Amtrak 2013 Annual Report Download - page 60

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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1411-1359280 21
4. Basis of Presentation and Summary of Significant Accounting Policies (continued)
For the fiscal years 2013 and 2012, Amtrak recognized a net increase of $6.5 million and a net
decrease of $10.4 million, respectively, in “Fuel, power, and utilities” expense in the
Consolidated Statements of Operations associated with derivative fuel contracts. As of
September 30, 2013 and 2012, Amtrak had derivative fuel contracts with a fair value of
$3.3 million and $10.4 million, respectively, included in “Other current assets” in the
Consolidated Balance Sheets.
On November 2, 2012, in conjunction with the PEDFA Garage Bond reissuance (see Note 7),
Amtrak entered into an interest rate swap arrangement. Amtrak does not designate the derivative
contract as a hedging instrument. Mark-to-market gains and losses are recorded in current
earnings in the Consolidated Statements of Operations. As of September 30, 2013, the fair value
of the PEDFA Garage Bond interest rate swap derivative contract was $1.0 million, which is
included in “Deferred charges, deposits, and other” in the Consolidated Balance Sheets (see
Note 9). This amount was included in “Interest expense” in the fiscal year 2013 Consolidated
Statement of Operations.
Property, Equipment, and Depreciation
Except as described below, property and equipment owned by the Company are carried at cost
and depreciated using the group method of depreciation (“group method”) in which a single
composite depreciation rate is applied to the gross investment in a particular class of property or
equipment, despite differences in the service life or salvage value of individual property units
within the same class. This excludes computer equipment and software, which are stated at cost
and are individually depreciated on a straight-line basis over their estimated useful lives, which
are generally 5 to 10 years. Properties held under capital leases and leasehold improvements are
depreciated over the shorter of their estimated useful lives or their respective lease terms. Land is
carried at cost.
For assets depreciated under the group method, upon normal sale or retirement, the cost less the
net salvage value is charged to “Accumulated depreciation” in the Consolidated Balance Sheets
and no gain or loss is recognized. Significant premature retirements of depreciable property and
the disposal of land are recorded as gains and losses at time of occurrence. There were no
significant premature retirements of depreciable property or disposals of land for which gains or
losses were recorded in fiscal years 2013 and 2012.