content_image/64502.jpg
## VALUATION OF LONG-LIVED ASSETS 

The Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets, when events or circumstances warrant such a r eview. The Company recognizes impairment losses for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows expected to be generated by the asset are not sufficient to recover the carrying amount of the asset. 

## CASH AND CASH EQUIVALENTS 

Cash and cash equivalents consist of cash in banks and investments readily convertible into cash which mature within three months from the date of purchase. 

## INVENTORIES AND SUPPLIES 

Inventories and supplies are primarily replacement par ts and supplies held for use in our drilling operations. 

Inventories and supplies ar valued at the lower of cost (moving average or actual) or market value. 

## DRILLING REVENUES 

Contract drilling revenues ar comprised primarily of daywork drilling contracts for which the related revenues and expenses are recognized as work progresses. For cer tain contracts, the Company receives lump-sum payments for the mobilization of rigs and other drilling equipment. Revenues earned, net of direct costs incurred for the mobilization, are deferred and recognized over the term of the related drilling contract. Costs incurred to relocate rigs and other drilling equipment to ar eas in which a contract has not been secured are expensed as incurred. The Company recognizes r eimbursements r eceived for out-of-pocket expenses incurred as revenues and accounts for out-of-pocket expenses as direct costs. 

## RENT REVENUES 

The Company enters into leases with tenants in its rental pr operties consisting primarily of retail and multi-tenant warehouse space. The lease terms of tenants occupying space in the retail centers and warehouse buildings range from one to ten years. Minimum rents are recognized on a straight-line basis over the term of the related leases. 

Overage and percentage rents ar based on tenants’ sales volume. The Company’s rent revenues are as follows: 

<img src='content_image/64502.jpg'>

