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):



	2017		2016		2015
Attributable to Consolidated Assets
Rail North America - certain railcars in flammable service	$	—	$	29.8	$	—
Portfolio Management - marine assets to be sold	—		6.7		30.8
Other	8.6		2.0		3.1
Total	$	8.6	$	38.5	$	33.9

Attributable to Affiliate Investments
Rail North America	$	3.0	$	—	$	—
Portfolio Management	$	—	$	—	$	19.0

In 2015, the Pipeline and Hazardous Materials Safety Administration of the U.S. 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 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 was 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 in flammable service into nonflammable service diminished as a substantial oversupply of tank cars developed to serve these alternative markets. We expected those conditions to continue and potentially worsen. As a result of those changed expectations, we believed 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 projected 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 reflected 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 was 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 was not material to subsequent financial results.

In 2015, we made the 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. As a result of this decision, we recorded impairment losses of $6.7 million and $30.8 million in 2016 and 2015 related to certain of the consolidated marine assets. Initial impairment losses recorded in 2015 were determined by adjusting the assets classified as held for sale to the lower of their respective carrying amounts or fair value less costs to sell. Subsequent impairment losses in 2016 were recorded, based on final disposition results and revised estimates of expected net sales proceeds for assets that remained classified as held for sale at December 31, 2016. Additionally, Portfolio Management 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, which was completed in 2015. As of December 31, 2017, we completed the sales of all of the planned marine assets that were previously classified as held for sale. In 2017, 2016 and 2015 disposition gains of $1.8 million, $5.2 million, and $21.6 million were realized from the sale of these marine assets.

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

In 2017, an impairment loss of $3.0 million attributable to affiliate investments was related to our investment in Adler Funding LLC, resulting from a decline in the value of certain railcars in the fleet.

In the consolidated statements of comprehensive income, impairment losses related to consolidated assets were included in net (loss) gains on asset dispositions, and impairment losses related to affiliate investments were recorded in share of affiliates' earnings.

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



	2017		2016
Rail North America	$	4.5	$	43.9
Portfolio Management	—		45.6
Total	$	4.5	$	89.5

All assets classified as held for sale at December 31, 2017 are expected to be sold in 2018.