SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997

                         Commission File Number 0-28732

                            HVIDE MARINE INCORPORATED
             (Exact name of registrant as specified in its charter)

              Florida                                      65-0524593
    State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                         Identification Number)

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

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

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

          Securities registered pursuant to Section 12(g) of the Act:  Class A
Common Stock, $.001 par value

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

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

     The  aggregate  market  value  of the  registrant's  Common  Stock  held by
non-affiliates  of the registrant as of March 27, 1998 (computed by reference to
the closing price of such stock on the Nasdaq National Market) was $213,675,000.

         As of March 16, 1998, there were 12,384,666  shares of the registrant's
Class A Common  Stock  outstanding  and  2,906,465  shares of its Class B Common
Stock outstanding.

                        DOCUMENTS INCORPORATED BY REFERENCE

                       DOCUMENT                               WHERE INCORPORATED

Portions of the Registrant's definitive Proxy Statement
regarding the 1997 Annual Meeting of Stockholders                  Part III

--------------------------------------------------------------------------------



<PAGE>



                          HVIDE MARINE INCORPORATED

                                  FORM 10-K


                               Table of Contents
<TABLE>
<CAPTION>

Item                                                                                                           Page


                                                      Part I
<S>      <C>                                                                                                 <C>
 1       Business...........................................................................................   1
 2       Properties.........................................................................................  21
 3       Legal Proceedings..................................................................................  21
 4       Submission of Matters to a Vote of Security Holders................................................  22
 4a      Executive Officers of the Registrant...............................................................  23

                                                      Part II

 5       Market for Registrant's Common Equity and Related Stockholder Matters.............................   26
 6       Selected Financial Data............................................................................  26
 7       Management's Discussion and Analysis of Financial Condition and Results of
         Operations.........................................................................................  28
 8       Financial Statements...............................................................................  40
 9       Changes in and Disagreements With Accountants on Accounting and Financial
         Disclosure.........................................................................................  40

                                                     Part III

10       Directors and Executive Officers of the Registrant.................................................  41
11       Executive Compensation.............................................................................  41
12       Security Ownership of Certain Beneficial Owners and Management.....................................  41
13       Certain Relationships and Related Transactions.....................................................  41

                                                      Part IV

14       Exhibits, Financial Statement Schedules and Reports on Form 8-K....................................  42

</TABLE>


<PAGE>



                                 PART I

Item 1.  Business

General

         Hvide  Marine  Incorporated  ("Hvide" or the  "Company")  is one of the
world's leading providers of marine support and transportation services, serving
primarily  the energy and  chemical  industries.  The Company has been an active
consolidator in each of the markets in which it operates,  increasing its vessel
fleet from 23 vessels in 1993 to 267 vessels as of March 13, 1998.  As a result,
the Company is the third largest  operator of offshore energy support vessels in
the U.S. Gulf of Mexico, the largest operator of offshore energy support vessels
in the Arabian Gulf, and a leading operator of such vessels offshore West Africa
and Southeast Asia. In addition,  the Company is the sole provider of commercial
tug services at Port  Everglades,  Tampa,  and Port  Canaveral,  Florida,  and a
leading provider of such services in Mobile,  Alabama, Lake Charles,  Louisiana,
and Port Arthur,  Texas.  The Company  also  transports  petroleum  products and
specialty  chemicals  in the  U.S.  domestic  trade,  a  market  insulated  from
international competition under the Jones Act.

         During 1997 and early  1998,  the Company  substantially  expanded  its
offshore energy support  operations into several new  international  markets and
increased its deepwater capability. Beginning with the May 1997 acquisition of a
35-vessel  fleet of offshore  energy  support  vessels  operating in the Arabian
Gulf,  the  Company has  substantially  expanded  its  offshore  energy  support
operations  into  several  international  markets and  increased  its  deepwater
capability.  Since the May 1997  acquisition,  the  Company has  completed  five
substantial  acquisitions (the "Recent Acquisitions") that have further expanded
its offshore  energy  support fleet  internationally  and increased its domestic
offshore and harbor  towing and  petroleum  product  transportation  operations.
These have consisted of (i) the October 1997  acquisition of 30 offshore  energy
support vessels operating  primarily in the Arabian Gulf, (ii) the December 1997
acquisition of 14 offshore  energy support  vessels  operating  primarily in the
Arabian Gulf,  (iii) the February 1998 acquisition of 37 offshore energy support
vessels  operating  primarily  offshore West Africa and Southeast Asia, (iv) the
October  1997  acquisition  of a company  operating  14 tugs that  expanded  the
Company's harbor towing  operations to the port of Tampa,  Florida,  and (v) the
March 1998  acquisition of two petroleum  product carriers and seven harbor tugs
operating in Port Arthur, Texas and Lake Charles, Louisiana.

The Industry

   Marine Support Services

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

         The market for offshore energy support services is fundamentally driven
by the offshore exploration,  development,  and production activities of oil and
gas companies worldwide. The level of exploration,  development,  and production
activities  depends  primarily  on  the  capital  expenditures  of oil  and  gas
producers,  which is a function  of current and  anticipated  future oil and gas
production and prices and operating costs of oil and gas producers.  Oil and gas
prices are influenced by a variety of factors,

                                                         1

<PAGE>



including worldwide demand,  production levels,  governmental policies regarding
exploration  and  development  of reserves,  and political  factors in producing
countries.

         The types of vessels  primarily  utilized  in offshore  energy  support
activities are supply boats, crew boats, and anchor handling vessels.

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

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

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

         Offshore and Harbor  Towing.  Offshore and harbor  towing  services are
provided by tugs to vessels utilizing the ports in which the tugs operate and to
vessels at sea to the extent required by environmental regulations, casualty, or
other  emergency.  The Company's  anchor handling  tug/supply boats and offshore
towing-equipped  tugs  have been  engaged  in  towing a wide  variety  of barges
carrying  heavy  equipment,  refinery  modules,  and petroleum  products for the
energy  industry  in the  U.S.  Gulf of  Mexico,  the  Atlantic  Ocean,  and the
Mediterranean Sea. In the case of docking services, charges are based on a fixed
rate per job, and in the case of towing  services,  on hourly or daily rates. In
most ports, including Tampa, Florida, competition is unregulated, although a few
ports--including  Port Canaveral and Port  Everglades,  where the Company is the
sole franchisee--grant  non-exclusive franchises to harbor tug operators.  Rates
are  unregulated  in the  franchised  ports served by the Company.  Each port is
generally a distinct  market for harbor  tugs,  even  though  harbor tugs can be
moved from port to port.  Demand for towing services  depends on vessel traffic,
which is in turn generally dependent on local and national economic  conditions.
OPA 90 and current state  legislation  require oil tankers to be escorted in and
around certain ports located in Alaska and the U.S.  Pacific coast.  The Company
anticipates that such regulatory  requirements will be expanded,  increasing the
demand for specially designed tractor tugs to perform escort services.



                                                         2

<PAGE>



   Marine Transportation Services

         Chemical Transportation. In the domestic chemical transportation trade,
vessels carry chemicals primarily from chemical manufacturing plants and storage
tank facilities  along the U.S. Gulf of Mexico coast to industrial  users in and
around the Atlantic and Pacific coast ports. The chemicals primarily transported
are  caustic  soda,  alcohols,  chlorinated  solvents,  paraxylene,   alkylates,
toluene,  methyl tertiary butyl ether (MTBE),  phosphoric  acid, and lubricating
oils. Since 1989, coastwise chemical tonnage demand has increased as a result of
the general  expansion of the U.S. economy and as gasoline  additives have begun
to move  coastwise.  Certain  of the  chemicals  transported  must be carried in
vessels  with  specially  coated or stainless  steel cargo tanks.  Many are very
sensitive to contamination and require special cargo-handling equipment.

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

The Company's Operations

   Fleet Overview

         The following table sets forth certain  information with respect to the
vessels owned or operated by the Company as of March 10, 1998:
<TABLE>
<CAPTION>


                                                                                                     Number of
                                                                                                      Vessels
<S>                                                                                                 <C>
Marine Support Services
   Domestic Offshore Energy Support
     Supply Boats.................................................................................        28
     Crew/Utility Boats...........................................................................        41
     Geophysical Boats............................................................................         2
                                                                                                    --------
     Total Domestic Offshore Energy Support.......................................................        71
   International Offshore Energy Support
     Anchor Handling Tug/Supply Boats.............................................................        41
     Anchor Handling Tugs.........................................................................        24
     Supply Boats.................................................................................        12
     Crew/Utility Boats...........................................................................        33
     Geophysical Boats............................................................................         3
     Other........................................................................................        11
                                                                                                    --------
       Total International Offshore Energy Support................................................       124
   Offshore and Harbor Towing
     Tugs.........................................................................................        38
                                                                                                    --------
       Total Marine Support Services..............................................................       233
</TABLE>


                                                         3

<PAGE>


<TABLE>
<S>                                                                                                 <C>
Marine Transportation Services
   Chemical/Petroleum Product Carriers............................................................         8
   Fuel Barges....................................................................................        16
   Towboats.......................................................................................        10
                                                                                                    --------
       Total Marine Transportation Services.......................................................        34
                                                                                                    --------
       Total Vessels..............................................................................       267
                                                                                                    ========
</TABLE>

   Marine Support Services

         Offshore Energy Support.  The Company has provided  services to the oil
and gas drilling  industry since 1989, when it acquired its first eight offshore
supply boats. In a series of acquisitions  and new buildings from September 1994
through  March 1998 the  Company  expanded  its  domestic  fleet to 71  vessels,
consisting of 28 supply boats,  including six anchor handling  tug/supply boats,
39 crew boats, two utility boats, and two geophysical  boats. These vessels have
primarily  served  exploration  and  production  operations  in the U.S. Gulf of
Mexico, operating from the Company's facilities in Lafayette, Louisiana.

         Beginning in May 1997, the Company began the  substantial  expansion of
its  international  offshore  energy  support fleet.  The primary  international
markets  served by the Company are the Arabian Gulf and offshore West Africa and
Southeast Asia, and the Company's  international fleet aggregated 124 vessels as
of March 10, 1998,  including 41 anchor  handling  tug/supply  boats,  24 anchor
handling  tugs,  12 supply boats,  16 crew boats,  and 17 utility  vessels.  The
Company's  Arabian Gulf  operations  are directed from its  facilities in Dubai,
United Arab Emirates. Operations offshore West Africa, as well as those of eight
vessels that  currently  operate in Southeast  Asia,  will be conducted at least
through June 1998 by an affiliate of Geneva-based Care Offshore, Inc. which sold
37 vessels  operated in those regions to the Company in February 1998,  pursuant
to a  management  agreement  with  the  Company.  The  remaining  operations  in
Southeast Asia are directed from the Company's facilities in Brunei.

     U.S.  Operations.  The  following  tables  set  forth  certain  information
concerning the offshore  energy support vessels owned or operated by the Company
in the U.S. Gulf of Mexico as of March 10, 1998.
<TABLE>
<CAPTION>

                                                       Length      Year Built/                     Area of
Supply Boat Name (1)                                   (feet)        Rebuilt        Horsepower     Operation
<S>                                                   <C>         <C>                 <C>           <C>
Seabulk New York...................................      234        1975/1997          4,300          U.S. Gulf
Seabulk New Jersey.................................      234        1975/1997          4,300          U.S. Gulf
Seabulk Oklahoma...................................      205          1998             4,000          U.S. Gulf
Seabulk Minnesota..................................      205        1976/1997          2,250          U.S. Gulf
Seabulk Montana(2).................................      205        1974/1994          5,350          U.S. Gulf
Seabulk Nevada(2)..................................      200        1977/1997          5,750          U.S. Gulf
Seabulk Massachusetts(2)...........................      191          1980             3,900          U.S. Gulf
Seabulk North Carolina(2)(3).......................      190        1979/1993          4,000          U.S. Gulf
Seabulk Arkansas...................................      185        1982/1997          2,250          U.S. Gulf
Seabulk Missouri...................................      185        1982/1997          2,250          U.S. Gulf
Seabulk Colorado...................................      185        1982/1997          2,250          U.S. Gulf
Seabulk Connecticut(2).............................      185          1981             3,900          U.S. Gulf
Seabulk Pennsylvania(2)............................      185          1979             3,900          U.S. Gulf
Seabulk Hawaii.....................................      180        1979/1995          3,000          U.S. Gulf
</TABLE>

                                                         4

<PAGE>


<TABLE>
<S>                                                 <C>          <C>              <C>          <C>
Seabulk Georgia....................................      180          1984             3,000          U.S. Gulf
Seabulk California.................................      180          1982             2,250          U.S. Gulf
Seabulk Florida....................................      180          1982             2,250          U.S. Gulf
Seabulk Alabama....................................      180          1982             2,250          U.S. Gulf
Seabulk Texas......................................      180          1982             2,250          U.S. Gulf
Seabulk Louisiana..................................      180          1982             2,250          U.S. Gulf
Seabulk Rhode Island...............................      180          1980             2,700          U.S. Gulf
Seabulk New Hampshire..............................      180          1980             1,950          U.S. Gulf
Seabulk Kentucky...................................      175        1983/1997          2,400          U.S. Gulf
Seabulk Washington.................................      175        1978/1997          2,250          U.S. Gulf
Seabulk Tennessee..................................      175          1983             2,400          U.S. Gulf
Seabulk Oregon.....................................      175          1979             2,250          U.S. Gulf
Seabulk Maryland(3)................................      165          1980             1,860          U.S. Gulf
Seabulk Virginia(3)................................      165          1979             1,860          U.S. Gulf

                                                       Length      Year Built/                     Area of
Crew Boat Name (1)                                     (feet)        Rebuilt        Horsepower     Operation

Seabulk St. Tammany................................      152          1997             4,400          U.S. Gulf
Seabulk St. Frances................................      152          1996             4,400          U.S. Gulf
Seabulk St. Charles(4).............................      152          1993             3,820          U.S. Gulf
Seabulk Acadia.....................................      135          1995             3,300          U.S. Gulf
Seabulk Monroe.....................................      135          1993             3,056          U.S. Gulf
Seabulk Grant......................................      135          1991             3,056          U.S. Gulf
Seabulk DeSoto.....................................      135          1991             3,056          U.S. Gulf
Seabulk Lexington..................................      135          1991             3,056          U.S. Gulf
Seabulk Winn.......................................      135          1991             3,056          U.S. Gulf
Seabulk Galveston..................................      135          1990             3,056          U.S. Gulf
Seabulk Bossier....................................      135          1990             3,056          U.S. Gulf
Seabulk LaFourche..................................      130          1991             2,040          U.S. Gulf
Seabulk Houston....................................      125          1985             2,600          U.S. Gulf
Seabulk Lafayette..................................      125          1985             2,040          U.S. Gulf
Seabulk Starr......................................      120          1984             2,040          U.S. Gulf
ThunderU.S.A.......................................      120          1984             2,040          U.S. Gulf
Seabulk Lamar......................................      120          1980             2,040          U.S. Gulf
Seabulk Liberty....................................      110          1985             2,040          U.S. Gulf
Seabulk Jefferson..................................      110          1982             2,040          U.S. Gulf
Seabulk Mobile.....................................      110          1982             2,040          U.S. Gulf
Seabulk Evangeline.................................      110          1981             2,040          U.S. Gulf
Seabulk Feliciana..................................      110          1981             2,040          U.S. Gulf
Seabulk Duval(5)...................................      110          1980             2,820          U.S. Gulf
Seabulk Jasper(5)..................................      110          1980             2,820          U.S. Gulf
Seabulk Madison....................................      110          1980             2,040          U.S. Gulf
Seabulk Bay........................................      110          1980             2,040          U.S. Gulf
Seabulk Beauregard.................................      110          1980             2,040          U.S. Gulf
Seabulk Nassau.....................................      110          1979             2,040          U.S. Gulf
Ralph Thompson(5)..................................      110          1978             2,820          U.S. Gulf
</TABLE>

                                                         5

<PAGE>


<TABLE>
<S>                                                  <C>       <C>                <C>            <C>
Seabulk Albany(5)..................................      110          1978             2,820          U.S. Gulf
Seabulk Aransas....................................      110          1978             2,100          U.S. Gulf
Seabulk Baldwin(5).................................      110          1976             2,400          U.S. Gulf
Seabulk Claiborne(5)...............................      110          1975             2,400          U.S. Gulf
Thundereagle.......................................      100        1977/1995          1,530          U.S. Gulf
Seabulk Cameron....................................      100        1976/1995          1,530          U.S. Gulf
Thundercat.........................................      100        1976/1995          1,530          U.S. Gulf
Seabulk Sabine.....................................      100        1976/1995          1,530          U.S. Gulf
Seabulk Bolivar(5).................................      90           1974             1,650          U.S. Gulf
Seabulk Maverick...................................      85           1976             1,200          U.S. Gulf

                                                       Length     Year Built/                        Area of
Utility Vessel Name(1)                                 (feet)        Rebuilt        Horsepower     Operation

Seabulk Tallahassee................................      135          1978             2,250          U.S. Gulf
Seabulk Baton Rouge(5).............................      100          1981              910           U.S. Gulf

                                                       Length     Year Built/                             Area of
Geophysical Boat Name                                  (feet)        Rebuilt        Horsepower     Operation

Seabulk Veritas(6).................................      194        1973/1997          4,400          U.S. Gulf
Seabulk Austin(7)..................................      110          1978             1,080          U.S. Gulf

</TABLE>

(1)      Certain names reflect name changes currently in process.
(2)      Anchor handling tug/supply vessel.
(3)      The  Company  is  bareboat  charterer  and  operator  with an option to
         purchase  the vessel at the end of the  bareboat  charter for a nominal
         amount.
(4)      The  Company  is  bareboat  charterer  and  operator  with an option to
         purchase the Seabulk St. Charles, at the end of the bareboat charter in
         2002 for $400,000.
(5)      The  Company  is  bareboat  charterer  and  operator  with an option to
         purchase  the vessel at the end of the  bareboat  charter for a nominal
         amount.
(6)      Supply boat.
(7)      Utility vessel.

         International  Operations.  The  following  tables  set  forth  certain
information  concerning the offshore energy support vessels owned or operated by
the Company in international waters as of March 10, 1998.

<TABLE>
<CAPTION>
Anchor Handling                                        Length      Year Built/                         Area of
Tug/Supply Vessel Name(1)                              (feet)        Rebuilt        Horsepower     Operation
<S>                                                  <C>       <C>              <C>             <C>
Red Tern...........................................      236          1982            10,560          Argentina
Red Raven..........................................      223          1980            10,560         West Africa
Red Rooster........................................      223          1980            10,560          North Sea
Seabulk Falcon II..................................      213          1975             7,040         West Africa
Red Condor.........................................      213          1975             7,040         West Africa
Red Cormorant......................................      212          1980             7,040         West Africa
</TABLE>

                                                         6

<PAGE>


<TABLE>
<S>                                                  <C>       <C>              <C>             <C>
Red Hawk...........................................      211          1975             8,000       Southeast Asia
Red Coot I.........................................      211          1975             7,040         West Africa
Red Coot II........................................      211          1975             7,040         West Africa
Seabulk Betsy......................................      210          1982             8,620        Arabian Gulf
Seabulk Persistence................................      204          1975             5,750        Arabian Gulf
Red Dove...........................................      203          1991             5,800         West Africa
Red Toucan.........................................      203          1985             8,430          Argentina
Seabulk Treasure Island............................      202          1982             6,000        Arabian Gulf
Seabulk Emerald....................................      202          1981             6,100        Arabian Gulf
Red Penguin II.....................................      201          1975             8,600         West Africa
Red Petrel.........................................      201          1975             8,600       Southeast Asia
Red Plover.........................................      201          1975             8,600       Southeast Asia
Red Puffin.........................................      201          1975             8,600       Southeast Asia
Red Penguin........................................      201          1975             8,600        South Africa
Red Snipe..........................................      197          1982             5,300        South Africa
Seabulk Lulu.......................................      197          1974             5,600        Arabian Gulf
Seabulk Neptune....................................      197          1973             6,160        Arabian Gulf
Seabulk Discovery..................................      195          1993             5,600        Arabian Gulf
Seabulk Defender...................................      193          1983             4,610        Arabian Gulf
Seabulk Liberty....................................      193          1973             4,500        Arabian Gulf
Red Grebe..........................................      192          1974             8,000          North Sea
Seabulk Energy.....................................      191          1990             5,300        Arabian Gulf
Seabulk Carol......................................      190          1982             8,620        Arabian Gulf
Seabulk Danah......................................      190          1976             3,900        Arabian Gulf
GMMOS Toota........................................      190          1975             3,900        Arabian Gulf
Seabulk Lark.......................................      189          1973             4,600       Southeast Asia
Red Osprey.........................................      186          1983             4,200         West Africa
Red Kestrel........................................      186          1982             4,200         West Africa
Red Merlin.........................................      186          1982             4,200         West Africa
Red Pelican........................................      186          1982             4,200         West Africa
Seabulk Saphire....................................      182          1983             3,000        Arabian Gulf
Seamark South Carolina(2)..........................      180          1983             3,000       Southeast Asia
Seabulk Nada.......................................      180          1974             3,000        Arabian Gulf
Seabulk Ruby.......................................      180          1974             3,000        Arabian Gulf
Seabulk Command....................................      175          1992             3,800        Arabian Gulf

                                                       Length     Year Built/                       Area of
Anchor Handling Tug Name(1)                            (feet)        Rebuilt        Horsepower     Operation

Tims 1.............................................      230          1979             4,900        Arabian Gulf
Red Gannet I.......................................      163          1977             7,500       Southeast Asia
Red Gannet II......................................      163          1977             7,500       Southeast Asia
Red Harrier........................................      162          1977             8,480        Arabian Gulf
Seabulk Duke.......................................      155          1983             5,750        Arabian Gulf
Red Eagle..........................................      150          1976             8,400       Southeast Asia
Red Skua I.........................................      147          1977             8,000         West Africa
Seabulk Master.....................................      146          1993             3,500        Arabian Gulf
</TABLE>

                                                         7

<PAGE>


<TABLE>
<S>                                                 <C>        <C>               <C>             <C>
Red Cygnet I.......................................      146          1974             6,000         West Africa
Red Cygnet II......................................      146          1974             6,000         West Africa
Seabulk Alkatar....................................      144          1981             6,000        Arabian Gulf
Seabulk Titan......................................      142          1976             7,200        Arabian Gulf
Seabulk Gabrielle .................................      140          1981             2,000        Arabian Gulf
Seabulk Sarah......................................      140          1981             2,000        Arabian Gulf
Seabulk Debbie.....................................      132          1983             2,000        Arabian Gulf
GMMOS Pride........................................      126          1978             5,000        Arabian Gulf
Seabulk Champ......................................      122          1993             2,300        Arabian Gulf
Seabulk Prince.....................................      116          1988             2,400        Arabian Gulf
Aries II...........................................      110          1983             3,477        Arabian Gulf
Seabulk Power......................................      105          1990             2,400        Arabian Gulf
Seabulk Isabel.....................................      97           1977             1,130        Arabian Gulf
Seabulk Knight.....................................      94           1975             2,200        Arabian Gulf
Seabulk Christopher................................      86           1977             1,800        Arabian Gulf
Seabulk Taurus.....................................      80           1982             1,400        Arabian Gulf

                                                       Length     Year Built/                         Area of
Supply Boat Name(1)                                    (feet)        Rebuilt        Horsepower       Operation

Red Swan(3)........................................      220          1976             4,200         West Africa
Red Martin I(3)....................................      200          1976             4,200         West Africa
Red Martin II(3)...................................      200          1976             4,200          North Sea
Seamark Mississippi(2).............................      180          1982             2,250       Southeast Asia
Seabulk Service....................................      180          1977             2,700        Arabian Gulf
Seabulk Trader.....................................      180          1975             2,318        Arabian Gulf
Seabulk Lara.......................................      180          1975             2,250        Arabian Gulf
Seabulk Voyager....................................      174          1974             2,000        Arabian Gulf
Seabulk Arabian....................................      173          1972             1,900        Arabian Gulf
Shell Star.........................................      168          1982             1,800        Arabian Gulf
GMMOS King.........................................      166          1970             1,700        Arabian Gulf
Seabulk Clipper(4).................................      165        1971/1992          3,000        Arabian Gulf

                                                       Length     Year Built/                          Area of
Crew Boat Name(1)                                      (feet)        Rebuilt        Horsepower       Operation

Red Mallard(5).....................................      145          1986             3,250         West Africa
Seabulk Tender.....................................      125          1978             2,240        Arabian Gulf
Capricorn III......................................      120          1983             2,040        Arabian Gulf
Red Swift(5).......................................      120          1980             2,040         West Africa
Seabulk Jebel Ali..................................      110          1991             1,550        Arabian Gulf
Seabulk Arzana.....................................      110          1991             1,550        Arabian Gulf
Virgo One..........................................      110          1982             2,040        Arabian Gulf
Seabulk Mubarrak...................................      110          1982             1,550        Arabian Gulf
Arctic Express.....................................      110          1981             2,040        Arabian Gulf
Lake Express.......................................      110          1981             2,040        Arabian Gulf
Red Heron(5).......................................      107          1981             1,530         West Africa
</TABLE>

                                                         8

<PAGE>


<TABLE>
<S>                                                 <C>        <C>              <C>             <C>
Seabulk Zakum......................................      105          1982             1,875        Arabian Gulf
Seabulk Penny......................................      105          1977             1,606        Arabian Gulf
Seabulk Bul Hanin..................................      102          1984             1,630        Arabian Gulf
Seabulk Explorer...................................      102          1979             1,530        Arabian Gulf
Seabulk Umm Shaif..................................      78         1973/1988          1,020        Arabian Gulf

                                                       Length     Year Built/                         Area of
Utility Vessel Name(1)                                 (feet)        Rebuilt        Horsepower       Operation

GMMOS Queen........................................      159          1969             1,500        Arabian Gulf
Seabulk Ibex.......................................      135          1972             2,400        Arabian Gulf
Seabulk Barracuda .................................      132          1984             2,000        Arabian Gulf
Seabulk Gazelle....................................      130          1982             1,200        Arabian Gulf
Seabulk Shindaga...................................      128          1982             1,200        Arabian Gulf
Seabulk Hatta......................................      120        1976/1993          1,140        Arabian Gulf
Seabulk Salihu.....................................      120        1976/1992          1,140        Arabian Gulf
Seabulk Falcon.....................................      120        1974/1992          1,140        Arabian Gulf
Seabulk Hamour.....................................      120        1974/1992          1,140        Arabian Gulf
Seabulk Eagle......................................      120          1989             1,500        Arabian Gulf
Seabulk Singali....................................      120          1981             1,272        Arabian Gulf
Seabulk Habara.....................................      120          1980             1,272        Arabian Gulf
Seabulk Shari......................................      120          1980             1,272        Arabian Gulf
Seabulk Houbare....................................      120          1980             1,272        Arabian Gulf
Seabulk Becky......................................      120          1980             1,130        Arabian Gulf
Seabulk Oryx.......................................      110        1980/1988          1,200        Arabian Gulf
Seabulk Seahorse...................................      100        1983/1992          1,000        Arabian Gulf

                                                       Length     Year Built/                         Area of
Geophysical Boat Name                                  (feet)        Rebuilt        Horsepower       Operation

Seabulk Wyoming....................................      185          1979             2,250         West Africa
Ross Seal..........................................      176        1977/1987          1,700       Southeast Asia
Seabulk Vermont....................................      176          1977             1,700        Arabian Gulf

Construction &                                         Length     Year Built/                         Area of
Maintenance Vessel Name                                (feet)        Rebuilt        Horsepower       Operation

Seabulk Giant......................................      207        1974/1990          4,200        Arabian Gulf
Seabulk Hercules...................................      200        1969/1986          4,300        Arabian Gulf
Seabulk Freedom....................................      194        1973/1996          4,600        Arabian Gulf

Accommodation                                          Length     Year Built/                        Area of
Jack-Up Rig Name                                       (feet)        Rebuilt        Horsepower      Operation

Seabulk Bravo......................................      150          1973              N/A         Arabian Gulf
</TABLE>



                                                         9

<PAGE>

<TABLE>
<CAPTION>

<S>                                                 <C>        <C>                <C>             <C>
Accommodation                                          Length     Year Built/                         Area of
Crane Barge Name                                       (feet)        Rebuilt        Horsepower       Operation

Seabulk Maintainer.................................      280        1966/1982           N/A         Arabian Gulf
Seabulk Constructor................................      180        1973/1994           N/A         Arabian Gulf

                                                       Length     Year Built/                         Area of
Survey Vessel Name                                     (feet)        Rebuilt        Horsepower       Operation

Red Fulmar.........................................      190          1968             2,400         West Africa

                                                       Length     Year Built/                          Area of
Tug Name(1)                                            (feet)        Rebuilt        Horsepower        Operation

Seabulk Princess(6)................................     230           1974            6,600          Arabian Gulf
Seabulk Dayna......................................      96           1973            3,200          Arabian Gulf
Seabulk Marlene....................................     103           1976            2,640          Arabian Gulf
Seabulk Diana......................................      99           1973            2,200          Arabian Gulf
</TABLE>


(1)  Certain names reflect name changes currently in process.
(2)  These offshore  supply boats are currently  chartered to a joint venture in
     which the Company has a 49% interest and are operated by the joint  venture
     in Southeast Asia. The Company receives  bareboat charter hire, which is at
     a rate  that  is  approximately  equivalent  to the  capital  costs  of the
     vessels,  and has the right to receive a 49% share of net  income  from the
     venture.  The joint  venture  has the right to  purchase  each  vessel  for
     $300,000 upon expiration of the charters in August 1998.
(3)  Platform/supply vessel.
(4)  Survey vessel.
(5)  Utility vessel.
(6)  Salvage vessel.

         Offshore  and Harbor  Towing.  The harbor tugs owned or operated by the
Company serve Port  Everglades,  Tampa,  and Port  Canaveral,  Florida,  Mobile,
Alabama,  Port Arthur,  Texas, and Lake Charles,  Louisiana where they primarily
assist  product  carriers,  barges,  other cargo  vessels,  and cruise  ships in
docking and undocking and in  proceeding  in confined  waters.  The Company also
operates eight tugs with offshore towing  capabilities that conduct a variety of
offshore  towing  services in the U.S. Gulf of Mexico and the Atlantic Ocean. In
addition,  the Company has  completed  the  construction  of one SDM(TM) and has
contracted for the construction of two additional  SDMs(TM) for delivery in 1998
which will augment the  Company's  harbor  towing  operations.  The Company also
charters three of its tugs to third-party operators in California.

         Port  Everglades.  Port  Everglades  has the second  largest  petroleum
non-refining  storage and  distribution  center in the United States,  providing
substantially all of the petroleum products for south Florida.  Since 1958, when
the  Company's  tug  operations  were  established,  the  Company  has enjoyed a
franchise as the sole provider of docking  services in the port.  That franchise
specifies,  among other things, that three tugs serving the port be less than 90
feet in length,  because of the  narrowness of slips in the port,  and that tugs
have  firefighting  capability.  The  franchise  is not  exclusive  and  another
operator  could be granted an  additional  franchise.  Although a  significantly
larger potential competitor sought a

                                                        10

<PAGE>



franchise in 1992, the Company won unanimous endorsement from the Port Authority
to continue its  sole-franchise  relationship with the port when that competitor
failed to make the requisite  showing of public need and necessity.  The current
franchise  expires  in  2007,  and  there  can be no  assurance  that it will be
renewed.

         Tampa.  The  Company  expanded  its harbor  towing  services  to Tampa,
Florida with the October 1997  acquisition  of Bay.  Tampa is the tenth  largest
port in the continental  United States in terms of tonnage.  Because the port is
comprised of three "sub-ports" and a distant sea-buoy,  a greater number of tugs
is required in order to be a  competitive  operator in Tampa than in other ports
of similar size. The Company currently operates 11 tugs, including three tractor
tugs, in the port and is Tampa's sole provider of harbor towing services.

         Port Canaveral. The Company expanded its services in the early 1960s to
Port  Canaveral,  Florida  where,  like  Port  Everglades,  it also has the sole
franchise  from the port  authority to provide  harbor  docking  services.  Port
Canaveral  is the smallest of the  Company's  harbor tug  operations,  providing
docking and undocking  services for  commercial  cargo vessels  serving  central
Florida and for cruise  ships  visiting  the Disney  World/Kennedy  Space Center
attractions.  The  Company's  franchise  is a  month-to-month  arrangement  and,
although  there can be no assurance  that the Company will be able to retain its
franchise in Port Canaveral,  there has been no challenge to the franchise since
1984.

         Mobile.  In 1988, the Company  purchased a division of a towing company
operating  in the  port of  Mobile,  Alabama.  The  port  provides  docking  and
undocking  services  primarily for commercial cargo vessels,  including  vessels
transporting  coal and other bulk exports.  At the time, that division  operated
three harbor tugs in Mobile. The Company added additional equipment and believes
it significantly  upgraded the quality and performance of the tug service,  thus
enabling  the Company to increase its market share to over 50% of the harbor tug
business in that port.

         Recent   Acquisition.   In  March  1998,  the  Company   completed  the
acquisition  of seven  harbor  tugs.  Currently,  four of these  tugs serve Port
Arthur, Texas, two serve Lake Charles,  Louisiana,  and one serves both harbors.
The Company expects to continue to operate the tugs in both of these ports, each
of which has a competing provider of harbor tug services.

         The following table sets forth certain  information with respect to the
37 tugs and one SDM(TM)  owned or  operated by the Company in U.S.  waters as of
March 10, 1998.

<TABLE>
<CAPTION>

                                                               Length       Year Built/
Vessel Name(1)                                Horsepower      (feet)         Rebuilt              Port
<S>                                           <C>              <C>        <C>               <C>
Kinsman Eagle II(2)(3)(4)................        6,700           110          1996                Tampa
Kinsman Condor(2)(3)(4)..................        6,700           110          1995                Tampa
Hawk(2)..................................        6,700           110          1995                Tampa
Tampa....................................        6,000           100          1985                Tampa
Broward(2)(4)............................        5,100           100          1995           Port Everglades
Vigilant(4)..............................        4,600           120        1981/1994           Offshore
New River(5).............................        4,400           90           1997           Port Everglades
Reliant(2)...............................        4,300           100          1996             Long Beach
Ft. Lauderdale...........................        4,200           90         1971/1996        Port Everglades
Hollywood(4).............................        4,200           106        1985/1997           Offshore
</TABLE>

                                                        11

<PAGE>

<TABLE>

<S>                                          <C>             <C>        <C>                <C>
Mobile Power.............................        4,100           98         1957/1986            Mobile
Z-Two(2)(6)..............................        4,100           94           1996               Mobile
Mobile Point.............................        4,000           107     1952/1990/1997          Mobile
Winslow C. Kelsey(2).....................        3,900           98           1985                Tampa
Nike.....................................        3,900           97           1982             Port Arthur
Titan....................................        3,900           96           1977            Lake Charles
Spartan..................................        3,900           96           1979             Port Arthur
Samson...................................        3,900           96           1980             Port Arthur
Goliath..................................        3,900           96           1981             Port Arthur
Challenger(4)............................        3,600           110          1976           Tampa/Offshore
Canaveral................................        3,600           105        1941/1984        Port Canaveral
Mobile Pride(4)..........................        3,300           107     1969/1989/1997         Offshore
Paragon(4)...............................        3,300           105     1978/1989/1996         Offshore
St. Petersburg...........................        3,300           95           1940                Tampa
Hillsborough.............................        3,300           94         1945/1981             Tampa
Clearwater...............................        3,300           93           1940                Tampa
Delta Deanna(2)..........................        3,200           92           1988            San Francisco
Delta Billie(2)..........................        3,200           92           1990            San Francisco
Mobile Persistence(7)....................        3,000           98         1940/1975        Port Canaveral
Hermes...................................        3,000           95           1973            Lake Charles
Brevard..................................        2,400           88      1945/1986/1996      Port Canaveral
Captain Brinn............................        2,145           88         1960/1986        Port Canaveral
Everglades...............................        2,145           88         1956/1984        Port Everglades
Manatee..................................        2,145           88         1959/1982        Port Everglades
Orange...................................        2,000           93           1903                Tampa
Ares.....................................        1,950           97           1957           Lake Charles/Port Arthur
Ybor.....................................        1,400           85           1965                Tampa
Trooper..................................         800            63           1964                Tampa
</TABLE>

(1) Certain names reflect name changes currently in process.
(2) Tractor tug.
(3) Currently operated offshore Mexico.
(4) Equipped for offshore towing.
(5) SDM(TM).
(6) Vessel operated under a one-year bareboat charter.
(7) Expected  to be retired in the first half of 1998.

         SDMs(TM).  The  Company  accepted  delivery  of its first  ship-docking
module or SDM(TM) in November 1997. In addition,  the Company has contracted for
the construction of two additional  SDMs(TM) for delivery in 1998.  SDMs(TM) are
innovative  ship-docking  vessels  that are  designed  to be more  maneuverable,
efficient, and flexible than harbor tugs. In addition, they are expected to have
lower  operating costs than harbor tugs because they require fewer crew members.
Company  personnel,  working in conjunction with consulting marine engineers and
architects,  prepared the conceptual design and detailed  specifications for the
SDMs(TM). The Company has been awarded a patent on the design.



                                                        12

<PAGE>



   Marine Transportation Services

         Chemical  Transportation.  The  Company's  chemical  carriers  are  the
298,000-barrel,  39,300 dwt Seabulk Magnachem,  the  297,000-barrel,  46,300 dwt
Seabulk   America,   the   360,000-barrel,   50,900   dwt  HMI   Dynachem,   the
360,000-barrel, 49,990 dwt HMI Petrochem, and the 260,000-barrel, 37,100 dwt HMI
Astrachem,  which are primarily  engaged in the U.S.  domestic  chemical  parcel
trade.  The  Company  operates  the  Seabulk  Magnachem  pursuant to a long-term
bareboat  charter  expiring  February  2002.  The  Company  owns a 67%  economic
interest,  and Stolt  Tankers  (U.S.A.),  Inc.  owns the  remaining 33% economic
interest, in the Seabulk America.

         The Seabulk Magnachem,  the Seabulk America, the HMI Dynachem,  and the
HMI Petrochem  have full double  bottoms (as distinct from double hulls) and the
HMI Astrachem has a partial double  bottom.  Double  bottoms  provide  increased
protection  over single hull vessels from a spill in the event of a mishap.  The
Company's  chemical  carriers  have from 13 to 24 cargo  segregations  which are
configured,  strengthened,  and coated to handle various sized parcels of a wide
variety of industrial chemical and petroleum products giving them the ability to
handle a broader range of chemicals than chemical-capable product carriers. Many
of the chemicals  transported by the Company are hazardous  substances.  Voyages
are currently  generally  conducted from the Houston and Corpus Christi,  Texas,
and Lake  Charles,  Louisiana  areas to such  ports as New  York,  Philadelphia,
Baltimore,  Wilmington, North Carolina, Charleston, South Carolina, Los Angeles,
San Francisco, and Kalama, Washington.  Delivered in 1977, the Seabulk Magnachem
is a CATUG(R) ITB, which requires fewer personnel to operate than a conventional
carrier of equivalent size and has a higher level of  dependability,  propulsion
efficiency,  and performance than an ordinary tug and barge.  Delivered in 1990,
the Seabulk  America is the only vessel in the U.S.  domestic  trade  capable of
carrying  large  cargoes  of acid,  as a result  of its large  high-grade  alloy
stainless steel tanks, and the only such vessel strengthened to carry relatively
heavy  cargoes  such as  phosphoric  and  other  acids.  The  Seabulk  America's
stainless steel tanks were constructed without internal structure, which greatly
reduces cargo residue from transportation and results in less cargo degradation.
Stainless steel tanks,  unlike  epoxy-coated tanks, also do not require periodic
sandblasting  and recoating.  The Seabulk America was one of the first U.S.-flag
carriers to be  equipped  with  state-of-the-art  integrated  navigation,  cargo
control monitoring, and automated engine room equipment.

         Pursuant to the  requirements of OPA 90, the Seabulk  America,  the HMI
Dynachem,  the HMI Petrochem,  and the Seabulk Magnachem,  which were built with
full double  bottoms  but not double  sides,  cannot be  utilized  to  transport
petroleum and petroleum  products in U.S.  commerce after 2015,  2011, 2011, and
2007, respectively. The HMI Astrachem, which has a partial double bottom, cannot
be so utilized after 2000. They may, however,  be permitted to continue to carry
certain  chemicals in U.S.  commerce and may be  redocumented in another country
and transport chemicals in non-U.S.  trades. Although it has no current plans to
do so,  the ITB  design of the  Seabulk  Magnachem  would  allow the  Company to
replace only the cargo-carrying  portion of the vessel with a double-hull barge,
which  the  Company  anticipates  would be  substantially  less  expensive  than
constructing an entirely new double-hull conventional tank vessel.

         The Company markets the five chemical carriers through its wholly owned
subsidiary Ocean Specialty Tankers Corporation  ("OSTC").  The total capacity of
the five carriers  represents  approximately 47% of the capacity of the domestic
specialty  chemical carrier fleet,  and four of the chemical  carriers are among
the last independently owned carriers scheduled to be retired under OPA 90.


                                                        13

<PAGE>



         OSTC  books  cargoes  either on a spot  (movement-by-movement)  or time
basis.  Approximately  75% of  contracts  for  cargo are  committed  on a 12- to
30-month  basis,  with minimum and maximum  cargo  tonnages  specified  over the
period at fixed or escalating  rates per ton. The HMI Dynachem and HMI Astrachem
are  currently  chartered to major oil companies  under  charters that expire in
August  1998 and  November  1998,  respectively.  Upon the  expiration  of these
charters,  the Company intends to enter into new contracts of  affreightment  or
time charters to market those vessels. OSTC is often able to generate additional
revenues by chartering cargo space on competitors'  vessels and by expanding the
carriers' backhaul (return voyage) opportunities.

   Petroleum Product Transportation.

         Seabulk Challenger.  The Company's 320,000-barrel,  39,300 dwt CATUG(R)
ITB  Seabulk  Challenger  is  engaged  in the  transportation  of fuel and other
petroleum  products  from  refineries  in Texas and  Louisiana to tank farms and
industrial sites primarily in Port Everglades and Tampa,  Florida.  Delivered in
1975,  the  Seabulk  Challenger  has six  cargo  segregations  and was the first
CATUG(R) ITB  constructed in the world.  Like the Seabulk  Magnachem,  it enjoys
certain manning and other advantages over conventional tank vessels. In 1989 and
1991, the vessel had extensive steel renewals and tank recoatings.  In addition,
in 1991 the vessel was outfitted with an inert-gas  system at the expense of the
charterer.

         The Seabulk Challenger has been under continuous  contract to Shell Oil
Company  ("Shell") since its delivery in 1975 and to date has performed over 690
voyages for Shell.  In January  1990,  Shell  renewed the charter for a ten-year
period ending in January 2000. Under the charter, the Company is responsible for
operating  costs such as crew,  maintenance,  and insurance,  and Shell pays for
voyage  costs such as fuel and port  charges.  The charter hire rate is adjusted
annually for  inflation.  The charter may be canceled by Shell in July 1998 upon
payment of a percentage of the charter hire due over the  remaining  term of the
charter.  Shell has in the past  repeatedly  renewed  its charter of the Seabulk
Challenger,  and continues to fully utilize the vessel.  Because the termination
penalties  are  substantial,   and  Shell  has  provided   significant   capital
enhancement  to the vessel,  the Company  believes  that Shell will  continue to
charter the vessel until January 2000,  although  there can be no assurance that
it will do so. The  operating  lease under  which the Company  holds the Seabulk
Challenger will not extend beyond January 2000.

         Recent   Acquisition.   In  March  1998,  the  Company   completed  the
acquisition  of the 36,600 dwt  petroleum  product  carrier  Willamette  and the
32,200 dwt petroleum product carrier Concho.  The Company expects to operate the
vessels  under a contract  of  affreightment  with an oil  company  expiring  in
December  1999.  Pursuant  to OPA 90, the  Willamette  and the Concho  cannot be
utilized to transport  petroleum and petroleum  products in U.S.  commerce after
2008 and 2000,  respectively.  Although the seller of the Concho  applied to the
U.S. Coast Guard to extend its retirement date by reducing its gross  registered
tonnage  and cargo  capacity,  the Company  has not  determined  whether it will
pursue that application.

         Sun State. In September 1994, the Company acquired the marine assets of
Sun State Marine,  Inc. ("Sun State").  Sun State currently owns and operates an
energy transportation fleet of ten towboats and 16 fuel barges, all of which are
engaged in fuel transportation along the Atlantic  intracoastal  waterway and in
the St.  Johns River in  Florida.  Sun State has been in  operation  for over 50
years, and the Company continues to operate it as a wholly owned subsidiary, Sun
State Marine Services, Inc.

                                                        14

<PAGE>



         A majority of Sun State's  revenue for the year ended December 31, 1995
and 1996 was derived from a fuel  transportation  contract  with Florida Power &
Light  Company  ("FPL").  The  remainder  of its revenue was derived from a fuel
transportation  contract  with  another  customer  and its  marine  maintenance,
repair, and drydocking  facility.  Under its contract with FPL, which has a term
extending to  September  1998,  Sun State has agreed to transport  fuel oil from
Port  Canaveral  and  Jacksonville  to certain  FPL  electric  power  generating
facilities  at specified  rates (a  combination  of per diem and variable  rates
based upon barrels transported) with an escalation  provision.  The FPL contract
has a specified guaranteed minimum utilization provision.

         The following table sets forth certain  information with respect to the
Sun State towboats:
<TABLE>
<CAPTION>

                                                                                     Length       Year Built/
Vessel Name                                                       Horsepower         (feet)         Rebuilt
<S>                                                               <C>               <C>          <C>
Sun River City...............................................        1,000             64            1994
Sun Commander................................................        1,000             61          1968/1990
Sun Chief....................................................        1,000             64          1971/1990
Sun Merchant.................................................        1,000             65          1966/1994
Sun Trader...................................................         850              56          1972/1980
Sun St. Johns................................................         850              58          1961/1990
Sun Explorer.................................................         800              57            1980
Sun Gypsy....................................................         800              53          1976/1992
Sun Rebel....................................................         800              60          1957/1991
Sun Venture..................................................         800              66          1956/1986
</TABLE>

         The following table sets forth certain  information with respect to the
Sun State barges:

<TABLE>
<CAPTION>

                                                                     Barge           Length       Year Built/
Vessel Name                                                        Capacity          (feet)         Rebuilt
<S>                                                             <C>                 <C>         <C>
Sun State No. 1..............................................     25,684 bbls          290         1952/1994
Sun State No. 3..............................................     25,974 bbls          290         1962/1986
Sun State No. 4..............................................     25,974 bbls          290         1962/1984
Sun State No. 6..............................................     21,408 bbls          264         1950/1982
Sun State No. 7..............................................     20,700 bbls          264         1967/1990
Sun State No. 8..............................................     23,000 bbls          272           1970
Sun State No. 9..............................................     23,000 bbls          272           1970
Sun State 501................................................     4,880 bbls           126           1966
Sun State 701................................................     7,000 bbls           175           1942
Sun State 902................................................     9,500 bbls           195           1947
Sun State 1101...............................................     11,277 bbls          200           1963
Sun State 1102...............................................     12,000 bbls          200           1997
Sun State 2501...............................................     25,420 bbls          298           1973
Sun State 2701...............................................     28,780 bbls          298           1975
Sun State 2702...............................................     27,683 bbls          298           1973
Sun State 2703...............................................     28,780 bbls          298           1974
</TABLE>


                                                        15

<PAGE>



         OPA 90 requires all single-hull barges, including the Sun State barges,
to  discontinue  transporting  fuel and other  petroleum  products in 2015.  The
Company has recently constructed one double-hull barge at a cost of $1.0 million
and has purchased an additional four double-hull barges for an aggregate of $2.4
million. These four barges are currently being refurbished for an aggregate cost
of approximately $2.6 million.

         New Product  Carriers.  The Company has an 0.8% equity interest in four
45,300 dwt double-hull product carriers, currently under construction by Newport
News  Shipbuilding,  intended  to serve the  market  now  served by  single-hull
product  carriers  whose  retirement  is  mandated by OPA 90. The  vessels,  the
operations  of which will be managed by the  Company,  will  operate in the U.S.
domestic  trade  under  long- or  short-term  charters,  depending  upon  market
conditions.  The Company is also serving as the construction  supervisor  during
the construction period. Two of the vessels are currently scheduled for delivery
during the fourth  quarter of 1998,  with the remaining two to follow during the
first and second quarters of 1999.

         The aggregate cost of the four carriers is estimated at $200.0 million,
of  which  a  substantial  portion  is  being  financed  with  the  proceeds  of
government-guaranteed  Title XI ship financing bonds issued in March 1996. Until
its restructuring in March 1998, the project consisted of five product carriers,
and the Company had a conditional option to acquire an additional 49.2% interest
in the  vessels.  As a result of the  restructuring,  the  Company has agreed to
acquire an additional  25.0%  interest in the vessels,  at an estimated  cost of
$12.0  million,  and has an  exclusive  option to acquire  the  remaining  74.2%
interest from the shipbuilder at an estimated cost of $27.4 million.

   Other Services

         Through  its Sun State  subsidiary,  the  Company  owns a small  marine
maintenance,  repair,  and drydocking  facility in Green Cove Springs,  Florida,
which is engaged  principally in the  maintenance  of tugs and barges,  offshore
support vessels, and other small vessels. The lease for the facility,  including
options,  expires in 2005.  The  towboat  Sun River City and the barge Sun State
1102 were  constructed  in the Green Cove  Springs  facility.  This  facility is
capable of  drydocking  vessels up to 300 feet in length for repair and can make
dockside  repairs on vessels up to 320 feet in length.  Since October 1994,  the
Green Cove Springs facility has been utilized to overhaul or rebuild a number of
the Company's  harbor tugs and offshore  energy  support  vessels.  The facility
(originally a U.S.  government naval repair and operations  station) has covered
steel  fabrication  facilities,  workshops,  and  office  spaces  adjacent  to a
1,840-foot  finger pier and mooring basins,  where the facility's three floating
drydocks are located.  The drydocks are 60, 80, and 108 feet in length,  and are
capable of lifting  350,  200, and 500 tons,  respectively.  The 60 and 108 foot
drydocks are capable of being joined together for lifting a vessel or barge with
a nominal capacity of 1,175 long tons.

   Customers and Charter Terms

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


                                                        16

<PAGE>



         The Company  offers its offshore and harbor  towing  services to vessel
owners and  operators and their  agents.  The Company's  rates for harbor towing
services  are set forth in the  Company's  published  tariffs and are subject to
modification  by the Company at any time,  limited by competitive  factors.  The
Company also grants volume discounts to major users of harbor services. Offshore
towing services are priced based upon the service required on an ad hoc basis.

         The primary purchasers of chemical transportation services are chemical
and oil companies.  The primary  purchasers of petroleum product  transportation
services are utilities,  oil companies,  and large industrial  consumers of fuel
with waterfront  facilities.  Both services are generally  contracted for on the
basis of short- or  long-term  time  charters,  voyage  charters,  contracts  of
affreightment,  or other  transportation  agreements  tailored to the  shipper's
requirements.  Shell is the Company's  largest single customer and the long-term
charterer of the Seabulk  Challenger.  In  addition,  Chevron  Corporation  is a
purchaser of the Company's  offshore energy support and chemical  transportation
services,  FPL is a purchaser of the Company's petroleum product  transportation
services and each of Phillips Petroleum Company and Amoco Corporation  currently
charters one of the Company's chemical carriers.

Competition

         The Company  operates in a highly  competitive  environment  in all its
operations.  The principal  competitive  factors in each of the markets in which
the Company operates are suitability of equipment,  personnel,  price,  service,
and reputation.  Competitive factors in the offshore energy support segment also
include  operating  conditions  and  intended use (both of which  determine  the
suitability of vessel type),  complexity of maintaining  logistical support, and
the cost of  transferring  equipment  from one market to another.  The Company's
vessels that provide  chemical and petroleum  products  transportation  services
compete with both other vessel  operators  and, in some areas and markets,  with
alternative modes of transportation, such as pipelines, rail tank cars, and tank
trucks.  Moreover,  the users of such services are placing increased emphasis on
safety, the environment, and quality, partly due to heightened liability for the
cargo owner in addition to the vessel  owner/operator under OPA 90. With respect
to towing services,  the Company's vessels compete not only with other providers
of tug services, but with the providers of tug services in nearby ports. Many of
the  companies  with  which the  Company  competes  have  substantially  greater
financial and other resources than the Company. Additional competitors may enter
the Company's  markets in the future.  Moreover,  should U.S.  coastwise laws be
repealed,  foreign-built,  foreign-manned,  and  foreign-owned  vessels could be
eligible to compete with the Company's vessels.

Environmental and Other Regulation

         The Company's operations are subject to significant federal, state, and
local regulation, the principal provisions of which are described below.

         Clean Water Regulations. OPA 90 established an extensive regulatory and
liability regime for the protection of the environment  from oil spills.  OPA 90
affects  all owners and  operators  of vessels in United  States  waters,  which
include the United States  territorial sea and the 200-mile  exclusive  economic
zone of the United  States.  Although it applies in general to all vessels,  for
purposes   of   its   liability   limits   and    financial-responsibility   and
response-planning  requirements,  OPA 90  differentiates  between  tank  vessels
(which  include the  Company's  chemical  carriers,  product  carrier,  and fuel
barges) and "other  vessels"  (which  include the  Company's  tugs and  offshore
energy service vessels).


                                                        17

<PAGE>



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

         For tank vessels,  the statutory  liability of  responsible  parties is
limited to the  greater of $1,200 per gross ton or $10 million ($2 million for a
vessel of 3,000  gross  tons or less) per  vessel;  for  "other  vessels,"  such
liability  is  limited  to the  greater  of $600 per gross ton or  $500,000  per
vessel. Such liability limits do not apply,  however, to an incident proximately
caused by violation of federal safety, construction, or operating regulations or
by the responsible  party's gross  negligence or willful  misconduct,  or if the
responsible  party fails to report the  incident or to  cooperate  and assist in
connection with oil removal activities. Although the Company currently maintains
pollution liability insurance with coverage of $700 million per incident for its
tank vessels  ($500 million per incident for its fuel  barges),  a  catastrophic
spill could  result in  liability  in excess of  available  insurance  coverage,
resulting in a material adverse effect on the Company.

         Under OPA 90,  with  certain  limited  exceptions,  all newly  built or
converted  tankers  operating in United  States waters must be built with double
hulls,  and  existing  single-hull  vessels  must be phased  out at some  point,
depending  upon their size,  age and place of  discharge,  between 1995 and 2015
unless retrofitted with double hulls. As a result of this phase-out requirement,
as interpreted by the U.S. Coast Guard, the Company's  chemical carriers and its
petroleum  product  carrier  will be  required to cease  transporting  petroleum
products  over the next 17 years,  and its fuel barges  will cease  transporting
fuel in 2015.

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

         OPA 90 also amended the Federal Water Pollution  Control Act to require
the owner or operator of a tank vessel to prepare  vessel  response plans and to
contract with oil spill response  organizations  to remove to the maximum extent
practicable a worst-case discharge (loss of all cargo). The Company has complied
with both  requirements.  As is  customary,  the  Company's  oil spill  response
contracts are executory in nature and are not activated  unless  required.  Once
activated,  the Company's pollution liability insurance covers the cost of spill
removal subject to overall coverage limitations and deductibles.

                                                        18

<PAGE>



         OPA  90  expressly  permits  individual  states  to  impose  their  own
liability regimes with respect to oil pollution incidents occurring within their
boundaries,  and many states have enacted  legislation  providing  for unlimited
liability for oil spills. States that have enacted such legislation have not yet
issued implementing  regulations defining tanker owners'  responsibilities under
the  legislation.  The Company  does not  anticipate  that such  legislation  or
regulations will have any material impact on its operations.

         The Company manages its exposure to losses from potential discharges of
pollutants through the use of well-maintained and well-equipped vessels,  safety
and environmental programs, and its insurance program, and believes that it will
be able to accommodate reasonably foreseeable environmental regulatory changes.

         There  can be no  assurance,  however,  that  any  new  regulations  or
requirements  or any  discharge  of  pollutants  by the Company will not have an
adverse effect on the Company.

         Clean Air Regulations. The federal Clean Air Act of 1970, as amended by
the Clean Air Act  Amendments  of 1990,  requires the  Environmental  Protection
Agency to promulgate  standards  applicable to the emission of volatile  organic
compounds  and other air  pollutants.  These  standards  are  designed to reduce
hydrocarbon  emissions  released in the  atmosphere  and are  implemented by the
states through State  Implementation  Plans for areas that are not in compliance
with those  standards.  The  Company's  vessels are subject to vapor control and
recovery  requirements  when loading  petroleum  cargoes in  Louisiana  and when
loading,  unloading,  ballasting,  cleaning,  and conducting other operations in
certain ports in Texas.  The Company's  chemical and petroleum  product carriers
are equipped with vapor control systems that satisfy these states' requirements.
The fuel  barges  are not  equipped  with,  and are not  operated  in areas that
require, such systems.

         Coastwise Laws. A substantial  portion of the Company's  operations are
conducted in the U.S. domestic trade, which is governed by the coastwise laws of
the United  States  (principally,  the Jones Act).  The  coastwise  laws reserve
marine  transportation  (including  harbor tug services)  between  points in the
United  States  (including  drilling  rigs  fixed  to the  ocean  floor  in U.S.
territorial  waters) to vessels  built in and  documented  under the laws of the
United States (U.S. flag) and owned and manned by U.S.  citizens.  Generally,  a
corporation  is  deemed  a  citizen  for  these  purposes  so  long as (i) it is
organized  under  the  laws of the U.S.  or a state  thereof,  (ii)  each of its
president  or other chief  executive  officer  and the  chairman of its board of
directors  is a  citizen,  (iii) no more than a  minority  of the  number of its
directors  necessary to constitute a quorum for the  transaction of business are
non-citizens,  and (iv) 75% of the interest and voting power in the  corporation
are held by citizens.  Because the Company would lose its privilege of operating
its vessels in the U.S. domestic trade if non-citizens were to own or control in
excess of 25% of the Company's outstanding capital stock, the Company's Articles
of Incorporation contain restrictions concerning foreign ownership of its stock.
There have been repeated  efforts aimed at repeal or  significant  change of the
Jones Act.  Although the Company believes that it is unlikely that the Jones Act
will be  substantially  modified or  repealed,  there can be no  assurance  that
Congress will not substantially  modify the Jones Act or repeal it. Such changes
could have a material  adverse effect on the Company's  operations and financial
condition.

         Occupational  Health  Regulations.  The Company's vessel operations are
subject to occupational safety and health regulations issued by the Coast Guard.
Such regulations  currently require the Company to perform extensive monitoring,
medical  testing,  and record  keeping  with  respect  to seamen  engaged in the
handling  of the various  cargoes  transported  by the  Company's  chemical  and
petroleum products carriers.

                                                        19

<PAGE>



         Vessel  Condition.   The  Company's  chemical  and  petroleum  products
carriers,  offshore  energy  support  vessels,  seven of its tugs,  and the fuel
barges are subject to periodic  inspection  and survey by, and  dry-docking  and
maintenance  requirements  of, the Coast  Guard  and/or the  American  Bureau of
Shipping, a marine classification society whose periodic certification as to the
construction and maintenance of certain vessels is required in order to maintain
insurance  coverage.  All of the Company's  vessels  requiring  certification to
maintain insurance coverage are certified.

         Oil Tanker  Escort  Requirements.  Implementation  of oil tanker escort
requirements  of OPA 90 and pending state  legislation are expected to introduce
certain  performance or  engineering  standards on tugs to be employed as tanker
escorts.  The Company  believes its tractor tugs will be able to comply with any
existing or currently anticipated requirements for escort tugs. Adoption of such
new standards  could  require  modification  or refitting of the tugs  currently
operated by the Company to the extent such tugs are employed as tanker  escorts.
The  Company  does  not  anticipate  OPA 90 or  state  requirements  to  require
modification of tugs, such as the Company's, involved in harbor tug operations.

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

         International Laws and Regulations.  The Company's vessels that operate
internationally  are  subject to various  international  conventions,  including
certain  safety,  environmental,  and  construction  standards.  Among  the more
significant   of  the   conventions   applicable  to  the  fleet  are:  (i)  the
International  Convention for the Prevention of Pollution of the Sea, 1973, 1979
Protocol, (ii) the International  Convention on the Safety of Life at Sea, 1974,
1978,  and  1981/1983  Protocol,  and  (iii)  the  International  Convention  on
Standards of Training,  Certification  and  Watchkeeping  for  Seafarers.  These
regulations  govern oil spills and other  matters of  environmental  protection,
worker  health,  and safety and the  manning,  construction,  and  operation  of
vessels.  The Company believes that it presently is in material  compliance with
the  international  environmental  laws and  regulations  to which the Company's
operations are subject.  In addition,  the countries under which the vessels are
flagged  require  certain   periodic   inspections  and  drydock   examinations.
Generally,  surveys and inspections are performed by internationally  recognized
classification  societies.  Most of the vessels that operate internationally are
flagged in the  Marshall  Islands.  The  Company  is not a party to any  pending
environmental  litigation or other proceeding,  and is unaware of any threatened
environmental  litigation or proceeding  which, if adversely  determined,  would
have a  material  adverse  effect  on the  financial  condition  or  results  of
operations  of  the  Company.   However,  the  risks  of  incurring  substantial
compliance costs and liabilities and penalties for noncompliance are inherent in
offshore energy support  operations.  There can be no assurance that significant
costs,  liabilities,  and  penalties  will not be  incurred by or imposed on the
Company in the future.

Insurance

         The Company's marine transportation  services operations are subject to
the normal hazards  associated with operating  vessels carrying large volumes of
cargo or rendering services in a marine  environment.  These hazards include the
risk of loss of or damage to the Company's vessels, damage to

                                                        20

<PAGE>



third  parties  as a result  of  collision,  loss,  or  contamination  of cargo,
personal injury of employees,  pollution,  and other environmental  damages. The
Company maintains  insurance coverage against these hazards.  Risk of loss of or
damage to the Company's  vessels is insured  through hull insurance  policies in
amounts that approximate fair market value. Vessel operating  liabilities,  such
as collision, cargo,  environmental,  and personal injury, are insured primarily
through  the  Company's  participation  in  the  Steamship  Mutual  Underwriting
Association  (Bermuda Limited),  a mutual insurance  association under which the
coverage against such hazards is currently unlimited for each incident except in
the case of  pollution,  which is limited to $700 million  (the  maximum  amount
available)  for each incident  involving  the  Company's  chemical and petroleum
products carriers and $500 million with respect to its other vessels. Because it
maintains mutual insurance,  the Company is subject to funding  requirements and
coverage  shortfalls in the event claims exceed  available funds and reinsurance
and to premium increases based on prior loss experience.

Employees

         As of March 15, 1998, the Company had  approximately  3,104  employees.
Management  considers  relations with employees to be satisfactory.  The Seabulk
America,  Seabulk Challenger,  and Seabulk Magnachem are manned by approximately
108 officers and crew who are subject to two collective bargaining arrangements.
In addition, the HMI Dynachem, HMI Petrochem,  HMI Astrachem,  HMI Defender, and
the seven  harbor tugs  acquired in March 1998 are manned by  approximately  175
members of national  maritime labor unions pursuant to an agreement  between the
Company and a third party employer.

Item 2.  Properties

         The  Company's  principal  offices  are  located  in  Fort  Lauderdale,
Florida, where the Company leases approximately 36,000 square feet of office and
shop space under a lease that expires in 2009. In addition,  the Company  leases
facilities in Houston, Texas, Lafayette and Amelia, Louisiana,  Mobile, Alabama,
Tampa,  Port Canaveral,  and Green Cove Springs,  Florida,  Sharjah,  Dubai, Abu
Dhabi, Brunei,  Yemen,  Karachi,  Qatar, Saudi Arabia,  Kuwait,  Singapore,  and
Thailand to support its operations.  The Company expects to lease  facilities in
various locations in West Africa to support its offshore operations.

Item 3.  Legal Proceedings

         The  Seabulk  America  was  completed  in 1990 by  combining  the stern
portion of the wrecked oil tanker Fuji with the forebody of the  chemical  barge
portion of the former  integrated  tug/barge Oxy  Producer/Oxy  4102. In Norfolk
Shipbuilding and Dry Dock Corporation v. Seabulk Transmarine Partnership,  Ltd.,
pending in the U.S.  District Court for the Eastern District of Louisiana (Civil
Action No.  93-1312),  one of the  shipyards  that  contracted  to complete  the
Seabulk  America  for the  Company  is  seeking  to  recover  from  the  Company
approximately  $6.1  million for alleged  additions  and changes to the contract
work and costs of alleged delay and  disruption,  in addition to $2.4 million of
the $5.9 million contract price that the Company has withheld. In addition,  the
shipyard  is  seeking  legal  fees  and  expenses.   The  Company  has  asserted
counterclaims  aggregating $5.6 million for contract  deletions,  unfinished and
defective  work, and liquidated  damages for late delivery.  In 1993,  when this
suit was filed, the Company obtained a $5.6 million letter of credit in order to
furnish a bond required to obtain the release of the Seabulk America,  which had
been arrested pursuant to customary  procedures in litigation involving vessels.
The suit, which involves numerous complex factual issues, is currently in

                                                        21

<PAGE>



the trial stage.  While the Company  believes  that the  plaintiff's  claims are
without  merit  and that its  counterclaims  are  meritorious,  there  can be no
assurance that the ultimate resolution of the suit will not require some payment
by the Company in addition to the $3.6 million previously paid.

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

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

         Not applicable.



                                                        22

<PAGE>



Item 4a.  Executive Officers

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

Name                                                Age                   Current Positions
<S>                                               <C>      <C>
J. Erik Hvide....................................   49      President and Chief Executive Officer
John H. Blankley.................................   50      Executive Vice President and Chief
                                                             Financial Officer
Eugene F. Sweeney................................   55      Executive Vice President--Operations
Andrew W. Brauninger.............................   51      Senior Vice President--Offshore Division and
                                                            President--Seabulk Offshore, Ltd
Walter S. Zorkers................................   51      Senior Vice President--Corporate Development
Leo T. Carey.....................................   46      Vice President--Ship Management
Arthur T. Denning................................   43      Vice President--Engineering
William R. Ludt..................................   50      Vice President--Inland Services Division
                                                              and President--Sun State Marine Services, Inc.
John J. O'Connell, Jr............................   54      Vice President--Corporate Communications
Robert A. Santos.................................   66      Vice President--Offshore and Harbor
                                                             Towing Operations
Christopher D. Strong............................   39      Vice President--Finance, Treasurer and Assistant
                                                              Secretary
L.  Stephen Willrich.............................   45      Vice President and President--Ocean Specialty
                                                              Tankers Corporation
</TABLE>

     Mr. Hvide has been the  Company's  President  and Chief  Executive  Officer
since  January  1991.  From 1981 until 1991,  Mr. Hvide was  President and Chief
Operating Officer of the Company. He has been employed by the Company in various
capacities  since 1970 and became Vice  President in 1973. He is also a director
of the  American  Waterways  Operators,  a  participant  on  the  Transportation
Committee of the American Petroleum  Institute,  a member of the American Bureau
of Shipping,  a past Chairman of the Board of the American Institute of Merchant
Shipping,  a past  appointee to the U.S.  Coast Guard's  Towing Safety  Advisory
Committee, and a director of Seal Holdings Corporation.  Mr. Hvide is the son of
Hans J. Hvide, the founder of the Company.

         Mr. Blankley has been Executive Vice President--Chief Financial Officer
since  September  1995. He previously  served as a director and Chief  Financial
Officer of Harris Chemical Group Inc., a chemical  manufacturing  company,  from
April 1993 to August 1994. Mr. Blankley is the owner of Seafirst Capital, a ship
finance  consulting  business he founded in 1994.  He served as  Executive  Vice
President--Finance  and  Chief  Financial  Officer  of  Stolt-Nielsen,  Inc.,  a
publicly traded international  operator of specialty chemical tankers, from 1985
to 1991.  From 1983  until  1985,  Mr.  Blankley  was a  director,  Senior  Vice
President,  and Chief Financial Officer of BP North America Inc. Mr. Blankley is
also a director of MC Shipping,  a publicly traded operator of multi-purpose gas
and petroleum product carriers and container feeder vessels.

     Mr. Sweeney has been Executive  Vice  President--Operations  of the Company
since  September 1994. He was Senior Vice  President--Operations  of the Company
from  1991  to  September   1994.   He  joined  the  Company  in  1981  as  Vice
President--Ship  Management.  Prior to joining  the  Company,  Mr.  Sweeney  was
employed for 17 years by Texaco, Inc., where he served in seagoing

                                                        23

<PAGE>



and shore management  positions,  including  operations manager of Texaco's U.S.
tanker  fleet.  Mr.  Sweeney  is on the board of  directors  of the  Chamber  of
Shipping of America and is a member of the American Bureau of Shipping.

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

         Mr. Zorkers has been Senior Vice President--Corporate Development since
April 1997.  Prior to joining the  Company,  Mr.  Zorkers was the  principal  of
Commonwealth  Management Group, a management  consulting firm. From 1993 to 1995
he served as  Executive  Vice  President  of Boston  Pacific  Medical,  Inc.,  a
manufacturer  of  disposable  medical  products,  and from 1991 to 1993 he was a
Senior Vice President of Metcalf & Eddy, Inc., an environmental  engineering and
consulting firm.

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

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

         Mr.  Ludt has  been  Vice  President--Inland  Services  Division  since
January 1995 and the President of Sun State Marine Services, Inc., the Company's
energy tug and barge  subsidiary,  since September 1994. He was  Director--Fleet
Operations of the Company from 1982 to September 1994. Since joining the Company
in 1979,  he has also served as Fleet  Manager and Port  Engineer.  He served as
President of the  Chemical  Carriers  Association  from 1989 to 1990 and as Vice
President  of that  association  from 1990 to 1992.  Mr. Ludt has also served on
various  working  groups within the U.S. Coast Guard's  Chemical  Transportation
Advisory   Committee   concerning  issues  such  as  vapor  control  and  marine
occupational  safety and health.  Mr. Ludt holds a dual  license as a Third Mate
and Third Assistant Engineer, Steam and Motor Vessels.

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

         Mr.  Santos has been Vice  President--Towing  Operations of the Company
since 1983.  Mr. Santos joined the Company as its Towing  Operations  Manager in
1962. He has served as a Commissioner of Florida's Board of Pilot Commissioners,
Chairman of the Escort Vessel Subcommittee

                                                        24

<PAGE>



of the American  Waterways  Operators and as a member of various  marine-related
trade associations and boards.

         Mr. Strong has been  Assistant  Secretary of the Company since February
1998, Vice  President--Finance  since August 1997, Treasurer since November 1996
and Director of Finance since joining the Company in December 1994. From January
1990 to December 1994, he was Treasurer of the Port Everglades  Authority.  From
1986 to 1989, he served in several  management  positions  with Kislak  Mortgage
Corporation  and Kislak  National Bank  including  Vice  President--Finance  and
Investment Officer. Mr. Strong previously served as an officer in the U.S. Navy.

         Mr.  Willrich has been Vice  President of the Company and  President of
Ocean  Specialty  Tankers  Corporation  since  March  1998.  He was Senior  Vice
President of Ocean Specialty  Tankers  Corporation from August 1996. He was Vice
President of Chartering of Ocean Specialty Tankers Corporation from January 1986
to August  1996.  Prior to joining  the  Company Mr.  Willrich  was  employed in
various capacities by Diamond Shamrock Chemical Company from 1975 to 1982.


                                                        25

<PAGE>



                               PART II

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

          Since August 9, 1996,  the Class A Common Stock has been traded on the
Nasdaq  National  Market under the symbol "HMAR." The following table sets forth
the high and low sale  prices per share of the Class A Common  Stock as reported
by the Nasdaq National Market for each calendar  quarter since the  commencement
of trading.

                                                           High           Low
1996
   Third Quarter (commencing August 9)..............   $    13 7/8      $ 11
   Fourth Quarter...................................        24 1/4        12 7/8
1997
   First Quarter....................................        28 3/4        18 1/4
   Second Quarter...................................        25 3/4        14 7/8
   Third Quarter....................................        36 1/2        22
   Fourth Quarter...................................        36 3/4        20 3/4
1998
   First Quarter (through March 27).................        25 3/4        16 5/8

         The Company has not paid any cash  dividends  on its Common Stock since
its  formation.  It  presently  intends  to retain its  earnings  for use in its
business and  therefore  does not  anticipate  paying any cash  dividends in the
foreseeable  future.  The payment of any future  dividends will be determined by
the Board of Directors  in light of  conditions  then  existing,  including  the
Company's  earnings,  financial  condition  and  requirements,  restrictions  in
financing agreements,  business conditions,  and other factors. In addition, the
Company's ability to pay dividends or make  distributions to its stockholders is
also restricted by the terms of the Credit Facility. As of March 16, 1998, there
were 116  holders  of record of Class A Common  Stock and 7 holders of record of
Class B Common Stock.

Item 6.  Selected Financial Data

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



                                                        26

<PAGE>



<TABLE>
<CAPTION>

                                                                              Year Ended December 31
                                                               1993         1994        1995        1996         1997
                                                                      (In thousands, except per share data)
<S>                                                         <C>         <C>         <C>          <C>         <C>
Consolidated Statement of Operations Data:
   Revenue ..............................................   $  41,527   $  49,792   $  70,562    $ 109,356   $   210,257
                                                            ---------   ---------    ---------   ---------    ----------
   Operating expenses ...................................      24,032      29,873      40,664       63,777       110,283
   Overhead expenses ....................................       6,176       9,581      12,518       14,979        24,791
   Depreciation and amortization ........................       4,735       4,500       6,308        9,830        19,850
                                                            ---------   ---------    ---------   ---------    ----------
   Income from operations ...............................       6,584       5,838      11,072       20,770        55,333
   Interest expense, net ................................       3,412       5,302      11,460       11,631         7,024
   Other income (expense) ...............................         519          11          26          437        (3,704)
                                                            ---------   ---------    ---------   ---------    ----------
   Income (loss) before provision for (benefit
     from) income taxes, extraordinary item
     and cumulative effect of a change in
     accounting principle ...............................       3,691         547        (362)       9,576        44,605
   Provision for (benefit from) income
     taxes ..............................................       1,873         189          (2)       3,543        16,950
                                                            ---------   ---------    ---------   ---------    ----------
   Income (loss) before extraordinary item
     and cumulative effect of a change in
     accounting principle ...............................       1,818         358        (360)       6,033        27,655
   Loss on extinguishment of debt, net(1) ...............        --          --          --          8,108         2,132
   Cumulative effect of a change in
     accounting principle ...............................       1,491        --          --           --          --
                                                            ---------   ---------    ---------   ---------    ----------
   Net income (loss) ....................................   $   3,309   $     358   $    (360)   $  (2,075)   $   25,523
                                                            =========   =========   =========    =========    ==========
Earnings (loss) per common share(2):
     Income (loss) before extraordinary
       item and cumulative effect of a
       change in accounting principle ...................   $    0.26   $    0.03   $   (0.14)   $    1.05    $     1.87
     Net income (loss)(3) ...............................   $    0.50   $    0.03   $   (0.14)   $   (0.36)   $     1.73
                                                            =========   =========   =========    =========    ==========
     Weighted average number of common
       shares and common share equivalents
       outstanding ......................................       6,268       5,302       2,535        5,763        14,785
                                                            =========   =========    =========   =========    ==========
Earnings (loss) per common share--assuming
 dilution(2):
     Income (loss) before extraordinary item
       and cumulative effect of change in
       accounting principle(3) ..........................   $    0.26   $    0.03   $   (0.14)   $    0.99    $     1.75
     Net income (loss)(3) ...............................   $    0.50   $    0.03   $   (0.14)   $   (0.24)   $     1.63
                                                            =========   =========   =========    =========    ==========
     Weighted average number of shares
       and common share equivalents
       outstanding(4) ...................................       6,268       5,302       2,535        6,590        17,120
                                                            =========   =========    =========   =========    ==========
Other Financial Data:
     EBITDA(5) ..........................................   $  11,319   $  10,338   $  17,380    $  30,600   $  75,183
</TABLE>



                                                         27

<PAGE>


<TABLE>
<CAPTION>

                                                                           Year Ended December 31
                                                            ------------------------------------------------------
                                                              1993       1994       1995        1996       1997
                                                                               (In thousands)
<S>                                                         <C>        <C>        <C>        <C>        <C>
Net Cash Provided by (used in):
   Operating activities...................................  $   6,956  $  2,858   $  3,948   $ 22,584   $  40,042
   Investing activities...................................     (2,247)  (39,815)   (8,066)    (84,354)   (261,343)
   Financing activities...................................     (6,158)   41,249        805     68,337     226,636
</TABLE>

<TABLE>
<CAPTION>

                                                                               At December 31
                                                            ------------------------------------------------------
                                                              1993       1994       1995        1996       1997
                                                                               (In thousands)
<S>                                                         <C>        <C>        <C>        <C>        <C>
Balance Sheet Data:
   Working capital (deficit).............................   $   2,640  $  7,793   $  4,315   $ (8,704)  $  25,790
   Total assets..........................................      82,373   135,471    143,683    273,473     604,561
   Total long-term obligations...........................      47,485    98,981    100,766    124,454     217,217
   Total debt............................................      51,273   104,281    109,051    141,464     197,547
   Convertible preferred securities of a subsidiary
     trust...............................................          --        --         --         --     115,000
   Stockholders' and minority partners'
     equity..............................................      19,926    14,903     13,999    101,989     227,282
</TABLE>

(1)  Reflects the loss on the  extinguishment  of debt, net of applicable income
     taxes of $1,474,000 and $1,252,000 for 1996 and 1997, respectively.

(2)  Statement  of  Financial  Accounting  Standards  No.  128,  adopted  by the
     Company,  requires the presentation of basic and diluted earnings per share
     and replaces the prior  presentation of primary and fully diluted  earnings
     per  share.  Earnings  per share is  calculated  on the  basis of  weighted
     average  outstanding common shares,  after giving effect to preferred stock
     dividends. Earnings per share assuming dilution is computed on the basis of
     weighted average  outstanding common shares,  outstanding  options that are
     dilutive,   and  equivalent  shares  assuming   conversion  of  outstanding
     convertible securities, where dilutive.

(3)  For the purposes of calculating earnings per share for the years 1993,
     and 1994,  historical income available to common stockholders has been
     reduced for  dividends  on Class A Preferred  Stock of  $203,000,  and
     $222,000,  respectively.  The Class A Preferred  Stock was redeemed on
     September 30, 1994.

(4)  For the years 1993 and 1994,  the  weighted  average  number of common
     shares and common  share  equivalents  assumes the  conversion  of the
     Class B  Preferred  Stock  into  shares of Common  Stock.  The Class B
     Preferred Stock was redeemed on September 30, 1994. For the year ended
     1994  shares  outstanding   assuming  dilution  reflects  the  assumed
     conversion  of a portion  of the Junior  Notes  into  shares of Common
     Stock.  The Junior Notes were issued in September  1994 and  converted
     into shares of Common Stock in September 1996.

(5)      EBITDA (net income from continuing  operations before interest expense,
         income  tax  expense,   depreciation  expense,   amortization  expense,
         minority interests,  and other non-operating income) is frequently used
         by  securities  analysts  and is presented  here to provide  additional
         information about the Company's  operations.  EBITDA is not required by
         generally accepted  accounting  principles and should not be considered
         as an  alternative  to net  income  as an  indicator  of the  Company's
         operating   performance  or  as  an  alternative  to  cash  flows  from
         operations as a measure of liquidity.

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

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

Area of Operations Overview

         The financial information presented below represents historical results
by major areas of  operations.  The historical  financial  data presented  below
should  be  read  in  conjunction  with  the  Company's  consolidated  financial
statements and notes thereto included elsewhere in this Offering Memorandum.



                                                        28

<PAGE>


<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                  1995        1996        1997
                                                                                            (In thousands)
<S>                                                                             <C>         <C>         <C>
Revenue:
Marine support services:
    Offshore energy support..................................................   $ 23,217    $ 43,715    $  111,385
    Offshore and harbor towing...............................................     12,582      13,950        20,424
                                                                                --------    --------    ----------
                                                                                  35,799      57,665       131,809
Marine transportation services:
  Chemical transportation....................................................     18,632      32,759        60,419
  Petroleum product transportation...........................................     16,131      18,932        18,029
                                                                                --------    --------    ----------
                                                                                  34,763      51,691        78,448
                                                                                --------    --------    ----------
      Total revenue..........................................................     70,562     109,356       210,257
                                                                                --------    --------    ----------
Operating expenses:
  Marine support services:
    Offshore energy support..................................................     13,335      25,525        45,322
    Offshore and harbor towing...............................................      6,001       7,480        12,296
                                                                                --------    --------    ----------
                                                                                  19,336      30,005        57,618
Marine transportation services:
  Chemical transportation....................................................     11,105      20,976        40,732
  Petroleum product transportation...........................................     10,223      12,796        11,933
                                                                                --------    --------    ----------
                                                                                  21,328      33,772        52,665
                                                                                --------    --------    ----------
      Total operating expenses...............................................     40,664      63,777       110,283
                                                                                --------    --------    ----------
Direct overhead expenses:
  Marine support services:
    Offshore energy support..................................................      2,182       2,558         5,866
    Offshore and harbor towing...............................................      1,111       1,364         2,361
                                                                                --------    --------    ----------
                                                                                   3,293       3,922         8,227
Marine transportation services:
  Chemical transportation....................................................      1,433       2,574         4,508
  Petroleum product transportation...........................................        738         920         1,231
                                                                                --------    --------    ----------
                                                                                   2,171       3,494         5,739
                                                                                --------    --------    ----------
      Total direct overhead..................................................   $  5,464    $  7,416    $   13,966
                                                                                ========    ========    ==========
  Fleet EBITDA(1):
  Marine support services:
    Offshore energy support..................................................      7,700      18,632        60,197
    Offshore and harbor towing...............................................      5,470       5,106         5,767
                                                                                --------    --------    ----------
                                                                                  13,170      23,738        65,964
Marine transportation services:
  Chemical transportation....................................................      6,094       9,209        15,179
  Petroleum product transportation...........................................      5,170       5,216         4,865
                                                                                --------     -------    ----------
                                                                                  11,264      14,425        20,044
                                                                                --------    --------    ----------
      Total fleet EBITDA(1)..................................................     24,434      38,163        86,008
Corporate overhead expenses..................................................      7,054       7,563        10,825
                                                                                --------    --------    ----------
EBITDA(1)....................................................................     17,380      30,600        75,183
  Depreciation and amortization expenses.....................................      6,308       9,830        19,850
                                                                                --------    --------    ----------
Income from operations.......................................................   $ 11,072    $ 20,770    $   55,333
                                                                                ========    ========    ==========
</TABLE>


(1)      EBITDA (net income from continuing  operations before interest expense,
         income  tax  expense,   depreciation  expense,   amortization  expense,
         minority interest and other non-operating income) is frequently used by
         securities  analysts  and  is  presented  here  to  provide  additional
         information  about the  Company's  operations.  Fleet  EBITDA is EBITDA
         before  corporate  overhead  expenses.  EBITDA and fleet EBITDA are not
         required

                                                        29

<PAGE>



         by generally accepted accounting  principles,  should not be considered
         as alternatives to net income as indicators of the Company's  operating
         performance,  or as  alternatives  to cash flows from  operations  as a
         measure  of  liquidity,  and  do  not  represent  funds  available  for
         management's  use.  The  Company's  EBITDA  may  not be  comparable  to
         similarly titled measures reported by other companies.

Historical Growth

         Since  December  31, 1994,  when the  Company's  fleet  consisted of 66
vessels,  the  Company  has  completed  the  acquisition  of 203  vessels  at an
aggregate cost of approximately $694.1 million,  including 109 vessels that will
have been  acquired  between  October 1, 1997 and March 16, 1998 at an aggregate
cost of $462.3  million.  Of the 203 vessels,  168 are offshore  energy  support
vessels and the balance are employed in the Company's offshore and harbor towing
operations  and  marine  transportation   services.  The  Company  believes  the
increased  size of its vessel fleet will enable it to take further  advantage of
the strong worldwide demand for marine support and transportation services.

Revenue Overview

  Marine Support Services

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

         Offshore  Energy Support.  Revenue derived from the Company's  offshore
energy  support  services is  primarily a function of the size of the  Company's
fleet,  vessel  day rates or charter  rates,  and fleet  utilization.  Rates and
utilization  are  primarily  a function of offshore  drilling,  production,  and
construction   activities.   Levels  of  offshore  drilling,   production,   and
construction  have  increased  over  the  past  several  years  as a  result  of
fundamental changes in the energy industry, including: (i) favorable oil and gas
prices, (ii) significant  improvement in the financial condition of many oil and
gas  companies  in  recent  years,   (iii)   increased   worldwide   demand  for
hydrocarbons, (iv) the potential for relatively large oil and gas discoveries in
various offshore areas,  particularly previously unexplored deepwater areas, (v)
the  opening of new  offshore  areas for  foreign  investment,  including  areas
offshore Brazil,  China, and West Africa, and (vi) royalty relief granted by the
U.S.  government  for oil and gas produced from wells drilled in newly  acquired
deepwater  blocks in the U.S.  Gulf of Mexico.  These  higher  overall  activity
levels have led to increased  demand for the Company's  offshore  energy support
services and higher  overall  vessel day rates in the U.S.  Gulf of Mexico.  Day
rates offshore West Africa are at levels  approaching  those in the U.S. Gulf of
Mexico.  Day rates in the Arabian Gulf and offshore  Southeast  Asia,  which the
Company  believes  have been  among  the  lowest  in the  world,  have also been
gradually  increasing  as a result of increases in  exploration  and  production
activity in these  areas.  Contracts  for the  utilization  of offshore  service
vessels commonly include  termination  provisions with three- to five-day notice
requirements  and  no  termination  penalty.  As a  result,  the  operations  of
companies  engaged  in the  offshore  energy  service  market  are  particularly
sensitive to changes in market demand.

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


                                                        30

<PAGE>


<TABLE>
<CAPTION>


                                                                                               1995
                                                                                ----------------------------------
                                                                                   Q1      Q2       Q3       Q4
<S>                                                                             <C>      <C>      <C>      <C>
Number of supply boats at end of period.....................................         10       10       10       10
Average supply boat day rates(1)............................................    $ 2,886  $ 2,843  $ 3,113  $ 3,244
Average supply boat utilization(2)..........................................         71%      76%      84%      93%
Number of crew boats at end of period(3)(4).................................         26       26       26       26
Average crew boat day rates(1)(3)...........................................    $ 1,444  $ 1,412  $ 1,422  $ 1,458
Average crew boat utilization(2)(3).........................................         79%      81%      90%      91%
</TABLE>

<TABLE>
<CAPTION>

                                                          1996                               1997
                                           ---------------------------------  -----------------------------------
                                              Q1       Q2        Q3        Q4      Q1       Q2      Q3       Q4
<S>                                        <C>      <C>       <C>      <C>      <C>      <C>      <C>      <C>
Number of supply boats at end of period..       10       11        16       18       19       21       25       26
Average supply boat day rates(1).........  $ 3,468  $ 4,095   $ 5,034  $ 5,776  $ 6,478  $ 7,176  $ 7,636  $ 8,032
Average supply boat utilization(2).......       92%     100%       97%      90%      87%      90%      91%      93%
Number of crew boats
    at end of period(3)(4)...............       35       35        36       36       39       39       39       39
Average crew boat day rates(1)(3)........  $ 1,469  $ 1,466   $ 1,528  $ 1,531  $ 1,777  $ 1,940  $ 2,119  $ 2,294
Average crew boat utilization(2)(3)......      89%       93%       96%      96%      95%      93%      95%      93%
</TABLE>

(1)      Average   day  rates  are   calculated   based  on  vessels   operating
         domestically  by dividing  total vessel  revenue by the total number of
         days of vessel utilization.
(2)      Utilization is based on vessels  operating  domestically and determined
         on the basis of a 365-day year.  Vessels are  considered  utilized when
         they are generating charter revenue.
(3)      Excludes utility boats.
(4)      The Company first began operating crew boats in July 1994.

         Offshore and Harbor  Towing.  Revenue  derived from the  Company's  tug
operations  is  primarily a function of the number of tugs  available to provide
services, the rates charged for their services, and the volume of vessel traffic
requiring docking and other ship-assist  services.  Vessel traffic,  in turn, is
largely a function of the  general  trade  activity in the region  served by the
port. The Company  generally has maintained five tugs in Port Everglades,  three
tugs in Port Canaveral,  three tugs in Mobile,  and 11 tugs in Tampa,  with five
additional tugs available to provide offshore towing services.

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

                                                                                     Year Ended December 31,
                                                                                  1995        1996       1997(1)
<S>                                                                            <C>          <C>        <C>
Number of tugs at end of period..............................................         11          16          16
Total ship docking tug jobs..................................................      9,233       9,034       9,353
Total offshore and harbor towing revenue (in thousands)......................  $  12,582    $ 13,950    $ 17,399
</TABLE>

(1)      Does not include 14 tugs acquired by the Company on October 16, 1997.

   Marine Transportation Services

         Chemical  Transportation.  Generally,  demand for  industrial  chemical
transportation  services coincides with overall economic  activity.  Since 1989,
revenue  derived  from  chemical  transportation  operations  has been  entirely
attributable  to the  operations  of OSTC, a company  owned equally by OMI Corp.
("OMI") and the Company  until  August  1996,  when the Company  acquired  OMI's
interest in OSTC

                                                        31

<PAGE>



along with three chemical  carriers owned by OMI (the "OMI Chemical  Carriers").
Prior  to  the  acquisition,   the  Company's  chemical  transportation  revenue
consisted of distributions  from OSTC attributable to the Company's two chemical
carriers marketed by OSTC based upon a formula that took into account individual
vessel performance characteristics applied to OSTC's revenue (net of fuel costs,
port charges,  and overhead).  Since the acquisition,  the Company  continues to
have  OSTC  market  the  five   chemical   carriers  and  receives  the  revenue
attributable to all five of the vessels.

         Petroleum Product  Transportation.  Since entering service in 1975, the
product  carrier  Seabulk  Challenger  has  derived  all  of  its  revenue  from
successive  voyage and time charters to Shell.  Under the current charter,  fuel
and port costs are for the  account of the  charterer,  charter  hire  escalates
based upon  changes in the consumer  price index,  and charter hire is suspended
while the vessel is  unavailable  to transport  cargo,  as when it is undergoing
repairs or regularly scheduled maintenance. The charter extends to January 2000,
with the charterer  retaining the right to early termination upon the payment to
the Company of a significant penalty. In the fourth quarter of 1997, the charter
rate was  renegotiated  and  reduced by  approximately  6% to reflect  the lower
current  market rate.  Revenue from the  Company's  towboats and fuel barges has
been derived  primarily  from  contracts of  affreightment  with FPL and Steuart
Petroleum Co. that require the Company to transport  fuel as needed by those two
customers, with the FPL contract having a guaranteed minimum utilization.

         The following table sets forth the average time charter equivalents for
the Company's chemical and product carriers, including the OMI Chemical Carriers
as if such vessels were owned by the Company during the periods presented.
<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                  1995        1996        1997
<S>                                                                             <C>         <C>         <C>
Number of vessels............................................................          6           6           6
Time charter equivalents(1)..................................................   $ 25,629    $ 25,276    $ 25,334
</TABLE>

(1) Time charter equivalents are calculated by deducting total voyage expenses
    from total voyage revenue and dividing the result by the total days per
    voyage.

Overview of Operating Expenses and Capital Expenditures

         The Company's operating expenses are primarily a function of fleet size
and utilization.  The most significant  expense  categories are crew payroll and
benefits, depreciation and amortization,  charter hire, maintenance and repairs,
fuel, and insurance.

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

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

     The  Company  capitalizes  expenditures  exceeding  $5,000 for  product and
chemical tankers and $3,000 for all other vessels, where the item acquired has a
useful life of three years or greater. Vessel

                                                        32

<PAGE>



improvements  are  capitalized  if they  extend the useful life of the vessel or
increase  its value.  The  Company  overhauls  main  engines  and key  auxiliary
equipment in accordance with a continuous  planned  maintenance  program.  Under
applicable  regulations,  the Company's chemical and product carriers,  offshore
service vessels, and its four largest tugs are required to be drydocked twice in
a five-year  period for inspection and routine  maintenance  and repairs.  These
vessels are also required to undergo  special surveys every five years involving
comprehensive  inspection  and  corrective  measures to insure their  structural
integrity  and proper  functioning  of their cargo and ballast  piping  systems,
critical  machinery  and  equipment,  and coatings.  The Company's  fuel barges,
because  they are operated in fresh  water,  are  required to be drydocked  only
twice in each ten-year period.  The Company's harbor tugs and towboats generally
are not required to be drydocked on a specific schedule.  During the years ended
December 31, 1995, 1996, and 1997, the Company drydocked 42, 25, and 42 vessels,
respectively,  at an aggregate cost (exclusive of lost revenue) of $2.0 million,
$1.6  million,  and $4.5  million,  respectively.  The Company  accounts for its
drydocking  costs  under  the  deferral  method.   Under  the  deferral  method,
capitalized  drydocking  costs are expensed  over the period  preceding the next
scheduled  drydocking.  See  Note  1 of  the  Company's  consolidated  financial
statements.  In addition to variable expenses associated with vessel operations,
the Company incurs fixed charges to depreciate  its marine  assets.  The Company
calculates  depreciation  based on a useful life  ranging from 25 years from the
date built for its steel-hull  offshore  energy support vessels to 30 years from
the date built for aluminum-hull vessels,  unless extended to give consideration
to the  condition  of vessels at  acquisition  date and the  extent,  if any, of
significant  capital  improvements  which  have been made to such  vessels,  the
lesser of any applicable  lease term life or the OPA 90 life for its product and
chemical carriers,  ten years from the acquisition date for its fuel barges, and
40 years from the date built for its towboats and tugs.

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

Results of Operations

  Year Ended December 31, 1997 Compared with the Year Ended December 31, 1996

         Revenue.  Revenue  increased  92% to $210.3  million for the year ended
December  31, 1997 from  $109.4  million  for the year ended  December  31, 1996
primarily due to increased revenue in the Company's  offshore energy support and
chemical transportation operations.

         Revenue from offshore energy support operations  increased 155% for the
year ended December 31, 1997 primarily due to acquisitions  and higher day rates
resulting  from  increased   offshore   exploration  and  production   activity.
Utilization of supply boats decreased to 91% for 1997 from 94% for 1996 due to a
program  of  regularly  scheduled  drydocking,  and  utilization  of crew  boats
remained constant at 94% for 1997 and 1996.  During 1997,  average day rates for
supply boats owned, operated, or managed by the Company increased 54% from 1996,
and average day rates for crew boats owned,  operated, or managed by the Company
increased 36% from 1996.


                                                        33

<PAGE>



         Petroleum product  transportation revenue decreased 5% to $18.0 million
for the year  ended  December  31,  1997 from $18.9  million  for the year ended
December  31,  1996  primarily  due to the reduced  charter  rate on the Seabulk
Challenger.

         Chemical  transportation revenue increased 84% to $60.4 million for the
year ended  December 31, 1997 from $32.8 million for the year ended December 31,
1996 primarily due to the August 1996  acquisition of the OMI Chemical  Carriers
and the remaining 50% interest in OSTC.

         Revenue from  offshore and harbor  towing  operations  increased 46% to
$20.4  million for the year ended  December 31, 1997 from $14.0  million for the
year ended  December  31, 1996  primarily  as a result of  acquisitions  and the
redeployment of certain vessels in the offshore towing sector.

         Operating Expenses.  Operating expenses increased 73% to $110.3 million
for the year  ended  December  31,  1997 from $63.8  million  for the year ended
December 31, 1996  primarily  due to  increases  in crew  payroll and  benefits,
maintenance and repair, and supplies and consumables resulting from acquisitions
and increased business activity. As a percentage of revenue,  operating expenses
decreased  to 52% for the year  ended  December  31,  1997 from 58% for the year
ended December 31, 1996.

         Overhead Expenses. Overhead expenses increased 66% to $24.8 million for
the year ended  December 31, 1997 from $15.0 million for the year ended December
31, 1996 primarily due to increased  staffing  requirements due to acquisitions.
As a  percentage  of revenue,  overhead  expenses  decreased to 12% for the year
ended December 31, 1997 from 14% for the year ended December 31, 1996.

         Depreciation  and Amortization  Expense.  Depreciation and amortization
expense  increased 102% to $19.9 million for the year ended December 31, 1997 as
compared  with $9.8 million for the year ended  December 31, 1996 as a result of
an increase in fleet size due to acquisitions.

         Income from Operations.  Income from operations increased 166% to $55.3
million,  or 26% of  revenue,  for the year ended  December  31, 1997 from $20.8
million, or 19% of revenue,  for the year ended December 31, 1996 as a result of
the factors noted above.

         Net  Interest  Expense.  Net  interest  expense  decreased  40% to $7.0
million,  or 3% of  revenue,  for the year ended  December  31,  1997 from $11.6
million, or 11% of revenue,  for the year ended December 31, 1996 primarily as a
result of debt retirement.

         Other Income (Expense). Other expenses were ($3.7) million for the year
ended December 31, 1997 as compared to other income of $0.4 million for the year
ended December 31, 1996 primarily due to dividend payments relating to the trust
convertible preferred securities.

         Net Income (Loss).  The Company had net income of $25.5 million for the
year ended December 31, 1997 as compared to a net loss of ($2.1) million for the
year ended December 31, 1996 primarily as a result of the factors noted above.

   Year Ended December 31, 1996 Compared with Year Ended December 31, 1995

         Revenue.  Revenue  increased  55% to $109.4  million in 1996 from $70.6
million in 1995  primarily due to increased  revenue in the  Company's  offshore
energy support and chemical transportation operations.

                                                        34

<PAGE>



         Revenue from offshore energy support operations  increased 88% to $43.7
million in 1996 from $23.2  million in 1995  primarily due to  acquisitions  and
greater utilization of supply and crew boats and higher day rates resulting from
increased offshore exploration and production  activity.  During 1996, day rates
for supply boats owned,  operated,  or managed by the Company increased 57% from
1995,  and day rates for crew boats owned,  operated,  or managed by the Company
increased 7% from 1995.  Utilization  of supply boats  increased to 94% for 1996
from 81% for 1995, and  utilization of crew boats increased to 94% for 1996 from
85% for 1995.

         Petroleum product transportation revenue increased 17% to $18.9 million
in 1996 from $16.1  million in 1995  primarily  due to  increased  movements  of
product by the Company's towboat and barge fleet.

         Chemical  transportation revenue increased 76% to $32.8 million in 1996
from $18.6 million in 1995  primarily due to the August 1996  acquisition of the
OMI Chemical Carriers and the remaining 50% interest in OSTC.

         Revenue from offshore and harbor tug operations  increased 11% to $14.0
million in 1996 from $12.6  million in 1995  primarily  as a result of increased
tanker and freighter  traffic in Port Everglades.  Revenue also increased in the
port of Mobile due to a tariff increase and an increase in port traffic.

         Operating  Expenses.  Operating expenses increased 57% to $63.8 million
in 1996 from $40.7  million in 1995  primarily  due to increases in crew payroll
and benefits,  maintenance and repair,  and supplies and  consumables  resulting
from acquisitions and increased business  activity.  As a percentage of revenue,
operating expenses remained stable at 58% for both 1996 and 1995.

         Overhead Expenses.  Overhead expenses increased 20% to $15.0 million in
1996 from $12.5 million in 1995 primarily due to increased staffing requirements
due to acquisitions.  As a percentage of revenue, overhead expenses decreased to
14% in 1996 from 18% in 1995.

         Depreciation  and Amortization  Expense.  Depreciation and amortization
expense increased 56% to $9.8 million in 1996 compared with $6.3 million in 1995
as a result of an increase in fleet size due to acquisitions.

         Income from Operations.  Income from operations  increased 88% to $20.8
million,  or 19% of revenue,  in 1996 from $11.1 million,  or 16% of revenue, in
1995 as a result of the factors noted above.

         Net  Interest  Expense.  Net  interest  expense  increased  1% to $11.6
million in 1996 from $11.5  million in 1995.  As a  percentage  of revenue,  net
interest expense decreased to 11% in 1996 from 16% in 1995.

         Net Income (Loss). The Company had a net loss of $(2.1) million in 1996
after  incurring a net loss of $(0.4)  million in 1995  primarily as a result of
non-recurring charges of $8.1 million, net of a $1.5 million income tax benefit,
related to an early  extinguishment  of debt in connection  with the August 1996
initial public offering.


                                                        35

<PAGE>



Seasonality

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

Liquidity and Capital Resources

         The Company's capital  requirements  historically have arisen primarily
from its working capital needs,  acquisition of marine vessels,  improvements to
vessels, and debt service requirements.  The Company's principal sources of cash
have been borrowings,  cash provided by operating activities,  and proceeds from
the  initial  public  offering  of its Class A Common  Stock in August 1996 (the
"IPO"),  a  follow-on  offering of Class A Common  Stock in  February  1997 (the
"Follow-on  Offering"),  an  offering  of 6  1/2%  trust  convertible  preferred
securities  in June 1997 (the "Trust  Preferred  Offering"),  and an offering of
83/8% Senior Notes in February 1998 (the "Senior Note Offering").

         In August 1996,  the Company  completed the IPO,  which resulted in net
proceeds to the Company of  approximately  $76.7 million.  Of such net proceeds,
approximately  $34.7  million was used to fund the $35.5 million cash portion of
the $97.5 million  aggregate  purchase  price of three  chemical  carriers,  ten
supply  boats  and  one  crew  boat  (the  "August   1996   Acquisitions")   and
approximately $42.0 million was used to repay  indebtedness.  The balance of the
purchase  price of the August 1996  Acquisitions  was paid by the  assumption or
incurrence of $62.0 million of debt obligations. In addition, the Company agreed
to indemnify certain affiliates of one of the sellers for certain liabilities up
to a maximum of $7.0 million.

         In February 1997, the Company completed the Follow-on  Offering,  which
resulted in net proceeds to the Company of approximately  $94.3 million. Of such
amount,  approximately $36.2 million was used to repay outstanding indebtedness.
Of the balance of  approximately  $58.1  million,  $5.5 million was used to fund
vessel  acquisitions,  $20.9  million  was  used to fund  the  remainder  of the
purchase  price of four  supply  boats and one crew boat  acquired in the second
quarter of 1997,  $1.8 million was used to fund the purchase of one crew boat in
the third quarter of 1997, $6.9 million was designated to fund the refurbishment
and  lengthening  of two supply  boats  which were put into  service  during the
fourth quarter of 1997 and the remaining $23.0 million was available for general
corporate  purposes  and to fund a  portion  of the costs of the  vessels  being
constructed.

         In May 1997, the Company  acquired 35 offshore  energy support  vessels
operating  primarily in the Arabian  Gulf for  consideration  of $58.7  million,
consisting  of cash of $49.0  million,  a note  payable  in the  amount  of $6.0
million,  and 141,760  shares of Class A Common  Stock  valued by the Company at
$3.7  million.  Of the cash portion of the  purchase  price,  $10.5  million was
funded from the Company's  available  cash and $38.5 million was drawn under the
Credit Facility.

         In June 1997, the Company completed the Trust Preferred Offering, which
resulted in net proceeds to the Company of approximately $111.6 million. Of that
amount,  approximately $94.2 million was used to repay amounts outstanding under
its bank credit  facility  and $6.0  million was used to repay the $6.0  million
note issued in the May 1997 GMMOS  acquisition.  The remaining $11.4 million was
used for general corporate purposes.

         In October 1997, the Company completed the acquisition of a fleet of 35
offshore  energy  support  vessels  operating  primarily in the Arabian  Gulf, a
topside vessel repair facility, and certain related assets

                                                        36

<PAGE>



for cash of $36.0 million,  which was funded with borrowings under the Company's
bank credit  facility.  In October  1997,  the Company also  acquired all of the
outstanding  stock of a  harbor  towing  company  that  operates  a fleet of six
tractor tugs and eight conventional harbor tugs, primarily in the port of Tampa,
Florida.  The aggregate  purchase price for the  acquisition  was $57.6 million,
consisting of cash of $37.0 million,  which was funded with borrowings under the
Company's  bank credit  facility,  and the  assumption  of  approximately  $20.6
million of debt,  of which $5.5  million  was repaid with  borrowings  under the
Company's bank credit facility.

         In December  1997, the Company  acquired a fleet of 14 offshore  energy
support  vessels,  operating  primarily in the Arabian Gulf, and certain related
assets for cash of $20.5  million,  which was funded with  borrowings  under the
Company's bank credit facility.

         In February  1998, the Company  acquired a fleet of 37 offshore  energy
support vessels, operating primarily offshore West Africa and offshore Southeast
Asia. The Company is operating 11 of the vessels  pursuant to bareboat  charters
pending their acquisition pursuant to the exercise of purchase options, which it
expects  to occur  during  the second  quarter  of 1998.  Of the $289.7  million
purchase price,  $271.1 million was funded with  borrowings  under the Company's
bank credit  facility  and the  remainder  is payable  upon the  exercise of the
purchase options.

         In February 1998, the Company completed the Senior Note Offering, which
resulted in net proceeds to the Company of approximately $291.7 million. Of that
amount,  $266.7 was used to repay  outstanding  indebtedness and the balance was
available for general corporate purposes.

         In February  1998,  the Company  entered  into an amended and  restated
revolving  credit and term loan agreement (the "Amended Credit  Agreement") with
Citibank,  N.A., as  Administrative  Agent, and BankBoston,  N.A. and BancBoston
Securities Inc., as Documentation Agent and Syndication Agent, respectively. The
Credit  Facility  merged the  Company's  revolving  line of credit and term loan
under one agreement and requires that aggregate borrowings thereunder be secured
with a portion of the Company's assets,  primarily vessels and subsidiary stock,
initially having an appraised value of approximately  $400.0 million. The Credit
Facility  provides  for (i) a $175.0  million  revolving  credit  facility  that
matures  February  12,  2003,  and (ii) a $150.0  million term loan that matures
March  31,  2005,  and  that  is  payable  in 28  equal  quarterly  installments
commencing on June 30, 1998 and ending on the maturity  date.  Borrowings  under
the Credit  Facility bear interest based on a rate tied to the Eurodollar or the
higher  of (i) the base  rate of the  Administrative  Agent or (ii) the  Federal
Funds rate plus 0.5%,  at the  Company's  option,  plus a margin  based upon the
ratio of the Company's consolidated debt to EBITDAR. The effective interest rate
under the Credit  Facility was 6.625% at March 10, 1998.  Pursuant to the Credit
Facility, the Company is required to meet certain financial tests and is subject
to certain covenants.

         In March 1998,  the Company  acquired  seven harbor tugs, two petroleum
product  carriers,  and a topside repair  facility for a purchase price of $31.4
million. The purchase price was funded with borrowings under the Credit Facility
and invested proceeds of the Senior Note Offering.

         The Company's  future capital needs are expected to relate primarily to
debt  service  obligations,  maintenance  and  improvements  of its  fleet,  and
acquisitions.  The Company's  outstanding  indebtedness under the Amended Credit
Agreement at March 10, 1998,  was $154.0  million.  The Company's  principal and
interest payment  obligations for 1998 are estimated to be  approximately  $63.8
million,   and  operating  lease  obligations  for  1998  are  estimated  to  be
approximately $4.9 million.


                                                        37

<PAGE>



         Capital requirements for vessel maintenance and improvements, including
scheduled  drydockings,  were  approximately  $20.0  million  for 1997,  and are
expected to be approximately $50.0 million for 1998.

         During  1997,  the  Company  constructed  one SDM(TM) at a cost of $5.0
million,  one  double-hull  barge at a cost of $1.0 million,  and purchased four
additional  double-hull  barges for an  aggregate  of $2.4  million.  These four
barges are currently being  refurbished for an estimated  aggregate cost of $2.6
million  and  will be  deployed  in Sun  State's  operations.  The  Company  has
contracted  for the  construction  of two  additional  SDMs(TM) at an  estimated
aggregate cost of  approximately  $10.0 million with delivery  expected in 1998.
The Company has contracted for the construction of six supply boats for delivery
during 1998 and 1999 at an estimated  aggregate  cost of $54.0  million,  one of
which was delivered in January 1998. The Company has also agreed to purchase for
an estimated  aggregate cost of $15.3 million,  five newly constructed  152-foot
crew  boats,  scheduled  for  delivery  in 1998 and 1999.  The  Company has also
contracted for the  construction  of two tugs at an estimated  aggregate cost of
$9.1 million for delivery in the second quarter of 1998, and the construction of
a double-skin  barge at an estimated  cost of $1.9 million for delivery in 1998.
During 1997,  the Company  formed a joint venture with Aker Marine  Contractors,
Inc.   ("Aker")  to  construct   and  operate  a  279-foot   construction/anchor
handling/tug  supply vessel. The Company's capital  expenditure  obligation with
respect to such joint venture is currently  estimated to be approximately  $20.8
million,  of which $1.6 million was expended in 1997, and $16.9 million and $2.3
million are expected to be expended in 1998 and 1999, respectively.  The Company
currently  intends to fund the aggregate  cost of the SDMs(TM),  the crew boats,
the supply boats,  the barges,  the tugs, and the  construction/anchor  handling
tug/supply  vessel from available  working capital,  borrowings under the Credit
Facility, lease financing, or a combination of such sources.

         The Company has an 0.8% equity  interest in four 45,300 dwt double-hull
product  carriers that are currently under  construction.  The aggregate cost of
the four  carriers is estimated  to be $200.0  million,  of which a  substantial
portion is being  financed with the proceeds of  government-guaranteed  Title XI
ship financing bonds issued in March 1996. The Company has agreed to purchase an
additional  25.0% interest during the first half of 1998 at an estimated cost of
$12.0  million and has an  exclusive  option to  purchase  the  remaining  74.8%
interest at an estimated cost of $27.4 million.

         In May 1997, the Company's board of directors authorized the repurchase
of up to 1,000,000  shares of the Company's Class A Common Stock.  The amount of
funds  required to  repurchase  Class A Common Stock will depend upon the actual
number of shares  repurchased and the market price paid by the Company for those
shares. The Company has not repurchased any shares of Class A Common Stock under
this authorization.

         The Company  believes  that the  remaining  proceeds of the Senior Note
Offering, cash generated from operations, and amounts available under the Credit
Facility will be sufficient to fund debt service  requirements,  planned capital
expenditures,  and working capital  requirements for the foreseeable future. The
Company also believes that such resources together with the potential future use
of debt or equity  financing,  will allow the Company to pursue its  strategy of
growth through acquisitions.  However,  since future cash flows are subject to a
number of  uncertainties,  including the condition of the markets  served by the
Company,  there can be no assurance  that these  resources  will  continue to be
sufficient to fund the Company's cash requirements.



                                                        38

<PAGE>



Forward-Looking Information

          The  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations ("MD&A") contains "forward-looking  statements" within the
meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
Act. All  statements  other than  statements of historical  fact included in the
MD&A, including  statements  regarding the Company's operating strategy,  plans,
objectives  and beliefs of management  for future  operations,  planned  capital
expenditures  and  vessel  acquisition  and  construction  are   forward-looking
statements. Although the Company believes the expectations and beliefs reflected
in such forward-looking statements are reasonable, it can give no assurance that
they will prove to have been correct.

Effect of Inflation

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

Prospective Accounting Changes

          In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income," which is effective for fiscal years  beginning after December 15, 1997.
This  Statement   established   standards  for  the  reporting  and  display  of
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial statements.  The new rule requires that the Company (a) classify items
of other  comprehensive  income by their nature in a financial statement and (b)
display the accumulated  balance of other  comprehensive  income separately from
retained  earnings and additional  paid-in  capital in the equity section of the
balance  sheet.  The Company  plans to adopt SFAS No. 130 in 1998 and expects no
material impact to the Company's financial statement presentation.

          Also in June 1997,  the FASB issued SFAS No.  131,  "Disclosure  about
Segments of an  Enterprise  and Related  Information,"  which is  effective  for
fiscal years beginning  after December 15, 1997. This Statement  supersedes SFAS
No. 14, "Financial Reporting for Segments of a Business  Enterprise," and amends
SFAS No. 94, "Consolidation of all Majority-Owned  Subsidiaries." This Statement
requires annual financial  statements to disclose information about products and
services,  geographic areas and major customers based on a management  approach,
along  with  interim  reports.   The  management  approach  requires  disclosing
financial and descriptive information about an enterprise's reportable operating
segments  based  on  reporting  information  the way  management  organizes  the
segments  for making  business  decisions  and  assessing  performance.  It also
eliminates the requirement to disclose additional information about subsidiaries
that were not  consolidated.  This new  management  approach  may result in more
information  being  disclosed than  presently  presented and require new interim
information not previously presented. The Company plans to adopt SFAS No. 131 in
1998  with  impact  only to the  Company's  disclosure  information  and not its
results of operations.

   Impact of Year 2000

          Some of the Company's  older computer  programs were written using two
digits  rather  than four to define  the  applicable  year.  As a result,  those
computer programs have time-sensitive  software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure

                                                        39

<PAGE>



or miscalculations  causing  disruptions of operations,  including,  among other
things, a temporary inability to process transactions,  send invoices, or engage
in similar normal business activities.

          The Company has  completed an assessment  of their  domestic  computer
systems and is currently completing the installation of a management information
system that is year 2000  compliant.  The  Company is  currently  assessing  the
information  systems at overseas  locations acquired during 1997 and believes it
will  have to  modify or  replace  portions  of its  software  so that  overseas
computer  systems will function  properly with respect to dates in the year 2000
and thereafter. The total expected cost to ensure overseas systems are year 2000
compliant is estimated to range from $3.0 to $3.5 million.

          The  overseas  project is  estimated  to be  completed  not later than
December 31, 1998,  which is prior to any  anticipated  impact on its  operating
systems.  The Company believes that with  modifications to existing software and
conversions  to new  software,  the Year 2000  Issue  will not pose  significant
operational  problems for its computer systems.  However,  if such modifications
and conversions are not made, or are not completed  timely,  the Year 2000 Issue
could have a material impact on the operations of the Company.

          The costs of the project and the date on which the Company believes it
will  complete  the Year  2000  modifications  are  based on  management's  best
estimates,  which were derived utilizing numerous  assumptions of future events,
including the continued  availability  of certain  resources and other  factors.
However,  there can be no guarantee  that these  estimates  will be achieved and
actual results could differ materially from those anticipated.  Specific factors
that might cause such material  differences include, but are not limited to, the
availability  and cost of personnel  trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertanties.

Item 8.  Financial Statements

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

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

          None

                                                        40

<PAGE>



                             Part III

Item 10.  Directors and Executive Officers of the Registrant.

          The  information  required by Item 10 is  contained  in the  Company's
Proxy Statement for the 1998 Annual Meeting of  Shareholders  under the captions
"Directors  and Nominees" and  "Compliance  with Section 16(a) of the Securities
Exchange  Act of  1934,"  and in Item 4a of this  Report  on Form  10-K,  and is
incorporated herein by reference.

Item 11.  Executive Compensation.

          The  information  required by Item 11 is  contained  in the  Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Executive Compensation," and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

          The  information  required by Item 12 is  contained  in the  Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Common Stock Ownership of Certain  Beneficial  Owners and  Management,"  and is
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

          The  information  required by Item 13 is  contained  in the  Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Compensation   Committee  Interlocks  and  Insider  Participation  and  Certain
Transactions," and is incorporated herein by reference.



                                                        41

<PAGE>



                                 Part IV

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

         (a) (1) List of Financial  Statements.  The  following is a list of the
financial  statements  included at the end of this Report of Form 10-K beginning
on page F-1:

         Report of Independent Certified Public Accountants
         Consolidated Balance Sheets as of December 31, 1996 and 1997
         Consolidated  Statements of Operations for the Years Ended December 31,
              1995, 1996 and 1997
         Consolidated Statements of Stockholders' Equity for the Years Ended
              December 31, 1995, 1996 and 1997
         Consolidated Statements of Cash Flows for the Years Ended December 31,
              1995, 1996 and 1997
         Notes to Consolidated Financial Statements

              (2) List of Financial Statement Schedules. All schedules have been
omitted  because  they  are not  applicable  or not  required,  or the  required
information is provided in the financial statements or notes thereto.

         (b)  Reports on Form 8-K.

         No reports on Form 8-K were filed during the last quarter of the fiscal
year covered by this Report on Form 10-K.

         (c) List of Exhibits.  The  following is a list of exhibits  furnished.
Copies of exhibits will be furnished upon written  request of any stockholder at
a charge of $.25 per page plus postage.

Exhibit
Number                                                Exhibit

 3.1       Amended  and  Restated  Articles  of  Incorporation.(5)
 3.2       Bylaws of the Company, as amended.(5)
 4.1       Form  of  Class  A  Common  Stock  Certificate (Domestic).(5)
 4.2       Form of Class A Common Stock Certificate  (Foreign).(5)
 4.3       Certificate of Trust of Hvide Capital Trust.(8)
 4.4       Amended and Restated Declaration of Trust, dated as of June 27, 1997,
           among Hvide Marine Incorporated as Depositor, The Bank of New York as
           Property Trustee, The Bank of New York (Delaware) as Delaware
           Trustee, and J. Erik Hvide, John H. Blankley and Gene Douglas as
           Administrative Trustees.(8)
 4.5       Indenture for the 6 1/2% Convertible Subordinated  Debentures,  dated
           as of June 27, 1997, among Hvide Marine  Incorporated and The Bank of
           New York, as Indenture Trustee.(8)
 4.6       Form of 6 1/2% Preferred Securities.(8)
 4.7       Form of 6 1/2% Convertible Debentures.(8)
 4.8       Preferred Securities Guarantee Agreement, dated as of June 27, 1997,
           between Hvide Marine Incorporated, as Guarantor, and The Bank of New
           York, as Guarantee Trustee.(8)
 4.9       Indenture,  dated February 19, 1998, among Hvide Marine Incorporated,
           the Subsidiary  Guarantors  named therein and the Bank of New York as
           Trustee.(12)

                                                        42

<PAGE>



 4.10      Registration  Rights Agreement,  dated as of February 19, 1998, among
           Hvide Marine  Incorporated,  the Subsidiary  Guarantors named therein
           and Donaldson, Lufkin & Jenrette Securities Corporation and the other
           Initial Purchasers.(12)
10.1       Non-Compete Agreement, between the Company and Hans J. Hvide, dated
           September 28, 1994.(2)
10.2       Equity Ownership Plan.(6)
10.3       Stock Option Plan for Directors.(6)
10.4.1     1996 Employee Stock Purchase Plan.(6)
10.4.2     Retirement Plan and Trust. (7)
10.5       Security  Agreement,  dated  December  14,  1973,  relating to United
           States  Government Ship Financing  Bonds,  between The Provident Bank
           and  The  United   States  of  America,   with   respect  to  Seabulk
           Challenger/S.T.L. 3901.(1)
10.6*      Bareboat  Charter,  dated as of December 14, 1973, by and between The
           Provident  Bank and Seabulk  Tankers,  Ltd.,  with respect to Seabulk
           Challenger/S.T.L. 3901.(1)
10.7*      Time Charter Party,  dated as of December 20, 1989,  between  Seabulk
           Tankers,  Ltd.,  and  Shell  Oil  Company  with  respect  to  Seabulk
           Challenger/S.T.L. 3901, as amended.(1)
10.8       Security  Agreement,  dated  August  20,  1975,  by  and  among  Port
           Everglades  Towing,  Inc., Central National Bank of Cleveland and The
           United   States   of   America,   with   respect   to   the   Seabulk
           Magnachem/S.C.C. 3902, as amended.(1)
10.9*      Bareboat  Charter,  dated  February 24, 1977, by and between  Central
           National Bank of Cleveland and Seabulk Chemical Carriers,  Inc., with
           respect to Seabulk Magnachem/S.C.C. 3902, as amended.(1)
10.10      Sub-Bareboat Charter, dated January 16, 1988, between Seabulk
           Chemical Carriers, Inc., and Hvide Shipping, Incorporated, with
           respect to Seabulk Magnachem/S.C.C. 3902, as amended.(1)
10.12*     Tanker Time Charter Party,  dated December 15, 1989,  between Seabulk
           Ocean Systems  Corporation and Ocean Specialty  Tankers  Corporation,
           with respect with to Seabulk Magnachem/S.C.C. 3902, as amended.(1)
10.13*     Tanker Time Charter Party, dated December 15, 1989, between Seabulk
           Transmarine Partnership, Ltd., and Ocean Specialty Tankers
           Corporation, with respect to Seabulk America.(1)
10.14      Franchise  Agreement,  dated as of January 8,  1975,  by and  between
           Canaveral Port Authority and Port Everglades Towing, Inc.(1)
10.15      Non-Exclusive Franchise Agreement,  dated as of March 7, 1991, by and
           between   Port    Everglades    Authority    and   Hvide    Shipping,
           Incorporated.(1)
10.16*     Contract for Fuel  Transportation,  dated as of February 18, 1993, by
           and  between  Florida  Power & Light  Company  and Sun State  Marine,
           Incorporated.(1)
10.17      Post-Retirement Benefits Agreement between the Company and Hans J.
           Hvide, dated September 28, 1994.(2)
10.18      Letter of Credit Agreement, dated as of September 29, 1994, between
           Hvide Shipping, Inc. and Bank of Boston.(2)
10.19      Amended and Restated  Credit  Agreement dated as of June 21, 1996, by
           and  among  Hvide  Marine  Incorporated,  Citibank,  N.A.,  The First
           National Bank of Boston, BNY Financial Corporation, Hibernia National
           Bank, and Amsouth Bank of Florida.(5)
10.20      Amended and Restated Credit Agreement dated as of February 3, 1997.
10.21      Amendment No. 2 to Charter of Seabulk Magnachem.(2)
10.22      Form of Recapitalization Agreement among Hvide Corp., Hvide Marine
           Incorporated, the Junior Subordinated Noteholders, the Senior
           Subordinated Noteholders, J. Erik Hvide, and certain trusts.(5)

                                                        43

<PAGE>



10.23      Form of Registration Rights Agreement by and between Hvide Marine
           Incorporated and certain shareholders.(5)
10.24      Form of Agreement Among Shareholders among certain shareholders.(5)
10.25      Form of Amended and Restated Contingent Share Issuance Agreement
           among Hvide Marine Incorporated and certain purchasers.(5)
10.26      Registration  Rights  Agreement,  dated June 27, 1997,  between Hvide
           Capital   Trust  and   Donaldson,   Lufkin  &   Jenrette   Securities
           Corporation,  Howard, Weil,  Labouisse,  Friedrichs  Incorporated and
           Raymond James & Associates, Inc., as Purchasers.(8)
10.27      Asset Sale Agreement between Hvide Marine Incorporated and Wellington
           Capital Limited.(9)
10.28      Revolving Credit Agreement dated September 30, 1997 by and among
           Hvide Marine Incorporated, Citibank, N.A., as Administrative Agent,
           BankBoston, N.A., as Syndicate Agent, with Citicorp Securities, Inc.
           and BankBoston Securities, Inc., having acted as Arrangers.(10)
10.29      Purchase Agreement between Hvide Marine Incorporated and Care
           Offshore, Inc.(11)
10.30      Amended and Restated Revolving Credit and Term Loan Agreement, dated
           as of February 12, 1998 among Hvide Marine Incorporated, as Borrower,
           the  Subsidiary Guarantors named therein,  the lending  institutions
           which are or may become parties  thereto,  CitiBank,  N.A., as
           Administrative  Agent, BankBoston,  N.A., as Documentation Agent and
           BancBoston  Securities, Inc., as Syndication Agent.(12)
12         Computation of Ratio of Earnings to Fixed Charges.
21         List of Subsidiaries.(12)
23.1       Consent of Ernst & Young LLP.
27.1       Financial Data Schedule.
27.2       Financial Data Schedule.
27.3       Financial Data Schedule.
27.4       Financial Data Schedule.
-------------------
  *    Confidential  treatment  requested.  The  materials  omitted  from  these
       documents  have been marked with an asterisk (*). The  materials  omitted
       have  been  separately   filed  with  the  Commission   pursuant  to  the
       confidential treatment request.
(1)    Incorporated  herein by reference to  Registration  Statement on Form S-1
       (Registration No. 33-78166) filed with the Commission on April 26, 1994.
(2)    Incorporated  herein by reference to Amendment No. 1 to  Registration
       Statement  on Form S-1  (Registration  No.  33-78166)  filed with the
       Commission on May 3, 1996.
(3)    Incorporated  herein by reference to Amendment No. 2 to  Registration
       Statement  on Form S-1  (Registration  No.  33-78166)  filed with the
       Commission on May 13, 1996.
(4)    Incorporated  herein by  reference  to  Amendment  No. 3 to  Registration
       Statement  on  Form  S-1  (Registration  No.  33-78166)  filed  with  the
       Commission on July 11, 1996.
(5)    Incorporated  herein by  reference  to  Amendment  No. 4 to  Registration
       Statement  on  Form  S-1  (Registration  No.  33-78166)  filed  with  the
       Commission on August 5, 1996.
(6)    Incorporated herein by reference to Form S-8 (Registration No. 333-17621)
       filed with the Commission on December 11, 1996.
(7)    Incorporated herein by reference to Form S-8 (Registration No. 333-19543)
       filed with the Commission on January 10, 1997.
(8)    Incorporated herein by reference to Form S-3 (Registration No. 333-34941)
       filed with the Commission on September 4, 1997.
(9)    Incorporated herein by reference to Form 8-K filed with the Commission on
       June 9, 1997.
(10)   Incorporated herein by reference to Form 10-Q filed with the Commission
       on November 7, 1997.
(11)   Incorporated herein by reference to Form 8-K filed with the Commission on
       February 25, 1998.
(12)   Incorporated herein by reference to Form S-4 (Registration No. 333-42039)
       filed with the Commission on March 18, 1998.


                                                        44

<PAGE>



                                     SIGNATURES

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

                                      HVIDE MARINE INCORPORATED

                                   By:      /s/ J. ERIK HVIDE
                                            J. Erik Hvide
                                   President and Chief Executive Officer

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

              Signature                              Title                                 Date

<S>                                         <C>                                       <C>
          /s/ J. ERIK HVIDE                     Chairman of the Board,                    March 30, 1998
--------------------------------------
            J. Erik Hvide                     President, Chief Executive
                                               Officer and Director
                                             (principal executive officer)

        /s/ JOHN H. BLANKLEY                    Executive Vice                            March 30, 1998
--------------------------------------
          John H. Blankley                    President -- Chief Financial
                                                 Officer and Director
                                              (principal financial officer)

        /s/ EUGENE F. SWEENEY                Executive Vice President and                 March 30, 1998
--------------------------------------
          Eugene F. Sweeney                            Director


       /s/ JOHN J. KRUMENACKER                  Controller (principal accounting          March 30, 1998
--------------------------------------
         John J. Krumenacker                               officer)

     /s/ ROBERT B. CALHOUN, JR.                        Director                           March 30, 1998
--------------------------------------
       Robert B. Calhoun, Jr.

          /s/ GERALD FARMER                            Director                           March 30, 1998
--------------------------------------
            Gerald Farmer

         /s/ JEAN FITZGERALD                           Director                           March 30, 1998
--------------------------------------
           Jean Fitzgerald

           /s/ JOHN J. LEE                             Director                           March 30, 1998
--------------------------------------
             John J. Lee

         /s/ WALTER C. MINK                            Director                           March 30, 1998
--------------------------------------
           Walter C. Mink

           /s/ ROBERT RICE                             Director                           March 30, 1998
--------------------------------------
             Robert Rice

                                                       Director                           March    , 1998
         Raymond B. Vickers

        /s/ JOSIAH O. LOW III                          Director                           March 30, 1998
--------------------------------------
          Josiah O. Low III
</TABLE>



                                                        45

<PAGE>




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
  Hvide Marine Incorporated

         We have audited the accompanying  consolidated  balance sheets of Hvide
Marine  Incorporated  and subsidiaries as of December 31, 1996 and 1997, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the three years in the period ended  December 31, 1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the consolidated  financial position of Hvide
Marine  Incorporated  and  subsidiaries  at December 31, 1997 and 1996,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted accounting principles.


                                             ERNST & YOUNG LLP



Miami, Florida
February 19, 1998,
   except for the third paragraph
   of Note 18, as to which the date is
   March 16, 1998




                                                        F-1

<PAGE>



                    HVIDE MARINE INCORPORATED AND SUBSIDIARIES

                              CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                                   December 31
                                                                                               1996       1997
                                                                                              (In thousands, except
                                                                                                 share amounts)
                                 ASSETS
<S>                                                                                          <C>        <C>
Current assets:
   Cash and cash equivalents..............................................................   $  9,617   $ 14,952
   Accounts receivable:
     Trade, net of allowances for doubtful accounts of $115 and $1,093, respectively......     16,049     36,903
     Insurance claims and other...........................................................      1,717      3,234
   Inventory, spare parts and supplies....................................................      5,517      8,162
   Prepaid expenses.......................................................................      1,253      3,085
   Deferred costs.........................................................................      4,173      4,516
                                                                                             --------   --------
     Total current assets.................................................................     38,326     70,852
Property:
   Construction in progress...............................................................      8,041     42,010
   Vessels and improvements...............................................................    229,776    492,070
     Less accumulated depreciation........................................................    (27,480)   (45,463)
   Furniture and equipment................................................................      4,502      7,366
     Less accumulated depreciation........................................................     (1,409)    (1,625)
                                                                                             --------   --------
     Net property.........................................................................    213,430    494,358
Other assets:
   Deferred costs.........................................................................      4,645      9,580
   Investment in affiliates...............................................................      1,291      1,627
   Goodwill (net).........................................................................      8,612     25,361
   Deposits and other.....................................................................      7,169      2,783
                                                                                             --------   --------
     Total other assets...................................................................     21,717     39,351
                                                                                             --------   --------
     Total................................................................................   $273,473   $604,561
                                                                                             ========   ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current maturities of long-term debt...................................................   $  24,375  $   7,534
   Current obligations under capital leases...............................................       1,443      1,714
   Accounts payable.......................................................................       6,278     17,187
   Charter hire and other liabilities.....................................................      14,934     18,627
                                                                                             ---------  ---------
     Total current liabilities............................................................      47,030     45,062
Long-term liabilities:
   Long-term debt.........................................................................     108,154    177,573
   Obligations under capital leases.......................................................       7,492     10,726
   Deferred income taxes..................................................................       6,385     25,649
   Other..................................................................................       2,423      3,269
                                                                                             ---------  ---------
     Total long-term liabilities..........................................................     124,454    217,217
                                                                                             ---------  ---------
     Total liabilities....................................................................     171,484    262,279
Company obligated mandatorily redeemable preferred securities issued
   by a consolidated subsidiary...........................................................          --    115,000
Minority partners' equity in subsidiaries.................................................         898      2,295
Commitments and contingencies
Stockholders' equity:
   Preferred Stock, $1.00 par value--authorized 10,000,000 shares,
     issued and outstanding, none.........................................................          --         --
   Class A Common Stock--$.001 par value, authorized 100,000,000
     shares, issued and outstanding, 7,647,791 and 12,382,435.............................           8         12
   Class B Common Stock--$.001 par value, authorized 5,000,000 shares
     issued and outstanding, 3,419,577 and 2,906,465......................................           3          3
   Additional paid-in capital.............................................................      97,153    195,522
   Retained earnings......................................................................       3,927     29,450
                                                                                             ---------  ---------
       Total stockholders' equity.........................................................     101,091    224,987
                                                                                             ---------  ---------
       Total minority partners' equity in subsidiaries and stockholders' equity...........     101,989    227,282
                                                                                             ---------  ---------
       Total..............................................................................   $ 273,473  $ 604,561
                                                                                             =========  =========
</TABLE>



                  See notes to consolidated financial statements


                                                         F-2

<PAGE>



                      HVIDE MARINE INCORPORATED AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                  1995        1996        1997
                                                                                ---------  ----------  ---------
                                                                                        (In thousands, except
                                                                                           per share data)
<S>                                                                             <C>         <C>        <C>
Revenues.....................................................................   $  70,562   $109,356   $ 210,257
Operating expenses:
   Crew payroll and benefits.................................................      20,132     29,756      48,732
   Charter hire and bond guarantee fee.......................................       4,063      4,667      10,548
   Repairs and maintenance...................................................       5,347      8,984      15,512
   Insurance.................................................................       4,547      7,633       8,867
   Consumables...............................................................       3,395      6,643      13,654
   Other.....................................................................       3,180      6,094      12,970
                                                                                ---------   --------   ---------
     Total operating expenses................................................      40,664     63,777     110,283
Selling, general and administrative expenses:
   Salaries and benefits.....................................................       6,856      7,936      12,052
   Office expenses...........................................................       1,068      1,394       2,248
   Professional fees.........................................................       2,137      2,947       4,683
   Other.....................................................................       2,457      2,702       5,808
                                                                                ---------   --------   ---------
     Total overhead expenses.................................................      12,518     14,979      24,791
Depreciation and amortization................................................       6,308      9,830      19,850
                                                                                ---------   --------   ---------
Income from operations.......................................................      11,072     20,770      55,333
Interest:
   Interest expense..........................................................      11,748     11,908       8,341
   Interest income...........................................................        (288)      (277)     (1,317)
                                                                                ---------   --------   ---------
     Net interest............................................................      11,460     11,631       7,024
Other income (expense):
   Minority interest and equity in earnings of subsidiaries..................         137        894      (3,527)
   Other.....................................................................        (111)      (457)       (177)
                                                                                ---------   --------   ---------
     Total other income (expense)............................................          26        437      (3,704)
Income (loss) before provision for (benefit from) income
   taxes and extraordinary item..............................................        (362)     9,576      44,605
Provision for (benefit from) income taxes....................................          (2)     3,543      16,950
                                                                                ---------   --------   ---------
Income (loss) before extraordinary item......................................        (360)     6,033      27,655
Loss on early extinguishment of debt, net of applicable
   income taxes of $1,474 and $1,252 in 1996 and 1997, respectively..........          --      8,108       2,132
                                                                                --------    --------   ---------
     Net income (loss).......................................................   $    (360)  $ (2,075)  $  25,523
                                                                                =========   ========   =========

Earnings (loss) per common share:
Income (loss) before extraordinary item......................................   $   (0.14)  $   1.05   $    1.87
Loss on early extinguishment of debt.........................................          --      (1.41)      (0.14)
                                                                                ---------   --------   ---------
     Net income (loss) per common share......................................   $   (0.14)  $  (0.36)  $    1.73
                                                                                =========   ========   =========

Earnings (loss) per common share--assuming dilution:
Income (loss) before extraordinary item......................................   $   (0.14)  $   0.99   $    1.75
Loss on early extinguishment of debt.........................................          --      (1.23)      (0.12)
                                                                                ---------   --------   ---------
     Net income (loss) per common share--assuming dilution....................  $   (0.14)  $  (0.24)  $    1.63
                                                                                =========   ========   =========

Weighted average common shares outstanding...................................       2,535      5,763      14,785
                                                                                =========   ========   =========

Weighted average common and common equivalent
   shares outstanding--assuming dilution......................................      2,535      6,590      17,120
                                                                                =========   ========   =========

</TABLE>




               See notes to consolidated financial statements

                                                         F-3

<PAGE>



                  HVIDE MARINE INCORPORATED AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                     Class A                Class B                 Class C
                                  Common Stock           Common Stock            Common Stock     Additional
                                                                                                   Paid-In     Retained
                              Shares      Amount       Shares      Amount      Shares     Amount   Capital     Earnings     Total
                             ---------   -------     ---------   ---------   ---------   -------  ---------   ---------     -----
                                                             (In thousands, except share amounts)
<S>                        <C>           <C>        <C>         <C>        <C>         <C>       <C>         <C>           <C>
Balance at January 1,
  1995..................            --   $    --    1,558,210   $      1     976,630   $     1   $   6,341   $    6,362    $ 12,705
Net loss................            --        --           --         --          --        --          --         (360)       (360)
                           -----------   -------    ---------   --------   ---------   -------   ---------   ----------    --------
Balance at December 31,
  1995..................            --        --    1,558,210          1     976,630         1       6,341        6,002      12,345
Common Stock issued, net
  of issuance costs.....     7,647,791         8    1,861,367          2    (976,630)       (1)     90,812           --      90,821
Net loss................            --        --           --         --          --        --          --       (2,075)     (2,075)
                           -----------   -------    ---------   --------   ---------   -------   ---------   ----------    --------
Balance at December 31,
  1996..................     7,647,791         8    3,419,577          3          --        --      97,153        3,927     101,091
Common Stock issued in
  public offering, net of
  issuance costs........     4,000,000         4           --         --          --        --      93,516           --      93,520
Conversion of Class B
 Common Stock to Class
  A Common Stock........       513,112        --     (513,112)        --          --        --          --           --          --
Common Stock issued in
  connection with
  acquisition...........       141,760        --           --         --          --        --       3,650           --       3,650
Common Stock issued
  upon exercise of
  stock options.........        53,425        --           --         --          --        --         641           --         641
Common Stock issued
  pursuant to employee
  stock purchase plan           21,639        --          --          --         --         --         467           --         467
Common Stock issued to
  directors.............         4,708        --           --         --          --        --          95           --          95
Net income..............            --        --           --         --          --        --          --       25,523      25,523
                           -----------   -------    ---------   --------   ---------   -------   ---------   ----------    --------
Balance at December 31,
  1997..................    12,382,435   $    12    2,906,465   $      3          --   $    --   $ 195,522   $   29,450    $224,987
                           ===========   =======    =========   ========   =========   =======   =========   ==========    ========
</TABLE>











                      See notes to consolidated financial statements.


                                                                    F-4

<PAGE>



                         HVIDE MARINE INCORPORATED AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                      Year Ended December 31,
                                                                                   1995       1996       1997
                                                                                 --------   --------   ------
                                                                                         (In Thousands)
<S>                                                                             <C>       <C>        <C>
Other activities:
   Net income (loss).........................................................   $   (360) $  (2,075) $   25,523
   Adjustments  to reconcile net income (loss) to net cash
    provided by operating activities:
     Loss on early extinguishment of debt, net...............................         --      8,108       2,132
     Depreciation and amortization of property...............................      4,770      8,291      19,093
     Amortization of drydocking costs........................................      1,517      3,057       5,350
     Amortization of intangible assets.......................................        505        505         757
     Amortization of discount on long-term debt and financing costs                1,234      1,196         680
     Provision for bad debts.................................................        114        125       1,029
     Loss (gain) on disposals of property....................................        (73)       (13)        524
     Provision for (benefit from) deferred taxes.............................         (2)     3,543      13,147
     Minority partners' equity in losses of subsidiaries, net                       (625)      (756)       (183)
     Undistributed (earnings) losses of affiliates, net......................        488       (132)       (110)
     Other non-cash items....................................................         --         36          95
     Changes in operating assets and liabilities,
       net of effect of acquisitions:
        Accounts receivable..................................................     (5,056)    (1,928)    (20,640)
        Other assets.........................................................     (3,228)    (1,978)     (9,500)
        Accounts payable and other liabilities...............................      4,664      4,605       2,145
                                                                                --------  ---------  ----------
Net cash provided by operating activities....................................      3,948     22,584      40,042
Investing activities:
   Purchase of property......................................................     (6,312)    (8,759)    (67,117)
   Deposits for the purchase of property.....................................         --     (6,349)       (910)
   Proceeds from disposals of property.......................................        690          8       1,633
   Capital contribution to affiliates........................................         --       (736)       (226)
   Acquisitions,  net of escrow  deposit of $500
    utilized in 1995,  net of cash acquired of
    $1,722 in 1996 and net of escrow deposits
    utilized of $6,349 and cash acquired of $3,525 in 1997...................     (2,444)   (68,518)   (194,723)
                                                                                --------  ---------  ----------
Net cash used in investing activities........................................     (8,066)   (84,354)   (261,343)
Financing activities:
   Proceeds (repayments) of short-term borrowings, net.......................      7,500      1,994     (16,242)
   Proceeds from long-term debt..............................................         --     36,964     177,210
   Proceeds from issuance of common stock, net...............................         --     76,595      94,628
   Proceeds from issuance of redeemable preferred securities, net                     --         --     111,109
   Principal payments of long-term debt......................................     (5,458)   (45,189)   (135,877)
   Payment of financing costs................................................       (727)      (838)     (2,724)
   Payment of obligations under capital leases...............................       (510)    (1,189)     (1,468)
                                                                                --------  ---------  ----------
Net cash provided by financing activities....................................        805     68,337     226,636
                                                                                --------  ---------  ----------
Increase (decrease) in cash and cash equivalents.............................     (3,313)     6,567       5,335
Cash and cash equivalents at beginning of period.............................      6,363      3,050       9,617
                                                                                --------  ---------  ----------
Cash and cash equivalents at end of period...................................   $  3,050  $   9,617  $   14,952
                                                                                ========  =========  ==========
Supplemental schedule of noncash investing and financing activities
Net assets recorded in connection with dissolution of affiliate                 $     341  $     --  $       --
                                                                                =========  ========  ==========
Notes payable issued for the acquisition of vessels..........................   $   3,000  $    675  $    6,000
                                                                                =========  ========  ==========
Capital lease obligations for the acquisition of vessels and
   equipment.................................................................   $     --  $   6,098  $    4,972
                                                                                ========  =========  ==========
Title XI debt assumed for the acquisition of vessels.........................   $     --  $  34,650  $   15,057
                                                                                ========  =========  ==========
Short-term debt assumed in connection with acquisition of business              $     --  $     --   $    5,595
                                                                                ========  =========  ==========
Common stock issued for the redemption of notes payable......................   $     --  $    307   $       --
                                                                                ========  =========  ==========
Common stock issued for the repayment of debt................................   $     --  $  13,883  $       --
                                                                                ========  =========  ==========
Common stock issued for the acquisition of vessels...........................   $     --  $      --  $    3,650
                                                                                ========  =========  ==========
</TABLE>


           See notes to consolidated financial statements



                                                        F-5

<PAGE>



                     HVIDE MARINE INCORPORATED AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                    December 31, 1997

1.  Description of Business and Significant Accounting and Reporting Policies

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

         Organization and Basis of Consolidation.  The accompanying consolidated
financial  statements include the accounts of Hvide Marine Incorporated  ("HMI")
and its majority-owned  subsidiaries  (collectively the "Company"). All material
intercompany  transactions and balances have been eliminated in the consolidated
financial statements.

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

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

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

         Spare Parts and  Supplies.  Inventories  consist of vessel spare parts,
fuel,  and supplies that are recorded at cost and charged to vessel  expenses as
consumed.

         Long-Lived  Assets. The Company accounts for long-lived assets pursuant
to Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of", which requires  impairment  losses to be recorded on long-lived assets used
in operations when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.  Management reviews long-lived assets
and the related  intangible assets for impairment  whenever events or changes in
circumstances indicate the assets may be impaired.

     Property.  Vessels,  improvements and furniture and equipment are stated at
cost  less  accumulated  depreciation.   Major  renewals  and  improvements  are
capitalized  and  replacements,  maintenance and repairs which do not improve or
extend the lives of the assets are  expensed.  Depreciation  is  computed on the
straight-line  method  over  the  estimated  useful  lives  of the  assets.  The
estimated useful lives of

                                                        F-6

<PAGE>



vessels other than tankers  range from 15 to 40 years and the  estimated  useful
lives  of  furniture  and  equipment  are 3 to 10  years.  Tankers  and  related
improvements  are depreciated  over estimated useful lives, as determined by the
Oil Pollution Act of 1990 and other factors, ranging from 3 to 23 years.

         Vessels under capital  leases are amortized  over the estimated  useful
lives of the vessels.  Included in vessels and improvements at December 31, 1996
and 1997 are vessels under  capital  leases of  approximately  $11.6 million and
$17.6 million, net of accumulated amortization of approximately $0.3 million and
$1.0 million, respectively.

         Deferred  Costs.  Deferred  costs  primarily  represent  drydocking and
financing costs.  Drydocking costs are deferred and amortized over the period to
the next  drydocking,  generally 30 to 36 months.  Deferred  financing costs are
amortized  over the term of the related  borrowings.  At  December  31, 1996 and
1997,  deferred  costs  include  unamortized  drydocking of  approximately  $6.3
million and $7.0 million, respectively.

         Goodwill. Goodwill represents the excess of the purchase price over the
fair  value of  certain  long-lived  assets  acquired  and is  amortized  on the
straight-line  basis over 20 to 40 years.  The  carrying  value of  goodwill  is
reviewed if facts and  circumstances  suggest that it may be  impaired.  If this
review  indicates that goodwill will not be recoverable,  as determined based on
the estimated  undiscounted cash flows of the assets acquired over the remaining
amortization  periods,  the  carrying  value will be  adjusted  accordingly.  At
December  31,  1996  and  1997,   accumulated   amortization   of  goodwill  was
approximately $2.2 million and $2.8 million, respectively.

         Income Taxes.  HMI files a  consolidated  tax return with all corporate
subsidiaries  other than Seabulk Ocean  Systems  Holdings,  Inc.,  Seabulk Ocean
Systems  Corporation  and  Ocean  Specialty  Tankers  Corporation  which  file a
separate  consolidated  income tax return. Each partnership and trust subsidiary
files a separate tax return.

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

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

     Recently  Issued  Accounting  Pronouncements.  In 1997, the Company adopted
SFAS No. 128,  "Earnings per Share" (EPS). EPS amounts for all periods presented
have  been  restated,  where  appropriate,  to  conform  to  the  SFAS  No.  128
requirements.  Earnings  (loss)  per  common  share is  calculated  based on the
weighted average number of common shares outstanding during the period. Earnings
(loss) per common share  assuming  dilution  includes the effect of the weighted
average number

                                                        F-7

<PAGE>



of common and dilutive common equivalent shares outstanding and the if-converted
effect of dilutive securities outstanding during the respective periods.

     SFAS No. 130, "Reporting  Comprehensive  Income" is effective in 1998. SFAS
No. 130 establishes standards for reporting and displaying comprehensive income.
The adoption of this statement is not expected to result in a significant change
from the current required disclosures.

         SFAS No. 131,  "Disclosure  about Segments of an Enterprise and Related
Information" is effective in 1998. This statement abandons the "Industry Segment
Approach"  in  favor  of the  "Management  Approach"  for  disclosure  purposes.
Adoption of this statement will only effect the Company's disclosures.

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

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

2.  Debt

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

                                                                                  December 31,
                                                                             1996            1997
                                                                         -------------  -------------
<S>                                                                      <C>            <C>
Lines of Credit........................................................  $      10,647  $     135,000
Term Loan..............................................................         58,500             --
Acquisition Line.......................................................          9,700             --
Senior Note............................................................          9,153             --
Title XI Debt..........................................................         32,243         42,162
Notes Payable..........................................................         12,286          7,945
                                                                         -------------  -------------
                                                                               132,529        185,107
Less:  Current maturities..............................................        (24,375)        (7,534)
                                                                         -------------  -------------
                                                                         $     108,154  $     177,573
                                                                         =============  =============
</TABLE>

         On November 26, 1997,  the Company  entered into a term loan  agreement
(the "Term Loan Agreement") that provides for a $300.0 million term loan to fund
the cash portion of qualifying future acquisitions,  as defined.  Advances under
the Term Loan  Agreement may be drawn at any time prior to April 1, 1998 and are
payable in 28 quarterly  installments from June 30, 1998 through March 31, 2005.
There were no amounts  outstanding under the Term Loan Agreement at December 31,
1997.  (See Notes 5 and 18.)

         Borrowings  under  the Term  Loan  Agreement,  when  drawn,  will  bear
interest based on one of two  calculations set forth in the Term Loan Agreement,
at the Company's  option,  plus a margin based on the Company's  compliance with
certain financial ratios. One interest rate calculation is tied to the

                                                        F-8

<PAGE>



Eurodollar Rate and the other calculation is tied to the higher of the base rate
of the  administrative  agent  named in the Term Loan  Agreement  or the Federal
Funds  Effective  Rate (the "Base  Rate").  The Term Loan  Agreement  allows the
Company to convert its outstanding loans from Eurodollar Rate loans to Base Rate
loans, and vice versa, from time to time.

         On September 30, 1997, the Company entered into a credit agreement (the
"Credit  Agreement") that provides for a $175.0 million revolving line of credit
through September 30, 1999, at which time availability decreases by $6.0 million
per quarter  until  September  30, 2002 (the  "Maturity  Date").  The  Company's
outstanding  indebtedness  under the  Credit  Agreement  was  $135.0  million at
December 31, 1997.

         Borrowings under the Credit Agreement bear interest based on one of two
calculations set forth in the Credit Agreement,  at the Company's option, plus a
margin based on the Company's  compliance  with certain  financial  ratios.  One
interest  rate  calculation  is  tied  to the  Eurodollar  Rate  and  the  other
calculation is tied to the higher of the base rate of the  administrative  agent
named in the Credit  Agreement or the Base Rate. The Credit Agreement allows the
Company to convert its revolving credit loans from Eurodollar Rate loans to Base
Rate loans,  and vice versa,  from time to time.  Such  Borrowings were accruing
interest at  approximately  6.5% at December 31, 1997. On the Maturity Date, all
amounts  outstanding  under the revolving line of credit,  together with accrued
and unpaid  interest,  will become due and payable.  Prior to the Maturity Date,
the  Company  may repay any  outstanding  amount,  in whole or in part,  without
penalty or premium.

         Covenants under the Credit Agreement and the Term Loan Agreement, among
other things, (i) require the Company to meet certain financial tests, including
tests  requiring  the  maintenance  of minimum  leverage  ratios,  debt  service
coverage ratios,  and indebtedness to tangible net worth ratios;  (ii) limit the
creation  or  incurrence  of  certain  liens;  (iii)  limit  the  incurrence  of
additional indebtedness; (iv) limit the Company from making certain investments;
(v) restrict certain payments,  including  dividends,  with respect to shares of
any class of  capital  stock;  (vi)  restrict  modification  of the terms of the
Preferred Securities, and in certain circumstances the repayment, redemption, or
repurchase of the Preferred  Securities;  and (vii) limit certain corporate acts
of the Company such as making certain  dispositions of assets, and entering into
certain  types  of  business   transactions,   including   certain  mergers  and
acquisitions.

         On August 30, 1997, the Company secured a $5.6 million  stand-by letter
of  credit  with  one of its  banks  for a  period  of one  year  which,  unless
terminated,  renews automatically for additional one year periods. The letter of
credit is collateral  for a surety bond to fund any final award  relating to the
shipyard's  claims discussed in Note 5. There were no amounts  outstanding under
the letter of credit at December 31, 1997.

         On September 28, 1994,  and as amended on February 3, 1997, the Company
entered into an agreement for a credit  facility (the "Credit  Facility")  which
provided for a revolving  working  capital credit line of $20.0 million  through
January 15, 2002 (the "Revolving  Line") and a stand-by letter of credit of $5.6
million.  The Credit  Facility  was  replaced  with the Credit  Agreement  dated
September  30,  1997.  Borrowings  outstanding  under  the  Revolving  Line were
approximately $8.0 million at December 31, 1996.


                                                        F-9

<PAGE>



         The Credit  Facility,  as amended,  also  provided for a term loan (the
"Term  Loan") of up to $56.8  million and a $50.0  million  acquisition  line of
credit  (the  "Acquisition  Line")  to fund the cash  portion  of  acquisitions.
Borrowings outstanding under the Term Loan and Acquisition Line were repaid with
a portion of the  proceeds  from the  Private  Offering on June 27, 1997 and the
Second Offering on February 5, 1997, respectively. (See Notes 4 and 10.)

         On  September  30, 1994,  and as amended on May 24,  1995,  the Company
issued a $25.0 million senior subordinated note (the "Senior Note"). The Company
received net proceeds of approximately  $23.1 million. In 1996, $15.2 million of
the Senior Note was repaid  with a portion of the  proceeds  from the  Company's
initial  public  offering (the "IPO").  The remaining  balance was repaid with a
portion of the proceeds of the Second Offering. (See Note 10.)

         On August 14, 1996, the Company assumed Title XI debt of  approximately
$34.7  million  in  connection   with  the   acquisition  of  certain   vessels.
Additionally,  on  October  16,  1997,  the  Company  assumed  Title  XI debt of
approximately  $15.1 million in connection  with the purchase of the outstanding
common stock of an entity. (See Note 13). The Title XI debt is collateralized by
first preferred mortgages on certain vessels and bears interest at rates ranging
from  5.4% to  10.1%.  The  debt is due in  semiannual  principal  and  interest
payments through June 1, 2021. Under the terms of the Title XI debt, the Company
is required  to maintain a minimum  level of working  capital,  as defined,  and
comply with certain other financial covenants.

         On August 14, 1996 and  November  20,  1996,  the Company  issued notes
payable aggregating $10.5 million for the acquisition of vessels. The notes bear
interest at rates  ranging from 7.92% to 10% and mature at various dates through
November 2011. Amounts outstanding under the notes totaled $9.9 million and $7.9
million at December 31, 1996 and 1997, respectively.

         The aggregate  annual future  payments due on debt and notes payable as
of December 31, 1997 are as follows (in thousands):

         1998..............................................  $     7,534
         1999..............................................        9,012
         2000..............................................        5,695
         2001..............................................        4,443
         2002..............................................      137,893
         Thereafter........................................       20,530
                                                             -----------
                                                             $   185,107
                                                             ===========

         The Company made interest payments of approximately $9.0 million, $19.2
million and $9.2 million in 1995,  1996 and 1997,  respectively  and capitalized
interest of  approximately  $0.9 million in 1997. No interest was capitalized in
1995 and 1996.



                                                       F-10

<PAGE>



3.  Capital Leases

         The Company owns certain  vessels and other equipment under leases that
are classified as capital leases.  The following is a schedule of future minimum
lease payments  under capital leases  together with the present value of the net
minimum lease payments as of December 31, 1997 (in thousands):

         1998.......................................................   $  2,569
         1999.......................................................      2,477
         2000.......................................................      2,369
         2001.......................................................      2,091
         2002.......................................................      1,189
         Thereafter.................................................      6,500
                                                                       --------
         Total minimum lease payments...............................     17,195
         Less amount representing interest..........................     (4,755)
                                                                       --------
         Present value of minimum lease payments (including current
            portion of $1,714)......................................   $ 12,440
                                                                       ========

4.  Company Obligated Mandatorily Redeemable Preferred Securities Issued by a
    Subsidiary

            On June 24,  1997,  the Company  completed a private  offering  (the
"Private  Offering")  of  2,300,000  of  6  1/2%  Trust  Convertible   Preferred
Securities (the "Preferred Securities"). The Preferred Securities were issued by
Hvide Capital Trust (the "Trust"),  a 100%-owned  subsidiary of the Company. The
Trust  exists for the sole  purpose  of issuing  the  Preferred  Securities  and
investing  the  proceeds  from  the  issuance  thereof  in  6  1/2%  Convertible
Subordinated  Debentures  due June 15,  2012  (the  "Debentures")  issued by the
Company.  The net proceeds to the Company  were  approximately  $111.1  million,
after deducting  underwriting  commissions and other offering expenses.  Of such
amount,  approximately $94.2 million was used to repay amounts outstanding under
the Credit Facility and $6.0 million was used to repay other  indebtedness.  The
remaining $10.9 million was available for general corporate purposes.

         Holders  of  the   Preferred   Securities   are   entitled  to  receive
preferential  cumulative cash distribution from the Trust at an annual rate of 6
1/2% of the liquidation  preference of $50 per Preferred  Security accruing from
the date of the  original  issuance  of the  Preferred  Securities  and  payable
quarterly  in arrears on January 1, April 1, July 1 and  October 1 of each year,
commencing on October 1, 1997. The  distribution  rate and the  distribution and
other payment dates for the Preferred Securities correspond to the interest rate
and  interest and other  payment  dates for the  Debentures,  which are the sole
assets of the Trust. Through certain  undertakings,  including a guarantee,  the
Declaration  of Trust,  the Trust  Indenture  and the  Debentures,  the  Company
provides a full and unconditional guarantee of the Trust's obligations under the
Preferred Securities.

         The Preferred Securities are convertible,  beginning September 25, 1997
and prior to the maturity  date of the  Debentures  or, in the case of Preferred
Securities called for redemption, prior to the close of business on the business
day prior to the redemption date, at the option of the holder into shares of the
Company's  Class A Common  Stock at the rate of 1.7544  shares of Class A Common
Stock for each Preferred  Security  (equivalent to a conversion  price of $28.50
per  share  of  Class  A  Common  Stock),   subject  to  adjustment  in  certain
circumstances.

                                                       F-11

<PAGE>



5.  Commitments and Contingencies

         The  Company  leases  its  office   facilities  under  operating  lease
agreements  which expire at various dates through 2002.  Rent expense under such
leases was $591,000,  $699,000,  and $929,000 for the years ending  December 31,
1995, 1996 and 1997, respectively.

         A  portion  of  the  Company's   operations  consists  of  charters  of
ocean-going  vessels.  Two tankers are bareboat  chartered for periods extending
through  the years 1999 and 2002.  Charter  hire  expense on these  tankers  was
approximately  $3.2 million for each of the years ended December 31, 1995,  1996
and 1997.  Additionally,  one tug is bareboat  chartered  through the year 2010.
Charter  hire  expense  on this tug was  approximately  $217,000,  $614,000  and
$614,000 for the years ended December 31, 1995, 1996 and 1997, respectively.

         Aggregate  annual future  payments due under  non-cancelable  operating
leases and charter agreements are as follows (in thousands):

         1998......................................   $      4,938
         1999......................................          5,031
         2000......................................          3,680
         2001......................................          3,698
         2002......................................          2,703
                                                      ------------
                                                      $     20,050

         In  1990,  the  Company  withheld  approximately  $2.4  million  from a
shipyard  relating to delays and other problems  encountered in the construction
of a vessel. In 1993, the shipyard filed a claim to recover  approximately  $8.5
million  for costs  allegedly  due the  shipyard,  and the  Company  asserted  a
counterclaim for approximately  $5.6 million against the shipyard.  In addition,
the shipyard is seeking $10.0 million of punitive damages.  Management  believes
the shipyard's  claim amounts are  unsubstantiated  and that recoveries upon the
Company's  counterclaim,  together with insurance coverage, will exceed amounts,
if any,  which may be  awarded to the  shipyard.  Management  believes  that the
additional  costs incurred to complete the  construction  of the vessel exceeded
the amounts withheld  (settlement of construction costs, if any, would generally
be capitalized and depreciated  over future  periods);  however,  the Company is
unable to predict the final outcome of this matter.

         At December 31, 1997,  Hvide  Partners,  L.P.  ("HPLP"),  an affiliated
entity in which the Company participates as the sole general partner, was party,
through its five 75%-owned limited liability companies Hvide Van Ommeren Tankers
I-V LLC ("HVOT I-V"),  to contracts  for the  construction  of five  double-hull
petroleum  product  carriers.  Construction  on the  vessels is  expected  to be
completed in 1998 and 1999. (See Note 18.)

         In December 1997, the Company entered into an agreement, as amended, to
purchase  37  offshore   energy  support   vessels  for  an  aggregate  cost  of
approximately  $289.7  million.  At February 13, 1998, the Company had completed
the  acquisition  of 26 of the vessels and is operating  11 vessels  pursuant to
bareboat charters pending their acquisition  during April 1998. Vessels acquired
were financed under the Company's Term Loan  Agreement.  The Company has entered
into a management  agreement  with an affiliate of the seller  pursuant to which
the affiliate will continue to manage the

                                                       F-12

<PAGE>



operations of the fleet,  in exchange for a per diem  management fee per vessel,
for a minimum term of six months that may be extended for up to an additional 30
months at the Company's option.

         At December 31, 1997, the Company had  contracted for the  construction
of 15 vessels under various  agreements for an aggregate  cost of  approximately
$99.1 million.  The vessels are to be delivered on various dates from April 1998
to July 1999. At December 31, 1997, the Company had incurred approximately $18.1
million of construction costs under such agreements.  Capital requirements under
the agreements for the years ended December 31, 1998 and 1999 are estimated to
be approximately $69.8 million and $11.2 million, respectively.

6.  Employee Benefit Plans

         The  Company   sponsors  a  retirement  plan  and  trust  (the  "Plan")
established  pursuant to Section  401(k) of the  Internal  Revenue  Code,  which
covers  substantially  all  employees.  Subject to certain  dollar  limitations,
employees may  contribute a percentage of their  salaries to this Plan,  and the
Company will match a portion of the  employees'  contributions.  Profit  sharing
contributions by the Company to the Plan are discretionary.  For the years ended
December  1995,  1996 and  1997,  the  Company  contributed  approximately  $1.0
million, $1.3 million and $1.5 million, respectively, to the Plan.

7.  Stock Option Plans

         During 1996, the Company's Board of Directors approved two stock option
plans  covering  substantially  all  employees.  The Equity  Ownership Plan (the
"EOP")  provides  for the  issuance of a maximum of  1,000,000  shares of Common
Stock.  Under the terms of the EOP, the Company is authorized to grant incentive
stock options  (ISOs),  nonqualified  stock options (NSOs),  stock  appreciation
rights, stock awards, and cash awards.  Options and other awards are issuable at
the  discretion of committees  appointed by the Board of Directors and generally
vest  ratably  over a four year  period.  Pursuant  to the EOP,  options  may be
granted to  employees  at exercise  prices not less than market value at date of
grant and, to employees who own more than 10% of the Company's  combined  voting
power,  at  exercise  prices not less than 110% of the  market  value at date of
grant. Option terms range from 5 to 10 years.

         The Stock Option Plan for Directors covers directors of the Company and
provides for the issuance of a maximum of 70,000 shares of Common  Stock.  Under
the Stock Option Plan for Directors,  each director will receive,  upon the date
of their initial election,  options to purchase 5,000 shares of Common Stock and
will  receive  options  to  purchase  1,500  shares  of Common  Stock  each year
following the grant of the initial  options.  The exercise price for all options
granted  will be equal to the fair market  value of the Common Stock at the date
of grant and will become 100% vested and  exerciseable on the first  anniversary
date of the date of grant. Option terms are for a period of 10 years.

         Information for all stock option plans for the years ended December 31,
1996 and 1997 is as follows.  There were no stock  options  granted prior to the
Company's initial public offering in August 1996.


                                                       F-13

<PAGE>


<TABLE>
<CAPTION>


                                                             1996                           1997
                                                  ---------------------------    ---------------------------
                                                                   Weighted                      Weighted
                                                   Number           average       Number          average
                                                     of            exercise         of           exercise
                                                   options           price        options          price
<S>                                               <C>           <C>              <C>           <C>

   Options outstanding at beginning of year               --    $          --      806,000     $       12.00
     Granted....................................     806,000            12.00      150,950             28.96
     Exercised..................................          --               --      (53,425)            12.00
     Canceled...................................          --               --       (9,500)            14.73
                                                  ----------                     ---------
   Options outstanding at end of year...........     806,000            12.00      894,025             14.83
                                                  ==========                     =========
   Options exercisable at end of year...........      35,000            12.00       99,325             12.00

   Options available for future grants at end
     of year....................................     264,000                       113,050

   Weighted average fair value of options
     granted during the year....................                         7.78                          18.38

</TABLE>


                                 Options Outstanding
                                               Weighted
                              Options           average             Options
                          outstanding at       remaining        exercisable at
                           December 31,    contractual life      December 31,
        Exercise price         1997           (in years)               1997
----------------------    ---------------  -----------------     --------------
$          12.00                 744,325                  8              99,325
           17.00                  25,000                  9                  --
           23.00                  10,500                  9                  --
           28.00                  16,000                 10                  --
           32.75                  98,200                 10                  --


         The Company  has adopted  SFAS No.  123,  "Accounting  for  Stock-Based
Compensation." As permitted by SFAS No. 123, the Company continues to follow the
measurement   provisions  of  Accounting   Principles   Board  Opinion  No.  25,
"Accounting for Stock Issued to Employees," and does not recognize  compensation
expense for its stock  based  incentive  plans.  Had  compensation  cost for the
Company's stock based incentive  compensation plans been determined based on the
fair value at the grant dates for awards under those plans,  consistent with the
methodology  prescribed  by SFAS No. 123, the  Company's net income and earnings
per share would have been reduced to the pro-forma  amounts  indicated below (in
thousands, except per share amounts).

                                                               1996       1997
                                                            ----------   -------
Net income (loss):
  As reported.............................................  $ (2,075)   $ 25,523
  Pro-forma...............................................    (2,498)     24,334
Earnings (loss) per share--assuming dilution:
  As reported.............................................     (0.24)       1.63
  Pro-forma...............................................     (0.30)       1.56

         The pro-forma  amounts may not be indicative of future pro-forma income
and earnings per share.

                                                       F-14

<PAGE>




         The fair  value of each  option is  estimated  on the date of the grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions applied to grants in 1996 and 1997:

                                                              1996         1997
         Dividend yields...................................   0.0%         0.0%
         Expected volatility...............................   0.72         0.62
         Risk-free interest rates..........................   7.0%         6.5%
         Expected life (in years)..........................     5            6

         Because the  determination of the fair value of all options is based on
the assumptions  described in the preceding  paragraph and,  because  additional
option grants are expected to be made each year, the above pro-forma disclosures
are not  representative  of pro-forma effects on reported net income or loss for
future years.

8.  Stock Purchase and Stock Compensation Plans

         The 1996 Stock  Purchase  Plan (the  "1996  Plan) was  approved  by the
Company's  Board of  Directors  on July 2, 1996 and  provides  for the sale of a
maximum of 500,000 shares of Common Stock to employees of the Company at a price
equal to 85% of the market value of the Common Stock at the  beginning or end of
each  purchase  period,  whichever  is lower.  Participants  under the 1996 Plan
received 0 and 21,639  shares of Common  Stock for the years ended  December 31,
1996 and 1997, respectively.

         The Key Employee Stock  Compensation  Plan was approved by the Board of
Directors  on May 19, 1997 and  provides for the issuance of a maximum of 65,000
shares of Common Stock to key employees.  Key employees are determined  annually
by  committees  elected by the Board of  Directors.  Pursuant  to the plan,  key
employees  may elect to receive  up to 50% of their  annual  incentive  payments
denominated  in shares of Common  Stock at the fair  value of the  shares at the
date of  issuance.  No shares of Common Stock were issued under the Key Employee
Stock Compensation Plan in 1997.

         The Board of Directors Stock Compensation Plan was approved in May 1997
and provides  for the issuance of a maximum of 30,000  shares of Common Stock to
non-employee board members.  Each eligible board member may elect to convert all
or a portion of his or her fees for  attendance at board and committee  meetings
into shares of the Company's  Common Stock at a 20% discount from the fair value
of the shares at the date of issuance. The Company issued 1,208 shares of Common
Stock under the Board of Directors Stock Compensation Plan in 1997.



                                                       F-15

<PAGE>



9.  Income Taxes

         The  components of the provision for (benefit from) income taxes are as
follows (in thousands):
<TABLE>
<CAPTION>

                                                                            1995          1996         1997
                                                                        ------------  -----------  -----------
<S>                                                                     <C>           <C>          <C>
         Current......................................................  $         --  $        --  $     3,803
         Deferred.....................................................            (2)       3,543       13,147
                                                                        ------------  -----------  -----------
                                                                        $         (2) $     3,543  $    16,950
                                                                        ============  ===========  ===========
</TABLE>

     Income taxes paid were  approximately $3.5 million in 1997. No income taxes
were paid in 1995 and 1996.

         A  reconciliation  of the  Company's  income tax rate to the  statutory
federal rate is as follows:

<TABLE>
<CAPTION>
                                                                       1995               1996             1997
                                                                  --------------     ------------      ------------
<S>                                                               <C>                <C>               <C>
         Income tax expense (benefit) computed at the
           statutory rate......................................        (34)%               34%             35%
         State income taxes....................................         (2)                 2               3
         Capital Construction Funds............................         24                  1              --
         Other.................................................         11                 --              --
                                                                  --------           --------          ------
                                                                       (1)%                37%             38%
                                                                  =========          =========         =======
</TABLE>

         Deferred  income  taxes  reflect  the  net  tax  effects  of  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and the amounts used for income tax  purposes.  Significant
components of the Company's  deferred  income tax assets and  liabilities  as of
December 31, 1996 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                            1996         1997
<S>                                                                                     <C>          <C>
         Deferred income tax assets:
            Net operating loss carry forward........................................    $    14,416  $    13,480
            Alternative minimum tax credit carryforward.............................          1,226        5,322
            Accrued compensation....................................................            410          755
            Other...................................................................            257          730
                                                                                        -----------  -----------
                  Total deferred income tax assets..................................         16,309       20,287
                                                                                        -----------  -----------
         Deferred income tax liabilities:
            Fixed asset differences.................................................         21,772       45,109
            Deferred drydocking costs...............................................            922          827
                                                                                        -----------  -----------
                  Total deferred income tax liabilities.............................         22,694       45,936
                                                                                        -----------  -----------
                  Net deferred income tax liability.................................    $     6,385  $    25,649
                                                                                        ===========  ===========
</TABLE>

         At December 31, 1997,  the Company had  approximately  $37.8 million in
net operating loss carry  forwards for federal income tax purposes,  expiring in
various  amounts from 1998 to 2012. Due to a change in ownership,  as defined in
Section  382  of  the  Internal   Revenue   Service  Code,  the  utilization  of
approximately  $26.3 million of net operating loss  carryforwards are limited to
approximately $3.3 million per year.


                                                        F-16

<PAGE>



10.  Capital Stock

         On February 5, 1997,  the Company  completed a second  public  offering
(the  "Second  Offering")  of  4,000,000  shares of its Class A Common  Stock at
$24.875 per share.  The net  proceeds to the Company were $93.5  million,  after
deducting underwriting  commissions and other offering expenses. Of such amount,
approximately  $36.2  million  was  used  to  repay  certain  indebtedness.  The
remaining  $57.3 million was used to fund the  acquisition  and  construction of
certain vessels and for general corporate purposes.

         On August 14, 1996 and September 12, 1996, the Company issued 7,000,000
and 159,000  shares of its Class A Common Stock,  respectively,  pursuant to the
IPO and underwriters' over-allotment option,  respectively.  Simultaneously with
the IPO,  shares  of the  Company's  Class C Common  Stock  were  exchanged  for
approximately  304,000 and approximately 673,000 shares of the Company's Class A
and Class B Common  Stock,  respectively.  Additionally,  182,000 and  1,188,000
shares of the  Company's  Class A and Class B Common Stock,  respectively,  were
issued in repayment of a portion of the Company's  junior-subordinated note (the
"Junior Note") and other outstanding indebtedness. Contemporaneous with the IPO,
the  Company's  Board of Directors  authorized  the  retirement of the Company's
Class C Common Stock.

         Each share of the  Company's  Class A Common  Stock is  entitled to one
vote per share and each share of Class B Common  Stock is  entitled to ten votes
per share.  The holders of Class B Common Stock are entitled to convert,  at the
holder's  election  and at any time,  such  shares into shares of Class A Common
Stock at the rate of one share of Class B Common  Stock for one share of Class A
Common Stock.

         In connection with the issuance of the Junior Note in 1994, the Company
issued to the note holders common stock and contingent share issuances  ("CSIs")
to  purchase a maximum of 554,495  additional  shares of its common  stock.  The
Junior Note,  common stock and the CSIs were recorded based upon their estimated
fair values at the date of  issuance.  Simultaneously  with the  issuance of the
CSIs,  the Company  entered  into an agreement  with its Chairman and  principal
stockholder and certain trusts whereby the principal  stockholder and the trusts
agreed to  contribute  pro rata a like  amount of shares of common  stock to the
Company  concurrently  with the issuance of shares pursuant to the CSIs.  During
1997,  the Company  issued  272,641  shares of Class A Common  Stock to the note
holders and the  principal  stockholder  contributed  272,641  shares of Class B
Common Stock in satisfaction of the CSIs.  Simultaneous  with this  transaction,
the noteholders  converted  240,471 shares of their Class B Common Stock into an
equal number of shares of Class A Common Stock.

         At December 31, 1997,  1,588,728  shares of Common Stock were  reserved
for issuance,  primarily under the Company's  benefit plans and 4,035,120 shares
of Common Stock were  reserved for  issuance in the event of  conversion  of the
Preferred Securities.



                                                        F-17

<PAGE>



11.  Earnings Per Share

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

                                                                         1995            1996           1997
                                                                     -------------  -------------  -------------
<S>                                                                  <C>            <C>            <C>
Numerator:
  Income (loss) before extraordinary item.........................   $       (360)  $       6,033  $      27,655
                                                                     ------------   -------------  -------------
  Numerator for basic earnings per share--income (loss)
    available to common shareholders..............................           (360)          6,033         27,655

Effect of dilutive securities:
  Payments on convertible preferred securities                                 --              --          2,369
  Interest on convertible Junior Note (a).........................             --             515             --
                                                                     ------------   -------------  -------------

Numerator for diluted earnings per share--income (loss)
  available to common shareholders after assumed
  conversions.....................................................   $       (360)  $       6,548  $      30,024
                                                                     ============   =============  =============

Denominator:
  Denominator for basic earnings per share--weighted
    average shares................................................          2,535           5,763         14,785

Effect of dilutive securities:
  Convertible preferred securities................................             --              --          2,067
  Convertible Junior Notes (a)....................................             --             772             --
  Stock options...................................................             --              55            268
                                                                     ------------   -------------  -------------
Dilutive potential common shares..................................             --             827          2,335
Denominator for diluted earnings per share--adjusted
  weighted average shares and assumed conversions                           2,535           6,590         17,120
                                                                     ============   =============  =============

Earnings (loss) per share before extraordinary item                  $      (0.14)  $        1.05  $        1.87
                                                                     ============   =============  =============

Earnings (loss) per share before extraordinary
  item--assuming dilution..........................................  $      (0.14)  $        0.99  $        1.75
                                                                     ============   =============  =============
</TABLE>

     (a)  Earnings per share--assuming  dilution for the year ended December 31,
          1995 does not reflect any potential  shares relating to the conversion
          of the  Junior  Note due to the net loss for that  year.  The  assumed
          issuance of any additional  shares would be  antidilutive.  The Junior
          Note was repaid in 1996.


                                                        F-18

<PAGE>



12.  Significant Customer

         The Company derived revenues from a long-term contract with one company
representing 13% and 10% of total revenues for the years ended December 31, 1995
and 1996,  respectively.  There were no customers from which the Company derived
more than 10% of its revenues for the year ended December 31, 1997.

13.  Acquisitions

         On August 14,  1996,  the Company  acquired  the  remaining  50% of the
outstanding common stock of Ocean Specialty Tankers Corporation in a transaction
accounted  for as a  purchase.  The  consideration,  valued  at  $64.7  million,
consisted of $30.0 million cash and the assumption of $34.7 million of debt. The
fair value of net assets  acquired  approximated  the purchase price paid by the
Company.  During 1996,  the Company also acquired 15 vessels under various asset
purchase agreements for aggregate  consideration of $43.2 million,  and acquired
nine vessels under capital lease obligations.

         On May 23, 1997, the Company acquired  substantially  all of the assets
of an  entity,  which now  operates  as  Seabulk  Offshore  International,  Inc.
("SOII") in a transaction accounted for as a purchase. The consideration, valued
at $58.7  million,  consisted  of $49.0  million  cash,  the  issuance of a note
payable in the amount of $6.0  million  and the  issuance  of 141,760  shares of
Class A Common Stock valued by the Company at approximately  $3.7 million.  The
fair value of net assets  acquired  approximated  the purchase price paid by the
Company.

         On October 16,  1997,  the  Company  acquired  100% of the  outstanding
common stock of Bay  Transportation  Corporation  ("Bay").  The Company effected
this  transaction by acquiring 100% of the  outstanding  common stock of Kinsman
Lines,  the  80%  owner  of  Bay,  and  purchased  the  remaining  20% of  Bay's
outstanding  common stock from an individual.  Consideration for the acquisition
consisted  of $36.5  million  cash and the  assumption  of  approximately  $20.6
million of debt. The purchase  agreement  provided for additional  consideration
based on changes  in the  working  capital of Bay,  as  defined,  which  totaled
approximately  $500,000  and was  paid in  January  1998.  The  acquisition  was
accounted for under the purchase method and, based upon a preliminary allocation
of the  purchase  price,  resulted in costs in excess of net assets  acquired of
approximately  $17.4 million,  which is being amortized on a straight-line basis
over 20 years.

         During 1997,  the Company also  acquired 64 vessels under various asset
purchase  agreements  for an  aggregate  consideration  of $115.2  million,  and
acquired one vessel under a capital lease obligation.

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



                                                        F-19

<PAGE>



         The Company's unaudited pro forma consolidated  condensed statements of
income, assuming the acquisitions of OSTC, SOII and Bay had occurred on January
1, 1996, are summarized as follows (in millions, except per share amounts):
<TABLE>
<CAPTION>

                                                                                 1996             1997
                                                                           --------------     -------------
<S>                                                                        <C>                <C>
         Revenues........................................................  $       165.6      $       232.2
         Income from operations..........................................           30.9               60.8
         Income before extraordinary item................................            8.8               30.2
         Diluted earnings per common share, before extraordinary
           item..........................................................           1.38               1.90
</TABLE>

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

14.  Geographic Data

         The Company is engaged in providing  marine support and  transportation
primarily in the United States and the Arabian Gulf.

         Beginning in 1997, the Company's results have been partially  dependent
on foreign  operations  located  primarily in the Arabian Gulf. These operations
are  subject to the risks that are  inherent  in  operating  in such  locations,
including government regulations,  currency, and ownership restrictions and risk
of expropriation.

         Revenues  by  geographic  area  consist  only of  services  provided to
customers, as reported in the Statement of Operations. Income from operations by
geographic  area  represents  net revenues  less  applicable  costs and expenses
related to those  revenues.  Unallocated  expenses  are  primarily  comprised of
general and administrative  expenses of a corporate nature.  Identifiable assets
by  geographic  area  represent  those  assets  used in the  operations  of each
geographic  area.  Corporate  assets  consist of an  allocation  of property and
equipment.

         The following table presents selected financial information  pertaining
to the  Company's  geographic  operations  for the year ended  December 31, 1997
(U.S. Dollars in thousands):

         Revenues
           Domestic...............................        $      189,336
           Foreign................................                20,921
                                                          --------------
         Consolidated revenues....................        $      210,257
                                                          ==============

         Income from operations
           Domestic...............................        $       57,782
           Foreign................................                 8,376
           Unallocated expenses...................               (10,825)
                                                          --------------
         Consolidated income from operations......        $       55,333
                                                          ==============

                                                        F-20

<PAGE>



         Identifiable assets
           Domestic...............................        $      454,688
           Foreign................................               147,332
           Corporate assets.......................                 2,541
                                                          --------------
         Consolidated identifiable assets.........        $      604,561
                                                          ==============

15.  Fair Value of Financial Instruments

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

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

         Credit Agreement and Term Loan Agreement. Amounts outstanding under the
Company's  Credit  Facility,  as amended,  bear interest at variable  rates that
periodically  adjust to reflect  changes in overall market rates and approximate
fair value.

         Notes Payable and Title XI Debt.  The carrying  amount  reported in the
balance sheets  approximates fair value using a discounted cash flow analysis at
estimated market rates.

         Preferred Securities.  The Preferred Securities provide for payments at
6.5%.  The Company does not believe it is  practicable  to estimate a fair value
different  from the  security's  carrying  value of $115.0  million  because  of
features  unique to the security  including,  but not limited to, its redemption
and conversion rights.

16.  Extraordinary Items

         On August 14,  1996,  the Company  paid cash of $26.3  million,  issued
55,500  shares of Class A Common  Stock and  1,188,502  shares of Class B Common
Stock to repay $25.0  million and $15.2  million of the Junior and Senior Notes,
respectively. Accordingly, the Company recorded a loss on extinguishment of debt
of $8.1 million for the write off of deferred  financing  costs and related debt
discounts, net of a tax benefit of $1.5 million.

         In February and June 1997,  the Company  repaid $33.2 million and $93.5
million,  respectively, of its outstanding debt and amended its Credit Facility.
As a result, the Company recorded  extraordinary losses of $1.8 million and $0.4
million,  respectively, for the write-off of deferred financing costs associated
with the early  extinguishment  of debt,  net of  income  tax  benefits  of $1.0
million and $0.2 million, respectively.

17.  Supplemental Guarantor Information

     The  $300  million  senior  notes  described  in  Note  18  are  fully  and
unconditionally  guaranteed on a joint and several basis by substantially all of
the Company's consolidated subsidiaries. Substantially all of the Company's cash
flows are generated by its  subsidiaries.  As a result,  funds necessary to meet
the Company's obligations are provided in part by distributions or advances from
its subsidiaries. Under

                                                        F-21

<PAGE>



certain  circumstances,  contractual  or  legal  restrictions,  as  well  as the
financial and operating requirements of the Company's subsidiaries,  could limit
the Company's  ability to obtain cash from its  subsidiaries  for the purpose of
meeting its obligations, including the payments of principal and interest on the
senior  notes.   Accordingly,   the  following  parent  company-only  summarized
financial information is provided (in thousands).
<TABLE>
<CAPTION>

                                                                                            December 31,
                                                                                          1996         1997
<S>                                                                                   <C>          <C>
Current assets......................................................................  $    16,931  $    12,059
Noncurrent assets(1)................................................................      186,521      534,424
Current liabilities.................................................................       28,632       17,158
Noncurrent liabilities(2)...........................................................       73,729      304,338
</TABLE>

<TABLE>
<CAPTION>

                                                                                1995        1996         1997
                                                                             ----------  ----------  ----------
<S>                                                                          <C>         <C>         <C>
Revenues...................................................................  $   38,208  $   46,910  $   52,280
Costs and expenses.........................................................      31,234      37,545      52,993
Income (loss) before extraordinary item(3).................................        (360)      6,033      27,655
Net income (loss)(4).......................................................        (360)     (2,075)     25,523
</TABLE>

(1)  Included $73.7 million and $277.9 million in investment in consolidated
     subsidiaries in 1996 and 1997, respectively.
(2)  Includes $115.0 million of trust preferred securities outstanding at
     December  31,  1997.
(3)  Extraordinary loss represents loss on early extinguishment of debt.
(4)  Includes  $0.6  million,  $4.4  million and $53.1 million of equity
     equity in the earnings of consolidated subsidiaries for the years ended
     December 31, 1995, 1996 and 1997, respectively.

18.  Subsequent Events

         On  February  13,  1998,  the Company  completed  an offering of $300.0
million of senior notes,  which closed on February 19, 1998. The net proceeds to
the Company were $291.7 million,  after deducting  underwriting  commissions and
other  offering  expenses.  Of such  amount,  $268.0  million  was used to repay
outstanding  indebtedness  and  $23.7  million  was used for  general  corporate
purposes.  Interest on the senior notes accrues at the rate of 8.375% per annum,
payable semi-annually in arrears commencing on August 15, 1998. The senior notes
mature on February  15,  2008 and are  redeemable,  in whole or in part,  at the
option of the Company on or after February 15, 2003.

         On February 12, 1998, the Company  entered into an Amended and Restated
Revolving Credit and Term Loan Agreement (the "Amended Credit Agreement"), which
closed on February 19, 1998 upon receipt by the Company of the proceeds from the
senior notes.  The Amended Credit  Agreement merged the Credit Agreement and the
Term Loan Agreement described in Note 2 into a single agreement  consisting of a
$175.0  million  revolving  line of credit that matures  February 12, 2003 and a
$150.0 million term loan payable in 28 equal quarterly  installments  commencing
June 30,  1998 and  maturing  on March 31,  2005.  Borrowings  under the Amended
Credit Agreement are secured by Company-owned vessels, having an appraised value
of not less than $400.0  million,  and  certain  other  assets  relating to such
vessels, including accounts receivable, spare parts, fuel and supplies.

                                                        F-22

<PAGE>


         On March  16,  1998,  the  Company's  Board of  Directors  approved  an
agreement  restructuring  HPLP, the limited partnership that owns a 75% interest
in limited  liability  companies  that own five  double-hull  petroleum  product
carriers  currently under  construction.  (See Note 5.) Under the restructuring,
the number of vessels has been reduced from five to four, the Company has agreed
to purchase  one third of the limited  partnership  interests in HPLP during the
first half of 1998 for  approximately  $12.0 million and has an exclusive option
to purchase all of the remaining limited partnership interests and the remaining
25% interest in the limited liability companies for approximately $27.4 million.

19.  Selected Quarterly Financial Information (unaudited)

         The  following  information  is  presented as  supplementary  financial
information for the years ended December 31, 1996 and 1997 (in thousands, except
per share and common stock price information):
<TABLE>
<CAPTION>

                                                             First       Second        Third        Fourth
             Year Ended December 31, 1997                   Quarter      Quarter      Quarter       Quarter
     --------------------------------------------         -----------  -----------  -----------  ----------
<S>                                                       <C>          <C>          <C>          <C>
     Revenues..........................................   $    39,652  $    46,295  $    56,906  $    67,404
     Income from operations............................         9,737       10,989       14,404       20,203
     Income before extraordinary item..................         4,626        5,720        7,500        9,809
     Loss on early extinguishment of debt..............         1,754          378           --           --
     Net income........................................         2,872        5,342        7,500        9,809
     Earnings per share--assuming dilution(1):
       Income before extraordinary item................   $      0.33  $      0.37  $      0.45  $      0.56
       Net income......................................          0.21         0.35         0.45         0.56

</TABLE>
<TABLE>
<CAPTION>

                                                             First       Second        Third        Fourth
             Year Ended December 31, 1996                   Quarter      Quarter      Quarter       Quarter
     --------------------------------------------         -----------  -----------  -----------  ----------
<S>                                                       <C>          <C>          <C>          <C>
     Revenues..........................................   $    20,211  $    21,540  $    30,379  $    37,226
     Income from operations............................         2,705        3,075        7,097        7,893
     Income (loss) before extraordinary item...........           (35)         260        2,483        3,325
     Loss on early extinguishment of debt..............            --           --        8,016           92
     Net income (loss).................................           (35)         260       (5,533)       3,233

     Earnings per share--assuming dilution(1):
       Income (loss) before extraordinary item.........   $     (0.01) $      0.10  $      0.35   $     0.30
       Net income (loss)...............................         (0.01)        0.10        (0.71)        0.29

</TABLE>

(1)  Sum of the four quarters' earnings per share will not necessarily equal
     the annual earnings per share as the computations for each quarter are
     independent of the annual computation.

                                          F-23