UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2008

GULFMARK OFFSHORE, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

000-22853
(Commission file number)

76-0526032
(I.R.S. Employer Identification No.)

10111 Richmond Avenue, Suite 340, Houston, Texas (Address of principal executive offices)		77042 (Zip Code)

(713) 963-9522
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ     NO o

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

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o     NO þ

     Number of shares of Common Stock, $0.01 Par Value, outstanding as of July 31, 2008: 25,320,935.

(Exhibit Index Located on Page 24)

 

 

GulfMark Offshore, Inc.
Index

Page

Number

Part I.

Financial Information

Item 1

Financial Statements

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statement of Stockholders’ Equity

5

Condensed Consolidated Statements of Cash Flows

6

Notes to the Condensed Consolidated Financial Statements

7

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4

Controls and Procedures

22

Part II.

Other Information

Item 4

Submission of Matters to a Vote of Security Holders

23

Item 5

Other Information

23

Item 6

Exhibits

24

Signatures

24

Exhibit Index

25

Membership Interest and Stock Purchase Agreement

Assignment and Assumption Agreement

Non-Competition and Non-Solicitation Agreement

Operating Agreement and By-Laws of Jackson Offshore, LLC

Delphin Marine Logistics Limited Joint Venture Agreement

Senior Secured Credit Facility Agreement

Amendment No. 1 to Senior Secured Credit Facility Agreement

Amendment No. 2 to Senior Secured Credit Facility Agreement

Amendment No. 3 to Senior Secured Credit Facility Agreement

Guaranty

First Preferred Fleet Mortgage

Amendment No. 1 to First Preferred Fleet Mortgage

Subordination Agreement

Assignment, Assumption, Amendment and Restatement of Loan Agreement

Guaranty

Second Preferred Fleet Mortgage

Assignment of Second Preferred Fleet Mortgage

Amendment to Second Preferred Fleet Mortgage

Secured Reducing Revolving Loan and Letter of Credit Facility Agreement

First Supplemental Agreement to Loan Agreement

Secured Reducing Revolving Loan Facility Agreement

Certification of B.A. Streeter Pursuant to Section 302

Certification of E.A. Guthrie Pursuant to Section 302

Certification of B.A. Streeter Pursuant to Section 906

Certification of E.A. Guthrie Pursuant to Section 906

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,
		2008				2007
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	214,668			$	40,119
Trade accounts receivable, net allowance for doubtful accounts of $225 in 2008 and $149 in 2007			83,936				87,243
Other accounts receivable			6,357				3,399
Prepaid expenses and other current assets			6,376				3,273
Total current assets			311,337				134,034
Vessels and equipment at cost, net of accumulated depreciation of $225,762 in 2008 and $218,342 in 2007			693,241				641,333
Construction in progress			116,244				112,667
Goodwill			36,572				34,264
Fair value hedge			11,688				6,740
Deferred costs and other assets			6,019				4,974
Total assets		$	1,175,101			$	934,012
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	17,132			$	21,409
Income taxes payable			4,209				2,516
Accrued personnel costs			17,780				17,872
Accrued interest expense			5,863				5,793
Accrued professional fees			1,512				982
Other accrued liabilities			3,423				1,906
Total current liabilities			49,919				50,478
Long-term debt			300,518				159,558
Long-term income taxes:
Deferred tax liabilities			879				2,731
Income tax liabilities — FIN 48			10,813				9,060
Other income taxes payable			22,542				23,602
Fair value hedge			11,688				6,740
Other liabilities			5,685				5,752
Stockholders’ equity:
Preferred stock, no par value; 2,000 authorized; no shares issued			—				—
Common stock, $0.01 par value; 30,000 shares authorized; 23,201 and 22,680 shares issued and outstanding, respectively			229				227
Additional paid-in capital			215,672				211,004
Retained earnings			415,891				336,846
Accumulated other comprehensive income			143,580				128,308
Treasury stock, at cost			(7,096	)			(4,200	)
Deferred compensation expense			4,781				3,906
Total stockholders’ equity			773,057				676,091
Total liabilities and stockholders’ equity		$	1,175,101			$	934,012

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

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		(In thousands, except shares and per share amounts)
Revenue		$	81,893			$	74,341			$	165,241			$	139,854
Costs and expenses:
Direct operating expenses			29,912				24,688				57,610				49,602
Drydock expense			2,630				1,012				6,322				5,471
General and administrative expenses			9,421				8,584				18,198				15,217
Depreciation and amortization expense			9,515				7,425				18,263				14,532
Gain on sale of assets			(16,407	)			(1,249	)			(16,410	)			(6,262	)
Total costs and expenses			35,071				40,460				83,983				78,560
Operating income		$	46,822			$	33,881			$	81,258			$	61,294
Other income (expense):
Interest expense			(935	)			(2,038	)			(2,117	)			(4,650	)
Interest income			296				845				592				1,871
Foreign currency gain (loss) and other			195				190				45				88
Total other expense, net			(444	)			(1,003	)			(1,480	)			(2,691	)
Income before income taxes			46,378				32,878				79,778				58,603
Income tax provision			403				(2,157	)			(733	)			(3,529	)
Net income		$	46,781			$	30,721			$	79,045			$	55,074
Earnings per share:
Basic		$	2.06			$	1.37			$	3.50			$	2.46
Diluted		$	2.00			$	1.32			$	3.40			$	2.39
Weighted average shares outstanding:
Basic			22,661				22,443				22,602				22,368
Diluted			23,334				23,187				23,240				23,071

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

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2008

														Accumulated
		Common				Additional								Other												Deferred				Total
		Stock at $0.01				Paid-In				Retained				Comprehensive												Compensation				Stockholders’
		Par Value				Capital				Earnings				Income				Treasury Stock								Expense				Equity
																		Shares				Amount
		(In thousands)
Balance at December 31, 2007		$	227			$	211,004			$	336,846			$	128,308				(164	)		$	(4,200	)		$	3,906			$	676,091
Net income			—				—				79,045				—				—				—				—				79,045
Issuance of common stock			1				4,505				—				—				—				—				—				4,506
Exercise of stock options			1				163				—				—				—				—				—				164
Shares reacquired			—				—				—				—				(31	)			(2,021	)			—				(2,021	)
Deferred compensation plan			—				—				—				—				(16	)			(875	)			875				—
Translation adjustment			—				—				—				15,272				—				—				—				15,272
Balance at June 30, 2008		$	229			$	215,672			$	415,891			$	143,580				(211	)		$	(7,096	)		$	4,781			$	773,057

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

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended
		June 30,
		2008				2007
		(In thousands)
Cash flows from operating activities:
Net income		$	79,045			$	55,074
Adjustments to reconcile net income to net cash provided by operations:
Depreciation expense			18,263				14,532
Gain on sale of assets			(16,410	)			(6,262	)
Amortization of stock based compensation			2,687				1,827
Amortization of deferred financing costs on debt			352				351
Adjustment for doubtful accounts receivable, net of write-offs			74				(361	)
Deferred income tax expense (benefit)			232				1,664
Foreign currency transaction loss			234				548
Change in operating assets and liabilities:
Accounts receivable			1,673				(10,285	)
Prepaids and other			(2,961	)			(1,978	)
Accounts payable			(4,746	)			2,683
Accrued liabilities and other			(1,797	)			(1,351	)
Net cash provided by operating activities			76,646				56,442
Cash flows from investing activities:
Purchases of vessels and equipment			(62,920	)			(80,722	)
Proceeds from disposition of vessels and equipment			21,048				8,150
Net cash used in investing activities			(41,872	)			(72,572	)
Cash flows from financing activities:
Proceeds from debt, net of debt financing costs			152,143				254
Repayments of debt			(12,000	)			(1,094	)
Proceeds from exercise of stock options			163				761
Proceeds from issuance of common stock			259				220
Net cash provided by financing activities			140,565				141
Effect of exchange rate changes on cash and cash equivalents			(790	)			2,732
Net increase (decrease) in cash and cash equivalents			174,549				(13,257	)
Cash and cash equivalents at beginning of the period		$	40,119			$	82,759
Cash and cash equivalents at end of period		$	214,668			$	69,502
Supplemental cash flow information:
Interest paid, net of interest capitalized		$	1,542			$	3,997
Income taxes paid		$	2,540			$	—

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

GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL INFORMATION

     The condensed consolidated financial statements of GulfMark Offshore, Inc. and its subsidiaries included herein have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Unless otherwise indicated, references to “we”, “us”, “our” and the “Company” refer to GulfMark Offshore, Inc. and its subsidiaries. Certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, has been condensed or omitted in this Form 10-Q pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to make the information presented not misleading. The consolidated balance sheet as of December 31, 2007, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for the presentation of complete financial statements. It is recommended that these financial statements be read in conjunction with our consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2007.

     In the opinion of management, all adjustments, which include reclassifications and normal recurring adjustments necessary to present fairly the financial statements for the periods indicated have been made. All significant intercompany accounts have been eliminated. Certain reclassifications of previously reported information may be made to conform with current year presentation.

     We provide marine support and transportation services primarily to companies involved in the offshore exploration and production of oil and natural gas. Our fleet of vessels provides various services that support the ongoing operation and construction of offshore oil and natural gas facilities and drilling rigs, including the transportation of materials, supplies and personnel, and the positioning of drilling structures. The majority of our operations are in the North Sea, with the balance offshore Southeast Asia and the Americas. Periodically, we will contract vessels into other regions to meet customers’ requirements.

     Basic Earnings Per Share, or EPS, is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed using the treasury stock method for common stock equivalents. The details of our EPS calculation are as follows (in thousands except per share amounts):

		Three Months Ended												Three Months Ended
		June 30, 2008												June 30, 2007
										Per Share												Per Share
		Income				Shares				Amount				Income				Shares				Amount
Earnings per share, basic		$	46,781				22,661			$	2.06			$	30,721				22,443			$	1.37
Dilutive effect of common stock options and unvested restricted stock							673												744
Earnings per share, diluted		$	46,781				23,334			$	2.00			$	30,721				23,187			$	1.32

		Six Months Ended												Six Months Ended
		June 30, 2008												June 30, 2007
										Per Share												Per Share
		Income				Shares				Amount				Income				Shares				Amount
Earnings per share, basic		$	79,045				22,602			$	3.50			$	55,074				22,368			$	2.46
Dilutive effect of common stock options and unvested restricted stock							638												703
Earnings per share, diluted		$	79,045				23,240			$	3.40			$	55,074				23,071			$	2.39

(2) OTHER COMPREHENSIVE INCOME

     The components of comprehensive income, net of related tax, for the three and six month periods ended June 30, 2008 and 2007 are as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		(In thousands)
Net income		$	46,781			$	30,721			$	79,045			$	55,074
Comprehensive income:
Foreign currency translation			4,890				15,283				15,272				20,949
Other comprehensive income		$	51,671			$	46,004			$	94,317			$	76,023

     Our accumulated other comprehensive income relates to our cumulative foreign currency translation adjustment.

(3) FLEET EXPANSION AND RENEWAL PROGRAM

     During the period 2000-2006, we added 15 new vessels to the fleet as part of our long-range growth strategy—nine in the North Sea, three in the Americas and three offshore Southeast Asia. In continuation of our growth strategy, we committed in 2005 to build six new 10,600 BHP AHTS vessels for a total cost of approximately $140 million. The vessels are of a new design we developed in conjunction with the builder, which incorporate Dynamic Positioning 2 (DP-2) certification and Fire Fighting Class 1 (FiFi-1). They have a large carrying capacity of approximately 2,700 tons. Keppel Singmarine Pte, Ltd. is building these vessels primarily to meet the growing demand of our customer base offshore Southeast Asia. Four of these vessels have been delivered to date beginning with the Sea Cheyenne in October 2007, the Sea Apache in January 2008, the Sea Kiowa in March 2008, and the Sea Choctaw in July 2008. The final two vessels in this group are scheduled for delivery in the fourth quarter of 2008. As a complement to these six new vessels, during 2006, we took delivery of two newly constructed vessels, the Sea Guardian and the Sea Sovereign. These vessels are currently under contract in Southeast Asia. Also during 2006, we exercised a right of first refusal granted under the Sea Sovereign purchase contract for an additional vessel, the Sea Supporter, which was delivered in

October 2007 and went to work on a term contract in Southeast Asia.

     We also agreed to participate in a joint venture with Aker Yards ASA for the construction of two large PSVs, one of which, the Highland Prestige, was delivered early in the second quarter of 2007 and immediately went to work in the North Sea region on a term contract. The second vessel, the North Promise, was delivered at the end of the third quarter 2007 and is also working on a term contract in the North Sea region. At the end of 2005, we purchased 100% of the Highland Prestige from the joint venture, and during the second quarter of 2007 we purchased 100% of the North Promise. Additionally, during the first quarter of 2007, we committed to build two new PSVs, similar to the design of the North Promise and Highland Prestige but with a double-layer hull and various environmental enhancements. Aker Yards ASA will build these vessels at a combined cost of approximately $91 million, with estimated delivery dates in late 2009 and the first half of 2010.

     In the third quarter of 2007, we entered into agreements with two shipyards to construct five additional vessels. Bender Shipbuilding & Repair Co., Inc., a Mobile, Alabama based company was contracted to build three PSVs and Gdansk Shiprepair Yard “Remontowa” SA, a Polish company, was contracted to build two AHTS vessels. The estimated total cost of the five new build vessels is $130 million. The first of these vessels is scheduled to be delivered in the fourth quarter of 2009 and the last of the five is scheduled to be delivered in the third quarter of 2010.

     When applicable, we will enter into forward currency contracts to minimize our foreign currency exchange risk related to the construction of new vessels. To this end on September 30, 2005, we entered into a forward contract related to the construction of the Highland Prestige. This forward contract was designated as a fair value hedge and was highly effective as the terms of the contract were the same as the purchase commitment. During the term of the hedge, the consolidated balance sheet reflected the change in fair value of the foreign currency contract and the offsetting purchase commitment. The contract expired on March 14, 2007 and upon settlement, the positive foreign currency change of $0.9 million resulting from the change in the fair value of the hedge was reflected as a reduction to the overall construction cost of the vessel.

     Additionally during August 2007, we entered into a series of forward currency contracts relative to future milestone payments for the construction of the six Keppel vessels and the two Aker Yards vessels. As of June 30, 2008, the positive foreign currency change on the remaining forward contracts was $11.7 million. The forward contracts are designated as fair value hedges and deemed highly effective with the foreign currency change reflected in the overall construction cost of the vessels.

     Historically, our strategy has been to sell older vessels in our fleet when the appropriate opportunity arises. Consistent with this strategy, in January 2007, we sold the North Prince, one of our oldest North Sea based vessels. The proceeds from this sale were $5.7 million, and we recognized a gain on the sale of $5.0 million. During the course of 2007, we also completed the sale of three small 1981-built AHTS’s based in Southeast Asia for proceeds totaling $10.1 million, recognizing a gain of $7.2 million. In the second quarter of 2008, we completed the sale of two pre-1985 built AHTS vessels, the Sea Diligent and the North Crusader, generating sales proceeds of $21.0 million and a gain of $16.4 million, which is recognized in the current quarter. Additionally, early in the third quarter of 2008, we sold the Sem Valiant, an older Southeast Asia based AHTS, for $2.6 million, generating a gain of approximately $0.9 million which will be recognized in our third quarter 2008 results. We believe the timing of these sales fit well with our Southeast Asia new build delivery schedule.

     Interest is capitalized in connection with the construction of vessels. During the three month period ended June 30, 2008 and 2007, $2.6 million and $1.4 million, respectively, were capitalized. During the six month period ended June 30, 2008 and 2007, $4.9 million and $2.3 million, respectively

was capitalized.

(4) INCOME TAXES

     We consider earnings of certain foreign subsidiaries to be permanently reinvested, and as such, we have not provided for any U.S. federal or state income taxes on these earnings. Our overall tax provision is affected by the mix of our operations within various taxing jurisdictions; accordingly, there is limited correlation between income before income taxes and the income tax provision or benefit. Our North Sea operations based in the U.K. and Norway have a special tax incentive for qualified shipping operations known as a tonnage tax. These tonnage tax regimes provide for a tax based on the net tonnage weight of a qualified vessel, resulting in significantly lower taxes than those that would apply if we were not a qualified shipping company in those jurisdictions. Further, as part of our 2007 Southeast Asia region realignment we began the movement of certain of our vessels into our Singapore subsidiary, which in late 2007 had been granted Approved International Shipping (“AIS”) status by the Singapore Maritime & Port Authority. This AIS status provides for a ten year tax exemption, with additional extensions available, for vessel profits in the Singapore subsidiary. During the three months ended June 30, 2008, our income was derived principally from lower tax jurisdictions.

     During the fourth quarter of 2007, the Norwegian taxing authority enacted tonnage tax legislation as part of their 2008 budgetary process where they repealed the previous tonnage tax system which had been in effect from 1996 to 2006, and created a new tonnage tax system from January 2007 forward which is similar to other EU tonnage tax systems. Companies that participated in the repealed Norwegian tonnage tax system are now required to pay the tax on accumulated untaxed shipping profits as of December 31, 2006. Two-thirds of the liability is payable in equal installments over ten years beginning in 2008, while the remaining one-third of the tax liability can be met through qualified environmental expenditures on Norwegian flagged vessels. As of December 31, 2007, we recorded current income tax expense of $25.3 million related to this repealed tonnage tax liability. During the quarter ended June 30, 2008 the Norwegian tax authorities provided additional guidance regarding the calculation of the accumulated untaxed shipping profits as of December 31, 2006 resulting in the previously recorded liability being reduced by $1.0 million, which was recorded as a discrete, or one time, tax benefit in our tax provision. This revision, along with the first of the ten annual installment payments having been paid in the quarter ended June 30, 2008, resulted in our balance sheet including a $1.7 million current income tax payable for one-tenth of the remaining liability and a $22.5 million other long term liability. Of this long term payable, $13.9 million of this remaining liability is payable over eight years and $8.6 million represents the one-third environmental portion of the total liability that we expect to fully utilize before the recently extended deadline of December 31, 2021.

     On January 1, 2008, a revenue based Flat Tax, or IETU, became effective for our operations in Mexico. The IETU replaced the Assets Tax, which was repealed as of December 31, 2007, and the IETU will, generally, function as an alternative minimum corporate tax payable to the extent that the new revenue based tax exceeds the current income tax liability. With the change to the IETU, we have determined that it is more likely than not we will not realize any economic benefit from the future utilization of our Mexican tax loss carryforwards, and, accordingly, at December 31, 2007 we established a net valuation allowance related to such carryforwards.

     Effective January 1, 2007, we adopted FASB Interpretation Number 48, “Accounting for Uncertainty in Income Taxes”, or FIN 48. We recognize income tax related penalties and interest in our provision for income taxes and, to the extent applicable, in the corresponding balance sheet presentations for accrued income tax assets and liabilities, including any amounts for uncertain tax positions.

(5) COMMITMENTS AND CONTINGENCIES

     We have contingent liabilities and future claims for which we have made estimates of the amount of the eventual cost to liquidate these liabilities or claims. These liabilities and claims may involve threatened or actual litigation where damages have not been specifically quantified but we have made an assessment of our exposure and recorded a provision in our accounts for the expected loss. Other claims or liabilities, including those related to taxes in foreign jurisdictions, may be estimated based on our experience in these matters and, where appropriate, the advice of outside counsel or other outside experts. Upon the ultimate resolution of the uncertainties surrounding our estimates of contingent liabilities and future claims, our future reported financial results would be impacted by the difference between our estimates and the actual amounts paid to settle the liabilities. In addition to estimates related to litigation and tax liabilities, other examples of liabilities requiring estimates of future exposure include contingencies arising out of acquisitions and divestitures. Our contingent liabilities are based on the most recent information available to us regarding the nature of the exposure. Such exposures change from period to period based upon updated relevant facts and circumstances, which can cause the estimate to change. In the recent past, our estimates for contingent liabilities have been sufficient to cover the actual amount of our exposure.

(6) NEW ACCOUNTING PRONOUNCEMENTS

     In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, or SFAS No. 162. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We are currently reviewing SFAS No. 162 and do not expect that this Statement will result in a change in current practice.

     In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”, or FSP No. FAS 142-3. FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142 “Goodwill and Other Intangible Assets”, or FASB No. 142. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under FASB No. 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 “Business Combinations” and other U.S. generally accepted accounting principles. FSP No. FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The implementation of this standard will not have an impact on our consolidated financial position or results of operations.

     In May 2008, the FASB issued FASB Staff Position (“FSP”) No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, or FSP No. APB 14-1. FSP No. APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14 “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”. Additionally, the FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP No. APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15,

2008, and interim periods within those fiscal years. The implementation of this standard will not have an impact on our consolidated financial position or results of operations.

     In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”, or FSP No. EITF 03-6-1. FSP No. EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share, or EPS, under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, “Earnings per Share”, or FASB No. 128. The guidance in this FSP applies to the calculation of EPS under FASB No. 128 for share-based payment awards with rights to dividends or dividend equivalents. FSP No. EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented should be adjusted retrospectively to conform with the provisions of this FSP. Early application is not permitted. The implementation of this standard will not have an impact on our consolidated financial position or results of operations.

(7) OPERATING SEGMENT INFORMATION

     We operate three segments: the North Sea, Southeast Asia and the Americas, each of which is considered a reportable segment under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. Our management evaluates segment performance primarily based on operating income. Cash and debt are managed centrally. Because the regions do not manage those items, the gains and losses on foreign currency remeasurements associated with these items are excluded from operating income. Our management considers segment operating income to be a good indicator of each segment’s operating performance from its continuing operations, as it represents the results of the ownership interest in operations without regard to financing methods or capital structures. Each operating segment’s operating income (loss) is summarized in the following table and detailed discussions below:

Operating Income (Loss) by Operating Segment

						Southeast
		North Sea				Asia				Americas				Other				Total
		(In thousands)
Quarter Ended June 30, 2008
Revenue		$	53,452			$	20,175			$	8,266			$	—			$	81,893
Direct operating expenses			22,519				2,992				4,401				—				29,912
Drydock expense			2,593				(515	)			552				—				2,630
General and administrative expenses			3,335				506				681				4,899				9,421
Depreciation and amortization expense			6,422				1,830				1,090				173				9,515
Gain on sale of assets			(13,034	)			(3,373	)			—				—				(16,407	)
Operating income (loss)		$	31,617			$	18,735			$	1,542			$	(5,072	)		$	46,822
Quarter Ended June 30, 2007
Revenue		$	59,997			$	8,459			$	5,885			$	—			$	74,341
Direct operating expenses			19,409				2,011				3,268				—				24,688
Drydock expense			122				896				(6	)			—				1,012
General and administrative expenses			3,380				337				369				4,498				8,584
Depreciation and amortization expense			6,173				543				678				31				7,425
Gain on sale of assets			—				(1,249	)			—				—				(1,249	)
Operating income (loss)		$	30,913			$	5,921			$	1,576			$	(4,529	)		$	33,881

						Southeast
		North Sea				Asia				Americas				Other				Total
		(In thousands)
Six Months Ended June 30, 2008
Revenue		$	113,960			$	36,403			$	14,878			$	—			$	165,241
Direct operating expenses			44,681				5,369				7,560				—				57,610
Drydock expense			5,122				445				755				—				6,322
General and administrative expenses			6,159				912				1,132				9,995				18,198
Depreciation and amortization expense			12,921				3,186				1,860				296				18,263
Gain on sale of assets			(13,037	)			(3,373	)			—				—				(16,410	)
Operating income (loss)		$	58,114			$	29,864			$	3,571			$	(10,291	)		$	81,258
Six Months Ended June 30, 2007
Revenue		$	111,665			$	17,163			$	11,026			$	—			$	139,854
Direct operating expenses			39,268				3,688				6,646				—				49,602
Drydock expense			4,256				1,142				73				—				5,471
General and administrative expenses			5,940				252				704				8,321				15,217
Depreciation and amortization expense			11,906				1,058				1,507				61				14,532
Gain on sale of assets			(5,013	)			(1,249	)			—				—				(6,262	)
Operating income (loss)		$	55,308			$	12,272			$	2,096			$	(8,382	)		$	61,294

(9) SUBSEQUENT EVENT

     On July 1, 2008, under the terms of a Membership Interest and Stock Purchase Agreement, we acquired 100% of the membership interests of Rigdon Marine Holdings, L.L.C. (“Rigdon Holdings”) and all the shares of common stock of Rigdon Marine Corporation (“Rigdon Marine”, together with Rigdon Holdings, “Rigdon”) not owned by Rigdon Holdings for consideration of $271 million (plus or minus certain post-closing adjustments), consisting of $150 million in cash and approximately 2.1 million shares of GulfMark Offshore, Inc. common stock valued at $121 million at closing, plus the assumption of $269 million in debt. We financed the cash portion of the consideration with cash on hand and borrowing of $140.9 million under our current $175 million revolver, which borrowing took place during the second quarter of 2008. Rigdon operates a fleet of 22 technologically advanced

offshore supply vessels primarily in the domestic Gulf of Mexico, with six additional vessels under construction to be delivered by the third quarter of 2009.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     We provide marine support and transportation services to companies involved in the offshore exploration and production of oil and natural gas. Our vessels transport drilling materials, supplies and personnel to offshore facilities, as well as move and position drilling structures. The current vessel count excludes the July 1, 2008 Rigdon acquisition. The majority of our operations are based in the North Sea with 36 vessels operating in the area. We also have 14 vessels offshore Southeast Asia, five vessels offshore Brazil, six vessels in the Gulf of Mexico, two in the Mediterranean Sea, two offshore India, and three offshore Africa. Our fleet has grown in both size and capability from an original 11 vessels acquired in 1990 to our present level of 68 vessels, through strategic acquisitions and new construction of technologically advanced vessels, partially offset by dispositions of certain older, less profitable vessels. Our fleet includes 47 owned vessels, and 21 managed vessels.

     Our results of operations are directly impacted by the level of activity in worldwide offshore oil and natural gas exploration, development and production. This activity is in turn influenced by trends in oil and natural gas prices. Oil and natural gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand. Over the last few years commodity prices have been at record highs, resulting in oil and natural gas companies increasing exploration and development activities, after reduced levels of activities from 2002 through early 2004.

     The operations of our fleet may be subject to seasonal factors. Operations in the North Sea are often at their highest levels during the summer months, from April to August, and at their lowest levels during the winter, from November to February. Operations in our other areas, although involving some seasonal factors, tend to remain more consistent throughout the year. We have historically, to the extent possible, accomplished the majority of our regulatory drydocks during these seasonal decreases in demand in order to minimize downtime during our traditionally peak demand periods. When a vessel is drydocked, we incur not only the drydocking cost but also the loss of revenue from the vessel during the drydock period. The demands of the market, the expiration of existing contracts, the start of new contracts and the availability allowed by our customers have and will continue to influence the timing of drydocks throughout the year. During the second quarter of 2008, we completed 156 drydock days, compared to 50 drydock days completed in the same quarter last year.

     We provide management services to other vessel owners for a fee. We do not include charter revenues and vessel expenses of these vessels in our operating results but rather include management fees in operating revenues. These vessels have been excluded for purposes of calculating fleet rates per day worked and utilization in the applicable periods.

     Our operating costs are primarily a function of fleet configuration and utilization levels. The most significant direct operating costs are wages paid to vessel crews, maintenance and repairs, and marine insurance. Generally, fluctuations in vessel utilization have little effect on direct operating costs in the short term, and as a result direct operating costs as a percentage of revenues may vary substantially due to changes in day rates and utilization.

     In addition to direct operating costs, we incur fixed charges related to the depreciation of our fleet and costs for routine drydock inspections, which are maintenance and repairs designed to ensure compliance with applicable regulations and maintaining certifications for our vessels with various international classification societies.

Critical Accounting Policies

     In the period covered by this report, there have been no changes to the critical accounting policies used in our reporting of results of operations and financial position. For a discussion of our critical accounting policies, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended December 31, 2007.

Results of Operations

     The table below sets forth, by region, the average day rates and utilization for our vessels and the average number of vessels owned or chartered during the periods indicated. These vessels generate substantially all of our revenues and operating profit. We use the information that follows to evaluate the performance of our business.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
Revenue by Region (000’s) (a):
North Sea Based Fleet (b)		$	53,452			$	59,997			$	113,960			$	111,665
Southeast Asia Based Fleet			20,175				8,459				36,403				17,163
Americas Based Fleet			8,266				5,885				14,878				11,026
Rates Per Day Worked (a) (b):
North Sea Based Fleet (c)		$	21,766			$	23,788			$	23,384			$	22,554
Southeast Asia Based Fleet			17,992				8,373				16,179				8,616
Americas Based Fleet			15,854				11,364				14,507				11,041
Overall Utilization (a):
North Sea Based Fleet			95.3	%			92.6	%			93.8	%			91.3	%
Southeast Asia Based Fleet			86.6	%			90.6	%			91.3	%			91.8	%
Americas Based Fleet			85.5	%			97.2	%			86.7	%			94.2	%
Average Owned/Chartered Vessels (a) (d):
North Sea Based Fleet			27.0				29.3				27.7				29.2
Southeast Asia Based Fleet			14.8				12.5				13.9				12.3
Americas Based Fleet			7.0				6.0				6.7				6.0
Total			48.8				47.8				48.3				47.5

(a)

Includes all owned or bareboat chartered vessels.

(b)

Rate per day worked is defined as total charter revenues divided by number of days worked. Utilization rate is defined as the total days worked divided by total days of availability in the period.

(c)

Revenues for vessels in the North Sea based fleet are primarily earned in Pound Sterling (GBP), Norwegian Kroner (NOK) and Euros, and have been converted to U.S. Dollars (US$) at the average exchange rate for the period. The average equivalent exchange rate per one US$ for the periods indicated is as follows:

		Quarter Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		1 US$ =
GBP			0.507				0.503				0.506				0.507
NOK			5.069				6.01				5.19				6.116
Euro			0.639				0.742				0.653				0.752

(d)

Average number of vessels is calculated based on the aggregate number of vessel days available during each period

divided by the number of calendar days in such period. Includes owned and bareboat vessels only, and is adjusted for vessel additions and dispositions occurring during each periods.

Comparison of the Three Months Ended June 30, 2008 with the Three Months Ended June 30, 2007

     For the quarter ended June 30, 2008, our net income was $46.8 million, or $2.00 per diluted share, on quarterly revenue of $81.9 million. This compares to a net income during the same period in 2007 of $30.7 million, or $1.32 per diluted share on revenues of $74.3 million.

     During this quarter, we continued to experience strong revenue levels. Our revenue increased $7.6 million compared to the same quarter a year ago, primarily as a result of higher day rates in both Southeast Asia and Americas region coupled with the addition of four new vessels in the Southeast Asia region partially offset by the sale of three of the older vessels. The overall mix in capacity and day rates partially contributed $4.8 million to the revenue increase, while the continued strengthening of the Norwegian Kroner (NOK) against the U.S. Dollar contributed $2.7 million to the overall revenue improvement. There was also an increase in utilization, amounting to an increase of $0.1 million.

     Operating income increased 38.2%, or $12.9 million, from $33.9 million reported in second quarter of 2007 to $46.8 million during this year’s second quarter. In addition to the increase in revenue, we recognized a gain of $16.4 million related to the sale of the Sea Diligent and North Crusader during the quarter. Offsetting these improvements was an increase in direct operating expenses of $5.2 million, largely due to higher levels of repair and maintenance, an increase in the NOK against the U.S. Dollar and the addition of the new vessels. Depreciation and amortization expense increased by $2.1 million over the prior year quarter as a result of the addition of the new vessels, while general and administrative expenses increased by $0.8 million, principally related to increased incentive compensation expense and administrative costs.

North Sea

     Revenue in our North Sea region decreased by $6.5 million, a decrease of 11%, from $60.0 million in the second quarter of 2007 to $53.5 million in the second quarter of the current year. From the prior quarter, day rates decreased by 8.5% due to the transfer of some vessels from spot contracts to long term contracts and the softening of the spot market which reduced revenue by $7.5 million. Offsetting the decrease in day rates was a positive exchange rate effect, as the NOK strengthened against the U.S. Dollar, which partially offset the decrease in day rates by $2.0 million. Capacity decreased revenue by $1.6 million, largely due to the mobilization of the Highland Drummer, Highland Piper and the North Crusader out of the region. The decrease in capacity was partially offset by the addition of the North Promise in the later part of 2007. Operating income for the region increased by $0.7 million to $31.6 million. In addition to the decrease in revenue, direct operating and drydock cost increased by $3.1 million and $2.5 million respectively from the quarter ending June 30, 2007. Offsetting these items was the recognized gain of $13.0 million related to the sale of the North Crusader in the second quarter of 2008. Depreciation and amortization expense increased by $0.2 million resulting from the addition of the North Promise.

Southeast Asia

     Our Southeast Asia region showed a significant improvement in revenue during the second quarter of this year, more than doubling over the second quarter of 2007. Revenues increased from $8.5 million to $20.2 million. Day rates increased from $8,373 to $17,992, while capacity increased by $10.9 million. The increase in capacity was due to the full quarter effect of the 2007 addition of the Highland Drummer and the mobilization of the North Crusader into the region in the first quarter of 2008. In addition as part of the new build program, four new vessels came online beginning in the

third quarter of 2007 through the current quarter. These vessels are the Sea Cheyenne, Sea Apache, Sea Kiowa and Sea Supporter. These increases in capacity were offset by the sale of the Sem Courageous in the first quarter of 2008, the Sea Diligent in the current quarter and the Sea Explorer and Sea Endeavor in the third quarter of 2007. Operating income for the region increased from $5.9 million to $18.7 million, an increase of $12.8 million quarter to quarter. In addition to the increase in revenue, drydock expense decreased by $1.4 million. These improvements were partially offset by an increase in direct operating expenses of $1.0 million, and an increase in depreciation and amortization expense of $1.3 million resulting from the increase in capacity. Also recognized, during the second quarter of this year, was a gain of $3.3 million on the sale of the Sea Diligent.

Americas

     Our Americas region revenue increased by $2.4 million, from $5.9 million in the second quarter of 2007 to $8.3 million in the second quarter of this year. This increase was primarily caused by the mobilization of the Highland Piper into the region during the second quarter of 2008, which increased capacity by $2.5 million and the result of the positive movement in exchange rates between the Brazilian Reis (BRL) and the U.S. Dollar. Offsetting these increases was a decrease in utilization from 97.2% to 85.5% which decreased revenue by $0.7 million. Operating income remained basically unchanged from the same quarter in 2007, even though revenue increased, as direct operating cost also increased by $1.1 million due to higher crew salaries and travel. Drydock expenses increased by $0.6 million and depreciation and amortization expense also increased by $0.4 million as a result of the amortization of the mobilization of the vessel into the region. General and administrative expense increased by $0.3 million due to increased salaries and start up cost related to the newly created U.S. operation.

Other

     Other expenses in the second quarter of 2008 decreased by $0.6 million compared to the prior year second quarter. This decrease was mainly caused by decreased interest expense, $1.1 million, due to the repayment of all outstanding balances on our revolving credit facility during 2007, coupled with increased capitalized interest being recorded in the second quarter of this year related to the vessels under construction. Interest income decreased by $0.5 million resulting from lower interest earned on lower cash balances throughout the quarter.

     Our income tax provision for the second quarter resulted in a credit to income tax expense of $0.4 million, compared to the $2.2 million charge, for the second quarter of 2007. The decrease in the 2008 period reflected a $1.0 million one-time benefit related to the 2007 changes to Norwegian tonnage tax laws plus increased profits in lower tax jurisdictions.

Comparison of the Six Months Ended June 30, 2008 with the Six Months Ended June 30, 2007

     For the six months ended June 30, 2008, we had net income of $79.0 million, or $3.40 per diluted share, on revenues of $165.2 million. During the same period in 2007, net income was $55.1 million, or $2.39 per diluted share, on revenues of $139.9 million.

     Our year to date revenue increased 18.2% or $25.4 million year over year. The overall mix in capacity and day rates increased revenue by $18.6 million, largely due to the additions of the North Promise and Sea Supporter in late 2007, as well as the Sea Cheyenne, Sea Apache and Sea Kiowa throughout 2008. This was offset in part by the sale of the Sem Courageous, Sea Explorer and Sea Endeavor in the later part of 2007 and the Sea Diligent and North Crusader in the second quarter of 2008. Also contributing to the revenue increase was the continued strength of primarily the NOK against the US$ which contributed $5.9 million to the overall increase. Utilization increased from

91.8% last year to 92.1% this year, for an increase of $0.9 million.

     Operating income increased by $20.0 million, from $61.3 million in 2007 to $81.3 million this year. While the increase in revenue was the main factor responsible for this increase, during 2008 we also recognized a gain of $16.4 million on the sale of two vessels. Partially offsetting these contributions was an increase in direct operating expenses of $8.0 million, due mainly to the addition of the new vessels, as well as the increase in the GBP and NOK exchange rate against the U.S. Dollar. Depreciation and amortization expense increased by $3.7 million also due to the addition of the new vessels. General and administrative expenses increased $3.0 million, resulting increased salaries, professional fees and administrative costs.

North Sea

     North Sea revenue increased 2.1%, or $2.3 million, from last year. The positive fluctuation in the exchange rates between the Pound Sterling (GBP) and NOK and the U.S. Dollar contributed $4.3 million to the increase in revenue while utilization rates increased from 91.3% to 93.8% thus resulting in an increase of $1.1 million. Capacity increased by $1.6 million, due to the full year effect of the Highland Prestige and North Promise partially offset by the mobilization of the Highland Drummer and Highland Piper out of the region. Partially offsetting was a decrease in day rates of $4.7 million resulting from lower spot market rates for both anchor handlers and large platform supply vessels during the first half of 2008. Operating income increased by $2.8 million, the majority of which is related to the gain of $13.0 million related to the sale of the North Crusader. Partially offsetting this was the increase in drydock expense of $0.9 million and an increase of direct operating costs of $5.4 million due mainly to the addition of the new vessels coupled with higher crew salaries and travel cost. Depreciation and amortization expense increased by $1.0 million, due to the addition of new vessels. General and administrative expenses also increased by $0.2 million due primarily to increased salaries.

Southeast Asia

     Revenue for our Southeast Asia based fleet increased by $19.2 million, from $17.2 million in the first six months of 2007 to $36.4 million in the same 2008 period. The increase was primarily attributable to an increase in the fleet size in the region. The increase resulted from the addition of the Sea Apache, Sea Cheyenne, and Sea Kiowa in 2008, the Sea Supporter in the later part of 2007, and we mobilized two vessels into the region in late 2007 and the first quarter of 2008. Partially offsetting the additions was the sale of the Sem Courageous and Sea Explorer in 2007 and the sale of the Sea Diligent in June 2008. In addition, day rates increased from $8,616 in 2007 to $16,179 in 2008, which contributed $0.9 million to the increase in revenue, resulting mainly from the addition of technologically advanced vessels into the region which command higher day rates. Operating income increased from $12.3 million in 2007 to $29.9 million this year. While the increase in revenue is the main factor attributing to this increase, the region also experienced a decrease in drydock expense of $0.7 million. Additionally, the sale of the Sea Diligent during the year contributed a gain of $3.3 million to the increase in operating income. Direct operating expense increased by $1.7 million resulting primarily from the net additions of the vessels into the region. Depreciation and amortization expense increased by $2.1 million also as a result of the additions of vessels to the region.

Americas

     Our Americas region revenue increased $3.9 million, from $11.0 million in 2007 to $14.9 million in 2008. The increase was the result of the combination of higher day rates and the positive fluctuation in exchange rates between BRL and the U.S. Dollar which contributed $1.7 million to the increase in revenue. The increase in capacity also contributed $2.6 million to the increase in revenue primarily resulting from the mobilization of the Highland Piper into the region in the first quarter of

2008. Utilization decreased from 94.2% last year to 86.7% this year, reducing revenue by $0.4 million. Operating income increased by $1.5 million, which was directly related to the increase in revenue, partially offset by increases in direct operating expenses of $0.9 million, drydock expenses of $0.7 million and depreciation expenses of $0.4 million. General and administrative expense increased by $0.4 million due to increased salaries, and start up cost related to the newly created U.S. operation.

Other

     In the six months ended June 30, 2008, other expenses totaled $1.5 million a decrease of $1.2 million from 2007. The decrease was attributed to a $2.5 million decrease in interest expense, and a $1.3 million decrease in interest income.

     Our income tax provision for the first half of 2008 was $0.7 million, a 0.92% effective tax rate, compared to a provision of $3.5 million for the same 2007 period, or 6.0% effective tax rate. The decrease in our effective tax rate is mainly a reflection of our higher pretax earnings in low tax jurisdictions coupled with a one-time $1.0 million Norwegian tax benefit related to the 2007 changes to Norway’s tonnage tax laws.

Liquidity, Capital Resources and Financial Condition

     Our ongoing liquidity requirements are generally associated with our need to service debt, fund working capital, acquire or improve equipment and make other investments. Since inception, we have been active in the acquisition of additional vessels through both the resale market and new construction. Bank financing, equity capital and internally generated funds have historically provided funding for these activities.

     As of June 30, 2008, we had total debt of $300.5 million, consisting of approximately $159.6 million of our 7.75% senior notes, and $140.9 million draw on our current $175 million revolver for the July 1, 2008 acquisition of Rigdon.

     Net working capital as of June 30, 2008 was $261.4 million, including $214.7 million in cash, as a result of borrowings of approximately $140.9 million under the company’s revolving credit agreement required to partially fund the cash purchase price of the Rigdon Marine Companies acquisition on July 1, 2008. Net cash provided by operating activities increased by $20.2 million to $76.6 million for the six months ended June 30, 2008. This increase was mainly due to improved financial performance in the first half of 2008, partially offset by working capital changes. Net cash used in investing activities was $41.9 million and $72.6 million for the six months ended June 30, 2008 and 2007, respectively. The decrease of $30.7 million reflects decreased payments on new build vessels, coupled with the higher proceeds from the disposition of two vessels.

     Most of our income tax liabilities are for deferred taxes. The tonnage tax regimes in both Norway and the U.K. reduce the cash required for taxes, and accelerated tax depreciation has further mitigated current taxes outside the North Sea region.

     In the first half of 2008, we made approximately $54.0 million in payments related to the vessels under construction. Drydocking expenditures for the first six months of 2008 were $6.3 million.

     We believe that our current level of cash on hand and cash flows from operations will be adequate to repay our debts due and will provide sufficient resources to finance our operating requirements. However, our ability to fund working capital, capital expenditures and debt service in excess of cash on hand will be dependent upon the success of our operations. To the extent that

existing sources are insufficient to meet those cash requirements, we would seek other debt or equity financing; however, we can give no assurances that such debt or equity financing would be available on acceptable terms.

     In addition, we have sold a Southeast Asia based vessel in July of 2008 that would result in cash proceeds of approximately $2.6 million.

Currency Fluctuations and Inflation

     In areas where currency risks are potentially high, we normally accept only a small percentage of charter hire in local currency. The remainder is paid in U.S. Dollars.

     Substantially all of our operations are international; therefore we are exposed to currency fluctuations and exchange rate risks. Charters for vessels in the North Sea fleet are primarily denominated in GBP with a portion denominated in NOK and Euros. Substantially all of our operating costs are denominated in the same currency as charter hire in order to reduce the risk of currency fluctuations. For the periods indicated, the average equivalent exchange rate per one U.S. Dollar (US$) were:

		Quarter Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		1 US$ =
GBP			0.507				0.503				0.506				0.507
NOK			5.069				6.01				5.19				6.116
Euro			0.639				0.742				0.653				0.752

     Our North Sea based fleet generated $114 million in revenues and $58.1 million in operating income for the six months ended June 30, 2008.

     Reflected in the accompanying balance sheet as of June 30, 2008, is $143.6 million in accumulated other comprehensive income, which fluctuates, based on differences in foreign currency exchange rates as of each balance sheet date compared to the exchange rates when we invested capital in these markets. Changes in other comprehensive income are non-cash items that are primarily attributable to investments in vessels and dollar based capitalization between our parent company and our foreign subsidiaries.

     After evaluating the U.S. Dollar debt, we have determined that it is in our best interest not to use any financial instruments to hedge the exposure of our revenue and costs of operations to currency fluctuations under present conditions. Our decision is based on a number of factors, including among others:

	•		the cost of using hedging instruments in relation to the risks of currency fluctuations,
	•		the propensity for adjustments in currency denominated vessel day rates over time to compensate for changes in the purchasing power of the currency as measured in U.S. Dollars,
	•		the level of U.S. Dollar denominated borrowings available to us, and
	•		the conditions in our U.S. Dollar generating regional markets.

     One or more of these factors may change and we, in response, may choose to use financial instruments to hedge risks of currency fluctuations. However, in 2007, we entered into forward currency contracts to specifically hedge the foreign currency exposure related to firm contractual commitments in the form of future vessel payments. These hedging relationships were formally

documented at inception and the contracts have been and continue to be highly effective. As a result, by design, there is an exact offset between the gain or loss exposure in the related underlying contractual commitment. The balance sheet reflects the change in the fair value of the foreign currency contracts and purchase commitments of $11.7 million, an increase of $5.0 million from year-end 2007.

     To date, general inflationary trends have not had a material effect on our operating revenues or expenses.

Forward-Looking Statements

     This Form 10-Q contains certain forward-looking statements and other statements that are not historical facts concerning, among other things, market conditions, the demand for marine and transportation support services and future capital expenditures. These statements are subject to certain risks, uncertainties and assumptions, including, without limitation:

	•		operational risk,
	•		catastrophic or adverse sea or weather conditions,
	•		dependence on the oil and gas industry,
	•		prevailing oil and natural gas prices,
	•		expectations about future prices,
	•		delay or cost over runs on construction projects,
	•		ongoing capital expenditure requirements,
	•		uncertainties surrounding environmental and government regulation,
	•		risk relating to leverage,
	•		risks of foreign operations,
	•		risk of war, sabotage or terrorism,
	•		assumptions concerning competition,
	•		risks of currency fluctuations, and
	•		other matters.

     These statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Such statements are subject to risks and uncertainties, including the risk factors discussed above and those discussed in our Form 10-K for the year ended December 31, 2007, filed with the SEC, general economic and business conditions, the business opportunities that may be presented to and pursued by us, changes in law or regulations and other factors, many of which are beyond our control.

     We cannot assure you that we have accurately identified and properly weighed all of the factors which affect market conditions and demand for our vessels, that the information upon which we have relied is accurate or complete, that our analysis of the market and demand for our vessels is correct, or that the strategy based on that analysis will be successful.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

     Our financial instruments that are potentially sensitive to changes in interest rates include our 7.75% Senior Notes. As of July 3, 2008, the fair value of these notes, based on quoted market prices, was approximately $159.6 million compared to a carrying amount of also $159.6 million.

Exchange Rate Sensitivity

     We operate in a number of international areas and are involved in transactions denominated in currencies other than U.S. Dollars, which exposes us to foreign currency exchange risk. At various times we may utilize forward exchange contracts, local currency borrowings and the payment structure of customer contracts to selectively hedge exposure to exchange rate fluctuations in connection with monetary assets, liabilities and cash flows denominated in certain foreign currency. We do not hold or issue forward exchange contracts or other derivative financial instruments for speculative purposes.

     Other information required under Item 3 has been incorporated into Management’s Discussion and Analysis of Financial Condition and Results of Operations, and is incorporated herein.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

     Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective for the period covered by the report ensuring that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b) Evaluation of internal controls and procedures.

     As of December 31, 2007, our management determined that our internal controls over financial reporting were effective. Our assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2007, has been audited by UHY LLP, an independent public accounting firm, as stated in our Form 10-K for the year ended December 31, 2007 filed with the SEC.

     There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

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

     At our annual meeting of Stockholders held on May 18, 2008, our stockholders approved the election of all nominated directors as follows:

Name of Nominee		For				Withheld
Peter I. Bijur			19,672,876				1,160,229
David J. Butters			18,837,850				1,995,255
Marshall A. Crowe			20,542,391				290,714
Louis S. Gimbel, 3rd			20,524,958				308,147
Sheldon S. Gordon			20,562,764				270,341
Robert B. Millard			20,562,764				270,341
Robert T. O’Connell			20,004,842				828,263
Rex C. Ross			20,523,148				309,957
Bruce A. Streeter			20,500,553				332,552

     At our annual meeting of Stockholders held on May 18, 2008, our stockholders approved the selection of UHY LLP as the Company’s independent auditors for the fiscal year ending December 31, 2008, as follows:

For		Against				Abstained
20,819,184			7,177				6,742

ITEM 5. OTHER INFORMATION

     On July 1, 2008, subsequent to the period covered by this report, we acquired 100% of the membership interests in Rigdon Marine Holdings, L.L.C. (“Rigdon Holdings”) and all the shares of common stock of Rigdon Marine Corporation not owned by Rigdon Holdings for consideration of $271 million (plus or minus certain post-closing adjustments), consisting of $150 million in cash and approximately 2.1 million shares of GulfMark Offshore, Inc. common stock valued at $121 million at closing, plus the assumption of $269 million in debt. We financed the cash portion of the consideration with both cash on hand and by borrowing $140.9 million under our current $175 million revolver, which borrowing took place during the second quarter of 2008.

ITEM 6. EXHIBITS

Exhibits

     See Exhibit Index for the list of Exhibits filed herewith.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 31, 2008

EXHIBIT INDEX

Exhibit No.		Document Description
3.1		Certificate of Incorporation, dated December 4, 1996		Incorporated by reference to Exhibit 3.1 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002
3.2		Certificate of Amendment of Certificate of Incorporation, dated March 6, 1997		Incorporated by reference to Exhibit 3.2 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002
3.3		Certificate of Amendment of Certificate of Incorporation, dated May 24, 2002		Incorporated by reference to Exhibit 3.3 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002
3.4		Bylaws, dated December 6, 1996		Incorporated by reference to Exhibit 3.3 to our Registration Statement on Form S-4, Registration No. 333-24141 filed on March 28, 1997
3.5		Amendment No. 1 to Bylaws		Incorporated by reference to Exhibit 3.1 to our Form 8-K/A filed on September 17, 2007
4.1		See Exhibit Nos. 3.1, 3.2 and 3.3 for provisions of the Certificate of Incorporation and Exhibit 3.4 for provisions of the Bylaws defining the rights of the holders of Common Stock		Incorporated by reference to Exhibits 3.1, 3.2 and 3.3 to our quarterly report on Form 10-Q for the quarter ended September 30, 2002 and Exhibit 3.3 to our Registration Statement on Form S-4, Registration No. 333-24141 filed on March 28, 1997
4.2		Specimen Certificate for GulfMark Offshore, Inc. Common Stock, $0.01 par value		Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-1, Registration No. 333-31139 filed on July 11, 1997
4.3		Indenture, dated July 21, 2004, among GulfMark Offshore, Inc., as Issuer, and U.S. Bank National Association, as Trustee, including a form of the Company’s 7.75% Senior Notes due 2014		Incorporated by reference to Exhibit 4.4 to our quarterly report on Form 10-Q for the quarter ended September 30, 2004
4.4		Registration Rights Agreement, dated July 21, 2004, among GulfMark Offshore, Inc. and the initial purchasers		Incorporated by reference to Exhibit 4.5 to our quarterly report on Form 10-Q for the quarter ended September 30, 2004
4.5		Registration Rights Agreement		Incorporated by reference to Exhibit 4.5 in Form 8-K, filed on July 7, 2008
10.1		GulfMark Offshore, Inc. 2005 Non-Employee Director Share Incentive Plan		Incorporated by reference to Exhibit A of our Proxy Statement on Form DEF 14A, filed on April 21, 2005
10.2		Amendment No. 1 to the GulfMark Offshore, Inc. 2005 Non-Employee Director Share Incentive Plan		Incorporated by reference to Exhibit 4.8.2 to our Registration Statement on Form S-8, Registration No. 333-143258 filed on May 25, 2007
10.3		Form of Non-Employee Director Restricted Stock Agreement for an award of restricted stock under the GulfMark Offshore, Inc. 2005 Non-Employee Director Share Incentive Plan		Incorporated by reference to our current report on Form 8-K, filed on May 18, 2006
10.4		Amendment No. 2 to the GulfMark Offshore, Inc. 1997 Incentive Equity Plan		Incorporated by reference to Exhibit 4.8.3 to our Post-Effective Amendment No. 1 to our Registration Statement on Form S-8, Registration No. 333-57294 filed on May 25, 2007
10.5		Amendment No. 3 to the GulfMark Offshore, Inc. 1997 Incentive Equity Plan		Incorporated by reference to Exhibit 4.8.4 to our Post-Effective Amendment No. 1 to our Registration Statement on Form S-8, Registration No. 333-57294 filed on May 25, 2007
10.6		Membership Interest and Stock Purchase Agreement among GulfMark Offshore, Inc., Rigdon Marine Corporation, Rigdon Marine Holdings, L.L.C., all the members		Filed herewith

Exhibit No.		Document Description
		of Rigdon Marine Holdings, L.L.C., Sherwood Investment, L.L.C., John J. Tennant III Irrevocable Trust, Brian M. Bowman Irrevocable Trust, and Bourbon Offshore, dated May 28, 2008
10.7		Assignment and Assumption Agreement between GulfMark Offshore, Inc. and GulfMark Management, Inc., dated June 30, 2008		Filed herewith
10.8		Non-Competition and Non-Solicitation Agreement between GulfMark Offshore, Inc. and Larry T. Rigdon, dated July 1, 2008		Filed herewith
10.9		Operating Agreement and By-laws of Jackson Offshore, LLC, by and between Rigdon Marine Corporation, Lee Jackson, and Bourbon Offshore Holdings SAS, dated August 16, 2006		Filed herewith
10.10		Delphin Marine Logistics Limited Joint Venture Agreement, by and between Rigdon Marine Corporation, Mariners Haven Limited and Delphin Marine Logistics Limited, dated February 29, 2008		Filed herewith
10.11		Senior Secured Credit Facility Agreement among Rigdon Marine Corporation and DVB Bank NV, as Underwriter, Arranger, Agent, Security Trustee, Swap Bank and Book Manager, and the lenders that are parties thereto, dated December 28, 2005		Filed herewith
10.12		Amendment No. 1 to Senior Secured Credit Facility Agreement among Rigdon Marine Corporation, DVB Bank NV, as Underwriter, Arranger, Agent, Security Trustee, Swap Bank and Book Manager, and the lenders that are parties thereto, dated February 28, 2006		Filed herewith
10.13		Amendment No. 2 to Senior Secured Credit Facility Agreement among Rigdon Marine Corporation, DVB Bank NV, as Underwriter, Arranger, Agent, Security Trustee, Swap Bank and Book Manager, DVB Bank AG, as Swap Bank, and the lenders that are parties thereto, dated May 9, 2007		Filed herewith
10.14		Amendment No. 3 to Senior Secured Credit Facility Agreement among Rigdon Marine Corporation, DVB Bank NV, as Underwriter, Arranger, Book Manager, Facility Agent and Security Trustee, DVB Bank AG, as Swap Bank, and the lenders that are parties thereto, dated July 1, 2008		Filed herewith

Exhibit No.		Document Description
10.15		Guaranty given by GulfMark Offshore, Inc. in favor of DVB Bank NV pursuant to Senior Secured Credit Facility Agreement, dated July 1, 2008		Filed herewith
10.16		First Preferred Fleet Mortgage by Rigdon Marine Corporation in favor of DVB Bank NV dated as of December 28, 2005		Filed herewith
10.17		Amendment No. 1 to First Preferred Fleet Mortgage dated July 1, 2008		Filed herewith
10.18		Subordination Agreement between DVB Bank NV, as Agent for Senior Lenders, DVB Bank NV, as Agent for the Junior Lenders, and Rigdon Marine Corporation, as Borrower, dated July 1, 2008		Filed herewith
10.19		Assignment, Assumption, Amendment and Restatement of Loan Agreement Providing for a US$85,000,000 Subordinated Secured Credit Facility between Bourbon Capital U.S.A., Inc., as Assignor, Rigdon Marine Corporation, as Borrower, DVB Bank NV, as Facility Agent and Security Trustee, and the lenders that are parties thereto, dated July 1, 2008		Filed herewith
10.20		Guaranty given by GulfMark Offshore, Inc. in favor of DVB Bank NV, pursuant to Assignment, Assumption, Amendment and Restatement of Loan Agreement, dated July 1, 2008		Filed herewith
10.21		Second Preferred Fleet Mortgage by Rigdon Marine Corporation in favor of Bourbon Capital U.S.A., Inc. dated December 28, 2005, as supplemented by Supplement Nos. 1, 2, 3, 4, 5, 6 and 7, dated August 20, 2007, October 22, 2007, November 30, 2007, December 18, 2007, February 26, 2008, February 29, 2008 and June 27, 2008, respectively		Filed herewith
10.22		Assignment of Second Preferred Fleet Mortgage between Bourbon Capital U.S.A., Inc., as Assignor, and DVB Bank NV, as Assignee, dated July 1, 2008		Filed herewith
10.23		Amendment to Second Preferred Fleet Mortgage by Rigdon Marine Corporation in favor of DVB Bank NV, as Security Trustee dated July 1, 2008		Filed herewith
10.24		US $25,000,000 Secured Reducing Revolving Loan and Letter of Credit Facility Agreement between GulfMark Offshore, Inc. and DnB NOR Bank ASA dated June 1, 2006 as amended and Restated by a First Supplemental Agreement dated June 5, 2008		Filed herewith
10.25		First Supplemental Agreement to Loan Agreement dated June 1, 2006 between GulfMark Offshore, Inc. and DnB NOR Bank ASA dated June 5, 2008		Filed herewith
10.26		US $60,000,000 Secured Reducing Revolving Loan Facility Agreement between Gulf Marine Far East PTE. LTD. dated June 5, 2008		Filed herewith
31.1		Section 302 certification for B.A. Streeter		Filed herewith
31.2		Section 302 certification for E.A. Guthrie		Filed herewith
32.1		Section 906 certification furnished for B.A. Streeter		Filed herewith

Exhibit No.		Document Description
32.2		Section 906 certification furnished for E.A. Guthrie		Filed herewith