##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31,
2007
 o
    
    Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 Commission File Number: 0-28316
 Trico Marine Services, Inc.
  Delaware
    
    72-1252405(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)3200 Southwest Freeway, Suite 2950,Houston, Texas
    
    77027(Address of principal executive offices)
    
    (Zip code)
 Registrants telephone number, including area code: (713) 780-9926
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01
    
    NASDAQ Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
None.
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  þ o
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TRICO MARINE SERVICES, INC.
 ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2007
 TABLE OF CONTENTS
 PagePART IItems 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    8Item 1B.
    
    Unresolved Staff Comments
    
    
    16Item 2.
    
    Properties
    
    
    16Item 3.
    
    Legal Proceedings
    
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    17PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    18Item 6.
    
    Selected Financial Data
    
    
    20Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 8.
    
    Financial Statements and Supplementary Data
    
    
    34Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    67Item 9A.
    
    Controls and Procedures
    
    
    67Item 9B.
    
    Other Information
    
    
    68PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    68Item 11.
    
    Executive Compensation
    
    
    68Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    68Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    68Item 14.
    
    Principal Accountant Fees and Services
    
    
    68PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    69EXHIBIT INDEX
    

    
    
    
    E-1Schedule of Director Compensation Arrangements(1)Description of Amendment to Amended and Restated Employment Agreement of Rishi A VarmaChange of Control Letter AgreementSubsidiaries of the Company(1)Consents of Experts and CounselCertification of CEO Pursuant to Rule 13A-14(A) and Rule 15D-14(A)Certification of CFO Pursuant to Rule 13A-14(A) and Rule 15D-14(A)Certification of CEO & CFO Pursuant to Section 906
  i




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FORWARD-LOOKING STATEMENTS
  
    
    our objectives, business plans or strategies, and projected or anticipated benefits or
other consequences of such plans or strategies;
    
    projected or anticipated benefits from acquisitions;
    
    the results, timing, outcome or effect of pending or potential litigation and our
intentions or expectations with respect thereto and the availability of insurance coverage
in connection therewith;
    
    our ability to repatriate cash from foreign operations if and when needed; and
    
    projections involving revenues, operating results or cash provided from operations, or
our anticipated capital expenditures or other capital projects.
   1




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PART I
 
 Item 1. Business
        www.tricomarine.com
 2




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Growth Strategy
  
    
    Expand our presence in the subsea services markets.We seek to partner with companies
providing subsea services by offering sophisticated vessels that serve as platforms for
subsea work. We expect that the resulting charter contracts will generally produce higher
margins and will be longer in duration than those in our traditional towing and supply
market. The acquisition of Active Subsea is expected to position us to be one of the
largest new subsea vessel operators in the world. We believe the subsea market is growing
at a faster rate and will provide a higher rate of return on new vessel construction than
our traditional towing and supply market.
    
    Continue to upgrade our fleet.Our upgrade program aims to improve our fleets
capabilities and reduce its average age by focusing on more sophisticated next-generation
vessels with broad customer applicability which can be deployed worldwide. Our upgrade
program has a specific emphasis on vessels capable of supporting a variety of subsea work.
We intend to continue to increase the number of vessels we have working in the subsea
market by:
 
    
    purchasing vessels from subsea service companies for cash in return for long-term contracts;
    
    constructing purpose-specific vessels for customers under long-term contracts;
    
    acquiring companies that own these vessels or have favorable contracts to build such vessels; and
    
    Converting certain platform supply vessels that can be readily upgraded
when current charter contracts expire, through the addition of cranes, moon pools,
helidecks and accommodation units to make them more suitable for subsea and/or
seismic activities.
 
    
    Continue to focus on international markets.We will continue to capitalize on our
experience, personnel and fleet to expand our presence in emerging markets, while
leveraging the strengths of our global partners. Our goal is to continue to efficiently
deploy our vessels into profitable operations, potentially through the use of joint
ventures, and with an emphasis on prudent mobilizations from the Gulf of Mexico to regions
that have stronger long-term growth fundamentals, more favorable contracting terms and
lower operating cost structures. Consistent with this strategy, we have reduced the number
of our vessels in the Gulf of Mexico by more than 50% since 2004.
    
    Leverage our global geographic presence to exploit repositioning opportunities. By
leveraging the expertise and resources of our global operations, we seek to identify and
exploit opportunities to reposition vessels that are underutilized or inefficiently
utilized. By moving assets among geographic regions or utilizing vessels in alternative
service modes, we believe we can increase profitability.
    
    Maintain a conservative financial profile.We use a centralized and disciplined approach
to pricing to achieve a balance of spot exposure and term contracts. Our expansion into the
subsea market is intended to have a stabilizing influence on our cash flows, resulting from
the longer-term contracts more prevalent in that market sector as compared to our
traditional towing and supply business. We also intend to maintain our conservative capital
structure, which we believe is a prudent financial strategy in our highly cyclical
industry.
 Our Fleet
  Multi-Purpose Service Vessels.
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##### Table of Contents



Subsea Platform Supply Vessels.
 Platform Supply Vessels.
 Anchor Handling, Towing and Supply Vessels.
 Supply Vessels.
 Crew Boats.
 Line Handling Vessel.
  Number ofType of Vessel
    
    Vessels
    
    Length
    
    HorsepowerExisting Fleet:MPSVs
    
    
    2
    
    
    
    280 304
    
    
    
    9,60010,800SPSVs
    
    
    3
    
    
    
    200 220
    
    
    
    3,000  5,724PSVs
    
    
    7
    
    
    
    190 280
    
    
    
    4,05010,800AHTSs
    
    
    6
    
    
    
    212 261
    
    
    
    11,14015,612Supply Vessels
    
    
    39
    
    
    
    166 230
    
    
    
    2,000  6,140Crew/Line
Handling Vessels
    
    
    7
    
    
    
    93 155
    
    
    
    1,20010,600On Order:MPSVs
    
    
    8
    
    
    
    241
    
    
    
    6,222PSVs
    
    
    3
    
    
    
    210 246
    
    
    
    4,200  6,500
  Vessel Maintenance.
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Dispositions of assets
 Our Market Areas
   North Sea.
 West Africa.
 Gulf of Mexico.
 5




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Mexico.
 Southeast Asia.
 Brazil.
  Customers and Charter Terms
     Without OptionsYear Ending
    
    Year EndingDecember 31, 2008
    
    December 31, 2009% of Total
    
    
    
    
    
    % of TotalDays
    
    Average
    
    Days
    
    AverageType of Vessel
    
    available
    
    day rate
    
    available
    
    day rateMPSVs (3 vessels) (1)PSVs (10 vessels)
    
    
    65
    %
    
    $
    21,535
    
    
    
    21
    %
    
    $
    21,193AHTSs (6 vessels)
    
    
    36
    %
    
    $
    17,760
    (2)
    
    
    31
    %
    
    $
    15,813
    (2)Supply Boats (40 active)
    
    
    35
    %
    
    $
    6,336
    (3)
    
    
    24
    %
    
    $
    5,586
    (3)Crew/Line Handling Boats (6 active)
    
    
    13
    %
    
    $
    6,933
    
    
    
    0
    %
    
    $
    N/A
 6




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With OptionsYear Ending
    
    Year EndingDecember 31, 2008
    
    December 31, 2009% of Total
    
    
    
    
    
    % of TotalDays
    
    Average
    
    Days
    
    AverageType of Vessel
    
    available
    
    day rate
    
    available
    
    day rateMPSVs (3 vessels) (1)PSVs (10 vessels)
    
    
    73
    %
    
    $
    20,664
    
    
    
    51
    %
    
    $
    23,493AHTSs (6 vessels)
    
    
    36
    %
    
    $
    17,760
    (2)
    
    
    33
    %
    
    $
    15,391
    (2)Supply Boats (40 active)
    
    
    36
    %
    
    $
    6,351
    (3)
    
    
    24
    %
    
    $
    5,586
    (3)Crew/Line Handling Boats (6 active)
    
    
    20
    %
    
    $
    7,158
    
    
    
    9
    %
    
    $
    7,535
 
 (1)
    
    We have executed long-term contracts (two bareboat and one time charter) for three of
the MPSVs that are currently under construction and are expected to be delivered in
the second and third quarters of 2008, subject to potential delays that may occur.(2)
    
    The day rate for the AHTS class includes one vessel operating under a bareboat charter.(3)
    
    Effective May 2007, five of our Gulf class supply vessels entered into bareboat
contracts which decreased average supply vessel day rates. Excluding the five vessels
under bareboat agreements, our average day rates for vessels without options would be
$9,597 and $10,945 for the years ended December 31, 2008 and 2009 respectively; our
average day rates for vessels with options would be $9,437 and $10,945 for the years
ended December 31, 2008 and 2009 respectively.   Competition
   Environmental and Government Regulation
   7




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Insurance
  Employees
    
 Item 1A. Risk Factors
 All phases of our operations are subject to a number of uncertainties, risks and other influences,
many of which are beyond our ability to control or predict. Any one of such influences, or a
combination, could materially affect the results of our operations and the accuracy of
forward-looking statements made by us. Some important risk factors that could cause actual results
to differ materially from the anticipated results or other expectations expressed in our
forward-looking statements includes the following:
 Risks Relating to our Business
 The failure to successfully complete construction or conversion of our vessels on schedule, on
budget, or at all, or to successfully utilize such vessels and the other vessels in our fleet at
profitable levels could adversely affect our financial condition and results of operations.
  8




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Our fleet includes many older vessels that may require increased levels of maintenance and capital
expenditures to be maintained in good operating condition, are less efficient than newer vessels,
and may be subject to a higher likelihood of mechanical failure, inability to economically return
to service or requirement to be scrapped. If we are unable to continue to upgrade our fleet
successfully, our financial condition and results of operations could be materially adversely
affected.
  Our inability to recruit, retain and train crew members may affect our ability to offer services,
reduce operational efficiency and increase our labor rates.
  The forecasted demand for subsea services may not materialize.
  9




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Our operations are subject to operating hazards and unforeseen interruptions for which we may not
be adequately insured.
  The cost and availability of dry-dock services may impede our ability to return vessels to the
market in a timely manner.
  Increases in size, quality and quantity of the offshore vessel fleet in areas where we operate
could increase competition for charters and lower day rates and/or utilization, which would
adversely affect our revenues and profitability.
  Operating internationally subjects us to significant risks inherent in operating in foreign
countries.
  
    
    Government instability, which can cause investment in capital projects by our potential
customers to be withdrawn or delayed, reducing or eliminating the viability of some markets
for our services;
    
    Potential vessel seizure or confiscation, or the expropriation, nationalization or
detention of assets;
    
    Repatriating foreign currency received in excess of local currency requirements and
converting it into dollars or other fungible currency;
    
    Exchange rate fluctuations, which can reduce the purchasing power of local currencies
and cause our costs to exceed our budget, reducing our operating margin in the affected
country;
    
    Lack of ability to collect amounts owed;
    
    Civil uprisings, riots, and war, which can make it unsafe to continue operations,
adversely affect both budgets and schedules, and expose us to losses;
 10




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
    
    Availability of suitable personnel and equipment, which can be affected by government
policy, or changes in policy, which limit the importation of qualified crew members or
specialized equipment in areas where local resources are insufficient;
    
    Decrees, laws, regulations, interpretations and court decisions under legal systems,
which are not always fully developed and which may be retroactively applied and cause us to
incur unanticipated and/or unrecoverable costs as well as delays which may result in real
or opportunity costs; and
    
    Terrorist attacks, including kidnappings of our crew members or onshore personnel.
  Our business plan involves establishing joint ventures with partners in targeted foreign markets.
As a U.S. corporation, we are subject to the Foreign Corrupt Practices Act (FCPA) and a
determination that we violated this act, including actions taken by our foreign agents or joint
venture partners, may adversely affect our business and operations.
  Our marine operations are seasonal and depend, in part, on weather conditions. As a result, our
results of operations will vary throughout the year.
  Our operations are subject to federal, state, local and other laws and regulations that could
require us to make substantial expenditures.
   11




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Our U.S. employees are covered by federal laws that may subject us to job-related claims in
addition to those provided by state laws.
  The loss of a key customer could have an adverse impact on our financial results.
  The early termination of contracts on our vessels could have an adverse effect on our operations.
  We are exposed to the credit risks of our key customers and certain other third parties, and
nonpayment by our customers could adversely affect our financial condition or results of
operations.
  Unionization efforts could increase our costs, limit our flexibility or increase the risk of a work
stoppage.
  The removal or reduction of the reimbursement of labor costs by the Norwegian government may
adversely affect our costs to operate our vessels in the North Sea.
  Certain management decisions needed to successfully operate EMSL, our 49% partnership, are subject
to the majority owners approval. The inability of our management representatives to reach a
consensus with the majority owner may negatively affect our results of operations.
  12




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Risks Related to Our Industry
 Changes in the level of exploration and production expenditures, in oil and gas prices or industry
perceptions about future oil and gas prices could materially decrease our cash flows and reduce our
ability to meet our financial obligations.
   If our competitors are able to supply services to our customers at a lower price, then we may have
to reduce our day rates, which would reduce our revenues.
  
    
    price, service, safety record and reputation of vessel operators and crews;
    
    fuel efficiency of vessels; and
    
    quality and availability of vessels of the type, capability and size required by the
customer.
  Risks Relating to our Capital Structure
 Our business is highly cyclical in nature due to our dependency on the levels of offshore oil and
gas drilling activity. If we are unable to stabilize our cash flow during depressed markets, we may
not be able to meet our obligations under our current or any future debt obligations, and we may
not be able to secure financing or have sufficient capital to support our operations, which may
materially adversely affect our financial condition or results of operations.
  13




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We may not be able to repatriate funds from Norway to the U.S., which could negatively impact our
operational flexibility.
  
    
    the availability of cash at our Norwegian subsidiaries, or availability under our NOK
Revolver of NOK 366.0 million ($67.4 million) at December 31, 2007;
    
    our ability to comply with the funded debt to operating income plus depreciation and
amortization covenant ratios in our Norwegian subsidiaries NOK Revolver following
completion of the repatriation; and
    
    our Norwegian subsidiaries having sufficient distributable equity to support the
repatriation.
  Our ability to utilize certain net operating loss carryforwards or foreign tax credits may be
limited by certain events which could have an adverse impact on our financial condition.
  We may face material tax consequences or assessments in countries in which we operate. If we are
required to pay material tax assessments, our financial condition may be materially adversely
affected.
   Our business segments have been capitalized and are financed on a stand-alone basis, which may
hinder efficient utilization of available financial resources.
  14




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Financial statements for periods subsequent to our emergence from bankruptcy will not be comparable
to those of prior periods, which will make it difficult for stockholders to assess our performance
in relation to prior periods.
  
    
    the reorganization of our assets and liabilities as of March 15, 2005, the effective
date of our plan of reorganization; and
    
    the application of the provisions of Statement of Position 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code, which is commonly referred to as
fresh-start accounting.
  Currency fluctuations could adversely affect our financial condition and results of operations.
  The terms of our existing registration rights agreement with certain of our common stockholders may
restrict the timing of any public offering or other distribution of shares of our common stock and
may depress the market price of our stock.
  Risks Relating to the Ownership of our Common Stock
 Our charter documents include provisions limiting the rights of foreign owners of our capital
stock.
  15




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Our shareholder rights plan, charter and bylaws may discourage unsolicited takeover proposals and
could prevent shareholders from realizing a premium on their common stock.
  We may issue preferred stock whose terms could adversely affect the voting power or value of our
common stock.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   
 Item 3. Legal Proceedings
  16




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Item 4. Submission of Matters to a Vote of Security Holders
  17




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PART II
 
 Item 5. Market for Registrants Common Stock, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Common Stock Market Prices and Dividends
  Sales Price Per ShareHigh
    
    Low2007First quarter
    
    $
    39.23
    
    
    $
    29.56Second quarter
    
    
    43.41
    
    
    
    37.02Third quarter
    
    
    42.37
    
    
    
    29.04Fourth quarter
    
    
    40.34
    
    
    
    29.652006First quarter
    
    $
    34.15
    
    
    $
    25.25Second quarter
    
    
    36.26
    
    
    
    28.16Third quarter
    
    
    38.94
    
    
    
    31.80Fourth quarter
    
    
    40.15
    
    
    
    31.10
   Recent Sales of Unregistered Securities
  Issuer Repurchases of Equity Securities
    18




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Equity Compensation Plan Information
   Number of
    
    
    
    
    
    Number of securities remainingsecurities to be
    
    Weighted-average
    
    available for future issuanceissued upon exercise
    
    exercise price of
    
    under equity compensationof outstanding options,
    
    outstanding options,
    
    plans (excluding securitiesPlan Category
    
    warrants and rights
    
    warrants and rights
    
    reflected in column(a))(a)
    
    (b)
    
    (c)Equity compensation plans approved by security holders
    
    
    76,400
    
    
    $
    38.43
    
    
    
    645,725Equity compensation plans not approved by security
holders
    
    
    151,317
    (1)
    
    $
    14.54
    
    
    
    Total
    
    
    227,717
    
    
    
    
    
    
    
    645,725
 
 (1)
    
    In connection with the prepackaged plan of reorganization, the Trico Marine Services,
Inc. 2004 Stock Incentive Plan (the 2004 Stock Incentive Plan) was submitted to the Bankruptcy
Court for approval. On January 19, 2005, the Bankruptcy Court issued an order confirming the
plan of reorganization, including the 2004 Stock Incentive Plan. See Note 12 to our consolidated
financial statements included in Item 8 of this Annual Report on Form 10-K for a description of
our 2004 Stock Incentive Plan. The securities remaining for issuance may also be issued as
restricted stock or other stock-based awards (which awards are valued in whole or in part on
the value of the shares of common stock). 19




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Item 6. Selected Financial Data
 Successor Company
    
    Predecessor Company(1)Period From
    
    Period FromMarch 15,
    
    January 1,2005
    
    2005Years Ended
    
    through
    
    through
    
    Years EndedDecember 31,
    
    December 31,
    
    March 14,
    
    December 31,2007
    
    2006
    
    2005
    
    2005
    
    2004
    
    2003(Dollars in thousands,
except per share amounts)Statement of Operations Data:Revenues
    
    $
    256,108
    
    
    $
    248,717
    
    
    $
    152,399
    
    
    $
    29,886
    
    
    $
    112,510
    
    
    $
    123,521Operating income (loss)
    
    
    66,630
    
    
    
    88,390
    
    
    
    41,816
    
    
    
    879
    
    
    
    (48,719
    )
    
    
    (135,501
    )Reorganization costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,659
    )
    
    
    (8,617
    )
    
    
    Fresh-start adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (219,008
    )
    
    
    
    
    
    
    Interest expense
    
    
    (3,258
    )
    
    
    (1,286
    )
    
    
    (6,430
    )
    
    
    (1,940
    )
    
    
    (33,405
    )(4)
    
    
    (30,159
    )Interest income
    
    
    14,132
    
    
    
    4,198
    
    
    
    615
    
    
    
    
    
    
    
    423
    
    
    
    323Net income (loss)
    
    
    62,931
    (6)
    
    
    58,724
    
    
    
    20,100
    
    
    
    (61,361
    )
    
    
    (95,952
    )(4)(5)
    
    
    (164,398
    )Adjusted EBITDA
    
    
    90,557
    
    
    
    112,336
    
    
    
    53,806
    
    
    
    9,648
    
    
    
    14,983
    
    
    
    26,814Earnings (loss) per common
share:Basic
    
    $
    4.32
    
    
    $
    4.01
    
    
    $
    1.78
    
    
    $
    (1.66
    )
    
    $
    (2.60
    )
    
    $
    (4.51
    )Diluted
    
    $
    4.16
    
    
    $
    3.86
    
    
    $
    1.74
    
    
    $
    (1.66
    )
    
    $
    (2.60
    )
    
    $
    (4.51
    )Balance Sheet Data:Working capital (deficit)
    
    $
    140,004
    
    
    $
    151,068
    (2)
    
    $
    46,259
    (2)
    
    $
    NA
    (3)
    
    $
    (26,660
    )(2)
    
    $
    (27,740
    )(2)Property and equipment, net
    
    
    473,614
    
    
    
    231,848
    
    
    
    225,646
    
    
    
    NA
    (3)
    
    
    459,211
    
    
    
    487,019Total assets
    
    
    681,744
    (7)
    
    
    435,322
    
    
    
    344,222
    
    
    
    NA
    (3)
    
    
    550,755
    
    
    
    585,191Debt, including current portion
    
    
    160,545
    
    
    
    9,863
    
    
    
    46,538
    
    
    
    NA
    (3)
    
    
    147,131
    
    
    
    380,166Liabilities subject to
compromise
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NA
    (3)
    
    
    275,179
    
    
    
    Stockholders equity
    
    $
    390,222
    
    
    $
    312,338
    
    
    $
    222,432
    
    
    $
    NA
    (3)
    
    $
    63,841
    
    
    $
    142,031Cash Flows Data:Cash flows from operations
    
    $
    112,476
    
    
    $
    101,731
    
    
    $
    27,174
    
    
    $
    9,168
    
    
    $
    (14,761
    )
    
    $
    (9,265
    )Cash flows from investing
activities
    
    
    (235,269
    )
    
    
    (23,227
    )
    
    
    4,292
    
    
    
    (650
    )
    
    
    (5,144
    )
    
    
    28,215Cash flows from financing
activities
    
    
    130,361
    
    
    
    (16,261
    )
    
    
    1,299
    
    
    
    (2,596
    )
    
    
    7,048
    
    
    
    (3,340
    )Effect of exchange rates on cash
    
    
    9,722
    
    
    
    712
    
    
    
    (701
    )
    
    
    62
    
    
    
    135
    
    
    
    117Net increase (decrease) in cash
    
    $
    17,290
    
    
    $
    62,955
    
    
    $
    32,064
    
    
    $
    5,984
    
    
    $
    (12,722
    )
    
    $
    15,727
 
 (1)
    
    We exited bankruptcy protection on March 15, 2005. In accordance with Statement of Position 90-7,
Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, we adopted fresh-start accounting as of
March 15, 2005. Fresh-start accounting is required
upon a substantive change in control and requires that the reporting entity allocate the reorganization
value to our assets and
liabilities in a manner similar to that which is required under Statement of Financial Accounting
Standards No. 141, Business
Combinations. Under the provisions of fresh-start accounting, a new entity has been deemed
created for financial reporting purposes.(2)
    
    Includes amounts outstanding under our Norwegian kroner (NOK) revolving credit facility (the NOK Revolver), which are classified as
current liabilities.(3)
    
    Not applicable due to fresh-start accounting, which was applied at an interim date that was not the end of a required reporting period.(4)
    
    Includes a charge of $2.8 million for accelerated amortization of debt discounts.(5)
    
    Includes a charge of $7.2 million for the accelerated amortization of deferred financing costs.(6)
    
    As more fully described in Note 9 to our Consolidated Financial Statements included herein in Item 8, a recent Norwegian tax legislation
provides for a tax exemption on certain profits earned after January 1, 2007.(7)
    
    Includes working capital and construction in progress of $247.6 million in connection with the acquisition of Active Subsea ASA in Norway. Non-GAAP Financial Measures
  20




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##### Table of Contents



Successor Company
    
    Predecessor CompanyPeriod From
    
    Period FromMarch 15, 2005
    
    January 1, 2005Years Ended
    
    Through
    
    Through
    
    Years EndedDecember 31,
    
    December 31,
    
    March 14,
    
    December 31,2007
    
    2006
    
    2005
    
    2005
    
    2004
    
    2003Net income (loss)
    
$
    62,931
    
    
$
    58,724
    
    
$
    20,100
    
    
$
    (61,361
    )
    
    $
    (95,952
    )
    
$
    (164,398
    )Depreciation and amortization (1)
    
    
    24,371
    
    
    
    24,998
    
    
    
    20,403
    
    
    
    8,758
    
    
    
    44,363
    
    
    
    44,167Amortization of non-cash
deferred revenues
    
    
    (910
    )
    
    
    (4,322
    )
    
    
    (10,137
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    3,258
    
    
    
    1,286
    
    
    
    6,430
    
    
    
    1,940
    
    
    
    33,405
    
    
    
    30,159Income tax expense (benefit)
    
    
    13,359
    
    
    
    33,723
    
    
    
    11,264
    
    
    
    1,047
    
    
    
    (3,068
    )
    
    
    (2,888
    )Stock-based compensation
    
    
    3,247
    
    
    
    2,024
    
    
    
    2,012
    
    
    
    9
    
    
    
    
    
    
    
    (Gain) loss on sale of assets
    
    
    (2,897
    )
    
    
    (1,334
    )
    
    
    (2,525
    )
    
    
    2
    
    
    
    30
    
    
    
    (1,045
    )Impairment on long-lived assets
    
    
    116
    
    
    
    2,580
    
    
    
    2,237
    
    
    
    
    
    
    
    19,309
    
    
    
    119,193Interest income
    
    
    (14,132
    )
    
    
    (4,198
    )
    
    
    (615
    )
    
    
    
    
    
    
    (423
    )
    
    
    (323
    )Other loss, net (2)
    
    
    3,646
    
    
    
    840
    
    
    
    4,637
    
    
    
    59,253
    
    
    
    17,319
    
    
    
    1,949Noncontrolling interest in loss
of consolidated subsidiary
    
    
    (2,432
    )
    
    
    (1,985
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA
    
$
    90,557
    
    
$
    112,336
    
    
$
    53,806
    
    
$
    9,648
    
    
$
    14,983
    
    
$
    26,814
  Successor Company
    
    Predecessor CompanyPeriod From
    
    Period FromMarch 15, 2005
    
    January 1, 2005Years Ended
    
    Through
    
    Through
    
    Years EndedDecember 31,
    
    December 31,
    
    March 14,
    
    December 31,2007
    
    2006
    
    2005
    
    2005
    
    2004
    
    2003Adjusted EBITDA
    
$
    90,557
    
    
$
    112,336
    
    
$
    53,806
    
    
$
    9,648
    
    
$
    14,983
    
    
$
    26,814Gain (loss) on sale of assets
    
    
    2,897
    
    
    
    1,334
    
    
    
    2,525
    
    
    
    (2
    )
    
    
    (30
    )
    
    
    1,045Stock-based compensation
    
    
    (3,247
    )
    
    
    (2,024
    )
    
    
    (2,012
    )
    
    
    (9
    )
    
    
    
    
    
    
    Impairment on long-lived assets
    
    
    (116
    )
    
    
    (2,580
    )
    
    
    (2,237
    )
    
    
    
    
    
    
    (19,309
    )
    
    
    (119,193
    )Depreciation and amortization,
net (1)
    
    
    (23,461
    )
    
    
    (20,676
    )
    
    
    (10,266
    )
    
    
    (8,758
    )
    
    
    (44,363
    )
    
    
    (44,167
    )Operating income (loss)
    
$
    66,630
    
    
$
    88,390
    
    
$
    41,816
    
    
$
    879
    
    
$
    (48,719
    )
    
$
    (135,501
    )
 
 (1)
    
    Depreciation and amortization includes amortization of marine inspection costs of $2.1
million, $11.4 million and $10.8 million for the period from January 1, 2005 through March
14, 2005 and the years ended December 31, 2004 and 2003, respectively.(2)
    
    Other loss, net includes (i) $4.0 million of loss on early retirement of debt and other
miscellaneous losses for the period from March 15, 2005 through December 31, 2005, (ii)
$59.2 million of net charges in connection with fresh-start accounting for the period
from January 1, 2005 through March 14, 2005 and (iii) $8.6 million and $7.8 million of
reorganization costs and amortization of deferred financing costs, respectively, for the
year ended December 31, 2004. 21




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
 Overview
      Key Focus for 2008 and Outlook
  
    
    increasing demand for our vessels in West Africa, Mexico, Brazil, Southeast Asia and
other emerging markets;
    
    the reliability of supply in major oil production nations such as the United States, the
Middle East and Nigeria; as affected by weather, geopolitical instability and other
threats;
    
    continued high demand for vessels due to increased activity in areas ancillary to
existing markets; and
    
    seasonal weather conditions in the North Sea and the Gulf of Mexico and their impact on
offshore development operations.
   22




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##### Table of Contents



2005 Reorganization and Fresh-Start Accounting Adjustments
 Financial Reporting by Entities in Reorganization Under the Bankruptcy Code Business Combinations
   Results of Operations
 Charter Hire Revenues and Direct Operating Expenses.
    23




---



##### Table of Contents



Years Ended December 31,2007
    
    2006
    
    2005Average Day Rates:PSV/AHTS (North Sea class)
    
    $
    27,024
    
    
    $
    20,455
    
    
    $
    16,300Supply Vessels (Gulf class)
    
    
    8,685
    
    
    
    11,071
    
    
    
    6,493Crew/line handling
    
    
    5,762
    
    
    
    4,785
    
    
    
    2,402Utilization:PSV/AHTS (North Sea class)
    
    
    90
    %
    
    
    94
    %
    
    
    92
    %Supply Vessels (Gulf class)
    
    
    75
    %
    
    
    66
    %
    
    
    60
    %Crew/line handling
    
    
    78
    %
    
    
    86
    %
    
    
    90
    %Average number of Vessels:PSV/AHTS (North Sea class)
    
    
    16.0
    
    
    
    16.0
    
    
    
    16.8Supply Vessels (Gulf class)
    
    
    41.1
    
    
    
    44.3
    
    
    
    47.6Crew/line handling
    
    
    7.2
    
    
    
    8.7
    
    
    
    16.4
 Revenues:
      24




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##### Table of Contents



Direct operating expenses:
   General and administrative expenses:
   Depreciation and amortization expense:
  Impairment on assets held for sale, net of recoveries:
  Gain on sales of assets:
  25




---



##### Table of Contents



Reorganization costs:
  Gain on debt discharge:
  Interest expense:
  Interest income:
  Other loss, net:
  Income tax expense:
   26




---



##### Table of Contents



Noncontrolling interest in loss of consolidated subsidiary:
  Liquidity and Capital Resources
  Description of Indebtedness  Senior Convertible Debentures
   27




---



##### Table of Contents



NOK Revolver.
  EMSL Credit Facility Agreement.
 New Credit Facilities.
 Our Capital Requirements
   28




---



##### Table of Contents



Cash Flows
 Operating Activities.
 Investing Activities.
  Financing Activities
  29




---



##### Table of Contents



Contractual Obligations
  Payments Due by PeriodLess than
    
    
    1-3
    
    
    4-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt obligations (1) (2)
    
    $
    160,174
    
    
    $
    3,258
    
    
    $
    3,774
    
    
    $
    1,258
    
    
    $
    151,884Interest on fixed rate debt (3)
    
    
    89,998
    
    
    
    4,965
    
    
    
    14,436
    
    
    
    4,658
    
    
    
    65,939Vessel construction obligations (4)
    
    
    199,309
    
    
    
    156,094
    
    
    
    43,215
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    10,389
    
    
    
    2,154
    
    
    
    5,114
    
    
    
    1,396
    
    
    
    1,725Foreign taxes payable (5)
    
    
    69,404
    
    
    
    4,627
    
    
    
    13,881
    
    
    
    9,254
    
    
    
    41,642Pension obligations
    
    
    4,118
    
    
    
    300
    
    
    
    1,022
    
    
    
    409
    
    
    
    2,387Total
    
    $
    533,392
    
    
    $
    171,398
    
    
    $
    81,442
    
    
    $
    16,975
    
    
    $
    263,577
 
 (1)
    
    Excludes fresh-start debt premium.(2)
    
    Includes the maturity of the $150.0 million of 3.0% Senior Convertible Debentures. The timing and amount of
payments that are set forth do not take into consideration any early redemption of obligations that may arise as a
result of conversion or repurchase. See Note 8 to the Consolidated Financial Statements included herein in Item 8.(3)
    
    Includes interest, payable semiannually, on the 3.0% $150.0 million Senior Convertible Debentures maturing in 2027.(4)
    
    At December 31, 2007, we had total construction commitments of $277.9 million for the construction of 11 vessels,
of which $78.6 million was paid as of December 31, 2007. Construction commitments are based on anticipated
delivery schedules which are subject to potential delays. The total purchase price for each vessel is subject to
certain adjustments based on the timing of delivery and the vessels specifications upon delivery, which is not
expected to materially alter the purchase price of the vessels.(5)
    
    As a result of recent changes in Norwegian tax laws, a portion of accumulated untaxed shipping profits, $46.2
million, will be payable in equal installments over the next 10 years. An additional liability of $23.2 million
can be met through qualifying environmental expenditures. Any remaining portion of the environmental part of the
liability not expended at the end of ten years would be payable to the Norwegian tax authorities at that time.    Our Critical Accounting Policies
   30




---



##### Table of Contents



Revenue recognition.
 Accounting for long-lived assets.
  Impairment of long-lived assets.
 Losses on insured claims.
 31




---



##### Table of Contents



Deferred tax valuation allowance.
  Uncertain tax positions.
 Vessel costs.
 Recent Accounting Standards
    32




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Sensitivity
  ApproximateExpected Maturity Date At December 31, 2007
    
    
    Fair Value atYear Ending December 31,
    
    
    December 31,2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    2007(Dollars in thousands)Fixed Rate Debt(1)
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    151,884
    
    
    $
    171,655Variable rate debt (2)
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Total debt
    
    $
    3,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    1,258
    
    
    $
    151,884
    
    
    $
    173,655
 
 (1)
    
    Includes (i) the 3.00% Senior Convertible Debentures,
bearing interest at 3.00%, interest payable semi-annually
and maturing in 2027 and (ii) the 6.11% Notes, bearing
interest at 6.11%, principal and interest due in 30
semi-annual installments, maturing in 2014.(2)
    
    EMSL Credit Facility Agreement, bearing interest at LIBOR
plus a margin of 0.08%, principal and interest due on
February 28, 2008, collateralized by one marine vessel 11%.  33




---



##### Table of Contents



Foreign Currency Exchange Rate Sensitivity
    
 Item 8. Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    35Predecessor Company  Report of Independent Registered Public Accounting Firm
    
    37Consolidated Balance SheetsSuccessor Company  as of December 31, 2007 and as of December 31, 2006
    
    38Consolidated Statements of OperationsSuccessor Company  Years Ended December 31, 2007 and 2006 and for the Period from March 15, 2005 through December 31, 2005
    
    39Predecessor Company  for the Period from January 1, 2005 though March 14, 2005
    
    39Consolidated Statements of Cash FlowsSuccessor Company  Years Ended December 31, 2007 and 2006 and for the Period from
March 15, 2005 through December 31, 2005
    
    40Predecessor Company  for the Period from January 1, 2005 though March 14, 2005
    
    40Consolidated Statements of Stockholders EquitySuccessor Company  Years Ended December 31, 2007 and 2006 and for the Period from
March 15, 2005 through December 31, 2005
    
    41Predecessor Company  for the Period from January 1, 2005 though March 14, 2005
    
    41Notes to Consolidated Financial Statements
    
    42
 34




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control
 Integrated Framework
    35




---



##### Table of Contents



/s/ PricewaterhouseCoopers LLPNew Orleans, LouisianaFebruary 25, 2008 36




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
   /s/ PricewaterhouseCoopers LLPNew Orleans, LouisianaFebruary 24, 2006 37




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##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 As of December 31,2007
    
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    131,463
    

    
    $
    114,173Available-for-sale securities
    
    
    
    

    
    
    2,475Restricted cash
    
    
    4,747
    

    
    
    716Accounts receivable, net
    
    
    47,253
    

    
    
    58,787Prepaid expenses and other current assets
    
    
    5,023
    

    
    
    4,036Assets held for sale
    
    
    3,786
    

    
    
    3,048Total current assets
    
    
    192,272
    

    
    
    183,235Property and equipment:Land and buildings
    
    
    117
    

    
    
    1,995Marine vessels
    
    
    285,656
    

    
    
    256,125Construction-in-progress
    
    
    255,749
    

    
    
    15,876Transportation and other
    
    
    3,574
    

    
    
    2,328545,096
    

    
    
    276,324Less accumulated depreciation and amortization
    
    
    (71,482
    )

    
    
    (44,476
    )Net property and equipment
    
    
    473,614
    

    
    
    231,848Restricted cash  noncurrent
    
    
    3,813
    

    
    
    11,842Other assets
    
    
    12,045
    

    
    
    8,397Total assets
    
    $
    681,744
    

    
    $
    435,322LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term and current maturities of debt
    
    $
    3,258
    

    
    $
    1,258Accounts payable
    
    
    15,480
    

    
    
    11,055Accrued expenses
    
    
    22,896
    

    
    
    14,590Accrued insurance reserve
    
    
    2,508
    

    
    
    3,062Accrued interest
    
    
    2,152
    

    
    
    110Foreign taxes payable
    
    
    4,627
    

    
    
    Income taxes payable
    
    
    1,347
    

    
    
    2,092Total current liabilities
    
    
    52,268
    

    
    
    32,167Long-term debt, including premium
    
    
    157,287
    

    
    
    8,605Foreign taxes payable
    
    
    64,777
    

    
    
    Deferred income taxes
    
    
    
    

    
    
    63,327Deferred revenues on unfavorable contracts
    
    
    599
    

    
    
    1,376Other liabilities
    
    
    3,713
    

    
    
    2,199Total liabilities
    
    
    278,644
    

    
    
    107,674Noncontrolling interest
    
    
    12,878
    

    
    
    15,310Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value, 5,000,000 shares
authorized and no shares issued at December 31, 2007 and
December 31, 2006
    
    
    
    

    
    
    Common stock, $.01 par value, 25,000,000 shares
authorized and 15,013,076 and 14,816,969 shares issued
outstanding at December 31, 2007 and December 31, 2006,
respectively
    
    
    150
    

    
    
    148Warrants  Series A
    
    
    1,645
    

    
    
    1,646Warrants  Series B
    
    
    632
    

    
    
    634Additional paid-in capital
    
    
    245,134
    

    
    
    231,218Retained earnings
    
    
    141,611
    

    
    
    78,824Accumulated other comprehensive income (loss), net of tax
    
    
    18,654
    

    
    
    (132
    )Treasury stock, at cost
    
    
    (17,604
    )

    
    
    Total stockholders equity
    
    
    390,222
    

    
    
    312,338Total liabilities and stockholders equity
    
    $
    681,744
    

    
    $
    435,322
  38




---



##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 Successor Company
    
    
    Predecessor CompanyPeriod from
    

    
    
    Period fromMarch 15, 2005
    
    
    
    January 1, 2005Year Ended December 31,
    
    
    through
    
    
    
    Through2007
    
    
    2006
    
    
    December 31, 2005

    
    
    
    March 14, 2005Revenues:Charter hire
    
    $
    250,239
    
    
    $
    243,424
    
    
    $

    141,953
    
    
    
    $
    29,869Amortization of non-cash deferred
revenues
    
    
    910
    
    
    
    4,322
    
    
    

    10,137
    
    
    
    
    Other vessel income
    
    
    4,959
    
    
    
    971
    
    
    

    309
    
    
    
    
    17Total revenues
    
    
    256,108
    
    
    
    248,717
    
    
    

    152,399
    
    
    
    
    29,886Operating expenses:Direct vessel operating expenses
    
    
    127,128
    
    
    
    106,981
    
    
    

    69,081
    
    
    
    
    16,217General and administrative
    
    
    40,760
    
    
    
    27,102
    
    
    

    21,387
    
    
    
    
    4,030Amortization of marine inspection costs
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    2,055Depreciation and amortization
    
    
    24,371
    
    
    
    24,998
    
    
    

    20,403
    
    
    
    
    6,703Impairment on assets held for sale,
net of insurance recoveries
    
    
    116
    
    
    
    2,580
    
    
    

    2,237
    
    
    
    
    (Gain) loss on sales of assets
    
    
    (2,897
    )
    
    
    (1,334
    )
    
    

    (2,525
    )
    
    
    
    2Total operating expenses
    
    
    189,478
    
    
    
    160,327
    
    
    

    110,583
    
    
    
    
    29,007Operating income
    
    
    66,630
    
    
    
    88,390
    
    
    

    41,816
    
    
    
    
    879Reorganization costs
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    (6,659
    )Gain on debt discharge
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    166,459Fresh-start adjustments
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    (219,008
    )Loss on early retirement of debt
    
    
    
    
    
    
    
    
    
    

    (3,950
    )
    
    
    
    Interest income
    
    
    14,132
    
    
    
    4,198
    
    
    

    615
    
    
    
    
    Interest expense
    
    
    (3,258
    )
    
    
    (1,286
    )
    
    

    (6,430
    )
    
    
    
    (1,940
    )Other loss, net
    
    
    (3,646
    )
    
    
    (840
    )
    
    

    (687
    )
    
    
    
    (45
    )Income (loss) before income taxes and
noncontrolling interest in loss of
consolidated subsidiary
    
    
    73,858
    
    
    
    90,462
    
    
    

    31,364
    
    
    
    
    (60,314
    )Income tax expense
    
    
    13,359
    
    
    
    33,723
    
    
    

    11,264
    
    
    
    
    1,047Income before noncontrolling interest in
loss of consolidated subsidiary
    
    
    60,499
    
    
    
    56,739
    
    
    

    20,100
    
    
    
    
    (61,361
    )Noncontrolling interest in loss of
consolidated subsidiary
    
    
    2,432
    
    
    
    1,985
    
    
    

    
    
    
    
    
    Net income (loss)
    
    $
    62,931
    
    
    $
    58,724
    
    
    $

    20,100
    
    
    
    $
    (61,361
    )Earnings (loss) per common share:Basic
    
    $
    4.32
    
    
    $
    4.01
    
    
    $

    1.78
    
    
    
    $
    (1.66
    )Diluted
    
    $
    4.16
    
    
    $
    3.86
    
    
    $

    1.74
    
    
    
    $
    (1.66
    )
  39




---



##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Successor Company
    
    

Predecessor CompanyPeriod from
    
    
    Period fromMarch 15, 2005
    
    
    January 1, 2005Year Ended December 31,
    
    
    Through
    
    
    through2007
    
    
    2006
    
    
    December 31, 2005
    
    
    March 14, 2005Net income (loss)
    
    $
    62,931
    
    
    $
    58,724
    
    
    $
    20,100
    
    
    $
    (61,361
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    24,371
    
    
    
    24,998
    
    
    
    20,403
    
    
    
    8,808Amortization of non-cash deferred revenues
    
    
    (910
    )
    
    
    (4,322
    )
    
    
    (10,137
    )
    
    
    Deferred marine inspection costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,277
    )Deferred income taxes
    
    
    5,829
    
    
    
    29,856
    
    
    
    10,084
    
    
    
    (1,047
    )Gain on debt discharge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166,459
    )Fresh-start adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    219,008Impairment on assets held for sale, net of insurance
recoveries
    
    
    116
    
    
    
    2,580
    
    
    
    2,237
    
    
    
    Loss on early retirement of debt
    
    
    
    
    
    
    
    
    
    
    3,950
    
    
    
    Gain (loss) on sales of assets
    
    
    (2,897
    )
    
    
    (1,334
    )
    
    
    (2,525
    )
    
    
    2Provision for doubtful accounts
    
    
    78
    
    
    
    1,234
    
    
    
    668
    
    
    
    40Stock based compensation
    
    
    3,247
    
    
    
    2,024
    
    
    
    2,012
    
    
    
    9Noncontrolling interest in loss of consolidated subsidiary
    
    
    (2,432
    )
    
    
    (1,985
    )
    
    
    
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    15,177
    
    
    
    (15,522
    )
    
    
    (12,688
    )
    
    
    2,404Prepaid expenses and other current assets
    
    
    (848
    )
    
    
    (384
    )
    
    
    (760
    )
    
    
    (630
    )Accounts payable and accrued expenses
    
    
    11,302
    
    
    
    8,938
    
    
    
    (4,629
    )
    
    
    7,676Other, net
    
    
    (3,488
    )
    
    
    (3,076
    )
    
    
    (1,541
    )
    
    
    1,995Net cash provided by operating activities
    
    
    112,476
    
    
    
    101,731
    
    
    
    27,174
    
    
    
    9,168Cash flows from investing activities:Acquisition of Active Subsea, net of acquired cash
    
    
    (220,443
    )
    
    
    
    
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (26,063
    )
    
    
    (19,472
    )
    
    
    (1,814
    )
    
    
    (947
    )Proceeds from sales of assets
    
    
    4,649
    
    
    
    3,402
    
    
    
    6,988
    
    
    
    Purchases of available-for-sale securities
    
    
    (184,815
    )
    
    
    (2,475
    )
    
    
    
    
    
    
    Sale of available-for-sale securities
    
    
    187,290
    
    
    
    
    
    
    
    
    
    
    
    Decrease (increase) in restricted cash
    
    
    4,113
    
    
    
    (4,682
    )
    
    
    (882
    )
    
    
    508Other, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (211
    )Net cash provided by (used in) investing activities
    
    
    (235,269
    )
    
    
    (23,227
    )
    
    
    4,292
    
    
    
    (650
    )Cash flows from financing activities:Net proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    95,323
    
    
    
    Purchases of treasury stock
    
    
    (17,604
    )
    
    
    
    
    
    
    
    
    
    
    Net proceeds from exercises of warrants and options
    
    
    2,027
    
    
    
    994
    
    
    
    1,806
    
    
    
    Proceeds from issuance of debt
    
    
    152,000
    
    
    
    15,878
    
    
    
    60,550
    
    
    
    54,550Repayment of debt
    
    
    (1,258
    )
    
    
    (54,041
    )
    
    
    (156,380
    )
    
    
    (56,771
    )Contribution from non-controlling interest
    
    
    
    
    
    
    20,910
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (4,804
    )
    
    
    (2
    )
    
    
    
    
    
    
    (375
    )Net cash provided by (used in) financing activities
    
    
    130,361
    
    
    
    (16,261
    )
    
    
    1,299
    
    
    
    (2,596
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    9,722
    
    
    
    712
    
    
    
    (701
    )
    
    
    62Net increase in cash and cash equivalents
    
    
    17,290
    
    
    
    62,955
    
    
    
    32,064
    
    
    
    5,984Cash and cash equivalents at beginning of period
    
    
    114,173
    
    
    
    51,218
    
    
    
    19,154
    
    
    
    13,170Cash and cash equivalents at end of period
    
    $
    131,463
    
    
    $
    114,173
    
    
    $
    51,218
    
    
    $
    19,154Supplemental information:Income taxes paid
    
    $
    1,854
    
    
    $
    3,451
    
    
    $
    471
    
    
    $
    72Interest paid
    
    $
    2,498
    
    
    $
    1,654
    
    
    $
    7,351
    
    
    $
    1,265Operating cash payments from reorganization items
    
    $
    
    
    
    $
    
    
    
    $
    6,195
    
    
    $
    1,457Noncash investing and financing activities 
Interest capitalized
    
    $
    1,382
    
    
    $
    300
    
    
    $
    
    
    
    $
    
  40




---



##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 (In thousands, except share amounts)
 AccumulatedRetained
    
    
    OtherAdditional
    
    
    Earnings
    
    
    Comprehensive
    
    
    
    
    
    
    
    
    
    
    TotalOld Common Stock
    
    
    New Common Stock
    
    

Warrant
 Series A
    
    

Warrant  Series B
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Income
    
    
    Treasury Stock
    
    
    StockholdersShares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    Capital
    
    
    Deficit)
    
    
    (Loss)
    
    
    Shares
    
    
    Dollars
    
    
    EquityBalance, December 31, 2004
    
    
    37,037,569
    
    
    $
    370
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    337,952
    
    
    $
    (310,797
    )
    
    $
    36,317
    
    
    
    72,032
    
    
    $
    (1
    )
    
    $
    63,841Forfeiture of restricted stock
    
    
    (5,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Comprehensive loss:Loss on foreign currency translations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,209
    )
    
    
    
    
    
    
    
    
    
    
    (1,209
    )Net loss
January 1, 2005 through March 14, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,361
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,361
    )Total comprehensive loss:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,570
    )Reorganization adjustments
    
    
    (37,032,569
    )
    
    
    (370
    )
    
    
    10,000,000
    
    
    
    100
    
    
    
    499,429
    
    
    
    1,658
    
    
    
    499,429
    
    
    
    637
    
    
    
    (230,356
    )
    
    
    372,158
    
    
    
    (35,108
    )
    
    
    (72,032
    )
    
    
    1
    
    
    
    108,720Balance, March 15, 2005 (Successor Company)
    
    
    
    
    
    
    
    
    
    
    10,000,000
    
    
    
    100
    
    
    
    499,429
    
    
    
    1,658
    
    
    
    499,429
    
    
    
    637
    
    
    
    107,605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,000Issuances of restricted stock
    
    
    
    
    
    
    
    
    
    
    105,000
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuances of stock
    
    
    
    
    
    
    
    
    
    
    4,373,500
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,423Exercises of stock options
    
    
    
    
    
    
    
    
    
    
    154,762
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,702
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,704Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    693
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    693Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,319Exercises of warrants
    
    
    
    
    
    
    
    
    
    
    4,841
    
    
    
    
    
    
    
    (2,850
    )
    
    
    (9
    )
    
    
    (1,991
    )
    
    
    (3
    )
    
    
    114
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Tax benefit from the utilization of fresh-start NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331Comprehensive income:Loss on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,240
    )
    
    
    
    
    
    
    
    
    
    
    (8,240
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,100Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,860Balance, December 31, 2005
    
    
    
    
    
    
    
    
    
    
    14,638,103
    
    
    
    146
    
    
    
    496,579
    
    
    
    1,649
    
    
    
    497,438
    
    
    
    634
    
    
    
    208,143
    
    
    
    20,100
    
    
    
    (8,240
    )
    
    
    
    
    
    
    
    
    
    
    222,432Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    89,650
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,025Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    88,085
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    969Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    1,131
    
    
    
    
    
    
    
    (960
    )
    
    
    (3
    )
    
    
    (171
    )
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23Tax benefit from the utilization of fresh-start NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,442
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,442Gain related to the sale of interest in EMSL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,615Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,816
    
    
    
    
    
    
    
    
    
    
    
    8,816Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,724
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,724Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,540Adjustment to adopt SFAS No. 158, net of tax of $0.3 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (708
    )
    
    
    
    
    
    
    
    
    
    
    (708
    )Balance, December 31, 2006
    
    
    
    
    
    
    
    
    
    
    14,816,969
    
    
    $
    148
    
    
    
    495,619
    
    
    $
    1,646
    
    
    
    497,267
    
    
    $
    634
    
    
    $
    231,218
    
    
    $
    78,824
    
    
    $
    (132
    )
    
    
    
    
    
    $
    
    
    
    $
    312,338Cumulative-effect adjustment for the adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,247Stock options exercised
    
    
    
    
    
    
    
    
    
    
    147,999
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,985
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,987Exercise of warrants for common stock
    
    
    
    
    
    
    
    
    
    
    1,696
    
    
    
    
    
    
    
    (417
    )
    
    
    (1
    )
    
    
    (1,279
    )
    
    
    (2
    )
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40Restricted stock activity
    
    
    
    
    
    
    
    
    
    
    46,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax benefit from the utilization of fresh-start NOL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,641Treasury stock purchases, at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (570,207
    )
    
    
    (17,604
    )
    
    
    (17,604
    )Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrecognized pension costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (207
    )
    
    
    
    
    
    
    
    
    
    
    (207
    )Gain on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,993
    
    
    
    
    
    
    
    
    
    
    
    18,993Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,931Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,717Balance, December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    15,013,076
    
    
    $
    150
    
    
    
    495,202
    
    
    $
    1,645
    
    
    
    495,988
    
    
    $
    632
    
    
    $
    245,134
    
    
    $
    141,611
    
    
    $
    18,654
    
    
    
    (570,207
    )
    
    $
    (17,604
    )
    
    $
    390,222
  41




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. The Company
   2. Summary of Significant Accounting Policies
  Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
 Business Combinations.
 Consolidation Policy.
 Cash and Cash Equivalents.
 Restricted Cash.
 42




---



##### Table of Contents




    
    Cash held in escrow for outstanding letters of credit, as prescribed following the
Companys retirement of the $50 million secured revolving credit facility in 2004, of $3.8
million and $7.5 million, at December 31, 2007 and 2006 respectively;
    
    Cash of $3.6 million and $3.5 million for the years ended December 31, 2007 and 2006
respectively, held in escrow until the second closing of EMSL which occurred on January 1,
2008, at which time the Company transferred the remaining four vessels to EMSL (See Note
14); and
    
    Cash of $1.2 million and $0.7 million, respectively, under Norwegian statutory rules
which require a subsidiary to segregate cash that will be used to pay tax withholdings in
future periods.
 Accounts Receivable.
  Accounting for long-lived assets.
    Impairment of long-lived assets.
 43




---



##### Table of Contents



Marine vessel spare parts.
 Deferred marine inspection costs.
 Deferred Financing Costs.
 Income Taxes.
  Revenue Recognition.
 Deferred Revenues on Unfavorable Contracts.
 Direct Vessel Operating Expenses.
 Losses on Insured Claims.
 44




---



##### Table of Contents



Foreign Currency Translation.
 Stock-based Compensation. , Share-Based Payment (Revised 2004)
 Accumulated other comprehensive income (loss).
 Use of Estimates.
 Recent Accounting Standards.
   45




---



##### Table of Contents



3. Acquisition of Active Subsea
   Cost of the acquisition:Cash paid for acquisition from available cash
    
    $
    243,000Cash paid for other acquisition cost
    
    
    4,000Assumed liabilities
    
    
    648$
    247,648Allocation of the purchase price:Working capital
    
    $
    27,215Construction in progress
    
    
    220,433$
    247,648
 46




---



##### Table of Contents



4. 2005 Reorganization
    Predecessor
    
    
    
    
    
    
    
    
    
    
    SuccessorCompany
    
    
    
    
    
    
    
    
    
    
    CompanyBalance Sheet
    
    
    
    
    
    
    
    
    
    
    Balance Sheetas of
    
    
    Reorganization
    
    
    Fresh Start
    
    
    as ofMarch 15, 2005
    
    
    Adjustments(1)
    
    
    Adjustments(2)
    
    
    March 15, 2005ASSETSTotal current assets
    
    $
    57,504
    
    
    $
    
    
    
    $
    
    
    
    $
    57,504Property and equipment
    
    
    451,529
    
    
    
    
    
    
    
    (181,081
    )
    
    
    270,448Restricted cash  noncurrent
    
    
    6,454
    
    
    
    
    
    
    
    
    
    
    
    6,454Other assets
    
    
    31,305
    
    
    
    
    
    
    
    (20,720
    )
    
    
    10,585Total assets
    
    $
    546,792
    
    
    $
    
    
    
    $
    (201,801
    )
    
    $
    344,991LIABILITIES AND STOCKHOLDERS EQUITYTotal current liabilities
    
    $
    86,435
    
    
    $
    
    
    
    $
    
    
    
    $
    86,435Liabilities subject to compromise:Senior Notes
    
    
    250,000
    
    
    
    (250,000
    )
    
    
    
    
    
    
    Accrued interest on Senior Notes
    
    
    25,179
    
    
    
    (25,179
    )
    
    
    
    
    
    
    Long-term debt, net of discounts
    
    
    85,479
    
    
    
    
    
    
    
    547
    
    
    
    86,026Deferred income taxes
    
    
    41,185
    
    
    
    
    
    
    
    
    
    
    
    41,185Deferred revenues on unfavorable contracts
    
    
    
    
    
    
    
    
    
    
    16,660
    
    
    
    16,660Other liabilities
    
    
    4,685
    
    
    
    
    
    
    
    
    
    
    
    4,685Total liabilities
    
    
    492,963
    
    
    
    (275,179
    )
    
    
    17,207
    
    
    
    234,991Commitments and contingenciesStockholders equity:Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.01 par value
    
    
    370
    
    
    
    (270
    )
    
    
    
    
    
    
    100Additional paid-in capital
    
    
    337,961
    
    
    
    (228,061
    )
    
    
    
    
    
    
    109,900Accumulated deficit
    
    
    (319,609
    )
    
    
    538,617
    
    
    
    (219,008
    )
    
    
    Cumulative foreign currency translation adjustment
    
    
    35,108
    
    
    
    (35,108
    )
    
    
    
    
    
    
    Treasury stock
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    Total stockholders equity
    
    
    53,829
    
    
    
    275,179
    
    
    
    (219,008
    )
    
    
    110,000Total liabilities and stockholders equity
    
    $
    546,792
    
    
    $
    
    
    
    $
    (201,801
    )
    
    $
    344,991
 47




---



##### Table of Contents



(1)
    
    To record the conversion of liabilities subject to compromise into new
common stock, the conversion of old common stock into warrants and the
adjustment of other comprehensive income and unearned compensation.(2)
    
    To adjust assets and liabilities to fair market value, and reflect the
write-off of the Predecessor Companys equity and the application of
negative goodwill to long-lived assets.   Amortizationof Non-CashDeferredYear ending December 31,
    
    Revenues2008
    
    $
    3592009
    
    
    1662010
    
    
    412011
    
    
    33599
   5. Asset Sales
  48




---



##### Table of Contents



As of December 31,2007
    
    
    2006Land and Buildings
    
    $
    1,678
    
    
    $
    Marine Vessels
    
    
    2,108
    
    
    
    3,048Total Assets Held for Sale
    
    $
    3,786
    
    
    $
    3,048
    6. Accounts Receivable
  As of December 31,2007
    
    
    2006Trade receivables
    
    $
    42,296
    
    
    $
    55,380Allowance for doubtful accounts
    
    
    (1,259
    )
    
    
    (1,846
    )Insurance and other
    
    
    6,216
    
    
    
    5,253Accounts receivable, net
    
    $
    47,253
    
    
    $
    58,787
  7. Other Assets
  As of December 31,2007
    
    2006Deferred financing costs, net of accumulated
amortization of $1.8 million and $1.2 million at
December 31, 2007 and December 31, 2006,
respectively
    
    $
    4,346
    
    
    $
    228Pension Assets
    
    
    183
    
    
    
    675Marine vessel spare parts
    
    
    2,654
    
    
    
    2,315Capitalized information system costs
    
    
    2,032
    
    
    
    1,296Other
    
    
    2,830
    
    
    
    3,883Other assets
    
    $
    12,045
    
    
    $
    8,397
 49




---



##### Table of Contents



8. Debt
  As of December 31,2007
    
    20063.00% Senior Convertible Debentures,
payable semi-annually in arrears,
maturing on January 15, 2027
    
    $
    150,000
    
    
    $
    6.11% Notes, principal and interest due
in 30 semi-annual installments,
maturing April 2014, collateralized by
two marine vessels
    
    
    8,174
    
    
    
    9,432EMSL Credit Facility Agreement, bearing
interest at LIBOR plus a margin of
0.08%, principal and interest due on
February 28, 2008, collateralized by
one marine vessel
    
    
    2,000
    
    
    
    Fresh-start debt premium(1)
    
    
    371
    
    
    
    431Total debt
    
    
    160,545
    
    
    
    9,863Less current maturities
    
    
    (3,258
    )
    
    
    (1,258
    )Long-term
debt, including premium
    
    $
    157,287
    
    
    $
    8,605
 
 (1)
    
    During the application of fresh-start accounting, the Company recorded
a fair-value adjustment to its fixed rate 6.11% Notes of approximately
$0.5 million as a result of current interest rates being lower than
the Companys stated interest rates on its fixed-rate debt. Fair value
was determined using discounted future cash flows based on quoted
market prices, where available, on its current incremental borrowing
rates for similar types of borrowing arrangements as of the Exit Date.
This premium is being amortized over the remaining life of the debt
using the effective interest rate method, which will lower future
interest expense.  Year ending December 31,
    
    Amount2008
    
    $
    3,2582009
    
    
    1,2582010
    
    
    1,2582011
    
    
    1,2582012
    
    
    1,258Thereafter
    
    
    151,884$
    160,174Fresh-start debt premium(1)
    
    
    371Total debt
    
    $
    160,545
 NOK Revolver.
  EMSL Credit Facility Agreement.
 50




---



##### Table of Contents



Senior Convertible Debentures.
     New Credit Facilities.
 51




---



##### Table of Contents



9. Income Taxes
  Successor Company
    
    Predecessor CompanyYears Ended
    
    Period from
    
    Period fromDecember 31,
    
    March 15, 2005 to
    
    January 1, 2005 to2007
    
    2006
    
    December 31, 2005
    
    March 14, 2005United States
    
    $
    16,327
    
    
    $
    47,407
    
    
    $
    (1,201
    )
    
    $
    63,362International
    
    
    57,531
    
    
    
    43,055
    
    
    
    32,565
    
    
    
    (123,676
    )Income
(loss) before income taxes and non-controlling interest in loss of
consolidated subsidiary
    
    $
    73,858
    
    
    $
    90,462
    
    
    $
    31,364
    
    
    $
    (60,314
    )
  Successor Company
    
    
    Predecessor CompanyPeriod from
    
    
    Period fromYears Ended
    
    
    March 15, 2005 to
    
    
    January 1, 2005 toDecember 31,
    
    
    December 31,
    
    
    March 14,2007
    
    
    2006
    
    
    2005
    
    
    2005Current income taxes:U.S. federal income taxes
    
    $
    844
    
    
    $
    970
    
    
    $
    
    
    
    $
    State income taxes
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    Foreign taxes
    
    
    6,308
    
    
    
    2,897
    
    
    
    1,180
    
    
    
    Deferred income taxes:U.S. federal income taxes
    
    
    8,134
    
    
    
    15,591
    
    
    
    
    
    
    
    State income taxes
    
    
    507
    
    
    
    979
    
    
    
    331
    
    
    
    Foreign taxes
    
    
    (2,812
    )
    
    
    13,286
    
    
    
    9,753
    
    
    
    (1,047
    )Total income
tax expense
    
    $
    13,359
    
    
    $
    33,723
    
    
    $
    11,264
    
    
    $
    (1,047
    )
 52




---



##### Table of Contents



Deferred Tax Assets
    
    
    Deferred Tax LiabilitiesCurrent
    
    
    Non-Current
    
    
    Current
    
    
    Non-CurrentAs of December 31, 2007Property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,836Foreign tax credit
    
    
    5,538
    
    
    
    
    
    
    
    
    
    
    
    Insurance reserves
    
    
    1,273
    
    
    
    
    
    
    
    
    
    
    
    Net operating loss carryforwards
    
    
    
    
    
    
    36,299
    
    
    
    
    
    
    
    Company incentive plans
    
    
    699
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    848
    
    
    
    
    
    
    
    
    
    
    
    1,432$
    8,358
    
    
    $
    36,299
    
    
    $
    
    
    
    $
    12,268Current deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,358Non-current deferred tax asset, net 
U.S. jurisdiction
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    23,623Non-current deferred tax asset, net  Foreign jurisdiction
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    408Valuation Allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    32,389Deferred tax asset after valuation, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Non-current deferred tax liabilities, net  foreign jurisdiction
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
 Deferred Tax Assets
    
    
    Deferred Tax LiabilitiesCurrent
    
    
    Non-Current
    
    
    Current
    
    
    Non-CurrentAs of December 31, 2006Property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13,604Deferral of taxes on Norwegian earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,327Foreign tax credit
    
    
    2,089
    
    
    
    
    
    
    
    
    
    
    
    Alternative minimum tax carryforward
    
    
    969
    
    
    
    
    
    
    
    
    
    
    
    Insurance reserves
    
    
    1,162
    
    
    
    
    
    
    
    
    
    
    
    U.S. net operating loss carryforwards
    
    
    
    
    
    
    44,854
    
    
    
    
    
    
    
    Company incentive plans
    
    
    1,199
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    1,103
    
    
    
    
    
    
    
    
    
    
    
    1,073$
    6,522
    
    
    $
    44,854
    
    
    $
    
    
    
    $
    78,004Current deferred tax assets, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,522Non-current deferred tax asset, net  U.S. jurisdiction
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,177Valuation Allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    36,699Deferred tax asset after valuation, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    Non-current deferred tax liabilities,
net  foreign jurisdiction
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    63,327
  53




---



##### Table of Contents



PredecessorSuccessor Company
    
    CompanyYears ended
    
    Period from
    
    Period fromDecember 31
    
    March 15, 2005 to
    
    January 1, 2005 to2007
    
    2006
    
    December 31, 2005
    
    March 14, 2005Federal taxes at statutory rate
    
    
    35.00
    %
    
    
    35.00
    %
    
    
    35.00
    %
    
    
    35.00
    %State income taxes net of federal benefit
    
    
    1.20
    %
    
    
    1.08
    %
    
    
    1.46
    %
    
    
    0.00
    %Foreign tax rate differential
    
    
    -29.76
    %
    
    
    -3.90
    %
    
    
    -7.79
    %
    
    
    -14.40
    %Change in foreign tax laws
    
    
    -3.81
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Non-deductible items in foreign jurisdictions
    
    
    3.12
    %
    
    
    1.69
    %
    
    
    0.00
    %
    
    
    -57.49
    %Other foreign taxes
    
    
    5.54
    %
    
    
    2.31
    %
    
    
    5.86
    %
    
    
    -0.09
    %U.S. tax on deemed repatriation
    
    
    3.21
    %
    
    
    0.00
    %
    
    
    6.87
    %
    
    
    0.00
    %Uncertain tax positions
    
    
    4.39
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Alternative minimum tax
    
    
    -1.31
    %
    
    
    1.07
    %
    
    
    0.00
    %
    
    
    0.00
    %Valuation allowance
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    -2.42
    %
    
    
    39.11
    %Other
    
    
    0.51
    %
    
    
    0.02
    %
    
    
    0.20
    %
    
    
    -3.86
    %Effective tax rate
    
    
    18.09
    %
    
    
    37.28
    %
    
    
    39.19
    %
    
    
    -1.74
    %
    54




---



##### Table of Contents



Uncertain Tax Positions
 Accounting for Uncertainty in Income Taxes
 Balance at January 1, 2007
    
    $
    143Additions based on tax positions related to the current year
    
    
    678Additions for tax positions of prior years
    
    
    1,506Reductions for tax positions of prior years
    
    
    Settlements
    
    
    Balance at December 31, 2007
    
    $
    2,327
  Norwegian Shipping Tax Regime
   Mexican Tax System Changes Accounting for Income Taxes
 10. Stockholders Equity
 Common Stock Repurchase Program 
 55




---



##### Table of Contents



Warrants to Purchase Common Stock 
 Stockholder Rights Plan
 56




---



##### Table of Contents



11. Earnings Per Share
  PredecessorSuccessor Company
    
    
    CompanyPeriod from
    
    
    Period fromYears
    
    
    March 15, 2005
    
    
    January 1, 2005Ended
    
    
    through
    
    
    throughDecember 31,
    
    
    December 31,
    
    
    March 14,2007
    
    
    2006
    
    
    2005
    
    
    2005Net income (loss)
    
    $
    62,931
    
    
    $
    58,724
    
    
    $
    20,100
    
    
    $
    (61,361
    )Basic:Weighted-average common shares outstanding
    
    
    14,558
    
    
    
    14,628
    
    
    
    11,272
    
    
    
    36,909Diluted:Add incremental shares for:Assumed exercise of outstanding options and
vesting of nonvested shares
    
    
    188
    
    
    
    233
    
    
    
    224
    
    
    
    Assumed exercise of warrants
    
    
    391
    
    
    
    345
    
    
    
    62
    
    
    
    Total
    
 $
    15,137
    
    
$
    15,206
    
    
$
    11,558
    
    
$
    36,909Earnings per Share:Basic
    
    $
    4.32
    
    
    $
    4.00
    
    
    $
    1.78
    
    
    $
    (1.66
    )Diluted
    
    $
    4.16
    
    
    $
    3.86
    
    
    $
    1.74
    
    
    $
    (1.66
    )
    12. Stock-Based Compensation
    57




---



##### Table of Contents



Stock Options
 Years Ended December 31,
    
For
thePeriod fromMarch 15, 2005 toDecember 31, 20052007
    
    2006
    
    2005Expected term (years)
    
    
    5
    
    
    
    5
    
    
    
    5Expected volatility
    
    
    35.15
    %
    
    
    36.47
    %
    
    
    46.70
    %Risk-free interest rate
    
    
    4.77
    %
    
    
    4.70
    %
    
    
    4.12
    %Expected dividends
    
    
    
    
    
    
    
    
    
    
    
  WeightedWeighted
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicShares
    
    Exercise
    
    Contractual
    
    Value(in thousands)
    
    Price
    
    Term (in years)
    
    (In thousands)Outstanding at January 1, 2007
    
    
    317
    
    
    $
    14.38Granted
    
    
    94
    
    
    
    38.17Exercised
    
    
    (148
    )
    
    
    13.42Forfeited
    
    
    (35
    )
    
    
    28.89Outstanding at December 31, 2007
    
    
    228
    
    
    $
    22.56
    
    
    
    5.0
    
    
    $
    3,402Exercisable at December 31, 2007
    
    
    52
    
    
    $
    14.52
    
    
    
    4.4
    
    
    $
    1,167
  Restricted Stock 
 Weighted-AverageGrant DateShares
    
    
    Fair Value(in thousands)
    
    
    per ShareNonvested at January 1, 2007
    
    
    125
    
    
    $
    27.00Granted
    
    
    135
    
    
    
    37.81Vested
    
    
    (52
    )
    
    
    35.30Forfeited
    
    
    (88
    )
    
    
    29.40Nonvested at December 31, 2007
    
    
    120
    
    
    $
    33.80
  58




---



##### Table of Contents



13. Employee Benefit Plans
 Defined Contribution Plan 
 Norwegian Pension Plans 
 Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans
  As of December 31, 2006Before
    
    
    
    
    
    AfterAdoption
    
    Adjusted
    
    AdoptionASSETS:Pension asset
    
    $
    1,631
    
    
    $
    (956
    )
    
    $
    675LIABILITIES:Pension obligation
    
    $
    113
    
    
    $
    27
    
    
    $
    140Deferred tax liability
    
    
    63,602
    
    
    
    (275
    )
    
    
    63,327EQUITY:Accumulated other comprehensive loss
    
    $
    
    
    
    $
    (708
    )
    
    $
    (708
    )
 59




---



##### Table of Contents



Years Ended December 31,2007
    
    
    2006Change in Benefit Obligation:Benefit obligation at beginning of the period
    
    $
    5,411
    
    
    $
    4,521Service cost
    
    
    721
    
    
    
    637Interest cost
    
    
    251
    
    
    
    207Benefits paid
    
    
    (318
    )
    
    
    (163
    )Actuarial loss (gain)
    
    
    684
    
    
    
    (180
    )Settlement (1)
    
    
    (1,321
    )Translation adjustment
    
    
    821
    
    
    
    389Benefit obligation at end of year
    
    $
    6,249
    
    
    $
    5,411Change in Plan AssetsFair value of plan assets at beginning of the period
    
    $
    5,946
    
    
    $
    3,989Actual return on plan assets
    
    
    299
    
    
    
    269Contributions
    
    
    818
    
    
    
    1,392Benefits paid
    
    
    (318
    )
    
    
    (163
    )Settlement payment (1)
    
    
    (1,498
    )Translation adjustment
    
    
    924
    
    
    
    459Fair value of plan assets at end of year
    
    $
    6,171
    
    
    $
    5,946
 
 (1)
    
    Due to changes in Norwegian legislation, one of
the three Norwegian defined benefit pension plans,
outstanding as of December 31, 2006, was terminated
on January 1, 2007. The Company accounted for the
plan termination as a plan settlement.  Successor Company
    
    
    Predecessor CompanyPeriod from
    
    
    Period fromMarch 15, 2005
    
    
    January 1, 2005Years Ended
    
    
    through
    
    
    ThroughDecember 31,
    
    
    December 31,
    
    
    March 14,2007
    
    
    2006
    
    
    2005
    
    
    2005Components of Net Periodic Benefit CostService cost
    
    $
    721
    
    
    $
    637
    
    
    $
    944
    
    
    $
    88Interest cost
    
    
    251
    
    
    
    207
    
    
    
    129
    
    
    
    33Return on plan assets
    
    
    (273
    )
    
    
    (236
    )
    
    
    (225
    )
    
    
    (52
    )Social security contributions
    
    
    66
    
    
    
    176
    
    
    
    46
    
    
    
    12Recognized net actuarial loss
    
    
    50
    
    
    
    36
    
    
    
    8
    
    
    
    2Net periodic benefit cost
    
    $
    815
    
    
    $
    820
    
    
    $
    902
    
    
    $
    83
 60




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##### Table of Contents



As of December 31,2007
    
    2006Reconciliation of funded status:Projected benefit obligation
    
    $
    (6,249
    )
    
    $
    (5,411
    )Fair value of plan assets
    
    
    6,171
    
    
    
    5,946(Under) over funded status
    
    $
    (78
    )
    
    $
    535Accumulated benefit obligation
    
    $
    4,621
    
    
    $
    4,488Amount recognized in the consolidated balance sheets:Noncurrent other assets
    
    $
    183
    
    
    $
    675Noncurrent liabilities
    
    
    273
    
    
    
    140Accumulated other comprehensive loss, net
    
    
    (915
    )
    
    
    (708
    )Net amount recognized
    
    $
    (459
    )
    
    $
    (107
    )Items included in accumulated other comprehensive
income and not yet recognized in net periodic
benefit cost:Unrecognized net actuarial loss
    
    $
    1,196
    
    
    $
    876Social security obligations
    
    
    57
    
    
    
    80$
    1,253
    
    
    $
    956Amounts in accumulated other comprehensive income
expected to be recognized in 2008 as components of
pension expense:Net actuarial loss
    
    $
    55
    
    
    $
    47Social security obligations
    
    
    3
    
    
    
    5$
    58
    
    
    $
    52
  Successor Company
    
    
    Predecessor CompanyPeriod from
    
    Period
fromYear
Ended December 31,
    
    March 15, 2005 to
    
    March 1, 2005 to2007
    
    2006
    

December 31, 2005
    

March 14, 2005Weighted-Average AssumptionsDiscount rate
    
    
    4.70
    %
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    4.50
    %Return on plan assets
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    5.50
    %Rate of compensation increase
    
    
    4.50
    %
    
    
    4.50
    %
    
    
    3.30
    %
    
    
    3.30
    %
  Successor Company
    
    
    Predecessor CompanyPeriod from
    
    Period
fromYear
Ended December 31,
    
    March 15, 2005 to
    
    March 1, 2005 to2007
    
    2006
    

December 31, 2005
    

March 14, 2005Equity securities
    
    
    25
    %
    
    
    30
    %
    
    
    22
    %
    
    
    18
    %Debt Securities
    
    
    59
    %
    
    
    55
    %
    
    
    43
    %
    
    
    49
    %Property and other
    
    
    16
    %
    
    
    15
    %
    
    
    35
    %
    
    
    33
    %All asset categories
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 61




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##### Table of Contents



Year Ending December 31,2008
    
    $
    3002009
    
    
    3212010
    
    
    3462011
    
    
    3552012
    
    
    409Years 2013  2017
    
    $
    2,387
 United Kingdom Pension Plan
  14. Minority owned consolidated subsidiary
      62




---



##### Table of Contents



(in thousands).
 As of December 31,2007
    
    
    2006ASSETSCurrent assets
    
    $
    3,410
    
    
    $
    4,360Property & Equipment, net
    
    
    22,263
    
    
    
    24,791Total Assets
    
    $
    25,673
    
    
    $
    29,151LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities
    
    $
    7,172
    
    
    $
    4,394Stockholders Equity
    
    
    18,501
    
    
    
    24,757Total liabilities and stockholders equity
    
    $
    25,673
    
    
    $
    29,151
 (in thousands).
 Years EndedDecember 31,2007
    
    
    2006Bareboat charter hire revenues
    
    $
    699
    
    
    $Intersegment revenues
    
    
    3,766
    
    
    
    1,899Vessel Revenues
    
    
    4,465
    
    
    
    1,899Operating Expenses:Direct vessel operating expenses
    
    
    6,035
    
    
    
    4,083Depreciation expense
    
    
    2,705
    
    
    
    2,059General and Administrative
    
    
    2,026
    
    
    
    243Total operating expense
    
    
    10,766
    
    
    
    6,385Operating loss
    
    
    (6,301
   )
    
    
    (4,486
   )Miscellaneous income
    
    
    47
    
    
    
    9Net loss
    
    $
    (6,254
    )
    
    $
    (4,477
    )
   As of December 31,2007
    
    
    2006Noncontrolling interest capital contribution
    
    $
    20,910
    
    
    $
    20,910Additional Paid in Capital
    
    
    (3,615
    )
    
    
    (3,615
    )Noncontrolling interests loss in EMSL
    
    
    (5,473
    )
    
    
    (2,283
    )Noncontrolling interests income in NAMESE
    
    
    1,056
    
    
    
    298Noncontrolling interest
    
    $
    12,878
    
    
    $
    15,310
 15. Commitments and Contingencies
 Litigation 
 63




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##### Table of Contents



Brazilian Tax Assessments
   Construction Commitments
 64




---



##### Table of Contents



Operating Leases 
    16. Fair Value of Financial Instruments and Market Risks
  Cash, cash equivalents and accounts receivable:
 Debt:
 2007
    
    2006Carrying amount
    
    $
    160,545
    
    
    $
    9,863Fair value
    
    $
    173,655
    
    
    $
    9,900
 Political Risk:
 Foreign Currency Risk:
 65




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##### Table of Contents



17. Segment and Geographic Information
  Successor CompanyYear Ended December 31, 2007
    
    U.S.
    
    North Sea
    
    West Africa
    
    Other
    
    TotalsRevenues from external customers
    
    $
    65,784
    
    
    $
    141,315
    (1)
    
    $
    37,671
    
    
    $
    11,338
    
    
    $
    256,108Intersegment revenues
    
    
    82
    
    
    
    
    
    
    
    1,841
    
    
    
    3,766
    
    
    
    5,689Operating income (loss)
    
    
    7,041
    
    
    
    63,802
    
    
    
    6,274
    
    
    
    (10,487
    )
    
    
    66,630Interest income
    
    
    10,766
    
    
    
    3,269
    
    
    
    2
    
    
    
    95
    
    
    
    14,132Interest expense
    
    
    3,148
    
    
    
    
    
    
    
    
    
    
    
    110
    
    
    
    3,258Depreciation and amortization expense
    
    
    5,722
    
    
    
    12,980
    
    
    
    3,332
    
    
    
    2,337
    
    
    
    24,371Income tax expense
    
    
    12,997
    
    
    
    (1,853
    )
    
    
    831
    
    
    
    1,384
    
    
    
    13,359Long-lived assets
    
    
    42,840
    
    
    
    399,059
    
    
    
    20,583
    
    
    
    11,132
    
    
    
    473,614Segment total assets
    
    
    56,381
    
    
    
    578,284
    
    
    
    23,022
    
    
    
    24,057
    
    
    
    681,744Capital expenditures
    
    
    18,322
    
    
    
    228,184
    
    
    
    
    
    
    
    
    
    
    
    246,506
 Year Ended December 31, 2006
    
    U.S.
    
    North Sea
    
    West Africa
    
    Other
    
    TotalsRevenues from external customers
    
    $
    102,831
    
    
    $
    106,435
    (1)
    
    $
    27,727
    
    
    $
    11,724
    
    
    $
    248,717Intersegment revenues
    
    
    2,249
    
    
    
    1,206
    
    
    
    693
    
    
    
    
    
    
    
    4,148Operating income (loss)
    
    
    42,087
    (2)
    
    
    47,244
    
    
    
    5,976
    
    
    
    (6,917
    )
    
    
    88,390Interest income
    
    
    2,706
    
    
    
    1,446
    
    
    
    3
    
    
    
    43
    
    
    
    4,198Interest expense
    
    
    554
    
    
    
    732
    
    
    
    
    
    
    
    
    
    
    
    1,286Depreciation and amortization expense
    
    
    8,000
    
    
    
    11,953
    
    
    
    2,773
    
    
    
    2,272
    
    
    
    24,998Income tax expense
    
    
    18,241
    
    
    
    13,078
    
    
    
    1,848
    
    
    
    556
    
    
    
    33,723Long-lived assets
    
    
    38,290
    
    
    
    164,908
    
    
    
    19,343
    
    
    
    9,307
    
    
    
    231,848Segment total assets
    
    
    132,739
    
    
    
    256,430
    
    
    
    21,088
    
    
    
    25,065
    
    
    
    435,322Capital expenditures
    
    
    12,369
    
    
    
    6,291
    
    
    
    169
    
    
    
    643
    
    
    
    19,472
 Period from March 15, 2005 throughDecember 31, 2005
    
    U.S.
    
    North Sea
    
    West Africa
    
    Other
    
    TotalsRevenues from external customers
    
    $
    50,311
    
    
    $
    77,988
    (1)
    
    $
    11,249
    
    
    $
    12,851
    
    
    $
    152,399Intersegment revenues
    
    
    1,329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,329Operating income (loss)
    
    
    4,182
    (3)
    
    
    34,959
    
    
    
    502
    
    
    
    2,173
    
    
    
    41,816Interest income
    
    
    530
    
    
    
    82
    
    
    
    1
    
    
    
    2
    
    
    
    615Interest expense
    
    
    4,491
    
    
    
    1,835
    
    
    
    
    
    
    
    104
    
    
    
    6,430Depreciation and amortization expense
    
    
    7,928
    
    
    
    9,804
    
    
    
    1,335
    
    
    
    1,336
    
    
    
    20,403Income tax expense
    
    
    331
    
    
    
    9,169
    
    
    
    617
    
    
    
    1,147
    
    
    
    11,264Long-lived assets
    
    
    42,287
    
    
    
    157,927
    
    
    
    17,881
    
    
    
    7,551
    
    
    
    225,646Segment total assets
    
    
    127,106
    
    
    
    186,256
    
    
    
    17,881
    
    
    
    12,979
    
    
    
    344,222Capital expenditures
    
    
    804
    
    
    
    463
    
    
    
    487
    
    
    
    60
    
    
    
    1,814
 Predecessor CompanyPeriod from January 1, 2005 throughMarch 14, 2005
    
    U.S.
    
    North Sea
    
    West Africa
    
    Other
    
    TotalsRevenues from external customers
    
    $
    8,171
    
    
    $
    16,528
    
    
    $
    1,980
    
    
    $
    3,207
    
    
    $
    29,886Operating income (loss)
    
    
    (2,996
    )
    
    
    4,220
    
    
    
    278
    
    
    
    (623
    )
    
    
    879Interest income
    
    
    14
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    50Interest expense
    
    
    1,313
    
    
    
    608
    
    
    
    
    
    
    
    19
    
    
    
    1,940Depreciation and amortization expense
    
    
    3,724
    
    
    
    3,973
    
    
    
    468
    
    
    
    593
    
    
    
    8,758Income tax expense
    
    
    
    
    
    
    1,047
    
    
    
    
    
    
    
    
    
    
    
    1,047Long-lived assets(4)
    
    
    65,347
    
    
    
    168,297
    
    
    
    27,292
    
    
    
    9,512
    
    
    
    270,448Segment total assets
    
    
    95,777
    
    
    
    208,499
    
    
    
    27,546
    
    
    
    13,170
    
    
    
    344,992Capital expenditures
    
    
    424
    
    
    
    1,701
    
    
    
    7
    
    
    
    92
    
    
    
    2,224
 
 (1)
    
    Includes $0.9 million, $4.3 million and $10.1 million in non-cash deferred revenues for the years ended
December 31, 2007 and 2006 and the period from March 15, 2005 through December 31, 2005.(2)
    
    Includes $3.2 million charge on loss on assets held for sale related to the impairment of the SWATH vessel.(3)
    
    Includes $2.2 million charge on loss on assets held for sale related to the impairment of the SWATH vessel. 66




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##### Table of Contents



(4)
    
    Includes property and equipment and deferred marine inspection costs.  18. Quarterly Financial Data (Unaudited)
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterYear ended December 31, 2007Total revenues
    
    $
    61,969
    
    
    $
    58,710
    
    
    $
    70,446
    
    
    $
    64,983Operating income
    
    
    20,783
    
    
    
    5,291
    
    
    
    22,310
    
    
    
    18,246Net income (1)
    
    $
    14,584
    
    
    $
    4,434
    
    
    $
    13,177
    
    
    $
    30,736Earnings per common share:Basic
    
    $
    0.99
    
    
    $
    0.30
    
    
    $
    0.90
    
    
    $
    2.15Diluted
    
    $
    0.95
    
    
    $
    0.29
    
    
    $
    0.87
    
    
    $
    2.08Year ended December 31, 2006Total revenues
    
    $
    51,832
    
    
    $
    61,456
    
    
    $
    68,537
    
    
    $
    66,892Operating income
    
    
    19,553
    
    
    
    20,249
    
    
    
    23,961
    
    
    
    24,627Net income
    
    $
    12,378
    
    
    $
    12,139
    
    
    $
    17,821
    
    
    $
    16,386Earnings per common share:Basic
    
    $
    0.85
    
    
    $
    0.83
    
    
    $
    1.22
    
    
    $
    1.12Diluted
    
    $
    0.82
    
    
    $
    0.80
    
    
    $
    1.17
    
    
    $
    1.07
 
 (1)
    
    The Company continued to recognize taxes on its earnings of the Norwegian Shipping tax
regime subsidiary ($10.3 million was recognized through September 30, 2007). As a result of
recent changes in Norwegian tax laws, enacted in December 2007, the deferred taxes
recognized on earnings generated after January 1, 2007 and through the date of enactment
are exempt from taxation, requiring the Company to reverse the associated deferred tax
liability through September 30, 2007. The reversal of the deferred tax liability results in
a net reduction to income tax expense of $2.8 million. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
 Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework
  67




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##### Table of Contents



Changes in Internal Control over Financial Reporting.
 
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  68




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a) Documents filed as part of this report:
 (1) Financial Statements
  (2) Financial Statement Schedules
  (b) Exhibits
  69




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##### Table of Contents



SIGNATURES
  Trico Marine Services, Inc.
(Registrant)By:
    /s/  Joseph S. CompofelicePresident, Chief Executive Officer
and Chairman of the Board (Principal Executive Officer)  Signature
    
    Title
    
    Date/s/ Joseph S. Compofelice
Joseph S. Compofelice
    
    President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
    
    February 25, 2008/s/ Geoff A. Jones
Geoff A. Jones
    
    Vice President and Chief Financial Officer
(Principal Financial Officer)
    
    February 25, 2008/s/
James S. Katosic
James S. Katosic
    
    Chief Accounting Officer
(Principal Accounting Officer)
    
    February 25, 2008/s/ Per Staehr
Per Staehr
    
    Director
    
    February 25, 2008/s/
Richard A. Bachmann
Richard A. Bachmann
    
    Director
    
    February 25, 2008/s/ Edward C. Hutcheson, Jr.
Edward C. Hutcheson, Jr.
    
    Director
    
    February 25, 2008/s/ Myles W. Scoggins
Myles W. Scoggins
    
    Director
    
    February 25, 2008/s/ Kenneth M. Burke
Kenneth M. Burke
    
    Director
    
    February 25, 2008
 70




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##### Table of Contents



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES  Valuation and Qualifying Accounts
For the Years ended December 31, 2007, 2006 and
For the Periods ended March 15, 2005 through
December 31, 2005and January 1, 2005 through March 14,
2005
(in thousands)
 ChargedBalance at
    
    (Credited)
    
    Charged
    
    
    
    
    
    Balance atbeginning
    
    to costs and
    
    to other
    
    Recoveries
    
    end ofDescription
    
    of period
    
    expenses
    
    accounts
    
    (Deductions)
    
    periodSuccessor Company2007Valuation allowance on deferred tax assets:
    
    $
    36,699
    
    
    $
    3,602
    
    
    $
    (8,641
    )
    
    $
    729
    
    
    $
    32,389Allowance for doubtful accounts  trade
    
    $
    1,846
    
    
    $
    78
    
    
    $
    658
    
    
    $
    (1,323
    )
    
    $
    1,259Allowance for doubtful accounts  non-trade
    
    $
    618
    
    
    $
    
    
    
    $
    (618
    )
    
    $
    
    
    
    $
    2006Valuation allowance on deferred tax assets:
    
    $
    43,824
    
    
    $
    
    
    
    $
    (16,442
    )
    
    $
    9,317
    
    
    $
    36,699Allowance for doubtful accounts  trade
    
    $
    1,396
    
    
    $
    616
    
    
    $
    25
    
    
    $
    (191
    )
    
    $
    1,846Allowance for doubtful accounts  non-trade
    
    $
    
    
    
    $
    618
    
    
    $
    
    
    
    $
    
    
    
    $
    618Period
from March 15, 2005 through December 31, 2005Valuation allowance on deferred tax assets:
    
    $
    104,221
    
    
    $
    
    
    
    $
    
    
    
    $
    (60,397
    )
    
    $
    43,824Allowance for doubtful accounts  trade
    
    $
    724
    
    
    $
    738
    
    
    $
    
    
    
    $
    (66
    )
    
    $
    1,396Predecessor CompanyPeriod
from January 1, 2005 through March 14, 2005Valuation allowance on deferred tax assets:
    
    $
    70,020
    
    
    $
    34,201
    
    
    $
    
    
    
    $
    
    
    
    $
    104,221Allowance for doubtful accounts  trade
    
    $
    1,233
    
    
    $
    448
    
    
    $
    12
    
    
    $
    (969
    )
    
    $
    724
 71




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##### Table of Contents



TRICO MARINE SERVICES, INC.
 EXHIBIT INDEX
 ExhibitNumber2.1
    
    Joint Prepackaged Plan of Reorganization of the
Company, Trico Marine Assets, Inc. and Trico Marine
Operators, Inc. under Chapter 11 of the United
States Bankruptcy Code (incorporated by reference
to Exhibit 99.2 to our Current Report on Form 8-K
dated November 12, 2004).2.2
    
    Plan Support Agreement, as amended, dated September
8, 2004 (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K dated September
10, 2004).3.1
    
    Second Amended and Restated Certificate of
Incorporation (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K dated March
16, 2005).3.2
    
    Certificate of Designation of Series A Junior
Participating Preferred Stock of Trico Marine
Services, Inc. (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K dated
April 9, 2007).3.3
    
    Fourth Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to our Current Report on
Form 8-K dated April 10, 2007).4.1
    
    Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to our Annual Report on
Form 10-K dated March 16, 2005).4.2
    
    Registration Rights Agreement, dated as of March
16, 2005, by and among the Company and the Holders
named therein (incorporated by reference to Exhibit
4.1 to our Current Report on Form 8-K dated March
16, 2005).4.3
    
    Warrant Agreement, dated March 16, 2005
(incorporated by reference to Exhibit 4.2 to our
Current Report on Form 8-K dated March 16, 2005).4.4
    
    Form of Series A Warrant (incorporated by reference
to Exhibit 4.3 to our Current Report on Form 8-K/A
dated March 21, 2005).4.5
    
    Form of Series B Warrant (incorporated by reference
to Exhibit 4.4 to our Current Report on Form 8-K/A
dated March 21, 2005).10.1*
    
    Trico Marine Services, Inc. 2004 Stock Incentive
Plan (incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K dated March 16,
2005).10.2*
    
    Form of Key Employee Option Agreement (incorporated
by reference to Exhibit 10.3 to our Current Report
on Form 8-K dated March 16, 2005).10.3*
    
    Form of Executive Option Agreement (incorporated by
reference to Exhibit 10.4 to our Current Report on
Form 8-K dated March 16, 2005).10.4*
    
    Director Option Agreement for Joseph S. Compofelice
(incorporated by reference to Exhibit 10.5 to our
Current Report on Form 8-K dated March 16, 2005).10.5*
    
    Retirement Agreement for Non-Executive Chairman
(incorporated by reference to Exhibit 10.8 to our
Current Report on Form 8-K dated March 16, 2005).10.6*
    
    Amendment to Retirement Agreement for Non-Executive
Chairman (incorporated by reference to Exhibit 10.9
to our Current Report on Form 8-K dated March 16,
2005).10.7*
    
    Employment Agreement dated as of July 9, 2007,
between Trico Marine Services, Inc. and Joseph S.
Compofelice (incorporated by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q/A dated November 5, 2007).10.8*
    
    Schedule of Director Compensation Arrangements (1)10.9*
    
    Employment Agreement dated as of September 1, 2005,
between Trico Marine Services, Inc. and Geoff A.
Jones (incorporated by reference to Exhibit 10.17
to our Quarterly Report on Form 10-Q dated November
4, 2005).10.10*
    
    Description of amendment to Employment Agreement of
Geoff A. Jones, effective as of March 21, 2007
(incorporated by reference to Exhibit 10.17 to our
Quarterly Report on Form 10-Q dated November 4,
2005).10.11*
    
    Employment Agreement dated as of September 1, 2005,
between Trico Marine Services, Inc. and Trevor
Turbidy (incorporated by reference to Exhibit 10.19
to our Quarterly Report on Form 10-Q dated
November 4, 2005).10.12*
    
    Shipbuilding Contract 2000, dated as of March 31,
2006, by and between Trico Shipping A S and
Solstrand AS (incorporated by reference to Exhibit
1.1 of our Current Report on Form 8-K dated April
6, 2006).10.13*
    
    Employment Agreement, effective as of May 8, 2006,
by and between Trico Marine Services, Inc. and
 72




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##### Table of Contents



ExhibitNumberLarry D. Francois (incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K
dated May 23, 2006).10.14*
    
    Amended and Restated Employment Agreement,
effective as of July 1, 2006, by and between Trico
Marine Services, Inc. and Rishi Varma (incorporated
by reference to Exhibit 10.3 to our Current Report
on Form 8-K dated July 6, 2006).10.15*
    
    Description of amendment to Amended and Restated
Employment Agreement of Rishi A. Varma, effective as
of March 21, 2007. (1)10.16*
    
    Shareholders Agreement, dated as of December 20,
2005, by and between Trico Marine Services (Hong
Kong) Limited and China Oilfield Services Limited
(incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K dated July 6, 2006).10.17*
    
    Employment Agreement, effective as of July 5, 2006,
by and between Trico Marine Services, Inc. and
Robert V. OConnor (incorporated by reference to
Exhibit 10.4 to our Current Report on Form 8-K
dated July 6, 2006).10.18
    
    Amended to the Shareholders Agreement, dated as of
June 29, 2006, by and among Trico Marine Services
(Hong Kong) Limited, China Oilfield Services
Limited and Eastern Marine Services Limited
(incorporated by reference to Exhibit 10.2 to our
Current Report on Form 8-K dated July 6, 2006).10.19
    
    Construction Contract, by and between Trico Marine
Assets, Inc. and Bender Shipbuilding & Repair Co.
Inc. (incorporated by reference to Exhibit 1.1 to
our Current Report on Form 8-K dated September 8,
2006).10.20*
    
    Amended and Restated Employment Agreement dated as
of January 23, 2007, between Trico Marine Services,
Inc. and D. Michael Wallace (incorporated by
reference to Exhibit 10.1 to our Current Report on
Form 8-K dated January 29, 2007).10.21*
    
    Trico Annual Incentive Plan (incorporated by
reference to Exhibit 10.1 to our Current Report on
Form 8-K dated February 7, 2006).10.22
    
    Indenture of Trico Marine Services, Inc. and Wells
Fargo Bank, National Association, as Trustee, dated
February 7, 2007 (incorporated by reference to
Exhibit 10.18 to our Annual Report on Form 10-K
dated March 2, 2007).10.23
    
    Registration Rights Agreement, by and among Trico
Marine Services, Inc. and the Initial Purchasers,
dated February 7, 2007 (incorporated by reference
to Exhibit 10.19 to our Annual Report on Form 10-K
dated March 2, 2007).10.24
    
    Stock Purchase Agreement, by and between Trico
Marine Services, Inc. and Kistefos AS, dated August
9, 2007 (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K dated August 13,
2007).10.25
    
    Letter Agreement, by and between Trico Marine
Services, Inc. and Kistefos AS, dated August 29,
2007 (incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K dated August 29,
2007).10.26
    
    Rights Agreement, dated as of April 9, 2007,
between Trico Marine Services, Inc. and Mellon
Investor Services LLC, as Rights Agent, including
the form of Certificate of Designation of Series A
Junior Participating Preferred Stock of Trico
Marine Services, Inc. attached thereto as Exhibit
A, the form of Rights Certificate attached thereto
as Exhibit B and the Summary of Rights to Purchase
Preferred Shares attached thereto as Exhibit C
(incorporated by reference to Exhibit 4.1 to our
Current Report on Form 8-K dated April 9, 2007).10.27
    
    Change of control letter agreement, dated as of
January 23, 2007, by and between Trico Marine
Services, Inc. and Tomas Salazar. (1)14.1
    
    Financial Code of Ethics (incorporated by reference
to Exhibit 14.1 to our Annual Report on Form 10-K
dated March 16, 2005).21.1
    
    Subsidiaries of the Company.(1)23.1
    
    Consents of experts and counsel.(1)31.1
    
    Certification of Chief Executive Officer pursuant
to Rule 13A-14(A) and Rule 15D-14(A) of the
Securities Exchange Act, as amended.(1)31.2
    
    Certification of Chief Financial Officer pursuant
to Rule 13A-14(A) and Rule 15D-14(A) of the
Securities Exchange Act, as amended.(1)32.1
    
    Certification of Chief Executive Officer and Chief
Financial Officer under Section 906 of the
Sarbanes- Oxley Act of 2002, 18 U.S.C. §1350. (1)
 
 *
    
    Management Contract or Compensation Plan or Arrangement.(1)
    
    Filed herewith 73