rtk-10k_20151231.htm

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o. 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 o. 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 o

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 o

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. x

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 o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $242.2 million (based upon the closing price of the common stock on June 30, 2015, as reported by the NASDAQ Stock Market).

The number of shares of the registrant’s common stock outstanding as of February 29, 2015 was 23,034,371.

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 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. 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. References to “NEWP” refer to New England Wood Pellet, LLC, a Delaware limited liability company and one of our indirect wholly owned subsidiaries.

We are a leading provider of wood fibre processing services, high-quality wood chips and wood pellets. Our processing business includes Fulghum, which operates 32 wood chipping mills in the United States and South America. It provides wood yard operations services and wood fibre processing services, and sells wood chips to the pulp, paper and packaging industry. Fulghum also owns and manages forestland and sells bark to industrial consumers in South America. Our wood pellet business includes our Atikokan and Wawa Facilities and NEWP. The Atikokan and Wawa Facilities, located in Ontario, Canada, are expected to have a combined annual production capacity of 560,000 metric tons, and NEWP’s annual capacity is 300,000 short tons. The Atikokan and Wawa Facilities produce wood pellets used as fuel for power generation in Canada and the United Kingdom. NEWP is one of the largest producers of wood pellets for the United States residential and commercial heating markets, operating four wood pellet facilities in the Northeast. The facilities are located in Jaffrey, New Hampshire; Deposit, New York; Schuyler, New York; and Youngsville, Pennsylvania.

We are engaged in the fertilizer business, which includes the ownership of the general partner interest and 59.6% of the common units representing limited partner interests in RNP, a publicly traded master limited partnership that owns and operates two fertilizer manufacturing facilities. Through its wholly owned subsidiary, RNLLC, RNP manufactures natural-gas based nitrogen fertilizer products at its facility in East Dubuque, Illinois, or our East Dubuque Facility. It sells its 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 facility in Pasadena, Texas, or our Pasadena Facility.

Our ownership interest in RNP currently entitles us to 59.6% of all cash distributions made by RNP to its common unit holders. We receive no distributions or other economic benefit as the general partner of RNP. Our ownership interest may be reduced over time if we were to elect to sell any of our common units, or if additional common units were to be issued by RNP.

Overview of Certain Significant Events that Occurred during 2015 and Subsequently

In August 2015, we announced a plan to restructure our wood fibre processing business and corporate activities to focus on operations and execution, while significantly reducing corporate overhead. We have been executing a reorganization plan to simplify our organizational structure and better integrate our various operating units for an overall lower cost model. As part of our overall cost reduction plan, we are targeting to reduce annual consolidated selling, general and administrative expenses by approximately $10.0 to $12.0 million by the end of 2016. We expect cost savings of $8.5 to $10.5 million per year by (i) completing a 25% reduction of corporate staff, (ii) reducing compensation levels, and (iii) moving the corporate headquarters from Los Angeles, California to the Washington, D.C. area. We are streamlining functions to create an integrated company focused on operations. We are targeting cost savings of $1.5 million at our fibre business units from a simplified organizational structure with fewer layers, consolidated back office functions and reduced spending. We have initiated these cost savings actions and are targeting completion of the plan by the end of the third quarter of 2016. Associated with the reorganization plan, we expect to incur non-recurring charges of approximately $6.0 million during 2016. We may adjust our restructuring plan in response to future performance, and our ability to identify and implement further cost reductions.

On August 9, 2015, RNP entered into an Agreement and Plan of Merger, or the Merger Agreement, under which RNP and the General Partner will merge with CVR Partners, L.P., or CVR Partners, and RNP will cease to be a public company and will become a wholly owned subsidiary of CVR Partners, or the Merger. The consummation of the Merger is still subject to certain conditions, but RNP completed the sale of the Pasadena Facility on March 14, 2016, which represented the Company’s most significant remaining condition to closing. The Merger is expected to close on or about March 31, 2016. The East Dubuque Facility is now reported as a discontinued operation, following the signing of the Merger Agreement. For further discussion, see “Note 1 — Description of Business” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

On March 14, 2016, we completed the sale of the Pasadena Facility to Interoceanic Corporation, or IOC. The transaction calls for an initial cash payment to RNP of $5.0 million and a cash working capital adjustment, which is expected to be approximately $6.0 million, after confirmation of the amount within ninety days of the closing of the transaction. The purchase agreement also includes a milestone payment which would be paid to RNP unitholders equal to 50% of the facility’s EBITDA, as defined in the purchase agreement, in excess of $8.0 million cumulatively earned over the next two years.

On March 11, 2016, the Company entered into an agreement with GSO that, among other things, modifies the repayment terms of the Company’s obligations of its Tranche A loans under its credit agreement with GSO and Series E Preferred Stock in conjunction with the Merger. As discussed under “Note 15 – Debt” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report, the Company is required to deliver to the GSO Funds the lesser of (i) all

of the units of CVR Partners the Company receives at the closing of the Merger or (ii) $140 million of units of CVR Partners (valued using the volume weighted average price of the CVR units for the 60 trading days ending two days prior to the closing of the Merger, less a 15% discount) in exchange for retiring the equivalent dollar amount of Series E Preferred Stock and Tranche A term loan debt. The agreement also eliminates Rentech’s obligation to deliver $10 million of newly-issued common shares to GSO at a 15% discount.

During 2015, we (i) completed the conversion of our two acquired facilities in Canada into wood pellet production facilities and began the ramp-up phase of operations; (ii) completed the integration of NEWP, which we acquired in 2014; (iii) amended and restated our term loan facility with GSO Capital Partners LP, or GSO Capital, which increased outstanding borrowings under the facility from $50.0 million to $95.0 million, or the A&R GSO Credit Agreement; (iv) acquired the assets of Allegheny Pellet Corporation, or Allegheny, which consisted of a wood pellet processing facility located in Youngsville, Pennsylvania, or the Allegheny Acquisition; and (v) continued to operate and expand production capacity at RNP.

During 2015, RNP also (i) completed the nitric acid expansion project at the East Dubuque Facility; (ii) started construction on the ammonia synthesis converter project at the East Dubuque Facility; (iii) recorded asset impairments totaling $160.6 million at the Pasadena Facility; (iv) terminated our distribution agreement with Agrium U.S.A., Inc., or Agrium; and (v) completed a full year of operations under the Pasadena restructuring plan.

Our operating segments were affected in different ways by various negative and positive factors in 2015. Although operating results at the Pasadena Facility improved from recent years, we recorded asset impairments, as stated above. Our East Dubuque Facility improved its production levels and its operating results as compared to 2014, benefitting from lower natural gas prices and $4.6 million of business interruption insurance proceeds related to a fire that occurred in 2013. The results and outlook for our Wood Pellets: Industrial segment depend primarily on operating results from the Atikokan and Wawa Facilities. Although both facilities began producing pellets in 2015, the combined output and losses for the plants were worse than we expected, due in part to problems with the material-handling equipment at both plants. The expected cost of correcting those problems increased our total expected construction spending to $145.0 million, though such estimates have significant uncertainty. The delays in production at the Wawa Facility have caused us to amend our contract with Drax Power Limited, or Drax, and we incurred penalties of $2.6 million. We also amended our contract with Canadian National Railway Company, or Canadian National, and incurred penalties of $3.3 million due to delays in production at the Wawa Facility. In contrast, NEWP performed well in 2015 and exceeded expectations for the year, with the Allegheny Acquisition contributing as expected. As a result of a full year of operations in 2015 compared to only eight months in 2014, higher selling prices, lower production costs and the Allegheny Acquisition, NEWP’s gross profit increased from $6.1 million for the period May 1, 2014 through December 31, 2014 to $12.1 million in 2015. During 2015, the Allegheny Acquisition contributed gross profit of $1.7 million. As a result of lower operating costs at its U.S. chipping mills, together with improved performance in South America, Fulghum showed marked improvement and exceeded expectations in 2015. Fulghum’s gross profit increased from $12.4 million in 2014 to $18.3 million in 2015. However, Fulghum did record asset impairments for three mills totaling $11.3 million in 2015.

Our wood fibre processing business primarily consists of wood chipping services to the pulp, paper and packaging industry and wood pellet production for the utility and industrial power generation market and the residential and commercial heating markets.

Fulghum provides wood yard operations services and high-quality wood chipping services, and produces and sells wood chips to the pulp, paper and packaging industry. In South America, Fulghum also manufactures and sells wood chips, processes and sells biomass fuel to industrial heat and utility customers, owns and manages forestland, and buys and trades wood chips. Fulghum provides services and sells to customers in the United States, South America and Asia. Fulghum and its subsidiaries operate 32 wood chipping mills, of which 27 are located in the United States, four are located in Chile and one is located in Uruguay. Fulghum owns 87% of the equity interest in the subsidiaries located in Chile and Uruguay.

During the year ended December 31, 2015, our mills in the United States processed 12.5 million green metric tons, or GMT, of logs into wood chips and residual fuels; our mills in South America processed 2.6 million GMT of logs. During the year ended December 31, 2014, our mills in the United States processed 12.4 million GMT of logs into wood chips and residual fuels; our mills in South America processed 2.4 million GMT of logs.

From time to time, we evaluate and pursue opportunities to increase our profitability by expanding our chip mills’ production capacities and product offerings. During the year ended December 31, 2015, we had no such expansion projects.

Service revenues represent revenues earned under 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. Our operations include: managing industrial scale wood yards; debarking and chipping of logs; and screening and storing of chips and bark.

The majority of Fulghum’s customers are large pulp, paper and packaging manufacturers who use wood chips from our mills to manufacture products such as: boxboard, containerboard, fluff, kraftliner, dissolving pulp, paper and medium density fiberboard for building products.

Fulghum generates revenue primarily from fees under exclusive processing agreements. Each of our United States mills typically operates under an exclusive processing agreement with a single customer. At these mills, Fulghum is paid a processing fee based on tons processed, with minimum volume base rates and a reduced fee rate for higher 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, which is typically lower than the base rate. Under our processing agreements, the customer generally has the opportunity to make up for any shortfall below minimum volume requirements with additional volumes in subsequent months before it is required to pay a shortfall fee. Shortfall fees are typically settled quarterly. Fulghum’s Chilean operations include chipping services that earn fees based on a per ton processing fee structure similar to that described above. Fulghum’s Chilean operations also involve the sale of wood chips for export and the local sale of bark for industrial heat and utility applications. In Chile, we purchase raw material and sell products through two subsidiaries. Forestal Los Andes S.A., or FLA, purchases logs from the market to fulfill an order from a customer which is typically for a specific vessel of wood chips. Forestal Pacifico S.A., or FP, provides de-barking services for FLA and several of our customers. FP processes bark into a biomass fuel that is sold to local power utilities and industrial customers for heat and electricity applications. We also operate one mill in Uruguay under a chipping services-for-fee contract.

Most of our mills operate under multi-year contracts with the majority of total processing volume contracted through 2018 with some continuing beyond 2018 until 2028. Five mills in the United States representing over 50% of our United States volume and two mills in Chile representing 44% of our South American volume are under contract through 2018 and beyond. Six of our mills located in the United States and two of our mills located in South America have contracts that are renegotiated annually. One of our mills located in the United States provides wood chips to its customer on an as-needed basis on the spot market. We own 20 of the 32 mills we operate in the United States and South America. For certain of the mills that we own, the customer has an option to purchase the mill for a pre-determined price. For each of the mills that we do not own but operate under an agreement with the customer, the customer can terminate the agreement with prior written notice (in most cases, the processing agreements require 90 days’ prior written notice). Historically, very few of our customers exercised purchase options or terminated agreements prior to their expiration. Only four contracts with Fulghum’s U.S. customers have been terminated prior to their expiration in the last 20 years (three due to mill closures and one associated with a customer buy-out in 1995).

During 2015, approximately 72% of the log volume we processed in the United States was for five customers at 15 mills, as listed below.

Our wood chipping mills typically operate throughout the year; however, there may be quarter-to-quarter fluctuations in processing revenue at individual mills. These fluctuations are usually due to variations in customer-controlled deliveries of logs, production levels at customers’ mills, maintenance requirements, and/or weather-related events. Our customer contracts typically stipulate minimum volume requirements and shortfall fees. Such fees partially mitigate volatility in revenues of our United States mills. If heavy rain is expected to prevent deliveries or make deliveries of logs to the mills difficult, we frequently coordinate delivery schedules with our customers to build log inventories in advance of such conditions. Building sufficient inventory of logs at our mills enables them to process logs with few interruptions during the rainy season. Based on our customers’ expected relatively continuous wood chip requirements, the terms of our processing agreements and our focus on maintaining proper log inventories, we do not expect to experience material seasonality in Fulghum’s United States or Uruguayan operations. However, one of our mills in Chile typically ceases wood chip processing operations for one to two months during its winter season due to the customer’s inability to harvest and deliver logs to the facility. Since a significant portion of the revenue in Fulghum’s South American operations is derived from the sale of wood chips, primarily for export from Chile, an interruption in the supply of logs could adversely affect revenue and profitability. The export portion of Fulghum’s revenues, and the associated profits, may be more variable than the revenue and profits derived from processing fees pursuant to long-term contracts.

The customers of our 27 mills located in the United States and the customers of most of our five mills in Chile and Uruguay are responsible for the procurement and delivery of wood to our mills. As a result, these mills are not directly exposed to logistics or delivery risks or to market risk associated with potential changes in wood supply or pricing, although they may be indirectly impacted if a customer is adversely impacted by these risks. For service revenue generated under our processing contracts where the customer is responsible for providing the logs, title to the wood remains with the customer throughout our receipt and processing of the wood fibre. In Chile, in addition to providing wood processing services, we sell wood chips primarily for export to Asian markets. We primarily purchase logs only to fulfill obligations under contracts with established prices for the delivery of wood chips, thereby minimizing our exposure to market fluctuations in prices for wood chips and logs. We also own approximately 1,400 acres of forestland in South America that can be harvested in cases of high log prices, which can help reduce market exposure in the short-term. However, if prices of wood remain at high levels for a prolonged period of time, revenue and profitability of our Chilean operations, which sells wood chips could be adversely affected.

In the United States, Fulghum’s customers are responsible for delivering logs to the respective Fulghum chipping facility and arranging transportation of the processed wood chips from the mill to the final destination, except at those mills which are within or adjacent to customers’ premises, where wood chips are delivered by conveyor. Our Uruguayan and certain of our Chilean operations are similar to the United States business model in that the customer is responsible for delivering logs to the wood chipping facility and either takes receipt of the wood chips from the mill (domestic customers) or requires Fulghum to load the wood chips into a ship for export at the customer’s expense (foreign customers).

While a significant portion of the wood chipping mills in the United States are integrated facilities (i.e. owned and operated by paper companies that produce wood chips for internal consumption), the number of contract wood chipping mills in the United States has grown over the last decade. We estimate that Fulghum has a 70% market share of the contract wood chipping market in the United States, and we believe we have an opportunity to expand its business further due to the benefits to paper and forestry companies to outsource wood yard operations and chip processing, as well as opportunities to serve the pellet, alloy smelting, and bio-chemical industries. We believe that most of the other contract wood chip processors in the United States that compete with Fulghum are smaller and less experienced and recognized than Fulghum. We believe that Fulghum’s 26 years of operating experience in the wood handling and chip processing industry, level of expertise and efficiency, scale, brand recognition and quality of services have enabled us, and will continue to enable us, to favorably distinguish ourselves from these competitors.

Our wood pellet facility in Atikokan, Ontario, Canada, or the Atikokan Facility, which is expected to produce 110,000 metric tons of wood pellets annually, is in the ramp-up phase. During ramp-up of the Atikokan Facility, we discovered the need to modify the plant’s truck dump hopper and modify or replace a portion of the plant’s conveyance systems. All of the truck dump hopper modifications have been completed, and the truck dump hopper is performing as expected. The first group of the faulty conveyors at the Atikokan Facility was repaired at the end of 2015 and the conveyors’ performance is currently being evaluated as part of the plant’s operations. The remaining work to address problems with the Atikokan Facility conveyor systems is expected to continue

through mid-2016. The Atikokan Facility is expected to reach full capacity this year at some point after the conveyor work is completed barring any other possible unforeseen issues that may arise during the ramp-up phase.

Our wood pellet facility in Wawa, Ontario, Canada, or the Wawa Facility, is expected to produce 450,000 metric tons of wood pellets annually. All of the equipment at the Wawa Facility has been commissioned and the plant has been producing an increasing quantity of wood pellets. However, we discovered during the ramp-up of the Wawa Facility the need to modify the front-end system of the facility that handles logs and feeds them into the chipping process and to modify or replace a significant portion of the plant’s conveyance systems. The modifications of the front-end system and the first phase of modifications of the plant’s conveyance systems were completed in late 2015. The remaining work to the conveyor systems is scheduled to be completed by mid-2016. In light of the setbacks we have experienced at the Wawa Facility, we are evaluating the production capacity of the plant. We are investigating whether there are potential design shortcomings similar to those that surfaced with the plant’s wood infeed and conveyance systems that might limit capacity. We are also evaluating uptime and operating efficiency rates achievable for full capacity. Our discussions with other pellet producers and engineering firms over the past year have shown that there is a wide disparity of these rates across established industrial pellet manufacturing plants in North America. We believe it is premature to revise the capacity of the Wawa Facility until such time that we have fully tested the design assumptions of the major processes of the plant, remediated all of the material handling issues, and completed the ramp-up of the facility. However, if we apply a range of assumed operating efficiencies typical for the industry, the plant’s annual production capacity would be between 400,000 and 450,000 metric tons. The low end of this capacity range would still allow us to fulfill our annual contractual obligations to Drax and to generate positive cash flow. We have also observed that historically within the wood pellet industry ramping to full design capacities takes considerable time, several years in most cases. Taking into account the amount of time required to complete the repair and modification of the conveyance systems and to ramp up to design operating efficiency rates as historically observed in the wood pellet industry, we do not expect the Wawa Facility to reach full capacity until 2017.

We estimate the total cost to acquire and convert the Atikokan and Wawa Facilities, including the costs of required modifications to the material-handling systems, will be approximately $145 million. This total cost includes working capital, commissioning costs, and contingency costs on the planned repairs and modifications to material handling systems. Our estimate for capital expenditures does not include unexpected contingency costs to address any other unforeseen issues that may arise during ramp-up of the facilities. As of December 31, 2015, remaining cash expenditures to complete the Atikokan and Wawa Facilities are expected to be approximately $21 million.

Our industrial wood pellets are used in larger scale power generation facilities. Our wood pellets are subject to specific product quality standards, which include energy density, ash content, durability index, fines content, chemical content and grindability as both electric utilities and government regulators have established standards for wood pellets used in renewable energy. Proof of biomass sustainability and independent verification of feedstock supply are also requirements to sell wood pellets to European utilities.

In 2013, we entered into a ten-year take-or-pay contract, or the Drax Contract, with Drax. In August 2015, we entered into an amendment to the Drax Contract. Under the amendment, we canceled all 2015 wood pellet deliveries and agreed to a total penalty, which encompasses all amendments relating to 2015 shipments to date, of $2.6 million associated with costs for Drax to purchase replacement pellets and to cancel shipping commitments. In 2015, we accrued the $2.6 million penalty in operating expenses. The penalty will be paid in the form of credits on the first several expected deliveries to Drax in early 2016. In addition, 72,000 metric tons of the original 2015 pellet deliveries were pushed to 2018 and 2019 at 2015 pricing, which is expected to be lower than the pricing in those future years under the original terms of the contract.

In January 2016, our first product shipment, a vessel containing approximately 28,000 metric tons of Atikokan and Wawa Facilities’ wood pellets shipped from the Port of Quebec, was delivered to and accepted by Drax. In March 2016, our second product shipment, a vessel containing approximately 20,000 metric tons of Atikokan and Wawa Facilities’ wood pellets, shipped from the Port of Quebec. These first two shipments were smaller than what we are contracted to deliver to Drax going forward.

For the Atikokan Facility, we entered into a ten-year take-or-pay contract, or the OPG Contract, with Ontario Power Generation Inc., or OPG, under which we are required to deliver 45,000 metric tons of wood pellets annually. OPG has the option to increase required delivery of wood pellets from the Atikokan Facility to up to 90,000 metric tons annually. We expect that wood pellets produced at the Atikokan Facility not purchased by OPG will be sold to Drax or marketed elsewhere.

We do not expect significant seasonality in our profits from our Atikokan and Wawa Facilities, although we do expect to recognize revenue and receive cash in large increments with each shipment by vessel for exported pellets. We expect each vessel to contain approximately 48,000 metric tons, and we will recognize revenue and receive cash payments upon each shipment’s acceptance by Drax. We have entered into long-term off-take contracts with Drax and OPG, which are utility companies that operate throughout the year. We have been producing wood pellets from these facilities year-round to meet these contractual requirements. Ground conditions during the wet season referred to as “spring break-up” or “snow melt”, may prevent or curtail the harvesting of wood to supply pellet production. We expect that our wood pellet mills will build sufficient wood inventory on site through the autumn and winter months to mitigate this potential interruption of wood supply. This inventory build-up may increase our working capital requirements. The Port of Quebec typically remains ice-free during the winter months, which we expect will reduce the risk of interruptions in shipments to Drax. Because shipments to Drax will occur in large vessels, quarterly or annual revenues and profits could fluctuate depending on the timing and number of shipments in each period, particularly until we reach full production capacity at the Wawa Facility.

We intend to utilize Crown Fibre as the primary feedstock at our industrial wood pellet facilities. We believe that using Crown Fibre is desirable due to Ontario’s long-term forest management regime, which supports the availability and supply of wood fibre, and its industry-leading sustainability practices. In addition, we believe that the mixed hardwood trees in Northern Ontario, which have a long maturity period before they can be harvested, have a natural chemical composition that allows for the production of high quality wood pellets for thermal applications. We also use sawmill wood residuals and other sources of biomass, from time to time, as part of the feedstock for the Atikokan and Wawa Facilities.

We have a contract with Canadian National, or the Canadian National Contract, for all rail transportation of wood pellets from the Atikokan Facility and the Wawa Facility to the Port of Quebec. The Atikokan Facility is located 1,300 track miles and the Wawa Facility is located 1,100 track miles from the Port of Quebec. We did not fully meet our 2015 commitment under the Canadian National Contract resulting in cash penalties of $3.3 million.

We have a contract with Quebec Stevedoring Company Limited, or QSL, for our exclusive use of railcar unloading services, pellet storage domes and ship loading services at the Port of Quebec. Access to the Port of Quebec port terminal is available for the entire year. The Port of Quebec’s location along the Saint Lawrence Seaway provides a direct route from Eastern Canada to Europe, and the port can accommodate large Panamax vessels that provide attractive economies of scale for our customers, in contrast to other nearby ports that can accommodate only smaller vessels.

In connection with our acquisition of Fulghum, or the Fulghum Acquisition, we entered into a joint venture with Graanul Invest AS, or 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. We and Graanul each own 50% equity interests in the joint venture, or the Rentech/Graanul JV, which is accounted for under the equity method. The Rentech/Graanul JV owns neither our Atikokan Facility nor our Wawa Facility. The joint venture has the right to develop certain wood pellet-related projects and has certain rights as exercised by either member to participate in future wood pellet projects or acquisitions in North America sourced by the other member. The joint venture currently does not own any tangible assets.

In January 2015, NEWP acquired the assets of Allegheny Pellet Corporation, which consists of a wood pellet processing facility located in Youngsville, Pennsylvania, or the Allegheny Facility. NEWP operates four wood pellet processing facilities with a combined annual production capacity of approximately 300,000 short tons. The other three facilities are located in Jaffrey, New Hampshire; Deposit, New York; and Schuyler, New York.

NEWP’s wood pellets, which are designed to have low moisture and ash content, are used in commercial and residential heating applications.

NEWP’s facilities and customers are located in the Northeastern United States. NEWP sells its wood pellets to big-box retailers and specialty retailers, including lawn and garden centers, heating supply stores, hardware stores, markets and convenience stores. It also sells pellets in bulk to large institutions, including schools, universities and governmental agencies to heat buildings. In the aggregate, NEWP’s top two big-box retailers, Home Depot and Lowe’s Home Improvement, represented approximately 31% of NEWP’s total sales for the year ended December 31, 2015. As is typical in the retail wood pellet industry, NEWP’s sales to its customers are primarily made on a purchase order basis, and NEWP generally does not have long-term orders or commitments.

Since NEWP’s wood pellets are used for heating, its sales are seasonal. We typically ship the highest volume of wood pellets from our NEWP facilities during the third and fourth quarters of each year. During the last two years, approximately 56% of NEWP’s total annual volumes were shipped in the second half of the year. As a result of the seasonality of shipments and sales, we expect to experience significant fluctuations in NEWP’s revenues, income and net working capital levels from quarter to quarter. Weather conditions can significantly impact quarterly results by affecting the timing and amount of product demand and deliveries. To accommodate NEWP’s seasonal sales, we build up NEWP’s finished goods inventory from March through August of each year. This inventory build-up typically increases our working capital requirements.

Due to unseasonably warm temperatures during November and December 2015, sales volumes were lower than expected, although our product prices remained high. The warm temperatures, along with depressed prices for competitive heating fuels such as heating oil and propane, continued into 2016. This resulted in lower sales volumes as NEWP’s customers are still carrying inventory purchased in 2015 due to slow buying by retail customers. Starting in February 2016, three of NEWP’s facilities scaled back production days from seven days a week to five days a week, and one facility scaled back its production days to four days a week.

Wood feedstock (wood chips and sawdust) represents the largest component of NEWP’s wood pellet product cost. Competition for wood feedstock supply from pulp, paper and packaging manufacturing, and commercial and institutional wood boiler heating systems may affect our cost of wood feedstock. Our Jaffrey, New Hampshire production facility is affected the most by this competition, followed by our Schuyler, New York production facility, with our Deposit, New York production facility and the Allegheny Facility least affected. We have approximately 171 wood suppliers, of which approximately 61 provide 80% of our wood feedstock needs. We have developed relationships with our suppliers such that our wood costs have remained relatively flat with minimal variability over the last several years.

NEWP’s customers take delivery of the wood pellets at the applicable facility.

Upon completion of Rentech Nitrogen’s merger with CVR Partners, Rentech will be a pure play wood fibre processing company with three core businesses: contract wood handling and chipping services, the manufacture and sale of wood pellets for the U.S. heating market and the manufacture, aggregation and sale of wood pellets for the utility and industrial power generation market. As a result of the fertilizer business divestiture, the new Rentech will be a much smaller company, with a less leveraged capital structure and lower cash interest expense. As we continue to implement our organizational restructuring plan, the Company is also expected to have lower SG&A expenses. Our goal is to operate our remaining businesses to generate more cash than we consume.

Our immediate goals are to strengthen our current industry positions within the outsourced wood chipping industry through our Fulghum Fibres business and in the domestic heating pellet business through our New England Wood Pellet subsidiary. We are also focused on ramping up our two Canadian wood pellet plants to full capacity. Safety remains a high priority for us, and we take great pride in operating our plants safely for the benefit of our employees, the communities in which we operate, and our investors.

Throughout its 25-year operating history, Fulghum has served its customers and grown its contract wood handling and chip processing business through the addition of both owned mills and operated mills. Today, Fulghum continues to focus on serving its existing customers and to pursue new business. We see opportunities to grow as pulp and paper companies consider outsourcing more of their wood chipping needs; as outsourced chipping contracts with competitors expire; and as new facilities requiring chipping services develop. We believe our long-standing reputation as the preferred outsourcing choice for cost-effective, quality and efficient on-demand chipping services well positions us to benefit from these opportunities as they arise. If the construction of a new chip mill is required to meet customer demand and fits our investment criteria, we believe Fulghum would be able to finance the construction at its own operating level as it has done historically, should capital remain limited at the Rentech corporate level. We also see opportunities to secure operating contracts for existing chipping facilities, which would require minimal capital expenditures.

NEWP is the market leader for providing wood pellets to the heating market in the Northeast. The business has historically grown through acquisitions and productivity improvements in the acquired businesses. The bagged pellet industry is fragmented with numerous small independently owned producers, and we believe that NEWP is well positioned given its scale and strength of management to be the natural leader to consolidate supply for the market. Our goal for NEWP is to acquire additional pellet facilities; however, there is no certainty that acquisitions can be completed with any regularity. We believe that NEWP, like Fulghum, could fund its growth acquisitions at the operating level with debt financing.

Developing industrial wood pellet facilities, such as our Atikokan and Wawa plants, requires significant capital; lead times to arrange off-take, supply and construction contracts; and time to construct and ramp-up production to design capacities. We are fully aware of the challenges and believe we have gained valuable institutional knowledge from our experience developing, constructing and now operating the Atikokan and Wawa Facilities, all of which would serve us well should we decide to embark on additional pellet plant development projects. Based on third party studies, we believe that the long-term demand for quality pellets for the industrial market will continue to exceed supply for a number of years. Given the Provincial Government Crown control, industry leading sustainability practices, high energy content, and exchange rate benefits associated with Eastern Canadian forests, we believe that we are situated amidst North America’s most attractive wood baskets and that opportunities exist for new development in this region. In addition, our facility at the port of Quebec presents ideal access to European markets for additional production from the region. We also believe that as the industry evolves, the production of wood pellets will be “commoditized” and projects with long-term contracts should be able to attract project debt, thereby reducing equity contributions from project owners as compared to today’s levels. If this indeed becomes the case, the industry can grow with lower levels of equity investment. Rentech could be a credible participant in such an environment. As other companies in the industry are nearing completion and/or ramping-up of their respective plants, we believe a reassessment of the industry is underway. Many industry participants are single plant operators, and as such, we believe there may be a consolidation in the industry, combining assets and operational expertise.

As we assess the new dynamics within the industrial wood pellet industry, we will determine an appropriate role for our Company in this segment. We believe that our diverse portfolio of wood fibre businesses can provide the basis for growing cash flow and significant value creation. However, our immediate focus is on ramping up our existing industrial pellet facilities in Canada and streamlining our organization to better and more cost effectively support a Rentech solely focused on wood fibre processing.

We own, through our wholly owned subsidiaries, the general partner interest and 59.6% of the common units representing limited partner interests in RNP, a publicly traded partnership. RNP, through its wholly owned subsidiary, RNLLC, manufactures natural-gas based nitrogen fertilizer products at our East Dubuque Facility and sells such products to customers located in the Mid Corn Belt region of the United States. In addition, RNP, through its wholly owned subsidiary, RNPLLC, manufactures fertilizer products and sulfuric acid at our Pasadena Facility and sells, through distributors, its products to customers primarily in the United States. Our East Dubuque Facility and our Pasadena Facility are referred to collectively as the “Fertilizer Facilities.” Substantially all of RNP’s revenues are derived from the sale of nitrogen-based fertilizer products.

On August 9, 2015, RNP entered into the Merger. The pending Merger represents a strategic shift that will have a major effect on our operations and financial results. Following the signing of the Merger Agreement, the East Dubuque Facility is now reported as a discontinued operation. For further discussion, see “Note 1 — Description of Business” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

Our East Dubuque Facility is located on 210 acres in the northwest corner of Illinois on a 140-foot bluff above the Upper Mississippi River. Our East Dubuque Facility produces ammonia, urea ammonium nitrate solution, or UAN, liquid and granular urea, nitric acid and food-grade carbon dioxide, or CO₂, using natural gas as its primary feedstock. We sell such products to customers located in the Mid Corn Belt region of the United States, the largest market in the United States for direct application of nitrogen fertilizer products. Our East Dubuque Facility operates continuously, except for planned shutdowns for maintenance and efficiency improvements, and unplanned shutdowns. Our East Dubuque Facility can optimize its product mix according to changes in demand and pricing for its various products. Some of these products are final products sold to customers, and others, including ammonia, are both final products and feedstocks for other products, such as UAN, nitric acid, liquid urea and granular urea.

The following table sets forth our East Dubuque Facility’s current rated production capacity for the listed products in tons per day and tons per year, and its product storage capacity:

The following table sets forth the amount of products produced by, and shipped from, the East Dubuque Facility for the years ended December 31, 2015, 2014 and 2013:

In 2015, we completed the nitric acid expansion project at our East Dubuque Facility, which consisted of replacing a compressor train. The new compressor train increased nitric acid production at the facility by 20 tons per day or 7,300 tons annually, and decreased electric power usage. We spent $7.8 million on this project.

In the past, we regularly evaluated or pursued opportunities to increase our profitability by expanding the East Dubuque Facility’s production capabilities and product offerings. In 2015, we started the ammonia synthesis converter project to replace the ammonia synthesis converter at our East Dubuque Facility. This is expected to increase reliability, production and plant efficiency. The project is expected to cost approximately $30.0 million and to be completed before the end of summer 2016. This project is being funded by operating cash and with borrowings under the credit agreement we entered into in July 2014 with General Electric Corporation, or the GE Credit Agreement.

Our East Dubuque Facility’s product sales are heavily weighted toward sales of ammonia and UAN, which together made up 80% or more of our East Dubuque Facility’s total revenues for the years ended December 31, 2015, 2014 and 2013. A majority of our East Dubuque Facility’s products were sold through our distribution agreement with Agrium, as described below under “—Marketing and Distribution,” with the exception of CO₂, which we sell directly to customers in the food and beverage market at negotiated contract prices. Ammonia and UAN are each sources of nitrogen, but each has its own characteristics, and customers’ preferences for each product vary according to the crop planted, soil and weather conditions, regional farming practices, relative prices and the cost and availability of storage, transportation, handling and application equipment.

Ammonia. Our East Dubuque Facility produces ammonia, the simplest form of nitrogen fertilizer and the feedstock for the production of other nitrogen fertilizers. The ammonia processing unit at our East Dubuque Facility has a current rated capacity of 1,025 tons per day. Our East Dubuque Facility’s ammonia product storage consists of three 20,000 ton tanks.

UAN. UAN is a liquid fertilizer that has a slight ammonia odor but, unlike ammonia, it does not need to be refrigerated or pressurized when transported or stored. Our East Dubuque Facility has two UAN storage tanks with a combined capacity of 80,000 tons.

Urea. Our East Dubuque Facility’s urea solution is (i) sold in its liquid state, (ii) processed into granular urea through the facility’s urea granulation plant to create dry granular urea, (iii) upgraded into UAN or (iv) upgraded into diesel exhaust fluid, or DEF. We assess market demand for each of these four end products and allocate our East Dubuque Facility’s urea solution as appropriate. We sell liquid urea, including DEF, primarily to industrial customers in the power, ethanol and diesel emissions markets. DEF is a urea-based chemical reactant that is intended to reduce nitrogen oxide emissions in the exhaust systems of certain diesel engines of trucks and off-road farm and construction equipment. Although we believe that there is high demand for our granular urea in agricultural markets, we sell it primarily to customers in specialty urea markets where the spherical shape and consistent size of the granules produced by our curtain granulation technology generally command a premium price. Our East Dubuque Facility has a 12,000 ton capacity bulk warehouse that can be used for storage of dry bulk granular urea.

Nitric Acid. Our East Dubuque Facility produces nitric acid through two separate nitric acid plants at the facility. Nitric acid is either sold to third parties or used within the facility for the production of ammonium nitrate solution, as an intermediate from which UAN is produced. We believe that our East Dubuque Facility currently has sufficient storage capacity available for the nitric acid produced at the facility.

CO₂. CO₂ is a gaseous product that is co-manufactured with ammonia, with 1.1 tons of CO₂ produced per ton of ammonia produced. Our East Dubuque Facility utilizes CO₂ in its urea production and has developed a market for CO₂ through purification to a food grade liquid CO₂. Our East Dubuque Facility has storage capacity for 1,900 tons of CO₂. We have multiple CO₂ sales agreements that allow for regular shipment of CO₂ throughout the year, and our current storage capacity is sufficient to support our CO₂ delivery commitments.

In 2006, RNLLC entered into a distribution agreement with Agrium under which a majority of our East Dubuque Facility’s products, including ammonia and UAN, were sold. Pursuant to the distribution agreement, Agrium was obligated to use commercially reasonable efforts to promote the sale of, and to solicit and secure orders from its customers, for ammonia, liquid and granular urea, UAN and nitric acid. RNLLC’s management approved price, quantity and other terms for each sale through Agrium, and it paid Agrium a commission for its services. Under the distribution agreement, Agrium bore the credit risk on products sold through Agrium. We terminated the distribution agreement as of December 31, 2015. We now sell all our products directly to our customers.

During the years ended December 31, 2015, 2014 and 2013, 65% or more of our East Dubuque Facility product sales were through Agrium pursuant to the distribution agreement. The remainder of our East Dubuque Facility’s products, including 100% of CO2, were sold by us directly to our customers.

Under the distribution agreement, RNLLC paid commissions to Agrium on applicable gross sales during the first 10 years of the agreement, not to exceed $5 million during each contract year. The effective commission rate associated with sales under the distribution agreement was 3.9% for the year ended December 31, 2015, 3.4% for the year ended December 31, 2014 and 3.6% for the year ended December 31, 2013.

We sell a majority of our East Dubuque Facility’s nitrogen products to customers located in the facility’s core market, which is the area located within an estimated 200-mile radius of the facility. Given the nature of our business, and consistent with industry practice, we generally do not have long-term minimum sales contracts for fertilizer products with any of our customers. The following table shows for the periods presented the percentage of our sales of products to our top five customers and sales to certain specific customers:

Ammonia, UAN and other nitrogen based fertilizer sales are seasonal, based upon planting, growing and harvesting cycles, and product availability. Inventories are accumulated to allow for shipments to customers during the spring and fall fertilizer application seasons, which require significant storage capacity. The accumulation of inventory to be available for seasonal sales creates significant seasonal working capital requirements. This seasonality generally results in higher fertilizer prices during peak fertilizer application periods, with prices normally reaching their highest point in the spring, decreasing in the summer, and increasing again in the fall. Our East Dubuque Facility’s products are sold both on the spot market for immediate delivery and under prepaid contracts for future delivery of products at fixed prices. The terms of the prepaid contracts, including the percentage of the purchase price paid as a down payment, can vary from season to season. Variations in the proportion of product sold through prepaid sales contracts and variations in the terms of such contracts can increase the seasonal volatility of our cash flows and cause changes in the patterns of seasonal volatility from year-to-year. The cash from prepaid contracts is included in our operating cash flow in the quarter in which the cash is received, while revenue and cost of sales related to prepaid contracts are recognized when products are picked up or delivered and the customer takes title. As a result, the timing of cash received under prepaid contracts may be very different from the timing of recognition of income and expense under those same contracts; significant amounts of profit may be related to cash collected in earlier periods and recorded profits may not be accompanied by a corresponding collection of cash in a particular reporting period. See “Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Another seasonal factor affecting the nitrogen fertilizer industry is the effect of weather-related conditions on the ability to transport products by barge on the Upper Mississippi River. During certain times of the winter, the Upper Mississippi River cannot be used for transport due to lock closures, which could preclude the transportation of nitrogen products by barge during this period and may increase transportation costs. The following table sets forth the percentage of ammonia and UAN tonnage sold that was transported from our East Dubuque Facility by barge:

The following table shows total tons of our East Dubuque Facility’s products shipped for each quarter presented below:

RNLLC expects to ship the highest volume of tons from our East Dubuque Facility during the spring planting season, which occurs during the quarter ending June 30 of each year. The next highest volume of tons shipped is expected in the summer and fall during the quarters ending September 30 and December 31 of each year when customers are filling their storage tanks for the next application season and applying ammonia after the fall harvest. However, as reflected in the table above, the seasonal patterns may change substantially from year-to-year due to various circumstances, including timing of or changes in weather. These seasonal increases and decreases in demand also can cause fluctuations in sales prices. In winter seasons with warmer weather, early planting may shift significant ammonia sales into the quarter ending March 31. Wet or cold weather during the normal spring application season can delay deliveries that would normally occur in the spring. Weather conditions can also affect the mix of demand for our products at various times in the year. Certain weather and soil conditions favor the application of ammonia, while other conditions favor the application of UAN solution.

The principal raw material used to produce nitrogen fertilizer products at our East Dubuque Facility is natural gas. We have historically purchased natural gas in the spot market, through the use of forward purchase contracts, or a combination of both. We use forward purchase contracts to lock in pricing for a portion of our East Dubuque Facility’s natural gas requirements. These forward purchase contracts are generally either fixed-price or index-price, short term in nature and for a fixed supply quantity. Our general policy is to purchase enough natural gas under fixed-price forward contracts to manufacture the products that have been sold under prepaid contracts for future delivery, effectively fixing a substantial portion of the gross margin on pre-sold product. We sometimes also purchase or fix prices on natural gas in excess of those requirements, when we believe that gas prices are attractive enough to lock in even without matching product pre-sales. We are able to purchase natural gas at competitive prices due to our East Dubuque Facility’s connection to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and the facility’s connection to the ANR Pipeline Company, or ANR, pipeline. The pipelines are connected to Nicor Inc.’s, or Nicor’s, distribution system at the Chicago Citygate receipt point and at the Hampshire interconnect, respectively, from which natural gas is transported to the facility. Though we do not typically purchase natural gas for the purpose of resale, we occasionally sell natural gas when purchase commitments exceed production requirements and/or storage capacities, or when the margin from selling natural gas significantly exceeds the margin from producing additional ammonia. The East Dubuque Facility’s receipt point locations and access to the Chicago Citygate receipt point has allowed us to obtain relatively favorable natural gas prices for sales of our excess natural gas due to our proximity to the stable residential demand for the commodity in Chicago, Illinois. The following table shows the natural gas purchased and used in production:

We plan to continue to operate our East Dubuque Facility with natural gas as its primary feedstock. Competitors may have access to cheaper natural gas or other feedstocks that could provide them with a cost advantage. Depending on its magnitude, the amount of this cost advantage could offset our savings on transportation and storage costs as a result of our East Dubuque Facility’s location. The following table shows the average prices for natural gas in our cost of sales, including unrealized gains (losses) on natural gas derivatives, for the periods presented:

Changes in the levels of natural gas prices and market prices of nitrogen-based products can materially affect our financial position and results of operations. Natural gas prices in the United States have experienced significant fluctuations over the last several years, increasing substantially in 2008 and subsequently declining to the current lower levels. Several recent discoveries of large natural gas deposits in North America, combined with advances in technology for natural gas production have caused large increases in the estimates of available natural gas reserves and production in the United States, contributing to significant reductions in the market price of natural gas.

In 2015, we entered into fixed-quantity forward purchase contracts at fixed and indexed prices for various delivery dates through May 31, 2016. As of December 31, 2015, the total MMBtus associated with these forward purchase contracts are 2.6 million and the total amount of the purchase commitments are $8.1 million, resulting in a weighted average rate per MMBtu of $3.15 in these commitments. During January and February 2016, we entered into additional fixed-quantity forward purchase contracts at fixed and indexed prices for various delivery dates through February 29, 2016. The total MMBtus associated with these additional forward purchase contracts are 0.7 million and the total amount of the purchase commitments is $1.5 million, resulting in a weighted average rate per MMBtu of $2.20 in these new commitments.

In most instances, our East Dubuque Facility’s customers take delivery of nitrogen products at the facility, and then arrange and pay to transport the products to their final destinations by truck. Similarly, under the distribution agreement, neither we nor Agrium are responsible for transportation, and customers that purchase our East Dubuque Facility’s products through Agrium also take delivery of such products at the facility. When products are purchased for delivery at the facility, the customer is responsible for all costs of, and bears all risks associated with, the transportation of products from the facility.

In certain instances, customers take delivery of products at the final destination. In these circumstances, we are responsible for the associated transportation costs. In order to accommodate barge and rail deliveries, we own and operate a barge dock on the Mississippi River, and a rail spur that connects to the Burlington Northern Santa Fe Railway and Canadian National.

Our East Dubuque Facility competes with a number of domestic and foreign producers of nitrogen fertilizer products, many of which are larger than us and have significantly greater financial and other resources than we do.

We believe that customers for nitrogen fertilizer products make purchasing decisions principally on the delivered price and availability of the product at the critical application times. Our East Dubuque Facility’s proximity to its customers provides us with a competitive advantage over producers located further away from those customers. The nitrogen fertilizer facilities closest to our East Dubuque Facility are located about 190 miles away in Fort Dodge, Iowa; 275 miles away in Creston, Iowa; 300 miles away in Port Neal, Iowa; and 350 miles away in Lima, Ohio. Our East Dubuque Facility’s physical location in the center of the Mid Corn Belt provides the facility with a transportation cost advantage compared to other producers who must ship their products over greater distances to our East Dubuque Facility’s market area. The combination of our East Dubuque Facility’s proximity to its customers and our storage capacity at the facility allows customers to better time the pick-up and application of our products, as deliveries from more distant locations have a greater risk of missing the short periods of favorable weather conditions during which the application of nitrogen fertilizer and planting may occur. However, other producers of nitrogen fertilizer products are constructing or contemplating the construction of new nitrogen fertilizer facilities in North America, including in the Mid Corn Belt. For example, Orascom Construction Industries Company, or OCI, an Egyptian producer of fertilizer products, has announced that a wholly owned subsidiary of OCI is constructing a facility located 165 miles away from our East Dubuque Facility that is designed to produce between 1.5 to 2.0 million metric tons per year of ammonia, urea, UAN and DEF and that it expects the facility to be operational in 2016. If a new nitrogen fertilizer facility is completed in our East Dubuque Facility’s core market, it could benefit from the same competitive advantage associated with the location of our East Dubuque Facility. The completion of such a facility could have a material adverse effect on our results of operations and financial condition.

On August 9, 2015, RNP entered into the Merger. The consummation of the Merger is subject to certain conditions, including the sale of the Pasadena Facility. At December 31, 2015, the Pasadena Facility did not qualify for held-for-sale or discontinued operations treatment because management had not committed to a plan to sell the Pasadena Facility. For further discussion, see “Note 1 — Description of Business” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

On March 14, 2016, we completed the sale of the Pasadena Facility to IOC. The transaction calls for an initial cash payment to RNP of $5.0 million and a cash working capital adjustment, which is expected to be approximately $6.0 million, after confirmation of the amount within ninety days of the closing of the transaction. The purchase agreement also includes a milestone payment which would be paid to RNP unitholders equal to 50% of the facility’s EBITDA, as defined in the purchase agreement, in excess of $8.0 million cumulatively earned over the next two years. RNP expects to set a record date prior to closing of the Merger for the distribution to its unitholders of the $5.0 million initial cash payment, net of estimated transaction-related fees of approximately $0.6 million. The distribution of the cash working capital adjustment, the milestone payment and any other additional cash payments made by IOC relating to the purchase of the Pasadena Facility will be made to RNP’s unitholders within a reasonable time shortly after receiving such cash payments. RNP expects to set a separate record date immediately prior to the closing of the Merger for the distribution of purchase price adjustment rights representing the right to receive these additional cash payments if and to the extent made. With the sale of the Pasadena Facility, RNP has satisfied all of the material conditions necessary to close the Merger, which is expected to close on or about March 31, 2016.

Our Pasadena Facility is located on an 85 acre site located on the Houston Ship Channel which includes 2,700 linear feet of water frontage and two deep-water docks. The property also includes 415 acres of land, which contains phosphogypsum stacks. In early 2011 prior to our ownership, the Pasadena Facility ceased production of diammonium phosphate and monoammonium phosphate. Agrifos undertook major capital and maintenance projects at the Pasadena Facility, including decommissioning certain phosphate production assets, and converting a portion of the Pasadena Facility’s assets to the production of ammonium sulfate fertilizer. Ammonium sulfate is now the primary product of the Pasadena Facility. Following the conversion, the Pasadena Facility continues to produce sulfuric acid and ammonium thiosulfate.

Our Pasadena Facility is the largest producer of synthetic ammonium sulfate and the third largest producer of ammonium sulfate in North America. We believe that our ammonium sulfate has several characteristics that distinguish it from competing products. In general, the ammonium sulfate that is available for sale in our industry is a byproduct of other processes and does not have certain characteristics valued by customers. Our ammonium sulfate is sized to the specifications preferred by customers and may more easily be blended with other fertilizer products. We also believe that our ammonium sulfate has a longer shelf-life, is more stable and is more easily transported and stored than many other competing products.

In late 2014, we restructured operations at our Pasadena Facility. As part of the restructuring, our Pasadena Facility reduced expected annual production of ammonium sulfate by approximately 25 percent, to 500,000 tons. The plan is to sell approximately 70 percent of the 500,000 tons in the domestic market and the remaining tons in New Zealand and Australia, which are historically the international markets with the highest net prices for ammonium sulfate. Our sales plan reduces historically low-margin sales to Brazil, other than modest amounts expected during peak seasons when higher margins may be achievable. Our restructuring plan provides us the flexibility to increase ammonium sulfate production above the 500,000 ton rate for limited periods, if needed.

The following table sets forth our Pasadena Facility’s current rated production capacity for the listed products in tons per day and tons per year, and our product storage capacity.

The following table sets forth the amount of products produced by, and shipped from, our Pasadena Facility for the years ended December 31, 2015, 2014 and 2013:

In 2015, we completed the power generation project at our Pasadena Facility. The power generation project consists of a steam turbine/generator set that uses excess steam produced from the sulfuric acid plant at the facility to produce electrical power. We expect that a portion of the power will be used in our Pasadena Facility, reducing electricity expenses, and the remaining power will be sold in the deregulated Texas power market, creating an additional revenue stream. We spent $32.9 million on this project through December 31, 2015, of which $2.1 million was spent in 2015.

Our Pasadena Facility’s products may be applied to many types of crops including soybeans, potatoes, cotton, canola, alfalfa, corn and wheat. Our Pasadena Facility’s product sales are heavily weighted toward sales of ammonium sulfate, which made up 80% or more of our Pasadena Facility’s total revenues for the years ended December 31, 2015, 2014 and 2013. Our Pasadena Facility’s products are sold primarily through distribution agreements as described below under “—Marketing and Distribution.”

Ammonium Sulfate. Ammonium sulfate is a solid dual-nutrient fertilizer produced by combining ammonia and sulfuric acid. The sulfur derived from ammonium sulfate is the form of sulfur most available as a nutrient for crops. Our Pasadena Facility produces ammonium sulfate that is sized to the specifications of other nitrogen, phosphate and potash fertilizer products which results in less segregation in blended products. The ammonium sulfate plant at our Pasadena Facility has a current rated capacity of 2,100 tons per day. Our Pasadena Facility has storage capacity for 60,000 tons of ammonium sulfate. In addition, we have an arrangement with IOC that permits us to store approximately 60,000 tons of ammonium sulfate at IOC-controlled terminals, which are located near end customers of our Pasadena Facility’s ammonium sulfate.

Sulfuric Acid. Sulfuric acid not used for production of ammonium sulfate is sold to third parties. The majority of the sulfuric acid sold by our Pasadena Facility is sold through a distributor to industrial consumers. Our Pasadena Facility has storage capacity for 27,000 tons of sulfuric acid.

Ammonium Thiosulfate. Ammonium thiosulfate is a liquid fertilizer. Ammonium thiosulfate typically is combined with UAN to help increase the efficiency of nitrogen in crops. Our Pasadena Facility has storage capacity for 14,000 tons of ammonium thiosulfate.

We sell substantially all of our Pasadena Facility’s products through marketing and distribution agreements. Pursuant to an exclusive marketing agreement we have entered into with IOC, IOC has the exclusive right and obligation to market and sell all of our 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. We compensate 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 years ended December 31, 2015, 2014 and 2013, the marketing agreement with IOC accounted for 80% or more of our Pasadena Facility’s total revenues. The ammonium sulfate storage arrangement with IOC currently is not governed by a written contract. We also have marketing and distribution agreements to sell other products that automatically renew for successive one year periods.

We sell substantially all of the products from our Pasadena Facility to three distributors, and do not have relationships with our distributors’ customers. Our distributors sell a majority of our Pasadena Facility’s products to customers located west of the Mississippi River. Through our distributors, we sold a majority of our Pasadena Facility’s nitrogen products to customers for agricultural uses during the years ended December 31, 2015, 2014 and 2013. The majority of the sulfuric acid our Pasadena Facility sells to its distributor is placed with industrial consumers.

Significant seasonal weather factors have affected demand for and timing of deliveries for our Pasadena Facility’s domestic agricultural products. Domestic prices for ammonium sulfate and ammonium thiosulfate normally reach their highest point in the spring, decreasing in the summer, and increasing again in the fall. Sales prices of these products are adjusted seasonally in order to facilitate distribution of the products throughout the year. Sales to Australia, Brazil and New Zealand may partially offset this domestic seasonal pattern because they are in the southern hemisphere. We operate the ammonium sulfate plant at our Pasadena Facility throughout the year to the extent that there is available storage capacity for this product. We manage our storage capacity by distributing the product through IOC to customers in both domestic and offshore markets throughout the year. If storage capacity becomes insufficient, we would be forced to reduce or cease production until storage capacity became available. Our Pasadena Facility’s ammonium sulfate product is delivered to IOC and sold at prevailing market prices. See “Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Because we sell sulfuric acid through a distributor to industrial consumers, demand for this product generally is constant during the year. Sales of industrial products, such as sulfuric acid, are generally not impacted by seasons and weather. We typically ship sulfuric acid from our Pasadena Facility each month of the year with the majority of the product sold under annual contracts.

The principal raw materials used to produce nitrogen fertilizer products at our Pasadena Facility are ammonia and sulfur. We purchase ammonia for use at the facility from OCI Beaumont, LLC, or OCI Beaumont. OCI Beaumont operates an ammonia and methanol production facility on the Neches River in Nederland, Texas just outside of Beaumont, Texas. Ammonia pricing is based on a published Tampa, Florida market index that is set on a monthly basis through negotiations between large industry producers and consumers, or the Tampa Index. The Tampa index is commonly used in annual contracts for both the agricultural and industrial sectors, and is based on the most recent major industry transactions in the Tampa market. Pricing considerations for ammonia incorporate international supply-demand, ocean freight and production factors. An 1,800 short ton ammonia barge delivers ammonia from Beaumont, Texas to our Pasadena Facility, pursuant to a long term lease we entered into with Port Arthur Towing Company. Ammonia consumed in cost of sales at our Pasadena Facility was 132,000 tons in the year ended December 31, 2015, 155,000 tons in the year ended December 31, 2014 and 128,000 tons in the year ended December 31, 2013.

We obtain sulfur for our Pasadena Facility primarily by truck from local refineries in the Houston area and, to a lesser extent, by rail car. Major suppliers of sulfur to our Pasadena Facility include refiners, such as Phillips 66 Company, Shell Oil Products U.S. and Valero Energy Corporation. Our contracts with these refiners generally have a term of one year. Once pricing for the first quarter of a year is negotiated, the price then fluctuates up or down each subsequent quarter based on changes to the Tampa Index. Sulfur consumed in cost of sales at our Pasadena Facility was 182,000 tons in the year ended December 31, 2015, 194,000 tons in the year ended December 31, 2014 and 172,000 tons in the year ended December 31, 2013.

Our Pasadena Facility is located on the Houston Ship Channel with access to various modes of transportation at favorable prices. The facility has two deep-water docks and access to the Mississippi waterway system and key international waterways. The docks at the facility are suitable for loading and unloading bulk or liquid barges with payloads of up to 35,000 tons. The facility is also connected to key domestic railways which permit the efficient, cost-effective distribution of its products west of the Mississippi River. We believe this provides a significant cost advantage relative to producers located on the East Coast that are forced to switch railways when shipping product to this region. Our location on the Houston Ship Channel allows our distributors or us to use low cost barge and vessel transport when selling products and purchasing feedstocks.

Our Pasadena Facility competes with a number of domestic and foreign producers of nitrogen fertilizer products, many of which are larger than we are and have significantly greater financial and other resources than we do. We believe that customers who purchase the product make purchasing decisions based, in part, on the product’s size and shelf life. The majority of ammonium sulfate

produced in North America and globally is generated as a byproduct of another process. We believe that our ammonium sulfate (which we refer to as synthetic ammonium sulfate) is made specifically for fertilizer, is sized to the specifications preferred by customers, is more easily blended with other fertilizer products and is better suited for use in agricultural application equipment. We also believe that our ammonium sulfate has a longer shelf-life, is more stable and is more easily transported and stored than many other competing products. Honeywell International Inc., or Honeywell, the largest producer of ammonium sulfate in the United States is located in Hopewell, Virginia, about 1,350 miles away from our Pasadena Facility. BASF AG, the second largest producer of ammonium sulfate, is located in Freeport, Texas, about 60 miles away from our Pasadena Facility. Our Pasadena Facility has access to transportation at favorable prices, such as low cost barge and vessel. We believe that our close proximity to sources of our primary feedstocks and access to low-cost transportation enables the facility to offer competitive pricing to customers adjacent to and west of the Mississippi River.

We also face competition from numerous regional producers of sulfuric acid, including E. I. du Pont de Nemours and Company located in El Paso and La Porte, Texas and Burnside, Louisiana, Eco Services located in Baytown and Houston, Texas and Chemtrade Logistics Inc., located in Beaumont, Texas.

Our business is subject to extensive and frequently changing federal, provincial, 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 our fertilizer products, raw materials, and other substances that are part of our operations. These laws include the Clean Air Act, or the CAA, the federal Water Pollution Control Act, or the Clean Water Act, the Resource Conservation and Recovery Act, or RCRA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the Toxic Substances Control Act, or the TSCA, and various other federal, provincial, state and local laws and regulations. These laws, their underlying regulatory requirements and the enforcement thereof impact us by imposing:

These laws significantly affect our operating activities as well as the level of our operating costs and capital expenditures. Failure to comply with environmental laws, including the permits issued to us thereunder, generally could result in substantial fines, penalties or other sanctions, court orders to install pollution-control equipment, permit revocations and facility shutdowns. The following table shows capital expenditures related to environmental, health and safety at the East Dubuque Facility and the Pasadena Facility:

Our operations require numerous permits and authorizations. A decision by a governmental regulator to revoke or substantially modify an existing permit or authorization could have a material adverse effect on our ability to continue operations at the impacted facility. Expansion of our operations is predicated upon obtaining the necessary environmental permits and authorizations. We may experience delays in obtaining, renewing or be unable to obtain required permits, which may delay or interrupt our operations and limit our growth and revenue.

In addition, environmental, health and safety laws may impose joint and several liability, without regard to fault, for cleanup of a contaminated site on current owners and operators of the site, former owners and operators of the site at the time of the disposal of the hazardous substances, any person who arranges for the transportation, disposal or treatment of the hazardous substances, and the transporters who select the disposal and treatment facilities, regardless of the care exercised by such persons. Private parties, including the owners of properties adjacent to other facilities where our wastes are taken for disposal, also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property or natural resource damages. In addition, the risk of accidental spills or releases could expose us to significant liabilities that could have a material adverse effect on our business, financial condition or results of operations.

The laws and regulations to which we are subject are complex, change frequently and have tended to become more stringent over time. The ultimate impact on our business of complying with existing laws and regulations is not always clearly known or determinable due in part to the fact that our 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.

Our facilities have experienced some level of regulatory scrutiny in the past, and we may be subject to further regulatory inspections, future requests for investigation or assertions of liability relating to environmental issues. In the future, we could incur material liabilities or costs related to environmental matters, and these environmental liabilities or costs (including fines or other sanctions) could have a material adverse effect on our results of operations, financial condition and ability to make cash distributions.

Certain environmental regulations and risks associated with our business are outlined below. We strive to maintain compliance with these regulations; however, they are complex and varied, and our operations are heavily regulated, and we may, from time to time, fall out of compliance. For example, the Pasadena Facility may not comply with wastewater and stormwater discharge requirements and solid and hazardous waste requirements. As another example the Illinois Environmental Protection Agency, or the IEPA, alleged that an ammonia release at our East Dubuque Facility violated environmental laws. We entered into a settlement agreement with the IEPA in August 2013 requiring us to connect a device at the facility to an ammonia safety flare by December 1, 2015, which we completed by the specified date.

The Federal Clean Air Act . The CAA and its implementing regulations, as well as the corresponding state laws and regulations that regulate emissions of pollutants into the air, impose permitting and emission control requirements relating to specific air pollutants, as well as the requirement to maintain a risk management program to help prevent accidental releases of certain substances. Standards promulgated pursuant to the CAA may require that we install controls at or make other changes to our facilities. If new controls or changes to operations are needed, the costs could be significant. In addition, failure to comply with the requirements of the CAA and its implementing regulations could result in substantial fines, civil or criminal penalties, or other sanctions.

The regulation of air emissions under the CAA requires that we obtain various construction and operating permits, including Title V air permits and incur capital expenditures for the installation of certain air pollution control devices at our facilities. Measures have been taken to comply with various regulations specific to our operations, such as National Emission Standard for Hazardous Air Pollutants, New Source Performance Standards and New Source Review. We have incurred, and expect to continue to incur, substantial capital expenditures to maintain compliance with these and other air emission regulations that have been promulgated or may be promulgated or revised in the future. As one example, we entered into a consent decree that required us to take action to achieve compliance with the emissions limits and other requirements applicable to our East Dubuque Facility.

In July 2011, we voluntarily began operating what we believe is the first tertiary nitrous oxide, or N₂O catalytic converter in the United States on one of our nitric acid plants at our East Dubuque Facility. This converter is designed to convert approximately 90% of the N₂O generated in our production of nitric acid into nitrogen and oxygen at that one plant. During the period August 21, 2014 through May 14, 2015, 81%, or 2209 metric tons, of N₂O generated by that plant was converted into nitrogen and oxygen. In late December 2013, we installed a N₂O abatement catalyst in the other nitric acid plant at our East Dubuque Facility. This catalyst is also designed to convert approximately 90% of the N₂O generated in our production of nitric acid into nitrogen and oxygen. During the period January 27, 2015 through November 4, 2015, 91%, or 380 metric tons, of N₂O generated by that plant was converted into nitrogen and oxygen. We monitor and record the reduction in N₂O emissions, which is verified by a third party. We have listed the credits on an active registry, such as the Climate Registry maintained by the Climate Action Reserve, and sell the credits for a profit. We have entered into a five-year agreement to supply emission reduction credits with sales totaling $0.5 million for the year ended December 31, 2015, 0.5 million for the year ended December 31, 2014 and $0.1 million for the year ended December 31, 2013.

Release Reporting. The release of hazardous substances or extremely hazardous substances into the environment is subject to release reporting requirements under federal and state environmental laws, including the Emergency Planning and Community Right-to-Know Act. We occasionally experience releases of hazardous or extremely hazardous substances from our operations or properties. We report such releases to the EPA, the IEPA, the Texas Commission on Environmental Quality, and other relevant federal, state and local agencies as required by applicable laws and regulations. If we fail to properly report a release, or if the release violates the law or our permits, it could cause us to become the subject of a governmental enforcement action or third-party claims. Government enforcement or third-party claims relating to releases of hazardous or extremely hazardous substances could result in significant expenditures and liability.

Clean Water Act. The Clean Water Act and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The Clean Water Act and regulations implemented thereunder also prohibit the discharge of dredge and fill material into regulated waters, including wetlands, unless authorized by an appropriately issued permit. In addition, the Clean Water Act and

analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities. Spill prevention, control and countermeasure requirements of federal laws require appropriate containment berms and similar structures to help prevent the contamination of navigable waters by a petroleum hydrocarbon tank spill, rupture or leak. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with discharge permits or other requirements of the Clean Water Act and analogous state laws and regulations.

Greenhouse Gas Emissions. Legislative and regulatory measures to address greenhouse gas, or GHG, emissions (including CO2, methane and N₂O) are in various phases of discussion or implementation. At the federal legislative level, Congress has previously considered legislation requiring a mandatory reduction of GHG emissions. Although Congressional passage of such legislation does not appear imminent at this time, it could be adopted at a future date. It is also possible that Congress may pass alternative climate change bills that do not mandate a nationwide cap-and-trade program and instead focus on promoting renewable energy and energy efficiency or impose a carbon fee.

Management of Hazardous Substances and Contamination. Under CERCLA and related state laws, certain persons may be liable at sites where or from release or threatened release of hazardous substances has occurred or is threatened. These persons can include the current owner or operator of property where a release or threatened release occurred, any persons who owned or operated the property when the release occurred, and any persons who disposed of, or arranged for the transportation or disposal of, hazardous substances at a contaminated property. Liability under CERCLA is strict, retroactive and, under certain circumstances, joint and several, so that any responsible party may be held liable for the entire cost of investigating and remediating the release of hazardous substances. RCRA regulates the generation, treatment, storage, handling, transportation and disposal of solid waste and requires states to develop programs to ensure the safe disposal of solid waste. Under RCRA, persons may be liable at sites where the past or present storage, handling, treatment, transportation, or disposal of any solid or hazardous waste may present an imminent and substantial endangerment to health or the environment. These persons can include the current owner or operator of property where disposal occurred, any persons who owned or operated the property when the disposal occurred, and any persons who disposed of, or arranged for the transportation or disposal of, hazardous substances at a contaminated property. Liability under RCRA is strict and, under certain circumstances, joint and several, so that any responsible party may be held liable for the entire cost of investigating and remediating the release of hazardous substances. As is the case with all companies engaged in similar industries, depending on the underlying facts and circumstances we face potential exposure from future claims and lawsuits involving environmental matters, including soil and water contamination, personal injury or property damage allegedly caused by hazardous substances that we manufactured, handled, used, stored, transported, spilled, disposed of or released. We cannot assure you that we will not become involved in future proceedings related to our release of hazardous or extremely hazardous substances or that, if we were held responsible for damages in any existing or future proceedings, such costs would be covered by insurance or would not be material. For a discussion of hazardous substances management at the Pasadena Facility, see the risk factor captioned “There are phosphogypsum stacks located at the Pasadena Facility that will require closure. In the event we become financially obligated for the costs of closure, this would have a material adverse effect on our business and cash flow.” For a discussion of releases at the Pasadena Facility, see the risk factor captioned “Soil and groundwater at the Pasadena Facility is pervasively contaminated, and we may incur costs to investigate and remediate known or suspected contamination at the Pasadena Facility. We may also face legal actions or sanctions or incur costs related to contamination or noncompliance with environmental laws at the facility.”

Underground Injection Operations. Underground injection operations are subject to the Safe Drinking Water Act, or SWDA, as well as analogous state laws and regulations. Under the SWDA, the EPA established the underground injection control, or UIC program, which includes requirements for permitting, testing, monitoring, record keeping, and reporting of injection well activities, as well as a prohibition against the migration of fluid containing any contaminant into underground sources of drinking water. ExxonMobil Corporation (a former owner of the Pasadena Facility), or ExxonMobil, operates injection wells located at or surrounded by our Pasadena Facility for the disposal of wastewater related to the phosphogypsum stacks. State regulations require that a permit be obtained from the applicable regulatory agencies to operate underground injection wells. Any leakage from the subsurface portions of the injection wells could cause degradation of fresh groundwater resources, potentially resulting in suspension of ExxonMobil’s UIC permit, which could adversely impact the closure of the phosphogypsum stacks.

Environmental Insurance. We have a premises pollution liability insurance policy which covers third party bodily injury and property damages claims, remediation costs and associated legal defense expenses for pollution conditions at or migrating from our facilities and the transportation risks associated with moving waste from our facilities to offsite locations for unloading or depositing waste. The policy also covers business interruptions and non-owned disposal sites. Our policy is subject to a limit and self-insured retention and contains other terms, exclusions, conditions and limitations that could apply to a particular pollution condition claim, including the closure of the gypsum stacks (the responsibility of ExxonMobil) and we cannot guarantee that a claim will be adequately insured for all potential damages.

We are subject to a number of federal, provincial and state laws and regulations in the United States and Canada related to safety, including the federal Occupational Safety and Health Act, or OSHA, the Occupational Health and Safety Regulations, the Ontario Occupational Health and Safety Act, and comparable Canadian, provincial and state statutes and regulations, the purpose of which are to protect the health and safety of workers. Various OSHA standards may apply to our operations, including standards concerning notices of hazards, safety in excavation and demolition work, the handling of asbestos and asbestos-containing materials, installation and operations of electrical equipment in a wood dust environment, and worker training and emergency response programs. We also are subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals. These regulations apply to any process that involves a chemical at or above the specified thresholds or any process that involves flammable liquid or gas, pressurized tanks, caverns and wells in excess of 10,000 pounds at various locations. We have an internal safety, health and security program designed to monitor and enforce compliance with worker safety requirements. We also are subject to EPA Chemical Accident Prevention Provisions, known as the Risk Management Plan requirements, which are designed to prevent the accidental release of toxic, reactive, flammable or explosive materials, and the United States Coast Guard’s Maritime Security Standards for Facilities, which are designed to regulate the security of high-risk maritime facilities.

Financial information about our business segments is provided in Note 24 of our Consolidated Financial Statements in “Part II — Item 8. Financial Statements and Supplementary Data.”

As of December 31, 2015, we had 716 non-unionized and salaried employees, and 223 unionized employees. Of these employees, 460 were employed by Fulghum, 77 were employed in Canada by Rentech, 97 were employed by NEWP, and 268 were employed by RNP. We believe that we have good relations with our employees. The General Partner has collective bargaining agreements in place covering unionized employees at our East Dubuque Facility and Pasadena Facility. Fulghum has a collective bargaining agreement in place covering unionized employees at one of its mills. The agreement for the East Dubuque Facility expires on October 17, 2016. There are two agreements for the Pasadena Facility. One agreement expires on March 28, 2017 and the other expires on April 30, 2017. The collective bargaining agreement covering unionized employees at one of our Fulghum mills expires on October 31, 2018. We have not experienced labor disruptions in the recent past.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge as soon as reasonably practical after they are filed or furnished to the SEC, at the “Investor Relations” portion of our website, www.rentechinc.com. Materials we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding us that we file electronically with the SEC. The information contained on our website does not constitute part of this report.

Set forth below are certain risk factors related to our business. Actual results could differ materially from those anticipated as a result of these and various other factors, including those set forth in our other periodic and current reports filed with the SEC, from time to time. If any risks or uncertainties develop into an actual event, our business, financial condition, cash flow or results of operations could be materially adversely affected. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Related to Our Consolidated Business, Liquidity, Financial Condition, and Results of Operations

We have never operated at a profit. If we do not become profitable on an ongoing basis, we may be unable to continue our operations.

We have a history of operating losses and have never operated at a profit. From our inception on December 18, 1981 through December 31, 2015, we have an accumulated deficit of $532.0 million. If we do not become profitable on an ongoing basis, we may be unable to continue our operations. Ultimately, our ability to remain in business will depend upon earning a profit from our wood fibre processing business. Failure to do so would have a material adverse effect on our financial position, results of operations, cash flows and prospects.

If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, acquisitions, investments or other business activities, reduce or eliminate future borrowings, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Failure to pay our indebtedness on time would constitute an event of default under the agreements governing our indebtedness,

We expect the Merger and associated sale of the Pasadena Facility to provide sufficient liquidity to the Company. The failure of the Merger to occur within the expected time frame could have a material adverse effect on our business, financial condition, results of operations, liquidity and share price if we are not able to access adequate alternate sources of liquidity.

On August 9, 2015, RNP entered into the Merger Agreement under which RNP and the General Partner will merge with affiliates of CVR Partners. Consummation of the Merger is subject to certain conditions. We cannot assure you that the conditions to the Merger will be satisfied, or where waiver is permissible, waived, or that the Merger will close in the expected time frame or at all. If (i) the Merger is not consummated within the expected time frame, or at all, and (ii) we are not able to access adequate alternate sources of liquidity, this could have a material adverse effect on our business, financial condition, results of operations, liquidity and share price.

Any failure to consummate the Merger, or significant delays in consummating the Merger, could negatively affect our share price, business and financial results.

If the Merger is not consummated, or if there are significant delays in consummating the Merger, our share price and future business and financial results could be negatively affected, and will be subject to several risks, including the following:

Subsequent to the announcement of the Merger, two putative class action lawsuits were commenced on behalf of the public unitholders of RNP against RNP, the General Partner and certain other parties seeking, among other things, to enjoin the Merger. On February 1, 2016, plaintiffs and defendants entered into a memorandum of understanding providing for the proposed settlements of the lawsuits. Additional lawsuits with similar allegations may be filed. One of the conditions to the closing of the Merger is that no law, order, judgment or injunction shall have been issued, enacted or promulgated by a court of competent jurisdiction or other governmental authority restraining or prohibiting a party from consummating the Merger. Accordingly, if any plaintiff is successful in obtaining an injunction prohibiting the consummation of the Merger, then such injunction may prevent the Merger from becoming effective, or delay its becoming effective within the expected time frame.

In connection with the Merger, we have agreed to use some or all of the CVR Partners common units to be issued to us in the Merger to repay the par value of the Series E Preferred Stock and the principal amount of the Tranche A Loan held by the GSO Funds. Depending on the value attributed to the CVR Partners common units in this exchange, we may not receive any CVR Partners common units in the Merger and some of the Series E Preferred Stock and the Tranche A Loan may remain outstanding after the Merger.

In connection with the Merger, the Company entered into an agreement with GSO Capital Partners LP and certain of its affiliated or managed funds, or GSO Funds, to modify the repayment terms of the Tranche A loan as defined under the A&R GSO Credit Agreement, or the Tranche A Loans, and Series E Convertible Preferred Stock, or the Series E Preferred Stock. As discussed in “Note 15 – Debt” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data”, under the new agreement, the Company is required to deliver to GSO Funds the lesser of (i) all of the units of CVR Partners the Company receives at the closing of the Merger or (ii) $140 million of units of CVR Partners (valued using the volume weighted average price of the CVR units for the 60 trading days ending two days prior to the closing of the Merger, less a 15% discount) in exchange for retiring the equivalent dollar amount of Series E Preferred Stock and Tranche A Loan debt. To the extent that there are not enough units of CVR Partners available to repay the GSO Funds in full, any portion of the par value of the Series E Preferred Stock or the principal amount of the Tranche A Loans not repaid shall remain outstanding (and the Tranche A Loans will be converted to Tranche B loans as defined under the A&R GSO Credit Agreement, or the Tranche B Loans). Based on the 60-day volume weighted average price of CVR Partners common units (less a 15% discount) as of February 29, 2016, we and the GSO Funds are expected to hold approximately 0% and 22%, respectively, of the aggregate number of CVR Partners common units outstanding immediately after the Merger. However, because the market price of CVR Partners common units will fluctuate prior to the consummation of the Merger, we cannot guarantee that the number of CVR Partners common units to be issued to us in the Merger will be sufficient to repay in full the par value of the Series E Preferred Stock and the principal amount of the Tranche A Loans. As a result, depending on the value attributed to the CVR Partners common units in the exchange, we may not receive any CVR Partners common units in the Merger and some of the Series E Preferred Stock and Tranche A Loan may remain outstanding after the Merger.

There are significant risks associated with construction, expansion and other projects that may prevent completion of those projects on budget, on schedule or at all.

We intend to continue to expand our wood fibre processing business and may undertake additional expansion projects at our Fertilizer Facilities. Projects of the scope and scale we are undertaking or may undertake in the future entail significant risks, including:

Construction, equipment or staffing problems or difficulties in obtaining any of the requisite licenses, permits and authorizations from regulatory authorities could increase the total cost, delay or prevent the construction or completion of a project. Expansion projects also increase operational risk due to the operation of new equipment and the integration of new equipment into facility operations.

In addition, we cannot assure you that we will have adequate sources of funding to undertake or complete major projects. As a result, we may need to obtain additional debt and/or equity financing to complete such projects. There is no guarantee that we will be able to obtain other debt or equity financing on acceptable terms or at all. Moreover, if we are able to complete these projects, production levels at our facilities may not meet expectations that we have set.

As a result of these factors, we cannot assure you that our projects will commence operations on schedule or at all, that the costs for the projects will not exceed budgeted amounts or that production levels will achieve the expectations that we have set. Failure to complete a project on budget, on schedule or at all or to achieve expected production levels may adversely impact our ability to grow our business.

Any operational disruption at our facilities, as a result of equipment failure, an accident, adverse weather, a natural disaster or another interruption, could result in a reduction of sales volumes and could cause us to incur substantial expenditures. A prolonged disruption could materially affect the cash flow we expect from our facilities, or lead to a default under our debt agreements.

The equipment at our facilities could fail and could be difficult to replace. Our facilities may be subject to significant interruption if they were to experience a major accident or equipment failure, including accidents or equipment failures caused during expansion projects, or if they were damaged by severe weather or natural disaster. Significant shutdowns at our facilities could significantly reduce the amount of product available for sale, which could reduce or eliminate profits and cash flow from our operations. For example, in March 2014, we experienced an operational disruption at one of our wood chipping facilities, and in the fourth quarter of 2013, we experienced operational disruptions at both of our Fertilizer Facilities, which in each case negatively affected our results of operations. In the case of the wood chipping facility, a fire started in the maintenance area during normal welding and grinding operations, and approximately 65% of the facility was lost in the fire, including the entire electrical system. We deployed portable and other temporary chipping systems to supply partial volumes to the facility’s customer while the facility was rebuilt. Construction of a new facility and supporting infrastructure was completed in September 2014. Our East Dubuque Facility halted production due to a fire and operated at reduced rates following its turnaround after the discovery of the need for repairs to the foundation of one of its syngas compressors. Our Pasadena Facility also underwent a turnaround in December 2013, which lasted longer than anticipated due to issues with a contractor and weather delays. In addition, we are currently replacing the ammonia synthesis converter at our East Dubuque Facility, which we expect to be completed before the end of summer 2016. However, if the existing ammonia synthesis converter were to fail or suffer damage prior to completion of its replacement, this could cause a shutdown of our East Dubuque Facility.

Repairs to our facilities could be expensive, and could be so extensive that our facilities could not economically be placed back into service. It has become increasingly difficult to obtain replacement parts for equipment and the unavailability of replacement parts could impede our ability to make repairs to our facilities when needed. We currently maintain property insurance, including business interruption insurance, but we may not have sufficient coverage, or may be unable in the future to obtain sufficient coverage at reasonable costs. A prolonged disruption at our facilities could materially affect the cash flow we expect from our facilities, or lead to a default under our debt agreements. In addition, operations at our Fertilizer Facilities are subject to hazards inherent in chemical processing. Some of those hazards may cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. As a result, operational disruptions at our facilities could materially adversely impact our business, financial condition and results of operations.

Our Chief Executive Officer transition involves significant risks and our ability to successfully manage this transition and other organizational change could impact our business results.

Mr. Forman was elected as our Chief Executive Officer and President on December 9, 2014. He is in the process of assessing our business and refining our strategy and operations. Leadership transitions can be inherently difficult to manage, and an inadequate transition of our CEO may cause disruption to our business, including our relationships with customers. In addition, we continue to execute a number of significant business and organizational changes, including acquisitions, divestitures and workforce optimization projects to support our growth strategies. Successfully managing these changes, including retention of particularly key employees, is critical to our business success. This includes developing organization capabilities in key growth markets where the depth of skilled or experienced employees may be limited and competition for these resources is intense.

We may have to raise substantial additional capital to execute our business plan and, in the event that our current and expected sources of funding are insufficient, to fund working capital and to continue our operations. Competitors with superior access to capital may have a substantial advantage over us.

We would require additional capital to pursue acquisitions of wood chipping or wood pellet businesses, to refinance our existing indebtedness and to pursue additional wood pellet projects. Our competitors who have superior access to capital may have a competitive advantage over us in these activities. In addition, since we have never operated at a profit, we may require additional capital to fund our working capital needs after we have exhausted our current cash on hand if we are unable to operate at a profit in the future. Our failure to raise additional capital when needed would have a material adverse effect on our results of operations, liquidity and cash flows and our ability to execute our business plan.

Changes in ownership of shares of our common stock could result in the loss of our ability to use our net operating losses.

We have accumulated substantial operating losses. For federal and state tax purposes, we may “carry forward” these losses to offset current and future taxable income and thereby reduce our tax liability, subject to certain requirements and restrictions. As of December 31, 2015, we had $196.1 million of federal tax net operating loss carryforwards. We believe our net operating loss carryforwards are an important asset of the Company.

Realization of any benefit from our tax net operating losses is dependent on: (1) our ability to generate future taxable income and (2) the absence of certain future “ownership changes” of our common stock. An “ownership change,” as defined in the applicable federal income tax rules, would place significant limitations, on an annual basis, on the use of such net operating losses to offset any future taxable income we may generate. Such limitations, in conjunction with the net operating loss expiration provisions, could effectively eliminate our ability to use a substantial portion of our net operating losses to offset any future taxable income.

The issuance of shares of our common stock could cause an “ownership change” which would limit our ability to use our net operating losses. Issuances of shares of our common stock that could cause an “ownership change” include the issuance of shares of common stock in financing or strategic transactions or upon future conversion or exercise of outstanding options and warrants.

Execution of our strategy depends, in part, upon the continuing treatment of RNP as a partnership for tax purposes, as well as the continuing ability to obtain partnership treatment for a potential master limited partnership to which we would transfer our wood fibre processing assets.

The present United States federal income tax treatment of publicly traded limited partnerships, including RNP, may be modified by administrative, legislative or judicial interpretation at any time, including on a retroactive basis. For example, from time to time, members of Congress and the President propose and consider substantive changes to the existing United States federal income tax laws that affect publicly traded limited partnerships, including the elimination of the qualifying income exception under Internal Revenue Code Section 7704(d), upon which RNP relies for its treatment as a partnership for United States federal income tax purposes. Any modification to the United States federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet the exception for RNP to be treated as a partnership for United States federal income tax purposes. However, we are unable to predict whether any such changes, or other proposals, will ultimately be enacted or, if enacted, whether they will be enacted in their proposed form, or whether they will apply to us. Any such changes could cause a substantial reduction in the value of our common units.

We have identified and disclosed material weaknesses in our internal control over financial reporting, which could, if not remediated, result in material misstatements in our financial statements, adversely affect investor confidence, impair the value of our common stock and increase our cost of raising capital. There is also the risk that additional control weaknesses could be discovered.

Our management identified material weaknesses in our internal control over financial reporting for the fiscal year ended December 31, 2014 relating to (i) the review of the cash flow forecasts used in the accounting for long-lived asset recoverability and goodwill impairment, (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. For a discussion of our internal control over financial reporting and a description of the identified material weaknesses, see “Part II—Item 9A. Controls and Procedures.”

A material weakness is a deficiency, or 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. Although management has implemented, and is continuing to implement, certain procedures to strengthen our internal controls, material weaknesses in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. If we are unsuccessful in implementing or following our remediation plan, or if we discover additional control weaknesses, we may not be able to accurately report our financial condition, results of operations or cash flows or maintain effective internal control over financial reporting. If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC and NASDAQ, including a delisting from NASDAQ, securities litigation and a general loss of investor confidence, any one of which could adversely affect investor confidence, impair the value of our common stock and increase our cost of raising capital.

We have a number of competitors in the wood fibre processing business in the United States and in other countries. Our wood chipping business’s principal competitors include major domestic and foreign biomass supply companies and paper and pulp manufacturers, our industrial wood pellet business’s principal competitors include major domestic and foreign biomass supply companies, and we have a number of competitors in our residential and commercial wood pellet business. Some competitors have greater total resources, or better name recognition, and are less dependent on earnings from those businesses, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and development opportunities. Our competitive position could suffer to the extent that we are not able to adapt or expand our own resources either through investments in new or existing operations or through acquisitions, joint ventures or partnerships. An inability to compete successfully in the wood fibre processing business could result in the loss of customers, which could adversely affect our sales and profitability. In addition, as a result of increased pricing pressures in the wood fibre processing business caused by competition, we may in the future experience reductions in our profit margins on sales, or may be unable to pass future input price increases on to our customers, which would reduce our cash flows.

We have experienced difficulties in constructing and ramping up production at our Canadian wood pellet facilities. We may face further difficulties in the future and may not be successful in growing our wood fibre processing businesses.

We have experienced difficulties in completing the construction of the Wawa Facility and Atikokan Facility, including significant cost overruns and delays. We have also experienced challenges increasing the production rate at both facilities toward their design capacities. We intend to grow our wood fibre processing businesses organically through these and future projects and through strategic investments, expansion projects and/or acquisitions. However, our success in growing these businesses is subject to various risks, including the other risks described in this report. We cannot assure you that we will be successful and, in the event that we are unable to achieve the growth in these businesses that we desire, this would limit our returns and our ability to realize upon the investments we have made, including through any initial public offering of such businesses. Accordingly, any failure to achieve the growth we intend to achieve in these businesses would have a material adverse effect on our prospects.

We could continue to face significant difficulties in increasing the production rates at the Atikokan Facility and the Wawa Facility and as well developing and constructing future projects, which could result in cost overruns and delays. These difficulties could include, among others:

There can be no assurance that we will be able to complete the development of these projects or future projects on budget and on time. Any failure by us to complete these projects could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may pursue acquisitions in our wood fibre processing businesses. However, acquisitions involve numerous risks and uncertainties, including intense competition for suitable acquisition targets, the potential unavailability of financial resources necessary to consummate acquisitions, difficulties in identifying suitable acquisition targets or in completing any transactions identified on sufficiently favorable terms, and the need to obtain regulatory or other governmental approvals that may be necessary to complete acquisitions. In addition, any future acquisitions may entail significant transaction costs, tax consequences and risks associated with entry into new markets and lines of business.

In addition to the risks involved in identifying and completing acquisitions described above, even when acquisitions are completed, integration of acquired entities can involve significant difficulties, such as:

Failure to manage wood fibre acquisition growth risks could have a material adverse effect on our results of operations, financial condition and cash flows. There can be no assurance that we will be able to consummate any wood fibre acquisitions, successfully integrate acquired entities, or generate positive cash flow at any acquired company.

Our wood chipping business depends, in significant part, on continued demand from the board, paper, pulp and packaging industry. Any decline in demand for our services from this industry could have a negative impact on us.

Our wood chipping business provides services to manufacturers of boxboard, container board, paper, pulp and similar products. Any decline in the industries in which these manufacturers participate could, in turn, have a negative impact on us. Some of the risks relating to this industry include:

In the event that our wood chipping business experiences a decline as a result of these factors or otherwise, this would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have contracted to sell a significant portion of our industrial wood pellets from the Atikokan and Wawa Facilities pursuant to our off-take contracts with Drax and OPG. We expect to sell the remaining portion of our industrial wood pellets from the Atikokan and Wawa Facilities in spot market arrangements rather than through off-take contracts. If either the Drax or OPG contract is terminated, if economic factors negatively affect pricing under our Drax contract, or if market pricing for industrial wood pellets falls substantially, this likely would adversely affect our business, financial condition, results of operations and cash flows.

We have entered into a ten-year off-take contract with Drax under which we are required to sell to Drax the first 400,000 metric tons of wood pellets per year produced from our Wawa Facility, and we have entered into a ten-year off-take contract with OPG under which we are required to deliver 45,000 metric tons of wood pellets annually. OPG has the option to increase the amount of wood pellets we are required to deliver under the contract to up to 90,000 metric tons annually. Under each of the off-take contracts, Drax and OPG have the right to terminate the contracts for specified reasons. For example, under the Drax Contract, in the event of certain changes to legislation in the UK relating to sustainability, each party may require the other to be financially responsible for half of the costs of such change in an amount up to $2.50 per tonne of wood pellets. In the event that the cost of such changes exceeds such cap, then either party may terminate the contract. We expect to sell the remaining portion of our industrial wood pellets from the Atikokan and Wawa Facilities in spot market arrangements rather than through off-take contracts. If either the Drax or OPG contract is terminated, or if market pricing for industrial wood pellets falls substantially, this could adversely affect our business, financial condition, results of operations and cash flows.

In addition, under the Drax Contract our contract prices are adjusted based on certain economic factors, including among other things, the price of oil. The recent reductions in oil prices have resulted in our products being sold at reduced prices without a commensurate decrease in our fibre procurement costs. If oil prices remain at their current historically low levels, or decline further, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are incurring expenses in Canadian dollars, and have contracted to sell a significant portion of our industrial wood pellets pursuant to off-take contracts under which the purchases are priced in Canadian dollars. As a result, we are subject to the effects of changing rates of exchange for the relevant currencies. Both the expenses we incur outside the United States and the value to our shareholders of future profits earned in foreign currencies may be affected by such exchange rates.

For financial statement reporting purposes, we translate the assets and liabilities of our Canadian subsidiaries at the exchange rates in effect on the balance sheet date and translate their costs and expenses at the rates of exchange in effect at the time of the transaction. We include translation gains and losses in the stockholders’ equity section of our balance sheets. We include net gains and losses resulting from foreign exchange transactions in interest and other income in our statements of operations. Since we translate Canadian dollars into United States dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results. Although the impact of currency fluctuations on our financial results has generally been immaterial in the past there can be no guarantee that the impact of currency fluctuations will not be material in the future.

We may not be able to successfully negotiate industrial wood pellet off-take contracts in the future.

In connection with future industrial wood pellet projects, we expect to enter into long-term off-take contracts for the sale of wood pellets. However, there is no guarantee that we will be able to successfully negotiate off-take contracts on acceptable terms. Our ability to proceed with future wood pellet projects likely will depend on our ability to enter into off-take contracts for those projects. As a result, in the event that we are not able to enter into an off-take contract on satisfactory terms, this may prevent us from proceeding with the project and, in turn, materially adversely affect our business and growth prospects.

We have entered into various contracts relating to our Atikokan and Wawa Facilities, which will require us to pay penalties if we do not comply with their terms.

Under the Drax Contract, we are required to sell to Drax the first 400,000 metric tons of wood pellets per year produced from our Wawa Facility and, under the OPG contract, we are required to sell to OPG up to 90,000 metric tons of wood pellets per year. In the event that we do not deliver wood pellets as required under the contracts, we will be required to pay an amount equal to the difference between the contract price for the wood pellets and the price of any wood pellets purchased in replacement. In August 2015, the Company entered into an amendment to the Drax Contract. The amendment canceled all wood pellet deliveries in 2015, and provided for a comprehensive settlement amount of approximately $2.6 million to be paid to Drax in exchange for all canceled deliveries under all Drax Contract amendments. The penalty will be paid in the form of credits on the first several expected deliveries to Drax in early 2016. In addition, the 72,000 metric tons of the original 2015 pellet deliveries were pushed to 2018 and 2019 at 2015 pricing, which is expected to be lower than the pricing in those future years under the original terms of the contract. In addition, each contract contains certain quality requirements, the failure of which to satisfy would give Drax or OPG the right to reject the wood pellets and to return them to us at our cost. We also have entered into a contract with Canadian National Railway Company for rail transportation of wood pellets from our Atikokan and Wawa Facilities to the Port of Quebec for delivery to Drax. Under the contract, we committed to transport a minimum of 3,600 rail carloads annually for the duration of the contract. If we do not meet these commitments, we would be required to pay a penalty equal to $1,000 per rail car. Due to issues discovered at the Wawa Facility, we did not fully meet our 2015 commitment under the Canadian National contract resulting in cash penalties of $3.3 million. In the event that we do not meet the commitments under the contracts described above in the future, we will be required to pay additional penalties and other damages resulting from our failure to perform, which would adversely affect our financial condition, results of operations and cash flows.

We will rely primarily on Crown Fibre from the Government of Ontario for our feedstock needs at our wood pellet facilities in Canada. In the event that we lose the right to Crown Fibre or we are otherwise unable to secure adequate supplies of wood fibre on acceptable terms, this would likely materially adversely affect operations at our Canadian wood pellet facilities.

We will use primarily Crown Fibre for our wood pellet facilities in Canada. Generally, obtaining Crown Fibre is a two-step process. First, the Government of Ontario must agree to make fibre available to us. At the Wawa Facility, we expect this will be achieved via multiple one to two year forest resource licenses. We expect to employ a similar strategy at our Atikokan Facility, except that we intend to enter into an Agreement for the Supply of Crown Forest Resources in the near term pursuant to which the Government of Ontario would make available to us 279,400 cubic meters of Crown Fibre annually for a 10 year term. There is no guarantee that the Government of Ontario will enter into or renew forest resource licenses as they expire. Further, there is no guarantee in the forest resource licenses or the Agreement for the Supply of Crown Forest Resources that the volumes contemplated therein will actually be available and the Government of Ontario reserves broad rights to modify and terminate such licenses and agreements.

The second step of our process for obtaining Crown Fibre is to enter into agreements with private parties that have existing rights over the forests from which the Government of Ontario has agreed to make Crown Fibre available to us. We expect that these agreements will provide us with the right to access and harvest or purchase the Crown Fibre made available to us by the Government of Ontario. While the private parties are statutorily required to make fibre available to parties such as us, the terms on which they make the fibre available may not be economical to us. As a result, we cannot assure you that will enter into such agreements on satisfactory terms or at all.

If the Government of Ontario ceases to make fibre available to us or we are unable to obtain the right to access and harvest or purchase Crown Fibre from the private parties on acceptable terms, we may attempt to make open market purchases of wood fibre to satisfy the feedstock needs for our Canadian wood pellet facilities. However, there is no guarantee that we would be able to secure a sufficient supply of wood fibre on acceptable terms or at all. If we are unable to secure adequate supplies of wood fibre on acceptable terms, this would likely have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We expect to depend on third parties to deliver and harvest the timber we process at, and to transport the finished wood pellets from, our wood pellet facilities in Canada.

We expect to contract with independent harvesting companies to harvest and deliver timber to our Atikokan and Wawa Facilities. Under the contracts, we expect that the harvesting companies will be responsible for all elements of harvesting and transporting timber to our wood pellet facilities in Canada, including but not limited to building haul roads, surveying and block layout. The harvesting companies’ ability to timely deliver timber to our facilities could be adversely impacted by various factors, including but not limited to the inability to build necessary roads on time, employee strikes, weather conditions or traffic accidents. In the event that the harvesting companies fail to deliver timber to our facilities on a timely basis, this would hinder our ability to produce wood pellets and, in turn, would materially adversely affect our business, financial condition, results of operations and cash flows.

In connection with the delivery of finished wood pellets to Drax at the Port of Quebec, we have entered into (i) the Canadian National Contract for all rail transportation of wood pellets from the Atikokan Facility and the Wawa Facility to the Port of Quebec and (ii) a contract with QSL for our exclusive use of pellet storage domes and loading services at the Port of Quebec. The Atikokan Facility is located 1,300 track miles, and the Wawa Facility is located 1,100 track miles, from the Port of Quebec. In the event that either Canadian National or QSL fails to perform its respective obligations under the applicable contract, this could hinder, delay or prevent our ability to meet our contractual obligations with respect to delivery of wood pellets to Drax and, in turn, could materially adversely affect our business, financial condition, results of operations and cash flows.

The energy industry is highly competitive. Our wood pellet businesses may not successfully compete with other forms of energy.

Our wood pellet businesses will face intense competition from well-established, conventional forms of energy, including petroleum, coal and natural gas. These forms of energy are abundant and widely accepted by consumers, and we may not be able to successfully compete with them. If we complete wood pellet projects and the price of these competing fuels declines as a result of the discovery of new deposits of oil, gas or coal or otherwise, this likely would weaken demand for our wood pellet products. Our wood pellet projects also will compete with other forms of renewable energy, many of which are developing and could attain greater market acceptance than electricity generated from wood pellets. Any failure of our wood pellet businesses to successfully compete with other forms of energy could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The demand for industrial wood pellets is dependent, in significant part, on government regulations over which we have no control.

The demand for industrial wood pellets for energy production is driven, in significant part, by governmental policies and incentives. For example, the European Union, or EU, has adopted legislation that includes certain climate and energy targets for the EU known as the “20-20-20 target.” This legislation aims to achieve the following targets by 2020: (i) a 20% reduction in EU greenhouse gas emissions from 1990 levels; (ii) an increase in the share of EU energy consumption produced from renewable resources to 20%; and (iii) a 20% improvement in the EU’s energy efficiency. The European Commission also has adopted the Communication “Energy Roadmap 2050” renewing its commitment to reduce greenhouse gas emissions to 80 to 95% below 1990 levels by 2050. As part of the Energy Roadmap 2050, the European Commission released the 2030 policy framework for climate and energy, which targets to reduce EU domestic greenhouse gas emissions by 40% below the 1990 level by 2030 and to increase the share of renewable energy consumption to at least 27% by 2030. The UK has been an early adopter of these policies. The UK has adopted legislation targeting a reduction in its greenhouse gas emissions by 80% of 1990 levels by 2050. Through the launch of the Renewable Heat Incentive, the UK has also introduced a new payment system for the generation of heat from renewable sources. Moreover, the “Renewables Obligation” imposed by the UK in 2002 requires all electricity suppliers licensed in the UK to source a specified and annually increasing proportion of electricity from eligible renewable resources, or such suppliers will face a penalty. Under current law, the Renewables Obligation will remain in place through 2037. Some electricity suppliers are transitioning from more traditional fuel such as coal, which cost less than wood pellets, to using wood pellets as a feedstock to comply with this legislation and to receive the related incentives. These transitions would not occur in the absence of such legislation and related incentives. In the event that any of these or other similar governmental policies and incentives are modified or withdrawn, the demand for wood pellets would likely decrease significantly. Any such change in government policies could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our wood fibre processing business is subject to environmental laws and regulations. We expect that the cost of compliance with these laws and regulations will increase over time, and we could become subject to material environmental liabilities.

Our wood fibre processing business is subject to federal, state and local environmental, health and safety regulations governing the emission and release of hazardous substances into the environment and the treatment and discharge of waste water and the storage, handling, use and transportation of hazardous substances. These laws may include, in the United States, the CAA, the Clean Water Act, RCRA, CERCLA, TSCA, and various other federal, state and local laws and regulations, and other laws in Canada and other jurisdictions. Violations of these laws and regulations could result in substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, permit revocations or facility shutdowns. In addition, new environmental laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement of laws and regulations or other developments could require us to make additional expenditures. These expenditures or costs for environmental compliance could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our operations require permits and authorizations. Failure to comply with these permits or environmental laws generally could result in substantial fines, penalties or other sanctions, court orders to install pollution-control equipment, permit revocations and facility shutdowns. We may experience delays in obtaining or be unable to obtain required permits, which may delay or interrupt our operations and limit our growth and revenue. From time to time, we may also need to seek modifications to our permits, and delays in obtaining modifications or an inability to obtain modifications could similarly delay or interrupt our operations and limit our growth and revenue. In addition, as our wood fibre processing facilities ramp-up, emissions testing is required to determine compliance with our permits and applicable law. If the results of this testing indicate that emissions levels exceed applicable thresholds, we could be required to curtail or reduce operations or install pollution control equipment.

Our business, and the real property on which it is operated, also is subject to spills, discharges or other releases of hazardous substances into the environment. We could be held liable for past or future releases at or migrating beneath the real property where we have operated, or the real property currently or formerly owned or leased by us, even if we did not cause the release or own, operate or lease the real property when the release occurred. Past or future spills related to our facilities or transportation of products or hazardous substances from our facilities may give rise to liability (including strict liability, or liability without fault, and potential clean-up responsibility) to governmental entities or private parties under federal, state or local environmental laws, as well as under common law. For example, we could be held strictly liable under CERCLA, for past or future spills without regard to fault or whether our actions were in compliance with the law at the time of the spills. Pursuant to CERCLA and similar state statutes, we could be held liable for contamination associated with our facilities, facilities we formerly owned or operated (if any) and facilities to which we transported or arranged for the transportation of wastes or by-products containing hazardous substances for treatment, storage or disposal. The potential penalties and clean-up costs for past or future releases or spills, liability to third parties for damage to their property or exposure to hazardous substances, or the need to address newly discovered information or conditions that may require response actions could be significant and could have a material adverse effect on our financial condition and results of operations.

Our operations outside the United States may be adversely affected by the operation of laws in those jurisdictions.

Our operations in non-United States jurisdictions are subject to the laws of the jurisdictions in which they operate. Laws in some jurisdictions differ in significant respects from those in the United States, and these differences can affect our ability to react to changes in our business and our rights or ability to enforce rights may be different than would be expected under United States law. Moreover, enforcement of laws in some overseas jurisdictions can be inconsistent and unpredictable, which can affect both our ability to enforce our rights and to undertake activities that we believe are beneficial to our business. As a result, our ability to generate revenue and our expenses in non-United States jurisdictions may differ from what would be expected if United States law governed these operations.

Our wood fibre processing and sales operations in Chile and Uruguay face additional risks.

Fulghum has four wood processing mills in Chile and one in Uruguay. We also sell wood chips and biomass fuel in Chile. Our operations in Chile and Uruguay expose us to the following risks:

If any of these risks materialize or worsen, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Weather conditions could adversely affect the results of operations and financial condition of our wood pellet business. In addition, NEWP’s business is seasonal, and events occurring during seasons in which revenues for this business are typically higher may disproportionately affect our results of operations and financial condition.

Adverse weather conditions could negatively impact sales of NEWP’s wood pellets and the processing of our industrial, residential and commercial wood pellets. Weather conditions generally have an impact on the demand for wood pellets. Because NEWP supplies distributors whose customers depend on heating fuel during the winter, warmer-than-normal temperatures during the first and fourth calendar quarters in one or more regions in which NEWP operates can decrease the total volume we sell and the gross margin realized on those sales. Warmer temperatures in the Northeast could have a particularly adverse impact on sales, since almost all of NEWP’s wood pellets are consumed in that region. A reduction in the total volume we sell or in the gross margin we realize on such sales would negatively impact our business, financial condition and results of operations. To accommodate the seasonality in sales, NEWP typically builds inventory during the months of March through August, which increases its working capital requirements during those months of the year. As a result of the seasonality in its business, NEWP’s revenues, results of operations and net working capital will vary from quarter to quarter.

In addition, colder weather during the winter months could adversely impact our ability to process and pelletize wood for our industrial and residential wood pellet facilities. Weather and weather changes have an impact on our production efficiencies. Colder weather during winter months may adversely impact the processing of wood (particle sizing and drying) prior to pelletizing. Significant moisture from rain and snow may also adversely impact the drying of wood and increase the costs of drying wood fuel. Production process changes such as moisture content, particle sizing, and pelletizing die size may be needed when weather climate conditions change, all of which may adversely affect the processing and pelletizing of wood. A decrease in production efficiencies would increase our production costs. A reduction in the gross margin we realize on such sales would negatively impact our business, financial condition and results of operations.

We are dependent upon the personnel we acquired from the Fulghum and NEWP acquisitions, the loss of whom could adversely affect our business.

Because efficient wood processing requires skilled employees, we depend on the services of the personnel that we acquired through the Fulghum and NEWP acquisitions. Since we have only recently acquired our wood processing business, we may not have sufficient experience or knowledge regarding the operations of this industry without these personnel. As a result, we may be dependent upon the expertise of these personnel to operate the assets or business successfully. If these personnel quit, retire or otherwise cease to be employed by us and we are unable to locate or hire qualified replacements, or if the cost to locate and hire qualified replacements for these employees increases materially, our business, financial condition and results of operations could be adversely affected.

Due to our dependence on significant customers in our residential and commercial wood pellet business, the loss of one or more of such significant customers could adversely affect our results of operations.

NEWP depends on significant customers, and the loss of one or several of such significant customers may have a material adverse effect on its results of operations and financial condition. In the aggregate, NEWP’s top two big-box retailers, Home Depot and Lowe’s Home Improvement, represented about 31% of NEWP’s total sales for the year ended December 31, 2015. As is typical in the wood pellet industry, NEWP’s sales to big-box retailers are primarily made on a purchase order basis, and NEWP generally does not have long-term orders or commitments from our big-box retailers. As a result, we are limited in our ability to predict the level of future sales or commitments from our current customers. If our sales to any of our significant customers were to decline, we may not be able to find other customers to purchase the excess supply of NEWP’s products. The loss of one or several of our significant customers of our wood pellet products, or a significant reduction in purchase volume by any of them, could have a material adverse effect on our results of operation and financial condition.

Our nitrogen fertilizer operations may become unprofitable and may require substantial working capital financing.

In recent years, our nitrogen fertilizer business has generated positive income from operations and positive cash flow from operations. However, in the past, we sustained losses and negative cash flow from operations. Our profits and cash flow are subject to changes in the prices for our products and our main inputs, natural gas, ammonia and sulfur, which are commodities, and, as such, the prices can be volatile in response to numerous factors outside of our control. For example, during the year ended December 31, 2014, the market prices for ammonia and sulfur increased at a faster rate than the increase in prices for our ammonium sulfate and sulfur acid products. As a result, our Pasadena Facility had to write-down $6.0 million of ammonium sulfate inventory to market value, which contributed to a gross loss at the Pasadena Facility for the year. Further, our profits depend on maintaining high rates of production of our products, and interruptions in operations at the Fertilizer Facilities, could materially adversely affect our profitability. In the fourth quarter of 2013, we experienced disruptions at both of our Fertilizer Facilities. The Pasadena Facility underwent a turnaround in December 2013, which lasted longer than anticipated due to issues with a contractor and weather delays, and experienced several relatively small disruptions in production that, in the aggregate, negatively impacted production in 2013. The East Dubuque Facility also experienced a turnaround and a fire, which halted the production of all products in late November and for most of December 2013. These events significantly contributed to a substantial decrease in sales volume in ammonia and UAN sales between the years ended December 31, 2013 and 2012. If we are not able to operate the Fertilizer Facilities at a profit or if we are not able to retain cash or access a sufficient amount of financing for working capital for our nitrogen fertilizer operations, our business, financial condition, cash flow and results of operations could be materially adversely affected, which could adversely affect the trading price of our common stock.

The nitrogen fertilizer business and nitrogen fertilizer prices are seasonal, cyclical and highly volatile and have experienced substantial and sudden downturns in the past. Currently, nitrogen fertilizer demand is at a relative high point and could decrease significantly in the future. Cycles in demand and pricing could potentially expose us to significant fluctuations in our operating and financial results and expose you to material reductions in the trading price of our common stock.

We are exposed to fluctuations in nitrogen fertilizer demand and prices in the agricultural industry. These fluctuations historically have had, and could in the future have, significant effects on prices across all nitrogen fertilizer products and, in turn, our financial condition, cash flow and results of operations, which could result in significant volatility or material reductions in the price of our common stock.

Nitrogen fertilizer products are commodities, the prices of which can be highly volatile. The price of nitrogen fertilizer products depends on a number of factors, including general economic conditions, cyclical trends in end-user markets, supply and demand imbalances, the prices of natural gas, ammonia, sulfur and other raw materials, the prices of other commodities such as corn, soybeans, potatoes, cotton, canola, alfalfa and wheat, and weather conditions, all of which have a greater relevance because of the seasonal nature of fertilizer application. If seasonal demand exceeds the projections on which we base production, our customers may acquire nitrogen fertilizer products from our competitors, and our profitability will be negatively impacted. If seasonal demand is less than we expect, we will be left with excess inventory for which we have limited storage capacity and that will have to be stored or liquidated, which could adversely affect our operating margins.

Demand for nitrogen fertilizer products is dependent on demand for crop nutrients by the global agricultural industry. In recent years, nitrogen fertilizer products have been in high demand, driven by a growing world population, changes in dietary habits and an expanded production of corn. Supply is affected by available capacity and operating rates of nitrogen producers, raw material costs, government policies and global trade. Our results of operations in any year could be negatively impacted by these factors. For example, RNP’s results for the year ended December 31, 2015 were heavily affected by significant unanticipated declines in nitrogen prices. During the year ended December 31, 2015, fertilizer prices fell due to weather factors, reduced expectations for corn acreage in 2016 and increased volumes of urea exported from China. A significant or prolonged decrease in nitrogen fertilizer prices would have a material adverse effect on our business and cash flow. Further, the margins on the sale of ammonium sulfate fertilizer products are currently lower than the margins on our other main nitrogen fertilizer products. If our costs to produce ammonium sulfate fertilizer products increase and the prices at which RNPLLC sells these products do not correspondingly increase, our profits from the sale of these products may decrease or we may suffer losses on these sales. For example, during the year ended December 31, 2015, our Pasadena Facility suffered a gross loss due to lower ammonium sulfate sales prices, a write-down of inventory and other factors. A significant or prolonged decrease in profits (or increase in losses) on the sale of our ammonium sulfate fertilizer products would have a material adverse effect on our business and cash flow.

Any decline in United States agricultural production or crop prices or limitations on the use of nitrogen fertilizer for agricultural purposes could have a material adverse effect on the market for nitrogen fertilizer, and on our results of operations and financial condition.

Conditions in the United States agricultural industry significantly impact our operating results. This is particularly the case in the production of corn, which is a major driver of the demand for nitrogen fertilizer products in the United States. The United States agricultural industry in general, and the production and prices of corn in particular, can be affected by a number of factors, including weather patterns and soil conditions, current and projected grain inventories and prices, domestic and international supply of and demand for United States agricultural products and United States and foreign policies regarding trade in agricultural products. Prices for these agricultural products can decrease suddenly and significantly.

State and federal governmental regulations and policies, including farm and biofuel subsidies and commodity support programs, as well as the prices of fertilizer products, may also directly or indirectly influence the number of acres planted, the mix of crops planted and the use of fertilizers for particular agricultural applications. Developments in crop technology, such as nitrogen fixation, the conversion of atmospheric nitrogen into compounds that plants can assimilate, could also reduce the use of chemical fertilizers and adversely affect the demand for nitrogen fertilizer. In addition, from time to time various state legislatures have considered limitations on the use and application of chemical fertilizers due to concerns about the impact of these products on the environment. The adoption or enforcement of such regulations could adversely affect the demand for and prices of nitrogen fertilizers, which could adversely affect our results of operations and cash flows.

A major factor underlying the current high level of demand for our nitrogen-based fertilizer products is the expanding production of ethanol. A decrease in ethanol production, an increase in ethanol imports or a shift away from corn as a principal raw material used to produce ethanol could have a material adverse effect on our results of operations and financial condition.

A major factor underlying the current level of demand for corn and the use of nitrogen fertilizer products is the current production level of ethanol in the United States. Ethanol production in the United States is dependent in part upon a myriad of federal and state incentives. Such incentive programs may not be renewed, or if renewed, they may be renewed on terms significantly less favorable to ethanol producers than current incentive programs. Studies showing that expanded ethanol production may increase the level of GHGs in the environment, or other factors, may reduce political support for ethanol production. The EPA has proposed reducing 2014 renewable blending mandates, which could reduce the level of corn-based ethanol to be blended into the nation’s gasoline supply. If the target for use of renewable fuels such as ethanol is reduced, the demand for corn may fall significantly. Moreover, the current trend in ethanol production research is to develop an efficient method of producing ethanol from cellulose-based biomass. If another ethanol-related subsidy is not implemented, or if an efficient method of producing ethanol from cellulose-based biomass is developed and commercially deployed at scale, the demand for corn may decrease significantly. Any reduction in the demand for corn and, in turn, for nitrogen fertilizer products could have a material adverse effect on our results of operations and financial condition.

We have a number of competitors in the nitrogen fertilizer business in the United States and in other countries, including state-owned and government-subsidized entities. Our East Dubuque Facility’s principal competitors include domestic and foreign fertilizer producers, major grain companies and independent distributors and brokers, including Koch, CF Industries, Agrium, Gavilon, LLC, CHS Inc., Transammonia, Inc., OCI and Helm Fertilizer Corp. Our Pasadena Facility’s principal competitors include domestic and foreign fertilizer producers and independent distributors and brokers, including BASF AG, Honeywell, Agrium, Royal DSM N.V., Dakota Gasification Company and Martin Midstream Partners L.P. and producers of nitrogen fertilizer in China.

Some competitors have greater total resources, or better name recognition, and are less dependent on earnings from fertilizer sales, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and development opportunities. For example, certain of our East Dubuque Facility’s nitrogen fertilizer competitors have recently expanded production capacity for their nitrogen fertilizer products. Furthermore, a few dormant nitrogen production facilities located outside of the East Dubuque Facility’s core market have recently resumed operations. The additional capacity has placed downward pressure on average sales prices for ammonia and UAN. Moreover, we may face additional competition due to further expansion of facilities that are currently operating and the reopening of currently dormant facilities. Also, other producers of nitrogen fertilizer products are contemplating the construction of new nitrogen fertilizer facilities in North America, including in the Mid Corn Belt. For example, OCI has announced that it is constructing a facility located 165 miles away from our East Dubuque Facility that is designed to produce between 1.5 to 2.0 million metric tons per year of ammonia, urea, UAN and diesel exhaust fluid. The facility is expected to begin production in 2016. If a new nitrogen fertilizer facility is completed in the East Dubuque Facility’s core market, it could benefit from the same competitive advantage associated with the location of the facility. As a result, the completion of such a facility could have a material adverse effect on our business and cash flow.

Many of our competitors in the nitrogen fertilizer business incur greater costs than we and our customers do in transporting their products over longer distances via rail, ships, barges and pipelines. There can be no assurance that our competitors’ transportation costs will not decline or that additional pipelines will not be built in the future, lowering the price at which our competitors can sell their products, which could have a material adverse effect on our results of operations and financial condition.

Our competitive position could also suffer to the extent that we are not able to adapt our nitrogen fertilizer product mix to meet the needs of our customers or expand our own resources either through investments in new or existing operations or through joint ventures or partnerships. An inability to compete successfully in the nitrogen fertilizer business could result in the loss of customers, which could adversely affect our sales and profitability. In addition, as a result of increased pricing pressures in the nitrogen fertilizer business caused by competition, we may in the future experience reductions in our profit margins on sales, or may be unable to pass future input price increases on to our customers, which would reduce our cash flows. For example, higher exports of ammonium sulfate from China during 2014 put downward pressure on ammonium sulfate prices, and prices for ammonia and sulfur, key inputs for ammonium sulfate, increased significantly. The factors together negatively impacted product margins for ammonium sulfate.

Our nitrogen fertilizer business is seasonal, which may result in our carrying significant amounts of inventory and seasonal variations in working capital. Our inability to predict future seasonal nitrogen fertilizer demand accurately may result in excess inventory or product shortages.

Our nitrogen fertilizer business is highly seasonal. Historically, most of the annual deliveries of the products from our East Dubuque Facility have occurred during the quarters ending June 30 and December 31 of each year due to the condensed nature of the spring planting season and the fall harvest in the East Dubuque Facility’s market. Farmers in that market tend to apply nitrogen fertilizer during two short application periods, one in the spring and the other in the fall. Since interim period operating results reflect the seasonal nature of our nitrogen fertilizer business, they are not indicative of results expected for the full fiscal year. In addition, results for comparable quarters can vary significantly from one year to the next due primarily to weather-related shifts in planting schedules and purchase patterns of our customers. We expect to incur substantial expenditures for fixed costs throughout the year and substantial expenditures for inventory in advance of the spring planting season and fall harvest season in our East Dubuque Facility’s market as we build inventories during these low demand periods. Seasonality also relates to the limited windows of opportunity that nitrogen fertilizer customers have to complete required tasks at each stage of crop cultivation. Should events such as adverse weather or production or transportation interruptions occur during these seasonal windows, we would face the possibility of reduced revenue without the opportunity to recover until the following season. In addition, an adverse weather pattern affecting one of our markets could have a material adverse effect on the demand for our nitrogen fertilizer products and our revenues, and we may not have sufficient geographic diversity in our customer base to mitigate such effects. Because of the seasonality of agriculture, we also expect to face the risk of significant inventory carrying costs should our customers’ activities be curtailed during their normal seasons. The seasonality can negatively impact accounts receivable collections and increase bad debts. In addition, variations in the proportion of product sold through forward sales and variances in the terms and timing of prepaid contracts can affect working capital requirements and increase the seasonal and year-to-year volatility of our cash flow.

If seasonal demand for nitrogen fertilizer exceeds our projections, we will not have enough product and our customers may acquire products from our competitors. If seasonal demand is less than we expect, we will be left with excess inventory and higher working capital and liquidity requirements. The degree of seasonality of our business can change significantly from year to year due to conditions in the agricultural industry and other factors.

The market for natural gas has been volatile. Natural gas prices are currently at a relative low point. An increase in natural gas prices could impact our relative competitive position when compared to other foreign and domestic nitrogen fertilizer producers, and if prices for natural gas increase significantly, we may not be able to economically operate our East Dubuque Facility.

The operation of our East Dubuque Facility with natural gas as the primary feedstock exposes us to market risk due to increases in natural gas prices, particularly if the price of natural gas in the United States were to become higher than the price of natural gas outside the United States. An increase in natural gas prices would impact our East Dubuque Facility’s operations by making us less competitive with competitors who do not use natural gas as their primary feedstock, and would therefore have a material adverse impact on the trading price of our common stock. In addition, if natural gas prices in the United States were to increase relative to prices of natural gas paid by foreign nitrogen fertilizer producers, this may negatively affect our competitive position in the Mid Corn Belt region and thus have a material adverse effect on our results of operations, financial condition and cash flows.

The profitability of operating our East Dubuque Facility is significantly dependent on the cost of natural gas, and our East Dubuque Facility has operated in the past, and may operate in the future, at a net loss. Local factors may affect the price of natural gas available to us, in addition to factors that determine the benchmark prices of natural gas. Since we expect to purchase a substantial portion of our natural gas for use in our East Dubuque Facility on the spot market, we remain susceptible to fluctuations in the price of natural gas in general and in local markets in particular. We also expect to use short-term, fixed supply, fixed price forward purchase contracts to lock in pricing for a portion of our natural gas requirements. Our ability to enter into forward purchase contracts is dependent upon our creditworthiness and, in the event of a deterioration in our credit, counterparties could refuse to enter into forward purchase contracts on acceptable terms. If we are unable to enter into forward purchase contracts for the supply of natural gas, we would need to purchase natural gas on the spot market, which would impair our ability to hedge our exposure to risk from fluctuations in natural gas prices. If we fix the price of natural gas with forward purchase contracts, and natural gas prices decrease, then our cost of sales could be higher than it would have been in the absence of the forward purchase contracts. However, forward purchase contracts may not protect us from all of the increases in natural gas prices. A hypothetical increase of $0.10 per MMBtu of natural gas would increase our cost to produce one ton of ammonia by approximately $3.35. Higher than anticipated costs for the catalyst and other materials used at our East Dubuque Facility could also adversely affect operating results. These increased costs could materially and adversely affect our results of operations and financial condition.

Any interruption in the supply of natural gas to our East Dubuque Facility through Nicor could have a material adverse effect on our results of operations and financial condition.

Our East Dubuque operations depend on the availability of natural gas. We have an agreement with Nicor pursuant to which we access natural gas from the ANR and Northern Natural Gas pipelines. Our access to satisfactory supplies of natural gas through Nicor could be disrupted due to a number of causes, including volume limitations under the agreement, pipeline malfunctions, service interruptions, mechanical failures or other reasons. The agreement, as amended, extends for five consecutive periods of 12 months each, with the first period having commenced on November 1, 2010 and the last period ending October 31, 2016. For each period, Nicor may establish a bidding period during which we may match the best bid received by Nicor for the natural gas capacity provided under the agreement. We could be out-bid for any of the remaining periods under the agreement. In addition, upon expiration of the last period, we may be unable to renew the agreement on satisfactory terms, or at all. Any disruption in the supply of natural gas to our East Dubuque Facility could restrict our ability to continue to make products at the facility. In the event we needed to obtain natural gas from another source, we would need to build a new connection from that source to our East Dubuque Facility and negotiate related easement rights, which would be costly, disruptive and/or unfeasible. As a result, any interruption in the supply of natural gas through Nicor could have a material adverse effect on our results of operations and financial condition.

The markets for ammonia and sulfur have been volatile. If prices for either ammonia or sulfur increase or decrease significantly, we may not be able to economically operate our Pasadena Facility.

The operation of our Pasadena Facility with ammonia and sulfur as its primary feedstocks also exposes us to market risk due to increases in ammonia or sulfur prices. Since we expect to purchase a substantial portion of our ammonia and sulfur for use in our Pasadena Facility on the spot market we remain susceptible to fluctuations in the respective prices of ammonia and sulfur. The margins on the sale of ammonium sulfate fertilizer products are relatively low. If our costs to produce ammonium sulfate fertilizer products increase and the prices at which we sell these products do not correspondingly increase, our profits from the sale of these products may decrease or we may suffer losses on these sales. A hypothetical increase of $10.00 per ton of ammonia would increase the cost to produce one ton of ammonium sulfate by $2.50. A hypothetical increase of $10.00 per ton of sulfur would also increase the cost to produce one ton of ammonium sulfate by $2.50. We do not believe that there is any significant opportunity to reduce the costs of these inputs through hedging.

During the year ended December 31, 2014, the prices paid by our Pasadena Facility for ammonia and sulfur increased substantially, which increased our costs of inputs, but the prices of our products did not rise at the same rate. As a result, during the year ended December 31, 2014, we had significant amounts of inventory at costs representing input costs higher than the current market price for our products, and we incurred an approximate $6.0 million write-down of ammonium sulfate inventory. During 2015, we incurred an approximate $2.2 million write-down of ammonium sulfate inventory. Market prices for ammonia and sulfur products may continue to remain low, which could have a material adverse effect on our results of operations and financial condition.

The success of our ammonium sulfate fertilizer business depends on our ability to improve product sales and margins and to reduce cost at the Pasadena Facility.

Our ammonium sulfate fertilizer business has a limited operating history upon which its business and products can be evaluated. The Pasadena Facility produced phosphate fertilizer until early 2011 when it underwent a conversion to produce ammonium sulfate fertilizer products. In late 2014, we restructured operations at our Pasadena Facility, including to reduce expected annual production of ammonium sulfate by approximately 25 percent, to 500,000 tons. Because our ammonium sulfate fertilizer business has a limited operating history, we may not be able to effectively:

The operations at the Pasadena Facility are subject to many of the risks inherent in the growth of a new business. The likelihood of the facility’s success must be evaluated in light of the challenges, expenses, difficulties, complications and delays frequently encountered in the operation of a new business. Moreover, the sales prices for ammonium sulfate have significantly worsened and remain low. We cannot assure you that we will achieve the goals set forth above or any goals we may set in the future. Our failure to meet any of these goals could have a material adverse effect on our business and cash flow.

We have recorded goodwill and asset impairment charges and recorded write-downs of finished goods and raw material inventories with respect to our Pasadena Facility, and we could be required to record additional material impairment charges and write-downs in the future.

During 2014, we lowered our profitability expectations for the Pasadena Facility primarily due to lower projected market prices for ammonium sulfate. As a result, during the year ended December 31, 2014, we recorded a goodwill impairment charge of $27.2 million relating to the Agrifos Acquisition, and we incurred an approximate $6.0 million write-down of ammonium sulfate inventory. During 2015, we recorded asset impairment charges relating to the Pasadena Facility of $160.6 million and wrote down the value of ammonium sulfate inventory by $2.2 million to its net realizable value. The future profitability of our Pasadena Facility will be significantly affected by, among other things, nitrogen fertilizer product prices and the prices of the inputs to its production processes. It is possible that adverse changes to supply and demand factors relating to the Pasadena Facility’s nitrogen fertilizer products could require us to lower further our expectations for the profitability of the facility in the future. If this were to occur, we could be required to record additional material impairment charges, including with respect to impairment of long-lived assets, and additional write-downs, which could have a material adverse effect on our results of operations, the trading price of our common stock and our reputation.

There are phosphogypsum stacks located at the Pasadena Facility that will require closure. In the event we become financially obligated for the costs of closure, this would have a material adverse effect on our business and cash flow.

The Pasadena Facility was used for phosphoric acid production until 2011, which resulted in the creation of a number of phosphogypsum stacks at the Pasadena Facility. Phosphogypsum stacks are composed of the mineral processing waste that is the byproduct of the extraction of phosphorous from mineral ores. Certain of the stacks also have been or are used for other waste materials and wastewater. Applicable environmental laws extensively regulate phosphogypsum stacks.

The EPA reached a CAFO with ExxonMobil in September 2010 making ExxonMobil responsible for closure of the stacks, proper disposal of process wastewater related to the stacks and other expenses. In addition, the asset purchase agreement between a subsidiary of Agrifos and ExxonMobil, or the 1998 APA, pursuant to which the subsidiary purchased the Pasadena Facility in 1998 also makes ExxonMobil liable for closure and post-closure care of the stacks, with certain limitations relating to use of the stacks after the date of the agreement, including the limitations that remediation and demolition debris not be deposited on “stack 1” and that any naturally-occurring radioactive material, or NORM, deposited on stack 1 not be commingled with NORM deposited by ExxonMobil and be removed prior to closure of stack 1. ExxonMobil is in the process of closing the “south stack” (a large phosphogypsum stack that combines “stacks 2, 3 and 5”) and “stack 4” at the facility. ExxonMobil has not yet started closure of “stack 1” at the facility, which is the only remaining stack that is currently in use for disposal of waste streams. Although ExxonMobil has expended significant funds and resources relating to the closures, we cannot assure you that ExxonMobil will remain able and willing to complete closure and post-closure care of the stacks in the future, including as a result of actions taken by Agrifos prior to the closing of the Agrifos Acquisition (such as if Agrifos deposited remediation or demolition debris on stack 1, or commingled its NORM with ExxonMobil’s NORM on stack 1). As of January 2016, ExxonMobil estimated that its total outstanding costs associated with the closures and long-term maintenance, monitoring and care of the stacks will be $51.2 million over the next 50 years. However, the actual amount of such costs could be in excess of this amount.

As discussed above, the costs of closure and post-closure care of the stacks will be substantial. If we become financially responsible for the costs of closure of the stacks, this would have a material adverse effect on our business and cash flow. The purchaser of the Pasadena Facility assumed liabilities for any environmental claims that may arise with respect to the Pasadena Facility, including closure of the phosphogysum stacks and post-closure care and it will also have the same indemnification rights from ExxonMobil that we had.

Soil and groundwater at the Pasadena Facility is pervasively contaminated, and we may incur costs to investigate and remediate known or suspected contamination at the Pasadena Facility. We may also face legal actions or sanctions or incur costs related to contamination or noncompliance with environmental laws at the facility.

The soil and groundwater at the Pasadena Facility is pervasively contaminated. The facility has produced fertilizer since as early as the 1940s, and a large number of spills and releases have occurred at the facility, many of which involved hazardous substances. Furthermore, naturally occurring and other radioactive contaminants have been discovered at the facility in the past, and asbestos-containing materials currently exist at the facility. In the past there have been numerous instances of weather events which have resulted in flooding and releases of hazardous substances from the facility. We cannot assure you that past environmental investigations at the facility were complete, and there may be other contaminants at the facility that have not been detected. Contamination at the Pasadena Facility has the potential to result in toxic tort, property damage, personal injury and natural resources damages claims or other lawsuits. Further, regulators may require investigation and remediation at the facility in the future at significant expense.

ExxonMobil submitted Affected Property Assessment Reports, or APARs, under the Texas Risk Reduction Program to the Texas Commission on Environmental Quality, or the TCEQ, beginning in 2011 for the plant site and phosphogypsum stacks at the Pasadena Facility. The APARs identify instances in which various regulatory limits for numerous hazardous materials in both the soil and groundwater at the plant site and in the vicinity of the stacks have been exceeded. TCEQ is requiring ExxonMobil to perform significant additional investigative work as part of the APAR process. The TCEQ may also require further remediation of the contamination at the Pasadena Facility. The TCEQ or other regulatory agencies may hold Agrifos or its subsidiaries responsible for certain of the contamination at the Pasadena Facility.

In the past, governmental authorities have alleged or determined that the Pasadena Facility has been in substantial noncompliance with environmental laws and the Pasadena Facility has been the subject of numerous regulatory enforcement actions. The facility has also been subject to a number of past or current governmental enforcement actions, consent agreements, orders, and lawsuits, including, as examples, actions concerning the closure of the phosphogypsum stacks at the facility, the release of process water and wastewater, emissions of sulfuric acid mist, releases of ammonia and other hazardous substances, various alleged Clean Water Act violations, the potential for off-site contamination, and other matters. In the future, we may be required to expend significant funds to attain or maintain compliance with environmental laws. For example, the facility may not comply with sulfuric acid mist emission limits. Following closure of phosphogypsum stack 1 at the facility, we may need to upgrade the facility’s wastewater system and arrange for offsite disposal of wastes that are currently disposed of onsite in order to maintain compliance with environmental laws, and the costs to design, construct, and operate such a system could be material. Regulatory findings of noncompliance could trigger sanctions, including monetary penalties, require installation of control or other equipment or other modifications, adverse permit modifications, the forced curtailment or termination of operations or other adverse impacts.

The costs we may incur in connection with the matters described above are not reasonably estimable and could be material. Subject to the terms and conditions of the 1998 APA, we are entitled to indemnification from ExxonMobil for certain losses relating to environmental matters relating to the facility and arising out of conditions present prior to our acquisition of the facility. However, our rights to indemnification under this agreement is subject to important limitations, and we cannot assure you we will be able to obtain payment from ExxonMobil on a timely basis, or at all. Depending on the amount of the costs we may incur for such matters in a given period, this could have a material adverse effect on the results of our business and cash flow. The purchaser of the Pasadena Facility assumed liabilities for any environmental claims that may arise with respect to the Pasadena Facility, including in connection with the matters described above and it will also have the same indemnification rights from ExxonMobil that we had.

Due to our lack of diversification, adverse developments in the nitrogen fertilizer industry or at either of our Fertilizer Facilities could adversely affect our results of operations.

We rely primarily on the revenues generated from our two Fertilizer Facilities. An adverse development in the market for nitrogen fertilizer products in our regions generally or at either of our Fertilizer Facilities in particular would have a significantly greater impact on our operations than it would on other companies that are more diversified geographically or that have a more diverse asset and product base. The largest publicly traded companies with which we compete in the nitrogen fertilizer business sell a more diverse range of fertilizer products to broader markets.

Our Fertilizer Facilities face operating hazards and interruptions, including unplanned maintenance or shutdowns. We could face potentially significant costs to the extent these hazards or interruptions cause a material decline in production and are not fully covered by our existing insurance coverage. Insurance companies that currently insure companies in our industry may cease to do so, may change the coverage provided or may substantially increase premiums in the future.

Our nitrogen fertilizer operations are subject to significant operating hazards and interruptions. Any significant curtailing of production at one of the Fertilizer Facilities or individual units within one of the Fertilizer Facilities could result in materially lower levels of revenues and cash flow for the duration of any shutdown. Operations at the Fertilizer Facilities could be curtailed or partially or completely shut down, temporarily or permanently, as the result of a number of circumstances, most of which are not within our control, such as:

The magnitude of the effect on us of any unplanned shutdown will depend on the length of the shutdown and the extent of the operations affected by the shutdown.

Our East Dubuque Facility has been in operation since 1965. Our Pasadena Facility has been in operation producing various products since the 1940s. In 2011, the 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. Historically, our East Dubuque Facility and Pasadena Facility have required a planned maintenance turnaround every two to three years. Starting with our planned maintenance turnaround in 2016, our East Dubuque Facility will have a planned maintenance turnaround every three years. Turnarounds at our East Dubuque Facility generally last between 15 and 30 days, and turnarounds at our 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. Upon completion of a facility turnaround, we may face delays and difficulties restarting production at the Fertilizer Facilities. During the fourth quarter of 2013, our East Dubuque Facility halted production due to a turnaround and a fire. Our Pasadena Facility also underwent a turnaround in December of 2013 which lasted longer than anticipated due to issues with a contractor and weather delays. The duration of our turnarounds or other shutdowns, and the impact they have on our operations, have in the past and could in the future materially adversely affect our cash flow in the quarter or quarters in which such turnarounds or shutdowns occur.

A major accident, fire, explosion, flood, severe weather event, terrorist attack or other event also could damage the Fertilizer Facilities or the environment and the surrounding communities or result in injuries or loss of life. Scheduled and unplanned maintenance could reduce our cash flow for the period of time that any portion of the Fertilizer Facilities are not operating.

If we experience significant property damage, business interruption, environmental claims, fines, penalties or other liabilities, our business could be materially adversely affected to the extent the damages or claims exceed the amount of valid and collectible insurance available to us. We are currently insured under our casualty, environmental, property and business interruption insurance policies. The policies are subject to limits, deductibles, and waiting periods and also contain exclusions and conditions that could have a material adverse impact on our ability to receive indemnification thereunder, as well as customary sub-limits for particular types of losses. For example, the current property policies contain specific sub-limits for losses resulting from business interruptions and for damage caused by covered flooding or named windstorms and resulting flooding or storm surge. We are fully exposed to all losses in excess of the applicable limits and sub-limits and for certain losses due to business interruptions.

Under the insurance policies that cover our Pasadena Facility, property exposures are subject to limits, deductibles and waiting periods with respect to insured physical damage and time element occurrences. Catastrophic perils such as named windstorms, floods and storm surges are subject to additional limitations that apply to each occurrence. The policies also contain exclusions and conditions that could have a material adverse impact on our ability to receive indemnification thereunder, as well as customary sub- limits for particular types of losses. For example, the current property policy contains specific sub-limits for losses resulting from business interruption.

Market factors, including but not limited to catastrophic perils that impact the nitrogen fertilizer industry, significant changes in the investment returns of insurance companies, insurance company solvency trends and industry loss ratios and loss trends, can negatively impact the future cost and availability of insurance. There can be no assurance that we will be able to buy and maintain insurance with adequate limits, reasonable pricing terms and conditions or collect from insurance claims that we make.

Our results of operations of our nitrogen fertilizer business are highly dependent upon and fluctuate based upon business and economic conditions and governmental policies affecting the agricultural industry. These factors are outside of our control and may significantly affect our profitability.

Our results of operations of our nitrogen fertilizer business are highly dependent upon business and economic conditions and governmental policies affecting the agricultural industry, which we cannot control. The agricultural products business can be affected by a number of factors. The most important of these factors, for United States markets, are:

International market conditions, which are also outside of our control, may also significantly influence our operating results. The international market for nitrogen fertilizers is influenced by such factors as the relative value of the United States dollar and its impact upon the cost of importing nitrogen fertilizers, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets, changes in the hard currency demands of certain countries and other regulatory policies of foreign governments, as well as the laws and policies of the United States affecting foreign trade and investment.

Ammonia can be very volatile and extremely hazardous. Any liability for accidents involving ammonia that cause severe damage to property or injury to the environment and human health could have a material adverse effect on our results of operations and financial condition. In addition, the costs of transporting ammonia could increase significantly in the future.

We produce, process, store, handle, distribute and transport ammonia, which can be very volatile and extremely hazardous. Major accidents or releases involving ammonia could cause severe damage or injury to property, the environment and human health, as well as a possible disruption of supplies and markets. Such an event could result in civil lawsuits, fines, penalties and regulatory enforcement proceedings, all of which could lead to significant liabilities. Any damage to persons, equipment or property or other disruption of our ability to produce or distribute our products could result in a significant decrease in operating revenues and significant additional cost to replace or repair and insure our assets, which could have a material adverse effect on our results of operations and financial condition. We periodically experience releases of ammonia related to leaks from our equipment or error in operation and use of equipment at our Fertilizer Facilities. Similar events may occur in the future.

These circumstances may result in sudden, severe damage or injury to property, the environment and human health. In the event of pollution, we may be held responsible even if we are not at fault and even if we complied with the laws and regulations in effect at the time of the accident. Litigation arising from accidents involving ammonia may result in our being named as a defendant in lawsuits asserting claims for large amounts of damages, which could have a material adverse effect on our results of operations and financial condition. Given the risks inherent in transporting ammonia, the costs of transporting ammonia could increase significantly in the future.

We are subject to risks and uncertainties related to transportation and equipment that are beyond our control and that may have a material adverse effect on our results of operations and financial condition.

Although our customers and distributors generally pick up our nitrogen fertilizer products at our Fertilizer Facilities, we occasionally rely on barge and railroad companies to ship products to our customers and distributors. The availability of these transportation services and related equipment is subject to various hazards, including extreme weather conditions, work stoppages, delays, spills, derailments and other accidents and other operating hazards. For example, barge transport can be impacted by lock closures resulting from inclement weather or surface conditions, including fog, rain, snow, wind, ice, strong currents, floods, droughts and other unplanned natural phenomena, lock malfunction, tow conditions and other conditions. Further, the limited number of towing companies and of barges available for ammonia transport may also impact the availability of transportation for our products. These transportation services and equipment are also subject to environmental, safety and other regulatory oversight. Due to concerns related to terrorism or accidents, local, state and federal governments could implement new regulations affecting the transportation of our products. In addition, new regulations could be implemented affecting the equipment used to ship products from our Fertilizer Facilities. Any delay in our ability to ship our nitrogen fertilizer products as a result of transportation companies’ failure to operate properly, the implementation of new and more stringent regulatory requirements affecting transportation operations or equipment, or significant increases in the cost of these services or equipment could have a material adverse effect on our results of operations and financial condition.

Our nitrogen fertilizer business is subject to extensive and frequently changing environmental laws and regulations. We expect that the cost of compliance with these laws and regulations will increase over time, and we could become subject to material environmental liabilities.

Our nitrogen fertilizer business is subject to extensive and frequently changing federal, state and local environmental, health and safety regulations governing the emission and release of hazardous substances into the environment, the treatment and discharge of waste water and the storage, handling, use and transportation of our nitrogen fertilizer products. These laws include the CAA, the federal Clean Water Act, the RCRA, CERCLA, the TSCA, and various other federal, state and local laws and regulations. Violations of these laws and regulations could result in substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, permit revocations or facility shutdowns. In addition, new environmental laws and regulations, new interpretations of existing laws and regulations, increased governmental enforcement of laws and regulations or other developments could require us to make additional expenditures. Many of these laws and regulations are becoming increasingly stringent, and we expect the cost of compliance with these requirements to increase over time. The ultimate impact on our business of complying with existing laws and regulations is not always clearly known or determinable due in part to the fact that our 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 expenditures or costs for environmental compliance could have a material adverse effect on our results of operations and financial condition.

Our nitrogen fertilizer operations, as well as expansion of such operations, require numerous permits and authorizations. Failure to obtain, renew, or comply with these permits or environmental laws generally could result in substantial fines, penalties or other sanctions, court orders to install pollution-control equipment, permit revocations and facility shutdowns. We may experience delays in obtaining or be unable to obtain required permits, which may delay or interrupt our operations and limit our growth and revenue. A decision by a government agency to revoke or substantially modify an existing permit or approval could have a material adverse effect on our ability to continue operations and on our business, financial condition and results of operations.

Our nitrogen fertilizer business is subject to accidental spills, discharges or other releases of hazardous substances into the environment. Past or future spills related to our Fertilizer Facilities or transportation of products or hazardous substances from our Fertilizer Facilities may give rise to liability (including strict liability, or liability without fault, and potential cleanup responsibility) to governmental entities or private parties under federal, state or local environmental laws, as well as under common law. For example, we could be held strictly liable under CERCLA, for past or future spills without regard to fault or whether our actions were in compliance with the law at the time of the spills. Pursuant to CERCLA and similar state statutes, we could be held liable for contamination associated with our Fertilizer Facilities, facilities we formerly owned or operated (if any) and facilities to which we transported or arranged for the transportation of wastes or byproducts containing hazardous substances for treatment, storage or disposal. The potential penalties and cleanup costs for past or future releases or spills, liability to third parties for damage to their property or exposure to hazardous substances, or the need to address newly discovered information or conditions that may require response actions could be significant and could have a material adverse effect on our results of operations and financial condition. For a discussion of releases at the Pasadena Facility, see the risk factor captioned “Soil and groundwater at the Pasadena Facility is pervasively contaminated, and we may incur costs to investigate and remediate known or suspected contamination at the Pasadena Facility. We may also face legal actions or sanctions or incur costs related to contamination or noncompliance with environmental laws at the facility.” In addition, limited subsurface investigation indicates the presence of certain contamination at the East Dubuque facility. In the future, we may determine that there are conditions at the East Dubuque Facility that require remediation or other response.

We may incur future costs relating to the off-site disposal of hazardous wastes. Companies that dispose of, or arrange for the transportation or disposal of, hazardous substances at off-site locations may be held jointly and severally liable for the costs of investigation and remediation of contamination at those off-site locations, regardless of fault. We could become involved in litigation or other proceedings involving off-site waste disposal and the damages or costs in any such proceedings could be material.

Environmental laws and regulations on fertilizer end-use and application and numeric nutrient water quality criteria could have a material adverse impact on fertilizer demand in the future.

Future environmental laws and regulations on the end-use and application of fertilizers could cause changes in demand for our nitrogen fertilizer products. In addition, future environmental laws and regulations, or new interpretations of existing laws or regulations, could limit our ability to market and sell such products to end users. From time to time, various state legislatures have proposed bans or other limitations on fertilizer products. In addition, a number of states have adopted or proposed numeric nutrient water quality criteria that could result in decreased demand for our fertilizer products in those states. Any such laws, regulations or interpretations could have a material adverse effect on our results of operations and financial condition.

Climate change laws, regulations, and impacts could have a material adverse effect on our results of operations and financial condition.

Legislative and regulatory measures to address GHG emissions (including CO₂, methane and N₂O) are in various phases of discussion or implementation. At the federal legislative level, Congress has previously considered legislation requiring a mandatory reduction of GHG emissions. Although Congressional passage of such legislation does not appear imminent at this time, it could be adopted at a future date. It is also possible that Congress may pass alternative climate change bills that do not mandate a nationwide cap-and-trade program and instead focus on promoting renewable energy and energy efficiency or impose a carbon fee.

In the absence of congressional legislation curbing GHG emissions, the EPA is moving ahead administratively under its CAA authority. In October 2009, the EPA finalized a rule requiring certain large emitters of GHGs to inventory and report their GHG emissions to the EPA. In accordance with the rule, we monitor our GHG emissions from our facilities and began reporting the emissions to the EPA annually beginning in September 2011. In December 2009, the EPA finalized its “endangerment finding” that GHG emissions, including CO₂, pose a threat to human health and welfare. The finding allows the EPA to regulate GHG emissions as air pollutants under the CAA. The EPA adopted regulations that limit emissions of greenhouse gases from motor vehicles, which then triggered the imposition of CAA construction and operating permit requirements under the Prevention of Significant Deterioration (“PSD”) and Title V permitting programs for certain large stationary sources that are already subject to these requirements due to emissions of conventional, or criteria, pollutants. Facilities that are required to obtain permits for their GHG emissions are required to reduce those emissions using “best available control technology,” or BACT, standards, which are currently being developed on a case-by-case basis. Future modification to one of our facilities may require us to satisfy BACT requirements and potentially require us to meet other CAA requirements applicable to GHG emissions. A number of states also have adopted reporting and mitigation requirements.

The implementation of additional EPA regulations and/or the passage of federal or state climate change legislation would likely increase the costs we incur to (i) operate and maintain our facilities, (ii) install new emission controls on our facilities and (iii) administer and manage any GHG emissions program. Increased costs associated with compliance with any future legislation or regulation of GHG emissions, if it occurs, may have a material adverse effect on our results of operations and financial condition. In addition, climate change legislation and regulations may result in increased costs not only for our nitrogen fertilizer business but also for agricultural producers that utilize our fertilizer products, thereby potentially decreasing demand for our nitrogen fertilizer products. Decreased demand for our nitrogen fertilizer products may have a material adverse effect on our results of operations and financial condition.

Similarly, the impact of potential climate change on our operations and those of our customers is uncertain and could adversely affect us.

IOC is the exclusive distributor of our ammonium sulfate fertilizer. Any loss of IOC as our distributor could materially adversely affect our results of operations and financial condition.

We have a marketing agreement that grants IOC the exclusive right and obligation to market and sell all of our Pasadena Facility’s granular ammonium sulfate. 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. If we are unable to renew our contract with IOC, we may be unable to find buyers for our granular ammonium sulfate. In addition, we have an arrangement with IOC that permits us to store approximately 60,000 tons of ammonium sulfate at IOC-controlled terminals, which are located near end customers of our Pasadena Facility’s ammonium sulfate. This arrangement currently is not governed by a written contract. If we lose the right to store ammonium sulfate at these IOC-controlled terminals, we may not be able to find suitable replacement storage on acceptable terms, or at all, and we may be forced to reduce production. Any loss of IOC as our distributor, loss of our storage rights or decline in sales of products through IOC could materially adversely affect our results of operations and financial condition.

Due to our dependence on significant customers in our nitrogen fertilizer business, the loss of one or more of such significant customers could adversely affect our results of operations.

Our nitrogen fertilizer business depends on significant customers, and the loss of one or several of such significant customers may have a material adverse effect on our results of operations and financial condition. In the aggregate, our top five ammonia customers represented 60%, 62% and 57% , respectively, of our ammonia sales for the years ended December 31, 2015, 2014 and 2013, and our top five UAN customers represented 66%, 58% and 59% , respectively, of our UAN sales for the same periods. For the years ended December 31, 2015, 2014 and 2013 , 0%, 0% and 2% , respectively, of the East Dubuque Facility’s total product sales of our nitrogen fertilizer business were to Agrium as a direct customer (rather than a distributor) and 11%, 12% and 12% , respectively, of the East Dubuque Facility’s total product sales of our nitrogen fertilizer business were to CPS, a controlled affiliate of Agrium. During the period beginning January 1, 2013 through December 31, 2015, the marketing agreement with IOC accounted for 80% or more of our Pasadena Facility’s total revenues. Given the nature of our business, and consistent with industry practice, we generally do not have long-term minimum sales contracts with any of our customers. If our sales to any of our significant customers were to decline, we may not be able to find other customers to purchase the excess supply of our products. The loss of one or several of our significant customers of our nitrogen fertilizer products, or a significant reduction in purchase volume by any of them, could have a material adverse effect on our results of operations and financial condition.

The sale of our products to customers in international markets exposes us to additional risks that could harm our business, operating results, and financial condition.

Our Pasadena Facility’s products are sold through distributors to customers in North America, New Zealand, Australia, Brazil and Thailand, and our distributors could expand sales to additional international markets in the future. In addition to risks described elsewhere in this section, the sale of our products in international markets expose us to other risks, including the following:

In addition, our distributors must comply with complex foreign and United States laws and regulations that apply to international sales and operations. These numerous and sometimes conflicting laws and regulations include internal control and disclosure rules, anti-corruption laws, such as the Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental officials, and antitrust and competition regulations, among others. Violations of these laws and regulations could result in fines and penalties, criminal sanctions against our distributors, prohibitions on the conduct of their business and on our ability to offer our products in one or more countries, and could also materially affect our brand, our ability to attract and retain employees, our business and our operating results. Although we have implemented policies and procedures designed to ensure our distributors’ compliance with these laws and regulations, there can be no assurance that our distributors will not violate our policies.

We are largely dependent on our customers and distributors to transport purchased goods from our Fertilizer Facilities because we do not maintain a fleet of trucks or rail cars.

We do not maintain a fleet of trucks and, unlike some of our major competitors, we do not maintain a fleet of rail cars. Our customers and distributors generally are located close to our Fertilizer Facilities and have been willing and able to transport purchased goods from each Fertilizer Facility. In most instances, our customers and distributors purchase products for delivery at the Fertilizer Facility and then arrange and pay to transport them to their final destinations by truck. However, in the future, the transportation needs of our customers and distributors as well as their preferences may change, and those customers and distributors may no longer be willing or able to transport purchased goods from our Fertilizer Facilities. In the event that our competitors are able to transport their products more efficiently or cost effectively than our customers and distributors, those customers and distributors may reduce or cease purchases of our products. If this were to occur, we could be forced to make a substantial investment in a fleet of trucks and/or rail cars to meet the delivery needs of customers and distributors, and this would be expensive and time consuming. We may not be able to obtain transportation capabilities on a timely basis or at all, and our inability to provide transportation for products could have a material adverse effect on our business and cash flow.

We are subject to strict laws and regulations regarding employee and process safety, and failure to comply with these laws and regulations could have a material adverse effect on our results of operations and financial condition.

We are subject to a number of federal and state laws and regulations related to safety, including OSHA and comparable state statutes, the purpose of which are to protect the health and safety of workers. In addition, OSHA requires that we maintain information about hazardous materials used or produced in our nitrogen fertilizer operations and that we provide this information to employees, state and local governmental authorities, and local residents. Failure to comply with OSHA requirements and other related state regulations, including general industry standards, record keeping requirements and monitoring and control of occupational exposure to regulated substances, could have a material adverse effect on our results of operations and financial condition if we are subjected to significant penalties, fines or compliance costs.

Expansion of our nitrogen fertilizer production capacity may change the balance of supply and demand in our markets, and our new products may not achieve market acceptance.

At our East Dubuque Facility, we increased our capacity to produce ammonia and urea and started to produce and sell DEF. Increased production of our existing nitrogen fertilizer products may reduce the selling price for those products as a result of market saturation. We may be required to sell these products at lower prices, or may not be able to sell all of the products we produce. In addition, there can be no assurance that our new products will be well-received or that we will achieve revenues or profitability levels we expect. If we cannot sell our products or are forced to reduce the prices at which we sell them, this could have a material adverse effect on our results of operations and financial condition.

A shortage of skilled labor, together with rising labor costs, could adversely affect our results of operations.

Efficient production of nitrogen fertilizer using modern techniques and equipment requires skilled employees. To the extent that the services of skilled labor becomes unavailable to us for any reason, including as a result of the expiration and non-renewal of our collective bargaining agreement or the retirement of experienced employees from our aging work force, we would be required to hire other personnel. We have a collective bargaining agreement in place covering unionized employees at our East Dubuque Facility which will expire in October 2016. In addition, we have two collective bargaining agreements for our Pasadena Facility. One of these agreements expires on March 28, 2017, and the other will expire on April 30, 2017. Upon expiration, we may be unable to renew the collective bargaining agreements on satisfactory terms or at all. We face hiring competition from our competitors, our customers and other companies operating in our industry, and we may not be able to locate or employ qualified replacements on acceptable terms or at all. If our current skilled employees quit, retire or otherwise cease to be employed by us and we are unable to locate or hire qualified replacements, or if the cost to locate and hire qualified replacements for these employees increases materially, our results of operations could be adversely affected.

Any reduction in RNP’s credit rating could adversely affect our fertilizer business.

Rating agencies regularly evaluate the RNP Notes, and their ratings are based on a number of factors, including RNP’s financial strength as well as factors not entirely within its control, including conditions affecting the fertilizer industry generally. There can be no assurance that the RNP Notes will maintain their current ratings. In September 2014, Standard & Poor’s downgraded the RNP Notes one notch to B-. While this action had little to no detrimental impact on our or RNP’s profitability, borrowing costs, or ability to access the capital markets, future downgrades to the RNP Notes or RNP’s or its credit rating could adversely affect our and RNP’s profitability, borrowing costs, or ability to access the capital markets or otherwise have a negative effect on our and RNP’s results of operations or financial condition. Additionally, a downgrade of the credit rating of any particular security issued by us or RNP could negatively affect the ability of the holders of that security to sell the securities and the prices at which any such securities may be sold.

The GE Credit Agreement, the Indenture governing the RNP Notes and the A&R GSO Credit Agreement contain significant limitations on RNP’s business operations, including RNP’s ability to make distributions to its common unitholders (including us).

On February 12, 2015, we entered into the A&R GSO Credit Agreement, and we entered into an amendment to the Subscription Agreement, or the Subscription Agreement, with funds managed by or affiliated with GSO Capital Partners LP, or GSO Capital, or the Series E Purchasers. In July 2014, RNP entered into the GE Credit Agreement, comprised of a $50.0 million senior secured revolving credit facility, or the GE Credit Facility. In April 2013, RNP entered into an indenture, or the Indenture, governing the RNP Notes.

The Indenture 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 limiting RNP’s ability to pay distributions to its common unitholders. The covenants apply differently depending 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 1.0, 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 1.0, RNP will generally be permitted to make restricted payments, including distributions to its common unitholders, up to an aggregate $60.0 million basket plus certain other amounts referred to as “incremental funds” under the Indenture. For the year ended December 31, 2015, RNP’s Fixed Charge Coverage ratio was 4.81 to 1.00.

Under the GE Credit Agreement, in the event that less than 30% of the commitment amount is available for borrowing on any distribution date, in order to make a distribution on such date (a) RNP must maintain a first lien leverage ratio no greater than 1.0 to 1.0 on a pro forma basis and (b) the sum of (i) the undrawn amount under the GE Credit Facility and (ii) cash maintained by RNP and its subsidiaries in collateral deposit accounts must be at least $5 million, in each case, on a pro forma basis. In addition, before RNP can make distributions, there cannot be any default under the GE Credit Agreement. The GE Credit Agreement also contains a springing financial covenant requirement that RNP maintain a first lien leverage ratio not to exceed 1.0 to 1.0 (a) at the end of each fiscal quarter where less than 30% of the commitment amount is available for drawing under the GE Credit Facility or (b) a default has occurred and is continuing. As of December 31, 2015, the first lien leverage ratio was 0.33 to 1.

We are subject to covenants contained in the agreements governing our indebtedness and preferred stock and may be subject to additional agreements governing other future indebtedness or preferred stock. These covenants restrict our ability to, among other things, incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations, incur liens, make negative pledges, pay dividends or make other distributions, make payments to our subsidiaries, make certain loans and investments, consolidate, merge or sell all or substantially all of our or RNP’s assets, enter into sale-leaseback transactions and enter into transactions with affiliates. Any failure to comply with these covenants could result in a default under the A&R GSO Credit Agreement, the Subscription Agreement, the GE Credit Agreement or the RNP Notes. Upon a default, unless waived, the lenders under our A&R GSO Credit Agreement or our GE Credit Agreement and holders of our RNP Notes would have all remedies available to a secured lender, including the ability to cause the outstanding amounts of such indebtedness to become due and payable in full, institute foreclosure proceedings against our or RNP’s assets, and force us or RNP into bankruptcy or liquidation.

The issuance of 100,000 shares of our Series E Preferred Stock to certain funds managed by or affiliated with GSO Capital in April 2014 reduces the relative voting power of holders of our common stock, may dilute the ownership of such holders, and may adversely affect the market price of our common stock.

On April 9, 2014, we entered into a Subscription Agreement, or the Subscription Agreement, with funds managed by or affiliated with GSO Capital, or the Series E Purchasers, pursuant to which we sold 100,000 shares of our Series E Preferred Stock, to the Series E Purchasers, which is convertible into approximately 16.4% of our outstanding common stock, on an as-converted basis. As holders of our Series E Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our common stock as a single class on all matters submitted to a vote of our common stock holders, the issuance of the Series E Preferred Stock to the Series E Purchasers has effectively reduced the relative voting power of the holders of our common stock.

In addition, conversion of the Series E Preferred Stock to common stock would dilute the ownership interest of existing holders of our common stock, and any sales in the public market of the common stock issuable upon conversion of the Series E Preferred Stock could adversely affect prevailing market prices of our common stock. We have granted the Series E Purchasers registration rights in respect of the shares of Series E Preferred Stock and any shares of common stock issued upon conversion of the Series E Preferred Stock. These registration rights would facilitate the resale of such securities into the public market, and any such resale would increase the number of shares of our common stock available for public trading. Sales by the Series E Purchasers of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

The Series E Purchasers may exercise significant influence over us, including through their ability to elect up to two members of our board of directors, or our Board.

As of December 31, 2015, the shares of Series E Preferred Stock owned by the Series E Purchasers represent approximately 16.4% of the voting rights of our common stock, on an as-converted basis. As a result, the Series E Purchasers have the ability to significantly influence the outcome of any matter submitted for the vote of our stockholders. In addition, our articles of incorporation grant certain consent rights to the holders of Series E Preferred Stock in respect of certain actions by us, including (a) issuing any indebtedness directly or indirectly convertible into or exchangeable for any capital stock; (b) redeeming or repurchasing or permitting any of our subsidiaries to redeem or repurchase any shares of any class or series of our capital stock, subject to certain exceptions; and (c) increasing or decreasing the maximum number of directors of our Board to more than ten persons or to less than eight persons, or collectively, the Protective Provisions. The Subscription Agreement also imposes a number of affirmative and negative covenants on us. The Series E Purchasers may have interests that diverge from, or even conflict with, those of our other shareholders. For example, the Series E Purchasers may have an interest in directly or indirectly pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their other equity investments, even though such transactions might involve risks to us.

In addition, our articles of incorporation grant the Series E Purchasers certain rights to designate directors to serve on our Board. For so long as the Series E Purchasers and their permitted transferees (i) own at least 85% of the shares of Series E Preferred Stock issued as of the original issue date, the holders of the outstanding shares of Series E Preferred Stock, voting as a separate class, are entitled to elect two individuals to our Board, or (ii) own at least 42.5% of the shares of Series E Preferred Stock issued as of the original issue date, the holders of the outstanding shares of Series E Preferred Stock, voting as a separate class, are entitled to elect one individual to our Board. Under the Subscription Agreement, in addition to the rights under our articles of incorporation, for so long as the Series E Purchasers in the aggregate have record and beneficial ownership of shares of common stock issued upon conversion of the Series E Preferred Stock, or the Conversion Shares, that constitute at least 6% of our outstanding common stock, the Series E Purchasers’ collectively have the right to nominate one person for election to our Board. For so long as the Series E Purchasers in the aggregate have record and beneficial ownership of Conversion Shares that constitute more than 18% of our outstanding common stock and less than 42.5% of the Series E Preferred Stock issued on the date of the Subscription Agreement, the Series E Purchasers collectively are entitled to nominate a total of two nominees for election to our Board. For so long as the Series E Purchasers have the right to appoint or nominate at least one person to our Board in accordance with the Subscription Agreement, the Series E Purchasers collectively have the right to appoint one observer to our Board who must be reasonably acceptable to us. Notwithstanding the fact that all directors will be subject to fiduciary duties and applicable law, the interests of the directors appointed by the Series E Purchasers may differ from the interests of our security holders as a whole or of our other directors.

The Series E Preferred Stock issued to the Series E Purchasers has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common shareholders. Such preferential rights could adversely affect our liquidity and financial condition, and may result in the interests of the Series E Purchasers differing from those of our common stockholders.

As holders of Series E Preferred Stock, the Series E Purchasers have the right to receive a liquidation preference entitling them to be paid out of our assets available for distribution to shareholders, before any payment may be made to holders of any other class or series of capital stock, an amount equal to the greater of (a) the original issue price plus all unpaid and accumulated dividends thereon (including any amounts accrued and unpaid since the last dividend payment date) of each outstanding share of Series E Preferred Stock held and (b) the amount that such holder would have been entitled to receive upon our liquidation, dissolution and winding up if all outstanding shares of Series E Preferred Stock had been converted into common stock immediately prior to such liquidation, dissolution or winding up.

In addition, dividends on the Series E Preferred Stock accrue and are cumulative, whether or not declared by our Board, at the rate of 4.5% per annum on the sum of the original issue price plus all unpaid accrued and accumulated dividends thereon, whether or not declared by our Board. Moreover, if we declare or pay a cash dividend on our common stock, we are required to declare and pay a dividend on the outstanding shares of Series E Preferred Stock on a pro rata basis with the common stock determined on an as-converted basis.

The holders of our Series E Preferred Stock also have certain redemption rights or put rights, including, but not limited to, upon the earliest of: (a) the seventh anniversary of the original issue date, (b) certain change in control events involving us, (c) a bankruptcy, dissolution, liquidation or the winding up of our affairs, or (d) uncured breach of any of the Protective Provisions, which, if exercised, could require us to repurchase any or all of the outstanding shares of Series E Preferred Stock at their original issue price plus all unpaid accrued and accumulated dividends thereon, including any amounts accrued and unpaid since the last dividend payment date, or the Redemption Price. In the event that we fail to redeem or purchase the Series E Preferred Stock and to pay to the Series E Purchaser the Redemption Price of such shares on the applicable redemption or purchase date, whether or not such payment or redemption is legally permissible or is otherwise prohibited, such Series E Purchaser will have the right, but not obligation, to cause a wholly owned subsidiary of ours, DSHC, LLC, or DSHC, to purchase any or all of the Series E Preferred Stock (other than the Series E Preferred Stock that has been redeemed). In such a case, the purchase price for the Series E Preferred Stock will equal (a) $1,000 per share (as adjusted for stock splits, stock dividends, recapitalizations or similar transactions with respect to the Series E Preferred Stock), plus (b) all accrued and unpaid dividends on such Series E Preferred Stock (including all amounts accrued since the last dividend payment date). DSHC’s obligation is secured by 9,453,314 common units of RNP owned by DSHC.

Our obligations to pay accrued and accumulated dividends, whether or not declared by our Board, to the holders of our Series E Preferred Stock on a pro-rata basis with the common stock when we declare or pay a cash dividend, and to repurchase any and all of the outstanding shares of Series E Preferred Stock under certain circumstances, could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of Series E Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the Series E Purchasers and those of our common shareholders.

We have a substantial overhang of common stock and future sales of our common stock or of securities linked to our common stock may cause substantial dilution and may negatively affect the market price of our shares.

As of December 31, 2015, there were approximately 23.0 million shares of our common stock outstanding. As of that date, an aggregate of approximately 1.9 million shares of common stock were issuable pursuant to outstanding restricted stock units, performance stock units, options and warrants, and approximately 4.5 million shares of common stock were issuable upon the conversion of Series E Preferred Stock. In addition, we have one shelf registration statement covering $200.0 million aggregate initial offering price of securities (up to all of which could be issued as shares of common stock) for issuance in future financing transactions. In the event that we acquire companies or assets, we may issue additional shares of stock to acquire those companies or assets.

The sale of common stock and common stock equivalents in material amounts may be necessary to finance the progress of our business plan and operations. Certain future holders of our securities may be granted rights to participate in or to require us to file registration statements with the SEC for resale of common stock.

We cannot predict the effect, if any, that future sales of shares of our common stock into the market, or the availability of shares of common stock for future sale, will have on the market price of our common stock. Sales of substantial amounts of common stock (including shares issued upon the exercise, conversion or exchange of other securities), or the perception that such sales could occur, may materially and adversely affect prevailing market prices for our common stock.

The East Dubuque Facility is located on a 210 acre site in the northwest corner of Illinois on a 140-foot bluff above Mile Marker 573 on the Upper Mississippi River. RNLLC owns all of the East Dubuque Facility’s properties and equipment; these include land, roads, buildings, several special purpose structures, equipment, storage tanks, and specialized truck, rail and river barge loading facilities.

The Pasadena Facility is located on an 85 acre site located on the Houston Ship Channel which includes 2,700 linear feet of water frontage and two deep-water docks. The property also includes 415 acres of land which contains phosphogypsum stacks. In addition, we have an arrangement with IOC under which we are permitted to store ammonium sulfate at terminals controlled by IOC that are located near end customers of our Pasadena Facility’s ammonium sulfate.

The Atikokan Facility is located on about a 15 acre site that we own in Atikokan, Ontario, Canada. The Wawa Facility is located on a 248 acre site that we own in Wawa, Ontario, Canada.

Our executive offices are located in Los Angeles, California, and consist of 16,600 square feet of leased office space. The lease expires in June 2020. These offices are used by all four of our segments.

We also have leased offices located in Thunder Bay, Ontario, Canada, which consist of 1,800 square feet of leased office space. The lease expires in September 2018. These offices are used by our Wood Pellets: Industrial segment. Fulghum has leased offices located in Augusta, Georgia, which consist of 7,900 square feet of leased office space. The lease expires in January 2017. NEWP leases offices located in Jaffrey, New Hampshire, which consist of 5,200 square feet of office space.

We own the site located in Commerce City, Colorado, which houses our decommissioned Product Demonstration Unit, or the PDU. The site consists of 17 acres located in an industrial area adjacent to a rail line and an interstate highway. Approximately six acres of the site are occupied by the PDU and our gasifier, and the remaining approximately 11 acres of the site are available for other uses. There is an approximately 12,000 square foot building on that site that was used primarily for laboratory and maintenance functions supporting the PDU. This property was used in our energy technologies segment. We are in the process of attempting to sell the property.

In 2013, we sold our property located in Natchez, Mississippi, or Natchez. In 2015 working with the Federal Energy Regulatory Commission, we abandoned an approximately 18 mile-long natural gas pipeline that runs from Tensas Parish, Louisiana to the site in Natchez.

As disclosed in Note 16 — Commitments and Contingencies to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report, we are engaged in certain legal matters, and the disclosure set forth in Note 16 relating to such legal matters is incorporated herein by reference.

We transferred our listing from the NYSE MKT to the NASDAQ Stock Market, or NASDAQ, effective with the start of trading on August 13, 2013. Our common stock is traded under the symbol “RTK.” The following table sets forth the range of high and low closing prices for our common stock as reported by the applicable market, for each quarterly period during the years ended December 31, 2015 and 2014:

The approximate number of shareholders of record of our common stock as of February 29, 2016 was 430. Based upon the securities position listings maintained for our common stock by registered clearing agencies, we estimate the number of beneficial owners is not less than 15,800.

Until 2012, we had never paid cash dividends on our common stock. On December 29, 2012, we paid a special one-time distribution of $0.19 per common share, which resulted in total distributions in the amount of $43.8 million. We will continue to evaluate from time to time whether additional dividends or distributions are warranted. Any future determination relating to dividend policy will be made at the discretion of our Board and will depend on a number of factors, including our future earnings, capital requirements, investment opportunities, access to capital, financial condition, future prospects, and other factors as our Board may deem relevant.

The following graph and table compare the cumulative total shareholder return on our common stock to those of the Russell 2000 Index, or the Russell 2000, and two customized peer groups for the 63 months ending December 31, 2015. The first customized peer group of four companies includes: Agrium, CF Industries, CVR Partners, and Terra Nitrogen Company, L.P., or Terra Nitrogen, or the Fertilizer Peer Group. The second customized peer group of nine companies includes: Astec Industries, Inc., Enviva Partners, LP, KapStone Paper and Packaging Corporation, Koppers Holdings Inc., Minerals Technologies Inc., Neenah Paper, Inc., PH Glatfelter Co., Schweitzer-Mauduit International Inc., and Wausau Paper Corp., or the Wood Fibre Peer Group. The following graph and table assumes that a $100 investment was made at the close of trading on September 30, 2010 in our common stock and in the index and the peer groups, and that dividends, if any, were reinvested. The stock price performance shown on the graph below should not be considered indicative of future price performance.

During 2012, our Board approved a change in our fiscal year end from September 30 to December 31. The following tables include selected summary financial data for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, the three months ended December 31, 2011 and 2010 and the fiscal year ended September 30, 2011. The statement of operations data for the calendar year ended December 31, 2011 was derived by deducting the statement of operations data for the three months ended December 31, 2010 from the statement of operations data for the fiscal year ended September 30, 2011 and then adding the statement of operations data from the three months ended December 31, 2011. The statements of operations data for calendar year ended December 31, 2011 and the three months ended December 31, 2010, while not required, are presented for comparison purposes.

The operations of the Pasadena Facility, Fulghum and NEWP are included in our historical results of operations only from the date of the closing of the Agrifos Acquisition, which was November 1, 2012, the Fulghum Acquisition, which was May 1, 2013, and the NEWP Acquisition, which was May 1, 2014. The results of our East Dubuque and our energy technologies segments, and a portion of the unallocated partnership expenses are accounted for as discontinued operations for all periods presented. 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.”

	For the Years Ended December 31,															Three Months Ended December 31,						Fiscal Year Ended September 30,
	2015			2014			2013			2012			2011			2011			2010			2011
													(unaudited)						(unaudited)
	(in thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Revenues	$	295,844		$	269,181		$	191,959		$	37,430		$	—		$	—		$	—		$	—
Cost of Sales	$	273,197		$	264,292		$	189,456		$	39,134		$	—		$	—		$	—		$	—
Gross Profit (Loss)	$	22,647		$	4,889		$	2,503		$	(1,704	)	$	—		$	—		$	—		$	—
Loss from Continuing Operations	$	(211,018	)	$	(80,559	)	$	(38,854	)	$	(52,072	)	$	(25,971	)	$	(8,068	)	$	(5,843	)	$	(23,746	)
Income (Loss) from Discontinued Operations, net of tax	$	57,987		$	48,055		$	38,892		$	79,758		$	(37,629	)	$	3,970		$	(37	)	$	(41,636	)
Net Income (Loss)	$	(153,031	)	$	(32,504	)	$	38		$	27,687		$	(63,596	)	$	(4,098	)	$	(5,884	)	$	(65,382	)
Net (Income) Loss Attributable to Noncontrolling Interests	$	38,422		$	494		$	(1,570	)	$	(41,687	)	$	(3,700	)	$	(4,433	)	$	366		$	1,099
Preferred Stock Dividends	$	(5,280	)	$	(3,840	)	$	—		$	—		$	—		$	—		$	—		$	—
Net Loss Attributable to Rentech	$	(119,889	)	$	(35,850	)	$	(1,532	)	$	(14,000	)	$	(67,296	)	$	(8,531	)	$	(5,518	)	$	(64,283	)
Net Income (Loss) per Common Share Attributable to Rentech(1):
Basic:
Continuing Operations	$	(6.50	)	$	(2.71	)	$	(0.72	)	$	(2.14	)	$	(1.13	)	$	(0.52	)	$	(0.25	)	$	(1.02	)
Discontinued Operations	$	1.24		$	1.10		$	0.64		$	1.45		$	(1.88	)	$	0.14		$	—		$	(1.87	)
Net Income (Loss)	$	(5.22	)	$	(1.57	)	$	(0.07	)	$	(0.63	)	$	(3.01	)	$	(0.38	)	$	(0.25	)	$	(2.89	)
Diluted:
Continuing Operations	$	(6.50	)	$	(2.71	)	$	(0.72	)	$	(2.14	)	$	(1.13	)	$	(0.52	)	$	(0.25	)	$	(1.02	)
Discontinued Operations	$	1.24		$	1.10		$	0.64		$	1.45		$	(1.88	)	$	0.14		$	—		$	(1.87	)
Net Income (Loss)	$	(5.22	)	$	(1.57	)	$	(0.07	)	$	(0.63	)	$	(3.01	)	$	(0.38	)	$	(0.25	)	$	(2.89	)
Weighted-average shares used to compute net income (loss) per common share(1):
Basic		22,981			22,856			22,614			22,319			22,328			22,441			22,198			22,266
Diluted		22,981			22,856			22,614			22,319			22,328			22,441			22,198			22,266

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.

We are a leading provider of wood fibre processing services, high-quality wood chips and wood pellets. Our processing business includes Fulghum, which operates 32 wood chipping mills in the United States and South America. Fulghum provides wood yard operations services and wood fibre processing services, and sells wood chips to the pulp, paper and packaging industry. Fulghum also owns and manages forestland and sells bark to industrial consumers in South America. Our wood pellet business includes our Atikokan and Wawa Facilities and NEWP. The Atikokan and Wawa Facilities are expected to have a combined annual production capacity of 560,000 metric tons, and NEWP’s annual capacity is 300,000 tons. Wood pellets produced at Atikokan are being used primarily for utility power generation in Canada and pellets produced at the Wawa Facility are being used primarily for utility power generation in the United Kingdom. The Atikokan Facility is currently in the ramp-up phase and producing wood pellets. All of the equipment at the Wawa Facility has been commissioned and the plant has been producing an increasing quantity of wood pellets. NEWP is one of the largest producers of wood pellets for the United States residential and commercial heating markets, operating four wood pellet facilities in the Northeast. The facilities are located in Jaffrey, New Hampshire; Deposit, New York; Schuyler, New York; and Youngsville, Pennsylvania.

During ramp-up of the Atikokan Facility, we discovered the need to modify the plant’s truck dump hopper and modify or replace a portion of the plant’s conveyance systems. All of the truck dump hopper modifications have been completed, and the truck dump hopper is performing as expected. The first group of faulty conveyors at the Atikokan Facility was replaced at the end of 2015 and the conveyors’ performance is currently being evaluated as part of the plant’s operations. The remaining work to address problems with the Atikokan Facility conveyor systems is expected to continue through mid-2016. The Atikokan Facility is expected to reach full capacity this year at some point after the conveyor work is completed barring any other possible unforeseen issues that may arise during the ramp-up phase.

We discovered during the ramp-up of the Wawa Facility the need to modify the front-end system of the facility that handles logs and feeds them into the chipping process and to modify or replace a significant portion of the plant’s conveyance systems. The modifications of the front-end system and the first phase of modifications of the plant’s conveyance systems were completed in late 2015. The remaining work to the conveyor systems is scheduled to be completed by mid-2016. In light of the setbacks we experienced at the Wawa Facility, we are evaluating the production capacity of the plant. We are investigating whether there are potential design shortcomings similar to those that surfaced with the plant’s wood infeed and conveyance systems that might limit capacity. We are also evaluating uptime and operating efficiency rates achievable at the plant’s full capacity. Our discussions with other pellet producers and engineering firms over the past year have shown that there is a wide disparity of these rates across established industrial pellet manufacturing plants in North America. We believe it is premature to revise the capacity of the Wawa Facility until such time that we have fully tested the design assumptions of the major processes of the plant, remediated all of the material handling issues, and completed the ramp-up of the facility. However, if we apply a range of assumed operating efficiencies typical for the industry, the plant’s annual production capacity would be between 400,000 and 450,000 metric tons. The low end of this capacity range would still allow us to fulfill our annual contractual obligations to Drax and to generate positive cash flow. We have also observed that historically within the wood pellet industry, that ramping to full design capacities takes considerable time, several years in most cases. Taking into account the amount of time required to complete the repair and modification of the conveyance systems and to ramp up to design operating efficiency rates as historically observed in the wood pellet industry, we don’t expect the Wawa Facility to reach full capacity until 2017.

Our fertilizer business includes the ownership of the general partner interest and 59.6% of the common units representing limited partner interests in RNP, a publicly traded master limited partnership that owns and operates two fertilizer manufacturing facilities. Through its wholly owned subsidiary, RNLLC, RNP manufactures natural-gas based nitrogen fertilizer products at its East Dubuque Facility. It sells its 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 region. Ammonia prices are typically significantly higher in the Mid Corn Belt than in Tampa.

On August 9, 2015, RNP entered into the Merger Agreement under which RNP and the General Partner will merge with CVR Partners, and RNP will cease to be a public company and will become a wholly owned subsidiary of CVR Partners. The consummation of the Merger is still subject to certain conditions, but RNP completed the sale of the Pasadena Facility on March 14, 2016, which represented the Company’s most significant remaining condition to closing. The Merger is expected to close on or about March 31, 2016. The East Dubuque Facility is now reported as a discontinued operation, following the signing of the Merger Agreement. For further discussion, see “Note 1 — Description of Business” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

Our operating segments were affected in different ways by various negative and positive factors in 2015. Although operating results at the Pasadena Facility improved from recent years, we recorded asset impairments totaling $160.6 million in 2015. Our East Dubuque Facility improved its production levels and its operating results as compared to 2014, benefitting from lower natural gas prices and $4.6 million of business interruption insurance proceeds related to a fire that occurred in 2013. The results and outlook for our Wood Pellets: Industrial segment depend primarily on operating results from the Atikokan and Wawa Facilities. Although both facilities began producing pellets in 2015, the combined output and losses for the plants were worse than we expected, due to problems with the material-handling equipment at both plants. The expected cost of correcting those problems increased our total expected construction spending to $145.0 million and such estimates have significant uncertainty. The delays in production at the Wawa Facility have caused us to amend our contract with Drax, and we incurred penalties of $2.6 million. NEWP performed well in 2015 and exceeded expectations for the year, with the Allegheny Acquisition contributing as expected. As a result of a full year of operations in 2015 compared to only eight months in 2014, higher selling prices, lower production costs and the Allegheny Acquisition, NEWP’s gross profit increased from $6.1 million for the period May 1, 2014 through December 31, 2014 to $12.1 million in 2015. During 2015, the Allegheny Acquisition contributed gross profit of $1.7 million. As a result of lower operating costs at its U.S. chipping mills, together with improved performance in South America, Fulghum showed marked improvement and exceeded expectations in 2015. Fulghum’s gross profit increased from $12.4 million in 2014 to $18.3 million in 2015. However, Fulghum did record asset impairments for two mills totaling $11.3 million in 2015.

In August 2015, we announced a plan to restructure our wood fibre processing and corporate activities to focus on operations and execution, while significantly reducing corporate overhead. We have been executing a reorganization plan to simplify our organizational structure and better integrate our various operating units for an overall lower cost model. We are targeting to reduce annual consolidated selling, general and administrative expenses by approximately $10.0 to $12.0 million by the end of 2016. We expect cost savings of $8.5 to $10.5 million per year by (i) completing a 25% reduction of corporate staff, (ii) reducing compensation levels, and (iii) moving the corporate headquarters from Los Angeles, California to the Washington, D.C. area. We are streamlining functions to create an integrated company focused on operations. We are targeting cost savings of $1.5 million at our fibre business units from a simplified organizational structure with fewer layers, consolidated back office functions and reduced spending. We have initiated these cost savings actions and are targeting completion of the plan by the end of the third quarter of 2016. Associated with the reorganization plan, we expect to incur non-recurring charges of approximately $6.0 million during 2016. We may adjust our restructuring plan in response to future performance, and our ability to identify and implement further cost reductions.

In the first quarter of 2016, the Company entered into an amendment to the credit facility with the GSO Funds, or the GSO credit facility, which provides the ability to draw $6.0 million in delayed draw term loans, or the Tranche D Loans as defined under the A&R GSO Credit Agreement, or the Tranche D Loans, at a rate equal to the greater of (i) LIBOR plus 14.00% and (ii) 15.00% per annum. While the Company does not expect to need proceeds from the Tranche D Loan, the facility is available through the earlier of the Merger closing and May 31, 2016 should expectations change.

Also in the first quarter, the Company entered into an agreement with the GSO Funds to modify the repayment terms of the Tranche A Loans and Series E Preferred Stock. Under the new agreement, the Company is required to deliver to GSO Funds the lesser of (i) all of the units of CVR Partners the Company receives at the closing of the Merger or (ii) $140 million of units of CVR Partners (valued using the volume weighted average price of the CVR units for the 60 trading days ending two days prior to the closing of the Merger, less a 15% discount) in exchange for retiring the equivalent dollar amount of Series E Preferred Stock and Tranche A Loans debt. To the extent that there are not enough units of CVR Partners available to repay the GSO Funds in full, any portion of the par value of the Series E Preferred Stock or the principal amount of the Tranche A Loans not repaid shall remain outstanding (and the Tranche A Loans will be converted to Tranche B Loans). For further details on the terms of the Tranche D Loans, or the Tranche D Loans, and modifications of the GSO exchange, see “Note 15 – Debt” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data”.

With the recent sale of the Pasadena Facility, the Company has satisfied all of the material conditions necessary to close the Merger, which is expected on or about March 31, 2016. Under terms of the Merger, each outstanding unit of RNP will be exchanged for 1.04 common units of CVR Partners and $2.57 of cash. We expect to receive $62.2 million in cash consideration, before payment of expenses and corporate taxes from the Merger, including our share of cash proceeds from the sale of the Pasadena Facility. Upon closing the Merger and completing the exchange with the GSO Funds, the Company is expected to have sufficient liquidity to fund the Company’s approved investment and operating needs for at least the next twelve months.

Although we do not believe it to be likely, if the Merger fails to close on the expected terms or at all, the Company would not have sufficient liquidity for the next twelve months without raising additional capital. There can be no assurance that the Company will be able to raise sufficient capital on terms it finds acceptable or at all. This would cause a material adverse effect on the Company’s business, results of operations, and financial condition, and on its ability to complete modifications and enhancements of the Atikokan Facility and the Wawa Facility and fund its normal operations.

In addition, the Company is in the process of ramping up production on the Wawa Facility and the Atikokan Facility. We expect to spend approximately $21 million to complete modifications and enhancements of the facilities in 2016. Our total operating and input costs at our Canadian facilities are expected to be higher than the net proceeds we receive under the agreements with Drax and OPG in 2016. In addition, we expect to continue to build working capital requirements for the plants as they ramp up production. If production is lower than expected, the use of cash could be higher at the Wawa Facility and the Atikokan Facility and the Company could also face significant penalties under its contracts with Drax and Canadian National in 2016. A 10% shortfall in forecasted production could increase the cash used by our Canadian facilities by an estimated $2 million, inclusive of estimated penalties of approximately $1 million.

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.

Wood feedstock represents the largest component of the Atikokan Facility’s wood pellet product cost, and will represent the largest component for the Wawa Facility once it ramps up production. We experienced supply shortages at the Atikokan Facility late in 2015 and early this year due to challenges managing wood harvesters given delays in ramping up the facility. As the Wawa Facility ramps up, it is possible that we could see similar challenges managing wood harvesters supplying feedstock and experience supply shortages. Wood feedstock represents the largest component of NEWP’s wood pellet product cost. Competition for wood feedstock supply from pulp and paper manufacturing companies, other pellet manufacturers and wood feedstock used in commercial and institutional wood boiler heating systems, may affect our cost of wood feedstock for NEWP.

Our earnings and cash flow from our fertilizer operations are significantly affected by nitrogen fertilizer product prices, the prices of the inputs to our production processes, and the timing of product deliveries as required by our 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 weather patterns and the behavior of our competitors and suppliers.

Fulghum’s operations are included in our historical operating results from the closing date of the Fulghum Acquisition, which was May 1, 2013. Fulghum provides wood yard operations services and wood fibre processing services, and sells wood chips to the pulp, paper and packaging industry. It also owns and manages forestland and sells bark to industrial consumers in South America.

NEWP’s operations are included in our historical operating results from the closing date of the NEWP Acquisition, which was May 1, 2014. NEWP is one of the largest producers of wood pellets for the United States’ residential and commercial heating markets. Allegheny’s operations are included in our historical operating results from the closing date of the Allegheny Acquisition, which was January 23, 2015. Through its acquisition of Allegheny, NEWP acquired the facility in Youngsville, Pennsylvania.

The Fulghum, NEWP and Allegheny Acquisitions also broadened the geographic area into which our products are sold. For periods after the closing of each acquisition: (i) our general and administrative expenses as well as sales-related expenses have increased due to the addition of the acquired operations; (ii) our depreciation and amortization expenses have increased due to the increase in tangible and definite lived intangible assets, which were recorded at fair value on the date of the acquisition; and (iii) our interest expense has increased due to the debt assumed with the Fulghum and NEWP Acquisitions that continues to be outstanding and, in the case of Allegheny Acquisition, the debt incurred to finance the purchase price. Due to these factors, our operating results for the periods prior to and after the closing dates of the Fulghum Acquisition, NEWP Acquisition and Allegheny Acquisition may not be comparable.

In late 2014, we restructured operations at our Pasadena Facility. As part of the restructuring, our Pasadena Facility reduced expected annual production of ammonium sulfate by approximately 25 percent, to 500,000 tons. We intend to sell predominantly in the domestic market and target higher-margin international markets. Our sales plan reduced our historically low-margin international sales. Furthermore, the restructuring plan provides us flexibility to increase ammonium sulfate production above 500,000 tons, if appropriate market conditions are present. The restructuring plan also included a reduction of the number of contractors and employees at the Pasadena Facility, which reduced the full-time equivalent workforce by approximately 20 percent.

The restructuring reduced operating and selling, general and administrative expenses and annual maintenance capital expenditures. This enabled our Pasadena Facility’s operations, including the benefits from our power generation project, to generate positive EBITDA in 2015.

One of our business strategies is to pursue acquisitions in related businesses. We may pursue acquisitions of additional wood fibre processing assets and businesses. 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 acquisition agreements on satisfactory terms, or at all. Costs associated with potential acquisitions are expensed as incurred, and could be significant.

Preparing our consolidated financial statements in conformity with generally accepted accounting principles in the United States of America, or GAAP, requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. 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, 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, storage locations or our distributors’ facilities 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 collectability is not considered reasonably assured at the time of sale, we do not recognize revenue until collection occurs.

Certain product sales occur under prepaid 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 prepaid contracts and relieve the liability for deferred revenue when end use customers take ownership of products. A significant portion of the revenue recognized during any period may be related to prepaid 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, although not typically 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 or storage capacities, or when the margin from selling natural gas significantly 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. During turnarounds, we allocate production overhead costs to inventory based on the normal capacity of our production facilities.

Valuation of Long-Lived Assets and Finite-Lived Intangible Assets. We recorded asset impairments in 2015. We assess the realizable value of long-lived assets and finite-lived 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 recorded goodwill impairments in 2014 and 2013. We test goodwill for impairment annually, or more often if an event or change of circumstance indicates that an impairment may have occurred. The first step of the required impairment test consists of a comparison of the fair value of a reporting unit to its carrying value. The determination of fair value involves a high degree of judgment as there are significant assumptions underlying the valuation. If the fair value of a reporting unit is greater than its carrying value, then there is no indication of potential impairment and step two of the goodwill impairment test is not required. If an indication of potential impairment exists, then step two is required whereby the fair value of the reporting unit is allocated to all of its assets and liabilities excluding goodwill, with the residual 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 goodwill.

Accounting for Major Maintenance. Expenditures for improving, replacing or adding to assets are capitalized. Major 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 to three 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 as incurred: 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 assets acquired, liabilities assumed and potential earn-out consideration be recognized at their respective 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.

We operate in four business segments, as described below. Fulghum’s operations are included only from the closing date of the Fulghum Acquisition, which was May 1, 2013. NEWP’s operations are included only from the closing date of the NEWP Acquisition, which was May 1, 2014. Allegheny’s operations are included only from the closing date of the Allegheny Acquisition, which was January 23, 2015. For all periods presented below, the Company has reclassed the expenses from the joint venture with Graanul Invest AS (“Graanul”), which are shown as equity in loss of investee, from the Fulghum Fibres business segment to the Wood Pellets: Industrial business segment. Results of the East Dubuque and the energy technologies segments, and a portion of the unallocated partnership expenses are accounted for as discontinued operations for all periods presented. Our four business segments are:

	For the Years Ended December 31,
	2015			2014			2013
	(in thousands)
Revenues
Pasadena	$	139,387		$	138,233		$	133,675
Fulghum Fibres		94,219			94,748			58,284
Wood Pellets: Industrial		7,933			4,086			—
Wood Pellets: NEWP		54,305			32,114			—
Total revenues	$	295,844		$	269,181		$	191,959
Gross profit (loss)
Pasadena	$	4,656		$	(14,308	)	$	(9,529	)
Fulghum Fibres		18,293			12,444			12,032
Wood Pellets: Industrial		(12,388	)		703			—
Wood Pellets: NEWP		12,086			6,050			—
Total gross profit (loss)	$	22,647		$	4,889		$	2,503
Operating income (loss)
Pasadena	$	(160,658	)	$	(47,907	)	$	(48,208	)
Fulghum Fibres		(1,324	)		3,919			9,914
Wood Pellets: Industrial		(34,808	)		(11,954	)		(5,505	)
Wood Pellets: NEWP		7,925			4,388			—
Total segment operating loss	$	(188,865	)	$	(51,554	)	$	(43,799	)
Net income (loss)
Pasadena	$	(159,278	)	$	(47,925	)	$	(48,357	)
Fulghum Fibres		(3,007	)		75			6,967
Wood Pellets: Industrial		(36,542	)		(11,616	)		(5,180	)
Wood Pellets: NEWP		7,664			4,342			—
Total segment net loss	$	(191,163	)	$	(55,124	)	$	(46,570	)
Reconciliation of segment net loss to consolidated net loss:
Segment net loss	$	(191,163	)	$	(55,124	)	$	(46,570	)
Corporate expenses allocated to RNP recorded as selling, general and administrative expenses		(6,673	)		(7,750	)		(7,683	)
Corporate expenses allocated to RNP recorded as other income (expenses)		(158	)		—			4,920
Corporate and unallocated expenses recorded as selling, general and administrative expenses		(17,991	)		(28,043	)		(24,849	)
Corporate and unallocated depreciation and amortization expense		(549	)		(579	)		(596	)
Corporate and unallocated income (expenses) recorded as other income (expense)		(730	)		(1,634	)		19
Corporate and unallocated interest expense		(6,517	)		(380	)		(532	)
Corporate income tax benefit (expense)		12,763			12,951			36,437
Income from discontinued operations, net of tax		57,987			48,055			38,892
Consolidated net income (loss)	$	(153,031	)	$	(32,504	)	$	38

We generate revenue from sales of nitrogen fertilizer and other products manufactured at our Pasadena Facility. The facility produces ammonium sulfate, and ammonium thiosulfate, which are nitrogen fertilizers, as well as sulfuric acid. These fertilizer products may be used in growing corn, soybeans, potatoes, cotton, canola, alfalfa and wheat. Revenues from domestic sales are seasonal based on planting, growing, and harvesting cycles. Planting seasons in the Southern Hemisphere are typically opposite those in the United States, thus ammonium sulfate international sales partially offset domestic seasonality.

Revenues for the year ended December 31, 2015 were $139.4 million, compared to $138.2 million for the year ended December 31, 2014. The increase was due to higher sales prices for ammonium sulfate and ammonium thiosulfate, and higher sales volumes for sulfuric acid and ammonium thiosulfate, partially offset by lower sales volumes for ammonium sulfate, and lower sales prices for sulfuric acid.

Average sales prices per ton increased by 16% for ammonium sulfate and decreased by 2% for sulfuric acid for the year ended December 31, 2015, as compared with the same period in the prior year. These two products comprised 89% of our Pasadena Facility’s revenues for the year ended December 31, 2015 and 91% for the year ended December 31, 2014. The increase in the average sales price for ammonium sulfate is due to a higher percentage of sales in the domestic market and continued strong demand for ammonium sulfate as customers move away from ammonium nitrate. As part of our restructuring plan implemented in late 2014, we reduced our historically low-margin sales to Brazil. Only 27% of ammonium sulfate sales were to Brazil during the year ended December 31, 2015, while 44% of ammonium sulfate sales were to Brazil during the year ended December 31, 2014.

The higher sales volumes for sulfuric acid and lower sales volumes for ammonium sulfate were the result of our restructuring plan. In addition to reducing sales to Brazil, the restructuring plan reduced expected annual production of ammonium sulfate by approximately 25 percent, to 500,000 tons. Sulfuric acid is a component in the production of ammonium sulfate. With reduced production of ammonium sulfate, less sulfuric acid is needed, which results in more sulfuric acid being available for sale.

We generate revenues at Fulghum Fibres from providing wood yard operation services and wood fibre processing services, and selling wood chips to the pulp, paper and packaging industry. Fulghum also owns and manages forestland and sells bark to industrial consumers in South America. Service revenues are those earned under agreements for wood yard operations services and wood fibre processing services in the United States and South America. Product revenues are those earned by our Chilean operations from the sale of wood chips and bark.

Revenues for the year ended December 31, 2015 were $94.2 million, compared to $94.7 million for the year ended December 31, 2014. Revenues from operations in the United States were $59.1 million for the year ended December 31, 2015, as compared to $59.0 million in the prior year. Revenues from operations in the South America were $35.1 million for the year ended December 31, 2015, as compared to $35.7 million in the prior year. During the year ended December 31, 2015, our mills in the United States processed 12.5 million GMT of logs into wood chips and residual fuels; our mills in South America processed 2.6 million GMT of logs. During the year ended December 31, 2014, our mills in the United States processed 12.4 million GMT of logs into wood chips and residual fuels; our mills in South America processed 2.4 million GMT of logs.

We generate revenues from sales of wood pellets to industrial customers, specifically electric utilities generating electricity. We began producing wood pellets at the Atikokan Facility in February 2015. Revenues were $7.9 million from the Atikokan Facility for the year ended December 31, 2015, earned by delivering to OPG 43,600 metric tons of wood pellets, 41,700 of which were produced at the Atikokan Facility. Revenues were $4.1 million at the Atikokan Facility for the year ended December 31, 2014, earned by delivering to OPG 21,000 metric tons of wood pellets sourced from a third-party wood pellet producer.

The Atikokan Facility is in the ramp-up phase. We experienced a transformer failure in early 2015 and had been using a smaller temporary transformer that caused us to operate the facility at reduced rates. In the third quarter of 2015, we installed the larger permanent transformer that allows the Atikokan Facility to operate at full production rates. During ramp-up of the Atikokan Facility, we discovered the need to modify the plant’s truck dump hopper and modify or replace a portion of the plant’s conveyance systems. All of the truck dump hopper modifications have been completed, and the truck dump hopper is performing as expected. The first group of the faulty conveyors at the Atikokan Facility was repaired at the end of 2015 and the conveyors’ performance is currently being evaluated as part of the plant’s operations. The remaining work to address problems with the Atikokan Facility conveyor systems is expected to continue through mid-2016. The Atikokan Facility is expected to reach full capacity this year at some point after the conveyor work is completed barring any other possible unforeseen issues that may arise during the ramp-up phase.

All of the equipment at the Wawa Facility has been commissioned and the plant has been producing an increasing quantity of wood pellets. However, we discovered during the ramp-up of the Wawa Facility the need to modify the front-end system of the facility that handles logs and feeds them into the chipping process and to modify or replace a significant portion of the plant’s conveyance systems. The modifications of the front-end system and the first phase of modifications of the plant’s conveyance systems were completed in late 2015. The remaining work to the conveyor systems is scheduled to be completed by mid-2016. In light of the setbacks we have experienced at the Wawa Facility, we are evaluating the production capacity of the plant. We are investigating whether there are potential design shortcomings similar to those that surfaced with the plant’s wood infeed and conveyance systems that might limit capacity. We are also evaluating uptime and operating efficiency rates achievable for full capacity. Our discussions with other pellet producers and engineering firms over the past year have shown that there is a wide disparity of these rates across established industrial pellet manufacturing plants in North America. We believe it is premature to revise the capacity of the Wawa Facility until such time that we have fully tested the design assumptions of the major processes of the plant, remediated all of the material handling issues, and completed the ramp-up of the facility. However, if we apply a range of assumed operating efficiencies typical for the industry, the plant’s annual production capacity would be between 400,000 and 450,000 metric tons. The low end of this capacity range would still allow us to fulfill our annual contractual obligations to Drax and to generate positive cash flow. We have also observed that historically within the wood pellet industry, ramping to full design capacities takes considerable time, several years in most cases. Taking into account the amount of time required to complete the repair and modification of the conveyance systems and to ramp up to design operating efficiency rates as historically observed in the wood pellet industry, we don’t expect the Wawa Facility to reach full capacity until 2017.

Due to the delays in production at the Wawa Facility, we amended our delivery commitments under the Drax Contract in 2015. Under the August Amendment executed in August 2015, we canceled all 2015 deliveries and agreed to a total penalty, which encompasses all amendments relating to 2015 shipments to date, of $2.6 million associated with costs to Drax to purchase replacement pellets and to cancel shipping commitments. In 2015, we accrued the $2.6 million penalty in operating expenses. The penalty will be paid in the form of credits on the first several expected deliveries to Drax in early 2016. In addition, 72,000 metric tons of the original 2015 pellet deliveries are being allocated to 2018 and 2019, but remains at 2015 pricing levels, which is expected to be lower than pricing in those future years under the original terms of the contract. We did not fully meet our 2015 commitment under the Canadian National Contract resulting in cash penalties of $3.3 million.

Given the significant cost overruns and our evaluation of potential production capacity for the Wawa Facility, we determined that indicators of impairment existed as of December 31, 2015 and performed a long-lived asset recoverability test. Based on the results of the impairment test, we concluded the Wawa Facility’s carrying value was recoverable and no impairment charge was recorded. However, the forecasts of operating cash flows used in the impairment test was based upon numerous factors and assumptions including estimates of future prices of crude oil, foreign exchange rates and inflation levels. A variation in any one factor or assumption could cause a different result, which could require an impairment charge. Assumptions used in the forecasts were based on production capacity between 400,000 and 450,000 metric tons. Based on economic factors today, if production were to permanently remain below the lower end of this range, there could be a material impairment.

We generate revenues at NEWP from sales of wood pellets to the United States’ residential and commercial heating markets. Revenues were $54.3 million for the year ended December 31, 2015 on deliveries of 272,000 tons of wood pellets. Revenues were $32.1 million from May 1, 2014 through December 31, 2014 on deliveries of 165,000 tons of wood pellets. At the beginning of June 2015, we began to operate the Allegheny mill seven days a week. The previous owners operated the facility slightly over four days a week.

The increase in revenues reflects our ownership of NEWP for the entire year of 2015 compared to only eight months for the same period in 2014, and the addition of the Allegheny mill in 2015.

Cost of sales primarily consists of the cost of ammonia, sulfur, labor and depreciation. Cost of sales for the year ended December 31, 2015 was $134.7 million, compared to $152.5 million for the year ended December 31, 2014. The decrease in cost of sales was primarily due to selling a lower volume of ammonium sulfate consistent with our restructuring plan as described above, partially offset by higher sales volume of sulfuric acid. Ammonia and sulfur together comprised 63% of cost of sales for the year ended December 31, 2015, compared to 61% for the same period in the prior year. Labor costs comprised 9% of cost of sales for the year ended December 31, 2015 and 8% for the year ended December 31, 2014. For the year ended December 31, 2015, we wrote down our ammonium sulfate inventory by $2.2 million because production costs exceeded market prices. For the year ended December 31, 2014, we wrote down our ammonium sulfate inventory by $6.0 million. During the year ended December 31, 2014, we incurred turnaround expenses of $2.1 million and unanticipated maintenance expenses of $1.3 million. Turnaround expenses represent maintenance costs incurred during planned shut-downs. The duration of the 2014 turnaround was extended by 13 days, as compared to the duration of a typical turnaround, to undertake activities necessary to tie-in the new sulfuric acid converter and cogeneration projects. During the extended outage, we conducted a comprehensive examination of other components within the sulfuric acid plant. This examination resulted in the discovery and repair of previously unidentified items. The incremental cost of these items and the extended downtime was approximately $1.3 million. These activities are not expected to recur in the future. Because our sulfuric acid plant was down during the turnaround period in order to continue producing ammonium sulfate and meet sales demand for sulfuric acid, we purchased sulfuric acid, which increased the cost of sales for the year ended December 31, 2014.

Depreciation expense included in cost of sales was $5.9 million for the year ended December 31, 2015 and $7.0 million for the year ended December 31, 2014. The decrease in depreciation expense was primarily due to the asset impairment charges relating to the Pasadena Facility in 2015.

Costs of sales include (i) service costs for our wood chipping mill operations, which primarily consist of costs for labor, repairs and maintenance, depreciation and utilities, and (ii) product costs relating to our sale of wood chips and bark in South America, which consist of costs to purchase, process and export wood fibre products.

Cost of sales for the year ended December 31, 2015 was $75.9 million, compared to $82.3 million for the year ended December 31, 2014. The reduction in cost of sales in 2015 was a result of concerted efforts to control labor, maintenance and insurance costs at our processing mills, particularly in the U.S. For the year ended December 31, 2015, service costs represented 71% of our cost of sales, while product costs represented 29% of our cost of sales. For the year ended December 31, 2014, service costs represented 70% of our cost of sales, while product costs represented 30% of our cost of sales. Labor costs comprised 39% of our service cost of sales for the year ended December 31, 2015 and 37% for the same period in the prior year. Repairs and maintenance and utilities comprised 34% of our service cost of sales for the year ended December 31, 2015 and 40% for the same period in the prior year. Depreciation expense included in cost of sales was $8.7 million during the year ended December 31, 2015 and $7.4 million for the same period in the prior year.

We began producing wood pellets at the Atikokan Facility in February 2015 and at the Wawa Facility in May 2015. Cost of sales primarily consists of wood fibre feedstock, labor, electricity, repair and maintenance, and depreciation.

Cost of sales for year ended December 31, 2015 was $20.3 million. For the year ended December 31, 2015, we wrote down our wood pellet inventory by $11.3 million as a result of a high level of fixed operating costs allocated to relatively low volumes produced at the Atikokan and Wawa Facilities during this period of ramp-up. Wood fibre feedstock comprised 26%, depreciation comprised 37%, and labor costs comprised 16% of cost of sales for the year ended December 31, 2015. As of December 31, 2014, we had not yet begun producing wood pellets at either the Atikokan or Wawa Facilities. As a result, cost of sales in 2014 consisted of purchasing and transporting wood pellets from a third party supplier to our customer OPG. Cost of sales for year ended December 31, 2014 was $3.4 million. Wood pellet purchases comprised 65% and transportation costs 32% of cost of sales for the year ended December 31, 2014. There was no depreciation expense included in cost of sales for the year ended December 31, 2014.

Cost of sales primarily consists of expenses for wood fibre feedstock, packaging, labor, electricity, freight and depreciation. Cost of sales for the year ended December 31, 2015 was $42.2 million. Cost of sales from May 1, 2014 through December 31, 2014 was $26.1 million. For the year ended December 31, 2015, wood fibre feedstock comprised 51%, packaging comprised 12%, and labor and electricity each comprised 7% of cost of sales. From May 1, 2014 through December 31, 2014, wood fibre feedstock comprised 48%, packaging comprised 12%, and labor and electricity each comprised 7% of cost of sales. Depreciation expense included in the cost of sales was $3.0 million for the year ended December 31, 2015. Depreciation expense included in the cost of sales was $1.9 million from May 1, 2014 through December 31, 2014. Cost of sales from May 1, 2014 through December 31, 2014 also included a $0.2 million write-up of inventory to fair value as part of the NEWP Acquisition.

Gross profit was $4.7 million for the year ended December 31, 2015, compared to a gross loss of $14.3 million for the year ended December 31, 2014. Gross profit margin for the year ended December 31, 2015 was 3%, compared to gross loss margin of 10% for the year ended December 31, 2014. The increases in gross profit and gross profit margin were primarily due to improvements from our restructured operating plan, higher sales prices for ammonium sulfate and ammonium thiosulfate, higher sales volumes for sulfuric acid and a decrease in the write down of inventories, turnaround expenses and other unplanned maintenance expenses.

Gross profit margin at our Pasadena Facility can vary significantly from period to period due to changes in the prices of nitrogen fertilizer, ammonia and sulfur, which are all commodities. The prices of these commodities can vary significantly from period to period and do not always move in the same direction. In addition, certain fixed costs of operating our Pasadena Facility are recorded in cost of sales. Their impact on gross profit and gross margins varies as product sales volumes vary seasonally. Because forward sales contracts have not developed for ammonium sulfate to the extent that they have for other nitrogen fertilizer products, it is not possible to lock in our gross profit margins. Additionally, input prices for ammonium sulfate are typically fixed several months before the corresponding product sales prices are known. See “Note 13 — Goodwill” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

Gross profit was $18.3 million for the year ended December 31, 2015, compared to $12.4 million for the year ended December 31, 2014. Gross profit margin for the year ended December 31, 2015 was 19%, compared to 13% for the same period in the prior year. The increases in gross profit and gross profit margin were due primarily to cost savings at our processing mills in the United States, partially offset by higher depreciation expense. In addition, gross profits and gross margins were lower in the 2014 periods as a result of the fire at our Maine mill in March of that year. Our losses related to the fire in Maine, which reflect lost revenues and increased operating costs associated with interim chip processing during the reconstruction, totaled approximately $1.0 million in 2014.

Gross loss for the year ended December 31, 2015 was $12.4 million, compared to gross profit of $0.7 million for the prior year. Gross loss margin was 156% for the year ended December 31, 2015, compared to gross profit margin of 17% for the prior year. The gross losses and gross loss margins for 2015 were due to high operating costs relative to revenues during commissioning and ramp-up of both the Atikokan and Wawa Facilities, including the related write down of inventory by $11.3 million during the year ended December 31, 2015.

Gross profit for the year ended December 31, 2015 was $12.1 million. Gross profit margin was 22% for the year ended December 31, 2015. Gross profit from May 1, 2014 through December 31, 2014 was $6.1 million. Gross profit margin was 19% for the year ended December 31, 2014. Gross margins were higher because of higher selling prices and lower production costs during 2015. The increase in gross profit reflects our ownership of NEWP for the entire year of 2015 compared to only eight months for the same period in 2014, and the addition of the Allegheny mill in 2015.

Operating expenses were comprised primarily of selling, general and administrative expenses, depreciation and amortization expense and impairment charges. Operating expenses were $165.3 million for the year ended December 31, 2015, compared to $33.6 million for the year ended December 31, 2014. Operating expenses, excluding impairments, were $4.7 million for the year ended December 31, 2015, compared to $6.4 million for the year ended December 31, 2014.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2015 were $3.9 million, compared to $5.1 million for the year ended December 31, 2014. The decrease was primarily due to our 2014 restructuring, partially offset by approximately $0.8 million of transaction costs relating to the sale or spin-off of the Pasadena Facility.

Depreciation and Amortization . Depreciation and amortization expense included in operating expenses was $0.8 million for the year ended December 31, 2015, compared to $1.3 million for the years ended December 31, 2014. Depreciation and amortization expense represents primarily amortization of intangible assets, which was fully written off during the 2015, as described below. The majority of depreciation expense incurred was a manufacturing cost and was distributed between cost of sales and finished goods inventory, based on production volumes and ending inventory levels.

Pasadena Asset Impairment. Pasadena asset impairment was $160.6 million for the year ended December 31, 2015. The impairment reduced property, plant and equipment by $140.1 million and eliminated intangible assets by $20.5 million. See “Note 12 — Property, Plant and Equipment” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report.

Pasadena Goodwill Impairment. Pasadena goodwill impairment was $27.2 million for the year ended December 31, 2014. There is no remaining goodwill associated with the Pasadena Facility. See “Note 13 — Goodwill” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

Operating expenses were comprised of selling, general and administrative expense and depreciation and amortization expense. Operating expenses were $19.6 million for the year ended December 31, 2015, compared to $8.5 million for the year ended December 31, 2014. Operating expenses, excluding impairments, were $8.4 million for the year ended December 31, 2015, compared to $8.5 million for the year ended December 31, 2014.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2015 were $5.0 million, compared to $6.4 million for the same period in the prior year. These expenses are for general administrative purposes, such as costs associated with general management personnel, travel, legal, office space, consulting, and information technology. The decrease was primarily due to reductions in personnel and professional services costs.

Depreciation and Amortization . Depreciation and amortization expense included in operating expense for the year ended December 31, 2015 was $3.0 million and $2.1 million for the same period in the prior year. For the year ended December 31, 2014, amortization of unfavorable processing agreements exceeded amortization of favorable processing agreements resulting in a credit in depreciation and amortization expense. The majority of depreciation expense relates to wood chip processing assets and was recorded in cost of sales.

Fulghum Asset Impairment. Fulghum’s asset impairments totaled $11.3 million for the year ended December 31, 2015. The impairment reduced property, plant and equipment by $11.3 million. See “Note 12 — Property, Plant and Equipment” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report.

Operating expenses were primarily comprised of selling, general and administrative expenses, and loss on disposal of fixed assets. Selling, general and administrative expenses include personnel costs, travel, acquisition-related and development costs associated with the Atikokan and Wawa Projects, and other business development costs. Our operating expenses for the year ended December 31, 2015 are not indicative of the amount of operating expenses we expect in the future once the Atikokan and Wawa Facilities are operating at full capacity. Certain expenses incurred prior to the commencement of commercial operations were recorded as operating expenses during the year ended December 31, 2015 which are now being capitalized to product inventory and included in cost of sales when the inventories are sold.

Operating expenses were $22.4 million for the year ended December 31, 2015, compared to $12.7 million for the same period in the prior year. The increase was primarily due to corporate allocations, penalties related to the Canadian National Contract of $3.3 million, penalties related to the Drax Contract of $2.6 million and loss on disposal of fixed assets of $2.3 million related to the replacement of material handling equipment. Corporate allocations totaled $4.4 million for the year ended December 31, 2015. There were no corporate allocations to the Wood Pellets: Industrial segment in 2014.

Operating expenses consist of selling, general and administrative expenses and depreciation and amortization expense. Selling, general and administrative expenses for the year ended December 31, 2015 were $2.7 million. Selling, general and administrative expenses from May 1, 2014 through December 31, 2014 were $1.6 million. The increase in operating expenses reflects our ownership of NEWP for the entire year of 2015 compared to only eight months for the same period in 2014, and the addition of the Allegheny mill in 2015.

Depreciation and amortization expense included in operating expense for the year ended December 31, 2015 was $1.5 million. Depreciation and amortization expense included in operating expense for the year ended December 31, 2014 was $0.1 million. At the time of the NEWP Acquisition, we recorded customer relationships at their fair values as part of purchase accounting for the acquisition. Amortization of these customer relationships in the eight months ended December 31, 2014 resulted in a credit in depreciation and amortization expense. The majority of depreciation expense relates to wood pellet processing assets and was recorded in cost of sales.

Operating expenses consist of certain partnership expenses and Rentech allocations to RNP for labor, travel and rent costs that will continue after the Merger and are therefore included in continuing operations. Operating expenses were $6.7 million for the year ended December 31, 2015, compared to $7.8 million for the prior year. The decrease was due to additional compensation expense in 2014 related to severance costs for an executive.

Corporate and unallocated expenses represent costs that relate directly to Rentech and its non-RNP subsidiaries but are not allocated to a segment. Operating expenses consist primarily of selling, general and administrative expenses and depreciation and amortization expense. Selling, general and administrative expenses include cash and non-cash personnel costs, acquisition related expenses, insurance costs, facilities expenses, information technology costs and professional services fees for legal, audit, tax and investor relations activities.

Selling, general and administrative expenses were $18.0 million for the year ended December 31, 2015, compared to $28.0 million for the year ended December 31, 2014. The decrease was primarily due to decreases in transaction costs of $3.1 million, non-cash equity based compensation of $2.1 million, and consulting costs of $1.0 million, partially offset by an increase in professional services fees of $0.7 million. Allocation of corporate expenses to the Wood Pellets: Industrial segment accounted for $4.4 million of the decrease between 2015 and 2014. Non-cash equity-based compensation expense was $3.4 million for the year ended December 31, 2015 compared to $5.5 million for the same period in the prior year.

Operating loss was $160.7 million for the year ended December 31, 2015, compared to $47.9 million for the year ended December 31, 2014. The increase in operating loss was primarily due to the $160.6 million asset impairment, partially offset by improvements from our restructured operating plan, higher average sales prices for ammonium sulfate and ammonium thiosulfate, higher sales volumes for sulfuric acid, and a decrease in the write down of inventories and goodwill impairment.

Operating loss was $1.3 million for the year ended December 31, 2015, compared to operating income of $3.9 million for the year ended December 31, 2014. The decrease in operating income was primarily due to asset impairments totaling $11.3 million, partially offset by lower operating costs of Fulghum’s U.S. chipping mills in 2015 and losses associated with the fire at our mill in Maine in 2014.

Operating loss was $34.8 million for the year ended December 31, 2015, compared to $12.0 million for the same period in the prior year. This increase in operating loss was due to high operating costs relative to revenues during commissioning and ramp-up of both the Atikokan and Wawa Facilities, including the related write down of inventory by $11.3 million during the year ended December 31, 2015, penalties related to the Canadian National Contract of $3.3 million, penalties related to the Drax Contract of $2.6 million and loss on disposal of fixed assets of $2.3 million related to the replacement of material handling equipment.

Operating income was $7.9 million for the year ended December 31, 2015, which reflects gross profit and operating expenses as described above. Operating income was $4.4 million for the year ended December 31, 2014, which reflects gross profit and operating expenses as described above.

The Pasadena Facility received a one-time easement payment of $1.4 million to allow an adjacent property owner to construct some pipelines under the facility.

Other expense, net was $1.5 million for the year ended December 31, 2015, compared to $2.9 million for the same period in the prior year. The decrease was primarily due to a gain of $1.6 million. During 2015, Fulghum negotiated a settlement with its insurance carriers related to the 2014 fire at their mill in Maine, which resulted in the gain of $1.6 million. The gain represented the excess of the settlement amount over the net book value of the property destroyed.

Other expense, net was $1.3 million for the year ended December 31, 2015, compared to other income, net of $0.3 million for the same period in the prior year. The increase was primarily due to interest expense. In 2014, we capitalized most of the interest to construction in progress.

Corporate and unallocated expenses recorded as other expense for the year ended December 31, 2015 was $6.5 million compared to $2.0 million for the same period in the prior year. The 2015 amount consisted primarily of interest expense. The 2014 amount consisted primarily of a fair value adjustment to earn-out consideration of $1.2 million related to the NEWP Acquisition and a loss on debt extinguishment of $0.9 million, partially offset by miscellaneous income of $0.4 million.

We generate revenue primarily from the sale of nitrogen fertilizer products manufactured at our East Dubuque Facility. Our East Dubuque Facility produces ammonia, UAN, liquid and granular urea, which are nitrogen fertilizers that use natural gas as a feedstock. We also produce nitric acid and food-grade CO₂. Nitrogen fertilizer products are used primarily in the production of corn. Revenues are seasonal based on the planting, growing, and harvesting cycles.

Revenues for the year ended December 31, 2015 were $201.3 million, compared to $196.4 million for the same period in the prior year. The increase was primarily due to higher sales volumes for ammonia, partially offset by lower sales prices for all nitrogen fertilizer products, and lower natural gas sales.

Ammonia deliveries increased due to strong demand from agricultural and industrial customers. Volumes were low in 2014 because production was interrupted by a planned turnaround and a fire in the fourth quarter of 2013 that reduced product available for sale in 2014, and production was purposely reduced in order to sell natural gas at high prices in the first quarter of 2014. In addition, production was higher in 2015 due to the completion of an expansion project to increase ammonia production capacity.

Average sales prices per ton for the year ended December 31, 2015 were 2% lower for ammonia and 9% lower for UAN, as compared to the same period in the prior year. These two products comprised 85% of our East Dubuque Facility’s revenues for the year ended December 31, 2015 and 81% for the same period in the prior year. The decrease in nitrogen fertilizer prices between the years was due primarily to an overall softening of the ammonia fertilizer market due to lower corn prices and higher supplies of nitrogen fertilizer.

Other revenues consist primarily of natural gas sales. We occasionally sell natural gas when purchase commitments exceed production requirements or storage capacities, or when the margin from selling natural gas significantly exceeds the margin from producing additional ammonia. During the year ended December 31, 2015, we recorded $0.5 million in each of natural gas sales and sales of nitrous oxide emission reduction credits. During the year ended December 31, 2014, we recorded $6.1 million in natural gas sales and $0.5 million in sales of nitrous oxide emission reduction credits. On rare occasions, we have also purchased natural gas with the specific intent of immediately reselling it when local market anomalies create low-risk opportunities for gain. During the first quarter of 2015, temporary operational problems with a natural gas pipeline in the Midwest caused a significant spike in the local price of natural gas. This created a unique opportunity to purchase natural gas from other locations at lower prices for the purpose of reselling it at significantly higher prices. We also sold natural gas originally purchased for production at a gross profit that exceeded the expected gross profits from additional production using that natural gas. During the first quarter of 2014, we sold, at an average price of $29.90 per MMBtu, 151,000 MMBtus of natural gas that cost an average of $9.42 per MMBtu. The total $4.5 million in natural gas sales in the first quarter resulted in a gross profit of $3.1 million, which was significantly higher than the profit we would likely have realized on the 2,900 tons of lost ammonia production.

Cost of sales primarily consists of the cost of natural gas (East Dubuque’s primary feedstock), labor, depreciation and electricity. Cost of sales for the year ended December 31, 2015 was $99.6 million compared to $121.6 million for the same period in the prior year. The decrease in the cost of sales was primarily due to business interruption insurance proceeds and a decrease in natural gas costs. During the year ended December 31, 2015, we recorded $4.6 million in business interruption insurance proceeds relating to the 2013 fire. Decreased natural gas costs were due to a $6.4 million increase in unrealized gain on natural gas derivatives and a decrease in natural gas prices. Natural gas, including unrealized gains (losses) on natural gas derivatives, comprised 42% and labor costs comprised 15% of cost of sales on product shipments for the year ended December 31, 2015. For the year ended December 31, 2014, natural gas was 50% and labor was 13% of cost of sales. Depreciation expense included in cost of sales was $18.0 million for the year ended December 31, 2015 and $15.7 million for the year ended December 31, 2014. The increase in depreciation expense included in cost of sales was primarily due to the increase in ammonia sales volumes as depreciation is a component of the cost of goods and recognized at the time the product is sold. During the year ended December 31, 2014, we recorded $0.9 million of expense reimbursements under an insurance claim filed for the fire, which occurred in 2013.

Gross profit was $101.7 million for the year ended December 31, 2015, compared to $74.8 million for the year ended December 31, 2014. Gross profit margin was 51% for the year ended December 31, 2015, compared to 38% for the year ended December 31, 2014. The increases in gross profit and gross margin were primarily due to higher sales volumes for ammonia, business interruption insurance proceeds and lower natural gas costs, partially offset by lower sales prices for all nitrogen fertilizer products. Gross profit margin, without business interruption insurance proceeds and natural gas derivatives, was 44% for the year ended December 31, 2015, compared to 40%, without natural gas derivatives, for the same period in the prior year.

Gross profit margin can vary significantly from period to period. Nitrogen fertilizer and natural gas are both commodities, the prices of which can vary significantly from period to period and do not always move in the same direction. In addition, certain fixed costs of operating our East Dubuque Facility are recorded in cost of sales. Their impact on gross profit and gross margins varies as product sales volumes vary seasonally.

During the fourth quarter of 2014, our East Dubuque Facility’s ammonia plant was shut down for seven days for unplanned repairs and maintenance. Also, during the third quarter of 2014, our East Dubuque Facility’s ammonia plant was shut down for ten days for unplanned repairs and maintenance. Gross profit was negatively impacted as the outages reduced the amount of product available for sale. Problems with the ammonia synthesis converter caused the shut-downs in both cases. The converter was damaged during a fire in 2013, then repaired and returned to service. The facility is currently operating near capacity, but it is possible that additional repairs will be needed before the converter is expected to be replaced before the end of summer 2016.

Operating expenses were $9.8 million for the year ended December 31, 2015, compared to $5.9 million for the year ended December 31, 2014. These expenses were primarily comprised of selling, general and administrative expenses, and depreciation expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2015 were $9.2 million, compared to $5.2 million for the year ended December 31, 2014. This increase was primarily due to professional fees related to the Merger.

Depreciation and Amortization . Depreciation expense included in operating expense was $0.1 million for the year ended December 31, 2015, compared to $0.2 million for the year ended December 31, 2014. The majority of depreciation expense incurred was a manufacturing cost and was distributed between cost of sales and finished goods inventory, based on production volumes and ending inventory levels. However, a portion of depreciation expense was associated with assets supporting general and administrative functions and was recorded in operating expense.

Other . Other expenses include loss on disposal of fixed assets, which was $0.4 million for the year ended December 31, 2015, compared to $0.5 million for the prior year.

Operating income was $91.9 million for the year ended December 31, 2015, compared to $68.9 million for the year ended December 31, 2014. The increase was primarily due to higher sales volumes for ammonia, business interruption insurance proceeds and lower natural gas costs, partially offset by lower sales prices for all nitrogen fertilizer products and higher selling, general and administrative expenses, as described above.

Income from discontinued operations, our former energy technologies segment, for the year ended December 31, 2015 was $0.4 million, compared to $7.3 million for the same period in the prior year.

For the year ended December 31, 2015, we received a property tax refund of $1.1 million, partially offset by severance costs, insurance costs, security costs and property taxes. During the year ended December 31, 2014, we completed the sale of our alternative energy technologies, which resulted in a gain of $15.3 million, and recorded a loss on impairment on the PDU of $2.9 million. For the year, we also had selling, general and administrative costs of $5.6 million consisting primarily of personnel and travel costs of the personnel team essential to the sale of operations, insurance costs, security costs and property taxes. Tax benefit for the year ended December 31, 2014 was $1.2 million.

Revenues for the year ended December 31, 2014 were $138.2 million, compared to $133.7 million for the year ended December 31, 2013. The increase was due to higher sales volumes for ammonium sulfate, partially offset by lower sales volumes for sulfuric acid and lower sales prices for ammonium sulfate and sulfuric acid.

Ammonium sulfate production increased after we completed the debottlenecking project in December 2013. Also, demand increased due to favorable weather during the planting season and an increase in international orders. We produce ammonium sulfate by combining ammonia and sulfuric acid, which we also produce to make ammonium sulfate or to sell to the industrial market. After expanding ammonium sulfate production capacity, less sulfuric acid was available for sale causing a decline in sulfuric acid sales volume during the year ended December 31, 2014 as compared to the same period in the prior year

Average sales prices per ton decreased by 19% for ammonium sulfate and 6% for sulfuric acid for the year ended December 31, 2014, as compared with the same period in the prior year. These two products comprised 91% of our Pasadena Facility’s revenues for the year ended December 31, 2014 and 90% for the year ended December 31, 2013. A higher proportion of export sales, priced lower than domestic sales, contributed to the decline in average product price. Furthermore, higher exports of ammonium sulfate from China put downward pressure on prices. The additional supplies from China originated from new plants that produce ammonium sulfate as a by-product of manufacturing caprolactam.

Fulghum’s operations are included in our historical operating results only from the closing date of the Fulghum Acquisition, which was May 1, 2013. Revenues for the year ended December 31, 2014 were $94.7 million, compared to $58.3 million for the year ended December 31, 2013. The increase was due to our ownership of Fulghum for the full year in 2014 as compared to eight months in 2013. For the year ended December 31, 2014, United States operations generated $59.0 million of revenues, while South America operations recorded $35.7 million of revenues. For the year ended December 31, 2013 United States operations generated $40.7 million of revenues, while South America operations recorded $17.6 million of revenues. Service revenues are those earned under agreements for wood yard operations services and wood fibre processing services in the United States and South America. Product revenues are those earned by our Chilean operations from the sale of wood chips and bark. During the year ended December 31, 2014, our mills in the United States processed 12.4 million GMT of logs into wood chips and residual fuels; our mills in South America processed 2.4 million GMT of logs. During the eight months ended December 31, 2013, our mills in the United States processed 8.4 million GMT of logs into wood chips and residual fuels; our mills in South America processed 1.5 million GMT of logs.

While revenues increased from 2013 due to our ownership of Fulghum for the full year in 2014, revenues were lower than expected in 2014 due to a number of issues. During 2014, service revenues at our mill in Maine were lower due to downtime and constraints resulting from conducting operations with temporary equipment following a fire that occurred in the first quarter. In addition, revenues for the sale of wood chips and biomass in South America were lower than expected due primarily to lower sales prices and reduced demand from customers.

Revenues were $4.1 million at the Atikokan Facility for the year ended December 31, 2014, earned by delivering to OPG 21,000 metric tons of wood pellets sourced from a third-party wood pellet producer. At December 31, 2014, the Atikokan Facility was in the commission phase and producing wood pellets, while the Wawa Facility was still under construction.

We amended the Drax Contract to cancel all wood pellet deliveries that were due in 2014 and to reduce the required volume of wood pellets to be delivered to Drax in 2015 to 240,000 tonnes from 360,000 tonnes. In exchange for the canceled deliveries and reduced volume commitments, we paid Drax a penalty of approximately $170,000.

Revenues were $32.1 million from May 1, 2014 through December 31, 2014 on deliveries of 165,000 tons of wood pellets.

Cost of sales for the year ended December 31, 2014 was $152.5 million, compared to $143.2 million for the year ended December 31, 2013. The increase in cost of sales was primarily due to selling a higher volume of ammonium sulfate and higher unit prices for inputs. Ammonia and sulfur together comprised 61% of cost of sales for the year ended December 31, 2014, compared to 59% for the same period in the prior year. Labor costs comprised 7% of cost of sales for each of the years ended December 31, 2014 and 2013. For the year ended December 31, 2014, we wrote down our ammonium sulfate inventory by $6.0 million because production costs exceeded market prices. During the same period in the prior year, we wrote down our ammonium sulfate, sulfur and sulfuric acid inventory by $12.4 million due to lower market prices of ammonium sulfate and sulfuric acid. During the year ended December 31, 2014, we incurred turnaround expenses of $2.1 million and unanticipated maintenance expenses of $1.3 million. Turnaround expenses represent maintenance costs incurred during planned shut-downs. The duration of the 2014 turnaround was extended by 13 days, as compared to the duration of a typical turnaround, to undertake activities necessary to tie-in the new sulfuric acid converter and cogeneration projects. During the extended outage, we conducted a comprehensive examination of other components within the sulfuric acid plant. This examination resulted in the discovery and repair of previously unidentified items. The incremental cost of these items and the extended downtime was approximately $1.3 million. These activities are not expected to recur in the future. Prices for ammonia and sulfur, key inputs for ammonium sulfate, increased significantly during 2014. Global ammonia supplies were lower than normal due to production issues in Egypt, Algeria, Trinidad and Qatar, as well as political issues in Libya and Ukraine. Because our sulfuric acid plant was down during the turnaround period in order to continue producing ammonium sulfate and meet sales demand for sulfuric acid, we purchased sulfuric acid, which increased the cost of sales for the year ended December 31, 2014.

Depreciation expense included in cost of sales was $7.0 million for the year ended December 31, 2014 and $4.2 million for the year ended December 31, 2013. The increased depreciation expense was primarily due to an increase in property, plant and equipment resulting from the completion of the debottlenecking project in late 2013, and the increase in ammonium sulfate volumes sold in 2014 compared to 2013.

Cost of sales for the year ended December 31, 2014 was $82.3 million, compared to $46.3 million for the year ended December 31, 2013. The increase in cost of sales was primarily due to our owning Fulghum for the full year in 2014 as compared to eight months during the year ended December 31, 2013. For the year ended December 31, 2014, service costs represented 70% of our cost of sales, while product costs represented 30% of our cost of sales. For the year ended December 31, 2013, service costs represented 80% of our cost of sales, while product costs represented 20% of our cost of sales. Labor costs comprised 37% of our service cost of sales for the year ended December 31, 2014 and 35% for the same period in the prior year. Repairs and maintenance and utilities comprised 40% of our service cost of sales for the year ended December 31, 2014 and 44% for the same period in the prior year. Depreciation expense included in cost of sales was $7.4 million during the year ended December 31, 2014 and $4.8 million for the same period in the prior year.

Several of Fulghum’s customers experienced unusually long outages in 2014 at their production facilities to which our mills supply chips. During the customers’ downtime, Fulghum performed significant preventative maintenance at these mills, which increased operating costs during the period. In addition, labor costs during 2014 were higher than normal, partially due to this increased maintenance work. A fire at our mill in Maine during the first quarter of 2014 disrupted operations, reducing chipping volumes and increasing processing costs at the facility in 2014.

As of December 31, 2014, we had not yet begun producing wood pellets at either the Atikokan or Wawa Facilities. As a result, cost of sales primarily consists of purchasing and transporting wood pellets from a third party supplier to our customer OPG. Cost of sales for year ended December 31, 2014 was $3.4 million. Wood pellet purchases in cost of sales were $2.2 million for the year ended December 31, 2014. Transportation costs were $1.1 million for the year ended December 31, 2014.

Cost of sales from May 1, 2014 through December 31, 2014 was $26.1 million. From May 1, 2014 through December 31, 2014, wood fibre feedstock comprised 48%, packaging comprised 12%, and labor and electricity each comprised 7% of cost of sales. Depreciation expense included in the cost of sales from May 1, 2014 through December 31, 2014 was $1.9 million. Cost of sales from May 1, 2014 through December 31, 2014 also included a $0.2 million write-up of inventory to fair value as part of the NEWP Acquisition.

Gross loss was $14.3 million for the year ended December 31, 2014, compared to $9.5 million for the year ended December 31, 2013. Gross loss margin for the year ended December 31, 2014 was 10%, compared to gross loss margin of 7% for the year ended December 31, 2013. The decreases in gross profit and gross profit margin were primarily due to declines in average sales prices for ammonium sulfate, increases in the unit prices of raw materials, turnaround expenses and other unplanned maintenance expenses.

Gross profit was $12.4 million for the year ended December 31, 2014, compared to $12.0 million for the year ended December 31, 2013. Gross profit margin for the year ended December 31, 2014 was 12%, compared to 19% for the same period in the prior year. The decrease in gross profit margin was primarily due to losses associated with the fire at our mill in Maine, increased labor and maintenance costs at our various other U.S. mills, and lower margins on South American exports. Our losses related to the fire in Maine, which reflect lost revenues and increased operating costs associated with interim chip processing during the reconstruction, totaled approximately $1.0 million in 2014.

Gross profit for the year ended December 31, 2014 was $0.7 million. Gross profit margin was 17% for the year ended December 31, 2014.

Gross profit from May 1, 2014 through December 31, 2014 was $6.1 million. Gross profit margin was 19% from May 1, 2014 through December 31, 2014.

Operating expenses were comprised primarily of selling, general and administrative expenses, depreciation expense and Pasadena goodwill impairment. Operating expenses were $33.6 million for the year ended December 31, 2014, compared to $38.7 million for the year ended December 31, 2013. Operating expenses, excluding impairments, were $6.4 million for the year ended December 31, 2014, compared to $8.7 million for the year ended December 31, 2013.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2014 were $5.1 million, compared to $4.8 million for the year ended December 31, 2013.

Depreciation and Amortization. Depreciation and amortization expense included in operating expenses was $1.3 million for the year ended December 31, 2014, compared to $3.9 million for the years ended December 31, 2013. Depreciation and amortization expense represents primarily amortization of intangible assets. The decreases between periods were primarily due to an intangible asset having been fully amortized at December 31, 2013. The majority of depreciation expense incurred was a manufacturing cost and was distributed between cost of sales and finished goods inventory, based on production volumes and ending inventory levels.

Pasadena Goodwill Impairment. Pasadena goodwill impairment was $27.2 million for the year ended December 31, 2014, compared to $30.0 million for the year ended December 31, 2013. There is no remaining goodwill associated with the Pasadena Facility. See “Note 13 — Goodwill” to the consolidated financial statements included in “Part II — Item 8. Financial Statements and Supplementary Data” in this report.

Operating expenses were comprised of selling, general and administrative expense and depreciation and amortization expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2014 were $6.4 million, compared to $3.8 million for the same period in the prior year. These expenses are for general administrative purposes, such as costs associated with general management personnel, travel, legal, office space, consulting, and information technology. The increase was due to our ownership of Fulghum for the full year of 2014 as compared to eight months for 2013.

Depreciation and Amortization. Depreciation and amortization expense included in operating expense for the year ended December 31, 2014 was $2.1 million and ($1.7) million for the same period in the prior year. For the year ended December 31, 2013, amortization of unfavorable processing agreements exceeded amortization of favorable processing agreements resulting in a credit in depreciation and amortization expense. The majority of depreciation expense relates to wood chip processing assets and was recorded in cost of sales.

Operating expenses were primarily comprised of selling, general and administrative expenses, which include personnel costs, travel, acquisition-related and development costs associated with the Atikokan and Wawa Projects, and other business development costs. Our operating expenses are not indicative of the amount of operating expenses we expect after the Atikokan and Wawa Facilities are commissioned and operating. Once we begin producing and selling wood pellets, certain expenses currently recorded as operating expenses will be capitalized to product inventory and included in cost of sales when the inventories are sold.

Operating expenses were $12.7 million for the year ended December 31, 2014, compared to $5.5 million for the same period in the prior year. The increase was primarily due to increases in plant personnel costs of $1.9 million, utilities and other plant start-up costs of $2.6 million, rail car delivery and lease expenses of $2.4 million and professional and consulting services of $0.7 million, partially offset by a gain on disposal of fixed assets of $0.4 million. Operating expenses included penalties of $0.7 million of which $0.5 million was for commitment shortfalls under the Canadian National Contract and $0.2 million for commitment shortfalls under the Drax Contract. During 2014, we did not meet our commitment under the Canadian National Contract to transport a minimum of 1,500 rail carloads. During 2014, we did not meet our commitment under the Drax Contract to deliver the wood pellets required under contract.

Operating expenses consist of selling, general and administrative expenses and depreciation and amortization expense. Selling, general and administrative expenses from May 1, 2014 through December 31, 2014 were $1.6 million.

Depreciation and amortization expense included in operating expense from May 1, 2014 through December 31, 2014 was $0.1 million. At the time of the NEWP Acquisition, we recorded customer relationships at their fair values as part of purchase accounting for the acquisition. Amortization of these customer relationships in the eight months ended December 31, 2014 resulted in a credit in depreciation and amortization expense. The majority of depreciation expense relates to wood pellet processing assets and was recorded in cost of sales.

Selling, general and administrative expenses were $28.0 million for the year ended December 31, 2014, compared to $24.8 million for the year ended December 31, 2013. The increase was primarily due to $1.5 million in legal and consulting costs associated with evaluating shareholder proposals, completing settlements with shareholders and conducting cost studies, a $1.2 million increase in accounting, tax and audit fees, $1.1 million in transaction costs related to the NEWP acquisition, and $0.7 million higher information technology costs, partially offset by $0.5 million lower cash personnel costs and a $0.4 million decrease in non-cash equity based compensation. Non-cash equity-based compensation expense was $5.5 million for the year ended December 31, 2014 compared to $5.9 million for the same period in the prior year.

Operating loss was $47.9 million for the year ended December 31, 2014, compared to $48.2 million for the year ended December 31, 2013. The improvement in the operating loss was primarily due to a lower goodwill impairment, inventory write-down, and depreciation and amortization expense, partially offset by the decline in average sales prices for ammonium sulfate, increases in the unit price of raw materials, and turnaround and maintenance expenses in 2014 as described above.

Operating income was $3.9 million for the year ended December 31, 2014 and $9.9 million for the same period in the prior year. The decrease in operating income was due to losses associated with the fire at our mill in Maine, increased labor and maintenance costs at our various other U.S. mills, lower margins on South American exports, and increased depreciation and amortization expense as described above.

Operating loss was $12.0 million for the year ended December 31, 2014, compared to $5.5 million for the same period in the prior year. This increase was due to non-capitalizable start-up costs in 2014, including personnel costs, related to the Atikokan and Wawa Projects. These costs were higher than expected in 2014 due to the delays in completing the Atikokan and Wawa Projects and placing the facilities into service.

Operating income was $4.4 million from May 1, 2014 through December 31, 2014, which reflects gross profit and operating expenses as described above.

Operating loss, which represents operating expenses, was $7.8 million for the year ended December 31, 2014, compared to $7.7 million for the year ended December 31, 2013.

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

Other expense, net was $2.9 million for the year ended December 31, 2014, compared to $2.2 million for the same period in the prior year. The increase was primarily due to an increase in interest expense, resulting from additional debt in South America.

Other expense, net for the year ended December 31, 2013 consists of a fair value reduction to earn-out consideration of $4.9 million related to the Agrifos Acquisition.

Corporate and unallocated expenses recorded as other expense for the year ended December 31, 2014 was $2.0 million compared to $0.5 million for the same period in the prior year. The increase was primarily due to a fair value adjustment to earn-out consideration of $1.2 million related to the NEWP Acquisition and a loss on debt extinguishment of $0.9 million, partially offset by miscellaneous income of $0.4 million.

Revenues for the year ended December 31, 2014 were $196.4 million, compared to $177.7 million for the same period in the prior year. The increase was due to higher sales volumes for ammonia and urea and higher natural gas sales, partially offset by lower sales prices for ammonia, UAN and urea.

Ammonia production capacity increased 23% after we completed the ammonia expansion project in December 2013. This additional ammonia available for sale enabled higher ammonia deliveries during the year ended December 31, 2014. During the fourth quarter of 2013, production was interrupted due to a planned turnaround and a subsequent fire, which resulted in lower amounts of ammonia available for sale in 2013. Urea sales increased during 2014 due to higher sales of DEF and granular urea.

Average sales prices per ton for the year ended December 31, 2014 were 16% lower for ammonia and 5% lower for UAN, as compared to the same period in the prior year. These two products comprised 81% of our East Dubuque Facility’s revenues for the year ended December 31, 2014 and 82% for the same period in the prior year. The decreases in our sales prices for ammonia and UAN were consistent with the decline in global nitrogen fertilizer prices in the earlier portions of the respective years, partially offset by increases in the latter portions of the respective years. These decreases were caused by significantly higher levels of low-priced urea in the global market, particularly from China. Prices were also affected by additional nitrogen fertilizer production brought on line in North America over the last 12 months.

Other revenues consist primarily of natural gas sales. We occasionally sell natural gas when purchase commitments exceed production requirements or storage capacities, or when the margin from selling natural gas significantly exceeds the margin from producing additional ammonia. During the year ended December 31, 2014, we recorded $6.1 million in natural gas sales and $0.5 million in sales of nitrous oxide emission reduction credits. On rare occasions, we have also purchased natural gas with the specific intent of immediately reselling it when local market anomalies create low-risk opportunities for gain. During the first quarter of 2014, temporary operational problems with a natural gas pipeline in the Midwest caused a significant spike in the local price of natural gas. This created a unique opportunity to purchase natural gas from other locations at lower prices for the purpose of reselling it at significantly higher prices. We also sold natural gas originally purchased for production at a gross profit that exceeded the expected gross profits from additional production using that natural gas. During the first quarter of 2014, we sold, at an average price of $29.90 per MMBtu, 151,000 MMBtus of natural gas that cost an average of $9.42 per MMBtu. The total $4.5 million in natural gas sales in the first quarter resulted in a gross profit of $3.1 million, which was significantly higher than the profit we would likely have realized on the 2,900 tons of lost ammonia production. During the year ended December 31, 2013, we recorded $3.4 million in natural gas sales and $0.1 million in sales of nitrous oxide emission reduction credits.

Cost of sales for the year ended December 31, 2014 was $121.6 million compared to $96.8 million for the same period in the prior year. The increase in the cost of sales was primarily due to an increase in depreciation, the cost of natural gas and electricity. Increased natural gas costs were due to an increase in product sales volumes, additional natural gas purchased for resale and a loss on natural gas derivatives of $4.0 million. Natural gas comprised 47% and labor costs comprised 13% of cost of sales on product shipments for the year ended December 31, 2014. For the year ended December 31, 2013, natural gas was 43% and labor was 12% of cost of sales. Depreciation expense included in cost of sales was $15.7 million for the year ended December 31, 2014 and $9.0 million for the year ended December 31, 2013. The increase in depreciation expense was primarily due to the completion of the ammonia expansion project in late 2013. Increased electricity costs reflected higher rates and usage due in part to the new equipment installed as part of the ammonia expansion project. During the year ended December 31, 2014, we recorded $0.9 million of expense reimbursements under an insurance claim filed for the fire, which occurred in 2013.

Gross profit was $74.8 million for the year ended December 31, 2014, compared to $80.9 million for the year ended December 31, 2013. Gross profit margin was 38% for the year ended December 31, 2014, compared to 46% for the year ended December 31, 2013. The decreases in gross profit and gross margin were primarily due to lower product pricing and increased costs of natural gas, depreciation and electricity.

During the fourth quarter of 2014, our East Dubuque Facility’s ammonia plant was shut down for seven days for unplanned maintenance. Also, during the third quarter of 2014, our East Dubuque Facility’s ammonia plant was shut down for ten days for unplanned maintenance. Gross profit was negatively impacted as the outages reduced the amount of product available for sale. Problems with the ammonia synthesis converter caused the shut-downs in both cases. The converter was damaged during a fire in 2013, then repaired and returned to service. The facility is currently operating near capacity, but it is possible that additional repairs will be needed before the converter is expected to be replaced before the end of summer 2016.

Operating expenses were $5.9 million for the year ended December 31, 2014, compared to $5.8 million for the year ended December 31, 2013. These expenses were primarily comprised of selling, general and administrative expenses, depreciation expense and asset disposal costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2014 were $5.2 million, compared to $4.8 million for the year ended December 31, 2013. This increase was primarily due to a one-time expense related to severance of $1.0 million, partially offset by a decrease in bonus expense of $0.5 million.

Depreciation and Amortization. Depreciation expense included in operating expense was $0.2 million for the years ended December 31, 2014 and 2013. The majority of depreciation expense incurred was a manufacturing cost and was distributed between cost of sales and finished goods inventory, based on production volumes and ending inventory levels. However, a portion of depreciation expense was associated with assets supporting general and administrative functions and was recorded in operating expense.

Other. Other expenses include loss on disposal of fixed assets, which was $0.5 million for the year ended December 31, 2014, compared to $0.8 million for the prior year.

Operating income was $68.9 million for the year ended December 31, 2014, compared to $75.0 million for the year ended December 31, 2013. The decrease was primarily due to lower product pricing, increased costs of natural gas, depreciation and electricity and higher selling, general and administrative expenses, as described above.

Income from discontinued operations, our former energy technologies segment, for the year ended December 31, 2014 was $7.3 million, compared to a loss from discontinued operations of $6.6 million for the same period in the prior year.

Selling, general and administrative costs consist primarily of personnel and travel costs of the personnel team essential to the sale of the operations, insurance costs, security costs and property taxes. Selling, general and administrative expenses were $5.6 million for the year ended December 31, 2014, compared to $7.7 million for the year ended December 31, 2013. The decrease between the periods was due to the elimination of expenses associated with research and development and business development activities, and to costs of terminating our alternative energy operations in 2013.

Research and development expense was $0 for the year ended December 31, 2014, compared to $5.7 million for the year ended December 31, 2013. During 2013, we terminated research and development activities and ceased operations, reduced staff at, and mothballed the PDU.

During the year ended December 31, 2014, we completed the sale of our alternative energy technologies, which resulted in a gain of $15.3 million, and recorded a loss on impairment on the PDU of $2.9 million. During the year ended December 31, 2013, we sold Natchez, which resulted in a gain of $6.3 million. Tax benefit for the years ended December 31, 2014 and 2013 was $1.2 million and $0.3 million, respectively.

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

Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) plus net interest expense and other financing costs, income tax (benefit) expense, depreciation and amortization and unusual items, like impairment and debt extinguishment charges and fair value adjustments to earn-out consideration. 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:

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 (including the portion of Adjusted EBITDA that is included in discontinued operations), which is a non-GAAP financial measure, to net income (loss) for RNP for the periods presented.

The table below reconciles Fulghum’s Adjusted EBITDA, which is a non-GAAP financial measure, to segment net income for Fulghum. For the year ended December 31, 2013, the period only reflects operations from the date of acquisition, May 1, 2013, through December 31, 2013.

The table below reconciles Wood Pellets: Industrial’s Adjusted EBITDA, which is a non-GAAP financial measure, to segment net loss for Wood Pellets: Industrial.

The table below reconciles NEWP’s Adjusted EBITDA, which is a non-GAAP financial measure, to segment net income for NEWP. The 2014 amounts for the year ended December 31, 2014 are for the period May 1, 2014 (date of NEWP Acquisition) through December 31, 2014.

The table below reconciles Consolidated Adjusted EBITDA (including discontinued operations), which is a non-GAAP financial measure, to consolidated net loss.

Net cash used in operating activities – continuing operations for the year ended December 31, 2015 was $7.5 million. We had net loss from continuing operations of $211.0 million for the year ended December 31, 2015 including non-cash asset impairment charges of $171.9 million. Inventories increased by $29.9 million during the year ended December 31, 2015 primarily due to a build-up of inventory at our Pasadena Facility as part of our restructuring of operations to focus on high-margin sales in the domestic market, a build-up of inventory at the Atikokan and Wawa Facilities, and an increase in inventory at NEWP. Deferred revenue increased by $2.9 million during the year ended December 31, 2015 primarily due to collections of cash for products stored at a distributor for our Pasadena Facility.

Net cash provided by operating activities – discontinued operations for the year ended December 31, 2015 was $61.2 million. We had net income – discontinued operations of $58.0 million for the year ended December 31, 2015. Deferred revenue decreased by $13.1 million during the period. The decrease in deferred revenue was due to a reduction in prepaid sales contracts at our East Dubuque Facility. A combination of lower corn prices and more nitrogen fertilizer product available on the market reduced the incentive for our East Dubuque Facility’s customers to enter into prepaid sales contracts like they typically do in the fourth quarter. We had an unrealized gain on natural gas derivatives of $2.4 million relating to our forward purchase natural gas contracts. We recorded $4.6 million in business interruption insurance proceeds relating to the 2013 fire at our East Dubuque Facility.

Net cash used in operating activities – continuing operations for the year ended December 31, 2014 was $39.7 million. We had net loss from continuing operations of $80.6 million for the year ended December 31, 2014, including a non-cash Pasadena goodwill impairment charge of $27.2 million, which relates to the Agrifos Acquisition. We also had non-cash equity-based compensation expense of $6.5 million during the year ended December 31, 2014.

Net cash provided by operating activities – discontinued operations for the year ended December 31, 2014 was $64.6 million. We had net income – discontinued operations of $48.1 million for the year ended December 31, 2014. For the year ended December 31, 2014, we had a net gain on sale of assets of $14.7 million, which consisted of a gain of $15.3 million related to the sale of our alternative energy technologies, partially offset by an increase of $0.8 million in the asset retirement obligation related to Natchez. In 2014, we recorded an impairment of $2.9 million for the PDU. We had a loss on natural gas derivatives of $4.0 million relating to our East Dubuque Facility’s forward purchase natural gas contracts.

Net cash used in operating activities – continuing operations for the year ended December 31, 2013 was $21.1 million. We had net loss from continuing operations of $38.9 for the year ended December 31, 2013. For the year ended December 31, 2013, we had a non-cash Pasadena goodwill impairment of $30.0 million. We also had equity-based compensation expense of $7.1 million. Deferred income tax benefit of $27.1 million was due primarily to the release of income tax valuation allowances resulting from recording deferred tax liabilities related to the Fulghum Acquisition.

Net cash provided by operating activities – discontinued operations for the year ended December 31, 2013 was $33.4 million. We had net income – discontinued operations of $38.9 million for the year ended December 31, 2013. During this period, we issued the RNP Notes and paid off the outstanding principal balance under a credit agreement, which resulted in a loss on the extinguishment of debt of $6.0 million. Accrued interest increased by $3.1 million due primarily to the RNP Notes.

Net cash used in investing activities – continuing operations was $56.3 million for the year ended December 31, 2015. Net cash used in investing activities was primarily related to the capital expenditures to finish construction of the Atikokan and Wawa Facilities. During the period, we also completed the Allegheny Acquisition.

Net cash used in investing activities – discontinued operations was $27.6 million for the year ended December 31, 2015. Net cash used in investing activities was primarily related to the capital expenditures to upgrade a nitric acid compressor train and replace the ammonia synthesis converter at our East Dubuque Facility.

Net cash used in investing activities – continuing operations was $179.0 million for the year ended December 31, 2014. Net cash used in investing activities was primarily related to capital expenditures of $126.4 million to construct the Atikokan and Wawa Projects, and to construct the power generation project and replace the sulfuric acid converter at our Pasadena Facility. During the period, we also completed the NEWP Acquisition for net cash of $31.6 million.

Net cash used in investing activities – discontinued operations was $11.0 million for the year ended December 31, 2014. Net cash used in investing activities was primarily related to the capital expenditures to upgrade a nitric acid compressor train and complete our urea expansion project at our East Dubuque Facility. During the period, we also sold the alternative energy technologies business and some related equipment, which resulted in cash receipts of $14.8 million.

Net cash used in investing activities – continuing operations was $113.1 million for the year ended December 31, 2013. During the period, 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 Facility. Also during the period, we had capital expenditures of $32.3 million related to 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.

Net cash used in investing activities – discontinued operations was $49.1 million for the year ended December 31, 2013. Net cash used in investing activities was primarily related to the ammonia production and storage capacity expansion project at our East Dubuque Facility.

Net cash provided by financing activities was $22.6 million for the year ended December 31, 2015. During the year ended December 31, 2015, we borrowed an additional $45.0 million under the A&R GSO Credit Agreement and RNP borrowed an additional $19.5 million under the GE Credit Agreement. We also entered into an $8.0 million term loan in connection with the Allegheny Acquisition. During the period, we made debt payments of $34.1 million and dividend payments to preferred stockholders of $4.5 million, and RNP made cash distributions to holders of noncontrolling interests of $30.3 million. We also made an earn-out consideration payment of $5.0 million, which includes the $3.8 million initially estimated value of the earn-out consideration at the closing date of the NEWP Acquisition. The payment also includes the portion of the earn-out consideration ($1.2 million) that was recorded in the consolidated statement of operations, which was reflected in changes in operating assets and liabilities in the consolidated cash flows statements.

Net cash provided by financing activities was $103.1 million for the year ended December 31, 2014. During the year ended December 31, 2014, we issued the 2014 Preferred Stock for an aggregate purchase price of $94.5 million (reflecting an issuance discount of 2% and other costs) and entered into the GSO Credit Agreement, borrowing $50.0 million under the facility. During the period, we also paid off the outstanding balance of $50.0 million under a $100.0 million revolving loan facility existing at that time. During the year ended December 31, 2014, we made debt payments of $61.5 million and dividend payments to preferred stockholders of $2.9 million, and RNP made cash distributions to holders of noncontrolling interests of $4.9 million.

Net cash provided by financing activities was $114.5 million for the year ended December 31, 2013. During the 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 $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 $37.3 million.

At December 31, 2015, our current assets and current liabilities consisted of the following:

We had long-term liabilities of $521.5 million, comprised primarily of the RNP Notes, Fulghum debt, GSO Credit Agreement, NEWP debt, and the financing obligation with respect to the construction of assets by QSL, or the QS Construction Facility.

Our subsidiaries other than RNP can distribute cash to us, to the extent that such distributions are permitted in our debt agreements. We do not have direct access to RNP’s cash. Any cash received from RNP is in the form of distributions received on a pro rata basis with other RNP unitholders. The Merger Agreement provides for cash distributions consistent with RNP’s historical practice before closing. After the closing of the Merger, we expect to receive distributions from CVR Partners for the CVR Partners units that we retain after closing of the Merger and the related transactions with GSO Capital.

In the first quarter of 2016, the Company entered into the GSO credit facility, which provides the ability to draw $6.0 million in delayed draw term loans, or the Tranche D Loans, at a rate equal to the greater of (i) LIBOR plus 14.00% and (ii) 15.00% per annum. While the Company does not expect to need proceeds from the Tranche D Loan, the facility is available through the earlier of the Merger closing and May 31, 2016 should expectations change.

With the recent sale of the Pasadena Facility, the Company has satisfied all of the material conditions necessary to close the Merger, which is expected to close on or about March 31, 2016. Under terms of the Merger, each outstanding unit of RNP will be exchanged for 1.04 common units of CVR Partners and $2.57 of cash. We expect to receive $62.2 million in cash consideration, before payment of expenses and corporate taxes from the Merger, including our share of cash proceeds from the sale of the Pasadena Facility. Upon closing the Merger and completing the exchange with the GSO Funds, the Company is expected to have sufficient liquidity to fund the Company’s approved investment and operating needs for at least the next twelve months.

Although we do not believe it to be likely, if the Merger fails to close on the expected terms or at all, the Company would not have sufficient liquidity for the next twelve months without raising additional capital. There can be no assurance that the Company will be able to raise sufficient capital on terms it finds acceptable or at all. This would cause a material adverse effect on the Company’s business, results of operations, and financial condition, and on its ability to complete construction of the Atikokan Facility and the Wawa Facility and fund its normal operations.

and OPG in 2016. In addition, we expect to continue to build working capital requirements for the plants as they ramp up production. If production is lower than expected, the use of cash could be higher at the Wawa Facility and the Atikokan Facility and the Company could also face significant penalties under its contracts with Drax and Canadian National in 2016. A 10% shortfall in forecasted production could increase the cash used by our Canadian facilities by an estimated $2 million, inclusive of estimated penalties of approximately $1 million.

During the twelve months ended December 31, 2015, we funded development activities, operations and investments in our wood fibre processing business and corporate activities primarily through cash on hand, distributions from RNP and proceeds from the A&R GSO Credit Agreement. Capital expenditures at one of our mills in Chile were funded with Chilean bank debt.

Our debt facilities used to support our wood fibre processing business and corporate activities are the Fulghum debt, the NEWP debt, the QS Construction Facility, the credit agreement with Bank of Montreal, or the BMO Credit Agreement, and the GSO Credit Agreement. For a description of the terms of the Fulghum debt, the NEWP debt, the QS Construction Facility, and the BMO Credit Agreement, see “Note 15 — Debt” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report. In January 2015, we funded the acquisition of Allegheny’s assets with a five-year, $8.0 million term loan, which amortizes as if it had a seven-year maturity. The term loan has an interest rate of LIBOR plus 2.25 percent, and contains financial covenants that may restrict dividends from NEWP to Rentech. The excess proceeds from the term loan will be used for transaction costs and capital expenditures. We also borrowed $45.0 million under the A&R GSO Credit Agreement (see below and “Note 15—Debt” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report).

On April 9, 2014, we entered into the GSO Credit Agreement, which consists of a $50.0 million term loan facility, with a five-year maturity. On February 12, 2015, we entered into the A&R GSO Credit Agreement, which increased available borrowing capacity under the facility from $50.0 million to $95.0 million. At December 31, 2015, we had outstanding borrowings under the facility of $95.0 million.

On March 11, 2016, the Company and RNHI, entered into a First Amendment to Loan Documents, or the First Amendment, among RNHI, as borrower, the Company, as parent guarantor, the GSO Funds, as lenders, or the Lenders, and Credit Suisse, as administrative agent, or the Agent. The First Amendment provides, among other items, the following:

On April 9, 2014, we issued the 2014 Preferred Stock in the aggregate purchase price of $98.0 million (reflecting an issuance discount of 2%). Dividends on the 2014 Preferred Stock, which are payable in cash, accrue and are cumulative, whether or not declared by our Board, at the rate of 4.5% per annum on the sum of the original issue price plus all unpaid accrued and accumulated dividends thereon.

In connection with the Merger, RNHI, the Company and certain of its other subsidiaries entered into a Waiver and Amendment of Certain Loan and Equity Documents, dated as of August 9, 2015, or the Waiver. In connection with the First Amendment, the Company and certain of its subsidiaries entered into an Amendment to Waiver Letter, or the Waiver Amendment, which amends the Waiver. The Waiver Amendment covers (i) the A&R GSO Credit Agreement, (ii) that certain Amended and Restated Guaranty Agreement, dated as of February 12, 2015 (as amended or modified to date, the Guaranty), by and among the Company and certain of its subsidiaries in favor of Credit Suisse and (iii) that certain Subscription Agreement, dated as of April 9, 2014 (as amended or modified to date, the Subscription Agreement), by and among the Company, the Purchasers identified therein and the Purchaser’s Representative identified therein.

Pursuant to the Waiver Amendment, the lenders under the A&R GSO Credit Agreement, the Agent and GSO Capital, as applicable, agreed to waive compliance with the A&R GSO Credit Agreement, Guaranty, and certain restrictions in the Subscription Agreement, solely to the extent they restrict or prohibit the Company, RNHI, RNP, and Rentech Nitrogen GP, LLC’s ability to fulfill its obligations under the Merger Agreement and related documents. The Waiver Amendment also attaches drafts of a second amended and restated credit agreement, or the Second A&R Credit Agreement, second amended and restated guaranty and a preferred equity exchange and discharge agreement, or the Exchange Agreement, relating to the Series E Preferred Stock of the Company, each of which would be entered into at the closing under the Merger Agreement.

The Second A&R Credit Agreement and the Exchange Agreement provides for, among other items, the following:

Certain provisions of the A&R GSO Credit Agreement and the Subscription Agreement may have substantial effects on our liquidity. The Company has pledged all of its RNP common units pursuant to the A&R GSO Credit Agreement and the Subscription Agreement, other than 3.1 million unpledged RNP common units. For further information regarding these terms, see “Note 15 — Debt” and “Note 18 — Preferred Stock” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report.

Simultaneously with the execution of the Merger Agreement, the Company entered into a voting and support agreement with CVR Partners pursuant to which it agreed to vote its approximately 59.6% of the outstanding RNP common units in support of the Merger, or the Voting and Support Agreement. In addition, the Company would need CVR Partners’ approval under the terms of the Voting and Support Agreement in order to transfer its unpledged RNP common units.

Simultaneously with the execution of the Merger Agreement, the Company entered into a transaction agreement with CVR Partners, pursuant to which it has agreed generally not to transfer the CVR Partners common units held by it for 180 days after the closing date of the Merger, without CVR Partners’ prior consent.

The RNP common units and, following the closing of the Merger, the CVR Partners common units held by the Company are or will be subject to further transfer restrictions arising under the Securities Act of 1933, as amended.

As a result of these restrictions, the Company may not be able to sell or otherwise transfer the RNP common units or CVR Partners common units which could impact its liquidity.

Until the Merger occurs, we expect quarterly distributions from RNP to be a source of liquidity for our wood fibre processing and corporate 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 2016 may be significantly less than cash available for distribution if RNP elects to replenish working capital reserves. We receive 59.6% of any quarterly distributions made to RNP’s common unitholders based on our current ownership interest in RNP. However, our ownership interest in RNP may be reduced over time if we elect to sell any of our common units or if additional common units were to be issued by RNP. The Indenture governing the RNP Notes and the GE Credit Agreement contain important restrictions on RNP’s ability to make distributions to its common unitholders (including us), as discussed below in “RNP Activities—Sources of Capital—RNP Notes Offering” and “RNP Activities—Sources of Capital—RNP GE Credit Agreement.” Additionally, the Merger Agreement permits RNP to make cash distributions to its common unitholders (including us), so long as cash available for distribution is calculated in accordance with the Merger Agreement, which generally requires the calculation to be consistent with RNP’s historical practice.

RNP paid a cash distribution to its common unitholders for the fourth quarter of 2015 of $0.10 per unit, which resulted in total distributions of $3.9 million, including payments to phantom unitholders. We received a distribution of $2.3 million, representing our share of distributions based on our ownership of common units. The cash distribution was paid on February 29, 2016 to unitholders of record at the close of business on February 25, 2016.

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.

Our primary uses of cash have been, and are expected to continue to be, for operating expenses, capital expenditures, acquisitions, debt service and dividend payments for the 2014 Preferred Stock.

We estimate the total cost to acquire and convert the Atikokan and Wawa Facilities, including the costs of required modifications to the material-handling systems, will be approximately $145 million. This total cost includes working capital, commissioning costs, and contingency on the planned repairs and modifications to material handling systems. Our projection for capital expenditures does not include contingencies to address any other unforeseen issues that may arise during ramp-up of the facilities. For the year ended December 31, 2015, total combined expenditures, including construction, working capital, and costs to commission, for the Atikokan and Wawa Facilities were approximately $20 million. As of December 31, 2015, remaining cash expenditures to complete the Atikokan and Wawa Facilities are expected to be approximately $21 million.

On January 23, 2015, NEWP acquired for $7.2 million substantially all of the assets of Allegheny Pellet Corporation, or Allegheny, which consisted of a wood pellet processing facility located in Youngsville, Pennsylvania, or the Allegheny Acquisition. At the Allegheny facility, we plan to spend $1.0 million in 2016 to address regulatory compliance issues related to state environmental and air emissions requirements as well as safety requirements.

Excluding RNP’s debt, Rentech’s current portion of debt is $18.7 million, of which $18.3 million represents outstanding principal balance and $0.4 million debt premium and debt issuance costs. Fulghum’s portion of the outstanding principal balance is $14.1 million, followed by $3.5 million for NEWP and $0.7 million for the Wood Pellets: Industrial segment. We expect Fulghum and NEWP to cover their respective debt service with their cash from operations. We expect to provide the Wood Pellets: Industrial segment with the funds to cover its debt service.

Our principal sources of capital at RNP have historically been cash from operations, the proceeds of RNP’s initial public offering, and borrowings. RNP’s current debt obligations are the RNP Notes and the GE Credit Agreement. We expect to be able to fund RNP’s operating needs, including maintenance capital expenditures, from RNP’s operating cash flow, cash on hand at RNP and borrowings under the GE Credit Agreement, for at least the next 12 months. We expect to fund RNP’s announced expansion projects at the East Dubuque Facility through borrowings under the GE Credit Agreement.

Capital markets have experienced periods of significant volatility 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.

The RNP Notes, with a principal amount of $320.0 million, bear interest at a rate of 6.5% per year, and are payable semi-annually in arrears on April 15 and October 15 of each year. The RNP Notes will mature on April 15, 2021, unless repurchased or redeemed earlier in accordance with their terms.

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 equal to or greater than 1.75 to 1.00, RNP will generally be permitted to make distributions to its common unitholders under the Indenture. If the Fixed Charge Coverage ratio is less than 1.75 to 1.00, RNP may make distributions to its common unitholders in an amount not exceed $60.0 million. For the year ended December 31, 2015, RNP’s Fixed Charge Coverage Ratio was 4.81 to 1.00. For a description of the terms of the RNP Notes, see “Note 15 — Debt” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report.

On July 22, 2014, RNP replaced a prior revolving credit agreement by entering into the GE Credit Agreement. The GE Credit Agreement consists of a $50.0 million senior secured revolving credit facility, or the GE Credit Facility, with a $10.0 million letter of credit sublimit. As of December 31, 2015, RNP had $34.5 million outstanding borrowings under the GE Credit Agreement.

Under the GE Credit Agreement, in the event that less than 30% of the commitment amount is available for borrowing on any distribution date, in order to make a distribution on such date (a) RNP must maintain a first lien leverage ratio no greater than 1.0 to 1.0 and (b) the sum of (i) the undrawn amount under the GE Credit Facility and (ii) cash maintained by RNP and its subsidiaries in collateral deposit accounts must be at least $5 million, in each case, on a pro forma basis. In addition, before RNP can make distributions, there cannot be any default under the GE Credit Agreement. The GE Credit Agreement also contains a springing financial covenant requirement that RNP maintain a first lien leverage ratio not to exceed 1.0 to 1.0 (a) at the end of each fiscal quarter where less than 30% of the commitment amount is available for drawing under the GE Credit Facility or (b) a default has occurred and is continuing. The first lien leverage ratio as of December 31, 2015 was 0.33 to 1.0.

Borrowing pursuant to the GE Credit Agreement is subject to compliance with certain conditions, and RNP is, as of the filing date of this report, in compliance with those conditions. Based on its current forecast, RNP expects to be able to borrow under the GE Credit Agreement. For a description of the terms of the GE Credit Agreement, see “Note 15 — Debt” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report.

RNP has an effective shelf registration statement with the SEC, which allows RNP and our subsidiary RNHI, from time to time, in one or more offerings, to offer and sell up to $500.0 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. Upon completion of the merger, the shelf registration statement will be withdrawn.

Our primary uses of cash at RNP have been, and are expected to continue to be, for operating expenses, capital expenditures, debt service and cash distributions to common unitholders. The Merger Agreement limits quarterly cash distributions from RNP to cash available for distribution, as defined in the Merger Agreement.

We divide our capital expenditures into two categories: maintenance and expansion. Maintenance capital expenditures include those for improving, replacing or adding to our assets, as well as expenditures for acquiring, constructing or developing new assets to maintain our operating capacity, or to comply with environmental, health, safety or other regulations. Maintenance capital expenditures that are required to comply with regulations may also improve the output, efficiency or reliability of our facilities. Expansion capital expenditures are those incurred for acquisitions or capital improvements that we expect will increase our operating capacity or operating income over the long-term. We generally fund maintenance capital expenditures from operating cash flow, and expansion capital expenditures from new capital.

Maintenance capital expenditures for our East Dubuque Facility totaled $10.8 million for the year ended December 31, 2015, $9.4 million for the year ended December 31, 2014 and $9.3 million for the year ended December 31, 2013. Maintenance capital expenditures for our East Dubuque Facility are expected to be $15.5 million for the year ending December 31, 2016. Expansion capital expenditures for our East Dubuque Facility totaled $17.6 million for the year ended December 31, 2015, $14.4 million for the year ended December 31, 2014 and $50.5 million for the year ended December 31, 2013. Expansion capital expenditures for our East Dubuque Facility are expected to be $11.4 million for the year ending December 31, 2016, of which $10.1 million is related to the ammonia synthesis converter project.

Maintenance capital expenditures for our Pasadena Facility totaled $3.9 million for the year ended December 31, 2015. $22.3 million for the year ended December 31, 2014 and $9.0 million for the year ended December 31, 2013. Maintenance capital expenditures for our Pasadena Facility are expected to be $2.9 million for the year ending December 31, 2016. Expansion capital expenditures for our Pasadena Facility totaled $2.1 million, related to the power generation project, for the year ended December 31, 2015, $14.4 million for the year ended December 31, 2014 and $24.2 million for the year ended December 31, 2013. We do not expect to have any expansion capital expenditures for the year ending December 31, 2016.

Our forecasted 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.

The following table lists our significant contractual obligations and their future payments at December 31, 2015:

Contractual Obligations	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(in thousands)
Continuing Operations:
GSO Credit Agreement ⁽¹⁾	$	95,000	$	—	$	—	$	95,000	$	—
Fulghum Debt ⁽²⁾		47,049		14,159		7,957		5,458		19,475
NEWP Debt ⁽³⁾		16,107		3,470		6,169		4,859		1,609
QS Construction Facility ⁽⁴⁾		13,733		678		1,517		1,760		9,778
Interest on debt ⁽⁵⁾		56,427		12,847		24,142		8,038		11,400
Earn-out consideration ⁽⁶⁾		871		—		—		—		871
Purchase obligations ⁽⁷⁾		7,148		7,148		—		—		—
Asset retirement obligation⁽⁸⁾		4,270		—		—		—		4,270
Operating leases		26,746		5,975		7,292		5,568		7,911
Pension plans and postretirement plan⁽⁹⁾		67		67		—		—		—
Total Continuing Operations	$	267,418	$	44,344	$	47,077	$	120,683	$	55,314
Discontinued Operations:
RNP Notes ⁽¹⁰⁾	$	320,000	$	—	$	—	$	—	$	320,000
GE Credit Agreement ⁽¹¹⁾		34,500		—		—		34,500		—
Interest on debt ⁽⁵⁾		114,379		22,033		44,067		42,295		5,984
Natural gas ⁽¹²⁾		8,131		8,131		—		—		—
Purchase obligations ⁽⁷⁾		13,491		13,491		—		—		—
Asset retirement obligation⁽¹³⁾		450		—		—		—		450
Operating leases		665		471		144		50		—
Gas and electric fixed charges ⁽¹⁴⁾		1,148		1,147		1		—		—
Total Discontinued Operations	$	492,764	$	45,273	$	44,212	$	76,845	$	326,434
Total	$	760,182	$	89,617	$	91,289	$	197,528	$	381,748

We did not have any material off-balance sheet arrangements as of December 31, 2015.

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

Interest Rate Risk. We are exposed to interest rate risks related to the GE Credit Agreement. Borrowings under the GE Credit Agreement bear interest at a rate equal to an applicable margin plus, at our 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 one month 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. The applicable margin for borrowings under the GE Credit Agreement is 2.25% with respect to base rate borrowings and 3.25% with respect to LIBOR borrowings. As of the date of this report, we had $34.5 million outstanding borrowings under the GE Credit Agreement. Assuming the entire $50.0 million was outstanding under the GE Credit Agreement, an increase or decrease of 100 basis points in the LIBOR rates would result in an increase or decrease in annual interest expense of $0.5 million.

We are exposed to interest rate risks related to the A&R GSO Credit Agreement. Borrowings under the first tranche of $50.0 million bear interest at a rate equal to the greater of (i) LIBOR plus 7.00% and (ii) 8.00% per annum. Borrowings under the second tranche, of up to an aggregate of $45.0 million, bear interest at a rate equal to the greater of (i) LIBOR plus 9.00% and (ii) 10.00% per annum. Currently, LIBOR is below the floor of 1.00%. As of the date of this report, we had outstanding borrowings under the A&R GSO Credit Agreement of $95.0 million. Based on the $95.0 million outstanding under the A&R GSO Credit Agreement and assuming interest rates were above the applicable floor, an increase or decrease of 100 basis points in the LIBOR rates would result in an increase or decrease in annual interest expense of approximately $1.0 million.

We are exposed to interest rate risks related to the NEWP debt. As of December 31, 2015, NEWP had outstanding debt of $16.1 million. Based upon this outstanding balance, and assuming no interest rate swaps, an increase or decrease by 100 basis points of interest would result in an increase or decrease in annual interest expense of approximately $0.2 million. NEWP entered into interest rate swaps to essentially fix the variable interest rate on its borrowings. At December 31, 2015, the fair value of the interest rate swaps was a liability of $0.4 million. An increase of 100 basis points in the LIBOR rates would result in the liability for interest rate swaps decreasing by $0.1 million. A decrease of 100 basis points in the LIBOR rates would result in the liability for interest rate swaps increasing by $0.1 million.

Commodity Price Risk. Our East Dubuque Facility is exposed to significant market risk due to potential changes in prices for fertilizer products and natural gas. Natural gas is the primary raw material used in the production of various nitrogen-based products manufactured at our East Dubuque Facility. Market prices of nitrogen-based products are affected by changes in the prices of commodities such as corn and natural gas as well as by supply and demand and other factors. Currently, we purchase natural gas for use in our East Dubuque Facility on the spot market, and through short-term, fixed supply, fixed-price and index price purchase contracts. Natural gas prices have fluctuated during the last several years, increasing substantially in 2008 and subsequently declining to the current lower levels. A hypothetical increase of $0.10 per MMBtu of natural gas would increase the cost to produce one ton of ammonia by $3.35.

In the normal course of business, RNLLC currently produces nitrogen-based fertilizer products throughout the year to supply the needs of our East Dubuque Facility’s customers during the high-delivery-volume spring and fall seasons. The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices. Prices of nitrogen fertilizer products can be volatile. We believe that market prices of nitrogen products are affected by changes in grain prices and demand, natural gas prices and other factors.

RNLLC enters into fixed-price prepaid contracts committing its East Dubuque Facility’s customers to purchase its nitrogen fertilizer products at a later date. To a lesser extent, RNPLLC also enters into prepaid contracts for our Pasadena Facility’s products. By using fixed-price forward contracts, RNLLC purchases enough natural gas to manufacture the products that have been sold by our East Dubuque Facility under prepaid contracts for later delivery. We believe that entering into such fixed-price contracts for natural gas and prepaid contracts effectively allows RNLLC to fix most of the gross margin on pre-sold product and mitigate risk of increasing market prices of natural gas or decreasing market prices of nitrogen to the extent of such pre-sold products. However, this practice also subjects us to the risk that we may have locked in margins at levels lower than those that might be available if, in periods following these contract dates, natural gas prices were to fall, or nitrogen fertilizer commodity prices were to increase. In addition, RNLLC occasionally makes forward purchases of natural gas that are not directly linked to specific prepaid contracts. To the extent RNLLC makes such purchases, we may be unable to benefit from lower natural gas prices in subsequent periods.

Our Pasadena Facility is exposed to significant market risk due to potential changes in prices for fertilizer products, and for ammonia, sulfuric acid and sulfur. Ammonia and sulfuric acid are the primary raw materials used in the production of ammonium sulfate which is the primary product manufactured at our Pasadena Facility. Sulfur is the primary raw material used in the production of sulfuric acid, which our Pasadena Facility produces for both internal consumption in the production of ammonium sulfate and for sales to third parties. During the year ended December 31, 2015, 94% of the sulfuric acid used in our Pasadena Facility’s production of ammonium sulfate was produced at our Pasadena Facility. We purchase a substantial portion of our ammonia and sulfur for use in our Pasadena Facility at prices based on market indices. The market price of ammonium sulfate is affected by changes in the prices of commodities such as soybeans, potatoes, cotton, canola, alfalfa, corn, wheat, ammonia and sulfur as well as by supply and demand for ammonium sulfate and other nitrogen fertilizers, and by other factors such as the price of its other inputs. The margins on the sale of ammonium sulfate fertilizer products are relatively low. If our costs to produce ammonium sulfate fertilizer products increase and the prices at which we sell these products do not correspondingly increase, our profits from the sale of these products may decrease or we may suffer losses on these sales. If the price of our products falls rapidly, we may not be able to recover the costs of our raw materials inventory that was purchased at an earlier time when commodity prices were at higher levels. A hypothetical increase of $10.00 per ton of ammonia would increase the cost to produce one ton of ammonium sulfate by $2.50. A hypothetical increase of $10.00 per ton of sulfur would also increase the cost to produce one ton of ammonium sulfate by $2.50. Without a corresponding increase in ammonium sulfate prices, at a volume of 500,000 tons per year, a $2.50 increase per ton would result in an impact of $1.2 million.

Our Pasadena Facility purchases ammonia as a feedstock at contractual prices based on a published Tampa, Florida market index, while the East Dubuque Facility sells similar quantities of ammonia at prevailing prices in the Mid Corn Belt, which are typically significantly higher than Tampa ammonia prices.

We provide wood fibre processing services and wood yard operations in the United States, Chile and Uruguay. We typically purchase logs through our trading company, Forestal Los Andes S.A., or FLA, only to fulfill obligations under contracts with established prices for the delivery of wood chips, thereby minimizing our exposure to market fluctuations in prices for wood chips and logs. A hypothetical increase of $0.10 per GMT in the price of logs would increase the cost to produce one ton of wood chips by $0.12. However, FLA historically has not experienced an impact of this nature due to the offtake and feedstock contract negotiation process of the Chilean export market. Each year, the Japanese market sets a fixed price for each species of wood chips imported from Chile regardless of producer. As such, Chilean timber suppliers have little power in altering the price of wood and thus, adjust their price within a narrow price band in conjunction with the Japanese wood chip price. Therefore, we do not expect that changes in log prices to materially impact Fulghum’s results of operations.

The cost to complete our wood pellet projects are subject to changes in the prices of construction materials, equipment and labor to be used in construction. The off-take contracts for the products of the wood pellet plants are designed to pass-through 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.

We operate in Chile and Uruguay, and are building wood pellet plants in Canada. We also have contracted to sell a significant portion of our industrial wood pellets pursuant to off-take contracts under which the purchases are priced in Canadian dollars. We are subject to the effects of changing rates of exchange for the relevant currencies. Both the expenses we incur outside the United States and the value to our shareholders of future profits earned in foreign currencies may be affected by such exchange rates.

Wood feedstock represents the largest component of NEWP’s wood pellet product cost. Competition for wood feedstock supply from pulp and paper manufacturing, and commercial and institutional wood boiler heating systems may affect our cost of wood feedstock. Our Jaffrey, New Hampshire production facility is affected the most by this competition, followed by our Schuyler, New York production facility, with our Deposit, New York production facility and our Allegheny Facility least affected . We have approximately 171 wood suppliers of which approximately 61 provide 80% of our wood feedstock needs. We have developed relationships with our suppliers such that our wood costs have remained relatively flat with minimal variability over the last several years. A hypothetical increase of $1.00 per green short ton in the price of wood fibre feedstock would increase the cost to produce one ton of wood pellets by $1.77.

Foreign Currency Exchange Risk. The functional currency of our Canadian subsidiaries is the Canadian dollar. We expect that, once the Atikokan Facility and the Wawa Facility are operational, our Canadian subsidiaries will invoice customers and satisfy their financial obligations almost exclusively in their local currency. As a result, we do not expect that our exposure to currency exchange fluctuation risk from our Canadian operations will be significant.

The functional currency of our South American subsidiaries is the United States dollar. Our South American subsidiaries enter into significant contracts that are primarily denominated in United States dollars and satisfy their financial obligations in that currency. As a result, we generally do not have exposure to currency exchange fluctuation risk from our South American subsidiaries.

For financial statement reporting purposes, we translate the assets and liabilities of our Canadian subsidiaries at the exchange rates in effect on the balance sheet date and translate their revenues, costs and expenses at the rates of exchange in effect at the time of the transaction. We include translation gains and losses in the stockholders’ equity section of our balance sheets. We include net gains and losses resulting from foreign exchange transactions in interest and other income in our statements of operations. Since we translate Canadian dollars into United States dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results. Although the impact of currency fluctuations on our financial results has generally been immaterial in the past there can be no guarantee that the impact of currency fluctuations will not be material in the future.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Rentech, Inc. and its subsidiaries at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because a material weakness in internal control over financial reporting related to the review of the cash flow forecasts used in the accounting for long-lived asset recoverability and impairment 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 weakness referred to above is described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2015 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 schedules, 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 schedules, 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.

As discussed in Note 2, if the merger with CVR Partners fails to close on the expected terms or at all, the Company would not have sufficient liquidity for the next twelve months.

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 of December 31,
	2015			2014
ASSETS
Current assets
Cash	$	41,708		$	19,666
Accounts receivable, including unbilled revenue, net of allowance for doubtful accounts of $0 and $500 at December 31, 2015 and 2014, respectively		11,945			27,085
Inventories		45,529			25,546
Prepaid expenses and other current assets		7,296			8,709
Other receivables, net		3,450			10,711
Assets of discontinued operations		27,201			46,344
Total current assets		137,129			138,061
Property, plant and equipment, net		242,510			241,394
Construction in progress		5,134			164,413
Other assets
Goodwill		40,255			38,393
Intangible assets		36,084			61,804
Deposits and other assets		4,530			4,681
Property held for sale		2,359			—
Assets of discontinued operations		182,290			167,903
Total other assets		265,518			272,781
Total assets	$	650,291		$	816,649
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	17,281		$	23,888
Accrued payroll and benefits		6,858			4,465
Accrued liabilities		22,802			28,464
Deferred revenue		12,187			9,328
Current portion of long term debt		18,744			17,784
Accrued interest		337			524
Earn-out consideration		—			5,000
Other		2,554			2,601
Liabilities of discontinued operations		32,606			44,697
Total current liabilities		113,369			136,751
Long-term liabilities
Debt		157,268			114,756
Earn-out consideration		871			1,295
Asset retirement obligation		4,270			4,005
Deferred income taxes		7,301			7,980
Other		3,216			4,545
Liabilities of discontinued operations		348,576			328,422
Total long-term liabilities		521,502			461,003
Total liabilities		634,871			597,754
Commitments and contingencies (Note 16)
Mezzanine equity
Series E convertible preferred stock: $10 par value; 100,000 shares authorized, issued and outstanding; 4.5% dividend rate		95,840			95,060
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; 45,000 shares authorized; 23,033 and 229,308 shares issued and outstanding at December 31, 2015 and 2014, respectively		230			2,293
Additional paid-in capital		543,724			543,091
Accumulated deficit		(531,971	)		(417,349	)
Accumulated other comprehensive loss		(27,204	)		(7,302	)
Total Rentech stockholders' equity (deficit)		(15,221	)		120,733
Noncontrolling interests		(65,199	)		3,102
Total equity (deficit)		(80,420	)		123,835
Total liabilities and stockholders' equity (deficit)	$	650,291		$	816,649

	For the Years Ended December 31,
	2015			2014			2013
Revenues
Product sales	$	222,856		$	196,802		$	141,262
Service revenues		70,569			70,317			48,192
Other revenues		2,419			2,062			2,505
Total revenues		295,844			269,181			191,959
Cost of sales
Product		219,318			206,849			152,864
Service		53,879			57,443			36,592
Total cost of sales		273,197			264,292			189,456
Gross profit		22,647			4,889			2,503
Operating expenses
Selling, general and administrative expense		56,262			61,718			46,529
Depreciation and amortization		5,930			4,202			2,800
Asset impairment		171,878			—			—
Pasadena goodwill impairment		—			27,202			30,029
Other (income) expense, net		3,395			(293	)		71
Total operating expenses		237,465			92,829			79,429
Operating loss		(214,818	)		(87,940	)		(76,926	)
Other expense, net
Interest expense		(10,746	)		(3,277	)		(2,295	)
Loss on debt extinguishment		—			(850	)		—
Gain (loss) on fair value adjustment to earn-out consideration		230			(1,033	)		5,122
Other income (expense), net		2,372			618			(271	)
Total other expenses, net		(8,144	)		(4,542	)		2,556
Loss from continuing operations before income taxes and equity in loss of investee		(222,962	)		(92,482	)		(74,370	)
Income tax benefit		12,417			12,316			35,758
Loss from continuing operations before equity in loss of investee		(210,545	)		(80,166	)		(38,612	)
Equity in loss of investee		473			393			242
Loss from continuing operations		(211,018	)		(80,559	)		(38,854	)
Income from discontinued operations, net of tax		57,987			48,055			38,892
Net income (loss)		(153,031	)		(32,504	)		38
Net (income) loss attributable to noncontrolling interests		38,422			494			(1,570	)
Preferred stock dividends		(5,280	)		(3,840	)		—
Net loss attributable to Rentech common shareholders	$	(119,889	)	$	(35,850	)	$	(1,532	)
Net income (loss) per common share allocated to Rentech common shareholders:
Basic:
Continuing operations	$	(6.50	)	$	(2.71	)	$	(0.72	)
Discontinued operations	$	1.24		$	1.10		$	0.64
Net loss	$	(5.22	)	$	(1.57	)	$	(0.07	)
Diluted:
Continuing operations	$	(6.50	)	$	(2.71	)	$	(0.72	)
Discontinued operations	$	1.24		$	1.10		$	0.64
Net loss	$	(5.22	)	$	(1.57	)	$	(0.07	)
Weighted-average shares used to compute net income (loss) per common share:
Basic		22,981			22,856			22,614
Diluted		22,981			22,856			22,614

	Common Stock						Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Rentech Stockholders'			Noncontrolling			Total Stockholders'
	Shares			Amount			Capital			Deficit			Income (Loss)			Equity (Deficit)			Interests			Equity (Deficit)
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 for 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	)
Distributions 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 (loss)		—			—			—			—			(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
Common stock issued for stock options exercised		214			2			91			—			—			93			—			93
Dividends - preferred stock		—			—			(3,840	)		—			—			(3,840	)		—			(3,840	)
Distributions to noncontrolling interests		—			—			—			—			—			—			(4,907	)		(4,907	)
Equity-based compensation expense		—			—			6,297			—			—			6,297			516			6,813
Restricted stock units		1,582			16			(1,031	)		—			—			(1,015	)		—			(1,015	)
Net loss		—			—			—			(32,010	)		—			(32,010	)		(494	)		(32,504	)
Other comprehensive loss		—			—			—			—			(7,185	)		(7,185	)		(524	)		(7,709	)
Other		—			—			320			—			—			320			(1,372	)		(1,052	)
Balance, December 31, 2014		229,308		$	2,293		$	543,091		$	(417,349	)	$	(7,302	)	$	120,733		$	3,102		$	123,835
Reverse stock split		(207,040	)		(2,070	)		2,070			—			—			—			—			—
Common stock issued for services		259			3			(3	)		—			—			—			—			—
Common stock issued for stock options exercised		254			2			27			—			—			29			—			29
Dividends - preferred stock		—			—			(5,280	)		—			—			(5,280	)		—			(5,280	)
Distributions to noncontrolling interests		—			—			—			—			—			—			(30,332	)		(30,332	)
Equity-based compensation expense		—			—			4,015			—			—			4,015			433			4,448
Restricted stock units		252			2			(182	)		—			—			(180	)		—			(180	)
Net loss		—			—			—			(114,609	)					(114,609	)		(38,422	)		(153,031	)
Other comprehensive income (loss)		—			—			—			—			(19,902	)		(19,902	)		4			(19,898	)
Other		—			—			(14	)		(13	)		—			(27	)		16			(11	)
Balance, December 31, 2015		23,033		$	230		$	543,724		$	(531,971	)	$	(27,204	)	$	(15,221	)	$	(65,199	)	$	(80,420	)

	For the Years Ended December 31,
	2015			2014			2013
Cash flows from operating activities
Net income (loss)	$	(153,031	)		(32,504	)	$	38
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Income from discontinued operations		(57,987	)		(48,055	)		(38,892	)
Depreciation and amortization		26,185			20,533			11,818
Asset impairment		171,878			—			—
Pasadena goodwill impairment		—			27,202			30,029
Deferred income tax benefit		(900	)		(316	)		(27,130	)
Gain on sale of easement		(1,425	)		—			—
Utilization of spare parts		3,325			4,285			1,350
Write-down of inventory		13,419			6,045			12,360
Non-cash interest expense		55			(671	)		(713	)
Loss on debt extinguishment		—			850			—
Equity-based compensation		4,156			6,541			7,070
Net (gain) loss on sale of assets		1,755			57			30
Unrealized net (gain) loss on derivatives		511			(148	)		—
Other		518			421			1,144
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable		14,984			(15,024	)		(2,069	)
Other receivables		6,239			(5,728	)		406
Inventories		(29,861	)		(328	)		(17,246	)
Prepaid expenses and other current assets		1,596			(2,647	)		381
Accounts payable		(1,484	)		3,447			(4,556	)
Deferred revenue		2,859			(2,882	)		2,880
Accrued interest		378			(367	)		1,011
Accrued liabilities, accrued payroll and other		4,378			(419	)		1,008
Cash provided by (used in) operating activities of continuing operations		7,548			(39,708	)		(21,081	)
Cash provided by operating activities of discontinued operations		61,211			64,642			33,429
Net cash provided by operating activities		68,759			24,934			12,348
Cash flows from investing activities
Capital expenditures		(53,700	)		(149,639	)		(46,725	)
Proceeds from easement		1,425			—			—
Payment for acquisitions, net of cash received		(7,214	)		(32,448	)		(67,004	)
Proceeds from disposal of assets		680			102			320
Receipt from Insurance		2,532			2,945			—
Other items		—			—			344
Cash used in investing activities of continuing operations		(56,277	)		(179,040	)		(113,065	)
Cash used in investing activities of discontinued operations		(27,643	)		(10,970	)		(49,129	)
Net cash used in investing activities		(83,920	)		(190,010	)		(162,194	)
Cash flows from financing activities
Proceeds from credit facilities and term loan, net of original issue discount		96,502			80,606			65,600
Proceeds from issuance of notes		—			—			320,000
Payment of offering costs		—			(16	)		(972	)
Proceeds from preferred stock, net of discount and issuance costs		—			94,495			—
Payment of stock issuance costs		—			—			(48	)
Proceeds from options and warrants exercised		29			93			297
Payments and retirement of debt		(34,062	)		(61,459	)		(223,105	)
Payment of debt issuance costs		(1,230	)		(2,794	)		(9,972	)
Dividends to preferred stockholders		(4,500	)		(2,900	)		—
Payment of earn-out consideration		(3,840	)		—			—
Distributions to noncontrolling interests		(30,332	)		(4,907	)		(37,329	)
Other		—			—			6
Net cash provided by financing activities		22,567			103,118			114,477
Effect of exchange rate on cash		(2,659	)		(216	)		2
Increase (decrease) in cash		4,747			(62,174	)		(35,367	)
Cash, beginning of period		44,195			106,369			141,736
Cash, end of period		48,942			44,195			106,369
Cash from discontinued operations, end of period		7,234		$	24,529			31,224
Cash from continuing operations, end of period	$	41,708		$	19,666		$	75,145

For the years ended December 31, 2015, 2014 and 2013 the Company made certain cash payments as follows:

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

Rentech, Inc. (“Rentech,” “the Company,” “we,” “us” or “our”) operates currently in four segments including Pasadena, Fulghum Fibres, Wood Pellets: Industrial and Wood Pellets: NEWP.

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 intercompany accounts and transactions have been eliminated in consolidation.

On August 9, 2015, Rentech Nitrogen Partners, L.P. (“RNP”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which RNP and Rentech Nitrogen GP, LLC (the “General Partner”) will merge with affiliates of CVR Partners, L.P. (“CVR Partners”), and RNP will cease to be a public company and will become a wholly-owned subsidiary of CVR Partners (the “Merger”). Upon closing of the Merger, each outstanding unit of RNP will be exchanged for 1.04 common units of CVR Partners and $2.57 of cash. The Merger Agreement required RNP to either sell its ammonium sulfate production facility located in Pasadena, Texas (the “Pasadena Facility”) to a third party or spin-out ownership of the Pasadena Facility to RNP unitholders prior to the closing of the Merger. The merger consideration therefore does not include any consideration attributable to the Pasadena Facility. Consummation of the Merger is subject to certain conditions. The Merger Agreement includes customary termination provisions, including a provision allowing RNP to terminate the Merger Agreement in order to accept a superior proposal, as defined in the Merger Agreement, upon payment of a termination fee. The Company has agreed, subject to certain terms and conditions, to vote its RNP common units, constituting 59.6% of the outstanding common units of RNP in favor of the transaction. Subject to satisfaction of the closing conditions and receipt of the required approvals, the Company expects that the Merger will close on or about March 31, 2016. Upon entering into the Merger Agreement, RNP (excluding the Pasadena Facility) met the accounting criteria for discontinued operations. Accordingly, the Company has presented its consolidated balance sheets and consolidated statements of operations for all periods presented in this report to reflect RNP, excluding the Pasadena business segment and certain allocated corporate expenses, as discontinued operations. See Note 8 — Discontinued Operations.

On March 14, 2016, we completed the sale of the Pasadena Facility to Interoceanic Corporation (“IOC”). The transaction resulted in an initial cash payment to RNP of $5.0 million and a cash working capital adjustment, which is expected to be approximately $6.0 million, after confirmation of the amount within ninety days of the closing of the transaction. The purchase agreement also includes an earn-out which would be paid to RNP unitholders equal to 50% of the facility’s EBITDA, as defined in the purchase agreement, in excess of $8.0 million cumulatively earned over the next two years.

On August 20, 2015, the Company effected a one-for-ten reverse stock split (the “Reverse Split”) of its issued and outstanding shares of common stock (“Common Stock”). All share and per share data in the accompanying consolidated financial statements and notes have been adjusted retrospectively for the effects of the Reverse Split. See Note 17 — Reverse Stock Split.

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. 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 with the acquisition of Agrifos LLC (“Agrifos”), is located in Pasadena, Texas. 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 (loss) of, and distribution from, RNP.

Rentech Nitrogen Holdings, Inc. (“RNHI”), Rentech’s indirect wholly owned subsidiary, owns approximately 60% of RNP common units outstanding and Rentech Nitrogen GP, LLC (the “General Partner”), RNHI’s wholly owned subsidiary, owns 100% of the non-economic general partner interest in RNP.

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 wood yard operation services and high-quality wood chipping services, and produces and sells wood chips to the pulp, paper and packaging industry. Fulghum operates 32 wood chipping mills, of which 27 are located in the United States, four are located in Chile and one is located in Uruguay. The noncontrolling interests reflected on the Company’s consolidated balance sheet also represent the non-acquired ownership interests in the subsidiaries located in Chile and Uruguay. Fulghum currently owns 87% of the equity interests in the subsidiaries located in Chile and Uruguay.

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. Under our processing agreements, the customer generally has the opportunity to make up for any shortfall below minimum volume requirements with additional volumes in subsequent months before it is required to pay a shortfall fee. 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.

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 12 — Property, Plant and Equipment” for a description of the two facilities and “Note 16 — Commitments and Contingencies” for major contracts and commitments for this business segment.

On May 1, 2014, the Company acquired all of the equity interests of New England Wood Pellet, LLC (“NEWP”), pursuant to a Unit Purchase Agreement (the “NEWP Purchase Agreement”). Upon the closing of the transaction (the “NEWP Acquisition”), NEWP became a wholly owned subsidiary of the Company. On January 23, 2015, NEWP, acquired for $7.2 million substantially all of the assets of Allegheny Pellet Corporation (“Allegheny”), which consist of a wood pellet processing facility located in Youngsville, Pennsylvania (the “Allegheny Acquisition”). NEWP is one of the largest producers of wood pellets for the United States residential and commercial heating markets. NEWP operates four wood pellet processing facilities with a combined annual production capacity of 300,000 tons. In addition to the Allegheny facility, the other facilities are located in Jaffrey, New Hampshire; Deposit, New York; and Schuyler, New York. For information on the Allegheny Acquisition and the NEWP Acquisition, refer to “Note 4 — Allegheny Acquisition” and “Note 5 — NEWP Acquisition”.

In the first quarter of 2016, the Company entered into an amendment to the credit facility with the GSO Funds (the “GSO Credit Facility”) which provides the ability to draw $6.0 million in delayed draw term loans (the “Tranche D Loans”) at a rate equal to the greater of (i) LIBOR plus 14.00% and (ii) 15.00% per annum. While the Company does not expect to need proceeds from the Tranche D Loans, the facility is available through the earlier of the Merger closing and May 31, 2016 should expectations change.

Also in the first quarter, the Company entered into an agreement with the GSO Funds to modify the repayment terms of the Tranche A loan and Series E Convertible Preferred Stock. Under the new agreement, the Company is required to deliver to the GSO Funds the lesser of (i) all of the units of CVR Partners the Company receives at the closing of the Merger or (ii) $140 million of units of CVR Partners (valued using the volume weighted average price of the CVR units for the 60 trading days ending two days prior to the closing of the Merger, less a 15% discount) in exchange for retiring the equivalent dollar amount of Series E Convertible Preferred Stock and Tranche A term loan debt. To the extent that there are not enough units of CVR Partners available to repay the GSO Funds in full, any portion of the par value of the Series E Convertible Preferred Stock or the principal amount of the Tranche A Loans not repaid shall remain outstanding (and the Tranche A term loans will be converted to Tranche B loans). For further details on the terms of the Tranche D Loans and modifications of the GSO exchange, see Note 15 – Debt.

Although we do not believe it to be likely, if the Merger fails to close on the expected terms or at all, the Company would not have sufficient liquidity for the next twelve months without raising additional capital. There can be no assurance that the Company will be able to raise sufficient capital on terms it finds acceptable or at all. This would cause a material adverse effect on the Company’s business, results of operations, and financial condition, and on its ability to complete construction of the Atikokan and Wawa facilities and fund its normal operations.

In addition, the Company is in the process of ramping up production on the Wawa Facility and the Atikokan Facility. We expect to spend approximately $21 million to complete modifications and enhancements of the facilities in 2016. Our total operating and input costs at our Canadian facilities are expected to be higher than the net proceeds we receive under the agreements with Drax and OPG in 2016. In addition, we expect to continue to build working capital requirements for the plants as they ramp up production. If production is lower than expected, the use of cash could be higher at the Wawa Facility and the Atikokan Facility and the Company could also face significant penalties under its contracts with Drax and Canadian National Railway Company in 2016. A 10% shortfall in forecasted production could increase the cash used by our Canadian facilities by an estimated $2 million, inclusive of estimated penalties of approximately $1 million.

The Company was initially formed to develop and commercialize certain alternative energy technologies, and it acquired other energy technologies that the Company further developed. The Company conducted significant research and development and project development activities related to those technologies. In 2013, the Company ceased operations and reduced staffing at, and mothballed, its Product Demonstration Unit (“PDU”), located in Commerce City, Colorado. The Company also eliminated all research and development activities in the first half of 2013. In October 2014, the Company sold its alternative energy technologies and certain pieces of equipment at the PDU. Any ongoing activities related to its alternative energy technologies will be to maintain the Commerce City site until it is sold. See “Note 8 — Discontinued Operations”.

In filings that covered reporting periods during 2013 and 2014, the Company incorrectly reported revenues and cost of sales for Fulghum’s South America operations. Certain intercompany transactions between two of Fulghum’s Chilean subsidiaries were not eliminated in consolidation. As a result, both revenues and cost of sales were overstated for 2013 by approximately $4.7 million and 2014 by approximately $7.1 million. The Company has revised the 2014 and 2013 amounts contained in this filing to properly reflect the elimination of the intercompany transactions. Management does not believe the impact of these errors was material to 2014 or 2013 financial statements.

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.

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) customer 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 typically 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 $0.5 million for the year ended December 31, 2015, $6.1 million for the year ended December 31, 2014 and $3.4 million for the year ended December 31, 2013.

Rentech Nitrogen, LLC (“RNLLC”) had a distribution agreement (the “Distribution Agreement”) with Agrium U.S.A., Inc. (“Agrium”). The Distribution Agreement was for a 10 year period, subject to renewal options. Pursuant to the Distribution Agreement, Agrium was 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 was appointed as the exclusive distributor for the sale, purchase and resale of nitrogen products manufactured at the East Dubuque Facility. Sale terms were negotiated and approved by RNLLC. Agrium bore the credit risk on products sold through Agrium pursuant to the Distribution Agreement. If an agreement was not reached on the terms and conditions of any proposed Agrium sale transaction, RNLLC had the right to sell to third parties provided the sale was on the same timetable and volumes and at a price not lower than the one proposed by Agrium. For the years ended December 31, 2015, 2014 and 2013, the Distribution Agreement accounted for 65% or more of net revenues from product sales for the East Dubuque Facility. Receivables from Agrium accounted for 44% and 36% of the total accounts receivable balance of the East Dubuque Facility as of December 31, 2015 and 2014, respectively. RNLLC terminated the Distribution Agreement as of December 31, 2015. RNLLC now sells directly to its customers.

Under the Distribution Agreement, the East Dubuque Facility paid 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 effective commission rate for the year ended December 31, 2015 was 3.9%, for the year ended December 31, 2014 was 3.4% and 3.6% for the year ended December 31, 2013. The commission expense was recorded in cost of sales for all periods.

Rentech Nitrogen Pasadena, LLC (“RNPLLC”) sells substantially all of its products through marketing and distribution agreements. Pursuant to an exclusive marketing agreement RNPLLC has entered into with 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 years ended December 31, 2015, 2014 and 2013 , the marketing agreement with IOC accounted for 80% or more of the Pasadena Facility’s total revenues. In addition, RNPLLC has an arrangement with IOC that permits RNPLLC to store approximately 60,000 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.

Tolling and Offtake Arrangements – Fulghum has wood chip processing and wood yard operation 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 bark 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.

The Company recognizes revenue at the time when customers take ownership upon shipment of the 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.

The Company recognizes revenue at the time when customers take ownership upon shipment from the facilities of the 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. Two customers accounted for 31% of NEWP’s total sales for the year ended December 31, 2015.

A significant portion of the revenue recognized during any period may be related to prepaid contracts or products stored at distributor 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, 2015, deferred revenue, including East Dubuque’s deferred revenue included in liabilities of discontinued operations, was $18.5 million and $28.6 million for the year ended December 31, 2014. At the East Dubuque Facility, the Company records a liability for deferred revenue to the extent that payment has been received under prepaid contracts, which create obligations for delivery of product within a specified period of time in the future. The terms of these prepaid contracts require payment in advance of delivery. At the Pasadena Facility, our distributor 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 prepaid contracts or products stored at distributor facilities and relieves the liability for deferred revenue when products are shipped (including shipments to end customers from distributor facilities).

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.

Cost of sales are also comprised of manufacturing costs related to the Company’s wood pellet products and processing costs for services. Cost of sales expenses include direct materials (such as wood and packaging materials), direct labor, indirect labor, employee fringe benefits, depreciation on plant machinery, electricity and other costs, including freight charges incurred to transport products sold related to freight revenues.

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 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 consolidated balance sheets 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 cost of product sales on our consolidated statement of operations and reported under cash flows from operating activities.

Cash and cash equivalents consist of cash on hand with original maturities of three months or less. The Company has checking accounts with major financial institutions. At times balances with these institutions may be in excess of federally insured limits.

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.

Inventories consist of raw materials and finished goods. The primary raw material used by the East Dubuque Facility (discontinued operations) 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. Raw materials at the wood pellet facilities primarily consist of wood fibre. Raw materials at NEWP primarily consist of wood chips and sawdust procured from third parties, and packaging materials. Inventories on the consolidated balance sheets, including East Dubuque’s inventories included in assets of discontinued operations, included depreciation in the amount of $6.9 million at December 31, 2015 and $2.1 million at December 31, 2014.

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. See Note 11 — Inventories for amounts written down during the periods. During turnarounds at the East Dubuque and Pasadena Facilities, 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.

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

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 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 facilities to reduce the length of possible interruptions in plant operations from an infrastructure breakdown at the 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 for impairment 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, (ii) disposal of asbestos at the East Dubuque Facility, which is recorded in liabilities of discontinued operations, 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 was $4.7 million at December 31, 2015 and $5.1 million at December 31, 2014.

The Company tracks project development costs and capitalizes those costs after a project has completed the scoping phase and enters the feasibility phase. 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.

During the calendar year ended December 31, 2015, the Company reclassified one of its Fulghum’s mills from property, plant and equipment to property held for sale on its consolidated balance sheet (See Note 12 — Property, Plant and Equipment – Fulghum Fibres).

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 5 — NEWP Acquisition” and “Note 4 — Allegheny 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 represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. The Company tests goodwill for impairment annually on July 1, 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.

There are significant assumptions involved in performing a goodwill impairment test, which include discount rates, terminal growth rates, future sales prices of end products, raw material costs, and sales volumes. The various valuation methods used (income approach, replacement cost and market approach) are weighted in determining fair value. Changes to any of these assumptions could increase or decrease the fair value of the Fulghum and NEWP reporting units. See Note 13 — Goodwill.

Intangible assets arose in conjunction with the NEWP Acquisition, Fulghum Acquisition and Agrifos Acquisition (See “Note 5 — NEWP Acquisition” and “Note 4 — Allegheny Acquisition”). NEWP’s intangible assets consist of trade names, customer relationships and non-compete agreements. Fulghum’s intangible assets consist of trade names and processing agreements to provide services to its customers. Acquired trade names related to Fulghum 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 with indefinite lives 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. Acquired trade names related to NEWP are amortized over 20 years.

The Company assesses the realizable value of finite-lived 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 its assets, the Company makes assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. As applicable, the Company makes assumptions regarding the useful lives of the assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets. During 2015, the Company wrote off its intangible assets relating to its Pasadena Facility as a result of its impairment test (See Note 12 — Property, Plant and Equipment).

The amortization of the assets will result in the following amortization expense for the next five years.

We also have unfavorable processing agreements in the amount of $1.6 million related to Fulghum Acquisition, 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 life.

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.

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 (i) the “treasury stock” method for the unvested restricted stock units, outstanding stock options and warrants and (ii) the “if converted” method for the preferred stock and convertible debt if their inclusion would not have been anti-dilutive.

Assets and liabilities have been translated to the reporting currency using the exchange rates in effect on the consolidated balance sheet dates. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. A portion of the intercompany balances between the Parent and certain foreign subsidiaries are classified as a long term investment because the Company does not intend to settle such accounts in the foreseeable future. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive loss in the accompanying consolidated statements of stockholders’ equity (deficit).

Comprehensive income (loss) includes all changes in consolidated 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.

Accumulated other comprehensive loss is $27.2 million and $7.3 million at December 31, 2015 and 2014, respectively. The balance at December 31, 2015 is comprised of foreign currency translation adjustments of $(27.5) million and pension and post-retirement plan adjustments of $0.3 million. The balance at December 31, 2014 is comprised of foreign currency translation adjustments of $(7.3) million and pension and post-retirement plan adjustments of $4,000. Activity for the years ending December 31, 2015, 2014 and 2013 are reflected in the Consolidated Statement of Comprehensive Income (Loss). There were no material amounts reclassified from accumulated other comprehensive income in any of the three years ended December 31, 2015.

In April 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance that provides a narrower definition of discontinued operations than under previous guidance. It requires that only disposals of components of an entity (or groups of components) that represent a strategic shift that has or will have a major effect on the reporting entity’s operations are to be reported in the financial statements as discontinued operations. It also provides guidance on the financial statement presentations and disclosures of discontinued operations. This guidance is effective prospectively for disposals (or classifications of held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. The adoption of this guidance was implemented during 2015. See “Note 8 — Discontinued Operations.”

In May 2014, the FASB issued guidance that will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. In August 2015, the FASB approved a one-year deferral of the effective date making the guidance effective for interim and annual reporting periods beginning after December 15, 2017. In addition, the FASB will continue to permit entities to early adopt the guidance for annual periods beginning on or after December 15, 2016. The Company is evaluating the provisions of this guidance and the potential impact, if any, on its consolidated financial position, results of operations and disclosures.

In June 2014, the FASB issued guidance on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have any impact on its consolidated financial position, results of operations or disclosures.

In August 2014, the FASB issued guidance on presentation of financial statements – going concern, which applies to all companies. It requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is evaluating the provisions of this guidance and the potential impact, if any, on its consolidated financial position, results of operations and disclosures.

In November 2014, the FASB issued guidance on hybrid financial instruments. The guidance does not change the current criteria for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The guidance clarifies that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company is evaluating the provisions of this guidance and the potential impact, if any, on its consolidated financial position, results of operations and disclosures.

In January 2015, the FASB issued guidance, which eliminates the concept of extraordinary items. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have any impact on its consolidated financial position, results of operations or disclosures.

In February 2015, the FASB issued guidance that changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company is evaluating the provisions of this guidance and the potential impact, if any, on its consolidated financial position, results of operations and disclosures.

In April 2015, the FASB issued guidance, which would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. As early adoption of the guidance is permitted, the Company has elected to implement the guidance in this report. As of December 31, 2015 and 2014, the Company had $2.0 million and $1.3 million, respectively, of debt issuance costs that were reclassified from assets to liabilities under this guidance. In addition, the Company has debt issuance costs of $6.9 million and $8.3 million as of December 31, 2015 and 2014, respectively, recorded in assets of discontinued operations that were reclassified to liabilities of discontinued operations.

In April 2015, the FASB issued guidance that will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have any impact on its consolidated financial position, results of operations or disclosures.

In July 2015, the FASB issued guidance that replaces the current lower of cost or market method of measurement for inventory with a lower of cost and net realizable value measurement. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial position, results of operations or disclosures.

In September 2015, the FASB issued guidance that simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by requiring the acquirer to (i) recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined, (ii) record, in the same period, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, and (iii) present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial position, results of operations or disclosures.

In November 2015, the FASB issued guidance to simplify the presentation of deferred income taxes. The guidance requires that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets be offset and presented as a single amount is not affected by this guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. As early adoption of the guidance is permitted, the Company has elected, effective December 31, 2015, to retrospectively implement the guidance in this report. As of December 31, 2014, the Company had $1.9 million of deferred income taxes reclassified from current assets to noncurrent liabilities under this guidance.

In February 2016, the FASB issued an update to its guidance on lease accounting. This update revises accounting for operating leases by a lessee, among other changes, and requires a lessee to recognize a liability to make lease payments and an asset representing its right to use the underlying asset for the lease term in the balance sheet. The distinction between finance and operating leases has not changed and the update does not significantly change the effect of finance and operating leases on the statement of operations. The new guidance is effective for the first interim and annual periods beginning after December 15, 2018, with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently assessing the impact of adoption of this standard on our consolidated financial statements.

On January 23, 2015, our subsidiary, NEWP, acquired for $7.2 million substantially all of the assets of Allegheny Pellet Corporation (“Allegheny”), which consist of a wood pellet processing facility located in Youngsville, Pennsylvania (the “Allegheny Acquisition”). NEWP financed the purchase with a five-year, $8.0 million term loan. The proceeds from the term loan not used for the purchase price of Allegheny will be used for transaction costs and capital expenditures related to environmental and safety improvements at the Allegheny facility.

The acquisition is considered a business combination and 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.

Intangible assets consist of customer relationships and the trade name. The estimated useful life for each of the customer relationships is 13 years and trade name is 20 years.

The goodwill recorded reflects the value to Rentech of Allegheny’s market position, and of the increases in Rentech’s product offerings, customer bases and geographic markets in the Allegheny Acquisition. The goodwill recorded as part of this acquisition is amortizable for tax purposes.

Allegheny’s operations are included in the consolidated statements of operations and are reported within the Company’s Wood Pellets: NEWP business segment as of January 23, 2015. During the year ended December 31, 2015, the Company recorded revenue of $8.5 million and gross profit of $1.7 million related to Allegheny. See “Note 7 — Pro Forma Information” for unaudited pro forma information relating to the Allegheny Acquisition.

On May 1, 2014, the Company acquired all of the equity interests of NEWP. The final purchase price consisted of $35.4 million of cash as well as earn-out consideration of up to $5.0 million, which was paid in cash during 2015.

This business combination was 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 final purchase price recognized in our financial statements consisted of the following (amounts in thousands):

Intangible assets consist primarily of customer relationships, trade names and non-compete agreements with former owners. The estimated useful life of each of the trade names is 20 years, 13 years for customer relationships and three years for non-compete agreements.

The goodwill recorded reflects the value to Rentech of NEWP’s market position, of entry into the residential and commercial heating markets, and of the increases in Rentech’s products offerings, customer bases and geographic markets. The goodwill recorded as part of this acquisition is amortizable for tax purposes.

NEWP’s operations are included in the consolidated statements of operations as of May 1, 2014. During the year ended December 31, 2014, the Company recorded revenue of $32.1 million and net income of $4.3 million related to NEWP. Acquisition related costs for this acquisition were $1.1 million for the year ended December 31, 2014, and have been included in the consolidated statements of operations within selling, general and administrative expenses. See “Note 7 — Pro Forma Information” for unaudited pro forma information relating to the NEWP Acquisition.

On November 1, 2012, the Company acquired all of the membership interests of Agrifos, pursuant to a Membership Interest Purchase Agreement (the “Agrifos Purchase Agreement”). 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”), 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 Agrifos Purchase Agreement, of the Pasadena Facility exceeded certain thresholds. RNP 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, to satisfy certain indemnity claims.

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 Agrifos Purchase Agreement, over a two-year period. The scenarios, which included a weighted probability factor, involved assumptions relating to the market prices of RNP’s products and feedstocks, as well as product profitability and production. The earn-out consideration was measured at each reporting date with

changes in its fair value recognized in the consolidated statements of income. For the 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.

In October 2014, the Company reached an agreement to settle all existing and future indemnity claims it may have under the Agrifos Purchase Agreement. The parties agreed to distribute $5.0 million of cash and 59,186 Common Units to RNP held in escrow. The remaining $0.9 million of cash and 264,090 Common Units held in escrow were released to the seller of Agrifos. No earn-out consideration was earned. During the year ended December 31, 2014, the Company recognized income from the Agrifos settlement of $5.6 million.

The unaudited pro forma information has been prepared as if the Allegheny Acquisition had taken place on January 1, 2014. The unaudited pro forma information has also been prepared as if the NEWP Acquisition and the Fulghum Acquisition had taken place on January 1, 2013. 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, 2013 or January 1, 2014, and the unaudited pro forma information does not purport to be indicative of future financial operating results.

The pending Merger represents a strategic shift that will have a major effect on Rentech’s operations and financial results. As a result of the Merger Agreement, the Company has classified its consolidated balance sheets and consolidated statements of operations for all periods presented in this report to reflect RNP, excluding the Pasadena business segment and certain allocated corporate expenses, as discontinued operations. Prior to 2015, the Company reflected RNP in its reports as the East Dubuque business segment, the Pasadena business segment, and unallocated partnership items. As of December 31, 2015, the Pasadena business segment did not qualify for held-for–sale treatment or discontinued operations treatment because management had not committed to a plan to sell the Pasadena Facility so it was included in continuing operations. Certain allocated corporate expenses included in continuing operations represent costs and expenses that are expected to continue in the ongoing reporting entity after the Merger is completed.

On October 28, 2014, the Company sold its alternative energy technologies and certain pieces of equipment at the PDU. The Company received a cash payment of $14.4 million from the buyer, Sunshine Kaidi New Energy Group Co., Ltd. (“Kaidi”), which was in addition to $0.5 million in cash payments previously received. Kaidi also paid an additional $0.4 million to the Company to purchase various equipment 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 upon the achievement of agreed milestones related to the development of the sold technologies. During the year ended December 31, 2014, the Company recorded a gain on sale of $15.3 million. As a result of the agreement to sell the technologies and certain equipment, the Company has classified its consolidated balance sheets and consolidated 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 separately classified or aggregated under operating and investing activities.

All discussions and amounts in the consolidated financial statements and related notes 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, 2015
	RNP, excl. Pasadena		Energy Technologies		Total
	(in thousands)
Cash	$	7,234	$	—	$	7,234
Accounts receivable		9,001		—		9,001
Inventories		8,596		—		8,596
Prepaid expenses and other current assets		2,233		106		2,339
Other receivables		31		—		31
Total current assets	$	27,095	$	106	$	27,201
Property held for sale	$	157,785	$	1,678	$	159,463
Construction in progress		22,817		—		22,817
Debt issuance costs		—		—		—
Other assets		—		10		10
Total other assets	$	180,602	$	1,688	$	182,290
Total assets	$	207,697	$	1,794	$	209,491

Accounts payable	$	7,007	$	498	$	7,505
Accrued payroll and benefits		4,228		4		4,232
Accrued liabilities		9,568		455		10,023
Deferred revenues		6,196		—		6,196
Accrued interest		4,650		—		4,650
Total current liabilities	$	31,649	$	957	$	32,606

Debt	$	347,575	$	—	$	347,575
Asset retirement obligation		450		—		450
Other		551		—		551
Total long-term liabilities	$	348,576	$	—	$	348,576
Total liabilities	$	380,225	$	957	$	381,182

	As of December 31, 2014
	RNP, excl. Pasadena		Energy Technologies		Total
	(in thousands)
Cash	$	24,529	$	—	$	24,529
Accounts receivable		6,534		—		6,534
Inventories		12,539		—		12,539
Prepaid expenses and other current assets		2,433		305		2,738
Other receivables		4		—		4
Total current assets	$	46,039	$	305	$	46,344
Property held for sale	$	151,057	$	1,677	$	152,734
Construction in progress		15,010		—		15,010
Other assets		159		—		159
Total other assets	$	166,226	$	1,677	$	167,903
Total assets	$	212,265	$	1,982	$	214,247

Accounts payable	$	7,551	$	144	$	7,695
Accrued payroll and benefits		2,720		559		3,279
Accrued liabilities		8,942		1,008		9,950
Deferred revenues		19,279		—		19,279
Accrued interest		4,494		—		4,494
Total current liabilities	$	42,986	$	1,711	$	44,697

Debt	$	326,685	$	—	$	326,685
Asset retirement obligation		400		—		400
Other		1,337		—		1,337
Total long-term liabilities	$	328,422	$	—	$	328,422
Total liabilities	$	371,408	$	1,711	$	373,119

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.

Accounting guidance provides for a fair value hierarchy 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 in 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:

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

The following table presents the financial instruments that were accounted for at fair value by level as of December 31, 2015 and 2014.

The following table presents the fair value and carrying value of the Company’s borrowings as of December 31, 2015.

The following table presents the fair value and carrying value of the Company’s borrowings as of December 31, 2014.

At December 31, 2015, the earn-out consideration represents $0.9 million relating to the Atikokan Facility, as defined in “Note 12 — Property, Plant and Equipment”. This consideration 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 EBITDA, as defined in the asset purchase agreement related to the Atikokan Facility, over a ten-year period. The scenarios, which included a weighted probability factor, involved assumptions relating to product profitability and production levels. The earn-out consideration will be measured at each reporting date with changes in its fair value recognized in the consolidated statements of operations. Assuming the minimum required EBITDA level is achieved, an increase or decrease of $1.0 million in EBITDA would result in an increase or decrease in earn-out consideration of $0.1 million. The Company provided a loan to the sellers in the Atikokan Facility of $0.9 million, which will be repayable from any earn-out consideration. The collectability of the loan is tied to the amount of earn-out consideration the sellers receive from the Company.

A reconciliation of the change in the carrying value of the earn-out consideration is as follows:

The RNP Notes, as defined in “Note 15 — Debt”, are deemed to be Level 1 financial instruments because there is an active market for such debt. The fair value of such debt was determined based on market prices.

The Fulghum debt and NEWP debt, as defined in “Note 15 — Debt”, are deemed to be Level 2 financial instruments because the measurements are based on observable market data. The Company’s valuation reflects discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, weighted average lives and maturity dates.

The A&R GSO Credit Agreement and GE Credit Agreement, as defined in “Note 15 — Debt”, are deemed to be a Level 2 financial instrument because the measurements are based on observable market data. The Company concluded that the carrying value, before the discount, of the A&R GSO Credit Agreement and the carrying value of the GE Credit Agreement approximate the fair value of such loans as of December 31, 2015 and 2014 based on their floating interest rates and the Company’s assessment that the fixed-rate margins are still at market.

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 years ended December 31, 2015 and 2014.

RNP uses commodity-based derivatives to minimize its exposure to the fluctuations in natural gas prices. RNP recognizes the unrealized gains or losses related to the commodity-based derivative instruments in its consolidated financial statements. RNP does not have any master netting agreements or collateral relating to these derivatives.

Our East Dubuque Facility enters into forward natural gas purchase contracts to reduce its exposure to the fluctuations in natural gas prices. The forward natural gas contracts are deemed to be Level 2 financial instruments because the measurement is based on observable market data. The fair value of such contracts had been determined based on market prices. Gain or loss associated with forward natural gas contracts is recorded in discontinued operations on the consolidated statements of operations. The amount of unrealized gain (loss) recorded was $2.4 million for the year ended December 31, 2015 and $(4.0) million for the year ended December 31, 2014.

NEWP entered into three interest rate swaps in notional amounts that cover the borrowings under its two industrial revenue bonds and a real estate mortgage loan.

Under the interest rate swaps, NEWP pays interest at a fixed rate of 5.29% on the outstanding balance of one of the industrial revenue bonds, 5.05% on the outstanding balance of the other industrial revenue bond and 7.95% on the outstanding balance of the real estate mortgage loan. NEWP receives interest at the variable interest rates specified in the various swap agreements.

Fulghum has entered into two interest rate swaps in notional amounts that cover the borrowings under two of its long-term loans. Under the interest rate swaps, Fulghum pays interest at a fixed rate of 6.83% on the outstanding balance of one of the loans and 5.15% on the outstanding balance of the other loan. Fulghum receives interest at the variable interest rates specified in the various swap agreements. The 5.15% interest rate swap was terminated in July 2015.

In 2012, RNLLC (discontinued operations) entered into two forward starting interest rate swaps in notional amounts which covered a portion of its outstanding borrowings. The realized loss represents the cash payments required under the interest rate swaps. During the year ended December 31, 2013, RNP paid $0.9 million to terminate the RNLLC interest rate swaps.

Through the interest rate swaps, the Company is essentially fixing the variable interest rate to be paid on these borrowings.

The interest rate swaps are accounted for as derivatives. The interest rate swaps are deemed to be Level 2 financial instruments because the measurements are based on observable market data. The Company 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 LIBOR rates, risk-free interest rates and an estimate of credit risk. The fair value of the interest rate swaps at December 31, 2015 and 2014 represents the unrealized loss of $0.6 million and $0.8 million, respectively. Any adjustments to the fair value of the interest rate swaps are recorded on the consolidated statements of operations in interest expense.

Fulghum’s subsidiary in Chile uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange rates have on certain monetary liabilities (in this case, two loans) denominated in nonfunctional currencies. The changes in fair value of economic hedges used to offset the monetary liabilities are recognized into earnings in the line item other income - net in our consolidated statements of operations. In addition, we use foreign currency economic hedges to minimize the variability in cash flows associated with changes in foreign currency exchange rates. The total notional values of derivatives related to our foreign currency economic hedges were $9.5 million and $2.2 million as of December 31, 2015 and December 31, 2014, respectively.

The currency swaps are accounted for as derivatives. The currency swaps are deemed to be Level 2 financial instruments because the measurements are based on observable market data. The fair value of the currency derivatives is the difference between the contract values and the exchange rates at the end of the period. The fair value of the currency swaps at December 31, 2015 represents the unrealized loss.

The forward natural gas contracts are recorded in discontinued operations on the consolidated balance sheets.

The currency swaps are recorded either in prepaid expenses and other current assets or in other liabilities on the consolidated balance sheets.

The interest rate swaps are recorded in current liabilities on the consolidated balance sheets.

The following table presents the financial instruments that were accounted for at fair value by level as of December 31, 2015:

The following table presents the financial instruments that were accounted for at fair value by level as of December 31, 2014:

During the year ended December 31, 2015, the Company wrote down the value of its wood pellet inventory by $11.3 million to estimated net realizable value within its Wood Pellets: Industrial segment and RNP wrote down the value of the Pasadena Facility’s ammonium sulfate inventory by $2.2 million to estimated net realizable value. During the year ended December 31, 2014, the Company wrote down the value of the Pasadena Facility’s ammonium sulfate inventory by $6.0 million to estimated net realizable value. The write-downs were reflected in cost of goods sold for the applicable periods.

After RNP launched and pursued its process to evaluate strategic alternatives, management determined that it was more likely than not that the Pasadena Facility would be sold or otherwise disposed of before the end of its previously estimated economic useful life. Although the Pasadena Facility was sold, held-for-sale accounting criteria was not met as management did not have the authority to commit to, and did not commit to, a plan of sale as of December 31, 2015. Because there was a likelihood that the Pasadena Facility was to be sold or otherwise disposed of before the end of its previously estimated useful life the Company performed impairment tests in 2015. During 2015, the Company updated forecasts of operating cash flows, assessed indications of interest from potential buyers,

and updated its estimates of the probabilities of each scenario for the Pasadena Facility. Based on the results of the impairment tests, management concluded the Pasadena Facility’s carrying value was no longer recoverable and wrote the associated assets down by $160.6 million to their estimated fair values in 2015. The impairments reduced property, plant and equipment by $140.1 million and intangible assets, consisting of technology acquired in the acquisition of the Pasadena Facility, by $20.5 million. Fair value was based on probability weighting various cash flow scenarios using Level 3 inputs, under the applicable accounting guidance. The cash flow scenarios were based on market participant assumptions and indications of value from potential buyers of the Pasadena Facility.

During the year ended December 31, 2015, RNP received a one-time easement payment of $1.4 million to allow an adjacent property owner to construct some pipelines under the Pasadena Facility.

During the year ended December 31, 2015, Fulghum recorded impairments totaling $11.3 million, approximately 6.0% of total assets at December 31, 2015.

One of Fulghum’s customers is undergoing a conversion at its facility that will result in lower wood fibre consumption than expected. As a result, the Company performed an impairment test. Based on the results of the impairment test, management concluded the mill’s carrying value was no longer recoverable and wrote the associated assets down by $6.9 million to their estimated fair values in 2015.

During 2015, customers of two of Fulghum’s mills exercised their contractual rights, under their respective processing agreements, to purchase those mills. One of the sales occurred in 2015, and the other sale is expected to occur in 2016. Fulghum will continue to operate one of the mills under a continuing operating services agreement. The customer will be taking over operations of the other mill. The purchase option price of Fulghum’s facilities was below their carrying value resulting in a write down of $4.4 million, which was recorded as of December 31, 2015. As of December 31, 2015, the Company classified the mill, which is scheduled to be sold in the second quarter of 2016, as property held for sale on its consolidated balance sheet.

The Company’s wood pellet facility in Atikokan, Ontario, Canada (the “Atikokan Facility”), which is expected to produce 110,000 metric tons of wood pellets annually, is in the ramp-up phase. During ramp-up of the Atikokan Facility, the Company discovered the need to modify the plant’s truck dump hopper and modify or replace a portion of the plant’s conveyance systems. All of the truck dump hopper modifications have been completed, and the truck dump hopper is performing as expected. The first group of the faulty conveyors at the Atikokan Facility was replaced at the end of 2015 and the conveyors’ performance is currently being evaluated as part of the plant’s operations. The remaining work to address problems with the Atikokan Facility conveyor systems is expected to continue through mid-2016. The Atikokan Facility is expected to reach full capacity this year after the conveyor work is completed barring any other possible unforeseen issues that may arise during the ramp-up phase.

The Company’s wood pellet facility in Wawa, Ontario, Canada (the “Wawa Facility”) is designed to produce 450,000 metric tons of wood pellets annually. All of the equipment at the Wawa Facility has been commissioned and the plant has been producing an increasing quantity of wood pellets. However, the Company discovered during the ramp-up of the Wawa Facility the need to modify the front-end system of the facility that handles logs and feeds them into the chipping process and to modify or replace a significant portion of the plant’s conveyance systems. The modifications of the front-end system and the first phase of modifications of the plant’s conveyance systems were completed in late 2015. The remaining work to the conveyor systems is scheduled to be completed by mid-2016. In light of the setbacks the Company has experienced at the Wawa Facility, it is evaluating the production capacity of the plant. The Company is investigating whether there are potential design shortcomings similar to those that surfaced with the plant’s wood infeed and conveyance systems that might limit capacity. The Company is also evaluating uptime and operating efficiency rates achievable for full capacity. The Company’s discussions with other pellet producers and engineering firms over the past year have shown that there is a wide disparity of these rates across established industrial pellet manufacturing plants in North America. The Company believes it is premature to revise the capacity of the Wawa Facility until such time that it has fully tested the design assumptions of the major processes of the plant, remediated all of the material handling issues, and completed the ramp-up of the facility. However, if the Company applies a range of assumed operating efficiencies typical for the industry, the plant’s annual production capacity would be between 400,000 and 450,000 metric tons. The low end of this capacity range would still allow the Company to fulfill its annual contractual obligations to Drax and to generate positive cash flow. We have also observed that historically within the wood pellet industry that ramping up to full design capacities takes considerable time, several years in most cases. Taking into account the amount of time required to complete the repair and modification of the conveyance systems and to ramp up to design operating efficiency rates as historically observed in the wood pellet industry, the Company doesn’t expect the Wawa Facility to reach full capacity until 2017. At December 31, 2015, remaining cash expenditures to complete the Atikokan and Wawa Facilities are expected to be approximately $21 million.

The Company expects that the proceeds from the Merger and debt exchange, together with cash on hand, will be sufficient to fund the Atikokan and Wawa Projects until they have been commissioned and later begin to generate positive cash flow.

During 2015, the Company experienced significant cost overruns and delays in completing the Wawa Facility. The Company is currently in the process of replacing and upgrading a substantial portion of the material handling and processing equipment at this facility. The replacement and upgrade activities have caused delays in producing wood pellets in quantities necessary to satisfy contractual obligations with Drax and Canadian National Railway Company, which resulted in cash penalties. In addition, during the fourth, quarter as the plant was ramping up production, the Company identified certain constraints that indicated the facility’s maximum capacity was potentially lower than originally estimated. Given the significant cost overruns and our evaluation of potential production capacity for the Wawa Facility, management determined that indicators of impairment existed as of December 31, 2015 and performed a long-lived asset recoverability test. Based on the results of the impairment test, management concluded the Wawa Facility’s carrying value was recoverable and no impairment charge was recorded. However, the forecasts of operating cash flows used in the impairment test was based upon numerous factors and assumptions including estimates of future prices of crude oil, foreign exchange rates and inflation levels. A variation in any one factor or assumption could cause a different result, which could require an impairment charge. Assumptions used in the forecasts were based on production capacity between 400,000 and 450,000 metric tons. Based on economic factors today, if production were to permanently remain below the lower end of this range, there would be a material impairment unless the Company was able to renegotiate contracts with Drax and Canadian National Railway Company.

Pursuant to the Port Agreement, as defined in “Note 15 — Debt”, Quebec Stevedoring Company Limited (“Quebec Stevedoring”) built handling equipment and 75,000 metric tons of wood pellet storage exclusively for the Company’s use at the Port of Quebec, with the same amount becoming a financing obligation for the Company.

The construction in progress balance at December 31, 2015 includes $0.7 million of capitalized interest cost and $6.3 million at December 31, 2014.

The goodwill resulting from the Agrifos Acquisition, the NEWP Acquisition and the Allegheny Acquisition is amortizable for tax purposes, while the goodwill from the Fulghum Acquisition is not amortizable for tax purposes.

At December 31, 2015 and 2014, the Company had accumulated goodwill impairment charges of $57.2 million related to the Pasadena Facility.

In 2015, the Company changed its annual goodwill testing date from October 1 to July 1. The Company believes this change in the method of applying an accounting principle is preferable, as it will more closely align the impairment testing date with the most current information from our budgeting and strategic planning process as well as alleviate the information and resource constraints that historically existed during the fourth quarter. This change in annual testing date does not delay, accelerate, or avoid an impairment charge.

The Company tests goodwill assets for impairment annually, or more often if an event or circumstances indicate an impairment may have occurred. Between annual goodwill impairment tests, the Company qualitatively assesses whether or not it is necessary to

perform the two-step goodwill impairment test for each reporting unit. If based on the results of its qualitative assessment, it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then the two-step goodwill impairment test is not required.

Management considered the inventory impairments, negative gross margins and negative EBITDA, in 2014 and 2013, as well as revised cash flow projections, all taken together, as indicators that a potential impairment of the goodwill related to the Pasadena Facility may have occurred. Factors that affect cash flow include, but are not limited to: product prices; product sales volumes; feedstock prices, labor, maintenance, and other operating costs; required capital expenditures; and plant productivity.

Cash flow projections decreased primarily because of a decline in forecasted product margins. The reduction of prices in the forecast was the result of an evaluation of many factors, including deterioration in reported margins. A global decline in nitrogen prices, along with higher exports of ammonium sulfate from China, put downward pressure on ammonium sulfate prices. The additional supplies from China originate from new plants that produce ammonium sulfate as a by-product of manufacturing caprolactam. Raw material prices for ammonia and sulfur, key inputs for ammonium sulfate, had increased significantly during 2014. Global ammonia supplies were tight, supported by production issues in Egypt, Algeria, Trinidad and Qatar, as well as political unrest in Libya and Ukraine.

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 reporting unit was based upon various assumptions and was based primarily on the discounted cash flows that the business could be expected to generate in the future (the “Income Approach”). The Income Approach valuation method required management to make projections of revenue and 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. The Company also considered other valuation methods including the replacement cost and market approach. Based upon its analysis of the fair value of the Pasadena reporting unit, the Company believed it was probable that the Pasadena reporting unit had a carrying value in excess of its fair value in 2014 and 2013. The inputs utilized in the analyses were classified as Level 3 inputs within the fair value hierarchy as defined in accounting guidance.

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. The estimated difference between the fair value of the entire reporting unit as determined in step one and the net fair value of all identifiable assets and liabilities represents the implied fair value of goodwill. The valuation of assets and liabilities in step two is performed only for purposes of assessing goodwill for impairment and the Company did not adjust the net book value of the assets and liabilities on its consolidated balance sheets other than goodwill as a result of this process. Completion of step two of the goodwill impairment test indicated a $27.2 million residual value at December 31, 2013 and no remaining residual value of goodwill at December 31, 2014. This resulted in the Company recording impairment charges of $27.2 million and $30.0 million during the years ended December 31, 2014 and 2013, respectively, which was primarily the result of a decrease in the implied fair value of the Pasadena reporting unit. A deterioration in projected cash flows and an increase in the rate used to discount such cash flows contributed to the decreases in 2014 and 2013. In addition, the implied residual value of goodwill decreased because of an increase in the amount of invested capital at the Pasadena Facility, which primarily was the result of capital expenditures for the power generation project and expenditures to replace the sulfuric acid converter. The Company also considered the realizability of long-lived assets and intangible assets at December 31, 2014 and noted that no impairment of such assets was required.

The Company’s borrowings at December 31, 2015 and 2014 are summarized below. Debt premium, discount and issuance expenses incurred in connection with financing are deferred and amortized on a straight line basis.

In connection with the Drax Contract (as defined in Note 16 — Commitments and Contingencies), in April 2013, the Company and 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 built handling equipment and 75,000 metric tons of wood pellet storage exclusively for the Company’s use at the port, a portion of the cost of which became a debt obligation for the Company (the “QS Construction Facility”). In accordance with generally accepted accounting principles in the United States of America (“GAAP”), the Company is considered the owner of the Quebec Port project and has accordingly recorded the total amount of the project cost in

property, plant and equipment and a corresponding amount as project financing in debt. Under the Port Agreement, the Company’s original debt obligation was limited to $16.1 million, subject to approved change orders. In April 2014, Quebec Stevedoring submitted change orders to the Company for $2.3 million over the original cost for the project, which in 2015 the Company agreed to pay. Including the change orders, the Company’s current debt obligation is $13.7 million at December 31, 2015 out of the $19.9 million of debt recorded under the QS Construction Facility. The Company is not obligated to pay Quebec Stevedoring the difference of $6.2 million under the terms of the Port Agreement.

As of December 31, 2015, Fulghum’s outstanding 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 2016 through 2028. Amount of debt outstanding with financial institutions located in the United States was $31.7 million and $16.4 million with financial institutions located in South America. The weighted average interest rate on the debt was 5.9%. Cash can be distributed to Rentech from Fulghum to the extent that such distributions are permitted in Fulghum’s debt agreements.

On September 23, 2013, RNHI obtained a $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, (“Credit Suisse”) as administrative agent and each other lender from time to time party thereto. On September 24, 2013, the Company borrowed $50.0 million under the facility. On April 9, 2014, the Company paid off the outstanding balance under the facility with proceeds from the GSO Credit Agreement and terminated the RNHI Credit Agreement.

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

On April 8, 2014, the BMO Credit Agreement was amended to increase the amount available under the revolving credit facility from $3.0 million to $10.0 million.

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 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 BMO Credit Agreement will terminate on November 25, 2017. At December 31, 2015, letters of credit had been issued, but not drawn upon, totaling $4.1 million, and $7.1 million had been issued, but not drawn upon, at December 31, 2014.

On April 9, 2014, RNHI (the “Borrower”), entered into a Term Loan Credit Agreement (the “GSO Credit Agreement”) among the Borrower, certain funds managed by or affiliated with GSO Capital Partners LP (“GSO Capital”, a related party), as lenders, Credit Suisse AG, Cayman Islands Branch (“Credit Suisse”), as administrative agent and each lender from time to time party thereto. The Company used the borrowings from the facility to fund the acquisition and development of its wood fibre business, which consists of its wood chipping and wood pellet businesses, and for general corporate purposes

The facility originally consisted of a $50.0 million term loan, with a five-year maturity. The obligations of the Borrower under the facility are unconditionally guaranteed by the Company and are secured by common units of RNP owned by the Borrower. The term loan facility was subject to a 2.00% original issue discount.

On February 12, 2015, the Company entered into the Amended and Restated Term Loan Credit Agreement among RNHI, GSO Capital, and Credit Suisse, as administrative agent (the “A&R GSO Credit Agreement”). The A&R GSO Credit Agreement consists of three tranches of term loans, all of which mature on April 9, 2019: (i) a $50 million term loan originally drawn on April 16, 2014 (“Tranche A Loans”), (ii) an up to $45 million delayed draw term loan facility (“Tranche B Loans”) and (iii) an up to $18 million delayed draw term loan facility, which expired (“Tranche C Loans,” and together with the Tranche A Loans and the Tranche B Loans, the “Loans” ). During 2015, the Company drew the entire amount of Tranche B Loans, which were used to fund the development of its wood pellet projects in Ontario, Canada.

Tranche A Loans under the A&R GSO Credit Agreement bear interest at a rate equal to the greater of (i) LIBOR plus 7.00% and (ii) 8.00% per annum. Tranche B Loans under the A&R GSO Credit Agreement bear interest at a rate equal to the greater of (i) LIBOR plus 9.00% and (ii) 10.00% per annum.

The Borrower’s obligations under the A&R GSO Credit Agreement are guaranteed by the Company and the Company’s direct and indirect subsidiaries other than RNP, the subsidiaries of RNP and certain other excluded subsidiaries (such subsidiaries guaranteeing obligations under the A&R GSO Credit Agreement, the “Subsidiary Guarantors,” and together with the Company and the Borrower, the “Loan Parties”). The obligations under the A&R GSO Credit Agreement and the guarantees are secured by a lien on substantially all of the Loan Parties’ tangible and intangible property, and by a pledge of all of the shares of stock and limited liability company interests owned by the Loan Parties, of which the Loan Parties now own or later acquire more than a 50% interest, subject to certain exceptions.

The obligations of the Borrower under the A&R GSO Credit Agreement are also secured by 10,682,246 common units of RNP owned by the Borrower. The Loans are subject to a 2.00% original issue discount at the time of a draw.

The A&R GSO Credit Agreement allows for dividends to be paid to the Company’s shareholders as long as there is no event of default and consent is given by GSO Capital. On March 11, 2016, the Company and RNHI, entered into a First Amendment to Loan Documents (the “First Amendment”), among RNHI, as borrower, the Company, as parent guarantor, certain funds (the “GSO Funds”) managed by or affiliated with GSO Capital, as lenders (the “Lenders”) and Credit Suisse, as administrative agent (the “Agent”). The First Amendment provides, among other items, the following:

As of December 31, 2015, NEWP’s outstanding debt of $16.3 million had a weighted average interest rate of 4.1%, including the Allegheny debt described below. The debt consists primarily of the Allegheny debt, term loans, bonds and a revolving credit facility with various financial institutions, and such debt is collateralized by the assets of NEWP. The debt has maturity dates ranging from 2016 through 2021.

On January 23, 2015, and in conjunction with the Allegheny Acquisition, NEWP entered into a five-year, $8.0 million term loan, which amortizes as if it had a seven-year maturity, with the unamortized balance due at maturity. The term loan has an interest rate of LIBOR plus 2.25%.

Cash can be distributed to Rentech from NEWP to the extent that such distributions are permitted in NEWP’s debt agreements.

As of December 31, 2015, the Company was in compliance with its debt covenants. Total debt, excluding discontinued operations, consisted of the following:

The payoff of the RNHI Revolving Loan resulted in a loss on debt extinguishment of $0.9 million for the year ended December 31, 2014.

Cash can be distributed to us from our subsidiaries to the extent that such distribution would not cause the subsidiary to be in violation of any financial covenants in its debt arrangements, and as permitted in our debt documents.

In connection with the Merger Agreement, RNHI, the Company and certain of its other subsidiaries entered into a Waiver and Amendment of Certain Loan and Equity Documents, dated as of August 9, 2015 (the “Waiver”). In connection with the First Amendment, the Company and certain of its subsidiaries entered into an Amendment to Waiver Letter (the “Waiver Amendment”), which amends the Waiver. The Waiver Amendment covers (i) the A&R GSO Credit Agreement, (ii) that certain Amended and Restated Guaranty Agreement, dated as of February 12, 2015 (as amended or modified to date, the “Guaranty”), by and among the Company and certain of its subsidiaries in favor of Credit Suisse and (iii) that certain Subscription Agreement, dated as of April 9, 2014 (as amended or modified to date, the “Subscription Agreement”), by and among the Company, the Purchasers identified therein and the Purchaser’s Representative identified therein.

Agreement, solely to the extent they restrict or prohibit the Company, RNHI, RNP, and Rentech Nitrogen GP, LLC’s ability to fulfill its obligations under the Merger Agreement and related documents. The Waiver Amendment also attaches drafts of a second amended and restated credit agreement (“Second A&R Credit Agreement”), second amended and restated guaranty and a preferred equity exchange and discharge agreement (the “Exchange Agreement”) relating to the Series E Convertible Preferred Stock of the Company, each of which would be entered into at the closing under the Merger Agreement.

The Second A&R Credit Agreement and the Exchange Agreement provides for, among other items, the following:

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 on April 15 and October 15 of each year. 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 a credit agreement entered into in October 2012 (“the 2012 RNP 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 payoff of the 2012 RNP Credit Agreement resulted in a loss on debt extinguishment, for the year ended December 31, 2013, of $6.0 million.

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, 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.

On April 12, 2013, RNP and Finance Corporation (collectively the “Borrowers”) entered into a new credit agreement (the “RNP Credit Agreement”) with various lenders. The RNP Credit Agreement consisted of a $35.0 million senior secured revolving credit facility (the “RNP Credit Facility”). The RNP Credit Agreement was terminated on July 22, 2014 and replaced with the GE Credit Agreement (as defined below). The termination of the RNP Credit Agreement resulted in a loss on debt extinguishment of $0.6 million for the year ended December 31, 2014.

On July 22, 2014, RNP replaced the RNP Credit Agreement by entering into a new credit agreement (the “GE Credit Agreement”) by and among RNP and Finance Corporation as borrowers (the “GE Borrowers”), certain subsidiaries of RNP, as guarantors, General Electric Capital Corporation, for itself as agent for the lenders party thereto, the other financial institutions party thereto, and GE Capital Markets, Inc., as sole lead arranger and bookrunner.

The GE Credit Agreement consists of a $50.0 million senior secured revolving credit facility (the “GE Credit Facility”) with a $10.0 million letter of credit sublimit. RNP expects that the GE Credit Agreement will be used to fund growth projects, working capital needs, letters of credit and for other general partnership purposes.

Borrowings under the GE Credit Agreement bear interest at a rate equal to an applicable margin plus, at the GE 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 one month 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. The applicable margin for borrowings under the GE Credit Agreement is 2.25% with respect to base rate borrowings and 3.25% with respect to LIBOR borrowings.

The GE Borrowers are required to pay a fee to the lenders under the GE Credit Agreement on the average undrawn available portion of the GE Credit Facility at a rate equal to 0.50% per annum. If letters of credit are issued, the GE Borrowers will also pay a fee to the lenders under the GE 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. The GE Borrowers are also required to pay customary letter of credit fees on issued letters of credit. In the event the GE Borrowers reduce or terminate the commitments under the GE Credit Facility on or prior to the 18-month anniversary of the closing date, the GE Borrowers shall pay a prepayment fee equal to 1.0% of the amount of the commitment reduction.

The GE Credit Agreement terminates on July 22, 2019. The GE Borrowers may voluntarily prepay their utilization and/or permanently cancel all or part of the available commitments under the GE Credit Agreement in minimum increments of $5.0 million (subject to the prepayment fee described above). Amounts repaid may be reborrowed. Borrowings under the GE 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.

RNLLC, RNPLLC and Rentech Nitrogen Pasadena Holdings, LLC guarantee the GE Credit Agreement. The obligations under the GE Credit Agreement and the subsidiary guarantees thereof are secured by the same collateral securing the RNP Notes, which includes substantially all the assets of RNP and 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 GE 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.

As of December 31, 2015, the Company had $34.5 million outstanding borrowings under the GE Credit Agreement. As of December 31, 2014, the Company had $15.0 million outstanding borrowings under the GE Credit Agreement. At December 31, 2015, a letter of credit had been issued, but not drawn upon, in the amount of $1.4 million.

As of December 31, 2015, the Company was in compliance with its debt covenants. Total debt for discontinued operations consisted of the following:

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

The Company’s policy and practice are to enter into fixed-price forward purchase contracts for natural gas in conjunction with contracted nitrogen fertilizer 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 reduce monthly and seasonal natural gas price volatility. The Company occasionally enters into index-price contracts for the purchase of natural gas. The Company has entered into multiple natural gas forward purchase contracts for various delivery dates through May 31, 2016. Commitments for natural gas purchases consist of the following:

As of December 31, 2015, deposits against these forward gas contracts were $0.6 million. During January and February 2016, the Company entered into additional fixed-quantity forward purchase contracts at fixed and indexed prices for various delivery dates through February 29, 2016. The total MMBtus associated with these additional forward purchase contracts are 0.7 million and the total amount of the purchase commitments is $1.5 million, resulting in a weighted average rate per MMBtu of $2.20 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.

The Company has various operating leases of real and personal property which expire through September 2029. Total lease expense, including month-to-month rent, common area maintenance charges and other rent related fees, for the year ended December 31, 2015 was $6.8 million, $6.4 million for the year ended December 31, 2014 and $2.0 million for the year ended December 31, 2013.

Future minimum lease payments, including the East Dubuque Facility (discontinued operations), as of December 31, 2015 are as follows (in thousands):

On May 1, 2013, Rentech’s subsidiary that owns the Wawa Facility entered into a ten-year take-or-pay contract (the “Drax Contract”) with Drax Power Limited (“Drax”). Under the Drax Contract, such subsidiary is required to sell to Drax the first 400,000 metric tons of wood pellets per year produced from the Wawa Facility. In the event that it does not deliver wood pellets as required under the Drax Contract, the Rentech subsidiary that owns the Wawa Facility is required to pay Drax an amount equal to the positive difference, if any, 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.

The Drax Contract has been amended twice in order to adjust required delivery schedules to reflect expected delays in production at the Wawa Facility. The amendments resulted in certain penalties under the contract, including cash payments, credits on deliveries in early 2016, and additional commitments for volumes in 2018 and 2019 at pricing levels contracted for 2015, which would be lower than prices for 2018-19 in the original contract. The August Amendment, described below, supersedes certain portions of the February Amendment.

On February 25, 2015, the Company entered into an amendment (the “February Amendment”) to the Drax Contract. The February Amendment canceled all wood pellet deliveries in 2014 and reduced to 240,000 metric tons the volume of wood pellets required to be delivered to Drax in 2015. In exchange for the canceled 2014 deliveries and reduced volume commitments in 2015, the Company paid Drax a penalty of approximately $0.2 million in cash, and agreed to provide price reductions totaling approximately $0.9 million on pellet shipments then expected to be made to Drax in 2015 (the “February Price Reduction”). The February Amendment also delayed the required delivery of 72,000 metric tons previously scheduled for 2015 into 2018 and 2019 but at 2015 pellet prices, which equated to a discount of approximately $0.9 million on the aggregate price of such deliveries.

In August 2015, the Company entered into a subsequent amendment (the “August Amendment”) to the Drax Contract. Under the August Amendment, the Company canceled all 2015 wood pellet deliveries and agreed to a total penalty, which encompasses all amendments relating to 2015 shipments to date, of $2.6 million associated with costs for Drax to purchase replacement pellets and to cancel shipping commitments. In 2015, the Company accrued the $2.6 million penalty in operating expenses. The penalty will be paid in the form of credits on the first several expected deliveries to Drax in early 2016. In addition, 72,000 metric tons of the original 2015 pellet deliveries are being pushed to 2018 and 2019 at 2015 pricing, which is expected to be lower than pricing in those future years under the original terms of the contract.

Rentech’s subsidiary that owns the Atikokan Facility entered into a ten-year take-or-pay contract (the “OPG Contract”) with Ontario Power Generation (“OPG”) under which such subsidiary is required to deliver 45,000 metric tons of wood pellets annually. OPG has the option to increase required delivery of wood pellets from the Atikokan Facility to up to 90,000 metric tons annually.

A Rentech subsidiary has contracted with Canadian National Railway Company (the “Canadian National Contract”) for all rail transportation of wood pellets from the Atikokan Facility and the Wawa Facility to the Port of Quebec. The Atikokan Facility is located 1,300 track miles and the Wawa Facility is located 1,100 track miles from the Port of Quebec. Under the Canadian National Contract, such subsidiary has committed to transport a minimum of 3,600 rail carloads annually for the duration of the long-term contract. Delivery shortfalls would result in a penalty of $1,000 per rail car. Due to issues discovered at the Wawa Facility, the Company did not fully meet its 2015 commitment under the Canadian National Contract. The resulting cash penalties are expected to be approximately $3.3 million.

The Company is party to litigation from time to time in the normal course of business. The Company accrues liabilities related to litigation only when it concludes that it is probable that it will incur costs related to such litigation, 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. The outcome of the Company’s current material litigation 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’s financial statements.

On August 29, 2015, Mike Mustard, a purported unitholder of RNP, filed a class action complaint on behalf of the public unitholders of RNP against RNP, Rentech Nitrogen GP, LLC (the “General Partner”), RNHI, Rentech, CVR Partners, DSHC, LLC, Lux Merger Sub 1 LLC (“Merger Sub 1”) and Lux Merger Sub 2 LLC (“Merger Sub 2”), and the members of the General Partner’s Board, in the Court of Chancery of the State of Delaware (the “Mustard Lawsuit”). On October 6, 2015, Jesse Sloan, a purported unitholder of RNP, filed a class action complaint on behalf of the public unitholders of RNP against RNP, the General Partner, CVR Partners, Merger Sub 1, Merger Sub 2 and members of the General Partner’s Board in the U.S. District Court for the Northern District of California (the “Sloan Lawsuit” and together with the Mustard Lawsuit, the “Lawsuits”).

The Lawsuits allege, among other things, that the consideration offered by CVR Partners is unfair and inadequate and that, by pursuing the proposed transaction with CVR Partners, RNP’s directors have breached their contractual and fiduciary duties to RNP’s unitholders. The Lawsuits also allege that the non-director defendants aided and abetted the director defendants in their purported breach of contractual and fiduciary duties. Furthermore, the Sloan Lawsuit alleges that the registration statement filed with the SEC with respect to the transaction fails to disclose material information leading up to the Merger, fails to disclose or contains misleading disclosures concerning Morgan Stanley & Co. LLC’s financial analyses and fails to disclose or contains misleading disclosure concerning financial projections. The Lawsuits seek to enjoin the Merger.

On February 1, 2016, plaintiffs and defendants entered into a memorandum of understanding (“MOU”) providing for the proposed settlement of the lawsuits. While the defendants believe that no supplemental disclosure is required under applicable laws, in order to avoid the burden and expense of further litigation, they have agreed, pursuant to the terms of the MOU, to make certain supplemental disclosures related to the proposed mergers, all of which were disclosed in a Form 8-K filed by RNP with the SEC on February 2, 2016. The MOU contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval following notice to RNP’s unitholders. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which the United States District Court for the Central District of California (the “Court”) will consider the fairness, reasonableness and adequacy of the proposed settlement. If the proposed settlement is finally approved by the Court, it will resolve and release all claims by unitholders of RNP challenging any aspect of the proposed mergers, the merger agreement and any disclosure made in connection therewith, including in the definitive proxy statement, pursuant to terms that will be disclosed to such unitholders prior to final approval of the proposed settlement. In addition, in connection with the proposed settlement, the parties contemplate that plaintiffs’ counsel will file a petition in the Court for an award of attorneys’ fees and expenses to be paid by RNP or its successor. The proposed settlement is also contingent upon, among other things, the mergers becoming effective under Delaware law. There can be no assurance that the Court will approve the proposed settlement contemplated by the MOU. In the event that the proposed settlement is not approved and such conditions are not satisfied, the defendants will continue to vigorously defend against the allegations in the lawsuits.

In June of 2015, RDR Industrial Contractors, Inc. (“RDR”) recorded liens against both the Atikokan Facility and Wawa Facility. RDR performed work at both of the facilities as a subcontractor to Agrirecycle, Inc. (“Agrirecycle”) and asserted that Agrirecycle had failed to pay RDR according to the terms of its subcontract. In September of 2015, EAD Control Systems, Inc. (“EAD Controls”) similarly filed liens against both pellet facilities alleging Agrirecycle’s failure to pay EAD Controls for work performed at both facilities as a subcontractor to Agrirecycle. In October of 2015, Agrirecycle filed liens against both facilities asserting that (i) it had not been paid for services performed as subcontractor for EAD Engineering, Inc. (“EAD Engineering”) and (ii) it had not been paid for work performed under direct contracts with certain wholly owned subsidiaries of the Company (the “RTK Parties”).

In order to perfect their liens, RDR, EAD Controls and Agrirecycle commenced separate causes of action in Ontario Superior Court naming the RTK Parties and the Company as defendants and seeking to recover over $4.9 million in the aggregate. Of this amount, approximately $2.7 million is attributable to claims for amounts allegedly due under contracts with the RTK Parties, whereas the remainder is attributable to amounts claimed by subcontractors against our direct contractors.

In December of 2015 and January of 2016, the RTK Parties filed statements of defense denying the allegations set forth by RDR, EAD Controls and Agrirecycle and seeking over $37.8 million in the aggregate by way of counterclaims and cross-claims against EAD Engineering, EAD Controls, Agrirecycle and RDR for damages incurred due to defective engineering, design, equipment supply and construction at our pellet facilities, including the cost to remedy and replace defective work as well as penalties, schedule delays and lost profits. The Company will continue to vigorously defend itself against the allegations made by EAD Controls, Agrirecycle and RDR and vigorously pursue recovery from EAD Engineering, EAD Controls, Agrirecycle and RDR. Given that this litigation is in the pleadings stage and discovery has yet to begin, the Company does not have an estimate of the likelihood or the amount of any judgments which may be rendered either in favor of or against it or the RTK Parties.

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, which it did. The cost of the project required by the settlement agreement was $0.4 million.

The Company negotiated a settlement agreement with Region 6 of the Environmental Protection Agency relating to an ammonia release that occurred at the Pasadena Facility on April 20, 2014. The penalty required by the settlement agreement was $0.1 million.

The Environmental Protection Agency reached a consent agreement and final order (“CAFO”) with ExxonMobil in September 2010 making ExxonMobil responsible for closure of the stacks, proper disposal of process wastewater related to the stacks and other expenses. In addition, the asset purchase agreement between a subsidiary of Agrifos and ExxonMobil, or the 1998 APA, pursuant to which the subsidiary purchased the Pasadena Facility in 1998, also makes ExxonMobil liable for closure and post-closure care of the stacks, with certain limitations relating to use of the stacks after the date of the agreement, including the limitations that remediation and demolition debris not be deposited on “stack 1” and that any naturally occurring radioactive material (“NORM”), deposited on stack 1 not be commingled with NORM deposited by ExxonMobil and be removed prior to closure of stack 1. Although ExxonMobil has expended significant funds and resources relating to the closures, we cannot assure you that ExxonMobil will remain able and willing to complete closure and post-closure care of the stacks in the future, including as a result of actions taken by Agrifos prior to the closing of the Agrifos Acquisition (such as if Agrifos deposited remediation or demolition debris on stack 1, or commingled its NORM with ExxonMobil’s NORM on stack 1). As of January 2016, ExxonMobil estimated that its total outstanding costs associated with the closures and long-term maintenance, monitoring and care of the stacks will be $51.2 million over the next 50 years. However, the actual amount of such costs could be in excess of this amount.

As discussed above, the costs of closure and post-closure care of the stacks will be substantial. If RNP becomes financially responsible for the costs of closure of the stacks, this would have a material adverse effect on its business and cash flow.

In addition, the soil and groundwater at the Pasadena Facility is pervasively contaminated. The facility has produced fertilizer since as early as the 1940s, and a large number of spills and releases have occurred at the facility, many of which involved hazardous substances. Furthermore, naturally occurring and other radioactive contaminants have been discovered at the facility in the past, and asbestos-containing materials currently exist at the facility. In the past there have been numerous instances of weather events which have resulted in flooding and releases of hazardous substances from the facility. RNP cannot assure you that past environmental investigations at the facility were complete, and there may be other contaminants at the facility that have not been detected.

Contamination at the Pasadena Facility has the potential to result in toxic tort, property damage, personal injury and natural resources damages claims or other lawsuits. Further, regulators may require investigation and remediation at the facility in the future at significant expense.

ExxonMobil submitted Affected Property Assessment Reports, or APARs, under the Texas Risk Reduction Program to the Texas Commission on Environmental Quality, or the TCEQ, beginning in 2011 for the plant site and phosphogypsum stacks at the Pasadena Facility. The APARs identify instances in which various regulatory limits for numerous hazardous materials in both the soil and groundwater at the plant site and in the vicinity of the stacks have been exceeded. TCEQ is requiring ExxonMobil to perform significant additional investigative work as part of the APAR process. The TCEQ may also require further remediation of the contamination at the Pasadena Facility. The TCEQ or other regulatory agencies may hold us responsible for certain of the contamination at the Pasadena Facility or ExxonMobil may seek indemnification from the Pasadena Facility for contamination they believe was caused by our operations.

In the past, governmental authorities have alleged or determined that the Pasadena Facility has been in substantial noncompliance with environmental laws and the Pasadena Facility has been the subject of numerous regulatory enforcement actions. The facility has also been subject to a number of past or current governmental enforcement actions, consent agreements, orders, and lawsuits, including, as examples, actions concerning the closure of the phosphogypsum stacks at the facility, the release of process water and wastewater, emissions of oxides of sulfuric acid mist, releases of ammonia and other hazardous substances, various alleged Clean Water Act and Resource Conservation and Recovery Act violations, the potential for off-site contamination, and other matters. In the future, RNP may be required to expend significant funds to attain or maintain compliance with environmental laws. Regulatory findings of noncompliance could trigger sanctions, including monetary penalties, require installation of control or other equipment or other modifications, adverse permit modifications, the forced curtailment or termination of operations or other adverse impacts.

The costs RNP may incur in connection with the matters described above are not reasonably estimable and could be material. Subject to the terms and conditions of the 1998 APA, RNP is entitled to indemnification from ExxonMobil for certain losses relating to environmental matters relating to the facility and arising out of conditions present prior to our acquisition of the facility. However, RNP’s right to indemnification under this agreement is subject to important limitations, and it cannot assure you it will be able to obtain payment from ExxonMobil on a timely basis, or at all. Depending on the amount of the costs RNP may incur for such matters in a given period, this could have a material adverse effect on the results of its business and cash flow.

RNP believes it is remote that ExxonMobil will not be able to meet its obligations under the 1998 APA and, therefore, it has not recorded any liabilities associated with these environmental issues.

In 2014, the Board of Assessment Appeals State of Colorado determined that Adams County owed the Company a property tax refund of $1.2 million related to the 2013 tax year. Adams County appealed to the Colorado Court of Appeals. In 2015, the Company and Adams County reached a settlement agreement whereby Adams County refunded $1.1 million of property taxes to the Company. The Company received the settlement in 2015 and recorded the amount in income from discontinued operations.

The costs to abandon a pipeline that the Company owns in Natchez, Mississippi, was $0.7 million. Almost all these costs were recorded in discontinued operations during the year ended December 31, 2014, but were incurred in 2015 to complete the abandonment process. The Company is entitled to reimbursement from the buyer of its property in Natchez for its costs relating to the pipeline abandonment. The Company has not recorded the receivable related to the reimbursement of abandonment costs as it represents a gain contingency.

On August 20, 2015, every ten shares of issued and outstanding Common Stock were automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share of Common Stock.

The Reverse Split affected all issued and outstanding shares of Common Stock, as well as Common Stock underlying stock options, restricted stock units, warrants and preferred stock outstanding immediately prior to the effectiveness of the Reverse Split. The Reverse Split reduced the total number of shares of Common Stock outstanding from approximately 230 million to approximately 23 million. Concurrent with the Reverse Split, the number of authorized shares of Common Stock was reduced from 450 million to 45 million. Since the par value per share of Common Stock did not change, Common Stock was reduced by approximately $2.1 million with a corresponding increase of $2.1 million to additional paid-in capital.

No fractional shares were issued in connection with the Reverse Split. Any fractional share of Common Stock that resulted from the Reverse Split was converted into a cash payment equal to such fraction multiplied by the closing trading price of Common Stock on August 19, 2015, the last trading day immediately preceding the effective date of the Reverse Split.

In 2014, the Company entered into the Subscription Agreement (the “Subscription Agreement”) with funds managed by or affiliated with GSO Capital (the “Series E Purchasers”), pursuant to which the Company sold 100,000 shares of its Series E Convertible Preferred Stock (the “2014 Preferred Stock” or “Series E Convertible Preferred Stock”) to the Series E Purchasers. The shares have an aggregate original issue price of $100.0 million and were purchased for an aggregate purchase price of $98.0 million (reflecting an issuance discount of 2%). Dividends on the 2014 Preferred Stock accrue and are cumulative, whether or not declared by the Board of Directors of the Company (the “Board”), at the rate of 4.5% per annum on the sum of the original issue price plus all unpaid accrued and accumulated dividends thereon. The 2014 Preferred Stock is convertible into up to 4,504,505 shares of Rentech’s common stock (“Common Stock”) at a conversion price of $22.20 per share, subject to adjustment. In certain circumstances, the 2014 Preferred Stock is redeemable by the Series E Purchasers for a price equal to the original issue price plus all accrued and unpaid dividends (including dividends accruing from the last dividend payment date).

In 2014, a newly formed wholly owned subsidiary of the Company, DSHC, LLC (“DSHC”), and each of the Series E Purchasers entered into a Put Option Agreement (the “Put Option Agreements”). Under the Put Option Agreements, each Series E Purchaser has the right to cause DSHC to purchase any of the 2014 Preferred Stock for the original issue price plus all accrued and unpaid dividends (including dividends accruing from the last dividend payment date) upon certain put trigger events, including the failure of the Company to redeem the 2014 Preferred Stock when required. All obligations of DSHC under the Put Option Agreements are secured by 5,524,862 common units of RNP owned by DSHC. DSHC is a special purpose entity referred to as a bankruptcy-remote entity whose operations are limited. DSHC is a separate and distinct legal entity from Rentech and its assets are not available to Rentech’s creditors.

The 2014 Preferred Stock is accounted for as mezzanine equity in the consolidated balance sheets. However, dividends are recorded in the consolidated statements of stockholders’ equity and consist of the 4.5% dividend plus the amortization of issuance costs and accretion of discount. Dividends are paid on the first business day of June and December of each year. See Note 15 – Debt, “Proposed Redemption of Preferred Stock and Reduction of Indebtedness.”

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.

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 “Original Plan”).

The Company has accumulated substantial operating losses. By adopting the Original 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 Original 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 NOLs. The Original 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 Original 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”). After adjusting for the effect of the Reverse Split, the number of Rights per share of common stock is ten. 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.

On August 1, 2014, the Company entered into an amendment to the Original Plan (the “Plan Amendment”, and together with the Original Plan, the “Plan”), primarily to extend the final expiration date of the rights contained therein from August 5, 2014 to August 4, 2017. As a result, the Rights will expire, unless earlier redeemed or exchanged by the Company or terminated, on the earliest to occur of: (i) August 5, 2017, 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.

The performance awards granted during the year ended December 31, 2014 vest over a four year period based on the Company’s level of total shareholder return over such period plus the recipient’s continued service with the Company.

The performance awards granted during the year ended December 31, 2013 vest equally over a three-year period from grant date based on the Company’s level of total shareholder return over such period plus the recipient’s continued service with the Company.

All of the time-based awards, which were issued during the years ended December 31, 2015, 2014 and 2013, vest over a three year period subject to the recipient’s continued service with the Company, except for grants to directors that vest in one year.

During the years ended December 31, 2015, 2014 and 2013, the Company issued the following performance shares and restricted stock units:

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. 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 of options vest upon the fulfillment of service conditions and have no performance or market-based vesting conditions. Certain grants of 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 years ended December 31, 2015, 2014 and 2013, charges associated with all equity-based grants were recorded as follows:

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:

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 daily stock price over the last 36 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, 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,
	2015		2015		2014		2015		2014
	(in thousands)
Name of Plan
2005 Stock Option Plan		100		—		21		—		—
2006 Incentive Award Plan:
Stock options		800		53		137		—		—
Restricted stock units and performance share awards				—		—		—		—
2009 Incentive Award Plan:
Stock options		3,922		918		144		899		1,228
Restricted stock units and performance share awards				444		828		—		—
Adjustment for Special Distribution		31		—		—		—		—
		4,853		1,415		1,130		899		1,228
Options not from a plan		110		110		110		—		—
Restricted stock units not from a plan		202		202		202		—		—
		5,165		1,727		1,442		899		1,228

The Company has multiple equity incentive 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 options 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 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 years ended December 31, 2015, 2014 and 2013, charges associated with stock option grants were recorded as follows:

Option transactions during the years ended December 31, 2015, 2014 and 2013 are summarized as follows:

The aggregate intrinsic value was calculated based on the difference between the Company’s stock price on December 31, 2015 and the exercise price of the outstanding shares, multiplied by the number of shares underlying outstanding awards as of December 31, 2015. The total intrinsic values of options exercised during the years ended December 31, 2015, 2014 and 2013 were $0.3 million, $0.4 million and $0.9 million, respectively.

As of December 31, 2015, there was $0.6 million 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 3.0 years.

The following information summarizes stock options outstanding and exercisable at December 31, 2015:

During the years ended December 31, 2015, 2014 and 2013, there was no compensation expense associated with grants of warrants.

Warrant transactions during the years ended December 31, 2015, 2014 and 2013 are summarized as follows:

As of December 31, 2015, 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, 2015:

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 years ended December 31, 2015, 2014 and 2013, the Company issued time-based RSUs to certain employees and directors as long-term incentives. In the years ended December 31, 2014 and 2013, the Company issued performance-based RSUs (or “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. Performance Share Award agreements contain vesting provisions based on performance against certain specific goals. The vesting of all RSUs is contingent on continued service of the grantee through the vesting date. 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 applicable award 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 RSUs will accelerate.

The compensation expense incurred by the Company for time-based 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 2014 Performance Share Awards, the key assumptions used in the Monte Carlo valuation model were an expected volatility of 54.58%, a risk-free rate of interest of 1.38% and a dividend yield of 0.00%. 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 years ended December 31, 2015, 2014 and 2013, charges associated with time-based RSUs and Performance Share Award grants were recorded as follows:

RSU and Performance Share Award transactions during the year ended December 31, 2015, 2014 and 2013 are summarized as follows:

Of the 0.6 million time-based RSUs and Performance Share Awards outstanding at December 31, 2015, 436,000 were granted pursuant to the 2009 Incentive Award Plan and the other 202,000 were not granted pursuant to an equity incentive plan but were “inducement grants.” Of the 1,020,200 time-based RSUs and Performance Share Awards outstanding at December 31, 2014, 818,500 were granted pursuant to the 2009 Incentive Award Plan and the other 201,700 RSUs were not granted pursuant to an equity incentive plan but were “inducement grants.” Of the 1,133,000 RSUs and Performance Share Awards outstanding at December 31, 2013, 132,200 and 999,100 were granted pursuant to the Company’s 2006 Incentive Award Plan and 2009 Incentive Award Plan, respectively. The other 1,700 RSUs were not granted pursuant to an equity incentive plan but were “inducement grants.”

As of December 31, 2015, there was $1.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements from previously granted time-based RSUs and Performance Share Awards. That cost is expected to be recognized over a weighted-average period of 1.6 years.

The grant date fair value of time-based RSUs and Performance Share Awards that vested during the year ended December 31, 2015, 2014 and 2013 was $2.0 million, $4.0 million and $3.9 million, respectively.

During the year ended December 31, 2015, the Company granted a total of 25,920 shares of stock to its directors, which were vested on the grant date and were issued. This resulted in stock-based compensation expense of $0.3 million for the shares granted to the directors. During the year ended December 31, 2014, the Company granted a total of 14,000 shares of stock to its directors, of which 4,000 shares vested at grant date and were issued, and 10,000 shares were vested at grant date but not issued as of December 31, 2014. This resulted in stock-based compensation expense of $351,000 for the shares granted to the directors. During the year ended December 31, 2013, the Company issued a total of 17,840 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.

Some grants under the Rentech Nitrogen Partners, L.P. 2011 Long-Term Incentive Plan (the “2011 LTIP”) are marked-to market at each reporting date. During the years ended December 31, 2015, 2014 and 2013, charges associated with all equity-based grants issued by RNP under the 2011 LTIP were recorded as follows:

Phantom unit transactions during the years ended December 31, 2015, 2014 and 2013 are summarized as follows:

During the year ended December 31, 2015, RNP issued 91,964 unit-settled phantom units (which entitle the holder to distribution rights during the vesting period) covering RNP’s common units. 78,634 of the phantom units are time-vested awards that vest in three equal annual installments, subject to continued services through the vesting date. 4,450 of the phantom units were time-vested awards issued to the directors that will vest on the one-year anniversary of the grant date, subject to continued services through the vesting date. The phantom unit grants resulted in unit-based compensation expense of $0.9 million for the year ended December 31, 2015.

As of December 31, 2015, there was $1.7 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 2.6 years.

During the year ended December 31, 2015, RNP issued a total of 8,880 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 $0.1 million.

The Company has certain wood chip processing and wood yard operations agreements, which contain embedded leases. The cost and carrying values of the properties underlying the leases at December 31, 2015 are $72.9 million and $60.2 million, respectively.

The following is a schedule by years of minimum future rentals on non-cancelable operating leases as of December 31, 2015 (in thousands):

The Company maintains a 401(k) plan. Most employees, excluding RNLLC’s and RNPLLC’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 of employment 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, including the East Dubuque Facility (discontinued operations), contributed $1.9 million to the plans for the year ended December 31, 2015, $1.3 million for the year ended December 31, 2014 and $1.2 million for the year ended December 31, 2013.

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”), one of which covers hourly paid employees represented by collective bargaining agreements in effect at its Pasadena Facility and the other of which covers non-union hourly employees at its Pasadena Facility who have 1,000 hours of service during a year of employment.

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 following tables summarize the projected benefit obligation, the assets and the funded status of the Pension Plans and the Postretirement Plan at December 31, 2015 and 2014:

	As of December 31, 2015						As of December 31, 2014
	Pension			Postretirement			Pension			Postretirement
	(in thousands)
Projected benefit obligation
Benefit obligation at beginning of year	$	5,796		$	927		$	4,505		$	853
Service cost		206			35			106			35
Interest cost		218			30			213			37
Actuarial (gain) loss		(500	)		(94	)		1,125			93
Actual benefit paid		(200	)		(27	)		(153	)		(91	)
Benefit obligation at end of year		5,520			871			5,796			927
Fair value of plan assets
Fair value of plan assets at beginning of year		5,025			—			4,927			—
Actual return on plan assets		(23	)		—			251			—
Employer contributions		—			27			—			91
Actual benefit paid		(200	)		(27	)		(153	)		(91	)
Fair value of plan assets at end of year		4,802			—			5,025			—
Funded status at end of year	$	(718	)	$	(871	)	$	(771	)	$	(927	)
Amounts recognized in the consolidated balance sheet
Noncurrent assets	$	19		$	—		$	—		$	—
Current liabilities		—			(67	)		—			(81	)
Noncurrent liabilities		(737	)		(804	)		(771	)		(846	)
	$	(718	)	$	(871	)	$	(771	)	$	(927	)

As of December 31, 2015 and 2014, 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 years ended December 31, 2015, 2014 and 2013:

	For the Year Ended December 31, 2015						For the Year Ended December 31, 2014						For the Year Ended December 31, 2013
	Pension			Postretirement			Pension			Postretirement			Pension			Postretirement
	(in thousands)
Net periodic benefit cost
Service cost	$	206		$	35		$	106		$	35		$	137		$	43
Interest cost		218			30			213			37			194			43
Expected return on plan assets		(296	)		—			(289	)		—			(260	)		—
Amortization of prior service cost		—			22			—			22			—			22
Amortization of net gain		—			(13	)		(54	)		(16	)		(5	)		—
Net periodic pension costs	$	128		$	74		$	(24	)	$	78		$	66		$	108
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial (gain) loss	$	(181	)	$	(94	)	$	1,163		$	93		$	(893	)	$	(233	)
Recognized actuarial gain		—			13			54			16			5			—
Prior service cost		—			—			—			—			—			—
Recognized prior service cost		—			(22	)		—			(22	)		—			(22	)
Total recognized in other comprehensive (income) loss	$	(181	)	$	(103	)	$	1,217		$	87		$	(888	)	$	(255	)

Accumulated other comprehensive loss at December 31, 2015, 2014 and 2013 consists of the following amounts that have not yet been recognized in net periodic benefit cost:

The expected portion of the accumulated other comprehensive loss expected to be recognized as a component of net periodic benefit cost in 2016 is $0 for the Pension Plans and $10,000 for the Postretirement Plan.

The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the asset returns are subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis. The GAAP gain/loss methodology provides that differences between expected and actual returns are recognized over the average future service of employees.

As of December 31, 2015, there were no mining retirees entitled to medical coverage, and there will not be any future mining retirees entitled to medical coverage since there are no active mining participants in the Postretirement Plan. Therefore, medical trend rates are no longer relevant.

The Pension Plans seek to maintain compliance with the Employee Retirement Income Security Act of 1974, as amended, and any applicable regulations and laws.

The pension plan assets are deemed to be Level 1 financial instruments at December 31, 2015 and 2014. The fair value of the pension plan assets consist of the following at December 31, 2015 and 2014:

RNP expects to contribute $0 to the Pension Plans and $67,000 to the Postretirement Plan in 2016.

In accordance with our former chief financial officer’s employment contract and another former executive officer’s employment contract, upon their cessation of employment with the Company in December 2015 and August 2015, respectively, they became entitled to severance equal to their respective annual salaries, payable over the one-year period after their respective departures from the Company, plus their respective target annual incentive bonuses. In addition to recording these amounts during the year ended December 31, 2015, the Company recorded an estimate for the potential severance due to employees at its Los Angeles, California corporate office due to the Company’s expected move out of state in 2016. The estimate was based upon severance packages and weighted probability factors.

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, 2015, 2014 and 2013 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, 2015, 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 newly 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, 2015.

As of December 31, 2015, Fulghum owned 87% of the equity interests in the subsidiaries located in Chile and Uruguay. As of December 31, 2014, Fulghum owned 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.

The income tax provision (benefit) for continuing operations for the years ended December 31, 2015, 2014 and 2013 was as follows:

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

For the years ended December 31, 2015, 2014 and 2013, the amount of tax expense related to discontinued operations was $12.8 million, $12.7 million and $9.2 million, respectively.

The components of the net deferred tax liability as of December 31, 2015 and 2014 are as follows:

The total gross deferred tax assets at December 31, 2015 and 2014 were $106.9 million and $86.0 million, respectively. The total gross deferred tax liabilities at December 31, 2015 and 2014 were $32.1 million and $55.0 million, respectively.

As of December 31, 2015, the Company had the following available carryforwards and tax attributes to offset future taxable income:

The Company expects to utilize all of its NOLs in 2016 upon completion of the Merger, the exchange with the GSO Funds and recognition of a tax gain.

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:

Of the $3.6 million of unrecognized tax benefits, $0.8 million, if recognized, would have an impact on the effective tax rate. The remaining $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 $0.9 million. The Company and its subsidiaries are subject to the following material taxing jurisdictions: United States federal, California, Colorado, Florida, Georgia, Illinois, Louisiana, Mississippi, New Hampshire and Texas. The tax years that remain open to examination by the United States federal jurisdiction (not including the current year) are years 2012 through 2014; the tax years that remain open to examination by the Arkansas, Florida, Georgia, Illinois, Louisiana, Maine, Massachusetts, Mississippi, New Hampshire, New York, North Carolina, South Carolina and Virginia jurisdictions are years 2012 through 2014; the tax years that remain open to examination (not including the current year) by the California, Colorado and Texas jurisdictions are years 2011 through 2014.

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.

The Company operates in four business segments, as described below. Fulghum’s operations are included only from the closing date of the Fulghum Acquisition, which was May 1, 2013. NEWP’s operations are included only from the closing date of the NEWP Acquisition, which was May 1, 2014. Allegheny’s operations are included only from the closing date of the Allegheny Acquisition, which was January 23, 2015. For all periods presented below, the Company has reclassed the expenses from the joint venture with Graanul Invest AS (“Graanul”), which are shown as equity in loss of investee, from the Fulghum Fibres business segment to the Wood Pellets: Industrial business segment. Results of the East Dubuque and the Energy Technologies segments, and a portion of the unallocated partnership expenses are accounted for as discontinued operations for all periods presented. As of December 31, 2015, the Company’s four business segments are:

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 Years Ended December 31,
	2015				2014				2013
	(in thousands)
Revenues
Pasadena	$	139,387			$	138,233			$	133,675
Fulghum Fibres		94,219				94,748				58,284
Wood Pellets: Industrial		7,933				4,086				—
Wood Pellets: NEWP		54,305				32,114				—
Total revenues	$	295,844			$	269,181			$	191,959
Gross profit (loss)
Pasadena	$	4,656			$	(14,308	)		$	(9,529	)
Fulghum Fibres		18,293				12,444				12,032
Wood Pellets: Industrial		(12,388	)			703				—
Wood Pellets: NEWP		12,086				6,050				—
Total gross profit (loss)	$	22,647			$	4,889			$	2,503
Selling, general and administrative expenses
Pasadena	$	3,937			$	5,078			$	4,764
Fulghum Fibres		4,999				6,399				3,754
Wood Pellets: Industrial		19,969				12,868				5,479
Wood Pellets: NEWP		2,693				1,581				—
Total segment selling, general and administrative expenses	$	31,598			$	25,926			$	13,997
Depreciation and amortization
Pasadena	$	755			$	1,315			$	3,886
Fulghum Fibres		2,986				2,088				(1,708	)
Wood Pellets: Industrial		172				139				26
Wood Pellets: NEWP		1,468				81				—
Total segment depreciation and amortization recorded in operating expenses		5,381				3,623				2,204
Pasadena		5,902				7,030				4,187
Fulghum Fibres		8,680				7,374				4,836
Wood Pellets: Industrial		2,063				—				—
Wood Pellets: NEWP		3,049				1,886				—
Total depreciation and amortization recorded in cost of sales		19,694				16,290				9,023
Total segment depreciation and amortization	$	25,075			$	19,913			$	11,227
Other operating (income) expenses
Pasadena	$	160,622			$	27,207			$	30,029
Fulghum Fibres		11,633				38				72
Wood Pellets: Industrial		2,279				(350	)			—
Wood Pellets: NEWP		—				—				—
Total segment other operating expenses	$	174,534			$	26,895			$	30,101
Operating income (loss)
Pasadena	$	(160,658	)	⁽¹⁾	$	(47,907	)	⁽²⁾	$	(48,208	)	⁽³⁾
Fulghum Fibres		(1,324	)	⁽⁴⁾		3,919				9,914
Wood Pellets: Industrial		(34,808	)			(11,954	)			(5,505	)
Wood Pellets: NEWP		7,925				4,388				—
Total segment operating loss	$	(188,865	)		$	(51,554	)		$	(43,799	)
Interest expense
Pasadena	$	—			$	—			$	8
Fulghum Fibres		2,263				2,590				1,755
Wood Pellets: Industrial		1,365				3				—
Wood Pellets: NEWP		601				304				—
Total segment interest expense	$	4,229			$	2,897			$	1,763
Net income (loss)
Pasadena	$	(159,278	)	⁽²⁾	$	(47,925	)		$	(48,357	)	⁽³⁾
Fulghum Fibres		(3,007	)			75				6,967
Wood Pellets: Industrial		(36,542	)			(11,616	)			(5,180	)
Wood Pellets: NEWP		7,664				4,342				—
Total segment net loss	$	(191,163	)		$	(55,124	)		$	(46,570	)
Reconciliation of segment net loss to consolidated net loss:
Segment net loss	$	(191,163	)		$	(55,124	)		$	(46,570	)
Corporate expenses allocated to RNP recorded as selling, general and administrative expenses		(6,673	)			(7,750	)			(7,683	)
Corporate income (expenses) allocated to RNP recorded as other income (expenses)		(158	)			—				4,920
Corporate and unallocated expenses recorded as selling, general and administrative expenses		(17,991	)			(28,043	)			(24,849	)

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

	For the Years Ended December 31,
	2015			2014			2013
	(in thousands, except for per share data)
Numerator:
Loss from continuing operations	$	(211,018	)	$	(80,559	)	$	(38,854	)
Less: Preferred stock dividends		5,280			3,840			—
Less: Loss from continuing operations attributable to noncontrolling interests		66,811			22,503			22,564
Less: Income from continuing operations allocated to participating securities		—			—			—
Loss from continuing operations allocated to common shareholders	$	(149,487	)	$	(61,896	)	$	(16,290	)
Numerator:
Income from discontinued operations	$	57,987		$	48,055		$	38,892
Less: Income from discontinued operations attributable to noncontrolling interests		28,389			22,009			24,134
Less: Income from discontinued operations allocated to participating securities		1,198			957			395
Income from discontinued operations allocated to common shareholders	$	28,400		$	25,089		$	14,363
Numerator:
Net loss attributable to Rentech common shareholders	$	(119,889	)	$	(35,850	)	$	(1,532	)
Less: Income allocated to participating securities		—			—			—
Net loss allocated to common shareholders	$	(119,889	)	$	(35,850	)	$	(1,532	)
Denominator:
Weighted average common shares outstanding		22,981			22,856			22,614
Effect of dilutive securities:
Preferred stock		—			—			—
Warrants		—			—			—
Common stock options		—			—			—
Restricted stock		—			—			—
Diluted shares outstanding		22,981			22,856			22,614
Basic:
Continuing operations	$	(6.50	)	$	(2.71	)	$	(0.72	)
Discontinued operations	$	1.24		$	1.10		$	0.64
Net loss per common share	$	(5.22	)	$	(1.57	)	$	(0.07	)
Diluted:
Continuing operations	$	(6.50	)	$	(2.71	)	$	(0.72	)
Discontinued operations	$	1.24		$	1.10		$	0.64
Net loss per common share	$	(5.22	)	$	(1.57	)	$	(0.07	)

For the year ended December 31, 2015, 6.4 million of Rentech’s common stock issuable pursuant to stock options, stock warrants, restricted stock units and preferred stock were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

For the year ended December 31, 2014, 6.1 million of Rentech’s common stock issuable pursuant to stock options, stock warrants, restricted stock units and preferred stock were excluded from the calculation of diluted income (loss) per share because their inclusion would have been anti-dilutive.

For the year ended December 31, 2013, 0.4 million of Rentech’s common stock issuable pursuant to stock options, stock warrants, and restricted stock units were excluded from the calculation of diluted income (loss) per share because their inclusion would have been anti-dilutive.

Selected unaudited condensed consolidated financial information for the years ended December 31, 2015 and 2014 is presented in the tables below (in thousands, except per share data).

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
For 2015
Revenues	$	68,859		$	77,718		$	80,348		$	68,920
Gross profit	$	6,868		$	5,862		$	6,215		$	3,703
Operating loss	$	(7,779	)	$	(113,424	)	$	(42,053	)	$	(51,563	)
Loss from continuing operations	$	(10,503	)	$	(113,547	)	$	(44,590	)	$	(42,379	)
Income from discontinued operations, net of tax	$	10,549		$	34,836		$	11,754		$	849
Net income (loss)	$	46		$	(78,711	)	$	(32,836	)	$	(41,530	)
Net (income) loss attributable to noncontrolling interests	$	(3,675	)	$	26,617		$	9,812		$	5,668
Net loss attributable to Rentech	$	(4,949	)	$	(53,414	)	$	(24,344	)	$	(37,182	)
Net income (loss) per common share allocated to Rentech:
Basic:
Continuing operations	$	(0.49	)	$	(3.23	)	$	(1.38	)	$	(1.41	)
Discontinued operations	$	0.26		$	0.86		$	0.31		$	(0.21	)
Net income (loss)	$	(0.22	)	$	(2.33	)	$	(1.06	)	$	(1.62	)
Diluted:
Continuing operations	$	(0.49	)	$	(3.23	)	$	(1.38	)	$	(1.41	)
Discontinued operations	$	0.26		$	0.86		$	0.31		$	(0.21	)
Net income (loss)	$	(0.22	)	$	(2.33	)	$	(1.06	)	$	(1.62	)

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
For 2014
Revenues	$	53,827		$	65,257		$	76,151		$	73,945
Gross profit (loss)	$	5,496		$	(1,512	)	$	(2,497	)	$	3,402
Operating loss	$	(7,970	)	$	(46,365	)	$	(18,252	)	$	(15,351	)
Loss from continuing operations	$	(10,082	)	$	(47,982	)	$	(19,127	)	$	(3,369	)
Income from discontinued operations, net of tax	$	4,487		$	24,948		$	7,440		$	11,179
Net income (loss)	$	(5,594	)	$	(23,033	)	$	(11,687	)	$	7,810
Net income (loss) attributable to noncontrolling interests	$	(1,394	)	$	3,588		$	1,311		$	(3,011	)
Net income (loss) attributable to Rentech	$	(6,988	)	$	(20,645	)	$	(11,697	)	$	3,480
Net income (loss) per common share allocated to Rentech:
Basic:
Continuing operations	$	(0.40	)	$	(1.53	)	$	(0.69	)	$	(0.10	)
Discontinued operations	$	0.09		$	0.60		$	0.17		$	0.24
Net income (loss)	$	(0.31	)	$	(0.91	)	$	(0.51	)	$	0.14
Diluted:
Continuing operations	$	(0.40	)	$	(1.53	)	$	(0.69	)	$	(0.10	)
Discontinued operations	$	0.09		$	0.60		$	0.17		$	0.23
Net income (loss)	$	(0.31	)	$	(0.91	)	$	(0.51	)	$	0.14

The net loss during the three months ended December 31, 2015 was primarily attributable to the asset impairments of $26.3 million relating to the Pasadena Facility and $10.6 million relating to Fulghum Fibres, and the write-downs of the Pasadena Facility’s inventory of $0.6 million, the Wawa Facility’s inventory of $5.0 million and the Atikokan Facility’s inventory of $0.6 million.

The net income during the three months ended December 31, 2014 was primarily attributable to (i) the sale of the Company’s alternative energy technologies, which resulted in a gain of $15.3 million being recorded in discontinued operations; (ii) higher sales prices for ammonia and UAN, recorded in discontinued operations, and ammonium sulfate; and (iii) the Agrifos settlement income of $5.6 million, partially offset by (a) a loss on gas derivatives of $3.1 million recorded in discontinued operations; (b) severance costs for a former officer of the Company of $2.0 million; and (c) write-down of inventory of $1.5 million.

On February 15, 2016, RNP announced a cash distribution to its common unitholders for the period October 1, 2015 through and including December 31, 2015 of $0.10 per common unit which resulted in total distributions in the amount of $3.9 million, including payments to phantom unitholders. RNHI received a distribution of $2.3 million, representing its share of distributions based on its ownership of common units. The cash distribution was paid on February 29, 2016 to unitholders of record at the close of business on February 25, 2016.

On March 14, 2016, the Company completed the sale of the Pasadena Facility to IOC. The transaction calls for an initial cash payment to RNP of $5.0 million and a cash working capital adjustment, which is expected to be approximately $6.0 million, after confirmation of the amount within ninety days of the closing of the transaction. The purchase agreement also includes a milestone payment which would be paid to RNP unitholders equal to 50% of the facility’s EBITDA, as defined in the purchase agreement, in excess of $8.0 million earned over the next two years.

RNP expects to set a record date prior to closing the pending merger between RNP and CVR Partners for the distribution to its unitholders of the $5.0 million initial cash payment, net of transaction-related fees, which are currently estimated to be approximately $0.6 million. The distribution of the cash working capital adjustment, the milestone payment and any other additional cash payments made by IOC relating to the purchase of the Pasadena Facility will be made to RNP’s unitholders within a reasonable time shortly after receiving such cash payments. RNP expects to set a separate record date immediately prior to the closing of the pending merger between RNP and CVR Partners for the distribution of purchase price adjustment rights representing the right to receive these additional cash payments if and to the extent made.

On March 11, 2016, the Company entered into various amendments with GSO Capital. See Note 15 – Debt.

	As of December 31,
	2015			2014

ASSETS
Current assets
Cash	$	13,241		$	3,051
Accounts receivable		7			510
Prepaid expenses and other current assets		474			370
Other receivables, net		—			3
Total current assets		13,722			3,934
Property, plant and equipment, net		1,389			1,827
Construction in progress		1,076			549
Other assets
Investment in subsidiaries		23,296			182,317
Deferred income taxes		26,053			29,493
Intercompany receivables		484,232			436,328
Deposits and other assets		416			462
Total other assets		533,997			648,600
Total assets	$	550,184		$	654,910
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,136		$	681
Accrued payroll and benefits		3,181			1,538
Accrued liabilities		2,307			3,642
Other		—			5,000
Total current liabilities		6,624			10,861
Long-term liabilities
Intercompany payables		527,930			424,473
Other		210			681
Total long-term liabilities		528,140			425,154
Total liabilities		534,764			436,015
Commitments and contingencies
Mezzanine equity
Series E convertible preferred stock: $10 par value; 100,000 shares authorized, issued and outstanding; 4.5% dividend rate		95,840			95,060
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; 45,000 shares authorized; 23,033 and 229,308 shares issued and outstanding at December 31, 2015 and 2014, respectively		230			2,293
Additional paid-in capital		543,724			543,091
Accumulated deficit		(531,971	)		(417,349	)
Accumulated other comprehensive loss		(27,204	)		(7,302	)
Total Rentech stockholders' equity (deficit)		(15,221	)		120,733
Noncontrolling interests		(65,199	)		3,102
Total equity (deficit)		(80,420	)		123,835
Total liabilities and stockholders' equity (deficit)	$	550,184		$	654,910

The condensed financial statements represent the financial information required by Securities and Exchange Commission Regulation S-X 5-04 for Rentech, Inc. Regulation S-X 5-04 requires the inclusion of parent company only financial statements if the restricted net assets of consolidated subsidiaries exceed certain thresholds of total consolidated net assets as of the last day of its most recent fiscal year.

The accompanying financial statements have been prepared to present the financial position, results of operations and cash flows of Rentech, Inc. on a stand-alone basis as a holding company. Investments in subsidiaries and other investees are stated at cost plus equity in undistributed earnings from the date of acquisition. These financial statements should be read in conjunction with Rentech, Inc.’s consolidated financial statements.

The parent company’s accounting policies are consistent with those of Rentech. The notes to the consolidated financial statements include disclosures related to commitments and contingencies in Note 16 “Commitments and Contingencies” and Note 23 “Income Taxes”. The notes to the consolidated financial statements also include disclosures related to the Company’s preferred stock in Note 18 “Preferred Stock”. Rentech received dividends from its subsidiary, Rentech Nitrogen Partners, L.P., of $44.4 million, $7.2 million and $55.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.

We maintain disclosure controls and procedures, or DCP, that are designed to provide reasonable assurance 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 financial 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.

The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s DCP as of the end of the period covered by this Annual Report. As we previously reported in 2014, management identified material weaknesses in internal control over financial reporting, or ICFR, as described below. See “Part II—Item 9A. Controls and Procedures—Management’s Annual Report on Internal Control Over Financial Reporting” in our Annual Report on Form 10-K/A filed on December 29, 2014. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our DCP were not effective at the reasonable assurance level as of December 31, 2015.

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, 2015. Management based its assessment on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

As we previously reported, we identified the following material weakness which continues to exist as of December 31, 2015. 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 the review of the cash flow forecasts used in the accounting for long-lived asset impairment and recoverability . Specifically, we did not design and maintain effective internal controls related to documenting management’s review of assumptions used in our cash flow forecasts for long-lived asset impairment and recoverability.

This control deficiency did not result in a material misstatement to our annual or interim consolidated financial statements. However, this control deficiency, if unremediated, could 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 this control deficiency constitutes a material weakness.

As a result of the material weakness described above, management concluded we did not maintain effective ICFR as of December 31, 2015 based on the criteria in Internal Control – Integrated Framework (2013) issued by COSO. The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

During the fourth quarter of 2015, we designed a number of measures to address the material weakness identified. Specifically, we designed additional controls over documentation and review of the inputs and results of our cash flow forecasts used in the impairment testing for our Wawa and Atikokan Facilities. These controls included the implementation of additional review activities by qualified personnel and additional documentation and support of conclusions with regard to accounting for long-lived asset recoverability and impairment. We are in the process of implementing our remediation plan, and expect the control weakness 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 weakness we have identified or avoid potential future material weaknesses.

As described in the Plan for Remediation of the Material Weakness section above, there were changes in our ICFR during the quarter ended December 31, 2015 that materially affected, or are reasonably likely to materially affect, our ICFR.

The directors and executive officers of Rentech and their ages and their positions as of February 29, 2015, are as follows:

Keith B. Forman, Chief Executive Officer, President and Director — Mr. Forman was appointed Chief Executive Officer, President and director of Rentech in December 2014. Mr. Forman was also appointed as the Chief Executive Officer and President of Rentech Nitrogen GP, LLC, the general partner of Rentech Nitrogen Partners, L.P., in December 2014 and was appointed as a director of Rentech Nitrogen GP, LLC in connection with the initial public offering of Rentech Nitrogen Partners, L.P. in November 2011. Since April 2007, Mr. Forman has been a director of Capital Product Partners L.P., a publicly traded shipping limited partnership specializing in the seaborne transportation of oil, refined oil products and chemicals. Mr. Forman also serves on the board of directors

of Applied Consulting, Inc., a privately held consulting firm. Mr. Forman currently serves as the Chairman of its conflicts committee and is a member of its audit committee. Since May of 2011, Mr. Forman has served as a Senior Advisor to Industry Funds Management (IFM). IFM is an Australian based fund investing in infrastructure projects around the world including making investments in energy related infrastructure. From November 2007 until March 2010, Mr. Forman served as Partner and Chief Financial Officer of Crestwood Midstream Partners LP, a private investment partnership focused on making equity investments in the midstream energy market. From February 2005 to 2007, Mr. Forman was a member of the board of directors of Kayne Anderson Energy Development, a closed-end investment fund focused on making debt and equity investments in energy companies, and was a member of its audit committee. Mr. Forman was also a member of the board of directors of Energy Solutions International Ltd., a privately held supplier of oil and gas pipeline software management systems, from April 2004 to January 2009. From January 2004 to July 2005, Mr. Forman was Senior Vice President, Finance for El Paso Corporation, a provider of natural gas services. From January 1992 to December 2003, he served as Chief Financial Officer of GulfTerra Energy Partners L.P., a publicly traded master limited partnership, and was responsible for the financing activities of the partnership, including its commercial and investment banking relationships. Mr. Forman received a B.A. degree in economics and political science from Vanderbilt University. Our Board has determined that Mr. Forman brings to our Board accounting, financial and directorial experience, including extensive experience with master limited partnerships, and therefore he should serve our Board.

Jeffrey R. Spain, Chief Financial Officer — Mr. Spain was appointed Chief Financial Officer of Rentech in December 2015. Mr. Spain was also appointed as the Chief Financial Officer of Rentech Nitrogen GP, LLC, the general partner of Rentech Nitrogen Partners, L.P., in December 2015. Mr. Spain joined Rentech in 2011 as Senior Vice President of Finance and Accounting. In December 2014, Mr. Spain was appointed Senior Vice President of Finance, Accounting & Administration for the Wood Fibre group. Mr. Spain’s experience spans over 20 years and includes investment banking and operations management and chief financial officer roles of high growth companies. Mr. Spain’s past employers include Credit Suisse First Boston, LeadPoint, Inc., eNutrition, Inc., and Kimberly-Clark Corporation. At LeadPoint, Inc., an internet performance marketing company funded by Redpoint Ventures, Mr. Spain served as its CFO from 2004 until joining Rentech in 2011. Mr. Spain received his Masters of Business Administration from the Anderson Graduate School of Management at UCLA and earned his Bachelor’s degree in finance from Southern Methodist University.

John H. Diesch, President of RNP. John H. Diesch was appointed President of RNP in July 2011. From 2008 to 2013, Mr. Diesch served as Senior Vice President of Operations of Rentech and was responsible for plant operations at our facilities and Rentech’s Product Demonstration Unit in Commerce City, Colorado. From April 2006 to January 2008, Mr. Diesch served as President of RNLLC (formerly REMC) and Vice President of Operations for Rentech. From April 1999 to April 2006, Mr. Diesch served as Managing Director of Royster-Clark Nitrogen, Inc., and previously served as Vice President and General Manager of nitrogen production and distribution for IMC AgriBusiness Inc., an agricultural fertilizer manufacturer. In 1991, he joined Vigoro Industries Inc., a manufacturer and distributor of potash, nitrogen fertilizers and related products, as North Bend, Ohio Plant Manager after serving as Plant Manager, Production Manager and Process Engineer with Arcadian Corporation, a nitrogen manufacturer, Columbia Nitrogen Corp., a manufacturer of fertilizer products, and Monsanto Company, a multinational agricultural biotechnology corporation. Mr. Diesch is a member of the board of directors of the Fertilizer Institute, a former member of the board of directors of the Gasification Technologies Council and previously served as director of the Dubuque Area Chamber of Commerce, and was recently management Chairman of the Board for the Dubuque Area Labor Management Council.

Joseph V Herold, Senior Vice President, Human Resources – Mr. Herold has served as Senior Vice President of Human Resources of Rentech since December 2011. During the past 30 years, Mr. Herold has worked in the oil, chemical, aerospace and semiconductor industries, with leadership roles in operating sites, engineering design centers, sales & service offices and division & corporate headquarters. His experiences include leadership roles with Occidental Petroleum, AlliedSignal Aerospace, Robertshaw Controls and International Rectifier, where he held the position of VP, Global Human Resources. Mr. Herold is a graduate of Case Western Reserve University, an alumnus of the Human Resources Roundtable (HARRT) at UCLA's Anderson School of Business and a member of the Advisory Board to the Master's in Human Behavior program at USC. He has also served as a life skills trainer and mentor at Covenant House Los Angeles, and a member of the Training Advisory Board for Inroads LA.

Colin M. Morris, Senior Vice President and General Counsel — Mr. Morris has served as Senior Vice President and General Counsel of Rentech since October 2011. From June 2006 to October 2011, Mr. Morris served as Vice President and General Counsel. Mr. Morris practiced corporate and securities law at the Los Angeles office of Latham & Watkins LLP from June 2004 to May 2006. From September 2000 to May 2004, Mr. Morris practiced corporate and securities law in the Silicon Valley office of Wilson, Sonsini, Goodrich and Rosati. Prior to that Mr. Morris practiced corporate and securities law in the Silicon Valley office of Pillsbury Winthrop Shaw Pittman LLP. Mr. Morris received an A.B. degree in government from Georgetown University and a J.D. from the University of California, Berkeley, Boalt Hall School of Law. Mr. Morris was appointed Senior Vice President, General Counsel and Secretary of Rentech Nitrogen GP, LLC, the general partner of Rentech Nitrogen Partners, L.P., in October 2011, and from July 2011 to October 2011, Mr. Morris served as Vice President, General Counsel and Secretary.

Michael S. Burke, Director — Mr. Burke was appointed as a director of Rentech in March 2007. He serves as chair of the Audit Committee and is a member of the Compensation Committee of Rentech. Mr. Burke was appointed as a director of Rentech Nitrogen GP, LLC in July 2011 and is a member of the Audit Committee of Rentech Nitrogen GP, LLC. Mr. Burke is the Chairman and Chief Executive Officer of AECOM, a global provider of professional technical and management support services to government and commercial clients. Mr. Burke was appointed chairman of the board of AECOM on March 4, 2015. From October 1, 2011 through March 5, 2014, Mr. Burke served as President of AECOM. From December 2006 through September 2011, Mr. Burke served as Executive Vice President, Chief Financial Officer of AECOM. Mr. Burke joined AECOM as Senior Vice President, Corporate Strategy in October 2005. From 1990 to 2005, Mr. Burke was with the accounting firm, KPMG LLP, where he served in various senior leadership positions, most recently as a Western Area Managing Partner from 2002 to 2005. Mr. Burke also was a member of the board of directors of KPMG from 2000 through 2005. While on the board of directors of KPMG, Mr. Burke served as the Chairman of the Board Process and Governance Committee and a member of the Audit and Finance Committee. Mr. Burke also serves on the boards of directors of various charitable and community organizations. Mr. Burke received a B.S. degree in accounting from the University of Scranton and a J.D. degree from Southwestern University. Our Board has determined that Mr. Burke brings to our Board extensive accounting, financial and business experience, including experience as an executive officer of a public company, and therefore he should serve on our Board.

General (ret) Wesley K. Clark, Director — General (ret) Wesley Clark was appointed as a director of Rentech in December 2010 and currently serves on the Audit Committee. General Clark is an active investment banker and strategic energy consultant in the oil, gas, biofuels, solar and wind industries in the United States, Europe, and Latin America. In 2003 General Clark founded his own strategic consulting firm, Wesley K. Clark and Associates, where he currently serves as Chairman and Chief Executive Officer. From 2000 to 2003 General Clark was a managing director at Stephens, Inc., an investment banking firm based in Arkansas. He acts as a Senior Advisor to the Blackstone Group with a focus in the energy sector. General Clark currently and historically has served on several public and private company boards in the areas of energy, infrastructure and technology. He serves on the board of directors of the following publically traded companies: BNK Petroleum Inc., an energy company focused on the acquisition, exploration and production of large oil and gas reserves; Bankers Petroleum Ltd., a Canadian based oil and gas exploration and production company; Amaya Gaming, a Canadian company in the electronic gaming industry; Petromanas Energy, Inc., a Canadian based oil and gas exploration company; Root 9B Technologies, a business advisory and consulting firm; and The Grilled Cheese Truck, a food service company providing career opportunities for veterans. General Clark retired a four star general from the United States Army in 2000, as NATO Supreme Allied Commander, Europe, following a 38 year Army career. He is a recipient of numerous U.S. and foreign awards, including the Presidential Medal of Freedom and Honorary Knighthoods from The United Kingdom and Netherlands. He graduated first in his class from the United States Military Academy at West Point and attended Oxford University as a Rhodes Scholar earning degrees in philosophy, politics and economics. Our Board has determined that General Clark brings to our Board extensive leadership experience, including having held high-ranking positions in the United States Army, and directorial and governance experience as a result of having served on boards of directors of numerous companies in the financial and energy sectors.

Patrick Fleury, Director — Mr. Fleury was appointed as a member to our Board of Directors in August 2015. Mr. Fleury is a Managing Director with GSO Capital Partners. Since joining GSO Capital in 2011, Mr. Fleury has been involved with public distressed, high yield and equity investments in the energy, power and commodity-related industries. Before joining GSO Capital, Mr. Fleury worked at Satellite Asset Management as a Portfolio Manager and Senior Research Analyst. Prior to joining Satellite, he was a Vice President in the Recapitalization & Restructuring Group at Jefferies & Company, Inc. Mr. Fleury began his career in the Global Energy & Power Investment Banking Group at Banc of America Securities, LLC. Mr. Fleury received a BA, magna cum laude, in Economics and Government & Legal Studies from Bowdoin College. Our Board has determined that Mr. Fleury brings to our Board financial and business experience, and therefore he should serve on our Board.

Ronald M. Sega, Director — Dr. Sega was appointed as a director of Rentech in December 2007 and serves as chairperson of the Nominating and Corporate Governance Committee. Currently Dr. Sega serves as Special Assistant to the Chancellor for Strategic Initiatives, Director, Systems Engineering Programs, and as Woodward Professor of Systems Engineering at Colorado State University where he also holds the title of Professor Emeritus. From 2010 to 2013 he served as Vice President and Enterprise Executive for Energy and the Environment for both Colorado State University (CSU) and The Ohio State University (OSU), two Land-Grant universities engaged in efficient, sustainable development of practical products using natural resources (e.g. land/crops, forests, water, natural gas, etc.) through education, research and outreach. At CSU, he served as chair of the Sustainability, Energy, and Environment Advisory Committee. Dr. Sega also served as chair of the President’s and the Provost’s Council on Sustainability at OSU. Since 2008, Dr. Sega has served as a member of the board of directors of Woodward Inc., a public company that designs, manufactures and services energy control systems and components for aircraft and industrial engines and turbines. From August 2005 to August 2007, Dr. Sega served as Under Secretary for the U.S. Air Force. In that capacity, he oversaw the recruiting, training and equipping of approximately 700,000 people and a budget of approximately $110 billion and was the first senior energy official for the Air Force. Designated as the Department of Defense (DoD) Executive Agent for Space, Dr. Sega developed, coordinated and integrated plans and programs for all Department of Defense space major defense acquisition programs. From August 2001 until July 2005, Dr. Sega was Director of Defense Research and Engineering, Office of the Secretary of Defense, serving as the Chief Technology Officer for the DoD. Dr. Sega worked for NASA from 1990 until 1996 and made two shuttle flights during his career as an astronaut. He serves on several non-profit boards and committees: U.S. Space Foundation (board of directors), Alaska Aerospace Corporation (director), U.S. Chamber of Commerce Institute for 21st Century Energy (advisory committee), Air University (board of visitors), U.S. Army Science Board, National Research Council (NRC) Division on Engineering and Physical Sciences, Defense Science Board (Capability Surprise study member), Colorado Space Coalition (CSU representative) and Joint Institute for Strategic Energy Analysis (CSU representative). Dr. Sega received a B.S. in mathematics and physics from the United States Air Force Academy in 1974, a master of science degree in physics from The Ohio State University in 1975, and a doctorate in electrical engineering from the University of Colorado in 1982. Our Board has determined that Dr. Sega brings to our Board a strong background in sustainability, energy, environment, aerospace, technology research, and operations with significant experience in leadership positions, including those involving responsibility for large budgets, and therefore he should serve on our Board.

Edward M. Stern, Director — Mr. Stern was appointed as a director of Rentech in December 2006 and he currently serves as chairperson of the Compensation Committee. He also serves on the Finance Committee and Nominating and Corporate Governance Committee of our Board. Mr. Stern is the President and Chief Executive Officer of PowerBridge, LLC, or PowerBridge, the leading developer of non-utility, privately financed electric transmission systems in the U.S. PowerBridge has developed, financed, constructed and now operates more than 1300 megawatts of transmission capacity, with a total investment in excess of $1.5 billion. PowerBridge has recently completed the development and construction of a natural gas line and is currently developing several billion dollars of new electric transmission facilities. Mr. Stern has nearly 30 years of experience leading the successful development, financing and operation of major energy and infrastructure projects. Under Mr. Stern’s guidance, PowerBridge developed and built the Neptune Regional Transmission System, completed in 2007, and the Hudson Transmission Project, completed in 2013. Both the Neptune Regional Transmission System and the Hudson Transmission Project are 660 megawatt HVDC underwater and underground electric transmission systems, managed by PowerBridge, that interconnect the PJM energy grid in New Jersey with power grids in New York. Both projects were completed on budget and ahead of schedule. From 1991 through 2004, Mr. Stern was employed by Enel North America, Inc., the North American subsidiary of the Italian electric utility, Enel SpA, and its predecessor, CHI Energy, Inc., an energy company specializing in renewable energy technologies including hydroelectric projects and wind farms. While at Enel North America, Inc. and CHI Energy, Inc., Mr. Stern served as General Counsel and, commencing in 1999, as President, Director and Chief Executive Officer. Prior to joining CHI, Mr. Stern was a vice president with BayBanks, Inc., a Boston-based $10 billion financial services organization, where for six years he specialized in energy project finance, real estate restructurings and asset management. Mr. Stern also currently serves on the boards of CAN Capital, Inc., a financial services company, and Deepwater Wind Holdings, LLC, a developer of offshore wind projects and serves on the Advisory Board of Starwood Energy Group Global, LLC, a private equity firm specializing in energy and infrastructure investments. Mr. Stern received B.A., J.D. and M.B.A. degrees from Boston University. He is a member of the Massachusetts Bar and the Federal Energy Bar. Our Board has determined that Mr. Stern brings to our Board significant management and legal experience at energy companies, including substantial project development experience, and his directorial and governance experience as a director at numerous companies, and therefore he should serve on our Board.

Halbert S. Washburn, Director and Chairman of the Board — Mr. Washburn was appointed as a director of Rentech in December 2005, and has served as Chairman of the Board since June 2011. He also serves on the Compensation Committee and Finance Committee of our Board. From July 2011 until April 2015, Mr. Washburn served as a director of Rentech Nitrogen GP, LLC. Mr. Washburn has over 25 years of experience in the energy industry. Since April 2010, Mr. Washburn has been the Chief Executive Officer of BreitBurn GP, LLC, the general partner of BreitBurn Energy Partners LP. From August 2006 until April 2010, he was the co-Chief Executive Officer and served on the board of directors of BreitBurn GP, LLC. In December 2011, he was reappointed as a member of the board of directors of BreitBurn GP, LLC. He has served as the co-President and a director of BreitBurn Energy Corporation since 1988. He also has served as a co-Chief Executive Officer and a director for Pacific Coast Energy Holdings, LLC (formerly BreitBurn Energy Holdings, LLC) and as co-Chief Executive Officer and a director of PCEC (GP), LLC (formerly BEH (GP), LLC). Since September 2013, Mr. Washburn has served on the board of directors of Jones Energy, Inc., a publically traded oil and gas exploration and production company. Mr. Washburn previously served as Chairman on the Executive Committee of the board of directors of the California Independent Petroleum Association. He also served as Chairman of the Stanford University Petroleum Investments Committee and as Secretary and Chairman of the Wildcat Committee. Our Board has determined that Mr. Washburn brings to our Board knowledge of our business, extensive experience in the field of energy and with the MLP structure, including his service as an executive officer and director of several BreitBurn entities, and familiarity with start-up and public energy companies, and therefore he should serve on our Board.

John A. Williams, Director — Mr. Williams was appointed as a director of Rentech in November 2009 and he currently serves on the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Williams has over 40 years of business experience, principally in the real estate and banking industries. Since January 2004, Mr. Williams has served as the Chief Executive Officer, President and Managing Member of Corporate Holdings, LLC, a diversified holdings company, and since November 2004, he has served as Chief Executive Officer and Managing Member of Williams Realty Advisors, LLC, a real estate fund advisor to over $3 billion in assets. Mr. Williams is currently Chairman and Chief Executive Officer of Preferred Apartment Communities, Inc., a real estate investment trust. In 1970, Mr. Williams founded Post Properties, Inc., a developer, owner and manager of upscale multifamily apartment communities in selected markets in the United States. Mr. Williams served as Chief Executive Officer of Post Properties from 1970 until 2002, and he served on its board from inception until 2004. Mr. Williams served as Chairman for Post Properties from inception until February 2003 and Chairman Emeritus from February 2003 until August 2004. Mr. Williams currently serves on the board of directors of the Atlanta Falcons of which he is also a minority owner. He previously served on a variety of boards of directors, including those of NationsBank Corporation, Barnett Banks, Inc. and Crawford & Company. Mr. Williams hold a B.S. degree in industrial management from Georgia Tech. Our Board has determined that Mr. Williams brings to our Board over 40 years of business experience and directorial and governance experience on boards of directors, and therefore he should serve on our Board.

Shareholders and other interested parties wishing to communicate with our Board may send a written communication addressed to:

Our corporate secretary will forward all appropriate communications directly to our Board or to any individual director or directors, depending upon the facts and circumstances outlined in the communication. Any shareholder or other interested party who is interested in contacting only the independent directors or non-management directors as a group or the director who presides over the meetings of the independent directors or non-management directors may also send written communications to the contact above and should state for whom the communication is intended.

Our Board has a standing Audit Committee. Our Board has determined that each member of the Audit Committee is “independent” within the meaning of the rules of the SEC and NASDAQ.

The charter of the Audit Committee is available on the Corporate Governance section of our website at http://www.rentechinc.com. Our Board regularly reviews developments in corporate governance and modifies the charter as warranted. Modifications are reflected on our website at the address referenced above. Information contained on our website is not incorporated into and does not constitute a part of this Annual Report on Form-10-K. Our website address referenced above is intended to be an inactive textual reference only and not an active hyperlink to the website.

The Audit Committee has been delegated responsibility for reviewing with the independent auditors the plans and results of the audit engagement; reviewing the adequacy, scope and results of the internal accounting controls and procedures; reviewing the degree of independence of the auditors; reviewing the auditors’ fees; and recommending the engagement of the auditors to our full Board.

The Audit Committee consists of Mr. Burke, Mr. Clark and Mr. Williams. Our Board has determined that Mr. Burke, the Chairman of the Audit Committee, qualifies as an “audit committee financial expert” as defined by the rules of the SEC.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Rentech’s executive officers and directors, and persons who own more than ten percent of a registered class of Rentech’s equity securities, or collectively, “Insiders,” to file initial reports of ownership and reports of changes in ownership with the SEC. Insiders are required by SEC regulations to furnish Rentech with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and/or written representations that no other reports were required to be filed during fiscal year 2015, all filing requirements under Section 16(a) applicable to our officers, directors and 10% stockholders were satisfied timely.

Rentech has adopted a Code of Business Conduct or Ethics that applies to Rentech’s directors, officers and employees. This code includes a special section entitled “Business Conduct and Ethics for Senior Financial Officers” which applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of the Code of Business Conduct or Ethics was filed as an exhibit to Rentech’s annual report on Form 10-K for the fiscal year ended September 30, 2008 and is available on the Corporate Governance Section of our website at www.rentechinc.com. We intend to disclose any amendment to or waiver of our Code of Business Conduct or Ethics either on our website or by filing a Current Report on Form 8-K. Our website address referenced above is not intended to be an active hyperlink, and the contents of our website shall not be deemed to be incorporated herein.

This Compensation Discussion and Analysis provides an overview and analysis of our executive compensation program during the fiscal year ended December 31, 2015, or 2015, for our named executive officers, or NEOs. Our executive compensation program is designed to align executive pay with individual performance on both short- and long-term bases; to link executive pay to specific, measurable financial, operational and development achievements intended to create value for shareholders; and to utilize compensation as a tool to attract and retain the high-caliber executives that are critical to our long-term success.

Pay-for-performance is paramount in our executive compensation program, and total compensation for our named executive officers was lower in 2015 than in 2014, as a result of lower cash bonuses and lower equity compensation value that corresponded with the Company’s 2015 performance compared to its 2014 performance. Further, awards of performance-based equity granted in prior years, which naturally aligned executive compensation to shareholder interests, were not earned because performance goals linked to stock price performance were not attained. Specifically performance vesting units (PSUs) linked to the attainment of total shareholder return (TSR) goals (determined by reference to the sum of our stock price increase and dividends over a specified period) comprised 60% -85% of our NEO’s equity grants in 2013 and 2014 and either were not earned or, in the case of grants that remain outstanding, are not on track to be earned due to our current stock price performance.

The NEO compensation program further emphasizes performance through short-term cash bonus opportunities that are tied to the achievement of pre-established performance metrics and through equity compensation that is linked to our stock price appreciation, neither of which provide value to our NEOs without corresponding Company performance.

In 2015, we changed our equity compensation program design to provide our NEOs solely with stock options that deliver a materially reduced grant-date value to our NEOs compared to PSUs granted in prior years. Awards of options naturally align our NEOs’ interests with those of our shareholders and incentivize stock price performance since they are only valuable if our stock price increases after grant. And further deliver a materially lower grant-date value as compared with PSUs. As of March 1, 2016, our stock price of $2.09 was lower than the per share 2015 option exercise price of $3.03, meaning that our NEOs who hold such awards will not realize value from them unless we experience a material stock price increase.

In December 2015, the CEO was granted his annual 2015 performance equity award in the form of stock options with a grant-date fair value that was 66% lower than the grant-date fair value of his 2014 equity award, in recognition of the decline in our stock price during 2015. Further, the fair value of the award (or $623,550) was 42% below the median fair value of awards granted to the

CEOs of our 2015 Peer Group Sub-Set companies (or $1,081,000). The 2015 Peer Group Sub-Set is discussed and defined further below.

We endeavor to structure our executive compensation program in a manner that reflects good corporate governance practices and aligns our NEOs’ pay with our operating and stock price performance. Pay-for-performance was a critical element of our compensation program for 2015, as demonstrated by the reduction in the overall compensation of our NEOs for 2015 and our use of stock options that had a materially reduced grant-date fair value. The grant-date fair value of these options was at least 40% below the median grant-date fair value of awards granted to similarly-situated named executive officers in our 2015 Peer Group Sub-Set companies and was generally 50% lower than 2014 equity awards granted to ongoing named executive officers at our 2015 Peer Group Sub-Set companies. Highlights of our 2015 executive compensation program included the following:

Pay for performance is a key component of our compensation philosophy. Consistent with this focus, our compensation program includes (i) annual performance-based incentives and (ii) long-term equity compensation which, commencing with 2015, was provided in the form of stock options that are linked to our performance in that their value derives from stock price appreciation. For 2015, approximately 25% of our NEOs’ aggregate compensation (excluding Mr. Forman’s compensation which had a higher

percentage of variable compensation) came from variable performance-based pay consisting of performance-based cash bonuses and stock option awards.

The following table sets forth the key elements of our NEOs’ compensation, along with the primary objectives associated with each element of compensation:

To serve the foregoing objectives, our overall compensation program is generally designed to be flexible rather than purely formulaic. In alignment with the objectives set forth above, the Company’s Compensation Committee (the “Compensation Committee”) and our Board have generally determined the overall compensation of our NEOs and its allocation among the elements described above, relying on the analyses and advice provided by the Compensation Committee’s compensation consultant. The Compensation Committee has generally made these determinations in executive sessions without our management team present, but has also sought input from our Chief Executive Officer with regard to individual NEO performance and compensation besides his own.

Our compensation decisions for our NEOs with respect to 2015 are discussed in detail below. This discussion is intended to be read in conjunction with the executive compensation tables and related disclosures that follow this Compensation Discussion and Analysis.

The following discussion and analysis describes our compensation objectives and policies for each of our NEOs for 2015, who consisted of:

During fiscal year 2015, Mr. Cohrs served as our Chief Financial Officer through December 4, 2015, and Mr. Spain served as our Chief Financial Officer from December 4, 2015 through December 31, 2015.

To succeed in achieving our key operational goals, we need to recruit and retain a highly talented and seasoned team of executive, technical, sales, marketing, operations, financial and other business professionals. As such, our compensation packages are designed to incentivize the achievement of these goals, and to recruit, reward and retain our employees, including our NEOs.

We have focused on building an experienced management team that is capable of managing our day-to-day operations while working to achieve our long-term operational and growth goals. We believe it is important both to retain our key executives, including our NEOs, and to recruit the additional talent we need to expand the Company and attain our organizational objectives. Accordingly, our policy is to hire executives who are not only highly qualified for their positions at our current size, but who also have the skills we believe are necessary to perform their roles at the same high standard if we are successful in achieving greater size and complexity.

Each of the key elements of our executive compensation program is discussed in more detail below under “—Core Components of Executive Compensation.”

During 2015, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“Cook”), as an independent compensation consultant to analyze our existing executive compensation programs, assist with the design of future compensation programs that more closely align our executive officers’ interests with those of our stockholders, and ensure that the levels and types of compensation provided to our executives (including our NEOs) and directors continue to reflect market practices. Cook serves at the discretion of the Compensation Committee and Cook may be terminated by the Compensation Committee in its discretion. The Compensation Committee has assessed the independence of Cook pursuant to the rules prescribed by the SEC and has concluded that no conflict of interest existed in 2015 or currently exists that would prevent Cook from serving as an independent consultant to the Compensation Committee.

The Compensation Committee provides levels and elements of executive compensation, including base salaries, target annual incentives as a percentage of salary, total cash compensation, long-term incentives and total direct compensation, based on information gathered from the public filings of our peer group companies as well as industry-specific published survey data (discussed in more detail below).

Our current peer group was established in June 2014 based on discussions among members of the Compensation Committee, certain of our executive officers and Cook and was modified in December 2015 (as discussed in more detail below) to bring our peer group companies more in-line with our market cap by removing the largest market-cap companies and focusing only on those who had market cap below $500M at the end of August 2014. Our 2014 Peer Group consisted of energy, energy technology, chemical, fertilizer and wood fiber companies, in each case, with (i) annual revenues ranging from approximately $265 million to $2.2 billion and (ii) market values ranging from approximately $170 million to $2.9 billion at the time the peer group was selected. Following are the companies that comprised our 2014 Peer Group, which were referenced when 2015 salary and target bonus decisions were made at the end of 2014:

In December 2015, the Compensation Committee conducted a review of compensation data provided by Cook with regard to the levels and types of compensation provided to our NEOs. The information provided by Cook included data gathered from the public filings of our 2014 Peer Group. However, the Compensation Committee determined that it was appropriate to limit its December 2015 review to a sub-set of our peer group to the nine smallest peer companies by market cap to reflect our smaller size. These companies, which we refer to as our 2015 Peer Group Sub-Set companies, all had market caps below $500M at the end of August 2014, when the Cook compensation data was prepared, consisted of American Vanguard, Hawkins, KMG Chemicals, Landec, Omnova Solutions, Penford, Trecora Resources, Wausau Paper, and Zep. The Compensation Committee considered data from these 2015 Peer Group Sub-Set companies when determining the actual cash bonus awards earned by our NEOs for 2015 under our annual incentive compensation programs and when determining to grant options to our NEOs in December 2015.

During its 2015 review, the Compensation Committee reviewed the compensation of our NEOs relative to the 2014 Peer Group with respect to total compensation and for individual components of compensation and determined that total direct compensation was at or below the median of the 2014 Peer Group companies, which was in line with our desired position in light of total shareholder return and the operations challenges faced by the Company.

The study provided by Cook to the Compensation Committee found that target total annual cash, which is the sum of base salaries and target bonus opportunities, was generally below the median of similarly situated executives in our 2014 Peer Group companies. Our CEO’s 2015 target annual cash compensation was lower than was projected for all of the CEOs in the 2014 Peer Group. A comparison of 2015 long-term equity incentives showed that the grant-date value of our NEOs’ December 2015 annual option grant was below the 2015 Peer Group Sub-Set median annual award grant-date value for all of the ongoing named executive officers, and below the 25^th percentile for most of them. Our CEO’s 2015 option grant-date fair value was 66% lower than the grant-date fair value of his 2014 equity awards in recognition of both the Company’s stock price decline during 2014 and of the significance of his 2014 new-hire equity award. In addition, the grant-date fair value of our CEO’s option award (or $623,550) was 42% below the median grant-date fair value of the annual awards granted to CEOs of our 2015 Peer Group Sub-Set companies.

Through the Compensation Committee, we design the principal components of our executive compensation program to fulfill one or more of the principles and objectives described above. Compensation of our NEOs consists of the following elements:

We view each component of our executive compensation program as related but distinct, and we have historically reassessed the total compensation of our NEOs periodically to ensure that overall compensation objectives are met. In addition, in determining the appropriate level for each compensation component, we have considered, but not exclusively relied on, our understanding of the competitive market based on the collective experience of members of the Compensation Committee (and our Chief Executive Officer with regard to the other NEOs), our recruiting and retention goals, our view of internal equity and consistency, the length of service of our executives, our overall financial and operational performance and other relevant considerations.

We have not adopted any formal or informal policies or guidelines for allocating compensation between currently-paid and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. Generally, we offer a competitive, but balanced, total compensation package that provides the stability of a competitive, fixed income while affording our executives the opportunity to be appropriately rewarded through cash and equity incentives if we attain our goals and perform well over time.

Each of the primary elements of our executive compensation program is discussed in more detail below. While we have identified particular compensation objectives that each element of executive compensation serves, our compensation programs are intended to be flexible and complementary and to collectively serve all of the executive compensation objectives described above. Accordingly, whether or not specifically mentioned below, we believe that, as a part of our overall executive compensation policy, each individual element, to a greater or lesser extent, serves each of our compensation objectives.

We provide our NEOs with 2015 cash compensation in the form of base salaries and annual cash incentive awards, except that our CEO was not eligible for a cash incentive award. Our 2015 cash compensation was structured to provide a market-level base salary for our NEOs while creating an opportunity to exceed market levels for total cash compensation if short- and long-term performance exceeded expectations. We believe that this mix appropriately combines the stability of non-variable compensation (in the form of base salary) with variable performance awards (in the form of annual cash incentives) that reward the performance of the Company and individual contributions to the success of the business.

Base salaries for our NEOs were initially set in arm’s-length negotiations during the hiring processes. These base salaries have historically been reviewed annually by the Compensation Committee (with input from our Chief Executive Officer with respect to the other NEOs) and were again reviewed at the end of 2015 for purposes of determining 2016 salaries. Our NEOs are not entitled to any contractual or other formulaic base salary increases. During 2015, Mr. Forman’s base salary was $200,000 from January 1, 2015 through June 28, 2015 and increased to $500,000 effective June 29, 2015 to bring Mr. Forman’s salary in line with those of CEOs in the 2014 Peer Group companies, although his new salary is approximately 20% below the median of those of CEOs in the 2015 Peer Group Sub-Set companies. None of the other NEOs were provided with base salary increases during 2015. In addition, the Compensation Committee determined not to increase our NEOs’ base salaries for 2016; accordingly, our NEOs’ base salaries for 2016 are expected to remain the same as in 2015.

The annual base salary rates for our NEOs during fiscal year 2015 (following the base salary increase for Mr. Forman) are set forth in the following table:

We maintain an annual incentive program to reward executive officers, including our NEOs, based on our financial and operational performance, achievement of specific milestones related to operation and expansion of our businesses, financing and project development work, and the individual NEO’s relative contributions to the Company’s performance during the year (referred to below as the our “annual incentive program”). We recognize that successful completion of short-term objectives is critical in achieving our planned level of growth and attaining our long-term business objectives. Accordingly, our annual incentive program is designed to reward executives for successfully taking the immediate steps necessary to implement our long-term business strategy.

During 2015, each of our NEOs (excluding Mr. Forman) was eligible to earn an incentive payment pursuant to our annual incentive program. Under our annual incentive program, cash incentives were determined and paid by reference to (i) the achievement of certain pre-established operational and financial goals and commercial and project development criteria, and (ii) target bonus amounts (as set forth in the NEOs’ respective employment agreements). The goals are weighted based on importance for the year.

In the beginning of 2015, as in prior fiscal years, our CEO and other senior officers developed a series of broad corporate objectives, which were then reviewed and approved by the Compensation Committee and our Board. Following that review, our Board set the 2015 performance goals for our annual incentive program, but retained discretion based on input from the Compensation Committee (and our Chief Executive Officer with respect to the other NEOs) to increase or decrease annual incentive award payouts to levels as high as 200% of the NEO’s target bonus and as low as zero, in each case, based on performance during the relevant period. The goals were designed to be challenging with no guarantee that any portion of the target award would actually be earned. The 2015 annual incentive awards were targeted for Messrs. Cohrs, Spain, Diesch, Herold and Morris at 60%, 40%, 50%, 50% and 50% of their respective base salaries (in accordance with their respective employment agreements where applicable). In accordance with his employment agreement with Rentech, Mr. Forman was not entitled to an annual incentive award with respect to fiscal year 2015. Payment of annual incentive awards to our NEOs (other than Mr. Cohrs) was based on the achievement by us of the specific targets and goals set forth below for the applicable annual incentive program, as well as the performance of the individual executive (and was subject to adjustment as described above).

The 2015 performance goals applicable to our NEOs (excluding Mr. Forman and Mr. Diesch) under our annual incentive program are set forth below, along with determinations as to the attainment of these goals (parentheticals following the description of each goal provide guidelines indicating the approximate weight given to the attainment of each goal).

Result : Goal attained. Safety performance was strong during 2015 with an OSHA recordable rate of 1.64 incidents for every 200,000 hours worked at Rentech Nitrogen facilities in fiscal year 2015. Rentech Nitrogen experienced 2 reportable environmental releases events.

Result : Goal attained. Safety performance was strong during 2015 with an OSHA recordable rate of 3.39 recordable incidents for every 200,000 hours worked at Rentech facilities in fiscal year 2015. Rentech experienced no reportable environmental release events.

Result : Goal attained. Safety performance was strong during 2015 with an OSHA recordable rate of 1.66 recordable incidents for every 200,000 hours worked at Rentech facilities in fiscal year 2015. Rentech experienced no reportable environmental release events.

Result : Goal attained. RNP EBITDA, excluding one-time transaction costs, for the year ended December 31, 2015 equaled $108.6 million.

Result : Goal not attained. EBITDA for Rentech’s wood fibre business for the year ended December 31, 2015 equaled $1.5 million.

Result : Goal attained. Corporate SG&A for the year ended December 31, 2015 was $18.0 million.

Result : Goal not attained. Sale of the Partnership was not completed by December 31, 2015.

Result : The Compensation Committee did not exercise its discretion to take into account any additional factors which contributed to Rentech’s success or adjust the results of the performance goals.

The 2015 performance goals applicable to Mr. Diesch under the RNP annual incentive program are set forth below, along with determinations as to the attainment of these goals (parentheticals following the description of each goal provide guidelines indicating the approximate weight given to the attainment of each goal).

Result : Goal attained. We completed fiscal year 2015 with an OSHA recordable rate of 1.64 recordable incidents for every 200,000 hours worked at our facilities.

Result : Goal attained. We experienced 2 reportable environmental release events.

Result : Goal attained. Total ammonia production for the fiscal year ending December 31, 2015 equaled 340,000 tons.

Result : Goal not attained. Total ammonia upgraded for the fiscal year ending December 31, 2015 equaled 153,000 tons.

Result : Goal attained. Total ammonium sulfate production for the fiscal year ending December 31, 2015 equaled 525,000 tons.

Result : Goal attained. Total sulfuric acid on-stream time for the fiscal year ending December 31, 2015 equaled 94.4%.

Result : Goal not attained. Sale of the Partnership was not completed by December 31, 2015.

Result : The Compensation Committee did not exercise its discretion to take into account any additional factors which contributed to the Partnership’s and Rentech’s success or adjust the results of the performance goals.

Final incentive payments for our NEOs (excluding Mr. Forman) were determined by the Compensation Committee based on our performance compared to the set goals under the annual incentive program. Messrs. Spain, Diesch, Herold and Morris received 2015 annual incentive payments equal to approximately 46%, 87%, 45% and 44% of their respective target bonuses based on the performance results described above (these awards were 18%, 44%, 22% and 22% of their respective base salaries). These payments were determined based on the achievement of the formulaic goals set forth above for each NEO with no material bonus adjustment based on individual assessment. Since Mr. Cohrs’ employment terminated prior to the end of fiscal year 2015, so he was not eligible to receive a 2015 annual incentive award. Instead, as a component of pre-established and contractual cash severance payable to him in connection with his termination of employment, Mr. Cohrs received a payment equal to his target 2015 annual incentive award, as described in more detail below under “—Potential Payments upon Termination or Change-in-Control”.

The Compensation Committee and our Board believe that senior executives, including our NEOs, should have an ongoing stake in the success of their employer to closely align their interests with those of its shareholders. The Compensation Committee also believes that equity awards provide meaningful retention and performance incentives that appropriately encourage our executive officers, including our NEOs, to remain employed with us and put forth their best efforts and performance at all times. Accordingly, long-term equity incentive awards covering shares of our common stock have historically been a key component of our compensation program, including during 2015, as these awards create an ownership stake for management that aligns the interests of our NEOs with those of our shareholders and incentivize our NEOs to work toward increasing value for our shareholders. During 2015, we granted equity awards to our NEOs (excluding Messrs. Cohrs, Diesch and Morris) under our 2009 Incentive Award Plan. In addition, RNP granted awards under its 2011 Long-Term Incentive Plan to Mr. Diesch.

Mr. Cohrs’ employment ceased before we and RNP granted equity awards to our and its respective executive officers in respect of 2015 services. Accordingly, Mr. Cohrs did not receive grants of equity awards from us or from RNP in respect of his services during 2015. Messrs. Forman, Spain and Herold received 100% of their Company equity awards in the form of time-vested stock options. Mr. Diesch received time-vested RNP phantom units, which we believe puts a shareholder-oriented emphasis on the shareholder return improvement before NEOs’ awards are earned and paid. Following the decline in our stock price during 2014 and 2015, the Company determined to grant equity compensation in the form of stock options in 2015 in order to provide our executives with an incentive that only provides value to these executives if we increase our stock price over time. Accordingly, the Company believes that options incentivize our executives to work toward increasing our stock price since the options will ultimately provide no value absent a stock price increase. The grant-date fair values of the 2015 annual equity awards was considerably lower than those of our 2014 equity awards due to our lower stock price at the time of grant.

The stock options granted to Messrs. Forman, Spain and Herold in 2015 vest and become exercisable with respect to one-third of the shares subject thereto on each of the first three anniversaries of the grant date, subject to the respective NEO’s continued service through the applicable vesting date. The stock options are subject to “double trigger” accelerated vesting in full upon a termination of the respective NEO’s employment with us without “cause” or for “good reason,” in either case, during the period beginning sixty (60) days prior to, or within one year following, a change in control. Any such accelerated vesting is subject to the respective NEO’s execution and non-revocation of a general release of claims.

During 2015, RNP also granted phantom units, which include distribution equivalent rights for dividends paid by RNP, to Mr. Diesch under its 2011 Long-Term Incentive Plan to compensate the executive for his service as an officer of RNP (which is a separate publicly traded fertilizer master limited partnership in which Rentech owns a 59.6% equity stake) and to create incentives aligned with the interests of the unit holders of RNP. These RNP units were considered part of Mr. Diesch’s total compensation package by the Compensation Committee. The value of these phantom units is included in the figures and tables reported herein. These phantom units vest in annual installments over a three-year period, subject to continued service through the applicable vesting date and, like our equity awards, are intended to provide retention incentives linked to equity value and to encourage equity ownership in order to align the interests of the executive with those of RNP’s unit holders (including the Company). For more information on these phantom unit awards, please see RNP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 15, 2016.

The options and phantom units are subject to accelerated vesting in certain circumstances as described under “—Potential Payments upon Termination or Change-in-Control” below. We believe that the applicable vesting periods provide an important retention incentive, while accelerated vesting (where appropriate) protects executives against forfeiture of their awards in appropriate circumstances and aligns management’s incentives more closely with the interests of our shareholders.

In determining appropriate levels of equity grants for 2015, we considered, among other things, the role(s) and responsibilities of each NEO and the perceived need to reward and retain the NEO. The table below sets forth the 2015 Awards that we and RNP granted to our NEOs during 2015. All grants were made on December 14, 2015.

The table below sets forth the grant date fair values of the 2015 equity awards that we and RNP granted to our NEOs during 2015.

We believe that vulnerability to termination of employment at the senior executive level, both within and outside of the change in control context, creates concern and uncertainty for our NEOs that is appropriately addressed by providing severance protections which enable and encourage these executives to focus their attention on their work duties and responsibilities in all situations. We operate in a volatile and acquisitive industry that heightens this vulnerability in the change-in-control context. Accordingly, in order to attract and retain our key managerial talent, we enter into employment agreements with certain of our NEOs which provide for specified severance payments and benefits in connection with certain qualifying terminations of employment. In addition, we believe that change in control and severance benefits are essential in order to fulfill our objective of attracting and retaining key managerial talent. We are (or in the case of Mr. Cohrs, were) party to employment agreements with each of Messrs. Forman, Cohrs, Diesch and Morris. Messrs. Spain and Herold have not entered into employment agreements with us; however, Mr. Spain is party to a severance agreement with us and Mr. Herold is party to a change in control severance benefits agreement with us. For a description of the specific terms and conditions of each agreement, see “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” and “—Potential Payments upon Termination or Change-in-Control” below.

We maintain a standard complement of health and retirement benefit plans for our employees, including our NEOs, that provide medical, dental, and vision benefits, flexible spending accounts, a 401(k) savings plan (including an employer-match component), short-term and long-term disability insurance, accidental death and dismemberment insurance and life insurance coverage. These benefits are generally provided to our NEOs on the same terms and conditions as they are provided to our other employees. We believe that these health and retirement benefits comprise key elements of a comprehensive compensation program. Our health benefits help provide stability and peace of mind to our NEOs, thus enabling them to better focus on their work responsibilities, while our 401(k) plan provides a vehicle for tax-preferred retirement savings with additional compensation in the form of an employer match that adds to the overall desirability of our executive compensation package. Our employee benefits programs are designed to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We periodically review and adjust these employee benefits programs as needed based upon regular monitoring of applicable laws and practices in the competitive market.

As part of the compensation package, during 2015, we provided our NEOs (other than Mr. Forman) with a monthly car allowance and Messrs. Cohrs and Morris also received reimbursement of certain financial advisor costs. During 2015, Messrs. Cohrs, Herold and Morris were also entitled to company-paid physical examinations. Those car allowances, reimbursements for financial advisor costs and company-paid physical examinations have been terminated as of December 31, 2015.

Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to any publicly-held corporation for any individual remuneration in excess of $1 million paid in any taxable year to its chief executive officer and each of its other named executive officers, other than its chief financial officer. However, remuneration in excess of $1 million may be deducted if it qualifies as “performance-based compensation” within the meaning of the Internal Revenue Code.

Where reasonably practicable, to the extent that the Section 162(m) deduction disallowance becomes applicable to our NEOs, the Compensation Committee may seek to qualify the variable compensation paid to our NEOs for an exemption from such deductibility limitations. As such, in approving the amount and form of compensation for our NEOs, the Compensation Committee will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m) of the Internal Revenue Code. The Compensation Committee may, in its judgment, authorize compensation payments that do not comply with an exemption from the deductibility limit in Section 162(m) of the Internal Revenue Code, as it has under its 2014 annual incentive program, when it believes that such payments are appropriate to attract and retain executive talent.

Section 280G of the Internal Revenue Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change in control. In addition, Section 4999 of the Internal Revenue Code imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Internal Revenue Code based on the executive’s prior compensation. In approving compensation arrangements for our NEOs in the future, we expect to consider all elements of the cost of providing such compensation, including the potential impact of Section 280G of the Internal Revenue Code. However, we may authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Internal Revenue Code and the imposition of excise taxes under Section 4999 of the Internal Revenue Code if we feel that such arrangements are appropriate to attract and retain executive talent.

Under their employment agreements with us, which were not entered into or amended during 2015, Messrs. Diesch and Morris are (and Mr. Cohrs was) entitled to gross-up payments in the event that any excise taxes are imposed on them. We have historically provided these protections to these senior executives to ensure that they will be properly incentivized in the event of a potential change in control of the Company to maximize shareholder value in a transaction while minimizing concern for potential consequences of the transaction to these executives. The need for such protection is enhanced by our prior emphasis on performance-contingent equity compensation, which has higher values if accelerated in connection with a successful transaction than if the equity compensation awards had been time-vested. We have committed not to provide any new tax gross-up rights to any executives that do not currently have such protection.

Section 409A of the Internal Revenue Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, substantial additional taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefit plans and arrangements for all of our employees and other service providers, including our NEOs, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Internal Revenue Code.

We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, for stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of stock options, restricted stock, RSUs and other equity-based awards under equity incentive award plans have been and will be accounted for under ASC Topic 718. We expect that we will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

At our annual meeting of shareholders held in July 2014, we provided our shareholders with the opportunity to cast an advisory vote on our executive compensation program, or a “say-on-pay proposal”. A significant majority of the votes cast on our say-on-pay proposal at that meeting (91%) were voted in favor of the proposal. The Compensation Committee believes this affirms our shareholders’ support of our approach to executive compensation. However, the Compensation Committee is always open to improving the Company’s compensation governance practices and believes that granting 100% of our executives’ equity awards in the form of stock options during 2015 provides meaningful improvements that further align executives’ interests with those of our shareholders. The Compensation Committee expects to take into consideration the outcome of our shareholders’ future say-on-pay proposal votes when making future compensation decisions for our NEOs. Our Board and shareholders previously determined to hold a say-on-pay advisory vote on the compensation of our NEOs every three years. Accordingly, we expect that our next say-on-pay proposal will be submitted to shareholders for an advisory vote at our annual meeting of stockholders in 2017.

The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, the Compensation Committee determined that the Compensation Discussion and Analysis should be included in this proxy statement.

The following table summarizes the compensation for the calendar years ended December 31, 2015, 2014 and 2013 for each of our NEOs.

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($) ⁽¹⁾		Non-Equity Incentive Plan Compensation ($) ⁽²⁾		All Other Compensation ($) ⁽³⁾		Total ($)
Keith B. Forman,	2015	$	350,000	$	—	$	—	$	623,550	$	—	$	85,726	$	1,059,276
Chief Executive Officer ⁽⁴⁾	2014	$	11,538	$	—	$	1,260,331	$	582,115	$	—	$	—	$	1,853,984

Dan J. Cohrs,	2015	$	446,154	$	—	$	—	$	—	$	—	$	361,085	$	807,239
Chief Financial Officer ^{(4) (5)}	2014	$	463,462	$	—	$	440,694	$	—	$	41,760	$	50,233	$	996,149
	2013	$	450,000	$	—	$	660,145	$	—	$	216,000	$	169,549	$	1,495,694

Jeffrey R. Spain,	2015	$	291,346	$	—	$	—	$	46,766	$	53,285	$	32,044	$	423,441
Chief Financial Officer ⁽⁴⁾	2014	$	290,941	$	—	$	104,680	$	—	$	17,481	$	25,484	$	438,586

John H. Diesch, President, RNP ⁽⁴⁾	2015	$	335,000	$	—	$	196,000	$	—	$	145,725	$	100,509	$	777,234

Joseph V. Herold, SVP, Human Resources ⁽⁴⁾	2015	$	275,000	$	—	$	—	$	46,766	$	61,250	$	39,404	$	422,420

Colin M. Morris,	2015	$	315,000	$	—	$	—	$	—	$	68,850	$	72,063	$	455,913
SVP, General Counsel ⁽⁴⁾	2014	$	314,423	$	—	$	271,190	$	—	$	23,625	$	52,103	$	661,341
	2013	$	300,000	$	—	$	406,233	$	—	$	120,000	$	114,228	$	940,461

The following table sets forth information with respect to our NEOs concerning the grant of plan-based awards from our and RNP’s plans during 2015.

		Estimated Possible Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of			All Other Option Awards: Number of Securities			Exercise or Base Price		Grant Date Fair Value of Stock and Option
Name	Grant Date	Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)		Stock or Units (#) (1)			Underlying Options (#)			of Option Awards ($/Sh)		Awards ($) (1)
Keith B. Forman(2)		$	—	$	—	$	—		—		—		—		—			400,000	(3)	$	3.03	$	623,550

Dan J. Cohrs	2015 Annual Non-Equity Incentive	$	—	$	278,400	$	556,800		—		—		—		—			—		$	—	$	—

Jeffrey R. Spain	12/14/2015	$	—	$	—	$	—		—		—		—		—			30,000	(3)	$	3.03	$	46,766
	2015 Annual Non-Equity Incentive	$	—	$	116,538	$	233,077		—		—		—		—			—		$	—	$	—

John H. Diesch	12/14/2015	$	—	$	—	$	—		—		—		—		20,000	(4)		—		$	—	$	196,000
	2015 Annual Non-Equity Incentive	$	—	$	167,500	$	335,000		—		—		—		—			—		$	—	$	—

Joseph V. Herold	12/14/2015	$	—	$	—	$	—		—		—		—		—			30,000	(3)	$	3.03	$	46,766
	2015 Annual Non-Equity Incentive	$	—	$	137,500	$	275,000		—		—		—		—			—		$	—	$	—

Colin M. Morris	2015 Annual Non-Equity Incentive	$	—	$	157,500	$	315,000		—		—		—		—			—		$	—	$	—

All of our NEOs are (or were in the case of Mr. Cohrs) employed by us at will and are (or were) terminable by us at any time, subject to the severance provisions (if applicable) contained in the employment arrangements with Messrs. Forman, Diesch, Morris and Cohrs, the change in control severance benefit agreement with Mr. Herold and the severance agreement with Mr. Spain. Each of Messrs. Forman, Diesch, and Morris are (and Mr. Cohrs was), party to an employment agreement with us. The employment agreements for each of Messrs. Diesch and Morris have terms that continue through November 3, 2016, subject in each case to automatic one-year renewals absent 90-days’ advance notice from either party to the contrary. Mr. Forman’s employment agreement does not have a set term. Mr. Cohrs’ employment agreement terminated in December 2015, when Mr. Cohrs ceased to serve as the chief financial officer of Rentech. Messrs. Spain and Herold have not entered into employment agreements with us. However, Spain has entered into a severance agreement with us and Mr. Mr. Herold has entered into a change in control severance benefit agreement with us.

Under their respective employment agreements, Messrs. Forman, Diesch and Morris are entitled, respectively, to (i) current base salaries, effective January 1, 2016, of $500,000, $335,000, and $315,000, and (ii) in the case of Messrs. Diesch and Morris, annual incentive bonus opportunities for 2016 each targeted at 50% of the applicable executive’s base salary (with actual bonus eligibility for each executive ranging from zero to twice the applicable target). Mr. Cohrs’ employment agreement provided for a base salary which, during 2015, was $464,000 and an annual incentive bonus opportunity targeted at 60% of his base salary (with actual bonus eligibility ranging from zero to twice the applicable target). Although neither Mr. Spain nor Mr. Herold is party to an employment agreement with us, Mr. Spain’s current base salary is $291,346 and his annual incentive bonus target for 2016 is 40% of his base salary, and Mr. Herold’s current base salary is $275,000 and his annual incentive bonus target for 2016 is 50% of his base salary.

In addition, the employment agreements provide for customary indemnification, health, welfare, retirement and vacation benefits, as well as (other than Mr. Forman’s employment agreement) monthly auto allowances. The employment and change in control severance benefit agreements also contain customary confidentiality and other restrictive covenants. Each of the executives has also executed a corporate confidentiality and proprietary rights agreement. The employment agreements and Messrs. Herold’s and Spain’s severance agreements entitle our NEOs to certain severance payments upon qualifying terminations of employment. The employment agreements also entitle Messrs. Diesch and Morris to “gross-up” payments from the Company equal to any excise taxes that the executive incurs by operation of Internal Revenue Code Section 280G (and any taxes on such gross-up payment) in connection with a change in control of the Company, but we note that these gross-up payments are legacy rights and that none of these employment agreements which contain gross-up payments were entered into or amended in any way during 2015. Mr. Cohrs’ gross-up provision terminated in December 2015 in connection with his cessation of employment with us. Though not addressed in the employment agreements, each of our NEOs is entitled to accelerated vesting of certain equity awards in the event of a change in control of the Company. For a discussion of the severance and change-in-control benefits for which our NEOs are eligible under their employment agreements or, for Messrs. Herold and Spain, their severance agreements, see “—Potential Payments upon Termination or Change-in-Control” below.

The following table sets forth information with respect to our NEOs, concerning the outstanding equity awards from us and RNP as of December 31, 2015. Footnotes to the table describe the generally applicable vesting conditions for each award. For a description of applicable accelerated vesting provisions, see “—Potential Payments upon Termination or Change-in-Control” below.

	Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Units or Shares of Stock that have not Vested (#)		Market Value of Units or Shares of Stock that have not Vested ($) ⁽¹⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($) ⁽¹⁾		Notes
Keith B. Forman		27,562		82,687		—	$	12.40	12/30/2019			—	$	—		—	$	—		(2	)
		—		400,000		—	$	3.03	12/14/2025			—	$	—		—	$	—		(3	)
		—		—		—	$	—		—		—	$	—		50,413	$	177,455		(4	)

Dan J. Cohrs		44,269		—		—	$	8.90	6/15/2016			—	$	—		—	$	—		(5	)

Jeffrey R. Spain		8,063		—		—	$	9.20	7/28/2021			—	$	—		—	$	—		(6	)
		—		30,000		—	$	3.03	12/14/2025			—	$	—		—	$	—		(3	)
		—		—		—	$	—		—		1,450	$	5,104		—	$	—		(7	)
		—		—		—	$	—		—		—	$	—		2,005	$	7,056		(8	)
		—		—		—	$	—		—		627	$	6,646		—	$	—		(9	)
		—		—		—	$	—		—		—	$	—		3,533	$	12,437		(4	)
		—		—		—	$	—		—		1,251	$	13,261		—	$	—		(10	)

John H. Diesch		4,300		—		—	$	38.70	7/13/2016			—	$	—		—	$	—		(11	)
		17,708		—		—	$	8.90	10/4/2020			—	$	—		—	$	—		(5	)
		—		—		—	$	—		—		7,748	$	82,129		—	$	—		(9	)
		—		—		—	$	—		—		15,495	$	164,247		—	$	—		(10	)
		—		—		—	$	—		—		20,000	$	212,000		—	$	—		(12	)

Joseph V. Herold		5,375		—		—	$	14.70	12/12/2021			—	$	—		—	$	—		(13	)
		—		30,000		—	$	3.03	12/14/2025			—	$	—		—	$	—		(3	)
		—		—		—	$	—		—		1,477	$	5,199		—	$	—		(7	)
		—		—		—	$	—		—		—	$	—		7,872	$	27,711		(8	)
		—		—		—	$	—		—		1,434	$	15,200		—	$	—		(9	)
		—		—		—	$	—		—		—	$	—		8,547	$	30,085		(4	)
		—		—		—	$	—		—		2,867	$	30,390		—	$	—		(10	)

Colin M. Morris		8,063		—		—	$	38.70	7/13/2016			—	$	—		—	$	—		(11	)
		17,708		—		—	$	8.90	10/4/2020			—	$	—		—	$	—		(5	)
		—		—		—	$	—		—		1,596	$	5,618		—	$	—		(7	)
		—		—		—	$	—		—		—	$	—		8,511	$	29,957		(8	)
		—		—		—	$	—		—		1,550	$	16,430		—	$	—		(9	)
		—		—		—	$	—		—		—	$	—		9,240	$	32,524		(4	)
		—		—		—	$	—		—		3,099	$	32,849		—	$	—		(10	)

The following table sets forth information with respect to our NEOs concerning the option exercises and stock vested under our equity plan(s) and the phantom units vested under RNP’s plan during calendar year 2015.

Our NEOs are entitled to certain payments and benefits upon qualifying terminations of employment and, in certain cases, in connection with a change in control at the Company or at RNP. The following discussion describes the terms and conditions of these payments and benefits and the circumstances in which they will be paid or provided. All severance payments are conditioned upon the executive’s execution of a general release of claims against the Company. In the event that any severance payment is subject to “golden parachute” excise taxes under Internal Revenue Code Section 280G, Messrs. Diesch and Morris are (and Mr. Cohrs was during his employment with us) entitled to receive gross-up payments from us for any such excise taxes plus any excise, income or payroll taxes owed on the gross-up payment. Mr. Cohrs’ gross-up provision terminated in December 2015 in connection with his cessation of employment with us.

For purposes of the following discussion, “change in control” refers to a change in control of us or RNP, as follows: with respect to (i) the severance payments and benefits provided to our NEOs pursuant to their respective employment agreements, (ii) the 2014 PSUs, (ii) the 2013 RSUs, (iii) the 2013 PSUs, (iv) in the case of Mr. Forman, the 2014 Forman Options, and (v) the 2015 stock options, a change in control refers to a change in control of us. With respect to (a) the 2015 Phantom Units, (b) the 2014 Phantom Units, and (c) the 2013 Phantom Units, a change in control refers to a change in control of RNP.

Under the employment agreements for Messrs. Forman, Cohrs, Diesch and Morris, upon termination of the executive’s employment by us without cause, by the executive with good reason (each as defined in the employment agreements) , the executives are entitled to receive: (i) two times (in the case of Mr. Forman) or one-time (in the case of the other NEOs) base salary payable in substantially equal installments over a period of two years (with respect to Mr. Forman) or one year (with respect to the other NEOs); (ii) in the case of our NEOs other than Mr. Forman, payment of the executive’s target annual bonus on the date that annual bonuses are paid generally for the year in which termination occurs, and (iii) Company-paid continuation health benefits for up to eighteen months following the date of termination. Upon termination of the employment of Messrs. Cohrs, Diesch and Morris due to our non-renewal of their respective employment terms, these NEOs will be entitled to receive an amount equal to one times base salary, payable over the one-year period following termination, and, at our discretion, an annual bonus for the fiscal year preceding the non-renewal.

Under Mr. Spain’s severance agreement with Rentech (described in “—Severance Benefits” above), upon an involuntary termination of employment by Rentech without cause or by Mr. Spain for good reason (each as defined in the severance agreement) or the expiration of the term of his employment under the severance agreement (if he remains employed through the end of the employment term, which expiration is expected to occur in the third quarter of 2016), Mr. Spain is entitled to receive: (i) twenty-six weeks’ base salary, payable over a six-month period, and (ii) up to six months of subsidized healthcare premiums. Under the terms of his change in control severance benefit agreement with us, Mr. Herold is not entitled to severance upon a qualifying termination of his employment that does not occur in connection with a change in control.

In addition, our NEOs will be entitled to the following enhanced vesting provisions with respect to qualifying terminations occurring outside of the context of a change in control:

In connection with Mr. Cohrs’ cessation of employment with us in December 2015, subject to his execution and non-revocation of a release of claims, he became entitled to receive the contractual severance benefits described above consisting of a cash severance payment totaling one times his base salary (or $464,000) payable over a one-year period, plus his target annual bonus (or $278,400) and the payment of his monthly premiums for continued health benefits for up to eighteen months following termination (with an estimated value, based on our costs to provide such coverage, equal to $30,461). Mr. Cohrs’ severance was calculated in accordance with the severance formulation contained in his pre-existing employment agreement and was not enhanced in any way.

The NEOs are not entitled to any cash payments based solely on the occurrence of a change in control (absent any qualifying termination). In addition, the 2015 Options, 2014 Forman Options, 2013 RSUs, 2014 Phantom Units, and 2013 Phantom Units are not impacted by a change in control alone and require a qualifying termination in connection with such change in control to vest. With respect to the 2013 PSUs, the applicable performance period ends upon a change in control, which may, depending upon performance through the change in control, result in the final vesting of awards with respect to which time-vesting requirements were previously satisfied, but performance-vesting requirements were not; however, as of December 31, 2015, none of the PSUs subject to these awards met these criteria and, accordingly, none were eligible for accelerated vesting upon a change in control.

With respect to the 2014 PSUs, if a change in control occurs prior to the year 3 measurement date, then a number of PSUs are eligible to vest on the year 3 measurement based on the per share change in control transaction proceeds, subject to the holder’s continued service through such year 3 measurement date. If, however, the change in control occurs after the year 3 measurement date but prior to the year 4 measurement date, the applicable performance period ends upon the change in control and may, depending the per share change in control transaction proceeds, result in the vesting of such 2014 PSUs (provided that the applicable service-vesting requirements are met). However, as of December 31, 2015, none of the 2014 PSUs met these criteria and, accordingly, none were eligible for accelerated vesting upon a change in control.

Pursuant to their respective employment agreements, upon a termination of employment without cause, for good reason or due to a non-renewal of the applicable employment term by us, in any case, within three months before or two years after a change in control of us, Messrs. Forman, Diesch and Morris will receive (and Mr. Cohrs was entitled to receive during his employment with us) the severance described above, except that (i) the base salary component of the executive’s severance will be paid in a lump sum and (ii) in the case of such NEOs other than Mr. Forman, if the executive’s actual annual bonus for the year immediately preceding the change in control exceeds his target bonus for the year in which the termination occurs, the executive will receive one times base salary plus the amount of such prior-year bonus (instead of base salary plus target annual bonus). Messrs. Diesch’s and Morris’ employment agreements provide (and Mr. Cohrs’ employment agreement provided) that the applicable executive would be entitled to a “gross-up” payment covering all taxes, penalties and interest associated with any “golden parachute” excise taxes that are imposed on the executives by reason of Internal Revenue Code Section 280G in connection with a change in control of us, although Mr. Cohrs’ gross-up provision terminated in connection with his cessation of employment with us. Upon a termination of Mr. Spain’s employment in connection with a change in control, Mr. Spain will receive the same severance payments and benefits described above under “Termination Not in Connection with a Change in Control.”

Under the terms of his change in control severance benefit agreement with us, upon a termination of employment without cause or for good reason, in any case, within one month before or one year after a change in control of us, Mr. Herold is entitled to receive (i) an amount equal to one times his base salary, (ii) payment of his target annual bonus (40% of base salary), and (iii) Company-paid continuation health benefits for up to twelve months following the date of termination.

In addition, our NEOs will be entitled to the following enhanced vesting provisions with respect to qualifying terminations occurring in connection with a change in control:

The following table summarizes the change-in-control and/or severance payments and benefits to which we expect that our NEOs would have become entitled if the relevant event(s) had occurred on December 31, 2015, in accordance with applicable disclosure rules. For purposes of the following table, we have assumed that a change in control of each relevant entity, whether Rentech and/or RNP, occurred on December 31, 2015, in order to provide a complete representation of the payments and benefits that each NEO would have become entitled to receive upon the occurrence of the relevant event(s). The severance benefits that Mr. Cohrs became entitled to receive when he ceased his employment with Rentech in December 2015 are described above (rather than in the table below).

Name	Benefit	Termination without Cause or for Good Reason ($)			Termination due to Non- Renewal or Expiration of Term ($)			Termination due to Death/Disability ($)			Qualifying Termination in Connection with a Change in Control			Other Terminations
Keith B. Forman	Cash Severance	$	1,000,000	(1)	$	—		$	—		$	1,000,000	(2)	$	—
	Value of Accelerated Stock Awards ⁽³⁾		—			—			—			—	(4)		—
	Value of Accelerated Option Awards ⁽⁵⁾		—			—			—			196,000	(6)		—
	Value of Healthcare Premiums		30,461	(7)		—			—			30,461	(7)		—
	Total	$	1,030,461		$	—		$	—		$	1,226,461		$	—
Jeffrey R. Spain	Cash Severance	$	145,673	(8)	$	145,673	(8)	$	—		$	145,673	(8)	$	—
	Value of Accelerated Stock Awards ⁽³⁾		—			—			19,216	(9)		5,104	(10)		—
	Value of Accelerated Option Awards ⁽⁵⁾		—			—			—			14,700	(11)		—
	Value of Accelerated Units ⁽¹²⁾		—			—			19,907	(13)		19,907	(14)		—
	Value of Healthcare Premiums		10,154	(7)		10,154	(7)		—			10,154	(7)		—
	Total	$	155,827		$	155,827		$	39,123		$	195,538		$	—
John H. Diesch	Cash Severance	$	502,500	(15)	$	335,000	(16)	$	—		$	480,725	(17)	$	—
	Value of Accelerated Stock Awards ⁽³⁾		—			—			—			—			—
	Value of Accelerated Units ⁽¹²⁾		—			—			458,376	(18)		458,376	(19)		—
	Value of Healthcare Premiums		30,461	(7)		—			—			30,461	(7)		—
	Total	$	532,961		$	335,000		$	458,376		$	969,562	(20)	$	—
Joseph V. Herold	Cash Severance	$	—		$	—		$	—		$	385,000	(21)	$	—
	Value of Accelerated Stock Awards ⁽³⁾		—			—			60,618	(22)		5,199	(23)		—
	Value of Accelerated Option Awards ⁽⁵⁾		—			—			—			14,700	(24)		—
	Value of Accelerated Units ⁽¹²⁾		—			—			45,591	(25)		45,591	(26)		—
	Value of Healthcare Premiums		—			—			—			—			—
	Total	$	—		$	—		$	106,209		$	450,490		$	—
Colin M. Morris	Cash Severance	$	472,500	(14)	$	315,000	(15)	$	—		$	383,850	(16)	$	—
	Value of Accelerated Stock Awards ⁽³⁾		—			—			65,532	(27)		5,618	(28)		—
	Value of Accelerated Units ⁽¹²⁾		—			—			49,279	(29)		49,279	(30)		—
	Value of Healthcare Premiums		10,391	(7)		—			—			10,391	(7)		—
	Total	$	482,891		$	315,000		$	114,811		$	449,138	(20)	$	—

The following table sets forth compensation information with respect to our non-employee directors during 2015.

Directors who are our employees do not receive additional compensation for their services on the Board.

For the first six months of 2015, non-employee directors received no cash compensation for their services on our Board; instead pursuant to Rentech’s director compensation program, all annual retainer fees and committee fees were paid to our non-employee directors in the form of restricted stock or deferred stock units. For the second six months of 2015, the non-employee directors received a mix of equity awards and cash retainers for their service.

Under the current director compensation program, each newly elected non-employee member of our Board is granted a fully-vested option to purchase 2,000 shares of our common stock with an exercise price equal to the fair market value of our common stock on the date of grant and a term of five years following the date of grant. Each non-employee director serving immediately following our annual meeting of shareholders also is granted (i) a number of shares of our fully vested common stock obtained by dividing $50,000 by the fair market value of our common stock on the date of grant, rounded up to the nearest 100 shares, and (ii) an RSU obtained by dividing $25,000 by the fair market value of our common stock on the date of grant, rounded up to the nearest 100 shares, vesting on the earlier of the one year anniversary of the date of grant and our annual meeting of shareholders, subject to the director’s continued service on our Board through such date.

Each director also receives annual cash retainers for chairing or participating on committees of our Board and for service as a member of our Board during the applicable year (pro-rated for any partial year), as follows:

Directors are also reimbursed for reasonable out-of-pocket expenses incurred in their capacity as directors. No additional fees are paid to directors for attendance at our Board or committee meetings.

During 2015, the following individuals served as members of the Compensation Committee: Michael S. Burke, Edward M. Stern, and Halbert S. Washburn. None of these individuals has ever served as our officer or employee or an officer or employee of any of our subsidiaries. None of our executive officers has served as a director or member of the compensation committee of another entity at which an executive officer of such entity is also one of our directors.

We have assessed the compensation policies and practices for our employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on us. In reaching our conclusion, we considered the following elements of our compensation plans and policies:

The following table sets forth certain information regarding beneficial ownership of our common stock as of February 29, 2016 by (i) all owners of record or those who are known to us to beneficially own more than 5% of the issued and outstanding shares of our common stock, (ii) each director and named executive officer, or NEO, identified in the tables under Item 11 “Executive Compensation,” and (iii) by all executive officers and directors as a group:

(A) Performance-vesting restricted stock units, or PSUs, granted during the year ended December 31, 2014 and held by our NEOs that vest over a four year period based on the level of total shareholder return over such period (the numbers below represent the target number of PSUs that may be issued to the NEOs):

PSUs, granted prior to January 1, 2014 and held by our NEOs that vest over a three year period based on the level of total shareholder return over such period (the numbers below represent the target number of PSUs that may be issued to the NEOs):

(B) unvested RSUs and/or options that will vest assuming the continued employment of the officer or director beyond each applicable vesting date:

The following table provides information as of December 31, 2015 with respect to our compensation plans, including individual compensation arrangements, under which our equity securities are authorized for issuance.

The equity securities issued as compensation under shareholder approved compensation plans consist of stock options, time-based RSUs and performance-based RSUs. The equity securities issued as compensation without shareholder approval consist of stock options, time-based RSUs and performance-based RSUs. The stock options have exercise prices equal to the fair market value of our common stock, as reported by the NYSE MKT (prior to August 13, 2013) or the NASDAQ Stock Market (on or after August 13, 2013), as of the date the securities were granted. The options may be exercised for a term ranging from five to ten years after the date they were granted.

On July 17, 2015, Mr. Burke was granted 890 phantom units of RNP. Such phantom units will vest on July 17, 2016, subject to Mr. Burke’s continued service through the vesting date. In addition, on July 17, 2015, Mr. Burke was granted 1,780 RNP common units.

Pursuant to its charter, the Audit Committee is responsible for reviewing and approving all related party transactions. While we do not have a formal written policy or procedure for the review, approval or ratification of related party transactions, the Audit Committee must review the material facts of any such transaction and approve that transaction on a case by case basis.

On August 9, 2015, we entered into the Waiver with certain funds managed by or affiliated with GSO Capital, which beneficially own approximately 16.4% of our common stock on an as-converted basis as of February 29, 2016. See “Note 15 — Debt” to the consolidated financial statements included in “Part II—Item 8. Financial Statements and Supplementary Data” in this report for further information. These transactions were approved by our Board, including all of the members of the Audit Committee, with Mr. Fleury abstaining from the approval.

The following table presents fees billed and expected to be billed for audit fees, audit-related fees, tax fees and other services rendered by PricewaterhouseCoopers LLP for the years ended December 31, 2015 and 2014.

The Audit Committee is required to pre-approve all audit services and non-audit services (other than de minimis non-audit services as defined by the Sarbanes-Oxley Act of 2002) to be provided by our independent registered public accounting firm. Non-audit services were reviewed with the Audit Committee, which concluded that the provision of such services by PricewaterhouseCoopers LLP were compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee pre-approved all fees incurred in the years ended December 31, 2014 and 2013.

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

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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Large accelerated filer	o	Accelerated filer	x

Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o


			Page
PART I
ITEM 1.	Business			4
ITEM 1A.	Risk Factors			23
ITEM 1B.	Unresolved Staff Comments			50
ITEM 2.	Properties			50
ITEM 3.	Legal Proceedings			51
ITEM 4.	Mine Safety Disclosures			52

PART II
ITEM 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		52
ITEM 6.		Selected Financial Data		54
ITEM 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		55
ITEM 7A.		Quantitative and Qualitative Disclosures About Market Risk		94
ITEM 8.		Financial Statements and Supplementary Data		97
ITEM 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		167
ITEM 9A.		Controls and Procedures		167
ITEM 9B.		Other Information		168

PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance			168
ITEM 11.	Executive Compensation			173
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			197
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence			200
ITEM 14.	Principal Accountant Fees and Services			201

PART IV
ITEM 15.	Exhibits and Financial Statement Schedules			201

Customer	Number of Mills		% of United States Volume			Weighted Average Remaining Contractual Life in Years ⁽¹⁾
WestRock		8		20	%		1.5
Graphic Packaging		2		17	%		3.9
Packaging Corp. of America		1		14	%		12.9
Weyerhaeuser		2		11	%		1.0
Georgia-Pacific		2		10	%		1.7

	Approximate Production Capacity
Product	Tons /Day		Tons /Year⁽¹⁾		Product Storage Capacity
Ammonia		1,025		374,125	60,000 tons (3 tanks);
UAN		1,100		401,500	80,000 tons (2 tanks)
Urea (liquid)		484		176,660	Limited capacity is not a factor
Urea (granular)		140		51,100	12,000 granular ton warehouse
Nitric acid		400		146,000	Limited capacity is not a factor
CO₂		350		127,750	1,900 tons

Locations	Production Capacity Tons (Short Tons)		Indoor Storage Capacity Tons (Short Tons)
New Hampshire - one facility ⁽¹⁾		84,000		3,000
New York - two facilities		165,000		33,000
Pennsylvania - one facility		60,000		2,000

	Approximate Production Capacity				Product Storage
Product	Tons /Day		Tons /Year ⁽¹⁾		Capacity
Ammonium sulfate		2,100		693,000	60,000 tons
Sulfuric acid		1,750		638,750	27,000 tons
Ammonium thiosulfate		220		80,300	14,000 tons

Year Ended December 31, 2015	High		Low
First Quarter, ended March 31, 2015	$	1.40	$	1.12
Second Quarter, ended June 30, 2015	$	1.24	$	1.05
Third Quarter, ended September 30, 2015	$	7.38	$	0.63
Fourth Quarter, ended December 31, 2015	$	6.54	$	2.46

Year Ended December 31, 2014	High		Low
First Quarter, ended March 31, 2014	$	2.04	$	1.74
Second Quarter, ended June 30, 2014	$	2.61	$	1.79
Third Quarter, ended September 30, 2014	$	2.52	$	1.71
Fourth Quarter, ended December 31, 2014	$	1.73	$	1.13

	9/10		9/11		12/11		12/12		12/13		12/14		12/15
Rentech, Inc.		100.00		79.13		132.86		285.86		190.21		136.95		38.26
Russell 2000		100.00		96.47		111.40		129.61		179.93		188.74		180.41
Fertilizer Peer Group		100.00		109.69		120.41		171.58		168.75		182.56		161.51
Wood Fibre Peer Group		100.00		96.89		115.35		145.65		229.62		230.52		191.94

	As of December 31,													As of September 30,
	2015			2014		2013		2012		2011		2010		2011
												(unaudited)
	(in thousands)
CONSOLIDATED BALANCE SHEET DATA
Cash(1)	$	41,708		$	19,666	$	106,369	$	141,637	$	237,478	$	84,586	$	121,209
Working Capital	$	23,760		$	1,310	$	68,682	$	106,293	$	202,365	$	27,404	$	36,429
Construction in Progress	$	5,134		$	164,413	$	60,136	$	61,417	$	7,332	$	5,017	$	20,788
Total Assets	$	650,291		$	816,649	$	693,129	$	471,978	$	355,262	$	238,144	$	246,565
Total Long-Term Liabilities	$	521,502		$	461,003	$	422,123	$	186,906	$	48,209	$	112,976	$	150,056
Total Rentech Stockholders' Equity (Deficit)	$	(15,221	)	$	120,733	$	158,073	$	157,987	$	208,848	$	33,203	$	(19,628	)

	For the Year Ended December 31, 2015				For the Year Ended December 31, 2014
	Tons		Revenue		Tons		Revenue
	(in thousands)
Revenues:
Ammonium sulfate		473	$	111,645		572	$	116,330
Sulfuric acid		150		12,660		112		9,624
Ammonium thiosulfate		76		12,735		67		10,217
Other	N/A			2,347	N/A			2,062
Total - Pasadena		699	$	139,387		751	$	138,233

	Rentech Excluding RNP		RNP		Consolidated Before RNP Disc Ops Adjmts		RNP Disc Ops Adjmts(1)			Rentech, Inc. Consolidated
	(in thousands)
Cash	$	33,119	$	15,823	$	48,942	$	(7,234	)	$	41,708
Accounts receivable		9,495		11,451		20,946		(9,001	)		11,945
Inventories		22,009		32,116		54,125		(8,596	)		45,529
Other current assets		6,891		6,119		13,010		(2,264	)		10,746
Assets of discontinued operations		106		—		106		27,095			27,201
Total current assets	$	71,620	$	65,509	$	137,129	$	—		$	137,129
Accounts payable	$	12,266	$	12,022	$	24,288	$	(7,007	)	$	17,281
Accrued liabilities		17,158		15,212		32,370		(9,568	)		22,802
Debt		18,744		—		18,744		—			18,744
Other current liabilities		10,773		26,237		37,010		(15,074	)		21,936
Liabilities of discontinued operations		957		—		957		31,649			32,606
Total current liabilities	$	59,898	$	53,471	$	113,369	$	—		$	113,369

	Excluding RNP		RNP		Rentech, Inc. Consolidated
	(in thousands)
RNP Notes - discontinued operations	$	—	$	320,000	$	320,000
A&R GSO Credit Agreement		95,000		—		95,000
GE Credit Agreement - discontinued operations		—		34,500		34,500
Fulghum debt⁽²⁾		47,049		—		47,049
NEWP debt⁽³⁾		16,107		—		16,107
QS Construction Facility⁽⁴⁾		19,926		—		19,926
Total debt	$	178,082	$	354,500	$	532,582


	Page
Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm		98
Consolidated Balance Sheets		99
Consolidated Statements of Operations		100
Consolidated Statements of Comprehensive Income (Loss)		101
Consolidated Statements of Stockholders’ Equity (Deficit)		102
Consolidated Statements of Cash Flows		103
Notes to Consolidated Financial Statements		105

Financial Statement Schedules:

Schedule I – Condensed Financial Information (Parent Company Only)		161

Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2015, 2014 and 2013		166

	For the Year Ended December 31,
	2015		2014		2013
Cash payments of interest
Net of capitalized interest of $2,188 (Dec 2015), $3,987 (Dec 2014) and $3 (Dec 2013)	$	10,308	$	3,741	$	2,693
Cash payments of income taxes from continuing operations		367		582		287

Type of Asset		Estimated Useful Life
Land and improvements		5 - 20 years
Building and building improvements		4 - 40 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

Balance at December 31, 2014	$	5,122
Accretion expense		309
Liabilities settled in current period		(710	)
Balance at December 31, 2015	$	4,721

			As of December 31, 2015							As of December 31, 2014
	Average Life (Years)		Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
			(in thousands)
Trade names	20 / Indefinite		$	10,896	$	(1,089	)	$	9,807	$	10,496	$	(442	)	$	10,054
Wood chip processing agreements	1 - 17			29,765		(7,951	)	$	21,814		29,765		(4,195	)	$	25,570
Off-take contract		10		2,154		(197	)	$	1,957		2,577		—		$	2,577
Technologies to produce fertilizers		20		—		—		$	—		23,680		(2,566	)	$	21,114
Fertilizer marketing agreements		1.5		—		—		$	—		3,088		(3,088	)	$	—
Customer relationships		13		2,700		(351	)	$	2,349		1,900		389		$	2,289
Non-competition agreements		3		200		(43	)	$	157		200		—		$	200
Intangibles			$	45,715	$	(9,631	)	$	36,084	$	71,706	$	(9,902	)	$	61,804

For the Years Ending December 31,
2016	$	3,116
2017	$	2,328
2018	$	2,193
2019	$	2,049
2020	$	1,990

Inventories	$	214
Property, plant and equipment		3,937
Construction in progress		28
Intangible assets (customer relationships - $800 and trade name - $400)		1,200
Goodwill		1,862
Accrued liabilities		(27	)
Total purchase price	$	7,214

Cash	$	35,434
Fair value of earn-out consideration		3,840
Total purchase price		39,274
Adjustment to earn-out consideration		1,160
Total consideration	$	40,434

Cash	$	3,852
Accounts receivable		2,925
Inventories		2,239
Prepaid expenses and other current assets		439
Property, plant and equipment		30,625
Intangible assets (trade name - $5,000, customer relationships - $1,900 and non-compete agreements - $200)		7,100
Goodwill		8,461
Accounts payable		(1,641	)
Accrued liabilities		(442	)
Customer deposits		(882	)
Loans		(12,600	)
Interest rate swaps		(802	)
Total purchase price		39,274
Adjustment to earn-out consideration⁽¹⁾		1,160
Total consideration	$	40,434

	For the Year Ended December 31, 2015
	As Reported			Pro Forma Adjustments		Pro Forma
	(in thousands)
Revenues	$	295,844		$	389	$	296,233
Net income (loss)	$	(153,031	)	$	130	$	(152,901	)
Net income (loss) attributable to Rentech	$	(119,889	)	$	130	$	(119,759	)
Basic and diluted net loss from continuing operations per common share allocated to Rentech	$	(6.50	)	$	—	$	(6.50	)

	For the Year Ended December 31, 2014
	As Reported			Pro Forma Adjustments		Pro Forma
	(in thousands)
Revenues	$	269,181		$	20,811	$	289,992
Net income (loss)	$	(32,504	)	$	1,525	$	(30,979	)
Net income (loss) attributable to Rentech	$	(35,850	)	$	1,525	$	(34,325	)
Basic and diluted net income (loss) from continuing operations per common share allocated to Rentech	$	(2.71	)	$	0.07	$	(2.64	)

	For the Calendar Year Ended December 31, 2013
	As Reported			Pro Forma Adjustments		Pro Forma
	(in thousands)
Revenues	$	191,959		$	80,399	$	272,358
Net income	$	38		$	3,065	$	3,103
Net income (loss) attributable to Rentech	$	(1,532	)	$	2,930	$	1,398
Basic and diluted net income (loss) from continuing operations per common share allocated to Rentech	$	(0.72	)	$	0.14	$	(0.58	)

	Level 1		Level 2		Level 3
	(in thousands)
Liabilities
Earn-out consideration - 2015	$	—	$	—	$	871
Earn-out consideration - 2014		—		—		1,295

	Fair Value						Carrying
	Level 1		Level 2		Level 3		Value
	(in thousands)
Liabilities
Fulghum debt	$	—	$	46,840	$	—	$	48,150
NEWP debt		—		15,964		—		16,203
A&R GSO Credit Agreement		—		95,000		—		91,733
RNP Notes - discontinued operations		310,400		—		—		313,934
GE Credit Agreement - discontinued operations		—		34,500		—		33,641

	Atikokan			NEWP			Total
	(in thousands)
Balance at December 31, 2013	$	1,544		$	—		$	1,544
Add: Earn-out consideration		—			3,840			3,840
Add: Unrealized (gain) loss		(127	)		1,160			1,033
Add: Unrealized gain on foreign currency translation		(122	)		—			(122	)
Balance at December 31, 2014	$	1,295		$	5,000		$	6,295
Less: Unrealized gain		(230	)		—			(230	)
Add: Unrealized gain on foreign currency translation		(194	)		—			(194	)
Less: Earn-out consideration payment		—			(5,000	)		(5,000	)
Balance at December 31, 2015	$	871		$	—		$	871

	For the Year Ended December 31, 2015
	(in thousands)
Realized loss	$	—
Unrealized loss		(1,254	)
Total net loss on currency swaps	$	(1,254	)

	As of
	December 31, 2015			December 31, 2014
	(in thousands)
Currency swaps recorded in current assets (liabilities):
Gross amounts recognized	$	(1,536	)	$	(2,321	)
Gross amounts offset in consolidated balance sheets		—			2,039
Net amounts presented in the consolidated balance sheets	$	(1,536	)	$	(282	)

	Pasadena			Fulghum		NEWP		Total
	(in thousands)
Balance at December 31, 2013	$	27,202		$	29,932		—	$	57,134
Add: Acquisition		—			—		8,461		8,461
Less: Impairment		(27,202	)		—		—		(27,202	)
Balance at December 31, 2014	$	—		$	29,932	$	8,461	$	38,393
Add: Allegheny Acquisition		—			—	$	1,862	$	1,862
Balance at December 31, 2015	$	—		$	29,932	$	10,323	$	40,255

For the Years Ending December 31,
2016	$	18,307
2017		9,013
2018		6,630
2019		101,320
2020		5,757
Thereafter		30,862
	$	171,889
Portion of QS Construction Facility not obligated to pay		6,193
	$	178,082

For the Years Ending December 31,
2016	$	6,446
2017		4,270
2018		3,166
2019		3,103
2020 and thereafter		10,426
	$	27,411

	Number of Awards
	For the Years Ended December 31,
Type of Award	2015		2014		2013
Performance awards		—		556,400		300,500
Time-vested awards		47,960		52,100		199,400
Total		47,960		608,500		499,900

	Number of shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2012		447,200		$	16.70	$	5,848,000
Granted		—			—
Exercised		(71,100	)		10.30
Canceled / Expired		(27,100	)		24.00
Outstanding at December 31, 2013		349,000		$	15.90	$	2,144,448
Granted		112,200			12.50
Exercised		(39,300	)		11.70
Canceled / Expired		(10,000	)		8.90
Outstanding at December 31, 2014		411,900		$	15.50	$	784,931
Granted		788,500			3.03
Exercised		(82,900	)		8.71
Canceled / Expired		(36,400	)		31.98
Outstanding at December 31, 2015		1,081,100		$	6.39	$	386,365
Options exercisable at December 31, 2015		209,994		$	16.64	$	—
Options exercisable at December 31, 2014		301,700		$	16.70
Options exercisable at December 31, 2013		343,600		$	16.00
Weighted average fair value of options granted during the year ended December 31, 2015				$	1.56

	Outstanding						Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$3.03-$3.03		788,500		9.95		3.03		—	$	—
$5.00-$9.20		110,000		4.82		8.92		109,943		8.92
$9.60-$10.00		2,700		5.49		9.60		2,687		9.60
$11.20-$18.10		129,000		3.73		12.42		46,483		12.45
$20.70-$25.00		3,200		1.31		20.70		3,225		20.70
$35.00-$35.00		2,200		0.95		35.00		2,150		35.00
$38.70-$40.00		45,500		0.55		38.81		45,506		38.81
		1,081,100						209,994