TIDEWATER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended March 31, 2010, 2009, and 2008  company periodically utilizes derivative financial instruments to hedge against foreign currency denominated  assets and liabilities, currency commitments, or to lock in desired interest rates. These transactions are  generally spot or forward currency contracts or interest rate swaps that are entered into with major financial  institutions. Derivative financial instruments are intended to reduce the company’s exposure to foreign  currency exchange risk and interest rate risk. The company enters into derivative instruments only to the  extent considered necessary to meet its risk management objectives and does not use derivative contracts  for speculative purposes. The derivative instruments are recorded at fair value using quoted prices and  quotes obtainable from the counterparties to the derivative instruments. Spot Derivatives . Spot derivative financial instruments are short-term in nature and generally settle within  two business days. The fair value approximates the carrying value due to the short-term nature of this  instrument, and as a result, no gains or losses are recognized. The company had 10 foreign exchange spot contracts outstanding at March 31, 2010, which totaled  $4.7 million. All 10 spot contracts settled by April 6, 2010. The company had no spot derivative financial  instruments outstanding at March 31, 2009. Forward Derivatives . Forward derivative financial instruments are generally longer-term in nature but  generally do not exceed one year. The accounting for gains or losses on forward contracts is dependent on  the nature of the risk being hedged and the effectiveness of the hedge. The company had no forward contracts outstanding at March 31, 2010 and 2009. The company accounts for long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of  Long-lived Assets, and reviews long-lived assets for impairment whenever events occur or changes in  circumstances indicate that the carrying amount of assets may not be recoverable. In such evaluation the  estimated future undiscounted cash flows generated by an asset group are compared with the carrying  amount of the asset group to determine if a write-down may be required. The company estimates cash flows  based upon historical data adjusted for the company’s best estimate of future market performance that is  based on industry trends. The company uses the discounted cash flow method to determine estimated fair  value of each asset group and compares such estimated fair value, considered Level 3, to the carrying  value of each asset group in order to determine if impairment exists. If impairment exists, the carrying value  of the asset group is reduced to its estimated fair value. Vessels with similar operating and marketing  characteristics are grouped for asset impairment testing. The combined fair value of the 17 and 10 vessels  that incurred impairments totaling $3.1 million and $1.4 million during fiscal 2010 and 2009, respectively,  was $10.6 million and $1.7 million, respectively. No impairment was recorded during fiscal 2008.  During fiscal 2010, the company sold and/or scrapped 55 vessels (excluding 15 vessel seized by the  Venezuelan government) which resulted in gain on asset dispositions, net of approximately $30.6 million. During fiscal 2009, the company sold and/or scrapped 47 vessels which resulted in gain on asset  dispositions, net of approximately $28.8 million. During fiscal 2008, the company sold and/or scrapped 26  vessels which resulted in gain on asset dispositions, net of approximately $10.6 million.  (12) GAIN ON DISPOSITION OF ASSETS, NET Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis  Asset Impairments  F-39