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GENERAL INFORMATION

Organization and Nature of Operations

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 collectively 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 Quarterly Report on Form

-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, 2017

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 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 Annual Report on Form

-K for the year ended

December 31, 2017.

In the opinion of management, all adjustments, which include reclassification and normal recurring adjustments, necessary to present fairly the unaudited condensed consolidated 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 to current year presentation.

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, and also move and position drilling structures. The majority of our operations are conducted in the North Sea, offshore Southeast Asia and the Americas. We also operate our vessels in other regions to meet our customers’ requirements.

May 17, 2017,

GulfMark Offshore, Inc. filed a voluntary petition, or the Chapter

Case, under chapter

of title

of the United States Code in the United States Bankruptcy Court for the District of Delaware, or the Bankruptcy Court. On

October 4, 2017,

the Bankruptcy Court entered an order approving our Amended Chapter

Plan of Reorganization, as confirmed, or the Plan. On

November 14, 2017,

or the Effective Date, the Plan became effective pursuant to its terms and we emerged from the Chapter

Case.

On the Effective Date, we adopted and applied the relevant guidance with respect to the accounting and financial reporting for entities that have emerged from bankruptcy proceedings, or Fresh Start Accounting, in connection with our emergence from bankruptcy. Upon emergence from the Chapter

Case, we qualified for and adopted Fresh Start Accounting in accordance with the provisions set forth in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC,

No.

852,

“Reorganizations” as (i) holders of existing shares of the Predecessor (as defined below) immediately before the Effective Date received less than

percent of the voting shares of the Successor (as defined below) entity and (ii) the reorganization value of the Successor was less than its post-petition liabilities and estimated allowed claims immediately before the Effective Date. Under Fresh Start Accounting, our balance sheet on the date of emergence reflects all of our assets and liabilities at their fair values. Our emergence and the adoption of Fresh Start Accounting resulted in a new reporting entity, or the Successor, for financial reporting purposes. To facilitate our discussion and analysis of our vessels, financial condition and results of operations herein, we refer to the reorganized company as the Successor for periods subsequent to

November 14, 2017

and the Predecessor for periods prior to

November 15, 2017.

In addition, we adopted new accounting policies related to drydock expenditures and depreciation of our long-lived assets. As a result, our consolidated financial statements and the accompanying notes thereto after

November 14, 2017

are

not

comparable to our consolidated financial statements and the accompanying notes thereto prior to

November 15, 2017.

Our presentations herein include a “black line” division to delineate and reinforce this lack of comparability. The effects of the Plan and the application of Fresh Start Accounting were reflected in the consolidated balance sheet as of

November 14, 2017,

and the related adjustments thereto were recorded in the consolidated statement of operations for the Predecessor period ended

November 14, 2017.

July 15, 2018,

GulfMark Offshore, Inc. entered into an Agreement and Plan of Merger, or the Merger Agreement, with Tidewater Inc., or Tidewater. As provided in the Merger Agreement, a to-be-formed wholly-owned subsidiary corporation of Tidewater will merge with and into GulfMark Offshore, Inc., resulting in GulfMark Offshore, Inc. becoming a wholly-owned subsidiary of Tidewater, or the First Merger. Immediately thereafter, Tidewater will cause GulfMark Offshore, Inc. to merge into a to-be-formed wholly-owned subsidiary limited liability company, or NewCo, with NewCo continuing as a wholly-owned subsidiary of Tidewater, or the Second Merger and, together with the First Merger, the Tidewater Merger. The Tidewater Merger is subject to approval by the stockholders of both entities and certain other conditions and, if approved, is expected to close in the

fourth

quarter of

2018,

subject to possible extension under circumstances described in the Merger Agreement. See Note

Revenue Recognition

We adopted ASC

606,

“Revenue from Contracts with Customers,” or ASC

606,

as of

January 1, 2018.

We applied ASC

606

retrospectively after the Effective Date of our emergence from bankruptcy on

November 14, 2017

using the following practical expedients allowed by the standard:

●

Contracts that ended prior to

December 31, 2017

were

not

restated.

●

For reporting periods prior to

January 1, 2018,

we did

not

disclose the transaction price allocated to any remaining performance obligations related to open contracts as of

December 31, 2017

or our expected timing on revenue recognition.

The adoption of ASC

606

primarily resulted in an immaterial change in the classification of reimbursable expenses we incurred on behalf of our customers. Prior to the adoption of ASC

606

the reimbursable revenues recognized and expenses incurred on behalf of our customers were classified on a gross basis in the statement of operations. After adopting ASC

606

only the fee that we earn is recorded as revenue.

Revenue is measured based on the consideration specified in a contract with a customer. Our charter hire contracts contain a single performance obligation. We generate revenue by providing a specific vessel along with a crew that both operates and maintains the vessel contracted by the customer and supports the offshore activities of the customer. In exchange we receive a daily contractual charter rate. Currently, contractual charter terms range from several days to

five

years. We recognize revenue over time as the customer simultaneously receives and consumes the benefits of the offshore marine support services we provide. Generally, our right to consideration from our customers corresponds directly with the value to the customer of our performance to date for substantially all our revenues. Accordingly, we usually recognize revenue as invoiced for vessel charter services. Payments for services rendered do

not

have a financing component as they are typically due from the customer within

days from the invoice date.

Taxes assessed by a governmental authority related to specific revenue producing transactions and collected by us from customers are excluded from revenue. We operate our business in

three

segments (see Note

): the North Sea, Southeast Asia and the Americas. Revenue in each of these segments is provided below.

	Successor								Predecessor
	Three months ended June 30, 2018								Three months ended June 30, 2017
	North Sea		Southeast Asia		Americas		Total		North Sea		Southeast Asia		Americas		Total
Services
Charter hire revenues	$	16,637	$	1,646	$	7,753	$	26,036	$	14,687	$	2,052	$	7,041	$	23,780
Management fees and reimbursables		212		23		182		417		252		89		520		861
	$	16,849	$	1,669	$	7,935	$	26,453	$	14,939	$	2,141	$	7,561	$	24,641

	Successor								Predecessor
	Six months ended June 30, 2018								Six months ended June 30, 2017
	North Sea		Southeast Asia		Americas		Total		North Sea		Southeast Asia		Americas		Total
Services
Charter hire revenues	$	31,861	$	3,568	$	14,529	$	49,958	$	28,381	$	5,124	$	14,216	$	47,721
Management fees and reimbursables		410		38		413		861		553		185		541		1,279
	$	32,271	$	3,606	$	14,942	$	50,819	$	28,934	$	5,309	$	14,757	$	49,000

In the North Sea, we manage

three

vessels for

third

-party owners and receive a fee for providing support services ranging from chartering assistance to full operational management. These managed vessels only provide a small direct financial contribution and are included in the North Sea revenues under management fees and reimbursables.

Costs of obtaining contracts

We expense the incremental costs of obtaining contracts when incurred if the amortization period of the assets that we otherwise would have recognized is

one

year or less. The incremental costs of obtaining charter hire contracts that have greater than a

one

-year term are deferred and amortized over the term of the related charter hire contract. As of

June 30, 2018,

we have

not

deferred any incremental costs of obtaining contracts.

Costs of fulfilling contracts

–

We immediately expense the cost of fulfilling contracts unless these costs: (i) relate directly to an existing contract; (ii) generate or enhance resources that will be used to satisfy performance obligations in the future; and (iii) are expected to be recovered. As of

June 30, 2018,

we have

not

deferred any contract fulfillment costs.

Contract assets and liabilities

We occasionally receive an upfront fee (mobilization fee) to cover the costs associated with moving the vessel and crew to the operating location and its return. These fees are recorded as a contract liability and amortized over the term of the related contract. We received

61,000

in upfront fees during the

three

- and

six

-month periods ended

June 30, 2018

which were amortized over the term of the related contract.

Cash Flow

Statement

November 2016,

the FASB issued Accounting Standards Update, or ASU,

2016

18,

“Statement of Cash Flows (Topic

230

): Restricted Cash.” ASU

2016

requires that a statement of cash flows explain the change during the period in the combined total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Under the new standard, cash, cash equivalents, restricted cash and restricted cash equivalents are combined and the beginning-of-period and end-of-period combined totals are reconciled on the statement of cash flows. We adopted ASU

2016

as of

January 1, 2018

and applied it retrospectively to the periods presented in our condensed consolidated statements of cash flows. Our

December 31, 2017

condensed consolidated balance sheet included restricted cash of

$3.5

million under “Deferred costs and other assets” related primarily to cash-backed performance bonds associated with

two

vessels operating in our Americas segment. These performance bonds were released during the

first

quarter of

2018

and there is

restricted cash on our condensed consolidated balance sheet as of

June 30, 2018.

In addition, there were

restricted cash balances on our condensed consolidated balance sheets at the beginning or at the end of the

six

-month period ended

June 30, 2017.

The adoption of ASU

2016

resulted in a

$3.5

million increase in net cash used in operating activities for the

six

months ended

June 30, 2018.

Earnings Per Share

Basic Earnings Per Share, or EPS, is computed by dividing net income (loss) by the weighted average number of shares of our common stock, par value

$0.01

per share, or Common Stock, outstanding during the period. Diluted EPS is computed using the treasury stock method for Common Stock equivalents.