| SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and such differences could be material. Assets Held for Sale We consider assets to be held for sale when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset is expected to be completed within one year and it is unlikely that significant changes will be made to the plan. Upon designation as held for sale, we record the carrying value of the assets at the lower of its carrying value or its estimated fair value, less costs to sell. In accordance with generally accepted accounting principles, assets held for sale are not depreciated or amortized. Discontinued Operations The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the discontinued segment that may be reasonably segregated from the costs of the ongoing operations of the Company. The assets and liabilities have been accounted for as assets held for sale in our Consolidated Balance Sheets for all periods presented. The operating results related to these lines of business have been included in discontinued operations in our Consolidated Statements of Operations for all periods presented. See Note 4 - Discontinued Operations for further detail. Restricted Cash and Equivalents We were required under agreements with our chief executive officer (“CEO”) and an officer in our Sand business (the “Sand Officer”) to establish and maintain Rabbi Trusts used to fund deferred compensation as described in the agreements. Restricted cash and equivalents were invested in short-term instruments at market rates; therefore the carrying values approximated fair value. In May 2014, all funds in the Rabbi Trusts were distributed to our CEO and Sand Officer and the Rabbi Trusts were terminated. Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recognized at their invoiced amounts and do not bear interest. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate our allowances for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances for doubtful accounts might be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance for doubtful accounts. For our continuing operations, the allowance for doubtful accounts was $3.1 million at December 31, 2016 and $1.4 million at December 31, 2015 . Inventories Finished goods inventories consist of dried sand. Finished sand costs include all transportation costs necessary to transport the finished sand to the point of sale. All inventories are stated at the lower of cost or market using the average cost method. Raw materials inventories consist of unprocessed sand and supplies. Raw materials inventories are stated at the lower of cost or market using the average cost method. Wet sand is included in work in process. Overhead in our Sand business is capitalized at an average rate per unit based on actual costs incurred. Property, Plant and Equipment, net We recognize purchases of property, plant and equipment at cost, including any capitalized interest. Maintenance, repairs and renewals are expensed when incurred. Additions and significant improvements are capitalized. Disposals are removed at cost less accumulated depreciation and any gain or loss from dispositions is recognized in income. We capitalized $0.6 million of interest on construction of assets for the years ended December 31, 2014 . Depreciation of property, plant and equipment other than mineral reserves is provided for on a straight-line basis over their estimated useful lives. We recognized $16.9 million , $19.2 million , and $15.2 million of depreciation expense for the years ended December 31, 2016 , 2015 and 2014 , respectively. Of these amounts, depreciation expense for continuing operations totaled $16.0 million , $15.7 million , and $11.6 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. Mineral reserves are initially recognized at cost, which approximates the estimated fair value as of the date of acquisition. The provision for depletion of the cost of mineral reserves is computed on the units-of-production method. Under this method, we compute the provision by multiplying the total cost of the mineral reserves by a rate arrived at dividing the physical units of sand produced during the period by the total estimated mineral resources at the beginning of the period. Depletion expense for the years ended December 31, 2016 , 2015 and 2014 totaled $0.1 million , $2.0 million , and $1.2 million , respectively. All depletion expense is related to our sand business and is therefor included in continuing operations. Following are the estimated useful lives of our property, plant and equipment: Useful Lives (in Years) Building and land improvements including assets under capital lease 10 – 39 Mineral reserves N/A* Railroad and related improvements 20 – 40 Machinery and equipment 5 – 10 Plant equipment including assets under capital lease 5 – 7 Industrial vehicles 3 – 7 Furniture, office equipment and software 3 – 7 Leasehold improvements 3 – 5 or lease term, whichever is less * Depletion calculated using units-of-production method Impairment or Disposal of Long-Lived Assets In accordance with FASB ASC 360-10-05, Impairment or Disposal of Long-Lived Assets , long-lived assets such as property, plant and equipment, and intangible assets subject to amortization are reviewed for impairments whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less selling costs. The recoverability of intangible assets subject to amortization is also evaluated whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In management's opinion, no impairment of long-lived assets exists at December 31, 2016 and 2015 . Intangible Assets Intangible assets consist of trade names, patents, customer relationships, supply and transportation arrangements, and non-compete agreements. Trade names are amortized on a straight-line basis over 15 years ; patents are amortized on a straight line basis over 30 months , customer relationships are amortized using an accelerated amortization method over 15 years ; supply and transportation arrangements are amortized using the straight-line method over varying periods up to 54 months , depending on the contract terms; and the non-compete agreements are amortized on a straight-line basis over the terms of the agreements. We recognized $4.5 million , $7.2 million , and $8.4 million of amortization expense for 2016 , 2015 and 2014 , respectively. Of these amounts, amortization expense for continuing operations totaled $3.1 million , $243 thousand , and $4 thousand , respectively. Railcar Freight Costs The cost to transport leased railcars from the manufacturer to our site for initial placement in service is capitalized and amortized over the term of the lease (typically five to seven years). The non-current portion of these capitalized costs totaled $8.6 million and $11.8 million as of December 31, 2016 and 2015 , respectively, and is included in “Other assets, net” on our Consolidated Balance Sheets. Derivative Instruments and Hedging Activities We account for derivatives and hedging activities in accordance with FASB ASC 815, Derivatives and Hedging , which requires entities to recognize all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. For derivative instruments that do not qualify as an accounting hedge, changes in fair value of the assets and liabilities are recognized in earnings. Our policy is to not hold or issue derivative instruments for trading or speculative purposes. Mining and Wet Sand Processing Agreement In April 2014, a five-year contract with a sand processor (“Processor”) became effective to support our sand business in Wisconsin. Under this contract, the Processor financed and built a wet wash processing plant near our Wisconsin operations. As part of the agreement, the Processor wet washes our sand, creates stockpiles of washed sand and maintains the plant and equipment. During the term of the agreement the Processor will own the wet plant along with the equipment and other temporary structures used to support this activity. At the end of the five -year term of the agreement or following a default under the contract by the Processor, we have the right to take ownership of the wet plant and other equipment without charge. Subject to certain conditions, ownership of the plant and equipment will transfer to us at the expiration of the term. We accounted for the wet plant as a capital lease obligation. The original capitalized lease asset and corresponding capital lease obligation totaled $ 3.3 million . Asset Retirement Obligations We follow the provisions of FASB ASC 410-20, Asset Retirement Obligations, which generally applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. The standard requires us to recognize an estimated liability for costs associated with the future reclamation of sand mining properties, whether leased or owned, whenever we have a legal obligation to restore the site in the future. A liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset is recognized at the time the land is mined. The asset is depleted using the straight-line method, and the discounted liability is increased through accretion over the remaining life of the mine site. The estimated liability is based on historical industry experience in abandoning mine sites, including estimated economic lives, external estimates as to the cost to bringing back the land to federal and state regulatory requirements. We have utilized a discounted rate reflecting management's best estimate of our credit-adjusted risk-free rate. Revisions to the liability could occur due to changes in the estimated costs, changes in the mine's economic life or if federal or state regulators enact new requirements regarding the abandonment of mine sites. Changes in the asset retirement obligations are as follows: Year Ended December 31, 2016 2015 ($ in thousands) Beginning balance $ 2,570 $ 2,386 Accretion 82 80 Reclamation costs (5 ) (9 ) Additions — 113 Ending balance $ 2,647 $ 2,570 Revenue Recognition Our revenue is recognized when persuasive evidence of an arrangement exists, delivery of products has occurred, the sales price charged is fixed or determinable, and collectability is reasonably assured. This generally means that we recognize revenue when our products leave our facilities. Sand and fuel are generally transported via railcar or trucking companies hired by the customer. We sell some of our Sand business products under short-term price agreements or at prevailing market rates. A portion of our sand business revenues are realized through take-or-pay supply agreements with large oilfield service companies. The initial terms of these contracts expire between 2016 and 2021. These agreements define, among other commitments, the volume of product that our customers must purchase, the volume we must provide and the price that we will charge, as well as the rate that our customers will pay. Prices under these agreements are generally fixed and subject to adjustment, upward or downward, only for certain changes in published producer cost indices or market factors. With respect to the take-or-pay arrangements, if the customer is unable to carry forward minimum quantity deficiencies, we recognize Sand segment revenues to the extent of the minimum contracted quantity, assuming payment has been received or is reasonably assured. If deficiencies can be carried forward, receipts in excess of actual sales are recognized as deferred revenues until product is actually delivered or the right to carry forward minimum quantities expires. Equity-Based Compensation and Equity Incentive Plan We recognize expenses for equity-based compensation based on the fair value method, which requires that a fair value be assigned to a unit grant on its grant date and that this value be amortized over the grantees' required service period. Restricted and phantom units have a fair value equal to the closing market price of the common units on the date of the grant. We amortize the fair value of the restricted and phantom units over the vesting period using the straight-line method. Pursuant to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, as of January 1, 2016, we now recognize forfeitures as they occur. For market-based awards, we make estimates as to the probability of the underlying market conditions being achieved and record expense if the conditions will probably be achieved. Environmental Costs Environmental costs are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. We capitalize expenditures that extend the life of the related property or mitigate or prevent future environmental risk. We record liabilities when site restoration and environmental remediation, cleanup and other obligations are either known or considered probable and can be reasonably estimated. Such estimates require judgment with respect to costs, time frame and extent of required remedial and clean-up activities and are subject to periodic adjustments based on currently available information. At December 31, 2016 and 2015 , we had no accrued expenses related to environmental costs. Provision for Income Taxes For federal income tax purposes, we report our income, expenses, gains, and losses as a partnership not subject to income taxes. As such, each partner is responsible for his or her share of federal and state income tax. Net earnings for financial statement purposes may differ significantly from taxable income reportable to each partner as a result of differences between the tax basis and financial reporting basis of assets and liabilities. We are responsible for our portion of the Texas margin tax that is included in our subsidiaries' consolidated Texas franchise tax returns. The margin tax qualifies as an income tax under GAAP, which requires us to recognize the impact of this tax on the temporary differences between the financial statement assets and liabilities and their tax basis attributable to such tax. Fair Value Measurements Fair value is an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2, or 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included with Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market. Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt instruments and warrants. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their fair values due to their short maturities. The carrying amounts of our revolving credit facility approximates fair value because the underlying instrument includes provisions that adjust our interest rates based on current market rates. The fair values of our other long-term liabilities are not materially different from their carrying values. On June 2, 2016, we issued warrants to lessors to purchase 370,000 common units representing limited partnership interests in the partnership for concessions on various long-term leases. These warrants may be exercised at any time and from time to time during next five years, at an exercise price per common unit equal to $4.77 . The fair value of these warrants was calculated at $2.45 per unit based on a Black Scholes valuation model, utilizing Level 2 inputs based on the hierarchy established in ASC 820, Fair Value Measurement. On August 8, 2016, we, as part of the private placement described above, also issued warrants to the Purchaser to purchase approximately 890,000 common units at an exercise price of $10.82 per common unit. The Warrants shall be exercisable for a period of six years from the closing date and include customary provisions and protections, including anti-dilution protections. The fair value of these warrants at issuance date was calculated at $5.56 per unit based on a Black Scholes valuation model, utilizing Level 2 inputs based on the hierarchy established in ASC 820, Fair Value Measurement. This liability is marked to market each quarter with fair value gains and losses recognized immediately in earnings and included in Other income (expense) on our Consolidated Statements of Operations. We recorded non-cash mark to market adjustments of $2.1 million during the year ended December 31, 2016 . Concentration of Credit Risk Financial instruments that potentially subject us to concentration of credit risk are cash and cash equivalents and trade accounts receivable. Cash deposits with banks are federally insured up to $250,000 per depositor at each financial institution; and certain of our cash balances did exceed federally insured limits as of December 31, 2016 . We maintain our cash and cash equivalents in financial institutions we consider to be of high credit quality. We provide credit, in the normal course of business, to customers located throughout the United States and Canada. We perform ongoing credit evaluations of our customers and generally do not require collateral. In addition, we regularly evaluate our credit accounts for loss potential. The trade receivables (as a percentage of total trade receivables) as of December 31, 2016 and December 31, 2015 from such significant customers are set forth below: December 31, 2016 December 31, 2015 Customer A 22 % 16 % Customer B 16 % 17 % Customer C 13 % * Customer D * 18 % Customer E * 13 % Customer F * 10 % An asterisk indicates balance is less than ten percent. Significant Customers Customer A represented 13.2% of total revenues for continuing and discontinued operations for the year ended December 31, 2016 . No other customers exceeded 10% of the total revenues for the years ended ended December 31, 2016 , 2015 , and 2014 . The table shows our significant customers for our continuing operations for the years ended December 31, 2016 , 2015 , and 2014 . December 31, 2016 December 31, 2015 December 31, 2014 Customer A 39 % 11 % * Customer E 12 % 17 % * Customer G * 15 % 29 % Customer D * 13 % 16 % An asterisk indicates revenue is less than ten percent. Segment Information On August 31, 2016, we completed the sale of our Fuel business. Accordingly, we have discontinued segment reporting. The assets and liabilities of the fuel business have been accounted for as assets held for sale in our consolidated balance sheets for all periods presented. The operating results related to these lines of business have been included in discontinued operations in our consolidated statements of operations for all periods presented. Geographical Data Although we own no long-term assets outside the United States, our Sand segment began selling product in Canada during 2013. We recognized $15.6 million , $39.1 million and $30.8 million of revenues in Canada for the years ended December 31, 2016 , 2015 , and 2014, respectively. All other sales have occurred in the United States. Seasonality For our Sand business, winter weather affects the months during which we can wash and wet-process sand in Wisconsin. Seasonality is not a significant factor in determining our ability to supply sand to our customers because we accumulate a stockpile of wet sand feedstock during non-winter months. During the winter, we process the stockpiled sand to meet customer requirements. However, we sell sand for use in oil and natural gas production basins where severe weather conditions may curtail drilling activities. This is particularly true in drilling areas located in the northern U.S. and western Canada. If severe winter weather precludes drilling activities, our frac sand sales volume may be adversely affected. Generally, severe weather episodes affect production in the first quarter with possible effect continuing into the second quarter. Other Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period presentation. These reclassifications do not impact net income (loss) and do not reflect a material change in the information previously presented in our consolidated financial statements. Recent Accounting Pronouncements In May 2014, August 2015 and May 2016, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date , ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients , and ASU 2016-20, Revenue from Contracts with Customers, Technical Corrections and Improvements, respectively, as a new Topic, Accounting Standards Codification Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue 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. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for annual periods beginning after December 15, 2017 with early adoption permitted on January 1, 2017 and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We have certain contractual arrangements that include "take-or-pay" provisions. The fixed fees to which we have an unconditional right under these contracts could be subject to certain recognition changes and additional disclosure under ASU 2014-09. As we are in the process of evaluating the impact of the standard, we have not yet quantified the impact of adoption or determined the method of adoption. During 2017, we will perform the remainder of our implementation process, which will include quantification of impact, selection of adoption method and development of policies. We will adopt this guidance in the first quarter of 2018. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern . This ASU requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. We adopted this new accounting guidance in December 2016. There was no impact on our financial position, results of operations or cash flows. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory . Under this ASU, inventory will be measured at the lower of cost and net realizable value and options that currently exist for market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. We will adopt the new guidance in the first quarter of 2017 and do not expect adoption will have a material impact on our financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU requires lessees to recognize lease assets and lease liabilities generated by contracts longer than a year on their balance sheet. The ASU also requires companies to disclose in the footnotes to their financial statements information about the amount, timing, and uncertainty for the payments they make for the lease agreements. ASU 2016-02 is effective for public companies for annual periods and interim periods within those annual periods beginning after December 31, 2018. Early adoption is permitted for all entities. While we are not yet in a position to assess the full impact of the application of this ASU, we expect that the impact of recording the lease liabilities and the corresponding additional assets will have a significant impact on our financial position and results of operations and related disclosures in the notes to our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting . This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. ASU 2016-09 is effective for public companies for annual periods and interim periods within those annual periods beginning after December 15, 2016. We adopted this ASU as of January 1, 2016. As a result, we changed our accounting policy to recognize forfeitures as they occur. The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows . This ASU provides classification guidance for certain cash receipts and cash payments including payment of debt extinguishment costs, settlement of zero-coupon debt instruments, insurance claim payments and distributions from equity method investees. ASU 2016-15 is effective on January 1, 2018, with early adoption permitted. We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on our financial position, results of operations or cash flows. In November 2016 the FASB issued ASU 2016-18, Statement of Cash Flows. This ASU requires entities to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one-line item on the balance sheet, a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet is required. The guidance will be effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Early adoption is permitted. We currently do not have any restricted cash and do not expect adoption will have a material impact on our financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations. This ASU provides guidance to entities to assist with evaluating when a set of transferred assets and activities (collectively, the "set") is a business and provides a screen to determine when a set is not a business. Under this ASU, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. ASU 2017-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. Early adoption is permitted for interim or annual periods in which the financial statements have not been issued. This guidance will be adopted and applied to business combinations in the future. |
