4.	Impairment of Long-Lived Assets

During 2017, 2016 and 2015, the Company recorded losses totaling $125,759, $1,065 and $43,697, 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. 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 all of 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, during the year-ended December 31, 2015, 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. As of December 31, 2017, the remaining carrying value of the previously impaired assets at the McIntyre, Georgia manufacturing plant and Marshfield, Wisconsin sand processing facility was approximately $3,144.

During the year-ended December 31, 2016, industry conditions remained depressed, but showed signs of improvement with oil prices above $50 per barrel. The Company evaluated substantially all of its long-lived assets for impairment as of December 31, 2016. Key assumptions were not materially different from the December 31, 2015 analysis, except that we evaluated the Eufaula facility separate from the Toomsboro and the Millen facilities given the completion of our KRYPTOSPHERE technology retrofitting in 2016. Pursuant to the December 31, 2016 analysis, the Company determined that the projected gross cash flows attributable to each asset group exceeded the carrying value; therefore, the Company concluded there was no impairment for the year-ended December 31, 2016.

As of September 30, 2017, the Company concluded that the Company’s Toomsboro and Millen, Georgia facilities should no longer be evaluated together as a group of assets because the facilities are no longer interchangeable and will not manufacture like products. As a result of the sustained and long-term shift away from base ceramic proppant to less expensive frac sand, the Company has made a strategic decision to focus on growing technology, industrial and mineral processing revenue streams. Our Toomsboro, Georgia plant is being repurposed to produce technology and industrial products, as well as for use in toll processing of minerals. Our Millen, Georgia facility is currently only able to produce base ceramic proppants, but given our current long-term outlook on base ceramic proppant demand, we do not expect to utilize this plant to produce base ceramic proppant. We are currently evaluating opportunities to monetize our assets at our Millen facility. As a result, we evaluated the Toomsboro and Millen, Georgia plants separately for indicators of impairment during the third quarter of 2017.

Given the change in the asset groupings of the two facilities and lack of estimated future cash flows associated with the base ceramic production at the Millen facility, the Company identified indicators of impairment at the Millen, Georgia facility as of September 30, 2017. The Company determined that the projected cash flows attributable to our Millen, Georgia facility did not exceed the carrying value of the assets; therefore the Company concluded there was an impairment at that facility. The Company engaged the services of a third party consulting firm to assist with the determination of the fair value of the related assets and concluded that the assets were impaired. The key assumptions and inputs impacting the fair value include third party data and commentary with respect to the property and equipment at our Millen facility. For machinery and equipment and construction in progress, we used a cost approach to estimate the valuation. We applied a 65 percent downward adjustment to calculated replacement cost based on an analysis of construction documents and historical expenditures to remove non-saleable soft costs such as engineering and installation that would have no value to a market participant. Based on discussions with market participants, a salvage value multiplier ranging from 12 percent to 50 percent of the remaining replacement cost basis was applied to arrive at the estimated fair value for the machinery and equipment and construction in progress subject to impairment. For real property, we used a market and cost approach and reconciled the two approaches. In using the market approach, we determined that the value of comparable property ranged from approximately $30 to $40 per square foot, and the concluded value of the property at the Millen facility was approximately $35 per square foot. In using the cost approach, we applied a 94% downward adjustment to the calculated value for the buildings and site improvements as a representation of economic obsolescence. As a result of these valuation procedures, which included the use of Level 3 inputs as defined in Note 9, the Company recognized a $125,759 impairment of long-lived assets, primarily relating to buildings, machinery and equipment, and construction in progress. As of September 30, 2017, as a result of our valuation procedures, the fair value of the Millen facility, including land, buildings, machinery and equipment and construction in progress, was approximately $18,786. As of September 30, 2017, related to the other asset groups, there were no events or circumstances that would indicate that carrying amounts of long-lived and other noncurrent assets might be impaired given that results for the first nine months of 2017 generally met our expectations from our analysis as of December 31, 2016 and given that our future outlook of cash flows associated with those asset groups has not significantly changed since that date.

There were no additional indicators of impairment during the fourth quarter of 2017.

As of December 31, 2017, the remaining carrying value of the impaired assets at the Millen facility was approximately $18,471, which included $6,753 classified as construction in progress.

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 2016 and 2015, the Company recognized an impairment charge of $1,065 and $6,488, respectively, on the long-term portion of the bauxite raw material inventories. There was no such impairment during 2017.

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 of 2015, and as a result of the further decline in the oil and natural gas industry during the fourth quarter of 2015, concluded that Asset Guard Products Inc. (“AGPI”) projected future cash flows were negatively impacted and thus indicated possible impairment of the AGPI goodwill. AGPI was formerly known as Falcon Technologies and Services, Inc. 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, during the fourth quarter of 2015, the Company recorded an $8,664 impairment of AGPI goodwill and an $833 impairment of the indefinite-lived AGPI 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 2017 or 2016.

During the years ended December 31, 2017, 2016 and 2015, the Company recognized a loss of $19, gain of $176, and gain of $230, respectively, on disposal of various assets.

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

	For the years ended December 31,
	2017		2016			2015
Domestic long-lived assets impairment	$	125,759	$	1,065		$	42,664
China assets impairment		—		—			1,033
Goodwill and intangible assets impairment		—		—			9,497
China CTA gain realization		—		—			(8,853	)
Loss (gain) on disposal of assets		19		(176	)		(230	)
Total	$	125,778	$	889		$	44,111