EQUIPMENT ACQUISITIONS, DISPOSITIONS AND DEPRECIATION AND IMPAIRMENT POLICIES

During the six months ended June 30, 2013, capital expenditures were $87.9 million. Equipment deliveries during the period included one specialty offshore support vessel, two liftboats, two wind farm utility vessels, two liquid tank barges and three U.S.-flag harbor tugs.

During the six months ended June 30, 2013, the Company sold two crew boats, one mini-supply vessel, one supply vessel, one specialty offshore support vessel, three liftboats, sixteen dry-cargo barges, eight liquid tank barges, two U.S.-flag harbor tugs and other property and equipment for net proceeds of $132.4 million ($125.1 million in cash, $0.2 million in vendor credits and $7.1 million in seller financing) and gains of $15.2 million, of which $12.9 million were recognized currently and $2.3 million were deferred. In addition, the Company recognized previously deferred gains of $1.4 million. The specialty offshore support vessel and the supply vessel were sold to certain of the Company's Offshore Marine Services' joint ventures for $60.5 million (see Note 6). During the six months ended June 30, 2013, the Company also received $0.3 million in deposits on future equipment sales.

The Company has sold certain equipment to 50% or less owned companies, entered into vessel sale-leaseback transactions with finance companies, and provided seller financing on sales of its equipment to third parties and its 50% or less owned companies. A portion of the gains realized from these transactions were deferred and recorded in deferred gains and other liabilities in the accompanying condensed consolidated balance sheets. Deferred gain activity related to these transactions for the six months ended June 30 was as follows (in thousands):



	2013			2012
Balance at beginning of period	$	111,514		$	117,192
Deferred gains arising from asset sales	2,289			7,280
Amortization of deferred gains included in operating expenses as a reduction to rental expense	(5,192		)	(9,526		)
Amortization of deferred gains included in gains on asset dispositions and impairments, net	(1,431		)	(2,039		)
Balance at end of period	$	107,180		$	112,907

Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

As of June 30, 2013, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:



Offshore support vessels (excluding wind farm utility)	20
Wind farm utility vessels	10
Inland river dry cargo and deck barges	20
Inland river liquid tank barges	25
Inland river towboats	25
U.S.-flag product tankers	25
RORO⁽¹⁾vessels	20
Harbor tugs	25
Ocean liquid tank barges	25
Terminal and manufacturing facilities	20

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(1)	Roll on/Roll off ("RORO").

The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to fair value. Generally, fair value is determined using valuation techniques, such as expected discounted cash flows or appraisals, as appropriate. During the six months ended June 30, 2013, the Company recognized impairment charges of $3.0 million related to two of Shipping Services' harbor tugs while under construction, which were sold and leased back upon their completion.