2.2.0.25falsefalse0207 - Disclosure - Income Taxestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(7) INCOME TAXES</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     The majority of our non-U.S. based operations are subject to foreign tax systems that provide
significant incentives to qualified shipping activities. Our U.K. and Norway based vessels are
taxed under ten year “tonnage tax” regimes and in late 2010 we renewed our U.K. tonnage tax
election through November 2020. Our qualified Singapore based vessels are exempt from Singapore
taxation through December 2017 with extensions available in certain circumstances beyond 2017. The
tonnage tax regimes provide for a tax based on the net tonnage weight of a qualified vessel. These
foreign tax beneficial structures continued to result in our earnings incurring significantly lower
taxes than those that would apply if we were not a qualified shipping company in those
jurisdictions.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In late 2007, Norway enacted legislation that created a new tonnage tax system from January
2007 forward and repealed the previous tonnage tax regime effective December 31, 2006 resulting in
a mandatory exit from Norway’s tonnage tax system or payment of tax at 28% of accumulated untaxed
pre-2007 profits. Accordingly, we recorded approximately $15.0 million Norwegian tax liability in
2007. Our liability for pre-2007 taxes was to be paid equally over ten years beginning in 2008. In
February 2010, the Norway Supreme Court ruled the 2007 tax legislation to be unconstitutional
retroactive taxation and we reversed our remaining tonnage tax liability and received a refund of
the pre-2007 tonnage taxes that had been paid in 2008 and 2009, which resulted in our recording an
approximately $15.0 million tax benefit in our 2010 tax provision. In June 2010, Norway’s Minister
of Finance published revised rules for the taxation of pre-2007 tonnage tax profits permitting a
qualified tonnage tax company to elect one of two systems, or methods, to determine and pay tax on
its untaxed shipping profits as of December 31, 2006. We decided to elect the simplified tax
system, which, beginning in 2011 requires three equal annual installment payments of the tax that
is calculated as ten percent (10%) of two-thirds of the untaxed tonnage tax profits. Under this
system, we recorded an approximately $4.9 million tax provision. The net result of the 2010
Norwegian tonnage tax law changes was a $10.1 million tax benefit recorded in our 2010 tax
provision. Our liability to settle under the simplified tax system is included in our December 31,
2010 balance sheet as approximately $1.6 million current income tax payable and approximately $3.3
million as other long term payable. Annually the subsequent year’s cash installment is classified
on our consolidated balance sheet as current income taxes payable, and the remainder is classified
on our consolidated balance sheet as other income taxes payable.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Our overall effective tax rate is substantially lower than the U.S. Federal statutory income
tax rate because our Southeast Asia and North Sea operations are tonnage tax qualified shipping
activities that are taxed at relatively low rates or that are otherwise tax exempt. Should our
operational structure change or should the laws that created these shipping tax regimes change, we
could be required to provide for taxes at rates much higher than those currently reflected in our
financial statements. Additionally, if our pre-tax earnings in higher tax jurisdictions increase,
there could be a significant increase in our annual effective tax rate. Any such increase could
cause volatility in the comparisons of our effective tax rate from period to period.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     U.S. foreign tax credits can be carried forward for ten years. We have $7.2 million of such
foreign tax credit carryforwards that begin to expire in 2011. We also have certain foreign net
operating loss carryforwards that result in net deferred tax assets of approximately $2.3 million
for which we have established a valuation allowance. We have considered estimated future taxable
income
in the relevant tax jurisdictions to utilize these tax credit and loss carryforwards and have
considered what we believe to be ongoing prudent and feasible tax planning strategies in assessing
the need for the valuation allowance. This information is based on estimates and assumptions
including projected taxable income. If these estimates and related assumptions change in the
future, or if we determine that we would not be able to realize other deferred tax assets in the
future, an adjustment to the valuation allowance would be recorded in the period such determination
was made.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 0%">     Effective January 1, 2008, Mexico legislated a new revenue based tax, which in effect is an
alternative minimum tax payable to the extent that the new revenue based tax exceeds the current
income tax liability. These revenue based tax rates are16.5% for 2008, 17% for 2009 and 17.5% for
2010 and beyond. Effective January 1, 2010, Mexico enacted changes to corporate income tax rates as
follows: 2010 through 2012 – 30%; 2013 – 29%; and 2014 and beyond - 28%.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-right: 0%">     Income before income taxes attributable to domestic and foreign operations was (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="60%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Year Ended December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">U.S.
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(121,938</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(66,854</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">7,109</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td> </td>
<td align="right">74,492</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">115,350</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">188,418</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(47,446</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">48,496</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">195,527</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt; margin-right: 0%">     The components of our tax provision (benefit) attributable to income before income taxes are
as follows for the year ended December 31, (in thousands):
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="4%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<tr>
<td style="font-size:10pt"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Current</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Deferred</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Other</b> (a)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Current</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Deferred</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Other</b> (a)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Current</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Deferred</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Other</b> (a)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">U.S.
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">65</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(7,519</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(7,454</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">20</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(2,988</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(254</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(3,222</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">432</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2,437</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2,869</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign
</div></td>
<td> </td>
<td> </td>
<td align="right">3,576</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(851</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,972</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(5,247</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,223</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,314</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1,226</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1,135</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,385</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">981</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,508</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,874</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 3,641</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right"> (8,370</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right"> (7,972</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right"> (12,701</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 5,243</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right"> (8,302</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">972</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right"> (2,087</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 2,817</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 3,418</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 5,508</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right"> 11,743</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div style="margin-top: 20pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="6%" style="background: transparent"> </td>
<td width="1%" nowrap="nowrap" align="left">(a)</td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Income tax effects determined under a more likely than not, or greater than 50%
probability, threshold.
</div></td>
</tr>
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt; margin-right: 0%">     The mix of our operations within various taxing jurisdictions affects our overall tax
provision. The difference between the provision at the statutory U.S. federal tax rate and the tax
provision attributable to income before income taxes in the accompanying consolidated statements of
operations is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="8%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">U.S. federal statutory income tax rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">35.0% </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">35.0% </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">35.0% </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of foreign operations
</div></td>
<td> </td>
<td> </td>
<td align="right">66.0</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(36.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(29.3</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">US state income taxes
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">4.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Valuation allowance
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">0.5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Impairment
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(72.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1.0</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">26.8% </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">(4.3%)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" colspan="2" nowrap="nowrap">6.0% </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt; margin-right: 0%">     Deferred income taxes reflect the impact of temporary differences between the amount of assets
and liabilities for financial reporting purposes and such amounts as measured by tax laws and
regulations. The components of the net deferred tax assets and liabilities at December 31, 2010 and
2009 are as follows:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="71%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>December 31,</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>(In thousands)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax assets
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Accruals currently not deductible for tax
purposes
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">26,083</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">24,773</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net operating loss carryforwards
</div></td>
<td> </td>
<td> </td>
<td align="right">44,549</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,357</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign and other tax credit carryforwards
</div></td>
<td> </td>
<td> </td>
<td align="right">10,686</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,793</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">81,318</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">61,923</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less valuation allowance
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,468</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5,192</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net deferred tax assets
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">76,850</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">56,731</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred tax liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Depreciation
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(151,912</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(142,674</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign income not currently recognizable
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(27,447</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(27,017</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total deferred tax liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(179,359</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(169,691</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net deferred tax liability
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(102,509</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(112,960</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 25pt">     As of December 31, 2010 and 2009, the total net deferred tax liability of $102.5 million and
$113.0 million, respectively, is included in non-current liabilities in the consolidated balance
sheet. The net change in the total valuation allowance for the years ended December 31, 2010 and
2009 was a decrease of $0.7 million and a decrease of $4.6 million, respectively. As of December
31, 2010, we had net operating loss carryforwards, or NOLs, for income tax purposes totaling $115.1
million in the U.S., $10.6 million in Brazil, $5.9 million in Norway, and $4.6 million in Mexico
that are, subject to certain limitations, available to offset future taxable income. The U.S. NOLs,
which we expect to fully utilize, will begin to expire beginning in 2023 through 2029. The NOLs in
Mexico will begin to expire in 2016, however as a result of the Mexico legislation described above,
it is more likely than not that the Mexican NOLs will not be utilized and a $0.3 million valuation
allowance has been established for these NOLs. In addition, it is more likely than not that the
Norway NOLs will not be utilized and a full valuation allowance has been established for such NOLs.
Except for the amounts related to Brazilian temporary differences, it is also more likely than not
that the Brazilian NOLs will not be utilized and a $2.5 million valuation allowance has been
established for such NOLs. Based on future expected U.S. taxable income, in 2009 we reversed $4.5
million of valuation allowance previously recorded against U.S. foreign tax credits.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Currently, our intention is to permanently reinvest the unremitted earnings of our non-U.S.
subsidiaries. As a result, we have not provided for U.S. deferred taxes on the cumulative
unremitted earnings of $766.3 million at December 31, 2010. In addition, as of December 31, 2010,
we had $84.3 million of cash held by our foreign subsidiaries which is subject to U.S. tax upon
repatriation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Based on a more likely than not, or greater than 50% probability, recognition threshold and
criteria for measurement of a tax position taken or expected to be taken in a tax return, we
evaluate and record in certain circumstances an income tax asset/liability for uncertain income tax
positions. Numerous factors contribute to our evaluation and estimation of our tax positions and
related tax liabilities and/or benefits, which may be adjusted periodically and may ultimately be
resolved differently than we anticipate. We also consider existing accounting guidance on
de-recognition, measurement, classification, interest and penalties, accounting in interim periods,
disclosure and transition. Accordingly, we continue to recognize income tax related penalties and
interest in our provision for income taxes and, to the extent applicable, in the corresponding
balance sheet presentations for accrued income tax assets and liabilities, including any amounts
for uncertain tax positions included in other income taxes payable in the consolidated balance
sheets and which total $15.7 million at December 31, 2010 and $13.3 million at December 31, 2009.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     A reconciliation of the beginning and ending balances of the total amounts of gross
unrecognized tax benefits is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 20pt">
<td width="70%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(in thousands)</td>
<td> </td>
</tr>
<tr>
<td style="font-size:10pt"> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits balance at January 1,
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,786</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">9,810</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross increases for tax positions taken in prior
years
</div></td>
<td> </td>
<td> </td>
<td align="right">645</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,265</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Gross decreases for tax positions taken in prior
years
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(795</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(289</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Decreases for settlements
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Lapse of statute of limitations
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits balance at December 31,
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,636</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">10,786</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 20pt">     We expect a foreign tax examination issue representing approximately $1.6 million of our
unrecognized tax benefits as of December 31, 2010 will be settled within twelve months. As of
December 31, 2010, we are under tax examination, or may be subject to examination in the U. S. for
years after 2001 and in seven major foreign tax jurisdictions with open years for one after 1999,
one after 2000, one after 2003, one after 2004, two after 2005 and one after the year 2006.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We accrue interest and penalties related to unrecognized tax benefits in our provision for
income taxes. At December 31, 2010, we had accrued interest and penalties related to unrecognized
tax benefits of $11.4 million. The amount of interest and penalties recognized in our tax provision
for the year ended December 31, 2010 was $1.6 million.
</div>
</div>
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