• projected or anticipated benefits from acquisitions, including our recent acquisition of DeepOcean ASA (DeepOcean);

• the results, timing, outcome or effect of pending or potential litigation, our intentions or expectations of prevailing with respect thereto and the availability of insurance coverage in connection therewith;

• our ability to repatriate cash from foreign operations if and when needed;

• projections involving revenues, operating results, cash provided from operations and available borrowings, or our anticipated capital expenditures or other capital projects; and

• future expectations and outlook and any other statements regarding future growth, cash needs, operations, business plans, financial results and any other statements which are not historical facts.

You can generally identify forward-looking statements by such terminology as "may," "will," "expect," "believe," "anticipate," "project," "estimate" or similar expressions. We caution you that such statements are only predictions and not guarantees of future performance or events. We disclaim any intent or obligation to update the forward-looking statements contained in this Quarterly Report, whether as a result of receiving new information, the occurrence of future events or otherwise, other than as required by law. We caution investors not to place undue reliance on forward-looking statements.
All phases of our operations are subject to a number of uncertainties, risks and other influences, many of which are beyond our ability to control or predict. Any one of such influences, or a combination, could materially affect the results of our operations and the accuracy of forward-looking statements made by us.
Important factors that may cause our actual results to differ materially from expectations or projections include those described in Part II- Item 1A "Risk Factors" located elsewhere in this Quarterly Report on Form 10-Q and Item 1A. "Risk Factors" included in our 2007 Form 10-K.

supply, subsea services and trenching (Note 15). The following information should be read in conjunction with the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
The revenues for our towing and supply business are impacted primarily by fleet size and capabilities, day rates and vessel utilization. Day rates and vessel utilization are primarily driven by demand for our vessels, supply of new vessels, customer requirements, our vessel availability and competition. The operating costs for the towing and supply business are primarily a function of the active fleet size. The most significant of our normal direct operating costs include compensation costs for vessel crews, maintenance and repairs, marine inspection costs, supplies and marine insurance. We are typically responsible for normal operating expenses, while our customers are typically responsible for mobilization expenses, including fuel costs.
The revenues and costs for our subsea services and trenching businesses are determined by the scope of each individual project. Our projects may utilize any combination of vessels, both owned and leased, and components of our fleet equipment consisting of ROV's, survey equipment, ploughs, water jetters and cutters. The complexity of the project will determine what assets will be deployed to service the project.
Generally, our projects last between three to 12 months in duration but certain projects can be much longer as we have had projects lasting up to 5 years. Revenue on our projects is generally recognized on a day-rate basis whereby it is determined by the utilization of each piece of equipment that is deployed in connection with the project. Variables that may affect our subsea services and trenching businesses include the scope and complexity of each project and weather or environmental downtime. Delays or acceleration of the timing of commencement of projects will result in fluctuations of when revenues and costs are incurred but generally it will not materially affect the amount of total costs. The subsea services and trenching businesses is somewhat seasonally driven but it is affected at different periods than our towing and supply business. The trenching business is seasonally driven as it generally needs calm seas to perform the highly specialized work with its subsea equipment so generally the second and third quarters are its stronger operating periods.
OUR OUTLOOK
• Integrate acquisition of DeepOcean into the Trico Group. Our acquisition of DeepOcean (see "Acquisition of DeepOcean" below) positions us as a global integrated subsea solutions provider. Together, the combined Company serves 17 of the 20 largest customers for subsea field development. We will leverage our integration to expand services provided to customers for subsea field development utilizing our existing global infrastructure and DeepOcean's expertise and equipment. We expect that the resulting contracts will generally be longer in duration than those in our traditional towing and supply market.

• Continue to upgrade our fleet. Our upgrade program aims to improve our fleet's capabilities and reduce its average age by focusing on more sophisticated next generation subsea vessels with broad customer applicability which can be deployed worldwide. Our upgrade program has a specific emphasis on vessels capable of supporting a variety of subsea work. We intend to continue to increase the number of vessels we have working in the subsea market by:

o purchasing vessels from subsea service companies in return for long-term contracts;

o constructing purpose-specific vessels for customers under long-term contracts;

o acquiring companies that own these vessels or have favorable contracts to build such vessels;

o converting certain platform supply vessels that can be readily upgraded when current charter contracts expire through the addition of cranes, moon pools, helidecks and accommodation units to make them more suitable for subsea and/or seismic activities; and

o supplementing our fleet through the addition of DeepOcean's 14 chartered and owned vessels. These newly acquired vessels not only increase the size of our fleet but reduce the average age of both our subsea services fleet from 13 years to 7 years and the overall fleet from 19 years to 16 years.

• Continue to focus on international markets. We will continue to capitalize on our experience, personnel and fleet to expand our presence in emerging markets while leveraging the strengths of our global partners. Our goal is to continue to efficiently deploy our vessels and services into profitable operations, including the use of joint ventures, and with an

emphasis on prudent mobilizations from the U.S. Gulf of Mexico to regions that have stronger long-term growth fundamentals, more favorable contracting terms and lower operating cost structures. Consistent with this strategy, we have reduced the number of our vessels in the Gulf of Mexico by more than 70% since 2004, including mobilizing three vessels in the first half of 2008 and two additional vessels since June 30, 2008.

• Leverage our global geographic presence to exploit repositioning opportunities. By leveraging the expertise and resources of our global operations, we seek to identify and exploit opportunities to reposition vessels that are underutilized or inefficiently utilized. By moving assets among geographic regions or utilizing vessels in alternative service modes, we believe we can increase profitability.

• Manage our capital resources and liquidity. Our acquisition of DeepOcean required us to incur and assume a substantial amount of indebtedness, which will require us to manage our cash flow to maintain flexibility under our debt covenants, allow us to meet our capital expenditure and debt service requirements, and, over time, reduce our borrowings outstanding.

• Continue to stabilize cash flows. We plan to continue to use a centralized and disciplined approach to pricing to achieve a balance of spot exposure and term contracts for our towing and supply vessels. Our expansion into the subsea services market is intended to have a stabilizing influence on our cash flow, resulting from the longer-term contracts more prevalent in that market sector as compared to our traditional towing and supply business.

• Expand our presence in the subsea services markets. Similar to our acquisition of DeepOcean (see "Acquisition of DeepOcean" below), we continually seek to acquire or partner with companies providing subsea services by offering sophisticated vessels and service packages for subsea work. We believe the subsea market is growing at a faster rate and will provide a higher rate of return on new vessel construction than our traditional towing and supply business.

• Expansion of our presence in the growing subsea services market with a global platform, which may provide a stage for additional organic growth;

• Synergies expected to arise from an acquisition that is complementary with the November 2007 acquisition of Active Subsea, a separate Norwegian subsea services company;

• Ability to leverage our existing infrastructure, equipment, vessels and resources to provide specialized service offerings to new and existing customers;

• Addition of earnings and cash flow to us;

• DeepOcean's operational track record and engineering expertise;

• Addition of seasoned management team with specialized knowledge of the subsea industry;

• DeepOcean's fleet of modern subsea capable equipment and vessels; and

• Further improvement in our international diversification, which improves growth prospects.

We paid approximately $690 million to acquire 99.7% of DeepOcean's fully diluted shares of capital stock, including approximately $63.2 million we funded on July 11, 2008 to settle the shares we acquired in the mandatory tender offer that ended on June 30, 2008. We estimate that we will require an additional $1.8 million to acquire the remaining 0.3% of DeepOcean's fully diluted shares, which is expected to be funded in the third quarter of 2008. To fund the transaction we used available cash, borrowing under new, existing and/or amended revolving lines of credit and proceeds from the issuance of $300 million of 6.5% convertible debentures. For a discussion of our debt instruments see Notes 3 and 4 and the section titled "Liquidity and Capital Resources -Debt" below.
Our financial results will change significantly with the inclusion of the operating results and cash flows of DeepOcean and our financing of its acquisition. In connection with acquiring DeepOcean, we now have three operating segments: towing and supply, represented primarily by our historical operation of vessels; subsea services, represented primarily by the operations of DeepOcean; and trenching operations, represented by the operations of CTC Marine. For additional information regarding DeepOcean's financial information see "Results of Operations" below and Notes 2 and 15.
NON-GAAP FINANCIAL MEASURES A non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as one that purports to measure historical or future financial performance, financial position or cash flow, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We define adjusted EBITDA, a non-GAAP financial measure, which is calculated as earnings (net income) before interest, income taxes, depreciation and amortization, gains (loss) on sales of assets, stock based compensation, other income (loss) and noncontrolling interest in (income) loss of a consolidated subsidiary.
Our measure of adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. Other companies may calculate adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.
We believe that the GAAP financial measure that our non-GAAP adjusted EBITDA financial measure most directly compares to is operating income. Because adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for operating income, net income (loss), cash flow provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.
EBITDA is widely used by investors and other users of our financial statements as a supplemental financial measure that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our ability to service debt, pay taxes and fund various capital expenditures. We also believe the disclosure of EBITDA helps investors meaningfully evaluate and compare our cash flow generating capacity. The following table provides the detailed components of adjusted EBITDA, as we define that term (in thousands):

                                                  Three Months Ended                 Six Months Ended
                                                       June 30,                          June 30,
                                                2008              2007            2008              2007
Net income (loss)                             $ (3,005 )        $  4,434        $  7,893          $ 19,018
Depreciation and amortization                   12,895             6,114          19,642            11,580
Amortization of non-cash deferred
revenues                                           (97 )            (221 )          (184 )            (429 )
Interest expense, including amortization
of deferred financing costs, net                 6,176             1,040           6,399             1,823
Income tax expense (benefit)                      (859 )           3,472           1,425            12,416
Stock-based compensation                         1,543             1,142           2,387             2,179
(Gain) loss on sale of assets                       91               (20 )        (2,746 )          (2,857 )
Interest income                                 (3,271 )          (3,981 )        (4,849 )          (6,699 )
Foreign currency exchange (gain) loss             (309 )             502          (1,573 )             968
Other loss, net                                  5,247 (1)           322           5,348 (1)           341
Noncontrolling interest in income (loss)
of consolidated subsidiary                       1,541              (498 )         2,382            (2,149 )

Adjusted EBITDA                               $ 19,952          $ 12,306        $ 36,124          $ 36,147

(1) Primarily reflects the $2.3 million loss to adjust the fair value of the embedded derivative to its market value at June 30, 2008 and the $2.5 million loss associated with the settlement of a legacy DeepOcean foreign currency swap instrument in June 2008.

The following table reconciles adjusted EBITDA to operating income (in thousands):

                                                    Three Months Ended                 Six Months Ended
                                                         June 30,                          June 30,
                                                   2008             2007            2008             2007
Adjusted EBITDA                                 $   19,952        $ 12,306        $  36,124        $  36,147
Amortization of non-cash deferred revenues              97             221              184              429
Gain on sale of assets                                 (91 )            20            2,746            2,857
Stock based compensation                            (1,543 )        (1,142 )         (2,387 )         (1,779 )
Depreciation and amortization                      (12,895 )        (6,114 )        (19,642 )        (11,580 )

Operating income                                $    5,520        $  5,291        $  17,025        $  26,074

                  Revenue                              $  48,114
                  Direct operating expenses              (37,321 )
                  General and administrative expense      (3,648 )
                  Depreciation and amortization           (6,155 )

                  Operating income                     $     990

In connection with the acquisition of DeepOcean, we now view our business in three operating segments: towing and supply, subsea services and trenching (Note 15). The following information should be read in conjunction with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

Towing and Supply
     Our towing and supply vessels' average day rates, utilization and average
number of vessels by each by vessel class, is as follows:

                          Period July 1,       Three months ended         Six months ended
                           2008 through             June 30,                  June 30,
                          July 18, 2008        2008          2007         2008         2007
     Average Day Rates

     Towing and Supply
     AHTSs(1)             $      36,241      $ 32,983     $ 36,452     $ 36,345     $ 34,100
     PSVs(2)                     17,168        17,486       17,810       17,721       18,164
     OSVs(3)                      7,560         7,252        8,916        7,209        9,322
     Crew/Line                    7,502         6,168        5,996        6,017        5,651

     Utilization

     Towing and Supply
     AHTSs                           88 %          78 %         74 %         82 %         83 %
     PSVs                            98 %          92 %         96 %         91 %         93 %
     OSVs                            84 %          82 %         74 %         79 %         72 %
     Crew/Line                       58 %          76 %         75 %         63 %         79 %



                               Period July 1,       Three months ended         Six months ended
                                2008 through             June 30,                  June 30,
                               July 18, 2008         2008          2007        2008         2007
  Average number of Vessels

  Towing and Supply
  AHTSs                                  6.0           6.0          6.0          6.0         6.0
  PSVs                                   7.0           7.0          7.0          7.0         7.0
  OSVs                                  38.0          38.0         39.0         38.1        39.2
  Crew/Line                              4.0           4.6          7.0          5.8         7.5

(1) Anchor handling, towing and supply vessels

(2) Platform Supply Vessels

(3) Offshore Supply Vessels

Operating income for our towing and supply operations follows (in thousands):

                                          Three Months Ended           Six Months Ended
                                               June 30,                    June 30,
                                          2008          2007          2008          2007
   Revenues                             $  47,605     $  52,461     $  97,800     $ 106,737
   Direct operating expenses              (27,542 )     (30,123 )     (54,949 )     (57,310 )
   General and administrative expense      (4,946 )      (4,572 )     (11,416 )      (9,003 )
   Depreciation and amortization           (5,917 )      (5,481 )     (11,912 )     (10,387 )
   Gain (loss) on sale of assets              (91 )          20         2,746         2,857

   Operating income                     $   9,109     $  12,305     $  22,269     $  32,894

Revenues. Charter hire revenues of $46.9 million and $97.0 million for the three and six month periods ended June 30, 2008, respectively, decreased by $5.5 million and $8.2 million over amounts for the three and six month periods ended June 30, 2007, respectively. AHTS revenues increased $0.6 million in the three months ended June 30, 2008 compared to the three months ended June 30, 2007 due to a four percentage increase in utilization partially offset by softer day rates. AHTS revenues increased $2.1 million for the six months periods ended June 30, 2008 compared to the same period last year reflecting stronger average day rates in the North Sea. PSV revenues decreased by $0.8 million in the three and six month periods ended June 30, 2008 compared to the same periods last year reflecting reduced day and utilization rates in the North Sea. OSV revenues were down $2.8 million and $7.6 million for the three month and six month periods ended June 30, 2008 compared to the same periods last year reflecting reduced day rates partially offset by slightly higher utilization in the Gulf of Mexico. Although we view the increase in utilization and rates for our vessels in the U.S. Gulf of Mexico as positive, we remain committed and continue to redeploy vessels to emerging international markets to increase utilization and to stabilize and/or increase our future cash flow. During the first half of 2008, three supply vessels were mobilized from the U.S. Gulf of Mexico, including two to Southeast Asia and one to West Africa. Subsequent to June 30, 2008, we mobilized two additional vessels formerly operating in the U.S. Gulf of Mexico to Mexico. During the three months ended June 30, 2008 we sold one supply vessel previously operating in the U.S. Gulf of Mexico. Other vessel income of $0.7 million and $0.8 million for the three months and six months ended June 30, 2008, respectively, increased by $0.2 million and decreased by $0.7 million compared to amounts for the three and six month periods ended June 30, 2007, respectively.
Direct Operating Expenses. Direct vessel operating expenses of $27.5 million and $54.9 million for the three and six month periods ended June 30, 2008, respectively, reflect decreases of $5.2 million and $2.4 million over amounts for the three and six month periods ended June 30, 2007, respectively. The decreases between the comparable three month periods primarily reflect the mobilization costs of five vessels to Southeast Asia in the second quarter of 2007 and the six month variance also reflects those mobilization costs partially offset by the costs we incurred to mobilize three vessels to West Africa and . . .