Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-31465
  ______________________________________________________
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12541726&doc=13
NATURAL RESOURCE PARTNERS L.P.
(Exact name of registrant as specified in its charter)
  ______________________________________________________
Delaware
 
35-2164875
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1201 Louisiana Street, Suite 3400
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 751-7507
(Registrant’s telephone number, including area code) 
  ______________________________________________________
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  ý    No  ¨

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  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
¨
Accelerated Filer
 
ý
Non-accelerated Filer
¨  (Do not check if a smaller reporting company)
Smaller Reporting Company
 
¨
 
 
Emerging Growth Company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At November 2, 2018 there were 12,245,920 Common Units outstanding.
 







NATURAL RESOURCE PARTNERS, L.P.
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 





i






PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
 
September 30,
 
December 31,
(In thousands, except unit data)
2018
 
2017
ASSETS
(Unaudited)
 
 
Current assets
 
 
 
Cash and cash equivalents
$
63,387

 
$
29,827

Accounts receivable, net
55,734

 
47,026

Accounts receivable—affiliates
22

 
161

Inventory
9,572

 
7,553

Prepaid expenses and other
4,665

 
5,838

Current assets of discontinued operations
988

 
991

Total current assets
134,368

 
91,396

Land
24,809

 
25,247

Plant and equipment, net
48,148

 
46,170

Mineral rights, net
869,106

 
883,885

Intangible assets, net
46,998

 
49,554

Equity in unconsolidated investment
242,901

 
245,433

Long-term contracts receivable
39,416

 
40,776

Other assets
6,188

 
6,547

Other assets—affiliate

 
156

Total assets
$
1,411,934

 
$
1,389,164

LIABILITIES AND CAPITAL
 
 
 
Current liabilities
 
 
 
Accounts payable
$
7,467

 
$
6,957

Accounts payable—affiliates
608

 
562

Accrued liabilities
14,005

 
16,890

Accrued liabilities—affiliates

 
515

Accrued interest
5,540

 
15,484

Current portion of deferred revenue
1,403

 

Current portion of long-term debt, net
75,201

 
79,740

Current liabilities of discontinued operations

 
401

Total current liabilities
104,224

 
120,549

Deferred revenue
40,885

 
100,605

Long-term debt, net
716,514

 
729,608

Other non-current liabilities
1,958

 
2,808

Other non-current liabilities—affiliate

 
346

Total liabilities
863,581

 
953,916

Commitments and contingencies (see Note 15)
 
 
 
Class A Convertible Preferred Units (250,000 and 258,844 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively, at $1,000 par value per unit; liquidation preference of $1,500 per unit)
164,587

 
173,431

Partners’ capital
 
 
 
Common unitholders’ interest (12,245,920 and 12,232,006 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively)
319,673

 
199,851

General partner’s interest
4,293

 
1,857

Warrant holders’ interest
66,816

 
66,816

Accumulated other comprehensive loss
(4,081
)
 
(3,313
)
Total partners’ capital
386,701

 
265,211

Non-controlling interest
(2,935
)
 
(3,394
)
Total capital
383,766

 
261,817

Total liabilities and capital
$
1,411,934


$
1,389,164

The accompanying notes are an integral part of these consolidated financial statements.

1


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Revenues and other income
 
 
 
 
 
 
 
Coal royalty and other
$
42,459

 
$
43,507

 
$
134,428

 
$
111,269

Coal royalty and other—affiliates
59

 
335

 
484

 
23,178

Transportation and processing services
6,853

 
5,571

 
17,238

 
9,717

Transportation and processing services—affiliate

 

 

 
6,013

Construction aggregates
30,398

 
29,553

 
91,055

 
82,399

Road construction and asphalt paving services
6,250

 
5,157

 
13,154

 
13,087

Equity in earnings of Ciner Wyoming
8,836

 
8,993

 
34,986

 
27,676

Gain on asset sales, net
163

 
171

 
1,033

 
3,576

Total revenues and other income
$
95,018

 
$
93,287

 
$
292,378


$
276,915

Operating expenses
 
 
 
 
 
 
 
Operating and maintenance expenses
$
35,134

 
$
32,441

 
$
103,403

 
$
93,089

Operating and maintenance expenses—affiliates
2,414

 
2,154

 
8,944

 
6,928

Depreciation, depletion and amortization
8,221

 
8,306

 
24,741

 
26,195

Amortization expense—affiliate

 

 

 
1,008

General and administrative
2,249

 
2,648

 
8,068

 
10,757

General and administrative—affiliates
934

 
1,207

 
2,714

 
3,183

Asset impairments

 

 
242

 
1,778

Total operating expenses
$
48,952


$
46,756


$
148,112

 
$
142,938

 
 
 
 
 
 
 
 
Income from operations
$
46,066


$
46,531


$
144,266

 
$
133,977

Other expense, net
 
 
 
 
 
 
 
Interest expense, net
$
(17,501
)
 
$
(20,032
)
 
$
(53,205
)
 
$
(63,464
)
Debt modification expense

 

 

 
(7,939
)
Loss on extinguishment of debt

 

 

 
(4,107
)
Total other expense, net
$
(17,501
)

$
(20,032
)

$
(53,205
)
 
$
(75,510
)
 
 
 
 
 
 
 
 
Net income from continuing operations
$
28,565


$
26,499


$
91,061

 
$
58,467

Loss from discontinued operations
(24
)
 
(433
)
 
(72
)
 
(507
)
Net income
$
28,541


$
26,066


$
90,989

 
$
57,960

Net loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Net income attributable to NRP
$
28,900

 
$
26,066

 
$
90,479

 
$
57,960

Less: income attributable to preferred unitholders
(7,500
)
 
(7,650
)
 
(22,500
)
 
(17,688
)
Net income attributable to common unitholders and general partner
$
21,400


$
18,416


$
67,979

 
$
40,272

 
 
 
 
 
 
 
 
Net income attributable to common unitholders
$
20,972

 
$
18,046

 
$
66,619

 
$
39,466

Net income attributable to the general partner
$
428

 
$
370

 
$
1,360

 
$
806

 
 
 
 
 
 
 
 
Income from continuing operations per common unit (see Note 5)
 
 
 
 
 
 
 
Basic
$
1.71

 
$
1.51

 
$
5.45

 
$
3.27

Diluted
$
1.30

 
$
1.08

 
4.06

 
2.67

Net income per common unit (see Note 5)
 
 
 
 
 
 
 
Basic
$
1.71

 
$
1.48

 
$
5.44

 
$
3.23

Diluted
$
1.30

 
$
1.07

 
4.06

 
2.65

 
 
 
 
 
 
 
 
Net income
$
28,541


$
26,066


$
90,989

 
$
57,960

Comprehensive income (loss) from unconsolidated investment and other
791

 
(268
)
 
(768
)
 
(1,413
)
Comprehensive income
$
29,332

 
$
25,798

 
$
90,221

 
$
56,547

Comprehensive loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Comprehensive income attributable to NRP
$
29,691


$
25,798


$
89,711

 
$
56,547

The accompanying notes are an integral part of these consolidated financial statements.

2


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
(Unaudited)


 
Common Unitholders
 
General Partner
 
Warrant Holders
 
Accumulated
Other
Comprehensive
Loss
 
Partners' Capital Excluding Non-Controlling Interest
 
Non-Controlling Interest
 
Total Capital
 
(In thousands)
Units
 
Amounts
 
Balance at December 31, 2017
12,232

 
$
199,851

 
$
1,857

 
$
66,816

 
$
(3,313
)
 
$
265,211

 
$
(3,394
)
 
$
261,817

Cumulative effect of adoption of accounting standard (See Note 2)

 
69,057

 
1,409

 

 

 
70,466

 

 
70,466

Net income (1)

 
88,669

 
1,810

 

 

 
90,479

 
510

 
90,989

Distributions to common unitholders and general partner

 
(16,526
)
 
(337
)
 

 

 
(16,863
)
 

 
(16,863
)
Distributions to preferred unitholders

 
(22,310
)
 
(455
)
 

 

 
(22,765
)
 

 
(22,765
)
Issuance of unit-based awards
14

 
410

 

 

 

 
410

 

 
410

Unit-based awards amortization and vesting

 
472

 

 

 

 
472

 

 
472

Comprehensive income (loss) from unconsolidated investment and other

 
50

 
9

 

 
(768
)
 
(709
)
 
(51
)
 
(760
)
Balance at September 30, 2018
12,246

 
$
319,673

 
$
4,293

 
$
66,816

 
$
(4,081
)
 
$
386,701

 
$
(2,935
)
 
$
383,766

 
 
 
 
 
(1)
Net income includes $22.5 million attributable to Preferred Unitholders that accumulated during the period, of which $22.1 million is allocated to the common unitholders and $0.5 million is allocated to the general partner.
The accompanying notes are an integral part of these consolidated financial statements.

3


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



 
Nine Months Ended September 30,
(In thousands)
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
90,989

 
$
57,960

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Depreciation, depletion and amortization
24,741

 
26,195

Amortization expense—affiliate

 
1,008

Distributions from unconsolidated investment
34,653

 
31,104

Equity earnings from unconsolidated investment
(34,986
)
 
(27,676
)
Gain on asset sales, net
(1,033
)
 
(3,576
)
Debt modification expense

 
7,939

Loss on extinguishment of debt

 
4,107

Loss from discontinued operations
72

 
507

Asset impairments
242

 
1,778

Unit-based compensation expense
1,226

 
(23
)
Amortization of debt issuance costs and other
2,541

 
6,547

Other—affiliates
(190
)
 
(974
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable
(7,004
)
 
508

Accounts receivable—affiliates
139

 
285

Accounts payable
670

 
730

Accounts payable—affiliates
46

 
(270
)
Accrued liabilities
(1,984
)
 
(7,096
)
Accrued liabilities—affiliates
(515
)
 

Accrued interest
(9,944
)
 
(5,322
)
Deferred revenue
9,200

 
(5
)
Deferred revenue—affiliates

 
(10,166
)
Other items, net
(846
)
 
(2,166
)
Net cash provided by operating activities of continuing operations
$
108,017

 
$
81,394

Net cash used in operating activities of discontinued operations
(469
)
 
(607
)
Net cash provided by operating activities
$
107,548

 
$
80,787

 
 
 
 
Cash flows from investing activities
 
 
 
Distributions from unconsolidated investment in excess of cumulative earnings
$
2,097

 
$
5,646

Proceeds from sale of assets
1,149

 
1,419

Return of long-term contract receivable
2,606

 
1,807

Return of long-term contract receivable—affiliate

 
804

Acquisition of plant and equipment and other
(9,666
)
 
(6,236
)
Net cash provided by (used in) investing activities of continuing operations
$
(3,814
)
 
$
3,440

Net cash provided by investing activities of discontinued operations

 
206

Net cash provided by (used in) investing activities
$
(3,814
)
 
$
3,646

 
 
 
 

4


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



 
Nine Months Ended September 30,
(In thousands)
2018
 
2017
Cash flows from financing activities
 
 
 
Proceeds from issuance of preferred units and warrants, net
$

 
$
242,100

Proceeds from issuance of 2022 Senior Notes, net

 
103,688

Borrowings on credit facility
35,000

 
69,000

Repayments of loans
(55,720
)
 
(356,292
)
Redemption of preferred units paid-in-kind
(8,844
)
 

Distributions to common unitholders and general partner
(16,863
)
 
(16,850
)
Distributions to preferred unitholders
(22,765
)
 
(5,019
)
Contributions to discontinued operations
(469
)
 
(401
)
Debt issuance costs and other
(982
)
 
(40,187
)
Net cash used in financing activities of continuing operations
$
(70,643
)
 
$
(3,961
)
Net cash provided by financing activities of discontinued operations
469

 
401

Net cash used in financing activities
$
(70,174
)
 
$
(3,560
)
 
 
 
 
Net increase in cash and cash equivalents
$
33,560

 
$
80,873

Cash and cash equivalents at beginning of period
29,827

 
40,371

Cash and cash equivalents at end of period
$
63,387

 
$
121,244

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid during the period for interest from continuing operations
$
58,153

 
$
61,857

Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes
$

 
$
240,638

The accompanying notes are an integral part of these consolidated financial statements.

5


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



1.    Basis of Presentation
Nature of Business
Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, operating, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal, natural soda ash from trona, construction aggregates and other natural resources. As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.
Principles of Consolidation and Reporting
The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management's opinion, all necessary adjustments to fairly present the Partnership's results of operations, financial position and cash flows for the periods presented have been made and all such adjustments were of a normal and recurring nature, except as noted in "Revision of Previously Issued Financial Statements" below. Certain reclassifications have been made to prior period amounts on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows to conform with current period presentation. These reclassifications had no impact on previously reported net income or cash flows from operating, investing or financing activities.
Revision of Previously Issued Financial Statements
During the three months ended September 30, 2018, NRP identified an error related to its modified retrospective adoption of ASC 606 on January 1, 2018 for certain coal and aggregates royalty leases. As a result, the Partnership has revised its financial statements as of and for the three months ended March 31, 2018 and as of and for the three and six months ended June 30, 2018, respectively, to correct this error as presented in Note 2. Revenue from Contracts with Customers. Management has concluded that the impact of the misstatements were not material to the previously issued consolidated financial statements. Additional information regarding the error and the effect of the revisions on the previously issued consolidated financial statements is provided in Note 2. Revenue from Contracts with Customers.
Recently Adopted Accounting Standards
Revenue Recognition
On January 1, 2018, NRP adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, and all the related amendments (the “new revenue standard” and "ASC 606") to all open contracts using the modified retrospective method. The adoption of the new revenue standard impacted royalty revenue from NRP's coal and aggregates royalty leases as further described below. NRP recognized a $70.5 million cumulative effect of adoption adjustment in the opening balance of partners' capital on January 1, 2018. Prior year information has not been restated and continues to be reported under the accounting standards in effect for those periods. The new revenue standard had no impact on revenues from NRP's Construction Aggregates or Soda Ash operating segments.

6


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


A majority of NRP’s coal and aggregates royalty revenue continues to be recognized over the lease term based on production. For coal and aggregates royalty leases for which NRP expects consideration from minimum payments to be greater than consideration from production over the lease term, royalty revenue is now recognized straight-line over the lease term based on the minimum payment consideration. The cumulative effects of the changes made to the Partnership's Consolidated Balance Sheet at January 1, 2018 for the adoption of the new revenue standard were as follows:
(In thousands)
Balance at
December 31, 2017
 
Adjustments due to
ASC 606
(As Adjusted)1
 
Balance at
January 1, 2018
Assets
 
 
 
 
 
Accounts receivable, net (including affiliates)
$
47,187

 
$
4,875

 
$
52,062

 
 
 
 
 


Liabilities
 
 
 
 


Current portion of deferred revenue
$

 
$
1,022

 
$
1,022

Deferred revenue
100,605

 
(66,613
)
 
33,992

 
 
 
 
 
 
Partners’ capital
 
 
 
 
 
Common unitholders’ interest
$
199,851

 
$
69,057

 
$
268,908

General partner’s interest
1,857

 
1,409

 
3,266

Total partners’ capital
265,211

 
70,466

 
335,677

 
 
 
 
 
(1)
Refer to "Revision to Original Adoption of ASC 606" in Note 2. Revenue from Contracts with Customers for adjustments made to original adoption entries.

7


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The impact of adoption of the new revenue standard on NRP’s Consolidated Balance Sheet and Consolidated Statements of Comprehensive Income was as follows:
 
As of September 30, 2018
(In thousands)
As Reported
 
Balances without Adoption of ASC 606
 
Effect of Change
Assets
 
 
 
 
 
Accounts receivable, net (including affiliates)
$
55,756

 
$
52,966

 
$
2,790

Total assets
1,411,934

 
1,409,144

 
2,790

 
 
 
 
 
 
Liabilities and capital
 
 
 
 
 
Current portion of deferred revenue
$
1,403

 
$

 
$
1,403

Deferred revenue
40,885

 
100,185

 
(59,300
)
Total liabilities
863,581

 
921,478

 
(57,897
)
Partners’ capital
 
 
 
 
 
Common unitholders’ interest
$
319,673

 
$
260,200

 
$
59,473

General partner’s interest
4,293

 
3,079

 
1,214

Total partners’ capital
386,701

 
326,014

 
60,687

Total liabilities and capital
1,411,934

 
1,409,144

 
2,790

 
For the Three Months Ended September 30, 2018
(In thousands, except per unit data)
As Reported
 
Amounts without Adoption of ASC 606
 
Effect of Change
Coal royalty and other revenues (including affiliates)
$
42,518

 
$
45,680

 
$
(3,162
)
Net income from continuing operations
28,565

 
31,727

 
(3,162
)
Net income
28,541

 
31,703

 
(3,162
)
Net income per common unit (basic)
1.71

 
1.96

 
(0.25
)
Net income per common unit (diluted)
1.30

 
1.44

 
(0.14
)
 
For the Nine Months Ended September 30, 2018
(In thousands, except per unit data)
As Reported
 
Amounts without Adoption of ASC 606
 
Effect of Change
Coal royalty and other revenues (including affiliates)
$
134,912

 
$
144,501

 
$
(9,589
)
Net income from continuing operations
91,061

 
100,840

 
(9,779
)
Net income
90,989

 
100,768

 
(9,779
)
Net income per common unit (basic)
5.44

 
6.22

 
(0.78
)
Net income per common unit (diluted)
4.06

 
4.50

 
(0.44
)
Recently Issued Accounting Standards
Leases 
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires a lessee to recognize assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. This standard does not apply to leases that explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. The guidance also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective for annual and interim periods beginning after December 15, 2018 and is to be adopted using a modified retrospective approach. The Partnership is currently evaluating the impact of the provisions of this guidance on its consolidated financial statements.

8


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


2.    Revenue from Contracts with Customers
Coal Royalty and Other Segment
The following table represents the Partnership's Coal Royalty and Other segment revenues (including affiliates) by major source:
 
 
Three Months Ended
 
Nine Months Ended
(In thousands)
 
September 30, 2018
Coal royalty revenue
 
$
30,709

 
$
96,473

Production lease minimum revenue
 
1,769

 
6,310

Minimum lease straight-line revenue
 
567

 
1,739

Wheelage revenue
 
1,572

 
5,155

Coal overriding royalty revenue
 
3,918

 
10,492

Aggregates royalty revenue
 
888

 
3,551

Oil and gas royalty revenue
 
1,427

 
5,679

Property tax revenue
 
1,263

 
3,968

Other revenue
 
405

 
1,545

Coal royalty and other revenues (1)
 
$
42,518

 
$
134,912

Transportation and processing services revenue (2)
 
6,853

 
17,238

Total Coal royalty and other segment revenues
 
$
49,371

 
$
152,150

 
 
 
 
 
(1)
Represents revenue from contracts with customers as defined under ASC 606.
(2)
Revenue from contracts with customers as defined under ASC 606 was $3.6 million and $9.6 million for the three and nine months ended September 30, 2018, respectively. The remaining transportation and processing services revenue of $3.3 million and $7.6 million for the three and nine months ended September 30, 2018, respectively, related to other NRP-owned infrastructure leased to and operated by third party operators accounted for under ASC 840, Leases.
Coal Royalty and Other segment revenues
Royalty-based leases. Approximately two-thirds of our royalty-based leases have initial terms of five to 40 years, with substantially all lessees having the option to extend the lease for additional terms. For these types of leases, the lessees generally make payments to NRP based on the greater of a percentage of the gross sales price or a fixed price per ton of mineral they mine or sell. Most of NRP’s coal and aggregates royalty leases require the lessee to pay quarterly or annual minimum amounts, either made in advance or arrears, which are generally recoupable through actual royalty production over certain time periods that generally range from three to five years.
In accordance with previous accounting standards in effect prior to January 1, 2018, NRP recognized all coal and aggregates royalty revenue over the lease term based on production. The recognition of revenue from minimum payments was deferred until either recoupment through royalty production occurred or when the recoupment period expired for unrecouped minimums.
Under the new revenue recognition standard, management has defined NRP's coal and aggregates royalty lease performance obligation as providing the lessee the right to mine and sell NRP's coal or aggregates over the lease term. The Partnership then evaluated the likelihood that consideration NRP expected to receive from its lessees resulting from production would exceed consideration expected to receive from minimum payments over the lease term.

9


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


As a result of this evaluation, revenue recognition from the Partnership's royalty-based leases is based on either production or minimum payments as follows:
Production Leases: Leases for which the Partnership expects that consideration from production will be greater than consideration from minimums over the lease term. Revenue recognition for these leases is recognized over time based on production as Coal royalty revenue or Aggregates royalty revenue, as applicable. Deferred revenue from minimums is recognized as royalty revenue when recoupment occurs or as Production lease minimum revenue when the recoupment period expires. In addition, NRP recognizes breakage revenue from minimums when NRP determines that recoupment is remote. This breakage revenue is included in Production lease minimum revenue.
Minimum Leases: Leases for which the Partnership expects that consideration from minimums will be greater than consideration from production over the lease term. Revenue recognition for these leases is recognized straight-line over the lease term based on the minimum consideration amount as Minimum lease straight-line revenue.
This evaluation is performed at the inception of the lease and only reassessed upon modification or renewal of the lease.
The Partnership also has overriding royalty revenue interests in certain oil and gas wells and coal reserves. Revenue from these interests is recognized over time based on when the respective commodities are sold.
Wheelage. Revenue related to fees collected per ton to transport foreign coal across property owned by the Partnership that is recognized over time as transportation across our property occurs.
Other revenue. Other revenue consists primarily of rental payments and surface damage fees related to certain land owned by the Partnership and is recognized straight-line over time as it is earned. Other revenues also include property tax revenues. The majority of property taxes paid on our properties are reimbursable by the lessee and are recognized on a gross basis over time which reflects the reimbursement of property taxes by the lessee. Property taxes paid by NRP are included in Operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income.
Transportation and processing services revenue. The Partnership owns transportation and processing infrastructure that is leased to third parties and collects throughput fees for which it recognizes revenue over time based on the coal tons transported over the beltlines or processed through the facilities.
Contract modifications
Contract modifications that impact goods or services or the transaction price are evaluated in accordance with ASC 606. A majority of our contract modifications pertain to our coal and aggregates royalty contracts and include, but are not limited to, extending the lease term, changes to royalty rates, floor prices or minimum consideration, assignment of the contract, or termination due to the exhaustion of merchantable and mineable reserves. In accordance with the transition guidance in paragraph 606-10-65-1, revenues from contracts that were modified before January 1, 2018 were not retrospectively restated for those modifications and instead reflected the aggregate effect of those modifications when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation.
Contract Assets and Liabilities
Contract assets include receivables from contracts with customers and are recorded when the right to consideration becomes unconditional. Receivables are recognized when the minimums are contractually owed, production occurs or minimums accrued for based on the passage of time.

10


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Contract liabilities represent minimum consideration received, contractually owed or earned based on the passage of time. The following table details the Partnership's Coal Royalty and Other segment receivables and liabilities resulting from contracts with customers:
 
 
September 30,
 
January 1,
(In thousands)
 
2018
 
2018
Receivables
 
 
 
 
Total accounts receivable, net (including affiliates)(1)
 
$
29,485

 
$
25,443

Prepaid expenses and other (2)
 
2,673

 
2,830

 
 
 
 
 
Contract liabilities
 
 
 
 
Current portion of deferred revenue
 
$
1,403

 
$
1,022

Deferred revenue
 
40,885

 
33,992

 
 
 
 
 
(1)
Included in this amount is $2.3 million and $1.9 million of accounts receivable related to accrued minimum consideration as of September 30, 2018 and January 1, 2018, respectively.
(2)
Prepaid expenses and other includes notes receivable from contracts with customers.
The following table shows the activity related to the Partnership's Coal Royalty and Other segment deferred revenue:
(In thousands)
Nine Months Ended September 30, 2018
Balance at December 31, 2017
$
100,605

Cumulative adjustment for change in accounting principle (1)
(65,591
)
Balance at January 1, 2018 (current and non-current)
$
35,014

Recognition of previously deferred revenue
(11,694
)
Accrued minimum payments due
3,837

Cash received for minimum payments
15,131

Balance at September 30, 2018 (current and non-current)
$
42,288

 
 
 
 
 
(1)
Included in this amount is $(67.5) million recognized in Partners' capital and $1.9 million of accrued minimum consideration recognized in Accounts receivable, net.
The following table shows the Partnership's Coal Royalty and Other segment revenue recognized during the three and nine months ended September 30, 2018 that was included in the deferred revenue balance at the beginning of the period:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2018
Production leases - revenue impact
 
 
 
Recoupments recognized in Coal and aggregates royalty revenue
$
3,166

 
$
8,554

Breakage revenue recognized in Production lease minimum revenue
273

 
867

Expiration of unrecouped minimums recognized in Production lease minimum revenue
497

 
846

Minimum leases - revenue impact
 
 
 
Minimum lease amortization recognized in Minimum lease straight-line revenue
483

 
1,427

Total previously deferred revenue recognized
$
4,419


$
11,694


11


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Remaining Performance Obligations
The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows:
Lease Term (1)
 
Weighted Average Remaining Years as of September 30, 2018
 
Annual Minimum Payments
(In thousands)
1 - 5 years
 
0.3
 
$
8,562

5 - 10 years
 
1.6
 
13,292

10+ years
 
9.5
 
34,205

 
 
 
 
 
(1)
The Partnership applied the practical expedient for disclosing remaining performance obligations for contracts with an expected duration of one year or less, and have excluded those contracts from this disclosure.
The Partnership's non-cancelable annual minimum payments on its coal and aggregates royalty leases are recognized as revenue as discussed above. In addition, the Partnership's non-cancelable annual minimum payments due under terms of its coal and aggregates overriding royalty agreements include a $1.8 million annual minimum that expires in 2023 and a $1.0 million minimum that expires upon exhaustion of the mineable and recoverable coal reserves, respectively.
Construction Aggregates Segment
The Partnership's Construction Aggregates segment revenues from contracts with customers by major source are as follows:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30, 2018
Crushed stone, sand and gravel
$
16,618

 
$
48,427

Delivery and fuel income
10,825

 
32,587

Other revenues
2,955

 
10,041

Total construction aggregates revenues
$
30,398


$
91,055

Road construction and asphalt paving services
6,250

 
13,154

Total construction aggregates segment revenues
$
36,648

 
$
104,209

Construction Aggregates segment revenues
The majority of the Construction Aggregates segment revenues is recognized at a point in time with the exception of revenue related to construction contracts, which is recognized on the percentage-of-completion method as discussed below. The majority of the Partnership's construction contracts have an original expected duration of one year or less. As such, the Partnership has elected to apply the practical expedient and not disclose remaining performance obligations for contracts with an original expected duration of one year or less. Additional discussion of the Partnership's major sources of Construction Aggregates segment revenue are as follows:
Crushed stone, sand and gravel and other revenues. Revenue from the sale of crushed stone, sand, gravel and asphalt is recognized based on a fixed price when title is transferred to the buyer and collectibility of the sales proceeds is reasonably assured (typically occurs when products are picked up or delivered to the customer). Other revenues consist of brokered stone sales and barge and service revenues. Brokered stone sales include aggregates purchases from third party quarries, which are then sold and transported to customers and recorded as revenue at the time of delivery. The purchase price of aggregates from third party quarries are recorded as expenses. Barge and service revenues relate to loading and unloading services at marine terminals and are recorded as revenue at the time the service is performed.
Delivery and fuel income. Revenue related to pass through delivery and fuel costs the Partnership incurs to deliver its products is recognized on a gross basis and is subsequently reimbursed by the customer. The related costs are recognized when incurred and are included in Operating and maintenance expenses on the Consolidated Statements of Comprehensive Income.

12


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Road construction and asphalt paving services revenue. Revenue related to construction contracts is recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract.
The Partnership had $23.2 million and $23.0 million in receivables from Construction Aggregates segment related contracts with customers included in Accounts receivable, net on its Consolidated Balance Sheets as of September 30, 2018 and January 1, 2018, respectively.
Revision to Original Adoption of ASC 606
During the third quarter of 2018, the Partnership identified an error related to the modified retrospective adoption of ASC 606 on January 1, 2018 for certain coal and aggregates royalty leases. Specifically, in evaluating its contracts for revenue recognition, NRP identified certain coal and aggregates royalty leases as minimum leases that should have been classified as production leases. As a result of these errors, the Partnership incorrectly accelerated the recognition of deferred revenue for these leases resulting in an overstatement of both the transition adjustment to the opening balance of Partners' capital at January 1, 2018 and revenue during the three months ended March 31, 2018 and the three and six months ended June 30, 2018, respectively. After evaluating the quantitative and qualitative aspects of the error to the Partnership's financial results, management has determined that the misstatements and the adjustments are not material to the prior period financial statements. However, in order to properly reflect the application of ASC 606 retrospectively, the Partnership has recasted its Consolidated Financial Statements as of and for the three months ended March 31, 2018 and as of and for the three and six months ended June 30, 2018, respectively.

The following table shows the effects of correcting the classification of certain coal and aggregates royalty leases in connection with the modified retrospective adoption of ASC 606 on the cumulative effects of the changes made to the Consolidated Balance Sheet at January 1, 2018:
 
Balance at January 1, 2018
 
 
(In thousands)
As Originally Reported
 
Corrected Balance
 
Effect of Correction
Assets
 
 
 
 
 
Accounts receivable, net (including affiliates)
$
50,666

 
$
52,062

 
$
1,396

 
 
 
 
 


Liabilities
 
 
 
 


Current portion of deferred revenue
$
1,973

 
$
1,022

 
$
(951
)
Deferred revenue
11,858

 
33,992

 
22,134

 
 
 
 
 


Partners’ capital
 
 
 
 


Common unitholders’ interest
$
288,299

 
$
268,908

 
$
(19,391
)
General partner’s interest
3,662

 
3,266

 
(396
)
Total partners’ capital
355,464

 
335,677

 
(19,787
)


13


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The following tables show the effect of correcting the classification of certain coal and aggregates royalty leases in connection with the modified retrospective adoption of ASC 606 on the Partnership's originally reported Consolidated Balance Sheets at March 31, 2018 and June 30, 2018:
 
Balance at March 31, 2018
 
 
(In thousands)
As Originally Reported
 
Corrected Balance
 
Effect of Correction
Assets
 
 
 
 
 
Accounts receivable, net (including affiliates)
$
55,745

 
$
56,497

 
$
752

Total assets
1,377,206

 
1,377,958

 
752

 
 
 
 
 


Liabilities and capital
 
 
 
 


Current portion of deferred revenue
$
1,554

 
$
1,377

 
$
(177
)
Deferred revenue
14,622

 
37,072

 
22,450

Total liabilities
848,367

 
870,641

 
22,274

Partners’ capital
 
 
 
 


Common unitholders’ interest
$
301,344

 
$
280,252

 
$
(21,092
)
General partner’s interest
3,924

 
3,494

 
(430
)
Total partners’ capital
367,646

 
346,124

 
(21,522
)
Total liabilities and capital
1,377,206

 
1,377,958

 
752

 
Balance at June 30, 2018
 
 
(In thousands)
As Originally Reported
 
Corrected Balance
 
Effect of Correction
Assets
 
 
 
 
 
Accounts receivable, net (including affiliates)
$
59,452

 
$
59,178

 
$
(274
)
Total assets
1,411,806

 
1,411,532

 
(274
)
 
 
 
 
 
 
Liabilities and capital
 
 
 
 
 
Current portion of deferred revenue
$
2,732

 
$
1,871

 
$
(861
)
Deferred revenue
17,136

 
40,224

 
23,088

Total liabilities
857,299

 
879,526

 
22,227

Partners’ capital
 
 
 
 


Common unitholders’ interest
$
326,125

 
$
304,074

 
$
(22,051
)
General partner’s interest
4,427

 
3,977

 
(450
)
Total partners’ capital
392,496

 
369,995

 
(22,501
)
Total liabilities and capital
1,411,806

 
1,411,532

 
(274
)


14


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The following tables show the effect of correcting the classification of certain coal and aggregates royalty leases in connection with the modified retrospective adoption of ASC 606 on the Partnership's originally reported Consolidated Statement of Comprehensive Income for the three months ended March 31, 2018 and June 30, 2018 and the six months ended June 30, 2018:
 
For the Three Months Ended March 31, 2018
 
 
(In thousands, except per unit data)
As Originally Reported
 
Corrected Amount
 
Effect of Correction
Revenues and other income
 
 
 
 
 
Coal royalty and other revenues (including affiliates)
$
46,210

 
$
44,474

 
$
(1,736
)
Total revenues and other income
89,026

 
87,290

 
(1,736
)
 
 
 
 
 
 
Income from operations
$
44,058

 
$
42,322

 
$
(1,736
)
Net income from continuing operations
26,088

 
24,352

 
(1,736
)
Net income
26,074

 
24,338

 
(1,736
)
Net income attributable to common unitholders and general partner
18,574

 
16,838

 
(1,736
)
 
 
 
 
 


Net income attributable to common unitholders
$
18,203

 
$
16,501

 
$
(1,702
)
Net income attributable to the general partner
371

 
337

 
(34
)
 
 
 
 
 


Income from continuing operations per common unit
 
 
 
 


Basic
$
1.49

 
$
1.35

 
$
(0.14
)
Diluted
1.16

 
1.08

 
(0.08
)
Net income per common unit
 
 
 
 


Basic
$
1.49

 
$
1.35

 
$
(0.14
)
Diluted
1.15

 
1.08

 
(0.07
)
 
 
 
 
 


Comprehensive income
$
24,949

 
$
23,213

 
$
(1,736
)
 
For the Three Months Ended June 30, 2018
 
 
(In thousands, except per unit data)
As Originally Reported
 
Corrected Amount
 
Effect of Correction
Revenues and other income
 
 
 
 
 
Coal royalty and other revenues (including affiliates)
$
48,899

 
$
47,920

 
$
(979
)
Total revenues and other income
111,049

 
110,070

 
(979
)
 
 
 
 
 
 
Income from operations
$
56,857

 
$
55,878

 
$
(979
)
Net income from continuing operations
39,123

 
38,144

 
(979
)
Net income
39,089

 
38,110

 
(979
)
Net income attributable to NRP
38,220

 
37,241

 
(979
)
Net income attributable to common unitholders and general partner
30,720

 
29,741

 
(979
)
 
 
 
 
 
 
Net income attributable to common unitholders
$
30,105

 
$
29,146

 
$
(959
)
Net income attributable to the general partner
615

 
595

 
(20
)
 
 
 
 
 


Income from continuing operations per common unit
 
 
 
 


Basic
$
2.46

 
$
2.38

 
$
(0.08
)
Diluted
1.75

 
1.71

 
(0.04
)
Net income per common unit
 
 
 
 


Basic
$
2.46

 
$
2.38

 
$
(0.08
)
Diluted
1.75

 
1.71

 
(0.04
)
 
 
 
 
 


Comprehensive income
$
38,655

 
$
37,676

 
$
(979
)
Comprehensive income attributable to NRP
37,786

 
36,807

 
(979
)

15


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


 
For the Six Months Ended June 30, 2018
 
 
(In thousands, except per unit data)
As Originally Reported
 
Corrected Amount
 
Effect of Correction
Revenues and other income
 
 
 
 
 
Coal royalty and other revenues (including affiliates)
$
95,109

 
$
92,394

 
$
(2,715
)
Total revenues and other income
200,075

 
197,360

 
(2,715
)
 
 
 
 
 
 
Income from operations
$
100,915

 
$
98,200

 
$
(2,715
)
Net income from continuing operations
65,211

 
62,496

 
(2,715
)
Net income
65,163

 
62,448

 
(2,715
)
Net income attributable to NRP
64,294

 
61,579

 
(2,715
)
Net income attributable to common unitholders and general partner
49,294

 
46,579

 
(2,715
)
 
 
 


 


Net income attributable to common unitholders
$
48,308

 
$
45,647

 
$
(2,661
)
Net income attributable to the general partner
986

 
932

 
(54
)
 
 
 
 
 


Income from continuing operations per common unit
 
 
 
 


Basic
$
3.95

 
$
3.73

 
$
(0.22
)
Diluted
2.96

 
2.83

 
(0.13
)
Net income per common unit
 
 
 
 


Basic
$
3.95

 
$
3.73

 
$
(0.22
)
Diluted
2.95

 
2.83

 
(0.12
)
 
 
 
 
 


Comprehensive income
$
63,604

 
$
60,889

 
$
(2,715
)
Comprehensive income attributable to NRP
62,735

 
60,020

 
(2,715
)

3.    Class A Convertible Preferred Units
On March 2, 2017, NRP issued $250 million of Class A Convertible Preferred Units representing limited partner interests in NRP (the "Preferred Units") to certain entities controlled by funds affiliated with The Blackstone Group, L.P. (collectively referred to as "Blackstone") and certain affiliates of GoldenTree Asset Management LP (collectively referred to as "GoldenTree") (together the "Preferred Purchasers") pursuant to a Preferred Unit and Warrant Purchase Agreement. NRP issued 250,000 Preferred Units to the Preferred Purchasers at a price of $1,000 per Preferred Unit (the "Per Unit Purchase Price"), less a 2.5% structuring and origination fee. The Preferred Units entitle the Preferred Purchasers to receive cumulative distributions at a rate of 12% per year, up to one half of which NRP may pay in additional Preferred Units (such additional Preferred Units, the "paid-in-kind units" or "PIK Units"), subject to approval by the Board of Directors.
During the three months ended March 31, 2018, the Partnership redeemed all of the outstanding PIK Units, which resulted in an $8.8 million cash payment during the period.
Activity related to the Preferred Units is as follows:
(In thousands, except unit data)
 
Units Outstanding
 
Financial Position
Balance at December 31, 2017
 
258,844

 
$
173,431

Redemption of PIK Units
 
(8,844
)
 
(8,844
)
Balance at September 30, 2018
 
250,000

 
$
164,587


16


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


4.    Common and Preferred Unit Distributions
The Partnership makes cash distributions to common unitholders on a quarterly basis, subject to approval by the Board of Directors. As discussed in Note 3 above, the Partnership also makes distributions to the preferred unitholders.
Common Unit Distributions
Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2% of such distributions. The following table shows the distributions declared and paid to common unitholders during the nine months ended September 30, 2018 and 2017, respectively:
 
 
 
 
 
 
Total Distributions (in thousands)
Date Paid
 
Period Covered by Distribution
 
Distribution per Common Unit
 
Common Units
 
GP Interest
 
Total
2018
 
 
 
 
 
 
 
 
 
 
February 14, 2018
 
October 1 - December 31, 2017
 
$
0.45

 
$
5,505

 
$
112

 
$
5,617

May 14, 2018
 
January 1 - March 31, 2018
 
$
0.45

 
$
5,510

 
$
113

 
$
5,623

August 14, 2018
 
April 1 - June 30, 2018
 
$
0.45

 
$
5,511

 
$
112

 
$
5,623

 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
February 14, 2017
 
October 1 - December 31, 2016
 
$
0.45

 
$
5,503

 
$
112

 
$
5,615

May 12, 2017
 
January 1 - March 31, 2017
 
$
0.45

 
$
5,506

 
$
113

 
$
5,619

August 14, 2017
 
April 1 - June 30, 2017
 
$
0.45

 
$
5,504

 
$
112

 
$
5,616

Preferred Unit Distributions
The following table shows the distributions declared and paid to Preferred Unitholders during the nine months ended September 30, 2018 and 2017, respectively:
Date Paid
 
Period Covered by Distribution
 
Distribution per Preferred Unit
 
Total Distribution Declared
(in thousands)
2018
 
 
 
 
 
 
February 7, 2018
 
October 1 - December 31, 2017
 
$
30.00

 
$
7,765

May 14, 2018
 
January 1 - March 31, 2018
 
$
30.00

 
$
7,500

August 14, 2018
 
April 1 - June 30, 2018
 
$
30.00

 
$
7,500

 
 
 
 
 
 
 
2017
 
 
 
 
 
 
May 30, 2017
 
March 2 - March 31, 2017
 
$
5.00

 
$
2,500

August 29, 2017
 
April 1 - June 30, 2017
 
$
15.00

 
$
7,538

Income available to common unitholders and the general partner is reduced by Preferred Unit distributions that accumulated during the period. During the three and nine months ended September 30, 2018, NRP reduced net income attributable to common unitholders and the general partner by $7.5 million and $22.5 million, respectively, as a result of accumulated Preferred Unit distributions earned during the period. The $7.5 million Preferred Unit distribution earned during the three months ended September 30, 2018 will be paid on November 14, 2018.

17


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


5.    Net Income Per Common Unit
Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's Preferred Units and Warrants, if the inclusion of these items is dilutive.
The dilutive effect of the Preferred Units is calculated using the if-converted method. Under the if-converted method, the Preferred Units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the Preferred Units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation.
The dilutive effect of the Warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of the dilutive effect of the Warrants for the three and nine months ended September 30, 2018 and 2017, respectively, did not include the net settlement of Warrants to purchase 2.25 million common units with a strike price of $34.00 because the impact would have been anti-dilutive.

18


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The following table reconciles the numerators and denominators of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Allocation of net income:
 
 
 
 
 
 
 
Net income from continuing operations
$
28,565

 
$
26,499

 
$
91,061

 
$
58,467

Add (less): net loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Less: income attributable to preferred unitholders
(7,500
)
 
(7,650
)
 
(22,500
)
 
(17,688
)
Net income from continuing operations attributable to common unitholders and general partner
$
21,424

 
$
18,849

 
$
68,051

 
$
40,779

Less: net income from continuing operations attributable to the general partner
(428
)
 
(379
)
 
(1,361
)
 
(816
)
Net income from continuing operations attributable to common unitholders
$
20,996


$
18,470


$
66,690


$
39,963

 
 
 
 
 
 
 
 
Net loss from discontinued operations
$
(24
)
 
$
(433
)
 
$
(72
)
 
$
(507
)
Less: net loss from discontinued operations attributable to the general partner

 
9

 
1

 
10

Net loss from discontinued operations attributable to common unitholders
$
(24
)

$
(424
)

$
(71
)
 
$
(497
)
 
 
 
 
 
 
 
 
Net income
$
28,541


$
26,066


$
90,989

 
$
57,960

Add (less): net loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Less: income attributable to preferred unitholders
(7,500
)
 
(7,650
)
 
(22,500
)
 
(17,688
)
Net income attributable to common unitholders and general partner
$
21,400

 
$
18,416

 
$
67,979

 
$
40,272

Less: net income attributable to the general partner
(428
)

(370
)

(1,360
)
 
(806
)
Net income attributable to common unitholders
$
20,972


$
18,046


$
66,619


$
39,466

 
 
 
 
 
 
 
 
Basic income (loss) per common unit:
 
 
 
 
 
 
 
Weighted average common units—basic
12,246

 
12,232

 
12,243

 
12,232

Basic net income from continuing operations per common unit
$
1.71


$
1.51


$
5.45

 
$
3.27

Basic net loss from discontinued operations per common unit
$


$
(0.03
)

$
(0.01
)
 
$
(0.04
)
Basic net income per common unit
$
1.71


$
1.48


$
5.44

 
$
3.23


19


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Diluted income (loss) per common unit:
 
 
 
 
 
 
 
Weighted average common units—basic
12,246

 
12,232

 
12,243

 
12,232

Plus: dilutive effect of Warrants
470

 
225

 
474

 
330

Plus: dilutive effect of Preferred Units
9,124

 
11,523

 
9,124

 
8,909

Weighted average common units—diluted
21,840


23,980


21,841

 
21,471

 
 
 
 
 
 
 
 
Net income from continuing operations
$
28,565


$
26,499


$
91,061

 
$
58,467

Add (less): net loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Diluted net income from continuing operations attributable to common unitholders and general partner
$
28,924

 
$
26,499

 
$
90,551

 
$
58,467

Less: diluted net income from continuing operations attributable to the general partner
(578
)
 
(530
)
 
(1,811
)
 
(1,169
)
Diluted net income from continuing operations attributable to common unitholders
$
28,346


$
25,969


$
88,740

 
$
57,298

 
 
 
 
 
 
 
 
Diluted net loss from discontinued operations attributable to common unitholders
$
(24
)

$
(424
)

$
(71
)
 
$
(497
)
 
 
 
 
 
 
 
 
Net income
$
28,541


$
26,066


$
90,989

 
$
57,960

Add (less): net loss (income) attributable to non-controlling interest
359

 

 
(510
)
 

Diluted net income attributable to common unitholders and general partner
$
28,900

 
$
26,066

 
$
90,479

 
$
57,960

Less: diluted net income attributable to the general partner
(578