Property and Equipment and Leases Property and Equipment and Leases

12 Months Ended

Dec. 31, 2011

PROPERTY AND EQUIPMENT AND LEASES [Abstract]

Property, Plant and Equipment Disclosure

PROPERTY AND EQUIPMENT AND LEASES:

Property and Equipment

Major classifications of property and equipment as of December 31, 2011 and 2010 were as follows (dollars in thousands):

	2011			2010
Property:
Land and land improvements	$	147,176		$	129,541
Buildings and leasehold improvements	60,362			55,721
Bridges/tunnels/culverts	224,227			192,006
Track property	1,148,331			1,031,640
Total property	1,580,096			1,408,908
Equipment:
Computer equipment	5,381			5,072
Locomotives and rail cars	265,167			225,598
Vehicles and mobile equipment	31,460			28,132
Signals and crossing equipment	27,813			23,090
Track equipment	9,868			9,395
Other equipment	20,206			13,723
Total equipment	359,895			305,010
Construction-in-process	68,188			33,540
Total property and equipment	2,008,179			1,747,458
Less: accumulated depreciation	(364,590		)	(303,281		)
Property and equipment, net	$	1,643,589		$	1,444,177

Construction-in-process consisted primarily of costs associated with equipment purchases and track and equipment upgrades. Major classifications of construction-in-process as of December 31, 2011 and 2010 were as follows (dollars in thousands):

	2011		2010
Property:
Buildings and leasehold improvements	$	19	$	259
Track property	4,158		15,743
Equipment:
Locomotives and rail cars	62,340		14,121
Bridges/tunnels/culverts	841		2,445
Other equipment	830		972
Total construction-in-process	$	68,188	$	33,540

Track property upgrades typically involve the substantial replacement of rail, ties and/or other track material. Locomotive upgrades generally consist of major mechanical enhancements to the Company’s existing locomotive fleet. Upgrades to the Company’s rail cars typically include rebuilding of car body structures and/or converting to an alternative type of freight car.

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 totaled $59.7 million, $44.6 million and $41.3 million, respectively.

Leases

The Company enters into operating leases for rail cars, locomotives and other equipment. As of December 31, 2011, the Company leased 10,315 rail cars and 21 locomotives. Related operating lease expense for the years ended December 31, 2011, 2010 and 2009 was $19.0 million, $13.1 million and $12.6 million, respectively. The Company leases certain real property, which resulted in operating lease expense for the years ended December 31, 2011, 2010 and 2009 of $4.6 million, $5.0 million and $4.6 million, respectively. The costs associated with operating leases are expensed as incurred and are not included in the property and equipment table above.

The Company is a party to several lease agreements with Class I carriers to operate over various rail lines in North America. Certain of these lease agreements have annual lease payments, which are included in the operating lease section of the schedule of future minimum lease payments shown below. Under certain other of these leases, no payments to the lessors are required as long as certain operating conditions are met. No material payments were required under these lease arrangements in 2011.

The following is a summary of future minimum lease payments under capital leases and operating leases as of December 31, 2011 (dollars in thousands):

	Capital		Operating		Total
2012	$	22	$	19,900	$	19,922
2013	23		15,850		15,873
2014	24		12,013		12,037
2015	24		8,922		8,946
2016	26		8,049		8,075
Thereafter	244		103,910		104,154
Total minimum payments	$	363	$	168,644	$	169,007