Property, Plant and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property, plant and equipment on the Consolidated Balance Sheets is summarized as follows:



	December 31,
(Thousands)	2012			2011
Land	$	8,797		$	9,123
Buildings	127,691			114,090
Machinery and equipment	570,001			485,593
Software	31,640			29,277
Construction in progress	15,389			86,149
Allowances for depreciation	(503,560		)	(476,443		)
Subtotal	249,956			247,789
Capital leases	10,912			10,898
Allowances for amortization	(1,440		)	(837		)
Subtotal	9,472			10,061
Mineral resources	4,979			5,029
Mine development	10,377			12,567
Allowances for amortization and depletion	(2,243		)	(12,048		)
Subtotal	13,113			5,548
Property, plant and equipment — net	$	272,542		$	263,398

The Company has a Title III contract with the Department of Defense (DoD) for the design and development of a primary beryllium production facility. Construction of the facility would not have been economically feasible without assistance from the government. The cost of the project, which included the equipment and building and project design, administrative and other general costs that were not capitalizable as fixed assets, totaled approximately $104.9 million. The Company capitalized $14.7 million of fixed assets and $10.0 million of capital leases as a portion of its cost share for the project. Reimbursements received by the Company from the DoD included $63.5 million for its share of the cost of equipment that was purchased by the Company and installed in the facility. The cost paid by the Company was recorded in property, plant and equipment and the reimbursement from the government was recorded as unearned income on the Consolidated Balance Sheets. The unearned income liability will be reduced and credited to income ratably with the depreciation expense recorded over the useful life the equipment.

The equipment was placed in service during 2012. Depreciation expense on the portion of the equipment whose cost was reimbursed by the DoD was $2.3 million in 2012. Accordingly, unearned income was reduced by $2.3 million and credited to cost of sales on the Consolidated Statement of Income in 2012, offsetting the impact of the depreciation expense on the associated equipment on the Company's cost of sales and gross margin.

Depreciation expense, including amortization for assets recorded under capital lease, was $31.0 million in 2012, $37.5 million in 2011 and $29.0 million in 2010. The 2012 expense of $31.0 million is net of the $2.3 million reduction from the unearned income liability. Depreciation, depletion and amortization as shown on the Consolidated Statement of Cash Flows is also net of the $2.3 million reduction in the unearned income liability in 2012.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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