Long-Lived Asset Impairment Charges

12 Months Ended

Dec. 31, 2015

Restructuring and Related Activities [Abstract]

We continuously evaluate our manufacturing needs by considering the capacity of existing and idled plants and production lines, as well as capital projects for manufacturing facilities, relative to the demand assumptions included in our long-range plan. Although industry and economic factors have improved and we believe that the overall economic recovery is intact, they are improving at a slower pace than expected, which required us to reconsider the future utilization of idled plants and production lines, and capital projects for manufacturing facilities. In 2014, we recorded the following impairment charges:



(millions)	2014
Ocean vessels	$	60
Wallboard lines or facilities	16
Previously incurred costs related to construction of future facilities	12
Other	2
Total long-lived asset impairment charges	$	90

There were no impairment charges recorded in 2015 or 2013.

In 2014, the long-lived asset impairment charges totaling $90 million included the following:

(a) $60 million related to two self-unloading ocean vessels that were subsequently sold in the second quarter of 2015. See Note 13 for further discussion.

(b) $16 million related to the carrying values of machinery, equipment and buildings at our temporarily idled gypsum quarry and wallboard production facility in Empire, Nevada and at our previously idled and now permanently closed gypsum wallboard line in New Orleans, Louisiana. In addition, in the third quarter of 2014 we permanently closed our wallboard line in Detroit, Michigan. No impairment charge was recorded with respect to our wallboard line in Detroit, Michigan, as these assets were previously impaired at the time the plant was originally idled.

(c) $12 million related to previously incurred and capitalized costs for the construction of two future facilities which we do not anticipate will be built within our planning horizon.

(d) $2 million related to the carrying values of machinery, equipment and buildings at our previously idled and now permanently closed paper production line in Gypsum, Ohio.

The carrying values of the machinery, equipment and buildings at our temporarily idled facility in Empire, Nevada exceeded the estimated future undiscounted cash flows for the remaining useful lives of the assets due to slower than expected acceleration in the markets served by this facility and our forecasts regarding the timing and future rate of recovery in those markets. Based on these conditions, we do not anticipate that the carrying values of the assets at this facility would be recovered prior to end of the assets’ useful lives, and therefore fully impaired these assets. For the production line in Gypsum, Ohio that we deemed to be permanently closed, we fully impaired the long-lived assets specific to that line.

The long-lived asset impairment charges relate solely to our Gypsum segment.

Gypsum Transportation Limited

Gypsum Transportation Limited, or GTL, owned two self-unloading ocean vessels. The two previously owned vessels and the third previously leased vessel were used to transship iron ore in and around Sierra Leone in accordance with a contract of affreightment. During 2014, our trading partner ceased performing under the contract, and consequently, we terminated the agreement. As a result of the contract termination, we assessed the recoverability of the two owned vessels and recorded an impairment charge of $60 million. Also in 2014, we recorded a contract termination charge of $6 million for costs to be incurred for the remaining term without economic benefit to us under the lease of the third vessel and we recorded a $9 million provision for bad debt for the trade receivable from our trading partner that we deemed uncollectible.

The impairment charge for the two owned vessels is recorded within "Long-lived asset impairment charges" on our consolidated statement of operations. The contract termination charge and provision for bad debt are recorded within "Contract termination and (recovery) loss on receivable" on our consolidated statements of operations.

In April 2015, we completed the sale of our two self-unloading ocean vessels owned by GTL for $42 million and recorded a gain of $7 million on the disposition. With a portion of the proceeds from the sale, GTL repaid the outstanding loan balance under GTL’s secured loan facility agreement with DVB Bank SE and paid applicable selling costs. Additionally, we returned the third vessel leased by GTL and paid $7 million of early termination costs which were previously accrued for in 2014. In the second quarter of 2015, GTL incurred charges of $6 million to exit our shipping operations. The net impact of the gain on the sale of the vessels and charges incurred to exit the shipping operations of $1 million is recorded in “Gain on disposal of shipping operations, net” on the consolidated statement of operations.

In November 2015, we entered into a release and debt settlement agreement (Settlement Agreement) to recover a portion of our loss incurred when our former trading partner ceased performing under the contract in the fourth quarter of 2014. The Settlement Agreement requires payments beginning in December 2015 for a total of $14 million. For the payments received that are meant to settle the $9 million loss on the trade receivable, we will record the benefit to our statement of operations when we determine the payments to be probable. For the remaining $5 million we will record the benefit to the statement of operations when realization is assured beyond a reasonable doubt, which is generally when the payments are received. For the year ended December 31, 2015, we have recorded a recovery of $6 million and it is presented within the "Contract termination and (recovery) loss on receivable" on our consolidated statement of operations.

GTL recorded operating profit (loss) of $7 million in 2015, ($52) million in 2014, and $20 million in 2013.