UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-33402

Trico Marine Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		72-1252405 (I.R.S. Employer Identification No.)

10001 Woodloch Forest Drive, Suite 610,		77380 (Zip code)
The Woodlands, Texas
(Address of principal executive offices)

Registrant’s telephone number, including area code: (281) 203-5700

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

The number of shares of the registrant’s common stock, $0.01 par value per share, issued and outstanding at August 4, 2009 was 19,222,931.

 

 

TRICO MARINE SERVICES, INC.
REPORT FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2009

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets — June 30, 2009 and December 31, 2008			1
Condensed Consolidated Statements of Income — Three and Six Months Ended June 30, 2009 and 2008			2
Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2009 and 2008			3
Notes to the Condensed Consolidated Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			46
Item 4. Controls and Procedures			46
Part II. Other Information			46
Item 1. Legal Proceedings			46
Item 1A. Risk Factors			47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49
Item 3. Defaults upon Senior Securities			49
Item 4. Submission of Matters to a Vote of Security Holders			49
Item 5. Other Information			50
Item 6. Exhibits			51
Signature			55
EX-10.24
EX-10.25
EX-10.26
EX-31.1
EX-31.2
EX-32.1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES

		June 30,				December 31,
		2009				2008
						As adjusted, see
						Notes 7 and 15
ASSETS
Current assets:
Cash and cash equivalents		$	35,069			$	94,613
Restricted cash			3,674				3,566
Accounts receivable, net			155,705				165,152
Prepaid expenses and other current assets			22,028				3,375
Total current assets			216,476				266,706
Property and equipment:
Marine vessels			509,653				502,417
Subsea equipment			176,542				153,003
Construction-in-progress			290,461				260,069
Transportation and other			5,952				4,902
			982,608				920,391
Less accumulated depreciation and amortization			(153,126	)			(115,981	)
Net property and equipment, net			829,482				804,410
Intangible assets			112,403				106,983
Other assets			24,323				24,637
Total assets		$	1,182,684			$	1,202,736
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term and current maturities of long-term debt		$	187,533			$	82,982
Accounts payable			42,741				53,872
Accrued expenses			120,458				85,656
Accrued interest			6,367				10,383
Foreign taxes payable			2,289				4,000
Income taxes payable			12,755				18,133
Other current liabilities			362				—
Total current liabilities			372,505				255,026
Long-term debt			517,290				687,098
Long-term derivative			3,746				1,119
Foreign taxes payable			33,018				47,508
Deferred income taxes			2,681				5,104
Other liabilities			7,327				6,001
Total liabilities			936,567				1,001,856
Commitments and contingencies (See Note 16)			—				—
Stockholders’ equity:
Common stock, $.01 par value, 50,000,000 shares authorized and 19,793,138 and 16,199,980 shares issued at June 30, 2009 and December 31, 2008, respectively			196				160
Warrants			1,640				1,640
Additional paid-in capital			330,472				316,694
Retained earnings			28,598				25,197
Accumulated other comprehensive loss, net of tax			(166,545	)			(202,681	)
Phantom stock			55,588				55,588
Treasury stock, at cost, 570,207 shares			(17,604	)			(17,604	)
Total Trico Marine Services, Inc. stockholders’ equity			232,345				178,994
Noncontrolling interest			13,772				21,886
Total equity			246,117				200,880
Total liabilities and stockholders’ equity		$	1,182,684			$	1,202,736

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES

		Three Months Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
						As adjusted, see								As adjusted, see
						Notes 7 and 15								Notes 7 and 15
Revenues		$	179,732			$	104,292			$	301,550			$	163,467
Operating expenses:
Direct operating expenses			130,221				70,846				228,709				103,839
General and administrative			19,390				14,940				40,829				25,707
Depreciation and amortization			18,547				12,895				36,619				19,642
Impairment			14,023				—				14,023				—
Gain on sales of assets			(17,684	)			91				(17,693	)			(2,746	)
Total operating expenses			164,497				98,772				302,487				146,442
Operating income (loss)			15,235				5,520				(937	)			17,025
Interest expense, net of amounts capitalized			(11,665	)			(7,134	)			(22,578	)			(8,286	)
Interest income			790				3,271				1,862				4,849
Unrealized gain (loss) on mark-to-market of embedded derivative			476				(2,310	)			1,415				(2,310	)
Gain on conversions of debt			551				—				11,330				—
Refinancing costs			(6,224	)			—				(6,224	)			—
Other income (expense), net			1,857				(2,628	)			1,128				(1,465	)
Income (loss) before income taxes			1,020				(3,281	)			(14,004	)			9,813
Income tax (benefit) expense			(3,641	)			(1,204	)			(18,669	)			746
Net income (loss)			4,661				(2,077	)			4,665				9,067
Less: Net (income) attributable to noncontrolling interest			(514	)			(1,541	)			(1,264	)			(2,382	)
Net income (loss) attributable to Trico Marine Services, Inc.		$	4,147			$	(3,618	)		$	3,401			$	6,685
Earnings (loss) per common share:
Basic		$	0.22			$	(0.24	)		$	0.19			$	0.46
Diluted		$	0.22			$	(0.24	)		$	0.19			$	0.43
Weighted average shares outstanding:
Basic			18,601				14,815				17,657				14,613
Diluted			26,345				14,815				18,011				15,458

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES

		Six Months Ended June 30,
		2009				2008
						As adjusted, see
						Notes 7 and 15
Cash flows from operating activities:
Net income		$	4,665			$	9,067
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			36,619				19,642
Amortization of non-cash deferred revenues			(286	)			(184	)
Amortization of deferred financing costs			1,437				1,293
Noncash benefit related to change in Norwegian tax law			(18,568	)			—
Accretion of debt discount			6,361				3,651
Deferred income taxes			(3,156	)			740
Impairment			14,023				—
Change in fair value of embedded derivative			(1,415	)			2,310
Gain on conversions of 6.5% Debentures			(11,330	)			—
Cash paid for make-whole premium related to conversions of 6.5% Debentures			(6,915	)			—
Gain on sales of assets			(17,693	)			(2,746	)
Provision on doubtful accounts			(140	)			9
Stock based compensation			1,787				2,387
Change in operating assets and liabilities			23,286				8,563
Net cash provided by operating activities			28,675				44,732
Cash flows from investing activities:
Acquisition of DeepOcean, net of acquired cash			—				(430,802	)
Purchases of property and equipment			(48,848	)			(62,180	)
Proceeds from sales of assets			30,024				7,023
Sale of hedge instrument			—				8,151
Decrease in restricted cash			215				4,650
Net cash used in investing activities			(18,609	)			(473,158	)
Cash flows from financing activities:
Net proceeds from exercises of warrants and options			—				11,615
Proceeds from issuance of debt			—				300,000
Payment for exchange of convertible debentures			(12,676	)			—
Proceeds and (repayments) of revolving credit facilities, net			(49,353	)			161,774
Dividend to noncontrolling partner			(6,120	)			—
Debt issuance or refinancing costs			(6,224	)			(16,123	)
Net cash provided by (used in) financing activities			(74,373	)			457,266
Effect of exchange rate changes on cash and cash equivalents			4,763				6,437
Net increase (decrease) in cash and cash equivalents			(59,544	)			35,277
Cash and cash equivalents at beginning of period			94,613				131,463
Cash and cash equivalents at end of period		$	35,069			$	166,740

The accompanying notes are an integral part of these condensed consolidated financial statements.

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES

1. Organization and Basis of Presentation

     The condensed consolidated financial statements include the accounts of Trico Marine Services, Inc. and its consolidated subsidiaries (the “Company”). The consolidated financial statements of the Company include the accounts of those subsidiaries where the Company directly or indirectly has more than 50% of the ownership rights and for which the right to participate in significant management decisions is not shared with other shareholders. The Company also consolidates the accounts of its noncontrolling owned variable interest subsidiaries for which the Company has been determined to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. For comparative purposes, certain amounts in 2008 have been adjusted to reflect the retrospective application of FAS 160 and APB 14-1 to conform to the current period’s presentation. The presentation and disclosure requirements of FAS 160 had no effect on net income or operating cash flows. See Note 15 “Noncontrolling Interests”. The APB 14-1 adjustments did have an effect on the financial statements. See Note 7 “FASB Staff Position APB 14-1”.

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required for complete financial statements under accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, which consist of normal recurring items considered necessary for a fair presentation, have been included. The results of operations for the interim periods are not necessarily indicative of results of operations to be expected for the full year.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires estimates and assumptions that affect the reported amounts as well as certain disclosures. The Company’s financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates.

     The consolidated balance sheet as of December 31, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures required by accounting principles generally accepted in the United States of America, since certain information and disclosures normally included in the notes to the financial statements have been condensed or omitted for interim periods as permitted by the rules and regulations of the Securities and Exchange Commission. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

2. Risks and Uncertainties

     The Company’s liquidity outlook has changed during the quarter ended June 30, 2009 primarily as a result of the following:

	o		While its subsea services businesses met its EBITDA forecast for the second quarter, the rates and utilization experienced in its towing and supply segment deteriorated more than it anticipated. As a result, the Company has revised its future EBITDA forecast to reflect its lower outlook for this segment of its business.
	o		The further weakening of the U.S. Dollar relative to the Norwegian Kroner during the second quarter resulted in additional cash payments required to bring the Company’s Kroner based credit facility within its contractual credit limit.

     As a result of the events described above, the Company believes that its forecasted cash and available credit capacity are not expected to be sufficient to meet its commitments as they come due over the next twelve months and that it will not be able to remain in compliance with its debt covenants unless it is able to successfully refinance certain debt, extend existing amortization requirements, sell assets, access cash in certain of its subsidiaries, obtain waivers or amendments from its lenders, and effectively manage its working capital. If the Company is unable to complete these actions, it will be in default under its credit agreements, which in turn, would constitute an event of default under all of its outstanding debt agreements. If this were

to occur, all of the Company’s outstanding debt would become callable by its creditors and would be reclassified as a current liability on its balance sheet. The Company’s inability to repay the outstanding debt, if it were to become current or if it were called by its creditors, would have a material adverse effect on the Company. The accompanying financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might result from the uncertainty associated with Company’s ability to meet its obligations as they come due.

     The Company is currently negotiating with the lenders under its $200 million revolving credit facility to amend the facility so that the scheduled principal payments currently due in the next year will be either deferred or reduced. In addition, it is continuing to pursue refinancing of its NOK 350 million revolving credit facility, NOK 230 million revolving credit facility, NOK 150 million additional term loan and NOK 200 million overdraft facility (collectively the “SR Bank Facility”). The Company has retained investment bankers and anticipates launching its refinancing of the SR Bank Facility during the third quarter of 2009. There can be no assurance that the Company will be able to refinance its debt, that lenders will be willing to waive or amend covenants, or that its other plans can be affected on a timely basis, on satisfactory terms or maintained once initiated. Even if the Company is able to refinance its debt and obtain waivers for any future covenant violations, its obligations will still pose significant restrictions on it which may include a higher cost of debt, significant amortization payments, or liens on a substantial portion of its assets, all of which could severely limit its ability to implement its plans which would negatively impact future operations.

     As an international integrated provider of subsea and marine support vessels and services to the oil and gas, wind power and telecommunications industries, the Company’s revenue, profitability, cash flows and future rate of growth are substantially dependent on its ability to (1) secure profitable contracts, (2) increase its vessel utilization and maximize its service spreads, (3) deploy its vessels to the most profitable markets, and (4) invest in a technologically advanced subsea fleet. Consistent with the Company’s strategy, it is in the process of constructing several subsea service specific vessels. Execution of the Company’s business plan is also dependent upon it obtaining a minimum level of EBITDA. The Company’s forecasted EBITDA contains certain estimates and assumptions regarding new vessel deliveries, fleet utilization, average day rates, and operating and general and administrative expenses, which could prove to be inaccurate. The Company’s inability to execute its plans could adversely affect its financial position, results of operations and cash flows.

     The Company’s revenues are primarily generated from entities operating in the oil and gas industry in the North Sea, China, West Africa, Brazil, the Mexican Gulf of Mexico (“Mexico”), the U.S. Gulf of Mexico (“Gulf of Mexico”) and the rest of Southeast Asia. The Company’s international operations account currently for 99% of revenues and are subject to a number of risks inherent to international operations including exchange rate fluctuations, unanticipated assessments from tax or regulatory authorities, and changes in laws or regulations. In addition, because of the Company’s corporate structure, it may not be able to repatriate funds from its Norwegian subsidiaries without adverse tax or debt compliance consequences. These factors could have a material adverse affect on the Company’s financial position, results of operations and cash flows.

          Because the Company’s revenues are generated primarily from customers who have similar economic interests, its operations are also susceptible to market volatility resulting from economic, cyclical, weather or other factors related to the energy industry. Changes in the level of operating and capital spending in the industry, decreases in oil or gas prices, or industry perceptions about future oil and gas prices could materially decrease the demand for the Company’s services, adversely affecting its financial position, results of operations and cash flows.

     The Company’s operations, particularly in the North Sea, China, West Africa, Mexico, and Brazil, depend on the continuing business of a limited number of key customers and some of its long-term contracts contain early termination options in favor of its customers. If any of these customers terminate their contracts with the Company, fail to renew an existing contract, refuse to award new contracts to it or choose to exercise their termination rights, the Company’s financial position, results of operations and cash flows could be adversely affected.

     The Company’s certificate of incorporation requires that it remain Jones Act eligible, and it must comply with the Jones Act to engage in operations in the Gulf of Mexico. The Jones Act provides that non-U.S. citizens may neither exercise control, directly or indirectly by any means, over more than 25% of the voting power in the corporation nor occupy seats that constitute

more than a minority of a quorum for the board of directors. The Company expects decommissioning and deep water projects in the Gulf of Mexico to comprise an important part of its subsea strategy, which will require continued compliance with the Jones Act. Any action that risks its status under the Jones Act could have a material adverse effect on its business, financial position, results of operations and cash flows.

     The Company is highly leveraged and its debt imposes significant restrictions on it and increases its vulnerability to adverse economic and industry conditions, and could limit its ability to obtain the additional financing required to successfully operate its business. Under certain of the Company’s debt agreements, an event of default will be deemed to have occurred if there is a change of control of the Company or certain of its subsidiaries or if a material adverse change or a fundamental change occurs in regards to the financial position of the applicable borrowing entity within the Company. Also, certain of the Company’s debt agreements contain a material adverse change/effect provision that is determined in the reasonable opinion of the respective lender, which is outside of the control of the Company. Under cross-default provisions in several agreements governing its indebtedness, a default or acceleration of one debt agreement will result in the default and acceleration of its other debt agreements and under its Master Charter lease agreement. A default, whether by the Company or any of its subsidiaries, could result in all or a portion of its outstanding debt becoming immediately due and payable and would provide certain other remedies to the counterparty to the Master Charter. If this were to occur, the Company might not be able to obtain waivers or secure alternative financing to satisfy all of its obligations simultaneously. Given current market conditions, the Company’s ability to access the capital markets or to consummate planned asset sales may be restricted at a time when it would like or need to raise additional capital. In addition, the current economic conditions could also impact its lenders, customers and vendors and may cause them to fail to meet their obligations to it with little or no warning. These events could have a material adverse effect on the Company’s business, financial position, results of operations, cash flows and ability to satisfy the obligations under its debt agreements. (Also see Note 6 “Debt”.)

     The holders of the Company’s 8.125% Convertible Debentures due 2013 (the “8.125% Debentures”) have the right to require the Company to repurchase the 8.125% Debentures upon the occurrence of a “Fundamental Change” in its business, which is defined as the occurrence of any of the following:

	(a)		the consummation of any transaction that is disclosed in a Schedule 13D (or successor form) by any “person” and the result of which is that such “person” has become the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s Capital Stock that is at the time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body); or
	(b)		the first day on which a majority of the members of the Board of Directors are not continuing directors of the Board; or
	(c)		the adoption of a plan relating to the liquidation or dissolution of the Company; or
	(d)		the consolidation or merger of the Company with or into any other Person, or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the Company’s assets and those of its subsidiaries taken as a whole to any “person” (as this term is used in Section 13(d)(3) of the Exchange Act), other than:

	(i)		any transaction pursuant to which the holders of 50% or more of the total voting power of all shares of the Company’s capital stock entitled to vote generally in elections of directors of the Company immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of the Company’s capital stock entitled to vote generally in elections of directors of the continuing or surviving Person (or any parent thereof) immediately after giving effect to such transaction; or
	(ii)		any merger primarily for the purpose of changing the Company’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity.

(e)

the termination of trading of the common stock, which will be deemed to have occurred if the common stock or other common equity interests into which the 8.125% Debentures are convertible is neither listed for trading on a United States national securities exchange nor approved for listing on any United States system of automated dissemination of quotations of securities prices, and no American Depositary Shares or similar instruments for such common equity interests are so listed or approved for listing in the United States.

     However, a Fundamental Change will be deemed not to have occurred if more than 90% of the consideration in the transaction or transactions (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) which otherwise would constitute a Fundamental Change under clauses (a) or (d) above consists of shares of common stock, depositary receipts or other certificates representing common equity interests traded or to be traded immediately following such transaction on a U.S. national securities exchange or approved for listing on any United States system on automated dissemination of quotations of securities prices, and, as a result of the transaction or transactions, the 8.125% Debentures become convertible into such common stock, depositary receipts or other certificates representing common equity interests. Such repurchases could significantly impact liquidity, and it may not have sufficient funds to make the required cash payments should a majority of the holders require the Company to repurchase the 8.125% Debentures. The Company’s failure to repurchase the 8.125% Debentures would constitute an event of default, which in turn, could constitute an event of default under all of its outstanding debt agreements.

3. Acquisition

     On May 15, 2008, the Company initiated a series of transactions that resulted in the acquisition of all of the equity ownership of DeepOcean ASA, a Norwegian public limited liability company (“DeepOcean”), including CTC Marine Projects LTD (“CTC Marine”), a wholly-owned subsidiary of DeepOcean. The Company began consolidating DeepOcean’s results on May 16, 2008, the date it obtained constructive control of DeepOcean. The Company’s ownership of DeepOcean ranged from 54% on May 16, 2008 to in excess of 99% by June 30, 2008. At December 31, 2008, the Company had a 100% interest in DeepOcean. The Company, through its subsidiary, Trico Shipping AS (Trico Shipping), acquired all of the outstanding common stock of DeepOcean for approximately $700 million plus the assumption of $281.7 million of debt.

     The acquisition has been accounted for under the purchase method as required by Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations.” To fund the acquisition, the Company used a combination of its available cash, borrowings under its existing, new and/or amended revolving credit facilities, the proceeds from the issuance of $300 million of the 6.5% Debentures and the issuance of the Company’s equity instruments in the form of phantom stock units. See Note 6 for further discussion on the debt associated with the acquisition.

     The operations of DeepOcean are reflected in the Company’s Subsea Services segment and the operations of CTC Marine are reflected in the Company’s Subsea Trenching and Protection segment.

     At December 31, 2008, the purchase price and purchase price allocation were finalized.

     Pro forma Information

     The following unaudited pro forma information assumes that the Company acquired DeepOcean and CTC Marine effective January 1, 2008 (amounts in thousands, except per share data).

		Three Months Ended								Six Months Ended
		June 30, 2008								June 30, 2008
		Historical				Pro Forma				Historical				Pro Forma
		As adjusted, see								As adjusted, see
		Notes 7 and 15								Notes 7 and 15
Revenues		$	104,292			$	166,236			$	163,467			$	312,192
Operating income (1)			5,520				(2,651	)			17,025				8,011
Income (loss) before income taxes (2)			(3,281	)			(15,022	)			9,813				(11,865	)
Net income (loss) attributable to Trico Marine Services, Inc.		$	(3,618	)		$	(14,782	)		$	6,685			$	(14,734	)
Diluted net income (loss) per share of common stock		$	(0.24	)		$	(1.00	)		$	0.43			$	(1.01	)
Diluted weighted average shares outstanding			14,815				14,815				15,458				14,613

4. Sale of Assets

     On April 28, 2009, the Company sold a platform supply vessel for $26.0 million in net proceeds and recognized a gain on sale of $15.2 million. The sale of this vessel required a prepayment of approximately $14.9 million for the $200 million Revolving Credit Facility as the vessel served as security for that facility.

     During June 2009, the Company sold five supply vessels for a total of $3.8 million, resulting in a gain of $2.5 million. The sale of these vessels did not require a debt prepayment.

5. Intangible Assets

     Intangible assets consist of trade names and customer relationships. The Company did not incur costs to renew or extend the term of acquired intangible assets during the period ending June 30, 2009. The Company classified trade names as indefinite lived assets. Under SFAS No. 142, indefinite lived assets are not amortized but instead are reviewed for impairment annually and more frequently if events or circumstances indicate that the asset may be impaired. At December 31, 2008, the Company performed an impairment analysis of its trade name assets utilizing a form of the income approach known as the relief-from-royalty method. As a result of this assessment, the Company recognized an impairment during 2008 of $3.1 million on trade name assets.

     The following table provides information relating to the Company’s intangible assets as of June 30, 2009 and December 31, 2008 (in thousands):

		As of June 30, 2009																As of December 31, 2008
										Foreign																Foreign
		Gross Carrying				Accumulated				Currency Translation								Gross Carrying				Accumulated				Currency Translation
		Amount				Amortization				Adjustment				Total				Amount				Amortization				Adjustment				Total
Amortized intangible assets:
Customer relationships		$	118,057			$	(8,496	)		$	(25,972	)		$	83,589			$	118,057			$	(5,040	)		$	(32,459	)		$	80,558
Total		$	118,057			$	(8,496	)		$	(25,972	)		$	83,589			$	118,057			$	(5,040	)		$	(32,459	)		$	80,558

										Foreign																Foreign
		Gross Carrying								Currency Translation								Gross Carrying								Currency Translation
		Amount				Impairment				Adjustment				Total				Amount				Impairment				Adjustment				Total
Unamortized intangible assets:
Trade name		$	40,881			$	(3,114	)		$	(8,953	)		$	28,814			$	40,881			$	(3,114	)		$	(11,342	)		$	26,425
Total		$	40,881			$	(3,114	)		$	(8,953	)		$	28,814			$	40,881			$	(3,114	)		$	(11,342	)		$	26,425

     Amortization expense was $1.8 million and $3.5 million for the three and six months ended June 30, 2009, respectively, and $0.9 million for the three and six months ended June 30, 2008. The estimated amortization expense for the remainder of 2009 is estimated to be $4.0 million and $7.5 million per year for 2010, 2011, 2012 and 2013.

6. Debt

     Unless otherwise specified, amounts in these footnotes disclosing U.S. Dollar equivalents for foreign denominated debt amounts are translated at currency rates in effect at June 30, 2009. The Company’s debt at June 30, 2009 and December 31, 2008 consisted of the following (in thousands):

		June 30,				December 31,
		2009				2008
						As adjusted
NOK 350 million Revolving Credit Facility(1), maturing January 1, 2010		$	59,790			$	61,531
NOK 230 million Revolving Credit Facility(1), maturing January 1, 2010			17,940				21,233
NOK 150 million Additional Term Loan(1), maturing January 1, 2010			9,428				10,398
NOK 200 million Overdraft Facility(1), maturing January 1, 2010			14,542				3,207
23.3 million Euro Revolving Credit Facility(1), maturing March 31, 2010			19,897				19,717
NOK 260 million Short Term Credit Facility, interest at 9.9%, maturing on February 1, 2009			—				11,631
$50 million U.S. Revolving Credit Facility Agreement (1), maturing in July 2010			31,509				46,460
$202.8 million face amount, 8.125% Convertible Debentures, net of unamortized discount of $14.6 million as of June 30, 2009, interest payable semi-annually in arrears, maturing on February 1, 2013			188,191				—
$278.0 million face amount, 6.5% Senior Convertible Debentures, net of unamortized discount of $45.0 million as of December 31, 2008, interest payable semi-annually in arrears, exchanged in May 2009			—				232,998
$150.0 million face amount, 3.0% Senior Convertible Debentures(2), net of unamortized discount of $33.0 million and $35.9 million as of June 30, 2009 and December 31, 2008, respectively, interest payable semi-annually in arrears, maturing on January 15, 2027			117,006				114,150
$200 million Revolving Credit Facility(1), maturing in May 2013			136,335				160,563
$100 million Revolving Credit Facility(1), maturing no later than December 2017			36,550				15,000
6.11% Notes, principal and interest due in 30 semi-annual installments, maturing April 2014			6,286				6,915
$18 million Revolving Credit Facility(1), maturing December 5, 2011			15,000				16,000
8 million Sterling Overdraft Facility, maturity 364 days after drawdown			12,491				9,812
24.2 million Sterling Asset Financing Revolving Credit Facility(1), maturing no later than December 13, 2014			17,705				17,286
Finance lease obligations assumed in the acquisition of DeepOcean, maturing from October 2009 to November 2015			14,082				14,172
Other debt, maturing from July 2009 to August 2014			7,789				8,695
Fresh-start debt premium			282				312
Total debt			704,823				770,080
Less current maturities			(187,533	)			(82,982	)
Long-term debt		$	517,290			$	687,098

     Maturities of debt during the next five years and thereafter based on debt amounts outstanding as of June 30, 2009 are as follows (in thousands):

		Amount
Due in one year		$	187,533
Due in two years			59,694
Due in three years			46,899
Due in four years			265,009
Due in five years			19,389
Due in over five years			173,631	(1)
			752,155
Fresh-start debt premium			282
Unamortized discount on 8.125% and 3.0% Debentures			(47,614	)
Total debt		$	704,823

Current Maturities:

     NOK 350 million Revolving Credit Facility. In December 2007, in connection with the financing of the vessel Deep Endeavour, DeepOcean entered into a Norwegian Kroner (NOK) 350 million credit facility (approximately $54.3 million at June 30, 2009). This multi-currency facility allows for borrowings to be made in either U.S. Dollars or NOK. The facility is drawn in U.S. Dollars and at the option of the lenders, they may require a partial repayment if the portion of the loan denominated in U.S. Dollars reaches 105% of the available NOK amount. Based on the exchange rate at June 30, 2009, the amount of this repayment would have been $10.3 million. The loan is guaranteed by DeepOcean and is secured with a mortgage on the Deep Endeavor, a portion of DeepOcean’s inventory and other security documents. The commitment under the facility decreases semi-annually by NOK 10 million (approximately $1.6 million at June 30, 2009) with a balloon payment at its maturity. Interest accrues on the facility at the 3-month NIBOR rate plus 2.75% for NOK borrowings and the LIBOR rate plus 2.75% for U.S. Dollar borrowings and is payable quarterly. The facility is subject to certain customary financial covenants with respect to leverage ratio, working capital ratio and book equity ratio.

     NOK 230 million Revolving Credit Facility. In July 2007, DeepOcean entered into a NOK 230 million ($35.7 million) revolving credit facility. This facility is part of a larger composite credit facility that once had capacity of approximately NOK 1.0 billion ($155.2 million) but has subsequently been reduced to NOK 585 million ($90.8 million). This NOK 230 million credit facility is secured with inventory up to NOK 1.0 billion and other security documents including the pledge of shares in certain DeepOcean subsidiaries. The facility’s commitment is subject to semi-annual reductions of NOK 8 million (approximately $1.2 million at June 30, 2009) with a final NOK 150.7 million ($23.4 million) balloon payment due at the maturity date. Interest on this facility is at the 3-month NIBOR rate plus 2.75% and is payable quarterly in arrears. The facility is subject to customary financial covenants with respect to leverage ratio, working capital ratio and book equity ratio.

     NOK 150 million Additional Term Loan. DeepOcean entered into this agreement in December 2006. Like the NOK 230 million ($35.7 million) facility discussed above, this NOK 150 million ($23.3 million) term loan is part of a larger composite credit facility that once had capacity of approximately NOK 1.0 billion ($155.2 million) but has subsequently been reduced to NOK 585 million ($90.8 million). The borrowings under this facility partially funded the acquisition of CTC Marine. This term loan is secured with inventory up to NOK 1.0 billion ($155.2 million) and other security documents, including the pledge of shares in certain DeepOcean subsidiaries. This facility allows for multi-currency borrowing including NOK, U.S. Dollar, Sterling and Euro. The term loan is subject to mandatory NOK 15 million ($2.3 million) semi-annual payments due in June and December every year until the debt matures. Interest on the debt accrues at LIBOR plus 2.75% and is payable quarterly. The facility is subject to customary financial covenants with respect to leverage ratio, working capital ratio and book equity ratio.

     NOK 200 million Overdraft Facility. DeepOcean entered into a multi-currency cash pool system agreement in July 2007. In conjunction with the cash pool system, DeepOcean has a multi-currency cash pool credit of up to NOK 200 million ($31.0 million). This facility is part of a larger composite credit facility that once had capacity of approximately NOK 1.0 billion ($155.2 million) but has subsequently been reduced to NOK 585 million ($90.8 million). This NOK 200 million cash pool credit is secured with inventory up to NOK 1.0 billion and other security documents including the pledge of shares in certain DeepOcean subsidiaries. Interest on this facility is at the 3-month NIBOR rate plus 2.75% and is payable quarterly in arrears. The facility is subject to customary financial covenants with respect to leverage ratio, working capital ratio and book equity ratio.

     Regarding the NOK 350 million revolving credit facility, NOK 230 million revolving credit facility, NOK 150 million additional term loan and NOK 200 million overdraft facility, the Company and the principal lender have entered into an amendment to these facilities, to, among other things, shorten the maturity dates for all facilities to January 1, 2010, waive the requirement that DeepOcean AS be listed on the Oslo Stock Exchange, consent to the tonnage tax related corporate reorganization, waive a financial covenant for the period ended March 31, 2009 and increase certain fees and margins. In conjunction with this amendment, the Company made a prepayment of NOK 50 million ($7.2 million) on November 1, 2008, an additional prepayment of NOK 25 million ($3.9 million) on June 30, 2009 and agreed to a retroactive increase in fees and margins to November 1, 2008. The total amount outstanding under these facilities as of June 30, 2009 was $101.7 million which is classified as current as the Company’s intent is to pay the outstanding balances by January 1, 2010.

     DeepOcean has $14.1 million of finance leases to finance certain of its equipment including ROVs. These leases have terms of up to seven years. A default under these leases would cause a cross-default on the NOK 350 million revolving credit facility, NOK 230 revolving credit facility, NOK 150 million additional term loan and the NOK 200 million overdraft facility.

     23.3 million Euro Revolving Credit Facility. In October 2001, a subsidiary of DeepOcean entered into this multi-currency facility, which provides for Euro and U.S. Dollar borrowings. The purpose of this facility was to fund the construction of the vessel Arbol Grande. The facility is secured by a first priority lien on the Arbol Grande. Interest on the loan is payable quarterly at LIBOR plus 3.25%. The facility matures on March 31, 2010. The facility is subject to financial covenants with respect to leverage ratio, net worth and minimum liquidity and affirmative and negative covenants.

     NOK 260 million Short Term Credit Facility. In May 2008, Trico Shipping entered into a credit facility agreement with Carnegie Investment Bank AB Norway Branch, as lender (the “Short Term Credit Facility”). The Short Term Credit Facility provided for a NOK 260 million short term credit facility that Trico Shipping used for general corporate purposes. The facility was scheduled to mature on November 1, 2008, but was amended to extend the term of the facility to February 2, 2009. Interest on the facility accrued at an average 9.05% per annum rate until November 1, 2008, at which time the interest rate increased to 9.9%. This facility was repaid in full at maturity on February 2, 2009.

     In addition to the principal amounts above at June 30, 2009, certain of the following debt instruments have current maturities.

     $50 million U.S. Credit Facility. In January 2008, the Company entered into a $50 million three-year credit facility (as amended and restated, the “U.S. Credit Facility”) secured by an equity interest in direct material domestic subsidiaries, a 65% interest in Trico Marine Cayman, LP, first preferred mortgage on vessels owned by Trico Marine Assets, Inc. and a pledge on the intercompany note due from Trico Supply AS to Trico Marine Operators, Inc. The commitment under the U.S. Credit Facility reduces to $40 million after one year and $30 million after two years. A voluntary prepayment of $15 million was made on January 14, 2009 which reduced the commitment under this Facility to $35 million. Interest is payable on the unpaid principal amount outstanding at the Eurodollar rate designated by the British Bankers Association plus 3.25% (subject to adjustment based on consolidated leverage ratio). On May 14, 2009, the facility was amended in conjunction with the granting of a second lien on the facility’s collateral for the Company’s new 8.125% Debentures and to shorten the maturity of the facility from January 31, 2011 to July 15, 2010. See below for further discussion.

     As of June 30, 2009, the Company had outstanding letters of credit under the U.S. Credit Facility totaling $3.5 million with various expiration dates through March 2010 for (1) securing certain payment under vessel operating leases and for (2) payment of certain taxes in Trinidad and Tobago.

     The U.S. Credit Facility subjects the Company’s subsidiaries that are parties to the credit agreement to certain financial and other covenants including, but not limited to, affirmative and negative covenants with respect to indebtedness, minimum liquidity, liens, declaration or payment of dividends, sales of assets, investments, consolidated leverage ratio, consolidated net worth and collateral coverage. Payment under the U.S. Credit Facility may be accelerated following certain events of default including, but not limited to, failure to make payments when due, noncompliance with covenants, breaches of representations and warranties, commencement of insolvency proceedings, entry of judgment in excess of $5 million, defaults by any of the credit parties under the credit agreement or certain other indebtedness in excess of $10 million and occurrence of certain changes of control.

     8.125% Convertible Debentures. On May 11, 2009, the Company entered into exchange agreements (the “Exchange Agreements”) with existing holders of its 6.5% senior convertible debentures due 2028 (the “6.5% Debentures”) party thereto as investors (the “Investors”). In accordance with the exchange (the “Exchange”) contemplated by the Exchange Agreements, on May 14, 2009 the Company exchanged $253.5 million in aggregate principal amount of its 6.5% Debentures (representing all of the outstanding 6.5% Debentures) for, in the aggregate, approximately $12.7 million in cash, 3,042,180 shares of the Company’s common stock (or warrants exercisable for $0.01 per share in lieu thereof) and $202.8 million in aggregate principal amount of the Company’s new 8.125% secured convertible debentures due 2013 (the “8.125% Debentures”).

     This Exchange is accounted for under modification accounting which requires the Company to defer and amortize any change in value exchanged. The amount deferred was approximately $10 million and is reflected as a discount to the 8.125% Debentures, which will be amortized under the effective interest method over the life of the 8.125% Debentures. This discount represents the fair value of the warrants and common shares of stock that were tendered in the Exchange. The warrants issued in the Exchange are required to be recorded as a liability due to the net-cash settlement terms included in the Exchange document.

The warrant liability recorded at June 30, 2009 was $0.4 million and is included in “Other current liabilities” in the accompanying Balance Sheet and will be revalued each reporting period based upon the Company’s stock price. Additionally, the debt issue costs previously recorded for the 6.5% Debentures continues to be amortized over the life of the 8.125% Debentures and any new debt issue costs are expensed as incurred. Debt issue costs of $6.2 million were expensed in the three and six month periods ended June 30, 2009 and are reflected in the Statement of Operations as “Refinancing costs”.

     The 8.125% Debentures are governed by an indenture (the “Indenture”) between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”), entered into on May 14, 2009. The 8.125% Debentures were issued in an aggregate principal amount of $202.8 million.

     The Company pays interest on the unpaid principal amount of the 8.125% Debentures at a rate of 8.125 percent per annum. The Company will pay interest semiannually on May 15 and November 15 of each year commencing on November 15, 2009. Interest on the 8.125% Debentures will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from May 15, 2009.

     The 8.125% Debentures are secured by a second priority lien on substantially all of the collateral that is pledged to secure the lenders under the Company’s U.S. Credit Facility, and are subject to quarterly principal amortizing payments beginning August 1, 2010 of 5% of the outstanding principal per quarter, increasing to 14% of the outstanding principal per quarter beginning February 1, 2012 until the final payment on February 1, 2013 (the “Maturity Date”). The Company has the right to pay principal installments in common stock instead of cash, subject to certain limitations. A majority of the holders of the 8.125% Debentures can elect to have the payment of all or any portion of an installment of principal deferred until the Maturity Date. The 8.125% Debentures are subject to certain mandatory pro rata repayments with net cash proceeds of asset sales.

     The 8.125% Debentures are convertible into common stock at any time at the option of the holder at a conversion price of $14 per share, subject to anti-dilution adjustments and adjustments in the event of certain fundamental change transactions. Holders who convert after May 1, 2011 are entitled to receive, in addition to the shares due upon conversion, a cash payment equal to the present value of remaining interest payments until final maturity. Holders of the 8.125% Debentures are entitled to require the Company to repurchase the debentures at par plus accrued interest in the event of certain fundamental change transactions. The Company is entitled to redeem the 8.125% Debentures at par plus accrued interest on or after May 1, 2011, if the trading price of the common stock exceeds $18.90 per share for specified periods. The conversion feature associated with the debentures is considered an embedded derivative as defined in SFAS No. 133. Under SFAS No. 133, the Company is required to bifurcate the conversion option as its fair value is not “clearly and closely” related to the debt host. This embedded derivative is recorded at fair value on the date of issuance. The estimated fair value of the derivative on the date of issuance was $4.7 million, which was recorded as a non-current derivative liability on the balance sheet with the offset recorded as a discount on the 8.125% Debentures. The derivative liability must be marked-to-market each reporting period with changes to its fair value recorded in the consolidated statement of operations as other income (expense) and the discount being accreted through an additional non-cash charge to interest expense over the term of the debt. See Note 8 for further discussion on the derivative liability.

     The Indenture restricts the Company’s ability and the ability of its subsidiaries to, among other things: (i) incur additional debt, (ii) incur additional liens; (iii) make certain transfers of interests in any ownership interest in Trico Marine Assets, Inc. and Trico Marine Operators, Inc; and (iv) make certain asset sales.

     The Indenture provides that each of the following is an event of default (“Event of Default”): (i) default for 30 days in the payment when due of interest on the 8.125% Debentures; (ii) default in the payment when due of the principal of the 8.125% Debentures; (iii) failure to deliver when due cash, shares of common stock or any interest make-whole payment upon conversion of the 8.125% Debentures and the failure continues for five calendar days; (iv) failure to provide notice of the anticipated effective date or actual effective date of a fundamental change on a timely bases as required by the Indenture; (v) failure to comply with certain agreements contained in the Indenture, the 8.125% Debentures or any Security Document (as defined in the Indenture) and such failure continues for 60 calendar days after notice (or 30 calendar days in the case of the covenant relating to indebtedness); (vi) indebtedness for borrowed money of the Company or any significant subsidiary is not paid within any applicable grace period after final maturity or the acceleration of any such indebtedness by the holders thereof because of a default and the total principal amount of such indebtedness unpaid or accelerated exceeds $30 million or its foreign currency equivalent at the time and such failure continues for 30 calendar days after notice; (vii) certain events of bankruptcy or insolvency described in the Indenture with respect to the Company or any significant subsidiary and (viii) any Security Document (other than the Intercreditor Agreement) fails to create or maintain a valid perfected second lien in favor of

the Trustee for the benefit of the holders of the 8.125% Debentures on the collateral purported to be covered thereby, with certain exclusions. In the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company or a Guarantor (as defined in the Indenture) all outstanding 8.125% Debentures will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the then outstanding 8.125% Debentures may declare all the 8.125% Debentures to be due and payable immediately.

     The 8.125% Debentures and the shares of common stock issuable upon the conversion of the 8.125% Debentures have not been registered because the Company sold the 8.125% Debentures to the investors in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933.

     The 8.125% Debentures are senior secured obligations of the Company, rank senior to all other indebtedness of the Company with respect to the collateral (other than indebtedness secured by permitted liens on the collateral), rank on parity in right of payment with all other senior indebtedness of the Company, and rank senior in right of payment to all subordinated indebtedness of the Company. The 8.125% Debentures shall rank senior to all future indebtedness of the Company to the extent the future indebtedness is expressly subordinated to the 8.125% Debentures. The 8.125% Debentures are secured by a perfected security interest in certain assets of the Company and its subsidiaries.

     6.5% Convertible Debentures. On May 14, 2008, the Company issued $300.0 million of the 6.5% Debentures. The Company received net proceeds of approximately $287 million, after deducting offering costs of approximately $13 million, which were capitalized as debt issuance costs and were being amortized over the life of the 6.5% Debentures. Net proceeds of the offering were used to partially fund the acquisition of DeepOcean.

     During 2009, various holders of the Company’s 6.5% Debentures converted $24.5 million principal amount of the debentures, collectively, for a combination of $6.9 million in cash related to the interest make-whole provision and 605,759 shares of our common stock based on an initial conversion rate of 24.74023 shares of common stock per $1,000 principal amount of debentures. In May 2009, the Company entered into the Exchange Agreements with all of the holders of the 6.5% Debentures and none of the 6.5% Debentures remain outstanding. See “8.125% Convertible Debentures” for more information on the Exchange Agreements.

     3% Senior Convertible Debentures. In February 2007, the Company issued $150.0 million of 3% senior convertible debentures due in 2027 (the “3% Debentures”). The Company received net proceeds of approximately $145.2 million after deducting commissions and offering costs of approximately $4.8 million. Net proceeds of the offering were for the acquisition of Active Subsea ASA, financing of the Company’s fleet renewal program and for general corporate purposes. Interest on the 3% Debentures is payable semiannually in arrears on January 15 and July 15 of each year. The 3% Debentures will mature on January 15, 2027, unless earlier converted, redeemed or repurchased. Effective January 1, 2009, the 3% Debentures were subject to FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”. See Note 7 for further information.

     The 3% Debentures are senior unsecured obligations of the Company and rank equally in right of payment to all of the Company’s other existing and future senior indebtedness. The 3% Debentures are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of its assets collateralizing such indebtedness and any liabilities of its subsidiaries. The 3% Debentures and shares of the common stock issuable upon the conversion of the debentures have been registered under the Securities Act of 1933.

     The 3% Debentures are convertible into cash and, if applicable, shares of the Company’s common stock, par value $0.01 per share, based on an initial conversion rate of 23.0216 shares of common stock per $1,000 principal amount of the 3% Debentures (which is equal to an initial conversion price of approximately $43.44 per share), subject to adjustment and certain limitations. Should the holders of such debentures convert, the Company would issue approximately 3.5 million shares of its common stock. For more information regarding the conversion and redemption options of the 3% Debentures see Note 5 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

     $200 million Revolving Credit Facility. In May 2008, in connection with financing the acquisition of DeepOcean, Trico Shipping AS and certain other subsidiaries of the Company entered into a credit agreement (as amended, the “$200 Million Credit Agreement”) with various lenders. The $200 Million Credit Agreement provides the Company with a $200 million, or equivalent in foreign currency, revolving credit facility, which is guaranteed by certain of the Company’s subsidiaries, and is

collateralized by vessel mortgages and other security documents. The final $10 million of availability was contingent on delivery of the Sapphire vessel, which was subsequently cancelled, which limited the maximum availability to $190 million. Additionally, on April 28, 2009, the Company sold a platform supply vessel which required a prepayment on this facility of $14.9 million. The prepayment changed the commitment reductions to $9.1 million each quarter and continues through the quarter ending June 30, 2010, at which time the facility will reduce by $5.4 million per quarter until March 31, 2013. The commitment under the facility is now at $145 million. The facility was previously drawn in NOK and the amount outstanding was subject to adjustment monthly for changes in the NOK-U.S. Dollar exchange rate. On April 7, 2009, the Company repaid NOK 51.2 million ($7.7 million) of the NOK 1.1 billion outstanding based on an exchange rate of 6.68 NOK per U.S. Dollar. The Company made additional repayments in May and June 2009 for NOK 21.6 million ($3.3 million) and NOK 14.5 million ($2.3 million), respectively. As of June 2, 2009, the loan was changed from a NOK denominated loan to a U.S. Dollar denominated loan and is no longer subject to prepayments due to changes on the NOK-U.S. Dollar exchange rate. Interest is payable on the unpaid principal amount outstanding at a rate applicable to the currency in which the funds are borrowed (the Eurodollar rate designated by the British Bankers Association for U.S. Dollar denominated loans, or Euro LIBOR, NOK LIBOR or Sterling LIBOR for loans denominated in Euro, NOK or Sterling, respectively) plus 3.25%. The $200 Million Credit Agreement matures May 14, 2013.

     The $200 Million Credit Agreement subjects the Company subsidiaries that are parties to the credit agreement to certain financial and other covenants including, but not limited to, affirmative and negative covenants with respect to indebtedness, minimum liquidity, liens, declaration or payment of dividends, sales of assets, investments, consolidated leverage ratio, consolidated net worth and collateral coverage. Payment under the $200 Million Credit Agreement may be accelerated following certain events of default including, but not limited to, failure to make payments when due, noncompliance with covenants, breaches of representations and warranties, commencement of insolvency proceedings, entry of judgment in excess of $5 million, defaults by any of the credit parties under the credit agreement or certain other indebtedness in excess of $10 million and occurrence of certain changes of control.

     $100 million Revolving Credit Facility. In April 2008, Trico Subsea AS entered into an eight-year multi-currency revolving credit facility (as amended, the “$100 Million Credit Agreement”) in the amount of $100 million or equivalent in foreign currency, secured by first preferred mortgages on Trico Subsea AS vessels, refund guarantees related thereto, certain additional vessel-related collateral, and guarantees from Trico Supply AS, Trico Subsea Holding AS and each subsidiary of Trico Subsea AS that acquires a vessel. The commitment under this multi-currency revolving facility matures on the earlier of the eighth anniversary of the delivery of the final vessel or December 31, 2017. The commitment under this facility reduces in equal quarterly installments of $3.125 million commencing on the earlier of the date three months after the delivery of the eighth and final vessel or June 30, 2010. On May 13, 2009, an additional $11.5 million was drawn subsequent to the delivery of the Trico Sabre. Interest is payable on the unpaid principal amount outstanding at a rate applicable to the currency in which the funds are borrowed (the Eurodollar rate designated by the British Bankers Association for U.S. Dollar denominated loans, or Euro LIBOR, NOK LIBOR or Sterling LIBOR for loans denominated in Euro, NOK or Sterling, respectively) plus 3.25%.

     The $100 Million Credit Agreement also subjects Trico Supply AS and its subsidiaries to certain financial and other covenants including, but not limited to, affirmative and negative covenants with respect to indebtedness, minimum liquidity, liens, declaration or payment of dividends, sales of collateral, loans, consolidated leverage ratio, consolidated net worth and collateral coverage. Payment under the $100 Million Credit Agreement may be accelerated following certain events of default, including, but not limited to, failure to make payments when due, noncompliance with covenants, breaches of representations and warranties, commencement of insolvency proceedings, entry of judgment in excess of $5 million, defaults by any of the credit parties under the credit agreement or certain other indebtedness in excess of $10 million and the occurrence of certain changes in control.

     6.11% Notes. In 1999, Trico Marine International issued $18.9 million of notes due 2014 to finance construction of two supply vessels, of which $6.3 million is outstanding at June 30, 2009. The notes are guaranteed by the Company and the U.S. Maritime Administration and secured by first preferred mortgages on two vessels. Failure to maintain the Company’s status as a Jones Act company would constitute an event of default under such notes.

     $18 million Revolving Credit Facility. In November 2007, DeepOcean entered into this $18 million revolving credit facility to refinance the original loan used to acquire and upgrade the vessel Atlantic Challenger. This facility is secured with a first priority lien on the Atlantic Challenger. This facility is subject to a mandatory $0.5 million per quarter payment. Interest under the facility accrues at LIBOR plus 3.25% and is payable quarterly. The facility is subject to financial covenants with respect to leverage ratio, net worth and minimum liquidity and affirmative and negative covenants.

     8 million Sterling Overdraft Facility. CTC Marine uses this secured short term overdraft facility in its normal business operations. The facility has a gross capacity of 12 million Sterling ($19.8 million) but it is offset by CTC Marine’s cash accounts. Borrowings under this facility can be made in Sterling, U.S. Dollars, NOK, Australian Dollars and Euros. At June 30, 2009, CTC Marine had cash totaling $11.9 million, which means the net borrowings on the overdraft facility were $0.6 million. Interest on the facility accrues at the lender’s base rate for Sterling borrowings plus 1% and is payable quarterly in arrears. The facility is secured by the property and equipment of CTC Marine.

     24.2 million Sterling Asset Financing Facilities. CTC Marine has two asset facilities totaling 24.2 million Sterling ($40.0 million) to finance new and existing assets. The Asset Finance Loan Facility (Existing Assets Facility) has a commitment of 8.3 million Sterling ($13.7 million), matures on various dates through 2012 and accrues interest at the 3-month Sterling LIBOR rate plus a margin of between 1.65% and 2.55%. As of June 30, 2009, CTC Marine’s outstanding balance on the Existing Assets Facility totaled approximately 4.7 million Sterling ($7.7 million). The Asset Finance Loan Facility (New Assets Facility) has a commitment of 15.9 million Sterling ($26.3 million), matures on various dates that are six years from the delivery of the financed assets and accrues interest at the 3-month Sterling LIBOR rate plus 1.65%. The final asset to be financed under the New Assets Facility was delivered in the fourth quarter of 2008. As of June 30, 2009, CTC Marine’s outstanding balance on the New Assets Facility totaled approximately 6.0 million Sterling ($10.0 million). These asset finance facilities are secured by mortgages on the assets financed and the property and equipment of CTC Marine and are partially guaranteed by DeepOcean. These asset finance loan facilities are subject to certain customary covenants and its outstanding balance cannot exceed 60% of the net book value of the assets collateralizing the facility. These facilities are subject to quarterly reductions of their borrowings.

     Under certain of the Company’s debt agreements, an event of default will be deemed to have occurred if there is a change of control of the Company or certain of its subsidiaries or if a material adverse change occurs to the financial position of the applicable borrowing entity within the Company. Also, certain of the Company’s debt agreements contain a material adverse change/effect provision that is determined in the reasonable opinion of the respective lenders, which is outside the control of the Company. Additionally, certain of the Company’s debt agreements contain cross-default and cross-acceleration provisions that trigger defaults under other of the Company’s debt agreements.

     The Company’s capitalized interest totaled $4.9 million and $9.7 million for the three and six month period ended June 30, 2009 and $4.3 million and $5.8 million for the three and six month period ended June 30, 2008.

7. FASB Staff Position APB 14-1

     Effective January 1, 2009, the 3% Debentures were subject to FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”. APB 14-1 changes the accounting and requires further disclosures for convertible debt instruments that permit cash settlement upon conversion. APB 14-1 required the Company to separately account for the liability and equity components of its senior convertible notes in a manner intended to reflect its nonconvertible debt borrowing rate. The discount on the liability component of the 3% Debentures is amortized until the first quarter of 2014. APB 14-1 requires retrospective application to all periods as defined within Statement of Financial Accounting Standards (SFAS) No. 154, “Accounting Changes and Error Corrections”.

     The information below reflects the impact of adopting APB 14-1 for the three and six months ended June 30, 2009 (in thousands, except per share data).

		Three Months Ended				Six Months Ended
		June 30, 2009				June 30, 2009
Net incremental non-cash interest expense		$	1,341			$	2,701
Less: tax effect			(483	)			(972	)
Net incremental non-cash interest expense, net of tax		$	858			$	1,729
Net decrease to earnings per common share:
Basic		$	0.05			$	0.10
Diluted		$	0.03			$	0.10

     The impact of adopting APB 14-1 for the period ending June 30, 2009 results in an overall $0.3 million increase in assets of which capitalized interest increased $1.3 million and capitalized debt issuance costs decreased $1.0 million, a $33.0 million decrease in long-term debt and an overall increase in stockholders’ equity of $33.3 million related to a $40.3 million increase in additional paid in capital and a $7.0 million decrease in retained earnings.

     The tables below reflect the Company’s retrospective adoption of APB 14-1. These selected financial captions summarize the adjustments for the three and six months ended June 30, 2008 and twelve months ended December 31, 2008 for the results of operations and December 31, 2008 and 2007 for the consolidated financial position (in thousands, except per share data).

		Three Months Ended June 30, 2008
		As Reported				APB 14-1				Adjusted
		June 30, 2008				Adjustment				June 30, 2008
Interest expense, net of amounts capitalized		$	(6,176	)		$	(958	)		$	(7,134	)
Income tax benefit			(859	)			(345	)			(1,204	)
Net income (loss) attributable to Trico Marine Services, Inc.			(3,005	)			(613	)			(3,618	)
Earnings (loss) per common share:
Basic		$	(0.20	)		$	(0.04	)		$	(0.24	)
Diluted			(0.20	)			(0.04	)			(0.24	)
Weighted average shares outstanding:
Basic			14,815				14,815				14,815
Diluted			14,815				14,815				14,815

		Six Months Ended June 30, 2008
		As Reported				APB 14-1				Adjusted
		June 30, 2008				Adjustment				June 30, 2008
Interest expense, net of amounts capitalized		$	(6,399	)		$	(1,887	)		$	(8,286	)
Income tax expense (benefit)			1,425				(679	)			746
Net income (loss) attributable to Trico Marine Services, Inc.			7,893				(1,208	)			6,685
Earnings (loss) per common share:
Basic		$	0.54			$	(0.08	)		$	0.46
Diluted			0.51				(0.08	)			0.43
Weighted average shares outstanding:
Basic			14,613				14,613				14,613
Diluted			15,458				15,458				15,458

		Twelve Months Ended December 31, 2008
		As Reported				APB 14-1				Adjusted
		December 31, 2008				Adjustment				December 31, 2008
Interest expense, net of amounts capitalized		$	(31,943	)		$	(3,893	)		$	(35,836	)
Income tax expense (benefit)			14,823				(1,401	)			13,422
Net income (loss) attributable to Trico Marine Services, Inc.			(111,163	)			(2,492	)			(113,655	)
Earnings (loss) per common share:
Basic		$	(7.54	)		$	(0.17	)		$	(7.71	)
Diluted			(7.54	)			(0.17	)			(7.71	)
Weighted average shares outstanding:
Basic			14,744				14,744				14,744
Diluted			14,744				14,744				14,744

		As Reported				APB 14-1				Adjusted
		December 31, 2008				Adjustment				December 31, 2008
ASSETS
Construction-in-progress		$	258,826			$	1,243			$	260,069
Other assets			25,720				(1,083	)			24,637
Total assets			1,202,576				160				1,202,736
LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-term debt		$	722,948			$	(35,850	)		$	687,098
Total liabilities			1,037,706				(35,850	)			1,001,856
Additional paid-in capital			275,433				41,261				316,694
Retained earnings			30,448				(5,251	)			25,197
Total Trico Marine Services, Inc. stockholders’ equity			142,984				36,010				178,994
Total liabilities and stockholders’ equity			1,202,576				160				1,202,736

		As Reported				APB 14-1				Adjusted
		December 31, 2007				Adjustment				December 31, 2007
ASSETS
Construction-in-progress		$	255,749			$	—			$	255,749
Other assets			15,858				(1,297	)			14,561
Total assets			681,744				(1,297	)			680,447
LIABILITIES AND STOCKHOLDERS’ EQUITY
Long-term debt		$	157,287			$	(41,200	)		$	116,087
Total liabilities			278,644				(41,200	)			237,444
Additional paid-in capital			245,134				42,662				287,796
Retained earnings			141,611				(2,759	)			138,852
Total Trico Marine Services, Inc. stockholders’ equity			390,222				39,903				430,125
Total liabilities and stockholders’ equity			681,744				(1,297	)			680,447

     The amount of interest cost recognized for the three and six months ending June 30, 2009 relating to both the contractual interest coupon and amortization of the discount on the liability component is $2.6 million and $5.1 million, respectively. The amount of interest cost recognized for the three and six months ending June 30, 2008 is $2.4 million and $4.9 million, respectively. The coupon and the amortization of the discount on the debt will yield an effective interest rate of approximately 8.9% on these convertible notes.

8. Derivative Instruments

     The conversion feature associated with the 8.125% and the prior 6.5% Debentures is considered an embedded derivative as defined in SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”). Under SFAS No. 133 the Company is required to bifurcate the embedded derivative from the host debt instrument and record it at fair value on the date of issuance, with subsequent changes in its fair value recorded in the consolidated statement of operations. The warrants issued in the Exchange are also derivative instruments and are required to be recorded as a liability due to the net-cash settlement terms included in the Exchange document. Changes in fair value will be measured in each subsequent period the warrants are still outstanding. Additionally, on January 1, 2009, we adopted SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires entities that use derivative instruments to provide qualitative disclosures about their objectives and strategies for using such

instruments, as well as any details of credit-risk-related contingent features contained within derivatives. SFAS No. 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS No. 133 have been applied, and the impact that hedges have on an entity’s financial position, financial performance and cash flows.

     For the Debentures, the estimate of fair value was determined through the use of a Monte Carlo simulation lattice option-pricing model that included various assumptions (see Note 9 for further discussion). The 6.5% Debentures were exchanged for the 8.125% Debentures in May 2009. See Note 6 for more information. The coupon and the amortization of the discount on the debt will yield an effective interest rate of approximately 11.1% on the 8.125% Debentures and 11.2% on the 6.5% Debentures. The reduction in the Company’s stock price as well as the passage of time for the 8.125% Debentures are the primary factors influencing the change in value of the derivatives and their impact on the Company’s net income (loss). The fair value of the warrant liability is revalued based upon the Company’s stock price each quarter. Any increase in the Company’s stock price for both the Debentures and the warrants will result in unrealized losses being recognized in future periods and such amounts could be material. The tables below reflect (1) Fair Values of Derivative Instruments in the Balance Sheets and (2) the Effect of Derivative Instruments on the Statements of Income (in thousands).

Liability Derivative

June 30, 2009

December 31, 2008

Derivatives Not Designated as Hedging

Balance Sheet

Fair

Balance Sheet

Fair

Instruments under Statement 133

Location

Value

Location

Value

Other contract — Warrant Liabilities (8.125% Debentures)

Other current liabilities

$

362

Other current liabilities

$

—

Other contract — 6.5% Debentures

Long-term derivative

—

Long-term derivative

1,119

Other contract — 8.125% Debentures

Long-term derivative

3,746

Long-term derivative

—

Total derivatives

$

4,108

$

1,119

Derivatives Not
Designated as Hedging		Location of Gain (Loss)		Amount of Gain (Loss) Recognized on Derivative
Instruments under		Recognized in Income		Three Months Ended June 30,								Six Months Ended June 30,
Statement 133		on Derivative		2009				2008				2009				2008
Other contract		Unrealized gain on mark-to-market of warrant liabilities — 8.125% Debentures		$	18			$	—			$	18			$	—
Other contract		Unrealized gain (loss) on mark-to-market of embedded derivative — 6.5% Debentures			(503	)			(2,310	)			436				(2,310	)
Other contract		Unrealized gain on mark-to-market of embedded derivative — 8.125% Debentures			979				—				979				—
				$	494			$	(2,310	)		$	1,433			$	(2,310	)

9. Fair Value Measurements

     SFAS No. 157, “Fair Value Measurements” defines fair value, provides guidance for measuring fair value and requires certain disclosures. This statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

	•		Level 1 — Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	•		Level 2 — Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
	•		Level 3 — Unobservable inputs that reflect the reporting entity’s own assumptions.
			Financial liabilities subject to fair value measurements on a recurring basis are as follows (in thousands):

		Fair Value Measurements
		at June 30, 2009 Using Fair Value
		Hierarchy
		Carrying Value as				Fair Value as of
		of June 30, 2009				June 30, 2009				Level 1				Level 2				Level 3
Liabilities
Warrant liabilities (8.125% Debentures)		$	362			$	362			$	—			$	362			$	—
Long-term derivative (8.125% Debentures)			3,746				3,746				—				—				3,746
		$	4,108			$	4,108			$	—			$	362			$	3,746

		Fair Value Measurements
		at December 31, 2008 Using Fair Value
		Hierarchy
		Carrying Value as
		of December 31,				Fair Value as of
		2008				December 31, 2008				Level 1				Level 2				Level 3
Liabilities
Warrant Liabilities (8.125% Debentures)		$	—			$	—			$	—			$	—			$	—
Long-term derivative (6.5% Debentures)			1,119				1,119				—				—				1,119
		$	1,119			$	1,119			$	—			$	—			$	1,119

     The estimated fair values of financial instruments have been determined by the Company using available market information and valuation methodologies described below. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein may not be indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

     Cash, cash equivalents, accounts receivable and accounts payable: The carrying amounts approximate fair value due to the short-term nature of these instruments.

     Debt: The fair value of the Company’s fixed rate debt is based on quoted market prices.

		June 30, 2009				December 31, 2008
Carrying amount		$	704,823			$	770,080
Fair value			564,907				562,783

     As discussed in Note 6, the Company’s conversion feature contained in its 8.125% and 6.5% Debentures is required to be accounted for separately and recorded as a derivative financial instrument measured at fair value. The estimate of fair value was determined through the use of a Monte Carlo simulation lattice option-pricing model. The assumptions used in the valuation model for the 8.125% Debentures as of June 30, 2009 include the Company’s stock closing price of $3.41, expected volatility of 60%, a discount rate of 25.0% and a United States Treasury Bond Rate of 1.90% for the time value of options. As the 8.125% Debentures were exchanged for the 6.5% Debentures, there were no assumptions used in the valuation model for the 6.5% Debentures as of June 30, 2009. The following table sets forth a reconciliation of changes in the fair value of the Company’s derivative liability as classified as Level 3 in the fair value hierarchy (in thousands).

		8.125%				6.5%
		Debentures				Debentures
Balance on March 31, 2008		$	—			$	—
Issuance of long-term derivative (6.5% Debentures)			—				53,772
Unrealized gain for the period May 14, 2008 through December 31, 2008			—				(52,653	)
Balance on December 31, 2008		$	—			$	1,119
Unrealized gain for 2009			(979	)			(436	)
Exchange 6.5% for 8.125% Debentures			4,725				(683	)
Balance on June 30, 2009		$	3,746			$	—

     We also adopted SFAS No. 157 for non-financial assets and liabilities in 2009. We had no required fair value measurements for non-financial assets and liabilities in 2009 and no required additional disclosures upon adoption.

10. Earnings (Loss) per Share

     Earnings (loss) per common share was computed based on the following (in thousands, except per share amounts):

		Three Months Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
						As adjusted, see								As adjusted, see
						Notes 7 and 15								Notes 7 and 15
Basic EPS
Net income (loss) attributable to Trico Marine Services, Inc.		$	4,147			$	(3,618	)		$	3,401			$	6,685
Weighted-average shares of common stock outstanding:
Basic			18,601				14,815				17,657				14,613
Earnings (Loss) per share:
Basic		$	0.22			$	(0.24	)		$	0.19			$	0.46
Diluted EPS
Net income (loss) attributable to Trico Marine Services, Inc.		$	4,147			$	(3,618	)		$	3,401			$	6,685
Add: Interest on 8.125% convertible debentures, net of tax			1,736				—				—	(1)			—
Net income (loss) attributable to Trico Marine Services, Inc. with assumed conversions		$	5,883			$	(3,618	)		$	3,401			$	6,685
Weighted-average shares of common stock outstanding:
Basic			18,601				14,815				17,657				14,613
Add dilutive effect of:
Phantom stock units			229				—				304				400
8.125% convertible debentures			7,482				—				—	(1)			—
Stock options and nonvested restricted stock			33				—				50				133
Warrants			—				—				—				312
Total			26,345				14,815				18,011				15,458
Earnings (Loss) per share:
Diluted		$	0.22			$	(0.24	)		$	0.19			$	0.43

     In May 2009, the existing holders of the 6.5% Debentures entered into the Exchange Agreements. See Note 6 for more information.

     Diluted earnings per share is computed using the if-converted method for the 8.125% Debentures. The scheduled principal amortizations for the 8.125% Debentures can be paid either in stock or cash based upon the Company’s election. However, if the 8.125% Debentures are converted at the option of the holders prior to maturity, the bondholders will be paid in stock.

     The Company’s 3% Debentures were not dilutive as the average price of the Company’s common stock was less than the conversion price for each series of the debentures during the presented periods they were outstanding (Note 6). Although the Company has the option of settling the principle amount of 3% Debentures in either cash, stock or a combination of both, management’s current intention is to settle the amounts when converted with available cash on hand, through borrowings under the Company’s existing lines of credit or other refinancing as necessary. Therefore, the Company has excluded the potential dilutive effect of the principal amount of these 3.0% Debentures in the calculation of diluted earnings per share.

11. Other Comprehensive Income (Loss)

     The components of total comprehensive income were as follows (in thousands):

		Three Months Ended June 30,
		2009												2008
		Shareholders of												Shareholders of
		Trico Marine				Noncontrolling								Trico Marine				Noncontrolling
		Services, Inc.				Interests				Total				Services, Inc.				Interests				Total
														As adjusted, see Notes 7 and 15
Net income (loss)		$	4,147			$	514			$	4,661			$	(3,618	)		$	1,541			$	(2,077	)
Foreign currency translation gain (loss)			22,862				—				22,862				(11,126	)			—				(11,126	)
Amortization of unrecognized actuarial gains			87				—				87				—				—				—
Total comprehensive income (loss)		$	27,096			$	514			$	27,610			$	(14,744	)		$	1,541			$	(13,203	)

		Six Months Ended June 30,
		2009												2008
		Shareholders of												Shareholders of
		Trico Marine				Noncontrolling								Trico Marine				Noncontrolling
		Services, Inc.				Interests				Total				Services, Inc.				Interests				Total
														As adjusted, see Notes 7 and 15
Net income		$	3,401			$	1,264			$	4,665			$	6,685			$	2,382			$	9,067
Foreign currency translation gain			35,952				—				35,952				15,235				—				15,235
Amortization of unrecognized actuarial gains			184				—				184				85				—				85
Total comprehensive income		$	39,537			$	1,264			$	40,801			$	22,005			$	2,382			$	24,387