Quarterly report pursuant to Section 13 or 15(d)

ASSETS HELD FOR SALE

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ASSETS HELD FOR SALE
 3 Months Ended
Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]  
ASSETS HELD FOR SALE ASSETS HELD FOR SALE
Our South Texas Assets:

On February 23, 2017, our Board of Directors approved management's recommendation to place our South Texas facilities located in Aransas Pass and Ingleside, Texas, up for sale. Our Texas South Yard in Ingleside, Texas, is located on the northwest intersection of the U.S. Intracoastal Waterway and the Corpus Christi Ship Channel. The 45-foot deep Corpus Christi Ship Channel provides direct and unrestricted access to the Gulf of Mexico. Our Texas North Yard in Aransas Pass, Texas, is located along the U.S. Intracoastal Waterway and is approximately three miles north of the Corpus Christi Ship Channel. These properties are currently underutilized and represent excess capacity within our Fabrication division. Our net book value of property, plant and equipment for these assets was $105.0 million at March 31, 2017. We measure and record assets held for sale at the lower of their carrying amount or fair value less cost to sell. We have compared the net book value of this asset group to the fair value less cost to sell based upon appraisals obtained which did not result in impairment.

We are working to wind down all fabrication activities at these locations and re-allocate remaining backlog and workforce to our Houma Fabrication Yard. As a result of the decision to place our South Texas facilities up for sale and the underutilization currently being experienced, we expect to incur costs associated with maintaining these facilities through their sale that will not be recoverable. These costs include insurance, general maintenance of the properties in its current state, property taxes and retained employees which will be expensed as incurred. We do not expect the sale of these assets to impact our ability to service our deepwater customers or operate our Fabrication division. Our South Texas assets held for sale do not qualify for discontinued operations presentation.

Prospect Shipyard Assets:

We lease a 35-acre complex 26 miles from the Gulf of Mexico near Houma, Louisiana. We have notified the owner of our intention to terminate the lease on mutually beneficial terms to facilitate an orderly disposal of assets at the facility. We have classified the machinery and equipment remaining at this shipyard as assets held for sale at February 6, 2017. Our net book value of property, plant and equipment for these assets was $5.5 million at March 31, 2017. We measure and record assets held for sale at the lower of their carrying amount or fair value less cost to sell. We have compared the net book value of this asset group to estimates of fair value less cost to sell and recorded an impairment of $389,000 for the three months ended March 31, 2017. We do not expect the sale of these assets to impact our ability to service our Shipyards customers. The future anticipated costs expected to be incurred prior to the termination of this lease are not significant to our consolidated financial statements. Our Prospect Shipyard assets held for sale do not qualify for discontinued operations presentation.

A summary of the significant assets included in assets held for sale at our South Texas facilities and our Prospect Shipyard is as follows (in thousands):
Assets
South Texas Fabrication Yards
 
Prospect Shipyard
 
Consolidated
 
Land
$
5,492

 
$
—

 
$
5,492

 
Buildings and improvements
117,582

 
—

 
117,582

 
Machinery and equipment
100,605

 
6,131

 
106,736

 
Furniture and fixtures
867

 
82

 
949

 
Vehicles
800

 
—

 
800

 
Other
252

 
—

 
252

 
Less: accumulated depreciation
(120,560
)
 
(706
)
 
(121,266
)
 
Total assets held for sale
$
105,038

 
$
5,507

 
$
110,545