##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2008
 o
    
    Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 Commission File Number: 1-33402
 Trico Marine Services, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    72-1252405
(I.R.S. Employer
Identification No.)10001 Woodloch Forest Drive, Suite 610
The Woodlands, Texas
(Address of principal executive offices)
    
    77380
(Zip code)
 Registrants telephone number, including area code: (281) 203-5700
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01
    
    NASDAQ Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
None.
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
  þ o
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TRICO MARINE SERVICES, INC.
 ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2008
 TABLE OF CONTENTS
 PagePART IItems 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    15Item 1B.
    
    Unresolved Staff Comments
    
    
    27Item 2.
    
    Properties
    
    
    27Item 3.
    
    Legal Proceedings
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27PART IIItem 5.
    
    Market for
Registrants Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    28Item 6.
    
    Selected Financial Data
    
    
    30Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    58Item 8.
    
    Financial Statements and Supplementary Data
    
    
    60Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    106Item 9A.
    
    Controls and Procedures
    
    
    106Item 9B.
    
    Other Information
    
    
    107PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    107Item 11.
    
    Executive Compensation
    
    
    107Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    107Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    107Item 14.
    
    Principal Accountant Fees and Services
    
    
    107PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    108EXHIBIT INDEX
    
    
    
    
    111EX-10.5EX-10.09EX-10.11EX-10.16EX-10.17EX-10.18EX-10.19EX-10.20EX-10.38EX-10.40EX-10.41EX-10.42EX-10.43EX-10.45EX-10.47EX-10.49EX-10.50EX-10.51EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
  i




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
  
    
    our objectives, business plans or strategies, and projected or anticipated benefits or other
consequences of such plans or strategies;
    
    our ability to obtain adequate financing on a timely basis and on acceptable terms, including
with respect to refinancing debt maturing in the next twelve months;
    
    our ability to continue to service, and to comply with our obligations under, our credit
facilities and our other indebtedness, including our obligation to pay make-whole amounts upon
any conversion of our convertible debentures due 2028;
    
    projections involving revenues, operating results or cash provided from operations, or our
anticipated capital expenditures or other capital projects;
    
    overall demand for and pricing of our vessels;
    
    changes in the level of oil and natural gas exploration and development;
    
    our ability to successfully or timely complete our various vessel construction projects;
    
    further reductions in capital spending budgets by customers;
    
    further declines in oil and natural gas prices;
    
    projected or anticipated benefits from acquisitions;
    
    increases in operating costs;
    
    the inability to accurately predict vessel utilization levels and day rates;
    
    variations in global business and economic conditions;
    
    the results, timing, outcome or effect of pending or potential litigation and our intentions
or expectations with respect thereto and the availability of insurance coverage in connection
therewith; and
    
    our ability to repatriate cash from foreign operations if and when needed.
   1




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2




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PART I
 Except as otherwise indicated or required by the context, references in this Annual Report to:
(1) we, us, our, the Company or Trico refer to the combined business of Trico Marine
Services, Inc. and its subsidiaries; (2) Gulf of Mexico refers to the U.S. Gulf of Mexico, and
(3) Mexico refers to the Mexican Gulf of Mexico.
 
 Item 1. Business
 General Information
  Recent Acquisition
    
    
    Creation of one of the worlds largest providers of integrated subsea services;
    
    Substantial expansion of our presence in the growing subsea services market with a
global platform, which may provide a stage for additional organic growth;
    
    Synergies with our existing subsea operations;
    
    Ability to leverage our existing infrastructure, equipment, vessels and resources to
provide specialized service offerings to new and existing customers;
 3




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
    
    Potential for the addition of earnings and cash flow;
    
    DeepOceans and CTC Marines successful operational track record and engineering
expertise;
    
    Addition of seasoned management team with specialized knowledge of the Subsea
Services and Subsea Trenching and Protection industry;
    
    DeepOceans and CTC Marines fleet of modern subsea capable equipment and vessels;
and
    
    Expanded international diversification, which improves growth prospects and
stabilizes cash flows.
 Joint Ventures
  Our Strategy
  Reduce our debt level, and carefully manage liquidity and cash flow
 Maximize our vessel utilization and our service spreads.
 Expand our presence in additional subsea services markets.
 Invest in growth of our subsea fleet.
 Focus on growing markets.
 4




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Our Business Segments
  Subsea Services
 General
  Vessels and Equipment
  Areas of Operation
  North Sea
 West Africa.
 Mediterranean
 Mexico.
 5




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Brazil.
 Competition
  Subsea Trenching and Protection
 General
   Vessels and Equipment
  6




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Ploughs.
 Jetters.
 Tractors.
 Competition
  Towing and Supply
 General
  Vessels and Equipment
  Areas of Operation
  7




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North Sea.
 West Africa.
 Southeast Asia.
 Mexico.
 Brazil.
 Gulf of Mexico.
 8




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Competition
     Our Fleet
   Multi-Purpose Service Vessels.
 Subsea Platform Supply Vessels.
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Trenching and Protection Support Vessels
 
    
    the installation of flexible pipe, umbilicals, power and telecommunication
cables;
    
    the deployment of our jetting subsea assets for the trenching of umbilicals and
flowlines; and
    
    other undertakings, such as subsea lifts, ROV intervention and survey support.
  Platform Supply Vessels.
 Anchor Handling, Towing and Supply Vessels.
 Supply Vessels.
 Crew Boats.
 10




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Number ofType of Vessel
    
    Vessels
    
    Length
    
    HorsepowerExisting Fleet:MSVs
    
    
    10
    
    
    
    200 426
    
    
    
    4,78817,795SPSVs
    
    
    7
    
    
    
    200 304
    
    
    
    3,000 10,800PSVs
    
    
    7
    
    
    
    190 280
    
    
    
    4,05010,800AHTSs
    
    
    6
    
    
    
    212 261
    
    
    
    11,14015,612OSVs
    
    
    38
    
    
    
    166 230
    
    
    
    2,000 6,140Crew/Line Handling Vessels
    
    
    4
    
    
    
    110 155
    
    
    
    1,2006,750Subsea Trenching and
Protection Vessels
    
    
    5
    
    
    
    295 351
    
    
    
    10,44023,480On Order:MPSVs
    
    
    8
    
    
    
    241
    
    
    
    6,222Subsea Trenching and
Protection Vessels
    
    
    1
    
    
    
    400
    
    
    
    16,320
  Vessel Maintenance.
    Dispositions of assets
 Customers and Charter Terms
  11




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Year Ending
    
    Year EndingDecember 31, 2009
    
    December 31, 2010% of Total
    
    
    
    
    
    % of TotalDays Under
    
    Average
    
    Days Under
    
    AverageType of Vessel
    
    Contract
    
    Day Rate
    
    Contract
    
    Day RateWithout OptionsAHTSs (6 vessels) (1)
    
    
    32
    %
    
    $
    12,626
    
    
    
    17
    %
    
    $
    17,515PSVs (7 vessels)
    
    
    55
    %
    
    
    14,910
    
    
    
    32
    %
    
    
    15,364OSVs (38 vessels) (2)
    
    
    23
    %
    
    
    11,523
    
    
    
    4
    %
    
    
    13,972Crew/Line Handling Boats (4 active)
    
    
    60
    %
    
    
    6,199
    
    
    
    27
    %
    
    
    6,250MSVs (10 vessels) (3)
    
    
    52
    %
    
    
    70,715
    
    
    
    38
    %
    
    
    72,429SPSVs (7 vessels)
    
    
    30
    %
    
    
    20,697
    
    
    
    29
    %
    
    
    20,196Subsea Trenching and Protection (5
vessels)
    
    
    13
    %
    
    
    71,274
    
    
    
    0
    %
    
    
    N/AWith OptionsAHTSs (6 vessels)
    
    
    35
    %
    
    $
    13,281
    
    
    
    33
    %
    
    $
    12,239PSVs (7 vessels)
    
    
    71
    %
    
    
    16,187
    
    
    
    58
    %
    
    
    16,398OSVs (38 vessels)
    
    
    23
    %
    
    
    11,397
    
    
    
    9
    %
    
    
    14,000Crew/Line Handling Boats (4 active)
    
    
    60
    %
    
    
    6,199
    
    
    
    27
    %
    
    
    6,250MSVs (10 vessels)
    
    
    55
    %
    
    
    69,757
    
    
    
    50
    %
    
    
    71,543SPSVs (7 vessels)
    
    
    44
    %
    
    
    26,996
    
    
    
    43
    %
    
    
    27,131Subsea Trenching and Protection (5
vessels)
    
    
    13
    %
    
    
    71,274
    
    
    
    0
    %
    
    
    N/A
 
 (1)
    
    The day rate for the AHTS class includes one vessel operating under a bareboat charter.(2)
    
    In 2007, five of our supply vessels entered into bareboat contracts which
decreased average supply vessel day rates. Including the five vessels under bareboat
agreements, our average day rates for vessels without options would be $6,882 and $3,324 for
the years ended December 31, 2009 and 2010 respectively; our average day rates for vessels
with options would be $6,872 and $5,618 for the years ended December 31, 2009 and 2010,
respectively.(3)
    
    We have executed a long-term contract (one bareboat) for one of the MPSVs that is currently
under construction and is expected to be delivered in the fourth quarter of 2009, subject to
potential delays that may occur.   12




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Environmental and Government Regulation
     Insurance
  13




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Employees
    Available Information
   14




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Item 1A. Risk Factors
 All phases of our operations are subject to a number of uncertainties, risks and other
influences, many of which are beyond our ability to control or predict. Any one of such
influences, or a combination, could materially affect the results of our operations and the
accuracy of forward-looking statements made by us. Some important risk factors that could cause
actual results to differ materially from the anticipated results or other expectations expressed in
our forward-looking statements includes the following:
 Risks Relating to our Businesses
 Our business is highly cyclical in nature due to our dependency on the levels of offshore oil
and gas drilling and subsea construction activity. If we are unable to stabilize our cash flow
during depressed markets, we may not be able to meet our obligations under our current or any
future debt obligations, and we may not be able to secure financing or have sufficient capital to
support our operations, which may materially adversely affect our financial position, results of
operations and cash flows.
  The failure to successfully complete construction or conversion of our vessels on schedule, on
budget, or at all, or to successfully utilize such vessels and the other vessels in our fleet at
profitable levels could adversely affect our financial position, results of operations and cash
flows.
    Our failure to retain key employees and attract additional qualified personnel for our
operations could prevent us from implementing our business strategy or operating our business
effectively.
  15




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Increased competitive forces in the subsea services and subsea trenching and protection
services markets could adversely affect our business.
  Time chartering of our subsea services and subsea trenching and protection vessels require us
to make payments absent revenue generation which could adversely affect our operations.
  Our fleet includes many older vessels that may require increased levels of maintenance and
capital expenditures to be maintained in good operating condition, are less efficient than newer
vessels, and may be subject to a higher likelihood of mechanical failure, an inability to
economically return to service or requirement to be scrapped. If we are unable to continue to
upgrade our fleet successfully, our financial position, results of operations and cash flows could
be materially adversely affected.
  Increases in size, quality and quantity of the offshore vessel fleet in areas where we operate
could increase competition for charters and lower day rates and/or utilization, which would
adversely affect our revenues and profitability.
  16




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Our U.S. employees are covered by federal laws that may subject us to job-related claims in
addition to those provided by state laws.
  Unionization efforts could increase our costs, limit our flexibility or increase the risk of a
work stoppage.
  The removal or reduction of the reimbursement of labor costs by the Norwegian government may
adversely affect our costs to operate our vessels in the North Sea.
  Certain management decisions needed to successfully operate EMSL, our 49% partnership, are
subject to the majority owners approval. The inability of our management representatives to reach
a consensus with the majority owner may negatively affect our results of operations.
  Our business plan involves establishing joint ventures with partners in targeted foreign
markets. As a U.S. corporation doing business in international jurisdictions, we are subject to
the Foreign Corrupt Practices Act, or FCPA. Our business may suffer because our efforts to comply
with U.S. laws could restrict our ability to do business in foreign markets relative to our
competitors who are not subject to U.S. law and a determination that we violated the FCPA,
including actions taken by our foreign agents or joint venture partners, may adversely affect our
business and operations.
  17




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Our marine operations are seasonal and depend, in part, on weather conditions. As a result,
our results of operations will vary throughout the year.
  Our operations are subject to federal, state, local and other laws and regulations that could
require us to make substantial expenditures.
   The loss of a key customer could have an adverse impact on our financial results.
  18




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The early termination of contracts on our vessels could have an adverse effect on our
operations.
  We are exposed to the credit risks of our key customers and certain other third parties, and
nonpayment by our customers could adversely affect our financial position, results of operations
and cash flows.
  Our inability to recruit, retain and train crew members may affect our ability to offer
services, reduce operational efficiency and increase our labor rates.
  Our operations are subject to operating hazards and unforeseen interruptions for which we may
not be adequately insured.
  The cost and availability of drydock services may impede our ability to return vessels to the
market in a timely manner.
  19




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Operating internationally subjects us to significant risks inherent in operating in foreign
countries.
  
    
    Government instability, which can cause investment in capital projects by our
potential customers to be withdrawn or delayed, reducing or eliminating the viability
of some markets for our services;
    
    Potential vessel seizure or confiscation, or the expropriation, nationalization or
detention of assets;
    
    Repatriating foreign currency received in excess of local currency requirements and
converting it into dollars or other fungible currency;
    
    Exchange rate fluctuations, which can reduce the purchasing power of local
currencies and cause our costs to exceed our budget, reducing our operating margin in
the affected country;
    
    Lack of ability to collect amounts owed;
    
    Civil uprisings, riots, and war, which can make it unsafe to continue operations,
adversely affect both budgets and schedules, and expose us to losses;
    
    Availability of suitable personnel and equipment, which can be affected by
government policy, or changes in policy, which limit the importation of qualified crew
members or specialized equipment in areas where local resources are insufficient;
    
    Decrees, laws, regulations, interpretations and court decisions under legal systems,
which are not always fully developed and which may be retroactively applied and cause
us to incur unanticipated and/or unrecoverable costs as well as delays which may result
in real or opportunity costs; and
    
    Terrorist attacks, including kidnappings of our crew members or onshore personnel.
  Risks Relating to our Capital Structure
 We may not be able to obtain funding or obtain funding on acceptable terms because of the
deterioration of the credit and capital markets. This may hinder or prevent us from meeting our
future capital needs.
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Our holding company structure may adversely affect our ability to meet our obligations.
  We have a substantial amount of indebtedness which may adversely affect our cash flow and our
ability to operate our business, to comply with debt covenants and to make payments on our
indebtedness.
   
    
    we may have difficulty satisfying our obligations under our senior credit
facilities or other indebtedness and, if we fail to comply with these requirements,
an event of default could result;
    
    we may be required to dedicate a substantial portion of our cash flow from
operations to required payments on indebtedness, thereby reducing the availability
of cash for working capital, capital expenditures and other general corporate
activities;
    
    covenants relating to our indebtedness may limit our ability to obtain
additional financing for working capital, capital expenditures and other general
corporate activities;
    
    covenants relating to our indebtedness may limit our flexibility in planning
for, or reacting to, changes in our business and the industry in which we operate;
    
    we may be more vulnerable to the impact of economic downturns and adverse
developments in our business; and
    
    we may be placed at a competitive disadvantage against any less leveraged
competitors.
   21




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Our business segments have been capitalized and are financed on a stand-alone basis, which may
hinder efficient utilization of available financial resources.
  We may not be able to repatriate funds from Norway to the U.S., which could negatively impact
our operational flexibility.
  
    
    the availability of cash at our Norwegian subsidiaries, or availability under
our existing credit facilities ($37 million) at December 31, 2008;
    
    our ability to comply with the funded debt to operating income plus depreciation
and amortization covenant ratios in our Norwegian subsidiaries NOK Revolver
following completion of the repatriation; and
    
    our Norwegian subsidiaries having sufficient distributable equity to support the
repatriation.
  Our ability to utilize certain net operating loss carryforwards or foreign tax credits may be
limited by certain events which could have an adverse impact on our financial condition.
  22




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We may face material tax consequences or assessments in countries in which we operate. If we
are required to pay material tax assessments, our financial position, results of operations and
cash flows may be materially adversely affected.
   Currency fluctuations and economic and political developments could adversely affect our
financial position, results of operations and cash flows.
   The terms of our existing registration rights agreement with certain of our common
stockholders may restrict the timing of any public offering or other distribution of shares of our
common stock and may depress the market price of our stock.
  Our charter documents include provisions limiting the rights of foreign owners of our capital
stock.
  23




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Our charter and bylaws may discourage unsolicited takeover proposals and could prevent
shareholders from realizing a premium on their common stock.
  Provisions of our debentures could discourage an acquisition of us by a third party.
  We may issue preferred stock whose terms could adversely affect the voting power or value of
our common stock.
  A substantial number of shares of our common stock will be eligible for future sale upon
conversion of the 6.5% Debentures and exercise of the phantom stock units, and the sale of those
shares could adversely affect our stock price.
  24




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You will experience substantial dilution if the 6.5% Debentures are converted and the phantom
stock units are exercised for shares of our common stock.
  We may be required to repurchase our debentures for cash upon specified events, which include
a fundamental change, or pay cash upon conversion of our debentures.
   25






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Risks Related to Our Industry
 Changes in the level of exploration and production expenditures, in oil and gas prices or
industry perceptions about future oil and gas prices could materially decrease our cash flows and
reduce our ability to meet our financial obligations.
   If our competitors are able to supply services to our customers at a lower price, then we may
have to reduce our day rates, which would reduce our revenues.
  
    
    price, service, safety record and reputation of vessel operators and crews;
    
    fuel efficiency of vessels; and
    
    quality and availability of equipment and vessels of the type, capability and size
required by the customer.
  The recent worldwide financial and credit crisis could lead to an extended worldwide economic
recession and have a material adverse effect on our financial position, results of operations and
cash flows.
  26




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
     
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  27




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PART II
 
 Item 5. Market for Registrants Common Stock, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Common Stock Market Prices and Dividends
  Sales Price Per ShareHigh
    
    Low2008First Quarter
    
    $
    42.50
    
    
    $
    30.37Second Quarter
    
    
    43.42
    
    
    
    32.36Third Quarter
    
    
    36.66
    
    
    
    14.36Fourth Quarter
    
    
    17.07
    
    
    
    3.222007First Quarter
    
    $
    39.23
    
    
    $
    29.56Second Quarter
    
    
    43.41
    
    
    
    37.02Third Quarter
    
    
    42.37
    
    
    
    29.04Fourth Quarter
    
    
    40.34
    
    
    
    29.65
   Issuer Repurchases of Equity Securities
    28




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Item 6. Selected Financial Data
 Successor Company
    
    Predecessor Company (1)Period from
    
    Period fromMarch 15,
    
    January 1,
    
    Year2005 through
    
    2005 through
    
    Ended(Dollars in thousands, except per
    
    Years Ended December 31,
    
    December 31,
    
    March 14,
    
    December 31,share amounts)
    
    2008(2)
    
    2007
    
    2006
    
    2005
    
    2005
    
    2004Statement of Operations Data:Revenues
    
    $
    556,131
    
    
    $
    256,108
    
    
    $
    248,717
    
    
    $
    152,399
    
    
    $
    29,866
    
    
    $
    112,510Impairments
    
    
    172,840
    (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Income (Loss)
    
    
    (127,545
    )
    
    
    66,630
    
    
    
    88,390
    
    
    
    41,816
    
    
    
    879
    
    
    
    (48,719
    )Reorganization Costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,659
    )
    
    
    (8,617
    )Fresh-Start Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (219,008
    )
    
    
    Interest Expense
    
    
    (31,943
    )
    
    
    (3,258
    )
    
    
    (1,286
    )
    
    
    (6,430
    )
    
    
    (1,940
    )
    
    
    (33,405
    )Interest Income
    
    
    9,875
    
    
    
    14,132
    
    
    
    4,198
    
    
    
    615
    
    
    
    
    
    
    
    423Unrealized Gain on Mark-to-Market of
Embedded Derivative
    
    
    52,653
    (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on Conversion of Debt
    
    
    9,008
    (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    
    (111,163
    )
    
    
    62,931
    
    
    
    58,724
    
    
    
    20,100
    
    
    
    (61,361
    )
    
    
    (95,952
    )Adjusted EBITDA (6)
    
    
    107,541
    
    
    
    90,577
    
    
    
    112,336
    
    
    
    53,806
    
    
    
    9,648
    
    
    
    14,983Earnings (Loss) per Common Share:Basic
    
    $
    (7.54
    )
    
    $
    4.32
    
    
    $
    4.01
    
    
    $
    1.78
    
    
    $
    (1.66
    )
    
    $
    (2.60
    )Diluted
    
    
    (7.54
    )
    
    
    4.16
    
    
    
    3.86
    
    
    
    1.74
    
    
    
    (1.66
    )
    
    
    (2.60
    )Balance Sheet Data:Working Capital Excess (Deficit)
    
    $
    11,680
    
    
    $
    140,004
    
    
    $
    151,068
    
    
    $
    46,259
    
    
    NA
    
    $
    (26,660
    )Property and Equipment, Net
    
    
    803,167
    
    
    
    473,614
    
    
    
    231,848
    
    
    
    225,646
    
    
    NA
    
    
    459,211Total Assets
    
    
    1,202,576
    
    
    
    681,774
    
    
    
    435,322
    
    
    
    344,222
    
    
    NA
    
    
    550,755Total Debt
    
    
    805,930
    
    
    
    160,545
    
    
    
    9,863
    
    
    
    46,538
    
    
    NA
    
    
    147,131Liabilities (subject to compromise)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NA
    
    
    275,179Stockholders Equity
    
    
    142,984
    
    
    
    390,222
    
    
    
    312,338
    
    
    
    222,432
    
    
    NA
    
    
    63,841Cash Flows Data:Cash Flows From Operations
    
    $
    79,176
    
    
    $
    112,476
    
    
    $
    101,731
    
    
    $
    27,174
    
    
    $
    9,168
    
    
    $
    (14,761
    )Cash Flows From Investing
    
    
    (592,115
    )
    
    
    (235,269
    )
    
    
    (23,227
    )
    
    
    4,292
    
    
    
    (650
    )
    
    
    (5,144
    )Cash Flows From Financing
    
    
    502,596
    
    
    
    130,361
    
    
    
    (16,261
    )
    
    
    1,299
    
    
    
    (2,596
    )
    
    
    7,048Effect of Exchange Rates on Cash
    
    
    (26,507
    )
    
    
    9,722
    
    
    
    712
    
    
    
    (701
    )
    
    
    62
    
    
    
    135Net Increase (Decrease) in Cash
    
    
    (36,850
    )
    
    
    17,290
    
    
    
    62,955
    
    
    
    32,064
    
    
    
    5,984
    
    
    
    (12,722
    )
 
 (1)
    
    We exited bankruptcy protection on March 15, 2005. In accordance with Statement of Position
90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, we adopted
fresh-start accounting as of March 15, 2005. Fresh-start accounting is required upon a
substantive change in control and requires that the reporting entity allocate the
reorganization value to our assets and liabilities in a manner similar to that which is
required under Statement of Financial Accounting Standards No. 141, Business Combinations.
Under the provisions of fresh-start accounting, a new entity has been deemed created for
financial reporting purposes.(2)
    
    We acquired DeepOcean and CTC Marine on May 15, 2008. Please see Managements Discussion
and Analysis of Financial Condition and Results of Operation  Overview for the
contributions of DeepOcean and CTC Marine to our results for 2008, and Note 4 in our accompanying
consolidated financial statements for pro forma results from this acquisition.(3)
    
    Includes impairment of goodwill of $169.7 million and tradenames of $3.1 million based on our
annual impairment analysis under SFAS 142.(4)
    
    We have an embedded derivative within our 6.5% Debentures that requires bifurcation and
valuation under SFAS No. 133. The estimate of fair value of the embedded derivative will
fluctuate based upon various factors that include our common stock closing price, volatility,
United States Treasury bond rates, and the time value of options. The calculation of the fair
value of the derivative requires the use of a Monte Carlo simulation lattice option-pricing
model. On December 31, 2008, the estimated fair value of the derivative was $1.1 million
resulting in a $52.7 million unrealized gain for the year ended December 31, 2008. For
additional information regarding our embedded derivative see Note 5 and Liquidity and Capital
Resources  Debt  6.5% Debentures below.(5)
    
    In December 2008, two holders of our 6.5% debentures converted $22 million principal amount
of the debentures, collectively, for a combination of $6.3 million in cash related to the
interest make-whole provision and 544,284 shares of our common stock based on the initial
conversion rate of 24.74023 shares for each $1,000 in principal amount of debentures. We
recognized a gain on conversion of $9.0 million.(6)
    
    See calculation of Adjusted EBITDA in the table included in Non-GAAP Financial Measures. 
 30




---



##### Table of Contents



Non-GAAP Financial Measures
      Successor Company
    
    
    Predecessor CompanyPeriod from
    
    
    Period fromMarch 15, 2005
    
    
    January 1, 2005
    
    
    Yearthrough
    
    
    through
    
    
    EndedYears Ended December 31,
    
    
    December 31,
    
    
    March 14,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004Net Income (Loss)
    
    $
    (111,163
    )
    
    $
    62,931
    
    
    $
    58,724
    
    
    $
    20,100
    
    
    $
    (61,361
    )
    
    $
    (95,952
    )Depreciation and Amortization
    
    
    61,432
    
    
    
    24,371
    
    
    
    24,998
    
    
    
    20,403
    
    
    
    8,758
    
    
    
    44,363Amortization of Non-Cash Deferred
Revenue
    
    
    (345
    )
    
    
    (910
    )
    
    
    (4,322
    )
    
    
    (10,137
    )
    
    
    
    
    
    
    Interest Income
    
    
    (9,875
    )
    
    
    (14,132
    )
    
    
    (4,198
    )
    
    
    (615
    )
    
    
    
    
    
    
    (423
    )Interest Expense, Net of Amounts
Capitalized
    
    
    31,943
    
    
    
    3,258
    
    
    
    1,286
    
    
    
    6,430
    
    
    
    1,940
    
    
    
    33,405Unrealized Gain on Mark-to-Market of
Embedded Derivative
    
    
    (52,653
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on Conversion of Debt
    
    
    (9,008
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Expense, Net
    
    
    1,597
    
    
    
    3,646
    
    
    
    840
    
    
    
    4,637
    
    
    
    59,253
    
    
    
    17,319Stock-Based Compensation
    
    
    3,834
    
    
    
    3,247
    
    
    
    2,024
    
    
    
    2,012
    
    
    
    9
    
    
    
    (Gain) Loss on Sale of Assets
    
    
    (2,675
    )
    
    
    (2,897
    )
    
    
    (1,334
    )
    
    
    (2,525
    )
    
    
    2
    
    
    
    30Impairments
    
    
    172,840
    
    
    
    116
    
    
    
    2,580
    
    
    
    2,237
    
    
    
    
    
    
    
    19,309Income Tax Expense (Benefit)
    
    
    14,823
    
    
    
    13,359
    
    
    
    33,723
    
    
    
    11,264
    
    
    
    1,047
    
    
    
    (3,068
    )Minority Interest in Income
(Loss) of
Consolidated Subsidiary
    
    
    6,791
    
    
    
    (2,432
    )
    
    
    (1,985
    )
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    107,541
    
    
    $
    90,557
    
    
    $
    112,336
    
    
    $
    53,806
    
    
    $
    9,648
    
    
    $
    14,983
 31




---



##### Table of Contents



Successor Company
    
    
    Predecessor CompanyPeriod from
    
    
    Period fromMarch 15,
    
    
    January 1,2005
    
    
    2005
    
    
    Yearthrough
    
    
    through
    
    
    EndedYears Ended December 31,
    
    
    December 31,
    
    
    March 14,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004Adjusted EBITDA
    
    $
    107,541
    
    
    $
    90,557
    
    
    $
    112,336
    
    
    $
    53,806
    
    
    $
    9,648
    
    
    $
    14,983Depreciation and Amortization
    
    
    (61,432
    )
    
    
    (24,371
    )
    
    
    (24,998
    )
    
    
    (20,403
    )
    
    
    (8,758
    )
    
    
    (44,363
    )Amortization of Non-Cash
Deferred
Revenue
    
    
    345
    
    
    
    910
    
    
    
    4,322
    
    
    
    10,137
    
    
    
    
    
    
    
    Stock-Based Compensation
    
    
    (3,834
    )
    
    
    (3,247
    )
    
    
    (2,024
    )
    
    
    (2,012
    )
    
    
    (9
    )
    
    
    (Gain) Loss on Sale of Assets
    
    
    2,675
    
    
    
    2,897
    
    
    
    1,334
    
    
    
    2,525
    
    
    
    (2
    )
    
    
    (30
    )Impairments
    
    
    (172,840
    )
    
    
    (116
    )
    
    
    (2,580
    )
    
    
    (2,237
    )
    
    
    
    
    
    
    (19,309
    )Operating Income (Loss)
    
    $
    (127,545
    )
    
    $
    66,630
    
    
    $
    88,390
    
    
    $
    41,816
    
    
    $
    879
    
    
    $
    (48,719
    )
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
  Introduction
  Overview
   32




---



##### Table of Contents



For the year ended December 31, 2008(1)DeepOcean andConsolidated
    
    
    CTC Marine
    
    
    Legacy TricoRevenues
    
    $
    556,131
    
    
    $
    308,649
    
    
    $
    247,482Direct operating expenses
    
    
    (383,894
    )
    
    
    (242,937
    )
    
    
    (140,957
    )General and administrative expense
    
    
    (68,185
    )
    
    
    (21,182
    )
    
    
    (47,003
    )Depreciation and amortization
    
    
    (61,432
    )
    
    
    (32,942
    )
    
    
    (28,490
    )Gain on sale of assets
    
    
    2,675
    
    
    
    
    
    
    
    2,675Impairments
    
    
    (172,840
    )
    
    
    (172,840
    )
    
    
    Operating income (loss)
    
    $
    (127,545
    )
    
    $
    (161,252
    )
    
    $
    33,707
 
 (1)
    
    Please see Note 4 to our accompanying consolidated financial statements for pro forma results from this acquisition.  Acquisition of DeepOcean and CTC Marine
   Our Outlook
  33




---



##### Table of Contents



Reduce our debt level, and carefully manage liquidity and cash flow
 Maximize our vessel utilization and our service spreads.
 Expand our presence in additional subsea services markets.
 Invest in growth of our subsea fleet.
 Focus on growing markets.
 Market Outlook  Demand for our Vessels and Services
  Subsea Services.
 Subsea Protection and Trenching.
 34




---



##### Table of Contents



Towing and Supply.
 Market Outlook  Credit Environment
  Factors that Affect Our Results
     35




---



##### Table of Contents



Risks and Uncertainties
       36




---



##### Table of Contents



(a)
    
    the consummation of any transaction that is disclosed in a Schedule 13D
(or successor form) by any person and the result of which is that such person
has become the beneficial owner (as these terms are defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
Companys Capital Stock that is at the time entitled to vote by the holder thereof
in the election of the Board of Directors (or comparable body); or(b)
    
    the first day on which a majority of the members of the Board of
Directors are not Continuing Directors; or(c)
    
    the adoption of a plan relating to the liquidation or dissolution of
the Company; or(d)
    
    the consolidation or merger of the Company with or into any other
Person, or the sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, of all or substantially all of the Companys assets
and those of its subsidiaries taken as a whole to any person (as this term is
used in Section 13(d)(3) of the Exchange Act), other than:
 a.
    
    any transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of the Companys Capital Stock
entitled to vote generally in elections of directors of the Company
immediately prior to such transaction have the right to exercise, directly
or indirectly, 50% or more of the total voting power of all shares of the
Companys Capital Stock entitled to vote generally in elections of
directors of the continuing or surviving Person (or any parent thereof)
immediately after giving effect to such transaction; orb.
    
    any merger primarily for the purpose of changing the
Companys jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding shares of Common
Stock solely into shares of common stock of the surviving entity.
 (e)
    
    the termination of trading of the Common Stock, which will be deemed to
have occurred if the Common Stock or other common equity interests into which the
Debentures are convertible is neither listed for trading on a United States
national securities exchange nor approved for listing on any United States system
of automated dissemination of quotations of securities prices, and no American
Depositary Shares or similar instruments for such common equity interests are so
listed or approved for listing in the United States.
  37




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##### Table of Contents



Subsequent Event
 Tonnage Tax Restructuring.
 38




---



##### Table of Contents



Results of Operations
  Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007
  Year Ended December 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeRevenues:Subsea Services
    
    $
    221,838
    
    
    $
    31,171
    
    
    $
    190,667
    
    
    
    612
    %Subsea Trenching and Protection
    
    
    123,804
    
    
    
    
    
    
    
    123,804
    
    
    
    100
    %Towing & Supply
    
    
    210,489
    
    
    
    224,937
    
    
    
    (14,448
    )
    
    
    (6
    )%Total Revenues
    
    
    556,131
    
    
    
    256,108
    
    
    
    300,023
    
    
    
    117
    %Operating Income (Loss):Subsea Services
    
    
    (114,575
    )
    
    
    11,594
    
    
    
    (126,169
    )
    
    
    (1,088
    )%Subsea Trenching and Protection
    
    
    (35,264
    )
    
    
    
    
    
    
    (35,264
    )
    
    
    100
    %Towing & Supply
    
    
    45,875
    
    
    
    75,483
    
    
    
    (29,608
    )
    
    
    (39
    )%Corporate
    
    
    (23,581
    )
    
    
    (20,447
    )
    
    
    (3,134
    )
    
    
    15
    %Total Operating Income (Loss)
    
    
    (127,545
    )
    
    
    66,630
    
    
    
    (194,175
    )
    
    
    (291
    )%Interest Income
    
    
    9,875
    
    
    
    14,132
    
    
    
    (4,257
    )
    
    
    (30
    )%Interest Expense, Net of Amounts Capitalized
    
    
    (31,943
    )
    
    
    (3,258
    )
    
    
    (28,685
    )
    
    
    880
    %Unrealized
Gain on Mark to Market of Embedded Derivative
    
    
    52,653
    
    
    
    
    
    
    
    52,653
    
    
    
    100
    %Gain on Conversion of Debt
    
    
    9,008
    
    
    
    
    
    
    
    9,008
    
    
    
    100
    %Other Expense, Net
    
    
    (1,597
    )
    
    
    (3,646
    )
    
    
    2,049
    
    
    
    (56
    )%Income
(Loss) from OperationsBefore Income Taxes and Minority Interests
    
    
    (89,549
    )
    
    
    73,858
    
    
    
    (163,407
    )
    
    
    (221
    )%Income Tax Expense
    
    
    (14,823
    )
    
    
    (13,359
    )
    
    
    (1,464
    )
    
    
    11
    %Minority Interest in Consolidated Subsidiaries
    
    
    (6,791
    )
    
    
    2,432
    
    
    
    (9,223
    )
    
    
    (379
    )%Net Income (Loss)
    
    $
    (111,163
    )
    
    $
    62,931
    
    
    $
    (174,094
    )
    
    
    (277
    )%
 39




---



##### Table of Contents



Years Ended December 31,2008
    
    
    2007Average Day Rates:SubseaSPSVs (1)
    
    $
    21,691
    
    
    $
    17,156MSVs (2)
    
    
    75,706
    
    
    
    N/ASubsea Trenching and Protection
    
    
    159,632
    
    
    
    N/ATowing and SupplyAHTSs (3)
    
    $
    35,508
    
    
    $
    38,813PSVs (4)
    
    
    17,933
    
    
    
    19,492OSVs (5)
    
    
    7,693
    
    
    
    8,600Utilization:SubseaSPSVs
    
    
    81
    %
    
    
    94
    %MSVs
    
    
    79
    %
    
    
    N/ASubsea Trenching and Protection
    
    
    91
    %
    
    
    N/ATowing and SupplyAHTSs
    
    
    88
    %
    
    
    88
    %PSVs
    
    
    92
    %
    
    
    89
    %OSVs
    
    
    82
    %
    
    
    74
    %Average number of Vessels:SubseaSPSVs
    
    
    5.4
    
    
    
    5.0MSVs
    
    
    9.3
    
    
    
    N/ASubsea Trenching and Protection
    
    
    3.5
    
    
    
    N/ATowing and SupplyAHTSs
    
    
    6.0
    
    
    
    6.0PSVs
    
    
    7.0
    
    
    
    7.0OSVs
    
    
    38.1
    
    
    
    39.1
 
 (1)
    
    Subsea platform supply vessels(2)
    
    Multi-purpose service vessels(3)
    
    Anchor handling, towing and supply vessels(4)
    
    Platform supply vessels(5)
    
    Offshore supply vessels 40




---



##### Table of Contents



Segment Results
 Subsea Services
   Subsea Trenching and Protection
  Towing and Supply
   Corporate
  41




---



##### Table of Contents



Other Items
 Interest Income.
 Interest
Expense.
 Unrealized Gain on Mark to Market of Embedded Derivative.
 Gain on Conversion of Debt.
 Other Expense, Net.
 Income Tax Expense.
 Minority Interest in Consolidated Subsidiary.
 42




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##### Table of Contents



Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006
  Year Ended December 31,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeRevenues:Subsea Services
    
    $
    31,171
    
    
    $
    26,333
    
    
    $
    4,838
    
    
    
    18
    %Towing & Supply
    
    
    224,937
    
    
    
    222,384
    
    
    
    2,553
    
    
    
    1
    %Total Revenues
    
    
    256,108
    
    
    
    248,717
    
    
    
    7,391
    
    
    
    3
    %Operating Income (Loss):Subsea Services
    
    
    11,594
    
    
    
    14,118
    
    
    
    (2,524
    )
    
    
    (18
    )%Towing & Supply
    
    
    75,483
    
    
    
    84,405
    
    
    
    (8,922
    )
    
    
    (11
    )%Corporate
    
    
    (20,447
    )
    
    
    (10,133
    )
    
    
    (10,314
    )
    
    
    102
    %Total Operating Income
    
    
    66,630
    
    
    
    88,390
    
    
    
    (21,760
    )
    
    
    (25
    )%Interest Income
    
    
    14,132
    
    
    
    4,198
    
    
    
    9,934
    
    
    
    237
    %Interest Expense, Net of
Amounts Capitalized
    
    
    (3,258
    )
    
    
    (1,286
    )
    
    
    (1,972
    )
    
    
    153
    %Other Expense, Net
    
    
    (3,646
    )
    
    
    (840
    )
    
    
    (2,806
    )
    
    
    334
    %Income from OperationsBefore Income Taxes and
Minority Interests
    
    
    73,858
    
    
    
    90,462
    
    
    
    (16,604
    )
    
    
    (18
    )%Income Tax Expense
    
    
    (13,359
    )
    
    
    (33,723
    )
    
    
    20,364
    
    
    
    (60
    )%Minority Interest in
Loss of Consolidated
Subsidiaries
    
    
    2,432
    
    
    
    1,985
    
    
    
    447
    
    
    
    23
    %Net Income
    
    $
    62,931
    
    
    $
    58,724
    
    
    $
    4,207
    
    
    
    7
    %
 43




---



##### Table of Contents



Years Ended December 31,2007
    
    
    2006Average Day Rates:SubseaSPSVs (1)
    
    $
    17,156
    
    
    $
    15,715Towing and SupplyAHTSs (2)
    
    $
    38,813
    
    
    $
    28,164PSVs (3)
    
    
    19,492
    
    
    
    14,219OSVs (4)
    
    
    8,600
    
    
    
    11,184Utilization:SubseaSPSVs
    
    
    94
    %
    
    
    97
    %Towing and SupplyAHTSs
    
    
    88
    %
    
    
    91
    %PSVs
    
    
    89
    %
    
    
    95
    %OSVs
    
    
    74
    %
    
    
    65
    %Average number of Vessels:SubseaSPSVs
    
    
    5.0
    
    
    
    5.0Towing and SupplyAHTSs
    
    
    6.0
    
    
    
    6.0PSVs
    
    
    7.0
    
    
    
    7.0OSVs
    
    
    39.1
    
    
    
    42.3
 
 (1)
    
    Subsea platform supply vessels(2)
    
    Anchor handling, towing and supply vessels(3)
    
    Platform supply vessels(4)
    
    Offshore supply vessels Segment Results
 Subsea Services
   Subsea Trenching and Protection
  44




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##### Table of Contents



Towing and Supply
   Corporate
  45




---



##### Table of Contents



Other Items
 Interest Income.
 Interest Expense.
 Other Expense, Net.
 Income Tax Expense.
  Minority Interest in Consolidated Subsidiary.
 46




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##### Table of Contents



Liquidity and Capital Resources
      47




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##### Table of Contents



December 31,2008
    
    
    2007$278.0 million face amount, 6.5% Senior Convertible Debentures net of unamortized discount
of $45.0 million, interest payable semi-annually in arrears,
maturing on May 15, 2028
(1)
    
    $
    232,998
    
    
    
    3.0% Senior Convertible Debentures, payable semi-annually in arrears, maturing
on January 15, 2027
(1)
    
    
    150,000
    
    
    
    150,000$200 million Revolving Credit
Facility(2) maturing in May 2013
    
    
    160,563
    
    
    
    $100 million Revolving Credit
Facility(2) maturing no later than
December 2017
    
    
    15,000
    
    
    
    $50 million US Revolving Credit
Facility
Agreement(2) maturing in January 2011
    
    
    46,460
    
    
    
    6.11% Notes, principal and interest due in 30 semi-annual installments, maturing April 2014
    
    
    6,915
    
    
    
    8,174NOK 260 million Short Term Credit Facility interest at 8.3% maturing on
on February 1, 2009
    
    
    11,631
    
    
    
    EMSL Revolving Credit Facility Agreement, bearing interest at LIBOR plus
a margin of 0.08%
    
    
    
    
    
    
    2,000Debt assumed in the acquisition of DeepOcean:NOK 350 million Revolving Credit
Facility(2), maturing December
1, 2014
    
    
    61,531
    
    
    
    NOK 230 million Revolving Credit
Facility(2), maturing June 1, 2012
    
    
    21,233
    
    
    
    NOK
150 million Additional Term
Loan(2), maturing December 18, 2011
    
    
    10,398
    
    
    
    NOK 200 million
Overdraft
Facility(2), maturing June 21, 2010
    
    
    3,207
    
    
    
    23.3 million Euro Revolving Credit
Facility(2), maturing March
31, 2010
    
    
    19,717
    
    
    
    $18 million
Revolving Credit
Facility(2), maturing December 5, 2011
    
    
    16,000
    
    
    
    8 million Sterling Overdraft Facility, maturity 364 days after drawdown
    
    
    9,812
    
    
    
    24.2 million Sterling Asset Financing Revolving Credit
Facility(2), maturing
no later than January 31, 2015
    
    
    17,286
    
    
    
    Finance
lease obligations assumed in the acquisition of DeepOcean, maturing
from October 2009 to November 2015
    
    
    14,172Other debt
assumed in the acquisition of DeepOcean, maturing from
March
2009 to August 2014
    
    
    8,695
    
    
    
    Fresh-start debt premium
    
    
    312
    
    
    
    371Total debt
    
    
    805,930
    
    
    
    160,545Less current maturities
    
    
    (82,982
    )
    
    
    (3,258
    )Long-term debt
    
    $
    722,948
    
    
    $
    157,287
  (1)
    
    Holders of our debentures have the right to require us to
repurchase the 6.5% Debentures on each of May 15, 2013, May 15, 2015,
May 15, 2018
and May 15, 2023 and the 3% Debentures on each of January 15, 2014,
January 15, 2017 and January 15, 2022.(2)
    
    Interest on such credit facilities is at London inter-bank offered
rate (LIBOR) or the Norwegian inter-bank offered rate (NIBOR) plus an
applicable margin ranging from 1.75% to 2.55%. The three month LIBOR rate was 1.8%
and 5.0% and the three month NIBOR was 3.97% and 5.88% for the periods
ending December 31, 2008 and December 31, 2007, respectively. 48




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##### Table of Contents



Facility
    
    Lender (s)
    
    Borrower
    
    Guarantor
    
    Financial Covenants6.5% Senior
Convertible
Debentures
    
    Various
    
    Trico Marine
Services, Inc.
    
    None
    
    No maintenance
covenants3.0% Senior
Convertible
Debentures
    
    Various
    
    Trico Marine
Services, Inc.
    
    None
    
    No maintenance
covenants6.11%Notes
    
    Various
    
    Trico Marine International, Inc.
    
    Trico Marine Services, Inc. and
U.S. Maritime Administration
    
    No maintenance covenants$200m
Revolving 
Credit
Facility
    
    Nordea Bank Finland
PLC / Bayerische
Hypo  Und
Vereinsbank AG
(HVB)
    
    Trico Shipping AS
    
    Trico Supply AS
    
    (1), (2), (3), (4)$100m
Revolving 
Credit
Facility
    
    Nordea Bank Finland
PLC / Bayerische
Hypo  Und
Vereinsbank AG
(HVB)
    
    Trico Subsea AS
    
    Trico Supply AS
    
    (1), (2), (3), (4)$50m US
Revolving 
Credit
Facility
    
    Nordea Bank Finland
PLC / Bayerische
Hypo  Und
Vereinsbank AG
(HVB)
    
    Trico Marine
Services, Inc.
    
    Trico Marine
Assets, Inc., Trico
Marine Operators,
Inc.
    
    (5), (2), (3), (6)NOK 350m 
Revolving
Credit
Facility
    
    Sparebank 1 SR-Bank
    
    Deep Ocean Shipping
II
    
    Deep Ocean AS
    
    (7) (8), (9)NOK 230m 
Revolving
Credit
Facility
    
    Sparebank 1 SR-Bank
    
    Deep Ocean AS
    
    None
    
    (7) (8), (9)23.3 Revolving Credit Facility
    
    Nordea Bank Norge ASA
    
    Deep Ocean Shipping III
    
    Trico Supply AS
    
    (1), (2), (3)NOK 150m
Additional
Term Loan
    
    Sparebank 1 SR-Bank
    
    Deep Ocean Shipping
II
    
    Deep Ocean AS
    
    (7) (8), (9)$18m Revolving 
Credit
Facility
    
    Nordea Bank Norge
PLC
    
    Deep Ocean Shipping
    
    Trico Supply AS
    
    (1), (2), (3)£8m Overdraft 
Facility
    
    Barlcays Bank PLC
    
    CTC Marine Projects
Limited
    
    Deep Ocean AS
(partial up to 100m
NOK)
    
    None£24.2m Asset
Financing
Revolving
Credit
Facility
    
    Barclays Bank PLC
    
    CTC Marine Projects
Limited
    
    Deep Ocean AS
(partial up to 100m
NOK)
    
    NoneNOK 200m 
Overdraft
Facility
    
    Sparebank 1 SR-Bank
    
    Deep Ocean AS
    
    None
    
    (7) (8), (9)Finance
Leases
    
    Sparebank 1 SR-Bank
    
    Deep Ocean AS
    
    None
    
    No maintenance covenants
 
 (1)
    
    Consolidated Leverage Ratio: Net Debt to 12 month
rolling EBITDA* less than or equal to 3.50:1
calculated at the Guarantor level(2)
    
    Consolidated Net Worth  minimum net worth of Borrower (if Trico Marine Services) or
Guarantor(3)
    
    Free Liquidity  minimum unrestricted cash and / or unutilized loan commitments at
Borrower or Guarantor(4)
    
    Collateral coverage  appraised value of collateral (vessels) must exceed 150% of
amount outstanding and amount available 49




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##### Table of Contents



(5)
    
    Consolidated Leverage Ratio: Net Debt to 12 month rolling EBITDA less than or equal to
4.75 for the quarter ending December 31, 2008, and 4.50 for the quarters ending March 31,
2009, June 30, 2009, September 30, 2009, or December 31, 2009, and 4.00 for any quarter
thereafter. Calculated at the Borrower level(6)
    
    Maintenance Capital Expenditures  limits the amount of maintenance capital
expenditures in any given fiscal year(7)
    
    Book Equity Ratio  Book Equity divided by Book Assets must exceed 35%. Calculated at
the Guarantor level(8)
    
    Leverage Ratio  Net Interest Bearing Debt divided by EBITDA** must be lower than 4:1
until December 31, 2008 and 3:1 thereafter. Calculated at the Guarantor level(9)
    
    Working Capital Ratio  Current Assets must be greater than Current Liabilities
(excluding short-term maturities of debt)*
    
    EBITDA is defined under (1) and (5) as Consolidated Net Income before deducting therefrom (i)
interest expense, (ii) provisions for taxes based on income included in Consolidated Net
Income, (iii) amortization and depreciation without giving any effect to (x) any extraordinary
gains or extraordinary non-cash losses and (y) any gains or losses from sales of assets other
than the sale of inventory in the ordinary course or business. Prior to December 31, 2009,
pro-forma adjustments shall be made for any vessels delivered during the period as if such
vessels were acquired or delivered on the first day of the relevant 12 month test period.**
    
    EBITDA is defined, on a consolidated basis, as the Borrowers earnings before interest,
taxes, depreciation, amortization and any gain or loss from the sale of assets or other
extraordinary gains or losses.   Minimum
    
    
    
    MinimumRequirement as
    
    
    
    Requirement to be metFinancial
    
    of December 31,
    
    December 31,
    
    on March 31,Facility
    
    Covenant
    
    2008
    
    2008 results
    
    2009 (1)NOK 350m Revolving
Credit Facility;
NOK 230m Revolving
Credit Facility;
NOK 150m Additional
Term Loan; NOK 200m
Overdraft Facility
    
    Book Equity Ratio
    
    Book Equity divided
Book Assets must
exceed 35%
    
    35.02%
    
    Book Equity divided
Book Assets must
exceed 35%NOK 350m Revolving
Credit Facility;
NOK 230m Revolving
Credit Facility;
NOK 150m Additional
Term Loan; NOK 200m
Overdraft Facility
    
    Leverage Ratio
    
    Net Interest Bearing Debt to by EBITDA** must be lower than 4:1
    
    3.02:1
    
    Net Interest Bearing Debt to by EBITDA** must be lower than 3:1NOK 350m Revolving
Credit Facility;
NOK 230m Revolving
Credit Facility;
NOK 150m Additional
Term Loan; NOK 200m
Overdraft Facility
    
    Working Capital
Ratio
    
    Higher than 1.1
    
    1.51
    
    Higher than 1.1
 
 (1)
    
    We expect to be in compliance with the covenants at March 31,
2009.
   Cross Default Provisions.
 
    
    The 6.5% Debentures and the 3.0% Debentures contain provisions where the debt holders
may declare an event of default and require immediate repayment if
repayment of certain other
indebtedness in a principal amount in excess of $30 million or its
foreign currency equivalent has been accelerated and not remedied
within 30 days after notice thereof.
    
    The $50m US Revolving allows the lenders to declare an event of default and require
immediate repayment if Trico Marine Services, Inc. or any of its Subsidiaries were to be in
default on more than $10 million in other indebtedness.
    
    The $100m Revolving Credit Facility and the $200m Revolving Credit Facility allow the
lenders to declare an event of default and require immediate repayment if Trico Supply AS
or any of its Subsidiaries were to be in default on more than $10m in other indebtedness.
 50




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##### Table of Contents




    
    Under the debt facilities where Deep Ocean AS or Deep Ocean Shipping II are the
borrowers, the lender may declare an event of default and require immediate repayment if
other indebtedness becomes due and payable prior to its specified maturity as a result of
an event of default.
    
    The $18m Revolving Credit Facility allows the lender to declare an event of default and
require immediate repayment if the Borrower (Deep Ocean Shipping) or the Guarantor (Trico
Supply AS) is in default on more than $1,000,000 or $5,000,000, respectively, in other
indebtedness.
    
    The
23.3 Revolving Credit Facility allows the lender to declare an event of default if
the Borrower defaults under any other agreement and in the reasonable opinion of the
lender, this default would have a material adverse effect on the financial condition of the
Borrower.
    
    The £8m Overdraft Facility and the £24.2m Asset Financing Revolving Credit Facility
contain cross default provisions where it is an event of default if Borrower (CTC) defaults
on its own debt.
  Our Capital Requirements
     51




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##### Table of Contents



Cash Flows
  Year Ended December 312008
    
    
    2007
    
    
    2006Cash flow provided by operations
    
    $
    78,695
    
    
    $
    112,476
    
    
    $
    101,731Cash flow used in investing
    
    
    (591,634
    )
    
    
    (235,269
    )
    
    
    (23,227
    )Cash flow provided by (used in) financing
    
    
    502,596
    
    
    
    130,361
    
    
    
    (16,261
    )Effects of foreign exchange rate changes
on cash
    
    
    (26,507
    )
    
    
    9,722
    
    
    
    712
 Operating Activities.
   Investing Activities.
   Financing Activities
  52




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodLess than
    
    
    2-3
    
    
    4-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt obligations (1) (2) (3)
    
    $
    850,620
    
    
    $
    82,982
    
    
    $
    164,608
    
    
    $
    109,422
    
    
    $
    493,608Interest on fixed rate debt (4)
    
    
    432,480
    
    
    
    22,958
    
    
    
    45,687
    
    
    
    45,379
    
    
    
    318,456Interest on
variable rate debt (5)
    
    
    59,839
    
    
    
    18,341
    
    
    
    25,030
    
    
    
    12,218
    
    
    
    4,250Vessel construction obligations (6)
    
    
    182,775
    
    
    
    110,536
    
    
    
    72,239
    
    
    
    
    
    
    
    Time charter and equipment leases
    
    
    385,562
    
    
    
    111,279
    
    
    
    166,616
    
    
    
    61,613
    
    
    
    46,054Operating lease obligations
    
    
    13,104
    
    
    
    3,793
    
    
    
    4,616
    
    
    
    3,487
    
    
    
    1,208Taxes payable (7)
    
    
    51,508
    
    
    
    4,000
    
    
    
    8,000
    
    
    
    8,000
    
    
    
    31,508Pension obligations
    
    
    6,048
    
    
    
    530
    
    
    
    1,136
    
    
    
    1,174
    
    
    
    3,208Total
    
    $
    1,981,936
    
    
    $
    354,419
    
    
    $
    487,932
    
    
    $
    241,293
    
    
    $
    898,292
 
 (1)
    
    Excludes fresh-start debt premium of $0.3 million and unamortized discount on 6.5% Debentures
of $45.0 million at December 31, 2008.(2)
    
    Does not assume any early conversions or redemption of the 6.5% Debentures and 3% Debentures
as each is assumed to reach its originally stated maturity date.
Holders of our debentures have the right to require us to repurchase
the 6.5% Debentures on each of May 15, 2013, May 15, 2015, May 15,
2018 and May 15, 2023 and the 3% Debentures on each of January 15,
2014, January 15, 2017 and January 15, 2022.  If the remaining holders of
the 6.5% Debentures convert their debentures, we would be required to pay approximately $75
million in cash related to the make-whole provision. Please see
Managements Discussion and Analysis of Financial
Condition and Results of OperationRisks and Uncertainties.(3)
    
    If the maturities of certain debt agreements with SR Bank are amended in accordance with the
agreed term sheet, approximately $86.0 million of maturities of debt shown in the above
table in the years between 2010 and 2014 would all be due on January 1, 2010.(4)
    
    Includes the semi-annual interest payments on the 6.5% Debentures and the 3% Debentures to
their maturities of 2028 and 2027, respectively and interest payments on the 6.11% Notes
maturing 2014.(5)
    
    For the purpose of this calculation amounts assume interest
rates on floating rate obligations remain unchanged from levels at
December 31, 2008, throughout the life of the obligation.(6)
    
    Reflects committed expenditures, of which approximately
$111.1 million will be covered through increases of the
available capacity  under our
existing credit facilities when the vessels are delivered ($83.1 million, and $24.0 million and $4.0 million of this amount
relates to expenditures in 2009, 2010 and 2011, respectively), and does not reflect the future
capital expenditures budgeted for periods presented which are discretionary.(7)
    
    Norwegian tax laws allow for a portion of the accumulated untaxed shipping profits, $34.3
million, to be paid in equal installments over the next 9 years. An additional liability of
$17.2 million can be satisfied through making qualifying environmental expenditures. Any
remaining portion of the environmental part of the liability not expended at the end of
fifteen years would be payable to the Norwegian tax authorities at
that time. We also have liabilities for uncertain tax positions of
$2.1 million at December 31, 2008 which has not been included in the
table above due to the uncertain timing of settlement.   53




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##### Table of Contents



Our Critical Accounting Policies
  Revenue recognition.
   Goodwill and Intangible Assets
    54




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##### Table of Contents



Accounting for long-lived assets.
  Impairment of Long-Lived Assets.
 Goodwill and Other Intangible Assets
 Unrealized Gain on Mark to Market of Embedded Derivative.
 Deferred tax valuation allowance.
   55




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##### Table of Contents



Uncertain tax positions.
 Recent Accounting Standards
   Effective Date of FASB
Statement No. 157
  56




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57




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Interest
Rate Risk
  ApproximateExpected Maturity Date at December 31, 2008
    
    
    Fair Value atYear Ending December 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    2008(Dollars in thousands)Fixed Rate Debt (1)
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    428,625
    
    
    $
    147,078Variable rate debt (2)
    
    
    81,724
    
    
    
    83,761
    
    
    
    78,331
    
    
    
    47,723
    
    
    
    59,183
    
    
    
    64,983
    
    
    
    415,705Total debt
    
    $
    82,982
    
    
    $
    85,019
    
    
    $
    79,589
    
    
    $
    48,981
    
    
    $
    60,441
    
    
    $
    493,608
    
    
    $
    562,783
 
 (1)
    
    Includes (i) the 3.00% Debentures, bearing interest at 3.00%, interest payable
semi-annually and maturing in 2027, (ii) the 6.5% Debentures bearing interest at 6.5%,
interest payable semi-annually, maturing 2028 and (iii) the 6.11% Notes, bearing interest at
6.11%, principal and interest due in 30 semi-annual installments, maturing in 2014. Amounts do not
include should the remaining holders of our 6.5% Debentures convert, we would be required to pay
approximately $75 million (as of March 11, 2009) in cash related to the interest
make-whole provision.(2)
    
    Includes various credit facilities and term debt as further described in Note 5 to our
Consolidated Financial Statements included herein in Item 8. Foreign
Currency Exchange Rate Risk
   58




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Embedded
Derivative Risk
  59




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    61Consolidated Balance SheetsAs of December 31, 2008 and as of December 31, 2007
    
    
    63Consolidated Statements of OperationsYears Ended December 31, 2008, 2007 and 2006
    
    
    64Consolidated Statements of Cash FlowsYears Ended December 31, 2008, 2007 and 2006
    
    
    65Consolidated Statements of Stockholders EquityYears Ended December 31, 2008, 2007 and 2006
    
    
    66Notes to Consolidated Financial Statements
    
    
    67
 60




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework
     61




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/s/ PricewaterhouseCoopers LLPHouston, TexasMarch 11, 2009 62




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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS  (in thousands, except share amounts)
 As of December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    94,613
    
    
    $
    131,463Restricted cash
    
    
    3,566
    
    
    
    4,747Accounts receivable, net
    
    
    165,152
    
    
    
    47,253Prepaid expenses and other current assets
    
    
    3,375
    
    
    
    5,023Assets held for sale
    
    
    
    
    
    
    3,786Total current assets
    
    
    266,706
    
    
    
    192,272Property and equipment:Marine vessels
    
    
    502,417
    
    
    
    285,656Subsea equipment
    
    
    153,003
    
    
    
    Construction-in-progress
    
    
    258,826
    
    
    
    255,749Transportation and other
    
    
    4,902
    
    
    
    3,691919,148
    
    
    
    545,096Less accumulated depreciation and amortization
    
    
    (115,981
    )
    
    
    (71,482
    )Net property and equipment, net
    
    
    803,167
    
    
    
    473,614Intangible assets
    
    
    106,983
    
    
    
    Other assets, including restricted cash of $3.8 million at December 31, 2007
    
    
    25,720
    
    
    
    15,858Total assets
    
    $
    1,202,576
    
    
    $
    681,744LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term and current maturities of long-term debt
    
    $
    82,982
    
    
    $
    3,258Accounts payable
    
    
    53,872
    
    
    
    15,480Accrued expenses
    
    
    85,656
    
    
    
    25,404Accrued interest
    
    
    10,383
    
    
    
    2,152Foreign taxes payable
    
    
    4,000
    
    
    
    4,627Income taxes payable
    
    
    18,133
    
    
    
    1,347Total current liabilities
    
    
    255,026
    
    
    
    52,268Long-term debt
    
    
    722,948
    
    
    
    157,287Long-term derivative
    
    
    1,119
    
    
    
    Foreign taxes payable
    
    
    47,508
    
    
    
    64,777Deferred income taxes
    
    
    5,104
    
    
    
    Other liabilities
    
    
    6,001
    
    
    
    4,312Total liabilities
    
    
    1,037,706
    
    
    
    278,644Commitments and contingencies (See Note 17)
    
    
    
    
    
    
    Minority interest
    
    
    21,886
    
    
    
    12,878Stockholders equity:Common stock, $.01 par value, 50,000,000 shares authorized and 16,199,980
and 15,013,076 shares issued at December 31, 2008 and 2007, respectively
    
    
    160
    
    
    
    150Warrants
    
    
    1,640
    
    
    
    2,277Additional paid-in capital
    
    
    275,433
    
    
    
    245,134Retained earnings
    
    
    30,448
    
    
    
    141,611Accumulated other comprehensive income (loss), net of tax
    
    
    (202,681
    )
    
    
    18,654Phantom stock
    
    
    55,588
    
    
    
    Treasury stock, at cost, 570,207 shares at December 31, 2008 and 2007
    
    
    (17,604
    )
    
    
    (17,604
    )Total stockholders equity
    
    
    142,984
    
    
    
    390,222Total liabilities and stockholders equity
    
    $
    1,202,576
    
    
    $
    681,744
  63




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TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME  (in thousands, except per share amounts)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    556,131
    
    
    $
    256,108
    
    
    $
    248,717Operating expenses:Direct operating expenses
    
    
    383,894
    
    
    
    127,128
    
    
    
    106,981General and administrative
    
    
    68,185
    
    
    
    40,760
    
    
    
    27,102Depreciation and amortization
    
    
    61,432
    
    
    
    24,371
    
    
    
    24,998Impairments
    
    
    172,840
    
    
    
    116
    
    
    
    2,580Gain on sales of assets
    
    
    (2,675
    )
    
    
    (2,897
    )
    
    
    (1,334
    )Total operating expenses
    
    
    683,676
    
    
    
    189,478
    
    
    
    160,327Operating income (loss)
    
    
    (127,545
    )
    
    
    66,630
    
    
    
    88,390Interest expense, net of amounts capitalized
    
    
    (31,943
    )
    
    
    (3,258
    )
    
    
    (1,286
    )Interest income
    
    
    9,875
    
    
    
    14,132
    
    
    
    4,198Unrealized gain on mark-to-market of embedded derivative
    
    
    52,653
    
    
    
    
    
    
    
    Gain on conversion of debt
    
    
    9,008
    
    
    
    
    
    
    
    Other expense, net
    
    
    (1,597
    )
    
    
    (3,646
    )
    
    
    (840
    )Income (loss) before income taxes and minority interest
of consolidated subsidiaries
    
    
    (89,549
    )
    
    
    73,858
    
    
    
    90,462Income tax expense
    
    
    14,823
    
    
    
    13,359
    
    
    
    33,723Income (loss) before minority interest of consolidated
subsidiaries
    
    
    (104,372
    )
    
    
    60,499
    
    
    
    56,739Minority interest of consolidated subsidiaries
    
    
    (6,791
    )
    
    
    2,432
    
    
    
    1,985Net income (loss)
    
    $
    (111,163
    )
    
    $
    62,931
    
    
    $
    58,724Earnings (loss) per common share:Basic
    
    $
    (7.54
    )
    
    $
    4.32
    
    
    $
    4.01Diluted
    
    $
    (7.54
    )
    
    $
    4.16
    
    
    $
    3.86Weighted average shares outstanding:Basic
    
    
    14,744
    
    
    
    14,558
    
    
    
    14,628Diluted
    
    
    14,744
    
    
    
    15,137
    
    
    
    15,206
  64




---



##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (111,163
    )
    
    $
    62,931
    
    
    $
    58,724Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    61,432
    
    
    
    24,371
    
    
    
    24,998Amortization of non-cash deferred revenues
    
    
    (345
    )
    
    
    (910
    )
    
    
    (4,322
    )Amortization of deferred financing costs
    
    
    3,671
    
    
    
    
    
    
    
    Accretion of debt discount
    
    
    5,200
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (13,527
    )
    
    
    
    
    
    
    29,856Impairments
    
    
    172,840
    
    
    
    116
    
    
    
    2,580Change in fair value of embedded derivative
    
    
    (52,653
    )
    
    
    
    
    
    
    Gain on conversion of 6.5% debentures
    
    
    (9,008
    )
    
    
    
    
    
    
    Cash paid for make-whole premium related to conversion of 6.5% debentures
    
    
    (6,255
    )
    
    
    
    
    
    
    Gain on sales of assets
    
    
    (2,675
    )
    
    
    (2,897
    )
    
    
    (1,334
    )Provision on doubtful accounts
    
    
    1,364
    
    
    
    78
    
    
    
    1,234Stock based compensation
    
    
    3,834
    
    
    
    3,247
    
    
    
    2,024Minority interest in income (loss) of consolidated subsidiary
    
    
    6,791
    
    
    
    (2,432
    )
    
    
    (1,985
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (16,597
    )
    
    
    15,177
    
    
    
    (15,522
    )Prepaid expenses and other current assets
    
    
    25,854
    
    
    
    (848
    )
    
    
    (384
    )Accounts payable and accrued expenses
    
    
    3,426
    
    
    
    12,247
    
    
    
    8,114Foreign taxes payable
    
    
    (16,930
    )
    
    
    5,829
    
    
    
    Income taxes payable
    
    
    17,865
    
    
    
    (945
    )
    
    
    824Other, net
    
    
    5,571
    
    
    
    (3,488
    )
    
    
    (3,076
    )Net cash provided by operating activities
    
    
    78,695
    
    
    
    112,476
    
    
    
    101,731Cash flows from investing activities:Acquisition of Active Subsea, net of acquired cash
    
    
    
    
    
    
    (220,443
    )
    
    
    Acquisition of DeepOcean, net of acquired cash
    
    
    (506,093
    )
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (106,235
    )
    
    
    (26,063
    )
    
    
    (19,472
    )Proceeds from sales of assets
    
    
    7,110
    
    
    
    4,649
    
    
    
    3,402Purchases of available-for-sale securities
    
    
    
    
    
    
    (184,815
    )
    
    
    (2,475
    )Sale of available-for-sale securities
    
    
    
    
    
    
    187,290
    
    
    
    Sale of hedge instrument
    
    
    8,150
    
    
    
    
    
    
    
    Decrease (increase) in restricted cash
    
    
    5,434
    
    
    
    4,113
    
    
    
    (4,682
    )Net cash used in investing activities
    
    
    (591,634
    )
    
    
    (235,269
    )
    
    
    (23,227
    )Cash flows from financing activities:Purchases of treasury stock
    
    
    
    
    
    
    (17,604
    )
    
    
    Net proceeds from exercises of warrants and options
    
    
    11,962
    
    
    
    2,027
    
    
    
    994Proceeds from issuance of senior convertible debentures
    
    
    300,000
    
    
    
    150,000
    
    
    
    Proceeds (Repayments) from debt
    
    
    203,764
    
    
    
    742
    
    
    
    (38,163
    )Contribution from minority interest
    
    
    3,519
    
    
    
    
    
    
    
    20,910Debt issuance costs
    
    
    (16,649
    )
    
    
    (4,804
    )
    
    
    (2
    )Net cash provided by (used in) financing activities
    
    
    502,596
    
    
    
    130,361
    
    
    
    (16,261
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (26,507
    )
    
    
    9,722
    
    
    
    712Net increase (decrease) in cash and cash equivalents
    
    
    (36,850
    )
    
    
    17,290
    
    
    
    62,955Cash and cash equivalents at beginning of year
    
    
    131,463
    
    
    
    114,173
    
    
    
    51,218Cash and cash equivalents at end of year
    
    $
    94,613
    
    
    $
    131,463
    
    
    $
    114,173Supplemental information:Income taxes paid
    
    $
    7,627
    
    
    $
    1,854
    
    
    $
    3,451Interest paid, net of amounts capitalized
    
    
    39,135
    
    
    
    2,498
    
    
    
    1,654Noncash investing and financing activities- Interest capitalized
    
    
    17,535
    
    
    
    1,382
    
    
    
    300
  65




---



##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  (in thousands, except share amounts)
 AccumulatedOtherAdditional
    
    
    
    
    
    
    Comprehensive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Warrant  Series A
    
    
    Warrant
    
    Series B
    
    
    PaidIn
    
    
    Retained
    
    
    Income
    
    
    Phantom Stock
    
    
    Treasury Stock
    
    
    StockholdersShares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    Capital
    
    
    Earnings
    
    
    (Loss)
    
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    EquityBalance, December 31, 2005
    
    
    14,638,103
    
    
    $
    146
    
    
    
    496,579
    
    
    $
    1,649
    
    
    
    497,438
    
    
    $
    634
    
    
    $
    208,143
    
    
    $
    20,100
    
    
    $
    (8,240
    )
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    222,432Stock-based compensation
    
    
    89,650
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,025Stock options exercised
    
    
    88,085
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    969Exercise of warrants for common stock
    
    
    1,131
    
    
    
    
    
    
    
    (960
    )
    
    
    (3
    )
    
    
    (171
    )
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Tax benefit from the utilization of freshstart NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,442
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,442Gain related to the sale of interest in EMSL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,615Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,816
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,816Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,724
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,724Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,540Adjustment to adopt SFAS No. 158, net of tax of
$0.3 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (708
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (708
    )Balance, December 31, 2006
    
    
    14,816,969
    
    
    $
    148
    
    
    
    495,619
    
    
    $
    1,646
    
    
    
    497,267
    
    
    $
    634
    
    
    $
    231,218
    
    
    $
    78,824
    
    
    $
    (132
    )
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    312,338Cumulative-effect adjustment for the adoption of
FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,247Stock options exercised
    
    
    147,999
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,985
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,987Exercise of warrants for common stock
    
    
    1,696
    
    
    
    
    
    
    
    (417
    )
    
    
    (1
    )
    
    
    (1,279
    )
    
    
    (2
    )
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40Restricted stock activity
    
    
    46,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax benefit from the utilization of freshstart NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,641Share repurchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (570,207
    )
    
    
    (17,604
    )
    
    
    (17,604
    )Comprehensive income:Unrecognized pension costs, net of tax of $127
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (207
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (207
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,993Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,931Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,717Balance, December 31, 2007
    
    
    15,013,076
    
    
    $
    150
    
    
    
    495,202
    
    
    $
    1,645
    
    
    
    495,988
    
    
    $
    632
    
    
    $
    245,134
    
    
    $
    141,611
    
    
    $
    18,654
    
    
    
    
    
    
    $
    
    
    
    
    (570,207
    )
    
    $
    (17,604
    )
    
    $
    390,222Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,834
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,834Stock options exercised
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Exercise of warrants for common stock
    
    
    472,875
    
    
    
    5
    
    
    
    (1,128
    )
    
    
    (5
    )
    
    
    (471,747
    )
    
    
    (597
    )
    
    
    12,246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,649Expiration of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,241
    )
    
    
    (35
    )
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock activity
    
    
    161,745
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax benefit from the utilization of freshstart NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,756
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,756Phantom stock issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,581,902
    
    
    
    55,588
    
    
    
    
    
    
    
    
    
    
    
    55,588Conversion on 6.5% debentures
    
    
    544,284
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,345Comprehensive loss:Unrecognized pension benefit, net of tax of $527
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222,273
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222,273
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111,163
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111,163
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332,498
    )Balance, December 31, 2008
    
    
    16,199,980
    
    
    $
    160
    
    
    
    494,074
    
    
    $
    1,640
    
    
    
    
    
    
    $
    
    
    
    $
    275,433
    
    
    $
    30,448
    
    
    $
    (202,681
    )
    
    
    1,581,902
    
    
    $
    55,588
    
    
    
    (570,207
    )
    
    $
    (17,604
    )
    
    $
    142,984
  66




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. The Company
      2. Risks and Uncertainties
   67




---



##### Table of Contents



(a)
    
    the consummation of any transaction that is disclosed in a Schedule 13D (or
successor form) by any person and the result of which is that such person has become
the beneficial owner (as these terms are defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the Companys Capital
Stock that is at the time entitled to vote by the holder thereof in the election of the
Board of Directors (or comparable body); or(b)
    
    the first day on which a majority of the members of the Board of
Directors are not Continuing Directors; or
 68




---



##### Table of Contents



(c)
    
    the adoption of a plan relating to the liquidation or dissolution of
the Company; or(d)
    
    the consolidation or merger of the Company with or into any other
Person, or the sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, of all or substantially all of the Companys assets
and those of its subsidiaries taken as a whole to any person (as this term is
used in Section 13(d)(3) of the Exchange Act), other than:
 (i)
    
    any transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of the Companys Capital Stock
entitled to vote generally in elections of directors of the Company
immediately prior to such transaction have the right to exercise, directly
or indirectly, 50% or more of the total voting power of all shares of the
Companys Capital Stock entitled to vote generally in elections of
directors of the continuing or surviving Person (or any parent thereof)
immediately after giving effect to such transaction; or(ii)
    
    any merger primarily for the purpose of changing the
Companys jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding shares of Common
Stock solely into shares of common stock of the surviving entity.
 (e)
    
    the termination of trading of the Common Stock, which will be deemed to
have occurred if the Common Stock or other common equity interests into which the
Debentures are convertible is neither listed for trading on a United States
national securities exchange nor approved for listing on any United States system
of automated dissemination of quotations of securities prices, and no American
Depositary Shares or similar instruments for such common equity interests are so
listed or approved for listing in the United States.
   3. Summary of Significant Accounting Policies
 Consolidation Policy.
 69




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##### Table of Contents



Use of Estimates.
 Revenue Recognition.
   Cash and Cash Equivalents.
 Restricted Cash.
 
    
    Cash of $2.7 million and $1.2 million at December 31, 2008 and 2007, respectively,
under Norwegian statutory rules which requires a subsidiary to segregate cash that will
be used to pay tax withholdings in future periods;
 70




---



##### Table of Contents




    
    Cash of $0.9 million at December 31, 2008, held for guaranteed deposits on certain
vessels and as collateral for a surety bond;
    
    Cash of $3.8 million at December 31, 2007, held in escrow for outstanding letters of
credit following the Companys retirement of a $50 million secured revolving credit
facility upon emergence from bankruptcy in 2004, released in 2008 as prescribed by the
agreement; and
    
    Cash of $3.6 million, at December 31, 2007, held in escrow until the second closing
of EMSL which occurred on January 1, 2008, at which time the Company transferred the
remaining four vessels to EMSL (See Note 16 for further discussion).
 Accounts Receivable.
  Goodwill and Intangible Assets.
 Goodwill
    71




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##### Table of Contents



Intangible Assets
    CustomerBacklog
    
    
    RelationshipsBalance at December 31, 2007
    
    $
    
    
    
    $
    Intangible assets acquired in connection with
DeepOcean acquisition
    
    
    2,991
    
    
    
    118,057Amortization
    
    
    (2,526
    )
    
    
    (5,040
    )Foreign
currency translation adjustment
    
    
    (465
    )
    
    
    (32,459
    )Balance at December 31, 2008
    
    $
    
    
    
    $
    80,558
   72




---



##### Table of Contents



Accounting for Long-Lived Assets.
    Impairment of Long-Lived Assets.
 Goodwill and Other Intangible Assets
 Marine Vessel Spare Parts.
 Marine Inspection Costs.
 Deferred Financing Costs.
 73




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##### Table of Contents



Income Taxes.
  Direct Operating Expenses.
 Losses on Insured Claims.
 Foreign Currency Translation.
 Stock-based Compensation. , Share-Based Payment (Revised 2004)
 Accumulated Other Comprehensive Income (Loss).
 Recent Accounting Standards.
 74




---



##### Table of Contents



Effective Date of FASB
Statement No. 157
   75




---



##### Table of Contents



4. Acquisitions
 DeepOcean and CTC Marine
    
    
    Subscription to purchase 20,000,000 newly issued DeepOcean shares, representing
approximately 18.5% of the fully diluted capital stock of DeepOcean directly from
DeepOcean for a price of NOK 32 per share (approximately $127.6 million);
    
    Acquisition of 17,495,055 DeepOcean shares, representing approximately 16.2% of the
fully diluted capital stock of DeepOcean, in the open market at a price of NOK 32 per
share (approximately $111.6 million); and
    
    Agreements between the Company, Trico Shipping and certain members of DeepOceans
management and another DeepOcean shareholder, pursuant to which Trico Shipping
purchased 18,233,900 DeepOcean shares, representing approximately 16.9% of the fully
diluted capital stock of DeepOcean. Trico Shipping acquired these DeepOcean shares in
exchange for a combination of cash and phantom stock units issued by the Company with a
combined value of NOK 32 per share (approximately $116.4 million).
   76




---



##### Table of Contents



Cash consideration
    
    $
    633,505
    (a)Issuance of phantom stock units
    
    
    55,588Acquisition-related costs
    
    
    9,914$
    699,007
 
 (a)
    
    U.S. Dollar investment reflects the conversion of NOK amounts funded using the
applicable foreign exchange rates in effect on the dates of funding. The total
investment in DeepOcean shares was NOK 3,460,706,976 ($690.1 million) including net
cash acquired of NOK 695,000,000 ($137.3 million) on May 16, 2008.    Cash and cash equivalents
    
    $
    137,320Property and equipment
    
    
    435,787
    aGoodwill
    
    
    234,053
    bIndefinite-lived intangible assets
    
    
    40,881Amortizable intangible assets and other
    
    
    135,959
    cNet working capital deficit, excluding acquired cash
    
    
    (25,006
    ) dLong-term debt assumed
    
    
    (222,230
    )Deferred income tax
    
    
    (35,786
    )Other long-term liabilities
    
    
    (1,971
    ) eTotal
    
    $
    699,007
 
 a.
    
    Reflects the estimated fair value of the tangible assets of DeepOcean and CTC
Marine. The subsea equipment acquired from DeepOcean and CTC Marine has estimated
depreciable lives ranging from two to 15 years. The marine vessels acquired have
estimated useful lives approximating 20 to 25 years.b.
    
The goodwill is not
deductible for tax purposes. Goodwill recorded in the Subsea Services and Subsea
Trenching and Protection segments was $181.1 million and
$52.9 million, respectively. See Note 3 for discussion of
impairment.c.
    
   Primarily reflects value associated with the customer relationships of
DeepOcean and CTC Marine. Accumulated amortization related to the intangible assets
for the period from May 16, 2008 to December 31, 2008 totaled $7.6 million. The
estimated useful lives of the customer relationships ranges from 11 to 13 years and is
being amortized using the straight-line method. See Note 3 for discussion of
impairment.d.
    
    Includes $59.5 million of short-term and current maturities of debt assumed in
the acquisition.e.
    
    Primarily includes pension liabilities. The Norwegian companies of DeepOcean
are required to maintain occupational pension plans. 77




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##### Table of Contents



Active Subsea
   Cost of the acquisition:Cash paid for acquisition from available cash
    
    $
    243,000Cash paid for other acquisition costs
    
    
    4,000Assumed liabilities
    
    
    648$
    247,648Allocation of the purchase price:Working capital
    
    $
    27,215Construction in progress
    
    
    220,433$
    247,648
 Pro
forma Information
  Year Ended
    
    Year EndedDecember 31, 2008
    
    December 31, 2007Historical
    
    Pro Forma
    
    Historical
    
    Pro Forma(Unaudited)
    
    
    
    (Unaudited)Revenues
    
    $
    556,131
    
    
    $
    703,561
    
    
    $
    256,108
    
    
    $
    586,657Operating income (loss)a
    
    
    (127,545
    )
    
    
    (158,268
    )
    
    
    66,630
    
    
    
    49,485Income
(loss) before income taxes and minority
interest in consolidated subsidiary b
    
    
    (89,549
    )
    
    
    (145,753
    )
    
    
    60,499
    
    
    
    (10,454
    )Net income (loss)
    
    $
    (111,163
    )
    
    $
    (159,502
    )
    
    $
    62,931
    
    
    $
    (5,750
    )Diluted net income (loss) per share of common stock
    
    $
    (7.54
    )
    
    $
    (10.82
    )
    
    $
    4.16
    
    
    $
    (0.39
    )Diluted weighted average shares outstanding
    
    
    14,744
    
    
    
    14,744
    
    
    
    15,137
    
    
    
    14,558
 
 a.
    
    Pro forma amounts for the year ended December 31, 2008 include the effect of
non-recurring transactions that occurred at DeepOcean prior to its acquisition by the
Company. These charges include a $17.9 million estimated loss on a contract for services
in Brazil that resulted following a delay in delivery of a vessel to
perform the contracted work.b.
    
    Pro forma amounts include acquisition-related debt costs
($16.3 million for both of
the years ended December 31, 2008 and 2007, respectively), including the amortization of
debt discount on the 6.5% Debentures (Note 5). The Company determined that approximately
50% of its acquisition related interest expense would be capitalized in the 2008 pro forma
periods.  78




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##### Table of Contents



5. Long Term Debt
  December 31,2008
    
    
    2007$278.0 million face amount, 6.5% Senior Convertible Debentures net of unamortized discount
of $45.0 million, interest payable semi-annually in arrears, maturing on May 15, 2028
    
    $
    232,998
    
    
    
    3.0% Senior Convertible Debentures, payable semi-annually in arrears, maturing
on January 15, 2027
    
    
    150,000
    
    
    
    150,000$200 million Revolving Credit Facility(1) maturing in May 2013
    
    
    160,563
    
    
    
    $100 million Revolving Credit Facility(1) maturing no later than December 2017
    
    
    15,000
    
    
    
    $50 million US Revolving Credit Facility Agreement(1) maturing in January 2011
    
    
    46,460
    
    
    
    6.11% Notes, principal and interest due in 30 semi-annual installments, maturing April 2014
    
    
    6,915
    
    
    
    8,174NOK 260 million Short Term Credit Facility interest at 8.3% maturing on
on February 1, 2009
    
    
    11,631
    
    
    
    EMSL Revolving Credit Facility Agreement, bearing interest at LIBOR plus
a margin of 0.08%
    
    
    
    
    
    
    2,000Debt assumed in the acquisition of DeepOcean:NOK 350 million Revolving Credit Facility(1),
maturing December 1, 2014
    
    
    61,531
    
    
    
    NOK 230 million Revolving Credit Facility(1), maturing June 1, 2012
    
    
    21,233
    
    
    
    NOK 150 million Additional Term Loan(1), maturing December 18,
2011
    
    
    10,398
    
    
    
    NOK 200 million Overdraft Facility(1), maturing June 21, 2010
    
    
    3,207
    
    
    
    23.3 million
Euro Revolving Credit Facility(1), maturing March
31, 2010
    
    
    19,717
    
    
    
    $18 million Revolving Credit Facility(1), maturing December 5, 2011
    
    
    16,000
    
    
    
    8 million Sterling Overdraft Facility, maturity 364 days after drawdown
    
    
    9,812
    
    
    
    24.2 million Sterling Asset Financing Revolving Credit
Facility(1), maturing
no later than January 31, 2015
    
    
    17,286
    
    
    
    Finance
lease obligations assumed in the acquisition of DeepOcean, maturing
from October 2009 to November 2015
    
    
    14,172Other debt
assumed in the acquisition of DeepOcean, maturing from March 2009 to
August 2014
    
    
    8,695
    
    
    
    Fresh-start debt premium
    
    
    312
    
    
    
    371Total debt
    
    
    805,930
    
    
    
    160,545Less current maturities
    
    
    (82,982
    )
    
    
    (3,258
    )Long-term debt
    
    $
    722,948
    
    
    $
    157,287
 
 (1)
    
    Interest on such credit facilities is at London inter-bank offered
rate (LIBOR) or the Norwegian inter-bank offered rate (NIBOR) plus an
applicable margin ranging from 1.75% to 2.55%. The three month LIBOR rate
 was 1.8% and 5.0% and the three month NIBOR rate was 3.97% and
5.88% for the periods ending December 31, 2008 and December 31, 2007, respectively. 79




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##### Table of Contents



2009
    
    $
    82,982
    a2010
    
    
    85,019
    b2011
    
    
    79,589
    b2012
    
    
    48,981
    b2013
    
    
    60,441
    b2014 and beyond
    
    
    493,608
    b c850,620Fresh start debt premium
    
    
    312Unamortized discount on 6.5% Debentures
    
    
    (45,002
    )Total debt
    
    $
    805,930
 
 a.
    
    Potential make-whole payments under the Companys 6.5% Debentures are not included.b.
    
    If the maturities of certain debt agreements with SR Bank are amended in accordance with
the agreed term sheet, approximately $86.0 million of maturities of debt shown in the
above table in the years between 2010 and 2014 would all be due on January 1, 2010.c.
    
    Includes the $278 million of 6.5% Debentures and the $150 million of 3% Debentures that
may be converted earlier but have stated maturity terms in excess of five years. 6.5% Convertible Debentures.
    80




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##### Table of Contents



3% Senior Convertible Debentures.
   81




---



##### Table of Contents



$200 million Revolving Credit Facility.
  82




---



##### Table of Contents



$100 million Revolving Credit Facility.
  $50 million U.S. Credit Facility.
 
 6.11% Notes
 NOK 260 million Short Term Credit Facility.
 83




---



##### Table of Contents



EMSL Credit Facility Agreement.
 NOK 300 million Senior Notes.
 NOK 350 million
Revolving Credit Facility.
 NOK 230 million
Revolving Credit Facility.
 NOK 150 million
Additional Term Loan
 NOK 200 million
Overdraft Facility.
 84




---



##### Table of Contents



23.3 million Euro Revolving Credit Facility.
 $18 million Revolving Credit Facility.
 8 million
Sterling Overdraft Facility
 24.2 million
Sterling Asset Financing Facilities.
   85




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##### Table of Contents



6. Derivative Instruments
   7. Phantom Stock Units
     86




---



##### Table of Contents



8. Fair Value Measurements
 Fair Value Measurements
  
    
    Level 1  Valuations utilizing quoted, unadjusted prices for identical assets or
liabilities in active markets that the Company has the ability to access. This is the
most reliable evidence of fair value and does not require a significant degree of
judgment.
    
    Level 2  Valuations utilizing quoted prices in markets that are not considered to
be active or financial instruments for which all significant inputs are observable,
either directly or indirectly, for substantially the full term of the asset or
liability.
    
    Level 3  Valuations utilizing significant, unobservable inputs. This provides the
least objective evidence of fair value and requires a significant degree of judgment.
Inputs may be used with internally developed methodologies and should reflect an
entitys assumptions using the best information available that market participants
would use in pricing an asset or liability.
 Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active
  Cash, cash equivalents, accounts receivable and accounts payable:
 Debt:
 87




---



##### Table of Contents



2008
    
    2007Carrying amount
    
    $
    805,930
    
    
    $
    160,545Fair value
    
    
    562,783
    
    
    
    173,655
  Balance on May 14, 2008 (Note 6)
    
    $
    53,772Unrealized gain for the period May 14, 2008
through December 31, 2008
    
    
    (52,653
    )Balance on December 31, 2008
    
    $
    1,119
 9. Asset Sales
    10. Other Assets
  As of December 31,2008
    
    
    2007Deferred financing costs, net of accumulated amortization of
$5.2 million
and $1.8 million at December 31, 2008 and 2007, respectively
    
    $
    16,996
    
    
    $
    4,346Pension assets
    
    
    236
    
    
    
    183Marine vessel spare parts
    
    
    2,265
    
    
    
    2,654Capitalized information system costs
    
    
    2,858
    
    
    
    2,032Restricted cash, noncurrent
    
    
    
    
    
    
    3,813Other
    
    
    3,365
    
    
    
    2,830Other assets
    
    $
    25,720
    
    
    $
    15,858
 88




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##### Table of Contents



11. Income Taxes
  2008
    
    
    2007
    
    
    2006United States
    
    $
    62,776
    
    
    $
    16,327
    
    
    $
    47,407International
    
    
    (152,325
    )
    
    
    57,531
    
    
    
    43,055Income (loss) before income taxes and
minority
interest in (income) loss of
consolidated subsidiary
    
    $
    (89,549
    )
    
    $
    73,858
    
    
    $
    90,462
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Current income taxes:U.S. federal income taxes
    
    $
    694
    
    
    $
    844
    
    
    $
    970State income taxes
    
    
    34
    
    
    
    378
    
    
    
    Foreign taxes
    
    
    7,375
    
    
    
    6,308
    
    
    
    2,897Deferred income taxes:U.S. federal income taxes
    
    
    26,507
    
    
    
    8,134
    
    
    
    15,591State income taxes
    
    
    638
    
    
    
    507
    
    
    
    979Foreign taxes
    
    
    (20,425
    )
    
    
    (2,812
    )
    
    
    13,286Total income tax expense
    
    $
    14,823
    
    
    $
    13,359
    
    
    $
    33,723
 89




---



##### Table of Contents



Deferred Tax Assets
    
    
    Deferred Tax LiabilitiesCurrent
    
    
    Non-Current
    
    
    Current
    
    
    Non-CurrentAs of December 31, 2008Property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,089Foreign tax credit
    
    
    8,740
    
    
    
    
    
    
    
    
    
    
    
    Insurance reserves
    
    
    852
    
    
    
    
    
    
    
    
    
    
    
    Net operating loss carryforwards
    
    
    
    
    
    
    70,405
    
    
    
    
    
    
    
    Nonamortizable intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,199Mark-to-market derivative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,504Company incentive plans
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    1,373
    
    
    
    
    
    
    
    
    
    
    
    1,815$
    11,103
    
    
    $
    70,405
    
    
    $
    
    
    
    $
    51,607Current deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,103Noncurrent deferred tax asset, net  U.S. jurisdiction
    
    
    
    
    
    $
    24,483Noncurrent deferred tax asset, net  Foreign jurisdiction
    
    
    
    
    
    $
    45,923Valuation Allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    32,324Deferred tax asset after valuation, net
    
    
    
    
    
    $
    49,185Noncurrent deferred tax liabilities, net  U.S. Jurisdiction
    
    
    
    
    
    $
    26,631Noncurrent deferred tax liabilities, net  foreign jurisdiction
    
    
    
    
    
    
    24,977Deferred tax liability, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,423
 Deferred Tax Assets
    
    
    Deferred Tax LiabilitiesCurrent
    
    
    Non-Current
    
    
    Current
    
    
    Non-CurrentAs of December 31, 2007Property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,836Foreign tax credit
    
    
    5,538
    
    
    
    
    
    
    
    
    
    
    
    Insurance reserves
    
    
    1,273
    
    
    
    
    
    
    
    
    
    
    
    Net operating loss carryforwards
    
    
    
    
    
    
    36,299
    
    
    
    
    
    
    
    Company incentive plans
    
    
    699
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    848
    
    
    
    
    
    
    
    
    
    
    
    1,432$
    8,358
    
    
    $
    36,299
    
    
    $
    
    
    
    $
    12,268Current deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,358Noncurrent deferred tax asset, net  U.S. jurisdiction
    
    
    
    
    
    $
    23,623Noncurrent deferred tax asset, net  Foreign jurisdiction
    
    
    
    
    
    $
    408Valuation Allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    32,389Deferred tax asset after valuation, net
    
    
    
    
    
    $
    Noncurrent deferred tax liabilities, net  foreign jurisdiction
    
    
    
    
    
    $
    
 90




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##### Table of Contents



Years ended December 31,2008
    
    
    2007
    
    
    2006Federal taxes at statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes net of federal benefit
    
    
    (0.8
    %)
    
    
    1.2
    %
    
    
    1.1
    %Foreign tax rate differential
    
    
    25.25
    %
    
    
    (29.8
    %)
    
    
    (3.9
    %)Impairment
of goodwill and intangibles
    
    
    (67.30
    %)
    
    
    
    
    
    
    Change in foreign tax laws
    
    
    0.0
    %
    
    
    (3.8
    %)
    
    
    0.0
    %Non-deductible items in foreign
jurisdictions
    
    
    1.6
    %
    
    
    3.1
    %
    
    
    1.7
    %Other foreign taxes
    
    
    (3.6
    %)
    
    
    5.6
    %
    
    
    2.3
    %U.S. tax on deemed repatriation
    
    
    (5.1
    %)
    
    
    3.2
    %
    
    
    0.0
    %Uncertain tax positions
    
    
    (1.7
    %)
    
    
    4.4
    %
    
    
    0.0
    %Alternative minimum tax
    
    
    (0.4
    %)
    
    
    (1.3
    %)
    
    
    1.1
    %Other
    
    
    0.4
    %
    
    
    0.5
    %
    
    
    0.0
    %Effective tax rate
    
    
    (16.6
    %)
    
    
    18.1
    %
    
    
    37.3
    %
 .
   Uncertain Tax Positions
 91




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##### Table of Contents



Accounting for Uncertainty in Income Taxes
 Balance at January 1, 2007
    
    $
    143Additions based on tax positions related to the current year
    
    
    678Additions for tax positions of prior years
    
    
    1,506Balance at December 31, 2007
    
    
    2,327Additions based on tax positions related to the current year
Additions for tax positions of prior years
    
    
    1,008Reductions for tax positions of prior years
    
    
    (116
    )Settlements
    
    
    (1,098
    )Balance at December 31, 2008
    
    $
    2,121
  Norwegian Shipping Tax Regime
   Tonnage Tax Restructuring.
 Mexican Tax System Changes Accounting for Income
Taxes
 92




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##### Table of Contents



12. Stockholders Equity
 Authorized Shares 
 Common Stock Repurchase Program 
     Warrants to Purchase Common Stock 
 Stockholder Rights Plan
  93




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##### Table of Contents



13. Earnings Per Share
  Years Ended December 31,2008
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (111,163
    )
    
    $
    62,931
    
    
    $
    58,724Weighted-average shares of common stock
outstanding:Basic
    
    
    14,744
    
    
    
    14,558
    
    
    
    14,628Add dilutive effect of:Stock options and nonvested restricted stock
    
    
    
    
    
    
    188
    
    
    
    233Warrants
    
    
    
    
    
    
    391
    
    
    
    345Total
    
    
    14,744
    
    
    
    15,137
    
    
    
    15,206Earnings per Share:Basic
    
    $
    (7.54
    )
    
    $
    4.32
    
    
    $
    4.01Diluted
    
    $
    (7.54
    )
    
    $
    4.16
    
    
    $
    3.86
   94




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##### Table of Contents



14. Stock-Based Compensation
     Stock Options
 Years Ended December 31,2008
    
    2007
    
    2006Expected term (years)
    
    
    4.5
    
    
    
    5.0
    
    
    
    5.0Expected volatility
    
    
    33.00
    %
    
    
    35.15
    %
    
    
    36.47
    %Riskfree interest rate
    
    
    2.90
    %
    
    
    4.77
    %
    
    
    4.70
    %Expected dividends
    
    
    
    
    
    
    
    
    
    
    
  WeightedAverageWeighted
    
    Remaining
    
    AggregateShares (in
    
    Average Exercise
    
    Contractual Term
    
    Intrinsic Value (inthousands)
    
    Price
    
    (in years)
    
    thousands)Outstanding at January 1, 2008
    
    
    228
    
    
    $
    22.56Granted
    
    
    5
    
    
    
    32.16Exercised
    
    
    (8
    )
    
    
    11.00Forfeited
    
    
    (14
    )
    
    
    35.96Outstanding at December 31, 2008
    
    
    211
    
    
    $
    22.35
    
    
    
    4.12
    
    
    $
    Exercisable at December 31, 2008
    
    
    110
    
    
    $
    18.97
    
    
    
    3.81
    
    
    $
    
 95




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##### Table of Contents



Restricted Stock 
 Weighted AverageShares (in
    
    
    Grant Date FairThousands)
    
    
    Value per ShareNonvested at January 1, 2008
    
    
    120
    
    
    $
    33.80Granted
    
    
    208
    
    
    
    28.85Vested
    
    
    (26
    )
    
    
    33.00Forfeited
    
    
    (47
    )
    
    
    30.93Nonvested at December 31, 2008
    
    
    255
    
    
    $
    30.37
  15. Employee Benefit Plans
 Defined Contribution Plan
   Defined Benefit Plans
 United Kingdom Pension Plan
 Norwegian Pension Plans 
 96




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##### Table of Contents



Employers Accounting
for Defined Benefit Pension and Other Postretirement Plans
  Years Ended December 31,2008
    
    
    2007Change in Benefit Obligation:Benefit obligation at beginning of the period
    
    $
    6,249
    
    
    $
    5,411Service cost
    
    
    1,530
    
    
    
    721Interest cost
    
    
    388
    
    
    
    251Benefits paid
    
    
    (240
    )
    
    
    (318
    )Actuarial loss (gain)
    
    
    (1,361
    )
    
    
    684Settlement (1)
    
    
    
    
    
    
    (1,321
    )Acquisition
    
    
    6,756
    
    
    
    Translation adjustment
    
    
    (1,343
    )
    
    
    821Benefit obligation at end of year
    
    $
    11,979
    
    
    $
    6,249Change in Plan AssetsFair value of plan assets at beginning of
the period
    
    $
    6,171
    
    
    $
    5,946Actual return on plan assets
    
    
    454
    
    
    
    299Contributions
    
    
    1,580
    
    
    
    818Benefits paid
    
    
    (1,024
    )
    
    
    (318
    )Settlement payment (1)
    
    
    
    
    
    
    (1,498
    )Acquisition
    
    
    4,885
    
    
    
    Translation adjustment
    
    
    (1,360
    )
    
    
    924Fair value of plan assets at end of year
    
    $
    10,706
    
    
    $
    6,171
 
 (1)
    
    Due to changes in Norwegian legislation, one of the three Norwegian defined
benefit pension plans, outstanding as of December 31, 2006, was terminated on January
1, 2007. The Company accounted for the plan termination as a plan settlement. 97




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##### Table of Contents



Years Ended December 31,2008
    
    
    2007
    
    
    2006Components of Net Periodic Benefit CostService cost
    
    $
    1,530
    
    
    $
    721
    
    
    $
    637Interest cost
    
    
    388
    
    
    
    251
    
    
    
    207Return on plan assets
    
    
    (406
    )
    
    
    (273
    )
    
    
    (236
    )Social security contributions
    
    
    115
    
    
    
    66
    
    
    
    176Recognized net actuarial loss
    
    
    39
    
    
    
    50
    
    
    
    36Net periodic benefit cost
    
    $
    1,666
    
    
    $
    815
    
    
    $
    820
  As of December 31,2008
    
    
    2007Reconciliation of funded status:Projected benefit obligation
    
    $
    (11,979
    )
    
    $
    (6,249
    )Fair value of plan assets
    
    
    10,706
    
    
    
    6,171(Under) over funded status
    
    $
    (1,273
    )
    
    $
    (78
    )Accumulated benefit obligation
    
    $
    8,427
    
    
    $
    4,621Amount recognized in the consolidated balance
sheets:Other assets
    
    $
    236
    
    
    $
    183Other liabilities
    
    $
    1,511
    
    
    $
    273Accumulated other comprehensive income
(loss), net
    
    $
    938
    
    
    $
    (915
    )Items included in accumulated other
comprehensive income and not yet recognized in
net periodic benefit cost:Unrecognized net actuarial loss
    
    $
    204
    
    
    $
    1,196Social security obligations
    
    
    29
    
    
    
    57$
    233
    
    
    $
    1,253
  98




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##### Table of Contents



Year Ended December 31,2008
    
    2007
    
    2006Weighted-Average AssumptionsDiscount rate
    
    
    4.91
    %
    
    
    4.70
    %
    
    
    4.50
    %Return on plan assets
    
    
    6.10
    %
    
    
    5.50
    %
    
    
    5.50
    %Rate of compensation increase
    
    
    4.30
    %
    
    
    4.50
    %
    
    
    4.50
    %
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Equity securities
    
    
    8
    %
    
    
    25
    %
    
    
    30
    %Debt securities
    
    
    63
    %
    
    
    59
    %
    
    
    55
    %Property and other
    
    
    29
    %
    
    
    16
    %
    
    
    15
    %All asset categories
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Year Ending December 31,2009
    
    $
    5302010
    
    
    5642011
    
    
    5722012
    
    
    5842013
    
    
    590Years 2014  2018
    
    
    3,208
 16. Minority-Owned Consolidated Subsidiary
   99




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##### Table of Contents



(in thousands).
 As of December 31,2008
    
    
    2007ASSETSCurrent assets
    
    $
    19,401
    
    
    $
    3,410Property & equipment, net
    
    
    23,255
    
    
    
    22,263Total assets
    
    $
    42,656
    
    
    $
    25,673LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    3,194
    
    
    $
    7,172Stockholders equity
    
    
    39,462
    
    
    
    18,501Total liabilities and stockholders equity
    
    $
    42,656
    
    
    $
    25,673
 (in thousands).
 For the years ended December 31,2008
    
    
    2007Revenues
    
    $
    30,879
    
    
    $
    4,465Operating Expenses:Direct vessel operating expenses
    
    
    10,507
    
    
    
    6,035Depreciation expense
    
    
    4,424
    
    
    
    2,705General and administrative
    
    
    2,406
    
    
    
    2,026Total operating expense
    
    
    17,337
    
    
    
    10,766Operating income (expense)
    
    
    13,542
    
    
    
    (6,301
    )Miscellaneous income (expense)
    
    
    (226
    )
    
    
    47Net income (loss)
    
    $
    13,316
    
    
    $
    (6,254
    )
  100




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##### Table of Contents



Minority interest at December 31, 2007
    
    $
    12,878Capital contribution
    
    
    3,519Minority interests income in EMSL
    
    
    6,791Distribution to NAMESE Partner
    
    
    (244
    )Adjustment to carrying value of NAMESE assets
    
    
    (824
    )Foreign currency translation
    
    
    (234
    )Minority interest at December 31, 2008
    
    $
    21,886
 17. Commitments and Contingencies
 Litigation 
 Brazilian Tax Assessments
 101




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##### Table of Contents



Construction Commitments
  Operating Leases 
  .
  102




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##### Table of Contents



18. Segment and Geographic Information
   SubseaTrenching and
    
    Towing andSubsea Services
    
    Protection
    
    Supply
    
    Corporate
    
    Total(In thousands)2008Revenues from Unaffiliated Customers
    
    $
    221,838
    
    
    $
    123,804
    
    
    $
    210,489
    
    
    $
    
    
    
    $
    556,131Intersegment Revenues
    
    
    4,850
    
    
    
    7,057
    
    
    
    
    
    
    
    
    
    
    
    11,907Depreciation and Amortization
    
    
    22,612
    
    
    
    14,153
    
    
    
    24,487
    
    
    
    180
    
    
    
    61,432Impairments (a)
    
    
    133,183
    
    
    
    39,657
    
    
    
    
    
    
    
    
    
    
    
    172,840Operating Income (Loss) (a)
    
    
    (114,575
    )
    
    
    (35,264
    )
    
    
    45,875
    
    
    
    (23,581
    )
    
    
    (127,545
    )Interest Income
    
    
    5,839
    
    
    
    2
    
    
    
    3,713
    
    
    
    321
    
    
    
    9,875Interest Expense
    
    
    (9,969
    )
    
    
    (1,481
    )
    
    
    (62
    )
    
    
    (20,431
    )
    
    
    (31,943
    )Capital Expenditures for Property and Equipment
    
    
    44,938
    
    
    
    20,877
    
    
    
    40,040
    
    
    
    380
    
    
    
    106,235Total Assets
    
    
    579,727
    
    
    
    175,986
    
    
    
    445,047
    
    
    
    1,816
    
    
    
    1,202,5762007Revenues from Unaffiliated Customers
    
    $
    31,171
    
    
    $
    
    
    
    $
    224,937
    
    
    $
    
    
    
    $
    256,108Depreciation and Amortization
    
    
    2,092
    
    
    
    
    
    
    
    21,625
    
    
    
    654
    
    
    
    24,371Impairments
    
    
    
    
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    116Operating Income (Loss)
    
    
    11,594
    
    
    
    
    
    
    
    75,483
    
    
    
    (20,447
    )
    
    
    66,630Interest Income
    
    
    
    
    
    
    
    
    
    
    10,817
    
    
    
    3,315
    
    
    
    14,132Interest Expense
    
    
    
    
    
    
    
    
    
    
    (595
    )
    
    
    (2,663
    )
    
    
    (3,258
    )Capital Expenditures for Property and Equipment
    
    
    22,358
    
    
    
    
    
    
    
    3,330
    
    
    
    375
    
    
    
    26,063Total Assets
    
    
    112,144
    
    
    
    
    
    
    
    567,289
    
    
    
    2,311
    
    
    
    681,7442006Revenues from Unaffiliated Customers
    
    $
    26,333
    
    
    $
    
    
    
    $
    222,384
    
    
    $
    
    
    
    $
    248,717Depreciation and Amortization
    
    
    2,471
    
    
    
    
    
    
    
    22,347
    
    
    
    180
    
    
    
    24,998Impairments
    
    
    
    
    
    
    
    
    
    
    2,580
    
    
    
    
    
    
    
    2,580Operating Income (Loss)
    
    
    14,118
    
    
    
    
    
    
    
    84,405
    
    
    
    (10,133
    )
    
    
    88,390Interest Income
    
    
    
    
    
    
    
    
    
    
    1,700
    
    
    
    2,498
    
    
    
    4,198Interest Expense
    
    
    
    
    
    
    
    
    
    
    (1,286
    )
    
    
    
    
    
    
    (1,286
    )Capital Expenditures for Property and Equipment
    
    
    15,742
    
    
    
    
    
    
    
    3,401
    
    
    
    329
    
    
    
    19,472Total Assets
    
    
    68,275
    
    
    
    
    
    
    
    364,709
    
    
    
    2,338
    
    
    
    435,322
 
 (a)
    
    Includes impairment of goodwill of $169.7 million and trade names of $3.1 million based on
our annual impairment analysis under SFAS 142. See Note 3 for further discussion.  103




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Year Ended December 31,2008
    
    
    2007
    
    
    2006United States
    
    $
    41,702
    
    
    $
    65,784
    
    
    $
    102,831North Sea
    
    
    323,358
    
    
    
    138,835
    
    
    
    106,435Mexico
    
    
    53,440
    
    
    
    9,807
    
    
    
    7,352Southeast Asia
    
    
    35,863
    
    
    
    699
    
    
    
    Brazil
    
    
    25,596
    
    
    
    4,599
    
    
    
    4,372West Africa
    
    
    47,448
    
    
    
    36,384
    
    
    
    27,727Other
    
    
    28,724
    
    
    
    Total
    
    $
    556,131
    
    
    $
    256,108
    
    
    $
    248,717
  December 31,2008
    
    
    2007United States
    
    $
    50,603
    
    
    $
    42,840North Sea
    
    
    436,166
    
    
    
    399,059United Kindom
    
    
    87,697
    
    
    
    China
    
    
    8,553
    
    
    
    1,987Mexico
    
    
    200,639
    
    
    
    6,720Brazil
    
    
    1,432
    
    
    
    2,425West Africa
    
    
    18,077
    
    
    
    20,583Total
    
    $
    803,167
    
    
    $
    473,614
  104




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##### Table of Contents



19. Quarterly Financial Data (Unaudited)
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter(a)
    
    Quarter
    
    QuarterYear ended December 31, 2008Total revenues
    
    $
    59,175
    
    
    $
    104,292
    
    
    $
    214,793
    
    
    $
    177,871Operating income (loss)
    
    
    11,504
    
    
    
    5,150
    
    
    
    19,193
    
    
    
    (163,392
    )(c)Net income (loss)
    
    
    10,901
    
    
    
    (3,023
    )(b)
    
    
    30,970
    (b)
    
    
    (150,011
    )(b)(c)(d)Earnings (loss) per common share:Basic
    
    $
    0.76
    
    
    $
    (0.20
    )
    
    $
    2.09
    
    
    $
    (10.05
    )Diluted
    
    $
    0.73
    
    
    $
    (0.20
    )
    
    $
    1.86
    
    
    $
    (10.05
    )Year ended December 31, 2007Total revenues
    
    $
    61,969
    
    
    $
    58,710
    
    
    $
    70,446
    
    
    $
    64,983Operating income
    
    
    20,783
    
    
    
    5,291
    
    
    
    22,310
    
    
    
    18,246Net income
    
    
    14,584
    
    
    
    4,434
    
    
    
    13,177
    
    
    
    30,736Earnings per common share:Basic
    
    $
    0.99
    
    
    $
    0.30
    
    
    $
    0.90
    
    
    $
    2.15Diluted
    
    $
    0.95
    
    
    $
    0.29
    
    
    $
    0.87
    
    
    $
    2.08
 
 (a)
    
    The second quarter of 2008 includes the results of the DeepOcean acquisition
from the acquisition date of May 16, 2008.(b)
    
    Includes unrealized gain (loss) of ($2.3 million), $31.5 million and $23.4
million for the second, third and fourth quarters of 2008, respectively, related to an
embedded derivative within the Companys 6.5% Debentures that requires valuation under
SFAS No. 157.(c)
    
    Includes impairment of goodwill of $169.7 million and
trade names of $3.1 million based on the Companys annual impairment analysis under SFAS 141.(d)
    
    Includes gain of $9.0 million due to the conversion by two bondholders of the
Companys 6.5% Debentures with a face value of $22.0 million. 105




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
 Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework
     Changes in Internal Control over Financial Reporting.
 106




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##### Table of Contents



Item 9B. Other Information
     
    
    amending the definition of Net Worth to exclude write-downs of goodwill and/or
nonamortizing intangible assets; and
    
    amending and restating the definition of Applicable Margin to mean a percentage per
annum equal to 3.25%.
   
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  107




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a) Documents filed as part of this report:
 (1) Financial Statements
  (2) Financial Statement Schedules
  (b) Exhibits
  108




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##### Table of Contents



SIGNATURES
  Trico Marine Services, Inc.
(Registrant)By:
    /s/ Joseph S. CompofelicePresident, Chief Executive Officer and Chairmanof the Board (Principal Executive Officer)   Signature
    
    Title
    
    Date/s/ Joseph S. Compofelice

Joseph S. Compofelice
    
    President, Chief Executive
Officer and
Chairman of the Board of
Directors
(Principal Executive Officer)
    
    March 11, 2009/s/ Geoff A. Jones

Geoff A. Jones
    
    Vice President and Chief
Financial Officer
(Principal Financial Officer)
    
    March 11, 2009/s/ Lisa Curtis

Lisa Curtis
    
    Chief Accounting Officer(Principal Financial Officer)
    
    March 11, 2009/s/ Per Staehr

Per Staehr
    
    Director
    
    March 11, 2009/s/ Richard A. Bachmann

Richard A. Bachmann
    
    Director
    
    March 11, 2009/s/ Kenneth M. Burke

Kenneth M. Burke
    
    Director
    
    March 11, 2009/s/ Ben A. Guill

Ben A. Guill
    
    Director
    
    March 11, 2009/s/ Edward C. Hutcheson, Jr.

Edward C. Hutcheson, Jr.
    
    Director
    
    March 11, 2009/s/ Myles W. Scoggins

Myles W. Scoggins
    
    Director
    
    March 11, 2009
 109




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##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
For the Years ended December 31, 2008, 2007 and 2006
(in thousands)
 Charged
    
    ChargedBalance at
    
    (Credited)
    
    (Credited)
    
    
    
    
    
    Balance atbeginning
    
    to costs and
    
    to other
    
    Recoveries
    
    end ofDescription
    
    of period
    
    expenses
    
    accounts
    
    (Deductions)
    
    periodSuccessor Company2008Valuation allowance on deferred tax assets
    
    $
    32,389
    
    
    $
    12,180
    
    
    $
    (11,756
    )
    
    $
    (489
    )
    
    $
    32,324Allowance for doubtful accounts  trade
    
    $
    1,259
    
    
    $
    1,858
    
    
    $
    (159
    )
    
    $
    (705
    )
    
    $
    2,2532007Valuation allowance on deferred tax assets
    
    $
    36,699
    
    
    $
    3,602
    
    
    $
    (8,641
    )
    
    $
    729
    
    
    $
    32,389Allowance for doubtful accounts  trade
    
    $
    1,846
    
    
    $
    78
    
    
    $
    658
    
    
    $
    (1,323
    )
    
    $
    1,259Allowance for doubtful accounts  nontrade
    
    $
    618
    
    
    $
    
    
    
    $
    (618
    )
    
    $
    
    
    
    $
    2006Valuation allowance on deferred tax assets
    
    $
    43,824
    
    
    $
    
    
    
    $
    (16,442
    )
    
    $
    9,317
    
    
    $
    36,699Allowance for doubtful accounts  trade
    
    $
    1,396
    
    
    $
    616
    
    
    $
    25
    
    
    $
    (191
    )
    
    $
    1,846Allowance for doubtful accounts  nontrade
    
    $
    
    
    
    $
    618
    
    
    $
    
    
    
    $
    
    
    
    $
    618
 110




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##### Table of Contents



TRICO MARINE SERVICES, INC.
 
 EXHIBIT INDEX
 2.1
    
    Joint Prepackaged Plan of Reorganization of the Company, Trico Marine Assets,
Inc. and Trico Marine Operators, Inc. under Chapter 11 of the United States
Bankruptcy Code (incorporated by reference to Exhibit 99.2 to our Current
Report on Form 8-K dated November 12, 2004).2.2
    
    Plan Support Agreement, as amended, dated September 8, 2004 (incorporated by
reference to Exhibit 99.3 to our Current Report on Form 8-K dated November 15,
2004).3.1
    
    Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to our Current Report on Form 8-K dated March 16,
2005).3.2
    
    Certificate of Designation of Series A Junior Participating Preferred Stock of
Trico Marine Services, Inc. (incorporated by reference to Exhibit 3.1 to our
Current Report on Form 8-K dated April 9, 2007).3.3
    
    Certificate of Elimination of Series A Junior Participating Preferred Stock of
Trico Marine Services, Inc. (incorporated by reference to Exhibit 3.1 to our
Current Report on Form 8-K dated April 24, 2008).3.4
    
    Eighth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1
to our Current Report on Form 8-K dated December 9, 2008).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to
our Annual Report on Form 10-K dated March 15, 2005).4.2
    
    Registration Rights Agreement, dated as of March 15, 2005, by and among Trico
Marine Services, Inc. and the Holders named therein (incorporated by reference
to Exhibit 4.1 to our Current Report on Form 8-K dated March 16, 2005).4.3
    
    Warrant Agreement, dated March 15, 2005 (incorporated by reference to Exhibit
4.2 to our Current Report on Form 8-K dated March 16, 2005).4.4
    
    Form of Series A Warrant (incorporated by reference to Exhibit 4.3 to our
Current Report on Form 8-K/A dated March 21, 2005).4.5
    
    Indenture of Trico Marine Services, Inc. and Wells Fargo Bank, National
Association, as Trustee, dated February 7, 2007 (incorporated by reference to
Exhibit 10.18 to our Annual Report on Form 10-K dated March 1, 2007).4.6
    
    Registration Rights Agreement, by and among Trico Marine Services, Inc. and
the Initial Purchasers, dated February 7, 2007 (incorporated by reference to
Exhibit 10.19 to our Annual Report on Form 10-K dated March 1, 2007).4.7
    
    Securities Purchase Agreement, dated as of May 14, 2008, by and among Trico
Marine Services, Inc. and the investors named therein (incorporated by
reference to Exhibit 4.1 to our Current Report on Form 8-K dated May 14,
2008).4.8
    
    Indenture of Trico Marine Services, Inc. and Wells Fargo Bank, National
Association, as Trustee, dated May 16, 2008 (incorporated by reference to
Exhibit 4.2 to our Current Report on Form 8-K/A dated May 14, 2008).4.9
    
    Form of Registration Rights Agreement, dated May 16, 2008, among Trico Marine
Services, Inc. and the purchasers named therein (incorporated by reference to
Exhibit 4.3 to our Current Report on Form 8-K dated May 14, 2008).4.10
    
    Phantom Stock Units Agreement, dated May 22, 2008, between Trico Marine
Services, Inc. and West Supply IV AS (incorporated by reference to Exhibit
10.3 to our Current Report on Form 8-K/A dated May 22, 2008).
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##### Table of Contents



4.11
    
    Registration Rights Agreement, dated May 22, 2008, between Trico Marine
Services, Inc. and West Supply IV AS (incorporated by reference to Exhibit
10.4 to our Current Report on Form 8-K/A dated May 22, 2008).4.12
    
    Form of Phantom Stock Units Agreement, dated May 15, 2008, by and between
Trico Marine Services, Inc. and certain members of management (and their
controlled entities) of DeepOcean (incorporated by reference to Exhibit 10.2
to our Current Report on Form 8-K dated May 14, 2008).10.1
    
    Credit Agreement dated April 24, 2008, by and among Trico Supply AS, Trico
Subsea Holding AS, Trico Subsea AS, Nordea Bank Finland PLC, New York Branch,
as Administrative Agent, Book Runner and Joint Lead Arranger, Nordea Bank
Norge ASA, Grand Cayman Branch and various lenders party thereto from time to
time (incorporated by reference to Exhibit 10.1 to our Current Report on Form
8-K dated April 24, 2008).10.2
    
    First Amendment to Credit Agreement, dated as of June 24, 2008, to the Credit
Agreement dated as of April 24, 2008 (incorporated by reference to Exhibit
10.4 to our Quarterly Report on Form 10-Q dated November 7, 2008).10.3
    
    Second Amendment to Credit Agreement, dated November 3, 2008, to the Credit
Agreement dated as of April 24, 2008 (incorporated by reference to Exhibit
10.5 to our Quarterly Report on Form 10-Q dated November 7, 2008).10.4
    
    Third Amendment to Credit Agreement, dated as of December 12, 2008, to the
Credit Agreement, dated as of April 24, 2008 (incorporated by reference to
Exhibit 10.2 to our Current Report on Form 8-K dated December 12, 2008).10.5
    
    Fourth Amendment to Credit Agreement, dated as of March 10,
2009, to the Credit Agreement, dated as of April 24, 2008(1).10.6
    
    Credit Agreement, dated as of May 14, 2008, among Trico Supply AS, Trico
Subsea Holding AS, Trico Subsea AS, Trico Shipping AS, the lenders party
thereto from time to time, and Nordea Bank Finland PLC, New York Branch, as
Administrative Agent and as Collateral Agent (incorporated by reference to
Exhibit 10.4 to our Current Report on Form 8-K dated May 14, 2008).10.7
    
    First Amendment to Credit Agreement, dated November 3, 2008, to the Credit
Agreement dated as of May 14, 2008 (incorporated by reference to Exhibit 10.7
to our Quarterly Report on Form 10-Q dated November 7, 2008).10.8
    
    Second Amendment to Credit Agreement, dated as of December 12, 2008, to the
Credit Agreement dated as of May 14, 2008 (incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K dated December 12, 2008).10.9
    
    Third Amendment to Credit Agreement, dated as of March 10,
2009, to the Credit Agreement, dated as of May 14, 2008(1).10.10
    
    Amended and Restated Credit Agreement, dated as of August 29, 2008, among
Trico Marine Services Inc., Trico Marine Assets Inc., and Trico Marine
Operators, Inc., the Lenders party thereto from time to time, and Nordea Bank
Finland PLC, New York Branch, as Administrative Agent and Lead Arranger for
the Lenders (incorporated by reference to Exhibit 10.8 to our Quarterly Report
on Form 10-Q dated November 7, 2008).10.11
    
    First Amendment to Credit Agreement, dated as of March 10,
2009, to the Amended and Restated Credit Agreement, dated as of
August 29, 2008(1).10.12
    
    NOK 260,000,000 Credit Facility, entered into on May 28, 2008, between Trico
Shipping AS, as Borrower, and Carnegie Investment Bank AB Norway Branch, as
Lender (incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K dated May 28, 2008).10.13
    
    Pledge of Shares, entered into on May 28, 2008, between Trico Shipping AS, as
Pledgor, and Carnegie Investment Bank AB Norway Branch, as Pledgeee
(incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K
dated May 28, 2008).10.14
    
    NOK 1,005,000 Facility Agreement, dated June 5, 2007, by and between DeepOcean
ASA, as borrower and Sparebank 1 SR Bank, as Lender and Agent (incorporated by
reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q dated August 8,
2008).10.15
    
    NOK 350,000,000 Loan Agreement, dated December 21, 2007, by and between
DeepOcean Shipping AS and Sparebank 1 SR Bank, as Lender and Agent
(incorporated by reference to Exhibit 10.8 to our Quarterly Report on Form
10-Q dated August 8, 2008).10.16
    
    Credit Facility Agreement, dated November 19, 2007, by and among DeepOcean Shipping AS, Deep
Ocean ASA, Nordea Bank Norge ASA as Agent and Arranger, and the Financial Institutions listed
therein as Banks(1).10.17
    
    First Amendment to Credit Facility Agreement, dated December 30, 2008, to the Credit
Facility Agreement, dated November 19, 2007(1).10.18
    
    Second Amendment to Credit Facility Agreement, dated March 6, 2009, to the Credit Facility
Agreement, dated November 19, 2007(1).
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##### Table of Contents



10.19
    
    Eighth Supplemental Agreement, dated December 30, 2008, to the Payment Guarantee Facility
and Multicurrency Loan Agreement, dated October 22, 2001(1).10.20
    
    Ninth Supplemental Agreement, dated March 6, 2009, to the Payment Guarantee Facility and
Multicurrency Loan Agreement, dated October 22, 2001(1).10.21*
    
    Shareholders Agreement, dated as of December 20,
2005, by and between Trico Marine Services (Hong
Kong) Limited and China Oilfield Services Limited
(incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K dated July 6, 2006).10.22
    
    Amendment to the Shareholders Agreement, dated as of June 30, 2006, by and among
Trico Marine Services (Hong Kong) Limited, China Oilfield Services Limited and
Eastern Marine Services Limited (incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K dated July 6, 2006).10.23
    
    Construction Contract, by and between Trico Marine Assets, Inc. and Bender
Shipbuilding & Repair Co. Inc. (incorporated by reference to Exhibit 1.1 to
our Current Report on Form 8-K dated September 8, 2006).10.24
    
    Stock Purchase Agreement, by and between Trico Marine Services, Inc. and
Kistefos AS, dated August 9, 2007 (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K dated August 9, 2007).10.25
    
    Letter Agreement, by and between Trico Marine Services, Inc. and Kistefos AS,
dated August 29, 2007 (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K dated August 24, 2007).10.26
    
    Share Purchase Agreement, dated May 15, 2008, by and among Trico Marine
Services, Inc., Trico Shipping AS, and West Supply IV AS (incorporated by
reference to Exhibit 2.1 to our Current Report on Form 8-K dated May 14,
2008).10.27
    
    Form of Management Share Purchase Agreement, dated May 15, 2008, by and among
Trico Marine Services, Inc., Trico Shipping AS, and certain members of
management of DeepOcean (incorporated by reference to Exhibit 2.2 to our
Current Report on Form 8-K dated May 14, 2008).10.28
    
    Share Purchase Agreement, entered into on June 13, 2008, by and between DOF
ASA, as Seller, and Trico Shipping AS, as Purchaser (incorporated by reference
to Exhibit 2.1 to our Current Report on Form 8-K dated June 13, 2008).10.29*
    
    Trico Marine Services, Inc. Amended and Restated 2004 Stock Incentive Plan
(incorporated by reference to Annex A to our Proxy Statement on Schedule 14A
filed April 28, 2006).10.30*
    
    Form of Director Restricted Stock Award Agreement (incorporated by reference
to Exhibit 10.2 to our Current Report on Form 8-K dated September 7, 2005).10.31*
    
    Form of Restricted Stock Award Agreement with Performance Based Shares
(incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K
dated February 20, 2008).10.32*
    
    Form of Key Employee Option Agreement (incorporated by reference to Exhibit
10.3 to our Current Report on Form 8-K dated March 16, 2005).10.33*
    
    Form of Executive Option Agreement (incorporated by reference to Exhibit 10.4
to our Current Report on Form 8-K dated March 16, 2005).10.34*
    
    Director Option Agreement for Joseph S. Compofelice (incorporated by reference
to Exhibit 10.5 to our Current Report on Form 8-K dated March 16, 2005).10.35*
    
    Retirement Agreement for Non-Executive Chairman (incorporated by reference to
Exhibit 10.8 to our Current Report on Form 8-K dated March 16, 2005).10.36*
    
    Amendment to Retirement Agreement for Non-Executive Chairman (incorporated by
reference to Exhibit 10.9 to our Current Report on Form 8-K dated March 16,
2005).
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##### Table of Contents



10.37*
    
    Second Amendment to Retirement Agreement, dated July 23, 2008, by and between
Joseph S. Compofelice and Trico Marine Services Inc. (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q dated August 8,
2008).10.38*
    
    Third Amendment to Retirement Agreement, dated December 9, 2008, by and
between Joseph S. Compofelice and Trico Marine Services Inc (1).10.39*
    
    Amended and Restated Employment Agreement, dated July 23, 2008, by and between
Joseph S. Compofelice and Trico Marine Services, Inc. (incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q dated August 8,
2008).10.40*
    
    First Amendment to Employment Agreement, dated December 9, 2008, amending the
Amended and Restated Employment Agreement between Joseph S. Compofelice and
Trico Marine Services, Inc (1).10.41*
    
    Schedule of Director Compensation Arrangements (1).10.42*
    
    Amended and Restated Employment Agreement dated as of December 9, 2008,
between Trico Marine Services, Inc. and Geoff A. Jones (1).10.43*
    
    Second Amended and Restated Employment Agreement, dated as of December 9,
2008, by and between Trico Marine Services, Inc. and Rishi Varma (1).10.44*
    
    Employment Agreement, effective as of July 5, 2006, by and between Trico
Marine Services, Inc. and Robert V. OConnor (incorporated by reference to
Exhibit 10.4 to our Current Report on Form 8-K dated July 6, 2006).10.45*
    
    Second Amended and Restated Employment Agreement dated as of January 23, 2007,
between Trico Marine Services, Inc. and D. Michael Wallace (1).10.46*
    
    Trico Marine Services, Inc. Annual Incentive Plan (incorporated by reference
to Exhibit 10.3 to our Quarterly Report on Form 10-Q dated May 2, 2008).10.47*
    
    Amendment to Trico Marine Services, Inc.
Annual Incentive Plan (1).10.48*
    
    Change of control letter agreement, dated as of January 23, 2007, by and
between Trico Marine Services, Inc. and Tomas Salazar (incorporated by
reference to Exhibit 10.27 to our Annual Report on Form 10-K filed February
25, 2008).10.49*
    
    First Amendment to Change of Control letter agreement, dated as of December 9,
2008, by and between Trico Marine Services, Inc. and Tomas Salazar (1).10.50*
    
    Amended and Restated Employment Agreement, dated as of December 9, 2008,
between Trico Marine Services, Inc. and Ray Hoover (1).10.51*
    
    Schedule of compensation arrangements for Lisa Curtis (1).14.1
    
    Financial Code of Ethics (incorporated by reference to Exhibit 14.1 to our
Annual Report on Form 10-K dated March 15, 2005).21.1
    
    Subsidiaries of Trico Marine Services, Inc (1).23.1
    
    Consent of Independent Registered Public Accounting Firm (1).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended (1).31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended (1).32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer under
Section 906 of the Sarbanes- Oxley Act of 2002, 18 U.S.C. §1350 (1).
 
 *
    
    Management Contract or Compensation Plan or Arrangement.(1)
    
    Filed herewith 114