Condensed Consolidating Financial Information | 17. Condensed Consolidating Financial Information The following financial information reflects consolidating financial information of the Partnership and its wholly owned guarantor subsidiaries and non-guarantor subsidiaries for the periods indicated. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of financial position, results of operations or cash flows had the guarantor subsidiaries or non-guarantor subsidiaries operated as independent entities. The Partnership has not presented separate financial and narrative information for each of the guarantor subsidiaries or non-guarantor subsidiaries because it believes such financial and narrative information would not provide any additional relative information that would be material in evaluating the sufficiency of the guarantor subsidiaries and non-guarantor subsidiaries. The Partnership anticipates issuing debt securities that will be fully and unconditionally guaranteed by the guarantor subsidiaries. These debt securities will be jointly and severally guaranteed by the guarantor subsidiaries. There are no restrictions on the Partnership’s ability to obtain cash dividends or other distributions of funds from the guarantor subsidiaries. The presentation of our Consolidating Balance Sheet as of December 31, 2015, our Consolidating Statement of Comprehensive Income (Loss) for the years ended December 31, 2015 and 2014, and our Consolidating Statement of Cash Flows for the year ended December 31, 2015 and 2014 have been updated to reflect adjustments between the Guarantors and Eliminations. These adjustments have (i) reduced the Guarantors’ notes receivable - affiliates partners’ capital partners’ capital comprehensive income Consolidating Balance Sheet As of December 31, 2016 (in thousands) Parent Guarantors Non- Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 695 $ 20,251 $ 5,747 $ — $ 26,693 Trade accounts receivable, net — 33,046 6,125 (689 ) 38,482 Accounts receivable - affiliates — 12,622 — (12,622 ) — Prepaid expenses and other — 996 46 — 1,042 Total current assets 695 66,915 11,918 (13,311 ) 66,217 Property and equipment: Property and equipment, at cost — 19,366 3,093 — 22,459 Less: Accumulated depreciation — 6,798 1,042 — 7,840 Total property and equipment, net — 12,568 2,051 — 14,619 Intangible assets, net — 23,875 5,749 — 29,624 Goodwill — 53,914 2,989 — 56,903 Investment in subsidiaries 29,454 (417 ) — (29,037 ) — Notes receivable - affiliates — 13,662 — (13,662 ) — Other assets — 139 10 — 149 Total assets $ 30,149 $ 170,656 $ 22,717 $ (56,010 ) $ 167,512 LIABILITIES AND OWNERS’ EQUITY Current liabilities: Accounts payable $ — $ 1,653 $ 712 $ (675 ) $ 1,690 Accounts payable - affiliates 8,860 — 5,400 (12,622 ) 1,638 Accrued payroll and other 15 7,082 503 (15 ) 7,585 Income taxes payable — 967 44 — 1,011 Total current liabilities 8,875 9,702 6,659 (13,312 ) 11,924 Long-term debt (1,201 ) 131,400 5,500 — 135,699 Notes payable - affiliates — — 13,662 (13,662 ) — Deferred tax liabilities — 8 354 — 362 Asset retirement obligations — 139 — — 139 Total liabilities 7,674 141,249 26,175 (26,974 ) 148,124 Commitments and contingencies - Note 13 Owners’ equity: Total partners’ capital 17,425 24,357 (3,458 ) (23,986 ) 14,338 Non-controlling interests 5,050 5,050 — (5,050 ) 5,050 Total owners’ equity 22,475 29,407 (3,458 ) (29,036 ) 19,388 Total liabilities and owners’ equity $ 30,149 $ 170,656 $ 22,717 $ (56,010 ) $ 167,512 Consolidating Balance Sheet As of December 31, 2015 (as adjusted - in thousands) Parent Guarantors Non- Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 378 $ 19,570 $ 4,202 $ — $ 24,150 Trade accounts receivable, net — 40,029 8,289 (53 ) 48,265 Accounts receivable - affiliates — 5,601 — (5,601 ) — Prepaid expenses and other — 2,078 286 (35 ) 2,329 Total current assets 378 67,278 12,777 (5,689 ) 74,744 Property and equipment: Property and equipment, at cost — 20,790 2,916 — 23,706 Less: Accumulated depreciation — 4,941 428 — 5,369 Total property and equipment, net — 15,849 2,488 — 18,337 Intangible assets, net — 26,135 6,351 — 32,486 Goodwill — 53,914 11,359 — 65,273 Investment in subsidiaries 42,034 10,465 — (52,499 ) — Notes receivable - affiliates — 13,527 — (13,527 ) — Other assets — 32 10 — 42 Total assets $ 42,412 $ 187,200 $ 32,985 $ (71,715 ) $ 190,882 LIABILITIES AND OWNERS’ EQUITY Current liabilities: Accounts payable $ 6 $ 467 $ 1,732 $ — $ 2,205 Accounts payable - affiliates 1,237 912 4,042 (5,278 ) 913 Accrued payroll and other — 6,855 293 (53 ) 7,095 Income taxes payable — 385 — (35 ) 350 Total current liabilities 1,243 8,619 6,067 (5,366 ) 10,563 Long-term debt (1,771 ) 135,400 5,500 — 139,129 Notes payable - affiliates — — 13,850 (13,850 ) — Deferred tax liabilities — 43 328 — 371 Asset retirement obligations — 117 — — 117 Total liabilities (528 ) 144,179 25,745 (19,216 ) 150,180 Commitments and contingencies Owners’ equity: Total partners’ capital 32,967 33,048 7,240 (42,526 ) 30,729 Non-controlling interests 9,973 9,973 — (9,973 ) 9,973 Total owners’ equity 42,940 43,021 7,240 (52,499 ) 40,702 Total liabilities and owners’ equity $ 42,412 $ 187,200 $ 32,985 $ (71,715 ) $ 190,882 Consolidating Statement of Operations For the Year Ended December 31, 2016 (in thousands) Parent Guarantors Non- Eliminations Consolidated Revenues $ — $ 252,955 $ 58,694 $ (13,652 ) $ 297,997 Costs of services — 222,067 54,102 (13,652 ) 262,517 Gross margin — 30,888 4,592 — 35,480 Operating costs and expense: General and administrative 4,637 12,625 4,591 — 21,853 Depreciation, amortization and accretion — 4,091 770 — 4,861 Impairments — 2,119 8,411 — 10,530 Operating (loss) (4,637 ) 12,053 (9,180 ) — (1,764 ) Other income (expense): Equity earnings (loss) in subsidiaries 862 (10,020 ) — 9,158 — Interest expense, net (889 ) (4,854 ) (816 ) — (6,559 ) Other, net — 334 22 — 356 Net income (loss) before income tax expense (4,664 ) (2,487 ) (9,974 ) 9,158 (7,967 ) Income tax expense — 1,150 45 — 1,195 Net income (loss) (4,664 ) (3,637 ) (10,019 ) 9,158 (9,162 ) Net (loss) attributable to non-controlling interests — (4,499 ) — — (4,499 ) Net income (loss) attributable to partners / controlling interests (4,664 ) 862 (10,019 ) 9,158 (4,663 ) Net (loss) attributable to general partner (6,298 ) — — — (6,298 ) Net income (loss) attributable to limited partners $ 1,634 $ 862 $ (10,019 ) $ 9,158 $ 1,635 Consolidating Statement of Operations For the Year Ended December 31, 2015 (in thousands) Parent Guarantors Non- Eliminations Consolidated Revenues $ — $ 329,086 $ 54,708 $ (12,603 ) $ 371,191 Costs of services — 290,524 48,340 (12,603 ) 326,261 Gross margin — 38,562 6,368 — 44,930 Operating costs and expense: General and administrative 1,282 18,180 4,333 — 23,795 Depreciation, amortization and accretion — 4,832 595 — 5,427 Impairments — 6,645 — — 6,645 Operating income (loss) (1,282 ) 8,905 1,440 — 9,063 Other income (expense): Equity earnings in subsidiaries 6,115 1,010 — (7,125 ) — Interest expense, net (902 ) (4,115 ) (639 ) — (5,656 ) Other, net — 1,116 20 — 1,136 Net income (loss) before income tax expense 3,931 6,916 821 (7,125 ) 4,543 Income tax expense — 372 80 — 452 Net income (loss) 3,931 6,544 741 (7,125 ) 4,091 Net income (loss) attributable to non-controlling interests 143 429 — 27 599 Net income (loss) attributable to partners / controlling interests 3,788 6,115 741 (7,152 ) 3,492 Net (loss) attributable to general partner (648 ) — — — (648 ) Net income (loss) attributable to limited partners $ 4,436 $ 6,115 $ 741 $ (7,152 ) $ 4,140 Consolidating Statement of Operations For the Year Ended December 31, 2014 (in thousands) Parent Guarantors Non- Eliminations Consolidated Revenues $ — $ 370,081 $ 34,337 $ — $ 404,418 Costs of services — 323,821 31,534 — 355,355 Gross margin — 46,260 2,803 — 49,063 Operating costs and expense: General and administrative — 19,257 2,064 — 21,321 Depreciation, amortization and accretion — 6,136 209 — 6,345 Impairments — 32,546 — — 32,546 Operating income (loss) — (11,679 ) 530 — (11,149 ) Other income (expense): Equity earnings in subsidiaries (14,134 ) — — 14,134 — Interest expense, net (983 ) (1,892 ) (333 ) — (3,208 ) Offering costs, net (446 ) — — — (446 ) Other, net — 84 8 — 92 Net income (loss) before income tax expense (15,563 ) (13,487 ) 205 14,134 (14,711 ) Income tax expense — 356 112 — 468 Net income (loss) (15,563 ) (13,843 ) 93 14,134 (15,179 ) Net income (loss) attributable to non-controlling interests 4,646 291 — 36 4,973 Net income (loss) attributable to partners / controlling interests (20,209 ) (14,134 ) 93 14,098 (20,152 ) Net income attributable to general partner 149 — — — 149 Net income (loss) attributable to limited partners $ (20,358 ) $ (14,134 ) $ 93 $ 14,098 $ (20,301 ) Consolidating Statement of Comprehensive Income (Loss) For the Year Ended December 31, 2016 (in thousands) Parent Guarantors Non- Eliminations Consolidated Net income (loss) $ (4,664 ) $ (3,637 ) $ (10,019 ) $ 9,158 $ (9,162 ) Other comprehensive income - — Foreign currency translation — 71 182 — 253 — Comprehensive income (loss) $ (4,664 ) $ (3,566 ) $ (9,837 ) $ 9,158 $ (8,909 ) Comprehensive (loss) attributable to non-controlling interests — (4,499 ) — — (4,499 ) Comprehensive (loss) attributable to general partner (6,298 ) — — — (6,298 ) Comprehensive income (loss) attributable to limited partners $ 1,634 $ 933 $ (9,837 ) $ 9,158 $ 1,888 Consolidating Statement of Comprehensive Income (Loss) For the Year Ended December 31, 2015 (in thousands) Parent Guarantors Non- Eliminations Consolidated Net income (loss) $ 3,931 $ 6,544 $ 741 $ (7,125 ) $ 4,091 Other comprehensive income - — Foreign currency translation — (564 ) (1,178 ) - (1,742 ) — Comprehensive income (loss) $ 3,931 $ 5,980 $ (437 ) $ (7,125 ) $ 2,349 Comprehensive (loss) attributable to non-controlling interests 143 429 — (430 ) 142 Comprehensive (loss) attributable to general partner (648 ) — — — (648 ) Comprehensive income (loss) attributable to limited partners $ 4,436 $ 5,551 $ (437 ) $ (6,695 ) $ 2,855 Consolidating Statement of Comprehensive Income (Loss) For the Year Ended December 31, 2014 (in thousands) Parent Guarantors Non- Eliminations Consolidated Net income (loss) $ (15,563 ) $ (13,843 ) $ 93 $ 14,134 $ (15,179 ) Other comprehensive income - — Foreign currency translation — (316 ) (621 ) — (937 ) — Comprehensive income (loss) $ (15,563 ) $ (14,159 ) $ (528 ) $ 14,134 $ (16,116 ) Comprehensive (loss) attributable to non-controlling interests 4,646 291 — (279 ) 4,658 Comprehensive income attributable to general partner 149 — — — 149 Comprehensive income (loss) attributable to limited partners $ (20,358 ) $ (14,450 ) $ (528 ) $ 14,413 $ (20,923 ) Consolidating Statement of Cash Flows For the Year Ended December 31, 2016 (in thousands) Parent Guarantors Non- Eliminations Consolidated Operating activities: Net income (loss) $ (4,664 ) $ (3,637 ) $ (10,019 ) $ 9,158 $ (9,162 ) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation, amortization and accretion — 4,495 1,293 — 5,788 Impairments — 2,119 8,411 — 10,530 Gain (loss) on asset disposal — (12 ) (7 ) — (19 ) Interest expense from debt issuance cost amortization 570 — — — 570 Equity-based compensation expense 1,086 — — — 1,086 Equity in earnings of investee — (309 ) — — (309 ) Distributions from investee — 200 — — 200 Equity earnings in subsidiaries (862 ) 10,020 — (9,158 ) — Deferred tax benefit, net — (35 ) 11 — (24 ) Non-cash allocated expenses 3,798 — — — 3,798 Changes in assets and liabilities: Trade accounts receivable — 6,983 2,252 636 9,871 Receivables from affiliates — (7,021 ) — 7,021 — Prepaid expenses and other — 941 308 101 1,350 Accounts payable and accrued payroll and other 7,632 507 132 (7,793 ) 478 Income taxes payable — 582 45 35 662 Net cash provided by (used in) operating activities 7,560 14,833 2,426 — 24,819 Investing activities: Proceeds from fixed asset disposals — 26 20 — 46 Purchases of property and equipment — (1,066 ) (310 ) — (1,376 ) Net cash used in investing activities — (1,040 ) (290 ) — (1,330 ) Financing activities: Repayments of long-term debt — (4,000 ) — — (4,000 ) Taxes paid related to net share settlement of equity-based compensation (107 ) — — — (107 ) Contributions from general partner 2,500 — — — 2,500 Distributions from subsidiaries 9,622 (9,239 ) (383 ) — — Distributions to limited partners (19,258 ) — — — (19,258 ) Distributions to non-controlling members — — (424 ) — (424 ) Net cash provided by (used in) financing activities (7,243 ) (13,239 ) (807 ) — (21,289 ) Effects of exchange rates on cash — 127 216 — 343 Net increase (decrease) in cash and cash equivalents 317 681 1,545 — 2,543 Cash and cash equivalents, beginning of period 378 19,570 4,202 — 24,150 Cash and cash equivalents, end of period $ 695 $ 20,251 $ 5,747 $ — $ 26,693 Consolidating Statement of Cash Flows For the Year Ended December 31, 2015 (in thousands) Parent Guarantors Non- Eliminations Consolidated Operating activities: Net income (loss) $ 3,931 $ 6,544 $ 741 $ (7,125 ) $ 4,091 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation, amortization and accretion — 5,102 902 — 6,004 Impairments — 6,645 — — 6,645 Loss on asset disposals — — (1 ) — (1 ) Interest expense from debt issuance cost amortization 547 — — — 547 Equity-based compensation expense 1,167 — — — 1,167 Equity in earnings of investee — (102 ) — — (102 ) Distributions from investee — 100 — — 100 Equity earnings in subsidiaries (6,115 ) (1,010 ) — 7,125 — Deferred tax benefit, net — 58 (90 ) — (32 ) Non-cash allocated expenses 648 — — — 648 Changes in assets and liabilities: Trade accounts receivable — 9,540 (546 ) 45 9,039 Receivables from affiliates 22 3,208 — (3,230 ) — Prepaid expenses and other — 267 (69 ) 35 233 Accounts payable and accrued payroll and other 1,203 (1,074 ) (4,536 ) 3,185 (1,222 ) Income taxes payable — (122 ) (39 ) (35 ) (196 ) Net cash provided by (used in) operating activities 1,403 29,156 (3,638 ) — 26,921 Investing activities: Proceeds from disposals of property and equipment — 2 — — 2 Cash paid for acquisition of 49.9% interest in the TIR Entities — (52,588 ) — — (52,588 ) Cash paid for acquisition of 51% of Brown Integrity, LLC, net of cash acquired of $175 — (10,436 ) — — (10,436 ) Purchases of property and equipment — (1,607 ) (250 ) — (1,857 ) Net cash (used in) investing activities — (64,629 ) (250 ) — (64,879 ) Financing activities: Advances on long-term debt — 63,300 5,500 — 68,800 Repayments of long-term debt — (5,500 ) — — (5,500 ) Distributions from subsidiaries 17,225 (17,225 ) — — — Distributions to limited partners (19,232 ) — — — (19,232 ) Distributions to non-controlling members — (1,567 ) — — (1,567 ) Net cash provided by (used in) financing activities (2,007 ) 39,008 5,500 — 42,501 Effects of exchange rates on cash — (563 ) (587 ) — (1,150 ) Net increase (decrease) in cash and cash equivalents (604 ) 2,972 1,025 — 3,393 Cash and cash equivalents, beginning of period 982 16,598 3,177 — 20,757 Cash and cash equivalents, end of period $ 378 $ 19,570 $ 4,202 $ — $ 24,150 Non-cash items: Accrued capital expenditures $ — $ 6 $ 94 $ — $ 100 Consolidating Statement of Cash Flows For the Year Ended December 31, 2014 (in thousands) Non- Parent Guarantors Guarantors Eliminations Consolidated Operating activities: Net income (loss) $ (15,563 ) $ (13,843 ) $ 93 $ 14,134 $ (15,179 ) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation, amortization and accretion — 6,304 209 — 6,513 Impairments — 32,546 — — 32,546 Loss on asset disposals — 3 — — 3 Interest expense from debt issuance cost amortization 714 — — — 714 Equity-based compensation expense 785 — — — 785 Equity in earnings of investee — (46 ) — — (46 ) Distributions from investee — 55 — — 55 Equity earnings in subsidiaries 14,134 — — (14,134 ) — Deferred tax benefit, net — (22 ) 9 — (13 ) Non-cash allocated expenses — 497 — — 497 Changes in assets and liabilities: Trade accounts receivable — 4,115 2,527 8 6,650 Receivables from affiliates (22 ) (9,604 ) 795 8,831 — Prepaid expenses and other (285 ) (248 ) (400 ) — (933 ) Accounts payable and accrued payroll and other 21 6,513 (659 ) (8,839 ) (2,964 ) Income taxes payable — (14,481 ) (1,131 ) — (15,612 ) Net cash provided by (used in) operating activities (216 ) 11,789 1,443 — 13,016 Investing activities: Acquisitions of businesses — (1,769 ) — — (1,769 ) Purchases of property and equipment — (483 ) (34) — (517 ) Net cash (used in) investing activities — (2,252 ) (34 ) — (2,286 ) Financing activities: Proceeds from initial public offering 80,213 — — — 80,213 Distribution of initial public offering proceeds to (80,213 ) — — — (80,213 ) Payment of offering costs (314 ) — — — (314 ) Advances on long-term debt — 7,600 — — 7,600 Repayments of long-term debt — (5,000 ) — — (5,000 ) Payment of debt issuance costs — (883 ) — — (883 ) Distributions to members prior to IPO (279 ) 111 — — (168 ) Contribution from general partner 314 168 — — 482 Distributions from subsidiaries 14,541 (14,541 ) — — — Distributions to limited partners (13,064 ) — — — (13,064 ) Distributions to non-controlling members — (4,683 ) — — (4,683 ) Net cash provided by (used in) financing activities 1,198 (17,228 ) — — (16,030 ) Effects of exchange rates on cash — (317 ) (316 ) — (633 ) Net increase (decrease) in cash and cash equivalents 982 (8,008 ) 1,093 — (5,933 ) Cash and cash equivalents, beginning of period — 24,606 2,084 — 26,690 Cash and cash equivalents, end of period $ 982 $ 16,598 $ 3,177 $ — $ 20,757 Non-cash items: Accrued capital expenditures $ — $ 756 $ — $ — $ 756 |