SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                         THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended December 31, 1999

                         Commission File Number 0-28732

                            HVIDE MARINE INCORPORATED

          (Exact  name of registrant as specified in its charter)

                   Delaware                                    65-0966399
          (State or other jurisdiction of                    (I.R.S. Employer
          incorporation or organization)                  Identification Number)

          2200 Eller Drive, P.O. Box 13038
          Ft. Lauderdale, Florida                                 33316
          (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code:  (954) 523-2200

Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered  pursuant  to  Section  12(g) of the Act:  Class A Common
Stock, $.01 par value

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. YES X NO __

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

         The  aggregate  market value of the  registrant's  Common Stock held by
non-affiliates  of the  registrant at March 29, 2000 (based on the closing price
of such stock on the Over-the-Counter Bulletin Board) was $122,500,000.

         At March 29, 2000,  there were  10,000,000  shares of the  registrant's
Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         DOCUMENT                                          WHERE INCORPORATED

         Proxy Statement for Annual Meeting
         to be held June 15, 2000 (specified portions)           Part III




<PAGE>






                            HVIDE MARINE INCORPORATED

                                 1999 FORM 10-K

                                Table of Contents
<TABLE>
<CAPTION>

Item                                                                                                           Page

                                     Part I
<S>     <C>                                                                                                 <C>
1        Business...........................................................................................   3
2        Properties.........................................................................................  17
3        Legal Proceedings..................................................................................  17
4        Submission of Matters to a Vote of Security Holders................................................  18
4A       Executive Officers of the Registrant...............................................................  18

                                     Part II

5        Market for Registrant's Common Equity and Related Stockholder Matters..............................  21
6        Selected Financial Data............................................................................  22
7        Management's Discussion and Analysis of Financial Condition and Results of
         Operations.........................................................................................  23
7A       Quantitative and Qualitative Disclosures About Market Risk.........................................  36
8        Financial Statements and Supplementary Data........................................................  36
9        Changes in and Disagreements With Accountants on Accounting and Financial
         Disclosure.........................................................................................  37

                                    Part III

10       Directors and Executive Officers of the Registrant.................................................  38
11       Executive Compensation.............................................................................  38
12       Security Ownership of Certain Beneficial Owners and Management.....................................  38
13       Certain Relationships and Related Transactions.....................................................  38

                                     Part IV

14       Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................................  39


</TABLE>


<PAGE>


                                     PART I

Item 1.  Business

General

         We provide marine support and transportation  services domestically and
internationally,  primarily serving the energy and chemical industries.  We have
been an  active  consolidator  in each  of the  markets  in  which  we  operate,
increasing  our fleet from 23 vessels in 1993 to 274 vessels at  year-end  1999.
Our three  principal  markets are domestic  and  international  offshore  energy
support   services,   domestic   offshore  and  harbor  towing   services,   and
transportation  of  specialty  chemicals  and  petroleum  products  in the  U.S.
domestic trade. Our offshore energy support fleet provides services to operators
of offshore oil and gas  exploration,  development and production  facilities in
the Gulf of Mexico,  the Arabian Gulf,  offshore West Africa and Southeast Asia.
We are the sole provider of commercial tug services at Port  Everglades and Port
Canaveral,  Florida and a leading provider of those services in Tampa,  Florida,
Mobile, Alabama, Lake Charles,  Louisiana,  and Port Arthur, Texas. Our domestic
transportation  fleet  includes  five new  double-hull  chemical  and  petroleum
product carriers delivered in 1998 and 1999.

         From  September 9 to December 15, 1999 we operated under the protection
of the reorganization  provisions of chapter 11 of the U.S. Bankruptcy Code. For
more information  about recent  developments in our business,  see "--Our Recent
Reorganization."  As used in this Report, the terms "we," "the Company" and "the
Successor Company" refer to Hvide Marine Incorporated,  a Delaware  corporation,
and its  pre-reorganization  predecessor (the "Predecessor  Company"), a Florida
corporation of the same name, and their  subsidiaries.  Our principal  executive
offices  are  located at 2200 Eller  Drive,  P.O.  Box 13038,  Fort  Lauderdale,
Florida 33316, and our telephone number is (954) 523-2200.

Projections and Other Forward-Looking Information

         This  Report  contains,  and other  communications  by us may  contain,
projections or other "forward-looking" information.  Forward-looking information
includes all statements  regarding our expected financial  position,  results of
operations, cash flows, financing plans, business strategy, budgets, capital and
other expenditures,  competitive position,  growth opportunities for existing or
new services,  management plans and objectives, and markets for securities. Like
any other business,  we are subject to risks and other  uncertainties that could
cause our actual results to differ materially from any projections or that could
cause  other  forward-looking  information  to prove  incorrect.  In addition to
general  economic and business  risks,  some of the specific  risks to which our
business is subject are:

o    declines  in  oil  or  gas  prices,  which  tend  to  cause  reductions  in
     exploration, development and production activities and, in turn, reductions
     in the use of  offshore  energy  support  vessels and in the rates paid for
     their use;

o    increased  construction of new offshore energy support  vessels,  which can
     cause oversupply in the market and consequent  reductions in the use of our
     offshore energy support vessels and rates paid for their use;

o    international  political  instability,  which  can  lead to  reductions  in
     exploration,  development and production  activities,  particularly in less
     developed regions;

o    fluctuations in weather,  which can lead to declines in energy  consumption
     and resulting declines in oil or gas prices;

o    changes  in  laws  and  regulations  affecting  the  marine  transportation
     industry,  including any possible  weakening of the Jones Act,  which could
     result in increased  competition  from  non-U.S.  companies in our domestic
     offshore  energy  support,  towing  and  petroleum  product  transportation
     businesses; and

o    changes in  environmental  laws and  regulations,  including  any  possible
     weakening of the U.S.  Oil  Pollution  Act of 1990 ("OPA 90"),  which could
     result in increased  competition for the petroleum  product  transportation
     services provided by our modern double-hull fleet.

         Additional  information regarding these and other factors affecting our
business appears elsewhere in this Report.

Our Recent Reorganization

         The events leading to the reorganization.  Between 1997 and early 1998,
we completed a number of acquisitions  and built new vessels that  substantially
expanded our offshore energy support  operations into several new  international
markets,  increased the  deepwater  capability  of our offshore  energy  support
fleet,  and  expanded  our domestic  harbor and  offshore  towing and  petroleum
product  transportation  operations.  Our  principal  sources of cash to finance
these acquisitions and vessel construction contracts were bank borrowings,  cash
provided by  operations,  Title XI debt,  proceeds from two public  offerings of
common  stock,  proceeds from an offering of $119.0  million of trust  preferred
securities and proceeds from an offering of $300.0 million  principal  amount of
senior notes. The significant  increase in our indebtedness  incurred to finance
these  acquisitions and newbuilds placed great demands on our capital  resources
beginning in mid-1998, when market forces brought about a precipitous decline in
our revenues.

         The revenues of our offshore  energy  support fleet are dependent  upon
the  level of  offshore  oil and gas  exploration,  development  and  production
activities,  which are in turn heavily  dependent upon the  prevailing  price of
crude oil and natural gas.  Beginning in late 1997 and continuing  through 1998,
crude oil prices declined substantially,  which resulted in a severe downturn in
these offshore  activities,  and in turn, in the revenues of our offshore energy
support  operations.  As a result of this decline in revenues,  we experienced a
liquidity  crisis  beginning  at the end of September  1998,  and were unable to
comply with some of the financial covenants in our bank loan agreement. Although
the lending banks agreed to  modifications  of these  covenants,  the continuing
decline  in our  revenues  caused us to be unable  to comply  with the  modified
financial covenants at the end of the first quarter of 1999.

         Our lending banks agreed to further waivers of our  noncompliance  with
covenants,  which were accompanied by substantial fees and increases in interest
rates.  Despite  these  waivers,  adoption  of a  cash  management  program  and
reduction in operating and overhead expenses during 1999, we were unable to make
a $12.5  million  interest  payment due on August 16, 1999 on our senior  notes.
Discussions  with an informal  committee  of holders of the senior notes and the
trust  preferred  securities led to our filing of a petition under Chapter 11 of
the U.S. Bankruptcy Code on September 8, 1999.

         The  reorganization.   Under  our  reorganization  plan,  which  became
effective on December 15, 1999:

o    the holders of the $300.0 million of senior notes received 9,800,000 shares
     of our common stock (representing 98.0% of our currently outstanding common
     stock) in exchange for their notes;

o    the holders of the $115.0 million of trust  preferred  securities  received
     200,000 shares of our common stock  (representing  2.0% of our  outstanding
     common  stock),  as well as Class A  Warrants  to  purchase  an  additional
     125,000 shares at $38.49 per share, in exchange for those securities;

o    our former  stockholders  received  Class A Warrants to purchase a total of
     125,000 shares of our common stock;

o    claims of general and trade creditors were unaffected; and

o    we reincorporated from Florida to Delaware.

         We also  obtained  new  credit  facilities  from a group  of  financial
institutions.  The new facilities,  totaling  $320.0 million,  consist of $200.0
million in term loans,  a $25.0 million  revolving  credit  facility,  and $95.0
million in aggregate  principal amount at maturity of new 12 1/2% senior secured
notes due 2007. As  consideration  for the purchase of the senior  secured notes
and as compensation for certain financial services,  we issued to the purchasers
of the notes and to the  investment  advisors  Noteholder  Warrants  to purchase
723,861  shares of our  common  stock at an  exercise  price of $.01 per  share.
Substantially  all of the proceeds from these  facilities were used to repay all
outstanding  borrowings under our prior bank loans and to pay administrative and
other  fees and  expenses.  The  balance  of the  proceeds  and the $25  million
revolving  credit  facility  is  available  to be used for  working  capital and
general corporate purposes.

         The  Reorganized  Company.  Although our  reorganization  significantly
reduced our debt, we still have substantial debt and debt service  requirements,
in absolute terms and in relation to stockholders'  equity.  Our ability to meet
our debt service  obligations will depend on a number of factors,  including our
ability to maintain operating cash flow, which in turn will depend in large part
upon  improvement  in the industry  conditions  that led to our  reorganization.
Those  conditions  have not yet  improved  significantly,  and,  despite  recent
increases  in oil and gas  prices,  are  not  expected  to  improve  unless  the
increases  are  sufficiently  sustained  to  lead  to  upturns  in  exploration,
development and production activities.

         In addition, as a result of our need to reduce capital expenditures, we
have deferred  required  drydockings of a number of our offshore  energy support
vessels that are laid up due to lack of demand.  We have also  deferred  certain
non-essential  vessel  maintenance.  If and when industry conditions improve, we
might not have the capital  resources  with which to proceed  with the  required
drydockings  and maintenance or to proceed with them on as timely a basis as our
competitors.  Also, as a result of our need to conserve capital,  during 1999 we
sold some of our newest  offshore energy support  vessels,  including some still
under  construction,  and  cancelled  the  construction  of  others,  which  may
adversely affect our ability to compete with operators having more modern fleets
than ours.

Recent Developments

         Due to continuing weakness in day rates and utilization in the offshore
energy support business,  as well as adverse market conditions in our towing and
transportation  businesses,  we  anticipate  that  earnings  will be lower  than
expected in the first quarter of 2000. As a result, we anticipated that we would
not be in compliance with certain  covenants in our bank credit  agreement as of
March 31, 2000 as well as future dates if market conditions did not improve.  We
have entered into an amendment to the credit  agreement  with our lending  banks
under which the relevant covenants have been modified through March 31, 2001 and
we are  required  to prepay  principal  under the term loans  aggregating  $10.0
million  before June 30,  2000,  $35 million  before  August 31,  2000,  and $60
million  before  January 1, 2001.  We intend to sell vessels and other assets to
obtain the funds with which to make these  payments.  Some of these sales may be
at less than book value. The amended credit agreement  further provides that, in
the event the we have not made the required  principal  payments as scheduled or
achieved  certain  target levels of EBITDA for the third and fourth  quarters of
2000,  the  lending  banks may  require  us to sell  additional  vessels,  to be
selected by the  lending  banks,  with an  aggregate  fair  market  value of $35
million on a timetable  specified  by the lending  banks.  Additionally,  we are
required to obtain the consent of the lending banks to borrow in excess of $17.5
million under the revolving loan portion of the credit facility. We are required
to pay a fee of $4.5  million  to the  lending  banks  in  connection  with  the
amendment of the credit  agreement.,  payable in the form of a promissory  note,
accruing  interest  at 15% per annum,  due the earlier of (i) April 2002 or (ii)
the date on which the ratio of our funded indebtedness to EBITDA for any quarter
is less than four to one.

Fleet Overview

         The following  table lists the types of vessels we owned or operated as
of March 15, 2000:

                                                                       Vessels
                                                                      in Fleet
                                                                   -------------
     Marine Support Services
         Domestic Offshore Energy Support:
        Supply Boats................................................       25
          Crew/Utility Boats........................................       39
          Geophysical Boats.........................................        3
                                                                          ---
               Total Domestic Offshore Energy Support...............       67
       International Offshore Energy Support:                              40
          Anchor Handling Tugs......................................       30
          Supply Boats..............................................       17
          Crew/Utility Boats........................................       35
          Specialty Units...........................................       11
                                                                         ----
               Total International Offshore Energy Support..........      133
       Offshore and Harbor Towing Tugs..............................       37
                                                                         ----
               Total Marine Support Services........................      237
                                                                         ----
     Marine Transportation Services

       Fuel Barges..................................................       17
       Towboats.....................................................        9
                                                                         ----
               Total Marine Transportation Services.................       37
                                                                         ----
                      Total Vessels.................................      274
                                                                          ===

These  include 265 vessels  that we own and operate,  seven  vessels that we own
that are operated by others, and two vessels owned by others but operated by us,
under various financing and operating arrangements.

         For financial  information  about our business  segments and geographic
areas of operation, see Note 19 to our financial statements.

Marine Support Services

   Offshore Energy Support

         Offshore  energy  support  vessels  are  used  primarily  to  transport
materials, supplies, equipment and personnel to drilling rigs and to support the
construction,  positioning  and  ongoing  operation  of oil and  gas  production
platforms.  Offshore  energy support  vessels are hired,  or "chartered," by oil
companies and others engaged in offshore exploration and production activities.

         The market for these services is  fundamentally  driven by the offshore
exploration,  development  and  production  activities  of oil and gas companies
worldwide.  The  level of these  activities  depends  primarily  on the  capital
expenditures  of oil and gas  producers,  which is largely a function of current
and  anticipated  oil and gas  prices.  Oil and gas prices are  influenced  by a
variety of factors, including worldwide demand, production levels,  governmental
policies  regarding  exploration  and  development  of reserves,  and  political
factors in producing countries.

         Offshore  energy  support  services  are  provided   primarily  by  the
following types of vessels:

o    Supply boats (also called workboats) are generally steel-hull vessels of at
     least 150 feet in length. They serve exploration and production  facilities
     and  support  offshore  construction  and  maintenance  activities  and are
     differentiated  from other vessel types by cargo  flexibility and capacity.
     In  addition  to  transporting  deck  cargo,  such as drill  pipe and heavy
     equipment,  supply boats transport  liquid mud, potable and drilling water,
     diesel fuel, dry bulk cement, and dry bulk mud. With their relatively large
     liquid mud and dry bulk cement capacity and large areas of open deck space,
     they are  generally in greater  demand than other types of support  vessels
     for exploration and workover drilling activities.

o    Crew boats (also  called  crew/supply  boats) are faster and  smaller  than
     supply boats and are used primarily to transport personnel and light cargo,
     including food and supplies,  to and among production  platforms,  rigs and
     other offshore installations. They are chartered together with supply boats
     to support drilling or construction operations or, separately, to serve the
     various  requirements  of  offshore  production  platforms.  Crew boats are
     typically  constructed  of aluminum and generally  have longer useful lives
     than  steel-hull  supply  boats.  Crew boats also provide a  cost-effective
     alternative to helicopter  transportation services and can operate reliably
     in all but the most severe weather conditions.

o    Anchor handling vessels, which include anchor handling tug/supply boats and
     some tugs,  are more  powerful  than  supply  boats and are used to tow and
     position drilling rigs, production facilities and construction barges. Some
     are  specially  equipped  to assist  tankers  while they are  loading  from
     single-point  buoy  mooring  systems,  and some are used in place of supply
     boats when not performing towing and positioning functions.

         From 1989 until mid-1997,  our offshore energy support  operations were
conducted  primarily in the U.S.  Gulf of Mexico from  facilities  in Lafayette,
Louisiana. At that time, we began the substantial expansion of our international
offshore energy support fleet. In addition,  in response to deteriorating market
conditions in the U.S. Gulf of Mexico in 1998, we redeployed some of our vessels
from the U.S. Gulf to international  markets. Our current primary  international
markets are the Arabian Gulf and adjacent areas, offshore West Africa, Southeast
Asia and  Mexico.  We also  operate  offshore  energy  support  vessels in other
regions,  including  Europe and Central  and South  America.  Operations  in the
Arabian Gulf,  Southeast Asia and adjacent areas are directed from facilities in
Dubai,  United Arab Emirates;  operations offshore West Africa and certain other
international areas are directed from facilities in Lausanne,  Switzerland;  and
operations in Mexico are directed from our Lafayette,  Louisiana facilities.  We
also have sales offices and/or  maintenance and other  facilities in many of the
countries where our vessels operate.

         The following table shows the deployment of our offshore energy support
fleet at March 15, 2000.

                                      Location                          Vessels

                       Arabian Gulf and adjacent areas                     80
                       U.S. Gulf of Mexico                                 61
                       West Africa                                         30
                       Southeast Asia                                      17
                       Mexico                                               8
                       Other                                                4

         The average age of our offshore  energy support  vessels,  based on the
later of the date of construction or rebuilding,  is approximately 18 years, and
approximately 31% of them are more than 20 years old. After a vessel has been in
service for  approximately 30 years, the costs of repair,  vessel  certification
and maintenance may not be economically justifiable.

Harbor and Offshore Towing

         Our  harbor  tugs  serve  six  ports in  Florida,  Alabama,  Texas  and
Louisiana,  where they assist petroleum  product carriers,  barges,  other cargo
vessels and cruise ships in docking and undocking  and in proceeding  within the
port  areas  and  harbors.  We also  operate  seven  tugs with  offshore  towing
capabilities  that conduct a variety of offshore  towing services in the Gulf of
Mexico and the Atlantic Ocean.  Our tug fleet consists of 24 conventional  tugs,
10 tractor tugs and three Ship Docking Modules(TM),  known as SDMs(TM). SDMs(TM)
are innovative ship docking vessels,  designed and patented by us, that are more
maneuverable,  efficient  and flexible,  and require  fewer crew  members,  than
conventional harbor tugs.

         Harbor Tug Operations.  In most U.S. ports, competition is unregulated.
However,  a few ports grant  non-exclusive  franchises to harbor tug  operators;
these  include  Port  Canaveral  and  Port  Everglades,  Florida,  where  we are
currently the sole franchisee,  and Tampa and Port Manatee (near Tampa), Florida
where we are currently a leading provider of commercial tug services.  Rates are
unregulated in all ports,  including the franchised  ports,  that we serve. Each
port is generally a distinct market for harbor tugs, even though harbor tugs can
be moved from port to port.

         Port  Everglades.  Port  Everglades  has the second  largest  petroleum
non-refining  storage and  distribution  center in the United States,  providing
substantially all of the petroleum products for south Florida.  Since 1958, when
our tug operations  commenced,  we have enjoyed a franchise as the sole provider
of docking  services in the port. The franchise  specifies,  among other things,
that five tugs  serve  the port and that  three be less than 90 feet in  length,
because of the narrowness of slips in the port, and that tugs have  firefighting
capability.  The franchise is not exclusive,  and a competing  operator could be
granted an additional  franchise.  The current  franchise  expires in 2007,  and
there  can be no  assurance  that it will be  renewed.  At March  15,  2000,  we
operated  five tugs in Port  Everglades  and were the port's  sole  provider  of
harbor towing services.

         Tampa.  We expanded  our harbor  towing  services to Tampa  through the
October 1997  acquisition of an established  operator in the port.  Tampa is the
tenth largest port in the continental United States in terms of tonnage. Because
the port is  comprised  of three  "sub-ports"  (including  Port  Manatee)  and a
distant  sea buoy,  a greater  number of tugs is  required  to be a  competitive
operator in Tampa than in other ports of similar  size.  At March 15,  2000,  we
operated  11 tugs,  including  six tractor  tugs,  in the port  (including  Port
Manatee).  We were the  principal  harbor  tug  operator  in the port until late
October  1999,  when  another  company  began  operations  in the port.  The new
competitor  includes two of our former executives  involved in the management of
our Tampa  operations,  whom we  believe  violated  legal  obligations  to us in
assisting the competitor.  While we have instituted  litigation  against the two
executives,  the new competitor has obtained some of our former market share and
has also instituted litigation against us under the antitrust laws.

         Port Canaveral.  In Port Canaveral,  like Port Everglades,  we have the
sole franchise to provide harbor docking services. In this port, the smallest of
the Company's harbor tug operations,  we provide docking and undocking  services
for  commercial  cargo  vessels  serving  central  Florida and for cruise  ships
visiting the Disney  World/Kennedy Space Center attractions.  Our franchise is a
month-to-month  arrangement  and, there can be no assurance that we will be able
to retain our franchise in Port  Canaveral.  At March 15, 2000, we operated four
tugs in Port  Canaveral  and were the  port's  sole  provider  of harbor  towing
services.

         Mobile.  At this  port,  we  provide  docking  and  undocking  services
primarily to commercial cargo vessels,  including vessels  transporting coal and
other bulk exports. We believe that we provide from 40% to 50% of the harbor tug
business in this port, where we operated three tugs at March 15, 2000.

         Port Arthur and Lake  Charles.  In March 1998 we acquired  seven harbor
tugs.  Currently,  four of these tugs serve Port Arthur,  Texas,  two serve Lake
Charles,  Louisiana,  and one serves  both  harbors.  Each of these  ports has a
competing provider of harbor tug services.

         Offshore Towing Operations.  We operate seven tugs with offshore towing
capabilities that conduct a variety of offshore towing services in the U.S. Gulf
of Mexico,  the Bay of Campeche  in Mexico and the  Atlantic  Ocean.  Demand for
towing services depends on vessel traffic,  which is in turn generally dependent
on local and national economic conditions.  OPA 90 and state legislation require
oil tankers to be escorted in and around certain ports located in Alaska and the
U.S. Pacific coast.

Marine Transportation Services

         We provide marine  transportation  services,  principally for specialty
chemicals and petroleum products, in the U.S. domestic, or "coastwise," trade, a
market largely insulated from international competition under the Jones Act.

         Chemical  Transportation.  In the U.S. domestic chemical transportation
trade, vessels carry chemicals, primarily from chemical manufacturing plants and
storage tank facilities along the coast of the U.S. Gulf of Mexico to industrial
users in and around Atlantic and Pacific coast ports. The chemicals  transported
consist primarily of caustic soda, alcohol,  chlorinated  solvents,  paraxylene,
alkylates,  toluene,  methyl  tertiary butyl ether (MTBE),  phosphoric  acid and
lubricating  oils.  Coastwise  chemical  tonnage  demand has increased in recent
years as a result of the general  expansion of the U.S.  economy and as gasoline
additives have begun to move coastwise.  Some of the chemicals  transported must
be carried in vessels with specially coated or stainless steel cargo tanks; many
of them are very sensitive to contamination  and require special  cargo-handling
equipment.

         At March 15, 2000, we operated the following chemical carriers:

                                                              Tonnage (in dead
 Name of Vessel             Capacity (in barrels)          weight tons or "dwt")
 --------------             ---------------------          ---------------------

 Seabulk Magnachem                  298,000                        39,300
 Seabulk America                    297,000                        46,300
 HMI Petrochem                      360,000                        49,900
 HMI Dynachem                       360,000                        49,900
 HMI Ambrose Channel                341,000                        45,000
 HMI Brenton Reef                   341,000                        45,000

         We operate the Seabulk  Magnachem  under a long-term  bareboat  charter
expiring  in  February  2002.  We own a 67.0%  equity  interest  in the  Seabulk
America;  the remaining 33.0% interest is owned by Stolt Tankers (U.S.A.),  Inc.
We own a 75.8%  equity  interest in the HMI Ambrose  Channel and the HMI Brenton
Reef and have an option  through  December  31, 2000 to purchase  the  remaining
minority interest.

         The Seabulk Magnachem,  Seabulk America, HMI Dynachem and HMI Petrochem
have full double bottoms (as distinct from double hulls). Double bottoms provide
increased  protection  over  single-hull  vessels  in the event of a  grounding.
Delivered  in  1977,  the  Seabulk  Magnachem  is a  CATUG  (or  catamaran  tug)
integrated tug and barge,  or "ITB," which has a higher level of  dependability,
propulsion efficiency and performance than an ordinary tug and barge.  Delivered
in 1990,  the  Seabulk  America is the only  vessel in the U.S.  domestic  trade
capable of carrying  large cargoes of acid, as a result of its large  high-grade
alloy  stainless  steel tanks,  and the only such vessel  strengthened  to carry
relatively  heavy  cargoes  such as  phosphoric  and other  acids.  The  Seabulk
America's  stainless steel tanks were constructed  without  internal  structure,
which  greatly  reduces cargo  residue from  transportation  and results in less
cargo degradation. Stainless steel tanks, unlike epoxy-coated tanks, also do not
require  periodic  sandblasting  and recoating.  The HMI Ambrose Channel and HMI
Brenton Reef are two of our five new double-hull carriers.

         All of our  chemical  carriers  have  from 13 to 24 cargo  segregations
which are configured,  strengthened,  and coated to handle various sized parcels
of a wide variety of industrial chemical and petroleum products, giving them the
ability to handle a broader  range of chemicals  than  chemical-capable  product
carriers.  Many of the chemicals we transport are hazardous substances.  Voyages
are currently  generally  conducted from the Houston and Corpus Christi,  Texas,
and Lake  Charles,  Louisiana  areas to such  ports as New  York,  Philadelphia,
Baltimore,  Wilmington, North Carolina, Charleston, South Carolina, Los Angeles,
San Francisco, and Kalama,  Washington.  Our chemical carriers are also suitable
for transporting other cargoes, including grain.

         Pursuant to OPA 90, the Seabulk  America,  HMI Dynachem,  HMI Petrochem
and Seabulk Magnachem (which unlike the two new double-hull  carriers were built
with full  double  bottoms  but not double  sides)  cannot be used to  transport
petroleum and petroleum  products in U.S.  commerce after 2015,  2011, 2011, and
2007, respectively.

         We market our chemical  carriers  through our wholly owned  subsidiary,
Ocean Specialty Tankers Corporation ("OSTC"). We believe that the total capacity
of these  carriers  represents  a  substantial  portion of the  capacity  of the
domestic  specialty chemical carrier fleet, and that these chemical carriers are
among the last  independently  owned carriers  scheduled to be retired under OPA
90.

         OSTC  books  cargoes  either on a spot  (movement-by-movement)  or time
basis.  Approximately  75% of  contracts  for  cargo are  committed  on a 12- to
30-month  basis,  with minimum and maximum  cargo  tonnages  specified  over the
period at fixed or  escalating  rates per ton.  OSTC is often  able to  generate
additional  revenues by chartering  cargo space on  competitors'  vessels and by
expanding the carriers' backhaul (return voyage) opportunities.

         Petroleum Product Transportation. In the domestic energy transportation
trade, oceangoing and inland-waterway vessels transport fuel and other petroleum
products,  primarily from refineries and storage  facilities  along the coast of
the U.S. Gulf of Mexico,  to utilities,  waterfront  industrial  facilities  and
distribution  facilities along the U.S. Gulf of Mexico, the Atlantic and Pacific
coasts and inland rivers. The inventory of U.S.-flag oceangoing vessels eligible
to participate in the U.S.  domestic trade and capable of  transporting  fuel or
petroleum  products has steadily  decreased  since 1980, as vessels have reached
the end of their  useful  lives  and the cost of  constructing  a vessel  in the
United  States  (a  requirement  for  U.S.  domestic  trade  participation)  has
substantially increased.

         At  March  15,  2000,  we  operated  the  following  petroleum  product
carriers:

                                                           Tonnage (in dead
    Name of Vessel             Capacity (in barrels)     weight tons or "dwt")
    --------------             ---------------------    ----------------------

    HMI Cape Lookout Shoals            340,000                  46,000
    HMI Diamond Shoals                 340,000                  46,000
    HMI Nantucket Shoals               340,000                  46,000
    HMI Defender                       260,000                  36,600
    HMI Trader                         250,000                  32,200

         The HMI Cape  Lookout  Shoals,  HMI  Diamond  Shoals and HMI  Nantucket
Shoals are the remaining  three of our five new double-hull  carriers.  We own a
75.8% equity  interest in the five carriers and have an option through  December
31, 2000 to purchase the remaining minority interest. The cost of exercising the
option  to  acquire  the  remaining  24.2%  interest  in all  five  carriers  is
approximately $11.0 million. Should we fail to exercise the option, we will then
have a right of first  refusal to purchase  the  minority  interest for the same
amount plus interest accrued from December 31, 2000.

         We acquired the HMI  Defender  and HMI Trader in March 1998.  Under OPA
90, these vessels cannot be used to transport  petroleum and petroleum  products
in U.S. commerce after 2008 and 2000, respectively.

         Our  petroleum  product  carriers  are also  marketed  through OSTC and
operate under  short-term spot charters or longer-term  charters  depending upon
market  conditions.  One of the new carriers is subject to a three-year  charter
commencing in the second  quarter of 2000 with a subsidiary of Tesoro  Petroleum
Corporation  to transport  crude oil and petroleum  products in Alaska and other
locations.

         Sun State. Our Sun State Marine Services subsidiary owns and operates a
petroleum  transportation fleet of nine towboats and 17 barges, all of which are
primarily  engaged  in  fuel  transportation  along  the  Atlantic  intracoastal
waterway and the St. Johns River in Florida.

         The   majority  of  Sun  State's   revenue  is  derived   from  a  fuel
transportation  contract with Steuart Petroleum  Company,  in which Sun State is
responsible  for  handling  all marine  deliveries  including  the  servicing of
Steuart's paper mill, electric utility and vessel bunker customers. The contract
with Steuart  Petroleum is up for renewal on November 30, 2000. The remainder of
its marine transportation revenue is derived from fuel transportation and towing
contracts  with  other  customers  along with its  marine  maintenance,  repair,
drydocking and construction facility.

         OPA 90 requires all  single-hull  barges,  including those owned by Sun
State, to discontinue transporting fuel and other petroleum products in 2015. We
recently  constructed two double-hull  barges at a cost of $1.0 million each and
previously purchased four additional double-hull barges for an aggregate of $2.4
million  (exclusive  of  refurbishment  costs  aggregating   approximately  $2.6
million).

Other Services

         Sun State also owns and operates a small vessel maintenance, repair and
construction  drydocking  facility  in Green  Cove  Springs,  Florida,  which is
engaged  principally in the  maintenance  and  construction  of tugs and barges,
offshore  support  vessels and other small vessels.  The lease for the facility,
including  optional  renewals,  expires  in 2005.  This  facility  is capable of
drydocking  vessels up to 300 feet in length  for  repair and can make  dockside
repairs on vessels up to 320 feet in length.  Since 1994,  when we acquired  Sun
State,  the  facility  has been  utilized to overhaul or rebuild a number of our
harbor tugs and offshore energy support vessels.  It also services vessels owned
by  others.  The  facility  (originally  a  U.S.  government  naval  repair  and
operations  station) has covered  steel  fabrication  facilities,  workshops and
office spaces adjacent to a 1,840-foot finger pier and mooring basins, where the
facility's three floating drydocks are located.  The drydocks are 60, 80 and 108
feet in length, and are capable of lifting 300, 200 and 700 tons,  respectively.
The 60- and 108-foot drydocks are capable of being joined together for lifting a
vessel or barge  with a nominal  capacity  of 1,000  long  tons.  Sun State also
maintains  another  yard,  primarily  for use in new  construction  projects and
vessels requiring  long-term  repairs.  The yard has a marine railway capable of
lifting and launching  vessels  weighing up to 600 tons,  and a 600-foot  finger
pier with adjacent covered steel  fabrication  facilities,  workshops and office
space.

         We also own a 40-acre  facility in Port Arthur,  Texas that serves as a
storage and supply base and a facility for topside  repairs.  This  facility has
1200 feet of dock space and is suitable for development as a shipyard.

Customers and Charter Terms

         We  offer  our  offshore  energy  support  services  primarily  to  oil
companies and large drilling companies.  Consistent with industry practice,  our
U.S.  Gulf of Mexico  operations  are  conducted  primarily in the "term" market
pursuant to  short-term  (less than six  months)  charters at varying day rates.
Generally,  such  short-term  charters  can be  terminated  either  by us or our
customers  upon  notice  of five  days or less.  Charters  in our  international
markets have terms ranging from a few days to several years.

         Our offshore and harbor  towing  services are offered to vessel  owners
and  operators and their  agents.  Our rates for harbor towing  services are set
forth  in  published  tariffs  and  may be  modified  at any  time,  subject  to
competitive  factors.  We also grant  volume  discounts to major users of harbor
services. Offshore towing services are priced based upon the service required on
an ad hoc basis.

         The primary purchasers of chemical transportation services are chemical
and oil companies.  The primary  purchasers of petroleum product  transportation
services are utilities,  oil companies,  and large industrial  consumers of fuel
with waterfront  facilities.  Both services are generally  contracted for on the
basis of short- or  long-term  time  charters,  voyage  charters,  contracts  of
affreightment,  or other  transportation  agreements  tailored to the  shipper's
requirements. CITGO, which accounted for 6.7% of our 1999 revenues, is currently
our  largest  single  customer  with  a  contract  of  affreightment  commitment
utilizing up to three ships of their choosing.  In addition,  Equiva Trading Co.
is a purchaser of our marine transportation services and accounted for 5% of our
1999  revenues.  On a segment  basis in 1999,  CITGO  accounted for 15.3% of our
marine transportation services revenues,  Oceanografia, S.A. accounted for 12.9%
of our harbor and offshore towing revenues,  and Elf Petroleum  accounted for 6%
of our offshore energy support revenues.

Competition

         We operate in a highly  competitive  environment in all our operations.
Recent adverse publicity  concerning our financial  condition and bankruptcy has
harmed  our  ability  to  attract  new  customers  and  to  maintain   favorable
relationships  with  our  existing   customers  and  suppliers.   The  principal
competitive  factors in each of the markets in which we operate are  suitability
of equipment,  personnel, price, service and reputation.  Competitive factors in
the  offshore  energy  support  segment also include  operating  conditions  and
intended  vessel use (both of which  determine the  suitability of vessel type),
the complexity of maintaining  logistical  support and the cost of  transferring
equipment  from  one  market  to  another.   Our  vessels  that  provide  marine
transportation  services  compete with both other vessel  operators and, in some
areas and markets, with alternative modes of transportation,  such as pipelines,
rail tank cars and tank trucks. Moreover, the users of such services are placing
increased  emphasis  on  safety,  the  environment  and  quality,  partly due to
heightened   liability   for  the  cargo   owner  in   addition  to  the  vessel
owner/operator  under OPA 90. With  respect to towing  services,  we compete not
only with other providers of tug services in the ports in which we operate,  but
with the providers of tug services in nearby ports. Many of our competitors have
substantially greater financial and other resources than we do. A new competitor
recently entered the harbor tug market in Tampa, and additional  competitors may
enter our  markets  in the  future.  Moreover,  should  U.S.  coastwise  laws be
repealed,  foreign-built,  foreign-manned  and  foreign-owned  vessels  could be
eligible to compete with our vessels operating in the domestic trade.

Environmental and Other Regulation

         Our  operations  are subject to  significant  federal,  state and local
regulation, the principal provisions of which are described below.

         Environmental.  Our operations are subject to federal,  state and local
laws and regulations relating to safety and health and environmental protection,
including  the  generation,  storage,  handling,  emission,  transportation  and
discharge  of  hazardous  and  non-hazardous  materials.  The  recent  trend  in
environmental legislation and regulation is generally toward stricter standards,
and this trend will likely  continue.  We believe that our operations  currently
are in substantial compliance with applicable environmental regulations.

         Governmental  authorities  have the power to  enforce  compliance  with
applicable regulations, and violations are subject to fines, injunction or both.
We do not expect that we will be  required in the near future to expend  amounts
that are  material  to our  financial  condition  or  operations  by  reason  of
environmental laws and regulations;  however,  because such laws and regulations
are frequently changed and may impose  increasingly  stricter  requirements,  we
cannot predict the ultimate cost of complying with these laws and regulations.

         OPA 90. OPA 90 established an extensive regulatory and liability regime
for the protection of the environment from oil spills. OPA 90 affects owners and
operators of facilities operating near navigable waters and owners and operators
of vessels operating in United States waters, which include the navigable waters
of the United  States and the  200-mile  exclusive  economic  zone of the United
States.  Although  it applies in general to all  vessels,  for  purposes  of its
liability   limits   and    financial-responsibility    and    response-planning
requirements,  OPA 90  differentiates  between tank vessels  (which  include our
chemical and petroleum  products  carriers and fuel barges) and "other  vessels"
(which include our tugs and offshore energy support vessels).

         Under OPA 90, owners and operators of facilities, and owners, operators
and certain  charterers of vessels,  are "responsible  parties" and are jointly,
severally  and strictly  liable for removal  costs and damages  arising from oil
spills relating to their facilities and vessels, unless the spill results solely
from  the  act or  omission  of a third  party,  an act of God or an act of war.
Damages are defined  broadly to include  (i) natural  resources  damages and the
costs of  assessment  thereof;  (ii)  damages for injury to, or economic  losses
resulting from the  destruction  of, real and personal  property;  (iii) the net
loss of taxes,  royalties,  rents,  fees and profits by the U.S.  government,  a
state or  political  subdivision  thereof;  (iv) lost profits or  impairment  of
earning capacity due to property or natural resources damage;  (v) the net costs
of providing  increased or additional  public  services  necessitated by a spill
response,  such as protection from fire,  safety or other hazards;  and (vi) the
loss of subsistence use of natural resources.

         For  facilities,  the  statutory  liability of  responsible  parties is
limited  to  $350  million.   For  tank  vessels,  the  statutory  liability  of
responsible  parties is  limited  to the  greater of $1,200 per gross ton or $10
million ($2  million  for a vessel of 3,000 gross tons or less) per vessel;  for
any "other  vessel," such  liability is limited to the greater of $600 per gross
ton or $500,000 per vessel.  Such liability limits do not apply,  however, to an
incident  proximately  caused by violation of federal  safety,  construction  or
operating  regulations or by the responsible party's gross negligence or willful
misconduct,  or if the responsible party fails to report the incident or provide
reasonable  cooperation and assistance as required by a responsible  official in
connection with oil removal activities. Although we currently maintain pollution
liability insurance, a catastrophic spill could result in liability in excess of
available  insurance  coverage,  resulting in a material  adverse  effect on our
business.

         Under OPA 90,  with  certain  limited  exceptions,  all newly  built or
converted  oil  tankers  operating  in United  States  waters must be built with
double hulls, and existing  single-hull,  double-side or  double-bottom  vessels
must be phased out at some point,  depending  upon their size,  age and place of
discharge,  through 2015 unless  retrofitted  with double hulls.  As a result of
this  phase-out  requirement,  as  interpreted  by the  U.S.  Coast  Guard,  our
single-hull  chemical and petroleum  product  carriers will be required to cease
transporting petroleum products over the next 15 years, and its "single-skinned"
fuel barges will cease transporting fuel in 2015.

         OPA 90 expanded pre-existing financial responsibility  requirements and
requires  vessel  owners and operators to establish and maintain with the United
States Coast Guard evidence of insurance or  qualification  as a self-insurer or
other evidence of financial  responsibility  sufficient to meet their  potential
liabilities under OPA 90. Coast Guard regulations  require evidence of financial
responsibility   demonstrated  by  insurance,  surety  bond,  self-insurance  or
guaranty.   The   regulations   also  implement  the  financial   responsibility
requirements  of the  Comprehensive  Environmental  Response,  Compensation  and
Liability  Act of 1980  ("CERCLA"),  which imposes  liability for  discharges of
hazardous  substances  such as  chemicals,  in an amount equal to $300 per gross
ton, thus increasing the overall amount of financial  responsibility from $1,200
to  $1,500  per  gross  ton.  We  have  obtained   "Certificates   of  Financial
Responsibility"  pursuant  to the Coast  Guard  regulations  for our product and
chemical  carriers  through  self-insurance  and  commercial  insurance  and  as
guarantor for the fuel barges.

         OPA 90 also amended the federal Water Pollution  Control Act to require
the owner or operator of certain  facilities  or the owner or operator of a tank
vessel to prepare  facility or vessel  response  plans and to contract  with oil
spill  removal  organizations  to remove to the  maximum  extent  practicable  a
worst-case discharge. We have complied with these requirements. As is customary,
our oil spill  response  contracts are executory in nature and are not activated
unless required.  Once activated,  our pollution  liability insurance covers the
cost of spill removal subject to overall coverage limitations and deductibles.

         OPA 90 does not  prevent  individual  states  from  imposing  their own
liability regimes with respect to oil pollution incidents occurring within their
boundaries,  and many states have enacted  legislation  providing  for unlimited
liability  for oil spills.  Some states  have  issued  implementing  regulations
addressing oil spill liability, financial responsibility and vessel and facility
response  planning  requirements.  We do not anticipate that such legislation or
regulations will have any material impact on our operations.

         In addition to OPA 90, the  following  are  examples of  environmental,
safety and health laws that relate to our operations:

         Water. The Federal Water Pollution Control Act ("FWPCA") or Clean Water
Act  ("CWA")  imposes  restrictions  and strict  controls  on the  discharge  of
pollutants into navigable  waters.  Such discharges are typically  authorized by
National Pollutant  Discharge  Elimination  System ("NPDES") permits.  The FWPCA
provides for civil,  criminal and administrative  penalties for any unauthorized
discharges and imposes substantial potential liability for the costs of removal,
remediation  and  damages.  State laws for the control of water  pollution  also
provide varying civil, criminal and administrative  penalties and liabilities in
the case of a discharge of petroleum,  its  derivatives,  hazardous  substances,
wastes  and  pollutants  into  state  waters.  In  addition,  the  Coastal  Zone
Management Act authorizes  state  implementation  and development of programs of
management  measures  for  non-point  source  pollution  to restore  and protect
coastal waters.

         We  manage  our  exposure  to  losses  from  potential   discharges  of
pollutants  through  the use of  well-maintained  and  well-managed  facilities,
well-maintained and well-equipped vessels, safety and environmental programs and
our insurance  program,  and believe we will be able to  accommodate  reasonably
foreseeable  environmental  regulatory  changes.  There  can  be  no  assurance,
however, that any new regulations or requirements or any discharge of pollutants
by the Company will not have an adverse effect on us.

         Solid   Waste.   Our   operations   may  generate  and  result  in  the
transportation, treatment and disposal of both hazardous and non-hazardous solid
wastes that are subject to the requirements of the federal Resource Conservation
and Recovery Act ("RCRA") and comparable state and local requirements. In August
1998, the EPA added four petroleum refining wastes to the list of RCRA hazardous
wastes.

         Clean Air Regulations. The federal Clean Air Act of 1970, as amended by
the Clean Air Act Amendments of 1990,  requires the EPA to promulgate  standards
applicable  to  the  emission  of  volatile  organic  compounds  and  other  air
pollutants.  Our vessels are subject to vapor control and recovery  requirements
when loading, unloading, ballasting, cleaning and conducting other operations in
certain  ports.  Our chemical and petroleum  product  carriers are equipped with
vapor control systems that satisfy these  requirements.  The fuel barges are not
equipped  with,  and are not operated in areas that require,  such  systems.  In
addition,  it is anticipated that the EPA will issue regulations  addressing air
emission requirements  applicable to marine engines.  Adoption of such standards
could require modifications to existing marine diesel engines in some cases.

         Coastwise  Laws. A substantial  portion of our operations are conducted
in the U.S.  domestic  trade,  which is  governed by the  coastwise  laws of the
United  States  (commonly  referred to as the Jones  Act).  The  coastwise  laws
reserve marine transportation  (including harbor tug services) between points in
the United States (including  drilling rigs fixed to the ocean floor on the U.S.
outer  continental  shelf) to vessels built in and documented  under the laws of
the United States (U.S. flag) and owned and manned by U.S. citizens.  Generally,
a  corporation  is deemed a  citizen  for  these  purposes  so long as (i) it is
organized  under the laws of the U.S. or a state,  (ii) each of its president or
other chief  executive  officer and the  chairman of its board of directors is a
citizen,  (iii) no more than a minority of the number of its directors necessary
to constitute a quorum for the  transaction  of business are  non-citizens,  and
(iv)  75% of the  interest  and  voting  power  in the  corporation  are held by
citizens.  Because we could lose our  privilege of operating  our vessels in the
U.S.  domestic trade if non-citizens  were to own or control in excess of 25% of
our  outstanding  capital  stock,  our  Certificate  of  Incorporation  contains
restrictions concerning foreign ownership of our stock.

         There have been repeated efforts aimed at repeal or significant  change
of the Jones Act.  Although we believe it is unlikely that the Jones Act will be
substantially modified or repealed, there can be no assurance that Congress will
not  substantially  modify or repeal  it.  Such  changes  could  have a material
adverse effect on our operations and financial condition.

         Occupational  Health   Regulations.   Our  facilities  are  subject  to
occupational  safety  and  health  regulations  issued by the U.S.  Occupational
Safety and Health Administration and comparable state programs. Such regulations
currently require us to maintain a workplace free of recognized hazards, observe
safety and health  regulations,  maintain records and keep employees informed of
safety and health practices and duties.  Our vessel  operations are also subject
to  occupational  safety and health  regulations  issued by the U.S. Coast Guard
and,  to an  extent,  OSHA.  Such  regulations  currently  require us to perform
monitoring, medical testing and record keeping with respect to seamen engaged in
the handling of the various  cargoes  transported  by our chemical and petroleum
products carriers.

         Vessel  Condition.   Our  chemical  and  petroleum  products  carriers,
offshore  energy  support  vessels,  certain of our tugs and our fuel barges are
subject to periodic  inspection and survey by, and  drydocking  and  maintenance
requirements  of, the Coast Guard  and/or the  American  Bureau of Shipping  and
other marine  classification  societies whose periodic  certification  as to the
construction and maintenance of certain vessels is required in order to maintain
insurance  coverage.  All of our  vessels  requiring  certification  to maintain
insurance coverage are certified.

         Oil Tanker  Escort  Requirements.  Implementation  of oil tanker escort
requirements  of OPA 90 and pending state  legislation are expected to introduce
certain  performance or  engineering  standards on tugs to be employed as tanker
escorts. We believe our tractor tugs will be able to comply with any existing or
currently  anticipated  requirements  for  escort  tugs.  Adoption  of such  new
standards  could  require  modification  or  refitting  of the tugs we currently
operate to the extent they are employed as tanker escorts.  We do not anticipate
OPA 90 or state  requirements to require  modification of tugs such as ours that
are involved in harbor tug operations.

         We believe we are currently in compliance in all material respects with
the  environmental  and other laws and regulations,  including health and safety
requirements, to which our operations are subject and are unaware of any pending
or  threatened  litigation  or other  judicial,  administrative  or  arbitration
proceedings  against it occasioned by any alleged  non-compliance with such laws
or regulations.  The risks of substantial costs,  liabilities and penalties are,
however,  inherent  in marine  operations,  and there can be no  assurance  that
significant  costs,  liabilities or penalties will not be incurred by or imposed
on us in the future.

         International   Laws  and   Regulations.   Our  vessels   that  operate
internationally  are  subject to various  international  conventions,  including
certain  safety,  environmental  and  construction  standards.  Among  the  more
significant   of  the   conventions   applicable  to  the  fleet  are:  (i)  the
International  Convention for the Prevention of Pollution from Ships, 1973, 1978
Protocol,  (ii) the International  Convention on the Safety of Life at Sea, 1978
Protocol,  including the International Management Code for the Safe Operation of
Ships and for Pollution  Prevention,  which went into effect for tank vessels on
July 1, 1998, and (iii) the  International  Convention on Standards of Training,
Certification  and Watchkeeping  for Seafarers,  1978, as amended in 1995. These
conventions  govern oil spills and other  matters of  environmental  protection,
worker health and safety and the manning, construction and operation of vessels.
Generally,  surveys and inspections are performed by internationally  recognized
classification   societies.   The  vessels  that  operate   internationally  are
registered  primarily in the Marshall  Islands,  Panama and St.  Vincent and The
Grenadines.

         Although  we  believe  we  are  in  substantial   compliance  with  all
applicable requirements, the risks of incurring substantial compliance costs and
liabilities  and penalties  for  noncompliance  are inherent in offshore  energy
support  operations  and  there  can be no  assurance  that  significant  costs,
liabilities  and  penalties  will not be  incurred  by or  imposed  on us in the
future.

Insurance

         Our marine transportation services operations are subject to the normal
hazards  associated with operating  vessels  carrying large volumes of cargo and
rendering  services in a marine  environment.  These hazards include the risk of
loss of or  damage  to our  vessels,  damage  to third  parties  as a result  of
collision,  loss, or contamination of cargo,  personal injury of employees,  and
pollution  and other  environmental  damages.  We  maintain  insurance  coverage
against  these  hazards.  Risk of loss of or damage to our  vessels  is  insured
through hull insurance  policies in amounts that  approximate fair market value.
Vessel  operating  liabilities,  such as collision,  cargo,  environmental,  and
personal injury,  are insured  primarily  through our  participation in a mutual
insurance  association,  Steamship  Mutual  Underwriting  Association  (Bermuda)
Limited.  Because  we  maintain  mutual  insurance,  we are  subject  to funding
requirements and coverage  shortfalls in the event claims exceed available funds
and reinsurance and to premium increases based on prior loss experience.

Employees

         As of March 15, 2000, we had approximately 2,530 employees.  Management
considers relations with employees to be satisfactory.  The Seabulk America, HMI
Trader,  and Seabulk Magnachem are manned by approximately 106 officers and crew
who are  subject  to two  collective  bargaining  arrangements  that  expire  on
December 31, 2002 and 2001,  respectively.  In addition,  the HMI Dynachem,  HMI
Petrochem,  HMI Defender,  the five new double-hull  carriers,  and seven harbor
tugs are manned by approximately  418 members of national  maritime labor unions
pursuant to an agreement  between the Company and a  third-party  employer  that
expires  December 20, 2000 for the HMI Dynachem,  HMI Petrochem and HMI Defender
and June 21, 2001 for the five new double-hull carriers.

Item 2.  Properties

         The  Company's  principal  offices  are  located  in  Fort  Lauderdale,
Florida, where the Company leases approximately 36,000 square feet of office and
shop space under a lease  expiring in 2009.  The Company also leases  office and
other  facilities  in  Lafayette,  Louisiana;  the  United  Arab  Emirates;  and
Lausanne,  Switzerland.  In addition,  the Company  leases sales offices  and/or
maintenance  and other  facilities  in many of the  locations  where its vessels
operate.  The Company  believes that its facilities  are generally  adequate for
current and anticipated  future use,  although the Company may from time to time
lease additional facilities as operations require.

Item 3.  Legal Proceedings

         Under United States law,  "United States  persons" are prohibited  from
performing contracts in support of an industrial,  commercial, public utility or
governmental  project in the Republic of Sudan, or facilitating such activities.
During 1999, two vessels owned by subsidiaries of the Company performed services
for third parties in support of energy  exploration  activities in Sudan; one of
these  vessels  continued to perform such services  until January 31, 2000.  The
Company has reported these activities to the Office of Foreign Assets Control of
the  United  States  Department  of the  Treasury  and to the  Bureau  of Export
Administration of the United States Department of Commerce. Should either of the
agencies determine that these activities  constituted  violations of the laws or
regulations  administered by them,  civil and/or criminal  penalties,  including
fines,  could be assessed  against the Company  and/or certain  individuals  who
knowingly  participated in such  activities.  The Company cannot predict whether
any  such  penalties  will be  imposed  or the  nature  or  extent  of any  such
penalties.

         In  Marine  Towing  of  Tampa,   Inc.  v.  Hvide  Marine  Towing,   No.
8:00-CV-444-T-26C, a civil action filed in March 2000 in the U.S. District Court
for the Middle  District of Florida,  the  plaintiff  seeks  unspecified  treble
damages from the Company as a result of alleged  violations of federal and state
antitrust  laws.  The  plaintiff,  Marine  Towing  of  Tampa,  Inc.,  has been a
competitor  of the Company in the harbor  towing  business in the port of Tampa,
Florida since October 1999 and alleges that the Company has obtained an unlawful
monopoly in  providing  tug  services in Tampa Bay and has  unlawfully  used its
monopoly  power and engaged in a  conspiracy  in  restraint of trade to restrain
others,  including  the  plaintiff,  from  competing in the port and to maintain
prices at  artificially  high levels.  The specific  acts of which the plaintiff
complains  include  the  non-exclusive  franchise  granted  by  the  Tampa  Port
Authority to the Company,  the Company's  reduction of its rates and granting of
discounts to specific customers when confronted with competition,  the Company's
one-year exclusive-provider agreements with customers, and the Company's alleged
disparagement of the plaintiff's  service.  The Company believes that it has not
engaged in any unlawful conduct, that the plaintiff has not been restrained from
competing in the market,  and that the suit has no merit. The Company intends to
vigorously defend the suit.

         In J. Erik Hvide and Betsy  Hvide v.  Hvide  Marine  Incorporated,  No.
5640-02,  a civil  action  filed in March 2000 in the  Circuit  Court of Broward
County,  Florida,  the  Company's  former chief  executive  officer and his wife
allege that the Company has  breached  an  agreement  to provide Mr.  Hvide with
severance  benefits valued at approximately $1.0 million.  In addition,  Mr. and
Mrs. Hvide allege that the Company's conduct, in obtaining the return of certain
of the  Company's  property from Mr. Hvide and in  discontinuing  the payment of
life insurance premiums, constituted an intentional course of conduct calculated
to cause them severe  emotional  distress and public  humiliation for which they
seek unspecified  punitive  damages.  The Company believes that it never reached
any agreement with Mr. Hvide concerning  compensation relating to his severance,
that it engaged in no conduct  intended to cause harm to Mr. or Mrs. Hvide,  and
that the suit has no merit. The Company intends to vigorously defend the suit.

         From time to time the  Company is also party to  litigation  arising in
the ordinary course of its business, most of which is covered by insurance.

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

         Not applicable.



<PAGE>



Item 4A.  Executive Officers

         The executive officers of the Company are:
<TABLE>
<CAPTION>

Name                                     Age                              Current Positions
<S>                                  <C>         <C>
Jean Fitzgerald.....................     73      Chairman of the Board, Chief Executive Officer and Director
Eugene F. Sweeney...................     57      President, Chief Operating Officer and Director
Walter S. Zorkers...................     53      Executive  Vice  President, Chief Financial Officer and Director
Andrew W. Brauninger................     53      Senior Vice President--Offshore
                                                       Division and President--Seabulk Offshore, Ltd
Walton S. Kinsey....................     49      Senior Vice President, General Counsel and Secretary
William R. Ludt.....................     52      Senior Vice President, President--Hvide Marine Towing, Inc.
John J. O'Connell, Jr...............     56      Senior  Vice   President--Corporate   Communications  and  Investor
                                                 Relations and Assistant Secretary
Leo T. Carey........................     48      Vice President--Ship Management
Arthur T. Denning...................     45      Vice President--Engineering
Eileen Florian......................     55      Vice President--Risk Management
L.  Stephen Willrich................     47      Vice President and President--Ocean Specialty Tankers Corporation

</TABLE>


         Mr.  Fitzgerald  has been Chairman and Chief  Executive  Officer of the
Company  since June 1999. He has served as a director of the Company since March
1994.  From 1990 to 1992,  he was  Executive  Vice  President  of NDE  Testing &
Equipment,  Inc., a nationwide  storage-tank testing company. From 1988 to 1990,
he was with Frederic R. Harris,  Inc., an international  consulting  engineering
firm. Mr. Fitzgerald was a co-founder and the President of American Tank Testing
Service,  Inc.,  a firm  that was  subsequently  acquired  by NDE  Environmental
Corporation,  from 1986 to 1987.  In 1982 and 1983,  he served as the  Company's
Vice President for Governmental  Affairs. His other business experience includes
service as President of Tracor  Marine,  Inc.  from 1976 to 1979 and Director of
Engineering  of Tracor's  Systems  Technology  Division  from 1974 to 1976.  Mr.
Fitzgerald retired from the U.S. Navy in 1974 in the rank of Captain. During his
naval career he commanded  major fleet units at sea and served in the offices of
the  Chief  of Naval  Operations  and the  Secretary  of  Defense.  He is a past
Commissioner and Chairman of the Port Everglades Authority.

         Mr.  Sweeney has been  President  since January 2000,  Chief  Operating
Officer since April 1998,  Executive Vice President  since  September 1994 and a
director  since 1984.  He was Senior Vice  President--Operations  of the Company
from  1991  to  September   1994.   He  joined  the  Company  in  1981  as  Vice
President--Ship  Management.  Prior to joining  the  Company,  Mr.  Sweeney  was
employed  for 17 years by Texaco,  Inc.,  where he served in seagoing  and shore
management  positions,  including  operations  manager of Texaco's  U.S.  tanker
fleet.  Mr.  Sweeney is on the board of  directors of the Chamber of Shipping of
America and the Florida Pilots Commission and is a member of the American Bureau
of Shipping.

         Mr.  Zorkers has been  Executive  Vice  President  and Chief  Financial
Officer since January 2000. He was Senior Vice President--Corporate  Development
since April 1997. Prior to joining the Company, Mr. Zorkers was the principal of
Commonwealth  Management Group, a management  consulting firm. From 1993 to 1995
he served as  Executive  Vice  President  of Boston  Pacific  Medical,  Inc.,  a
manufacturer of disposable medical products.

         Mr. Brauninger has been Senior Vice President--Offshore  Division since
August 1997. He was Vice President--Offshore  Division from 1990 until July 1997
and has been President of Seabulk Offshore,  Ltd., the Company's offshore energy
support  services  subsidiary,  since  September  1994. He was Vice President of
Offshore Operations from 1990 to September 1994 and Vice  President--Development
from 1989 to 1990.  From  1987 to 1989,  Mr.  Brauninger  was  President  of OMI
Offshore Services, Inc., an operator of offshore service vessels. Previously, he
was  employed  by Sabine  Towing  and  Transportation  Company,  where he held a
variety of posts including Vice President--Harbor Division.

         Mr.  Kinsey  has  been  Senior  Vice  President,  General  Counsel  and
Secretary  since April 2000. He was  previously  Branch Chief in the Division of
Enforcement of the U.S. Securities and Exchange  Commission,  which he joined in
1995 as Senior Counsel.  Prior to that, Mr. Kinsey practiced general  securities
law in  Florida  and  Washington,  D.C.  with the  firms of  Gunster,  Yoakley &
Stewart;  Malizia,  Spidi, Sloane & Fisch; and Muldoon,  Murphy & Faucette. From
1974 to 1982 he served in the Office of the Comptroller of the State of Florida,
first as Chief  Investigator and then as Deputy  Comptroller.  He is a member of
both the Florida and District of Columbia Bar Associations.

         Mr. Ludt has been Senior Vice  President  and President of Hvide Marine
Towing,  Inc.  since  December 1999 and President of Sun State Marine  Services,
Inc.,  since  September 1994. He was  Director--Fleet  Operations of the Company
from 1982 to  September  1994.  Since  joining the Company in 1979,  he has also
served  as Fleet  Manager  and Port  Engineer.  He served  as  President  of the
Chemical  Carriers  Association from 1989 to 1990 and as its Vice President from
1990 to 1992. Mr. Ludt has also served on various working groups within the U.S.
Coast Guard's Chemical  Transportation Advisory Committee concerning issues such
as vapor  control and marine  occupational  safety and health.  Mr. Ludt holds a
dual  license  as a Third  Mate and Third  Assistant  Engineer,  Steam and Motor
Vessels.

         Mr.   O'Connell   has  been  Senior   Vice   President   of   Corporate
Communications  and Investor  Relations since January 2000. He is also Assistant
Secretary.  He was Vice  President--Corporate  Communications since August 1996,
when he  joined  the  Company.  From  September  1995 to  August  1996 he was an
independent  consultant.  Previously,  he  served  in a  variety  of  management
positions  with W. R. Grace & Co. for 20 years,  most  recently  as  Director of
Public Affairs.  Mr.  O'Connell was a member of the  President's  Private Sector
Survey on Cost Control in the Federal Government from 1982 to 1984.

         Mr. Carey has been Vice President--Ship Management since November 1996.
He  previously  served as  Director of  Operations  for the  Company's  fleet of
chemical  and  petroleum  product  carriers.  He joined  the  Company in 1981 as
Superintendent  Engineer.  Prior to that, he served with El Paso Marine Co. as a
deck officer and maintenance manager.

         Mr. Denning has been Vice President--Engineering  since August 1997. He
previously  served as Director of  Engineering of the Company from November 1994
to July 1997, and as  Superintendent  Engineering from September 1986 to October
1994.

         Miss Florian has been Vice President - Risk  Management  since February
2000. She was previously  Director of Risk Management  since 1997 and Manager of
Risk Management since 1995. She joined the Company in 1980 as Benefits Manager.

         Mr.  Willrich has been a Vice President of the Company and President of
OSTC since March 1998. He was Senior Vice President of OSTC from August 1996. He
served as Vice  President  of  Chartering  of OSTC from January  1988.  Prior to
joining the Company,  Mr.  Willrich was  employed by Diamond  Shamrock  Chemical
Company from 1975 to 1988, where he rose to Division  General Manager.  Prior to
his service with Diamond Shamrock, he worked for Gulf Oil Corporation as a Third
Assistant  Engineer  on various  company  tankers.  He has more than 25 years of
experience in the management of Jones Act product tankers.


<PAGE>



                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

          The  Predecessor  Company's  Class A Common Stock began trading on the
NASDAQ  National Market on August 9, 1996 under the symbol "HMAR." Prior to that
date,  there was no  established  public  trading  market for the Class A Common
Stock.  On  September  28, 1999,  the common stock was delisted  from the NASDAQ
National  Market.  Subsequent  to September  28, 1999 and prior to the Effective
Date of the Plan, the  Predecessor  Company's Class A Common Stock was traded on
the OTC Bulletin Board under the symbol  "HMARQ." Prior to the Effective Date of
the Plan, the  Predecessor  Company's  Class B Common Stock was not traded on an
established  public  trading  market.  The  Predecessor  Company did not pay any
dividends  on its common  stock in 1998 or in 1999.  Pursuant to the Plan,  each
class of the Predecessor Company's common stock was canceled as of the Effective
Date.

          In  connection   with  the   emergence   from  Chapter  11  bankruptcy
protection,  the Successor  Company issued  10,000,000  shares of Class A Common
Stock and 250,000 Class A Warrants.  As of and  subsequent to the Effective Date
of the Plan, the Successor  Company's  Class A Common Stock and Class A Warrants
were traded on the OTC  Bulletin  Board under the  symbols  "HVDM" and  "HVDMW,"
respectively.  The Successor Company has not paid and does not expect to pay any
dividends on its Class A Common Stock.

          The  following  table sets forth the high and low closing  sale prices
per share of the Predecessor  Company's Class A Common Stock, as reported by the
NASDAQ National Market and the OTC Bulletin Board, through the Effective Date of
the Plan and the  Successor  Company's  Common  Stock and Class A  Warrants,  as
reported by the OTC Bulletin  Board,  subsequent  to the  Effective  Date of the
Plan.

          Predecessor Company

                                                         High           Low

         1998

            First Quarter .............................   25 3/4      16 5/8
            Second Quarter.............................   18 1/4      12
            Third Quarter..............................   13 5/8       6 3/4
            Fourth Quarter.............................    8 3/8       4 1/2

         1999

            First Quarter..............................    6 1/8       3 15/16
            Second Quarter.............................    3 1/2       1 19/32
            Third Quarter..............................    2 11/32       17/32
            Fourth Quarter (through December 15).......      15/32        7/64

         Successor Company

         Common Stock

         1999

            Fourth Quarter (from December 15)..........      --            --

         2000

            First Quarter (through March 15)...........   16           9 3/4

         Class A Warrants

         1999

            Fourth Quarter (from December 15)..........      --            --

         2000

            First Quarter (through March 15)...........    5             1/4

         As of March  15,  2000,  there  were  three  holders  of  record of the
Successor Company's Class A Common Stock.

Item 6.  Selected Financial Data.

         Upon emergence from its Chapter 11 proceeding the Company adopted Fresh
Start   Accounting,   see  "---  Fresh  Start  Reporting."  Thus  the  Company's
consolidated balance sheets and statements of operation and cash flows after the
Effective Date reflect a new reporting Company and are not comparable to periods
prior to the Effective Date.

          The  financial  data  presented  below  includes  the  results  of the
Predecessor Company for the period from January 1, 1999 to December 15, 1999 and
the Successor Company for the period December 16, 1999 to December 31, 1999. The
principal   differences  between  these  periods  relate  to  reporting  changes
regarding the  Company's  capital  structure,  changes in  indebtedness  and the
revaluation of the Company's long-term assets to reflect reorganization value at
the Effective Date.

          The selected  consolidated  financial data  presented  below should be
read in conjunction with the consolidated financial statements and notes thereto
and "Management's  Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this Report.


<PAGE>


<TABLE>
<CAPTION>


                                                                       Predecessor                                   Successor
                                                                         Company                                       Company
                                                                                                  Period from        Period from
                                                                                                 January 1 to      December 16 to
                                                          Year Ended December 31,                December 15,       December 31,
                                                 -------------------------------------------     ------------       ------------
                                                      1995       1996       1997        1998(5)      1999(6)            1999
                                                   ---------- ---------- ----------  -----------  ------------       -----------
                                                                       (in thousands, except share data)
<S>                                               <C>          <C>        <C>         <C>          <C>              <C>
Consolidated Statement of Operations Data:

   Revenues.....................................     $ 70,562   $109,356   $210,257    $404,793      $328,751         $ 13,479
   Operating expenses...........................       39,147     60,720    104,933     213,601       212,753            8,047
   Overhead expenses............................       12,518     14,979     24,791      43,179        47,814            1,643
   Depreciation, amortization and drydocking....        7,825     12,887     25,200      64,244        79,410            2,069
                                                   ----------  ---------   --------    --------     ---------       ----------
   Income (loss) from operations................       11,072     20,770     55,333      83,769      (11,226)            1,720
   Interest expense, net (1)....................       11,460     11,631      7,024      41,238        70,374            2,688
   Other income (expense).......................           26        437    (3,704)     (5,692)      (32,129)            (597)
   Reorganization items (2).....................           --         --         --          --     (433,273)               --
                                                   ----------  ---------   --------    --------     ---------       ----------
   Income (loss) before income taxes and
     extraordinary item.........................        (362)      9,576     44,605      36,839     (547,002)          (1,565)
   Provision for (benefit from) income
     taxes......................................          (2)      3,543     16,950      13,489      (32,004)               --
                                                   ---------- ----------  ---------   ---------    ----------       ----------
   Income (loss) before extraordinary item......        (360)      6,033     27,655      23,350     (514,998)          (1,565)
   Gain (loss) on extinguishment of debt (3)....           --    (8,108)    (2,132)     (1,602)       266,643               --
                                                   ----------  --------- ----------  ----------   -----------       ----------
   Net income (loss)............................   $     (360) $ (2,075)   $ 25,523    $ 21,748    $(248,355)       $  (1,565)
                                                   =========== =========   ========    ========    ==========       ==========
     Diluted earnings (loss) per common share:

       Income (loss) before extraordinary item..   $    (0.14) $    0.99   $   1.75    $   1.43    $  (33.22)       $   (0.16)
                                                   =========== =========   ========    ========    ==========       ==========
       Net income (loss)........................   $    (0.14) $  (0.24)   $   1.63    $   1.35    $  (16.02)       $   (0.16)
                                                   =========== =========   ========    ========    ==========       ==========
       Weighted average number of shares
         and common equivalent shares
         outstanding............................         2,535     6,590     17,120      19,451        15,503           10,000
                                                   =========== =========   ========    ========    ==========       ==========
   Other Financial Data:
     EBITDA (4).................................   $   18,897  $  33,657   $ 80,533    $148,013   $   68,184        $    3,789
                                                   ==========  =========   ========    ========   ==========        ==========
</TABLE>


<TABLE>
<CAPTION>


                                                                       Predecessor                                        Successor
                                                                         Company                                            Company
                                                                                                           Period from   Period from
                                                                                                          January 1 to   December 16
                                                                                                                               to
                                                                  Year Ended December 31,              December 15,     December 31,
                                                       ----------------------------------------------   ------------    ------------
                                                           1995        1996       1997       1998 (5)        1999(6)        1999
                                                       ---------     ------    -------    -----------   -------------   ------------
                                                                                (In thousands)
<S>                                                <C>            <C>           <C>          <C>            <C>          <C>

Consolidated Statement of Cash Flows Data:
Net cash provided by (used in):
     Operating activities........................    $     3,948     $ 22,584    $  40,042   $    66,918   $    9,042      $  1,137
     Investing activities........................         (8,066)     (84,354)    (261,343)     (501,314)      (9,672)       (1,597)
     Financing activities........................            805       68,337      226,636       429,550       11,521        (1,491)

</TABLE>

<TABLE>
<CAPTION>

                                                                          Predecessor                        Successor
                                                                            Company                            Company
                                                                                   At December 31,
                                                          1995         1996       1997       1998 (5)          1999 (6)
                                                        --------     ------    -------    ---------------   -----------
                                                                                      (In thousands)
<S>                                                 <C>           <C>         <C>         <C>              <C>
Consolidated Balance Sheet Data:

   Working capital (deficit).....................    $   4,315       $(8,704)     $ 25,790   $ (216,802)    $    30,645
   Total assets..................................      143,683        273,473      604,561     1,355,267        830,740
   Total long-term obligations...................      100,766        124,454      217,217       631,416        582,364
   Convertible preferred securities of a subsidiary
     trust.......................................           --             --      115,000       115,000             --
   Stockholders and minority partner's equity....       13,999        101,989      227,282       276,584        175,783

</TABLE>


(1)Interest  expense for the period from  January 1, 1999  through  December 15,
   1999  excludes  $8.8  million of  contractual  interest  that was not accrued
   during  the  Company's  Chapter  11  proceeding.  See Notes to the  Company's
   consolidated financial statements.

(2)Reorganization   items  are  comprised  of  items  directly  related  to  the
   Predecessor  Company's  Chapter  11  proceeding.  See Notes to the  Company's
   consolidated financial statements.

(3)Reflects  gains and losses on the  extinguishment  of debt, net of applicable
   income  taxes  of  $1,474,   $1,252  and  $413  for  1996,  1997,  and  1998,
   respectively.

(4)EBITDA  (net income  from  continuing  operations  before  interest  expense,
   income tax expense,  depreciation  expense,  amortization  expense,  minority
   interests,  and other non-operating  income) is frequently used by securities
   analysts and is presented here to provide  additional  information  about the
   Company's EBITDA  operations.  EBITDA is not recognized by generally accepted
   accounting  principles,  should not be  considered as an  alternative  to net
   income  as an  indicator  of the  Company's  operating  performance  or as an
   alternative to cash flows from operations as a measure of liquidity, and does
   not represent funds available for management's  use.  Further,  the Company's
   EBITDA may not be comparable to similarly  titled measures  reported by other
   companies.

(5)Reflects  the  acquisition  of a 50%  ownership  interest  in  1998,  and  an
   additional  25%  interest in 1999,  of five  newly-constructed  double-hulled
   tankers. See Notes to the Company's consolidated financial statements.

(6)Reflects the Chapter 11  reorganization  and the  application  of fresh-start
   accounting. See Notes to the Company's consolidated financial statements.


<PAGE>


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

         The Company  emerged from its Chapter 11  proceeding  and adopted fresh
start accounting on December 15, 1999 (the "Effective Date"). Thus the Company's
balance  sheets and  statements  of operation and cash flows after the Effective
Date reflect a new reporting  Company and are not comparable to periods prior to
the Effective Date.

         For purposes of comparative analysis,  the twelve months ended December
31,  1999  include the  results of the  Predecessor  Company for the period from
January 1, 1999 to December 15, 1999,  and the Successor  Company for the period
from December 16, 1999 to December 31, 1999. The principal  differences  between
these  periods  relate to reporting  changes  regarding  the  Company's  capital
structure,  changes  in  indebtedness  and  the  revaluation  of  the  Company's
long-term  assets to reflect  reorganization  value at the Effective Date. These
changes  primarily affect  depreciation  and  amortization  expense and interest
expense in the Company's results of operations.

         This discussion and analysis of the Company's  financial  condition and
historical  results  of  operations  should  be read  in  conjunction  with  the
Company's  consolidated  historical  financial  statements and the related notes
thereto included elsewhere in this Report.

Revenue Overview

  Marine Support Services

         Revenue from marine support  services is  attributable to the Company's
offshore   energy  support   operations  and  its  offshore  and  harbor  towing
operations.

Offshore  Energy  Support.  Revenue from the Company's  offshore  energy support
operations  is primarily a function of the size of the Company's  fleet,  vessel
day rates or charter rates,  and fleet  utilization.  Rates and  utilization are
primarily  a  function  of  offshore  exploration,  development  and  production
activities,  which are in turn  heavily  dependent  upon the price of crude oil.
Beginning in late 1997 and continuing  through the first half of 1999, crude oil
prices declined  substantially,  with resultant  adverse effects on exploration,
development  and  production  activities  and, in turn,  the Company's  offshore
energy support operations.  Further, in certain areas where the Company conducts
offshore  energy  support  operations  (particularly  the U.S.  Gulf of Mexico),
contracts  for the  utilization  of offshore  energy  support  vessels  commonly
include  termination  provisions with three- to five-day notice requirements and
no  termination  penalty.  As a result,  companies  engaged in  offshore  energy
support operations (including the Company) are particularly sensitive to changes
in market demand.  In late 1999, crude oil prices began to decrease and offshore
development and production activities began to increase over their 1998 levels.

         The  following  table  sets forth  average  day rates  achieved  by the
offshore  supply  boats and crew boats  owned or  operated by the Company in the
U.S. Gulf of Mexico and their average utilization for the periods indicated.


<PAGE>


<TABLE>
<CAPTION>


                                                 1997                       1998                               1999
                                      -----------------------------------------------------------------------------------------
                                         Q1     Q2      Q3     Q4     Q1     Q2    Q3      Q4       Q1      Q2     Q3     Q4
<S>                                   <C>    <C>    <C>    <C>    <C>   <C>      <C>    <C>       <C>   <C>      <C>   <C>
Number of supply boats at end
   of period(1).....................      19     21     25     26     28     29     27       24       21      21     21     21
Average supply boat day rates(2)....  $6,478 $7,176 $7,636 $8,032 $8,475 $8,211 $6,505   $5,191   $4,530  $4,049 $3,596 $3,174
Average supply boat utilization(3)..     87%    90%    91%    93%    86%    80%    55%      72%      70%     69%    75%    73%
Number of crew boats at end
   of period(4).....................      39     39     39     39     39     39     38       37       33      33     33     33

Average crew boat day rates(2)(4)...  $1,777 $1,940 $2,119 $2,294 $2,419 $2,502 $2,375   $2,383   $2,097  $1,864 $1,754 $1,837
Average crew boat utilization(3)(4).     95%    93%    95%    93%    89%    91%    77%      83%      69%     72%    75%    87%
</TABLE>


(1)  The decline in the number of supply boats beginning in the third quarter of
     1998 primarily  reflects bareboat  chartering and the redeployment of boats
     to other  global  regions in response to  declines in  utilization  and day
     rates in the U.S. Gulf of Mexico.

(2)  Average day rates are calculated based on vessels operating domestically by
     dividing  total  vessel  revenue  by the  total  number  of days of  vessel
     utilization.

(3)  Utilization is based on vessels  operating  domestically  and determined on
     the basis of a 365-day year. Vessels are considered  utilized when they are
     generating charter revenue.

(4)  Excludes  utility boats.  The decline in the number of crew boats beginning
     in the third quarter of 1998 primarily  reflects the  redeployment of boats
     to other  global  regions in response to  declines in  utilization  and day
     rates in the U.S. Gulf of Mexico.

         As  indicated  in the  above  table,  average  supply  boat  day  rates
continued  to decline in 1999.  The third and fourth  quarters  reflect a slight
improvement  in  utilization  due  to  the  increase  in  offshore   exploration
activities  in the U.S.  Gulf of  Mexico;  however,  it is unclear  whether  the
increase in exploration  activities  will continue to have a positive  effect on
utilization.  At March 31, 2000,  supply boat day rates  averaged  approximately
$3,900 per day, which reflects an increase over levels experienced in the fourth
quarter  of  1999  as a  result  of the  increased  exploration  and  production
activities  indicated  above.  The  current  level of  supply  boat day rates is
expected  to  continue  until  there  is  a  significant  increase  in  offshore
exploration, development and production activities.

         In the first half of 1999,  average crew boat day rates and utilization
declined  compared  to their  1998  levels.  However,  the  second  half of 1999
reflects a slight  improvement in day rates and  utilization due to the increase
in offshore  exploration  activities  in the U.S.  Gulf of Mexico.  At March 31,
2000, crew boat day rates averaged  approximately $1,900 per day, which reflects
an increase over levels experienced in the fourth quarter of 1999 as a result of
the increased  exploration and production  activities indicated above. As is the
case with supply boat rates,  no  substantial  improvement in crew boat rates is
anticipated  until there is a  significant  increase  in  offshore  exploration,
development and production activities

         The following table shows rate and utilization  information for foreign
operations (which commenced in the 1997 second quarter):
<TABLE>
<CAPTION>

                                                    1997                     1998 (4)                        1999
                                          Q1     Q2    Q3     Q4      Q1    Q2    Q3      Q4      Q1     Q2     Q3     Q4
<S>                                   <C>    <C>     <C>     <C>     <C>   <C>   <C>    <C>    <C>   <C>    <C>   <C>
Number of anchor handling tug/supply
boats...............................       --     9    23     23      66    67     66     69      67     69     67    67
Average anchor handling tug/supply
boat day rates(1)...................  $    -- $2,900 $3,162 $3,357 $5,505 $6,008 $5,914 $5,727 $4,817 $5,433 $4,662 $4,803
Average anchor handling tug/supply boat
utilization(1)(2)...................       --    66%   80%    75%     75%   77%    77%    77%     61%    49%    49%   47%

Number of crew/utility boats........       --      8     8      8     32    33     31     36      38     39     39    39
Average crew/utility boat
    day rates(2)....................  $    -- $1,330 $1,365 $1,344 $1,549 $1,544 $1,588 $1,616 $1,543 $1,559 $1,629 $1,749
Average crew/utility boat
    utilization(3)..................       --   100%   93%   90%     75%   76%     72%   67%      65%   48%     47%   52%
</TABLE>


(1)  Includes anchor handling tug boats.

(2)  Average day rates are calculated based on vessels operating internationally
     by  dividing  total  vessel  revenue by the total  number of days of vessel
     utilization.

(3)  Utilization is based on vessels operating internationally and determined on
     the basis of a 365-day year. Vessels are considered  utilized when they are
     generating charter revenue.

(4)  In 1997,  the Company  acquired by  acquisition  an aggregate of 82 vessels
     operating  primarily in the Middle East. In 1998,  the Company  acquired 37
     vessels operating primarily offshore West Africa.

         As indicated in the above table,  foreign  anchor  handling tugs supply
boats experienced decreased day rates in 1999 as compared with 1998. Utilization
decreased  substantially  throughout  1999 for all foreign  operated  vessels as
offshore  drilling  exploration  continued  to  decrease.  Day rates for foreign
crew/utility  boats experienced a slight decrease in the first half of the year,
but  rebounded  in the second  half of the year to levels  that are higher  than
those that have been experienced for several  quarters but at lower  utilization
rates.  Foreign rates have again declined  slightly through March 2000. At March
31, 2000,  day rates  averaged  approximately  $4,100 per day for foreign anchor
handling  tugs supply boats and  approximately  $1,600 for foreign  crew/utility
boats.

Harbor and Offshore Towing. Revenue derived from the Company's tug operations is
primarily a function of the number of tugs  available to provide  services,  the
rates charged for their  services,  and the volume of vessel  traffic  requiring
docking and other ship-assist  services.  Vessel traffic,  in turn, is largely a
function of the general trade activity in the region served by the port.

The following table summarizes  certain operating  information for the Company's
tugs.
<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                --------------------------------
                                                                                  1997        1998        1999
<S>                                                                            <C>        <C>          <C>
Number of tugs at end of period..............................................         30          41          37
Total offshore and harbor towing revenue (in thousands)......................   $ 20,424    $ 46,368    $ 42,959

</TABLE>



         In 1998, the Company  acquired or  constructed  several harbor tugs and
expanded their operations to two new ports. Revenue for 1999 reflect a full year
of operations for these tugs.  However,  total revenues decreased in 1999 due to
the  sale  of  certain   underutilized   tugboats,   decreased  offshore  towing
opportunities  and less  shipping  activity in ports served by the Company.  The
decrease in revenues was also partially due to increased competition in the Port
of Tampa. In November 1999,  certain of the Company's  former  personnel began a
competing  harbor towing  operation in the Port of Tampa. The Company is not yet
able to determine the ultimate impact of these  developments on its operation in
Tampa.

Marine Transportation

         Revenues from the Company's marine transportation  services are derived
principally  from the operations of chemical and petroleum  product  carriers in
the U.S.  Jones Act Trade,  and to a lesser  extent from  towboat and fuel barge
operations in Jacksonville, Florida.

         Chemical   Tankers.   Generally,   demand   for   industrial   chemical
transportation  services coincides with overall economic  activity.  The Company
operated  six  chemical  tankers at  December  31,  1999.  Two of the  Company's
chemical  tankers  are  newly  built  and are  owned  by  Lightship  Tankers,  a
consolidated  subsidiary  in which the  Company has a 75.8%  ownership  interest
(50.8% at December 31, 1998).  These tankers were delivered in the first half of
1999.

         Petroleum Product Tankers.  Demand for petroleum product transportation
services is dependent both on the level of production  and refining,  as well as
consumer use of  petroleum-based  products.  The Company operated five petroleum
tankers at December 31, 1999. Three of the Company's petroleum tankers are newly
built and are owned by Lightship  Tankers.  These tankers were delivered in late
1998.

         The Company's tanker fleet operates on either long-term voyage and time
charters  or  pursuant  to  short-term  arrangements.  During  1999,  two of the
Company's tankers operated under long-term contracts. In April 2000, the Company
entered  into a new  one-year  contract  for one of its  newly  built  petroleum
product tankers.

         The  following  table sets forth the number of vessels and revenues for
the Company's chemical and product carriers.
<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                ----------------------------------
                                                                                  1997       1998(1)     1999(2)
<S>                                                                           <C>          <C>          <C>
Number of vessels owned......................................................          6          11          11
Revenues (in thousands)......................................................   $ 61,229    $ 98,930    $146,555
</TABLE>

(1)  During 1998, the Company acquired two tankers and took delivery of three of
     the newly built Lightship Tankers.

(2)  During  1999,  the  Company  took  delivery  of the final  two newly  built
     Lightship  Tankers,  scrapped  one tanker that was at the end of its useful
     life,  and returned one tanker to the lessor  pursuant to the expiration of
     the lease.

         Revenues for 1999 increased  substantially over 1998 due to a full year
of operations  for the five vessels built or acquired in 1998 and a partial year
of  operations  for the two newly built  vessels  delivered in the first half of
1999. The effect of these vessels was partially  offset by the loss of two older
vessels in the fourth  quarter of 1999.  One of these  vessels was at the end of
its useful life and was scrapped and the other was returned to the lessor at the
expiration of the lease.

         Towboats and Fuel Barges.  Revenue from the Company's towboats and fuel
barges has been derived  primarily from contracts of affreightment  with FPL and
Steuart  Petroleum  Co. that require the Company to transport  fuel as needed by
those two customers,  with the Florida Power and Light Company contract having a
guaranteed  minimum  utilization.  The  principal  contract  with FPL expired in
September 1998 and the current contract expires in September 2002. Revenues from
these  operations  were $10 million in 1998 and $5.2 million in 1999. The extent
of the services  provided under the new FPL contract is substantially  less than
under the prior contract, which led to the decrease in revenues in 1999.

Overview of Operating Expenses and Capital Expenditures

         The Company's operating expenses are primarily a function of fleet size
and utilization.  The most significant  expense  categories are crew payroll and
benefits, depreciation and amortization,  maintenance and repairs, charter hire,
insurance and fuel. During periods of decreased demand for vessels,  the Company
temporarily  ceases using,  i.e. lay-ups or stacks,  certain vessels to minimize
investments in marine operating supplies, crew payroll and maintenance costs. At
December 31, 1999, 41 of the Company's 200 offshore  energy support vessels were
stacked.

         The crews of Company-manned chemical and product carriers are paid on a
time-for-time  basis under which they receive paid leave in  proportion  to time
served aboard a vessel. The crews of offshore energy support vessels and certain
tugs and towboats are paid only for days worked.

         In addition to variable expenses associated with vessel operations, the
Company  incurs  fixed  charges to  depreciate  its marine  assets.  The Company
calculates  depreciation  based on useful lives ranging from 11 to 25 years from
acquisition for its steel-hull  offshore energy support vessels,  11 to 30 years
from acquisition for aluminum-hull  vessels,  the lesser of any applicable lease
term or the OPA 90 life for its  product  and  chemical  carriers,  30 years for
newly constructed double-hulled carriers, 10 years from acquisition for its fuel
barges, and 40 years from the date built for its towboats and tugs.

         The Company capitalizes  expenditures exceeding $10,000 for product and
chemical tankers and $5,000 for all other vessels, where the item acquired has a
useful life of seven years or greater.  Vessel  improvements  are capitalized if
they  extend the useful life of the vessel or  increase  its value.  The Company
overhauls  main  engines  and  key  auxiliary  equipment  in  accordance  with a
continuous  planned  maintenance  program.  Under  applicable  regulations,  the
Company's  chemical and product  carriers and offshore  service  vessels and its
four largest tugs are required to be drydocked  twice in each  five-year  period
for  inspection  and routine  maintenance  and repairs.  These  vessels are also
required to undergo  special  surveys every five years  involving  comprehensive
inspection  and  corrective  measures to insure their  structural  integrity and
proper functioning of their cargo and ballast piping systems, critical machinery
and  equipment,  and  coatings.  The  Company's  fuel  barges,  because they are
operated  in fresh  water,  are  required  to be  drydocked  only  twice in each
ten-year  period.  The  Company's  harbor tugs and  towboats  generally  are not
required to be drydocked on a specific schedule. During the years ended December
31,  1997,  1998,  and 1999,  the  Company  drydocked  42, 90,  and 47  vessels,
respectively,  at an aggregate cost (exclusive of lost revenue) of $4.5 million,
$13.7 million,  and $11.8 million,  respectively.  The Company  accounts for its
drydocking costs under the deferral method,  under which capitalized  drydocking
costs are expensed over the period preceding the next scheduled drydocking.  See
Note 4 to the Company's consolidated financial statements.

         Charter hire  consists  primarily of payments  made with respect to the
bareboat  charter of the Seabulk  Magnachem,  which was  acquired  pursuant to a
leveraged  lease  transaction,  and operating  lease payments on the tractor tug
Broward. The Company also pays charter hire when it charters harbor tugs to meet
requirements in excess of its own tugs' availability.

         Insurance  costs consist  primarily of premiums paid for (i) protection
and indemnity  insurance for the Company's  marine  liability  risks,  which are
insured by a mutual  insurance  association of which the Company is a member and
through the commercial insurance markets;  (ii) hull and machinery insurance and
other  maritime-related  insurance,  which are provided  through the  commercial
marine  insurance  markets;  and (iii) general  liability and other  traditional
insurance, which is provided through the commercial insurance markets. Insurance
costs,  particularly costs of marine insurance,  are directly related to overall
insurance market conditions and industry and individual loss records, which vary
from year to year.

Results of Operations

         Upon emergence from its Chapter 11 proceeding the Company adopted Fresh
Start Accounting. See Note 5 to the company's consolidated financial statements.
Thus the  Company's  balance  sheets and  statements of operation and cash flows
after the Effective Date reflect a new reporting  Company and are not comparable
to periods prior to the Effective Date.

         The twelve  months  ended  December 31, 1999 include the results of the
Predecessor Company for the period from January 1, 1999 to December 15, 1999 and
the  Successor  Company for the period from  December  16, 1999 to December  31,
1999.  The  principal  differences  between  these  periods  relate to reporting
changes regarding the Company's capital  structure,  changes in indebtedness and
the  revaluation  of the Company's  long-term  assets to reflect  reorganization
value at the Effective Date.  These changes  primarily  affect  depreciation and
amortization   expense  and  interest  expense  in  the  Company's   results  of
operations.

         The following  table sets forth  certain  selected  financial  data and
percentages of net revenue for the periods indicated:
<TABLE>
<CAPTION>

                                                                      Year Ended December 31,
                                                                      -----------------------
                                                    1997                       1998                    1999
                                                    ----                       ----                    ----
                                                                           (in millions)
<S>                                       <C>         <C>           <C>           <C>          <C>      <C>
Net revenues...........................   $   210.2         100%     $     404.8      100%     $  342.2     100%
Operating expenses.....................       104.9          50%           213.6       53%        220.8      65%
Overhead expenses......................        24.8          12%            43.2       11%         49.4      14%
Depreciation, amortization and
   drydocking..........................        25.2          12%            64.2       16%         81.5      24%
                                          ---------    ---------     -----------   -------    ---------  -------
Income (loss) from operations..........   $    55.3          26%     $      83.8       21%    $    (9.5)     -3%
                                          =========    =========     ===========   =======    ========== =======

Interest expense, net..................   $     7.0           3%     $      41.2       10%    $    73.0      21%
                                          =========    =========     ===========   =======    =========  =======

Other expenses.........................   $   (3.7)          -2%     $      (5.7)      -1%    $   (32.7)    -10%
                                          =========    =========     ===========   =======    =========  =======
Reorganization items...................   $      --           --     $         --       --    $ (433.3)    -127%
                                          =========    =========     ============  =======    =========  =======
Net income (loss)......................   $    25.5          12%     $       21.7       5%    $  (249.9)    -73%
                                          =========    =========     ============  =======    ========== =======
</TABLE>


1999 Compared with 1998

         Net Revenue.  Net revenue  decreased 15% to $342.2 for 1999 from $404.8
for 1998 primarily due to decreased  revenue from the Company's  offshore energy
support operations.

         Revenue from offshore energy support operations decreased 38% to $150.3
million for 1999 from $242.6  million for 1998 due  primarily  to the  worldwide
decrease  in day rates and  utilization  for both  supply and crew  boats.  This
decline,  as described above, began in 1998 and continued in 1999 as a result of
a steep decline in energy prices and exploration and production activity.

         Marine transportation  services revenue increased 29% to $148.9 million
for 1999 from $115.7  million for 1998  primarily  due to revenue  earned by the
five new Lightship Tankers, which were brought into service between October 1998
and June 1999.  These new tankers  operate  more  efficiently  and in some cases
demand higher rates than the Company's other tankers. Revenue from Lightship was
$49.5  million in 1999  compared to $3.2  million for the three  months in 1998.
These  increases  were offset in part  because the Company  returned the Seabulk
Challenger  to the lessor at the  expiration  of the lease in  October  1999 and
scrapped  the  HMI  Astrachem,  in  November  1999  in  anticipation  of its OPA
90-mandated  retirement  date.  Combined  revenues for these  tankers were $14.9
million in 1999 compared to $17.2 million in 1998.

         Revenue from harbor and offshore  towing  decreased 7% to $43.0 million
for 1999 from $46.4  million  for 1998 due to reduced  shipping  activity in the
ports  that  the  Company  serves,  decreased  offshore  towing  activities  and
increased competition in the Port of Tampa, as described above.

         Operating  Expenses.  Operating expenses increased 3% to $220.8 million
for 1999 from $213.6 million for 1998, primarily due to increases in maintenance
and repairs of $7.0  million  and crew  payroll  and  benefits  of $3.0  million
resulting  from the  acquisition  of the Lightship  Tankers,  increased bad debt
expense and rising fuel prices  approximately  $5.3  million,  offset in part by
reduced crew payroll and benefits and maintenance of approximately  $5.7 million
on vessels that were stacked.  This factor,  combined with the general  economic
downturn experienced by the Company's offshore energy customers,  resulted in an
increase provision for uncollectible  accounts  receivable of approximately $5.2
million  in 1999,  compared  to 1998.  As a  percentage  of  revenue,  operating
expenses  increased  to 65% for 1999  from 53% for  1998  due  primarily  to the
decline in revenue from the offshore  energy  support  operations  and the other
factors noted above.

         Overhead Expenses. Overhead expenses increased 14% to $49.4 million for
1999  from  $43.2  for 1998  primarily  due to an  increase  in  consulting  and
professional fees of 53% in 1999 over 1998 incurred as a result of the Company's
liquidity issues. As a percentage of revenue, overhead expenses were 14% and 11%
for 1999 and  1998,  respectively.  The  increase  as a  percentage  of  revenue
reflects the combined effects of increased expenditures and lower revenues.

         Depreciation,   Amortization  and  Drydocking  Expenses.  Depreciation,
amortization and drydocking expenses increased 27% to $81.5 million in 1999 from
$64.2  million  in  1998.   Approximately   $7.7  million  of  the  increase  is
attributable  to an increase in the marine  transportation  operation  resulting
from the  addition of the  Lightship  Tankers.  Also,  the  Company  acquired 37
offshore  energy support vessels in the first quarter of 1998 and the results of
operations  for 1999  reflect  a full  year of  depreciation  expense  for those
acquired  vessels,  which had the effect of increasing  depreciation  expense by
approximately $9.6 million.

         Income (loss) from Operations.  Income (loss) from operations decreased
111% to $(9.5)  million in 1999 from $83.8  million in 1998,  as a result of the
factors indicated above.

         Net Interest Expense. Net interest expense increased $31.8 million from
$41.2  million  in  1998  to $73  million  in 1999  as a  result  of  additional
borrowings under the Company's revolving credit facility and additional interest
payable at default  rates of interest  from March 31, 1999 through the September
8, 1999 bankruptcy  filing date.  Besides these  increases,  the Company did not
accrue  approximately  $8.8 million of  contractual  interest  subsequent to the
bankruptcy filing on debt that was ultimately extinguished at the Effective Date
of the Plan of Reorganization. Interest expense was partially offset by interest
income of $0.9 million and $8.5 million in 1999 and 1998, respectively. Interest
income in 1998  primarily  reflects  earnings on the  proceeds of the  Lightship
Tankers  Title XI ship  financing  bonds that were  invested  pursuant  to MARAD
regulations  and  restricted  to fund the  remaining  construction  costs of the
Lightship Tankers.

         Other  Expenses.  Other expenses  increased  $27.0  million,  from $5.7
million in 1998 to $32.7 million in 1999.  The increase was primarily the result
of the loss on the sale of vessels.

         Reorganization  Items.  Reorganization  items in 1999  represent  items
directly related to the Company's Chapter 11 proceeding.  These expenses consist
primarily  of the  writedown  of  long-term  assets and  goodwill to reflect the
reorganization value of the Company and professional fees.

1998 Compared with 1997

         Revenue.  Revenue  increased 93% to $404.8 million for 1998 from $210.3
million for 1997, primarily due to increased revenue from the Company's offshore
energy support and chemical transportation operations.

         Revenue from offshore energy support operations increased 118% for 1998
over 1997,  primarily  due to an increase of $133.6  million from  acquisitions,
offset by a decrease of $2.3 million  resulting from a decrease in day rates and
utilization  rates.  Utilization of supply boats  decreased to 73% for 1998 from
93% in 1997 and domestic rates for crew boats decreased to 83% for 1998 from 93%
in  1997.  As  indicated   above  under  "Revenue   Overview  -  Marine  Support
Services-Domestic  Operations,"  average  supply boat day rates and  utilization
rates in the U.S. Gulf of Mexico  declined in the 1998 second,  third and fourth
quarters.  In  addition,  average  crew  boat day rates  and  utilization  rates
declined in the 1998 second half (although the decline was not as severe as that
of supply boat rates,  due primarily to fewer actual and  anticipated new vessel
deliveries).

         Marine transportation  services revenue increased 48% to $115.8 million
for 1998 from $78.4  million  for 1997,  primarily  due to  additional  revenues
earned by OSTC for marketing  vessels owned by third parties and the acquisition
of five petroleum product tankers in 1998.

         Revenue from offshore and harbor towing  operations  increased  127% to
$46.4 million for 1998 from $20.4 million for 1997, primarily due to an increase
of $24.6 million from  acquisitions.  The remaining  increase  resulted from the
redeployment of certain vessels from harbor towing to offshore towing.  Offshore
towing contracts generate higher revenues than harbor towing contracts.

         Operating Expenses. Operating expenses increased 104% to $213.6 million
for 1998 from $104.9 million for 1997,  primarily due to the acquisitions.  As a
result  of these  acquisitions,  crew  payroll  and  benefits,  maintenance  and
repairs, and supplies and consumables  increased $37.9, $9.0, and $27.7 million,
respectively.  As a percentage of revenue,  operating  expenses increased to 53%
for 1998 from 50% for 1997, primarily due to the aforementioned  declines in day
rates  and  utilization  and  an  increase  in  consumable  expenses  due to the
acquisition of two tankers.

         Overhead Expenses. Overhead expenses increased 74% to $43.2 million for
1998  from  $24.8  million  for  1997,   primarily  due  to  increased  staffing
requirements due to acquisitions.  As a percentage of revenue, overhead expenses
were 11% and 12% for 1998 and 1997, respectively.

         Depreciation,   Amortization   and   Drydock   Expense.   Depreciation,
amortization  and  drydock  expense  increased  155% to $64.2  million  for 1998
compared  with $25.2  million  for 1997 as a result of an increase in fleet size
due to acquisitions.

         Income from Operations.  Income from operations  increased 52% to $83.8
million, or 21% of revenue,  for 1998 from $55.3 million, or 26% of revenue, for
1997 as a result of the factors noted above.

         Net Interest  Expense.  Net interest  expense  increased  488% to $41.2
million, or 10% of revenue,  for 1998 from $7.0 million,  or 3% of revenue,  for
1997,  primarily as a result of the February  1998  offering of Senior Notes and
debt incurred in connection with acquisitions.

         Other Income  (Expense).  Other  expenses were $5.7 million for 1998 as
compared to $3.7 million for 1997,  primarily due to dividend  payments relating
to the Trust Convertible Preferred Securities issued in July 1997.

         Net Income (Loss). The Company had net income of $21.7 million for 1998
as compared to $25.5 million for 1997 as a result of the factors noted above.

Seasonality

         The Company has experienced some slight  seasonality in its operations.
The first half of the year is generally  not as strong as the second half due to
lower  activity  in offshore  energy  support  services  and  petroleum  product
transportation during the months of February, March, and April.

Liquidity and Capital Resources

         Background. The Company's capital requirements have historically arisen
primarily from its working capital needs,  acquisitions  of and  improvements to
vessels, and debt service requirements.  The Company's principal sources of cash
have been bank borrowings, cash provided by operations, and proceeds from public
offerings of  securities,  consisting of the initial  public  offering of common
stock in August 1996, a second  offering of common  stock in February  1997,  an
offering  of 6 1/2%  Trust  Convertible  Preferred  Securities  (the  "Preferred
Securities") in 1997, and an offering of 83/8% Senior Notes (the "Senior Notes")
in  February  1998.  In  addition,  the  Company  has  financed  various  vessel
acquisitions  through U.S.  government-guaranteed  Title XI ship financing bonds
and capital lease obligations.

         In addition to these securities offerings,  the Company has established
various bank credit  facilities  from time to time.  The Company  entered into a
revolving credit and term loan agreement with a group of banks in February 1998.
The  agreement  provided  for (i) a $175.0  million  revolving  credit  facility
maturing in 2003, and (ii) a $150.0 million term loan maturing in 2005,  payable
in equal quarterly  installments  beginning in June 1998. The agreement required
the Company to maintain specified ratios relating to leverage,  debt service and
indebtedness;  limited the Company's  ability to create or incur certain  liens;
limited the incurrence of certain indebtedness; restricted the Company's ability
to  make  certain  investments;   and  restricted  certain  payments,  including
dividends on the Company's capital stock.

         As a result of the  declines in rates and  utilization  of its offshore
energy support vessels  beginning in 1998 (discussed more fully under "Liquidity
Concerns"  below),  the Company  entered  into an  amendment  of the  agreement,
effective September 30, 1998. In the absence of the amendment, the Company would
not have been in  compliance  with the  covenant in the loan  agreement  that it
maintain a maximum  "Leverage  Ratio" (as defined in the  Agreement) of 4.0:1.0.
The amendment  modified  that and other  covenants in the  agreement,  generally
imposing restraints on future capital and other expenditures.  In addition,  the
amendment  (i)  reduced  the  revolving   credit  facility  to  $150.0  million,
increasing to $166.0 million  subsequent to March 1, 1999,  subject to repayment
of a  portion  of  the  term  loan  with  proceeds  from a  sale  and  leaseback
transaction, and then increasing to $175.0 million, subject to compliance with a
specified leverage ratio; (ii) provided that borrowings thereunder be secured by
Company-owned  vessels having an appraised  value of at least $600.0 million and
by substantially  all other assets of the Company;  and (iii) increased the rate
of interest on borrowings and fees payable under the Agreement.

         Cash Flows.  During 1998, the Company  generated  $66.9 million in cash
flows  from  operations,  primarily  reflecting  net income  adjusted  by normal
recurring non-cash items and changes in working capital.  Cash used in investing
activities  was   approximately   $501.3  million,   primarily   reflecting  the
acquisition  and  construction  of and capital  improvements  to  vessels.  Cash
provided by financing activities was approximately $429.6 million, consisting of
proceeds from the offering of the Senior Notes and borrowings  under bank credit
facilities,  offset in part by  principal  payments  on debt and  capital  lease
obligations.

         During  1999,  the  Company   generated  $10.2  million  of  cash  from
operations before  reorganization  items,  primarily reflecting the net loss for
the period,  after elimination of  reorganization  expense of $433.3 million and
noncash items. Cash used in investing activities was approximately $11.3 million
for the period,  primarily reflecting the disposal of vessels and the redemption
of investments,  offset by the costs of construction of and capital improvements
to other vessels. Cash generated by financing activities was approximately $10.0
million,  consisting  primarily of payments under the Loan Agreement,  offset by
borrowings.

         Recent  Expenditures  and Future  Cash  Requirements.  During  1998 and
through June 1999, 61 vessels were delivered to or acquired by the Company, at a
total cost of $405.4  million.  These  vessels  included  more than 30  offshore
energy support vessels and seven petroleum  product and chemical  tankers.  As a
result of the declines in rates and  utilization  discussed  above,  the Company
curtailed its vessel acquisition activities in March 1999.

         The Company's current and future capital needs relate primarily to debt
service and maintenance and improvements of its fleet.  The Company's  principal
and interest  payment  obligations  for 2000 are  estimated to be  approximately
$114.4  million,  and operating  lease  obligations for 2000 are estimated to be
approximately  $4.4 million.  Capital  requirements  for fleet  maintenance  and
improvements were  approximately  $72.8 million for 1998, $13.6 million for 1999
and are currently  expected to aggregate $19 million during 2000. The reductions
for 1999 and 2000  reflect  the  substantial  amounts  expended  in 1998,  which
resulted  primarily from planned  refurbishments of vessels acquired in 1997 and
early 1998, and the deferral of certain  scheduled  drydockings and reduction of
other  expenses  in 1999 and 2000.  In view of declines in average day rates and
utilization rates,  particularly in the U.S. Gulf of Mexico, and the possibility
that rates will remain at low levels,  the  Company  has  curtailed  or deferred
certain capital and other expenditures.

         The  above  amounts  do not  include  capital  and  other  expenditures
relating to five 45,300 dwt double-hull  product and chemical  carriers in which
the  Company  currently  holds  a  75.8%  equity  interest  (see  Note  1 to the
consolidated financial statements).  The Company paid $18.5 million in June 1998
to  increase  its equity  interest in these  carriers  from 0.8% to 50.8% and an
additional $9.6 million (comprised of cash of $1.0 million and a note payable of
$8.6 million) in December 1999 to further increase its interest to 75.8%.  Three
of these  carriers  were  delivered in the fourth  quarter of 1998, a fourth was
delivered in early 1999,  and the fifth was  delivered in the second  quarter of
1999. The aggregate cost of the five carriers was approximately  $280 million, a
substantial   portion  of  which  was   financed   with  the  proceeds  of  U.S.
government-guaranteed  Title XI ship  financing  bonds.  The Company has through
December 31, 2000 to purchase the  remaining  24.2%  interest for  approximately
$11.0 million and  thereafter a right of first refusal to purchase such interest
for the same amount plus interest accrued from December 31, 2000.

         During 2000,  an  estimated  $19.5  million of  principal  and interest
payments are due on the Title XI ship financing  bonds referred to above. In the
event that the  operations  of the carriers do not generate  sufficient  cash to
fund those payments and other operating and capital  expenses of the carriers on
a  cumulative  basis from May 1, 1999,  the Company has the right to require the
current holder of the 24.2% minority  interest to fund up to $5.0 million of the
cumulative operating shortfall through June 1, 2000.

         Liquidity  Concerns.  As a result of the severe  worldwide  downturn in
offshore  oil  and  gas  exploration,   development  and  production  activities
beginning in 1998 and continuing and deepening during 1999, substantial declines
in offshore energy support vessel day rates and utilization  adversely  affected
the Company's  operating  results during 1999. See "Results of Operations" above
for additional information.  As a result of these declines,  beginning March 31,
1999, the Company was not in compliance with certain covenants  contained in its
bank  credit  agreement.   The  Company's  bank  lenders  waived  the  Company's
noncompliance  on several  occasions,  the last such waiver  covering the period
from August 20 until September 7, 1999.  However,  these waivers resulted in the
payment of additional  interest,  as well as substantial fees.  Further, in late
August and early  September 1999, due to the Company's  financial  condition and
the covenants in the credit  agreement and other debt  instruments,  the Company
had  no  further  borrowing  capacity.  In  addition,  an  interest  payment  of
approximately  $12.5 million was due on the Senior Notes on August 16, 1999. The
Company did not have sufficient funds to make this payment.  Discussions with an
informal  committee of holders of the Senior Notes and Preferred  Securities led
to the Company's  filing of a petition  under Chapter 11 of the U.S.  Bankruptcy
Code on September 8, 1999.

         The Reorganization.  The Company's reorganization plan became effective
on December 15, 1999. Under the plan:

o    the holders of the $300.0 million of senior notes received 9,800,000 shares
     of Company  common stock in exchange for their notes;  o the holders of the
     $118.0 million of trust  preferred  securities  received  200,000 shares of
     common stock, as well as Class A warrants to purchase an additional 125,000
     shares, in exchange for those securities;

               o    stockholders  received  Class A warrants to purchase a total
                    of 125,000 shares of common stock; o noteholder  warrants to
                    purchase  6.75% of  common  stock on a fully  diluted  basis
                    after  giving  effect  to the  exercise  of these  warrants,
                    exercisable  at a  nominal  purchase  price  for  seven  and
                    one-half years,  were issued to purchasers of our new senior
                    secured second notes described below;

o        claims of general and trade creditors were unaffected; and

o        the Company reincorporated from Florida to Delaware.

         The  9,800,000  shares  received  by the  holders of the  senior  notes
represent 98.0% of the Company's currently outstanding common stock and 89.3% of
its common stock on a fully  diluted  basis after  assuming  exercise of all the
Class A warrants and the noteholder  warrants.  The 200,000  shares  received by
holders  of the  trust  preferred  securities  represent  2.0% of the  Company's
currently  outstanding  common  stock  and 1.8% of its  common  stock on a fully
diluted basis.

         The  Company  also  obtained  new  credit  facilities  from a group  of
financial institutions. The new facilities,  totaling $320.0 million, consist of
$200.0 million in term loans, a $25.0 million  revolving  credit  facility,  and
$95.0  million in aggregate  principal  amount at maturity of new 12 1/2% senior
secured notes due 2007. A portion of the proceeds from these facilities was used
to repay all  outstanding  borrowings  under the Company's bank loans and to pay
administrative and other fees and expenses.  The balance of the proceeds will be
used for working capital and general corporate  purposes.  At December 31, 1999,
no amounts were outstanding under the revolving credit facility.

         The terms of the term loans and revolving credit facility are contained
in a credit agreement  between the Company and the financial  institutions.  The
credit agreement provides for the following facilities:

         Facility.                          Amount              Maturity
         --------                           ------              --------

o        Tranche A term loan        $75 million               2004
o        Tranche B term loan        $30 million               2005
o        Tranche C term loan        $95 million               2006
o        Revolving loan             $25 million               2004

         The interest rate for borrowings under the credit agreement is set from
time to time at the Company's option, subject to certain conditions set forth in
the credit agreement, at either:

o                 the higher of the rate that the administrative agent announces
                  from time to time as its prime  lending  rate and 1/2 of 1% in
                  excess of the  overnight  federal  funds  rate,  plus a margin
                  ranging from 2.25% to 4.25% or

o                 a rate based on a  percentage  of the  administrative  agent's
                  quotation  to  first-class  banks  in the New  York  interbank
                  Eurodollar  market for dollar deposits,  plus a margin ranging
                  from 3.25% to 4.25%.

         Borrowings  under the credit  agreement  are secured by first  priority
perfected security interests in substantially all of the equity of the Company's
subsidiaries and by first priority perfected security interests in substantially
all of the vessels and other assets  owned by the Company and its  subsidiaries.
In addition, substantially all of the Company's subsidiaries have guaranteed its
obligations under the credit agreement.  The credit agreement contains customary
covenants  that  require  the  Company,  among  other  things,  to meet  certain
financial  ratios and that prohibit it from taking certain  actions and entering
into certain transactions.

         The senior  secured notes are senior  obligations  and are secured by a
second  priority  lien on the assets  that  secure  borrowings  under the credit
agreement.  The notes are  unconditionally  guaranteed  by all of the  Company's
subsidiaries  that have guaranteed  borrowings under the credit  agreement.  The
notes  were  issued at 90.0% of their  face  value for gross  proceeds  of $85.5
million.  The notes  were  issued  under an  indenture  among the  Company,  the
subsidiary  guarantors  and  financial   institutions  serving  as  trustee  and
collateral agent. The indenture contains  customary  covenants that, among other
things,  restrict the Company's  ability to incur  additional debt, sell assets,
and engage in mergers and transactions with affiliates. As consideration for the
purchase of the notes and as compensation  for certain  financial  services,  we
issued to the purchasers of the notes  noteholder  warrants to purchase 6.75% of
the  Company's  common stock on a fully diluted basis after giving effect to the
exercise of these  warrants at an exercise price of $.01 per share for a term of
seven and one-half years.

         Recent  Developments.  Due to  continuing  weakness  in day  rates  and
utilization in the offshore energy support  business,  as well as adverse market
conditions in the Company's towing and  transportation  businesses,  the Company
anticipated  that earnings  would be lower than expected in the first quarter of
2000. As a result,  the Company  anticipated  that it would not be in compliance
with certain covenants in its bank credit agreement as of March 31, 2000 as well
as future dates if market  conditions  did not improve.  The Company has entered
into an amendment to the credit agreement with the lending banks under which the
relevant  covenants have been modified through March 31, 2001 and the Company is
required to prepay  principal  under the term loans  aggregating  $10.0  million
before June 30, 2000, $35 million before August 31, 2000, and $60 million before
January 1, 2001. The Company  intends to sell vessels and other assets to obtain
the funds with which to make these payments.  Some of these sales may be at less
than book value.  The amended  credit  agreement  further  provides that, in the
event the Company has not made the required  principal  payments as scheduled or
achieved  certain  target levels of EBITDA for the third and fourth  quarters of
2000, the lending banks may require the Company to sell additional  vessels,  to
be selected by the lending  banks,  with an  aggregate  fair market value of $35
million on a timetable specified by the lending banks. Additionally, the Company
is required  to obtain the  consent of the lending  banks to borrow in excess of
$17.5  million  under the  revolving  loan portion of the credit  facility.  The
Company  is  required  to pay a fee of $4.5  million  to the  lending  banks  in
connection with the amendment of the credit agreement., payable in the form of a
promissory  note,  accruing  interest  at 15% per annum,  due the earlier of (i)
April 2002 and (ii) the date on which the ratio of funded indebtedness to EBITDA
for any quarter is less than four to one.

         The Company believes that operating cash flow,  amounts available under
its revolving credit facility and anticipated  proceeds from the sale of vessels
will be sufficient  for it to meet its debt service,  including the  prepayments
described above, and other capital  requirements  through 2000. As the Company's
operating  cash flow is  dependent  on  factors  beyond the  Company's  control,
however, including general economic conditions and conditions in the markets the
Company serves,  there can be no assurance that actual  operating cash flow will
meet expectations.

Effects of Inflation

          The Company does not consider inflation a significant business risk in
the current and foreseeable  future,  although the Company has experienced  some
cost  increases,  some of which  have been  offset by  charter  hire  escalation
clauses.

Prospective Accounting Changes

          In September  1998, the Financial  Accounting  Standards  Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended by  statement  No. 137 which is required to be adopted by the company
in fiscal 2001. Because of the Company's minimal use of derivatives,  management
does  not  anticipate  that  the  adoption  of the  new  Statement  will  have a
significant effect on the Company's earnings or financial position.

Impact of Year 2000

          In prior  years,  the  Predecessor  Company  discussed  the nature and
progress  of its plans to become Year 2000 ready.  In late 1999,  the  Successor
Company  substantially  completed its remediation  and testing of systems.  As a
result of those  planning and  implementation  efforts,  the  Successor  Company
experienced  no  significant   disruptions   in   mission-critical   information
technology  and  non-information  technology  systems and believes those systems
successfully  responded to the Year 2000 date change.  The Successor  Company is
not aware of any material problems resulting from Year 2000 issues,  either with
its  products,  its  internal  systems,  or the  products  and services of third
parties.  The Company  will  continue to monitor its  mission-critical  computer
applications and those of its suppliers and vendors  throughout the year 2000 to
ensure that any latent Year 2000 matters that may arise are addressed promptly.

 Euro Conversion Issues

         On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common  currency,  the "Euro." For a three-year
transition period,  both the Euro and individual  participants'  currencies will
remain in  circulation;  after January 1, 2002,  the Euro will be the sole legal
tender for EMU countries.  The adoption of the Euro affects  numerous  financial
systems and business applications.

          While the Company does  business in many  countries  around the world,
substantially all of such business is U.S.  dollar-denominated.  Thus, while the
Company  is  reviewing  the  impact of the  introduction  of the Euro on various
aspects of its business (including  information systems,  currency exchange rate
risk, taxation, contracts,  competitive position and pricing), such introduction
is not expected to have a material impact on the Company.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

          The Company is exposed to market risk from  changes in interest  rates
which may adversely  affect its results of operations  and financial  condition.
The Company's  policy is not to use financial  instruments  for trading or other
speculative  purposes and the Company is not a party to any leveraged  financial
instruments.  Except as set forth  below,  the  Company  manages  market risk by
restricting the use of derivative financial  instruments to infrequent purchases
of forward  contracts  for the purchase of fuel oil for its carrier  fleet.  The
Company does not have any open  contracts at December 31, 1999. A discussion  of
the  Company's  credit  risk and the  fair  value of  financial  instruments  is
included in Notes 19 and 21 of the Company's consolidated financial statements.

          Exposure To Short-Term Interest Rates.  Short-term variable rate debt,
primarily  borrowings under the Credit Agreement,  comprised  approximately $200
million of the Company's total debt at December 31, 1999. The Company's variable
rate  debt had an  average  interest  rate of  11.3% at  December  31,  1999.  A
hypothetical  2% increase in interest  rates on $200 million of debt would cause
the Company's interest expense to increase  approximately $4.0 million per year,
with a corresponding decrease in income before taxes.

          As a requirement of its Credit Agreement,  the Company entered into an
interest rate cap in February 2000 with Deutsche Bank AG. The notional amount of
the cap is $75 million and is for a term of three years. The underlying index is
the three-month  LIBOR and the strike price of the cap is 8.5%. Each quarter the
three-month LIBOR will be compared to the strike price. If the three-month LIBOR
is above the strike price,  Deutsche Bank AG will make a payment to the Company.
The interest rate cap gives Hvide  protection  against  rising rates and benefit
from declining rates.

Item 8.  Financial Statements

          The Company's  Consolidated  Financial  Statements  are listed in Item
14(a)(1), included at the end of this Report on Form 10-K beginning on page F-1,
and incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

          None


<PAGE>



                                    Part III

Item 10.  Directors and Executive Officers of the Registrant

          The  information  required by Item 10 is  contained  in the  Company's
Proxy Statement for the 2000 Annual Meeting of  Shareholders  under the captions
"Directors  and Nominees" and  "Compliance  with Section 16(a) of the Securities
Exchange  Act of  1934,"  and in Item 4a of this  Report  on Form  10-K,  and is
incorporated herein by reference.

Item 11.  Executive Compensation

          The  information  required by Item 11 is  contained  in the  Company's
Proxy  Statement for the 2000 Annual Meeting of  Shareholders  under the caption
"Executive Compensation," and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

          The  information  required by Item 12 is  contained  in the  Company's
Proxy  Statement for the 2000 Annual Meeting of  Shareholders  under the caption
"Common Stock Ownership of Certain  Beneficial  Owners and  Management,"  and is
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

          The  information  required by Item 13 is  contained  in the  Company's
Proxy  Statement for the 2000 Annual Meeting of  Shareholders  under the caption
"Compensation   Committee  Interlocks  and  Insider  Participation  and  Certain
Transactions," and is incorporated herein by reference.


<PAGE>



                                     Part IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.

         (a)  Financial  Statements  and  Schedules.  See Index to  Consolidated
Financial Statements and Schedules which appear on page F-1 herein.

         (b)  Reports on Form 8-K.

         Reports on Form 8-K filed  during the last  quarter of the fiscal  year
covered by this Report on Form 10-K are as follows:

              (1) a Current Report on Form 8-K dated October 12, 1999, reporting
                  (under  Item 5,  "Other  Events")  the filing of the  proposed
                  Joint Plan of Reorganization and a related proposed Disclosure
                  Statement with the Bankruptcy Court;

              (2) a  Current  Report  on  Form  8-K  dated  December  27,  1999,
                  reporting  (under Item 3,  "Bankruptcy or  Receivership")  the
                  confirmation of the First Amended Joint Plan of Reorganization
                  as filed in the Bankruptcy Court;

              (3) a Current  Report  on Form  8-K/A  dated  December  30,  1999,
                  reporting  (under Item 3,  "Bankruptcy or  Receivership")  the
                  amendment to Form 8-K filed on December 27, 1999.

         (c) List of Exhibits.  The  following is a list of exhibits  furnished.
Copies of exhibits will be furnished upon written  request of any stockholder at
a charge of $.25 per page plus postage. The Company hereby files as part of this
Form  10-K the  exhibits  listed  in Item  14(a)(3)  above.  Exhibits  which are
incorporated  herein by  reference  can be  inspected  and  copied at the public
reference facilities maintained by the Commission,  450 Fifth Street, N.W., Room
1024,  Washington,  D.C., and at the  Commission's  regional offices at CitiCorp
Center, 500 West Madison Street,  Suite 1400,  Chicago,  IL 60661-2511 and Seven
World Trade Center,  Suite 1300, New York, NY 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission,  450 Fifth
Street, N.W., Washington, D.C. 29549, at prescribed rates.

Exhibit

Number                                                 Exhibit

2.1*     Debtor's First Amended Joint Plan of Reorganization,  dated November 1,
         1999, and related Disclosure Statement,  filed with the U.S. Bankruptcy
         Court for the  District  of  Delaware  (incorporated  by  reference  to
         Exhibits 1 and 2 to the  Schedule  13D/A filed with the  Commission  on
         December 29, 1999 by Loomis,  Sayles & Company,  L.P.  (Commission File
         No. 000-28732)).

3.1(a)*  Certificate of Incorporation of the Registrant

3.1(b)*  Certificate of Merger of the Registrant

3.2*     By-laws of the Registrant

4.1*     Form of Common Stock Certificate of the Registrant

4.2*     Form of Warrant Certificate of the Registrant

4.3*     Indenture for the 12 1/2% Senior Secured Notes due 2007, dated December
         15, 1999 among Hvide Marine  Incorporated as the Issuer, the Subsidiary
         Guarantors  named  therein,  State Street Bank and Trust Company as the
         Trustee and Bankers Trust Company as the Collateral Agent (incorporated
         by reference to Exhibit 4.1 to the Registrant's Form 8-K filed with the
         Commission on December 27, 1999 (Commission File No. 000-28732)).

4.4*     Warrant  Agreement,  dated  December  15,  1999,  between  Hvide Marine
         Incorporated  and State Street Bank and Trust  Company as Warrant Agent
         (incorporated by reference to Exhibit 4.2 to the Registrant's  Form 8-K
         filed with the  Commission  on December 27, 1999  (Commission  File No.
         000-28732)).

4.5*     Class A Warrant Agreement, dated as of December 15, 1999 by and between
         Hvide Marine Incorporated and State Street Bank and Trust Company.

10.1*    Credit   Agreement,   dated  December  15,  1999,  among  Hvide  Marine
         Incorporated,  Bankers Trust Company as Administrative  Agent, Deutsche
         Bank  Securities  Inc. as Lead Arranger and Book  Manager,  Meespierson
         Capital  Corp. as  Syndication  Agent and  Co-Arranger  and the various
         persons  from  time  to  time  parties  to  the  agreement  as  Lenders
         (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K
         filed with the  Commission  on December 27, 1999  (Commission  File No.
         000-28732)).

10.2*    Common Stock  Registration  Rights Agreement,  dated December 15, 1999,
         among Hvide Marine  Incorporated,  Bankers Trust  Corporation and Great
         American Life Insurance Company,  Great American Insurance Company, New
         Energy  Corp.,   American  Empire  Surplus  Lines  Insurance   Company,
         Worldwide  Insurance  Company  and  American  National  Fire  Insurance
         Company as Purchasers (incorporated by reference to Exhibit 10.2 to the
         Registrant's  Form 8-K filed with the  Commission  on December 27, 1999
         (Commission File No. 000-28732)).

10.3*    Registration  Rights Agreement for the 12 1/2% Senior Secured Notes due
         2007, dated December 15, 1999, among Hvide Marine Incorporated, Bankers
         Trust  Corporation  and Great  American Life Insurance  Company,  Great
         American Insurance Company,  New Energy Corp.,  American Empire Surplus
         Lines  Insurance  Company,  Worldwide  Insurance  Company and  American
         National  Fire  Insurance   Company  as  Purchasers   (incorporated  by
         reference to Exhibit 10.3 to the  Registrant's  Form 8-K filed with the
         Commission on December 27, 1999 (Commission File No. 000-28732)).

10.4*    Registration  Rights  Agreement  by  and  between  Loomis,   Sayles  &
         Company, L.P. and Hvide Marine Incorporated,  dated as of December  15,
         1999  (incorporated  by  reference  to Exhibit 4 to the  Schedule 13D/A
         filed with the Commission on December 29, 1999 by Loomis,  Sayles &
         Company,  L.P.  (Commission File No. 000-28732)).

10.5     First  Amendment,  dated  as of  April  13,  2000  among  Hvide  Marine
         Incorporated,  the financial institutions party to the Credit Agreement
         and Bankers Trust Company, as administrative agent.

23.1     Consents of Ernst & Young LLP.
27       Financial Data Schedule.
99.1*    Order,  dated December 9, 1999, of the United States  Bankruptcy  Court
         for the District of Delaware,  confirming  the First Amended Joint Plan
         of Reorganization in In re: Hvide Marine Incorporated, et al., Case No.
         99-3024 (PJW),  including the Supplement to such Plan  (incorporated by
         reference to Exhibit 99.1 to the  Registrant's  Form 8-K filed with the
         Commission on December 27, 1999 (Commission File No. 000-28732)).

-----------------
* Incorporated herein by reference.


<PAGE>



                                   SIGNATURES

       Pursuant  to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                         HVIDE MARINE INCORPORATED

                            By: /s/ EUGENE F. SWEENEY
                               ----------------------
                                Eugene F. Sweeney
                            Principal Executive Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the  following  persons in the  capacities  and on the
dates indicated.

<TABLE>
<CAPTION>


              Signature                              Title                                 Date
<S>                                     <C>                                        <C>
                                         Chairman of the Board,                       April      , 2000
--------------------------------------
           Jean Fitzgerald               Chief Executive Officer
                                         and Director

        /s/ JAMES J. GAFFNEY             Acting Chairman of the Board,                April 14, 2000
--------------------------------------
          James J. Gaffney               Director

        /s/ EUGENE F. SWEENEY            President, Chief Operating                   April 14, 2000
--------------------------------------
          Eugene F. Sweeney              Officer and Director (principal
                                         executive officer)

        /s/ WALTER S. ZORKERS            Executive Vice President,                    April 14, 2000
--------------------------------------
          Walter S. Zorkers              Chief Financial Officer
                                         and Director (principal financial
                                         officer)

       /s/ JOHN J. KRUMENACKER           Controller (chief accounting                 April 14, 2000
--------------------------------------
         John J. Krumenacker             officer)

      /s/ THOMAS P. MOORE, JR.           Director                                     April 14, 2000
--------------------------------------
        Thomas P. Moore, Jr.

       /s/ DONALD R. SHEPHERD            Director                                     April 14, 2000
--------------------------------------
         Donald R. Shepherd

         /s/ PETER H. CRESSY             Director                                     April 14, 2000
--------------------------------------
           Peter H. Cressy

        /s/ JOHN F. MCGOVERN             Director                                     April 14, 2000
--------------------------------------
          John F. McGovern

         /s/ ROBERT KEISER               Director                                     April 14, 2000
--------------------------------------
         Robert Keiser
</TABLE>


<PAGE>

                  Hvide Marine Incorporated and Subsidiaries

            Index to Consolidated Financial Statements and Schedules

<TABLE>
<CAPTION>

<S>                                                                                                           <C>
Report of Independent Certified Public Accountants.............................................................F-2

Consolidated Financial Statements:

Consolidated Balance Sheets as of December 31, 1998 (Predecessor Company)
and December 31, 1999 (Successor Company)......................................................................F-3

Consolidated  Statements  of Operations  for the years ended  December 31, 1997,
December  31,  1998,  the period  from  January  1, 1999 to  December  15,  1999
(Predecessor Company) and the period from December 16, 1999 to December 31, 1999

(Successor Company)............................................................................................F-4

Consolidated Statements of Changes in Stockholders' Equity

for the years ended December 31, 1997, December 31, 1998, the period from January 1, 1999 to
December 15, 1999 (Predecessor Company) and the period from December 16, 1999 to
December 31, 1999 (Successor Company)..........................................................................F-5

Consolidated  Statements  of Cash Flows for the years ended  December  31, 1997,
December  31,  1998,  the period  from  January  1, 1999 to  December  15,  1999
(Predecessor Company) and the period from December 16, 1999 to December 31, 1999

(Successor Company)............................................................................................F-6

Notes to Consolidated Financial Statements.....................................................................F-7

</TABLE>



All schedules have been omitted  because the information is not applicable or is
not material or because the information required is included in the consolidated
financial statements or the notes thereto.


<PAGE>



                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Hvide Marine Incorporated

         We have audited the  accompanying  consolidated  balance sheet of Hvide
Marine Incorporated as of December 31, 1999 (Successor Company), and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the period from  December  16, 1999 to  December  31, 1999  (Successor
Company)  and  for  the  period  from  January  1,  1999 to  December  15,  1999
(Predecessor  Company).  We have also audited the consolidated  balance sheet of
Hvide Marine Incorporated as of December 31, 1998 (Predecessor Company), and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for each of the two years in the period  ended  December 31, 1998
(Predecessor  Company).  The Predecessor  Company and the Successor  Company are
hereinafter  referred to as the  Company.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the consolidated  financial position of Hvide
Marine   Incorporated  at  December  31,  1999   (Successor   Company)  and  the
consolidated  results of its  operations  and its cash flows for the period from
December  16, 1999 to December 31, 1999  (Successor  Company) and for the period
from January 1, 1999 to December 15, 1999  (Predecessor  Company) as well as the
consolidated  financial position at December 31, 1998 (Predecessor  Company) and
the  consolidated  results of its  operations and its cash flows for each of the
two years in the period then ended  (Predecessor  Company),  in conformity  with
accounting principles generally accepted in the United States.

         As  discussed in Note 1 to the  consolidated  financial  statements,  a
change in reporting  entity  occurred  during 1999. The  consolidated  financial
statements as of and for the year ended  December 31, 1998 have been restated to
reflect this change.

                                                    /s/ Ernst & Young LLP
Miami, Florida
February 25, 2000, except for the seventh
    paragraph of Note 10, as to which the date
    is March 31, 2000 and Note 24, as to which
    the date is April 14, 2000


<PAGE>




                   HVIDE MARINE INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except par value data)
<TABLE>
<CAPTION>


                                                                                             Predecessor        Successor
                                                                                               Company             Company
                                                                                         December 31, 1998  December 31, 1999

                                 ASSETS
<S>                                                                                         <C>                <C>
Current assets:
   Cash and cash equivalents..............................................................  $    10,106        $       19,046
   Restricted cash........................................................................           --                15,217
   Accounts receivable:
     Trade, net of allowance for doubtful accounts of $2,169 and $5,799 in 1998 and 1999..       69,448                47,555
     Insurance claims and other...........................................................       12,290                 6,775
   Marine operating supplies..............................................................       18,998                10,632
   Prepaid expenses.......................................................................        4,623                 4,013
                                                                                             ----------        --------------
     Total current assets.................................................................      115,465               103,238
Property:
   Construction-in-progress...............................................................      116,056                 1,345
   Vessels and improvements...............................................................    1,042,717               698,979
   Furniture and equipment................................................................       17,328                11,643
   Less accumulated depreciation..........................................................     (95,468)              (22,087)
                                                                                             ----------        --------------
   Net property...........................................................................    1,080,633               689,880
Deferred costs, net.......................................................................       38,771                29,464
Restricted investments....................................................................       23,344                 3,752
Goodwill, net.............................................................................       91,357                    --
Other.....................................................................................        5,697                 4,406
                                                                                             ----------        --------------
                                                                                            $ 1,355,267        $      830,740
                                                                                            ===========        ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable.......................................................................  $    26,759        $       10,895
   Current maturities of long-term debt...................................................      264,341                17,775
   Current obligations under capital leases...............................................        2,991                 3,332
   Accrued interest.......................................................................       10,553                 3,102
   Accrued liabilities and other..........................................................       27,623                37,489
                                                                                             ----------        --------------
     Total current liabilities............................................................      332,267                72,593

Long-term debt............................................................................      256,161               465,769
Obligations under capital leases..........................................................       36,983                33,934
Senior notes..............................................................................      300,000                76,709
Deferred income taxes.....................................................................       32,721                    --
Other.....................................................................................        5,551                 5,952

Company-obligated mandatorily redeemable preferred securities of a subsidiary trust
   holding solely debentures issued by the Predecessor Company............................      115,000                    --

Minority interest.........................................................................       28,549                10,457

Commitments and contingencies

Stockholders' equity:
   (Predecessor Company)
     Preferred stock, $1.00 par value--authorized 10,000 shares;
       issued and outstanding, none.......................................................           --                    --
     Class A common stock--$.001 par value, authorized 100,000 shares; 12,873 shares issued and
       outstanding as of December 31, 1998................................................           13                    --
     Class B common stock--$.001 par value, authorized 5,000 shares; 2,547 shares issued and
       outstanding as of December 31, 1998................................................            2                    --
   (Successor Company)
     Class A common stock--$.01 par value, authorized 20,000 shares; 10,000 shares issued and
       outstanding as of December 31, 1999................................................          --                    100
   Additional paid-in capital.............................................................      196,822               166,791
   Retained earnings (accumulated deficit)................................................       51,198               (1,565)
                                                                                             ----------        --------------
       Total stockholders' equity.........................................................      248,035               165,326
                                                                                             ----------        --------------
                                                                                             $1,355,267        $      830,740
                                                                                             ==========        ==============
</TABLE>

               See notes to consolidated financial statements.


<PAGE>


                     HVIDE MARINE INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                                                     Successor
                                                                               Predecessor Company                   Company
                                                                                                    Period from      Period from
                                                                               Year Ended            January 1 to    December 16 to
                                                                              December 31,           December 15,   December 31,
                                                                      --------------------------    -------------- ------------
                                                                           1997        1998             1999             1999
                                                                      ------------ ------------   --------------     -------
<S>                                                                    <C>        <C>            <C>               <C>
Revenues..........................................................     $  210,257  $  404,793    $    328,751      $   13,479
Operating expenses:
   Crew payroll and benefits......................................         48,732      92,483          91,374           4,155
   Charter hire and bond guarantee fee............................         10,548      19,679          15,791             554
   Repairs and maintenance........................................         10,162      19,807          26,045             719
   Insurance......................................................          8,867      12,718          12,716             532
   Consumables....................................................         13,654      39,628          35,966           1,660
   Rent and utilities.............................................         12,970      29,286          30,861             427
                                                                       ----------   ---------    ------------      ----------
     Total operating expenses.....................................        104,933     213,601         212,753           8,047
Selling, general and administrative expenses:
   Salaries and benefits..........................................         12,052      21,062          18,048             870
   Office.........................................................          2,248       5,827           6,563             220
   Professional fees..............................................          4,683       6,963          10,447             211
   Other..........................................................          5,808       9,327          12,756             342
                                                                       ----------   ---------    ------------      ----------
     Total overhead expenses......................................         24,791      43,179          47,814           1,643
Depreciation, amortization and drydocking.........................         25,200      64,244          79,410           2,069
                                                                       ----------   ---------    ------------      ----------
Income (loss) from operations.....................................         55,333      83,769        (11,226)           1,720
Other income (expense):
   Interest expense...............................................        (8,341)    (49,723)        (71,215)         (2,756)
   Interest income................................................          1,317       8,485             841              68
   Minority interest and equity in earnings of subsidiaries.......        (3,527)     (5,848)         (2,596)           (408)
   Loss on disposal of assets.....................................             --          --        (25,658)              --
Other.............................................................          (177)         156         (3,875)           (189)
                                                                       ---------    --------- ---------------      ----------
     Total other expense, net.....................................       (10,728)    (46,930)       (102,503)         (3,285)
Income (loss) before reorganization items, income taxes, and
   extraordinary item.............................................         44,605      36,839       (113,729)         (1,565)
Reorganization items:
   Professional fees..............................................             --          --         (8,535)              --
   Write down of goodwill and property............................             --          --       (419,998)              --
   Other, net.....................................................             --          --         (4,740)              --
                                                                       ----------   ---------    ------------      ----------
     Total reorganization items...................................             --          --       (433,273)              --
                                                                       ----------   ---------    ------------      ----------
Income (loss) before income taxes and extraordinary item..........         44,605      36,839       (547,002)         (1,565)
Provision for (benefit from) income taxes.........................         16,950      13,489        (32,004)              --
                                                                       ----------   ---------    ------------      ----------
Income (loss) before extraordinary item...........................         27,655      23,350       (514,998)         (1,565)
Gain (loss) on early extinguishment of debt, net of applicable
   income taxes...................................................        (2,132)     (1,602)         266,643              --
                                                                       ----------   ---------    ------------      ----------
     Net income (loss)............................................     $   25,523   $  21,748    $  (248,355)      $  (1,565)
                                                                       ==========   =========    ============      ==========

Earnings per common share:
Income (loss) before extraordinary item...........................     $     1.87   $    1.52    $    (33.22)      $   (0.16)
Gain (loss) on early extinguishment of debt.......................         (0.14)      (0.10)           17.20              --
                                                                       ---------    ---------    ------------      ----------
     Net income (loss) per common share...........................     $     1.73   $    1.42    $    (16.02)      $   (0.16)
                                                                       ==========   =========    ============      ==========

Earnings per common share--assuming dilution:

Income (loss) before extraordinary item...........................     $     1.75   $    1.43 $       (33.22)      $   (0.16)
Gain (loss) on early extinguishment of debt.......................         (0.12)      (0.08)           17.20              --
                                                                       ---------    --------- ---------------      ----------
     Net income (loss) per common share...........................     $     1.63   $    1.35 $       (16.02)      $   (0.16)
                                                                       ==========   ========= ===============      ==========

Weighted average common shares outstanding........................         14,785      15,324          15,503          10,000
                                                                       ==========   ========= ===============      ==========
Weighted average common and common equivalent
   shares outstanding--assuming dilution..........................         17,120      19,451          15,503          10,000
                                                                        ==========   ========= ===============      ==========
</TABLE>



                    See notes to consolidated financial statements.


<PAGE>



                        HVIDE MARINE INCORPORATED AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (In thousands)
<TABLE>
<CAPTION>

                                     Class A

Class B
     Retained

                          Common Stock                Common Stock                     Additional              Earnings

     Paid-In                                                                                  (Accumulated

                         Shares     Amount     Shares        Amount            Capital         Deficit)      Total
                       ----------   ------     ------        ------            -------         --------     ------
<S>                    <C>           <C>      <C>            <C>           <C>                <C>         <C>          <C>
PREDECESSOR COMPANY
Balance at December 31, 1996          7,647  $       8          3,419      $         3    $    97,153    $    3,927    $101,091

Common stock issued in public
    offering, net of issuance costs   4,000          4             --             --              93,516        --   93,520
Conversion of Class B to Class A
   common  stock...         513          --      (513)             --               --             --            --
Common stock issued in connection
   with acquisition                 142     --             --             --              3,650         --                 3,650
Common stock issued upon exercise
   of stock options                 53      --             --             --              641           --                 641
Common stock issued pursuant to
   employee stock purchase plan              22            --             --             --              467              --
467

Common stock issued to directors             5             --             --             --              95               --
95

Net income.........          --          --         --             --               --         25,523        25,523
                    -----------     -------  ---------      ---------      -----------    -----------    ----------
Balance at December 31, 1997         12,382         12          2,906                3        195,522        29,450
224,987

Conversion of common stock              360          1          (359)              (1)             --            --
--
Common stock issued upon exercise
   of stock options                 1       --             --             --              1             --                 1
Common stock issued pursuant to
   employee stock purchase plan              112           --             --             --              889              --
889

Common stock issued to directors             18            --             --             --              216              --
216

Stock compensation pursuant to key
   employee stock plan                   --         --             --               --            194            --
194

Net income.........          --          --         --             --               --         21,748        21,748
                    -----------     -------  ---------      ---------      -----------    -----------    ----------
Balance at December 31, 1998         12,873         13          2,547                2        196,822        51,198        248,035
Common stock issued pursuant to
   employee stock purchase plan              79            --             --             --              253     --
253

Stock compensation pursuant to key
   employee stock plan                   --         --             --               --            104        --             104
Common stock issued to directors             55            --             --             --              130     --
130

Other..............          --          --         --             --            (167)             --         (167)
Conversion of common stock            2,020          2        (2,020)              (2)
Cancellation of Predecessor
  Company common stock and

  elimination of existing stockholder's
  equity upon emergence from
  bankruptcy.......    (15,027)        (15)      (527)             --        (197,142)        197,157            --
Issuance of Successor Company
  common stock.....      10,000         100         --             --          154,881             --       154,981
Warrants issued in connection with
  exit financing...          --          --         --             --           11,910             --        11,910
Net loss...........          --          --         --             --               --      (248,355)     (248,355)
                    -----------     -------  ---------      ---------      -----------    -----------    ----------

SUCCESSOR COMPANY

Balance at December 15, 1999         10,000        100             --               --        166,791            --        166,891
Net loss...........          --          --         --             --               --        (1,565)       (1,565)
                    -----------     -------  ---------      ---------      -----------    -----------    ----------
Balance at December 31, 1999         10,000  $     100             --      $        --    $   166,791    $  (1,565)       $165,326
                                    =======  =========      =========      ===========    ===========    ==========       ========

</TABLE>


                     See notes to consolidated financial statements.


<PAGE>



                 HVIDE MARINE INCORPORATED AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands)
<TABLE>
<CAPTION>

                                                                                                                         Successor
                                                                                     Predecessor Company                   Company
                                                                                                         Period from     Period from
                                                                                       Year Ended        January 1 to December 16 to
                                                                                       December 31,      December 15,   December 31,

                                                                                  1997           1998            1999      1999

Operating activities:
<S>                                                                        <C>            <C>             <C>            <C>
   Net income (loss).....................................................    $   25,523     $   21,748      $ (248,355)  $   (1,565)
   Adjustments to reconcile  net income (loss) to net
     cash provided by operating activities:
       Reorganization items:
         Write-off of goodwill............................................           --              --         88,052        --
         Revaluation of property and related assets.......................           --              --        331,946        --
         Accrued reorganization expenses..................................           --              --          5,828        --
         Revaluation of other liabilities and assets......................           --              --          2,872        --
       Loss (gain) on early extinguishment of debt........................        2,132           1,602      (266,643)        --
       Depreciation and amortization of property .........................       19,093          49,106         64,220       1,795
       Provision for bad debts............................................        1,029           1,087          6,180          56
       Loss (gain) on disposal of assets..................................          524            (26)         25,658        --
       Amortization of drydocking costs...................................        5,350          11,354         11,249         268
       Amortization of goodwill...........................................          757           3,784          3,940           6
       Amortization of discount on long-term debt and financing costs.....          680           1,489          2,777         180
       Deferred income tax provision (benefit)............................       13,147          10,189       (32,004)        --
       Minority partners' equity in (earnings) loss of subsidiaries, net..        (183)         (1,627)        (2,596)         408
       Undistributed losses of affiliates.................................        (110)           (395)             --        --
       Other non-cash items...............................................           95             217          (164)        --
       Changes in operating assets and liabilities, net of effect of acquisitions:
         Accounts receivable..............................................     (20,640)        (41,110)         20,000       1,172
         Marine operating supplies........................................      (1,032)         (4,270)            232         239
         Other current and long-term assets...............................      (8,468)        (17,503)        (6,409)        (118)
         Accounts payable and other liabilities...........................        2,145          31,273          3,084      (1,304)
                                                                             ----------      ----------     ----------    ---------
              Net cash provided by operating activities...................       40,042          66,918          9,867       1,137
                                                                             ----------      ----------     ----------    ---------

Investing activities:

   Purchases of property..................................................     (67,117)       (114,521)       (57,144)       (597)
   Acquisitions of businesses, net of escrow deposits utilized of $6,349 and of
     cash acquired of $3,525 in 1997......................................    (194,723)       (373,535)             --          --
   Payments on vessels under construction.................................        (910)       (155,980)        (5,102)          --
   Purchases of restricted investments....................................           --       (369,629)       (45,790)          --
   Redemption of restricted investments...................................           --         515,584         65,382
   Capital contribution to unconsolidated affiliates......................        (226)         (3,233)             --          --
   Proceeds from disposals of assets......................................        1,633              --         32,852          --
         Purchase of minority interest in subsidiary......................           --              --             --     (1,000)
                                                                             ----------      ----------     ----------  ----------
               Net cash used in investing activities......................    (261,343)       (501,314)        (9,802)     (1,597)

Financing activities:

   Repayments of short-term borrowings....................................     (16,242)              --             --          --
   Proceeds from DIP credit facility......................................           --              --         26,690          --
   Proceeds from long-term borrowings.....................................      177,210         431,700        245,208          --
   Repayment of long-term borrowings......................................    (130,416)       (313,938)      (288,205)        (80)
   Proceeds from issuance of Senior notes and warrants....................           --         292,500             --          --
   Proceeds from issuance of Successor Company senior secured notes and warrants                     --             --      85,500
             --
   Proceeds from issuance of Title XI bonds...............................           --         139,023          5,428          --
   Repayment of Title XI bonds............................................      (5,461)       (137,250)        (6,643)     (1,252)
   Escrow of restricted cash..............................................           --              --       (15,217)          --
   Payments of financing costs............................................      (2,724)        (10,819)       (12,678)          --
   Proceeds from sale-leaseback of vessels................................           --          32,622             --          --
   Payments of obligations under capital leases...........................      (1,468)         (5,088)        (2,820)       (159)
   Proceeds from issuance of common stock.................................       94,628             800            253          --
   Proceeds from issuance of redeemable preferred securities, net.........      111,109              --             --          --
   Repayment of DIP credit facility.......................................           --              --       (26,690)          --
                                                                             ----------      ----------     ----------  ----------
         Net cash provided by (used in) financing activities..............      226,636         429,550         10,826     (1,491)
                                                                             ----------      ----------     ----------  ----------
Change in cash and cash equivalents.......................................        5,335         (4,846)         10,891     (1,951)
Cash and cash equivalents at beginning of period..........................        9,617          14,952         10,106      20,997
                                                                             ----------      ----------     ----------  ----------
Cash and cash equivalents at end of period................................   $   14,952      $   10,106     $   20,997   $  19,046
                                                                             ==========      ==========     ==========  ==========
Supplemental schedule of noncash investing and financing activities:
Notes payable issued for the acquisition of vessels.......................   $    6,000      $       --     $       --  $   8,586
                                                                             ==========      ==========     ==========  ==========
Capital lease obligations for the acquisition of vessels and equipment....   $    4,972      $   32,621     $       --  $      --
                                                                             ==========      ==========     ==========  ==========
Title XI debt assumed for the acquisition of vessels......................   $   15,057      $       --     $       --  $      --
                                                                             ==========      ==========     ==========  ==========
Short-term debt assumed in connection with acquisition of business........   $    5,595      $       --     $       --  $      --
                                                                             ==========      ==========     ==========  ==========
Common stock issued for the acquisition of vessels........................   $    3,650      $       --     $       --  $      --
                                                                             ==========      ==========     ==========  ==========
Supplemental disclosures:
   Interest paid, net of interest capitalized.............................   $    9,200      $   44,972     $   57,821  $      739
                                                                             ==========      ==========     ==========  ==========
   Cash paid for professional fees in connection with
        Chapter 11 Proceedings............................................   $       --      $    --        $    4,575  $      --
                                                                             ==========      ==========     ==========  ==========
</TABLE>

                   See notes to consolidated financial statements.


<PAGE>



                   HVIDE MARINE INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999

1.       Organization and Basis of Presentation

         Hvide  Marine   Incorporated   and  subsidiaries   (collectively,   the
"Company") is a provider of marine support and transportation services,  serving
primarily  the energy and chemical  industries.  The Company  operates  offshore
energy  support  vessels,  principally  in the U.S. Gulf of Mexico,  the Arabian
Gulf,  offshore West Africa and Southeast  Asia. The Company's  fleet of tankers
transports  petroleum  products and  specialty  chemicals  in the U.S.  domestic
trade. The Company also provides commercial tug services in several ports in the
southeastern U.S.

         The accompanying consolidated financial statements include the accounts
of Hvide Marine Incorporated and its majority-owned  subsidiaries.  All material
intercompany  transactions and balances have been eliminated in the consolidated
financial statements.

         Hvide Marine  Incorporated  and  substantially  all of its wholly-owned
subsidiaries filed voluntary petitions for relief under Chapter 11 of the United
States  Bankruptcy Code (the "Bankruptcy  Code") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") on September 8, 1999
(the "Petition  Date").  The Bankruptcy Court confirmed the Company's Joint Plan
of  Reorganization  (the  "Plan")  on  December  9,  1999 , and the Plan  became
effective on December 15, 1999 (the "Effective  Date"). The Company emerged from
bankruptcy on December 15, 1999; See Note 3 for additional information.

         The consolidated financial statements reflect accounting principles and
practices  set forth in  American  Institute  of  Certified  Public  Accountants
Statement  of  Position  ("SOP")  90-7,   Financial  Reporting  by  Entities  in
Reorganization  under the Bankruptcy Code, which provides guidance for financial
reporting by entities that have filed voluntary  petitions for relief under, and
have reorganized in accordance  with, the Bankruptcy Code. As discussed  further
in Note 4, the  assets  and  liabilities  of the  Company  were  restated  as of
December 15, 1999,  in  accordance  with SOP 90-7 and  therefore  the results of
operations  and  cash  flows  for  periods  prior  to  December  15,  1999  (the
"Predecessor  Company") are not comparable to the results of operations and cash
flows of the Company subsequent to emergence from bankruptcy for the period from
December 16 to December 31, 1999 (the "Successor Company").

         In June 1998,  the Company  paid $18.5  million to increase  its equity
interest in five double-hull carries (collectively the "Lightship Tankers") from
0.8% to 50.8%.  Three of these  carriers were delivered in the fourth quarter of
1998, and two others were delivered  during 1999. At the time of the increase in
its equity interest,  the Company intended to reduce its equity interest to less
than 50% and accounted for this investment under the equity method. During 1999,
the Company was not able to reduce its equity  investment  in Lightship  Tankers
and was required to consolidate the Lightship  Tankers as of September 30, 1999,
in accordance  with the Financial  Accounting  Standard Board  Statement No. 94;
Consolidation  of All  Majority-Owned  Subsidiaries.  The  consolidation  of the
Lightship  Tankers was  accounted  for as a change in  reporting  entity and the
financial  statements for 1998 have been  retroactively  restated to include the
accounts of the Lightship  Tankers as if they were  consolidated  as of the date
majority  ownership was obtained.  The Successor Company increased its ownership
in the Lightship Tankers at December 30, 1999 from 50.8% to 75.8% (see Note 11).
The Lightship Tankers were not a party to the Chapter 11 proceeding.

2.       Issues Affecting Liquidity

         As  a  result  of a  decline  in  revenues,  the  Company  was  not  in
compliance, as of March 31, 2000, with certain covenants contained in its Credit
Facility  and  anticipated  that it  would  not be in  compliance  with  certain
covenants throughout 2000. Accordingly, the Company entered into Amendment No. 1
to the Credit  Facility,  which  reduced  the  Company's  covenant  requirements
through  March 31, 2001.  The  Amendment  also requires the Company to prepay an
additional $60 million of borrowings in 2000 and limits the  availability  under
the $25 million revolving credit portion of the Credit Facility to $17.5 million
(See Note 24).

         The Company  believes that it will remain in compliance with the Credit
Facility,  as amended.  Additionally,  the Company  believes that operating cash
flow  and  amounts  available  under  its  revolving  credit  facility  will  be
sufficient to meet current obligations and capital requirements through 2000 and
that net  proceeds  from  planned  asset  sales  will be  sufficient  to satisfy
prepayments of debt as set forth above. As the Company's  operating cash flow is
dependent on factors beyond the Company's  control,  however,  including general
economic conditions and conditions in the markets the Company serves,  there can
be no assurance  that actual  operating cash flow and the proceeds from sales of
vessels will equal or exceed management's expectations.

3.       Joint Plan of Reorganization and Exit Financing

         In September 1999, the Company filed the Plan with the Bankruptcy Court
which set forth a plan for  repaying or  otherwise  compensating  the  Company's
creditors  in order of  relative  seniority  of their  respective  claims  while
seeking to  maintain  the  Company  as a going  concern.  The Plan  specifically
provided  for the  conversion  of the  Predecessor  Company's  senior  notes and
Preferred   Securities  to  equity  interests  in  the  Successor   Company  and
cancellation  of all of the  prepetition  equity  interests  in the  Predecessor
Company, as more fully described in the Plan. Substantially all of the Company's
other pre- and post petition unsecured liabilities were unaffected by the Plan.

         On the  Effective  Date,  the  Predecessor  Company's  Senior Notes and
Preferred Securities were converted to 9.8 million and 0.2 million shares of the
Successor Company's common stock, respectively.  As a result of the transactions
which  occurred on the Effective  Date,  indebtedness  of  approximately  $266.6
million was discharged and is reflected as a gain on the  extinguishment of debt
in the  accompanying  consolidated  statements of  operations.  This gain is not
recognized  for tax purposes to the extent the Company was insolvent at the date
of  discharge.   However,   the  Company's  net  operating  loss  carryforwards,
alternative  minimum tax credits and tax basis in fixed  assets were  reduced by
the amount of the gain.

         On the Effective Date, the Company raised an aggregate of approximately
$295 million through the issuance of term loans and 12 1/2% Senior Secured Notes
(the "Senior  Secured Notes") with  detachable  common stock purchase  warrants,
resulting in  approximately  $263  million of net proceeds to the Company  after
deducting  related  offering costs and discount on the Senior Secured Notes (the
"Exit   Financing").   The   proceeds   were   used  to  repay   the   Company's
debtor-in-possession   credit  facilities,   the  Predecessor  Company's  Credit
Facility and certain bankruptcy  administrative  claims and reorganization costs
incurred in connection with the Company's bankruptcy proceeding.

4.       Summary of Significant Accounting Policies

         Revenues.  Revenues from time  charters are earned and  recognized on a
daily basis.  Time charter rates are adjusted  periodically  based on changes in
specified price indices and market conditions.  Revenues on voyage contracts are
recognized based upon the percentage of voyage completion.

         Cash and Cash  Equivalents.  The Company  considers  all highly  liquid
investments  with a maturity of three  months or less when  purchased to be cash
equivalents.

         Restricted  Cash.  Restricted  cash primarily  consists of money market
investments  held to fund the first  four  scheduled  interest  payments  on the
Senior Secured Notes.

         Insurance  Claims  Receivable.  Insurance claims  receivable  represent
costs  incurred in  connection  with  insurable  incidents for which the Company
expects to be  reimbursed  by the  insurance  carrier(s),  subject to applicable
deductibles. Deductible amounts related to covered incidents are expensed in the
period of occurrence of the incident.

         Marine Operating Supplies.  Such amounts consist of vessel spare parts,
fuel and supplies  that are  recorded at cost and charged to vessel  expenses as
consumed.

         Impairment  of  Long-Lived   Assets.   The  Company  accounts  for  the
impairment of long-lived  assets under the  provisions of Statement of Financial
Accounting  Standards  ("SFAS")  No.  121,  Accounting  For  the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be disposed of, which requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indications of impairment are present and the undiscounted  cash flows estimated
to be generated by those assets are less than the assets  carrying  amounts.  If
the carrying value of the assets will not be recoverable, as determined based on
the  undiscounted  cash flows  estimated,  the carrying  value of the assets are
reduced to fair value. Generally,  fair value will be determined using valuation
techniques such as expected discounted cash flows or appraisals, as appropriate.
The Company has not recorded any impairment losses.

         Property. Vessels,  improvements and furniture and equipment are stated
at cost less  accumulated  depreciation.  The Company recorded the allocation of
its reorganization  value (see Note 5) to vessels,  improvements,  furniture and
equipment, and identifiable intangible assets in accordance with SOP 90-7, which
provides for the  reorganization  value to be applied to the Company's assets in
conformity with the procedures specified by Accounting  Principles Board Opinion
No. 16, "Business  Combinations",  for transactions reported on the basis of the
purchase method.  Depreciation is computed on the straight-line  method over the
estimated  useful lives of the assets.  The  estimated  useful lives of vessels,
other than tankers,  range from 12 to 40 years and the estimated useful lives of
furniture  and  equipment  range  from  3  to  10  years.  Tankers  and  related
improvements  are depreciated  over estimated  useful lives ranging from 1 to 30
years, as determined by the Oil Pollution Act of 1990 and other factors.

         Vessels under capital leases are amortized over the lesser of the lease
term or their estimated  useful lives.  Included in vessels and  improvements at
December 31, 1998 and 1999 are vessels  under  capital  leases of  approximately
$47.1  million  and  $36.1   million,   net  of  accumulated   amortization   of
approximately $1.7 million and $0.1 million, respectively.

         Deferred  Costs.  Deferred  costs  primarily  represent  drydocking and
financing costs. Substantially all of the company's vessels must be periodically
drydocked and pass certain inspections to maintain its operating classification,
as  mandated  by certain  maritime  regulations.  Costs  incurred to drydock the
vessel  are  deferred  and  amortized  over the  period to the next  drydocking,
generally 30 to 36 months. Drydocking costs are comprised of painting the vessel
hull and sides, recoating cargo and fuel tanks, and performing other maintenance
activities to bring the vessel into compliance with classification standards and
which can typically  only be performed  while the vessel is drydocked.  Deferred
financing  costs  are  amortized  over the term of the  related  borrowings.  At
December 31, 1998 and 1999, deferred costs include unamortized  drydocking costs
of approximately $16.0 million and $7.2 million, respectively, and net financing
costs of $14.8 million and $22.3 million, respectively.

         Restricted  Investments.  Pursuant to the Lightship  Tankers'  Title XI
Bond Financing Agreements,  the Company is required to deposit all proceeds from
the bond issuance into an escrow account  (restricted  investments)  with MARAD.
Funds from the escrow account are disbursed for qualifying  expenses  related to
the construction of the Vessels after  documentation is received and approved by
MARAD. The Company expects the provisioning of the Lightship Tankers in 2000 and
does  not  expect  the  costs to  exceed  the  amounts  included  in  restricted
investments.

         Restricted  investments  primarily  consists of U.S. Treasury bills and
notes  stated  at  their  amortized  cost as  they  are  expected  to be held to
maturity.  The maturity  date of such  investments  range from February to April
2000.  The average  interest  rates on these  investments  in 1998 and 1999 were
consistent  with  short  term U.S.  treasury  note rates  during  such  periods.
Interest earned on the investments is not restricted and may be used for general
working capital purposes for the Lightship Tankers.

         Goodwill. Goodwill represents the excess of the purchase price over the
fair value of assets acquired and is amortized on the  straight-line  basis over
periods ranging from 20 to 35 years.  The carrying value of goodwill is reviewed
if facts and  circumstances  suggest  that it may be  impaired.  If this  review
indicates  that goodwill  will not be  recoverable,  as determined  based on the
estimated  undiscounted  cash flows of the assets  acquired  over the  remaining
amortization  periods,  the  carrying  value will be adjusted  accordingly.  The
remaining  carrying  amounts  relating to the Company's  intangible  assets were
written  off at  the  Effective  Date  as a  result  of  the  allocation  of its
reorganization value (see Note 5). At December 31, 1998 accumulated amortization
of goodwill was approximately $6.0 million.

         Accrued   Liabilities.   Accrued   liabilities   included   in  current
liabilities consist of the following (in thousands):

                                                       Predecessor     Successor
                                                         Company        Company
                                                          1998           1999
                                                      ------------      --------

Accrued reorganization items......................    $        --      $  4,437
Accrued payroll and benefits......................          7,267         6,134
Accrued professional services.....................            249         1,098
Accrued voyage operating expenses.................          6,880         7,218
Accrued litigation, claims and settlements........          4,082         8,146
Accrued taxes.....................................          2,713         4,890
Deferred voyage revenues..........................            788         2,587
Other.............................................          5,644         2,979
                                                      -----------      --------
Total.............................................    $    27,623     $  37,489
                                                      ===========     =========

         Stock-Based Compensation.  As permitted by SFAS No. 123, Accounting for
Stock-Based  Compensation  ("SFAS  123"),  the  Company  has  elected  to follow
Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to
Employees ("APB 25") and related  interpretations in accounting for its employee
stock-based  transactions  and has complied with the  disclosure  requirement of
SFAS 123. Under APB 25, compensation expense is calculated at the time of option
grant based upon the  difference  between the exercise  prices of the option and
the  fair  market  value  of the  Company's  common  stock  at the date of grant
recognized over the vesting period.

         Income  Taxes.  The  Company  files  a  consolidated  tax  return  with
substantially all corporate  subsidiaries;  the other subsidiaries file separate
income tax returns.  Each  partnership and trust subsidiary files a separate tax
return.

         Deferred  income tax assets and  liabilities  are  determined  based on
differences between financial reporting and tax bases of assets and liabilities,
and are  measured  using the  enacted  tax  rates  and laws in  effect  when the
differences  are  expected  to reverse.  The effect on  deferred  tax assets and
liabilities  of a change in tax rates is recognized in income in the period that
includes the enactment date.

         Foreign Currency  Translation.  In accordance with SFAS No. 52, Foreign
Currency Translation,  assets and liabilities  denominated in foreign currencies
are  translated  into  U.S.  dollars  at the rate of  exchange  in effect at the
balance sheet date,  while  revenue and expenses are  translated at the weighted
average  rates   prevailing   during  the   respective   years.   Components  of
shareholders'  equity are translated at historical  rates. The Company's foreign
subsidiaries use the U.S. dollar as their functional  currency and substantially
all external  transactions  are  denominated in U.S.  dollars.  Gains and losses
resulting from changes in exchange rates from year to year are insignificant for
all years presented.

         Reorganization  Items.  In  accordance  with SOP 90-7,  costs  incurred
directly related to the bankruptcy  proceeding are classified as  Reorganization
Items in the accompanying statements of operations.

         Recent Pronouncements. In June 1999, the Financial Accounting Standards
Board (FASB) issued SFAS 137, Accounting for Derivative  Instruments and Hedging
Activities--Deferral  of the Effective Date of FASB Statement 133. The Statement
defers the effective  date of SFAS 133 to fiscal 2001.  Management is evaluating
SFAS 133 and  does not  believe  that  adoption  of the  Statement  will  have a
material impact in the Company's financial statements.

         Reclassifications.  Certain  amounts from prior  periods'  consolidated
financial statements have been reclassified to conform with the current period's
presentation.

5   Fresh Start Reporting

         Upon  emergence  from  Chapter  11  Bankruptcy  Protection  as  of  the
Effective  Date,  the  Company  adopted  fresh start  reporting  pursuant to the
provisions of SOP 90-7. In accordance  with SOP 90-7,  assets of the entities in
Chapter 11 proceeding have been restated as of the Effective Date to reflect the
reorganization  value of the Company and  liabilities  have been recorded at the
present  value of the future  amounts  expected  to be paid.  In  addition,  the
accumulated  deficit  of  the  Company  through  the  Effective  Date  has  been
eliminated  and the  debt  and  capital  structure  of the  Predecessor  Company
reflects the application of the provisions of the Plan.  Thus, the balance sheet
as of December 31, 1999 reflects  reporting of the Successor  Company and is not
comparable to the prior periods of the  Predecessor  Company.  Furthermore,  the
accompanying  consolidated  statements  of  operations  and  cash  flows  of the
Predecessor  Company  reflect  operations  prior to the  Effective  Date and the
effect of adopting fresh start  reporting and are thus not  comparable  with the
results of operations and cash flows of the Successor Company.

         The reorganization value of the Company of approximately $587.6 million
(excluding  the  Lightship  Tankers  which  were  not  part  of the  Chapter  11
proceeding)  was  determined  by the Company  with the  assistance  of financial
advisors.  These advisors (1) reviewed certain historical financial  information
of the Company;  (2) reviewed  certain  internal  operating  reports,  including
management-prepared financial projections and analyses; (3) discussed historical
and projected financial performance with senior management and industry experts;
(4) reviewed  industry  trends and operating  statistics as well as analyzed the
effects of certain  economic  factors on the industry;  (5) analyzed the capital
structures,  financial  performance  and  market  valuations  of  the  Company's
competitors,  and (6) prepared such other  analyses as they deemed  necessary to
their valuation determination.  Based upon the foregoing, the financial advisors
developed  a range of  values  for the  Company  as of the  Effective  Date.  In
developing this valuation estimate, the advisors,  using a rate of approximately
14%,  discounted  the  Company's  five year  forecasted  free cash  flows and an
estimate of sales  proceed  assuming the Company would be sold at the end of the
five year period within a range of comparable company multiples.  Certain of the
projected  results  used in the  valuation  were  materially  better  than those
achieved  historically  by the Company.  In addition to relying on  management's
projections,  the valuation analysis made a number of assumptions including, but
not limited to, a successful and timely  reorganization of the Company's capital
structure and the continuation of current market conditions through the forecast
period.

         The  difference   between  the  Company's   reorganized   value  and  a
revaluation of the Company's assets and liabilities resulted in the recording of
a  reorganization  item of  approximately  $420  million  for the  period  ended
December 15, 1999, which primarily consisted of a decrease in goodwill, property
and other long-term assets.





<PAGE>






         The effects of the Plan, the Exit Financing,  and fresh start reporting
on the Company's condensed  consolidated balance sheet at the Effective Date are
as follows (in thousands):
<TABLE>
<CAPTION>

                                                      Pre-         Discharge        Exit          Fresh Start   Reorganized
                                                   Emergence         of          Financing       Adjustments     Balance
                                                  Balance Sheet    Debt (1)         (2)              (3)           Sheet
<S>                                               <C>            <C>              <C>           <C>             <C>
                  Assets
Current assets:

   Cash and cash equivalents....................   $     13,229   $       --      $      7,768     $        --    $  20,997
   Restricted cash..............................            190            --           15,027              --       15,217
   Accounts receivables, net....................         55,557            --               --              --       55,557
   Marine operating supplies....................         13,525            --               --         (2,654)       10,871
   Prepaid expenses.............................          5,832            --              125              --        5,957
                                                   ------------   -----------     ------------     -----------     --------
      Total current assets......................         88,333            --           22,920         (2,654)      108,599
   Net property.................................      1,017,600            --               --       (325,555)      692,045
   Deferred costs, net..........................         32,309      (10,399)           11,194         (4,679)       28,425
   Restricted investments.......................          3,752            --               --              --        3,752
   Goodwill, net................................         88,052            --               --        (88,052)           --
   Other........................................          3,996            --               --           (220)        3,776
                                                   ------------   -----------     ------------     -----------     --------
                                                   $  1,234,042   $  (10,399)     $     34,114     $ (421,160)   $  836,597

    Liabilities and Stockholders' Equity
Current liabilities:

   Accounts payable.............................   $     10,998   $        --     $         --     $        --    $  10,998

   Current maturities of long-term debt.........         30,041            --         (13,269)              --       16,772
   Current obligations under capital leases.....          3,326            --               --              --        3,326
   Accrued interest.............................         21,073      (19,337)            (322)              --        1,414
   Accrued liabilities and other................         40,625            --            (145)              --       40,480
                                                   ------------   -----------     ------------     -----------     --------
      Total current liabilities.................        106,063      (19,337)         (13,736)              --       72,990

Long-term debt..................................        497,909            --         (38,390)              --      459,519
Obligations under capital leases................         34,098            --               --              --       34,098
Senior notes....................................        300,000     (300,000)           76,644              --       76,644
Other ..........................................          3,743            --               --           2,109        5,852

Company-obligated mandatorily
   redeemable preferred securities
   of subsidiary trust holding solely
   debentures issued by the
   Predecessor Company..........................        115,000     (115,000)               --              --           --

Minority interest...............................         20,603            --               --              --       20,603

Stockholders' equity:
   (Predecessor Company)
       Class A common Stock.....................             13            --               --            (13)           --
     Class B common Stock.......................              2            --               --             (2)           --
   (Successor company)
     Class A common Stock.......................             --           100               --              --          100
   Additional paid-in capital...................        197,142       154,881           11,910       (197,142)      166,791
   Retained earnings (accumulated deficit)......       (40,531)       268,957          (2,314)       (226,112)           --
                                                   ------------   -----------     ------------     -----------     --------
       Total stockholders' equity...............        156,626       423,938            9,596       (423,269)      166,891
                                                   ------------   -----------     ------------     ----------      --------
                                                   $  1,234,042   $  (10,399)     $     34,114     $ (421,160)    $ 836,597
</TABLE>


<PAGE>



6.       Change in Estimates

         In 1998, the Predecessor  Company changed the estimated useful lives of
certain  offshore energy support vessels from an average useful life of 13 years
to 16.78 years and the  amortization  period for certain  goodwill from 20 to 35
years.  Management  believes these changes more accurately  reflect the economic
lives of the Company's  assets.  For 1998, the change had the effect of reducing
depreciation  and  amortization  expense by  approximately  $4.0 million,  which
increased   earnings  per  diluted   share  by  $0.21  for  both  income  before
extraordinary item and net income.

7.       Long-Term Debt

Senior Notes

         In February  1998,  the  Predecessor  Company  completed an offering of
$300.0  million of 8.375%  senior  notes (the "Senior  Notes").  Pursuant to the
Plan,  the Senior  Notes and  accrued and unpaid  interest  were  exchanged  for
9,800,000 shares of the Successor Company's Common Stock. In accordance with SOP
90-7, the Company did not accrue  pre-petition  interest of  approximately  $6.7
million on the Senior Notes after the  Petition  Date,  as it was unlikely  such
amounts would be paid under the Plan.

         On the Effective  Date, the Company issued $95.0 million face amount of
12.5% senior  secured lien notes,  Series A, (the "Senior  Secured  Notes") with
536,193 detachable common stock purchase warrants and an original issue discount
of $9.5 million.  As determined by the Company's  management,  the fair value of
the warrants was estimated to be approximately  $8.9 million and was recorded as
part of the discount on the Senior Secured Notes.  The Senior Secured Notes were
recorded at approximately $76.6 million,  net of discounts and offering costs of
approximately  $18.4  million.  The  discount  is being  amortized  through  the
maturity  date  using  the  effective  interest  method  (amortization  of  $0.1
million).  The discounts and offering  costs  resulted in an effective  interest
rate on the Senior Secured Notes of 18.2%.  Interest on the Senior Secured Notes
is payable quarterly in arrears beginning March 30, 2000.

         Of the  proceeds,  approximately  $69.8  million  was  used to  repay a
portion  of the  Predecessor  Company's  indebtedness  and  approximately  $11.9
million  was used to  establish  an  interest  escrow  account to fund  interest
payments  through  December 30, 2000.  The interest  escrow  account  balance is
classified as Restricted Cash in the Company's Consolidated Balance Sheet.

         The Senior  Secured Notes mature June 30, 2007 and are  redeemable,  in
whole or in part,  at the option of the Company  after  December 15, 1999 at the
redemption  amount, as defined,  plus accrued and unpaid interest.  In addition,
upon a change in control, as defined, the Company must redeem the Senior Secured
Notes at 101% of the stated principal amount, plus accrued and unpaid interest.

         The Company is obligated to  consummate an exchange  offer  pursuant to
which the holders of the Senior  Secured  Notes shall have the right to exchange
the  Series A Notes  for 12.5%  Senior  Secured  Notes due 2007,  Series B, (the
"Exchange  Notes").  The Exchange Notes will be registered  under the Securities
Act in like principal  amount and having  identical  terms as the Senior Secured
Notes.

         The Senior Secured Notes are secured by substantially all the assets of
the  Company.  Covenants  under the Notes  require the  Company to meet  certain
financial tests and, among other things,  (1) limit the incurrence of additional
indebtedness;  (2) limit the  creation  or  incurrence  of  certain  liens;  (3)
restrict certain payments and investments;  and (4) restrict certain asset sales
and affiliate transactions.

Other Debt

         Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                   Predecessor      Successor
                                                                                     Company         Company
                                                                                      1998            1999
                                                                                  ----------------------------
<S>                                                                               <C>            <C>
         Lines of Credit........................................................  $     135,000  $          --
         Term Loan..............................................................        117,954        200,000
         Title XI Debt..........................................................        261,674        259,206
         Notes Payable..........................................................          5,874         24,338
                                                                                  -------------  -------------
                                                                                        520,502        483,544
         Less:  Current maturities..............................................        264,341         17,775
                                                                                  -------------  -------------
                                                                                  $     256,161  $     465,769
                                                                                  =============  =============
</TABLE>

         In  September  1997,  the  Predecessor  Company  entered  into a $175.0
million  revolving line of credit.  In November 1997,  the  Predecessor  Company
entered  into a $300.0  million  Term Loan  Agreement.  In  February  1998,  the
Predecessor  Company entered into an Amended and Restated  Revolving  Credit and
Term  Loan  Agreement  which  merged  the  Credit  Agreement  and the Term  Loan
Agreement and resulted in their individual termination.

         Effective  September 30, 1998,  the  Predecessor  Company  entered into
Amendment  No. 1 to the  Amended  and  Restated  Revolving  Credit and Term Loan
Agreement  (the  "Predecessor  Credit  Facility").  Pursuant to the  Predecessor
Credit  Facility,  borrowings  under  the  revolving  line of  credit  could not
initially  exceed $150.0 million,  inclusive of a letter of credit  sub-limit of
$20.0  million,  increasing to (1) $166.0  million  subsequent to March 1, 1999,
subject  to  repayment  of a  portion  of the term  loan  with  proceeds  from a
specified sale and leaseback  transaction or (2) $175.0 million,  based upon the
Predecessor   Company's   compliance  with  a  specified   leverage  ratio.  The
Predecessor Credit Facility provided that borrowings thereunder would be secured
by  substantially  all  of  the  Predecessor  Company-owned  vessels  having  an
appraised value of at least $600.0 million and by substantially all other assets
of the  Predecessor  Company and its  subsidiaries.  Interest on borrowings were
based on one of two rates, at the Company's election, plus a margin based on the
Predecessor Company's compliance with certain financial ratios. In addition, the
revolving  line of credit was subject to a commitment  fee of 0.4% on the unused
potion.

         Prior to the Chapter 11 filing,  the  Predecessor  Company entered into
various amendments to the Predecessor Credit Facility that provided, among other
things,  for (1) increased  commitment  fees and/or the payment of certain other
fees;  (2) increased  interest on borrowings;  and (3) waivers of  noncompliance
with certain covenants in the Predecessor Credit Facility.

         Effective  September  10,  1999,  the  Predecessor  Company and certain
lending  institutions entered into a  Debtor-in-Possession  Revolving Credit and
Term Loan  Agreement  (the "DIP  Facility").  Subject to certain  conditions and
limitations,  the DIP Facility provided the Predecessor Company with a revolving
credit facility of up to $60 million. In addition, approximately $241 million of
borrowings previously outstanding under the Predecessor Credit Facility with the
same group of banks  were  converted  into a term loan  under the DIP  Facility.
Borrowings under the DIP Facility bore interest at three percentage  points over
the "Base Rate" of  Citibank.  The DIP Facility  also  provided for certain fees
payable by the  Company and for certain  covenants  relating to earnings  before
interest, taxes, depreciation and amortization; capital expenditures; collateral
coverage; and outstanding borrowings.

         Outstanding  borrowings  under the  Predecessor  Credit  Facility  were
repaid upon the Company's  emergence  from  bankruptcy  with the proceeds of the
Exit Financing (See Note 3) and the facility was eliminated.

         On December 15, 1999, the Company  entered into a Credit Facility ("the
Credit Facility") consisting of $200.0 million of term loans and a $25.0 million
revolving  line of credit.  The term loans consist of three  facilities of $75.0
million,  $30.0  million,  and $95.0  million  maturing  over 5, 6, and 7 years,
respectively.  The revolving  line of credit  matures on December 15, 2004.  The
$75.0 million term loan and the revolving line of credit accrue  interest at the
Base Rate, as defined,  of 8.5% plus 2.25%  (10.75% at December 31,  1999).  The
$30.0 million and $95.0 million term loans accrue interest at the Base Rate plus
2.75% (11.25% at December 31, 1999) and Base Rate plus 3.25% (11.75% at December
31,  1999),  respectively.  At December 31,  1999,  the Company did not have any
outstanding  indebtedness  under the revolving line of credit and  approximately
$200.0 million was outstanding under the term loans.

         Covenants under the Credit  Facility,  among other things,  (i) require
the Company to meet certain  financial  tests,  including  tests  requiring  the
maintenance  of minimum  leverage  ratios,  debt service  coverage  ratios,  and
indebtedness to tangible worth ratios;  (ii) limit the creation or incurrence of
certain liens; (iii) limit the incurrence of additional indebtedness; (iv) limit
the Company from making  certain  investments;  (v) limit sales of assets;  (vi)
require  maintenance of certain appraised market collateral values,  (vii) limit
transactions  with affiliates and changes in business;  and (viii) limit mergers
and consolidations.

         Based upon current  circumstances the Company will not be in compliance
at March 31, 2000 with certain of the covenants contained in the Credit Facility
and on April 13, 2000, entered into amendment No. 1 to the Credit Facility which
waived the Company's non-compliance at March 31, 2000 and Modified the covenants
(see Note 25).

         In March  1996,  the  Company  issued  United  States  Government  Ship
Financing  Bonds (the Original Bonds) under Title XI of the Merchant Marine Act,
1936 (Title XI), as amended,  bearing  interest at 7.54%. On September 30, 1998,
the Company  redeemed  approximately  $129.9  million of the bonds at face value
plus accrued interest pursuant to the special  redemption feature under the bond
indenture.  The Company  issued new United  States  Government  Guaranteed  Ship
Financing Bonds (the Reissued  Bonds) under Title XI bearing  interest at 6.50%.
The  proceeds  of the  Title  XI debt  were  used  for the  construction  of the
Lightship Tankers.

         On February 14, 1999, and on June 18, 1999, the Company issued Title XI
bonds (the  Tack-on  Bonds) of  approximately  $2.1  million  and $3.3  million,
respectively,  in connection with the construction of the Lightship Tankers. The
Original Bonds,  Reissued Bonds, and Tack-on Bonds are collectively  referred to
as the Title XI Bonds. The full faith and credit of the United States Government
is pledged as a guarantee  to the payment of all  principal  and interest on the
Title XI Bonds. The Title XI Bonds are subject to semi-annual redemption at par,
plus accrued  interest  through  mandatory  sinking funds,  calculated to retire
approximately 96% of the Bonds prior to maturity through 49 increasing principal
payments with balloon payments at maturity.

         On each mandatory  sinking fund  redemption  date, the Company,  at its
option,  will  have  the  noncumulative  right  to  redeem  without  premium  an
additional principal amount of the Title XI Bonds up to the amount of such bonds
redeemed on such date. Title XI Bonds optionally redeemed without premium by the
Company may be credited against mandatory sinking fund payments.

         The Original Bonds may be redeemed at any time following June 14, 1999,
in whole,  but not in part, at the Company's  option at a premium  equivalent to
107%, if on or prior to December 14, 1999 and,  thereafter,  at prices declining
semiannually to par through June 14, 2009, plus accrued interest,  upon at least
30 but not  exceeding  60  days  prior  to the  holders,  provided  that no such
redemption may be made through  refunding at an effective  interest cost of less
than the interest rate thereon.

         The Reissued Bonds may be redeemed at any time following June 14, 1999,
in whole,  or in part,  at the Company's  option at a redemption  price equal to
100% of the principal  amount plus accrued  interest and the make whole premium,
as defined,  upon at least 30 but not  exceeding  60 days prior to the  holders,
provided  that no such  redemption  may be made prior to June 14,  2008  through
refunding at an effective cost of less than the interest rate thereon.  However,
the Reissued  Bonds are  redeemable  at face value plus accrued  interest  under
certain circumstances.

         The Tack-on Bonds may be redeemed at any time following their issuance,
in whole, or in part, a the Company's option at a redemption price equal to 100%
of the principal  amount plus accrued  interest and the make whole  premium,  as
defined.

         Covenants under the Title Bond agreements contain financial tests which
if not met,  among other things,  (1) restrict the  withdrawal  of capital;  (2)
restrict  certain   payments,   including   dividends,   increases  in  employee
compensation  and payments of other  indebtedness;  (3) limit the  incurrence of
additional  indebtedness;  and (4)  prohibit  the Company  from  making  certain
investments  or  acquiring  additional  fixed  assets.  Certain  vessels and all
contract rights thereof have been secured as collateral in  consideration of the
United States Government guarantee of the Title XI Bonds.

         The  Company is required  to make  deposits to a Title XI reserve  fund
based  on a  percentage  of net  income  attributable  to the  operation  of the
Lightship Tanker Vessels, as defined by the Title Bond agreement.

         Cash held in the Title XI reserve  fund is  invested  by the trustee of
the fund and any income earned thereon is either paid to the Company or retained
in the reserve fund.  Withdrawals from the Title XI reserve fund may be made for
limited  purposes,  subject to prior  approval from MARAD.  To date, no deposits
have been required.

         Other Title XI debt of approximately $31.2 million is collateralized by
first preferred mortgages on certain vessels and bears interest at rates ranging
from  5.4% to  10.1%.  The  debt is due in  semiannual  principal  and  interest
payments through June 1, 2021. Under the terms of the Title XI debt, the Company
is required  to maintain a minimum  level of working  capital,  as defined,  and
comply with certain other financial covenants.

          On  February  17,  1999,  the  Company  issued  a  promissory  note of
approximately  $14.2  million for the  acquisition  of  vessels.  The note bears
interest at 8.49%.  Monthly  principal  and  interest  payments  are due through
February 2009.

         On  December  30,  1999,  the  Company  issued  a  promissory  note  of
approximately  $8.6 million for the  acquisition of an additional  interest in a
subsidiary. The note bears interest at 8.5%. Semi-annual interest and increasing
principal payments are due through December 2003.

         Other notes  payable bear  interest at rates  ranging from 7.92% to 10%
and mature at various dates through November 2011. The notes are  collateralized
by certain vessels.

         At December 31, 1999, the Company had letters of credit  outstanding in
the amount of  approximately  $2.9 million which expire on various dates through
December 2002. At December 31, 1999, restricted cash on the accompanying balance
sheet includes $3.1 million as collateral for these letters of credit.

         The aggregate  annual future payments due on the Senior Notes and other
debt as of December 31, 1999 are as follows (in thousands):

         2000..............................................  $      17,775
         2001..............................................         20,129
         2002..............................................         24,704
         2003..............................................         35,962
         2004..............................................         38,077
         Thereafter........................................        441,897
                                                             -------------
                                                             $     578,544

8.       Capital Leases

         The Company owns certain  vessels and other equipment under leases that
are classified as capital leases.  The following is a schedule of future minimum
lease payments under capital leases,  including obligations under sale-leaseback
transactions,  together with the present value of the net minimum lease payments
as of December 31, 1999 (in thousands):

         2000........................................................$   5,665
         2001........................................................    5,436
         2002........................................................    4,587
         2003........................................................    4,446
         2004........................................................    4,217
         Thereafter..................................................   28,970
                                                                     ---------
         Total minimum lease payments................................   53,321
         Less amount representing interest........................... (16,055)
                                                                     --------
         Present value of minimum lease payments (including current
            portion of $3,332).......................................$  37,266
                                                                     =========

9.       Company Obligated Mandatorily Redeemable Preferred Securities

         In  June  1997,  a  private  offering  of  2,300,000  of 6  1/2%  Trust
Convertible  Preferred Securities (the "Preferred  Securities") was completed by
Hvide  Capital  Trust,  a  100%-owned  subsidiary  of the  Predecessor  Company.
Pursuant to the Plan,  the  Preferred  Securities  along with accrued and unpaid
preferred  distributions  were  exchanged  for 200,000  shares of the  Successor
Company's Common Stock and 125,000 common stock purchase warrants (See Note 16).
In  accordance   with  SOP  90-7,   the  Company  did  not  accrue   prepetition
distributions  of approximately  $2.1 million on the Preferred  Securities after
the Petition Date, as it was unlikely such amounts would be paid under the plan.

10.      Commitments and Contingencies

Commitments

         Subsequent to the Petition Date,  the Company  defaulted on its payment
obligations under certain  contracts  providing for the construction of vessels.
The shipyard has asserted claims for damages against the Company and included in
other current liabilities at December 31, 1999 is approximately $7 million which
represents  management's  estimate  of the  amount  of these  claims  that  will
ultimately be paid.

         The Company  leases its office  facilities  and certain  vessels  under
operating  lease  agreements  which expire at various dates  through 2013.  Rent
expense was  approximately  $4.7 million,  $5.9 million and $5.6 million for the
years ended December 31, 1997, 1998 and 1999, respectively.

         Aggregate  annual future  payments due under  non-cancelable  operating
leases with remaining terms in excess of one year are as follows (in thousands):

         2000...............................................   $      4,426
         2001...............................................          4,446
         2002...............................................          3,554
         2003...............................................          2,610
         2004...............................................          2,669
                                                               ------------
                                                               $     17,705

Contingencies

         In  1990,  the  Company  withheld  approximately  $2.4  million  from a
shipyard  relating to delays and other problems  encountered in the construction
of a vessel. In 1993, the shipyard filed a claim to recover  approximately  $6.1
million  for  additional  construction  costs  allegedly  due the  shipyard.  In
December 1998, all claims were dismissed with prejudice in  consideration of the
Company's  agreement  to pay  the  shipyard  $4.75  million  of  the  additional
construction  costs  previously  claimed.  Included  in  charter  hire and other
liabilities on the accompanying December 31, 1998 balance sheet is $3.75 million
due the shipyard in 1999,  representing the Company's  remaining  payments under
the settlement agreement. The remaining amounts were paid in 1999.

         Under United States law,  "United States  persons" are prohibited  from
performing contracts in support of an industrial,  commercial, public utility or
governmental  project in the Republic of Sudan, or facilitating such activities.
During 1999, two vessels owned by subsidiaries of the Company performed services
for third parties in support of energy  exploration  activities in Sudan; one of
these  vessels  continued to perform such services  until January 31, 2000.  The
Company has reported these activities to the Office of Foreign Assets Control of
the  United  States  Department  of the  Treasury  and to the  Bureau  of Export
Administration of the United States Department of Commerce. Should either of the
agencies determine that these activities  constituted  violations of the laws or
regulations  administered by them,  civil and/or criminal  penalties,  including
fines,  could be assessed  against the Company  and/or certain  individuals  who
knowingly  participated in such  activities.  The Company cannot predict whether
any  such  penalties  will be  imposed  or the  nature  or  extent  of any  such
penalties.

         The  Company  has been named in Marine  Towing of Tampa,  Inc. v. Hvide
Marine Towing,  pursuant to which the plaintiff seeks unspecified treble damages
from the  Company  as a result  of  alleged  violations  of  federal  and  state
antitrust  laws.  The  plaintiff,  has been a  competitor  of the Company in the
harbor  towing  business in the port of Tampa,  Florida  since  October 1999 and
alleges  that the unlawful  monopoly in providing  tug services in Tampa Bay and
has unlawfully  used its monopoly power and engaged in a conspiracy in restraint
of trade to restrain others, including the plaintiff, from operating in the port
and to maintain prices at artificially  high levels.  The specific acts of which
the plaintiff complains include the non-exclusive franchise granted by the Tampa
Port Authority to the Company,  the Company's reduction of its rates and on-year
exclusive-provider agreements with customers, and the Company's alleged unlawful
conduct,  that the  plaintiff  has not been  restrained  from  competing  in the
market,  and that the suit has no merit.  The  Company is unable to predict  the
ultimate outcome of this matter.

         On March 31,  2000,  the  Company  was named in J. Erik Hvide and Betsy
Hvide v. Hvide Marine Incorporated, pursuant to which the Company's former chief
executive officer and his wife allege that the Company has breached an agreement
to provide  Mr.  Hvide with  severance  benefits  valued at  approximately  $1.0
million.  In addition,  Mr. and Mrs. Hvide allege that the Company's conduct, in
obtaining the return of certain of the Company's  property from Mr. Hvide and in
discontinuing the payment of life insurance premiums, constituted an intentional
course of conduct  calculated to cause them severe emotional distress and public
humiliation  for which  they seek  unspecified  punitive  damages.  The  Company
believes  that  it  never  reached  any  agreement  with  Mr.  Hvide  concerning
compensation  relating to his severance,  that it engaged in no conduct intended
to cause harm to Mr. or Mrs. Hvide, and that the suit has no  merit. The Company
is unable to predict the ultimate outcome of this matter.

11.      Acquisitions

         In February  1998, the Company  acquired a fleet of 37 offshore  energy
support vessels,  operating  primarily  offshore West Africa and Southeast Asia,
which now  operate as Seabulk  Offshore  Operators,  Inc.  ("SOOP"),  for a cash
purchase price of  approximately  $291.7 million.  The acquisition was accounted
for under the  purchase  method  and  resulted  in costs in excess of net assets
acquired of approximately $61.4 million.

         In May 1997, the Company acquired substantially all of the assets of an
entity, which now operates as Seabulk Offshore International,  Inc. ("SOII"), in
a transaction  accounted for as a purchase.  The consideration,  valued at $58.7
million,  consisted of $49.0  million  cash, a $6.0 million note (repaid in June
1997) and 141,760  shares of Class A Common Stock valued at  approximately  $3.7
million.  The fair value of net assets acquired  approximated the purchase price
paid by the Company.

         In October 1997, the Company  acquired 100% of the  outstanding  common
stock of Bay  Transportation  Corporation  ("Bay") for $36.5 million in cash and
the assumption of  approximately  $20.6 million of debt. The purchase  agreement
provided for additional  consideration based on specified changes in the working
capital of Bay,  which  resulted  in the  payment of  approximately  $500,000 in
January 1998. The  acquisition  was accounted for under the purchase  method and
resulted in goodwill of approximately $17.4 million.

         The  Company's  unaudited  pro-forma  information,  assuming  that  the
acquisition of SOOP, SOII and Bay had occurred on January 1, 1997, is summarized
as follows (in thousands, except per share amounts):

                                                         Year Ended December 31,
                                                       -------------------------
                                                            1997          1998
                                                       -------------  ----------

   Revenues............................................ $    292,248  $  409,494
   Income before extraordinary item....................       21,032      22,549
   Net income..........................................       18,900      21,815
   Diluted earnings per common share, before
     extraordinary item................................         1.37        1.40
   Diluted earnings per common share...................         1.24        1.36

         This  pro-forma  information  does not purport to be  indicative of the
results which might have been obtained had the acquisitions  been consummated at
the date assumed.

         In March 1998,  the Company  acquired  seven harbor tugs, two petroleum
product  carriers,  and a topside  repair  facility for a cash purchase price of
$31.9 million.  The fair value of net assets acquired  approximated the purchase
price paid by the Company.

         In 1998,  the  Company  also  acquired 3 vessels  under  various  asset
purchase  agreements for an aggregate cash  consideration of approximately  $8.9
million and  completed the  construction  of 10 vessels at a total cost of $56.0
million.

         On December 30, 1999,  the  Successor  Company  exercised its option to
purchase an additional  25% equity  interest in the  Lightship  Tankers and paid
cash of $1 million and issued a note for $8,6 million. The Successor Company has
an option to purchase the remaining  24.2% equity interest for $9.0 million plus
interest through December 31, 2000. The Successor Company has not yet determined
whether or to what extent it will exercise the option.

         The  operations  of the  acquired  three  vessels  and  businesses  are
included in the accompanying  consolidated  statements of operations for periods
subsequent to their acquisition dates.

12.      Loss on Disposal of Assets

         Loss on disposal of assets on the accompanying  consolidated  statement
of operations includes losses on the vessels sold and the forfeiture of deposits
and progress payments on and the settlement of cancelled shipbuilding contracts.
During 1999, the  Predecessor  Company sold ten vessels for net cash proceeds of
approximately  $32.9 million.  The proceeds were primarily used to repay amounts
outstanding under the Predecessor Company Credit Facility.

13.      Stock Option Plans

         In August 1996, the  Predecessor  Company  adopted an Equity  Ownership
Plan (the  "EOP"),  which  provided  for the  issuance of a maximum of 2,000,000
shares of the Predecessor Company's Class A Common Stock. Under the terms of the
EOP,  options were  generally  granted to employees at exercise  prices not less
than the fair market value of the underlying  common stock at the date of grant.
Option terms ranged from 5 to 10 years.

         The Stock  Option Plan for  Directors  provided  for the  issuance of a
maximum of 70,000 shares of the  Predecessor  Company's  Class A common stock to
directors of the  Predecessor  Company.  The exercise  price for all options was
equal to the fair market  value of the  underlying  common  stock at the date of
grant and the term of these options was 10 years.

         On the Effective  Date, all rights and awards granted under the EOP and
Stock  Option Plan for  Directors  were  cancelled.  The holders of common stock
issuable but not earned or vested under these plans received a pro rata share of
125,000 Class A warrants issued by the Successor Company (See Note 16).

         On the  Effective  Date,  the  Successor  Company  approved a new stock
option plan, which provides  certain key employees of the Successor  Company the
right to acquire shares of common stock. Pursuant to the plan, 500,000 shares of
the  Successor   Company's  common  stock  are  reserved  for  issuance  to  the
participants in the form of nonqualified  stock options.  Options may be granted
at exercise prices not less than 100% of the fair market value of the underlying
common stock on the date of the grant.  The vesting and other terms of the stock
options granted under the plan will be determined by the compensation  committee
of the Board of Directors ("the Compensation Committee").  The options expire no
later than seven years from the date of the grant.

         Pursuant to the Successor plan,  options to purchase  200,000 shares of
the Successor Company's common stock were granted to certain senior employees on
the Effective Date. Half of these options vested  automatically on the Effective
Date and the remaining  option vest 91 days  thereafter.  On March 31, 2000, the
Compensation Committee approved the exercise price of these option at $12.47 per
share.


<PAGE>



     The  following  table of data is  presented  in  connection  with the stock
     option plans for both the Predecessor and Successor Company:
<TABLE>
<CAPTION>

                                                                                                                     Successor
                                                                 Predecessor Company                                  Company
                                                                                              January 1 to          December 16 to
                                                                                              December 15,           December 31,
                                                  1997                     1998                  1999                  1999
                                          ----------------------  --------------------- ----------------------- -------------------
                                                       Weighted               Weighted               Weighted              Weighted
                                            Number      average     Number     average    Number      average     Number    average
                                              of       exercise       of      exercise      of       exercise       of     exercise
                                            options      price      options     price     options      price      options    price
                                            -------      -----      -------               -------      -----      -------    -----
<S>                                        <C>        <C>        <C>         <C>          <C>         <C>       <C>       <C>
Options outstanding at
     beginning of period...........          806,000  $   12.00      894,025  $    14.83    987,675   $  12.60      --      $    --
 Granted...........................          150,950      28.96      221,350     13.61     379,441       6.06     200,000    12.47
 Exercised.........................         (53,425)      12.00        (100)     12.00          --         --          --      --
 Cancelled.........................          (9,500)      14.73    (127,600)     29.35 (1,367,116)      10.78          --      --
Options outstanding at
      end of period................          894,025      14.83      987,675     12.60       --            --     200,000    12.47

Options exercisable at end of period          99,325     12.00       228,325    12.73        --          --       100,000      --
Options available for future grants at end
 of period.........................          113,050         --      891,700        --          --         --     300,000      --
</TABLE>

         The  weighted   average  fair  value  of  options   granted  under  the
Predecessor  Company's  stock option plans during 1997, 1998 and the period from
January 1, 1999 through  December 15, 1999,  based on the  Black-Scholes  option
valuation model, were $18.38,  $7.98 and $5.72,  respectively.  Had compensation
expense for the stock option grants been  determined  based on the fair value at
the grant date for awards  consistent  with the  methods  of SFAS No.  123,  the
Predecessor  Company's net income would have  increased to the pro forma amounts
for each year as indicated below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                                                             January 1 to
                                                                            1997          1998             December 15, 1999
                                                                         --------  -----------          -----------------
<S>                                                                      <C>          <C>                  <C>
         Net income (loss):
                As reported............................................  $    25,523  $    21,748          $   (248,355)
                Pro-forma..............................................       24,334       20,261              (250,395)

         Earnings per share--assuming dilution:
                As reported............................................         1.63         1.35                (16.02)
                Pro-forma..............................................         1.56         1.27                (16.15)

</TABLE>

                  The fair value of each option is  estimated on the date of the
         grant using the Black-Scholes  option-pricing  model with the following
         assumptions applied to grants in 1997, 1998 and the period from January
         1, 1999 through December 15, 1999:

<TABLE>
<CAPTION>
                                                                                                             January 1 to
                                                                            1997          1998             December 15, 1999
                                                                         -----------  -----------        -------------------
<S>                                                                      <C>         <C>                 <C>
         Dividend yield................................................         0.0%         0.0%                   0.0%
         Expected volatility factor....................................       0.62         0.68                   1.39
         Approximate risk-free interest rate...........................         6.5%         4.5%                   6.5%
         Expected life (in years)......................................          6            6                      6
</TABLE>


<PAGE>



         The  Black-Scholes  options  valuation  model was  developed for use in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because changes in the subjective input  assumptions can materially
affect the fair value estimate, the existing models, in management's opinion, do
not  necessarily  provide a  reliable  single  measure  of the fair value of the
Company's stock options.

14.      Employee Benefit and Stock Plans

         The  Company   sponsors  a  retirement  plan  and  trust  (the  "Plan")
established  pursuant to Section  401(k) of the  Internal  Revenue  Code,  which
covers  substantially  all  employees.  Subject to certain  dollar  limitations,
employees may  contribute a percentage of their  salaries to this Plan,  and the
Company will match a portion of the  employees'  contributions.  Profit  sharing
contributions by the Company to the Plan are  discretionary.  For 1997, 1998 and
1999 the Company contributed  approximately $1.5 million,  $2.7 million and $1.9
million, respectively, to the Plan.

         The 1996 Stock Purchase Plan (the "1996 Plan") provided for the sale of
a maximum of 500,000 shares of the Predecessor Company's Class A common stock to
employees  of the  Company at a price  equal to 85% of the  market  value of the
Predecessor  Company's  common stock at the  beginning  or end of each  purchase
period,  whichever was lower.  Participants under the 1996 Plan received 21,639,
112,319 and 79,678 shares of Predecessor  Company's common stock for 1997, 1998,
and 1999, respectively.

         The Key Employee Stock Compensation Plan provided for the issuance of a
maximum of 65,000 shares of the  Predecessor  Company's  Class A common stock to
key  employees.  Key employees  could elect to receive up to 50% of their annual
incentive compensation denominated in shares of the Predecessor Company's common
stock at the fair  value of the  shares  at the date of  issuance.  No shares of
common stock were issued under the Key Employee Stock Compensation Plan.

         The Board of Directors Stock Compensation Plan was approved in 1997 and
provided  for the  issuance  of a maximum  of 90,000  shares of the  Predecessor
Company's common stock to non-employee  directors.  Each eligible director could
elect to  convert  all or a  portion  their  fees for  attendance  at Board  and
committee  meetings into shares of the Predecessor  Company's  common stock at a
20% discount  from the fair value of the shares at the date of issuance.  Shares
issued  pursuant  to  the  plan  were  14,374  and  55,048  in  1998  and  1999,
respectively.


<PAGE>



         On the  Effective  Date,  all rights and awards  granted under the 1996
Stock Purchase Plan, the Key Employee Stock  Compensation  Plan and the Board of
Directors Stock  Compensation  Plan were cancelled.  The holders of common stock
issuable but not earned or vested under these plans received a pro rata share of
125,000 Class A warrants issued by the Successor Company (See Note 16).

15.      Income Taxes

         The United States and foreign components of income (loss) before income
taxes and extraordinary item are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                                              Successor
                                                               Predecessor Company                            Company
                                                                                         Period from         Period from
                                                             Year Ended                 January 1 to       December 16 to
                                                             December 31,               December 15,        December 31,
                                                 ----------------------------------     -------------       ------------
                                                         1997            1998              1999                 1999
                                                   --------------  ---------------    ---------------     ---------------
<S>                                               <C>            <C>               <C>                  <C>
United States................................      $    39,013     $      (2,525)     $    (314,447)      $         (855)
Foreign......................................            5,592             39,364          (232,555)                (710)
                                                   -----------     --------------     --------------      ---------------
     Total...................................      $    44,605     $       36,839     $    (547,002)      $       (1,565)
                                                   ===========     ==============     ==============      ===============
</TABLE>

         The components of the provision for income tax expense (benefit) are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                              Successor
                                                       Predecessor Company                                    Company
                                                                                         Period from         Period from
                                                             Year Ended                 January 1 to       December 16 to
                                                             December 31,               December 15,        December 31,
                                                 ----------------------------------     -------------       ------------
                                                         1997           1998                1999                1999
                                                   -------------   ---------------    -----------------   ----------
<S>                                              <C>             <C>                   <C>              <C>
Current:
    Federal..................................      $      3,803    $           --     $         (2,234)   $            --
    Foreign..................................                --             3,300                 2,234                --
                                                   ------------    --------------     -----------------   ---------------
         Total current.......................             3,803             3,300                    --                --
                                                   ------------    --------------     -----------------   ---------------

Deferred ....................................            13,147            10,189             (32,004)           --
                                                   ------------    --------------     -----------------   ---------------
    Total income tax expense (benefit).......      $     16,950    $       13,489     $        (32,004)   $            --
                                                   ============    ==============     =================   ===============
</TABLE>

         Income taxes paid were  approximately $4.3 million and $3.6 million for
the years ended December 31, 1997 and 1998,  respectively.  No income taxes were
paid in 1999.

         A reconciliation  of income tax  attributable to continuing  operations
computed  at the U.S.  federal  statutory  tax rates to income tax  expense  is:
Successor
<TABLE>
<CAPTION>

                                                                   Predecessor Company                        Company
                                                                                         Period from         Period from
                                                             Year Ended                 January 1 to       December 16 to
                                                             December 31,               December 15,        December 31,
                                                 ----------------------------------     -------------       ------------
                                                         1997           1998               1999                 1999
                                                   -------------   ---------------    ---------------      ---------
<S>                                                <C>             <C>               <C>                  <C>
Income tax expense computed at the federal
     statutory rate...............................          35%              35%               (35)%               (35)%
State income taxes................................            3                1                 (1)                 (1)
Permanent reorganization items....................           --               --                   2                  --
Reduction of tax attributes.......................           --               --                  20                  --
Valuation allowance...............................           --               --                   8                  36
Other.............................................           --                1                  --                  --
                                                     ----------    -------------      --------------      --------------
                                                            38%              37%                (6)%                   0%
                                                     ==========   ==============      ==============      ===============
</TABLE>

         The tax effect of temporary  differences  that give rise to significant
portions  of  the  deferred  tax  assets  and  liabilities  are as  follows  (in
thousands):

                                                          Predecessor  Successor
                                                            Company     Company
                                                               December 31,
                                                             1998           1999
                                                         -----------     -------
Deferred income tax assets:
   Allowances for doubtful accounts .................    $     786     $   1,978
   Goodwill..........................................           --        22,752
   Property differences..............................           --        12,804
   Accrued compensation..............................        1,883           840
   Foreign tax credit carryforwards..................        4,683         5,448
   Alternative minimum tax credit carryforwards......        6,141            --
   Net operating loss carryforwards..................       26,903            --
   Other.............................................           --         4,007
                                                         ---------     ---------
     Total deferred income tax assets................       40,396        47,829
     Less:  valuation allowance......................           --        43,252
                                                         ---------     ---------
     Net deferred income tax assets..................       40,396         4,577

Deferred income tax liabilities:
   Property differences..............................       70,480            --
   Deferred drydocking costs.........................        1,172         2,569
   Other ............................................          748         2,008
                                                         ---------     ---------
     Total deferred income tax liabilities...........       72,400         4,577
                                                         ---------     ---------
Net deferred income tax liabilities..................    $(32,004)     $      --
                                                         =========     =========

         The Company has  available  approximately  $5.4  million in foreign tax
credits,  expiring in years 2002  through  2004,  that are  available  to offset
future federal tax liabilities.

         SFAS No. 109 requires a valuation  allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence,  it is more likely than
not that some  portion or all of the  deferred  tax assets will not be realized.
After consideration of all the evidence, both positive and negative,  management
has  determined  that a valuation  allowance of  approximately  $43.2 million is
necessary  at December  31, 1999 to reduce the deferred tax assets to the amount
that will more likely than not be realized.  After  application of the valuation
allowance,  the Company's net deferred tax assets and  liabilities  are zero. In
the event that the Company  recognizes,  in subsequent years, the tax benefit of
any  deferred  tax asset  that  existed  on the date the  reorganization  became
effective, such tax benefit will be reported as a direct addition to contributed
capital.

         For financial reporting purposes, the Company reported a gain of $266.6
million resulting from the extinguishment of indebtedness that occurred from the
bankruptcy  discharge  on the  Effective  Date.  Pursuant  to Section 108 of the
Internal  Revenue Code,  this gain is excluded from income  taxation and certain
tax  attributes of the Company are  eliminated  or reduced,  up to the amount of
such income  excluded from  taxation.  As a result,  the Company's net operating
loss and alternative  minimum tax credit  carryforwards  in the amount of $245.8
million and $2.0 million respectively,  were eliminated and the tax basis in the
Company's  assets  was  reduced by $14.8  million.

         As of December 31,  1999,  the Company has a tax basis in its assets in
excess of its basis for  financial  reporting  purposes  that will  generate tax
deductions in future periods.  As a result of a "change in ownership"  under the
Internal   Revenue  Code  Section   382,  the   Company's   ability  to  utilize
depreciation,   amortization  and  other  tax  attributes  will  be  limited  to
approximately  $9.5  million  per  year  for the  five  subsequent  years.  This
limitation  is applied to all net built-in  losses which exist on the "change of
ownership"  date (the  Effective  Date),  including  all items  giving rise to a
deferred tax asset.

16.      Stockholder's Equity

         Pursuant  to the  Plan,  prior to the  effective  date,  shares  of the
Predecessor  Company's  Class B common  stock were  converted  to Class A common
stock.  On the Effective  Date,  holders of  Predecessor  Company Class A common
stock and holders of certain rights to obtain common stock under the Predecessor
Company's  compensation  plans were issued 125,000  warrants to purchase Class A
common stock of the Successor  Company on a pro rata basis.  The warrants have a
four-year term and an exercise price of $38.49 per share. On the Effective Date,
all classes of the Successor Company's equity securities were cancelled.

         Pursuant to the articles of incorporation  of the Successor,  there are
20 million shares of common stock  authorized for issuance,  of which 10 million
were  granted  at  the  Effective  Date  in  exchange  for  Predecessor  Company
liabilities  as discussed in Note 3. The  Predecessor  Company's  Class A common
shares were issued on January 21, 2000.

         At the Effective Date, holders of the Predecessor  Company's  Preferred
Securities,  discussed  in Note 9,  received  $0.2  million  shares of Successor
Company Class A common stock and 125,000  common stock  purchase  warrants.  The
warrants have a four-year term and an exercise price of $38.49 per share.

         At the Effective Date, the holders of the Predecessor  Company's Senior
Notes,  discussed in Note 7, received  9.8 million  shares of Successor  Company
Class A common stock.

         As discussed in Note 7, the holders of Senior  Secured  Notes  received
536,193  common stock  purchase  warrants.  The warrants have a six and one-half
year  term and a  exercise  price of $0.01 per  warrant.  As  determined  by the
Company's  Management,  the fair value of the  warrants was  approximately  $8.9
million and was  recorded as a component  of  additional  paid in capital of the
Succesor.

         All of the Predecessor Company's outstanding warrants contain customary
anti-dilution provisions for issuances of common stock, splits, combinations and
certain other events,  as defined.  In addition,  the outstanding  warrants have
certain registration rights, as defined.

         In  connection  with the  issuance  of the Senior  Secured  Notes,  the
Successor Company issued 187,668 Class A Warrants to purchase common stock to an
investment  advisor.  The  warrants  have a six and  one-half  year  term and an
exercise  price of $0.01.  As determined by the Company's  management,  the fair
value of the  warrants  was  approximately  $3.5  million  and was  recorded  as
financing costs.

         The  Successor  Company  is  authorized  to issue 5  million  shares of
preferred stock,  $0.01 par value per share. The company has no present plans to
issue such shares.

         At December 31, 1999,  1,473,861  shares of Common Stock were  reserved
for  issuance,  under  the  Successor  Company's  1999  Stock  Option  Plan  and
outstanding warrants.

17.      Earnings Per Share

The following  table sets forth the  computation  of basic and diluted  earnings
(loss)  per share  before  extraordinary  item (in  thousands,  except per share
amounts).
<TABLE>
<CAPTION>

                                                                                                        Successor
                                                                       Predecessor Company               Company
                                                                                     Period from       Period from
                                                                  Year Ended        January 1 to     December 16 to
                                                                 December 31,       December 15,     December 31,
                                                          ------------------------  ------------  ---------------
                                                              1997         1998          1999             1999
                                                          -----------  -----------  -------------- ---------------
<S>                                                       <C>          <C>          <C>            <C>
Numerator:
Numerator for basic earnings per share--income
     (loss) before extraordinary item available to common
     shareholders......................................   $    27,655  $    23,350  $   (514,998)  $        (1,565)

Effect of dilutive securities:
Payments on convertible preferred securities...........         2,369        4,635             --                --
                                                          -----------  -----------  -------------  ----------------
Numerator for diluted earnings per share--income
     (loss) available to common shareholders after
     assumed  conversions..............................   $    30,024  $    27,985  $   (514,998)  $        (1,565)
                                                          ===========  ===========  =============  ================

Denominator:
Denominator for basic earnings per share--
     weighted average shares...........................        14,785       15,324         15,503            10,000

Effect of dilutive securities:
Convertible preferred securities.......................         2,067        4,035             --                --
Deferred compensation(a)...............................            --           14             --                --
Stock options..........................................           268           78             --                --
                                                          -----------  -----------  -------------  ----------------
Dilutive potential common shares.......................         2,335        4,127             --                --
                                                          -----------  -----------  -------------  ----------------
Denominator for diluted earnings per share--
     adjusted weighted average shares and assumed
     conversions.......................................        17,120       19,451         15,503            10,000
                                                          ===========  ===========  =============  ================
Earnings (loss) per share before extraordinary item....   $      1.87  $      1.52  $     (33.22)  $         (0.16)
                                                          ===========  ===========  =============  ================
Earnings (loss) per share before extraordinary item--
     assuming dilution.................................   $      1.75  $      1.43  $     (33.22)  $         (0.16)
                                                          ===========  ===========  =============  ================

</TABLE>

(a) Includes  shares  contingently  issuable  pursuant to the Key Employee Stock
Plan (see Note 11).

18.      Business Risks

         Risks and Uncertainties.  The Company's operating results and financial
condition may vary in the future depending on a number of factors. The following
factors may impact the Company's  business,  results of operations and financial
condition.

         Significant Customers.  The Company derived revenues from one customer,
Oceanografia,  S.A., representing approximately 13% of total offshore and harbor
towing  revenue  for the year ended  December  31,  1999.  The  Company  derived
revenues from one customer,  Oceanografia,  S.A., representing approximately 16%
of total  offshore  and harbor  towing  revenue for the year ended  December 31,
1998. The Company derived revenues from two customers,  CITGO and Equiva Trading
Co., each  representing  approximately  15% and 12% respectively of total marine
transportation  services  revenue  for the year ended  December  31,  1999.  The
Company  derived  revenues  from  three  customers,  Amoco,  Koch  Refining  and
Phillips,  each  representing  10-11% of total  marine  transportation  services
revenue for the year ended December 31, 1997. There were no customers from which
the  Company  derived  more than 10% of its  total  revenue  for the year  ended
December 31, 1999.

         Dependence on Oil and Gas Industry.  The Company's current business and
operations  are  substantially  dependent  upon  conditions  in the  oil and gas
industry,  particularly  the  expenditures by oil and gas companies for offshore
exploration  and production  activities.  To the extent that oil and natural gas
prices decline or remain at present  levels for an extended  period of time, the
Company's  business could be adversely affected due to a reduction in or absence
of an increase in expenditures for offshore exploration and production.

         International Operations.  The Company derives substantial revenue from
international operations, primarily under U.S. dollar-denominated contracts with
major   international   oil  companies.   Risks  associated  with  operating  in
international markets include vessel seizure,  foreign exchange restrictions and
currency fluctuations,  foreign taxation, political instability,  expropriation,
nationalization,  modification  or  renegotiation  of  contracts,  war and civil
disturbances or other risks that may limit or disrupt markets.

         Concentrations of Credit Risk. Financial  instruments which potentially
subject the Company to  concentrations  of credit risk consists  principally  of
cash and cash equivalents in banks,  restricted cash, trade accounts  receivable
and insurance claims  receivable.  The credit risk associated with cash and cash
equivalents  and restricted  cash in banks is considered low due to their credit
quality.  The Company performs ongoing credit evaluations of its trade customers
and  generally  does not require  collateral.  The credit risk  associated  with
insurance  claims  receivable  is considered  low due to the credit  quality and
funded status of the insurance pools in which the Company participates.

         Estimates.  The preparation of financial  statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

         Litigation.   The  Company  is  sometimes   named  as  a  defendant  in
litigation,  usually  relating to claims for bodily injuries or property damage.
The  Company  maintains  insurance  coverage  against  such claims to the extent
deemed prudent by management and  applicable  deductible  amounts are accrued at
the time of the incident. The Company believes that there are no existing claims
of a potentially  material  adverse nature for which it has not already provided
appropriate accruals.

         Unions and  Collective  Bargaining  Agreements.  At December  31, 1999,
approximately  10% of the Company's  employees were members of national maritime
labor unions,  or are subject to collective  bargaining  agreements.  Management
considers   relations  with   employees  to  be   satisfactory;   however,   the
deterioration  of these  relations could have an adverse effect on the Company's
operating results.

19.      Segment and Geographic Data

         The Company  adopted  SFAS No.  131,  Disclosure  about  Segments of an
Enterprise  and  Related   Information.   The  Company  organizes  its  business
principally  into three  segments.  The  accounting  policies of the  reportable
segments  are the same as those  described  in Note 4. The Company does not have
significant intersegment transactions.

         These segments and their respective operations are as follows:

         Offshore  Energy Support - Offshore  energy support  includes  vessels,
         operating in U.S.  and foreign  locations  used  primarily to transport
         materials,  supplies,  equipment  and personnel to drilling rigs and to
         support the construction, positioning and ongoing operations of oil and
         gas productions platforms.

         Harbor and Offshore  Towing - Harbor and offshore  towing  services are
         provided  by tugs to  vessels  utilizing  the  ports in which  the tugs
         operate and to vessels at sea to the extent  required by  environmental
         regulations, casualty or other emergency.

         Marine  Transportation   Services  -  Marine  transportation   services
         includes  oceangoing  and  inland-waterway  vessels  used to  transport
         chemicals,  fuel and other petroleum products,  primarily from chemical
         manufacturing plants,  refineries and storage facilities along the U.S.
         Gulf of Mexico coast to industrial users and distribution facilities in
         and around the Gulf of Mexico,  Atlantic  and  Pacific  coast ports and
         inland rivers.

         The Company evaluates  performance by operating  segment.  Also, within
the offshore energy support segment, the Company performs additional performance
evaluation  of vessels  marketed in U.S. and foreign  locations.  Resources  are
allocated based on segment profit or loss from  operations,  before interest and
taxes.

         Revenues  by segment  and  geographic  area  consist  only of  services
provided to external  customers,  as reported in the  Statements of  Operations.
Income  from   operations  by  geographic  area  represents  net  revenues  less
applicable  costs and expenses related to those revenues.  Unallocated  expenses
are primarily  comprised of general and  administrative  expenses of a corporate
nature.  Identifiable  assets  represent  those assets used in the operations of
each segment or geographic area and unallocated  assets include corporate assets
and intercompany eliminations.


<PAGE>



         The  following  schedule  presents   information  about  the  Company's
operations in these segments (in thousands):
<TABLE>
<CAPTION>

                                                                                                                    Successor
                                                                     Predecessor Company                             Company
                                                                                              Period from          Period from
                                                              Year Ended                      January 1 to       December 16 to
                                                             December 31,                      December 15         December 31
                                                      1997                  1998                  1999                  1999
<S>                                              <C>                   <C>                   <C>               <C>
Revenues

    Offshore energy support.................     $       111,385       $       242,655       $       144,702    $         5,610
    Offshore and harbor towing..............              20,424                46,368                41,431              1,528
    Marine transportation services..........              78,448               115,770               142,618              6,341
                                                 ---------------       ---------------       ---------------    ---------------
Consolidated revenue........................     $       210,257       $       404,793       $       328,751    $        13,479
                                                 ===============       ===============       ===============    ===============

Operating expenses

    Offshore energy support.................     $        43,697       $       114,369       $        95,811    $         4,168
    Offshore and harbor towing..............              11,798                21,558                19,949                745
    Marine transportation services..........              49,438                77,674                96,993              3,134
                                                 ---------------       ---------------       ---------------    ---------------
Consolidated operating expenses.............     $       104,933       $       213,601       $       212,753    $         8,047
                                                 ===============       ===============       ===============    ===============

Selling, general and administrative

   expenses

    Offshore energy support.................     $         5,866       $        14,707       $        19,684    $           635
    Offshore and harbor towing..............               2,361                 5,528                 5,385                239
    Marine transportation services..........               5,739                 8,269                 7,416                199
    General corporate.......................              10,825                14,675                15,329                570
                                                 ---------------       ---------------       ---------------    ---------------
Consolidated selling, general and

   administrative expenses..................     $        24,791       $        43,179       $        47,814    $         1,643
                                                 ===============       ===============       ===============    ===============

Depreciation, amortization and drydocking

    Offshore energy support.................     $        10,949       $        41,547       $        49,893    $         1,236
    Offshore and harbor towing..............               1,645                 4,750                 4,991                150
    Marine transportation services..........              12,181                16,876                22,855                623
    General corporate.......................                 425                 1,071                 1,671                 60
                                                 ---------------       ---------------       ---------------    ---------------
Consolidated depreciation, amortization and

    drydocking..............................     $        25,200       $        64,244       $        79,410    $         2,069
                                                 ===============       ===============       ===============    ===============

Income (loss) from operations

    Offshore energy support.................     $        50,873       $        72,032       $      (20,686)    $         (429)
    Offshore and harbor towing..............               4,620                14,532                11,106                394
    Marine transportation services..........              11,090                12,951                15,354              2,385
    General corporate.......................            (11,250)              (15,746)              (17,000)              (630)
                                                 ---------------       ---------------       ---------------    ---------------
Consolidated income (loss) from operations..     $        55,333       $        83,769       $      (11,226)    $         1,720
                                                 ===============       ===============       ===============    ===============
</TABLE>

<TABLE>
<CAPTION>

                                                                 Consolidated Balance Sheet
                                                                     as of December 31,
                                                ------------------------------------------------------------
                                                      1997                     1998                1999
                                                ----------------      -----------------      ---------------
<S>                                              <C>                  <C>                    <C?

Identifiable assets

    Offshore energy support.................     $       237,131       $       653,687       $       386,444
    Offshore and harbor towing..............             101,547               116,381                81,364
    Marine transportation services..........             298,707               579,580               325,936
Unallocated.................................            (33,602)                 5,619                36,996
                                                 ---------------       ---------------       ---------------
Total  .....................................     $       603,783       $     1,355,267       $       830,740
                                                 ===============       ===============       ===============


Capital expenditures

    Offshore energy support.................     $       207,207       $       304,387       $        10,649
    Offshore and harbor towing..............              47,003                27,525                   838
    Marine transportation services..........               7,513               179,251                 2,083
    Unallocated.............................              37,404                50,057                   138
                                                 ---------------       ---------------       ---------------
Total ......................................     $       299,127       $       561,220       $        13,708
                                                 ===============       ===============       ===============
</TABLE>

<PAGE>



         The Company is engaged in providing  marine support and  transportation
services  in the United  States and foreign  locations.  The  Company's  foreign
operations  are conducted on a worldwide  basis,  primarily in the Arabian Gulf,
West  Africa,  Southeast  Asia and Mexico,  with assets that are highly  mobile.
These operations are subject to risks inherent in operating in such locations.

         The vessels generating revenues from offshore and marine transportation
services move regularly and routinely from one country to another,  sometimes in
different  continents  depending  on the  charter  party.  Because of this asset
mobility,  revenues and long-lived assets  attributable to the Company's foreign
operations in any one country are not material, as defined in SFAS No. 131.

         The following table presents selected financial information  pertaining
to the Company's geographic operations for 1997, 1998 and 1999 (in thousands):
<TABLE>
<CAPTION>

                                                                                                                  Successor
                                                                          Predecessor Company                     Company
                                                                                               Period from       Period from
                                                  Year Ended             Year Ended           January 1 to     December 16 to
                                                 December 31,           December 31,          December 15,      December 31,
                                                     1997                  1998                  1999                1999
                                                ---------------        -------------         -------------       --------
<S>                                             <C>                    <C>                   <C>               <C>
Revenues

    Domestic..............................      $       189,336        $     254,582         $     232,067     $       10,039
    Foreign...............................               20,921              150,211                96,684              3,440
                                                ---------------        -------------         -------------     --------------
Consolidated revenues.....................      $       210,257        $     404,793         $     328,751     $       13,479
                                                ===============        =============         =============     ==============

Income (loss) from operations
    Domestic..............................      $        57,782        $      56,184         $      23,252      $       2,877
    Foreign...............................                8,376               43,331              (17,478)              (527)
    Unallocated expenses..................             (10,825)             (15,746)              (17,000)              (630)
                                                ---------------        -------------         -------------     --------------
Consolidated income (loss)from operations       $        55,333        $      83,769         $     (11,226)    $        1,720
                                                ===============        =============         =============     ==============
</TABLE>

<TABLE>
<CAPTION>

                                                                Consolidated Balance Sheet
                                                                    as of December 31,
                                                -----------------------------------------------------------
                                                      1997                 1998                   1999
                                                ---------------        -------------         --------------
<S>                                             <C>                    <C>                   <C>
Identifiable assets

    Domestic..............................      $       454,688        $     836,915         $     546,235
    Foreign...............................              147,332              512,733               247,509
    Unallocated...........................                2,541                5,619                36,996
                                                ---------------        -------------         -------------
Consolidated identifiable assets..........              604,561        $   1,355,267         $     830,740
                                                ===============        =============         =============
</TABLE>

20.      Fair Value of Financial Instruments

         The following  methods and  assumptions  were used to estimate the fair
value of financial instruments included in the following categories:

         Cash, Cash Equivalents,  Restricted Cash, Accounts Receivable, Accounts
Payable and Accrued  Liabilities.  The carrying  amounts reported in the balance
sheets approximate fair value due to the current maturity of such instruments.

         Successor  Company  Senior  Secured  Notes and Term Loan.  The carrying
amounts reported in the December 31, 1999 balance sheet  approximates fair value
due to the recent issuance of such instruments.

         Senior Notes. The fair value of the Predecessor  Company's Senior Notes
was  approximately  $237.0 million at December 31, 1998 based upon quoted market
rates.  Pursuant  to the Plan,  the  Senior  Notes were  converted  to an equity
interest in the Successor Company at the Effective Date.

         Revolving   Credit  and  Term  Loan   Agreement.   Amounts   previously
outstanding  under the Credit  Facility  provided for interest at variable rates
that are  periodically  adjusted to reflect  changes in overall market rates and
therefore approximated fair value.

         Title XI Debt.  The fair value of the  Lightship  Tanker Title XI Bonds
was  approximately  $213.8  million and $238.2  million at December 31, 1999 and
1998,  respectively,  compared to its  carrying  value of  approximately  $228.0
million and $225.0 million,  respectively.  The carrying value of other Title XI
debt  approximates  fair  value at  December  31,  1999.  The fair  values  were
determined using a discounted cash flow analysis at estimated market rates as of
December 31, 1999.

         Notes  Payable and Capital  Lease  Obligations.  The  carrying  amounts
reported in the balance sheets  approximate  fair value using a discounted  cash
flow analysis at estimated market rates.

         Preferred  Securities.  The Preferred  Securities were publicly traded.
The fair value of the Preferred  Securities was  approximately  $39.0 million at
December 31, 1998,  based upon quoted  market rates.  Pursuant to the Plan,  the
Preferred  Securities  were  converted  to an equity  interest in the  Successor
Company at the Effective Date.

21.      Extraordinary Items

         In 1997, the Company repaid $126.7 million of its outstanding  debt and
amended its then existing credit facility.  As a result,  the Company recorded a
loss on the early  extinguishment of $2.1 million,  net of an income tax benefit
of $1.2 million.

         In February 1998, the Company repaid $268.0 million of its  outstanding
debt. As a result,  the Company recorded a loss on the early  extinguishment  of
approximately $0.7 million, net of an income tax benefit of $0.4 million.

         In 1999, the Predecessor  Company was relieved of approximately  $421.6
million of  outstanding  debt and  related  accrued  interest  in  exchange  for
approximately  $155  million in equity  interests  in the  Successor  Company in
connection with the Plan. As a result,  the Predecessor  Company recorded a gain
on the early extinguishment of debt of approximately $266.6 million.

22.      Supplemental Condensed Consolidating Financial Information

         The  Senior   Secured   Notes   described  in  Note  7  are  fully  and
unconditionally  guaranteed  on a joint  and  several  basis by  certain  of the
Company's consolidated subsidiaries. A substantial portion of the Company's cash
flows are generated by its  subsidiaries.  As a result,  the funds  necessary to
meet the Company's obligations are provided in substantial part by distributions
or advances from its subsidiaries.  Under certain circumstances,  contractual or
legal restrictions,  as well as the financial and operating  requirements of the
Company's  subsidiaries,  could limit the Company's  ability to obtain cash from
its  subsidiaries  for the purpose of meeting  its  obligations,  including  the
payments of principal and interest on the Senior Secured Notes.

         The  following  is   summarized   condensed   consolidating   financial
information for the Company,  segregating the Parent,  the combined  guarantors,
the combined non-guarantor subsidiaries and eliminations.

<TABLE>
<CAPTION>


                                                                Condensed Consolidating Balance Sheet
                                                                           (in thousands)
                                                                          December 31, 1999
                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated
<S>                                       <C>          <C>               <C>               <C>               <C>
Assets

Current assets.......................
 ...Cash and cash equivalents............. $     4,830  $        10,724   $         3,492    $          --    $       19,046
 ...Restricted cash.......................      15,027              190                --               --            15,217
 ...Accounts receivable:
 ...  Trade, net..........................       1,804           41,307             5,132            (688)            47,555
 ...  Insurance claims and other..........       1,866            5,178               516            (785)             6,775
Marine operating supplies................       (465)            6,291             4,806               --            10,632
 ...Prepaid expenses......................         933            2,593               487               --             4,013
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total current assets................      23,995           66,283            14,433          (1,473)           103,238

Property:
 ...Construction in progress..............          --            1,205               140               --              1345
 ...Vessel and improvements...............       9,292          384,702           304,985               --           698,979
 ...Furniture and equipment...............       5,822            5,186               635               --            11,643
 ...Less accumulated depreciation.........       (196)          (1,204)          (20,687)               --          (22,087)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Net property..........................      14,918          389,889           285,073               --           689,880
Deferred costs (net).....................      14,962            6,069             8,433               --            29,464
Restricted investments...................          --               --             3,752               --             3,752
Due from affiliates......................     (82,320)         120,532           (34,734)          (3,478)
Goodwill, net............................          --               --                --               --                --
 ...  Other...............................     537,880          356,947            43,038        (933,459)             4,406
                                          -----------  ---------------   ---------------    -------------    --------------
 ...                                       $   509,435  $       940,112   $       319,603    $   (938,410)    $      830,740
                                          ===========  ===============   ===============    =============    ==============

Current liabilities:
 ...Accounts payable...................... $     1,383  $         8,565   $           947    $          --    $       10,895
 ...Current maturities of long term debt..      12,065            1,890             3,820                             17,775
 ...Current obligations under capital leases       555             2,777               --               --             3,332
 ...Accrued interest......................       2,418               --               684               --             3,102
 ...Accrued liabilities and other.........      18,685           17,214             3,063          (1,473)            37,489
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total current liabilities...........      35,106           30,446             8,514          (1,473)            72,593

 ...Long-term debt........................     214,212           27,410           224,147               --           465,769
 ...Obligations under capital leases......      13,662           20,272                --               --            33,934
 ...Senior notes..........................      76,709               --                --               --            76,709
 ...Deferred income taxes.................          --               --                --               --                --
 ...Other.................................       4,425            1,301               226                              5,952

Company-obligated mandatorily redeemable
 ...preferred securities of a subsidiary trust
 ...holding solely debentures issued by the
 ...Company...............................          --               --                 --              --                 --

Minority interest........................          --              (1)                --           10,458            10,457

Commitments and contingencies............          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------

Stockholders' equity.....................          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------

Common stock.............................         100               --                --               --               100
Additional paid in capital...............     166,786          633,985            11,143        (645,123)           166,791
Retained earnings (accumulated deficit)..     (1,565)          226,308            75,964        (302,272)           (1,565)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...    Total stockholders' equity........     165,321          860,293            87,107        (947,395)           165,326
                                          -----------  ---------------   ---------------    -------------    --------------
 ...                                       $   509,435  $       939,721   $       319,994    $   (938,410)    $      830,740
                                          ===========  ===============   ===============    =============    ==============
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                                                                Condensed Consolidating Balance Sheet
                                                                           (in thousands)
                                                                          December 31, 1998

                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated
<S>                                       <C>          <C>               <C>                 <C>             <C>
Assets

Current assets.......................
 ...Cash and cash equivalents............. $     1,401  $         7,101   $         1,604    $          --    $       10,106
 ...Restricted cash.......................          --               --                --               --                --
 ...Accounts receivable:
 ...  Trade, net..........................       5,337           62,973             1,810            (672)            69,448
 ...  Insurance claims and other..........       4,874            7,015               401               --            12,290
 ...Marine operating supplies.............       2,707           13,704             2,864            (277)            18,998
 ...Prepaid expenses......................       1,373            2,852               398               --             4,623
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total current assets................      15,692           93,645             7,077            (949)           115,465

Property:
 ...Construction in progress..............      14,573           24,716            76,601              166           116,056
 ...Vessel and improvements...............     116,256          710,114           219,358          (3,011)         1,042,717
 ...Furniture and equipment...............       6,833            9,597               898               --            17,328
 ...Less accumulated depreciation.........    (23,974)         (58,839)          (12,655)               --          (95,468)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Net property..........................     113,688          685,588           284,202          (2,845)         1,080,633
Deferred costs (net).....................      15,642           15,704             7,711            (286)            38,771
Restricted investments...................          --               --            23,344               --            23,344
Due from affiliates......................     167,216        (117,420)          (50,230)              434                --
Goodwill, net............................         114           86,842                --            4,401            91,357
 ...  Other...............................     697,005          822,426            32,467      (1,546,201)             5,697
                                          -----------  ---------------   ---------------    -------------    --------------
 ...                                       $ 1,009,357  $     1,586,785   $       304,571    $ (1,545,446)    $    1,355,267
                                          ===========  ===============   ===============    =============    ==============

Current liabilities:
 ...Accounts payable...................... $     6,190  $        19,388   $         1,182    $          --    $       26,759
 ...Current maturities of long term debt..     261,106              859             2,376               --           264,341
 ...Current obligations under capital leases       630             2,361               --                --            2,991
 ...Accrued interest......................       9,688              175               690               --            10,553
 ...Accrued liabilities and other.........       5,166           17,426             5,753            (722)            27,623
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total current liabilities...........     282,780           40,209            10,000            (722)           332,267

 ...Long-term debt........................     136,355           15,766           222,597        (118,557)           256,161
 ...Obligations under capital leases......      14,186           22,797                --               --            36,983
 ...Senior notes..........................     300,000               --                --               --           300,000
 ...Deferred income taxes.................      25,649            7,072                --               --            32,721
 ...Other.................................       2,352            3,084               115               --             5,551

Preferred securities.....................          --          115,000                --               --           115,000

Minority interest........................          --                1                --           28,548            28,549

Commitments and contingencies............          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------

Stockholders' equity.....................          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------
Common stock.............................          15               17                 3             (20)                15
Additional paid in capital...............     196,822          658,017            30,086        (688,103)           196,822
Retained earnings........................      51,198          724,822            41,770        (766,592)            51,198
                                          -----------  ---------------   ---------------    -------------    --------------
 ...    Total stockholders' equity........     248,035        1,382,856            71,859      (1,454,715)           248,035
                                          -----------  ---------------   ---------------    -------------    --------------
 ...                                       $ 1,009,357  $     1,586,785   $       304,571    $ (1,545,446)    $    1,355,267
                                          ===========  ===============   ===============    =============    ==============


</TABLE>

<TABLE>
<CAPTION>

                                                                Condensed Consolidating Income Sheet
                                                                           (in thousands)
                                                      For the Period of December 16, 1999 to December 31, 1999

                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated

<S>                                       <C>          <C>               <C>                <C>              <C>
Revenues................................. $     2,118  $        10,516   $         3,203    $     (2,358)    $       13,479
Operating expenses:
 ...Crew payroll and benefits.............         876            2,598               681               --             4,155
 ...Charter hire and bond guarantee fee...          80            2,618                --          (2,144)               554
 ...Repair and maintenance................          70              594                55               --               719
 ...Insurance.............................          51              338               143               --               532
 ...Consumables...........................         217            1,228               224              (9)             1,660
 ...Rent and utilities....................          91              613             (110)            (167)               427
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total operating expenses............       1,385            7,989               993          (2,320)             8,047
Selling, general and administrative expenses:
 ...Salaries and benefits.................         239              522               109               --               870
 ...Office................................          83              125                12               --               220
 ...Professional fees.....................         203              (6)                14               --               211
 ...Other.................................         100              419                59            (236)               342
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Total overhead expenses...............         625            1,060               194            (236)             1,643
 ...Depreciation, amortization and drydocking      222             1,445              402                --            2,069

Income (loss) from operations............       (114)               22             1,614              198             1,720

Other income (expense):
 ...Interest expense......................     (2,041)               --             (715)               --           (2,756)
 ...Interest income.......................          24                1                43               --                68
 ...Minority interest and equity earnings of
 ...  subsidiaries........................         565            1,645               582          (3,200)             (408)
 ...Loss on disposal of assets............          --               --                --               --                --
 ...  Other...............................           1                8                 0            (198)             (189)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...    Total other expense, net..........     (1,451)            1,654              (90)          (3,398)           (3,285)
 ...Income (loss) before reorganization items,
 ...income taxes and extraordinary item...     (1,565)            1,676             1,524          (3,200)           (1,565)
Reorganization items:
 ...Professional fees.....................          --               --                --               --                --
 ...Write down of goodwill and property...          --               --                --               --                --
 ...Other, net............................          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total reorganization items..........          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------
Income (loss) before income taxes and
 ...extraordinary item....................     (1,565)            1,676             1,524          (3,200)           (1,565)
Provision for (benefit from) income taxes         --               --                 --               --               --

Income (loss) before extraordinary item..     (1,565)            1,676             1,524          (3,200)           (1,565)
Gain (loss) on early extinguishment of debt,
 ...net of applicable income taxes........          --               --                --               --                --
                                          -----------  ---------------   ---------------    -------------    --------------
Net income (loss)........................ $   (1,565)  $         1,676   $         1,524    $     (3,200)    $      (1,565)
                                          ===========  ===============   ===============    =============    ==============

</TABLE>






<PAGE>

<TABLE>
<CAPTION>


                                                               Condensed Consolidating Statement of Operations
                                                                           (in thousands)
                                                       For the Period January 1, 1999 to December 15, 1999

                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated
<S>                                      <C>            <C>              <C>                <C>              <C>
Revenues................................. $    48,598  $       279,355   $        60,999    $    (60,201)    $      328,751
Operating expenses:
 ...Crew payroll and benefits.............      17,405           59,386            14,799            (216)            91,374
 ...Charter hire and bond guarantee fee...       1,859           61,192                --         (47,260)            15,791
 ...Repairs and maintenance...............       2,263           22,796             1,182            (196)            26,045
 ...Insurance.............................       1,569            9,694             1,453               --            12,716
 ...Consumables...........................       4,063           29,556             5,381          (3,034)            35,966
 ...Rent and utilities....................       2,963           21,049            10,851          (4,002)            30,861
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total operating expenses............      30,122          203,673            33,666         (54,708)           212,753
Selling, general and administrative expenses:
 ...Salaries and benefits.................       5,836           12,212                --               --            18,048
 ...Office................................       2,569            3,598               396               --             6,563
 ...Professional fees.....................       6,753            2,482             1,212               --            10,447
 ...Other.................................       1,684           11,797             4,891          (5,616)            12,756
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Total overhead expenses...............      16,842           30,089             6,499          (5,616)            47,814
 ...Depreciation, amortization and drydocking   12,105           57,793             9,524             (12)            79,410

Income (loss)  from operations...........    (10,471)         (12,200)            11,310              135          (11,226)

Other income (expense):
 ...Interest expense......................    (61,692)            (407)          (17,150)            8,034          (71,215)
 ...Interest income.......................       2,850            5,558               467          (8,034)               841
 ...Minority interest and equity earnings of
 ...  subsidiaries........................   (377,286)        (286,522)           (3,938)          665,150           (2,596)
 ...Loss on disposal of asset sales.......    (13,573)         (12,085)                --               --          (25,658)
 ...Other.................................       4,629         (15,332)             2,658            4,170           (3,875)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total other expense, net............   (445,072)        (308,788)          (17,963)          669,320         (102,503)
                                          -----------  ---------------   ---------------    -------------    --------------
Income (loss) before reorganization items,
 ...income taxes and extraordinary item...   (455,543)        (320,988)           (6,653)          669,455         (113,729)
Reorganization items:
 ...Professional fees.....................     (8,535)               --                --               --           (8,535)
 ...Write down of goodwill and property...    (79,868)        (332,999)           (2,730)          (4,401)         (419,998)
                                                                                                                          -
 ...Other.................................     (4,154)            (586)                --               --           (4,740)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total reorganization items..........    (92,557)        (333,585)           (2,730)          (4,401)         (433,273)
                                          -----------  ---------------   ---------------    -------------    --------------
Income (loss) before taxes and extraordinary
 ...item..................................   (548,100)        (654,573)           (9,383)          665,054         (547,002)
Provision for (benefit from) taxes.......    (32,004)               --                --               --          (32,004)
                                          -----------  ---------------   ---------------    -------------    --------------
Income (loss) before extraordinary item..   (516,096)        (654,573)           (9,383)          665,054         (514,998)
Gain (loss) on early extinguishment of debt  267,741           (1,098)               --                --          266,643

 ...Net income (loss)..................... $ (248,355)  $     (655,671)   $       (9,383)    $     665,054    $    (248,355)
                                          ===========  ===============   ===============    =============    ==============
</TABLE>




<PAGE>

<TABLE>
<CAPTION>


                                                                Condensed Consolidating Statement of Operations
                                                                           (in thousands)
                                                                          Year ended December 31, 1998

                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated
<S>                                       <C>          <C>               <C>                <C>              <C>
Revenues................................. $    69,616  $       452,263   $        16,822    $   (133,908)    $      404,793
Operating expenses:
 ...Crew payroll and benefits.............      21,507           68,744             3,851          (1,619)            92,483
 ...Charter hire and bond guarantee fee...       3,633           69,113                --         (53,067)            19,679
 ...Repair and maintenance................       3,888           15,376               543               --            19,807
 ...Insurance.............................       2,014           10,348               356               --            12,718
 ...Consumables...........................       5,994           36,846               687          (3,899)            39,628
 ...Rent and utilities....................       3,408           26,669               485          (1,275)            29,286
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total operating expenses............      40,444          227,095             5,922         (59,860)           213,601
Selling, general and administrative expenses:
 ...Salaries and benefits.................       9,344           10,232             1,486               --            21,062
 ...Office................................       2,013            3,574               240               --             5,827
 ...Professional fees.....................       2,868            1,831             2,264               --             6,963
 ...Other.................................       3,621            9,712             1,636          (5,642)             9,327
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Total overhead expenses...............      17,846           25,349             5,626          (5,642)            43,179
 ...Depreciation, amortization and drydocking   13,690            47,056            3,498              --             64,244

Income (loss) from operations............     (2,364)          152,763             1,776         (68,406)            83,769

Other income (expense):
 ...Interest expense......................    (50,483)          (7,223)           (7,110)            9,839          (49,723)
 ...Interest income.......................       2,767               --             7,855          (9,839)             8,485
 ...Minority interest and equity earnings of
 ...  subsidiaries........................      81,513           75,147               582        (163,090)           (5,848)
 ...Loss on disposal of assets............          --               --                --               --                --
 ...Other.................................       4,538         (71,872)               277           67,213               156
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total other expense, net............      38,335           10,498               114         (95,877)          (46,930)
Income (loss) before reorganization items,
 ...income taxes and extraordinary item...      35,971          163,261             1,890        (164,283)            36,839
Provision for (benefit from) income taxes      13,489             --                 --               --             13,489
Income (loss) before extraordinary item..      22,482          163,261             1,890        (164,283)            23,350
Gain (loss) on early extinguishment of debt,
 ...net of applicable income taxes........       (734)               --             (868)               --           (1,602)
                                          -----------  ---------------   ---------------    -------------    --------------
Net income (loss)........................ $    21,748  $       163,261   $         1,022    $   (164,283)    $       21,748
                                          ===========  ===============   ===============    =============    ==============
</TABLE>




<PAGE>

<TABLE>
<CAPTION>


                                                                Condensed Consolidating Statement of Operations
                                                                           (in thousands)
                                                                          Year ended December 31, 1997

                                                           Guarantor       Non Guarantor                         Condensed
                                              Parent     Subsidiaries      Subsidiaries       Eliminations     Consolidated
<S>                                       <C>           <C>               <C>               <C>              <C>
Revenues................................. $    52,280  $       219,735   $        10,329    $    (72,087)    $      210,257
Operating expenses:
 ...Crew payroll and benefits.............      15,866           31,103             2,741            (978)            48,732
 ...Charter hire and bond guarantee fee...       4,170           59,124                --         (52,746)            10,548
 ...Repairs and maintenance...............       2,380            7,390               392               --            10,162
 ...Insurance.............................       2,230            6,166               471               --             8,867
 ...Consumables...........................       2,796           15,750               254          (5,146)            13,654
 ...Rent and utilities....................       2,635            9,909               448             (22)            12,970
                                          -----------  ---------------   ---------------    -------------    --------------
 ...  Total operating expenses............      30,077          129,442             4,306         (58,892)           104,933
Selling, general and administrative expenses:
 ...Salaries and benefits.................       7,167            4,715               170               --            12,052
 ...Office................................       1,118            1,129                 1               --             2,248
 ...Professional fees.....................       1,921              478             2,284                              4,683
 ...Other.................................       2,960            4,368               563          (2,083)             5,808
                                          -----------  ---------------   ---------------    -------------    --------------
 ...Total overhead expenses...............      13,166           10,690             3,018          (2,083)            24,791
 ...Depreciation, amortization and drydocking    9,750           13,720             1,730                             25,200

Income (loss) from operations............       (713)           65,883             1,275         (11,112)            55,333

Other income (expense):
 ...Interest expense......................    (10,274)          (1,432)           (1,800)            5,165           (8,341)
 ...Interest income.......................       2,346            4,136                --          (5,165)             1,317
 ...Minority interest and equity earnings of
 ...  subsidiaries........................      53,147          114,282               192        (171,148)           (3,527)
Other....................................          99          (9,133)              (36)            8,893             (177)
                                          -----------  ---------------   ---------------    -------------    --------------
 ...    Total other expense, net..........      45,318          107,853           (1,644)        (162,255)          (10,728)
Income (loss) before reorganization items,
 ...income taxes and extraordinary item...      44,605          173,736             (369)        (173,367)            44,605
Provision for (benefit from) income taxes      16,950           --                 --               --               16,950

Income (loss) before extraordinary item..      27,655          173,736             (369)        (173,367)            27,655
Gain (loss) on early exinguishment of debt,
 ...net of applicable income taxes........     (2,132)               --                --               --           (2,132)
                                          -----------  ---------------   ---------------    -------------    --------------
Net income (loss)........................ $    25,523  $       173,736   $         (369)    $   (173,367)    $       25,523
                                          ===========  ===============   ===============    =============    ==============
</TABLE>























<PAGE>

<TABLE>
<CAPTION>


                                                                         Condensed Consolidating Statement of Cash Flows
                                                                                         (In thousands)
                                                                       For the Period December 16, 1999 to December 31, 1999
                                                                             Guarantor    Non Guarantor                  Condensed
                                                                  Parent    Subsidiaries  Subsidiaries  Eliminations   Consolidated
<S>                                                             <C>         <C>          <C>              <C>           <C>
Operating activities:

   Net income (loss)..........................................  $   (1,565)  $    1,676  $      1,524      $ (3,200)    $ (1,565)
   Adjustments to reconcile  net income (loss)
     to net cash provided by operating
     activities:
       Reorganization items:
         Write-off of goodwill..............................          --           --              --            --            --
         Revaluation of property and related assets..........          --           --              --            --            --
         Accrued reorganization expenses................               --           --              --            --            --
         Revaluation of other liabilities and assets..........          --           --              --            --            --
       Loss (gain) on early extinguishment of debt............
       Depreciation and amortization of property .............         157        1,251             387            --         1,795
       Provision for bad debts................................           4           39              13            --            56
       Loss (gain) on disposal of assets......................          --           --              --            --            --
       Amortization of drydocking costs.......................          --          259               9            --           268
       Amortization of goodwill...............................          --           --               6            --             6
       Amortization of discount on long-term debt
               and financing costs............................          65          115            --            --             180

       Deferred income tax provision (benefit)................          --           --              --            --            --
       Minority partners' equity in (earnings)
               loss of subsidiaries, net......................          --           --            --           408             408

       Undistributed losses of affiliates.....................       (565)      (1,646)           (582)         2,793            --
       Other non-cash items...................................          --           --              --            --            --
    Changes in operating assets and liabilities, net of effect of acquisitions:

       Accounts receivable....................................       (208)        1,583         (1,068)           865         1,172
       Marine operating supplies..............................       (157)          240             156            --           239
       Other current and long-term assets.....................      22,970      (2,104)             124      (21,108)         (118)
       Accounts payable and other liabilities.................         515      (1,469)             515         (865)       (1,304)
                                                               -----------  -----------  --------------  ------------  ------------
             Net cash provided by operating activities........      21,216       (56)            1,084       (21,107)        1,137

Investing activities:

   Purchases of property......................................          --        (458)           (139)            --         (597)
   Acquisitions of businesses, net of
             cash acquired of $3,525 in 1997..............           (1,000)         --            --            --         (1,000)

   Payments on vessels under construction.....................
   Purchases of restricted investments........................          --           --              --            --            --
   Redemption of restricted investments.......................          --           --              --            --            --
   Capital contributions to consolidated affiliates...........          --           --              --            --            --
   Proceeds from disposals of assets..........................          --           --              --            --            --
         Purchase of minority interest in subsidiary..........          --           --              --            --            --
                                                               -----------  -----------  --------------  ------------  ------------
               Net cash used in investing activities..........     (1,000)        (458)           (139)            --       (1,597)

Financing activities:

   Repayments of short-term borrowings........................          --           --              --            --            --
   Proceeds from DIP credit facility..........................
   Proceeds from long-term borrowings.........................          --           --              --            --            --
   Repayment of long-term borrowings..........................          --         (80)              --            --          (80)
   Proceeds from issuance of Senior notes and warrants........
   Proceeds from issuance of Successor Company Senior Secured Notes
    with warrants.............................................          --           --              --            --            --
   Proceeds from issuance of Title XI bonds...................          --           --              --            --            --
   Repayment of Title XI bonds................................     (1,252)           --              --            --       (1,252)
   Escrow of restricted cash..................................          --           --              --            --            --
   Payments of financing costs................................          --           --              --            --            --
   Proceeds from sale-leaseback of vessels....................
   Payments of obligations under capital leases...............        (36)        (123)              --            --         (159)
   Proceeds from issuance of common stock.....................          --           --              --            --            --
   Proceeds from issuance of redeemable preferred securities, net       --           --            --            --              --
   Repayment of DIP credit facility...........................          --           --              --            --            --
   Capital contribution (to) from consolidated affiliates.....    (21,707)          279             321        21,107            --
                                                               -----------  -----------  --------------  ------------  ------------
         Net cash provided by (used in) financing activities..    (22,995)           76             321        21,107       (1,491)
Change in cash and cash equivalents...........................     (2,779)        (438)           1,266            --       (1,951)
Cash and cash equivalents at beginning of period..............       7,609       11,162           2,226            --        20,997
                                                               -----------  -----------  --------------  ------------  ------------
Cash and cash equivalents at end of period.................... $     4,830  $    10,724  $        3,492  $         --   $   19,046

</TABLE>


<TABLE>
<CAPTION>

                                                                         Condensed Consolidating Statement of Cash Flows
                                                                                         (In thousands)
                                                                     For the Period December 1, 1999 to December 15, 1999

                                                                             Guarantor    Non Guarantor                  Condensed
                                                                  Parent    Subsidiaries  Subsidiaries  Eliminations   Consolidated
<S>                                                           <C>           <C>             <C>         <C>              <C>
Operating activities:

   Net income (loss)..........................................    (248,355)  $   (655,671)  $    (9,383)    $ 665,054    $ (248,355)
   Adjustments to reconcile  net income (loss)
     to net cash provided by operating
     activities:
       Reorganization items:
         Write-off of goodwill................................         109       83,542              --         4,401        88,052
         Revaluation of property and related assets...........      79,759       249,457         2,730             --       331,946
         Accrued reorganization expenses......................       5,828          --              --             --         5,828
         Revaluation of other liabilities and assets..........       1,710        1,162              --            --         2,872
       Loss (gain) on early extinguishment of debt............   (151,643)    (115,000)              --            --     (266,643)
       Depreciation and amortization of property .............       9,186       46,178           8,856            --        64,220
       Provision for bad debts................................         746        5,199             235            --         6,180
       Loss (gain) on disposal of assets......................      13,573       12,085              --            --        25,658
       Amortization of drydocking costs.......................       2,861        8,158             230            --        11,249
       Amortization of goodwill...............................          58        3,444             438            --         3,940
       Amortization of discount on long-term
          debt and financing costs............................       1,624          180           973              --         2,777

       Deferred income tax provision (benefit)................    (32,004)           --              --            --      (32,004)
       Minority partners' equity in (earnings)
         loss of subsidiaries, net............................       --              --            --       (2,596)         (2,596)

       Undistributed losses of affiliates.....................     377,286      287,241           3,938     (668,465)            --
       Other non-cash items...................................       (164)           --              --            --         (164)
       Changes in operating assets and liabilities, net of effect of  acquisitions:
       Accounts receivable....................................       5,997       16,569         (2,502)          (64)        20,000
       Marine operating supplies..............................       (310)        2,917         (2,098)         (277)           232
       Other current and long-term assets.....................     111,238       33,879         (3,228)     (148,298)       (6,409)
       Accounts payable and other liabilities.................      14,800      (8,496)         (3,334)           114         3,084
                                                               -----------  -----------  --------------  ------------  ------------
           Net cash provided by operating activities..........     192,299      (29,156)        (3,145)     (150,131)         9,867

Investing activities:

   Purchases of property......................................    (13,043)     (27,584)        (13,672)       (2,845)      (57,144)
   Acquisitions of businesses, net of cash
        acquired of $3,525 in 1997............................        --            --            --            --             --
   Payments on vessels under construction.....................          --      (5,102)              --            --       (5,102)
   Purchases of restricted investments........................          --           --        (45,790)            --      (45,790)
   Redemption of restricted investments.......................          --           --          65,382            --        65,382
   Capital contribution to unconsolidated affiliates..........          --           --              --            --            --
   Proceeds from disposals of assets..........................      15,045       17,807              --            --        32,852
         Purchase of minority interest in subsidiary..........          --           --              --            --            --
                                                               -----------  -----------  --------------  ------------  ------------
               Net cash used in investing activities..........       2,002     (14,879)           5,920       (2,845)       (9,802)
Financing activities:

   Repayments of short-term borrowings........................
   Proceeds from DIP credit facility..........................      26,690           --              --            --        26,690
   Proceeds from long-term borrowings.........................     231,008       14,200              --            --       245,208
   Repayment of long-term borrowings..........................   (287,299)        (906)              --            --     (288,205)
   Proceeds from issuance of Senior notes and warrants........      85,500           --              --            --        85,500
   Proceeds from issuance of Successor Company Senior Secured Notes
    with warrants.............................................
   Proceeds from issuance of Title XI bonds...................          --           --           5,428            --         5,428
   Repayment of Title XI bonds................................     (3,670)        (539)         (2,434)            --       (6,643)
   Escrow of restricted cash..................................    (15,027)        (190)              --            --      (15,217)
   Payments of financing costs................................    (12,186)           --           (492)            --      (12,678)
   Proceeds from sale-leaseback of vessels....................          --           --              --            --            --
   Payments of obligations under capital leases...............       (563)      (2,257)              --            --       (2,820)
   Proceeds from issuance of common stock.....................         253           --              --            --           253
   Proceeds from issuance of redeemable preferred
             securities, net..................................        --             --            --            --            --
   Repayment of DIP credit facility...........................    (26,690)           --              --            --      (26,690)
   Capital contributions (to) from consolidated affiliates....   (186,109)       37,788         (4,655)       152,976            --
                                                               -----------  -----------  --------------  ------------  ------------
         Net cash provided by (used in) financing activities..   (188,093)       48,096         (2,153)       152,976        10,826
                                                               -----------  -----------  --------------  ------------  ------------
Change in cash and cash equivalents...........................       6,208        4,061             622            --        10,891
Cash and cash equivalents at beginning of period..............       1,401        7,101           1,604            --        10,106
                                                               -----------  -----------  --------------  ------------  ------------
Cash and cash equivalents at end of period.................... $     7,609  $    11,162  $        2,226  $         --   $   20,997

</TABLE>


<TABLE>
<CAPTION>

                                                                         Condensed Consolidating Statement of Cash Flows
                                                                                       (In thousands)
                                                                                  Year ended December 31, 1998
                                                                             Guarantor    Non Guarantor                  Condensed
                                                                  Parent    Subsidiaries  Subsidiaries  Eliminations   Consolidated
<S>                                                          <C>            <C>         <C>           <C>               <C>
Operating activities:

   Net income (loss).......................................... $  21,748    $   163,261   $    1,022     $ (164,283)     $ 21,748
   Adjustments to reconcile  net income (loss) to net cash provided by operating
     activities:
       Reorganization items:
         Write-off of goodwill................................
         ...........Revaluation of property and related assets
         ......................Accrued reorganization expenses
         Revaluation of other liabilities and assets..........
       Loss (gain) on early extinguishment of debt............         734           --             868            --         1,602
       Depreciation and amortization of property .............       9,088       37,331           2,687            --        49,106
       Provision for bad debts................................         176          911              --            --         1,087
       Loss (gain) on disposal of assets......................        (29)            3              --            --          (26)
       Amortization of drydocking costs.......................       4,575        6,024             755            --        11,354
       Amortization of goodwill...............................          27        3,402             355            --         3,784
       Amortization of discount on long-term
            debt and financing costs..........................       1,274              --           215            --        1,489

       Deferred income tax provision (benefit)................      10,189           --              --            --        10,189
       Minority partners' equity in (earnings)
           loss of subsidiaries, net..........................         --         (2,973)         1,346            --       (1,627)
       Undistributed losses of affiliates.....................    (81,513)     (81,566)           (406)       163,090         (395)
       Other non-cash items...................................         217           --              --            --           217
    Changes in operating assets and liabilities, net of effect of acquisitions:
       Accounts receivable....................................     (6,456)     (33,856)           (817)            19      (41,110)
       Marine operating supplies..............................       (209)      (2,787)         (1,544)           270       (4,270)
       Other current and long-term assets.....................    (12,504)     (22,797)          17,698           100      (17,503)
       Accounts payable and other liabilities.................       9,381       15,912           5,994          (14)        31,273
                                                               -----------  -----------  --------------  ------------  ------------
            Net cash provided by operating activities........     (43,302)     82,865          28,173           (818)        66,918

Investing activities:

   Purchases of property......................................    (15,803)     (76,057)        (23,479)           818     (114,521)
   Acquisitions of businesses, net
       of cash acquired of $3,525 in 1997.....................   (341,442)     360,987)            44       328,850       (373,535)
   Payments on vessels under construction.....................          --           --       (155,980)            --     (155,980)
   Purchases of restricted investments........................          --           --       (369,629)            --     (369,629)
   Redemption of restricted investments.......................          --           --         515,584            --       515,584
   Capital contribution to unconsolidated affiliates..........     (3,233)           --              --            --       (3,233)
   Proceeds from disposals of assets..........................          --           --              --            --            --
         Purchase of minority interest in subsidiary..........          --           --              --            --            --
                                                               -----------  -----------  --------------  ------------  ------------
               Net cash used in investing activities..........   (360,478)    (437,044)        (33,460)       329,668     (501,314)

Financing activities:

   Repayments of short-term borrowings........................          --           --              --            --            --
   Proceeds from DIP credit facility..........................          --           --              --            --            --
   Proceeds from long-term borrowings.........................     431,700           --              --            --       431,700
   Repayment of long-term borrowings..........................   (313,746)        (192)              --            --     (313,938)
   Proceeds from issuance of Senior notes and warrants........     292,500           --              --            --       292,500
   Proceeds from issuance of Successor Company Senior Secured Notes
    with warrants.............................................          --           --              --            --            --
   Proceeds from issuance of Title XI bonds...................          --           --         139,023            --       139,023
   Repayment of Title XI bonds................................     (6,693)        (647)       (129,910)            --     (137,250)
   Escrow of restricted cash..................................          --           --              --            --            --
   Payments of financing costs................................     (2,760)           --         (8,059)            --      (10,819)
   Proceeds from sale-leaseback of vessels....................      10,025       22,597              --            --        32,622
   Payments of obligations under capital leases...............       (552)      (4,536)              --            --       (5,088)
   Proceeds from issuance of common stock.....................         800           --              --            --           800
   Proceeds from issuance of redeemable preferred securities, net      --              --            --            --            --
   Repayment of DIP credit facility...........................          --           --              --            --            --
   Capital contributions (to) from consolidated affiliates....     (8,603)      331,634           5,819     (328,850)            --
                                                               -----------  -----------  --------------  ------------  ------------
         Net cash provided by (used in) financing activities..     402,671      348,856           6,873     (328,850)       429,550
Change in cash and cash equivalents...........................     (1,109)      (5,323)           1,586            --       (4,846)
Cash and cash equivalents at beginning of period..............       2,510       12,424              18            --        14,952
                                                               -----------  -----------  --------------  ------------  ------------
Cash and cash equivalents at end of period.................... $     1,401  $     7,101  $        1,604  $         --   $   10,106

</TABLE>


<TABLE>
<CAPTION>

                                                                         Condensed Consolidating Statement of Cash Flows
                                                                                         (In thousands)

                                                                                    Year ended December 31, 1997
                                                                             Guarantor    Non Guarantor                 Condensed
                                                                  Parent    Subsidiaries  Subsidiaries  Eliminations   Consolidated
<S>                                                           <C>           <C>           <C>           <C>            <C>
Operating activities:

   Net income (loss).........................................  $    25,523  $     173,736  $     (369)   $ (173,367)     $   25,523
   Adjustments to reconcile  net income (loss) to net cash provided by operating
     activities:
       Reorganization items:
         Write-off of goodwill................................
         ...........Revaluation of property and related assets
         ......................Accrued reorganization expenses
         Revaluation of other liabilities and assets..........
       Loss (gain) on early extinguishment of debt............       2,132                                         --         2,132
       Depreciation and amortization of property .............       6,616       11,060           1,417            --        19,093
       Provision for bad debts................................         217          812              --            --         1,029
       Loss (gain) on disposal of assets......................         493           31              --            --           524
       Amortization of drydocking costs.......................       3,096        1,962             292            --         5,350
       Amortization of goodwill...............................          38          698              21            --           757
       Amortization of discount on long-term
             debt and financing costs.........................         680           --             176         (176)           680
       Deferred income tax provision (benefit)................      13,147           --              --            --        13,147
       Minority partners' equity in (earnings)
            loss of subsidiaries, net.........................         --              --            --         (183)          (183)
       Undistributed losses of affiliates.....................    (53,147)    (117,993)           (192)       171,222         (110)
       Other non-cash items...................................          95           --              --            --            95
    Changes in operating assets and liabilities, net of effect of acquisitions:
       Accounts receivable....................................       (735)     (51,995)          32,073            17      (20,640)
       Marine operating supplies..............................       (158)        (881)              --             7       (1,032)
       Other current and long-term assets.....................     175,840    (150,154)        (31,674)       (2,480)       (8,468)
       Accounts payable and other liabilities.................     (2,372)        3,205             160         1,152         2,145
                                                               -----------  -----------  --------------  ------------  ------------
            Net cash provided by operating activities.........     171,465     (129,519)         1,904        (3,808)       40,042

Investing activities:

   Purchases of property......................................    (15,061)     (53,811)           (458)         2,213      (67,117)
   Acquisitions of businesses, net of
         cash acquired of $3,525 in 1997......................   (194,723)          --            --            --        (194,723)
   Payments on vessels under construction.....................          --        (910)              --            --         (910)
   Purchases of restricted investments........................          --           --              --            --            --
   Redemption of restricted investments.......................          --           --              --            --            --
   Capital contribution to unconsolidated affiliates..........       (226)           --              --            --         (226)
   Proceeds from disposals of assets..........................          --        1,633              --            --         1,633
         Purchase of minority interest in subsidiary..........          --           --              --            --            --
                                                               -----------  -----------  --------------  ------------  ------------
               Net cash used in investing activities..........   (210,010)     (53,088)           (458)         2,213     (261,343)

Financing activities:

   Repayments of short-term borrowings........................     (8,000)      (8,242)              --            --      (16,242)
   Proceeds from DIP credit facility..........................          --           --              --            --            --
   Proceeds from long-term borrowings.........................     177,210           --              --            --       177,210
   Repayment of long-term borrowings..........................   (108,660)     (21,756)         (1,446)         1,446     (130,416)
   Proceeds from issuance of Senior notes and warrants........          --           --              --            --            --
   Proceeds from issuance of Successor Company Senior Secured Notes
    with warrants.............................................          --           --              --            --            --
   Proceeds from issuance of Title XI bonds...................          --           --              --            --            --
   Repayment of Title XI bonds................................     (5,461)           --              --            --       (5,461)
   Escrow of restricted cash..................................          --           --              --            --            --
   Payments of financing costs................................     (2,724)           --              --            --       (2,724)
   Proceeds from sale-leaseback of vessels....................          --           --              --            --            --
   Payments of obligations under capital leases...............       (191)      (1,277)              --            --       (1,468)
   Proceeds from issuance of common stock.....................      94,628           --              --            --        94,628
   Proceeds from issuance of redeemable
             preferred securities, net........................        --         111,109            --            --        111,109
   Repayment of DIP credit facility...........................          --           --              --            --            --
   Capital contribution (to) from consolidated affiliates.....   (112,984)      112,835              --           149            --
                                                               -----------  -----------  --------------  ------------  ------------
         Net cash provided by (used in) financing activities..      33,818      192,669         (1,446)         1,595       226,636
Change in cash and cash equivalents...........................     (4,727)       10,062              --            --         5,335
Cash and cash equivalents at beginning of period..............       7,237        2,362              18            --         9,617
                                                               -----------  -----------  --------------  ------------  ------------
Cash and cash equivalents at end of period.................... $     2,510  $    12,424  $           18  $         --    $   14,952

</TABLE>


23.      Selected Quarterly Financial Information (unaudited)

         The  following  information  is  presented as  supplementary  financial
information for 1998 and 1999 (in thousands, except per share information):
<TABLE>
<CAPTION>

                                                                                                                      Successor
                                                                           Predecessor Company                         Company
                                                                                                    Period from     Period from
                                                             First       Second        Third       October 1 to    December 16 to
             Year Ended December 31, 1999                   Quarter      Quarter      Quarter    December 15,       December 31,
             ----------------------------                 -----------  -----------  -----------  --------------    -------------
<S>                                                      <C>          <C>           <C>          <C>               <C>
     Revenues..........................................   $    90,400  $    89,004  $    85,989  $       63,358      $    13,479

     Income (loss) from operations.....................         4,431        (250)      (1,846)        (13,561)            1,720
     Loss before extraordinary item....................       (9,064)     (23,718)     (20,107)       (462,109)          (1,565)
     Gain on early extinguishment of debt (1)..........            --           --           --         266,643               --
     Net loss..........................................       (9,064)     (23,718)     (20,107)       (195,466)          (1,565)
     Earnings per share--basic:
       Loss before extraordinary item..................   $    (0.59)  $    (1.53)  $    (1.29)  $      (29.71)      $    (0.16)
       Net loss........................................        (0.59)       (1.53)       (1.29)         (12.57)           (0.16)
     Earnings per share--assuming dilution (2):
       Loss before extraordinary item..................   $    (0.59)  $    (1.53)  $    (1.29)  $      (29.71)      $    (0.16)
       Net loss........................................        (0.59)       (1.53)       (1.29)         (12.57)           (0.16)
</TABLE>



<TABLE>
<CAPTION>
                                                                        Predecessor Company
                                                             First       Second        Third        Fourth
             Year Ended December 31, 1998                   Quarter      Quarter      Quarter       Quarter
             ----------------------------                 -----------  -----------  -----------  ----------
<S>                                                       <C>           <C>         <C>          <C>
     Revenues..........................................   $    86,485  $   109,332  $   100,149  $      108,827
     Income from operations............................        20,563       27,839       18,963          16,404
     Income before extraordinary item..................         7,184        9,472        4,772           1,922
     Loss on early extinguishment of debt (1)..........         (734)           --        (868)              --
     Net income........................................         6,450        9,472        3,904           1,922
     Earnings per share--basic:
       Income before extraordinary item................   $      0.47  $      0.62  $      0.31  $         0.13
       Net income......................................          0.42         0.62         0.25            0.13
     Earnings per share--assuming dilution(2):
       Income before extraordinary item................   $      0.43  $      0.55  $      0.31  $         0.12
       Net income......................................          0.39         0.55         0.25            0.12
</TABLE>

----------------
(1)      See Note 22.
(2)  The sum of the four quarters' earnings per share will not necessarily equal
     the annual  earnings per share,  as the  computations  for each quarter are
     independent of the annual computation.

24.      Subsequent Events

         The Company has entered into an amendment to the Credit  Facility  with
the lending banks under which the relevant  covenants have been modified through
March 31, 2001 and the Company is  required to prepay  principal  under the term
loans  aggregating  $10.0 million  before June 30, 2000,  $35.0  million  before
August 31, 2000, and $60.0 million  before January 1, 2001. The Company  intends
to sell  vessels  and other  assets to obtain the funds with which to make these
payments and may sell certain  vessels at amounts below book value.  The amended
Credit Facility further provides that, in the event the Company has not made the
required  principal  payments as scheduled or achieved  certain target levels of
EBITDA for the third and fourth  quarters of 2000, the lending banks may require
the Company to sell  additional  vessels,  to be selected by the lending  banks,
with an aggregate fair market value of $35 million. The amounts that the Company
has agreed to prepay in 2000 have not been reclassified to current maturities of
long-term debt because the prepayments will be made with the proceeds from sales
of long-term assets. Additionally, the Company is required to obtain the consent
of the lending  banks to borrow in excess of $17.5  million  under the revolving
loan  portion of the Credit  Facility.  The  Company is required to pay a fee of
$4.5 million to the lending banks in connection  with the amendment,  payable in
the form of a  promissory  note,  accruing  interest  at 15% per annum,  due the
earlier  of (i)  April  2002 and (ii) the  date on  which  the  ratio of  funded
indebtedness to EBITDA for any quarter is less than four to one.