Rentech 10K/A 2013 Annual report (amended)

Rentech (RTK) Inactive 10-K/A2013 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

Amendment No. 1

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the Fiscal Year Ended December 31, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File No. 001-15795

RENTECH, INC.

(Exact name of registrant as specified in its charter)

Colorado

84-0957421

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

10877 Wilshire Boulevard, Suite 600

Los Angeles, California 90024

(Address of principal executive offices)

(310) 571-9800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock

Name of Each Exchange on Which Registered: NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨. No x.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨. No x.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 28, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $463.4 million (based upon the closing price of the common stock on June 28, 2013, as reported by the NYSE MKT).

The number of shares of the registrant’s common stock outstanding as of February 28, 2014 was 227,530,698.

DOCUMENTS INCORPORATED BY REFERENCE: None

TABLE OF CONTENTS


		Page
PART II
ITEM 6.	Selected Financial Data		5
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		6
ITEM 8.	Financial Statements and Supplementary Data		39
ITEM 9A.	Controls and Procedures		95
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules		97

EXPLANATORY NOTE

Rentech, Inc. (“the Company,” “Rentech,” “we,” “us” and “our”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2014 (the “Original 10-K”), to: (i) update the Company’s consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for all periods presented to reflect its energy technologies segment as discontinued operations; (ii) reissue the Report of Independent Registered Public Accounting Firm to revise the firm’s opinion regarding the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013; and (iii) revise management’s conclusions regarding the Company’s disclosure controls and procedures and internal control over financial reporting as of December 31, 2013. Accordingly, the Company hereby amends and replaces in its entirety Items 6, 7, 8 and 9A in the Original 10-K.

As required by Rule 12b-15, our principal executive officer and principal financial officer are providing updated certifications. In addition, we are filing a new consent of our independent registered public accounting firm, PricewaterhouseCoopers LLP. Accordingly, we hereby amend Item 15 in the Original 10-K to reflect the filing of the new certifications and the consent.

Except as indicated above, this Amendment does not purport to reflect any information or events subsequent to the filing date of the Original 10-K. As such, this Amendment speaks only as of the date the Original 10-K was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original 10-K to give effect to any subsequent events. Accordingly, this Amendment should be read in conjunction with the Original 10-K and any documents filed by us with the SEC subsequent to the Original 10-K, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014.

FORWARD-LOOKING STATEMENTS

Certain information included in this report contains, and other reports or materials filed or to be filed by us with the Securities and Exchange Commission, or SEC (as well as information included in oral statements or other written statements made or to be made by us or our management) contain or will contain, “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Section 27A of the Securities Act of 1933, as amended, and pursuant to the Private Securities Litigation Reform Act of 1995. The forward-looking statements may relate to financial results and plans for future business activities, and are thus prospective. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. They can be identified by the use of terminology such as “may,” “will,” “expect,” “believe,” “intend,” “plan,” “estimate,” “anticipate,” “should” and other comparable terms or the negative of them. You are cautioned that, while forward-looking statements reflect management’s good faith belief and best judgment based upon current information, they are not guarantees of future performance and are subject to known and unknown risks and uncertainties. Factors that could affect our results include the risk factors detailed in the Original 10-K, Part I—Item 1A “Risk Factors” and from time to time in our periodic reports and registration statements filed with the SEC. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

As used in this report, the terms “we,” “our,” “us,” “the Company” and “Rentech” mean Rentech, Inc., a Colorado corporation and its consolidated subsidiaries, unless the context indicates otherwise. References to “RNHI” refer to Rentech Nitrogen Holdings, Inc., a Delaware corporation and one of our indirect wholly-owned subsidiaries. References to “RNP” refer to Rentech Nitrogen Partners, L.P., a publicly traded Delaware limited partnership and one of our indirectly majority owned subsidiaries. References to “the General Partner” refer to Rentech Nitrogen GP, LLC, a Delaware limited liability company, RNP’s general partner and one of our indirect wholly-owned subsidiaries. References to “RNLLC” refer to Rentech Nitrogen, LLC, a Delaware limited liability company that was formerly known as Rentech Energy Midwest Corporation, or REMC. References to “RNPLLC” refer to Rentech Nitrogen Pasadena, LLC, a Delaware limited liability company that was formerly known as Agrifos Fertilizer, LLC. References to “Fulghum” refer to Fulghum Fibres, Inc., a Georgia corporation and one of our indirectly wholly-owned subsidiaries.

PART II

ITEM 6.

SELECTED FINANCIAL DATA

The following tables include selected summary financial data for the calendar years ended December 31, 2013, 2012 and 2011, the three months ended December 31, 2011 and 2010 and each of the three fiscal years ended September 30, 2011, 2010 and 2009. The operations of the Pasadena Facility and Fulghum are included in our historical results of operations only from the date of the closing of the Agrifos Acquisition and the Fulghum Acquisition, which were November 1, 2012 and May 1, 2013, respectively. The results of our energy technologies segment are included in “loss from discontinued operations, net of tax”. The data below should be read in conjunction with Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Financial Statements and Supplementary Data.”


	Calendar Years Ended December 31,									Three Months Ended December 31,						Fiscal Years Ended September 30,
	2013			2012			2011			2011			2010			2011			2010			2009
							(unaudited)						(unaudited)
	(in thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Revenues	$	374,349		$	261,635		$	199,909		$	63,014		$	42,962		$	179,857		$	131,396		$	186,541
Cost of Sales	$	290,963		$	129,796		$	113,911		$	37,460		$	26,835		$	103,286		$	106,021		$	125,888
Gross Profit	$	83,386		$	131,839		$	85,998		$	25,554		$	16,127		$	76,571		$	25,375		$	60,653
Income (Loss) from Continuing Operations	$	6,644		$	65,063		$	24,386		$	2,706		$	1,192		$	19,005		$	(15,608	)	$	25,021
Loss from Discontinued Operations, net of tax	$	(6,606	)	$	(37,376	)	$	(87,982	)	$	(6,804	)	$	(7,076	)	$	(84,387	)	$	(26,654	)	$	(25,042	)
Net Income (Loss)	$	38		$	27,687		$	(63,596	)	$	(4,098	)	$	(5,884	)	$	(65,382	)	$	(42,262	)	$	(21	)
Net (Income) Loss Attributable to Noncontrolling Interests	$	(1,570	)	$	(41,687	)	$	(3,700	)	$	(4,433	)	$	366		$	1,099		$	94		$	—
Net Loss Attributable to Rentech	$	(1,532	)	$	(14,000	)	$	(67,296	)	$	(8,531	)	$	(5,518	)	$	(64,283	)	$	(42,168	)	$	(21	)
Net Loss per Common Share Attributable to Rentech:
Basic:
Continuing Operations	$	0.02		$	0.10		$	0.09		$	(0.01	)	$	0.01		$	0.09		$	(0.07	)	$	0.14

Discontinued Operations	$	(0.03	)	$	(0.17	)	$	(0.39	)	$	(0.03	)	$	(0.03	)	$	(0.38	)	$	(0.12	)	$	(0.14	)

Net Income (Loss)	$	(0.01	)	$	(0.06	)	$	(0.30	)	$	(0.04	)	$	(0.02	)	$	(0.29	)	$	(0.20	)	$	0.00

Diluted:
Continuing Operations	$	0.02		$	0.10		$	0.09		$	(0.01	)	$	0.01		$	0.09		$	(0.07	)	$	0.14

Discontinued Operations	$	(0.03	)	$	(0.16	)	$	(0.39	)	$	(0.03	)	$	(0.03	)	$	(0.37	)	$	(0.12	)	$	(0.14	)

Net Income (Loss)	$	(0.01	)	$	(0.06	)	$	(0.30	)	$	(0.04	)	$	(0.02	)	$	(0.28	)	$	(0.20	)	$	0.00

Weighted-average shares used to compute net loss per common share:
Basic		226,139			223,189			223,281			224,414			221,980			222,664			216,069			174,445
Diluted		233,703			230,524			226,182			224,414			226,679			226,680			216,069			176,039


	As of December 31,								As of September 30,
	2013		2012		2011		2010		2011			2010		2009
							(unaudited)
	(in thousands)
CONSOLIDATED BALANCE SHEET DATA
Cash	$	106,369	$	141,637	$	237,478	$	84,586	$	121,209		$	54,146	$	69,117
Working Capital	$	69,822	$	107,059	$	206,434	$	26,843	$	36,332		$	22,107	$	12,032
Construction in Progress	$	60,136	$	61,417	$	7,332	$	5,017	$	20,788		$	2,938	$	6,882
Total Assets	$	703,590	$	479,202	$	360,528	$	239,556	$	254,674		$	200,515	$	200,600
Total Long-Term Liabilities	$	432,584	$	194,130	$	53,475	$	113,702	$	155,752		$	98,520	$	46,759
Total Rentech Stockholders’ Equity	$	158,073	$	157,987	$	208,848	$	33,203	$	(19,628	)	$	37,920	$	68,236

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to the information provided here in Management’s Discussion and Analysis of Financial Condition and Results of Operations, we believe that in order to more fully understand our discussion in this section, you should read our consolidated financial statements and the notes thereto and the other disclosures herein, including the discussion of our business and the risk factors.

OVERVIEW OF OUR BUSINESS

RNHI, one of Rentech’s indirect wholly owned subsidiaries, owns the general partner interest and 59.8% of the common units representing limited partner interests in RNP, a publicly traded limited partnership. Through its wholly owned subsidiary, RNLLC, RNP manufactures natural-gas based nitrogen fertilizer products at its East Dubuque Facility and sells such products to customers located in the Mid Corn Belt region of the United States. Through its wholly owned subsidiary, RNPLLC, RNP manufactures ammonium sulfate fertilizer, sulfuric acid and ammonium thiosulfate fertilizer at its Pasadena Facility. The Pasadena Facility purchases ammonia as a feedstock at contractual prices based on the monthly Tampa Index market, while the East Dubuque Facility sells ammonia at prevailing prices in the Mid Corn Belt, which are typically significantly higher than Tampa ammonia prices.

Our ownership interest in RNP currently entitles us to 59.8% of all cash distributions made by RNP to its common unit holders, which distributions can be used for general corporate purposes. However, Rentech’s ownership interest may be reduced over time if it elects to cause RNHI to sell any of its common units or if additional common units are issued by RNP in a manner that dilutes Rentech’s ownership interest in RNP.

Through our recent acquisition of Fulghum, we are a leading provider of wood handling, de-barking and wood chipping services, and we sell high-quality wood chips for the production of pulp and paper products. We also plan to become a leading provider of wood pellets. These new businesses consist of the provision of wood chipping services and the manufacture and sale of wood chips through our wholly-owned subsidiary, Fulghum, and the development and operation of wood pellet production facilities, starting with the Wawa Project and Atikokan Project. Fulghum, which operates 32 wood chipping mills, provides wood fibre processing services and wood yard operations, sells wood chips to the pulp, paper and packaging industry, and owns and manages forestland and sells bark to industrial consumers in South America.

Any ongoing activities related to our discontinued energy technologies operations will be to protect patents, to maintain the Commerce City site until it is sold, or to close the sale of the technologies.

For further information concerning our potential financing needs and related risks, see the Original 10-K, Part I—Item 1 “Business” and Part I—Item 1A “Risk Factors.”

FACTORS AFFECTING COMPARABILITY OF FINANCIAL INFORMATION

Our historical results of operations for the periods presented may not be comparable with our results of operations for the subsequent periods for the reasons discussed below.

Supply and Demand Factors

Our earnings and cash flow from operations are significantly affected by nitrogen fertilizer product prices, the prices of the inputs to our production processes, and the timing of product deliveries required by customers. The price at which we ultimately sell our nitrogen fertilizer products depends on numerous factors, including global and local supply and demand for nitrogen fertilizer products and global and local supply and demand for our key raw materials, many of which factors may be significantly affected by unpredictable weather patterns and the behavior of competitive suppliers.

RNP’s results for 2013 were heavily affected by significant unanticipated declines in nitrogen prices, which ended the year 20% to 30% below price levels at the beginning of the year. Unusually high volumes of low-priced urea exports from China drove down prices of urea and of competing nitrogen products, and a very wet spring application period throughout our United States markets

delayed and reduced demand for products. We believe that several factors have improved the balance of global supply and demand, including the closing of China’s low-tariff export window in late October 2013, and strong urea demand from India. As a result, urea prices began to stabilize entering the 2013 fall application period, followed by increases in the prices of urea and other nitrogen products to their current levels. However, we expect that the current market environment for 2014 will differ relative to early 2013, with lower corn prices and somewhat lower anticipated corn plantings. These factors and the dynamics that affect input prices could rapidly change based on weather patterns and other conditions, and could positively or negatively affect our product prices, margins and deliveries.

RNPLLC Operations

The operations of RNPLLC, which owns the Pasadena Facility, are included in our historical results of operations only from the closing date of the Agrifos Acquisition, which was November 1, 2012. Our Pasadena Facility produces three products that we did not produce or sell before the Agrifos Acquisition: ammonium sulfate, ammonium thiosulfate and sulfuric acid. The Agrifos Acquisition also broadened the geographic area into which our products are sold. Upon the closing of the acquisition (i) general and administrative expenses as well as sales-related expenses increased due to the addition of RNPLLC’s operations, (ii) depreciation and amortization expenses increased due to the increase in fixed and intangible assets, which were recorded at fair value on the date of the Agrifos Acquisition, and (iii) interest expense increased due to the debt incurred to finance a significant portion of the purchase price for the Agrifos Acquisition. As a result, our results of operations for the periods prior to and after the closing date of the Agrifos Acquisition may not be comparable.

Fulghum Operations

The operations of Fulghum are included in our historical results of operations only from the closing date of the Fulghum Acquisition, which was May 1, 2013. Fulghum provides wood fibre processing services and wood yard operations, sells wood chips to the pulp, paper and packaging industry, and owns and manages forestland and sells bark to industrial consumers in South America. The Fulghum Acquisition also broadened the geographic area into which our services are provided. For periods after the closing of the acquisition (i) general and administrative expenses as well as sales-related expenses have increased due to the addition of Fulghum’s operations, (ii) depreciation and amortization expenses have increased due to the increase in fixed and intangible assets, which were recorded at fair value on the date of the Fulghum Acquisition and (iii) interest expense has increased due to the debt of Fulghum that continues to be outstanding after the closing of the transaction. As a result, our results of operations for the periods prior to and after the closing date of the Fulghum Acquisition may not be comparable.

Expansion Projects

We are evaluating or pursuing opportunities to increase our profitability by expanding our facilities. To the extent that we proceed with and complete one or more of the expansion or other capital projects, we expect to incur significant costs and expenses for the construction and development of such projects. We expect to finance the costs and expenses of some of the various projects with indebtedness, which will significantly increase our interest expense. We also expect our depreciation expense to increase from additional assets placed into service from the projects. As a result, our results of operations for periods prior to, during and after the construction of any expansion project may not be comparable.

Acquisitions

One of our business strategies is to pursue acquisitions in related businesses. We are pursuing acquisitions related to our wood chipping business and our wood pellet business, and other closely related lines of business, and may evaluate acquisitions of assets and businesses that generate qualifying income for RNP. If completed, acquisitions could have significant effects on our business, financial condition and results of operations. We cannot assure you that we will enter into any definitive agreements on satisfactory terms, or at all, with respect to any acquisitions. Costs associated with potential acquisitions are expensed as incurred, and could be significant.

Discontinued Operations—Energy Technologies

We were initially formed to develop and commercialize certain alternative energy technologies, and we acquired other energy technologies that we subsequently further developed. We conducted significant research and development and project development activities related to those technologies. In 2013, we ceased operations and reduced staffing at, and mothballed, our decommissioned Product Demonstration Unit, or PDU, that successfully produced diesel and jet fuel from wood chips and from natural gas. We also eliminated all research and development activities in the first half of 2013. Any ongoing activities related to our alternative energy technologies will be to protect patents, to maintain the Commerce City site until it is sold, or to close the sale of the technologies.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ based on the accuracy of the information utilized and subsequent events. Our accounting policies are described in the notes to our audited consolidated financial statements included elsewhere in this report. Our critical accounting policies, estimates and assumptions could materially affect the amounts recorded in our consolidated financial statements. The most significant estimates and assumptions relate to: revenue recognition, inventories, the valuation of long-lived assets and intangible assets, recoverability of goodwill, accounting for major maintenance and the acquisition method of accounting.

Revenue Recognition. We recognize revenue when the following elements are substantially satisfied: when the customer takes ownership from our facilities or storage locations and assumes risk of loss; there are no uncertainties regarding customer acceptance; there is persuasive evidence that an agreement exists documenting the specific terms of the transaction; the sales price is fixed or determinable; and collectibility is reasonably assured. Management assesses the business environment, the customer’s financial condition, historical collection experience, accounts receivable aging and customer disputes to determine whether collectibility is reasonably assured. If collectibility is not considered reasonably assured at the time of sale, we do not recognize revenue until collection occurs.

Certain product sales occur under product prepayment contracts which require payment in advance of delivery. We record a liability for deferred revenue in the amount of, and upon receipt of, cash in advance of shipment. We recognize revenue related to the product prepayment contracts and relieve the liability for deferred revenue when customers take ownership of products. A significant portion of the revenue recognized during any period may be related to product prepayment contracts, for which cash may have been collected during an earlier period, with the result being that a significant portion of revenue recognized during a period may not generate cash receipts during that period.

Natural gas, though not purchased for the purpose of resale, is occasionally sold under certain circumstances. Natural gas is sold when purchase commitments are in excess of production requirements and storage capacities, or when the margin from selling natural gas exceeds the margin from producing additional ammonia, in which case the sales price is recorded in revenues and the related cost is recorded in cost of sales.

Inventories. Our inventory is stated at the lower of cost or estimated net realizable value. The cost of inventories is determined using the first-in first-out method. We perform an analysis of our inventory balances at least quarterly to determine if the carrying amount of inventories exceeds their net realizable value. The analysis of estimated net realizable value is based on customer orders, market trends and historical pricing. If the carrying amount exceeds the estimated net realizable value, the carrying amount is reduced to the estimated net realizable value. We allocate fixed production overhead costs to inventory based on the normal capacity of our production facilities.

Valuation of Long-Lived Assets and Intangible Assets.We assess the realizable value of long-lived assets and intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In assessing the recoverability of our assets, we make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. As applicable, we make assumptions regarding the useful lives of the assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets.

Recoverability of Goodwill.We test goodwill assets for impairment annually, or more often if an event or circumstance indicates that an impairment may have occurred. The recoverability of goodwill involves a high degree of judgment since the first step of the required impairment test consists of a comparison of the fair value of a reporting unit with its book value. Based on the assumptions underlying the valuation, impairment is determined by estimating the fair value of a reporting unit and comparing that value to the reporting unit’s book value. If the fair value is more than the book value of the reporting unit, an impairment loss is not recognized. If an impairment exists, the fair value of the reporting unit is allocated to all of its assets and liabilities excluding goodwill, with the excess amount representing the fair value of goodwill. An impairment loss is measured as the amount by which the book value of the reporting unit’s goodwill exceeds the estimated fair value of that goodwill.

Accounting for Major Maintenance.Expenditures during turnarounds or at other times for improving, replacing or adding to assets are capitalized. Expenditures for the acquisition, construction or development of new assets to maintain operating capacity, or to comply with environmental, health, safety or other regulations, are also capitalized. Costs of general maintenance and repairs are expensed. The East Dubuque Facility and Pasadena Facility require a planned maintenance turnaround every two years. Turnarounds at the East Dubuque Facility generally last between 18 and 25 days, and turnarounds at the Pasadena Facility generally last between 14 and 25 days. We intend to alternate the year in which a turnaround occurs at each facility, so that both facilities do not experience a turnaround in the same year. As a result, the facilities incur turnaround expenses which represent the cost of shutting down the plants

for planned maintenance. Such costs are expensed as incurred. In many cases, the East Dubuque Facility and the Pasadena Facility also perform significant maintenance capital projects at the plants during a turnaround to minimize disruption to operations. Such projects are capitalized as property, plant and equipment rather than expensed as turnaround costs.

Examples of maintenance capital projects include the installation of additional components and projects that increase an asset’s useful life, increase the quantity or quality of the product manufactured or create efficiencies in the production process. Major turnaround costs, which are expensed, include gas, electricity and other shutdown and startup costs, labor, contractor and materials costs used to complete non-capital activities such as opening, dismantling, inspecting and reassembling major vessels, testing pressure and safety devices, cleaning or hydro-jetting major exchangers, replacing gaskets, repacking valves, checking instrument calibration and performing mechanical integrity inspections, all of which are completed with the goal of improving reliability and likelihood for continuous operation until the next turnaround.

Acquisition Method of Accounting.We account for business combinations using the acquisition method of accounting, which requires, among other things, that most assets acquired, liabilities assumed and earn-out consideration be recognized at their fair values as of the acquisition date. The earn-out consideration will be measured at each reporting date with changes in its fair value recognized in the consolidated statements of operations.

Business Segments

We operated in two business segments prior to the Fulghum Acquisition, the Atikokan Project and the Wawa Project. We now operate in four business segments, as described below. The operations of the Pasadena Facility and Fulghum are included in our historical results of operations only from the date of the closing of the Agrifos Acquisition and the Fulghum Acquisition, which were November 1, 2012 and May 1, 2013, respectively. For the comparison of calendar year ended December 31, 2013 to the calendar year ended December 31, 2012, the results for calendar year ended December 31, 2012 were shown as four business segments to aid in the comparison between years. Results of the energy technologies segment are accounted for as discontinued operations for all periods presented.

•

East Dubuque – The operations of the East Dubuque Facility, which produces primarily ammonia and UAN.

•

Pasadena – The operations of the Pasadena Facility, which produces primarily ammonium sulfate.

•

Fulghum Fibres – The operations of Fulghum, which provides wood fibre processing services and wood yard operations, sells wood chips to the pulp, paper and packaging industry, and owns and manages forestland and sells bark to industrial consumers in South America.

•

Wood Pellets – This segment includes wood pellet projects owned by the Company, currently the Atikokan Project and Wawa Project, equity in the Rentech/Graanul JV and wood pellet development costs. The wood pellet development costs represent the Company’s personnel costs for employees dedicated to the wood pellet business and other supporting third party costs.

On February 1, 2012, our board of directors approved a change in our fiscal year end from September 30 to December 31. The statement of operations for calendar year ended December 31, 2011 was derived by deducting the statement of operations for the three months ended December 31, 2010 from the statement of operations for the fiscal year ended September 30, 2011 and then adding the statement of operations for the three months ended December 31, 2011. The statements of operations for calendar year ended December 31, 2011 and the three months ended December 31, 2010, while not required, are presented for comparison purposes.


	For the Calendar Years Ended December 31,
	2013			2012			2011
							(unaudited)
	(in thousands)
Revenues:
East Dubuque	$	177,700		$	224,205		$	199,909
Pasadena		133,675			37,430			—
Fulghum Fibres		62,974			—			—

Total revenues	$	374,349		$	261,635		$	199,909

Gross profit (loss):
East Dubuque	$	80,883		$	133,543		$	85,998
Pasadena		(9,529	)		(1,704	)		—
Fulghum Fibres		12,032			—			—

Total gross profit	$	83,386		$	131,839		$	85,998

Operating income (loss):
East Dubuque	$	75,310		$	125,984		$	77,918
Pasadena		(48,208	)		(2,648	)		—
Fulghum Fibres		9,914			—			—
Wood pellets		(5,505	)		(1,919	)		—

Total segment operating income	$	31,511		$	121,417		$	77,918

Net income (loss):
East Dubuque	$	75,244		$	123,721		$	45,700
Pasadena		(48,357	)		(2,648	)		—
Fulghum Fibres		6,967			—			—
Wood pellets		(5,180	)		(1,919	)		—

Total segment net income	$	28,674		$	119,154		$	45,700

Reconciliation of segment net income to consolidated net income (loss):
Segment net income	$	28,674		$	119,154		$	45,700
RNP—partnership and unallocated expenses recorded as selling, general and administrative expenses		(7,945	)		(11,773	)		—
RNP—partnership and unallocated income (expenses) recorded as other income (expense)		(1,081	)		232			—
RNP—unallocated interest expense and loss on interest rate swaps		(14,096	)		(2,226	)		—
RNP— income tax benefit (expense)		303			(303	)		—
Corporate and unallocated expenses recorded as selling, general and administrative expenses		(24,849	)		(23,432	)		(16,533	)
Corporate and unallocated depreciation and amortization expense		(596	)		(754	)		(548	)
Corporate and unallocated income (expenses) recorded as other income (expense)		19			(2,708	)		79
Corporate and unallocated interest expense		(532	)		(9,055	)		(4,308	)
Corporate income tax benefit (expense)		26,747			(4,072	)		(4	)
Loss from discontinued operations, net of tax		(6,606	)		(37,376	)		(87,982	)

Consolidated net income (loss)	$	38		$	27,687		$	(63,596	)

Partnership and unallocated expenses represent costs that relate directly to RNP and its subsidiaries but are not allocated to a segment. Partnership and unallocated expenses recorded in selling, general and administrative expenses consist primarily of business development expenses for RNP; unit-based compensation expense for executives of RNP; services from Rentech for executive, legal, finance, accounting, human resources, and investor relations support in accordance with the services agreement; audit and tax fees; legal fees; compensation for RNP partnership level personnel; certain insurance costs; and board expense. The decrease in partnership and unallocated expenses recorded as selling, general and administrative expenses between the calendar years ended December 31, 2013 and 2012 was primarily due to decreases in business development expenses of approximately $3.5 million and unit-based compensation of approximately $1.4 million, partially offset by increases in various professional services fees of approximately $0.5 million and salaries of approximately $0.5 million. The increase in partnership and unallocated expenses recorded as other expense between the calendar years ended December 31, 2013 and 2012 was primarily due to loss on interest rate swaps of approximately $14.1 million and loss on debt extinguishment of approximately $6.0 million partially offset by fair value adjustment to earn-out consideration of approximately $4.9 million. Unallocated interest expense for the year ended December 31, 2013 represents primarily interest expense on the RNP Notes. Prior to calendar year ended December 31, 2012, East Dubuque and RNP were considered one entity for financial reporting purposes. Prior to the Agrifos Acquisition, RNP operated as one segment.

Corporate and unallocated expenses represent costs that relate directly to Rentech and its non-RNP subsidiaries but are not allocated to a segment. Corporate and unallocated expenses recorded in operating expenses consist primarily of selling, general and administrative expenses and depreciation and amortization. Corporate and unallocated income (expenses) recorded as other income (expense) for the calendar year ended December 31, 2012 consists primarily of loss on debt extinguishment relating to the convertible notes due in 2013, or the Convertible Notes. On December 31, 2012, the Convertible Notes were completely redeemed for cash and the unamortized debt discount and debt issuance costs were written off which resulted in a loss on debt extinguishment of approximately $2.7 million. Corporate and unallocated interest expense for the year ended December 31, 2012 consists primarily of interest expense on the Convertible Notes.

THE CALENDAR YEAR ENDED DECEMBER 31, 2013 COMPARED TO THE CALENDAR YEAR ENDED DECEMBER 31, 2012

Continuing Operations:

Revenues


	For the Calendar Years Ended December 31,
	2013		2012
	(in thousands)
Revenues:
East Dubuque	$	177,700	$	224,205
Pasadena		133,675		37,430

Total RNP		311,375		261,635
Fulghum Fibres		62,974		—

Total revenues	$	374,349	$	261,635

East Dubuque


	For the Calendar Year Ended December 31, 2013				For the Calendar Year Ended December 31, 2012
	Tons		Revenue		Tons		Revenue
	(in thousands)				(in thousands)
Revenues:
Ammonia		103	$	66,796		149	$	99,378
UAN		269		79,377		291		94,836
Urea (liquid and granular)		43		20,455		35		21,189
CO₂		71		2,416		76		2,517
Nitric Acid		14		5,150		14		5,016
Other		N/A		3,506		N/A		1,269

Total		500	$	177,700		565	$	224,205

We generate revenue in our East Dubuque segment primarily from sales of nitrogen fertilizer products manufactured at our East Dubuque Facility and used primarily in corn production. Our East Dubuque Facility is designed to produce ammonia, UAN, liquid and granular urea, nitric acid and CO₂using natural gas as a feedstock. Revenues are seasonal based on the planting, growing, and harvesting cycles of customers utilizing nitrogen fertilizer.

Revenues were approximately $177.7 million for the calendar year ended December 31, 2013 compared to approximately $224.2 million for the calendar year ended December 31, 2012. The decrease in revenue for the calendar year ended December 31, 2013 compared to the calendar year ended December 31, 2012 was primarily the result of a decrease in ammonia and UAN sales volumes and sales prices.

The average sales prices per ton for the calendar year ended December 31, 2013 as compared with those of the calendar year ended December 31, 2012 were lower by 3% and 10% for ammonia and UAN, respectively. These two products comprised approximately 82% and 87% of our revenues for calendar years ended December 31, 2013 and 2012, respectively. The decrease in sales prices for UAN for the calendar year ended December 31, 2013 as compared to 2012 was due largely to weather. The drought in the Midwestern region of the United States during the spring and summer of 2012 created expectations of poor corn yields and anticipated increases in acreage dedicated to corn in 2013; as a result, fertilizer prices remained high throughout 2012. Nitrogen fertilizer prices then declined significantly in the second half of 2013 as wet weather persisted throughout much of the country which severely limited the spring planting and application season. During the fourth quarter of 2013, our East Dubuque Facility halted production due to a planned turnaround and a fire. For most of October and a portion of November, we underwent a turnaround, which lasted slightly longer than anticipated due to operating difficulties experienced while commissioning new equipment. Our East Dubuque Facility also operated at reduced rates following the turnaround after the discovery of the need for repairs to the foundation of one of its syngas compressors. At the end of November, we experienced a fire that began in the ammonia converter of the ammonia synthesis loop. As a result of the fire, the production of all products was halted in late November and for most of December. During the turnaround and the aftermath of the fire, we were able to continue shipments of our products from inventory. These fourth quarter events were the primary reason why ammonia and UAN sales volume decreased between the calendar years ended December 31, 2013 and 2012.

Other revenue for the years ended December 31, 2013 and 2012 consists primarily of sales of excess inventory of natural gas of approximately $3.4 million and $1.1 million, respectively.

Pasadena


	For the Calendar Year Ended December 31, 2013				For the Calendar Year Ended December 31, 2012
	Tons		Revenue		Tons		Revenue
	(in thousands)				(in thousands)
Revenues:
Ammonium sulfate		428	$	107,435		115	$	34,493
Sulfuric acid		148		13,514		27		2,586
Ammonium thiosulfate		54		10,221		—		—
Other		N/A		2,505		N/A		351

Total		630	$	133,675		142	$	37,430

We generate revenue in our Pasadena segment primarily from sales of nitrogen fertilizer products manufactured at our Pasadena Facility and used in the production of corn, soybeans, potatoes, cotton, canola, alfalfa and wheat. The facility produces ammonium sulfate, sulfuric acid and ammonium thiosulfate. Revenues from domestic sales are seasonal based on the planting, growing, and harvesting cycles of customers utilizing nitrogen fertilizer; however, our ammonium sulfate sales internationally offset a portion of this seasonal impact in our total revenues.

Revenues were approximately $133.7 million for the calendar year ended December 31, 2013 compared to approximately $37.4 million for the calendar year ended December 31, 2012. The increase in revenue for the calendar year ended December 31, 2013 compared to the calendar year ended December 31, 2012 reflects our full year of ownership of the Pasadena Facility.

The average sales prices per ton for the calendar year ended December 31, 2013 as compared with those of the calendar year ended December 31, 2012 were lower by 16% and 5% for ammonium sulfate and sulfuric acid, respectively. These two products comprised approximately 90% and 99% of our revenues for calendar years ended December 31, 2013 and 2012, respectively. The decrease in sales prices for the ammonium sulfate for the calendar year ended December 31, 2013 was in part a result of weather which delayed the application of the product. During the calendar year ended December 31, 2013 significant volumes of urea were exported from China and this supply also suppressed global urea and other nitrogen fertilizer prices. The sales price for ammonium

sulfate has significantly worsened and still remains low. Our Pasadena Facility also underwent a turnaround in December 2013, which lasted a little longer than anticipated due to issues with a contractor and weather delays, and experienced several relatively small disruptions in production that reduced production during 2013. During the turnaround, we conducted scheduled debottlenecking and reliability improvement projects. Our Pasadena Facility was off-line for approximately three weeks in December 2013.

Fulghum Fibres


	For the Year Ended December 31, 2013
	(in thousands)
Revenues:
Service	$	49,822
Product		13,152

Total revenues	$	62,974

The operations of Fulghum are included in our historical results of operations only from the date of the closing of the Fulghum Acquisition, which was May 1, 2013. Revenues for the calendar year ended December 31, 2013 were approximately $63.0 million, of which approximately $40.7 million and $22.3 million were from sales in the United States and South America, respectively. We generate revenue primarily from fees for handling and de-barking wood and producing wood chips. Each of our mills typically operates under an exclusive processing agreement with a single customer. Under each agreement, the customer is responsible for procuring and delivering wood, and Fulghum is paid a processing fee based on tons processed, with minimum and maximum fees tied to volumes. In most cases, if the customer fails to deliver the minimum contracted log volume for processing, it must pay a shortage fee to Fulghum. Fulghum’s Chilean operations also include the sale of wood chips for export and the local sale of bark for power production. In both situations, the wood is purchased by Fulghum. Service revenues represent revenues earned under the agreements for wood fibre processing services and wood yard operations. Product revenues represent revenues earned by our Chilean operations from the sale of wood chips and bark. During the eight months ended December 31, 2013, Fulghum processed approximately 9.9 million GMT of logs into wood chips and residual fuels.

Cost of Sales


	For the Calendar Years Ended December 31,
	2013		2012
	(in thousands)
Cost of sales:
East Dubuque	$	96,817	$	90,662
Pasadena		143,204		39,134

Total RNP		240,021		129,796
Fulghum Fibres		50,942		—

Total cost of sales	$	290,963	$	129,796

East Dubuque

Cost of sales was approximately $96.8 million for the calendar year ended December 31, 2013 compared to approximately $90.7 million for the calendar year ended December 31, 2012. The increase in cost of sales was primarily due to turnaround expenses in 2013 of approximately $7.9 million, higher market prices for natural gas which increased the cost of natural gas by approximately $2.7 million, fixed operating costs while idle of approximately $4.3 million, and the $1.0 million insurance deductible for the fire which occurred in late November 2013, all of which were partially offset by lower sales volumes. Turnaround expenses represent the cost of maintenance during turnarounds, which occur approximately every two years. A facility turnaround at the East Dubuque Facility occurred in October and November of 2013. The East Dubuque Facility has fixed production costs that it incurs whether or not the facility is operating. These production costs are recorded directly to cost of sales when the facility is idle. RNP filed an insurance claim for approximately $2.7 million related to damage caused by the fire, and incurred the $1.0 million deductible under its property insurance policy in 2013. RNP expects to receive full payment of $1.7 million for the claim in early 2014.

Natural gas costs comprised approximately 43% of cost of sales for the calendar year ended December 31, 2013 and December 31, 2012. Labor costs comprised approximately 12% of cost of sales for the calendar year ended December 31, 2013 compared to approximately 14% of cost of sales for the calendar year ended December 31, 2012. Depreciation expense included in cost of sales was approximately $9.0 million and $10.7 million, respectively, for the calendar year ended December 31, 2013 and 2012 and comprised approximately 10% and 12% of cost of sales for the calendar years ended December 31, 2013 and 2012, respectively.

Pasadena

Costs of sales were approximately $143.2 million for the calendar year ended December 31, 2013 compared to approximately $39.1 million for the calendar year ended December 31, 2012. The increase in cost of sales for the calendar year ended December 31, 2013 compared to the calendar year ended December 31, 2012 reflects our full year of ownership of the Pasadena Facility. Cost of sales consists primarily of expenses for ammonia, sulfur, labor and depreciation. Ammonia and sulfur together comprised approximately 59% and 64% of cost of sales for the calendar years ended December 31, 2013 and 2012, respectively. Labor costs comprised approximately 7% and 5% of cost of sales for the calendar years ended December 31, 2013 and 2012, respectively. Depreciation expense included in cost of sales was approximately $4.2 million and $0.4 million for the calendar years ended December 31, 2013 and 2012, respectively. During the calendar year ended December 31, 2013, we incurred a write-down of ammonium sulfate, sulfur and sulfuric acid inventory to market value of approximately $12.4 million due primarily to lower market prices of ammonium sulfate, in accordance with accounting guidance. Cost of sales includes turnaround expenses of approximately $1.7 million. Turnaround expenses represent the cost of maintenance during turnarounds, which occur approximately every two years.

Cost of sales also includes maintenance expenses. Turnaround at the sulfuric acid plant occurred in November 2012. As a result, we incurred turnaround expenses of approximately $0.8 million. The turnaround was originally scheduled for the first calendar quarter of 2013, but due to two unexpected outages at the sulfuric acid plant, we decided to conduct the turnaround early. As a result of the two unexpected outages, we incurred approximately $0.5 million in additional expenses. The acquisition method of accounting required that the inventory be recognized at fair value as of the closing date of the Agrifos Acquisition. This resulted in the value of inventory, which was sold during the two-month period ended December 31, 2012, being increased by approximately $3.4 million.

Fulghum Fibres

Cost of sales consists of product costs, which relate to the purchase of biomass for our operations in South America, and service costs, which relates to our chipping mill operations. Product costs amounted to approximately 25% of the cost of sales for the year ended December 31, 2013 and include expenses related to the sale of forestry products and the export of those products. Service costs amounted to approximately 75% of the cost of sales for the year ended December 31, 2013 and include the cost of chip mill operations, primarily consisting of labor costs, repairs and maintenance, depreciation and utilities. Labor costs comprised approximately 26% of the cost of sales for the year ended December 31, 2013, while repairs and maintenance and utilities comprised approximately 32% of such cost of sales. Depreciation expense included in cost of sales was approximately $4.8 million during the same period.

Gross Profit (Loss)


	For the Calendar Years Ended December 31,
	2013			2012
	(in thousands)
Gross profit (loss):
East Dubuque	$	80,883		$	133,543
Pasadena		(9,529	)		(1,704	)

Total RNP		71,354			131,839
Fulghum Fibres		12,032			—

Total gross profit	$	83,386		$	131,839

East Dubuque

Gross profit was approximately $80.9 million for the calendar year ended December 31, 2013 compared to approximately $133.5 million for the calendar year ended December 31, 2012. Gross profit margin was 46% for the calendar year ended December 31, 2013 as compared to 60% for the calendar year ended December 31, 2012. Gross profit margin can vary significantly from period to period due to changes in nitrogen fertilizer prices and natural gas costs, both of which are commodities. The prices of these commodities can vary significantly from period to period and do not always move in the same direction. In addition, there are certain fixed costs of operating our East Dubuque Facility that are recorded in cost of sales and whose impact on gross profit and gross margins varies as product sales volumes vary seasonally. The decrease in gross profit margin during the calendar year ended December 31, 2013 was primarily due to a decrease in revenues and an increase in cost of sales as described above.

Pasadena

Gross loss margins for the calendar years ended December 31, 2013 and 2012 was 7% and 5%, respectively. Gross loss for calendar year ended December 31, 2013 is due to lower ammonium sulfate sale prices and the write-down of inventory, as described above. Similar to our East Dubuque Facility, gross profit margin can vary significantly from period to period due to changes in the prices of nitrogen fertilizer, ammonia and sulfur, which are commodities. The prices of these commodities can vary significantly from period to period and do not always move in the same direction. In addition, there are certain fixed costs of operating our Pasadena Facility that are recorded in cost of sales and whose impact on gross profit and gross margins varies as product sales volumes vary seasonally. Moreover, forward sales contracts have not developed for ammonium sulfate to the extent that they have for other nitrogen fertilizer products, so it is not possible to lock product prices and input prices at the same time, as has been our practice for a portion of the sales of the most important products of our East Dubuque Facility. Since input prices for ammonium sulfate are typically fixed several months before the corresponding product price, margins may be compressed during a declining commodity market. Gross loss for calendar year ended December 31, 2012 was primarily due to reduced margins due to the write-up of inventory to fair value, along with the turnaround expenses at the sulfuric acid plant and expenses related to two unexpected outages of the sulfuric acid plant.

Fulghum Fibres

Gross profit and gross profit margin for the calendar year ended December 31, 2013 (period May 1, 2013 through December 31, 2013) was approximately $12.0 million and 19%, respectively.

Operating Expenses


	For the Calendar Years Ended December 31,
	2013		2012
	(in thousands)
Operating expenses:
East Dubuque	$	5,573	$	7,559
Pasadena		38,679		944
RNP – partnership and unallocated expenses		7,945		11,773

Total RNP		52,197		20,276
Fulghum Fibres		2,118		—
Wood pellets		5,505		1,919
Corporate and unallocated expenses		25,445		24,186

Total operating expenses	$	85,265	$	46,381

East Dubuque

Operating expenses were approximately $5.6 million for the calendar year ended December 31, 2013 compared to approximately $7.6 million for the calendar year ended December 31, 2012. These expenses were primarily comprised of selling, general and administrative expense and depreciation expense.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were approximately $4.6 million for the calendar year ended December 31, 2013 compared to approximately $6.2 million for the calendar year ended December 31, 2012. This decrease was primarily due to decreases in various professional services fees of approximately $0.6 million, salaries of approximately $0.4 million and debt related expenses of approximately $0.4 million.

Depreciation and Amortization. Depreciation expense was approximately $0.2 million and $0.8 million for the calendar years ended December 31, 2013 and 2012, respectively. This decrease was primarily due to the acceleration of depreciation in 2012 on an asset that was dismantled as part of the ammonia production and storage capacity expansion project and certain software having been fully depreciated. A portion of depreciation expense is associated with assets supporting general and administrative functions and is recorded in operating expense. The majority of depreciation expense, as a manufacturing cost, is distributed between cost of sales and finished goods inventory, based on product volumes.

Pasadena

Operating expenses were approximately $38.7 million for the calendar year ended December 31, 2013 compared to approximately $0.9 million for the calendar year ended December 31, 2012. These expenses were primarily comprised of selling, general and administrative expense, depreciation expense and Agrifos goodwill impairment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $4.8 million for the calendar year ended December 31, 2013. These expenses are for general administrative purposes at our Pasadena Facility, such as general management salaries and travel, legal, consulting, information technology, and banking fees. Selling, general and administrative expenses for the calendar year ended December 31, 2013 included approximately $0.7 million in integration related expenses.

Depreciation and Amortization. Amortization expense was approximately $3.9 million for the calendar year ended December 31, 2013. This amount represents amortization of intangible assets. The depreciation expense relating to fixed assets is a manufacturing cost which is distributed between cost of sales and finished goods inventory, based on product volumes.

Agrifos Goodwill Impairment. Agrifos goodwill impairment was approximately $30.0 million for the calendar year ended December 31, 2013. See Note 10 — Goodwill to the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data”.

RNP – Partnership and Unallocated Expenses

Fulghum Fibres

Operating expenses were primarily comprised of selling, general and administrative expense and depreciation and amortization expense. Selling, general and administrative expenses for the calendar year ended December 31, 2013 were approximately $3.8 million. These expenses are for general administrative purposes, such as general management salaries and travel, legal, consulting, information technology, and banking fees. Depreciation and amortization expense included in operating expense for the calendar year ended December 31, 2013 was approximately ($1.7) million. Amortization of unfavorable processing agreements exceeds amortization of favorable processing agreements resulting in a credit in depreciation and amortization expense. The depreciation expense relating to fixed assets is a manufacturing cost which is recorded in cost of sales.

Wood Pellets

Operating expenses were primarily comprised of selling, general and administrative expense, which included salaries, travel, acquisition-related and development costs associated with the Atikokan Project and Wawa Project, and other business development costs.

Corporate and Unallocated Expenses

Operating expenses consist primarily of selling, general and administrative expense and depreciation and amortization expense. Selling, general and administrative expenses were approximately $24.8 million for the calendar year ended December 31, 2013 compared to approximately $23.4 million for the calendar year ended December 31, 2012.

Operating Income (Loss)


	For the Calendar Years Ended December 31,
	2013			2012
	(in thousands)
Operating income (loss):
East Dubuque	$	75,310		$	125,984
Pasadena		(48,208	)		(2,648	)
RNP – partnership and unallocated expenses		(7,945	)		(11,773	)

Total RNP		19,157			111,563
Fulghum Fibres		9,914			—
Wood pellets		(5,505	)		(1,919	)
Corporate		(25,445	)		(24,186	)

Total operating loss	$	(1,879	)	$	85,458

East Dubuque

Operating income was approximately $75.3 million for the calendar year ended December 31, 2013 compared to approximately $126.0 million for the calendar year ended December 31, 2012. The decrease was primarily due to lower revenues and higher cost of sales partially offset by lower selling, general and administrative expenses and depreciation and amortization expense as described above.

Pasadena

Operating loss was approximately $48.2 million for the calendar year ended December 31, 2013 which was due to gross loss as described above.

RNP – Partnership and Unallocated Expenses

Operating loss was approximately $7.9 million for the calendar year ended December 31, 2013 which was due to operating expenses as described above.

Fulghum Fibres

Operating income was approximately $9.9 million for the calendar year ended December 31, 2013 (period May 1, 2013 through December 31, 2013) which was due to gross profit and operating expenses as described above.

Wood Pellets

Operating loss was approximately $5.5 million for the calendar year ended December 31, 2013 compared to approximately $1.9 million for the calendar year ended December 31, 2012.

Corporate and Unallocated Expenses

Loss from operations primarily consists of operating expenses, such as selling, general and administrative expenses and depreciation and amortization.

Other Income (Expense), Net


	For the Calendar Years Ended December 31,
	2013			2012
	(in thousands)
Other income (expense), net:
East Dubuque	$	—		$	(2,263	)
Pasadena		(8	)		—
RNP – unallocated interest expense and other		(15,177	)		(1,994	)

Total RNP		(15,185	)		(4,257	)
Fulghum Fibres		(2,169	)		—
Wood pellets		326			—
Corporate and unallocated expenses		(513	)		(11,763	)

Total other expense, net	$	(17,541	)	$	(16,020	)

East Dubuque

Other expense, net was approximately $0 for the calendar year ended December 31, 2013 compared to approximately $2.3 million for the calendar year ended December 31, 2012. The entry into the credit agreement entered into in October 2012, or the Second 2012 Credit Agreement, and the payoff of the credit agreement entered into in February 2012, or the First 2012 Credit Agreement, resulted in a loss on debt extinguishment of approximately $2.1 million for the calendar year ended December 31, 2012.

RNP – Partnership and Unallocated Expenses

Other expense, net consists primarily of unallocated interest expense and loss on interest rate swaps of approximately $14.1 million and loss on debt extinguishment of approximately $6.0 million partially offset by fair value adjustment to earn-out consideration of approximately $ 4.9 million. Unallocated interest expense for the calendar year ended December 31, 2013 represents primarily interest expense on the RNP Notes.

Corporate and Unallocated Expenses

Corporate and unallocated expenses recorded as other expense for the calendar year ended December 31, 2012 consists primarily of loss on debt extinguishment relating to the Convertible Notes. On December 31, 2012, the Convertible Notes were completely redeemed for cash and the unamortized debt discount and debt issuance costs were written off, which resulted in a loss on debt extinguishment of approximately $2.7 million. Corporate and unallocated interest expense for the year ended December 31, 2012 consists primarily of interest expense on the Convertible Notes.

Discontinued Operations:

Loss from discontinued operations, our former energy technologies segment, for the year ended December 31, 2013 was $6.6 million, compared to a loss of $37.4 million for the same period last year.

Selling, general and administrative expenses were approximately $7.7 million for the calendar year ended December 31, 2013 compared to approximately $4.5 million for the calendar year ended December 31, 2012. The increase was primarily due to the inclusion of approximately $4.4 million in costs that were previously reported as research and development expense partially offset by a decrease in project development costs of approximately $0.9 million. These former research and development costs include third party costs of approximately $1.4 million in support of de-commissioning the PDU, labor cost of approximately $0.9 million, patent costs of approximately $0.8 million and various taxes of approximately $1.1 million.

Research and development expense was approximately $5.7 million for the calendar year ended December 31, 2013 compared to approximately $20.9 million for the calendar year ended December 31, 2012. The decrease was due to terminating research and development activities and ceasing operations, reducing staff at, and mothballing the PDU.

During the calendar year ended December 31, 2013, we sold the Natchez site which resulted in a gain of approximately $6.3 million. During the calendar year ended December 31, 2012, we recorded loss on impairments primarily relating to the capitalized SilvaGas patents and goodwill from the acquisition of ClearFuels in the amounts of approximately $8.5 million and $7.2 million, respectively, for a loss on impairments of approximately $15.7 million.

Tax benefit was $0.3 million for the calendar year ended December 31, 2013 compared to tax benefit of $3.0 million for the same period last year.

THE CALENDAR YEAR ENDED DECEMBER 31, 2012 COMPARED TO THE CALENDAR YEAR ENDED DECEMBER 31, 2011

Continuing Operations:

Revenues


	For the Calendar Years Ended December 31,
	2012		2011
			(unaudited)
	(in thousands)
Revenues:
East Dubuque	$	224,205	$	199,909
Pasadena		37,430		—

Total revenues	$	261,635	$	199,909


	For the Calendar Year Ended December 31, 2012				For the Calendar Year Ended December 31, 2011
	Tons		Revenue		Tons		Revenue
					(unaudited)
	(in thousands)				(in thousands)
Revenues:
Ammonia		149	$	99,378		135	$	87,909
UAN		291		94,836		301		89,435
Urea (liquid and granular)		35		21,189		29		14,428
CO₂		76		2,517		92		2,476
Nitric Acid		14		5,016		15		4,846
Other		N/A		1,269		N/A		815

Total		565	$	224,205		572	$	199,909


	For the Calendar Year Ended December 31, 2012
	Tons		Revenue
	(in thousands)
Revenues:
Ammonium sulfate		115	$	34,493
Sulfuric acid		27		2,586
Other		—		351

Total revenues		142	$	37,430

East Dubuque

Revenues were approximately $224.2 million for the calendar year ended December 31, 2012 compared to approximately $199.9 million for the calendar year ended December 31, 2011. The increase in revenue for the calendar year ended December 31, 2012 compared to the calendar year ended December 31, 2011 was primarily due to increased sales prices for all products and sales volume for ammonia, partially offset by a decrease in sales volume for UAN.

The average sales prices per ton in the calendar year ended December 31, 2012 as compared with the calendar year ended December 31, 2011 increased by 3% and 10% for ammonia and UAN, respectively. These increases were due to higher demand. Grain inventory levels were low which created a higher demand for corn, and therefore higher corn prices. Higher demand for corn and corn prices led to expectations of higher corn acreage during the calendar year ended December 31, 2012 which increased the demand for fertilizer. These two products comprised approximately 87% and 89%, respectively, of our revenues for calendar year ended December 31, 2012 and 2011.

Sales volume for ammonia increased as a result of an increase in the amount of product available for sale which was due to production rates being higher in calendar year 2012 as a result of the work performed during the fall 2011 turnaround. Sales volume for UAN decreased as a result of less available product during November and December 2012. During this period, the ammonia plant at our East Dubuque Facility experienced two unexpected outages. Ammonia is upgraded to produce UAN. Production of UAN ceased during the outages, postponing UAN sales into the first quarter of 2013.

Although our East Dubuque Facility’s primary product is ammonia, the facility has the manufacturing capability to upgrade ammonia into other saleable products, including liquid and granular urea, nitric acid and UAN. We regularly evaluate selling prices, incremental margins and demand for the various products we sell in order to determine the appropriate proportion of products to manufacture.

Other revenue for the year ended December 31, 2012 consists of sales of excess inventory of natural gas and sales of nitrous oxide emission reduction credits of approximately $1.1 million and $0.1 million, respectively. Other revenue for the year ended December 31, 2011 consists of sales of excess inventory of natural gas.

Pasadena

We generate revenue primarily from sales of nitrogen fertilizer products manufactured at our Pasadena Facility and used in the production of corn, soybeans, potatoes, cotton, canola, alfalfa and wheat. The facility is designed to produce ammonium sulfate, sulfuric acid and ammonium thiosulfate.

Cost of Sales


	For the Calendar Years Ended December 31,
	2012		2011
			(unaudited)
	(in thousands)
Cost of sales:
East Dubuque	$	90,662	$	113,911
Pasadena		39,134		—

Total cost of sales	$	129,796	$	113,911

East Dubuque

Cost of sales was approximately $90.7 million for the calendar year ended December 31, 2012 compared to approximately $113.9 million for the calendar year ended December 31, 2011. The decrease in cost of sales was primarily due to lower natural gas costs of approximately $11.9 million, purchase of ammonia by barge which resulted in additional cost of sales of approximately $8.3 million in the prior year, turnaround expenses in the prior year of approximately $7.4 million, and an out-of-period adjustment for spare parts which resulted in a credit to depreciation expense in cost of sales of approximately $1.2 million. During calendar year 2011, we sold approximately 20,000 tons of ammonia that were purchased by barge, resulting in a cost for the purchased ammonia much higher than the production cost of such ammonia. Since demand for nitrogen fertilizer in our market generally exceeds the amount of nitrogen fertilizer we can produce, we occasionally purchase product for immediate resale when the price of such nitrogen fertilizer available for immediate resale is lower than our sales price at that time. These sales accounted for approximately $8.3 million in additional cost of sales over production cost. Turnaround expenses represent the cost of maintenance during turnarounds, which occur approximately every two years at the East Dubuque Facility. A facility turnaround at the East Dubuque Facility occurred in September and October 2011. The overall decrease in cost of sales was partially offset by additional expenses in 2012, including the following: higher depreciation expense of approximately $1.7 million, prior to the out-of-period adjustment; approximately $2.3 million of expenses related to the two unexpected outages of the ammonia plant, consisting of $1.0 million of direct shutdown expenses and $1.3 million of fixed costs expensed through cost of sales that would have been inventoried had the plant remained operational; and approximately $1.7 million in lime removal costs.

Natural gas costs comprised approximately 44% of cost of sales for the calendar year ended December 31, 2012 compared to 45% of cost of sales for the calendar year ended December 31, 2011. Labor costs comprised approximately 14% of cost of sales for the calendar year ended December 31, 2012 compared to approximately 11% of cost of sales for the calendar year ended December 31, 2011. Depreciation expense included in cost of sales was approximately $10.7 million and $10.3 million, respectively, for the calendar year ended December 31, 2012 and 2011 and comprised approximately 12% and 9% of cost of sales for the calendar years ended December 31, 2012 and 2011, respectively.

Pasadena

Cost of sales primarily consists of ammonia, sulfur, labor costs and depreciation. Ammonia, sulfur and labor costs comprised approximately 49%, 15% and 5%, respectively, of cost of sales for the calendar year ended December 31, 2012. Depreciation expense included in cost of sales was approximately $0.4 million. Cost of sales also includes maintenance expenses. Maintenance at the sulfuric acid plant occurred in November 2012. As a result, we incurred maintenance expenses of approximately $0.8 million. The maintenance was originally scheduled for the first calendar quarter of 2013, but due to two unexpected outages at the sulfuric acid plant, we decided to conduct the maintenance early. As a result of the two unexpected outages, we incurred approximately $0.5 million in additional expenses. The acquisition method of accounting required that the inventory be recognized at fair value as of the closing date of the Agrifos Acquisition. This resulted in the value of inventory, which was sold during the two-month period ended December 31, 2012, being increased by approximately $3.4 million.

Gross Profit


	For the Calendar Years Ended December 31,
	2012			2011
				(unaudited)
	(in thousands)
Gross profit (loss):
East Dubuque	$	133,543		$	85,998
Pasadena		(1,704	)		—

Total gross profit	$	131,839		$	85,998

East Dubuque

Gross profit was approximately $133.5 million for the calendar year ended December 31, 2012 compared to approximately $86.0 million for the calendar year ended December 31, 2011. Gross profit margin was 60% for the calendar year ended December 31, 2012 as compared to 43% for the calendar year ended December 31, 2011. Gross profit margin can vary significantly from period to period due to changes in nitrogen fertilizer prices and natural gas costs, both of which are commodities. The prices of these commodities can vary significantly from period to period and do not always move in the same direction. The increase in gross profit margin during the calendar year ended December 31, 2012 was primarily due to an increase in revenues and a decrease in cost of sales as described above.

Pasadena

Gross loss was primarily due to reduced margins due to the write-up of inventory to fair value along with the turnaround expenses at the sulfuric acid plant and expenses related to two unexpected outages of the sulfuric acid plant.

Operating Expenses


	For the Calendar Years Ended December 31,
	2012		2011
			(unaudited)
	(in thousands)
Operating expenses:
East Dubuque	$	7,559	$	8,080
Pasadena		944		—
RNP – partnership and unallocated expenses		11,773		—

Total RNP		20,276		8,080
Wood pellets		1,919		—
Corporate and unallocated expenses		24,186		17,081

Total operating expenses	$	46,381	$	25,161

RNP – Partnership and Unallocated Expenses

Partnership and unallocated expenses represent costs that relate directly to RNP or to RNP and its subsidiaries but are not allocated to a segment. Such expenses consist primarily of the Agrifos Acquisition costs of approximately $4.1 million, unit-based compensation expense of approximately $2.8 million, labor allocations from Rentech of approximately $2.1 million, accounting and tax fees of approximately $1.2 million, legal fees of approximately $0.3 million, certain insurance costs of approximately $0.2 million and board expense of approximately $0.1 million. Prior to calendar year ended December 31, 2012, East Dubuque and RNP were considered one entity for financial reporting purposes. Prior to the Agrifos Acquisition, RNP operated as one segment.

Wood Pellets

Corporate and Unallocated Expenses

Operating expenses consist primarily of selling, general and administrative expense and depreciation and amortization expense. Selling, general and administrative expenses were approximately $23.4 million for the calendar year ended December 31, 2012 compared to approximately $16.5 million for the calendar year ended December 31, 2011.

Operating Income


	For the Calendar Years Ended December 31,
	2012			2011
				(unaudited)
	(in thousands)
Operating income (loss):
East Dubuque	$	125,984		$	77,918
Pasadena		(2,648	)		—
RNP – partnership and unallocated expenses		(11,773	)		—

Total RNP		111,563			77,918
Wood pellets		(1,919	)		—
Corporate and unallocated expenses		(24,186	)		(17,081	)

Total operating income	$	85,458		$	60,837

East Dubuque

Operating income was approximately $126.0 million for the calendar year ended December 31, 2012 compared to approximately $77.9 million for the calendar year ended December 31, 2011. The increase in operating income was primarily due to higher gross profit as described above.

Pasadena

Operating loss was approximately $2.6 million for the calendar year ended December 31, 2012 which was due to gross loss as described above.

RNP – Partnership and Unallocated Expenses

Operating loss was approximately $11.8 million for the calendar year ended December 31, 2012 which was due to operating expenses as described above.

Wood Pellets

Operating loss was approximately $1.9 million for the calendar year ended December 31, 2012, which was due to operating expenses as described above.

Corporate and Unallocated Expenses

Loss from operations primarily consists of operating expenses such as selling, general and administrative expenses and depreciation and amortization.

Other Expense, Net


	For the Calendar Years Ended December 31,
	2012			2011
				(unaudited)
	(in thousands)
Other expense, net:
East Dubuque	$	(2,263	)	$	(32,218	)
Pasadena		—			—
RNP – unallocated interest expense and other		(1,994	)		—

Total RNP		(4,257	)		(32,218	)
Corporate and unallocated expenses		(11,763	)		(4,229	)

Total other expense, net	$	(16,020	)	$	(36,447	)

East Dubuque

Other expense, net was approximately $2.3 million for the calendar year ended December 31, 2012 compared to approximately $32.2 million for the calendar year ended December 31, 2011. The decrease was primarily due to a decrease in loss on extinguishment of debt and interest expense of approximately $17.4 million and $12.5 million, respectively. The entry into the Second 2012 Credit Agreement and the payoff of the First 2012 Credit Agreement resulted in a loss on debt extinguishment of approximately $2.1 million for the calendar year ended December 31, 2012. In November 2011, the entry into the credit agreement, or 2011 Credit Agreement, and the payoff of the previous credit agreement, resulted in a loss on debt extinguishment of approximately $10.3 million. In June 2011, we had a loss on debt extinguishment of $9.2 million relating to a former credit agreement REMC entered into during the fiscal year ended September 30, 2011.

RNP – Partnership and Unallocated Expenses

Other expense, net consists primarily of unallocated interest expense and loss on interest rate swaps of approximately $2.2 million. Unallocated interest expense represents interest expense on the term loan under the Second 2012 Credit Agreement, which was used to finance the Agrifos Acquisition.

Corporate and Unallocated Expenses

Corporate and unallocated expenses recorded as other expense for the calendar year ended December 31, 2012 consists primarily of loss on debt extinguishment relating to the Convertible Notes and interest expense. On December 31, 2012, the Convertible Notes were completely redeemed for cash and the unamortized debt discount and debt issuance costs were written off, which resulted in a loss on debt extinguishment of approximately $2.7 million. Corporate and unallocated interest expense for the year ended December 31, 2012 consists primarily of interest expense on the Convertible Notes of $9.1 million. Corporate and unallocated expense for the year ended December 31, 2011 includes $4.2 million in interest expense related to the Convertible Notes.

Discontinued Operations:

Loss from discontinued operations for the year ended December 31, 2012 was $37.4 million, compared to a loss of $88.0 million for the same period last year.

The primary reason for the decrease in loss from discontinued operations is due to the decrease in operating expenses, which was the result of a decrease in loss on impairments of approximately $43.3 million, partially offset by a decrease in extinguishment of liability of approximately $7.9 million. Other expense also increased by $6.0 million.

During the calendar year ended December 31, 2012, we recorded loss on impairments primarily relating to the capitalized SilvaGas patents and goodwill from the acquisition of ClearFuels in the amounts of approximately $8.5 million and $7.2 million, respectively, for a loss on impairments of approximately $15.7 million. During the calendar year ended December 31, 2011, we recorded a loss on impairment relating to our project in Rialto, California, or the Rialto Project, our project in Natchez, Mississippi, or the Natchez Project, and our project in Port St. Joe, Florida, or the Port St. Joe Project, of approximately $27.2 million, $26.6 million and $4.8 million, respectively. Other costs primarily include previously capitalized option payments on potential sites and deferred fees on potential financing arrangements.

During calendar year ended December 31, 2011, there was an extinguishment of a liability relating to the East Dubuque Facility coal-to-liquids conversion project, which was abandoned during the fiscal year ended September 30, 2008. For the years ended prior to December 31, 2011, the liability for the advance for equity investment remained because the potential for another coal-to-liquids project still existed. During calendar year ended December 31, 2011, we adopted a revised project development strategy for the commercialization of our alternative energy technologies, which included pursuing projects that were smaller and required less capital. Coal-to-liquids projects, like the East Dubuque Facility conversion project, no longer fit our development strategy. As a result, the liability associated with this project was reversed.

Tax benefit was $3.0 million for the calendar year ended December 31, 2012.

THE THREE MONTHS ENDED DECEMBER 31, 2011 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2010

Continuing Operations:

Revenues


	For the Three Months Ended December 31,
	2011		2010
			(unaudited)
	(in thousands)
Revenues:
Product shipments	$	62,656	$	42,962
Sales of excess inventory of natural gas		358		—

Total revenues	$	63,014	$	42,962


	For the Three Months Ended December 31, 2011				For the Three Months Ended December 31, 2010
	Tons		Revenue		Tons		Revenue
					(unaudited)
	(in thousands)				(in thousands)
Product Shipments:
Ammonia		55	$	37,391		44	$	22,828
UAN		65		20,088		79		15,298
Urea (liquid and granular)		7		3,714		7		2,994
CO₂		15		433		34		783
Nitric Acid		3		1,030		3		1,059

Total		145	$	62,656		167	$	42,962

Revenues were approximately $63.0 million for the three months ended December 31, 2011 compared to approximately $43.0 million for the three months ended December 31, 2010. The increase in revenues for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 was primarily the result of higher prices paid for our products during three months ended December 31, 2011 and higher ammonia sales volume, partially offset by lower UAN and CO₂ sales volumes.

The average sales prices per ton in the three months ended December 31, 2011 as compared with the three months ended December 31, 2010 increased by 34% and 59% for ammonia and UAN, respectively. These increases were due to higher demand caused by a combination of low levels of grain and fertilizer inventories and expectations of higher corn acreage in 2012. These two products comprised approximately 92% and 89%, respectively, of our product sales for three months ended December 31, 2011 and 2010.

Sales volume for ammonia increased during the three months ended December 31, 2011 compared to the comparable period in 2010 as a result of lower inventories available for sale in the fall of 2010 given high deliveries during the summer of 2010. Deliveries in 2011 shifted from summer to fall as a result of strong presales to customers during the summer of 2011 for the fall ammonia application season, whereas, in the prior period, we had fewer ammonia tons presold for shipment in the fall. Sales volumes for UAN and CO₂ decreased due to lower availability of the products during the quarter as a result of the shutdown of the East Dubuque Facility for the fall 2011 turnaround. The net impact of the increase in sales volume of ammonia and the decrease in the sales volume of UAN and CO₂ resulted in a decrease in the total number of product shipments as reflected in the table above.

Although our primary product is ammonia, we have the manufacturing capability to upgrade ammonia into other saleable products, including liquid and granular urea, nitric acid and UAN. During the three months ended December 31, 2011 and 2010, we regularly evaluated selling prices, incremental margins and demand for the various products we sold in order to determine the appropriate proportion of products to manufacture. Liquid and granular urea, UAN and nitric acid sold at a premium to ammonia per nutrient ton during each of the three months ended December 31, 2011 and 2010.

Cost of Sales


	For the Three Months Ended December 31,
	2011		2010
			(unaudited)
	(in thousands)
Cost of sales:
Product shipments	$	34,024	$	26,835
Turnaround expenses		2,957		—
Sales of excess inventory of natural gas		479		—

Total cost of sales	$	37,460	$	26,835

Since the demand for nitrogen fertilizer in our market generally exceeds the amount of nitrogen fertilizer we can produce, we occasionally purchase product for immediate resale when there is an opportunity to do so at a price that is lower than our sales prices. The increase in total cost of sales on all product shipments for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 was primarily due to (i) higher natural gas costs and (ii) the sale of approximately 12,000 tons of ammonia that were purchased by barge at a cost much higher than the production cost of such ammonia would have been. During the three months ended December 31, 2011, this sale accounted for approximately $5.0 million in additional cost of sales over production cost, $1.1 million of the increase in cost of sales was due to higher natural gas costs and the remaining increase was primarily due to other operating expenses, particularly depreciation expense, as discussed below. There were no sales of purchased ammonia during the three months ended December 31, 2010.

Natural gas costs comprised approximately 47% of cost of sales on product shipments for the three months ended December 31, 2011 compared to 53% of cost of sales on product shipments for the three months ended December 31, 2010. Labor costs comprised approximately 14% of cost of sales on product shipments for the three months ended December 31, 2011 compared to approximately 12% of cost of sales on product shipments for the three months ended December 31, 2010. Depreciation expense included in cost of sales was $3.2 million and $2.5 million, respectively, for the three months ended December 31, 2011 and 2010, and comprised approximately 9% of cost of sales on product shipments for each of the three months ended December 31, 2011 and 2010.

Turnaround expenses represent the cost of maintenance during turnarounds, which occur approximately every two years. A facility turnaround occurred in September and October 2011. As a result, during the three months ended December 31, 2011, we incurred turnaround expenses of approximately $3.0 million.

Natural gas, though not purchased for the purpose of resale, is occasionally sold under certain circumstances, such as when contracted quantities received exceed our production requirements or our storage capacity. In these situations, which we refer to as sales of excess inventory of natural gas, the sales proceeds are recorded as revenue and the related cost is recorded as a cost of sales.

Gross Profit


	For the Three Months Ended December 31,
	2011			2010
				(unaudited)
	(in thousands)
Gross profit (loss):
Product shipments	$	28,632		$	16,127
Turnaround expenses		(2,957	)		—
Sales of excess inventory of natural gas		(121	)		—

Total gross profit	$	25,554		$	16,127

The gross profit margin on product shipments was 46% for the three months ended December 31, 2011 as compared to 38% for the three months ended December 31, 2010. Gross profit margin on product shipments can vary significantly from period to period due to changes in nitrogen fertilizer prices and natural gas costs, both of which are commodities. The prices of these commodities can vary significantly from period to period and do not always move in the same direction. Specifically, the increase in gross profit margin during the three months ended December 31, 2011 was due to stronger average sales prices for our products resulting from a combination of low levels of grain and fertilizer inventories and expectations of higher corn acreage in 2012. This increase was partially offset by lower margins received on sales of approximately 12,000 tons of ammonia purchased by barge as discussed above, approximately $1.1 million in higher natural gas costs, and approximately $0.7 million more in depreciation expense running through cost of sales.

Operating Expenses


	For the Three Months Ended December 31,
	2011			2010
				(unaudited)
	(in thousands)
Operating expenses:
Selling, general and administrative	$	3,336		$	1,431
Depreciation and amortization		77			112
Gain on sale of assets		(507	)		—

Total nitrogen products manufacturing		2,906			1,543
Corporate selling, general and administrative		5,515			5,038
Corporate depreciation and amortization		165			123

Total operating expenses	$	8,586		$	6,704

Selling, General and Administrative Expenses.During the three months ended December 31, 2011 as compared to the three months ended December 31, 2010, selling, general and administrative expenses increased by $2.4 million or 37%. This increase was primarily due to an increase in accounting and tax services expenses of approximately $1.3 million due to the change in fiscal year end and RNP becoming a public company, and approximately $0.4 million in each of pre-development project expenses and public company expenses during the three months ended December 31, 2011 that we had not incurred during the three months ended December 31, 2010.

Depreciation and Amortization. A portion of depreciation and amortization expense is associated with assets supporting general and administrative functions and is recorded in operating expense. The majority of depreciation and amortization expense originates at our nitrogen products manufacturing segment and, as a manufacturing cost, is distributed between cost of sales and finished goods inventory, based on product volumes.

Operating Income (Loss)


	For the Three Months Ended December 31,
	2011			2010
				(unaudited)
	(in thousands)
Operating income (loss):
Product shipments	$	25,726		$	14,584
Turnaround expenses		(2,957	)		—
Sales of excess inventory of natural gas		(121	)		—

Total nitrogen products manufacturing		22,648			14,584
Corporate operating income		(5,680	)		(5,161	)

Total operating income	$	16,968		$	9,423

Nitrogen Products Manufacturing.The increase in income from operations for product shipments for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to higher sales prices, partially offset by lower margins received on sales of approximately 12,000 tons of ammonia purchased by barge, higher natural gas costs and higher operating expenses.

Other Income (Expense), Net


	For the Three Months Ended December 31,
	2011			2010
				(unaudited)
	(in thousands)
Other income (expense), net:
Interest expense	$	(1,947	)	$	(2,912	)
Loss on debt extinguishment		(10,263	)		(4,593	)
Other income, net		17			16

Total nitrogen products manufacturing		(12,193	)		(7,489	)
Corporate interest expense		(2,101	)		(765	)
Corporate other income, net		33			22

Total other expense, net	$	(14,261	)	$	(8,232	)

The increase in other expense for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010 was primarily due to the larger loss on debt extinguishment, which was primarily due to a higher amount of debt issuance costs to write off and the payment of call premium fees of approximately $2.9 million. Corporate interest expense is on the Convertible Notes for each of the three months ended December 31, 2011 and 2010.

Discontinued Operations:

Loss from discontinued operations for the three months ended December 31, 2011 was $6.8 million, compared to a loss of $7.1 million for the three months ended December 31, 2010. Loss from discontinued operations decreased primarily because of a $1.2 million decrease in research and development expenses partially offset by a $0.4 million increase in selling, general and administrative expenses and $0.5 million in loss on impairments.

INFLATION

Inflation has and is expected to have an insignificant impact on our results of operations and sources of liquidity.

ADJUSTED EBITDA

RNP’s Adjusted EBITDA is defined as RNP’s net income plus interest expense and other financing costs, Agrifos goodwill impairment, loss on debt extinguishment, loss on interest rate swaps, income tax expense, depreciation and amortization and net of fair value adjustment to earn-out consideration. Fulghum’s Adjusted EBITDA is defined as net income plus interest expense and other financing costs and depreciation and amortization. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our consolidated financial statements, such as investors and commercial banks, to assess:

•

the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; and

•

our operating performance and return on invested capital compared to those of other publicly traded limited partnerships and other public companies, without regard to financing methods and capital structure.

Adjusted EBITDA should not be considered an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.

The table below reconciles RNP’s Adjusted EBITDA, which is a non-GAAP financial measure, to net income for RNP.


	Year Ended December 31,									Three Months Ended December 31,						Fiscal Year Ended September 30,
	2013			2012			2011			2011			2010			2011
	(unaudited, in thousands)
Net income (loss)	$	38		$	27,687		$	(63,596	)	$	(4,098	)	$	(5,884	)	$	(65,382	)
Add back: non-RNP loss		4,030			79,316			94,653			14,553			10,208			90,308

RNP net income	$	4,068		$	107,003		$	31,057		$	10,455		$	4,324		$	24,926
Add RNP Items:
Net interest expense		14,098			1,424			12,735			1,933			2,899			13,701
Agrifos goodwill impairment		30,029			—			—			—			—			—
Loss on debt extinguishment		6,001			2,114			19,486			10,263			4,593			13,816
Fair value adjustment to earn-out consideration		(4,920	)		—			—			—			—			—
Loss on interest rate swaps		7			951			—			—			—			—
Income tax (benefit) expense		(96	)		303			14,643			—			2,772			17,415
Depreciation and amortization		17,312			12,460			10,706			3,287			2,601			10,020
Other		(1	)		(232	)		(3	)		(3	)

RNP’s Adjusted EBITDA	$	66,498		$	124,023		$	88,624		$	25,935		$	17,189		$	79,878

The table below reconciles Fulghum’s Adjusted EBITDA, which is a non-GAAP financial measure, to segment net income for Fulghum, from the date of the acquisition through December 31, 2013.


	Year Ended December 31,
	2013
	(in thousands)
Fulghum net income per segment disclosure	$	6,967
Add Fulghum Items:
Net interest expense		1,755
Depreciation and amortization		3,128
Other		1,192

Fulghum’s Adjusted EBITDA	$	13,042

ANALYSIS OF CASH FLOWS

The following table summarizes our Consolidated Statements of Cash Flows:


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,						For the Fiscal Year Ended September 30,
	2013			2012			2011			2010			2011
										(unaudited)
	(in thousands)
Net Cash Provided by (Used in):
Operating activities	$	12,354		$	70,237		$	(2,544	)	$	13,301		$	36,469
Investing activities		(162,194	)		(188,198	)		(9,464	)		(10,323	)		(40,240	)
Financing activities		114,473			22,219			128,277			27,462			70,834

Net Increase (Decrease) in Cash	$	(35,367	)	$	(95,742	)	$	116,269		$	30,440		$	67,063

In the consolidated statements of cash flows, the cash flows of discontinued operations are not separately classified or aggregated, and are reported in the respective categories with those of continuing operations.

Operating Activities

Revenues were approximately $374.3 million for the calendar year ended December 31, 2013 compared to approximately $261.6 million for the calendar year ended December 31, 2012. The increase in revenue for the calendar year ended December 31, 2013 compared to the calendar year ended December 31, 2012 was primarily due to the addition of the Pasadena Facility for a full year in 2013 from the Agrifos Acquisition and the Fulghum Acquisition, partially offset by decreases at the East Dubuque Facility in ammonia and UAN sales volume and sales prices. Deferred revenue decreased by $9.1 million and $4.0 million during the calendar years ended December 31, 2013 and 2012, respectively. The decrease for calendar year ended December 31, 2013 was a result of a decrease in our East Dubuque Facility’s deferred revenue by approximately $12.0 million caused by lower demand for product prepayment contracts due to expectations that fertilizer prices would not rise, which was partially offset by an increase in our Pasadena Facility’s deferred revenue by approximately $2.7 million. The increase in our Pasadena Facility’s deferred revenue occurred because of an increase in ammonium sulfate held in IOC terminals that had not sold through to end customers. The decrease for the calendar year ended December 31, 2012 was a result of a decrease in our Pasadena Facility’s deferred revenue by approximately $5.0 million due to completing a high volume of sales, which was partially offset by an increase in our East Dubuque Facility’s deferred revenue by approximately $1.0 million. The increase in our East Dubuque Facility’s deferred revenue occurred because an unscheduled plant outage at the end of 2012 made us unable to fulfill all fall 2012 product prepayment contracts before December 31, 2012 and the resulting extension of a portion of its fall 2012 product prepayment contracts into the first calendar quarter of 2013.

Revenues were approximately $63.0 million for the three months ended December 31, 2011 compared to approximately $43.0 million for the three months ended December 31, 2010. This increase was primarily the result of higher prices paid for our products during the three months ended December 31, 2011. Deferred revenue decreased $13.8 million during the three months ended December 31, 2011, versus an increase of $17.0 million during the three months ended December 31, 2010. The decrease during the three months ended December 31, 2011 was a result of a high volume of prepaid shipments resulting from the normal seasonality of our business, and due to the fact that few new contracts were signed during the period, as compared to the three months ended December 31, 2010. In comparison, the balance increased during the three months ended December 31, 2010 due to a significant number of new contracts during the period, partially offset by the fulfillment of product prepayment contracts during the three months ended December 31, 2010.

Revenues were approximately $180.0 million for the fiscal year ended September 30, 2011 which was an increase compared to the fiscal year ended September 30, 2010. This increase was primarily the result of higher prices paid for our products during fiscal year ended September 30, 2011, resulting from stronger demand for nitrogen fertilizer products during the period. Deferred revenue increased $19.7 million during the fiscal year ended September 30, 2011. This increase in deferred revenue was due to higher prepaid sales prices in fiscal year 2011 than in fiscal year 2010, and also a higher quantity of ammonia and UAN product presold in fiscal year 2011.

Our profits and operating cash flows are subject to changes in the prices of our products and our primary feedstocks, natural gas for the East Dubuque Facility and ammonia, sulfuric acid and sulfur for the Pasadena Facility. Our products and feedstocks are commodities and, as such, their prices can be volatile in response to numerous factors outside of our control. In addition, the timing of product prepayment contracts and associated cash receipts are factors largely outside of our control that affect our profits, operating cash flows and cash available for distribution by RNP.

Net cash provided by operating activities for the calendar year ended December 31, 2013 was approximately $12.4 million. We had net income of approximately $38,000 for the calendar year ended December 31, 2013. For the calendar year ended December 31, 2013, we had Agrifos goodwill impairment of approximately $30.0 million. During this period, we issued the RNP Notes and paid off the outstanding principal balance under our Second 2012 Credit Agreement, which resulted in a loss on the extinguishment of debt of approximately $6.0 million. We also had equity-based compensation expense of approximately $7.4 million. Due to the fire and the subsequent halting of production, our East Dubuque Facility had excess natural gas which it sold. The payments for such natural gas

sales were recorded as deposits for future natural gas purchases. Accrued interest increased by approximately $4.1 million due primarily to the RNP Notes. Deferred income tax benefit of approximately $27.1 million due primarily to the release of valuation allowance resulting from recording of deferred tax liabilities related to the Fulghum Acquisition.

Net cash provided by operating activities for the calendar year ended December 31, 2012 was approximately $70.2 million. We had net income of approximately $27.7 million for the calendar year ended December 31, 2012. During this period, we recorded loss on impairments relating to the capitalized SilvaGas patents and goodwill from the acquisition of ClearFuels in the amounts of approximately $8.5 million and $7.2 million, respectively, which accounted for approximately $15.7 million out of the total loss on impairments of approximately 16.0 million. We entered into our Second 2012 Credit Agreement and paid off the outstanding principal balance under our First 2012 Credit Agreement. This transaction resulted in a loss on the extinguishment of debt of approximately $2.1 million. As a result of redeeming the Convertible Notes prior to maturity, the unamortized debt discount and debt issuance costs were written off which resulted in a loss on debt extinguishment of approximately $2.7 million. These two transactions resulted in a loss on debt extinguishment of approximately $4.8 million for the calendar year ended December 31, 2012. We also had equity-based compensation expense of approximately $10.8 million. Deposits on natural gas contracts decreased by approximately $2.8 million due to obtaining lines of credit with two natural gas vendors that had previously required prepayment. Accrued liabilities decreased by approximately $23.4 million due to the payment of income taxes of approximately $8.1 million relating to the sale of the 39.2% of RNP outstanding common units in the offering, an approximately $3.1 million reduction in liability for sales and use taxes relating to the PDU and our Pasadena Facility decreasing their accrued liabilities by approximately $9.1 million primarily due to the payment of bonuses of approximately $7.2 million, which was partially offset by our East Dubuque Facility increasing their accrued liabilities primarily from amounts due to customers for recent overpayments and refunds on product prepayment contracts that we chose to cancel.

Net cash used by operating activities for the three months ended December 31, 2011 was approximately $2.5 million. We had net loss of $4.1 million for the three months ended December 31, 2011. During this period, we used a portion of the net proceeds from our initial public offering to repay in full the term loans outstanding under our 2011 Credit Agreement, including approximately $2.9 million to pay the associated prepayment penalty fees. This transaction resulted in a loss on debt extinguishment of $10.3 million. Accounts receivable increased by approximately $2.8 million due to higher sales volumes in the three months ended December 31, 2011 than in the three months ended September 30, 2011, due to normal seasonality of the business and our facility being down for a turnaround during the second half of September 2011. Inventories decreased by approximately $11.2 million due to a high volume of product sales during this quarter, which was due to the normal seasonality of our business. Deferred revenue decreased by approximately $13.8 million as a result of deliveries on product prepayment contracts being higher than the signing of new product prepayment contracts during the period due to the normal seasonality of our business, and due to the fact that few new product prepayment contracts were signed during the period. Accrued liabilities, accrued payroll and other liabilities decreased by approximately $4.7 million due to a large amount of accruals at September 30, 2011 related to turnaround costs at our East Dubuque Facility and the completion of the Rentech-ClearFuels Gasifier.

Net cash provided by operating activities for the three months ended December 31, 2010 was approximately $13.3 million. We had net loss of $5.9 million for the three months ended December 31, 2010. During this period, we entered into the second amendment to our 2010 credit agreement and repaid a portion of the principal outstanding under our 2010 credit agreement. This transaction resulted in a loss on the extinguishment of debt of $4.6 million. Accounts receivable increased by approximately $7.0 million due to higher sales volume leading up to December 31, 2010 than up to September 30, 2010, due to normal seasonality of the business and due to a large increase in UAN sales prices beginning in October 2010. Inventories decreased by approximately $1.5 million due to a high volume of product sales during this quarter which was attributable to the normal seasonality of our business. This decrease was less than the decrease we typically experience during this period due to low inventory levels leading into the period, caused by unusually high sales volume the previous summer. Deferred revenue increased by approximately $17.0 million due to a significant number of new contracts that were signed during the period, partially offset by the fulfillment of product prepayment contracts during the three months ended December 31, 2010.

Net cash provided by operating activities for the fiscal year ended September 30, 2011 was approximately $36.5 million. We had net loss of $65.4 million for the fiscal year ended September 30, 2011. During this period, we recorded loss on impairments relating to the Rialto Project, the Natchez Project and the Port St. Joe Project of approximately $27.2 million, $26.6 million and $4.8 million, respectively. We recorded approximately $7.9 million for the extinguishment of a liability relating to the East Dubuque Facility coal-to-liquids conversion project, which was abandoned during fiscal year ended September 30, 2008. We also entered into the second amendment to our 2010 credit agreement and repaid a portion of the principal outstanding under our 2010 credit agreement. This transaction resulted in a loss on the extinguishment of debt of $4.6 million. We also entered into our 2011 Credit Agreement during this period and paid off the outstanding principal balance under our 2010 credit agreement. This transaction resulted in a loss on debt extinguishment of $9.2 million. These two transactions resulted in a total loss on debt extinguishment of $13.8 million. During the fiscal year ended September 30, 2011, we used $8.3 million of proceeds from our 2011 Credit Agreement to pay the prepayment penalty fee resulting from the prepayment of term loans outstanding under our 2010 credit agreement. During the fiscal year ended September 30, 2011, accounts receivable decreased by $5.0 million, due to having a high volume of summer sales in fiscal year ended September 30, 2010 which increased the September 30, 2010 balance. Accrued liabilities increased by approximately

$7.4 million during the fiscal year ended September 30, 2011 due to significant vendor invoices and accruals for turnaround activities at our East Dubuque Facility in September 2011 and the Rentech-ClearFuels Gasifier, as well as for significant capital expenditures during the turnaround. Inventories increased $9.2 million during the fiscal year ended September 30, 2011 due to having more summer sales contracts in fiscal year 2010, whereas in fiscal year 2011, it followed the normal seasonal trend of having more fall sales contracts, requiring high inventory levels at September 30, 2011 to fulfill those contracts. Deferred revenue increased $19.7 million during the fiscal year ended September 30, 2011. The increase was due to higher prepaid sales prices in the fiscal year ended September 30, 2011 than in the fiscal year ended September 30, 2010, and also a higher quantity of ammonia and UAN product presold in the fiscal year ended September 30, 2011.

Investing Activities

Net cash used in investing activities was approximately $162.2 million, $188.2 million, $9.5 million, $10.3 million and $40.2 million, respectively, for the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and 2010, and the fiscal year ended September 30, 2011. In the calendar year ended December 31, 2013, we paid approximately $53.2 million, net of cash received, for the Fulghum Acquisition, $6.2 million for the Wawa Project and $4.9 million for the Atikokan Project. The amount for capital expenditures of approximately $104.7 million for the calendar year ended December 31, 2013 was primarily related to the ammonia production and storage capacity expansion project at our East Dubuque Facility, and the ammonium sulfate debottlenecking and production capacity project, the power generation project and the initial phases of the sulfuric acid converter replacement project at our Pasadena Facility. In the calendar year ended December 31, 2012, we paid approximately $128.6 million, net of cash received, for the Agrifos Acquisition. The amount for purchase of property, plant, equipment and construction in progress of approximately $59.1 million for the calendar year ended December 31, 2012 relates primarily to the ammonia production and storage capacity expansion project, the urea expansion project and the DEF build-out. The increase in net additions of $2.0 million for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 was primarily due to capital projects completed during the turnaround at the East Dubuque Facility. For the fiscal year ended September 30, 2011 investing activities were primarily due to capital projects undertaken during the turnaround, which was started in September of 2011, at the East Dubuque Facility and spending for development activities at various projects.

Financing Activities

Net cash provided by financing activities was approximately $114.5 million for the calendar year ended December 31, 2013. During the calendar year ended December 31, 2013, we issued the RNP Notes for $320.0 million and paid off the Second 2012 Credit Agreement in the amount of approximately $205.0 million. We also entered into the RNHI Revolving Loan and borrowed $50.0 million under such facility, and RNP paid distributions to noncontrolling interests of approximately $37.3 million.

Net cash provided by financing activities was approximately $22.2 million for the calendar year ended December 31, 2012. During the calendar year ended December 31, 2012, RNP had borrowings under its Second 2012 Credit Agreement and its First 2012 Credit Agreement which totaled approximately $222.8 million and repaid borrowings under our First 2012 Credit Agreement of approximately $29.5 million. We also redeemed the Convertible Notes for cash of approximately $57.5 million and paid distributions of approximately $43.3 million. RNP paid distributions to noncontrolling interests of approximately $47.2 million.

Net cash provided by financing activities was approximately $128.3 million and $27.5 million, respectively, for the three months ended December 31, 2011 and 2010. During the three months ended December 31, 2011, RNP completed its initial public offering, which raised a total of $300.0 million in gross proceeds, and approximately $276.0 million in net proceeds after deducting underwriting discounts and commissions of $21.0 million and offering expenses of approximately $3.0 million, excluding approximately $1.0 million in offering expenses paid prior to September 30, 2011. We also repaid in full and terminated our 2011 Credit Agreement, which had an outstanding principal balance of $146.3 million. During the three months ended December 31, 2010, concurrently with entering into the second amendment to our 2010 credit agreement, we entered into a second incremental loan assumption agreement to borrow an additional $52.0 million, with an original issue discount of $1.0 million. We also prepaid $20.0 million of outstanding principal in connection with the second amendment to our 2010 credit agreement, from cash on hand that we had reserved for such purpose, and made $2.5 million in scheduled principal payments.

Net cash provided by financing activities was approximately $70.8 million for the fiscal year ended September 30, 2011. During the fiscal year ended September 30, 2011, concurrently with entering into the second amendment to our 2010 credit agreement, we entered into a second incremental loan assumption agreement to borrow an additional $52.0 million, with an original issue discount of $1.0 million. We also entered into our 2011 Credit Agreement pursuant to which we borrowed $150.0 million, $85.4 million of which was used to pay off the outstanding principal balance under our 2010 credit agreement. Additionally, for the fiscal year ended September 30, 2011, in addition to $8.7 million of scheduled principal payments, we prepaid $20.0 million of outstanding principal in connection with the second amendment to our 2010 credit agreement, from cash on hand that we had reserved for such purpose, and $5.0 million as a mandatory prepayment in connection with the $5.0 million dividend we received from REMC.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2013, our current assets totaled approximately $172.9 million, including cash of approximately $106.4 million, of which approximately $34.0 million was held at RNP, and accounts receivable of approximately $14.2 million. At December 31, 2013, our current liabilities were approximately $103.1 million, and we had long-term liabilities of approximately $432.6 million, comprised primarily of the RNP Notes, Fulghum debt and the RNHI Revolving Loan.

RNP Activities

With the remaining proceeds from the offering of the RNP Notes, we intend to fund all of the remaining costs of our urea expansion project at our East Dubuque Facility and the replacement of our sulfuric acid converter and our power generation project, both at our Pasadena Facility. If we decide to undertake additional expansion projects at our Fertilizer Facilities, RNP would need to raise additional capital. The board of directors of RNP’s general partner recently approved an expansion project to replace a nitric acid compressor train at our East Dubuque Facility, which is expected to increase production of nitric acid and UAN, and is expected to cost approximately $7.0 million. We expect to fund that project with new RNP equity capital. We expect to be able to fund RNP’s operating needs, including maintenance capital expenditures, from RNP’s operating cash flow and cash on hand at RNP, for at least the next 12 months.

Capital markets have experienced periods of extreme uncertainty in the recent past, and access to those markets may become difficult. If we need to access capital markets, we cannot assure you that we will be able to do so on acceptable terms, or at all.

Capital Expenditures

Our maintenance capital expenditures for our East Dubuque Facility totaled approximately $9.3 million and $7.9 million in the calendar years ended December 31, 2013 and 2012, $2.5 million and $2.7 million in the three months ended December 31, 2011 and December 31, 2010, and $24.5 million in the fiscal year ended September 30, 2011, respectively. Our maintenance capital expenditures for our East Dubuque Facility are expected to be approximately $7.2 million for the year ending December 31, 2014. Our expansion capital expenditures for our East Dubuque Facility totaled approximately $50.5 million and $52.4 million in the calendar years ended December 31, 2013 and 2012 and $1.9 million and $0 in the three months ended December 31, 2011 and December 31, 2010, respectively. Our expansion capital expenditures for our East Dubuque Facility are expected to be approximately $12.3 million for the year ending December 31, 2014 and are expected to be related to our nitric acid expansion project, our urea expansion project and spare parts related to our ammonia production and storage capacity expansion.

Our maintenance capital expenditures for our Pasadena Facility totaled approximately $9.0 million, including approximately $2.4 million spent as part of the project to replace the sulfuric acid converter, in the calendar year ended December 31, 2013. Our maintenance capital expenditures for our Pasadena Facility are expected to be approximately $21.8 million for the year ending December 31, 2014. The maintenance capital expenditures expected in 2014 include approximately $14.5 million to complete replacement of the sulfuric acid converter at the sulfuric acid plant at our Pasadena Facility, which will be funded with proceeds from the RNP Notes. Our expansion capital expenditures for our Pasadena Facility totaled approximately $24.2 million in the calendar year ended December 31, 2013. Our expansion capital expenditures for our Pasadena Facility are expected to be approximately $15.2 million for the year ending December 31, 2014 for expenditures primarily related to the power generation project.

We expect to fund the remainder of the expected cost of our urea expansion project at our East Dubuque Facility and our power generation expansion project and of our sulfuric acid converter maintenance project at our Pasadena Facility, from proceeds from the offering of the RNP Notes. We expect to fund the estimated $7.0 million cost of our nitric acid expansion project at our East Dubuque Facility with new capital.

Our estimated capital expenditures are subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of our facilities. Our future capital expenditures will be determined by the board of directors.

Shelf Registration

On April 4, 2013, RNP filed a shelf registration statement with the SEC, which allowed RNP to offer and sell up to $500.0 million in aggregate initial offering price of common units or debt securities. In February 2014, RNP post-effectively amended the shelf registration statement. Once the post-effective amendment has been declared effective by the SEC, the shelf registration statement will allow for the offer and sale of up to $500 million in the aggregate of securities comprised of (i) up to $265.5 million of common units and debt securities to be offered and sold by RNP in primary offerings and (ii) up to 12.5 million common units to be offered and sold by RNHI in secondary offerings. This report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

RNP Notes Offering

On April 12, 2013, the Issuers issued the RNP Notes to qualified institutional buyers and non-United States persons in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended. The RNP Notes bear interest at a rate of 6.5% per year, payable semi-annually in arrears with the first interest payment made on October 15, 2013. The RNP Notes will mature on April 15, 2021, unless repurchased or redeemed earlier in accordance with their terms. We used part of the net proceeds from the offering to repay in full and terminate the Second 2012 Credit Agreement and related interest rate swaps, and intend to use the remaining proceeds to pay for expenditures related to certain of our expansion projects and for general partnership purposes.

The Indenture governing the RNP Notes prohibits RNP from making distributions to its common unitholders (including us) if any Default (except a Reporting Default) or Event of Default (each as defined in the Indenture) exists. In addition, the Indenture contains covenants that may limit RNP’s ability to pay distributions to its common unitholders. The effect, if any, of the covenants depends on RNP’s Fixed Charge Coverage Ratio (as defined in the Indenture). If the Fixed Charge Coverage Ratio is not less than 1.75 to 1.00, RNP will generally be permitted to make restricted payments, including distributions to its common unitholders, without substantive restriction. If the Fixed Charge Coverage ratio is less than 1.75 to 1.00, RNP will generally be permitted to make restricted payments, including distributions to its common unitholders, up to an aggregate $60.0 million plus certain other amounts referred to as “incremental funds” under the Indenture. For the year ended December 31, 2013, RNP’s Fixed Charge Coverage Ratio was 3.27 to 1.00.

The RNP Notes are fully and unconditionally guaranteed, jointly and severally, by each of RNP’s existing domestic subsidiaries, other than Finance Corporation. In addition, the RNP Notes and the guarantees thereof are collateralized by a second priority lien on substantially all of RNP’s and the guarantors’ assets, subject to permitted liens.

The Issuers may redeem some or all of the RNP Notes at any time prior to April 15, 2016 at a redemption price equal to 100% of the principal amount of the RNP Notes redeemed, plus a “make whole” premium, and accrued and unpaid interest, if any, to the date of redemption. At any time prior to April 15, 2016, we may also, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the RNP Notes issued with the net proceeds of certain equity offerings at 106.5% of the principal amount of the RNP Notes, plus accrued and unpaid interest, if any, to the date of redemption. On or after April 15, 2016, we may redeem some or all of the RNP Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any, to the redemption date.

2013 RNP Credit Agreement

On April 12, 2013, RNP and Finance Corporation (collectively the “Borrowers”) entered into the 2013 RNP Credit Agreement. The 2013 RNP Credit Agreement governs borrowing under the RNP Credit Facility. The Borrowers may use the 2013 RNP Credit Agreement to fund their working capital needs, to fund capital expenditures, to issue letters of credit and for other general partnership purposes. The 2013 RNP Credit Agreement also includes a $10.0 million letter of credit sublimit. The commitment under the RNP Credit Facility may be increased by up to $15.0 million upon the Borrowers’ request at the discretion of the lenders and subject to certain customary requirements. Prior to the amendment described below, borrowings under the RNP Credit Facility were strictly limited if we exceeded a Secured Leverage Ratio of 3.75 to 1.00. As of December 31, 2013, our Secured Leverage Ratio was 4.71 to 1.00, and at such time there were no outstanding advances under the RNP Credit Facility.

On March 7, 2014 the Borrowers entered into the First Amendment to the 2013 RNP Credit Agreement (the “First RNP Amendment”). In certain circumstances the First RNP Amendment replaces the financial test that the Borrowers must satisfy for any borrowing from a Secured Leverage Ratio to a Fixed Charge Coverage Ratio (each as defined in the 2013 RNP Credit Agreement) for the period from the date of the amendment until immediately prior to the time RNP reports its fiscal year 2014 annual results (the “FCCR End Date”). The Fixed Charge Coverage Ratio that RNP has to meet from the date of the First RNP Amendment through the date immediately prior to reporting its 2014 first quarter results is 2.00 to 1.00, and thereafter through the FCCR End Date is 2.25 to 1.00. For the year ended December 31, 2013, RNP’s Fixed Charge Coverage Ratio was 3.27 to 1.00. Based on the new financial test contained in the First RNP Amendment the Borrowers expect to have the ability to borrow in calendar year 2014 under the 2013 RNP Credit Agreement.

As of December 31, 2013, the 2013 RNP Credit Agreement required that, before RNP could make distributions, (a) there must be no Default or Event of Default (as defined in the 2013 RNP Credit Agreement) and no Default or Event of Default would arise as a result of such distribution, (b) at the time of the distribution and immediately after giving effect to the distribution, the Secured Leverage Ratio on a pro forma basis must not be greater than 3.75 to 1.00, and (c) RNP must have at least $8.75 million available to

be drawn under the 2013 RNP Credit Agreement on a pro forma basis. The RNP First Amendment modifies for a specified period in certain circumstances the financial test applicable to the announcement or payment of a distribution. In the event that RNP has no amounts outstanding under the 2013 RNP Credit Agreement on the date of the announcement or payment of an RNP distribution, the minimum Fixed Charge Coverage Ratio that it has to meet in order to pay distributions in the period from the date of the First RNP Amendment through the date immediately prior to reporting RNP’s 2014 first quarter results is 2.00 to 1.00, and thereafter through the FCCR End Date is 2.25 to 1.00. If there is any amount outstanding under the 2013 RNP Credit Agreement on the date of the announcement or payment of a distribution from the period beginning with the date of the First RNP Amendment through the FCCR End Date, RNP must have a Secured Leverage Ratio not in excess of 3.75 to 1.00. Following the FCCR End Date, to announce or pay a distribution RNP must have a Secured Leverage Ratio not in excess of 3.75 to 1.00. During the fiscal year 2014, RNP expects to have enough capital from other sources so that RNP does not need to borrow under the 2013 RNP Credit Agreement. However, in the event that RNP does make such a borrowing and RNP’s Secured Leverage Ratio exceeds 3.75 to 1.00, RNP expects to repay such borrowings so that RNP will not be prohibited from making distributions under the 2013 RNP Credit Agreement.

Borrowings under the 2013 RNP Credit Agreement bear interest at a rate equal to an applicable margin plus, at the Borrowers’ option, either (a) in the case of base rate borrowings, a rate equal to the highest of (1) the prime rate, (2) the federal funds rate plus 0.5% or (3) LIBOR for an interest period of three months plus 1.00% or (b) in the case of LIBOR borrowings, the offered rate per annum for deposits of dollars for the applicable interest period on the day that is two business days prior to the first day of such interest period. If the Borrowers maintain a secured leverage ratio of less than 1.75:1 for the last quarter reported to the lenders, then the applicable margin for borrowings under the 2013 RNP Credit Agreement is 2.25% with respect to base rate borrowings and 3.25% with respect to LIBOR borrowings. If the Borrowers maintain a secured leverage ratio equal or greater than 1.75:1 for the last quarter reported to the lenders, then the applicable margin for borrowings under the 2013 RNP Credit Agreement is 2.50% with respect to base rate borrowings and 3.50% with respect to LIBOR borrowings.

Additionally, the Borrowers are required to pay a fee to the lenders under the 2013 RNP Credit Agreement on the average undrawn available portion of the RNP Credit Facility at a rate equal to 0.50% per annum. The Borrowers must also pay a fee to the lenders under the 2013 RNP Credit Agreement at a rate equal to the product of the average daily undrawn face amount of all letters of credit issued, guaranteed or supported by risk participation agreements multiplied by a per annum rate equal to the applicable margin with respect to LIBOR borrowings, plus all customary letter of credit fees on issued letters of credit.

All of RNP’s existing subsidiaries (other than Finance Corporation) guarantee, and certain of RNP’s future domestic subsidiaries will guarantee, RNP’s obligations pursuant to the 2013 RNP Credit Agreement. The 2013 RNP Credit Agreement, any hedging agreements issued by lenders under the 2013 RNP Credit Agreement and the subsidiary guarantees are collateralized by the same collateral securing the RNP Notes, which includes substantially all of RNP’s assets and all of the assets of its subsidiaries. After the occurrence and during the continuation of an event of default, proceeds of any collection, sale, foreclosure or other realization upon any collateral will be applied to repay obligations under the 2013 RNP Credit Agreement and the subsidiary guarantees thereof to the extent secured by the collateral before any such proceeds are applied to repay obligations under the RNP Notes, subject to a first lien cap (equal to the greater of $65 million or 20% of RNP’s consolidated net tangible assets (as defined in the Indenture governing the RNP Notes), plus obligations in respect of the first-priority secured indebtedness and obligations under certain hedging agreements and cash management agreements).

The 2013 RNP Credit Agreement will terminate on April 12, 2018. Any amounts still outstanding at that time will be immediately due and payable. The Borrowers may voluntarily prepay their utilization and/or permanently cancel all or part of the available commitments under the 2013 RNP Credit Agreement in a minimum amount of $5.0 million. Amounts repaid may be reborrowed. Borrowings under the 2013 RNP Credit Agreement will be subject to mandatory prepayment under certain circumstances, with customary exceptions, from the proceeds of permitted dispositions of assets and from certain insurance and condemnation proceeds.

Non-RNP Activities

During the twelve months ended December 31, 2013, we funded our operations and investments in our non-RNP activities primarily through cash on hand, cash from distributions from RNP, and $50.0 million borrowed under the RNHI Revolving Loan for the construction of the Atikokan Project and Wawa Project. We expect quarterly distributions from RNP to be a major source of liquidity for our non-RNP activities. Cash distributions from RNP may vary significantly from quarter to quarter and from year to year, and could be as low as zero for any quarter. Cash distributions in 2014 may be significantly less than cash available for distribution if RNP elects to replenish working capital reserves that were diminished by the negative cash available for distribution in the fourth quarter of 2013. Any distributions made by RNP to its unitholders will be done on a pro rata basis. We will receive 59.8% of RNP’s quarterly distributions to common unitholders based on our current ownership interest in RNP. However, our ownership interest may be reduced over time if we elect to sell any of our common units or if additional common units are issued by RNP. RNP paid cumulative cash distributions for the twelve months ended December 31, 2013 of $1.67 per unit which resulted in distributions to us of approximately $38.8 million. The Indenture governing the RNP Notes and the 2013 RNP Credit Agreement contain important restrictions on RNP’s ability to make distributions to its common unitholders (including us), as discussed above in “—RNP Notes Offering” and “—2013 RNP Credit Agreement.”

On April 22, 2013, we announced that our Board authorized the repurchase of up to $25.0 million, exclusive of commissions, of outstanding shares of our common stock through December 31, 2013. No shares were acquired through December 31, 2013 and the share repurchase program has expired.

Capital Expenditures

During the calendar year ended December 31, 2013, the Rentech/Graanul JV determined that the Wawa Project and the Atikokan Project would not be purchased by the Rentech/Graanul JV. Therefore, we will continue to own 100% of both projects. We estimate that the total cost to acquire and convert the Wawa Project and Atikokan Project are expected to be approximately $90.0 million with approximately $66.0 million to be spent during 2014. We expect to fund the costs of these projects from cash on hand, distributions from RNP, and cash generated by Fulghum. In the event all of these sources of funds are insufficient and if we were unable to borrow under the RNHI Revolving Loan and if other funding sources were not available, the Wawa Project and Atikokan Project would need to be curtailed.

We intend to install a second debarking line at one of our mills in Chile, subject to obtaining debt financing for the project with Chilean banks. We expect the project to increase debarking capacity at the mill from 120,000 to 240,000 BDMTs per year. Construction of this project is expected to be completed during the summer of 2014, at an expected cost of approximately $2.5 million.

Shelf Registration

On July 9, 2013, we filed a shelf registration statement with the SEC, which allows us from time to time, in one or more offerings, to offer and sell up to $200.0 million in aggregate initial offering price of debt securities, common stock, preferred stock, depositary shares, warrants, rights to purchase shares of common stock and/or any of the other registered securities or units of any of the other registered securities. Capital markets have experienced periods of extreme uncertainty in the recent past, and access to those markets may become difficult. If we need to access capital markets, we cannot assure you that we will be able to do so on acceptable terms, or at all. This report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

RNHI Revolving Loan

On September 23, 2013, RNHI obtained the RNHI Revolving Loan by entering into the RNHI Credit Agreement. The new facility is intended to fund growth in our wood fibre processing business and for general corporate purposes. On September 24, 2013, we borrowed $50.0 million under the facility.

All obligations of RNHI under the new facility are unconditionally guaranteed by Rentech in a guaranty agreement, or the Guaranty, and are secured by a portion of the common units of RNP owned by RNHI, or the Underlying Equity. RNHI currently owns 23.25 million common units of RNP, 15.4 million of which have been provided as initial collateral under the RNHI Credit Agreement. As of December 31, 2013 our loan to value ratio was 18.4%. Upon RNHI’s loan to value ratio meeting or exceeding 40% initially, and 35% after a first exceedance, or the MC Level, RNHI must pledge additional common units to the lenders to keep the loan to value ratio below the MC Level. Depending on the market price of RNP’s common units, up to 19.4 million common units may be pledged as collateral. Our ability to draw on the Revolving Loan will be limited or prohibited if the market price of RNP’s common units declines below certain thresholds.

The new facility has a three-year maturity and borrowings under the new facility bear interest at a rate equal to LIBOR plus 4.00% per annum. In the event we reduce a portion of or terminate all of the facility prior to its second anniversary through a refinancing collateralized by the Underlying Equity in form or substance materially similar to the facility and in which the current lender is not the lead lender, we will be required to pay a refinancing fee equal to 2.75% of the amount of commitments to be terminated, multiplied by a fraction, the numerator of which is the number of days from the date of such termination until the second anniversary of the closing and the denominator of which is 360. We are also required to pay a commitment fee to the administrative agent on the daily undrawn loan amount at a rate of 0.70% per annum. Additionally, on the closing date we paid one-time customary structuring and administrative fees to certain of the lenders.

The new facility and the Guaranty contain customary affirmative and negative covenants and events of default relating to RNHI and Rentech. The covenants and events of default in the RNHI Credit Agreement restrict RNHI from engaging in activities outside of its ordinary course operation as a holding company and include, among other things, limitations on the incurrence of indebtedness and

liens, the making of investments, the sale of assets, and the making of restricted payments. There are also events of default relating to substantial declines in value of the Underlying Equity in relation to the amount drawn under the RNHI Credit Agreement. Dividends and distributions from RNHI are permitted so long as no default or event of default exists or will result therefrom, including if the Value (as defined in the RNHI Credit Agreement) of the Underlying Equity pledged to secure the loan does not meet the valuation requirements set forth in the RNHI Credit Agreement. RNHI also has the right to sell RNP common units not held as collateral as long as certain conditions outlined in the new facility, including meeting a certain LTV Ratio (as defined below) and realizing a minimum price on the sale, are met.

In addition, our ability to draw or maintain an outstanding balance under the new facility is subject to the ratio of (i) the amount of loans and unpaid interest minus the Value of cash and cash equivalents in the collateral account divided by (ii) the Value of the collateral shares (the “LTV Ratio”), being less than an agreed upon ratio. On December 31, 2013, based upon the maximum number of RNP units that we could pledge as of such date, we had the ability to borrow an aggregate of $85.0 million under the RNHI Revolving Loan, subject to satisfaction of conditions to borrowing. Our ability to make future borrowings will depend on the market price of RNP’s units.

During the next 12 months, we expect the liquidity needs of our non-RNP activities, including our discontinued operations, and our projects under construction in Ontario, Canada could be met from cash on hand, distributions from RNP, cash generated by Fulghum and, in the case of capital expenditures in Chile, local Chilean bank debt financing. In the event that these sources of funds are less than expected, or if our expenses, including capital expenses related to the Atikokan Project and Wawa Project, are higher than expected, or if we approve additional projects or acquire additional assets, we may need to borrow additional amounts under the RNHI Revolving Loan, obtain funding through the Rentech/Graanul JV, and/or seek additional funds in the capital markets. In addition, we could seek additional external capital to enhance our liquidity position, to refinance the RNHI Revolving Loan, or to provide capital for additional projects or acquisitions. We cannot assure you that capital markets, local Chilean bank debt or other sources of external financing will be available on satisfactory terms or at all. In addition, as discussed above, borrowing under the RNHI Revolving Loan is subject to certain conditions, including minimum market price levels for RNP’s common units.

CONTRACTUAL OBLIGATIONS

The following table lists our significant contractual obligations and their future payments at December 31, 2013:


Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(in thousands)
RNP Notes (1)	$	320,000	$	—	$	—	$	—	$	320,000
RNHI Revolving Loan (2)		50,000		—		50,000		—		—
Fulghum Debt (3)		47,452		8,401		12,859		5,921		20,271
QS Construction Facility (4)		4,527		1,515		—		—		3,012
2013 RNP Credit Agreement (5)		—		—		—		—		—
Earn-out consideration (6)		1,544		—		1,544		—		—
Natural gas (7)		8,571		8,571		—		—		—
Purchase obligations (8)		46,335		46,335		—		—		—
Asset retirement obligation (9)		3,014		19		44		54		2,897
Operating leases – Continuing Operations		26,521		3,263		6,267		4,227		12,764
Operating leases – Discontinued Operations		139		119		20		—		—
Gas and electric fixed charges (10)		1,844		1,249		595		—		—
Pension plans and postretirement plan (11)		88		88		—		—		—

Total	$	510,035	$	69,560	$	71,329	$	10,202	$	358,944

(1)	There is $320.0 million of principal outstanding under the RNP Notes.

(2)	There is $50.0 million of principal outstanding under the RNHI Revolving Loan.

(3)	As of December 31, 2013, Fulghum had outstanding debt of approximately $47.5 million with a weighted average interest rate of approximately 7.0%. The debt consists primarily of term loans with various financial institutions with each term loan secured by specific property and equipment.

(4)	Pursuant to the Port Agreement, Quebec Stevedoring is required to build handling equipment and 75,000 metric tons of wood pellet storage exclusively for our use at the port, with the same amount becoming a financing obligation for us, or the QS Construction Facility.

(5)	The 2013 RNP Credit Agreement as amended consists of the RNP Credit Facility. As of December 31, 2013, there are no outstanding advances under the RNP Credit Facility.

(6)

RNP entered into the Purchase Agreement relating to the Agrifos Acquisition which, among other things, provides for the potential payment of earn-out consideration calculated based on the amount by which the two-year Adjusted EBITDA, as defined in the Purchase Agreement, of the Pasadena Facility exceeds certain Adjusted EBITDA thresholds. The amount reflected in the table reflects our current estimate of the amount of the earn-out consideration we will be required to pay. Depending on the two-year Adjusted EBITDA amounts, such additional earn-out consideration may vary from zero to a maximum of $50.0 million. The potential additional consideration would be paid after April 30, 2015 and completion of the relevant calculations in either common units or cash at the option of RNP. At December 31, 2013, the potential earn-out consideration relating to the Agrifos Acquisition was $0. We entered into an asset purchase agreement relating to the Atikokan Project which, among other things, provides for the potential payment of earn-out consideration, which will equal 7% of annual EBITDA of the Atikokan Project, as defined in the asset purchase agreement for the Atikokan Project, over a ten-year period. At December 31, 2013, the potential earn-out consideration relating to the Atikokan Project was approximately $1.5 million.

(7)

As of December 31, 2013, the natural gas forward purchase contracts included delivery dates through March 31, 2014. Subsequent to December 31, 2013 through February 28, 2014, we entered into additional fixed-quantity forward purchase contracts at fixed and indexed prices for various delivery dates through March 31, 2014. The total MMBtus associated with these additional forward purchase contracts are approximately 0.5 million and the total amount of the purchase commitments are approximately $4.5 million, resulting in a weighted average rate per MMBtu of approximately $9.27. We are required to make additional prepayments under these forward purchase contracts in the event that market prices fall below the purchase prices in the contracts.

(8)	The amount presented represents certain open purchase orders with our vendors. Not all of our open purchase orders are purchase obligations, since some of the orders are not enforceable or legally binding on us until the goods are received or the services are provided.

(9)

We have recorded asset retirement obligations, or AROs, related to future costs associated with the removal of contaminated material upon removal of the phosphoric acid plant at our Pasadena Facility, handling and disposal of asbestos at our East Dubuque Facility removal of machinery and equipment at Fulghum mills on leased property. The fair value of a liability for an ARO is recorded in the period in which it is incurred and the cost of such liability increases the carrying amount of the related long-lived asset by the same amount. The liability is accreted each period through charges to operating expense and the capitalized cost is depreciated over the remaining useful life of the asset. Since we own our Fertilizer Facilities and currently have no plans to dispose of the properties, the obligation is considered long-term and, therefore, considered to be incurred more than five years after December 31, 2013.

(10)	As part of the natural gas transportation and electricity supply contracts at our East Dubuque Facility, we must pay monthly fixed charges over the term of the contracts.

(11)	We expect to contribute $0 and approximately $88,000 to pension plans and a postretirement plan, respectively, in 2014. We acquired these plans as part of the Agrifos Acquisition.

In addition, we have entered into the following contracts relating to our wood pellet business:

•

We have entered into the Drax Contract under which we have committed to deliver approximately 400,000 metric tons of pellets annually starting in the fourth quarter of calendar year 2014.

•

We have entered into the OPG Contract under which we have committed to deliver 45,000 metric tons of wood pellets from the Atikokan Project annually starting in January 2014.

•

We have entered into the KD Contract under which we committed to purchase between 15,000 and 20,000 metric tonnes of wood pellets between December 1, 2013 and June 30, 2014.

•

We have entered into the Canadian National Contract under which we have committed to transport a minimum of 1,500 rail carloads between the months of January 2014 and December 2014, and 3,600 rail carloads annually thereafter for the duration of the contract. Delivery shortfalls result in a $1,000 per rail car penalty.

In connection with our Pasadena Facility, we entered into an engineering, procurement and construction contract, or the EPC Contract, with Abeinsa Abener Teyma General Partnership, or Abeinsa. The EPC Contract provides for Abeinsa to be the contractor on our power generation project at the Pasadena Facility. The value of the contract is approximately $25.0 million and the project is expected to be completed by the late 2014. Approximately $14.0 million of the contract amount is currently included in purchase obligations listed above.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have any material off-balance sheet arrangements as of December 31, 2013.

Recent Accounting Pronouncements From Financial Statement Disclosures

For a discussion of the recent accounting pronouncements relevant to our operations, please refer to “Recent Accounting Pronouncements” provided under Note 2 to the consolidated financial statements included in Item 8 “Financial Statements and Supplementary Data.”

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

RENTECH, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm		40
Consolidated Balance Sheets		42
Consolidated Statements of Operations		43
Consolidated Statements of Comprehensive Income (Loss)		44
Consolidated Statements of Stockholders’ Equity		45
Consolidated Statements of Cash Flows		46
Notes to Consolidated Financial Statements		48

Financial Statement Schedules:

Schedule II – Valuation and Qualifying Accounts for the calendar years ended December 31, 2013 and 2012, three months ended December 31, 2011 and the fiscal year ended September 30, 2011		95

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Rentech, Inc.

In our opinion, the accompanying consolidated balance sheets as of December 31, 2013 and 2012 and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the two years in the period ended December 31, 2013, three months ended December 31, 2011, and fiscal year ended September 30, 2011 present fairly, in all material respects, the financial position of Rentech, Inc. and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2013, the three months ended December 31, 2011, and the fiscal year ended September 30, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Management and we previously concluded that the Company maintained effective internal control over financial reporting as of December 31, 2013. However, management has subsequently determined that material weaknesses in internal control over financial reporting related to (i) the review of the cash flow forecasts used in the accounting for business combinations and goodwill, (ii) the determination of the goodwill impairment charge in accordance with generally accepted accounting principles, and (iii) maintaining documentation supporting management’s review of events and changes in circumstances that indicate it is more likely than not that a goodwill impairment has occurred between annual impairment tests existed as of that date. Accordingly, management’s report has been restated and our present opinion on internal control over financial reporting, as presented herein, is different from that expressed in our previous report. In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established inInternal Control — Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because material weaknesses in internal control over financial reporting related to (i) the review of the cash flow forecasts used in the accounting for business combinations and goodwill, (ii) the determination of the goodwill impairment charge in accordance with generally accepted accounting principles, and (iii) maintaining documentation supporting management’s review of events and changes in circumstances that indicate it is more likely than not that a goodwill impairment has occurred between annual impairment tests existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2013 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded Fulghum Fibres, Inc. from its assessment of internal control over financial reporting as of December 31, 2013 because the entity was acquired by the Company in a purchase business combination on May 1, 2013. We have also excluded Fulghum Fibres, Inc. from our audit of internal control over financial reporting. Fulghum Fibres, Inc. is a wholly-owned subsidiary whose total assets, excluding goodwill and intangible assets resulting from purchase price adjustments, and total revenues represent approximately 18% and 17%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2013.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 17, 2014, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the discontinued operations described in Note 6, and except with respect to our opinion on internal control over financial reporting insofar as it relates to the effects of the matter described in the sixth paragraph of Management’s Annual Report on Internal Control Over Financial Reporting, as to which the date is December 29, 2014

RENTECH, INC.

Consolidated Balance Sheets

(Amounts in thousands, except per share data)


	As of December 31,
	2013				2012
ASSETS
Current assets
Cash	$	106,369			$	141,637
Accounts receivable, including unbilled revenue, net of allowance for doubtful accounts of $0 at December 31, 2013 and 2012, respectively		14,227				9,705
Inventories		35,376				27,140
Prepaid expenses and other current assets		8,309				6,671
Deferred income taxes		1,140				766
Other receivables, net		7,432				2,626
Assets of discontinued operations		19				2,518

Total current assets		172,872				191,063

Property, plant and equipment, net		334,654				129,296

Construction in progress		60,136				61,417

Other assets
Goodwill		57,134				56,592
Intangible assets		59,730				26,185
Debt issuance costs		9,321				6,458
Deposits and other assets		5,092				788
Assets of discontinued operations		4,651				7,403

Total other assets		135,928				97,426

Total assets	$	703,590			$	479,202

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities				��
Accounts payable	$	19,875			$	16,680
Accrued payroll and benefits		9,155				7,414
Accrued liabilities		33,953				14,446
Deferred revenue		21,643				29,660
Current portion of long term debt		9,916				7,750
Accrued interest		5,490				142
Asset retirement obligation		19				2,776
Other		996				452
Liabilities of discontinued operations		2,003				4,684

Total current liabilities		103,050				84,004

Long-term liabilities
Debt		412,063				185,540
Earn-out consideration		1,544				4,920
Asset retirement obligation		2,995				313
Deferred income taxes		9,271				766
Other		6,711				2,518
Liabilities of discontinued operations		—				73

Total long-term liabilities		432,584				194,130

Total liabilities		535,634				278,134

Commitments and contingencies(Note 14)
Stockholders’ equity
Preferred stock — $10 par value; 1,000 shares authorized; 90 series A convertible preferred shares authorized and issued; no shares outstanding and $0 liquidation preference		—				—
Series C participating cumulative preferred stock — $10 par value; 500 shares authorized; no shares issued and outstanding		—				—
Series D junior participating preferred stock — $10 par value; 45 shares authorized; no shares issued and outstanding		—				—
Common stock — $.01 par value; 450,000 shares authorized; 227,512 and 224,121 shares issued and outstanding at December 31, 2013 and 2012, respectively		2,275				2,241
Additional paid-in capital		541,254				539,448
Accumulated deficit		(385,339	)			(383,807	)
Accumulated other comprehensive income (loss)		(117	)			105

Total Rentech stockholders’ equity		158,073				157,987
Noncontrolling interests		9,883				43,081

Total equity		167,956				201,068

Total liabilities and stockholders’ equity	$	703,590			$	479,202

See Accompanying Notes to Consolidated Financial Statements.

RENTECH, INC.

Consolidated Statements of Operations

(Amounts in thousands, except per share data)


	For the Calendar Years Ended December 31,									For the Three Months Ended December 31,						For the Fiscal Year Ended September 30,
	2013			2012			2011			2011			2010			2011
							(unaudited)						(unaudited)
Revenues
Product sales	$	322,022		$	261,284		$	199,909		$	63,014		$	42,962		$	179,857
Service revenues		49,822			—			—			—			—			—
Other revenues		2,505			351			—			—			—			—

Total revenues		374,349			261,635			199,909			63,014			42,962			179,857

Cost of sales
Product		252,741			129,796			113,911			37,460			26,835			103,286
Service		38,222			—			—			—			—			—

Total cost of sales		290,963			129,796			113,911			37,460			26,835			103,286

Gross profit		83,386			131,839			85,998			25,554			16,127			76,571

Operating expenses
Selling, general and administrative expense		51,367			43,727			24,224			8,851			6,469			21,842
Depreciation and amortization		2,991			2,144			922			242			235			915
Agrifos goodwill impairment		30,029			—			—			—			—			—
Loss on impairments		—			238			—			—			—			—
(Gain) loss on sale of assets		878			272			15			(507	)		—			522

Total operating expenses		85,265			46,381			25,161			8,586			6,704			23,279

Operating income (loss)		(1,879	)		85,458			60,837			16,968			9,423			53,292
													��
Other income (expense), net
Interest expense		(16,385	)		(10,524	)		(17,095	)		(4,048	)		(3,677	)		(16,724	)
Loss on debt extinguishment		(6,001	)		(4,801	)		(19,486	)		(10,263	)		(4,593	)		(13,816	)
Fair value adjustment to earn-out consideration		5,122			—			—			—			—			—
Other income (expense), net		(277	)		(695	)		134			50			38			122

Total other expenses, net		(17,541	)		(16,020	)		(36,447	)		(14,261	)		(8,232	)		(30,418	)

Income (loss) from continuing operations before income taxes and equity in loss of investee		(19,420	)		69,438			24,390			2,707			1,191			22,874
Income tax (benefit) expense		(26,306	)		4,375			4			1			(1	)		3,869

Income (loss) from continuing operations before equity in loss of investee		6,886			65,063			24,386			2,706			1,192			19,005
Equity in loss of investee		(242	)		—			—			—			—			—

Income (loss) from continuing operations		6,644			65,063			24,386			2,706			1,192			19,005
Loss from discontinued operations, net of tax		(6,606	)		(37,376	)		(87,982	)		(6,804	)		(7,076	)		(84,387	)

Net income (loss)		38			27,687			(63,596	)		(4,098	)		(5,884	)		(65,382	)
Net (income) loss attributable to noncontrolling interests		(1,570	)		(41,687	)		(3,700	)		(4,433	)		366			1,099

Net loss attributable to Rentech common shareholders	$	(1,532	)	$	(14,000	)	$	(67,296	)	$	(8,531	)	$	(5,518	)	$	(64,283	)

Net loss per common share allocated to Rentech common shareholders:
Basic:
Continuing operations	$	0.02		$	0.10		$	0.09		$	(0.01	)	$	0.01		$	0.09

Discontinued operations	$	(0.03	)	$	(0.17	)	$	(0.39	)	$	(0.03	)	$	(0.03	)	$	(0.38	)

Net loss	$	(0.01	)	$	(0.06	)	$	(0.30	)	$	(0.04	)	$	(0.02	)	$	(0.29	)

Diluted:
Continuing operations	$	0.02		$	0.10		$	0.09		$	(0.01	)	$	0.01		$	0.09

Discontinued operations	$	(0.03	)	$	(0.16	)	$	(0.39	)	$	(0.03	)	$	(0.03	)	$	(0.37	)

Net loss	$	(0.01	)	$	(0.06	)	$	(0.30	)	$	(0.04	)	$	(0.02	)	$	(0.28	)

Weighted-average shares used to compute net loss per common share:
Basic		226,139			223,189			223,281			224,414			221,980			222,664

Diluted		233,703			230,524			226,182			224,414			226,679			226,680

See Accompanying Notes to Consolidated Financial Statements.

RENTECH, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)


	For the Calendar Years Ended December 31,									For the Three Months Ended December 31,						For the Fiscal Year Ended September 30,
	2013			2012			2011			2011			2010			2011
							(unaudited)						(unaudited)
Net income (loss)	$	38		$	27,687		$	(63,596	)	$	(4,098	)	$	(5,884	)	$	(65,382	)
Other comprehensive income, net of tax:
Pension and postretirement plan adjustments		1,143			166			—			—			—			—
Foreign currency translation		(907	)		6			—			—			—			—

Other comprehensive income		236			172			—			—			—			—

Comprehensive income (loss)		274			27,859			(63,596	)		(4,098	)		(5,884	)		(65,382	)
Less: net (income) loss attributable to noncontrolling interests		(1,570	)		(41,687	)		(3,700	)		(4,433	)		366			1,099
Less: other comprehensive income attributable to noncontrolling interests		(458	)		(67	)		—			—			—			—

Comprehensive loss attributable to Rentech	$	(1,754	)	$	(13,895	)	$	(67,296	)	$	(8,531	)	$	(5,518	)	$	(64,283	)

See Accompanying Notes to Consolidated Financial Statements.

RENTECH, INC.

Consolidated Statements of Stockholders’ Equity

(Amounts in thousands)


							Additional Paid-in						Accumulated Other Comprehensive			Total Rentech Stockholders’						Total Stockholders’
	Common Stock						Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Rentech Stockholders’			Noncontrolling			Total Stockholders’
	Shares			Amount			Capital			Deficit			Income			Equity			Interests			Equity
Balance, September 30, 2010		221,731		$	2,217		$	332,696		$	(296,993	)	$	—		$	37,920		$	7,433		$	45,353
Acquisition of additional interest in subsidiary		—			—			5,797			—			—			5,797			(5,797	)		—
Payment of offering costs		—			—			(58	)		—			—			(58	)		—			(58	)
Issuance of common stock		465			5			(5	)		—			—			—			—			—
Stock-based compensation expense		—			—			1,729			—			—			1,729			—			1,729
Restricted stock units		1,213			12			(720	)		—			—			(708	)		—			(708	)
Net loss		—			—			—			(64,283	)		—			(64,283	)		(1,099	)		(65,382	)
Other		—			—			(25	)		—			—			(25	)		—			(25	)

Balance, September 30, 2011		223,409		$	2,234		$	339,414		$	(361,276	)	$	—		$	(19,628	)	$	537		$	(19,091	)
Adjustment for investment in Rentech Nitrogen Partners, L.P.		—			—			240,662			—			—			240,662			34,430			275,092
Stock issued for acquisition								2,680			—			—			2,680			—			2,680
Stock-based compensation expense		—			—			1,112			—			—			1,112			25			1,137
Common stock issued for stock options exercised		31			—			30			—			—			30			—			30
Common stock issued for warrants exercised		1,052			11			(11	)		—			—			—			—			—
Restricted stock units		739			7			(432	)		—			—			(425	)		—			(425	)
Net loss		—			—			—			(8,531	)		—			(8,531	)		4,433			(4,098	)
Other		—			—			3			—			—			3			—			3

Balance, December 31, 2011		225,231		$	2,252		$	583,458		$	(369,807	)	$	—		$	215,903		$	39,425		$	255,328
Income taxes payable adjustment		—			—			(7,055	)		—			—			(7,055	)		—			(7,055	)

Balance, December 31, 2011 (revised)		225,231		$	2,252		$	576,403		$	(369,807	)	$	—		$	208,848		$	39,425		$	248,273
Agrifos acquisition.		—			—			11,177			—			—			11,177			8,823			20,000
Common stock issued for services		259			2			(2	)		—			—			—			—			—
Common stock issued for acquisition		2,000			20			(20	)		—			—			—			—			—
Common stock issued for stock options exercised		264			3			287			—			—			290			—			290
Common stock issued for warrants exercised		3,371			34			2,406			—			—			2,440			—			2,440
Payment of stock issuance costs		—			—			(40	)		—			—			(40	)		—			(40	)
Distributions		—			—			(44,100	)		—			—			(44,100	)		—			(44,100	)
Distributions to noncontrolling interests		—			—			—			—			—			—			(47,205	)		(47,205	)
Equity-based compensation expense		—			—			9,737			—			—			9,737			1,112			10,849
Restricted stock units		2,080			21			(2,548	)		—			—			(2,527	)		—			(2,527	)
Repurchase of common stock, including commissions		(9,084	)		(91	)		(16,630	)		—			—			(16,721	)		—			(16,721	)
Income tax provision true-up for prior year equity adjustment		—			—			2,757			—						2,757			—			2,757
Net income		—			—			—			(14,000	)					(14,000	)		41,687			27,687
Other comprehensive income		—			—			—			—			105			105			67			172
Other		—			—			21			—			—			21			(828	)		(807	)

Balance, December 31, 2012		224,121		$	2,241		$	539,448		$	(383,807	)	$	105		$	157,987		$	43,081		$	201,068
Noncontrolling interests		—			—			—			—			—			—			4,000			4,000
Acquisition of additional interest in subsidiary		—			—			(536	)		—			—			(536	)		(1,964	)		(2,500	)
Common stock issued for services		178			2			(2	)		—			—			—			—			—
Common stock issued for stock options exercised		533			5			293			—			—			298			—			298
Payment of stock issuance costs		—			—			(48	)		—			—			(48	)		—			(48	)
Distribution to noncontrolling interests		—			—			—			—			—			—			(37,329	)		(37,329	)
Equity-based compensation expense		—			—			6,814			—			—			6,814			586			7,400
Restricted stock units		2,680			27			(4,715	)		—			—			(4,688	)		—			(4,688	)
Net income		—			—			—			(1,532	)					(1,532	)		1,570			38
Other comprehensive income		—			—			—			—			(222	)		(222	)		458			236
Other		—			—			—			—			—			—			(519	)		(519	)

Balance, December 31, 2013		227,512		$	2,275		$	541,254		$	(385,339	)	$	(117	)	$	158,073		$	9,883		$	167,956

See Accompanying Notes to Consolidated Financial Statements.

RENTECH, INC.

Consolidated Statements of Cash Flows

(Amounts in thousands)


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,						For the Fiscal Year Ended September 30,
	2013			2012			2011			2010			2011
										(unaudited)
Cash flows from operating activities
Net income (loss)	$	38		$	27,687		$	(4,098	)	$	(5,884	)	$	(65,382	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		21,184			14,824			3,776			3,062			11,836
Agrifos goodwill impairment		30,029			—			—			—			—
Deferred income tax benefit		(27,130	)		—			—			—			—
Loss on asset impairments		—			15,965			583			53			58,742
Advance for equity investment		—			—			—			—			(7,892	)
Utilization of spare parts		3,821			2,042			309			380			1,698
Write-down of inventory		12,360			—			—			—			—
Non-cash interest expense		248			7,138			1,880			1,793			7,146
Net (gain) loss on sale of fixed assets		(5,379	)		272			(507	)		—			523
Loss on debt extinguishment		6,001			4,801			10,263			4,593			13,816
Equity-based compensation		7,400			10,849			1,137			1,106			1,729
Payment of call premium fee		—			—			(2,933	)		—			(8,261	)
Other		957			181			9			9			115
Changes in operating assets and liabilities:
Accounts receivable		(585	)		927			(2,811	)		(7,026	)		4,969
Other receivables		3,326			124			(1,015	)		37			(979	)
Inventories		(18,075	)		8,727			11,164			1,451			(9,218	)
Other assets		(766	)		2,807			(1,409	)		303			955
Prepaid expenses and other current assets		380			(571	)		586			257			167
Accounts payable		(7,048	)		1,810			(412	)		(1,035	)		(544	)
Deferred revenue		(9,115	)		(3,954	)		(13,802	)		17,028			19,681
Accrued interest		4,110			—			(566	)		(513	)		(40	)
Accrued liabilities, accrued payroll and other		(9,402	)		(23,392	)		(4,698	)		(2,313	)		7,408

Net cash provided by (used in) operating activities		12,354			70,237			(2,544	)		13,301			36,469

Cash flows from investing activities
Payment for acquisitions, net of cash acquired		(65,823	)		(128,596	)		—			—			—
Capital expenditures		(104,705	)		(59,131	)		(12,423	)		(10,450	)		(39,402	)
Proceeds from disposal of assets		8,991			569			140			—			30
Other items		(657	)		(1,040	)		2,819			127			(868	)

Net cash used in investing activities		(162,194	)		(188,198	)		(9,464	)		(10,323	)		(40,240	)

Cash flows from financing activities
Proceeds from issuance of notes		320,000			—			—			—			—
Payment of offering costs		(972	)		—			—			—			—
Proceeds from initial public offering, net of costs		—			(245	)		276,007			—			—
Proceeds from credit facilities and term loan, net of original issue discount		65,600			222,780			—			50,960			200,960
Payments and retirement of debt		(223,105	)		(86,990	)		(146,250	)		(22,522	)		(119,041	)
Proceeds from issuance of common stock		—			—			30			—			—
Repurchase of common stock, including commissions		—			(16,721	)		—			—			—
Payment of stock issuance costs		(48	)		(40	)		—			(2	)		(58	)
Proceeds from options and warrants exercised		297			2,729			—			—			—
Payment of debt issuance costs		(9,972	)		(7,788	)		(904	)		(290	)		(8,747	)
Other		2			(1,000	)		(606	)		(684	)		(2,280	)
Distributions		—			(43,301	)		—			—			—
Distributions to noncontrolling interests		(37,329	)		(47,205	)		—			—			—

Net cash provided by financing activities		114,473			22,219			128,277			27,462			70,834

Increase (decrease) in cash		(35,367	)		(95,742	)		116,269			30,440			67,063
Cash and cash equivalents, beginning of period		141,736			237,478			121,209			54,146			54,146

Cash and cash equivalents, end of period (1)	$	106,369		$	141,736		$	237,478		$	84,586		$	121,209

(1)	Cash balance at December 31, 2012 includes $100 of cash from discontinued operations.

For the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and 2010, and the fiscal year ended September 30, 2011 the Company made certain cash payments as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,				For the Fiscal Year Ended September 30,
	2013		2012		2011		2010		2011
							(unaudited)
Cash payments of interest
Net of capitalized interest of $3,246 (Dec 2013), $701 (Dec 2012), $0 (Dec 2011), $1,116 (Dec 2010) and $4,868 (2011)	$	12,367	$	3,805	$	2,783	$	3,566	$	14,427
Cash payments of income taxes from continuing operations	$	288	$	8,609	$	2	$	12	$	13

Excluded from the statements of cash flows were the effects of certain non-cash financing and investing activities as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,				For the Fiscal Year Ended September 30,
	2013		2012		2011		2010		2011
							(unaudited)
Purchase of insurance policies financed with notes payable	$	—	$	—	$	867	$	516	$	1,872
Restricted stock units surrendered for withholding taxes payable		4,688		2,527		425		303		708
Units issued for acquisition		—		20,000				—		—
Fair value of assets and liabilities assumed in acquisition		181,975		—		—		—		7,530
Contingent consideration		1,850		—		—		—		—
Adjustment for investment in subsidiary		—		—		240,362		—		—
Receivables from sales of property, plant and equipment in other receivables		—		—		741		—		325
Purchase of property, plant, equipment and construction in progress in accounts payable and accrued liabilities		20,503		5,301		3,914		3,547		11,904
Prepaid initial public offering costs offset against proceeds of initial public offering		—		—		3,907		—		—
Initial public offering costs in accrued liabilities		—		—		72		—		—
Adjustment to intangible assets for shares granted for earn-out payment		—		20		2,680		—		—
Financed construction costs		5,181		—		—		—		—

See Accompanying Notes to Consolidated Financial Statements.

RENTECH, INC.

Notes to Consolidated Financial Statements

Note 1 — Description of Business

Description of Business

Rentech, Inc. (“Rentech,” “the Company,” “we,” “us” or “our”) operates currently in four segments including East Dubuque, Pasadena, Fulghum Fibres and wood pellets.

The Company through its indirect majority-owned subsidiary, Rentech Nitrogen Partners, L.P. (“RNP”), owns and operates two fertilizer facilities: the Company’s East Dubuque Facility and the Company’s Pasadena Facility, referred to collectively as the “Fertilizer Facilities.” Our East Dubuque Facility is located in East Dubuque, Illinois, and has been in operation since 1965. The Company produces primarily ammonia and urea ammonium nitrate solution (“UAN”) at the Company’s East Dubuque Facility, using natural gas as the facility’s primary feedstock. Our Pasadena Facility, which the Company acquired in November 2012, is located in Pasadena, Texas, and has been in operation producing various products since the 1940s. In 2011, the Company’s Pasadena Facility was converted to the production of high-quality granulated synthetic ammonium sulfate, and began selling ammonium sulfate and ammonium thiosulfate as its primary products using ammonia and sulfate as the facility’s primary feedstocks. The Company produces ammonium sulfate, ammonium thiosulfate and sulfuric acid at the Company’s Pasadena Facility, using ammonia and sulfur as the facility’s primary feedstocks. The noncontrolling interests reflected on the Company’s consolidated balance sheets are affected by the net income of, and distribution from, RNP.

On November 9, 2011, RNP completed its initial public offering (the “Offering”) of 15,000,000 common units representing limited partner interests at a public offering price of $20.00 per common unit. The common units sold to the public in the Offering represented 39.2% of RNP common units outstanding as of the closing of the Offering. Rentech Nitrogen Holdings, Inc. (“RNHI”), Rentech’s indirect wholly-owned subsidiary, owned the remaining 60.8% of RNP common units outstanding as of the closing of the Offering and Rentech Nitrogen GP, LLC (the “General Partner”), RNHI’s wholly-owned subsidiary, owns 100% of the non-economic general partner interest in RNP. RNP’s assets consisted as of the closing of the Offering of all of the equity interests of Rentech Nitrogen, LLC (“RNLLC”), formerly known as Rentech Energy Midwest Corporation (“REMC”), which owns the East Dubuque Facility. At the closing of the Offering, RNLLC was converted into a limited liability company. In connection with the Offering, the Company received proceeds, net of costs of $275.1 million. The Company recorded additional paid-in capital of $240.7 million and a noncontrolling interest of $34.4 million which represented 39.2% of the net book value of RNP. As a result of the Offering, there was no change in control and, there was no step up in accounting basis of assets or gain recognized.

On November 1, 2012, RNP completed its acquisition of 100% of the membership interests of Agrifos LLC (“Agrifos”) from Agrifos Holdings Inc. (the “Seller”), pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”). Upon the closing of this transaction (the “Agrifos Acquisition”), Agrifos became a wholly-owned subsidiary of RNP and its name changed to Rentech Nitrogen Pasadena Holdings, LLC. Rentech Nitrogen Pasadena Holdings, LLC owns all of the member interests in Rentech Nitrogen Pasadena, LLC (“RNPLLC”), formerly known as Agrifos Fertilizer, LLC, which owns and operates the Pasadena Facility. For information on the Agrifos Acquisition refer to Note 4—Agrifos Acquisition.

On May 1, 2013, the Company acquired all of the capital stock of Fulghum Fibres, Inc. (“Fulghum”). Upon the closing of this transaction (the “Fulghum Acquisition”), Fulghum became a wholly-owned subsidiary of the Company. Fulghum provides high-quality wood chipping and wood yard operations services, and produces and sells wood chips to the pulp, paper and packaging industry. Through Fulghum and its subsidiaries, the Company now operates 32 wood chipping mills, of which 26 are located in the United States, five in Chile and one in Uruguay. Noncontrolling interests of $4.0 million represent the non-acquired ownership interests in the subsidiaries located in Chile and Uruguay as of May 1, 2013. During the calendar year 2013, Fulghum acquired an additional equity interest of approximately 13% in the subsidiary located in Chile. Fulghum currently owns approximately 88% and 87% of the equity interests in the subsidiaries located in Chile and Uruguay, respectively. For information on the Fulghum Acquisition refer to Note 3— Fulghum Acquisition.

Each of Fulghum’s United States mills typically operates under an exclusive processing agreement with a single customer. Under each agreement, the customer is responsible for procuring and delivering wood, and Fulghum is paid a processing fee based on tons processed, with minimum and maximum fees tied to volumes. In most cases, if the customer fails to deliver the minimum contracted log volume for processing, it must pay a shortage fee to Fulghum. Generally, under the terms of the Company’s processing agreements, customers have the option to purchase the mill equipment for a pre-negotiated amount (which decreases over time) and, in some cases, customers have the option to acquire the land. Fulghum’s Chilean operations also include the sale of wood chips for export and the local sale of bark for power production. In both situations, the wood is purchased by Fulghum.

In connection with the Fulghum Acquisition, the Company entered into a joint venture with Graanul Invest AS (“Graanul”), a European producer of wood pellets, for the potential development and construction of, and investment in, wood pellet plants in the United States and Canada. The Company and Graanul each own 50% equity interests in the joint venture (the “Rentech/Graanul JV”) which is accounted for under the equity method. The two facilities under development in Eastern Canada will not be owned by the Rentech/Graanul JV. For the year ended December 31, 2013, the Rentech/Graanul JV’s loss, which is shown as equity in loss of investee in the consolidated statements of operations, was approximately $0.2 million.

The Company is developing two facilities in Eastern Canada to produce and sell wood pellets for use as renewable fuel to produce electricity. See Note 9—Property, Plant and Equipment for a description of the two facilities and Note 14—Commitments and Contingencies for major contracts and commitments for this business segment.

Discontinued Operations

The Company decided to exit the energy technologies business. This was a direct result of the high projected cost to develop the technologies and deploy them at commercial scale. It was also due to lower projected returns on such investments. Many factors led to the lower projected returns. One factor was the decrease in energy prices in the United States due to the proliferation of hydraulic fracturing and other factors. Another factor was the failure of, and reductions in, government incentives and regulations intended to support the development of alternative energy, particularly within the United States. See “Note 6— Discontinued Operations”.

In addition to the energy technologies business, activity related to discontinued operations in calendar year ended 2012 also represent final settlement of activity and balances related to a business discontinued in fiscal year ended 2005.

Change in Fiscal Year End and Basis of Presentation

On February 1, 2012, the Company changed its fiscal year end from September 30 to December 31. References to any of the Company’s calendar years mean the twelve-month period ended December 31 of that calendar year. References to the Company’s fiscal year mean the fiscal year ended September 30, 2011. The statement of operations for the calendar year ended December 31, 2011 was derived by deducting the statement of operations for the three months ended December 31, 2010 from the statement of operations for the fiscal year ended September 30, 2011 and then adding the statement of operations for the three months ended December 31, 2011. The statements of operations for calendar year ended December 31, 2011 and the three months ended December 31, 2010, while not required, are presented for comparison purposes. Financial information in these notes with respect to calendar year 2011 and the three months ended December 31, 2010 is unaudited.

The Company identified errors that impacted product sales and cost of sales for the year ended December 31, 2012. The impact of correcting these errors in 2013 increased operating income by $0.2 million. Management does not believe the impact of these errors was material to 2013 or any previously issued financial statements.

Note 2 — Summary of Certain Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and all subsidiaries in which the Company directly or indirectly owns a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation.

Subsequent Events

The Company has evaluated events occurring between December 31, 2013 and the date of these financial statements to ensure that such events are properly reflected in these statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

East Dubuque and Pasadena Policy

Product sales revenues from the Fertilizer Facilities are recognized when customers take ownership upon shipment from the Fertilizer Facilities, the East Dubuque Facility’s leased facility or the Pasadena Facility’s distributors’ facilities and (i) assumes risk of loss, (ii) there are no uncertainties regarding customer acceptance, (iii) collection of the related receivable is probable, (iv) persuasive evidence of a sale arrangement exists and (v) the sales price is fixed or determinable. Management assesses the business environment, the customer’s financial condition, historical collection experience, accounts receivable aging and customer disputes to determine whether collectability is reasonably assured. If collectability is not considered reasonably assured at the time of sale, the Company does not recognize revenue until collection occurs.

Natural gas, though not purchased for the purpose of resale, is occasionally sold by the East Dubuque Facility when contracted quantities received are in excess of production and storage capacities, in which case the sales price is recorded in product sales and the related cost is recorded in cost of sales. Natural gas sales were approximately $3.4 million, $1.1 million and $0.1 million for 2013, 2012 and 2011, respectively.

East Dubuque Contracts

On April 26, 2006, the Company’s subsidiary, Rentech Development Corporation (“RDC”), entered into a Distribution Agreement (the “Distribution Agreement”) with Royster-Clark Resources, LLC, who subsequently assigned the agreement to Agrium U.S.A., Inc. (“Agrium”), and RDC similarly assigned the agreement to REMC, prior to its conversion into RNLLC. The Distribution Agreement is for a 10 year period, subject to renewal options. Pursuant to the Distribution Agreement, Agrium is obligated to use commercially reasonable efforts to promote the sale of, and solicit and secure orders from its customers for nitrogen fertilizer products manufactured at the East Dubuque Facility, and to purchase from RNLLC nitrogen fertilizer products manufactured at the facility for prices to be negotiated in good faith from time to time. Under the Distribution Agreement, Agrium is appointed as the exclusive distributor for the sale, purchase and resale of nitrogen products manufactured at the East Dubuque Facility. Sale terms are negotiated and approved by RNLLC. Agrium bears the credit risk on products sold through Agrium pursuant to the Distribution Agreement. If an agreement is not reached on the terms and conditions of any proposed Agrium sale transaction, RNLLC has the right to sell to third parties provided the sale is on the same timetable and volumes and at a price not lower than the one proposed by Agrium. For the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, the Distribution Agreement accounted for 79%, 83%, 92% and 83%, respectively, of net revenues from product sales for the East Dubuque Facility. Receivables from Agrium accounted for 84% and 73% of the total accounts receivable balance of the East Dubuque Facility as of December 31, 2013 and 2012, respectively. RNLLC negotiates sales with other customers and these transactions are not subject to the terms of the Distribution Agreement.

Under the Distribution Agreement, the East Dubuque Facility pays commissions to Agrium not to exceed $5 million during each contract year on applicable gross sales during the first 10 years of the agreement. The commission rate was 2% during the first year of the agreement and increased by 1% on each anniversary date of the agreement up to the current maximum rate of 5%. For the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, the effective commission rate associated with sales under the Distribution Agreement was 3.6%, 2.7%, 2.6% and 4.3%, respectively. The commission expense was recorded in cost of sales for all periods.

Pasadena Contracts

RNPLLC sells substantially all of its products through marketing and distribution agreements. Pursuant to an exclusive marketing agreement RNPLLC has entered into with Interoceanic Corporation (“IOC”), IOC has the exclusive right and obligation to market and sell all of the Pasadena Facility’s ammonium sulfate product. Under the marketing agreement, IOC is required to use commercially reasonable efforts to market the product to obtain the most advantageous price. RNPLLC compensates IOC for transportation and storage costs relating to the ammonium sulfate product it markets through the pricing structure under the marketing agreement. The marketing agreement has a term that ends December 31, 2016, but automatically renews for subsequent one-year periods (unless either party delivers a termination notice to the other party at least 210 days prior to an automatic renewal). The marketing agreement may be terminated prior to its stated term for specified causes. During the calendar year ended December 31, 2013 and the period beginning November 1, 2012 through December 31, 2012, the marketing agreement with IOC accounted for

100% of the Pasadena Facility’s revenues from the sale of ammonium sulfate. In addition, RNPLLC has an arrangement with IOC that permits RNPLLC to store 59,500 tons of ammonium sulfate at IOC-controlled terminals, which are located near end customers of the Pasadena Facility’s ammonium sulfate. This arrangement currently is not governed by a written contract. RNPLLC also has marketing and distribution agreements to sell other products that automatically renew for successive one year periods.

Fulghum Fibres Contracts

Tolling and Offtake Arrangements – The Company has certain wood chip processing, wood yard operation and wood pellet agreements, which contain embedded leases for accounting purposes. This generally occurs when the agreement designates a specific chip mill or pellet plant in which the buyer purchases substantially all of the output and does not otherwise meet a fixed price per unit of output exception. The Company determined that these are operating leases.

A tolling and offtake agreement that does not contain a lease may be classified as a derivative subject to a normal purchase and sale exception, in which case the agreement is classified as an executory contract and accounted for on an accrual basis. Tolling and offtake agreements, and components of these agreements that do not meet the above classifications, are accounted for on an accrual basis.

For sales which are not accounted for as operating leases as described above, the Company recognizes revenue at the time the service is provided or when customers take ownership upon shipment from the facilities of the chips or pellets and assumes risk of loss, collection of the related receivable is probable, persuasive evidence of a sale arrangement exists and the sales price is fixed or determinable. Revenues associated with tolling arrangements are included in service revenues and sales of product under offtake agreements are included in product sales in our consolidated statements of operations.

Deferred Revenue

A significant portion of the revenue recognized during any period may be related to product prepayment contracts or products stored at IOC facilities, for which cash was collected during an earlier period, with the result that a significant portion of revenue recognized during a period may not generate cash receipts during that period. As of December 31, 2013 and 2012, deferred revenue was approximately $21.6 million and $29.7 million, respectively. At the East Dubuque Facility, the Company records a liability for deferred revenue to the extent that payment has been received under product prepayment contracts, which create obligations for delivery of product within a specified period of time in the future. The terms of these product prepayment contracts require payment in advance of delivery. At the Pasadena Facility, IOC pre-pays a portion of the sales price for shipments received into its storage facilities which is recorded as deferred revenue. The Company recognizes revenue related to the product prepayment contracts or products stored at IOC facilities and relieves the liability for deferred revenue when products are shipped (including shipments to end customers from IOC facilities).

Cost of Sales

Cost of sales are comprised of manufacturing costs related to the Company’s fertilizer products and processing costs for services. Cost of sales expenses include direct materials (such as natural gas, ammonia, sulfur and sulfuric acid), direct labor, indirect labor, employee fringe benefits, depreciation on plant machinery, electricity and other costs, including shipping and handling charges incurred to transport products sold.

The Company enters into short-term contracts to purchase physical supplies of natural gas in fixed quantities at both fixed and indexed prices. The Company anticipates that it will physically receive the contract quantities and use them in the production of fertilizer. The Company believes it is probable that the counterparties will fulfill their contractual obligations when executing these contracts. Natural gas purchases, including the cost of transportation to the East Dubuque Facility, are recorded at the point of delivery into the pipeline system.

Accounting for Derivative Instruments

Accounting guidance establishes accounting and reporting requirements for derivative instruments and hedging activities. This guidance requires recognition of all derivative instruments as assets or liabilities on the Company’s balance sheet and measurement of those instruments at fair value. The accounting treatment of changes in fair value is dependent upon whether or not a derivative instrument is designated as a hedge and if so, the type of hedge. The Company currently does not designate any of its derivatives as hedges for financial accounting purposes. Gains and losses on derivative instruments not designated as hedges are currently included in earnings and reported under cash from operating activities.

The Company elects the normal purchase normal sale exemption for the Company’s commodity-based derivative instruments. As such, the Company does not recognize the unrealized gains or losses related to these derivative instruments in its consolidated financial statements. For interest rate swaps, RNP did not use hedge accounting; however, RNP reflected the instruments at fair value and any change in value was recorded in other expense, net on the consolidated statement of operations. RNP terminated the interest rate swaps in calendar year 2013.

Cash

The Company has checking and savings accounts with major financial institutions. At times balances with these institutions may be in excess of federally insured limits.

Accounts and Other Receivables

Trade receivables are recorded at net realizable value. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

At December 31, 2013, the Company has recorded an insurance receivable of approximately $1.7 million for losses incurred at a November 2013 fire at the East Dubuque Facility. The receivable is not in dispute, and recovery is probable due to a legally enforceable insurance policy.

Inventories

Inventories consist of raw materials and finished goods within the Company’s East Dubuque, Pasadena and Fulghum Fibres segments. The primary raw material used by the East Dubuque Facility in the production of its nitrogen products is natural gas. The primary raw materials used by the Pasadena Facility in the production of its products are ammonia and sulfur. Raw materials also include certain chemicals used in the manufacturing process. Fulghum Fibres’ raw materials inventory consists of purchased roundwood to be chipped at its South American mills. Finished goods include the products stored at the Fertilizer Facilities that are ready for shipment along with any inventory that may be stored at remote facilities, and Fulghum Fibres’ processed wood chips. The Company allocates fixed production overhead costs to inventory based on the normal capacity of its production facilities and unallocated overhead costs are recognized as expense in the period incurred. At December 31, 2013 and 2012, inventories on the consolidated balance sheets included depreciation of approximately $1.2 million and $1.0 million, respectively.

Inventories are stated at the lower of cost or estimated net realizable value. The cost of inventories is determined using the first-in first-out method. The estimated net realizable value is based on customer orders, market trends and historical pricing. On at least a quarterly basis, the Company performs an analysis of its inventory balances to determine if the carrying amount of inventories exceeds its net realizable value. If the carrying amount exceeds the estimated net realizable value, the carrying amount is reduced to the estimated net realizable value.

Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the estimated useful lives of the assets, except for platinum catalyst, as follows:


Type of Asset		Estimated Useful Life
Building and building improvements		4-40 years
Land improvements		5-20 years
Machinery and equipment		7-22 years
Furniture, fixtures and office equipment		3-10 years
Computer equipment and software		2-5 years
Vehicles		2-15 years
Leasehold improvements		Useful life or remaining lease term whichever is shorter
Ammonia catalyst		3-10 years
Platinum catalyst		Based on units of production

Expenditures during turnarounds or at other times for improving, replacing or adding to RNP’s assets are capitalized. Expenditures for the acquisition, construction or development of new assets to maintain RNP’s operating capacity, or to comply with environmental, health, safety or other regulations, are also capitalized. Costs of general maintenance and repairs are expensed.

When property, plant and equipment is retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in operating expenses.

Spare parts are maintained by the Fertilizer Facilities to reduce the length of possible interruptions in plant operations from an infrastructure breakdown at the Fertilizer Facilities. The spare parts may be held for use for years before the spare parts are used. As a result, they are capitalized as a fixed asset at cost. When spare parts are utilized, the book values of the assets are charged to earnings as a cost of production. Periodically, the spare parts are evaluated for obsolescence and impairment and if the value of the spare parts is impaired, it is charged against earnings.

Long-lived assets, construction in progress and identifiable intangible assets are reviewed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the asset’s fair value.

The Company capitalizes certain direct development costs associated with internal-use software, including external direct costs of material and services, and payroll costs for employees devoting time to software implementation projects. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred.

The Company has recorded asset retirement obligations (“AROs”) related to future costs associated with (i) the removal of contaminated material at the former phosphorous plant at the Pasadena Facility and handling, (ii) disposal of asbestos at the East Dubuque Facility and (iii) removal of machinery and equipment at Fulghum mills on leased property. The fair value of a liability for an ARO is recorded in the period in which it is incurred and the cost of such liability increases the carrying amount of the related long-lived asset by the same amount. The liability is accreted each period through charges to operating expense and the capitalized cost is depreciated over the remaining useful life of the asset. The liability at December 31, 2013 and 2012 was approximately $3.0 million and $3.1 million.

Construction in Progress

The Company tracks project development costs and capitalizes those costs after a project has completed the scoping phase and enters the feasibility phase. The most significant projects under construction are the Wawa and Atikokan facilities at December 31, 2013. The Company also capitalizes costs for improvements to the existing machinery and equipment at the Fertilizer Facilities and certain costs associated with the Company’s information technology initiatives. Interest incurred on development and construction projects is capitalized until construction is complete. The Company does not depreciate construction in progress costs until the underlying assets are placed into service.

Acquisition Method of Accounting

The Company accounts for business combinations using the acquisition method of accounting, which requires, among other things, that assets acquired, liabilities assumed and earn-out consideration be recognized at their fair values as of the acquisition date. The Company has recognized goodwill and intangibles related to its acquisitions as described in Note 3— Fulghum Acquisition and Note 4— Agrifos Acquisition. The earn-out consideration will be measured at each reporting date with changes in its fair value recognized in the consolidated statements of operations.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business acquisition. The Company tests goodwill assets for impairment annually, or more often if an event or circumstance indicates that an impairment may have occurred. The analysis of the potential impairment of goodwill is a two step process. Step one of the impairment test consists of comparing the fair value of the reporting unit with the aggregate carrying value, including goodwill. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, step two must be performed to determine the amount, if any, of the goodwill impairment. Step one of the goodwill impairment test involves a high degree of judgment and consists of a comparison of the fair value of a reporting unit with its book value. The fair value of the Pasadena and Fulghum reporting units is based upon various assumptions and is based on the discounted cash flows that the business can be expected to generate in the future (the “Income Approach”). The Income Approach valuation method requires the Company to make projections of revenue and operating costs over a multi-year period. Additionally, the Company made an estimate of a weighted average cost of capital that a market participant would use as a discount rate.

If the fair value of the reporting unit is less than its carrying value, step two of the impairment test is performed. Step two of the goodwill impairment test consists of comparing the implied fair value of the reporting unit’s goodwill against the carrying value of the goodwill. Determining the implied fair value of goodwill requires the valuation of a reporting unit’s identifiable tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination on the testing date. The valuation of assets and liabilities in step two is performed only for purposes of assessing goodwill for impairment. See Note 10 — Goodwill.

Intangible Assets

Intangible assets arose in conjunction with the Fulghum Acquisition and Agrifos Acquisition (See Note 3— Fulghum Acquisition and Note 4— Agrifos Acquisition). Fulghum’s intangible assets consist of trade names and processing agreements to provide high-quality wood chipping and wood yard operations services to its customers. Acquired trade names were assessed as indefinite lived assets because there is no foreseeable limit on the period of time over which they are expected to contribute cash flows. Acquired trade names are not amortized but are subject to an annual test for impairment and in between annual tests when events or circumstances indicate that the carrying value may not be recoverable.

Intangible assets consist of the following at December 31, 2013 and 2012 (amounts in thousands):


	2013			2012			Average Life
Trade names	$	5,496		$	—			Indefinite
Wood chip processing agreements		29,765			—			1-17
Off-take contract		2,811			—			10
Technologies to produce fertilizers		23,680			23,680			20
Fertilizer marketing agreements		3,088			3,088			1.5

Intangibles, gross	$	64,840		$	26,768
Less: accumulated amortization		(5,110	)		(583	)

Intangibles, net	$	59,730		$	26,185

The amortization of the assets will result in amortization expense of approximately $4.3 million in 2014 and $4.4 million for each of the next four years thereafter.

We also have unfavorable processing agreements in the amount of approximately $4.1 million, which are included in other liabilities both current and long term. These agreements along with processing agreements recorded in intangible assets are amortized over the economic benefit.

Income Taxes

The Company accounts for income taxes under the liability method, which requires an entity to recognize deferred tax assets and liabilities for temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. An income tax valuation allowance has been established to reduce the Company’s deferred tax asset to the amount that is expected to be realized in the future.

The Company recognizes in its consolidated financial statements only those tax positions that are “more-likely-than-not” of being sustained, based on the technical merits of the position. The Company performs a comprehensive review of its material tax positions in accordance with the applicable guidance.

Net Income (Loss) Per Common Share Allocated To Rentech

Basic net income (loss) per common share allocated to Rentech is calculated by dividing net income (loss) allocated to Rentech by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share allocated to Rentech is calculated by dividing net income (loss) allocated to Rentech by the weighted average number of common shares outstanding plus the dilutive effect, calculated using the “treasury stock” method for the unvested restricted stock units, outstanding stock options and warrants and using the “if converted” method for the convertible debt if their inclusion would not have been anti-dilutive.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in stockholders’ equity during the period from non-owner sources. To date, accumulated other comprehensive income (loss) is primarily comprised of adjustments to the defined benefit pension plans and the postretirement benefit plans and foreign currency translation.

Variable Interest Entities

The Company may enter into joint ventures or make investments with business partners that support its underlying business strategy and provide it the ability to enter new markets. In certain instances, an entity in which the Company may make an investment may qualify as a variable interest entity (“VIE”). If the Company determines that it is the primary beneficiary of an entity, it must consolidate that entity’s operations. Determination of the primary beneficiary focuses on determining which variable interest holder has the power to direct the most significant activities of the VIE. The Company currently has no VIEs.

Recent Accounting Pronouncements

In January 2013, the Financial Accounting Standards Board (the “FASB”) issued guidance requiring companies to disclose information about financial instruments that have been offset on the balance sheet or subject to an enforceable master netting agreement, irrespective of whether they have been offset, and related arrangements to enable users of a company’s financial statements to understand the effect of those arrangements on the company’s financial position. Companies will be required to provide both net (offset amounts) and gross information in the notes to the financial statements for relevant assets and liabilities that are offset. This guidance is effective for interim and annual periods beginning on or after January 1, 2013 and requires retrospective application, and thus became effective for the Company’s interim period beginning on January 1, 2013. The adoption of this guidance did not have any impact on the Company’s consolidated financial position, results of operations or disclosures.

In February 2013, the FASB issued guidance that requires a company to disclose information about amounts reclassified out of accumulated other comprehensive income and their corresponding effect on net income. This guidance is effective for interim and annual periods beginning after December 15, 2012, and thus became effective for the Company’s interim period beginning on January 1, 2013. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or disclosures.

In July 2013, the FASB issued guidance as to when an unrecognized tax benefit should be classified as a reduction of a deferred tax asset or when it should be classified as a liability in the consolidated balance sheet. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. It is effective for the Company’s interim period beginning on January 1, 2014. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or disclosures.

Note 3 — Fulghum Acquisition

On May 1, 2013, the Company acquired all of the capital stock of Fulghum. The preliminary purchase price consisted of approximately $64.2 million of cash, including approximately $3.3 million used to retire certain debt of Fulghum at closing. The amount of the purchase price is subject to certain potential post-closing adjustments set forth in the stock purchase agreement.

This business combination has been accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

The Company’s preliminary purchase price allocation as of May 1, 2013 is as follows (amounts in thousands):


Cash	$	10,137
Accounts receivable		3,936
Inventories		2,389
Prepaid expenses and other current assets		952
Other receivables, net		5,435
Property, plant and equipment		94,382
Intangible assets (Trade name—$5,496 and Processing agreements—$29,765)		35,261
Goodwill		29,932
Other assets		2,974
Accounts payable		(6,547	)
Accrued liabilities		(5,823	)
Customer deposits		(1,059	)
Asset retirement obligation		(178	)
Credit facility and loans		(61,865	)
Unfavorable processing agreements		(6,496	)
Deferred income taxes		(35,262	)
Noncontrolling interests		(4,000	)

Total preliminary purchase price	$	64,168

Long-term deferred tax liabilities and other tax liabilities result from identifiable tangible and intangible assets fair value adjustments. These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist. As part of purchase accounting for Fulghum, we recorded additional deferred tax liabilities of approximately $15.8 million attributable to identifiable tangible and intangible assets.

The final purchase price and the allocation thereof will not be known until the final working capital adjustments are performed and a review of various tax issues is completed.

The operations of Fulghum are included in the consolidated statement of operations effective May 1, 2013. During the calendar year ended December 31, 2013, the Company recorded revenue and net income related to Fulghum of approximately $63.0 million and $7.0 million, respectively. Acquisition related costs for this acquisition totaled approximately $1.5 million and have been included in the consolidated statements of operations within selling, general and administrative expense.

Note 4 — Agrifos Acquisition

On November 1, 2012, the Company acquired all of the membership interest of Agrifos. The purchase price for Agrifos and its subsidiaries consisted of an initial purchase price of $136.3 million in cash, less working capital adjustments, and $20.0 million in common units representing limited partnership interests in RNP (the “Common Units”), which reduced the Company’s ownership interest in RNP at the time from 60.8% to 59.9%, as well as potential earn-out consideration of up to $50.0 million to be paid in Common Units or cash at RNP’s option based on the amount by which the two-year Adjusted EBITDA, as defined in the Purchase Agreement, of the Pasadena Facility exceeds certain thresholds. Among other terms, the Seller is required to indemnify us for a period of six years after the closing for certain environmental matters relating to the Pasadena Facility, which indemnification obligations are subject to important limitations including a deductible and an overall cap. We deposited with an escrow agent in several escrow accounts a portion of the initial consideration consisting of an aggregate of $7.25 million in cash, and 323,276 Common Units, representing a value of $12.0 million, which amounts may be used to satisfy certain indemnity claims upon the occurrence of certain events. Any earn-out consideration would be paid after April 30, 2015 and the completion of the relevant calculations in either common units or cash at RNP’s option.

This business combination has been accounted for using the acquisition method of accounting, which requires, among other things, that most assets acquired, liabilities assumed and earn-out consideration be recognized at their fair values as of the acquisition date.

The purchase price consisted of the following (amounts in thousands):


Cash (through borrowings under a previous credit agreement) less working capital adjustments	$	136,308
Fair market value of 538,793 Common Units issued		20,000
Estimate of potential earn-out consideration⁽¹⁾		4,920

Total purchase price	$	161,228

(1)

The amount of earn-out consideration reflected in the table above reflects the Company’s estimate, as of November 1, 2012, of the amount of the earn-out consideration RNP will be required to pay pursuant to the Purchase Agreement, as defined in Note 7 — Fair Value. The earn-out consideration will be measured at each reporting date with changes in its fair value recognized in the consolidated statements of operations. As of December 31, 2013, the fair value of the potential earn-out consideration was $0.

RNP’s final purchase price allocation as of November 1, 2012 is as follows (amounts in thousands):


Cash	$	2,622
Accounts receivable		3,204
Inventories		30,373
Prepaid expenses and other current assets		566
Property, plant and equipment		68,688
Construction in progress		7,011
Intangible assets (Technology—$23,680 and Marketing Agreement—$3,088)		26,768
Goodwill		57,231
Other assets		73
Accounts payable		(10,638	)
Accrued liabilities		(6,640	)
Customer deposits		(13,301	)
Asset retirement obligation		(2,776	)
Other long-term liabilities		(1,953	)

Total purchase price	$	161,228

During the calendar year ended December 31, 2013, RNP and the Seller finalized the working capital adjustments which resulted in an increase in the preliminary purchase price of approximately $0.3 million. The working capital adjustments receivable was recorded separately from the purchase price allocation shown above. The finalization and recording of the cash receipt resulted in cash increasing by approximately $2.2 million and other receivables decreasing by approximately $2.5 million. During the calendar year ended December 31, 2013, RNP recognized adjustments to the preliminary purchase price allocation with an increase in fair value to goodwill of approximately $0.6 million and accrued liabilities of approximately $0.3 million.

The operations of Agrifos are included in the consolidated statement of operations effective November 1, 2012. During the calendar year ended December 31, 2012, the Company recorded revenue and net loss related to Agrifos of approximately $37.4 million and $2.6 million, respectively. Acquisition related costs for this acquisition totaled approximately $4.1 million for the calendar year ended December 31, 2012 and have been included in the consolidated statements of operations within selling, general and administrative expense.

Note 5 — Pro Forma Information

The unaudited pro forma information has been prepared as if the Fulghum Acquisition and the Agrifos Acquisition, as defined in Note 3— Fulghum Acquisition and Note 4— Agrifos Acquisition, had taken place on January 1, 2012. The unaudited pro forma information is not necessarily indicative of the results that the Company would have achieved had the transactions actually taken place on January 1, 2012, and the unaudited pro forma information does not purport to be indicative of future financial operating results.


	For the Calendar Year Ended December 31, 2013
	As Reported			Pro Forma Adjustments			Pro Forma
	(in thousands)
Revenues	$	374,349		$	36,683		$	411,032
Net income (loss)⁽¹⁾	$	38		$	(27,332	)	$	(27,294	)
Net loss attributable to Rentech	$	(1,532	)	$	(27,467	)	$	(28,999	)
Basic and diluted net income (loss) from continuing operations per common share attributable to Rentech	$	0.02		$	(0.12	)	$	(0.10	)


	For the Calendar Year Ended December 31, 2012
	As Reported			Pro Forma Adjustments		Pro Forma
	(in thousands)
Revenues	$	261,635		$	226,346	$	487,981
Net income⁽¹⁾	$	27,687		$	29,137	$	56,824
Net income (loss) attributable to Rentech	$	(14,000	)	$	29,573	$	15,573
Basic and diluted net income (loss) from continuing operations per common share attributable to Rentech	$	0.10		$	0.13	$	0.23

(1)

As discussed in Note 19— Income Taxes, during the calendar year ended December 31, 2013, there was a release of a valuation allowance resulting from recording deferred tax liabilities from the Fulghum Acquisition. Since the pro forma information is presented as if the transaction had taken place on January 1, 2012, the release of the valuation allowance is included in the pro forma results for the calendar year ended December 31, 2012 and excluded from the pro forma results for the calendar year ended December 31, 2013.

Note 6 — Discontinued Operations

On March 5, 2014, the Company announced that it had entered into a definitive agreement with Sunshine Kaidi New Energy Group Co., Ltd. (“Kaidi”) (the “Kaidi Agreement”) to sell its alternative energy technologies and certain pieces of equipment at the PDU. The transaction closed on October 28, 2014. The Company received a cash payment of $14.4 million from Kaidi, which is in addition to $0.5 million in cash payments previously received. Kaidi will pay an additional $0.4 million to the Company to purchase various equipment currently located at the Company’s PDU, resulting in $15.3 million of total proceeds to the Company from these transactions, which does not include the possibility of a success payment of up to $16.2 million. As a result of the Kaidi Agreement, the Company has classified its balance sheets and statements of operations for all periods presented in this report to reflect the energy technologies segment as a discontinued operation. In the consolidated statements of cash flows, the cash flows of discontinued operations are not separately classified or aggregated, and are reported in the respective categories with those of continuing operations.

All discussions and amounts in the consolidated financial statements and related notes, except for cash flows, for all periods presented relate to continuing operations only, unless otherwise noted.

The following table summarizes the components of assets and liabilities of discontinued operations.


	As of
	December, 31
	2013		2012
	(in thousands)
Cash	$	—	$	100
Prepaid expenses and other current assets		19		375
Other receivables		—		2,043

Total current assets	$	19	$	2,518

Property, plant and equipment, net	$	—	$	4,899
Property held for sale		4,647		2,475
Deposits and other assets		4		29


	As of
	December, 31
	2013		2012
	(in thousands)
Total other assets	$	4,651	$	7,403

Total assets	$	4,670	$	9,921

Accounts payable	$	151	$	1,108
Accrued payroll and benefits		356		1,031
Accrued liabilities		1,496		2,504
Other		—		41

Total current liabilities	$	2,003	$	4,684

Other	$	—	$	73

Total long-term liabilities	$	—	$	73

Total liabilities	$	2,003	$	4,757

The following table summarizes the results of discontinued operations.


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,				For the Fiscal Year Ended September 30,
	2013		2012		2011		2011		2010		2011
	(in thousands)
					(unaudited)				(unaudited)
Revenues	$	506	$	290	$	206	$	52	$	52	$	206
Operating loss	$	7,001	$	42,114	$	88,046	$	6,754	$	7,034	$	88,326
Loss from discontinued operations, net of tax	$	6,606	$	37,376	$	87,982	$	6,804	$	7,076	$	84,387

Note 7 — Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and its counterparties is incorporated in the valuation of assets and liabilities. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Company classifies fair value balances based on the fair value hierarchy, defined as follows:

•

Level 1— Consists of unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.

•

Level 2— Consists of inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

•

Level 3— Consists of unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

Fair values of cash, deposits, other current assets, accounts payable, accrued liabilities and other current liabilities are assumed to approximate carrying value since they are short term and can be settled on demand.

The following table presents the financial instruments that require fair value disclosure as of December 31, 2013.


	Fair Value						Carrying Value
	(in thousands)
	Level 1		Level 2		Level 3
Liabilities
RNP Notes	$	318,400	$	—	$	—	$	320,000
Fulghum debt		—		45,970		—		47,452
RNHI Revolving Loan		—		50,000		—		50,000
QS Construction Facility		—		4,527		—		4,527
Earn-out consideration		—		—		1,544		1,544

The following table presents the financial instruments that require fair value disclosure as of December 31, 2012.


	Fair Value						Carrying Value
	(in thousands)
	Level 1		Level 2		Level 3
Liabilities
Credit facilities and term loan	$	—	$	193,290	$	—	$	193,290
Interest rate swaps		—		929		—		929
Earn-out consideration		—		—		4,920		4,920

RNP Notes

The RNP Notes, as defined in Note 12 — Debt, are deemed to be Level 1 financial instruments because there was an active market for such debt. The fair value of such debt had been determined based on market prices.

Fulghum Debt

Fulghum debt, as defined in Note 12 — Debt, is deemed to be Level 2 financial instruments because the measurement is based on observable market data. The fair value was determined by management using an independent, third party valuation company.

RNHI Revolving Loan

The RNHI Revolving Loan, as defined in Note 12 — Debt, is deemed to be a Level 2 financial instrument because the measurement is based on observable market data. It is concluded that the carrying value of the RNHI Revolving Loan approximates the fair value of such loan as of December 31, 2013 because of the floating nature of the interest rate and the fact that the Company’s credit worthiness has not changed since the loan was issued.

QS Construction Facility

The QS Construction Facility, as defined in Note 12 — Debt, is deemed to be a Level 2 financial instrument because the measurement is based on observable market data. To determine the fair value, the Company reviewed the current market interest rates of similar borrowing arrangements. It was concluded that the carrying value of the QS Construction Facility approximates the fair value of the obligation at December 31, 2013 because of the floating nature of the interest rate and the fact that the Company’s credit worthiness has not changed since the QS Construction Facility was established.

Credit Facilities and Term Loan

The credit facilities and term loan were deemed to be Level 2 financial instruments because the measurement was based on observable market data. RNP used part of the proceeds from the offering of the RNP Notes to repay in full and terminate the Second 2012 Credit Agreement, as defined in Note 12 — Debt, and related interest rate swaps.

Interest Rate Swaps

In 2012, RNLLC entered into two forward starting interest rate swaps in notional amounts which covered a portion of its outstanding borrowings. The interest rate swaps were deemed to be Level 2 financial instruments because the measurements were based on observable market data. RNP used a standard swap contract valuation method to value its interest rate derivatives, and the inputs it uses for present value discounting included forward one-month and three-month LIBOR rates, risk-free interest rates and an estimate of credit risk. The change in fair value was recorded in other expense, net on the consolidated statement of operations. The realized loss represents the cash payments required under the interest rate swaps.

Net loss on interest rate swaps:


	For the Calendar Years Ended December 31,
	2013			2012
	(in thousands)
Realized loss	$	(24	)	$	(22	)
Unrealized gain (loss)		17			(929	)

Total net loss on interest rate swaps	$	(7	)	$	(951	)

During the calendar year ended December 31, 2013, RNP paid approximately $0.9 million to terminate the interest rate swaps as described above

Earn-out Consideration

The earn-out consideration relates to potential additional consideration the Company may be required to pay under the Purchase Agreement relating to the Agrifos Acquisition. The earn-out consideration related to the Agrifos Acquisition is deemed to be a Level 3 financial instrument because the measurement is based on unobservable inputs. The fair value of earn-out consideration was determined based on the Company’s analysis of various scenarios involving the achievement of certain levels of Adjusted EBITDA, as defined in the Purchase Agreement, over a two year period. The scenarios, which included a weighted probability factor, involved

assumptions relating to the market prices of the Company’s products and feedstocks, as well as product profitability and production. The earn-out consideration will be measured at each reporting date with changes in its fair value recognized in the consolidated statements of operations. For the calendar year ended December 31, 2013, the fair value of the liability decreased by approximately $4.9 million. At December 31, 2013, the fair value of the potential earn-out consideration relating to the Agrifos Acquisition was $0. The decrease in fair value was a result of lower than expected profitability in 2013 due primarily to unfavorable weather and increased Chinese exports, as well as a reduced outlook for longer-term profitability due to reduced levels of nitrogen fertilizer prices. Due to an unusually wet spring, there was a shortened planting season which resulted in lower ammonium sulfate revenues during the calendar year ended December 31, 2013. In addition, significant volumes of urea were exported from China and this supply suppressed global urea and other nitrogen fertilizer prices.

At December 31, 2013, the earn-out consideration also includes approximately $1.5 million of potential earn-out consideration relating to the Atikokan Project, as defined in Note 9— Property, Plant and Equipment. The fair value of earn-out consideration was determined based on the Company’s analysis of various scenarios involving the achievement of certain levels of EBITDA, as defined in the asset purchase agreement related to the Atikokan Project, over a ten year period. The scenarios, which included a weighted probability factor, involved assumptions relating to product profitability and production. The Company provided a loan to the sellers of approximately $0.9 million, which will be repayable from any earn-out consideration.

The levels within the fair value hierarchy at which the Company’s financial instruments have been evaluated have not changed for any of the Company’s financial instruments during the year ended December 31, 2013 and 2012.

Note 8 — Inventories

Inventories consisted of the following:


	As of December 31,
	2013		2012
	(in thousands)
Finished goods	$	27,638	$	21,756
Raw materials		7,448		5,269
Other		290		115

Total inventory	$	35,376	$	27,140

During the year ended December 31, 2013, the Company wrote down the value of the Pasadena Facility’s ammonium sulfate, sulfur and sulfuric acid inventory by $12.4 million to market value. This expense is reflected in cost of goods sold.

Note 9 — Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	As of December 31,
	2013			2012
	(in thousands)
Land and land improvements	$	26,149		$	22,387
Buildings and building improvements		33,096			22,136
Machinery and equipment and catalysts		334,645			134,979
Furniture, fixtures and office equipment		1,123			949
Computer equipment and computer software		7,977			5,896
Vehicles		4,624			215
Leasehold improvements		2,348			114
Other		210			210

		410,172			186,886
Less: accumulated depreciation		(75,518	)		(57,590	)

Total property, plant and equipment, net	$	334,654		$	129,296

Construction in progress consisted of the following:


	As of December 31,
	2013		2012
	(in thousands)
East Dubuque Facility		2,195		52,435
Pasadena Facility		31,335		8,512
Fulghum Fibres		273		—
Wawa Project		17,007		—
Atikokan Project		8,458		—
Other		868		470

Total construction in progress	$	60,136	$	61,417

The construction in progress balance at December 31, 2013 and 2012 includes approximately $0.8 million and $0.9 million of capitalized interest costs, respectively.

On May 13, 2013, the Company acquired an idled oriented strand board processing mill from Weyerhaeuser Corporation in Wawa, Ontario, Canada for approximately $5.5 million. The Company is in the process of converting the mill to a wood pellet facility with the capacity to produce approximately 450,000 metric tons of wood pellets annually (the “Wawa Project”). Also, on June 7, 2013, the Company acquired a former particle board processing mill from Atikokan Renewable Fuels in Atikokan, Ontario, Canada. The Company is in the process of converting the mill to a wood pellet facility with the capacity to produce approximately 90,000 metric tons of wood pellets annually (the “Atikokan Project”). The initial purchase price for the Atikokan Project was approximately $3.8 million in cash plus potential earn-out consideration. The earn-out consideration will equal 7% of EBITDA of the Atikokan Project, as defined in the asset purchase agreement for the Atikokan Project, over a ten-year period. In addition to the initial purchase price, the Company provided a loan to the sellers of approximately $0.9 million, which is repayable from any earn-out consideration. Both the Wawa and Atikokan Projects were accounted for as asset purchases.

Note 10 — Goodwill

A reconciliation of the change in the carrying value of goodwill is as follows (in thousands):


Balance at December 31, 2011	$	7,209
Agrifos Acquisition		56,592
Goodwill impairment – discontinued operations		(7,209	)

Balance at December 31, 2012	$	56,592
Increase attributable to Pasadena		639
Fulghum Acquisition		29,932
Goodwill impairment – Pasadena		(30,029	)

Balance at December 31, 2013	$	57,134

The inventory impairment (see Note 8 — Inventories), negative gross margin and EBITDA in the calendar year ended December 31, 2013 and revised cash flow projections developed during the calendar year ended December 31, 2013 indicated that an impairment of the goodwill related to the Pasadena Facility was probable. See Note 11 — Impairments.

The goodwill resulting from the Agrifos Acquisition is deductible for tax purposes, while the goodwill from the Fulghum Acquisition is not deductible for tax purposes.

Note 11 — Impairments

Calendar Year 2013

During the calendar year, the Company incurred an approximate of $12.4 million write-down of ammonium sulfate, sulfur and sulfuric acid inventory to market value primarily due to lower market prices of ammonium sulfate. This expense is reflected in product cost of sales.

Ammonium sulfate is the primary product of the Pasadena Facility. Results for the calendar year ended December 31, 2013 and our projections of future cash flow from the production and sale of this product are worse than the results originally projected in late 2012, when the Company acquired Agrifos. The expected results and cash flows as of 2012 were utilized to allocate the purchase price of the Agrifos Acquisition, as described in Note 4 – Agrifos Acquisition. The primary cause of the reduction in the estimated fair value of the Pasadena reporting unit is the decline in the cash flow expected to be generated from the sale of ammonium sulfate, compared to the expectations at the time of the acquisition. A major cause of the lower expected cash flows is a decline in the level of prices, and expected prices, for nitrogen fertilizer caused by, among other things, lower corn prices, poor weather conditions for fertilizer application throughout the United States in 2013 and increased supply of urea from China.

Factors that affect cash flows include, but are not limited to, product prices; product transportation costs; product sales volumes; feedstock prices and availability; labor, maintenance, and other operating costs; required capital expenditures, and plant productivity. The Pasadena Facility generated negative EBITDA during the calendar year ended December 31, 2013. EBITDA is currently expected to be positive in 2014, but the current projection is well below the projection at the time of the acquisition, and is based on current and projected levels of prices for the products of, and inputs for, the Pasadena Facility. Current and projected prices for the products and inputs are below the levels at the time of the acquisition, yielding expectations for lower variable dollar margins per ton of product, even though percentage margins are expected to be consistent with those at the time of the acquisition because the prices of ammonium sulfate and its major raw materials have dropped by similar percentages. Lower dollar variable margins provide fewer dollars per ton sold to cover the fixed costs of the facility, resulting in reduced expectations of cash generated by the facility in a lower-price environment. In addition, the Pasadena Facility’s production has been lower than expected due to plant outages, and costs have been higher than expected due to higher maintenance expense.

Based upon its analysis of the value of the Pasadena reporting unit using the Income Approach, the Company recorded an estimated impairment to goodwill of $30.0 million during the quarter ended September 30, 2013. During the fourth quarter the Company performed a “step 2” analysis of goodwill and determined no adjustment to the initial goodwill impairment charge was necessary. There are significant assumptions involved in determining a goodwill impairment charge, which includes discount rates, terminal growth rates, future prices of end products and raw materials, terminal values and production volumes. The various valuation methods used (income approach, replacement cost, market approach) are also weighted in determining fair market value. Changes to any of these assumptions could increase or decrease the fair value of the Pasadena reporting unit. At December 31, 2013 the fair value of the Pasadena reporting unit is essentially equal to its carrying value and any adverse change to the critical assumptions used to measure discounted cash flows could result in a diminution in fair value that may result in additional goodwill impairment charges. If gross margins on sales of products were to decline 5 percent from our expectations, an impairment charge of approximately $15.0 million would be required at December 31, 2013. If the discount rate were to increase by 100 basis points from our expectations, an impairment charge of approximately $16.5 million would be required at December 31, 2013.

Calendar Year 2012

The Company recorded intangibles related to the acquisition of two subsidiaries in its energy technology segment. The Company expected that these assets would be used in various development projects with unrelated parties. During the calendar year 2012 the Company determined, based upon the status of negotiations with third parties to fund development of projects using the technologies, that the likelihood of future cash flows were significantly diminished. The Company concluded, based on the high degree of uncertainty and low probability of completion of these projects, that the intangibles were impaired. As a result, the Company impaired the net book value of the intangibles in the amounts of approximately $16.0 million, which was recorded in discontinued operations.

Fiscal Year 2011

Prior to the fourth quarter of the fiscal year ended September 30, 2011, the Company’s energy technologies segment had under development three projects for which it had capitalized certain construction work in process and other development costs. These projects included a biomass project in Rialto, California (the “Rialto Project”), a coal to liquid project at the Natchez Property (the “Natchez Project”) and a renewable energy project in Port St. Joe, Florida (the “Port St. Joe Project”).

In the fourth quarter of the fiscal year ended September 30, 2011 the Company revised its strategy for commercialization of its alternative energy technologies to include reduced spending on research and development and pursuit of projects that are smaller and require less capital to be invested by Rentech than those recently under development by the Company. Rentech believed that project financing for the Rialto Project and the Port St. Joe Project would not be available, and the Company would not be moving forward with the projects. As a result, Rentech impaired capitalized costs associated with the projects in its consolidated financial statements for the period ending September 30, 2011. The loss on impairment for the Rialto Project represented the total costs of the project. The loss on impairment for the Port St. Joe Project represented the total costs of the project less the elimination of the contingent consideration liability of approximately $1.6 million.

The Company has also concluded that project financing for its large Natchez Project was not available, and the Company’s future development efforts at its Natchez Property would focus on pursuing smaller projects that would use biomass or natural gas as feedstocks, not on the Natchez Project. As a result, Rentech impaired capitalized costs associated with its development of the Natchez Project in its consolidated financial statements for the period ending September 30, 2011. The loss on impairment for the Natchez Project represented the total costs of the project less the appraised value of the property, which the Company owns, of approximately $2.5 million.

The financial impact recorded in the fiscal year ended September 30, 2011 statement of operations in discontinued operations is as follows:


Project	Loss on Impairments
	(in thousands)
Rialto Project	$	(27,238	)
Natchez Project		(26,645	)
Port St. Joe Project		(4,806	)
Miscellaneous		(53	)

Total	$	(58,742	)

Note 12 — Debt

The Company’s debt obligations at December 31, 2013 consist of $320.0 million of RNP Notes, $47.0 million of Fulghum debt and $50 million of RNHI Revolving loan as defined below. The Company’s debt obligations at December 31, 2012 consisted of approximately $193.3 million in outstanding advances under its Second 2012 Credit Agreement, as defined below. Debt premium, discount and issuance expenses incurred in connection with financing are deferred and amortized on a straight line basis.

First 2012 Credit Agreement

On February 28, 2012, RNLLC entered into a credit agreement (the “First 2012 Credit Agreement”). The First 2012 Credit Agreement consisted of (i) a $100.0 million multiple draw term loan, and (ii) a $35.0 million revolving facility.

Second 2012 Credit Agreement

On October 31, 2012, RNLLC, RNP, RNPLLC and certain subsidiaries of RNPLLC entered into a new credit agreement (the “Second 2012 Credit Agreement”). The Second 2012 Credit Agreement amended, restated and replaced the First 2012 Credit Agreement. The Second 2012 Credit Agreement consisted of (i) a $110.0 million multiple draw term loan (the “CapEx Facility”) to be used by RNP and its subsidiaries for expansion projects and general partnership purposes, (ii) a $155.0 million term loan to fund the Agrifos Acquisition and (iii) the $35.0 million revolving credit facility (the “2012 Revolving Credit Facility”).

The Second 2012 Credit Agreement had a maturity date of October 31, 2017. Borrowings under the Second 2012 Credit Agreement bore interest at a rate equal to an applicable margin plus, at RNLLC’s option, either (a) in the case of base rate borrowings, a rate equal to the highest of (1) the prime rate, (2) the federal funds rate plus 0.5% or (3) LIBOR for an interest period of three months plus 1.00% or (b) in the case of LIBOR borrowings, the offered rate per annum for deposits of dollars for the applicable interest period on the day that was two business days prior to the first day of such interest period. The applicable margin for borrowings under the Second 2012 Credit Agreement was 2.75% with respect to base rate borrowings and 3.75% with respect to LIBOR borrowings. Additionally, RNLLC were required to pay a fee to the lenders under the CapEx Facility on the undrawn available portion at a rate of 0.75% per annum and a fee to the lenders under the 2012 Revolving Credit Facility on the undrawn available portion at a rate of 0.50% per annum. RNLLC also was required to pay customary letter of credit fees on issued letters of credit.

RNP Notes Offering

On April 12, 2013, RNP and Rentech Nitrogen Finance Corporation, a wholly-owned subsidiary of RNP (“Finance Corporation” and collectively with RNP, the “Issuers”), issued $320.0 million of 6.5% second lien senior secured notes due 2021 (the “RNP Notes”) to qualified institutional buyers and non-United States persons in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended. The RNP Notes bear interest at a rate of 6.5% per year, payable semi-annually in arrears with the first interest payment made on October 15, 2013. The RNP Notes will mature on April 15, 2021, unless repurchased or redeemed earlier in accordance with their terms. RNP used part of the net proceeds from the offering to repay in full and terminate the Second 2012 Credit Agreement and related interest rate swaps, and intends to use the remaining proceeds to pay for expenditures related to its expansion projects and for general partnership purposes.

The Issuers may redeem some or all of the RNP Notes at any time prior to April 15, 2016 at a redemption price equal to 100% of the principal amount of the RNP Notes redeemed, plus a “make whole” premium, and accrued and unpaid interest, if any, to the date of redemption. At any time prior to April 15, 2016, RNP may also, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the RNP Notes issued with the net proceeds of certain equity offerings at 106.5% of the principal amount of the RNP Notes, plus accrued and unpaid interest, if any, to the date of redemption. On or after April 15, 2016, RNP may redeem some or all of the RNP Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any, to the redemption date.

2013 RNP Credit Agreement

On April 12, 2013, RNP and Finance Corporation (collectively the “Borrowers”) entered into a new credit agreement (the “2013 RNP Credit Agreement”). The 2013 RNP Credit Agreement consists of a $35.0 million senior secured revolving credit facility (the “RNP Credit Facility”). The Borrowers may use the 2013 RNP Credit Agreement to fund their working capital needs, to fund capital expenditures, to issue letters of credit and for other general partnership purposes. The 2013 RNP Credit Agreement also includes a $10.0 million letter of credit sublimit. The commitment under the RNP Credit Facility may be increased by up to $15.0 million upon the Borrowers’ request at the discretion of the lenders and subject to certain customary requirements. As of December 31, 2013, borrowings under the RNP Credit Facility were strictly limited if RNP exceeded a Secured Leverage Ratio of 3.75 to 1.00. As of December 31, 2013, RNP’s Secured Leverage Ratio was 4.71 to 1.00, and at such time there were no outstanding advances under the RNP Credit Facility.

Fulghum Debt

As of December 31, 2013, Fulghum’s outstanding debt of $45.3 million had a weighted average interest rate of approximately 7.0%. The debt consists primarily of term loans with various financial institutions with each term loan collateralized by specific property and equipment. The term loans have maturity dates ranging from 2015 through 2028. Approximately $40.7 million and $4.6 million of the outstanding debt is with financial institutions located in the United States and South America, respectively.

Fulghum debt at December 31, 2013 consisted of the following (in thousands):


Outstanding debt	$	45,290
Plus: unamortized premium		2,162

Total debt		47,452
Less: current portion		(8,401	)

Long-term debt	$	39,051

RNHI Revolving Loan

On September 23, 2013, RNHI obtained a new $100.0 million revolving loan facility (“RNHI Revolving Loan”) by entering into a credit agreement (the “RNHI Credit Agreement”) among RNHI, Credit Suisse AG, Cayman Islands Branch, as administrative agent and each other lender from time to time party thereto. The Company expects that the new facility will be used to fund growth in its wood fibre processing business and for general corporate purposes. On September 24, 2013, the Company borrowed $50.0 million under the facility.

All obligations of RNHI under the new facility are unconditionally guaranteed by the Company in a guaranty agreement (the “Guaranty”) and are secured by a portion of the common units of RNP owned by RNHI (the “Underlying Equity”). RNHI currently owns 23.25 million common units in RNP, 15.4 million of which have been provided as initial collateral under the RNHI Credit Agreement. Under certain circumstances, up to 19.4 million common units may be pledged as collateral.

The new facility has a three year maturity and borrowings under the new facility bear interest at a rate equal to LIBOR plus 4.00% per annum. In the event the Company reduces a portion of or terminates all of the facility prior to its second anniversary through a refinancing collateralized by the Underlying Equity in form or substance materially similar to the facility and in which Credit Suisse AG, Cayman Islands Branch is not the lead lender, the Company will be required to pay a refinancing fee equal to 2.75% of the amount of commitments to be terminated, multiplied by a fraction, the numerator of which is the number of days from the date of such termination until the second anniversary of the closing and the denominator of which is 360. The Company is also required to pay a commitment fee to the administrative agent on the daily undrawn loan amount at a rate of 0.70% per annum. Additionally, on the closing date the Company paid one-time customary structuring and administrative fees to certain of the lenders.

The new facility and the Guaranty contain customary affirmative and negative covenants and events of default relating to RNHI and the Company. The covenants and events of default in the RNHI Credit Agreement restrict RNHI from engaging in activities outside of its ordinary course operation as a holding company and include, among other things, limitations on the incurrence of indebtedness and liens, the making of investments, the sale of assets, and the making of restricted payments. There are also events of default relating to substantial declines in value of the Underlying Equity in relation to the amount drawn under the RNHI Credit Agreement. Dividends and distributions from RNHI are permitted so long as no default or event of default exists or will result therefrom, including if the Value (as defined in the RNHI Credit Agreement) of the Underlying Equity pledged to secure the loan does not meet the valuation requirements set forth in the RNHI Credit Agreement. RNHI also has the right to sell RNP common units not held as collateral as long as certain conditions outlined in the new facility, including meeting a certain LTV Ratio (as defined below) and realizing a minimum price on the sale, are met.

In addition, the Company’s ability to draw or maintain an outstanding balance under the new facility is subject to the ratio of (i) the amount of loans and unpaid interest minus the Value of cash and cash equivalents in the collateral account divided by (ii) the Value of the collateral shares (the “LTV Ratio”), being less than an agreed upon ratio.

BOM Credit Agreement

On November 25, 2013, the Company entered into a credit agreement with Bank of Montreal (the “BOM Credit Agreement”). The BOM Credit Agreement consists of a $3.0 million revolving credit facility, which can be utilized as letters of credit.

Borrowings bear a letter of credit fee of 3.75% per annum on the daily average face amount of the letters of credits outstanding during the preceding calendar quarter. The Company also is required to pay a commitment fee to on the average daily undrawn portion of the credit facility at a rate equal to 0.75% per annum. This commitment fee is payable quarterly in arrears on the last day of each calendar quarter and on the termination date. The BOM Credit Agreement will terminate on November 25, 2015. At December 31, 2013, letters of credit totaling approximately $1.1 million had been issued.

QS Construction Facility

In connection with the Drax Contract (as defined in Note 14 — Commitments and Contingencies), on April 30, 2013, the Company and Quebec Stevedoring Company Limited (“Quebec Stevedoring”) entered into a Master Services Agreement (the “Port Agreement”) pursuant to which Quebec Stevedoring is required to provide stevedoring, terminalling and warehousing services to the Company at the Port of Quebec. The Port Agreement is designed to support the term and volume commitments of the Drax Contract as well as future wood pellet exports through the Port of Quebec. Pursuant to the Port Agreement, Quebec Stevedoring is required to build handling equipment and 75,000 metric tons of wood pellet storage exclusively for the Company’s use at the port, with the same amount becoming a financing obligation for the Company (the “QS Construction Facility”).

Total Debt

As of December 31, 2013, the Company was in compliance with all covenants under the RNP Notes, Fulghum debt, RNHI Revolving Loan and the 2013 RNP Credit Agreement. Total debt consisted of the following:


	As of December 31,
	2013			2012
	(in thousands)
Second 2012 Credit Agreement	$	—		$	193,290
RNP Notes		320,000			—
Fulghum debt		47,452			—
RNHI Revolving Loan		50,000			—
QS Construction Facility		4,527			—

Total debt	$	421,979		$	193,290
Less: current portion		(9,916	)		(7,750	)

Long-term debt	$	412,063		$	185,540

Future maturities of total debt are as follows (in thousands):


For the Calendar Years Ending December 31
2014	$	9,916
2015		7,324
2016		55,535
2017		4,285
2018		1,636
Thereafter		343,283

	$	421,979

The payoff of the Second 2012 Credit Agreement resulted in a loss on debt extinguishment, for the calendar year ended December 31, 2013, of approximately $6.0 million. The entry into the Second 2012 Credit Agreement and the payoff of the First 2012 Credit Agreement resulted in a loss on debt extinguishment of approximately $2.1 million. As a result of redeeming convertible notes prior to maturity, the unamortized debt discount and debt issuance costs were written off which resulted in a loss on debt extinguishment of approximately $2.7 million. These two transactions resulted in a loss on debt extinguishment of approximately $4.8 million for the calendar year ended December 31, 2012. The entry into a credit agreement and the payoff of the previous credit agreements resulted in a loss on debt extinguishment, for the three months ended December 31, 2011, of approximately $10.3 million. The entry into and payoff of various credit agreements, resulted in a loss on debt extinguishment for the fiscal year ended September 30, 2011 of approximately $13.8 million.

Note 13 — Advance for Equity Investment

In May 2007, the Company entered into an Equity Option Agreement with Peabody Venture Fund, LLC (“PVF”). Under the Equity Option Agreement, PVF agreed to fund the lesser of $10.0 million or 20% of the development costs for the Company’s proposed coal-to-liquids conversion project at the East Dubuque Facility incurred during the period between November 1, 2006 and the closing date of the financing for the project. In consideration for PVF’s payment of development costs, Rentech granted PVF an option to purchase an equity interest in the project for a purchase price equal to 20% of the equity contributions made to the project at the closing of the project financing, less the amount of development costs paid by PVF as of such time.

The net proceeds from PVF under this agreement were $7.9 million which was recorded as an advance for equity investment on the consolidated balance sheets. Although the Company’s board of directors decided in the first quarter of 2008 to suspend development of the conversion of the East Dubuque Facility, the liability for the advance for equity investment was maintained as the potential for another coal-to-liquids project was considered probable by the Company.

During the fiscal year ended September 30, 2011, the Company adopted a revised project development strategy for the commercialization of its alternative energy technologies, which included pursuing projects that were smaller and required less capital. Coal-to-liquids projects no longer fit the Company’s development strategy and development of a coal-to-liquids project was no longer probable. As a result, the liability was reversed as it was unlikely the Company would be required to fund the obligation in the future. The income related to the reversal of the liability was recorded in discontinued operations.

Note 14 — Commitments and Contingencies

Natural Gas Forward Purchase Contracts

The Company’s policy and practice are to enter into fixed-price forward purchase contracts for natural gas in conjunction with contracted product sales in order to substantially fix gross margin on those product sales contracts. The Company may also enter into a limited amount of additional fixed-price forward purchase contracts for natural gas in order to minimize monthly and seasonal gas price volatility. The Company occasionally enters into index-price contracts for the purchase of natural gas. The Company elects the normal purchase normal sale exemption for these derivative instruments. As such, the Company does not recognize the unrealized gains or losses related to these derivative instruments in its consolidated financial statements. The Company has entered into multiple natural gas forward purchase contracts for various delivery dates through March 31, 2014. Commitments for natural gas purchases consist of the following:


	As of December 31,
	2013		2012
	(in thousands, except weighted average rate)
MMBtus under fixed-price contracts		2,071		1,955
MMBtus under index-price contracts		81		143

Total MMBtus under contracts		2,152		2,098

Commitments to purchase natural gas	$	8,571	$	7,531
Weighted average rate per MMBtu based on the fixed rates and the indexes applicable to each contract	$	3.98	$	3.59

Subsequent to December 31, 2013 through February 28, 2014, the Company entered into additional fixed-quantity forward purchase contracts at fixed and indexed prices for various delivery dates through March 31, 2014. The total MMBtus associated with these additional forward purchase contracts are approximately 0.5 million and the total amount of the purchase commitments are approximately $4.5 million, resulting in a weighted average rate per MMBtu of approximately $9.27 in these new commitments. The Company is required to make additional prepayments under these forward purchase contracts in the event that market prices fall below the purchase prices in the contracts.

Operating Leases

The Company has various operating leases of real and personal property which expire through October 2028. Total lease expense, including month-to-month rent, common area maintenance charges and other rent related fees, for the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 was $2.0 million, $2.0 million, $0.5 million and $1.7 million, respectively.

Future minimum lease payments as of December 31, 2013 are as follows (in thousands):


For the Calendar Years Ending December 31,
2014	$	3,263
2015		3,610
2016		2,657
2017		2,117
2018 and thereafter		14,874

	$	26,521

Contractual Obligations

Pasadena

On April 17, 2013, the Company entered into an engineering, procurement and construction contract (the “EPC Contract”) with Abeinsa Abener Teyma General Partnership (“Abeinsa”). The EPC Contract provides for Abeinsa to be the contractor on the Company’s power generation project at the Pasadena Facility. The value of the contract is approximately $25.0 million and the project is expected to be completed by the fourth quarter of 2014.

Wood Pellets

On April 30, 2013, the Company entered into a ten-year off-take contract (the “Drax Contract”) with Drax Power Limited (“Drax”). Under the Drax Contract, the Company is required to sell to Drax the first 400,000 metric tonnes of wood pellets per year produced from the Wawa Project, with the first delivery under the contract scheduled for the end of calendar year 2014. In the event that the Company does not deliver wood pellets as required under the Drax Contract, the Rentech subsidiary that owns the Wawa Project is required to pay Drax an amount equal to the difference between the contract price for the wood pellets and the price of any wood pellets Drax purchases in replacement. Rentech has guaranteed this obligation in an amount not to exceed $20.0 million.

For the Atikokan Project, the Company entered into a ten-year “take-or-pay” contract (the “OPG Contract”) with Ontario Power Generation (“OPG”) under which the Company is required to deliver 45,000 metric tonnes of wood pellets annually starting in 2014. OPG has the option to increase the amount of wood pellets the Company is required to deliver up to 90,000 metric tonnes annually. The Company expects that wood pellets produced at the Atikokan Project not purchased by OPG may be sold to Drax or marketed elsewhere. The Company expects that its initial deliveries to OPG will consist of wood pellets produced at the Atikokan Project during its early commissioning phase along with wood pellets purchased from third party suppliers.

The contracts with Drax and OPG are designed to minimize exposure to variable costs over the ten-year terms by passing-through to Drax and OPG increased costs resulting from certain changes in input prices, including general inflation, the price of fuel, and prices of wood supplied to the mills. However, such indexation may not exactly offset increases or decreases in the prices of inputs and the cost of transporting and handling wood pellets.

The Company has contracted with Canadian National (the “Canadian National Contract”) for all rail transportation of wood pellets from the Atikokan Project and the Wawa Project to the Port of Quebec for delivery to Drax. The Atikokan Project and the Wawa Project are located approximately 1,300 track miles and 1,100 track miles, respectively, from the Port of Quebec.

Under the Canadian National Contract, the Company has committed to transport a minimum of 1,500 rail carloads during the months of January 2014 through December 2014, and 3,600 rail carloads annually thereafter for the duration of the long-term contract. Delivery shortfalls would result in a $1,000 per rail car penalty. Under the Drax Contract, the Company is responsible for the transportation of the wood pellets to the Port of Quebec. Drax is obligated to take delivery of the wood pellets on a FOB shipping point basis. Under the OPG Contract, OPG is obligated to take delivery of the Atikokan Project’s product on a FOB basis at the Atikokan Project.

On November 25, 2013, the Company entered into a one-year wood pellet purchase contract (the “KD Contract”) with KD Quality Pellets. Under the KD Contract, the Company committed to purchase between 15,000 and 20,000 metric tonnes of wood pellets between December 1, 2013 and June 30, 2014. The KD Contract provides the Company with an option to extend the term of the agreement to five years. The Company may use the wood pellets that it purchases under the KD Contract to cover shortfalls in production during commissioning of the Atikokan Project, so that it meets its delivery commitments under an off-take contract with Ontario Power Generation. Any wood pellets that the Company purchases under the KD Contract and do not sell to OPG may be aggregated and sold to other consumers, including Drax.

Litigation

The Company is party to litigation from time to time in the normal course of business. The Company accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where the Company determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss, if such estimate can be made. While the outcome of the Company’s current matters are not estimable or probable, the Company maintains insurance to cover certain actions and believes that resolution of its current litigation matters will not have a material adverse effect on the Company.

Regulation

The Company’s business is subject to extensive and frequently changing federal, state and local, environmental, health and safety regulations governing a wide range of matters, including the emission of air pollutants, the release of hazardous substances into the environment, the treatment and discharge of waste water and the storage, handling, use and transportation of the Company’s fertilizer products, raw materials, and other substances that are part of our operations. These laws include the Clean Air Act (the “CAA”), the federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, and various other federal, state and local laws and regulations. The laws and regulations to which the Company is subject are complex, change frequently and have tended to become more stringent over time. The ultimate impact on the Company’s business of complying with existing laws and regulations is not always clearly known or determinable due in part to the fact that the Company’s operations may change over time and certain implementing regulations for laws, such as the CAA, have not yet been finalized, are under governmental or judicial review or are being revised. These laws and regulations could result in increased capital, operating and compliance costs.

The Company entered into a settlement agreement with the Illinois Environmental Protection Agency in August 2013 requiring it to connect a device at the East Dubuque Facility to an ammonia safety flare by December 1, 2015. The Company estimates the cost of the project required by the settlement agreement as being approximately $300,000.

Note 15 — Stockholders’ Equity

Shelf Registration Statement

On July 9, 2013, the Company filed a shelf registration statement with the Securities and Exchange Commission, which allows it from time to time, in one or more offerings, to offer and sell up to $200.0 million in aggregate initial offering price of debt securities, common stock, preferred stock, depositary shares, warrants, rights to purchase shares of common stock and/or any of the other registered securities or units of any of the other registered securities.

Special Cash Distribution

On December 27, 2012, the Company paid a special one-time distribution of $0.19 per common share, to its shareholders of record as of the close of business on December 20, 2012 (the “Special Distribution”). In connection with the Special Distribution and in accordance with and pursuant to the Company’s various equity plans, the Company equitably adjusted its outstanding stock options, restricted stock units and performance stock units, as follows: (i) the exercise price of each outstanding stock option and the number of shares subject to each option were adjusted to reflect the impact of the Special Distribution, while preserving the aggregate spread of the options (i.e., the difference between the aggregate fair market value of the shares underlying the option and the aggregate exercise price for such shares); (ii) holders of time-vesting restricted stock units (“RSUs”) received a distribution equivalent distribution of $0.19 per RSU on December 27, 2012, (iii) holders of performance-vesting restricted stock units (“PSUs”) became eligible to receive $0.19 per PSU, payable, in the case of any unvested PSUs, only upon the subsequent vesting of the PSUs, and (iv) for purposes of determining whether the performance vesting requirement of a $3.00 weighted average closing share price over a trailing thirty-day period has been met for outstanding PSUs, $0.19 per share is added to the closing price for each day occurring on or after December 18, 2012. The Company did not record any incremental stock-based compensation in connection with the adjustment of stock options, payment of distributions on the RSUs and accrual of distributions on the PSUs. Some of the PSUs vested in January 2013 and the Special Distributions related to such PSUs were paid. There is still approximately $0.3 million which will be paid when the remaining PSUs vest. The Special Distribution payments were approximately $43.3 million in 2012, and $0.5 million in 2013, for a total of approximately $43.8 million.

Common Stock

In February 2012, the board of directors (the “Board”) of Rentech authorized the repurchase of up to $25.0 million, exclusive of commissions, of outstanding shares of its common stock over the subsequent 12-month period. The share repurchase program took effect in March 2012. As of December 31, 2012, Rentech had repurchased approximately 9.1 million shares of its common stock under the program for an aggregate purchase price of approximately $16.4 million. Share repurchases under this program were funded by Rentech’s available cash. No shares were acquired subsequent to December 31, 2012 and the share repurchase program expired.

On April 22, 2013, Rentech announced that the Board authorized the repurchase of up to $25.0 million, exclusive of commissions, of outstanding shares of its common stock through December 31, 2013. No shares were acquired through December 31, 2013 and the share purchase program has expired.

On December 28, 2011 the Company entered into Amendment No. 2 (the “Amendment”) to the Merger Agreement dated June 23, 2009 with Milton Farris, as Stockholder Representative, John A. Williams and certain other former stockholders of SilvaGas, a subsidiary of the Company in the Energy technology segment. The Amendment provided for the release of the approximately 3.4 million shares held in escrow and payment of 2.0 million shares of the Company’s common stock as final consideration as contemplated in the Merger Agreement. The issuance of the 2.0 million shares was recorded as an increase in the value of the SilvaGas patents in accordance with accounting standards for business combinations in effect when the Merger Agreement was executed.

Preferred Stock / Tax Benefit Preservation Plan

On August 5, 2011, the Board approved a Tax Benefit Preservation Plan between the Company and Computershare Trust Company, N.A., as rights agent (as amended from time to time, the “Plan”).

The Company has accumulated substantial operating losses. By adopting the Plan, the Board is seeking to protect the Company’s ability to carry forward its net operating losses (collectively, “NOLs”). For federal and state income tax purposes, the Company may “carry forward” NOLs in certain circumstances to offset current and future taxable income, which will reduce future federal and state income tax liability, subject to certain requirements and restrictions. However, if the Company were to experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code (the “Code”), its ability to utilize these NOLs to offset future taxable income could be significantly limited. Generally, an “ownership change” would occur if the percentage of the Company’s stock owned by one or more “five percent stockholders” increases by more than fifty percentage points over the lowest percentage of stock owned by such stockholders at any time during the prior three-year period.

The Plan is intended to act as a deterrent to any person acquiring 4.99% or more of the outstanding shares of the Company’s common stock or any existing 4.99% or greater holder from acquiring more than an additional 1% of then outstanding common stock, in each case, without the approval of the Board and to thus mitigate the threat that stock ownership changes present to the Company’s NOL. The Plan includes procedures whereby the Board will consider requests to exempt certain acquisitions of common stock from the applicable ownership trigger if the Board determines that the acquisition will not limit or impair the availability of the NOLs to the Company.

In connection with its adoption of the Plan, the Board declared a dividend of one preferred stock purchase right (individually, a “Right” and collectively, the “Rights”) for each share of common stock of the Company outstanding at the close of business on August 19, 2011 (the “Record Date”). Each Right entitles the registered holder, after the Rights become exercisable and until expiration, to purchase from the Company one ten-thousandth of a share of the Company’s Series D Junior Participating Preferred Stock, par value $10.00 per share (the “Preferred Stock”), at a price of $3.75 per one ten-thousandth of a share of Preferred Stock, subject to certain anti-dilution adjustments (the “Purchase Price”).

One Right was distributed to stockholders of the Company for each share of common stock owned of record by them at the close of business on August 19, 2011. As long as the Rights are attached to the common stock, the Company will issue one Right with each new share of common stock so that all such shares will have attached Rights. The Company has reserved 45,000 shares of Preferred Stock for issuance upon exercise of the Rights.

The Rights will expire, unless earlier redeemed or exchanged by the Company or terminated, on the earliest to occur of: (i) August 5, 2014, subject to the Company’s right to extend such date, or (ii) the time at which the Board determines that the NOLs are fully utilized or no longer available under Section 382 of the Code or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the NOLs, or materially impair the amount of the NOLs that could be used by the Company in any particular time period, for applicable tax purposes. The Rights do not have any voting rights.

Long-Term Incentive Equity Awards

2009 Awards and Options

In the fiscal year ended September 30, 2009, ten percent (10%) of the cash bonus awards for the named executive officers was allocated to purchase vested restricted stock units in December 2009 pursuant to the management stock purchase plan. The Company matched these awards with an equal number of restricted stock units that vested on December 10, 2012, subject to the recipient’s continued employment with the Company.

In the fiscal year ended September 30, 2011, approximately 3.0 million options were awarded to a group of employees.

The Board and its compensation committee (the “Compensation Committee”) approved long-term incentive equity awards for a group of its officers including its named executive officers effective November 17, 2009. The awards include both restricted stock units that may vest upon the achievement of certain performance targets, and restricted stock units that vest over time. The awards are intended to balance the objectives of retention, equity ownership by management, and achievement of performance targets. Vesting of the performance awards is tied to milestones related to the development, construction and operation of the Company’s proposed renewable synthetic fuels and power project in Rialto, California or another comparable project designated by the Compensation Committee. In the fourth quarter of the fiscal year ended September 30, 2011, the Company determined that the Rialto Project would not be developed. Previously accrued compensation expense of $1.9 million for performance based restricted stock units tied to Rialto Project milestones was reversed and is included in selling, general and administrative expense.

The November 2009 long-term incentive equity awards also include a time vesting restricted stock unit award, granted to a group of employees, that vests over a three year period with one-third of the restricted stock units vesting on each of the first three anniversaries of November 17, 2009. The time vesting awards are subject to the recipient’s continued employment with the Company, provided that a recipient’s award may vest upon (i) termination without cause related to a change in control or (ii) death or disability.

Performance Awards 2011 – 2013

Two types of performance awards were granted in December 2011, 2012 and 2013. For the December 2012 and 2013 awards, vesting was based on total shareholder return over a three-year period.

For the December 2011 performance awards, vesting was based on a price benchmark for the shares of Rentech. The performance awards vested in full on the first date occurring on or prior to October 12, 2014 on which the Company’s volume weighted average share price for any 30-day period equaled or exceeded $3.00. The $3.00 threshold was calculated by using the normal closing share price for each day in the thirty day period that was prior to the ex-dividend date and using the closing share price plus the Special Distribution of $0.19 per share for the ex-dividend date and each day after that. These awards vested in January 2013.

The performance awards granted during the calendar year ended December 31, 2013 and 2012 vest equally over a three-year period from grant date based on achieving a certain total shareholder return on the Company’s stock on each measurement date plus the recipient’s continued employment with Company.

Time Vested Awards 2011 – 2013

Time vested restricted stock awards of approximately 2.0 million, 1.1 million, 3.5 million and 2.2 million were issued during the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011. Of the 3.5 million awards issued during the three months ended December 31, 2011, 2.0 million of these awards were to reward executives for their success in completing the Offering and to incentivize these executives with respect to the additional demands that will be placed upon them in connection with RNP becoming a publicly traded company. All the awards vest over a three year period and vesting is subject to the recipient’s continued employment with the Company.

During the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, the Company issued the following performance shares and restricted stock units:


	Number of Awards
	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013		2012		2011		2011
Type of Award
Performance awards		3,005,000		1,963,000		2,960,000		—
Time-vested awards		1,994,000		1,136,000		3,508,000		2,195,000

Total		4,999,000		3,099,000		6,468,000		2,195,000

Long-Term Incentive Equity Awards – RNP

On November 2, 2011, the board of directors of the General Partner adopted the Rentech Nitrogen Partners, L.P. 2011 Long-Term Incentive Plan (the “2011 LTIP”) to provide awards of RNP’s units. The General Partner’s officers, employees, consultants and non-employee directors, as well as other key employees of the Company, the indirect parent of the General Partner, and certain of RNP’s other affiliates who make significant contributions to its business, are eligible to receive awards under the 2011 LTIP, thereby linking the recipients’ compensation directly to RNP’s performance. The 2011 LTIP provides for the grant of unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights, profits interest units and other unit-based awards of RNP units. Subject to adjustment in the event of certain transactions or changes in capitalization, 3,825,000 common units may be delivered pursuant to awards under the 2011 LTIP.

Note 16 — Accounting for Equity Based Compensation

The accounting guidance requires all share-based payments, including grants of stock options, to be recognized in the statement of operations, based on their fair values. Stock based compensation expense for all fiscal periods is based on estimated grant-date fair value. Stock options generally vest over three years. As a result, compensation expense recorded during the period includes amortization related to grants during the period as well as prior grants. Some grants under the 2011 LTIP are marked-to market at each reporting date. Most grants have graded vesting provisions where an equal number of shares vest on each anniversary of the grant date. The Company allocates the total compensation cost on a straight-line attribution method over the requisite service period. Most grants vest upon the fulfillment of service conditions and have no performance or market-based vesting conditions. Certain grants of warrants and restricted stock units include share price driven vesting provisions. Stock based compensation expense that the Company records is included in selling, general and administrative expense. There was no tax benefit in periods reported herein from recording this non-cash expense as such benefits will be recorded upon utilization of the Company’s net operating losses.

During the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, charges associated with all equity-based grants were recorded as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013		2012		2011		2011
	(in thousands)
Compensation expense	$	5,319	$	7,357	$	1,015	$	1,063
Board compensation expense		603		591		50		604

Total compensation expense		5,922		7,948		1,065		1,667
Consulting expense		18		74		9		62

Total expense	$	5,940	$	8,022	$	1,074	$	1,729

Reduction to both basic and diluted earnings per share from compensation expense	$	0.03	$	0.04	$	—	$	0.01

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. The assumptions utilized to determine the fair value of options and warrants are indicated in the following table:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,	For the Fiscal Year Ended September 30,
	2013		2012		2011	2011
Risk-free interest rate		—		—	1.16% - 1.74%	1.55% - 2.69%
Expected volatility		—		—	104.0%	97.0% - 98.0%
Expected life (in years)		—		—	6.00 - 8.00	5.00 - 8.00
Dividend yield		—		—	0.0%	0.0%
Forfeiture rate		—		—	14.0%	0.0% - 8.0%

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the Company’s stock options. The Company used the last day of the month stock price over the last 54 months to calculate and project expected stock price volatility Expected volatility was assumed to equal historical volatility. The estimated expected term of the grant is based on the Company’s historical exercise experience. The Company included a forfeiture component in the pricing model on certain grants to employees, based on historical forfeiture rate for the grantees’ level employees.

The number of shares reserved and outstanding as of December 31, 2012 have been adjusted to reflect the increase of approximately 312,000 shares that resulted from adjustments resulting from the Special Distribution. The number of shares reserved, outstanding and available for issuance are as follows:


	Shares Reserved as of December 31,		Shares Underlying Outstanding Awards as of December 31,				Shares Available for Issuance as of December 31,
	2013		2013		2012		2013		2012
Name of Plan	(in thousands)
2005 Stock Option Plan		1,000		195		195		—		—
2006 Incentive Award Plan:
Stock options		8,000		1,338		1,710		—		67
Restricted stock units and performance share awards				1,322		1,745		—		—
2009 Incentive Award Plan:
Stock options		32,900		1,713		2,255		4,483		3,513
Restricted stock units and performance share awards				9,991		9,223		—		—
Adjustment for Special Distribution		312		244		312		—		—

		42,212		14,803		15,440		4,483		3,580
Restricted stock units not from a plan		1,225		17		33		—		—

		43,437		14,820		15,473		4,483		3,580

Stock Options

The Company has multiple stock option plans under which options have been granted to employees, including officers and directors of the Company, to purchase shares of the Company at a price not less than the fair market value of the Company’s common stock at the date the options were granted. Each of these plans allows the issuance of incentive stock options, within the meaning of the Code, and other options pursuant to the plan that constitute non-statutory options. Options under the Company’s 2005 Stock Option Plan generally expire five years from the date of grant or at an alternative date as determined by the committee of the Board that administers the plan. Options under the Company’s 2006 Incentive Award Plan and the 2009 Incentive Award Plan generally expire between three and ten years from the date of grant or at an alternative date as determined by the committee of the Board that administers the plan. Options under the Company’s 2005 Stock Option Plan, 2006 Incentive Award Plan and the 2009 Incentive Award Plan are generally exercisable on the grant date or a vesting schedule between one and three years from the grant date as determined by the committee of the Board that administers the plans.

During the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, charges associated with stock option grants were recorded as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013		2012		2011		2011
			(in thousands)
Compensation expense	$	516	$	658	$	216	$	632
Board compensation expense		—		—		—		129

Total compensation expense		516		658		216		761
Consulting expense		18		22		9		30

Total expense	$	534	$	680	$	225	$	791

Option transactions during the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 are summarized as follows:


	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at September 30, 2010		2,407,000		$	2.90
Granted		3,217,000			0.96
Exercised		—
Canceled / Expired		(689,000	)		2.06

Outstanding at September 30, 2011		4,935,000			1.75
Granted		50,000			1.58
Exercised		(32,000	)		0.95
Canceled / Expired		(281,000	)		3.67

Outstanding at December 31, 2011		4,672,000			1.64
Granted		—			—
Exercised		(276,000	)		1.10
Canceled / Expired		(236,000	)		1.89
Adjustment for Special Distribution		312,000

Outstanding at December 31, 2012		4,472,000			1.67	$	5,848,000
Granted		—			—
Exercised		(711,000	)		1.03
Canceled / Expired		(271,000	)		2.40

Outstanding at December 31, 2013		3,490,000		$	1.59	$	2,144,448

Options exercisable at December 31, 2013		3,436,000		$	1.60	$	2,110,045
Options exercisable at December 31, 2012		3,485,000		$	1.73
Options exercisable at December 31, 2011		2,739,000		$	2.11
Options exercisable at September 30, 2011		2,116,000		$	2.81
Weighted average fair value of options granted during the three months ended December 31, 2011				$	1.32
Weighted average fair value of options granted during the fiscal year ended September 30, 2011				$	0.78

The aggregate intrinsic value was calculated based on the difference between the Company’s stock price on December 31, 2013 and the exercise price of the outstanding shares, multiplied by the number of shares underlying outstanding awards as of December 31, 2013. The total intrinsic values of options exercised during the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 were $0.9 million, $0.3 million, $21,000 and $0, respectively.

As of December 31, 2013, there was $25,460 of total unrecognized compensation cost related to nonvested share-based compensation arrangements from previously granted stock options. This cost is expected to be recognized over a weighted-average period of 0.75 years.

The following information summarizes stock options outstanding and exercisable at December 31, 2013:


	Outstanding						Exercisable
			Weighted Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual Life		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		in Years		Price		Exercisable		Price
$0.56-$0.92		2,193,000		6.60	$	0.88		2,166,000	$	0.88
$0.96-$1.00		27,000		7.49		0.96		18,000		0.96
$1.12-$1.51		493,000		2.72		1.31		475,000		1.30
$2.07-$2.50		32,000		2.31		2.07		32,000		2.07
$3.50-$3.50		21,000		2.95		3.50		21,000		3.50
$3.87-$4.00		724,000		2.55		3.88		724,000		3.88

		3,490,000		5.16	$	1.60		3,436,000	$	1.60

Warrants

During fiscal 2005, the Company issued a warrant to Management Resource Center, Inc, an entity controlled by D. Hunt Ramsbottom, the Company’s President and CEO. During the last quarter of fiscal 2005, Mr. Ramsbottom assigned the warrant to East Cliff Advisors, LLC, an entity controlled by Mr. Ramsbottom. The warrant is for the purchase of 3.5 million shares of the Company’s common stock at an exercise price of $1.82 per share. The warrant has vested or will vest in the following incremental amounts upon such time as the Company’s stock reaches the stated closing prices for 12 consecutive trading days: 10% at $2.10 (vested); 15% at $2.75 (vested); 20% at $3.50 (vested); 25% at $4.25 (vested); and 30% at $5.25 (not vested). The Company recognizes compensation expense as the warrants vest, as the total number of shares to be granted under the warrant was not known on the grant date. In fiscal 2005, the Company accounted for the warrant under guidance for accounting for stock issued to employees due to the employer-employee relationship between the Company and Mr. Ramsbottom. Under the guidance applicable at the time, compensation cost would be recognized for stock based compensation granted to employees only when the exercise price of the Company’s stock options granted is less than the market price of the underlying common stock on the date of grant.

The original warrants covered 2,082,500 shares that had vested and 1,050,000 shares that had not vested. East Cliff Advisors assigned 262,500 unvested warrants to a third party and continued to hold 787,500 unvested warrants. In January 2009, the vesting terms and expiration for the warrants held by East Cliff Advisors, LLC were amended. As amended, with respect to the unvested warrants representing 787,500 shares, half of these warrants vested on December 31, 2011. The exercise price of the warrants remained at $1.82 per share. The expiration date for this half of the warrants was extended from August 4, 2010 to December 31, 2012. The warrants were excised during the calendar year ended December 31, 2012. The other 393,750 unvested warrants and the original vested 2,082,500 warrants expired on December 31, 2011.

During the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, charges associated with grants of warrants were recorded as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013		2012		2011		2011
					(in thousands)
Compensation expense	$	—	$	—	$	6	$	26
Board compensation expense		—		—		—		—

Total compensation expense	$	—	$	—	$	6	$	26

Warrant transactions during the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 are summarized as follows:


	Number of Shares			Weighted Average Exercise Price
Outstanding at September 30, 2010		12,596,000		$	1.89
Granted		1,980,000			0.99
Exercised		—			—
Canceled / Expired		—			—

Outstanding at September 30, 2011		14,576,000		$	1.77
Granted		—			—
Vested		394,000			1.82
Exercised		(2,464,000	)		0.91
Canceled / Expired		(2,082,000	)		1.82

Outstanding at December 31, 2011		10,424,000		$	1.96
Granted		—			—
Vested		—			—
Exercised		(5,156,000	)		1.27
Canceled / Expired		(4,018,000	)		3.28

Outstanding at December 31, 2012		1,250,000		$	0.57
Granted		—			—
Vested		—			—
Exercised		—			—
Canceled / Expired		—			—

Outstanding at December 31, 2013		1,250,000		$	0.57

Warrants exercisable at December 31, 2013		1,250,000		$	0.57
Warrants exercisable at December 31, 2012		1,250,000		$	0.57
Warrants exercisable at December 31, 2011		10,424,000		$	1.96
Warrants exercisable at September 30, 2011		14,576,000		$	1.77
Weighted average fair value of warrants granted during the fiscal year ended September 30, 2011				$	0.64

As of December 31, 2013, there was no unrecognized compensation cost related to share-based compensation arrangements from previously granted warrants.

The following information summarizes warrants outstanding and exercisable at December 31, 2013:

Outstanding

Exercisable

Weighted Average

Weighted

Remaining

Average

Number

Contractual Life

Exercise

Number

Exercise

Range of Exercise Prices

Outstanding

in Years

Price

Exercisable

Price

$0.57

1,250,000

9.25

0.57

1,250,000

0.57

Restricted Stock Units and Performance Share Awards

The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. In the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, the Company issued RSUs and Performance Share Awards to certain employees and directors as long-term incentives.

Most RSU agreements vest with the passage of time and include a three-year vesting period such that one-third will vest on each annual anniversary date of the commencement date of the agreement. Other RSU agreements contain vesting provisions based on performance against certain specific goals. The vesting of all RSUs is contingent on continued employment of the grantee. The vesting

of various RSUs are subject to partial or complete acceleration under certain circumstances, including termination without cause, end of employment for good reason or upon a change in control (in each case as defined in the agreement). In certain agreements, if the Company fails to offer to renew an employment agreement on competitive terms or if a termination occurs which would entitle the grantee to severance during the period of three months prior and two years after a change in control, the vesting of the restricted stock unit grant will accelerate.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite service period and charged to selling, general and administrative expense with a corresponding increase to additional paid-in capital. The compensation expense incurred by the Company for Performance Share Awards is based on the Monte Carlo valuation model. For the 2013 Performance Share Awards, the key assumptions used in the Monte Carlo valuation model were an expected volatility of 57.51%, a risk-free rate of interest of 0.64% and a dividend yield of 0.00%.

During the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, charges associated with RSUs and Performance Share Award grants were recorded as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013		2012		2011		2011
	(in thousands)
Compensation expense	$	4,803	$	6,699	$	793	$	405
Board compensation expense		202		190		50		75

Total compensation expense	$	5,005	$	6,889	$	843	$	480

RSU and Performance Share Award transactions during the calendar year ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 are summarized as follows:


	Number of Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at September 30, 2010		7,560,000			1.30
Granted		2,195,000			0.98
Vested and Settled in Shares		(1,212,000	)		1.35
Vested and Surrendered for Withholding Taxes Payable		(578,000	)		1.33
Canceled / Expired		(1,342,000	)		1.30

Outstanding at September 30, 2011		6,623,000			1.18
Granted		6,468,000			1.50
Vested and Settled in Shares		(739,000	)		1.08
Vested and Surrendered for Withholding Taxes Payable		(371,000	)		1.09
Canceled / Expired		(93,000	)		1.12

Outstanding at December 31, 2011		11,888,000			1.37
Granted		3,099,000			2.55
Vested and Settled in Shares		(2,080,000	)		1.35
Vested and Surrendered for Withholding Taxes Payable		(975,000	)		1.40
Canceled / Expired		(931,000	)		1.37

Outstanding at December 31, 2012		11,001,000			1.71	$	28,934,000
Granted		4,999,000			1.66
Vested and Settled in Shares		(2,680,000	)		1.49
Vested and Surrendered for Withholding Taxes Payable		(1,812,000	)		1.37
Canceled / Expired		(178,000	)		2.18

Outstanding at December 31, 2013		11,330,000			1.76	$	23,793,000

Of the 11,330,000 RSUs and Performance Share Awards outstanding at December 31, 2013, 1,322,000 and 9,991,000 were granted pursuant to the Company’s 2006 Incentive Award Plan and 2009 Incentive Award Plan, respectively. The other 17,000 RSUs were not granted pursuant to a stock option plan but were “inducement grants.” Of the 11,001,000 RSUs and Performance Share Awards outstanding at December 31, 2012, 1,745,000 and 9,223,000 were granted pursuant to the Company’s 2006 Incentive Award Plan and 2009 Incentive Award Plan, respectively. Of the 11,888,000 RSUs and Performance Share Awards outstanding at December 31, 2011, 2,567,000 and 8,963,000 were granted pursuant to the Company’s 2006 Incentive Award Plan and 2009 Incentive Award Plan, respectively. The other 358,000 RSUs were not granted pursuant to a stock option plan but were “inducement grants.” Of the 6,623,000 RSUs and Performance Share Awards outstanding at September 30, 2011, 1,812,000 and 4,228,000 were granted pursuant to the Company’s 2006 Incentive Award Plan and 2009 Incentive Award Plan, respectively. The other 583,000 RSUs were not granted pursuant to a stock option plan but were “inducement grants.”

As of December 31, 2013, there was $8.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements from previously granted RSUs and Performance Share Awards. That cost is expected to be recognized over a weighted-average period of 1.9 years.

The grant date fair value of RSUs and Performance Share Awards that vested during the calendar year ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 was $3.9 million, $4.2 million, $1.2 million and $2.4 million, respectively.

Stock Grants

During the calendar year ended December 31, 2013, the Company issued a total of 178,400 shares of stock to its directors, which were fully vested at date of grant. This resulted in stock-based compensation expense of $401,400 for the shares granted to the directors. During the calendar year ended December 31, 2012, the Company issued a total of 259,400 shares of stock which were fully vested at date of grant. Of this amount, 234,400 shares, which were evenly distributed, were granted to the directors and 25,000 shares were granted to a consultant. This resulted in stock-based compensation expense of $401,000 and $52,000 for the shares granted to the directors and consultant, respectively. During the three months ended December 31, 2011, the Company did not issue any grants of stock. During the fiscal year ended September 30, 2011, the Company issued a total of 465,000 shares of stock which were fully vested at date of grant. Of this amount, 440,000 shares, which were evenly distributed, were granted to the directors and 25,000 shares were granted to a consultant. This resulted in stock-based compensation expense of $400,000 and $32,000 for the shares granted to the directors and consultant, respectively.

2011 LTIP

Some grants under the 2011 LTIP are marked-to market at each reporting date. During the calendar years ended December 31, 2013 and 2012 and the three months ended December 31, 2011, charges associated with all equity-based grants issued by RNP under the 2011 LTIP were recorded as follows:


	For the Calendar Years Ended December 31,				For the Three Months Ended December 31,
	2013		2012		2011
	(in thousands)
Stock based compensation expense	$	1,460	$	2,827	$	63

Phantom unit transactions during the calendar years ended December 31, 2013 and 2012 and the three months ended December 31, 2011 are summarized as follows:


	Number of Shares			Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
Granted		163,388		$	18.40

Outstanding at December 31, 2011		163,388			18.40
Granted		54,059			34.86
Vested and Settled in Shares		(42,350	)		(15.68	)
Vested and Surrendered for Withholding Taxes Payable		(20,040	)		(18.40	)
Canceled / Expired		(119	)		(18.40	)

Outstanding at December 31, 2012		154,938		$	23.78		$	5,839,626
Granted		116,508			18.71
Vested and Settled in Shares		(49,409	)		(23.42	)
Vested and Surrendered for Withholding Taxes Payable		(27,127	)		(21.75	)
Canceled / Expired		(1,278	)		(35.14	)

Outstanding at December 31, 2013		193,632		$	20.97		$	3,407,929

During the calendar year ended December 31, 2013, RNP issued 116,508 unit-settled phantom units (which entitle the holder to distribution rights during the vesting period) covering RNP’s common units. 108,218 of the phantom units are time-vested awards that vest in three equal annual installments. 2,780 of the phantom units were time-vested awards issued to the directors that vested on the one-year anniversary of the Offering. The phantom unit grants resulted in unit-based compensation expense of $1.2 million for the calendar year ended December 31, 2013.

As of December 31, 2013, there was $3.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements from previously granted phantom units. That cost is expected to be recognized over a weighted-average period of 2.2 years.

During the calendar year ended December 31, 2013, RNP issued a total of 5,510 common units which were fully vested at date of grant. The common units were issued to the directors and resulted in unit-based compensation expense of $0.3 million.

Note 17 — Future Minimum Lease Receipts

The Company has certain wood chip processing, wood yard operations and wood pellet agreements, which contain embedded leases.

The following is a schedule by years of minimum future rentals on non-cancelable operating leases as of December 31, 2013 (in thousands):


For the Calendar Years Ending December 31,
2014	$	41,900
2015		90,951
2016		94,378
2017		91,629
2018		84,573

	$	403,431

Note 18 — Employee Benefit Plans

Defined Contribution Plans

The Company has a 401(k) plan. Most employees, excluding RNLLC’s union employees, who are at least 18 years of age are eligible to participate in the plan on the first of the month following 60 days and share in the employer matching contribution. The Company is currently matching 100% of the first 3% and 50% of the next 3% of the participant’s salary deferrals. The Company contributed $1.2 million, $1.0 million, $0.2 million and $0.9 million to the plans for the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011, respectively. Additionally, RNP has a savings and profit sharing plan for the benefit of qualified employees at the Pasadena Facility. The plan cost for the calendar year ended December 31, 2013 and for the period November 1, 2012 through December 31, 2012 was approximately $108,000 and $9,000 respectively.

Pension Plans

Reporting and disclosures related to pension and other postretirement benefit plans require that companies include an additional asset or liability on the balance sheet to reflect the funded status of retirement and other postretirement benefit plans, and a corresponding after-tax adjustment to accumulated other comprehensive income.

RNP has two noncontributory pension plans (the “Pension Plans”), which cover either hourly paid employees represented by collective bargaining agreements in effect at its Pasadena Facility or hourly employees at its Pasadena Facility who have 1,000 hours of service during a year of employment.

Postretirement Benefits

RNP has a postretirement benefit plan (the “Postretirement Plan”) for certain employees at its Pasadena Facility. The plan provides a fixed dollar amount to supplement payment of eligible medical expenses. The amount of the supplement under the plan is based on years of service and the type of coverage elected (single or family members and spouses). Participants are eligible for supplements at retirement after age 55 with at least 20 years of service to be paid until the attainment of age 65 or another disqualifying event, if earlier.

The Pension Plans and the Postretirement Plan were acquired as part of the Agrifos Acquisition. The following tables summarize the projected benefit obligation, the assets and the funded status of the Pension Plans and the Postretirement Plan at December 31, 2013 and 2012:


	As of December 31, 2013						As of December 31, 2012
	Pension			Postretirement			Pension			Postretirement
	(in thousands)
Projected benefit obligation
Benefit obligation at beginning of year	$	4,841		$	1,136		$	5,213		$	863
Service cost		137			43			29			4
Interest cost		194			43			31			5
Amendment		—			—			—			332
Actuarial (gain) loss		(528	)		(233	)		(412	)		(54	)
Actual benefit paid		(139	)		(136	)		(20	)		(14	)

Benefit obligation at end of year		4,505			853			4,841			1,136

Fair value of plan assets
Fair value of plan assets at beginning of year		4,333			—			4,279			—
Actual return on plan assets		624			—			74			—
Employer contributions		109			136			—			14
Actual benefit paid		(139	)		(136	)		(20	)		(14	)

Fair value of plan assets at end of year		4,927			—			4,333			—

Funded status at end of year		422			(853	)	$	(508	)	$	(1,136	)

Amounts recognized in the consolidated balance sheet
Noncurrent assets	$	422		$	—		$	—		$	—
Current liabilities		—			(86	)		—			(95	)
Noncurrent liabilities		—			(767	)		(508	)		(1,041	)

	$	422			(853	)	$	(508	)	$	(1,136	)

As of December 31, 2013 and 2012, the accumulated benefit obligation equaled the projected benefit obligation.

The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income are as follows for the calendar year ended December 31, 2013 and for the two-month period ended December 31, 2012:


	For the Calendar Year Ended December 31, 2013						For the Two-Month Period Ended December 31, 2012
	Pension			Postretirement			Pension			Postretirement
	(in thousands)
Net periodic benefit cost
Service cost	$	137		$	43		$	29		$	4
Interest cost		194			43			31			5
Expected return on plan assets		(260	)		—			(42	)		—
Amortization of prior service cost		—			22			—			—
Amortization of net gain		(5	)		—			—			—

Net periodic pension costs	$	66		$	108		$	18		$	9

Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial gain	$	(893	)	$	(233	)	$	(444	)	$	(54	)
Recognized actuarial gain		5			—			—			—
Prior service cost		—			—			—			332
Recognized prior service cost		—			(22	)		—			—

Total recognized in other comprehensive (income) loss	$	(888	)	$	(255	)	$	(444	)	$	278

Accumulated other comprehensive income (loss) at December 31, 2013 and 2012 consists of the following amounts that have not yet been recognized in net periodic benefit cost:


	As of December 31, 2013						As of December 31, 2012
	Pension			Postretirement			Pension			Postretirement
	(in thousands)
Net (gain) loss	$	(1,332	)	$	(287	)	$	(444	)	$	(54	)
Prior service costs		—			310			—			332

	$	(1,332	)	$	23		$	(444	)	$	278

The expected portion of the accumulated other comprehensive (income) loss expected to be recognized as a component of net periodic benefit cost in 2014 is approximately $(56,000) and $6,000 for the Pension Plans and Postretirement Plan, respectively.

Weighted average assumptions used to determine benefit obligations:


	As of December 31, 2013						As of December 31, 2012
	Pension			Postretirement			Pension			Postretirement
Discount rate		4.8	%		4.7	%		4.1	%		4.0	%

Weighted average assumptions used to determine net pension cost:


	For the Year Ended December 31, 2013						For the Year Ended December 31, 2012
	Pension			Postretirement			Pension			Postretirement
Discount rate		4.1	%		4.0	%		3.6	%		3.6	%
Expected rate of return on assets		6.0	%		N/A			6.0	%		N/A


	Postretirement As of December 31,
	2013			2012
Health care cost trend: initial		7.25	%		7.50	%
Health care cost trend: ultimate		5.00	%		5.00	%
Year ultimate reached		2023			2023

As the Postretirement Plan provides a fixed dollar amount to participants, increasing or decreasing the health care cost trend rate by 1% would not have a material impact on the December 31, 2013 and 2012 obligation.


	As of December 31, 2013						As of December 31, 2012
	Target Allocation			Percentage of Pension Plan Assets 2013			Target Allocation			Percentage of Pension Plan Assets 2012
Asset Category
Equity securities		50	%		52	%		50	%		51	%
Debt securities		50	%		48	%		50	%		49	%

The pension plan assets, which are deemed to be Level 1, measured at fair value consist of the following at December 31, 2013 and 2012 (in thousands):


	As of December 31,
	2013		2012
Mutual funds — equity	$	2,560	$	2,193
Mutual funds — fixed income		2,356		2,134
Cash		11		6

Fair value of plan assets	$	4,927	$	4,333

RNP expects to contribute $0 and approximately $88,000 to Pension Plans and a Postretirement Plan, respectively, in 2014.

Expected Future Benefit Payments:


	Pension		Postretirement
	(in thousands)
2014	$	193	$	88
2015		206		79
2016		211		58
2017		223		68
2018		228		63
2019-2023		1,259		226

Note 19 — Income Taxes

Accounting guidance requires deferred tax assets and liabilities to be recognized for temporary differences between the tax basis and financial reporting basis of assets and liabilities, computed at the expected tax rates for the periods in which the assets or liabilities will be realized, as well as for the expected tax benefit of net operating loss and tax credit carryforwards. A full valuation allowance was recorded against the deferred tax assets at December 31, 2013, 2012 and 2011 for the Company’s United States operations.

The realization of deferred income tax assets is dependent on the generation of taxable income in appropriate jurisdictions during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management determines if it is more likely than not that the Company will not fully realize the benefits of these deductible differences in the United States. As of December 31, 2013, the most significant factors considered in determining the realizability of these deferred tax assets were the Company’s profitability over the past three years and the projected future taxable income of the new acquired companies. Management believes that at this point in time, it is more likely than not that the deferred tax assets will not be fully realized. The Company therefore has recorded a valuation allowance against its deferred tax assets at December 31, 2013.

As of December 31, 2013, Fulghum owned approximately 88% and 87% of the equity interests in the subsidiaries located in Chile and Uruguay, respectively. Upon acquisition, Fulghum’s management concluded the earnings of these foreign subsidiaries should be taxed at the full United States tax rate and are not permanently reinvested under accounting guidance. As such, the Company provided for a deferred tax liability on the book-tax basis difference through purchase price accounting.

On May 1, 2013, the Company acquired all of the capital stock of Fulghum. The Company’s purchase price allocation as of May 1, 2013 includes $35.3 million of deferred income taxes. Long-term deferred tax liabilities and other tax liabilities result from identifiable tangible and intangible assets fair value adjustments. These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist. As part of purchase accounting for Fulghum, the Company recorded additional deferred tax liabilities of approximately $15.8 million attributable to identifiable tangible and intangible assets. As of December 31, 2013, deferred tax liabilities related to Fulghum are approximately $37.8 million. In 2013 the Company released a valuation reserve of approximately $27.4 million resulting from recording of deferred tax liabilities of Fulghum.

The income tax provision (benefit) for continuing operations for the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and the fiscal year ended September 30, 2011 was as follows:


	For the Calendar Years Ended December 31,					For the Three Months Ended December 31,		For the Fiscal Year Ended September 30,
	2013			2012		2011		2011
	(in thousands)
Current:
Federal	$	66		$	711	$	—	$	690
State		644			3,664		1		3,179
Foreign		114			—		—		—

Total Current		824			4,375		1		3,869

Deferred:
Federal	$	(22,038	)	$	—	$	—	$	—
State		(5,092	)		—		—		—
Foreign		—			—		—		—

Total Deferred		(27,130	)		—		—		—

	$	(26,306	)	$	4,375	$	1	$	3,869

A reconciliation of the income taxes at the federal statutory rate to the effective tax rate for continuing operations is as follows:


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,			For the Fiscal Year Ended September 30,
	2013			2012			2011			2011
	(in thousands)
Federal income tax benefit calculated at the federal statutory rate	$	(6,667	)	$	24,431		$	(416	)	$	8,121
Impact of foreign earnings		669			—			—			—
State income tax benefit net of federal benefit		(770	)		(859	)		3,882			(3,070	)
Permanent differences, other		316			357			131			419
Return to provision		467			—			—			—
Change in state tax rate		—			(1,006	)		—			(957	)
Minority interest, net of state tax benefit		685			(13,124	)		—			—
Partnership state taxes		(96	)		303			—			—
Basis difference in foreign subsidiaries		374			—			—			—
Partnership basis difference		(1,022	)		(3,439	)		93,527			—
Change in valuation allowance		(20,330	)		(2,288	)		(97,123	)		(644	)
Other items		68			—			—			—

Income tax expense from continuing operations	$	(26,306	)	$	4,375		$	1		$	3,869

The components of the net deferred tax liability and net deferred tax asset as of December 31, 2013 and 2012 are as follows:


	As of December 31,
	2013			2012
	(in thousands)
Current:
Accruals for financial statement purposes not allowed for income taxes	$	2,626		$	2,511
Basis difference in prepaid expenses		(344	)		(366	)
Inventory		—			84
Unrealized gain		(12	)		—
Valuation allowance		(1,130	)		(1,463	)

Current, net		1,140			766
Long-Term:
Net operating loss and AMT credit carryforwards	$	55,066		$	42,810
R&D credit carryforward		6,191			—
Basis difference relating to intangibles		(11,336	)		722
Basis difference in property, plant and equipment		(11,421	)		15,770
Stock option exercises		3,344			6,309
Basis difference in foreign subsidiaries		(6,142	)		—
Basis difference in partnership interest		(19,051	)		(29,375	)
Other items		1,652			663
Valuation allowance		(27,574	)		(37,665	)

Long-Term, net	$	(9,271	)	$	(766	)

Total deferred tax liabilities, net	$	(8,131	)	$	—

As of December 31, 2013, the Company had the following available carryforwards and tax attributes to offset future taxable income:


Description	Amount		Expiration
	(in thousands)
Net Operating Losses – Federal	$	136,057		2020 - 2033
Net Operating Losses – States (Post-Apportionment and Pre-tax)
Alabama	$	749		2014 - 2029
California		12,845		2015 - 2031
Colorado		3,363		2027 - 2034
Georgia		567		2021 - 2029
Hawaii		6,101		2024 - 2034
Illinois		93,836		2019 - 2026
Louisiana		66		2020 - 2029
Mississippi		11,765		2019 - 2034
Virginia		161		2034

	$	129,453

R&D federal credit	$	6,981		2016 - 2022
Alternative minimum tax credit	$	1,471		No Expiration

Tax Contingencies

Accounting guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance requires that the Company recognize in its consolidated financial statements, only those tax positions that are “more-likely-than-not” of being sustained as of the adoption date, based on the technical merits of the position. The Company performed a comprehensive review of its material tax positions in accordance with accounting guidance.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	As of December 31,
	2013			2012		2011
	(in thousands)
Reconciliation of Unrecognized Tax Liability
Balance at beginning of year	$	2,754		$	2,754	$	2,754
Additions based on tax positions taken during a prior period		3,479			—		—
Additions based on tax positions related to the current period		—			—		—
Reductions based on tax positions related to prior years		(1,965	)		—		—
Settlements with taxing authorities		—			—		—
Lapse of statutes of limitations		—			—		—

Balance at end of year	$	4,268		$	2,754	$	2,754

The additions based on tax positions taken during a prior period relate to the acquisition of Fulghum and to positions taken with respect to the Company’s foreign subsidiary in Uruguay and Chile. The Company is indemnified for these positions by the seller in the Fulghum Acquisition. The reduction in the unrecognized tax liability relates to the Company’s R&D credits. The Company completed an analysis of its R&D expenditures for previous years, and as a result was able to reduce its unrecognized tax liability for certain credits that were deemed to meet the more-likely-than-not threshold.

Of the approximately $4.3 million of unrecognized tax benefits, approximately $1.5 million, if recognized, would have an impact on the effective tax rate. The remaining approximately $2.8 million would not have an impact on the effective tax rate as the Company is indemnified by the seller. The Company believes that it is possible that the unrecognized tax benefits will significantly decrease within the next 12 months, but that the reductions would not impact the Company’s effective tax rate. The amount that is expected to decrease relates to the exposures in connection with the foreign subsidiaries of Fulghum mentioned above. The Company expects that one of the uncertain positions related to Fulghum Uruguay will be settled with the Uruguay taxing authorities. The amount of tax related to this position is approximately $0.9 million. In addition, it is expected that an uncertainty related to an intercompany loan with Fulghum Chile will be remedied by the fall of 2014. The amount related to this uncertainty is approximately $0.7 million. The Company and its subsidiaries are subject to the following material taxing jurisdictions: United States federal, California, Colorado, Illinois, Louisiana, Mississippi and Texas. The tax years that remain open to examination by the United States federal jurisdiction (not including the current year) are years 2010 through 2012; the tax years that remain open to examination by the Illinois, Louisiana and Mississippi jurisdictions are years 2009 through 2012; the tax years that remain open to examination (not including the current year) by the California, Colorado and Texas jurisdictions are years 2008 through 2012. As a result of the Fulghum Acquisition, the Company is now subject to taxation in Alabama, Arkansas, Florida, Maine, North Carolina and South Carolina in the United States as well as in Chile and Uruguay.

In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. The Company has not accrued any interest and penalties related to uncertain tax positions in the balance sheet or statement of operations as a result of the Company’s net operating loss position.

While management believes the Company has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from the Company’s accrued positions as a result of uncertain and complex application of tax regulations. Additionally, the recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently includes subjectivity. Accordingly, additional provisions on federal and state tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.

Note 20 — Segment Information

The Company operated in two business segments prior to the Fulghum Acquisition, the Atikokan Project, the Wawa Project and the winding down of the PDU. The Company now operates in four business segments, as described below. The operations of the Pasadena Facility and Fulghum are included in the Company’s historical results of operations only from the date of the closing of the Agrifos Acquisition and the Fulghum Acquisition, which were November 1, 2012 and May 1, 2013, respectively. Results of the energy technologies segment are accounted for as discontinued operations for all periods presented.

•

East Dubuque — The operations of the East Dubuque Facility, which produces primarily ammonia and UAN.

•

Pasadena — The operations of the Pasadena Facility, which produces primarily ammonium sulfate.

•

Fulghum Fibres — The operations of Fulghum, which provides wood fibre processing services and wood yard operations, sells wood chips to the pulp, paper and packaging industry, and owns and manages forestland and sells bark to industrial consumers in South America.

•

Wood pellets — This segment includes wood pellet projects owned by the Company, currently the Atikokan Project and Wawa Project, equity in the Rentech/Graanul JV and wood pellet development costs. The wood pellet development costs represent the Company’s personnel costs for employees dedicated to the wood pellet business and other supporting third party costs.

The Company’s reportable operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measure is segment-operating income.


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,					For the Fiscal Year Ended September 30,
	2013			2012			2011			2010		2011
	(in thousands)
										(unaudited)
Revenues
East Dubuque	$	177,700		$	224,205		$	63,014		$	42,962	$	179,857
Pasadena		133,675			37,430			—			—		—
Fulghum Fibres		62,974			—			—			—		—

Total revenues	$	374,349		$	261,635		$	63,014		$	42,962	$	179,857

Gross profit (loss)
East Dubuque	$	80,883		$	133,543		$	25,554		$	16,127	$	76,571
Pasadena		(9,529	)		(1,704	)		—			—		—
Fulghum Fibres		12,032			—			—			—		—

Total gross profit	$	83,386		$	131,839		$	25,554		$	16,127	$	76,571

Selling, general and administrative expense
East Dubuque	$	4,576		$	6,242		$	3,336		$	1,431	$	5,786
Pasadena		4,764			361			—			—		—
Fulghum Fibres		3,754			—			—			—		—
Wood pellets		5,479			1,919			—			—		—

Total selling, general and administrative expense	$	18,573		$	8,522		$	3,336		$	1,431	$	5,786

Depreciation and amortization
East Dubuque	$	191		$	807		$	77		$	112	$	409
Pasadena		3,886			583			—			—		—
Fulghum Fibres¹		(1,708	)		—			—			—		—
Wood pellets		26			—			—			—		—

Total depreciation and amortization recorded in operating expenses	$	2,395		$	1,390		$	77		$	112	$	409

East Dubuque		9,048			10,690			3,210			2,489		9,611
Pasadena		4,187			380			—			—		—
Fulghum Fibres		4,836			—			—			—		—

Total depreciation and amortization expense recorded in cost of sales		18,071			11,070			3,210			2,489		9,611

Total depreciation and amortization	$	20,466		$	12,460		$	3,287		$	2,601	$	10,020

Other operating (income) expenses
East Dubuque	$	806		$	510		$	(507	)	$	—	$	522
Pasadena		30,029			—			—			—		—
Fulghum Fibres		72			—			—			—		—
Wood pellets		—			—			—			—		—

Total other operating expenses	$	30,907		$	510		$	(507	)	$	—	$	522

Operating income (loss)
East Dubuque	$	75,310		$	125,984		$	22,648		$	14,584	$	69,854
Pasadena		(48,208	)		(2,648	)		—			—		—
Fulghum Fibres		9,914			—			—			—		—
Wood pellets		(5,505	)		(1,919	)		—			—		—

Total segment operating income (loss)	$	31,511		$	121,417		$	22,648		$	14,584	$	69,854

Interest (income) expense
East Dubuque	$	—		$	194		$	1,947		$	2,912	$	13,752
Pasadena		8			—			—			—		—
Fulghum Fibres		1,755			—			—			—		—

Total interest (income) expense	$	1,763		$	194		$	1,947		$	2,912	$	13,752

Net income (loss)
East Dubuque	$	75,244		$	123,721		$	10,455		$	7,096	$	42,341
Pasadena		(48,357	)		(2,648	)		—			—		—


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,						For the Fiscal Year Ended September 30,
	2013			2012			2011			2010			2011
	(in thousands)
										(unaudited)
Fulghum Fibres		6,967			—			—			—			—
Wood pellets		(5,180	)		(1,919	)		—			—			—

Total segment net income	$	28,674		$	119,154		$	10,455		$	7,096		$	42,341

Reconciliation of segment net income to consolidated net income (loss):
Segment net income	$	28,674		$	119,154		$	10,455		$	7,096		$	42,341
RNP – partnership and unallocated expenses recorded as selling, general and administrative expenses		(7,945	)		(11,773	)		—			—			—
RNP – partnership and unallocated expenses recorded as other income (expense)		(1,081	)		232			—			—			—
RNP – unallocated interest expense and loss on interest rate swaps		(14,096	)		(2,226	)		—			—			—
RNP – income tax benefit (expense)		303			(303	)		—			—			—
Corporate and unallocated expenses recorded as selling, general and administrative expenses		(24,849	)		(23,432	)		(5,515	)		(5,038	)		(16,056	)
Corporate and unallocated depreciation and amortization expense		(596	)		(754	)		(165	)		(123	)		(506	)
Corporate and unallocated income (expenses) recorded as other income (expense)		19			(2,708	)		32			22			63
Corporate and unallocated interest expense		(532	)		(9,055	)		(2,101	)		(765	)		(2,972	)
Corporate income tax benefit (expense)		26,747			(4,072	)		—			—			(3,865	)
Loss from discontinued operations, net of tax		(6,606	)		(37,376	)		(6,804	)		(7,076	)		(84,387	)

Consolidated net income (loss)	$	38		$	27,687		$	(4,098	)	$	(5,884	)	$	(65,382	)

¹	Amortization of unfavorable processing agreements exceeds amortization of favorable processing agreements resulting in a credit in depreciation and amortization for Fulghum.


	As of December 31,
	2013		2012
	(in thousands)
Total assets
East Dubuque	$	175,430	$	125,100
Pasadena		188,836		191,279
Fulghum Fibres		188,397		—
Wood pellets		42,089		58

Total segment assets	$	594,752	$	316,437

Reconciliation of segment total assets to consolidated total assets:
Segment total assets	$	594,752	$	316,437
RNP – partnership and other		42,078		60,266
Corporate and other		62,090		92,578
Discontinued operations		4,670		9,921

Consolidated total assets	$	703,590	$	479,202

Partnership and unallocated expenses represent costs that relate directly to RNP and its subsidiaries but are not allocated to a segment. Partnership and unallocated expenses recorded in selling, general and administrative expenses consist primarily of business development expenses for RNP; unit-based compensation expense for executives of RNP; services from the Company for executive, legal, finance, accounting, human resources and investor relations support in accordance with the services agreement between RNP and the Company; audit and tax fees; legal fees; compensation for RNP partnership level personnel; board expense; and certain insurance costs. Partnership and unallocated expenses recorded in other expense represent primarily loss on debt extinguishment partially offset by fair value adjustment to earn-out consideration. Unallocated interest expense represents primarily interest expense on the RNP Notes. Corporate and unallocated expenses represent costs that relate directly to Rentech and its non-RNP subsidiaries but are not allocated to a segment. Corporate and unallocated expenses recorded in operating expenses consist primarily of selling, general and administrative expenses and depreciation and amortization. For the years ended December 31, 2013 and 2012, corporate and unallocated interest expense consists primarily of interest expense on the RNHI Revolving Loan and the convertible debt, which was completely redeemed for cash on December 31, 2012, respectively.

The Company’s revenue by geographic area, based on where the customer takes title to the product, was as follows:


	For Calendar Years Ended December 31,
	2013		2012
	(in thousands)
United States	$	352,008	$	261,635
Other		22,341		—

Total revenues	$	374,349	$	261,635

The following table sets forth assets by geographic area:


	As of
	December 31, 2013		December 31, 2012
	(in thousands)
United States	$	633,886	$	479,202
Other		69,704		—

Total assets	$	703,590	$	479,202

Note 21 — Net Income (Loss) Per Common Share Attributable To Rentech


	For the Calendar Years Ended December 31,						For the Three Months Ended December 31,			For the Fiscal Year Ended September 30,
	2013			2012			2011			2011
Numerator:
Income (loss) from continuing operations attributable to Rentech common shareholders	$	5,074		$	23,376		$	(1,727	)	$	20,104
Less: Income from continuing operations allocated to participating securities		139			860			—			371

Income (loss) from continuing operations allocated to common shareholders	$	4,935		$	22,516		$	(1,727	)	$	19,733

Numerator:
Income (loss) from discontinued operations attributable to Rentech common shareholders	$	(6,606	)	$	(37,376	)	$	(6,804	)	$	(84,387	)
Less: Income from discontinued operations allocated to participating securities		—			—			—			—

Income (loss) from discontinued operations allocated to common shareholders	$	(6,606	)	$	(37,376	)	$	(6,804	)	$	(84,387	)

Numerator:
Net income (loss) attributable to Rentech common shareholders	$	(1,532	)	$	(14,000	)	$	(8,531	)	$	(64,283	)
Less: Income allocated to participating securities		—			—			—			—

Net income (loss) allocated to common shareholders	$	(1,532	)	$	(14,000	)	$	(8,531	)	$	(64,283	)

Denominator:
Weighted average common shares outstanding		226,139			223,189			224,414			222,664
Effect of dilutive securities:
Warrants		927			920			—			1,671
Common stock options		1,525			1,686			—			71
Restricted stock		5,112			4,729			—			2,274

Diluted shares outstanding		233,703			230,524			224,414			226,680

Continuing operations	$	0.02		$	0.10		$	(0.01	)	$	0.09

Discontinued operations	$	(0.03	)	$	(0.17	)	$	(0.03	)	$	(0.38	)

Basic net income (loss) per common share	$	(0.01	)	$	(0.06	)	$	(0.04	)	$	(0.29	)

Continuing operations	$	0.02		$	0.10		$	(0.01	)	$	0.09

Discontinued operations	$	(0.03	)	$	(0.16	)	$	(0.03	)	$	(0.37	)

Diluted net income (loss) per common share	$	(0.01	)	$	(0.06	)	$	(0.04	)	$	(0.28	)

For the calendar years ended December 31, 2013 and 2012, the three months ended December 31, 2011 and 2010 and the fiscal year ended September 30, 2011, approximately 3.8 million, 4.3 million, 33.3 million, 29.7 million and 28.8 million shares, respectively, of Rentech’s common stock issuable pursuant to stock options, stock warrants, restricted stock units and convertible debt were excluded from the calculation of diluted income (loss) per share because their inclusion would have been anti-dilutive.

Note 22 — Selected Quarterly Financial Data (Unaudited)

Selected unaudited condensed consolidated financial information for the calendar years ended December 31, 2013 and 2012 is presented in the tables below (in thousands, except per share data).


	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
For the 2013 Calendar Year
Revenues	$	59,564		$	120,061		$	115,657		$	79,067
Gross profit (loss)	$	22,719		$	42,273		$	21,144		$	(2,750	)
Operating income (loss)	$	8,990		$	27,688		$	(24,758	)	$	(13,799	)
Income (loss) from continuing operations	$	7,679		$	45,802		$	(27,136	)	$	(19,701	)
Income (loss) from discontinued operations, net of tax	$	(6,893	)	$	(1,496	)	$	3,558		$	(1,775	)
Net income (loss)	$	786		$	44,306		$	(23,578	)	$	(21,476	)
Net (income) loss attributable to noncontrolling interests	$	(6,026	)	$	(11,474	)	$	8,985		$	6,945
Net income (loss) attributable to Rentech	$	(5,240	)	$	32,832		$	(14,593	)	$	(14,531	)
Net income (loss) per common share allocated to Rentech:
Basic:
Continuing operations	$	0.01		$	0.15		$	(0.08	)	$	(0.06	)

Discontinued operations	$	(0.03	)	$	(0.01	)	$	0.02		$	(0.01	)

Net income (loss)	$	(0.02	)	$	0.14		$	(0.06	)	$	(0.06	)

Diluted:
Continuing operations	$	0.01		$	0.14		$	(0.08	)	$	(0.06	)

Discontinued operations	$	(0.03	)	$	(0.01	)	$	0.02		$	(0.01	)

Net income (loss)	$	(0.02	)	$	0.14		$	(0.06	)	$	(0.06	)


	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
For the 2012 Calendar Year
Revenues	$	38,473		$	70,643		$	60,112		$	92,407
Gross profit	$	22,572		$	45,646		$	35,035		$	28,586
Operating income	$	12,961		$	34,943		$	23,201		$	14,353
Income from continuing operations	$	10,396		$	30,282		$	19,801		$	4,584
Loss from discontinued operations, net of tax	$	(6,070	)	$	(4,603	)	$	(4,224	)	$	(22,479	)
Net income (loss)	$	4,326		$	25,679		$	15,577		$	(17,895	)
Net income attributable to noncontrolling interests	$	(7,590	)	$	(16,159	)	$	(11,307	)	$	(6,631	)
Net income (loss) attributable to Rentech	$	(3,264	)	$	9,520		$	4,270		$	(24,526	)
Net income (loss) per common share allocated to Rentech:
Basic and diluted:
Continuing operations	$	0.01		$	0.06		$	0.04		$	(0.01	)

Discontinued operations	$	(0.03	)	$	(0.02	)	$	(0.02	)	$	(0.10	)

Net income (loss)	$	(0.01	)	$	0.04		$	0.02		$	(0.11	)

The gross loss during the three months ended December 31, 2013 was primarily attributable to (i) turnaround expenses at the East Dubuque Facility and the Pasadena Facility of approximately $7.8 million and $1.7 million, respectively, (ii) a write-down of the Pasadena Facility’s inventory of approximately $5.1 million, (iii) fixed operating costs while the East Dubuque Facility was idle of approximately $4.2 million, and (iv) the $1.0 million insurance deductible for the fire which occurred in November 2013 at the East Dubuque Facility.

Note 23 — Subsequent Events

On February 13, 2014, RNP announced a cash distribution to its common unitholders for the period October 1, 2013 through and including December 31, 2013 of $0.05 per common unit which resulted in total distributions in the amount of approximately $2.0 million, including payments to phantom unitholders. RNHI received a distribution of approximately $1.2 million, representing its share of distributions based on its ownership of common units. The cash distribution was paid on February 28, 2014 to unitholders of record at the close of business on February 24, 2014.

On March 7, 2014 the Borrowers entered into the First Amendment to the 2013 RNP Credit Agreement (the “First RNP Amendment”). The First RNP Amendment replaces in certain circumstances the financial test that the Borrowers must satisfy for any borrowing from the Secured Leverage Ratio to a Fixed Charge Coverage Ratio (each as defined in the 2013 RNP Credit Agreement) for the period from the date of the amendment until immediately prior to the time RNP reports its fiscal year 2014 annual results (the “FCCR End Date”). The Fixed Charge Coverage Ratio that the Borrowers have to meet from the date of the First RNP Amendment through the date immediately prior to the time RNP reports its 2014 first quarter results is 2.00 to 1.00, and thereafter through the FCCR End Date is 2.25 to 1.00. For the year ended December 31, 2013, RNP’s Fixed Charge Coverage Ratio was 3.27 to 1.00.

The First RNP Amendment also modifies for a specified period the financial test applicable to the announcement or payment of a distribution. In the event that RNP has no amounts outstanding under the 2013 RNP Credit Agreement on the date of the announcement or payment of an RNP distribution, the minimum Fixed Charge Coverage Ratio that it has to meet in order to pay distributions in the period from the date of the First RNP Amendment through the date immediately prior to reporting RNP’s 2014 first quarter results is 2.00 to 1.00, and thereafter through the FCCR End Date is 2.25 to 1.00. If there is any amount outstanding under the 2013 RNP Credit Agreement on the date of the announcement or payment of a distribution from the period beginning with the date of the First RNP Amendment through the FCCR End Date, RNP must have a Secured Leverage Ratio not in excess of 3.75 to 1.00. Following the FCCR End Date, to announce or pay a distribution RNP must have a Secured Leverage Ratio not in excess of 3.75 to 1.00. In addition, before RNP can make distributions, RNP must have at least $8.75 million available to be drawn under the 2013 RNP Credit Agreement on a pro forma basis.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS


	Balance at Beginning of Period		Charged to Expense		Deductions and Write-Offs			Balance at End of Period
	(in thousands)
Calendar Year Ended December 31, 2013
Deferred tax valuation account	$	39,128	$	—	$	(10,424	)	$	28,704
Calendar Year Ended December 31, 2012
Allowance for doubtful accounts	$	100	$	—	$	(100	)	$	—
Deferred tax valuation account	$	32,018	$	—	$	7,110		$	39,128
Reserve for REN earn-out	$	697	$	—	$	(697	)	$	—
Three Months Ended December 31, 2011
Allowance for doubtful accounts	$	100	$	—	$	—		$	100
Deferred tax valuation account	$	126,831	$	—	$	94,813		$	32,018
Reserve for REN earn-out	$	697	$	—	$	—		$	697
Year Ended September 30, 2011
Allowance for doubtful accounts	$	100	$	—	$	—		$	100
Deferred tax valuation account	$	100,144	$	26,687	$	—		$	126,831
Reserve for REN earn-out	$	697	$	—	$	—		$	697

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, or DCP, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer, or Chief Executive Officer, and principal executive officer, or Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating DCP, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In the Original 10-K, our Chief Executive Officer and Chief Financial Officer concluded that our DCP were effective as of December 31, 2013. Subsequent to that evaluation, management identified the material weaknesses in internal control over financial reporting, or ICFR, described below, and our Chief Executive Officer and Chief Financial Officer concluded that our DCP were not effective as of December 31, 2013.

Management’s Annual Report on Internal Control Over Financial Reporting (Restated)

Management is responsible for establishing and maintaining adequate ICFR (as defined in Rule 13a-15(f) of the Exchange Act). Our ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our ICFR includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, ICFR may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, the risk.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our ICFR as of December 31, 2013. Management based its assessment on criteria established inInternal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

We identified the following material weaknesses that existed at December 31, 2013. A material weakness is a deficiency, or combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design and maintain effective internal controls over (i) the review of the cash flow forecasts used in the accounting for business combinations and goodwill, (ii) the determination of the goodwill impairment charge in accordance with generally accepted accounting principles, and (iii) maintaining documentation supporting management’s review of events and changes in circumstances that indicate it is more likely than not that a goodwill impairment has occurred between annual impairment tests. Specifically, with respect to (i) and (ii), we did not design and maintain effective internal controls related to determining the carrying value and fair value of reporting units for the purpose of performing goodwill impairment testing, documenting management’s review of assumptions used in the forecasts, and verifying that data contained in reports provided by specialists reconcile to the information provided to those specialists.

These control deficiencies did not result in a material misstatement to our consolidated financial statements for the year ended December 31, 2013. However, these control deficiencies, if unremediated, could, in another reporting period, result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected by the controls. Accordingly, our management has determined that these control deficiencies constitute material weaknesses.

In Management’s Annual Report on Internal Control Over Financial Reporting included in our Original 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that we maintained effective ICFR as of December 31, 2013. Management subsequently concluded that the material weaknesses described above existed as of December 31, 2013. As a result, we have concluded we did not maintain effective ICFR as of December 31, 2013 based on the criteria inInternal Control – Integrated Framework (1992) issued by COSO. Accordingly, management has restated its report on ICFR.

Management has excluded our wholly owned subsidiary, Fulghum, from its assessment of ICFR as of December 31, 2013 because Fulghum was acquired by us in a purchase business combination on May 1, 2013 which did not allow management enough time to make a proper assessment. The total assets, excluding goodwill and intangible assets resulting from purchase price adjustments, and total revenues of Fulghum represent approximately 18% and 17%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2013.

The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Plan for Remediation of the Material Weaknesses

We have implemented and are continuing to implement a number of measures to address the material weaknesses identified. Specifically, we are designing additional controls over documentation and review of the inputs and results of our cash flow forecasts, the use of the work of specialists and the identification of events and changes in circumstances that may indicate potential impairment of goodwill. These controls are expected to include the implementation of additional review activities by qualified personnel and additional documentation and support of conclusions with regard to accounting for business combinations and goodwill impairment calculations. We are also designing additional controls around identification and documentation relating to accounting for goodwill impairment. These controls are expected to include the implementation of additional review activities by qualified personnel, additional documentation and the development and use of checklists and procedures related to accounting for business combinations and goodwill impairment calculations. We are in the process of implementing our remediation plan, and expect the control weaknesses to be remediated in the coming reporting periods. However, we are unable at this time to estimate when the remediation will be completed.

The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. As we continue to evaluate and take actions to improve our ICFR, we may determine to take additional actions to address control deficiencies or determine to modify certain of the remediation measures described above. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses.

Changes in Internal Control over Financial Reporting

There were significant changes in our ICFR during the quarter ended December 31, 2013 that materially affected, or are reasonably likely to materially affect, our ICFR. During the quarter ended December 31, 2013, we completed the integration of RNPLLC’s operations, processes, and internal controls.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) and (2) Financial Statements and Schedules.

The information required by this Item is included in Part II—Item 8 “Financial Statements and Supplementary Data” of this report.

(b) Exhibits.

See Exhibit Index.

EXHIBIT INDEX



2.1*		Membership Interest Purchase Agreement between Rentech Nitrogen Partners, L.P. and Agrifos Holdings Inc., dated as of October 31, 2012 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on November 5, 2012).

2.2*		Stock Purchase Agreement, dated as of May 1, 2013, among the Company, the Buyer, the Sellers and Anthony M. Hauff, as the Sellers’ representative (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Rentech on May 7, 2013).

2.3*		Membership Interest Purchase and Sale Agreement, dated as of February 28, 2014, by and among Rentech, RES and the Buyer Plan (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Rentech on March 6, 2014).

3.1		Amended and Restated Articles of Incorporation, dated April 29, 2005 (incorporated by reference to Exhibit 3(i) to the Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2005, filed by Rentech on May 9, 2005).

3.2		Articles of Amendment to Amended and Restated Articles of Incorporation of Rentech, Inc. (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2008, filed by Rentech on May 9, 2008).

3.3		Articles of Amendment to Amended and Restated Articles of Incorporation of Rentech, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Rentech on May 22, 2009).

3.4		Articles of Amendment to Amended and Restated Articles of Incorporation of Rentech, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Rentech on May 14, 2010).

3.5		Bylaws dated November 30, 2004 (incorporated by reference to Exhibit 3(ii) to the Annual Report on Form 10-K for the year ended September 30, 2004 filed by Rentech on December 9, 2004).

3.6		Articles of Amendment to the Articles of Incorporation of Rentech, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Rentech on August 5, 2011).

4.1		Stock Purchase Warrant, dated September 17, 2004, by and between Rentech, Inc. and Mitchell Technology Investments (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Rentech on September 23, 2004).

4.2		Registration Rights Agreement, dated September 17, 2004, by and between Rentech, Inc. and Mitchell Technology Investments (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed by Rentech on September 23, 2004).

4.3		Tax Benefit Preservation Plan, dated as of August 5, 2011, Rentech, Inc. and Computershare Trust Company, N.A., which includes the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by Rentech on August 5, 2011).

4.4		Indenture, dated as April 12, 2013, among Rentech Nitrogen Partners, L.P., Rentech Nitrogen Finance Corporation, the guarantors named therein, Wells Fargo Bank, National Association, as Trustee, and Wilmington Trust, National Association, as Collateral Trustee (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP with the Securities and Exchange Commission on April 16, 2013).

4.5		Forms of 6.5% Second Lien Senior Secured Notes due 2021 (incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP with the Securities and Exchange Commission on April 16, 2013).

4.6		Intercreditor Agreement, dated as of April 12, 2013, among Credit Suisse AG, Cayman Islands Branch, as priority lien agent, Wilmington Trust, National Association, as second lien collateral trustee, Rentech Nitrogen Partners, L.P., Rentech Nitrogen Finance Corporation and the subsidiaries of Rentech Nitrogen Partners, L.P. named therein (incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP with the Securities and Exchange Commission on April 16, 2013).

10.1**		Amended and Restated Employment Agreement by and between Rentech, Inc. and D. Hunt Ramsbottom, Jr. dated December 31, 2008 (incorporated by reference to Exhibit 10.43 to Amendment No. 1 to the Annual Report on Form 10-K/A filed by Rentech January 28, 2009).

10.2**+		Amended and Restated Employment Agreement by and between Rentech, Inc. and Sean Ebnet dated July 26, 2013.



10.3**		Employment Agreement by and between Rentech, Inc. and Dan J. Cohrs, dated October 22, 2008 (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K for the year ended September 30, 2008 filed by Rentech on December 15, 2008).

10.4**+		Employment Agreement by and between Rentech, Inc. and Harold Wright, dated November 3, 2009.

10.5**		Employment Agreement with Colin Morris (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Rentech on November 6, 2009).

10.6**		Rentech, Inc. Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K for the fiscal year ended September 30, 2010 filed by Rentech on December 14, 2010).

10.7**		Form of Stock Option Grant Notice and Stock Option Agreement under 2006 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on July 20, 2006).

10.8**		2005 Stock Option Plan (incorporated by reference to Exhibit 10.34 to the Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004 filed by Rentech on February 9, 2005).

10.9**		Amended and Restated Rentech, Inc. 2006 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on March 29, 2007).

10.10**		First Amendment to Rentech’s Amended and Restated 2006 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on November 6, 2009).

10.11**		Rentech, Inc. 2009 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on May 22, 2009).

10.12**		First Amendment to Rentech’s 2009 Incentive Award Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Rentech on November 6, 2009).

10.13***		Development Cost Sharing and Equity Option Agreement, dated May 25, 2007 by and between Rentech, Inc. and Peabody Venture Fund, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed by Rentech on August 9, 2007).

10.14**		Form of Absolute Share Price Target Performance Share Award Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on July 23, 2008).

10.15**		Form of Total Shareholder Return Performance Share Award Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Rentech on July 23, 2008).

10.16**		Form of Performance Vesting Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on November 23, 2009).

10.17		Distribution Agreement, dated April 26, 2006, by and between Royster-Clark Resources LLC and Rentech Development Corporation (incorporated by reference to Exhibit 10.1 to the Form S-1 (File No. 333-176065) filed by RNP on August 5, 2011).

10.18		Amendment to Distribution Agreement, dated October 13, 2009, among Rentech Energy Midwest Corporation, Rentech Development Corporation and Agrium U.S., Inc. (incorporated by reference to Exhibit 10.2 to the Form S-1 (File No. 333-176065) filed by RNP on August 5, 2011).

10.19		Assignment and Assumption Agreement, dated as of September 29, 2006, by and between Royster-Clark, Inc., Agrium U.S. Inc. and Rentech Development Corporation (incorporated by reference to Exhibit 10.3 to the Form S-1 (File No. 333-176065) filed by RNP on August 5, 2011).

10.20**		Amended and Restated 2009 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on May 13, 2011).

10.21		Contribution, Conveyance and Assignment Agreement, dated as of November 9, 2011, by and among Rentech, Inc., Rentech Development Corporation, Rentech Nitrogen Holdings, Inc., Rentech Nitrogen GP, LLC, Rentech Nitrogen Partners, L.P. and Rentech Energy Midwest Corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP on November 9, 2011).

10.22		Omnibus Agreement, dated as of November 9, 2011, by and among Rentech, Inc., Rentech Nitrogen GP, LLC and Rentech Nitrogen Partners, L.P. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP on November 9, 2011).



10.23		Services Agreement, dated as of November 9, 2011, by and among Rentech Nitrogen Partners, L.P., Rentech Nitrogen GP, LLC and Rentech, Inc. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-35334) filed by RNP on November 9, 2011).

10.24		Indemnification Agreement dated November 9, 2011, by and between Rentech Nitrogen Partners, L.P. and D. Hunt Ramsbottom (all other Indemnification Agreements, which are substantially identical in all material respects, except as to the parties thereto and the dates of execution, are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K) (incorporated by reference to Exhibit 10.42 to the Annual Report on Form 10-K filed by Rentech on December 14, 2011).

10.25		Second Amended and Restated Credit Agreement, dated as of October 31, 2012, by and among Rentech Nitrogen, LLC, Agrifos LLC, Agrifos Fertilizer L.L.C. and Agrifos SPA LLC, as borrowers, Rentech Nitrogen Partners, L.P., as guarantor, General Electric Capital Corporation, as administrative agent and swingline lender, GE Capital Markets, Inc. as sole lead arranger and bookrunner, BMO Harris Bank, N.A., as syndication agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on November 5, 2012).

10.26		Third Amended and Restated Agreement of Limited Partnership of Rentech Nitrogen Partners, L.P., dated as of November 1, 2012 (including form of common unit certificate) (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on November 5, 2012).

10.27		First Amendment to Second Amended and Restated Credit Agreement, dated as of November 30, 2012, by and among Rentech Nitrogen, LLC, Rentech Nitrogen Pasadena Holdings, LLC (formerly known as Agrifos LLC), Rentech Nitrogen Pasadena, LLC (formerly known as Agrifos Fertilizer L.L.C.) and Rentech Nitrogen Pasadena SPA, LLC (formerly known as Agrifos SPA LLC), as borrowers, Rentech Nitrogen Partners, L.P., as guarantor, General Electric Capital Corporation, as administrative agent and swingline lender, GE Capital Markets, Inc. as sole lead arranger and bookrunner, BMO Harris Bank, N.A., as syndication agent, and the lenders party thereto (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 18, 2013).

10.28		Second Amendment to Second Amended and Restated Credit Agreement, dated as of December 30, 2012, by and among Rentech Nitrogen, LLC, Rentech Nitrogen Pasadena Holdings, LLC (formerly known as Agrifos LLC), Rentech Nitrogen Pasadena, LLC (formerly known as Agrifos Fertilizer L.L.C.) and Rentech Nitrogen Pasadena SPA, LLC (formerly known as Agrifos SPA LLC), as borrowers, Rentech Nitrogen Partners, L.P., as guarantor, General Electric Capital Corporation, as administrative agent and swingline lender, GE Capital Markets, Inc. as sole lead arranger and bookrunner, BMO Harris Bank, N.A., as syndication agent, and the lenders party thereto (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 18, 2013).

10.29		Third Amendment to Second Amended and Restated Credit Agreement, dated as of January 18, 2013, by and among Rentech Nitrogen, LLC, Rentech Nitrogen Pasadena Holdings, LLC (formerly known as Agrifos LLC), Rentech Nitrogen Pasadena, LLC (formerly known as Agrifos Fertilizer L.L.C.) and Rentech Nitrogen Pasadena SPA, LLC (formerly known as Agrifos SPA LLC), as borrowers, Rentech Nitrogen Partners, L.P., as guarantor, General Electric Capital Corporation, as administrative agent and swingline lender, GE Capital Markets, Inc. as sole lead arranger and bookrunner, BMO Harris Bank, N.A., as syndication agent, and the lenders party thereto (incorporated by reference to Exhibit 10.34 to the Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 18, 2013).

10.30		Agreement, dated November 1, 2010, between Northern Illinois Gas Company, d/b/a Nicor Gas Company and Rentech Energy Midwest (incorporated by reference to Exhibit 10.14 to the Form S-1 filed by Rentech Nitrogen Partners, L.P. on August 5, 2011).

10.31		Asset Purchase Agreement, dated as of September 10, 1998, by and between ExxonMobil Corporation (formerly known as Mobil Oil Corporation) and Rentech Nitrogen Pasadena, LLC (formerly known as Agrifos Fertilizer L.P.) (incorporated by reference to Exhibit 10.35 to the Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 18, 2013).

10.32***		Marketing Agreement, dated as of March 22, 2011, by and between Interoceanic Corporation and Rentech Nitrogen Pasadena, LLC (Agrifos Fertilizer L.L.C.) (incorporated by reference to Exhibit 10.36 to the Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 18, 2013).

100



10.33		Credit Agreement, dated as of April 12, 2013, among Rentech Nitrogen Partners, L.P. and Rentech Nitrogen Finance Corporation, as borrowers, the other parties thereto that are designated as credit parties from time to time, Credit Suisse AG, Cayman Islands Brach, for itself and as agent for all lenders, the other financial institutions party thereto, as lenders, Credit Suisse Securities (USA) LLC, as sole lead arranger and bookrunner, and BMO Harris Bank, N.A., as syndication agent (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-35334) filed by RNP with the Securities and Exchange Commission on May 9, 2013).

10.34		Second Amended and Restated 2009 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Rentech on June 5, 2013).

10.35		Amended and Restated Joint Venture and Operating Agreement of Rentech Graanul, LLC, dated April 30, 2013, by and among the parties specified therein (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by Rentech on August 8, 2013).

10.36***		Agreement for the Sale and Purchase of Biomass, dated April 30, 2013 between Drax Power Limited and RTK WP Canada, ULC (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by Rentech on August 8, 2013).

10.37***		Master Services Agreement, dated April 30, 2013 between RTK WP Canada, ULC and Quebec Stevedoring Company Limited (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by Rentech on August 8, 2013).

10.38***+		Credit Agreement dated as of September 23, 2013, among Rentech Nitrogen Holdings, Inc., Credit Suisse AG, Cayman Islands Branch, as administrative agent, and each other lender from time to time party hereto.

10.39		Guaranty Agreement dated as of September 23, 2013 by Rentech, Inc. in favor of Credit Suisse AG, Cayman Islands Branch, as administrative agent for the benefit of the lender parties (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by Rentech on November 7, 2013).

10.40***		Amended and Restated Marketing Agreement, effective as of January 1, 2014, by and between Interoceanic Corporation and Rentech Nitrogen Pasadena, LLC (Agrifos Fertilizer L.L.C.) (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 17, 2014).

10.41+		Amendment Agreement for the Sale and Purchase of Biomass, dated February 11, 2014 between Drax Power Limited and RTK WP Canada, ULC.

10.42		First Amendment to Credit Agreement, dated as of March 7, 2014, by and among Rentech Nitrogen Partners, L.P., Rentech Nitrogen Finance Corporation, the subsidiary guarantors party hereto, the lenders party hereto and Credit Suisse AG, Cayman Islands Branch, as agent for the lenders. (incorporated by reference to Exhibit 10.33 to the Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-35334) filed by Rentech Nitrogen Partners, L.P. on March 17, 2014).

14		Code of Ethics (incorporated by reference to Exhibit 14 to the Annual Report on Form 10-K for the fiscal year ended September 30, 2008 filed by Rentech on December 15, 2008).

21+		Subsidiaries of Rentech, Inc.

23.1		Consent of Independent Registered Public Accounting Firm.

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14 or Rule 15d-14(a).

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14 or Rule 15d-14(a).

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

101		The following financial information from the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2013 formatted in Extensible Business Reporting Language, or XBRL, includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, detailed tagged.

*	Schedules and exhibits have been omitted from this Exhibit pursuant to Item 601(b)(2) of Regulation S-K and are not filed herewith. The Company agrees to furnish supplementally a copy of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

**	Management contract or compensatory plan or arrangement.

***	Certain portions of this Exhibit have been omitted and filed separately under an application for confidential treatment.

+	Previously filed with the Original 10-K.

101

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RENTECH, INC.

/s/ Dan J. Cohrs

Dan J. Cohrs,

Executive Vice President and Chief Financial Officer

Date: December 29, 2014

102

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