Bison Merger Sub I (FMSA) 8-K Other Events

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 1, 2016

FAIRMOUNT SANTROL HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36670	34-1831554
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
8834 Mayfield Road, Chesterland, Ohio		44026
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (800) 255-7263

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events.

As disclosed in Fairmount Santrol Holdings Inc.’s (the “Company’s”) Quarterly Report on Form 10-Q for the period ended September 30, 2016, the Company evaluated the reporting of its segments, Proppant Solutions and Industrial & Recreational Products. Previously, the segment results were reported based on segment contribution margin. Segment contribution margin included selling, general, and administrative expenses directly allocable to an operating segment and excluded certain corporate costs not associated with the operations of the segment. These corporate costs were separately stated, and included costs related to functional areas such as operations management, corporate purchasing, accounting, treasury, information technology, legal and human resources. After evaluation of the Company’s comparability to industry peers and practices, the Company’s CEO, who is the chief operating decision maker, changed the method to evaluate the Company’s operating segments’ performance based on segment gross margin. Segment gross margin does not include any selling, general, and administrative costs or corporate costs. The change to using segment gross margin results in an increase in segment profitability compared to segment contribution margin as allocable selling, general, and administrative costs were charged against segment contribution margin. This change was effective beginning the three months ended September 30, 2016.

For comparability purposes, the following is a reconciliation of previously reported segment contribution margin to segment gross margin for the periods presented. The Company has evaluated its Management Discussion and Analysis for these previous periods and determined that the explanations provided for the material variances of segment results are not impacted by the change of the measurement from segment contribution margin to segment gross margin.

Fairmount Santrol

Segment Reports

(unaudited)

	Three Months Ended																	Year Ended December 31,
	March 31, 2015		June 30, 2015			September 30, 2015		December 31, 2015			March 31, 2016		June 30, 2016			September 30, 2016		2015		2014		2013
	(in thousands, except volume amounts)																	(in thousands, except volume amounts)
Volume (tons)
Proppant Solutions
Raw sand		1,487,414		1,387,203			1,309,428		1,253,257			1,413,248		1,230,077			1,657,799		5,437,302		5,713,374		4,088,136
Coated proppant		290,568		206,572			154,902		114,414			112,704		59,826			96,532		766,456		1,475,095		1,028,567
Total Proppant Solutions		1,777,982		1,593,775			1,464,330		1,367,671			1,525,952		1,289,903			1,754,331		6,203,758		7,188,469		5,116,703
Industrial & Recreational Products		534,021		641,482			569,971		555,495			587,178		661,244			668,333		2,300,969		2,425,756		2,461,750
Total volumes		2,312,003		2,235,257			2,034,301		1,923,166			2,113,130		1,951,147			2,422,664		8,504,727		9,614,225		7,578,453
Revenues
Proppant Solutions	$	272,869	$	188,150		$	141,584	$	107,480		$	117,463	$	82,102		$	103,140	$	710,083	$	1,232,232	$	856,212
Industrial & Recreational Products		28,621		33,173			29,366		27,466			27,995		32,147			31,635		118,626		124,226		132,174
Total revenues		301,490		221,323			170,950		134,946			145,458		114,249			134,775		828,709		1,356,458		988,386
Segment Gross Profit
Proppant Solutions		90,110		43,594			26,788		14,734			16,592		(13,529	)		6,356		175,226		463,426		317,117
Industrial & Recreational Products		8,832		12,599			12,483		10,724			10,402		13,649			13,546		44,638		41,578		43,427
Total gross profit		98,942		56,193			39,271		25,458			26,994		120			19,902		219,864		505,004		360,544
Segment Allocated Selling, General and Administrative Expenses
Proppant Solutions		6,291		8,178			7,849		82,098			3,984		60,869			6,356		104,416		32,647		20,797
Industrial & Recreational Products		1,756		13,493			3,285		855			1,556		1,643			13,546		19,389		7,105		8,662
Total segment expenses		8,047		21,671			11,134		82,953			5,540		62,512			19,902		123,805		39,752		29,459
Segment Contribution Margin as reported
Proppant Solutions		83,819		35,416			18,939		(67,364	)		12,608		(74,398	)		—		70,810		430,779		296,320
Industrial & Recreational Products		7,076		(894	)		9,198		9,869			8,846		12,006			—		25,249		34,473		34,765
Total segment contribution margin		90,895		34,522			28,137		(57,495	)		21,454		(62,392	)		—		96,059		465,252		331,085

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 hereunto duly authorized.

	Fairmount Santrol Holdings Inc. (Registrant)
Date: December 1, 2016	/s/ Michael F. Biehl
	Michael F. Biehl
	Executive Vice President and Chief Financial Officer