Property And Equipment

9 Months Ended

Sep. 30, 2011


9.		*Property and Equipment*


		The components of property and equipment, at cost, and the related accumulated depreciation are as follows:


	September 30			December 31
	2011			2010
	(In thousands)
Land	$	6,322		$	6,322
Facilities and equipment		238,361			153,695
Marine vessels		448,947			285,113
Construction in progress		315,090			531,765

Total property and equipment		1,008,720			976,895
Less: Accumulated depreciation		(183,183	)		(192,176	)

Property and equipment, net	$	825,537		$	784,719

Expenditures for property and equipment and items that substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred. We capitalized $4.2 million and $4.5 million of interest costs for the three months ended September 30, 2011 and 2010, respectively. We capitalized $12.6 million and $13.4 million of interest costs for the nine months ended September 30, 2011 and 2010, respectively. Except for major construction vessels that are depreciated on the units-of-production ("UOP") method over estimated vessel operating days, depreciation is provided utilizing the straight-line method over the estimated useful lives of the assets. The UOP method is based on vessel utilization days and more closely correlates depreciation expense to vessel revenue. In addition, the UOP method provides for a minimum depreciation floor in periods with nominal vessel use. In general, if we applied only a straight-line depreciation method instead of the UOP method, less depreciation expense would be recorded in periods of high utilization and revenues, and more depreciation expense would be recorded in periods of low vessel utilization and revenues.

- 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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