PROPERTY AND EQUIPMENT AND LEASES:

Property and Equipment

Major classifications of property and equipment as of December 31, 2014 and 2013 were as follows (dollars in thousands):



	2014
	Gross Book Value		Accumulated Depreciation			Net Book Value
Property:
Land and land improvements	$	582,383	$	—		$	582,383
Buildings and leasehold improvements	126,860		(22,719		)	104,141
Bridges/tunnels/culverts	636,605		(60,771		)	575,834
Track property	2,350,647		(357,969		)	1,992,678
Total property	3,696,495		(441,459		)	3,255,036
Equipment:
Computer equipment	13,997		(8,352		)	5,645
Locomotives and railcars	531,948		(145,073		)	386,875
Vehicles and mobile equipment	54,419		(31,209		)	23,210
Signals and crossing equipment	65,581		(22,408		)	43,173
Track equipment	27,073		(9,019		)	18,054
Other equipment	29,532		(16,017		)	13,515
Total equipment	722,550		(232,078		)	490,472
Construction-in-process	42,974		—			42,974
Total property and equipment	$	4,462,019	$	(673,537	)	$	3,788,482



	2013
	Gross Book Value		Accumulated Depreciation			Net Book Value
Property:
Land and land improvements	$	547,163	$	—		$	547,163
Buildings and leasehold improvements	123,295		(19,834		)	103,461
Bridges/tunnels/culverts	556,108		(46,162		)	509,946
Track property	2,078,084		(297,207		)	1,780,877
Total property	3,304,650		(363,203		)	2,941,447
Equipment:
Computer equipment	11,307		(5,967		)	5,340
Locomotives and railcars	493,977		(118,544		)	375,433
Vehicles and mobile equipment	42,127		(27,112		)	15,015
Signals and crossing equipment	63,208		(16,746		)	46,462
Track equipment	19,205		(7,277		)	11,928
Other equipment	28,524		(13,800		)	14,724
Total equipment	658,348		(189,446		)	468,902
Construction-in-process	30,395		—			30,395
Total property and equipment	$	3,993,393	$	(552,649	)	$	3,440,744

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, 2014 and 2013 were as follows (dollars in thousands):



	2014		2013
Property:
Buildings and leasehold improvements	$	1,312	$	92
Bridges/tunnels/culverts	4,082		937
Track property	24,078		21,912
Equipment:
Locomotives and railcars	11,170		6,657
Other equipment	2,332		797
Total construction-in-process	$	42,974	$	30,395

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 railcars typically include rebuilding of car body structures and/or converting to an alternative type of railcar.

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 totaled $135.0 million, $119.2 million and $66.6 million, respectively.

The Company's credit agreement is collateralized by a substantial portion of the Company's real and personal property assets of its domestic subsidiaries that have guaranteed the United States obligations under the credit agreement and a substantial portion of the personal property assets of its foreign subsidiaries that have guaranteed the foreign obligations under the credit agreement. See Note 9, Long-Term Debt, for more information on the Company's credit agreement.

Leases

The Company enters into operating leases for railcars, locomotives and other equipment as well as real property. The Company also enters into agreements with other railroads and other third parties to operate over certain sections of their track and pays a per car fee to use the track or makes an annual lease payment. The costs associated with operating leases are expensed as incurred and are not included in the property and equipment table above.

The number of railcars and locomotives leased by the Company as of December 31, 2014 and 2013 was as follows:

The Company's operating lease expense for equipment and real property leases and expense for the use of other railroad and other third parties' track for the years ended December 31, 2014, 2013 and 2012 was as follows (2012 excludes lease expense related to RailAmerica's equipment and real property leases and trackage rights expense included in equity earnings for the period from October 1, 2012 to December 28, 2012) (dollars in thousands):



	2014		2013		2012
Equipment	$	29,462	$	32,050	$	13,386
Real property	$	8,361	$	8,062	$	5,055
Trackage rights	$	53,783	$	50,911	$	28,250

The Company is a party to several lease agreements with Class I carriers and other third parties to operate over various rail lines in North America, with varied expirations. 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 as well as the trackage rights expense in the table above. Revenues from railroads that the Company leases from Class I carriers and other third parties collectively accounted for approximately 9% of the Company's 2014 total operating revenues. Leases from Class I railroads and other third parties that are subject to expiration in each of the next 10 years represent less than 3% of the Company's annual revenues in the year of expiration based on the Company's operating revenues for the year ended December 31, 2014.

The following is a summary of future minimum lease payments under capital leases and operating leases as of December 31, 2014 (dollars in thousands):



	Capital		Operating		Total
2015	$	1,996	$	30,570	$	32,566
2016	1,612		23,124		24,736
2017	8,295		18,520		26,815
2018	24		14,912		14,936
2019	25		11,325		11,350
Thereafter	143		121,469		121,612
Total minimum payments	$	12,095	$	219,920	$	232,015

December 31,

Locomotives