Valuation Of Long-Lived Assets And Goodwill	6 Months Ended
Jun. 30, 2011
Valuation Of Long-Lived Assets And Goodwill
Valuation Of Long-Lived Assets And Goodwill	Note 6 — Valuation of Long-Lived Assets and Goodwill *Long-Lived Assets* As of December 31, 2010, the Company performed an impairment review of its long-lived assets due to the continued global economic softness and its impact on the shipping industry. The Company concluded that events and circumstances occurred during the fourth quarter of 2010 that suggested a possible impairment of long-lived assets. These indicators included significant declines in freight and charter rates and asset values toward the end of 2010. As a result, the Company performed a fleet level impairment analysis of its long-lived assets, which compared undiscounted cash flows with the carrying values of the Company's long-lived assets to determine if the assets were impaired. Management made assumptions used in estimating undiscounted cash flows, which included utilization rates, revenues, capital expenditures, operating expenses and the weighted remaining useful life of the fleet of vessels. These assumptions were based on historical trends, as well as future expectations that are consistent with the plans and forecasts used by management to conduct its business. Management's impairment analysis as of December 31, 2010 indicated that future undiscounted operating cash flows at the fleet level, including vessels to be delivered during the first half of 2011, were below the vessel's carrying amount, and accordingly an impairment charge of $201.7 million was recognized in the consolidated statement of operations. The assumptions and estimates we used in our impairment analysis are highly subjective and could be negatively affected by future declines in freight or charter rates, decreases in the market value of vessels or other factors which could require the Company to record additional material impairment charges in future periods. Due to the continuing global economic softness and its impact on the shipping industry, the Company updated its qualitative impairment analysis of long-lived assets at June 30, 2011, and concluded that there was no indication of further impairment of long-lived assets. *Goodwill* The provisions of Financial Accounting Standards Board ("FASB") ASC Topic 350 – Intangibles – Goodwill and Other require an annual impairment test of goodwill or more frequently if there are indicators of impairment present. The first of two steps require the Company to compare the reporting unit's carrying value of net assets to its fair value. If the fair value exceeds the carrying value, goodwill is not considered impaired and the Company is not required to perform further testing. In December 2010, the FASB issued Update No. 2010-28, which requires that Step 2 of the goodwill impairment test be performed if qualitative factors exist. Step 2 calculates the implied fair value of goodwill by deducting the fair value of the reporting unit's tangible and intangible assets, excluding goodwill, from the fair value of the reporting unit. The implied fair value of goodwill determined in Step 2 is then compared to the carrying value of goodwill and if the implied fair value is less than the carrying value, an impairment charge is recognized equal to the difference. The reporting unit consists of service companies that at March 31, 2011 had recognized goodwill of $8.4 million, yet possessed an aggregate negative carrying value. Management performed a goodwill impairment test at that date due to the existence of qualitative factors indicating that it was more likely than not that goodwill had been impaired. These qualitative factors included: (a) a significant adverse change in business climate as indicated by a dramatic decline in Baltic Dry Index (a measure of the demand for shipping capacity versus the supply of dry bulk carriers), (b) impairment recorded at December 31, 2010 on vessel values, and (c) a continuing decline in the Company's stock price and market capitalization. Determining the reporting unit's fair value involves the use of significant judgments and assumptions and was estimated using income and market approaches through the application of a discounted cash flow methodology. The Company concluded that goodwill of $8.4 million was impaired and, as required by Update No. 2010-28, recorded an impairment charge as a cumulative-effect adjustment, which reduced retained earnings at December 31, 2010.

Valuation Of Long-Lived Assets And Goodwill

6 Months Ended

Jun. 30, 2011

Valuation Of Long-Lived Assets And Goodwill

Valuation Of Long-Lived Assets And Goodwill

Note 6 — Valuation of Long-Lived Assets and Goodwill

Long-Lived Assets

As of December 31, 2010, the Company performed an impairment review of its long-lived assets due to the continued global economic softness and its impact on the shipping industry. The Company concluded that events and circumstances occurred during the fourth quarter of 2010 that suggested a possible impairment of long-lived assets. These indicators included significant declines in freight and charter rates and asset values toward the end of 2010. As a result, the Company performed a fleet level impairment analysis of its long-lived assets, which compared undiscounted cash flows with the carrying values of the Company's long-lived assets to determine if the assets were impaired. Management made assumptions used in estimating undiscounted cash flows, which included utilization rates, revenues, capital expenditures, operating expenses and the weighted remaining useful life of the fleet of vessels. These assumptions were based on historical trends, as well as future expectations that are consistent with the plans and forecasts used by management to conduct its business. Management's impairment analysis as of December 31, 2010 indicated that future undiscounted operating cash flows at the fleet level, including vessels to be delivered during the first half of 2011, were below the vessel's carrying amount, and accordingly an impairment charge of $201.7 million was recognized in the consolidated statement of operations. The assumptions and estimates we used in our impairment analysis are highly subjective and could be negatively affected by future declines in freight or charter rates, decreases in the market value of vessels or other factors which could require the Company to record additional material impairment charges in future periods.

Due to the continuing global economic softness and its impact on the shipping industry, the Company updated its qualitative impairment analysis of long-lived assets at June 30, 2011, and concluded that there was no indication of further impairment of long-lived assets.

Goodwill

The provisions of Financial Accounting Standards Board ("FASB") ASC Topic 350 – Intangibles – Goodwill and Other require an annual impairment test of goodwill or more frequently if there are indicators of impairment present. The first of two steps require the Company to compare the reporting unit's carrying value of net assets to its fair value. If the fair value exceeds the carrying value, goodwill is not considered impaired and the Company is not required to perform further testing.

In December 2010, the FASB issued Update No. 2010-28, which requires that Step 2 of the goodwill impairment test be performed if qualitative factors exist. Step 2 calculates the implied fair value of goodwill by deducting the fair value of the reporting unit's tangible and intangible assets, excluding goodwill, from the fair value of the reporting unit. The implied fair value of goodwill determined in Step 2 is then compared to the carrying value of goodwill and if the implied fair value is less than the carrying value, an impairment charge is recognized equal to the difference.

The reporting unit consists of service companies that at March 31, 2011 had recognized goodwill of $8.4 million, yet possessed an aggregate negative carrying value. Management performed a goodwill impairment test at that date due to the existence of qualitative factors indicating that it was more likely than not that goodwill had been impaired. These qualitative factors included: (a) a significant adverse change in business climate as indicated by a dramatic decline in Baltic Dry Index (a measure of the demand for shipping capacity versus the supply of dry bulk carriers), (b) impairment recorded at December 31, 2010 on vessel values, and (c) a continuing decline in the Company's stock price and market capitalization. Determining the reporting unit's fair value involves the use of significant judgments and assumptions and was estimated using income and market approaches through the application of a discounted cash flow methodology. The Company concluded that goodwill of $8.4 million was impaired and, as required by Update No. 2010-28, recorded an impairment charge as a cumulative-effect adjustment, which reduced retained earnings at December 31, 2010.