its vessels in the U.S. GOM market in the near term to remain relatively weak, particularly if natural gas  prices deteriorate from current levels. As such, management anticipates the company’s U.S.-based results  of operations during fiscal 2011 will likely be no more favorable than its fiscal 2010 results. During fiscal  2010, the company responded to the deterioration in the U.S. GOM market by stacking and removing from  its active vessel fleet those vessels that could not find attractive charter hire contracts. In addition,  drydockings associated with stacked vessels have been deferred. The impact of the recent rig catastrophe  in the U.S. GOM may also have a negative impact on activity levels in fiscal 2011 and beyond. As a result of  the reduced number of active vessels in the U.S. GOM, crew personnel reductions took place, and effective  June 1, 2009, wages on the remaining crew personnel in the U.S. GOM were reduced by approximately  15%. Historically, when the U.S. market weakened, the company would redeploy some of its highly mobile assets  to international markets where, market conditions permitting, the vessels could benefit from stronger  demand and average day rates and from statutory income tax rates that are generally lower than those in  the U.S. Given the current challenges in international markets, the company’s ability to mitigate the effects  of a weak U.S. GOM market by redeploying vessels to other markets has been significantly reduced. The  company continues to assess the demand for vessels in the U.S. GOM and in the various international  markets and may relocate additional vessels to international areas and between international areas. The  cost of mobilizing vessels to a different market is sometimes for the account of the company and sometimes  for the account of a contracting customer.  The deepwater offshore energy market is a growing segment of the global energy market and is one sector  of the global energy market that has yet to experience any significant negative effects from the global  economic recession. During the past few years, worldwide rig construction increased as rig owners  capitalized on the high worldwide demand for drilling. Reports published during the most recently completed  quarter suggest that over the next four years, the worldwide moveable drilling rig count (currently estimated  at approximately 785 movable rigs worldwide, approximately thirty percent of which are designed to operate  in deeper waters) will increase as approximately 135 new-build rigs that are currently on order and under  construction are delivered. It is further estimated that approximately fifty percent of these new build rigs are  intended to operate in deeper waters, suggesting that the number of rigs designed to operate in deeper  waters could grow in the coming years by approximately one third. Investment is also being made in the  floating production market, in which approximately 50 new floating production units are currently under  construction and are expected to be delivered over the next four years to supplement the current  approximately 325 floating production units worldwide. However, analysts have reported that several drilling  rigs currently on order have been cancelled and/or delayed due to the uncertain economic outlook, which  may reduce the number of rigs ultimately built and delivered. Moreover, to the extent the rigs are built and  delivered, it is believed that the new build rigs will largely target international regions rather than the U.S.  GOM due to longer contract durations, generally lower operating costs (including insurance costs) and  higher drilling day rates available in the international markets.  According to ODS-Petrodata, the global offshore supply vessel market has approximately 450 new-build  offshore support vessels (platform supply vessels and anchor handlers only) that are currently estimated to  be under construction and that are expected to be delivered to the worldwide offshore vessel market over  the next three years. The current worldwide fleet of these classes of vessels is estimated at approximately  2,450 vessels. An increase in vessel capacity could have the effect of lowering charter rates, particularly in  the context of declining levels of exploration, field development and production activity. However, the  worldwide offshore marine vessel industry also has a large number of aging vessels, including more than  800 vessels that are at least 25 years old, that are nearing or exceeding original expectations of their  estimated economic lives. These older vessels could potentially be removed from the market within the next  few years if the cost of extending the vessels’ lives is not economically justifiable. Although the future  attrition rate of these aging vessels cannot be accurately predicted, the company believes that the  retirement of a sizeable portion of these aging vessels would likely mitigate the potential combined negative  effects of new-build vessels on vessel utilization and vessel pricing. Additional vessel demand could also be  created with the addition of new drilling rigs and floating production units that are expected to be delivered  and become operational over the next few years, which should help minimize the possible negative effects  the new-build offshore support vessels (platform supply vessels and anchor handlers only) being added to  the offshore support vessel fleet. It is unknown at this time the extent to which the recovery from the recent  worldwide recession will influence the utilization of equipment currently in existence or the ultimate timing of  delivery and placing into service of new drilling rigs, floating production units and vessels currently under  -31- 