Asset Impairments and Assets Held for Sale

We review our operating assets annually, or whenever indicators of impairment maybe present. The following table summarizes the components of asset impairments for the years ending December 31 (in millions):



	2016		2015		2014
Attributable to Consolidated Assets
Rail North America - railcars in flammable service	$	29.8	$	—	$	—
Portfolio Management - marine assets	6.7		30.8		—
Other	2.0		3.1		1.3
	$	38.5	$	33.9	$	1.3

Attributable to Affiliate Investments
Portfolio Management	$	—	$	19.0	$	—

In 2015, the Pipeline and Hazardous Materials Safety Administration of the US Department of Transportation (“PHMSA”) and Transport Canada ("TC") each issued rules that established new design standards for tank cars utilized in flammable liquids service in North America. In addition to setting standards for newly built tank cars, the regulations established guidelines for modifying existing tank cars utilized in certain flammable liquids service and deadlines for modifying or removing those cars from service. The deadlines range from November 2016 to May 2029, depending on the type of car and the nature of commodity carried. The PHMSA rule was subsequently modified by legislation adopted by Congress, and in August 2016, PHMSA amended its earlier rule to incorporate the legislative mandates into the final rule, which included expanded retrofit requirements and a shorter phase out period for the older tank cars.

During 2016, excess railcar supply, muted demand for certain railcar types, and increased railroad efficiency have combined to put pressure on lease rates for most car types. Within the flammable tank car market, the challenge of keeping existing tank cars in service has been compounded by the increased availability of newer cars with enhanced designs, including those that comply with the new regulations, to serve this market. Further, our expectations of redeploying certain tank cars currently in flammable service into nonflammable service has diminished as a substantial oversupply of tank cars has developed to serve these alternative markets. We expect these conditions to continue and potentially worsen. As a result of these changed expectations, we believe indicators of impairment were present for certain tank cars impacted by the new regulations, and a comprehensive impairment analysis was completed.

While all railcars subject to the new regulations were reviewed, approximately 2,400 railcars with a carrying value of approximately $90 million were determined to be most vulnerable based on their age, configuration, and carrying values. For purposes of this review, we modeled multiple scenarios of net cash flows using a range of assumptions, including revised estimated useful lives for these railcars. Based on this analysis, we concluded that our carrying values exceeded our estimates of undiscounted cash flows, indicating an impairment for this group of railcars. The market for this group of railcars is fairly illiquid, given the circumstances noted above. Accordingly, the fair value of this railcar group was estimated based on discounting our estimated cash flows using a discount rate we believe reflects the applicable return for typical buyers and sellers of these types of assets. Concurrently with this analysis, we entered into an agreement to sell approximately 400 of these railcars, for total proceeds consistent with our valuations. As a result, we recorded impairment losses of $29.8 million related to these tank cars, of which $5.8 million is attributable to assets held for sale. The total carrying value of assets held for sale at Rail North America was $43.9 million at December 31, 2016, including the impaired tank cars that were written down to their expected net sales proceeds. Lastly, we shortened the depreciable lives for these tank cars consistent with our revised expectations, beginning January 1, 2017; however, the impact of adjusting the useful lives for these assets will not be material to future financial results.

The assumptions we relied upon for purposes of this impairment analysis were based on our judgment of current and future market conditions. Actual results could differ from our estimates, and we may incur future impairment losses with respect to this railcar group, particularly if we sell or scrap the railcars sooner than anticipated.

In 2015, we recorded impairment losses of $30.8 million at Portfolio Management related to certain marine assets. This was the result of management's decision to exit the majority of our marine investments within the Portfolio Management segment, including six chemical parcel tankers (the "Nordic Vessels"), certain inland marine vessels, and our 50% interest in the Cardinal Marine joint venture. In 2016 and 2015 disposition gains of $5.2 million and $21.6 million were realized from the sale of certain of these marine assets. During 2016, $6.7 million of additional impairment losses were recorded, reflective of final disposition results and revised estimates of expected net sales proceeds for assets that remain classified as held for sale with a carrying value of $45.6 million at December 31, 2016.

Other impairment losses in each year were primarily attributable to railcars we have retired early due to excess damage or functional obsolescence and designated for scrap.

These impairment losses were included in net (loss) gains on asset dispositions in the consolidated statement of comprehensive income.

Additionally, as part of the decision to exit the marine investments, Portfolio Management also recorded impairment losses of $19.0 million in 2015 related to our 50% interest in the Cardinal Marine joint venture, based on expected proceeds from the final sale of this investment. This impairment loss was included in the share of affiliates' earnings in the consolidated statement of comprehensive income. This investment was sold in 2015.

The following table summarizes the components of assets held for sale at December 31 (in millions):



	2016		2015
Rail North America	$	43.9	$	2.6
Portfolio Management	45.6		103.4
	$	89.5	$	106.0

All assets classified as held for sale are expected to be sold in 2017.