stock (including our
    common stock) to 23%;
    permits us to withhold dividends and suspend voting rights with
    respect to any shares held by
    non-U.S. citizens;
    permits a stock certification system with two types of
    certificates to aid tracking of ownership;
    permits us to redeem any shares held by
    non-U.S. citizens
    so that our foreign ownership is less than 23%; and
    permits us to take measures to ascertain ownership of our stock.  non-U.S. citizens
    Listing
 
   
  Transfer
    Agent and Registrar
   110




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##### Table of Contents



SHARES
    ELIGIBLE FOR FUTURE SALE
 
   
  lock-up
  Lock-Up
    Agreements
    
    offer, pledge, sell, contract to sell, sell any option or
    contract to purchase, purchase any option or contract to sell,
    grant any option, right or warrant for the sale of, lend or
    otherwise dispose of or transfer, directly or indirectly, any of
    our equity securities or any securities convertible into or
    exercisable or exchangeable for our equity securities, or file
    any registration statement under the Securities Act with respect
    to any of the foregoing; or
    enter into any swap or other arrangement that transfers to
    another, in whole or in part, directly or indirectly, any of the
    economic consequences of ownership of any of our equity
    securities, whether any such transaction described above is to
    be settled by delivery of shares of our common stock or such
    other securities, in cash or otherwise.    Lock-Up
  
    offer, pledge, sell, contract to sell, sell any option or
    contract to purchase, purchase any option or contract to sell,
    grant any option, right or warrant for the sale of, lend or
    otherwise dispose of or transfer, directly or indirectly, any of
    our equity securities or any securities convertible into or
    exercisable or exchangeable for our equity securities; or
    enter into any swap or other arrangement that transfers to
    another, in whole or in part, directly or indirectly, any of the
    economic consequences of ownership of any of our equity
    securities, whether any such transaction described above is to
    be settled by delivery of shares of our common stock or such
    other securities, in cash or otherwise.   111




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Eligibility
    of Restricted Shares for Sale in the Public Market
  Rule 144.
  
    1.0% of the then outstanding shares of our common stock, or
    approximately 215,653 shares immediately after this
    offering; or
    the average weekly trading volume during the four calendar weeks
    preceding the date of which notice of the sale is filed on
    Form 144.    Rule 144(k).
 112




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##### Table of Contents



REGISTRATION
    RIGHTS
        
    compliance with the registration rights agreement;
    cutback rights on the part of the underwriters, provided that
    the holders of the registrable shares will be entitled to
    include shares comprising at least 25% of the total securities
    in the initial public offering proposed under the registration
    statement; and
    other conditions and limitations that may be imposed by the
    underwriters.     113




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DESCRIPTION
    OF INDEBTEDNESS
  Credit
    Facility
 
   
    
    maintain a net worth, at all times, of not less than the sum of
    (a) $40.0 million plus (b) 50% of adjusted net
    income since December 31, 2006 plus (c) 75% of the net
    proceeds of equity issuances (other than the proceeds of this
    offering);
    maintain a ratio, as of any date, of (a) EBITDA (earnings
    before interest, taxes, depreciation, amortization and
    depletion) minus the greater of (y) the maintenance capital
    expenditures for such period or (z) $3.0 million to
    (b) the sum of (x) interest expense plus
    (y) scheduled principal payments for such period plus
    (z) the amount of all income and franchise taxes paid in
    cash during such period, of not less than 1.30 to 1.00; and
    maintain a ratio, as of the last day of each fiscal quarter, of
    (a) total debt to (b) EBITDA of not greater than 3.00
    to 1.00.   114




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##### Table of Contents



PLAN
    OF DISTRIBUTION
      
    directly by the selling shareholders and their successors, which
    include their donees, pledges or transferees or their
    successors-in-interest; or
    through underwriters, broker-dealers or agents, who may receive
    compensation in the form of discounts, commissions or
    agents commissions from the selling shareholders or the
    purchasers of the common stock. These discounts, concessions or
    commissions may be in excess of those customary in the types of
    transactions involved but will not be greater than 8% for the
    sale of any securities being registered pursuant to
    SEC Rule 415.      
    fixed prices;
    prevailing market prices at the time of sale;
    prices related to such prevailing market prices;
    varying prices determined at the time of sale; or
    negotiated prices.    
    on any national securities exchange or quotation on which the
    common stock may be listed or quoted at the time of the sale;
    in the over-the-counter market;
    in transactions other than on such exchanges or services or in
    the over-the-counter market;
    through the writing of options (including the issuance by the
    selling shareholders of derivative securities), whether the
    options or such other derivative securities are listed on an
    options exchange or otherwise;
    through the settlement of short sales; or
    through any combination of the foregoing.   115




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##### Table of Contents




    engage in short sales of the common stock in the course of
    hedging their positions;
    sell the common stock short and deliver the common stock to
    close out short positions;
    loan or pledge the common stock to broker-dealers or other
    financial institutions that in turn may sell the common stock;
    enter into option or other transactions with broker-dealers or
    other financial institutions that require the delivery to the
    broker-dealer or other financial institution of the common
    stock, which the broker-dealer or other financial institution
    may resell under the prospectus; or
    enter into transactions in which a broker-dealer makes purchases
    as a principal for resale for its own account or through other
    types of transactions.   
   
  non-U.S. persons
       116




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LEGAL
    MATTERS
    EXPERTS
    WHERE
    YOU CAN FIND MORE INFORMATION
  http://www.sec.gov. 1-800-SEC-0330
  http://www.orionmarinegroup.com,
 117




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##### Table of Contents



INDEX
    TO FINANCIAL STATEMENTS
  
 PageAnnual Audited Financial Statements:Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2006 and 2005


F-3Consolidated Statements of Income for the Years
    Ended December 31, 2006 and 2005 (Successor) and for the
    Periods January 1, 2004 through October 13, 2004
    (Predecessor) and October 14, 2004 through
    December 31, 2004 (Successor)


F-4Consolidated Statements of Stockholders
    Equity for the Period from Inception through December 31,
    2004 and for the Years Ended December 31, 2005 and 2006


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2006 and 2005 (Successor) and for
    the Periods January 1, 2004 through October 13, 2004
    (Predecessor) and October 14, 2004 through
    December 31, 2004 (Successor)


F-6Notes to Consolidated Financial Statements


F-7Interim Unaudited Financial StatementsConsolidated Balance Sheets as of
    September 30, 2007 and December 31, 2006


F-24Consolidated Statements of Income for the Nine
    Months Ended September 30, 2007 and 2006


F-25Consolidated Statements of Stockholders
    Equity for the Nine Months Ended September 30, 2007


F-26Consolidated Statements of Cash Flows for the
    Nine Months Ended September 30, 2007 and 2006


F-27Notes to Consolidated Financial Statements


F-28  
 F-1




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##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
    
   
           F-2




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Balance Sheets
  December 31,2006


2005(In thousands, except share and per share information)ASSETSCurrent assets:Cash and cash equivalents

$
18,561


$
7,645Accounts receivable:Trade, net of allowance of $500 and $0, respectively


22,253



20,974Retainage


4,514



7,079Other


432



168Inventory


526



558Taxes receivable






914Deferred tax asset


559



188Costs and estimated earnings in excess of billings on
    uncompleted contracts


2,136



3,492Prepaid expenses and other


217



193Total current assets


49,198



41,211Accounts receivable  long term retainage


1,306



Property and equipment, net


71,334



69,914Goodwill


2,481



2,481Other assets


753



1,020Total assets

$
125,072


$
114,626LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
5,810


$
4,565Accounts payable:Trade


6,099



9,660Retainage


1,114



970Related party


45



257Accrued liabilities


10,632



4,301Taxes payable


330



Billings in excess of costs and estimated earnings on
    uncompleted contracts


12,198



6,729Total current liabilities


36,228



26,482Long-term debt, less current portion


19,190



29,983Deferred income taxes


15,934



16,896Deferred revenue


481



535Total liabilities


71,833



73,896Commitments and contingenciesStockholders equity:Preferred stock  $0.01 par value,
    35,000 shares authorized, issued and outstanding, $1,000
    per share liquidation preference






Common stock  $0.01 par value,
    50,000,000 shares authorized, 16,730,942 shares issued


167



167Treasury Stock, 100,897 and 0 shares at cost


(24
)


Additional paid-in capital


34,963



34,833Retained earnings


18,133



5,730Total stockholders equity


53,239



40,730Total liabilities and stockholders equity

$
125,072


$
114,626    F-3




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statements of Income
  Successor


PredecessorOctober 14


January 1Year Ended


Year Ended


Through


ThroughDecember 31,


December 31,


December 31,


October 13,2006


2005


2004


2004(In thousands, except share and per share information)Contract revenues

$
183,278


$
167,315


$
32,570


$
97,989Costs of contract revenues


144,741



145,740



30,065



79,185Gross profit


38,537



21,575



2,505



18,804Selling, general and administrative expenses


17,425



10,685



1,611



7,75221,112



10,890



894



11,052Other (income) expenseInterest expense, net


1,755



2,179



446



24Other income


(86
)


(405
)


(237
)


(52
)Other expense (income), net


1,669



1,774



209



(28
)Income before income taxes


19,443



9,116



685



11,080Income tax expense


7,040



3,805



266



4,378Net income

$
12,403


$
5,311


$
419


$
6,702Net income

$
12,403


$
5,311


$
419


$
6,702Preferred dividends


2,100



2,100



460



Earnings available to common shareholders

$
10,303


$
3,211


$
(41
)

$
6,702Basic earnings per share

$
0.65


$
0.20


$
0.00


$
69.02Diluted earnings per share

$
0.63


$
0.20


$
0.00


$
69.02Shares used to compute earnings per share:Basic


15,872,360



15,706,960



15,695,067



97,100Diluted


16,407,250



16,135,211



15,695,067



97,100    F-4




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statement of Stockholders Equity
  AdditionalPreferred Stock


Common Stock


Treasury Stock


Paid-In


RetainedShares


Amount


Shares


Amount


Shares


Amount


Capital


Earnings


Total(In thousands, except share information)PredecessorBalance, January 1, 2004










97,100



1











896



31,141



32,039Net Income






























6,702



6,702Balance, 10/13/2004










97,100



1











896



37,843



38,741SuccessorBalance at inception





$







$







$



$



$



$
Sale of stock


31,500







14,125,561















31,500







31,500Exchange of stock


3,500







1,569,507















3,500







3,500Net income






























419



419Balance, December 31, 2004


35,000







15,695,068















35,000



419



35,419Stock split














157











(157
)






Issuance of stock awards










1,035,874



10











(10
)






Net income






























5,311



5,311Balance, December 31, 2005


35,000







16,730,942



167











34,833



5,730



40,730Purchase of treasury stock


















(100,897
)


(24
)










(24
)Stock-based compensation


























130







130Net income






























12,403



12,403Balance, December 31, 2006


35,000


$




16,730,942


$
167



(100,897
)

$
(24
)

$
34,963


$
18,133


$
53,239    F-5




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statements of Cash Flows
  Successor


PredecessorOctober 14


January 1Year Ended


Year Ended


Through


ThroughDecember 31,


December 31,


December 31,


October 13,2006


2005


2004


2004(In thousands)Cash flows from operating activities:Net income

$
12,403


$
5,311


$
419


$
6,702Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


11,634



10,865



1,919



5,416Deferred financing cost amortization


171



171



41



24Non-cash interest expense


87



65



(7
)


7Bad debt expense


500











Deferred income taxes


1,333



(1,175
)


(193
)


(1,231
)Stock-based compensation


130











Loss (gain) on sale of property and equipment


(69
)


(642
)


80



(518
)Change in operating assets and liabilities:Accounts receivable


1,339



(8,151
)


3,179



(9,761
)Income tax receivable


914



(839
)


(75
)Inventory


32



(32
)






(259
)Prepaid expenses and other


(24
)


54



571



(379
)Costs and estimated earnings in excess of billings on
    uncompleted contracts


2,261



3,488



(517
)


(4,669
)Accounts payable


(5,248
)


1,076



7,022



(1,673
)Accrued liabilities


5,077



2,039



(1,445
)


3,237Income tax payable


330







335



1,403Billings in excess of costs and estimated earnings on
    uncompleted contracts


4,325



(1,147
)


(8,067
)


9,894Deferred revenue


(54
)


535







Net cash provided by operating activities


32,475



11,618



3,262



8,193Cash flows from investing activities:Proceeds from sale of property and equipment


438



3,718



625



1,773Purchase of property and equipment


(11,931
)


(9,149
)


(2,383
)


(8,407
)Acquisition of business (net of cash acquired)


(494
)






(59,896
)


Net cash used in investing activities


(11,987
)


(5,431
)


(61,654
)


(6,634
)Cash flows from financing activities:Proceeds from issuance of subsidiary preferred stock






3,513



31,500



1,000Repurchase of subsidiary preferred stock






(3,513
)






Borrowings on long-term debt










41,500



Payments for debt issue costs






(303
)


Net borrowings (repayments) under credit facility










(471
)


471Payments on long-term debt


(9,548
)


(5,941
)


(5,449
)


(2,526
)Purchase of treasury stock


(24
)










Payment of debt issuance costs










(986
)


Net cash (used in) provided by financing activities


(9,572
)


(6,244
)


66,094



(1,055
)Net change in cash and cash equivalents


10,916



(57
)


7,702



504Cash and cash equivalents at beginning of year


7,645



7,702







8,420Cash and cash equivalents at end of year

$
18,561


$
7,645


$
7,702


$
8,924Supplemental disclosures of cash flow information:cash paid during the year for:Interest

$
3,453


$
2,146


$
263


$
150Income taxes, net of refunds received


7,127



6,330



88



2,530    F-6




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
  Years Ended December 31, 2006 and 2005, and the Period
    from
 October 14, 2004 Through December 31, 2004 and the
    Period from
 January 1, 2004 Through October 13, 2004 for
 Orion Marine Group Holdings, Inc.
 (Dollars in 000s, except for share and per share
    amounts and as otherwise indicated)
  1.
    Summary
    of Significant Accounting Policies  Principle
    of Consolidation and Basis of Presentation
    Business Combinations
    Use of
    Estimates
    Revenue
    Recognition
   F-7




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  81-1, Accounting for Performance of Construction  Type
    and Certain Production  Type Contracts
    Cash
    Equivalents
    Risk
    Concentrations
       F-8




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Revenue


%


A/R


%2006Federal Government

$
43,682



24
%

$
1,880



7
%State Governments


29,172



16



1,647



6Local Municipalities


59,159



32



13,426



48Private Companies


51,265



28



11,120



39$
183,278



100
%

$
28,073



100
%2005Federal Government

$
28,214



17
%

$
1,178



4
%State Governments


40,990



25



6,076



22Local Municipalities


37,237



22



8,549



30Private Companies


60,874



36



12,250



44$
167,315



100
%

$
28,053



100
%   Accounts
    Receivable
      Inventory
    Income
    Taxes
  Accounting for Income Taxes
 F-9




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property
    and Equipment
      Automobiles and trucks

3 to 5 yearsBuilding and improvements

5 to 30 yearsConstruction equipment

3 to 15 yearsVessels and dredges

1 to 15 yearsOffice equipment

1 to 5 years  
   
  Accounting for the
    Impairment or Disposal of Long-lived Assets
 F-10




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Goodwill
    Fair
    Values of Financial Instruments
    Debt
    Issuance Costs
    Intangible
    Assets
    Self-Insurance
     
   
 F-11




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
   
  Stock-Based
    Compensation
  Share-Based Payment. Accounting for Stock
    Issued to Employees
    Recently
    Issued Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
  Fair Value
    Measurements
  The Fair Value Option
    for Financial Assets and Financial Liabilities
  Accounting for Planned Major Maintenance Activities Elements of
    Financial Statements
 F-12




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Considering the Effects of Prior Year Misstatements
    when Quantifying Misstatements in Current Year Financial
    Statements
  2.
    Property
    and Equipment    Useful lives(Years)


2006


2005Automobiles and trucks


3 to 5


$
2,956


$
3,807Building and improvements


5 to 30



11,734



10,979Construction equipment


3 to 15



74,282



68,999Dredges and dredging equipment


1 to 15



23,444



17,471Office equipment


1 to 5



796



218113,212



101,474Less: accumulated depreciation






(48,596
)


(38,508
)Net book value of depreciable assets






64,616



62,966Construction in progress






1,489



1,719Land






5,229



5,229$
71,334


$
69,914      F-13




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  3.
    Contracts
    in Progress    2006


2005Costs incurred on uncompleted contracts

$
180,421


$
128,025Estimated earnings


43,975



16,168224,396



144,193Less: Billings to date


(234,458
)


(147,430
)$
(10,062
)

$
(3,237
)Included in the accompanying consolidated balance sheet under
    the following captions:Costs and estimated earnings in excess of billings on
    uncompleted contracts

$
2,136


$
3,492Billings in excess of costs and estimated earnings on
    uncompleted contracts


(12,198
)


(6,729
)$
(10,062
)

$
(3,237
)     4.
    Accrued
    Liabilities    2006


2005Accrued salaries, wages and benefits

$
7,028


$
1,868Accrual for self insurance liabilities


1,954



1,084Accrued interest


21



419Warranty reserve


61



100Other accrued expenses


1,568



830$
10,632


$
4,301   5.
    Debt     F-14




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year Ending December 31,

Amount2007

$
5,8102008


8,3002009


9,9602010


930$
25,000   6.
    Line of
    Credit       F-15




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Income
    Taxes    Current


Deferred


TotalPredecessor:Period ended October 13, 2004:U.S. Federal


2,891



1,093


$
3,984State and local


256



138



394$
3,147


$
1,231


$
4,378Successor:Period October 14, 2004 through December 31, 2004:U.S. Federal

$
145


$
134


$
279State and local


(72
)


59



(13
)$
73


$
193


$
266Period ended December 31, 2005:U.S. Federal

$
1,946


$
1,290


$
3,236State and local


684



(115
)


569$
2,630


$
1,175


$
3,805Period ended December 31, 2006:U.S. Federal

$
7,712


$
(1,096
)

$
6,616State and local


661



(237
)


424$
8,373


$
(1,333
)

$
7,040     Successor


PredecessorOctober 14,


January 1,Year Ended


Year Ended


Through


ThroughDecember 31,


December 31,


December 31,


October 13,2006


2005


2004


2004Tax provision at statutory U.S. federal income tax rate

$
6,805


$
3,099


$
233


$
3,767State income tax, net of federal income tax benefit


424



569



(13
)


394Permanent differences


(70
)


71



46



217Other


(119
)


66







Income tax provision

$
7,040


$
3,805


$
266


$
4,378  F-16




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,


December 31,2006


2005Net deferred tax (assets) liabilities:Accrued liabilities

$
(559
)

$
(188
)Depreciation and amortization


15,248



16,896Other


686



Total net deferred tax liabilities:

$
15,375


$
16,708As reported in the balance sheet:Net current deferred tax assets


(559
)


(188
)Net non-current deferred tax liabilities


15,934



16,896Total net deferred tax (assets) liabilities:

$
15,375


$
16,708     Accounting for
    Contingencies.
  8.
    Related
    Party Transaction      9.
    Commitments
    and Contingencies  Operating
    Leases
   F-17




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Year Ending December 31,

Amount2007

$
8412008


8092009


3312010


1702011


173Thereafter


629$
2,953   Litigation
 
   
 
  In
    re Canal Breaches Consolidation Litigation, 05-4182, (In re Canal Breaches
    Consolidation Litigation, 05-4182, Order and Reasons,
 
 
   
 F-18




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
 
 
   
  10.
    Employee
    Benefits    11.
    Earnings
    Per Share  Earnings Per Share
   SuccessorOctober 14Year Ended


Year Ended


throughDecember 31,


December 31,


December 31,2006


2005


2004Basic EPS computation:Numerator:Net Income

$
12,403


$
5,311


$
419Preferred dividends


2,100



2,100



460Earnings available to common stockholders


10,303



3,211



(41
)Denominator:Total common shares  basic


15,872,360



15,706,960



15,695,067Basic EPS(1)

$
0.65


$
0.20


$
0.00Diluted EPS computation:Numerator:Earnings available to common stockholders

$
10,303


$
3,211


$
(41
)Denominator:Common shares


15,872,360



15,706,960



15,695,067Common share equivalents


534,892



428,251



Total common shares  diluted


16,407,250



16,135,211



15,695,067Diluted EPS

$
0.63


$
0.20


$
0.00     (1)
    Unvested shares of restricted stock are not included in this
    computation. F-19




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Acquisition      Cash

$
3,606Accounts receivable


2,121Cost & profits in excess of billings


905Fixed assets


1,484Billings in excess of cost & profits


(1,144
)Liabilities assumed


(2,872
)$
4,100     Year EndedDecember 31,2005Contract revenues

$
184,665Income before income tax expense


8,586Net income


5,136Basic earnings per share


0.20Shares used in computing basic earnings per share


15,706,960Diluted earnings per share


0.20Shares used in computing diluted earnings per share


16,135,211   13.
    Stock-Based
    Compensation    Restricted
    Stock
   F-20




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Weighted Average


Weighted Average


AggregateNumber of


Fair Value


Remaining Vesting


IntrinsicRestricted Stock

Shares


per Share


(Years)


ValueNonvested at January 1, 2005





$
Granted


1,035,874



0.02Vested


17,937



0.02Forfeited






Nonvested at December 31, 2005


1,017,937


$
0.02Granted






Vested


312,332



0.02Forfeited


(100,897
)


0.02Nonvested at December 31, 2006


604,708


$
0.02



4.3


$
1,173Vested at December 31, 2006 and expected to vest


923,242


$
0.02



4.3


$
1,791   Stock
    Options
      Weighted Average


Weighted Average


AggregateNumber of


Exercise Price


Contractual Life


IntrinsicStock Options

Shares


per Share


(Years)


ValueOutstanding at January 1, 2006






Granted


443,946


$
1.96Exercised






Forfeited






Outstanding at December 31, 2006


443,946


$
1.96



9.58


$
Vested at December 31, 2006 and expected to vest


435,067


$
1.96



9.58


$
Exercisable at December 31, 2006





$
1.96



9.58


$
       14.
    Stockholders
    Equity  Preferred
    Stock
   F-21




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Stock
    Split
    Treasury
    Stock
    15.
    Enterprise
    Wide Disclosures      2006


%


2005


%


2004


%Federal

$
43,682



24
%


28,214



17
%


32,474



25
%State


29,172



16
%


40,990



25
%


30,252



23
%Local


59,159



32
%


37,237



22
%


16,334



13
%Private


51,265



28
%


60,874



36
%


51,499



39
%$
183,278



100
%

$
167,315



100
%

$
130,559



100
%  
   
    Significant
    Customers
    2006


2005


2004*Customer A


23
%


13
%


23
%Customer B


15
%



**



**Customer C


10
%


13
%


11
%     *
    
    for comparability, 2004 combines the Predecessor and Successor
    periods**
    
    represents less than 10% F-22




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  16.
    Subsequent
    Events         
 
 F-23




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Balance Sheets
 
  
 September 30,


December 31,2007


2006(Unaudited)(In thousands, except shareand per share information)ASSETSCurrent assets:Cash and cash equivalents

$
14,420


$
18,561Accounts receivable:Trade, net of allowance of $500 and $500, respectively


27,251



22,253Retainage


7,841



4,514Other


1,092



432Inventory


572



526Deferred tax asset


559



559Costs and estimated earnings in excess of billings on
    uncompleted contracts


5,647



2,136Prepaid expenses and other


617



217Total current assets


57,999



49,198Accounts receivable  long term retainage






1,306Property and equipment, net


68,379



71,334Goodwill


2,481



2,481Other assets


818



753Total assets

$
129,677


$
125,072LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
1,643


$
5,810Accounts payable:Trade


6,330



6,099Retainage


996



1,114Related party






45Accrued liabilities


9,680



10,632Taxes payable


2,009



330Billings in excess of costs and estimated earnings on
    uncompleted contracts


9,087



12,198Total current liabilities


29,745



36,228Long-term debt, less current portion






19,190Deferred income taxes


15,120



15,934Deferred revenue


440



481Total liabilities


45,305



71,833Commitments and contingenciesStockholders equity:Preferred stock  $0.01 par value,
    35,000 shares authorized, $1,000 per share liquidation
    preference, 0 and 35,000 shares issued






Common stock  $0.01 par value,
    50,000,000 shares authorized, 21,565,324 and
    16,730,942 shares issued; 21,452,762 and 16,117,489
    outstanding


216



167Treasury Stock, 0 and 100,897 shares at cost






(24
)Additional paid-in capital


54,694



34,963Retained earnings


29,462



18,133Total stockholders equity


84,372



53,239Total liabilities and stockholders equity

$
129,677


$
125,072  
 
   
 F-24




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##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statements of Income
 
 
 Nine Months


Nine MonthsSeptember 30,


September 30,2007


2006(Unaudited)


(Unaudited)(In thousands, except share and per share information)Contract revenues

$
149,771


$
129,917Costs of contract revenues


114,850



105,565Gross profit


34,921



24,352Selling, general and administrative expenses


16,649



9,55018,272



14,802Other (income) expenseInterest (income) expense, net


136



1,368Other income (expense), net


(27
)


32Other (income) expense, net


109



1,400Income before income taxes


18,163



13,402Income tax expense


6,834



4,874Net income

$
11,329


$
8,528Net income

$
11,329


$
8,528Preferred dividends


777



1,571Earnings available to common stockholders

$
10,552


$
6,957Basic earnings per share  Common

$
0.57


$
0.44Diluted earnings per share  Common

$
0.55


$
0.42Shares used to compute earnings per share:Basic  Common


18,631,171



15,832,362Diluted  Common


19,271,091



16,432,013  
 
   
 F-25




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statement of Stockholders Equity
 
  
 AdditionalPreferred Stock


Common Stock


Treasury Stock


Paid-In


RetainedShares


Amount


Shares


Amount


Shares


Amount


Capital


Earnings


Total(Unaudited)(In thousands, except share information)Balance, December 31, 2006


35,000


$




16,730,942


$
167



(100,897
)

$
(24
)

$
34,963


$
18,133


$
53,239Forfeited unvested restricted stock


















(8,969
)














Stock-based compensation


























311







311Liquidation of preferred stock


(35,000
)






















(40,431
)






(40,431
)Exercise of stock options










22,422















48







48Proceeds from sale of common stock, net of expenses










20,839,350



210



109,866



24



260,840







261,074Redemption of common shares


















(16,053,816
)


(201,555
)










(201,555
)Cancellation of treasury shares










(16,053,816
)


(161
)


16,053,816



201,555



(201,394
)






Issuance of restricted stock










26,426















357







357Net income






























11,329



11,329Balance, September 30, 2007





$




21,565,324


$
216






$



$
54,694


$
29,462


$
84,372  
 
   
 F-26




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Consolidated Statements of Cash Flows
 
  
 Nine Months


Nine MonthsSeptember 30,


September 30,2007


2006(Unaudited)


(Unaudited)(In thousands)Cash flows from operating activities:Net income

$
11,329


$
8,528Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


9,342



8,605Deferred financing cost amortization


150



129Non-cash interest expense


65



74Deferred income taxes


(814
)


(1,410
)Stock-based compensation


668



Issuance of restricted stock


357



(Gain) loss on sale of property and equipment


(333
)


21Change in operating assets and liabilities:Accounts receivable


(7,679
)


5,922Inventory


(46
)


29Prepaid expenses and other


(486
)


82Costs and estimated earnings in excess of billings on
    uncompleted contracts


(3,511
)


(403
)Accounts payable


68



(7,606
)Accrued liabilities


(952
)


2,025Income tax payable


1,679



1,204Billings in excess of costs and estimated earnings on
    uncompleted contracts


(3,111
)


7,846Deferred revenue


(41
)


360Net cash provided by operating activities


6,328



25,406Cash flows from investing activities:Acquisition of assets of F. Miller Construction






(494
)Proceeds from sale of property and equipment


1,885



246Purchase of property and equipment


(7,939
)


(9,849
)Net cash used in investing activities


(6,054
)


(10,097
)Cash flows from financing activities:Payments on long-term debt


(23,357
)


(3,606
)Increase in loan costs


(194
)


Purchase of treasury stock






24Exercise of stock options


48



Payment of accumulated preferred dividends and liquidation of
    preferred stock


(40,431
)


Proceeds from the sale of common stock


261,074



Redemption of common stock


(201,555
)


Net cash used in financing activities


(4,415
)


(3,630
)Net change in cash and cash equivalents


(4,141
)


11,679Cash and cash equivalents at beginning of period


18,561



7,645Cash and cash equivalents at end of period

$
14,420


$
19,324Supplemental disclosures of cash flow information: cash paid
    during the period for:Interest

$
926


$
1,876Taxes, net of refunds

$
7,804


$
5,349  
 
   
 F-27




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
    Notes to Condensed Consolidated Financial Statements
    Quarter and Nine Months Ended September 30, 2007
    (Unaudited)
    (Tabular Amounts in 000s, Except for Share and per Share
    Amounts)
 
 
  1.
    Summary
    of Significant Accounting Policies 
 
  Principle
    of Consolidation and Basis of Presentation
 
 
   
 
   
 
   
 
   
 
  Use of
    Estimates
 
 
   
 F-28




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  Revenue
    Recognition
 
 
  81-1, Accounting for Performance of Construction  Type
    and Certain Production  Type Contracts,
 
 
   
 
  Cash
    Equivalents
 
 
   
 
  Risk
    Concentrations
 
 
   
 
   
 
   
 F-29




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
  
 A/R


%September 30, 2007Federal Government

$
2,000



6
%State Governments


2,705



8
%Local Municipalities


14,071



40
%Private Companies


16,316



46
%$
35,092



100
%December 31, 2006Federal Government

$
1,880



7
%State Governments


1,647



6
%Local Municipalities


13,426



48
%Private Companies


11,120



39
%$
28,073



100
%  
 
   
  
 2007 Revenue


%


2006 Revenue


%Federal Government

$
23,814



16
%

$
35,457



27
%State Governments


10,424



7
%


22,213



17
%Local Municipalities


51,340



34
%


43,045



33
%Private Companies


64,193



43
%


29,202



23
%$
149,771



100
%

$
129,917



100
%  
 
  Accounts
    Receivable
 
 
   
 
   
 F-30




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
  Inventory
 
 
   
 
  Income
    Taxes
 
 
  Accounting for Income Taxes
 
 
  Accounting for Uncertainty in Income Taxes
 
 
  Property
    and Equipment
 
 
   
 
   
  
 Automobiles and trucks

3 to 5 yearsBuildings and improvements

5 to 30 yearsConstruction equipment

3 to 15 yearsVessels and dredges

1 to 15 yearsOffice equipment

1 to 5 years  
 
   
 F-31




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  Accounting for the
    Impairment or Disposal of Long-lived Assets
 
 
  Goodwill
 
 
   
 
  Fair
    Values of Financial Instruments
 
 
   
 
  Debt
    Issuance Costs
 
 
   
 
  Self-Insurance
 
 
   
 
   
 F-32




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
   
 
   
 
  Stock-Based
    Compensation
 
 
  Share-Based Payment. Accounting for Stock
    Issued to Employees
 
 
   
 
  Recently
    Issued Accounting Pronouncements
 
 
  Accounting for Uncertainty in Income
    Taxes
 
 
  Fair Value
    Measurements
 
 
  The Fair Value Option
    for Financial Assets and Financial Liabilities
 
 
  EITF 06-11 Accounting for the Income Tax Benefits of Dividends on
    Share-Based Payment Awards EITF 06-11 EITF 06-11
 
 F-33




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
 
 
  2.
    Property
    and Equipment 
 
   
  
 September 30,


December 31,2007


2006Automobiles and trucks

$
1,887


$
2,956Building and improvements


11,987



11,734Construction equipment


72,702



74,282Dredges and dredging equipment


24,189



23,444Office equipment


891



796111,656



113,212Less: accumulated depreciation


(53,795
)


(48,596
)Net book value of depreciable assets


57,861



64,616Construction in progress


5,289



1,489Land


5,229



5,229$
68,379


$
71,334  
 
   
 
  3.
    Contracts
    in Progress 
 
   
  
 September 30,


December 31,2007


2006Costs incurred on uncompleted contracts

$
172,214


$
180,421Estimated earnings


43,216



43,975215,430



224,396Less: Billings to date


(218,870
)


(234,458
)$
(3,440
)

$
(10,062
)Included in the accompanying consolidated balance sheet under
    the following captions:Costs and estimated earnings in excess of billings on
    uncompleted contracts

$
5,647


$
2,136Billings in excess of costs and estimated earnings on
    uncompleted contract


(9,087
)


(12,198
)$
(3,440
)

$
(10,062
)  
 
   
 F-34




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  4.
    Accrued
    Liabilities 
 
   
  
 September 30,


December 31,2007


2006Accrued salaries, wages and benefits

$
5,199


$
7,028Accrual for self-insurance liabilities


2,256



1,954Accrued interest


5



21Warranty reserve


61



61Other accrued expenses


2,159



1,568$
9,680


$
10,632  
 
  5.
    Debt 
 
   
 
   
 
   
 
   
 
  6.
    Line of
    Credit 
 
   
 F-35




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
   
 
  7.
    Income
    Taxes 
 
   
  
 Current


Deferred


TotalNine months ended September 30, 2007:U.S. Federal

$
7,383


$
(814
)

$
6,569State and local


265







265$
7,648


$
(814
)

$
6,834Nine months ended September 30, 2006:U.S. Federal

$
6,068


$
(1,410
)

$
4,658State and local


216







216$
6,284


$
(1,410
)

$
4,874  
 
   
  
 Nine Months EndedSeptember 30,2007


2006Tax provision at statutory U.S. federal income tax rate

$
6,357


$
4,691State income tax, net of federal income tax benefit


265



216Other


212



(33
)Income tax provision

$
6,834


$
4,874  
 F-36




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
  
 September 30,


December 31,2007


2006Net deferred tax (assets) liabilities:Accrued liabilities

$
(559
)

$
(559
)Depreciation and amortization


15,120



15,248Other






686Total net deferred tax liabilities:

$
14,561


$
15,375As reported in the balance sheet:Net current deferred tax assets


(559
)


(559
)Net non-current deferred tax liabilities


15,120



15,934Total net deferred tax liabilities:

$
14,561


$
15,375  
 
   
 
  Accounting for
    Contingencies.
 
 
   
 
 
 
   
 
 
 
  8.
    Related
    Party Transaction 
 
   
 F-37




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  9.
    Commitments
    and Contingencies 
 
  Operating
    Leases
 
 
   
 
   
 
   
  
 AmountThree months ending December 31, 2007

$
295Year ending December 31, 2008


1,161Year ending December 31, 2009


692Year ending December 31, 2010


241Year ending December 31, 2011


173Thereafter


629$
3,189  
 
  Litigation
 
 
   
 
  In re Canal Breaches Consolidation Litigation, 05-4182, (In re Canal Breaches
    Consolidation Litigation, 05-4182, Order and
 
 F-38




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
   
 
  10.
    Employee
    Benefits 
 
   
 
  11.
    Earnings
    Per Share 
 
  Earnings Per Share
 
 
   
 F-39




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
  
 Nine Months


Nine MonthsSeptember 30,


September 30,2007


2006Basic EPS computation:Numerator:Net Income

$
11,329


$
8,528Preferred dividends(1)


777



1,571Earnings available to common stockholders


10,552



6,957Denominator:Total common shares  basic


18,631,171



15,832,362Basic EPS(2)

$
0.57


$
0.44Diluted EPS computation:Numerator:Earnings available to common stockholders

$
10,552


$
6,957Denominator:Common shares


18,631,171



15,832,362Common share equivalents


639,920



599,651Total common shares  diluted


19,271,091



16,432,013Diluted EPS

$
0.55


$
0.42  
   
  (1)
    
    Upon any liquidation of the Company, holders of preferred shares
    would have received a liquidation preference of $1,000 per
    share, plus 6% cumulative dividends per year. Holders were not
    entitled to additional payment or distribution of the earnings,
    assets or surplus funds of the Company upon liquidation. The
    shares were converted into preferred stock, redeemed and retired
    in May 2007. See Note 15. 
 
  (2)
    
    Unvested shares of restricted stock are not included in this
    computation. 
 
  12.
    Acquisition 
 
   
 
   
  
 Cash

$
3,606Accounts receivable


2,121Cost and profits in excess of billings


905Fixed assets


1,484Billings in excess of cost and profits


(1,144
)Liabilities assumed


(2,872
)$
4,100  
 F-40




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  13.
    Stock-Based
    Compensation 
 
   
 
   
 
  Restricted
    Stock
 
 
  1 60
 
 
   
 
   
  
 Weighted Average


Weighted Average


AggregateNumber of


Fair Value


Remaining Vesting


IntrinsicRestricted Stock

Shares


Per Share


(Years)


ValueNonvested at December 31, 2005


1,017,937


$
0.02Granted






Vested


312,332



0.02Forfeited/repurchased shares


(100,897
)


0.02Nonvested at December 31, 2006


604,708


$
0.02Granted


26,426


$
13.50Vested


509,603



0.72Forfeited/repurchased shares


(8,969
)


0.02Nonvested at September 30, 2007


112,562


$
0.02



2.5


$
1,602Vested at September 30, 2007 and expected to vest


613,876


$
0.60



2.5


$
8,378  
 F-41




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
  Stock
    Options
 
 
  1 60
 
 
   
  
 Weighted Average


Weighted Average


AggregateNumber of


Exercise Price


Contractual Life


IntrinsicStock Options

Shares


Per Share


(Years)


ValueOutstanding at December 31, 2005





$
Granted


443,946



1.96Exercised


Forfeited






Outstanding at December 31, 2006


443,946


$
1.96Granted


369,261


$
13.52Exercised


(22,422
)

$
1.96Forfeited


(89,686
)

$
1.96Outstanding at September 30, 2007


701,099


$
8.05



9.27


$
4,346Vested at September 30, 2007 and expected to vest


692,883


$
8.05



9.27


$
4,295Exercisable at September 30, 2007


248,393


$
1.96



9.27


$
3,052  
 
   
 
   
 
   
 
   
 F-42




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
  
 Weighted AverageNumber of


Exercise PriceStock Options

Shares


Per ShareOutstanding at December 31, 2005





$
Granted


443,946



1.96Vested


Forfeited






Outstanding at December 31, 2006


443,946


$
1.96Granted


369,261


$
13.52Vested


(270,815
)

$
1.96Forfeited


(89,686
)

$
1.96Non-vested at September 30, 2007


452,706


$
11.39  
 
  14.
    Stockholders
    Equity 
 
  Common
    Stock
 
 
   
 
  Treasury
    Stock
 
 
   
 
  15.
    Private
    Placement Offering 
 
   
 F-43




---



##### Table of Contents



Orion
    Marine Group, Inc. and Subsidiaries
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
 
 
   
 
  16.
    Enterprise
    Wide Disclosures 
 
   
 
   
  
 Nine Months Ended September 30,2007


%


2006


%Federal

$
23,814



16
%

$
35,457



27
%State


10,424



7
%


22,213



17
%Local


51,340



34
%


45,045



33
%Private


64,193



43
%


29,202



23
%$
149,771



100
%

$
129,917



100
%  
 
   
 
   
 
   
 
   
  
 2007


2006Customer A


14.4
%


15.0
%Customer B


12.1
%


25.8
%Customer C


N/A



12.7
%  
 F-44




---



##### Table of Contents








---



##### 



Until          ,
    2007, all dealers that effect transactions in these securities,
    whether or not participating in this offering, may be required
    to deliver a prospectus. This is in addition, to the
    dealers obligation to deliver a prospectus when acting as
    underwriters and with respect to their unsold allotments or
    subscriptions.
  TABLE OF
    CONTENTS
  
  
 PageNOTICE TO INVESTORS


iMARKET DATA


iPROSPECTUS SUMMARY


1THE OFFERING


6SUMMARY CONSOLIDATED FINANCIAL DATA


7RISK FACTORS


10SPECIAL NOTE REGARDING FORWARD-LOOKING
    STATEMENTS


24USE OF PROCEEDS


26DIVIDEND POLICY


26CAPITALIZATION


26MARKET FOR COMMON STOCK


26SELECTED CONSOLIDATED FINANCIAL DATA


27MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


29BUSINESS


43MANAGEMENT


62COMPENSATION DISCUSSION AND ANALYSIS


68EXECUTIVE COMPENSATION


76SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT


87CERTAIN RELATIONSHIPS AND RELATED PARTY
    TRANSACTIONS


88SELLING SHAREHOLDERS


89DESCRIPTION OF CAPITAL STOCK


107SHARES ELIGIBLE FOR FUTURE SALE


111REGISTRATION RIGHTS


113DESCRIPTION OF INDEBTEDNESS


114PLAN OF DISTRIBUTION


115LEGAL MATTERS


117EXPERTS


117WHERE YOU CAN FIND MORE INFORMATION


117INDEX TO FINANCIAL STATEMENTS


F-1Consent of Grant Thornton  
         
  20,949,196 Shares
 of
 Common Stock
    PROSPECTUS




---



##### Table of Contents



PART II
  INFORMATION
    NOT REQUIRED IN PROSPECTUS
  Item 13.
    Other
    Expenses of Issuance and Distribution.    
 Amount to be PaidSEC Registration Fee

$
8,683Nasdaq Global Market Listing Fee

$
12,000FINRA Filing Fee

$
28,781.00Printing and Engraving Expenses

$
115,000Legal Fees and Expenses

$
306,000Accounting Fees and Expenses

$
75,000TOTAL

$
545,464  
 
 
  Item 14.
    Indemnification
    of Directors and Officers.    
    for any breach of the directors duty of loyalty to us or
    our stockholders;
    for acts or omissions not in good faith or which involve
    intentional misconduct or a knowing violation of law;
    under Section 174 of the Delaware General Corporation Law
    relating to unlawful stock repurchases, redemptions or
    dividends; or
    for any transaction from which the director derives an improper
    personal benefit.       II-1




---



##### Table of Contents



Item 15.
    Recent
    Sales of Unregistered Securities.    non-U.S. persons
       II-2




---



##### Table of Contents



Item 16.
    Exhibits
    and Financial Statement Schedules    
 ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation of Orion
    Marine Group, Inc.3
.2

Amended and Restated Bylaws of Orion Marine Group, Inc.4
.1

Registration Rights Agreement between Friedman, Billings,
    Ramsey & Co., Inc. and Orion Marine Group, Inc. dated
    May 17, 20075
.1

Opinion of Vinson & Elkins LLP10
.1

Loan Agreement, dated as of July 10, 2007, between Orion
    Marine Group, Inc. and Amegy Bank National Association10
.2

Purchase/Placement Agreement dated May 9, 2007 between
    Orion Marine Group, Inc. and Friedman, Billings,
    Ramsey & Co., Inc.10
.3

Amended & Restated Redemption Agreement dated
    May 7, 200710
.4

Lease dated September 13, 2006, by and between
    F. Miller Construction, LLC and Joe T. Miller Sr.10
.5

Lease dated September 28, 2006, by and between Southpoint
    Square I, Ltd. and Misener Marine Construction, Inc.10
.6

Lease dated June 23, 1997, by and between the City of Port
    Lavaca, Texas and King Fisher Marine Service, Inc.10
.7

Land Sublease Agreement dated May 1, 2007, by and between
    Signet Maritime Corporation and Orion Construction, L.P.10
.8

2005 Stock Incentive Plan10
.9

Form of Stock Option Agreement Under the 2005 Stock Incentive
    Plan & Notice of Grant of Stock Option10
.10

Form of Restricted Stock Agreement Under the 2005 Stock
    Incentive Plan & Notice of Grant of Restricted Stock10
.11

Orion Marine Group, Inc. Long Term Incentive Plan10
.12

Form of Stock Option Agreement Under the 2007 Long Term
    Incentive Plan10
.13

Form of Restricted Stock Agreement and Notice of Grant of
    Restricted Stock10
.14

Executive Incentive Plan Document Fiscal Year 200710
.15

Subsidiary Incentive Plan10
.16

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and J. Michael Pearson10
.17

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Mark Stauffer10
.18

Employment Agreement , dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Elliott Kennedy10
.19

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Jim Rose10
.20

Employment Agreement, dated as of August 13, 2007, by and
    between Orion Marine Group, Inc. and J. Cabell Acree, III10
.21

Lease agreement dated May 18, 2007, by and between Lazzara
    Leasing, LLC and Misener Marine Construction, Inc.21
.1

List of Subsidiaries23
.1*

Consent of Grant Thornton LLP24
.1

Power of Attorney  
   
  *
    
    Filed herewith. 
 
  
    
    Previously filed. 
  (b)
    
    Financial Statement Schedules     II-3




---



##### Table of Contents



Item 17.
    Undertakings.                         II-4




---



##### Table of Contents



II-5




---



##### Table of Contents



SIGNATURES
 
   
  
  By:
    /s/  J.
    Michael Pearson   Title:
    President and Chief Executive Officer   
 Signature

Title

Date/s/  J.
    Michael PearsonJ.
    Michael Pearson

President and Chief
    Executive Officer
    (Principal Executive Officer)

November 13, 2007/s/  Mark
    Stauffer*Mark
    Stauffer

Secretary and Chief
    Financial Officer
    (Principal Financial Officer
    and Principal Accounting Officer)

November 13, 2007/s/  Richard
    L. Daerr, Jr.*Richard
    L. Daerr, Jr.

Chairman of the Board

November 13, 2007/s/  Thomas
    N. Amonett*Thomas
    N. Amonett

Director

November 13, 2007/s/  Austin
    J. Shanfelter*Austin
    J. Shanfelter

Director

November 13, 2007/s/  Gene
    Stoever*Gene
    Stoever

Director

November 13, 2007  
  *By:
    /s/  J.
    Michael Pearson  Attorney-in-Fact
 II-6




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm




---



##### Table of Contents



ORION
    MARINE GROUP, INC.
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  
 Balance at the


Charged to





Balance at theBeginning of


Revenue, Cost,





End ofDescription

the Period


or Expenses


Deductions


the Period(In thousands)Year ended December 31, 2004:Provision for Doubtful Accounts


$



$



$



$Year ended December 31, 2005:Provision for Doubtful Accounts


$



$



$



$Year ended December 31, 2006:Provision for Doubtful Accounts


$



$500



$



$500Nine Months ended September 30, 2007:Provision for Doubtful Accounts


$500



$



$



$500




---



##### Table of Contents



EXHIBIT INDEX
  
 ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation of Orion
    Marine Group, Inc.3
.2

Amended and Restated Bylaws of Orion Marine Group, Inc.4
.1

Registration Rights Agreement between Friedman, Billings,
    Ramsey & Co., Inc. and Orion Marine Group, Inc. dated
    May 17, 20075
.1

Opinion of Vinson & Elkins LLP10
.1

Loan Agreement, dated as of July 10, 2007, between Orion
    Marine Group, Inc. and Amegy Bank National Association10
.2

Purchase/Placement Agreement dated May 9, 2007 between
    Orion Marine Group, Inc. and Friedman, Billings,
    Ramsey & Co., Inc.10
.3

Amended & Restated Redemption Agreement dated
    May 7, 200710
.4

Lease dated September 13, 2006, by and between
    F. Miller Construction, LLC and Joe T. Miller Sr.10
.5

Lease dated September 28, 2006, by and between Southpoint
    Square I, Ltd. and Misener Marine Construction, Inc.10
.6

Lease dated June 23, 1997, by and between the City of Port
    Lavaca, Texas and King Fisher Marine Service, Inc.10
.7

Land Sublease Agreement dated May 1, 2007, by and between
    Signet Maritime Corporation and Orion Construction, L.P.10
.8

2005 Stock Incentive Plan10
.9

Form of Stock Option Agreement Under the 2005 Stock Incentive
    Plan & Notice of Grant of Stock Option10
.10

Form of Restricted Stock Agreement Under the 2005 Stock
    Incentive Plan & Notice of Grant of Restricted Stock10
.11

Orion Marine Group, Inc. Long Term Incentive Plan10
.12

Form of Stock Option Agreement Under the 2007 Long Term
    Incentive Plan10
.13

Form of Restricted Stock Agreement and Notice of Grant of
    Restricted Stock10
.14

Executive Incentive Plan Document Fiscal Year 200710
.15

Subsidiary Incentive Plan10
.16

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and J. Michael Pearson10
.17

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Mark Stauffer10
.18

Employment Agreement , dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Elliott Kennedy10
.19

Employment Agreement, dated as of April 2, 2007, by and
    between Orion Marine Group, Inc. and Jim Rose10
.20

Employment Agreement, dated as of August 13, 2007, by and
    between Orion Marine Group, Inc. and J. Cabell Acree, III10
.21

Lease Agreement dated May 18, 2007, by and between Lazzara
    Leasing, LLC and Misener Marine Construction, Inc.21
.1

List of Subsidiaries23
.1*

Consent of Grant Thornton LLP24
.1

Power of Attorney  
   
  *
    
    Filed herewith 
  
    
    Previously filed