The carrying value of Superior's property, plant, and equipment includes $67.8 million of leased assets as at December 31, 2012 (December 31, 2011 - $74.2 million).
On October 20, 2012, a kerosene leak was discovered in the bottom of a storage tank at U.S. Refined Fuels Marcy terminal location. The leak was investigated and contained by the environmental group. U.S. Refined Fuels then notified the Department of Environmental Conservation (DEC) which performed an independent review of the leak and other tanks at this location. On December 27, 2012, the DEC issued a notice of violation based on their inspections and subsequent to discussions between management and the DEC, a consent order was issued to U.S. refined fuels on February 4, 2013. The consent order identified that the secondary containment system and storage tanks are not in compliance with DEC design requirements and need to be rebuilt to specific standards by September 1, 2013 in order to remain operational. Management is assessing the implications of the consent order on the future operations of the facility and potential alternatives to completing the repair work required. This event is not expected to have an impact on the operations of U.S. Refined Fuels or operating results going forward. Management is assessing the impact of additional remediation costs although they are not expected to be material.
Due to the leak and receipt of the consent order, management has performed a detailed impairment review of the Marcy terminal to assess whether the carrying value of all the storage tanks does not exceed their recoverable amount. The recoverable amount of the assets was based on management's estimate of the fair value less costs to sell. Based on a detailed review by management, the fair value less costs to sell of the storage tanks was lower than the carrying value. An impairment charge of $4.7 million was recorded against net earnings along with a $4.7 million reduction in the carrying value of the impaired storage tanks.
Depreciation per cost category:
Three months ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011----------------------------------------------------------------------------Cost of sales 11.5 11.4 44.9 44.9Selling, distribution and administrative costs 10.7 14.3 42.4 44.3----------------------------------------------------------------------------Total 22.2 25.7 87.3 89.2----------------------------------------------------------------------------
The carrying amount of Superior's property, plant, and equipment includes $67.8 million of leased assets as at December 31, 2012 (December 31, 2011 - $74.2 million).
8. Provisions
---------------------------------------------------------------------------- Decommissioning Environmental Costs Expenditures Total----------------------------------------------------------------------------Balance at December 31, 2011 15.5 1.7 17.2 Utilization - (0.3) (0.3) Unwinding of discount 0.4 - 0.4 Impact of change in discount rate 0.4 - 0.4 Net foreign currency exchange difference (0.1) - (0.1)--------------------------------------------------------------------------------------------------------------------------------------------------------Balance at December 31, 2012 16.2 1.4 17.6----------------------------------------------------------------------------
