NEWPARK RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we collectively refer to as “we,” ~~“our”~~“our,” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. Our fiscal year end is December 31, our second quarter represents the three-month period ended June 30, and our first half represents the six-month period ended June 30. The results of operations for the second quarter and first half of ~~2018~~2019 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise noted, all currency amounts are stated in U.S. dollars.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of June 30, ~~2018,~~2019, our results of operations for the second quarter and first half of ~~2018~~2019 and ~~2017,~~2018, and our cash flows for the first half of ~~2018~~2019 and ~~2017.~~2018. All adjustments are of a normal recurring nature. Our balance sheet at December 31, ~~2017~~2018 is derived from the audited consolidated financial statements at that date.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

New Accounting Pronouncements

Standards Adopted in ~~2018~~2019

~~Revenue from Contracts with Customers.~~Leases. In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) amended the guidance for revenue from contracts with customers. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.We adopted this new guidance as of January 1, 2018 using the modified retrospective transition method, and recorded a net reduction of $2.3 million to opening retained earnings to reflect the cumulative effect of adoption for contracts not completed as of December 31, 2017. Results for reporting periods beginning after December 31, 2017 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance.

The adoption of this new guidance primarily affected the timing of revenue recognition for drilling fluid additive products provided to customers in the delivery of an integrated fluid system in our U.S. drilling fluids business. Under previous guidance, we recognized revenue for these products upon shipment of materials and passage of title, with a reserve for estimated product returns. Under the new guidance, we recognize revenue for these products when they are utilized, which generally occurs at the time of consumption by the customer. There was no material impact on reported revenues for the second quarter or first half of 2018 as a result of applying the new revenue recognition guidance.

The adoption of this guidance also requires additional disclosures for disaggregated revenues, which are included in Note 11. The following provides a summary of our significant accounting policies for revenue recognition under the new guidance for periods beginning after December 31, 2017.

~~Revenue Recognition - Fluids Systems.~~Revenues for drilling fluid additive products and engineering services, when provided to customers in the delivery of an integrated fluid system, are recognized as product revenues when utilized by the customer. Revenues for formulated liquid systems are recognized as product revenues when utilized or lost downhole while drilling. Revenues for equipment rentals and other services provided to customers that are ancillary to the fluid system product delivery are recognized in rental and services revenues when the services are performed. For direct sales of drilling fluid products, revenues are recognized when control passes to the customer, which is generally upon shipment of materials.

~~Revenue Recognition - Mats and Integrated Services.~~ Revenues for rentals and services are generated from both fixed-price and unit-priced contracts, which are generally short-term in duration. The activities under these contracts include the installation and rental of matting systems for a period of time and services such as site planning and preparation, pit design, access road construction, environmental protection, fluids and spill storage/containment, erosion control, site restoration services and construction and drilling waste management. Rental revenues are recognized over the rental term and services revenues are

recognized when the specified services are performed. Revenues from any subsequent extensions to the rental agreements are recognized over the extension period. Revenues from the sale of mats are recognized when control passes to the customer, which is upon shipment or delivery, depending on the terms of the underlying sales contract.

For both segments, the amount of revenue we recognize for products sold and services performed reflects the consideration to which we expect to be entitled in exchange for such goods or services, which generally reflects the amount we have the right to invoice based on agreed upon unit rates. While billing requirements vary, many of our customer contracts require that billings occur periodically or at the completion of specified activities, even though our performance and right to consideration occurs throughout the contract. As such, we recognize revenue as performance is completed in the amount to which we have the right to invoice. We do not disclose the value of our unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue for the amount to which we have the right to invoice for products sold and services performed.

~~Shipping and handling costs are reflected in cost of revenues, and all reimbursements by customers of shipping and handling costs are included in revenues.~~

~~Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory.~~ In October 2016, the FASB amended the guidance related to the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than the previous requirement to defer recognition of current and deferred income taxes for an intra-entity asset transfer until the asset had been sold to an outside party. This update does not change U.S. GAAP for the pre-tax effects of an intra-entity asset transfer or for an intra-entity transfer of inventory. We adopted this new guidance as of January 1, 2018 using the modified retrospective transition method, and recorded a net reduction of $4.5 million to opening retained earnings to reflect the cumulative effect of adoption for the current and deferred income tax consequences of an intra-entity sale of mats from the U.S. to the U.K. completed prior to 2018.

The cumulative effect of the changes made to our consolidated balance sheet for the adoption of the new guidance for revenue from contracts with customers and the income tax consequences of intra-entity transfers of assets other than inventory were as follows:

(In thousands) Balance at December 31, 2017 Impact of Adoption of New Revenue Recognition Guidance Impact of Adoption of New Intra-Entity Transfers of Assets Guidance Balance at January 1, 2018
Receivables, net 265,866
(8,441 ) —
257,425
Inventories 165,336
5,483
—
170,819
Deferred tax liabilities 31,580
(679 ) 4,485
35,386
Retained earnings 123,375
(2,279 ) (4,485 ) 116,611

~~Statement of Cash Flows.~~ In August 2016, the FASB issued new guidance that clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update provides guidance on eight specific cash flow issues. We adopted this new guidance as of January 1, 2018. The adoption of this new guidance had no impact on our historical financial statements or related disclosures.

~~Standards Not Yet Adopted~~

~~Leases.~~ ~~In February 2016, the FASB~~ amended the guidance related to the accounting for leases. The new guidance provides principles for the recognition, measurement, presentation, and disclosure of leases and requires lessees to recognize both assets and liabilities arising from ~~financing~~finance and operating leases. The classification as either a ~~financing~~finance or operating lease will determine whether lease expense is recognized based on an effective interest method basis or on a straight-line basis over the term of the lease, respectively. ~~This~~

We adopted this new guidance ~~is effective for us in the first quarter of 2019, and will be applied retrospectively~~ as of ~~the date of adoption, although the FASB is currently considering allowing~~January 1, 2019 using the modified retrospective transition ~~method. As part~~method, and recorded approximately $28 million of operating lease assets and liabilities as of January 1, 2019, with no cumulative effect adjustment to retained earnings. The new guidance had no impact on our ~~assessment work to date, we have formed an implementation work team, conducted a preliminary analysis~~consolidated statements of operations or cash flows. Results for reporting periods beginning after December 31, 2018 are presented under the new guidance, while prior period amounts were not adjusted and continue to ~~review contracts~~be reported in ~~our lease portfolio. Based on our current lease portfolio, we anticipate~~accordance with previous guidance.

As permitted under the transition guidance within the new ~~guidance will require us~~standard, we elected to ~~reflect additional assets~~carry forward the historical lease identification and ~~liabilities on our~~classification for existing leases upon adoption. We have also made an accounting policy election to not recognize leases with an initial term of 12 months or less in the consolidated balance ~~sheet; however, we have not yet completed an estimation of such amount and we are still evaluating the overall impact of the new guidance on our consolidated financial statements and related~~sheets. See Note 8 for additional required disclosures.

Standards Not Yet Adopted

Credit Losses. In June 2016, the FASB issued new guidance which requires financial assets measured at amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new guidance requires an entity to estimate its lifetime “expected credit loss” for such assets at inception which will generally result in the earlier recognition of allowances for losses. This guidance is effective for us in the first quarter of 2020 with early adoption permitted, and will be applied using a modified retrospective transition method through a cumulative-effect adjustment, if any, to retained earnings as of the date of adoption. WeAs part of our assessment work to date, we have formed an implementation work team and conducted a preliminary analysis of the new guidance. Based on our current financial assets measured at amortized cost basis, we anticipate the new guidance will require us to reflect additional credit loss expense; however, we have not yet completed an estimation of such amount and we are ~~currently~~still evaluating the overall impact of the new guidance on our consolidated financial statements and related disclosures.

~~Note 2 – Business Combinations~~

In November 2017, we acquired certain assets and assumed certain liabilities of Well Service Group, Inc. and Utility Access Solutions, Inc. (together, “WSG”). The purchase price for this acquisition was approximately $77.4 million, net of cash acquired, which included $45.0 million of cash consideration and the issuance of 3,361,367 shares of our common equity valued at $32.4 million. The results of operations of WSG are reported within the Mats and Integrated Services segment for the periods subsequent to the date of the acquisition.

The WSG transaction has been recorded using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The acquisition resulted in the preliminary recognition of $27.0 million in other intangible assets consisting primarily of customer relationships, technology and tradename. All of the other intangibles are finite-lived intangible assets that are preliminarily expected to be amortized over periods of 10 to 15 years with a weighted average amortization period of approximately 13 years. The excess of the total consideration was recorded as goodwill, which is deductible for tax purposes, and includes the value of the assembled workforce. The fair values of the identifiable assets acquired and liabilities assumed were based on the company's estimates and assumptions using various market, income and cost valuation approaches, which are classified within level 3 of the fair value hierarchy. While the initial purchase price allocation has been completed, the allocation of the purchase price is subject to change for a period of one year following the closing date of the acquisition.

The following table summarizes the preliminary amounts recognized for the assets acquired and liabilities assumed as of the November 13, 2017 acquisition date, updated for changes to the purchase price allocation during the first half of 2018.

(In thousands)
Receivables $ 14,527
Inventories 3,207
Other current assets 114
Property, plant and equipment 16,002
Intangible assets 26,970
Total assets acquired 60,820

Current liabilities 7,133
Total liabilities assumed 7,133

Net assets purchased 53,687
Goodwill 23,750
Total purchase consideration $ 77,437

Cash conveyed at closing in 2017 $ 44,750
Equity issued at closing in 2017 32,438
Cash conveyed at working capital settlement in 2018 249
Total purchase consideration $ 77,437

Results of operations and pro-forma combined results of operations for the acquired business have not been presented as the effect of this acquisition is not material to our consolidated financial statements.

Note 32 – Earnings Per Share

The following table presents the reconciliation of the numerator and denominator for calculating net income per share:



	Second Quarter				First Half
(In thousands, except per share data)	2019		2018		2019		2018
Numerator
Net income - basic and diluted	$	4,306	$	10,846	$	5,588	$	18,068

Denominator
Weighted average common shares outstanding - basic	89,806		89,703		89,958		89,400
Dilutive effect of stock options and restricted stock awards	1,900		2,823		2,082		2,730
Dilutive effect of 2021 Convertible Notes	—		1,265		—		636
Weighted average common shares outstanding - diluted	91,706		93,791		92,040		92,766

Net income per common share
Basic	$	0.05	$	0.12	$	0.06	$	0.20
Diluted	$	0.05	$	0.12	$	0.06	$	0.19

Second Quarter First Half
(In thousands, except per share data) 2018 2017 2018 2017
Numerator
Net income - basic and diluted $ 10,846
$ 1,632
$ 18,068
$ 649

Denominator
Weighted average common shares outstanding - basic 89,703
84,653
89,400
84,404
Dilutive effect of stock options and restricted stock awards 2,823
2,662
2,730
2,695
Dilutive effect of 2021 Convertible Notes 1,265
—
636
—
Weighted average common shares outstanding - diluted 93,791
87,315
92,766
87,099

Income per common share
Basic $ 0.12
$ 0.02
$ 0.20
$ 0.01
Diluted $ 0.12
$ 0.02
$ 0.19
$ 0.01

We excluded the following weighted-average potential shares from the calculations of diluted net income per share during the applicable periods because their inclusion would have been anti-dilutive:



	Second Quarter		First Half
(In thousands)	2019	2018	2019	2018
Stock options and restricted stock awards	1,707	1,173	1,710	1,412

Second Quarter First Half
(In thousands) 2018 2017 2018 2017
Stock options and restricted stock awards 1,173
2,464
1,412
2,381
2017 Convertible Notes —
7,569
—
7,569
2021 Convertible Notes —
—
—
—

~~The unsecured convertible senior notes due 2017 (~~“~~2017 Convertible Notes~~”) ~~were repaid upon maturity in October 2017.~~ The 2021 Convertible Notes (as defined in Note 7) only impact the calculation of diluted net income per share in periods that the average price of our common stock, as calculated in accordance with the terms of the indenture governing the 2021 Convertible Notes, exceeds the conversion price of $9.33 per share. We have the option to pay cash, issue shares of common stock, or any combination thereof for the aggregate amount due upon conversion of the 2021 Convertible Notes as further described in Note 7. If converted, we currently intend to settle the principal amount of the notes in cash and as a result, only the amounts payable in excess of the principal amount of the notes, if any, are assumed to be settled with shares of common stock for purposes of computing diluted net income per share.

Note 3 – Repurchase Program

In November 2018, our Board of Directors authorized changes to our existing securities repurchase program. The authorization increased the amount under the repurchase program to $100 million, available for repurchases of any combination of our common stock and our 2021 Convertible Notes. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility (as defined in Note 7). As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934.

During the first half of 2019, we repurchased an aggregate of 2,047,014 shares of our common stock under our Board authorized repurchase program for a total cost of $15.5 million. There were no shares repurchased under the program during the first half of 2018. As of June 30, 2019, we had $84.5 million of authorization remaining under the program.

Note 4 -– Stock-Based and Other ~~Long Term~~Long-Term Incentive Compensation

During the second quarter of ~~2018,~~2019, our stockholders approved an amendment to the 2015 Employee Equity Incentive Plan (“2015 Plan”) to increase the number of shares authorized for issuance under the 2015 Plan from 9,800,000 to 12,300,000 shares and remove the fungible share counting provision.

During the second quarter of 2019, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees, consisting of ~~917,901~~1,135,216 shares of restricted stock units which will primarily vest in equal installments over a three-year period. At June 30, ~~2018, there~~2019, 3,229,820 shares remained ~~959,889 shares~~ available for award under the 2015 ~~Employee Equity Incentive Plan (“2015 Plan”).~~Plan. In addition, non-employee directors received a grant of ~~85,578~~104,900 shares of restricted stock awards which will vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant date. The weighted average grant-date fair value was ~~$10.58~~$7.34 per share for both the restricted stock units and ~~$10.75 per share for the~~ restricted stock awards.

Also during the second quarter of ~~2018,~~2019, the Compensation Committee approved the issuance of cash-settled awards to certain executive officers, ~~including $1.3 million~~consisting of ~~time-based cash awards and~~ a target amount of ~~$1.3~~$2.3 million of performance-based cash awards. The ~~time-based cash awards vest in equal installments over a three-year period and the~~ performance-based cash awards will be settled based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year period. The performance period began June 1, ~~2018~~2019 and ends May 31, ~~2021,~~2022, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, ~~2021~~2022 and the cash payout for each executive ranging from 0% to ~~150%~~200% of target. The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statements of operations.

In February 2019, the Compensation Committee modified our retirement policy applicable to cash and equity awards granted to include our Chief Executive Officer and those officers who report to our Chief Executive Officer, whom were previously excluded from the retirement policy. In addition, the Compensation Committee also modified the retirement policy for certain vested stock options that remain outstanding to extend the exercise period available following the qualifying retirement of eligible employees. As a result of these modifications, we recognized a pretax charge of approximately $4.0 million in the first quarter of 2019. This charge primarily reflects the acceleration of expense, as well as the incremental value associated with modifications to extend the exercise period of outstanding options, for previously-granted awards for retirement eligible executive officers.

Note 5 – Receivables

Receivables consisted of the following:



(In thousands)	June 30, 2019			December 31, 2018
Trade receivables:
Gross trade receivables	$	242,009		$	248,176
Allowance for doubtful accounts	(9,473		)	(10,034		)
Net trade receivables	232,536			238,142
Income tax receivables	9,620			9,027
Other receivables	7,041			7,225
Total receivables, net	$	249,197		$	254,394

(In thousands) June 30, 2018 December 31, 2017
Trade receivables:
Gross trade receivables $ 244,003
$ 256,851
Allowance for doubtful accounts (9,460 ) (9,457 )
Net trade receivables 234,543
247,394
Income tax receivables 7,261
6,905
Other receivables 10,350
11,567
Total receivables, net $ 252,154
$ 265,866

Other receivables included ~~$9.3~~$6.0 million and ~~$10.8~~$6.3 million for value added, goods and service taxes related to foreign jurisdictions as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. ~~As described in Note 1, the adoption of the new revenue recognition guidance resulted in an $8.4 million reduction in gross trade receivables as of January 1, 2018.~~

Note 6 – Inventories

Inventories consisted of the following:



(In thousands)	June 30, 2019		December 31, 2018
Raw materials:
Fluids systems	$	144,699	$	148,737
Mats and integrated services	6,380		1,485
Total raw materials	151,079		150,222
Blended fluids systems components	34,515		38,088
Finished goods - mats	7,870		8,586
Total inventories	$	193,464	$	196,896

(In thousands) June 30, 2018 December 31, 2017
Raw materials:
Drilling fluids $ 144,674
$ 123,022
Mats 1,780
1,419
Total raw materials 146,454
124,441
Blended drilling fluids components 36,280
30,495
Finished goods - mats 6,837
10,400
Total inventory $ 189,571
$ 165,336

Raw materials ~~consist~~for the Fluids Systems segment consists primarily of barite, chemicals, and other additives that are consumed in the production of our ~~drilling fluid~~fluids systems. Raw materials for the Mats and Integrated Services segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats, as well as materials that are consumed in providing spill containment and other services to our customers. Our blended ~~drilling~~ fluids systems components consist of base ~~drilling~~ fluid systems that have been either mixed internally at our ~~mixing plants~~blending facilities or purchased from third-party vendors. These base ~~drilling~~ fluid systems require raw materials to be added, as needed to meet specified customer requirements. ~~As described in Note 1, the adoption of the new revenue recognition guidance resulted in a $5.5 million increase in inventories as of January 1, 2018.~~

Note 7 – Financing Arrangements and Fair Value of Financial Instruments

Financing arrangements consisted of the following:



	June 30, 2019									December 31, 2018
(In thousands)	Principal Amount			Unamortized Discount and Debt Issuance Costs			Total Debt			Principal Amount			Unamortized Discount and Debt Issuance Costs			Total Debt
2021 Convertible Notes	$	100,000		$	(15,097	)	$	84,903		$	100,000		$	(17,752	)	$	82,248
ABL Facility	70,800			—			70,800			76,300			—			76,300
Other debt	6,609			—			6,609			3,199			—			3,199
Total debt	177,409			(15,097		)	162,312			179,499			(17,752		)	161,747
Less: Current portion	(5,657		)	—			(5,657		)	(2,522		)	—			(2,522		)
Long-term debt	$	171,752		$	(15,097	)	$	156,655		$	176,977		$	(17,752	)	$	159,225

June 30, 2018 December 31, 2017
(In thousands) Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt
2021 Convertible Notes $ 100,000
$ (20,264 ) $ 79,736
$ 100,000
$ (22,643 ) $ 77,357
ABL Facility 113,900
—
113,900
81,600
—
81,600
Other debt 3,584
—
3,584
1,518
—
1,518
Total debt 217,484
(20,264 ) 197,220
183,118
(22,643 ) 160,475
Less: current portion (3,584 ) —
(3,584 ) (1,518 ) —
(1,518 )
Long-term debt $ 213,900
$ (20,264 ) $ 193,636
$ 181,600
$ (22,643 ) $ 158,957

2021 Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“2021 Convertible Notes”) that mature on December 1, 2021, unless earlier converted by the holders pursuant to the terms of the notes. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.

Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:

during any calendar quarter commencing after the calendar quarter ending on March 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (regardless of whether consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes in effect on each applicable trading day;

during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or

upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.

On or after June 1, 2021 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of whether any of the foregoing conditions have been satisfied. As of July ~~26, 2018,~~29, 2019, the notes were not convertible.

The notes are convertible into, at our election, cash, shares of common stock, or a combination of both, subject to satisfaction of specified conditions and during specified periods, as described above. If converted, we currently intend to pay cash for the principal amount of the notes converted. The conversion rate is ~~initially~~ 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date.

In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of June 30, ~~2018,~~2019, the carrying amount of the debt component was ~~$79.7~~$84.9 million, which is net of the unamortized debt discount and issuance costs of ~~$18.2~~$13.5 million and ~~$2.0~~$1.6 million, respectively. Including the impact of the debt discount and related deferred debt issuance costs, the effective interest rate on the notes is approximately 11.3%.

Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement which replaced our previous credit agreement. In October 2017, we entered into an Amended and Restated Credit Agreement and in March 2019, we entered into a First Amendment to Amended and Restated Credit Agreement (as amended, the ~~"ABL Facility"~~“ABL Facility”) ~~which amended~~. The March 2019 amendment increased the amount available for borrowings, reduced applicable borrowing rates, and ~~restated~~extended the ~~prior asset-based revolving credit agreement.~~term. The ABL Facility provides financing of up to ~~$150.0~~$200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of ~~$225.0~~$275.0 million, subject to certain conditions. As of June 30, ~~2018,~~2019, our total ~~borrowing base~~ availability under the ABL Facility was ~~$150.0~~$165.7 million, of which ~~$113.9~~$70.8 million was drawn, resulting in remaining availability of ~~$36.1~~$94.9 million.

The ABL Facility terminates ~~on October 17, 2022;~~in March 2024; however, the ABL Facility has a springing maturity date that will accelerate the maturity of the ABL Facility to September 1, 2021 if, prior to such date, the 2021 Convertible Notes have not ~~either~~ been repurchased, redeemed, ~~converted~~refinanced, exchanged or otherwise satisfied in full or we have not ~~provided~~escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficient ~~funds to repay~~for the future settlement of the 2021 Convertible Notes ~~in full on~~at their ~~maturity date. For this purpose, funds may be provided in cash to an escrow agent or a combination of cash to an escrow~~

~~agent and the assignment of a portion of availability under the ABL Facility.~~maturity. The ABL Facility requires compliance with a minimum fixed charge coverage ratio and minimum unused availability of $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the 2021 Convertible Notes.

Borrowing availability under the ABL Facility is calculated based on eligible accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation ~~shall~~ also ~~include~~includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio and a minimum level of operating income for the Mats and Integrated Services segment.

Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate plus an applicable margin based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. orand (c) LIBOR, subject to a floor of zero, plus 100 basis ~~points.~~points, plus, in each case, an applicable margin per annum. The applicable margin ranges from ~~175~~150 to ~~275~~200 basis points for LIBOR borrowings, and 75 50

to ~~175~~100 basis points for base rate borrowings, based on the ~~ratio of debt to~~ consolidated ~~EBITDA~~fixed charge coverage ratio as defined in the ABL Facility. As of June 30, ~~2018,~~2019, the applicable margin for borrowings under our ABL Facility was ~~200~~150 basis points with respect to LIBOR borrowings and ~~100~~50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was ~~4.1%~~4.3% at June 30, ~~2018.~~2019. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the ~~ratio~~level of ~~debt to consolidated EBITDA,~~outstanding borrowings, as defined in the ABL Facility. ~~The~~As of June 30, 2019, the applicable commitment fee ~~as of June 30, 2018~~ was 37.5 basis points.

The ABL Facility is a senior secured obligation, secured by first liens on all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires compliance with a fixed charge coverage ratio if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.

Other Debt. Our foreign subsidiaries in Italy, India, and Canada maintain local credit arrangements consisting primarily of lines of credit which are renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs. ~~Advances under these short-term credit arrangements are typically based on a percentage of the subsidiary’s accounts receivable or firm contracts with certain customers.~~ We had ~~$0.5~~$1.3 million and ~~$1.0~~$1.1 million ~~respectively,~~ outstanding under these arrangements at June 30, ~~2018~~2019 and December 31, ~~2017.~~2018, respectively.

At June 30, ~~2018,~~2019, we had letters of credit issued and outstanding of ~~$5.8~~$8.9 million that are collateralized by ~~$6.6~~$9.4 million in restricted cash. Additionally, our foreign operations had ~~$26.1~~$39.3 million outstanding in letters of credit and other guarantees, primarily issued under a credit arrangement in Italy as well as certain letters of credit that are collateralized by ~~$2.2~~$2.0 million in restricted cash.

Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our 2021 Convertible Notes, approximated their fair values at June 30, ~~2018~~2019 and December 31, ~~2017.~~2018. The estimated fair value of our 2021 Convertible Notes was ~~$137.3~~$107.0 million at June 30, ~~2018~~2019 and ~~$127.3~~$120.9 million at December 31, ~~2017,~~2018, based on quoted market prices at these respective dates.

Note 8 – ~~Income Taxes~~Leases

~~The U.S. Tax Cuts~~We lease certain office space, manufacturing facilities, warehouses, land, and ~~Jobs Act (“Tax Act”) was enacted~~equipment. Our leases have remaining terms ranging from 1 to 8 years with various extension and termination options. We consider these options in determining the lease term used to establish our operating lease assets and liabilities. Lease agreements with lease and non-lease components are accounted for as a single lease component. Leases with an initial term of 12 months or less are not recorded in the balance sheet; we recognize lease expense for these leases on ~~December 22, 2017 resulting in broad and complex changes to U.S. income tax law. The Tax Act includes~~ a ~~one-time transition tax in 2017 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax, reduces~~straight-line basis over the U.S. corporate statutory tax rate from 35% to 21% effective January 1, 2018, generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, creates new tax on certain foreign-sourced earnings, makes other changes to limit certain deductions and changes rules on how certain tax credits and net operating loss carryforwards can be utilized. Due to the timinglease term.

Leases consisted of the ~~enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our financial statements~~following:



(In thousands)	Balance Sheet Classification	June 30, 2019
Assets:
Operating	Operating lease assets	$	27,365
Finance	Property, plant and equipment, net	1,241
Total lease assets		$	28,606
Liabilities:
Current:
Operating	Accrued liabilities	$	6,495
Finance	Current debt	274
Noncurrent:
Operating	Noncurrent operating lease liabilities	$	21,850
Finance	Long-term debt, less current portion	952
Total lease liabilities		$	29,571

Total operating lease expenses were $7.3 million for the year ended December 31, 2017. As we finalize the necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service (“IRS”), or other standard-setting bodies, we may make adjustments to these provisional amounts during 2018.

~~Provisional amounts for the following income tax effects~~second quarter of ~~the Tax Act were recorded as~~2019, of ~~December 31, 2017 and are subject to change during 2018. We have not made any significant measurement-period adjustments~~which $4.8 million related to ~~these items during the first half of 2018. However, we are continuing~~short-term leases and $2.5 million related to ~~gather additional information to complete our accounting for these items and may make adjustments to the provisional amounts during 2018.~~

~~One-Time Transition Tax~~

The Tax Act requires us to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. We recorded a provisional amount of $6.9 million in 2017 for our one-time transitional tax liability and income tax expense based on estimates of the effects of the Tax Act. We continue to analyze the significant data from our foreign subsidiaries in connection with the completion of our 2017 income tax returns.

~~Taxes on Repatriation of Foreign Earnings~~

Prior to the Tax Act, we considered the unremitted earnings in our non-U.S. subsidiaries held directly by a U.S. parent to be indefinitely reinvested and, accordingly, had not provided any deferred income taxes. As a result of the Tax Act, we now intend to pursue repatriation of unremitted earnings in our non-U.S. subsidiaries held directly by a U.S. parent to the extent that such earnings have been includedleases recognized in the one-time transition tax discussed above, and subject to cash requirements to support the strategic objectives of the non-U.S. subsidiary. As such, we recorded a provisional amount of $7.0 million in 2017 for the estimated liability and income tax expense for any U.S. federal or state income taxes or additional foreign withholding taxes related to repatriation of such earnings. In addition, in 2017 we recognized certain foreign tax credits of $5.5 million in the U.S. related to the provisional accounting for taxes on repatriation of foreign earnings, however, we also recognized a full valuation allowance related to such tax assets as it is more likely than not that these assets will not be realized. The provisional amounts recorded in 2017 may change as we finalize the analysis of these items during 2018.

In 2018, our income tax provision includes the estimated expense for any U.S. federal and state income taxes from the new tax on certain foreign-sourced earnings as well as any additional foreign withholding taxes related to future repatriation of current year earnings in our non-U.S. subsidiaries held directly by a U.S. parent.

~~Deferred Tax Effects~~

The Tax Act reduced the U.S. corporate statutory tax rate from 35% to 21% for years after 2017. Accordingly, we remeasured our U.S. net deferred tax liabilities as of December 31, 2017 to reflect the reduced rate that will apply in future periods when those deferred taxes are settled or realized. We recognized a provisional deferred tax benefit of $17.4 million in 2017 to reflect the reduced U.S. tax rate on our estimated U.S. net deferred tax liabilities. Although the tax rate reduction is known, we have not completed our analysis of the effect of the Tax Act on the underlying deferred taxes for the items discussed above, and as such, the amounts recorded as of December 31, 2017 are provisional.

The net tax benefit recognized in 2017 related to the Tax Act was $3.4 million. As we complete our analysis of the Tax Act and incorporate additional guidance that may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, we may identify additional effects not reflected as of December 31, 2017. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018.

~~The provision for income taxes was $7.2~~balance sheet. Total operating lease expenses were $14.4 million for the first half of ~~2018, reflecting an effective tax rate~~2019, of ~~29%, compared to $3.5~~which $9.4 million ~~for the first half of 2017, reflecting an effective tax rate of 84%. The provision for income taxes for the first half of 2018 includes a $0.8 million net excess tax benefit primarily~~ related to ~~the vesting of certain stock-based compensation awards~~short-term leases and $5.0 million related to leases recognized in the ~~second quarter. Although the Tax Act reduced the U.S. corporate statutory tax rate effectiveJanuary 1, 2018, our provision~~balance sheet. Total operating lease expenses approximate cash paid during each period. Amortization and interest for finance leases are not material. Operating lease expenses and amortization of leased assets for finance leases are included in either cost of revenues or selling, general and administrative expenses. Interest for finance leases is included in interest expense, net.

The maturity of lease liabilities as of June 30, 2019 is as follows:



(In thousands)	Operating Leases		Finance Leases		Total
2019 (remainder of year)	$	4,330	$	168	$	4,498
2020	6,234		320		6,554
2021	5,062		320		5,382
2022	3,987		320		4,307
2023	3,071		215		3,286
Thereafter	9,882		—		9,882
Total lease payments	32,566		1,343		33,909
Less: Interest	4,221		117		4,338
Present value of lease liabilities	$	28,345	$	1,226	$	29,571

for income taxes in 2018 also includes the estimated expense for any U.S. federal and state income taxes from the new tax on certain foreign-sourced earnings as well as any additional foreign withholding taxes related to future repatriation of current year earnings from our non-U.S. subsidiaries. Due to the relative contribution of our domestic and foreign earnings, these taxes on certain foreign-sourced earnings and the impact of changes to deduction limitations from the Tax Act effectively offset the benefit of the lower U.S. corporate statutory tax rate in our 2018 provision for income taxes. The impact of the Tax Act on our effective tax rate in future periods will depend in large part on the relative contribution of our domestic and foreign earnings, as well as finalization of the provisional accounting for the Tax Act in 2018. The 2017 effective tax rate was negatively impacted by pre-tax losses in certain international jurisdictions, most notably Australia, and non-deductible expenses relative to the amount of pre-tax income.

We file income tax returns in the United States and several non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file. We are no longer subject to income tax examinations for U.S. federal and substantially all state jurisdictions for years prior to 2012 and for substantially all foreign jurisdictions for years prior to 2008. We are currently under examination by the United States federal tax authorities for tax years 2014 – ~~2016.~~ During the second quarter and first half of ~~2017,~~2019, we ~~received a Revenue Agent~~entered into $1.5 million and $2.9 million, respectively, of new operating lease liabilities in exchange for leased assets.



Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.5
Finance leases	4.2
Weighted-average discount rate
Operating leases	4.3	%
Finance leases	4.5	%

As previously disclosed in our 2018 Annual Report ~~from~~on Form 10-K and under the ~~IRS disallowing a deduction claimed on our 2015 tax return associated~~previous lease accounting guidance, future minimum payments under non-cancelable operating leases at December 31, 2018, with ~~the forgiveness~~initial or remaining terms in excess of ~~certain inter-company balances due from our Brazilian subsidiary and assessing tax due of approximately $3.9 million. We submitted our response to the IRS~~one year are included in the ~~third quarter of 2017, and had an initial tax appeals hearing in June 2018. Although the tax appeals process has~~table below. Future minimum payments under capital leases are not concluded, we believe our tax position is properly reported in accordance with applicable U.S. tax laws and regulations and will continue to vigorously defend our position through the tax appeals process.significant.

Following an audit in 2015, the treasury authority in Mexico issued a tax assessment (inclusive of interest and penalties) in the amount of 60 million pesos (approximately $3.3 million) to our Mexico subsidiary primarily in connection with the export of mats from Mexico which took place in 2010. The mats that are the subject of this assessment were owned by a U.S. subsidiary and leased to our Mexico subsidiary for matting projects in the Mexican market. In 2010, we made the decision to move these mats out of Mexico to markets with higher demand. The Mexican treasury authority determined the export of the mats was the equivalent of a sale, and assessed taxes on the gross declared value of the exported mats to our Mexico subsidiary. We retained outside legal counsel and filed administrative appeals with the treasury authority, but we were notified on April 13, 2018, that the last administrative appeal had been rejected. In the second quarter of 2018, we filed an appeal in the Mexican Federal Tax Court, which required that we post a bond in the amount of the assessed taxes (plus additional interest). Although the tax appeals process has not concluded, we believe our tax position is properly reported in accordance with applicable tax laws and regulations in Mexico and intend to vigorously defend our position through the tax appeals process.



(In thousands)
2019	$	9,112
2020	5,707
2021	4,630
2022	3,816
2023	3,144
Thereafter	4,507
	$	30,916

We are also under examination by various tax authorities in other countries, and certain foreign jurisdictions have challenged the amounts of taxes due for certain tax periods. These audits are in various stages of completion. We fully cooperate with all audits, but defend existing positions vigorously. We evaluate the potential exposure associated with various filing positions and record a liability for uncertain tax positions as circumstances warrant. Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals.

Note 9 – Commitments and Contingencies

In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state, and local levels. While the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, has been incurred that is expected to have a material adverse impact on our consolidated financial statements.

~~Escrow Claims Related to the Sale of the Environmental Services Business~~

Under the terms of the March 2014 sale of our previous Environmental Services business to Ecoserv, LLC (“Ecoserv”), $8.0 million of the sales price was withheld and placed in an escrow account to satisfy claims for possible breaches of representations and warranties contained in the purchase/sale agreement. In December 2014, we received a letter from Ecoserv asserting that we had breached certain representations and warranties contained in the purchase/sale agreement, including failing to disclose operational problems and service work performed on injection/disposal wells and increased barge rental costs. The letter indicated that Ecoserv expected the damages associated with these claims to exceed the escrow amount. In July 2015 we filed an action against Ecoserv in state district court in Harris County, Texas, seeking release of the escrow funds. Thereafter, Ecoserv filed a counterclaim seeking recovery in excess of the escrow funds based on the alleged breach of representations and covenants in the purchase/sale agreement. Ecoserv also alleged that we committed fraud in connection with the March 2014 transaction. Following commencement of the trial in December 2017, we reached a settlement agreement with Ecoserv in the first quarter of 2018, under which Ecoserv received $22.0 million in cash, effectively reducing the net sales price of the Environmental Services business by such amount in exchange for dismissal of the pending claims in the lawsuit, and release of any future claims related to the March

2014 transaction. As a result of the settlement, we recognized a charge to discontinued operations in the fourth quarter of 2017 for $22.0 million ($17.4 million net of tax) to reduce the previously recognized gain from the sale of the Environmental Services business. The reduction in sales price was funded in the first quarter of 2018 with a cash payment of $14.0 million and release of the $8.0 million that had been held in escrow since the March 2014 transaction. In March 2018, the lawsuit was dismissed with prejudice. Litigation expenses related to this matter are included in corporate office expenses in operating income.

Kenedy, Texas Drilling Fluids Facility Fire ~~– Subsequent Event~~

In July 2018, a fire occurred at our Kenedy, Texas drilling fluids facility, destroying the distribution warehouse, including inventory and surrounding equipment. In addition, nearby residences and businesses were evacuated as part of the response to the fire. In order to avoid any customer service disruptions, we implemented contingency plans to supply products from alternate facilities in the area and region. During the third quarter of 2018, we received a petition filed on behalf of 23 plaintiffs seeking a total of $1.5 million for alleged bodily injuries and property damage claimed to have been incurred as a result of the fire and the subsequent efforts we undertook to remediate any potential smoke damage. The plaintiffs’ counsel subsequently filed amended petitions that increased the number of plaintiffs to 41 and also seeks punitive damages. While no trial date has been set for the matter at this time, we have been advised by our insurer that these claims are insured under our general liability insurance program. While this event isand related claims are covered by our property, business interruption, and general liability insurance programs, these programs contain self-insured retentions, which remain our financial obligations. ~~Although~~

During 2018, we incurred fire-related costs of $4.8 million, which included $1.9 million for inventory and property, plant and equipment, $2.1 million in property-related cleanup and other costs, and $0.8 million relating to our self-insured retention for third-party claims. Based on the ~~total costs associated with the event are not currently estimable,~~provisions of our insurance policies and initial insurance claims filed, we ~~expect to record approximately $1~~estimated $4.0 million ~~to $2~~ in expected insurance recoveries and recognized a charge of $0.8 million ~~of charges~~ in other operating (income) loss, net, in the third quarter of ~~2018~~2018. The insurance receivable balance included in other receivables was $0.6 million as of June 30, 2019, and December 31, 2018. As of June 30, 2019, the claims related to ~~this incident, primarily reflecting~~the fire under our ~~self-insured retention obligations under the~~property, business interruption, and general liability insurance ~~programs.~~programs have not been finalized.

Note 10 – Supplemental Disclosures to the Statements of Cash Flows

Supplemental disclosures to the statements of cash flows are presented below:



	First Half
(In thousands)	2019		2018
Cash paid for:
Income taxes (net of refunds)	$	5,927	$	7,175
Interest	$	4,705	$	4,245

First Half
(In thousands) 2018 2017
Cash paid (received) for:
Income taxes (net of refunds) $ 7,175
$ (31,637 )
Interest $ 4,245
$ 4,043

Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:



(In thousands)	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	49,035	$	56,118
Restricted cash (included in other current assets)	11,389		8,148
Cash, cash equivalents, and restricted cash	$	60,424	$	64,266

(In thousands) June 30, 2018 December 31, 2017
Cash and cash equivalents $ 71,722
$ 56,352
Restricted cash (included in other current assets) 8,788
9,108
Cash, cash equivalents, and restricted cash $ 80,510
$ 65,460

Note 11 – Segment Data

Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):



	Second Quarter						First Half
(In thousands)	2019			2018			2019			2018
Revenues
Fluids systems	$	172,544		$	179,738		$	333,197		$	357,117
Mats and integrated services	43,868			56,524			94,688			106,438
Total revenues	$	216,412		$	236,262		$	427,885		$	463,555

Operating income (loss)
Fluids systems	$	12,184		$	13,327		$	16,058		$	23,804
Mats and integrated services	9,276			14,853			22,814			26,939
Corporate office	(10,546		)	(9,037		)	(22,279		)	(17,762		)
Total operating income	$	10,914		$	19,143		$	16,593		$	32,981

Second Quarter First Half
(In thousands) 2018
2017
2018
2017
Revenues
Fluids systems $ 179,738
$ 150,623
$ 357,117
$ 286,673
Mats and integrated services 56,524
32,397
106,438
55,038
Total revenues $ 236,262
$ 183,020
$ 463,555
$ 341,711

Operating income (loss)
Fluids systems $ 13,327
$ 5,863
$ 23,804
$ 12,215
Mats and integrated services 14,853
11,419
26,939
17,821
Corporate office (9,037 ) (9,314 ) (17,762 ) (18,322 )
Operating income $ 19,143
$ 7,968
$ 32,981
$ 11,714

The following table presents further disaggregated revenues for the Fluids Systems segment:



	Second Quarter				First Half
(In thousands)	2019		2018		2019		2018
United States	$	117,154	$	104,333	$	220,213	$	196,802
Canada	4,988		11,285		18,254		34,357
Total North America	122,142		115,618		238,467		231,159

EMEA	44,455		49,546		82,220		100,981
Asia Pacific	4,539		5,671		9,663		8,160
Latin America	1,408		8,903		2,847		16,817
Total International	50,402		64,120		94,730		125,958

Total Fluids Systems revenues	$	172,544	$	179,738	$	333,197	$	357,117

Second Quarter First Half
(In thousands) 2018
2017
2018
2017
United States $ 104,333
$ 88,206
$ 196,802
$ 153,826
Canada 11,285
7,434
34,357
27,089
Total North America 115,618
95,640
231,159
180,915
Latin America 8,903
8,598
16,817
17,658
Total Western Hemisphere 124,521
104,238
247,976
198,573

EMEA 49,546
44,788
100,981
85,296
Asia Pacific 5,671
1,597
8,160
2,804
Total Eastern Hemisphere 55,217
46,385
109,141
88,100

Total Fluids Systems revenues $ 179,738
$ 150,623
$ 357,117
$ 286,673

The following table presents further disaggregated revenues for the Mats and Integrated Services segment:



	Second Quarter				First Half
(In thousands)	2019		2018		2019		2018
Service revenues	$	19,909	$	24,447	$	41,059	$	45,751
Rental revenues	17,675		20,938		39,255		39,750
Product sales revenues	6,284		11,139		14,374		20,937
Total Mats and Integrated Services revenues	$	43,868	$	56,524	$	94,688	$	106,438

Second Quarter First Half
(In thousands) 2018 2017 2018 2017
Service revenues $ 24,447
$ 7,625
$ 45,751
$ 14,346
Rental revenues 20,938
17,722
39,750
30,362
Product sales revenues 11,139
7,050
20,937
10,330
Total Mats and Integrated Services revenues $ 56,524
$ 32,397
$ 106,438
$ 55,038

~~The Mats and Integrated Services segment includes the impact of the WSG acquisition completed in November 2017.~~


ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read ~~together~~in conjunction with ~~our~~the unaudited condensed consolidated financial statements and notes ~~to unaudited condensed consolidated financial statements contained~~thereto included in this ~~Quarterly Report~~report as well as our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. Our second quarter represents the three-month period ended June 30 and ~~the~~our first half represents the six-month period ended June 30. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”

Overview

We are a geographically diversified supplier providing products, as well as rentals and services primarily to the oil and natural gas exploration and production (“E&P”) industry. We operate our business through two reportable segments: Fluids Systems and Mats and Integrated Services. In ~~recent years,~~addition to the E&P industry, our Mats and Integrated Services segment ~~has expanded beyond the E&P industry, and now~~ serves a variety of industries, including the electrical transmission & distribution, pipeline, solar, petrochemical, and construction industries.

Our operating results depend, to a large extent, on oil and natural gas drilling activity levels in the markets we serve, and particularly for the Fluids Systems segment, the nature of the drilling operations (including the depth and whether the wells are drilled vertically or horizontally), which governs the revenue potential of each well. Drilling activity levels, in turn, depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions. Oil and natural gas prices and activity are cyclical and ~~volatile. This~~volatile, and this market volatility has a significant impact on our operating results.

While our revenue potential is driven by a number of factors including those described above, rig count data remains the most widely accepted indicator of drilling activity. Average North American rig count data for the second quarter and first half of ~~2018~~2019 as compared to the same periods of ~~2017~~2018 is as follows:


	Second Quarter		2018 vs 2017				Second Quarter		2019 vs 2018
	2018	2017	Count		%		2019	2018	Count		%
U.S. Rig Count	1,039	895	144		16	%	989	1,039	(50	)	(5	)%
Canada Rig Count	108	117	(9	)	(8	)%	82	108	(26	)	(24	)%
North America Rig Count	1,147	1,012	135		13	%	1,071	1,147	(76	)	(7	)%


	First Half		2018 vs 2017				First Half		2019 vs 2018
	2018	2017	Count		%		2019	2018	Count		%
U.S. Rig Count	1,003	819	184		22	%	1,016	1,003	13		1	%
Canada Rig Count	188	206	(18	)	(9	)%	132	188	(56	)	(30	)%
North America Rig Count	1,191	1,025	166		16	%	1,148	1,191	(43	)	(4	)%

Source: Baker Hughes, a GE Company

The ~~Canadian~~Canada rig count reflects the normal seasonality for this market, with the highest rig count levels generally observed in the first quarter of each year, prior to Spring break-up. Outside of North America, drilling activity is generally more stable as drilling activity in many countries is based on longer-term economic projections and multi-year drilling programs, which tends to reduce the impact of short-term changes in commodity prices on overall drilling activity. Although drilling activity in certain of our international markets (including Brazil and Australia) has declined in recent years, as a whole, our international activities have remained relatively stable, primarily driven by key contracts with national oil companies. While our international contracts vary in revenue potential and duration, certain international contracts are scheduled to conclude in 2018, including those with Sonatrach, Petrobras, and Kuwait Oil Company, as described below. Our future revenue levels in international markets are largely dependent on our ability to maintain existing market share upon contract renewals which may be subject to a competitive bid process and can be impacted by our customers’ procurement strategies and allocation of contract awards.

Segment Overview

Our Fluids Systems segment, which generated ~~77%~~78% of consolidated revenues for the first half of ~~2018,~~2019, provides customized fluids solutions to E&P customers globally, operating through four geographic regions: North America, Europe, the Middle East and Africa (“EMEA”), Asia Pacific, and Latin ~~America, and Asia Pacific.~~America. International expansion, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), is a key element of our Fluids Systems strategy, which in recent years has helped to stabilize revenues as North American oil and natural gas exploration activities have fluctuated significantly. ~~Our significant~~Significant international ~~contracts~~contract awards with recent developments include:

In Kuwait, we provide drilling and completion fluids and related services for land operations under a multi-year contract with Kuwait Oil Company (“KOC”)~~. Work under this~~, which began in 2014. Following a recent tender process with KOC, we have received two new contract awards to provide drilling and completion fluids, along with related services, covering a five-year term which began in the first quarter of 2019. The initial revenue value of the combined awards is approximately $165 million and expands our presence to include a second base of operations in Northern Kuwait.

The transition to the new contracts resulted in recent fluctuations in revenues, with first half of ~~2014 and is expected to be completed by~~2019 revenues reflecting a $6 million decline from the ~~end~~first half of 2018. ~~KOC has recently initiated a~~However, based on the customer plans currently in place, we expect the revenue levels of the new ~~tender process for a multi-year period~~awards to ~~provide drilling fluids~~increase and ~~related services for land operations. Tender proposals are expected to be submitted in~~eventually surpass the ~~third quarter and awards are anticipated to be finalized by~~levels achieved on the ~~end of 2018, although there are no assurances that we will receive a new~~previous contract.

In Algeria, we provide drilling and completion fluids and related services to Sonatrach under a multi-year contract. Work under Lot 1 and Lot 3 of a three-year contract awarded in 2015 (“2015 Contract”)~~. Work under this contract began~~ was completed in ~~the second quarter of 2015 and is expected to be completed by~~ the fourth quarter of 2018. During ~~the first quarter of~~ 2018, Sonatrach initiated a new tender (“2018 Tender”), for a three-year term succeeding the 2015 Contract. For the 2018 Tender, Sonatrach adopted a change in its procurement process, limiting the number of Lots that could be awarded to major service ~~providers. As a consequence, we expect any~~providers, which consequently reduced the potential revenue of the 2018 Tender as compared to the 2015 Contract. Based upon the new ~~award~~contract awarded under the 2018 Tender, ~~will result in lower revenues from Sonatrach. Based upon provisional contract award notification,~~ we ~~currently~~ expect that revenue from Sonatrach ~~under the 2018 Tender~~ will be approximately $125 million over the three-year term, which would result in a reduction of approximately $25 million per year as compared to the ~~recent~~prior activity levels. ~~The award remains subject~~Consequently, with the transition to ~~final approval by Sonatrach and the execution of contract documents. The impact of~~ the new ~~award could begin as early as the fourth quarter~~contract that began in late 2018, first half of ~~2018, as work transitions~~2019 revenues reflect a $10 million decline from the ~~2015 Contract to the final contract awarded under the 2018 Tender.~~first half of 2018.

In Australia, we provide drilling and completion fluids and related services under a contract with Baker Hughes, a GE Company (“Baker Hughes”), as part of its integrated service offering in support of the Greater Enfield project in offshore Western Australia. Work under this contract began in the first quarter of ~~2018.~~2018 and is expected to continue through 2019.

In Brazil, we ~~provide~~provided drilling fluids and related services under a multi-year contract with Petrobras for both onshore and offshore locations. Work under this contract began in the first half of 2009 and ~~is scheduled to conclude by~~concluded in December 2018. For the end of 2018. In the second quarter of 2018, we submitted our proposal for Petrobras’ recent tender process, which will cover fluids products and services for a three-year term beginning in 2019. Awards are anticipated to be finalized in the secondfirst half of 2018, ~~although there~~our Brazilian subsidiary generated revenues of $13 million, substantially all of which related to the Petrobras contract. Despite the completion of the Petrobras contract, we are ~~no assurances that~~maintaining infrastructure in the Brazilian market to support our efforts to penetrate the offshore IOC market.

In addition to our international expansion efforts, we ~~will receive a new contract.~~are also expanding our presence in North America, capitalizing on our capabilities, infrastructure, and strong market position in the North American land drilling fluids markets to expand our drilling fluids presence within the deepwater Gulf of Mexico, as well as our presence in adjacent product offerings, including completion fluids and stimulation chemicals. To support this effort, we have incurred start-up costs, including costs associated with additional personnel and facility-related expenses, and have made additional capital investments. Revenues from the deepwater Gulf of Mexico increased to $18 million for the first half of 2019 compared to $5 million for the first half of 2018.

Our Mats and Integrated Services segment, which generated ~~23%~~22% of consolidated revenues for the first half of ~~2018,~~2019, provides composite mat rentals utilized for temporary worksite access, along with related site construction and ~~related site~~ services to customers in various markets including ~~oil and gas exploration and production,~~E&P, electrical transmission & distribution, pipeline, solar, petrochemical, and construction industries across North America and Europe. We also sell composite mats to customers ~~outside of~~around the ~~U.S. and to domestic customers outside of the E&P market. Following our efforts in recent years to diversify our customer base,~~world. The Mats and Integrated Services segment revenues from non-E&P markets represented approximately ~~half~~40% of ~~our segment~~the segment's revenues for the first half of ~~2018.~~2019.

In November 2017, we acquired certain assets and assumed certain liabilities of Well Service Group, Inc. and Utility Access Solutions, Inc. (together, “WSG”) for approximately $77 million. Since 2012, WSG has been a strategic logistics and installation service provider for our Mats and Integrated Services segment, offering a variety of complementary services to our composite matting systems, including access road construction, site planning and preparation, environmental protection, fluids and spill storage/containment, erosion control, and site restoration services. The completion of the WSG acquisition expanded our service offering as well as our geographic footprint across the Northeast, Midwest, Rockies, and West Texas regions of the U.S. WSG contributed approximately $35 million of revenues to the Mats and Integrated Services segment for the first half of 2018.

Second Quarter of ~~2018~~2019 Compared to Second Quarter of ~~2017~~2018

Consolidated Results of Operations

Summarized results of operations for the second quarter of ~~2018~~2019 compared to the second quarter of ~~2017~~2018 are as follows:


	Second Quarter						2018 vs 2017					Second Quarter						2019 vs 2018
(In thousands)	2018			2017			$			%		2019			2018			$			%
Revenues	$	236,262		$	183,020		$	53,242		29	%	$	216,412		$	236,262		$	(19,850	)	(8	)%
Cost of revenues	188,480			148,431			40,049			27	%	177,933			188,480			(10,547		)	(6	)%
Selling, general and administrative expenses	28,708			26,630			2,078			8	%	28,037			28,708			(671		)	(2	)%
Other operating income, net	(69		)	(9		)	(60		)	NM		(472		)	(69		)	(403		)	NM
Operating income	19,143			7,968			11,175			NM		10,914			19,143			(8,229		)	(43	)%

Foreign currency exchange loss	458			534			(76		)	(14	)%	990			458			532			NM
Interest expense, net	3,691			3,441			250			7	%	3,523			3,691			(168		)	(5	)%
Income from operations before income taxes	14,994			3,993			11,001			NM
Income before income taxes												6,401			14,994			(8,593		)	(57	)%

Provision for income taxes	4,148			2,361			1,787			76	%	2,095			4,148			(2,053		)	(49	)%
Net income	$	10,846		$	1,632		$	9,214		NM		$	4,306		$	10,846		$	(6,540	)	(60	)%

Revenues

Revenues ~~increased 29%~~decreased 8% to $216.4 million for the second quarter of 2019, compared to $236.3 million for the second quarter of ~~2018, compared to $183.0~~2018. This $19.9 million ~~for the second quarter of 2017. This $53.2 million increase~~decrease includes a ~~$43.2~~$5.0 million ~~(34%~~(3%) ~~increase~~decrease in revenues in North America, comprised of a ~~$20.0~~$11.5 million ~~increase in our Fluids Systems segment and a $23.2 million increase~~decrease in the Mats and Integrated Services segment ~~which includes approximately $18~~partially offset by an increase of $6.5 million ~~contributed from~~in the ~~WSG acquisition.~~Fluids Systems segment. Revenues from our international operations ~~increased~~decreased by ~~$10.1~~$14.9 million ~~(17%~~(22%), primarily driven by ~~increased activity~~transitions in key contracts in our EMEA and ~~Asia Pacific~~Latin America regions, ~~in the Fluids Systems segment.~~as described above. Additional information regarding the change in revenues is provided within the operating segment results below.

Cost of revenues

Cost of revenues ~~increased 27%~~decreased 6% to $177.9 million for the second quarter of 2019, compared to $188.5 million for the second quarter of ~~2018, compared~~2018. This $10.5 million decrease was primarily driven by the 8% decrease in revenues described above.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $0.7 million to ~~$148.4~~$28.0 million for the second quarter of 2017. The 27% increase in cost of revenues was primarily driven by the 29% increase in revenues described above. Additional information regarding the change in cost of revenues is provided within the operating segment results below.

~~Selling, general and administrative expenses~~

~~Selling, general and administrative expenses increased $2.1 million (8%)~~2019, compared to $28.7 million for the second quarter of ~~2018, compared to $26.6~~2018. This decrease was primarily driven by lower performance-based incentive compensation, partially offset by $2.0 million ~~for~~in professional fees incurred in the second quarter of ~~2017. The increase in expense was primarily driven by an increase in the Mats and Integrated Services segment, including costs attributable~~2019 related to ~~the WSG acquisition, partially offset by recoveries associated with favorable resolutions of patent enforcement actions.~~updating our long-term strategic plan. Selling, general and administrative expenses as a percentage of revenues ~~decreased to 12%~~was 13.0% for the second quarter of ~~2018 from 15%~~2019 compared to 12.2% for the second quarter of ~~2017~~2018.

Other operating income, net

Other operating income was $0.5 million in the second quarter of 2019 compared to $0.1 million in the second quarter of 2018, primarily reflecting gains recognized on the sale of assets in both periods.

Foreign currency exchange

Foreign currency exchange was a $1.0 million loss for the second quarter of 2019 compared to a $0.5 million loss for ~~each of~~ the second quarter of 2018, and ~~2017,~~reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.

Interest expense, net

Interest expense was $3.5 million for the second quarter of 2019 compared to $3.7 million for the second quarter of 2018. Interest expense for the second quarter of 2019 and 2018 includes $1.5 million and $1.3 million, respectively, in noncash amortization of original issue discount and debt issuance costs.

Provision for income taxes

The provision for income taxes was $2.1 million for the second quarter of 2019, reflecting an effective tax rate of 33%, compared to $4.1 million for the second quarter of 2018, reflecting an effective tax rate of 28%. The effective tax rate for the second quarter of 2018 was positively impacted by $0.8 million in excess tax benefits related to the vesting of certain stock-based compensation awards during the period.

Operating Segment Results

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):



	Second Quarter						2019 vs 2018
(In thousands)	2019			2018			$			%
Revenues
Fluids systems	$	172,544		$	179,738		$	(7,194	)	(4	)%
Mats and integrated services	43,868			56,524			(12,656		)	(22	)%
Total revenues	$	216,412		$	236,262		$	(19,850	)	(8	)%

Operating income (loss)
Fluids systems	$	12,184		$	13,327		$	(1,143	)
Mats and integrated services	9,276			14,853			(5,577		)
Corporate office	(10,546		)	(9,037		)	(1,509		)
Total operating income	$	10,914		$	19,143		$	(8,229	)

Segment operating margin
Fluids systems	7.1		%	7.4		%
Mats and integrated services	21.1		%	26.3		%

Fluids Systems

Revenues

Total revenues for this segment consisted of the following:



	Second Quarter				2019 vs 2018
(In thousands)	2019		2018		$			%
United States	$	117,154	$	104,333	$	12,821		12	%
Canada	4,988		11,285		(6,297		)	(56	)%
Total North America	122,142		115,618		6,524			6	%

EMEA	44,455		49,546		(5,091		)	(10	)%
Asia Pacific	4,539		5,671		(1,132		)	(20	)%
Latin America	1,408		8,903		(7,495		)	(84	)%
Total International	50,402		64,120		(13,718		)	(21	)%

Total Fluids Systems revenues	$	172,544	$	179,738	$	(7,194	)	(4	)%

North America revenues increased 6% to $122.1 million for the second quarter of 2019 compared to $115.6 million for the second quarter of 2018. This increase was primarily attributable to market share gains in the offshore Gulf of Mexico market

partially offset by the impact of lower customer drilling activity in Canada, as reflected by the 24% decline in the average rig count. Despite the 5% decline in the United States average rig count, revenues increased in the U.S. land markets primarily related to improvements in customer drilling efficiency, which is leading to an increase in footage drilled per rig.

Internationally, revenues decreased 21% to $50.4 million for the second quarter of 2019 compared to $64.1 million for the second quarter of 2018. This decrease was primarily attributable to declines related to the contract transitions described above in Brazil, Algeria, and Kuwait as well as lower drilling activity in Romania, which was largely attributable to lower commodity prices.

Operating income

The Fluids Systems segment generated operating income of $12.2 million for the second quarter of 2019 compared to operating income of $13.3 million for the second quarter of 2018. The decrease in operating income includes a $4.3 million decline from international operations, primarily related to the decrease in revenues described above. This decline was partially offset by a $3.2 million increase from North American operations, primarily attributable to an improvement in the United States from the increase in revenues and cost optimization efforts.

Mats and Integrated Services

Revenues

Total revenues for this segment consisted of the following:



	Second Quarter				2019 vs 2018
(In thousands)	2019		2018		$			%
Rental and service revenues	$	37,584	$	45,385	$	(7,801	)	(17	)%
Product sales revenues	6,284		11,139		(4,855		)	(44	)%
Total Mats and Integrated Services revenues	$	43,868	$	56,524	$	(12,656	)	(22	)%

Rental and service revenues decreased $7.8 million to $37.6 million for the second quarter of 2019 compared to $45.4 million for the second quarter of 2018, primarily due to lower E&P customer activity, while non-E&P revenues have remained relatively stable. Product sales revenues were $6.3 million for the second quarter of 2019 compared to $11.1 million for the second quarter of 2018. Revenues from product sales have typically fluctuated based on the timing of mat orders from customers.

Operating income

The Mats and Integrated Services segment generated operating income of $9.3 million for the second quarter of 2019 compared to $14.9 million for the second quarter of 2018, primarily attributable to the change in revenues as described above.

Corporate Office

Corporate office expenses increased $1.5 million to $10.5 million for the second quarter of 2019 compared to $9.0 million for the second quarter of 2018. This increase was primarily driven by $2.0 million in professional fees incurred in the second quarter of 2019 related to updating our long-term strategic plan, partially offset by lower performance-based incentive compensation.

First Half of 2019 Compared to First Half of 2018

Consolidated Results of Operations

Summarized results of operations for the first half of 2019 compared to the first half of 2018 are as follows:



	First Half						2019 vs 2018
(In thousands)	2019			2018			$			%
Revenues	$	427,885		$	463,555		$	(35,670	)	(8	)%
Cost of revenues	352,909			374,935			(22,026		)	(6	)%
Selling, general and administrative expenses	58,779			55,662			3,117			6	%
Other operating income, net	(396		)	(23		)	(373		)	NM
Operating income	16,593			32,981			(16,388		)	(50	)%

Foreign currency exchange (gain) loss	(72		)	683			(755		)	NM
Interest expense, net	7,179			6,991			188			3	%
Income before income taxes	9,486			25,307			(15,821		)	(63	)%

Provision for income taxes	3,898			7,239			(3,341		)	(46	)%
Net income	$	5,588		$	18,068		$	(12,480	)	(69	)%

Revenues

Revenues decreased 8% to $427.9 million for the first half of 2019, compared to $463.6 million for the first half of 2018. This $35.7 million decrease includes a $2.3 million (1%) decrease in revenues in North America, comprised of a $9.6 million decrease in the Mats and Integrated Services segment partially offset by an increase of $7.3 million in the Fluids Systems segment. Revenues from our international operations decreased by $33.3 million (25%), primarily driven by transitions in key contracts in our EMEA and Latin America regions, as described above. Additional information regarding the change in revenues is provided within the operating segment results below.

Cost of revenues

Cost of revenues decreased 6% to $352.9 million for the first half of 2019, compared to $374.9 million for the first half of 2018. This $22.0 million decrease was primarily driven by the 8% decrease in revenues described above.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $3.1 million to $58.8 million for the first half of 2019, compared to $55.7 million for the first half of 2018. This increase was primarily driven by $4.0 million in charges associated with the February 2019 retirement policy modification, as discussed in Note 4, $2.0 million in professional fees incurred in 2019 related to updating our long-term strategic plan, as well as higher personnel costs, partially offset by lower performance-based incentive compensation. Selling, general and administrative expenses as a percentage of revenues was 13.7% for the first half of 2019 compared to 12.0% for the first half of 2018.

Foreign currency exchange

Foreign currency exchange was a $0.1 million gain for the first half of 2019 compared to a $0.7 million loss for the first half of 2018, and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.

Interest expense, net

Interest expense was ~~$3.7~~$7.2 million for the ~~second quarter~~first half of ~~2018~~2019 compared to ~~$3.4~~$7.0 million for the ~~second quarter~~first half of ~~2017.~~2018. Interest expense ~~in each~~for the first half of ~~the second quarter of~~2019 and 2018 includes $3.0 million and ~~2017 includes $1.3~~$2.6 million, respectively, in noncash amortization of original issue discount and debt issuance costs.

Provision for income taxes

The provision for income taxes was ~~$4.1~~$3.9 million for the ~~second quarter~~first half of 2019, reflecting an effective tax rate of 41%, compared to $7.2 million for the first half of 2018, reflecting an effective tax rate of ~~28%, compared to $2.4 million for the second quarter of 2017, reflecting an~~29%. The effective tax rate ~~of 59%. The provision for income taxes~~ for the ~~second quarter~~first half of 2019 was negatively impacted by $0.6 million of discrete tax adjustments relative to the amount of pre-tax income, and the

effective tax rate for the first half of 2018 ~~includes a~~was positively impacted by $0.8 million ~~net~~in excess tax ~~benefit primarily~~benefits related to the vesting of certain stock-based compensation awards during the period. ~~Although the Tax Act reduced the U.S. corporate statutory tax rate effective January 1,~~

2018, our provision for income taxes in 2018 also includes the estimated expense for any U.S. federal and state income taxes from the new tax on certain foreign-sourced earnings as well as any additional foreign withholding taxes related to future repatriation of current year earnings from our non-U.S. subsidiaries. Due to the relative contribution of our domestic and foreign earnings, these taxes on certain foreign-sourced earnings and the impact of changes to deduction limitations from the Tax Act effectively offset the benefit of the lower U.S. corporate statutory tax rate in our 2018 provision for income taxes. The impact of the Tax Act on our effective tax rate in future periods will depend in large part on the relative contribution of our domestic and foreign earnings, as well as finalization of the provisional accounting for the Tax Act in 2018. The 2017 effective tax rate was negatively impacted by pre-tax losses in certain international jurisdictions, most notably Australia, and non-deductible expenses relative to the amount of pre-tax income.

The Tax Act enacted in December 2017 resulted in broad and complex changes to U.S. income tax law. The Tax Act includes a one-time transition tax in 2017 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax, reduces the U.S. corporate statutory tax rate from 35% to 21% effective January 1, 2018, generally eliminates U.S. federal income tax on dividends from foreign subsidiaries, creates new tax on certain foreign-sourced earnings, makes other changes to limit certain deductions and changes rules on how certain tax credits and net operating loss carryforwards can be utilized.

Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in our 2017 financial statements. As we finalize the necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service (“IRS”), or other standard-setting bodies, we may make adjustments to the provisional amounts during 2018. We have not made any significant measurement-period adjustments related to these items during the first half of 2018. However, we are continuing to gather additional information to complete our accounting for these items and may make adjustments to these provisional amounts during 2018.

Operating Segment Results

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):


	Second Quarter						2018 vs 2017				First Half						2019 vs 2018
(In thousands)	2018			2017			$		%		2019			2018			$			%
Revenues
Fluids systems	$	179,738		$	150,623		$	29,115	19	%	$	333,197		$	357,117		$	(23,920	)	(7	)%
Mats and integrated services	56,524			32,397			24,127		74	%	94,688			106,438			(11,750		)	(11	)%
Total revenues	$	236,262		$	183,020		$	53,242	29	%	$	427,885		$	463,555		$	(35,670	)	(8	)%

Operating income (loss)
Fluids systems	$	13,327		$	5,863		$	7,464			$	16,058		$	23,804		$	(7,746	)
Mats and integrated services	14,853			11,419			3,434				22,814			26,939			(4,125		)
Corporate office	(9,037		)	(9,314		)	277				(22,279		)	(17,762		)	(4,517		)
Operating income	$	19,143		$	7,968		$	11,175
Total operating income											$	16,593		$	32,981		$	(16,388	)

Segment operating margin
Fluids systems	7.4		%	3.9		%					4.8		%	6.7		%
Mats and integrated services	26.3		%	35.2		%					24.1		%	25.3		%

Fluids Systems

Revenues

Total revenues for this segment consisted of the following:


	Second Quarter				2018 vs 2017				First Half				2019 vs 2018
(In thousands)	2018		2017		$		%		2019		2018		$			%
United States	$	104,333	$	88,206	$	16,127	18	%	$	220,213	$	196,802	$	23,411		12	%
Canada	11,285		7,434		3,851		52	%	18,254		34,357		(16,103		)	(47	)%
Total North America	115,618		95,640		19,978		21	%	238,467		231,159		7,308			3	%
Latin America	8,903		8,598		305		4	%
Total Western Hemisphere	124,521		104,238		20,283		19	%

EMEA	49,546		44,788		4,758		11	%	82,220		100,981		(18,761		)	(19	)%
Asia Pacific	5,671		1,597		4,074		255	%	9,663		8,160		1,503			18	%
Total Eastern Hemisphere	55,217		46,385		8,832		19	%
Latin America									2,847		16,817		(13,970		)	(83	)%
Total International									94,730		125,958		(31,228		)	(25	)%

Total Fluids Systems revenues	$	179,738	$	150,623	$	29,115	19	%	$	333,197	$	357,117	$	(23,920	)	(7	)%

Critical Accounting Estimates and Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires us to make ~~assumptions,~~ estimates and ~~judgments~~assumptions that affect the reported amounts and ~~disclosures reported.~~disclosures. Significant estimates used in preparing our condensed consolidated financial statements include the following: allowances for doubtful accounts, reserves for self-insured retention under insurance programs, estimated performance and values associated with employee incentive programs, fair values used for impairments of long-lived assets, including goodwill and other intangibles, ~~the provisional accounting for the Tax Act,~~ and valuation allowances for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.

For additional discussion of our critical accounting estimates and policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2017. Except as set forth below, our~~2018. Our critical accounting estimates and policies have not materially changed since December 31, ~~2017.~~2018.

In May 2014, the FASB amended the guidance for revenue from contracts with customers. We adopted this new guidance as of January 1, 2018 using the modified retrospective transition method. The adoption of this new guidance primarily affected the timing of revenue recognition for drilling fluid additive products provided to customers in the delivery of an integrated fluid system in our U.S. drilling fluids business. Under previous guidance, we recognized revenue for these products upon shipment of materials and passage of title, with a reserve for estimated product returns. Under the new guidance, we recognize revenue for these products when they are utilized, which generally occurs at the time of consumption by the customer. See Note 1 for additional information.


ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. A discussion of our primary market risk exposure in financial instruments is presented below.

Interest Rate Risk

At June 30, ~~2018,~~2019, we had total principal amounts outstanding under financing arrangements of ~~$217.5~~$177.4 million, including $100.0 million of borrowings under our 2021 Convertible Notes which bear interest at a fixed rate of 4%4.0% and ~~$113.9~~$70.8 million of borrowings under our ABL Facility. Borrowings under our ABL Facility are subject to a variable interest rate as determined by the ABL Facility. The weighted average interest rate at June 30, ~~2018~~2019 for the ABL Facility ~~is 4.1%~~was 4.3%. Based on the balance of variable rate debt at June 30, ~~2018,~~2019, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by ~~$1.1~~$0.7 million.

Foreign Currency Risk

Our principal foreign operations are conducted in certain areas of EMEA, Asia Pacific, Latin America, ~~Asia Pacific,~~ and Canada. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate including European euros, Algerian dinar, Romanian new leu, Canadian dollars, British pounds, Australian dollars, ~~British pounds~~ and Brazilian reais. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies.


ITEM 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Based on their evaluation~~Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this ~~report,~~quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ~~the~~our disclosure controls and procedures were effective as of June 30, ~~2018,~~2019, the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended June 30, ~~2018~~2019 that materially affected, or ~~were~~are reasonably likely to materially affect, our internal control over financial reporting.

~~PART II OTHER INFORMATION~~


PART II	OTHER INFORMATION


ITEM 1.	Legal Proceedings

~~Escrow Claims Related to the Sale of the Environmental Services Business~~

~~Newpark Resources, Inc. v. Ecoserv, LLC.~~ ~~On July 13, 2015, we filed a declaratory action in the District Court in Harris County, Texas (80~~^th Judicial District) seeking release of $8.0 million of funds placed in escrow by Ecoserv, LLC (“Ecoserv”) in connection with its purchase of our Environmental Services business. Ecoserv filed a counterclaim asserting that we breached certain representations and covenants contained in the purchase/sale agreement including, among other things, the condition of certain assets. In addition, Ecoserv has alleged that Newpark committed fraud in connection with the March 2014 transaction.

Under the terms of the March 2014 sale of the Environmental Services business to Ecoserv, $8.0 million of the sales price was withheld and placed in an escrow account to satisfy claims for possible breaches of representations and warranties contained in the purchase/sale agreement. In December 2014, we received a letter from Ecoserv asserting that we had breached certain representations and warranties contained in the purchase/sale agreement, including failing to disclose operational problems and service work performed on injection/disposal wells and increased barge rental costs. The letter indicated that Ecoserv expected the damages associated with these claims to exceed the escrow amount. In July 2015, we filed the action against Ecoserv referenced above. Thereafter, Ecoserv filed a counterclaim seeking recovery in excess of the escrow funds based on the alleged breach of representations and covenants in the purchase/sale agreement. Ecoserv also alleged that we committed fraud in connection with the March 2014 transaction. Following commencement of the trial in December 2017, we reached a settlement agreement with Ecoserv in the first quarter of 2018, under which Ecoserv received $22.0 million in cash, effectively reducing the net sales price of the Environmental Services business by such amount in exchange for dismissal of the pending claims in the lawsuit, and release of any future claims related to the March 2014 transaction. As a result of the settlement, we recognized a charge to discontinued operations in the fourth quarter of 2017 for $22.0 million ($17.4 million net of tax) to reduce the previously recognized gain from the sale of the Environmental Services business. The reduction in sales price was funded in the first quarter of 2018 with a cash payment of $14.0 million and release of the $8.0 million that had been held in escrow since the March 2014 transaction. In March 2018, the lawsuit was dismissed with prejudice. Litigation expenses related to this matter are included in corporate office expenses in operating income.None.


ITEM 1A.	Risk Factors

There have been no material changes during the period ended June 30, ~~2018~~2019 in our “Risk Factors” as discussed in Item 1A toof our Annual Report on Form 10‑K for the year ended December 31, ~~2017.~~2018.


ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds


a)	Not applicable


b)	Not applicable


c)	The following table details our repurchases of shares of our common stock for the three months ended June 30, ~~2018:~~2019:

Period
Total Number
of Shares
Purchased (1)
Average Price Paid
Per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
April 2018 6,087
$ 9.80
—
$ 33.5
May 2018 —
$ —
—
$ 33.5
June 2018 274,497
$ 10.83
—
$ 33.5
Total 280,584
$ 10.80
—



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
April 2019	300,000	$	7.51	300,000	$	92.7
May 2019	1,109,249	$	7.55	1,091,348	$	84.5
June 2019	234,317	$	7.03	—	$	84.5
Total	1,643,566	$	7.47	1,391,348

~~(1)~~ During the three months ended June 30, ~~2018,~~2019, we purchased an aggregate of ~~280,584~~252,218 shares surrendered in lieu of taxes under vesting of restricted shares.

~~Our~~In November 2018, our Board of Directors ~~has approved a~~authorized changes to our existing securities repurchase program. The authorization increased the authorized amount under the repurchase program ~~that~~to $100.0 million, available for repurchases of any combination of our common stock and our 2021 Convertible Notes.

Our repurchase program authorizes us to purchase ~~up to $100.0 million of~~ our outstanding shares of common stock or 2021 Convertible Notes in the open market or as otherwise determined by management, subject to certain limitations under the ABL Facility and other factors. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, ~~and~~ available cash on ~~hand.~~hand, and borrowings under our ABL Facility. As part of the ~~share~~ repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. ~~There were no share repurchases under~~During the ~~program during the first half of 2018 or 2017. As of~~three months ended June 30, ~~2018, there was $33.5 million~~2019, we repurchased an aggregate of ~~authorization remaining under the program.~~

We have not paid any dividends during the three most recent fiscal years or any subsequent interim period, and we do not intend to pay any cash dividends in the foreseeable future. In addition, our ABL Facility contains covenants which limit the payment1,391,348 shares of ~~dividends on~~ our common ~~stock.~~stock under our Board authorized repurchase program for a total cost of $10.5 million.


ITEM 3.	Defaults Upon Senior Securities

~~Not applicable.~~None.


ITEM 4.	Mine Safety Disclosures

The information concerning mine safety violations and other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference.


ITEM 5.	Other Information

None.


ITEM 6.	Exhibits

The exhibits listed are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.



†10.1	Retirement and Restrictive Covenant Agreement and General Release, dated as of July 2, 2019, between Newpark Resources, Inc. and Bruce C. Smith, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.2	Consulting Services Agreement, dated as of July 2, 2019, between Newpark Resources, Inc. and Bruce C. Smith, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.3	Employment Agreement, dated as of July 2, 2019 between Newpark Drilling Fluids S.p.A. and David Paterson, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.4	Letter Agreement, dated as of July 2, 2019 between Newpark Resources, Inc. and David Paterson, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.5	Change in Control Agreement, dated as of July 2, 2019 between Newpark Resources, Inc. and David Paterson, incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.6	Confidentiality and Non-Competition Agreement, dated as of July 2, 2019 between Newpark Resources, Inc. and David Paterson, incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 8, 2019 (SEC File No. 001-02960)
†10.7	Newpark Resources, Inc. Amended and Restated 2015 Employee Equity Incentive Plan, incorporated by reference to Exhibit 4.8 to the Company’s Registration Statement on Form S-8 filed on May 23, 2019 (SEC File No. 333-231715)
†*10.8	Form of Performance-Based Cash Award Agreement under the Newpark Resources, Inc. Long-Term Cash Incentive Plan
*31.1	Certification of Paul L. Howes pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Gregg S. Piontek pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
**32.1	Certification of Paul L. Howes pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**32.2	Certification of Gregg S. Piontek pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*95.1	Reporting requirements under the Mine Safety and Health Administration
*101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*101.SCH	XBRL Schema Document
*101.CAL	XBRL Calculation Linkbase Document
*101.DEF	XBRL Definition Linkbase Document
*101.LAB	XBRL Label Linkbase Document
*101.PRE	XBRL Presentation Linkbase Document
*104	The cover page from Newpark Resources, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL (included within the Exhibit 101 attachments)

† Management compensation plan or agreement.

* Filed ~~herewith~~herewith.

** Furnished herewith.

NEWPARK RESOURCES, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July ~~27, 2018~~31, 2019



NEWPARK RESOURCES, INC.
(Registrant)

By:	/s/ Paul L. Howes
	Paul L. Howes President and Chief Executive Officer (Principal Executive Officer)



By:	/s/ Gregg S. Piontek
	Gregg S. Piontek Senior Vice President and Chief Financial Officer (Principal Financial Officer)



By:	/s/ Douglas L. White
	Douglas L. White Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

3331



Delaware		72-1123385
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9320 Lakeside Boulevard,	Suite 100
The Woodlands,	Texas	77381
(Address of principal executive offices)		(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NR	New York Stock Exchange



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


(In thousands, except share data)	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	71,722		$	56,352		$	49,035		$	56,118
Receivables, net	252,154			265,866			249,197			254,394
Inventories	189,571			165,336			193,464			196,896
Prepaid expenses and other current assets	20,492			17,483			23,671			15,904
Total current assets	533,939			505,037			515,367			523,312

Property, plant and equipment, net	316,062			315,320			316,597			316,293
Operating lease assets							27,365			—
Goodwill	44,020			43,620			43,889			43,832
Other intangible assets, net	27,622			30,004			23,285			25,160
Deferred tax assets	4,484			4,753			4,632			4,516
Other assets	3,587			3,982			3,363			2,741
Total assets	$	929,714		$	902,716		$	934,498		$	915,854

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	$	3,584		$	1,518		$	5,657		$	2,522
Accounts payable	93,254			88,648			96,359			90,607
Accrued liabilities	39,769			68,248			42,205			48,797
Total current liabilities	136,607			158,414			144,221			141,926

Long-term debt, less current portion	193,636			158,957			156,655			159,225
Noncurrent operating lease liabilities							21,850			—
Deferred tax liabilities	36,158			31,580			36,936			37,486
Other noncurrent liabilities	8,590			6,285			8,707			7,536
Total liabilities	374,991			355,236			368,369			346,173

Commitments and contingencies (Note 9)

Common stock, $0.01 par value (200,000,000 shares authorized and 106,071,255 and 104,571,839 shares issued, respectively)	1,061			1,046
Common stock, $0.01 par value (200,000,000 shares authorized and 106,696,719 and 106,362,991 shares issued, respectively)							1,067			1,064
Paid-in capital	611,667			603,849			618,626			617,276
Accumulated other comprehensive loss	(63,097		)	(53,219		)	(67,873		)	(67,673		)
Retained earnings	134,589			123,375			153,395			148,802
Treasury stock, at cost (15,513,806 and 15,366,504 shares, respectively)	(129,497		)	(127,571		)
Treasury stock, at cost (16,858,005 and 15,530,952 shares, respectively)							(139,086		)	(129,788		)
Total stockholders’ equity	554,723			547,480			566,129			569,681
Total liabilities and stockholders' equity	$	929,714		$	902,716
Total liabilities and stockholders’ equity							$	934,498		$	915,854


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2018			2017		2018			2017		2019		2018			2019			2018

Net income	$	10,846		$	1,632	$	18,068		$	649	$	4,306	$	10,846		$	5,588		$	18,068

Foreign currency translation adjustments (net of tax benefit of $1,486, $0, $987, $0)	(9,212		)	5,269		(9,878		)	7,824
Foreign currency translation adjustments (net of tax benefit (expense) of $(179), $1,486, $(109), $987)											1,721		(9,212		)	(200		)	(9,878		)

Comprehensive income	$	1,634		$	6,901	$	8,190		$	8,473	$	6,027	$	1,634		$	5,388		$	8,190



PART I	FINANCIAL INFORMATION	2
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of ~~Stockholders'~~Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1817
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3028
ITEM 4.	Controls and Procedures	3028
PART II	OTHER INFORMATION	3129
ITEM 1.	Legal Proceedings	3129
ITEM 1A.	Risk Factors	3129
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
ITEM 3.	Defaults Upon Senior Securities	29
ITEM 4.	Mine Safety Disclosures	29
ITEM 5.	Other Information	29
ITEM 6.	Exhibits	30
	Signatures	31
~~ITEM 3.~~	~~Defaults Upon Senior Securities~~	32
~~ITEM 4.~~	~~Mine Safety Disclosures~~	32
~~ITEM 5.~~	~~Other Information~~	32
~~ITEM 6.~~	~~Exhibits~~	32
	~~Signatures~~	33


(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Total			Common Stock		Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Total
Balance at December 31, 2016	$	998	$	558,966	$	(63,208	)	$	129,873		$	(126,086	)	$	500,543
Balance at March 31, 2019																	$	1,064	$	622,554		$	(69,594	)	$	150,084		$	(134,320	)	$	569,788
Net income	—		—		—			649			—			649			—		—			—			4,306			—			4,306
Employee stock options, restricted stock and employee stock purchase plan	11		728		—			(237		)	(1,088		)	(586		)	3		(5,833		)	—			(995		)	5,758			(1,067		)
Stock-based compensation expense	—		5,874		—			—			—			5,874			—		1,905			—			—			—			1,905
Foreign currency translation	—		—		7,824			—			—			7,824
Balance at June 30, 2017	$	1,009	$	565,568	$	(55,384	)	$	130,285		$	(127,174	)	$	514,304
Treasury shares purchased at cost																	—		—			—			—			(10,524		)	(10,524		)
Foreign currency translation, net of tax																	—		—			1,721			—			—			1,721
Balance at June 30, 2019																	$	1,067	$	618,626		$	(67,873	)	$	153,395		$	(139,086	)	$	566,129

Balance at March 31, 2018																	$	1,046	$	606,491		$	(53,885	)	$	123,743		$	(127,180	)	$	550,215
Net income																	—		—			—			10,846			—			10,846
Employee stock options, restricted stock and employee stock purchase plan																	15		2,617			—			—			(2,317		)	315
Stock-based compensation expense																	—		2,559			—			—			—			2,559
Foreign currency translation, net of tax																	—		—			(9,212		)	—			—			(9,212		)
Balance at June 30, 2018																	$	1,061	$	611,667		$	(63,097	)	$	134,589		$	(129,497	)	$	554,723

Balance at December 31, 2018																	$	1,064	$	617,276		$	(67,673	)	$	148,802		$	(129,788	)	$	569,681
Net income																	—		—			—			5,588			—			5,588
Employee stock options, restricted stock and employee stock purchase plan																	3		(5,524		)	—			(995		)	6,239			(277		)
Stock-based compensation expense																	—		6,874			—			—			—			6,874
Treasury shares purchased at cost																	—		—			—			—			(15,537		)	(15,537		)
Foreign currency translation, net of tax																	—		—			(200		)	—			—			(200		)
Balance at June 30, 2019																	$	1,067	$	618,626		$	(67,873	)	$	153,395		$	(139,086	)	$	566,129

Balance at December 31, 2017	$	1,046	$	603,849	$	(53,219	)	$	123,375		$	(127,571	)	$	547,480		$	1,046	$	603,849		$	(53,219	)	$	123,375		$	(127,571	)	$	547,480
Cumulative effect of accounting changes	—		—		—			(6,764		)	—			(6,764		)	—		—			—			(6,764		)	—			(6,764		)
Net income	—		—		—			18,068			—			18,068			—		—			—			18,068			—			18,068
Employee stock options, restricted stock and employee stock purchase plan	15		2,970		—			(90		)	(1,926		)	969			15		2,970			—			(90		)	(1,926		)	969
Stock-based compensation expense	—		4,848		—			—			—			4,848			—		4,848			—			—			—			4,848
Foreign currency translation, net of tax	—		—		(9,878		)	—			—			(9,878		)	—		—			(9,878		)	—			—			(9,878		)
Balance at June 30, 2018	$	1,061	$	611,667	$	(63,097	)	$	134,589		$	(129,497	)	$	554,723		$	1,061	$	611,667		$	(63,097	)	$	134,589		$	(129,497	)	$	554,723


	Six Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2018			2017			2019			2018
Cash flows from operating activities:
Net income	$	18,068		$	649		$	5,588		$	18,068
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	22,755			19,244			23,070			22,755
Stock-based compensation expense	4,848			5,874			6,874			4,848
Provision for deferred income taxes	243			(3,672		)	(1,514		)	243
Net provision for doubtful accounts	1,229			1,412			789			1,229
Gain on sale of assets	(371		)	(1,266		)	(5,128		)	(371		)
Amortization of original issue discount and debt issuance costs	2,643			2,679			2,973			2,643
Change in assets and liabilities:
Increase in receivables	(1,185		)	(48,612		)
Increase in inventories	(21,459		)	(10,500		)
(Increase) decrease in receivables							6,583			(1,185		)
(Increase) decrease in inventories							3,868			(21,459		)
Increase in other assets	(3,417		)	(2,773		)	(5,058		)	(3,417		)
Increase in accounts payable	6,659			15,590			6,207			6,659
Increase (decrease) in accrued liabilities and other	(9,326		)	43,685
Decrease in accrued liabilities and other							(10,012		)	(9,326		)
Net cash provided by operating activities	20,687			22,310			34,240			20,687

Cash flows from investing activities:
Capital expenditures	(24,458		)	(16,644		)	(23,866		)	(24,458		)
Proceeds from sale of property, plant and equipment							5,708			920
Refund of proceeds from sale of a business	(13,974		)	—			—			(13,974		)
Proceeds from sale of property, plant and equipment	920			1,222
Business acquisitions, net of cash acquired	(249		)	—			—			(249		)
Net cash used in investing activities	(37,761		)	(15,422		)	(18,158		)	(37,761		)

Cash flows from financing activities:
Borrowings on lines of credit	203,716			—			135,952			203,716
Payments on lines of credit	(171,796		)	—			(141,317		)	(171,796		)
Debt issuance costs	(11		)	(335		)	(917		)	(11		)
Proceeds from employee stock plans	3,700			1,517			1,090			3,700
Purchases of treasury stock	(3,074		)	(2,382		)	(17,365		)	(3,074		)
Other financing activities	2,515			2,333			2,758			2,515
Net cash provided by financing activities	35,050			1,133
Net cash provided by (used in) financing activities							(19,799		)	35,050

Effect of exchange rate changes on cash	(2,926		)	2,017			(125		)	(2,926		)

Net increase in cash, cash equivalents, and restricted cash	15,050			10,038
Net increase (decrease) in cash, cash equivalents, and restricted cash							(3,842		)	15,050
Cash, cash equivalents, and restricted cash at beginning of period	65,460			95,299			64,266			65,460
Cash, cash equivalents, and restricted cash at end of period	$	80,510		$	105,337		$	60,424		$	80,510



(In thousands)	Balance at December 31, 2017	Impact of Adoption of New Revenue Recognition Guidance		Impact of Adoption of New Intra-Entity Transfers of Assets Guidance		Balance at January 1, 2018
Receivables, net	265,866	(8,441	)	—		257,425
Inventories	165,336	5,483		—		170,819
Deferred tax liabilities	31,580	(679	)	4,485		35,386
Retained earnings	123,375	(2,279	)	(4,485	)	116,611



(In thousands)
Receivables	$	14,527
Inventories	3,207
Other current assets	114
Property, plant and equipment	16,002
Intangible assets	26,970
Total assets acquired	60,820

Current liabilities	7,133
Total liabilities assumed	7,133

Net assets purchased	53,687
Goodwill	23,750
Total purchase consideration	$	77,437

Cash conveyed at closing in 2017	$	44,750
Equity issued at closing in 2017	32,438
Cash conveyed at working capital settlement in 2018	249
Total purchase consideration	$	77,437



Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
April 2018	6,087	$	9.80	—	$	33.5
May 2018	—	$	—	—	$	33.5
June 2018	274,497	$	10.83	—	$	33.5
Total	280,584	$	10.80	—