(3) Discontinued Operations

As discussed in Note 1, railcar assets of $284.8 million and $449.7 million were reclassified as held for sale as of September 30, 2019 and December 31, 2018, respectively, and the related operations of the rail business as discontinued operations in the accompanying unaudited consolidated statements of operations and cash flows.

The Company’s held for sale railcar assets as of the dates indicated are made up as follows (in thousands):


	September 30,		December 31,
	2019		2018
Rental equipment	$	315,868	$	448,466
Other assets		1,878		1,264
Loss on classification as held for sale		(7,323)		-
Impairment of rental equipment		(25,632)		-
Assets held for sale	$	284,791	$	449,730

Other assets and liabilities of the rail business, including accounts receivable, accrued expenses and other liabilities, deferred tax liabilities and debt, have not been classified as held for sale in the consolidated balance sheets as of September 30, 2019 and December 31, 2018 as they will not be sold by the Company. The rail debt will be repaid upon the sale of the railcar assets.

During the three months ended June 30, 2019, a loss of $7.3 million was recorded when the assets of the railcar business were reclassified as held for sale. During the three months ended September 30, 2019, the Company incurred an additional impairment charge of $25.6 million to reduce the book value of its railcar portfolio to its estimated fair value. To assist the Company in its assessment of fair value, a third-party desk top appraisal was carried out on the railcar fleet using the market value approach. The railcars were classified within Level 3 of the fair value hierarchy.

The following table summarizes the components of net loss from discontinued operations in the accompanying unaudited consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Revenue
Rail lease revenue	$	5,871	$	8,759	$	20,214	$	26,982

Operating expenses
Depreciation of rental equipment		-		3,537		5,248		10,505
Storage, handling and other expenses		3,453		1,008		5,813		4,424
(Gain) loss on sale of rental equipment		(757)		8		(9,418)		(9)
Administrative expenses		620		974		2,977		2,825
Total operating expenses		3,316		5,527		4,620		17,745

Operating income		2,555		3,232		15,594		9,237

Interest expense		2,975		3,972		10,104		11,364
(Loss) income before income taxes		(420)		(740)		5,490		(2,127)

Loss on classification as held for sale and subsequent impairment		25,632		-		32,955		-
Loss from discontinued operations before income taxes		(26,052)		(740)		(27,465)		(2,127)
Income tax benefit		(6,140)		(175)		(6,482)		(502)
Net loss from discontinued operations	$	(19,912)	$	(565)	$	(20,983)	$	(1,625)