Commitments and Contingencies

Leases

The Company is obligated under certain operating leases, minimum royalty payments for our leased properties in West Texas, and rental agreements for railcars, office space, and other equipment. Future minimum annual commitments under such operating leases at June 30, 2018 are as follows:



2019	$	17,304
2020	12,467
2021	9,973
2022	7,276
2023	5,072
Thereafter	37,007
Total	$	89,099

Expense related to operating leases and rental agreements was $3,363 and $2,092 for three months ended June 30, 2018 and 2017, respectively. Expense related to operating leases and rental agreements was $6,693 and $4,068 for the six months ended June 30, 2018 and 2017, respectively.

Lease expense related to rail cars is included in cost of goods sold in the condensed consolidated income statements.

Litigation

The Company is periodically involved in litigation and claims incidental to its operation. Management believes that any pending litigation will not have a material impact the Company’s financial position.

Required Capital

As of June 30, 2018, the Company has commitments related to its Oakdale facility as well as future expansion projects of approximately $29,217.

Consulting Agreements

On August 1, 2010, the Company entered into a consulting agreement related to the purchase of land with a third party. The third party acted as an agent for the Company to obtain options to purchase certain identified real property in Wisconsin, as well as obtain permits and approvals necessary to open, construct and operate a sand mining and processing facility on such real property. The third party’s compensation, which continues indefinitely, consists of reimbursement of certain expenses and $1,000 per each acre purchased as a closing fee. For the three months ended June 30, 2018 and 2017, the Company incurred no closing costs and expense reimbursements. For the six months ended June 30, 2018 and 2017, the Company incurred $60 and $16 of closing costs and expense reimbursements, respectively.

The closing costs have been capitalized in property and equipment in the accompanying consolidated balance sheets when they relate to the acquisition of land.

In addition to the aforementioned fees, the third-party agreement provides for tonnage fees based upon mining operations. The payment of $0.50 per sold ton of certain grades of sand that have been mined and sold from the properties acquired under the consulting agreement continues indefinitely. The minimum annual tonnage fee is $200 per contract year, which runs from August 1 to July 31. During the three months ended June 30, 2018 and 2017, the Company incurred $204 and $113 related to tonnage fees, respectively. During the six months ended June 30, 2018 and 2017, the Company incurred $368 and $229 related to tonnage fees, respectively. These costs are presented as operating expenses in the condensed consolidated income statement.

Bonds

The Company entered into a performance bond with Jackson County, Wisconsin and Monroe County, Wisconsin for $4,400 and $900, respectively. The Company provided a performance bond to assure performance under the reclamation plan filed with each respective county. The Company entered into permit bonds amounting to $1,350 with certain towns and counties in which it operates to use designated town and county roadways. The Company provided these permit bonds to assure maintenance and restoration of the roadways. The Company has an outstanding $1,943 bond to assure performance under its agreement with a pipeline common carrier. As of June 30, 2018 and December 31, 2017, $0 and $487, respectively, of cash is being held as collateral related to the bond and is presented as restricted cash on the consolidated balance sheets. As of April 13, 2018, the Company no longer had any restrictions on cash.