| 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. We will periodically evaluate the carrying value of our property, plant and equipment based upon the estimated cash flows to be generated by the related assets. If impairment is indicated, a loss will be recognized. 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 discontinued operations 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. Allowance for Doubtful Accounts The allowance for doubtful accounts was $3.8 million and $1.9 million at June 30, 2016 and December 31, 2015 , respectively. Of these amounts, allowance for doubtful accounts for continuing operations totaled $3.2 million and $1.4 million at June 30, 2016 and December 31, 2015 , respectively. Inventories Inventories for continuing operations consisted of the following: June 30, 2016 December 31, 2015 ($ in thousands) Sand finished goods $ 13,378 $ 12,224 Sand work in process 6,731 17,796 Sand raw materials and supplies 196 142 Total $ 20,305 $ 30,162 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 attribute this write down to declining market conditions and a significant decline in prices. We classified $8.8 million and $12.5 million of our inventories related to our Fuel business to assets held for sale as of June 30, 2016 and December 31, 2015 , respectively. See Note 2 - Discontinued operations for further information. Property, Plant and Equipment Property, plant and equipment for continuing operations consisted of the following: June 30, 2016 December 31, 2015 ($ in thousands) Machinery and equipment (1) $ 88,057 $ 87,357 Buildings and improvements (1) 66,280 66,215 Land and improvements (1) 45,065 45,065 Mineral reserves 30,181 30,181 Construction in progress 2,694 2,532 Capitalized reclamation costs 2,445 2,445 Total cost 234,722 233,795 Accumulated depreciation and depletion 62,527 54,275 Net property, plant and equipment $ 172,195 $ 179,520 (1) Includes assets under capital lease We classified $59.4 million and $54.1 million of our property, plant and equipment related to our Fuel business to assets held for sale as of June 30, 2016 and December 31, 2015 , respectively. See Note 2 - Discontinued operations for further information. We recognized $9.1 million and $10.3 million of depreciation and depletion expense for the six months ended June 30, 2016 and 2015 , respectively. Of these amounts, depreciation and depletion expense for continuing operations totaled $8.3 million and $8.5 million at June 30, 2016 and 2015 , respectively. Property, plant and equipment that have been included as part of the assets held for sale are no longer depreciated from the time that they are classified as such. We will periodically evaluate the carrying value of its property, plant and equipment based upon the estimated cash flows to be generated by the related assets. If impairment is indicated, a loss will be recognized. Intangible Assets Other Than Goodwill Our intangible assets for continuing operations consisted of the following: Cost Accumulated Amortization Net ($ in thousands) June 30, 2016: Patents $ 7,443 $ 1,698 $ 5,745 Supply and transportation agreements 569 55 514 Non-compete agreement 100 19 81 Total $ 8,112 $ 1,772 $ 6,340 December 31, 2015: Patents $ 7,000 $ 234 $ 6,766 Supply and transportation agreements 471 — 471 Non-compete agreement 100 14 86 Total $ 7,571 $ 248 $ 7,323 We classified $22.7 million and $24.1 million of our intangible assets other than goodwill related to our Fuel business to assets held for sale as of June 30, 2016 and December 31, 2015 , respectively. See Note 2 - Discontinued operations for further information. We recognized $3.0 million and $3.5 million of amortization expense for the six months ended June 30, 2016 and 2015 , respectively. Of these amounts, amortization expense for continuing operations totaled $1.5 million and $0 million for the six months June 30, 2016 and 2015 , respectively. Other Assets, Net Other assets, net for continuing operations consisted of the following: June 30, 2016 December 31, 2015 ($ in thousands) Prepaid lease assets, net of current portion (1) $ 10,285 $ 11,796 Deferred lease asset (2) 8,851 — Other 1,922 1,434 Total $ 21,058 $ 13,230 (1) 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. (2) During the first six months of 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. The cumulative excess of rent expense over rent payments is recorded as a deferred lease asset and recorded in “Other assets” in the accompanying Condensed Consolidated Balance Sheets. We classified $43 thousand of our other assets, net related to our Fuel business to assets held for sale as of June 30, 2016 and December 31, 2015 . See Note 2 - Discontinued operations for further information. Accrued Liabilities Accrued liabilities for continuing operations consisted of the following: June 30, 2016 December 31, 2015 ($ in thousands) Current portion of business acquisition obligations $ 1,913 $ 2,843 Logistics 1,840 2,486 Sales, excise, property and income taxes 1,045 198 Accrued interest 887 947 Deferred compensation 848 1,191 Derivative contract liability 729 472 Salaries and other employee-related 635 491 Mining 429 — Sand purchases and royalties 242 520 Current portion of contract termination 160 135 Maintenance 40 — Purchase of intangible assets — 2,500 Other 2,392 1,511 Total $ 11,160 $ 13,294 We classified $6.0 million and $5.1 million of our accrued liabilities related to our Fuel business to liabilities held for sale as of June 30, 2016 and December 31, 2015 , respectively. See Note 2 - Discontinued operations for further information. Other Long-term Liabilities Other Long-term Liabilities for continuing operations consisted of the following: June 30, 2016 December 31, 2015 ($ in thousands) Long-term promissory note $ 8,064 $ — Contract and project terminations 5,130 1,162 Asset retirement obligation due 2,612 2,570 Other 2,604 1,000 Total $ 18,410 $ 4,732 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 in 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”) Accounting Standards Codification (“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 the first half of 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 $4 million with interest payable in cash or, in certain situations, in-kind, when certain financial metrics have been met. This note bears interest at a rate of five percent per annum and are is due and payable within 30 days following the date on which financial statements are publicly available covering the first date on which these financial metrics have been met. The following table illustrates the various contract termination liabilities and exit and disposal reserves included in Accrued liabilities and Other long-term liabilities in our Condensed Consolidated Balance Sheets: ($ in thousands) Balance at December 31, 2015 $ 1,297 Contract termination charges 4,000 Accretion 84 Payments (24 ) Balance at June 30, 2016 $ 5,357 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 . Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, restricted cash and equivalents, accounts receivable, accounts payable and debt instruments. The carrying amounts of cash and cash equivalents, restricted 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. 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. 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. Our employer contributions to these plans for continuing operations totaled $177 thousand and $299 thousand for the six months ended June 30, 2016 and 2015 , respectively. We classified $118 thousand and $157 thousand to Income from discontinued operations, net of taxes for the six months ended June 30, 2016 and 2015 , respectively. As of July 1, 2016, we have suspended all employer contributions to this plan. 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 June 30, 2016 and December 31, 2015 from such significant customers are set forth below: June 30, 2016 December 31, 2015 Customer A 18 % 11 % Customer B 13 % * Customer C * 12 % Customer D * 12 % An asterisk indicates balance is less than ten percent. For continuing operations, the trade receivables (as a percentage of total trade receivables) as of June 30, 2016 and December 31, 2015 from such significant customers are set forth below: June 30, 2016 December 31, 2015 Customer A 35 % 16 % Customer D * 17 % Customer E 13 % 10 % Customer F 10 % * Customer G * 13 % Customer B 25 % * Customer C * 18 % An asterisk indicates balance is less than ten percent. Significant customers No individual customer represented 10% of total revenues for the six months ended June 30, 2016 , while one customer represented 10% of revenues for the six months ended June 30, 2015 . The table shows our significant customers for our continuing operations for the three months ended June 30, 2016 and 2015 . June 30, 2016 June 30, 2015 Customer A 35 % * Customer G 16 % 18 % Customer H * 19 % Customer C * 24 % 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 $8.0 million and $22.9 million of revenues in Canada for the six months ended June 30, 2016 and 2015 , respectively. All other sales have occurred in the United States. Interim Indicators of Impairment Goodwill The $29.3 million balance of goodwill at June 30, 2016 is related solely to our Fuel business. At June 23, 2016, we entered into a Purchase and Sale Agreement to sell our Fuel business. Accordingly, Goodwill is classified as held for sale on the Condensed Consolidated Balance Sheets. Long-Lived Assets We believe the decrease in our common units’ market value is attributable primarily to our Sand business’ decreasing profits and the frac sand industry’s downturn. Therefore, we have assessed the recoverability of long-lived assets for our Sand business, and determined that the carrying values are recoverable from our forecasted cash flows as of June 30, 2016 . 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 are evaluating the effect of adopting this new accounting guidance. 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. The new guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. 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 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. We are evaluating the effect of adopting this new accounting guidance. 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. |
