(1)  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Nature of Operations  Principles of Consolidation  Use of Estimates  Cash Equivalents  Marine Operating Supplies  Properties and Equipment  F-9 The company provides offshore service vessels and marine support services to the global offshore energy  industry through the operation of a diversified fleet of offshore marine service vessels. The company’s  revenues, net earnings and cash flows from operations are dependent upon the activity level of the vessel  fleet. Like other energy service companies, the level of the company’s business activity is driven by the level  of drilling and exploration activity by our customers. Our customers’ activity, in turn, is dependent on crude  oil and natural gas prices, which fluctuate depending on respective levels of supply and demand for crude  oil and natural gas.  The consolidated financial statements include the accounts of Tidewater Inc. and its subsidiaries.  Intercompany balances and transactions are eliminated in consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the  United States of America requires management to make estimates and assumptions that affect the reported  amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the  consolidated financial statements and the reported amounts of revenues and expenses during the reporting  period. The accompanying consolidated financial statements include estimates for allowance for doubtful  accounts, useful lives of property and equipment, valuation of goodwill, income tax provisions, deferred  revenues, impairments, commitments and contingencies and certain accrued liabilities. The company  evaluates its estimates and assumptions on an ongoing basis based on a combination of historical  information and various other assumptions that are considered reasonable under the particular circumstances. Actual results may differ from these estimates under different assumptions.  The company considers all highly liquid investments with maturities of three months or less when purchased  to be cash equivalents. Marine operating supplies, which consist primarily of operating parts and supplies for the company’s  vessels, are stated at the lower of weighted-average cost or market. Properties and equipment are stated at cost. Depreciation is computed primarily on the straight-line basis  beginning with the date construction is completed, with salvage values of 5%-10% for marine equipment,  using estimated useful lives of 15 - 25 years for marine equipment (from date of construction) and 3 - 30  years for other properties and equipment. Depreciation is provided for all vessels unless a vessel meets the  criteria to be classified as held for sale. Estimated remaining useful lives are reviewed when there has been  a change in circumstances that indicates the original estimated useful life may no longer be appropriate.  Upon retirement or disposal of a fixed asset, the costs and related accumulated depreciation are removed  from the respective accounts and any gains or losses are included in our consolidated statements of  earnings. Depreciation and amortization expense for the years ended March 31, 2010, 2009 and 2008 was  $130.2 million, $126.2 million and $120.8 million, respectively.  Used equipment is depreciated in accordance with the above policy; however, no life less than six years is  used for marine equipment regardless of the date constructed.  Years ended March 31, 2010, 2009, and 2008  TIDEWATER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS