The 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 four years, according to  ODS-Petrodata. The current worldwide fleet of these classes of vessels is estimated at approximately  2,450 vessels. An increase in vessel capacity could result in increased competition in the company’s  industry which may have the effect of lowering charter rates and utilization rates, which, in turn, would result  in lower revenues to the company. Also, please read “Potential Repeal or Amendment of the Shipping Act  May Have an Adverse Impact on the Company’s U.S. Segment” risk below for additional information that  can increase vessels overcapacity in our U.S. Segment.  For the fiscal years ended March 31, 2010, 2009 and 2008, 92%, 89%, and 87%, respectively, of the  company’s total revenues were generated by its international segment. The company's international vessel  operations are vulnerable to many risks inherent in doing business in countries other than the United States,  some of which have recently become more pronounced. Our customary risks of operating internationally  include political and economic instability within the host country; possible vessel seizures or nationalization  of assets and other governmental actions by the host country (please refer to Item 7 in this report and Note  10 to Notes to Consolidated Financial Statements for a discussion of our Venezuelan operations regarding  vessel seizures); foreign government regulations that favor or require the awarding of contracts to local  competitors; an inability to recruit and retain management of overseas operations; currency fluctuations,  revaluations, devaluations and restrictions on repatriation of currency; and import/export quotas and  restrictions; most of which are beyond the control of the company. The company is also subject to acts of piracy and kidnappings that put its assets and personnel at risk. The  increase over the last few years in the level of these criminal or terrorist acts has been well-publicized. As a  marine services company that usually operates in coastal or tidal waters, the company is particularly  vulnerable to these kinds of illicit activities. Although the company takes what it considers to be prudent  measures to protect its personnel and assets in markets that present these risks, it has confronted these  issues in the past and there can be no assurance it will not be subjected to them in the future. The continued threat of terrorist activity and other acts of war or hostility have significantly increased the risk  of political, economic and social instability in some of the geographic areas in which the company operates.  It is possible that further acts of terrorism may be directed against the United States domestically or abroad  and such acts of terrorism could be directed against properties and personnel of U.S.-owned companies  such as ours. To date, the company has not experienced any material adverse effects on its results of  operations and financial condition as a result of terrorism, political instability or war.  The operation of any marine vessel involves inherent risk that could adversely affect our financial  performance if we are not adequately insured or indemnified. Our operations are also subject to various  operating hazards and risks, including risk of catastrophic marine disaster; adverse sea and weather  conditions; mechanical failure; collisions and property losses to the vessel; damage to and loss of drilling  rigs and production facilities; war, sabotage, pirate and terrorism risks; and business interruption due to  political action or inaction, including nationalization of asset by foreign governments.  These risks present a threat to the safety of personnel and to our vessels, cargo, equipment under tow and  other property, as well as the environment. Any such event may result in a reduction in revenues, increased  costs, property damage, and additionally, third parties may have significant claims against us for damages  due to personal injury, death, property damage, pollution and loss of business. Our vessels are generally  insured for their estimated market value against damage or loss, including war, terrorism acts, and pollution  risks, but the company does not fully insure for business interruption. Our insurance coverage is subject to  deductibles and certain exclusions. We can provide no assurance, however, that our insurance coverage  will be available beyond the renewal periods, that we will be able to obtain insurance for all operational risks  and that our insurance policies will be adequate to cover future claims that may arise.  -18-  Operational Hazards Inherent to the Offshore Marine Vessel Industry  Risks Associated with Operating Internationally