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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A



AMENDMENT NO. 1



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(Mark One)

|x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2003



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



Commission File Number: 0-28316



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Trico Marine Services, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 72-1252405                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|250 North American Court Houma, Louisiana                      |  | 70363                               
|(Address of principal executive offices)                       |  | (Zip code)                          



Registrants
telephone number, including area code: (985) 851-3833



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Securities registered pursuant to Section 12(b) of the Act:

None.



Securities registered pursuant to Section 12(g) of the Act:



Common Stock, $0.01 par value per share



Preferred Stock Purchase Rights



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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days.    Yes  x    No ̈



Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2.)    Yes  x    No ̈



The aggregate market value of the voting stock held by non-affiliates of the Registrant at June 30, 2003 based on the
closing price on NASDAQ National Market on that date was $109,744,438.



The number of shares of the Registrants common stock, $0.01 par value per share, outstanding at February 27, 2004 was 36,935,537.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrants definitive proxy statement, to be filed electronically no later than 120 days after the end of the fiscal year, are
incorporated by reference in Part III.



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EXPLANATORY NOTE



This Form 10-K/A of Trico Marine Services, Inc. (together with its subsidiaries collectively referred to as the
Company, Trico, or we) is being filed for the purpose of amending and restating Items 6, 7 and 8 of Part II and Item 15 of Part IV of our Form 10-K for the fiscal year ended December 31, 2003, filed March 15, 2004 (the
2003 Form 10-K), to reflect the restatement of our Consolidated Financial Statements as of and for the years ended December 31, 2003 and 2002 and to update certain information regarding our Norwegian revolving credit facility. We
restated our Consolidated Financial Statements as of and for the years ended December 31, 2003 and 2002 to properly classify our Norwegian revolving line of credit as a current liability.



Following the filing of the Companys Form 10-K for the fiscal year ended December 31, 2003 (the 2003 Form
10-K), the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the SEC) selected the 2003 Form 10-K for review. The SEC commented that Statement of Financial Accounting Standards
(SFAS) No. 6, Classification of Short-Term Obligations Expected to be Refinanced  an amendment of ARB No. 43, Chapter 3A appeared to apply to the Companys Norwegian Kroner (NOK) 800 million revolving
credit facility (the Trico Supply Bank Facility). After consultations with the staff members of the SEC and a review of the Trico Supply Bank Facility, the SEC advised, and the Company and its auditors agreed that the outstanding balance
of the facility should technically be classified as a current liability in accordance with SFAS No. 6 since the facility contains a subjective acceleration clause (material adverse change clause) and the agreement language replaces short-term
advances with other short-term advances. Previously, the Company presented the outstanding balance as a long-term liability because the facility has a final maturity of September 2009 and the fact that the Company does not use cash to repay advances
on a short-term basis, but instead rolls over an advance into a new advance period. The Company had NOK 410 million outstanding under this facility as of December 31, 2003 ($61.5 million) and NOK 610 million outstanding as of December 31, 2002
($87.9 million). The Companys Norwegian operating subsidiary, Trico Shipping AS, is the borrower of this facility. This change in classification does not affect the Companys compliance with this facility or other currently outstanding
debt instruments and does not affect the liquidity position of the Company for any period previously reported.



This amendment to the original Form 10-K amends and restates the original Form 10-K in its entirety. This Form 10-K/A contains no changes to the
Consolidated Statements of Operations, Consolidated Statements of Stockholders Equity, or Consolidated Statements of Cash Flows as previously reported, although this Form 10-K/A does include changes to the Consolidated Balance Sheets and
disclosures as described below:



Part IIItem 6. Selected
Financial InformationBalance Sheet DataWorking capital (deficit)The 2003 amount has been restated to $(27,740) from $33,768 as originally reported. The 2002 amount has been restated to $(69,427) from $18,498 as originally reported.



Part IIItem 7. Managements Discussion and Analysis
of Financial Condition and Results of OperationsLiquidity and Capital ResourcesAdded disclosure concerning the reclassification of the Companys revolving credit facility pursuant to U.S. GAAP regulations, updated the table
summarizing contractual commitments, added a discussion of our Norwegian revolving credit facility, and added a reference to Note 4 of the Financial Statements included in Item 8.



Part IIItem 8. Financial Statements and Supplementary DataReport of Independent Registered Public Accounting
FirmChanges were made to the opinion wording and the opinion date.



i



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Part IIItem 8. Financial Statements and Supplementary DataConsolidated Balance
SheetsLiabilities and Stockholders EquityAmounts for current portion of long-term debt, total current liabilities, and long-term debt at December 31, 2003 and 2002 have been restated from amounts originally reported as follows:



|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|-------------------------- |  | ----------------- | ------- | ------------------ | - | -------- |  | ------------------ | ------- |  | - | -------
|                           |  | December 31, 2003 |         | December 31, 2002 
|                           |  | Restated          |         | OriginallyReported |   | Restated |  | OriginallyReported
|Current Liabilities:       |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Current maturities of debt |  | $                 | 66,266  |                    | $ | 4,758    |  | $                  | 96,626  |  | $ | 8,701  
|Accounts payable           |  |                   | 6,190   |                    |   | 6,190    |  |                    | 11,135  |  |   | 11,135 
|Accrued expenses           |  |                   | 6,352   |                    |   | 6,352    |  |                    | 5,923   |  |   | 5,923  
|Accrued insurance reserve  |  |                   | 4,497   |                    |   | 4,497    |  |                    | 3,030   |  |   | 3,030  
|Accrued interest           |  |                   | 3,656   |                    |   | 3,656    |  |                    | 4,025   |  |   | 4,025  
|Income taxes payable       |  |                   | 331     |                    |   | 331      |  |                    | 94      |  |   | 94     
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Total current liabilities  |  |                   | 87,292  |                    |   | 25,784   |  |                    | 120,833 |  |   | 32,908 
|                           |  |                   |         |                   
|Long-term debt             |  |                   | 313,900 |                    |   | 375,408  |  |                    | 287,520 |  |   | 375,445
|Deferred income taxes      |  |                   | 39,772  |                    |   | 39,772   |  |                    | 41,392  |  |   | 41,392 
|Other liabilities          |  |                   | 2,196   |                    |   | 2,196    |  |                    | 2,104   |  |   | 2,104  
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Total liabilities          |  | $                 | 443,160 |                    | $ | 443,160  |  | $                  | 451,849 |  | $ | 451,849
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        



Part IIItem 8.
Financial Statements and Supplementary DataNotes to Consolidated Financial Statements3. RestatementA new footnote describing the reclassification has been added.



Part IIItem 8. Financial Statements and Supplementary DataNotes to Consolidated Financial Statements4.
Subsequent EventsA new footnote describing the Companys subsequent events has been added.



Part IIItem 8. Financial Statements and Supplementary DataNotes to Consolidated Financial Statements9. DebtThe heading of the
footnote was changed to Debt.



Part IIItem 8.
Financial Statements and Supplementary DataNotes to Consolidated Financial Statements9. DebtThe caption reading Less current maturitiesThe 2003 amount has been restated to $66,266 from $4,758 (in thousands) as
originally reported. The 2002 amount has been restated to $96,626 from $8,701 (in thousands) as originally reported. The caption reading Long-term debtThe 2003 amount has been restated to $313,900 from $375,408 (in thousands) as
originally reported. The 2002 amount has been restated to $287,520 from $375,445 (in thousands) as originally reported. Under the caption reading Annual maturities on long-term debt during the next five years are as follows (in
thousands):The 2004 amount has been restated to $66,266 from $4,758 as originally stated, the 2005 amount remains at $35,758 as originally stated, the 2006 amount remains at $20,510 as originally stated, the 2007 amount has been restated
to $1,258 from $2,758 as originally stated, the 2008 amount has been restated to $1,258 from $13,260 as originally stated, and the Thereafter amount has been restated to $255,116 from $303,122 as originally stated.



Part IIItem 8. Financial Statements and Supplementary DataNotes
to Consolidated Financial Statements9. DebtIn the paragraph discussing the Norwegian revolving credit facility, disclosure concerning the reclassification of the Companys revolving credit facility pursuant to SFAS No. 6 has been
added.



ii



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Part IIItem 8. Financial Statements and Supplementary DataNotes to Consolidated Financial
Statements20. Condensed Consolidating Financial Statements for Subsidiary GuarantorsCondensed Consolidating Balance SheetsAmounts for current portion of long-term debt, total current liabilities, and long-term debt for the
Non-Guarantor Subsidiaries at December 31, 2003 and 2002 have been restated from amounts originally reported as follows:



|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|-------------------------- |  | ----------------- | ------- | ------------------ | - | -------- |  | ------------------ | ------- |  | - | -------
|                           |  | December 31, 2003 |         | December 31, 2002 
|                           |  | Restated          |         | OriginallyReported |   | Restated |  | OriginallyReported
|Current Liabilities:       |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Current maturities of debt |  | $                 | 66,266  |                    | $ | 4,758    |  | $                  | 96,626  |  | $ | 8,701  
|Accounts payable           |  |                   | 3,295   |                    |   | 3,295    |  |                    | 5,868   |  |   | 5,868  
|Due to affiliates          |  |                   | 107     |                    |   | 107      |  |                    |        |  |   |       
|Accrued expenses           |  |                   | 3,987   |                    |   | 3,987    |  |                    | 4,181   |  |   | 4,181  
|Accrued insurance reserve  |  |                   |        |                    |   |         |  |                    |        |  |   |       
|Accrued interest           |  |                   | 781     |                    |   | 781      |  |                    | 1,151   |  |   | 1,151  
|Income taxes payable       |  |                   | 331     |                    |   | 331      |  |                    | 94      |  |   | 94     
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Total current liabilities  |  |                   | 74,767  |                    |   | 13,259   |  |                    | 107,920 |  |   | 19,995 
|                           |  |                   |         |                   
|Long-term debt             |  |                   | 34,701  |                    |   | 96,209   |  |                    | 16,956  |  |   | 104,881
|Due to affiliates          |  |                   | 17,186  |                    |   | 17,186   |  |                    | 19,269  |  |   | 19,269 
|Deferred income taxes      |  |                   | 44,015  |                    |   | 44,015   |  |                    | 45,617  |  |   | 45,617 
|Other liabilities          |  |                   | 2,196   |                    |   | 2,196    |  |                    | 2,104   |  |   | 2,104  
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        
|Total liabilities          |  | $                 | 172,865 |                    | $ | 172,865  |  | $                  | 191,866 |  | $ | 191,866
|                           |  |                   |         |                    |   |          |  |                    |         |  |   |        



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PART II



Item 6.Selected Financial Data



The selected financial data presented below for the five fiscal years ended December 31, 2003 is derived from our audited consolidated financial
statements. You should read this information in conjunction with the discussion under Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements.



|                                       |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------- |  | ------------------------------------------------------- | -------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                       |  | Years ended December 31,                                |         
|                                       |  | 2003                                                    |          |   | 2002 |   |         | 2001 |  |   | 2000    |   |  | 1999 |        
|                                       |  | (Financial data in thousands, except per share amounts) |         
|Statement of Operations Data:          |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Revenues                               |  | $                                                       | 123,521  |   |      | $ | 133,942 |      |  | $ | 182,625 |   |  | $    | 132,887 |   |  | $ | 110,800 |  
|Direct operating expenses and other(1) |  |                                                         | 225,630  |   |      |   | 114,149 |      |  |   | 132,484 |   |  |      | 88,101  |   |  |   | 92,578  |  
|Depreciation and amortization expense  |  |                                                         | 33,392   |   |      |   | 31,870  |      |  |   | 32,888  |   |  |      | 33,419  |   |  |   | 32,919  |  
|                                       |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Operating income (loss)                |  | $                                                       | (135,501 | ) |      | $ | (12,077 | )    |  | $ | 17,253  |   |  | $    | 11,367  |   |  | $ | (14,697 | )
|                                       |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net loss                               |  | $                                                       | (164,398 | ) |      | $ | (67,978 | )    |  | $ | (6,923  | ) |  | $    | (12,722 | ) |  | $ | (33,410 | )
|                                       |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic and Diluted Per Share Data:      |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net loss                               |  | $                                                       | (4.51    | ) |      | $ | (1.87   | )    |  | $ | (0.19   | ) |  | $    | (0.39   | ) |  | $ | (1.33   | )
|                                       |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Balance Sheet Data:                    |  |                                                         |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Working capital (deficit) (Restated)   |  | $                                                       | (27,740  | ) |      | $ | (69,427 | )    |  | $ | 43,175  |   |  | $    | 28,763  |   |  | $ | (1,478  | )
|Property and equipment, net            |  | $                                                       | 487,019  |   |      | $ | 546,223 |      |  | $ | 450,057 |   |  | $    | 491,062 |   |  | $ | 553,388 |  
|Total assets                           |  | $                                                       | 585,191  |   |      | $ | 747,175 |      |  | $ | 655,712 |   |  | $    | 678,122 |   |  | $ | 730,579 |  
|Debt, including current maturities     |  | $                                                       | 380,166  |   |      | $ | 384,146 |      |  | $ | 305,095 |   |  | $    | 326,655 |   |  | $ | 401,128 |  
|Stockholders equity                   |  | $                                                       | 142,031  |   |      | $ | 295,326 |      |  | $ | 291,726 |   |  | $    | 299,581 |   |  | $ | 270,108 |  

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|(1) | Includes asset losses/write-downs of $6,165 in 2003, $5,200 in 2002, $24,260 in 2001 and $1,111 in 1999, and goodwill impairments of $113,028 in 2003.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------



Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations



General



We are a leading provider of marine support vessels to the oil and gas industry, primarily in the U.S. Gulf of Mexico, the North Sea, and Latin America.
We have a total fleet of 84 vessels, including 48 supply vessels, 13 large capacity platform supply vessels, six large anchor handling, towing and supply vessels, 11 crew boats and six line-handling vessels. Three of the crew boats are being leased
under ten-year operating leases.



Our results of operations are
affected primarily by the day rates we receive and our fleet utilization. Demand for our vessels is primarily impacted by the level of offshore oil and gas drilling activity, which historically has been primarily influenced by oil and gas prices and
drilling budgets of oil and gas companies. Our day rates and utilization rates are also affected by the size, configuration, age and capabilities of our fleet. In the case of supply boats and PSVs, their deck space and liquid mud and dry bulk cement
capacity are important attributes. In certain markets and for certain customers, horsepower and dynamic positioning systems are also important requirements. For crew boats, size and speed are important factors. Our day rates and utilization are also
affected by the supply of other vessels available in a given market area with similar configurations and capabilities.



Our operating costs are primarily a function of fleet size and utilization levels. The most significant direct operating costs are wages paid to vessel
crews, maintenance and repairs and marine insurance. Generally, increases or decreases in vessel utilization only affect that portion of our direct operating costs that is incurred when the vessels are active. As a result, direct operating costs as
a percentage of revenues may vary substantially due to changes in day rates and utilization.



1



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In addition to these variable costs, we incur fixed charges related to the depreciation of our fleet and
costs for the routine dry-dock inspection, maintenance and repair designed to ensure compliance with U.S. Coast Guard regulations and to maintain required certifications for our vessels. Maintenance and repair expense and marine inspection
amortization charges are generally determined by the aggregate number of dry-dockings and other repairs undertaken in a given period. Costs incurred for dry-dock inspection and regulatory compliance are capitalized and amortized over the period
between such dry-dockings, typically two to five years.



Overview



During 2003, the Company experienced disappointing
results from operations primarily due to low levels of drilling activity in the key markets in which it operates. These low levels of drilling activity, combined with the increase of competition to our market areas, led to reductions in day rates
and utilization of our fleet in most market areas. As a result of reduced revenues and disappointing operating results in 2003 and in the recent past, the Company completed steps to enhance liquidity. During 2003, the Company sold a large North Sea
vessel and a Brazilian vessel under construction, which generated approximately $52.5 million of cash. Additionally, the Company entered into a new term loan in February 2004, which added flexibility and increased available liquidity.



The Company had goodwill related to the 1997 acquisition of its North Sea
reporting segment. Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires an annual assessment of goodwill for impairment, which the Company elected to conduct during the
second quarter of its fiscal year. During the second quarter ended June 30, 2002, the Company conducted its initial assessment for goodwill impairment as required under SFAS No. 142. That assessment used a projection of discounted cash flows,
comparable industry financial ratios and other data. The Company determined at that time that there was no impairment of goodwill based on the operating results to date, and, as discussed in previous filings, managements expectations that
market conditions for the North Sea would remain stable through 2002, and then improve in 2003. However, operating results in the North Sea began to experience a decline during the early part of fiscal 2003. Upon the completion of the Companys
annual goodwill analysis in the second quarter ended June 30, 2003, the Company recorded a goodwill impairment charge of approximately $28.6 million. This charge reflected the devaluation in the North Sea reporting units fair value compared to
the book value, and was estimated based on the projected future discounted cash flows of the reporting unit, in light of current market conditions and our expectations at the time, which we believed would remain stable or improve in the latter half
of 2003. After continued deterioration in market conditions in the North Sea during the third and fourth quarters of 2003, the Company determined that an additional interim test of impairment was necessary as of December 31, 2003. While annual
average day rates and number of vessels in the North Sea had remained relatively steady for the past three years and the utilization had declined marginally, our expectation of the low level of activity in the North Sea is believed to continue
rather than return to 2001 levels in the near term. As a result of performing this test, we recorded an additional charge of $84.4 million in the fourth quarter of 2003 which represents the remainder of the goodwill associated with the North Sea
reporting unit.



Looking forward, we will continue to explore
ways to enhance the Companys liquidity and leverage structure. Although the overall U.S. economy is improving in general, we are very cautious about 2004 operating results, and believe the exploration and production activity in our market
areas could remain somewhat depressed. If market conditions in any market in which the Company operates were to continue to deteriorate, it could require the Company to examine the recoverability of its long-lived assets in that market. See further
discussion in Impairment of long-lived assets other than goodwill in Critical Accounting Policies included in Item 7.



2



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Results of Operations



The table below sets forth by vessel class, the average day rates and utilization for our vessels and the average number of vessels we operated during the
periods indicated.



|                                     |  |                          |        |   |      |   |        |      |  |   |        |  
|------------------------------------ |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                     |  | Years ended December 31, |       
|                                     |  | 2003                     |        |   | 2002 |   |        | 2001 | 
|Average vessel day rates(1):         |  |                          |        |   |      |   |        |      |  |   |        |  
|Supply boats (Gulf class)            |  | $                        | 4,954  |   |      | $ | 5,575  |      |  | $ | 7,043  |  
|PSVs/AHTSs (North Sea)               |  |                          | 11,295 |   |      |   | 11,641 |      |  |   | 11,884 |  
|Crew/line handling boats             |  |                          | 2,897  |   |      |   | 2,654  |      |  |   | 2,714  |  
|                                     |  |                          |       
|Average vessel utilization rates(2): |  |                          |        |   |      |   |        |      |  |   |        |  
|Supply boats (Gulf class)            |  |                          | 51     | % |      |   | 53     | %    |  |   | 69     | %
|PSVs/AHTSs (North Sea)               |  |                          | 82     | % |      |   | 89     | %    |  |   | 93     | %
|Crew/line handling boats             |  |                          | 74     | % |      |   | 67     | %    |  |   | 78     | %
|                                     |  |                          |       
|Average number of vessels:           |  |                          |        |   |      |   |        |      |  |   |        |  
|Supply boats (Gulf class)            |  |                          | 48.0   |   |      |   | 48.0   |      |  |   | 52.5   |  
|PSVs/AHTSs (North Sea)               |  |                          | 19.7   |   |      |   | 18.8   |      |  |   | 18.0   |  
|Crew/line handling boats             |  |                          | 16.8   |   |      |   | 17.3   |      |  |   | 20.5   |  

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|(1) | Average vessel day rate is calculated by dividing a vessels total revenues in a period by the total number of days such vessel was under contract during such period.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Average vessel utilization is calculated by dividing the total number of days for which a vessel is under contract in a period by the total number of days in such period.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Set forth below is the internal allocation of
our charter revenues and charter revenues less direct vessel operating expenses among vessel classes for each of the periods indicated (dollars in thousands).



|                                                        |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|------------------------------------------------------- |  | ------------------------ | ------- | - | - | --- | - | ---- | - | ------- |  | --- | ---- |  | - | ------- |  | --- | -
|                                                        |  | Years ended December 31, |        
|                                                        |  | 2003                     |         |   | % |     |   | 2002 |   | %       |  |     | 2001 |  | % |        
|Charter Revenues:                                       |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|Supply boats                                            |  | $                        | 43,866  |   |   | 36  | % |      | $ | 51,597  |  | 39  | %    |  | $ | 93,370  |  | 51  | %
|PSVs/AHTSs (North Sea)                                  |  |                          | 66,157  |   |   | 54  | % |      |   | 70,983  |  | 53  | %    |  |   | 73,228  |  | 40  | %
|Crew/line handling boats                                |  |                          | 13,267  |   |   | 10  | % |      |   | 11,191  |  | 8   | %    |  |   | 15,929  |  | 9   | %
|                                                        |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|                                                        |  | $                        | 123,290 |   |   | 100 | % |      | $ | 133,771 |  | 100 | %    |  | $ | 182,527 |  | 100 | %
|                                                        |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|Charter Revenues less direct vessel operating expenses: |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|Supply boats                                            |  | $                        | 9,766   |   |   | 24  | % |      | $ | 13,317  |  | 26  | %    |  | $ | 51,670  |  | 51  | %
|PSVs/AHTSs (North Sea)                                  |  |                          | 29,520  |   |   | 72  | % |      |   | 36,365  |  | 73  | %    |  |   | 45,311  |  | 45  | %
|Crew/line handling boats                                |  |                          | 1,551   |   |   | 4   | % |      |   | 458     |  | 1   | %    |  |   | 3,929   |  | 4   | %
|Other                                                   |  |                          | (26     | ) |   |    |   |      |   | 14      |  |    |      |  |   |        |  |    |  
|                                                        |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  
|                                                        |  | $                        | 40,811  |   |   | 100 | % |      | $ | 50,154  |  | 100 | %    |  | $ | 100,910 |  | 100 | %
|                                                        |  |                          |         |   |   |     |   |      |   |         |  |     |      |  |   |         |  |     |  



Comparison of
the Year Ended December 31, 2003 to the Year Ended December 31, 2002



Our revenues in 2003 were $123.5 million compared to $133.9 million in 2002. The 8% decrease in revenues during the year was a result of lower average vessel day rates and utilizations, specifically in the Gulf class
supply boats and the North Sea AHTS vessels.



3



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For the Gulf class supply vessels, day rates decreased 11% from $5,575 in 2002 to $4,954 in 2003.
Utilization also decreased for these vessels from 53% in 2002 to 51% in 2003. The decrease in both day rates and utilization is a direct result of the continued low level of Gulf of Mexico drilling activity.



For our North Sea PSVs and AHTSs, day rates decreased 3% from $11,641 in 2002
to $11,295 in 2003. Utilization also decreased from 89% in 2002 to 82% in 2003. The decrease in both day rates and utilization were results of continued market pressure from competition and low levels of drilling activity.



In contrast, the Companys crew boats and line handlers experienced
increased day rates and utilization in 2003 compared to 2002. Day rates increased 9% from $2,654 in 2002 to $2,897 in 2003, while utilization increased from 67% in 2002 to 74% in 2003. These increases were partly due to the full year effect of
several two-year contracts for line handlers entered into during the third quarter of 2002 at increased day rates.



Direct vessel operating expenses decreased 3% from $84.1 million in 2002 to $81.2 million in 2003. The decrease is primarily due to reductions in vessel
maintenance and repairs and labor costs during 2003, offset partially by an increase in supplies. The reduction in labor and maintenance costs is a result of an increase in the Norwegian governments reimbursement of such costs, and the sale of
the large North Sea AHTS in 2003.



General and administrative
expenses increased 3% from $15.1 million to $15.5 million when comparing 2003 to 2002. The increase in general and administrative expenses are related to increased insurance and professional fees, as well as increased costs associated with the new
sales and operations offices in Mexico and Nigeria.



The
Companys depreciation and amortization expense increased $1.5 million or 5% from $31.9 million in 2002 to $33.4 million in 2003. Depreciation and amortization increased when comparing 2003 to 2002 due to the Company recording the first full
year of depreciation for two vessels entering the North Sea fleet in 2002.



During 2003, the Company recorded a charge of $6.2 million in association with the sale of one of its larger North Sea vessels, and the sale of its investment in a construction project in Brazil. The expense is
classified as a Loss on assets held for sale since the Company recorded the charge when the formal plan to sell the assets was committed to.



Also in 2003, the Company recorded two impairment charges to goodwill of $28.6 and $84.4 million during the second and fourth quarters of 2003,
respectively. When performing its annual impairment test during the second quarter ended June 2003, the Company determined that an impairment was necessary for its goodwill balance related to the North Sea reporting unit and, to a lesser extent,
Brazil. The June 2003 impairment was a result of the continued slowness in the North Sea market, which in turn, devalued the reporting unit. As a result, the Company recorded a charge of $28.6 million in the second quarter of 2003. After continued
deterioration in market conditions in the North Sea during the third and fourth quarters of 2003, the Company determined that an additional interim test of impairment was necessary as of December 31, 2003. As a result of the December 2003 analysis,
the Company determined that an additional impairment was warranted, and recorded an impairment on the remaining goodwill balance of approximately $84.4 million.



During 2003, the Company sold two crew boats and one supply vessel, which resulted in gains of $1.0 million in the aggregate.



Interest expense increased $1.7 million or 6% as a result of a higher average
debt balance, and the full year of expense for the 8.875% senior notes, which were issued in May 2002 to replace the 8.5% senior notes.



The Company recorded a consolidated income tax benefit in 2003 of $2.9 million, which is primarily related to the Companys Norwegian operations. The
Companys $14.6 million tax expense in 2002 is a result of the deferred tax valuation allowance booked in 2002. The Company has continued to book a full valuation allowance against its U.S. deferred tax assets during 2003.



4



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Comparison of the Year Ended December 31, 2002 to the Year Ended December 31, 2001



Our revenues in 2002 were $133.9 million, a decrease
of 27%, compared to $182.6 million in 2001. The decrease was due primarily to a decrease in day rates and utilization for our Gulf class supply boats and crew boats. The decrease in utilization and day rates of our Gulf class fleet is attributable
to decreased Gulf drilling activity.



Our average Gulf class
supply boat day rates decreased 21% to $5,575 for 2002, compared to $7,043 for 2001. The average day rates for our fleet of crew boats and line handling vessels decreased 2% to $2,654, compared to $2,714 for 2001.



Utilization for our Gulf class supply boat fleet decreased to 53% in 2002
from 69% in 2001 due to the decrease in offshore drilling activity in the Gulf. Utilization for our crew boats and line handling vessels decreased to 67% in 2002, compared to 78% in 2001, due to the decrease in activity in the Gulf.



Average day rates for our North Sea vessels in 2002 decreased 2% to $11,641
compared to $11,884 for 2001. Vessel utilization was 89% for 2002, compared to 93% for 2001. Two large PSVs were added to our North Sea fleet during 2002.



During 2002, direct vessel operating expenses increased to $84.1 million, compared to $82.1 million for 2001. The direct vessel operating expenses
increased as a result of higher North Sea labor costs, higher insurance costs and the addition of two new PSVs during 2002. The higher North Sea labor costs were primarily attributable to the addition of two new PSVs during 2002, required union
related pay increases and the strengthening of the Norwegian Kroner against the dollar. The above rate increases were offset in part by reduced U.S. vessel labor and U.S. maintenance costs.



During the fourth quarter of 2002, we recorded a non-cash vessel book value
write-down in the amount of $5.2 million. The write-down was taken against the book value of two special purpose towing vessels that have limited capabilities as conventional supply vessels.



Depreciation and amortization expense was $31.9 million in 2002, down from
$32.9 million in 2001. Depreciation and amortization in 2001 included $2.6 million of amortization expense associated with goodwill. Pursuant to the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets, no goodwill amortization expense was recorded in 2002. Amortization of marine inspection costs decreased to $10.2 million in 2002, from $13.4 million in 2001 due to a reduction in dry docking and marine inspection
costs.



Our general and administrative expenses increased to
$15.1 million in 2002, from $13.6 million for 2001, principally due to increases in insurance, professional fees and the strengthening of the Norwegian Kroner against the dollar. General and administrative expenses, as a percentage of revenues,
increased in 2002 due primarily to the decrease in average day rates and utilization for our Gulf class supply boats and crew boats.



Interest expense increased to $28.4 million during 2002, compared to $26.2 million during 2001, due to additional borrowings associated with the
construction of the two North Sea PSVs completed in 2002 and additional borrowings and interest costs associated with the refinancing of our senior notes.



We incurred an $11.0 million loss in 2002, which resulted from the early retirement of the Companys previously issued 81/2% senior notes and the fourth quarter 2002 refinancing of our revolving credit facility.



Income tax expense in 2002 of $14.5 million is comprised of a $1.7 million
income tax expense associated with our North Sea operations and a $12.8 million income tax expense associated with our third quarter of 2002 U.S. deferred tax valuation allowance made pursuant to the provisions under SFAS No. 109, Accounting
for Income Taxes. In 2001, we had an income tax benefit of $3.3 million and an effective tax rate of 32%. The



5



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variance from our statutory rate is due to income that was contributed by our Norwegian operations for which taxes were provided at the Norwegian statutory
rate of 28%.



Liquidity and Capital Resources



In accordance with U.S. GAAP, we have classified the NOK 800 million
revolving credit facility (the Trico Supply Bank Facility) as a current liability in the consolidated balance sheets. Previously, the Company presented the outstanding balance as a long-term liability because the facility has a final
maturity of September 2009 and the fact that the Company does not use cash to repay advances on a short-term basis, but instead rolls over an advance into a new advance period. For future cash flow purposes, we consider the Trico Supply Bank
Facility to be a long-term source of funds since advances can be re-financed until the facility reduces over time, concluding in September 2009. As long as the Company is in compliance with the covenants of the Trico Supply Bank Facility, and the
lender does not exercise the subjective acceleration clause, the Company is not obligated to repay and retire any amounts outstanding under the facility during the next 12 months. The Company had NOK 410 million outstanding under this facility as of
December 31, 2003 ($61.5 million). The Companys Norwegian operating subsidiary, Trico Shipping AS, is the borrower of this facility. This change in classification does not affect the Companys compliance with this facility or other
currently outstanding debt instruments, and does not affect the liquidity position of the Company for any period previously reported.



See Note 4 to the Financial Statements included in Item 8 for a discussion of subsequent events and liquidity.



Our on-going capital requirements arise primarily from our need to service
debt, maintain or improve equipment and provide working capital to support our operating activities.



Continued low levels of Gulf of Mexico drilling activity have negatively impacted Gulf class vessel utilization and day rates in 2003. North Sea operating
results for 2003 also lagged behind the comparable 2002 period. During the third quarter of 2003, the Company completed phase one of its liquidity enhancement plan that was designed to address its near-term financial and liquidity needs. Phase one
of the liquidity enhancement plan resulted in the Company entering into a loan agreement providing for a NOK 150 million ($22.5 million) term loan, receiving a $4.5 million federal tax refund as a result of net operating loss carryback claims, and
selling a North Sea class vessel and the Brazilian AHTS project for a total of approximately $52.5 million.



Phase two of the Companys liquidity enhancement plan included amending the Companys U.S. bank credit facility in an effort to comply with its
restrictive covenants, or refinancing the facility. In February 2004, the Company entered into a new $55 million senior secured term loan (the 2004 Term Loan) which retired and replaced the existing Bank Credit Facility (See Note 9 to
the Consolidated Financial Statements, included in Item 8). The 2004 Term Loan eliminates the financial maintenance covenants of the Bank Credit Facility, and is collateralized by 43 Gulf Coast class supply vessels.



In the short-term, we expect a substantial portion of our liquidity to be
provided by cash provided by operations, our unrestricted cash, and our NOK Credit Facility. As of February 27, 2004, we had unrestricted cash of $37.6 million and NOK 320 million of borrowing capacity under our NOK Credit Facility. However, we are
restricted to NOK 202 million of availability as a result of financial covenants under such facility. With the completion of the 2004 Term Loan, the Company believes that cash provided by operations and current unrestricted cash and availability
under its NOK credit facility will be sufficient to fund our debt service requirements, working capital and vessel maintenance expenditures until at least December 31, 2004, barring any unforeseen circumstances. If current activity levels continue
in the Gulf of Mexico and the North Sea, it would require us to depend more heavily on our NOK Credit Facility.



In the longer term, our ability to pay debt service and other contractual obligations will depend on improving our future performance and cash flow
generation, which in turn will be affected by prevailing economic and industry conditions and financial, business and other factors, many of which are beyond our control. If we have difficulty paying debt service or other contractual obligations in
the future, we will be forced



6



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to take actions such as reducing or delaying capital expenditures, reducing costs, selling assets, refinancing or restructuring our debt or other obligations
and seeking additional equity capital. We may not be able to take any of these actions on satisfactory terms or at all.



As a result of the Companys operating losses and continued negative market conditions during 2003, on July 25, 2003, Moodys Investors Service
(Moodys) downgraded our long-term senior implied rating to B3 from B1 and lowered our senior unsecured notes rating to Caa1 from C2. On January 27, 2004, Moodys downgraded our long-term senior implied rating to Caa1
from B3 and lowered our senior unsecured notes rating to Caa2 from Caa1. On November 24, 2003, Standard & Poors Ratings Services (S&P), a division of The McGraw-Hill Companies, Inc., downgraded our senior unsecured
notes to CCC from CCC+ and placed that credit rating on creditwatch with negative implications. In addition, S&P lowered our corporate rating to B- from B on the same date. On March 11, 2004, S&P downgraded the senior unsecured notes from
CCC to CCC- and the corporate rating from B- to CCC+. This downgrade requires the Company to post an additional letter of credit of approximately $1.7 million under the Companys master bareboat charter agreement. Because of these downgrades,
and the potential of one or both rating agencies continuing to downgrade our debt, it is likely that we will have difficulty obtaining financing and our cost of obtaining additional financing or refinancing existing debt may be increased
significantly.



During 2003, $9.6 million in funds were used in
operating activities compared to $7.9 million used in operating activities during 2002. Operating cash flows have remained negative, due primarily to the continued slowness of drilling activity in our market areas. Operating cash flows decreased by
$1.7 million primarily due to reduced revenues compared to 2002, offset by a recovery of cash from a reduction of the accounts receivable balance during the year. In 2003, $31.5 million was provided by investing activities, compared with $63.6
million used in investing activities in 2002. The increase of funds in 2003 was the result of the sales of the Brazilian AHTS and a large Norwegian vessel for $52.5 million, accompanied by a $43.4 million reduction of property and equipment
purchases during 2003 due to fewer vessel constructions. The sale of vessels and the reduction of new property purchases are a direct result of the Companys liquidity enhancement plan enacted during 2003. From financing activities, the Company
used $6.3 million in 2003 compared to cash provided by financing activities of $47.5 million in 2002. In 2003, the Company repaid current debt maturities as well as retiring a portion of the existing debt with new debt issuances.



The following table summarizes our contractual commitments, as of December
31, 2003, related to the principal amount of our debt (adjusted to reflect subsequent transactions), leases and other arrangements for the periods indicated below (in thousands), restated.



|                    |  |      |        |      |   |       |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|------------------- |  | ---- | ------ | ---- | - | ----- |  | ---- | ------ | ---- | - | ---------- |  | ----- | ------ |  | - | ------- |  | - | -------
|Description         |  | 2004 |        | 2005 |   | 2006  |  | 2007 |        | 2008 |   | Thereafter |  | Total
|Debt(1)             |  | $    | 66,716 |      | $ | 5,358 |  | $    | 21,110 |      | $ | 1,858      |  | $     | 11,708 |  | $ | 299,216 |  | $ | 405,966
|Operating leases    |  |      | 1,272  |      |   | 1,189 |  |      | 1,191  |      |   | 1,181      |  |       | 1,125  |  |   | 4,344   |  |   | 10,302 
|Vessel construction |  |      |       |      |   |      |  |      |       |      |   |           |  |       |       |  |   |        |  |   |       
|                    |  |      |        |      |   |       |  |      |        |      |   |            |  |       |        |  |   |         |  |   |        
|Total               |  | $    | 67,988 |      | $ | 6,547 |  | $    | 22,301 |      | $ | 3,039      |  | $     | 12,833 |  | $ | 303,560 |  | $ | 416,268

---

|(1) | Adjusted to reflect the 2004 Term Loan entered into during February 2004 and the repayment of the U.S. credit facility.
|--- | -----------------------------------------------------------------------------------------------------------------------



The Companys Trico Supply Bank Facility is classified as a current
maturity in accordance with U.S. GAAP requirements.



As of
December 31, 2003, the Company has approximately $380.2 million of debt outstanding with a weighted average interest rate of 7.2%. Of this amount, approximately $4.8 million is due in 2004. When adjusted to include the effects of the 2004 Term Loan
entered into subsequent to December 31, 2003, the current maturities of long term debt increase to $5.2 million and the total debt balance increases to $406.0 million, as reflected in the table above.



The Companys long term debt is comprised of a combination of senior
unsecured notes, credit facilities, and senior secured notes, subject to restrictive covenants. The indenture governing the 87/8% Senior Notes contains covenants that, among other things, prevent us from incurring additional debt, paying dividends or making other distributions, unless our ratio of cash flow to interest expense on a rolling twelve month basis
is at



7



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least 2.0 to 1. Currently we do not meet this ratio and, therefore, are limited under the indenture to incurring at any one time and having outstanding, up
to $150.0 million of secured debt after the date of issuance of the notes. In addition, our NOK credit facility contains covenants that require our North Sea reporting unit to maintain certain financial ratios and limit its ability to create liens,
or merge or consolidate with other entities.



Approximately 22%
of the Companys total debt is payable in NOK, while 78% is payable in U.S. Dollars (USD). At December 31, 2003, the Company had approximately $265.2 million (or 70%) of fixed rate debt and approximately $115.0 million (or 30%) of variable rate
debt. The Companys fixed interest rates range from 6.08% to 8.875%. The Companys variable rate debts are indexed based on LIBOR (London Interbank Offered Rate) and NIBOR (Norwegian Interbank Offered Rate), some of which are subject to
floors.



The Company has entered into operating leases,
primarily as a result of sale-leaseback type transactions. The leases are classified as operating leases due to their relative short duration (10 years) as compared to the expected life of the vessel.



The Company has issued stand-by letters of credit totaling $6.3 million as of
December 31, 2003.



At December 31, 2003, the Company does not
have any planned capital expenditures other than approximately $10.5 million to fund the dry docking of vessels and related repairs to be incurred during 2004.



Subsequent to December 31, 2003, the Company entered into a $55 million term loan, the proceeds of which were used primarily to retire its U.S. Credit
Facility. As a result of the refinancing, at February 27, 2003, we had approximately $45.7 million in cash, of which $37.6 million was unrestricted. In addition to cash on hand, the Company has NOK 320 million ($45.4 million) of available borrowing
capacity under our NOK Credit Facility. The NOK credit facility availability reduces by NOK 40 million every March and September. However, we are restricted to NOK 202 million ($28.7 million) of availability as a result of financial covenants under
such facility. In an effort to repatriate funds from Norway to the U.S. in a tax-efficient manner, the Company is undertaking a reduction of its paid-in capital in Trico Supply AS. Upon completion of this reduction, the Company will be able to
repatriate NOK 200 million ($28.4 million) for working capital and other corporate purposes. The Company believes that the reduction of its paid-in capital process will be completed by June 30, 2004.



We cannot make any assurances, however, that the factors beyond our control
affecting demand for our vessels will not impact our ability to generate sufficient cash flow from operations, or obtain borrowings under our credit facilities, in an amount sufficient to enable us to pay our indebtedness and fund our other
liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including existing and subsequent facilities, on commercially
reasonable terms or at all.



Critical Accounting Policies



Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, fixed
assets, deferred expenses, inventories, goodwill, income taxes, pension liabilities, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions
or conditions.



8



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We consider certain accounting policies to be critical policies due to the significant judgement,
estimation processes and uncertainty involved for each in the preparation of our consolidated financial statements. We believe the following represent our critical accounting policies.



Impairment of long-lived assets other than goodwill.    In accordance with the provisions of SFAS
No. 144, Accounting for the Impairment or Disposal of Long Lived Assets, we review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. We
record impairment losses on long-lived assets used in operations when the net discounted cash flows estimated to be generated by those assets are less than the carrying amount of those items. Our cash flow estimates are based upon historical results
adjusted to reflect our best estimate of future market rates, utilization, operating performance and other factors. Our estimates of cash flows may differ from actual cash flows due to changes in economic conditions or changes in an assets
operating performance, among other things. If the undiscounted value of the cash flows is less than the carrying value, we recognize an impairment loss, measured as the amount by which the carrying value exceeds the net discounted cash flow. No
impairments were determined as a result of the 2003 FAS No. 144 analysis. During the year ended December 31, 2002, we recognized $5.2 million of fixed asset impairments. While we believe that our estimates of future cash flows are reasonable,
different assumptions regarding future market rates, utilization and operating performance could materially affect our evaluations. If market conditions were to decline in any markets in which the Company operates, it could require the Company to
evaluate the recoverability of its long-lived assets in that market.



Impairment of goodwill.    At the beginning of 2003, the Companys goodwill balance of $110.6 million related primarily to the 1997 acquisition of our North Sea operations, which is considered a reporting
unit pursuant to the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. The Company tests for the possible impairment of goodwill at the reporting unit level in accordance with the requirements of SFAS No. 142. In
assessing reporting unit fair value, we must make assumptions regarding estimated future cash flows and other factors used to determine fair value. If these estimates or their related assumptions adversely change in the future, we may be required to
record material impairment charges for these assets. Annually or when market conditions necessitate interim analysis, the Company calculates reporting unit fair value based on estimated cash flows, comparable industry financial ratios and other
analysis. The reporting unit fair value is compared to carrying value to determine whether the goodwill is impaired. The Company performed its annual impairment analysis as of June 30, 2003 and determined that a goodwill impairment did exist.
Therefore, the Company recorded a charge of approximately $28.6 million during the second quarter of 2003. After continued deterioration in market conditions in the North Sea during the third and fourth quarters of 2003, the Company determined that
an additional interim test of impairment was necessary as of December 31, 2003. As a result of the December 2003 analysis, the Company determined that an additional impairment was warranted, and recorded an impairment on the remaining goodwill
balance of approximately $84.4 million.



Deferred Tax
Valuation Allowance.    Income taxes are determined in accordance with SFAS No. 109, Accounting for Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future
tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax
bases of liabilities and assets using enacted tax rates in effect for the year in which the differences are expected to reverse. SFAS 109 also provides for the recognition of deferred tax assets if it is more likely than not that the assets will be
realized in future years. A valuation allowance of $22.7 million was established in the third quarter of 2002 associated with the U.S. deferred tax asset. The Company has continued to book a full valuation allowance against all U.S. net operating
losses since the establishment of the allowance in 2002.



Deferred marine inspection costs.    We record the cost of major scheduled drydocking inspection costs for our vessels as deferred charges. We amortize these deferred charges over the expected periods of benefit,
typically ranging from two to five years. See New Accounting Standards below for more discussion on proposed accounting changes for deferred marine inspection costs.



9



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New Accounting Standards



In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The FASB subsequently revised FIN 46 with FIN
46R. FIN 46 and FIN 46R apply immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. The statements apply in the first fiscal year or
interim period ending after March 15, 2004, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company believes that the adoption of the provisions of FIN 46 will have no
impact upon its financial position or results of operations.



In June 2001, the Accounting Standards Executive Committee of the AICPA, (AcSEC), issued an exposure draft of a proposed Statement of Position (SOP), Accounting for Certain Costs and Activities Related to
Property, Plant, and Equipment. This SOP provides guidance on accounting for certain costs and activities relating to property, plant, and equipment (PP&E). For purposes of this SOP, a project stage or timeline framework is
used and PP&E assets are accounted for at a component level. Costs incurred for PP&E are classified into four stages: preliminary, preacquisition, acquisition-or-construction and in-service. The SOP requires, among other things, that
preliminary, preacquisition and acquisition-or-construction stage costs, except for payments to obtain an option to acquire PP&E, should be charged to expense as incurred. Costs related to PP&E that are incurred during the in-service stage,
including costs of normal, recurring, or periodic repairs and maintenance activities, should be charged to expense as incurred unless the costs are incurred for acquisition of additional PP&E or components of PP&E or the replacement of
existing PP&E or components of PP&E. Costs of planned major maintenance activities would be charged to expense, except for acquisitions or replacements of components that are capitalizable under the in-service stage guidance of this SOP. In
September 2003, the AcSEC approved the SOP for issuance to the FASB for final clearance, which is expected in the second quarter of 2004. If the proposed SOP is adopted in its current form, the Company will have to expense its currently capitalized
deferred marine inspection costs, which totaled approximately $20.8 million at December 31, 2003. This write-off would be accounted for as a cumulative effect of a change in accounting principle as of the beginning of the year of adoption. This SOP,
if approved, is scheduled to become effective for fiscal periods beginning after December 15, 2004. Further evaluation is required by the Company to fully quantify the impact of this proposed pronouncement, if adopted.



In December 2003, the FASB issued a revised version of SFAS No. 132. This
revised statement adds to the annual disclosures about pensions and other postretirement benefits that were required by the original statement issued in 1997. The revised statement also requires certain interim disclosures. Both the original and the
revised statements address disclosure only and do not address accounting, measurement or recognition for benefit obligations. With certain limited exceptions, the added annual disclosures were effective as of December 31, 2003 for the Company and
are included in Note 15 of the Consolidated Financial Statements in Item 8. The Company is required to present the interim disclosures beginning with its quarter ending March 31, 2004.



10



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Item 8.Financial Statements and Supplementary Data



Index to Consolidated Financial Statements



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | Page
|Report of Independent Registered Public Accounting Firm                                              |  | 12  
|Consolidated Balance Sheets as of December 31, 2003 and 2002                                         |  | 13  
|Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001           |  | 14  
|Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2003, 2002 and 2001 |  | 15  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001           |  | 16  
|Notes to Consolidated Financial Statements                                                           |  | 17  



11



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and

Stockholders of Trico Marine Services, Inc.:



In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders equity and cash flows present fairly, in all material respects, the financial
position of Trico Marine Services, Inc. and Subsidiaries (the Company) as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management; our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



As discussed in Note 7 to the consolidated financial statements, the Company changed the manner in which it accounts for
goodwill and other intangible assets as of January 1, 2002.



As
discussed in Note 3 to the consolidated financial statements, the Company has restated its consolidated financial statements as of December 31, 2003 and 2002.



The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes
1 and 4 to the consolidated financial statements, the Company elected not to make its cash interest payment due May 15, 2004 and is currently in default under the terms of its Senior Notes Indenture. This also resulted in cross-defaults under the
terms of other obligations described in Note 4. These events raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regards to these matters are also described in Note 4. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ PricewaterhouseCoopers LLP



New Orleans, Louisiana

March 11, 2004 except for Note 1, paragraph 4, and Notes 3, 4, 9 and 20

which are as of
August 6, 2004.



12



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

as of December 31, 2003 and 2002



|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                                                                                                                                 |  | 2003                                                     |          |   | 2002 |  
|                                                                                                                                                                                                 |  | (Dollars in thousands,except share and per shareamounts) |         
|ASSETS                                                                                                                                                                                           |  |                                                          | Restated |   |      |   | Restated |  
|Current assets:                                                                                                                                                                                  |  |                                                          |          |   |      |   |          |  
|Cash and cash equivalents                                                                                                                                                                        |  | $                                                        | 25,892   |   |      | $ | 10,165   |  
|Restricted cash                                                                                                                                                                                  |  |                                                          | 1,708    |   |      |   | 950      |  
|Accounts receivable, net                                                                                                                                                                         |  |                                                          | 30,451   |   |      |   | 39,137   |  
|Prepaid expenses and other current assets                                                                                                                                                        |  |                                                          | 1,501    |   |      |   | 1,154    |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total current assets                                                                                                                                                                             |  |                                                          | 59,552   |   |      |   | 51,406   |  
|                                                                                                                                                                                                 |  |                                                         
|Property and equipment, at cost:                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Land and buildings                                                                                                                                                                               |  |                                                          | 6,402    |   |      |   | 5,337    |  
|Marine vessels                                                                                                                                                                                   |  |                                                          | 661,729  |   |      |   | 687,710  |  
|Construction-in-progress                                                                                                                                                                         |  |                                                          | 170      |   |      |   | 7,058    |  
|Transportation and other                                                                                                                                                                         |  |                                                          | 4,628    |   |      |   | 4,190    |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|                                                                                                                                                                                                 |  |                                                          | 672,929  |   |      |   | 704,295  |  
|Less accumulated depreciation and amortization                                                                                                                                                   |  |                                                          | 185,910  |   |      |   | 158,072  |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Net property and equipment                                                                                                                                                                       |  |                                                          | 487,019  |   |      |   | 546,223  |  
|                                                                                                                                                                                                 |  |                                                         
|Goodwill, net                                                                                                                                                                                    |  |                                                          |         |   |      |   | 110,605  |  
|Other assets                                                                                                                                                                                     |  |                                                          | 38,620   |   |      |   | 38,941   |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total assets                                                                                                                                                                                     |  | $                                                        | 585,191  |   |      | $ | 747,175  |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                             |  |                                                          |          |   |      |   |          |  
|Current liabilities:                                                                                                                                                                             |  |                                                          |          |   |      |   |          |  
|Current maturities of debt                                                                                                                                                                       |  | $                                                        | 66,266   |   |      | $ | 96,626   |  
|Accounts payable                                                                                                                                                                                 |  |                                                          | 6,190    |   |      |   | 11,135   |  
|Accrued expenses                                                                                                                                                                                 |  |                                                          | 6,352    |   |      |   | 5,923    |  
|Accrued insurance reserve                                                                                                                                                                        |  |                                                          | 4,497    |   |      |   | 3,030    |  
|Accrued interest                                                                                                                                                                                 |  |                                                          | 3,656    |   |      |   | 4,025    |  
|Income taxes payable                                                                                                                                                                             |  |                                                          | 331      |   |      |   | 94       |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total current liabilities                                                                                                                                                                        |  |                                                          | 87,292   |   |      |   | 120,833  |  
|                                                                                                                                                                                                 |  |                                                         
|Debt, net of discounts                                                                                                                                                                           |  |                                                          | 313,900  |   |      |   | 287,520  |  
|Deferred income taxes                                                                                                                                                                            |  |                                                          | 39,772   |   |      |   | 41,392   |  
|Other liabilities                                                                                                                                                                                |  |                                                          | 2,196    |   |      |   | 2,104    |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total liabilities                                                                                                                                                                                |  |                                                          | 443,160  |   |      |   | 451,849  |  
|                                                                                                                                                                                                 |  |                                                         
|Commitments and contingencies (see Note 16)                                                                                                                                                      |  |                                                          |          |   |      |   |          |  
|Stockholders equity:                                                                                                                                                                            |  |                                                          |          |   |      |   |          |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued at December 31, 2003 and 2002                                                                                  |  |                                                          |         |   |      |   |         |  
|Common stock, $.01 par value, 55,000,000 shares authorized, 36,982,569 and 36,344,367 shares issued and 36,910,537 and 36,272,335 shares
outstanding at December 31, 2003 and 2002, respectively |  |                                                          | 370      |   |      |   | 363      |  
|Additional paid-in capital                                                                                                                                                                       |  |                                                          | 338,007  |   |      |   | 337,343  |  
|Accumulated deficit                                                                                                                                                                              |  |                                                          | (214,845 | ) |      |   | (50,447  | )
|Unearned compensation                                                                                                                                                                            |  |                                                          | (127     | ) |      |   |         |  
|Cumulative foreign currency translation adjustment                                                                                                                                               |  |                                                          | 18,627   |   |      |   | 8,068    |  
|Treasury stock, at par value, 72,032 shares at December 31, 2003 and 2002                                                                                                                        |  |                                                          | (1       | ) |      |   | (1       | )
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total stockholders equity                                                                                                                                                                       |  |                                                          | 142,031  |   |      |   | 295,326  |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  
|Total liabilities and stockholders equity                                                                                                                                                       |  | $                                                        | 585,191  |   |      | $ | 747,175  |  
|                                                                                                                                                                                                 |  |                                                          |          |   |      |   |          |  

The accompanying notes are an integral part of these consolidated financial statements.



13



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended December 31, 2003, 2002
and 2001



|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|------------------------------------------ |  | ---------------------------------------------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                           |  | 2003                                                       |            |   | 2002 |   |            | 2001 | 
|                                           |  | (Dollars in thousands, except share and per share amounts) |           
|Revenues:                                  |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Charter hire                               |  | $                                                          | 123,290    |   |      | $ | 133,771    |      |  | $ | 182,527    |  
|Other vessel income                        |  |                                                            | 231        |   |      |   | 171        |      |  |   | 98         |  
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Total revenues                             |  |                                                            | 123,521    |   |      |   | 133,942    |      |  |   | 182,625    |  
|                                           |  |                                                            |           
|Operating expenses:                        |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Direct vessel operating expenses and other |  |                                                            | 81,188     |   |      |   | 84,101     |      |  |   | 82,144     |  
|General and administrative                 |  |                                                            | 15,519     |   |      |   | 15,077     |      |  |   | 13,593     |  
|Amortization of marine inspection costs    |  |                                                            | 10,775     |   |      |   | 10,225     |      |  |   | 13,424     |  
|Depreciation and amortization expense      |  |                                                            | 33,392     |   |      |   | 31,870     |      |  |   | 32,888     |  
|Loss on assets held for sale               |  |                                                            | 6,165      |   |      |   |           |      |  |   |           |  
|Impairment of goodwill                     |  |                                                            | 113,028    |   |      |   |           |      |  |   |           |  
|Impairment of long-lived assets            |  |                                                            |           |   |      |   | 5,200      |      |  |   | 24,260     |  
|Gain on sales of assets                    |  |                                                            | (1,045     | ) |      |   | (454       | )    |  |   | (937       | )
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Total operating expenses                   |  |                                                            | 259,022    |   |      |   | 146,019    |      |  |   | 165,372    |  
|                                           |  |                                                            |           
|Operating income (loss)                    |  |                                                            | (135,501   | ) |      |   | (12,077    | )    |  |   | 17,253     |  
|                                           |  |                                                            |           
|Interest expense                           |  |                                                            | (30,159    | ) |      |   | (28,432    | )    |  |   | (26,232    | )
|Amortization of deferred financing costs   |  |                                                            | (977       | ) |      |   | (1,127     | )    |  |   | (1,366     | )
|Loss on early retirement of debt           |  |                                                            |           |   |      |   | (10,998    | )    |  |   |           |  
|Other income (loss), net                   |  |                                                            | (649       | ) |      |   | (794       | )    |  |   | 105        |  
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Loss before income taxes                   |  |                                                            | (167,286   | ) |      |   | (53,428    | )    |  |   | (10,240    | )
|                                           |  |                                                            |           
|Income tax expense (benefit)               |  |                                                            | (2,888     | ) |      |   | 14,550     |      |  |   | (3,317     | )
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Net loss                                   |  | $                                                          | (164,398   | ) |      | $ | (67,978    | )    |  | $ | (6,923     | )
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Basic loss per common share:               |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Net loss                                   |  | $                                                          | (4.51      | ) |      | $ | (1.87      | )    |  | $ | (0.19      | )
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Average common shares outstanding          |  |                                                            | 36,470,940 |   |      |   | 36,260,993 |      |  |   | 36,250,604 |  
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Diluted loss per common share:             |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Net loss                                   |  | $                                                          | (4.51      | ) |      | $ | (1.87      | )    |  | $ | (0.19      | )
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  
|Average common shares outstanding          |  |                                                            | 36,470,940 |   |      |   | 36,260,993 |      |  |   | 36,250,604 |  
|                                           |  |                                                            |            |   |      |   |            |      |  |   |            |  



The accompanying notes
are an integral part of these consolidated financial statements.



14



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

for the years ended December
31, 2003, 2002 and 2001



|                                      |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|------------------------------------- | ------ | -------------------------------------------- | ------- | -------------------------- | --- | -------------------------------------- | - | ------- | --------------------- | - | -------- | -------------------------------------------------- |  | - | -------------- | - |  | -------------------------- | ------- | - |  | ------ |  | - | -- | - |  | - | -------- | -
|                                      |        | Common Stock                                 |         | Additional Paid-In Capital |     | RetainedEarnings (Accumulated Deficit) |   |         | Unearned Compensation |   |          | Cumulative Foreign Currency Translation Adjustment |  |   | Treasury Stock |   |  | Total Stockholders Equity |        
|                                      |        |                                              |         |                            |     |                                       
|                                      |        |                                              |         |                            |     |                                       
|                                      | Shares |                                              | Dollars |                            |     |                                        |   |         | Shares                |   | Dollars  |                                                    | 
|                                      |        | (Dollars in thousands, except share amounts) |        
|Balance, December 31, 2000            |        | 36,317,617                                   |         | $                          | 363 |                                        | $ | 337,200 |                       | $ | 24,454   |                                                    |  | $ |               |   |  | $                          | (62,435 | ) |  | 72,032 |  | $ | (1 | ) |  | $ | 299,581  |  
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Stock options exercised               |        | 8,750                                        |         |                            |    |                                        |   | 83      |                       |   |         |                                                    |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | 83       |  
|Comprehensive loss:                   |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Loss on foreign currency translation  |        |                                             |         |                            |    |                                        |   |        |                       |   |         |                                                    |  |   |               |   |  |                            | (1,015  | ) |  |       |  |   |   |   |  |   | (1,015   | )
|Net loss                              |        |                                             |         |                            |    |                                        |   |        |                       |   | (6,923   | )                                                  |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | (6,923   | )
|                                      |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Comprehensive loss                    |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   | (7,938   | )
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Balance, December 31, 2001            |        | 36,326,367                                   |         |                            | 363 |                                        |   | 337,283 |                       |   | 17,531   |                                                    |  |   |               |   |  |                            | (63,450 | ) |  | 72,032 |  |   | (1 | ) |  |   | 291,726  |  
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Stock options exercised               |        | 18,000                                       |         |                            |    |                                        |   | 60      |                       |   |         |                                                    |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | 60       |  
|Comprehensive income:                 |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |               |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Gain on foreign currency translation  |        |                                             |         |                            |    |                                        |   |        |                       |   |         |                                                    |  |   |               |   |  |                            | 71,518  |   |  |       |  |   |   |   |  |   | 71,518   |  
|Net loss                              |        |                                             |         |                            |    |                                        |   |        |                       |   | (67,978  | )                                                  |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | (67,978  | )
|                                      |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Comprehensive income:                 |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   | 3,540    |  
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Balance, December 31, 2002            |        | 36,344,367                                   |         |                            | 363 |                                        |   | 337,343 |                       |   | (50,447  | )                                                  |  |   |               |   |  |                            | 8,068   |   |  | 72,032 |  |   | (1 | ) |  |   | 295,326  |  
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Stock options exercised               |        | 578,202                                      |         |                            | 6   |                                        |   | 520     |                       |   |         |                                                    |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | 526      |  
|Issuances of restricted stock         |        | 60,000                                       |         |                            | 1   |                                        |   | 144     |                       |   |         |                                                    |  |   | (145           | ) |  |                            |        |   |  |       |  |   |   |   |  |   |         |  
|Amortization of unearned compensation |        |                                             |         |                            |    |                                        |   |        |                       |   |         |                                                    |  |   | 18             |   |  |                            |        |   |  |       |  |   |   |   |  |   | 18       |  
|Comprehensive loss:                   |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Gain on foreign currency translation  |        |                                             |         |                            |    |                                        |   |        |                       |   |         |                                                    |  |   |               |   |  |                            | 10,559  |   |  |       |  |   |   |   |  |   | 10,559   |  
|Net loss                              |        |                                             |         |                            |    |                                        |   |        |                       |   | (164,398 | )                                                  |  |   |               |   |  |                            |        |   |  |       |  |   |   |   |  |   | (164,398 | )
|                                      |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  
|Comprehensive loss:                   |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   | (153,839 | )
|                                      |        |                                              |         |                            |     |                                        |   |         |                      
|Balance, December 31, 2003            |        | 36,982,569                                   |         | $                          | 370 |                                        | $ | 338,007 |                       | $ | (214,845 | )                                                  |  | $ | (127           | ) |  | $                          | 18,627  |   |  | 72,032 |  | $ | (1 | ) |  | $ | 142,031  |  
|                                      |        |                                              |         |                            |     |                                        |   |         |                       |   |          |                                                    |  |   |                |   |  |                            |         |   |  |        |  |   |    |   |  |   |          |  





The accompanying notes are an integral part of these consolidated financial statements.



15



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended December 31, 2003, 2002
and 2001



|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---- | - | -------- | ---- |  | - | ------- | -
|                                                                                          |  | 2003                   |          |   | 2002 |   |          | 2001 | 
|                                                                                          |  | (Dollars in thousands) |         
|Net loss                                                                                  |  | $                      | (164,398 | ) |      | $ | (67,978  | )    |  | $ | (6,923  | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |                        |          |   |      |   |          |      |  |   |         |  
|Depreciation and amortization                                                             |  |                        | 45,280   |   |      |   | 43,264   |      |  |   | 47,606  |  
|Deferred marine inspection costs                                                          |  |                        | (10,840  | ) |      |   | (9,542   | )    |  |   | (11,348 | )
|Deferred income taxes                                                                     |  |                        | (3,132   | ) |      |   | 14,359   |      |  |   | (3,831  | )
|Loss on asset held for sale                                                               |  |                        | 6,165    |   |      |   |         |      |  |   |        |  
|Impairment of goodwill                                                                    |  |                        | 113,028  |   |      |   |         |      |  |   |        |  
|Loss on early retirement of debt                                                          |  |                        |         |   |      |   | 10,998   |      |  |   |        |  
|Impairment of long-lived assets                                                           |  |                        |         |   |      |   | 5,200    |      |  |   | 24,260  |  
|Gain on sales of assets                                                                   |  |                        | (1,045   | ) |      |   | (454     | )    |  |   | (937    | )
|Provision for doubtful accounts                                                           |  |                        | 120      |   |      |   | 120      |      |  |   | 120     |  
|Amortization of unearned compensation                                                     |  |                        | 18       |   |      |   |         |      |  |   |        |  
|Change in operating assets and liabilities:                                               |  |                        |          |   |      |   |          |      |  |   |         |  
|Restricted cash                                                                           |  |                        | (364     | ) |      |   | (92      | )    |  |   | (137    | )
|Accounts receivable                                                                       |  |                        | 9,074    |   |      |   | 6,069    |      |  |   | (1,847  | )
|Prepaid expenses and other current assets                                                 |  |                        | (347     | ) |      |   | 2,676    |      |  |   | 234     |  
|Accounts payable and accrued expenses                                                     |  |                        | (3,659   | ) |      |   | (3,892   | )    |  |   | 2,071   |  
|Other, net                                                                                |  |                        | 471      |   |      |   | (8,665   | )    |  |   | 148     |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Net cash (used in) provided by operating activities                                       |  |                        | (9,629   | ) |      |   | (7,937   | )    |  |   | 49,416  |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Cash flows from investing activities:                                                     |  |                        |          |   |      |   |          |      |  |   |         |  
|Purchases of property and equipment                                                       |  |                        | (26,443  | ) |      |   | (69,797  | )    |  |   | (15,331 | )
|Proceeds from sales of assets                                                             |  |                        | 54,392   |   |      |   | 1,984    |      |  |   | 1,818   |  
|Proceeds from sale-leaseback transactions                                                 |  |                        | 2,929    |   |      |   | 5,858    |      |  |   |        |  
|Other                                                                                     |  |                        | 630      |   |      |   | (1,610   | )    |  |   | (435    | )
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Net cash provided by (used in) investing activities                                       |  |                        | 31,508   |   |      |   | (63,565  | )    |  |   | (13,948 | )
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Cash flows from financing activities:                                                     |  |                        |          |   |      |   |          |      |  |   |         |  
|Net proceeds from issuance of common stock                                                |  |                        | 526      |   |      |   | 60       |      |  |   | 83      |  
|Proceeds from issuance of long-term debt                                                  |  |                        | 50,763   |   |      |   | 346,592  |      |  |   | 1,075   |  
|Repayment of long-term debt                                                               |  |                        | (57,408  | ) |      |   | (292,286 | )    |  |   | (22,467 | )
|Deferred financing costs and other                                                        |  |                        | (150     | ) |      |   | (6,866   | )    |  |   | (141    | )
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Net cash (used in) provided by financing activities                                       |  |                        | (6,269   | ) |      |   | 47,500   |      |  |   | (21,450 | )
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                              |  |                        | 117      |   |      |   | 2,213    |      |  |   | (158    | )
|                                                                                          |  |                        |         
|Net increase (decrease) in cash and cash equivalents                                      |  |                        | 15,727   |   |      |   | (21,789  | )    |  |   | 13,860  |  
|Cash and cash equivalents at beginning of period                                          |  |                        | 10,165   |   |      |   | 31,954   |      |  |   | 18,094  |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Cash and cash equivalents at end of period                                                |  | $                      | 25,892   |   |      | $ | 10,165   |      |  | $ | 31,954  |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Supplemental cash flow information:                                                       |  |                        |          |   |      |   |          |      |  |   |         |  
|Income taxes paid                                                                         |  | $                      | 14       |   |      | $ | 796      |      |  | $ | 670     |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  
|Interest paid                                                                             |  | $                      | 32,547   |   |      | $ | 36,474   |      |  | $ | 26,509  |  
|                                                                                          |  |                        |          |   |      |   |          |      |  |   |         |  



The accompanying notes
are an integral part of these consolidated financial statements.



16



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003, 2002 and 2001



1.    The Company



Trico Marine Services, Inc. (the Company) is a leading provider
of marine support vessels to the oil and gas industry in the U.S. Gulf of Mexico (the Gulf), the North Sea and Latin America. At December 31, 2003, the Company had a total fleet of 84 vessels, including 48 supply vessels, 13 large
capacity platform supply vessels (PSVs), six large anchor handling, towing and supply vessels (AHTSs), 11 crew boats, and six line-handling vessels. We are leasing three of the crew boats under ten-year operating lease
agreements. The services provided by the Companys diversified fleet include transportation of drilling materials, supplies and crews to drilling rigs and other offshore facilities, towing drilling rigs and equipment from one location to
another and support for the construction, installation, maintenance and removal of offshore facilities.



Our cash provided by operations in 2004 will be determined by the day rates and utilization levels of our vessels, which is affected by expenditures for
oil and gas exploration, development and production. Assuming that market conditions will not improve over those experienced in 2003, we are forecasting a use of cash from operations in 2004. As a result, we have evaluated our ability to continue as
a going concern and, given the progress achieved in connection with the liquidity initiatives in 2003 and early 2004, the Company believes that cash on hand and available borrowings under the NOK credit facility (see Note 9) will be sufficient to
fund debt service requirements, working capital and capital expenditures through at least December 31, 2004, barring a continued deterioration in market conditions in 2004, as compared to 2003, and any other unforeseen circumstances.



The Company cannot make any assurances, however, that the factors beyond the
Companys control affecting demand for our vessels will not impact the Companys ability to generate sufficient cash flow from operations, or obtain borrowings under credit facilities, in amounts sufficient to pay indebtedness and fund
other liquidity needs. The Company may need to refinance all or a portion of our indebtedness on or before the scheduled maturities (See Note 9). The Company can make no assurances that refinancing any debt facilities will be possible on
commercially reasonable terms or at all.



See subsequent events
and liquidity discussion in Note 4.



2.    Summary of
Significant Accounting Policies



Consolidation
Policy



The consolidated financial statements include
Trico Marine Services, Inc., and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.



Cash and Cash Equivalents



All highly liquid debt instruments with original maturity dates of three months or less are considered to be cash equivalents.



Restricted Cash



The Company segregates restricted cash due to the legal or other
restrictions regarding its use. The restricted cash balance is comprised of proceeds from asset sales that are restricted to the uses of repaying debt or purchasing assets, per the Companys 87/8% Senior Notes agreement. Also, the Company has statutory requirements in Norway, which require a subsidiary to segregate cash that will be used to pay tax
withholdings in the following year, and other cash amounts held in escrow for specific purposes.



Property and Equipment



All property and equipment is stated at cost, reduced by the amount of impairments, if any. Depreciation for financial statement purposes is provided on
the straight-line method, assuming a salvage value of between zero



17



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



and 10% for marine vessels. Marine vessels are depreciated over a useful life of 15 to 30 years from the date of acquisition. Major modifications, which
extend the useful life of marine vessels, are capitalized and amortized over the adjusted remaining useful life of the vessel. Buildings and improvements are depreciated over a useful life of 15 to 40 years. Transportation and other equipment are
depreciated over a useful life of five to ten years. When assets are retired or disposed, the cost and accumulated depreciation thereon are removed, and any resultant gains or losses are recognized in current operations.



Depreciation expense amounted to approximately $33.4 million, $31.9 million,
and $32.9 million in 2003, 2002, and 2001, respectively.



Interest is capitalized in connection with the construction of vessels. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the assets estimated useful life. Approximately $236,000,
$737,000, and $156,000 of interest was capitalized in 2003, 2002 and 2001, respectively.



Marine vessel spare parts are stated at the lower of average cost or market and are included in other assets in the consolidated balance sheet.



Drydocking expenditures incurred in connection with regulatory marine inspections are capitalized and amortized on a
straight-line basis over the period to be benefited (generally 24 to 60 months). These marine inspection costs are included in other assets in the consolidated balance sheet.



In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the Company reviews long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment recognized is
measured by the amount by which the carrying amount of the asset exceeds the discounted cash flow or fair market value of the asset.



Deferred Financing Costs



Deferred financing costs include costs associated with the issuance of the Companys debt and are amortized using the effective interest rate method
of amortization over the life of the related debt agreement or on a straight-line basis over the life of the related debt agreement which approximates the effective interest rate method of amortization.



Goodwill



SFAS No. 142, Goodwill and Other Intangible Assets, provides
that goodwill is no longer amortized, but must be tested for impairment using a fair value approach rather than an undiscounted cash flow approach. The Companys evaluation of goodwill is performed at its reporting unit level. SFAS No. 142
requires that goodwill of a reporting unit must be tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its
carrying amount. The Company conducts its annual goodwill impairment analysis during the second quarter of each fiscal year. As a result of the Companys annual evaluation of goodwill in June 2003, the Company recorded a goodwill impairment
charge in the second quarter of approximately $28.6 million. After continued deterioration in market conditions in the North Sea during the third and fourth quarters of 2003, the Company determined that an additional interim test of impairment was
necessary as of December 31, 2003. As a result of



18



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



the December 2003 analysis, the Company determined that an additional impairment was warranted, and recorded an impairment on the remaining goodwill balance
of approximately $84.4 million. See Note 7 for additional information regarding the goodwill impairment charge.



As a result of the adoption of SFAS No. 142, the Company no longer amortizes goodwill, effective January 1, 2002. The following is a reconciliation
of net loss and net loss per share for the year ended December 31, 2001, adjusted for the elimination of goodwill amortization required by SFAS No. 142.



|                                                 |  |                              |        |  
|------------------------------------------------ |  | ---------------------------- | ------ | -
|(Dollars in thousands, except per share amounts) |  | Year Ended December 31, 2001 |       
|Net loss                                         |  | $                            | (6,923 | )
|Goodwill amortization                            |  |                              | 2,613  |  
|                                                 |  |                              |        |  
|Adjusted net loss                                |  | $                            | (4,310 | )
|                                                 |  |                              |        |  
|Basic and diluted loss per common share:         |  |                              |        |  
|Net loss                                         |  | $                            | (0.19  | )
|Goodwill amortization                            |  |                              | 0.07   |  
|                                                 |  |                              |        |  
|Adjusted net loss                                |  | $                            | (0.12  | )
|                                                 |  |                              |        |  



Income Taxes



Deferred income taxes are provided at the currently
enacted income tax rates for the difference between the financial statement and income tax bases of assets and liabilities and carryforward items. Management provides valuation allowances against deferred tax assets for amounts which are not
considered more likely than not to be realized.



Revenue and Expense Recognition



Charter revenue is earned and recognized on a daily rate basis. Operating costs are expensed as incurred.



Direct Vessel Operating Expenses



Direct vessel operating expenses principally include crew costs, insurance, repairs and maintenance, supplies and casualty losses.



Foreign Currency Translation



All assets and liabilities of the Companys foreign subsidiaries are
translated into U.S. dollars at the exchange rate in effect at the end of the period, and revenue and expenses are translated at weighted average exchange rates prevailing during the period. The resulting translation adjustments are reflected within
the stockholders equity component, cumulative foreign currency translation adjustment.



19



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Stock Based Compensation



The Company has stock-based employee compensation plans, under which employees are granted stock options and restricted
stock awards. These plans are described in more detail in Note 13. The Company accounts for these plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees and has adopted the disclosure-only provisions of SFAS No. 123, Accounting For Stock Based Compensation and, subsequently, SFAS No. 148, Accounting for Stock-Based CompensationTransition and
Disclosurean Amendment of FASB Statement No. 123. For restricted stock awards, the fair value at the date of the grant is expensed over the vesting period. For stock options, no compensation cost is reflected in earnings, as all options
granted under these plans had an exercise price equal to or greater than the market value of the underlying common stock on the grant date. The following table illustrates the effect on net loss and net loss per share if the Company had applied the
fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.



|                                                                                                             |  |                         |          |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                                             |  | Year Ended December 31, |         
|                                                                                                             |  | 2003                    |          |   | 2002 |   |         | 2001 | 
|Net loss                                                                                                     |  | $                       | (164,398 | ) |      | $ | (67,978 | )    |  | $ | (6,923 | )
|Add: Stock based compensation expense included in reported net income, net of related tax effects            |  |                         | 18       |   |      |   |        |      |  |   |       |  
|Deduct: Total stock-based employee compensation expense determined under fair value-based method, net of tax |  |                         | (472     | ) |      |   | (878    | )    |  |   | (1,083 | )
|                                                                                                             |  |                         |          |   |      |   |         |      |  |   |        |  
|Pro forma net loss                                                                                           |  | $                       | (164,852 | ) |      | $ | (68,856 | )    |  | $ | (8,006 | )
|                                                                                                             |  |                         |          |   |      |   |         |      |  |   |        |  
|Net loss per common share:                                                                                   |  |                         |          |   |      |   |         |      |  |   |        |  
|Basic and Dilutedas reported                                                                                |  | $                       | (4.51    | ) |      | $ | (1.87   | )    |  | $ | (0.19  | )
|                                                                                                             |  |                         |          |   |      |   |         |      |  |   |        |  
|Basic and Dilutedpro forma                                                                                  |  | $                       | (4.52    | ) |      | $ | (1.90   | )    |  | $ | (0.22  | )
|                                                                                                             |  |                         |          |   |      |   |         |      |  |   |        |  



The estimated weighted
average fair value of options granted during 2003, 2002, and 2001 were $1.52, $4.01, and $7.01, respectively.



The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes value method of option pricing with the following
weighted-average assumptions by grant year:



|                          |  |      |       |   |      |   |       |      |  |   |       |  
|------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                          |  | 2003 |       |   | 2002 |   |       | 2001 | 
|Expected annual dividends |  | $    |      |   |      | $ |      |      |  | $ |      |  
|Risk free interest rate   |  |      | 3.15  | % |      |   | 6.28  | %    |  |   | 6.17  | %
|Expected term (in years)  |  |      | 5     |   |      |   | 5     |      |  |   | 5     |  
|Volatility                |  |      | 62.24 | % |      |   | 44.36 | %    |  |   | 57.55 | %



Loss Per Share



Basic and diluted loss per share exclude dilution, as
discussed below, and are computed by dividing net loss by the weighted-average number of common shares outstanding for the period.



Options to purchase 1,984,166, 2,133,218, and 1,889,343 shares of common stock at prices ranging from $0.91 to $23.13 were outstanding during 2003, 2002,
and 2001, respectively, but were not included in the computation of diluted loss per share because doing so would have been anti-dilutive.



20



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Comprehensive Income/(Loss)



Comprehensive income or loss represents the change in equity of the Company
during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income or
loss is reflected in the consolidated statement of changes in stockholders equity.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



New Accounting Standards



In January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain
entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other
parties. The FASB subsequently revised FIN 46 with FIN 46R in December 2003. FIN 46 and FIN 46R apply immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an
interest after that date. The statements apply in the first fiscal year or interim period ending after March 15, 2004, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The
Company believes that the adoption of the provisions of FIN 46 and FIN 46R will have no impact upon its financial position or results of operations.



In June 2001, the Accounting Standards Executive Committee of the AICPA, (AcSEC), issued an exposure draft of a proposed Statement of Position
(SOP), Accounting for Certain Costs and Activities Related to Property, Plant, and Equipment. This SOP provides guidance on accounting for certain costs and activities relating to property, plant, and equipment
(PP&E). For purposes of this SOP, a project stage or timeline framework is used and PP&E assets are accounted for at a component level. Costs incurred for PP&E are classified into four stages: preliminary, preacquisition,
acquisition-or-construction and in-service. The SOP requires, among other things, that preliminary, preacquisition and acquisition-or-construction stage costs, except for payments to obtain an option to acquire PP&E, should be charged to expense
as incurred. Costs related to PP&E that are incurred during the in-service stage, including costs of normal, recurring, or periodic repairs and maintenance activities, should be charged to expense as incurred unless the costs are incurred for
acquisition of additional PP&E or components of PP&E or the replacement of existing PP&E or components of PP&E. Costs of planned major maintenance activities would be charged to expense, except for acquisitions or replacements of
components that are capitalizable under the in-service stage guidance of this SOP. In September 2003, the AcSEC approved the SOP for issuance to the FASB for final clearance, which is expected in the second quarter of 2004. If the proposed SOP is
adopted in its current form, the Company will have to expense its currently capitalized deferred marine inspection costs, which totaled approximately $20.8 million at December 31, 2003. This write-off would be accounted for as a cumulative effect of
a change in accounting principle as of the beginning of the year of adoption. This SOP, if approved, is scheduled to become effective for fiscal periods beginning after December 15, 2004. Further evaluation may be required by the Company to fully
quantify the impact of this proposed pronouncement, if adopted.



21



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



In December 2003, the FASB issued a revised version of SFAS No. 132. This revised statement adds to
the annual disclosures about pensions and other postretirement benefits that were required by the original statement issued in 1997. The revised statement also requires certain interim disclosures. Both the original and the revised statements
address disclosure only and do not address accounting, measurement or recognition for benefit obligations. With certain limited exceptions, the added annual disclosures were effective as of December 31, 2003 for the Company and are included in Note
15. The Company is required to present the interim disclosures beginning with its quarter ending March 31, 2004.



During 2003, the Company adopted SFAS No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of
April 2002. The Companys adoption of SFAS No. 145 resulted in the reclassification of the losses on early debt extinguishments in prior years from extraordinary items to other expense.



3.    Restatement



Following the filing of the Companys Form 10-K for the fiscal year
ended December 31, 2003 (the 2003 Form 10-K), the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the SEC) selected the 2003 Form 10-K for review. The SEC commented that Statement of
Financial Accounting Standards (SFAS) No. 6, Classification of Short-Term Obligations Expected to be Refinanced  an amendment of ARB No. 43, Chapter 3A appeared to apply to the Companys Norwegian Kroner
(NOK) 800 million revolving credit facility (the Trico Supply Bank Facility). After consultations with the staff members of the SEC and a review of the Trico Supply Bank Facility, the SEC advised, and the Company and its
auditors agreed that the outstanding balance of the facility should technically be classified as a current liability in accordance with SFAS No. 6 since the facility contains a subjective acceleration clause (material adverse change clause) and the
agreement language replaces short-term advances with other short-term advances. Previously, the Company presented the outstanding balance as a long-term liability because the facility has a final maturity of September 2009 and the fact that the
Company does not use cash to repay advances on a short-term basis, but instead rolls over an advance into a new advance period. The Company had NOK 410 million outstanding under this facility as of December 31, 2003 ($61.5 million) and NOK 610
million outstanding as of December 31, 2002 ($87.9 million). The Companys Norwegian operating subsidiary, Trico Shipping AS, is the borrower of this facility. This change in classification does not affect the Companys compliance with
this facility or other currently outstanding debt instruments and does not affect the liquidity position of the Company for any period previously reported.



4.    Subsequent Events and Liquidity



During the second quarter of 2004, the Company continued to suffer operating losses due to weak demand for its vessels in the Gulf of Mexico and North Sea
market areas. Day rates for the Companys vessels continued to decline to three year lows, while utilization remained depressed. As a result, the Company began implementing a financial and operational restructuring plan in order to preserve
liquidity. The financial restructuring is discussed in more depth herein. With regard to its operations, the Company has initiated a cost reduction program and intends to relocate vessels to relatively stronger markets in an effort to improve
operating results and cash flows. The Company cannot provide any assurance that market conditions in its key markets will improve, that relocated vessels will experience higher day rates or improved utilization in the future, or that its
restructuring efforts will succeed.



On April 28, 2004,
Standard & Poors Ratings Services (S&P) placed the Companys corporate rating on creditwatch, with negative implications. On May 17, 2004, S&P lowered both the corporate rating and the 87/8%



22



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



senior notes due 2012 (the Senior Notes) rating to D. On May 11, 2004, Moodys Investors Service (Moodys) announced a
reduction in the corporate implied rating from Caa2 to Ca, and a reduction in the Senior Notes rating from Caa3 to Ca.



Negative operating results and cash flows since 2002 have led the Company to design and complete steps to enhance liquidity. As part of this program, the
Company refinanced long-term debt in 2002, sold vessels in September 2003 and refinanced its U.S. revolving credit facility in February 2004. The Company entered into a senior secured credit facility (the 2004 Term Loan), which increased
available liquidity and eliminated restrictive financial maintenance covenants. From the net proceeds of the 2004 Term Loan of $51.4 million, the Company used $31.0 million to repay and retire the U.S. revolving credit facility, and is using the
remaining funds to fund operating, capital expenditures and debt service requirements.



As described in this report on Form 10-K/A, the Companys financial results and position have continued to deteriorate since 2002, principally due to its leveraged condition, continued operating losses and
negative cash flows. In the second quarter of 2004, the Company decided to proactively address its financial leverage and liquidity situation while it had sufficient cash resources to allow it to pursue a variety of alternatives. On April 27, 2004,
the Company announced that it had retained legal and financial advisors to assist in its objective of fundamentally restructuring the Companys capital structure. This initiative has resulted in the decision not to pay the $11.1 million cash
interest payment on its Senior Notes, which was due on May 15, 2004. Since the Company did not remit payment before the expiration of the 30-day grace period, the Company is currently in default under the Senior Notes indenture. Since an event of
default under the Senior Notes indenture has occurred, the trustee or holders of greater than 25% of the notes can declare the notes immediately due and payable, or pursue any other remedy available to collect the payment of principal and accrued
interest, including any default interest. As of August 6, 2004, the maturity of the Senior Notes has not been accelerated. However, as a result of the occurrence of an event of default, the entire outstanding principal balance of the Senior Notes
has been classified as a current liability in the accompanying condensed consolidated balance sheet. Since May 2004, the Company has held and continues to hold discussions regarding a restructuring with an ad hoc committee of holders of at least 80
percent of the Senior Notes and their financial and legal advisors, but as of August 6, 2004, no agreement had been reached. The Company cannot provide any assurance that an agreement will be reached or that the maturity of the Senior Notes will not
be accelerated.



The occurrence of an event of default under
the Senior Notes indenture triggered a cross-default under the Companys 2004 Term Loan. Since an event of default has occurred under the 2004 Term Loan agreement, the holders of more than 50% of the unpaid principal or the administrative agent
may declare the outstanding balance, including accrued interest, immediately due and payable. As of August 6, 2004, the maturity of the 2004 Term Loan has not been accelerated. However, as a result of the Companys default, the entire
outstanding principal balance of the 2004 Term Loan has been classified as a current liability in the accompanying condensed consolidated balance sheet. Since May 2004, the Company has held and continues to hold discussions regarding a restructuring
with an ad hoc committee of a majority of holders of the 2004 Term Loan and their legal advisors, but as of August 6, 2004, no agreement had been reached. The Company cannot provide any assurance that an agreement will be reached or that the
maturity of the 2004 Term Loan will not be accelerated.



On
June 28, 2004, the Company announced it had reached an agreement (the Pledge Agreement) with General Electric Capital Corporation (GECC) to provide $1.7 million in cash in lieu of letters of credit to secure payment and
performance pursuant to its master bareboat charter agreement with GECC dated September 30, 2002 (the Master Charter). The Company became obligated to provide the additional security when, on March 11, 2004, the Companys S&P
corporate credit rating was downgraded below the B- level. Under the



23



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Master Charter, the Company was required to provide a supplemental letter of credit within 30 days of receiving notice from GECC to secure its obligations
under the Master Charter. However, due to the Companys inability to provide the additional letters of credit in a timely manner due to restrictions in other debt agreements, GECC agreed to accept $1.7 million in cash deposits, plus forbearance
fees. As a result of reaching an agreement with GECC, the Company is currently not in default of the Master Charter. If the Senior Note holders or the Companys other lenders were to accelerate the maturities of their respective outstanding
debt balances, the Company would be in default of the cross-default provisions of the Master Charter. However, as part of the Pledge Agreement, GECC also agreed to forbear for six months from exercising its remedies under the cross-default
provisions in the Master Charter related to the Companys failure to pay interest due on the Senior Notes.



The costs associated with the Companys restructuring initiatives will continue to have a significant negative impact on the Companys cash
flows in the near term. The Company anticipates spending approximately $0.7 million per month in fees, to be expensed as incurred, to pay its financial and legal advisors, and its creditors financial and legal advisors while undertaking this
restructuring. In addition to the monthly fees, the Company has agreed to pay a success fee of $2.5 million to its financial advisors upon successful completion of a restructuring, reorganization or recapitalization. The Company is also obligated to
pay a success fee equal to 1% of the aggregate value received by the holders to the financial advisors of the ad hoc committee of holders of the Senior Notes upon consummation of certain restructuring transactions. These success fees have not been
accrued as of June 30, 2004 since the consummation of any restructuring transactions was not considered probable as defined by SFAS No. 5, Accounting for Contingencies. The Company will accrue these success fees if
discussions with lenders and their advisors indicate that it is likely a restructuring event will occur. These success fees would only be payable upon consummation of a restructuring, in which case, the Company would likely record a substantial net
gain on the transaction after expensing the aforementioned fees. Other fees to the Companys financial advisors may also be incurred upon asset sales or other transactions. There can be no assurance that the Company will be successful in its
restructuring, or that any measures that are achievable will result in sufficient improvement to the Companys financial position.



As a result of an inability to achieve adequate day rates and long-term contracts for the oldest North Sea platform supply vessels (PSVs), the Company has
initiated the process of selling three vessels, one of which was sold on July 8, 2004. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, these three North Sea class PSVs are classified as
Assets held for sale in the condensed consolidated balance sheet as of June 30, 2004. Also included in Assets held for sale is the Companys primary North Sea office, located in Norway, due to the Companys intent
to enter into a sale or sale-leaseback arrangement.



Any
restructuring plan could involve various operational restructuring alternatives, asset sales, a purchase, exchange or amendment to the Senior Notes, equity transactions, or other potential transactions or decisions to resolve leverage and liquidity
issues. The restructuring may include a complete conversion of Senior Notes to equity, causing substantial or complete dilution of the currently outstanding common stock. The impacts of any restructuring could have a material impact on the
Companys financial position, results of operations, cash flows, and classification of assets and liabilities.



The restructuring process presents inherent material uncertainty. It is not possible to determine the length of time it will take the Company to complete
its restructuring, or the outcome of the restructuring in general.



While the Company is in the process of restructuring, investments in its securities will be highly speculative. Shares of the Companys common stock may have little or no value. The value of its Senior Notes is significantly



24



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



impaired and may be further impaired. If the Company is unable to accomplish a financial restructuring outside the protection of bankruptcy laws, it may be
forced to seek the protection of the bankruptcy laws. To the extent the Company and its creditors reach agreement on the terms of a plan of reorganization, it may be necessary to implement the plan through the bankruptcy court.



The Companys liquidity generally depends on cash provided by operating
activities, currently planned asset sales, its Trico Supply Bank Facility, and the ability to comply with the credit agreements described in Note 9. On a consolidated basis, cash flow from operations has been negative since 2002. The Company may not
be able to rely on the Trico Supply Bank Facility to support operations due to restrictions on transfers of funds from Norway and limitations in the facilitys availability. In an effort to maintain adequate funds for operations in the U.S.,
the Company has initiated the process of repatriating funds from Norway, however, there are substantial obstacles which the Company must overcome in order to achieve a funds transfer in a tax efficient manner and there can be no assurance as to the
success of such efforts.



The ability of the Company to
continue as a going concern, including its ability to meet its ongoing operational obligations, is dependent upon, among other things, (i) the Companys ability to maintain adequate cash on hand, including repatriating cash from its foreign
subsidiaries; (ii) the Companys ability to generate cash from operations; (iii) the cost, duration and outcome of the restructuring process; and (iv) the Companys ability to achieve profitability following a restructuring. The Company,
in conjunction with its advisors, is working to design and implement strategies to ensure the Company maintains adequate liquidity. However, there can be no assurance as to the success of such efforts.



In general, the Company operates through two primary operating segments, the
U.S. Gulf of Mexico and the North Sea. These business segments have been capitalized and are generally financed on a stand-alone basis. Debt covenants and the Norwegian shipping tax regime preclude the Company from effectively transferring the
financial resources from one segment for the benefit of the other. Over the past three years, the Companys U.S. Gulf of Mexico operating segment has incurred significant losses while operating under a significant debt load, and has not been
able to utilize the financial resources of its North Sea operating segment, which carries a lower level of debt.



The potential adverse publicity associated with the Companys announcements relating to its financial restructuring and the resulting uncertainty
regarding the Companys future prospects, may hinder the Companys ongoing business activities and its ability to operate, fund and execute its business plan by, among other things, (i) impairing relations with existing and potential
customers; (ii) limiting the Companys ability to obtain trade credit on reasonable and customary terms and conditions; (iii) impairing present and future relationships with vendors and service providers; and (iv) negatively impacting the
ability of the Company to attract, retain and compensate key executives, and to retain employees generally. The Company, in conjunction with its advisors, is working with its current customers, vendors and employees to minimize the disruption its
restructuring will impose on the business. However, there can be no assurance as to the success of such efforts.



5.    Sale of Vessels



During the second quarter of fiscal year 2003, the Company committed to a formal plan to sell its investment in the construction of the anchor handling
towing supply vessel (AHTS) which had a long-term contract with Petroleo Brasilerio S.A. (Petrobras) as well as dispose of one of its larger North Sea vessels. In accordance with SFAS No. 144, these assets were classified as
held for sale, and the Company recorded a charge of approximately $5.2 million for the impairment related to the anticipated sale of the assets. The Company



25



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



completed the sale of the above-described assets in September 2003. The Company received net proceeds in the amount of $52.5 million from the sale of the
Brazilian AHTS and North Sea vessel and recorded an additional loss of $940,000 on the transactions. The total loss on the sale of the North Sea vessel and Brazilian AHTS was $6.2 million.



In February 2003, the Company sold one of its crew boats for approximately
$617,500 and recognized a gain of approximately $477,000 on the transaction. In March 2003, the Company completed the sale-leaseback on a 155-foot crew boat that had been under construction. The Company received approximately $2.9 million on the
sale-leaseback transaction. Pursuant to the master lease agreement, the Company entered a 10-year operating lease agreement with required payments of approximately $29,900 per month. In July 2003, the Company sold one crew boat and one supply boat,
both of which were in non-operating condition, for approximately $889,000 in the aggregate, and recognized a gain of approximately $738,000.



In February 2002, the Company sold one of its crew boats for $725,000 and recognized a gain of approximately $496,000 from the sale. In April 2002, the
Company completed an agreement for a sales-type lease of three of its line handling vessels and recognized a loss of approximately $103,000 on the transaction. The sales are included in gain on sale of assets in the accompanying Consolidated
Statement of Operations.



During 2001, the Company sold two of
its crew boats for $1,750,000 and recognized a gain of approximately $942,000 on the sales.



6.    Accounts Receivable



The Companys accounts receivable, net consists of the following at December 31, 2003 and 2002 (in thousands):



|                                |  |      |        |   |      |   |        |  
|------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                |  | 2003 |        |   | 2002 |  
|Trade receivables               |  | $    | 24,432 |   |      | $ | 24,990 |  
|Allowance for doubtful accounts |  |      | (542   | ) |      |   | (422   | )
|Insurance and other             |  |      | 6,561  |   |      |   | 14,569 |  
|                                |  |      |        |   |      |   |        |  
|Accounts receivable, net        |  | $    | 30,451 |   |      | $ | 39,137 |  
|                                |  |      |        |   |      |   |        |  



The Companys
receivables are primarily due from entities operating in the oil and gas industry in the Gulf of Mexico, the North Sea, West Africa, and Latin America. Since the Companys receivables are primarily generated from customers having similar
economic interests, the Company has potential exposure to credit risk that could result from economic or other changes to the oil and gas industry. As of December 31, 2003, one customer, Newfield Shipping Co., individually represented 20% of the
Companys outstanding accounts receivable balance. No other individual customer represented greater than 10% of the outstanding accounts receivable balance.



7.    Goodwill



Goodwill totaled approximately zero and $110.6 million as of December 31, 2003 and 2002, respectively.



As a result of the Companys adoption of SFAS No. 142 in 2002, goodwill
is not amortized but is tested annually for impairment. In accordance with SFAS No. 142, the Company performs its annual goodwill



26



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



impairment review during the second quarter of each fiscal year, and performs interim analysis of goodwill if circumstances change that would more likely
than not reduce the fair value of a reporting unit below its carrying amount. The evaluation of goodwill is performed at the Companys reporting unit level, which is generally one level lower than that of the total entity. The Companys
fair value analysis is based on reporting unit cash flows, comparable industry financial ratios and other assumptions.



When the Company performed its evaluation of goodwill during the second quarter of 2003, a goodwill impairment charge of approximately $28.6 million was
required, primarily related to the North Sea reporting unit. In calculating the goodwill impairment charge, the fair value of the reporting units was determined by analyzing current market conditions, future projections for the market, historical
results and current vessel contracts. Factors leading to the impairment included continued slowness in the North Sea market and an overall decrease in the supply of vessels, forcing a decline in prices. After continued deterioration in market
conditions in the North Sea during the third and fourth quarters of 2003, the Company determined that an additional interim test of impairment was necessary as of December 31, 2003. As a result of the December 2003 analysis, the Company determined
that an additional impairment was warranted, and recorded an impairment on the remaining goodwill balance of approximately $84.4 million.



The Company did not record a tax benefit for the goodwill impairments in 2003 because these charges are not deductible for tax purposes.



The changes during 2003 to the carrying amount of goodwill attributable to
each geographic segment is as follows:



|                                         |  |           |          |   |       |   |      |       |  |   |          |  
|---------------------------------------- |  | --------- | -------- | - | ----- | - | ---- | ----- |  | - | -------- | -
|(Dollars in thousands)                   |  | North Sea |          |   | Other |   |      | Total | 
|Balance, December 31, 2002               |  | $         | 109,693  |   |       | $ | 912  |       |  | $ | 110,605  |  
|Impairments                              |  |           | (112,116 | ) |       |   | (912 | )     |  |   | (113,028 | )
|Foreign exchange translation adjustments |  |           | 2,423    |   |       |   |     |       |  |   | 2,423    |  
|                                         |  |           |          |   |       |   |      |       |  |   |          |  
|Balance, December 31, 2003               |  | $         |         |   |       | $ |     |       |  | $ |         |  
|                                         |  |           |          |   |       |   |      |       |  |   |          |  



8.    Other
Assets



The Companys other assets consist of the
following at December 31, 2003 and 2002 (in thousands):



|                                                                                                                        |  |      |        |      |   |       
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                                                                                        |  | 2003 |        | 2002
|Deferred marine inspection costs, net of accumulated amortization of $25,461 and $20,459 in 2003 and 2002, respectively |  | $    | 20,828 |      | $ | 20,369
|Deferred financing costs, net of accumulated amortization of $1,810 and $940 in 2003 and 2002, respectively             |  |      | 6,366  |      |   | 7,153 
|Marine vessel spare parts                                                                                               |  |      | 9,122  |      |   | 8,762 
|Other                                                                                                                   |  |      | 2,304  |      |   | 2,657 
|                                                                                                                        |  |      |        |      |   |       
|Other assets                                                                                                            |  | $    | 38,620 |      | $ | 38,941
|                                                                                                                        |  |      |        |      |   |       



27



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



9.    Debt



The Companys debt consists of the following at December 31, 2003 and 2002 (in thousands):



|                                                                                                                                                                                                                                                                                                                                                                                                  |  |          |         |          |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ------- | -------- | - | -------
|                                                                                                                                                                                                                                                                                                                                                                                                  |  | 2003     |         | 2002    
|                                                                                                                                                                                                                                                                                                                                                                                                  |  | Restated |         | Restated
|Senior Notes, interest at 8.875%, due May 2012, net of discount                                                                                                                                                                                                                                                                                                                                   |  | $        | 248,199 |          | $ | 248,064
|Revolving loan, bearing interest at NIBOR (Norwegian Interbank Offered Rate) plus a margin (weighted average interest rate of 3.77% at
December 31, 2003) and collateralized by certain marine vessels. This facilitys current availability reduces in 13 semi-annual installments of NOK 40 million ($6.0 million) beginning March 2003 with balance of the commitment expiring September
2009. |  |          | 61,508  |          |   | 87,925 
|Revolving loan, bearing interest at a Eurocurrency rate plus a margin, as defined on the date of the borrowing (weighted average interest rate
of 3.94% at December 31, 2003) interest payable at the end of the interest period or quarterly, principal due December 2005, collateralized by certain marine vessels.                                                                             |  |          | 31,000  |          |   | 22,500 
|Note payable, bearing interest at 6.11%, principal and interest due in 30 semi-annual installments, maturing April 2014, collateralized by two
marine vessels                                                                                                                                                                                                                                     |  |          | 13,206  |          |   | 14,464 
|Term loan, bearing interest at NIBOR (Norwegian Interbank Offered Rate) plus a margin (3.33% at December 31, 2003), collateralized by two
marine vessels, reducing in 5 semi-annual installments beginning June 30, 2004 by NOK 7.5 million ($1.1 million) with the balance of the commitment expiring June 2006.                                                                                 |  |          | 22,503  |          |   |       
|Note payable, bearing interest at 6.08%, principal and interest due in 16 semi-annual installments, maturing September 2006, collateralized by
a marine vessel                                                                                                                                                                                                                                    |  |          | 3,750   |          |   | 5,000  
|Term loan, bearing interest at NIBOR (Norwegian Interbank Offered Rate) plus a margin collateralized by two marine vessels. This
facilitys availability reduces in 5 semi-annual installments beginning June 28, 2001 by NOK 12.5 million ($1.9 million) with the balance of the commitment expiring June 2003                                                                                   |  |          |        |          |   | 5,766  
|Note payable, bearing interest at NIBOR (Norwegian Interbank Offered Rate) plus a margin (7.80% at December 31, 2002), repaid in March
2003                                                                                                                                                                                                                                                       |  |          |        |          |   | 427    
|                                                                                                                                                                                                                                                                                                                                                                                                  |  |          |         |          |   |        
|                                                                                                                                                                                                                                                                                                                                                                                                  |  |          | 380,166 |          |   | 384,146
|Less current maturities                                                                                                                                                                                                                                                                                                                                                                           |  |          | 66,266  |          |   | 96,626 
|                                                                                                                                                                                                                                                                                                                                                                                                  |  |          |         |          |   |        
|Long-term debt                                                                                                                                                                                                                                                                                                                                                                                    |  | $        | 313,900 |          | $ | 287,520
|                                                                                                                                                                                                                                                                                                                                                                                                  |  |          |         |          |   |        



Annual maturities
(restated) on long-term debt during the next five years are as follows (in thousands):



|           |  |   |        
|---------- |  | - | -------
|2004       |  | $ | 66,266 
|2005       |  |   | 35,758 
|2006       |  |   | 20,510 
|2007       |  |   | 1,258  
|2008       |  |   | 1,258  
|Thereafter |  |   | 255,116
|           |  |   |        
|           |  | $ | 380,166
|           |  |   |        



Subsequent to year
end, on February 12, 2004, the Company entered into a new $55 million term loan (the 2004 Term Loan), to refinance and retire the Bank Credit Facility discussed below. The 2004 Term Loan borrowings bear interest at LIBOR or 2%, whichever
is higher, plus 6.0%, or U.S. Prime rate plus 5%, at the



28



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Companys option. Under the 2004 Term Loan, the Company is not subject to financial maintenance covenants, but is subject to other covenants that
restrict additional indebtedness and dispositions of property, among other things. The 2004 Term Loan is collateralized by 43 of the Companys U.S. Gulf class supply boats and places certain restrictions on the Companys ability to incur
additional indebtedness or liens, dispose of property, make dividends or make certain other distributions and other specified limitations. The principal balance is reduced by quarterly principal payments of $150,000 through 2007, payments of $10.5
million in 2008, and $42.3 million in 2009.



On June 26, 2003,
we entered in a new term loan (the NOK Term Loan) payable in Norwegian Kroner (NOK) in the amount of NOK 150.0 million ($22.5 million). Amounts borrowed under the NOK Term Loan bear interest at NIBOR plus 1.0% (3.3% at
December 31, 2003). The NOK Term Loan is required to be repaid in five semi-annual repayments of NOK 7.5 million ($1.1 million), with the first payment due on June 30, 2004, and a final payment of NOK 112.5 million ($16.9 million) on June 30, 2006.
Borrowings under the NOK Term Loan are collaterallized by mortgages on two of our North Sea class vessels.



In December 2002, the Company entered into a new $50.0 million revolving credit agreement (the Bank Credit Facility). Bank Credit Facility
borrowings bore interest at a Eurocurrency rate plus a margin that was indexed to the Companys interest coverage ratio. The Bank Credit Facility was collateralized by substantially all of the Companys U.S. Gulf class supply and crew
boats and required the Company to maintain mortgaged vessel values equal to 200% of the borrowings under the Bank Credit Facility. The Bank Credit Facility contained covenants which required the Company to maintain minimum cash flow to interest
expense ratios, positive working capital, a maximum debt to capitalization ratio and a minimum tangible net worth ratio, as defined. The Bank Credit Facility also placed certain restrictions on the Company with regard to the Companys ability
to incur additional indebtedness, make dividends or make certain other distributions and other specified limitations. As of December 31, 2003, the Company had $31.0 million outstanding under the Bank Credit Facility, and letters of credit totaling
approximately $6.3 million, which reduce the amount available under the Bank Credit Facility. Subsequent to year end, the Bank Credit Facility was repaid and retired, using a portion of the net proceeds of the 2004 Term Loan discussed above. A loss
of $0.6 million was recognized on the repayment, primarily related to the recognition of un-amortized issuance costs.



On May 31, 2002, the Company issued $250.0 million of 87/8% Senior Notes due 2012 (the Notes), net of an original issue discount of $2.5 million. The Notes were issued by Trico Marine Services, Inc. and are guaranteed by the Companys primary
U.S. operating subsidiaries. Consolidating financial statements of Trico Marine Services, Inc. (the Notes guarantor) subsidiaries and the non-guarantor subsidiaries are set forth in Note 20. Interest is payable semi-annually on May 15th and
November 15th. Up to 35% of the Notes may be redeemed at any time prior to May 15th, 2005 from the proceeds of equity offerings at a redemption price equal to 108.875% of the principal amount plus any accrued interest. Commencing May 15, 2007, all
or a portion of the remaining Notes may be redeemed at a price of 104.438% plus accrued interest, with the redemption price declining ratably beginning on May 15th of each of the succeeding three years. No principal payments are required on the
Notes until their final maturity.



On July 25, 2003,
Moodys Investors Service (Moodys) downgraded our long-term senior implied rating to B3 from B1 and lowered our senior unsecured notes rating to Caa1 from C2. On January 27, 2004, Moodys downgraded our long-term
senior implied rating to Caa1 from B3 and lowered our senior unsecured notes rating to Caa2 from Caa1. On November 24, 2003, Standard & Poors Ratings Services (S&P), a division of The McGraw-Hill Companies, Inc.,
downgraded our senior unsecured notes to CCC from CCC+ and placed that credit rating on creditwatch with negative implications. In addition, S&P lowered our corporate rating to B- from B on the same date. See Note 21 for discussion of subsequent
event.



29



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



In conjunction with the issuance of the Notes, the Company received proceeds of $242.7 million, net
of placement fees and original issue discount. On May 31, 2002, the Company retired $201.2 million of previously issued 81/2% senior notes due 2005 plus accrued interest and premium for $213.7 million. On June 18, 2002, the Company retired an additional $1.0 million of previously issued 81/2% senior notes. On August 1, 2002, the Company retired the remaining $45.7 million balance of the 81/2% senior notes for $49.0 million, including accrued interest and premium. In total, the Company recognized a $10.9 million loss on the early retirement of the 81/2% senior notes during 2002.



The indenture governing the Notes contains covenants that, among other
things, prevent the Company from incurring additional debt, paying dividends or making other distributions, unless the ratio of cash flow to interest expense on a rolling 12 months basis is at least 2.0 to 1. Currently the Company does not meet this
ratio and, therefore, is limited under the indenture to incurring at any one time, and having outstanding, up to $150 million of collateralized debt after the date of issuance of the Notes. The Company believes this limit will be sufficient to
finance its business during the period that the Company does not satisfy this ratio. The indenture also contains covenants that restrict the Companys ability to create certain liens, sell assets, or enter into mergers or acquisitions.



In June 1998, the Company refinanced a significant portion of
its debt, which was issued at the subsidiary level, into a single NOK 650,000,000 ($97.5 million) revolving credit facility (the Trico Supply Bank Facility) bearing interest at NIBOR plus a margin, which originally reduced in ten
semiannual installments of NOK 50,000,000 ($7.5 million) and one final payment of NOK 150,000,000 ($22.5 million), due at maturity in June 2003. In 1999, the Trico Supply Bank Facility was amended to defer a NOK 50,000,000 ($7.5 million) reduction
in the facility amount that was scheduled to occur in December 31, 2000, until June 2003. In April 2002, the Company amended the Trico Supply Bank Facility by increasing the Trico Supply Bank Facility amount to NOK 800,000,000 ($120.0 million) and
revised reductions to the facility amount to provide for 40,000,000 NOK ($6.0 million) reductions every six months starting in March of 2003. The Trico Supply Bank Facility provides for a NOK 280,000,000 ($42.0 million) balloon payment in September
of 2009. At December 31, 2003, the Company had NOK 410,000,000 ($61.5 million) outstanding under this facility. The amended credit facility is collateralized by a mortgage on the same vessels securing the prior credit facility, with the addition of
the two PSVs delivered in 2002. The amended bank facility contains covenants that are substantially similar to those in the prior credit facility and requires that the North Sea operating unit maintain certain financial ratios and limits its ability
to create liens, or merge or consolidate with other entities. At December 31, 2003, the Company had $40.5 million of unused borrowing capacity under its Trico Supply Bank Facility. After a review of the credit facilitys terms, the Company
determined that since the facility has both a subjective acceleration clause (material adverse change clause) and the facility replaces short-term advances with other short-term advances, the entire outstanding balance of the credit facility must be
classified as a current liability in accordance with SFAS No. 6.



In April 2000, the Company executed a loan agreement for an additional Norwegian bank facility at the Trico Supply level in the amount of NOK 125,000,000 ($18.8 million). The commitment amount for this additional facility was reduced by NOK
12,500,000 ($1.9 million) every six months beginning June 2001, with a final reduction of NOK 75,000,000 ($11.3 million) in June 2003.



In April 1999, the Company issued $18.9 million principal amount of 15 year United States Government Guaranteed Ship Financing Bonds (the Ship
Bonds) at an interest rate of 6.11% per annum. The Ship Bonds are due in 30 semi-annual installments of principal and interest. The Ship Bonds are collateralized by first preferred ship mortgages on two supply vessels.



30



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



In April 1998, the Company issued $10.0 million principal amount of eight year United States
Government Guaranteed Ship Financing Bonds, SWATH Series I, at an interest rate of 6.08% (the Bonds). The Bonds are due in 16 semi-annual installments of principal and interest. The Bonds are collateralized by a first preferred ship
mortgage on the Companys SWATH (small water area twin hull) vessel, and by an assignment of the charter contract that the vessel commenced upon its completion.



10.    Financial Instruments



During 2003, in conjunction with the sale of the Companys large North Sea vessel described in Note 5, the Company
entered into a series of foreign currency forward contracts with notional amounts of $24.0 million to fix the currency exchange rates between Norwegian Kroner and U.S. Dollars. As a result of the hedge, the Company recorded a net transaction gain
during 2003 of $0.6 million, which is included in other income (loss) in the consolidated statement of operations. There were no foreign exchange contracts outstanding as of December 31, 2003.



During 2002, the Company purchased foreign exchange contracts with notional
amounts ranging from $12.5 million to $28.2 million, with contract terms lasting less than six months, to protect against the adverse effects that exchange rate fluctuations may have on foreign-currency-denominated intercompany payables and
receivables. These derivatives did not qualify for hedge accounting, in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, because they relate to existing assets and liabilities denominated in a
foreign-currency. The gains and losses on both the derivatives and the foreign-currency-denominated intercompany payables and receivables are recorded as transaction adjustments in current earnings. A net loss of approximately $37,900 was recorded
in 2002.



During 2001, the Company purchased a foreign exchange
contract with a notional amount of approximately $24.6 million, to protect against the adverse effects that exchange rate fluctuations may have on foreign-currency-denominated intercompany payables and receivables. These derivatives did not qualify
for hedge accounting. A net gain of approximately $19,000 was recorded in 2001.



11.    Income Taxes



Income (loss) before income taxes derived from U.S. and international operations for the three years in the period ended December 31, 2003 are as follows (in thousands):



|              |  |      |          |   |      |   |         |      |  |   |         |  
|------------- |  | ---- | -------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|              |  | 2003 |          |   | 2002 |   |         | 2001 | 
|United States |  | $    | (44,092  | ) |      | $ | (59,044 | )    |  | $ | (26,327 | )
|International |  |      | (123,194 | ) |      |   | 5,616   |      |  |   | 16,087  |  
|              |  |      |          |   |      |   |         |      |  |   |         |  
|              |  | $    | (167,286 | ) |      | $ | (53,428 | )    |  | $ | (10,240 | )
|              |  |      |          |   |      |   |         |      |  |   |         |  



31



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



The components of income tax expense (benefit) from continuing operations of the Company for the
periods ended December 31, 2003, 2002 and 2001, are as follows (in thousands):



|                          |  |      |        |   |      |   |        |  |   |        |  
|------------------------- |  | ---- | ------ | - | ---- | - | ------ |  | - | ------ | -
|                          |  | 2003 |        |   | 2002 |   | 2001   | 
|Current income taxes:     |  |      |        |   |      |   |        |  |   |        |  
|U.S. federal income taxes |  | $    |       |   |      | $ |       |  | $ |       |  
|State income taxes        |  |      |       |   |      |   |       |  |   | (35    | )
|Foreign taxes             |  |      | 231    |   |      |   |       |  |   | 601    |  
|Deferred income taxes:    |  |      |        |   |      |   |        |  |   |        |  
|U.S. federal income taxes |  |      |       |   |      |   | 12,844 |  |   | (8,723 | )
|State income taxes        |  |      |       |   |      |   | 41     |  |   | (426   | )
|Foreign taxes             |  |      | (3,119 | ) |      |   | 1,665  |  |   | 5,266  |  
|                          |  |      |        |   |      |   |        |  |   |        |  
|                          |  | $    | (2,888 | ) |      | $ | 14,550 |  | $ | (3,317 | )
|                          |  |      |        |   |      |   |        |  |   |        |  



The Company has not
recognized a deferred tax liability for the undistributed earnings of a non-U.S. subsidiary because the Company currently does not expect those unremitted earnings to be distributed and become taxable to the Company in the foreseeable future. A
deferred tax liability will be recognized when the Company expects that it will realize those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of investments. The amount of the potential deferred tax liability
has not been disclosed because it is impractical to calculate the amount at this time.



The Companys deferred income taxes at December 31, 2003 and 2002 represent the tax effect of the following temporary differences between the financial reporting and income tax accounting bases of its assets and
liabilities (in thousands):



|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|---------------------------------------------------------------- |  | ------------------- | ----- | ------------------------ | - | ------- |  | ------------ | - |  | - | ------
|                                                                 |  | Deferred Tax Assets |       | Deferred Tax Liabilities
|                                                                 |  | Current             |       | Non- Current             |   | Current |  | Non- Current
|2003                                                             |  |                     |       |                          |   |         |  |              |   |  |   |       
|Depreciation and amortization                                    |  | $                   |      |                          | $ |        |  | $            |  |  | $ | 54,012
|Deferral of foreign earnings                                     |  |                     |      |                          |   |        |  |              |  |  |   | 39,772
|Insurance reserves                                               |  |                     | 1,656 |                          |   |        |  |              |  |  |   |      
|Net operating loss carryforward                                  |  |                     |      |                          |   | 99,893  |  |              |  |  |   |      
|Other                                                            |  |                     | 207   |                          |   |        |  |              |  |  |   |      
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|                                                                 |  | $                   | 1,863 |                          | $ | 99,893  |  | $            |  |  | $ | 93,784
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Current deferred tax assets, net                                 |  |                     |       |                          |   |         |  |              |   |  | $ | 1,863 
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Non-current deferred tax asset, net                              |  |                     |       |                          |   |         |  |              |   |  | $ | 45,881
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Valuation Allowance                                              |  |                     |       |                          |   |         |  |              |   |  |   | 47,744
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Deferred tax asset after valuation, net                          |  |                     |       |                          |   |         |  |              |   |  |   |      
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Non-current deferred tax liabilities, net - foreign jurisdiction |  |                     |       |                          |   |         |  |              |   |  | $ | 39,772
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       



32



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|---------------------------------------------------------------- |  | ------------------- | ----- | ------------------------ | - | ------- |  | ------------ | - |  | - | ------
|                                                                 |  |                    
|                                                                 |  | Deferred Tax Assets |       | Deferred Tax Liabilities
|                                                                 |  | Current             |       | Non- Current             |   | Current |  | Non- Current
|2002                                                             |  |                     |       |                          |   |         |  |              |   |  |   |       
|Depreciation and amortization                                    |  | $                   |      |                          | $ |        |  | $            |  |  | $ | 55,282
|Deferral of foreign earnings                                     |  |                     |      |                          |   |        |  |              |  |  |   | 41,392
|Insurance reserves                                               |  |                     | 1,114 |                          |   |        |  |              |  |  |   |      
|Net operating loss carryforward                                  |  |                     |      |                          |   | 86,935  |  |              |  |  |   |      
|Other                                                            |  |                     | 230   |                          |   |        |  |              |  |  |   |      
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|                                                                 |  | $                   | 1,344 |                          | $ | 86,935  |  | $            |  |  | $ | 96,674
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Current deferred tax assets, net                                 |  |                     |       |                          |   |         |  |              |   |  | $ | 1,344 
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Non-current deferred tax asset, net                              |  |                     |       |                          |   |         |  |              |   |  | $ | 31,653
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Valuation Allowance                                              |  |                     |       |                          |   |         |  |              |   |  |   | 32,997
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Deferred tax asset after valuation, net                          |  |                     |       |                          |   |         |  |              |   |  |   |      
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       
|Non-current deferred tax liabilities, net - foreign jurisdiction |  |                     |       |                          |   |         |  |              |   |  | $ | 41,392
|                                                                 |  |                     |       |                          |   |         |  |              |   |  |   |       



The provisions
(benefits) for income taxes as reported are different from the provisions (benefits) computed by applying the statutory federal income tax rate. The differences are reconciled as follows (in thousands):



|                                              |  |      |         |   |      |   |         |      |  |   |        |  
|--------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                              |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Federal income taxes at statutory rate        |  | $    | (58,550 | ) |      | $ | (18,700 | )    |  | $ | (3,588 | )
|State income taxes net of federal benefit     |  |      | 14      |   |      |   | 41      |      |  |   | (462   | )
|Foreign tax rate differential                 |  |      | 8,559   |   |      |   | (417    | )    |  |   | (1,138 | )
|Non-deductible items in foreign jurisdictions |  |      | 31,516  |   |      |   |        |      |  |   | 915    |  
|Non-deductible loss and expenses              |  |      | 569     |   |      |   | 40      |      |  |   | 382    |  
|Foreign earnings                              |  |      | 545     |   |      |   | 589     |      |  |   | 574    |  
|Valuation Allowance                           |  |      | 14,459  |   |      |   | 32,997  |      |  |   |       |  
|                                              |  |      |         |   |      |   |         |      |  |   |        |  
|Income tax expense (benefit)                  |  | $    | (2,888  | ) |      | $ | 14,550  |      |  | $ | (3,317 | )
|                                              |  |      |         |   |      |   |         |      |  |   |        |  
|Effective tax rate                            |  |      | 2       | % |      |   | 27      | %    |  |   | 32     | %
|                                              |  |      |         |   |      |   |         |      |  |   |        |  



A tax benefit for the
exercise of stock options in the amount of zero, zero, and $28,000, that was not included in income for financial reporting purposes was credited directly to additional paid-in capital as of December 31, 2003, 2002 and 2001, respectively.



The net operating loss carryforwards for federal and state tax
purposes are approximately $280 million at December 31, 2003 and expire at various periods through 2023. The Company incurred a change of control under IRC Section 382 on May 26, 2000 that will limit the utilization of approximately $167 million of
net operating loss carryforwards to a set level as provided by regulations. The limitation should be approximately $17 million per year.



The Company incurred non-cash charges of approximately $14.5 million and $33.0 million in 2003 and 2002, respectively, as a result of establishing
valuation allowances against its net deferred tax assets. The



33



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



valuation allowance is in accordance with SFAS No. 109, Accounting for Income Taxes, which places significant weight on recent loss history in
the determination of whether or not a valuation allowance is required.



The Companys Brazilian subsidiary received a tax assessment from a Brazilian State tax authority for approximately 14.8 million Real ($5.1 million at December 31, 2003). The tax assessment is based on the premise that certain services
provided in Brazilian federal waters are considered taxable by certain Brazilian states as transportation services and are subject to a state tax. The Company had filed a timely defense at the time of the assessment. In September 2003, an
administrative court upheld the assessment. In response, the Company filed an administrative appeal in the Rio de Janeiro administrative tax court during October 2003. The Company is currently under no obligation to pay the assessment unless and
until such time as all appropriate appeals are exhausted. The Company intends to vigorously challenge the imposition of this tax. Broader industry actions have been taken against the tax in the form of a suit filed at the Brazilian federal supreme
court seeking a declaration that the state statue attempting to tax the industrys activities is unconstitutional. If the Companys challenge to the imposition of this tax proves unsuccessful, which Brazilian counsel and the Company
believe improbable, current contract provisions and other factors could potentially mitigate the Companys tax exposure.



12.    Preferred Stock



In February 1998, the Companys Board of Directors approved the adoption of a Stockholder Rights Plan (the Plan). In connection with the
Plan, the Board of Directors approved the authorization of 100,000 shares of $0.01 par value preferred stock, designated the Series AA Participating Cumulative Preference Stock. Under the Plan, Preference Stock Purchase Rights (the
Rights) were distributed as a dividend at a rate of one Right for each share of the Companys common stock held as of record as of the close of business on March 6, 1998. Each Right entitles holders of the Companys common
stock to buy a fraction of a share of the new series of the Companys preferred stock at an exercise price of $105. The Rights will become exercisable and detach from the common stock, only if a person or group, with certain exceptions,
acquires 15% or more of the outstanding common stock, or announces a tender or exchange offer that, if consummated, would result in a person or group beneficially owning 15% or more of outstanding common stock. Once exercisable, each Right will
entitle the holder (other than the acquiring person) to acquire common stock with a value of twice the exercise price of the Rights. The Company will generally be able to redeem the Rights at $0.01 per Right at any time until the close of business
on the tenth day after the Rights become exercisable. As of December 31, 2003, there are no preferred shares issued or outstanding.



13.    Equity Incentive Plans



The Company sponsors two stock-based incentive compensation plans, the 1993 Stock Option Plan (the 1993 Plan) and the 1996
Stock Incentive Plan (the 1996 Plan). Under the 1993 Plan, the Company is authorized to issue shares of Common Stock pursuant to Awards granted in the form of incentive stock options (qualified under Section 422 of the
Internal Revenue Code of 1986, as amended) and non-qualified stock options. Awards may be granted to key employees of the Company. The Compensation Committee administers the Plan and has broad discretion in selecting Plan participants and
determining the vesting period and other terms applicable to Awards granted under the Plan.



According to the 1993 Plan, Awards may be granted with respect to a maximum of 1,455,018 shares of common stock. Awards have been granted with respect to all 1,455,018 shares. All of these Awards had a ten-year term.
All un-exercised awards expired during October 2003, leaving no options under the 1993 plan outstanding as of December 31, 2003.



34



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Under the 1996 Plan, the Company is authorized to issue shares of Common Stock pursuant to
Awards granted as incentive stock options (qualified under Section 422 of the Internal Revenue Code of 1986, as amended), non-qualified stock options, restricted stock, stock awards, or any combination of such Awards. Awards, having a
maximum term of 10 years, may be granted to key employees of the Company, including directors. The Compensation Committee administers the Plan and has broad discretion in selecting Plan participants and determining the vesting period and other terms
for Awards granted under the Plan.



According to the 1996 Plan,
Awards may be granted with respect to a maximum of 1,500,000 shares of common stock. No participant may be granted more than 100,000 restricted shares of common stock or common stock options in any calendar year.



Generally, stock option awards under the 1996 Plan expire 10 years from the
date of the grant. Generally, stock option awards to employees vest ratably over 4 years while awards to directors vest immediately, and have a 10 year life. As of December 31, 2003, there were 1,242,050 options outstanding under the 1996
Plan.



A summary of the status of the Companys stock
options as of December 31, 2003, 2002 and 2001 and the changes during the years ended on those dates are presented below:



|                                 |  |                                     |   |      |                                  |       |                                     |           |   |                                  |   |                                     |  |           |                                  |  |   |      
|-------------------------------- |  | ----------------------------------- | - | ---- | -------------------------------- | ----- | ----------------------------------- | --------- | - | -------------------------------- | - | ----------------------------------- |  | --------- | -------------------------------- |  | - | -----
|                                 |  | 2003                                |   | 2002 |                                  | 2001 
|                                 |  | Number of Shares Underlying Options |   |      | Weighted Average Exercise Prices |       | Number of Shares Underlying Options |           |   | Weighted Average Exercise Prices |   | Number of Shares Underlying Options |  |           | Weighted Average Exercise Prices
|Outstanding at beginning of year |  | 2,083,968                           |   |      | $                                | 7.03  |                                     | 1,857,218 |   |                                  | $ | 7.19                                |  | 1,879,343 |                                  |  | $ | 7.24 
|Granted                          |  | 57,000                              |   |      | $                                | 2.76  |                                     | 296,000   |   |                                  | $ | 7.12                                |  | 10,000    |                                  |  | $ | 12.91
|Exercised                        |  | (578,202                            | ) |      | $                                | 0.91  |                                     | (18,000   | ) |                                  | $ | 3.36                                |  | (8,750    | )                                |  | $ | 6.30 
|Expired / Forfeited              |  | (320,716                            | ) |      | $                                | 3.79  |                                     | (51,250   | ) |                                  | $ | 14.67                               |  | (23,375   | )                                |  | $ | 13.88
|                                 |  |                                     |   |      |                                  |       |                                     |           |   |                                  |   |                                     |  |           |                                  |  |   |      
|Outstanding at end of year       |  | 1,242,050                           |   |      | $                                | 10.51 |                                     | 2,083,968 |   |                                  | $ | 7.03                                |  | 1,857,218 |                                  |  | $ | 7.19 
|                                 |  |                                     |   |      |                                  |       |                                     |           |   |                                  |   |                                     |  |           |                                  |  |   |      
|Exercisable at end of year       |  | 962,050                             |   |      | $                                | 11.29 |                                     | 1,625,531 |   |                                  | $ | 6.68                                |  | 1,492,118 |                                  |  | $ | 6.64 
|                                 |  |                                     |   |      |                                  |       |                                     |           |   |                                  |   |                                     |  |           |                                  |  |   |      



The following table
summarizes information about stock options outstanding at December 31, 2003:



|                         |  |                                |  |                                          |  |                                 |       |                                |         |                                 |   |      
|------------------------ |  | ------------------------------ |  | ---------------------------------------- |  | ------------------------------- | ----- | ------------------------------ | ------- | ------------------------------- | - | -----
|                         |  | Options Outstanding            |  | Options Exercisable                     
|Range of Exercise Prices |  | Number Outstanding at 12/31/03 |  | Weighted Average Remaining Contract Life |  | Weighted Average Exercise Price |       | Number Exercisable at 12/31/03 |         | Weighted Average Exercise Price
|$2.05 to $2.45           |  | 55,000                         |  | 9.3                                      |  | $                               | 2.36  |                                | 20,000  |                                 | $ | 2.25 
|$3.09 to $3.79           |  | 22,000                         |  | 9.3                                      |  | $                               | 3.47  |                                | 22,000  |                                 | $ | 3.47 
|$4.50                    |  | 169,250                        |  | 5.2                                      |  | $                               | 4.50  |                                | 169,250 |                                 | $ | 4.50 
|$7.00 to $8.00           |  | 416,500                        |  | 7.7                                      |  | $                               | 7.59  |                                | 241,375 |                                 | $ | 7.74 
|$10.69 to $12.91         |  | 291,500                        |  | 6.5                                      |  | $                               | 11.63 |                                | 221,625 |                                 | $ | 11.63
|$17.75 to $19.50         |  | 155,400                        |  | 4.1                                      |  | $                               | 17.80 |                                | 155,400 |                                 | $ | 17.80
|$20.13 to $23.13         |  | 132,400                        |  | 3.4                                      |  | $                               | 20.91 |                                | 132,400 |                                 | $ | 20.91
|                         |  |                                |  |                                          |  |                                 |       |                                |         |                                 |   |      
|                         |  | 1,242,050                      |  | 6.3                                      |  | $                               | 10.51 |                                | 962,050 |                                 | $ | 11.29
|                         |  |                                |  |                                          |  |                                 |       |                                |         |                                 |   |      



35



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



In 2003, the Company issued a restricted stock award to one employee, which vests ratably over 3
years. Since there is no price to the employee for this award, the Company has recorded the deferred compensation cost and is amortizing the value of the award over the 3 year vesting period. The following table summarizes the restricted stock
activity:



|                                 |  |                 
|-------------------------------- |  | ----------------
|                                 |  | Restricted Stock
|Outstanding at December 31, 2002 |  |                
|Granted                          |  | 60,000          
|Vested                           |  |                
|Cancelled                        |  |                
|                                 |  |                 
|Outstanding at December 31, 2003 |  | 60,000          
|                                 |  |                 



14.    Impairment of long-lived assets



During 2002, the Company determined that the carrying value of two vessels exceeded their fair values. Fair value was determined through the use of estimated vessel discounted cash flows. The Company reduced net book
value to the estimated fair value for the vessels and recorded a non-cash $5.2 million impairment charge. The above noted vessels are special purpose towing vessels with limited supply capabilities. In response to market conditions, the Company
determined during 2002 that the primary market for these vessels was in non-U.S. locations with lower day rates.



During 2001, the Company determined that the carrying value of eight vessels exceeded their estimated fair values. Accordingly, the Company reduced the
net book value of these eight vessels to their estimated fair values, resulting in a non-cash asset write-down of approximately $24.3 million. Six of the vessels were located in the U.S. Gulf of Mexico and had been removed from active status for
extended periods. The vessels were permanently withdrawn from service when the Company determined that it would no longer be economically feasible to refurbish and reactivate these vessels due to their age and overall condition. The Company
determined their fair values using a combination of estimates of fair values obtained from third parties and detailed analyses of residual equipment values assuming that certain vessels would be scrapped. The Company reduced the value of these six
vessels by approximately $21.2 million. The other two vessels are located in the North Sea and are still in service; however, due to their age and declining utilization, the Company determined that their carrying values exceeded their estimated fair
values. Accordingly, their net book values were adjusted to their estimated fair values based on projections of the future cash flows of the vessels over their remaining lives, discounted at a current market rate of interest. The write-down
associated with these two vessels was approximately $3.0 million.



15.    Employee Benefit Plans



Defined Contribution Plan



The Company
has a defined contribution profit sharing plan under Section 401(k) of the Internal Revenue Code (the Plan) that covers substantially all U.S. employees meeting certain eligibility requirements. Employees may contribute up to 15%
(subject to certain ERISA limitations) of their eligible compensation on a pre-tax basis. The Company will match 25% of the participants before tax savings contributions on up to 5% of the participants taxable wages or salary. The
Company may also make a matching contribution to the Plan at its discretion. The Company expensed contributions to the Plan for the years ended December 31, 2003, 2002, and 2001 of approximately $165,000, $219,000, and $245,000, respectively.



36



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



In October 2003, the Company discovered that shares of common stock purchased on the open market
through its 401(k) Plan for the accounts of employees electing to purchase Company common stock exceeded the amount that had been registered under the Securities Act of 1933. The Company has recently notified the participating employees of their
rights under Section 12(a)(1) of the Securities Act. No claims have been asserted against the Company with respect to these matters. If any of these claims are litigated, the Company believes it can assert arguments and defenses that could
significantly reduce or eliminate any liability. The Company does not believe the resolution of any such claims, if asserted, would have a material adverse impact on its results from operations or financial condition.



Pension Plan and Employee Benefits



Substantially all of the Companys Norwegian and United Kingdom
employees are covered by a number of non-contributory, defined benefit pension plans. Benefits are based primarily on participants compensation and years of credited services. The Companys policy is to fund contributions to the plans
based upon actuarial computations. The Company uses an October measurement date for all pension plans.



|                                               |  |                |       |   |      |   |       |  
|---------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                               |  | 2003           |       |   | 2002 |  
|                                               |  | (in thousands) |      
|Change in Benefit Obligation                   |  |                |       |   |      |   |       |  
|Benefit obligation at beginning of year        |  | $              | 3,082 |   |      | $ | 2,241 |  
|Service cost                                   |  |                | 443   |   |      |   | 307   |  
|Interest cost                                  |  |                | 158   |   |      |   | 118   |  
|Benefits paid                                  |  |                | (69   | ) |      |   | (51   | )
|Translation adjustment and other               |  |                | (149  | ) |      |   | 467   |  
|                                               |  |                |       |   |      |   |       |  
|Benefit obligation at end of year              |  | $              | 3,465 |   |      | $ | 3,082 |  
|                                               |  |                |       |   |      |   |       |  
|Change in Plan Assets                          |  |                |       |   |      |   |       |  
|Fair value of plan assets at beginning of year |  | $              | 3,651 |   |      | $ | 2,444 |  
|Actual return on plan assets                   |  |                | 215   |   |      |   | 187   |  
|Contributions                                  |  |                | 466   |   |      |   | 504   |  
|Benefits paid                                  |  |                | (69   | ) |      |   | (51   | )
|Translation adjustment and other               |  |                | (168  | ) |      |   | 567   |  
|                                               |  |                |       |   |      |   |       |  
|Fair value of plan assets at end of year       |  | $              | 4,095 |   |      | $ | 3,651 |  
|                                               |  |                |       |   |      |   |       |  
|Funded status, over funded                     |  | $              | 630   |   |      | $ | 569   |  
|Unrecognized net actuarial gain and other      |  |                | (18   | ) |      |   | 31    |  
|                                               |  |                |       |   |      |   |       |  
|Prepaid benefit cost                           |  | $              | 612   |   |      | $ | 600   |  
|                                               |  |                |       |   |      |   |       |  



|                                        |  |                |      |   |      |   |      |      |  |   |      |  
|--------------------------------------- |  | -------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                        |  | 2003           |      |   | 2002 |   |      | 2001 | 
|                                        |  | (in thousands) |     
|Components of Net Periodic Benefit Cost |  |                |      |   |      |   |      |      |  |   |      |  
|Service cost                            |  | $              | 443  |   |      | $ | 307  |      |  | $ | 242  |  
|Interest cost                           |  |                | 158  |   |      |   | 118  |      |  |   | 98   |  
|Return on plan assets                   |  |                | (215 | ) |      |   | (187 | )    |  |   | (154 | )
|Social security contributions           |  |                | 71   |   |      |   | 44   |      |  |   | 36   |  
|Recognized net actuarial loss           |  |                | 18   |   |      |   |     |      |  |   | (15  | )
|                                        |  |                |      |   |      |   |      |      |  |   |      |  
|Net periodic benefit cost               |  | $              | 475  |   |      | $ | 282  |      |  | $ | 207  |  
|                                        |  |                |      |   |      |   |      |      |  |   |      |  



37



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



The vested benefit obligation is calculated as the actuarial present value of the vested benefits to
which employees are currently entitled based on the employees expected date of separation or retirement.



|                              |  |      |   |  |      |  
|----------------------------- |  | ---- | - |  | ---- | -
|                              |  | 2003 |   |  | 2002 |  
|Weighted-Average Assumptions  |  |      |   |  |      |  
|Discount rate                 |  | 5.25 | % |  | 5.80 | %
|                              |  |      |   |  |      |  
|Return on plan assets         |  | 6.25 | % |  | 6.80 | %
|                              |  |      |   |  |      |  
|Rate of compensation increase |  | 3.30 | % |  | 3.30 | %
|                              |  |      |   |  |      |  



The weighted average
assumptions shown above were used for both the determination of net periodic benefit cost, and the determination of benefit obligations as of the measurement date. In determining the weighted average assumptions, the Company reviewed overall market
performance and specific historical performance of the investments in the plan. The Companys asset allocations at the measurement date were as follows:



|                     |  |      |   |  |      |  
|-------------------- |  | ---- | - |  | ---- | -
|                     |  | 2003 |   |  | 2002 |  
|Equity securities    |  | 31   | % |  | 12   | %
|Debt Securities      |  | 5    | % |  | 76   | %
|Property and other   |  | 64   | % |  | 12   | %
|                     |  |      |   |  |      |  
|All asset categories |  | 100  | % |  | 100  | %
|                     |  |      |   |  |      |  



The projected benefit
obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans were approximately $3.8 million, $3.0 million, and $4.1 million, respectively, at December 31, 2003 and $2.8 million, $2.3 million and $3.7 million,
respectively, as of December 31, 2002.



The Company expects to
contribute $450,000 to its pension plans in 2004.



16.    Commitments and Contingencies



In the ordinary course of business, the Company is involved in certain personal injury, pollution and property damage claims and related threatened or pending legal proceedings. The Company does not believe that any
of these proceedings, if adversely determined, would have a material adverse effect on our financial position, results of operations or cash flows. Additionally certain claims would be covered under the Companys insurance program. Management,
after review with legal counsel and insurance representatives, is of the opinion these claims and legal proceedings will be resolved within the limits of the Companys insurance coverages. At December 31, 2003 and 2002, the Company has accrued
a liability in the amount of approximately $4.5 million and $3.0 million, respectively, based upon the insurance deductibles that management believes it may be responsible for paying in connection with these matters. The amounts the Company will
ultimately be responsible for paying in connection with these matters could differ materially from amounts accrued.



Future minimum payments under non-cancelable operating lease obligations are approximately $1.3 million, $1.2 million, $1.2 million, $1.2 million, $1.1
million and $4.3 million for the years ending December 31, 2004, 2005, 2006, 2007, 2008 and subsequent years, respectively. Operating lease payments in 2003, 2002, and 2001 were $1.4 million, $0.3 million, and $0.2 million, respectively.



38



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



17.    Fair Value of Financial Instruments and Market Risks



The estimated fair values of financial instruments have been determined by
the Company using available market information and valuation methodologies described below. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein
may not be indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.



Cash and cash equivalents and accounts receivable:The carrying
amounts approximate fair value due to the short-term nature of these instruments.



Debt:The carrying amounts of the Companys variable rate debt approximate fair value because the interest rates are based on floating rates identified by reference to market rates. The fair value of the
Companys fixed rate debt is based on quoted market prices, where available, or discounted future cash flows based on the Companys current incremental borrowing rates for similar types of borrowing arrangements as of the balance sheet
date. The carrying amounts and fair values of debt, including accrued interest, as of December 31, 2003 and 2002 were as follows (in thousands):



|                |  |      |         |      |   |        
|--------------- |  | ---- | ------- | ---- | - | -------
|                |  | 2003 |         | 2002
|Carrying amount |  | $    | 383,822 |      | $ | 388,171
|Fair value      |  | $    | 314,237 |      | $ | 370,806



Political Risk:The Company is exposed to political or country risks inherent in doing business in some countries. These risks may include actions of governments (especially those newly appointed) and contract loss. The Company considers these risks carefully
in connection with its investing and operating activities.



Foreign Currency Risk:The Companys international operations are subject to certain risks, including currency fluctuations and government actions. Exposures primarily relate to assets and liabilities denominated in foreign
currencies as well as the risk that currency fluctuations could affect the dollar value of future cash flows generated in foreign currencies. Accordingly, from time to time, the Company utilizes short-term forward contracts to minimize the exposure
to foreign currency risk. There were no contracts outstanding at December 31, 2003.



18.    Quarterly Financial Data (Unaudited)



|                                                 |  |       |         |   |        |   |         |       |  |   |         |   |  |   |         |  
|------------------------------------------------ |  | ----- | ------- | - | ------ | - | ------- | ----- |  | - | ------- | - |  | - | ------- | -
|Year ended December 31, 2003(1)                  |  | First |         |   | Second |   |         | Third |  |   | Fourth  |  
|(Dollars in thousands, except per share amounts) |  |       |         |   |        |   |         |       |  |   |         |  
|Revenues                                         |  | $     | 29,011  |   |        | $ | 34,492  |       |  | $ | 31,583  |   |  | $ | 28,435  |  
|Operating loss                                   |  |       | (5,721  | ) |        |   | (35,814 | )     |  |   | (1,929  | ) |  |   | (92,037 | )
|Net loss                                         |  | $     | (13,471 | ) |        | $ | (41,989 | )     |  | $ | (9,505  | ) |  | $ | (99,433 | )
|Basic and diluted loss per share:                |  |       |         |   |        |   |         |       |  |   |         |   |  |   |         |  
|Net loss per average common share outstanding    |  | $     | (0.37   | ) |        | $ | (1.16   | )     |  | $ | (0.26   | ) |  | $ | (2.70   | )
|                                                 |  |       |         |  
|Year ended December 31, 2002(2)                  |  | First |         |   | Second |   |         | Third |  |   | Fourth  |  
|(Dollars in thousands, except per share amounts) |  |       |         |   |        |   |         |       |  |   |         |  
|Revenues                                         |  | $     | 32,108  |   |        | $ | 32,622  |       |  | $ | 33,996  |   |  | $ | 35,216  |  
|Operating loss                                   |  |       | (344    | ) |        |   | (2,319  | )     |  |   | (2,189  | ) |  |   | (7,225  | )
|Net loss                                         |  | $     | (4,793  | ) |        | $ | (13,784 | )     |  | $ | (34,952 | ) |  | $ | (14,449 | )
|Basic and diluted loss per share:                |  |       |         |   |        |   |         |       |  |   |         |   |  |   |         |  
|Net loss per average common share outstanding    |  | $     | (0.13   | ) |        | $ | (0.38   | )     |  | $ | (0.96   | ) |  | $ | (0.40   | )



39



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



---

|(1) | In the second quarter of 2003, a $5.2 million impairment charge was recognized on assets held for sale. Also in the second quarter, the Company recorded a goodwill impairment of
$28.6 million. In the third quarter of 2003, the Company completed the sale of the aforementioned assets, and recognized an additional charge of $0.9 million. In the fourth quarter of 2003, the Company recorded an additional goodwill impairment
charge of $84.4 million.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The second, third and fourth quarters of fiscal year 2002 include non-cash charges of approximately $6.1 million (net of a $3.1 million tax benefit), $4.8 million and $0.1 million,
respectively, for the early extinguishment of debt. The Company incurred a non-cash charge of approximately $22.7 million in the third quarter of 2002 as a result of a valuation allowance against its net deferred tax assets. Additionally the fourth
quarter of fiscal year 2002 includes a $5.2 million non-cash charge related to the write-down on two vessels.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19.    Segment and Geographic Information



The Company is a provider of marine vessels and related services to the oil and gas industry. Substantially all revenues result from the charter of
vessels owned by the Company. The Companys three reportable segments are based on geographic area, consistent with the Companys management structure. The accounting policies of the segments are the same as those described in the summary
of significant accounting policies except for purposes of income taxes and intercompany transactions and balances. The North Sea segment provides for a flat tax, in addition to taxes on equity and net financial income, at a rate of 28%, which is the
Norwegian statutory tax rate. Additionally, segment data includes intersegment revenues, receivables and payables, and investments in consolidated subsidiaries. The Company evaluates performance based on net income (loss). The U.S. segment
represents the domestic operations; the North Sea segment includes Norway and the United Kingdom, and the other segment includes primarily Latin America and West Africa. Long-term debt and related interest expense associated with the acquisitions of
foreign subsidiaries are reflected in the U.S. segment.



Segment data as of and for the years ended December 31, 2003, 2002 and 2001 are as follows (in thousands):



|                                      |  |      |         |      |           |   |          |       |  |   |        |     |  |   |          |  
|------------------------------------- |  | ---- | ------- | ---- | --------- | - | -------- | ----- |  | - | ------ | --- |  | - | -------- | -
|December 31, 2003                     |  | U.S. |         |      | North Sea |   |          | Other |  |   | Totals |    
|Revenues from external customers      |  | $    | 29,345  |      |           | $ | 66,399   |       |  | $ | 27,777 |     |  | $ | 123,521  |  
|Intersegment revenues                 |  |      | 23      |      |           |   |         |       |  |   |       |     |  |   | 23       |  
|Interest revenue                      |  |      | 94      |      |           |   | 229      |       |  |   |       |     |  |   | 323      |  
|Interest expense                      |  |      | 24,509  |      |           |   | 5,595    |       |  |   | 55     |     |  |   | 30,159   |  
|Depreciation and amortization expense |  |      | 17,839  |      |           |   | 22,367   |       |  |   | 4,938  |     |  |   | 45,144   |  
|Income tax expense (benefit)          |  |      |        |      |           |   | (2,888   | )     |  |   |       |     |  |   | (2,888   | )
|Segment net income (loss)             |  |      | (45,693 | )(1) |           |   | (118,729 | )(2)  |  |   | 24     | (3) |  |   | (164,398 | )
|Long-lived assets(7)                  |  |      | 121,243 |      |           |   | 316,304  |       |  |   | 70,300 |     |  |   | 507,847  |  
|Segment total assets                  |  |      | 431,743 |      |           |   | 356,176  |       |  |   | 71,073 |     |  |   | 858,992  |  
|Expenditures for segment assets       |  |      | 4,566   |      |           |   | 16,678   |       |  |   | 16,034 |     |  |   | 37,278   |  



40



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



|                                      |  |      |         |      |           |   |         |       |  |   |        |   |  |   |           |  
|------------------------------------- |  | ---- | ------- | ---- | --------- | - | ------- | ----- |  | - | ------ | - |  | - | --------- | -
|                                      |  |      |         |     
|December 31, 2002                     |  | U.S. |         |      | North Sea |   |         | Other |  |   | Totals |  
|Revenues from external customers      |  | $    | 42,862  |      |           | $ | 71,155  |       |  | $ | 19,925 |   |  | $ | 133,942   |  
|Intersegment revenues                 |  |      | 112     |      |           |   |        |       |  |   |       |   |  |   | 112       |  
|Interest revenue                      |  |      | 447     |      |           |   | 293     |       |  |   | 2      |   |  |   | 742       |  
|Interest expense                      |  |      | 24,005  |      |           |   | 4,403   |       |  |   | 24     |   |  |   | 28,432    |  
|Depreciation and amortization expense |  |      | 20,366  |      |           |   | 18,556  |       |  |   | 4,300  |   |  |   | 43,222    |  
|Income tax expense                    |  |      | 12,885  |      |           |   | 1,665   |       |  |   |       |   |  |   | 14,550    |  
|Segment net income (loss)             |  |      | (72,344 | )(4) |           |   | 6,314   |       |  |   | (1,948 | ) |  |   | (67,978   | )
|Long-lived assets(7)                  |  |      | 137,150 |      |           |   | 353,622 |       |  |   | 75,820 |   |  |   | 566,592   |  
|Segment total assets                  |  |      | 468,776 |      |           |   | 488,598 |       |  |   | 80,406 |   |  |   | 1,037,780 |  
|Expenditures for segment assets       |  |      | 11,234  |      |           |   | 62,313  |       |  |   | 5,792  |   |  |   | 79,339    |  
|                                      |  |      |         |     
|December 31, 2001                     |  | U.S. |         |      | North Sea |   |         | Other |  |   | Totals |  
|Revenues from external customers      |  | $    | 99,021  |      |           | $ | 73,228  |       |  | $ | 10,376 |   |  | $ | 182,625   |  
|Intersegment revenues                 |  |      | 144     |      |           |   |        |       |  |   |       |   |  |   | 144       |  
|Interest revenue                      |  |      | 752     |      |           |   | 269     |       |  |   | 2      |   |  |   | 1,023     |  
|Interest expense                      |  |      | 22,654  |      |           |   | 3,566   |       |  |   | 12     |   |  |   | 26,232    |  
|Depreciation and amortization expense |  |      | 28,142  |      |           |   | 16,837  |       |  |   | 2,699  |   |  |   | 47,678    |  
|Income tax expense (benefit)          |  |      | (8,802  | )    |           |   | 5,867   |       |  |   | (382   | ) |  |   | (3,317    | )
|Segment net income (loss)             |  |      | (16,432 | )(5) |           |   | 11,377  | (6)   |  |   | (1,868 | ) |  |   | (6,923    | )
|Long-lived assets(7)                  |  |      | 195,027 |      |           |   | 235,347 |       |  |   | 37,670 |   |  |   | 468,044   |  
|Segment total assets                  |  |      | 561,265 |      |           |   | 340,695 |       |  |   | 39,474 |   |  |   | 941,434   |  
|Expenditures for segment assets       |  |      | 10,961  |      |           |   | 14,171  |       |  |   | 1,547  |   |  |   | 26,679    |  

---

|(1) | Includes a gain of $1.0 million related to the sale of three boats.
|--- | -------------------------------------------------------------------

|(2) | Includes a charge of $5.2 million related to a loss on sale of a North Sea vessel, and goodwill impairment charges of $112.1 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes a charge of $1.0 million related to the sale of a the investment in a construction project in Brazil, and a goodwill impairment charge of $0.9 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes a charge of $5.2 million related to vessel impairments.
|--- | ----------------------------------------------------------------

|(5) | Includes a charge of $21.2 million related to vessel impairments.
|--- | -----------------------------------------------------------------

|(6) | Includes a charge of $3.0 million related to vessel impairments.
|--- | ----------------------------------------------------------------

|(7) | Long-lived assets include net property and equipment and unamortized deferred marine inspection costs.
|--- | ------------------------------------------------------------------------------------------------------



A reconciliation of segment total assets to consolidated total assets as of December 31, 2003, 2002 and 2001 is as follows
(in thousands):



|                                          |  |      |          |   |      |   |           |      |  |   |          |  
|----------------------------------------- |  | ---- | -------- | - | ---- | - | --------- | ---- |  | - | -------- | -
|                                          |  | 2003 |          |   | 2002 |   |           | 2001 | 
|Total assets for reportable segments      |  | $    | 858,992  |   |      | $ | 1,037,780 |      |  | $ | 941,434  |  
|Elimination of intersegment receivables   |  |      | (7,403   | ) |      |   | (10,423   | )    |  |   | (4,527   | )
|Elimination of investment in subsidiaries |  |      | (266,398 | ) |      |   | (280,182  | )    |  |   | (281,195 | )
|                                          |  |      |          |   |      |   |           |      |  |   |          |  
|Total consolidated assets                 |  | $    | 585,191  |   |      | $ | 747,175   |      |  | $ | 655,712  |  
|                                          |  |      |          |   |      |   |           |      |  |   |          |  



For the year ended
December 31, 2003, no individual customer represented more than 10% of consolidated revenues.



41



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



For the year ended December 31, 2002, revenues from one customer and its affiliates were
approximately $17.8 million or 13% of the Companys consolidated revenues. Revenues for the Companys U.S., North Sea and West Africa segments include approximately $8.2 million, $3.3 million and $6.3 million of these revenues,
respectively.



For the year ended December 31, 2001, revenues
from one customer and its affiliates were approximately $29.7 million, or 16% of the Companys consolidated revenues. Revenues for the Companys U.S. and North Sea segments include approximately $22.6 million and $7.1 million of these
revenues, respectively.



20.    Condensed Consolidating
Financial Statements for Subsidiary Guarantors



The
following tables present the consolidating historical financial statements as of December 31, 2003 and 2002 and for the three fiscal years in the period ended December 31, 2003 for the subsidiaries of the Company that serve as guarantors of the
87/8% Senior Notes and for the Companys subsidiaries that do not serve as guarantors. The guarantor
subsidiaries are 100% owned by the parent company and their guarantees are full and unconditional and joint and several.



42



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Balance Sheets

(Dollars in thousands, except per share amounts)



|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                                                                                       |  | December 31, 2003 |         
|                                                                                                                       |  | Parent            |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|                                                                                                                       |  |                   |          |   |                        |   |         | Restated                   |  |   |              |   |  | Restated     |         
|ASSETS                                                                                                                 |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Current assets:                                                                                                        |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Cash and cash equivalents                                                                                              |  | $                 |         |   |                        | $ | 4,460   |                            |  | $ | 21,432       |   |  | $            |         |   |  | $ | 25,892   |  
|Restricted cash                                                                                                        |  |                   |         |   |                        |   | 866     |                            |  |   | 842          |   |  |              |         |   |  |   | 1,708    |  
|Accounts receivable, net                                                                                               |  |                   |         |   |                        |   | 16,571  |                            |  |   | 13,880       |   |  |              |         |   |  |   | 30,451   |  
|Due from affiliates                                                                                                    |  |                   | 21,902   |   |                        |   | 107     |                            |  |   | 525          |   |  |              | (22,534  | ) |  |   |         |  
|Prepaid expenses and other current assets                                                                              |  |                   | 125      |   |                        |   | 424     |                            |  |   | 952          |   |  |              |         |   |  |   | 1,501    |  
|Deferred income taxes                                                                                                  |  |                   |         |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   |         |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Total current assets                                                                                                   |  |                   | 22,027   |   |                        |   | 22,428  |                            |  |   | 37,631       |   |  |              | (22,534  | ) |  |   | 59,552   |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Property and equipment, at cost:                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Land and buildings                                                                                                     |  |                   |         |   |                        |   | 3,616   |                            |  |   | 2,786        |   |  |              |         |   |  |   | 6,402    |  
|Marine vessels                                                                                                         |  |                   |         |   |                        |   | 242,113 |                            |  |   | 419,616      |   |  |              |         |   |  |   | 661,729  |  
|Construction-in-progress                                                                                               |  |                   |         |   |                        |   | 170     |                            |  |   |             |   |  |              |         |   |  |   | 170      |  
|Transportation and other                                                                                               |  |                   |         |   |                        |   | 2,891   |                            |  |   | 1,737        |   |  |              |         |   |  |   | 4,628    |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                                                                       |  |                   |         |   |                        |   | 248,790 |                            |  |   | 424,139      |   |  |              |         |   |  |   | 672,929  |  
|Less accumulated depreciation and amortization                                                                         |  |                   |         |   |                        |   | 101,881 |                            |  |   | 84,029       |   |  |              |         |   |  |   | 185,910  |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net property and equipment                                                                                             |  |                   |         |   |                        |   | 146,909 |                            |  |   | 340,110      |   |  |              |         |   |  |   | 487,019  |  
|                                                                                                                       |  |                   |          |   |                       
|Investment in subsidiaries                                                                                             |  |                   | 199,014  |   |                        |   | 7,274   |                            |  |   |             |   |  |              | (206,288 | ) |  |   |         |  
|Due from affiliates                                                                                                    |  |                   | 150,386  |   |                        |   | 17,186  |                            |  |   |             |   |  |              | (167,572 | ) |  |   |         |  
|Goodwill, net                                                                                                          |  |                   |         |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   |         |  
|Other assets                                                                                                           |  |                   | 5,436    |   |                        |   | 14,547  |                            |  |   | 18,637       |   |  |              |         |   |  |   | 38,620   |  
|Deferred income taxes                                                                                                  |  |                   | 16,248   |   |                        |   |        |                            |  |   |             |   |  |              | (16,248  | ) |  |   |         |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                                                                       |  | $                 | 393,111  |   |                        | $ | 208,344 |                            |  | $ | 396,378      |   |  | $            | (412,642 | ) |  | $ | 585,191  |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                   |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Current liabilities:                                                                                                   |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Current portion of long-term debt                                                                                      |  | $                 |         |   |                        | $ |        |                            |  | $ | 66,266       |   |  | $            |         |   |  | $ | 66,266   |  
|Accounts payable                                                                                                       |  |                   |         |   |                        |   | 2,895   |                            |  |   | 3,295        |   |  |              |         |   |  |   | 6,190    |  
|Due to affiliates                                                                                                      |  |                   |         |   |                        |   | 22,426  |                            |  |   | 107          |   |  |              | (22,533  | ) |  |   |         |  
|Accrued expenses                                                                                                       |  |                   | 46       |   |                        |   | 2,319   |                            |  |   | 3,987        |   |  |              |         |   |  |   | 6,352    |  
|Accrued insurance reserve                                                                                              |  |                   |         |   |                        |   | 4,497   |                            |  |   |             |   |  |              |         |   |  |   | 4,497    |  
|Accrued interest                                                                                                       |  |                   | 2,835    |   |                        |   | 40      |                            |  |   | 781          |   |  |              |         |   |  |   | 3,656    |  
|Income tax payable                                                                                                     |  |                   |         |   |                        |   |        |                            |  |   | 331          |   |  |              |         |   |  |   | 331      |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Total current liabilities                                                                                              |  |                   | 2,881    |   |                        |   | 32,177  |                            |  |   | 74,767       |   |  |              | (22,533  | ) |  |   | 87,292   |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Long-term debt                                                                                                         |  |                   | 248,199  |   |                        |   | 31,000  |                            |  |   | 34,701       |   |  |              |         |   |  |   | 313,900  |  
|Due to affiliates                                                                                                      |  |                   |         |   |                        |   | 150,386 |                            |  |   | 17,186       |   |  |              | (167,572 | ) |  |   |         |  
|Deferred income taxes                                                                                                  |  |                   |         |   |                        |   | 12,005  |                            |  |   | 44,015       |   |  |              | (16,248  | ) |  |   | 39,772   |  
|Other liabilities                                                                                                      |  |                   |         |   |                        |   |        |                            |  |   | 2,196        |   |  |              |         |   |  |   | 2,196    |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Total liabilities                                                                                                      |  |                   | 251,080  |   |                        |   | 225,568 |                            |  |   | 172,865      |   |  |              | (206,353 | ) |  |   | 443,160  |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Commitments and contingencies                                                                                          |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Stockholders equity:                                                                                                  |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued                                      |  |                   |         |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   |         |  
|Common stock, $.01 par value, 55,000,000 shares authorized, 36,982,569 shares issued and 36,910,537 shares outstanding |  |                   | 370      |   |                        |   | 50      |                            |  |   | 1,938        |   |  |              | (1,988   | ) |  |   | 370      |  
|Additional paid-in capital                                                                                             |  |                   | 338,007  |   |                        |   | 4,822   |                            |  |   | 265,585      |   |  |              | (270,407 | ) |  |   | 338,007  |  
|Retained earnings (accumulated deficit)                                                                                |  |                   | (214,845 | ) |                        |   | (22,096 | )                          |  |   | (62,637      | ) |  |              | 84,733   |   |  |   | (214,845 | )
|Unearned compensation                                                                                                  |  |                   | (127     | ) |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   | (127     | )
|Cumulative foreign currency translation adjustment                                                                     |  |                   | 18,627   |   |                        |   |        |                            |  |   | 18,627       |   |  |              | (18,627  | ) |  |   | 18,627   |  
|Treasury stock, at par value, 72,032 shares                                                                            |  |                   | (1       | ) |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   | (1       | )
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Total stockholders equity                                                                                             |  |                   | 142,031  |   |                        |   | (17,224 | )                          |  |   | 223,513      |   |  |              | (206,289 | ) |  |   | 142,031  |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                                                                       |  | $                 | 393,111  |   |                        | $ | 208,344 |                            |  | $ | 396,378      |   |  | $            | (412,642 | ) |  | $ | 585,191  |  
|                                                                                                                       |  |                   |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  



43



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Balance Sheets

(Dollars in thousands, except per share amounts)



|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------------- | - | -------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | ------- | -
|                                                                                                                       |  | December 31, 2002 |        
|                                                                                                                       |  | Parent            |         |   | Guarantor Subsidiaries |   | Non-Guarantor Subsidiaries |  | Eliminations |         |  | Consolidated |         
|                                                                                                                       |  |                   |         |   |                        |   | Restated                   |  |              |         |  | Restated     |         
|ASSETS                                                                                                                 |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Current assets:                                                                                                        |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Cash and cash equivalents                                                                                              |  | $                 |        |   |                        | $ | 2,971                      |  | $            | 7,194   |  | $            |         |   |  | $ | 10,165  |  
|Restricted cash                                                                                                        |  |                   |        |   |                        |   |                           |  |              | 950     |  |              |         |   |  |   | 950     |  
|Accounts receivable, net                                                                                               |  |                   | 5,109   |   |                        |   | 19,924                     |  |              | 14,104  |  |              |         |   |  |   | 39,137  |  
|Due from affiliates                                                                                                    |  |                   | 17,078  |   |                        |   |                           |  |              | 3,547   |  |              | (20,625  | ) |  |   |        |  
|Prepaid expenses and other current assets                                                                              |  |                   | 67      |   |                        |   | 771                        |  |              | 316     |  |              |         |   |  |   | 1,154   |  
|Deferred income taxes                                                                                                  |  |                   |        |   |                        |   |                           |  |              |        |  |              |         |   |  |   |        |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Total current assets                                                                                                   |  |                   | 22,254  |   |                        |   | 23,666                     |  |              | 26,111  |  |              | (20,625  | ) |  |   | 51,406  |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Property and equipment, at cost:                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Land and buildings                                                                                                     |  |                   |        |   |                        |   | 3,617                      |  |              | 1,720   |  |              |         |   |  |   | 5,337   |  
|Marine vessels                                                                                                         |  |                   |        |   |                        |   | 241,076                    |  |              | 446,634 |  |              |         |   |  |   | 687,710 |  
|Construction-in-progress                                                                                               |  |                   |        |   |                        |   | 2,690                      |  |              | 4,368   |  |              |         |   |  |   | 7,058   |  
|Transportation and other                                                                                               |  |                   |        |   |                        |   | 2,875                      |  |              | 1,315   |  |              |         |   |  |   | 4,190   |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|                                                                                                                       |  |                   |        |   |                        |   | 250,258                    |  |              | 454,037 |  |              |         |   |  |   | 704,295 |  
|Less accumulated depreciation and amortization                                                                         |  |                   |        |   |                        |   | 86,747                     |  |              | 71,325  |  |              |         |   |  |   | 158,072 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Net property and equipment                                                                                             |  |                   |        |   |                        |   | 163,511                    |  |              | 382,712 |  |              |         |   |  |   | 546,223 |  
|                                                                                                                       |  |                   |         |   |                       
|Investment in subsidiaries                                                                                             |  |                   | 344,466 |   |                        |   | 7,239                      |  |              |        |  |              | (351,705 | ) |  |   |        |  
|Due from affiliates                                                                                                    |  |                   | 157,138 |   |                        |   | 19,269                     |  |              |        |  |              | (176,407 | ) |  |   |        |  
|Goodwill, net                                                                                                          |  |                   | 364     |   |                        |   |                           |  |              | 110,241 |  |              |         |   |  |   | 110,605 |  
|Other assets                                                                                                           |  |                   | 5,803   |   |                        |   | 14,350                     |  |              | 18,788  |  |              |         |   |  |   | 38,941  |  
|Deferred income taxes                                                                                                  |  |                   | 16,230  |   |                        |   |                           |  |              |        |  |              | (16,230  | ) |  |   |        |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|                                                                                                                       |  | $                 | 546,255 |   |                        | $ | 228,035                    |  | $            | 537,852 |  | $            | (564,967 | ) |  | $ | 747,175 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                   |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Current liabilities:                                                                                                   |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Current portion of long-term debt                                                                                      |  | $                 |        |   |                        | $ |                           |  | $            | 96,626  |  | $            |         |   |  | $ | 96,626  |  
|Accounts payable                                                                                                       |  |                   |        |   |                        |   | 5,267                      |  |              | 5,868   |  |              |         |   |  |   | 11,135  |  
|Due to affiliates                                                                                                      |  |                   |        |   |                        |   | 20,625                     |  |              |        |  |              | (20,625  | ) |  |   |        |  
|Accrued expenses                                                                                                       |  |                   | 30      |   |                        |   | 1,712                      |  |              | 4,181   |  |              |         |   |  |   | 5,923   |  
|Accrued insurance reserve                                                                                              |  |                   |        |   |                        |   | 3,030                      |  |              |        |  |              |         |   |  |   | 3,030   |  
|Accrued interest                                                                                                       |  |                   | 2,835   |   |                        |   | 39                         |  |              | 1,151   |  |              |         |   |  |   | 4,025   |  
|Income tax payable                                                                                                     |  |                   |        |   |                        |   |                           |  |              | 94      |  |              |         |   |  |   | 94      |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Total current liabilities                                                                                              |  |                   | 2,865   |   |                        |   | 30,673                     |  |              | 107,920 |  |              | (20,625  | ) |  |   | 120,833 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Long-term debt                                                                                                         |  |                   | 248,064 |   |                        |   | 22,500                     |  |              | 16,956  |  |              |         |   |  |   | 287,520 |  
|Due to affiliates                                                                                                      |  |                   |        |   |                        |   | 157,138                    |  |              | 19,269  |  |              | (176,407 | ) |  |   |        |  
|Deferred income taxes                                                                                                  |  |                   |        |   |                        |   | 12,005                     |  |              | 45,617  |  |              | (16,230  | ) |  |   | 41,392  |  
|Other liabilities                                                                                                      |  |                   |        |   |                        |   |                           |  |              | 2,104   |  |              |         |   |  |   | 2,104   |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Total liabilities                                                                                                      |  |                   | 250,929 |   |                        |   | 222,316                    |  |              | 191,866 |  |              | (213,262 | ) |  |   | 451,849 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Commitments and contingencies                                                                                          |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Stockholders equity:                                                                                                  |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued                                      |  |                   |        |   |                        |   |                           |  |              |        |  |              |         |   |  |   |        |  
|Common stock, $.01 par value, 55,000,000 shares authorized, 36,344,367 shares issued and 36,272,335 shares outstanding |  |                   | 363     |   |                        |   | 50                         |  |              | 2,964   |  |              | (3,014   | ) |  |   | 363     |  
|Additional paid-in capital                                                                                             |  |                   | 337,343 |   |                        |   | 4,822                      |  |              | 278,247 |  |              | (283,069 | ) |  |   | 337,343 |  
|Retained earnings (accumulated deficit)                                                                                |  |                   | (50,447 | ) |                        |   | 847                        |  |              | 56,707  |  |              | (57,554  | ) |  |   | (50,447 | )
|Cumulative foreign currency translation adjustment                                                                     |  |                   | 8,068   |   |                        |   |                           |  |              | 8,068   |  |              | (8,068   | ) |  |   | 8,068   |  
|Treasury stock, at par value, 72,032 shares                                                                            |  |                   | (1      | ) |                        |   |                           |  |              |        |  |              |         |   |  |   | (1      | )
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|Total stockholders equity                                                                                             |  |                   | 295,326 |   |                        |   | 5,719                      |  |              | 345,986 |  |              | (351,705 | ) |  |   | 295,326 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  
|                                                                                                                       |  | $                 | 546,255 |   |                        | $ | 228,035                    |  | $            | 537,852 |  | $            | (564,967 | ) |  | $ | 747,175 |  
|                                                                                                                       |  |                   |         |   |                        |   |                            |  |              |         |  |              |          |   |  |   |         |  



44



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Operations and Comprehensive Loss

(Dollars in thousands)



|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|-------------------------------------------- |  | ---------------------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------- | -
|                                             |  | Year Ended December 31, 2003 |         
|                                             |  | Parent                       |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Revenues:                                    |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Charter hire                                 |  | $                            |         |   |                        | $ | 54,234  |                            |  | $ | 72,323       |   |  | $            | (3,267  | ) |  | $ | 123,290  |  
|Other vessel income                          |  |                              |         |   |                        |   | 179     |                            |  |   | 1,841        |   |  |              | (1,789  | ) |  |   | 231      |  
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Total revenues                               |  |                              |         |   |                        |   | 54,413  |                            |  |   | 74,164       |   |  |              | (5,056  | ) |  |   | 123,521  |  
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Operating expenses:                          |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Direct vessel operating expenses and other   |  |                              | 228      |   |                        |   | 46,498  |                            |  |   | 39,517       |   |  |              | (5,055  | ) |  |   | 81,188   |  
|General and administrative                   |  |                              | 361      |   |                        |   | 8,709   |                            |  |   | 6,449        |   |  |              |        |   |  |   | 15,519   |  
|Amortization of marine inspection costs      |  |                              |         |   |                        |   | 3,975   |                            |  |   | 6,800        |   |  |              |        |   |  |   | 10,775   |  
|Depreciation and amortization expense        |  |                              |         |   |                        |   | 15,934  |                            |  |   | 17,458       |   |  |              |        |   |  |   | 33,392   |  
|Loss on assets held for sale                 |  |                              | 358      |   |                        |   |        |                            |  |   | 5,807        |   |  |              |        |   |  |   | 6,165    |  
|Impairment of goodwill                       |  |                              | 364      |   |                        |   |        |                            |  |   | 112,664      |   |  |              |        |   |  |   | 113,028  |  
|Asset write-down                             |  |                              |         |   |                        |   |        |                            |  |   |             |   |  |              |        |   |  |   |         |  
|Loss (gain) on sales of assets               |  |                              |         |   |                        |   | (1,210  | )                          |  |   | 165          |   |  |              |        |   |  |   | (1,045   | )
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Total operating expenses                     |  |                              | 1,311    |   |                        |   | 73,906  |                            |  |   | 188,860      |   |  |              | (5,055  | ) |  |   | 259,022  |  
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Operating loss                               |  |                              | (1,311   | ) |                        |   | (19,493 | )                          |  |   | (114,696     | ) |  |              | (1      | ) |  |   | (135,501 | )
|                                             |  |                              |          |   |                       
|Interest expense                             |  |                              | (22,323  | ) |                        |   | (3,315  | )                          |  |   | (6,760       | ) |  |              | 2,239   |   |  |   | (30,159  | )
|Amortization of deferred financing costs     |  |                              | (397     | ) |                        |   | (349    | )                          |  |   | (231         | ) |  |              |        |   |  |   | (977     | )
|Equity in net earnings of subsidiaries       |  |                              | (143,247 | ) |                        |   | 35      |                            |  |   |             |   |  |              | 143,212 |   |  |   |         |  
|Other income, net                            |  |                              | 2,862    |   |                        |   | 179     |                            |  |   | (1,451       | ) |  |              | (2,239  | ) |  |   | (649     | )
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Loss before income taxes                     |  |                              | (164,416 | ) |                        |   | (22,943 | )                          |  |   | (123,138     | ) |  |              | 143,211 |   |  |   | (167,286 | )
|                                             |  |                              |          |   |                       
|Income tax benefit                           |  |                              | (18      | ) |                        |   |        |                            |  |   | (2,870       | ) |  |              |        |   |  |   | (2,888   | )
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net loss                                     |  |                              | (164,398 | ) |                        |   | (22,943 | )                          |  |   | (120,268     | ) |  |              | 143,211 |   |  |   | (164,398 | )
|                                             |  |                              |          |   |                       
|Equity in comprehensive loss of subsidiaries |  |                              | 10,559   |   |                        |   |        |                            |  |   |             |   |  |              | (10,559 | ) |  |   |         |  
|Other comprehensive loss, net of tax:        |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Foreign currency translation adjustments     |  |                              |         |   |                        |   |        |                            |  |   | 10,559       |   |  |              |        |   |  |   | 10,559   |  
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Comprehensive loss                           |  | $                            | (153,839 | ) |                        | $ | (22,943 | )                          |  | $ | (109,709     | ) |  | $            | 132,652 |   |  | $ | (153,839 | )
|                                             |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  



45



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands)



|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|---------------------------------------------- |  | ---------------------------- | ------- | - | ---------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                               |  | Year Ended December 31, 2002 |        
|                                               |  | Parent                       |         |   | Guarantor Subsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Revenues:                                      |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Charter hire                                   |  | $                            |        |   |                        | $ | 60,240  |                           |  | $ | 79,711       |   |  | $            | (6,180  | ) |  | $ | 133,771 |  
|Other vessel income                            |  |                              |        |   |                        |   | 454     |                           |  |   | 306          |   |  |              | (589    | ) |  |   | 171     |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Total revenues                                 |  |                              |        |   |                        |   | 60,694  |                           |  |   | 80,017       |   |  |              | (6,769  | ) |  |   | 133,942 |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Operating expenses:                            |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Direct vessel operating expensesand other      |  |                              | 240     |   |                        |   | 52,250  |                           |  |   | 38,382       |   |  |              | (6,771  | ) |  |   | 84,101  |  
|General and administrative                     |  |                              | 145     |   |                        |   | 9,365   |                           |  |   | 5,567        |   |  |              |        |   |  |   | 15,077  |  
|Amortization of marine inspection costs        |  |                              |        |   |                        |   | 4,941   |                           |  |   | 5,284        |   |  |              |        |   |  |   | 10,225  |  
|Depreciation and amortization expense          |  |                              |        |   |                        |   | 16,804  |                           |  |   | 15,066       |   |  |              |        |   |  |   | 31,870  |  
|Asset write-down                               |  |                              |        |   |                        |   | 5,200   |                           |  |   |             |   |  |              |        |   |  |   | 5,200   |  
|Gain on sales of assets                        |  |                              |        |   |                        |   | (443    | )                         |  |   | (11          | ) |  |              |        |   |  |   | (454    | )
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Total operating expenses                       |  |                              | 385     |   |                        |   | 88,117  |                           |  |   | 64,288       |   |  |              | (6,771  | ) |  |   | 146,019 |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income (loss)                        |  |                              | (385    | ) |                        |   | (27,423 | )                         |  |   | 15,729       |   |  |              | 2       |   |  |   | (12,077 | )
|                                               |  |                              |         |   |                       
|Interest expense                               |  |                              | (22,352 | ) |                        |   | (2,441  | )                         |  |   | (5,690       | ) |  |              | 2,051   |   |  |   | (28,432 | )
|Amortization of deferred financing costs       |  |                              | (589    | ) |                        |   | (296    | )                         |  |   | (242         | ) |  |              |        |   |  |   | (1,127  | )
|Loss on early retirement of debt               |  |                              | (10,896 | ) |                        |   | (102    | )                         |  |   |             |   |  |              |        |   |  |   | (10,998 | )
|Equity in net earnings of subsidiaries         |  |                              | (20,316 | ) |                        |   | 1,605   |                           |  |   |             |   |  |              | 18,711  |   |  |   |        |  
|Other income (loss), net                       |  |                              | 2,090   |   |                        |   | 451     |                           |  |   | (1,282       | ) |  |              | (2,053  | ) |  |   | (794    | )
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) before income taxes              |  |                              | (52,448 | ) |                        |   | (28,206 | )                         |  |   | 8,515        |   |  |              | 18,711  |   |  |   | (53,428 | )
|                                               |  |                              |         |   |                       
|Income tax expense (benefit)                   |  |                              | 15,530  |   |                        |   | (3,837  | )                         |  |   | 2,857        |   |  |              |        |   |  |   | 14,550  |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                              |  |                              | (67,978 | ) |                        |   | (24,369 | )                         |  |   | 5,658        |   |  |              | 18,711  |   |  |   | (67,978 | )
|                                               |  |                              |         |   |                       
|Equity in comprehensive income of subsidiaries |  |                              | 71,518  |   |                        |   |        |                           |  |   |             |   |  |              | (71,518 | ) |  |   |        |  
|Other comprehensive income, net of tax:        |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Foreign currency translation adjustments       |  |                              |        |   |                        |   |        |                           |  |   | 71,518       |   |  |              |        |   |  |   | 71,518  |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Comprehensive income (loss)                    |  | $                            | 3,540   |   |                        | $ | (24,369 | )                         |  | $ | 77,176       |   |  | $            | (52,807 | ) |  | $ | 3,540   |  
|                                               |  |                              |         |   |                        |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  



46



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands)



|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|----------------------------------------------- |  | ---------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                |  | Year Ended December 31, 2001 |        
|                                                |  | Parent                       |         |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Revenues:                                       |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Charter hire                                    |  | $                            |        |   |                        | $ | 106,447 |                            |  | $ | 83,940       |   |  | $            | (7,860 | ) |  | $ | 182,527 |  
|Other vessel income                             |  |                              |        |   |                        |   | 326     |                            |  |   | 1,289        |   |  |              | (1,517 | ) |  |   | 98      |  
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Total revenues                                  |  |                              |        |   |                        |   | 106,773 |                            |  |   | 85,229       |   |  |              | (9,377 | ) |  |   | 182,625 |  
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Operating expenses:                             |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Direct vessel operating expenses and other      |  |                              | 297     |   |                        |   | 58,740  |                            |  |   | 32,484       |   |  |              | (9,377 | ) |  |   | 82,144  |  
|General and administrative                      |  |                              | 129     |   |                        |   | 8,688   |                            |  |   | 4,776        |   |  |              |       |   |  |   | 13,593  |  
|Amortization of marine inspection costs         |  |                              |        |   |                        |   | 9,807   |                            |  |   | 3,617        |   |  |              |       |   |  |   | 13,424  |  
|Depreciation and amortization expense           |  |                              | 86      |   |                        |   | 17,854  |                            |  |   | 14,948       |   |  |              |       |   |  |   | 32,888  |  
|Asset write-down                                |  |                              |        |   |                        |   | 21,249  |                            |  |   | 3,011        |   |  |              |       |   |  |   | 24,260  |  
|Loss (gain) on sales of assets                  |  |                              |        |   |                        |   | (926    | )                          |  |   | (11          | ) |  |              |       |   |  |   | (937    | )
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Total operating expenses                        |  |                              | 512     |   |                        |   | 115,412 |                            |  |   | 58,825       |   |  |              | (9,377 | ) |  |   | 165,372 |  
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Operating income (loss)                         |  |                              | (512    | ) |                        |   | (8,639  | )                          |  |   | 26,404       |   |  |              |       |   |  |   | 17,253  |  
|                                                |  |                              |         |   |                       
|Interest expense                                |  |                              | (20,997 | ) |                        |   | (2,110  | )                          |  |   | (5,000       | ) |  |              | 1,875  |   |  |   | (26,232 | )
|Amortization of deferred financing costs        |  |                              | (835    | ) |                        |   | (335    | )                          |  |   | (196         | ) |  |              |       |   |  |   | (1,366  | )
|Equity in net earnings of subsidiaries          |  |                              | 6,946   |   |                        |   | 2,859   |                            |  |   |             |   |  |              | (9,805 | ) |  |   |        |  
|Other income (loss), net                        |  |                              | 1,872   |   |                        |   | 830     |                            |  |   | (722         | ) |  |              | (1,875 | ) |  |   | 105     |  
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Loss before income taxes and extraordinary item |  |                              | (13,526 | ) |                        |   | (7,395  | )                          |  |   | 20,486       |   |  |              | (9,805 | ) |  |   | (10,240 | )
|                                                |  |                              |         |   |                       
|Income tax expense (benefit)                    |  |                              | (6,603  | ) |                        |   | (4,121  | )                          |  |   | 7,407        |   |  |              |       |   |  |   | (3,317  | )
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                               |  |                              | (6,923  | ) |                        |   | (3,274  | )                          |  |   | 13,079       |   |  |              | (9,805 | ) |  |   | (6,923  | )
|                                                |  |                              |         |   |                       
|Equity in comprehensive loss of subsidiaries    |  |                              | (1,015  | ) |                        |   |        |                            |  |   |             |   |  |              | 1,015  |   |  |   |        |  
|Other comprehensive income (loss), net of tax:  |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Foreign currency translation adjustments        |  |                              |        |   |                        |   |        |                            |  |   | (1,015       | ) |  |              |       |   |  |   | (1,015  | )
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Comprehensive income (loss)                     |  | $                            | (7,938  | ) |                        | $ | (3,274  | )                          |  | $ | 12,064       |   |  | $            | (8,790 | ) |  | $ | (7,938  | )
|                                                |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  



47



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Cash Flows

(Dollars in thousands)



|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|---------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                                                         |  | Year Ended December 31, 2003 |         
|                                                                                         |  | Parent                       |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Net income (loss)                                                                        |  | $                            | (164,398 | ) |                        | $ | (22,943 | )                          |  | $ | (120,269     | ) |  | $            | 143,212  |   |  | $ | (164,398 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Depreciation and amortization expense                                                    |  |                              | 532      |   |                        |   | 20,258  |                            |  |   | 24,490       |   |  |              |         |   |  |   | 45,280   |  
|Deferred marine inspection costs                                                         |  |                              |         |   |                        |   | (4,623  | )                          |  |   | (6,217       | ) |  |              |         |   |  |   | (10,840  | )
|Amortization of unearned compensation                                                    |  |                              | 18       |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   | 18       |  
|Deferred income taxes                                                                    |  |                              | (18      | ) |                        |   |        |                            |  |   | (3,114       | ) |  |              |         |   |  |   | (3,132   | )
|Equity in net earnings (loss)                                                            |  |                              | 143,247  |   |                        |   | (35     | )                          |  |   |             |   |  |              | (143,212 | ) |  |   |         |  
|Loss on impairment of goodwill                                                           |  |                              | 364      |   |                        |   |        |                            |  |   | 112,664      |   |  |              |         |   |  |   | 113,028  |  
|Loss on assets held for sale                                                             |  |                              | 358      |   |                        |   |        |                            |  |   | 5,807        |   |  |              |         |   |  |   | 6,165    |  
|Loss (gain) on sales of assets                                                           |  |                              |         |   |                        |   | (1,211  | )                          |  |   | 166          |   |  |              |         |   |  |   | (1,045   | )
|Provision for doubtful accounts                                                          |  |                              |         |   |                        |   | 120     |                            |  |   |             |   |  |              |         |   |  |   | 120      |  
|Change in operating assets and liabilities:                                              |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Restricted cash                                                                          |  |                              |         |   |                        |   | (500    | )                          |  |   | 136          |   |  |              |         |   |  |   | (364     | )
|Accounts receivable                                                                      |  |                              | 5,109    |   |                        |   | 3,233   |                            |  |   | 732          |   |  |              |         |   |  |   | 9,074    |  
|Prepaid expenses and other current assets                                                |  |                              | (59      | ) |                        |   | 347     |                            |  |   | (635         | ) |  |              |         |   |  |   | (347     | )
|Accounts payable and accrued expenses                                                    |  |                              | 15       |   |                        |   | (297    | )                          |  |   | (3,377       | ) |  |              |         |   |  |   | (3,659   | )
|Other, net                                                                               |  |                              | (28      | ) |                        |   | 140     |                            |  |   | 359          |   |  |              |         |   |  |   | 471      |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net cash provided by (used in) operating activities:                                     |  |                              | (14,860  | ) |                        |   | (5,511  | )                          |  |   | 10,742       |   |  |              |         |   |  |   | (9,629   | )
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Cash flows from investing activities:                                                    |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Purchases of property and equipment                                                      |  |                              |         |   |                        |   | (2,598  | )                          |  |   | (23,845      | ) |  |              |         |   |  |   | (26,443  | )
|Proceeds from sales of assets                                                            |  |                              | 5,927    |   |                        |   | 1,548   |                            |  |   | 46,917       |   |  |              |         |   |  |   | 54,392   |  
|Proceeds from sale-leaseback transactions                                                |  |                              |         |   |                        |   | 2,929   |                            |  |   |             |   |  |              |         |   |  |   | 2,929    |  
|Dividends received from subsidiaries                                                     |  |                              | 12,662   |   |                        |   |        |                            |  |   |             |   |  |              | (12,662  | ) |  |   |         |  
|Increase in restricted cash and other                                                    |  |                              | (6,183   | ) |                        |   | (366    | )                          |  |   | 995          |   |  |              | 6,184    |   |  |   | 630      |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net cash provided by (used in) investing activities:                                     |  |                              | 12,406   |   |                        |   | 1,513   |                            |  |   | 24,067       |   |  |              | (6,478   | ) |  |   | 31,508   |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Cash flows from financing activities:                                                    |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net proceeds from issuance of stock                                                      |  |                              | 526      |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   | 526      |  
|Equity contribution from parent                                                          |  |                              |         |   |                        |   |        |                            |  |   | 6,184        |   |  |              | (6,184   | ) |  |   |         |  
|Proceeds from issuance of long-term debt                                                 |  |                              |         |   |                        |   | 12,094  |                            |  |   | 38,669       |   |  |              |         |   |  |   | 50,763   |  
|Repayment of long-term debt                                                              |  |                              |         |   |                        |   | (3,594  | )                          |  |   | (53,814      | ) |  |              |         |   |  |   | (57,408  | )
|Dividends paid to parent                                                                 |  |                              |         |   |                        |   |        |                            |  |   | (12,662      | ) |  |              | 12,662   |   |  |   |         |  
|Advances (to)/from affiliates                                                            |  |                              | 1,928    |   |                        |   | (2,974  | )                          |  |   | 1,046        |   |  |              |         |   |  |   |         |  
|Deferred financing costs and other                                                       |  |                              |         |   |                        |   | (40     | )                          |  |   | (110         | ) |  |              |         |   |  |   | (150     | )
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net cash provided by (used in) financing activities:                                     |  |                              | 2,454    |   |                        |   | 5,486   |                            |  |   | (20,687      | ) |  |              | 6,478    |   |  |   | (6,269   | )
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Effect of exchange rates on cash and cash equivalents                                    |  |                              |         |   |                        |   |        |                            |  |   | 117          |   |  |              |         |   |  |   | 117      |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Net increase in cash and cash equivalents                                                |  |                              |         |   |                        |   | 1,488   |                            |  |   | 14,239       |   |  |              |         |   |  |   | 15,727   |  
|Cash and cash equivalents at beginning of period                                         |  |                              |         |   |                        |   | 2,971   |                            |  |   | 7,194        |   |  |              |         |   |  |   | 10,165   |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  
|Cash and cash equivalents at end of period                                               |  | $                            |         |   |                        | $ | 4,459   |                            |  | $ | 21,433       |   |  | $            |         |   |  | $ | 25,892   |  
|                                                                                         |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |          |  



48



---

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Cash Flows

(Dollars in thousands)



|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------- | -
|                                                                                                   |  | Year Ended December 31, 2002 |         
|                                                                                                   |  | Parent                       |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net income (loss)                                                                                  |  | $                            | (67,978  | ) |                        | $ | (24,369 | )                          |  | $ | 5,658        |   |  | $            | 18,711  |   |  | $ | (67,978  | )
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Depreciation and amortization expense                                                              |  |                              | 632      |   |                        |   | 22,040  |                            |  |   | 20,592       |   |  |              |        |   |  |   | 43,264   |  
|Deferred marine inspection costs                                                                   |  |                              |         |   |                        |   | (3,212  | )                          |  |   | (6,330       | ) |  |              |        |   |  |   | (9,542   | )
|Deferred income taxes                                                                              |  |                              | 15,529   |   |                        |   | (3,837  | )                          |  |   | 2,667        |   |  |              |        |   |  |   | 14,359   |  
|Equity in net earnings (loss)                                                                      |  |                              | 20,316   |   |                        |   | (1,605  | )                          |  |   |             |   |  |              | (18,711 | ) |  |   |         |  
|Loss on early retirement of debt                                                                   |  |                              | 10,896   |   |                        |   | 102     |                            |  |   |             |   |  |              |        |   |  |   | 10,998   |  
|Asset write-down                                                                                   |  |                              |         |   |                        |   | 5,200   |                            |  |   |             |   |  |              |        |   |  |   | 5,200    |  
|Gain on sales of assets                                                                            |  |                              |         |   |                        |   | (443    | )                          |  |   | (11          | ) |  |              |        |   |  |   | (454     | )
|Provision for doubtful accounts                                                                    |  |                              |         |   |                        |   | 120     |                            |  |   |             |   |  |              |        |   |  |   | 120      |  
|Change in operating assets and liabilities:                                                        |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Restricted cash                                                                                    |  |                              |         |   |                        |   |        |                            |  |   | (92          | ) |  |              |        |   |  |   | (92      | )
|Accounts receivable                                                                                |  |                              |         |   |                        |   | 3,933   |                            |  |   | 2,136        |   |  |              |        |   |  |   | 6,069    |  
|Prepaid expenses and other current assets                                                          |  |                              | 132      |   |                        |   | (67     | )                          |  |   | 2,611        |   |  |              |        |   |  |   | 2,676    |  
|Accounts payable and accrued expenses                                                              |  |                              | (5,913   | ) |                        |   | (639    | )                          |  |   | 2,660        |   |  |              |        |   |  |   | (3,892   | )
|Other, net                                                                                         |  |                              | 24       |   |                        |   | (2,179  | )                          |  |   | (6,510       | ) |  |              |        |   |  |   | (8,665   | )
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) operating activities                                                |  |                              | (26,362  | ) |                        |   | (4,956  | )                          |  |   | 23,381       |   |  |              |        |   |  |   | (7,937   | )
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Cash flows from investing activities:                                                              |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Purchases of property and equipment                                                                |  |                              |         |   |                        |   | (8,593  | )                          |  |   | (61,204      | ) |  |              |        |   |  |   | (69,797  | )
|Proceeds from sales of assets                                                                      |  |                              |         |   |                        |   | 1,965   |                            |  |   | 19           |   |  |              |        |   |  |   | 1,984    |  
|Proceeds from sale-leaseback transactions                                                          |  |                              |         |   |                        |   | 5,858   |                            |  |   |             |   |  |              |        |   |  |   | 5,858    |  
|Dividends received from subsidiaries                                                               |  |                              | 2,089    |   |                        |   |        |                            |  |   |             |   |  |              | (2,089  | ) |  |   |         |  
|Other                                                                                              |  |                              | (1,025   | ) |                        |   |        |                            |  |   | (1,610       | ) |  |              | 1,025   |   |  |   | (1,610   | )
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) investing activities                                                |  |                              | 1,064    |   |                        |   | (770    | )                          |  |   | (62,795      | ) |  |              | (1,064  | ) |  |   | (63,565  | )
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Cash flows from financing activities:                                                              |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net proceeds from issuance of stock                                                                |  |                              | 60       |   |                        |   |        |                            |  |   | 1,025        |   |  |              | (1,025  | ) |  |   | 60       |  
|Proceeds from issuance of long-term debt                                                           |  |                              | 247,990  |   |                        |   | 44,000  |                            |  |   | 54,602       |   |  |              |        |   |  |   | 346,592  |  
|Repayment of long-term debt                                                                        |  |                              | (256,366 | ) |                        |   | (21,518 | )                          |  |   | (14,402      | ) |  |              |        |   |  |   | (292,286 | )
|Dividends paid to parent                                                                           |  |                              |         |   |                        |   |        |                            |  |   | (2,089       | ) |  |              | 2,089   |   |  |   |         |  
|Advances (to)/from affiliates                                                                      |  |                              | 39,503   |   |                        |   | (40,762 | )                          |  |   | 1,259        |   |  |              |        |   |  |   |         |  
|Deferred financing costs and other                                                                 |  |                              | (5,889   | ) |                        |   | (977    | )                          |  |   |             |   |  |              |        |   |  |   | (6,866   | )
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) financing activities                                                |  |                              | 25,298   |   |                        |   | (19,257 | )                          |  |   | 40,395       |   |  |              | 1,064   |   |  |   | 47,500   |  
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Effect of exchange rates on cash and cash equivalents                                              |  |                              |         |   |                        |   |        |                            |  |   | 2,213        |   |  |              |        |   |  |   | 2,213    |  
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                                               |  |                              |         |   |                        |   | (24,983 | )                          |  |   | 3,194        |   |  |              |        |   |  |   | (21,789  | )
|Cash and cash equivalents at beginning of period                                                   |  |                              |         |   |                        |   | 27,954  |                            |  |   | 4,000        |   |  |              |        |   |  |   | 31,954   |  
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Cash and cash equivalents at end of period                                                         |  | $                            |         |   |                        | $ | 2,971   |                            |  | $ | 7,194        |   |  | $            |        |   |  | $ | 10,165   |  
|                                                                                                   |  |                              |          |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  



49



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

December 31, 2003, 2002 and 2001



Condensed Consolidating Statements of Cash Flows

(Dollars in thousands)



|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                         |  | Year Ended December 31, 2001 |        
|                                                                                         |  | Parent                       |         |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net income (loss)                                                                        |  | $                            | (6,923  | ) |                        | $ | (3,274  | )                          |  | $ | 13,079       |   |  | $            | (9,805 | ) |  | $ | (6,923  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Depreciation and amortization expense                                                    |  |                              | 849     |   |                        |   | 27,996  |                            |  |   | 18,761       |   |  |              |       |   |  |   | 47,606  |  
|Deferred marine inspection costs                                                         |  |                              |        |   |                        |   | (4,782  | )                          |  |   | (6,566       | ) |  |              |       |   |  |   | (11,348 | )
|Deferred income taxes                                                                    |  |                              | (6,421  | ) |                        |   | (4,269  | )                          |  |   | 6,859        |   |  |              |       |   |  |   | (3,831  | )
|Equity in net earnings (loss)                                                            |  |                              | (6,946  | ) |                        |   | (2,859  | )                          |  |   |             |   |  |              | 9,805  |   |  |   |        |  
|Asset write-down                                                                         |  |                              |        |   |                        |   | 21,249  |                            |  |   | 3,011        |   |  |              |       |   |  |   | 24,260  |  
|Gain on sales of assets                                                                  |  |                              |        |   |                        |   | (926    | )                          |  |   | (11          | ) |  |              |       |   |  |   | (937    | )
|Provision for doubtful accounts                                                          |  |                              |        |   |                        |   | 120     |                            |  |   |             |   |  |              |       |   |  |   | 120     |  
|Change in operating assets and liabilities:                                              |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Restricted cash                                                                          |  |                              |        |   |                        |   |        |                            |  |   | (137         | ) |  |              |       |   |  |   | (137    | )
|Accounts receivable                                                                      |  |                              | (183    | ) |                        |   | 1,830   |                            |  |   | (3,494       | ) |  |              |       |   |  |   | (1,847  | )
|Prepaid expenses and other current assets                                                |  |                              | (160    | ) |                        |   | (293    | )                          |  |   | 687          |   |  |              |       |   |  |   | 234     |  
|Accounts payable and accrued expenses                                                    |  |                              |        |   |                        |   | 5,376   |                            |  |   | (3,305       | ) |  |              |       |   |  |   | 2,071   |  
|Other, net                                                                               |  |                              |        |   |                        |   | (1,222  | )                          |  |   | 1,370        |   |  |              |       |   |  |   | 148     |  
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) operating activities:                                     |  |                              | (19,784 | ) |                        |   | 38,946  |                            |  |   | 30,254       |   |  |              |       |   |  |   | 49,416  |  
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Cash flows from investing activities:                                                    |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Purchases of property and equipment                                                      |  |                              |        |   |                        |   | (7,170  | )                          |  |   | (8,161       | ) |  |              |       |   |  |   | (15,331 | )
|Proceeds from sales of assets                                                            |  |                              |        |   |                        |   | 1,785   |                            |  |   | 33           |   |  |              |       |   |  |   | 1,818   |  
|Investment in subsidiaries                                                               |  |                              |        |   |                        |   |        |                            |  |   |             |   |  |              |       |   |  |   |        |  
|Dividends received from subsidiaries                                                     |  |                              |        |   |                        |   |        |                            |  |   |             |   |  |              |       |   |  |   |        |  
|Other                                                                                    |  |                              | 65      |   |                        |   |        |                            |  |   | (500         | ) |  |              |       |   |  |   | (435    | )
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) investing activities:                                     |  |                              | 65      |   |                        |   | (5,385  | )                          |  |   | (8,628       | ) |  |              |       |   |  |   | (13,948 | )
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Cash flows from financing activities:                                                    |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net proceeds from issuance of stock                                                      |  |                              | 83      |   |                        |   |        |                            |  |   |             |   |  |              |       |   |  |   | 83      |  
|Proceeds from issuance of long-term debt                                                 |  |                              |        |   |                        |   |        |                            |  |   | 1,075        |   |  |              |       |   |  |   | 1,075   |  
|Repayment of long-term debt                                                              |  |                              |        |   |                        |   |        |                            |  |   | (22,467      | ) |  |              |       |   |  |   | (22,467 | )
|Dividends paid to parent                                                                 |  |                              |        |   |                        |   |        |                            |  |   |             |   |  |              |       |   |  |   |        |  
|Advances (to)/from affiliates                                                            |  |                              | 19,633  |   |                        |   | (20,950 | )                          |  |   | 1,317        |   |  |              |       |   |  |   |        |  
|Deferred financing costs and other                                                       |  |                              |        |   |                        |   | (141    | )                          |  |   |             |   |  |              |       |   |  |   | (141    | )
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) financing activities:                                     |  |                              | 19,716  |   |                        |   | (21,091 | )                          |  |   | (20,075      | ) |  |              |       |   |  |   | (21,450 | )
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Effect of exchange rates on cash and cash equivalents                                    |  |                              |        |   |                        |   |        |                            |  |   | (158         | ) |  |              |       |   |  |   | (158    | )
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                              | (3      | ) |                        |   | 12,470  |                            |  |   | 1,393        |   |  |              |       |   |  |   | 13,860  |  
|Cash and cash equivalents at beginning of period                                         |  |                              | 3       |   |                        |   | 15,484  |                            |  |   | 2,607        |   |  |              |       |   |  |   | 18,094  |  
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  
|Cash and cash equivalents at end of period                                               |  | $                            |        |   |                        | $ | 27,954  |                            |  | $ | 4,000        |   |  | $            |       |   |  | $ | 31,954  |  
|                                                                                         |  |                              |         |   |                        |   |         |                            |  |   |              |   |  |              |        |   |  |   |         |  



50



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PART IV



Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K



(a) The following financial statements, schedules and exhibits are filed as part of this Report:



(1) Financial Statements. Reference is made to Item 8
hereof.



(2) Financial Statement Schedules



Report of Independent Auditors on Financial
Statement Schedule



Valuation and Qualifying
Accounts



(3) Exhibits. See Index to Exhibits
on page E-1. The Company will furnish to any eligible stockholder, upon written request of such stockholder, a copy of any exhibit listed upon the payment of a reasonable fee equal to the Companys expenses in furnishing such exhibit.



(b) Reports Form 8-K:



On November 14, 2003, we filed a report on Form 8-K, reporting under Item 5,
announcing earnings for the quarter ended September 30, 2003.



51



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K/A Report to
be signed on its behalf by the undersigned, thereunto duly authorized.



TRICO MARINE SERVICES, INC.(Registrant)By:

/s/    THOMAS E.
FAIRLEYThomas E. FairleyPresident and Chief Executive Officer




Date:  August 6, 2004



52



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON FINANCIAL STATEMENT SCHEDULE



To the Board of Directors and

Stockholders of Trico Marine Services, Inc.



Our audits of the consolidated financial statements referred to in our report dated March 11, 2004 except for Note 1, paragraph 4, and Notes 3, 4, 9 and 20 which are as of August 6, 2004 which are included in Item 8
in this Annual Report on Form 10-K/A also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K/A. In our opinion, this financial statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated financial statements.



/s/    PRICEWATERHOUSECOOPERS LLP



New Orleans, Louisiana

March 11, 2004, except for Note 1, paragraph 4, and
Notes 3, 4, 9 and 20

which are as of August 6, 2004.



53



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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES



Valuation and Qualifying Accounts

for the years ended December 31, 2003, 2002 and 2001

(in thousands)



|                                                    |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|--------------------------------------------------- |  | ------------------------------ | ------ | ---------------------------------------- | - | ------------------------- |  | ----------------------- | --- |  | ------------------------ | --- | - |  | - | ------
|Column A                                            |  | Column B                       |        | Column C                                 |   | Column C                  |  | Column D                |     |  | Column E                
|Description                                         |  | Balance at beginning of period |        | Charged (Credited) to costs and expenses |   | Charged to other accounts |  | Recoveries (Deductions) |     |  | Balance at end of period
|2003                                                |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|Valuation allowance on deferred tax assets:         |  | $                              | 32,997 |                                          | $ | 14,459                    |  | $                       | 288 |  | $                        |    |   |  | $ | 47,744
|Deducted in balance sheet from accounts receivable: |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|                                                    |  |                                |        |                                          |  
|Allowance for doubtful accountstrade               |  | $                              | 422    |                                          | $ | 120                       |  | $                       |    |  | $                        |    |   |  | $ | 542   
|                                                    |  |                                |        |                                          |  
|2002                                                |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|Valuation allowance on deferred tax assets:         |  | $                              |       |                                          | $ | 32,997                    |  | $                       |    |  | $                        |    |   |  | $ | 32,997
|Deducted in balance sheet from accounts receivable: |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|                                                    |  |                                |        |                                          |  
|Allowance for doubtful accountstrade               |  | $                              | 338    |                                          | $ | 120                       |  | $                       |    |  | $                        | (36 | ) |  | $ | 422   
|                                                    |  |                                |        |                                          |  
|2001                                                |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|Deducted in balance sheet from accounts receivable: |  |                                |        |                                          |   |                           |  |                         |     |  |                          |     |   |  |   |       
|                                                    |  |                                |        |                                          |  
|Allowance for doubtful accountstrade               |  | $                              | 184    |                                          | $ | 120                       |  | $                       |    |  | $                        | 34  |   |  | $ | 338   



54



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TRICO MARINE SERVICES, INC.



EXHIBIT INDEX



|               |  |                                                                                             
|-------------- |  | --------------------------------------------------------------------------------------------
|Exhibit Number |  |                                                                                             
|               | 
|23.1           |  | Consent of PricewaterhouseCoopers LLP                                                       
|               | 
|31.1           |  | Chief Executive Officers Certification under Section 302 of the Sarbanes-Oxley Act of 2002.
|               | 
|31.2           |  | Chief Financial Officers Certification under Section 302 of the Sarbanes-Oxley Act of 2002.
|               | 
|32.1           |  | Officers certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.         



E-1