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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 Commission File Number 0-28732 SEABULK INTERNATIONAL, INC.  Delaware
    
    65-0966399(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)2200 Eller Drive, P.O. Box 13038
Ft. Lauderdale, Florida
(Address of principal executive offices)
    
    33316
(Zip Code)
 Registrants telephone number, including area code: (954) 523-2200 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common stock, $.01 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). YES o NO þ The aggregate market value of the shares of voting stock held by non-affiliates of the
registrant is approximately $46,423,265 based upon the closing market price on June 30, 2004 of
$8.26 per share of common stock on the NASDAQ National Market as reported by the Wall Street
Journal. Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES þ NO o There were 23,554,620 shares of the registrants common stock par value $0.01 per share
outstanding, at March 1, 2005.




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SEABULK INTERNATIONAL, INC.
2004 FORM 10-K
Table of Contents Item
    
    
    
    PagePart I1 Business
    
    
    2A.  GeneralB.  Projections and Other Forward-Looking InformationC.  Recent DevelopmentsD.  Fleet OverviewE.  Lines of BusinessF.  Customers and Charter TermsG.  CompetitionH.  Environmental and Other RegulationsI.  InsuranceJ.  SecurityK.  Risks of Operating InternationallyL.  EmployeesM.  Executive Officers of the RegistrantN.  Additional Business and Corporate Risk FactorsO.  Website Access to Reports2 Properties
    
    
    263 Legal Proceedings
    
    
    264 Submission of Matters to a Vote of Security Holders
    
    
    27Part II5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    286 Selected Financial Data
    
    
    297 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    307A  Quantitative and Qualitative Disclosures about Market Risk
    
    
    488 Financial Statements and Supplementary Data
    
    
    489 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    489A  Controls and Procedures
    
    
    48Part III10 Directors and Executive Officers of the Registrant
    
    
    5111 Executive Compensation
    
    
    5112 Security Ownership of Certain Beneficial Owners and Management
    
    
    5113 Certain Relationships and Related Transactions
    
    
    5114 Principal Accounting Fees and Services
    
    
    51Part IV15 Exhibits, Financial Statement Schedules
    
    
    52Financial SupplementConsolidated Financial Statements
    
    
    F-1Severance AgreementThird Supplemental Credit AgreementThird Supplemental Subsidiary Guarantee AgreementSubsidiariesConsent of Independent Registered Public Accounting FirmSection 302 Principal Executive Officer CertificationSection 302 Principal Financial Officer CertificationSection 906 Principal Executive Officer CertificationSection 906 Principal Financial Officer Certification




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##### Table of Contents



PART I 
 Item 1. Business. 
 A. General Seabulk International, Inc. operates three main lines of businesses  offshore energy support,
marine transportation (tankers), and marine towing. Our offshore energy services fleet, numbering
109 vessels, is one of the worlds largest and provides services to operators of offshore oil and
gas exploration, development and production facilities in the Gulf of Mexico, the Arabian Gulf,
offshore West Africa, South America and Southeast Asia. Our tanker fleet consists of ten U.S.-flag
tankers and two foreign-flag tankers. Nine of the U.S.-flag tankers are engaged in coastwise trade
carrying petroleum products, crude oil, and chemicals, and one is employed in U.S. foreign
commerce. The two foreign-flag vessels, acquired in March and April 2004, have been employed in
the world-wide foreign product tanker shipping trade. Our marine towing fleet numbers 26 vessels
and is one of the largest and most modern in the United States and provides domestic harbor and
offshore towing services. We are a leading provider of commercial tug services in our four ports
in Florida: Port Canaveral, Port Everglades, and Tampa (including Port Manatee). We are also a
leading provider of those services in Mobile, Alabama; Lake Charles, Louisiana; and Port Arthur,
Texas. We also provide offshore towing services primarily in the Gulf of Mexico. As used in this Form 10-K Annual Report (the Report), the terms we, our, us and the
Company refer to Seabulk International, Inc., a Delaware corporation, and its subsidiaries. Our
principal executive offices are located at 2200 Eller Drive, P.O. Box 13038, Fort Lauderdale,
Florida 33316, and our telephone number is (954) 523-2200. 
 B. Projections and Other Forward-Looking Information This Report contains, and other communications by us may contain, projections or other
forward-looking information. Forward-looking information includes all statements regarding our
expected financial position, results of operations, cash flows, financing plans, business strategy,
budgets, capital and other expenditures, competitive position, growth opportunities for existing or
new services, management plans and objectives, and markets for securities. Like other businesses,
we are subject to risks and other uncertainties that could cause our actual results to differ
materially from any projections or that could cause other forward-looking information to prove
incorrect. In addition to general economic and business risks, some of the specific risks to which
our business is subject are:  
    declines in oil or gas prices, which tend to cause reductions in
exploration, development and production activities and, in turn,
reductions in the use of offshore energy support vessels and in
the rates paid for their use;
    increased construction of new offshore energy support vessels or
construction of new Jones Actproduct tankers by competitors,
which can cause oversupply in the market and consequent reductions
in the use of our offshore energy support vessels and Jones Act
product tankers and reductions in the rates paid for their use;
    international political instability, which can lead to reductions
in exploration, development and production activities,
particularly in less developed regions; 2




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
    fluctuations in weather, which can lead to declines in energy
consumption and resulting declines in oil or gas prices;
    changes in laws and regulations affecting the tankers industry,
including any possible weakening of the Jones Act, which could
result in increased competition from non-U.S. companies in our
domestic offshore energy support, towing, and petroleum and
chemical product tanker businesses;
    changes in environmental laws and regulations, including any
possible weakening of the U.S. Oil Pollution Act of 1990 (OPA
90), which could result in increased competition for the
petroleum and chemical product transportation services provided by
our modern double-hull fleet;
    risks associated with potential oil spills or other environmental
pollution incidents, which, although believed to be covered by
liability insurance, may result in adverse market reaction and
loss of business; and
    terrorist attacks or hijackings, which could disable or destroy
one of our vessels and result in significant loss of hire and
revenue. Additional information regarding these and other factors affecting our business appears
elsewhere in this Report under Additional Business and Corporate Risk Factors. 
 C. Recent Developments In January 2005, the Company took delivery of the Seabulk Carmenand delivered three of the
Companys offshore crewboats and one offshore support vessel,
which was held for sale, to Centurion Marine Offshore, L.L.C.
The transaction is a like-kind exchange of assets of equal value of approximately $4.4 million and
is a tax-free transaction to the Company. In January 2005, the Company took delivery of the Seabulk Angra,our second newbuild vessel
constructed in Brazil. 3




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D. Fleet Overview The following table lists the types of vessels, by assigned operating region or segments,
which the Company owned, operated, or chartered as of March 1, 2005: VesselsinFleetOffshore Energy SupportDomestic:Gulf of MexicoAnchor Handling Tug Supply/Supply Boats
    
    
    24Crew/Utility Boats
    
    
    15Other
    
    
    2Total Gulf of Mexico
    
    
    41International:West AfricaAnchor Handling Tug Supply/Supply Boats
    
    
    30Anchor Handling Tugs/Tugs
    
    
    2Crew/Utility Boats
    
    
    3Other
    
    
    1Total West Africa
    
    
    36Middle EastAnchor Handling Tug Supply/Supply Boats
    
    
    8Anchor Handling Tugs/Tugs
    
    
    5Crew/Utility Boats
    
    
    7Other
    
    
    4Total Middle East
    
    
    24Southeast AsiaAnchor Handling Tug Supply/Supply Boats
    
    
    7Other
    
    
    1Total Southeast Asia
    
    
    8Total Offshore Energy Support
    
    
    109TankersPetroleum/Chemical Product Tankers
    
    
    12Marine Towing
    
    
    26Total vessels
    
    
    147
 For the year ended December 31, 2004, 11 offshore energy support vessels were sold, including
five in the Gulf of Mexico, one of which was held-for-sale, four in West Africa, one in the Middle
East, and one in Southeast Asia. 4




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For financial information about our business segments and geographic areas of operation, see
Note 13 to our consolidated financial statements. 
 E. Lines of Business (1) Offshore Energy Support (Seabulk Offshore) The offshore energy support business accounted for approximately 46.6% of our total revenue in
2004. Offshore energy support vessels are used primarily to transport materials, supplies,
equipment, and personnel to drilling rigs and to support the construction, positioning and ongoing
operation of oil and gas production platforms. These vessels are hired, or chartered, by oil
companies and others engaged in offshore exploration and production activities. The market for these services is fundamentally driven by the offshore exploration,
development, and production activities of oil and gas companies worldwide. The level of these
activities depends primarily on the capital expenditures of oil and gas producers, which has
traditionally been a function of current and anticipated oil and gas prices. Oil and gas prices
are influenced by a variety of factors, including worldwide demand, production levels, inventory
levels, governmental policies regarding exploration and development of reserves, and political
factors in producing countries.  Offshore energy support services are provided primarily by the following types of vessels:
    Supply boats(also called workboats) are generally steel-hull vessels of at least 150
feet in length. They serve exploration and production facilities and support offshore
construction and maintenance activities and are differentiated from other vessel types by
cargo flexibility and capacity. In addition to transporting deck cargo, such as drill pipe
and heavy equipment, supply boats transport liquid mud, potable and drilling water, diesel
fuel, dry bulk cement, and dry bulk mud. With their relatively large liquid mud and dry
bulk cement capacity and large areas of open deck space, they are generally in greater
demand than other types of support vessels for exploration and workover drilling
activities.
    Anchor handling vessels, which include anchor handling tug/supply vessels and some tugs,
are more powerful than supply boats and are used to tow and position drilling rigs,
production facilities and construction barges. Some of these vessels are specially
equipped to assist tankers while they are loading from single-point buoy mooring systems,
and others are used in place of supply boats when not performing towing and positioning
functions.
    Crewboats(also called crew/supply boats) are faster and smaller than supply boats and
are used primarily to transport personnel and light cargo, including food and supplies, to
and among production platforms, rigs and other offshore installations. These vessels are
chartered together with supply boats to support drilling or construction operations or,
separately, to serve the various requirements of offshore production platforms. Crewboats
are typically aluminum-hull vessels and generally have longer useful lives than steel-hull
supply boats. Crewboats also provide a cost-effective alternative to helicopter
transportation services and can operate reliably in all but the most severe weather
conditions. However, our strategy is to focus on higher-value, higher-margin vessels and
de-emphasize the smaller, lower-margin crewboat business. As a result, the Company sold
four crewboats during 2004 and its strategy is to continue to de-emphasize its crewboat
business in 2005. 5




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Approximately 22.8% of our 2004 offshore revenue was derived from domestic operations under
U.S.-flag vessel registration in the Gulf of Mexico, directed from offices in Amelia, Louisiana.
The balance was derived from international operations, including offshore West Africa, the Arabian
Gulf and adjacent areas, such as India, and Southeast Asia. We also operate offshore energy
support vessels in other regions, including Brazil. Operations in the Arabian Gulf, Southeast Asia
and adjacent areas are directed from facilities in Dubai, United Arab Emirates; operations in
offshore West Africa and certain other international areas are directed from facilities in Nyon,
Switzerland; and operations in Mexico and Brazil are directed from our Amelia, Louisiana facility.
We also have sales offices and/or maintenance and other facilities in many of the countries where
our vessels operate. The average age of our offshore energy support vessels, based on the later of the date of
construction or rebuilding, is approximately 17 years. Of the offshore fleet, approximately
29% are less than 10 years old and approximately 52% are more than 20 years old. After a vessel
has been in service for approximately 25-30 years, the costs of repair, vessel certification and
maintenance may not be economically justifiable. (2) Marine Transportation (Seabulk Tankers) The Company provides marine transportation services, principally for petroleum products and
petrochemicals, in the U.S. domestic or coastwise trade, a market largely insulated from direct
international competition under the Jones Act. Tankers consists of our ten U.S.-flag tankers, five
of which are double-hulled, and our two double-hull foreign-flag tankers, one of which began
international service for us in the first quarter of 2004 and the other in the second quarter of
2004. Seabulk Tankers accounted for approximately 41.9% of our total revenue in 2004. Petroleum Product Transportation.In the domestic energy transportation trade, oceangoing
vessels transport fuel and other petroleum products, primarily from refineries and storage
facilities along the coast of the U.S. Gulf of Mexico to utilities, waterfront industrial
facilities and distribution facilities along the U.S. Gulf of Mexico, the Atlantic and Pacific
coasts, as well as transportation of petroleum crude and product between Alaska, the West Coast and
Hawaii. The number of U.S.-flag oceangoing vessels eligible to participate in the U.S. domestic
trade and capable of transporting fuel or petroleum products has steadily decreased since 1980, as
vessels have reached the end of their useful lives, the cost of constructing vessels in the United
States (a requirement for U.S. domestic coastwise trade participation) has substantially increased,
and single-hull tanker vessels are being retired due to the age requirements of OPA 90. 6




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At March 1, 2005, the Company operated the following U.S.-flag petroleum product tankers: Capacity
    
    
    Tonnage
    
    
    OPA 90(2)Name of Vessel
    
    in barrels
    
    
    in dwt(1)
    
    
    Retirement dateSeabulk Trader
    
    
    360,000
    
    
    
    49,900
    
    
    
    2011Seabulk Challenge
    
    
    360,000
    
    
    
    49,900
    
    
    
    2011Brenton Reef
    
    
    341,000
    
    
    
    45,000
    
    
    NoneSeabulk Energy
    
    
    341,000
    
    
    
    45,000
    
    
    NoneSeabulk Arctic
    
    
    340,000
    
    
    
    46,000
    
    
    NoneSeabulk Mariner
    
    
    340,000
    
    
    
    46,000
    
    
    NoneSeabulk Pride
    
    
    340,000
    
    
    
    46,000
    
    
    NoneSeabulk Power
    
    
    260,000
    
    
    
    36,600
    
    
    
    2008
   (1)
    
    Dead weight tons or dwt.(2)
    
    Oil Pollution Act of 1990 or OPA 90. The
Seabulk Energy, Seabulk Arctic, Seabulk Mariner, Seabulk Pride,and Brenton Reefare
our five double-hull carriers. These vessels are the newest and most technologically advanced
product carriers in the Jones Actmarket. The Company acquired the Seabulk Powerin March 1998. Under OPA 90, this vessel cannot be
used to transport petroleum and petroleum products in U.S. coastwise commerce after 2008. The
Company acquired the Seabulk Challengeand Seabulk Traderin August 1996. Their OPA 90 retirement
date is 2011. The double-hulls have no retirement date under OPA 90. At March 1, 2005, seven of the Companys U.S.-flag petroleum product tankers were operating
under time charters, and one vessel trades under a consecutive voyage charter in foreign commerce. Chemical Transportation.In the U.S. domestic coastwise chemical transportation trade,
vessels carry chemicals, primarily from chemical manufacturing plants and storage tank facilities
along the coast of the U.S. Gulf of Mexico to industrial users in and around Atlantic and Pacific
coast ports. The chemicals transported consist primarily of caustic soda, paraxylene, alkylates,
toluene and lubricating oils. Some of the chemicals transported must be carried in vessels with
specially coated or stainless steel cargo tanks; many of them are very sensitive to contamination
and require special cargo-handling equipment. 7




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At March 1, 2005, the Company operated the following U.S.-flag chemical product tankers: Capacity
    
    
    Tonnage
    
    
    OPA 90Name of Vessel
    
    in barrels
    
    
    in dwt
    
    
    Retirement dateSeabulk Magnachem
    
    
    297,000
    
    
    
    39,300
    
    
    
    2007Seabulk America
    
    
    297,000
    
    
    
    46,300
    
    
    
    2015
 The Seabulk Magnachemand the Seabulk Americahave full double bottoms (as distinct from
double hulls). Double bottoms provide increased protection over single-hull vessels in the event
of grounding. The Seabulk Americasstainless steel tanks were constructed without internal
structure, which greatly reduces cargo residue from transportation and results in less cargo
degradation. Stainless steel tanks, unlike epoxy-coated tanks, also do not require periodic
sandblasting and recoating, which the Company deems to be a competitive advantage. Delivered in
1977, the Seabulk Magnachemis a catamaran tug (CATUG) or integrated tug and barge (ITB) which
has a higher level of dependability, propulsion efficiency and performance than an ordinary tug and
barge. The chemical carriers have from 13 to 24 cargo segregations which are configured and coated to
handle various sized parcels of a wide variety of industrial chemical and petroleum products,
giving them the ability to handle a broader range of chemicals than chemical-capable product
carriers. Many of the chemicals we transport are hazardous substances. Current voyages are
generally conducted from the Houston and Corpus Christi (Texas), and Lake Charles (Louisiana) areas
to such ports as New York, Philadelphia (Pennsylvania), Baltimore (Maryland), Wilmington (North
Carolina), Charleston (South Carolina), Los Angeles and San Francisco (California), and Kalama
(Washington). The chemical carriers are also suitable for transporting other cargoes. Pursuant to OPA 90, the Seabulk Americaand Seabulk Magnachemcannot be used to transport
petroleum and petroleum products in U.S. coastwise commerce after 2015 and 2007, respectively. The
two chemical carriers, Seabulk Americaand Seabulk Magnachem,can also be used as petroleum tankers
until 2015 and 2007, respectively. Seabulk Americais among the last independently owned product
tankers scheduled to be retired under OPA 90. The Company operates the Seabulk Magnachemunder a bareboat charter expiring in February 2007
with a purchase option. In December 2004, the Company purchased the minority interest in a
partnership that owns the Seabulk America.The Company owned a 67% equity interest and purchased
the 33% interest owned by Stolt Tankers (U.S.A.), Inc. for $2.4 million. For vessels not operating under time charters or consecutive voyage charters, the Company
books cargoes either on a spot (movement-by-movement) or contract of affreightment basis.
Approximately 60.0% of contracts for cargo are committed on a 12- to 24-month basis, with minimum
and maximum cargo tonnage specified over the period at fixed or escalating rates per ton. At March 1, 2005, the Companys chemical product tankers were operating under contracts of
affreightment. 8




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At March 1, 2005, the Company operated the following foreign-flag product tankers: Capacity
    
    
    Tonnage
    
    
    OPA 90Name of Vessel
    
    in barrels
    
    
    in dwt
    
    
    Retirement dateSeabulk Reliant
    
    
    334,000
    
    
    
    48,000
    
    
    NoneSeabulk Trust
    
    
    334,000
    
    
    
    48,000
    
    
    None
 Acquired in 2004, the Seabulk Reliantand the Seabulk Trustare our two foreign-flag tankers,
operating in foreign trade, carrying petroleum products. The two five-year-old, foreign-flag
product tankers are modern double-hull vessels suitable for world-wide trading. Both vessels are
operating under time charters in an international product tanker pool. (3) Marine Towing (Seabulk Towing) Towing is the smallest of the Companys three businesses and represented approximately 11.5%
of our total revenue in 2004. Our harbor operations consist of four ports in Florida, with six
tugs in Tampa (including Port Manatee), four tugs in Port Everglades, and three tugs in Port
Canaveral. The towing division also has three tugs in Mobile, Alabama, two tugs in Lake Charles,
Louisiana, and four tugs in Port Arthur, Texas. Our tugs assist petroleum and chemical product
tankers, barges, container ships and other cargo vessels in docking and undocking and in proceeding
within the port areas and harbors. We also operate three tugs with offshore towing capabilities
that conduct a variety of offshore towing services in the Gulf of Mexico and the Atlantic Ocean.
Demand for towing services depends on vessel traffic and oilfield activity, which is in turn
generally dependent on local, national and international economic conditions, including the volume
of world trade. Our tug fleet consists of 16 conventional tugs and 10 tractor tugs, including four Ship
Docking Module tractor tugs, known as SDMs. SDMs are innovative ship docking vessels, designed and
patented by us, that are more maneuverable, efficient, and flexible and require fewer crew members
than conventional harbor tugs. In August 2004, the two-year term bareboat-charter of the tug Hollywoodto Signet Maritime
ended operations in the port of Brownsville, Texas. In January 2004, the tug Eagle IIwas
bareboated to Exxon/SeaRiver for one year with renewable options for service in San Francisco,
California. As of March 1, 2005, the Eagle IIremained bareboated to Exxon/SeaRiver. Harbor Tug Operations.In most U.S. ports, competition is unregulated. Rates are
unregulated in all ports that we serve, including the franchised ports. Generally, harbor tugs can
be moved from port to port. However, Port Everglades grants non-exclusive franchises to harbor tug
operators, which limit tug mobility from that port. Port Everglades. Port Everglades is the second largest non-refining petroleum storage
and distribution center in the United States, providing substantially all of the petroleum products
for South Florida. Seabulks Towing franchise requires it to maintain a minimum of three tractor
tugs in the port. The franchise is not exclusive and expires in 2007. While the Company is
regarded as a high-standards operator, there is no assurance the franchise will be renewed. As of
December 31, 2004, the Company operated four tugs in Port Everglades. 9




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Tampa. The Tampa port is comprised of three sub-ports (including Port Manatee) and
a distant sea buoy, a greater number of tugs is required to be a competitive operator in Tampa than
in other ports of similar size. As of December 31, 2004, we operated six tugs, including three
tractor tugs, one SDM, and two conventional tugs in the port (including Port Manatee). The Company
is conducting outside harbor services in addition to normal harbor operations. Port Canaveral. In Port Canaveral, the Company had been the sole franchise holder for
harbor-docking services until May 2003 when the Canaveral Port Authority terminated its franchise
system. The Company began to face competition by another operator in Port Canaveral in June 2004.
We provide docking services for commercial cargo vessels serving central Florida and, on a very
limited basis, for cruise ships, as well as for Navy vessels. Currently, the Company operates
three tugs in Port Canaveral. Mobile. At Mobile, the Company provides docking services primarily to commercial
cargo vessels, including vessels transporting coal and other bulk exports. The Company operates
three tugs at this port. There is a competing provider. During 2004, Mobile had an increase in
revenue due to increased port traffic and advanced operations including an increase in in-bound
coal and cruise ship docking in the port. Port Arthur and Lake Charles. At Port Arthur and Lake Charles the Company operates
six tugs. Currently, four of these tugs serve Port Arthur, Texas and two serve Lake Charles,
Louisiana. Each of these ports has a competing provider. Revenue increased due to increased bulk
and tanker traffic during 2004. Offshore and Bareboat Towing Operations.The Company currently has three tugs working
in the offshore towing market conducting a variety of offshore towing services in the Gulf of
Mexico and the Atlantic Ocean, and one tug working on a bareboat charter in San Francisco,
California. 
 F. Customers and Charter Terms The Company offers offshore energy support services primarily to oil and gas companies and
large drilling companies. Consistent with industry practice, our U.S. Gulf of Mexico operations
are conducted primarily in the term market pursuant to short-term (less than six months) charters
at varying day rates. Generally, such short-term charters can be terminated either by us or our
customers upon notice of five days or less. Charters in our international markets have terms
ranging from a few days to several years. The primary purchasers of petroleum product transportation services are utilities, oil and gas
companies, and large industrial consumers of fuel with waterfront facilities. The primary
purchasers of chemical transportation services are chemical and oil companies. Both services are
generally contracted for on the basis of short-term or long-term time charters, voyage charters,
contracts of affreightment, or other transportation agreements tailored to the shippers
requirements. Tesoro and Citgo each accounted for 7% of our 2004 revenue and were our largest
customers. The Companys towing services are offered to vessel owners and operators and their agents.
Our rates for harbor towing services are set forth in published tariffs and may be modified at any
time, subject to competitive factors. The Company also grants volume discounts to major users of
harbor services. Offshore towing services are priced based upon the service required on an ad hoc
basis. 10




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G. Competition The Company operates in a competitive environment in all our operations. Although we are
insulated from foreign vessel operators in the Jones Act U.S. coastwise trade in our businesses, we
are subject to U.S. citizen competitors in these trades. The principal competitive factors in
these markets are suitability, reliability and capability of equipment, safety record, personnel,
price, service, and reputation. Competitive factors in the offshore energy support segment also
include operating conditions and intended vessel use (both of which determine the suitability of
vessel type), shallow water versus deepwater needs, the complexity of maintaining logistical
support and the cost of transferring equipment from one market to another. Our vessels compete
with other vessel and barge operators and, in some areas and markets, with alternative modes of
transportation, such as pipelines, rail tank cars, and tank trucks. Moreover, the customers of
such services are placing increased emphasis on safety, the environment and quality, partly due to
heightened liability for the cargo owner in addition to the vessel owner/operator under OPA 90.
With respect to towing services, we compete with other providers of tug services in all of the
ports in which we operate. Additional competitors may enter our markets in the future. While
U.S.-flag, coastwise-operated vessels are protected under the
Jones Actand the Outer Continental
Shelf Act, foreign-built, foreign-manned and foreign-owned vessels could be eligible to compete
with our vessels operating in the domestic trade if the Jones Actwere repealed or waived. There
are no current indications that this will occur, although there are continuing attempts by foreign
operators to undermine the Jones Actthrough exceptions and by interpretation. 
 H. Environmental and Other Regulations The Companys business and operations are subject to significant federal, state, local and
international laws and regulations. The principal laws affecting us are described below. Environmental.The Companys business and operations are subject to federal, state, local and
international laws and regulations relating to environmental protection and occupational safety and
health, including those relating to the generation, storage, handling, emission, transportation and
discharge of oil and hazardous and non-hazardous materials, the remediation of contamination and
liability for damages to natural resources. The recent trend in environmental legislation and
regulation is generally toward stricter standards, and this trend will likely continue. Governmental authorities have the power to enforce compliance with applicable environmental
protection and operational safety and health laws and regulations, and violators are subject to
penalties, fines, injunctions, and other sanctions. The Company believes that our operations
currently are in substantial compliance with applicable environmental laws and regulations. The
Company does not expect that it will be required in the near future to make capital expenditures
that are material to the financial condition or operations by reason of environmental laws and
regulations; however, because such laws and regulations are frequently changed and may impose
increasingly stricter requirements, the Company cannot predict the ultimate cost of complying with
these laws and regulations. OPA 90.OPA 90 established an extensive regulatory and liability regime for the protection of
the environment from oil spills. OPA 90 affects owners and operators of facilities operating near
navigable waters and owners and operators of vessels operating in U.S. waters, which include the
navigable waters of the United States and the 200-mile exclusive economic zone of the United
States. Although it applies in general to all vessels, for purposes of its liability limits and
financial-responsibility and response-planning requirements, OPA 90 differentiates between tank
vessels (which include our chemical and petroleum product vessels) and other vessels (which
include our tugs and offshore energy support vessels). 11




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Under OPA 90, owners and operators of regulated facilities and owners, operators and certain
charterers of vessels are responsible parties and are jointly, severally and strictly liable for
removal costs and damages arising from oil spills relating to their facilities and vessels, unless
the spill results solely from the act or omission of certain third parties under specified
circumstances, an act of God or an act of war. Damages are defined broadly to include (i) natural
resources damages and the costs of remediation thereof; (ii) damages for injury to, or economic
losses resulting from the destruction of, real and personal property; (iii) the net loss of taxes,
royalties, rents, fees and profits by the U.S. government, a state or political subdivision
thereof; (iv) lost profits or impairment of earning capacity due to property or natural resources
damage; (v) the net costs of providing increased or additional public services necessitated by a
spill response, such as protection from fire, safety or other hazards; and (vi) the loss of
subsistence use of natural resources. For facilities, the statutory liability of responsible parties is limited to $350.0 million.
For tank vessels, the statutory liability of responsible parties is limited to the greater of
$1,200 per gross ton or $10.0 million ($2.0 million for a vessel of 3,000 gross tons or less) per
vessel; for any other vessel, such liability is limited to the greater of $600 per gross ton or
$500,000 per vessel. Such liability limits do not apply, however, to an incident caused by the
responsible partys violation of federal safety, construction or operating regulations or by the
responsible partys gross negligence or willful misconduct, or if the responsible party fails to
report the incident or provide reasonable cooperation and assistance as required by a responsible
official in connection with oil removal activities or fails to comply with certain governmental
orders. Although we currently maintain maximum available pollution liability insurance, a
catastrophic spill or a failure or refusal of the insurance carrier to provide coverage could
result in material liability in excess of available insurance coverage, resulting in a material
adverse effect on our business results of operations or financial condition. Under OPA 90, with certain limited exceptions, all newly built or converted oil tankers
carrying crude oil and petroleum products in U.S. waters must be built with double-hulls, and
existing single-hull, double-side or double-bottom vessels must be phased out of service at some
point, depending upon their size, age and place of discharge, through 2015 unless retrofitted with
double-hulls. As a result of this phase-out requirement, as interpreted by the U.S. Coast Guard,
our five single-hull chemical and petroleum product tankers will be required to cease transporting
petroleum products by 2015, with the first vessel phased out in 2007 and the last vessel phased out
in 2015, unless they are modified to install double hulls. OPA 90 expanded pre-existing financial responsibility requirements and requires vessel owners
and operators to establish and maintain with the U.S. Coast Guard evidence of insurance or
qualification as a self-insurer or other evidence of financial responsibility sufficient to meet
their potential liabilities under OPA 90. Coast Guard regulations require evidence of financial
responsibility demonstrated by insurance, surety bond, self-insurance, or guaranty. The
regulations also implement the financial responsibility requirements of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980(CERCLA), which imposes liability
for discharges of hazardous substances such as chemicals, in an amount equal to $300 per gross ton,
thus increasing the overall amount of financial responsibility from $1,200 to $1,500 per gross ton.
We have obtained Certificates of Financial Responsibility pursuant to the Coast Guard regulations
for our product and chemical carriers through self-insurance and commercial insurance. OPA 90 also amended the federal Water Pollution Control Actto require the owner or operator
of certain facilities or the owner or operator of a tank vessel to prepare facility or vessel
response plans and to contract with oil spill removal organizations to remove to the maximum extent
practicable a worst-case discharge. We have complied with these requirements. As is customary,
our oil spill response contracts 12




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are executory in nature and are not activated unless required. Once activated, we expect our
pollution liability insurance to cover the cost of spill removal subject to overall coverage
limitations of $1.0 billion; however a failure or refusal of the insurance carrier to provide
coverage in the event of a catastrophic spill could result in material liability in excess of
available insurance coverage, resulting in a material adverse effect on our business, results of
operations or financial condition. OPA 90 does not prevent individual states from imposing their own liability regimes with
respect to oil pollution incidents occurring within their boundaries, and many states have enacted
legislation providing for unlimited liability for oil spills. Some states have issued implementing
regulations addressing oil spill liability, financial responsibility, and vessel and facility
response planning requirements. We do not anticipate that such legislation or regulations will
have any material impact on our operations. In addition to OPA 90, the following are examples of environmental and occupational health and
safety laws that relate to our business and operations: Clean Water Act.The federal Water Pollution Control Act, also referred to as the Clean Water
Act,imposes restrictions on the discharge of pollutants into navigable waters of the United States.
The Clean Water Actprovides for civil, criminal and administrative penalties for any unauthorized
discharges and imposes substantial potential liability for the costs of removal, remediation, and
damages. State laws for the control of water pollution also provide varying civil, criminal and
administrative penalties and liabilities in the case of a discharge of petroleum or hazardous
materials into state waters. In addition, the federal Coastal Zone Management Actauthorizes state
development and implementation of programs to manage non-point source pollution to restore and
protect coastal waters. The Company manages our exposure to losses from potential discharges of pollutants through the
use of well-maintained, well-managed and equipped facilities and vessels and development of safety
and environmental programs, including a maritime compliance program and our insurance program; and
we believe we will be able to accommodate reasonably foreseeable environmental regulatory changes.
There can be no assurance, however, that any new regulations or requirements or any discharge of
pollutants by the Company will not have a material effect on us. RCRA.The Companys operations may generate and result in the transportation, treatment and
disposal of both hazardous and non-hazardous solid wastes that are subject to the requirements of
the federal Resource Conservation and Recovery Act(RCRA) and comparable state and local laws. CERCLA.The federal Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) and comparable state laws establish strict and, under certain circumstances, joint and
several liabilities for specified parties in connection with liability for the investigation and
remediation of releases of hazardous materials to the environment and damages to natural resources.
The Company has agreed to remediate certain shoreside portions of our former Sun State Marine
facility in Green Cove Springs, Florida in cooperation with the state of Florida Department of
Environmental Protection and the current owner of the property. The Company has expended
approximately $140,000 to date in remediation expenses and anticipates approximately another
$40,000 to complete the project over the remainder of 2005. Also, the Company may have certain
limited clean-up responsibilities regarding a replacement tenant at the facility. Clean Air Act.The federal Clean Air Actrequires the U.S. Environmental Protection Agency
(EPA) to promulgate, among other things, standards applicable to the emission of volatile organic
compounds and other air pollutants. The Companys chemical and petroleum product carrier vessels
are subject to such vapor control and recovery requirements when loading, unloading, ballasting,
cleaning, 13




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and conducting other operations in certain ports and are equipped with vapor control systems
that satisfy these requirements in all material respects. In addition, the EPA has issued
regulations addressing air emission requirements applicable to marine engines. These standards
will require modifications to new or replacement marine diesel engines in some cases. Coastwise Laws.A substantial portion of the Companys operations is conducted in the U.S.
domestic trade, which is governed by the coastwise laws of the United States (commonly referred to
as the Jones Act). The coastwise laws reserve tankers (including harbor tug services) operating
between points in the United States (including drilling rigs fixed to the ocean floor on the U.S.
outer continental shelf, under the Outer Continental Shelf Act) to vessels built in and documented
under the laws of the United States (U.S.-flag) and owned and manned by U.S. citizens, with an
exception to the ownership requirement with respect to foreign owned financial entities which own
and lease U.S. vessels to U.S. citizen operators. Generally, a corporation is deemed a U.S.
citizen so long as (i) it is organized under the laws of the United States or a state, (ii) each of
its president or other chief executive officer and the chairman of its board of directors is a
citizen, (iii) no more than a minority of the number of its directors necessary to constitute a
quorum for the transaction of business are non-citizens, and (iv) 75.0% of the interest and voting
power in the corporation are held by U.S. citizens. Under the citizenship provisions of the U.S. Merchant Marine Act of 1920(Jones Act) and the
Shipping Act of 1916, the Company would lose the privilege of engaging in U.S. coastwise trade if
more than 25% of the Companys outstanding stock was owned by non-U.S. citizens. The Company has a
dual stock certificate system to prevent non-U.S. citizens from owning more than 25% of the
Companys common stock. In addition, the Companys charter provides the Company with certain
remedies with respect to any transfer or purported transfer of shares of the Companys common stock
that would result in the ownership by non-U.S. citizens of more than 25% of its common stock. The laws of the United States provide that once a vessel is registered under a foreign-flag it
cannot thereafter engage in the U.S. coastwise trade. Therefore, the Companys non-U.S.-flag
vessels must continue to be operated abroad, and if the Company was not able to secure charters or
contracts abroad for them, and work would otherwise have been available for them in the United
States, its operations would be adversely affected. Of the total vessels owned or operated by the
Company at December 31, 2004, 76 were registered under the U.S. flag and 72 were registered under
foreign flags. The Companys offshore vessels and foreign-flag tankers are subject to international safety
and classification standards. U.S.-flag tanker and offshore support vessels operating in the
United States are required to undergo periodic inspections and to be recertified under drydock
examination at least every five years. Vessels registered under flags other than the United States
are subject to similar regulations as governed by the laws of the applicable jurisdictions. There have been repeated efforts aimed to repeal or significantly change the Jones Act.
Although we believe it is unlikely that the Jones Actwill be substantially modified or repealed,
there can be no assurance that Congress will not substantially modify or repeal it or that Coast
Guard interpretations of it may weaken it. Such changes could have a material adverse effect on
our operations and financial condition. Occupational Health Regulations and Safety Act.The Companys shoreside facilities and, as of
2001, the Companys U.S.-based vessels, are subject to occupational safety and health regulations
issued by the U.S. Occupational Safety and Health Administration (OSHA) and comparable state
programs. Such regulations currently require the Company to maintain a workplace free of
recognized hazards, observe safety and health regulations, maintain records and keep employees
informed of safety and health practices and duties. The Companys vessel operations are also
subject to occupational safety and health 14




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regulations issued by the U.S. Coast Guard and, to an extent, OSHA.  Such regulations
currently require the Company to perform monitoring, medical testing and record keeping with
respect to mariners engaged in the handling of the various cargoes transported by our chemical and
petroleum product vessels." Vessel Condition.The Companys chemical and petroleum product tankers, offshore energy
support vessels, and certain of the Companys tugs are subject to periodic inspection and survey
by, and drydocking and maintenance requirements of, the Coast Guard and/or the American Bureau of
Shipping and other marine classification societies. The Company believes it is currently in compliance in all material respects with environmental
and other laws and regulations, including health and safety requirements, to which the Companys
business and operations are subject. The Company is unaware of any pending or threatened material
litigation or other material judicial, administrative or arbitration proceedings against us based
on any alleged non-compliance with or liability under such laws or regulations, with the exception
of the potential for a dispute, claim or litigation in connection with the Sun State remediation
matter referred to above. The risks of substantial costs, liabilities, penalties and other
sanctions for releases of oil or hazardous materials into the environment or non-compliance are,
however, inherent in marine operations, and there can be no assurance that significant costs,
liabilities, penalties or other sanctions will not be incurred by or imposed on us in the future. International Laws and Regulations.The Companys vessels that operate internationally are
subject to various international conventions, including certain safety, environmental and
construction standards, as well as foreign local laws. Among the more significant of the
conventions applicable to the fleet are: (i) the International Convention for the Prevention of
Pollution from Ships, 1973, 1978 Protocol, (ii) the International Convention on the Safety of Life
at Sea, 1978 Protocol, including the International Management Code for the Safe Operation of Ships
and for Pollution Prevention, which went into effect for tank vessels on July 1, 1998, and (iii)
the International Convention on Standards of Training, Certification and Watchkeeping for
Seafarers, 1978, as amended in 1995. These conventions govern oil spills and other matters of
environmental protection, worker health and safety, and the manning, construction and operation of
vessels. Generally, surveys and inspections are performed by internationally recognized
classification societies. The vessels that operate internationally are registered primarily in the
Marshall Islands, Liberia and Panama. Although the Company believes it is in substantial compliance with all applicable
requirements, the risks of incurring substantial compliance costs and liabilities and penalties for
noncompliance are inherent in marine operations and there can be no assurance that significant
costs, liabilities, penalties and other sanctions will not be incurred by us or imposed on us in
the future. 
 I. Insurance The Companys operations are subject to the normal hazards associated with operating vessels
carrying large volumes of cargo and rendering services in a marine environment. These hazards
include the risk of loss of or damage to the Companys vessels, damage to third parties as a result
of collision, loss, or contamination of cargo, personal injury of employees and third parties, and
pollution and other environmental damages. The Company maintains insurance coverage against these
hazards with certain deductibles for which we are responsible. Risk of loss of or damage to the
Companys vessels is insured through hull and machinery insurance policies in amounts that
approximate fair market value, also subject to certain deductibles. Vessel operating liabilities,
such as collision, cargo, environmental, and personal injury, are insured primarily through our
participation in a mutual insurance association, the West of England Association (West of
England). 15




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As of February 20, 2004, the Company switched its protection and indemnity (P&I) marine
insurance club from Steamship Mutual (Steamship) to West of England Association (West of
England). The premium for 2005 is approximately $223,000 greater than the premium for 2004. The
per incident deductible for U.S. Gulf offshore claims decreased from $375,000 to $250,000 for 2005.
Because the Company maintains mutual insurance, the Company is subject to potential additional
premiums for prior years due to funding requirements and coverage shortfalls of the clubs in the
event claims exceed available funds, reserves and reinsurance, and to future premium increases
based on prior underwriting loss experience. In order to cover potential future additional
insurance calls which might be made by Steamship Mutual for 2002 and 2003, the Company was required
to post a letter of credit in the amount of approximately $1.9 million to support such potential
additional calls as a condition to its departure from Steamship. The letter of credit will be
returned if no additional insurance calls are made. Potential claims liabilities are recorded as
insurance expense reserves when they become probable and can be reasonably estimated. The Company carries workers compensation, maritime employers liability, general liability,
directors and officer liability, and other insurance customary in the industry. The Company also
carries War Risk insurance for all of its vessels for both hull and machinery damage to the vessels
and protection and indemnity liability. This insurance provides coverage for marine perils
including war, terrorism, sabotage, riots, seizure and piracy. The terrorist attacks on the United States on September 11, 2001, and the continued threat of
terrorist activity, together with uncertain investment performance for future years, have created
uncertainty in the insurance markets. It is also possible that acts of terrorism could be directed
against U.S. companies such as ours. These uncertainties have contributed to significant increases
in the premiums quoted for our insurance coverages, which in turn has also contributed to
substantial increases in the Companys insurance deductibles and self-insured retention levels. P&I insurance expense decreased by approximately $1.8 million from $9.3 million in 2003 to
$7.5 million in 2004. Over the last several years, premiums of both marine and non-marine insurers
have been adversely impacted by the erosion of reserves, underwriting losses and increased
reinsurance costs. The Companys hull and machinery insurance was renewed in October 2004. We
maintain high levels of self-insurance for P&I and hull and machinery risks through the use of
substantial deductibles and self-insured retentions, which may increase in the future. In 2004 we
increased our U.S. Gulf offshore segment deductible to $375,000 per incident but eliminated the
self-insurance layer we had in prior years. In 2005 that deductible was reduced to $250,000 per
incident. We carry coverage related to loss of earnings subject to deductibles ranging from 14 to
30 days for our tanker operations, but not for our offshore and tug operations. Insurance costs
represented approximately 6.2% of vessel and voyage costs in 2004. 
 J. Security Heightened awareness of security needs brought about by the events of September 11, 2001 has
caused the U.S. Coast Guard, the International Maritime Organization, and the states and local
ports to adopt heightened security procedures relating to ports and vessels. The Company has
updated its procedures in light of the new requirements. In 2002 Congress passed the Maritime Transportation Security Act(the Act) which, together
with the International Maritime Organizations recent security proposals (collectively known as The
International Ship and Port Facility Security Code), requires specific security plans for our vessels and
more rigorous crew identification requirements. The Company has implemented vessel security plans
and procedures for each of its U.S.-flag vessels pursuant to rules implementing the Act which have
been 16




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issued by the U.S. Coast Guard. The Company anticipates that the costs of security for our
business will continue to increase. In addition, both the Companys U.S.-flag and foreign-flag
vessels have been certified under the International Ship and Port Facility Security (ISPS)
Code effective July 1, 2004. 
 K. Risks of Operating Internationally The Companys international offshore vessel support operations are subject to the usual risks
inherent in doing business in countries other than the United States. Such risks include changing
political conditions, local cabotage and content laws, possible vessel seizure, company
nationalization and other governmental actions, currency restrictions and revaluations,
import/export restrictions, increases in duty taxes and royalties, war, and terrorist attacks, all
of which are beyond the control of the Company. In Nigeria there has recently been legislation enacted which will provide for certain Nigerian
ownership and crew requirements for offshore vessel support operators such as the Company operating
in Nigeria. Waivers of these laws may be obtained in Nigeria through the annual payment of
prescribed vessel fees. It is expected that such fees will increase our costs in Nigeria, where we
have 20 offshore vessels. The Company has entered into a joint venture with Nigerian interests to
operate Nigerian-flag crewboats in Nigeria, partially in response to Nigerian cabotage and local
content laws. Although it is impossible to fully predict the effect of any of these developments
on the Company, the Company believes these risks to be within acceptable limits and, in view of the
mobile nature of the Companys principal revenue producing assets, does not consider them at this
time to constitute a factor materially adverse to the conduct of its international offshore vessel
support operations as a whole. 
 L. Employees As of February 1, 2005, the Company had 2,502 employees. Management considers relations with
employees to be satisfactory. Renegotiations of labor contracts are on-going. The Company has
various collective bargaining arrangements in its towing and tanker segments with expiration dates
through December 31, 2007. The Company has approximately 500 members of national maritime labor
unions, with approximately 90 members of unions with collective bargaining arrangements expiring by
March 31, 2005. 
 M. Executive Officers of the Registrant The following table provides information on the Companys current executive officers. Name
    
    Age
    
    Current PositionGerhard E. Kurz
    
    65
    
    Chairman of the Board, President, Chief Executive Officer and DirectorVincent deSostoa
    
    60
    
    Senior Vice President and Chief Financial OfficerLarry D. Francois
    
    62
    
    Senior Vice President and PresidentSeabulk OffshoreMichael J. Pellicci
    
    41
    
    Senior Vice PresidentFinance & Planning, Treasurer and Chief Accounting OfficerKenneth M. Rogers
    
    49
    
    Senior Vice President and PresidentSeabulk TowingAlan R. Twaits
    
    57
    
    Senior Vice President, General Counsel and SecretaryL. Stephen Willrich
    
    52
    
    Senior Vice President and PresidentSeabulk TankersHubert E. Thyssen
    
    57
    
    Vice President Seabulk Offshore
 17




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Mr. Kurzwas elected Chief Executive Officer and a Director of the Company in April 2000,
President in September 2000, and Chairman in September 2002. He formerly served as President of
Mobil Shipping and Transportation Company (MOSAT), a Mobil Oil-affiliated company from which he
retired in March 2000. Mr. Kurz joined Mobil in London in 1964 as a Chartering Assistant. In 1965
he was transferred to Mobils Marine Division in New York. After a series of assignments, he was
named Vice President of Planning, Middle East and Marine Transportation, and then President of
MOSAT in 1989. Mr. Kurz is past Chairman of the Marine Preservation Association and the Oil
Companies International Marine Forum. He serves on the Board of Directors of the American Bureau
of Shipping and chairs its Audit Committee. He previously chaired its Finance and Nominating
Committees. He also serves on the Boards of the Seamens Church Institute and the Coast Guard
Foundation. He is a founding member and Chairman of the Massachusetts Maritime Academys
International Business Advisory Council and a member of the International Advisory Board to the
Panama Canal Authority. Mr. Kurz is the recipient of numerous awards and honors, including the
International Maritime Hall of Fame Award, the 1999 SeaTradePersonality of the Year award, the
Seamens Church Institute Silver Bell Award, the Order of the U.S.S. St. MarysMedal from the
State University of New York Maritime College, the U.S. Coast Guard Award and Medal for Meritorious
Public Service, and the Seafarers House International Golden Compass Award. He holds an Honorary
Doctorate Degree from the Massachusetts Maritime Academy. Mr. deSostoahas been Senior Vice President and Chief Financial Officer since June 2002. He
was previously President and Chief Financial Officer of Zeosoft Corporation, a provider of mobile
service networks. Previously, Mr. deSostoa served as Senior Vice President and Chief Financial
Officer of OMI Corporation, an international tanker operator with interests in real estate and
energy. Mr. deSostoa was also Chief Financial Officer of the New York City Transit Authority and a
partner with Peat Marwick, Mitchell & Co., a public accounting firm, which he joined in 1973. Mr. Francoishas been Senior Vice President since February 2003 and President, Seabulk
Offshore since January 2003. He previously served as Area Manager of domestic offshore marine
operations for Tidewater Inc. Previously, Mr. Francois was Division Manager for Zapata Gulf Marine
Corporation in Mexico, International Marketing Manager in London for Western Oceanic, Inc., and
Area Executive for Tidewater in Egypt. He was also Marketing & Sales Manager for Dillingham
Maritime, a division of the Dillingham Corporation. A Vietnam War veteran, Mr. Francois served in
the United States Air Force with the rank of Captain. Mr. Pelliccihas been Senior Vice PresidentFinance and Planning, and Treasurer since January
2005. He was previously Vice PresidentFinance and Corporate Controller of the Company, which he
joined in January 2001. Mr. Pellicci also continues to serve as Chief Accounting Officer, to which
he was appointed in March 2002. He previously served as Director of Corporate Finance and
Corporate Controller of Caraustar Industries, Inc. in Atlanta, which he joined in 1989. Prior to
that, he was a Senior Auditor with Arthur Andersen & Co. He is a Certified Public Accountant. Mr. Rogershas been Senior Vice President and President, Seabulk Towing since July 2002. He
was previously Senior Vice President of Marketing for Seabulk Towing, which he joined in October
2001. Previously, Mr. Rogers was Managing Director of Maritime Audit Services for Carnival
Corporation and President of Southern Ship Management. Mr. Rogers was successively Port Captain,
Ship Manager, Assistant Vice President of Operations and Vice President of Operations for OMI
Corporation, which he joined in 1986. He began his career upon graduation from the United States
Merchant Marine Academy as a deck officer with Texaco Inc. 18




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Mr. Twaitshas been Senior Vice President, General Counsel and Secretary since November 2000.
He was previously Senior Vice President, General Counsel and Secretary of Premier Cruise Lines.
Previously, Mr. Twaits was in private practice and served as General Counsel and Secretary for
Carnival Corporation as well as a Director and Vice President, General Counsel and Secretary of
Carnival Air Lines. Mr. Twaits has also held senior counsel positions with Crowley Maritime
Corporation, Trusthouse Forte, Inc., United States Lines, Inc., and a staff counsel position at Pan
American World Airways. He is a member of the Florida Bar, the District of Columbia Bar, the
American Bar Association and its International Law Section, and the American Corporate Counsel
Association. Mr. Willrichhas been Senior Vice President since June 2000 and President of Seabulk Tankers
since March 1998, when he was also elected a corporate Vice President. He was appointed Senior Vice
President of Seabulk Tankers in August 1996. He joined the Company as Vice President of Chartering
in January 1988. Previously, Mr. Willrich was employed by Diamond Shamrock Chemical Company from
1975 to 1988, where he rose to Division General Manager. Prior to his service with Diamond
Shamrock, he worked for Gulf Oil Corporation as a Third Assistant Engineer on various company
tankers. He has more than 28 years of experience in the management of Jones Actproduct tankers. Mr. Thyssenhas been Vice President since August 2002. He is also Senior Vice President of
Marketing & Sales for Seabulk Offshore and Managing Director of Seabulk Offshore, S.A. Mr. Thyssen
joined the Company in 1998 when it acquired Care Offshore, where he served as Managing Director and
Director of Marketing. Prior to that, he was Manager for Saunier Maritime SARL in Marseilles, a
shipbroker and agent, which he joined in 1972. He is a member of the Association Francaise du
Petrole. 
 N. Additional Business and Corporate Risk Factors The Company operates in a business environment that has many risks. Listed below are some
additional critical risk factors that affect the Company and particularly its offshore vessel
support business and that should be considered when evaluating any forward-looking statement. The
impact of any one risk factor or a combination of several risk factors could materially impact the
Companys results of operations and financial condition and the accuracy of any forward-looking
statement made in this Form 10-K.  Risks Relating to Our Business  Demand for many of our services substantially depends on the level of activity in the offshore
oil and natural gas exploration, development and production industry. The level of offshore oil and natural gas exploration, development and production activity has
historically been volatile and is likely to continue to be so in the future. The level of activity
is subject to large fluctuations in response to relatively minor changes in a variety of factors
that are beyond our control, including:  
    prevailing oil and natural gas prices and expectations about future prices and price
volatility;
    the cost of exploring for, producing and delivering oil and natural gas offshore;
    worldwide demand for energy and other petroleum products as well as chemical products;
    availability and rate of discovery of new oil and natural gas reserves in offshore areas;
    local and international political and economic conditions and policies including
cabotage and local content laws;
    technological advances affecting energy production and consumption; 19




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
    weather conditions;
    environmental regulation; and
    the ability of oil and natural gas companies to generate or otherwise obtain funds
for capital. We expect levels of oil and natural gas exploration, development and production activity to
continue to be volatile and affect the demand for and rates of our offshore energy support services
and, to a lesser extent, tanker services. A prolonged material downturn in oil and natural gas prices is likely to cause a substantial
decline in expenditures for exploration, development and production activity. Lower levels of
expenditure and activity would result in a decline in the demand and lower rates for our offshore
energy support services and tanker services. Moreover, approximately 25% of our offshore energy
support services are currently conducted in the Gulf of Mexico and are therefore dependent on
levels of activity in that region, which may differ from levels of activity in other regions of the
world.  Excess vessel supply could depress day rates, charter or spot market rates, and adversely affect
our operating results. Increases in oil and natural gas prices and higher levels of expenditure by oil and natural
gas companies for exploration, development and production may not result in increased demand for
our offshore energy support services and tanker services. For example, our offshore energy support
segment is affected by the supply of and demand for offshore energy support vessels. During
periods when supply exceeds demand, there is significant downward pressure on the rates we can
obtain for our vessels. Because vessel operating costs cannot be completely reduced, any reduction
in rates adversely affects our results of operations. Currently, demand for our offshore energy
support vessels in the important Gulf of Mexico market has improved somewhat, a trend that began in
the second half of 2004, particularly in the deep water areas. A significant increase in the
capacity of the offshore energy support industry through new construction could not only
potentially lower day rates, which would adversely affect our revenues and profitability, but could
also worsen the impact of any downturn in oil and natural gas prices on our results of operations
and financial condition. Similarly, should our competitors in the domestic petroleum and chemical
product tankers industry construct a significant number of new tankers or large capacity integrated
or articulated tug and barges, demand for our tanker assets could be negatively impacted. During
2004 there were no newly built U.S.-flag Jones Actproduct tankers, and no comparably sized tug and
barge tank vessels have been announced or delivered in the domestic industry.  The consolidation or loss of companies that charter our offshore energy support and tanker
vessels could adversely affect demand for our vessels and reduce our revenues. Oil and natural gas companies, energy companies and drilling contractors have undergone
substantial consolidation in the last few years and additional consolidation is likely.
Consolidation results in fewer companies to charter or contract for our vessels. Also, merger
activity among both major and independent oil and natural gas companies affects exploration,
development and production activity as the consolidated companies integrate operations to increase
efficiency and reduce costs. Less promising exploration and development projects of a combined
company may be dropped or delayed. Such activity may result in an exploration and development
budget for a combined company that is lower than the total budget of both companies before
consolidation, adversely affecting demand for our offshore energy support vessels and tankers,
thereby reducing our revenues. 20




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Intense competition in our lines of business could result in reduced profitability and loss of
market share for us. Contracts for our vessels are generally awarded on a competitive basis, and competition in the
offshore energy support segment is intense. The most important factors determining whether a
contract will be awarded include:  

    suitability, reliability and capability of equipment;
    safety record;
    age of equipment;
    personnel;
    price;
    service; and
    reputation. Many of our major competitors are much larger companies with substantially greater financial
resources and substantially larger operating staffs than we have. They may be better able to
compete in making vessels available more quickly and efficiently or in constructing new vessels,
meeting customers scheduling needs, and withstanding the effect of downturns in the market. As a
result, we could lose customers and market share to these competitors.  Acquisitions of vessels and businesses involve risks that could adversely affect our results of
operations. From time to time we consider possible acquisitions of vessels, vessel fleets and businesses
that complement our existing operations. Consummation of such acquisitions is typically subject to
the negotiation of definitive agreements. We can give no assurance that we will be able to
identify desirable acquisition candidates or that we will be successful in entering into definitive
agreements on terms we regard as favorable or satisfactory. Moreover, even if we do enter into a
definitive acquisition agreement, the related acquisition may not thereafter be completed. We may
be unable to integrate any particular acquisition into our operations successfully or realize the
anticipated benefits of the acquisition. The process of integrating acquired operations into our
own may result in unforeseen operating difficulties, may absorb significant management attention
and may require significant financial resources that would otherwise be available for the ongoing
development or expansion of our existing operations. Future acquisitions could result in the
incurrence of additional indebtedness and liabilities which could have a material adverse effect on
our financial condition and results of operations.  We conduct international operations, which involve additional risks. We operate vessels worldwide. Operations outside the U.S. involve additional risks, including
the possibility of:  
    restrictive actions by foreign governments, including vessel seizure;
    foreign taxation and changes in foreign tax laws;
    limitations on repatriation of earnings;
    changes in currency exchange rates;
    local cabotage and local ownership laws and requirements;
    nationalization and expropriation; 21




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
    loss of contract rights; and
    political instability, war and civil disturbances or other risks that may limit or
disrupt markets. Our ability to compete in the international offshore energy support market may be adversely
affected by foreign government regulations that favor or require the awarding of contracts to local
persons, or that require foreign persons to employ citizens of, or purchase supplies from, a
particular jurisdiction. Further, our foreign subsidiaries may face governmentally imposed
restrictions on their ability to transfer funds to their parent company.  Revenue from our tanker segment and towing segment could be adversely affected by a decline in
demand for domestic refined petroleum products, crude oil or chemical products, or a change in
existing methods of delivery in response to certain conditions that may develop. A reduction in domestic consumption of refined petroleum products, crude oil or chemical
products may adversely affect revenue from our tanker segment and towing segment and therefore our
financial condition and results of operations. Weather conditions also affect demand for our
tanker services and towing services. For example, a mild winter may reduce demand for heating oil
in our areas of operation. Moreover, alternative methods of delivery of refined petroleum, natural
gas or crude oil may develop as a result of:  Construction of additional refined petroleum product, natural gas or crude oil pipelines, which
could have a material adverse effect on our tanker and towing revenues. Long-haul transportation of refined petroleum products, crude oil and natural gas is generally
less costly by pipeline than by tanker. Existing pipeline systems are either insufficient to meet
demand in, or do not reach all of, the markets served by our tankers. New pipeline segments are
being planned and approved for the Florida market. Such activity could have an adverse effect on
the volume of our tanker and towing businesses.  Our offshore energy support fleet includes many older vessels. The average age of our offshore energy support vessels, based on the later of the date of
construction or rebuilding, is approximately 17 years. Approximately 52% of these vessels are more
than 20 years old. We believe that after a vessel has been in service for approximately 30 years,
repair, vessel certification and maintenance costs may not be economically justifiable. We may not
be able to maintain our fleet by extending the economic life of existing vessels through major
refurbishment or by acquiring new or used vessels. Some of our competitors have newer fleets and
may be able to compete more effectively against us.  We are subject to complex laws and regulations, including environmental laws and regulations
that can adversely affect the cost, manner or feasibility of doing business. Increasingly stringent federal, state, local and international laws and regulations governing
worker safety and health and the manning, construction and operation of vessels significantly
affect our operations. Many aspects of the marine industry are subject to extensive governmental
regulation by the U.S. Coast Guard, Occupational Safety and Health Administration, the National
Transportation Safety Board and the U.S. Customs Service and to regulation by port states and class
society organizations such as the American Bureau of Shipping, as well as to international
regulations from international treaties such as the Safety of Life at Sea (SOLAS) convention
administered by port states and class societies. The U.S. Coast Guard, Occupational Safety and
Health Administration, and the National Transportation Safety Board set safety standards and are authorized to investigate vessel accidents and
recommend improved safety standards. The U.S. Customs Service is authorized to inspect vessels at
will. 22




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Our business and operations are also subject to federal, state, local and international laws
and regulations that control the discharge of oil and hazardous materials into the environment or
otherwise relate to environmental protection and occupational safety and health. Compliance with
such laws and regulations may require installation of costly equipment or operational changes, and
the phase-out of certain product tankers. Failure to comply with applicable laws and regulations
may result in administrative and civil penalties, criminal sanctions or the suspension or
termination of our operations. Some environmental laws impose strict and, under certain
circumstances, joint and several liability for remediation of spills and releases of oil and
hazardous materials and damage to natural resources, which could subject us to liability without
regard to whether we were negligent or at fault. These laws and regulations may expose us to
liability for the conduct of or conditions caused by others, including charterers. Moreover, these
laws and regulations could change in ways that substantially increase our costs. We cannot be
certain that existing laws, regulations or standards, as currently interpreted or reinterpreted in
the future, or future laws and regulations will not have a material adverse effect on our business,
results of operations and financial condition. For more information, see Environmental and Other
Regulations. We are subject to the Merchant Marine Act of 1920, commonly referred to as the Jones Act. The
Jones Actrequires that vessels used to carry cargo between U.S. ports be constructed, owned and
operated by U.S. citizens. To ensure that we are determined to be a U.S. citizen as defined under
these laws, our articles of incorporation and by-laws contain certain restrictions on the ownership
of our capital stock by persons who are not U.S. citizens and establish certain mechanisms to
maintain compliance with these laws. If we are determined at any time not to be in compliance with
these citizenship requirements, our vessels would become ineligible to engage in the U.S. coastwise
trade, and our business and operating results would be adversely affected.  We could lose Jones Act protection, which would result in additional competition. A substantial portion of our operations is conducted in the U.S. coastwise trade. Under the
Jones Act, this trade is restricted to vessels built in the United States, owned and manned by U.S.
citizens and registered under U.S. law. There have been attempts to repeal or undermine the Jones
Act, and these attempts are expected to continue in the future. Repeal of the Jones Actcould
result in additional competition from vessels built in lower-cost foreign shipyards and owned and
manned by foreign nationals with promotional foreign tax incentives and with lower wages and
benefits than U.S. citizens, which could have a material adverse effect on our business, results of
operations and our financial condition.  We may have to phase-out some of our single hull tankers from petroleum product transportation
service in U.S. waters. The Oil Pollution Act of 1990, commonly referred to as OPA 90, establishes a phase-out
schedule, depending upon vessel size and age, for non-double-hull vessels carrying crude oil and
petroleum products in U.S. coastwise transportation. The phase-out dates for our non-double-hull
tankers are as follows: Seabulk Magnachem- 2007, Seabulk Power 2008, Seabulk Trader 2011,
Seabulk Challenge- 2011 and Seabulk America- 2015. As a result of this requirement, these
vessels will be prohibited from transporting crude oil and petroleum products in U.S. coastwise
transportation after their phase-out dates unless they are modified to install double hulls. They
would also be prohibited from transporting petroleum products in most foreign and international
markets under a more accelerated IMO international phase-out schedule, were we to attempt to enter
those markets. 23




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Our business involves hazardous activities and other risks of loss against which we may not be
adequately insured. Our business is affected by a number of risks, including:  
    terrorism;
    the mechanical failure of our vessels;
    collisions;
    vessel loss or damage;
    cargo loss or damage;
    hostilities; and
    labor strikes. In addition, the operation of any vessel is subject to the inherent possibility of a
catastrophic marine disaster, including oil, fuel or chemical spills and other environmental
mishaps, as well as other liabilities arising from owning and operating vessels. Any such event
may result in the loss of revenues and increased costs and other liabilities. OPA 90 imposes significant liability upon vessel owners, operators and certain charterers for
certain oil pollution accidents in the U.S. This has made liability insurance more expensive and
has also prompted insurers to consider reducing available liability coverage. We may be unable to
maintain or renew insurance coverage at levels and against risks we believe are customary in the
industry at commercially reasonable rates, and existing or future coverage may not be adequate to
cover claims as they arise. Because we maintain mutual insurance, we are subject to funding
requirements and coverage shortfalls in the event claims exceed available funds and reinsurance,
and to premium increases based on prior loss experience. Any shortfalls could have a material
adverse impact on our financial condition.  We depend on attracting and retaining qualified, skilled employees to operate our business and
protect our business expertise. Our results of operations depend in part upon our business expertise. We believe that
protection of our expertise depends in large part on our ability to attract and retain highly
skilled and qualified personnel. Any inability we experience in the future to hire, train and
retain a sufficient number of qualified employees could impair our ability to manage and maintain
our business and to protect our expertise. We require skilled employees who can perform physically demanding work on board our vessels.
As a result of the volatility of the oil and natural gas industry and the demanding nature of the
work, potential employees may choose to pursue employment in fields that offer a more desirable
work environment at wage rates that are competitive with ours. With a reduced pool of workers, it
is possible that we will have to raise wage rates to attract workers from other fields and to
retain our current employees. If we are not able to increase our service rates to our customers to
compensate for wage-rate increases, our operating results may be adversely affected.  Our employees are covered by federal laws that may subject us to job-related claims in addition
to those provided by state laws. Some
of our employees are covered by provisions of the Jones Act,
the Death on the High Seas
Act and general maritime law. These laws typically operate to make liability limits established by
state workers compensation laws inapplicable to these employees and to permit these employees and
their 24




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##### Table of Contents



representatives to pursue actions against employers for job-related injuries in federal
courts. Because we are not generally protected by the limits imposed by state workers
compensation statutes, we may have greater exposure for any claims made by these employees.  Our success depends on key members of our management, the loss of whom could disrupt our
business operations. We depend to a large extent on the business expertise, efforts and continued employment of our
executive officers, directors and key management personnel. The loss of services of certain key
members of our management could disrupt our operations and have a negative impact on our operating
results.  Our borrowing agreements, including our amended credit facility and bond indenture, contain
covenants that restrict our activities. Our borrowing agreements, including our amended credit facility and bond indenture:  
    require us to meet certain financial tests, including the maintenance of minimum
ratios of leverage, and debt service and indebtedness to net worth;
    limit certain liens;
    limit additional borrowing;
    restrict us from making certain investments;
    restrict certain payments, including dividends, on shares of any class of capital stock; and
    limit our ability to do certain things, such as entering into certain types of
business transactions, including mergers and acquisitions. These provisions could limit our future ability to continue to pursue actions or strategies that we
believe would be beneficial to our Company, our stockholders or the holders of the notes or may
result in default of our borrowing agreements. Our insurance costs may rise and no assurance can be given that they will not continue to rise. Our P&I marine insurance clubs, West of England and Steamship Mutual, are mutual associations
and rely on member premiums, investment reserves and income, and reinsurance to manage liability
risks on behalf of their members. Investment losses, underwriting losses, and high costs of
reinsurance have caused West of England, and other international marine insurance clubs, to raise
the cost of membership, resulting in higher premium costs. Deterioration in this insurance market
could lead to higher levels of premiums, deductibles and self-insurance. Our controlling shareholders effectively control the outcome of shareholder voting. A group of shareholders currently beneficially owns approximately 75% of our voting power. As
a result, this group of shareholders has the power to effectively control the outcome of
shareholder votes and, therefore, corporate actions requiring such votes. Further, the existence
of the controlling group of shareholders may adversely affect the prevailing market price of our
shares if they are viewed as discouraging takeover attempts in the future. Changes in operating and financing costs could have an adverse impact. The impact of changes in operating and financing costs, including foreign currency, interest
rates, fuel, insurance and security costs could adversely affect results. 25




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##### Table of Contents



O. Website Access to Reports Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements, Insider
Transactions, Current Reports on Form 8-K and Registration Statements are available through the
Investors page of our website at www.seabulkinternational.com, as soon as reports are
electronically filed with the SEC. 
 Item 2. Properties. The Companys fleet ownership is described in Item 1. Business. Many of the Companys vessels
are mortgaged to secure the Companys Amended Credit Facility or U.S. Maritime Administration Title
XI financing. The Companys principal offices are located in Fort Lauderdale, Florida, where the Company
leases approximately 36,000 square feet of office and shop space under a lease expiring in 2009.
The Company also leases office and other facilities in Amelia, Louisiana; Dubai, the United Arab
Emirates; Nyon, Switzerland; Houston, Texas; Tampa, Florida; Port Harcourt, Nigeria; and
Singapore. In addition, the Company leases sales offices and maintenance and other facilities in
other locations where our vessels operate. The Company believes that its facilities are generally
adequate for current and anticipated future use, although the Company may from time to time close
or consolidate facilities or lease additional facilities as operations require. 
 Item 3. Legal Proceedings. Under U.S. law, United States persons are prohibited from business activities and contracts
in certain countries, including Sudan and Iran. Relating to the prohibitions, the Company filed
three reports with and submitted documents to the Office of Foreign Asset Control (OFAC) of the
U.S. Department of Treasury. One of the reports was also filed with the Bureau of Export
Administration of the U.S. Department of Commerce. The reports and documents related to certain
limited charters with third parties involving three of the Companys vessels which called in the
Sudan for several months in 1999 and January 2000, and charters with third parties involving
several of the Companys vessels which called in Iran in 1998. In March 2003, the Company received
notification from OFAC that the case had been referred to its Civil Penalties Division. Should OFAC
determine that these activities constituted violations of the laws or regulations, civil penalties,
including fines, could be assessed against the Company and/or certain individuals who knowingly
participated in such activities. The Company cannot predict the extent of such penalties; however,
management does not believe the outcome of these matters will have a material impact on its
financial position or results of operations. The Company was sued by Maritime Transport Development Corporation (MTDC) in January 2002 in
Florida state court in Broward County alleging broker commissions due since 1998 from charters on
three of its vessels, the Seabulk Magnachem, Seabulk Challengeand Seabulk Pride,under an alleged
broker commission agreement. MTDC was controlled by the founders of our predecessor company. The
claim allegedly continues to accrue. The amount alleged to be due is over $800,000, but is subject
to offset claims and defenses by the Company. The Company is vigorously defending such charges,
but the Company cannot predict the ultimate outcome. From time to time the Company is also party to personal injury and property damage claims
litigation arising in the ordinary course of our business. Protection and indemnity marine
liability insurance covers large claims in excess of the substantial
deductibles and, for 2002 and
2003, significant self-insured retentions. 26




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Item 4. Submission of Matters to a Vote of Security Holders. None. 27




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##### Table of Contents



PART II 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Common Stock of Seabulk International, Inc. trades on the NASDAQ National Market under the
symbol SBLK. Warrants issued to former noteholders (the Noteholder Warrants) have an exercise price of
$0.01 per share. These warrants expire on June 30, 2007. As of March 1, 2005 there were 157,570
Noteholder Warrants outstanding. The Company has not paid and does not expect to pay any dividends on its Common Stock. The
Company declared no dividends in 2004 and 2003. The following tables set forth the high and low closing prices of the Companys Common Stock,
as reported by the NASDAQ National Market. Common Stock
    
    High
    
    
    Low2005First Quarter (through March 1, 2005)
    
    $
    18.03
    
    
    $
    11.112004First Quarter
    
    
    11.99
    
    
    
    8.31Second Quarter
    
    
    9.54
    
    
    
    6.39Third Quarter
    
    
    11.10
    
    
    
    7.36Fourth Quarter
    
    
    13.47
    
    
    
    10.592003First Quarter
    
    
    9.05
    
    
    
    5.61Second Quarter
    
    
    10.25
    
    
    
    8.13Third Quarter
    
    
    8.71
    
    
    
    6.42Fourth Quarter
    
    
    9.50
    
    
    
    7.17
 Class A Warrants
    
    High
    
    
    Low2003First Quarter
    
    $
    0.12
    
    
    $
    0.03Second Quarter
    
    
    0.10
    
    
    
    0.02Third Quarter
    
    
    0.10
    
    
    
    0.02Fourth Quarter
    
    
    0.14
    
    
    
    0.02
 As of March 1, 2005, there were 230 holders of record of the Companys Common Stock. The Companys ability to pay dividends in the future is subject to certain limitations,
contained in the Companys amended credit facility and the senior notes indenture. Information
concerning the Companys plans, which may involve the issuance of equity required by Item 5,
Market for Registrants Common Equity and Related Stockholder Matters, will be incorporated by
reference to Item 12, Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters, of this Form 10-K and included in the Proxy Statement for the 2005 Annual
Stockholders Meeting. 28




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##### Table of Contents



Information regarding our equity compensation plans as of December 31, 2004 is disclosed in
Item 12, Security Ownership of Certain Beneficial Owners and Management. 
 Item 6. Selected Financial Data. The selected consolidated financial data presented below should be read in conjunction with
the consolidated financial statements and notes thereto and Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations, included elsewhere in this Report. Year Ended December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(in thousands except per share data),Consolidated Statement of Operations Data:Revenue
    
    $
    352,328
    
    
    $
    316,558
    
    
    $
    323,997
    
    
    $
    346,730
    
    
    $
    320,483Vessel and voyage expenses
    
    
    192,444
    
    
    
    179,676
    
    
    
    182,558
    
    
    
    199,327
    
    
    
    205,226General and administrative
    
    
    37,526
    
    
    
    38,043
    
    
    
    38,657
    
    
    
    37,002
    
    
    
    39,630Depreciation, amortization and drydocking
    
    
    66,132
    
    
    
    66,592
    (4)
    
    
    66,376
    
    
    
    61,313
    (4)
    
    
    50,271(Gain) loss on disposal of assets
    
    
    (4,116
    )
    
    
    (1,463
    )
    
    
    (1,364
    )
    
    
    134
    
    
    
    (3,863
    )Income from operations
    
    
    60,342
    
    
    
    33,710
    
    
    
    37,770
    
    
    
    48,954
    
    
    
    29,219Interest expense, net
    
    
    33,579
    
    
    
    33,498
    
    
    
    44,240
    
    
    
    55,667
    
    
    
    62,010Other income (expense), net
    
    
    4,205
    (3)
    
    
    (939
    )(2)
    
    
    (27,758
    )(2)
    
    
    (38
    )
    
    
    8,711
    (1)Income (loss) before provision for income
taxes
    
    
    30,968
    
    
    
    (727
    )
    
    
    (34,228
    )
    
    
    (6,751
    )
    
    
    (24,080
    )Provision for income taxes
    
    
    5,034
    
    
    
    4,238
    
    
    
    4,642
    
    
    
    5,210
    
    
    
    4,872Net income (loss)
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )
    
    $
    (11,961
    )
    
    $
    (28,952
    )Net income (loss) per common share:Basic
    
    $
    1.11
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )
    
    $
    (1.16
    )
    
    $
    (2.89
    )Diluted
    
    $
    1.09
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )
    
    $
    (1.16
    )
    
    $
    (2.89
    )Weighted average number of shares and
common equivalent shares outstanding:Basic
    
    
    23,264
    
    
    
    23,176
    
    
    
    14,277
    
    
    
    10,277
    
    
    
    10,034Diluted
    
    
    23,761
    
    
    
    23,176
    
    
    
    14,277
    
    
    
    10,277
    
    
    
    10,034Ratio
earnings to fixed charges(7)(8)
    
    
    1.8
    
    
    
    0.9
    
    
    
    0.2
    
    
    
    0.9
    
    
    
    0.6Consolidated Statement of Cash Flows Data:Net cash provided by (used in):Operating activities
    
    $
    59,145
    
    
    $
    38,323
    (5)
    
    $
    37,612
    (5)
    
    $
    37,391
    (5)
    
    $
    11,910
    (5)Investing activities
    
    
    (109,087
    )
    
    
    (21,658
    )(5)
    
    
    8,922
    (5)
    
    
    (2,366
    )(5)
    
    
    16,594
    (5)Financing activities
    
    
    61,492
    
    
    
    (26,810
    )
    
    
    (33,412
    )
    
    
    (37,627
    )
    
    
    (33,317
    )
 29




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As of December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(in thousands)Consolidated Balance Sheet Data:Working capital (deficit)(6)
    
    $
    49,643
    
    
    $
    30,848
    
    
    $
    26,261
    
    
    $
    (7,313
    )
    
    $
    7,026Total assets
    
    
    786,788
    
    
    
    694,440
    
    
    
    695,818
    
    
    
    744,765
    
    
    
    775,476Total long-term liabilities
    
    
    512,318
    
    
    
    445,071
    
    
    
    443,095
    
    
    
    519,552
    
    
    
    544,870Stockholders equity
    
    
    198,995
    
    
    
    172,355
    
    
    
    176,800
    
    
    
    124,687
    
    
    
    136,514
   (1) Includes a $7.0 million favorable settlement of a disputed liability in
2000.(2)Includes loss on early extinguishment of debt of $1.7 million and $27.8
million in 2003 and 2002, respectively.(3)Includes $4.5 million in proceeds from the favorable settlement of
litigation in 2004.(4)Includes
write-down of assets held for sale of approximately
$1.2 million and $1.4 million in 2003 and 2001, respectively.(5)As restated, see Note 2 to our consolidated financial statements.(6)Includes restricted cash of $35.7 million, $28.5 million, $21.0 million, $8.5
million and $8.9 million, in 2004, 2003, 2002, 2001 and 2000 respectively.(7) For purposes of computing the ratio of earnings to fixed
charges: Earnings consists of income before provision for income
taxes plus fixed charges less interest capitalized. Fixed charges
consists of interest expense, interest capitalized and a portion of
operating lease rent expense deemed to be representative of interest.

(8)
 Pursuant to Statement of Financial Accounting Standards No. 145,
Recision of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections, the Company was
required to reclassify to continuing operations amounts previously
reported as extinguishments of debt. See note (2). 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations. This discussion and analysis of the Companys financial condition and historical results of
operations should be read in conjunction with the Companys consolidated financial statements and
the related notes thereto included elsewhere in this Report. Overview The Company has three lines of business: offshore energy support, marine transportation
(tankers) and marine towing.  
    Offshore operates 109 vessels and is one of the worlds largest providers of support
services to the offshore oil and gas exploration, development and production industry.
    Tankers operates 10 U.S.-flag product tankers and two foreign-flag product tankers.
Nine of the U.S-flag product tankers operate in domestic trade and one operates in
international trade, carrying petroleum products, crude oil and chemicals. Five of the
U.S.-flag vessels have double-hulls and are the newest and most technologically advanced
product carriers in the Jones Actmarket. The foreign-flag tankers, operating in foreign
trade, carry petroleum products. The two five-year-old, foreign-flag product tankers are
modern double-hull vessels suitable for world-wide trading.
    Marine towing operates 26 vessels and has one of the most modern fleets operating in the
U.S. We provide towing and harbor assist services in seven ports. Since a limited number of customers account for a significant amount of the Companys
worldwide revenue, our results are subject to volatility from changes in spending for energy
distribution, exploration, development and production. A significant slowdown in capital spending
in our markets can create uncertainty as to the level of demand for our equipment. As a result of
the uncertainty, an accurate estimate of earnings and cash flow is difficult. The following themes and events are important to an understanding of our business:  
    Our results of operations since the second half of 2001 have been adversely affected
by a slowdown in natural gas and crude oil activity in the Gulf of Mexico. However,
international demand remains high. 30




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Rates and utilization for our offshore vessels in the Gulf of Mexico began to improve
in the third quarter of 2004, and this trend has continued into 2005.
    The Company has implemented certain changes to improve profitability including: (1)
selective new buildings for offshore vessels, (2) selective acquisitions and charters
of existing vessels and tankers, and (3) repositioning offshore vessels and tugboats.
    We continue to reduce our exposure to low margin assets and sell offshore vessels
that are not an integral part of our core operations. We have reduced our operating
expenses through restructuring of our personnel requirements in our offshore division
in both domestic and international operations.
    The Company entered the foreign-flag tanker market in 2004 with the purchase of two
modern product tankers, which have contributed significantly to earnings.
    The Company incurs substantial capital requirements for debt service, vessel
maintenance, vessel replacement and upgrades to the fleet to comply with increased
regulatory requirements.
    In August 2003, the Company issued $150.0 million 9.50% senior unsecured notes to
increase the Companys liquidity and renegotiated its primary credit facility. The
notes require the semiannual payment of interest only; principal is paid at maturity in
2013. The Companys credit facility was amended in August 2003 to an $80.0 million
revolving facility.
    The Company entered into an interest rate swap in October 2003 for the notes to take
advantage of a lower available interest rate. The Company effectively converted the
fixed rate to a floating rate currently at 7.88%.
    The Company has certain restrictions on distributing excess cash from the five
U.S.-flag double-hull tankers to fund the Companys general working capital
requirements. It can distribute 100% of excess cash from the Lightships once they have
attained $12 million in working capital, which they had as of December 31, 2004. In
2004, the five U.S.-flag double-hull tankers distributed approximately $3.9 million to
the Company for working capital purposes. The Company expects to receive $10.0 million
during the first quarter of 2005 from the double-hull tankers for working capital
purposes. Critical Accounting Policies and Estimates Our discussion and analysis of the Companys financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On
an on-going basis, we evaluate our estimates, including those related to bad debts, useful lives of
vessels and equipment, deferred tax assets, and certain accrued liabilities. We base our estimates
on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments
and estimates used in the preparation of our consolidated financial statements: Revenue Recognition.Revenue is generally recorded when services are rendered, the Company
has a signed charter agreement or other evidence of an arrangement, pricing is fixed or
determinable and collection is reasonably assured. For the majority of the offshore energy and
towing segments, revenues are recorded on a daily basis as services are rendered. For the tankers
segment, revenue is earned under time charters, bareboat charters, consecutive voyage charters or
affreightment/voyage contracts. Revenue from time charters and bareboat charters is earned and
recognized on a daily basis. Certain time charters contain performance provisions, which provide
for decreased fees based upon actual performance against established targets such as speed and fuel
consumption. Recorded revenue is based on actual performance. Affreightment/voyage contracts are
contracts for cargoes that are committed on a 12 to 30 month basis, with minimum and maximum cargo
tonnages specified over the period at fixed or escalating rates per ton. 31




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##### Table of Contents



Revenue and voyage expenses for the affreightment contracts and consecutive voyage charters
are recognized based upon the percentage of voyage completion. The percentage of voyage completion
is based on the number of voyage days worked at the balance sheet date divided by the total number
of days expected on the voyage. Allowance for Doubtful Accounts.We maintain allowances for doubtful accounts for estimated
losses resulting from the inability of our customers to make required payments. If the financial
condition of our customers were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required. Asset Impairment.We record impairment losses on long-lived assets used in operations when
indicators of impairment are present and the estimated undiscounted cash flows to be generated by
those assets are less than the assets carrying amounts. If the carrying value is not recoverable,
the carrying value of the assets is reduced to estimated fair value. Useful Lives of Fixed Assets.We determine the useful lives of the vessels and equipment
based upon regulatory requirements such as OPA 90, market conditions and operational
considerations. We continue to evaluate the reasonableness of the useful lives of the vessels and
equipment. Major Maintenance Costs.Currently, the costs incurred to drydock our vessels are deferred
and amortized on a straight-line basis over the period to the next
drydocking, generally 24 to 36
months. At December 31, 2004, the net book value of the deferred drydocking costs was $32.4
million. Insurance Premium Accruals. Under the Companys mutual protection and indemnity (P&I)
marine insurance policies, the Company could be liable for additional premiums to cover any
investment losses and reserve shortfalls experienced by its marine insurance clubs, however
additional premiums can only be assessed for open policy years. A policy year closes three years
after the policy year has ended. Policy years 2002, 2003 and 2004 are still open. There have been
no additional premiums assessed for these policy years and the Company believes it is unlikely that
additional premiums for those policy years will be assessed. The Company will record a liability
for any such additional premiums if and when they are assessed and the amount can be reasonably
estimated. Valuation of Deferred Tax Assets.We record a valuation allowance to reduce our deferred tax
assets to the amount that is more likely than not to be realized. After application of the
valuation allowance, our net deferred tax assets and liabilities were zero at December 31, 2004 and
2003. Overview of Revenue We derive our revenue from three main lines of business  offshore energy support, tankers,
and marine towing. Seabulk Offshore, our domestic and international offshore energy support
business, accounted for approximately 46.6% and 50.8% of Company revenue in 2004 and 2003,
respectively. Seabulk Tankers, our tankers business, consists of the Companys Jones Actproduct
tanker business, in which it owns nine petroleum and chemical product tankers in the domestic
coastwise trade and leases one chemical product carrier. The tanker business also consists of the
Companys two foreign-flag product tankers which began operations in international trade in March
and April 2004. Seabulk Tankers accounted for approximately 41.9% and 37.6% of Company revenue in
2004 and 2003, respectively. Seabulk Towing, our domestic harbor and offshore towing business,
accounted for approximately 11.5% and 11.6% of Company revenue in 2004 and 2003, respectively. Seabulk Offshore Revenue from our offshore energy support operations is primarily a function of the size of our
fleet, vessel day rates or charter rates, and fleet utilization. Rates and utilization are
primarily a function of offshore exploration, development, and production activities. In certain
areas where we conduct offshore energy support operations (particularly the U.S. Gulf of Mexico),
contracts for the utilization of offshore energy support vessels commonly include 32




---



##### Table of Contents



termination provisions with three- to five-day notice requirements and no termination penalty.
As a result, companies engaged in offshore energy support operations (including us) are
particularly sensitive to changes in market demand. As the Companys offshore energy support fleet gets older, our strategy is to look for
opportunities to improve our age profile by acquiring higher-value, larger and newer vessels, and
selling a number of older and smaller vessels, mainly crewboats. The Company sold 11 offshore energy support vessels during 2004 including one which had been
held-for-sale for an aggregate total of $6.4 million and a gain of approximately $4.1 million. The
Company sold 18 offshore energy support vessels and three tugs during 2003 for an aggregate total
of $9.0 million and a gain of approximately $1.5 million. During 2002, the Company sold 17 vessels
for a total of $6.8 million and a gain of approximately $55,000. 33




---



##### Table of Contents



The following table represents revenue for Seabulk Offshore by major operating area (in
thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002Domestic (1)
    
    $
    37,535
    
    
    $
    41,770
    
    
    $
    47,490West Africa
    
    
    85,498
    
    
    
    79,680
    
    
    
    84,576Middle East
    
    
    26,255
    
    
    
    24,650
    
    
    
    23,683Southeast Asia
    
    
    15,072
    
    
    
    14,616
    
    
    
    15,730Total
    
    $
    164,360
    
    
    $
    160,716
    
    
    $
    171,479
   (1)
    
    Domestic consists of vessels operating in the United States,
the Gulf of Mexico, South America, and the Caribbean. 34




---



##### Table of Contents



The following tables set forth, by primary area of operation, average day rates achieved
by the offshore energy fleet owned or operated by the Company and average utilization for the
periods indicated. Average day rates are calculated by dividing total revenue by the number of
days worked. Utilization percentages are based upon the number of working days over a 365/366-day
year and the number of vessels in the fleet on the last day of the
quarter. Day rates and utilization are not disclosed for categories
with a limited number of vessels.  Q1  2004
    
    
    
    Q2  2004
    
    
    
    Q3  2004
    
    
    
    Q4  2004AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    OtherDomestic(1)Vessels(2)
    
    
    
    21
    
    
    
    
    
    
    
    22
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    21
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    18
    
    
    
    2
    
    
    
    
    22
    
    
    
    
    
    
    
    18
    
    
    
    2Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Effective
Utilization(3)
    
    
    
    43
    %
    
    
    
    
    
    
    63
    %
    
    
    
    
    
    
    
    52
    %
    
    
    
    
    
    
    67
    %
    
    
    
    
    
    
    
    68
    %
    
    
    
    
    
    
    73
    %
    
    
    
    
    
    
    
    69
    %
    
    
    
    
    
    
    72
    %
    
    
    Day Rate
    
    
    $
    5,001
    
    
    
    
    
    
    $
    2,410
    
    
    
    
    
    
    
    $
    4,879
    
    
    
    
    
    
    $
    2,442
    
    
    
    
    
    
    
    $
    4,768
    
    
    
    
    

    
    $
    2,705
    
    
    
    
    
    
    
    $
    5,421
    
    
    
    
    
    
    $
    2,958
    
    
    
    West AfricaVessels(2)
    
    
    
    33
    
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    
    33
    
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    
    33
    
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    
    32
    
    

    
    2
    
    
    
    3
    
    
    
    1Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    82
    %
    
    
    86
    %
    
    
    98
    %
    
    
    
    
    
    
    
    83
    %
    
    
    75
    %
    
    
    94
    %
    
    
    
    
    
    
    
    78
    %
    
    
    67
    %
    
    
    93
    %
    
    
    
    
    
    
    
    77
    %
    
    
    70
    %
    
    
    84
    %
    
    
    Day Rate
    
    
    $
    7,281
    
    
    $
    6,193
    
    
    $
    3,413
    
    
    
    
    
    
    
    $
    7,350
    
    
    $
    6,831
    
    
    $
    3,524
    
    
    
    
    
    
    
    $
    7,300
    
    
    $
    6,196
    
    
    $
    3,620
    
    
    
    
    
    
    
    $
    7,574
    
    
    $
    6,329
    
    
    $
    3,664
    
    
    
    Middle EastVessels(2)
    
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    5
    
    
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    4
    
    
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    4
    
    
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    4Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    89
    %
    
    
    80
    %
    
    
    79
    %
    
    
    43
    %
    
    
    
    97
    %
    
    
    84
    %
    
    
    92
    %
    
    
    78
    %
    
    
    
    83
    %
    
    
    75
    %
    
    
    93
    %
    
    
    95
    %
    
    
    
    86
    %
    
    
    64
    %
    
    
    80
    %
    
    
    99
    %Day Rate
    
    
    $
    3,750
    
    
    $
    4,565
    
    
    $
    1,740
    
    
    $
    3,966
    
    
    
    $
    3,880
    
    
    $
    4,739
    
    
    $
    1,712
    
    
    $
    5,043
    
    
    
    $
    3,827
    
    
    $
    4,951
    
    
    $
    1,659
    
    
    $
    4,804
    
    
    
    $
    3,782
    
    
    $
    5,388
    
    
    $
    1,580
    
    
    $
    4,733Southeast AsiaVessels(2)
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    1Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    66
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    %
    
    
    
    
    
    
    
    
    
    
    Day Rate
    
    
    $
    5,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,388
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,327
    
    
    
    
    
    
    
    
    
    
    
    
   (1) Domestic consists of vessels operating in the United States, the Gulf of Mexico,
South America, and the Caribbean.(2) Held-for-sale vessels are excluded from the vessel count.(3) Effective utilization excludes laid-up vessels. 35




---



##### Table of Contents



Q1  2003
    
    
    
    Q2  2003
    
    
    
    Q3  2003
    
    
    
    Q4  2003AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    OtherDomestic(1)Vessels(2)
    
    
    
    21
    
    
    
    
    
    
    
    25
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    25
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    24
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    24
    
    
    
    2Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Effective
Utilization(3)
    
    
    
    56
    %
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    
    67
    %
    
    
    
    
    
    
    69
    %
    
    
    
    
    
    
    
    73
    %
    
    
    
    
    
    
    77
    %
    
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    73
    %
    
    
    Day Rate
    
    
    $
    5,192
    
    
    
    
    
    
    $
    2,330
    
    
    
    
    
    
    
    $
    4,989
    
    
    
    
    
    
    $
    2,422
    
    
    
    
    
    
    
    $
    4,970
    
    
    
    
    
    
    $
    2,557
    
    
    
    
    
    
    
    $
    5,101
    
    
    
    
    
    
    $
    2,463
    
    
    
    West AfricaVessels(2)
    
    
    
    32
    
    
    
    4
    
    
    
    6
    
    
    
    1
    
    
    
    
    32
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    
    33
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    
    34
    
    
    
    4
    
    
    
    1
    
    
    
    Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    80
    %
    
    
    72
    %
    
    
    97
    %
    
    
    
    
    
    
    
    83
    %
    
    
    76
    %
    
    
    
    
    
    
    
    
    
    
    
    78
    %
    
    
    86
    %
    
    
    
    
    
    
    
    
    
    
    
    73
    %
    
    
    82
    %
    
    
    
    
    
    
    Day Rate
    
    
    $
    7,223
    
    
    $
    6,131
    
    
    $
    3,038
    
    
    
    
    
    
    
    $
    7,199
    
    
    $
    6,198
    
    
    
    
    
    
    
    
    
    
    
    $
    7,321
    
    
    $
    6,265
    
    
    
    
    
    
    
    
    
    
    
    $
    7,591
    
    
    $
    6,053
    
    
    
    
    
    
    
    Middle EastVessels(2)
    
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6
    
    
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6
    
    
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6
    
    
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    5Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    90
    %
    
    
    56
    %
    
    
    86
    %
    
    
    52
    %
    
    
    
    89
    %
    
    
    48
    %
    
    
    95
    %
    
    
    50
    %
    
    
    
    91
    %
    
    
    63
    %
    
    
    92
    %
    
    
    71
    %
    
    
    
    75
    %
    
    
    94
    %
    
    
    92
    %
    
    
    58
    %Day Rate
    
    
    $
    3,283
    
    
    $
    4,457
    
    
    $
    1,682
    
    
    $
    5,213
    
    
    
    $
    3,393
    
    
    $
    5,364
    
    
    $
    1,677
    
    
    $
    4,246
    
    
    
    $
    3,476
    
    
    $
    5,266
    
    
    $
    1,742
    
    
    $
    5,341
    
    
    
    $
    3,711
    
    
    $
    4,855
    
    
    $
    1,760
    
    

    $
    4,975Southeast AsiaVessels(2)
    
    
    
    9
    
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    1Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    59
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    %
    
    
    
    
    
    
    
    
    
    
    Day Rate
    
    
    $
    5,936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,321
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,310
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,558
    
    
    
    
    
    
    
    
    
    
    
    
   (1)
    
    Domestic consists of vessels operating in the United States, the Gulf
of Mexico, South America, and the Caribbean.(2)
    
    Held-for-sale vessels are excluded from the vessel count.(3)
    
    Effective utilization excludes laid-up vessels. 36




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##### Table of Contents



Q1  2002
    
    
    
    Q2  2002
    
    
    
    Q3  2002
    
    
    
    Q4  2002AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    Other
    
    
    
    AHTS/Supply
    
    
    AHT/Tugs
    
    
    Crew/Utility
    
    
    OtherDomestic(1)Vessels(2)
    
    
    
    24
    
    
    
    
    
    
    
    30
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    

    
    
    31
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    31
    
    
    
    2
    
    
    
    
    21
    
    
    
    
    
    
    
    28
    
    
    
    2Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Effective
Utilization(3)
    
    
    
    59
    %
    
    
    
    
    
    
    65
    %
    
    
    
    
    
    
    
    63
    %
    
    
    
    
    
    
    58
    %
    
    
    
    
    
    
    
    63
    %
    
    
    
    
    
    
    62
    %
    
    
    
    
    
    
    
    65
    %
    
    
    
    
    
    
    65
    %
    
    
    Day Rate
    
    
    $
    6,687
    
    
    
    
    
    
    $
    2,666
    
    
    
    
    
    
    
    $
    6,005
    
    
    
    
    
    
    $
    2,469
    
    
    
    
    
    
    
    $
    5,581
    
    
    
    
    
    
    $
    2,530
    
    
    
    
    
    
    
    $
    5,252
    
    
    
    
    
    
    $
    2,315
    
    
    
    West AfricaVessels(2)
    
    
    
    29
    
    
    
    5
    
    
    
    7
    
    
    
    1
    
    
    
    
    30
    
    
    
    5
    
    
    
    6
    
    
    
    1
    
    
    
    
    30
    
    
    
    5
    
    
    
    6
    
    
    
    1
    
    
    
    
    30
    
    
    
    4
    
    
    
    6
    
    
    
    1Laid-Up
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    84
    %
    
    
    86
    %
    
    
    89
    %
    
    
    
    
    
    
    
    85
    %
    
    
    97
    %
    
    
    84
    %
    
    
    
    
    
    
    
    80
    %
    
    
    87
    %
    
    
    76
    %
    
    
    
    
    
    
    
    79
    %
    
    
    71
    %
    
    
    68
    %
    
    
    Day Rate
    
    
    $
    7,368
    
    
    $
    6,613
    
    
    $
    3,124
    
    
    
    
    
    
    
    $
    8,042
    
    
    $
    6,522
    
    
    $
    2,722
    
    
    
    
    
    
    
    $
    7,787
    
    
    $
    6,234
    
    
    $
    2,976
    
    
    
    
    
    
    
    $
    7,316
    
    
    $
    5,891
    
    
    $
    2,878
    
    
    
    Middle EastVessels(2)
    
    
    
    6
    
    
    
    8
    
    
    
    8
    
    
    
    5
    
    
    
    
    6
    
    
    
    8
    
    
    
    8
    
    
    
    5
    
    
    
    
    6
    
    
    
    8
    
    
    
    8
    
    
    
    5
    
    
    
    
    6
    
    
    
    7
    
    
    
    7
    
    
    
    5Laid-Up
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Effective
Utilization(3)
    
    
    
    83
    %
    
    
    75
    %
    
    
    81
    %
    
    
    77
    %
    
    
    
    79
    %
    
    
    62
    %
    
    
    85
    %
    
    
    66
    %
    
    
    
    92
    %
    
    
    49
    %
    
    
    88
    %
    
    
    65
    %
    
    
    
    86
    %
    
    
    71
    %
    
    
    95
    %
    
    
    57
    %Day Rate
    
    
    $
    3,265
    
    
    $
    4,571
    
    
    $
    1,649
    
    
    $
    4,502
    
    
    
    $
    3,250
    
    
    $
    5,048
    
    
    $
    1,668
    
    
    $
    4,475
    
    
    
    $
    3,496
    
    
    $
    4,556
    
    
    $
    1,646
    
    
    $
    4,181
    
    
    
    $
    3,684
    
    
    $
    3,991
    
    
    $
    1,666
    
    
    $
    4,197Southeast AsiaVessels(2)
    
    
    
    8
    
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    2Laid-Up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effective
Utilization(3)
    
    
    
    59
    %
    
    
    
    
    
    
    53
    %
    
    
    
    
    
    
    
    68
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    
    
    
    
    Day Rate
    
    
    $
    5,510
    
    
    
    
    
    
    $
    1,472
    
    
    
    
    
    
    
    $
    6,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,484
    
    
    
    
    
    
    
    
    
    
    
    
   (1)
    
    Domestic consists of vessels operating in the United States, the Gulf
of Mexico, South America, and the Caribbean.(2)
    
    Held-for-sale vessels are excluded from the vessel count.(3)
    
    Effective utilization excludes laid-up vessels. 37




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##### Table of Contents



Domestic offshore revenue in the first half of 2004 was adversely affected by the
continued slowdown in natural gas and crude oil drilling activity in the U.S. Gulf of Mexico.
However, this situation began to improve during the second half of 2004, a trend that has continued
into 2005. The Company redeployed four vessels to Mexico in the second half of 2004. The Company
continues to explore charter opportunities to Mexico, which remains an active market. International offshore revenues for 2004 increased by approximately 6.6% over the same period
in 2003. International vessel demand is primarily driven by crude oil exploration and production.
During 2004, crude oil prices and demand remained high. In West Africa, utilization and day rates
were strong as this is an oil-driven deepwater market with long time horizons and increasing
exploration and production budgets primarily from oil company majors. Based on oil company
projections and independent analyses, the Company expects international exploration and production
spending to continue to increase in West Africa, which should lead to strong levels of demand in
that area for some time to come. Revenue increased for the Companys Middle East operations versus
the prior year as a result of higher day rates and higher utilization. Revenue remained
substantially the same for the Companys Southeast Asia operations versus the prior year. Seabulk Tankers Revenue from the Companys tanker business is derived from the operations of nine U.S.-flag
tankers carrying, petroleum, crude oil and chemical products in the U.S. Jones Acttrade, one in
U.S. foreign commerce and two foreign-flag tankers in foreign trade. The Companys U.S.-flag product tanker fleet operates on long-term time charters, consecutive
voyage charters and contracts of affreightment. The Company currently has seven tankers operating
under time charters, two under contracts of affreightment, and one under a consecutive voyage
charter. The two foreign-flag tankers have been placed in an international tanker pool. The following table sets forth the number of vessels and revenue for the Companys U.S. and
foreign-flag product tankers: Year Ended December 31,2004
    
    
    2003
    
    
    2002Number of vessels operated at end of period
    
    
    12
    
    
    
    10
    
    
    
    10Revenue (in thousands)
    
    $
    147,828
    
    
    $
    119,002
    
    
    $
    117,486
    (a)
   (a)
    
    Excludes revenue from the Companys shipyard operations, which were discontinued
in March 2002. Tanker revenue increased 24.2% to $147.8 million in 2004 from $119.0 million in 2003 The
increase primarily reflects the addition of two foreign-flag double-hull product tankers in March
and April 2004. In addition, revenue increased for one tanker after the Company converted a
bareboat charter to a consecutive voyage charter in January 2004 and the number of contracts of
affreightment increased. U.S.-Flag Product Tankers.Demand for the Companys ten Jones Actproduct carriers is
dependent on several factors, including production and refining levels in the United States,
domestic consumer and commercial consumption of petroleum products and chemicals, and competition
from foreign imports. The Company owned nine U.S.-flag tankers and operated a tenth under a
bareboat charter at December 31, 2004. Five of the petroleum product tankers are double-hull,
state-of-the-art vessels, of which two have chemical-carrying capability. The Companys Jones Act
fleet is benefiting from higher energy demand and a tightening domestic tanker market, although
increased competition from imported products has had a moderating effect on Jones Acttanker rates.
One of the Companys 38




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##### Table of Contents



single-hull vessels is scheduled for retirement in 2007, one in 2008, two in 2011, and one in
2015. None of the five U.S.-flag double-hull tankers has an OPA 90 restriction. In October 2004, the Company renewed for two years the time charter on one of its Jones Act
vessels at a higher rate. Foreign-Flag Product Tankers.The international product tanker market is highly cyclical and
dependent upon the worldwide demand for refined products. Surging demand from China and an
increase in U.S. imports have favorably impacted international tanker rates, which are currently
high by historical standards. The Companys two double-hull, foreign-flag carriers are benefiting
from the current high rates. Neither has a regulatory age restriction. Seabulk Towing Revenue derived from the Companys tug operations is primarily a function of the rates
charged for their services, the volume of vessel traffic requiring docking and other ship-assist
services, competition and the number of tugs available to provide services. Vessel traffic is a
function of the general trade activity in the region served by the port. The following table summarizes certain operating information for the Companys tugs. Year Ended December 31,2004
    
    
    2003
    
    
    2002Number of tugs at end of period
    
    
    26
    
    
    
    26
    
    
    
    31Revenue (in thousands)
    
    $
    40,582
    
    
    $
    37,257
    
    
    $
    31,475
 Towing revenue increased 8.9% to $40.6 million in 2004 from $37.3 million in 2003. The
increase primarily reflects additional vessel traffic in certain of the Companys ports. In
addition, the Companys tug fleet achieved higher rates and improved utilization during the period. Overview of Operating Expenses and Capital Expenditures The Companys operating expenses are primarily a function of fleet size and utilization. The
most significant expense categories are crew payroll and benefits, maintenance and repairs, fuel,
insurance and charter hire. During periods of decreased demand for vessels, the Company does not
crew certain vessels. In addition to variable expenses associated with vessel operations, we incur fixed charges
such as drydocking, which are capitalized and amortized for our vessels. The Company provides for
depreciation on a straight-line basis over the estimated useful lives of the related assets. OPA
90 mandates the useful life of the Companys non-double-hull product carriers. Under applicable regulations, the Companys chemical and product tankers, offshore service
vessels, and its four largest tugs are required to be drydocked twice in each five-year period for
inspection and routine maintenance and repairs. These vessels are also required to undergo special
surveys every five years involving comprehensive inspection and corrective measures. The Companys
harbor tugs generally are not required to be drydocked on a specific schedule. During the years
ended December 31, 2004, 2003 and 2002, the Company drydocked 39, 64, and 54 vessels, respectively,
at an aggregate cost (exclusive of lost revenue) of $22.9 million, $31.5 million and $23.4 million,
respectively. The Company accounts for its drydocking costs under the deferral method, under which
capitalized drydocking costs are 39




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##### Table of Contents



expensed over the period preceding the next scheduled drydocking. See Note 2 to the Companys
consolidated financial statements. The Company had drydocking and capital expenditures, including vessel acquisition and newbuild
construction, in the years ended December 31, 2004, 2003 and 2002 of $135.7 million, $62.2 million
and $27.2 million, respectively. The cost of fuel is an item which has significant impact on the Companys operating results on
contracts of affreightment. Consumables and fuel costs represented approximately 15.8% of vessel
and voyage costs in 2004. Insurance costs consist primarily of premiums and substantial deductibles, and for 2001, 2002
and 2003 self-retention layers (P&I only) for:  
    protection and indemnity insurance for our marine liability risks, which are insured by
two mutual insurance associations of which we are members and through the commercial
insurance markets;
    hull and machinery insurance and other maritime-related insurance, which are provided
through the commercial marine insurance markets; and
    general liability and other traditional insurance, which is provided through the
commercial insurance markets. Insurance costs, particularly costs of marine insurance, are directly related to overall
insurance market conditions and industry and individual loss records, which vary from year to year. P&I insurance expense decreased by approximately $1.8 million from $9.3 million in 2003 to
$7.5 million in 2004 due to higher deductibles and improved safety performance. Over the last
several years, premiums of both marine and non-marine insurers have been adversely impacted by the
erosion of reserves, underwriting losses and increased reinsurance costs. The Companys hull and
machinery insurance was renewed in October 2004. We maintain high levels of self-insurance for P&I
and hull and machinery risks through the use of substantial deductibles and for 2001, 2002, and
2003, self-insured retentions (for P&I only), which may increase in the future. In 2004 we
increased our U.S. Gulf offshore segment deductible to $375,000 per incident but eliminated the
self-insurance layer we had in prior years. In 2005 that deductible was reduced to $250,000 per
incident. We carry coverage related to loss of earnings subject to deductibles ranging from 14 to
30 days for our tanker operations, but not for our offshore and tug operations. Insurance costs
represented approximately 6.2% of vessel and voyage costs in 2004. 40




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##### Table of Contents



Results of Operations The following table sets forth certain selected financial data and percentages of net revenue
for the periods indicated: Year Ended December 31,2004
    
    
    2003
    
    
    2002(Dollars in millions)Revenue
    
    $
    352.3
    
    
    
    100
    %
    
    $
    316.6
    
    
    
    100
    %
    
    $
    324.0
    
    
    
    100
    %Vessel and voyage expenses
    
    
    192.5
    
    
    
    55
    %
    
    
    179.7
    
    
    
    56
    %
    
    
    182.5
    
    
    
    56
    %General and administrative
    
    
    37.5
    
    
    
    11
    %
    
    
    38.0
    
    
    
    12
    %
    
    
    38.7
    
    
    
    12
    %Depreciation, amortization and
drydocking (b)
    
    
    66.1
    
    
    
    19
    %
    
    
    66.6
    
    
    
    21
    %
    
    
    66.4
    
    
    
    20
    %Gain on disposal of assets
    
    
    (4.1
    )
    
    
    (1
    )%
    
    
    (1.4
    )
    
    
    0
    %
    
    
    (1.4
    )
    
    
    0
    %Income from operations
    
    $
    60.3
    
    
    
    17
    %
    
    $
    33.7
    
    
    
    11
    %
    
    $
    37.8
    
    
    
    12
    %Interest expense, net
    
    $
    33.6
    
    
    
    10
    %
    
    $
    33.5
    
    
    
    11
    %
    
    $
    44.3
    
    
    
    14
    %Other income (expense), net(a)
    
    $
    4.2
    
    
    
    1
    %
    
    $
    (0.9
    )
    
    
    0
    %
    
    $
    (27.8
    )
    
    
    (9
    %)Income
(loss) before provision for income taxes
    
    $
    31.0
    
    
    
    9
    %
    
    $
    (0.7
    )
    
    
    0
    %
    
    $
    (34.3
    )
    
    
    (11
    %)Net income (loss)
    
    $
    25.9
    
    
    
    7
    %
    
    $
    (5.0
    )
    
    
    (2
    %)
    
    $
    (38.9
    )
    
    
    (12
    %)
   (a)Includes loss on early extinguishment of debt of $27.8 million in
2002, consisting of the write-off of the unamortized financing cost on the Senior Notes and bank
debt of $9.7 million, unamortized original issue discount on the Senior Notes of $14.1 million and
contractual redemption premiums on the Senior Notes of
$4.0 million.(b)Includes write down of assets held for sale of approximately $1.2 million in 2003. 41




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##### Table of Contents



2004 Compared with 2003 Revenue.Revenue increased 11.3% to $352.3 million in 2004 from $316.6 million in 2003. The
increase primarily reflects higher revenue from the Companys tanker segment and, to a lesser
extent, higher offshore and towing revenue. Offshore energy support revenue increased 2.3% to $164.4 million in 2004 from $160.7 million
in 2003. The increase primarily reflects revenue growth of $5.8 million in West Africa due to
increased utilization and higher day rates. The increase also reflects revenue growth of $2.1
million in the Middle East and Southeast Asia combined. The increase was offset by lower revenue
from the Gulf of Mexico of $4.2 million due to fewer vessels and lower utilization. Tanker revenue increased 24.2% to $147.8 million in 2004 from $119.0 million in 2003. The
increase primarily reflects an additional $12.7 million in revenue due to the addition of two
foreign-flag double-hull product tankers in March and April 2004. In addition, revenue increased
$7.4 million for one tanker after the Company converted a bareboat charter to a consecutive voyage
charter in January 2004. The increase also reflects the tanker fleet average day rate improvement,
which resulted in an increase in tanker revenue for four petroleum product tankers and one chemical
product carrier of approximately $9.7 million, offset by a slight decrease in revenue for two
carriers of approximately $1.0 million. Towing revenue increased 8.9% to $40.6 million in 2004 from $37.3 million in 2003. The
increase primarily reflects additional vessel traffic in certain of the Companys ports. In
addition, the Companys tug fleet achieved higher rates and improved utilization during the period. Vessel and Voyage Expenses.Vessel and voyage expenses increased 7.1% to $192.5 million in
2004 from $179.7 million for 2003. Crew payroll and benefits increased by approximately $2.5
million due to increased crew days and higher wages, particularly as a result of the addition of
the two foreign-flag tankers to our fleet. Charter hire increased by approximately $4.3 million as
a result of the conversion of a bareboat to a consecutive voyage charter, and additional bareboat
expenses in the offshore segment as the Company chartered additional vessels in its West African
operations. Repairs, maintenance and insurance decreased by approximately $2.1 million combined
primarily due to reductions in the number of repairs in the offshore segment and improved cost
management, particularly in West Africa. Insurance decreased primarily due to reduced premiums and
deductibles paid and fewer claims, particularly related to the U.S. Gulf and West Africa. Fuel and
consumables increased by approximately $4.9 million as a result of higher fuel costs related to the
tanker and towing segments. Port charges and other increased by approximately $3.2 million as a
result of increased activity, particularly in West Africa, with a slight increase in Southeast
Asia. General and Administrative.General and administrative expenses remained substantially the
same at $37.5 million in 2004 and $38.0 million in 2003. Salaries and benefit expenses increased
by approximately $0.2 million, offset by a decrease in professional fees. Depreciation, Amortization, and Drydocking.Depreciation, amortization, and drydocking
expenses remained substantially the same at $66.1 million for 2004 and $66.6 million for 2003.
Amortization of drydocking costs increased by approximately $2.6 million due to higher drydocking
costs in 2003, offset by a decrease in depreciation expense of
approximately $1.8 million due to
the sale of vessels. Gain on Disposal of Assets.Gain on disposal of assets increased 173.3% to $4.1 million in
2004 from $1.5 million in 2003. The increase is primarily the result of the sale of the Seabulk
Maintainer, which had a gain of approximately $1.5 million. During 2004, the Company sold 11
offshore energy 42




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##### Table of Contents



support vessels including one which had been held-for-sale for an aggregate total of $6.4
million and a gain of approximately $4.1 million. During 2003, the Company sold 18 offshore energy
support vessels and three tugs for an aggregate total of $9.0 million and a gain of approximately
$1.5 million. Net Interest Expense. Net interest expense remained substantially the same at $33.6 million
for 2004 and $33.5 million for 2003. Other Income (Expense), Net.Other income (expense), net increased to income of $4.2 million
in 2004 from an expense of $0.9 million in 2003. The income in 2004 is primarily due to the
proceeds from the settlement of litigation, in which the Company received approximately $4.5
million from two of its suppliers in March 2004. The expense in 2003 included $1.7 million
primarily due to the loss on early extinguishment of debt in connection with the Companys amended
credit facility. 2003 Compared with 2002 Revenue.Revenue decreased 2.3% to $316.6 million for 2003 from $324.0 million for 2002 due
to decreased revenue from the Companys offshore energy support segment. Offshore energy support revenue decreased 6.3% to $160.7 million for 2003 from $171.5 million
for the same period in 2002, primarily due to reduced revenue from the U.S. Gulf of Mexico and West
Africa. Revenue from the U.S. Gulf of Mexico decreased during 2003 compared to the same period in
2002 primarily due to reduced exploration and production activity. The decrease in West Africa
revenue was driven by lower rates and utilization and lower vessel count. As a result of increased
competition from additional vessels from other weaker markets, rates and utilizations of our
vessels were negatively affected in West Africa. Tanker revenue decreased 2.0% to $119.0 million for 2003 compared to $121.4 million for 2002.
The decrease in revenue is primarily due to the sale of our inland barge and shipyard operations in
2002, as well as an increase in off-hire days in 2003 as a result of vessel drydockings and
repairs. Towing revenue increased by 18.4% to $37.3 million for 2003 from $31.5 million for 2002. The
increase in revenue was due to increased vessel traffic in certain of the Companys ports, higher
rates and improved utilization of the Companys tug fleet. Vessel and Voyage Expenses.Vessel and voyage expenses decreased 1.6% to $179.7 million from
$182.6 million for the same period in 2002. Payroll decreased in the U.S. Gulf of Mexico market
due to lower crewing costs and in the tanker segment due to payroll expense control. Repair and
maintenance expenditures decreased due to unusually high repairs in the tankers segment in the
prior year. Fuel and consumables decreased as a result of the sale of our inland barge and
shipyard operations in 2002. This was partially offset by an increase in insurance costs. General and Administrative.General and administrative expenses remained substantially the
same at $38.0 million in 2003 as compared to $38.7 million for the same period in 2002. Depreciation, Amortization, and Drydocking.Depreciation, amortization, and drydocking
expenses remained substantially the same at $66.6 million for 2003 from $66.4 million for 2002.
Other includes a write-down of assets held for sale of $1.2 million. This is offset by a decrease
in drydocking amortization due to a reduction in drydockings in the offshore energy segment as the
Company has been selling its older and smaller vessels. 43




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Net Interest Expense.Net interest expense decreased 24.3% to $33.5 million for 2003 from
$44.3 million for the same period in 2002. The decrease was primarily due to a lower debt balance
and lower interest rates as a result of the recapitalization in September 2002. Other Expense, Net.Other expense, net decreased to $0.9 million in 2003 compared to other
expense of $27.8 million in 2002. This decrease is primarily due to the reduced losses on the
early extinguishment of debt. The Company had a loss on early extinguishment of debt of $1.7
million in 2003 compared to a loss on early extinguishment of debt of $27.8 million in 2002. Liquidity and Capital Resources At December 31, 2004, the Company had cash on hand of $18.9 million and working capital of
approximately $49.6 million which includes $35.7 million in restricted cash. The Companys main
sources of liquidity are cash from operations, borrowings under our amended credit facility, and
proceeds from the sale of vessels with marginal operating performance. In 2004, cash from
operations totaled $59.1 million, which was $20.8 million greater than 2003. At December 31, 2004,
availability under our amended credit facility was approximately $1.1 million. Additionally, the
Company received $6.4 million from the sale of vessels during 2004. While the Company believes
cash from operations will continue to be a meaningful source of liquidity, factors that can affect
our operating earnings and liquidity are discussed further in this report under Additional
Business and Corporate Risk Factors in Part 1, Item 1. The Company relies on external financing
to fund a substantial portion of the purchase price of new vessels to its fleet. The Company
currently has commitments from various lenders to fund at least 80% of the cost of vessels it has
contracted to purchase. Long-Term Debt.Long-term debt, including capital leases and current maturities,
consisted of the following (in millions): Outstanding
    
    
    OutstandingBalance
    
    
    Balance
    
    
    
    
    Interest Rateas of
    
    
    as of
    
    
    
    
    as ofDecember 31,
    
    
    December 31,
    
    
    
    
    February 15,Facility
    
    2004
    
    
    2003
    
    
    Maturity
    
    2005Senior Notes
    
    $
    152.9
    
    
    $
    151.5
    
    
    2013
    
    9.50%    (a)Amended credit facility
    
    $
    48.5
    
    
    $
    30.0
    
    
    2008
    
    6.58%Title XI financing bonds
    
    $
    209.0
    
    
    $
    216.1
    
    
    2005 to 2024
    
    5.86% to 10.10%Other notes payable
    
    $
    85.1
    
    
    $
    23.1
    
    
    2003 to 2011
    
    4.00% to 8.50%Capital leases
    
    $
    32.3
    
    
    $
    35.8
    
    
    2004 to 2013
    
    5.71% to 10.0%Total long-term debt
    
    $
    527.8
    
    
    $
    456.5
   (a)
    
    The Company effectively converted the interest rate on its outstanding 2003 Senior Notes to
a floating rate based on LIBOR. The effective floating rate was 6.79% as of December 31, 2004 and the current
effective floating interest rate is 7.88%, as of February 15, 2005. In addition to the amended credit facility balance of $48.5 million, there are $22.4
million in outstanding letters of credit as of December 31, 2004. The Company is subject to
semi-annual reductions on the amended credit facility commencing February 5, 2004, with the final
payment due in August 2008. 44




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On August 5, 2003, the Company completed the offering of $150.0 million of Senior Notes (the
2003 Senior Notes) due 2013 through a private placement to institutional investors eligible for
resale under Rule 144A and Regulation S. The net proceeds of the offering were used to repay a
portion of the Companys indebtedness under a $180.0 million credit facility. Interest on the 2003
Senior Notes is payable semi-annually in arrears, commencing on February 15, 2004. The 2003 Senior
Notes are senior unsecured obligations guaranteed by certain of the Companys subsidiaries. The
2003 Senior Notes are subject to certain covenants, including, among other things, limiting the
Companys ability to incur additional indebtedness or issue preferred stock, pay dividends to
stockholders, and make certain investments or sell assets under certain conditions. On October 31,
2003, the Company filed a registration statement with the SEC to register substantially identical
senior notes to be exchanged for the 2003 Senior Notes pursuant to a registration rights agreement,
so that the notes are eligible for trading in the public markets. On November 13, 2003, the
registration statement was declared effective and the Company completed the exchange offer on
December 16, 2003. In connection with the 2003 Senior Notes offering, the Company amended and restated its $180.0
million credit facility. The amended credit facility consists of a revolving credit facility with
an original amount available of $80.0 million and has a five-year maturity (the Amended Credit
Facility). The Amended Credit Facility is subject to semi-annual reductions commencing February
5, 2004. The principal reductions on the Amended Credit Facility are as follows: $4.0 million each
February and August from 2004 through 2007, and $48.0 million in 2008. As of December 31, 2004 the
outstanding borrowings on the Amended Credit Facility were $70.9 million including outstanding
letters of credit of $22.4 million. Interest on the Amended Credit Facility is payable monthly,
with a variable interest rate. The rate is either LIBOR or a base rate plus a margin based upon
certain financial ratios of the Company (6.21% at December 31, 2004). It is secured by first liens
on certain of the Companys vessels (excluding vessels financed with Title XI financing and some of
its other vessels), second liens on two vessels, and stock of certain subsidiaries and is
guaranteed by certain subsidiaries. The Amended Credit Facility is subject to various financial
covenants, including minimum ratios of adjusted EBITDA to adjusted interest expense and a minimum
ratio of adjusted funded debt to adjusted EBITDA, minimum adjusted tangible net worth, and minimum
fair market value of the Companys vessels. In October 2003, the Company entered into a ten-year interest rate swap agreement with its
Amended Credit Facility lender and other members of its lending group. The Company entered into
this transaction in order to take advantage of a lower available interest rate. Through this
derivative instrument, which covers a notional amount of $150.0 million, the Company effectively
converted the interest rate on its outstanding 2003 Senior Notes due August 2013 to a floating rate
based on LIBOR. The Company entered into the swap transaction at-market, and as a result there
was no exchange of a premium at the initial date of the transaction. The current effective
floating interest rate is 7.88%. The swap agreement is secured by a second lien on the assets that
secure the Companys amended credit facility. Capital Requirements.During 2004, the Company incurred $135.7 million in capital improvements
for drydocking costs and fleet additions. Approximately $22.9 million was for drydockings and
approximately $112.7 million was for fleet additions including newbuild vessels and vessel
acquisitions. The Company incurred approximately $12.9 million for the construction of the Seabulk
Angolaand the Seabulk Luanda, approximately $27.6 million for the construction of the Seabulk
Brasiland the Seabulk Angra, and approximately $9.4 million for the construction of the Seabulk
Advantage. The Company incurred approximately $62.0 million for the purchase of the Seabulk
Reliantand the Seabulk Trust,the two new foreign flag product tankers added to our fleet in March
and April 2004. The vessels were funded by a combination of borrowings and available cash. The
Company expects that cash flow from operations will continue to be a significant source of funds
for its working capital and capital requirements. 45




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The Companys expected 2005 capital requirements for drydocking costs is $30.7 million. The
Companys 2005 expected capital requirements for newbuild vessels and fleet improvements is $20.3
million, which includes $6.6 million for four anchor handling tug supply vessels the Company agreed
to construct for approximately $43.7 million. The Companys Amended Credit Facility contains certain restrictive financial covenants that,
among other things, require minimum levels of EBITDA and tangible net worth. A covenant was
amended as of February 26, 2004, to allow the Company a greater degree of flexibility under the
debt/EBITDA ratio. The Company is in compliance with all such covenants at December 31, 2004. The Company is in compliance with the financial covenants of the 2003 Senior Notes at December
31, 2004. The 2003 Senior Notes require the Company to make payments of interest only. Based on
current financial projections, the Company expects to be in compliance through the balance of 2005.
Management continues implementation of the initiative to sell unprofitable vessels in an effort to
improve profitability and liquidity. The possibility exists that unforeseen events or business or regulatory conditions, including
deterioration in the markets, could prevent the Company from meeting targeted operating results.
If unforeseen events or business or regulatory conditions prevent the Company from meeting targeted
operating results, the Company will continue to pursue alternative plans including additional asset
sales, additional reductions in operating expenses, and deferral of capital expenditures, which
should enable the Company to satisfy essential capital requirements. While the Company believes it
could successfully complete alternative plans, if necessary, there can be no assurance that such
alternatives would be available or that the Company would be successful in its implementation. Cash Flows.Net cash provided by operating activities totaled $59.1 million for the year
ended December 31, 2004 compared to $38.3 million for the same period in 2003. The increase in
cash provided by operating activities resulted primarily from a $30.9 million improvement in net
income from a net loss of $5.0 million in 2003 to net income of $25.9 million in 2004. The
increase was offset by the change in operating assets including cash used for other current and
long-term assets of approximately $3.5 million and cash used for accounts payable and other
liabilities of approximately $6.1 million. Net cash used in investing activities was $109.1 million for the year ended December 31, 2004
compared to $21.7 million for the same period in 2003. The increase in cash used in investing
activities was due primarily to the purchase of vessels of approximately $112.7 million. In 2004,
the Company used approximately $62.0 million for the purchase of the two foreign-flag product
tankers, the Seabulk Reliantand the Seabulk Trust.In addition, the Company used approximately
$27.6 for the construction of two offshore supply vessels, the Seabulk Brasiland the Seabulk
Angra,approximately $6.9 million for the construction of a terminal support tug, the Seabulk
Angola,approximately $9.4 million for the construction of a multi-purpose offshore supply vessel,
the Seabulk Advantage,and approximately $6.0 million for the construction of the anchor handling
tug supply vessel, the Seabulk Luanda.In addition, the Company used approximately $2.4 million
for the acquisition of the remaining minority interest in the Seabulk Americafrom Stolt. Net cash
provided by investing activities was due to the sale of 11 offshore energy support vessels
including one which had been held-for-sale during 2004 for an aggregate total of $6.4 million. Net cash provided by financing activities was $61.5 million for the year ended December 31,
2004 compared to net cash used in financing activities of $26.8 million for the same period in
2003. The increase in cash provided by financing activities is mainly attributable to additional
vessel financing of approximately $89.9, of which the Company obtained $20.0 million in proceeds
from its Amended Credit Facility, and approximately $69.8 million of proceeds from long-term debt
for financing primarily related 46




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to the purchase of the Seabulk Reliant, Seabulk Trust, Seabulk Angola, Seabulk Luanda, Seabulk
Braziland the Seabulk Angra . Debt Service and Other Contractual Obligations.The Companys principal and interest
obligations for 2004 were $20.0 million and $33.3 million, respectively. In 2005, principal and
interest obligations are expected to be $20.4 million and
$38.3 million, respectively. The Companys principal and interest obligations exclusive of the Title XI debt on its five
double-hull tankers for 2004 were $15.0 million and $17.8 million for debt and interest,
respectively. In 2005, principal and interest obligations are expected to be $15.0 million and
$24.1 million, respectively. The Company is required to make deposits to a Title XI reserve fund based on a percentage of
net income attributable to the operations of the five double-hull tankers, as defined by the Title
XI bond agreement. Cash held in a Title XI reserve fund is invested by the trustee of the fund,
and any income earned thereon is either paid to the Company or retained in the reserve fund.
Withdrawals from the Title XI reserve fund may be made for limited purposes, subject to prior
approval from U.S. Maritime Administration (MARAD). In the second quarter of 2003, the first
deposits to the reserve fund were made in the amount of $3.8 million. In the first quarter of
2004, the second deposits to the reserve fund were made in the amount of approximately $4.7
million. Additionally, according to the Title XI financial agreement, the Company is restricted
from distributing excess cash from the operations of the five double-hull tankers until certain
working capital levels have been reached and maintained. Accordingly, at December 31, 2004, the
Company had approximately $32.9 million in restricted cash which is restricted for use for the
operations of the five double-hull tankers and cannot be used to fund the Companys general working
capital requirements. In 2004, the five double-hull tankers distributed approximately $3.9 million
to the Company for general working capital purposes. The Company expects to receive $10.0 million
during the first quarter of 2005 from the double-hull tankers for working capital purposes. The following summarizes the Companys contractual obligations at December 31, 2004, and the
effect such obligations are expected to have on its liquidity and cash flow in future periods. Payments due by periodLess than 1
    
    
    2  3
    
    
    4  5
    
    
    Over 5Contractual Obligations
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    years(in millions)Long-term debt
    
    $
    495.5
    
    
    $
    16.7
    
    
    $
    28.2
    
    
    $
    79.7
    
    
    $
    370.9Capital lease obligations
    
    
    47.3
    
    
    
    5.9
    
    
    
    10.0
    
    
    
    12.4
    
    
    
    19.0Operating leases
    
    
    32.5
    
    
    
    9.1
    
    
    
    16.4
    
    
    
    6.2
    
    
    
    0.8Newbuild vessels
    
    
    57.4
    
    
    
    20.3
    
    
    
    37.1
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    632.7
    
    
    $
    52.0
    
    
    $
    91.7
    
    
    $
    98.3
    
    
    $
    390.7
 Future Capital Requirements.Our near-term cash requirements are related primarily to funding
operations. We cannot provide assurance that our actual cash requirements will not be greater than
we currently expect. If the Company cannot generate sufficient cash flow from operations, we may
obtain additional sources of funding through capital market transactions. The Company cannot
provide assurance that these sources will be available. 47




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Effects of Inflation The rate of inflation has not had a material impact on our operations. Moreover, if inflation
remains at its recent levels, it is not expected to have a material impact on our operations for
the foreseeable future. Recent Accounting Pronouncements In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R, a
revised Share-Based Payment(SFAS 123R), a revision effective for the Companys third quarter of
fiscal 2005. SFAS 123R requires companies to expense in their consolidated statement of operations
the estimated fair value of employee stock options and similar awards. The Company currently uses
the intrinsic value method to value stock options, and accordingly, no compensation expense has
been recognized for stock options since the Company grants stock options with exercise prices equal
to or greater than the Companys common stock market price on the date of the grant. The Company
will adopt the provisions of SFAS 123R using a modified prospective application. Under the
modified prospective application, Statement 123R will apply to new awards and to awards that are
outstanding on the effective date and are subsequently modified or cancelled. Compensation expense
for unvested stock-based awards will be recognized over the remaining vesting periods. Depending
on the model used to calculate stock-based compensation expense in the future, the implementation
of certain other requirements of SFAS 123R and additional option grants expected to be made in the
future, the pro forma disclosure included in the consolidated financial statements may not be
indicative of the stock-based compensation expense that will be recognized in the Companys future
financial statements. The Company is in the process of determining the impact adopting SFAS 123R
will have on its consolidated financial position and consolidated results of operations. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets(SFAS 153),
an amendment of APB Opinion No. 29, Accounting for NonMonetary Transactions(APB 29). APB 29 is
based on the principle that exchanges of nonmonetary assets should be measured based on the fair
value of assets exchanged, however certain exceptions apply. SFAS 153 amends APB 29 to eliminate
the exception for nonmonetary exchanges of similar productive assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity
are expected to change significantly as a result of the exchange. SFAS 153 is effective for
nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The Companys
adoption of SFAS 153 is not expected to have a material impact on the Companys consolidated
financial position and consolidated results of operations. In June 2001, the Accounting Standards Executive Committee (AcSEC) of the American Institute
of Certified Public Accountants (AICPA) issued an exposure draft of a proposed Statement of
Position (SOP) entitled Accounting for Certain Costs and Activities Related to Property, Plant
and Equipment. Under the proposed SOP, the Company would expense major maintenance costs as
incurred and be prohibited from deferring the cost of a planned major maintenance activity.
Currently, the costs incurred to drydock the Companys vessels are deferred and amortized on a
straight-line basis over the period of the next drydocking, generally
24 to 36 months. At its
April 14, 2004 meeting, the FASB voted not to clear the AcSECs proposed SOP. In February 2005,
the FASB asked its staff to further research the issue, specifically with regard to how the
projects scope could be limited. 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Jones Actrestricts the U.S. coastwise trade to vessels owned, operated and crewed
substantially by U.S. citizens. The Jones Actcontinues to be in effect and supported by Congress
and the 48




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##### Table of Contents



Administration. However, it is possible that the Companys advantage as a U.S. citizen operator of
Jones Actvessels may be eroded over time as there continue to be periodic efforts and attempts by
foreign interests to circumvent certain aspects of the Jones Act. Interest Rate Risk The Company is exposed to market risk from changes in interest rates, which may adversely
affect its results of operations and financial condition. On October 20, 2003, the Company entered
into a ten-year interest rate swap agreement with its Amended Credit Facility lenders and other
members of its lending group. The Company entered into this transaction in order to take advantage
of a lower available interest rate. Through this derivative instrument, which covers a notional
amount of $150.0 million, the Company effectively converted the interest rate on its outstanding
2003 Senior Notes due August 2013 to a floating rate based on LIBOR. The current effective
floating interest rate is 7.88%. The floating rate is adjusted semi-annually in February and
August of each year. The swap agreement is secured by a second lien on the assets that secure the
Companys amended credit facility. The interest rate swap was valued at $2.9 million as of December 31, 2004 an increase of $1.4
million from $1.5 million as of December 31, 2003, and is included in other assets with an
offsetting increase in the 2003 Senior Notes in the accompanying consolidated financial statements.
The Company expects the fair value of the interest rate swap to change in accordance with the
movement in the underlying LIBOR rate. The variable interest rate of the interest rate swap as of
December 31, 2004 was 6.79% and increased to 7.88% effective February 15, 2005, which results in an
increase in interest expense annually of $1.6 million. In connection with the 2003 Senior Notes offering, the Company amended and restated its credit
facility. The Amended Credit Facility consists of a revolving credit facility with an original
amount available of $80.0 million and has a five-year maturity. The interest rate as of December
31, 2004 was 6.21%. A hypothetical 2.0%
increase in the interest rate on the outstanding borrowings of
$70.9 million, including outstanding letters of credit of $22.4 million, as of December 31, 2004,
would cause the Companys interest expense to increase on average approximately $1.4 million per
year over the term of the Amended Credit Facility, with a corresponding decrease in income before
taxes. 
 Item 8. Financial Statements and Supplementary Data. The Companys consolidated financial statements are listed in Item 15(a), included at the end
of this Report on Form 10-K beginning on page F-1, and incorporated herein by reference. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 
 Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures. The Company maintains systems of disclosure controls and procedures (as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934) designed to ensure that the Company is able to
record, process, summarize and report, within the applicable time periods, the information required
in the Companys annual and quarterly reports under the Securities Exchange Act of 1934.
Management of the Company has evaluated the effectiveness of these disclosure controls and
procedures as of the end of the period covered by this report. Based upon that evaluation, the
principal executive officer and principal 49




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financial officer concluded that these disclosure controls and procedures are effective to
accomplish their purpose. There have been no changes to the Companys internal control over
financial reporting (as defined in Rule 13a-15(f) of the Securities and Exchange Act of 1934) that
occurred during the Companys last fiscal quarter that have materially affected the Companys
internal control over financial reporting or are reasonably likely to materially affect the
Companys internal control over financial reporting. Attached as Exhibits 31.1 and 31.2 hereto are certifications by the Companys Chief Executive
Officer and Chief Financial Officer, which are required by Section 302 of the Sarbanes-Oxley Act of
2002. The information set forth in this Item 9A should be read in conjunction with these Section
302 certifications. Additionally, our Chief Executive Officer and Chief Financial Officer have
provided certain certifications to the Commission pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, which are filed as exhibits to this Report on Form 10-K. 50




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##### Table of Contents



Part III 
 Item 10. Directors and Executive Officers of the Registrant. The information required by Item 10 is incorporated herein by reference to the applicable
information in the Proxy Statement for our 2005 Annual Meeting of Shareholders, including the
information set forth under the captions Directors and Executive Officers of the Registrant and
Compliance with Section 16(a) of the Securities Exchange Act of 1934, to be filed with the
Commission not later than 120 days after the close of the fiscal year. The Executive Officers of
the Company are presented in Part I, Item 1. Business of the Companys Annual Report on Form 10-K. 
 Item 11. Executive Compensation. The information required by Item 11, including information concerning grants under the
Companys employees and directors stock compensation plans, is incorporated herein by reference
to the applicable information in the Proxy Statement for our 2005 Annual Meeting of Shareholders
set forth under the caption Executive Compensation to be filed with the Commission not later than
120 days after the close of the fiscal year. 
 Item 12. Security Ownership of Certain Beneficial Owners and Management. The information required by Item 12, including information concerning ownership and options
under the Companys employees and directors stock compensation plans, is incorporated herein by
reference to our Proxy Statement for our 2005 Annual Meeting of Shareholders set forth under the
caption Common Stock Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters to be filed with the Commission not later than 120 days after the close of the fiscal
year. 
 Item 13. Certain Relationships and Related Transactions. The information required by Item 13 is incorporated herein by reference to the applicable
information in the Proxy Statement for the 2005 Annual Meeting of Shareholders set forth under the
caption Certain Relationships and Related Transactions to be filed with the Commission not later
than 120 days after the close of the fiscal year. 
 Item 14. Principal Accounting Fees and Services. The information required by Item 14 is incorporated herein by reference to the applicable
information in the Proxy Statement for the 2005 Annual Meeting of Shareholders set forth under the
caption Principal Accounting Fees and Services to be filed with the Commission not later than 120
days after the close of the fiscal year. 51




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##### Table of Contents



Part IV 
 Item 15. Exhibits, Financial Statement Schedules. (a) Financial Statements and Schedules.See Index to Consolidated Financial Statements and Schedules which appears on page F-1 herein. (b) Lists of Exhibits.The following is a list of exhibits furnished. Copies of exhibits
will be furnished upon request of any stockholder at a charge of $0.25 per page plus postage. The
Company hereby files as part of this Form 10-K the exhibits required by Item 15(c) listed below.
Exhibits which are incorporated herein by reference can be inspected and copied at the public
reference facilities maintained by the Commission, 450 Fifth Street N.W., Room 1024, Washington,
D.C. 29549 and at the Commissions regional office at CitiCorp Center, 500 West Madison Street,
Suite 1400, Chicago, IL 60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission, 450 Fifth Street N.W., Washington, D.C. 29549, at prescribed
rates. 52




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EXHIBIT INDEX Incorporated byReference toExhibit
    
    
    
    Registration orNo.
    
    Description
    
    File No.
    
    Form or Report
    
    File Date2.1
    
    Debtors First Amended Joint Plan of
Reorganization, dated November 1, 1999,
and related Disclosure Statement filed
with the U.S. Bankruptcy Court for the
District of Delaware
    
    000-28732
    
    13D/A
    
    Dec. 19993.1(a)
    
    Certificate of Incorporation
    
    
    
    10-K
    
    April 20003.1(b)
    
    Certificate of Merger
    
    
    
    10-K
    
    April 20003.1(c)
    
    Certificate of Merger changing the name
of the Company
    
    
    
    10-K
    
    March 20023.1(d)
    
    Certificate of Amendment
    
    
    
    8-K
    
    Sept. 20023.2
    
    Amended and Restated By-Laws of the
Company
    
    
    
    8-K
    
    Sept. 20023.3
    
    Bylaws, revised effective October 5, 2004
    
    
    
    8-K
    
    Oct. 20044.1
    
    Form of Common Stock Certificate of the
Company4.1(a)
    
    Form of Common Stock Certificate
reflecting new name of the Company
    
    000-28732
    
    10-K
    
    March 20014.2
    
    Form of Class A Warrant Certificate of
the Company
    
    333-30390
    
    S-3
    
    Feb. 20004.2(a)
    
    Form of Class A Warrant Certificate
reflecting new name of the Company
    
    000-28732
    
    10-K
    
    March 20014.3
    
    Warrant Agreement, dated December 15,
1999, between Hvide Marine Incorporated
and State Street Bank and Trust Company
as Warrant Agent
    
    333-30390
    
    S-3/A
    
    May 20004.4
    
    Class A Warrant Agreement, dated as of
December 15, 1999, by and between Hvide
Marine Incorporated and State Street
Bank and Trust Company
    
    333-30390
    
    S-3
    
    Feb. 20004.5
    
    Amended and Restated Equity Ownership
Plan
    
    000-28732
    
    14A
    
    April 20034.6
    
    Stock Option Plan for Directors
    
    000-28732
    
    14A
    
    April 20034.7
    
    Indenture, dated as of August 5, 2003,
among Seabulk International, Inc., the
Guarantors named therein, and Wachovia
Bank, National Association, as Trustee
(including forms of notes)
    
    333-110138
    
    S-4
    
    Oct. 20034.8
    
    Registration Rights Agreement dated as
of August 5, 2003 between Seabulk
International, Inc. and Credit Suisse
First Boston LLC, Banc of America
Securities LLC, RBC Dominion Securities
Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated
    
    333-110138
    
    S-4
    
    Oct. 20034.9
    
    Supplemental Indenture, dated as of
October 3, 2003, among Seabulk
International, Inc., the Guarantors
named therein, and Wachovia Bank,
National Association, as Trustee
    
    333-110138
    
    S-4
    
    Oct. 200310.1
    
    Common Stock Registration Rights
Agreement, dated December 15, 1999,
among Hvide Marine Incorporated, Bankers
Trust Corporation and Great American
Life Insurance Company, Great American
Insurance Company, New Energy Corp.,
American Empire Surplus Lines Insurance
Company, Worldwide Insurance Company and
American National Fire Insurance Company as
Purchasers
    
    000-28732
    
    8-K
    
    Dec. 1999
 53




---



##### Table of Contents



Incorporated byReference toExhibit
    
    
    
    Registration orNo.
    
    Description
    
    File No.
    
    Form or Report
    
    File Date10.2*
    
    Employment Agreement dated as of April
18, 2000 between the Company and Gerhard
E. Kurz
    
    000-28732
    
    10-K
    
    March 200110.3*
    
    Amendment to Employment Agreement dated
July 16, 2001 between the Company and
Gerhard E. Kurz
    
    000-28732
    
    10-K
    
    March 200210.4
    
    Stock Purchase Agreement by and among
Seabulk International, Inc. and the
Investors listed on Schedule 1 thereto,
dated as of June 13, 2002
    
    000-28732
    
    8-K
    
    June 200210.5
    
    Stockholders Agreement, dated as of
September 13, 2002, among Seabulk
International, Inc., Nautilus
Acquisition, L.P., C/R Marine Domestic
Partnership, L.P., C/R Marine Non-U.S.
Partnership, L.P., C/R Marine
Coinvestment, L.P., C/R Marine
Coinvestment II, L.P. and Gerhard Kurz
    
    000-28732
    
    8-K
    
    Sept. 200210.6*
    
    Amendment to Employment Agreement, dated
as of September 13, 2002, between the
Company and Gerhard E. Kurz
    
    000-28732
    
    8-K
    
    Sept. 200210.7*
    
    Severance Agreement and Release between
the Company and Andrew W. Brauninger
    
    000-28732
    
    10-Q
    
    May 200310.8
    
    Seabulk International, Inc. Executive
Deferred Compensation Plan
    
    000-28732
    
    10-Q
    
    May 200310.9
    
    Summary Provisions of the Seabulk
International, Inc. Management Annual
Incentive Compensation Plan
    
    000-28732
    
    10-Q
    
    May 200310.10
    
    Amended and Restated Credit Agreement,
dated as of August 5, 2003, among
Seabulk International, Inc., each
Subsidiary Guarantor, Fortis Capital
Corp., NIB Capital Bank N.V. and each
other financial institution which may
become a party to the Agreement as a
Lender, Fortis Capital Corp., as
administrative agent on behalf of the
Lenders, and as book runner and as an
arranger, and NIB Capital Bank N.V., as
an arranger
    
    333-110138
    
    S-4
    
    Oct. 200310.11
    
    Supplemental Indenture, dated as of
March 22, 2004, among Seabulk
International, Inc., the Guarantors
named therein, and Wachovia Bank,
National Association, as Trustee
    
    000-28732
    
    10-K
    
    March 200410.12
    
    Loan Agreement among Seabulk Global
Transport, Inc. and Seabulk Overseas
Transport, Inc., as Joint and Several
Borrowers, the Guarantors named therein,
the Banks and Financial Institutions
listed therein, Nordea Bank Finland PLC,
New York Branch, as Arranger and Agent,
Nordea Bank Finland PLC, New York
Branch, as Security Trustee, and Nordea
Bank Finland PLC, New York Branch, as
Swap Provider
    
    000-28732
    
    10-K
    
    March 200410.13
    
    Amendment Number 1 to the Amended and
Restated Credit Agreement dated as of
March, 2004
    
    000-28732
    
    10-Q
    
    April 2004
 54




---



##### Table of Contents



Incorporated byReference toExhibit
    
    
    
    Registration orNo.
    
    Description
    
    File No.
    
    Form or Report
    
    File Date10.14*
    
    Severance Agreement between the Company
and Vincent J. deSostoa dated April 10,
2003
    
    000-28732
    
    10-Q
    
    Aug. 200410.15*
    
    Severance Agreement between the Company
and Larry D. Francois dated April 10,
2003
    
    000-28732
    
    10-Q
    
    Aug. 200410.16*
    
    Severance Agreement between the Company
and Alan R. Twaits dated April 10, 2003
    
    000-28732
    
    10-Q
    
    Aug. 200410.17*
    
    Severance Agreement between the Company
and Hubert E. Thyssen dated April 21,
2003
    
    000-28732
    
    10-Q
    
    Aug. 200410.18*
    
    Severance Agreement between the Company
and Michael J. Pellicci dated as of May
27, 2004
    
    000-28732
    
    10-Q
    
    Aug. 200410.19*
    
    Severance Agreement between the Company
and Kenneth M. Rogers dated as of May
27, 2004.
    
    000-28732
    
    10-Q
    
    Aug. 200410.20*
    
    Severance Agreement between the Company
and L. Stephen Willrich dated as of May
27, 2004
    
    000-28732
    
    10-Q
    
    Aug. 200410.21
    
    Subsidiary Guarantee Agreement dated as
of March 16, 2004, among Seabulk
International, Inc., the Subsidiary
Guarantors named therein, Fortis Capital
Corp, as Agents for the Counterparties
to the Swap Agreements, Fortis Capital
Corp., as Counterparty, NIB Capital Bank
N.V., as Counterparty, and HBOS Treasury
Services PLC, as Counterparty
    
    000-28732
    
    10-Q
    
    Aug. 200410.22
    
    Supplemental Credit Agreement dated as
of June 17, 2004 between Seabulk
International, Inc., as Borrower, and
Fortis Capital Corp., as Agent
    
    000-28732
    
    10-Q
    
    Aug. 200410.23
    
    First Supplemental Subsidiary Guarantee
Agreement dated as of June 17, 2004
between Seabulk International, Inc., as
Borrower, and Fortis Capital Corp., as
Agent
    
    000-28732
    
    10-Q
    
    Aug. 200410.24
    
    Loan Agreement in the amount of U.S.
$11,840,000 dated October 5, 2004
between Seabulk Angola, Inc., as
Borrower, and Caterpillar Financial
Services Corporation, as Lender, for the
construction and financing of the 65
meter anchor handling tug supply vessel
Seabulk Luanda
    
    000-28732
    
    8-K
    
    Oct. 200410.25*
    
    Amendment No. 1 to the Severance
Agreement between the Company and
Vincent J. deSostoa dated September 15,
2004
    
    000-28732
    
    10-Q
    
    Nov. 200410.26*
    
    Amendment No. 1 to the Severance
Agreement between the Company and Larry
D. Francois dated September 15, 2004.
    
    000-28732
    
    10-Q
    
    Nov. 200410.27*
    
    Amendment No. 1 to the Severance
Agreement between the Company and Alan
R. Twaits dated September 15, 2004
    
    000-28732
    
    10-Q
    
    Nov. 200410.28*
    
    Amendment No. 1 to the Severance
Agreement between the Company and Hubert
E. Thyssen dated September 15, 2004
    
    000-28732
    
    10-Q
    
    Nov. 200410.29*
    
    Amendment No. 1 to the Severance
Agreement between the Company and
Michael J. Pellicci dated September 15,
2004
    
    000-28732
    
    10-Q
    
    Nov. 200410.30*
    
    Amendment No. 1 to the Severance
Agreement between the Company and
Kenneth M. Rogers dated September 15,
2004
    
    000-28732
    
    10-Q
    
    Nov. 2004
 55




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##### Table of Contents



Incorporated byReference toExhibit
    
    
    
    Registration orNo.
    
    Description
    
    File No.
    
    Form or Report
    
    File Date10.31*
    
    Amendment No. 1 to the Severance
Agreement between the Company and L.
Stephen Willrich dated
September 15, 2004
    
    000-28732
    
    10-Q
    
    Nov. 200410.32*
    
    Amendment No. 3 to Executive Employment
Agreement by and between Gerhard E. Kurz
and Seabulk International, Inc
    
    000-28732
    
    10-Q
    
    Nov. 200410.33
    
    Loan Agreement in the amount of
Singapore $14,384,000 dated July 15,
2004 between Seabulk Angola, Inc., as
Borrower, and Caterpillar Financial
Services Corporation, as Lender, for the
construction and acquisition of the 162
terminal support vessel Seabulk Angola
    
    000-28732
    
    10-Q
    
    Nov. 200410.34
    
    Second Supplemental Credit Agreement
dated August 6, 2004 between Seabulk
International, Inc., as Borrower, and
Fortis Capital Corp., as Agent
    
    000-28732
    
    10-Q
    
    Nov. 200410.35
    
    Second Supplemental Subsidiary Guarantee
Agreement dated August 6, 2004 between
Seabulk International, Inc., as
Borrower, and Fortis Capital Corp., as
Agent
    
    000-28732
    
    10-Q
    
    Nov. 200410.36
    
    Shipbuilding Contract dated October 26,
2004 between Seabulk Angola, Inc. and
Labroy Shipbuilding and Engineering Pte
Ltd. (Hull T145)
    
    000-28732
    
    10-Q
    
    Nov. 200410.37
    
    Shipbuilding Contract dated October 26,
2004 between Seabulk Angola, Inc. and
Labroy Shipbuilding and Engineering Pte
Ltd. (Hull T146)
    
    000-28732
    
    10-Q
    
    Nov. 200410.38
    
    Shipbuilding Contract dated October 26,
2004 between Seabulk Angola, Inc. and
Labroy Shipbuilding and Engineering Pte
Ltd. (Hull T147)
    
    000-28732
    
    10-Q
    
    Nov. 200410.39
    
    Shipbuilding Contract dated October 26,
2004 between Seabulk Angola, Inc. and
Labroy Shipbuilding and Engineering Pte
Ltd. (Hull T148)
    
    000-28732
    
    10-Q
    
    Nov. 200410.40
    
    Agreement for the Purchase and Sale of
Selected Assets between Seabulk
Transport, Inc. and Stolt-Nielsen
Transportation Group, Inc. dated
December 15, 2004
    
    000-28732
    
    8-K
    
    Dec. 200410.41
    
    Specimen form of Non-Qualified Stock
Option Agreement
    
    000-28732
    
    8-K
    
    Jan. 200510.42
    
    Specimen form of Restricted Stock
Agreement
    
    000-28732
    
    8-K
    
    Jan. 200510.43**
    
    Severance Agreement between the Company
and
Bryn D. Jones dated November 18, 200410.44**
    
    Third Supplemental Credit Agreement
dated December 10, 2004 between Seabulk
International, Inc., as Borrower, and
Fortis Capital Corp., as Agent
 56




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##### Table of Contents



Incorporated byReference toExhibit
    
    
    
    Registration orNo.
    
    Description
    
    File No.
    
    Form or Report
    
    File Date10.45**
    
    Third Supplemental Subsidiary
Guarantee Agreement dated December 10, 2004
between Seabulk International, Inc., as
Borrower, and Fortis Capital Corp., as
Agent21.**
    
    List of Subsidiaries23.1**
    
    Consent of Independent Registered Public
Accounting Firm31.1**
    
    Certification of Principal Executive
Officer pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 193431.2**
    
    Certification of Principal Financial
Officer pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 193432.1**
    
    Certification of Principal Executive
Officer pursuant to 18 U.S.C. §1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule
13a-14(b) of the Securities Exchange Act
of 1934 (furnished herewith)32.2**
    
    Certification of Principal Financial
Officer pursuant to 18 U.S.C. §1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule
13a-14(b) of the Securities Exchange Act
of 1934 (furnished herewith)99.1
    
    Order dated December 9, 1999 of the
United States Bankruptcy Court for the
District of Delaware the First Amended
Joint Plan of Reorganization in re:
    
    000-28732
    
    8-K
    
    Dec. 1999Hvide Marine Incorporated, et al., Case
No. 99-3024 (PJW), including the
Supplement to such Plan [incorporated by
reference to Exhibit 99.1 of the
Companys Form 8-K filed with the
Commission on December 27, 1999
(Commission File No. 000-28732)]
   *
    
    Indicates a management contract or compensation arrangement**
    
    Filed herewith 57




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
this report has been signed on behalf of the registrant by the undersigned, thereunto duly
authorized, on the 11th day of March, 2005. SEABULK INTERNATIONAL, INC.By:
    /s/ GERHARD E. KURZGerhard E. KurzChairman, President, and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated. Signature
    
    Title
    
    Date/s/ GERHARD E. KURZ
    
    Chairman, President,
    
    March 11, 2005Gerhard E. Kurz
    
    and Chief Executive Officer(Principal Executive Officer)/s/ VINCENT J. deSOSTOA
    
    Senior Vice President and
    
    March 11, 2005Vincent J. deSostoa
    
    Chief Financial Officer(Principal Financial Officer)/s/ MICHAEL J. PELLICCI
    
    Senior Vice President  Finance
    
    March 11, 2005Michael J. Pellicci
    
    and Planning, Treasurer andChief Accounting Officer(Principal Accounting Officer)/s/ DANIEL H. CLARE
    
    Director
    
    March 11, 2005Daniel H. Clare/s/ PETER H. CRESSY
    
    Director
    
    March 11, 2005Peter H. Cressy/s/ DAVID A. DURKIN
    
    Director
    
    March 11, 2005David A. Durkin/s/ KENNETH V. HUSEMAN
    
    Director
    
    March 11, 2005Kenneth V. Huseman/s/ ROBERT L. KEISER
    
    Director
    
    March 11, 2005Robert L. Keiser/s/ PIERRE F. LAPEYRE, JR.
    
    Director
    
    March 11, 2005Pierre F. Lapeyre, Jr./s/ DAVID M. LEUSCHEN
    
    Director
    
    March 11, 2005David M. Leuschen/s/ THOMAS P. MOORE, JR.
    
    Director
    
    March 11, 2005Thomas P. Moore, Jr./s/ STEVEN A. WEBSTER
    
    Director
    
    March 11, 2005Steven A. Webster
 58




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##### Table of Contents



Seabulk International, Inc. and Subsidiaries Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2004, 2003, and 2002
    
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002
    
    
    F-5Consolidated Statements of Changes in Stockholders Equity for the years ended December 31,
2004, 2003, and 2002
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-9
 All schedules have been omitted because the information is not applicable or is not material or
because the information required is included in the consolidated financial statements or the notes
thereto. F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders
Seabulk International, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Seabulk International, Inc.
and Subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of
operations, cash flows, and changes in stockholders equity, for each of the three years in the
period ended December 31, 2004. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our
audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Seabulk International, Inc. and Subsidiaries at
December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31,
2004, in conformity with U.S. generally
accepted accounting principles. As described in Note 2, the Company restated the accompanying consolidated statements of cash
flows for the years ended December 31, 2003 and 2002. /s/ Ernst & Young LLPCertified Public Accountants
 
 F-2




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data) December 31,2004
    
    
    2003AssetsCurrent assets:Cash and cash equivalents
    
    $
    18,949
    
    
    $
    7,399Restricted cash
    
    
    35,681
    
    
    
    28,458Trade accounts receivable net of allowance for doubtful accounts of $5,649 in 2004
an and $4,321 in 2003, respectively
    
    
    55,209
    
    
    
    49,599Other receivables
    
    
    3,784
    
    
    
    10,730Marine operating supplies
    
    
    7,868
    
    
    
    8,155Prepaid expenses and other current assets
    
    
    3,627
    
    
    
    3,045Total current assets
    
    
    125,118
    
    
    
    107,386Vessels and equipment, net
    
    
    598,793
    
    
    
    527,026Deferred costs, net
    
    
    45,053
    
    
    
    48,486Other
    
    
    17,824
    
    
    
    11,542Total assets
    
    $
    786,788
    
    
    $
    694,440Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    14,918
    
    
    $
    18,805Current maturities of long-term debt
    
    
    16,653
    
    
    
    11,037Current obligations under capital leases
    
    
    3,708
    
    
    
    3,521Accrued interest
    
    
    4,875
    
    
    
    5,812Accrued liabilities and other
    
    
    35,321
    
    
    
    37,363Total current liabilities
    
    
    75,475
    
    
    
    76,538Long-term debt
    
    
    325,965
    
    
    
    258,217Senior notes
    
    
    152,906
    
    
    
    151,472Obligations under capital leases
    
    
    28,568
    
    
    
    32,246Other liabilities
    
    
    4,879
    
    
    
    3,136Total liabilities
    
    
    587,793
    
    
    
    521,609Commitments and contingenciesMinority interest
    
    
    
    
    
    
    476Stockholders equity:Preferred stock, no par value-authorized 5,000; issued and outstanding, none
    
    
    
    
    
    
    Common stock-$.01 par value, authorized 40,000 shares; 23,446 and 23,347 shares
issued and outstanding in 2004 and
2003, respectively
    
    
    234
    
    
    
    233Additional paid-in capital
    
    
    259,843
    
    
    
    259,134Accumulated other comprehensive income
    
    
    55
    
    
    
    Unearned compensation
    
    
    (758
    )
    
    
    (699
    )Accumulated deficit
    
    
    (60,379
    )
    
    
    (86,313
    )Total stockholders equity
    
    
    198,995
    
    
    
    172,355Total liabilities and stockholders equity
    
    $
    786,788
    
    
    $
    694,440
 See notes to consolidated financial statements. F-3




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) Year Ended December 31,2004
    
    
    2003
    
    
    2002Revenue
    
    $
    352,328
    
    
    $
    316,558
    
    
    $
    323,997Vessel and voyage expenses:Crew payroll and benefits
    
    
    88,893
    
    
    
    86,409
    
    
    
    88,473Charter hire
    
    
    13,848
    
    
    
    9,575
    
    
    
    7,607Repairs and maintenance
    
    
    26,560
    
    
    
    27,282
    
    
    
    30,345Insurance
    
    
    11,915
    
    
    
    13,285
    
    
    
    11,385Fuel and consumables
    
    
    30,316
    
    
    
    25,405
    
    
    
    28,365Port charges and other
    
    
    20,912
    
    
    
    17,720
    
    
    
    16,383192,444
    
    
    
    179,676
    
    
    
    182,558General and administrative
    
    
    37,526
    
    
    
    38,043
    
    
    
    38,657Depreciation, amortization and drydocking
    
    
    66,132
    
    
    
    65,373
    
    
    
    66,376Write-down of assets held for sale
    
    
    
    
    
    
    1,219
    
    
    
    Gain on disposal of assets
    
    
    (4,116
    )
    
    
    (1,463
    )
    
    
    (1,364
    )Income from operations
    
    
    60,342
    
    
    
    33,710
    
    
    
    37,770Other income (expense):Interest expense
    
    
    (33,888
    )
    
    
    (33,853
    )
    
    
    (44,715
    )Interest income
    
    
    309
    
    
    
    355
    
    
    
    475Minority interest in (gains) losses of subsidiaries
    
    
    (419
    )
    
    
    147
    
    
    
    219Loss on early extinguishment of debt
    
    
    
    
    
    
    (1,567
    )
    
    
    (27,823
    )Other, net
    
    
    4,624
    
    
    
    481
    
    
    
    (154
    )Total other income (expense), net
    
    
    (29,374
    )
    
    
    (34,437
    )
    
    
    (71,998
    )Income (loss) before provision for income taxes
    
    
    30,968
    
    
    
    (727
    )
    
    
    (34,228
    )Provision for income taxes
    
    
    5,034
    
    
    
    4,238
    
    
    
    4,642Net income (loss)
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )Net income (loss) per common share:Net income (loss) per common share  basic
    
    $
    1.11
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )Net income (loss) per common share  diluted
    
    $
    1.09
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )Weighted average common shares outstanding  basic
    
    
    23,264
    
    
    
    23,176
    
    
    
    14,277Weighted average common shares outstanding 
diluted
    
    
    23,761
    
    
    
    23,176
    
    
    
    14,277
 See notes to consolidated financial statements. F-4




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) As of December 31,2004
    
    
    2003
    
    
    2002(as restated, see Note 2)Operating activities:Net income (loss)
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization of vessels and equipment
    
    
    40,537
    
    
    
    42,330
    
    
    
    43,711Expenditures for drydocking
    
    
    (22,931
    )
    
    
    (31,539
    )
    
    
    (23,441
    )Amortization of drydocking costs
    
    
    25,595
    
    
    
    23,043
    
    
    
    22,665Amortization of discount on long-term debt and deferred
financing costs
    
    
    1,701
    
    
    
    1,531
    
    
    
    4,249Amortization of unearned compensation
    
    
    255
    
    
    
    238
    
    
    
    99Provision for (recovery of) bad debts
    
    
    1,774
    
    
    
    (79
    )
    
    
    (93
    )Gain on disposal of assets
    
    
    (4,116
    )
    
    
    (1,463
    )
    
    
    (1,364
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    1,567
    
    
    
    27,823Minority interest in gains (losses) of subsidiaries
    
    
    419
    
    
    
    (147
    )
    
    
    (219
    )Write-down of assets held for sale
    
    
    
    
    
    
    1,219
    
    
    
    Senior and notes payable issued for payment of interest and fees
    
    
    
    
    
    
    
    
    
    
    626Other non-cash items
    
    
    60
    
    
    
    
    
    
    
    551Changes in operating assets and liabilities:Trade accounts and other receivables
    
    
    (438
    )
    
    
    (8,404
    )
    
    
    12,043Other current and long-term assets
    
    
    (3,517
    )
    
    
    1,099
    
    
    
    (4,129
    )Accounts payable and other liabilities
    
    
    (6,128
    )
    
    
    13,893
    
    
    
    (6,039
    )Net cash provided by operating activities
    
    
    59,145
    
    
    
    38,323
    
    
    
    37,612Investing activities:Purchases of vessels and equipment
    
    
    (112,740
    )
    
    
    (30,683
    )
    
    
    (3,753
    )Proceeds from disposals of assets
    
    
    6,363
    
    
    
    9,425
    
    
    
    12,675Investment in joint venture
    
    
    (300
    )
    
    
    (400
    )
    
    
    Acquisition of minority interest
    
    
    (2,410
    )
    
    
    
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (109,087
    )
    
    
    (21,658
    )
    
    
    8,922
 F-5




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) Year Ended December 31,2004
    
    
    2003
    
    
    2002(as restated, see Note 2)Financing activities:Net payments of revolving credit facility
    
    
    
    
    
    
    
    
    
    
    (9,000
    )Payments of prior credit facility
    
    
    
    
    
    
    (148,179
    )
    
    
    (125
    )Proceeds from prior credit facility
    
    
    
    
    
    
    
    
    
    
    178,800Payments of prior Senior notes
    
    
    
    
    
    
    
    
    
    
    (101,499
    )Proceeds from 2003 Senior Notes
    
    
    
    
    
    
    150,000
    
    
    
    Proceeds of Private placement, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    90,901Payments on Amended Credit Facility
    
    
    (1,483
    )
    
    
    
    
    
    
    Proceeds from Amended Credit Facility
    
    
    20,000
    
    
    
    
    
    
    
    Payments of long-term debt
    
    
    (7,856
    )
    
    
    (7,408
    )
    
    
    (165,817
    )Proceeds from long-term debt
    
    
    69,851
    
    
    
    8,622
    
    
    
    Payments of Title XI bonds
    
    
    (7,148
    )
    
    
    (7,378
    )
    
    
    (7,166
    )Retirement of Title XI bonds
    
    
    
    
    
    
    (11,181
    )
    
    
    Payments of deferred financing costs under prior credit facility
    
    
    
    
    
    
    (88
    )
    
    
    (4,128
    )Payments of deferred financing costs under Senior notes
and amended credit facility
    
    
    (285
    )
    
    
    (5,458
    )
    
    
    Payments of other deferred financing costs
    
    
    (1,269
    )
    
    
    (226
    )
    
    
    Net proceeds from sale leaseback
    
    
    
    
    
    
    13,274
    
    
    
    Payments of obligations under capital leases
    
    
    (3,491
    )
    
    
    (9,422
    )
    
    
    (2,986
    )Proceeds from exercise of stock options
    
    
    396
    
    
    
    307
    
    
    
    42Proceeds from exercise of warrants
    
    
    
    
    
    
    2
    
    
    
    1Increase in restricted cash
    
    
    (7,223
    )
    
    
    (9,675
    )
    
    
    (12,435
    )Net cash provided by (used in) financing activities
    
    
    61,492
    
    
    
    (26,810
    )
    
    
    (33,412
    )Change in cash and cash equivalents
    
    
    11,550
    
    
    
    (10,145
    )
    
    
    13,122Cash and cash equivalents at beginning of period
    
    $
    7,399
    
    
    $
    17,544
    
    
    $
    4,422Cash and cash equivalents at end of period
    
    $
    18,949
    
    
    $
    7,399
    
    
    $
    17,544Supplemental schedule of non-cash investing and financing
activities:Obligation for fair market value of interest rate swap
    
    $
    1,434
    
    
    $
    1,472
    
    
    $
    Vessels exchanged for drydock expenditures
    
    $
    
    
    
    $
    
    
    
    $
    900Senior and notes payable issued for payment of accrued interest
and fees
    
    $
    
    
    
    $
    
    
    
    $
    626Issuance of restricted common stock
    
    $
    314
    
    
    $
    838
    
    
    $
    Supplemental disclosures:Interest paid
    
    $
    33,315
    
    
    $
    27,780
    
    
    $
    40,085Income taxes paid
    
    $
    3,646
    
    
    $
    4,169
    
    
    $
    4,537
 See notes to consolidated financial statements. F-6




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(in thousands) AdditionalCommon Stock
    
    
    Paid-InShares
    
    
    Amount
    
    
    CapitalBalance at December 31, 2001
    
    
    10,506
    
    
    $
    105
    
    
    $
    167,259Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    Translation adjustment
    
    
    
    
    
    
    
    
    
    
    Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    Common stock issued upon Private Placement, net
of issuance costs of $9,160
    
    
    12,500
    
    
    
    125
    
    
    
    90,715Common stock issued upon exercise of warrants
    
    
    112
    
    
    
    1
    
    
    
    Common stock issued upon exercise of options
    
    
    6
    
    
    
    
    
    
    
    42Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2002
    
    
    23,124
    
    
    $
    231
    
    
    $
    258,016Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    Translation adjustment
    
    
    
    
    
    
    
    
    
    
    Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    Issuance costs related to Private Placement
    
    
    
    
    
    
    
    
    
    
    (27
    )Common stock issued upon exercise of warrants
    
    
    51
    
    
    
    
    
    
    
    2Common stock issued upon exercise of options
    
    
    57
    
    
    
    1
    
    
    
    306Restricted common stock issued to officers
    
    
    115
    
    
    
    1
    
    
    
    837Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2003
    
    
    23,347
    
    
    $
    233
    
    
    $
    259,134Comprehensive income:Net income:
    
    
    
    
    
    
    
    
    
    
    Foreign currency item
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    Common stock issued upon exercise of warrants
    
    
    1
    
    
    
    
    
    
    
    Common stock issued upon exercise of options
    
    
    67
    
    
    
    1
    
    
    
    395Restricted common stock issued to officers
    
    
    31
    
    
    
    
    
    
    
    314Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2004
    
    
    23,446
    
    
    $
    234
    
    
    $
    259,843
 See notes to consolidated financial statements. F-7




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY(in thousands)
 AccumulatedOtherComprehensive
    
    
    Unearned
    
    
    (AccumulatedIncome (Loss)
    
    
    Compensation
    
    
    Deficit)
    
    
    TotalBalance at December 31, 2001
    
    $
    (1
    )
    
    $
    (198
    )
    
    $
    (42,478
    )
    
    $
    124,687Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (38,870
    )
    
    
    (38,870
    )Translation adjustment
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,869
    )Common Stock issued upon Private Placement, net
of issuance costs of $9,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,840Common stock issued upon exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Common stock issued upon exercise of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42Amortization of unearned compensation
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    99Balance at December 31, 2002
    
    $
    
    
    
    $
    (99
    )
    
    $
    (81,348
    )
    
    $
    176,800Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (4,965
    )
    
    
    (4,965
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,965
    )Issuance costs related to Private Placement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27
    )Common stock issued upon exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Common stock issued upon exercise of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307Restricted common stock issued to officers
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    Amortization of unearned compensation
    
    
    
    
    
    
    238
    
    
    
    
    
    
    
    238Balance at December 31, 2003
    
    $
    
    
    
    $
    (699
    )
    
    $
    (86,313
    )
    
    $
    172,355Comprehensive income:Net income:
    
    
    
    
    
    
    
    
    
    
    25,934
    
    
    
    25,934Foreign currency item
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    55Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,989Common stock issued upon exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued upon exercise of options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396Restricted common stock issued to officers
    
    
    
    
    
    
    (314
    )
    
    
    
    
    
    
    Amortization of unearned compensation
    
    
    
    
    
    
    255
    
    
    
    
    
    
    
    255Balance at December 31, 2004
    
    $
    55
    
    
    $
    (758
    )
    
    $
    (60,379
    )
    
    $
    198,995
 See notes to consolidated financial statements. F-8




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##### Table of Contents



SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Seabulk International, Inc. and subsidiaries (collectively, the Company) provide marine
support, tanker and towing services, serving primarily the energy and chemical industries. The
Company operates offshore energy support vessels, principally in the U.S. Gulf of Mexico, the
Arabian Gulf, offshore West Africa, Southeast Asia, and South America. The Companys fleet of
tankers transports petroleum products, specialty chemicals and crude oil primarily in the U.S.
domestic trade, with two foreign-flag product tankers in foreign trade. The Company also provides
commercial tug services in several ports primarily in the southeastern U.S. The Company derives substantial revenue from international operations, primarily under U.S.
dollar-denominated contracts with major international oil companies. Risks associated with
operating in international markets include vessel seizure, foreign exchange restrictions, foreign
taxation, political instability, nationalization, civil disturbances, and other risks that may
limit or disrupt markets. The accompanying consolidated financial statements include the accounts of Seabulk
International, Inc. and its subsidiaries, both majority and wholly-owned. All intercompany
transactions and balances have been eliminated in the consolidated financial statements. 2. Summary of Significant Accounting Policies Restatement.The Company recently reviewed its financial statement presentation and
disclosure in response to comments received from the staff of the Securities and Exchange
Commission (the SEC) in a normal periodic review of the Companys filings. As a result, the
Company is restating the accompanying 2003 and 2002 consolidated statements of cash flows to
classify expenditures for drydocking, $31.5 million and $23.4 million, respectively, as an
operating activity rather than an investing activity. Revenue.Revenue is generally recorded when services are rendered, the Company has a signed
charter agreement or other evidence of an arrangement, pricing is fixed or determinable and
collection is reasonably assured. For the majority of the offshore energy and towing segments,
revenues are recorded on a daily basis as services are rendered. For the tankers segment, revenue
is earned under time charters, bareboat charters, consecutive voyage charters or
affreightment/voyage contracts. Revenue from time charters and bareboat charters is earned and
recognized on a daily basis. Certain time charters contain performance provisions, which provide
for decreased fees based upon actual performance against established targets such as speed and fuel
consumption. Recorded revenue is based on actual performance. Affreightment/voyage contracts are
contracts for cargoes that are committed on a 12 to 30 month basis, with minimum and maximum cargo
tonnages specified over the period at fixed or escalating rates per ton. Revenue and voyage
expenses for the affreightment contracts and consecutive voyage charters are recognized based upon
the percentage of voyage completion. The percentage of voyage completion is based on the number of
voyage days worked at the balance sheet date divided by the total number of days expected on the
voyage. Cash and Cash Equivalents. The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. Cash equivalents consist of
money F-9




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##### Table of Contents



market instruments and overnight investments. The credit risk associated with cash and cash
equivalents is considered low due to the high credit quality of the financial institutions. Restricted Cash. At December 31, 2004 and 2003, restricted cash consisted of cash generated
from the operations of our five U.S.-flag double-hull tankers (see Note 3) and fixed deposits
required in our foreign locations that allow our banks to issue short-term tender bonds. The bonds
are issued during the process of securing contracts and have expiration dates ranging from three
months to one year. Upon expiration of the bonds, the funds are returned to the Company. The
Company reclassified approximately $27.0 million from cash and cash equivalents to restricted cash
in the consolidated balance sheet as of December 31, 2003, related to the five U.S.-flag
double-hull tankers, to conform to the 2004 presentation. Additionally, the Company has a
certificate of deposit in the amount of $2.2 million as of December 31, 2004 and 2003, which was
required in the financing of a Brazilian vessel acquired in October 2004 (see Note 6). The
certificate of deposit is classified as long-term restricted cash and is included in other assets
in the accompanying consolidated balance sheets. The Company reclassified $2.2 million related to
the certificate of deposit from restricted cash to other assets in the consolidated balance sheet
as of December 31, 2003 to conform to the 2004 presentation. Accounts Receivable.Substantially all of the Companys accounts receivable are due from
international oil companies and their subcontractors in the drilling industry. The Company
performs ongoing credit evaluations of its trade customers and generally does not require
collateral. Expected credit losses are provided for in the consolidated financial statements Two
customers each accounted for 7% of the Companys total revenue for the years ended December 31,
2004 and 2003. During the years ended December 31, 2004, 2003 and 2002, the Company wrote off
accounts receivable of approximately $0.4 million, $2.4 million and $0.6 million, respectively. Insurance Claims Receivable.Insurance claims receivable represent costs incurred in
connection with insurable incidents for which the Company expects it is probable it will be
reimbursed by the insurance carriers, subject to applicable deductibles. Deductible amounts
related to covered incidents are generally expensed in the period of occurrence of the incident.
Expenses incurred for insurable incidents in excess of deductibles are recorded as receivables
pending the completion of all repair work and the administrative claims process. The credit risk
associated with insurance claims receivable is considered low due to the high credit quality and
funded status of the insurance clubs in which the Company participates. Insurance claims
receivable, included in other receivables in the accompanying consolidated balance sheets,
approximated $1.2 million and $4.0 million at December 31, 2004 and 2003, respectively. Marine Operating Supplies.Such amounts consist of fuel and supplies that are recorded at
cost less a reserve for obsolescence and are charged to operating expenses as consumed. Impairment of Long-Lived Assets. The Company accounts for the impairment of long-lived assets
under the provisions of Statement of Financial Accounting Standards (SFAS) SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets(SFAS 144), which requires
impairment losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the estimated undiscounted cash flows to be generated by those assets
are less than the assets carrying value. If the carrying value of the assets will not be
recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the
assets is reduced to fair value. Generally, fair value will be determined using valuation
techniques such as expected discounted cash flows or appraisals, as appropriate. The Company did
not recognize an impairment loss in 2004 and 2002 related to assets held for use or sale. An
impairment loss of $1.2 million was recognized in 2003 related to assets held for sale. F-10




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##### Table of Contents



Assets Held for Sale.It is Company policy to make available for sale vessels and equipment
considered by management as excess and no longer necessary for the operations of the Company. In
accordance with SFAS 144, these assets are valued at the lower of carrying value or fair value less
costs to sell. Also, depreciation expense for these assets is discontinued at the time of the
reclassification. Total assets held for sale (primarily assets in the offshore energy segment)
were approximately $0.3 million and $0.4 million at December 31, 2004 and 2003, respectively, and
are included in other assets in the accompanying consolidated balance sheets. Vessels and Equipment.Vessels and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. At the time property is disposed of, the assets and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is recorded in operating
income. Major renewals and betterments that extend the life of the vessels and equipment are
capitalized. Interest incurred on debt related to newbuild vessels is capitalized. Maintenance
and repairs are expensed as incurred except for drydocking expenditures. Vessels under capital leases are amortized over the lesser of the lease term or their
estimated useful lives. Included in vessels and equipment at December 31, 2004 and 2003 are
vessels under capital leases of approximately $48.1 million and
$55.4 million, net of accumulated
amortization of approximately $5.7 million and $6.4 million, respectively. Listed below are the estimated useful lives of vessels and equipment at December 31, 2004: Useful Lives(in years)Supply boats
    
    6-25Crewboats
    
    6-25Anchor handling tug/supply vessels
    
    5-25Other
    
    6-25Tankers (1)
    
    7-30Tugboats
    
    7-40Furniture and equipment
    
    5-10
   (1)
    
    Range in years is determined by the Oil
Pollution Act of 1990 and other factors. Deferred Costs.Deferred costs primarily represent drydocking and financing costs.
Substantially all of the Companys vessels must be periodically drydocked and pass inspections to
maintain their operating classification, as mandated by maritime regulations. Costs incurred to
drydock the vessels are deferred and amortized over the period to the next drydocking, generally 24
to 36 months. Drydocking costs are comprised of painting the vessel hull and sides, recoating
cargo and fuel tanks, and performing other engine and equipment maintenance activities to bring the
vessels into compliance with classification standards. Deferred financing costs are amortized over
the term of the related borrowings using the effective interest method. At December 31, 2004 and
2003, deferred costs included unamortized drydocking costs of approximately $32.4 million and $35.2
million, respectively, and net deferred financing costs of $12.7 million and $13.2 million,
respectively. Accrued Liabilities and Other.Accrued liabilities included in current liabilities at
December 31 consist of the following (in thousands): F-11




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##### Table of Contents



2004
    
    
    2003Voyage operating expenses
    
    $
    8,135
    
    
    $
    7,756Foreign taxes
    
    
    9,661
    
    
    
    8,541Payroll and benefits
    
    
    7,796
    
    
    
    6,803Deferred voyage revenue
    
    
    1,499
    
    
    
    1,990Professional services
    
    
    374
    
    
    
    552Litigation, claims and settlements
    
    
    263
    
    
    
    608Insurance
    
    
    4,012
    
    
    
    6,101Other
    
    
    3,581
    
    
    
    5,012Total
    
    $
    35,321
    
    
    $
    37,363
 Stock-Based Compensation.As permitted by SFAS No. 123, Accounting for Stock-Based
Compensation(SFAS 123),the Company has elected to follow Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees(APB 25) and related interpretations in
accounting for its employee stock-based transactions. Under APB 25, compensation expense is
calculated at the time of option grant based upon the difference between the exercise price of the
option and the fair market value of the Companys common stock at the date of grant recognized
over the vesting period. Had compensation expense for stock option grants been determined based on the fair value at
the grant date for awards consistent with the methods of SFAS 123, the Companys net income (loss)
would have decreased/(increased) to the pro forma amounts presented below for 2004, 2003 and 2002: Year Ended December 31,2004
    
    
    2003
    
    
    2002Net income (loss):As reported
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )Compensation expense
    
    
    (1,437
    )
    
    
    (1,106
    )
    
    
    (1,147
    )Pro forma
    
    $
    24,497
    
    
    $
    (6,071
    )
    
    $
    (40,017
    )Net income (loss) per common share:As reported  basic
    
    $
    1.11
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )As reported  diluted
    
    $
    1.09
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )Pro forma  basic
    
    $
    1.05
    
    
    $
    (0.26
    )
    
    $
    (2.80
    )Pro forma  diluted
    
    $
    1.03
    
    
    $
    (0.26
    )
    
    $
    (2.80
    )
 Income Taxes.The Company files a consolidated tax return with substantially all corporate
subsidiaries. In addition, subsidiaries doing business in foreign countries file separate income
tax returns in foreign jurisdictions, where applicable. Each subsidiary organized as a partnership
files a separate tax return. Deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws in effect when the differences are expected to reverse. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. F-12




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##### Table of Contents



Income Tax Contingencies. Our future effective tax rate is based on estimates of expected
income, statutory tax rates and tax planning strategies. Significant judgment is required in
determining our effective tax rate and the ultimate resolution of our tax return positions.
Despite our belief that our tax return positions are correct, our policy is to establish accruals
for tax contingencies that may arise in future years as a result of examination by tax authorities.
Our tax accruals are analyzed periodically and adjustments are made as events occur to warrant
such adjustment. Net Income (Loss) Per Share. Net income (loss) per common share is computed in accordance
with SFAS No. 128, Earnings Per Share(SFAS 128), which requires the reporting of both net income
(loss) per common share and diluted net income (loss) per common share. The calculation of net
income (loss) per common share is based on the weighted average number of common shares outstanding
and therefore excludes any dilutive effect of stock options and warrants while diluted net income
(loss) per common share includes the dilutive effect of all applicable stock options and warrants. Foreign Currency Translation. In accordance with SFAS No. 52, Foreign Currency Translation
(SFAS 52), assets and liabilities denominated in foreign currencies are translated into U.S.
dollars at the rate of exchange at the balance sheet date, while revenue and expenses are
translated at the weighted average rates prevailing during the respective years. Components of
stockholders equity are translated at historical rates. Substantially all of the Companys
foreign subsidiaries use the U.S. dollar as their functional currency and substantially all
external transactions are denominated in U.S. dollars. For 2002 translation adjustments were
deferred in accumulated other comprehensive loss, which is a separate component of stockholders
equity. Transaction gains and losses resulting from changes in exchange rates for 2004, 2003 and
2002 were insignificant and are included in other, net in the accompanying consolidated statements
of operations. Estimates.The preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of assets and
liabilities at the date of the financial statements, and the reported amounts of revenue and
expenses during the periods. Significant estimates have been made by management, including the
allowance for doubtful accounts, useful lives and valuation of vessels and equipment,
realizability of deferred tax assets and certain accrued liabilities. Actual results may differ
from those estimates. Comprehensive Income (Loss).SFAS No. 130, Reporting Comprehensive Income(SFAS 130),
establishes standards for the reporting and display of comprehensive income (loss), which is
defined as the change in equity arising from non-owner sources. Comprehensive income (loss) is
reflected in the consolidated statement of changes in stockholders equity. In addition to net
income (loss), total comprehensive income (loss) includes a gain on a foreign currency forward
contract of approximately $55,000 in 2004 (see Note 6) and a foreign currency translation
adjustment of approximately $1,000 in 2002. Reclassifications.Certain previously reported amounts have been reclassified to conform to
the 2004 presentation. Derivative Instruments.The Company follows the provisions of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, (SFAS 133) which establishes accounting and
reporting standards for derivative instruments and hedging activities. The statement requires that
derivative instruments be measured at fair value and recognized as either assets or liabilities on
the balance sheet (see Note 14). F-13




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Fair Value of Financial Instruments. The estimated fair values of financial instruments
recognized in the accompanying consolidated balance sheets or disclosed within these notes to the
consolidated financial statements have been determined using available market information,
information from unrelated third party financial institutions and appropriate valuation
methodologies, primarily discounted projected cash flows. However, considerable judgment is
required when interpreting market information and other data to develop estimates of fair value.
Accordingly, the estimates presented are not necessarily indicative of the amounts that could be
realized in a current market exchange. Recent Pronouncements.In December 2004, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123R, a revised Share-Based Payment(SFAS 123R), a revision effective for the
Companys third quarter of fiscal 2005. SFAS 123R requires companies to expense in their
consolidated statement of operations the estimated fair value of employee stock options and similar
awards. The Company currently uses the intrinsic value method to value stock options, and
accordingly, no compensation expense has been recognized for stock options since the Company grants
stock options with exercise prices equal to or greater than the Companys common stock market price
on the date of the grant. The Company will adopt the provisions of SFAS 123R using a modified
prospective application. Under the modified prospective application, Statement 123R will apply to
new awards and to awards that are outstanding on the effective date and are subsequently modified
or cancelled. Compensation expense for unvested stock-based awards will be recognized over the
remaining vesting period. Depending on the model used to calculate stock-based compensation
expense in the future, the implementation of certain other requirements of SFAS 123R and additional
option grants expected to be made in the future, the pro forma disclosure discussed previously may
not be indicative of the stock-based compensation expense that will be recognized in the Companys
future consolidated financial statements. The Company is in the process of determining the impact
adopting SFAS 123R will have on its consolidated financial position and consolidated results of
operations. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets(SFAS 153),
an amendment of APB Opinion No. 29, Accounting for NonMonetary Transactions(APB 29). APB 29 is
based on the principle that exchanges of nonmonetary assets should be measured based on the fair
value of assets exchanged, however certain exceptions apply. SFAS 153 amends APB 29 to eliminate
the exception for nonmonetary exchanges of similar productive assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity
are expected to change significantly as a result of the exchange. SFAS 153 is effective for
nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The Companys
adoption of SFAS 153 is not expected to have a material impact on the Companys consolidated
financial position and consolidated results of operations. In June 2001, the Accounting Standards Executive Committee (AcSEC) of the American Institute
of Certified Public Accountants (AICPA) issued an exposure draft of a proposed Statement of
Position (SOP) entitled Accounting for Certain Costs and Activities Related to Property, Plant
and Equipment. Under the proposed SOP, the Company would expense major maintenance costs as
incurred and be prohibited from deferring cost of a planned maintenance activity. Currently, the
costs incurred to drydock the Companys vessels are deferred and amortized on a straight-line basis
over the period of the next drydocking, generally 24 to 36 months. At its April 14, 2004 meeting,
the FASB voted not to clear the AcSECs proposed SOP. In February 2005, the FASB asked its staff
to further research the issue, specifically with regard to how the projects scope could be
limited. F-14




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3. Long-Term Debt Long-term debt at December 31 consists of the following (in thousands): 2004
    
    
    2003Senior notes, including related interest rate swap
    
    $
    152,906
    
    
    $
    151,472Amended credit facility
    
    
    48,517
    
    
    
    30,000Title XI debt
    
    
    208,969
    
    
    
    216,117Notes payable
    
    
    85,132
    
    
    
    23,137495,524
    
    
    
    420,726Less: current maturities
    
    
    (16,653
    )
    
    
    (11,037
    )Long-term debt, including senior notes
    
    $
    478,871
    
    
    $
    409,689
 On August 5, 2003, the Company completed the offering of $150.0 million of Senior Notes
(the 2003 Senior Notes) due 2013 through a private placement to institutional investors eligible
for resale under Rule 144A and Regulation S. The net proceeds of the offering were used to repay a
portion of the Companys indebtedness under a prior $180.0 million credit facility. Interest on
the 2003 Senior Notes is payable semi-annually in arrears. The 2003 Senior Notes are senior
unsecured obligations guaranteed by certain of the Companys U.S. subsidiaries. The 2003 Senior
Notes are subject to certain covenants, including, among other things, limiting the Parents and
certain U.S. subsidiaries ability to incur additional indebtedness or issue preferred stock, pay
dividends to stockholders, and make investments or sell assets under certain conditions. On
October 31, 2003, the Company filed a registration statement with the SEC to register substantially
identical senior notes to be exchanged for the 2003 Senior Notes pursuant to a registration rights
agreement, so that the 2003 Senior Notes may be eligible for trading in the public markets. On
November 13, 2003, the registration statement was declared effective and the Company completed the
exchange offer on December 16, 2003. In October 2003, the Company entered into an interest rate
swap agreement related to the 2003 Senior Notes (see Note 14). As of December 31, 2004 and 2003,
the market value of the interest rate swap was approximately $2.9 million and $1.5 million,
respectively, and is included in other assets in the accompanying consolidated balance sheets. In connection with the 2003 Senior Notes offering, the Company amended and restated its $180.0
million credit facility. The amended credit facility consists of a revolving credit facility with
an original amount available of $80.0 million and has a five-year maturity (the Amended Credit
Faciltiy). The Amended Credit Facility is subject to semi-annual reductions commencing February
5, 2004. The principal reductions on the Amended Credit Facility are as follows: $4.0 million each
February and August from 2004 through 2007, and $48.0 million in 2008. As of December 31, 2004 and
2003 the outstanding borrowings on the Amended Credit Facility were $70.9 million and $33.9 million,
respectively, including outstanding letters of credit of $22.4 million and $3.9 million,
respectively. Available borrowings under the Amended Credit Facility
were approximately $1.1
million as of December 31, 2004. Interest on the Amended Credit Facility is payable monthly, with
a variable interest rate. The rate is either LIBOR or a base rate plus a margin based upon certain
financial ratios of the Company (6.21% at December 31, 2004). It is secured by first liens on
certain of the Companys vessels (excluding vessels financed with Title XI financing and some of
its other vessels), second liens on two vessels, and stock of certain subsidiaries and is
guaranteed by certain subsidiaries (see Note 17). The Amended Credit Facility is subject to
various financial covenants, including minimum ratios of adjusted EBITDA to adjusted interest
expense and a minimum ratio of adjusted funded debt to adjusted EBITDA, minimum adjusted tangible
net worth, and minimum fair market value of the Companys vessels. F-15




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Early Extinguishment of Debt In connection with amending and restating its prior $180.0 million credit facility in 2003,
the Company wrote off approximately 45% of the unamortized financing costs of the prior credit
facility. The total amount written off was approximately $1.1 million. In connection with the
2003 Senior Notes offering, the Company paid $11.2 million to retire the debt of certain towing
vessels financed with Title XI financing. As a result of this early retirement, the Company wrote
off $400,000 of unamortized financing costs and paid an early retirement premium of $226,000. The
Company recorded a gain on extinguishment of debt of $125,000 related to the refinancing of two
offshore vessels in December 2003. Title XI Financing Bonds The Companys five double-hull product and chemical tankers are financed through Title XI
Government Guaranteed Ship Financing Bonds. There are a total of seven bonds with interest rates
ranging from 6.50% to 7.54% that require principal amortization through June 2024. The aggregate
outstanding principal balance of the bonds was $206.0 million and $211.0 million at December 31,
2004 and 2003, respectively. Principal payments during 2004, 2003 and 2002 were $5.0 million, $4.7
million and $4.4 million, respectively, and interest payments
were $14.5 million, $14.8 million and
$15.1 million, respectively. Covenants under the Title XI Bond agreements contain financial tests which, if not met by the
five double-hull tanker companies, among other things (1) restrict the withdrawal of capital; (2)
restrict certain payments, including dividends, increases in employee compensation and payments of
other indebtedness; (3) limit the incurrence of additional indebtedness; and (4) prohibit the five
double-hull tanker companies from making certain investments or acquiring additional fixed assets.
The five double-hull vessels have a net book value of $208.7 million as of December 31, 2004. In
the event of default, all of the vessels, in addition to the assignment of earnings on one vessel,
serve as collateral on the United States Government guarantee of the Title XI Bonds. The five double-hull vessel companies are required to make deposits to a Title XI reserve fund
based on a percentage of net income attributable to the operations of the five double-hull tankers,
as defined by the Title XI financial agreement. Cash held in a Title XI reserve fund is invested
by the trustee of the fund, and any income earned thereon is either paid to the double-hull
companies or retained in the reserve fund. Withdrawals from the Title XI reserve fund may be made
for limited purposes, subject to prior approval from MARAD. In the second quarter of 2003, the
first deposits to the reserve fund were made in the amount of
$3.8 million, and in the first quarter
of 2004, the second deposits to the reserve fund were made in the amount of $4.7 million. These
deposits are included in other assets in the accompanying balance sheets. According to the Title
XI financial agreement, the Company is restricted from distributing excess cash from the five
double-hull tankers until certain working capital levels have been reached and maintained.
Accordingly, at December 31, 2004 and 2003, the Company had approximately $32.9 million and $27.0
million in restricted cash, which is restricted for use for the operations of the five double-hull
tankers and cannot be used to fund the Companys general working capital requirements. In 2004,
the five double-hull tankers distributed approximately $3.9 million to the Company for general
working capital purposes. The Company expects to receive $10.0 million during the first quarter of
2005 from the double-hull tankers for working capital purposes. As of December 31, 2004 and 2003, other Title XI debt of approximately $3.0 million and $5.1
million, respectively, was collateralized by first preferred mortgages on two non-double-hull
product tankers and bears interest at rates ranging from 5.9% to 10.1%. The debt is due in
semi-annual principal and interest payments through December 2006. Under the terms of this other
Title XI debt, the Company is required to maintain a minimum level of working capital, as defined,
and comply with certain other financial covenants. During 2004, 2003 and 2002, $2.2 million, $13.7
million and $2.8 million, F-16




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##### Table of Contents



respectively, in principal and $0.4 million, $1.4 million and $1.7 million, respectively, in
interest were paid on this debt. The debt on one of the vessels will be completely paid off in
March 2005. Notes Payable The Company has one promissory note relating to the purchase of equity interests in the
double-hull product tankers. The note bears interest at 8.5%. Quarterly principal and interest
payments are due through January 2006. The promissory note is collateralized by securities of
certain subsidiaries. The outstanding balance of the promissory note was $2.6 million and $4.7
million as of December 31, 2004 and 2003, respectively. In March 2004, the Company obtained two notes payable in the amount of $24.8 million each, the
proceeds of which were used to purchase two four-year old, foreign-flagged, double-hulled product
tankers. Each note payable is divided into two tranches. Tranche A, in the principal amount of
$21.7 million, bears interest at LIBOR, which is reset monthly, plus 1.75% (4.0% at December 31,
2004) and requires quarterly principal and interest payments through March 2011. Tranche B, in the
principal amount of $3.1 million, bears interest at LIBOR, which is reset monthly, plus 4.0% (6.2%
at December 31, 2004) and requires quarterly principal and interest payments through March 2007.
The notes payable are collateralized by first mortgages on the tankers. The notes payable contain
certain restrictive financial covenants that, among other things, require minimum levels of EBITDA
and tangible net worth, as defined in the notes payable agreements. As of December 31, 2004, the
Company was in compliance with such covenants. The outstanding balance of the notes payable was
approximately $45.5 million as of December 31, 2004. During 2004, approximately $4.1 million in
principal and approximately $1.3 million in interest were paid on the notes payable. In July 2004, the Company entered into a loan agreement for the Singapore dollar equivalent of
$10.8 million with an unrelated financial services company to finance the construction of the
Seabulk Angola(see Note 6). During the construction of the vessel the Company is required to make
monthly interest payments based on the one month LIBOR rate plus 4.0% (6.6% as of December 31,
2004). At the time of vessel completion and acceptance, the construction loan will convert to a
permanent loan whereby the Company will be required to make monthly interest and principal payments
in 120 installments. The permanent loan bears interest at the one month LIBOR rate plus 3.68%. As
of December 31, 2004, the outstanding balance under the loan agreement was approximately $4.3
million. In October 2004, the Company entered into a loan agreement for $14.3 million with an
unrelated financial services company to finance the construction of the Seabulk Luanda(see Note
6). During the construction of the vessel the Company is required to make monthly interest
payments based on the one month LIBOR rate plus 4.0% (6.6% as of December 31, 2004). At the time
of vessel completion and acceptance, the construction loan will convert to a permanent loan whereby
the Company will be required to make monthly interest and principal payments in 120 installments.
The permanent loan bears interest at the one month LIBOR rate plus 3.68%. As of December 31, 2004,
the outstanding balance under the loan agreement was approximately $3.0 million. In July 2004, the Company entered into a loan agreement with Banco Nacional de Desenvolvimento
Economico e Social (BNDES) of Brazil, a government-owned company, to finance the construction of
the Seabulk Brasiland Seabulk Angra(see Note 6). The loan in the principal amount of $29.9
million is divided into two Subcredits, A and
B, in the amounts of $15.0 million and $14.9 million,
respectively. Progress payments for Subcredits A and B are demandable at various dates monthly for
sixteen year terms with final installments due May 2021 and August 2021, respectively. The loan
bears interest at the rate of 4.0% per annum and as of December 31, 2004 the outstanding balance under the
loan agreement was $13.0 million. F-17




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The Company has various promissory notes relating to the previous acquisition and construction
of various vessels. The promissory notes are collateralized by mortgages on certain vessels and
bear interest at rates ranging from 4.0% to 8.1%. The debt is due in monthly installments of
principal and interest through December 2018. The outstanding balance of the notes was $16.7
million and $18.4 million as of December 31, 2004 and 2003, respectively. The Company has letters of credit outstanding in the amount of approximately $22.4 million and
$3.9 million as of December 31, 2004 and 2003, respectively, which expire on various dates through
December 2025. The aggregate annual future principal payments due on the long-term debt are as follows (in
thousands): Years ending December 31:2005
    
    $
    16,6532006
    
    
    15,5782007
    
    
    12,6672008
    
    
    68,2042009
    
    
    11,531Thereafter
    
    
    370,891$
    495,524
 F-18




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4. Capital Leases The Company operates certain vessels and other equipment under leases that are classified as
capital leases. The future minimum lease payments under capital leases, including obligations
under sale-leaseback transactions, together with the present value of the net minimum lease
payments are as follows (in thousands): Years ending December 31:2005
    
    $
    5,9482006
    
    
    4,9912007
    
    
    4,9912008
    
    
    6,2962009
    
    
    6,063Thereafter
    
    
    18,966Total minimum lease payments
    
    
    47,255Less: amount representing interest
    
    
    (14,979
    )Present value of minimum lease payments (including
current portion of
$3,708)
    
    $
    32,276
 F-19




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5. Commitments and Contingencies Lease Commitments The Company leases its office facilities and certain vessels under operating lease agreements,
which expire at various dates through 2013. Certain leases include escalation clauses for
adjusting rentals to reflect changes in price indicies. Rent expense
was approximately $9.0 million, $6.3 million and $4.5 million for the years ended December 31, 2004, 2003 and 2002,
respectively. The aggregate annual future payments due under non-cancelable operating leases with
remaining terms in excess of one year are as follows (in thousands): Years ending December 31:2005
    
    $
    9,1032006
    
    
    8,8662007
    
    
    7,5212008
    
    
    4,8502009
    
    
    1,365Thereafter
    
    
    745$
    32,450
 Sublease The Company subleases certain office space in Tampa, Florida. The sublease in Tampa is
expected to terminate in December 2006. There are no renewal or escalation clauses relating to the
sublease. The future minimum receipts under the sublease are as follows (in thousands): Years ending December 31:2005
    
    $
    982006
    
    
    98$
    196
 F-20




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Contingencies Under United States law, United States persons are prohibited from business activities and
contracts in certain countries, including Sudan and Iran. Relating to the prohibitions, the
Company has filed three reports with and submitted documents to the Office of Foreign Asset Control
(OFAC) of the U.S. Department of Treasury. One of the reports was also filed with the Bureau of
Export Administration of the U.S. Department of Commerce. The reports and documents related to
certain limited charters with third parties involving three of the Companys vessels which called
in the Sudan for several months in 1999 and January 2000, and charters with third parties involving
several of the Companys vessels which called in Iran in 1998. In March 2003, the Company received
notification from OFAC that the case had been referred to its Civil Penalties Division. Should
OFAC determine that these activities constituted violations of laws or regulations, civil
penalties, including fines, could be assessed against the Company and/or certain individuals who
knowingly participated in such activities. The Company cannot predict the extent of such
penalties; however, management does not believe the outcome of these matters will have a material
impact on the Companys consolidated balance sheets or consolidated results of operations. The Company was sued by Maritime Transport Development Corporation (MTDC) in January 2002 in
Florida state court in Broward County alleging broker commissions due since 1998 from charters on
three of its vessels, the Seabulk Magnachem, Seabulk Challengeand Seabulk Pride,under an alleged
broker commission agreement. MTDC was controlled by the founders of our predecessor company. The
claim allegedly continues to accrue. The amount alleged to be due is over $800,000, but is subject
to offset claims and defenses by the Company. The Company is vigorously defending such charges,
but the Company cannot predict the ultimate outcome. As of February 20, 2004, the Company switched its mutual protection and indemnity (P&I)
marine insurance policies from Steamship Mutual (Steamship) to West of England Association (West
of England). Under the Companys P&I policies, the Company could be liable for additional
premiums to cover any investment losses and reserve shortfalls experienced by its marine insurance
clubs; however, additional premiums can only be assessed for open policy years. Steamship and West
of England close a policy year three years after the policy year has ended. Completed policy years
2002 and 2003 are still open for Steamship, and policy year 2004 is open for West of England.
There have been no additional premiums assessed for these policy
years, and the Company believes it
is unlikely that additional premiums for those policy years will be assesed. The Company will
record a liability for any such additional premiums if and when they are assessed and the amount
can be reasonably estimated. In order to cover potential future additional insurance calls made by Steamship for 2002 and
2003, the Company was required to post a letter of credit in the amount of $1.9 million to support
such potential additional calls as a condition to its departure from Steamship. The letter of
credit will be returned if no additional insurance calls are made. Potential claims liabilities
are recorded as insurance expense reserves when they become probable and can be reasonably
estimated. P&I insurance premiums were approximately $7.5 million, $9.3 million and $7.0 million for the
years ended December 31, 2004, 2003 and 2002, respectively. The Companys hull and machinery
insurance renewed in October 2004. The Company maintains high levels of self-insurance for P&I and
hull and machinery risks through the use of substantial deductibles and self-insured retentions. From time to time the Company is also party to personal injury and property damage claims
litigation arising in the ordinary course of our business. Protection and indemnity marine
liability insurance covers large claims in excess of the substantial
deductibles and, for 2002 and
2003, substantial self-insured retentions. F-21




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At December 31, 2004 and 2003, approximately 20% and 19%, respectively, of the Companys
employees were members of national maritime labor unions or are subject to collective bargaining
agreements. Management considers relations with employees to be satisfactory; however, the
deterioration of these relations could have an adverse effect on the Companys operating results. In March 2004, the Company received $400,000 from the settlement of litigation over a previous
joint venture partner and $4.5 million from the settlement of litigation against two of its
suppliers. The settlement against its suppliers represents reimbursement for certain direct
expenses and economic losses that adversely affected operating results. The $4.5 million in
proceeds is recorded in other, net in the accompanying consolidated statement of operations.  6.
    Vessels and Equipment Vessels and equipment are summarized below (in thousands): December 31,2004
    
    
    2003Vessels and improvements
    
    $
    800,986
    
    
    $
    697,358Furniture and
equipment
    
    
    10,065
    
    
    
    9,848811,051
    
    
    
    707,206Less: accumulated depreciation and
amortization
    
    
    (212,258
    )
    
    
    (180,180
    )Vessels and equipment,
net
    
    $
    598,793
    
    
    $
    527,026
 During
2004, the Company sold 11 offshore energy support vessels, including one which had been
held-for-sale, for an aggregate total of $6.4 million and a gain of approximately $4.1 million. The
Company sold 18 offshore energy support vessels and three tugs during 2003 for an aggregate total of
$9.0 million and a gain of approximately $1.5 million. During 2002, the Company sold 17 vessels
for a total of $6.8 million and a gain of approximately $55,000. During 2004, the Company incurred interest cost of $34.9 million, of which approximately $1.0
million was capitalized. During 2003, the Company incurred interest cost of $33.9 million, of
which approximately $90,000 was capitalized. Vessel Acquisitions In January 2004, the Company entered into a contract with Labroy Shipbuilding and Engineering
Pte. Ltd. of Singapore for the construction of a terminal support tug to be named Seabulk Angola
for delivery in March 2005 for the Singapore dollar equivalent of U.S. $10.8 million. The Company
also entered into a forward exchange contract intended to fully hedge its foreign currency
commitment (see Note 2). Under the forward contract, the Company will purchase Singapore dollars
at various rates from February 2004 through March 2005 in conjunction with the progress payment
dates as required by the construction agreement. In July 2004, the Company entered into a loan
agreement to finance the construction of the vessel (see Note 3). The vessel will be employed on a
long-term contract in Angola. In March 2004, the Company completed the purchase of two four-year-old, foreign-flag,
double-hull product tankers from World-Wide Shipping of Singapore for a total purchase price of
approximately $62.0 million. The purchase price was funded by a combination of bank borrowings and available cash F-22




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(see Note 3). The tankers are modern double-hull vessels suitable for worldwide
trading. The Company ook delivery of the two vessels in March and April 2004. Both vessels have been placed in an
international product tanker pool. In May 2004, the Company entered into a contract with Labroy Shipbuilding and Engineering Pte.
Ltd. for the construction of an anchor handling tug supply vessel to be named Seabulk Luandafor
delivery in mid-2005. In October 2004, the Company entered into a loan agreement to finance the
construction of the anchor handling tug supply vessel (see Note 3). The vessel will be employed on
a long-term contract in Angola. In May 2004, the Company entered into a contract with Jaya Shipbuilding and Engineering Pte.
Ltd. of Singapore for the construction of a multi-purpose offshore
supply vessel with a four-point
mooring system. The vessel, named Seabulk Advantage,was delivered in December  2004. The vessel
cost was $8.6 million. The purchase price was paid with available cash. In July 2004, the Company entered into a loan agreement with Banco Nacional de Desenvolvimento
Economico e Social (BNDES) of Brazil, a government-owned company, to finance the construction of
two offshore supply vessels (see Note 3). The vessels were constructed by Estaleiro Promar I
Reparos Navais Ltda (Promar) and are on charter with Petrobas in Brazil. The Company took
delivery of the Seabulk Brasilin October 2004 and the Seabulk Angrain January 2005. In October 2004, the Company entered into a contract with Labroy Shipbuilding and Engineering
Pte. Ltd. of Singapore for the construction of four anchor handling tug supply vessels with an
option for four additional vessels. The four vessels are to be built at a combined cost of
approximately $43.7 million with delivery scheduled in 2006. The vessels are expected to work
under long-term contracts in West Africa and Southeast Asia. In October 2004, the Company entered into a contract with Centurion Marine Offshore, L.L.C. to
exchange four of the Companys offshore vessels for one offshore energy support vessel. The
transaction is a like-kind exchange of assets of equal value and is a tax-free transaction to the
Company. The Company delivered the four vessels, at a combined market value of approximately $4.4
million and simultaneously took delivery of the Seabulk Carmenin January 2005. In December 2004, the Company purchased the minority interest in a partnership that owns the
Seabulk America,a chemical product carrier. The Company owned a 67% equity interest and purchased
the 33% interest owned by Stolt Tankers (U.S.A.), Inc. for $2.4 million. The minority interest
acquisition was accounted for under the purchase method of accounting
and, accordingly, the excess
of the purchase price over the minority interest acquired of $1.5 million was allocated to vessels
and equipment.  7.
    Joint Venture Agreements In March 2003, the Company formed a joint venture company in Nigeria, named Modant Seabulk
Nigeria Limited, with CTC International, Inc., a company owned by Nigerian interests. The Company
has a 40% interest in Modant Seabulk Nigeria Limited. The Company also sold five of its crewboats
operating in Nigeria to joint venture vessel-owning companies related to CTC International in April
2003 for $2 million. The Company invested $400,000 of the sale proceeds and acquired a 20%
interest in these joint venture vessel-owning companies. In July 2003, the five crewboats were
reflagged into the Nigerian registry. The Company has not guaranteed any debt of the joint
venture, nor is the Company required to provide additional funding. As of December 31, 2004 and
2003, the Companys investment in the joint venture was $0.5 million and is included in other
assets in the accompanying consolidated balance sheets. F-23




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In September 2003, the Company entered into a joint venture agreement called Angobulk Sarl
with Angola Drilling Company. The agreement has since been terminated by the parties.  8.
    Stock Option and Equity Ownership Plans In December 1999, the Company adopted the Hvide Marine Incorporated Stock Option Plan (the
1999 Plan), a stock option plan which provided certain key employees of the Company the right to
acquire shares of common stock. Pursuant to the 1999 Plan, 500,000 shares of the Companys common
stock were reserved for issuance to the participants in the form of nonqualified stock options.
The options expire no later than 10 years from the date of the grant. On June 15, 2000, the Company adopted the Amended and Restated Equity Ownership Plan (the
Plan). The Plan amends and restates in its entirety the 1999 Plan. Pursuant to the Plan,
800,000 shares of the Companys stock were reserved for issuance to participants in the form of
nonqualified or incentive stock options, restricted stock grants and other stock related
instruments, subject to adjustment to reflect stock dividends, recapitalizations, reorganizations
and other changes in the capital structure. In December 2001, the Compensation Committee agreed to
amend the Plan by authorizing and reserving for issuance an additional 500,000 shares to be
eligible for grants under the Plan, bringing the total under the Plan to 1,300,000 shares. In
February 2003, the Compensation Committee increased the number of shares eligible for grants to
2,300,000 shares. The Committees action was approved by the shareholders at the Companys Annual
Meeting of Shareholders held on May 16, 2003. The vesting period and certain other terms of stock
options granted under the Plan are determined by the Compensation Committee. The Plan requires
that the option price may not be less than 100% of the fair market value on the date of grant. The
options expire no later than 10 years from the date of grant. There were 147,000 and 530,000
options granted under the Plan in 2004 and 2003, respectively, and no options were granted in 2002.
In addition, there were 31,400 and 115,000 shares of restricted stock granted in 2004 and 2003,
respectively. The Company amortizes the value of the restricted stock over the three-year vesting
period. The Company recognized stock compensation expense of approximately $255,000, $238,000 and
$99,000 in 2004, 2003 and 2002, respectively, related to restricted stock. On June 15, 2000, the Company also adopted the Stock Option Plan for Directors (the Directors
Plan). Pursuant to the Directors Plan, as of December 31, 2004, an aggregate of 360,000 shares of
common stock are authorized and reserved for issuance, subject to adjustments to reflect stock
dividends, reorganizations, and other changes in the capital structure of the Company. Under the
Stock Option Plan for Directors, each director not employed by the Company is granted annual stock
options exercisable for 4,000 shares. The Chairman of the Board of Directors, if not an employee
of the Company, is entitled to receive annual stock options for 8,000 shares. In 2002 each of the
continuing outside directors was granted options to purchase 4,000 shares, and each of the four
previous directors who resigned upon the Companys equity transaction in September 2002 were also
granted options to purchase 4,000 shares, with the exception of the former chairman, who was
granted 8,000 shares. In his initial year, a director is granted options to purchase 10,000
shares. The six new directors were eligible for initial grants of options to purchase 10,000
shares on the Annual Meeting date in 2004 and the continuing directors, with the exception of Mr.
Kurz, were eligible for grants of options to purchase 4,000 shares. Under the Directors Plan, the
option price for each option granted is required to be 100% of the fair market value of common
stock on the day of grant. Options granted under the Directors Plan totaled 36,000, 72,000 and
32,000 during 2004, 2003 and 2002, respectively. F-24




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##### Table of Contents



The following table of data is presented in connection with the stock option plans: Year Ended December 31,2004
    
    
    2003
    
    
    2002Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageNumber of
    
    
    exercise
    
    
    Number of
    
    
    exercise
    
    
    Number of
    
    
    exerciseoptions
    
    
    price
    
    
    options
    
    
    price
    
    
    options
    
    
    priceOptions outstanding at beginning of period
    
    
    1,203,000
    
    
    $
    7.35
    
    
    
    774,502
    
    
    $
    6.84
    
    
    
    822,000
    
    
    $
    6.91Granted
    
    
    183,000
    
    
    
    9.78
    
    
    
    602,000
    
    
    
    7.85
    
    
    
    32,000
    
    
    
    6.19Exercised
    
    
    (66,170
    )
    
    
    5.98
    
    
    
    (57,169
    )
    
    
    5.37
    
    
    
    (6,667
    )
    
    
    6.31Cancelled
    
    
    (40,332
    )
    
    
    9.10
    
    
    
    (116,333
    )
    
    
    7.49
    
    
    
    (72,831
    )
    
    
    7.48Options outstanding at end of period
    
    
    1,279,498
    
    
    
    7.71
    
    
    
    1,203,000
    
    
    
    7.35
    
    
    
    774,502
    
    
    
    6.84Options exercisable at end of period
    
    
    733,086
    
    
    
    7.16
    
    
    
    571,513
    
    
    
    7.00
    
    
    
    562,856
    
    
    
    7.30Options available for future grants at end of
period
    
    
    1,029,096
    
    
    
    
    
    
    
    1,203,164
    
    
    
    
    
    
    
    618,831
    
    
    
    
 Summarized information about stock options outstanding as of December 31, 2004 is as
follows: Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Remaining
    
    
    Average
    
    
    Number of
    
    
    AverageOptions
    
    
    Life
    
    
    Exercise
    
    
    Options
    
    
    ExerciseExercise Price Range
    
    
    Outstanding
    
    
    (In Years)
    
    
    Price
    
    
    Exercisable
    
    
    PriceUnder $6.25
    
    
    
    97,832
    
    
    
    7.03
    
    
    $
    4.50
    
    
    
    97,832
    
    
    $
    4.50$6.25 to $7.29
    
    
    
    446,333
    
    
    
    6.42
    
    
    
    6.60
    
    
    
    341,671
    
    
    
    6.40$7.30 to $8.00
    
    
    
    422,333
    
    
    
    7.81
    
    
    
    7.92
    
    
    
    163,583
    
    
    
    7.80$8.01 to $10.00
    
    
    
    255,000
    
    
    
    8.98
    
    
    
    9.45
    
    
    
    72,000
    
    
    
    8.61Over $10.00
    
    
    
    58,000
    
    
    
    1.96
    
    
    
    12.47
    
    
    
    58,000
    
    
    
    12.47
 The weighted average fair value of options granted under the Companys stock option plans
during 2004, 2003 and 2002 was $7.85, $5.58, and $4.91 respectively. F-25




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##### Table of Contents



The fair value of each option is estimated on the date of the grant using the Black-Scholes
option-pricing model with the following assumptions applied to grants in 2004, 2003 and 2002: 2004
    
    
    2003
    
    
    2002Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility factor
    
    
    0.73
    
    
    
    0.58
    
    
    
    0.72Approximate risk-free interest rate
    
    
    4.32
    %
    
    
    4.27
    %
    
    
    4.25
    %Expected life (in years)
    
    
    10
    
    
    
    10
    
    
    
    10
 The Black-Scholes option valuation model was developed for use in estimating the fair value of
traded options that have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions including the expected stock
price volatility. Because changes in the subjective input assumptions can materially affect the
fair value estimate, the existing models, in managements opinion, do not necessarily provide a
reliable single measure of the fair value of the Companys stock options. Effective October 14, 2004, the Company amended the stock option agreements for all of the
vested and unvested awards, whereby the option exercise period was extended from 12 months to 36
months in the event of termination within two years of a change in control, as defined in the plan.
In accordance with FASB Interpretation No. 44 Accounting for Certain Transactions involving Stock
Compensation, the amendment to the agreements is considered a modification of the award and
accordingly the intrinsic value of the option award shall be measured at the date of the
modification and any intrinsic value in excess of the amount measured at the original measurement
date shall be recognized as compensation cost if the separation event occurs. As of December 31,
2004 the intrinsic value in excess of the amount measured at the original measurement date was $4.1
million and, if a separation event occurred within two years of a change in control, would be
recognized as compensation expense in the accompanying consolidated statement of operations.  9.
    Employee Benefit Plans The Company sponsors a retirement plan and trust (the Plan) established pursuant to Section
401(k) of the Internal Revenue Code, which covers substantially all administrative and non-union
employees. Subject to certain dollar limitations, employees may contribute a percentage of their
salaries to this Plan, and the Company will match a portion of the employees contributions.
Profit sharing contributions by the Company to the Plan are discretionary. Additionally, the
Company contributes to various union-sponsored, collectively bargained pension plans for certain
crew members in the tankers and towing segments. The plans are not administered by the Company,
and contributions are determined in accordance with provisions of negotiated labor contracts. The
expense resulting from Company contributions to the Plan and various union-sponsored plans amounted
to approximately $4.0 million, $3.7 million and $3.5 million for the years ended December 31, 2004,
2003 and 2002, respectively. In February 2003, the Company established an Executive Deferred Compensation Plan for highly
compensated employees. Under the Plan, such employees may elect to defer up to 50% of their salary
and 100% of bonuses and grants of restricted Company stock for periods of at least five years or
until retirement. Income tax on deferred amounts is payable when distributed to the employee after
such deferral periods. The Company is permitted to make contributions to the Plan. Salary, bonus
and restricted stock deferred under the Plan are funded by the Company into a trust for the benefit
of the eligible employees, which together with an outside consultant/administrator, administers the
Plan. F-26




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##### Table of Contents



10. Income Taxes The United States and foreign components of income (loss) before provision for income taxes
are as follows (in thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002United States
    
    $
    12,497
    
    
    $
    (3,959
    )
    
    $
    (35,578
    )Foreign
    
    
    18,471
    
    
    
    3,232
    
    
    
    1,350Total
    
    $
    30,968
    
    
    $
    (727
    )
    
    $
    (34,228
    )
 Foreign income taxes are levied on gross receipts. The
components of the provision for income tax expense (benefit) are as follows (in thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    (1,520
    )Foreign
    
    
    5,034
    
    
    
    4,238
    
    
    
    6,162Total current
    
    
    5,034
    
    
    
    4,238
    
    
    
    4,642Deferred
    
    
    
    
    
    
    
    
    
    
    Total income tax expense
    
    $
    5,034
    
    
    $
    4,238
    
    
    $
    4,642
 A reconciliation of U.S. Federal income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense (benefit) is: Year Ended December 31,2004
    
    
    2003
    
    
    2002Income tax expense (benefit) computed at theFederal statutory rate
    
    
    35
    %
    
    
    (35
    )%
    
    
    (35
    )%State income taxes, net of federal benefit
    
    
    1
    
    
    
    (1
    )
    
    
    (1
    )Change in valuation allowance
    
    
    (37
    )
    
    
    35
    
    
    
    31Permanent, non deductible items
    
    
    1
    
    
    
    1
    
    
    
    10
    %
    
    
    0
    %
    
    
    (4
    )%
 F-27




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##### Table of Contents



The tax effect of temporary differences that give rise to deferred tax assets and
liabilities are as follows (in thousands): As of December 31,2004
    
    
    2003Deferred income tax assets:Allowance for doubtful accounts
    
    $
    2,019
    
    
    $
    919Goodwill
    
    
    11,853
    
    
    
    13,321Accrued compensation
    
    
    929
    
    
    
    698Foreign tax credit carryforwards
    
    
    28,987
    
    
    
    21,967Accrued supplemental insurance premiums
    
    
    71
    
    
    
    71Net operating loss carryforwards
    
    
    145,350
    
    
    
    147,300Other
    
    
    543
    
    
    
    1,662Total deferred income tax assets
    
    
    189,752
    
    
    
    185,938Less: valuation allowance
    
    
    (62,374
    )
    
    
    (78,311
    )Net deferred income tax assets
    
    
    127,378
    
    
    
    107,627Deferred income tax liabilities:Property differences
    
    
    114,280
    
    
    
    94,060Deferred drydocking costs
    
    
    11,574
    
    
    
    12,364Other
    
    
    1,524
    
    
    
    1,203Total deferred income tax liabilities
    
    
    127,378
    
    
    
    107,627Net deferred income tax assets
    
    $
    
    
    
    $
    
 SFAS No. 109, Accounting for Income Taxes(SFAS 109) requires a valuation allowance to
reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management determined that a
valuation allowance of approximately $62.4 million and $78.3 million was necessary at December 31,
2004, and 2003, respectively, to reduce the deferred tax assets to the amount that will more likely
than not be realized. After application of the valuation allowance, the Companys net deferred tax
assets and liabilities were zero at December 31, 2004 and 2003. The net change in the total
valuation allowance was a decrease of approximately $15.9 million in 2004 and an increase of
approximately $3.1 million and $9.9 million in 2003 and 2002, respectively. In 2002, the Job Creation and Worker Assistance Act of 2002 was signed into law, which allowed
a 2001 federal net operating loss to be carried back five years instead of two years. This new law
allowed the Company to carry back its 2001 federal net operating loss into the five-year carryback
period. The Company received a refund of approximately $2.0 million related to the net operating
loss carryback in 2004. The Company has a basis for tax purposes in excess of its basis for financial reporting
purposes that will generate additional income tax deductions in future periods. As of December 31,
2004, the Company had net operating loss carryforwards of approximately $406.6 million, which are
available to offset future federal taxable income through the year 2023. The Company also has
foreign tax credit carryforwards, due to expire in years 2005 through 2008, of approximately $29.0
million, which are available to reduce future federal income tax liability. F-28




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##### Table of Contents



Section 382 of the Internal Revenue Code outlines restrictions on the utilization of net
operating losses. When a change of ownership occurs, as broadly defined by Section 382, the
Company is subject to an annual limitation on the usage of its net operating loss carryforwards
that existed before that date. In September 2002, the issuance of stock resulted in a change of
ownership under Section 382. The Company believes these annual limitations are significantly
large enough as to not restrict its ability to utilize the majority of its net operating loss
carryforwards against future earnings to reduce its future federal income tax liability. The Company estimates its income tax expense and liabilities annually. These liabilities
generally are not finalized with the individual taxing authorities until several years after the
end of the annual period for which income taxes have been estimated. Settlement of open tax years,
as well as tax issues in other countries where the Company conducts its businesses, is not expected
to have a material effect on the consolidated financial position or liquidity of the Company, and
in the opinion of management, adequate provision has been made for income and franchise taxes for
all years under examination or subject to future examination. 11. Stockholders Equity Pursuant to the articles of incorporation of the Company, as amended in 2002, there are 40
million shares of common stock authorized for issuance. In December 1999, as part of the Companys reorganization under Chapter 11 bankruptcy, the
holders of the Predecessor Companys Senior Notes received 9.8 million shares of Company common
stock. The holders of Senior Notes received 536,193 common stock purchase warrants (the
Noteholder Warrants). The warrants have a seven and one-half year term and an exercise price of
$0.01 per warrant. Also in connection with the former Senior Notes, the Company issued an
additional 187,668 Noteholder Warrants to an investment advisor. The warrants have a seven and
one-half year term and an exercise price of $0.01 per warrant. During the years ended December 31,
2004 and 2003, approximately 1,000 and 51,000 Noteholder Warrants were exercised. The amount of
outstanding Noteholder Warrants amounted to approximately 158,000 at December 31, 2004 and 159,000
at December 31, 2003. The weighted average contractual life is 2.5 years at December 31, 2004. All of the Companys outstanding warrants contain customary anti-dilution provisions for
issuances of common stock, splits, combinations and certain other events, as defined. In addition,
the outstanding warrants have certain registration rights, as defined. The Company is authorized to issue 5 million shares of preferred stock, no par value per
share. The Company has no present plans to issue such shares. At December 31, 2004, approximately 1,279,000 shares of Common Stock were outstanding and
reserved for issuance under the Companys Amended and Restated Equity Ownership Plan and the Stock
Option Plan for Directors. On September 13, 2002, the Company completed the private placement of 12.5 million shares of
newly issued Seabulk Common Stock at a cash price of $8.00 per share (the Private Placement) to a
group of investors including an entity associated with DLJ Merchant Banking Partners III, L.P., an
affiliate of CSFB Private Equity, and entities associated with Carlyle/Riverstone Global Energy and
Power Fund I, L.P., an affiliate of The Carlyle Group of Washington, D.C. The stock issuance was F-29




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##### Table of Contents



approved by the Companys Shareholders at a Special Meeting held on September 5, 2002. The new investors also purchased, for $8.00 per share, 5.1 million of the Companys Common
Stock and Common Stock purchase warrants beneficially owned by accounts managed by Loomis, Sayles &
Co., L.P., an SEC-registered investment advisor. Taken together, the two transactions gave the new
investors approximately 76% of the Companys outstanding common stock. Pursuant to the agreement
with the investors, the Companys Board of Directors was restructured to permit the new investors
to hold a majority of seats on the Board and to give minority shareholders certain minority rights. 12. Net Income (Loss) Per Share The following table sets forth the computation of basic and diluted net income (loss) per
share (in thousands, except per share amounts): Year Ended December 31,2004
    
    
    2003
    
    
    2002Numerator:Numerator for basic and diluted income (loss) per share  net income (loss) available to common shareholders
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )Denominator:Denominator weighted average income (loss) per share  basic
    
    
    23,264
    
    
    
    23,176
    
    
    
    14,277Denominator weighted average income (loss) per share  diluted
    
    
    23,761
    
    
    
    23,176
    
    
    
    14,277Net income (loss) per common share  basic
    
    $
    1.11
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )Net income (loss) per common share  diluted
    
    $
    1.09
    
    
    $
    (0.21
    )
    
    $
    (2.72
    )
 The weighted average diluted common shares outstanding for fiscal 2004 includes
approximately 283,000 stock options, 158,000 warrants and 56,000 shares of restricted stock. The
weighted average diluted common shares outstanding for fiscal 2003 and 2002 excludes 1,203,000 and
774,502 stock options, respectively, and 409,000 and 406,000 warrants in 2003 and 2002,
respectively. The common stock equivalents in 2003 and 2002 are excluded as they are anti-dilutive
due to the Companys net losses for 2003 and 2002. 13. Segment and Geographic Data The Company organizes its business principally into three segments. The accounting policies
of the reportable segments are the same as those for the consolidated financial statements (Note
2). The Company does not have significant intersegment transactions. These segments and their respective operations are as follows: Offshore Energy Support(Seabulk Offshore)  Offshore energy support includes
vessels operating in U.S. and foreign locations used primarily to transport
materials, supplies, equipment and personnel to drilling rigs and to support the
construction, positioning and ongoing operations of oil and gas production
platforms. F-30




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##### Table of Contents



Marine Transportation Services(Seabulk Tankers)  Tankers include 10 U.S.-flag
product tankers and two foreign-flag product tankers. The U.S.-flag oceangoing
vessels are used to transport petroleum, chemicals, and crude products, primarily
from chemical manufacturing plants, refineries and storage facilities along the U.S.
Gulf coast to industrial users and distribution facilities in and around the Gulf of
Mexico, Atlantic and Pacific coast ports. Certain of the vessels also transport
crude oil within Alaska and among Alaska, the Pacific coast and Hawaiian ports. One
U.S.-flag vessel and the two foreign-flag vessels operate in the foreign trade. Towing(Seabulk Towing)  Harbor and offshore towing services are provided by tugs
to vessels utilizing the ports in which the tugs operate, and to vessels at sea to
the extent required by offshore commercial contract opportunities and by
environmental regulations, casualty or other emergencies. The Company evaluates performance by operating segment. Within the offshore energy support
segment, the Company conducts additional performance evaluation of vessels marketed in U.S. and
foreign locations. Resources are allocated based on segment profit or loss from operations, before
interest and taxes. Revenue by segment and geographic area consists only of services provided to external
customers, as reported in the consolidated Statements of Operations. Income from operations by
geographic area represents net revenue less applicable costs and expenses related to that revenue.
Unallocated expenses are primarily comprised of general and administrative expenses of a corporate
nature. Unallocated expenses are primarily comprised of general and administrative expenses of
corporate nature. Identifiable assets represent those assets used in the operations of each
segment or geographic area, and unallocated assets generally include corporate assets. F-31




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##### Table of Contents



The following schedule presents segment information about the Companys operations (in
thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002RevenueOffshore energy support
    
    $
    164,360
    
    
    $
    160,716
    
    
    $
    171,479Tankers
    
    
    147,828
    
    
    
    119,002
    
    
    
    121,371Towing
    
    
    40,582
    
    
    
    37,257
    
    
    
    31,475Eliminations(1)
    
    
    (442
    )
    
    
    (417
    )
    
    
    (328
    )Total
    
    $
    352,328
    
    
    $
    316,558
    
    
    $
    323,997Vessel and voyage expensesOffshore energy support
    
    $
    96,791
    
    
    $
    100,001
    
    
    $
    99,572Tankers
    
    
    72,765
    
    
    
    59,371
    
    
    
    64,151Towing
    
    
    23,330
    
    
    
    20,721
    
    
    
    18,909General corporate
    
    
    
    
    
    
    
    
    
    
    254Eliminations (1)
    
    
    (442
    )
    
    
    (417
    )
    
    
    (328
    )Total
    
    $
    192,444
    
    
    $
    179,676
    
    
    $
    182,558Depreciation, amortization,
drydocking and write-down of
assets held for saleOffshore energy support
    
    $
    37,674
    
    
    $
    41,701
    
    
    $
    43,305Tankers
    
    
    24,416
    
    
    
    19,455
    
    
    
    18,159Towing
    
    
    3,766
    
    
    
    3,793
    
    
    
    3,222General corporate
    
    
    276
    
    
    
    1,643
    
    
    
    1,690Total
    
    $
    66,132
    
    
    $
    66,592
    
    
    $
    66,376Income from operationsOffshore energy support
    
    $
    15,789
    
    
    $
    990
    
    
    $
    10,209Tankers
    
    
    46,957
    
    
    
    36,267
    
    
    
    35,669Towing
    
    
    8,667
    
    
    
    7,678
    
    
    
    4,847General corporate
    
    
    (11,071
    )
    
    
    (11,225
    )
    
    
    (12,955
    )Total
    
    $
    60,342
    
    
    $
    33,710
    
    
    $
    37,770Net income (loss)Offshore energy support
    
    $
    (1,710
    )
    
    $
    (16,097
    )
    
    $
    (16,912
    )Tankers
    
    
    28,123
    
    
    
    19,354
    
    
    
    17,346Towing
    
    
    5,533
    
    
    
    4,511
    
    
    
    (151
    )General corporate
    
    
    (6,012
    ) (3)
    
    
    (12,733
    ) (2)
    
    
    (39,153
    )(2)Total
    
    $
    25,934
    
    
    $
    (4,965
    )
    
    $
    (38,870
    )
   (1)  Elimination of intersegment towing revenue and intersegment tankers
operating expenses of $0.4 million, $0.4 million and
$0.3 million for      the years
ended December 31, 2004, 2003 and 2002, respectively. (2)  Includes loss on early extinguishment of debt of $1.7 million and $27.8
million in 2003 and 2002, respectively (see Note 3). (3)  Includes proceeds from the settlement of litigation, in which the
Company received a total of $4.5 million from two of its
suppliers in 2004
      (see Note 5). F-32




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##### Table of Contents



Consolidated Balance Sheet Informationas of December 31,2004
    
    
    2003Identifiable assetsOffshore energy support
    
    $
    298,259
    
    
    $
    288,760Tankers
    
    
    393,409
    
    
    
    327,911Towing
    
    
    59,082
    
    
    
    60,594Unallocated
    
    
    36,038
    
    
    
    17,175Total
    
    $
    786,788
    
    
    $
    694,440Vessels and equipmentOffshore energy support
    
    $
    305,441
    
    
    $
    287,972Tankers
    
    
    405,409
    
    
    
    341,572Towing
    
    
    61,106
    
    
    
    60,924Total
    
    
    771,956
    
    
    
    690,468Construction in progress
    
    
    30,140
    
    
    
    7,856General corporate
    
    
    8,955
    
    
    
    8,882Gross vessels and equipment
    
    
    811,051
    
    
    
    707,206Less accumulated depreciation
    
    
    (212,258
    )
    
    
    (180,180
    )Total
    
    $
    598,793
    
    
    $
    527,026
 Year Ended December 31,2004
    
    
    2003Capital expenditures and drydockingOffshore energy support
    
    $
    64,241
    
    
    $
    47,720Tankers
    
    
    69,622
    
    
    
    11,283Towing
    
    
    1,675
    
    
    
    3,179Unallocated
    
    
    133
    
    
    
    40Total
    
    $
    135,671
    
    
    $
    62,222
 The Company is engaged in providing marine support and transportation services in the
United States and foreign locations. The Companys foreign operations are conducted on a worldwide
basis, primarily in West Africa, the Arabian Gulf, Southeast Asia, Mexico, and South America with
assets that are highly mobile. These operations are subject to risks inherent in operating in such
locations. The foreign-flag offshore vessels and the two foreign-flag tankers move regularly and
routinely from one country to another, sometimes in different continents depending on the charter
party. Because of this asset mobility, revenue and long-lived assets attributable to the Companys
foreign operations in any one country are not material, as defined in SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information(SFAS 131). There were no individual customers from whom the Company derived more than 10% of its total
revenue for the years ended December 31, 2004, 2003, and 2002. F-33




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The following table presents selected financial information pertaining to the Companys
geographic operations for 2004, 2003 and 2002 (in thousands): Year Ended December 31,2004
    
    
    2003
    
    
    2002RevenueDomestic
    
    $
    225,503
    
    
    $
    197,612
    
    
    $
    200,008ForeignWest Africa
    
    
    85,498
    
    
    
    79,680
    
    
    
    84,576Middle East
    
    
    26,255
    
    
    
    24,650
    
    
    
    23,683Southeast Asia
    
    
    15,072
    
    
    
    14,616
    
    
    
    15,730Consolidated revenue
    
    $
    352,328
    
    
    $
    316,558
    
    
    $
    323,997
 Consolidated Balance Sheet Informationas of December 31,2004
    
    
    2003Identifiable assetsDomestic
    
    $
    600,175
    
    
    $
    516,773ForeignWest Africa
    
    
    117,303
    
    
    
    123,918Middle East
    
    
    27,064
    
    
    
    28,164Southeast Asia
    
    
    6,208
    
    
    
    8,410Other
    
    
    36,038
    
    
    
    17,175Total
    
    $
    786,788
    
    
    $
    694,440Vessels and equipmentDomestic
    
    $
    648,214
    
    
    $
    544,370ForeignWest Africa
    
    
    121,022
    
    
    
    120,049Middle East
    
    
    17,770
    
    
    
    16,637Southeast Asia
    
    
    15,090
    
    
    
    17,268802,096
    
    
    
    698,324General corporate
    
    
    8,955
    
    
    
    8,882811,051
    
    
    
    707,206Less: accumulated depreciation
    
    
    (212,258
    )
    
    
    (180,180
    )Total
    
    $
    598,793
    
    
    $
    527,026
 F-34




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##### Table of Contents



14. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of financial
instruments included in the following categories: Cash, Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Accrued
Liabilities. The carrying amounts reported in the balance sheet approximate fair value due to the
short-term nature of such instruments. Amended Credit Facility and Title XI.The amended credit facility and Title XI obligations
provide for interest and principal payments at various rates and dates as discussed in Note 3. The
Company estimates the fair value of such obligations using a discounted cash flow analysis at
estimated market rates. Interest Rate Swap and Related 2003 Senior Notes.In October 2003, the Company entered into a
ten-year interest rate swap agreement with its Amended Credit Facility lender and other members of
its lending group. The Company entered into the swap transaction at-market, and as a result
there was no exchange of a premium at the initial date of the transaction. Through this derivative
instrument, which covers a notional amount of $150.0 million, the Company effectively converted the
interest rate on its outstanding 2003 Senior Notes due August 2013 to a floating rate based on
LIBOR. The Company designated the interest rate swap as a fair-value hedge of fixed-rate
interest-bearing debt, and is accounting for the change in fair value of the interest rate swap in
accordance with the shortcut method outlined in SFAS 133, whereby the carrying amount of the 2003
Senior Notes are adjusted by the same amount as the change in fair value of the interest rate swap
(see Note 3). As of December 31, 2004, the effective floating interest rate was 6.79% and
increased to 7.88% effective February 15, 2005. The floating rate is adjusted semi-annually in
February and August of each year. The swap agreement is secured by a second lien on the assets
that secure the Companys amended and restated credit facility. Notes Payable and Capital Lease Obligations. The carrying amounts reported in the balance
sheet approximate fair value as the interest rates either adjust
based on LIBOR, or in the case of fixed rate borrowings, are consistent
with the Companys current borrowing rate. The following table presents the carrying value and fair value of the financial instruments at
December 31 (in millions): As of December 31,2004
    
    
    2003Issue
    
    Carrying Value
    
    
    Fair Value
    
    
    Carrying Value
    
    
    Fair ValueAmended credit facility
    
    $
    48.5
    
    
    $
    48.5
    
    
    $
    30.0
    
    
    $
    30.0Title XI
    
    $
    209.0
    
    
    $
    223.4
    
    
    $
    216.1
    
    
    $
    227.2Interest Rate Swap
    
    $
    2.9
    
    
    $
    2.9
    
    
    $
    1.5
    
    
    $
    1.5
 15. Liquidity At December 31, 2004, the Company had cash and cash equivalents on hand of $18.9 million and
working capital of approximately $49.6 million which includes $35.7 million in restricted cash (see
Note 2). The Companys main sources of liquidity are from operations, borrowings under our Amended
Credit Facility, and proceeds from the sale of vessels with marginal operating performance. In
2004, cash from operations totaled $59.1 million, which was $20.8 million greater than 2003. At
December 31, 2004, availability under our Amended Credit Facility was approximately $1.1 million
(see Note 3). Additionally, the Company received $6.4 million from the sale of vessels during 2004
(see Note 6). The F-35




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##### Table of Contents



Company believes cash from operations will continue to be a meaningful source of liquidity.
Furthermore the Company relies on external financing to fund a substantial portion of the purchase
price of new vessels to its fleet. The Company believes it will obtain commitments from various
lenders to fund at least 80% of the cost of vessels it has contracted to purchase. The Companys capital requirements arise primarily from its need to service debt, fund working
capital, maintain and improve its vessels, and make vessel acquisitions. The Company expects that
cash flow from operations will continue to be a significant source of funds for its working capital
and capital requirements. During 2004, the Company incurred $135.7 million in capital improvements for drydocking costs
and fleet additions. Approximately $22.9 million was for drydockings and approximately $112.7
million was for fleet additions including newbuild vessels and vessel acquisitions. The Company
incurred approximately $12.9 million for the construction of the Seabulk Angolaand the Seabulk
Luanda, approximately $27.6 million for the construction of the Seabulk Brasiland the Seabulk
Angra, approximately $9.4 million for the construction of the Seabulk Advantage,and approximately
$62.0 million for the purchase of the Seabulk Reliantand the Seabulk Trust,the two new
international tankers added to our fleet in March and April 2004. The vessels were funded by a
combination of borrowings and available cash. The Companys expected 2005 capital requirements for drydocking costs is $30.7 million. The
Companys expected 2005 capital requirements for newbuild vessels and fleet improvements is $20.3
million, which includes $6.6 million for four anchor handling tug supply vessels the Company agreed
to construct for approximately $43.7 million (see Note 6). The Companys Amended Credit Facility contains certain restrictive financial covenants that,
among other things, require minimum levels of EBITDA, as defined in the credit agreement, and
tangible net worth. A covenant was amended as of February 26, 2004 to allow the Company a greater
degree of flexibility under the debt/EBITDA ratio. The Company is in compliance with all such
covenants at December 31, 2004. F-36




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##### Table of Contents



16. Selected Quarterly Financial Information (unaudited) The following information is presented as supplementary financial information for 2004 and
2003 (in thousands, except per share information): First
    
    
    Second
    
    
    Third
    
    
    FourthYear Ended December 31, 2004
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenue
    
    $
    82,534
    
    
    $
    87,203
    
    
    $
    89,361
    
    
    $
    93,230Income from operations
    
    
    10,400
    
    
    
    12,548
    
    
    
    16,791
    
    
    
    20,603Net income(a)
    
    
    5,650
    
    
    
    2,721
    
    
    
    6,813
    
    
    
    10,750Net income per common share -
basic and diluted (b):Net income  basic
    
    $
    0.24
    
    
    $
    0.12
    
    
    $
    0.29
    
    
    $
    0.46Net income  diluted
    
    $
    0.24
    
    
    $
    0.12
    
    
    $
    0.29
    
    
    $
    0.45
 First
    
    
    Second
    
    
    Third
    
    
    FourthYear Ended December 31, 2003
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenue
    
    $
    77,229
    
    
    $
    79,924
    
    
    $
    79,670
    
    
    $
    79,735Income from operations(c)
    
    
    10,830
    
    
    
    12,378
    
    
    
    9,477
    
    
    
    1,025Net income (loss)(d)
    
    
    1,586
    
    
    
    2,660
    
    
    
    (1,876
    )
    
    
    (7,335
    )Net income (loss) per common share
basic and diluted(b)Net income (loss)  basic
    
    $
    0.07
    
    
    $
    0.11
    
    
    $
    (0.08
    )
    
    $
    (0.32
    )Net income (loss)  diluted
    
    $
    0.07
    
    
    $
    0.11
    
    
    $
    (0.08
    )
    
    $
    (0.32
    )
   (a)
    
    Includes $4.5 million in proceeds from the settlement of litigation in the
first quarter of 2004 (see Note 5).(b)
    
    The sum of the four quarters income (loss) per share may not equal
the annual earnings per share, as the quarterly
quarterly computations are independent of the annual computation.(c)
    
    Includes write-down of assets held for sale of $1.2 million, an increase in repairs
and maintenance of $1.8 million related to drydockings and
the write-off of bad debts of approximately $1.9 million in the fourth quarter of 2003.(d)
    
    Includes loss on early extinguishment of debt of $1.7 million in the third quarter
of 2003 (see Note 3). 17. Supplemental Condensed Consolidated Financial Information The Restricted Subsidiaries as to which financial information is included in the table below
are subsidiaries of the Company that are subject to the terms and conditions of the Indenture
governing the Senior Notes. Only certain of the Restricted Subsidiaries (representing the domestic
restricted subsidiaries and referred to in the Indenture as the Guarantor Subsidiaries), jointly
and severally guarantee the Notes on a senior unsecured basis. The Non-guarantor Unrestricted
Subsidiaries as to which financial information is included in the table below are the subsidiary
entities that own the five U.S.-flag double hull tankers which are financed by the Title XI debt
with recourse to the tankers and the subsidiaries that own them. These entities are designated as
Non-Recourse or Unrestricted subsidiaries under the Indenture and do not guarantee the Notes. F-37




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##### Table of Contents



Supplemental financial information for the Company and its guarantor restricted subsidiaries,
non-guarantor restricted subsidiaries and non-guarantor unrestricted subsidiaries for the notes is
presented below. Condensed Consolidating Balance Sheet(in thousands)As of December 31, 2004Wholly
    
    
    Non-WhollyOwned
    
    
    Owned
    
    
    Non-
    
    
    Non-Guarantor
    
    
    Guarantor
    
    
    Guarantor
    
    
    GuarantorRestricted
    
    
    Restricted
    
    
    Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiaries
    
    
    Subsidiaries(a)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    8,265
    
    
    $
    4,983
    
    
    $
    
    
    
    $
    5,701
    
    
    $
    
    
    
    $
    
    
    
    $
    18,949Restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,756
    
    
    
    32,925
    
    
    
    
    
    
    
    35,681Trade accounts receivable, net
    
    
    35
    
    
    
    17,797
    
    
    
    
    
    
    
    32,207
    
    
    
    5,170
    
    
    
    
    
    
    
    55,209Other receivables
    
    
    1,003
    
    
    
    2,430
    
    
    
    
    
    
    
    204
    
    
    
    147
    
    
    
    
    
    
    
    3,784Marine operating supplies
    
    
    79
    
    
    
    2,503
    
    
    
    
    
    
    
    2,700
    
    
    
    2,586
    
    
    
    
    
    
    
    7,868Due from affiliates
    
    
    
    
    
    
    66,330
    
    
    
    
    
    
    
    119,375
    
    
    
    3,372
    
    
    
    (189,077
    )
    
    
    Prepaid expenses and other
    
    
    2,005
    
    
    
    285
    
    
    
    
    
    
    
    1,239
    
    
    
    98
    
    
    
    
    
    
    
    3,627Total current assets
    
    
    11,387
    
    
    
    94,328
    
    
    
    
    
    
    
    164,182
    
    
    
    44,298
    
    
    
    (189,077
    )
    
    
    125,118Vessels and equipment, net
    
    
    46,072
    
    
    
    216,200
    
    
    
    
    
    
    
    127,848
    
    
    
    208,673
    
    
    
    
    
    
    
    598,793Deferred costs, net
    
    
    14,546
    
    
    
    6,625
    
    
    
    
    
    
    
    15,438
    
    
    
    8,444
    
    
    
    
    
    
    
    45,053Investments in affiliates
    
    
    525,588
    
    
    
    14,644
    
    
    
    
    
    
    
    364
    
    
    
    82,611
    
    
    
    (623,207
    )
    
    
    Other
    
    
    7,231
    
    
    
    813
    
    
    
    
    
    
    
    1,177
    
    
    
    8,603
    
    
    
    
    
    
    
    17,824Total assets
    
    $
    604,824
    
    
    $
    332,610
    
    
    $
    
    
    
    $
    309,009
    
    
    $
    352,629
    
    
    $
    (812,284
    )
    
    $
    786,788Liabilities and Stockholders
EquityCurrent liabilities:Accounts payable
    
    $
    4,802
    
    
    $
    1,159
    
    
    $
    
    
    
    $
    8,957
    
    
    $
    
    
    
    $
    
    
    
    $
    14,918Current maturities of
long-term debt
    
    
    3,799
    
    
    
    7,065
    
    
    
    
    
    
    
    436
    
    
    
    5,353
    
    
    
    
    
    
    
    16,653Current obligations under
capital leases
    
    
    1,093
    
    
    
    2,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,708Accrued interest
    
    
    4,008
    
    
    
    159
    
    
    
    
    
    
    
    5
    
    
    
    703
    
    
    
    
    
    
    
    4,875Due to affiliates
    
    
    161,144
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161,144
    )
    
    
    Accrued liabilities and other
    
    
    8,854
    
    
    
    4,676
    
    
    
    
    
    
    
    17,929
    
    
    
    3,862
    
    
    
    
    
    
    
    35,321Total current liabilities
    
    
    183,700
    
    
    
    15,674
    
    
    
    
    
    
    
    27,327
    
    
    
    9,918
    
    
    
    161,144
    )
    
    
    75,475Long-term debt
    
    
    57,544
    
    
    
    53,275
    
    
    
    
    
    
    
    14,480
    
    
    
    200,666
    
    
    
    
    
    
    
    325,965Senior notes
    
    
    152,906
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152,906Obligations under capital leases
    
    
    10,476
    
    
    
    18,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,568Due to affiliates
    
    
    
    
    
    
    27,935
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,935
    )
    
    
    Other liabilities
    
    
    2,851
    
    
    
    242
    
    
    
    
    
    
    
    1,740
    
    
    
    46
    
    
    
    
    
    
    
    4,879Total liabilities
    
    
    407,477
    
    
    
    115,218
    
    
    
    
    
    
    
    43,547
    
    
    
    210,630
    
    
    
    (189,079
    )
    
    
    587,793Commitments and contingenciesMinority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total stockholders equity
    
    
    197,347
    
    
    
    217,392
    
    
    
    
    
    
    
    265,462
    
    
    
    141,999
    
    
    
    (623,205
    )
    
    
    198,995Total liabilities and
stockholders equity
    
    $
    604,824
    
    
    $
    332,610
    
    
    $
    
    
    
    $
    309,009
    
    
    $
    352,629
    
    
    $
    (812,284
    )
    
    $
    786,788
    F-38




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##### Table of Contents



Condensed Consolidating Balance Sheet(in thousands)As of December 31, 2003Wholly
    
    
    Non-WhollyOwned
    
    
    Owned
    
    
    Non-
    
    
    Non-Guarantor
    
    
    Guarantor
    
    
    Guarantor
    
    
    GuarantorRestricted
    
    
    Restricted
    
    
    Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    217
    
    
    $
    452
    
    
    $
    1,030
    
    
    $
    5,700
    
    
    $
    
    
    
    $
    
    
    
    $
    7,399Restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,478
    
    
    
    26,980
    
    
    
    
    
    
    
    28,458Trade accounts receivable, net
    
    
    (296
    )
    
    
    13,686
    
    
    
    822
    
    
    
    34,161
    
    
    
    1,226
    
    
    
    
    
    
    
    49,599Other receivables
    
    
    3,739
    
    
    
    3,338
    
    
    
    16
    
    
    
    2,799
    
    
    
    838
    
    
    
    
    
    
    
    10,730Marine operating supplies
    
    
    121
    
    
    
    1,575
    
    
    
    482
    
    
    
    3,504
    
    
    
    2,473
    
    
    
    
    
    
    
    8,155Due from affiliates
    
    
    
    
    
    
    73,837
    
    
    
    
    
    
    
    120,556
    
    
    
    3,377
    
    
    
    (197,770
    )
    
    
    Prepaid expenses and other
    
    
    960
    
    
    
    365
    
    
    
    19
    
    
    
    1,505
    
    
    
    196
    
    
    
    
    
    
    
    3,045Total current assets
    
    
    4,741
    
    
    
    93,253
    
    
    
    2,369
    
    
    
    169,703
    
    
    
    35,090
    
    
    
    (197,770
    )
    
    
    107,386Vessels and equipment, net
    
    
    34,998
    
    
    
    138,211
    
    
    
    29,893
    
    
    
    106,401
    
    
    
    217,523
    
    
    
    
    
    
    
    527,026Deferred costs, net
    
    
    13,869
    
    
    
    9,347
    
    
    
    1,022
    
    
    
    14,202
    
    
    
    10,046
    
    
    
    
    
    
    
    48,486Investments in affiliates
    
    
    506,250
    
    
    
    2,214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508,464
    )
    
    
    Due from affiliates
    
    
    30,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,069
    )
    
    
    Other
    
    
    3,907
    
    
    
    2,234
    
    
    
    
    
    
    
    1,562
    
    
    
    3,839
    
    
    
    
    
    
    
    11,542Total assets
    
    $
    593,834
    
    
    $
    245,259
    
    
    $
    33,284
    
    
    $
    291,868
    
    
    $
    266,498
    
    
    $
    (736,303
    )
    
    $
    694,440Liabilities and Stockholders
EquityCurrent liabilities:Accounts payable
    
    $
    5,256
    
    
    $
    2,658
    
    
    $
    
    
    
    $
    9,504
    
    
    $
    1,387
    
    
    $
    
    
    
    $
    18,805Current maturities of
long-term debt
    
    
    4,250
    
    
    
    1,650
    
    
    
    
    
    
    
    139
    
    
    
    4,998
    
    
    
    
    
    
    
    11,037Current obligations under
capital leases
    
    
    1,039
    
    
    
    2,482
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,521Accrued interest
    
    
    5,079
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    633
    
    
    
    
    
    
    
    5,812Due to affiliates
    
    
    194,184
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    (194,247
    )
    
    
    Accrued liabilities and other
    
    
    11,395
    
    
    
    3,010
    
    
    
    415
    
    
    
    20,293
    
    
    
    2,250
    
    
    
    
    
    
    
    37,363Total current liabilities
    
    
    221,203
    
    
    
    9,900
    
    
    
    478
    
    
    
    29,936
    
    
    
    9,268
    
    
    
    (194,247
    )
    
    
    76,538Long-term debt
    
    
    35,575
    
    
    
    14,665
    
    
    
    
    
    
    
    1,958
    
    
    
    206,019
    
    
    
    
    
    
    
    258,217Senior Notes
    
    
    151,472
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,472Obligations under capital leases
    
    
    11,569
    
    
    
    20,677
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,246Due to affiliates
    
    
    
    
    
    
    
    
    
    
    30,069
    
    
    
    
    
    
    
    
    
    
    
    (30,069
    )
    
    
    Other liabilities
    
    
    1,660
    
    
    
    273
    
    
    
    
    
    
    
    1,157
    
    
    
    46
    
    
    
    
    
    
    
    3,136Total liabilities
    
    
    421,479
    
    
    
    45,515
    
    
    
    30,547
    
    
    
    33,051
    
    
    
    215,333
    
    
    
    (224,316
    )
    
    
    521,609Commitments and contingenciesMinority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476
    
    
    
    476Total stockholders equity
    
    
    172,355
    
    
    
    199,744
    
    
    
    2,737
    
    
    
    258,817
    
    
    
    51,165
    
    
    
    (512,463
    )
    
    
    172,355Total liabilities and
stockholders equity
    
    $
    593,834
    
    
    $
    245,259
    
    
    $
    33,284
    
    
    $
    291,868
    
    
    $
    266,498
    
    
    $
    (736,303
    )
    
    $
    694,440
 F-39




---



##### Table of Contents



Condensed Consolidating Statement of Operations(in thousands)Year Ended December 31, 2004Wholly
    
    
    Non-WhollyOwned
    
    
    Owned
    
    
    Non-
    
    
    Non-Guarantor
    
    
    Guarantor
    
    
    Guarantor
    
    
    GuarantorRestricted
    
    
    Restricted
    
    
    Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiaries
    
    
    Subsidiaries(a)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    44,565
    
    
    $
    105,237
    
    
    $
    
    
    
    $
    128,773
    
    
    $
    74,195
    
    
    $
    (442
    )
    
    $
    352,328Vessel and voyage expenses
    
    
    26,591
    
    
    
    60,547
    
    
    
    
    
    
    
    71,508
    
    
    
    34,240
    
    
    
    (442
    )
    
    
    192,444General and administrative
    
    
    11,994
    
    
    
    9,297
    
    
    
    
    
    
    
    14,708
    
    
    
    1,527
    
    
    
    
    
    
    
    37,526Depreciation, amortization
and drydocking
    
    
    8,191
    
    
    
    19,864
    
    
    
    
    
    
    
    27,144
    
    
    
    10,933
    
    
    
    
    
    
    
    66,132Gain on disposal of assets
    
    
    
    
    
    
    (605
    )
    
    
    
    
    
    
    (3,511
    )
    
    
    
    
    
    
    
    
    
    
    (4,116
    )Income (loss) from
operations
    
    
    (2,211
    )
    
    
    16,134
    
    
    
    
    
    
    
    18,924
    
    
    
    27,495
    
    
    
    
    
    
    
    60,342Other (expense) income, net
    
    
    4,348
    
    
    
    (10,068
    )
    
    
    
    
    
    
    (7,850
    )
    
    
    (15,385
    )
    
    
    (419
    )
    
    
    (29,374
    )Income before income taxes
    
    
    2,137
    
    
    
    6,066
    
    
    
    
    
    
    
    11,074
    
    
    
    12,110
    
    
    
    (419
    )
    
    
    30,968Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,034
    
    
    
    
    
    
    
    
    
    
    
    5,034Net income
    
    $
    2,137
    
    
    $
    6,066
    
    
    $
    
    
    
    $
    6,040
    
    
    $
    12,110
    
    
    $
    (419
    )
    
    $
    25,934
   (a)  In December 2004, the Company purchased the minority interest in a
partnership that owns the Seabulk America (see Note 6). Subsequent to the acquisition, all
Guarantor Restricted Subsidiaries are wholly-owned subsidiaries of the Company. Condensed Consolidating Statement of Operations(in thousands)Year Ended December 31, 2003Wholly
    
    
    Non-WhollyOwned
    
    
    Owned
    
    
    Non-
    
    
    Non-Guarantor
    
    
    Guarantor
    
    
    Guarantor
    
    
    GuarantorRestricted
    
    
    Restricted
    
    
    Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    44,264
    
    
    $
    78,637
    
    
    $
    13,662
    
    
    $
    119,466
    
    
    $
    60,946
    
    
    $
    (417
    )
    
    $
    316,558Vessel and voyage expenses
    
    
    25,453
    
    
    
    54,459
    
    
    
    8,616
    
    
    
    66,264
    
    
    
    25,301
    
    
    
    (417
    )
    
    
    179,676General and administrative
    
    
    10,912
    
    
    
    10,206
    
    
    
    894
    
    
    
    14,349
    
    
    
    1,682
    
    
    
    
    
    
    
    38,043Depreciation, amortization
and drydocking
    
    
    8,250
    
    
    
    15,710
    
    
    
    2,988
    
    
    
    28,629
    
    
    
    9,796
    
    
    
    
    
    
    
    65,373Write-down of assets held for
sale
    
    
    
    
    
    
    1,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,219Gain on disposal of assets
    
    
    
    
    
    
    (1,136
    )
    
    
    
    
    
    
    (327
    )
    
    
    
    
    
    
    
    
    
    
    (1,463
    )Income (loss) from operations
    
    
    (351
    )
    
    
    (1,821
    )
    
    
    1,164
    
    
    
    10,551
    
    
    
    24,167
    
    
    
    
    
    
    
    33,710Other expense, net
    
    
    (1,268
    )
    
    
    (8,588
    )
    
    
    (1,616
    )
    
    
    (7,428
    )
    
    
    (15,684
    )
    
    
    147
    
    
    
    (34,437
    )Income (loss) before income
taxes
    
    
    (1,619
    )
    
    
    (10,409
    )
    
    
    (452
    )
    
    
    3,123
    
    
    
    8,483
    
    
    
    147
    
    
    
    (727
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,238
    
    
    
    
    
    
    
    
    
    
    
    4,238Net income (loss)
    
    $
    (1,619
    )
    
    $
    (10,409
    )
    
    $
    (452
    )
    
    $
    (1,115
    )
    
    $
    8,483
    
    
    $
    147
    
    
    $
    (4,965
    )
 F-40




---



##### Table of Contents



Condensed Consolidating Statement of Operations(in thousands)Year Ended December 31, 2002Wholly
    
    
    Non-WhollyOwned
    
    
    Owned
    
    
    Non-
    
    
    Non-Guarantor
    
    
    Guarantor
    
    
    Guarantor
    
    
    GuarantorRestricted
    
    
    Restricted
    
    
    Restricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalRevenue
    
    $
    43,604
    
    
    $
    82,881
    
    
    $
    12,352
    
    
    $
    123,989
    
    
    $
    61,284
    
    
    $
    (113
    )
    
    $
    323,997Vessel and voyage expenses
    
    
    26,398
    
    
    
    54,329
    
    
    
    7,783
    
    
    
    67,546
    
    
    
    26,615
    
    
    
    (113
    )
    
    
    182,558General and administrative
    
    
    12,257
    
    
    
    10,333
    
    
    
    885
    
    
    
    13,534
    
    
    
    1,648
    
    
    
    
    
    
    
    38,657Depreciation, amortization
and
drydocking
    
    
    7,952
    
    
    
    17,453
    
    
    
    2,313
    
    
    
    29,127
    
    
    
    9,531
    
    
    
    
    
    
    
    66,376(Gain) loss on disposal of
assets, net
    
    
    
    
    
    
    (1,901
    )
    
    
    
    
    
    
    537
    
    
    
    
    
    
    
    
    
    
    
    (1,364
    )Income (loss) from operations
    
    
    (3,003
    )
    
    
    2,667
    
    
    
    1,371
    
    
    
    13,245
    
    
    
    23,490
    
    
    
    
    
    
    
    37,770Other expense, net
    
    
    (30,576
    )
    
    
    (11,474
    )
    
    
    (2,043
    )
    
    
    (11,895
    )
    
    
    (16,010
    )
    
    
    
    
    
    
    (71,998
    )Income (loss) before
provision
for income taxes
    
    
    (33,579
    )
    
    
    (8,807
    )
    
    
    (672
    )
    
    
    1,350
    
    
    
    7,480
    
    
    
    
    
    
    
    (34,228
    )Provision (benefit) for
income
taxes
    
    
    (1,520
    )
    
    
    
    
    
    
    
    
    
    
    6,162
    
    
    
    
    
    
    
    
    
    
    
    4,642Net income (loss)
    
    $
    (32,059
    )
    
    $
    (8,807
    )
    
    $
    (672
    )
    
    $
    (4,812
    )
    
    $
    7,480
    
    
    $
    
    
    
    $
    (38,870
    )
 F-41




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2004Wholly
    
    
    Non-WhollyOwned
    
    
    OwnedGuarantor
    
    
    GuarantorRestricted
    
    
    RestrictedParent
    
    
    Subsidiaries
    
    
    Subsidiaries(a)Operating activities:Net cash provided by operating
activities
    
    $
    8,330
    
    
    $
    11,375
    
    
    $
    Investing activities:Purchases of vessels and equipment
    
    
    (20,220
    )
    
    
    (62,706
    )
    
    
    Proceeds from disposals of assets
    
    
    
    
    
    
    1,011
    
    
    
    Investment in joint venture
    
    
    
    
    
    
    
    
    
    
    Acquisition of minority interest
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (20,220
    )
    
    
    (61,695
    )
    
    
    Financing activities:Payments on Amended Credit Facility
    
    
    (1,483
    )
    
    
    
    
    
    
    Proceeds from Amended Credit Facility
    
    
    20,000
    
    
    
    
    
    
    
    Payments of long-term debt
    
    
    (2,100
    )
    
    
    (5,756
    )
    
    
    Proceeds from long-term debt
    
    
    7,252
    
    
    
    62,599
    
    
    
    Payments of Title XI bonds
    
    
    (2,142
    )
    
    
    
    
    
    
    Payments of other deferred financing
costs
    
    
    (661
    )
    
    
    (570
    )
    
    
    Payments of deferred financing costs
under
2003 Senior Notes and Amended Credit
Facility
    
    
    (285
    )
    
    
    
    
    
    
    Payments of obligations under
capital leases
    
    
    (1,039
    )
    
    
    (2,452
    )
    
    
    Proceeds from exercise of stock options
    
    
    396
    
    
    
    
    
    
    
    Proceeds from exercise of warrants
    
    
    
    
    
    
    
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    19,938
    
    
    
    53,821
    
    
    
    Change in cash and cash equivalents
    
    
    8,048
    
    
    
    3,501
    
    
    
    Cash and cash equivalents at beginning of
period
    
    $
    217
    
    
    $
    1,482
    
    
    $
    Cash and cash equivalents at end of
period
    
    $
    8,265
    
    
    $
    4,983
    
    
    $
    
   (a)  In December 2004, the Company purchased the minority interest in a
partnership that owns the Seabulk America (see Note 6). Subsequent to the acquisition, all
Guarantor Restricted Subsidiaries are wholly-owned subsidiaries of the Company. F-42




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2004Non-
    
    
    Non-Guarantor
    
    
    GuarantorRestricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activities:Net cash provided by operating activities
    
    $
    26,044
    
    
    $
    13,396
    
    
    $
    
    
    
    $
    59,145Investing activities:Purchases of vessels and equipment
    
    
    (29,779
    )
    
    
    (35
    )
    
    
    
    
    
    
    (112,740
    )Proceeds from disposal of assets
    
    
    5,352
    
    
    
    
    
    
    
    
    
    
    
    6,363Investment in joint venture
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    (300
    )Acquisition of minority interest
    
    
    
    
    
    
    (2,410
    )
    
    
    
    
    
    
    (2,410
    )Net cash used in investing activities
    
    
    (24,727
    )
    
    
    (2,445
    )
    
    
    
    
    
    
    (109,087
    )Financing activities:Payments on Amended Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,483
    )Proceeds from Amended Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000Payments of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,856
    )Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,851Payments of Title XI bonds
    
    
    
    
    
    
    (5,006
    )
    
    
    
    
    
    
    (7,148
    )Payments of other deferred financing
costs
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    (1,269
    )Payments of deferred financing costs
under 2003 Senior Notes and Amended Credit
Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (285
    )Payments of obligations under capital
leases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,491
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396Proceeds from exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase in restricted cash
    
    
    (1,278
    )
    
    
    (5,945
    )
    
    
    
    
    
    
    (7,223
    )Net cash provided by (used in)
financing activities
    
    
    (1,316
    )
    
    
    (10,951
    )
    
    
    
    
    
    
    61,492Change in cash and cash equivalents
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    11,550Cash and cash equivalents at beginning of
period
    
    $
    5,700
    
    
    $
    
    
    
    $
    
    
    
    $
    7,399Cash and cash equivalents at end of
period
    
    $
    5,701
    
    
    $
    
    
    
    $
    
    
    
    $
    18,949
 F-43




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2003Wholly
    
    
    Non-WhollyOwned
    
    
    OwnedGuarantor
    
    
    GuarantorRestricted
    
    
    RestrictedParent
    
    
    Subsidiaries
    
    
    SubsidiariesOperating activities:Net cash provided by (used in) operating
activities
    
    $
    (9,958
    )
    
    $
    12,850
    
    
    $
    1,028Investing activities:Purchases of vessels and equipment
    
    
    (1,388
    )
    
    
    (1,314
    )
    
    
    (11
    )Proceeds from disposals of assets
    
    
    
    
    
    
    4,380
    
    
    
    Investment in joint venture
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in)
investment activities
    
    
    (1,388
    )
    
    
    3,066
    
    
    
    (11
    )Financing activities:Payments of prior credit facility
    
    
    (148,179
    )
    
    
    
    
    
    
    Proceeds from 2003 Senior Notes
    
    
    150,000
    
    
    
    
    
    
    
    Payments of long-term debt
    
    
    (5,436
    )
    
    
    (1,972
    )
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    6,525
    
    
    
    Payment of other deferred financing costs
    
    
    
    
    
    
    (106
    )
    
    
    Payments of Title XI bonds
    
    
    (2,150
    )
    
    
    (549
    )
    
    
    Retirement of Title XI bonds
    
    
    
    
    
    
    (11,181
    )
    
    
    Payment of deferred financing costs
under prior credit facility
    
    
    (88
    )
    
    
    
    
    
    
    Payments of deferred financing costs
under
2003 Senior Notes and Amended Credit
Facility
    
    
    (5,458
    )
    
    
    
    
    
    
    Net proceeds from sale leaseback
    
    
    13,274
    
    
    
    
    
    
    
    Payments of obligations under capital
leases
    
    
    (828
    )
    
    
    (8,594
    )
    
    
    Proceeds from exercise of stock options
    
    
    307
    
    
    
    
    
    
    
    Proceeds from exercise of warrants
    
    
    2
    
    
    
    
    
    
    
    Increase in restricted cash
    
    
    (2,197
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing
activities
    
    
    (753
    )
    
    
    (15,877
    )
    
    
    Change in cash and cash equivalents
    
    
    (12,099
    )
    
    
    39
    
    
    
    1,017Cash and cash equivalents at beginning of
period
    
    $
    12,316
    
    
    $
    413
    
    
    $
    13Cash and cash equivalents at end of
period
    
    $
    217
    
    
    $
    452
    
    
    $
    1,030
 F-44




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2003Non-
    
    
    Non-Guarantor
    
    
    GuarantorRestricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activities:Net cash provided by (used in) operating
activities
    
    $
    22,216
    
    
    $
    12,187
    
    
    $
    
    
    
    $
    38,323Investing activities:Purchases of vessels and equipment
    
    
    (27,798
    )
    
    
    (172
    )
    
    
    
    
    
    
    (30,683
    )Proceeds from disposals of assets
    
    
    5,045
    
    
    
    
    
    
    
    
    
    
    
    9,425Investment in joint venture
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    (400
    )Net cash provided by (used in) investing
activities
    
    
    (23,153
    )
    
    
    (172
    )
    
    
    
    
    
    
    (21,658
    )Financing activities:Payments of prior credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (148,179
    )Proceeds from 2003 Senior Notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000Payments of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,408
    )Proceeds from long-term debt
    
    
    2,097
    
    
    
    
    
    
    
    
    
    
    
    8,622Payments of other deferred financing costs
    
    
    (120
    )
    
    
    
    
    
    
    
    
    
    
    (226
    )Payments of Title XI bonds
    
    
    
    
    
    
    (4,679
    )
    
    
    
    
    
    
    (7,378
    )Retirement of Title XI bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,181
    )Payments of deferred financing costs under
prior credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )Payments of deferred financing costs under
2003 Senior Notes and Amended Credit
Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,458
    )Net proceeds from sale leaseback
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,274Payments of obligations under capital leases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,422
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307Proceeds from exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Increase in restricted cash
    
    
    (142
    )
    
    
    (7,336
    )
    
    
    
    
    
    
    (9,675
    )Net cash provided by (used in) financing
activities
    
    
    1,835
    
    
    
    (12,015
    )
    
    
    
    
    
    
    (26,810
    )Change in cash and cash
equivalents
    
    
    898
    
    
    
    
    
    
    
    
    
    
    
    (10,145
    )Cash and cash equivalents at beginning of
period
    
    $
    4,802
    
    
    $
    
    
    
    $
    
    
    
    $
    17,544Cash and cash equivalents at end of period
    
    $
    5,700
    
    
    $
    
    
    
    $
    
    
    
    $
    7,399
 F-45




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2002Wholly
    
    
    Non-WhollyOwned
    
    
    OwnedGuarantor
    
    
    GuarantorRestricted
    
    
    RestrictedParent
    
    
    Subsidiaries
    
    
    SubsidiariesOperating activities:Net cash provided by (used in) operating
activities
    
    $
    23,811
    
    
    $
    (2,144
    )
    
    $
    248Investing activities:Purchases of vessels and equipment
    
    
    (315
    )
    
    
    (2,837
    )
    
    
    (249
    )Proceeds from disposals of assets
    
    
    252
    
    
    
    10,049
    
    
    
    Net cash provided by (used in) investing
activities
    
    
    (63
    )
    
    
    7,212
    
    
    
    (249
    )Financing activities:Net payments of revolving credit facility
    
    
    (9,000
    )
    
    
    
    
    
    
    Payments of prior credit facility
    
    
    (125
    )
    
    
    
    
    
    
    Proceeds from prior credit facility
    
    
    178,800
    
    
    
    
    
    
    
    Payments of prior Senior Notes
    
    
    (101,499
    )
    
    
    
    
    
    
    Payments of long-term debt
    
    
    (164,524
    )
    
    
    (1,293
    )
    
    
    Proceeds of Private Placement, net of
issuance costs
    
    
    90,901
    
    
    
    
    
    
    
    Payments of Title XI bonds
    
    
    (2,150
    )
    
    
    (646
    )
    
    
    Payments of deferred financing costs under
prior credit facility
    
    
    (4,128
    )
    
    
    
    
    
    
    Payments of obligations under capital
leases
    
    
    
    
    
    
    (2,986
    )
    
    
    Proceeds from exercise of warrants
    
    
    1
    
    
    
    
    
    
    
    Proceeds from exercise of stock options
    
    
    42
    
    
    
    
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (11,682
    )
    
    
    (4,925
    )
    
    
    Change in cash and cash
equivalents
    
    
    12,066
    
    
    
    143
    
    
    
    (1
    )Cash and cash equivalents at beginning of
period
    
    $
    250
    
    
    $
    270
    
    
    $
    14Cash and cash equivalents at end of
period
    
    $
    12,316
    
    
    $
    413
    
    
    $
    13
 F-46




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows(in thousands)Year Ended December 31, 2002Non-
    
    
    Non-Guarantor
    
    
    GuarantorRestricted
    
    
    Unrestricted
    
    
    
    
    
    
    ConsolidatedSubsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalOperating activities:Net cash provided by (used in) operating
activities
    
    $
    (1,108
    )
    
    $
    16,805
    
    
    $
    
    
    
    $
    37,612Investing activities:Purchases of vessels and equipment
    
    
    (352
    )
    
    
    
    
    
    
    
    
    
    
    (3,753
    )Proceeds from disposals of assets
    
    
    2,374
    
    
    
    
    
    
    
    
    
    
    
    12,675Net cash provided by (used in) investing
activities
    
    
    2,022
    
    
    
    
    
    
    
    
    
    
    
    8,922Financing activities:Net payments of revolving credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,000
    )Payments of prior credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )Proceeds for prior credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,800Payments of prior Senior Notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,499
    )Payments of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (165,817
    )Proceeds of Private Placement, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,901Payments of Title XI bonds
    
    
    
    
    
    
    (4,370
    )
    
    
    
    
    
    
    (7,166
    )Payments of deferred financing costs
under prior credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,128
    )Payments of obligations under capital
leases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,986
    )Proceeds from exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42Increase in restricted cash
    
    
    
    
    
    
    (12,435
    )
    
    
    
    
    
    
    (12,435
    )Net cash used in financing activities
    
    
    
    
    
    
    (16,805
    )
    
    
    
    
    
    
    (33,412
    )Change in cash and cash equivalents
    
    
    914
    
    
    
    
    
    
    
    
    
    
    
    13,122Cash and cash equivalents at beginning of
period
    
    $
    3,888
    
    
    $
    
    
    
    $
    
    
    
    $
    4,422Cash and cash equivalents at end of
period
    
    $
    4,802
    
    
    $
    
    
    
    $
    
    
    
    $
    17,544
 F-47