4. Impairment of Long-Lived Assets

During 2015 and 2014, the Company recorded losses totaling $43,697 and $15,120, respectively, on impairment of certain long-lived assets as market conditions changed with regard to demand for certain products offered by the Company.

A decline in oil and natural gas prices during the second half of 2014 resulted in a severe decline in market conditions beginning in early 2015. As a result, the Company temporarily idled production and furloughed employees at the Toomsboro and Millen, Georgia manufacturing plants for approximately 90 days and mothballed the manufacturing plant in McIntyre, Georgia. At the time the manufacturing facility in McIntyre, Georgia was mothballed, the Company conducted an interim impairment analysis of the related long-lived assets, with the primary assumption that the plant would resume production after two years and return to production levels at normal capacity within four years. Pursuant to that analysis, the Company determined that the projected gross cash flows attributable to the facility substantially exceed the carrying value of the assets; therefore, the Company concluded that there was no impairment. The Company did not assess the temporarily idled facilities for impairment because such short-term stoppages of production for less than one year would not significantly impact the long-term expected cash flows of the idled facilities.

During the fourth quarter of 2015, industry conditions further deteriorated as oil prices fell below $30 per barrel. As a result of these worsening conditions, the Company evaluated substantially of all its long-lived assets for possible impairment as of December 31, 2015. Key assumptions used in the analysis varied by facility. However, the overriding assumptions included: 1) the industry downturn would last longer than originally anticipated, taking up to five years to fully recover; 2) production levels would rise over the recovery period eventually returning to production levels within normal capacity; 3) market pricing would be similar to lower 2015 levels, thus conservatively reducing expected gross profit and thus cash flows; 4) the Company’s wet process manufacturing plants (Toomsboro and Millen, Georgia and Eufaula Alabama) were evaluated as a group of assets because these facilities manufacture like products; and 5) other facilities were separately evaluated. Pursuant to that analysis, the Company determined that the projected gross cash flows attributable to certain assets did not exceed the carrying value of the assets; therefore, the Company concluded that there was indication of possible impairment. The Company engaged the services of a third party consulting firm to assist with the determination of the fair market value of the related assets and concluded that the assets were impaired. The key assumptions and inputs impacting the fair value analysis were the weighted average cost of capital and perpetuity growth rate as well as certain market data with respect to the property and equipment at each facility. As a result, the Company recorded a $36,177 impairment of long-lived assets, primarily relating to machinery and equipment at the McIntyre, Georgia manufacturing plant and Marshfield, Wisconsin sand processing facility.

Related to the impairment evaluation and resulting impairment loss regarding the McIntyre, Georgia manufacturing plant, the Company also evaluated the carrying value of the long-term portion of bauxite raw materials. Much of the bauxite raw material was intended for use in production at the McIntyre facility. Based upon this evaluation, during 2015, the Company recognized an impairment charge of $6,488 on the long-term portion of the bauxite raw material inventories.

Market conditions inside China deteriorated somewhat earlier relative to conditions in the United States. As a result of deteriorating market conditions in China during the fourth quarter of 2014, the Company recorded a $10,164 impairment of its long-lived assets in China during that period. As a result of the further deterioration of conditions in 2015, the Company ceased production activities at its Luoyang, China manufacturing plant. During the course of 2015, the Company released substantially all of its employees inside China, sold off inventories and proceeded to wind-down the operation. The Company does not intend to resume operations in China. During the fourth quarter of 2015, the Company incurred a loss of $1,033 related to the write-off of abandoned inventories and other assets, and substantially liquidated the China assets and liabilities, as defined by U.S generally accepted accounting principles. As a result, the foreign currency cumulative translation gain of $8,853 was released into the statement of operations and is netted with other impairment losses. The Company anticipates in the near term commencing the process to legally dissolve the entity, which is expected to be completed by the end of 2016.

In addition, during late 2014, the Company made a decision that it will not move forward with construction of a resin coating plant in Marshfield, Wisconsin for which the Company had previously developed engineering plans and procured certain equipment that had long-lead delivery times. As such, the Company recorded a $4,956 impairment of those assets during the year ended December 31, 2014. There were no such impairments during 2013.

The Company assesses goodwill for possible impairment annually or sooner if circumstances indicate possible impairment may have occurred. The Company evaluated goodwill during the fourth quarter, and as a result of the further decline in the oil and natural gas industry during the fourth quarter of 2015, concluded that Falcon projected future cash flows were negatively impacted and thus indicated possible impairment of the Falcon goodwill. The Company engaged a third party to assist in the evaluation and concluded that impairment had occurred. Fair value, which was determined using a discounted cash flows method, fell below the carrying value. Consequently, the Company recorded an $8,664 impairment of Falcon goodwill and an $833 impairment of the indefinite-lived Falcon Trademark intangible asset, both the full value of each of those assets. Evaluation of the StrataGen goodwill resulted in no indication of possible impairment. There were no such impairments during 2014 or 2013.

During the years ended December 31, 2015, 2014, and 2013, the Company recognized gains of $230, $41, and $43 on disposal of various assets.

Components of loss (gain) on disposal or impairment of assets are as follows:


	For the years ended December 31,
	2015			2014			2013
Domestic long-lived assets impairment	$	42,664		$	4,956		$	—
China assets impairment		1,033			10,164			—
Goodwill and intangible assets impairment		9,497			—			—
China CTA gain realization		(8,853	)		—			—
Gain on disposal of assets		(230	)		(41	)		(43	)

Total	$	44,111		$	15,079		$	(43	)