##### Table of Contents



UNITED
    STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
  FORM 10-K
  (Mark One)þ

Annual report pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934 for the fiscal year ended
    December 31, 2006o

Transition report pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934    Trico Marine Services,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

72-1252405(I.R.S. Employer
    Identification No.)3200 Southwest Freeway,
    Suite 2950,
    Houston, Texas(Address of principal
    executive offices)

77027(Zip code)   Registrants telephone number, including area code:
    (713) 780-9926
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01

NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None.
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  þ o
  Rule 12b-2
 o þ o
  o þ
  o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



TRICO
    MARINE SERVICES, INC.
  ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE
 YEAR
    ENDED DECEMBER 31, 2006
  TABLE OF
    CONTENTS
  
  PagePART IItems 1

Business


1Item 1A.

Risk
    Factors


5Item 1B.

Unresolved Staff
    Comments


17Item 2.

Properties


17Item 3.

Legal
    Proceedings


17Item 4.

Submission of
    Matters to a Vote of Security Holders


18PART IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


19Item 6.

Selected Financial
    Data


21Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


22Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


40Item 8.

Financial
    Statements and Supplementary Data


43Item 9.

Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


87Item 9A.

Controls and
    Procedures


88Item 9B

Other
    Information


88PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


89Item 11.

Executive
    Compensation


89Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


89Item 13.

Certain
    Relationships, Related Transactions and Director
    Independence


89Item 14.

Principal
    Accountant Fees and Services


89PART IVItem 15.

Exhibits and
    Financial Statement Schedules


89EXHIBIT
    INDEX


E-1Convertible NotesRegistraton Rights AgreementEarnings to Fixed Charges RatioSubsidiariesConsent of Experts and CounselCertification of President & CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Officers' Certifications Pursuant to Section 906   i




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PART I  Items 1.
    Business  General
          www.tricomarine.com
  Business
    Strategy
  Our
    Growth Strategy
    
    Expand into growing markets.  We will continue
    to capitalize on our experience, personnel and fleet to expand
    our presence in emerging markets while leveraging the strengths
    of our global partners. Our goals are to continue to efficiently
    deploy our vessels into profitable operations, particularly
    through the use of joint ventures, and with an emphasis on
    prudent mobilizations from the Gulf of Mexico to regions that
    have stronger long-term growth fundamentals. 1




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
    Upgrade and renew our fleet.  Through our fleet
    renewal program, we will continue to seek opportunities to
    acquire existing vessels or construct new vessels to address the
    global needs of our customers and to renew our fleet. Our fleet
    renewal program aims to improve our fleets capabilities
    and reduce our fleets age by focusing on next generation
    vessels with broad customer applicability which can be deployed
    worldwide.
    Maintain a conservative financial profile.  We
    use a centralized and disciplined approach to pricing to achieve
    a balance of spot exposure and term contracts. We also intend to
    maintain our conservative capital structure which we believe is
    a prudent financial strategy in our highly cyclical industry.
    Seek attractive acquisition opportunities.  In
    addition to organic growth through our fleet renewal program,
    our management team will seek attractive acquisition
    opportunities that complement our existing growth strategy,
    further enhance our global footprint, and maximize our ability
    to service our customers needs worldwide.
    Leverage our geographic presence to develop niche
    opportunities.  By leveraging the expertise and
    resources of our global operations, we intend to develop and
    pursue niche opportunities in specific regions to expand our
    service offerings in the marine oilfield service sector.  2006
    Events
  New vessel construction.
    Minority owned consolidated
    subsidiary.
  Increased executive management
    depth.
    The
    Industry
    Platform Supply Vessels.
 2




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Anchor Handling, Towing and Supply
    Vessels.
  Supply Vessels.
  Crew Boats.
  Line Handling Vessel.
  Market
    Areas
    Form 10-K.
  North Sea.
  Gulf of Mexico.
 3




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West Africa.
  Mexico.
  Southeast Asia.
  Brazil.
  Our
    Fleet
  Existing Fleet.
  Number ofType of Vessel

Vessels


Length


HorsepowerSupply Vessels


41



166¢-230¢


2,000  6,140PSVs


10



190¢-304¢


4,050  10,800AHTSs


6



212¢-261¢


11,140  15,612Crew/Line handling vessels(1)


8



93¢-155¢


1,200  10,600     (1)
    
    Includes our SWATH crew boat, which is classified as an asset
    held for sale as of January 31, 2007.      Vessel Maintenance.
 4




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Dispositions of assets 10-year
  Item 1A.
    Risk
    Factors    Risks
    Relating to our Business
  Our fleet
    includes many older vessels that may require increased levels of
    maintenance and capital expenditures to maintain them in good
    operating condition and the fleet may be subject to a higher
    likelihood of mechanical failure, inability to economically
    return to service or requirement to be scrapped.
   5




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The cost
    and availability of dry-dock services may impede our ability to
    return vessels to the market in a timely manner.
    Our
    inability to upgrade our fleet successfully could adversely
    affect our financial condition and results of
    operations.
    Increases
    in size, quality and quantity of the offshore vessel fleet in
    areas where we operate could increase competition for charters
    and lower day rates
    and/or
    utilization, which would adversely affect our revenues and
    profitability.
  U.S.-flagged U.S.-flagged and/or
  Operating
    internationally subjects us to significant risks inherent in
    operating in foreign countries.
    
    Government instability, which can cause investment in capital
    projects by our potential customers to be withdrawn or delayed,
    reducing or eliminating the viability of some markets for our
    services;
    Potential vessel seizure or confiscation, or the expropriation,
    nationalization or detention of assets;
    Repatriating foreign currency received in excess of local
    currency requirements and converting it into dollars or other
    fungible currency;
    Exchange rate fluctuations, which can reduce the purchasing
    power of local currencies and cause our costs to exceed our
    budget, reducing our operating margin in the affected country;
    Lack of ability to collect amounts owed; 6




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
    Civil uprisings, riots and war, which can make it unsafe to
    continue operations, adversely affect both budgets and schedules
    and expose us to losses;
    Availability of suitable personnel and equipment, which can be
    affected by government policy, or changes in policy, which limit
    the importation of qualified crewmembers or specialized
    equipment in areas where local resources are insufficient;
    Decrees, laws, regulations, interpretations and court decisions
    under legal systems, which are not always fully developed and
    which may be retroactively applied and cause us to incur
    unanticipated
    and/or
    unrecoverable costs as well as delays which may result in real
    or opportunity costs; and
    Terrorist attacks, including kidnappings of our crewmembers or
    onshore personnel.    Our
    business plan involves establishing joint ventures with partners
    in targeted foreign markets. As a U.S. corporation we are
    subject to the Foreign Corrupt Practices Act and a determination
    that we violated this act including through actions taken by our
    foreign joint venture partners, may affect our business and
    operations adversely.
    Our
    marine operations are seasonal and depend, in part, on weather
    conditions. As a result, our results of operations will vary
    throughout the year.
    Our
    operations are subject to operating hazards and unforeseen
    interruptions for which we may not be adequately
    insured.
    Our
    operations are subject to federal, state, local and other laws
    and regulations that could require us to make substantial
    expenditures.
   7




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Our
    U.S. employees are covered by federal laws that may subject
    us to job-related claims in addition to those provided by state
    laws.
    The loss
    of a key customer could have an adverse impact on our financial
    results.
    We are
    exposed to the credit risks of our key customers, and nonpayment
    by our customers could adversely affect our financial condition
    or results of operations.
    The loss
    of key personnel may reduce operational efficiency and
    negatively impact our results of operations.
    The loss
    of crewmembers may reduce operational efficiency and increase
    our labor rates.
   8




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Unionization
    efforts could increase our costs, limit our flexibility or
    increase the risk of a work stoppage.
    The
    removal or reduction of the reimbursement of labor costs by the
    Norwegian government may adversely affect our costs to operate
    our vessels in the North Sea.
    Certain
    management decisions needed to successfully operate EMSL, our
    49% partnership, are subject to the majority owners
    approval. The inability of our management representatives to
    reach a consensus with the majority owner may negatively affect
    our results of operations.
    Changes
    in the level of exploration and production expenditures and in
    oil and gas prices and industry perceptions about future oil and
    gas prices could materially decrease our cash flows and reduce
    our ability to service our credit facilities.
     9




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If our
    competitors are able to supply services to our customers at a
    lower price, then we may have to reduce our day rates, which
    would reduce our revenues.
    
    price, service, safety record and reputation of vessel operators
    and crews; and
    quality and availability of vessels of the type, capability and
    size required by the customer.    Risks
    Relating to our Capital Structure
  Our
    business is highly cyclical in nature due to our dependency on
    the levels of offshore oil and gas drilling activity. If we are
    unable to stabilize our cash flow during depressed markets, we
    may not be able to meet our obligations under our current or any
    future debt obligations, and we may not be able to secure
    financing or have sufficient capital to support our operations,
    which may materially adversely affect our financial condition or
    results of operations.
    We may
    not be able to repatriate funds from Norway to the U.S., which
    could negatively impact our operational flexibility.
    
    the availability of cash at our Norwegian subsidiaries, or
    availability under the NOK Revolver of NOK 446 million or
    ($71.7 million) available at December 31, 2006;
    our ability to comply with the funded debt to operating income
    plus depreciation and amortization covenant ratios in our
    Norwegian subsidiaries NOK Revolver following completion
    of the repatriation; and
    our Norwegian subsidiaries having sufficient distributable
    equity to support the repatriation.    
    obtain the consent of our lenders under the NOK
    Revolver; and
    reduce the
    paid-in-capital
    in one of our Norwegian subsidiaries without the incurrence of
    tax or other consequences by national regulating and taxing
    authorities in Norway.   10




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Our
    ability to utilize certain net operating loss carryforwards or
    investment tax credits may be limited by certain events which
    could have an adverse impact on our financial results.
  7 8
      We may
    face material tax consequences or assessments in countries in
    which we operate. If we are required to pay material tax
    assessments, our financial condition may be materially adversely
    affected.
      Our
    business segments have been capitalized and are financed on a
    stand-alone basis, which may hinder efficient utilization of
    available financial resources.
   11




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Financial
    statements for periods subsequent to our emergence from
    bankruptcy will not be comparable to those of prior periods,
    which will make it difficult for stockholders to assess our
    performance in relation to prior periods.
    
    the reorganization of our assets and liabilities as of
    March 15, 2005, the effective date of our plan of
    reorganization; and
    the application of the provisions of Statement of Position
    90-7,
    Financial Reporting by Entities in Reorganization under
    the Bankruptcy Code, which is commonly referred to as
    fresh-start accounting.    Currency
    fluctuations could adversely affect our financial condition and
    results of operations.
    The terms
    of our existing registration rights agreement with certain of
    our common stockholders may restrict the timing of any public
    offering or other distribution of shares of our common stock and
    may depress the market price of our stock.
   12




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Risks
    Relating to the Ownership of our Common Stock
  Our
    charter documents include provisions limiting the rights of
    foreign owners of our capital stock.
  non-U.S. citizens non-U.S. citizens. non-U.S. citizens
  Some
    anti-takeover provisions contained in our charter could hinder a
    takeover attempt.
    We may
    issue preferred stock whose terms could adversely affect the
    voting power or value of our common stock.
    Customers
    and Charter Terms
     13




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Without OptionsYear Ended


Year EndedDecember 31, 2007


December 31, 2008% of Total





% of TotalType of Vessel

Days available


Average day rate


Days available


Average day ratePSVs(10)


71
%

$
17,650



25
%

$
18,812AHTSs(6)


27
%

$
11,764
(1)


0
%

$

(1)Supply Boats (34 active)


21
%

$
8,038



1
%

$
6,148Crew/Line Handling Boats
    (7 active)


38
%

$
5,378



6
%

$
4,000   With OptionsYear Ended


Year EndedDecember 31, 2007


December 31, 2008% of Total





% of TotalType of Vessel

Days available


Average day rate


Days available


Average day ratePSVs(10)


82
%

$
18,424



70
%

$
18,381AHTS s(6)


45
%

$
14,739
(1)


23
%

$
9,242
(1)Supply Boats (34 active)


26
%

$
7,921



6
%

$
7,149Crew/Line Handling Boats
    (7 active)


47
%

$
5,544



14
%

$
5,938     (1)
    
    The day rate for the AHTS class includes one vessel operating
    under a bareboat charter, during which we receive a lower day
    rate, but do not pay for the operating costs of the vessel.        Competition
    Regulation
   14




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non-U.S. citizens.
       15




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Insurance
    Employees
         16




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Cautionary
    Statements
    
    our objectives, business plans or strategies, and projected or
    anticipated benefits or other consequences of such plans or
    strategies;
    projected or anticipated benefits from future or past
    acquisitions;
    projections involving revenues, operating results or cash
    provided from operations, or our anticipated capital
    expenditures or other capital projects;
    the results, timing, outcome or effect of pending or potential
    litigation and our intentions or expectations of prevailing with
    respect thereto and the availability of insurance coverage in
    connection therewith;
    our ability to repatriate cash from foreign operations if and
    when needed; and
    future expectations and outlook and any other statements
    regarding future growth, cash needs, operations, business plans
    and financial results and any other statements which are not
    historical facts.    Item 1B.
    Unresolved
    Staff Comments    Items 2.
    Properties  Operations
    Bases
  62.5-acre
  Item 3.
    Legal
    Proceedings  Form 10-Q 04-17985 04-17987. No. 04-17985. 05-02313
 17




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Item 4.
    Submission
    of Matters To a Vote Of Security Holders   18




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PART II  Item 5.
    Market
    for Registrants Common Stock, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    over-the-counter
  Predecessor
    Company(1)
  High


Low2005First quarter (through
    March 14, 2005)(2)

$
0.32


$
0.10   Successor
    Company(1)
  High


Low2005First quarter (from March 22,
    2005 through March 31, 2005)(3)


22.25



21.00Second quarter


21.50



17.50Third quarter


26.75



18.70Fourth quarter


27.20



24.25   High


Low2006First quarter


33.74



26.10Second quarter


35.20



28.57Third quarter


38.69



32.00Fourth quarter


39.67



31.692007First quarter (through
    February 12, 2007)


38.00



30.00     (1)
    
    The average basic common shares outstanding for our Predecessor
    were 36,908,505 for the period from January 1, 2005 through
    March 14, 2005. The average basic common shares outstanding
    for our Successor Company was 11,271,786 and 14,628,490 for the
    period from March 15, 2005 through December 31, 2005
    and the year ended December 31, 2006, respectively.(2)
    
    These prices reflect the pre-reorganization shares which were
    subsequently canceled. The bid prices between January 1,
    2005 and March  14, 2005 reflect
    over-the-counter
    market quotations without retail
    mark-up,
    mark-down or commission, and may not represent actual
    transactions.(3)
    
    No reported trading of our stock occurred between March 15,
    2005 and March 21, 2005.   19




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Equity
    Compensation Plan Information
      Number of securities remainingNumber of securities to be


Weighted-average


available for future issuanceissued upon exercise of


exercise price of


under equity compensationoutstanding options,


outstanding options,


plans (excluding securitiesPlan Category

warrants and rights


warrants and rights


reflected in column(a))(a)


(b)


(c)Equity compensation plans approved
    by security holders


4,649







745,351Equity compensation plans not
    approved by security holders


952,501
(2)

$
14.38



Total


957,150







745,351
(1)     (1)
    
    The shares remaining for issuance may also be issued as
    restricted stock or other stock based awards (which awards are
    valued in whole or in part on the value of the shares of common
    stock).(2)
    
    In connection with the prepackaged plan of reorganization, the
    Trico Marine Services, Inc. 2004 Stock Incentive Plan (the
    2004 Stock Incentive Plan) was submitted to the
    Bankruptcy Court for approval. On January 19, 2005, the
    Bankruptcy Court issued an order confirming the plan of
    reorganization, including the 2004 Stock Incentive Plan. See
    Note 15 to our Consolidated Financial Statements included
    in Item 8 of this Annual Report on
    Form 10-K
    for a description of our 2004 Stock Incentive Plan. 20




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Item 6.
    Selected
    Financial Data  Form 10-K.
  Successor Company



Predecessor Company(1)Period From



Period FromMarch 15, 2005



January 1, 2005Year Ended


through



through


Years Ended December 31,December 31, 2006


December 31, 2005



March 14, 2005


2004


2003


2002(Financial data in thousands, except per share amounts)Statement of Operations
    Data:Revenues

$
248,717


$
152,399



$
29,886


$
112,510


$
123,521


$
133,942Direct operating expenses and other


106,981



69,081




16,217



80,712



81,188



84,101Depreciation and amortization
    expense


24,998



20,403




6,703



32,931



33,392



31,870Operating income (loss)


88,390
(2)


41,816
(3)



879



(48,719
)(4)


(135,501
)(5)


(12,077
)(6)Interest expense


1,286



6,430




1,940



33,405



30,159



28,432Net income (loss)


58,724
(7)


20,100
(8)



(61,361
)(9)


(95,952
)(10)


(164,398
)


(67,978
)(11)Basic Per Share Data:Net earnings (loss) per share

$
4.01


$
1.78



$
(1.66
)

$
(2.60
)

$
(4.51
)

$
(1.87
)Diluted Per Share
    Data:Net earnings (loss) per share

$
3.86


$
1.74



$
(1.66
)

$
(2.60
)

$
(4.51
)

$
(1.87
)Balance Sheet Data:Working capital (deficit)

$
151,068
(12)

$
46,259
(12)



NA
(13)

$
(26,660
)(12)

$
(27,740
)(12)

$
(69,427
)(12)Property and equipment, net


231,848



225,646




NA
(13)


459,211



487,019



546,223Total assets


435,322



344,222




NA
(13)


550,755



585,191



747,175Debt, including current portion


9,863



46,538




NA
(13)


147,131



380,166



384,146Liabilities subject to compromise











NA
(13)


275,179







Stockholders equity

$
312,338



222,432




NA
(13)


63,841



142,031



295,326     (1)
    
    We exited bankruptcy protection on March 15, 2005. In
    accordance with Statement of Position
    90-7,
    Financial Reporting by Entities in Reorganization Under
    the Bankruptcy Code, we adopted fresh-start
    accounting as of March 15, 2005. Fresh-start accounting is
    required upon a substantive change in control and requires that
    the reporting entity allocate the reorganization value of our
    company to our assets and liabilities in a manner similar to
    that which is required under Statement of Financial Accounting
    Standards, or SFAS, No. 141, Business
    Combinations. Under the provisions of fresh-start
    accounting, a new entity has been deemed created for financial
    reporting purposes.(2)
    
    Includes impairment on assets held for sale, net of insurance
    recoveries, of $2.6 million(3)
    
    Includes impairment on assets held for sale of $2.2 million
    and gains on sales of assets $2.5 million.(4)
    
    Includes impairment charges of long-lived assets held for use of
    $8.6 million and losses on assets held for sale of
    $10.7 million.(5)
    
    Includes goodwill impairment charges of $113.0 million,
    losses on assets held for sale of $6.2 million and a gain
    on sales of assets of $1.0 million.(6)
    
    Includes charges for impairment of long-lived assets of
    $5.2 million.(7)
    
    Includes the items in footnote (2) and interest income of
    $4.2 million.(8)
    
    Includes the items in footnote (3) and a loss on early
    retirement of debt of $4.0 million. 21




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(9)
    
    Includes reorganization costs of $6.7 million, a gain on
    debt discharge of $166.5 million and fresh-start
    adjustments of $219.0 million.(10)
    
    Includes the items in footnote (4), reorganization costs of
    $8.6 million and charges of $2.8 million and
    $7.2 million for the accelerated amortization of debt
    discounts and deferred financing costs, respectively, and a loss
    on early retirement of debt of $0.6 million.(11)
    
    Includes the operating items in footnote (6) and a loss on
    early retirement of debt of $11.0 million.(12)
    
    Includes amounts outstanding under the Trico Supply Bank
    Facility of $16.3 million, $55.9 million,
    $61.5 million and $87.9 million at December 31,
    2005, 2004, 2003 and 2002, respectively, which are classified as
    current liabilities in accordance with SFAS No. 6.(13)
    
    Not applicable due to fresh-start accounting, which was applied
    at an interim date that was not the end of a required reporting
    period.  Form 10-K.
  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation  Overview
    of the Year Ended December 31, 2006
        Primary
    Factors Affecting our Operations
   22




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Day Rates and Utilization.
  
    demand for our vessels;
    customer requirements;
    availability of our vessels; and
    competition.        
    the ability to attract and retain qualified crewmembers;
    price, service and reputation of vessel operators; and
    the age, quality and availability of vessels of the type and
    size required by the customer.  Operating Costs.
  Managements
    Outlook
    
    increasing demand from West Africa, Mexico, Southeast Asia and
    other emerging markets;
    the reliability of supply in major oil production nations such
    as the United States, the Middle East and Nigeria; as affected
    by weather, geopolitical instability and other threats;
    increasing demand for vessels due to increased activity in areas
    ancillary to existing markets;
    impact of jack-up rigs exiting the Gulf of Mexico and the
    resulting downward pressure on the Gulf shallow water
    segment; and
    seasonal weather conditions in the North Sea and their impact on
    offshore development operations.   23




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Primary
    Measures Used by Management to Evaluate Our Results of
    Operations
    Our
    Results of Operations
    Years Ended December 31,2006


2005(4)


2004Average Day Rates:(1)PSV/AHTS (North Sea class)

$
20,455


$
16,300


$
10,875Supply Vessels (Gulf class)


11,071



6,493



4,479Crew/line handling


4,785



2,402



2,522Utilization:(2)PSV/AHTS (North Sea class)


94
%


92
%


82
%Supply Vessels (Gulf class)(3)


66
%


60
%


48
%Crew/line handling


86
%


90
%


89
%Average number of Vessels:PSV/AHTS (North Sea class)


16.0



16.8



18.5Supply Vessels (Gulf class)


44.3



47.6



48.0Crew/line handling


8.7



16.4



17.0     (1)
    
    Average vessel day rate is calculated by dividing a
    vessels total revenues in a period by the total number of
    days such vessel was under contract during such period.(2)
    
    Average vessel utilization is calculated by dividing the total
    number of days for which a vessel is under contract in a period
    by the total number of days in such period.(3)
    
    Stacked vessels for the Gulf of Mexico supply vessel class are
    included in the average number of vessels and the calculation of
    utilization. Excluding stacked vessels, our utilization was 88%,
    92%, and 77% for the years ended December 31, 2006, 2005
    and 2004, respectively.(4)
    
    Includes periods of both the Successor and Predecessor
    companies, before and after our reorganization. 24




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##### Table of Contents



Years Ended December 31,2006


2005(1)


2004Charter Revenues:PSVs/AHTSs (North Sea class)

$
112,153



46
%

$
91,810



54
%

$
60,517



54
%Supply vessels (Gulf Class)


118,169



49
%


67,570



39
%


37,899



34
%Crew/line handling boats


13,102



5
%


12,442



7
%


13,899



12
%$
243,424



100
%

$
171,822



100
%

$
112,315



100
%     (1)
    
    For presentation purposes, we have included periods of both the
    Successor and Predecessor companies, before and after our
    reorganization.  Comparison
    of day rates and utilization during the year ended
    December 31, 2006 to the year ended December 31,
    2005
        Comparison
    of the Year Ended December 31, 2006 to the Year Ended
    December 31, 2005
    
    Amortization of non-cash deferred revenues;
    Total revenues;
    Direct vessel operation expenses and other; 25




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##### Table of Contents




    General and administrative;
    Amortization of marine inspection costs;
    Depreciation and amortization expenses;
    Total operating expenses;
    Operating income (loss);
    Income (loss) before income taxes; and
    Net income (loss).  PredecessorSuccessor Company



Company


Non-GAAPPeriod from



Period from


CombinedMarch 15, 2005



January 1, 2005


Results for theYear Ended


through



through


Year endedDecember 31, 2006


December 31, 2005



March 14, 2005


December 31, 2005


VarianceRevenues:Charter hire

$
243,424


$
141,953



$
29,869


$
171,822


$
71,602Amortization of non-cash deferred
    revenues


4,322



10,137








10,137



(5,815
)Other vessel income


971



309




17



326



645Total revenues


248,717



152,399




29,886



182,285



66,432Operating expenses:Direct vessel operating expenses
    and other


106,981



69,081




16,217



85,298



21,683General and administrative


27,102



21,387




4,030



25,417



1,685Amortization of marine inspection
    costs











2,055



2,055



(2,055
)Depreciation and amortization
    expense


24,998



20,403




6,703



27,106



(2,108
)Impairment on assets held for sale,
    net of insurance recoveries


2,580



2,237








2,237



343Loss (gain) on sales of assets


(1,334
)


(2,525
)



2



(2,523
)


1,189Total operating expenses


160,327



110,583




29,007



139,590



20,737Operating income


88,390



41,816




879



42,695



45,695Reorganization costs











(6,659
)


(6,659
)


6,659Gain on debt discharge











166,459



166,459



(166,459
)Fresh-start adjustments











(219,008
)


(219,008
)


219,008Interest expense


(1,286
)


(6,430
)



(1,940
)


(8,370
)


7,084Amortization of deferred financing
    costs


(168
)


(285
)



(50
)


(335
)


167Loss on early retirement of debt






(3,950
)







(3,950
)


3,950Interest income


4,198



615








615



3,583Other gain (loss), net


(672
)


(402
)



5



(397
)


(275
)Income before income taxes and
    noncontrolling interest in loss of consolidated subsidiary


90,462



31,364




(60,314
)


(28,950
)


119,412Income tax expense


33,723



11,264




1,047



12,311



21,412Income before noncontrolling
    interest in loss of consolidated subsidiary


56,739



20,100




(61,361
)


(41,261
)


98,000Noncontrolling interest in loss of
    consolidated subsidiary


1,985
















1,985Net income (loss)

$
58,724


$
20,100



$
(61,361
)

$
(41,261
)

$
99,985  26




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##### Table of Contents



Charter Hire Revenues.
  Amortization of Non-Cash Deferred
    Revenues.
  Direct Vessel Operating Expenses.
  
    increased class costs of $13.2 million primarily
    attributable to the destacking of nine of our cold stacked
    vessels, some of which are currently in progress, and the timing
    and class of vessels undergoing regulatory dry dockings. Five of
    these vessels will operate in Southeast Asia, five vessels have
    been mobilized to West Africa and the remaining vessels will
    operate in our Gulf of Mexico fleet. As a result of our
    accounting policy to expense maintenance and classification
    costs as incurred, the timing of a vessels regulatory dry
    docking and the class of vessels undergoing regulatory dry
    docking may result in fluctuations in direct vessel operating
    expenses when compared to prior periods;
    increased labor costs of $5.9 million as a result of higher
    vessel utilization, increased pension accrual of
    $1.1 million and increases in crew labor rates; and
    increased supplies and miscellaneous costs of $1.6 million
    which is primarily due to mobilization cost of five vessels to
    West Africa.  General and Administrative Expenses.
  Depreciation and Amortization
    Expense.
  Impairment on assets held for sale, net of
    recoveries.
  Gain on Sale of Assets.
  Reorganization Costs.
  Gain on Debt Discharge.
  Fresh-start adjustments.
 27




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##### Table of Contents



Interest Expense.
  Interest Income.
  Income Tax Expense. paid-in-capital paid-in-capital
  Noncontrolling interest in loss of consolidated
    subsidiary.
  Comparison
    of the Year Ended December 31, 2005 to the Year Ended
    December 31, 2004
    
    Amortization of non-cash deferred revenues,
    Total revenues,
    Direct vessel operating expenses and other,
    General and administrative,
    Amortization of marine inspection costs,
    Depreciation and amortization expense,
    Total operating expenses,
    Operating income (loss),
    Income (loss) before income taxes, and
    Net income (loss) 28




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##### Table of Contents



Non-GAAP


Successor Company



Predecessor CompanyCombined


Period from



Period fromResults for the


March 15, 2005



January 1, 2005


YearYear Ended


through



through


EndedDecember 31, 2005


December 31, 2005



March 14, 2005


December 31, 2004


VarianceRevenues:Charter hire

$
171,822


$
141,953



$
29,869


$
112,315


$
59,507Amortization of non-cash deferred
    revenues (see Note 4)


10,137



10,137












10,137Other vessel income


326



309




17



195



131Total revenues


182,285



152,399




29,886



112,510



69,775Operating expenses:Direct vessel operating expenses
    and other


85,298



69,081




16,217



80,712



4,586General and administrative


25,417



21,387




4,030



16,815



8,602Amortization of marine inspection
    costs


2,055








2,055



11,432



(9,377
)Depreciation and amortization
    expense


27,106



20,403




6,703



32,931



(5,825
)Impairment of long-lived assets















8,584



(8,584
)Impairment on assets held for sale


2,237



2,237








10,725



(8,488
)(Gain) loss on sales of assets


(2,523
)


(2,525
)



2



30



(2,553
)Total operating expenses


139,590



110,583




29,007



161,229



(21,639
)Operating income (loss)


42,695



41,816




879



(48,719
)


91,414Reorganization costs


(6,659
)







(6,659
)


(8,617
)


1,958Gain on debt discharge


166,459








166,459







166,459Fresh-start adjustments


(219,008
)







(219,008
)






(219,008
)Interest expense


(8,370
)


(6,430
)



(1,940
)


(33,405
)


25,035Amortization of deferred financing
    costs


(335
)


(285
)



(50
)


(7,813
)


7,478Loss on early retirement of debt


(3,950
)


(3,950
)







(618
)


(3,332
)Foreign exchange gain (loss)


174



151




23



(294
)


468Interest income


615



615








423



192Other income (loss), net


(571
)


(553
)



(18
)


23



(594
)Income before income taxes


(28,950
)


31,364




(60,314
)


(99,020
)


70,070Income tax expense (benefit)


12,311



11,264




1,047



(3,068
)


15,379Net income (loss)

$
(41,261
)

$
20,100



$
(61,361
)

$
(95,952
)

$
54,691   Charter Hire Revenues.
  Amortization of Non-Cash Deferred
    Revenues.
  Direct Vessel Operating Expenses.
  
    increase of $1.5 million due to a weaker U.S. Dollar
    relative to the Norwegian Kroner;
    inclusion of $7.2 million of marine inspection cost in
    2005. On March 15, 2005, we changed our method of
    accounting for marine inspection cost from the defer and
    amortize method to the expense as incurred
    method. Therefore, in all periods after March 15, 2005,
    marine inspection costs have been expensed as 29




---



##### Table of Contents



incurred. In future periods, because of our change in accounting
    methods related to marine inspection costs, our expenses in a
    given period may vary dramatically based on timing and the
    number of marine inspections;  
    decreased labor cost of $2.0 million primarily due to the
    reduction of pension cost of $0.6 million and reduced
    workforce from the sale of vessels in 2005; and
    decreased supplies and miscellaneous expense of
    $1.1 million, primarily due to the reduction in vessels
    operated in 2005.  General and Administrative Expenses.
  
    increased cost associated with recruiting and compensating our
    new management team as well as our new Board of Directors;
    increase of $2.1 million which was accrued due to the
    adoption of an annual worldwide incentive plan;
    increase of $0.9 million due to the increase of
    infrastructure in West Africa;
    increase of $1.2 million for higher consulting, legal and
    accounting fees;
    recognition of $1.3 million of non-cash compensation
    expense related to stock option grants since the Exit Date. We
    adopted the expense recognition provisions of
    SFAS No. 123R on the Exit Date in accordance with
    accounting guidance for companies emerging from bankruptcy;
    increased severance related cost of $0.8 million; and
    currency translation effects of $0.3 million.  Depreciation and Amortization
    Expense.
  Impairment Charges.
  Impairment on Asset Held for Sale.
  Gain on the Sale of Assets.
  Reorganization Expense.
  Gain on Debt Discharge.
  Fresh-start adjustments.
 30




---



##### Table of Contents



Interest Expense.
  Amortization of Deferred Financing
    Costs.
  Loss on early retirement of debt.
  Income Tax Expense/Benefit.
  Liquidity
    and Capital Resources
    Description
    of Indebtedness
  Senior
    Convertible Debentures
     31




---



##### Table of Contents



business-day trading-day
        NOK
    Revolver
     32




---



##### Table of Contents



MARAD
    Bonds
    Our
    Capital Requirements
      start-up start-up
     33




---



##### Table of Contents



PredecessorSuccessor Company



Company


Non-GAAPPeriod from



Period from


CombinedFor the


March 15, 2005



January 1, 2005


Results for theYear Ended


through



through


Year EndedDecember 31, 2006


December 31, 2005



March 14, 2005


December 31, 2005


VarianceCash and cash equivalents at
    beginning of period

$
51,218


$
19,154



$
13,170


$
13,170


$
38,048Cash flow provided by (used in)Operating activities


101,731



27,174




9,168



36,342



65,389Investing activities


(23,227
)


4,292




(650
)


3,642



(26,869
)Financing activities


(16,261
)


1,299




(2,596
)


(1,297
)


(14,964
)Effect of exchange rate changes on
    cash and cash equivalents


712



(701
)



62



(639
)


1,351Net increase (decrease in cash and
    cash equivalents)


62,955



32,064




5,984



38,048



24,907Cash and cash equivalents at end
    of period

$
114,173


$
51,218



$
19,154


$
51,218


$
62,955          34




---



##### Table of Contents



2007


2008


2009


2010


2011


2012


Thereafter


TotalDebt(1),(2)

$
1,258


$
1,258


$
1,258


$
1,258


$
1,258


$
1,258


$
1,884


$
9,432Interest on fixed rate debt


542



466



389



312



235



158



93



2,195Construction contracts


40,686



8,750























49,436Operating leases


2,117



1,946



1,764



1,669



1,510



1,381



1,646



12,033Pension obligations


1,747



900



945



992



1,042



1,094



910



7,630Total

$
46,350


$
13,320


$
4,356


$
4,231


$
4,045


$
3,891


$
4,533


$
80,726     (1)
    
    Excludes fresh-start debt premium.(2)
    
    On February 7, 2007, we issued $125.0 million of
    3% senior convertible debentures due in 2027. On
    February 12, 2007, the purchasers of the debentures
    exercised the $25. 0 million purchase option. The net
    proceeds received from the initial sale of the debentures was
    approximately $121.3 million, after deducting the initial
    purchasers discount and offering expenses (approximately
    $145.5 million, after the option to purchase additional
    debentures in full). The debentures will be exchangeable into
    cash and, if applicable, shares of the our common stock, par
    value $.01 per share, based on an initial conversion rate
    of 23.0216 shares of common stock per $1,000 principal
    amount of debentures. Holders may require us to repurchase all
    or a portion of the debentures on January 15, 2014,
    January 15, 2017 and January 15, 2022. For further
    explanation, see discussion above under Our Capital
    Requirements.      construction-in-progress.
     35




---



##### Table of Contents



Our
    Critical Accounting Policies
      Financial reporting by entities in
    reorganization. 90-7, (SOP 90-7). SOP 90-7 SOP 90-7
    Revenue recognition.
 36




---



##### Table of Contents



Variable interest entity. Consolidation of Variable
    Interest Entities
  Direct Vessel Operating Expenses.
  Accounting for long-lived assets.
    Impairment of long-lived assets.
 37




---



##### Table of Contents



Restricted cash.
  Losses on insured claims.
  Deferred tax valuation allowance.
  Marine inspection costs.
   38




---



##### Table of Contents



Equity-based compensation. SOP 90-7,
  Deferred revenue on unfavorable
    contracts.
  New
    Accounting Standards:
  The
    Fair Value Option for Financial Assets and Financial Liabilities ).
     39




---



##### Table of Contents



Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
  Fair Value Measurements
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   40




---



##### Table of Contents



Interest
    Rate Sensitivity
          Foreign
    Currency Exchange Rate Sensitivity
  non-U.S. operations
       41




---



##### Table of Contents



42




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Index to
    Consolidated Financial Statements
  PageSuccessor
    Company  Report of Independent Registered Public
    Accounting Firm


44Predecessor
    Company  Report of Independent Registered Public
    Accounting Firm


46Consolidated
    Balance SheetsSuccessor Company  as
    of December 31, 2006 and as of December 31,
    2005


47Consolidated Statements of
    OperationsSuccessor
    Company  Year Ended December 31, 2006 and for
    the Period from March 15, 2005 through December 31,
    2005Predecessor Company 
    for the Period from January 1, 2005 though March 14,
    2005 and the Year Ended December 31, 2004


48Consolidated Statements of Cash
    FlowsSuccessor Company  Year
    Ended December 31, 2006 and for the Period from
    March 15, 2005 through December 31, 2005Predecessor Company 
    for the Period from January 1, 2005 though March 14,
    2005 and the Year Ended December 31, 2004


49Consolidated Statements of
    Stockholders EquitySuccessor
    Company  Year Ended December 31, 2006 and for
    the Period from March 15, 2005 through December 31,
    2005Predecessor Company 
    for the Period from January 1, 2005 though March 14,
    2005 and the Year Ended December 31, 2004


50Notes to
    Consolidated Financial Statements


51  43




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM       Consolidated
    financial statements and financial statement
    schedule
        Internal
    control over financial reporting
  Internal Control  Integrated Framework Internal Control 
    Integrated Framework
 44




---



##### Table of Contents



PricewaterhouseCoopers
    LLP
    45




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         PricewaterhouseCoopers
    LLP
    46




---



##### Table of Contents



TRICO
    MARINE SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
    as of December 31, 2006 and December 31, 2005 (Dollars
    in thousands, except share and per share amounts)
  December 31,



December 31,2006



2005ASSETSCurrent assets:Cash and cash equivalents

$
114,173



$
51,218Available for sale securities


2,475




Restricted cash


716




570Accounts receivable, net


58,787




42,986Prepaid expenses and other current
    assets


4,036




3,484Assets held for sale


3,048




5,853Total current assets


183,235




104,111Property and equipment:Land and buildings


1,995




1,844Marine vessels


256,125




241,360Construction-in-progress


15,876




235Transportation and other


2,328




1,566276,324




245,005Less accumulated depreciation and
    amortization


44,476




19,359Net property and equipment


231,848




225,646Restricted cash 
    noncurrent


11,842




7,253Other assets


8,397




7,212Total assets

$
435,322



$
344,222LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Short-term and current maturities
    of debt

$
1,258



$
36,610Accounts payable


11,055




6,295Accrued expenses


14,590




10,715Accrued insurance reserve


3,062




3,426Accrued interest


110




288Income taxes payable


2,092




518Total current liabilities


32,167




57,852Long-term debt, including premium


8,605




9,928Deferred income taxes


63,327




46,055Deferred revenues on unfavorable
    contracts


1,376




5,379Other liabilities


2,199




2,576Total liabilities


107,674




121,790Noncontrolling interest


15,310




Commitments and contingencies
    Stockholders equity:Preferred stock, $.01 par
    value, 5,000,000 shares authorized and no shares issued at
    December 31, 2006 and December 31, 2005







Common stock, $.01 par value,
    25,000,000 shares authorized,and 14,816,969 and
    14,638,103 shares issued outstanding at December 31,
    2006 and December 31, 2005, respectfully


148




146Warrants- Series A


1,646




1,649Warrants- Series B


634




634Additional paid-in capital


231,218




208,143Retained earnings


78,824




20,100Adoption of FASB Statement
    No. 158, net of taxes of $0.3 million


(708
)



Cumulative foreign currency
    translation adjustment


576




(8,240
)Total stockholders equity


312,338




222,432Total liabilities and
    stockholders equity

$
435,322



$
344,222    47




---



##### Table of Contents



TRICO
    MARINE SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    for the Year Ended December 31, 2006 and for the Period
    from March 15, 2005
    through December 31, 2005 and for the Period from
    January 1, 2005 through March 14, 2005
    and the Year Ended December 31, 2004(Dollars
    in thousands, except share and per share amounts)  Successor Company



Predecessor CompanyPeriod from



Period fromYear


March 15, 2005



January 1, 2005


YearEnded


through



through


EndedDecember 31, 2006


December 31, 2005



March 14, 2005


December 31, 2004Revenues:Charter hire

$
243,424


$
141,953



$
29,869


$
112,315Amortization of non-cash deferred
    revenues (see Note 4)


4,322



10,137








Other vessel income


971



309




17



195Total revenues


248,717



152,399




29,886



112,510Operating expenses:Direct vessel operating expenses
    and other


106,981



69,081




16,217



80,712General and administrative


27,102



21,387




4,030



16,815Amortization of marine inspection
    costs











2,055



11,432Depreciation and amortization
    expense


24,998



20,403




6,703



32,931Impairment of long-lived assets















8,584Impairment on assets held for sale,
    net of insurance recoveries


2,580



2,237








10,725(Gain) loss on sales of assets


(1,334
)


(2,525
)



2



30Total operating expenses


160,327



110,583




29,007



161,229Operating income (loss)


88,390



41,816




879



(48,719
)Reorganization costs











(6,659
)


(8,617
)Gain on debt discharge











166,459



Fresh-start adjustments











(219,008
)


Interest expense


(1,286
)


(6,430
)



(1,940
)


(33,405
)Amortization of deferred financing
    costs


(168
)


(285
)



(50
)


(7,813
)Loss on early retirement of debt






(3,950
)







(618
)Interest income


4,198



615








423Other income (loss), net


(672
)


(402
)



5



(271
)Income before income taxes and
    noncontrolling interest in loss of consolidated subsidiary


90,462



31,364




(60,314
)


(99,020
)Income tax expense (benefit)


33,723



11,264




1,047



(3,068
)Income before noncontrolling
    interest in loss of consolidated subsidiary


56,739



20,100




(61,361
)


(95,952
)Noncontrolling interest in loss of
    consolidated subsidiary


1,985












Net income (loss)

$
58,724


$
20,100



$
(61,361
)

$
(95,952
)Basic income (loss) per common
    share:Net income (loss)

$
4.01


$
1.78



$
(1.66
)

$
(2.60
)Average common shares outstanding


14,628,490



11,271,786




36,908,505



36,876,152Diluted income (loss) per common
    share:Net income (loss)

$
3.86


$
1.74



$
(1.66
)

$
(2.60
)Average common shares outstanding


15,206,137



11,558,100




36,908,505



36,876,152    48




---



##### Table of Contents



TRICO
    MARINE SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    for the Year Ended December 31, 2006 and for the Period
    from March 15, 2005
    through December 31, 2005 and for the Period from
    January 1, 2005 through March
     14, 2005 and the Year Ended December 31, 2004(Dollars
    in thousands)  Successor Company



Predecessor CompanyPeriod from



Period from


YearYear


March 15, 2005



January 1, 2005


EndedEnded


through



through


December 31,December 31, 2006


December 31, 2005



March 14, 2005


2004Net income (loss)

$
58,724


$
20,100



$
(61,361
)

$
(95,952
)Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activities:Depreciation and amortization


25,029



20,636




8,808



55,077Amortization of non-cash deferred
    revenue (see Note 4)


(4,322
)


(10,137
)







Deferred marine inspection costs











(1,277
)


(11,360
)Deferred income taxes


29,856



10,084




(1,047
)


(3,393
)Gain on debt discharge











(166,459
)


Fresh-start adjustments











219,008



Impairment on assets held for sale,
    net of insurance recoveries


2,580



2,237








10,725Loss on early retirement of debt






3,950








618Impairment of long-lived assets















8,584Gain on sales of assets


(1,334
)


(2,525
)



2



30Provision for doubtful accounts


1,234



668




40



565Stock based compensation


2,024



2,012




9



66Noncontrolling interest in loss of
    consolidated subsidiary


(1,985
)











Change in operating assets and
    liabilities:Accounts receivable


(15,522
)


(12,688
)



2,404



(3,065
)Prepaid expenses and other current
    assets


(384
)


(760
)



(630
)


163Accounts payable and accrued
    expenses


8,938



(4,629
)



7,676



23,380Other, net


(3,107
)


(1,774
)



1,995



(199
)Net cash provided by (used in)
    operating activities


101,731



27,174




9,168



(14,761
)Cash flows from investing
    activities:Purchases of property and equipment


(19,472
)


(1,814
)



(947
)


(6,155
)Proceeds from sales of assets


3,402



6,988








3,831Increase in
    available-for-sale
    securities


(2,475
)











Increase in restricted cash


(4,682
)


(882
)



508



(5,677
)Other, net











(211
)


2,857Net cash provided by (used in)
    investing activities


(23,227
)


4,292




(650
)


(5,144
)Cash flows from financing
    activities:Net proceeds from issuance of
    common stock






95,323








Net proceeds from exercises of
    warrants and options


994



1,806








Proceeds from issuance of debt


15,878



60,550




54,550



55,365Repayment of debt


(54,041
)


(156,380
)



(56,771
)


(48,280
)Proceeds from sale-leaseback
    transactions















2,746Contribution from non-controlling
    interest


20,910












Deferred financing costs and other


(2
)







(375
)


(2,783
)Net cash (used in) provided by
    financing activities


(16,261
)


1,299




(2,596
)


7,048Effect of exchange rate changes on
    cash and cash equivalents


712



(701
)



62



135Net increase (decrease) in cash and
    cash equivalents


62,955



32,064




5,984



(12,722
)Cash and cash equivalents at
    beginning of period


51,218



19,154




13,170



25,892Cash and cash equivalents at end of
    period

$
114,173


$
51,218



$
19,154


$
13,170Supplemental cash flow information:Income taxes paid

$
3,451


$
471



$
72


$
210Interest paid

$
1,654


$
7,351



$
1,265


$
8,464Operating cash payments from
    reorganization items

$



$
6,195



$
1,457


$
8,168    49




---



##### Table of Contents



TRICO
    MARINE SERVICES, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYfor the Year Ended December 31, 2006 and for the Period
    from March 15, 2005 through December 31, 2005 and for
    the Period from January 1, 2005 through March 14, 2005
    and the Year Ended December 31, 2004(Dollars
    in thousands, except share amounts) AccumulatedRetained





OtherAdditional


Earnings





Comprehensive








TotalOld Common Stock


New Common Stock


Warrant  Series A


Warrant  Series B


Paid-In


(Accumulated


Unearned


Income


Treasury Stock


StockholdersShares


Dollars


Shares


Dollars


Shares


Dollars


Shares


Dollars


Capital


Deficit)


Compensation


(Loss)


Shares


Dollars


EquityBalance, December 31, 2003


36,982,569



370



























338,007



(214,845
)


(127
)


18,627



72,032



(1
)


142,031Issuances of restricted stock


25,000































58







(58
)














Issuances of stock to directors


30,000































6























6Amortization of unearned
    compensation










































66















66Comprehensive loss:Gain on foreign currency translation














































17,690











17,690Net loss






































(95,952
)


















(95,952
)Total comprehensive loss:


























































(78,262
)Balance, December 31, 2004


37,037,569



370



























338,071



(310,797
)


(119
)


36,317



72,032



(1
)


63,841Forfeiture of restricted stock


(5,000
)






























(12
)






12















Amortization of unearned
    compensation










































9















9Comprehensive loss:Loss on foreign currency
    translations














































(1,209
)










(1,209
)Net loss January 1, 2005
    through March 14,2005






































(61,361
)


















(61,361
)Total comprehensive loss:


























































(62,570
)Reorganization adjustments


37,032,569



370



10,000,000



100



499,429



1,658



499,429



637



(230,454
)


372,158



98



(35,108
)


(72,032
)


1



108,720Balance, March 15, 2005
    (Successor Company)










10,000,000



100



499,429



1,658



499,429



637



107,605























110,000Issuances of restricted stock to
    employees and directors










105,000



1



















(1
)






















Issuances of stock to advisors










100,000



1



















1,099























1,100Issuances of stock during
    underwritten public offering










4,273,500



42



















95,281























95,323Exercises of stock options










154,762



2



















1,702























1,704Amortization of unearned
    compensation


































693























693Stock based compensation


































1,319























1,319Exercises of warrants for common
    stock










4,841







(2,850
)


(9
)


(1,991
)


(3
)


114























102Tax benefit from the utilization of
    fresh-start NOL


































331























331Comprehensive income:Loss on foreign currency translation














































(8,240
)










(8,240
)Net income 
    March 15, 2005 through December 31, 2005






































20,100



















20,100Total comprehensive income:


























































11,860Balance, December 31, 2005










14,638,103



146



496,579



1,649



497,438



634



208,143



20,100







(8,240
)










222,432Stock based compensation










89,650



1



















2,024























2,025Stock options exercised










88,085



1



















968























969Exercise of warrants for common
    stock










1,131







(960
)


(3
)


(171
)






26























23Tax benefit from the utilization of
    fresh-start NOL


































16,442























16,442Gain related to the sale of
    interest in EMSL


































3,615























3,615Comprehensive income:


























































Gain on foreign currency translation














































8,816











8,816Net income






































58,724



















58,724Total comprehensive income:


























































67,540Adjustment to adopt
    SFAS No. 158, net of tax of $0.3 million














































(708
)










(708
)Balance, December 31, 2006










14,816,969


$
148



495,619


$
1,646



497,267


$
634


$
231,218


$
78,824


$



$
(132
)





$



$
312,338    50




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS   1.
    The
    Company    04-17985 04-17987. No. 04-17985. debtors-in-possession
  2.
    Summary
    of Significant Accounting Policies  Basis of Presentation.
  90-7, (SOP 90-7). SOP 90-7 7 8
  SOP 90-7,
  Consolidation Policy.
 51




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Cash and Cash Equivalents.
  Restricted Cash.
  
    Cash held in escrow for outstanding letters of credit, as
    prescribed following the Companys retirement of the
    $50 million secured revolving credit facility in 2004.
    Since the cash held in escrow for outstanding letters of credit
    will not be used to offset currently maturing liabilities, the
    balance of $7.5 million has been classified as
    Restricted cash  noncurrent in the
    accompanying consolidated financial statements;
    $3.5 million held in escrow until the second closing of
    EMSL scheduled to occur at January 1, 2008 at which time
    the Company will transfer the remaining four vessels to EMSL
    (see Note 17). Since the cash held in escrow will not be
    used to offset currently maturing liabilities, it has been
    classified as Restricted cash  noncurrent
    in the accompanying consolidated financial statements; and
    Statutory requirements in Norway which require a subsidiary to
    segregate cash that will be used to pay tax withholdings in
    following periods, and other cash amounts held in escrow for
    specific purposes aggregating $0.7 million at
    December 31, 2006, which are classified as current assets.  Accounts Receivable.
    Accounting for long-lived
    assets.
   52




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        Impairment of long-lived assets.
  Marine vessel spare parts.
  Deferred marine inspection
    costs.
 53




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Deferred Financing Costs.
  Income Taxes. paid-in-capital.
  Revenue Recognition.
  Deferred Revenues on Unfavorable
    Contracts.
 54




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Direct Vessel Operating
    Expenses.
  Losses on Insured Claims.
  Foreign Currency Translation.
  Stock Based Compensation.
    Accumulated other comprehensive income
    (loss).
  Use of Estimates.
  New
    Accounting Standards.
  The
    Fair Value Option for Financial Assets and Financial Liabilities ).
 55




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
  Fair Value Measurements
   56




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    3.
    Fresh-start
    Reporting  Fresh-start
    Adjustments
          Predecessor









SuccessorCompany









CompanyBalance Sheet









Balance Sheetas of


Reorganization


Fresh Start



as ofMarch 15, 2005


Adjustments(1)


Adjustments(2)



March 15, 2005ASSETSTotal current assets

$
57,504


$



$




$
57,504Property and equipment:Land and buildings


3,771







(1,949
)



1,822Marine vessels


657,780







(390,405
)



267,375Transportation and other


5,216







(4,029
)



1,187Construction-in-progress


100







(36
)



64 57




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Predecessor









SuccessorCompany









CompanyBalance Sheet









Balance Sheetas of


Reorganization


Fresh Start



as ofMarch 15, 2005


Adjustments(1)


Adjustments(2)



March 15, 2005666,867







(396,419
)



270,448Less accumulated depreciation and
    amortization


215,338







(215,338
)



Net property and equipment


451,529







(181,081
)



270,448Restricted cash 
    noncurrent


6,454












6,454Other assets


31,305







(20,720
)



10,585Total assets

$
546,792


$



$
(201,801
)


$
344,991LIABILITIES AND STOCKHOLDERS
    EQUITYTotal current liabilities

$
86,435


$



$




$
86,435Liabilities subject to compromise:Senior Notes


250,000



(250,000
)







Accrued interest on Senior Notes


25,179



(25,179
)







Long-term debt, net of discounts


85,479







547




86,026Deferred income taxes


41,185












41,185Deferred revenues on unfavorable
    contracts (see Note 4)










16,660




16,660Other liabilities


4,685












4,685Total liabilities


492,963



(275,179
)


17,207




234,991Commitments and contingenciesStockholders equity:Preferred stock















Common stock, $.01 par value


370



(270
)







100Warrants  Series A






1,658








1,658Warrants  Series B






637








637Additional paid-in capital


338,059



(230,454
)







107,605Accumulated deficit


(319,609
)


538,617



(219,008
)



Unearned compensation


(98
)


98








Cumulative foreign currency
    translation adjustment


35,108



(35,108
)







Treasury stock, at par value


(1
)


1








Total stockholders equity


53,829



275,179



(219,008
)



110,000Total liabilities and
    stockholders equity

$
546,792


$



$
(201,801
)


$
344,991     (1)
    
    To record the conversion of liabilities subject to compromise
    into new common stock, the conversion of old common stock into
    warrants and the adjustment of other comprehensive income and
    unearned compensation.(2)
    
    To adjust assets and liabilities to fair market value, and
    reflect the write-off of the Predecessor Companys equity
    and the application of negative goodwill to long-lived assets.  Changes
    to Significant Accounting Policies
   58




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   SOP 90-7,
  Predecessor CompanyPeriod fromJanuary 1, 2005


Yearthrough


EndedMarch 14, 2005


December 31, 2004Net loss

$
(61,361
)

$
(95,952
)Add: Stock based compensation
    expense included in reported net loss, net of related tax effects


9



72Deduct: Total stock-based
    compensation expense determined under fair value-based method,
    net of tax


(40
)


(238
)Pro forma net loss

$
(61,392
)

$
(96,118
)Net loss per common share:Basic and Diluted  as
    reported

$
(1.66
)

$
(2.60
)Basic and Diluted  pro
    forma

$
(1.66
)

$
(2.61
)     Period fromJanuary 1, 2005


Yearthrough


EndedMarch 14, 2005


December 31, 2004Net loss

$
(61,361
)

$
(95,952
)Add: Amortization of marine
    inspection costs included in reported net loss


2,055



11,432Deduct: Expenditures for marine
    inspection costs determined under the expense as
    incurred method


(1,277
)


(11,360
)Pro forma net loss

$
(60,583
)

$
(95,880
)Net loss per common share:Basic and Diluted  as
    reported

$
(1.66
)

$
(2.60
)Basic and Diluted  pro
    forma

$
(1.64
)

$
(2.60
)  59




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Predecessor



SuccessorCompany



CompanyBuildings and improvements


15-40 years




7-33 yearsMarine vessels


15-35 years




3-27 yearsTransportation and other


5-10 years




1-9 years   4.
    Deferred
    Revenue on Unfavorable Contracts    Amortizationof Non-CashDeferredPeriod

RevenueYear ending December 31, 2007

$
853Year ending December 31, 2008


313Year ending December 31, 2009


145Year ending December 31, 2010


36Year ending December 31, 2011


29$
1,376   5.
    Warrants
    to Purchase Common Stock:   60




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  00-19,
    WarrantsSeries A


Series BExpected annual dividends

$



$
Risk free interest rate


4.12
%


3.96
%Expected term (in years)


5



3Volatility


46.7
%


46.7
%     Period fromMarch 15, 2005Year Ended


throughDecember 31, 2006


December 31, 2005Series A


960



2,850Series B


171



1,9911,131



4,841   6.
    Reorganization
    Costs    Predecessor CompanyPeriod fromJanuary 1, 2005


Yearthrough


EndedMarch 14, 2005


December 31, 2004Professional and other fees

$
6,479


$
8,009Key employee retention program


180



608Reorganization costs

$
6,659


$
8,617    61




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      7.
    Assets
    Held for Sale and Sales of Assets               62




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  set-up
  10-year
    8.
    Vessel
    Impairments      9.
    Accounts
    Receivable    2006


2005Trade receivables

$
55,380


$
39,775Allowance for doubtful accounts


(1,846
)


(1,397
)Insurance and other


5,253



4,608Accounts receivable, net

$
58,787


$
42,986    63




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    10.
    Other
    Assets    December 31,



December 31,2006



2005Deferred financing costs, net of
    accumulated amortization of $1.1 million and $1.0 at
    December 31, 2006 and December 31, 2005, respectively

$
228



$
296Pension Assets


675




1,264Marine vessel spare parts


2,315




1,534GE lease deposits


1,698




1,698Capitalized information system
    costs


1,296




168Other


2,185




2,252Other assets

$
8,397



$
7,212     11.
    Debt    December 31, 2006



December 31, 2005Trico Supply Bank Facility,
    bearing interest at NIBOR (Norwegian Interbank Offered Rate)
    plus a margin and collateralized by certain marine vessels. This
    facilitys current availability reduces in 13 semi-annual
    installments of NOK 40 million ($6.0 million)
    beginning March 2003 with balance of the commitment expiring
    September 2009

$




$
16,310NOK Term loan, bearing interest at
    NIBOR (Norwegian Interbank Offered Rate) plus a margin,
    collateralized by two marine vessels, reducing in 5 semi-annual
    installments beginning June 30, 2004 by NOK
    7.5 million ($1.2 million) with the balance of the
    commitment expiring June 2006







17,7926.11% Notes, bearing interest
    at 6.11%, principal and interest due in 30 semi-annual
    installments, maturing April 2014, collateralized by two marine
    vessels


9,432




10,6906.08% Notes, bearing interest
    at 6.08%, principal and interest due in 16 semi-annual
    installments, maturing September 2006, collateralized by a
    marine vessel







1,250Fresh-start debt premium(1)


431




4969,863




46,538Less current maturities


1,258




36,610Long-term debt

$
8,605



$
9,928     (1)
    
    During the application of fresh-start accounting, the Company
    recorded a fair-value adjustment to its fixed rate
    6.11% Notes and 6.08% Notes of approximately
    $0.5 million as a result of current interest rates being
    lower 64




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  than the Companys stated interest rates on its fixed-rate
    debt. Fair value was determined using discounted future cash
    flows based on quoted market prices, where available, on its
    current incremental borrowing rates for similar types of
    borrowing arrangements as of the Exit Date. This premium will be
    amortized over the remaining life of the debt using the
    effective interest rate method, which will lower future interest
    expense.    Period

Amount12 months ending
    December 31, 2007

$
1,25812 months ending
    December 31, 2008


1,25812 months ending
    December 31, 2009


1,25812 months ending
    December 31, 2010


1,25812 months ending
    December 31, 2011


1,258Thereafter


3,142$
9,432Fresh-start debt premium(1)


431$
9,863          65




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    12.
    Operating
    Leases      10-year
    13.
    Taxes    Successor Company



Predecessor CompanyPeriod from



Period fromMarch 15, 2005 to



January 1, 2005 to2006


December 31, 2005



March 14, 2005


2004United States

$
47,407


$
(1,201
)


$
63,362


$
(72,431
)International


43,055



32,565




(123,676
)


(26,589
)$
90,462


$
31,364



$
(60,314
)

$
(99,020
)  66




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Successor Company



Predecessor CompanyPeriod from



Period fromMarch 15, 2005 to



January 1, 2005 toDecember 31,



March 14,2006


2005



2005


2004Current income taxes:U.S. federal income taxes

$
970


$




$



$
State income taxes















Foreign taxes


2,897



1,180








325Deferred income taxes:U.S. federal income taxes


15,591












State income taxes


979



331








Foreign taxes


13,286



9,753




(1,047
)


(3,393
)$
33,723


$
11,264



$
(1,047
)

$
(3,068
)    67




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Deferred Tax Assets


Deferred Tax LiabilitiesCurrent


Non-Current


Current


Non-Current2006Property and equipment

$



$



$



$
15,251Deferral of taxes on Norwegian
    earnings














63,327Foreign tax credit


2,089











Alternative minimum tax
    carryforward


969











Insurance reserves


1,162











U.S. net operating loss
    carryforwards






44,854







Gain on sale of vessels


1,209



438







Company incentive plans


1,199











Other


1,103











1,073$
7,731


$
45,292


$



$
79,651Current deferred tax assets, net













$
7,731Non-current deferred tax asset,
    net  U.S. jurisdiction













$
28,968Valuation Allowance













$
36,699Deferred tax asset after
    valuation, net













$
Non-current deferred tax
    liabilities, net  foreign jurisdiction













$
63,327   Deferred Tax Assets


Deferred Tax LiabilitiesCurrent


Non-Current


Current


Non-Current2005Property and equipment

$



$



$



$
17,095Deferral of taxes on Norwegian
    earnings














46,055Insurance reserves


1,196











U.S. net operating loss
    carryforwards






116,518







Cancellation of debt income














58,260Other


1,465











$
2,661


$
116,518


$



$
121,410Current deferred tax assets, net













$
2,661Non-current deferred tax asset,
    net  U.S. jurisdiction













$
41,163Valuation Allowance













$
43,824Deferred tax asset after
    valuation, net













$
Non-current deferred tax
    liabilities, net  foreign jurisdiction













$
46,055  68




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        Successor Company



Predecessor CompanyPeriod from



Period fromMarch 15, 2005 to



January 1, 2005 toDecember 31,



March 14,2006


2005



2005


2004Federal income taxes at statutory
    rate

$
31,660


$
10,977



$
(21,110
)

$
(34,657
)State income taxes net of federal
    benefit


979



458








(333
)Norwegian tax rate differential


(3,524
)


(2,443
)



8,685



6,300U.S. tax on deemed
    repatriation






2,156








Non-deductible items in foreign
    jurisdictions


1,530








34,673



Non-deductible loss and expenses


989



62




2,331



3,322Impact of foreign earnings at
    various rates


2,089



1,838




55



24Valuation Allowance






(1,784
)



(23,587
)


22,276Income tax expense (benefit)

$
33,723


$
11,264



$
1,047


$
(3,068
)     7 8
 69




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
         paid-in-capital
     70




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
         14.
    Earnings
    Per Share    Successor Company



Predecessor CompanyPeriod from



Period fromYear


March 15, 2005



January 1, 2005


YearEnded


through



through


EndedDecember 31,


December 31,



March 14,


December 31,2006


2005



2005


2004Net income (loss) available to
    common shares (numerator)

$
58,724


$
20,100



$
(61,361
)

$
(95,952
)Weighted-average common shares
    outstanding (denominator)


14,628,490



11,271,786




36,908,505



36,876,152Basic EPS

$
4.00


$
1.78



$
(1.66
)

$
(2.60
)Net income (loss) available to
    common shares (numerator)

$
58,724


$
20,100



$
(61,361
)

$
(95,952
)Weighted-average common shares
    outstanding (denominator)


14,628,490


$
11,271,786




36,908,505



36,876,152Options


189,772



190,948








Restricted Stock


42,887



33,476








Warrants


344,988



61,890








Total effect of dilutive securities


577,647



286,314








Adjusted weighted-average shares


15,206,137



11,558,100




36,908,505



36,876,152Diluted EPS

$
3.86


$
1.74



$
(1.66
)

$
(2.60
)    71




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        15.
    Equity
    Incentive Plans      Options
    December 31,December 31, 2006


2005Expected annual dividends

$



$
Risk free interest rate


4.70
%


4.12
%Expected term (in years)


5



5Volatility(1)


36.47
%


46.70
%     (1)
    
    The volatility assumption was based on the average volatility of
    a peer group. 72




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     2006


2005


2004Number of


Weighted


Weighted


Number of


Weighted


Number of


WeightedShares


Average


Average


Shares


Average


Shares


AverageUnderlying


Exercise


Fair Market


Underlying


Exercise


Underlying


ExerciseOptions


Prices


Value


Options


Prices


Options


PricesOutstanding at beginning of the
    year


355,738


$
11.00


$
5.06



1,077,800


$
10.57



1,242,050


$
10.51Cancelled during reorganization














(1,077,800
)


10.57







Granted


59,500



29.55



11.77



698,000



11.00







Exercised


(88,085
)


11.00



5.06



(154,762
)


11.00







Expired / Forfeited


(10,001
)


14.23



6.20



(187,500
)


11.00



(164,250
)


10.14Outstanding at end of the year


317,152


$
14.38


$
6.28



355,738


$
11.00



1,077,800


$
10.5Exercisable at end of the year


61,903


$
11.00


$
5.06



44,574


$
11.00



955,550


$
11.10     Aggregate Intrinsic ValueYear Ended December 31,2006Options Outstanding at
    December 31, 2006

$
7,590Options Exercisable at
    December 31, 2006

$
1,691Options exercised in 2006

$
2,406     Options Outstanding


Options ExercisableWeighted


Weighted





Weighted


WeightedNumber


Average


Average


Number


Average


AverageRange of

Outstanding


Remaining


Exercise


Exercisable


Remaining


ExerciseExercise Prices

at
    12/31/06


Contract Life


Price


at
    12/31/06


Contract Life


Price$11.00


259,652



5.2


$
11.00



61,903



5.2


$
11.00$27.13


38,500



6.2


$
27.13







6.2


$
27.13$33.75


9,000



6.5


$
33.75







6.5


$
33.75$35.56


10,000



6.5


$
35.56







6.5


$
35.56$11.00 - $35.56


317,152



5.4


$
14.38



61,903



5.4


$
11.00       Restricted
    Stock
   73




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    AverageRestricted


Grant DateStock


Fair ValueOutstanding at December 31,
    2003


60,000


$
2.41Granted


25,000



2.33Vested


(20,000
)


2.41Cancelled






Outstanding at December 31,
    2004


65,000


$
2.38Converted into warrants during
    reorganization


(60,000
)


2.37Granted


105,000



19.88Vested


(40,000
)


13.67Cancelled


(5,000
)


2.44Outstanding at December 31,
    2005


65,000


$
23.71Granted


94,650



29.70Vested


(29,417
)


28.19Cancelled


(5,000
)


28.45Outstanding at December 31,
    2006


125,233


$
27.00     16.
    Employee
    Benefit Plans  Defined
    Contribution Plan
    Norwegian
    Pension Plans
   74




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Adoption
    of SFAS No. 158, Employers Accounting for
    Defined Benefit Pension and Other Postretirement
    Plans
        December 31, 2006Before





AfterAdoption


Adjusted


AdoptionASSETS:Pension asset

$
1,631


$
(956
)

$
675LIABILITIES:Pension obligation

$
113


$
27


$
140Deferred tax liability


63,602



(275
)


63,327EQUITY:Accumulated other comprehensive
    loss

$



$
(708
)

$
(708
)    75




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Period from



Period fromMarch 15, 2005



January 1, 2005through



throughDecember 31,



March 14,2006


2005



2005Change in Benefit ObligationBenefit obligation at beginning of
    the period

$
4,521


$
3,925



$
3,811Service cost


637



944




88Interest cost


207



129




33Benefits paid


(163
)


(89
)



(23
)Actuarial gain


(180
)







Translation adjustment and other


389



(388
)



16Benefit obligation at end of year

$
5,411


$
4,521



$
3,925Change in Plan AssetsFair value of plan assets at
    beginning of the period

$
5,596


$
4,952



$
4,871Actual return on plan assets


269



193




49Contributions


1,392



992




454Benefits paid


(163
)


(89
)



(23
)Actuarial loss


(1,607
)







Translation adjustment and other


459



(452
)



(399
)Fair value of plan assets at end
    of year

$
5,946


$
5,596



$
4,952Funded Status, over funded





$
1,075



$
1,027Unrecognized net actuarial gain
    and other






(489
)



(552
)Prepaid benefit costs





$
586



$
475   st
  Successor Company



Predecessor CompanyPeriod from



Period fromMarch 15, 2005



January 1, 2005through



throughDecember 31,



March 14,2006


2005



2005


2004Components of Net Periodic Benefit
    CostService cost

$
637


$
944



$
88


$
380Interest cost


207



129




33



133Return on plan assets


(236
)


(225
)



(52
)


(221
)Social security contributions


176



46




12



59Recognized net actuarial loss


36



8




2



10Net periodic benefit cost

$
820


$
902



$
83


$
361  76




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Projected benefit obligation

$
(5,411
)Fair value of plan assets


5,946Funded status

$
535Items included in accumulated
    other comprehensive income and not yet recognized Unrecognized
    net actuarial loss

$
876Social security obligations


80$
956Items to be recognized in 2007 as
    a component of net periodic cost:Net actuarial loss

$
47Social security obligations


5Net periodic cost to be recorded
    in 2007 as a component of other comprehensive loss (income)

$
52       PredecessorSuccessor Company






CompanyDecember 31,



March 14,


December 31,December 31, 2006


2005



2005


2004Weighted-Average AssumptionsDiscount rate


4.50
%


4.50
%



4.50
%


4.50
%Return on plan assets


5.50
%


5.50
%



5.50
%


5.50
%Rate of compensation increase


4.50
%


3.30
%



3.30
%


3.30
%     PredecessorSuccessor Company



CompanyDecember 31,


December 31,



March 14,2006


2005



2005Equity securities


30
%


22
%



18
%Debt Securities


55
%


43
%



49
%Property and other


15
%


35
%



33
%All asset categories


100
%


100
%



100
%    77




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   United
    Kingdom Pension Plan
        17.
    Minority
    owned consolidated subsidiary:      start-up
   78




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      paid-in-capital
  (in thousands)
  Cash

$
17,442Restricted cash


3,468Total assets

$
20,910Non-controlling interest

$
17,295Additional
    paid-in-capital


3,615Total liabilities and
    shareholders equity

$
20,910   (in
    thousands).
  79




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  December 31, 2006ASSETSCurrent Assets:Cash

$
4,360Total current assets


4,360Property & Equipment:Vessels


26,497Other


28Construction-in-progress


32526,850Less: accumulated depreciation:


2,05924,791Total Assets

$
29,151LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesIntercompany payables

$
4,394Total current liabilities


4,394Stockholders EquityCommon stock


129Additional paid in capital


33,783Retained earnings


(4,478
)Accounts receivable from
    shareholder


(4,677
)Total stockholders equity


24,757Total liabilities and
    stockholders equity

$
29,151   (in thousands).
  Intersegment revenues

$
1,899Operating Expenses:Direct vessel operating expenses
    and other


4,083Depreciation expense


2,059General and Administrative


243Total operating expense


6,385Operating loss


4,486Interest income


9Net loss

$
(4,477
)    80




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   (in thousands).
  Noncontrolling interest capital
    contribution

$
20,910Additional Paid in Capital


(3,615
)Noncontrolling interests
    loss in EMSL


(2,283
)Noncontrolling interests
    income in NAMESE


298Noncontrolling interest

$
15,310   18.
    Commitments
    and Contingencies  Leif Weizman v. Trico Marine Services, Inc., Thomas E.
    Fairley, and Ronald O. Palmer; class-action Rule 10b-5
  construction-in-progress.
  construction-in-progress.
     81




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     19.
    Fair
    Value of Financial Instruments and Market Risks    Cash, cash equivalents and accounts
    receivable:
  Debt:
  2006


2005Carrying amount

$
9,863


$
46,538Fair value

$
9,900


$
46,758   Political Risk:
  Foreign Currency Risk:
  20.
    Segment
    and Geographic Information   82




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
         Successor CompanyYear Ended December 31, 2006

U.S.


North Sea


West Africa


Other


TotalsRevenues from external customers

$
102,831


$
106,435
(1)

$
27,727


$
11,724


$
248,717Intersegment revenues


2,249



1,206



693







4,148Operating income (loss)(3)


42,087
(2)


47,244



5,976



(6,917
)


88,390Interest income


2,706



1,446



3



43



4,198Interest expense


554



732











1,286Depreciation and amortization
    expense


8,000



11,953



2,773



2,272



24,998Income tax expense


18,241



13,078



1,848



556



33,723Long-lived assets


132,739



256,430



21,088



25,065



435,322Segment total assets


268,070



326,802



21,088



25,065



641,025Capital expenditures


12,369



6,291



169



643



19,472   Period from March 15, 2005 throughDecember 31, 2005

U.S.


North Sea


West Africa


Other


TotalsRevenues from external customers

$
50,311


$
77,988
(1)

$
11,249


$
12,851


$
152,399Intersegment revenues


1,329















1,329Operating income (loss)


4,182
(4)


34,959



502



2,173



41,816Interest income


530



82



1



2



615Interest expense


4,491



1,835







104



6,430Depreciation and amortization
    expense


7,928



9,804



1,335



1,336



20,403Income tax expense


331



9,169



617



1,147



11,264Long-lived assets


42,287



157,927



17,881



7,551



225,646Segment total assets


212,161



186,256



17,881



12,979



429,277Capital expenditures


804



463



487



60



1,814   83




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Predecessor CompanyPeriod from January 1, 2005 throughMarch 14, 2005

U.S.


North Sea


West Africa


Other


TotalsRevenues from external customers

$
8,171


$
16,528


$
1,980


$
3,207


$
29,886Operating income (loss)


(2,996
)


4,220



278



(623
)


879Interest income


14



36











50Interest expense


1,313



608







19



1,940Depreciation and amortization
    expense


3,724



3,973



468



593



8,758Income tax expense






1,047











1,047Long-lived assets(6)


65,347



168,297



27,292



9,512



270,448Segment total assets


95,777



208,499



27,546



13,170



344,992Capital expenditures


424



1,701



7



92



2,224   Year Ended December 31, 2004

U.S.


North Sea


West Africa


Other


TotalsRevenues from external customers

$
35,090


$
60,409


$
4,360


$
12,651


$
112,510Operating loss


(17,927
)


(23,016
)(5)


(1,827
)


(5,949
)


(48,719
)Interest income


208



209



3



2



422Interest expense


30,799



2,504







102



33,405Depreciation and amortization
    expense


28,192



22,011



2,046



2,828



55,077Income tax benefit






(3,068
)










(3,068
)Long-lived assets(6)


124,015



304,414



20,308



29,491



478,228Segment total assets


424,572



339,589



20,500



33,642



818,303Capital expenditures


3,108



11,608



2,170



628



17,514     (1)
    
    Includes $4.3 million and $10.1 million in non-cash
    deferred revenues for the year ended December 31, 2006 and
    the period from March 15, 2005 through December 31,
    2005.(2)
    
    Includes $3.2 million charge on loss on assets held for
    sale related to the impairment of the SWATH vessel.(3)
    
    The Company performed a transfer pricing study, which resulted
    in a newly adopted allocation of corporate general and
    administrative costs to its international subsidiaries. The
    Company completed the transfer pricing study in 2006 and
    determined it would change the allocation of these costs in
    2005. The Company did not allocate corporate general and
    administrative cost for 2004. If such allocation were preformed
    for 2004, it would not have a significant impact on segment
    operating results. See the table for 2005 costs that were
    allocated in the 2006 year, (in thousands).  Successor



PredecessorCompany



CompanyPeriod from



Period fromMarch 15, 2005



January 1, 2005through



throughDecember 31,



March 14,2005



2005North Sea

$
193



$
40West Africa







Other


490




103US


(683
)



(143
)   (4)
    
    Includes $2.2 million charge on loss on assets held for
    sale related to the impairment of the SWATH vessel.(5)
    
    Includes an impairment charge of $8.6 million on assets
    held for use and an impairment charge of $10.7 million on
    assets held for sale.(6)
    
    Includes property and equipment and deferred marine inspection
    costs. 84




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     2006


2005


2004Total assets for reportable
    segments

$
641,026


$
429,277


$
818,303Elimination of intersegment
    receivables


(27,768
)


(12,943
)


(8,288
)Elimination of investment in
    subsidiaries


(177,936
)


(72,112
)


(259,260
)Total consolidated assets

$
435,322


$
344,222


$
550,755     21.
    Quarterly
    Financial Data (Unaudited)  Year Ended December 31, 2006(1)

First


Second


Third


Fourth(Dollars in thousands, except per share amounts)Total revenues

$
51,832


$
61,456


$
68,537


$
66,892Operating income


19,553



20,249



23,961



24,627Net income

$
12,378


$
12,139


$
17,821


$
16,386Basic income per common share:Net income

$
0.85


$
0.83


$
1.22


$
1.12Average common shares outstanding


14,574,169



14,600,247



14,634,937



14,667,556Diluted income per common share:Net income

$
0.82


$
0.80


$
1.17


$
1.07Average common shares outstanding


15,042,889



15,170,537



15,254,877



15,274,223   PredecessorCompanyPeriod from



Successor CompanyJanuary 1, 2005



Period fromthrough



March 15, 2005March 14,



throughYear Ended December 31, 2005(2)

2005



March 31, 2005


Second


Third


Fourth(Dollars in thousands, except per share amounts)Total revenues

$
29,886



$
8,210


$
43,157


$
47,126


$
53,906Operating income


879




1,111



9,054



15,217



16,434Net income (loss)

$
(61,361
)


$
106


$
3,565


$
8,550


$
7,879Basic income (loss) per common
    share:Net income (loss)

$
(1.66
)


$
0.01


$
0.35


$
0.83


$
0.58Average common shares outstanding


36,908,505




10,064,447



10,224,348



10,294,250



13,504,657Diluted income (loss) per common
    share:Net income (loss)

$
(1.66
)


$
0.01


$
0.34


$
0.81


$
0.57Average common shares outstanding


36,908,505




10,293,357



10,438,659



10,577,956



13,924,371     (1)
    
    The first, second, third and fourth quarters included deferred
    revenues of $1.3 million, $1.3 million,
    $1.1 million, and $0.6 million, respectively. In the
    third quarter of 2006, the Company recognized a loss of
    $3.2 million on assets held for sale due to the impairment
    of the SWATH vessel and a foreign exchange gain of
    $2.2 million 85




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  due to the establishment of a $45.5 million dollar
    U.S. dollar account held in a Norwegian subsidiary in June
    of 2006.(2)
    
    In the period from January 1, 2005 through March 14,
    2005, the Company recognized a gain on debt discharge of
    $166.5 million, fresh-start adjustments of
    $219.0 million and reorganizations costs of
    $6.7 million due to the Companys reorganization. The
    period March 15, 2005 through March 31, 2005, and the
    second, third and fourth quarters included deferred revenues of
    $0.6 million, $3.2 million $3.2 million, and
    $3.1 million, respectively. In the fourth quarter of 2005,
    the Company recognized a loss of $2.2 million on assets
    held for sale due to the impairment of the SWATH vessel, gain on
    sale of assets of $1.8 million and a loss on early
    repayment of debt of $4.0 million.  22.
    Subsequent
    Events  Senior
    Convertible Debentures
    business-day trading-day
       86




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Assets
    held for Sale Update
    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   87




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Internal Control  Integrated Framework
      Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information   88




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##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules          page E-1.
 89




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##### Table of Contents



SIGNATURES
      Trico Marine Services,
    Inc.
   By:
    /s/  Trevor
    Turbidy  Trevor Turbidy
 President and Chief Executive Officer
      Signature

Title

Date/s/  Trevor
    TurbidyTrevor
    Turbidy

President, Chief Executive Officer
    and Director (Principal Executive Officer)

March 1, 2007/s/  Geoff
    A.
    JonesGeoff
    A. Jones

Vice President and Chief Financial
    Officer (Principal Financial Officer and Principal Accounting
    Officer)

March 1, 2007/s/  Joseph
    S.
    CompofeliceJoseph
    S. Compofelice

Non-executive Chairman of the
    Board of Directors

March 1, 2007/s/  Per
    StaehrPer
    Staehr

Director

March 1, 2007/s/  Richard
    A.
    BachmannRichard
    A. Bachmann

Director

March 1, 2007/s/  Edward
    C.
    Hutcheson, Jr.Edward
    C. Hutcheson, Jr.

Director

March 1, 2007/s/  Myles
    W.
    ScogginsMyles
    W. Scoggins

Director

March 1, 2007/s/  Kenneth
    M.
    BurkeKenneth
    M. Burke

Director

March 1, 2007  90




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##### Table of Contents



TRICO
    MARINE SERVICES, INC. AND SUBSIDIARIES
    Valuation and Qualifying Accounts
    for the Years ended December 31, 2006, 2005 and 2004
    (in thousands)
  Column A

Column B


Column C


Column C


Column D


Column EChargedBalance at


(Credited)


Charged





Balance atbeginning


to costs and


to other


Recoveries


end ofDescription

of period


expenses


accounts


(Deductions)


period2006Valuation allowance on deferred tax
    assets:

$
43,824


$



$
(16,442
)

$
9,317


$
36,699Deducted in balance sheet from
    accounts receivable:Allowance for doubtful
    accounts  trade

$
1,396


$
616


$
24


$
(191
)

$
1,845Allowance for doubtful
    accounts  non-trade

$



$
618


$



$



$
618The Period from March 15,
    2005 through December 31, 2005Valuation allowance on deferred tax
    assets:

$
104,221


$



$



$
(60,397
)

$
43,824Deducted in balance sheet from
    accounts receivable:Allowance for doubtful
    accounts  trade

$
724


$
738


$



$
(66
)

$
1,396Predecessor
    CompanyThe Period from January 1,
    2005 through March 14, 2005Valuation allowance on deferred tax
    assets:

$
70,020


$
34,201


$



$



$
104,221Deducted in balance sheet from
    accounts receivable:Allowance for doubtful
    accounts  trade

$
1,233


$
448


$
12


$
(969
)

$
7242004Valuation allowance on deferred tax
    assets:

$
47,744


$
22,276


$



$



$
70,020Deducted in balance sheet from
    accounts receivable:Allowance for doubtful
    accounts  trade

$
542


$
947


$
11


$
(267
)

$
1,2332003Valuation allowance on deferred tax
    assets:

$
32,997


$
14,459


$
288


$



$
47,744Deducted in balance sheet from
    accounts receivable:Allowance for doubtful
    accounts  trade

$
422


$
120


$



$



$
542  91




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##### Table of Contents



TRICO
    MARINE SERVICES, INC.
 EXHIBIT INDEX    ExhibitNumber2
.1

Joint Prepackaged Plan of
    Reorganization of the Company, Trico Marine Assets, Inc. and
    Trico Marine Operators, Inc. under Chapter 11 of the United
    States Bankruptcy Code (incorporated by reference to
    Exhibit 2.1 to our Current Report on
    Form 8-K
    dated November 12, 2004).2
.2

Plan Support Agreement, as
    amended, dated September 8, 2004 (incorporated by reference
    to Exhibit 10.1 to our Current Report on
    Form 8-K
    dated September 10, 2004).3
.1

Second Amended and Restated
    Certificate of Incorporation of the company (incorporated by
    reference to Exhibit 3.1 to our Current Report on
    Form 8-K
    dated March 16, 2005).3
.2

Third Amended and Restated Bylaws
    of the Company (incorporated by reference to Exhibit 3.1 to
    our Current Report on
    Form 8-K
    dated June 16, 2005).4
.1

Specimen Common Stock Certificate
    (incorporated by reference to Exhibit 4.1 to our Annual
    Report on
    Form 10-K
    dated March 16, 2005).4
.2

Registration Rights Agreement,
    dated as of March 16, 2005, by and among the Company and
    the Holders named therein (incorporated by reference to
    Exhibit 4.1 to our Current Report on
    Form 8-K
    dated march 16, 2005).4
.3

Warrant Agreement, dated
    March 16, 2005 (incorporated by reference to
    Exhibit 4.2 to the Companys Current Report on
    Form 8-K
    dated March 16, 2005).4
.4

Form of Series A Warrant
    (incorporated by reference to Exhibit 4.3 to the
    companys Current Report on
    form 8-K/A
    dated March 21, 2005).4
.5

Form of Series B Warrant
    (incorporated by reference to Exhibit 4.4 to the
    Companys Current Report on
    Form 8-K/A
    dated March 21, 2005).10
.1*

Trico Marine Services, Inc. 2004
    Stock Incentive Plan (incorporated by reference to
    Exhibit 10.2 to our Current Report on
    Form 8-K
    dated March 16, 2005).10
.2*

Form of Key Employee Option
    Agreement (incorporated by reference to Exhibit 10.3 to our
    Current Report on
    form 8-K
    dated March 16, 2005).10
.3*

Form of Executive Option Agreement
    (incorporated by reference to Exhibit 10.4 to our Current
    Report on
    Form 8-K
    dated March 16, 2005).10
.4*

Director Option Agreement for
    Joseph S. Compofelice (incorporated by reference to
    Exhibit 10.5 to our Current Report on
    form 8-K
    dated March 16, 2005).10
.5*

Retirement Agreement for
    Non-Executive Chairman (incorporated by reference to
    Exhibit 10.8 to our Current Report on
    Form 8-K
    dated March 16, 2005).10
.6*

Amendment to Retirement Agreement
    for Non-Executive Chairman (incorporated by reference to
    Exhibit 10.9 to our Current Report on
    form 8-K
    dated March 16, 2005).10
.7*

Schedule of Director Compensation
    Arrangements (incorporated by reference to Exhibit 10.10 to
    our Current Report on
    Form 8-K
    dated March 16, 2005).10
.8*

Employment Agreement dated as of
    September 1, 2005, between Trico Marine Services, Inc. and
    Geoff A. Jones (incorporated by reference to Exhibit 10.17
    to our Quarterly Report on
    form 10-Q
    dated November 3, 2005).10
.9*

Employment Agreement dated as of
    September 1, 2005, between Trico marine Services, inc. and
    Trevor Turbidy (incorporated by reference to Exhibit 10.19
    to our Quarterly Report on
    Form 10-Q
    dated November 3, 2005).10
.10*

Shipbuilding Contract 2000, dated
    as of March 31, 2006, by and between Trico Shipping A S and
    Solstrand AS (incorporated by reference to Exhibit 10.1 of
    our Current Report on
    Form 8-K
    dated April 6, 2006).10
.11*

Employment Agreement, effective as
    of May 8, 2006, by and between Trico Marine Services, Inc.
    and Larry D. Francois (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    dated May 22, 2006). E-1




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##### Table of Contents



ExhibitNumber10
.12*

Amended and Restated Employment
    Agreement, effective as of July 1, 2006, by and between
    Trico Marine Services, Inc. and Rishi Varma (incorporated by
    reference to Exhibit 10.3 to our Current Report on
    Form 8-K
    dated July 6, 2006).10
.13*

Shareholders Agreement, dated as
    of December 20, 2005, by and between Trico Marine Services
    (Hong Kong) Limited and China Oilfield Services Limited
    (incorporated by reference to Exhibit 10.1 to our Current
    Report on
    Form 8-K
    dated July 6, 2006).10
.14*

Employment Agreement, effective as
    of July 5, 2006, by and between Trico Marine Services, Inc.
    and Robert V. OConnor (incorporated by reference to
    Exhibit 10.4 to our Current Report on
    Form 8-K
    dated July 6, 2006).10
.15

Amended to the Shareholders
    Agreement, dated as of June 29, 2006, by and among Trico
    Marine Services (Hong Kong) Limited, China Oilfield Services
    Limited and Eastern Marine Services Limited (incorporated by
    reference to Exhibit 10.2 to our Current Report on
    Form 8-K
    dated July 6, 2006).10
.16

Construction Contract, by and
    between Trico Marine Assets, Inc. and Bender
    Shipbuilding & Repair Co. Inc. (incorporated by
    reference to Exhibit 1.1 to our Current Report on
    Form 8-K
    dated September 8, 2006).Amended and Restated Employment
    Agreement dated as of January 23, 2007, between Trico
    Marine Services, Inc. and D. Michael Wallace (incorporated by
    reference to Exhibit 10.1 to our Current Report on
    Form 8-K
    dated January 29, 2007).10
.17*

Trico Annual Incentive Plan
    (incorporated by reference to Exhibit 10.1 to our Current
    Report on
    Form 8-K
    dated February 7, 2006).10
.18(1)

Indenture of Trico Marine
    Services, Inc. and Wells Fargo Bank, National Association, as
    Trustee, dated February 7, 2007.10
.19(1)

Registration Rights Agreement, by
    and among Trico Marine Services, Inc. and the Initial
    Purchasers, dated February 7, 2007.12
.1

Earning to Fixed Charges Ratio.(1)14
.1

Financial Code of Ethics
    (incorporated by reference to Exhibit 14.1 to our Annual
    Report on
    Form 10-K
    dated March 16, 2005).21
.1

Subsidiaries of the Company.(1)23
.1

Consents of experts and counsel.(1)31
.1

Chief Executive Officers
    Certification under Section 302 of the Sarbanes-Oxley Act
    of 2002.(1)31
.2

Chief Financial Officers
    Certification under Section 302 of the Sarbanes-Oxley Act
    of 2002.(1)32
.1

Officers certifications
    pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.(1)     *
    
    Management Contract or Compensation Plan or Arrangement.  (1)
    
    Filed herewith E-2