Property, Plant and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note 6 - Property, Plant and Equipment

Property, plant and equipment at December 31, 2014 and 2013 consist of the following:

(In thousands)	2014		2013
Land and land improvements	$	15,859	$	16,124
Buildings		63,245		63,242
Machinery and equipment		284,447		259,697
Property, plant and equipment, gross		363,551		339,063
Less: accumulated depreciation		151,368		119,439
Property, plant and equipment, net	$	212,183	$	219,624

Depreciation expense for the years ended December 31, 2014, 2013, and 2012 was $33.7 million, $35.6 million and $48.1 million, respectively.

In 2012, the Company considered the impact of business developments in its Gunite reporting unit, including a loss of customer market share and evidence of declining aftermarket sales.  In addition to the concerns with our Gunite business, the Company had also experienced a decline in its stock price to an amount below then current book value.   These events triggered a long-lived asset impairment analysis for Gunite.

We performed a recoverability test of the Gunite's long-lived assets by using an undiscounted cash flow method.  We first determined the asset group to be the Gunite reporting unit, which represents the lowest level of identifiable cash flows.  Our test concluded that the Gunite asset group was not recoverable as the resulting undiscounted cash flows were less than the carrying amount of the asset group.  Accordingly, we estimated the fair value of the long lived assets to determine the impairment amount.  Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs.

To determine the estimated fair value of real and personal property, the market approach and cost approach were considered.  The income approach was not considered as we concluded it was not feasible to allocate or attribute income to individual assets given our asset group determination to be the Gunite reporting unit.  Under the cost approach, the determination of fair value considered the estimates of the cost to replace or reproduce assets of equal utility at current prices with adjustments in value for physical deterioration and functional obsolescence based on the condition of the assets. Under the market approach, the determination of fair value considered the market prices in transactions for similar assets and certain direct market values based on quoted prices from brokers and market professionals.  For real estate, we concluded that the market approach was the most appropriate valuation method.  For buildings, we concluded that the cost approach was the most appropriate valuation method.  For personal property, we concluded that the cost approach, adjusted for an in-exchange or salvage premise, was the most appropriate method for determining fair value.

Significant Level 3 inputs for real estate and building measurements included location of the property, zoning, physical deterioration, functional obsolescence and external obsolescence.  Significant Level 3 inputs for personal property included physical deterioration, functional obsolescence and economic obsolescence.

As a result of our fair value estimates, we adjusted the carrying amount of the Gunite's personal property to fair value and recorded asset impairment charges of $34.1 million in 2012.  The fair value estimates for the Gunite personal property were based on a valuation premise that assumes the assets' highest and best use are different than their current use as a result of lower volume demands for Gunite's products due to the loss of customers in 2012, reduced production levels in the commercial vehicle market, and its declining aftermarket segments in North America.