2.2.0.25falsefalse0201 - Disclosure - Nature of Operations and Summary of Significant Accounting Policiestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>(1) NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Nature of Operations</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     GulfMark Offshore, Inc. and its subsidiaries (collectively referred to as “we”, “us”, “our” or
the “Company”) own and operate offshore support vessels, principally in the North Sea, offshore
Southeast Asia and offshore the Americas. The vessels provide transportation of materials, supplies
and personnel to and from offshore platforms and drilling rigs. Some of these vessels also perform
anchor handling and towing services.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     On February 23, 2010, we reorganized the Company. The Reorganization was designed to prevent
certain situations from occurring that could jeopardize our ability to engage in Coastwise Trade.
See Reorganization in Note 11.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Principles of Consolidation</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Our consolidated financial statements include our accounts and those of our majority-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Use of Estimates</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires us 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 revenue and
expenses during the reporting period. The accompanying consolidated financial statements include
significant estimates for allowance for doubtful accounts receivable, depreciable lives of vessels
and equipment, valuation of goodwill, income taxes and commitments and contingencies. While we
believe current estimates are reasonable and appropriate, actual results could differ from these
estimates.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Cash and Cash Equivalents</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Our investments, consisting of U.S. Government securities and commercial paper with original
maturities of up to three months, are included in cash and cash equivalents in the accompanying
consolidated balance sheets and consolidated statements of cash flows.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Vessels and Equipment</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Vessels and equipment are stated at cost, net of accumulated depreciation, which is provided
by the straight-line method over their estimated useful life of 25 years for all vessels other then
crew boats which are depreciated over 20 years. Interest is capitalized in connection with the
construction of vessels. The capitalized interest is included as part of the asset to which it
relates and is depreciated over the asset’s estimated useful life. In 2010, 2009, and 2008,
interest of $1.4 million, $3.6 million, and $8.5 million respectively, was capitalized. Office
equipment, furniture and fixtures, and vehicles are depreciated over two to five years.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Major renovation costs and modifications that extend the life or usefulness of the related
assets are capitalized and depreciated over the assets’ estimated remaining useful lives.
Maintenance and repair costs are expensed as incurred. Included in the consolidated statements of
operations for 2010, 2009 and 2008, are $20.6 million, $20.1 million, and $16.7 million,
respectively, of costs for maintenance and repairs.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Goodwill and Intangibles</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     At December 31, 2009, our goodwill consisted of $97.7 million related to an acquisition in our
Americas region and $32.1 million related to acquisitions in the North Sea region. The
determination of impairment of all long-lived assets, goodwill, and intangibles is conducted when
indicators of impairment are present and at least annually for goodwill. Impairment testing for
goodwill is performed on a reporting segment basis.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In the second quarter of 2010, we assessed our Americas region goodwill for impairment and, as
a result, recorded a $97.7 million impairment charge, reflecting all of our Americas region
goodwill. See Note 2 for a discussion of the goodwill impairment charge.
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Impairment of Long-Lived Assets</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We review long-lived assets for impairment whenever there is evidence that the carrying amount
of such assets may not be recoverable. This consists of comparing the carrying amount of the asset
with its expected future undiscounted cash flows before tax and interest costs. If the asset’s
carrying amount is less than such cash flow estimate, it is written down to its fair value on a
discounted cash flow basis. Estimates of expected future cash flows represent management’s best
estimate based on currently available information and reasonable and supportable assumptions. Any
impairment recognized is permanent and may not be restored. We did not record any significant
impairment write-downs of our long-lived assets during 2010 or 2008. See Note 2 for discussion of
an impairment of assets under construction in the first quarter of 2009.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Fair Value of Financial Instruments</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     As of December 31, 2010, our financial instruments consist primarily of accounts receivable
and payable (which are stated at fair value), long-term debt and an interest rate swap for a
portion of the Facility Agreement.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     As of December 31, 2009, we had forward currency exchange contracts that were designated as
fair value hedges and were highly effective, as the terms of the forward contracts were the same as
the purchase commitments under a new build contract. Any gains or losses resulting from changes in
fair value were recognized in income with an offsetting adjustment to income for changes in the
fair value of the hedged item such that there was no net impact on the statement of operations. As
of December 31, 2010, no contracts remained open under such agreements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We also had interest rate swap agreements that hedged the interest rate associated with a
portion of our previous senior indebtedness. We reported changes in the fair value of these cash
flow hedges in accumulated other comprehensive income. On December 17, 2009 we entered into the
$200.0 million Facility Agreement (See Note 6) and terminated the existing senior indebtedness and
the swaps associated with that debt. Concurrently, we entered into an interest rate swap agreement
for approximately $100.0 million of the Facility Agreement indebtedness that has fixed the interest
rate at 4.145%. The interest rate swap is accounted for as cash flow hedge. We report changes in
the fair value of the cash flow hedges in accumulated other comprehensive income. The consolidated
balance sheet contains a cash flow hedge reflecting the fair value of the interest rate swap, which
was $6.8 million at December 31, 2010 based on expected cash inflows and outflows associated with
the contracts. We expect to reclassify $3.1 million of deferred loss related to the interest rate
swaps to interest expense during the next 12 months.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In addition, when we terminated the interest rate swaps discussed above, there was a $4.3
million balance remaining in other comprehensive income representing expected future interest
payments. Of this amount, $0.1 million was amortized to interest expense in 2009, $2.4 million was
amortized to interest expense in 2010 and the remaining $1.8 million will be amortized into
interest expense through December 31, 2012 based on forecasted payments as of the settlement date.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Deferred Costs and Other Assets</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Deferred costs and other assets consist primarily of deferred financing costs and deferred
vessel mobilization costs. Deferred financing costs are amortized over the expected term of the
related debt. Should the debt for which a deferred financing cost has been recorded terminate by
means of payment in full, tender offer or lender termination, the associated deferred financing
costs would be immediately expensed.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In connection with new long-term contracts, costs incurred that directly relate to
mobilization of a vessel from one region to another are deferred and recognized over the primary
contract term. Should either party terminate the contract prior to the end of the original contract
term, the deferred amount would be immediately expensed. Costs of relocating vessels from one
region to another without a contract are expensed as incurred.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Revenue Recognition</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Revenue from charters for offshore marine services is recognized as performed based on
contractual charter rates and when collectability is reasonably assured. Currently, charter terms
range from as short as several days to as long as 10 years in duration. Management services revenue
is recognized in the period in which the services are performed.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Income Taxes</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We recognize deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the difference between the financial
statement carrying amounts and tax bases of assets and liabilities using enacted tax rates and laws
in effect in the years in which the differences are expected to reverse. The likelihood and amount
of future taxable income and tax planning strategies
are included in the criteria used to determine the timing and amount of tax benefits
recognized for net operating loss and tax credit carryforwards in the consolidated financial
statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In addition, we also account for uncertainty in income taxes by determining 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. 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.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Foreign Currency Translation</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     The local currencies of the majority of our foreign operations have been determined to be
their functional currencies, except for certain foreign operations whose functional currency has
been determined to be the U.S. Dollar, based on an assessment of the economic circumstances of the
foreign operations. Assets and liabilities of our foreign affiliates are translated at year-end
exchange rates, while revenue and expenses are translated at average rates for the period. As a
result, amounts related to changes in assets and liabilities reported in the consolidated
statements of cash flows will not necessarily agree to changes in the corresponding balances on the
consolidated balance sheets. We consider most intercompany loans to be long-term investments;
accordingly, the related translation gains and losses are reported as a component of stockholders’
equity. Transaction gains and losses are reported directly in the consolidated statements of
operations. During the years ended December 31, 2010, 2009 and 2008, we reported net foreign
currency losses in the amount of $0.1 million, $2.2 million and $2.0 million, respectively.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Concentration of Credit Risk</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We extend credit to various companies in the energy industry that may be affected by changes
in economic or other external conditions. Our policy is to manage our exposure to credit risk
through credit approvals and limits. Our trade accounts receivable are aged based on contractual
payment terms and an allowance for doubtful accounts is established in accordance with our written
corporate policy. The age of the trade accounts receivable, customer collection history and
management’s judgment as to the customer’s ability to pay are considered in determining whether an
allowance is necessary. Historically, write-offs for doubtful accounts have been insignificant. In
2010, 2009 and 2008, no single customer accounted for 10% or more of total consolidated revenue.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock-Based Compensation</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     We account for stock-based compensation using the modified prospective application method
where compensation cost will be recognized related to new awards and to awards modified,
repurchased, or cancelled after the required effective date. Additionally, compensation cost for
portions of awards for which the requisite service has not been rendered that are outstanding at
January 1, 2006 shall be recognized as if the requisite service is rendered on or after the
required effective date. At January 1, 2006, all of our stock option awards were fully vested.
Under the modified prospective method, vested equity awards outstanding at the effective date
create no additional compensation expense. Only new awards granted after January 1, 2006 would
continue to be measured and charged to expense over remaining requisite service. Our employee
stock purchase plan would be considered compensatory whereby it allows all of our U.S. employees
and participating subsidiaries to acquire shares of common stock at 85% of the fair market value of
the common stock under a qualified plan as defined by Section 423 of the Internal Revenue Service.
The plan has a look-back option that establishes the purchase price as an amount based on the
lesser of the common stock’s market price at the grant date or its market price at the exercise
date. The total value of the look-back option imbedded in the plan is calculated using the
component approach where each award is computed as the sum of 15% of a share of non-vested stock, a
call option on 85% of a share of non-vested stock, and a put option on 15% of a share of non-vested
stock.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Pro forma information regarding net income and earnings per share, or EPS, and has been
determined as if we had accounted for our employee stock options under the fair-value method
described above. The last granted stock options were in October 2003. The fair value calculations
at the date of grant using the Black-Scholes option pricing model were calculated with the
following weighted average assumptions:
</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">
<td width="81%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="12%"> </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">2003</td>
</tr>
<!-- End Table Head -->
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<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right" nowrap="nowrap">2.2%</td>
<td nowrap="nowrap"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Volatility factor of stock price
</div></td>
<td> </td>
<td> </td>
<td align="right">0.28  </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Dividends
</div></td>
<td> </td>
<td> </td>
<td align="right">-  </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Option life
</div></td>
<td> </td>
<td colspan="3" align="right">4 years </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Calculated fair value per share
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">3.58  </td>
<td> </td>
</tr>
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</table>
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Earnings Per Share</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Basic EPS is computed by dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the year. Diluted EPS is computed using the treasury stock
method for common stock equivalents. The detail of the earnings per share calculations for
continuing operations for the years ended December 31, 2010, 2009 and 2008 is as follows (in
thousands, except per share amounts):
</div>
<div align="left">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="54%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>Year ended December 31, 2010</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Per Share</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>Loss</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Average Shares</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Loss per share, basic
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(34,745</td>
<td nowrap="nowrap">) </td>
<td> </td>
<td> </td>
<td align="right">25,519</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(1.36</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> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </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>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive effect of common
stock options
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td> </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> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Loss per share, diluted
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(34,745</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">  $</td>
<td align="right">25,519</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">  $</td>
<td align="right">(1.36</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>
<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>
<tr valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>Year ended December 31, 2009</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Per Share</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>Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Average Shares</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income per share, basic
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">50,583</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,151</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">2.01</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<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>
<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>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive effect of common
stock options
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">295</td>
<td> </td>
<td> </td>
<td> </td>
<td> </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> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income per share, diluted
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">50,583</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">25,446</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">1.99</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>
<tr valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 1px solid #000000"><b>Year ended December 31, 2008</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Net</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Weighted</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Per Share</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>Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Average Shares</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income per share, basic
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">183,784</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,737</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">7.74</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<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>
<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>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Dilutive effect of common
stock options
</div></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">582</td>
<td> </td>
<td> </td>
<td> </td>
<td> </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> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income per share, diluted
</div></td>
<td> </td>
<td align="left">  $</td>
<td align="right">183,784</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">24,319</td>
<td> </td>
<td> </td>
<td align="left">  $</td>
<td align="right">7.56</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"><i>Reclassifications</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     Certain reclassifications of previously reported information have been made to conform to the
current year presentation.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>New Accounting Pronouncements</i>
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In June 2009, the Financial Accounting Standards Board (“FASB”) amended its accounting
guidance on Accounting Standards Codification (“ASC”) Topic 810, <i>Consolidations </i>relating to the
consolidation of variable interest entities (“VIE”). Among other things, the new guidance requires
a qualitative rather than a quantitative assessment to determine the primary beneficiary of a VIE
based on whether the entity (1) has the power to direct matters that most significantly impact the
activities of the VIE and (2) has the obligation to absorb losses or the right to receive benefits
of the VIE that could potentially be significant to the VIE. In addition, the amended guidance
requires an ongoing reconsideration of the primary beneficiary. The provisions of this new guidance
were effective as of the beginning of our 2010 fiscal year, and the adoption did not have a
material impact on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In April 2010, the FASB issued additional guidance relating to the ASC Topic 718, <i>Compensation
— Stock Compensation </i>to clarify classification of an employee stock-based payment award when the
exercise price is denominated in the currency of a market in which the underlying equity security
trades. This guidance becomes effective for us on January 1, 2011 and will not have a material
effect on our consolidated financial statements.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt">     In January 2010, the FASB amended ASC Topic 820, <i>Fair Value Measurement and Disclosure </i>to
require additional disclosures on (1) transfers between levels, (2) Level 3 activity presented on a
gross basis, (3) valuation techniques, and (4) inputs into the valuation. The additional disclosure
has no impact on our consolidated financial statements.
</div>
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<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis element may be used to describe all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 22
-Paragraph 8
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