|12 Months Ended|
Dec. 31, 2017
|Property, Plant and Equipment [Abstract]|
During the second quarter of 2016, the Company’s M&EC subsidiary was notified by the lessor that the lease agreement under which M&EC operates its Oak Ridge, Tennessee facility would not be renewed at the end of the lease term ending January 21, 2018. In light of this event and our strategic review of operations within our Treatment Segment, the Company instituted a plan to close its M&EC facility located in Oak Ridge, Tennessee at the end of the lease term which has been extended to June 30, 2018. Operations at the M&EC facility are limited during the remaining term of the lease and the facility continues to transition waste shipments and operational capabilities to our other Treatment Segment facilities, subject to customer requirements and regulatory approvals. Simultaneously, the Company continues with closure and decommissioning activities in accordance with M&EC’s license and permit requirements. As a result of the Company’s decision to close its M&EC facility, the Company’s financial results have been impacted by certain non-cash impairment losses, write-offs and accruals as described below for years ended December 31, 2017 and 2016.
The Company performed a discounted cash flow analysis prepared at June 30, 2016 for M&EC’s intangible assets (permits), utilizing our best estimates of projected future cash flows. Based on this analysis, the Company concluded that impairment existed and subsequently determined that the permit for our M&EC subsidiary was fully impaired resulting in an intangible impairment loss of approximately $8,288,000.
M&EC is required to complete certain clean-up/maintenance activities at its facility pursuant to its permit requirements. The extent and cost of these activities are determined by federal/state mandate requirements. The Company performed an analysis and related estimate of the cost to complete the closure activities in accordance with its permit requirements during the second quarter of 2016 and based on this analysis, the Company recorded an additional $1,626,000 in closure liabilities with a corresponding increase to capitalized ARO costs, which were being depreciated over the remaining term of the lease. The capitalized ARO costs were reported as a component of “Net Property and equipment” in the Consolidated Balance Sheets.
In accordance with ASC 360, “Property, Plant, and Equipment,” the Company performed an updated financial valuation of M&EC’s long-lived tangible assets during the second quarter of 2016, inclusive of the capitalized ARO costs, for potential impairment. Based on our analysis using an undiscounted cash flows approach, the Company concluded that the carrying value of certain tangible assets (property and equipment) for M&EC was not recoverable and exceeded its fair value. Consequently, the Company recorded $1,816,000 in tangible asset impairment loss in the second quarter of 2016. The Company also reevaluated the estimated useful lives of the remaining tangible assets and as a result of this analysis, reduced the current estimated useful lives of these assets ranging from 2 to 28 years at June 30, 2016 to 1.6 years, the remaining term of the lease. Accordingly, the Company was depreciating the carrying value of M&EC’s remaining tangible assets of approximately $4,728,000 at June 30, 2016 over a period of approximately 1.6 years, which was to the original lease expiration date of January 21, 2018.
In the second quarter of 2016, the Company also wrote-off approximately $587,000 in fees previously incurred relating to emission performance testing certification requirement in order to meet state compliance mandate in connection with certain M&EC equipment which was impaired. Such amount had been previously included in “Prepaid and other assets” on the Consolidated Balance Sheets.
During the third quarter of 2017, the Company performed an updated financial valuation of M&EC’s remaining long-lived tangible assets (inclusive of ARO costs) for further potential impairment. Based on our analysis using an undiscounted cash flow approach, the Company concluded that the carrying value of the remaining tangible assets for M&EC was not recoverable and exceeded its fair value. Consequently, the Company fully impaired the remaining tangible assets at M&EC resulting in a tangible asset impairment loss of $672,000. Additionally, during the third and fourth quarters of 2017, the Company recorded an additional $550,000 and $850,000, respectively, in closure costs and current closure costs liabilities due to change in estimated closure costs.
During the years ended December 31, 2017 and 2016, M&EC’s revenues were approximately $6,312,000 and $4,419,000, respectively.
The entire disclosure for intangible assets and long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.
Reference 1: http://www.xbrl.org/2003/role/presentationRef