company periodically utilizes derivative financial instruments to hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. These transactions are generally spot or forward currency contracts or interest rate swaps that are entered into with major financial institutions. Derivative financial instruments are intended to reduce the company’s exposure to foreign currency exchange risk and interest rate risk. The company enters into derivative instruments only to the extent considered necessary to meet its risk management objectives and does not use derivative contracts for speculative purposes. The derivative instruments are recorded at fair value using quoted prices and quotes obtainable from the counterparties to the derivative instruments. 

Spot Derivatives . Spot derivative financial instruments are short-term in nature and generally settle within two business days. The fair value approximates the carrying value due to the short-term nature of this instrument, and as a result, no gains or losses are recognized. 

The company had 10 foreign exchange spot contracts outstanding at March 31, 2010, which totaled $4.7 million. All 10 spot contracts settled by April 6, 2010. The company had no spot derivative financial instruments outstanding at March 31, 2009. 

Forward Derivatives . Forward derivative financial instruments are generally longer-term in nature but generally do not exceed one year. The accounting for gains or losses on forward contracts is dependent on the nature of the risk being hedged and the effectiveness of the hedge. 

The company had no forward contracts outstanding at March 31, 2010 and 2009. 

## Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis 

## Asset Impairments 

The company accounts for long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-lived Assets, and reviews long-lived assets for impairment whenever events occur or changes in circumstances indicate that the carrying amount of assets may not be recoverable. In such evaluation the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. The company estimates cash flows based upon historical data adjusted for the company’s best estimate of future market performance that is based on industry trends. The company uses the discounted cash flow method to determine estimated fair value of each asset group and compares such estimated fair value, considered Level 3, to the carrying value of each asset group in order to determine if impairment exists. If impairment exists, the carrying value of the asset group is reduced to its estimated fair value. Vessels with similar operating and marketing characteristics are grouped for asset impairment testing. The combined fair value of the 17 and 10 vessels that incurred impairments totaling $3.1 million and $1.4 million during fiscal 2010 and 2009, respectively, was $10.6 million and $1.7 million, respectively. No impairment was recorded during fiscal 2008. 

## (12) GAIN ON DISPOSITION OF ASSETS, NET 

During fiscal 2010, the company sold and/or scrapped 55 vessels (excluding 15 vessel seized by the Venezuelan government) which resulted in gain on asset dispositions, net of approximately $30.6 million. During fiscal 2009, the company sold and/or scrapped 47 vessels which resulted in gain on asset dispositions, net of approximately $28.8 million. During fiscal 2008, the company sold and/or scrapped 26 vessels which resulted in gain on asset dispositions, net of approximately $10.6 million. 

