Note 12 - Segment and Related Information

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 12 — Segment and Related Information

Our Company consists of two reportable segments, which offer different products and services to a relatively homogenous customer base. The reportable segments include: Fluids Systems and Mats and Integrated Services. Intersegment revenues are generally recorded at cost for items which are included in inventory of the purchasing segment, and at standard markups for items which are included in cost of revenues of the purchasing segment. All intersegment revenues and related profits have been eliminated.

Fluids Systems —

Our Fluids Systems business offers customized solutions including highly technical drilling projects involving complex subsurface conditions, such as horizontal, directional, geologically deep or deep water drilling. These projects require increased monitoring and critical engineering support of the fluids system during the drilling process. We provide drilling fluids products and technical services to markets in North America, EMEA, Latin America, and the Asia Pacific regions.

We also have industrial mineral grinding operations for barite, a critical raw material in drilling fluids products, which serve to support our activity in the North American drilling fluids market. We grind barite and other industrial minerals at four facilities, including locations in Texas, Louisiana and Tennessee. We use the resulting products in our drilling fluids business, and also sell them to third party users, including other drilling fluids companies. We also sell a variety of other minerals, principally to third party industrial (non-oil and gas) markets.

Mats and Integrated Services —

We manufacture our DURA-BASE

®

Advanced Composite Mats for use in our rental operations as well as for third party sales. Our mats provide environmental protection and ensure all-weather access to sites with unstable soil conditions. We sell composite mats direct to customers in areas around the world where we do not maintain an infrastructure for our mat rental activities. In addition, we provide mat rentals to E&P customers in the Northeast U.S., onshore U.S. Gulf Coast, and Rocky Mountain Regions, and to non-E&P customers in the U.S., Canada and the United Kingdom. We also offer location construction and related well site services to E&P customers in the Gulf Coast Region.

Historically, our marketing efforts for the sale of composite mats remained focused in principal oil and gas industry markets outside the U.S., as well as markets outside the E&P sector in the U.S. and Europe. We believe these mats have worldwide applications outside our traditional oilfield market, primarily in infrastructure construction, maintenance and upgrades of pipelines and electric utility transmission lines, and as temporary roads for movement of oversized or unusually heavy loads. In late 2013, we announced plans to significantly expand our manufacturing facility, in order to support our efforts to expand our markets globally. This project was completed in 2015, which nearly doubled our manufacturing capacity and significantly expanded our research and development capabilities.

Summarized financial information concerning our reportable segments is shown in the following tables:

	Year Ended December 31,
(In thousands)	2015			2014			2013
Revenues
Fluids Systems	$	581,136		$	965,049		$	926,392
Mats and Integrated Services		95,729			153,367			115,964
Total Revenues	$	676,865		$	1,118,416		$	1,042,356
Depreciation and Amortization
Fluids Systems	$	22,108		$	22,934		$	26,679
Mats and Integrated Services		18,869			15,507			10,501
Corporate Office		2,940			2,734			2,584
Total Depreciation and Amortization	$	43,917		$	41,175		$	39,764
Operating Income (loss)
Fluids Systems	$	(86,770	)	$	95,600		$	72,604
Mats and Integrated Services		24,949			70,526			49,394
Corporate Office		(37,278	)		(35,530	)		(27,553	)
Operating Income (loss)	$	(99,099	)	$	130,596		$	94,445
Segment Assets
Fluids Systems	$	549,827		$	778,148		$	733,340
Mats and Integrated Services		172,415			175,318			112,619
Assets of discontinued operations		-			-			79,020
Corporate		126,651			54,206			29,939
Total Assets	$	848,893		$	1,007,672		$	954,918
Capital Expenditures
Fluids Systems	$	40,533		$	36,626		$	39,316
Mats and Integrated Services		27,456			64,101			26,455
Corporate		1,415			5,215			464
Total Capital Expenditures	$	69,404		$	105,942		$	66,235

In response to the significant declines in activity, we initiated cost reduction programs in the first quarter of 2015, including workforce reductions, reduced discretionary spending, and temporary salary freezes for substantially all employees, including executive officers, and have continued these efforts throughout 2015. In September 2015, we also initiated a voluntary retirement program with certain eligible employees in the United States for retirement dates ranging from the fourth quarter of 2015 through the third quarter of 2016. As part of these cost reduction programs, we have reduced our North American employee base by 436 (approximately 34%) in 2015 in addition to eliminating substantially all contract positions. As a result of these termination programs, our 2015 operating results include $8.2 million of charges associated with employee termination costs with $5.7 million reported in cost of revenues and $2.5 million reported in selling, general and administrative expenses. The employee termination costs include $7.2 million in Fluids Systems, $0.7 million in Mats and Integrated Services and $0.3 million in our corporate office. Accrued employee termination costs at December 31, 2015 are $3.3 million and are expected to be substantially paid in the first half of 2016. Additional employee termination costs of $0.7 million associated with the voluntary retirement program will be recognized in 2016.

During the fourth quarter of 2015, a total of $80.5 million of charges were included in operating loss for the reduction in value of certain assets and the pending resolution of certain wage and hour litigation claims. The Fluids Systems segment operating results include $75.5 million of these charges including a $70.7 million non-cash impairment of goodwill, a $2.6 million non-cash impairment of assets, following our decision to exit a facility, and a $2.2 million charge to reduce the carrying value of diesel-based drilling fluid inventory. In addition, corporate office expenses include a $5.0 million charge for the pending resolution of certain wage and hour litigation claims and related costs. In our 2015 consolidated statement of operations, a total of $78.3 million of these charges are reported in impairments and other charges with the $2.2 million charge for the write-down of inventory being reported in cost of revenues.

The Consolidated Statements of Cash Flows included in this Item 8 of these Financial Statements and Supplementary Data include $0.9 million and $4.4 million in depreciation and amortization expense and capital expenditures of $1.0 million and $1.7 million for 2014 and 2013, respectively, related to the Environmental Services business sold in 2014 that are classified as discontinued operations.

The following table sets forth geographic information for our operations. Revenues by geographic location are determined based on the operating location from which services are rendered or products are sold.

	Year Ended December 31,
(In thousands)	2015		2014		2013
Revenue
United States	$	384,147	$	748,845	$	717,263
Canada		52,851		79,516		47,559
EMEA		174,524		177,244		141,535
Latin America		47,240		85,244		99,587
Asia Pacific		18,103		27,567		36,412
Total Revenue	$	676,865	$	1,118,416	$	1,042,356
Long-Lived Assets
United States	$	275,109	$	294,762	$	247,947
Canada		552		10,044		10,862
EMEA		50,759		55,560		44,262
Latin America		4,543		6,635		9,852
Asia Pacific		9,731		25,991		27,241
Total Long-Lived Assets	$	340,694	$	392,992	$	340,164

No single customer accounted for more than 10% of our consolidated revenues for the years ended December 31, 2015, 2014 or 2013.