HVIDE MARINE INC, S-3, 1997-12-11

HVIDE MARINE INC
S-3, 1997-12-11
DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

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

<TABLE>
<S> <C> <C>
FLORIDA 4424 65-0524593
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

---------------------
2200 ELLER DRIVE, P.O. BOX 13038
FORT LAUDERDALE, FLORIDA 33316
(954) 523-2200

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
J. ERIK HVIDE, CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
2200 ELLER DRIVE, P.O. BOX 13038
FORT LAUDERDALE, FLORIDA 33316
(954) 523-2200

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
COPIES OF COMMUNICATIONS TO:

<TABLE>
<C> <C>
MICHAEL JOSEPH, ESQ. SETH R. MOLAY, P.C.
DYER ELLIS & JOSEPH PC AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
600 NEW HAMPSHIRE AVENUE, N.W. 1700 PACIFIC AVENUE, SUITE 4100
WASHINGTON, D.C. 20037 DALLAS, TEXAS 75201
(202) 944-3000 (214) 969-2800
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective. If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock $0.001 par
value................................ 5,750,000 shares $30.8125 $177,171,875 $52,265.70
=========================================================================================================================
</TABLE>

(1) Includes 750,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for purposes of calculating the registration fee.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED DECEMBER 11, 1997
PROSPECTUS
, 1998
5,000,000 SHARES

[HVIDE MARINE LOGO GRAPHIC]
[HVIDE MARINE INCORPORATED LOGO]

CLASS A COMMON STOCK

All of the 5,000,000 shares of Class A Common Stock offered hereby (the
"Offering") are being sold by the Company. The Class A Common Stock is traded on
the Nasdaq National Market under the symbol "HMAR." On December 9, 1997, the
last reported sale price of the Class A Common Stock was $30 3/4 per share. See
"Price Range of the Class A Common Stock" and "Dividend Policy."

The Company's issued and outstanding capital stock consists of Class A
Common Stock and Class B Common Stock. Each holder of Class A Common Stock is
entitled to one vote per share and each holder of Class B Common Stock is
entitled to ten votes per share on all matters submitted to a vote of
shareholders. Except as required by law and the Company's Articles of
Incorporation, holders of the Class A Common Stock and the Class B Common Stock
vote together as a single class. Each share of Class A Common Stock and Class B
Common Stock will share ratably in any dividends or other distributions,
including upon the liquidation, dissolution, or winding up of the Company. The
shares of Class B Common Stock are freely convertible on a one-for-one basis
into shares of Class A Common Stock.

Ownership and control of the Class A Common Stock by persons not citizens
of the United States are limited by the terms of the Company's Articles of
Incorporation. See "Description of Capital Stock -- Foreign Ownership
Restrictions."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................................... $ $ $
Total(3)............................................ $ $ $
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) See "Underwriting" for indemnification arrangements with the Underwriters.

(2) Before deduction of expenses payable by the Company estimated at
$ .

(3) The Company has granted the Underwriters a 30-day option to purchase up to
750,000 additional shares of Class A Common Stock at the Price to the Public
less Underwriting Discounts and Commissions, solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the total Price to the Public, Underwriting Discounts and Commissions,
and Proceeds to the Company will be $ , $ , and
$ , respectively.

The shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of the shares will be made on or about ,
1998.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY DEAN WITTER

RAYMOND JAMES & ASSOCIATES, INC.
<PAGE> 3

[PICTURES OF VESSELS]

[GRAPHIC DEPICTING DEPLOYMENT OF WORLDWIDE FLEET]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
THE CLASS A COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION
WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
Except as otherwise indicated, all information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option. Information in this
Prospectus concerning the Company's operations and vessels currently owned by
the Company include the 36 vessels expected to be acquired in January 1998 from
Care Offshore, Inc. and related parties ("Care") for $284.2 million in cash. The
completion of the Offering is contingent upon the consummation of the Care
acquisition. Unless the context otherwise requires, all references in this
Prospectus to the "Company" or "Hvide" include Hvide Marine Incorporated, its
predecessors, and its consolidated subsidiaries. See "Glossary" for definitions
of certain terms used herein.

THE COMPANY

Hvide (pronounced "vee-dah") is one of the world's leading providers of
marine support and transportation services, serving primarily the energy and
chemical industries. The Company has been an active consolidator in each of the
markets in which it operates, increasing its vessel fleet from 23 vessels in
1993 to 256 vessels currently. As a result, the Company is the third largest
operator of offshore energy support vessels in the U.S. Gulf of Mexico and the
largest operator of such vessels in the Arabian Gulf. Upon completion of the
Care acquisition, the Company will also be a leading operator of energy support
vessels offshore West Africa and Southeast Asia. In addition, the Company is the
sole provider of commercial tug services at Port Everglades, Tampa, and Port
Canaveral, Florida, and a leading provider of such services in Mobile, Alabama.
The Company also transports petroleum products and specialty chemicals in the
U.S. domestic trade.

During 1997, the Company substantially expanded its offshore energy support
operations into several international markets and increased its deepwater
capability. The acquisition of vessels from GMMOS, IMS, and Selat (each as
defined herein), for aggregate consideration of $115.2 million, positioned Hvide
as the largest operator of offshore energy support vessels in the Arabian Gulf.
The Care acquisition will extend the Company's international operations to
offshore West Africa and increase its presence offshore Southeast Asia. The
resulting international fleet of 124 offshore energy support vessels provides a
platform for possible further international expansion in regions in which the
Company believes demand for offshore energy support services will continue to
increase. The diversity of the Company's overall fleet enables the Company to
provide a broad range of services and to take advantage of market upturns while
reducing its exposure to downturns in any particular market sector or geographic
region.

FLEET OVERVIEW

<TABLE>
<CAPTION>
NUMBER OF
VESSELS
<S> <C>
Marine Support Services
Domestic Offshore Energy Support
Supply Boats........................................... 27
Crew/Utility Boats..................................... 41
Geophysical Boats...................................... 2
International Offshore Energy Support
Anchor Handling Tug/Supply Vessels..................... 40
Anchor Handling Tugs................................... 24
Supply Boats........................................... 12
Crew/Utility Boats..................................... 33
Geophysical Boats...................................... 4
Other.................................................. 11
Offshore and Harbor Towing
Tugs................................................... 30
Marine Transportation Services
Chemical/Petroleum Product Carriers.................... 6
Fuel Barges............................................ 16
Towboats............................................... 10
---
Total............................................. 256
===
</TABLE>

3
<PAGE> 5

BUSINESS STRATEGY

The Company's strategy is to grow through selected acquisitions that (i)
further consolidate the marine support and transportation services markets in
which the Company operates and (ii) establish a meaningful presence in new
markets that will benefit from consolidation. The Company believes it will
continue to have numerous opportunities to make additional accretive
acquisitions in its core business segments. In addition, to satisfy increasing
demand in certain of its market segments, the Company intends to grow through
new construction of premium assets such as deepwater-capable, dynamically
positioned supply boats, high-speed crew boats, a construction/anchor handling
tug/supply vessel, innovative ship-docking modules ("SDMs(TM)"), and double-hull
petroleum product carriers. Critical elements of the Company's strategy include
continuing to (i) utilize its demonstrated expertise in acquiring vessels,
thereby further consolidating its target markets, (ii) focus on domestic and
international markets that the Company believes will benefit from consolidation,
(iii) develop and apply marine technology to meet customers' needs in an
innovative and cost-effective manner, (iv) maintain and pursue long-term
customer relationships that may reduce the risk associated with the investment
required for new vessels and mitigate the effects of industry cyclicality, and
(v) enhance its record of quality service and safety.

RECENT AND PENDING ACQUISITIONS AND NEW VESSEL CONSTRUCTION

Consistent with its business strategy, the Company has entered into a
series of consolidating acquisitions during 1997 that have expanded its offshore
energy support fleet internationally, and increased its offshore and harbor
towing operations.

- Care. In November 1997, the Company entered into a definitive agreement
to purchase a diversified fleet of 36 offshore energy support vessels,
including 22 deepwater-capable anchor handling tug/supply vessels from
Care, for a purchase price of $284.2 million. As currently deployed, the
fleet consists of 21 vessels offshore West Africa, eight vessels offshore
Southeast Asia, two vessels in the North Sea, two vessels offshore
Argentina, two vessels offshore South Africa, and one vessel in the
Arabian Gulf. See "The Care Acquisition."

- GMMOS. In May 1997, the Company completed the acquisition of a
diversified fleet of 35 offshore energy support vessels from Gulf Marine
Maintenance and Offshore Service Company ("GMMOS") for consideration of
$58.7 million. The GMMOS acquisition established the Company's position as
the leading offshore energy support provider in the Arabian Gulf.

- IMS. In October 1997, the Company acquired a diversified fleet of 30
offshore energy support vessels, operating primarily in the Arabian Gulf,
a topside vessel repair facility, and certain related assets from
International Marine Services ("IMS") for $36.0 million.

- Selat. In December 1997, the Company acquired a diversified fleet of 14
offshore energy support vessels, operating primarily in the Arabian Gulf,
and certain related assets from Selat Marine Services Co., Ltd. ("Selat")
for $20.5 million.

- Bay. In October 1997, the Company acquired all of the outstanding stock
of Bay Transportation Corporation ("Bay"), a harbor towing company that
operates a fleet of six tractor tugs and eight conventional harbor tugs.
Bay is the sole provider of harbor towing services in the port of Tampa,
Florida, where nine of its tugs operate. An additional two tugs are to be
deployed in towing operations offshore Mexico, and the remaining three
tugs are chartered to operators in California. The acquisition of Bay's
fleet of 14 vessels increased the Company's tug fleet to 30 tugs,
including eight tractor tugs. The aggregate purchase price for the
acquisition was $56.0 million, including the assumption of approximately
$19.5 million of debt.

- MPL. In October 1997, the Company entered into an agreement in principle
to purchase two anchor handling tug/supply vessels from a subsidiary of
Minnesota Power and Light Company ("MPL") for $12.3 million, which
transaction is expected to close in December 1997. These vessels are
currently operating offshore Southeast Asia.
4
<PAGE> 6

- Digicon. In December 1997, the Company entered into an agreement in
principle to acquire one geophysical survey vessel from Digicon
Geophysical Corporation ("Digicon") for $5.9 million in a transaction
expected to close in the first quarter of 1998.

- New Vessel Construction. The Company has entered into agreements to (i)
construct six 205-foot dynamically positioned supply boats and five
152-foot high-speed crew boats in response to the increasing demand for
deepwater support vessels in the U.S. Gulf of Mexico, (ii) construct two
SDMs(TM) for use in the Company's harbor towing operations, (iii)
construct two offshore tugs, and (iv) construct and operate a 279-foot
construction/anchor handling/tug supply vessel pursuant to a joint
venture. It is currently estimated that these construction projects will
require capital expenditures of approximately $100.0 million through 1999.

MARINE SUPPORT SERVICES

Offshore Energy Support. The Company currently operates a fleet of 70
offshore energy support vessels in the U.S. Gulf of Mexico and a fleet of 124
offshore energy support vessels internationally, principally in the Arabian Gulf
and offshore West Africa and Southeast Asia. The offshore energy support
industry has experienced substantial consolidation and vessel attrition during
the past decade. Such improved industry fundamentals, in combination with
continued strong demand, have resulted in increasing day rates in the U.S. Gulf
of Mexico and offshore West Africa, regions in which exploration and production
activity has increased substantially. Day rates in the Arabian Gulf and offshore
Southeast Asia, which the Company believes have been among the lowest in the
world, have been gradually increasing as a result of increases in exploration
and production activity in these areas. The Company expects that increasing
demand in its international markets, combined with continuing consolidation in
such markets, will result in higher day rates. See "Risk Factors -- Dependence
on Oil and Gas Industry; Cyclical Industry Conditions" and "Business -- The
Industry -- Marine Support Services."

Offshore and Harbor Towing. The Company's 30 tugs provide offshore towing
services and harbor assistance primarily to tankers, barges, containerships,
other cargo vessels, and cruise ships calling at Port Everglades, Tampa, and
Port Canaveral, Florida, where the Company is the sole provider of commercial
tug services, and Mobile, Alabama, where the Company is a leading provider of
such services. The Company's tug fleet includes eight technologically advanced
tractor tugs capable of providing escort services to tankers and other large
vessels and specialized deepwater services to the offshore energy industry.

MARINE TRANSPORTATION SERVICES

Chemical Transportation. The total capacity of the Company's five chemical
carriers represents approximately 47% of the capacity of the domestic specialty
chemical carrier fleet, and four of the vessels are among the last independently
owned chemical carriers scheduled to be retired under the Oil Pollution Act of
1990 ("OPA 90"). Two of the carriers currently transport industrial chemicals in
bulk parcel lots, and the other three carriers currently transport petroleum
products and petrochemicals, primarily for major oil and chemical companies. The
Company believes that domestic energy and chemical transportation freight rates
will increase within the next three to five years and continue thereafter, as
the supply of vessels eligible to carry petroleum products diminishes as a
result of mandatory retirement imposed by OPA 90.

Petroleum Product Transportation. The Company's petroleum product
transportation fleet is currently comprised of the Seabulk Challenger, a 39,300
dwt petroleum product carrier, and a fleet of ten towboats and 16 fuel barges.
Since 1975, the Seabulk Challenger has operated under successive charters to
Shell Oil Company ("Shell") carrying refined petroleum products from Shell's
refineries in Louisiana to Florida. The towboat and barge fleet is engaged in
the transportation of residual and diesel fuels along the Atlantic intracoastal
waterway and in the St. Johns River in Florida, primarily for a major Florida
utility.

The Company also owns a minority interest in five 45,300 dwt double-hull
petroleum product carriers currently under construction for delivery during 1999
and 2000. The product carriers are intended to serve the domestic market
currently served by single-hull tankers whose retirement is mandated by OPA 90.
The Company, whose ownership is currently 2.4%, has options to purchase up to an
additional 72.6% ownership interest in the vessels for a total estimated cost of
up to $32.0 million.

The Company's principal office is located at 2200 Eller Drive, Fort
Lauderdale, Florida 33316, and its telephone number is (954) 523-2200.
5
<PAGE> 7

THE OFFERING

Class A Common Stock
Offered.................. 5,000,000 shares

Common Stock to be
Outstanding After the
Offering:
Class A Common Stock..... 17,373,236 shares(1)
Class B Common Stock..... 2,906,719 shares
-----------------

Total...................... 20,279,955 shares
=================

Voting Rights.............. The Company's outstanding capital stock consists of
Class A Common Stock and Class B Common Stock
(together, the "Common Stock"). Each holder of
Class A Common Stock is entitled to one vote per
share and each holder of Class B Common Stock is
entitled to ten votes per share on all matters
submitted to a vote of shareholders. Except as
required by law and the Company's Articles of
Incorporation, holders of the Class A Common Stock
and the Class B Common Stock vote together as a
single class. See "Description of Capital Stock."
After the Offering, the holders of the Class A
Common Stock and the Class B Common Stock will have
37.4% and 62.6% of the voting power of the Common
Stock, respectively (38.4% and 61.6%, respectively,
if the Underwriters' over-allotment option is
exercised in full).

Upon completion of the Offering, J. Erik Hvide, the
Company's Chairman, together with certain trusts of
which he is the trustee (the "Hvide Trusts"), and a
group of investors (the "Investor Group") that
purchased debt and equity securities of the Company
in September 1994 each will own shares representing
32.2% of the voting power of all Common Stock
(31.7% if the Underwriters' over-allotment option
is exercised in full). In addition, the Hvide
Family (as defined herein) and the Investor Group
have the right to nominate eight and two persons,
respectively, to the Company's Board of Directors.
The Company's Articles of Incorporation require
that certain significant transactions be approved
by holders of 95% of the Class B Common Stock,
which is held entirely by members of the Hvide
Family and the Investor Group. See "Risk
Factors -- Control by Current Shareholders;
Shareholders Agreement; Restrictions on Corporate
Actions; Anti-takeover Effect of Dual Classes of
Stock and Certain Other Provisions" and
"Description of Capital Stock -- Certain Provisions
of Articles of Incorporation and By-Laws" and
"-- Shareholders Agreement."

Condition to Closing....... Completion of the Offering is contingent upon the
consummation of the Care acquisition.

Use of Proceeds to the
Company.................. To repay a portion of the aggregate indebtedness
incurred to finance recent and pending
acquisitions. See "Use of Proceeds."

Nasdaq National Market
Symbol................... HMAR
- ------------------------------

(1) Excludes 860,675 shares of Class A Common Stock reserved for issuance upon
exercise of currently outstanding options and 484,988 shares reserved for
issuance under the Company's Employee Stock Purchase Plan.
6
<PAGE> 8

SUMMARY CONSOLIDATED HISTORICAL AND
PRO FORMA FINANCIAL DATA

The summary consolidated financial data presented below should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company, "Selected Historical and Pro Forma Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Pro Forma Condensed Consolidated Financial Statements"
included elsewhere in this Prospectus. The summary unaudited pro forma statement
of operations data for the year ended December 31, 1996 give pro forma effect to
the August 1996 initial public offering (the "IPO") and the application of the
net proceeds therefrom, the acquisition of three chemical carriers and eight
supply boats in August 1996 and nine crew boats in January and February 1996,
the GMMOS and Bay acquisitions, the pending Care acquisition, the repayment of
certain indebtedness and the Offering, as if all such transactions had occurred
on January 1, 1996. Such pro forma data for the nine months ended September 30,
1997 give pro forma effect to the GMMOS, Bay and Care acquisitions, the
repayment of certain indebtedness and the Offering as if such transactions had
occurred on January 1, 1997. Such pro forma data are presented for illustrative
purposes only and do not purport to represent what the Company's results
actually would have been if such events had occurred at the dates indicated, nor
do such data purport to project the results of operations for any future period
or as of any future date. Such pro forma data do not give pro forma effect to
the acquisition of 20 marine support vessels from December 1996 through
September 1997, the Company's second public offering in February 1997 (the
"Follow-on Offering"), the offering by Hvide Capital Trust (the "Trust Preferred
Offering") of 6 1/2% Trust Convertible Preferred Securities in June 1997 (the
"Trust Preferred Securities"), or the IMS and Selat acquisitions. The summary
balance sheet data at September 30, 1997, as adjusted, give pro forma effect to
the Bay and Care acquisitions, the Offering, and the application of the
estimated net proceeds therefrom as if these transactions had occurred on
September 30, 1997. The results for the nine months ended September 30, 1997 are
not necessarily indicative of the results to be expected for the full year.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------- --------------------------------
PRO FORMA PRO FORMA
1994 1995 1996 1996 1996 1997 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ $ 49,792 $70,562 $109,356 $215,692 $ 72,130 $ 142,853 $209,854
Income from operations............. 5,838 11,072 20,770 24,069 12,877 35,130 47,357
Interest expense, net.............. 5,302 11,460 11,631 28,572 8,751 4,529 16,023
Income (loss) before provision for
(benefit from) income taxes and
extraordinary item............... 547 (362) 9,576 (4,755) 4,325 28,508 28,681
Income (loss) before extraordinary
item............................. 358 (360) 6,033 (1,200) 2,709 17,846 17,782
Loss on extinguishment of debt,
net(1)........................... -- -- (8,108) (8,016) (2,132) --
-------- ------- -------- -------- -------- --------- --------
Net income (loss).................. $ 358 $ (360) $ (2,075) $ (3,555) $ (5,307) $ 15,714 $ 17,782
======== ======= ======== ======== ======== ========= ========
EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary
item(2).......................... $ 0.03 $ (0.14) $ 1.04 $ (0.32) $ 0.68 $ 1.19 $ 0.89
Net income (loss)(2)............... 0.03 (0.14) (0.36) -- (1.32) 1.05 --
Weighted average number of common
shares and common share
equivalents outstanding(3)....... 5,302 2,535 5,818 10,960 4,018 14,974 20,248
EARNINGS (LOSS) PER COMMON SHARE
ASSUMING FULL DILUTION:
Income before extraordinary
item(2).......................... $ 0.06 $ 0.12 $ 0.99 $ (0.26) $ 0.68 $ 1.16 $ 0.88
Net income (loss)(2)............... 0.06 0.12 (0.23) -- (1.32) 1.03 --
Weighted average number of common
shares and common share
equivalents outstanding(3)....... 5,616 3,779 6,645 11,787 4,018 16,476 21,551

OTHER FINANCIAL DATA:
EBITDA(4).......................... 10,338 17,380 30,600 62,005 18,992 48,151 77,647
NET CASH PROVIDED BY (USED IN):
Operating activities............... 2,858 3,948 22,584 11,038 18,137
Investing activities............... (39,815) (8,066) (84,354) (62,452) (137,757)
Financing activities............... 41,249 805 68,337 53,962 117,793
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 24,362 $ 7,318
Total assets................................................ 433,267 777,510
Convertible preferred securities of subsidiary trust........ 115,000 115,000
Long-term obligations....................................... 53,476 228,432
Stockholders' and minority partners' equity................. 215,872 361,529
</TABLE>

7
<PAGE> 9

SUMMARY HISTORICAL VESSEL AND OPERATING DATA

The following table presents information with respect to the Company's
domestic operations. Corresponding data with respect to the Company's
international operations are not presented in light of the relatively short
period for which its international operations have been significant.

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
VESSEL DATA:
Marine Support Services
Supply boats.............................................. 14 14 21 19 27
Crew boats(5)............................................. 21 28 36 31 41
Tugs...................................................... 10 11 16 14 16
Marine Transportation Services
Chemical carriers......................................... 2 2 5 5 5
Product carriers.......................................... 1 1 1 1 1
Towboats and barges....................................... 18 23 23 23 27
------- ------- ------- ------- -------
Total............................................... 66 79 102 93 117
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Supply boats:
Average vessel day rates(6)............................... $ 3,195 $ 3,023 $ 4,748 $ 4,276 $ 7,097
Average vessel utilization(7)............................. 84% 81% 94% 95% 89%
Crew boats:
Average vessel day rates(6)............................... $ 1,421 $ 1,434 $ 1,533 $ 1,490 $ 1,946
Average vessel utilization(7)............................. 88% 85% 94% 93% 94%
Tugs:
Total ship docking tug jobs............................... 8,740 9,233 9,034 7,150 7,126
Total offshore and ship docking tug revenue (in
thousands).............................................. $11,140 $12,582 $13,951 $10,234 $12,993
Chemical and product carriers:
Time charter equivalents(8)............................. $24,751 $25,629 $25,276 $25,551 $25,863
</TABLE>

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

(1) Reflects the loss on the extinguishment of debt from a portion of the
proceeds of the IPO and Follow-on Offering, net of applicable income taxes
of $1,405,000 for the year ended December 31, 1996 and nine months ended
September 30, 1996 and $1,252,000 for the nine months ended September 30,
1997.

(2) For the purpose of calculating earnings per share for the year ended
December 31, 1994, historical income available to common shareholders has
been reduced for dividends on Hvide's Class A Preferred Stock of $222,000.
The Class A Preferred Stock was redeemed on September 30, 1994. For the
purpose of calculating earnings per common share assuming full dilution for
the historical and pro forma year ended December 31, 1996, income (loss)
before extraordinary item has been adjusted for interest expense of $515,000
related to the assumed conversion of a portion of the Junior Notes (as
defined herein) into shares of Common Stock. For the purpose of calculating
earnings per common share assuming full dilution for the historical and pro
forma nine months ended September 30, 1997, income (loss) before
extraordinary item has been adjusted for interest expense of $1,246,000
related to the assumed conversion of convertible preferred securities of a
subsidiary trust.

(3) For the year ended December 31, 1994, the weighted average number of common
shares and common share equivalents assumes the conversion of the Class B
Preferred Stock into shares of Common Stock. The Class B Preferred Stock was
redeemed on September 30, 1994. For the years ended December 31, 1994, 1995
and 1996 and the nine months ended September 30, 1996, shares outstanding
assuming full dilution reflects the assumed conversion of a portion of
certain indebtedness owed to the Investor Group (the "Junior Notes") into
shares of Common Stock. The Junior Notes were issued in September 1994 and
converted into shares of Common Stock in September 1996. For the nine months
ended September 30, 1997, shares outstanding assuming full dilution reflects
the assumed conversion of the Trust Preferred Securities. Pro forma shares
reflect the weighted average number of common shares giving effect to the
issuance of 141,760 shares of Class A Common Stock in partial payment for
the GMMOS vessels. They do not include 484,996 shares reserved for issuance
under the Company's Employee Stock Purchase Plan, 29,353 shares of Class A
Common Stock reserved for issuance under the Company's Board of Directors
Stock Compensation Plan, and 65,000 shares of Class A Common Stock reserved
for issuance under the Company's Key Employee Stock Compensation Plan. In
addition, historical and pro forma shares for the nine months ended
September 30, 1997 reflect the weighted average number of common shares from
the issuance of 4,000,000 shares of Class A Common Stock in the Follow-on
Offering.

(4) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not required by generally accepted
accounting principles, should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows from operations as a measure of liquidity, and
does not represent funds available for management's use. The Company's
EBITDA may not be comparable to similarly titled measures reported by other
companies.

(5) For the years ended December 31, 1994, 1995 and 1996 and the nine months
ended September 30, 1996 and 1997, the crew boat vessel data include two
utility boats. However, the crew boat operating data exclude the results of
the two utility boats.

(6) Average day rates are calculated based on vessels operating domestically by
dividing total vessel revenue by the total number of days of vessel
utilization.

(7) Utilization is based on vessels operating domestically and determined on the
basis of a 365-day year. Vessels are considered utilized when they are
generating charter revenue.

(8) Time charter equivalents are calculated by deducting total voyage expenses
from total voyage revenue and dividing the result by the total days per
voyage.
8
<PAGE> 10

RISK FACTORS

In addition to the information contained elsewhere in this Prospectus,
prospective purchasers of the Class A Common Stock should carefully consider the
following factors in evaluating an investment in the Company.

DEPENDENCE ON OIL AND GAS INDUSTRY; CYCLICAL INDUSTRY CONDITIONS

The Company's current business and operations are substantially dependent
upon conditions in the oil and gas industry, particularly the expenditures by
oil and gas companies for offshore exploration and production activities. The
demand for offshore energy support and transportation services is directly
influenced by oil and gas prices, expectations concerning future prices, the
cost of producing and delivering oil and gas, government regulation, local and
international political and economic conditions, including the ability of the
Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and prices, the level of production by non-OPEC countries, and
the policies of various governments regarding exploration and development of
their oil and gas reserves. There can be no assurance that current levels of
expenditures for offshore exploration and production will be maintained or that
demand for the Company's services will reflect the level of such expenditures.

Historically, the marine support and transportation services industry has
been cyclical, with corresponding volatility in profitability and vessel values.
This industry cyclicality has been due to changes in the level of general
economic growth as well as changes in the supply of and demand for vessel
capacity, which impact charter rates and vessel values. The supply of vessels is
influenced by the number of vessels constructed and retired and by government
and industry regulation of maritime transportation practices. The Company's
offshore energy support services are dependent upon the levels of activity in
offshore oil and natural gas exploration, development, and production, which are
affected by oil and natural gas prices. Utilization of the Company's towboat and
fuel barge fleet is also partly dependent on such prices as well as energy
utilization, which is partly a function of the weather. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- The Industry -- Marine Support Services -- Offshore Energy
Support."

RISKS OF ACQUISITION STRATEGY; MANAGEMENT OF GROWTH

A key component of the Company's business strategy is to pursue selected
acquisitions of complementary assets and businesses. The Company has completed a
number of significant acquisitions since 1994 and has rapidly expanded its
international operations since May 1997, including the pending acquisition of 36
vessels from Care. No assurance can be given that the Company will be able to
continue to identify additional suitable acquisition opportunities, negotiate
acceptable terms, obtain financing for acquisitions on satisfactory terms or
successfully acquire identified targets. Possible future acquisitions may be for
purchase prices significantly higher than those paid for recent and pending
acquisitions. Certain risks are inherent in an acquisition strategy, such as
increasing leverage and debt service requirements, which could adversely affect
the Company's operating results.

The success of any completed acquisition will depend in part on the
Company's ability to integrate effectively the acquired business into the
Company. The Company's recent rapid growth and the process of integrating the
acquired operations has placed, and is expected to continue to place,
substantial demands on the Company's management and operational resources. The
Company's failure to achieve consolidation savings, to incorporate the acquired
businesses and assets into its existing operations successfully, or to minimize
any unforeseen operational difficulties could have a material adverse effect on
the Company. In addition, the assumption of liabilities, whether disclosed or
undisclosed, associated with acquired businesses could have a material adverse
effect on the Company. See "Business -- Strategy."

RISKS OF INTERNATIONAL OPERATIONS

The Company derives substantial revenue from international operations. The
Company currently operates 124 vessels in international waters, primarily the
Arabian Gulf and to a lesser extent the waters offshore West

9
<PAGE> 11

Africa and Southeast Asia, and other international locations. Risks associated
with operating in international markets include vessel seizure, foreign exchange
restrictions and currency fluctuations, foreign taxation, political instability,
foreign and domestic monetary and tax policies, expropriation, nationalization,
nullification, modification or renegotiation of contracts, war and civil
disturbances or other risks that may limit or disrupt markets. Additionally, the
ability of the Company to compete in the international marine support market may
be adversely affected by foreign government regulations that favor or require
the awarding of contracts to local persons, or by regulations requiring foreign
persons to employ citizens of, or purchase supplies from, a particular
jurisdiction. Further, the Company's foreign subsidiaries may face
governmentally imposed restrictions from time to time on their ability to
transfer funds to the Company. No predictions can be made as to what foreign
governmental regulations may be applicable to the Company's operations in the
future.

AGE OF OFFSHORE ENERGY SUPPORT FLEET

Because of overcapacity within the marine support services industry on a
worldwide basis, there has been no significant construction of offshore energy
support vessels since 1983. As of September 30, 1997, the average age of the
Company's offshore energy support vessels (based on the date of construction)
was approximately 17 years. Management believes that after a vessel has been in
service for approximately 30 years, repair, vessel certification, and
maintenance costs may become no longer economically justifiable. There can be no
assurance that the Company will be able to maintain its fleet by extending the
economic life of existing vessels through major refurbishment or by acquiring
new or used vessels. See "Business -- The Company."

HAZARDOUS ACTIVITIES

The operation of ocean-going vessels carries an inherent risk of
catastrophic marine disasters and property losses caused by adverse weather
conditions, mechanical failures, human error, and other circumstances or events.
In addition, the transportation of petroleum and toxic chemicals is subject to
the risk of spills and environmental damage. Any such event could have a
material adverse effect on the Company. While the Company carries insurance to
protect against most of the accident-related risks involved in the conduct of
its business, including environmental damage and pollution insurance coverage,
there can be no assurance that all risks are adequately insured against, that
any particular claim will be paid, or that the Company will be able to procure
adequate insurance coverage at commercially reasonable rates in the future. In
particular, more stringent environmental regulations may result in increased
costs for, or the lack of availability of, insurance against the risks of
environmental damage or pollution.

ENVIRONMENTAL RISK AND REGULATIONS

Current laws and regulations could impose substantial liability on the
Company for damages, remediation costs, and penalties associated with oil or
hazardous-substance spills or other discharge into the environment involving the
Company's vessel operations. Shoreside industrial operations, including a small
marine maintenance and drydocking facility owned and operated by the Company,
are also subject to federal, state, and local environmental laws and
regulations. Amendment of these laws and regulations to impose more stringent
requirements would likely result in increased maintenance and operating
expenses. In addition, OPA 90 requires tanker owners and operators to establish
and maintain with the U.S. Coast Guard evidence of financial responsibility, as
demonstrated by a certificate of financial responsibility ("COFR"), with respect
to potential oil spill liability, which the Company and most of its competitors
currently satisfy by virtue of self-insurance or third-party insurance.
Additional laws and regulations may be adopted that could limit the ability of
the Company to do business or increase the cost of its doing business and could
have a material adverse effect on its operations. See "Business -- Environmental
and Other Regulation."

LEVERAGE AND DEBT SERVICE

As of September 30, 1997, after giving effect to the Bay and Care
acquisitions and the Offering and the application of the estimated net proceeds
therefrom, the Company would have had outstanding indebtedness

10
<PAGE> 12

in the aggregate principal amount of approximately $257.2 million and
significant debt service obligations, plus additional payments of interest on
$115.0 million of debentures relating to the Trust Preferred Securities that are
not classified as indebtedness in the Company's financial statements. In
addition, the Company may incur additional indebtedness in the future.

The Company's high level of indebtedness will have several important
effects on its future operations, including the following: (i) the Company will
have significant cash requirements to service debt, thereby reducing funds
available for operations and future business opportunities and increasing the
Company's vulnerability to adverse general economic and industry conditions;
(ii) the Company may be restricted in the future from obtaining additional
financing, whether for acquisitions, working capital, or other purposes; and
(iii) the Company will be required to comply with certain financial covenants
and other restrictions contained in the debt instruments.

The Company's ability to meet its debt service obligations will depend on
its future operating performance and financial results, which are subject to
economic, financial, competitive, and other factors beyond its control,
including fluctuations in charter rates and vessel values, government and
industry regulation, and levels of activity in offshore oil and gas exploration.
See "-- Dependence on Oil and Gas Industry; Cyclical Industry Conditions." There
can be no assurance that the Company's business will generate sufficient cash
flow from operations in the future to service its debt and make necessary
capital expenditures. If the Company is unable to generate sufficient cash flow
in the future, the Company may be required to refinance all or a portion of its
existing debt, to sell assets, or to obtain additional financing. There can be
no assurance that any such refinancing would be possible or that any such sales
of assets or additional financing could be achieved. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

COMPETITION

The Company operates in a highly competitive industry. In addition to
price, service, and reputation, which affect all of the Company's operations,
the principal competitive factors for offshore support vessel fleets include
operating conditions and intended use (both of which determine the suitability
of vessel types), complexity of maintaining logistical support, and the cost of
transferring equipment from one market to another. Some of the Company's
competitors have significantly greater financial resources than the Company. See
"Business -- Competition."

POTENTIAL LOSS OF JONES ACT PROTECTION

A substantial portion of the Company's operations is conducted in the U.S.
domestic trade, which, by virtue of the U.S. coastwise laws (often referred to
collectively as the "Jones Act"), is restricted to vessels built in the United
States, owned and crewed by U.S. citizens, and registered under U.S. law. There
have been repeated attempts to repeal the coastwise laws, and efforts to effect
such repeal are expected to continue in the future. The Company is already
subject to vigorous competition and potential additional competition in all
aspects of its operations, including competition by companies with financial
resources greater than those of the Company which could be committed to the
construction of new vessels in excess of market requirements. Repeal of the
coastwise laws would result in additional competition from vessels built in
lower-cost foreign shipyards and manned by foreign nationals accepting lower
wages than U.S. citizens and could have a material adverse effect on the
Company.

MANDATED REMOVAL OF VESSELS FROM JONES ACT TRADE

OPA 90 establishes a phase-out schedule, depending upon vessel size and
age, for single-hull vessels carrying crude oil and petroleum products which, in
the case of the Company's petroleum products carrier (Seabulk Challenger) and
five chemical carriers (HMI Astrachem, Seabulk Magnachem, HMI Dynachem, HMI
Petrochem and Seabulk America), are the years 2003, 2000, 2007, 2011, 2011, and
2015, respectively; and in the case of some of its fuel barges is the year 2015.
As a result of this requirement, these vessels will be prohibited from
transporting petroleum products in U.S. waters after their respective phase-out
dates. There

11
<PAGE> 13

can be no assurance that future tanker market rates will be sufficient to
support construction of replacement vessels. Although the Company's remaining
vessels are not subject to mandatory retirement, and the Company employs what it
believes to be a rigorous maintenance program for all its vessels, there can be
no assurance that the Company will be able to maintain its fleet by extending
the economic lives of existing vessels or acquiring new or used vessels. See
"Business -- Company Operations -- Marine Transportation Services" and
"-- Environmental and Other Regulation."

RISK OF LOSS AND INSURANCE

The business of the Company is affected by a number of risks, including the
mechanical failure of its vessels, collisions, vessel loss or damage, cargo loss
or damage, hostilities, and labor strikes. In addition, the operation of any
vessel is subject to the inherent possibility of a catastrophic marine disaster,
including oil, fuel, or chemical spills and other environmental mishaps, as well
as other liabilities arising from owning and operating vessels. Any such event
may result in loss of revenues and increased costs and other liabilities.
Although the Company's losses from such hazards have not historically exceeded
its insurance coverage, there can be no assurance that this will continue to be
the case.

OPA 90, by imposing virtually unlimited liability upon vessel owners,
operators, and certain charterers for certain oil pollution accidents in the
United States, has made liability insurance more expensive and has also prompted
insurers to consider reducing available liability coverage. See
"Business -- Environmental and Other Regulation." While the Company maintains
insurance, there can be no assurance that all risks are adequately insured
against particularly in light of the virtually unlimited liability imposed by
OPA 90, that any particular claim will be paid, or that the Company will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. Because it maintains mutual insurance, the Company is subject to funding
requirements and coverage shortfalls in the event claims exceed available funds
and reinsurance and to premium increases based on prior loss experience. Any
such shortfalls could have a material adverse impact on the Company.

CONTROL BY CURRENT SHAREHOLDERS; SHAREHOLDERS AGREEMENT; RESTRICTIONS ON
CORPORATE ACTIONS; ANTI-TAKEOVER EFFECT OF DUAL CLASSES OF STOCK AND CERTAIN
OTHER PROVISIONS

The Common Stock is divided into Class A Common Stock, of which each share
is entitled to one vote with respect to all matters submitted to shareholder
vote, and Class B Common Stock, of which each share is entitled to ten votes
with respect to such matters. J. Erik Hvide and the Hvide Trusts together
beneficially own 10,000 shares of Class A Common Stock and 1,496,466 shares of
Class B Common Stock, and the Investor Group beneficially owns 872,124 shares of
Class A Common Stock and 1,410,253 shares of Class B Common Stock. Upon
completion of the Offering, Mr. Hvide (together with the Hvide Trusts) and the
Investor Group each will own shares that represent 32.2% of the voting power of
all Common Stock. Accordingly, Mr. Hvide and the Investor Group, acting
together, are able to elect a majority of the Company's directors and to
determine the disposition of all matters submitted to a vote of the Company's
shareholders.

In addition, J. Erik Hvide and the Investor Group are party to an agreement
that currently gives them the right to nominate eight and two persons,
respectively, to the Company's Board of Directors. Each share of Class B Common
Stock is convertible by its holder into one share of Class A Common Stock at any
time, and automatically converts into Class A Common Stock if held by persons
other than the Hvide Family and members of the Investor Group. See "Management"
and "Description of Capital Stock -- Certain Provisions of Articles of
Incorporation and Bylaws." In addition, so long as the Investor Group owns
specified percentages of the outstanding Class B Common Stock, certain
significant transactions will require the approval of holders of 95% of the
Class B Common Stock, and the appointment of a new chief executive officer will
require approval of holders of 75% of the Class B Common Stock. See "Description
of Capital Stock -- Certain Provisions of Articles of Incorporation and Bylaws."

Such control by Mr. Hvide and the Investor Group may also have the effect
of discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-

12
<PAGE> 14

current market prices. Further, pursuant to the Company's Articles of
Incorporation, the Board of Directors is divided into three classes of directors
serving staggered three-year terms and, consequently, it would likely require
two annual meetings rather than one for the shareholders to replace a majority
of the Board of Directors.

RESTRICTION ON FOREIGN OWNERSHIP

In order to maintain the eligibility of the Company to operate vessels in
the U.S. domestic trade, 75% of the outstanding capital stock and voting power
of the Company is required to be held by U.S. citizens. See
"Business -- Environmental and Other Regulation." Although the Company's
Articles of Incorporation contain provisions limiting non-citizen ownership of
its capital stock (see "Description of Capital Stock -- Foreign Ownership
Restrictions"), the Company could lose its ability to conduct operations in the
U.S. domestic trade if such provisions prove unsuccessful in maintaining the
required level of citizen ownership. Such loss would have a material adverse
effect on the Company.

KEY PERSONNEL

The Company is materially dependent upon the continued services of key
members of its management, including its Chairman, President, and Chief
Executive Officer, J. Erik Hvide. The loss of one or more key members of
management could have a material adverse effect on the Company. See
"Management."

POSSIBLE VOLATILITY OF STOCK PRICE

There may be significant volatility in the market price for the Common
Stock. Quarterly operating results of the Company, changes in general conditions
in the economy, the financial markets, or the marine support and transportation
services industry, or other developments affecting the Company or its
competitors, could cause the market price of the Common Stock to fluctuate
substantially. In addition, in recent years, the stock market and, in
particular, the marine support and transportation services industry segment, has
experienced significant price and volume fluctuations. This volatility has
affected the market prices of securities issued by many companies for reasons
unrelated to their operating performance. In addition, the Company's operating
results in future periods may be below the expectations of securities analysts
and investors. In such event, the price of the Common Stock would likely
decline, perhaps substantially.

RESTRICTIVE COVENANTS UNDER DEBT INSTRUMENTS

The terms of the Credit Facility and Term Loan (i) require the Company to
meet certain financial tests, including the maintenance of minimum leverage
ratios, debt service coverage ratios, and indebtedness to net worth ratios; (ii)
limit the creation or incurrence of certain liens; (iii) limit the incurrence of
additional indebtedness; (iv) restrict the Company from making certain
investments; (v) restrict certain payments, including dividends, with respect to
shares of any class of capital stock; (vi) restrict modification of the terms of
the Trust Preferred Securities, and in certain circumstances the repayment,
redemption, or repurchase of the Trust Preferred Securities; and (vii) limit
certain corporate acts of the Company, such as making certain dispositions of
assets, and entering into certain types of business transactions, including
certain mergers and acquisitions. Such provisions could adversely affect the
Company's ability to continue to pursue its strategy of growth through
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" and "Description
of Certain Indebtedness -- Credit Facility."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could have an adverse effect on the market
price of the stock. Subject to an agreement that restricts their sale for 90
days following the date of this Prospectus, an aggregate of 3,841,840 shares of
Common Stock owned by executive officers and directors of the Company, the Hvide
Trusts, and the Investor Group are eligible for public sale subject to volume
and other limitations of Rule 144 under the Securities Act.

13
<PAGE> 15

The Investor Group has indicated its intention to sell all of its shares as soon
as practicable. See "Shares Eligible for Future Sale." Moreover, the Company may
issue shares of Common Stock in connection with future acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Strategy."

LEGAL PROCEEDINGS

The Company's chemical carrier Seabulk America is the subject of a pending
legal proceeding which, if determined adversely to the Company, could have a
material adverse effect on the Company. See "Business -- Legal Proceedings."

FORWARD-LOOKING STATEMENTS

This Prospectus includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"). All statements, other than
statements of historical fact, included in this Prospectus that address
activities, events, or developments that the Company expects, projects,
believes, or anticipates will or may occur in the future, including such matters
as future levels of day rates for offshore energy support vessels, future demand
for domestic chemical and petroleum product carriers, future operating results
of the Company, future capital expenditures and investments in the acquisition
and refurbishment of vessels, repayment of debt, business strategies, future
acquisitions, expansion and growth of operations and other such matters, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by management of the Company in light of its experience and
its perception of historical trends, current conditions, expected future
developments, and other factors it believes are appropriate in the
circumstances. Such statements are subject to a number of assumptions, risks and
uncertainties, including the risk factors discussed herein, general economic and
business conditions, oil and gas prices, foreign exchange and currently
fluctuations, the business opportunities (or lack thereof) that may be presented
to and pursued by the Company, changes in laws or regulations and other factors,
many of which are beyond the control of the Company. Prospective investors are
cautioned that such forward-looking statements are not guarantees of future
performance and that actual results or developments may differ materially from
those projected in such statements.

14
<PAGE> 16

THE CARE ACQUISITION

On November 15, 1997, the Company entered into a definitive agreement to
purchase a fleet of 36 offshore energy support vessels from Care, consisting of
22 deepwater-capable anchor handling tug/supply vessels, seven anchor handling
tugs, three supply boats, three crew boats, and one survey vessel.
Simultaneously with the closing of the transaction, the Company will enter into
a management agreement with an affiliate of Care, pursuant to which the
affiliate will continue to manage the operations of the fleet, in exchange for a
per diem management fee per vessel, for a minimum term of six months which may
be extended up to an additional 30 months, at the Company's option.

The aggregate purchase price for the fleet is $284.2 million, all of which
will be paid in cash funded with borrowings under the Term Loan. As currently
deployed, the fleet consists of 21 vessels offshore West Africa, eight vessels
offshore Southeast Asia, two vessels in the North Sea, two vessels offshore
Argentina, two vessels offshore South Africa, and one vessel in the Arabian
Gulf. The closing of the transaction is subject to the Company's inspection of
the vessels. Depending upon the nature of any deficiencies discovered upon such
inspection, the parties may negotiate a reduction in the purchase price or the
seller may eliminate one or more vessels having such deficiencies from the
transaction, with a corresponding reduction of the purchase price. The Offering
is conditioned upon consummation of the Care acquisition, which is expected to
occur in early January 1998.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Class A Common Stock
offered hereby (based upon an assumed offering price of $30.75, the last
reported sales price of the Class A Common Stock on December 9, 1997) after
deducting discounts and commissions and estimated offering expenses, are
estimated to be approximately $146.0 million. Of such net proceeds, $100.0
million will be used to repay a portion of the Term Loan and the balance will be
used to reduce the amount outstanding under the Credit Facility. The
indebtedness outstanding under both the Term Loan and the Credit Facility was or
will have been incurred largely to finance the acquisition of Bay, the
acquisition of the Care, IMS, Selat, and MPL vessels, and certain new vessel
construction and refurbishment projects. See "Business -- Recent and Pending
Acquisitions and New Vessel Construction." Principal payments under the Term
Loan, which allows prepayment of $150.0 million without penalty, are due in 28
equal quarterly installments beginning June 30, 1998 and continuing through
March 31, 2005. Borrowings under the Term Loan bore interest at % on
December , 1997. The Credit Facility consists of a revolving line of credit
that matures September 30, 2002. Borrowings under the Credit Facility bore
interest at 6.1% on November 30, 1997. See "Description of Certain
Indebtedness."

If the Underwriters' over-allotment option is exercised in full, the
Company intends to use the proceeds therefrom further to reduce outstanding
indebtedness under the Credit Facility and for general corporate purposes.

15
<PAGE> 17

PRICE RANGE OF THE CLASS A COMMON STOCK

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

<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
1996
Third Quarter (commencing August 9)....................... $13 7/8 $11
Fourth Quarter............................................ 24 1/4 12 7/8

1997
First Quarter............................................. 28 5/8 21 1/8
Second Quarter............................................ 25 3/4 14 7/8
Third Quarter............................................. 36 1/2 22
Fourth Quarter (through December 9)....................... 35 11/16 27 1/8
</TABLE>

The last reported sale price of the Class A Common Stock, as reported by
the Nasdaq National Market on December 9, 1997, was $30 3/4 per share. As of
December 9, 1997, there were 96 holders of record of Class A Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends on its Common Stock since its
formation. It presently intends to retain its earnings for use in its business
and therefore does not anticipate paying any cash dividends in the foreseeable
future. The payment of any future dividends will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition and requirements, restrictions in financing
agreements, business conditions, and other factors. The Company's ability to pay
dividends or make distributions to its shareholders is also limited by the terms
of the Credit Facility and the Term Loan. See "Description of Certain
Indebtedness -- Credit Facility" and "-- Term Loan."

16
<PAGE> 18

CAPITALIZATION

The following table sets forth the actual consolidated capitalization of
the Company as of September 30, 1997, and such capitalization as adjusted to
give effect to the Bay and Care acquisitions and as further adjusted to give
effect to the Offering and the application of the estimated net proceeds
therefrom. The information presented below should be read in conjunction with
the Company's consolidated financial statements and pro forma consolidated
financial statements and the notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------------------------
AS FURTHER
AS ADJUSTED ADJUSTED FOR
ACTUAL FOR ACQUISITIONS THE OFFERING
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt.......................... $ 8,381 $ 28,730 $ 28,730
======== ======== ========
Long-term debt (excluding current portion)(1)
Credit Facility.......................................... 17,000 53,500 13,064
Term Loan................................................ -- 264,485 164,485
Title XI debt............................................ 23,756 38,163 38,163
Notes payable............................................ 6,408 6,408 6,408
Obligations under capital leases......................... 6,312 6,312 6,312
-------- -------- --------
Total long-term debt.................................. 53,476 368,868 228,432
Company-obligated mandatorily redeemable preferred
securities issued by a consolidated subsidiary(2)........ 115,000 115,000 115,000
Minority partners' equity in subsidiaries.................. 818 818 818
Stockholders' equity:
Class A Common Stock, par value $0.001; 100,000,000
shares authorized; 12,045,568 shares issued and
outstanding, 18,045,568 shares to be issued and
outstanding........................................... 12 12 17
Class B Common Stock, par value $0.001; 5,000,000 shares
authorized; 3,181,936 shares issued and outstanding... 3 3 3
Additional paid-in capital............................... 195,398 195,398 341,424
Retained earnings........................................ 19,641 19,641 19,267
-------- -------- --------
Total stockholders' equity................................. 215,054 215,054 360,711
-------- -------- --------
Total minority partners' equity in subsidiaries and
stockholders' equity..................................... 215,872 215,872 361,529
-------- -------- --------
Total capitalization....................................... $384,348 $699,740 $704,961
======== ======== ========
</TABLE>

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

(1) Does not include an aggregate of $56.5 million of indebtedness incurred
after September 30, 1997 under the Credit Facility and the Term Loan related
to the IMS and Selat acquisitions. See "Description of Certain Indebtedness"
and Note 2 to the Company's consolidated financial statements for a
description of long-term debt.

(2) The sole assets of the subsidiary, Hvide Capital Trust, are Debentures (as
defined herein) having an aggregate principal amount of $115.0 million. Upon
redemption or maturity of the Debentures, the Trust Preferred Securities
will be mandatorily redeemable.

17
<PAGE> 19

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus. The results for
the nine months ended September 30, 1997 are not necessarily indicative of the
results to be expected for the full year.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue.............................................. $39,639 $41,527 $49,792 $70,562 $109,356 $72,130 $142,853
Operating expenses................................... 24,602 24,032 29,873 40,664 63,777 42,089 77,134
Overhead expenses.................................... 6,778 6,176 9,581 12,518 14,979 11,049 17,568
Depreciation and amortization........................ 4,106 4,735 4,500 6,308 9,830 6,115 13,021
------- ------- ------- ------- -------- ------- --------
Income from operations............................... 4,153 6,584 5,838 11,072 20,770 12,877 35,130
Interest expense, net................................ 3,993 3,412 5,302 11,460 11,631 8,751 4,529
Other income (expense)............................. 8 519 11 26 437 199 (2,093)
------- ------- ------- ------- -------- ------- --------
Income (loss) before provision for (benefit from)
income taxes, extraordinary item and cumulative
effect of a change in accounting principle......... 168 3,691 547 (362) 9,576 4,325 28,508
Provision for (benefit from) income taxes............ 158 1,873 189 (2) 3,543 1,616 10,662
------- ------- ------- ------- -------- ------- --------
Income (loss) before extraordinary item and
cumulative effect of a change in accounting
principle.......................................... 10 1,818 358 (360) 6,033 2,709 17,846
Loss on extinguishment of debt, net(1)............... -- -- -- -- (8,108) (8,016) (2,132)
Cumulative effect of a change in accounting
principle.......................................... -- 1,491 -- -- -- -- --
------- ------- ------- ------- -------- ------- --------
Net income (loss)............................ $ 10 $ 3,309 $ 358 $ (360) $ (2,075) $(5,307) $ 15,714
======= ======= ======= ======= ======== ======= ========
EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item(2)........... $ (0.01) $ 0.26 $ 0.03 $ (0.14) $ 1.04 $ 0.68 $ 1.19
Net income (loss)(2)................................. (0.01) 0.50 0.03 (0.14) (0.36) (1.32) 1.05
Weighted average number of common shares and common
share equivalents outstanding(3)................... 6,268 6,268 5,302 2,535 5,818 4,018 14,974
EARNINGS (LOSS) PER COMMON SHARE ASSUMING FULL
DILUTION:
Income before extraordinary item(2).................. $ (0.01) $ 0.26 $ 0.06 $ 0.12 $ 0.99 $ 0.68 $ 1.16
Net income (loss)(2)................................. (0.01) 0.50 0.06 0.12 (0.23) (1.32) 1.03
Weighted average number of common shares and common
share equivalents outstanding(3)................... 6,268 6,268 5,616 3,779 6,645 4,018 16,476

OTHER FINANCIAL DATA:
EBITDA(4)............................................ $ 8,259 $11,319 $10,338 $17,380 $ 30,600 $18,992 $ 48,151
NET CASH PROVIDED BY (USED IN):
Operating activities................................. $ (930) $ 6,956 $ 2,858 $ 3,948 $ 22,584 $11,038 $ 18,137
Investing activities................................. (1,592) (2,247) (39,815) (8,066) (84,354) (62,452) (137,757)
Financing activities................................. (2,473) (6,158) 41,249 805 68,337 53,962 117,793
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................................... $ 847 $ 2,640 $ 7,793 $ 4,315 $ (8,704) $ 24,362
Total assets........................................ 83,718 82,373 135,471 143,683 273,473 433,267
Convertible preferred securities of subsidiary
trust............................................. -- -- -- -- -- 115,000
Long-term obligations............................... 50,861 47,485 98,981 100,766 115,824 53,476
Stockholders' and minority partners' equity......... 15,858 19,926 14,903 13,999 101,989 215,872
</TABLE>

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

(2) For the purpose of calculating earnings per share for the years ended
December 31, 1992, 1993, and 1994, historical income available to common
stockholders has been reduced for dividends on Class A Preferred Stock of
$50,000, $203,000, and $222,000, respectively. The Class A Preferred Stock
was redeemed on September 30, 1994. For the purpose of calculating earnings
per common share assuming full dilution for the year ended December 31,
1996, income (loss) before extraordinary item has been adjusted for interest
expense of $515,000 related to the assumed conversion of a portion of the
Junior Notes (as defined herein) into shares of Common Stock. For the
purpose of calculating earnings per common share assuming full dilution for
the nine months ended September 30, 1997, income (loss) before extraordinary
item has been adjusted for interest expense of $1,246,000 related to the
assumed conversion of convertible preferred securities of a subsidiary
trust.

(footnotes continued on next page)

18
<PAGE> 20

(3) For the years ended December 31, 1992, 1993, and 1994, the weighted average
number of common shares and common share equivalents assumes the conversion
of the Class B Preferred Stock into shares of Common Stock. The Class B
Preferred Stock was redeemed on September 30, 1994. For the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1996, shares outstanding assuming full dilution reflects the assumed
conversion of a portion of the Junior Notes into shares of Common Stock. The
Junior Notes were issued in September 1994 and converted into shares of
Common Stock in September 1996. For the nine months ended September 30,
1997, shares outstanding assuming full dilution reflects the assumed
conversion of the Trust Preferred Securities. Earnings per share for all
periods do not include 484,996 shares reserved for issuance under the
Company's Employee Stock Purchase Plan, 29,353 shares of Class A Common
Stock reserved for issuance under the Company's Board of Directors Stock
Compensation Plan, and 65,000 shares of Class A Common Stock reserved for
issuance under the Company's Key Employee Stock Compensation Plan.

19
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

AREA OF OPERATIONS OVERVIEW

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

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue:
Marine support services:
Offshore energy support................................. $11,317 $23,217 $43,715 $28,226 $72,727
Offshore and harbor towing.............................. 11,140 12,582 13,950 10,234 12,992
------- ------- ------- ------- -------
22,457 35,799 57,665 38,460 85,719
Marine transportation services:
Chemical transportation................................... 16,886 18,632 32,759 19,230 44,053
Petroleum product transportation.......................... 10,449 16,131 18,932 14,440 13,081
------- ------- ------- ------- -------
27,335 34,763 51,691 33,670 57,134
------- ------- ------- ------- -------
Total revenue....................................... 49,792 70,562 109,356 72,130 142,853
------- ------- ------- ------- -------
Operating expenses:
Marine support services:
Offshore energy support................................. 7,017 13,335 25,525 15,371 30,622
Offshore and harbor towing.............................. 5,568 6,001 7,480 5,417 8,461
------- ------- ------- ------- -------
12,585 19,336 30,005 20,788 39,083
Marine transportation services:
Chemical transportation................................... 10,698 11,105 20,976 11,693 29,324
Petroleum product transportation.......................... 6,590 10,223 12,796 9,608 8,727
------- ------- ------- ------- -------
17,288 21,328 33,772 21,301 38,051
------- ------- ------- ------- -------
Total operating expenses............................ 29,873 40,664 63,777 42,089 77,134
------- ------- ------- ------- -------
Direct overhead expenses:
Marine support services:
Offshore energy support................................. 1,090 2,182 2,558 1,859 3,792
Offshore and harbor towing.............................. 958 1,111 1,364 992 1,282
------- ------- ------- ------- -------
2,048 3,293 3,922 2,851 5,074
Marine transportation services:
Chemical transportation................................. 881 1,433 2,574 1,887 3,331
Petroleum product transportation........................ 264 738 920 684 818
------- ------- ------- ------- -------
1,145 2,171 3,494 2,571 4,149
------- ------- ------- ------- -------
Total direct overhead............................... $ 3,193 $ 5,464 $ 7,416 $ 5,422 $ 9,223
======= ======= ======= ======= =======
Fleet EBITDA(1):
Marine support services:
Offshore energy support................................. 3,210 7,700 18,632 10,996 38,313
Offshore and harbor towing.............................. 4,614 5,470 5,106 3,825 3,249
------- ------- ------- ------- -------
7,824 13,170 23,738 14,821 41,562
Marine transportation services:
Chemical transportation................................. 5,307 6,094 9,209 5,650 11,398
Petroleum product transportation........................ 3,595 5,170 5,216 4,148 3,536
------- ------- ------- ------- -------
8,902 11,264 14,425 9,798 14,934
------- ------- ------- ------- -------
Total fleet EBITDA(1)............................... 16,726 24,434 38,163 24,619 56,496
Corporate overhead expenses................................. 6,388 7,054 7,563 5,627 8,345
------- ------- ------- ------- -------
EBITDA(1)................................................... 10,338 17,380 30,600 18,992 48,151
Depreciation and amortization expenses...................... 4,500 6,308 9,830 6,115 13,021
------- ------- ------- ------- -------
Income from operations...................................... $ 5,838 $11,072 $20,770 $12,877 $35,130
======= ======= ======= ======= =======
</TABLE>

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

(1) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interest and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. Fleet EBITDA is EBITDA before corporate overhead
expenses. EBITDA and fleet EBITDA are not required by generally accepted
accounting principles, should not be considered as alternatives to net
income as indicators of the Company's operating performance, or as
alternatives to cash flows from operations as a measure of liquidity, and do
not represent funds available for management's use. The Company's EBITDA may
not be comparable to similarly titled measures reported by other companies.

20
<PAGE> 22

HISTORICAL GROWTH

Since December 31, 1994, when the Company's fleet consisted of 66 vessels,
the Company has completed the acquisition of 190 vessels at an aggregate cost of
approximately $640.8 million, including 96 vessels that will have been acquired
between October 1, 1997 and the completion of the Offering at an aggregate cost
of $409.0 million. Of the 190 vessels, 165 are offshore energy support vessels
and the balance are employed in the Company's offshore and harbor towing
operations and marine transportation services. The Company believes the
increased size of its vessel fleet will enable it to take further advantage of
the strong worldwide demand for marine support and transportation services.

REVENUE OVERVIEW

MARINE SUPPORT SERVICES

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

Offshore Energy Support. Revenue derived from the Company's offshore
energy support services is primarily a function of the size of the Company's
fleet, vessel day rates or charter rates, and fleet utilization. Rates and
utilization are primarily a function of offshore drilling, production, and
construction activities. Levels of offshore drilling, production, and
construction have increased over the past several years as a result of
fundamental changes in the energy industry, including: (i) improvements in
exploration technologies, such as 3-D seismic technology and directional
drilling techniques, that have increased drilling success rates; (ii)
improvements in subsea completion and production technologies that have led to
increased deepwater drilling and development; and (iii) expansion of production
infrastructure that has improved the economics of developing smaller oil and gas
fields. These higher overall activity levels have led to increased demand for
the Company's offshore energy support services and higher overall vessel day
rates in the U.S. Gulf of Mexico. Day rates offshore West Africa, where the
Company expects to commence significant operations in January 1998 upon closing
of the Care acquisition, are at levels approaching those in the U.S. Gulf of
Mexico. Day rates in the Arabian Gulf and offshore Southeast Asia, which the
Company believes have been among the lowest in the world, have also been
gradually increasing as a result of increases in exploration and production
activity in these areas. Contracts for the utilization of offshore service
vessels commonly include termination provisions with three- to five-day notice
requirements and no termination penalty. As a result, the operations of
companies engaged in the offshore energy service market are particularly
sensitive to changes in market demand.

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

<TABLE>
<CAPTION>
1994 1995
--------------------------------- ---------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of supply boats at end of period............... 5 7 7 8 10 10 10 10
Average supply boat day rates(1)...................... $3,433 $3,035 $3,200 $3,060 $2,886 $2,843 $3,113 $3,244
Average supply boat utilization(2).................... 94% 73% 80% 90% 71% 76% 84% 93%
Number of crew boats at end of period(3)(4)........... -- -- 20 19 26 26 26 26
Average crew boat day rates(1)(3)..................... -- -- $1,405 $1,435 $1,444 $1,412 $1,422 $1,458
Average crew boat utilization(2)(3)................... -- -- 87% 88% 79% 81% 90% 91%
</TABLE>

21
<PAGE> 23

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

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

(1) Average day rates are calculated based on vessels operating domestically by
dividing total vessel revenue by the total number of days of vessel
utilization.

(2) Utilization is based on vessels operating domestically and determined on the
basis of a 365-day year. Vessels are considered utilized when they are
generating charter revenue.

(3) Excludes utility boats.

(4) The Company first began operating crew boats in July 1994.

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

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

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------- -------------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Number of tugs at end of period.................. 10 11 16 14 16
Total ship docking tug jobs...................... 8,740 9,233 9,034 7,150 7,126
Total offshore and harbor towing revenue (in
thousands)..................................... $11,140 $12,582 $13,951 $10,234 $12,993
</TABLE>

MARINE TRANSPORTATION SERVICES

Chemical Transportation. Generally, demand for industrial chemical
transportation services coincides with overall economic activity. Since 1989,
revenue derived from chemical transportation operations has been entirely
attributable to the operations of Ocean Specialty Tankers Corporation ("OSTC"),
a company owned equally by OMI Corp. ("OMI") and the Company until August 1996,
when the Company acquired OMI's interest in OSTC along with three chemical
carriers owned by OMI (the "OMI Chemical Carriers"). Prior to the acquisition,
the Company's chemical transportation revenue consisted of distributions from
OSTC attributable to the Company's two chemical carriers marketed by OSTC based
upon a formula that took into account individual vessel performance
characteristics applied to OSTC's revenue (net of fuel costs, port charges, and
overhead). Since the acquisition, the Company continues to have OSTC market the
five chemical carriers and receives the revenue attributable to all five of the
vessels.

Petroleum Product Transportation. Since entering service in 1975, the
product carrier Seabulk Challenger has derived all of its revenue from
successive voyage and time charters to Shell. Under the current charter, fuel
and port costs are for the account of the charterer, charter hire escalates
based upon changes in the consumer price index, and charter hire is suspended
while the vessel is unavailable to transport cargo, as when it is undergoing
repairs or regularly scheduled maintenance. The charter extends to January 2000,
with the charterer retaining the right to early termination upon the payment to
the Company of a significant penalty. In the fourth quarter of 1996, the charter
rate was renegotiated and reduced by approximately 6% to reflect the lower
current market rate. Revenue from the Company's towboats and fuel barges has
been derived primarily from contracts of affreightment with Florida Power &
Light Company ("FPL") and Steuart Petroleum Co. that require the Company to
transport fuel as needed by those two customers, with the FPL contract having a
guaranteed minimum utilization.

22
<PAGE> 24

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

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------- -------------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Number of vessels................................ 6 6 6 6 6
Time charter equivalents(1)...................... $24,751 $25,629 $25,276 $25,551 $25,863
</TABLE>

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

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

OVERVIEW OF OPERATING EXPENSES AND CAPITAL EXPENDITURES

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

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

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

The Company capitalizes expenditures exceeding $5,000 for product and
chemical tankers and $3,000 for all other vessels, where the item acquired has a
useful life of three years or greater. Vessel improvements are capitalized if
they extend the useful life of the vessel or increase its value. The Company
overhauls main engines and key auxiliary equipment in accordance with a
continuous planned maintenance program. Under applicable regulations, the
Company's chemical and product carriers, offshore service vessels, and its four
largest tugs are required to be drydocked twice in a five-year period for
inspection and routine maintenance and repairs. These vessels are also required
to undergo special surveys every five years involving comprehensive inspection
and corrective measures to insure their structural integrity and proper
functioning of their cargo and ballast piping systems, critical machinery and
equipment, and coatings. The Company's fuel barges, because they are operated in
fresh water, are required to be drydocked only twice in each ten-year period.
The Company's harbor tugs and towboats generally are not required to be
drydocked on a specific schedule. During the years ended December 31, 1994,
1995, and 1996, the Company drydocked 13, 42, and 25 vessels, respectively, at
an aggregate cost (exclusive of lost revenue) of $1.6 million, $2.0 million, and
$1.6 million, respectively, and during the nine months ended September 30, 1996
and 1997 the Company drydocked 17 and 34 vessels, respectively, at an aggregate
cost (exclusive of lost revenue) of $0.6 million and $3.5 million, respectively.
See "-- Liquidity and Capital Resources" for information regarding anticipated
maintenance and improvement expense, including drydocking expense. The Company
accounts for its drydocking costs under the deferral method. Under the deferral
method, capitalized drydocking costs are expensed over the period preceding the
next scheduled drydocking. See Note 1 of the Company's consolidated financial
statements. In addition to variable expenses associated with vessel operations,
the Company incurs fixed charges to depreciate its marine assets. The Company
calculates depreciation based on a useful life ranging from 25 years from the
date built for its steel-hull offshore energy support vessels to 30 years from
the date built for aluminum-hull vessels, unless extended to give consideration
to the condition of vessels at acquisition date and the extent, if any, of
significant capital improvements which have been made to such vessels, the
lesser of any applicable lease term life or the OPA 90 life for its product and
chemical carriers, ten years from the acquisition date for its fuel barges, and
40 years from the date built for its towboats and tugs.

23
<PAGE> 25

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

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 1996

Revenue. Revenue increased 98% to $142.9 million for the nine months ended
September 30, 1997 from $72.1 million for the nine months ended September 30,
1996 primarily due to increased revenue in the Company's offshore energy support
and chemical transportation operations.

Revenue from offshore energy support operations increased 158% for the nine
months ended September 30, 1997 primarily due to acquisitions, greater
utilization of crew boats, and higher day rates resulting from increased
offshore exploration and production activity. Utilization of supply boats
decreased to 89% for the 1997 period from 96% for the 1996 period due to a
program of regularly scheduled drydocking, and utilization of crew boats
increased to 94% for the 1997 period from 93% for the 1996 period. During the
1997 period, day rates for supply boats owned, operated, or managed by the
Company increased 64% from the 1996 period, and day rates for crew boats owned,
operated, or managed by the Company increased 31% from the 1996 period.

Petroleum product transportation revenue decreased 9% to $13.0 million for
the nine months ended September 30, 1997 from $14.4 million for the nine months
ended September 30, 1996 primarily due to the reduced charter rate on the
Seabulk Challenger.

Chemical transportation revenue increased 129% to $44.1 million for the
nine months ended September 30, 1997 from $19.2 million for the nine months
ended September 30, 1996 primarily due to the August 1996 acquisition of the OMI
Chemical Carriers and the remaining 50% interest in OSTC.

Revenue from offshore and harbor towing operations increased 27% to $13.0
million for the nine months ended September 30, 1997 from $10.2 million for the
nine months ended September 30, 1996 primarily as a result of acquisitions and
the redeployment of certain vessels in the offshore towing sector.

Operating Expenses. Operating expenses increased 83% to $77.1 million for
the nine months ended September 30, 1997 from $42.1 million for the nine months
ended September 30, 1996 primarily due to increases in crew payroll and
benefits, maintenance and repair, and supplies and consummables resulting from
acquisitions and increased business activity. As a percentage of revenue,
operating expenses decreased to 54% for the nine months ended September 30, 1997
from 58% for the nine months ended September 30, 1996.

Overhead Expenses. Overhead expenses increased 59% to $17.6 million for
the nine months ended September 30, 1997 from $11.0 million for the nine months
ended September 30, 1996 primarily due to increased staffing requirements due to
acquisitions. As a percentage of revenue, overhead expenses decreased to 12% for
the nine months ended September 30, 1997 from 15% for the nine months ended
September 30, 1996.

Depreciation and Amortization Expense. Depreciation and amortization
expense increased 113% to $13.0 million for the nine months ended September 30,
1997 as compared with $6.1 million for the nine months ended September 30, 1996
as a result of an increase in fleet size due to acquisitions.

Income from Operations. Income from operations increased 173% to $35.1
million, or 25% of revenue, for the nine months ended September 30, 1997 from
$12.9 million, or 18% of revenue, for the nine months ended September 30, 1996
as a result of the factors noted above.

24
<PAGE> 26

Net Interest Expense. Net interest expense decreased 48% to $4.5 million,
or 3% of revenue, for the nine months ended September 30, 1997 from $8.8
million, or 12% of revenue, for the nine months ended September 30, 1996
primarily as a result of debt retirement.

Net Income (Loss). The Company had net income of $15.7 million for the
nine months ended September 30, 1997 as compared to a net loss of $5.3 million
for the nine months ended September 30, 1996 primarily as a result of the
factors noted above.

YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995

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

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

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

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

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

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

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

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

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

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

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

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<PAGE> 27

YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994

Revenue. Revenue increased 42% to $70.6 million in 1995 compared with
$49.8 million in 1994 primarily due to the Company's purchase of new businesses
and additional vessels.

Offshore energy support operations showed a 105% increase in revenue in
1995 primarily due to the acquisition of additional supply and crew boats.
Although revenue increased, the utilization of supply boats decreased to 81% in
1995 from 84% in 1994 and the utilization of crew boats decreased to 85% in 1995
from 88% in 1994 due primarily to the relatively warm winter in early 1995,
which caused a decline in oil and gas prices thereby reducing exploration and
production activities. There was a 5% decrease in average day rates for the
Company's supply boats in 1995 from 1994, while average day rates for the
Company's crew boats remained relatively stable.

Chemical transportation revenue increased 10% in 1995 primarily due to
fewer off-hire (out-of- service) days incurred by the Seabulk Magnachem in 1995
following its regularly scheduled drydocking in 1994.

Revenue from petroleum product transportation increased 54% in 1995
primarily due to a full year of operating results for the Sun State tug and
barge fleet, which was acquired in September 1994.

Revenue from offshore and harbor tug operations increased 13% to $12.6
million in 1995 from $11.1 million in 1994 primarily due to an increase in
overall traffic in the ports served by the Company.

Operating Expenses. Operating expenses increased 36% to $40.7 million in
1995 from $29.9 million in 1994 primarily due to increased operating expenses
associated with acquisitions, although operating expenses decreased as a
percentage of revenues to 58% in 1995 from 60% in 1994.

Overhead Expenses. Overhead expenses increased 31% to $12.5 million in
1995 compared with $9.6 million in 1994 primarily due to increases in staffing,
certain benefits, and insurance expenses directly related to new business
acquisitions. Also, in addition to paying discretionary performance bonuses in
April 1995 which were, in part, related to prior periods, an accrual of $400,000
was made at year end for 1995 performance bonuses. As a percentage of revenues,
overhead expenses decreased to 18% in 1995 from 19% in 1994.

Depreciation and Amortization. Depreciation and amortization expense
increased 40% to $6.3 million in 1995 compared with $4.5 million in 1994
primarily due to an increase in fleet size as a result of acquisitions.

Income from Operations. Income from operations increased 90% to $11.1
million, or 16% of revenue, in 1995 compared with $5.8 million, or 12% of
revenue, in 1994. This increase was a result of a substantial increase in income
from operations from the Company's offshore energy segment and an increase in
the Company's fuel energy segment that were mainly the result of acquisitions.
Harbor towing achieved an increase in income from operations of 25% over 1994 as
a result of an overall increase in traffic in Mobile, Port Canaveral, and Port
Everglades.

Net Interest Expense. Net interest expense increased 116% to $11.5
million, or 16% of revenue, in 1995 compared with $5.3 million, or 11% of
revenue, in 1994 primarily due to interest on debt incurred in the last quarter
of 1994 to finance acquisitions.

Net Income (Loss). The Company had a net loss of $(0.4) million in 1995
compared with net income of $0.4 million in 1994, primarily due to an increase
in financing costs incurred in connection with acquisitions completed in 1994
and the other factors noted above.

SEASONALITY

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

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<PAGE> 28

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital requirements historically have arisen primarily from
its working capital needs, acquisition of marine vessels, improvements to
vessels, and debt service requirements. The Company's principal sources of cash
have been borrowings, cash provided by operating activities, and proceeds from
the IPO in August 1996, the Follow-on Offering in February 1997, and the Trust
Preferred Offering in June 1997.

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

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

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

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

The Credit Facility currently provides for a $175.0 million revolving line
of credit that matures on September 30, 2002. See "Description of Certain
Indebtedness -- Credit Facility." At September 30, 1997, borrowings outstanding
under the Credit Facility aggregated $17.0 million. In October 1997, the Company
borrowed an additional $84.5 million under the Credit Facility to fund the
acquisition of Bay, repay certain of Bay's indebtedness, fund the acquisition of
the IMS vessels, and fund $10.0 million of new vessel construction and
refurbishment costs. In December 1997, the Company borrowed $4.7 million under
the Credit Facility to fund a portion of the $20.5 million purchase price of the
Selat vessels. The Company intends to reduce the outstanding borrowings under
the Credit Facility by approximately $46.0 million with a portion of the
proceeds of the Offering.

The Term Loan provides for a $300.0 million facility which can be drawn at
any time prior to April 1, 1998 primarily to finance the Care acquisition. The
Term Loan is payable in 28 equal quarterly installments from June 30, 1998
through March 31, 2005. See "Description of Certain Indebtedness -- Term Loan."
In December 1997, the Company borrowed $15.8 million under the Term Loan to fund
the balance of the purchase price for the acquisition of the Selat vessels and
it expects to borrow $284.2 million under the Term Loan to fund the Care
acquisition in January 1998. Accordingly, at the time of the Offering it is
expected that $300.0 million will be outstanding under the Term Loan, of which
$100.0 million will be repaid with a portion of the proceeds of the Offering.

The Company's future capital needs are expected to relate primarily to debt
service obligations, maintenance and improvements of its fleet, and
acquisitions. The Company's outstanding indebtedness at September 30, 1997,
after giving pro forma effect to the acquisitions occurring between that date
and the

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<PAGE> 29

Offering, and to the Offering and the application of the proceeds therefrom,
would have been $320.3 million. The Company's principal and interest payment
obligations for 1998 are estimated to be approximately $50.8 million, and
operating lease obligations for 1998 are estimated to be approximately $4.4
million.

Capital requirements for vessel maintenance and improvements, including
scheduled drydockings, are estimated to be approximately $20.0 million for 1997,
of which $10.3 million had been expended as of September 30, 1997, and
approximately $39.0 million for 1998.

During 1997, the Company constructed one SDM(TM) at a cost of $5.0 million,
one double-hull barge at a cost of $1.0 million, and purchased four additional
double-hull barges for an aggregate of $2.4 million. These four barges are
currently being refurbished for an estimated aggregate cost of $2.6 million and
will be deployed in Sun State's operations. The Company has contracted for the
construction of two additional SDMs(TM) at an estimated aggregate cost of
approximately $10.0 million with delivery expected in 1998. The Company has
contracted for the construction of six supply boats for delivery during 1998 at
an estimated aggregate cost of $54.0 million. The Company has also agreed to
purchase for an estimated aggregate cost of $15.3 million, five newly
constructed 152-foot crew boats, one of which was delivered in the third quarter
of 1997 and the remainder are scheduled for delivery in 1998 and 1999. The
Company has also contracted for the construction of two tugs at an estimated
aggregate cost of $9.0 million for delivery in the second quarter of 1998.
During 1997, the Company formed a joint venture with Aker Marine Contractors,
Inc. ("Aker") to construct and operate a 279-foot construction/anchor
handling/tug supply vessel. The Company's capital expenditure obligation with
respect to such joint venture is currently estimated to be approximately $20.8
million, of which $1.6 million was expended in 1997, and $16.9 million and $2.3
million are expected to be expended in 1998 and 1999, respectively. The Company
currently intends to fund the aggregate cost of the SDMs(TM), the crew boats,
the supply boats, the barges, the tugs, and the construction/anchor handling
tug/supply vessel from available working capital, borrowings under the Credit
Facility, lease financing, or a combination of such sources.

The Company has a 2.4% equity interest in five 45,300 dwt double-hull
petroleum product carriers currently under construction. The aggregate costs of
the five carriers is estimated to be $255.0 million, of which approximately
$40.0 million will constitute equity investment and $215.0 million will be
financed with the proceeds of government-guaranteed Title XI ship financing
bonds issued in March 1996. Subject to certain conditions, the Company has an
option, exercisable through 2002, to purchase a 49.2% interest at a price equal
to (i) the investor's equity investment plus a stated annual return, or (ii) if
exercised after December 31, 1997, the greater of the fair market value of the
interest or the amount set forth in (i). The Company also has an option,
exercisable on January 15, 1998, to purchase an additional 23.4% interest at a
price equal to the investor's equity investment plus a stated return. Should the
Company fail to exercise the latter option, the investor has the option to
acquire 1.6% of the ownership interest from the Company for nominal
consideration. The total estimated cost of exercising the Company's options is
up to $32.0 million (assuming the options are exercised prior to January 1,
1998). The Company currently has no understanding or agreements with respect to
the financing that it would require if it were to exercise either or both of
these options, and there can be no assurance that such financing will be
available.

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

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

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FORWARD-LOOKING INFORMATION

The Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A") contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). All statements other than
statements of historical fact included in the MD&A, including statements
regarding the Company's operating strategy, plans, objectives and beliefs of
management for future operations, planned capital expenditures and vessel
acquisition and construction are forward-looking statements. Although the
Company believes the expectations and beliefs reflected in such forward-looking
statements are reasonable, it can give no assurance that they will prove to have
been correct. See "Risk Factors" for a discussion of important factors that
could cause actual results to differ materially from the Company's expectations.
Also, see "Forward-Looking Statements."

EFFECT OF INFLATION

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

PROSPECTIVE ACCOUNTING CHANGES

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," and SFAS No. 129, "Disclosure of Information about Capital Structure,"
which are effective for fiscal years beginning after December 15, 1997. SFAS No.
128 simplifies the current required calculation of earnings per share ("EPS")
under Accounting Principles Board No. 15, "Earnings Per Share," by replacing the
existing calculation of primary EPS with a basic EPS calculation. It requires a
dual presentation, for complex capital structures, of basic and diluted EPS on
the face of the income statement and requires a reconciliation of basic EPS
factors to diluted EPS factors. SFAS No. 129 requires disclosing information
about an entity's capital structure. The Company plans to adopt SFAS No. 128 and
SFAS No. 129 in 1998 and expects no material impact to the Company's EPS
calculation or disclosure information.

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

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

OTHER MATTERS

In 1997, the Company purchased and is installing a software package for its
significant domestic applications which is year 2000 compliant.

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<PAGE> 31

BUSINESS

GENERAL

Hvide is one of the world's leading providers of marine support and
transportation services, serving primarily the energy and chemical industries.
The Company has been an active consolidator in each of the markets in which it
operates, increasing its vessel fleet from 23 vessels in 1993 to 256 vessels
currently. As a result, the Company is the third largest operator of offshore
energy support vessels in the U.S. Gulf of Mexico and, as a result of several
recent and pending acquisitions, is the largest operator of offshore energy
support vessels in the Arabian Gulf and a leading operator of such vessels
offshore West Africa and Southeast Asia. In addition, the Company is the sole
provider of commercial tug services at Port Everglades and Port Canaveral,
Florida, a leading provider of such services in Mobile, Alabama, and, as a
result of the recent acquisition of Bay, the sole provider of such services in
Tampa, Florida. The Company also transports petroleum products and specialty
chemicals in the U.S. domestic trade, a market insulated from international
competition under the Jones Act.

During 1997, the Company substantially expanded its offshore energy support
operations into several new international markets and increased its deepwater
capability. The acquisition of vessels from GMMOS, IMS, and Selat for aggregate
consideration of $115.2 million, positioned Hvide as the largest operator of
offshore energy support vessels in the Arabian Gulf. The Care acquisition will
expand the Company's international operations to offshore West Africa and
Southeast Asia. The resulting international fleet of 124 offshore energy support
vessels provides a platform for further international expansion in regions in
which the Company believes demand for offshore energy support services will
continue to increase. The diversity of the Company's overall fleet enables the
Company to provide a broad range of services and to take advantage of market
upturns while reducing its exposure to downturns in any particular market sector
or geographic region.

RECENT AND PENDING ACQUISITIONS AND NEW VESSEL CONSTRUCTION

Consistent with its business strategy, the Company has entered into a
series of consolidating acquisitions during 1997 that have substantially
expanded its international offshore energy support fleet and increased its
domestic offshore and harbor towing operations.

Care. In November 1997, the Company entered into a definitive agreement to
purchase a diversified fleet of 36 offshore energy support vessels, including 22
deepwater-capable anchor handling tug/supply vessels, from Care. As currently
deployed, the fleet consists of 21 vessels offshore in West Africa, eight
vessels offshore Southeast Asia, two vessels in the North Sea, two vessels
offshore Argentina, two vessels offshore South Africa, and one vessel in the
Arabian Gulf. The aggregate purchase price for the fleet is $284.2 million in
cash to be funded with borrowings under the Term Loan. The transaction is
expected to close in early January 1998.

GMMOS. In May 1997, the Company completed the acquisition of a diversified
fleet of 35 offshore energy support vessels from GMMOS for consideration of
$58.7 million. The GMMOS acquisition established the Company's position as the
leading offshore energy support provider in the Arabian Gulf.

IMS. In October 1997, the Company acquired a diversified fleet of 30
offshore energy support vessels operating primarily in the Arabian Gulf, a
topside vessel repair facility, and certain related assets from IMS for $36.0
million.

Selat. In December 1997, the Company acquired a diversified fleet of 14
offshore energy support vessels, operating primarily in the Arabian Gulf, and
certain related assets from Selat for $20.5 million.

Bay. In October 1997, the Company acquired all of the outstanding stock of
Bay, a harbor towing company that operates a fleet of six tractor tugs and eight
conventional harbor tugs. Bay is the sole provider of harbor towing services in
the port of Tampa, Florida, where nine of its tugs operate. An additional two
tugs are to be deployed in towing operations offshore Mexico, and the remaining
three tugs are chartered to operators in California. The acquisition of Bay's
fleet of 14 vessels increased the Company's domestic tug fleet to 30 tugs,
including eight tractor tugs. The aggregate purchase price for such acquisition
was $56.0 million, including the assumption of approximately $19.5 million of
debt.

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<PAGE> 32

MPL. In October 1997, the Company entered into an agreement in principle
to purchase two anchor handling tug/supply vessels from a subsidiary of MPL for
an aggregate purchase price of $12.3 million, which transaction is expected to
close in December 1997. These vessels are currently operating offshore Southeast
Asia.

Digicon. In December 1997, the Company entered into an agreement in
principle to acquire one geophysical survey vessel from Digicon for $5.9 million
in cash in a transaction expected to close in the first quarter of 1998.

New Vessel Construction. The Company has entered into agreements to (i)
construct six 205-foot dynamically positioned supply boats and five 152-foot
high-speed crew boats in response to the increasing demand for deepwater support
vessels in the U.S. Gulf of Mexico, (ii) construct two SDMs(TM) for use in the
Company's harbor towing operations, (iii) construct two offshore tugs, and (iv)
construct and operate a 279-foot construction/anchor handling tug/supply vessel
pursuant to a joint venture. It is currently estimated that these construction
projects will require capital expenditures of up to $100.0 million through 1999.

STRATEGY

The Company's strategy is to grow through selected acquisitions that (i)
further consolidate the marine support and transportation services markets in
which the Company operates and (ii) establish a meaningful presence in new
markets that will benefit from consolidation. The Company believes it will
continue to have numerous opportunities to make additional accretive
acquisitions in its core business segments. In addition, to satisfy increasing
demand in certain of its market segments, the Company intends to grow through
new construction of premium assets such as deepwater-capable, dynamically
positioned supply boats, high-speed crew boats, a construction/anchor handling
tug/supply vessel, innovative SDMs(TM), and double-hull petroleum product
carriers. Critical elements of the Company's strategy include continuing to (i)
utilize its demonstrated expertise in acquiring vessels, thereby further
consolidating its target markets, (ii) focus on domestic and international
markets that the Company believes will benefit from consolidation, (iii) develop
and apply marine technology to meet customers' needs in an innovative and
cost-effective manner, (iv) maintain and pursue long-term customer relationships
that may reduce the risk associated with the investment required for new vessels
and mitigate the effects of industry cyclicality, and (v) enhance its record of
quality service and safety.

Demonstrated Expertise in Acquiring Vessels in its Target Markets. Many
international and domestic marine transportation markets, including offshore
energy support and towing, are undergoing consolidation. Small, privately owned
companies face increasing difficulty competing for market share, obtaining
adequate insurance coverage at economically viable rates, and meeting
increasingly more stringent customer and regulatory safety and environmental
requirements. The Company believes it is well positioned to take advantage of
this consolidation trend. The Company's recent acquisitions have (i)
substantially increased the size of its fleet, (ii) established it as one of the
leading operators in the U.S. Gulf of Mexico and certain international energy
markets, and (iii) given it a reputation as a successful consolidator in its
target markets. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Historical Growth" and "-- Recent and Pending
Acquisitions and New Vessel Construction."

Focus on Domestic and International Markets that the Company Believes Will
Benefit from Consolidation. The Company has operated a substantial number of
vessels in the U.S. domestic trade since its inception. During 1997, the Company
has expanded into several international markets through a series of
consolidating acquisitions. The Company intends to continue to pursue selected
domestic and international opportunities where significant consolidation savings
and economies of scale can be achieved.

Technological Leadership and Business Innovation. The Company believes it
has been a leader in developing and applying marine technology to meet its
customers' needs in a cost-effective manner. Principals of the Company designed,
engineered, and developed the CATUG(R) integrated tug/barge ("ITB"), in which a
catamaran-hull tug is married to the stern section of a dedicated barge to
achieve construction cost savings and operating efficiencies, such as lower
manning requirements. The Seabulk Challenger, the Company's petroleum product
carrier, was the first of 12 CATUG(R)s constructed in the world. The Company's
Seabulk

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America is an innovative combination of the stern portion of a wrecked oil
tanker with the forebody of the chemical barge portion of a former ITB. By
combining this stern and forebody, the Company obtained one of the most recently
constructed chemical carriers in the U.S. domestic trade at a cost substantially
lower than that of a newly constructed vessel. The Company demonstrated its
business innovation in the formation of what was, prior to completion of its
acquisition of the OMI Chemical Carriers, the only pool of chemical carriers in
the U.S. domestic trade, in the formation of the entities that will own five new
double-hull petroleum product carriers currently under construction, and most
recently in the design of ship-docking modules, or SDMs(TM). See "-- Company
Operations -- Marine Transportation Services."

Long-term Relationships. The Company currently maintains and continues to
pursue long-term customer relationships. Long-term contracts can both minimize
the risk associated with the substantial investments frequently required for new
vessels and may reduce the effects of any cyclical downturns in the industry.
This element of the strategy began with the Company's long-term charter of its
petroleum product carrier to Shell and continued with the acquisition of the
towboat and fuel barge fleet in September 1994, which has a long-term contract
with FPL that expires in September 1998.

Quality Service and Safety. Over a span of nearly 40 years, the Company
believes it has built a reputation for providing its customers with the highest
quality service and safety in terms of timeliness, dependability, and technical
expertise. The Company continuously seeks to improve the quality of its service
both by upgrading the capabilities of its vessels and by increasing the skill
levels of its employees. It believes, for example, that its chemical carriers
have experienced a particularly low level of cargo degradation claims relative
to its competitors; that its emphasis on preventive maintenance minimizes vessel
time out of service and repair expenses; and that its reputation provides an
advantage in retaining customer loyalty (particularly in times of excess
capacity) and in entering new markets.

As part of its continuing effort to maintain high standards of quality and
safety, the Company has obtained certification under the voluntary quality
assurance, safety, and environmental standards established under ISO 9002 and a
document of compliance with the International Ship Management (ISM) Code, which
becomes mandatory in July 1998. The Company's offshore energy support group is
currently undergoing separate ISM/ISO certification, expected to be completed by
the end of 1998. The Company's success in establishing high levels of quality
and safety are further reflected by its receipt of Shell's offshore safety award
for the last three years.

THE INDUSTRY

MARINE SUPPORT SERVICES

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

The market for offshore energy support services is fundamentally driven by
the offshore exploration, development, and production activities of oil and gas
companies worldwide. The level of exploration, development, and production
activities depends primarily on the capital expenditures of oil and gas
producers, which is a function of current and anticipated future oil and gas
production and prices and operating costs of oil and gas producers. Oil and gas
prices are influenced by a variety of factors, including worldwide demand,
production levels, governmental policies regarding exploration and development
of reserves, and political factors in producing countries. Fundamental economics
in the oil and gas sector have improved in recent years, with demand rising and
inventories comparatively low. In addition to increased production from the
historically active U.S. Gulf of Mexico and North Sea, much of the incremental
offshore production is emerging from activity in the frontier regions offshore
West Africa and Southeast Asia and in the Arabian Gulf.

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<PAGE> 34

Since 1995, offshore exploration, development, and production activity has
increased considerably due to, among other factors, (i) favorable oil and gas
prices, (ii) significant improvement in the financial condition of many oil and
gas companies in recent years, (iii) increased worldwide demand for
hydrocarbons, (iv) the potential for relatively large oil and gas discoveries in
various offshore areas, particularly previously unexplored deepwater areas, (v)
the opening of new offshore areas for foreign investment, including areas
offshore Brazil, China, and West Africa, and (vi) royalty relief granted by the
U.S. government for oil and gas produced from wells drilled in newly acquired
deepwater blocks in the U.S. Gulf of Mexico. In addition, technological advances
in exploration, development, and production techniques, including seismic data
collection and interpretation (particularly with respect to 3-D seismic data),
drilling techniques (such as the use of deviated, horizontal, and multilateral
wells), subsea completion and production equipment, and mobile production units
have contributed to increased offshore activity by oil and gas companies. These
factors have facilitated exploration for and development of new reserves in
deepwater and environmentally harsh offshore areas, allowed the development of
oil and gas fields that were previously considered commercially marginal, and
extended development and production of reserves from existing fields.

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

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

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

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

There has been substantial worldwide vessel attrition over the past ten
years as many vessels have reached the end of their useful lives. Management
estimates that the number of offshore supply boats of at least 150 feet in
length available for service in the U.S. Gulf of Mexico decreased from a peak of
approximately 700 in 1985 to approximately 330 in November 1997. Management also
estimates that during the same period, the number of companies operating supply
boats of at least 150 feet in length decreased from approximately 40 to 19. Day
rates declined in the mid-1980s and have since improved from an average of
$1,730 in August 1987 to an average of $7,636 in the third quarter of 1997.
Although some supply boats were redeployed from the U.S. Gulf of Mexico to
overseas locations, management believes that existing regulations, mobilization
costs, and overseas opportunities will limit the number of such vessels
returning to the U.S. Gulf of Mexico in the foreseeable future. Management
estimates there are currently approximately 70 supply boats under construction
in U.S. shipyards, the majority of which are at least 200 feet in length.
Management believes several of these boats will be placed into service in
geophysical-related roles and several will be placed into service overseas. The
remainder will likely be placed into service in deepwater activity in the U.S.
Gulf of Mexico.

The Company estimates that there are currently approximately 14 crew boat
operators in the U.S. Gulf of Mexico operating an estimated 215 vessels. The
Company also estimates there are approximately 42 crew

33
<PAGE> 35

boats greater than 120 feet in length currently under construction (not all of
which are expected to be utilized in the U.S. Gulf of Mexico), and the Company
believes that current demand created by exploration for oil in the deeper waters
of the U.S. Gulf of Mexico may support construction of a limited number of
additional crew boats.

The following table sets forth as of November 30, 1997, the Company's
estimate of the number of supply boats and crew boats operating in the U.S. Gulf
of Mexico.

<TABLE>
<CAPTION>
CREW
OPERATOR SUPPLY BOATS BOATS TOTAL
<S> <C> <C> <C>
Tidewater, Inc.............................................. 122 27 149
Seacor Smit Inc............................................. 30 75 105
HVIDE MARINE INCORPORATED................................... 28 39 67
Trico Marine Services, Inc.................................. 53 14 67
Ensco International Incorporated............................ 29 0 29
Others...................................................... 66 61 127
</TABLE>

While existing exploration and production activities create an ongoing
demand for offshore energy support vessels, incremental vessel demand depends
primarily upon the level of drilling activity, which in turn depends on oil and
gas prices. As a result, drilling rig day rates and utilization are influenced
by oil and gas prices, which are highly cyclical. The relationship since 1995
between natural gas prices and drilling rig utilization in the U.S. Gulf of
Mexico and, similarly, average vessel utilization, is displayed in the following
table.

<TABLE>
<CAPTION>
1995 1996
--------------------------------- ---------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Natural gas prices(1)........... $ 1.51 $ 1.63 $ 1.54 $ 2.06 $ 3.44 $ 2.45 $ 2.18 $ 2.96
Competitive mobile rig
utilization(2)................ 70.3% 73.6% 81.8% 85.2% 83.3% 87.5% 89.4% 90.7%
Offshore service vessels(3)
Utilization................... 84.2% 89.7% 91.7% 94.8% 95.3% 92.9% 94.5% 95.5%
Day rates..................... $2,917 $2,975 $3,307 $3,543 $3,793 $4,933 $5,683 $6,683
Anchor handling tug/supply
vessels utilization(4)........ 86.0% 81.5% 92.6% 92.5% 94.9% 90.1% 94.4% 91.2%
</TABLE>

<TABLE>
<CAPTION>
1997
------------------------
Q1 Q2 Q3
<S> <C> <C> <C>
Natural gas prices(1)....................................... $ 2.63 $ 2.08 $ 2.37
Competitive mobile rig utilization(2)....................... 90.1% 92.3% 96.0%
Offshore service vessels(3)
Utilization............................................... 96.0% 93.4% 94.1%
Day rates................................................. $7,283 $7,783 $8,400
Anchor handling tug/supply vessels utilization(4)........... 92.3% 95.5% 95.5%
</TABLE>

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

(1) Average monthly natural gas cash price delivered at Henry Hub in $/MMBtu, as
reported in Natural Gas Week.

(2) Includes all jack-up rigs, semi-submersible rigs, submersible rigs,
drillships, and other mobile rig units operating in the U.S. Gulf of Mexico,
as compiled by Offshore Data Services.

(3) Includes all supply boats and other offshore service vessels greater than or
equal to 150 feet in length operating in the U.S. Gulf of Mexico, as
compiled by Offshore Data Services.

(4) Includes all anchor handling tug/supply vessels operating in the U.S. Gulf
of Mexico, as compiled by Offshore Data Services. Day rates are not included
as they are not considered meaningful (i.e., tugs work on a per-job basis,
not a daily basis).

The Company estimates there are in excess of 100 vessels being employed in
each of the following major international markets: the Arabian Gulf, offshore
West Africa, offshore Southeast Asia, and the North Sea. The industry remains
relatively fragmented, with more than 25 major participants and numerous small
regional competitors. Historically, few of these competitors have participated
in all five of the major markets.

34
<PAGE> 36

The primary international markets in which the Company currently operates
are the Arabian Gulf (84 vessels) and offshore West Africa (21 vessels) and
Southeast Asia (11 vessels). The Arabian Gulf market consists primarily of the
waters along the coasts of the United Arab Emirates, Yemen, Qatar, Saudi Arabia,
and Kuwait. The offshore West Africa market includes the waters offshore
Nigeria, Cameroon, Congo, Angola, and Guinea. The offshore Southeast Asia market
encompasses the general area bounded on the west by the Indian subcontinent and
on the north by China and includes offshore Brunei, Cambodia, Indonesia,
Malaysia, Myanmar, the Phillipines, Singapore, Thailand, and Vietnam.

The design requirements for vessels in the Arabian Gulf and offshore
Southeast Asia are generally similar to those in the U.S. Gulf of Mexico.
However, advanced exploration technology and rapid growth in energy demand in
emerging international economies have led to more drilling activity in remote
locations. As a result, demand for vessels has increased around the world,
especially for those with improved technical capabilities. The offshore West
Africa market, for example, typically demands vessels with increased cargo
capacity and anchor handling capability, such as the fleet of anchor handling
tug/supply vessels being acquired by the Company from Care.

Day rates offshore West Africa are at levels approaching those in the U.S.
Gulf of Mexico. Day rates in the Arabian Gulf and offshore Southeast Asia, which
the Company believes have been among the lowest in the world, have been
gradually increasing as a result of increased exploration and production
activity. The Company expects that increasing demand, combined with continuing
consolidation of the offshore energy support industry, in both of these markets
will result in continued increases in day rates. Political developments in any
of these markets, particularly West Africa and the Arabian Gulf, however, could
have an adverse effect on exploration and production activity, which in turn
would adversely affect the Company's operations in these markets.

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

MARINE TRANSPORTATION SERVICES

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

The Company estimates that approximately 11% (in terms of tonnage) of bulk
domestic chemical transportation is waterborne, with the remainder transported
by rail. The Company also estimates that

35
<PAGE> 37

approximately 60% of that waterborne trade is in specialty chemicals, such as
caustic soda, which can be transported only by specially designed vessels.
Although chemical carriers and petroleum product carriers are similar in design,
vessels engaged in the transportation of petroleum products generally lack the
large number of small tanks, special tank coatings, and sophisticated
cargo-handling capability necessary to operate in the parcel or specialty
chemical trade. Parcel shipments are usually carried pursuant to contracts of
affreightment by which a shipper contracts for the use of a portion of a
vessel's cargo capacity. See "-- Customers and Charter Terms."

Vessels engaged in domestic chemical transportation that are owned by major
chemical or other companies that use the vessels to transport cargoes for their
own accounts are referred to as "captive" or proprietary vessels. Management
believes that there are 12 specialty chemical carriers active in the domestic
chemical trade, of which nine are non-proprietary, or independently operated,
and three are proprietary. Some of these vessels also transport petroleum
products, and all but one of them will be ineligible to do so after the year
2015 in accordance with OPA 90 double-hull requirements. See "-- Environmental
and Other Regulation -- Clean Water Regulations." The Seabulk America is the
only chemical carrier to enter service in the domestic trade since 1984, and no
new specialty chemical carriers are currently under construction. In addition to
the specialty chemical tankers, there are 44 tankers and 90 barges in the
U.S.-flag domestic fleet over 10,000 gross tons that are capable of carrying
some so-called "easy chemicals," such as gasoline additives (e.g. MTBE), and
that compete with specialty chemical carriers for the transportation of those
chemicals. There are also four newly converted double-hull product carriers (the
Capt. H.A. Downing, the Anasazi, the New River, and the Monseigneur) that are
capable of carrying additional chemicals. See "-- Petroleum Product
Transportation."

The following table sets forth certain information concerning mandatory OPA
90 retirement dates (from transportation of petroleum products) for the 12
tankers eligible to participate in the U.S. domestic chemical trade that are
actively engaged in transporting specialty chemicals. The Company believes that
certain of these vessels will be retired once they are no longer able to augment
their cargoes with petroleum products and that some may be retired in advance of
their OPA 90 retirement dates as required capital investments may not be
economically justifiable over the remaining lives of the vessels. The retirement
dates of others have been extended by reducing their gross registered tonnage
and cargo capacity.

<TABLE>
<CAPTION>
OPA 90
YEAR BUILT/ RETIREMENT DEADWEIGHT
VESSEL NAME OWNER/OPERATOR REBUILT DATE TONS
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HMI ASTRACHEM................ HVIDE MARINE INCORPORATED 1970 2000 37.5
Marine Chemist............... Marine Transport Lines 1970 2000 35.9
Guadalupe(1)................. Sabine/Kirby Corp. 1945/1978 2004 30.4
Chilbar...................... Keystone Shipping Co. 1959/1981 2006 39.4
SEABULK MAGNACHEM............ HVIDE MARINE INCORPORATED 1977 2007 39.3
HMI DYNACHEM(2).............. HVIDE MARINE INCORPORATED 1981 2011 50.9
HMI PETROCHEM................ HVIDE MARINE INCORPORATED 1981 2011 50.9
SeaRiver Charleston(3)....... SeaRiver Maritime 1983 2013 48.1
SeaRiver Wilmington(3)....... SeaRiver Maritime 1984 2014 48.0
Sea Venture.................. Atlantic Tankships 1972/1983 2013 18.7
SEABULK AMERICA.............. HVIDE MARINE INCORPORATED 1975/1990 2015 46.3
Chemical Pioneer(3).......... Marine Transport Lines 1968/1983 n/a(4) 34.9
-----
Total capacity..... 480.3
=====
</TABLE>

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

Source: Lloyd's Maritime Directory 1994 (for owner/operators, year
built/rebuilt, and deadweight tons); U.S. Maritime Administration (for
OPA 90 retirement dates)

(1) Currently in lay-up.

(2) Chemical capable, but currently under charter carrying clean petroleum
products.

(3) Proprietary.

(4) Double-hull vessel.

Although single-hull chemical carriers may be permitted to continue to
carry chemicals in the U.S. domestic and foreign trade after their OPA 90
retirement dates, the Company believes that the inability of

36
<PAGE> 38

single-hull carriers to augment chemical cargoes with petroleum products (such
as lubricating oils) after such dates will, in light of the current near balance
between supply and demand and assuming increasing chemical shipment volume as a
result of improvements in the economy, result in increased charter rates for the
Company's chemical carriers.

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

As a result of the retirement dates for single-hull tankers mandated by OPA
90, the Company believes that, of the 69 single-hull U.S.-flag product and
chemical carriers and product and chemical barges from 20,000 dwt to 55,000 dwt
currently operating, eight will have to be retired by the end of year 2000. See
"-- Environmental and Other Regulation -- Clean Water Regulations." Replacement
vessels recently delivered consist of four late 1950s-built steam-powered
single-hull product carriers converted to double-hull vessels and the five new
diesel-powered double-hull product carriers currently under construction in
which the Company has an interest. See "-- Company Operations -- Marine
Transportation Services -- Petroleum Product Transportation -- New Product
Carriers." The Company believes that the mandatory replacement of single-hull
carriers by environmentally safer double-hull vessels will result in a gradual
increase in charter rates for product carriers over the next few years.

THE COMPANY

FLEET OVERVIEW

MARINE SUPPORT SERVICES

Offshore Energy Support. The Company has provided services to the oil and
gas drilling industry since 1989, when it acquired its first eight offshore
supply boats. In a series of acquisitions from September 1994

37
<PAGE> 39

through April 1997, the Company expanded its fleet to 70 vessels, consisting of
27 supply boats, including six anchor handling tug/supply vessels, 39 crew
boats, two utility boats, and two geophysical boats. These vessels have
primarily served exploration and production operations in the U.S. Gulf of
Mexico, operating from the Company's facilities in Lafayette, Louisiana.

Beginning in May 1997, the Company began the substantial expansion of its
international offshore energy support fleet. Following consummation of the Care
acquisition in January 1998, the primary international markets served by the
Company will be the Arabian Gulf and offshore West Africa and Southeast Asia,
and the Company's international fleet will aggregate 124 vessels, including 40
anchor handling tug/supply vessels, 24 anchor handling tugs, 12 supply boats, 16
crew boats, and 17 utility vessels. The Company's Arabian Gulf operations are
directed from its facilities in Dubai, United Arab Emirates. Operations offshore
West Africa, as well as those of eight other vessels included in the Care
acquisition that currently operate in Southeast Asia, will be conducted at least
through June 1998 by an affiliate of Care based in Geneva, Switzerland, pursuant
to a management agreement with the Company. See "The Care Acquisition." The
remaining operations in Southeast Asia are directed from the Company's
facilities in Brunei.

U.S. Operations. The following tables set forth certain information
concerning the offshore energy support vessels currently owned or operated by
the Company in the U.S. Gulf of Mexico.

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
SUPPLY BOAT NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk New York.................................... 234 1975/1997 4,300 U.S. Gulf
Seabulk New Jersey.................................. 234 1975/1997 4,300 U.S. Gulf
Seabulk Minnesota................................... 205 1976/1997 2,250 U.S. Gulf
Seabulk Montana(2).................................. 205 1974/1994 5,350 U.S. Gulf
Seabulk Nevada(2)(3)................................ 200 1977/1992 5,750 U.S. Gulf
Seabulk Massachusetts(2)............................ 191 1980 3,900 U.S. Gulf
Seabulk North Carolina(2)(4)........................ 190 1979/1993 4,000 U.S. Gulf
Seabulk Arkansas.................................... 185 1982/1997 2,250 U.S. Gulf
Seabulk Missouri.................................... 185 1982/1997 2,250 U.S. Gulf
Seabulk Colorado.................................... 185 1982/1994 2,250 U.S. Gulf
Seabulk Connecticut(2).............................. 185 1981 3,900 U.S. Gulf
Seabulk Pennsylvania(2)............................. 185 1979 3,900 U.S. Gulf
Seabulk Hawaii...................................... 180 1979/1995 3,000 U.S. Gulf
Seabulk Georgia..................................... 180 1984 3,000 U.S. Gulf
Seabulk California.................................. 180 1982 2,250 U.S. Gulf
Seabulk Florida..................................... 180 1982 2,250 U.S. Gulf
Seabulk Alabama..................................... 180 1982 2,250 U.S. Gulf
Seabulk Texas....................................... 180 1982 2,250 U.S. Gulf
Seabulk Louisiana................................... 180 1982 2,250 U.S. Gulf
Seabulk Rhode Island................................ 180 1980 2,700 U.S. Gulf
Seabulk New Hampshire............................... 180 1980 1,950 U.S. Gulf
Seabulk Kentucky.................................... 175 1983/1997 2,400 U.S. Gulf
Seabulk Washington.................................. 175 1978/1997 2,250 U.S. Gulf
Seabulk Tennessee................................... 175 1983 2,400 U.S. Gulf
Seabulk Oregon...................................... 175 1979 2,250 U.S. Gulf
Seabulk Maryland(4)................................. 165 1980 1,860 U.S. Gulf
Seabulk Virginia(4)................................. 165 1979 1,860 U.S. Gulf
</TABLE>

38
<PAGE> 40

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
CREW BOAT NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk St. Tammany................................. 152 1997 4,400 U.S. Gulf
Seabulk St. Frances................................. 152 1996 4,400 U.S. Gulf
Seabulk St. Charles(5).............................. 152 1993 3,820 U.S. Gulf
Seabulk Acadia...................................... 135 1995 3,300 U.S. Gulf
Seabulk Monroe...................................... 135 1993 3,056 U.S. Gulf
Seabulk Grant....................................... 135 1991 3,056 U.S. Gulf
Seabulk DeSoto...................................... 135 1991 3,056 U.S. Gulf
Seabulk Lexington................................... 135 1991 3,056 U.S. Gulf
Seabulk Winn........................................ 135 1991 3,056 U.S. Gulf
Seabulk Galveston................................... 135 1990 3,056 U.S. Gulf
Seabulk Bossier..................................... 135 1990 3,056 U.S. Gulf
Seabulk LaFourche................................... 130 1991 2,040 U.S. Gulf
Seabulk Houston..................................... 125 1985 2,600 U.S. Gulf
Seabulk Lafayette................................... 125 1985 2,040 U.S. Gulf
Seabulk Starr....................................... 120 1984 2,040 U.S. Gulf
ThunderU.S.A........................................ 120 1984 2,040 U.S. Gulf
Seabulk Lamar....................................... 120 1980 2,040 U.S. Gulf
Seabulk Liberty..................................... 110 1985 2,040 U.S. Gulf
Seabulk Jefferson................................... 110 1982 2,040 U.S. Gulf
Seabulk Mobile...................................... 110 1982 2,040 U.S. Gulf
Seabulk Evangeline.................................. 110 1981 2,040 U.S. Gulf
Thunderwar.......................................... 110 1981 2,040 U.S. Gulf
Seabulk Duval(6).................................... 110 1980 2,820 U.S. Gulf
Seabulk Jasper(6)................................... 110 1980 2,820 U.S. Gulf
Seabulk Madison..................................... 110 1980 2,040 U.S. Gulf
Seabulk Bay......................................... 110 1980 2,040 U.S. Gulf
Seabulk Beauregard.................................. 110 1980 2,040 U.S. Gulf
Seabulk Nassau...................................... 110 1979 2,040 U.S. Gulf
Ralph Thompson(6)................................... 110 1978 2,820 U.S. Gulf
Seabulk Albany(6)................................... 110 1978 2,820 U.S. Gulf
Seabulk Aransas..................................... 110 1978 2,100 U.S. Gulf
Seabulk Baldwin(6).................................. 110 1976 2,400 U.S. Gulf
Seabulk Claiborne(6)................................ 110 1975 2,400 U.S. Gulf
Thundereagle........................................ 100 1977/1995 1,530 U.S. Gulf
Seabulk Cameron..................................... 100 1976/1995 1,530 U.S. Gulf
Thundercat.......................................... 100 1976/1995 1,530 U.S. Gulf
Seabulk Sabine...................................... 100 1976/1995 1,530 U.S. Gulf
Seabulk Bolivar(6).................................. 90 1974 1,650 U.S. Gulf
Seabulk Maverick.................................... 85 1976 1,200 U.S. Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
UTILITY VESSEL NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk Tallahassee................................. 135 1978 2,250 U.S. Gulf
Seabulk Baton Rouge(6).............................. 100 1981 910 U.S. Gulf
</TABLE>

39
<PAGE> 41

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
GEOPHYSICAL BOAT NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk Veritas(7).................................. 194 1973/1997 4,400 U.S. Gulf
Seabulk Austin(8)................................... 110 1978 1,080 U.S. Gulf
</TABLE>

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

(1) Certain names reflect name changes currently in process.
(2) Anchor handling tug/supply vessel.
(3) Vessel expected to be put into service during December 1997. Vessel data
reflect upgrading and refurbishment.
(4) The Company is bareboat charterer and operator with an option to purchase
the vessel at the end of the bareboat charter for a nominal amount.
(5) The Company is bareboat charterer and operator with an option to purchase
the Seabulk St. Charles, at the end of the bareboat charter in 2002 for
$400,000.
(6) The Company is bareboat charterer and operator with an option to purchase
the vessel at the end of the bareboat charter for a nominal amount.
(7) Supply boat.
(8) Utility vessel.

International Operations. The following tables set forth certain
information concerning the offshore energy support vessels currently owned or
operated by the Company in international waters.

<TABLE>
<CAPTION>
ANCHOR HANDLING LENGTH YEAR BUILT/ AREA OF
TUG/SUPPLY VESSEL NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Red Tern(2)..................................... 236 1982 10,560 Argentina
Red Raven(2).................................... 223 1980 10,560 West Africa
Red Rooster(2).................................. 223 1980 10,560 North Sea
Red Falcon II(2)................................ 213 1975 7,040 West Africa
Red Condor(2)................................... 213 1975 7,040 West Africa
Red Cormorant(2)................................ 212 1980 7,040 West Africa
Red Hawk(2)..................................... 211 1975 8,000 Southeast Asia
Red Coot I(2)................................... 211 1975 7,040 West Africa
Red Coot II(2).................................. 211 1975 7,040 West Africa
Seabulk Betsy(2)................................ 210 1982 8,620 Arabian Gulf
Seabulk Persistence(2).......................... 204 1975 5,750 Arabian Gulf
Red Dove(2)..................................... 203 1991 5,800 West Africa
Red Toucan(2)................................... 203 1985 8,430 Argentina
Seabulk Treasure Island......................... 202 1982 6,000 Arabian Gulf
Seabulk Emerald................................. 202 1981 6,100 Arabian Gulf
Red Penguin II.................................. 201 1975 8,600 West Africa
Red Petrel(2)................................... 201 1975 8,600 Southeast Asia
Red Plover(2)................................... 201 1975 8,600 Southeast Asia
Red Puffin(2)................................... 201 1975 8,600 Southeast Asia
Red Penguin(2).................................. 201 1975 8,600 South Africa
Red Snipe(2).................................... 197 1982 5,300 South Africa
Seabulk Lulu(2)................................. 197 1974 5,600 Arabian Gulf
Seabulk Neptune................................. 197 1973 6,160 Arabian Gulf
Seabulk Discovery............................... 195 1993 5,600 Arabian Gulf
GMMOS Defender.................................. 193 1983 4,610 Arabian Gulf
Seabulk Liberty................................. 193 1973 4,500 Arabian Gulf
Seabulk Energy.................................. 191 1990 5,300 Arabian Gulf
Seabulk Carol(2)................................ 190 1982 8,620 Arabian Gulf
Seabulk Danah................................... 190 1976 3,900 Arabian Gulf
GMMOS Toota..................................... 190 1975 3,900 Arabian Gulf
</TABLE>

40
<PAGE> 42
<TABLE>
<CAPTION>
ANCHOR HANDLING LENGTH YEAR BUILT/ AREA OF
TUG/SUPPLY VESSEL NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Red Lark(2)..................................... 189 1973 4,600 Southeast Asia
Red Osprey(2)................................... 186 1983 4,200 West Africa
Red Kestrel(2).................................. 186 1982 4,200 West Africa
Red Merlin(2)................................... 186 1982 4,200 West Africa
Red Pelican(2).................................. 186 1982 4,200 West Africa
Seabulk Saphire................................. 182 1983 3,000 Arabian Gulf
Seamark South Carolina(3)....................... 180 1983 3,000 Southeast Asia
Seabulk Nada.................................... 180 1974 3,000 Arabian Gulf
Seabulk Ruby(2)................................. 180 1974 3,000 Arabian Gulf
Seabulk Command................................. 175 1992 3,800 Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
ANCHOR HANDLING TUG NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Tims 1.......................................... 230 1979 4,900 Arabian Gulf
Red Gannet I.................................... 163 1977 7,500 Southeast Asia
Red Gannet II................................... 163 1977 7,500 Southeast Asia
Red Harrier(2).................................. 162 1977 8,480 Arabian Gulf
Seabulk Duke.................................... 155 1983 5,750 Arabian Gulf
Red Eagle....................................... 150 1976 8,400 Southeast Asia
Red Skua I(2)................................... 147 1977 8,000 West Africa
Seabulk Master.................................. 146 1993 3,500 Arabian Gulf
Red Cygnet I(2)................................. 146 1974 6,000 West Africa
Red Cygnet II(2)................................ 146 1974 6,000 West Africa
Seabulk Alkatar................................. 144 1981 6,000 Arabian Gulf
Seabulk Titan................................... 142 1976 7,200 Arabian Gulf
Seabulk Gabrielle .............................. 140 1981 2,000 Arabian Gulf
Seabulk Sarah................................... 140 1981 2,000 Arabian Gulf
Seabulk Debbie.................................. 132 1983 2,000 Arabian Gulf
GMMOS Pride..................................... 126 1978 5,000 Arabian Gulf
Seabulk Champ................................... 122 1993 2,300 Arabian Gulf
Seabulk Prince.................................. 116 1988 2,400 Arabian Gulf
Aries II........................................ 110 1983 3,477 Arabian Gulf
Seabulk Power................................... 105 1990 2,400 Arabian Gulf
Seabulk Isabel.................................. 97 1977 1,130 Arabian Gulf
Seabulk Knight.................................. 94 1975 2,200 Arabian Gulf
Seabulk Christopher............................. 86 1977 1,800 Arabian Gulf
Seabulk Taurus.................................. 80 1982 1,400 Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
SUPPLY BOAT NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Red Swan(2)(6).................................. 220 1976 4,200 West Africa
Red Martin I(2)(6).............................. 200 1976 4,200 West Africa
Red Martin II(2)(6)............................. 200 1976 4,200 North Sea
Seamark Mississippi(3).......................... 180 1982 2,250 Southeast Asia
Seabulk Service................................. 180 1977 2,700 Arabian Gulf
Seabulk Trader(2)............................... 180 1975 2,318 Arabian Gulf
GMMOS Lara...................................... 180 1975 2,250 Arabian Gulf
Seabulk Voyager(2).............................. 174 1974 2,000 Arabian Gulf
Seabulk Arabian(2).............................. 173 1972 1,900 Arabian Gulf
Shell Star...................................... 168 1982 1,800 Arabian Gulf
GMMOS King...................................... 166 1970 1,700 Arabian Gulf
Seabulk Clipper(4).............................. 165 1971/1992 3,000 Arabian Gulf
</TABLE>

41
<PAGE> 43

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
CREW BOAT NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Red Mallard(2)(5)............................... 145 1986 3,250 West Africa
Seabulk Tender.................................. 125 1978 2,240 Arabian Gulf
Capricorn III................................... 120 1983 2,040 Arabian Gulf
Red Swift(2)(5)................................. 120 1980 2,040 West Africa
Seabulk Jebel Ali .............................. 110 1991 1,550 Arabian Gulf
Seabulk Arzana.................................. 110 1991 1,550 Arabian Gulf
Virgo One....................................... 110 1982 2,040 Arabian Gulf
Seabulk Mubarrak................................ 110 1982 1,550 Arabian Gulf
Arctic Express.................................. 110 1981 2,040 Arabian Gulf
Lake Express.................................... 110 1981 2,040 Arabian Gulf
Red Heron(2)(5)................................. 107 1981 1,530 West Africa
Seabulk Zakum(2)................................ 105 1982 1,875 Arabian Gulf
Seabulk Penny................................... 105 1977 1,606 Arabian Gulf
Seabulk BulHanin(2)............................. 102 1984 1,630 Arabian Gulf
Seabulk Explorer................................ 102 1979 1,530 Arabian Gulf
Seabulk Umm Shaif............................... 78 1973/1988 1,020 Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
CONSTRUCTION & LENGTH YEAR BUILT/ AREA OF
MAINTENANCE VESSEL NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk Giant................................... 207 1974/1990 4,200 Arabian Gulf
Seabulk Hercules................................ 200 1969/1986 4,300 Arabian Gulf
Seabulk Freedom................................. 194 1973/1996 4,600 Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
UTILITY VESSEL NAME(1) (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
GMMOS Queen..................................... 159 1969 1,500 Arabian Gulf
Seabulk Ibex(2)................................. 135 1972 2,400 Arabian Gulf
Seabulk Barracuda............................... 132 1984 2,000 Arabian Gulf
Seabulk Gazelle(2).............................. 130 1982 1,200 Arabian Gulf
Seabulk Shindaga(2)............................. 128 1982 1,200 Arabian Gulf
Seabulk Hatta................................... 120 1976/1993 1,140 Arabian Gulf
Seabulk Salihu.................................. 120 1976/1992 1,140 Arabian Gulf
Seabulk Falcon.................................. 120 1974/1992 1,140 Arabian Gulf
Seabulk Hamour.................................. 120 1974/1992 1,140 Arabian Gulf
Seabulk Eagle................................... 120 1989 1,500 Arabian Gulf
Seabulk Singali................................. 120 1981 1,272 Arabian Gulf
Seabulk Habara.................................. 120 1980 1,272 Arabian Gulf
Seabulk Shari................................... 120 1980 1,272 Arabian Gulf
Seabulk Houbare................................. 120 1980 1,272 Arabian Gulf
Seabulk Becky................................... 120 1980 1,130 Arabian Gulf
Seabulk Oryx.................................... 110 1980/1988 1,200 Arabian Gulf
Seabulk Seahorse................................ 100 1983/1992 1,000 Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
GEOPHYSICAL BOAT NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Acadian Searcher(2)............................. 220 1981 3,600 Australia
Seabulk Wyoming................................. 185 1979 2,250 West Africa
Ross Seal....................................... 176 1977/1987 1,700 Southeast Asia
Seabulk Vermont................................. 176 1977 1,700 Arabian Gulf
</TABLE>

42
<PAGE> 44

<TABLE>
<CAPTION>
ACCOMMODATION LENGTH YEAR BUILT/ AREA OF
JACK-UP RIG NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk Bravo................................ 150 1973 N/A Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
ACCOMMODATION LENGTH YEAR BUILT/ AREA OF
CRANE BARGE NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Seabulk Maintainer........................... 280 1966/1982 N/A Arabian Gulf
Seabulk Constructor.......................... 180 1973/1994 N/A Arabian Gulf
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
SURVEY VESSEL NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Red Fulmar(2)................................ 190 1968 2,400 West Africa
</TABLE>

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/
TUG NAME(1) HORSEPOWER (FEET) REBUILT PORT
<S> <C> <C> <C> <C>
Ocean Admiral(7)............................. 6,600 230 1974 Arabian Gulf
Seabulk Dayna(2)............................. 3,200 96 1973 Arabian Gulf
Seabulk Marlene(2)........................... 2,640 103 1976 Arabian Gulf
Seabulk Diana(2)............................. 2,200 99 1973 Arabian Gulf
</TABLE>

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

(1) Certain names reflect name changes currently in process.

(2) To be acquired.

(3) These offshore supply boats are currently chartered to a joint venture in
which the Company has a 49% interest and are operated by the joint venture
in Southeast Asia. The Company receives bareboat charter hire, which is at a
rate that is approximately equivalent to the capital costs of the vessels,
and has the right to receive a 49% share of net income from the venture. The
joint venture has the right to purchase each vessel for $300,000 upon
expiration of the charters in August 1998.

(4) Survey vessel.

(5) Utility vessel.

(6) Platform/supply vessel.

(7) Salvage vessel.

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

Port Everglades. Port Everglades has the second largest petroleum
non-refining storage and distribution center in the United States, providing
substantially all of the petroleum products for South Florida. Since 1958, when
the Company's tug operations were established, the Company has enjoyed a
franchise as the sole provider of docking services in the port. That franchise
specifies, among other things, that three tugs serving the port be less than 90
feet in length, because of the narrowness of slips in the port, and that tugs
have firefighting capability. The franchise is not exclusive and another
operator could be granted an additional franchise. Although a significantly
larger potential competitor sought a franchise in 1992, the Company won
unanimous endorsement from the Port Authority to continue its sole-franchise
relationship with the port when that competitor failed to make the requisite
showing of public need and necessity. The current franchise expires in 2007, and
there can be no assurance that it will be renewed.

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

43
<PAGE> 45

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

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

The following table sets forth certain information with respect to the 29
tugs and one SDM(TM) owned or operated by the Company in U.S. waters.

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/
VESSEL NAME(1) HORSEPOWER (FEET) REBUILT PORT
<S> <C> <C> <C> <C>
Kinsman Eagle II(2)(3)................... 6,700 110 1996 Tampa
Kinsman Condor(2)(3)..................... 6,700 110 1995 Tampa
Hawk(2).................................. 6,700 110 1995 Tampa
Tampa.................................... 6,000 100 1985 Tampa
Broward(2)(4)............................ 5,100 100 1995 Port Everglades
Vigilant(4).............................. 4,600 120 1981/1994 Offshore
New River(5)............................. 4,400 90 1997 Port Everglades
Reliant(2)............................... 4,300 100 1996 Long Beach
Ft. Lauderdale........................... 4,200 90 1971/1996 Port Everglades
Hollywood(4)............................. 4,200 106 1985 Offshore
Mobile Power............................. 4,100 98 1957/1986 Mobile
Z-Two(2)(6).............................. 4,100 94 1996 Mobile
Mobile Point............................. 4,000 107 1952/1990 Mobile
Challenger(4)............................ 3,600 110 1976 Tampa/Offshore
Mary Dee Sanders......................... 3,600 105 1941/1984 Port Canaveral
Mobile Pride(4).......................... 3,300 107 1969/1989 Offshore
Paragon(4)............................... 3,300 105 1978/1989/1996 Offshore
St. Petersburg........................... 3,300 95 1940 Tampa
Hillsborough............................. 3,300 94 1945/1981 Tampa
Clearwater............................... 3,300 93 1940 Tampa
Delta Deanna(2).......................... 3,200 92 1988 San Francisco
Delta Billie(2).......................... 3,200 92 1990 San Francisco
Mobile Persistence(7).................... 3,000 98 1940/1975 Port Canaveral
Brevard.................................. 2,400 88 1945/1986/1996 Port Canaveral
Captain Brinn............................ 2,145 88 1960/1986 Port Canaveral
Everglades............................... 2,145 88 1956/1984 Port Everglades
Manatee.................................. 2,145 88 1959/1982 Port Everglades
Orange................................... 2,000 93 1903 Tampa
Ybor..................................... 1,400 85 1965 Tampa
Trooper.................................. 800 63 1964 Tampa
</TABLE>

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

(1) Certain names reflect name changes currently in process.

(2) Tractor tug.

(3) Currently scheduled to be operated offshore Mexico in 1998.

(4) Equipped for offshore towing.

(5) SDM(TM).

(6) Vessel operated under a one-year bareboat charter.

(7) Expected to be retired in the first half of 1998.

44
<PAGE> 46

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

MARINE TRANSPORTATION SERVICES

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

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

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

The Company markets the five chemical carriers through its wholly owned
subsidiary OSTC. The total capacity of the five carriers represents
approximately 47% of the capacity of the domestic specialty chemical carrier
fleet, and four of the chemical carriers are among the last independently owned
carriers scheduled to be retired under OPA 90. See "-- The Industry -- Marine
Transportation Services -- Chemical Transportation."

45
<PAGE> 47

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

Petroleum Product Transportation.

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

The Seabulk Challenger has been under continuous contract to Shell since
its delivery in 1975 and to date has performed over 675 voyages for Shell. In
January 1990, Shell renewed the charter for a ten-year period ending in January
2000. Under the charter, the Company is responsible for operating costs such as
crew, maintenance, and insurance, and Shell pays for voyage costs such as fuel
and port charges. The charter hire rate is adjusted annually for inflation. The
charter may be canceled by Shell in January 1998 and January 1999 upon payment
of a percentage of the charter hire due over the remaining term of the charter.
Shell has in the past repeatedly renewed its charter of the Seabulk Challenger,
and continues to fully utilize the vessel. Because the termination penalties are
substantial, and Shell has provided significant capital enhancement to the
vessel, the Company believes that Shell will continue to charter the vessel
until January 2000, although there can be no assurance that it will do so. In
the fourth quarter of 1996, the charter rate was renegotiated and reduced by
approximately 6% to reflect the lower current market rate. The operating lease
under which the Company holds the Seabulk Challenger will not extend beyond
January 2000.

Sun State. In September 1994, the Company acquired the marine assets of
Sun State Marine, Inc. ("Sun State"), which then owned and operated an energy
transportation fleet of ten towboats and eight fuel barges (one small barge was
acquired in April 1995 and four small barges were acquired in December 1995),
all of which are engaged in fuel transportation along the Atlantic intracoastal
waterway and in the St. Johns River in Florida. Sun State has been in operation
for over 50 years, and the Company continues to operate it as a wholly-owned
subsidiary, Sun State Marine Services, Inc.

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

46
<PAGE> 48

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

<TABLE>
<CAPTION>
LENGTH YEAR BUILT/
VESSEL NAME HORSEPOWER (FEET) REBUILT
<S> <C> <C> <C>
Sun River City.............................................. 1,000 72 1994
Sun Commander............................................... 1,000 70 1968/1990
Sun Chief................................................... 1,000 72 1971/1990
Sun Merchant................................................ 1,000 65 1966/1994
Sun Trader.................................................. 850 56 1972/1980
Sun St. Johns............................................... 850 58 1961/1990
Sun Explorer................................................ 800 57 1980
Sun Gypsy................................................... 800 53 1976/1992
Sun Rebel................................................... 800 60 1957/1991
Sun Venture................................................. 800 66 1956/1986
</TABLE>

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

<TABLE>
<CAPTION>
BARGE LENGTH YEAR BUILT/
VESSEL NAME CAPACITY (FEET) REBUILT
<S> <C> <C> <C>
Sun State No. 1............................................. 25,684 bbls 290 1953/1994
Sun State No. 3............................................. 25,974 bbls 290 1962/1986
Sun State No. 4............................................. 25,974 bbls 290 1962/1984
Sun State No. 6............................................. 21,408 bbls 264 1950/1982
Sun State No. 7............................................. 20,700 bbls 264 1967/1990
Sun State No. 8............................................. 23,000 bbls 272 1970
Sun State No. 9............................................. 23,000 bbls 272 1970
Sun State 501............................................... 4,880 bbls 126 1966
Sun State 701............................................... 7,000 bbls 175 1942
Sun State 902............................................... 9,500 bbls 195 1947
Sun State 1101.............................................. 11,000 bbls 200 1963
Sun State 1102.............................................. 12,000 bbls 200 1997
Sun State 2501.............................................. 25,000 bbls 298 1973
Sun State 2701.............................................. 27,000 bbls 298 1975
Sun State 2702.............................................. 27,000 bbls 298 1973
Sun State 2703.............................................. 27,000 bbls 298 1974
</TABLE>

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

New Product Carriers. The Company has a 2.4% equity interest in five
45,300 dwt double-hull petroleum product carriers currently under construction
by Newport News Shipbuilding and Drydock Co. for delivery during 1999 and 2000.
The aggregate cost of the five carriers is estimated to be $255.0 million, of
which approximately $40.0 million will constitute equity investment and $215.0
million will be financed with the proceeds of government-guaranteed Title XI
ship financing bonds issued in March 1996. In addition to the Company's
interest, 25% of the equity interest in the vessels is held by Van Ommeren
International BV and 49.2% and 23.4%, respectively, by two other investors.
Subject to the condition that the current owner of the 49.2% interest has not
previously sold such interest to a third party, the Company has an option,
exercisable through 2002, to purchase the 49.3% interest at a price equal to (i)
the investor's equity investment plus a stated annual return, or (ii) if
exercised after December 31, 1997, the greater of the fair market value of the
interest or the amount set forth in (i). The Company also has an option,
exercisable on January 15, 1998, to purchase the additional 23.4% interest at a
price equal to the investor's equity investment plus a stated return. Should the
Company fail to exercise the latter option, the investor has the option to
acquire 1.6% of the ownership interest from the Company for nominal
consideration. The total estimated cost of exercising the Company's options is
up to $32.0 million (assuming the options are exercised prior to January 1,
1998). The

47
<PAGE> 49

Company currently has no understandings or agreements with respect to the
financing that it would require if it were to exercise either or both of these
options, and there can be no assurance that such financing will be available.

The five double-hull product carriers, the operations of which will be
managed by the Company, are intended to serve the market currently served by
single-hull product carriers whose retirement is mandated by OPA 90. The vessels
will operate in the U.S. domestic trade and may be operated pursuant to long- or
short-term charters, depending upon market conditions during the period prior to
their delivery and thereafter. The Company is serving as the construction
supervisor during the construction period.

OTHER SERVICES

Through its Sun State subsidiary, the Company owns a small marine
maintenance, repair, and drydocking facility in Green Cove Springs, Florida,
which is engaged principally in the maintenance of tugs and barges, offshore
support vessels, and other small vessels. The lease for the facility, including
options, expires in 2000. The towboat Sun River City was constructed in the
Green Cove Springs facility. This facility is capable of drydocking vessels up
to 300 feet in length for repair and can make dockside repairs on vessels up to
320 feet in length. Since October 1994, the Green Cove Springs facility has been
utilized to overhaul or rebuild a number of the Company's harbor tugs and
offshore energy support vessels. The facility (originally a U.S. government
naval repair and operations station) has covered steel fabrication facilities,
workshops, and office spaces adjacent to a 1,840-foot finger pier and mooring
basins, where the facility's three floating drydocks are located. The drydocks
are 60, 80, and 108 feet in length, and are capable of lifting 350, 200, and 500
tons, respectively. The 60 and 108 foot drydocks are capable of being joined
together for lifting a vessel or barge with a nominal capacity of 1,175 long
tons.

CUSTOMERS AND CHARTER TERMS

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

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

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

COMPETITION

The Company operates in a highly competitive environment in all its
operations. The principal competitive factors in each of the markets in which
the Company operates are suitability of equipment, personnel, price, service,
and reputation. Competitive factors in the offshore energy support segment also
include operating conditions and intended use (both of which determine the
suitability of vessel type),

48
<PAGE> 50

complexity of maintaining logistical support, and the cost of transferring
equipment from one market to another. The Company's vessels that provide
chemical and petroleum products transportation services compete with both other
vessel operators and, in some areas and markets, with alternative modes of
transportation, such as pipelines, rail tank cars, and tank trucks. Moreover,
the users of such services are placing increased emphasis on safety, the
environment, and quality, partly due to heightened liability for the cargo owner
in addition to the vessel owner/operator under OPA 90. See "-- Environmental and
Other Regulation -- Clean Water Regulations." With respect to towing services,
the Company's vessels compete not only with other providers of tug services, but
with the providers of tug services in nearby ports. Many of the companies with
which the Company competes have substantially greater financial and other
resources than the Company. Additional competitors may enter the Company's
markets in the future. Moreover, should U.S. coastwise laws be repealed,
foreign-built, foreign-manned, and foreign-owned vessels could be eligible to
compete with the Company's vessels. See "-- Environmental and Other
Regulation -- Coastwise Laws."

ENVIRONMENTAL AND OTHER REGULATION

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

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

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

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

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

OPA 90 expanded pre-existing financial responsibility requirements and
requires vessel owners and operators to establish and maintain with the United
States Coast Guard evidence of insurance or qualification as a self-insurer or
other evidence of financial responsibility sufficient to meet their potential
liabilities under

49
<PAGE> 51

OPA 90. U.S. Coast Guard regulations require evidence of financial
responsibility demonstrated by insurance, surety bond, self-insurance, or
guaranty. The regulations also implement the financial responsibility
requirements of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), which imposes liability for discharges of
hazardous substances such as chemicals, by increasing the amount of financial
responsibility from $1,200 to $1,500 per gross ton. The Company has obtained
COFRs pursuant to the Coast Guard regulations for its product carrier and for
its chemical carriers through self-insurance and commercial insurance and as
guarantor for the fuel barges.

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

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

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

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

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

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

50
<PAGE> 52

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

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

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

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

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

INSURANCE

The Company's marine transportation services operations are subject to the
normal hazards associated with operating vessels carrying large volumes of cargo
or rendering services in a marine environment. These hazards include the risk of
loss of or damage to the Company's vessels, damage to third parties as a result
of collision, loss, or contamination of cargo, personal injury of employees,
pollution, and other environmental damages. The Company maintains insurance
coverage against these hazards. Risk of loss of or damage to the Company's
vessels is insured through hull insurance policies in amounts that approximate
fair market value. Vessel operating liabilities, such as collision, cargo,
environmental, and personal injury, are insured primarily

51
<PAGE> 53

through the Company's participation in the Steamship Mutual Underwriting
Association (Bermuda Limited), a mutual insurance association under which the
coverage against such hazards is currently unlimited for each incident except in
the case of pollution, which is limited to $700 million (the maximum amount
available) for each incident involving the Company's chemical and petroleum
products carriers and $500 million with respect to its other vessels. Because it
maintains mutual insurance, the Company is subject to funding requirements and
coverage shortfalls in the event claims exceed available funds and reinsurance
and to premium increases based on prior loss experience.

LEGAL PROCEEDINGS

The Seabulk America was completed in 1990 by combining the stern portion of
the wrecked oil tanker Fuji with the forebody of the chemical barge portion of
the former integrated tug/barge Oxy Producer/Oxy 4102. In Norfolk Shipbuilding
and Dry Dock Corporation v. Seabulk Transmarine Partnership, Ltd., pending in
the U.S. District Court for the Eastern District of Louisiana (Civil Action No.
93-1312), one of the shipyards that contracted to complete the Seabulk America
for the Company is seeking to recover from the Company approximately $6.1
million for alleged additions and changes to the contract work and costs of
alleged delay and disruption, in addition to $2.4 million of the $5.9 million
contract price that the Company has withheld. In addition, the shipyard is
seeking legal fees and expenses. The Company has asserted counterclaims
aggregating $5.6 million for contract deletions, unfinished and defective work,
and liquidated damages for late delivery. In 1993, when this suit was filed, the
Company obtained a $5.6 million letter of credit in order to furnish a bond
required to obtain the release of the Seabulk America, which had been arrested
pursuant to customary procedures in litigation involving vessels. The suit,
which involves numerous complex factual issues, is currently in the trial stage.
While the Company believes that the plaintiff's claims are without merit and
that its counterclaims are meritorious, there can be no assurance that the
ultimate resolution of the suit will not require some payment by the Company in
addition to the $3.6 million previously paid.

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

EMPLOYEES

As of November 30, 1997, the Company had approximately 2,250 employees.
Management considers relations with employees to be satisfactory. The Seabulk
America, Seabulk Challenger, and Seabulk Magnachem are manned by approximately
108 officers and crew who are subject to two collective bargaining arrangements.
In addition, the HMI Dynachem, HMI Petrochem, and HMI Astrachem are manned by
approximately 90 members of national maritime labor unions pursuant to an
agreement between the Company and a third party employer. In connection with the
Care acquisition, the Company expects to add approximately 550 additional
employees.

PROPERTIES

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

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<PAGE> 54

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are:

<TABLE>
<CAPTION>
NAME AGE CURRENT POSITIONS
<S> <C> <C>
J. Erik Hvide(1)(2)............................. 49 Chairman of the Board, President, Chief
Executive Officer, and Director
John H. Blankley(1)(2).......................... 50 Executive Vice President, Chief
Financial Officer, and Director
Eugene F. Sweeney(1)............................ 54 Executive Vice President -- Operations
and Director
Walter S. Zorkers............................... 51 Senior Vice President -- Corporate
Development
Andrew W. Brauninger............................ 51 Senior Vice President -- Offshore
Division and President -- Seabulk
Offshore, Ltd
Leo T. Carey.................................... 45 Vice President -- Ship Management
Arthur T. Denning............................... 43 Vice President -- Engineering
Gene Douglas.................................... 50 Vice President -- Legal & General
Counsel and Secretary
William R. Ludt................................. 50 Vice President -- Inland Services
Division and President -- Sun State
Marine Services, Inc.
John J. O'Connell, Jr........................... 53 Vice President -- Corporate
Communications
Robert A. Santos................................ 65 Vice President -- Offshore and Harbor
Towing Operations
Christopher D. Strong........................... 39 Vice President -- Finance and Treasurer
Robert B. Calhoun, Jr.(2)(3).................... 55 Director
Gerald Farmer(3)(4)............................. 52 Director
Jean Fitzgerald(1)(4)........................... 71 Director
John J. Lee(4).................................. 61 Director
Walter C. Mink(3)............................... 71 Director
Robert Rice(3).................................. 75 Director
Raymond B. Vickers(4)........................... 48 Director
</TABLE>

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

(1) Member of the Executive Committee.

(2) Member of the Special Acquisitions Committee.

(3) Member of the Audit Committee.

(4) Member of the Compensation Committee.

MR. HVIDE has been the Company's Chairman since September 1994 and its
President and Chief Executive Officer since January 1991. He has been a director
of the Company since 1973. From 1981 until 1991, Mr. Hvide was President and
Chief Operating Officer of the Company. He has been employed by the Company in
various capacities since 1970 and became Vice President in 1973. He is also a
director of the American Waterways Operators, a participant on the
Transportation Committee of the American Petroleum Institute, a member of the
American Bureau of Shipping, a past Chairman of the Board of the American
Institute of Merchant Shipping, a past appointee to the U.S. Coast Guard's
Towing Safety Advisory Committee, and a director of Seal Holdings Corporation, a
publicly traded company seeking to make acquisitions. Mr. Hvide is the son of
Hans J. Hvide, the founder of the Company.

MR. BLANKLEY has been a director of the Company since September 1991 and
has been Executive Vice President -- Chief Financial Officer since September
1995. He previously served as a director and Chief Financial Officer of Harris
Chemical Group Inc., a chemical manufacturing company, from April 1993 to

53
<PAGE> 55

August 1994. Mr. Blankley is the owner of Seafirst Capital, a ship finance
consulting business he founded in 1994. He served as Executive Vice
President -- Finance and Chief Financial Officer of Stolt-Nielsen, Inc., a
publicly traded international operator of specialty chemical tankers, from 1985
to 1991. From 1983 until 1985, Mr. Blankley was a director, Senior Vice
President, and Chief Financial Officer of BP North America Inc. Mr. Blankley is
also a director of MC Shipping, a publicly traded operator of container feeder
vessels.

MR. SWEENEY has been Executive Vice President -- Operations of the Company
since September 1994 and a director since 1984. He was Senior Vice
President -- Operations of the Company from 1991 to September 1994. He joined
the Company in 1981 as Vice President -- Ship Management. Prior to joining the
Company, Mr. Sweeney was employed for 17 years by Texaco, Inc., where he served
in seagoing and shore management positions, including operations manager of
Texaco's U.S. tanker fleet. Mr. Sweeney is past President of the Chemical
Carriers Association, a member of the Society of Naval Architects and Marine
Engineers and served as a member of a National Academy of Sciences Committee to
study marine navigation and pilotage.

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

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

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

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

MR. DOUGLAS has been Vice President -- Legal & General Counsel and
Secretary of the Company since 1975. He was an attorney with the Fort
Lauderdale, Florida law firm of Spear and Deuschle, P. A. prior to joining the
Company. He has been admitted to the Florida Bar since 1972 and is admitted to
practice before various federal courts. He is also a member of the American Bar
Association, the Maritime Law Association of the United States, and other
professional organizations.

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

MR. O'CONNELL has been Vice President -- Corporate Communications since
August 1996, when he joined the Company. From September 1995 to August 1996 he
was an independent consultant. Previously, he served in a variety of management
positions with W. R. Grace & Co. for 20 years, most recently as Director of

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<PAGE> 56

Public Affairs. Mr. O'Connell was a member of the President's Private Sector
Survey on Cost Control in the Federal Government from 1982 to 1984.

MR. SANTOS has been Vice President -- Towing Operations of the Company
since 1983. Mr. Santos joined the Company as its Towing Operations Manager in
1962. He has served as a Commissioner of Florida's Board of Pilot Commissioners,
Chairman of the Escort Vessel Subcommittee of the American Waterways Operators
and as a member of various marine-related trade associations and boards.

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

MR. CALHOUN has been a director of the Company since September 1994. Mr.
Calhoun has been President of Clipper Asset Management Corporation, the sole
general partner of The Clipper Group, L. P., a private investment firm, since
1991. From 1975 to 1991, Mr. Calhoun was a Managing Director of CS First Boston
Corporation, an investment banking firm. Mr. Calhoun serves as a director of
Avondale Mills, Inc., a textile company, Interstate Bakeries Corporation, a
national distributor of baked goods, and Sterling Chemicals Holdings, Inc., a
chemical producer. He also serves as a director of several privately held
companies.

MR. FARMER has served as a director of the Company since 1975. He was
Executive Vice President -- Chief Financial Officer and Treasurer of the Company
from September 1994 until September 1, 1995. In September 1995 Mr. Farmer
retired as Chief Financial Officer and Treasurer and continued to serve as an
Executive Vice President of the Company through December 15, 1995. He was Senior
Vice President -- Finance and Administration from January 1991 to September
1994, having joined the Company in 1973 as Vice President -- Finance.

MR. FITZGERALD has been a director of the Company since March 1994. Since
1992, he has served as the Chairman of Florida Alliance, Inc., a consortium of
maritime interests. From 1990 to 1992, he was Executive Vice President of NDE
Testing & Equipment, Inc., a nationwide storage-tank testing company. From 1988
to 1990, he was with Frederic R. Harris, Inc., an international consulting
engineering firm. Mr. Fitzgerald was a co-founder and the President of American
Tank Testing Service, Inc., a firm that was subsequently acquired by NDE
Environmental Corporation, from 1986 to 1987. In 1982 and 1983, he served as the
Company's Vice President for Governmental Affairs. His other business experience
includes service as President of Tracor Marine, Inc. from 1976 to 1979 and
Director of Engineering of Tracor's Systems Technology Division from 1974 to
1976. Mr. Fitzgerald retired from the U.S. Navy in 1974 in the rank of Captain.
During his naval career he commanded major fleet units at sea and served in the
offices of the Chief of Naval Operations and the Secretary of Defense. He is a
past Commissioner and Chairman of the Port Everglades Authority.

MR. LEE has been a director of the Company since September 1994 and is
Chairman and Chief Executive Officer of Hexcel Corporation, an advanced
materials manufacturer. Mr. Lee joined the Board of Hexcel Corporation in May of
1993 as an outside independent director. In August 1993, Mr. Lee was asked to
become the Chairman and Co-Chief Executive Officer of Hexcel Corporation, which
was experiencing financial difficulties, in order to effect a consensual
reorganization. In December 1993, having concluded that a consensual
reorganization could not be accomplished, Hexcel Corporation filed for
protection under Chapter 11 of the Federal Bankruptcy Code and appointed Mr. Lee
sole Chief Executive Officer to effect a Plan of Reorganization. The
reorganization was completed in February 1995 and Hexcel emerged from Chapter
11. Mr. Lee has been a Director of Aviva Petroleum, Inc. since August 1993, and
has been Chairman, President and Chief Executive Officer of Lee Development
Corporation, a corporation providing investment and merchant banking services,
since 1987. He was a director of XTRA Corporation, a Massachusetts-based
transportation and equipment leasing company, from 1990 through January 1996.
Mr. Lee also served as Chairman and Chief Executive Officer of Seminole
Corporation, a fertilizer manufacturer, from July 1989 through April 1993 and
director of Tosco Corporation, a refiner, from April 1988 through April 1993 and
was

55
<PAGE> 57

President and Chief Operating Officer of Tosco Corporation from April 1990
through April 1993. Mr. Lee is an advisor to The Clipper Group, L.P. and is a
trustee of Yale University.

MR. MINK has been a director of the Company since October 1990. He is
President of Walter C. Mink & Associates, a maritime advisory and consulting
firm in Las Vegas, Nevada. From 1978 to 1986, Mr. Mink was President of Mobil
Shipping and Transportation Company. Previously, he was President of Seabrokers,
Inc., a marine brokerage firm, and was earlier employed by Lago Oil, Esso
Tankers, and Mobil Oil Transport. Mr. Mink is a director of First Olsen Tankers,
Ltd. He served on the Board of Managers of the American Bureau of Shipping and
is a member of the Society of Naval Architects and Marine Engineers.

MR. RICE has been a director of the Company since January 1992. A financial
consultant, he was Senior Vice President of Citibank, N.A. from 1954 to his
retirement in 1983. Mr. Rice is a director of ATCO Ltd., First Olsen Tankers
Ltd., and Pride Refining Inc.

DR. VICKERS has been a director of the Company since March 1994. An
attorney in private practice in Florida, he has represented more than a hundred
financial institutions. He is the author of Panic in Paradise: Florida's Banking
Crash of 1926 and an adjunct professor of U.S. economic and business history at
Florida State University. From 1975 to 1979, he served as Assistant Comptroller
of the State of Florida.

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<PAGE> 58

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock immediately prior to the Offering and as adjusted to
give effect to the sale of 5,000,000 shares of Class A Common Stock by the
Company in the Offering, by (i) certain of the Company's executive officers,
(ii) each director of the Company, (iii) each of the Company's shareholders who
is known by the Company beneficially to own at least five percent of any class
of Common Stock of the Company or at least five percent of the voting power of
the Company's Common Stock, and (iv) all executive officers and directors of the
Company as a group. Management believes that the beneficial owners of the Common
Stock listed below, based on information furnished by such owners, have sole
voting and investment power with respect to such shares, subject to community
property laws where applicable, the provisions of the Shareholders Agreement,
and the information contained in the footnotes to the table below.

<TABLE>
<CAPTION>
COMMON STOCK
-------------------
CLASS A CLASS B PERCENTAGE
COMMON STOCK COMMON STOCK OF TOTAL
------------ ------------ VOTING POWER
SHARES SHARES -------------------
BENEFICIALLY BENEFICIALLY BEFORE AFTER
NAME OWNED(1) OWNED(1) OFFERING OFFERING
<S> <C> <C> <C> <C>
J. Erik Hvide(2)................................... 10,000 1,496,466 36.1% 32.2%
Hvide Family Trust I(3)............................ -- 1,215,244 29.3% 26.2%
Hvide Family Trust II(3)........................... -- 78,230 1.9% 1.7%
Clipper/Park HMI, L.P.(4).......................... 213,952 650,084 16.2% 14.5%
Clipper/Hercules, L.P.(4).......................... 118,303 359,459 9.0% 8.0%
Clipper/Merban, L.P.(4)............................ 305,433 112,003 3.4% 3.1%
Clipper/Merchant HMI, L.P.(4)...................... 85,583 260,033 6.5% 5.8%
Clipper Capital Associates, L.P.(4)(5)............. 732,708 1,410,253 35.8% 31.9%
Metropolitan Life Insurance Company(4)............. 71,820 -- * *
Olympus Growth Fund II, L.P.(4).................... 67,596 -- * *
John H. Blankley................................... 1,276 -- * *
Eugene F. Sweeney.................................. 9,164 -- * *
Gene Douglas....................................... 4,668 -- * *
Walter S. Zorkers.................................. -- -- * *
Andrew W. Brauninger............................... 8,063 -- * *
Robert B. Calhoun, Jr.(5).......................... 733,920 1,410,253 35.8% 31.9%
Gerald Farmer...................................... 5,968 -- * *
Jean Fitzgerald.................................... 2,149 -- * *
John J. Lee........................................ 1,215 -- * *
Walter C. Mink..................................... 1,164 -- * *
Robert Rice........................................ 3,000 -- * *
Raymond B. Vickers................................. 11,000 -- * *
All executive officers and directors as a group
(19 persons)(5).................................. 795,705 2,906,719 72.1% 64.3%
</TABLE>

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

* Less than one percent

(1) Unless otherwise indicated, the address of each of the persons whose name
appears in the table above is: c/o Hvide Marine Incorporated, 2200 Eller
Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316.

(2) Includes the shares held by Hvide Family Trust I and Hvide Family Trust II,
of which Mr. Hvide is the sole trustee.

(3) J. Erik Hvide is the sole trustee for both trusts. Hvide Family Trust I is a
trust for the benefit of Mr. Hvide, his sister, Elsa Hvide Sowrey (now known
as Elsa Hvide Mumma) and their children in which Mr. Hvide has an economic
interest in 65% of the income of the trust. Hvide Family Trust II is a trust
for the benefit of Elsa Hvide Sowrey and her children, in which Mr. Hvide
has no economic interest.

(4) Member of the Investor Group, defined as the "Investor Shareholders" in the
Company's Articles of Incorporation. The Investor Group owns an aggregate of
872,124 shares of Class A Common Stock and 1,410,253 shares of Class B
Common Stock (31.5% of total voting power). The address for Clipper Capital
Associates, L.P., Clipper/Hercules HMI, L.P., Clipper/Merban, L.P.,
Clipper/Merchant HMI, L.P., Clipper/Park HMI, L.P. is: c/o Clipper Capital
Associates, L.P., 650 Madison Avenue, 9th Floor, New York, NY 10010. The
address for Metropolitan Life Insurance Company is: 334 Madison Avenue, P.O.
Box 633, Convent Station, New Jersey 07961-0633. The address for Olympus
Growth Fund II, L.P. is: c/o Olympus Partners, Metro Center, One Station
Place, Stamford, Connecticut 06902.

(5) Includes shares held by Clipper/Hercules, L.P., Clipper/Merban, L.P.
Clipper/Merchant, L.P., and Clipper/Park, L.P. Capital Associates, L.P. is
the general partner of those entities, and Mr. Calhoun is an officer,
director, and stockholder of the corporate general partner of Clipper
Capital Associates, L.P.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a description of the principal terms of certain of the
Company's existing indebtedness.

CREDIT FACILITY

The Company is party to a revolving credit agreement dated September 30,
1997 with Citibank N.A., as Administrative Agent and BancBoston Securities Inc.
as Syndication Agent providing for a $175.0 million revolving line of credit
(the "Credit Facility") that matures on September 30, 2002 (the "Maturity
Date"). The Company's outstanding indebtedness under the Credit Facility is
expected to be approximately $121.5 million at the time of the Offering, of
which the Company intends to repay approximately $46.0 million with a portion of
the proceeds of the Offering.

Borrowings under the Credit Facility bear interest at LIBOR or the higher
of (i) the base rate of the Administrative Agent or (ii) the Federal Funds rate
plus 0.5%, at the Company's option, plus a margin based upon the ratio of the
Company's consolidated debt to EBITDA. The effective interest rate under the
Credit Facility was 6.1% at November 30, 1997.

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

Events of default under the Credit Facility include, among other things,
(i) any failure to pay principal thereunder when due, or to pay interest or fees
within three business days after the date due; (ii) the breach of certain
covenants or the inaccuracy of certain representations or warranties made under
the Credit Facility; (iii) any failure to pay amounts due on certain
indebtedness, or defaults that result in or permit the acceleration of such
indebtedness; (iv) certain events of bankruptcy, insolvency, or dissolution; (v)
certain judgments or orders; (vi) an acceleration of the maturity of the Trust
Preferred Securities or in certain circumstances the prepayment, redemption or
repurchase of the Trust Preferred Securities, or any default under the Trust
Preferred Securities, and (vii) a change in control.

TERM LOAN

The Company is party to a term loan agreement dated November 26, 1997 with
BankBoston, N.A., as Agent, providing a staged advance term of $300.0 million
which can be drawn at any time prior to April 1, 1998 (the "Term Loan").
Proceeds of the Term Loan are available primarily to finance the Care
acquisition and are payable in 28 equal quarterly installments from June 30,
1998 through March 31, 2005. The Company's outstanding indebtedness under the
Term Loan is expected to be $300.0 million at the time of the Offering, of which
$100.0 million will be repaid with a portion of the proceeds of the Offering.

Borrowings under the Term Loan bear interest at LIBOR plus 1% until June
30, 1998, and thereafter at LIBOR or the higher of (i) the Agent's base rate or
(ii) the Federal Funds rate plus 0.5%, at the Company's option, plus a margin
based upon the ratio of the Company's consolidated debt to EBITDA. The effective
interest rate under the Term Loan was % at December , 1997. Covenants and
events of default under the Term Loan are substantially the same as those under
the Credit Facility.

LONG-TERM CHARTER OBLIGATIONS

Title XI Bonds. Two of the Company's subsidiaries are parties to
long-term, "hell or high water" charters of the Seabulk Challenger and the
Seabulk Magnachem, the performance of which is guaranteed by the Company. Both
vessels were financed by the issuance of U.S. Government Guaranteed Ship
Financing

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Bonds issued pursuant to Title XI of the Merchant Marine Act, 1936, as amended
("Title XI") in leveraged lease transactions. As of December 31, 1996, the total
remaining outstanding obligations of the Company under the charters for the
Seabulk Challenger and Seabulk Magnachem are $4.3 million and $10.6 million,
respectively. The Company's aggregate payments due under such charters for 1997
and 1998 are $3.2 million and $3.3 million, respectively. The long-term charter
for the Seabulk Challenger is coterminous with the maturity date of the
respective obligation, and the charter for the Seabulk Magnachem terminates in
2002. The Company has the option to purchase the vessels or renew the charters
at fair market value and, with respect to the Seabulk Magnachem, has the right
to share in the residual value proceeds of any sale to a third party.

In connection with the acquisition of the OMI Chemical Carriers the Company
assumed approximately $34.7 million of Title XI bonds bearing interest at an
average rate of 7.65%. In connection with the Bay acquisition the Company
assumed approximately $15.1 million of Title XI bonds bearing interest at an
average rate of 7.6%.

Repayment of the Company's Title XI bonds is guaranteed by the full faith
and credit of the United States, acting through the Maritime Administration. As
security for such guarantee, the vessels are mortgaged to the United States, and
the subsidiaries that own or charter the vessels are each party to a security
agreement and a financial agreement with the United States containing various
operating covenants and financial conditions that, among other things, restrict
the ability of each to (i) incur additional indebtedness, (ii) make certain
loans, advances, or investments, (iii) create certain liens, (iv) pay stock
dividends, (v) sell, transfer, or dispose of assets, (vi) change the nature of
its business, (vii) make capital expenditures, (viii) effect certain mergers,
consolidations, or similar business combinations, or (ix) enter into certain
vessel charter arrangements. The agreements specify various events of default,
including failure to pay charter hire, pay certain guarantee fees, satisfy
certain covenants, maintain required insurance, and maintain U.S. citizenship
(within the meaning of Section 2 of the Shipping Act, 1916) and certain events
of insolvency or bankruptcy.

Bareboat Charters. The Company is party to bareboat charters relating to
four offshore service vessels, two of which expire in June 2001 and two of which
expire in January 2002. See "Certain Transactions" and Note 4 to the Company's
consolidated financial statements. The Company has an option to purchase each of
these vessels for a nominal amount upon the expiration of the charters. The
Company is also party to two bareboat charters relating to a total of nine crew
boats. The charter on one crew boat expires in 2002 with an option to purchase
the vessel for $0.4 million. The charter on the remaining eight crew boats
expires in 2004 with an option to purchase the vessels for a nominal amount. In
addition, the Company is party to a bareboat charter on a tractor tug which
expires in 2010 with an option to purchase the vessel for $1.6 million.

DESCRIPTION OF THE TRUST CONVERTIBLE PREFERRED SECURITIES

The following summary description of the Trust Preferred Securities is
qualified in its entirety by reference to the Guarantee, the Amended and
Restated Declaration of Trust and the Trust Indenture, all dated June 27, 1997
(referred to herein as the "Guarantee," the "Declaration," and the "Indenture,"
respectively), which have been filed as exhibits to the Company's Registration
Statement on Form S-3, Registration No. 333-34941.

The Trust Preferred Securities represent undivided beneficial interests in
the assets of Hvide Capital Trust (the "Trust"), a statutory business trust
created under the laws of the State of Delaware. All of the common securities of
the Trust are owned by the Company. The Trust was created solely for the purpose
of issuing the Trust Preferred Securities and investing the proceeds from the
issuance thereof in the Company's 6 1/2% Convertible Subordinated Debentures due
June 15, 2012 (the "Debentures"), which are the sole assets of the Trust. On
June 27, 1997, the Trust issued 2,300,000 Trust Preferred Securities to several
initial purchasers who in turn resold the securities in transactions exempt from
the registration requirements of the Securities Act. In October 1997 the Trust
Preferred Securities and the Class A Common Stock issuable upon their conversion
were registered under the Securities Act to permit their resale.

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<PAGE> 61

Holders of the Trust Preferred Securities are entitled to receive
preferential cumulative cash distributions from the Trust at an annual rate of
6 1/2% of the liquidation preference of $50 per Trust Preferred Security,
payable in quarterly installments. Distributions on the Trust Preferred
Securities correspond to the interest rate and interest and other payment dates
in the Debentures. As a result, if principal or interest is not paid on the
Debentures, no amounts are paid on the Trust Preferred Securities.

Each Trust Preferred Security is convertible, at the option of the holders
of the Trust Preferred Securities and subject to certain conditions, into shares
of the Company's Class A Common Stock at the rate of 1.7544 shares of Class A
Common Stock for each Trust Preferred Security (equivalent to $28.50 per share
of Class A Common Stock), subject to adjustment under certain circumstances. In
order to maintain the Company's eligibility to operate vessels in the U.S.
domestic trade, however, no conversion of the Trust Preferred Securities will be
effected if such conversion will cause more than 25% of the Company's
outstanding Common Stock to be held by non-citizens, thereby violating the
requirement that 75% of the outstanding capital stock and voting power of the
Company be held by U.S. citizens.

So long as the Company is not in default under the Debentures, the Company
has the right, subject to certain conditions, to defer payment of interest on
the Debentures for a period not exceeding 20 consecutive quarters with respect
to each deferral period. If interest payments on the Debentures are so deferred,
distributions on the Trust Preferred Securities will also be deferred and the
Company will not be permitted, subject to certain exceptions, to declare or pay
cash distributions with respect to the Company's capital stock or debt
securities that rank pari passu with or junior to the Debentures. During
deferral periods, interest on the Debentures will continue to accrue and the
amount of distributions to which holders of the Trust Preferred Securities are
entitled will accumulate at the stated rate per annum, compounded quarterly.

Except under certain circumstances, the Trust Preferred Securities may not
be redeemed by the Trust prior to July 2, 2000. Thereafter, the Trust Preferred
Securities are subject to mandatory redemption, in whole or in part, at preset
redemption prices, upon a permitted redemption of the Debentures. In addition,
the Trust Preferred Securities are subject to mandatory redemption upon payment
at maturity or as a result of acceleration of the Debentures.

The Trust Preferred Securities are subject to exchange for Debentures, or
redemption, in whole or in part, if there is more than an insubstantial risk
that the Trust is or will be considered an "investment company" that is required
to be registered under the Investment Company Act of 1940, as amended, or if
there is more than an insubstantial risk that the Company, the Trust or the
Debentures will be subjected to certain adverse tax consequences, as a result of
a change in any law relevant to the foregoing. At any time, the Company has the
right to terminate the Trust and cause the Debentures to be distributed to the
holders of Trust Preferred Securities in liquidation of the Trust.

The Company has, through the Guarantee, the Declaration, the Debentures and
the Indenture, taken together, fully, irrevocably and unconditionally guaranteed
all of the Trust's obligations under the Trust Preferred Securities. The
Guarantee of the Company guarantees the payment of distributions and payments on
liquidation or redemption of the Trust Preferred Securities, but only in each
case to the extent of funds held by the Trust. The obligations of the Company
under the Guarantee are subordinate and junior in right of payment to all other
liabilities of the Company and rank pari passu with any guarantee entered into
by the Company in respect of any preferred or preference stock of any affiliate
of the Company.

The Debentures are subordinate and junior in right of payment to all senior
debt of the Company. The terms of the Debentures place no limitation on the
amount of senior debt that may be incurred by the Company or its subsidiaries.
The Company has the right, on or after July 2, 2000, to redeem the Debentures,
in whole or in part, at preset redemption prices.

In the event of the dissolution of the Trust, after satisfaction of the
creditors of the Trust, as provided by applicable law, the holders of Trust
Preferred Securities will be entitled to receive a liquidation preference of $50
per Trust Preferred Security plus any accumulated and unpaid distributions
thereon to the date of payment, which may be in the form of a distribution of
such amounts in Debentures, subject to certain exceptions.

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DESCRIPTION OF CAPITAL STOCK

The following summary description of the Company's capital stock is
qualified in its entirety by reference to the Articles of Incorporation and its
Amended and Restated Bylaws (the "Bylaws"), copies of which have been included
as exhibits to the Registration Statement relating to the IPO, and reference to
Florida law. All capitalized terms used and not defined below have the
respective meanings assigned to them in the Articles of Incorporation.

The authorized capital stock of the Company consists of 100,000,000 shares
of Class A Common Stock, par value $.001 per share, of which 12,373,236 shares
were issued and outstanding as of November 30, 1997, 5,000,000 shares of Class B
Common Stock, par value $.001 per share, of which 2,906,719 shares were issued
and outstanding as of November 30, 1997, and 10,000,000 shares of Preferred
Stock, par value $1.00 per share, none of which are issued and outstanding.

COMMON STOCK

The holders of Common Stock are entitled to receive such dividends, in
cash, property or securities, as may be declared from time to time by the Board
of Directors out of funds legally available therefor. The holders of Common
Stock are entitled to participate in dividends ratably on a per share basis. If
dividends consist of Common Stock or other voting securities of the Company, the
voting rights of each such security shall correspond to the voting rights of the
security held. Any dividend declared for one class of Common Stock must be
declared for the other classes of Common Stock. The holders of Common Stock have
no preemptive or redemption rights and are not subject to future calls or
assessments by the Company. Subject to the prior rights of holders, if any, of
any outstanding class or series of capital stock having a preference in relation
to the Common Stock as to distributions upon dissolution, liquidation, and
winding-up of the Company, holders of Common Stock are entitled to share ratably
in any assets of the Company that remain after payment in full of all debts and
liabilities of the Company.

The holders of Class A Common Stock and Class B Common Stock vote together
as a single class on all matters submitted to a vote of the shareholders,
including the election of directors, except as described below under "-- Foreign
Ownership Restrictions" and as provided under Florida law. In all matters
submitted to a vote of the shareholders, including the election of directors,
and except as described below under "-- Foreign Ownership Restrictions" and
under "-- Certain Provisions of Articles of Incorporation and Bylaws," each
share of Class A Common Stock is entitled to one vote and each share of Class B
Common Stock is entitled to ten votes. The shareholders do not have cumulative
voting rights.

The Class B Common Stock can be owned only by (i) J. Erik Hvide and,
subject to certain limitations set forth in the Articles of Incorporation, any
person related to him by kinship or marriage, trusts or similar arrangements
established solely on the behalf of one or more of them, and partnerships and
other entities that are wholly owned by them (collectively, the "Hvide Family");
or (ii) the Investor Group and its affiliates. If the ownership or beneficial
interest in any share of Class B Common Stock ceases to be vested in any of
these persons, then such share will automatically and immediately convert into a
share of Class A Common Stock, although such a conversion will not occur where
Class B Common Stock is transferred from one Hvide Family member, upon death, to
another Hvide Family member.

Except as described below under "-- Foreign Ownership Restrictions," each
holder of Class B Common Stock may elect at any time to convert any of his
shares, share for share, into Class A Common Stock.

The Hvide Family and the Investor Group hold 51.5% and 48.5%, respectively,
of the outstanding Class B Common Stock. The Hvide Family and the Investor Group
own 7.4% and 11.3%, respectively, of the combined classes of Common Stock and
each controls 32.2% of the voting power of such stock upon completion of the
Offering and control the management and affairs of the Company and any corporate
actions requiring shareholder approval.

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PREFERRED STOCK

The Board of Directors has the authority, without further action by the
shareholders, to issue from time to time shares of Preferred Stock in one or
more series and to fix, with respect to each series, the number of shares,
voting powers, designations, relative rights, preferences (including seniority
upon liquidation), privileges, and restrictions thereof. The rights,
preferences, privileges, and restrictions of different series of Preferred Stock
may differ with respect to dividend rates, amounts payable on liquidation,
voting rights, conversion rights, redemption provisions, sinking fund
provisions, and other matters. The Preferred Stock is subject to the dual stock
certificate system described below under "--Foreign Ownership Restrictions."

The issuance of Preferred Stock could decrease the amount of earnings and
assets available for distribution to holders of Common Stock, could adversely
affect the rights and powers, including voting and distribution rights, of
holders of Common Stock and could have the effect of delaying, deferring, or
preventing a change in control of the Company. Except as otherwise provided by
law, the holders of any series of Preferred Stock may be given the right, voting
separately as a class, to elect one or more directors of the Company. The term
of any such director would expire at the next succeeding annual meeting of
shareholders.

The Company has no present intention to issue any shares of Preferred
Stock.

FOREIGN OWNERSHIP RESTRICTIONS

The Articles of Incorporation (i) contain provisions limiting the aggregate
percentage ownership by Non-Citizens of each class of the Company's capital
stock (including the Class A Common Stock and the Class B Common Stock) to
24.99% of the outstanding shares of each such class (the "Permitted Percentage")
to ensure that such foreign ownership will not exceed the maximum percentage
permitted by applicable federal law (presently 25.0%), (ii) require institution
of a dual stock certificate system to help determine such ownership, and (iii)
permit the Board of Directors to make such determinations as may reasonably be
necessary to ascertain such ownership and implement such limitations. These
provisions are intended to protect the Company's ability to operate its vessels
in the U.S. domestic trade governed by the Jones Act. The ability of the Company
to so operate is necessary to avoid default under certain of the Company's
financings, may enhance the Company's ability to incur additional debt, and may
have other effects upon the Company. See "Risk Factors -- Restriction on Foreign
Ownership" and "Business -- Environmental and Other Regulation -- Coastwise
Laws."

To provide a method to enable the Company reasonably to determine stock
ownership by Non-Citizens, the Articles of Incorporation require the Company to
institute (and to implement through the transfer agent for the Common Stock) a
dual stock certificate system, pursuant to which certificates representing
shares of Common Stock will bear legends that designate such certificates as
either "citizen" or "non-citizen," depending on the citizenship of the owner.
Accordingly, stock certificates are denominated as "citizen" (blue) in respect
of Class A Common Stock owned by Citizens and as "non-citizen" (red) in respect
of Class A Common Stock owned by Non-Citizens. The Company may also issue
non-certificated shares through depositories if the Company determines such
depositories have established procedures that allow the Company to monitor the
ownership of Common Stock by Non-Citizens.

For purposes of the dual stock certificate system, a "Non-Citizen" is
defined as any person other than a Citizen, and a "Citizen" is defined as: (i)
any individual who is a citizen of the U.S. by birth, naturalization, or as
otherwise authorized by law; (ii) any corporation (a) organized under the laws
of the U.S., or a state, territory, district, or possession thereof, (b) of
which title to not less than 75% of its stock is beneficially owned by and
vested in Citizens, free from any trust or fiduciary obligation in favor of
Non-Citizens, (c) of which not less than 75% of the voting power is vested in
Citizens, free from any contract or understanding through which it is arranged
that such voting power may be exercised directly or indirectly in behalf of
Non-Citizens, (d) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, (e) whose president
or chief executive officer, chairman of the board of directors and all officers
authorized to act in their absence or disability are Citizens, and (f) of which
more than 50% of that number of its directors necessary to constitute a quorum
are Citizens; (iii) any partnership (a) organized under the laws of the U.S., or
a state, territory, district, or possession thereof, (b) all general partners of
which are Citizens,

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<PAGE> 64

and (c) of which not less than a 75% interest is beneficially owned and
controlled by, and vested in, Citizens, free and clear of any trust or fiduciary
obligation in favor of Non-Citizens; (iv) any association (a) organized under
the laws of the U.S., or a state, territory, district, or possession thereof,
(b) of which 100% of the members are Citizens, (c) whose president, chief
executive officer, or equivalent position, chairman of the board of directors,
or equivalent committee or body, and all persons authorized to act in their
absence or disability are Citizens, (d) of which not less than 75% of the voting
power is beneficially owned by Citizens, free and clear of any trust or
fiduciary obligation in favor of Non-Citizens, and (e) of which more than 50% of
that number of its directors or equivalent persons necessary to constitute a
quorum are Citizens; (v) any limited liability company (a) organized under the
laws of the U.S., or a state, territory, district or possession thereof, (b) of
which not less than 75% of the membership interests are beneficially owned by
and vested in Citizens, free from any trust or fiduciary obligation in favor of
Non-Citizens, and the remaining membership interests are beneficially owned by
and vested in persons meeting the requirements of 46 U.S.C. Sec. 12102(a), (c)
of which not less than 75% of the voting power is vested in Citizens, free from
any contract or understanding through which it is arranged that such voting
power may be exercised directly or indirectly in behalf of Non-Citizens, (d) of
which there are no other means by which control is conferred upon or permitted
to be exercised by Non-Citizens, (e) whose president or other chief executive
officer or equivalent position, chairman of the board of directors or equivalent
committee or body, managing members (or equivalent), if any, and all persons
authorized to act in their absence or disability are citizens, free and clear of
any trust or fiduciary obligation in favor of any Non-Citizens, and (f) of which
more than 50% of that number of its directors or equivalent persons necessary to
constitute a quorum are Citizens; (vi) any joint venture, if not an association,
corporation, partnership, or limited liability company (a) organized under the
laws of the U.S., or a state, territory, district, or possession thereof, and
(b) of which 100% of the equity is beneficially owned and vested in Citizens,
free and clear of any trust or fiduciary obligation in favor of any
Non-Citizens; and (vii) any trust (a) domiciled in and existing under the laws
of the U.S., or a state, territory, district, or possession thereof, (b) the
trustee of which is a Citizen, and (c) of which not less than a 75% interest is
held for the benefit of Citizens, free and clear of any trust or fiduciary
obligation in favor of any Non-Citizens. The foregoing definition is applicable
at all tiers of ownership and in both form and substance at each tier of
ownership.

Shares of Common Stock are transferable to Citizens at any time and are
transferable to Non-Citizens if, at the time of such transfer, the transfer
would not increase the aggregate ownership by Non-Citizens of that particular
class of Common Stock above the Permitted Percentage in relation to the total
outstanding shares of that particular class of Common Stock. Non-Citizen
certificates may be converted to Citizen certificates upon a showing,
satisfactory to the Company, that the holder is a Citizen. Any purported
transfer to Non-Citizens of shares or of an interest in shares of the Company
represented by a Citizen certificate in excess of the Permitted Percentage will
be ineffective as against the Company for all purposes (including for purposes
of voting, dividends, and any other distribution, upon liquidation or
otherwise). In addition, the shares may not be transferred on the books of the
Company, and the Company, whether or not such stock certificate is validly
issued, may refuse to recognize the holder thereof as a shareholder of the
Company except to the extent necessary to effect any remedy available to the
Company. Subject to the foregoing limitations, upon surrender of any stock
certificate for transfer, the transferee will receive citizen (blue)
certificates or non-citizen (red) certificates, as applicable.

The Articles of Incorporation establish procedures with respect to the
transfer of shares to enforce the limitations referred to above and authorize
the Board of Directors to implement such procedures. The Board of Directors may
take other ministerial actions or make interpretations of the Company's foreign
ownership policy as it deems necessary in order to implement the policy.
Pursuant to the procedures established in the Articles of Incorporation, as a
condition precedent to each issuance and/or transfer of stock certificates
representing shares of Common Stock (including the shares of Class A Common
Stock being sold in the Offering), a citizenship certificate will be required
from all transferees (and from any recipient upon original issuance) of Common
Stock and, with respect to the beneficial owner of the Common Stock being
transferred, if the transferee (or the original recipient) is acting as a
fiduciary or nominee for such beneficial owner. The registration of the transfer
(or original issuance) will be denied upon refusal to furnish such citizenship
certificate, which must provide information about the purported transferee's or
beneficial owner's citizenship.

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<PAGE> 65

Furthermore, as part of the dual stock certificate system, depositories holding
shares of the Company's Common Stock will be required to maintain separate
accounts for "Citizen" and "Non-Citizen" shares. When the beneficial ownership
of such shares is transferred, the depositories' participants will be required
to advise such depositories as to which account the transferred shares should be
held. In addition, to the extent necessary to enable the Company to determine
the number of shares owned by Non-Citizens, the Company may from time to time
require record holders and beneficial owners of shares of Common Stock to
confirm their citizenship status and may, in the discretion of the Board of
Directors, temporarily withhold dividends payable to, and deny voting rights to,
any such record holder or beneficial owner until confirmation of citizenship is
received.

Should the Company (or its transfer agent for the Common Stock) become
aware that the ownership by Non-Citizens of Common Stock at any time exceeds the
Permitted Percentage (the "Excess Shares"), the Board of Directors is authorized
to withhold dividends and other distributions temporarily on the Excess Shares,
pending the transfer of such shares to a Citizen or the reduction in the
percentage of shares owned by Non-Citizens to or below the Permitted Percentage,
and to deny voting rights with respect to the Excess Shares. If dividends and
distributions are to be withheld, they will be set aside for the account of the
Excess Shares. At such time as such shares are transferred to a Citizen or the
ownership of such shares by Non-Citizens will not result in aggregate ownership
by Non-Citizens in excess of the Permitted Percentage, the dividends withheld
shall be paid to the then record holders of the related shares. Excess Shares
shall, so long as the excess exists, not be deemed to be outstanding for
purposes of determining the vote required on any matter brought before the
shareholders for a vote. The Articles of Incorporation provide that the Board of
Directors has the power, in its reasonable discretion and based upon the records
maintained by the Company's transfer agent, to determine those shares of Common
Stock that constitute the Excess Shares. Such determination will be made by
reference to the date or dates on which such shares were purchased by Non-
Citizens, starting with the most recent acquisition of shares by a Non-Citizen
and including, in reverse chronological order, all other acquisitions of shares
by Non-Citizens from and after the acquisition that first caused the Permitted
Percentage to be exceeded; provided that Excess Shares resulting from a
determination that a record holder or beneficial owner is no longer a Citizen
will be deemed to have been acquired as of the date of such determination. To
satisfy the Permitted Percentage described above, the Articles of Incorporation
authorize the Board of Directors, in its discretion, to redeem (upon written
notice) Excess Shares in order to reduce the aggregate ownership by Non-Citizens
to the Permitted Percentage. As long as the shares of Class A Common Stock
offered hereby continue to be authorized for quotation on the Nasdaq National
Market, the redemption price will be the average of the closing sale price of
the shares (as reported by the Nasdaq National Market) during the 30 trading
days next preceding the date of the notice of redemption. The redemption price
for Excess Shares will be payable in cash. In the event the Company is not
permitted by applicable law to make such redemption or the Board of Directors,
in its discretion, elects not to make such redemption, the Company will give
notice to the holders of Class B Common Stock and those of whom are Citizens may
elect to purchase their pro rata portion of the Excess Shares by delivering
written notice of such election within 30 days of receipt of the Company's
notice.

POSSIBLE ANTI-TAKEOVER PROVISIONS

Florida Business Corporation Act. The Company is subject to Sections
607.0901 and 607.0902 of the Florida Business Corporation Act ("FBCA"), which
regulate the acquisition and exercise of corporate control.

Under Section 607.0902 of the FBCA, "control shares" of certain
corporations acquired in a "control share acquisition," with certain exceptions,
have no voting rights unless such rights are granted pursuant to a vote of the
holders of a majority of the corporation's voting stock (excluding all
"interested shares"). "Control shares" are shares that, when added to all other
shares which a person owns or has the power to vote, would give that person any
of the following ranges of voting power: (i) one-fifth or more but less than
one-third of the voting power; (ii) one-third or more but less than a majority
of the voting power; and (iii) more than a majority of the voting power. A
"control share acquisition" is the acquisition of ownership of, or the power to
vote, outstanding control shares. Shares acquired within 90 days, or as part of
a plan to effectuate a control

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<PAGE> 66

share acquisition, are deemed to have been acquired in the same transaction.
"Interested shares" include shares held by the person attempting to effectuate
the control share acquisition or any officer or employee-director of the
corporation. A corporation may elect to not be governed by Section 607.0902 of
the FBCA in its articles of incorporation or bylaws.

Section 607.0901 of the FBCA requires that certain transactions between an
interested shareholder (in general, a shareholder that beneficially owns more
than 10% of a corporation's outstanding voting stock) and a corporation be
approved by the affirmative vote of the holders of two-thirds of the
corporation's voting shares (excluding those shares beneficially owned by the
interested shareholder). In general, such approval will not be required if the
transaction is approved by a majority of disinterested directors, the interested
shareholder has been the beneficial owner of at least 80% of the corporation's
outstanding voting stock for at least the preceding five years, the interested
shareholder is the beneficial owner of at least 90% of the outstanding voting
stock of the corporation (excluding stock acquired directly from the corporation
in a transaction not approved by a majority of the disinterested directors), or
the consideration paid in the affiliated transaction satisfies the statutory
"fair price" formula and certain other conditions are met. Transactions covered
by Section 607.0901 include mergers, consolidations, sales of assets having an
aggregate fair market value of 5% or more of the aggregate fair market value of
all the corporation's assets on a consolidated basis or of all the corporation's
outstanding stock or representing 5% or more of the corporation's earning power
or net income on a consolidated basis, transfers of shares having an aggregate
fair market value of 5% or more of the aggregate fair market value of all
outstanding shares of the corporation, liquidations, dissolutions,
reclassifications, recapitalizations, and loans. A corporation may elect, by the
vote of a majority of the outstanding voting stock (not including shares held by
an interested shareholder), by amending such corporation's articles of
incorporation or bylaws, to not be subject to the provisions of Section 607.0901
of the FBCA. Any such election, however, will not be effective until 18 months
after it is made, and will not apply to any affiliated transaction between such
corporation and someone who was an interested shareholder prior to the effective
date of such amendment.

Each of the foregoing provisions of the FBCA could have the effect of
delaying or making it more difficult to effect a change of control or management
of the Company, even though such a change may be beneficial to the Company and
its shareholders.

Dual Classes of Common Stock. The Class A Common Stock entitles its
holders to one vote per share, and the Class B Common Stock entitles its holders
to ten votes per share. Accordingly, upon consummation of the Offering, the
Hvide Family and the Investor Group, as the holders of all the outstanding Class
B Common Stock, will be able to control the vote on all matters submitted to a
vote of the holders of the Common Stock, and such control may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-current market prices.

Board of Directors. In all elections of directors, except elections, if
any, for directors for Preferred Stock, as described in "-- Preferred Stock,"
the holders of the Class A Common Stock and Class B Common Stock vote together
as a class, with each share of Class A Common Stock entitled to one vote and
each share of Class B Common Stock entitled to ten votes. Neither class has
cumulative voting rights. As a result of their ownership of Class B Common
Stock, the Hvide Family and the Investor Group will, upon consummation of the
Offering, have the ability to elect all of the members of the Company's Board of
Directors. Under the terms of the Shareholders Agreement, the Hvide Family and
the Investor Group have the ability to nominate eight and two persons,
respectively, to the Company's Board of Directors. In addition, pursuant to the
Articles of Incorporation, the Board of Directors is divided into three classes
of directors serving staggered three-year terms as well as directors, if any,
for Preferred Stock who serve one-year terms. As a result, approximately one
third of the Board of Directors is elected each year. Each of these provisions
could have the effect of delaying or making it more difficult to effect a change
in control or management of the Company, even though such a change may be
beneficial to the Company and its shareholders.

Restrictions on Taking Shareholder Action. The Company's Bylaws provide
that a shareholder must notify the Company in advance of such holder's intent to
bring up items of business or nominate directors at

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<PAGE> 67

any annual meeting of shareholders. With respect to other items of business, the
Bylaws provide that a shareholder's notice must be given in accordance with the
procedures set forth in Rule 14a-8 of Regulation 14A under the Securities
Exchange Act of 1934, as amended, which generally requires that such proposals
be received by the Company not less than 120 days prior to the anniversary date
that proxy solicitation materials were sent out for the immediately preceding
annual meeting of shareholders of the Company. As permitted by the FBCA,
pursuant to the Company's Articles of Incorporation, shareholders may only call
a special meeting of shareholders when the holders of not less than 50% of the
shares entitled to vote make written demand on the Company for such a meeting.

Authorized but Unissued Capital Stock. One of the effects of the existence
of authorized but unissued Common Stock and undesignated Preferred Stock may be
to enable the Board of Directors to make more difficult or to discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest, or otherwise, and thereby to protect the continuity of the
Company's management. If, in the exercise of its fiduciary obligations, the
Board of Directors were to determine that a takeover proposal was not in the
Company's best interest, such shares could be issued by the Board of Directors
without shareholder approval in one or more transactions that might prevent or
make more difficult or costly the completion of the takeover transaction by
diluting the voting or other rights of the proposed acquiror or insurgent
shareholder group, by creating a substantial voting block in institutional or
other hands that might undertake to support the position of the incumbent Board
of Directors, by effecting an acquisition that might complicate or preclude the
takeover, or otherwise. In this regard, the Articles of Incorporation grant the
Board of Directors broad power to establish the rights and preferences of the
authorized and unissued Preferred Stock, one or more series of which could be
issued entitling holders (i) to vote separately as a class on any proposed
merger or consolidation, (ii) to cast a proportionately larger vote together
with the Common Stock on any such transaction or for all purposes, (iii) to
elect directors having terms of office or voting rights greater than those of
other directors, (iv) to convert Preferred Stock into a greater number of shares
of Common Stock or other securities, (v) to demand redemption at a specified
price under prescribed circumstances related to a change of control, or (vi) to
exercise other rights designated to impede a takeover. The issuance of shares of
Preferred Stock pursuant to the Board of Directors' authority described above
may adversely effect the rights of holders of the Common Stock.

CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS

Rights of Approval. So long as the Investor Group owns at least 5% of the
Company's outstanding Class B Common Stock, subject to the following exception,
the following actions must be approved by holders of at least 95% of the Class B
Common Stock: (i) engagement of the Company or its subsidiaries in any material
new business; (ii) a merger involving the Company or a sale of all or
substantially all of the Company's assets; (iii) a recapitalization or voluntary
bankruptcy filing; (iv) a capital investment, acquisition, or asset sale in
excess of $5.0 million; (v) borrowings or issuances of securities in excess of
$5.0 million; or (vi) amendment to the Articles of Incorporation reducing or
delegating the authority of the Board of Directors or affecting the rights of
holders of shares of Class B Common Stock. After September 30, 1999, however, a
merger or sale of substantially all of the Company's assets no longer will
require the approval of holders of 95% of the Class B Common Stock. In addition,
so long as the Investor Group owns at least 25% of the Company's outstanding
Class B Common Stock, the appointment of a new chief executive officer must be
approved by the holders of at least 75% of the Class B Common Stock. As of
November 30, 1997, the Investor Group owned 1,425,744 shares of Class B Common
Stock representing 48.8% of the outstanding Class B Common Stock on such date.

Liability of Directors and Officers. The FBCA permits corporations to (i)
include provisions in their articles of incorporation that limit the personal
liability of directors for monetary damages resulting from breaches of the duty
of care, subject to certain exceptions, and (ii) indemnify directors and
officers, among others, in certain circumstances for their expenses and
liabilities incurred in connection with defending pending or threatened suits.

The Articles of Incorporation include a provision that eliminates the
personal liability of a director to the Company and its shareholders for
monetary damages resulting from breaches of the duty of care to the fullest

66
<PAGE> 68

extent permitted by the FBCA and further provide that any amendment or repeal of
that provision will not adversely affect any right or protection of a director
of the Company existing at the time of such amendment, modification, or repeal
to any director for acts or omissions occurring prior to such amendment.

Pursuant to the Articles of Incorporation, the Board of Directors has
indemnified the Company's current and former directors, officers, employees, and
agents to the fullest extent permitted, from time to time, under the FBCA as
presently or hereafter in effect. The Company also may enter into agreements
providing for greater or different indemnification of any of these persons. The
Company maintains an insurance policy covering the liability of its directors
and officers for actions taken in their official capacity.

Citizenship of Directors and Officers. The Company's Bylaws provide that
the Chairman of the Board of Directors, Chief Executive Officer, President, and
all Vice Presidents must be Citizens, and restrict any officer who is not a
Citizen from acting in such capacities in the absence or disability of such
persons. The Bylaws further provide that the number of Non-Citizen directors
shall not exceed a minority of the number necessary to constitute a quorum for
the transaction of business. See "Business -- Environmental and Other
Regulation -- Coastwise Laws."

SHAREHOLDERS AGREEMENT

The Company, J. Erik Hvide, the Hvide Trusts, and the Investor Group are
party to an agreement (the "Shareholders Agreement") that provides as follows:

Designations to the Board of Directors. The Investor Group may initially
nominate three persons to the Board of Directors and must vote all its shares so
as to elect eight other persons nominated to the Board of Directors by Mr. J.
Erik Hvide. Of these eight nominees, one will be Mr. Hvide, no more than three
others may be employees of the Company, its subsidiaries or members of the Hvide
Family, and the remainder must be independent of Mr. Hvide, the Company, and its
subsidiaries. In addition, J. Erik Hvide and the Hvide Trusts must vote their
shares to elect the three Investor Group nominees. The number of nominees that
the Investor Group is entitled to designate will be reduced by one at such times
as the Investor Group's Primary Economic Interest (as defined in the
Shareholders Agreement) drop below 20%, 10%, and 5%, respectively, of the
Company's outstanding Common Stock. The Investor Group may remove their
nominees, with or without cause, and may nominate successors to their nominees.
All director nominees must be U.S. citizens.

Right of First Refusal. Mr. Hvide (together with the Hvide Trusts) and the
Investor Group, respectively, have granted a right of first refusal for each to
purchase the other's stock in certain circumstances.

The Investor Group's Primary Economic Interest currently grants it the
right to nominate two directors. The rights granted to the Investor Group under
the Shareholders Agreement are in addition to the rights granted to the Investor
Group under the Articles of Incorporation. See "-- Certain Provisions of the
Articles of Incorporation and Bylaws."

REGISTRATION RIGHTS AGREEMENT

The Company and the Investor Group have entered into a registration rights
agreement. Under such registration rights agreement, the Investor Group has the
right to demand that its shares of Common Stock be registered for sale pursuant
to the requirements of the Securities Act, up to three times, subject to certain
deferral rights of the Company. Each of the members of the Investor Group has
the right to request that its shares be included in any registered underwritten
public offering of the Company's Common Stock, subject to certain cutbacks.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, LLC, New York, New York.

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<PAGE> 69

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, 17,373,236 shares of Class A Common Stock
and 2,906,719 shares of Class B Common Stock will be outstanding, of which the
5,000,000 shares of Class A Common Stock offered hereby (assuming the
Underwriters' over-allotment option is not exercised), the 7,159,000 shares sold
in the IPO, and the 4,000,000 shares sold in the Follow-on Offering will be
transferable without restriction under the Securities Act, except for shares
acquired by "affiliates" of the Company (as defined in Rule 144 under the
Securities Act ("Rule 144")). In addition, subject to an agreement that
restricts their sale for 90 days following the date of this Prospectus, an
aggregate of 3,841,840 shares of Common Stock owned by the Company's executive
officers and directors, the Hvide Trusts and the Investor Group are currently
eligible for resale under Rule 144, subject to volume and other restrictions
under Rule 144. The members of the Investor Group have indicated their intention
to sell all of their shares as soon as practicable.

In general, under Rule 144, a person (or persons whose shares are
aggregated) (i) who is not an "affiliate," as that term is defined below, and
whose shares have been outstanding and not owned by an "affiliate" for at least
two years, or (ii) who is an "affiliate" and has beneficially owned his or its
shares for a period of at least two years, is entitled to sell, within any
90-day period, such number of shares that does not exceed the greater of (i) one
percent (1%) of the then-outstanding shares or (ii) the average weekly trading
volume of the then outstanding shares during the four calendar weeks next
preceding each such sale. Resales under Rule 144 are also subject to certain
notice and manner of sale requirements, and the availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not deemed an "affiliate" of the Company at any time during the three
months next preceding a sale by such person (or persons) and who has
beneficially owned shares of Common Stock that were not acquired from the
Company or an "affiliate" of the Company within the previous three years, would
be entitled to sell such shares under Rule 144(k) without regard to volume
limitations, manner of sale provisions, notification requirements, or the
availability of current public information concerning the Company. Affiliates
continue to be subject to the restrictions and requirements of Rule 144. As
defined in Rule 144, an "affiliate" of an issuer is a person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such issuer.

The Company has granted registration rights to certain shareholders. See
"Description of Capital Stock -- Registration Rights Agreement."

The Company has filed registration statements covering an aggregate of
195,000 shares of Common Stock reserved for issuance under the Company's Equity
Ownership Plan, Employee Stock Purchase Plan, and Directors Plan. Shares issued
under such plans, or issued upon exercise of options granted under such plans,
will be eligible for sale by non-affiliates in the public market without
limitation and by affiliates subject tot the provisions of Rule 144, except for
the holding period limitation of Rule 144, subject to the terms of the lock-up
agreements described above. The Company has also filed a registration statement
covering an aggregate of 4,176,880 shares of Common Stock issuable upon
conversion of the Trust Preferred Securities.

As part of its business plan, the Company may, from time to time, issue
shares of Common Stock or Preferred Stock to finance future vessel improvements,
acquisitions, and other transactions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Business -- Strategy."

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<PAGE> 70

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") between the Company and each of the underwriters
named below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters, for whom Donaldson, Lufkin &
Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated, and Raymond
James & Associates, Inc. are acting as representatives (the "Representatives"),
have severally agreed to purchase from the Company an aggregate of 5,000,000
shares of Class A Common Stock. The number of shares of Class A Common Stock
that each Underwriter has agreed to purchase is set forth opposite its name
below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Morgan Stanley & Co. Incorporated ..........................
Raymond James & Associates, Inc. ...........................

---------
Total............................................. 5,000,000
=========
</TABLE>

The Underwriters are obligated to purchase all of such shares if any are
purchased. Under certain circumstances, the commitments of non-defaulting
Underwriters may be increased as set forth in the Underwriting Agreement.

The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Class A Common
Stock are subject to certain conditions precedent.

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Class A Common Stock to the public initially at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, a discount not
in excess of $0.10 per share on sale to certain other dealers. After the initial
offering of the Class A Common Stock, the public offering price, concession, and
discount may be changed.

The Company has granted the Underwriters an option, exercisable by the
Representatives, to purchase up to 750,000 additional shares of Class A Common
Stock, at the public offering price, less the underwriting discount. Such
option, which expires 30 days after the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent the Representatives
exercise such option, each of the Underwriters will be obligated, subject to
certain conditions, to purchase approximately the same percentage of the option
shares as the number of shares of Class A Common Stock to be purchased initially
by that Underwriter bears to the total number of shares to be purchased
initially by the Underwriters.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

In accordance with applicable rules of the National Association of
Securities Dealers, Inc. ("NASD"), no NASD member participating in the
distribution is permitted to confirm sales to accounts over which it exercises
discretionary authority without prior written consent, and, accordingly, each
Underwriter intends to abide by such rules.

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<PAGE> 71

In connection with the Offering, the Company's officers and directors and
certain of its shareholders, have agreed that, during a period of 90 days from
the date of this Prospectus, such holders will not, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation, directly or
indirectly, offer, sell, grant any option with respect to, pledge, hypothecate,
or otherwise dispose of, any shares of Common Stock. In addition, the Company
has agreed that, during a period of 90 days from the date of this Prospectus,
the Company will not, without the prior written consent of the Representatives,
directly or indirectly, offer, sell, grant any option with respect to, pledge,
hypothecate, or otherwise dispose of any shares of Class A Common Stock or Class
B Common Stock except for shares issued upon the exercise of options to be
granted under certain employee and director benefit plans. See "Shares Eligible
for Future Sale."

In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot the Offering,
creating a syndicate short position. The Underwriters may bid for and purchase
Common Stock in the open market to cover such syndicate short position or to
stabilize the price of the Common Stock. These activities may stabilize or
maintain the market price of the Common Stock above independent market levels.
The Underwriters are not required to engage in these activities, and may end
either of these activities at any time.

EXPERTS

The consolidated financial statements of Hvide Marine Incorporated and
subsidiaries at December 31, 1996 and 1995, and for each of the three years in
the period ended December 31, 1996, appearing in this Prospectus and
Registration Statement and in Hvide Marine Incorporated's Annual Report (Form
10-K) for the year ended December 31, 1996, have been audited by Ernst & Young
LLP, independent certified public accountants, as set forth in their reports
thereon, appearing elsewhere herein and included in Hvide Marine Incorporated's
Annual Report (Form 10-K) and incorporated herein by reference. Such
consolidated financial statements are included and incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.

The combined statements of assets to be sold of Care Offshore, Inc. as of
December 31, 1995 and 1996 and the related combined statements of vessel
operations for the years then ended, appearing in this Prospectus and
Registration Statement have been audited by ATAG Ernst & Young SA, independent
auditors, as set forth in their reports thereon, appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Bay Transportation Corporation as
of December 31, 1996 and 1995 and for each of the two years in the period ended
December 31, 1996 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, certified independent public accountants,
given on the authority of said firm as experts in auditing and accounting.

LEGAL MATTERS

The validity of the Notes and certain legal matters relating thereto will
be passed upon on behalf of Hvide by Dyer Ellis & Joseph PC, Washington, D.C.
Certain legal matters will be passed upon for the Initial Purchasers by Akin,
Gump, Strauss, Hauer & Feld, L.L.P.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") pursuant to the Securities Act, with respect to the Class A Common
Stock offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents of any contract, agreement, or other document
are summaries of the material terms of such contract, agreement, or document.
With respect to each such contract, agreement, or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved.

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<PAGE> 72

The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by Hvide may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Hvide Class A Common Stock is traded on the Nasdaq National Market and
reports and other information herein and therein concerning Hvide can also be
inspected at the Nasdaq National Market Exchange, 1735 K Street, N.W.,
Washington, D.C. 20546. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission are incorporated by
reference into this Prospectus:

(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;

(ii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997;

(iii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997;

(iv) the Company's Current Report on Form 8-K dated June 9, 1997 and
on Form 8-K/A dated June 26, 1997; and

(v) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.

Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus, or in any other
subsequently filed document which is also incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated into this Prospectus by reference,
other than exhibits to such documents. Requests for such copies should be
directed to Investor Relations, Hvide Marine Incorporated, 2200 Eller Drive,
Fort Lauderdale, Florida 33316, telephone number (954) 523-2200.

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<PAGE> 73

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES:
Pro Forma Condensed Consolidated Financial Statements
(unaudited):.............................................. F-2
Condensed Consolidated Balance Sheets September 30, 1997
(unaudited)............................................ F-3
Condensed Consolidated Statement of Operations for the
Nine Months Ended September 30, 1997 (unaudited)....... F-4
Notes to Pro Forma Condensed Consolidated Financial
Statements............................................. F-5
Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1996 (unaudited)............... F-7
Notes to Pro Forma Condensed Consolidated Financial
Statements............................................. F-8
Interim Condensed Consolidated Financial Statements
(unaudited):
Condensed Consolidated Balance Sheets December 31, 1996
and September 30, 1997 (unaudited)..................... F-10
Condensed Consolidated Statements of Operations for the
Nine Months Ended September 30, 1996 and 1997
(unaudited)............................................ F-11
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1996 and 1997
(unaudited)............................................ F-12
Notes to Condensed Consolidated Financial Statements...... F-13
Consolidated Financial Statements:
Report of Independent Certified Public Accountants........ F-18
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-19
Consolidated Statements of Operations for the Three Years
Ended December 31, 1996................................ F-20
Consolidated Statements of Stockholders' Equity for the
Three Years Ended December 31, 1996.................... F-21
Consolidated Statements of Cash Flows for the Three Years
Ended December 31, 1996................................ F-22
Notes to Consolidated Financial Statements for December
31, 1995 and 1996...................................... F-23
BAY TRANSPORTATION CORPORATION:
Interim Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets December 31, 1996 and
September 30, 1997 (unaudited)......................... F-35
Consolidated Income and Retained Earnings for the Nine
Months Ended September 30, 1996 and 1997 (unaudited)... F-36
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1997 (unaudited).......... F-37
Notes to Consolidated Financial Statements................ F-38
Consolidated Financial Statements:
Report of Independent Certified Public Accountants........ F-43
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-44
Consolidated Statements of Income and Retained Earnings
for the Two Years Ended December 31, 1996.............. F-45
Consolidated Statements of Cash Flows for the Two Years
Ended December 31, 1996................................ F-46
Notes to Consolidated Financial Statements................ F-47
CARE OFFSHORE, INC.:
Report of Independent Certified Public Accountants.......... F-53
Combined Statements of Assets to be Sold as of December 31,
1995 and 1996 and Nine Months Ended September 30, 1997
(Unaudited)............................................... F-54
Combined Statements of Vessel Operations for the Two Years
Ended December 31, 1996 and Nine Months Ended September
30, 1996 and 1997 (Unaudited)............................. F-55
Notes to Combined Financial Statements for the Two Years
Ended December 31, 1996................................... F-56
</TABLE>

F-1
<PAGE> 74

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The pro forma condensed consolidated statements of operations for the year
ended December 31, 1996 give effect to the acquisitions of the three OMI
Chemical Carriers and the eight supply boats from Seal Fleet, Inc. and related
parties (the "Seal Fleet Vessels") in August 1996, eight crew boats from Gulf
Boat Marine Services, Inc. and related parties (the "GBMS Vessels") in January
1996, the IPO and the repayment of certain indebtedness with the proceeds
thereof, the acquisition of the 35 GMMOS vessels in May 1997, the acquisition of
Bay in October 1997, the pending acquisition of 36 vessels from Care in January
1998, and the Offering and the application of the net proceeds therefrom as if
all such transactions had occurred on January 1, 1996. The pro forma condensed
consolidated statements of operations for the nine months ended September 30,
1997 give effect to the GMMOS and Bay acquisitions, the pending Care
acquisition, the Offering and the repayment of certain indebtedness with the net
proceeds therefrom as if all such transactions had occurred on January 1, 1997.
The pro forma financial information is presented for illustrative purposes only
and does not purport to represent what the Company's results actually would have
been if such events had occurred at the dates indicated, nor does such
information purport to project the results of operations for any future period
or as of any future date. The pro forma condensed consolidated balance sheets at
September 30, 1997 give effect to the Bay acquisition, the pending Care
acquisition, the Offering and the application of the net proceeds therefrom as
if these transactions had occurred on September 30, 1997. The pro forma
condensed consolidated financial information should be read in conjunction with
the notes thereto and with the financial statements and the notes thereto of the
Company and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," all appearing elsewhere in this Prospectus.

F-2
<PAGE> 75

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
AS ADJUSTED
COMPANY
COMPANY PRO FORMA
AS PRO FORMA CONDENSED
REPORTED BAY ADJUSTMENTS(1) OFFERING(2) CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents............... $ 7,790 $ 2,814 $ (7,312) $ 5,595 $ 8,887
Accounts receivable, net................ 30,617 2,104 32,721
Spare parts and supplies................ 7,928 285 8,213
Prepaid expenses and other.............. 10,990 782 11,772
-------- ------- -------- --------- --------
Total current assets.......... 57,325 5,700 (7,027) 5,595 61,593
Property, net........................... 358,939 26,760 210,314 596,013
Goodwill, net........................... 8,233 96,734 104,967
Deferred costs, net..................... 5,806 5,819 (604) 11,021
Investment in affiliates................ 1,537 1,537
Other................................... 1,427 952 2,379
-------- ------- -------- --------- --------
Total assets.................. $433,267 $33,412 $305,840 $ 4,991 $777,510
======== ======= ======== ========= ========
Current maturities of debt.............. $ 6,847 $ 924 $ 19,425 $ $ 27,196
Current obligation under capital
lease................................. 1,534 1,534
Accounts payable........................ 11,214 97 11,311
Other................................... 13,368 866 14,234
-------- ------- -------- --------- --------
Total current liabilities..... 32,963 1,887 19,425 54,275
Long-term debt.......................... 47,164 19,689 295,703 (140,436) 222,120
Obligations under capital lease......... 6,312 6,312
Deferred income taxes................... 13,795 1,748 (230) 15,313
Other liabilities....................... 2,161 800 2,961
-------- ------- -------- --------- --------
Total liabilities............. 102,395 24,124 315,128 (140,666) 300,981
-------- ------- -------- --------- --------
Company-obligated mandatorily redeemable
preferred securities issued by a
consolidating subsidiary.............. 115,000 115,000
Minority partners' equity............... 818 818
Common stock, paid-in capital, retained
earnings and treasury stock........... 215,054 9,288 (9,288) 145,657 360,711
-------- ------- -------- --------- --------
Total stockholders' equity.... 215,054 9,288 (9,288) 145,657 360,711
-------- ------- -------- --------- --------
Total liabilities and
equity...................... $433,267 $33,412 $305,840 $ 4,991 $777,510
======== ======= ======== ========= ========
</TABLE>

See notes to pro forma condensed consolidated financial statements.

F-3
<PAGE> 76

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
AS ADJUSTED
COMPANY
PRO FORMA
COMPANY AS PRO FORMA CONDENSED
REPORTED GMMOS(A) BAY CARE ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues.................... $ 142,853 $7,035 $10,787 $45,036 $ 4,143(3) $ 209,854
Operating expenses.......... 77,134 3,083 4,666 22,520 1,058(3) 108,461
Overhead expenses........... 17,568 296 2,854 6,265 (3,237)(3) 23,746
Depreciation and
amortization.............. 13,021 2,288 1,505 5,296 8,180(4) 30,290
---------- ------ ------- ------- -------- ----------
Income (loss) from
operations................ 35,130 1,368 1,762 10,955 (1,858) 47,357
Net interest................ 4,529 1,200 4,433 5,861(5) 16,023
Other income (expense):
Minority interest and
equity in
subsidiaries........... (1,807) (1,807)
Other..................... (286) 832 (1,392) (846)
---------- ------ ------- ------- -------- ----------
Total other income
(expense)................. (2,093) 832 (1,392) (2,653)
---------- ------ ------- ------- -------- ----------
Income before provision for
income taxes.............. 28,508 1,368 1,394 5,130 (7,719) 28,681
Provision (benefit) for
income taxes.............. 10,662 584 (347)(6) 10,899
---------- ------ ------- ------- -------- ----------
Net income (loss) before
non-recurring items
directly attributable to
the transaction........... $ 17,846 $1,368 $ 810 $ 5,130 $ (7,372) $ 17,782
========== ====== ======= ======= ======== ==========
Earnings per common share... $ 1.19 $ 0.89
========== ==========
Weighted average number of
common shares and common
share equivalents
outstanding............... 14,973,772 20,048,027
========== ==========
Earnings per common share
assuming full
dilution(b)............... $ 1.16 $ 0.88
========== ==========
Weighted average number of
common shares assuming
full dilution............. 16,476,346 21,550,601
========== ==========
</TABLE>

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

(a) Amounts represent results of operation for the three month period ended
March 31, 1997 for GMMOS.

(b) For the purpose of calculating earnings per common share assuming full
dilution, net income before non-recurring items directly attributable to the
transaction has been increased for interest expense of $1,246,000 related to
the assumed conversion of convertible preferred securities of a subsidiary
trust.

See notes to pro forma condensed consolidated financial statements.

F-4
<PAGE> 77

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) Adjustments to reflect the purchase price allocation and the acquisition
financing of the Bay and Care acquisitions

<TABLE>
<CAPTION>
BAY CARE TOTAL
<S> <C> <C> <C>
Cash.................................................... $(5,595) $ (1,717) $ (7,312)
Inventory, spares and supplies.......................... 285 285
Deferred costs.......................................... 5,819 5,819
Property, net........................................... 14,664 195,650 210,314
Goodwill, net........................................... 12,548 84,186 96,734
------- -------- --------
$21,617 $284,223 $305,840
======= ======== ========
Current maturities of debt.............................. $ (313) $ 19,738 $ 19,425
Long-term debt.......................................... 31,218 264,485 295,703
Common stock, paid-in capital, retained earnings and
treasury stock........................................ (9,288) (9,288)
------- -------- --------
$21,617 $284,223 $305,840
======= ======== ========
</TABLE>

(2) Adjustments to reflect transactions that are expected to use certain of the
proceeds of the Offering, or occur in conjunction with the Offering as
follows:

<TABLE>
<CAPTION>
OFFERING
OF REPAYMENT
COMMON OF
STOCK LOANS TOTAL
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash........................................... $146,031 $(140,436) $ 5,595
Deferred costs (net)........................... (604) (604)
-------- --------- ---------
$146,031 $(141,040) $ 4,991
======== ========= =========
Current maturities of debt..................... $ $ $
Other current liabilities......................
Long-term debt................................. (140,436) (140,436)
Deferred income taxes.......................... (230) (230)
Common stock................................... 146,031(a) 146,031
Retained earnings.............................. (374)(b) (374)
-------- --------- ---------
$146,031 $(141,040) $ 4,991
======== ========= =========
</TABLE>

(a) Common stock issued in conjunction with the Offering, less expenses as
follows:

<TABLE>
<S> <C>
Common stock issued......................................... $153,750
Less: Underwriter's discount of 4.5%........................ (6,919)
Legal, accounting and other fees...................... (800)
--------
$146,031
========
</TABLE>

(b) Represents the extraordinary loss associated with the write off of deferred
loan costs on the portion of the Term Loan to be repaid from proceeds of the
Offering, net of applicable income taxes of $230. The extraordinary loss
would have a pro forma effect of ($0.02) per share on a fully diluted basis.

(3) Reflects the adjustments for the historical results of operations for the
period from April 1, 1997 to May 23, 1997 for the GMMOS acquisition.
Historical operating and overhead expenses are adjusted for drydocking
expense to reflect the Company's deferral method; adjustments to reflect
incremental

F-5
<PAGE> 78

corporate overhead and management fees and the reduction of historical
overhead expenses pursuant to contractually agreed upon management rates.

<TABLE>
<CAPTION>
GMMOS BAY CARE TOTAL
<S> <C> <C> <C> <C>
Revenues:
Historical revenues.............................. $4,143 $ $ $ 4,143
====== ===== ======= =======
Operating Expenses:
Historical operating expenses.................... $1,816 $ $ $ 1,816
Drydocking....................................... (758) (758)
------ ----- ------- -------
$1,816 $ $ (758) $ 1,058
====== ===== ======= =======
Overhead Expenses:
Historical overhead expenses..................... $ 174 $ $ $ 174
Management and consulting fees................... (413) (2,998) (3,411)
------ ----- ------- -------
$ 174 $(413) $(2,998) $(3,237)
====== ===== ======= =======
</TABLE>

(4) The adjustment to depreciation and amortization is comprised of:

<TABLE>
<S> <C>
Depreciation adjustment to reflect the historical
depreciation for the period from April 1, 1997 to May 23,
1997, the acquisition date, for GMMOS..................... $ 1,347
Depreciation adjustment to reflect the Company's policies
applied to the acquired cost of GMMOS assets.............. (1,374)
Depreciation adjustment to reflect the Company's policies
applied to the acquired cost of Bay assets................ (621)
Depreciation adjustment to reflect the Company's policies
applied to the acquired cost of CARE assets............... 5,200
Amortization of goodwill over the estimated economic life of
20 years for Bay.......................................... 471
Amortization of goodwill over the estimated economic life of
20 years for Care......................................... $ 3,157
-------
$ 8,180
=======
</TABLE>

(5) The adjustment to net interest is comprised of:

<TABLE>
<S> <C>
Interest expense on note payable issued pursuant to GMMOS
acquisition............................................... 238
Interest expense on additional borrowings pursuant to the
GMMOS acquisition......................................... 1,086
Interest expense on additional borrowing pursuant to the
Care acquisition.......................................... 4,926
Reduction of interest expense due to repayment of Bay term
loan at acquisition date.................................. (340)
Reduction of interest expense due to repayment of
revolver.................................................. (49)
-------
$ 5,861
=======
(6) To adjust pro forma income taxes to combined federal and
state statutory rates:.................................... $ (347)
=======
</TABLE>

F-6
<PAGE> 79

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
AS ADJUSTED
COMPANY
IPO PRO FORMA
COMPANY AS ACQUISITIONS PRO FORMA CONDENSED
REPORTED (A) GMMOS BAY CARE ELIMINATIONS ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................. $ 109,356 $51,702 $21,733 $12,452 $43,235 $(27,548)(1) $ 4,762(2) $ 215,692
Operating expenses....... 63,777 43,717 10,767 5,749 28,218 (27,548)(1) 4,202(2) 128,882
Overhead expenses........ 14,979 1,132 1,244 3,360 7,132 (3,042)(2) 24,805
Depreciation and
amortization........... 9,830 2,880 6,390 1,742 5,897 11,197(3) 37,936
--------- ------- ------- ------- ------- -------- -------- ----------
Income (loss) from
operations............. 20,770 3,973 3,332 1,601 1,988 (7,595) 24,069
Net interest............. 11,631 2,022 1,213 4,491 9,215(4) 28,572
Other income (expense):
Minority interest and
equity in
subsidiaries......... 894 (66) 828
Other.................. (457) 857 (1,480) (1,080)
--------- ------- ------- ------- ------- -------- -------- ----------
Total other income
(expense).............. 437 791 (1,480) (252)
--------- ------- ------- ------- ------- -------- -------- ----------
Income before provision
for income taxes....... 9,576 1,951 3,332 1,179 (3,983) (16,810) (4,755)
Provision (benefit) for
income taxes........... 3,543 (272) 450 (4,921)(5) (1,200)
--------- ------- ------- ------- ------- -------- -------- ----------
Net income (loss) before
non-recurring items
directly attributable
to the transaction..... $ 6,033 $ 2,223 $3,332 $ 729 $(3,983) $ $(11,889) $ (3,555)
========= ======= ======= ======= ======= ======== ======== ==========
Earnings (loss) per
common share........... $ 1.04 $ (0.32)
========= ==========
Weighted average number
of common shares and
common share
equivalents
outstanding............ 5,818,076 10,959,836
========= ==========
Earnings (loss) per
common share assuming
full dilution(b)....... $ 0.99 $ (0.26)
========= ==========
Weighted average number
of common shares and
common share
equivalents outstanding
assuming dilution...... 6,644,963 11,786,723
========= ==========
</TABLE>

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

(a) Amounts represent the 1996 results of operations for OMI Chemical Carriers,
Seal Fleet, GBMS, Royal Runner and OSTC as reported in the Company's S-1 of
January 28, 1997.

(b) For the purpose of calculating earnings per common share assuming full
dilution, net income before non-recurring items directly attributable to the
transaction has been increased for interest expense of $515,000 related to
the assumed conversion of a portion of the Junior Notes into shares of
Common Stock.

See notes to pro forma condensed consolidated financial statements.

F-7
<PAGE> 80

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

<TABLE>
<S> <C> <C>
(1) Elimination of historical revenue and expense associated
with OSTC charter hire of vessels from Hvide and OMI...... $27,548
=======

(2) Reflects the adjustments for the historical results of operations for the
period July 1, 1996 to August 14, 1996 for the IPO acquisitions.
Historical operating and overhead expenses are adjusted for insurance
expense based upon quotations received from the Company's insurance
underwriters; adjustments to drydocking expense to reflect the Company's
deferral method; elimination of operating lease expense on acquired IPO
vessels that were financed by Hvide; and adjustments to reflect
incremental corporate overhead and management fees and reduction of
historical overhead expenses pursuant to contractually agreed upon
management rates;
</TABLE>

<TABLE>
<CAPTION>
IPO
ACQUISITIONS BAY CARE TOTAL
<S> <C> <C> <C> <C>
REVENUES:
Historical Revenues........................... $ 4,762 $ $ $ 4,762
------- ------ ------- -------
OPERATING EXPENSES:
Historical operating expenses................. $ 2,364 $ $ $ 2,364
Insurance..................................... (352) (352)
Maintenance and repair........................ 410 410
Drydocking.................................... 1,764 771 2,535
Operating lease expense....................... (755) (755)
------- ------ ------- -------
$ 3,431 $ $ 771 $ 4,202
======= ====== ======= =======
OVERHEAD EXPENSES:
Historical overhead expenses.................. $ 145 $ $ $ 145
Salaries and benefits......................... 186 186
Management and consulting fees................ (550) (2,533) (3,083)
Other......................................... (290) -- -- (290)
------- ------ ------- -------
$ 41 $ (550) $(2,533) $(3,042)
======= ====== ======= =======
</TABLE>
(3) The adjustment to depreciation for and amortization is comprised of:

<TABLE>
<S> <C>
Depreciation adjustment to reflect the historical
depreciation for the IPO acquisitions for the period from
July 1, 1996 to August 14, 1996........................... $ 754
Depreciation adjustment to reflect the Company's policies
applied to the acquired cost of the vessels:
IPO acquisitions............................................ 1,398
GMMOS....................................................... (3,376)
Bay......................................................... (491)
Care........................................................ 8,098
-------
6,383
Amortization adjustment related to deferred loan costs for
the IPO acquisitions...................................... (22)
Amortization of goodwill over the estimated economic life of
20 years for Bay.......................................... 627
Amortization of goodwill over the estimated economic life of
20 years for Care......................................... 4,209
-------
4,814
-------
$11,197
=======
</TABLE>

F-8
<PAGE> 81
(4) The adjustment to net interest is comprised of:
Historical interest for the period from July 1, 1996 to
August 14, 1996 for IPO acquisitions...................... $ 2,146
Interest expense on assumed Title XI debt................... (2,352)
Interest expense on additional borrowings pursuant to the
IPO acquisitions.......................................... 1,116
Reduction of interest expense due to the repayment of Junior
Notes in conjunction with the IPO......................... (1,460)
Reduction of interest expense due to the repayment of Senior
Notes in conjunction with the IPO......................... (1,167)
Reduction of interest expense due to the repayment of other
subordinated notes in conjunction with the IPO............ (85)
Commitment fee on acquisition line of credit in conjunction
with the IPO.............................................. 63
Interest expense on note payable issued pursuant to the
GMMOS acquisition......................................... 608
Interest expense on additional borrowings pursuant to GMMOS
acquisition............................................... 2,757
Interest expense or additional borrowings pursuant to the
CARE acquisition.......................................... 7,803
Reduction of interest expense due to the repayment of the
Bay term loan at acquisition date......................... (214)
-------
$ 9,215
=======
(5) Adjustment for historical income taxes for the period from
July 1, 1996 to August 14, 1996........................... $ (258)
To adjust pro forma income taxes to combined federal and
state statutory rates..................................... (4,663)
-------
$(4,921)
=======

F-9
<PAGE> 82

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 9,617 $ 7,790
Accounts receivable:
Trade, net.............................................. 16,049 30,617
Insurance claims and other.............................. 1,717 1,740
Spare parts and supplies.................................. 5,517 7,928
Prepaid expenses.......................................... 1,253 2,967
Deferred costs, net....................................... 4,173 6,283
-------- --------
Total current assets................................ 38,326 57,325
PROPERTY:
Construction in progress.................................. 8,041 36,877
Vessels and improvements.................................. 229,776 357,460
Less accumulated depreciation........................... (27,480) (39,390)
Furniture and equipment................................... 4,502 5,593
Less accumulated depreciation........................... (1,409) (1,601)
-------- --------
Net property........................................ 213,430 358,939
OTHER ASSETS:
Deferred costs, net....................................... 4,645 5,806
Due from affiliates....................................... 49 439
Investment in affiliates.................................. 1,291 1,537
Goodwill, net............................................. 8,612 8,233
Deposits and other........................................ 7,120 988
-------- --------
Total other assets.................................. 21,717 17,003
-------- --------
Total assets........................................ $273,473 $433,267
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 24,375 $ 6,847
Current obligations under capital leases.................. 1,443 1,534
Accounts payable.......................................... 6,278 11,214
Deferred income........................................... 2,001 1,784
Accrued liabilities and other............................. 12,933 11,584
-------- --------
Total current liabilities........................... 47,030 32,963
LONG-TERM LIABILITIES:
Long-term debt............................................ 108,154 47,164
Notes payable to related parties.......................... 178 --
Obligations under capital leases.......................... 7,492 6,312
Deferred income taxes..................................... 6,385 13,795
Other..................................................... 2,245 2,161
-------- --------
Total long-term liabilities......................... 124,454 69,432
-------- --------
Total liabilities................................... 171,484 102,395
Company-obligated mandatorily redeemable preferred
securities issued by a consolidated subsidiary............ -- 115,000
Minority partners' equity in subsidiaries................... 898 818
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred Stock -- $1.00 par value authorized 10,000,000
shares, issued and outstanding, none.................... -- --
Class A Common Stock -- $.001 par value, authorized
100,000,000 shares, issued and outstanding, 7,647,791
and 12,095,568.......................................... 8 12
Class B Common Stock -- $.001 par value, authorized
5,000,000 shares, issued and outstanding, 3,419,577 and
3,181,936............................................... 3 3
Additional paid-in capital................................ 97,153 195,398
Retained earnings......................................... 3,927 19,641
-------- --------
Total stockholders' equity.......................... 101,091 215,054
-------- --------
Total............................................... $273,473 $433,267
======== ========
</TABLE>

See accompanying notes.

F-10
<PAGE> 83

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1997
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
Revenues.................................................... $ 72,130 $ 142,853
OPERATING EXPENSES:
Crew payroll and benefits................................. 19,968 34,109
Charter hire and bond guarantee fee....................... 3,386 7,087
Repairs and maintenance................................... 5,848 11,357
Insurance................................................. 4,957 6,555
Consummables.............................................. 4,196 9,210
Other..................................................... 3,734 8,816
--------- ----------
Total operating expenses.......................... 42,089 77,134
Selling, general and administrative expenses................ 11,049 17,568
Depreciation and amortization............................... 6,115 13,021
--------- ----------
Income from operations.................................... 12,877 35,130
Net interest.............................................. 8,751 4,529
OTHER INCOME (EXPENSE):
Minority interest and equity in earnings of
subsidiaries........................................... 721 (1,807)
Other..................................................... (522) (286)
--------- ----------
Total other income (expense)...................... 199 (2,093)
--------- ----------
Income before provision for income taxes and extraordinary
item...................................................... 4,325 28,508
Provision for income taxes.................................. 1,616 10,662
--------- ----------
Income before extraordinary item............................ 2,709 17,846
Loss on early extinguishment of debt, net of applicable
income taxes of $1,405 and $1,252, respectively........... 8,016 2,132
--------- ----------
Net income........................................ $ (5,307) $ 15,714
========= ==========
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Income applicable to common shares before extraordinary
item................................................... $ 0.68 $ 1.19
Loss on early extinguishment of debt...................... (2.00) (0.14)
--------- ----------
Net income (loss) applicable to common shares..... $ (1.32) $ 1.05
========= ==========
EARNINGS PER COMMON SHARE ASSUMING FULL DILUTION:
Income applicable to common shares before extraordinary
item................................................... $ 0.68 $ 1.16
Loss on early extinguishment of debt...................... (2.00) (0.13)
--------- ----------
Net income (loss) applicable to common shares..... $ (1.32) $ 1.03
========= ==========
Weighted average number of common shares and common share
equivalents outstanding................................... 4,017,796 14,973,772
========= ==========
Weighted average number of common shares outstanding
assuming full dilution.................................... 4,017,796 16,476,346
========= ==========
</TABLE>

See accompanying notes.

F-11
<PAGE> 84

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1996 1997
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income................................................ $ (5,307) $ 15,714
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Loss on early extinguishment of debt, net................. 8,016 2,132
Depreciation and amortization............................. 6,115 13,021
Provision for bad debts................................... 144 496
Loss on disposal of property.............................. -- 63
Amortization of drydocking costs.......................... 1,937 3,871
Amortization of discount on long-term debt................ 148 5
(Benefit from) provision for deferred taxes............... (1,616) 8,662
Minority partners' equity in losses of subsidiaries,
net.................................................... (651) (80)
Undistributed losses of affiliates, net................... (87) (64)
Other non-cash items...................................... -- 464
CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECT
OF ACQUISITIONS:
Accounts receivable....................................... (2,459) (15,087)
Due from affiliates....................................... (23) (389)
Current and other assets.................................. 3,219 (8,224)
Accounts payable and other liabilities.................... 1,602 (2,447)
-------- ---------
Net cash provided by operating activities......... 11,038 18,137
INVESTING ACTIVITIES:
Purchase of property...................................... (3,671) (18,688)
Construction in progress.................................. (4,064) (23,872)
Proceeds from disposal of property........................ 21 1,633
Capital contribution to affiliates........................ (602) (182)
Acquisitions, net of cash acquired of $1,722 in 1996 and
$2,819 escrow deposit utilized in 1997................. (54,136) (96,648)
-------- ---------
Net cash used in investing activities............. (62,452) (133,757)
FINANCING ACTIVITIES:
Proceeds from revolving line of credit, net of
repayment.............................................. (1,222) (10,647)
Proceeds from long-term debt.............................. 21,700 59,210
Principal payments of long-term debt...................... (41,243) (133,738)
Payment of debt and other financing costs................. (628) (984)
Payment of obligations under capital leases............... (972) (1,090)
Payment of notes payable to related parties............... (370) (178)
Proceeds from issuance of common stock, net of offering
costs.................................................. 76,697 94,111
Proceeds from issuance of preferred securities, net of
offering costs......................................... -- 111,109
-------- ---------
Net cash provided by financing activities......... 53,962 117,793
-------- ---------
Increase (decrease) in cash and cash equivalents............ 2,548 (1,827)
Cash and cash equivalents at beginning of period............ 3,050 9,617
-------- ---------
Cash and cash equivalents at end of period.................. $ 5,598 $ 7,790
======== =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Capital leases assumed for the acquisition of vessels..... $ 5,410 $ --
======== =========
Capital stock issued for the acquisition of vessels....... $ -- $ 3,650
======== =========
</TABLE>

See accompanying notes.

F-12
<PAGE> 85

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

1. BASIS OF PRESENTATION

The unaudited condensed consolidated interim financial statements for the
nine-month periods ended September 30, 1996 and 1997 and as of September 30,
1997 have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the unaudited information shown have been included. The
results of operations for such interim periods are not necessarily indicative of
the results expected for the full year ending December 31, 1997.

2. OFFERINGS OF EQUITY SECURITIES

On August 14, 1996, the Company completed the initial public offering (the
"IPO") of 7,000,000 shares of its Class A Common Stock at $12.00 per share. The
net proceeds to the Company were approximately $74,821,000, after deducting
underwriting commissions and other offering expenses. A portion of the net
proceeds was used primarily to repay certain indebtedness that was outstanding
prior to the IPO and for the cash portion of the purchase price of certain
acquisitions consummated subsequent to the IPO. On September 12, 1996, the
underwriters' over-allotment option was exercised, in part, pursuant to which an
additional 159,000 shares were issued. The net proceeds of approximately
$1,774,000 were used by the Company to repay certain outstanding indebtedness.
In addition, on August 14, 1996, the Company issued 182,000 and 1,188,000 shares
of Class A and Class B Common Stock, respectively, in payment of certain
outstanding indebtedness.

On February 5, 1997, the Company completed a second public offering (the
"Second Offering") of 4,000,000 shares of its Class A Common Stock at $24.875
per share. The net proceeds to the Company were $94,300,000, after deducting
underwriting commissions. Of such amount, approximately $36.2 million was used
to repay certain indebtedness. Of the balance of approximately $58.1 million,
$5.5 million was used to fund vessel acquisitions, $20.9 million was used to
fund the remainder of the purchase price of four supply boats and one crew boat
acquired in the second quarter of 1997, $1.8 million was designated to fund the
purchase of one crew boat in the third quarter of 1997, $6.9 million was
designated to fund the refurbishment and lengthening of two supply boats
expected to be put into service during the third quarter of 1997, and the
remaining $23.0 million was available for general corporate purposes and to fund
a portion of the costs of the vessels to be constructed.

On June 24, 1997, the Company completed a private offering (the "Private
Offering") of 2,300,000, 6 1/2% Trust Convertible Preferred Securities (the
"Preferred Securities"). The Preferred Securities were issued by Hvide Capital
Trust (the "Trust"), a 100%-owned subsidiary of the Company. The Trust exists
for the sole purpose of issuing the Preferred Securities and investing the
proceeds from the issuance thereof in 6 1/2% Convertible Subordinated Debentures
due June 15, 2012 (the "Debentures") issued by the Company. The net proceeds to
the Company were $111,550,000 after deducting underwriting commissions. Of such
amount, approximately $94.2 million was used to repay principal and interest
outstanding under the Company's credit agreement (the "Credit Facility"), and
$6.0 million was used to repay other indebtedness. The remaining $11.4 million
is available for general corporate purposes.

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

F-13
<PAGE> 86

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

undertakings, including a guarantee, the Declaration of Trust, the Trust
Indenture and the Debentures, the Company provides a full and unconditional
guarantee of the Trust's obligations under the Preferred Securities.

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

3. DEBT

Long-term debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
(UNAUDITED)
<S> <C> <C>
Borrowings outstanding under lines of credit................ $ 10,647 $17,000
Term Loan................................................... 58,500 --
Acquisition Line............................................ 9,700 --
Senior Note................................................. 9,153 --
Title XI Debt............................................... 32,243 28,573
Notes payable............................................... 12,286 8,438
-------- -------
132,529 54,011
Less: Current maturities.................................... (24,375) (6,847)
-------- -------
$108,154 $47,164
======== =======
</TABLE>

The Company currently has a credit agreement (the "Credit Agreement") that
provides for a $175 million revolving line of credit through September 30, 1999
at which time availability decreases by $6 million per quarter until September
30, 2002 (the "Maturity Date"). The Company's outstanding indebtedness under the
Credit Facility was $17 million at September 30, 1997.

Borrowings under the Credit Agreement bear interest based on one of two
calculations set forth in the Credit Agreement, at the Company's option, plus a
margin based on the Company's compliance with certain financial ratios. One
interest rate calculation is tied to the Eurodollar (the "Eurodollar Rate") and
the other calculation is tied to the higher of the base rate of the
administrative agent named in the Credit Agreement or the Federal Funds
Effective Rate (the "Base Rate"). The Credit Agreement allows the Company to
convert its revolving credit loans from Eurodollar Rate loans to Base Rate
loans, and vice versa, from time to time. Such borrowings were accruing interest
at approximately 6.2% at September 30, 1997. On the Maturity Date, all amounts
outstanding under the revolving line of credit, together with any and all
accrued and unpaid interest, will become due and payable. Prior to the Maturity
Date, the Company can repay any outstanding amount, in whole or in part, without
penalty or premium.

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

F-14
<PAGE> 87

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company, such as making certain dispositions of assets, and entering into
certain types of business transactions, including certain mergers and
acquisitions.

On August 30, 1997, the Company secured a $5.6 million stand-by letter of
credit with one of its banks for a period of one year which, unless terminated,
renews automatically for additional one year periods.

The Company's Credit Facility, which was replaced by the Credit Agreement
dated September 30, 1997, was amended on February 3, 1997, provided for a
revolving working capital credit line of $20,000,000 through January 15, 2002
(the "Revolving Line") and a stand-by letter of credit of $5,600,000. Borrowings
outstanding under the Revolving Line totaled $8,000,000 at December 31, 1996.

The Credit Facility also provided for a term loan (the "Term Loan") of up to
$56,750,000 and a $50,000,000 acquisition line of credit (the "Acquisition
Line") to fund the cash portion of acquisitions. Borrowings outstanding under
the Term Loan and Acquisition Line were repaid with a portion of the proceeds
from the Private Offering on June 27, 1997 and the Second Offering on February
5, 1997, respectively.

On September 30, 1994, and as amended on May 24, 1995, the Company issued a
$25,000,000 senior subordinated note (the "Senior Note"). The Company received
proceeds of approximately $23,072,000, net of discount of $1,928,000 which was
being amortized as interest expense over the term of the Senior Note. On August
14, 1996 and September 12, 1996, the Company repaid $13,490,000, and $1,700,000,
respectively, of the principal balance of the Senior Note with a portion of the
proceeds from the IPO and the exercise of the underwriters' related
over-allotment option. The remaining balance of $9,810,000, including interest,
was repaid with a portion of the proceeds of the Second Offering on February 5,
1997.

On August 14, 1996, the Company assumed $34,650,000 of Title XI Debt in
connection with the acquisitions of certain vessels. The Title XI Debt is
collateralized by first preferred mortgages on certain vessels and bears
interest at rates ranging from 5.4% to 10.1%. The debt is due in semi-annual
principal and interest payments through December 1, 2006. Under the terms of the
Title XI Debt, the Company is required to maintain a minimum level of working
capital, as defined, and comply with certain other financial covenants.

In connection with redemption of the outstanding preferred stock of the
predecessor company in 1994, the Company issued notes payable totaling
approximately $3,561,000 to the former stockholder. On August 14, 1996,
approximately $1,548,000 was repaid with a portion of the proceeds from the IPO.
The remaining balance of approximately $2,013,000 was repaid with a portion of
the proceeds from the Second Offering on February 5, 1997.

In connection with the acquisition of the outstanding common stock of its
previously unconsolidated 50%-owned affiliate, Ocean Specialty Tankers
Corporation ("OSTC"), on August 14, 1996, the Company assumed OSTC's obligations
under a $4,000,000 revolving line of credit secured by the outstanding accounts
receivables generated by three chemical tankers. The revolving line of credit
bears interest monthly at LIBOR + 1.5% (7.3% at December 31, 1996). At December
31, 1996 and September 30, 1997, $2,647,000 and $0 was outstanding under the
line of credit.

The Company made interest payments of approximately $12,953,011 and
$6,977,363 for the nine months ended September 30, 1996 and 1997, respectively.

4. INCOME TAXES

For the nine months ended September 30, 1996 and 1997, the provision for
income taxes was computed using an estimated annual effective tax rate of 37.0%
and 37.4%, respectively, adjusted principally for depreciation on vessels built
with capital construction funds.

F-15
<PAGE> 88

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. ACQUISITIONS

In January 1997, the Company purchased a supply boat and two tug boats for
cash of approximately $4.7 million and $600,000, respectively.

In February 1997, the Company purchased three crew boats for cash of
approximately $5.6 million.

In February 1997, the Company purchased the outstanding common stock of an
entity for cash of approximately $1.5 million. Pursuant to the purchase
agreement, the Company assumed the entity's commitments to fund the remaining
construction costs of three crew boats, two which are currently under
construction, and one which was completed in June 1997 for an additional cost of
approximately $1.0 million. The aggregate remaining construction cost of the two
vessels under construction is approximately $4.8 million. The fair value of net
assets acquired approximates the purchase price paid by the Company.

In April 1997, the Company purchased two supply boats for cash of
approximately $10.5 million.

In May 1997, the Company acquired 35 offshore energy support vessels for
consideration valued at $58.7 million, consisting of cash of $49.0 million, a
note payable in the amount of $6.0 million, and 141,760 shares of Class A Common
Stock valued by the Company at $3.7 million. Of the cash portion of the purchase
price, $10.5 million was funded from the Company's available cash and $38.5
million was drawn under the Credit Facility. The $6.0 million note payable and
the $38.5 million of debt incurred to fund the acquisition were repaid with the
proceeds of the Private Offering.

In May 1997, the Company purchased a supply boat for cash of approximately
$2.8 million.

In June 1997, the Company purchased two supply boats and a crew boat for
cash of approximately $13.2 million.

In July 1997, the Company purchased four double skin barges for cash of
approximately $2.4 million.

In August 1997, the Company purchased one anchor-handling vessel and a crew
boat for cash of approximately $1.7 million and $1.8 million, respectively.

In September 1997, the Company purchased an anchor-handling vessel for cash
of approximately $5.4 million.

6. EXTRAORDINARY ITEM

On August 14, 1996, the Company paid cash of $26,307,000; issued 55,000
shares of Class A common stock and 1,188,502 shares of Class B common stock to
repay $25,000,000 and $15,190,000 of the Junior and Senior Notes, respectively.
Accordingly, the Company recorded a loss on extinguishment of $8,108,000 for the
write off of deferred financing costs and related debt discounts, net of a tax
benefit of $1,474,000.

In February and June 1997, the Company repaid $33,220,000 and $93,500,000,
respectively, of its outstanding debt and amended its Credit Facility. As a
result, the Company recorded extraordinary losses of $1,754,000 and $378,000,
respectively, for the write-off of deferred financing costs associated with the
early extinguishment of debt, net of income tax benefits of $1,030,000 and
$222,000 respectively.

7. SUBSEQUENT EVENTS

In October 1997, the Company purchased the outstanding common stock of an
entity for cash of approximately $36.5 million and the assumption of
approximately $24.5 million of long-term debt and other liabilities. Cost in
excess of net assets acquired was approximately $12.5 million which will be
amortized over 20 years.

F-16
<PAGE> 89

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In October 1997, the Company entered into a joint venture agreement whereby
the venture will design, construct and operate a construction/anchor handling
tug supply vessel. Pursuant to the terms of the venture agreement, the Company
is required to fund $20.8 million of the estimated $37.0 of the construction
costs.

In October 1997, the Company purchased 30 offshore energy support vessels
and a repair facility for cash of approximately $36.0 million.

8. PROSPECTIVE ACCOUNTING CHANGES

In February 1997, the FASB issued SFAS No. 128 "Earnings Per Share" and
SFAS No. 129 "Disclosure of Information about Capital Structure," which are
effective for fiscal years beginning after December 15, 1997. SFAS No. 128
simplifies the current required calculation of earnings per share ("EPS") under
APB No. 15, "Earnings per Share," by replacing the existing calculation of
primary EPS with a basic EPS calculation. It requires a dual presentation, for
complex capital structures, of basic and diluted EPS on the face of the income
statement and requires a reconciliation of basic EPS factors to diluted EPS
factors. SFAS No. 129 requires disclosing information about an equity's capital
structure. The Company plans to adopt SFAS No. 128 and SFAS No. 129 in 1998 and
expects no material impact to the Company's EPS calculation or disclosure
information.

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

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

F-17
<PAGE> 90

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
Hvide Marine Incorporated

We have audited the accompanying consolidated balance sheets of Hvide
Marine Incorporated and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Hvide Marine
Incorporated and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Miami, Florida
February 20, 1997, except the eighth
paragraph of Note 3, as
to which the date is March 25, 1997

F-18
<PAGE> 91

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1995 1996
(IN THOUSANDS EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 3,050 $ 9,617
Accounts receivable:
Trade, net.............................................. 9,602 16,049
Insurance claims and other.............................. 4,399 1,717
Due from affiliate........................................ 101 --
Spare parts and supplies.................................. 3,417 5,517
Prepaid expenses.......................................... 960 1,253
Deferred costs (net)...................................... 2,550 4,173
-------- --------
Total current assets................................ 24,079 38,326
Property:
Construction in progress.................................. 1,387 8,041
Vessels and improvements.................................. 122,198 229,776
Less accumulated depreciation........................... (20,585) (27,480)
Furniture and equipment................................... 2,601 4,502
Less accumulated depreciation........................... (998) (1,409)
-------- --------
Net property........................................ 104,603 213,430
Other assets:
Deferred costs (net)...................................... 4,112 4,645
Due from affiliates....................................... 131 49
Investment in affiliates.................................. 423 1,291
Goodwill (net)............................................ 9,117 8,612
Long-term receivable (net)................................ 831 59
Deposits and other........................................ 387 7,061
-------- --------
Total other assets.................................. 15,001 21,717
-------- --------
Total............................................... $143,683 $273,473
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt...................... $ 7,708 $ 24,375
Current obligations under capital leases.................. 577 1,443
Accounts payable.......................................... 4,905 6,278
Charter hire and other liabilities........................ 6,574 14,934
-------- --------
Total current liabilities........................... 19,764 47,030
Long-term liabilities:
Long-term debt............................................ 96,014 108,154
Notes payable to related parties.......................... 1,302 178
Obligations under capital leases.......................... 3,450 7,492
Due to charterer.......................................... 547 831
Deferred income taxes..................................... 4,317 6,385
Other..................................................... 4,290 1,414
-------- --------
Total long-term liabilities......................... 109,920 124,454
-------- --------
Total liabilities................................... 129,684 171,484
Minority partners' equity in subsidiaries................... 1,654 898
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1.00 par value -- authorized 10,000,000
shares, issued and outstanding, none.................... -- --
Class A Common Stock -- $.001 par value, authorized
100,000,000 shares, issued and outstanding, 0 and
7,647,791............................................... -- 8
Class B Common Stock -- $.001 par value, authorized
5,000,000 shares issued and outstanding, 1,558,210 and
3,419,577............................................... 1 3
Class C Common Stock -- $.001 par value, authorized
2,500,000 shares, issued and outstanding, 976,630, and
0....................................................... 1 --
Additional paid-in capital................................ 6,341 97,153
Retained earnings......................................... 6,002 3,927
-------- --------
Total stockholders' equity.......................... 12,345 101,091
-------- --------
Total minority partners' equity in subsidiaries and
stockholders' equity................................ 13,999 101,989
-------- --------
Total............................................... $143,683 $273,473
======== ========
</TABLE>

See notes to consolidated financial statements.

F-19
<PAGE> 92

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Revenues.................................................... $49,792 $70,562 $109,356
Operating expenses:
Crew payroll and benefits................................. 13,510 20,132 29,756
Charter hire and bond guarantee fee....................... 5,013 4,063 4,667
Repairs and maintenance................................... 3,847 5,347 8,984
Insurance................................................. 2,991 4,547 7,633
Consummables.............................................. 2,237 3,395 6,643
Other..................................................... 2,275 3,180 6,094
------- ------- --------
Total operating expenses.......................... 29,873 40,664 63,777
Selling, general and administrative expenses:
Salaries and benefits..................................... 4,649 6,856 7,936
Office expenses........................................... 819 1,068 1,394
Professional fees......................................... 2,645 2,137 2,947
Other..................................................... 1,468 2,457 2,702
------- ------- --------
Total overhead expenses........................... 9,581 12,518 14,979
Depreciation and amortization............................... 4,500 6,308 9,830
------- ------- --------
Income from operations...................................... 5,838 11,072 20,770
Interest:
Interest expense.......................................... 5,614 11,748 11,908
Interest income........................................... (312) (288) (277)
------- ------- --------
Net interest...................................... 5,302 11,460 11,631
Other income (expense):
Minority interest and equity in earnings of
subsidiaries........................................... (115) 137 894
Other..................................................... 126 (111) (457)
------- ------- --------
Total other income (expense)...................... 11 26 437
------- ------- --------
Income (loss) before provision for (benefit from) income
taxes and extraordinary item.............................. 547 (362) 9,576
Provision for (benefit from) income taxes................... 189 (2) 3,543
------- ------- --------
Income (loss) before extraordinary item..................... 358 (360) 6,033
------- ------- --------
Loss on early extinguishment of debt, net of applicable
income taxes of $1,474.................................... -- -- 8,108
------- ------- --------
Net income (loss)................................. $ 358 $ (360) $ (2,075)
======= ======= ========
Earnings (loss) per common and common equivalent share:
Income (loss) applicable to common shares before
extraordinary item........................................ $ 0.03 $ (0.14) $ 1.04
Loss on early extinguishment of debt........................ -- -- (1.40)
------- ------- --------
Net income (loss) applicable to common shares..... $ 0.03 $ (0.14) $ (0.36)
======= ======= ========
Earnings (loss) per common share--assuming full dilution:
Income applicable to common shares before extraordinary
item...................................................... $ 0.06 $ 0.12 $ 0.99
Loss on early extinguishment of debt........................ -- -- (1.22)
------- ------- --------
Net income (loss) applicable to common shares..... $ 0.06 $ 0.12 $ (0.23)
======= ======= ========
Weighted average common and common equivalent shares
outstanding............................................... 5,302 2,535 5,818
======= ======= ========
Weighted average common shares outstanding assuming full
dilution.................................................. 5,616 3,779 6,645
======= ======= ========
</TABLE>

See notes to consolidated financial statements.

F-20
<PAGE> 93

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
11% 5% CLASS A CLASS B
CLASS A CLASS B COMMON STOCK COMMON STOCK
PREFERRED PREFERRED ------------------ ------------------
STOCK STOCK SHARE AMOUNT SHARE AMOUNT
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1994.................... $ 2,669 $ 3,266 -- $-- 1,105,692 $ 1
Net income................ -- -- -- -- -- --
Common stock issued, net
of issuance costs....... -- -- -- -- 452,518 --
Redemption of preferred
stock................... (2,669) (3,266) -- -- -- --
Acquisition of limited
partnership interests... -- -- -- -- -- --
Preferred stock cash
dividends............... -- -- -- -- -- --
------- ------- --------- --- --------- ---
Balance at December 31,
1994.................... -- -- -- -- 1,558,210 1
Net loss.................. -- -- -- -- -- --
------- ------- --------- --- --------- ---
Balance at December 31,
1995.................... -- -- -- -- 1,558,210 1
Net loss.................. -- -- -- -- -- --
Common Stock issued, net
of issuance costs....... -- -- 7,647,791 8 1,861,367 2
------- ------- --------- --- --------- ---
Balance at December 31,
1996.................... $ -- $ -- 7,647,791 $ 8 3,419,577 $ 3
======= ======= ========= === ========= ===

<CAPTION>
CLASS C
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED
SHARE AMOUNT CAPITAL EARNINGS TOTAL
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1994.................... 663,415 $ 1 $ 1,025 $ 6,389 $ 13,351
Net income................ -- -- -- 358 358
Common stock issued, net
of issuance costs....... 313,215 -- 8,640 -- 8,640
Redemption of preferred
stock................... -- -- (1,350) -- (7,285)
Acquisition of limited
partnership interests... -- -- (1,974) -- (1,974)
Preferred stock cash
dividends............... -- (385) (385)
-------- --- ------- ------- --------
Balance at December 31,
1994.................... 976,630 1 6,341 6,362 12,705
Net loss.................. -- -- -- (360) (360)
-------- --- ------- ------- --------
Balance at December 31,
1995.................... 976,630 1 6,341 6,002 12,345
Net loss.................. -- -- -- (2,075) (2,075)
Common Stock issued, net
of issuance costs....... (976,630) (1) 90,812 -- 90,821
-------- --- ------- ------- --------
Balance at December 31,
1996.................... -- $-- $97,153 $ 3,927 $101,091
======== === ======= ======= ========
</TABLE>

See notes to consolidated financial statements.

F-21
<PAGE> 94

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
(IN THOUSANDS)
<S> <C> <C> <C>
OTHER ACTIVITIES:
Net Income (loss)......................................... $ 358 $ (360) $ (2,075)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Loss on early extinguishment of debt, net............... -- -- 8,108
Depreciation and amortization........................... 4,500 6,308 9,830
Provision for bad debts................................. -- 114 125
Gain on disposals of property........................... -- (73) (13)
Amortization of discount on long-term debt.............. 52 201 162
Provision for (benefit from) deferred taxes............. 189 (2) 3,543
Minority partners' equity in earnings (losses) of
subsidiaries, net...................................... 184 (625) (756)
Undistributed (earnings) losses of affiliates, net...... (69) 488 (132)
Other non-cash items.................................... -- -- 36
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable................................... (4,574) (5,056) (1,928)
Due from affiliates................................... (235) (394) 182
Other assets.......................................... (1,622) (1,317) 897
Accounts payable and other liabilities................ 4,075 4,664 4,605
-------- ------- --------
Net cash provided by operating activities.......... 2,858 3,948 22,584
INVESTING ACTIVITIES:
Purchase of property...................................... (5,672) (6,312) (8,759)
Deposits for the purchase of property..................... -- -- (6,349)
Proceeds from disposals of property....................... -- 690 8
Capital contribution to affiliates........................ -- -- (736)
Deposits of funds in escrow............................. (500) -- --
Acquisitions, net of cash acquired of $106 in 1994, net of
$500 escrow deposit utilized in 1995 and net of cash
acquired of $1,722 in 1996.............................. (33,643) (2,444) (68,518)
-------- ------- --------
Net cash used in investing activities.............. (39,815) (8,066) (84,354)
FINANCING ACTIVITIES:
Proceeds of lines of credit, net.......................... -- 7,500 1,994
Proceeds from long-term debt.............................. 90,580 -- 36,964
Proceeds from issuance of common stock, net............... 8,640 -- 76,595
Principal payments of long-term debt...................... (51,700) (5,458) (44,819)
Payment of financing costs................................ (3,478) (727) (838)
Payment of obligations under capital leases............... (34) (510) (1,189)
Payment of notes payable to related parties............... -- -- (370)
Payment of dividends...................................... (385) -- --
Redemption of preferred stock............................. (2,374) -- --
-------- ------- --------
Net cash provided by financing activities.......... 41,249 805 68,337
-------- ------- --------
Increase (decrease) in cash and cash equivalents............ 4,292 (3,313) 6,567
Cash and cash equivalents at beginning of period............ 2,071 6,363 3,050
-------- ------- --------
Cash and equivalents at end of period....................... $ 6,363 $ 3,050 $ 9,617
======== ======= ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Net assets recorded in connection with dissolution to
affiliate................................................. $ -- $ 341 $ --
======== ======= ========
Notes payable and notes payable to related parties issued
for the acquisition of vessels............................ $ 2,149 $ 3,000 $ 675
======== ======= ========
Capital lease obligations for the acquisition of vessels and
equipment................................................. $ 4,534 $ -- $ 6,098
======== ======= ========
Note payable issued for the acquisition of minority
interest.................................................. $ 3,039 $ -- $ --
======== ======= ========
Note payable issued and other liabilities incurred in
conjunction with the redemption of preferred stock........ $ 4,911 $ -- $ --
======== ======= ========
Liabilities assumed for the acquisition of vessels (see Note
3)........................................................ $ 279 $ -- $ 34,650
======== ======= ========
Common stock issued for the redemption of notes payable to
related parties........................................... $ -- $ -- $ 307
======== ======= ========
Common stock issued for the repayment of debt............... $ -- $ -- $ 13,883
======== ======= ========
</TABLE>

See notes to consolidated financial statements.

F-22
<PAGE> 95

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Organization and Basis of Consolidation. Hvide Marine Incorporated ("HMI"
and the "Company") was incorporated in the state of Florida on September 28,
1994 as the holding company for the former Hvide Marine Incorporated and its
majority-owned subsidiaries (the "Predecessor Company"). On September 30, 1994,
100% of the Common Stock of the Predecessor Company was exchanged for common
stock of HMI and accounted for in a manner similar to a pooling of interests.
Accordingly, the accompanying consolidated financial statements include the
combined successor/predecessor companies for all periods subsequent to September
30, 1994 and the Predecessor Company for all periods prior to September 30,
1994. All share and per share amounts have been adjusted to give retroactive
effect to the capital structure of HMI. All material intercompany transactions
and balances have been eliminated in the consolidated financial statements.
Investments in limited partnerships and less-than-majority-owned subsidiaries
are accounted for on the equity method.

On August 14, 1996, the Company completed the initial public offering (the
"IPO") of 7,000,000 shares of its Class A Common Stock at $12.00 per share. The
net proceeds to the Company were approximately $74,821,000, after deducting
underwriting commissions and other offering expenses. The net proceeds were used
primarily to repay certain indebtedness that was outstanding prior to the IPO
and for the cash portion of the purchase price of certain acquisitions
consummated simultaneously with and subsequent to the IPO. On September 12,
1996, the underwriters' over-allotment option was exercised in part, pursuant to
which an additional 159,000 shares were issued. The net proceeds of
approximately $1,774,000 were used by the Company to repay certain outstanding
indebtedness. In addition, on August 14, 1996, the Company issued 182,000 and
1,188,000 shares of Class A and Class B Common Stock, respectively, in payment
of certain outstanding indebtedness.

Operations. The principal operations of the Company consist of vessel time
charters, vessel operating agreements and harbor towing. Through its vessel time
charters and operating agreements, the Company serves the energy and chemical
industries primarily in the U.S. domestic trade. The Company's harbor towing
operations principally serve the passenger cruise ship, energy, and chemical
industries and are concentrated in ports located in the southeastern United
States.

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

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

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

Spare Parts and Supplies. Inventories of spare parts and supplies are
stated at the lower of cost, determined on a basis that approximates the
last-in, first-out method, or market.

Prepaid Expenses. Prepaid expenses primarily include prepaid vessel
insurance.

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

F-23
<PAGE> 96

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

whenever events or changes in circumstances indicate the assets may be impaired.
The Company, based on current circumstances, does not believe that any
long-lived assets are impaired at December 31, 1996.

Property. Vessels, improvements, furniture and equipment are stated at
cost less accumulated depreciation. Major renewals and improvements are
capitalized and replacements, maintenance and repairs which do not improve or
extend the lives of the assets are expensed. Depreciation is computed on the
straight-line method over the estimated useful lives of the assets. The
estimated useful lives of vessels and improvements other than tankers are 15 to
40 years and the estimated useful lives of furniture and equipment are 3 to 10
years. Tankers and related improvements are depreciated over estimated useful
lives, as determined by the Oil Pollution Act of 1990 and other factors, ranging
from 4 to 24 years.

Vessels under capital leases are amortized over the estimated useful lives
of the vessels. Included in vessels and improvements at December 31, 1995 and
1996 are vessels under capital leases of approximately $5,229,000 and
$11,594,000, net of accumulated amortization of approximately $149,000 and
$293,000, respectively.

For the years ended December 31, 1994, 1995 and 1996, depreciation and
amortization of vessels, improvements, furniture and equipment was approximately
$3,397,000, $4,770,000, and $8,291,000, respectively.

Deferred Costs. Deferred costs primarily represent drydocking and
financing costs. Deferred financing costs are amortized over the term of the
related borrowings. Deferred drydocking costs are amortized over the period to
the next required regulatory classification date, generally 30 months. At
December 31, 1995 and 1996, deferred costs include unamortized drydocking of
approximately $2,534,000 and $6,267,000, respectively.

Goodwill. Goodwill represents the excess of the purchase price over the
fair value of certain long-lived assets acquired and is amortized on the
straight-line basis over 20 to 40 years. The carrying value of goodwill is
reviewed if facts and circumstances suggest that it may be impaired. If this
review indicates that goodwill will not be recoverable, as determined based on
the estimated undiscounted cash flows of the assets acquired over the remaining
amortization periods, the carrying value will be adjusted as a component of
continuing operations and be measured based on the estimated fair value of the
associated assets. At December 31, 1995 and 1996, accumulated amortization of
goodwill was approximately $1,689,000 and $2,194,000, respectively.

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

The Company accounts for income taxes pursuant to Financial Accounting
Standards Board ("FASB") Statement No. 109 ("FASB 109"), "Accounting for Income
Taxes." Under FASB 109, deferred income tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities, and are measured using the enacted tax rates and laws in
effect when the differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

Earnings (Loss) per Common Share. Earnings (loss) per common share is
calculated based on the weighted average number of common shares and dilutive
common stock equivalents outstanding during the period. Common stock equivalents
result from convertible preferred stock outstanding in 1994 and outstanding
stock options at December 31, 1996. Earnings (loss) per common share-assuming
full dilution includes the if-converted dilutive effect of a portion of the
convertible Junior Note through conversion in August 1996 (see Note 3) and the
incremental dilutive effect of outstanding common stock options at December 31,
1996.

Concentrations of Credit Risk. Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of cash
and cash equivalents in banks, trade accounts

F-24
<PAGE> 97

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

receivable and insurance claims receivable. The credit risk associated with cash
and cash equivalents in banks is considered low due to the credit quality of the
financial institutions. The Company performs ongoing credit evaluations of its
trade customers and generally does not require collateral. The credit risk
associated with insurance claims receivable is considered low due to the credit
quality and funded status of the insurance pools that the Company participates
in.

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

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

2. CAPITAL CONSTRUCTION FUNDS

Pursuant to a Dual Use Agreement between Seabulk Tankers, Ltd. ("STL") and
the United States of America ("U.S."), the Capital Construction Funds maintained
by STL is collateral to the U.S., which amounts were $36,000 and $37,000 at
December 31, 1995 and 1996, respectively.

3. DEBT

Long-term debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
<S> <C> <C>
Lines of Credit............................................. $ 7,500 $ 10,647
Term Loan................................................... 46,000 58,500
Acquisition Line............................................ -- 9,700
Senior Note................................................. 23,200 9,153
Junior Note................................................. 17,633 --
Title XI Debt............................................... -- 32,243
Notes Payable............................................... 9,389 12,286
-------- --------
103,722 132,529
Less: Current maturities.................................... (7,708) (24,375)
-------- --------
$ 96,014 $108,154
======== ========
</TABLE>

On September 28, 1994, the Company entered into an agreement, as amended on
June 21, 1996, for a credit facility (the "Credit Facility") with its principal
banks.

The Credit Facility provides for a working capital credit line of
$10,000,000 through January 15, 2001 (the "Line") and a stand-by letter of
credit (the "Letter of Credit") of $5,600,000. Borrowings under the Line bear
interest at the prime rate or LIBOR, at the option of the Company, plus an
applicable margin based upon the Company's compliance with certain financial
covenants (8.1% at December 31, 1996), and are subject to an annual commitment
fee of 0.50% of the unused portion of the Line. Borrowings outstanding under the
Line totaled $8,000,000 at December 31, 1996, which is currently due. The Letter
of Credit is collateral for a surety bond to fund any final award relating to
the shipyard's claims discussed in Note 5. Additionally, the Credit Facility
provides for a letter of credit in an amount equal to the greater of amounts
available to be drawn under the Line or $4,000,000. Amounts drawn under either
letter of credit are due on demand or the ultimate maturity date of January 15,
2001. There were no amounts outstanding under the letters of credit at December
31, 1996.

F-25
<PAGE> 98

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Credit Facility provides for a term loan (the "Term Loan") of
$60,500,000 and is payable in quarterly principal and interest payments.
Borrowings under the Term Loan bear interest at the prime rate or LIBOR, at the
option of the Company, plus an applicable margin based upon the Company's
compliance with certain financial covenants (8.1% at December 31, 1996).

The Credit Facility also provides for a $19,900,000 Acquisition Line of
Credit (the "Acquisition Line") to fund the cash portion of acquisitions.
Borrowings under the Acquisition Line are limited to the lesser of 70% of the
purchase price or a multiple of six times projected EBITDA from the acquisition,
as defined. The Acquisition Line bears interest at the prime rate or LIBOR, at
the option of the Company, plus an applicable margin based upon the Company's
compliance with certain financial covenants (8.1% at December 31, 1996).
Principal amounts outstanding under the Acquisition Line are due in quarterly
payments beginning in January, 1998. At December 31, 1996, $9,700,000 was
outstanding under the Acquisition Line.

The collateral for the Company's indebtedness under the Credit Facility
includes all Company-owned vessels, its partnership interests in STL and Seabulk
Transmarine Partnership, Ltd., spare parts, fuel and supplies, and eligible
accounts receivable.

On September 30, 1994, and as amended on May 24, 1995, the Company issued a
$25,000,000 senior subordinated note (the "Senior Note"). The Senior Note bears
interest at 12%, payable semi-annually on September 30, and September 30. The
principal portion of the Senior Note is payable in equal annual installments on
September 30, 2003 and 2004. The Company received proceeds of approximately
$23,072,000, net of a discount of $1,928,000 ($1,904,000, $1,800,000 and
$657,000 at December 31, 1994, 1995, and 1996, respectively) which is being
amortized as interest expense over the term of the Senior Note. On August 14,
1996 and September 12, 1996, the Company repaid $13,490,000, and $1,700,000,
respectively, of the principal balance of the Senior Note with a portion of the
proceeds from the IPO and the exercise of the underwriters' related
over-allotment option. Repayment of the Senior Note is subordinated to the
claims of the Company's principal banks for amounts outstanding under the Credit
Facility.

The terms of the Credit Facility and Senior Note prohibit the Company or
any of its wholly owned subsidiaries from paying dividends on any class of
common stock and restrict, among other things, the Company's ability to enter
into new commitments or borrowings over specified amounts and dispose of assets
outside the ordinary course of business. In addition, the Company is required to
maintain a minimum level of tangible net worth, as defined.

On August 14, 1996, the Company assumed approximately $34,650,000 of Title
XI Debt in connection with the acquisitions of certain vessels (see Note 12).
The Title XI Debt is collateralized by first preferred mortgages on certain
vessels and bears interest at rates ranging from 5.4% to 10.1%. The debt is due
in semiannual principal and interest payments through December 1, 2006. Under
the terms of the Title XI debt, the Company is required to maintain a minimum
level of working capital, as defined, and comply with certain other financial
covenants. At December 31, 1996, the Company was not in compliance with the
working capital financial covenant. On March 25, 1997, the U.S. Department of
Transportation, which administers the Title XI debt, waived the Company's
non-compliance with this covenant through February 7, 1997, the date the company
became in compliance.

In connection with redemption of the outstanding preferred stock of the
Predecessor Company in 1994 (see Note 10), the Company issued notes payable
totaling approximately $3,561,000 to the former stockholder. Interest on the
notes is payable quarterly at the greater of 12% or Prime + 3% (12% at December
31, 1996). The principal portion of the notes is due in the year 2000. Repayment
of these notes is subordinated to the claims of the Company's principal banks
for amounts outstanding under the Credit Facility. On August 14, 1996,
approximately $1,548,000 was repaid with a portion of the proceeds from the IPO.

In connection with the acquisition of the outstanding common stock of its
previously unconsolidated 50%-owned affiliate Ocean Specialty Tankers
Corporation ("OSTC"), on August 14, 1996, the Company assumed

F-26
<PAGE> 99

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OSTC's obligations under a $4,000,000 revolving line of credit secured by the
outstanding accounts receivables generated by three chemical tankers. The
revolving line of credit bears interest monthly at LIBOR + 1.5% (7.3% at
December 31, 1996). At December 31, 1996, $2,647,000 was outstanding under the
line of credit, which is currently due.

On August 14, 1996, the Company issued a $675,000 note payable for the
acquisition of a vessel (see Note 12). The note is due in quarterly principal
and interest payments (10%) through August, 2001.

In connection with the acquisition of the outstanding limited partnership
interests in Hvide Chartering, Ltd. ("HCL") and Hvide Offshore Services, Ltd.
("HOS") in 1994 (see Note 6), the Company issued notes payable of approximately
$2,149,000. Approximately $1,302,000 of these notes were issued to certain
officers and employees of the Company and the outstanding amounts are recorded
as notes payable to related parties in the accompanying consolidated balance
sheets. Interest on the notes is payable quarterly at 12% and the notes are due
in 2004. On August 14, 1996, approximately $678,000 of the notes payable to
related parties was repaid with $816,000 in cash and the issuance of 25,667
shares of Common Stock.

On September 30, 1994, HMI issued a $25,000,000 junior subordinated note
(the "Junior Note") bearing interest at 8%. In August 1996, the principal sum
and all accrued and unpaid interest was repaid with $15,115,000 of the proceeds
from the IPO and the issuance of 1,244,002 shares of Common Stock.

In connection with the acquisition of the minority interest in STL in 1994,
the Company issued a note payable of approximately $3,039,000. On August 14,
1996, the outstanding balance of the note was repaid with proceeds from the IPO.

In connection with the acquisition of seven crew vessels in 1995 (see Note
12), the Company issued a $3,000,000 note payable. The outstanding balance of
the note was repaid in February 1996.

The aggregate annual future payments due on debt and notes payable as of
December 31, 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1997........................................................ $ 24,375
1998........................................................ 17,052
1999........................................................ 21,112
2000........................................................ 22,801
2001........................................................ 26,760
Thereafter.................................................. 20,429
--------
$132,529
========
</TABLE>

In addition to the Letter of Credit available pursuant to the Credit
Facility, the Company has an available letter of credit of $7,000,000 for future
charter hire payments relating to the Seabulk Magnachem lease financing.

The Company made interest payments of approximately $3,062,000, $8,952,000,
and $19,213,000 in 1994, 1995 and 1996, respectively.

F-27
<PAGE> 100

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. CAPITAL LEASES

The Company owns certain vessels and other equipment under leases that are
classified as capital leases. The following is a schedule of future minimum
lease payments under capital leases together with the present value of the net
minimum lease payments as of December 31, 1996 (in thousands):

<TABLE>
<S> <C>
1997........................................................ $ 2,108
1998........................................................ 2,105
1999........................................................ 2,004
2000........................................................ 1,907
2001........................................................ 1,629
Thereafter.................................................. 1,357
-------
Total minimum lease payments................................ 11,110
Less amount representing interest........................... (2,175)
-------
Present value of minimum lease payment (including current
portion of $1,443)........................................ $ 8,935
=======
</TABLE>

5. COMMITMENTS AND CONTINGENCIES

The Company leases its office facilities under operating lease agreements
which expire at various dates through 2001. Rent expense was $467,000, $591,000,
and $699,000 for the years ending December 31, 1994, 1995, and 1996. Future
annual rentals due under non-cancelable operating leases are as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
<S> <C>
1997........................................................ $ 763
1998........................................................ 705
1999........................................................ 677
2000........................................................ 654
2001........................................................ 575
Thereafter.................................................. 4,545
------
$7,919
======
</TABLE>

A portion of the Company's operations consists of charters of ocean-going
vessels. Two tankers are bareboat chartered for periods extending through the
years 1999 and 2002, respectively. Charter hire expense on these tankers was
approximately $3,100,000, $3,153,000, and $3,181,000 for the years ended
December 31, 1994, 1995 and 1996, respectively. Additionally one tug is bareboat
chartered through the year 2010. Charter hire expense on this tug was
approximately $217,000 and $614,000 for the years ended December 31, 1995 and
1996, respectively. The aggregate annual future payments due under these charter
agreements as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
<S> <C>
1997........................................................ $ 3,842
1998........................................................ 3,893
1999........................................................ 3,949
2000........................................................ 2,592
2001........................................................ 2,608
-------
$16,884
=======
</TABLE>

In 1990, the Company withheld approximately $2,400,000 from a shipyard
relating to delays and other problems encountered in the construction of a
vessel. In 1993, the shipyard filed a claim to recover

F-28
<PAGE> 101

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately $8,500,000 for costs allegedly due the shipyard, and the Company
asserted a counterclaim for approximately $5,600,000 against the shipyard. In
addition, the shipyard is seeking $10,000,000 of punitive damages. Management
believes the shipyard's claim amounts are unsubstantiated and that recoveries
upon the Company's counterclaim, together with insurance coverage, will exceed
amounts, if any, which may be awarded to the shipyard. Management believes that
the additional costs incurred to complete the construction of the vessel
exceeded the amounts withheld (settlement of construction costs, if any, would
generally be capitalized and depreciated over future periods); however, the
Company is unable to predict the final outcome of this matter.

In November 1989, STL formed an 88%-owned subsidiary, Seabulk Offshore,
Ltd. ("SOL"), which acquired eight offshore supply vessels for approximately
$13,510,000. In December 1990, STL and Hvide Marine Transport, Incorporated (a
wholly-owned subsidiary of HMI) purchased the remaining 12% interest in SOL from
the limited partner ("U.S. Offshore") for $825,000. Additionally, SOL agreed to
pay U.S. Offshore an amount equal to 5% of gross revenues from the operation of
the vessels for a period not to exceed a maximum of 40 months (December 1, 1990
through September 30, 1994) and in a total amount not to exceed $1,300,000,
whichever occurred first. Approximately $769,000 has been paid to U.S. Offshore
under this agreement. U.S. Offshore has filed a claim against SOL related to the
amount due under the agreement. SOL is vigorously defending this claim and
believes that it will ultimately prevail; however, the Company is unable to
predict the final outcome of this matter.

On August 6, 1992, a wholly-owned subsidiary, Seabulk Transmarine II, Inc.
acquired a 49% interest in a joint venture which charters two offshore supply
vessels from SOL for a period of six years. At the end of the charter period,
the joint venture shall have the option to purchase each of the vessels at an
agreed-upon purchase price of $300,000.

On September 30, 1994, the Company acquired Sun State Marine Services, Inc.
("SSMS"). The acquisition agreement provides the sellers contingent payments for
a period of five years from the date of the agreement. There were no contingent
amounts due related to SSMS for the year ended December 31, 1996.

At December 31, 1996, Hvide Partners, L.P. ("HPLP"), an affiliated entity
in which the Company participates as the sole general partner, was party,
through its five 75%-owned limited liability companies Hvide Van Ommeren Tankers
I-V LLC ("HVOT I-V"), to contracts for the construction of five double-hull
petroleum product carriers. Pursuant to its general and indirect limited
partnership interests in HPLP, the Company is required to make capital
contributions to HPLP in 1997 totaling approximately $150,000. The Company was
also party to an agreement at December 31, 1996 to provide technical services
and support related to the operations of HVOT I-V. Pursuant to this agreement
and commencing in 1997, the Company is to be paid an annual fee of $295,000,
subject to future escalation equal to increases, if any, in the CPI.

In November 1996, the Company entered into an agreement to bareboat charter
two tugs for a one year period.

In December 1996, the Company entered an agreement (the Agreement) to
purchase four crew boats for cash of approximately $7,400,000. Two of these
boats were delivered in February 1997 (see Note 16). The Agreement also consists
of the purchase of three additional crew boats to be constructed and delivered
on various dates from March 1998 to February 1999 at an aggregate cost of
approximately $8,200,000.

In December 1996, the Company entered into an agreement to purchase four
supply boats for an aggregate cost of approximately $21,800,000.

F-29
<PAGE> 102

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. RELATED PARTY TRANSACTIONS

In 1994, the Company acquired outstanding limited partnership interests of
HCL, a limited partnership in which the Company owned a 33 1/3% interest as
general partner, from certain officers and employees of the Company for cash and
notes payable of approximately $668,000 and $1,089,000, respectively.

In 1994, the Company acquired the outstanding limited partnership interests
of HOS from certain officers and employees of the Company for cash and notes
payable of approximately $607,000 and $1,060,000, respectively. Additionally,
the company assumed HOS's outstanding capital lease obligations and certain
other liabilities.

The purchase price of the vessels and other net assets acquired in the
acquisition of the limited partnership interests of HCL and HOS was
approximately $1,974,000 in excess of their historical net book value.
Accordingly, such amounts were deemed special distributions to the related
parties and recorded as a reduction of paid-in capital.

7. EMPLOYEE BENEFIT PLANS

The Company sponsors a Section 401(k) retirement plan covering
substantially all employees. Expense under this plan for the years ended
December 31, 1994, 1995 and 1996, was approximately $834,000, $1,047,000, and
$1,333,000, respectively. Contributions under the plan are determined on the
basis of employee compensation.

8. STOCK OPTIONS

The Company has authorized the grant of options for up to 1,000,000 shares
of Class A common stock pursuant to a non-qualified stock option plan (the
"Plan") covering primarily employees and outside directors. Options under the
Plan are issuable at the discretion of committees appointed by the Board of
Directors and generally vest ratably over a four year period. Option terms range
from 5 to 10 years. At December 31, 1996, there were 806,000 options which were
all granted on August 12, 1996. The exercise price of all options ($12.00) is
equal to the fair market value of the underlying common stock at that date.
There were no options exercised or forfeited during 1996 and at December 31,
1996, 35,000 options are exercisable. The Class A Common Stock issuable pursuant
to the plan have been reserved.

The Company has elected to account for stock-based employee compensation
awards under Accounting Principles Board Option No. 25 "Accounting for
Stock-Based Compensation" (APB 25). Under APB 25, because the exercise price of
the Company's employee stock options was equal to the market price of the
underlying stock at the date of grant, no compensation expense was recognized.

Pro forma information regarding net loss and loss per share is required by
FASB 123 as if the Company has accounted for its options under the fair value
method proscribed. However, the effect of applying the fair value method
proscribed by FASB 123 to the Company's stock options results in net loss and
loss per share that are not materially different from amounts reported.

F-30
<PAGE> 103

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. INCOME TAXES

The components of the provision for (benefit from) income taxes are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1994 1995 1996
(IN THOUSANDS)
<S> <C> <C> <C>
Current..................................................... $ -- $ -- $ --
Deferred.................................................... 189 (2) 3,543
---- ---- ------
$189 $ (2) $3,543
==== ==== ======
</TABLE>

Income taxes paid were approximately $400,000 in 1994. There were no income
taxes paid in 1995 and 1996.

A reconciliation of the Company's income tax rate to the federal rate of
34% is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Income tax expense (benefit) computed at the statutory
rate...................................................... 34% (34)% 34%
State income taxes.......................................... 2 (2) 2
Capital Construction Funds.................................. 16 24 1
Other....................................................... (17) 11 --
---- ---- --
35% (1)% 37%
==== ==== ==
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income tax assets and liabilities as of December 31, 1995
and 1996 are as follows:

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
DEFERRED INCOME TAX ASSETS:
Net operating loss carryforward........................... $ 8,388 $14,416
Charitable contributions carryforward..................... 43 66
Alternative minimum tax credit carryforward............... 1,226 1,226
Accrued compensation...................................... 315 410
Other..................................................... 149 191
------- -------
Total deferred income tax assets.................. 10,121 16,309
------- -------
DEFERRED INCOME TAX LIABILITIES:
Fixed asset differences................................... 13,770 21,772
Deferred drydocking costs................................. 668 922
------- -------
Total deferred income tax liabilities............. 14,438 22,694
------- -------
Net deferred income tax liability................. $ 4,317 $ 6,385
======= =======
</TABLE>

At December 31, 1996 the Company had approximately $40,500,000 in net
operating loss carryforwards for federal income tax purposes, expiring in
various amounts from 1998 to 2011. Due to a change in ownership, as defined in
Section 382 of the Internal Revenue Service Code, the utilization of
approximately $26,287,000 of net operating loss carryforwards, existing at the
date of the IPO, are limited to approximately $3,300,000 per year.

F-31
<PAGE> 104

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. CAPITAL STOCK

On August 14, 1996 and September 12, 1996, the Company issued 7,000,000 and
159,000 shares of its Class A Common Stock, respectively, pursuant to the IPO
and underwriters' over-allotment option. Simultaneously with the IPO, shares of
the Company's Class C Common Stock were exchanged for 304,000 and 673,000 shares
of the Company's Class A and Class B Common Stock, respectively. Additionally,
182,000 and 1,188,000 shares of the Company's Class A and Class B Common Stock,
respectively, were issued in repayment of a portion of the Junior Notes and
other outstanding indebtedness.

On May 10, 1996, the Company's Board of Directors authorized a 1.5843-for-1
split of its common stock, and an increase of the number of authorized shares of
its Class A, Class B, and Class C Common Stock to 100,000,000, 5,000,000, and
2,500,000, respectively. All share and per share data in the accompanying
financial statements have been restated to reflect the stock split.
Contemporaneous with the IPO, the Company's Board of Directors authorized the
retirement of the Company's Class C Common Stock.

On September 28, 1994, all the stock of the Predecessor Company was
exchanged for shares of the Company's stock (see Note 1). The fair value of the
Predecessor Company's common stock and the Company's common stock were
equivalent.

On September 29, 1994, all of the outstanding shares of Class A and Class B
Preferred Stock of the Predecessor Company were repurchased from the shareholder
for cash of $2,374,000, notes of $3,561,000 and certain agreements providing for
future payments over a specified term. The present value of the agreements
providing for future payments has been recorded in other liabilities in the
accompanying consolidated balance sheets and total approximately $1,282,000 and
$1,261,000 at December 31, 1995 and 1996, respectively.

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

In connection with the issuance of the Junior Note, the Company issued to
the note holders 765,733 shares of its Class B and Class C Common Stock and
Common Stock Contingent Share Issuances ("CSIs") to purchase a maximum of
554,495 additional shares of its common stock. The Junior Note, shares of Class
A and Class C Common Stock and the CSIs were recorded based upon their estimated
fair values at the date of issuance. The CSIs are exercisable at a price equal
to the par value of the underlying shares on June 10, 1997. The maximum amount
of CSIs that may be exercised is based upon the note holders return on their
investment in the Company.

Simultaneously with the issuance of the CSIs, the Company entered into an
agreement with its Chairman and principal stockholder and certain trusts whereby
the principal stockholder and the trusts agreed to contribute pro rata a like
amount of shares of common stock to the Company concurrently with the issuance
of shares pursuant to the CSIs. Accordingly, issuance of shares pursuant to the
CSIs will not effect the Company's financial position or results of operations.

11. SIGNIFICANT CUSTOMER

The Company derived revenues from a long-term contract with one company
representing 17%, 13%, and 10% of its revenues over the three years ended
December 31, 1994, 1995, and 1996, respectively.

12. ACQUISITIONS

On March 8, 1995, the Company acquired seven crew boats for $5,875,000,
including cash of $2,875,000 and a $3,000,000 promissory note.

F-32
<PAGE> 105

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In January and February 1996, the Company acquired nine crew boats under
capital lease obligations.

On August 14, 1996, the Company purchased the remaining 50% of the
outstanding common stock of an entity and acquired three chemical tankers. The
aggregate purchase price of approximately $64,650,000 consisted of approximately
$30,000,000 in cash and the assumption of approximately $34,650,000 in mortgage
obligations related to two of the vessels acquired.

On August 14, 1996, the Company purchased eight supply boats for
$26,075,000. The Company has agreed to indemnify certain affiliates of the
sellers against certain of one seller's liabilities due to its creditors. The
Company's maximum liability pursuant to the guarantee and indemnification is
$7,000,000. Future amounts paid pursuant to the guarantee and indemnification,
if any, will be considered as additional purchase price of the vessels.

On August 14, 1996, the Company acquired two supply boats and one crew boat
for cash of $6,150,000 and the issuance of a $675,000 note payable.

In October 1996, the Company purchased two supply boats for cash of
approximately $4,600,000.

In November 1996, the Company purchased a crew boat for cash from the
Company's Chairman and the Investor Group for a purchase price of approximately
$2,200,000, which was equal to their cost of the vessel.

In December 1996, the Company purchased a tug for cash of approximately
$3,400,000.

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

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Cash and cash equivalents and accounts receivable. The carrying amounts
reported in the balance sheets approximates fair value due to the current
maturity of such instruments.

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

Senior Notes. Amounts outstanding under the Senior Notes bear interest at
12%. The fair value of the Notes at December 31, 1996 was estimated to be $9.2
million, using a discounted cash flow analysis at estimated market rates.

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

14. SUPPLEMENTARY EARNINGS PER SHARE

Primary earnings per share for the year ended December 31, 1996 would have
been $0.03 assuming the retirement of certain indebtedness with proceeds from
both the IPO and the public offering completed in January 1997 (see note 16),
had taken place on January 1, 1996. Supplementary earnings per share reflect an
increase in weighted average shares outstanding during the period of
approximately 4,157,000 shares and an increase in net income applicable to
common shares of approximately $2,389,000 net of applicable income taxes for the
period.

F-33
<PAGE> 106

HVIDE MARINE INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. EXTRAORDINARY ITEM

On August 14, 1996, the Company paid cash of $26,307,000; issued 55,500
shares of Class A Common Stock and 1,188,502 shares of Class B Common Stock to
repay $25,000,000 and $15,190,000 of the Junior and Senior Notes, respectively.
Accordingly, the Company recorded a loss on extinguishment of $8,108,000 for the
write off of deferred financing costs and related debt discounts, net of a tax
benefit of $1,474,000.

16. SUBSEQUENT EVENTS

In January 1997, the Company purchased a supply boat and two tug boats for
cash of approximately $4,700,000 and $600,000, respectively.

On February 5, 1997, the Company completed a public offering of 4,000,000
shares of its Class A Common Stock at $24.875 per share. The net proceeds to the
Company were $94,300,000, after deducting underwriting commissions. The net
proceeds will be used primarily to repay certain indebtedness, to fund the cash
portion of certain potential acquisitions and for general corporate purposes.

In February 1997, the Company purchased three crew boats for cash of
approximately $5,575,000 and entered into a contract to construct one supply
boat for an estimated aggregate cost of $7,520,000.

In February 1997, the Company repaid $33,220,000 of its outstanding debt
and amended its Credit Facility. As a result, the Company recorded extraordinary
losses of $1,754,000 for the write off of deferred financing costs associated
with the early extinguishment of debt, net of income tax benefits of $1,030,000.

In February 1997, the Company purchased the outstanding common stock of an
entity for cash of approximately $1,500,000. Pursuant to the purchase agreement,
the Company assumed the entity's commitments to fund the remaining construction
costs of three crew boats currently under contract with a shipyard. The
aggregate remaining construction cost of the vessels is approximately $5.7
million. The fair value of net assets acquired approximates the purchase price
paid by the company.

In February 1997, the Company contracted for the construction of three
ship-docking modules for an estimated aggregate cost of $14,500,000.

F-34
<PAGE> 107

BAY TRANSPORTATION CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,830,059 $ 2,814,401
Trade receivables, net.................................... 2,166,087 1,945,264
Other receivables......................................... 62,709 159,050
Related party receivables................................. 8,575 --
Short term investments.................................... 464,940 14,234
Prepaid expenses.......................................... 296,244 487,282
Income taxes receivable................................... 541,262 138,377
Intercompany income taxes receivable...................... 141,800 141,800
----------- -----------
Total current assets.............................. 5,511,676 5,700,408
Property and equipment, net................................. 26,766,767 26,759,615
Other assets, net........................................... 893,213 951,929
Investment in affiliate..................................... 28,071 --
----------- -----------
$33,199,727 $33,411,952
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt......................... $ 924,143 $ 924,143
Accounts payable.......................................... 421,087 96,593
Accrued expenses.......................................... 801,427 865,168
Due to parent............................................. 14,369 --
----------- -----------
Total current liabilities......................... 2,161,026 1,885,904
Long term debt.............................................. 20,210,857 19,689,321
Deferred compensation....................................... 730,082 800,416
Deferred income taxes....................................... 1,619,435 1,747,903
----------- -----------
Total liabilities................................. 24,721,400 24,123,544
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding................................. 1,000 1,000
Capital in excess of par value............................ 999,000 999,000
Retained earnings......................................... 7,478,327 8,288,408
----------- -----------
Total shareholders' equity........................ 8,478,327 9,288,408
----------- -----------
$33,199,727 $33,411,952
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-35
<PAGE> 108

BAY TRANSPORTATION CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1997
<S> <C> <C>
Revenues.................................................... $9,070,673 $10,786,567
Cost of revenues earned..................................... 5,284,141 6,052,321
---------- -----------
3,786,532 4,734,246
General and administrative expenses......................... 2,660,215 2,971,584
---------- -----------
Income from operations...................................... 1,126,317 1,762,662
Other income (expense):
Interest expense, net..................................... (872,583) (1,200,309)
Net gain on sale of property and equipment................ 767,623 699,175
Other income.............................................. 326,777 132,791
---------- -----------
Income before provision for intercompany income taxes....... 1,348,134 1,394,319
Provision for intercompany income taxes..................... 512,291 584,238
---------- -----------
Net income.................................................. 835,843 810,081
Retained earnings at beginning of period.................... 6,748,939 7,478,327
---------- -----------
Retained earnings at end of period.......................... $7,584,782 $ 8,288,408
========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-36
<PAGE> 109

BAY TRANSPORTATION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1996 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 835,843 $ 810,081
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 1,161,692 1,457,923
Amortization........................................... 64,621 47,398
Distributed earnings of affiliate...................... -- 28,071
Net gain on sale of property and equipment............. (767,623) (699,175)
Deferred income taxes.................................. 512,291 128,468
Deferred compensation.................................. 77,351 70,334
Changes in:
Trade receivables, net............................... 132,364 220,823
Other receivables.................................... 34,877 (96,341)
Related party receivables............................ 179,240 8,575
Prepaid expenses..................................... (22,960) (191,038)
Income taxes receivable.............................. (293,194) 402,885
Other assets......................................... (275,483) (106,114)
Accounts payable..................................... 291,876 (324,494)
Accrued expenses..................................... 145,178 63,741
Other long term liabilities.......................... 35,576 --
Due to parent........................................ (26,050) (14,369)
----------- -----------
Net cash provided by operating activities......... 2,085,599 1,806,768
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment.............. 777,050 769,622
Capital expenditures...................................... (9,402,283) (1,521,218)
Sale of short term investments............................ 150,046 450,706
----------- -----------
Net cash used in investing activities............. (8,475,187) (300,890)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt........................................ (1,360,194) (521,536)
Proceeds from debt........................................ 9,850,645 --
----------- -----------
Net cash provided by (used in) financing
activities...................................... 8,490,451 (521,536)
Net increase in cash and cash equivalents................. 2,100,863 984,342
Cash and cash equivalents at beginning of period.......... 516,853 1,830,059
----------- -----------
Cash and cash equivalents at end of period................ $ 2,617,716 $ 2,814,401
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................... $ 552,295 $ 913,073
=========== ===========
Income taxes........................................... $ 383,237 $ 428,662
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-37
<PAGE> 110

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

Bay Transportation Corporation (formerly St. Philip Towing and
Transportation Company) (the "Company") is 80% owned by Kinsman Lines, Inc. (the
"Parent Company") and 20% by the former majority owner of St. Philip Towing and
Transportation Company (the "Minority Owner"). The Company owns tugboats that
provide ship docking services in Tampa, Florida; Bradenton, Florida; San
Francisco, California; and Long Beach, California. The Company's operations are
heavily concentrated in providing tug services to the phosphate and oil
industries. A significant economic down turn in either of these industries could
impact the Company.

INTERIM FINANCIAL STATEMENTS

The interim financial statements are unaudited but, in the opinion of
management, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for the periods
presented. The results of operations for any interim period are not necessary
indicative of the results to be expected for the full year. These interim
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1996.

USE OF ESTIMATES

The Company prepares its financial statements in conformity with generally
accepted accounting principles. These principles require management to (1) make
estimates and assumptions that affect the reported amounts of assets and
liabilities, (2) disclose contingent assets and liabilities at the date of the
financial statements and (3) report amount of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

F-38
<PAGE> 111

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

PROPERTY AND EQUIPMENT, NET

Property and equipment is stated at cost less accumulated depreciation.
Depreciation is provided for financial reporting purposes on the straight-line
method using the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
<S> <C>
Vessels and related marine equipment........................ 9-18
Office equipment............................................ 5
Automobiles and trucks...................................... 5
Leasehold improvements...................................... remaining lease life
</TABLE>

Expenditures for renewals and improvements that add to the productive
capacity or extend the useful life of the asset are capitalized. Expenditures
for repairs and maintenance are expensed as incurred.

OTHER ASSETS

Other assets consist primarily of capitalized loan origination fees, and
cash surrender value of officers' life insurance (see Note 5). Loan origination
fees are amortized over the term of the related debt.

INTERCOMPANY INCOME TAXES

The Company is a member of an affiliated group which files a consolidated
federal income tax return. Under the terms of the tax allocation agreement, the
Company is required to advance to the Parent Company any federal income taxes
computed as though the Company had filed a separate return. Additionally, net
operating losses or tax credits utilized by the Parent Company to reduce the
consolidated tax liability are recorded as a benefit to the Company.

VALUATION ASSESSMENT OF LONG-LIVED ASSETS

Management continuously reviews the value of the Company's long-lived
assets and records necessary adjustments to the asset's carrying value when the
asset becomes impaired. If an asset is determined to be impaired, a loss is
recognized in the statement of income and retained earnings.

2. PROPERTY AND EQUIPMENT, NET

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
<S> <C>
Vessels and related marine equipment........................ $ 37,128,661
Leasehold improvements...................................... 412,233
Office equipment............................................ 601,155
Automobiles, trucks and yard equipment...................... 254,841
Construction in progress.................................... 42,437
------------
38,439,327
Less accumulated depreciation............................... (11,679,712)
------------
$ 26,759,615
============
</TABLE>

Substantially all property and equipment are pledged as collateral for long
term debt.

F-39
<PAGE> 112

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

3. LONG TERM DEBT

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
<S> <C>
Maritime Administration ship financing bonds payable, fixed
interest rate of 7.75%, interest paid semi-annually,
semi-annual redemption of bonds of $216,000, scheduled
maturity April 19, 2020................................... $ 9,926,000
Maritime Administration ship financing bonds payable, fixed
interest rate of 7.3%, interest paid semi-annually,
semi-annual redemption of bonds of $107,000, scheduled
maturity June 1, 2021..................................... 5,131,000
Mortgage note payable to financial institution, fixed
monthly principal and interest payments of $60,856. Fixed
monthly payments will be adjusted every five years
thereafter to provide for full amortization by June 16,
2012...................................................... 5,556,464
-----------
20,613,464
Less current portion........................................ (924,143)
-----------
$19,689,321
===========
</TABLE>

Substantially all of the Company's property and equipment are pledged as
collateral and, additionally, the Parent Company has guaranteed the mortgage
note payable.

4. EMPLOYEE BENEFITS

The Company is self insured, up to certain limits, for the risks and losses
from health care costs of substantially all employees. Contributions by the
Company during the nine months ended September 30, 1997, amounted to
approximately $493,000.

5. DEFERRED COMPENSATION AGREEMENTS

As part of the purchase of the assets of St. Philip Towing and
Transportation Company, the Company assumed a deferred compensation agreement
with an executive. Under the terms of the agreement, annual payments of $45,000
commenced in 1993 and will be paid until death. The Company recorded $16,414 of
interest expense during the nine months ended September 30, 1997, related to
this agreement. Payments to the employee amounted to $33,750 through September
30, 1997.

In 1992, the Company entered into deferred compensation agreements with
five executives. The liability was determined by discounting the projected
payments at 9.0%. During the nine months ended September 30, 1997, the Company
incurred $88,403 of deferred compensation expense, which is included in general
and administrative expenses. To assist in funding the deferred compensation
agreements, the Company has invested in corporate owned life insurance policies.
The cash surrender value of these policies was $385,246 at September 30, 1997,
which is included in other assets.

F-40
<PAGE> 113

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

6. INCOME TAXES

The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS
ENDED
SEPTEMBER 30,
1997
<S> <C>
Current:
Federal................................................... $ 50,887
State..................................................... 49,660
--------
Total current..................................... 100,547
--------
Deferred:
Federal................................................... 432,776
State..................................................... 50,915
--------
Total deferred.................................... 483,691
--------
$584,238
========
</TABLE>

The Company's combined state and federal tax rate approximates the
statutory tax rate in effect during the nine-month period.

Significant components of the Company's deferred taxes as of September 30,
1997 are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
<S> <C>
DEFERRED TAX LIABILITIES:
Tax depreciation in excess of book........................ $(2,542,954)
-----------
DEFERRED TAX ASSETS:
Deferred compensation..................................... 318,831
AMT credit carry forward.................................. 334,746
Non-deductible accruals................................... 111,074
Provision for doubtful accounts........................... 30,400
-----------
Deferred tax assets......................................... 795,051
-----------
Net deferred tax liability.................................. $(1,747,903)
===========
</TABLE>

7. RELATED PARTY TRANSACTIONS

A related party owns Kinsman Companies Partnership which provides
consulting, management and advisory services to the Company. Fees for consulting
services rendered to the Company aggregated approximately $375,000 during the
nine months ended September 30, 1997, and are included in general and
administrative expenses.

8. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases its land, buildings and certain office equipment under
operating leases with initial terms ranging from four to six years. Several
leases contain options which provide for renewal for up to five additional
years. Rental expense for the nine months ended September 30, 1997, amounted to
approximately $46,582.

F-41
<PAGE> 114

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Future minimum lease payments under noncancellable operating leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
<S> <C>
1997........................................................ $31,009
1998........................................................ 16,142
1999........................................................ 14,668
2000........................................................ 11,502
2001........................................................ 11,502
Thereafter.................................................. 0
-------
$84,823
=======
</TABLE>

EMPLOYMENT AGREEMENT

The Company has an employment agreement with an officer, which extends to
December 1997, at which time both parties have the option of renewing the
agreement. The Agreement provides for annual compensation of $200,000 plus
additional incentive compensation calculated as a percentage of the excess of
pretax profits before interest charges over $2,200,000. No incentive
compensation was earned or paid during the nine months ended September 30, 1997.

LITIGATION

Several other legal actions are pending and in process against the Company
in the ordinary course of business. In the opinion of management, the eventual
disposition of these actions will not have a material adverse effect on the
financial position of the Company.

9. MAJOR CUSTOMERS

The Company had two major customers which accounted for approximately
$1,214,000 and 1,023,000, respectively of gross revenues for the nine months
ended September 30, 1997.

10. SUBSEQUENT EVENTS

On October 16, 1997, Hvide Marine Incorporated purchased the outstanding
common stock of the Parent Company and purchased the 20% interest in the Company
from the Minority Owner.

On October 16, 1997, the Company repaid the mortgage note payable (see Note
3).

On October 16, 1992, the Company terminated their employment agreement with
an officer (see Note 8).

In October 1997, the management agreement with a related party (see Note 7)
was terminated.

Subsequent to September 30, 1997, the Company forgave their intercompany
income tax receivable.

F-42
<PAGE> 115

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Bay Transportation Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and retained earnings and of cash
flows present fairly, in all material respects, the financial position of Bay
Transportation Corporation and its subsidiary at December 31, 1996 and 1995, and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conduced our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

Price Waterhouse LLP
Tampa, Florida

March 20, 1997

F-43
<PAGE> 116

BAY TRANSPORTATION CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 516,853 $ 1,830,059
Trade receivables, net of allowance for doubtful accounts
of $80,000 and $65,382................................. 1,779,300 2,166,087
Other receivables (includes $0 and $127,234 of MARAD
escrow funds).......................................... 216,130 62,709
Related party receivables................................. 179,240 8,575
Short term investments.................................... 175,043 464,940
Prepaid expenses.......................................... 310,883 296,244
Income taxes receivable................................... 93,970 541,262
Intercompany income taxes receivable...................... 141,800 141,800
----------- -----------
Total current assets.............................. 3,413,219 5,511,676
Property and equipment, net................................. 18,970,599 26,766,767
Other assets, net........................................... 644,670 893,213
Investment in affiliate..................................... 259,100 28,071
----------- -----------
$23,287,588 $33,199,727
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt......................... $ 1,230,387 $ 924,143
Accounts payable.......................................... 300,484 421,087
Accrued expenses.......................................... 596,293 801,427
Due to Parent Company..................................... 26,050 14,369
----------- -----------
Total current liabilities......................... 2,153,214 2,161,026
Long term debt.............................................. 11,737,162 20,210,857
Deferred compensation....................................... 636,181 730,082
Deferred income taxes....................................... 1,012,092 1,619,435
----------- -----------
Total liabilities................................. 15,538,649 24,721,400
Commitments and contingencies (Note 3 and 8)
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding................................. 1,000 1,000
Capital in excess of par value............................ 999,000 999,000
Retained earnings......................................... 6,748,939 7,478,327
----------- -----------
Total shareholders' equity........................ 7,748,939 8,478,327
----------- -----------
$23,287,588 $33,199,727
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-44
<PAGE> 117

BAY TRANSPORTATION CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
Revenues.................................................... $11,453,129 $12,451,725
Costs of revenues earned.................................... 7,445,867 7,273,724
----------- -----------
4,007,262 5,178,001
General and administrative expenses......................... 3,380,500 3,577,474
----------- -----------
Income from operations...................................... 626,762 1,600,527
OTHER INCOME (EXPENSE):
Interest expense, net..................................... (392,348) (1,212,642)
Net gain on sale of property and equipment................ 579,228 767,623
Equity in earnings (loss) of affiliate.................... 190,610 (65,953)
Miscellaneous income...................................... 249,040 90,263
----------- -----------
Income before provision for intercompany income taxes....... 1,253,292 1,179,818
Provision for intercompany income taxes..................... (457,141) (450,430)
----------- -----------
Net income.................................................. 796,151 729,388
Retained earnings at beginning of year...................... 5,952,788 6,748,939
----------- -----------
Retained earnings at end of year............................ $ 6,748,939 $ 7,478,327
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-45
<PAGE> 118

BAY TRANSPORTATION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 796,151 $ 729,388
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 1,790,618 1,647,391
Amortization........................................... 50,022 95,378
Distributed earnings of affiliate...................... 66,390 231,029
Net gain on sale of property and equipment............. (579,228) (767,623)
Deferred income taxes.................................. (45,628) 607,343
Deferred compensation.................................. 129,946 93,901
Changes in:
Trade receivables, net............................... 201,963 (386,787)
Other receivables.................................... (112,870) 153,421
Related party receivables............................ 20,332 170,665
Prepaid expenses..................................... (107,288) 14,639
Income taxes receivable.............................. (65,721) (447,292)
Other assets......................................... (60,273) (159,992)
Accounts payable..................................... (191,817) 120,603
Accrued expenses..................................... (154,336) 205,134
Other long term liabilities.......................... (4,883) --
Due to Parent Company................................ (157,500) (11,681)
----------- -----------
Net cash provided by operating activities......... 1,575,878 2,295,517
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment.............. 800,533 777,050
Capital expenditures...................................... (7,551,120) (9,452,986)
Proceeds from sale of short term investments.............. 1,784,558 --
Purchase of short term investments........................ -- (289,897)
----------- -----------
Net cash used in investing activities............. (4,966,029) (8,965,833)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt........................................ (9,377,567) (3,177,549)
Proceeds from debt........................................ 12,817,191 11,345,000
Loan origination fees..................................... (258,182) (183,929)
----------- -----------
Net cash provided by financing activities......... 3,181,442 7,983,522
----------- -----------
Net increase (decrease) in cash and cash equivalents........ (208,709) 1,313,206
Cash and cash equivalents at beginning of year.............. 725,562 516,853
----------- -----------
Cash and cash equivalents at end of year.................... $ 516,853 $ 1,830,059
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest............................................... $ 1,225,200 $ 1,361,000
=========== ===========
Income taxes........................................... $ 551,000 $ 293,000
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

F-46
<PAGE> 119

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of Bay Transportation Corporation
(the "Company") include the accounts of Bay Transportation Corporation and its
wholly-owned subsidiary Bay Tractor Tugs, Inc. The Company owns tugboats that
provide ship docking services in Tampa, Florida; Bradenton, Florida; San
Francisco, California; and Long Beach, California. The Company's operations are
heavily concentrated in providing tug services to the phosphate and oil
industries. A significant economic down turn in either of these industries could
impact the Company.

The Company is 80% owned by Kinsman Lines, Inc. (the "Parent Company") and
20% by the former majority owner of St. Philip Towing and Transportation
Company.

USE OF ESTIMATES

The Company prepares its financial statements in conformity with generally
accepted accounting principles. These principles require management to (1) make
estimates and assumptions that affect the reported amounts of assets and
labilities, (2) disclose contingent assets and liabilities at the date of the
financial statements and (3) report amount of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

PROPERTY AND EQUIPMENT, NET

OTHER ASSETS

Other assets consist of capitalized loan origination fees, charter start-up
costs, cash surrender value of officers' life insurance (see Note 5) and capital
construction funds. Loan origination fees are amortized over the related life of
the debt and charter start-up costs are amortized over the life of the related
charter agreements. The Company's capital construction fund account had on
deposit $6,137 and $11,368 at December 31, 1996 and 1995, respectively.

SHORT-TERM INVESTMENTS

Short-term investments consist of mutual funds and certificates of deposit
with maturities of one year or less. Short-term investments have been
categorized as available for sale and, as a result, are stated at fair

F-47
<PAGE> 120

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

value. Unrealized holding gains and losses are included as a component of
shareholders' equity until realized. At December 31, 1996 and 1995, there were
no unrealized gains or losses.

INTERCOMPANY INCOME TAXES

VALUATION ASSESSMENT OF LONG-LIVED ASSETS

RECLASSIFICATIONS

Certain prior year balances have been reclassified to be consistent with
the current year presentation.

2. PROPERTY AND EQUIPMENT, NET:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
<S> <C> <C>
Vessels and related marine equipment........................ $ 28,348,895 $ 36,831,918
Leasehold improvements...................................... 391,688 412,233
Office equipment............................................ 526,260 552,402
Automobiles, trucks and yard equipment...................... 230,062 230,956
Construction in progress.................................... 947,708 34,437
------------ ------------
30,444,613 38,061,946
Less accumulated depreciation............................. (11,474,014) (11,295,179)
------------ ------------
$ 18,970,599 $ 26,766,767
============ ============
</TABLE>

Construction was completed on one escort tug boat during 1996 and two
escort tug boats during 1995 (see Note 3). These vessels were classified as
construction in progress and subsequently reclassified to vessels and related
marine equipment when construction was completed and the vessels were placed in
service. Interest capitalized on these vessels during 1996 and 1995 amounted to
$88,856 and $722,184, respectively. Substantially all property and equipment are
pledged as collateral for long term debt.

3. LONG TERM DEBT:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
Maritime Administration ship financing bonds payable, fixed
interest rate of 7.75% interest paid semi-annually,
semi-annual redemption of bonds of $216,000, scheduled
maturity April 19, 2020................................... $10,574,000 $10,142,000
Maritime Administration ship financing bonds payable, fixed
interest rate of 7.3%, interest paid semi-annually,
semi-annual redemption of bonds of $107,000, scheduled
maturity June 1, 2021..................................... -- 5,238,000
</TABLE>

F-48
<PAGE> 121

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
Mortgage note payable to financial institution, prime
lending rate plus 0.50%, interest payable monthly,
quarterly principal payments of $199,597, refinanced July
18, 1996.................................................. $ 2,393,549 $ --
Mortgage note payable to financial institution, LIBOR plus
2.50%, (8.1% at December 31, 1996) monthly interest until
January 16, 1997; then commencing fixed monthly principal
and interest payments of $60,856. Fixed monthly payments
will be adjusted every five years thereafter to provide
for full amortization by June 16, 2012.................... -- 5,755,000
----------- -----------
12,967,549 21,135,000
Less current portion...................................... (1,230,387) (924,143)
----------- -----------
$11,737,162 $20,210,857
=========== ===========
</TABLE>

Scheduled annual principal payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
<S> <C>
1997........................................................ $ 924,143
1998........................................................ 949,076
1999........................................................ 974,231
2000........................................................ 1,001,474
2001........................................................ 1,030,979
Thereafter.................................................. 16,255,097
-----------
$21,135,000
===========
</TABLE>

Substantially all of the Company's property and equipment are pledged as
collateral and, additionally, the Parent Company has guaranteed the mortgage
note payable.

The mortgage note and Maritime Administration debt agreements contain
certain restrictive covenants requiring the maintenance of a stated owners'
equity level, limitations on capital expenditures, indebtedness and certain
other matters with which the Company was in compliance as of December 31, 1995.
As of December 31, 1996, the Company was not in compliance with the debt to net
worth financial covenant; however, the Company received a waiver of this default
from MARAD. At December 31, 1995, included in other receivables is $127,234 of
MARAD escrow funds which the Company received subsequent to year end.

In August 1995 the Company entered into an agreement for the construction
of one escort tug boat for approximately $5,850,000 with an option to build a
second escort tug boat for approximately $6,100,000. Construction was completed
on the first tug boat in July 1996 and $5,345,000 of Maritime Administration
ship financing bonds were issued.

In July 1996 the Company refinanced its existing institutional debt in
conjunction with the purchase of an enhanced tug boat (see Note 7). Of the
refinanced $6,000,000 note payable, approximately $3,500,000 of the proceeds
were used to purchase the tug boat and the remainder refinanced the existing
mortgage note payable.

4. EMPLOYEE BENEFITS:

The Company is self insured, up to certain limits, for the risks and losses
from health care costs of substantially all employees. Contributions by the
Company during 1996 and 1995 amounted to approximately $643,000 and $629,000
respectively.

F-49
<PAGE> 122

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. DEFERRED COMPENSATION AGREEMENTS:

As part of the purchase of the assets of St. Philip Towing and
Transportation Company, the Company assumed a deferred compensation agreement
with an executive. Under the terms of the agreement, annual payments of $45,000
commenced in 1993 and will be paid until death. The Company recorded $21,885 and
$57,932 of interest expense in 1996 and 1995, respectively, related to this
agreement. Payments to the employee amounted to $45,000 in 1996 and 1995.

In 1992, the Company entered into deferred compensation agreements with
five executives. The liability was determined by discounting the projected
payments at 9.0%. During 1996 and 1995, the Company incurred $117,014 of
deferred compensation expense, which is included in general and administrative
expenses. To assist in funding the deferred compensation agreements, the Company
has invested in corporate owned life insurance policies. The cash surrender
value of these policies was $315,241 and $242,825 at December 31, 1996 and 1995,
respectively, which is included in other assets.

6. INTERCOMPANY INCOME TAXES:

The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------
1995 1996
<S> <C> <C>
CURRENT:
Federal................................................... $ 424,582 $(140,396)
State..................................................... 78,187 (16,517)
--------- ---------
Total current..................................... 502,769 (156,913)
--------- ---------
DEFERRED:
Federal................................................... (40,826) 522,713
State..................................................... (4,802) 84,630
--------- ---------
Total deferred.................................... (45,628) 607,343
--------- ---------
Total provision for intercompany income taxes..... $ 457,141 $ 450,430
========= =========
</TABLE>

The Company's combined state and federal tax rate approximates the
statutory tax rates in effect for fiscal years 1996 and 1995.

F-50
<PAGE> 123

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the Company's deferred tax liabilities and assets
as of December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1995 1996
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Tax depreciation in excess of book........................ $(1,335,279) $(2,235,308)
DEFERRED TAX ASSETS:
Investment in affiliate................................... 4,185 29,095
Deferred compensation..................................... 258,849 294,531
AMT credit created in 1996................................ -- 196,649
Non-deductible accruals................................... 35,308 65,198
Provision for doubtful accounts........................... 24,845 30,400
----------- -----------
Deferred tax assets......................................... 323,187 615,873
----------- -----------
Net deferred tax liability........................ $(1,012,092) $(1,619,435)
=========== ===========
</TABLE>

7. RELATED PARTY TRANSACTIONS:

During 1993, the Company formed a wholly-owned subsidiary, Bay Tractor
Tugs, Inc. which entered into a partnership agreement with Bay & Delta Tractor
Tug Ltd. whereby both parties were 50% owners in a California partnership, Bay &
Delta Tractor Tug Company which was accounted for under the equity method. On
May 8, 1996, the partnership ceased operations. The net assets of the
partnership will be distributed in accordance with the partnership agreement.

The parties entered into the partnership in order to charter two escort tug
boats under the Bareboat Charter Party agreement on the San Francisco Bay. In
accordance with the terms of the charter agreement Bay & Delta Tractor Tug
Company (the charterer) made advanced monthly payments to the Company (the
vessel's owner) in the amount $90,976. Charter revenues amounted to $387,383 and
$1,091,712 in 1996 and 1995, respectively. Amounts due from Bay & Delta Tractor
Tug Company at December 31, 1996 and 1995 were $0 and $90,976, respectively.
Under the terms of the partnership agreement, profits and losses for each
taxable year shall be allocated to the partners in accordance with their
respective percentage interests. During 1996 and 1995 Bay Tractor Tugs, Inc.
recognized (losses) profits of $(65,953) and $190,610, respectively, in
connection with this venture. A new charter agreement was entered into during
1996 (see Note 8).

During 1995, the Company directed the construction of an enhanced tug boat
for American Tractor Tug, Inc. ("American Tractor Tug"), which is owned by a
related party. The Company provided certain administrative services during
construction at no charge. On July 17, 1996, the Company purchased the completed
vessel for American Tractor Tug's cost plus approximately $106,000. See Note 3
for details of the financing of this purchase.

Additionally, a related party owns Kinsman Companies Partnership which
provides consulting, management and advisory services to the Company. Fees for
consulting services rendered to the Company aggregated approximately $500,000 in
1996 and 1995, respectively, and are included in general and administrative
expenses.

8. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases its land, buildings, and certain office equipment under
operating leases with initial terms ranging from four to six years. Several
leases contain options which provide for renewal for up to five

F-51
<PAGE> 124

BAY TRANSPORTATION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

additional years. Rental expense for the years ended December 31, 1996 and 1995
amounted to approximately $50,653 and $60,940, respectively.

Future minimum lease payments under noncancellable operating leases are as
follows:

BAREBOAT CHARTER AGREEMENTS

The Company provides tug boats under bareboat charter agreements ranging in
length from two to three years, expiring in 1998 and 1999, with optional
one-year renewals. Charter revenues for the years ended December 31, 1996 and
1995 amounted to $2,033,285 and $1,091,712, respectively.

Future minimum charter payments under bareboat charter agreement are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
<S> <C>
1997........................................................ $2,336,004
1998........................................................ 2,001,419
1999........................................................ 525,700
----------
$4,863,123
==========
</TABLE>

EMPLOYMENT AGREEMENT

The Company has an employment agreement with an officer, which extends to
December 1997, at which time both parties have the option of renewing the
agreement. The agreement provides for annual compensation of $200,000 plus
additional incentive compensation calculated as a percentage of the excess of
pretax profits before interest charges over $2,200,000. No incentive
compensation was earned or paid during the years ended December 31, 1996 and
1995.

LITIGATION

9. MAJOR CUSTOMERS

The Company had two major customers which accounted for approximately
$1,515,000 and $1,487,000 of gross revenues for the year ended December 31, 1996
and one major customer which accounted for approximately $1,470,000 of its gross
revenues for the year ended December 31, 1995.

F-52
<PAGE> 125

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders
Hvide Marine Incorporated

We have audited the accompanying combined statements of assets to be sold
of Care Offshore, Inc. and related entities (the Company) as of December 31,
1996 and 1995, and the related statements of vessel operations for the years
then ended. These combined statements of assets to be sold and the related
combined statements of vessel operations are the responsibility of the
management of the Company. Our responsibility is to express an opinion on the
statements of assets to be sold and the related statements of vessel operations
based on our audits.

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

As described in Note 1, the combined statements of assets to be sold and
the related combined statements of vessel operations referred to above have been
prepared in accordance with the Asset Purchase Agreement between the Company and
Hvide Marine Incorporated dated November 15, 1997 for the sale of certain assets
to Hvide Marine Incorporated, and is not intended to be a complete presentation
of the Company's assets, liabilities, revenue and expenses.

In our opinion, the combined statements of assets to be sold and the
related combined statements of vessel operations referred to above present
fairly, in all material respects, the assets to be sold of the Company at
December 31, 1996 and 1995, and its vessel operations for each of the years then
ended, pursuant to the Asset Purchase Agreement described in Note 1, in
conformity with generally accepted accounting principles.

/s/ ATAG Ernst & Young SA

Geneva, Switzerland
December 8, 1997

F-53
<PAGE> 126

CARE OFFSHORE, INC.

COMBINED STATEMENTS OF ASSETS TO BE SOLD

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
Vessels and improvements............................. $82,826 $91,940 $96,389
Less accumulated depreciation........................ 25,094 30,991 36,287
------- ------- -------
Total assets................................. $57,732 $60,949 $60,102
======= ======= =======
</TABLE>

See accompanying notes.

F-54
<PAGE> 127

CARE OFFSHORE, INC.

COMBINED STATEMENTS OF VESSEL OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1995 1996 1996 1997
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues.................................................. $39,028 $43,235 $32,230 $45,036
Operating Expenses:
Crew payroll and benefits............................... 10,141 11,049 7,883 9,514
Charter Hire............................................ 2,794 2,441 2,055 253
Repairs, maintenance and consummables................... 9,448 10,943 8,295 9,543
Insurance............................................... 2,078 2,269 1,652 1,905
Depreciation............................................ 4,895 5,897 4,423 5,296
Other................................................... 1,552 1,516 1,082 1,305
------- ------- ------- -------
Total operating expenses........................ 30,908 34,115 25,390 27,816
Selling, general and administrative expenses:
Corporate overhead...................................... 5,956 6,343 4,999 5,650
Other................................................... 977 789 473 615
------- ------- ------- -------
Total overhead expenses......................... 6,933 7,132 5,472 6,265
Income from operations.................................... 1,187 1,988 1,368 10,955
------- ------- ------- -------
Other expenses:
Interest expense........................................ 4,332 4,491 3,368 4,433
Other................................................... 773 1,480 784 1,392
------- ------- ------- -------
Total other expense............................. 5,105 5,971 4,152 5,825
------- ------- ------- -------
Loss (income) from vessel operations...................... $(3,918) $(3,983) $(2,784) $ 5,130
======= ======= ======= =======
</TABLE>

See accompanying notes.

F-55
<PAGE> 128

CARE OFFSHORE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996

1. BASIS OF PRESENTATION

Under the terms of an Asset Purchase Agreement (the Agreement) dated
November 15, 1997, Care Offshore, Inc. and certain related entities
(collectively the Company) have agreed to sell thirty-six vessels to Hvide
Marine Incorporated (Hvide) for approximately $284 million. Care Offshore, Inc.
is a Liberian corporation.

The accompanying combined statements of assets to be sold presents the
historical cost and accumulated depreciation of the vessels operated by the
Company. Five vessels included in the Agreement were not owned or operated by
the Company at September 30, 1997. See Note 5.

The accompanying combined statements of vessel operations include the
revenue, operating expenses and overhead expenses directly related to the
operations of these thirty-one vessels. Items excluded are the revenue,
operating expenses and overhead expenses associated with the operations of the
Company's tankers, oil and gas production services and certain other offshore
vessels not being sold to Hvide, along with interest income and income taxes.
Overhead expenses were allocated based upon revenue by vessel.

All significant intercompany transactions and balances have been eliminated
for the presentation of the combined financial statements presented herein.

The accompanying statements are not intended to be complete financial
statements of the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

UNAUDITED INTERIM FINANCIAL STATEMENTS

The unaudited combined statement of assets to be sold at September 30, 1997
and the unaudited combined statements of vessel operations for the nine months
ended September 30, 1996 and 1997 and the notes thereto have been prepared in
accordance with generally accepted accounting principles for interim financial
information. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair statement have been
included. The unaudited results of vessel operations are not necessarily
indicative of the results which can be expected for full years.

OPERATIONS

The principal operations of the Company consist of short-term vessel
charters of its vessels. The vessels are used primarily in the offshore waters
of West Africa, South East Asia, South America, the Mediterranean and the Middle
East by operators drilling oil and gas wells. During the years ended December
31, 1995 and 1996, five major customers accounted for 60% and 63%, respectively,
of its charter hire revenue. During the years ending December 31, 1995 and 1996,
one and two individual customers, respectively, represented more than 10% of
charter hire revenues, as follows:

REVENUE

Revenue from time charters are earned and recognized on a daily basis.
Primarily all revenues are invoiced and collected in U.S. dollars.

F-56
<PAGE> 129

CARE OFFSHORE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

VESSELS AND IMPROVEMENTS

Vessels and improvements are stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated useful
life of 25 years for vessels. Major renewals and betterments are capitalized,
while replacements, maintenance, and repairs which do not improve or extend the
life of the assets are expensed.

During the years ended December 31, 1995 and 1996, the Company paid
approximately $3,900,000 and $416,000, respectively for vessel improvements.

3. LONG TERM OBLIGATIONS

Primarily all of the Company's vessels are operated under mortgage
financing or agreements classified as capital leases which contain options to
purchase the vessels during the lease term. The Asset Purchase Agreement (see
Note 1) requires that the Company satisfy its obligations under the vessel
mortgages and lease agreements and use its best efforts to obtain ownership
prior to the closing date of the Agreement.

At December 31, 1996, the agreements provided for interest at rates ranging
from 7.25% to 14.5%. The terms of the agreements generally restrict the
Company's ability to enter into new commitments or borrowings over specified
amounts or dispose of assets outside the ordinary course of business.

During the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997, net proceeds received under vessel financing agreements were
approximately $7.3 million, $14.6 million and $0.5 million, respectively. The
Company paid interest of approximately $4.3 million, $4.6 million, $3.4 million
and $4.0 million for the years ended December 31, 1995 and 1996 and the nine
months ended September 30, 1996 and 1997, respectively.

4. VESSEL PURCHASES

During the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997, the Company acquired three, three and two vessels,
respectively, under agreements classified as capital leases. The capitalized
cost of the acquired vessels was $6.0 million, $8.7 million and $4.4 million,
respectively. The operations of the acquired vessels are included in the
accompanying statements of vessel operations from their respective dates of
acquisition.

5. COMMITMENTS

The Company operates one vessel under a bareboat charter agreement with an
unrelated entity under which the Company will own a 50% interest in the vessel
after the initial five year term of the bareboat agreement. Payments under the
charter agreement are included as charter hire expense on the accompanying
statements of vessel operations. The Agreement (see Note 1) contemplates that
the Company will purchase the remaining interest in the vessel prior to the
closing date of the Agreement.

The Company has entered into agreements with unrelated parties to purchase
five offshore vessels. These vessels will subsequently be sold to Hvide pursuant
to the terms of the Agreement described in Note 1.

The Company has entered into charter party agreements for substantially all
of their vessels. Primarily all charter party agreements are of a short term
nature.

F-57
<PAGE> 130

GLOSSARY

The following definitions apply to certain maritime terms used in this
Prospectus:

American Bureau of Shipping (or "ABS") -- a vessel classification society.

Anchor Handling Tugs -- large, relatively powerful tugs, called AHTs, used
in positioning offshore drilling rigs, some of which are designed to serve as
supply boats as well and are called anchor handling tug/supply boats, or AHTS
vessels.

Bareboat Charter -- the rental or lease of an empty ship, without crew,
stores or provisions; the charterer (lessee) has the responsibility of operating
the vessel as though it were his own.

Certificate of Financial Responsibility (Water Pollution) or
"COFR" -- means a certificate issued by the U.S. Coast Guard that evidences a
vessel owner or operator's compliance with the statutory requirement to provide
evidence of the financial ability to meet liability for discharges of oil and
hazardous substances under the federal Water Pollution Control Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, and OPA
90.

Classification Societies -- classification societies hold records of the
class maintenance of each ship registered or classed with them; these records
are deposited for the personal and confidential information and guidance of the
owner of the vessel.

Crew Boat or Vessel -- an offshore supply vessel generally employed to
transport crew and supplies between ports and offshore drilling or production
facilities.

Day Rate -- the price paid under a bareboat charter for one day's
operation.

Double Bottom -- compartments at the bottom of a vessel between the skin of
the vessel and its inner compartments containing cargo tanks and machinery
spaces; double bottom spaces can be used as void spaces or as ballast, water, or
fuel tanks.

Double Hull -- hull construction technique by which a ship has an inner and
outer hull separated by void space, usually several feet in width.

Drydocking -- the process by which a vessel is taken out of the water to
accomplish underwater repairs.

dwt -- deadweight ton; a measurement of the carrying capacity of a vessel,
generally equal to the difference between the amount of water displaced by the
unloaded vessel and that displaced by the fully loaded vessel.

Dynamically Positioned Vessel -- a vessel equipped with specialized
instrumentation and positioning gear enabling it to maintain a constant position
with respect to wellheads and other devices on the ocean floor.

Escort Tug -- a tugboat employed as an escort for a larger vessel usually
in dangerous or constricted waters.

Gross Ton -- enclosed space of a ship measured in cubic feet divided by
100; thus 100 cubic feet of such capacity is equivalent to one gross ton.

Integrated Tug/Barge or "ITB" -- a large barge integrated from the stern
onto the bow of a tug constructed to push the barge.

ISO 9002 -- one of three generic standards for quality management and
quality assurance intended to instill confidence in customers that a business
will provide satisfactory service on a consistent basis.

Jones Act -- the portions of the federal Merchant Marine Act, 1920
restricting U.S. domestic trade to U.S. owned and constructed U.S.-flag vessels.

OPA 90 -- the federal Oil Pollution Act of 1990.

SDM(TM) -- an innovative ship-docking vessel, designed and patented by the
Company, designed to be more maneuverable, efficient, and flexible than
conventional harbor-tugs.

G-1
<PAGE> 131

Supply Boat or Vessel -- an offshore service vessel engaged in providing
supply services to the offshore energy industry.

Time Charter -- the hire of a fully operational ship for a specified period
of time; the shipowner provides the ship with crew, stores and provisions, ready
in all aspects to load cargo and proceed on a voyage as instructed by the
charterer. The charterer pays for fuel and all voyage-related expenses including
canal tolls and port charges.

Topside Vessel Repair Facility -- a vessel repair facility not capable of
drydocking vessels.

Tractor Tug -- a tugboat able to apply force in all directions which can
generally perform certain maneuvers more quickly and efficiently than
conventional tugs.

Utility Boat or Vessel -- an offshore supply vessel generally employed to
transport crew and supplies between ports and offshore drilling or production
facilities.

Voyage Charter -- contract of carriage in which the charterer pays for the
use of a ship's cargo capacity for one, or sometimes more than one, voyage;
under this type of charter, the shipowner pays all the operating costs of the
ship (including fuel, canal and port charges, pilotage, towage and ship's
agency) while payment for port and cargo handling charges are subject to
agreement between the parties; freight is generally paid per unit of cargo, such
as a ton, based on an agreed quantity, or as a lump sum irrespective of the
quantity loaded.

G-2
<PAGE> 132

======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE UNDERWRITERS, OR ANY OTHER
PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHO IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 9
Forward-Looking Statements............ 14
The Care Acquisition.................. 15
Use of Proceeds....................... 15
Price Range of the Class A Common
Stock............................... 16
Dividend Policy....................... 16
Capitalization........................ 17
Selected Historical Consolidated
Financial Data...................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 30
Management............................ 53
Principal Shareholders................ 57
Description of Certain Indebtedness... 58
Description of the Trust Convertible
Preferred Securities................ 59
Description of Capital Stock.......... 61
Shares Eligible for Future Sale....... 68
Underwriting.......................... 69
Experts............................... 70
Legal Matters......................... 70
Available Information................. 70
Incorporation of Certain Documents by
Reference........................... 71
Index to Financial Statements......... F-1
Glossary.............................. G-1
</TABLE>

======================================================
======================================================

5,000,000 SHARES

[HVIDE MARINE GRAPHIC]

[HVIDE MARINE INCORPORATED LOGO]

CLASS A COMMON STOCK
-------------------

PROSPECTUS
-------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY DEAN WITTER

RAYMOND JAMES & ASSOCIATES, INC.

, 1998

======================================================
<PAGE> 133

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses payable in connection with the
registration of the Common Stock that is the subject of this Registration
Statement, all of which shall be borne by the Company. All the amounts shown are
estimates except for the registration fee, and the NASD listing and filing fees.

<TABLE>
<CAPTION>
TO BE PAID BY
REGISTRANT
<S> <C>
Securities and Exchange Commission registration fee......... $52,265.70
NASD filing fee............................................. 18,217.19
Nasdaq National Market listing fees......................... 17,500
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue sky fees and expenses.................................. *
Transfer Agent and Registrar fees........................... *
Miscellaneous expenses and expenses (including counsel
fees)..................................................... *
----------
Total............................................. *
==========
</TABLE>

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

* To be supplied.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation provides that the Company shall
indemnify each director and officer of the Company to the fullest extent
permitted from time to time by the laws of the State of Florida or any other
applicable laws as presently or hereafter in effect. Section 607.0850 of the
Florida Business Corporation Act currently provides as follows:

(1) A corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of,
the corporation), by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against liability incurred in connection with such proceeding, including
any appeal thereof, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any
proceeding by judgment, order, settlement, or conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in, or not opposed to, the best interests of
the corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

(2) A corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the estimated expense
of litigating the proceeding to conclusion, actually and reasonably
incurred in connection with the defense or settlement of such proceeding,
including any appeal thereof. Such indemnification shall be authorized if
such person acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation, except
that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which

II-1
<PAGE> 134

such person shall have been adjudged to be liable unless, and only to the
extent that, the court in which such proceeding was brought, or any other
court of competent jurisdiction, shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for
such expenses which such court shall deem proper.

(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of
any proceeding referred to in subsection (1) or subsection (2), or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by him in connection
therewith.

(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsection (1) or subsection (2). Such determination shall be
made:

(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;

(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors
(in which directors who are parties may participate) consisting solely
of two or more directors not at the time parties to the proceeding;

1. Selected by the board of directors prescribed in paragraph
(a) or the committee prescribed in paragraph (b); or

2. If a quorum of the directors cannot be obtained for paragraph
(a) and the committee cannot be designated under paragraph (b),
selected by majority vote of the full board of directors (in which
directors who are parties may participate); or

(d) By the stockholders by a majority vote of a quorum consisting
of stockholders who were not parties to such proceeding or, if no such
quorum is obtainable, by a majority vote of stockholders who were not
parties to such proceeding.

(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of
permissibility is made by independent legal counsel, persons specified by
paragraph (4)(c) shall evaluate the reasonableness of expenses and may
authorize indemnification.

(6) Expenses incurred by an officer or director in defending a civil
or criminal proceeding may be paid by the corporation in advance of the
final disposition of such proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount if he is
ultimately found not to be entitled to indemnification by the corporation
pursuant to this section. Expenses incurred by other employees and agents
may be paid in advance upon such terms or conditions that the board of
directors deems appropriate.

(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office. However, indemnification or advancement of expenses shall not
be made to or on behalf of any director, officer, employee, or agent if a
judgment or other final adjudication

II-2
<PAGE> 135

establishes that his actions, or omissions to act, were material to the
cause of action so adjudicated and constitute:

(a) A violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was
unlawful;

(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;

(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a stockholder.

(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee,
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person, unless otherwise provided when authorized
or ratified.

(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of
the stockholders in the specific case, a director, officer, employee, or
agent of the corporation who is or was a party to a proceeding may apply
for indemnification or advancement of expenses, or both, to the court
conducting the proceeding, to the circuit court, or to another court of
competent jurisdiction. On receipt of an application, the court, after
giving any notice that it considers necessary, may order indemnification
and advancement of expenses, including expenses incurred in seeking
court-ordered indemnification or advancement of expenses, if it determines
that:

(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court
shall also order the corporation to pay the director reasonable expenses
incurred in obtaining court-ordered indemnification or advancement of
expenses;

(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the
exercise by the corporation of its power pursuant to subsection (7); or

(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or
both, in view of all the relevant circumstances, regardless of whether
such person met the standard of conduct set forth in subsection (1),
subsection (2), or subsection (7).

(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at the request of
a constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, is in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.

(11) For purposes of this section:

(a) The term "other enterprises" includes employee benefit plans;

(b) The term "expenses" includes counsel fees, including those for
appeal;

II-3
<PAGE> 136

(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect
to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;

(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative, and whether formal or
informal;

(e) The term "agent" includes a volunteer;

(f) The term "serving at the request of the corporation" includes
any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties
relating to an employee benefit plan and its participants or
beneficiaries; and

(g) The term "not opposed to the best interest of the corporation"
describes the actions of a person who acts in good faith and in a manner
he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.

(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was director, officer, employee, or agent
of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the provisions
of this section.

The Underwriting Agreement (Exhibit 1) provides for indemnification by the
Underwriters of the Registrant, its directors and executive officers and by the
Registrant of the Underwriters for certain liabilities, including liabilities
arising under the Securities Act and affords certain rights of contribution with
respect thereto.

The Registrant has purchased an insurance policy that provides for
indemnification of the Registrant's executive officers and directors for
liability resulting from their negligence, error, omission or breach of duty
while acting in their capacities as executive officers and directors on any
matter claimed against them by reason of their being executive officers and
directors.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In September 1994, the Company exchanged 1,105,962 shares of Class B Common
Stock and 663,415 shares of Class C Common Stock for all of the outstanding
common stock of its predecessor. Also in September 1994, in connection with the
issuance of the Senior Notes and the Junior Notes, the Company issued 452,518
shares of Class B Common Stock and 313,215 shares of Class C Common Stock to
members of the Investors Group. The proceeds of the issuances of the Senior
Notes and the Junior Notes were $23.1 million and $17.5 million, respectively,
and the proceeds of the issuances of the Class B Common Stock and the Class C
Common Stock to the Investor Group were $4.1 million and $2.9 million,
respectively.

In August 1996, the Company exchanged 74,704 shares of Class A Common Stock
for 74,704 shares of Class B Common Stock owned by the Investor Group, 229,062
shares of Class A Common Stock and 84,153 shares of Class B Common Stock for
313,215 shares of Class C common Stock owned by the Investor Group, and 663,415
shares of Class B Common Stock for 663,415 shares of Class C Common Stock owned
by the Hvide Family.

In September 1996, the Company exchanged 1,188,502 shares of Class B Common
Stock and 55,500 shares of Class A Common Stock for $13.9 million principal
amount of Junior Notes.

Each such issuance was made in reliance upon section 4(2) of the Act.

II-4
<PAGE> 137

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following is a list of exhibits furnished:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
<S> <C> <C>
1+ -- Form of Underwriting Agreement.
4.1 -- Form of Class A Common Stock Certificate (Domestic).(2)
4.2 -- Form of Class A Common Stock Certificate (Foreign).(2)
5+ -- Opinion of Counsel as to the legality of the securities
being registered.
11 -- Computation of Ratios.
21 -- List of Subsidiaries.(1)
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of ATAG Ernst & Young SA
23.3+ -- Consent of Counsel (included as part of Exhibit 5).
23.4 -- Consent of Deloitte & Touche LLP.
23.5 -- Consent of Price Waterhouse LLP.
24.1 -- Powers of Attorney.
24.2 -- Certificate of Secretary.
</TABLE>

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

+ To be filed by amendment.

(1) Incorporated herein by reference to Amendment No. 3 to Registration
Statement on Form S-1 (Registration No. 33-78166) filed with the Commission
on July 11, 1996.

(2) Incorporated herein by reference to Amendment No. 4 to Registration
Statement on Form S-1 (Registration No. 33-78166) filed with the Commission
on August 5, 1996.

Schedules not listed above have been omitted because they are not
applicable or because required information is included in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(2) The undersigned registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 138

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Fort Lauderdale,
Florida on the 9th day of December, 1997.

HVIDE MARINE INCORPORATED

By: *
------------------------------------
J. Erik Hvide
Chairman, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chairman of the Board, December 9, 1997
President, Chief Executive
* Officer and Director
- --------------------------------------------------- (principal executive
J. Erik Hvide officer)

Executive Vice December 9, 1997
* President -- Chief
- --------------------------------------------------- Financial Officer and
John H. Blankley Director

* Controller (principal December 9, 1997
- --------------------------------------------------- accounting officer)
John J. Krumenacker

* Executive Vice President and December 9, 1997
- --------------------------------------------------- Director
Eugene F. Sweeney

* Director December 9, 1997
- ---------------------------------------------------
Robert B. Calhoun, Jr.

* Director December 9, 1997
- ---------------------------------------------------
Gerald Farmer

* Director December 9, 1997
- ---------------------------------------------------
Jean Fitzgerald

* Director December 9, 1997
- ---------------------------------------------------
John J. Lee

* Director December 9, 1997
- ---------------------------------------------------
Walter C. Mink

* Director December 9, 1997
- ---------------------------------------------------
Robert Rice
</TABLE>

II-6
<PAGE> 139
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

* Director December 9, 1997
- ---------------------------------------------------
Raymond B. Vickers

*By: /s/ MICHAEL JOSEPH
---------------------------------------------
Michael Joseph
Attorney-in-Fact
</TABLE>

II-7

<PAGE> 1

EXHIBIT 11

HVIDE MARINE INCORPORATED
COMPUTATION OF EARNINGS (LOSS) PER SHARE

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ ------------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Income (loss) before extraordinary item and
cumulative effect............................. $ 358 $ (360) $6,033 $2,709 $17,846
Less: Class A Preferred Stock cash dividends.... 222 -- -- -- --
------ ------ ------ ------ -------
Adjusted income (loss) applicable to common
shares -- primary............................. 136 (360) 6,033 2,709 17,846
Plus: Interest on Junior Notes net of income tax
effect........................................ 192 807 515 536 1,246
------ ------ ------ ------ -------
Adjusted income applicable to common
shares -- fully diluted....................... $ 328 $ 447 $6,548 $3,245 $19,092
====== ====== ====== ====== =======
Weighted average of shares outstanding.......... 1,962 2,535 5,762 4,012 14,620
If-converted dilutive effect of Convertible
Class B Preferred Stock....................... 3,340 -- -- -- --
Dilutive effect of outstanding stock options.... -- -- 56 6 354
------ ------ ------ ------ -------
Common shares used in earnings (loss) per share
calculation -- primary........................ 5,302 2,535 5,818 4,018 14,974
If-converted dilutive effect of Junior Note..... 314 1,244 772 1,026 --
If-converted dilutive effect of convertible
preferred securities of a subsidiary trust.... -- -- -- -- 1,404
Incremental dilutive effect of outstanding stock
options....................................... -- -- 55 5 98
------ ------ ------ ------ -------
Common shares used in earnings per share
calculation -- fully diluted.................. 5,616 3,779 6,645 5,049(a) 16,476
====== ====== ====== ====== =======
</TABLE>

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

(a) The effect on earnings per share on a fully diluted basis is anti-dilutive
and is not considered in the per share calculation.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 20, 1997, except the eighth paragraph of
Note 3, as to which the date is March 25, 1997, in the Registration Statement
(Form S-3, No. 333-00000) and related Prospectus of Hvide Marine Incorporated,
for the registration of 5,750,000 shares of its common stock and to the
incorporation by reference therein of our report dated February 20, 1997, except
the eighth paragraph of Note 3, as to which the date is March 25, 1997, with
respect to the consolidated financial statements of Hvide Marine Incorporated
included in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Miami, Florida
December 9, 1997

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated December 8, 1997, with respect to the combined
statements of assets to be sold and the related combined statements of vessel
operations of Care Offshore, Inc., included in the Registration Statement (Form
S-3) and related Prospectus of Hvide Marine Incorporated, dated December 11,
1997, for the Registration of 5,750,000 shares of its common stock.

/s/ ATAG Ernst & Young SA

Geneva, Switzerland
December 9, 1997

<PAGE> 1

EXHIBIT 23.4

[Deloitte & Touche Letterhead]

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement (Form
S-3) and related Prospectus of Hvide Marine Incorporated (the Company) for the
registration of 6,000,000 shares of the Company's Class A common stock of our
report dated May 19, 1997, with respect to the financial statements of the
Marine Division of GMMOS, included in the Company's report on Form 8-K dated May
23, 1997.

/S/ DELOITTE & TOUCHE
--------------------------------------
DELOITTE & TOUCHE

Dubai, U.A.E.
December 9, 1997

<PAGE> 1

EXHIBIT 23.5

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated March 20, 1997 relating
to the consolidated financial statements of Bay Transportation Corporation as of
December 31, 1996 and 1995 and for the years then ended, which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.

/S/ PRICE WATERHOUSE LLP

PRICE WATERHOUSE LLP

Tampa, Florida
December 8, 1997

<PAGE> 1

EXHIBIT 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Hvide Marine Incorporated, a
corporation organized under the laws of the State of Florida (the
"Corporation"), and the undersigned officers and directors of the Corporation,
individually and in their respective capacities indicated below, hereby make,
constitute and appoint Michael Joseph and John F. Kearney its and their true and
lawful attorneys, their separate or joint signatures sufficient to bind, with
power of substitution, to execute, deliver and file in its or their behalf, and
in each person's respective capacity or capacities as shown below, a
registration statement on Form S-3 under the Securities Act of 1933, any
amendments to and any and all documents in support of or supplemental to said
registration statement by the Corporation, and any additional registration
statements filed pursuant to Rule 462(b) to register additional shares; and the
Corporation and each said person hereby grant to said attorneys full power and
authority to do and perform each and every act and thing whatsoever as any on of
said attorneys may deem necessary or advisable to carry out the full intent of
this Power of Attorney to the same extent and with the same effect as the
Corporation or the undersigned officers and directors of the Corporation might
or could do personally in its or their capacity or capacities as aforesaid; and
the Corporation and each of said persons hereby ratify, confirm and approve all
acts and things that any one of said attorneys may do or cause to be done by
virtue of this Power of Attorney and its signature or their signatures as the
same may be signed by any one of said attorneys to said registration statement
and any and all documents in support of or supplemental to said registration
statement and any and all amendments thereto.

Dated as of December 8, 1997.

Hvide Marine Incorporated

<TABLE>
<C> <C>
Attest: /s/ GENE DOUGLAS By: /s/ J. ERIK HVIDE
---------------------------------------------- -------------------------------------------------
Gene Douglas J. Erik Hvide
Secretary Chairman, President, and Chief Executive Officer

/s/ ERIK HVIDE /s/ JOHN H. BLANKLEY
----------------------------------------------------- -----------------------------------------------------
J. Erik Hvide John H. Blankley
Chairman of the Board of Directors, President, Executive Vice President -- Chief
Chief Executive Officer and Director Financial Officer, and Director
(Principal Executive Officer) (Principal Financial Officer)

/s/ EUGENE F. SWEENEY /s/ JOHN J. KRUMENACKER
----------------------------------------------------- -----------------------------------------------------
Eugene F. Sweeney John J. Krumenacker
Executive Vice President and Director Controller
(Principal Accounting Officer)

/s/ ROBERT B. CALHOUN, JR. /s/ GERALD FARMER
----------------------------------------------------- -----------------------------------------------------
Robert B. Calhoun, Jr. Gerald Farmer
Director Director

/s/ JEAN FITZGERALD /s/ JOHN J. LEE
----------------------------------------------------- -----------------------------------------------------
Jean Fitzgerald John J. Lee
Director Director

/s/ WALTER C. MINK /s/ ROBERT RICE
----------------------------------------------------- -----------------------------------------------------
Walter C. Mink Robert Rice
Director Director

/s/ RAYMOND B. VICKERS
-----------------------------------------------------
Raymond B. Vickers
Director
</TABLE>

<PAGE> 1

EXHIBIT 24.2

CERTIFICATE OF SECRETARY

The undersigned, Gene Douglas, Secretary of Hvide Marine Incorporated, a
Florida corporation (the "Corporation"), hereby certifies that on December 11,
1997, the Board of Directors of the Corporation duly adopted the resolution set
forth below:

RESOLVED, that the Chief Executive Officer of the Corporation be, and
he hereby is, authorized to grant, on behalf of the Corporation, a power of
attorney to Michael Joseph and John F. Kearney, their separate or joint
signatures sufficient to bind, with power of substitution, to execute on
behalf of the Corporation, by signing the name of the Chief Executive
Officer as acting for the Corporation, a registration statement on Form S-3
under the Securities Act, any and all documents in support of or
supplemental to such registration statement, and any and all amendments
thereto with respect to the public offering of shares of the Class A Common
Stock of the Corporation and any additional registration statements filed
pursuant to Rule 462(b) to register additional shares; that each of them
are granted full power and authority to do and perform each and every act
and thing whatsoever as any one of said attorneys may deem necessary or
advisable to carry out the full intent of this resolution to the same
extent and with the same effect as the Corporation might or could do
personally in its capacity; and that all acts and things that any one of
said attorneys may do or cause to be done by virtue of power of attorney
granted by this resolution and its signature as the same may be signed by
any one of said attorneys to such registration statement and any and all
documents in support of or supplemental to such registration statement and
any and all amendments thereto are hereby ratified, confirmed and approved;

Such resolution has not been amended, rescinded or otherwise modified and is in
full force and effect on the date hereof.

IN WITNESS WHEREOF, I have executed this Certificate this 11th day of
December, 1997.

/s/ GENE DOUGLAS
--------------------------------------
Gene Douglas
Secretary