| OTHER FINANCIAL DATA | OTHER FINANCIAL DATA 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. 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 Condensed Consolidated Balance Sheets for all periods presented. The operating results related to these lines of business have been included in discontinued operations in our Condensed Consolidated Statements of Operations for all periods presented. See Note 2 - Discontinued Operations for further detail. Private Placement On August 8, 2016, we entered into the Purchase Agreement with the Purchaser to issue and sell to the Purchaser in a private placement an aggregate principal amount of $20 million of our Series A Preferred Units and a Warrant that may be exercised to purchase common units representing limited partner interests in the Partnership. The first half of the Preferred Units converted into 993,049 common units on November 3, 2016 and the second half converted to 985,222 common units on February 15, 2017. We also issued to the Purchaser a warrant to purchase approximately 890,000 common units at an exercise price of $10.82 per common unit. The Warrant, which expires on August 16, 2022, was exercisable immediately upon issuance and contains a cashless exercise provision and other customary provisions and protections, including anti-dilution protections. This warrant is classified as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity, and is included in Other long-term liabilities on our Condensed Consolidated Balance Sheets. This warrant has not been exercised as of March 31, 2017 . Public Offering In November 2016, we completed a public offering of 3,400,000 of our common units at a price of $10.00 per unit and granted the underwriters an option to purchase up to an additional 510,000 common units, which the underwriter exercised in full. The offering closed on November 23, 2016. We received proceeds (net of underwriting discounts and offering expenses) from the offering of approximately $36.9 million The net proceeds from this offering were used to repay outstanding borrowings under our revolving credit agreement. Allowance for Doubtful Accounts The allowance for doubtful accounts totaled $0.9 million and $3.1 million at March 31, 2017 and December 31, 2016 , respectively. Inventories Inventories consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Sand finished goods $ 9,656 $ 9,631 Sand work in process 3,307 7,597 Sand raw materials and supplies 290 229 Total $ 13,253 $ 17,457 During the first quarter of 2016, we wrote down $5.4 million of our sand inventory based on our lower or cost or market analysis. We attributed this write-down to declining market conditions and a significant decline in prices. Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Escrow receivable, current $ 5,256 $ 5,253 Prepaid lease assets, current 3,464 3,408 Prepaid insurance 793 826 Other 2,646 1,887 Total $ 12,159 $ 11,374 Property, Plant and Equipment Property, plant and equipment consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Machinery and equipment (1) $ 90,035 $ 90,035 Buildings and improvements (1) 66,190 66,190 Land and improvements (1) 45,065 45,065 Mineral reserves 30,181 30,181 Construction in progress 3,529 1,878 Capitalized reclamation costs 2,445 2,445 Total cost 237,445 235,794 Accumulated depreciation and depletion 74,150 70,310 Net property, plant and equipment $ 163,295 $ 165,484 (1) Includes assets under capital lease We classified $473 thousand and $371 thousand to assets held for sale for continuing operations as of March 31, 2017 and December 31, 2016 . We recognized $3.9 million and $5.1 million of depreciation and depletion expense for the three months ended March 31, 2017 and 2016 , respectively. Depreciation and depletion expense for continuing operations totaled $4.2 million for the three months ended March 31, 2016 . Property, plant and equipment included as part of the assets held for sale were no longer depreciated from the time that they were classified as such. Intangible Assets Our intangible assets consisted of the following: Cost Accumulated Amortization Net ($ in thousands) March 31, 2017: Patents $ 7,443 $ 3,943 $ 3,500 Supply and transportation agreements 569 140 429 Non-compete agreement 100 27 73 Total $ 8,112 $ 4,110 $ 4,002 December 31, 2016: Patents $ 7,443 $ 3,195 $ 4,248 Supply and transportation agreements 569 112 457 Non-compete agreement 100 24 76 Total $ 8,112 $ 3,331 $ 4,781 We recognized $0.8 million and $2.2 million of amortization expense for the three months ended March 31, 2017 and 2016 , respectively. Amortization expense for continuing operations totaled $0.7 million for the three months ended March 31, 2016 . Other Assets, Net Other assets, net consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Deferred lease asset (1) $ 8,813 $ 8,826 Prepaid lease assets, net of current portion (2) 8,360 8,616 Escrow receivable, non-current (3) 5,544 5,459 Other 2,402 2,429 Total $ 25,119 $ 25,330 (1) During 2016, we completed negotiations with various railcar lessors pursuant to which we terminated a future order of railcars, deferred future railcar deliveries and reduced and deferred payments on existing leases. The related rent expense is recorded on a straight-line basis over the lease term. (2) 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). This balance reflects the non-current portion of these capitalized costs. (3) Non-current receivables are recorded at net present value of estimated recoveries and will be adjusted as contingencies are resolved. Accrued Liabilities Accrued liabilities consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Mining $ 3,381 $ 227 Fuel sale related-liabilities 2,525 2,784 Current portion of business acquisition obligations 1,799 1,703 Logistics 1,560 1,814 Sand purchases and royalties 914 517 Deferred compensation 848 848 Maintenance 518 53 Salaries and other employee-related 513 710 Professional fees 508 452 Accrued interest 466 641 Sales, excise, property and income taxes 409 — Current portion of contract termination 210 160 Derivative contract liability 78 227 Other 164 1,493 Total $ 13,893 $ 11,629 Other Long-term Liabilities Other long-term liabilities consisted of the following: March 31, 2017 December 31, 2016 ($ in thousands) Long-term promissory note $ 8,480 $ 8,480 Stock warrants 7,715 7,019 Deferred lease obligation (1) 7,579 5,858 Contract and project terminations 5,244 5,319 Asset retirement obligation due 2,667 2,647 Other 1,000 1,000 Total $ 32,685 $ 30,323 (1) We recognize lease expense for operating leases on a straight-line basis over the term of the lease, beginning on the date we take possession of the property. The difference between the cash paid to the lessor and the amount recognized as lease expense on a straight-line basis is included in deferred lease obligation and classified in Other long-term liabilities on our Condensed Consolidated Balance Sheets. Long-term Promissory Note During the second quarter of 2016, we negotiated significant concessions on the majority of our railcar leases pursuant to which we cancelled or deferred deliveries on rail cars and reduced cash payments on a substantial portion of the existing rail cars in our fleets. In exchange of these concessions, we issued at par an Unsecured Promissory Note in the aggregate principal amount of $8 million (the “PIK Note”) for delivery deferrals. The PIK Note bears interest at a rate of 10% per annum payable in cash or, in certain situations, in-kind, when certain financial metrics have been met. The PIK Note will mature on June 2, 2020. We also issued warrants to purchase 370,000 common units representing limited partnership interests in the Partnership in exchange of these concessions during the second quarter of 2016. This note is included in Other long-term liabilities on our Condensed Consolidated Balance Sheets. Contract and Project Terminations In 2014 and 2015, we began development of sand processing facilities in Independence, Wisconsin and other small projects in Ohio and Missouri. Due to a number of complications, such as an increase in projected operating costs and a decline in the market price and demand for frac sand in early 2015, we determined that these projects were no longer economically viable. In 2015, we recorded a $9.3 million charge to earnings, of which $9.2 million related to the Independence, Wisconsin facilities. This charge to earnings included items such as engineering, legal and other professional service fees, site preparation costs, and writedowns of assets to estimated net realizable value. Management committed to a plan to discontinue these projects in April 2015. In accordance with Financial Accounting Standards Board (“FASB”) ASC 420, Exit or Disposal Cost Obligations, any contract termination charges and estimated values of continuing contractual obligations for which we will receive no future value will be recognized as a charge to earnings as of the contract termination date or cease-use date. We estimated these contract termination charges to be approximately $1.4 million . These liabilities will be reviewed periodically and may be adjusted when necessary, but we do not expect any such adjustments to be significant. During 2016, we negotiated concessions on the majority of our railcar leases pursuant to which we cancelled or deferred deliveries on rail cars and reduced cash payments on a substantial portion of the existing rail cars in our fleets. In exchange for these concessions, we incurred a contract termination charge of $4 million . We issued at par an Unsecured Promissory Note in the aggregate principal amount of $4 million with interest payable in cash or, in certain situations, in-kind, when certain financial metrics have been met. This note bears interest at a rate of five percent per annum and is due and payable within 30 days following the date on which financial statements are publicly available covering the first date on which these financial metrics have been met. The following table illustrates the various contract termination liabilities and exit and disposal reserves included in Accrued liabilities and Other long-term liabilities in our Condensed Consolidated Balance Sheets: ($ in thousands) Balance at December 31, 2016 $ 5,479 Contract termination charges — Accretion 60 Payments (85 ) Balance at March 31, 2017 $ 5,454 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 . As of March 31, 2017 , we do not have any liability for capital lease obligation. Fair Value Measurements Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and debt instruments. 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 . These 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 a warrant to the Purchaser to purchase approximately 890,000 common units at an exercise price of $10.82 per common unit. This Warrant 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 this warrant 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 a loss of $0.7 million during the three months ended March 31, 2017 . Retirement Plan We sponsor a 401(k) plan for substantially all employees that provides for us to match 100% of participant contributions up to 5% of the participant’s pay. Additionally, we can make discretionary contributions as deemed appropriate by management. As of July 1, 2016, all employer contributions to the 401(k) plan were suspended. Employer contributions to these plans for continuing operations totaled $90 thousand for the three months ended March 31, 2016 . We classified $54 thousand as Income from discontinued operations, net of taxes, for the three months ended March 31, 2016 . 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 effects possibly continuing into the second quarter. Concentration of Credit Risk We provide credit, in the normal course of business, to customers located throughout the United States and Canada. We encounter a certain amount of credit risk as a result of a concentration of receivables among a few significant customers. We perform ongoing credit evaluations of our customers and generally do not require collateral. The trade receivables (as a percentage of total trade receivables) as of March 31, 2017 and December 31, 2016 from such significant customers are set forth below: March 31, 2017 December 31, 2016 Customer A 29 % 22 % Customer B 17 % 13 % Customer C 10 % 16 % Significant customers The table shows our significant customers for our continuing operations for the three months ended March 31, 2017 and 2016 . March 31, 2017 March 31, 2016 Customer A 32 % 34 % Customer B 17 % * Customer D * 18 % An asterisk indicates revenue is less than ten percent. Geographical Data Although we own no long-term assets outside the United States, our Sand business began selling product in Canada during 2013. We recognized $4.2 million and $5.7 million of revenues in Canada for the three months ended March 31, 2017 and 2016 , respectively. All other sales have occurred in the United States. 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 , and ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients , 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 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 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. |
