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ASSETS HELD FOR SALE | 3 Months Ended
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Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract] |
ASSETS HELD FOR SALE | ASSETS HELD FOR SALE South Texas Properties: We measure and record assets held for sale at the lower of their carrying amount or fair value less costs to sell. 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. This property represents excess capacity within our Fabrication Division. On April 20, 2018, we closed the sale of our Texas South Yard for a sale price of $55 million, less selling costs of $1.5 million. We received approximately $52.7 million at closing which was in addition to the $750,000 of earnest money previously received on January 3, 2018, related to the option to purchase the Texas South Yard. We plan to use the net proceeds to rebuild liquidity, to support upcoming projects, continue investing in our newly created EPC Division and for other general corporate purposes. We expect to recognize a gain of approximately $3.8 million from the sale during the second quarter of 2018; however, we do not anticipate any material cash tax liability given our NOLs. Subsequent to March 31, 2018, and in connection with the sale, our cash increased approximately $52.7 million and our assets held for sale decreased approximately $49.9 million. As of the date of this Report, our Texas North Yard and machinery and equipment remains held for sale. We have and will continue to incur costs associated with maintaining these assets until their sale. These costs include insurance, general maintenance of the assets in their 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 operate our Fabrication Division. Our South Texas Properties do not qualify for discontinued operations presentation as we continue to operate our Fabrication Division at other facilities. On August 25, 2017, our South Texas Properties were impacted by Hurricane Harvey, which made landfall as a Category 4 hurricane. As a result, we suffered damages to buildings and equipment at our South Texas Properties. We maintain coverage on these assets up to a maximum of $25 million, subject to a 3% deductible with a minimum deductible of $500,000. Our estimate of the claim that we believe is recoverable through our property and casualty insurance is approximately $17.8 million; however, final settlement with our insurance carrier could be less and such difference could be material. We have not accrued for any insurance recovery at March 31, 2018, in excess of insurance claim payments received to date. To date, our insurance underwriters have made advance insurance claim payments of $8.2 million in the aggregate, including $2.2 million that was received during the three months ended March 31, 2018. We have applied the $8.2 million received to date as follows:
• | Clean-up and repair related costs of $1.6 million that we have incurred since August 25, 2017, through March 31, 2018;
• | A building at our Texas South Yard and a building at our Texas North Yard were determined to be total losses. As a result, we impaired the remaining net book value of $1.5 million related to these buildings and recorded a corresponding insurance recovery offsetting the impairment during the fourth quarter of 2017; and
• | During the first quarter of 2018, we determined that we do not expect to repair the damaged buildings and equipment at the Texas North Yard. Accordingly, we impaired our Texas North Yard by $5.1 million, which represents our best estimate of the decline in the fair value of the property and equipment as a result of our decision to not repair the facility and recorded a corresponding insurance recovery offsetting the impairment.
As we work with our insurance agents and adjusters to finalize our estimate of the damage, it is our belief that final settlement of our claim will most likely be based upon a global settlement. Our final assessment of the damages incurred to our South Texas Properties as well as the amount of insurance proceeds we actually receive could be less than our estimate of the above claim when it is ultimately settled and such difference could be material. We recorded an impairment of $750,000 during the three months ended March 31, 2018, related to a piece of equipment at our Texas North Yard that we intend to sell at auction. This piece of equipment was not damaged by Hurricane Harvey. The impairment was calculated as management's estimated net proceeds from the sale less its net book value. Based upon our assessment of the damages and the estimated fair value of the assets held for sale management believes that there is no basis to record additional impairment at this time. Shipyard Division Assets: Our Shipyard Division assets held for sale at March 31, 2018, primarily consist of a 2,500-ton drydock located at our Houma Shipyard. During the first quarter of 2017, management placed the assets at our former Prospect Shipyard for sale, and we recorded an impairment of $389,000 related to those assets based upon their estimated sale price. During the second quarter of 2017, we sold two drydocks for proceeds of $2 million and recorded a loss on sale of $259,000. During the fourth quarter of 2017, we recorded an additional impairment of $600,000 as we terminated the former Prospect Shipyard lease. Our net book value of property, plant and equipment for these assets was $1.9 million at March 31, 2018. Our shipyard assets held for sale do not qualify for discontinued operations presentation. A summary of the significant assets included in assets held for sale as of March 31, 2018, at our South Texas Properties and the Shipyard Division assets is as follows (in thousands):
| South Texas Properties |  |  |  |
Assets | Texas South Yard(1) |  | Texas North Yard |  | Shipyard Division Assets |  | Consolidated
Land | $ | 3,335 |  |  | $ | 2,157 |  |  | $ | — |  |  | $ | 5,492 |
Buildings and improvements | 90,370 |  |  | 30,692 |  |  | — |  |  | 121,062 |
Machinery and equipment | — |  |  | 66,305 |  |  | 2,187 |  |  | 68,492 |
Less: accumulated depreciation | (43,808 | ) |  | (52,554 | ) |  | (298 | ) |  | (96,660 | )
Total assets held for sale | $ | 49,897 |  |  | $ | 46,600 |  |  | $ | 1,889 |  |  | $ | 98,386 |
______________ (1) We closed on the sale of these assets on April 20, 2018, for net proceeds of $53.5 million.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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