Edgar Filing: SEABULK INTERNATIONAL INC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the fiscal year ended December 31, 2001

Commission File Number 0-28732

SEABULK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant at March 1, 2002 (based on the closing price of
such stock on the Nasdaq National Market) was $31,205,451.

At March 1, 2002 there were 10,505,017 shares of the registrant's
Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

DOCUMENT WHERE INCORPORATED
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Proxy Statement for Annual Meeting
to be held May 14, 2002 (specified portions) Part III

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This amendment on Form 10-K/A amends and restates in its entirety, the
Annual Report of the Company on Form 10-K previously filed for the year ended
December 31, 2001. This Annual Report on Form 10-K/A is filed in connection with
the Company's restatement of its consolidated financial statements as of and for
the year ended December 31, 2001. The restatement is being made solely in order
to accrue an additional $4.1 million in operating expense in the fourth quarter
2001 related to supplemental marine insurance calls, which was previously
disclosed as a contingency in the previously filed Form 10-K (see Note 2 to the
consolidated financial statements). Changes related to this expense have been
made in the following parts of the Form 10-K:

Item 1. Business - Liquidity;

Item 3. Legal Proceedings;

Item 6. Selected Financial Data; and

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

Item 8. Consolidated Financial Statements and Schedules

Except as described above, all other disclosures contained in this
amendment are restated without amendment for convenience and have not been
revised or updated since the date of the filing of the Company's original
Annual Report on Form 10-K for the year ended December 31, 2002.

SEABULK INTERNATIONAL, INC.

2001 FORM 10-K/A

TABLE OF CONTENTS

Item Page
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PART I

1 Business............................................................................................. 3
2 Properties........................................................................................... 17
3 Legal Proceedings.................................................................................... 17
4 Submission of Matters to a Vote of Security Holders.................................................. 18
4A Executive Officers of the Registrant................................................................. 19

PART II

5 Market for Registrant's Common Equity and Related Stockholder Matters................................ 22
6 Selected Financial Data.............................................................................. 23
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................................... 26
7A Quantitative and Qualitative Disclosures About Market Risk........................................... 46
8 Financial Statements................................................................................. 46
9 Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure........................................................................................... 46

PART III

10 Directors and Executive Officers of the Registrant................................................... 47
11 Executive Compensation............................................................................... 47
12 Security Ownership of Certain Beneficial Owners and Management....................................... 47
13 Certain Relationships and Related Transactions....................................................... 47

PART IV

14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................................... 48

FINANCIAL SUPPLEMENT

Consolidated Financial Statements and Schedules...................................................... F-1

PART I

ITEM 1. BUSINESS

GENERAL

Seabulk International, Inc. is the new name for Hvide Marine
Incorporated. The change was effective March 19, 2001 and symbolizes the
Company's transformation under new management and new ownership into a strong
competitor in each of its three main businesses - offshore energy support,
marine transportation, and towing. Our offshore energy services fleet, numbering
140 vessels, is one of the world's largest and provides services to operators of
offshore oil and gas exploration, development and production facilities in the
Gulf of Mexico, the Arabian Gulf, offshore West Africa, South America and
Southeast Asia. Our marine transportation fleet, numbering ten tankers, carries
petroleum products, crude oil, and specialty chemicals in the U.S. domestic
trade and includes five double-hull petroleum product and chemical carriers
delivered in 1998 and 1999. Our towing fleet numbers 31 vessels and is one of
the largest and most modern in the United States. We are the sole provider of
commercial tug services at Port Canaveral, Florida; and a leading provider of
those services in Port Everglades, Florida; Tampa, Florida; Mobile, Alabama;
Lake Charles, Louisiana; and Port Arthur, Texas. We also provide offshore towing
services primarily in the Gulf of Mexico. In March 2002, we sold the eight
towboats and 14 barges in our marine transportation fleet, which was part of our
Jacksonville, Florida, based Sun State Marine Services subsidiary.

From September 9 to December 15, 1999, we operated under the protection
of the reorganization provisions of Chapter 11 of the U.S. Bankruptcy Code. For
more information on this subject, see "Our Reorganization." As used in this
Report, the terms "we" and "the Company" refer to Seabulk International, Inc., a
Delaware corporation, formerly known as Hvide Marine Incorporated, and its
subsidiaries. Our principal executive offices are located at 2200 Eller Drive,
P.O. Box 13038, Fort Lauderdale, Florida 33316, and our telephone number is
(954) 523-2200.

PROJECTIONS AND OTHER FORWARD-LOOKING INFORMATION

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

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

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

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

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

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

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

o risks associated with potential oil spills or other environmental pollution
incidents, which, although believed to be covered by liability insurance,
may result in adverse market reaction and loss of business; and

o terrorist attacks or hijackings, which could disable or destroy one of our
vessels and result in significant loss of hire and revenue.

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

LIQUIDITY

At December 31, 2001, the Company had a working capital deficit of
approximately $7.3 million as day rates and utilization during the last four
months of 2001 sharply declined for offshore vessels working in the Gulf of
Mexico. The slowdown in the domestic market was offset in part by continued
strength in the Company's international offshore operations, where rising day
rates throughout the year contributed to increased revenue in West Africa and
Southeast Asia. This increased revenue was driven by higher exploration and
production spending as major oil companies moved ahead with oil exploration and
development programs outside the U.S. Nonetheless, during the second half of
2001, there was a noticeable softening in both energy demand and prices for oil
and natural gas. Management believes that the softening trend is unlikely to
affect international exploration and development outlays in key areas where the
Company operates as most of the activity there is controlled by the
international oil companies, whose strategy reflects a longer-term time horizon.
Since the September 11 attacks and subsequent war on terrorism, the U.S. economy
has been subject to further downward pressure and, as we enter 2002, the timing
of a recovery in the domestic offshore segment is less certain. We therefore do
not expect earnings in 2002 from the offshore segment to match those of 2001.
Nevertheless, consistent with industry forecasts regarding exploration and
production spending, the Company believes that the energy fundamentals that
drive the offshore industry will lead to a recovery in the U.S. offshore market
during the second half of 2002 and that the more important international
offshore markets will remain strong throughout the year. However, there can be
no assurance this will occur. The Company also expects to benefit from higher
earnings in its tanker business as a result of higher time charter and bareboat
charter rates that take effect in 2002.

Company expects that cash flow from operations will continue to make significant
contributions toward working capital and its capital requirements. The Company
also expects to complete the sale of certain non-strategic assets in 2002 of
which $5 million in proceeds could be used for working capital purposes. If
operating cash flow is not adequate, the Company believes that the amounts
available under the revolving line of credit will be sufficient to meet its
capital requirements.

Management is currently implementing certain initiatives in an effort
to improve profitability and liquidity. These initiatives include (1)
repositioning certain vessels to take advantage of higher day rates, (2) lay-up
or selling unprofitable vessels , (3) changing tanker contracts from spot
trading to time charters, and (4) eliminating non-essential operating and
overhead expenses. As a result of the expanding market in West Africa and
softening in the Gulf of Mexico, the Company has mobilized two of its Gulf of
Mexico supply boats for redeployment to West Africa during the first quarter of
2002. At the end of December 2001, low-rate voyage charters for three of the
Company's tankers expired and were replaced by two higher-rate time charters and
a ten-year bareboat charter. Additionally, on March 15, 2002, a sixth amendment
to the credit facility was executed, which is expected to allow the Company to
maintain compliance with its financial covenants. The amendment reduced the
working capital ratio for 2002 and for the life of the term loans and reduced
the fixed charge ratio in 2002, with a gradual increase over the remaining life
of the term loans. The Company continues to evaluate financing alternatives,
including a possible equity infusion or other strategic transaction to reduce
debt levels and support future growth opportunities.

In December 2001, management decided to sell the fixed assets of Sun
State. On March 22, 2002, the Company closed on the sale of the marine
transportation assets of Sun State for $3.8 million in cash.

While management believes that the initiatives are sound and
attainable, the possibility exists that unforeseen events or business
conditions, including deterioration in its markets could prevent the Company
from meeting targeted operating results and meeting its financial covenants.

If unforeseen events or business conditions prevent the Company from
meeting targeted operating results, the Company has alternative plans including
additional asset sales, additional reductions in operating expenses and deferral
of capital expenditures, which should enable it to satisfy essential capital
requirements. While the Company believes it could successfully complete
alternative plans, if necessary, there can be no assurance that such
alternatives would be available or that the Company would be successful in their
implementation.

RECENT DEVELOPMENTS

NEW NAME AND STOCK SYMBOL: On March 19, 2001, the Company changed its
name to Seabulk International, Inc. from Hvide Marine Incorporated. On March 21,
2001, the Company's stock symbol on the Nasdaq National Market changed to SBLK
from HVDM. Throughout 2000, the Company's stock traded on the OTC Bulletin Board
under the symbol HVDM. On January 2, 2001, it began trading on the Nasdaq
National Market.

NEW WARRANT SYMBOL: On March 21, 2001, the symbol for the Company's
Class A Warrants changed to SBLKW from HVDMW. The Class A Warrants trade on the
OTC Bulletin Board.

LIGHTSHIP TANKERS LLC: On January 15, 2001, the Company completed the
purchase of the remaining 24.25% interest in Lightship Tankers I - V LLC, the
vessel-owning companies of the five double-hull tankers (formerly known as the
Lightship Tankers), previously held by Newport News Shipbuilding for
approximately $11.0 million, of which $0.5 million was paid in cash and the
balance was

paid by a promissory note of $10.5 million. The Company now has 100.0% equity
ownership of these five double-hull tankers.

FLEET OVERVIEW

The following table lists the types of vessels we owned, operated, or
chartered as of March 1, 2002:

Vessels
in Fleet
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OFFSHORE ENERGY SUPPORT
Domestic Offshore Energy Support:
Anchor Handling Tug Supply/Supply Boats.................. 24
Crew/Utility Boats..................................... 30
Geophysical Boats...................................... 2
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Total Domestic Offshore Energy Support ............. 56
International Offshore Energy Support:
Anchor Handling Tug Supply/Supply Boats................ 43
Anchor Handling Tugs/Tugs.............................. 13
Crew/Utility Boats..................................... 20
Other.................................................. 8
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Total International Offshore Energy Support ........ 84
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Total Offshore Energy Support....................... 140

MARINE TRANSPORTATION
Petroleum/Chemical Product Carriers...................... 10
Fuel Barges.............................................. 14
Towboats................................................. 8
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Total Marine Transportation......................... 32
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TOWING........................................................ 31
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TOTAL VESSELS.................. 203
=======

The total vessels referred to above include 199 vessels that we own and
operate; one vessel that we own but is operated by others; two vessels owned by
others but operated by us, under various chartering and operating arrangements;
and one vessel chartered to a third party that is neither owned nor operated by
us. At March 1, 2002, we are actively marketing 13 of the offshore energy
support vessels for sale. During the first quarter of 2002, we reactivated two
vessels.

For financial information about our business segments and geographic
areas of operation, see Note 14 to our consolidated financial statements.

LINES OF BUSINESS

(1) OFFSHORE ENERGY SUPPORT (SEABULK OFFSHORE)

This is our biggest business, accounting for approximately 55.1% of our
total revenue in 2001. Offshore energy support vessels are used primarily to
transport materials, supplies, equipment, and personnel to drilling rigs and to
support the construction, positioning and ongoing operation of oil and gas
production platforms. Offshore energy support vessels are hired, or "chartered,"
by oil companies and others engaged in offshore exploration and production
activities.

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

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

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

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

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

About 44.0% of our 2001 offshore revenue is derived from domestic
operations under U.S.-flag vessel registration in the Gulf of Mexico, directed
from offices in Lafayette, Louisiana. The balance is derived from international
operations, including offshore West Africa, the Arabian Gulf and adjacent areas,
and Southeast Asia. We also operate offshore energy support vessels in other
regions, including Central and South America and, to a limited extent, Europe.
Operations in the Arabian Gulf, Southeast Asia and adjacent areas are directed
from facilities in Dubai, United Arab Emirates; operations in offshore West
Africa and certain other international areas are directed from facilities in
Nyon, Switzerland; and operations in Mexico are directed from our Lafayette,
Louisiana facilities. We also have sales offices and/or maintenance and other
facilities in many of the countries where our vessels operate.

The following table shows the deployment of our offshore energy support
fleet at March 1, 2002.

Location Vessels
-------- -------

Domestic Offshore Energy Support
U.S. Gulf of Mexico 55
Other 1
---
Total Domestic Offshore Energy Support 56
---

International Offshore Energy Support
West Africa 38
Middle East 24
Southeast Asia 13
Other 9
---
Total International Offshore Energy Support 84
---
Total 140
===

The average age of our offshore energy support vessels, based on the
later of the date of construction or rebuilding, is approximately 20 years.
About 21.0% of the offshore fleet is less than ten years old, and approximately
40.0% is more than 20 years old. After a vessel has been in service for
approximately 30 years, the costs of repair, vessel certification and
maintenance may not be economically justifiable.

(2) MARINE TRANSPORTATION (SEABULK TANKERS)

We provide marine transportation services, principally for petroleum
products and specialty chemicals, in the U.S. domestic or "coastwise" trade, a
market largely insulated from international competition under the Jones Act.
Marine transportation includes our ten tankers, five of which are double-hulled,
and our inland tug-and-barge operation, Sun State Marine Services, which was
sold in March 2002. This is our second largest business, accounting for
approximately 35.2% of our total revenue in 2001.

PETROLEUM PRODUCT TRANSPORTATION. In the domestic energy transportation
trade, oceangoing and inland-waterway vessels transport fuel and other petroleum
products, primarily from refineries and storage facilities along the coast of
the U.S. Gulf of Mexico to utilities, waterfront industrial facilities and
distribution facilities along the U.S. Gulf of Mexico, the Atlantic and Pacific
coasts and inland rivers. The number of U.S.-flag oceangoing vessels eligible to
participate in the U.S. domestic trade and capable of transporting fuel or
petroleum products has steadily decreased since 1980, as vessels have reached
the end of their useful lives and the cost of constructing vessels in the United
States (a requirement for U.S. domestic trade participation) has substantially
increased. The decline in the number of available vessels has tightened the
supply/demand balance and put upward pressure on freight rates, thereby
benefiting the Company and its fleet of relatively young tankers.

At March 1, 2002 we operated the following petroleum product carriers:

Tonnage (In Dead
Name of Vessel Capacity (In Barrels) Weight Tons or "Dwt")
-------------- --------------------- ---------------------

SEABULK TRADER (formerly known as DYNACHEM) 360,000 49,900
SEABULK CHALLENGE (formerly known as PETROCHEM) 360,000 49,900
AMBROSE CHANNEL 341,000 45,000
SEABULK ARCTIC (formerly known as CAPE LOOKOUT SHOALS) 340,000 46,000
SEABULK MARINER (formerly known as DIAMOND SHOALS) 340,000 46,000
SEABULK PRIDE (formerly known as NANTUCKET SHOALS) 340,000 46,000
DEFENDER (to be renamed SEABULK MARKETER) 260,000 36,600

The AMBROSE CHANNEL is operated by a major oil company on a bareboat
charter as of March 1, 2002.

The AMBROSE CHANNEL, SEABULK ARCTIC, SEABULK MARINER and SEABULK PRIDE
are four of our five double-hull carriers. These vessels are the newest and most
technologically advanced product carriers in the Jones Act market. The fifth
double-hull, BRENTON REEF, is listed below under chemical tankers.

We acquired the DEFENDER in March 1998. Under OPA 90, this vessel
cannot be used to transport petroleum and petroleum products in U.S. commerce
after 2008. We acquired THE SEABULK CHALLENGE and SEABULK TRADER in August 1996.
Their OPA 90 retirement date is 2011. The four double-hulls have no retirement
date under OPA 90.

At March 1, 2002, five of our petroleum product carriers were operating
under time charters, one under a bareboat charter and one in the short-term,
spot market.

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

At March 1, 2002, we operated three vessels in the chemical trade:

Tonnage (In Dead-
Name of Vessel Capacity (In Barrels) Weight Tons or "Dwt")
-------------- --------------------- ---------------------

BRENTON REEF 341,000 45,000
SEABULK MAGNACHEM 298,000 39,300
SEABULK AMERICA 297,000 46,300

Delivered in 1999, the BRENTON REEF is a double-hull carrier in which
we have a 100.0% equity interest. We operate the SEABULK MAGNACHEM under a
bareboat charter expiring in February 2007. We own a 67.0% equity interest in
the SEABULK AMERICA; the remaining 33.0% interest is owned by Stolt Tankers
(U.S.A.), Inc.

The SEABULK MAGNACHEM and SEABULK AMERICA have full double bottoms (as
distinct from double hulls). Double bottoms provide increased protection over
single-hull vessels in the event of a grounding. Delivered in 1977, the SEABULK
MAGNACHEM is a CATUG (or catamaran tug) integrated tug and barge, or ITB, which
has a higher level of dependability, propulsion efficiency and performance than
an ordinary tug and barge. 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.

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

Pursuant to OPA 90, the SEABULK AMERICA and SEABULK MAGNACHEM cannot be
used to transport petroleum and petroleum products in U.S. commerce after 2015
and 2007, respectively. THE BRENTON REEF has no retirement date under OPA 90.

We believe that the total capacity of these carriers represents a
substantial portion of the capacity of the domestic specialty chemical carrier
fleet. The two chemical carriers, SEABULK AMERICA and SEABULK MAGNACHEM, can
also be used as petroleum tankers. They are among the last independently owned
carriers scheduled to be retired under OPA 90 for carrying petroleum products.

We book cargoes either on a spot (movement-by-movement) or time basis.
Approximately 75.0% of contracts for cargo are committed on a 12- to 30-month
basis, with minimum and maximum cargo tonnage specified over the period at fixed
or escalating rates per ton. We are often able to generate additional revenue by
chartering cargo space on competitors' vessels.

SUN STATE. Until the sale in March 2002, our Sun State Marine Services
subsidiary owned and operated a petroleum transportation fleet of eight towboats
and 14 barges, all of which were primarily engaged in fuel transportation along
the Atlantic intracoastal waterway and the St. Johns River in Florida.

The majority of Sun State's revenue was derived from a fuel
transportation contract with Colonial Oil Industries (Colonial) (formerly known
as Steuart Petroleum Company), purchaser of the eight tow boats and 14 barges,
in which Sun State was responsible for handling all marine deliveries including
the servicing of Colonial's paper mill, electric utility and vessel bunker
customers. The remainder of Sun State's marine transportation revenue was
derived from fuel transportation and towing contracts with other customers along
with its marine maintenance, repair, drydocking and construction facility. This
facility is planned to be sold in the second quarter of 2002.

OPA 90 requires all single-hull barges to discontinue transporting fuel
and other petroleum products in 2015.

OTHER SERVICES

Sun State also owns and operates a small vessel maintenance, repair and
construction drydocking facility in Green Cove Springs, Florida, which is
engaged principally in the maintenance and construction of tugs and barges,
offshore support vessels, and other small vessels. This facility is planned to
be sold in the second quarter of 2002.

We own a 40-acre facility in Port Arthur, Texas that serves as a
regional office for our towing business, storage and supply base, and a facility
for topside repairs of oceangoing vessels. This facility is planned to be sold
during the second quarter of 2002. The regional office for the Port Arthur
towing business would continue to operate from a portion of the facility on a
rental basis.

(3) TOWING (SEABULK TOWING)

Towing is the smallest of our three businesses, representing about 9.7%
of our total revenue in 2001. Our harbor tugs serve seven ports in Florida,
Alabama, Texas and Louisiana, where they assist petroleum product carriers,
barges, container ships and other cargo vessels in docking and undocking and in
proceeding within the port areas and harbors. We also operate four tugs with
offshore towing capabilities that conduct a variety of offshore towing services
in the Gulf of Mexico, Guayanilla, Puerto Rico, and the Atlantic Ocean. Our tug
fleet consists of 20 conventional tugs, seven tractor tugs, and four Ship
Docking Module(TM) tractor tugs, known AS SDMs(TM). SDMs(TM) are innovative ship
docking vessels, designed and patented by us, that are more maneuverable,
efficient and flexible, and require fewer crew members, than conventional harbor
tugs.

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

PORT EVERGLADES. Port Everglades has the second largest petroleum
non-refining storage and distribution center in the United States, providing
substantially all of the petroleum products for South Florida. Between 1958,
when our tug operations commenced, and December 2001, we operated the franchise
as the sole provider of docking services in the port. In August 2001, a second
franchise was issued to a competitor by the port, who commenced operations in
the port in December 2001. Seabulk Towing's franchise was amended in January
2002 to require Seabulk Towing to maintain a minimum of three tractor tugs in
the port, rather than five tugs previously. The franchise is not exclusive and
expires in 2007. While we are regarded as a high-standards operator, there is no
assurance that it will be renewed. As of March 1, 2002, we operated five tugs in
Port Everglades.

TAMPA. We expanded our harbor towing services to Tampa through the
October 1997 acquisition of an established operator in the port. Because the
port is comprised of three "sub-ports" (including Port Manatee) and a distant
sea buoy, a greater number of tugs is required to be a competitive operator in
Tampa than in other ports of similar size. On January 1, 2002, we operated eight
tugs, including two tractor tugs and two SDMs(TM), in the port (including Port
Manatee). We were the sole harbor tug operator in the port until October 1999,
when another company began operations in the port. We currently maintain an
approximate 65.0% market share in Tampa.

PORT CANAVERAL. In Port Canaveral, we currently have the sole franchise
to provide harbor-docking services. In this port, we provide docking and
undocking services for commercial cargo vessels serving central Florida and, on
a very limited basis, for cruise ships. Our franchise can be canceled with 60
days notice, and there can be no assurance that we will be able to retain our
franchise in Port Canaveral. At March 1, 2002, we operated four tugs in Port
Canaveral and were the port's sole provider of harbor towing services.

MOBILE. At this port, we provide docking and undocking services
primarily to commercial cargo vessels, including vessels transporting coal and
other bulk exports. We believe that we provide about 50.0% of the harbor tug
business in this port, where we operated three tugs at March 1, 2002.

PORT ARTHUR AND LAKE CHARLES. At these ports we operate seven harbor
tugs. Currently, four of these tugs serve Port Arthur, Texas; two serve Lake
Charles, Louisiana, and one serves both harbors.

Each of these ports has a competing provider of harbor tug services. We estimate
our market share in both ports at 50.0%.

OFFSHORE TOWING OPERATIONS. We currently have four tugs working in the
offshore towing market that conduct a variety of offshore towing services in the
Gulf of Mexico, Guayanilla, Puerto Rico, and the Atlantic Ocean. Demand for
towing services depends on vessel traffic and oilfield activity, which is in
turn generally dependent on local and national economic conditions.

CUSTOMERS AND CHARTER TERMS

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

The primary purchasers of petroleum product transportation services are
utilities, oil companies, and large industrial consumers of fuel with waterfront
facilities. The primary purchasers of chemical transportation services are
chemical and oil companies. Both services are generally contracted for on the
basis of short- or long-term time charters, voyage charters, contracts of
affreightment, or other transportation agreements tailored to the shipper's
requirements. CITGO, which accounted for 11.0% of our 2001 revenue, was our
largest single customer in 2001 with a contract of affreightment commitment of
three tankers. Commencing January 2002, CITGO committed to two time charters.

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

COMPETITION

We operate in a highly competitive environment in all our operations.
The principal competitive factors in each of the markets in which we operate are
suitability and reliability of equipment, safety record, personnel, price,
service, and reputation. Competitive factors in the offshore energy support
segment also include operating conditions and intended vessel use (both of which
determine the suitability of vessel type), shallow water versus deepwater needs,
the complexity of maintaining logistical support and the cost of transferring
equipment from one market to another. Our vessels that provide marine
transportation services compete with both other vessel operators and, in some
areas and markets, with alternative modes of transportation, such as pipelines,
rail tank cars, and tank trucks. Moreover, the users of such services are
placing increased emphasis on safety, the environment and quality, partly due to
heightened liability for the cargo owner in addition to the vessel
owner/operator under OPA 90. With respect to towing services, we compete with
other providers of tug services in all but one of the ports in which we operate.
A new competitor entered the harbor tug market in Tampa in 1999, and another in
Port Everglades at the end of 2001. Additional competitors may enter our markets
in the future. While U.S. flag, coastwise-operated vessels are protected under
the Jones Act, foreign-built, foreign-manned and foreign-owned vessels could be
eligible to compete with our vessels operating in the domestic trade if the
Jones Act were repealed. There are no current indications that this will occur.

ENVIRONMENTAL AND OTHER REGULATIONS

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

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

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

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

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

For facilities, the statutory liability of responsible parties is
limited to $350.0 million. For tank vessels, the statutory liability of
responsible parties is limited to the greater of $1,200 per gross ton or $10.0
million ($2.0 million for a vessel of 3,000 gross tons or less) per vessel; for
any "other vessel," such liability is limited to the greater of $600 per gross
ton or $500,000 per vessel. Such liability limits do not apply, however, to an
incident caused by violation of federal safety, construction or operating
regulations or by the responsible party's gross negligence or willful
misconduct, or if the responsible party fails to report the incident or provide
reasonable cooperation and assistance as required by a responsible official in
connection with oil removal activities. Although we currently maintain maximum
available pollution liability insurance, a catastrophic spill could result in
liability in excess of available insurance coverage, resulting in a material
adverse effect on our business.

Under OPA 90, with certain limited exceptions, all newly built or
converted oil tankers operating in United States waters must be built with
double hulls, and existing single-hull, double-side or double-bottom vessels
must be phased out at some point, depending upon their size, age and place of
discharge, through 2015 unless retrofitted with double hulls. As a result of
this phase-out requirement, as interpreted by the U.S. Coast Guard, our five
single-hull chemical and petroleum product carriers will be required to cease
transporting petroleum products by 2015 with the first vessel phased out in 2007
and the last vessel phased out in 2015.

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

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

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

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

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

We manage our exposure to losses from potential discharges of
pollutants through the use of well-maintained and well-managed facilities;
well-maintained and well-equipped vessels; safety and environmental programs,
including a maritime compliance program and our insurance program; and we

believe we will be able to accommodate reasonably foreseeable environmental
regulatory changes. There can be no assurance, however, that any new regulations
or requirements or any discharge of pollutants by the Company will not have an
adverse effect on us.

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

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

COASTWISE LAWS. A substantial portion of our operations is conducted in
the U.S. domestic trade, which is governed by the coastwise laws of the United
States (commonly referred to as the Jones Act). The coastwise laws reserve
marine transportation (including harbor tug services) between points in the
United States (including drilling rigs fixed to the ocean floor on the U.S.
outer continental shelf) to vessels built in and documented under the laws of
the United States (U.S. flag) and owned and manned by U.S. citizens, with an
exception to the ownership requirement with respect to foreign owned financial
entities which own and lease U.S. vessels to U.S. operators. Generally, a
corporation is deemed an U.S. citizen so long as (i) it is organized under the
laws of the U.S. or a state, (ii) each of its president or other chief executive
officer and the chairman of its board of directors is a citizen, (iii) no more
than a minority of the number of its directors necessary to constitute a quorum
for the transaction of business are non-citizens, and (iv) 75.0% of the interest
and voting power in the corporation is held by citizens. Because we could lose
our privilege of operating our vessels in the U.S. domestic trade if
non-citizens were to own or control in excess of 25.0% of our outstanding
capital stock, our Certificate of Incorporation contains restrictions concerning
foreign ownership and control of our stock.

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

OCCUPATIONAL HEALTH REGULATIONS. Our shoreside facilities and, as of
2001, our U.S.-based vessels are subject to occupational safety and health
regulations issued by the U.S. Occupational Safety and Health Administration
(OSHA) and comparable state programs. Such regulations currently require us to
maintain a workplace free of recognized hazards, observe safety and health
regulations, maintain records and keep employees informed of safety and health
practices and duties. Our vessel operations are also subject to occupational
safety and health regulations issued by the U.S. Coast Guard and, to an extent,
OSHA. Such regulations currently require us to perform monitoring, medical
testing and record keeping with respect to mariners engaged in the handling of
the various cargoes transported by our chemical and petroleum product carriers.

VESSEL CONDITION. Our chemical and petroleum product carriers, offshore
energy support vessels, certain of our tugs and our fuel barges are subject to
periodic inspection and survey by, and drydocking

and maintenance requirements of, the Coast Guard and/or the American Bureau of
Shipping and other marine classification societies.

OIL TANKER ESCORT REQUIREMENTS. Implementation of oil tanker escort
requirements of OPA 90 and pending state legislation are expected to introduce
certain performance or engineering standards on tugs to be employed as tanker
escorts. We believe our tractor tugs will be able to comply with any existing or
currently anticipated requirements for escort tugs. Adoption of such new
standards could require modification or refitting of the conventional tugs we
currently operate to the extent they are employed as tanker escorts.

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

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

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

INSURANCE

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

SECURITY

Heightened awareness of security needs brought about by the events of
September 11, 2001 have caused the U.S. Congress, the states and local ports to
require the adoption of heightened security procedures relating to ports with
vessel access, The Company has complied with such new procedures and has revised
its vessel access procedures in light of new requirements.

EMPLOYEES

As of January 1, 2002, we had 2,563 employees. Management considers
relations with employees to be satisfactory. Renegotiations of labor contracts
are on-going and are expected to be settled amicably. The SEABULK AMERICA and
SEABULK MAGNACHEM are manned by approximately 80 officers and crew who are
subject to two collective bargaining arrangements that expire on December 31,
2003 and 2002, respectively. In addition, the SEABULK TRADER, SEABULK CHALLENGE,
DEFENDER, the five new double-hull carriers, and thirty-one harbor tugs are
manned by approximately 418 members of national maritime labor unions.

ITEM 2. PROPERTIES

The Company's principal offices are located in Fort Lauderdale,
Florida, where the Company leases approximately 36,000 square feet of office and
shop space under a lease expiring in 2009. The Company owns a 40-acre facility
in Port Arthur, Texas that serves as a regional office and includes 1,200 feet
of dock space. This facility is planned to be sold in the second quarter of
2002. The Company also leases office and other facilities in Lafayette,
Louisiana; Green Cove Springs, Florida; Dubai; the United Arab Emirates; and
Nyon, Switzerland. It is expected that the lease in Green Cove Springs will be
terminated or assigned during the second quarter of 2002 as part of the sale of
its Sun State Marine Services business. In addition, the Company leases sales
offices and maintenance and other facilities in many of the locations where its
vessels operate. The Company believes that its facilities are generally adequate
for current and anticipated future use, although the Company may from time to
time close or consolidate facilities or lease additional facilities as
operations require.

ITEM 3. LEGAL PROCEEDINGS

Under United States law, "United States persons" are prohibited from
business activities and contracts in certain countries, including Sudan and
Iran. The Company has filed two reports with and submitted documents to the
Office of Foreign Asset Control of the U.S. Department of Treasury. One of the
reports was also filed with the Bureau of Export Administration of the U.S.
Department of Commerce. The reports and documents related to certain limited
charters with third parties involving three of the Company's vessels which
called in the Sudan for several months in 1999 and January 2000, and charters
with third parties involving several of the Company's vessels which called in
Iran in 1998. Should either of the agencies determine that these activities
constituted violations of the laws or regulations administered by them, civil
penalties, including fines, could be assessed against the Company and/or certain
individuals who knowingly participated in such activities. The Company cannot
predict whether any such penalties will be imposed or the nature or extent of
such penalties; however, management does not believe the outcome of these
matters will have a material impact on its financial position or results of
operations.

The Company was sued by Maritime Transportation Development Corporation
in January 2002 alleging broker commissions due from charters on two of its
vessels, the MAGNACHEM and SEABULK CHALLENGER, since 1998. The Company is
vigorously defending such charges, believes it has good defenses, but cannot
predict the ultimate outcome.

In December 2001, the Company was notified by Steamship Mutual, its
protection and indemnity marine insurance club (the "Club"), of additional
insurance calls in the projected amount of $4.1 million, due to investment
losses resulting in reserve shortfalls for the Club. Although the Company has
serious disagreements over the basis for these additional assessments and has
instituted a dispute procedure, the Company has accrued the full $4.1 million
in 2001. Payments toward the calls are projected to be made in various
installments during 2002 and 2003.

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,
subject to certain deductibles. We do not believe such litigation to be
material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are:

Name Age Current Positions
---- --- -----------------

Gerhard E. Kurz 62 President & Chief Executive Officer
J. Stephen Nouss 47 Senior Vice President & Chief Financial Officer*
Alan R. Twaits 54 Senior Vice President, General Counsel & Secretary
Andrew W. Brauninger 55 Senior Vice President - Offshore
William R. Ludt 54 Senior Vice President - Towing
John J. O'Connell, Jr. 58 Senior Vice President - Corporate Communications and Investor
Relations & Assistant Secretary
L. Stephen Willrich 49 Senior Vice President - Tankers
A. Thomas Denning 47 Vice President - Engineering
Michael J. Pellicci 38 Controller**

* Resigned as of March 31, 2002
** Acting Chief Financial Officer as of March 31, 2002

MR. KURZ has been Chief Executive Officer and a director of the Company
since April 2000 and was appointed President in September 2000. He formerly
served as President of Mobil Shipping and Transportation Company (MOSAT), a
Mobil Oil-affiliated company from which he retired in March 2000. Mr. Kurz
joined Mobil in London in 1964 as a Chartering Assistant. In 1965 he was
transferred to Mobil's Marine Division in New York. After a series of
assignments, he was named Vice President of Planning, Middle East and Marine
Transportation, and then President of MOSAT in 1989. He serves on the Board of
Directors of the American Bureau of Shipping and previously chaired its Finance
and Nominating Committees. He also serves on the Boards of the Seamen's Church
Institute, the Coast Guard Foundation, and the Newport News Mariners' Museum.
Mr. Kurz is past Chairman of the Marine Preservation Association and the Oil
Companies International Marine Forum. He is a founding member and Chairman of
the Massachusetts Maritime Academy's International Business Advisory Council and
a member of the International Advisory Board to the Panama Canal Authority. He
is the recipient of numerous awards and honors, including the International
Maritime Hall of Fame Award, the 1999 SEATRADE "Personality of the Year" award,
the Seamen's Church Institute Silver Bell Award, and the U. S. Coast Guard Award
and Medal for Meritorious Public Service. He holds an Honorary Doctorate Degree
from Massachusetts Maritime Academy.

MR. NOUSS has been Senior Vice President and Chief Financial Officer
since August 2000. He was previously Vice President of Finance and
Administration for Certified Vacations Group, Inc. Prior to that he served on
the management teams of two FORTUNE 500 companies - W. R. Grace & Co., where he
was Assistant Vice President, and Ryder System, Inc., in International Finance.
He is a Certified Public Accountant and has 16 years of public accounting
experience with Price Waterhouse LLP and Coopers & Lybrand LLP. Mr. Nouss is
President of the Florida Institute of Certified Public Accountants; serves on
the Council for the American Institute of Certified Public Accountants, and is a
former Director of the University of Florida Athletic Association, Inc., where
he also served as Vice President. He is a past President of the Mental Health
Resource Center, Inc. and the University of Florida National Alumni Association.

MR. TWAITS has been Senior Vice President, General Counsel and
Secretary since November 2000. He was previously Senior Vice President, General
Counsel and Secretary of Premier Cruise Lines. Prior to his experience at
Premier, he was in private practice and served as General Counsel and Secretary
for Carnival Corporation as well as a Director and Vice President, General
Counsel and Secretary

of Carnival Air Lines. Mr. Twaits has also held senior counsel positions with
Crowley Maritime Corporation, Trusthouse Forte, Inc., United States Lines, Inc.,
and a staff counsel position at Pan American World Airways. He is a member of
the Florida Bar, the District of Columbia Bar, the American Bar Association and
its International Law Section, and the American Corporate Counsel Association.

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

MR. LUDT has been Senior Vice President - Towing Division since
February 2000 and the President of Sun State Marine Services, Inc., the
Company's inland tug and barge subsidiary and shipyard, since 1994. From
September 1998 to February 2000, he was managing director of Seabulk Offshore,
Ltd. He was elected Vice President of the Company in January 1995. He was
Director - Fleet Operations of the Company from 1982 to 1994. Since joining the
Company in 1979, he has also served as Fleet Manager and Port Engineer. He
served as President of the Chemical Carriers Association from 1989 to 1990 and
as its Vice President from 1990 to 1992. Mr. Ludt has also served on various
working groups within the U.S. Coast Guard's Chemical Transportation Advisory
Committee concerning issues such as vapor control and marine occupational safety
and health. Mr. Ludt holds a dual license as a Third Mate and Third Assistant
Engineer, Steam and Motor Vessels.

MR. O'CONNELL has been Senior Vice President - Corporate Communications
and Investor Relations since January 2000 and Assistant Secretary since February
2000. He was elected Vice President - Corporate Communications upon joining the
Company in August 1996. 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. Prior
to that, he was Instructor in English at George Washington University. Mr.
O'Connell was a member of the President's Private Sector Survey on Cost Control
in the Federal Government (Grace Commission) from 1982 to 1984.

MR. WILLRICH has been Senior Vice President - Tankers since June 2000
and President of Seabulk Tankers (formerly OSTC- Ocean Specialty Tankers
Corporation), the Company's marine transportation subsidiary, since March 1998,
when he was also elected Vice President. He was appointed Senior Vice President
of OSTC in August 1996. He joined the Company as Vice President of Chartering in
January 1988. Prior to joining the Company, Mr. Willrich was employed by Diamond
Shamrock Chemical Company from 1975 to 1988, where he rose to Division General
Manager. Prior to his service with Diamond Shamrock, he worked for Gulf Oil
Corporation as a Third Assistant Engineer on various company tankers. He has
more than 27 years of experience in the management of Jones Act product tankers.

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 Engineer from September 1986 to October
1994.

MR. PELLICCI has been Controller since January 2001 and effective March
31, 2002, will also serve as Chief Accounting Officer. He previously served as
Director of Corporate Finance and Corporate Controller of Caraustar Industries,
Inc. in Atlanta, which he joined in 1989. Prior to that, he was a Senior Auditor
with Arthur Andersen & Co. He is a Certified Public Accountant.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock of Seabulk International, Inc. trades on the Nasdaq
National Market under the symbol SBLK. Between January 2, 2001 and March 20,
2001, the stock traded on the Nasdaq National Market under the symbol HVDM. In
2000, the common stock traded on the OTC Bulletin Board under the symbol HVDM.

The Class A Warrants trade on the OTC Bulletin Board under the symbol
SBLKW. In 2000 and through March 20, 2001, they traded under the symbol HVDMW.
The warrants expire December 14, 2003 and entitle the holder, for each warrant
held, to purchase one share of the Common Stock of the Company for $38.49.

There is no established market for another series of warrants issued to
noteholders (the Noteholder Warrants) to purchase 723,861 shares of common stock
at an exercise price of $0.01 per share.

The Company has not paid and does not expect to pay any dividends on
its Common Stock.

The following tables set forth the high and low closing prices of the
Company's Common Stock and Class A Warrants, as reported by the Nasdaq National
Market and the OTC Bulletin Board.

Common Stock High Low
------------ ------ ------

2002
First Quarter (through March 1)...... $ 3.65 $ 2.70

2001
First Quarter........................ 9.06 7.75
Second Quarter....................... 7.80 5.00
Third Quarter........................ 5.95 3.75
Fourth Quarter....................... 4.35 2.95

2000
First Quarter ....................... 16.00 9.75
Second Quarter....................... 12.50 4.88
Third Quarter........................ 8.25 5.44
Fourth Quarter....................... 12.44 7.19

Class A Warrants High Low
---------------- ---- ---

2002
First Quarter (through March 1)...... $ 0.38 $ 0.38

2001
First Quarter........................ 3.00 0.38
Second Quarter....................... 0.91 0.38
Third Quarter........................ 2.00 0.38
Fourth Quarter....................... 2.00 0.38

2000
First Quarter ....................... 5.00 0.25
Second Quarter....................... 3.50 1.50
Third Quarter........................ 2.75 1.75
Fourth Quarter....................... 4.00 0.38

As of March 1, 2002 there were 282 holders of record of the Company's
Common Stock.

ITEM 6. SELECTED FINANCIAL DATA.

Upon emergence from its Chapter 11 proceeding on December 15, 1999 (the
Effective Date) the Company adopted Fresh Start Accounting, see "--- Fresh Start
Reporting." Thus the Company's consolidated balance sheets and statements of
operations and cash flows after the Effective Date reflect a new reporting
Company and are not comparable to periods prior to the Effective Date.

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

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

Successor Company Predecessor Company
--------------------------------------------------- -----------------------
Period From Period From
Year Ended December 16 January 1 Year Ended
December 31, to to December 31,
----------------------- December 31, December 15, -----------------------
2001 2000 1999 1999(6) 1998(6) 1997
--------- --------- --------- --------- --------- ---------
(as restated)(7)
(in thousands)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue .................................... $ 346,730 $ 320,483 $ 13,479 $ 328,751 $ 404,793 $ 210,257
Operating expenses ......................... 199,327 205,226 8,047 212,753 213,601 104,933
Overhead expenses .......................... 37,002 39,630 1,643 47,814 43,179 24,791
Depreciation, amortization, drydocking and
other .................................... 61,313 50,271 2,069 79,410 64,244 25,200
--------- --------- --------- --------- --------- ---------
Income (loss) from operations .............. 49,088 25,356 1,720 (11,226) 83,769 55,333
Interest expense, net(1) ................... 55,667 62,010 2,688 70,374 41,238 7,024
Other income (expense), net ................ (172) 12,574 (597) (32,129) (5,692) (3,704)
Reorganization items(2) .................... -- -- -- (433,273) -- --
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes and
extraordinary item ...................... (6,751) (24,080) (1,565) (547,002) 36,839 44,605
Provision for (benefit from) income taxes .. 5,210 4,872 -- (32,004) 13,489 16,950
--------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary item .... (11,961) (28,952) (1,565) (514,998) 23,350 27,655
Gain (loss) on extinguishment of debt(3) ... -- -- -- 266,643 (1,602) (2,132)
--------- --------- --------- --------- --------- ---------
Net income (loss) .......................... $ (11,961) $ (28,952) $ (1,565) $(248,355) $ 21,748 $ 25,523
========= ========= ========= ========= ========= =========
Diluted earnings (loss) per common share:
Income (loss) before extraordinary item . $ (1.16) $ (2.89) $ (0.16) $ (33.22) $ 1.43 $ 1.75
========= ========= ========= ========= ========= =========
Net income (loss) ....................... $ (1.16) $ (2.89) $ (0.16) $ (16.02) $ 1.35 $ 1.63
========= ========= ========= ========= ========= =========
Weighted average number of shares and
common equivalent shares outstanding .. 10,277 10,034 10,000 15,503 19,451 17,120
========= ========= ========= ========= ========= =========
Other Financial Data:
EBITDA(4) ............................... $ 110,401 $ 75,627 $ 3,789 $ 68,184 $ 148,013 $ 80,533
========= ========= ========= ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS DATA:
Net cash provided by (used in):
Operating activities .................... $ 66,840 $ 26,276 $ 2,561 $ 14,927 $ 90,853 $ 42,596
Investing activities .................... (31,815) 2,228 (3,021) (14,862) (525,652) (263,897)
Financing activities .................... (37,627) (33,317) (1,491) 10,826 429,550 226,636

Successor Company Predecessor Company
-------------------------------------------------- -------------------------------
As of December 31,
-----------------------------------------------------------------------------------------
2001(5) 2000 1999(5)(6) 1998(5) 1997
----------- ----------- ----------- ----------- -----------
(as restated)
(in thousands)

CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit) ........... $ (7,313) $ 7,026 $ 33,498 $ (216,802) $ 25,790
Total assets ........................ 744,765 775,476 830,740 1,355,267 604,561
Total long-term liabilities ......... 519,552 544,870 582,364 631,416 217,217
Convertible preferred securities of a
subsidiary trust ................. -- -- -- 115,000 115,000
Stockholders' equity ................ 124,687 136,514 165,326 248,035 224,987

---------

(1) Interest expense for the period from January 1, 1999 through December 15,
1999 excludes $8.8 million of contractual interest that was not accrued
during the Company's Chapter 11 proceeding. See Notes to the Company's
consolidated financial statements.
(2) Reorganization items are comprised of items directly related to the
Predecessor Company's Chapter 11 proceeding. See Notes to the Company's
consolidated financial statements.
(3) Reflects gains and losses on the extinguishment of debt, net of applicable
income taxes of $413 and $1,252 in 1998 and 1997, respectively.
(4) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's EBITDA operations. EBITDA is not recognized by accounting
principles generally accepted in the United States of America, should not
be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flows from
operations as a measure of liquidity, and does not represent funds
available for management's use. Further, the Company's EBITDA may not be
comparable to similarly titled measures reported by other companies.
(5) Reflects the acquisition of a 50.0% ownership interest in 1998, 25.0% in
1999 and the final 25.0% interest in 2001, of five double-hull tankers. See
Notes to the Company's consolidated financial statements.
(6) Reflects the Chapter 11 reorganization and the application of fresh-start
accounting. See Notes to the Company's consolidated financial statements.
(7) Includes $4.1 million dollars for additional insurance premiums in the
fourth quarter 2001 (See Note 21 of the Company's Consolidated Financial
Statements).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

On December 15, 1999 (the "Effective Date"), the Company emerged from
its Chapter 11 proceeding and adopted Fresh Start Accounting. Thus the Company's
consolidated statements of operations and cash flows after the Effective Date
reflect a new reporting Company and are not comparable to periods prior to the
Effective Date.

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

In August 2002, the Company restated its consolidated financial
statements as of and for the year ended December 31, 2001. The restatement was
made solely in order to accrue an additional $4.1 million operating expense in
the fourth quarter 2001 related to supplemental marine insurance calls.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of the Company's financial condition and
results of operations are based upon the consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, the Company evaluates
its estimates, including those related to bad debts, useful lives of vessels and
equipment, deferred tax assets, and certain accrued liabilities. The Company
bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect
its more significant judgments and estimates used in the preparation of its
consolidated financial statements. Revenue is generally recorded when services
are rendered, the Company has a signed charter agreement or other evidence of an
arrangement, pricing is fixed or determinable and collection is reasonably
assured. For the majority of the offshore energy and towing segments, revenues
are recorded on a daily basis as services are rendered. For the marine
transportation segment, revenue is earned under time charters or
affreightment/voyage contracts. Revenue from time charters is earned and
recognized on a daily basis. Certain time charters contain performance
provisions, which provide for decreased fees based upon actual performance
against established targets such as speed and fuel consumption. Revenue for
affreightment/voyage contracts is recognized based upon the percentage of voyage
completion. The percentage of voyage completion is based on the number of voyage
days worked at the balance sheet date divided by the total number of days
expected on the voyage. The Company maintains allowances for doubtful accounts
for estimated losses resulting from the inability of its customers to make
required payments. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. The Company records impairment

losses on long-lived assets used in operations when indications of impairment
are present and the estimated undiscounted cash flows to be generated by those
assets are less than the assets carrying amounts. If the carrying value is not
recoverable, the carrying value of the assets is reduced to estimated fair
value. Management determines the useful lives of the vessels and equipment based
upon regulatory requirements such as OPA 90, market conditions and operational
considerations. The Company continues to evaluate the reasonableness of the
useful lives of the vessels and equipment. Substantially all of the Company's
vessels must be periodically drydocked and pass certain inspections to maintain
their operating classification, as mandated by certain maritime regulations.
Costs incurred to drydock the vessels are deferred and amortized on a straight
line basis over the period to the next drydocking, generally 30 to 36 months.
The alternative accounting policy for drydocking costs is to expense the
expenditures as incurred. The Financial Accounting Standards Board and the
American Institute of Certified Public Accountants have proposed that the
deferral method of accounting for planned major maintenance activities such as
drydocking expenditures should be eliminated. Under the proposal, the Company
would expense drydocking expenditures as incurred. The Company records a
valuation allowance to reduce its deferred tax assets to the amount that is more
likely than not to be realized. After application of the valuation allowance,
the Company's net deferred tax assets and liabilities are zero at December 31,
2001 and 2000.

REVENUE OVERVIEW

The Company derives its revenue from three main lines of business -
Seabulk Offshore, Seabulk Tankers, and Seabulk Towing. Seabulk Offshore, the
Company's domestic and international offshore energy support business, accounted
for approximately 55.1% and 47.0% of Company revenue in 2001 and 2000,
respectively. Marine transportation under the new name Seabulk Tankers consists
of (1) the Company's Jones Act tanker business, in which it operates ten
petroleum product and chemical carriers in the U.S. coastwise trade, and (2) its
inland tug and barge operation and shipyard, Sun State Marine Services. The tug
and barge assets were sold in March 2002 and the shipyard assets are planned to
be sold in the second quarter of 2002. Together, they accounted for
approximately 35.2% and 43.0% of Company revenue in 2001 and 2000, respectively.
Seabulk Towing, the Company's domestic harbor and offshore towing business,
accounted for approximately 9.7% and 10.0% of the Company's 2001 and 2000
revenue, respectively.

SEABULK OFFSHORE

Revenue from the Company's offshore energy support operations is
primarily a function of the size of the Company's fleet, vessel day rates or
charter rates, and fleet utilization. Rates and utilization are primarily a
function of offshore exploration, development, and production activities, which
are in turn heavily dependent upon the price of crude oil and natural gas.
Further, in certain areas where the Company conducts offshore energy support
operations (particularly the U.S. Gulf of Mexico), contracts for the utilization
of offshore energy support vessels commonly include termination provisions with
three- to five-day notice requirements and no termination penalty. As a result,
companies engaged in offshore energy support operations (including the Company)
are particularly sensitive to changes in market demand.

The following table represents revenue for the Seabulk Offshore by
major operating area as of December 31 (in thousands):

2001 2000 1999
-------- -------- --------

Domestic(1) ....... $ 83,686 $ 54,491 $ 50,188
West Africa ....... 69,305 48,268 46,953
Middle East ....... 22,450 34,242 40,335
Southeast Asia .... 15,737 14,394 12,836
-------- -------- --------
Total ............. $191,178 $151,395 $150,312
======== ======== ========
-------------

(1) Domestic consists of vessels operating in the United States, the Gulf of
Mexico, Mexico, the Caribbean, and South America.

The following tables set forth, by primary area of operation, average
day rates achieved by the offshore energy fleet owned or operated by the Company
and their average utilization for the periods indicated. Average day rates are
calculated by dividing total revenue by the number of days worked. Utilization
percentages are based upon the number of working days over a 365/366-day year
and the number of vessels in the fleet on the last day of the quarter.

Q1 2001 Q2 2001
----------------------------------------- ---------------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------- ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels(2)(3)(4) .... 26 -- 31 1 26 -- 33 1
Bareboat-out(4) ..... -- -- 2 1 -- -- 2 1
Laid-Up ............. 1 -- -- 1 1 -- -- 1
Effective
Utilization(5) ...... 75% -- 87% -- 90% -- 87% --
Day Rate ............ $ 6,946 -- $2,709 -- $7,397 -- $ 2,929 --

WEST AFRICA
Vessels(2)(3)(6)(8) 27 3 6 1 27 4 5 1
Laid-Up ............. -- -- -- -- -- -- -- --
Effective
Utilization(5) ...... 83% 46% 85% -- 86% 41% 77% 84%
Day Rate ............ $ 6,325 $4,491 $2,754 -- $6,988 $5,528 $2,774 $6,160

MIDDLE EAST
Vessels(2)(3)(7)(9)
(11)(12) 5 8 11 7 5 8 11 7
Laid-Up12) .......... -- -- -- -- -- -- -- --
Effective
Utilization(5) ...... 77% 24% 66% 56% 92% 50% 59% 69%
Day Rate ............ $ 3,003 $4,129 $1,421 $5,197 $2,855 $3,889 $1,434 $5,393

SOUTHEAST ASIA
Vessels(2)(6)(10)(1) 8 1 5 1 8 1 5 1
Laid-Up ............. -- -- 1 -- -- -- 1 --
Effective
Utilization(5) ...... 87% 37% 89% 33% 83% 46% 73% 71%
Day Rate ............ $ 5,347 $3,929 $1,429 $6,614 $4,277 $4,255 $1,443 $6,630

Q3 2001 Q4 2001
--------------------------------------- ---------------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------ ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels(2)(3)(4) .... 26 -- 32 1 26 -- 32 1
Bareboat-out(4) ..... -- -- -- 1 -- -- -- 1
Laid-Up ............. -- -- -- 1 -- -- -- 1
Effective
Utilization(5) ...... 83% -- 83% -- 63% -- 72% --
Day Rate ............ $7,486 -- $3,061 -- $7,141 -- $2,928 --

WEST AFRICA
Vessels(2)(3)(6)(8) 27 4 6 1 27 4 6 1
Laid-Up ............. -- -- -- -- -- -- -- --
Effective
Utilization(5) ...... 82% 63% 64% 84% 76% 86% 80% 96%
Day Rate ............ $7,644 $6,097 $2,715 $7,363 $7,829 $8,041 $3,358 $9,246

MIDDLE EAST
Vessels(2)(3)(7)(9)
(11)(12) 5 8 9 6 6 8 8 5
Laid-Up12) .......... -- -- -- -- -- 1 1 1
Effective
Utilization(5) ...... 86% 48% 65% 43% 81% 60% 86% 64%
Day Rate ............ $2,954 $4,443 $1,611 $5,399 $3,121 $4,937 $1,671 $3,986

SOUTHEAST ASIA
Vessels(2)(6)(10)(1) 8 -- 6 2 7 -- 6 2
Laid-Up ............. -- -- -- -- -- -- -- --
Effective
Utilization(5) ...... 79% -- 69% 100% 69% -- 51% 52%
Day Rate ............ $4,762 -- 41,708 $8,298 $5,285 -- $1,674 $7,302

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

(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean and South America.
(2) Held-for-sale and bareboat-out vessels are excluded from the vessel count.
(3) During Q1 2001, one AHTS, one supply boat, and one specialty vessel (Other)
transferred from the Middle East to West Africa. During Q2 2001, the
Company purchased a crewboat and transferred one vessel in the Crew/Utility
category from West Africa to Domestic.
(4) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics. During Q3 2001, bareboat contracts for two
crewboats in the Domestic operating region were terminated and the vessels
were returned to the Company.
(5) Effective utilization excludes laid-up vessels.
(6) One vessel in the AHT/Tugs category worked in West Africa and Southeast
Asia during Q2 2001 and earned sufficient revenue to be included in the
statistics for both regions.
(7) The Middle East - Other category includes a vessel that is in a 50/50 joint
venture and not included in the day rate and utilization statistics.
(8) During Q3 2001, one crewboat and one utility boat in Domestic region were
transferred to "held-for-sale" status. Additionally, the Company
transferred one crewboat from Domestic to West Africa. The reduction in the
Domestic Crew/Utility vessel count was offset in part by the addition of
two crewboats as bareboat-out contracts were terminated during Q3 2001.
(9) During Q3 2001, the Company transferred one crewboat and one specialty
vessel (Other) from the Middle East to Southeast Asia. Additionally, one
crewboat was transferred to "held-for-sale" status.
(10) During Q3 2001, one crewboat and one specialty vessel (Other) were
transferred from West Africa to Southeast Asia. Also, one vessel in the
AHT/Tugs category that worked in West Africa and Southeast Asia during Q2
2001 did not work in Southeast Asia during Q3. Additionally, the Company
reactivated one crewboat from laid-up status during Q3 2001.
(11) During Q4 2001, one supply vessel was transferred from Southeast Asia to
Middle East. Also, one vessel in the AHT/Tugs category that worked in West
Africa and Southeast Asia during Q2 2001 did not work in Southeast Asia
during Q3. Additionally, the Company reactivated one crewboat from laid-up
status during Q3 2001.
(12) During Q4 2001, the Company transferred one crewboat to "held for sale"
status. Additionally, three vessels were laid-up during Q4 2001.

Q1 2000 Q2 2000
--------------------------------------- -----------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------ ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels(2)(3) . 25 -- 33 2 26 -- 33 2
Bareboat-out(4) -- -- 6 1 -- -- 2 1
Laid-Up ....... 3 -- 1 2 5 -- 2 2
Effective
Utilization(5) 80% -- 79% -- 79% -- 81% --
Day Rate ...... $3,663 -- $1,894 -- $4,024 -- $1,921 --

WEST AFRICA
Vessels(3) .... 24 4 5 1 25 4 5 1
Laid-Up ....... 2 1 1 1 2 1 1 1
Effective
Utilization(5).. 85% 57% 53% -- 83% 60% 59% --
Day Rate ...... $5,304 $4,289 $2,450 -- $5,618 $5,200 $2,460 --

MIDDLE EAST
Vessels(6) .... 24 21 29 8 21 21 29 8
Laid-Up ....... 10 5 15 -- 10 5 12 --
Effective
Utilization(5) 62% 72% 69% 69% 83% 74% 61% 70%
Day Rate ...... $2,899 $2,809 $1,373 $6,988 $2,995 $2,960 $1,446 $6,302

SOUTHEAST ASIA
Vessels ....... 9 2 5 2 9 2 5 2
Laid-Up ....... 3 -- -- 1 2 1 -- --
Effective
Utilization(4) 49% 7% 46% 33% 90% 96% 66% 85%
Day Rate ...... $4,031 $8,516 $1,540 $8,086 $4,358 $4,569 $1,549 $5,268

Q3 2000 Q4 2000
--------------------------------------- -----------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------ ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels(2)(3) . 26 -- 31 2 26 -- 32 2
Bareboat-out(4) -- -- 2 1 -- -- 2 1
Laid-Up ....... 3 -- -- 2 2 -- -- 2
Effective
Utilization(5) 76% -- 86% -- 68% -- 86% --
Day Rate ...... $4,821 -- $2,117 -- $6,174 -- $2,403 --

WEST AFRICA
Vessels(3) .... 26 4 6 1 26 4 6 1
Laid-Up ....... 1 2 1 1 1 2 1 1
Effective
Utilization(5).. 85% 81% 62% -- 87% 95% 84% --
Day Rate ...... $5,887 $5,122 $2,809 -- $5820 $5,103 $2,978 --

MIDDLE EAST
Vessels(6) .... 18 21 24 8 12 16 19 8
Laid-Up ....... 10 6 12 -- 6 5 8 --
Effective
Utilization(5) 83% 50% 61% 55% 69% 45% 63% 55%
Day Rate ...... $2,634 $3,345 $1,483 $5,510 $3,544 $3,841 $1,543 $5,669

SOUTHEAST ASIA
Vessels ....... 10 2 5 2 10 2 5 2
Laid-Up ....... 2 1 -- -- 2 1 -- --
Effective
Utilization(4) 85% 60% 69% 83% 68% 41% 83% 61%
Day Rate ...... $3,765 $7,364 $1,330 $5,474 $5,380 $4,775 $1,655 $5,085

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

(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean and South America.
(2) One vessel was sold in Q4 2000 from the Crew/Utility category. Since the
vessel earned substantial revenue during the quarter, it was included in
the statistics.
(3) One vessel in the Crew/Utility category changed reporting area from
Domestic to West Africa after Q2 2000. The statistics reflected this move.
(4) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(5) Effective utilization excludes laid-up vessels.
(6) The Middle East-AHT/Tugs and Other categories include a vessel that is a
44-foot harbor tug and in a 50/50 joint venture, respectively, which are
not included in the day rate and utilization statistics.

Q1 1999 Q2 1999
--------------------------------------- -----------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------ ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels ....... 25 -- 35 2 24 -- 34 3
Bareboat-out(2) 1 -- 5 -- 1 -- 5 --
Laid-Up(3) .... 1 -- 1 1 2 -- 1 2
Effective
Utilization(4) 73% -- 68% 77% 81% -- 75% 50%
Fleet
Utilization(4) 70% -- 66% 77% 74% -- 73% 33%
Day Rate ...... $4,842 -- $2,142 $5,765 $4,007 -- $1,881 $5,259

WEST AFRICA
Vessels ....... 24 4 5 1 25 4 5 1
Laid-Up ....... -- -- -- -- -- -- -- --
Effective
Utilization(4) 74% 89% 71% -- 61% 88% 44% 41%
Fleet
Utilization(4) 74% 89% 71% -- 61% 88% 44% 41%
Day Rate ...... $7,838 $6,414 $2,910 -- $7,189 $5,508 $2,622 $5,218

MIDDLE EAST
Vessels(5)(6) . 24 23 29 10 24 23 30 9
Laid-Up ....... 5 2 12 1 7 2 13 --
Effective
Utilization(4) 53% 50% 87% 60% 46% 39% 74% 72%
Fleet
Utilization(4) 42% 46% 52% 54% 33% 36% 42% 72%
Day Rate ...... $4,127 $2,905 $1,385 $7,127 $3,382 $2,889 $1,364 $6,383

SOUTHEAST ASIA
Vessels ....... 9 2 4 2 9 2 4 2
Laid-Up ....... 2 -- -- -- 2 -- -- --
Effective
Utilization(4) 59% 73% 100% 39% 63% 40% 100% 76%
Fleet
Utilization(4) 46% 73% 100% 39% 49% 40% 100% 76%

Day Rate ...... $5,565 $5,308 $1,577 $5,029 $4,593 $7,042 $1,586 $7,079

Q3 1999 Q4 1999
--------------------------------------- -----------------------------------
AHTS/ AHT/ Crew/ AHTS/ AHT/ Crew/
Supply Tugs Utility Other Supply Tugs Utility Other
------ ------ ------ ------ ------ ------ ------ ------

DOMESTIC(1)
Vessels ....... 25 -- 34 2 25 -- 34 2
Bareboat-out(2) -- -- 5 1 -- -- 5 1
Laid-Up(3) .... 2 -- 2 2 2 -- 2 2
Effective
Utilization(4) 84% -- 78% 100% 83% -- 91% --
Fleet
Utilization(4) 77% -- 73% 43% 77% -- 85% --
Day Rate ...... $3,392 -- $1,755 $1,317 $3,520 -- $1,823 --

WEST AFRICA
Vessels ....... 24 4 5 1 24 4 5 1
Laid-Up ....... -- -- -- 1 1 1 -- 1
Effective
Utilization(4) 52% 60% 49% -- 66% 67% 77% --
Fleet
Utilization(4) 52% 60% 49% -- 63% 50% 77% --
Day Rate ...... $6,056 $5,094 $2,675 -- $6,145 $4,734 $2,351 --

MIDDLE EAST
Vessels(5)(6) . 24 21 30 8 24 21 29 8
Laid-Up ....... 8 4 13 -- 8 5 13 --
Effective
Utilization(4) 47% 61% 70% 68% 44% 51% 78% 64%
Fleet
Utilization(4) 31% 49% 40% 68% 29% 38% 43% 64%
Day Rate ...... $3,308 $2,822 $1,407 $5,828 $3,304 $3,193 $1,629 $6,048

SOUTHEAST ASIA
Vessels ....... 9 2 4 2 9 2 5 2
Laid-Up ....... 3 -- -- -- 3 -- -- --
Effective
Utilization(4) 61% 54% 99% 50% 48% 37% 81% --
Fleet
Utilization(4) 43% 54% 99% 50% 32% 37% 81% --
Day Rate ...... $4,753 $6,546 $1,645 $4,295 $3,187 $8,227 $1,549 --

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

(1) Domestic consists of vessels operating in the United States, the U.S. Gulf
of Mexico, Mexico, the Caribbean, and South America.
(2) Bareboat-out chartered vessels are not included in the day rate and
utilization statistics.
(3) One vessel in the Other category was laid-up during 1999 after her contract
was terminated. She continued to collect charter hire, which was included
in the day rate and utilization statistics.
(4) Fleet utilization includes laid-up vessels and effective utilization
excludes laid-up vessels.
(5) The Middle East AHTS/Supply category includes two vessels in Q1 1999 that
were on bareboat-out charter. They are not included in the day rate and
utilization statistics.
(6) The Middle East Other and AHT/Tugs categories include a vessel that is in a
50/50 joint venture and a 44-foot harbor tug, respectively, which are not
included in the day rate and utilization statistics.

Domestic offshore revenue during the first eight months of fiscal 2001
benefited from increased average day rates and fleet utilization. September and
fourth quarter results, however, showed a downturn due to reduced drilling
activity in the Gulf of Mexico. The slowdown resulted from a sharp drop in the
price of natural gas, economic recession, reduced energy demand and the events
of September 11. It continued into early 2002 as the warmest winter on record
further reduced the demand for natural gas. As a result, the timing of a
recovery in the Gulf of Mexico is uncertain. Nevertheless, the Company believes
that the energy fundamentals that drive this industry will lead to a recovery in
the U.S. offshore market during the second half of 2002. This should have a
positive impact on offshore vessel demand.

International offshore revenue for the year ended December 31, 2001
benefited from rising day rates, particularly in West Africa and Southeast Asia,
as major oil companies moved ahead with oil exploration and development programs
outside the U.S. During 2001, both demand for and the price of oil remained
relatively firm. As a result of the expanding market in West Africa, the Company
has mobilized two of its Gulf of Mexico-based supply boats for redeployment to
West Africa during the first quarter of 2002.

During the fourth quarter of 2001, the Company's actual performance in
West Africa and Southeast Asia was affected by an aggressive drydocking and
repair program, which reduced utilization for the Company's vessels. The
benefits of these actions should be reflected in improved vessel performance,
reliability and utilization in future quarters.

Average day rates and utilization for the Company's anchor handling tug
supply vessels and supply boats as of March 1, 2002 for Domestic, West Africa,
the Middle East and Southeast Asia approximated $6,900/58%, $7,200/90%,
$3,200/83% and $4,400/38%, respectively.

The Company had 13 offshore vessels in "held for sale" status as of
December 31, 2001. Most of these vessels were previously in lay-up. Subsequent
to December 31, 2001, the Company sold two crewboats in the held-for-sale
category.

SEABULK TANKERS

Revenue from the Company's marine transportation services is derived
principally from the operations of 10 tankers carrying crude oil, petroleum
products and chemical products in the U.S. Jones Act trade and, to a lesser
extent, from towboat and fuel barge operations in Green Cove Springs, Florida,
which was sold in March 2002.

PETROLEUM PRODUCT TANKERS. Demand for crude oil and petroleum product
transportation services is dependent both on the level of production and
refining levels as well as on consumer and commercial consumption of petroleum
products and chemicals. The Company operated seven petroleum tankers at December
31, 2001. Four of these are double-hull, state-of-the-art vessels delivered in
late 1998 and the first half of 1999. The Company operates a fifth double-hull
tanker in the chemical transportation trade. At the end of December 2001, voyage
charters for three vessels expired and were replaced by two multi-year time
charters at time-charter-equivalent rates 55% above the returns achieved for
these vessels in 2001. For the third vessel, the Company entered into a ten-year
bareboat charter agreement with a major oil company. Beginning in January 2002,
the oil company has exclusive possession and control of the vessel. As a result,
the charterer incurs and pays all operating costs during the charter period. A
fourth vessel also secured a time charter, commencing in the fourth quarter of
2001, at a 25% increase over the expiring rate. Under a time charter, fuel and
port charges are borne by the charterer and are therefore not reflected in the
charter rates. Consequently, both the revenue and cost side of time charter
vessels are reduced by the amount of the fuel and port charges. Our Jones Act
fleet is benefiting from a tightening domestic tanker market, which should see a
further strengthening as OPA 90 forces out older, single-hull vessels. None of
our single hull vessels is scheduled for retirement under OPA 90 before 2007.

CHEMICAL TANKERS. Demand for industrial chemical transportation
services generally coincides with overall economic activity. The Company
operated two chemical tankers and one multipurpose vessel in the chemical trade
as of December 31, 2001. This multi-purpose vessel is a double-hull,
state-of-the-art vessel delivered in the first half of 1999. The other two are
double-bottom ships. The higher day rate environment for petroleum tankers is
carrying over into the chemical tanker market. Higher spot market rates helped
push time charter equivalents up substantially during 2001.

The Company's tanker fleet operates on either long-term time charters
or pursuant to short-term arrangements. During 2001, five of the Company's
tankers operated under long-term contracts. The Company expects that seven of
the Company tankers will work under long-term contracts in fiscal 2002. As a
result of the change from spot trading to time charters for two tankers and the
bareboat charter of a third tanker, the Company expects that revenue and
operating expenses will decline in 2002. However, operating income should
increase due to the change in contracts.

The following table sets forth the number of vessels and revenue for
the Company's chemical and product carriers:

Year Ended December 31,
-------------------------------------
2001 2000(1)(3) 1999(2)(3)
-------- --------- ----------

Number of vessels owned at end of period 10 10 11
Revenue (in thousands) ................. $112,694 $126,670 $143,401

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

(1) During 2000, the Company scrapped one tanker that was at the end of its OPA
90-mandated useful life and terminated a charter-in contract for another
tanker.
(2) During 1999, the Company took delivery of the final two newly built
double-hull tankers, scrapped one tanker that was at the end of its useful
life, and returned one tanker to the lessor pursuant to the expiration of
the lease.
(3) Includes revenue from chartered in vessels of $9.7 million and $15.9
million in 2000 and 1999, respectively.

INLAND TUGS AND BARGES. Revenue from the Company's Sun State Marine
Services subsidiary has been derived primarily from contracts of affreightment
with Colonial Oil Industries (formerly known as Steuart Petroleum Co.) and
Florida Power and Light (FPL) that require the Company to transport fuel as
needed. Revenue is also derived from Sun State's ship maintenance, repair,
drydocking and construction activities. Sun State's revenue totaled $9.4 million
and $9.3 million for the years ended December 31, 2001 and 2000, respectively.

During the fourth quarter of fiscal 2001, management decided to sell
the fixed assets (mostly tugs and barges) of Sun State as part of its ongoing
program to focus on the Company's core business. On March 22, 2002, the Company
closed on the sale of the marine transportation assets of Sun State for $3.8
million in cash.

SEABULK 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, the volume of vessel traffic requiring docking and other
ship-assist services and competition. Vessel traffic, in turn, is largely a
function of the general trade activity in the region served by the port.

The following table summarizes certain operating information for the
Company's tugs.

Year Ended December 31,
---------------------------------
2001 2000 1999
------- ------- -------

Number of tugs at end of period ................ 31 33 37
Towing revenue (in thousands) .................. $33,493 $33,106 $42,959

Towing revenue increased 1% to $33.5 million in 2001 from $33.1 in 2000
primarily due to increased port activity during the fourth quarter of 2001.

In August 2001, the Broward County Board of Commissioners granted a
second Port Everglades tug franchise to a competitor. Since 1958, when our tug
operations commenced, the Company has been the sole provider of docking services
in Port Everglades. The competitor put two boats into service in December 2001
and is expected to put a third boat into service in January 2003. As a result,
the Company expects that towing revenue will decrease in fiscal 2002. However,
the decline is not considered to be material to the Company as a whole.

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, fuel, maintenance and repairs, and
insurance. During periods of decreased demand for vessels, the Company
temporarily ceases using certain vessels, i.e., lays up vessels, to reduce
expenses for marine operating supplies, crew payroll and maintenance. At
December 31, 2001, 17 of the Company's 140 offshore energy support vessels were
laid up or held for sale. The Company took other steps during 2001 to reduce
operating costs, including the consolidation of certain international offshore
functions in Dubai, United Arab Emirates; and the relocation of tanker and
purchasing functions from Port Arthur, Texas to corporate headquarters.

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

In addition to variable expenses associated with vessel operations, the
Company incurs fixed charges, which are capitalized and amortized for its
vessels and other assets. The Company provides for depreciation on a
straight-line basis over the estimated useful lives of the related assets. OPA
90 mandates the useful life of the Company's product and chemical carriers,
except for the five double-hull carriers.

The Company overhauls main engines and key auxiliary equipment in
accordance with a continuous planned maintenance program. Under applicable
regulations, the Company's chemical and product carriers and offshore service
vessels and its four largest tugs are required to be drydocked twice in each
five-year period for inspection and routine maintenance and repairs. These
vessels are also

required to undergo special surveys every five years involving comprehensive
inspection and corrective measures to insure their structural integrity and the
proper functioning of their cargo and ballast tankers and piping systems,
critical machinery and equipment, and coatings. The Company's harbor tugs
generally are not required to be drydocked on a specific schedule. During the
years ended December 31, 2001, 2000 and 1999, the Company drydocked 66, 62 and
47 vessels, respectively, at an aggregate cost (exclusive of lost revenue) of
$29.4 million, $14.4 million and $7.5 million, respectively. The increase in
drydock expenditures is due mainly to tanker drydockings, which generally cost
more than offshore vessels. The Company accounts for its drydocking costs under
the deferral method, under which capitalized drydocking costs are expensed over
the period preceding the next scheduled drydocking. See Note 2 to the Company's
consolidated financial statements.

The Company had capital expenditures, including drydocking costs, in
the years ended December 31, 2001, 2000 and 1999 of $38.7 million, $26.4 million
and $64.2 million, respectively.

The cost of fuel is an item having significant impact on the Company's
operating results. Its cost has been relatively stable in 2001.

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. The Company has been notified by its insurance protection of
indemnity club of additional insurance calls allegedly necessitated by
investment mismanagement by the club's advisors causing reserve shortfalls for
the club. This company is contesting the validity of these calls. The Company
accrued a $4.1 million expense in the fourth quarter 2001 related to these calls
(see Note 2 to the consolidated financial statements).

RESULTS OF OPERATIONS

Results for 2001 and 2000 reflect years of operation after the
Company's adoption of Fresh Start Accounting upon its emergence from Chapter 11
on December 15, 1999 (the Effective Date). See Note 4 to the Company's
consolidated financial statements. Thus the Company's consolidated statements of
operations and cash flows after the Effective Date reflect a new reporting
Company and are not comparable to periods prior to the Effective Date.

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

Year Ended December 31,
------------------------------------------------------------------------
2001 2000 1999
-------------------- -------------------- --------------------
(as restated)
(dollars in millions)

Revenue ........................................ $ 346.7 100.0% $ 320.5 100.0% $ 342.2 100.0%
Operating expenses ............................. 199.3 57.0% 205.2 64.0% 220.8 65.0%
Overhead expenses .............................. 37.0 11.0% 39.6 12.0% 49.4 14.0%
Depreciation, amortization, drydocking and other 61.3 18.0% 50.3 16.0% 81.5 24.0%
-------- ----- -------- ----- -------- -----
Income (loss) from operations .................. $ 49.1 14.0% $ 25.4 8% $ (9.5) (3.0)%
======== ===== ======== ===== ======== =====

Interest expense, net .......................... $ 55.7 16.0% $ 62.0 19.0% $ 73.1 21.0%
======== ===== ======== ===== ======== =====

Other income (expense) ......................... $ (0.2) 0.0% $ 12.6 4.0% $ (32.7) (10.0)%
======== ===== ======== ===== ======== =====

Reorganization items ........................... $ -- -- $ -- -- $ (433.3) (127.0)%
======== ===== ======== ===== ======== =====
Net loss ....................................... $ (12.0) (3.0)% $ (29.0) (9.0)% $ (249.9) (73.0)%
======== ===== ======== ===== ======== =====

2001 COMPARED WITH 2000

REVENUE. Revenue increased 8.2% to $346.7 million for 2001 from $320.5
million in 2000 primarily due to increased revenue from the Company's offshore
energy support segment offset in part by decreased revenue from the Company's
marine transportation services.

Offshore energy support revenue increased 26.3% to $191.2 million for
2001 from $151.4 million for 2000 primarily due to the significant increases in
day rates for both supply and crew boats in the Gulf of Mexico and West Africa
operating regions offset in part by decreased revenue from the Middle East
region. Additionally, the Company purchased two crewboats in December 2000 and
May 2001 and placed those vessels into service in the Gulf of Mexico. During the
first eight months of 2001, day rates and utilization for all vessels working in
the Gulf of Mexico rose due to increased exploration and production activities.
During the last four months of 2001, day rates and utilization for the Company's
Gulf of Mexico-based vessels decreased as drilling activity fell sharply on the
heels of lower natural gas prices and reduced energy demand. Nevertheless, the
strong first half of fiscal 2001 resulted in a significant increase in full-year
revenue for the Gulf of Mexico operating region. In the West Africa operating
region, average day rates rose across all vessel classes and utilization
remained strong throughout 2001 as the market continued to expand in what is
primarily an oil-driven, deepwater business. The Company mobilized two of its
Gulf of Mexico-based supply boats for redeployment to West Africa during the
first quarter of 2002. The decline in Middle East revenue in 2001 is
attributable to fewer vessels (average of 72 vessels in 2000 compared to 30
vessels in 2001) as the Company sold a significant number of underperforming
vessels that were working in the Middle East region in 2000 and 1999. The
reduction in the number of vessels working in the Middle East is a direct result
of the lack of profitability stemming from production cutbacks by the
Organization of Petroleum Exporting Countries. During 2001, a total of 25
offshore energy support vessels were sold, most of which were based in the
Middle East.

Marine transportation services revenue decreased $13.9 million, or
10.2%, to $122.1 million for 2001 from $136.0 million for 2000. This decrease is
primarily due to the mandated retirement of one of the Company's Jones Act
tankers in the third quarter of 2000 and the termination of the Company's

chartering-in of one tanker in the first quarter of 2000 through October 2000.
Total 2000 revenue relating to the two additional tankers amounted to $14.5
million. The decrease from the two tankers was offset in part by increased
transportation activity with tankers working under various voyage contracts.

Towing revenue increased 1.2% to $33.5 million in 2001 from $33.1 in
2000 primarily due to increased port activity during the fourth quarter of 2001.

OPERATING EXPENSES. Operating expenses decreased 2.9% to $199.3 million
from $205.2 million for 2000 primarily due to the lease termination and
retirement of two tankers and the change of three tankers from spot trading to
time charters in the Company's marine transportation services operations. This
decrease is offset in part by higher crew salaries and benefits and consumables
and supplies expenses in offshore energy support operations. Total 2000
operating expenses (primarily charter hire, fuel and port charges) relating to
the two tankers noted above amounted to $13.6 million. Since three tankers were
changed from spot trading to time charters in 2001, fuel and port charges
significantly decreased as these expenses are the responsibility of the
charterer under time charters. Operating expenses for 2001 were also adversely
affected by $4.1 million of supplemental insurance calls assessed by the Club to
cover current and anticipated investment losses (see Note 2 to the Company's
consolidated financial statements). The increase in offshore crew salaries and
benefits is primarily due to additional maritime staff resulting from (1)
purchase of two crewboats in December 2000 and May 2001, (2) termination of a
bareboat-out contract for two crewboats and (3) increased utilization of vessels
in the Gulf of Mexico and West Africa. Under a bareboat contract, the charterer
is responsible for crewing and operating the vessel. Additionally, expenses for
consumables and supplies increased in the West Africa operating region due to
increased operating activity.

In November 2001, the Company entered into a three-year e-procurement
contract with an outside vendor. The contract will consolidate the purchasing
activity of the Company's three segments into one common platform and standard.
Additionally, the contract will include spare parts and consumable data base
rationalization to reduce on-board and warehouse inventory and procurement
costs, automated tendering to increase competitive quoting, sourcing
enhancements to increase number of qualified suppliers quoting, automated
contract management to increase utilization of pre-negotiated contracts, and
automated supplier connectivity via the Internet to reduce transaction cost and
time. Management expects that the contract will be a significant step toward our
ongoing efforts to further reduce various operating costs such as supplies and
consumables, and maintenance and repair. However, management cannot estimate the
amount of the savings at this time.

OVERHEAD EXPENSES. Overhead expenses decreased 6.6% to $37.0 million in
2001 from $39.6 million for 2000 primarily due to a decrease in professional
fees and other overhead expenses offset in part by increases in salaries and
benefits. Higher headcount and related salary expense for corporate activity
resulted in savings on third-party consulting fees and services. The decrease in
other overhead expenses is primarily due to lower charges for rent and other
miscellaneous items as a result of the elimination of non-essential services and
consolidation of administrative functions.

DEPRECIATION, AMORTIZATION, DRYDOCKING AND OTHER EXPENSES.
Depreciation, amortization, drydocking and other expenses increased 22.0% to
$61.3 million in 2001 from $50.3 million in 2000 primarily due to higher planned
drydocking expenditures for offshore energy support vessels and tankers and the
write-down of the book value of vessels and equipment and deferred drydocking
costs of Sun State Marine Services, Inc. Drydocking amortization expense
increased 117.1% to $14.7 million in 2001 from $6.8 million in 2000. In response
to increased activity in the offshore energy support segment in 2001, the
Company increased the level of drydocking expenditures. Additionally, the
Company had to drydock five tankers in 2001. Tanker drydocking expenditures are
generally higher than expenditures for

offshore vessels and tugs. The Company expects that drydocking amortization
expense in 2002 will increase by 30.0% over 2001 as a result of drydocking
expenditures made in 2001.

During the fourth quarter of fiscal 2001, management decided to sell
the fixed assets (mostly tug barges) of Sun State Marine Services, Inc. The sale
of the tug and barge assets was consummated in March 2002. It is anticipated
that the shipyard assets will be sold in the second quarter of 2002. Upon
reclassifying Sun State's assets to assets held for sale, management considered
recent appraisals, offers and bids and its estimate of future cash flows related
to the fixed assets. As a result, the Company recorded a write-down of $1.4
million.

INCOME FROM OPERATIONS. Income from operations increased 93.6% to $49.1
million in 2001 compared to $25.4 million in 2000 as a result of higher day
rates in the Company's offshore energy support business and lower operating and
overhead expenses.

NET INTEREST EXPENSE. Net interest expense decreased 10.2% to $55.7
million in 2001 from $62.0 million in 2000 primarily due to lower interest rates
on variable rate debt and lower outstanding balances under our term loans and
revolving credit facility. The Eurodollar Rate for the term loans and revolving
line of credit decreased from 6.7% at December 31, 2000 to 1.9% at December 31,
2001. The decline in the Eurodollar Rate resulted from the series of interest
rate cuts by the Federal Reserve and the general slowdown of the global economy
during 2001. This decrease is offset in part by interest expense on additional
borrowings in 2001 for the remaining 24.25% interest in the five double-hull
tankers and the purchase of two crewboats (financed through borrowings under the
Company's revolving line of credit).

OTHER INCOME (EXPENSE). Other expense totaled $(0.2) million in 2001
compared to other income of $12.6 million in 2000. The decrease in other income
is primarily due to a net loss of $(0.1) million on vessel sales in 2001
compared to a net gain of $3.9 million on vessel sales and a $7.0 million
favorable settlement of a disputed liability in 2000.

NET LOSS. The Company's net loss decreased 58.7% to $12.0 million in
2001 from $29.0 million for 2000 as a result of higher revenue and lower
operating and interest expenses. The provision for income taxes increased from
$4.8 million in 2000 to $5.2 million in 2001 primarily due to higher foreign
revenue. As of December 31, 2001 and 2000, management believes that it was more
likely than not that the deferred tax assets would not be realized. Therefore, a
full valuation allowance is recorded reducing the net deferred tax assets to
zero.

2000 COMPARED WITH 1999

NET REVENUE. Net revenue decreased 6.0% to $320.5 million for 2000 from
$342.2 million for 1999 primarily due to decreased revenue from the Company's
marine transportation services and towing operations.

Offshore energy support revenue increased 1.0% to $151.4 million for
2000 from $150.3 million for 1999 primarily due to the increase in day rates for
both supply and crew boats. This increase began in the first quarter of 2000 and
continued throughout the year as a result of an increase in energy prices and
exploration and production activity. During 2000, a total of 29 offshore energy
support vessels were sold of which six were sold during the first half of the
year and 23 during the second half of the year.

Marine transportation services revenue decreased $12.9 million, or
9.0%, to $136.0 million for 2000 from $148.9 million for 1999. This decrease is
primarily due to the mandated retirement of three of the Company's Jones Act
tankers, two in the last quarter of 1999 and one in the third quarter of 2000.
Additionally, the Company had chartered in two tankers in 1999 and one tanker
through October 2000.

Revenue from these tankers was $28.9 million in 1999 compared to $9.7 million in
2000. This decrease was partially offset by the operation of two of the
Company's double-hull tankers for the entire year 2000. The AMBROSE CHANNEL and
BRENTON REEF were placed in service in March and June of 1999, respectively.
Revenue from these two double-hull tankers was $14.9 million in 1999 compared to
$27.2 million in 2000.

Towing revenue decreased 23.0% to $33.1 million for 2000 from $43.0
million for 1999. This decrease is primarily due to the sale of five tugs during
2000 and increased competition in the Port of Tampa as well as decreased
activity in some of the other remaining ports in which the Company operates.

OPERATING EXPENSES. Operating expenses decreased 7.0% to $205.2 million
for 2000 from $220.8 million for 1999, primarily due to decreases in charter
hire expenses and port charges in the Company's marine transportation services
operations and crew payroll expenses in the Company's offshore energy support
operations, offset in part by increased fuel expense.

OVERHEAD EXPENSES. Overhead expenses decreased 20.0% to $39.6 million
for 2000 from $49.4 million for 1999 primarily due to a decrease in professional
fees related to the Company's Chapter 11 proceeding in 1999.

DEPRECIATION, AMORTIZATION AND DRYDOCKING EXPENSES. Depreciation,
amortization and drydocking expenses decreased 38.0% to $50.3 million in 2000
from $81.5 million in 1999 primarily due to the write-down of the book value of
property and deferred drydocking costs, and the write-off of goodwill as a
result of the reorganization in 1999. Drydocking amortization expense decreased
41.0% to $6.8 million in 2000 from $11.5 million in 1999. The reduction in
drydocking expense was a direct result of reduced drydocking expenditures in
late 1998 and through 1999 as drydocking expenditures were deferred on
non-working vessels. In response to increased activity in the offshore segment
in 2000, the Company increased the level of drydocking expenditures. The Company
expects that drydocking amortization expense will increase in the future as a
result of the additional level of expenditures. As previously indicated, the
Company revised the estimated remaining useful lives of certain offshore energy
and support vessels as part of fresh start accounting. As a result of this
change, offset in part by the impact of vessels sold in 2000, total depreciation
expense for 2001 increased by approximately $1.7 million to approximately $45.2
million in 2001 versus $43.5 million in 2000.

INCOME (LOSS) FROM OPERATIONS. Income (loss) from operations increased
367.0% to income of $25.4 million in 2000 from a loss of $(9.5) million in 1999
as a result of the factors noted above.

NET INTEREST EXPENSE. Net interest expense decreased 15.0% to $62.0
million in 2000 from $73.0 million in 1999 primarily due to the reorganization
and conversion of the Predecessor Company's senior notes and preferred
securities to shares in the Successor Company's common stock.

OTHER INCOME (EXPENSE). Other income totaled $12.6 million in 2000
compared to other expense of $(32.7) million in 1999 primarily due to a net gain
of $3.9 million on vessel sales and a $7.0 million favorable settlement of a
disputed liability in 2000 compared to a net loss of $(25.7) million on vessel
sales in 1999.

NET INCOME (LOSS). The Company's net loss decreased 88% to $(29.0)
million for 2000 compared to a loss of $(249.9) million for 1999 as a result of
the factors noted above and reorganization items incurred in 1999. As of
December 31, 2000, management believes that it was more likely than not that the
deferred tax assets would not be realized. Therefore, a full valuation allowance
is recorded reducing the net deferred tax assets to zero.

LIQUIDITY AND CAPITAL RESOURCES

BACKGROUND. The Company's capital requirements arise primarily from its
need to service debt, fund working capital and maintain and improve its fleet of
vessels.

CASH FLOWS. Net cash provided by operating activities totaled $66.8
million for the year ended December 31, 2001 compared to $26.2 million for 2000.
The significant increase in cash provided by operating activities is primarily a
result of higher operating income before non-cash charges such as depreciation
and amortization in 2001. During 1999, the Company generated $17.5 million of
cash from operations before reorganization items, primarily reflecting the net
loss for the period, after elimination of reorganization expense of $433.3
million and non-cash items.

Net cash used in investing activities was $(31.8) million for the year
ended December 31, 2001 compared to net cash provided by investing activities of
$2.2 million for the same period in 2000. The increased use of cash for
investing activities is due primarily to planned drydocking expenditures for an
additional four vessels including tanker drydock expenditures, which are
generally more expensive, and smaller proceeds from disposal of assets held for
sale. The number of vessels sold in 2001 decreased to 25 vessels from 39 vessels
in 2000. During 1999, net cash used in investing activities was approximately
$17.9 million for the period, primarily reflecting the disposal of vessels and
the redemption of restricted investments, offset by the costs of construction of
and capital improvements to other vessels.

Net cash used in financing activities for the year ended December 31,
2001 was $37.6 million compared to $33.3 million for the same period in 2000.
The increase in cash used in financing activities is attributable to a larger
net decrease in the outstanding balance of the revolving credit facility and
increased restricted cash. Restricted cash increased as the Company obtained
fully funded letters of credit for its international offshore business during
2001. The increased use of cash from financing activities was offset in part by
smaller repayments toward the term loans. The payments on the term loans include
payments generated from vessel sales during the respective years. Proceeds from
vessel sales decreased from $25.7 million in 2000 to $6.6 million in 2001,
resulting in smaller repayment of term debt. During 1999, net cash provided by
financing activities was approximately $9.3 million, consisting primarily of
payments under the existing loan agreement, offset by borrowings.

RECENT EXPENDITURES AND FUTURE CASH REQUIREMENTS. The Company's current
and future capital needs relate primarily to debt service and maintenance and
improvements of its fleet. Excluding the five double-hull product and chemical
tankers, the Company's principal debt obligations for 2001 were $23.7 million;
cash interest obligations were $31.9 million of the $39.1 million in total
interest expense, which includes amortization of bank fees and discounts on
notes. Operating lease obligations were $4.9 million in 2001. Excluding the five
double-hull product and chemical tankers, the Company's principal debt
obligations for 2002 are estimated to be approximately $34.0 million; cash
interest obligations will be approximately $27.2 million of the estimated $35.7
million in total interest expense, and operating lease obligations for 2002 are
estimated to be $4.6 million.

During 2001, the Company paid $4.1 million in principal and $15.4
million in interest on the five double-hull tankers. For 2002, an estimated $4.4
million of principal and $15.1 million in interest payments are due on the Title
XI ship financing bonds associated with the five double-hull product and
chemical tankers.

XI reserve fund may be made for limited purposes, subject to prior approval from
MARAD. To date, no deposits have been required. Additionally, according to the
Title XI Financial Agreement, the Company is restricted from formally
distributing excess cash from the operations of the five double-hull tankers
until certain working capital ratios have been reached and maintained.
Accordingly, at December 31, 2001, the Company had approximately $7.3 million in
cash and cash equivalents that are restricted for use for the operations of the
five double-hull tankers and cannot be used to fund the Company's general
working capital requirements. Based on current projections, the Company expects
to meet the working capital requirements under the financial agreement in the
first quarter of 2003 and may begin to formally distribute any available excess
cash.

During 2001, the Company incurred $38.7 million in capital improvements
to its fleet, including drydock expenditures for 66 vessels. For 2002, these
improvements are expected to aggregate $25.0 million.

In December 2000, the Company signed an agreement to purchase the
remaining 24.25% equity interest in its five 45,300 dwt double-hull product
tankers. The purchase was completed in January 2001 and was funded by $0.5
million in cash and a promissory note in the amount of $10.5 million at an
interest rate of 8.5%. The aggregate cost of the five carriers was approximately
$260.0 million, a substantial portion of which was financed with the proceeds of
U.S. government-guaranteed Title XI ship financing bonds.

The following summarizes the Company's contractual obligations at
December 31, 2001, and the effect such obligations are expected to have on its
liquidity and cash flow in future periods.

Payments Due by Period
---------------------------------------------------------------------
Contractual Less Than 1
Obligations Total Year 1 - 3 Years 4 - 5 Years Over 5 Years
----------- -------------- ------------- ------------- -------------- --------------

Long-term debt and
Senior Notes $535.3 million(a) $38.4 million $69.7 million $120.9 million $306.3 million
Capital lease obligations 48.3 million 5.3 million 10.0 million 8.8 million 24.2 million
Operating leases 24.0 million 4.6 million 7.5 million 6.6 million 5.3 million
-------------- ------------- ------------- -------------- --------------
Total contractual cash
obligations $607.6 million $48.3 million $87.2 million $136.3 million $335.8 million
============== ============= ============= ============== ==============

-----------

(a) Total contractual obligations for long-term debt and Senior Notes excludes
unamortized discount of $15.3 million.

Long-term debt and the Senior Notes consisted of the following at
December 31, 2001:

Outstanding Balance
2001 as of Interest Rate as of
Facility Payments December 31, 2001 Maturity March 1, 2002
-------- -------- ----------------- -------- -------------------

Tranche A term loan $8.6 million $ 52.4 million 2004 5.13%
Tranche B term loan $1.2 million $ 24.6 million 2005 5.63%
Tranche C term loan $4.0 million $ 78.0 million 2006 6.13%
Amendment fee note $1.0 million $ 4.8 million 2002 15.00%
Senior Notes $0.0 million $ 81.6 million(1) 2007 13.50%
Title XI Financing Bonds $8.3 million $241.6 million 2005 to 2024 6.50% to 10.00%
Other notes payable $4.7 million $ 27.9 million Various Various
Revolving credit facility $5.3 million(2) $ 9.0 million 2004 5.13%

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

(1) Outstanding balance is net of unamortized discount of $15.3 million
(2) Represents net payments

CREDIT FACILITIES AND SENIOR NOTES. The Company has credit facilities
from a group of financial institutions. The facilities, totaling $320.0 million,
consist of $200.0 million in term loans, a $25.0 million revolving credit
facility, and $95.0 million in aggregate principal amount at maturity of 12.5%
senior secured notes. A portion of the proceeds from these facilities was used
to repay all outstanding borrowings under the Predecessor Company's bank loans
and to pay administrative and other fees and expenses. The balance of the
proceeds is being used for working capital and general corporate purposes.

In connection with the first amendment of the credit agreement, the
Company paid a fee of $4.5 million to the lending banks in the form of a
promissory note, accruing interest at 15.0% per annum, due the earlier of (i)
April 2002 or (ii) the date on which the ratio of funded indebtedness to EBITDA
for any quarter is less than four to one. The Company is repaying the amendment
fee and accrued interest in installments of $1 million per month beginning in
December 2001. The amendment also required the Company to obtain the consent of
the lending banks to borrow in excess of $17.5 million under the revolving
credit portion of the credit facility. Additionally, the amendment required a
cumulative $60.0 million prepayment of the term loans prior to January 1, 2001.
Subsequent amendments throughout 2000 reduced the prepayment requirements and
abolished them altogether.

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

o the higher of the rate that the administrative agent announces from time to
time as its prime lending rate (4.75% as of December 31, 2001) or 1/2 of
1.0% in excess of the overnight federal funds rate, plus a margin ranging
from 2.25% to 3.25% or

o a rate based on a percentage of the administrative agent's quotation to
first-class banks in the New York interbank Eurodollar market for dollar
deposits (LIBOR: 1.93% as of December 31, 2001), plus a margin ranging from
3.25% to 4.25%.

During the year ended December 31, 2001, the Company made the following
interest payments under the term loans: Tranche A, $4.3 million; Tranche B, $2.0
million; and Tranche C, $6.7 million. At December 31, 2001, $9.0 million was
outstanding under the revolving credit facility. In addition to the revolver
balance, there are $1.9 million in outstanding letters of credit as of December
31, 2001. As a result, the unused portion of the revolver was $6.6 million at
December 31, 2001. With the bank's

approval, the Company can borrow an additional $7.5 million on the revolver.
However, there can be no assurance that the bank will approve additional
borrowings under the revolver.

Borrowings under the credit agreement are collateralized by first
priority perfected security interests in substantially all of the equity of the
Company's subsidiaries and by first priority perfected security interests in
certain of the vessels and other assets owned by the Company and its
subsidiaries. In addition, certain of the Company's subsidiaries have guaranteed
its obligations under the credit agreement. The credit agreement contains
covenants that require the Company, among other things, to meet certain
financial ratios and that prohibit it from taking certain actions and entering
into certain transactions. At December 31, 2001, the Company was in compliance
with these covenants.

The Company has issued $95.0 million face amount of 12.5% senior
secured lien notes, Series A (the "Senior Notes") with 536,193 detachable common
stock purchase warrants. Interest on the Senior Notes is payable quarterly in
arrears. The Senior Notes mature in June 2007 and are redeemable, in whole or
part, at the Company's option at the redemption amount, as defined, plus accrued
and unpaid interest. In addition, upon a change in control as defined, the
Company must redeem the Senior Notes at 101.0% of the stated principal amount,
plus accrued and unpaid interest. During the year ended December 31, 2001, the
Company made $11.9 million in interest payments on the Senior Notes.

In August 2000, the Company consummated an exchange offer pursuant to
which the holders of the Senior Notes had the right to exchange them for Series
B Senior Notes that are registered under the Securities Act in like principal
amount and with identical terms.

The Senior Notes are collateralized by substantially all of the assets
of the Company. Covenants require the Company to (1) limit the incurrence of
additional indebtedness; (2) limit the creation or incurrence of certain liens;
(3) restrict certain payments and investments; and (4) restrict certain asset
sales or affiliate transactions. At December 31, 2001, the Company is in
compliance with the debt covenants.

RECENT DEVELOPMENTS. For the period from April 2000 through December
2001, the senior secured notes have not received the rating from the rating
agencies required under the note indenture. As a result, the interest rate for
the notes increased from 12.5% to 13.5% effective December 15, 1999. The
indenture requires that such additional interest be paid in the form of
additional notes, of which notes in the aggregate principal amounts of $963,533
and $992,752 were issued during the years ended December 31, 2001 and 2000,
respectively. The Company is currently seeking the required ratings that would
return the interest rate to 12.5%.

During November 2001, a fifth amendment to the Credit Facility was
executed, which maintained the current working capital ratio requirement and did
not increase it as of December 31, 2001. Additionally, the amendment required
that the $4.5 million promissory note be repaid in monthly installments of $1
million beginning in December 2001. The note matures in April 2002 at which time
the remaining unpaid principal and accrued interest is due in a balloon payment
of approximately $1.9 million. The amendment did not affect any provisions
relating to interest on the promissory note.

Additionally, on March 15, 2002, a sixth amendment to the Credit
Facility was executed, which is expected to allow the Company to maintain
compliance with its financial covenants. The amendment reduced the working
capital ratio for 2002 and for the life of the term loans and reduced the fixed
charge ratio in 2002, with a gradual increase over the remaining life of the
term loans.

On August 9, 2002, the Company executed the seventh amendment to the
credit facility which waived the Company's non-compliance with its working
capital covenants at December 31, 2001, which occurred as a result of the
restatement discussed in Note 2 to the Company's consolidated financial
statements.

At December 31, 2001, the Company had a working capital deficit of
approximately $7.3 million as day rates and utilization during the last four
months of 2001 sharply declined for offshore vessels working in the Gulf of
Mexico. The slowdown in the domestic market was offset in part by continued
strength in the Company's international offshore operations, where rising day
rates throughout the year contributed to increased revenue in West Africa and
Southeast Asia. This increase revenue was driven by higher exploration and
production spending as major oil companies moved ahead with oil exploration and
development programs outside the U.S. Nonetheless, during the second half of
2001, there was a noticeable softening in both energy demand and the prices paid
for oil and natural gas. Management believes that the softening trend is
unlikely to affect international exploration and development outlays in key
areas where the Company operates as most of the activity there is controlled by
the international oil companies, whose strategy reflects a longer-term time
horizon. Since the September 11 attacks and subsequent war on terrorism, the
U.S. economy has been subject to further downward pressure and, as we enter
2002, the timing of a recovery in the domestic offshore segment is less certain.
We therefore do not expect earnings in 2002 from the offshore segment to match
those of 2001. Nevertheless, consistent with industry forecasts regarding
exploration and production spending, the Company believes that the energy
fundamentals that drive the offshore industry will lead to a recovery in the
U.S. offshore market during the second half of 2002 and that the more important
international offshore markets will remain strong throughout the year. However,
there can be no assurance this will occur. The Company also expects to benefit
from higher earnings in its tanker business as a result of higher time charter
and bareboat charter rates that take effect in 2002.

The Company's capital requirements arise primarily from its need to
service debt, fund working capital and maintain and improve its vessels. The
Company's expected 2002 capital requirements for debt service, vessel
maintenance and fleet improvements total approximately $109.4 million. The
Company expects that cash flow from operations will continue to make significant
contributions toward working capital and its capital requirements. The Company
also expects to complete the sale of certain non-strategic assets in 2002 of
which $5 million in proceeds could be used for working capital purposes. If
operating cash flow is not adequate, the Company believes that the amounts
available under the revolving line of credit will be sufficient to meet its
capital requirements.

EFFECTS OF INFLATION

The Company does not consider inflation a significant business risk in
the current and foreseeable future.

PROSPECTIVE ACCOUNTING CHANGES

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 142, "Goodwill and Other
Intangible Assets," which establishes a new method of testing goodwill for
impairment using a fair-value-based approach and does not permit amortization of
goodwill as previously required by Accounting Principles Board (APB) Opinion No.
17, "Intangible Assets." An impairment loss would be recorded if the recorded
goodwill exceeds its implied fair value. The Company adopted SFAS No. 142
effective January 1, 2002. As the Company does not have any recorded goodwill or
other intangible assets, the adoption of this statement will not have a material
impact.

Also in July 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" which requires companies
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred and a corresponding increase in the carrying
amount of the related long-lived asset. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The company expects to adopt SFAS No. 143
on January 1, 2002 and does not anticipate any material financial statement
impact.

In August 2001, the Financial Accounting Standards Board issued SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which
establishes one accounting model to be used for long-lived assets to be disposed
of by sale and broadens the presentation of discontinued operations to include
more disposal transactions. SFAS No. 144 supersedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets to Be Disposed Of" and the accounting
and reporting provisions of APB Opinion No. 30. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. The company expects to adopt
SFAS No. 144 on January 1, 2002 and does not anticipate any material financial
statement impact.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates,
which may adversely affect its results of operations and financial condition.
The Company's policy is not to use financial instruments for trading or other
speculative purposes and the Company is not a party to any leveraged financial
instruments. Except as set forth below, the Company manages market risk by
restricting the use of derivative financial instruments to infrequent purchases
of forward contracts for the purchase of fuel oil for its carrier fleet. These
contracts have been terminated as of December 31, 2001. A discussion of the
Company's credit risk and the fair value of financial instruments is included in
Notes 2 and 14 of the Company's consolidated financial statements.

EXPOSURE TO SHORT-TERM INTEREST RATES. Short-term variable rate debt,
primarily borrowings under the credit agreement, comprised approximately $164.0
million of the Company's total debt at December 31, 2001. The Company's variable
rate debt had an average interest rate of 5.77% at December 31, 2001. A
hypothetical 2.0% increase in interest rates on $164.0 million of debt would
cause the Company's interest expense to increase approximately $2.2 million per
year over the term of the loans, with a corresponding decrease in income before
taxes.

ITEM 8. FINANCIAL STATEMENTS

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

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

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 2002 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 2002 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 2002 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 2002 Annual Meeting of Shareholders under the caption,
"Certain Transactions," and is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) FINANCIAL STATEMENTS AND SCHEDULES. See Index to consolidated
financial statements and Schedules which appear on page F-1 herein.

(b) REPORTS ON FORM 8-K. The Company did not file any reports on Form
8-K for the fourth quarter ended December 31, 2001.

(c) LISTS OF EXHIBITS. The following is a list of exhibits furnished.
Copies of exhibits will be furnished upon request of any stockholder at a charge
of $0.25 per page plus postage. The Company hereby files as part of this Form
10-K the exhibits listed in Item 14(c) below. Exhibits which are incorporated
herein by reference can be inspected and copied at the public reference
facilities maintained by the Commission, 450 Fifth Street N.W., Room 1024,
Washington, D.C. 29549 and at the Commission's regional office at CitiCorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies of
such material can also be obtained from the Public Reference Section of the
Commission, 450 Fifth Street N.W., Washington, D.C. 29549, at prescribed rates.

Exhibit
Number Exhibits
------ --------

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

3.1(a)* Certificate of Incorporation (incorporated by reference to the
Company's Form 10-K for the fiscal year ended December 31, 1999).

3.1(b)* Certificate of Merger (incorporated by reference to the Company's
Form 10-K for the fiscal year ended December 31, 1999).

3.1(c)** Certificate of Merger changing the name of the Company.

3.2* By-laws of the Company.

4.1* Form of Common Stock Certificate of the Company.

4.1(a)** Form of Common Stock Certificate reflecting new name of the Company.

4.2* Form of Class A Warrant Certificate of the Company.

4.2(a)** Form of Class A Warrant Certificate reflecting new name of the
Company.

4.3* Indenture for the 12.5% Senior Secured Notes due 2007, dated
December 15, 1999 among Hvide Marine Incorporated as the Issuer, the
Subsidiary Guarantors named therein, State Street Bank and Trust
Company as the Trustee and Bankers Trust Company as the Collateral
Agent [incorporated by reference to Exhibit 4.1 to the Company's
Form 8-K filed with the Commission on December 27, 1999 (Commission
File No. 000-28732)].

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

4.5* Class A Warrant Agreement dated as of December 15, 1999 by and
between Hvide Marine Incorporated and State Street Bank and Trust
Company (incorporated by reference to the Company's Form 10-K for
the fiscal year ended December 31, 1999).

4.6* Amended and Restated Equity Ownership Plan (incorporated by
reference to the Company's definitive Proxy Statement dated May 15,
2000).

4.7* Stock Option Plan for Directors (incorporated by reference to the
Company's definitive Proxy Statement dated May 15, 2000).

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

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

10.3* Registration Rights Agreement for the 12.5% Senior Secured Notes due
2007 dated December 15, 1999 among Hvide Marine Incorporated,
Bankers Trust Corporation and Great American Life Insurance Company,
Great American Insurance Company, New Energy Corp., American Empire
Surplus Lines Insurance Company, Worldwide Insurance Company and
American National Fire Insurance Company as Purchasers [incorporated
by reference to Exhibit 10.3 of the Company's Form 8-K filed with
the Commission on December 27, 1999 (Commission File No.
000-28732)].

10.4* Registration Rights Agreement by and between Loomis, Sayles &
Company, L.P. and Hvide Marine Incorporated dated as of December 15,
1999 [incorporated by reference to Exhibit 4 of the Schedule 13D/A
filed with the Commission on December 29, 1999 by Loomis, Sayles &
Company, L.P. (Commission File No. 005-46833)].

10.5* First Amendment dated as of April 13, 2000 among Hvide Marine
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company as Administrative Agent
(incorporated by reference to the Company's Form 10-K for the fiscal
year ended December 31, 1999).

10.6* Second Amendment dated June 29, 2000 among Hvide Marine
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company, as Administrative Agent
(incorporated by reference to the Company's Form 10-K for the fiscal
year ended December 31, 2000).

10.7* Third Amendment dated August 30, 2000 among Hvide Marine
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company, as Administrative Agent
(incorporated by reference to the Company's Form 10-K for the fiscal
year ended December 31, 2000).

10.8* Fourth Amendment dated December 22, 2000 among Hvide Marine
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company, as Administrative Agent
(incorporated by reference to the Company's Form 10-K for the fiscal
year ended December 31, 2000).

10.9** Fifth Amendment dated November 8, 2001 among Seabulk International
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company, as Administrative Agent.

10.10** Sixth Amendment dated March 15, 2002 among Seabulk International
Incorporated, the financial institutions party to the credit
agreement and Bankers Trust Company, as Administrative Agent.

10.11* Employment Agreement dated as of April 18, 2000 between the Company
and Gerhard E. Kurz.

10.12** Amendment to Employment Agreement dated July 16, 2001 between the
Company and Gerhard E. Kurz.

21* Subsidiary List.

21(a)** Revised Subsidiary List.

23.1 Consent of Ernst & Young LLP.

99.1* Order dated December 9, 1999 of the United States Bankruptcy Court
for the District of Delaware confirming the First Amended Joint Plan
of Reorganization in IN RE: HVIDE MARINE INCORPORATED, et al., Case
No. 99-3024 (PJW), including the Supplement to such Plan
[incorporated by reference to Exhibit 99.1 of the Company's Form 8-K
filed with the Commission on December 27, 1999 (Commission File No.
000-28732)].

--------------------------
* Incorporated herein by reference.
** Filed as exhibit to original Annual Report on Form 10-K for the Year
ended December 31, 2001 filed with the Commission on March 29, 2002.

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.

SEABULK INTERNATIONAL, INC.

By: Gerhard E. Kurz
-------------------------------------
Gerhard E. Kurz
President, Chief Executive Officer,
and Director

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.

Signature Title Date
--------- ----- ----

/s/ James J. Gaffney Chairman of the Board, and August 14 2002
-------------------------------------- Director
James J. Gaffney

/s/ Gerhard E. Kurz President, Chief Executive Officer, August 14 2002
-------------------------------------- and Director
Gerhard E. Kurz

/s/ Vincent deSostoa Senior Vice President and August 14 2002
-------------------------------------- Chief Financial Officer
Vincent deSostoa (Principal Financial Officer)

/s/ Jean Fitzgerald Director August 14 2002
--------------------------------------
Jean Fitzgerald

/s/ Thomas P. Moore, Jr. Director August 14 2002
--------------------------------------
Thomas P. Moore, Jr.

/s/ Donald R. Shepherd Director August 14 2002
--------------------------------------
Donald R. Shepherd

/s/ Peter H. Cressy Director August 14 2002
--------------------------------------
Peter H. Cressy

/s/ John F. McGovern Director August 14 2002
--------------------------------------
John F. McGovern

/s/ Robert Keiser Director August 14, 2002
--------------------------------------
Robert Keiser

Seabulk International, Inc. and Subsidiaries

Index to Consolidated Financial Statements and Schedules

Report of Independent Certified Public Accountants......................................F-2

Consolidated Financial Statements:

Consolidated Statements of Operations for the years ended December 31, 2001 (as
restated) and 2000, the period from December 16, 1999 to December 31, 1999
(Successor Company) and the period from January 1, 1999 to December 15, 1999
(Predecessor Company)...................................................................F-3

Consolidated Statements of Cash Flows for the years ended December 31, 2001 (as
restated) and 2000, the period from December 16, 1999 to December 31, 1999
(Successor Company) and the period from January 1, 1999 to December 15, 1999
(Predecessor Company)..................................................................F-4

Consolidated Balance Sheets as of December 31, 2001 (as restated) and 2000.............F-6

Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2001(as restated) and 2000, the period from December 16, 1999 to
December 31, 1999 (Successor Company) and the period from January 1, 1999 to
December 15, 1999 (Predecessor Company)................................................F-7

Notes to Consolidated Financial Statements (as restated)...............................F-9

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

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Seabulk International, Inc.

We have audited the accompanying consolidated balance sheets of Seabulk
International, Inc. (formerly known as Hvide Marine Incorporated) as of December
31, 2001 (as restated) and 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 2001 (as restated) and 2000 and for the period from December 16, 1999 to
December 31, 1999 (Successor Company) and for the period from January 1, 1999 to
December 15, 1999 (Predecessor Company). The Predecessor Company and the
Successor Company are hereinafter referred to collectively as the Company. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Seabulk
International, Inc. at December 31, 2001 (as restated) and 2000, and the
consolidated results of its operations and its cash flows for the years ended
December 31, 2001 (as restated) and 2000 and for the period from December 16,
1999 to December 31, 1999 (Successor Company), and for the period from January
1, 1999 to December 15, 1999 (Predecessor Company), in conformity with
accounting principles generally accepted in the United States.

The December 31, 2001 consolidated financial statements have been
restated as described in Note 2.

/s/ Ernst & Young LLP

Miami, Florida
February 6, 2002, except for Note 2, as
to which the date is August 14, 2002, the
penultimate and ultimate paragraphs of Note 5,
as to which the dates are March 15, 2002 and
August 9, 2002, respectively, and Note 20,
as to which the date is March 22, 2002

F-2

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

Successor Company Predecessor
------------------------------------- Company
Period From -------------
December 16 Period From
Year Ended December 31, to January 1 to
----------------------- December 31, December 15,
2001 2000 1999 1999
--------- --------- ----------- ------------
(as restated)

Revenue ............................................................ $ 346,730 $ 320,483 $ 13,479 $ 328,751
Operating expenses:
Crew payroll and benefits ....................................... 96,431 90,370 4,155 91,374
Charter hire and Title XI guarantee fee ......................... 6,326 12,802 554 15,791
Repairs and maintenance ......................................... 25,810 24,522 719 26,045
Insurance ....................................................... 15,809 12,645 532 12,716
Consumables ..................................................... 34,955 40,605 1,660 35,966
Rent and utilities .............................................. 19,996 24,282 427 30,861
--------- --------- --------- -----------
Total operating expenses ...................................... 199,327 205,226 8,047 212,753
Overhead expenses:
Salaries and benefits ........................................... 21,531 22,083 870 18,048
Office .......................................................... 5,993 6,113 220 6,563
Professional fees ............................................... 3,429 4,629 211 10,447
Other ........................................................... 6,049 6,805 342 12,757
--------- --------- --------- -----------
Total overhead expenses ....................................... 37,002 39,630 1,643 47,815
Depreciation, amortization and drydocking .......................... 59,913 50,271 2,069 79,409
Write-down of assets held for sale ................................. 1,400 -- -- --
--------- --------- --------- -----------
Income (loss) from operations ...................................... 49,088 25,356 1,720 (11,226)
Other (expense) income:
Interest expense ................................................ (55,907) (62,714) (2,756) (71,215)
Interest income ................................................. 240 704 68 841
Minority interest and equity in losses (earnings) of subsidiaries 35 1,639 (408) (2,596)
(Loss) gain on disposal of assets ............................... (134) 3,863 -- (25,658)
Other ........................................................... (73) 7,072 (189) (3,875)
--------- --------- --------- -----------
Total other expense, net ...................................... (55,839) (49,436) (3,285) (102,503)
--------- --------- --------- -----------
Loss before reorganization items, income taxes, and
extraordinary item .............................................. (6,751) (24,080) (1,565) (113,729)
Reorganization items:
Professional fees ............................................... -- -- -- (8,535)
Write down of goodwill and property ............................. -- -- -- (419,998)
Other, net ...................................................... -- -- -- (4,740)
--------- --------- --------- -----------
Total reorganization items .................................... -- -- -- (433,273)
--------- --------- --------- -----------
Loss before income taxes and extraordinary item .................... (6,751) (24,080) (1,565) (547,002)
Provision for (benefit from) income taxes .......................... 5,210 4,872 -- (32,004)
--------- --------- --------- -----------
Loss before extraordinary item ..................................... (11,961) (28,952) (1,565) (514,998)
Gain on early extinguishment of debt, net of applicable
income taxes .................................................... -- -- -- 266,643
--------- --------- --------- -----------
NET LOSS ...................................................... $ (11,961) $ (28,952) $ (1,565) $ (248,355)
========= ========= ========= ===========

Net loss per common share - basic and diluted:
Loss before extraordinary item ..................................... $ (1.16) $ (2.89) $ (0.16) $ (33.22)
Gain on early extinguishment of debt ............................... -- -- -- 17.20
--------- --------- --------- -----------
Net loss per common share ....................................... $ (1.16) $ (2.89) $ (0.16) $ (16.02)
========= ========= ========= ===========

Weighted average common shares outstanding ......................... 10,277 10,034 10,000 15,503
========= ========= ========= ===========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Successor Company Predecessor
----------------------------------- Company
Period From ------------
December 16 Period From
to January 1 to
Year Ended December 31, December 31, December 15,
---------------------- ------------ ------------
2001 2000 1999 1999
--------- --------- --------- ---------
(as restated)

OPERATING ACTIVITIES:
Net loss ............................................................... $ (11,961) $ (28,952) $ (1,565) $(248,355)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Reorganization items:
Write-off of goodwill ........................................... -- -- -- 88,052
Revaluation of property and related assets ...................... -- -- -- 331,946
Accrued reorganization expenses ................................. -- (4,494) -- 5,828
Revaluation of other liabilities and assets ..................... -- -- -- 2,872
Gain on early extinguishment of debt .............................. -- -- -- (266,643)
Depreciation and amortization of vessels and equipment ............ 45,212 43,498 1,801 64,220
Provision for bad debts ........................................... 228 1,021 56 6,180
Loss (gain) on disposal of assets ................................. 134 (3,863) -- 25,658
Amortization of drydocking costs .................................. 14,701 6,773 268 11,249
Amortization of goodwill .......................................... -- -- -- 3,940
Amortization of discount on long-term debt and financing costs .... 5,324 5,672 180 2,777
Deferred income tax benefit ....................................... -- -- -- (32,004)
Minority partners' equity in (losses) earnings of subsidiaries, net (35) (1,639) 408 2,596
Write-down of assets held for sale ................................ 1,400 -- -- --
Senior and notes payable issued for payment of interest and fees 1,752 1,493 -- --
Other non-cash items .............................................. 459 (75) -- (164)
Changes in operating assets and liabilities:
Accounts receivable ........................................... 3,210 (13,394) 1,172 20,000
Marine operating supplies ..................................... (476) 994 239 232
Other current and long-term assets ............................ (5,009) 19,355 1,306 (1,349)
Accounts payable and other liabilities ........................ 11,901 (113) (1,304) (2,108)
--------- --------- --------- ---------
Net cash provided by operating activities ................... 66,840 26,276 2,561 14,927

INVESTING ACTIVITIES:
Purchases of vessels and equipment ..................................... (9,282) (12,047) (597) (57,144)
Expenditures for drydocking ............................................ (29,449) (14,366) (1,424) (5,060)
Payments on vessels under construction ................................. -- -- -- (5,102)
Purchases of restricted investments .................................... (1,677) -- -- (45,790)
Redemption of restricted investments ................................... 2,542 2,931 -- 65,382
Proceeds from disposals of vessels and equipment ....................... 6,575 25,710 -- 32,852
Purchase of minority interest .......................................... (524) -- (1,000) --
--------- --------- --------- ---------
Net cash (used in) provided by investing activities ................. (31,815) 2,228 (3,021) (14,862)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

FINANCING ACTIVITIES:
(Repayments) proceeds from revolving credit facility, net ............... (5,250) 14,250 -- --
Proceeds from Debtor-in-Possession (DIP) credit facility ................ -- -- -- 26,690
Proceeds from long-term borrowings ...................................... -- -- -- 245,208
Repayment of long-term borrowings ....................................... (19,504) (33,390) (80) (288,205)
Proceeds from issuance of Successor Company senior secured notes and
Warrants ............................................................. -- -- -- 85,500
Proceeds from issuance of Title XI bonds ................................ -- -- -- 5,428
Repayment of Title XI bonds ............................................. (8,312) (9,282) (1,252) (6,643)
Increase in restricted cash ............................................. (1,006) -- -- (15,217)
Payments of financing costs ............................................. -- (596) -- (12,678)
Proceeds from exercise of warrants ...................................... 3 -- -- --
Payments of obligations under capital leases ............................ (3,558) (4,300) (159) (2,820)
Proceeds from issuance of common stock .................................. -- 1 -- 253
Repayment of DIP credit facility ........................................ -- -- -- (26,690)
--------- --------- --------- ---------
Net cash (used in) provided by financing activities .................. (37,627) (33,317) (1,491) 10,826
--------- --------- --------- ---------
Change in cash and cash equivalents ..................................... (2,602) (4,813) (1,951) 10,891
Cash and cash equivalents at beginning of period ........................ 14,233 19,046 20,997 10,106
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............................. $ 11,631 $ 14,233 $ 19,046 $ 20,997
========= ========= ========= =========

Supplemental schedule of noncash investing and financing activities:
Note payable issued for amendment fee to credit facility ................ $ -- $ 4,500 $ -- $ --
========= ========= ========= =========
Notes payable issued for the acquisition of vessels ..................... $ -- $ -- $ 8,586 $ --
========= ========= ========= =========
Capital lease obligations for the acquisition of vessels and equipment .. $ -- $ 5,332 $ -- $ --
========= ========= ========= =========
Senior and notes payable issued for payment of accrued interest and fees $ 1,752 $ 1,493 $ -- $ --
========= ========= ========= =========
Notes payable issued for acquisition of minority interest ............... $ 10,500 $ -- $ -- $ --
========= ========= ========= =========
Supplemental disclosures:
Interest paid, net of interest capitalized .............................. $ 47,279 $ 56,219 $ 739 $ 57,821
========= ========= ========= =========
Income taxes paid ....................................................... $ 3,304 $ 4,478 $ -- $ 734
========= ========= ========= =========
Cash paid for professional fees in connection with Chapter 11 proceeding $ -- $ -- $ -- $ 4,575
========= ========= ========= =========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-5

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)

December 31,
-------------------------
2001 2000
--------- ---------
(as restated)

ASSETS
Current assets:
Cash and cash equivalents ........................................................... $ 11,631 $ 14,233
Restricted cash ..................................................................... 1,337 331
Accounts receivable:
Trade, net of allowance for doubtful accounts of $5,919 in 2001 and $6,398 in 2000 50,088 53,526
Insurance claims and other ........................................................ 16,282 11,516
Marine operating supplies ........................................................... 10,049 9,638
Prepaid expenses .................................................................... 2,984 3,055
--------- ---------
Total current assets .............................................................. 92,371 92,299

Vessels and equipment, net ............................................................. 589,371 639,896
Deferred costs, net .................................................................... 48,899 38,159
Restricted investments ................................................................. -- 865
Other .................................................................................. 14,124 4,257
--------- ---------
Total assets ...................................................................... $ 744,765 $ 775,476
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................................... $ 18,171 $ 12,906
Current maturities of long-term debt ................................................ 38,367 33,270
Current obligations under capital leases ............................................ 2,972 3,580
Accrued interest .................................................................... 1,455 1,677
Accrued liabilities and other ....................................................... 38,719 33,840
--------- ---------
Total current liabilities ......................................................... 99,684 85,273

Long-term debt ......................................................................... 399,974 426,849
Obligations under capital leases ....................................................... 31,768 34,718
Senior notes ........................................................................... 81,635 79,108
Other liabilities ...................................................................... 6,175 4,195
--------- ---------
Total liabilities ................................................................. 619,236 630,143

Commitments and contingencies

Minority interest ...................................................................... 842 8,819

Stockholders' equity:
Preferred stock, no par value--authorized 5,000; issued and outstanding, none ....... -- --
Class A common stock--$.01 par value, authorized 20,000 shares; 10,506 and 10,117
shares issued and outstanding in 2001 and 2000, respectively ........................ 105 101
Additional paid-in capital .......................................................... 167,259 166,963
Unearned compensation ............................................................... (198) --
Accumulated other comprehensive loss ................................................ (1) (33)
Accumulated deficit ................................................................. (42,478) (30,517)
--------- ---------
Total stockholders' equity .......................................................... 124,687 136,514
--------- ---------
Total liabilities and stockholders' equity ........................................ $ 744,765 $ 775,476
========= =========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)

Class A Class B
Common Stock Common Stock Additional
------------------------- ------------------------- Paid-In
Shares Amount Shares Amount Capital
--------- --------- --------- --------- ----------

PREDECESSOR COMPANY
BALANCE AT DECEMBER 31, 1998 ..................... 12,873 $ 13 2,547 $ 2 $ 196,822
Common stock issued pursuant to employee stock
purchase plan .................................. 79 -- -- -- 253
Stock compensation pursuant to key employee stock
plan ........................................... -- -- -- -- 104
Common stock issued to directors ................. 55 -- -- -- 130
Other ............................................ -- -- -- -- (167)
Conversion of common stock ....................... 2,020 2 (2,020) (2) --
Cancellation of Predecessor Company common stock
and elimination of existing stockholders' equity
upon emergence from bankruptcy ................. (15,027) (15) (527) -- (197,142)
Issuance of Successor Company common stock ....... 10,000 100 -- -- 154,881
Warrants issued in connection with exit financing -- -- -- -- 11,910
Net loss ....................................... -- -- -- -- --
--------- --------- --------- --------- ---------
SUCCESSOR COMPANY
BALANCE AT DECEMBER 15, 1999 ..................... 10,000 100 -- -- 166,791
Net loss ......................................... -- -- -- -- --
--------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1999 ..................... 10,000 100 -- -- 166,791
Comprehensive loss:
Net loss ...................................... -- -- -- -- --
Translation adjustment ........................ -- -- -- -- --
Total comprehensive loss
Common stock issued to employees ................. 28 -- -- -- 172
Common stock issued upon exercise of warrants .... 89 1 -- -- --
--------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 2000 ..................... 10,117 101 -- -- 166,963
Comprehensive loss:
Net loss (as restated) ........................ -- -- -- -- --
Translation adjustment ........................ -- -- -- -- --
Total comprehensive loss (as restated)

Common stock issued upon exercise of warrants .... 314 3 -- -- --
Restricted common stock issued to officer ........ 75 1 -- -- 296
--------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 2001 (as restated) ....... 10,506 $ 105 -- $ -- $ 167,259
========= ========= ========= ========= =========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-7

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)

Accumulated Retained
Other Earnings
Comprehensive Unearned (Accumulated
Loss Compensation Deficit) Total
------------- ------------ -------------- ---------

PREDECESSOR COMPANY
BALANCE AT DECEMBER 31, 1998 ......................... $ -- $ -- $ 51,198 $ 248,035
Common stock issued pursuant to employee stock
purchase plan ...................................... -- -- -- 253
Stock compensation pursuant to key employee stock plan -- -- -- 104
Common stock issued to directors ..................... -- -- -- 130
Other ................................................ -- -- -- (167)
Conversion of common stock ........................... -- -- -- --
Cancellation of Predecessor Company common
stock and elimination of existing stockholders'
equity upon emergence from bankruptcy ........... -- -- 197,157 --
Issuance of Successor Company common stock ........... -- -- -- 154,981
Warrants issued in connection with exit financing .... -- -- -- 11,910
Net loss ........................................... -- -- (248,355) (248,355)
--------- --------- --------- ---------

SUCCESSOR COMPANY
BALANCE AT DECEMBER 15, 1999 ......................... -- -- -- 166,891
Net loss ............................................. -- -- (1,565) (1,565)
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1999 ......................... -- -- (1,565) 165,326
Comprehensive loss:
Net loss .......................................... -- -- (28,952) (28,952)

Translation adjustment ............................ (33) -- -- (33)
---------

Total comprehensive loss ..................... -- -- -- (28,985)
Common stock issued to employees ..................... -- -- -- 172
Common stock issued upon exercise of warrants ........ -- -- -- 1
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 2000 ......................... (33) -- (30,517) 136,514
Comprehensive loss:
Net loss (as restated) ............................ -- -- (11,961) (11,961)

Translation adjustment ............................ 32 -- -- 32
---------
Total comprehensive loss (as restated) ....... -- -- -- (11,929)
Common stock issued upon exercise of warrants ........ -- -- -- 3
Restricted common stock issued to officer ............ -- (198) -- 99
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 2001 (as restated) ........... $ (1) $ (198) $ (42,478) $ 124,687
========= ========= ========= =========

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-8

SEABULK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

On March 12, 2001, Hvide Marine Incorporated (the "Issuer") filed a
"Certificate of Ownership and Merger" with the Secretary of State of the State
of Delaware that merged the Issuer's newly organized, wholly-owned subsidiary
Seabulk International, Inc. into the Issuer. This Certificate of Ownership and
Merger provided that from and after the effective date of the merger, the name
of the merged companies would be Seabulk International, Inc. The merger and name
change became effective on March 19, 2001, and the Issuer's common stock began
trading on the Nasdaq National Market under its new symbol "SBLK" on March 21,
2001. The Company's Class A Warrants began trading on the OTC Bulletin Board
under their new symbol "SBLKW" on March 21, 2001.

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

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

The accompanying consolidated financial statements include the accounts
of Seabulk International, Inc. and its subsidiaries, both majority and
wholly-owned. All intercompany transactions and balances have been eliminated in
the consolidated financial statements.

The Predecessor Company and substantially all of its wholly-owned
subsidiaries filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") on September 8, 1999
(the "Petition Date"). The Bankruptcy Court confirmed the Company's Joint Plan
of Reorganization (the "Plan") on December 9, 1999, and the Plan became
effective on December 15, 1999 (the "Effective Date"). The Company emerged from
bankruptcy on December 15, 1999; see Note 4 for additional information.

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

F-9

As of December 31, 1999, the Company had an equity interest of 75.8% in
the five double-hull tankers. On January 15, 2001, the Company purchased the
remaining 24.2% equity interest for approximately $11.0 million (see Note 17).
The double-hull tankers were not a party to the Chapter 11 proceeding.

2. RESTATEMENT

In December 2001, the Company was notified by its protection and
indemnity marine insurance club (Steamship), of approximately $4.1 million in
additional insurance premiums. The additional premiums were assessed on policy
years 1999 through 2001 to cover investment losses and reserve shortfalls
experienced by Steamship in 2001. Upon receipt of the notification, the Company
vigorously contested the authority of Steamship to levy such assessments and
contested the calculation basis of the assessments. Through the second quarter
of 2002, the Company gathered additional facts, spoke to outside advisors and,
based on the advice of Steamship, filed a formal protest with Steamship's Board
of Directors. On May 27, 2002, the Company received Steamship's response
rejecting the Company's grounds for protest and reasserting the premium
assessments based on the authority of the Steamship Directors to levy such calls
at their discretion. Based on the response from Steamship and information
obtained from outside advisors, the Company concluded that it was within
Steamship's authority to levy the premium assessments. Therefore, the Company
determined that the additional premiums should have been recorded in the period
in which they were notified of the assessment.

Accordingly, the accompanying consolidated financial statements as of
and for the year ended December 31, 2001 have been restated to reflect
approximately $4.1 million of additional insurance premiums. The effect of the
restatement is summarized below:

As Reported As Restated
----------- --------------
(in thousands, except per share data)

Income from operations ...................... $ 53,181 $ 49,088
Net loss .................................... (7,868) (11,961)
Net loss per common share - basic and diluted (0.77) (1.16)

Accrued liabilities and other ............... 36,583 38,719
Other liabilities ........................... 4,218 6,175
Accumulated deficit ......................... (38,385) (42,478)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE. Revenue is generally recorded when services are rendered, the
Company has a signed charter agreement or other evidence of an arrangement,
pricing is fixed or determinable and collection is reasonably assured. For the
majority of the offshore energy and towing segments, revenues are recorded on a
daily basis as services are rendered. For the marine transportation segment,
revenue is earned under time charters or affreightment/voyage contracts. Revenue
from time charters is earned and recognized on a daily basis. Certain time
charters contain performance provisions, which provide for decreased fees based
upon actual performance against established targets such as speed and fuel
consumption. Recorded revenue is based on actual performance.
Affreightment/voyage contracts are contracts for cargoes that are committed on a
12 to 30 month basis, with minimum and maximum cargo tonnages specified over the
period at fixed or escalating rates per ton. Revenue and voyage expenses for
these affreightment contracts is recognized based upon the percentage of voyage
completion. The percentage of voyage completion is based on the number of voyage
days worked at the balance sheet date divided by the total number of days
expected on the voyage.

F-10

CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments with an original maturity of three months or less when purchased to
be cash equivalents. Cash equivalents consist of money market instruments and
overnight investments. The credit risk associated with cash and cash equivalents
is considered low due to the high credit quality of the financial institutions.

RESTRICTED CASH. At December 31, 2001 and 2000, restricted cash
consisted of fully funded letters of credit.

ACCOUNTS RECEIVABLE. Substantially all of the Company's accounts
receivable are due from entities that operate in the oilfield industry. The
Company performs ongoing credit evaluations of its trade customers and generally
does not require collateral. Actual credit losses are provided for in the
consolidated financial statements and have been within management's
expectations. One customer accounted for 11.0% and 12.0% of the Company's total
revenue for the years ended December 31, 2001 and 2000, respectively. During the
years ended December 31, 2001, 2000, and 1999, the Company wrote off accounts
receivable of approximately $0.7 million, $0.6 million and $2.6 million,
respectively.

INSURANCE CLAIMS RECEIVABLE. Insurance claims receivable represent
costs incurred in connection with insurable incidents for which the Company
expects are probable of being 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. Expenses incurred for
insurable incidents in excess of deductibles are recorded as receivables pending
the completion of all repair work and administrative claims process. The credit
risk associated with insurance claims receivable is considered low due to the
high credit quality and funded status of the insurance clubs in which the
Company participates.

MARINE OPERATING SUPPLIES. Such amounts consist of fuel and supplies
that are recorded at cost and charged to operating expenses as consumed.

IMPAIRMENT OF LONG-LIVED ASSETS. The Company accounts for the
impairment of long-lived assets under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, which requires
impairment losses to be recorded on long-lived assets used in operations when
indications of impairment are present and the estimated undiscounted cash flows
to be generated by those assets are less than the assets' carrying value. If the
carrying value of the assets will not be recoverable, as determined by the
estimated undiscounted cash flows, the carrying value of the assets is reduced
to fair value. Generally, fair value will be determined using valuation
techniques such as expected discounted cash flows or appraisals, as appropriate.

During the fourth quarter of fiscal 2001, management decided to sell
the fixed assets of the Company's subsidiary, Sun State Marine Services, Inc.
("Sun State"). In applying the provisions of SFAS No. 121, management considered
recent appraisals, offers and bids and its estimate of future cash flows related
to the fixed assets. As a result, the Company reclassified assets of $5.9
million to assets held for sale and recognized a write-down of $1.4 million,
representing the difference between the net book value of the underlying assets
and the estimated fair value of the assets, less costs to sell. These fixed
assets are included in other assets on the accompanying consolidated December
31, 2001 balance sheet. On March 22, 2002, the Company closed on the sale of the
marine transportation assets of Sun State for $3.8 million in cash (see Note
20).

F-11

ASSETS HELD FOR SALE. It is Company policy to make available for sale
vessels and equipment considered by management as excess and no longer necessary
for the operations of the Company. In accordance with SFAS No. 121, these assets
are valued at the lower of carrying value or fair value less costs to sell.
Also, depreciation expense for these assets is terminated at the time of the
reclassification. Total assets held for sale (primarily assets in the offshore
energy and marine transportation segments) were approximately $11.4 million and
$1.8 million at December 31, 2001 and 2000, respectively, and are included in
other assets in the accompanying consolidated balance sheets.

VESSELS AND EQUIPMENT. Vessels and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets. At the time property is
disposed of, the assets and related accumulated depreciation are removed from
the accounts, and any resulting gain or loss is charged to other income. Major
renewals and betterments that extend the life of the vessels and equipment are
capitalized. Maintenance and repairs are expensed as incurred except for
drydocking expenditures.

Vessels under capital leases are amortized over the lesser of the lease
term or their estimated useful lives and included in depreciation expense.
Included in vessels and equipment at December 31, 2001 and 2000 are vessels
under capital leases of approximately $45.4 million and $45.6 million, net of
accumulated amortization of approximately $3.3 million and $1.6 million,
respectively.

During 2000, the Company determined that the useful lives previously
assigned to certain offshore vessels were in excess of the expected remaining
service lives. The Company performed a vessel-by-vessel analysis to evaluate the
remaining useful lives of its offshore fleet. The analysis was completed in the
fourth quarter of 2000 and the average remaining useful life of the Company's
offshore supply and crewboat fleet decreased from approximately 16 years to 9
years. Management believes these changes more accurately reflect the remaining
economic lives of these vessels. As a result of the change in estimated
remaining useful lives, depreciation in 2001 and 2000 increased $5.4 million and
$0.9 million, respectively.

Listed below are the estimated remaining useful lives of vessels and
equipment at December 31, 2001:

Remaining
Useful Lives
-----------------
(in years)
Supply boats 5-25
Crewboats 2-21
Anchor handling tug/supply vessels 3-14
Other 1-11
Tankers(1) 6-27
Tugboats and barges 4-38
Furniture and equipment 3-9

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

(1) Range in years is determined by the Oil Pollution Act of 1990 and other
factors.

DEFERRED COSTS. Deferred costs primarily represent drydocking and
financing costs. Substantially all of the Company's vessels must be periodically
drydocked and pass certain inspections to maintain their operating
classification, as mandated by certain maritime regulations. Costs incurred to
drydock the vessels are deferred and amortized over the period to the next
drydocking, generally 30 to 36 months.

F-12

Drydocking costs are comprised of painting the vessel hull and sides, recoating
cargo and fuel tanks, and performing other engine and equipment maintenance
activities to bring the vessels into compliance with classification standards.
Deferred financing costs are amortized over the term of the related borrowings
using the effective interest method. At December 31, 2001 and 2000, deferred
costs included unamortized drydocking costs of approximately $29.4 million and
$14.8 million, respectively, and net deferred financing costs of $19.6 million
and $23.4 million, respectively.

RESTRICTED INVESTMENTS. Pursuant to the Title XI bond financing
agreements for the Company's five double-hull product tankers, the Company was
required to deposit all proceeds from bond issuances into an escrow account
(restricted investments) with MARAD. At December 31, 2000, restricted
investments of approximately $865,000 primarily consisted of United States
Treasury Bills and Notes, which were recorded at amortized cost as they were
expected to be held to maturity. During fiscal 2001, MARAD approved the final
disbursement of the restricted investments to the Company. Under the bond
financing agreements, there is no further requirement for restricted investments
to be held by MARAD.

ACCRUED LIABILITIES. Accrued liabilities included in current
liabilities consist of the following at December 31, (in thousands):

2001 2000
------- -------
(as restated)

Voyage operating expenses ........ $11,423 $ 8,099
Foreign taxes .................... 10,626 9,408
Payroll and benefits ............. 8,068 7,492
Deferred voyage revenue .......... 1,451 3,466
Professional services ............ 1,267 1,231
Litigation, claims and settlements 200 2,672
Supplemental insurance calls ..... 2,136 --
Other ............................ 3,548 1,472
------- -------
Total .......................... $38,719 $33,840
======= =======

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

INCOME TAXES. The Company files a consolidated tax return with
substantially all corporate subsidiaries; the other subsidiaries file separate
income tax returns. Each partnership 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.

NET LOSS PER SHARE. Net loss per common share is computed in accordance
with SFAS No. 128, EARNINGS PER SHARE, which requires the reporting of both net
loss per common share and diluted net loss per common share. The calculation of
net loss per common share is based on the weighted average number of common
shares outstanding and therefore excludes any dilutive effect of stock options
and

F-13

warrants while diluted net loss per common share includes the dilutive effect of
stock options and warrants, unless the effects are antidilutive.

FOREIGN CURRENCY TRANSLATION. In accordance with SFAS No. 52, Foreign
Currency Translation, assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the rate of exchange at the balance sheet
date, while revenue and expenses are translated at the weighted average rates
prevailing during the respective years. Components of stockholders' equity are
translated at historical rates. Translation adjustments are deferred in
accumulated other comprehensive loss, which is a separate component of
stockholders' equity. The Company's foreign subsidiaries use the U.S. dollar as
their functional currency and substantially all external transactions are
denominated in U.S. dollars. Gains and losses resulting from changes in exchange
rates from year to year are insignificant for all years presented and are
included in the accompanying consolidated statements of operations.

REORGANIZATION ITEMS. Upon emergence from Chapter 11 Bankruptcy
Protection as of the Effective Date, the Company adopted Fresh Start Reporting
pursuant to the provisions of SOP 90-7.

ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the periods. Significant estimates have been made by management,
including the allowance for doubtful accounts, useful lives of vessels and
equipment, realizability of deferred tax assets and certain accrued liabilities.
Actual results could differ from those estimates.

COMPREHENSIVE LOSS. SFAS No. 130, REPORTING COMPREHENSIVE INCOME,
establishes standards for reporting and the display of comprehensive loss, which
is defined as the change in equity arising from non-owner sources. Comprehensive
loss consists of net loss and foreign currency translation adjustments.
Comprehensive loss is reflected in the consolidated statement of changes in
stockholders' equity.

RECENT PRONOUNCEMENTS. In July 2001, the Financial Accounting Standards
Board issued SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, which
establishes a new method of testing goodwill for impairment using a fair
value-based approach and does not permit amortization of goodwill as previously
required by Accounting Principles Board (APB) Opinion No. 17, INTANGIBLE ASSETS.
An impairment loss would be recorded if the recorded goodwill exceeds its
implied fair value. The Company adopted SFAS No. 142 effective January 1, 2002.
As the Company does not have any recorded goodwill or other intangible assets,
the adoption of this statement will not have an impact.

Also in July 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS, which requires companies to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying amount of the related
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. The Company expects to adopt SFAS No. 143 as of January 1, 2002
and does not anticipate any material financial statement impact.

In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, which establishes one accounting
model to be used for long-lived assets to be disposed of by sale and broadens
the presentation of discontinued operations to include more disposal
transactions. SFAS No. 144 supersedes SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF, and the accounting and
reporting provisions of APB Opinion No. 30. SFAS No.

F-14

144 is effective for fiscal years beginning after December 15, 2001. The Company
expects to adopt SFAS No. 143 as of January 1, 2002 and does not anticipate any
material financial statement impact.

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

4. JOINT PLAN OF REORGANIZATION AND FRESH START REPORTING

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

On the Effective Date, the Predecessor Company's Senior Notes and
Preferred Securities were converted into 9.8 million and 0.2 million shares of
the Successor Company's common stock, respectively. As a result of the
transactions, which occurred on the Effective Date, indebtedness of
approximately $266.6 million was discharged and is reflected as a gain on the
early extinguishment of debt in the accompanying consolidated statement of
operations for the 1999 Predecessor Company. This gain was not recognized for
tax purposes to the extent the Company was insolvent at the date of discharge.
However, the Company's net operating loss carry forwards, alternative minimum
tax credits and tax basis in fixed assets at the Effective Date were reduced by
the amount of the gain.

On the Effective Date, the Company raised an aggregate of approximately
$295.0 million through the issuance of term loans and 12.5% Senior Notes (the
"Senior Notes") with detachable common stock purchase warrants, resulting in
approximately $263.0 million of net proceeds to the Company after deducting
related offering costs and discount on the Senior Notes (the "Exit Financing").
The proceeds were used to repay the Company's debtor-in-possession credit
facilities, the Predecessor Company's Credit Facility and certain bankruptcy
administrative claims and reorganization costs incurred in connection with the
Company's bankruptcy proceeding.

The difference between the Company's reorganization value and the
historical carrying value of the Company's net assets resulted in the recording
of reorganization items of approximately $420.0 million for the period ended
December 15, 1999, which consisted of a writedown of goodwill and property.

5. LONG-TERM DEBT AND SENIOR NOTES

Long-term debt consists of the following at December 31 (in thousands):

2001 2000
--------- ---------
Revolving line of credit ......... $ 9,000 $ 14,250
Term loan ........................ 154,996 168,861
Title XI debt .................... 241,616 249,928
Notes payable .................... 32,729 27,080
--------- ---------
438,341 460,119
Less: current maturities ........ (38,367) (33,270)
--------- ---------
$ 399,974 $ 426,849
========= =========

F-15

The Company's five double-hull product and chemical tankers are
financed through Title XI Government Guaranteed Ship Financing Bonds. There are
a total of seven bonds with interest rates ranging from 6.50% to 7.54% that
require principal amortization through June 2024. The aggregate outstanding
principal balance of the bonds was $220.1 million and $224.2 million at December
31, 2001 and 2000, respectively. Principal payments during 2001 and 2000 were
$4.1 million and $3.8 million, respectively, and interest payments were $15.4
million and $15.7 million, respectively.

Covenants under the Title XI Bond agreements contain financial tests
which, if not met, among other things (1) restrict the withdrawal of capital;
(2) restrict certain payments, including dividends, increases in employee
compensation and payments of other indebtedness; (3) limit the incurrence of
additional indebtedness; and (4) prohibit the Company from making certain
investments or acquiring additional fixed assets. Vessels with a net book value
of $235.1 million, and all contract rights thereof, have been secured as
collateral in consideration of the United States Government guarantee of the
Title XI Bonds.

The Company is required to make deposits to a Title XI reserve fund
based on a percentage of net income attributable to the operations of the five
double-hull tankers, as defined by the Title XI Bond agreement. Cash held in a
Title XI reserve fund is invested by the trustee of the fund, and any income
earned thereon is either paid to the Company or retained in the reserve fund.
Withdrawals from the Title XI reserve fund may be made for limited purposes,
subject to prior approval from MARAD. To date, no deposits have been required.
Additionally, according to the Title XI Financial Agreement, the Company is
restricted from formally distributing excess cash from the operations of the
five double-hull tankers until certain working capital ratios have been reached
and maintained. Accordingly, at December 31, 2001, the Company has approximately
$7.3 million in cash and cash equivalents that are restricted for use for the
operations of the five double-hull tankers and cannot be used to fund the
Company's general working capital requirements.

As of December 31, 2001 and 2000, other Title XI debt of approximately
$21.5 million and $25.8 million, respectively, was 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 semi-annual principal and interest payments
through June 2021. Under the terms of the Other Title XI debt, the Company is
required to maintain a minimum level of working capital, as defined, and comply
with certain other financial covenants. During 2001 and 2000, $4.2 million and
$5.5 million, respectively, in principal and $2.0 million and $2.4 million,
respectively, in interest was repaid on this debt.

The Company has a promissory note of approximately $8.6 million
relating to the increase of its equity interest in the double-hull product and
chemical carriers from 50.8% to 75.75%. The note bears interest at 8.5%.
Semi-annual interest and principal payments are due through December 2003. In
January 2001, the Company purchased the remaining 24.25% equity interest. The
purchase was funded by $0.5 million in cash and a note payable in the amount of
$10.5 million at an interest rate of 8.5%. The promissory notes are
collateralized by securities of certain subsidiaries. Quarterly principal and
interest payments are due through January 2006 (see Note 17). The outstanding
balance of the note(s) was $14.8 million and $7.6 million as of December 31,
2001 and 2000, respectively.

The Company has various promissory notes relating to the acquisitions
of various vessels. The promissory notes are collateralized by mortgages on
certain vessels and bear interest at rates ranging from 8.1% to 8.5%. The debt
is due in monthly installments of principal and interest through November 2011.
The outstanding balance of the notes was $13.1 million and $14.5 million as of
December 31, 2001 and 2000, respectively.

F-16

The Company has a Credit Facility ("the Credit Facility"), consisting
of $200.0 million of term loans and a $25.0 million revolving line of credit,
and issued Senior Notes (see below). The term loans consist of three facilities
of $75.0 million, $30.0 million, and $95.0 million maturing over 5, 6, and 7
years, respectively. The revolving line of credit is subject to a commitment fee
of 0.5% on the unused portion. The revolving line of credit matures on December
15, 2004. The $75.0 million term loan and the revolving line of credit accrue
interest at the Eurodollar Rate, as defined, of 1.93% plus 3.25% (5.18% at
December 31, 2001). The $30.0 million and $95.0 million term loans accrue
interest at the Eurodollar Rate plus 3.75% (5.68% at December 31, 2001) and
Eurodollar Rate plus 4.25% (6.18% at December 31, 2001), respectively.

At December 31, 2001, the Company had letters of credit outstanding in
the amount of approximately $1.9 million, which expire on various dates through
December 2002. This amount is collateralized against the maximum amount
available under the revolving line of credit. The amount available to the
Company under the revolving line of credit, without prior approval of the bank
group, was decreased from $25.0 million to $17.5 million as part of the first
amendment to the credit agreement. At December 31, 2001, the unused portion of
the revolver was $6.6 million. With the bank's approval, the Company can borrow
an additional $7.5 million on the revolver. However, there can be no assurance
that the bank will approve additional borrowings under the revolver.

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

An amendment to the credit agreement was executed in April 2000, which
required the Company to prepay an aggregate of $60.0 million in principal under
the term loans in 2000. The Company paid a fee of $4.5 million to the lending
banks in connection with the amendment in the form of a promissory note,
accruing interest at 15.0% compounded quarterly, due the earlier of (i) April
2002 or (ii) the date on which the ratio of funded indebtedness to EBITDA for
any quarter is less then four to one. The $4.5 million loan fee was capitalized
to deferred financing costs and is being amortized over the remaining term of
the Credit Facility using the interest method. Subsequent amendments throughout
2000 reduced the prepayment requirements and then abolished them altogether.

During November 2001, the fifth amendment to the Credit Facility was
executed, which reduced financial requirements of certain debt covenants for
December 31, 2001. Additionally, the agreement requires that the $4.5 million
promissory note will be repaid in monthly installments of $1.0 million beginning
in December 2001. The note matures in April 2002 at which time the remaining
unpaid principal and accrued interest is due in a balloon payment of
approximately $1.9 million. The amendment did not affect any provisions relating
to interest on the promissory note.

Additionally, on March 15, 2002, a sixth amendment to the credit
facility was executed. The amendment reduced the working capital ratio for 2002
and for the life of the term loans and reduced the fixed charge ratio in 2002,
with a gradual increase over the remaining life of the term loans.

F-17

SENIOR NOTES

On December 15, 1999, the Company issued $95.0 million face amount of
12.5% senior secured lien notes, Series A (the "Senior Notes") with 536,193
detachable common stock purchase warrants and an original issue discount of $9.5
million. As determined by the Company's management, the fair value of the
warrants was approximately $8.9 million and was recorded as an additional
discount on the Senior Notes. The Senior Notes were recorded at approximately
$76.6 million, net of discounts and offering costs of approximately $18.4
million. The discount is being amortized through the maturity date using the
effective interest method (amortization of $1.5 million and $1.4 million in 2001
and 2000, respectively). Unamortized discount was $15.3 million and $16.8
million at December 31, 2001 and 2000, respectively. Interest on the Senior
Notes is payable quarterly in arrears.

The Senior Notes mature in June 2007 and are redeemable, in whole or in
part, at the Company's option at the redemption amount, as defined, plus accrued
and unpaid interest. In addition, upon a change in control, as defined, the
Company must redeem the Senior Notes at 101.0% of the stated principal amount,
plus accrued and unpaid interest.

During the period from April 2000 through December 2001, the Company
had not yet received a necessary rating from the rating agencies required under
the indenture; thus the interest rate was increased from 12.5% to 13.5%
effective December 15, 1999. The additional interest is paid on a quarterly
basis, in arrears, through the issuance of additional Senior Notes. The total
amount of additional Senior Notes issued amounted to $963,533 and $992,752 for
the years ended December 31, 2001 and 2000, respectively. The Company is
currently seeking the appropriate ratings, which would return the interest rate
to 12.5%.

The Senior Notes are collateralized by substantially all the assets of
the Company (see Note 18). Covenants require the Company to (1) limit the
incurrence of additional indebtedness; (2) limit the creation or incurrence of
certain liens; (3) restrict certain payments and investments; and (4) restrict
certain asset sales and affiliate transactions. At December 31, 2001, the
Company is in compliance with the covenants.

The aggregate annual future payments due on the long-term debt and
Senior Notes as of December 31, 2001 are as follows (in thousands):

Years Ending December 31:
-------------------------

2002........................................... $ 38,367
2003........................................... 34,213
2004........................................... 35,518
2005........................................... 36,140
2006........................................... 84,779
Thereafter..................................... 306,280
---------
535,297
Less: discount on Senior Notes................. (15,321)
---------
$ 519,976

F-18

6. CAPITAL LEASES

The Company operates certain vessels and other equipment under leases
that are classified as capital leases. The following is a schedule of future
minimum lease payments under capital leases, including obligations under
sale-leaseback transactions, together with the present value of the net minimum
lease payments as of December 31, 2001 (in thousands):

Years Ending December 31:
-------------------------

2002 ........................................................................ $ 5,269
2003 ........................................................................ 5,128
2004 ........................................................................ 4,897
2005 ........................................................................ 4,876
2006 ........................................................................ 3,919
Thereafter .................................................................. 24,207
--------
Total minimum lease payments ................................................ 48,296
Less: amount representing interest .......................................... (13,556)
--------
Present value of minimum lease payments (including current portion of $2,972) $ 34,740
========

7. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company leases its office facilities and certain vessels under
operating lease agreements, which expire at various dates through 2013. Rent
expense was approximately $4.9 million, $4.4 million and $5.6 million for the
years ended December 31, 2001, 2000 and 1999, respectively. Aggregate annual
future payments due under non-cancelable operating leases with remaining terms
in excess of one year are as follows (in thousands):

Years Ending December 31:
-------------------------

2002 ......................................... $ 4,574
2003 ......................................... 3,800
2004 ......................................... 3,720
2005 ......................................... 3,616
2006 ......................................... 2,993
Thereafter ................................... 5,261
-------
$23,964
=======

BAREBOAT CHARTER AND SUBLEASE

During 2001, the Company entered into a ten-year non-cancelable
bareboat charter agreement for a double-hull tanker with a third party (the
"charterer"). Beginning in January 2002 (commencement of contract), the
charterer has exclusive possession and control of the vessel. As a result, the
charter party will incur and pay all operating costs during the charter period.
The Company receives a fixed amount per day for the charter of the vessel. Also,
the Company subleases certain office space in Houston, Texas. The sublease is
expected to terminate in January 2004. There are no renewal or escalation
clauses relating to the bareboat charter or sublease.

F-19

Future minimum lease receipts under the bareboat charter and sublease
as of December 31, 2001 (in thousands) are as follows:

Years Ending December 31:
-------------------------

2002............................... $ 6,444
2003............................... 7,033
2004............................... 6,943
2005............................... 6,935
2006............................... 6,935
Thereafter......................... 35,264
--------
$ 69,554
========

CONTINGENCIES

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

At December 31, 2001, approximately 16.0% of the Company's employees
were members of national maritime labor unions, or are subject to collective
bargaining agreements. Management considers relations with employees to be
satisfactory; however, the deterioration of these relations could have an
adverse effect on the Company's operating results.

F-20

8. VESSELS AND EQUIPMENT

Vessels and equipment are summarized below (in thousands):

Year Ended December 31,
--------- ---------
2001 2000
--------- ---------

Vessels and improvements ...................... $ 681,599 $ 691,006
Furniture and equipment ....................... 11,729 12,516
--------- ---------
693,328 703,522
Less: accumulated depreciation and amortization (103,957) (63,626)
--------- ---------
Vessels and equipment, net .................... $ 589,371 $ 639,896
========= =========

In 2001, the Company acquired one vessel for approximately $2.5 million
for cash. In 2000, the Company acquired two vessels: one under a cash purchase
agreement and the other under a capital lease agreement, for total consideration
of approximately $7.6 million.

In 2001, the Company sold 25 vessels for proceeds of $6.6 million. In
2000, the Company sold 39 vessels and scrapped one tanker pursuant to its OPA
90-mandated retirement date for proceeds of approximately $25.7 million. The
proceeds from vessel sales were used primarily to repay a portion of the
Company's term loans.

9. STOCK OPTION PLANS

On the Effective Date, all rights and awards granted under the Equity
Ownership Plan and Stock Option Plan for Directors were canceled. The holders of
options to purchase common stock issuable under these plans received a pro rata
share of the 125,000 Class A warrants issued by the Successor Company (see Note
12).

On the Effective Date, the Successor Company adopted the Hvide Marine
Incorporated Stock Option Plan (the "1999 Plan"), a new stock option plan which
provided certain key employees of the Successor Company the right to acquire
shares of common stock. Pursuant to the plan, 500,000 shares of the Successor
Company's common stock were reserved for issuance to the participants in the
form of nonqualified stock options. The options expire no later than 10 years
from the date of the grant.

Pursuant to the 1999 Plan, options to purchase 200,000 shares of the
Successor Company's common stock were granted to certain senior employees on the
Effective Date. One-half of these options vested automatically immediately, and
the remaining options vested 91 days thereafter.

On June 15, 2000, the Company adopted the Amended and Restated Equity
Ownership Plan (the "Plan"). The Plan amends and restates in its entirety the
1999 Plan. Pursuant to the Plan, 800,000 shares of the Company's stock were
reserved for issuance to participants in the form of nonqualified or incentive
stock options, restricted stock grants and other stock related instruments,
subject to reflect stock dividends, recapitalizations, reorganizations and other
changes in the capital structure. In December 2001, the Compensation Committee
agreed to amend the Plan by authorizing and reserving for issuance of an
additional 500,000 shares to be eligible for grants under the Plan, bringing the
total under the Plan to 1,300,000 shares. The Committee's action is subject to
shareholder approval at the Company's Annual Meeting of Shareholders to be held
on May 14, 2002, pursuant to the Notice of Meeting and Proxy. The vesting and
certain other terms of the stock options granted under the Plan will be
determined by the Compensation Committee. The Plan requires that the option
price may not be less than 100% of the fair

F-21

market value on the date of grant. The options expire no later than 10 years
from the date of grant. Options granted under this Plan totaled 283,000 and
415,000 during 2001 and 2000, respectively.

On June 15, 2000, the Company also adopted the Stock Option Plan for
Directors (the "Directors Plan"). Pursuant to the Directors Plan, an aggregate
of 175,000 shares of common stock are authorized and reserved for issuance,
subject to adjustments to reflect stock dividends, recapitalizations,
reorganizations, and other changes in the capital structure of the Company.
Eligible directors as of the effective date of the Plan were granted options to
purchase 10,000 shares of common stock on the first option date, and the
Chairman of the Board received 20,000 options, for a total granted of 80,000.
Eligible directors will receive 4,000 and the Chairman will receive 8,000
options to purchase shares of common stock annually, effective as of each Annual
Meeting of Shareholders of the Company commencing May 17, 2001. Under the Plan,
the option price for each option granted is required to be 100% of the fair
market value of common stock on the date of grant. Options granted under the
Director's Plan totaled 32,000 and 80,000 during 2001 and 2000, respectively.

The following table of data is presented in connection with the stock
option plans:

Predecessor
Successor Company Company
-------------------------------------------------------------------- --------------------
Period From Period From
Year Ended December 31, December 16, January 1
-------------------------------------------- to December 31, to December 15,
2001 2000 1999 1999
--------------------- --------------------- --------------------- ---------------------
Weighted Weighted Weighted Weighted
Number Average Number Average Number Average Number Average
of Exercise of Exercise of Exercise of Exercise
Options Price Options Price Options Price Options Price
------- -------- ------- --------- ------- -------- ---------- --------

Options outstanding at
beginning of period ......... 604,000 $ 8.27 200,000 $12.47 -- $ -- 987,675 $12.60

Granted ..................... 315,000 5.61 495,000 7.16 200,000 12.47 379,441 6.06

Exercised ................... -- -- -- -- -- -- -- --
Canceled .................... (97,000) 10.80 (91,000) 11.33 -- -- (1,367,116) 10.78
------- ----- ------- ------ -------- ------ ---------- -----
Options outstanding at
end of period ................ 822,000 $6.91 604,000 $ 8.27 200,000 $ 12.47 -- $ --
======= ===== ======= ====== ======== ======= ========== =====
Options exercisable at
end of period ................ 333,837 $8.38 207,000 $ 12.11 100,000 -- -- --
Options available for
future grants at end of
period ....................... 153,000 -- 371,000 -- 300,000 -- -- --

Summarized information about stock options outstanding as of December 31, 2001
is as follows:

Weighted Weighted
Number of Remaining Average Number of Average
Options Life Exercise Options Exercise
Exercise Price Range Outstanding (In Years) Price Exercisable Price
-------------------- ----------- ---------- --------- ----------- ---------

Under $6.25 174,000 9.92 $ 3.95 -- $ 3.95
$6.25 to $6.31 387,000 8.71 $ 6.26 219,837 $ 6.26
$6.32 to $7.30 32,000 1.50 $ 7.30 -- $ 7.30
$7.31 to $7.75 109,000 9.24 $ 7.75 -- $ 7.75
Over $7.76 120,000 5.18 $ 12.46 114,000 $ 12.47

F-22

The weighted average fair value of options granted under the Successor
Company's stock option plans during 2001 and 2000 was $5.54 and $6.65,
respectively. The weighted average fair value of options granted under the
Predecessor Company's stock option plans during the period from January 1, 1999
through December 15, 1999 was $5.72. These values are based on the Black-Scholes
option valuation model. Had compensation expense for the stock option grants
been determined based on the fair value at the grant date for awards consistent
with the methods of SFAS No. 123, the Company's net loss would have increased to
the pro forma amounts presented below for 2001 and 2000, the period from January
1, 1999 to December 15, 1999 (in thousands, except per share amounts):

January 1 to
2001 2000 December 15, 1999
---------- ---------- -----------------
(as restated)

Net loss:
As reported ................................. $ (11,961) $ (28,952) $ (248,355)
Pro forma ................................... (13,705) (31,823) (250,863)

Net loss per common share--assuming dilution:
As reported ................................. $ (1.16) $ (2.89) $ (16.02)
Pro forma ................................... (1.33) (3.17) (16.18)

The fair value of each option is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following assumptions
applied to grants in 2001, 2000 and the period from January 1, 1999 to December
15, 1999:

January 1 to
2001 2000 December 15, 1999
---- ---- ------------------

Dividend yield .................... 0.0% 0.0% 0.0%
Expected volatility factor ........ 3.21 1.21 1.39
Approximate risk-free interest rate 5.0% 5.0% 6.5%
Expected life (in years) .......... 10 10 6

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

10. EMPLOYEE BENEFIT AND STOCK PLANS

The Company sponsors a retirement plan and trust (the "Plan")
established pursuant to Section 401(k) of the Internal Revenue Code, which
covers substantially all administrative and non-union employees. Subject to
certain dollar limitations, employees may contribute a percentage of their
salaries to this Plan, and the Company will match a portion of the employees'
contributions. Profit sharing contributions by the Company to the Plan are
discretionary. Additionally, the Company contributed to various union-sponsored,
collectively bargained pension plans for certain crew members in the marine
transportation and towing segments. The plans are not administered by the
Company, and contributions

F-23

are determined in accordance with provisions of negotiated labor contracts. The
expense resulting from Company contributions to the Plan and various union
sponsored plans amounted to approximately $2.9 million, $2.0 million and $1.9
million for the years ended December 31, 2001, 2000 and 1999, respectively.

On the Effective Date, all rights and awards granted under the 1996
Stock Purchase Plan, the Key Employee Stock Compensation Plan and the Board of
Directors Stock Compensation Plan were canceled. The holders of common stock
issuable under these plans received a pro rata share of 125,000 Class A warrants
issued by the Successor Company (see Note 12).

11. INCOME TAXES

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

Predecessor
Successor Company Company
-------------------------------------------------- ------------
Period From Period From
Year Ended December 31, December 16 to January 1 to
----------------------------- December 31, December 15,
2001 2000 1999 1999
--------- ---------- --------- ----------
(as restated)

United States............................ $ (3,849) $ (1,502) $ (855) $ (314,447)
Foreign.................................. (2,902) (22,578) (710) (232,555)
--------- ---------- --------- ----------
Total.................................. $ (6,751) $ (24,080) $ (1,565) $ (547,002)
========= ========== ========= ==========

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

Predecessor
Successor Company Company
------------------------------------------------- --------------
Period From Period From
Year Ended December 31, December 16 to January 1 to
-------------------------- December 31, December 15,
2001 2000 1999 1999
-------- -------- ------------ ------------
(as restated)

Current:
Federal .......................... $ -- $ -- $ -- $ (2,234)
Foreign .......................... 5,210 4,872 -- 2,234
-------- -------- ------------ --------
Total current ................. 5,210 4,872 -- --
-------- -------- ------------ --------

Deferred ........................... -- -- -- (32,004)
-------- -------- ------------ --------
Total income tax expense (benefit) $ 5,210 $ 4,872 $ -- $(32,004)
======== ======== ============ ========

F-24

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

Predecessor
Successor Company Company
------------------------------------------------ ---------------
Period From Period From
December 16 to January 1 to
Year Ended December 31, December 31, December 15,
------------------------- --------------- --------------
2001 2000 1999 1999
-------- -------- --------------- --------------
(as restated)

Income tax expense computed at the
federal statutory rate......................... (35)% (35)% (35)% (35)%
State income taxes, net of Federal benefit....... (1) (1) (1) (1)
Foreign taxes in excess of credits recognized.... (77) 20 -- --
Reduction of tax attributes...................... -- -- -- 20
Change in valuation allowance.................... 35 35 36 8
Permanent, non deductible items.................. 1 1 -- 2
------------ ------------ ------------- ------------
77% 20% 0% (6)%
=========== =========== ============= ============

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

Year Ended December 31,
-----------------------------
2001 2000
-------- --------
(as restated)

Deferred income tax assets:
Allowances for doubtful accounts ....... $ 828 $ 2,347
Goodwill ............................... 17,882 19,560
Accrued compensation ................... 733 --
Foreign tax credit carryforwards ....... 16,548 11,338
Net operating loss carryforwards ....... 61,509 53,068
Other .................................. 1,351 2,939
-------- --------
Total deferred income tax assets .... 98,851 89,252
Less: valuation allowance .......... (65,263) (57,396)
-------- --------
Net deferred income tax assets ...... 33,588 31,856

Deferred income tax liabilities:
Property differences ................... 28,885 25,445
Deferred drydocking costs .............. 3,768 5,284
Other .................................. 935 1,127
-------- --------
Total deferred income tax liabilities 33,588 31,856
-------- --------
Net deferred income tax assets ...... $ -- $ --
======== ========

SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
determined that a valuation allowance of approximately $65.3 million and $57.4
million was necessary at December 31, 2001, and 2000, respectively, to reduce
the deferred tax assets to the amount that will more likely than not be
realized. After application of the valuation allowance, the Company's net
deferred tax assets and liabilities are zero at December 31, 2001 and 2000. The
net change in the total valuation

F-25

allowance was an increase of approximately $7.9 million and $14.1 million in
2001 and 2000, respectively.

Subsequently, recognized tax benefits relating to the valuation
allowance for deferred tax assets as of December 31, 2001 will be allocated as
follows (in thousands):

Income tax benefit that would be reported in the consolidated statement of operations........... $ 7,867
Additional paid-in capital...................................................................... 57,396
----------
Total...................................................................................... $ 65,263
==========

At December 31, 2001, the Company has a net operating loss carryforward
of approximately $172.1 million, which is available to offset future federal
taxable income through 2021. The Company also has foreign tax credit
carryforwards, expiring in years 2002 through 2005, of approximately $16.5
million, which are available to reduce future federal income tax liabilities.

In 1999, the Company reported a gain of $266.6 million resulting from
the extinguishment of indebtedness that occurred from the bankruptcy discharge
on the Effective Date. Pursuant to Section 108 of the Internal Revenue Code,
this gain was excluded from income taxation and certain tax attributes of the
Company were eliminated or reduced, up to the amount of such income excluded
from taxation.

The Company has a tax basis in its assets in excess of its basis for
financial reporting purposes that will generate tax deductions in future
periods. As a result of a "change in ownership" under the Internal Revenue Code
Section 382, the Company's ability to utilize depreciation, amortization and
other tax attributes will be limited to approximately $9.5 million per year
through 2004. This limitation is applied to all net built-in losses, which
existed on the "change of ownership" date (the Effective Date), including all
items giving rise to a deferred tax asset.

12. STOCKHOLDERS' EQUITY

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

Pursuant to the articles of incorporation of the Successor Company,
there are 20 million shares of common stock authorized for issuance, of which 10
million were granted at the Effective Date in exchange for Predecessor Company
liabilities, as discussed in Note 4.

At the Effective Date, holders of the Predecessor Company's Preferred
Securities received 200,000 shares of Successor Company common stock and 125,000
Class A warrants. The warrants have a four-year term and an exercise price of
$38.49 per share. There was no Class A warrant exercises during 2001 and 2000.
The remaining weighted average contractual life is 2 years at December 31, 2001.

At the Effective Date, the holders of the Predecessor Company's Senior
Notes, discussed in Note 4, received 9.8 million shares of Successor Company
common stock. As discussed in Note 5, the holders of Senior Notes received
536,193 common stock purchase warrants ("the Noteholder Warrants"). The

F-26

warrants have a six and one-half year term and an exercise price of $0.01 per
warrant. As determined by the Company's management, the fair value of the
warrants was approximately $8.9 million and was recorded as a component of
additional paid-in capital of the Successor.

Also in connection with the issuance of the Senior Notes, the Successor
Company issued an additional 187,668 Noteholder Warrants to an investment
advisor. They have a six and one-half year term and an exercise price of $0.01
per warrant. As determined by the Company's management, the fair value of these
warrants was estimated to be approximately $3.5 million and was recorded as
deferred financing costs. During the years ended December 31, 2001 and 2000,
314,000 and 89,000 Noteholder Warrants were exercised, respectively. The amount
of outstanding Noteholder Warrants amounted to approximately 322,000 at December
31, 2001. The weighted average contractual life is 4.5 years at December 31,
2001.

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

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

At December 31, 2001, 1,547,000 shares of Common Stock were reserved
for issuance under the Successor Company's Amended and Restated Equity Ownership
Plan, the Stock Option Plan for Directors and outstanding warrants.

In December 2001, the Company granted 75,000 shares of restricted
common stock to an officer. One-third of the shares vested on the grant date.
The remaining two-thirds of the shares will vest evenly over the next two years.
Compensation expense for this award amounted to $99,000 and was recorded in
salaries and benefits in 2001. The unvested portion of the award is recorded in
unearned compensation in the accompanying consolidated balance sheets.

During 2000, the Company granted 28,200 shares of restricted common
stock to certain key employees. Compensation expense for this award was recorded
in salaries and benefits for approximately $174,000.

F-27

13. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net
loss per share before extraordinary items (in thousands, except per share
amounts):

Predecessor
Successor Company Company
---------------------------------------- ------------
Period From Period From
December 16 to January 1 to
Year Ended December 31, December 31, December 15,
----------------------- -------------- ------------
2001 2000 1999 1999
-------- -------- -------- ----------
(as restated)

Numerator:
Numerator for basic and diluted loss per share--net loss before
extraordinary item available to common shareholders............. $ (11,961) $ (28,952) $ (1,565) $ (514,998)
========== ========== ========== ============

Denominator:
Denominator for basic and diluted loss per share--weighted average
shares 10,277 10,034 10,000 15,503
========= ========= ========= ===========

Net loss per common share before extraordinary item............... $ (1.16) $ (2.89) $ (0.16) $ (33.22)
======== ======== ======== ==========
Net loss per common share before extraordinary item--assuming
Dilution........................................................ $ (1.16) $ (2.89) $ (0.16) $ (33.22)
======== ======== ======== ==========

The weighted average diluted common shares outstanding for fiscal 2001,
2000 and 1999 excludes 822,000, 604,000 and 200,000 stock options, respectively.
Additionally, 572,000, 885,000 and 974,000 warrants in 2001, 2000 and 1999,
respectively, are excluded from the weighted average diluted common shares
outstanding. These common stock equivalents are antidilutive because the Company
incurred net losses for 2001, 2000 and 1999.

F-28

14. SEGMENT AND GEOGRAPHIC DATA

The Company organizes its business principally into three segments. The
accounting policies of the reportable segments are the same as those described
in Note 3. The Company does not have significant intersegment transactions.

These segments and their respective operations are as follows:

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

MARINE TRANSPORTATION SERVICES - Marine transportation services
includes oceangoing and inland-waterway vessels used to transport
chemicals, fuel and other petroleum products, primarily from chemical
manufacturing plants, refineries and storage facilities along the U.S.
Gulf of Mexico coast to industrial users and distribution facilities in
and around the Gulf of Mexico, Atlantic and Pacific coast ports and
inland rivers. Marine transportation services also include work
performed in the Company's shipyard facilities at Green Cove Springs,
Florida.

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

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

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

F-29

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

Predecessor
Successor Company Company
----------------------------------------------------------- --------------
Period From Period From
December 16 to January 1 to
Year Ended December 31, December 31, December 15,
-------------------------------- -------------- ------------
2001 2000 1999 1999
-------- -------- -------- --------
(as restated)

REVENUE
Offshore energy support ...... $191,178 $151,395 $ 5,610 $144,702
Marine transportation services 122,059 135,982 6,341 142,618
Towing ....................... 33,493* 33,106* 1,528* 41,431*
-------- -------- -------- --------
TOTAL ..................... $346,730 $320,483 $ 13,479 $328,751
======== ======== ======== ========

OPERATING EXPENSES
Offshore energy support ...... $ 98,549 $ 94,331 $ 4,168 $ 95,811
Marine transportation services 76,555* 91,104* 3,134* 96,993*
Towing ....................... 20,130 19,791 745 19,949
General corporate ............ 4,093 -- -- --
-------- -------- -------- --------
TOTAL ..................... $199,327 $205,226 $ 8,047 $212,753
======== ======== ======== ========

DEPRECIATION, AMORTIZATION,
DRYDOCKING AND WRITE-DOWN
OF ASSETS HELD FOR SALE
Offshore energy support ...... $ 37,550 $ 31,478 $ 1,236 $ 49,893
Marine transportation services 19,311 14,417 623 22,855
Towing ....................... 2,910 2,919 150 4,991
General corporate ............ 1,542 1,457 60 1,670
--------- --------- -------- ---------
TOTAL ..................... $ 61,313 $ 50,271 $ 2,069 $ 79,409
========= ========= ======== =========

INCOME (LOSS) FROM OPERATIONS
Offshore energy support ...... $ 39,151 $ 10,389 $ (429) $ (20,686)
Marine transportation services 20,952 23,893 2,385 15,354
Towing ....................... 6,169 5,096 394 11,106
General corporate ............ (17,184) (14,022) (630) (17,000)
--------- --------- -------- ---------
TOTAL ..................... $ 49,088 $ 25,356 $ 1,720 $ (11,226)
========= ========= ======== =========

NET INCOME (LOSS)
Offshore energy support ...... $ 5,566 $ (30,920) $ (619) $(337,253)
Marine transportation services (278) 7,200 1,307 (79,585)
Towing ....................... 396 2,906 394 (21,709)
General corporate ............ (17,645) (8,138) (2,647) 190,192
--------- --------- -------- ---------
TOTAL ..................... $ (11,961) $ (28,952) $ (1,565) $(248,355)
========= ========= ======== =========

* Net of elimination of intersegment towing revenue and intersegment marine
transportation operating expenses of $2.1 million, $2.6 million, $0.1
million and $2.2 million for the years ended December 31, 2001 and 2000 and
the periods for December 16 to December 31, 1999 and January 1 to December
15, 1999, respectively.

F-30

Consolidated Balance Sheet Information
as of December 31,
--------------------------------------
2001 2000
--------- ---------

IDENTIFIABLE ASSETS
Offshore energy support ......... $ 326,608 $ 334,614
Marine transportation services .. 334,272 347,466
Towing .......................... 64,931 68,446
Unallocated ..................... 18,954 24,950
--------- ---------
TOTAL ........................ $ 744,765 $ 775,476
========= =========

VESSELS AND EQUIPMENT
Offshore energy support ......... $ 281,933 $ 284,652
Marine transportation services .. 341,087 345,005
Towing .......................... 61,317 61,100
--------- ---------
Total ........................ 684,337 690,757
Construction in progress ........ 837 249
General corporate ............... 8,154 12,516
--------- ---------
Gross vessels and equipment ..... 693,328 703,522
Less accumulated depreciation (103,957) (63,626)
--------- ---------
TOTAL ...................... $ 589,371 $ 639,896
========= =========

CAPITAL EXPENDITURES AND DRYDOCKING
Offshore energy support ......... $ 30,959 $ 17,596
Marine transportation services .. 6,597 8,341
Towing .......................... 951 5,530
Unallocated ..................... 224 26
--------- ---------
TOTAL ........................ $ 38,731 $ 31,493
========= =========

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

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

One customer, CITGO Petroleum, accounted for 11.0% and 12.0% of the
Company's total revenue for the years ended December 31, 2001 and 2000. The
revenue received from CITGO was approximately $38.0 million and $38.6 million in
2001 and 2000, respectively, which related to the marine transportation services
segment. There were no customers from which the Company derived more than 10% of
its total revenue for the year ended December 31, 1999.

F-31

The following table presents selected financial information pertaining
to the Company's geographic operations for 2001, 2000 and 1999 (in thousands):

Predecessor
Successor Company Company
--------------------------------------------------------- -------------
Period From Period From
December 16 to January 1 to
Year Ended December 31, December 31, December 15,
------------------------------- ------------ ------------
2001 2000 1999 1999
-------- -------- -------- --------

REVENUE
Domestic ......... $239,238 $223,579 $ 10,039 $232,067
Foreign
West Africa ... 69,305 48,268 1,658 45,295
Middle East ... 22,450 34,242 1,524 38,811
Southeast Asia 15,737 14,394 258 12,578
-------- -------- -------- --------
CONSOLIDATED REVENUE $346,730 $320,483 $ 13,479 $328,751
======== ======== ======== ========

Consolidated Balance Sheet Information
as of December 31,
------------------------------------
2001 2000
--------- ---------

IDENTIFIABLE ASSETS
Domestic ..................... $ 551,915 $ 566,862
Foreign
West Africa ............... 117,725 102,926
Middle East ............... 40,955 50,728
Southeast Asia ............ 15,216 30,009
Other ........................ 18,954 24,951
--------- ---------
TOTAL ..................... $ 744,765 $ 775,476
========= =========

VESSELS AND EQUIPMENT
Domestic ..................... $ 545,613 $ 544,631
Foreign
West Africa ............... 94,285 85,942
Middle East ............... 27,887 34,903
Southeast Asia ............ 16,771 25,530
--------- ---------
684,556 691,006
General corporate ............ 8,772 12,516
--------- ---------
693,328 703,522
Less: accumulated depreciation (103,957) (63,626)
--------- ---------
TOTAL ..................... $ 589,371 $ 639,896
========= =========

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, CASH EQUIVALENTS, RESTRICTED CASH, ACCOUNTS RECEIVABLE, ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES. The carrying amounts reported in the balance
sheet approximate fair value due to the short-term nature of such instruments.

SENIOR NOTES, TERM LOAN, AND TITLE XI. The Senior Notes, Term Loan and
Title XI obligations provide for interest and principal payments at various
rates and dates as discussed in Note 5. The

F-32

Company estimates the fair value of such obligations using a discounted cash
flow analysis at estimated market rates. The following table presents the
carrying value and fair value of the financial instruments at December 31, 2001
and 2000 (in millions):

December 31,
-----------------------------------------------------------
2001 2000
--------------------------- ----------------------------
Issue Carrying Value Fair Value Carrying Value Fair Value
----- -------------- ---------- -------------- ----------
Senior notes $ 81.6 $ 97.0 $ 79.1 $ 99.9
Term loans . 155.0 155.0 168.9 168.9
Title XI ... 241.6 246.5 249.9 262.8

REVOLVING LINE OF CREDIT. Amounts outstanding under the revolving line
of credit provide for interest at variable rates that are periodically adjusted
to reflect changes in overall market rates and therefore approximate fair value.

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS. The carrying amounts
reported in the balance sheet approximate fair value determined using a
discounted cash flow analysis at estimated market rates.

16. EXTRAORDINARY ITEMS

In 1999, the Predecessor Company was relieved of approximately $421.6
million of outstanding debt and related accrued interest in exchange for
approximately $155.0 million in equity interests in the Successor Company in
connection with the Plan. As a result, the Predecessor Company recorded a gain
on the early extinguishment of debt of approximately $266.6 million.

17. ACQUISITION OF MINORITY INTEREST

On January 15, 2001, the Company acquired the remaining 24.25% interest
in its five double-hull petroleum and chemical tankers. The purchase price was
approximately $11.0 million, of which $523,544 was paid in cash and the
remaining balance was paid by a promissory note in the principal amount of $10.5
million. The note is guaranteed by certain securities of certain subsidiaries of
the Company. The note accrues interest at 8.5% per annum and is paid quarterly.
Principal and interest is due in quarterly payments through January 2006. This
transaction resulted in the elimination of minority interest and an increase to
vessels and equipment of $3.1 million, representing the fair value of assets
acquired over the carrying value of the minority interest. The increase in
vessels and equipment is being depreciated over the remaining useful lives of
the tankers.

18. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Senior Notes described in Note 5 are fully and unconditionally
guaranteed on a joint and several basis by certain of the Company's consolidated
subsidiaries. A substantial portion of the Company's cash flows are generated by
its subsidiaries. As a result, the funds necessary to meet the Company's
obligations are provided in substantial part by distributions or advances from
its subsidiaries. Under certain circumstances, contractual or legal
restrictions, as well as the financial and operating requirements of the
Company's subsidiaries, could limit the Company's ability to obtain cash from
its subsidiaries for the purpose of meeting its obligations, including the
payments of principal and interest on the Senior Notes.

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

F-33

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)

Year Ended December 31, 2001 (As Restated)
-----------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ ---------

Revenue .................................. $ 9,198 $ 175,244 $ 107,493 $ 59,921 $ (5,126) $ 346,730

Operating expenses ....................... 5,125 110,738 58,181 30,142 (4,859) 199,327
Overhead expenses ........................ 12,486 11,490 11,526 1,791 (291) 37,002
Depreciation, amortization, drydocking and
other ................................... 6,890 20,539 22,621 11,263 -- 61,313
--------- --------- --------- --------- --------- ---------
(Loss) income from operations ............ (15,303) 32,477 15,165 16,725 24 49,088

Other income (expense), net .............. 3,342 22,123 (18,195) (19,947) (43,162) (55,839)
--------- --------- --------- --------- --------- ---------
(Loss) income before income taxes ........ (11,961) 54,600 (3,030) (3,222) (43,138) (6,751)
Provision for income taxes ............... -- -- 5,210 -- -- 5,210
--------- --------- --------- --------- --------- ---------
Net (loss) income ........................ $ (11,961) $ 54,600 $ (8,240) $ (3,222) $ (43,138) $ (11,961)
========= ========= ========= ========= ========= =========

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in thousands)

Year Ended December 31, 2001 (As Restated)
---------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ -----------

Net cash provided by operating activities ........... $ 21,759 $ 19,821 $ 12,357 $ 4,961 $ 7,942 $ 66,840

INVESTING ACTIVITIES:
Purchases of vessels and equipment ................. (278) (4,942) (3,198) (864) -- (9,282)
Expenditures for drydocking ........................ (4,299) (8,638) (15,171) (1,341) -- (29,449)
Redemption of restricted investments ............... -- -- -- 2,542 -- 2,542
Proceeds from disposals of vessels and equipment ... -- 1,738 4,837 -- -- 6,575
Purchases of restricted investments ................ -- -- -- (1,677) -- (1,677)
Purchase of minority interest ...................... 8,354 -- -- (936) (7,942) (524)
-------- -------- -------- -------- -------- --------
Net cash provided by (used in) investing activities 3,777 (11,842) (13,532) (2,276) (7,942) (31,815)
FINANCING ACTIVITIES:
Repayments of revolving credit facility, net ........ (5,250) -- -- -- -- (5,250)
Repayment of long-term borrowings ................... (18,189) (1,315) -- -- -- (19,504)
Repayment of Title XI bonds ......................... (3,583) (646) -- (4,083) -- (8,312)
Increase in restricted cash ......................... 331 -- (1,337) -- -- (1,006)
Payments of obligations under capital leases ........ -- (3,558) -- -- -- (3,558)
Proceeds from exercise of warrants .................. 3 -- -- -- -- 3
-------- -------- -------- -------- -------- --------
Net cash used in financing activities ............. (26,688) (5,519) (1,337) (4,083) -- (37,627)
-------- -------- -------- -------- -------- --------
Change in cash and cash equivalents ................. (1,152) 2,460 (2,512) (1,398) -- (2,602)
Cash and cash equivalents at beginning of year ...... 1,402 (2,190) 6,400 8,621 -- 14,233
-------- -------- -------- -------- -------- --------
Cash and cash equivalents at end of year ............ $ 250 $ 270 $ 3,888 $ 7,223 $ -- $ 11,631
======== ======== ======== ======== ======== ========

F-34

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)

Year Ended December 31, 2000
------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ -----------

Revenue ................................. $ 13,834 $ 156,395 $ 96,904 $ 59,337 $ (5,987) $ 320,483

Operating expenses ...................... 3,948 111,801 61,557 33,650 (5,730) 205,226
Overhead expenses ....................... 14,120 12,387 11,472 1,932 (281) 39,630
Depreciation, amortization and drydocking 3,667 16,002 19,817 10,785 -- 50,271
--------- --------- --------- --------- --------- ---------
(Loss) income from operations ........... (7,901) 16,205 4,058 12,970 24 25,356

Other (expense) income, net ............. (16,179) (19,903) (31,507) (24,475) 42,628 (49,436)
--------- --------- --------- --------- --------- ---------
(Loss) income before income taxes ....... (24,080) (3,698) (27,449) (11,505) 42,652 (24,080)
Provision for income taxes .............. 4,872 -- -- -- -- 4,872
--------- --------- --------- --------- --------- ---------
Net (loss) income ....................... $ (28,952) $ (3,698) $ (27,449) $ (11,505) $ 42,652 $ (28,952)
========= ========= ========= ========= ========= =========

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in thousands)

Year Ended December 31, 2000
-----------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ ----------

Net cash provided by (used in)
operating activities ...................... $ 46,864 $ 18,743 $ (55,367) $ 16,036 $ -- $ 26,276

INVESTING ACTIVITIES:
Purchases of vessels and equipment ........ (29,323) (34,559) 54,174 (2,339) -- (12,047)
Expenditures for drydocking ............... (2,251) (6,110) (4,788) (1,217) -- (14,366)
Redemption of restricted investments ...... -- -- -- 2,931 -- 2,931
Proceeds from disposals of assets ......... -- 21,146 4,564 -- -- 25,710
-------- -------- -------- -------- --------- --------
Net cash (used in) provided by
investing activities .................... (31,574) (19,523) 53,950 (625) -- 2,228

FINANCING ACTIVITIES:
Repayments of short-term borrowings ........ 14,250 -- -- -- -- 14,250
Repayment of long-term borrowings .......... (32,390) -- -- (1,000) -- (33,390)
Repayment of Title XI bonds ................ -- -- -- (9,282) -- (9,282)
Payments of financing costs ................ -- (596) -- -- -- (596)
Proceeds from sale/leaseback of vessels .... -- -- -- -- -- --
Payments of obligations under capital leases (579) (3,721) -- -- -- (4,300)
Proceeds from issuance of common stock ..... 1 -- -- -- -- 1
-------- -------- -------- -------- --------- --------
Net cash used in financing activities .... (18,718) (4,317) -- (10,282) -- (33,317)
-------- -------- -------- -------- --------- --------
Change in cash and cash equivalents ........ (3,428) (5,097) (1,417) 5,129 -- (4,813)
Cash and cash equivalents at
beginning of year ......................... 4,830 2,907 7,817 3,492 -- 19,046
-------- -------- -------- -------- --------- --------
Cash and cash equivalents at end of year ... $ 1,402 $ (2,190) $ 6,400 $ 8,621 $ -- $ 14,233
======== ======== ======== ======== ========= ========

F-35

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)

For the Period from December 16, 1999 to December 31, 1999
-----------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ ----------

Revenue ................................. $ 871 $ 6,657 $ 3,439 $ 2,700 $ (188) $ 13,479

Operating expenses ...................... 138 4,879 2,717 490 (177) 8,047
Overhead expenses ....................... 625 396 440 194 (12) 1,643
Depreciation, amortization and drydocking 222 663 782 402 -- 2,069
-------- -------- -------- -------- -------- --------
Income (loss) from operations ........... (114) 719 (500) 1,614 1 1,720

Other expense, net ...................... (1,451) 2,735 (1,277) (90) (3,202) (3,285)
-------- -------- -------- -------- -------- --------
Net income (loss) ....................... $ (1,565) $ 3,454 $ (1,777) $ 1,524 $ (3,201) $ (1,565)
======== ======== ======== ======== ======== ========

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in thousands)

Net cash provided by (used in) operating
activities ................................ $ 21,151 $ (538) $ 1,971 $ 1,084 $(21,107) $ 2,561

INVESTING ACTIVITIES:
Purchases of vessels and equipment ......... -- 42 (500) (139) -- (597)
Acquisitions of businesses ................. (1,000) -- -- -- -- (1,000)
Expenditures for drydocking ................ 65 (833) (656) -- -- (1,424)
-------- -------- -------- -------- -------- --------
Net cash used in investing activities ..... (935) (791) (1,156) (139) -- (3,021)

FINANCING ACTIVITIES:
Proceeds from long-term borrowings ......... -- (80) -- -- -- (80)
Repayment of Title XI bonds ................ (1,252) -- -- -- -- (1,252)
Payments of obligations under capital leases (36) (123) -- -- -- (159)
Capital contribution (to) from consolidated
affiliates ................................ (21,707) 279 -- 321 21,107 --
-------- -------- -------- -------- -------- --------
Net cash (used in) provided by financing
activities ............................. (22,995) 76 -- 321 21,107 (1,491)
-------- -------- -------- -------- -------- --------
Change in cash and cash equivalents ........ (2,779) (1,253) 815 1,266 -- (1,951)
Cash and cash equivalents at beginning of
period .................................... 7,609 4,160 7,002 2,226 -- 20,997
-------- -------- -------- -------- -------- --------
Cash and cash equivalents at end of period . $ 4,830 $ 2,907 $ 7,817 $ 3,492 $ -- $ 19,046
======== ======== ======== ======== ======== ========

F-36

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)

For the Period From January 1, 1999 to December 15, 1999
------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ -----------

Revenue .................................... $ 18,046 $ 170,652 $ 96,684 $ 51,115 $ (7,746) $ 328,751

Operating expenses ......................... (430) 131,645 65,204 23,782 (7,448) 212,753
Overhead expenses .......................... 16,843 13,210 11,480 6,499 (217) 47,815
Depreciation, amortization and drydocking .. 12,104 23,945 33,848 9,524 (12) 79,409
--------- --------- --------- --------- --------- ---------
Income (loss) from operations .............. (10,471) 1,852 (13,848) 11,310 (69) (11,226)

Other expense, net ......................... (445,072) (331,884) (36,271) (17,963) 728,687 (102,503)
--------- --------- --------- --------- --------- ---------
Income (loss) before reorganization items,
income taxes ............................. (455,543) (330,032) (50,119) (6,653) 728,618 (113,729)

Reorganization items:
Professional fees ........................ (8,535) -- -- -- -- (8,535)
Write down of goodwill and property ...... (79,868) (123,900) (209,099) (2,730) (4,401) (419,998)
Other, net ............................... (4,154) (586) -- -- -- (4,740)
--------- --------- --------- --------- --------- ---------
Total reorganization items ............ (92,557) (124,486) (209,099) (2,730) (4,401) (433,273)
--------- --------- --------- --------- --------- ---------
Loss before income taxes and
extraordinary item ....................... (548,100) (454,518) (259,218) (9,383) 724,217 (547,002)
Provision for income taxes ................. (32,004) -- -- -- -- (32,004)
--------- --------- --------- --------- --------- ---------
Loss before extraordinary item ............. (516,096) (454,518) (259,218) (9,383) 724,217 (514,998)
Gain (loss) on early extinguishment of debt,
net of applicable income taxes ........... 267,741 (1,098) -- -- -- 266,643
--------- --------- --------- --------- --------- ---------
Net loss ................................... $(248,355) $(455,616) $(259,218) $ (9,383) $ 724,217 $(248,355)
========= ========= ========= ========= ========= =========

F-37

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in thousands)

For the Period From January 1, 1999 to December 15, 1999
-----------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ ----------

Net cash provided by (used in) operating
activities ................................ $ 193,780 $ (47,750) $ 21,953 $ (2,925) $(150,131) $ 14,927

INVESTING ACTIVITIES:
Purchases of vessels and equipment ......... (13,043) 171 (27,755) (13,672) (2,845) (57,144)
Expenditures for drydocking ................ (1,481) (2,054) (1,305) (220) -- (5,060)
Payments on vessels under construction ..... -- (5,102) -- -- -- (5,102)
Purchases of restricted investments ........ -- -- -- (45,790) -- (45,790)
Redemption of restricted investments ....... -- -- -- 65,382 -- 65,382
Proceeds from disposal of assets ........... 15,045 8,700 9,107 -- -- 32,852
--------- --------- --------- --------- --------- ---------
Net cash provided by (used in) investing
activities ............................... 521 1,715 (19,953) 5,700 (2,845) (14,862)

FINANCING ACTIVITIES:
Proceeds from DIP credit facility .......... 26,690 -- -- -- -- 26,690
Proceeds from long-term borrowings ......... 231,008 14,200 -- -- -- 245,208
Repayment of long-term borrowings .......... (287,299) (906) -- -- -- (288,205)
Proceeds from issuance of Senior Notes and
warrants .................................. 85,500 -- -- -- -- 85,500
Proceeds from issuance of Title XI bonds ... -- -- -- 5,428 -- 5,428
Repayment of Title XI bonds ................ (3,670) (539) -- (2,434) -- (6,643)
Escrow of restricted cash .................. (15,027) (190) -- -- -- (15,217)
Payments of financing costs ................ (12,186) -- -- (492) -- (12,678)
Payments of obligations under capital leases (563) (2,257) -- -- -- (2,820)
Proceeds from issuance of common stock ..... 253 -- -- -- -- 253
Repayment of DIP credit facility ........... (26,690) -- -- -- -- (26,690)
Capital contribution (to) from consolidated
affiliates ................................ (186,109) 37,788 -- (4,655) 152,976 --
--------- --------- --------- --------- --------- ---------
Net cash provided by (used in) financing
activities ............................. (188,093) 48,096 -- (2,153) 152,976 10,826
--------- --------- --------- --------- --------- ---------
Change in cash and cash equivalents ........ 6,208 2,061 2,000 622 -- 10,891
Cash and cash equivalents at beginning of
period .................................... 1,401 2,099 5,002 1,604 -- 10,106
--------- --------- --------- --------- --------- ---------
Cash and cash equivalents at end of period . $ 7,609 $ 4,160 $ 7,002 $ 2,226 $ -- $ 20,997
========= ========= ========= ========= ========= =========

F-38

CONDENSED CONSOLIDATING BALANCE SHEET
(in thousands)

As of December 31, 2001 (as restated)
------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ -----------

ASSETS
Current assets:
Cash and cash equivalents ................ $ 250 $ 270 $ 3,888 $ 7,223 $ -- $ 11,631
Restricted cash .......................... -- -- 1,337 -- -- 1,337
Accounts receivable:
Trade, net ............................ 1,088 20,186 27,098 2,420 (704) 50,088
Insurance claims and other ............ 2,896 5,849 7,149 388 -- 16,282
Marine operating supplies ................ (795) 3,072 3,624 4,148 -- 10,049
Prepaid expenses ......................... 864 844 988 288 -- 2,984
--------- --------- --------- --------- --------- ---------
Total current assets .................. 4,303 30,221 44,084 14,467 (704) 92,371
Vessels and equipment, net ................. 45,388 166,678 109,451 267,854 -- 589,371
Deferred costs, net ........................ 16,107 10,063 14,187 8,542 -- 48,899
Restricted investments ..................... -- -- -- -- -- --
Due (to) from affiliates ................... (170,000) 80,479 123,866 (30,867) (3,478) --
Investments in affiliates .................. 522,764 366,174 -- 35,547 (924,485) --
Other ...................................... 289 7,661 6,174 -- -- 14,124
--------- --------- --------- --------- --------- ---------
Total assets ............................. $ 418,851 $ 661,276 $ 297,762 $ 295,543 $(928,667) $ 744,765
========= ========= ========= ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................... $ 5,892 $ 2,353 $ 9,102 $ 824 $ -- $ 18,171
Current maturities of long-term debt ..... 32,056 1,941 -- 4,370 -- 38,367
Current obligations under capital leases . -- 2,972 -- -- -- 2,972
Accrued interest ......................... 340 420 -- 695 -- 1,455
Accrued liabilities and other ............ 8,787 5,442 23,110 2,084 (704) 38,719
--------- --------- --------- --------- --------- ---------
Total current liabilities ............. 47,075 13,128 32,212 7,973 (704) 99,684

Long-term debt ............................. 160,887 23,391 -- 215,696 -- 399,974
Obligations under capital leases ........... -- 31,768 -- -- -- 31,768
Senior notes ............................... 81,635 -- -- -- -- 81,635
Other liabilities .......................... 4,567 753 807 48 -- 6,175
--------- --------- --------- --------- --------- ---------
Total liabilities ........................ 294,164 69,040 33,019 223,717 (704) 619,236

Commitment and contingencies

Minority interest .......................... -- -- -- -- 842 842

Total stockholders' equity (deficit) ....... 124,687 592,236 264,743 71,826 (928,805) 124,687
--------- --------- --------- --------- --------- ---------
Total liabilities and stockholders' equity
(deficit) .............................. $ 418,851 $ 661,276 $ 297,762 $ 295,543 $(928,667) $ 744,765
========= ========= ========= ========= ========= =========

F-39

CONDENSED CONSOLIDATING BALANCE SHEET
(in thousands)

As of December 31, 2000
------------------------------------------------------------------------------------
Domestic Foreign Non- Condensed
Guarantor Guarantor Guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------ ------------

ASSETS
Current assets:
Cash and cash equivalents ................ $ 1,402 $ (2,190) $ 6,400 $ 8,621 $ -- $ 14,233
Restricted cash .......................... 331 -- -- -- -- 331
Accounts receivable:
Trade, net ............................ 1,607 24,011 24,298 4,314 (704) 53,526
Insurance claims and other ............ 1,029 3,060 7,114 313 -- 11,516
Marine operating supplies ................ (695) 2,466 3,503 4,364 -- 9,638
Prepaid expenses ......................... 568 920 1,250 317 -- 3,055
--------- ---------- --------- --------- --------- ---------
Total current assets .................. 4,242 28,267 42,565 17,929 (704) 92,299
Vessels and equipment, net ................. 47,349 186,174 129,725 276,648 -- 639,896
Deferred costs, net ........................ 17,268 7,926 4,427 8,538 -- 38,159
Restricted investments ..................... -- -- -- 865 -- 865
Due (to) from affiliates ................... (141,953) 63,892 117,521 (35,980) (3,480) --
Investments in affiliates .................. 508,955 327,308 -- 37,105 (873,368) --
Other ...................................... 397 99 3,756 5 -- 4,257
--------- --------- --------- --------- --------- ---------
Total assets ............................. $ 436,258 $ 613,666 $ 297,994 $ 305,110 $(877,552) $ 775,476
========= ========= ========= ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................... $ 976 $ 4,847 $ 6,538 $ 545 $ -- $ 12,906
Current maturities of long-term debt ..... 27,226 1,960 -- 4,084 -- 33,270
Current obligations under capital leases . -- 3,580 -- -- -- 3,580
Accrued interest ......................... 454 492 -- 731 -- 1,677
Accrued liabilities and other ............ 7,552 4,676 17,719 4,597 (704) 33,840
--------- --------- --------- --------- --------- ---------
Total current liabilities ............. 36,208 15,555 24,257 9,957 (704) 85,273

Long-term debt ............................. 181,451 25,333 -- 220,065 -- 426,849
Obligations under capital leases ........... -- 34,718 -- -- -- 34,718
Senior notes ............................... 79,108 -- -- -- -- 79,108
Other liabilities .......................... 2,944 424 785 42 -- 4,195
--------- --------- --------- --------- --------- ---------
Total liabilities ........................ 299,711 76,030 25,042 230,064 (704) 630,143

Commitment and contingencies

Minority interest .......................... -- -- -- -- 8,819 8,819

Total stockholders' equity (deficit) ....... 136,547 537,636 272,952 75,046 (885,667) 136,514
--------- ---------- --------- ---------- --------- ---------
Total liabilities and stockholders' equity
(deficit) .............................. $ 436,258 $ 613,666 $ 297,994 $ 305,110 $(877,552) $ 775,476
========= ========== ========= ========= ========= =========

F-40

19. LIQUIDITY

At December 31, 2001, the Company had a working capital deficit of
approximately $7.3 million as day rates and utilization during the last four
months of 2001 sharply declined for offshore vessels working in the Gulf of
Mexico. The slowdown in the domestic market was offset in part by continued
strength in the Company's international offshore operations, where rising day
rates throughout the year contributed to increased revenue in West Africa and
Southeast Asia. This increased revenue was driven by higher exploration and
production spending as major oil companies moved ahead with oil exploration and
development programs outside the U.S. Nonetheless, during the second half of
2001, there was a noticeable softening in both energy demand and the prices paid
for oil and natural gas. Management believes that the softening trend is
unlikely to affect international exploration and development outlays in key
areas where the Company operates as most of the activity there is controlled by
the international oil companies, whose strategy reflects a longer-term time
horizon. Since the September 11 attacks and subsequent war on terrorism, the
U.S. economy has been subject to further downward pressure and, as we enter
2002, the timing of a recovery in the domestic offshore segment is less certain.
We therefore do not expect earnings in 2002 from the offshore segment to match
those of 2001. Nevertheless, consistent with industry forecasts regarding
exploration and production spending, the Company believes that the energy
fundamentals that drive the offshore industry will lead to a recovery in the
U.S. offshore market during the second half of 2002 and that the more important
international offshore markets will remain strong throughout the year. However,
there can be no assurance this will occur. The Company also expects to benefit
from higher earnings in its tanker business as a result of higher time charter
and bareboat charter rates that take effect in 2002.

Management is currently implementing certain initiatives in an effort
to improve profitability and liquidity. These initiatives include (1)
repositioning certain vessels to take advantage of higher day rates, (2) lay-up
or selling unprofitable vessels , (3) changing tanker contracts from spot
trading to time charters, and (4) eliminating non-essential operating and
overhead expenses. As a result of the expanding market in West Africa and
softening in the Gulf of Mexico, the Company has mobilized two of its Gulf of
Mexico supply boats for redeployment to West Africa during the first quarter of
2002. At the end of December 2001, low-rate voyage charters for three of the
Company's tankers expired and were replaced by two higher-rate time charters and
a ten-year bareboat charter. The Company continues to evaluate financing
alternatives, including a possible equity infusion or other strategic
transaction to reduce debt levels and support future growth opportunities.

F-41

there can be no assurance that such alternatives would be available or that the
Company would be successful in their implementation.

20. SUBSEQUENT EVENTS

21. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following information is presented as supplementary financial
information for 2001 and 2000 (in thousands, except per share information):

First Second Third Fourth
Year Ended December 31, 2001 Quarter Quarter Quarter Quarter(d)
---------------------------- -------- -------- -------- ----------
(as restated)

Revenue ...................................... $ 81,420 $ 91,424 $ 89,720 $ 84,166
Income from operations(a) .................... 8,409 18,903 18,565 3,211
Net (loss) income(b) ......................... (7,233) 2,750 2,907 (10,385)
Net (loss) earnings per common share--basic(c) $ (0.71) $ 0.27 $ 0.28 $ (0.99)
Net (loss) earnings per common
share--assuming dilution(c) ................ $ (0.71) $ 0.27 $ 0.28 $ (0.99)

First Second Third Fourth
Year Ended December 31, 2000 Quarter Quarter Quarter Quarter(d)
---------------------------- -------- -------- -------- ----------

Revenue ...................................... $ 78,607 $ 80,211 $ 81,623 $ 80,042
Income from operations ....................... 2,013 5,976 9,307 8,060
Net loss(1)(2)(3) ............................ (12,909) (3,251) (3,142) (9,650)
Net loss per common share--basic(c) .......... $ (1.29) $ (0.33) $ (0.31) $ (0.96)
Net loss per common share--assuming
dilution(c) ................................ $ (1.29) $ (0.33) $ (0.31) $ (0.96)

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

(a) Includes $1.4 million writedown on the value of a shipyard's assets held
for sale in the fourth quarter of 2001.
(b) Includes gains (losses) on the disposal of assets of $0.3 million, $(0.1)
million, $(0.2) million and $(0.1) million in the first, second, third and
fourth quarters of 2001.
(c) The sum of the four quarters' (loss) earnings per share will not
necessarily equal the annual earnings per share, as the computations for
each quarter are independent of the annual computation.
(d) Includes $4.1 million in additional insurance premiums in the fourth
quarter of 2001 (see Note 2).

(1) Includes gains (losses) on the disposal of assets of $(0.2) million, $0.5
million, $4.0 million, and $(0.4) million in the first, second, third, and
fourth quarters of 2000, respectively.
(2) Includes gain of $7.0 million on the settlement of a contingent liability
in the third quarter of 2000.
(3) Includes approximately $0.9 million in additional depreciation expense in
the fourth quarter of 2000 as a result of the change in estimated useful
lives of certain vessels (see Note 3).

22. SUBSEQUENT EVENTS (UNAUDITED)

On June 13, 2002, the Company announced the signing of a definitive
agreement with DLJ Merchant Banking Partners III, L.P., a CSFB Private Equity
fund, and affiliated entities, and Carlyle/Riverstone Global Energy and Power
Fund I, L.P. and affiliated entities, for the private placement of 12.5 million
shares of newly issued Seabulk common stock at a cash price of $8.00 per share.
The $100 million investment would give the new investors approximately 51% of
the pro forma, fully diluted

F-42

common shares of the Company and majority representation on its Board of
Directors. The investment is subject to shareholder approval, the refinancing of
the Company's senior credit facility, certain regulatory approvals and
satisfaction of other customary conditions.

The new investors have also agreed to purchase, for $8.00 per share,
all of the Company's common stock and common stock purchase warrants
beneficially owned by accounts managed by Loomis, Sayles & Co., L.P., an
SEC-registered investment advisor. These accounts, which collectively represent
approximately 48% of the Company's outstanding shares of common stock, currently
hold approximately 5.2 million shares (excluding shares issuable upon exercise
of warrants). Loomis has agreed to approve the investment transaction and the
related amendments to the Company's Certificate of Incorporation, subject to
approvals and certain other conditions customary for transactions of this type.

Taken together, the two transactions would give the new investors
approximately 73% of the pro forma, fully diluted shares of the Company.

The Company also announced that it has signed a commitment letter with
Fortis Capital Corp. and NIB Capital Bank N.V., as arrangers, for a $180 million
senior secured credit facility, which would replace the Company's existing
facility. The new credit facility will consist of an $80 million term loan and a
$100 million revolving credit facility and will have a five-year maturity.

The term loan portion of the new credit facility will be used to redeem
the Company's outstanding 12 1/2% Senior Secured Notes due 2007. The revolving
portion of the credit facility will be subject to semi-annual reductions
commencing six months after closing. The new credit facility will be secured by
first liens on substantially all of the Company's vessels (excluding vessels
financed with U.S. Maritime Administration Title XI financing) and will be
guaranteed by substantially all of the subsidiaries of the Company. The new
credit facility will be subject to various financial covenants, including
minimum adjusted tangible net worth requirements, minimum ratios of adjusted
EBITDA to adjusted interest expense, and a maximum ratio of adjusted funded debt
to adjusted EBITDA. The Company will also be required to maintain a minimum fair
market value of collateralized assets of at least 175% of outstanding borrowings
under the new credit facility, based upon appraisals which may be requested not
more than once during any 12-month period.

In connection with the closing of the new investment, the Company
expects to redeem or repurchase all of its outstanding 12 1/2% Senior Secured
Notes due 2007. In addition, and as a condition to the closing of the new
investment, President and Chief Executive Officer Gerhard E. Kurz has agreed to
a five-year extension of his employment contract with the Company.

Proceeds from the new equity investment and new bank credit facility,
totaling approximately $280 million before payment of fees and expenses of the
transaction, will be used to repay the Company's existing bank debt, repurchase
or redeem its outstanding Senior Notes, and provide growth capital for new
initiatives.

It is contemplated that, in connection with the new investment, the new
investors would enter into a stockholders agreement together with the Company
and Mr. Kurz.

A shareholder vote will be required to approve the new share issuance
under Nasdaq Stock Market rules and to approve the necessary amendments to the
Company's Certificate of Incorporation. The amendments to the Certificate of
Incorporation include several provisions intended, for certain periods following
closing, to ensure independent director oversight of affiliated party
transactions and to provide certain protective rights to minority shareholders.
Certain regulatory approvals are also required. If the approvals are obtained,
closing of the transaction is expected to take place by the end of the third
quarter.

F-43