Equipment Acquisitions, Dispositions and Depreciation and Impairment Policies

3 Months Ended

Mar. 31, 2012

Equipment Acquisitions, Dispositions And Depreciation And Impairment Policies [Abstract]

Equipment Acquisitions, Dispositions and Depreciation and Impairment Policies

EQUIPMENT ACQUISITIONS, DISPOSITIONS AND DEPRECIATION AND IMPAIRMENT POLICIES

During the three months ended March 31, 2012, capital expenditures were $119.6 million. Equipment deliveries during the period included one offshore support vessel, one wind farm utility vessel, three inland river dry cargo barges and seven helicopters.

During the three months ended March 31, 2012, the Company sold one offshore support vessel, one helicopter, one inland river towboat and other equipment for net proceeds of $5.8 million and gains of $4.5 million, all of which was recognized currently.

From time to time, the Company enters into vessel sale-leaseback transactions with finance companies, provides seller financing on sales of its vessels to third parties and sells vessels, helicopters and barges to its 50% or less owned companies. A portion of the gains realized from these transactions may be 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 three months ended March 31 was as follows (in thousands):



	2012			2011
Balance at beginning of period	$	119,570		$	131,836
Amortization of deferred gains included in operating expenses as a reduction to rental expense	(4,925		)	(5,596		)
Amortization of deferred gains included in gains on asset dispositions and impairments, net	(1,064		)	(1,074		)
Balance at end of period	$	113,581		$	125,166

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 March 31, 2012, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:



Offshore support vessels	20
Helicopters⁽¹⁾	15
Inland river dry cargo and deck barges	20
Inland river liquid tank barges	25
Inland river towboats	25
U.S.-flag tankers	25
RORO vessels	20
Harbor and offshore tugs	25
Ocean liquid tank barges	25

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(1)

Effective July 1, 2011, the Company changed its estimated useful life and salvage value for helicopters from 12 to 15 years and 30% to 40%, respectively, due to improvements in new aircraft models that continue to increase their long-term value and make them viable for operation over a longer period of time. For the three months ended March 31, 2012, the change in estimate increased operating income by $3.9 million, net income by $2.6 million, and basic and diluted earnings per share by $0.12.

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 three months ended March 31, 2012, impairment charges recognized by the Company related to long-lived assets held for use were not material.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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