2019

Impairments and (gain) loss on assets held for sale

Fabrication

Shipyard

Services

Corporate

Total

Impairments of AHFS

$

7,842

$

324

$

—

$

—

$

8,166

Impairments of assets removed from AHFS

1,060

—

—

—

1,060

Impairments of Jennings Yard assets

—

4,578

—

—

4,578

Impairments of Lake Charles Yard assets

—

2,998

—

—

2,998

Impairments of inventory and other assets

118

—

282

21

421

(Gain) loss on AHFS and other

(369

)

20

—

654

305

Total

$

8,651

$

7,920

$

282

$

675

$

17,528

•

Impairments of AHFS – At December 31, 2019, our Fabrication Division assets held for sale totaled $9.0 million and primarily consisted of three 660-ton crawler cranes, two plate bending roll machines and a deck barge.  The deck barge was classified as held for sale during the fourth quarter 2019.  The crawler cranes and plate bending roll machines were classified as held for sale for all of 2019. During the fourth quarter 2019, we revised our estimates of fair value for the crawler cranes based on updated broker opinions of value and revised our estimates of fair value for the plate bending roll machines based on third party indications of value.  Our revised estimates of fair value for these assets were lower than our previous estimates due to current market conditions, the limited interest received in the assets during the last twelve months, the specific use nature of the assets (and the size of the assets in the case of the cranes), and our expectation of a shorter marketing period due to concerns regarding future deterioration of the assets. As a result of the aforementioned, during 2019 we recorded impairments of $7.8 million for the crawler cranes and plate bending roll machines. During 2019, we also recorded impairments of $0.3 million associated with a drydock in our Shipyard Division that was held-for-sale and sold during the fourth quarter 2019 for proceeds of $0.6 million.

•

Impairments of assets removed from AHFS – During the fourth quarter 2019, we determined that we no longer intended to sell a deck barge (separate from the aforementioned deck barge) and panel line equipment that was previously classified as held for sale, and the assets were reclassified as property, plant and equipment.  In connection therewith, the assets were recorded at the lower of their fair value or net book value as if they had been depreciated while being classified as held for sale, which resulted impairments of $1.1 million during 2019.

•

Impairments of Jennings Yard assets – During the fourth quarter 2019, we reassessed our previous estimates of the future cashflows expected to be generated by our leased Jennings Yard.  Our revised forecast gave consideration to recent operating losses experienced on our harbor tug projects in the Jennings Yard and our intention to close the facility upon completion of the harbor tug projects, which is forecast to occur during the third quarter 2020.  Based on our revised forecast, we determined that the net book value of the Jennings Yard assets exceeded our estimates of future cashflows, which indicated that the assets were impaired.  Our Jennings Yard assets primarily consist of a lease asset, non-moveable facility improvements and certain moveable equipment. We based our impairments of the lease asset and non-moveable facility improvements on our current expectation to abandon the facility upon completion of the harbor tugs, and we based our impairments of the moveable equipment on broker opinions of value for such assets.  As a result of the aforementioned, we fully impaired the lease asset and non-moveable facility improvements and partially impaired the moveable equipment, which resulted in impairments of $4.6 million during 2019. We do not believe the anticipated closure of the Jennings Yard will impact our ability to operate our Shipyard Division and it does not qualify for discontinued operations presentation as we will continue to operate our Shipyard Division from our Lake Charles Yard and Houma Yards. See Note 4 for further discussion of our Jennings Yard lease.

•

Impairments Lake Charles Yard assets - During the fourth quarter 2019, we reassessed our previous estimates of the future cashflows expected to be generated by our leased Lake Charles Yard.  Our revised forecast gave consideration to previous and current under-utilization of the facility, our expectations of future work for the facility and the required future capital investment in the facility and its assets. Based on our revised forecast, we determined that the net book value of the Lake Charles Yard assets exceeded our estimates of future cashflows, which indicated that the assets were impaired.  Our Lake Charles Yard assets primarily consist of a lease asset, non-moveable facility improvements, three drydocks and certain moveable equipment.  We based our impairments of the lease asset and non-moveable facility improvements on our anticipated cashflows from such assets, and we based our impairments of the drydocks and moveable equipment on broker opinions of value for such assets.  As a result of the aforementioned, we fully impaired the non-moveable facility improvements and partially impaired the lease asset, drydocks and moveable equipment, which resulted in impairments of $3.0 million during 2019. See Note 4 for further discussion of our Lake Charles Yard lease.

•

Impairments of inventory and other assets - During the fourth quarter 2019, we abandoned certain inventory and fixed assets and recorded impairments of such assets.  We determined our impairments of the assets based on scrap value estimates of fair value. As a result of the aforementioned, we recorded partial impairments of the inventory and fixed assets, which resulted in impairments of $0.4 million during 2019.

2018

Impairments and (gain) loss on assets held for sale

Fabrication

Shipyard

Services

Corporate

Total

Gain on sale of South Texas Properties, net

$

(7,724

)

$

—

$

—

$

—

$

(7,724

)

Impairments of AHFS

1,387

964

—

—

2,351

Impairments of inventory and other assets

2,012

—

82

—

2,094

Gain from insurance proceeds

(3,571

)

—

—

—

(3,571

)

Total

$

(7,896

)

$

964

$

82

$

—

$

(6,850

)

•

South Texas Properties and Gain on Sale of South Texas Properties, net - During 2017, we classified our fabrication yards and certain associated equipment in Ingleside, Texas ("Texas South Yard") and Aransas Pass, Texas ("Texas North Yard") (collectively, "South Texas Properties") as held for sale.  During 2018, we completed the sale of portions of the South Texas Properties, which consisted of the following:

-

The sale of certain equipment prior to the sale of the South Texas Properties for proceeds of $1.3 million, and a loss of $0.3 million;

-

The sale of our Texas South Yard for $55.0 million, less selling costs of $1.2 million, for total net proceeds received during 2018 of $53.8 million and a gain of $3.9 million; and

-

The sale of our Texas North Yard for $28.0 million, less selling costs of $0.6 million, for total net proceeds of $27.4 million during 2018 and a gain of $4.1 million.

•

Impairments of AHFS - During 2018, we recorded impairments of $1.4 million for certain equipment previously associated with the South Texas Properties prior to their sale, but not sold in connection with the Texas South Yard or Texas North Yard transactions. In addition, during 2018 we recorded an impairment of $1.0 million for a drydock that was held for sale by our Shipyard Division at December 31, 2017.  Our impairments were based on our best estimate of the fair value of the assets.

•

Impairments of inventory and other assets – During 2018, we recorded impairments of $2.0 million for inventory in our Fabrication Division that was partially impaired during 2017 (see below) based on third party indications of value for the inventory, which reduced the carrying value of the inventory to its scrap value of $0.2 million.

•

Gain from insurance proceeds - During 2017, buildings and equipment located at our South Texas Properties were damaged by Hurricane Harvey, and in connection therewith, during 2017 we received $6.0 million of insurance proceeds as an initial payment from our insurance carriers.  During 2018, we agreed to a global settlement with our insurance carriers for total insurance payments of $15.4 million (inclusive of the $6.0 million received during 2017), of which $9.4 million was received during 2018. We allocated the insurance recoveries as follows:

-

$1.3 million, recorded during 2017, which offset clean-up and repair related costs incurred directly related to the damage as a result of Hurricane Harvey, resulting in no net gain or loss,

-

$1.5 million recorded during 2017, which offset impairments of two buildings which were determined to be a total loss as a result of Hurricane Harvey, resulting in no net gain or loss;

-

$9.0 million, recorded during 2018, which offset impairments of property and equipment, primarily at our Texas North Yard, resulting in no net gain or loss. The impairments were based upon our best estimate of the decline in fair value of the asset group as a result of Hurricane Harvey; and

-

$3.6 million gain recorded during 2018.

2017

Impairments and (gain) loss on assets held for sale

Fabrication

Shipyard

Services

Corporate

Total

Impairments of AHFS

$

—

$

989

$

—

$

—

$

989

Impairments of inventory and other assets

6,683

—

—

—

6,683

Other

—

259

—

—

259

Total

$

6,683

$

1,248

$

—

$

—

$

7,931

•

Impairments of AHFS – During 2017, we recorded impairments of $1.0 million associated with three drydocks in Shipyard Division. Two of the drydocks were sold during 2017 (further discussed below), and the remaining drydock was held for sale at December 31, 2017 and sold during 2019.

•

Impairments of inventory and other assets - During 2017, we recorded an impairment of $3.7 million related to inventory in our Fabrication Division that was originally received in connection with a settlement with a vendor in 2014. The inventory consisted of specialty and high-grade copper nickel and steel materials as well as lower-grade carbon steel pipe and valve fittings. During 2017, we performed our annual inspection of this inventory and determined that the high-grade stainless steel and copper nickel components remained in good condition; however; much of the lower-grade carbon steel pipe and valve fittings had deteriorated significantly due to exposure to the elements. As a result, we reduced the carrying value of the lower-grade inventory to scrap value and reduced the carrying value of the high-grade inventory to its estimated net realizable value based on its good condition. In addition, we recorded an impairment of $3.0 million related to inventory in our Fabrication Division that was originally received in connection with a settlement with a customer in 2013 related to a deepwater construction project. The inventory consisted of specialty piping and valves for which demand for the inventory was negatively impacted by a lack of offshore construction activity. As a result, we recorded an impairment to reduce the carrying value of the inventory to scrap value.

•

Other – During 2017, we sold two drydocks in our Shipyard Division for proceeds of $2.0 million and a loss of $0.3 million.

December 31,

Assets

2019

2018

Machinery and equipment

$

17,618

$

27,104

Accumulated depreciation

(8,612

)

(8,169

)

Total assets held for sale

$

9,006

$

18,935