x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2016 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to |
Delaware | 76-0346924 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Item | Page |
September 30, 2016 | December 31, 2015 | |||||||
(in thousands of dollars, except par values and share amounts) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 380,519 | $ | 662,525 | ||||
Marketable securities | — | 520,144 | ||||||
Accounts receivable, net | 1,070,501 | 508,532 | ||||||
Inventories | 744,536 | 434,060 | ||||||
Prepaid expenses and other current assets | 54,868 | 14,489 | ||||||
Restricted cash | 169,320 | — | ||||||
Deferred income taxes | — | 35,439 | ||||||
Total current assets | 2,419,744 | 2,175,189 | ||||||
Property, plant and equipment, net | 6,450,947 | 3,004,067 | ||||||
Other assets, net | ||||||||
Goodwill | 925,700 | 62,016 | ||||||
Customer relationships | 604,551 | 52,677 | ||||||
Other intangible assets, net | 185,651 | 98,711 | ||||||
Deferred charges and other assets, net | 310,456 | 176,625 | ||||||
Total other assets, net | 2,026,358 | 390,029 | ||||||
Total assets | $ | 10,897,049 | $ | 5,569,285 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts and notes payable | $ | 503,388 | $ | 235,329 | ||||
Accrued liabilities | 552,581 | 287,313 | ||||||
Term loan | 148,681 | — | ||||||
Total current liabilities | 1,204,650 | 522,642 | ||||||
Long-term debt, net | 3,680,585 | 758,148 | ||||||
Deferred income taxes | 1,607,084 | 575,603 | ||||||
Pension and other post-retirement benefits | 434,067 | 122,821 | ||||||
Other liabilities | 146,526 | 28,140 | ||||||
Total liabilities | 7,072,912 | 2,007,354 | ||||||
Commitments and contingencies (Notes 10 and 20) | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and 134,663,244 shares issued at September 30, 2016 and December 31, 2015, respectively | 1,347 | 1,347 | ||||||
Common stock, held in treasury, at cost; 5,752,377 and 4,444,898 shares at September 30, 2016 and December 31, 2015, respectively | (319,980 | ) | (258,312 | ) | ||||
Additional paid-in capital | 546,519 | 542,148 | ||||||
Retained earnings | 3,337,968 | 3,109,987 | ||||||
Accumulated other comprehensive loss | (108,126 | ) | (129,292 | ) | ||||
Total Westlake Chemical Corporation stockholders' equity | 3,457,728 | 3,265,878 | ||||||
Noncontrolling interests | 366,409 | 296,053 | ||||||
Total equity | 3,824,137 | 3,561,931 | ||||||
Total liabilities and equity | $ | 10,897,049 | $ | 5,569,285 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in thousands of dollars, except per share data and share amounts) | ||||||||||||||||
Net sales | $ | 1,279,028 | $ | 1,188,037 | $ | 3,340,276 | $ | 3,476,570 | ||||||||
Cost of sales | 1,076,895 | 876,761 | 2,641,192 | 2,527,567 | ||||||||||||
Gross profit | 202,133 | 311,276 | 699,084 | 949,003 | ||||||||||||
Selling, general and administrative expenses | 72,729 | 57,248 | 179,757 | 170,321 | ||||||||||||
Transaction and integration-related costs | 82,841 | — | 90,550 | — | ||||||||||||
Income from operations | 46,563 | 254,028 | 428,777 | 778,682 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (24,366 | ) | (8,211 | ) | (36,966 | ) | (26,760 | ) | ||||||||
Other income, net | 41,265 | 2,636 | 52,091 | 33,790 | ||||||||||||
Income before income taxes | 63,462 | 248,453 | 443,902 | 785,712 | ||||||||||||
(Benefit from) provision for income taxes | (6,552 | ) | 60,033 | 129,332 | 236,824 | |||||||||||
Net income | 70,014 | 188,420 | 314,570 | 548,888 | ||||||||||||
Net income attributable to noncontrolling interests | 4,352 | 4,816 | 14,656 | 13,847 | ||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 65,662 | $ | 183,604 | $ | 299,914 | $ | 535,041 | ||||||||
Earnings per common share attributable to Westlake Chemical Corporation: | ||||||||||||||||
Basic | $ | 0.51 | $ | 1.39 | $ | 2.31 | $ | 4.04 | ||||||||
Diluted | $ | 0.51 | $ | 1.39 | $ | 2.29 | $ | 4.02 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 128,793,661 | 131,664,296 | 129,519,577 | 132,301,814 | ||||||||||||
Diluted | 129,379,956 | 132,121,235 | 130,103,897 | 132,786,534 | ||||||||||||
Dividends per common share | $ | 0.1906 | $ | 0.1815 | $ | 0.5536 | $ | 0.5115 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in thousands of dollars) | ||||||||||||||||
Net income | $ | 70,014 | $ | 188,420 | $ | 314,570 | $ | 548,888 | ||||||||
Other comprehensive (loss) income, net of income taxes | ||||||||||||||||
Pension and other post-retirement benefits liability | ||||||||||||||||
Pension and other post-retirement reserves adjustment (excluding amortization) | (206 | ) | (22 | ) | (412 | ) | (208 | ) | ||||||||
Amortization of benefits liability | 369 | 692 | 1,072 | 2,019 | ||||||||||||
Income tax provision on pension and other post-retirement benefits liability | (60 | ) | (232 | ) | (251 | ) | (621 | ) | ||||||||
Foreign currency translation adjustments | 6,453 | (1,920 | ) | 15,758 | (43,746 | ) | ||||||||||
Available-for-sale investments | ||||||||||||||||
Unrealized holding gains (losses) on investments | 1,550 | (716 | ) | 61,524 | 3,987 | |||||||||||
Reclassification of net realized gains to net income | (52,401 | ) | — | (53,720 | ) | (3,795 | ) | |||||||||
Income tax benefit (provision) on available-for-sale investments | 18,270 | 257 | (2,805 | ) | (68 | ) | ||||||||||
Other comprehensive (loss) income | (26,025 | ) | (1,941 | ) | 21,166 | (42,432 | ) | |||||||||
Comprehensive income | 43,989 | 186,479 | 335,736 | 506,456 | ||||||||||||
Comprehensive income attributable to noncontrolling interests, net of tax of $0 for each of the respective periods presented | 4,352 | 4,816 | 14,656 | 13,847 | ||||||||||||
Comprehensive income attributable to Westlake Chemical Corporation | $ | 39,637 | $ | 181,663 | $ | 321,080 | $ | 492,609 |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
(in thousands of dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 314,570 | $ | 548,888 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 227,193 | 180,229 | ||||||
Provision for doubtful accounts | 1,176 | 778 | ||||||
Amortization of debt issuance costs | 1,018 | 1,504 | ||||||
Stock-based compensation expense | 6,588 | 7,544 | ||||||
Loss from disposition of property, plant and equipment | 6,541 | 2,590 | ||||||
Gains realized on previously held shares of Axiall common stock and from sales of securities | (53,720 | ) | (3,795 | ) | ||||
Gain on acquisition, net of loss on the fair value remeasurement of preexisting equity interest | — | (21,045 | ) | |||||
Impairment of equity method investment | — | 4,925 | ||||||
Deferred income taxes | 105,910 | 7,585 | ||||||
Windfall tax benefits from share-based payment arrangements | (1,190 | ) | (2,452 | ) | ||||
Income from equity method investments, net of dividends | (61 | ) | (1,016 | ) | ||||
Other losses, net | 833 | 3,584 | ||||||
Changes in operating assets and liabilities, net of effect of business acquisitions | ||||||||
Accounts receivable | (92,311 | ) | 54,937 | |||||
Inventories | (6,124 | ) | 105,899 | |||||
Prepaid expenses and other current assets | 1,631 | (5,496 | ) | |||||
Accounts payable | 34,109 | (30,511 | ) | |||||
Accrued liabilities | 73,157 | (10,893 | ) | |||||
Other, net | (75,160 | ) | (1,955 | ) | ||||
Net cash provided by operating activities | 544,160 | 841,300 | ||||||
Cash flows from investing activities | ||||||||
Acquisition of business, net of cash acquired | (2,437,829 | ) | 15,782 | |||||
Additions to cost method investment | (4,000 | ) | — | |||||
Additions to property, plant and equipment | (467,330 | ) | (329,236 | ) | ||||
Proceeds from disposition of assets | 213 | 17 | ||||||
Proceeds from disposition of equity method investment | — | 27,865 | ||||||
Proceeds from sales and maturities of securities | 662,938 | 16,056 | ||||||
Purchase of securities | (138,422 | ) | (282,542 | ) | ||||
Settlements of derivative instruments | (4,655 | ) | (1,535 | ) | ||||
Net cash used for investing activities | (2,389,085 | ) | (553,593 | ) | ||||
Cash flows from financing activities | ||||||||
Debt issuance costs | (35,207 | ) | — | |||||
Dividends paid | (71,933 | ) | (67,852 | ) | ||||
Distributions to noncontrolling interests | (12,300 | ) | (10,982 | ) | ||||
Proceeds from debt issuance | 1,428,512 | — | ||||||
Proceeds from exercise of stock options | 1,650 | 984 | ||||||
Proceeds from issuance of notes payable | 5,597 | 19,483 | ||||||
Proceeds from term loan and drawdown of revolver | 600,000 | — | ||||||
Restricted cash associated with term loan | (154,000 | ) | — | |||||
Repayment of notes payable | (10,602 | ) | (32,954 | ) | ||||
Repayment of revolver | (125,000 | ) | — | |||||
Repurchase of common stock for treasury | (67,406 | ) | (114,254 | ) | ||||
Windfall tax benefits from share-based payment arrangements | 1,190 | 2,452 | ||||||
Net cash provided by (used for) financing activities | 1,560,501 | (203,123 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,418 | (3,260 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (282,006 | ) | 81,324 | |||||
Cash and cash equivalents at beginning of period | 662,525 | 880,601 | ||||||
Cash and cash equivalents at end of period | $ | 380,519 | $ | 961,925 |
Pro Forma Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Net sales | $ | 5,345,365 | $ | 6,053,330 | ||||
Net income (1) | $ | 284,324 | $ | 595,442 | ||||
Net income (loss) attributable to noncontrolling interest | 16,404 | (5,953 | ) | |||||
Net income attributable to Westlake Chemical Corporation (1) | $ | 267,920 | $ | 601,395 | ||||
Earnings per common share attributable to Westlake Chemical Corporation | ||||||||
Basic | $ | 2.06 | $ | 4.54 | ||||
Diluted | $ | 2.05 | $ | 4.52 |
(1) | The 2016 pro forma net income amounts include Axiall's historical charges recorded during the eight-month period prior to the closing of the Merger for (1) divestitures; (2) restructuring; and (3) legal and settlement claims, net, of $26,666, $22,881 and $23,376, respectively. These amounts have not been eliminated for pro forma purposes because they do not relate to nonrecurring transaction specific costs related to the Merger. |
Closing stock purchase: | ||||
Offer per share | $ | 33.00 | ||
Multiplied by number of shares outstanding at acquisition | 67,277 | |||
Fair value of Axiall shares outstanding purchased by the Company | $ | 2,220,141 | ||
Axiall debt repaid at acquisition | 247,135 | |||
Seller's transaction costs paid by the Company (1) | 47,458 | |||
Fair value of Axiall share-based awards attributed to pre-combination service (2) | 11,346 | |||
Purchase consideration transferred | $ | 2,526,080 | ||
Fair value of previously held equity interest in Axiall (3) | 102,300 | |||
Total fair value allocated to net assets acquired | $ | 2,628,380 |
(1) | Transactions costs incurred by the seller include legal and advisory costs incurred for the benefit of Axiall's former shareholders and board of directors to evaluate the Company's initial Merger proposals, explore strategic alternatives and negotiate the purchase price. |
(2) | The fair value of share-based awards attributable to pre-combination service includes the ratio of the pre-combination service performed to the original service period of the Axiall restricted share units and options, including related dividend equivalent rights. |
(3) | Prior to the Merger, the Company owned 3.1 million shares in Axiall. The investment in Axiall was carried at estimated fair value with unrealized gains recorded as a component of accumulated other comprehensive loss on the consolidated balance sheet. The Company recognized a $49,080 gain for the investment in other income, net in the consolidated statement of operations upon gaining control. |
Cash | $ | 88,251 | ||
Accounts receivable | 422,023 | |||
Income tax receivable | 48,398 | |||
Inventories | 302,868 | |||
Prepaid expenses and other current assets | 48,435 | |||
Property, plant and equipment | 3,189,582 | |||
Customer relationships (weighted average life of 10.7 years) | 560,000 | |||
Other intangible assets: | ||||
Trade name (weighted average life of 6.8 years) | 50,000 | |||
Technology (weighted average life of 5.4 years) | 41,500 | |||
Supply contracts and leases (weighted average life of 6.0 years) | 26,710 | |||
Other assets | 105,214 | |||
Total assets acquired | 4,882,981 | |||
Accounts and notes payable | 253,967 | |||
Interest payable | 8,154 | |||
Income tax payable | 1,921 | |||
Accrued compensation | 30,057 | |||
Accrued liabilities | 165,793 | |||
Deferred income taxes | 973,799 | |||
Tax reserve non-current | 3,130 | |||
Pension and other post retirement obligations | 311,106 | |||
Other liabilities | 114,528 | |||
Long-term debt | 1,187,290 | |||
Total liabilities assumed | 3,049,745 | |||
Total identifiable net assets acquired | 1,833,236 | |||
Noncontrolling interest | (68,000 | ) | ||
Goodwill | 863,144 | |||
Total purchase consideration | $ | 2,628,380 |
December 31, 2015 | ||||
Current | $ | 520,144 | ||
Non-current | 48,081 | |||
Total available-for-sale securities | $ | 568,225 |
December 31, 2015 | ||||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized Losses (1) | Fair Value | |||||||||||||
Debt securities | ||||||||||||||||
Corporate bonds | $ | 336,665 | $ | 55 | $ | (1,076 | ) | $ | 335,644 | |||||||
U.S. government debt (2) | 135,226 | 2 | (374 | ) | 134,854 | |||||||||||
Asset-backed securities | 49,759 | 2 | (115 | ) | 49,646 | |||||||||||
Equity securities | 54,371 | 466 | (6,756 | ) | 48,081 | |||||||||||
Total available-for-sale securities | $ | 576,021 | $ | 525 | $ | (8,321 | ) | $ | 568,225 |
(1) | All unrealized loss positions were held at a loss for less than 12 months. |
(2) | U.S. Treasury obligations, U.S. government agency obligations and U.S. government agency mortgage-backed securities. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Proceeds from sales and maturities of securities | $ | 360,506 | $ | 1,019 | $ | 662,938 | $ | 16,056 | ||||||||
Gross realized gains | 52,414 | — | 53,755 | 3,795 | ||||||||||||
Gross realized losses | 13 | — | 35 | — |
September 30, 2016 | December 31, 2015 | |||||||
Trade customers | $ | 923,499 | $ | 438,538 | ||||
Allowance for doubtful accounts | (15,322 | ) | (14,095 | ) | ||||
908,177 | 424,443 | |||||||
Federal and state taxes | 134,733 | 60,748 | ||||||
Other | 27,591 | 23,341 | ||||||
Accounts receivable, net | $ | 1,070,501 | $ | 508,532 |
September 30, 2016 | December 31, 2015 | |||||||
Finished products | $ | 466,165 | $ | 253,338 | ||||
Feedstock, additives and chemicals | 199,827 | 106,435 | ||||||
Materials and supplies | 78,544 | 74,287 | ||||||
Inventories | $ | 744,536 | $ | 434,060 |
Olefins Segment | Vinyls Segment | Total | ||||||||||
Balance at December 31, 2015 | $ | 29,990 | $ | 32,026 | $ | 62,016 | ||||||
Goodwill acquired during the period | — | 863,144 | 863,144 | |||||||||
Effects of changes in foreign exchange rates | — | 540 | 540 | |||||||||
Balance at September 30, 2016 | $ | 29,990 | $ | 895,710 | $ | 925,700 |
September 30, 2016 | December 31, 2015 | |||||||
Accounts payable | $ | 502,378 | $ | 229,219 | ||||
Notes payable to banks | 1,010 | 6,110 | ||||||
Accounts and notes payable | $ | 503,388 | $ | 235,329 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Principal Amount | Unamortized Premium, Discount and Debt Issuance Costs (1) | Net Long-term Debt | Principal Amount | Unamortized Discount and Debt Issuance Costs (1) | Net Long-term Debt | |||||||||||||||||||
Revolving credit facility | $ | 325,000 | $ | — | $ | 325,000 | $ | — | $ | — | $ | — | ||||||||||||
4.625% senior notes due 2021 (the "4.625% Westlake 2021 Senior Notes") | 624,793 | 28,463 | 653,256 | — | — | — | ||||||||||||||||||
4.625% senior notes due 2021 (the "4.625% Subsidiary 2021 Senior Notes") | 63,207 | 3,036 | 66,243 | — | — | — | ||||||||||||||||||
3.60% senior notes due 2022 | 250,000 | (1,976 | ) | 248,024 | 250,000 | (2,232 | ) | 247,768 | ||||||||||||||||
4.875% senior notes due 2023 (the "4.875% Westlake 2023 Senior Notes") | 433,793 | 13,958 | 447,751 | — | — | — | ||||||||||||||||||
4.875% senior notes due 2023 (the "4.875% Subsidiary 2023 Senior Notes") | 16,207 | 562 | 16,769 | — | — | — | ||||||||||||||||||
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes") | 750,000 | (10,918 | ) | 739,082 | — | — | — | |||||||||||||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027 | 10,889 | — | 10,889 | 10,889 | — | 10,889 | ||||||||||||||||||
6 ½% senior notes due 2029 | 100,000 | (934 | ) | 99,066 | 100,000 | (989 | ) | 99,011 | ||||||||||||||||
6 ¾% senior notes due 2032 | 250,000 | (1,913 | ) | 248,087 | 250,000 | (2,002 | ) | 247,998 | ||||||||||||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes") | 89,000 | (851 | ) | 88,149 | 89,000 | (884 | ) | 88,116 | ||||||||||||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes") | 65,000 | (610 | ) | 64,390 | 65,000 | (634 | ) | 64,366 | ||||||||||||||||
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes") | 700,000 | (26,121 | ) | 673,879 | — | — | — | |||||||||||||||||
Long-term debt, net | $ | 3,677,889 | $ | 2,696 | $ | 3,680,585 | $ | 764,889 | $ | (6,741 | ) | $ | 758,148 |
(1) | Includes unamortized debt issuance costs of $21,286 and $5,967 at September 30, 2016 and December 31, 2015, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||
Service cost | $ | 315 | $ | 318 | $ | — | $ | 416 | $ | 315 | $ | 777 | $ | 29 | $ | 1,248 | ||||||||||||||||
Expected administrative expenses | 730 | — | — | — | 730 | — | — | — | ||||||||||||||||||||||||
Interest cost | 2,191 | 622 | 487 | 528 | 1,553 | 1,763 | 1,519 | 1,585 | ||||||||||||||||||||||||
Expected return on plan assets | (3,800 | ) | (50 | ) | (712 | ) | — | (5,260 | ) | (50 | ) | (2,237 | ) | — | ||||||||||||||||||
Amortization of net loss | 338 | — | 333 | 263 | 978 | — | 942 | 789 | ||||||||||||||||||||||||
Net periodic benefit (income) cost | $ | (226 | ) | $ | 890 | $ | 108 | $ | 1,207 | $ | (1,684 | ) | $ | 2,490 | $ | 253 | $ | 3,622 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | |||||||||||||||||||
Service cost | $ | 72 | $ | 1 | $ | 6 | $ | 81 | $ | 1 | $ | 17 | ||||||||||||
Interest cost | 250 | 3 | 149 | 540 | 3 | 448 | ||||||||||||||||||
Amortization of net loss | 31 | — | 96 | 94 | — | 288 | ||||||||||||||||||
Net periodic benefit cost | $ | 353 | $ | 4 | $ | 251 | $ | 715 | $ | 4 | $ | 753 |
Common Stock | Common Stock, Held in Treasury | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total | ||||||||||||||||||||||
Balances at December 31, 2015 | $ | 1,347 | $ | (258,312 | ) | $ | 542,148 | $ | 3,109,987 | $ | (129,292 | ) | $ | 296,053 | $ | 3,561,931 | ||||||||||||
Net income | — | — | — | 299,914 | — | 14,656 | 314,570 | |||||||||||||||||||||
Other comprehensive income, net of income taxes: | ||||||||||||||||||||||||||||
Pension and other post- retirement benefits liability | — | — | — | — | 409 | — | 409 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | 15,758 | — | 15,758 | |||||||||||||||||||||
Net unrealized holding gains on investments | — | — | — | — | 4,999 | — | 4,999 | |||||||||||||||||||||
Common stock repurchased | — | (66,725 | ) | — | — | — | — | (66,725 | ) | |||||||||||||||||||
Shares issued—stock- based compensation | — | 5,057 | (3,407 | ) | — | — | — | 1,650 | ||||||||||||||||||||
Stock-based compensation, net of tax on stock options exercised | — | — | 7,778 | — | — | — | 7,778 | |||||||||||||||||||||
Dividends paid | — | — | — | (71,933 | ) | — | — | (71,933 | ) | |||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (12,300 | ) | (12,300 | ) | |||||||||||||||||||
Noncontrolling interest in acquired business | — | — | — | — | — | 68,000 | 68,000 | |||||||||||||||||||||
Balances at September 30, 2016 | $ | 1,347 | $ | (319,980 | ) | $ | 546,519 | $ | 3,337,968 | $ | (108,126 | ) | $ | 366,409 | $ | 3,824,137 |
Common Stock | Common Stock, Held in Treasury | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total | ||||||||||||||||||||||
Balances at December 31, 2014 | $ | 1,347 | $ | (96,372 | ) | $ | 530,441 | $ | 2,555,528 | $ | (79,433 | ) | $ | 290,377 | $ | 3,201,888 | ||||||||||||
Net income | — | — | — | 535,041 | — | 13,847 | 548,888 | |||||||||||||||||||||
Other comprehensive income (loss), net of income taxes | ||||||||||||||||||||||||||||
Pension and other post- retirement benefits liability | — | — | — | — | 1,190 | — | 1,190 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | (43,746 | ) | — | (43,746 | ) | |||||||||||||||||||
Net unrealized holding gains on investments | — | — | — | — | 124 | — | 124 | |||||||||||||||||||||
Common stock repurchased | — | (122,249 | ) | — | — | — | — | (122,249 | ) | |||||||||||||||||||
Shares issued—stock- based compensation | — | 1,079 | (95 | ) | — | — | — | 984 | ||||||||||||||||||||
Stock-based compensation, net of tax on stock options exercised | — | — | 9,996 | — | — | — | 9,996 | |||||||||||||||||||||
Dividends paid | — | — | — | (67,852 | ) | — | — | (67,852 | ) | |||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (10,982 | ) | (10,982 | ) | |||||||||||||||||||
Noncontrolling interest in acquired business | — | — | — | — | — | 1,597 | 1,597 | |||||||||||||||||||||
Balances at September 30, 2015 | $ | 1,347 | $ | (217,542 | ) | $ | 540,342 | $ | 3,022,717 | $ | (121,865 | ) | $ | 294,839 | $ | 3,519,838 |
Benefits Liability, Net of Tax | Cumulative Foreign Currency Exchange, Net of Tax | Net Unrealized Holding Gains (Losses) on Investments, Net of Tax (1) | Total | |||||||||||||
Balances at December 31, 2015 | $ | (8,607 | ) | $ | (115,690 | ) | $ | (4,995 | ) | $ | (129,292 | ) | ||||
Other comprehensive (loss) income before reclassifications | (252 | ) | 15,758 | 57,550 | 73,056 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss (income) | 661 | — | (52,551 | ) | (51,890 | ) | ||||||||||
Net other comprehensive income for the period | 409 | 15,758 | 4,999 | 21,166 | ||||||||||||
Balances at September 30, 2016 | $ | (8,198 | ) | $ | (99,932 | ) | $ | 4 | $ | (108,126 | ) |
(1) | Includes other comprehensive income from equity method investment. |
Benefits Liability, Net of Tax | Cumulative Foreign Currency Exchange, Net of Tax | Net Unrealized Holding Gains on Investments, Net of Tax | Total | |||||||||||||
Balances at December 31, 2014 | $ | (23,442 | ) | $ | (56,224 | ) | $ | 233 | $ | (79,433 | ) | |||||
Other comprehensive (loss) income before reclassifications | (128 | ) | (43,746 | ) | 2,556 | (41,318 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss (income) | 1,318 | — | (2,432 | ) | (1,114 | ) | ||||||||||
Net other comprehensive income (loss) for the period | 1,190 | (43,746 | ) | 124 | (42,432 | ) | ||||||||||
Balances at September 30, 2015 | $ | (22,252 | ) | $ | (99,970 | ) | $ | 357 | $ | (121,865 | ) |
Details about Accumulated Other Comprehensive Income (Loss) Components | Location of Reclassification (Income (Expense)) in Consolidated Statements of Operations | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Amortization of pension and other post-retirement items | ||||||||||||||||||
Net loss | (1) | $ | (369 | ) | $ | (692 | ) | $ | (1,072 | ) | $ | (2,019 | ) | |||||
Provision for income taxes | 141 | 241 | 411 | 701 | ||||||||||||||
(228 | ) | (451 | ) | (661 | ) | (1,318 | ) | |||||||||||
Net unrealized gains on available-for-sale investments | ||||||||||||||||||
Realized gain on available-for-sale investments | Other income, net | 52,401 | — | 53,720 | 3,795 | |||||||||||||
Provision for income taxes | (696 | ) | — | (1,169 | ) | (1,363 | ) | |||||||||||
51,705 | — | 52,551 | 2,432 | |||||||||||||||
Total reclassifications for the period | $ | 51,477 | $ | (451 | ) | $ | 51,890 | $ | 1,114 |
(1) | These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. For additional information, please read Note 11 (Employee Benefits) to the financial statements included in the 2015 Form 10-K. |
Derivative Assets | ||||||||||
Balance Sheet Location | Fair Value as of | |||||||||
September 30, 2016 | December 31, 2015 | |||||||||
Not designated as hedging instruments | ||||||||||
Commodity forward contracts | Accounts receivable, net | $ | 2,221 | $ | 3,465 | |||||
Commodity forward contracts | Other assets, net | 3,674 | 2,088 | |||||||
Total derivative assets | $ | 5,895 | $ | 5,553 |
Derivative Liabilities | ||||||||||
Balance Sheet Location | Fair Value as of | |||||||||
September 30, 2016 | December 31, 2015 | |||||||||
Not designated as hedging instruments | ||||||||||
Commodity forward contracts | Accrued liabilities | $ | 3,196 | $ | 9,325 | |||||
Commodity forward contracts | Other liabilities | 6,811 | 12,437 | |||||||
Total derivative liabilities | $ | 10,007 | $ | 21,762 |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Commodity forward contracts | Gross profit | $ | (7,840 | ) | $ | (9,314 | ) | $ | 7,784 | $ | (4,478 | ) |
Derivative Assets as of | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Derivative assets subject to enforceable master netting arrangements | $ | — | $ | — | ||||
Derivative assets not subject to enforceable master netting arrangements | 3,560 | 462 | ||||||
Total derivative assets | $ | 3,560 | $ | 462 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Offsetting of Derivative Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | ||||||||||||||||||
Commodity forward contracts | $ | 2,335 | $ | (2,335 | ) | $ | — | $ | 5,091 | $ | (5,091 | ) | $ | — |
Derivative Liabilities as of | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Derivative liabilities subject to enforceable master netting arrangements | $ | 1,889 | $ | 5,803 | ||||
Derivative liabilities not subject to enforceable master netting arrangements | 5,782 | 10,868 | ||||||
Total derivative liabilities | $ | 7,671 | $ | 16,671 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Offsetting of Derivative Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | ||||||||||||||||||
Commodity forward contracts | $ | 4,224 | $ | (2,335 | ) | $ | 1,889 | $ | 10,894 | $ | (5,091 | ) | $ | 5,803 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Derivative Liabilities by Counterparty | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | Net Amount | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | Net Amount | ||||||||||||||||||
Counterparty A | $ | 1,889 | $ | — | $ | 1,889 | $ | 5,564 | $ | — | $ | 5,564 | ||||||||||||
Counterparty B | — | — | — | 239 | — | 239 | ||||||||||||||||||
Total | $ | 1,889 | $ | — | $ | 1,889 | $ | 5,803 | $ | — | $ | 5,803 |
September 30, 2016 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Derivative instruments | ||||||||||||
Risk management assets—Commodity forward contracts | $ | 1,551 | $ | 4,344 | $ | 5,895 | ||||||
Risk management liabilities—Commodity forward contracts | (8,091 | ) | (1,916 | ) | (10,007 | ) | ||||||
December 31, 2015 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Derivative instruments | ||||||||||||
Risk management assets—Commodity forward contracts | $ | 5,553 | $ | — | $ | 5,553 | ||||||
Risk management liabilities—Commodity forward contracts | (11,648 | ) | (10,114 | ) | (21,762 | ) | ||||||
Marketable securities | ||||||||||||
Available-for-sale securities | 48,081 | 520,144 | 568,225 |
September 30, 2016 | December 31, 2015 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Revolving credit facility | $ | 325,000 | $ | 325,000 | $ | — | $ | — | ||||||||
4.625% Westlake 2021 Senior Notes | 653,256 | 653,715 | — | — | ||||||||||||
4.625% Subsidiary 2021 Senior Notes | 66,243 | 66,058 | — | — | ||||||||||||
3.60% senior notes due 2022 | 248,024 | 251,480 | 247,768 | 244,828 | ||||||||||||
4.875% Westlake 2023 Senior Notes | 447,751 | 454,151 | — | — | ||||||||||||
4.875% Subsidiary 2023 Senior Notes | 16,769 | 16,954 | — | — | ||||||||||||
3.60% 2026 Senior Notes | 739,082 | 752,055 | — | — | ||||||||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027 | 10,889 | 10,889 | 10,889 | 10,889 | ||||||||||||
6 ½% senior notes due 2029 | 99,066 | 117,726 | 99,011 | 117,153 | ||||||||||||
6 ¾% senior notes due 2032 | 248,087 | 265,383 | 247,998 | 268,490 | ||||||||||||
6 ½% 2035 GO Zone Senior Notes | 88,149 | 105,298 | 88,116 | 106,491 | ||||||||||||
6 ½% 2035 IKE Zone Senior Notes | 64,390 | 76,837 | 64,366 | 76,741 | ||||||||||||
5.0% 2046 Senior Notes | 673,879 | 705,985 | — | — |
Balance as of June 30, 2016 | $ | — | ||
Amounts attributable to Axiall pre-acquistion | 5,471 | |||
Additions during the three months ended September 30, 2016 | 3,444 | |||
Reduction during the three months ended September 30, 2016 due to expiration of statute of limitations | (92 | ) | ||
Foreign currency translation | (5 | ) | ||
Balance as of September 30, 2016 | $ | 8,818 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 65,662 | $ | 183,604 | $ | 299,914 | $ | 535,041 | ||||||||
Less: | ||||||||||||||||
Net income attributable to participating securities | (294 | ) | (195 | ) | (1,347 | ) | (653 | ) | ||||||||
Net income attributable to common shareholders | $ | 65,368 | $ | 183,409 | $ | 298,567 | $ | 534,388 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Weighted average common shares—basic | 128,793,661 | 131,664,296 | 129,519,577 | 132,301,814 | ||||||||||||
Plus incremental shares from: | ||||||||||||||||
Assumed exercise of options | 586,295 | 456,939 | 584,320 | 484,720 | ||||||||||||
Weighted average common shares—diluted | 129,379,956 | 132,121,235 | 130,103,897 | 132,786,534 | ||||||||||||
Earnings per common share attributable to Westlake Chemical Corporation: | ||||||||||||||||
Basic | $ | 0.51 | $ | 1.39 | $ | 2.31 | $ | 4.04 | ||||||||
Diluted | $ | 0.51 | $ | 1.39 | $ | 2.29 | $ | 4.02 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest income | $ | 537 | $ | 1,631 | $ | 6,899 | $ | 3,383 | ||||||||
Dividend income | 868 | — | 5,142 | 3,328 | ||||||||||||
Acquisition-related financing costs | (11,420 | ) | — | (12,220 | ) | — | ||||||||||
Foreign exchange currency (losses) gains, net | (1,281 | ) | (731 | ) | (2,435 | ) | 1,140 | |||||||||
Impairment of equity method investment | — | — | — | (4,925 | ) | |||||||||||
Gain realized on previously held shares of Axiall common stock | 49,080 | — | 49,080 | — | ||||||||||||
Gain on acquisition and related expenses, net | — | — | — | 20,430 | ||||||||||||
Gains from sales of securities, net | 3,321 | — | 4,640 | 3,795 | ||||||||||||
Other | 160 | 1,736 | 985 | 6,639 | ||||||||||||
Other income, net | $ | 41,265 | $ | 2,636 | $ | 52,091 | $ | 33,790 |
• | In May 2013, an amendment to an existing consent order agreed to by the West Virginia Department of Environmental Protection and a predecessor of Axiall required that it, among other things, pay a penalty in the amount of $449 and continue certain corrective action associated with discharges of hexachlorocyclohexane |
• | In May 2013 and September 2013, the Environmental Protection Agency (the "EPA") conducted inspections at the Company's Plaquemine, Louisiana facility pursuant to requirements of the federal Clean Air Act Section 112(r) Risk Management Program and Title V. As a result of the inspections, the EPA identified areas of concern and the Company has subsequently engaged in negotiations, which are anticipated to result in sanctions of $167. |
• | The LDEQ has issued notices of violations ("NOVs") regarding the Company's olefins facilities in Lake Charles, Louisiana for various air and water compliance issues. The Company is working with the LDEQ to settle these claims, and a global settlement of all claims is being discussed. The Company has reached a verbal agreement with the LDEQ to settle certain of the NOVs in two separate settlements for a combined $192 in civil penalties. |
• | During September 2010, the Company's vinyls facilities in north Lake Charles and Plaquemine each received a Consolidated Compliance Order and Notice of Potential Penalty, alleging violations of various requirements of those facilities' air permits, based largely on self-reported permit deviations related to record-keeping violations. The Company has been negotiating a possible global settlement of these and several other matters with the LDEQ. The Company believes the resolution of these matters may require the payment of a monetary sanction in excess of $100. |
• | In April 2015, Axiall received a communication from the EPA related to, among other things, the EPA's investigation of the 2012 and 2013 fires that occurred at its VCM plant in Lake Charles. In late 2015, Axiall settled this matter with the EPA, with such settlement including on-going supplemental environmental projects and a payment of $900. |
• | For several years, the EPA has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares. On April 21, 2014, the Company received a Clean Air Act Section 114 Information Request from the EPA which sought information regarding flares at the Calvert City, Kentucky and certain Lake Charles facilities. The EPA has informed the Company that the information provided leads the EPA to believe that some of the flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate the Company to take corrective actions relating to the alleged noncompliance. The Company believes the resolution of these matters may require the payment of a monetary sanction in excess of $100. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net external sales | ||||||||||||||||
Olefins | ||||||||||||||||
Polyethylene | $ | 380,810 | $ | 423,631 | $ | 1,098,500 | $ | 1,283,545 | ||||||||
Styrene, feedstock and other | 116,555 | 164,466 | 324,369 | 508,507 | ||||||||||||
Total Olefins | 497,365 | 588,097 | 1,422,869 | 1,792,052 | ||||||||||||
Vinyls | ||||||||||||||||
PVC, caustic soda and other | 599,276 | 468,235 | 1,492,650 | 1,315,101 | ||||||||||||
Building products | 182,387 | 131,705 | 424,757 | 369,417 | ||||||||||||
Total Vinyls | 781,663 | 599,940 | 1,917,407 | 1,684,518 | ||||||||||||
$ | 1,279,028 | $ | 1,188,037 | $ | 3,340,276 | $ | 3,476,570 | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Intersegment sales | ||||||||||||||||
Olefins | $ | 30,614 | $ | 28,551 | $ | 85,856 | $ | 78,654 | ||||||||
Vinyls | 2,130 | 341 | 2,719 | 1,098 | ||||||||||||
$ | 32,744 | $ | 28,892 | $ | 88,575 | $ | 79,752 | |||||||||
Income (loss) from operations | ||||||||||||||||
Olefins | $ | 118,475 | $ | 196,703 | $ | 408,274 | $ | 608,744 | ||||||||
Vinyls | 22,235 | 67,779 | 136,559 | 202,831 | ||||||||||||
Corporate and other | (94,147 | ) | (10,454 | ) | (116,056 | ) | (32,893 | ) | ||||||||
$ | 46,563 | $ | 254,028 | $ | 428,777 | $ | 778,682 | |||||||||
Depreciation and amortization | ||||||||||||||||
Olefins | $ | 36,649 | $ | 27,678 | $ | 95,582 | $ | 82,240 | ||||||||
Vinyls | 56,136 | 33,432 | 128,691 | 97,615 | ||||||||||||
Corporate and other | 1,444 | 138 | 2,920 | 374 | ||||||||||||
$ | 94,229 | $ | 61,248 | $ | 227,193 | $ | 180,229 | |||||||||
Other income (expense), net | ||||||||||||||||
Olefins | $ | 1,101 | $ | 1,323 | $ | 3,706 | $ | 3,770 | ||||||||
Vinyls | (1,226 | ) | 10 | 1,722 | 6,927 | |||||||||||
Corporate and other | 41,390 | 1,303 | 46,663 | 23,093 | ||||||||||||
$ | 41,265 | $ | 2,636 | $ | 52,091 | $ | 33,790 | |||||||||
Provision for (benefit from) income taxes | ||||||||||||||||
Olefins | $ | 31,956 | $ | 45,865 | $ | 136,429 | $ | 186,534 | ||||||||
Vinyls | (3,912 | ) | 15,812 | 29,655 | 55,270 | |||||||||||
Corporate and other | (34,596 | ) | (1,644 | ) | (36,752 | ) | (4,980 | ) | ||||||||
$ | (6,552 | ) | $ | 60,033 | $ | 129,332 | $ | 236,824 | ||||||||
Capital expenditures | ||||||||||||||||
Olefins | $ | 96,469 | $ | 69,885 | $ | 285,359 | $ | 206,719 | ||||||||
Vinyls | 83,523 | 53,510 | 180,392 | 114,935 | ||||||||||||
Corporate and other | 178 | 1,909 | 1,579 | 7,582 | ||||||||||||
$ | 180,170 | $ | 125,304 | $ | 467,330 | $ | 329,236 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Income from operations | $ | 46,563 | $ | 254,028 | $ | 428,777 | $ | 778,682 | ||||||||
Interest expense | (24,366 | ) | (8,211 | ) | (36,966 | ) | (26,760 | ) | ||||||||
Other income, net | 41,265 | 2,636 | 52,091 | 33,790 | ||||||||||||
Income before income taxes | $ | 63,462 | $ | 248,453 | $ | 443,902 | $ | 785,712 |
September 30, 2016 | December 31, 2015 | |||||||
Total assets | ||||||||
Olefins | $ | 2,094,163 | $ | 1,869,888 | ||||
Vinyls | 8,262,971 | 2,638,833 | ||||||
Corporate and other | 539,915 | 1,060,564 | ||||||
$ | 10,897,049 | $ | 5,569,285 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 144,899 | $ | 1,884 | $ | 233,736 | $ | — | $ | 380,519 | ||||||||||
Accounts receivable, net | 1,457 | 2,838,917 | 765,949 | (2,535,822 | ) | 1,070,501 | ||||||||||||||
Inventories | — | 329,233 | 415,303 | — | 744,536 | |||||||||||||||
Prepaid expenses and other current assets | 8,257 | 16,264 | 43,741 | (13,394 | ) | 54,868 | ||||||||||||||
Restricted cash | — | — | 169,320 | — | 169,320 | |||||||||||||||
Total current assets | 154,613 | 3,186,298 | 1,628,049 | (2,549,216 | ) | 2,419,744 | ||||||||||||||
Property, plant and equipment, net | — | 1,538,148 | 4,912,799 | — | 6,450,947 | |||||||||||||||
Other assets, net | 9,074,810 | 418,588 | 1,695,970 | (9,163,010 | ) | 2,026,358 | ||||||||||||||
Total assets | $ | 9,229,423 | $ | 5,143,034 | $ | 8,236,818 | $ | (11,712,226 | ) | $ | 10,897,049 | |||||||||
Current liabilities | ||||||||||||||||||||
Accounts and notes payable | $ | 2,172,989 | $ | 466,907 | $ | 387,807 | $ | (2,524,315 | ) | $ | 503,388 | |||||||||
Accrued liabilities | 12,022 | 162,645 | 402,815 | (24,901 | ) | 552,581 | ||||||||||||||
Term loan | — | — | 148,681 | — | 148,681 | |||||||||||||||
Total current liabilities | 2,185,011 | 629,552 | 939,303 | (2,549,216 | ) | 1,204,650 | ||||||||||||||
Long-term debt, net | 3,586,684 | 775,995 | 2,199,812 | (2,881,906 | ) | 3,680,585 | ||||||||||||||
Deferred income taxes | — | 596,928 | 1,022,226 | (12,070 | ) | 1,607,084 | ||||||||||||||
Pension and other liabilities | — | 48,837 | 531,756 | — | 580,593 | |||||||||||||||
Total liabilities | 5,771,695 | 2,051,312 | 4,693,097 | (5,443,192 | ) | 7,072,912 | ||||||||||||||
Total Westlake Chemical Corporation stockholders' equity | 3,457,728 | 3,091,722 | 3,177,312 | (6,269,034 | ) | 3,457,728 | ||||||||||||||
Noncontrolling interests | — | — | 366,409 | — | 366,409 | |||||||||||||||
Total equity | 3,457,728 | 3,091,722 | 3,543,721 | (6,269,034 | ) | 3,824,137 | ||||||||||||||
Total liabilities and equity | $ | 9,229,423 | $ | 5,143,034 | $ | 8,236,818 | $ | (11,712,226 | ) | $ | 10,897,049 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Balance Sheet | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 303,131 | $ | 6,818 | $ | 352,576 | $ | — | $ | 662,525 | ||||||||||
Marketable securities | 520,144 | — | — | — | 520,144 | |||||||||||||||
Accounts receivable, net | 10,943 | 2,474,963 | 190,384 | (2,167,758 | ) | 508,532 | ||||||||||||||
Inventories | — | 287,114 | 146,946 | — | 434,060 | |||||||||||||||
Prepaid expenses and other current assets | 2,201 | 10,186 | 4,981 | (2,879 | ) | 14,489 | ||||||||||||||
Deferred income taxes | 702 | 28,325 | 6,412 | — | 35,439 | |||||||||||||||
Total current assets | 837,121 | 2,807,406 | 701,299 | (2,170,637 | ) | 2,175,189 | ||||||||||||||
Property, plant and equipment, net | — | 1,476,642 | 1,527,425 | — | 3,004,067 | |||||||||||||||
Other assets, net | 5,003,096 | 914,823 | 1,442,436 | (6,970,326 | ) | 390,029 | ||||||||||||||
Total assets | $ | 5,840,217 | $ | 5,198,871 | $ | 3,671,160 | $ | (9,140,963 | ) | $ | 5,569,285 | |||||||||
Current liabilities | ||||||||||||||||||||
Accounts payable | $ | 1,817,963 | $ | 374,468 | $ | 185,931 | $ | (2,143,033 | ) | $ | 235,329 | |||||||||
Accrued liabilities | 9,117 | 163,167 | 142,633 | (27,604 | ) | 287,313 | ||||||||||||||
Total current liabilities | 1,827,080 | 537,635 | 328,564 | (2,170,637 | ) | 522,642 | ||||||||||||||
Long-term debt, net | 747,259 | 744,405 | — | (733,516 | ) | 758,148 | ||||||||||||||
Deferred income taxes | — | 513,692 | 68,478 | (6,567 | ) | 575,603 | ||||||||||||||
Pension and other liabilities | — | 49,202 | 101,759 | — | 150,961 | |||||||||||||||
Total liabilities | 2,574,339 | 1,844,934 | 498,801 | (2,910,720 | ) | 2,007,354 | ||||||||||||||
Total Westlake Chemical Corporation stockholders' equity | 3,265,878 | 3,353,937 | 2,876,306 | (6,230,243 | ) | 3,265,878 | ||||||||||||||
Noncontrolling interests | — | — | 296,053 | — | 296,053 | |||||||||||||||
Total equity | 3,265,878 | 3,353,937 | 3,172,359 | (6,230,243 | ) | 3,561,931 | ||||||||||||||
Total liabilities and equity | $ | 5,840,217 | $ | 5,198,871 | $ | 3,671,160 | $ | (9,140,963 | ) | $ | 5,569,285 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net sales | $ | — | $ | 775,474 | $ | 823,238 | $ | (319,684 | ) | $ | 1,279,028 | |||||||||
Cost of sales | — | 677,085 | 714,365 | (314,555 | ) | 1,076,895 | ||||||||||||||
Gross profit | — | 98,389 | 108,873 | (5,129 | ) | 202,133 | ||||||||||||||
Selling, general and administrative expenses | 2,092 | 31,180 | 44,586 | (5,129 | ) | 72,729 | ||||||||||||||
Transaction and integration-related costs | — | 35,379 | 47,462 | — | 82,841 | |||||||||||||||
(Loss) income from operations | (2,092 | ) | 31,830 | 16,825 | — | 46,563 | ||||||||||||||
Interest expense | (22,130 | ) | (10,247 | ) | (9,117 | ) | 17,128 | (24,366 | ) | |||||||||||
Other income (expense), net | 35,405 | (8,622 | ) | 31,610 | (17,128 | ) | 41,265 | |||||||||||||
Income before income taxes | 11,183 | 12,961 | 39,318 | — | 63,462 | |||||||||||||||
(Benefit from) provision for income taxes | (2,088 | ) | 18,987 | (23,451 | ) | — | (6,552 | ) | ||||||||||||
Equity in net income of subsidiaries | 52,391 | — | — | (52,391 | ) | — | ||||||||||||||
Net income (loss) | 65,662 | (6,026 | ) | 62,769 | (52,391 | ) | 70,014 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | 4,352 | — | 4,352 | |||||||||||||||
Net income (loss) attributable to Westlake Chemical Corporation | $ | 65,662 | $ | (6,026 | ) | $ | 58,417 | $ | (52,391 | ) | $ | 65,662 | ||||||||
Comprehensive income (loss) attributable to Westlake Chemical Corporation | $ | 39,637 | $ | (5,923 | ) | $ | 45,945 | $ | (40,022 | ) | $ | 39,637 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net sales | $ | — | $ | 901,006 | $ | 596,860 | $ | (309,829 | ) | $ | 1,188,037 | |||||||||
Cost of sales | — | 712,681 | 469,137 | (305,057 | ) | 876,761 | ||||||||||||||
Gross profit | — | 188,325 | 127,723 | (4,772 | ) | 311,276 | ||||||||||||||
Selling, general and administrative expenses | 804 | 37,156 | 24,060 | (4,772 | ) | 57,248 | ||||||||||||||
(Loss) income from operations | (804 | ) | 151,169 | 103,663 | — | 254,028 | ||||||||||||||
Interest expense | (10,405 | ) | (5,711 | ) | — | 7,905 | (8,211 | ) | ||||||||||||
Other income, net | 1,239 | 203 | 9,099 | (7,905 | ) | 2,636 | ||||||||||||||
(Loss) income before income taxes | (9,970 | ) | 145,661 | 112,762 | — | 248,453 | ||||||||||||||
(Benefit from) provision for income taxes | (3,249 | ) | 53,131 | 10,151 | — | 60,033 | ||||||||||||||
Equity in net income of subsidiaries | 190,325 | — | — | (190,325 | ) | — | ||||||||||||||
Net income | 183,604 | 92,530 | 102,611 | (190,325 | ) | 188,420 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | 4,816 | — | 4,816 | |||||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 183,604 | $ | 92,530 | $ | 97,795 | $ | (190,325 | ) | $ | 183,604 | |||||||||
Comprehensive income attributable to Westlake Chemical Corporation | $ | 181,663 | $ | 92,781 | $ | 96,062 | $ | (188,843 | ) | $ | 181,663 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net sales | $ | — | $ | 2,357,769 | $ | 1,945,866 | $ | (963,359 | ) | $ | 3,340,276 | |||||||||
Cost of sales | — | 2,018,282 | 1,570,669 | (947,759 | ) | 2,641,192 | ||||||||||||||
Gross profit | — | 339,487 | 375,197 | (15,600 | ) | 699,084 | ||||||||||||||
Selling, general and administrative expenses | 3,648 | 104,488 | 87,221 | (15,600 | ) | 179,757 | ||||||||||||||
Transaction and integration-related costs | — | 43,088 | 47,462 | — | 90,550 | |||||||||||||||
(Loss) income from operations | (3,648 | ) | 191,911 | 240,514 | — | 428,777 | ||||||||||||||
Interest expense | (43,228 | ) | (19,051 | ) | (9,117 | ) | 34,430 | (36,966 | ) | |||||||||||
Other income (expense), net | 40,807 | (12,057 | ) | 57,771 | (34,430 | ) | 52,091 | |||||||||||||
(Loss) income before income taxes | (6,069 | ) | 160,803 | 289,168 | — | 443,902 | ||||||||||||||
(Benefit from) provision for income taxes | (8,268 | ) | 136,856 | 744 | — | 129,332 | ||||||||||||||
Equity in net income of subsidiaries | 297,715 | — | — | (297,715 | ) | — | ||||||||||||||
Net income | 299,914 | 23,947 | 288,424 | (297,715 | ) | 314,570 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | 14,656 | — | 14,656 | |||||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 299,914 | $ | 23,947 | $ | 273,768 | $ | (297,715 | ) | $ | 299,914 | |||||||||
Comprehensive income attributable to Westlake Chemical Corporation | $ | 321,080 | $ | 24,356 | $ | 293,859 | $ | (318,215 | ) | $ | 321,080 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Operations | ||||||||||||||||||||
Net sales | $ | — | $ | 2,677,773 | $ | 1,727,561 | $ | (928,764 | ) | $ | 3,476,570 | |||||||||
Cost of sales | — | 2,078,730 | 1,362,710 | (913,873 | ) | 2,527,567 | ||||||||||||||
Gross profit | — | 599,043 | 364,851 | (14,891 | ) | 949,003 | ||||||||||||||
Selling, general and administrative expenses | 1,617 | 115,400 | 68,195 | (14,891 | ) | 170,321 | ||||||||||||||
(Loss) income from operations | (1,617 | ) | 483,643 | 296,656 | — | 778,682 | ||||||||||||||
Interest expense | (31,726 | ) | (18,353 | ) | — | 23,319 | (26,760 | ) | ||||||||||||
Other income (expense), net | 17,627 | (4,743 | ) | 44,225 | (23,319 | ) | 33,790 | |||||||||||||
(Loss) income before income taxes | (15,716 | ) | 460,547 | 340,881 | — | 785,712 | ||||||||||||||
(Benefit from) provision for income taxes | (5,226 | ) | 222,743 | 19,307 | — | 236,824 | ||||||||||||||
Equity in net income of subsidiaries | 545,531 | — | — | (545,531 | ) | — | ||||||||||||||
Net income | 535,041 | 237,804 | 321,574 | (545,531 | ) | 548,888 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | 13,847 | — | 13,847 | |||||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 535,041 | $ | 237,804 | $ | 307,727 | $ | (545,531 | ) | $ | 535,041 | |||||||||
Comprehensive income attributable to Westlake Chemical Corporation | $ | 492,609 | $ | 238,433 | $ | 264,542 | $ | (502,975 | ) | $ | 492,609 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Cash Flows | ||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 299,914 | $ | 23,947 | $ | 288,424 | $ | (297,715 | ) | $ | 314,570 | |||||||||
Adjustments to reconcile net income to net cash (used for) provided by operating activities | ||||||||||||||||||||
Depreciation and amortization | 747 | 98,658 | 128,806 | — | 228,211 | |||||||||||||||
Deferred income taxes | (5,178 | ) | 111,795 | (707 | ) | — | 105,910 | |||||||||||||
Net changes in working capital and other | (314,423 | ) | 93,280 | (181,103 | ) | 297,715 | (104,531 | ) | ||||||||||||
Net cash (used for) provided by operating activities | (18,940 | ) | 327,680 | 235,420 | — | 544,160 | ||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Acquisition of business, net of cash acquired | — | — | (2,437,829 | ) | — | (2,437,829 | ) | |||||||||||||
Additions to cost method investment | — | — | (4,000 | ) | — | (4,000 | ) | |||||||||||||
Additions to property, plant and equipment | — | (163,579 | ) | (303,751 | ) | — | (467,330 | ) | ||||||||||||
Proceeds from disposition of assets | — | 48 | 165 | — | 213 | |||||||||||||||
Proceeds from sales and maturities of securities | 658,338 | — | 4,600 | — | 662,938 | |||||||||||||||
Purchase of securities | (138,422 | ) | — | — | — | (138,422 | ) | |||||||||||||
Settlements of derivative instruments | — | (4,655 | ) | — | — | (4,655 | ) | |||||||||||||
Net cash provided by (used for) investing activities | 519,916 | (168,186 | ) | (2,740,815 | ) | — | (2,389,085 | ) | ||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Intercompany financing | (2,242,604 | ) | (366,639 | ) | 2,609,243 | — | — | |||||||||||||
Capitalized debt issuance costs | (33,617 | ) | — | (1,590 | ) | — | (35,207 | ) | ||||||||||||
Dividends paid | (71,933 | ) | — | — | — | (71,933 | ) | |||||||||||||
Distributions paid | — | 202,211 | (214,511 | ) | — | (12,300 | ) | |||||||||||||
Proceeds from debt issuance | 1,428,512 | — | — | — | 1,428,512 | |||||||||||||||
Proceeds from exercise of stock options | 1,650 | — | — | — | 1,650 | |||||||||||||||
Proceeds from issuance of notes payable | — | — | 5,597 | — | 5,597 | |||||||||||||||
Proceeds from term loan and drawdown of revolver | 450,000 | — | 150,000 | — | 600,000 | |||||||||||||||
Restricted cash associated with term loan | — | — | (154,000 | ) | — | (154,000 | ) |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Repayment of notes payable | — | — | (10,602 | ) | — | (10,602 | ) | |||||||||||||
Repayment of revolver | (125,000 | ) | — | — | — | (125,000 | ) | |||||||||||||
Repurchase of common stock for treasury | (67,406 | ) | — | — | — | (67,406 | ) | |||||||||||||
Windfall tax benefits from share-based payment arrangements | 1,190 | — | — | — | 1,190 | |||||||||||||||
Net cash (used for) provided by financing activities | (659,208 | ) | (164,428 | ) | 2,384,137 | — | 1,560,501 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 2,418 | — | 2,418 | |||||||||||||||
Net decrease in cash and cash equivalents | (158,232 | ) | (4,934 | ) | (118,840 | ) | — | (282,006 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 303,131 | 6,818 | 352,576 | — | 662,525 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 144,899 | $ | 1,884 | $ | 233,736 | $ | — | $ | 380,519 |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Statement of Cash Flows | ||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 535,041 | $ | 237,804 | $ | 321,574 | $ | (545,531 | ) | $ | 548,888 | |||||||||
Adjustments to reconcile net income to net cash (used for) provided by operating activities | ||||||||||||||||||||
Depreciation and amortization | 1,504 | 81,770 | 98,459 | — | 181,733 | |||||||||||||||
Deferred income taxes | 87 | 3,972 | 3,526 | — | 7,585 | |||||||||||||||
Net changes in working capital and other | (567,137 | ) | 110,574 | 14,126 | 545,531 | 103,094 | ||||||||||||||
Net cash (used for) provided by operating activities | (30,505 | ) | 434,120 | 437,685 | — | 841,300 | ||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Acquisition of business, net of cash acquired | — | — | 15,782 | — | 15,782 | |||||||||||||||
Additions to property, plant and equipment | — | (137,844 | ) | (191,392 | ) | — | (329,236 | ) | ||||||||||||
Proceeds from disposition of assets | — | — | 17 | — | 17 | |||||||||||||||
Proceeds from disposition of equity method investment | — | 27,865 | — | — | 27,865 | |||||||||||||||
Proceeds from sales and maturities of securities | 16,056 | — | — | — | 16,056 | |||||||||||||||
Purchase of securities | (282,542 | ) | — | — | — | (282,542 | ) | |||||||||||||
Settlements of derivative instruments | — | (1,535 | ) | — | — | (1,535 | ) | |||||||||||||
Net cash used for investing activities | (266,486 | ) | (111,514 | ) | (175,593 | ) | — | (553,593 | ) | |||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Intercompany financing | 467,360 | (570,217 | ) | 102,857 | — | — | ||||||||||||||
Dividends paid | (67,852 | ) | — | — | — | (67,852 | ) | |||||||||||||
Distributions paid | — | 249,999 | (260,981 | ) | — | (10,982 | ) | |||||||||||||
Proceeds from exercise of stock options | 984 | — | — | — | 984 | |||||||||||||||
Proceeds from issuance of notes payable | — | — | 19,483 | — | 19,483 | |||||||||||||||
Repayment of notes payable | — | — | (32,954 | ) | — | (32,954 | ) | |||||||||||||
Repurchase of common stock for treasury | (114,254 | ) | — | — | — | (114,254 | ) | |||||||||||||
Windfall tax benefits from share-based payment arrangements | 2,452 | — | — | — | 2,452 | |||||||||||||||
Net cash provided by (used for) financing activities | 288,690 | (320,218 | ) | (171,595 | ) | — | (203,123 | ) |
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (3,260 | ) | — | (3,260 | ) | |||||||||||||
Net (decrease) increase in cash and cash equivalents | (8,301 | ) | 2,388 | 87,237 | — | 81,324 | ||||||||||||||
Cash and cash equivalents at beginning of period | 655,947 | 3,047 | 221,607 | — | 880,601 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 647,646 | $ | 5,435 | $ | 308,844 | $ | — | $ | 961,925 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
Net external sales | ||||||||||||||||
Olefins | ||||||||||||||||
Polyethylene | $ | 380,810 | $ | 423,631 | $ | 1,098,500 | $ | 1,283,545 | ||||||||
Styrene, feedstock and other | 116,555 | 164,466 | 324,369 | 508,507 | ||||||||||||
Total Olefins | 497,365 | 588,097 | 1,422,869 | 1,792,052 | ||||||||||||
Vinyls | ||||||||||||||||
PVC, caustic soda and other | 599,276 | 468,235 | 1,492,650 | 1,315,101 | ||||||||||||
Building products | 182,387 | 131,705 | 424,757 | 369,417 | ||||||||||||
Total Vinyls | 781,663 | 599,940 | 1,917,407 | 1,684,518 | ||||||||||||
Total | $ | 1,279,028 | $ | 1,188,037 | $ | 3,340,276 | $ | 3,476,570 | ||||||||
Income (loss) from operations | ||||||||||||||||
Olefins | $ | 118,475 | $ | 196,703 | $ | 408,274 | $ | 608,744 | ||||||||
Vinyls | 22,235 | 67,779 | 136,559 | 202,831 | ||||||||||||
Corporate and other | (94,147 | ) | (10,454 | ) | (116,056 | ) | (32,893 | ) | ||||||||
Total income from operations | 46,563 | 254,028 | 428,777 | 778,682 | ||||||||||||
Interest expense | (24,366 | ) | (8,211 | ) | (36,966 | ) | (26,760 | ) | ||||||||
Other income, net | 41,265 | 2,636 | 52,091 | 33,790 | ||||||||||||
(Benefit from) provision for income taxes | (6,552 | ) | 60,033 | 129,332 | 236,824 | |||||||||||
Net income | 70,014 | 188,420 | 314,570 | 548,888 | ||||||||||||
Net income attributable to noncontrolling interests | 4,352 | 4,816 | 14,656 | 13,847 | ||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 65,662 | $ | 183,604 | $ | 299,914 | $ | 535,041 | ||||||||
Diluted earnings per share | $ | 0.51 | $ | 1.39 | $ | 2.29 | $ | 4.02 | ||||||||
EBITDA (1) | $ | 182,057 | $ | 317,912 | $ | 708,061 | $ | 992,701 |
(1) | See "Reconciliation of EBITDA to Net Income and to Net Cash Provided by Operating Activities" below. |
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||
Average Sales Price | Volume | Average Sales Price | Volume | |||||||||
Product sales price and volume percentage change from prior-year period | ||||||||||||
Olefins | -6.3 | % | -9.1 | % | -12.0 | % | -8.6 | % | ||||
Vinyls | -3.0 | % | +33.3 | % | -5.7 | % | +19.5 | % | ||||
Company average | -4.6 | % | +12.3 | % | -8.9 | % | +5.0 | % | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Average industry prices (1) | ||||||||||||
Ethane (cents/lb) | 6.3 | 6.4 | 6.2 | 6.3 | ||||||||
Propane (cents/lb) | 11.2 | 9.6 | 10.7 | 11.0 | ||||||||
Ethylene (cents/lb) (2) | 32.5 | 28.2 | 26.5 | 33.6 | ||||||||
Polyethylene (cents/lb) (3) | 68.7 | 72.3 | 65.3 | 73.8 | ||||||||
Styrene (cents/lb) (4) | 66.8 | 64.2 | 63.3 | 61.4 | ||||||||
Caustic soda ($/short ton) (5) | 660.8 | 563.3 | 618.3 | 576.1 | ||||||||
Chlorine ($/short ton) (6) | 304.2 | 275.0 | 295.3 | 260.8 | ||||||||
PVC (cents/lb) (7) | 71.5 | 66.5 | 68.8 | 66.5 |
(1) | Industry pricing data was obtained from IHS Chemical. We have not independently verified the data. |
(2) | Represents average North American spot prices of ethylene over the period as reported by IHS Chemical. |
(3) | Represents average North American net transaction prices of polyethylene low density GP-Film grade over the period as reported by IHS Chemical. |
(4) | Represents average North American contract prices of styrene over the period as reported by IHS Chemical. |
(5) | Represents average North American undiscounted contract prices of caustic soda over the period as reported by IHS Chemical. |
(6) | Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical. |
(7) | Represents average North American contract prices of PVC over the period as reported by IHS Chemical. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
EBITDA | $ | 182,057 | $ | 317,912 | $ | 708,061 | $ | 992,701 | ||||||||
Less: | ||||||||||||||||
(Benefit from) provision for income taxes | (6,552 | ) | 60,033 | 129,332 | 236,824 | |||||||||||
Interest expense | 24,366 | 8,211 | 36,966 | 26,760 | ||||||||||||
Depreciation and amortization | 94,229 | 61,248 | 227,193 | 180,229 | ||||||||||||
Net income | 70,014 | 188,420 | 314,570 | 548,888 | ||||||||||||
Changes in operating assets and liabilities and other | 101,334 | 213,028 | 123,680 | 284,827 | ||||||||||||
Deferred income taxes | 2,920 | 4,497 | 105,910 | 7,585 | ||||||||||||
Net cash provided by operating activities | $ | 174,268 | $ | 405,945 | $ | 544,160 | $ | 841,300 |
• | future operating rates, margins, cash flow and demand for our products; |
• | industry market outlook, including the price of crude oil; |
• | production capacities; |
• | currency devaluation; |
• | our ability to borrow additional funds under the Credit Agreement; |
• | our ability to meet our liquidity needs; |
• | our ability to meet debt obligations under our debt instruments; |
• | our intended quarterly dividends; |
• | future capacity additions and expansions in the industry; |
• | timing, funding and results of capital projects, such as the expansion program at our Calvert City facility; |
• | results of acquisitions, including our acquisition of Axiall (including the benefits, results and effects thereof); |
• | pension plan obligations, funding requirements and investment policies; |
• | compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties that may come into force to limit or control carbon dioxide and other greenhouse gases emissions or to address other issues of climate change; |
• | effects of pending legal proceedings; and |
• | timing of and amount of capital expenditures. |
• | general economic and business conditions; |
• | the cyclical nature of the chemical industry; |
• | the availability, cost and volatility of raw materials and energy; |
• | uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East, the Commonwealth of Independent States (including Ukraine) and elsewhere; |
• | current and potential governmental regulatory actions in the United States and other countries and political unrest in other areas; |
• | industry production capacity and operating rates; |
• | the supply/demand balance for our products; |
• | competitive products and pricing pressures; |
• | instability in the credit and financial markets; |
• | access to capital markets; |
• | terrorist acts; |
• | operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); |
• | changes in laws or regulations; |
• | technological developments; |
• | our ability to realize anticipated benefits of the Merger and to integrate Axiall's business; |
• | charges or other liabilities relating to the Merger; |
• | the significant indebtedness that we have incurred in connection with the Merger; |
• | our ability to integrate acquired businesses other than Axiall; |
• | foreign currency exchange risks; |
• | our ability to implement our business strategies; and |
• | creditworthiness of our customers. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | the diversion of management's attention to integration matters; |
• | difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining Axiall's business with our business; |
• | difficulties entering new markets or manufacturing in new geographies where we have no or limited direct prior experience; |
• | difficulties in the integration of operations and systems; |
• | difficulties in the assimilation of employees; |
• | difficulties in managing the expanded operations of a significantly larger and more complex company; |
• | successfully managing relationships with our strategic partners and our supplier and customer base; |
• | challenges in maintaining existing, and establishing new, business relationships; and |
• | challenges in attracting and retaining key personnel. |
• | a portion of our cash flow from operations will be dedicated to the payment of interest and principal on our debt and will not be available for other purposes, including the payment of dividends; |
• | we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes; |
• | our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flow to improve their operations; |
• | we may be exposed to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates; |
• | we could be vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions; and |
• | should we pursue additional expansions of existing assets or acquisition of third party assets, we may not be able to obtain additional liquidity at cost effective interest rates. |
• | pay dividends on, redeem or repurchase our capital stock; |
• | make investments and other restricted payments; |
• | incur additional indebtedness or issue preferred stock; |
• | create liens; |
• | permit dividend or other payment restrictions on our restricted subsidiaries; |
• | sell all or substantially all of our assets or consolidate or merge with or into other companies; |
• | engage in transactions with affiliates; and |
• | engage in sale-leaseback transactions. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||
July 2016 | — | $ | — | — | $ | 171,285,000 | ||||||||
August 2016 | 16,613 | $ | 51.91 | — | $ | 171,285,000 | ||||||||
September 2016 | 13,212 | $ | 51.11 | — | $ | 171,285,000 | ||||||||
29,825 | $ | 51.56 | — |
(1) | Represents shares withheld in satisfaction of withholding taxes due upon the vesting of restricted stock and restricted stock units granted to our employees under the 2013 Plan. |
(2) | In November 2014, our Board of Directors authorized a $250.0 million share repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150.0 million. As of September 30, 2016, 4,193,598 shares of common stock had been acquired at an aggregate purchase price of approximately $228.7 million under the 2014 Program. Transaction fees and commissions are not reported in the average price paid per share in the table above. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flow from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time. |
Item 6. | Exhibits |
Exhibit No. | ||
4.1 | Eighth Supplemental Indenture (including the form of the Notes), dated as of August 10, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to Westlake's Current Report on Form 8-K, filed on August 10, 2016, File No. 001-32260) | |
4.2 | Fourth Supplemental Indenture, dated as of August 22, 2016, to the Indenture, dated as of February 1, 2013, by and among Axiall Corporation, the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Axiall's Current Report on Form 8-K, filed on August 22, 2016, File No. 001-09753) | |
4.3 | Fifth Supplemental Indenture, dated as of August 22, 2016, to the Indenture, dated as of January 28, 2013, by and among Eagle Spinco, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to Axiall's Current Report on Form 8-K, filed on August 22, 2016, File No. 001-09753) | |
4.4 | Ninth Supplemental Indenture (including the form of the Notes) as of September 7, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and the Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to Westlake's Current Report on Form 8-K, filed on September 7, 2016, File No. 001-32260) | |
4.5 | Indenture dated as of September 8, 2016 by and among Westlake and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.4 to Westlake's Registration Statement on Form S-3, filed on September 8, 2016, File No. 333-213548) | |
10.1 | Registration Rights Agreement, dated as of August 10, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and Deutsche Bank Securities Inc. and Goldman Sachs & Co., as representatives of the Initial Purchasers (as defined therein) (incorporated by reference to Exhibit 4.3 to Westlake's Current Report on Form 8-K, filed on August 10, 2016, File No. 001-32260) | |
10.2 | Registration Rights Agreement, dated as of September 7, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and Deutsche Bank Securities Inc. and Goldman, Sachs & Co., as dealer managers (incorporated by reference to Exhibit 4.3 to Westlake's Current Report on Form 8-K, filed on September 7, 2016, File No. 001-32260) | |
10.3† | Credit Agreement, dated as of August 10, 2016, by and between Bank of America, N.A. and Westlake International Holdings II C.V. | |
10.4 | Credit Agreement dated as of August 23, 2016, by and among Westlake Chemical Corporation, the other borrowers and guarantors referred to therein, the lenders from time to time party thereto, the issuing banks party thereto and JPMorgan Chase Bank, National Association, as Administrative Agent, relating to a $1 billion senior unsecured revolving credit facility (incorporated by reference to Exhibit 10.1 to Westlake's Current Report on Form 8-K, filed on August 24, 2016, File No. 001-32260) | |
31.1† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer) | |
31.2† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer) | |
32.1# | Section 1350 Certification (Principal Executive Officer and Principal Financial Officer) | |
101.INS† | XBRL Instance Document | |
101.SCH† | XBRL Taxonomy Extension Schema Document | |
101.CAL† | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document |
† | Filed herewith. |
# | Furnished herewith. |
WESTLAKE CHEMICAL CORPORATION | ||||||
Date: | November 9, 2016 | By: | /S/ ALBERT CHAO | |||
Albert Chao | ||||||
President and Chief Executive Officer (Principal Executive Officer) | ||||||
Date: | November 9, 2016 | By: | /S/ M. STEVEN BENDER | |||
M. Steven Bender | ||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Exhibit No. | Exhibit | |
4.1 | Eighth Supplemental Indenture (including the form of the Notes), dated as of August 10, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to Westlake's Current Report on Form 8-K, filed on August 10, 2016, File No. 001-32260) | |
4.2 | Fourth Supplemental Indenture, dated as of August 22, 2016, to the Indenture, dated as of February 1, 2013, by and among Axiall Corporation, the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Axiall's Current Report on Form 8-K, filed on August 22, 2016, File No. 001-09753) | |
4.3 | Fifth Supplemental Indenture, dated as of August 22, 2016, to the Indenture, dated as of January 28, 2013, by and among Eagle Spinco, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to Axiall's Current Report on Form 8-K, filed on August 22, 2016, File No. 001-09753) | |
4.4 | Ninth Supplemental Indenture (including the form of the Notes) as of September 7, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and the Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to Westlake's Current Report on Form 8-K, filed on September 7, 2016, File No. 001-32260) | |
4.5 | Indenture dated as of September 8, 2016 by and among Westlake and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.4 to Westlake's Registration Statement on Form S-3, filed on September 8, 2016, File No. 333-213548) | |
10.1 | Registration Rights Agreement, dated as of August 10, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and Deutsche Bank Securities Inc. and Goldman Sachs & Co., as representatives of the Initial Purchasers (as defined therein) (incorporated by reference to Exhibit 4.3 to Westlake's Current Report on Form 8-K, filed on August 10, 2016, File No. 001-32260) | |
10.2 | Registration Rights Agreement, dated as of September 7, 2016, among Westlake Chemical Corporation, the Guarantors (as defined therein) and Deutsche Bank Securities Inc. and Goldman, Sachs & Co., as dealer managers (incorporated by reference to Exhibit 4.3 to Westlake's Current Report on Form 8-K, filed on September 7, 2016, File No. 001-32260) | |
10.3† | Credit Agreement, dated as of August 10, 2016, by and between Bank of America, N.A. and Westlake International Holdings II C.V. | |
10.4 | Credit Agreement dated as of August 23, 2016, by and among Westlake Chemical Corporation, the other borrowers and guarantors referred to therein, the lenders from time to time party thereto, the issuing banks party thereto and JPMorgan Chase Bank, National Association, as Administrative Agent, relating to a $1 billion senior unsecured revolving credit facility (incorporated by reference to Exhibit 10.1 to Westlake's Current Report on Form 8-K, filed on August 24, 2016, File No. 001-32260) | |
31.1† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer) | |
31.2† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer) | |
32.1# | Section 1350 Certification (Principal Executive Officer and Principal Financial Officer) | |
101.INS† | XBRL Instance Document | |
101.SCH† | XBRL Taxonomy Extension Schema Document | |
101.CAL† | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document |
† | Filed herewith. |
# | Furnished herewith. |
Page | |||
ARTICLE I | |||
LOANS | |||
SECTION 1.1 | Facility | 1 | |
SECTION 1.2 | Loans | 1 | |
ARTICLE II | |||
INTEREST AND FEES | |||
SECTION 2.1 | Interest | 2 | |
SECTION 2.2 | Continuation and Conversion Elections | 3 | |
SECTION 2.3 | Maximum Interest Rate | 3 | |
SECTION 2.4 | Closing Fee | 4 | |
ARTICLE III | |||
PAYMENTS AND PREPAYMENTS | |||
SECTION 3.1 | Loans | 4 | |
SECTION 3.2 | Prepayments of the Loans | 4 | |
SECTION 3.3 | LIBOR Rate Loan Prepayments | 4 | |
SECTION 3.4 | Payments by the Borrower | 4 | |
SECTION 3.5 | Apportionment, Application and Reversal of Payments | 4 | |
SECTION 3.6 | Indemnity for Returned Payments | 5 | |
SECTION 3.7 | Agent's and Lenders' Books and Records; Monthly Statements | 5 | |
ARTICLE IV | |||
TAXES, YIELD PROTECTION AND ILLEGALITY | |||
SECTION 4.1 | Taxes | 5 | |
SECTION 4.2 | Lender Tax Information | 6 | |
SECTION 4.3 | Illegality | 8 | |
SECTION 4.4 | Increased Costs; Capital Adequacy | 8 | |
SECTION 4.5 | Funding Losses | 9 | |
SECTION 4.6 | Inability to Determine Rates | 9 | |
SECTION 4.7 | Certificates of the Agent | 9 | |
SECTION 4.8 | Delay in Requests | 9 | |
SECTION 4.9 | Mitigation | 9 | |
SECTION 4.10 | Replacement of Lenders | 9 | |
SECTION 4.11 | Survival | 9 | |
ARTICLE V | |||
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES | |||
SECTION 5.1 | Books and Records | 10 | |
SECTION 5.2 | Financial Information | 10 | |
SECTION 5.3 | Notices to the Agent | 10 | |
ARTICLE VI | |||
GENERAL WARRANTIES AND REPRESENTATIONS | |||
SECTION 6.1 | Authorization, Validity, and Enforceability of this Agreement and the Loan Documents | 10 | |
SECTION 6.2 | Validity and Priority of Security Interest | 11 | |
SECTION 6.3 | Organization and Qualification | 11 | |
SECTION 6.4 | Corporate Name; Prior Transactions | 11 | |
SECTION 6.5 | Subsidiaries and Affiliates | 11 | |
SECTION 6.6 | Financial Statements and Projections | 11 | |
SECTION 6.7 | Solvency | 11 | |
SECTION 6.8 | Litigation | 11 | |
SECTION 6.9 | No Violation of Law | 11 | |
SECTION 6.10 | No Default | 11 | |
SECTION 6.11 | Taxes | 11 | |
SECTION 6.12 | Regulated Entities | 11 | |
SECTION 6.13 | Use of Proceeds; Margin Regulations | 12 | |
SECTION 6.14 | No Material Adverse Change | 12 | |
SECTION 6.15 | Full Disclosure | 12 | |
SECTION 6.16 | Governmental Authorization | 12 | |
SECTION 6.17 | OFAC | 12 | |
SECTION 6.18 | Anti-Corruption Laws | 12 | |
ARTICLE VII | |||
AFFIRMATIVE AND NEGATIVE COVENANTS | |||
SECTION 7.1 | Taxes and Other Obligations | 12 | |
SECTION 7.2 | Legal Existence and Good Standing | 13 | |
SECTION 7.3 | Compliance with Law and Agreements; Maintenance of Licenses; Amendments to Charter Documents | 13 | |
SECTION 7.4 | Insurance | 13 | |
SECTION 7.5 | Mergers; Consolidations; or Sales | 13 | |
SECTION 7.6 | Distributions | 13 | |
SECTION 7.7 | Transactions Affecting Collateral or Obligations | 13 | |
SECTION 7.8 | Debt | 13 | |
SECTION 7.9 | Payment / Prepayment of Debt | 14 | |
SECTION 7.10 | Transactions with Affiliates | 14 | |
SECTION 7.11 | Business Conducted | 15 | |
SECTION 7.12 | Liens | 15 |
SECTION 7.13 | Fiscal Year | 15 | |
SECTION 7.14 | Financial Covenant | 15 | |
SECTION 7.15 | Use of Proceeds | 15 | |
SECTION 7.16 | Collateral | 15 | |
SECTION 7.17 | Further Assurances | 15 | |
SECTION 7.18 | Burdensome Agreements | 16 | |
ARTICLE VIII | |||
CONDITIONS OF LENDING | |||
SECTION 8.1 | Conditions Precedent of Making of Loans on the Closing Date | 16 | |
ARTICLE IX | |||
DEFAULT; REMEDIES | |||
SECTION 9.1 | Events of Default | 17 | |
SECTION 9.2 | Remedies | 18 | |
ARTICLE X | |||
TERM AND TERMINATION | |||
SECTION 10.1 | Term and Termination | 19 | |
ARTICLE XI | |||
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS | |||
SECTION 11.1 | Amendments and Waivers | 19 | |
SECTION 11.2 | Assignments; Participations | 20 | |
ARTICLE XII | |||
THE AGENT | |||
SECTION 12.1 | Appointment and Authorization | 22 | |
SECTION 12.2 | Delegation of Duties | 22 | |
SECTION 12.3 | Liability of Agent | 22 | |
SECTION 12.4 | Reliance by Agent | 23 | |
SECTION 12.5 | Notice of Default | 23 | |
SECTION 12.6 | Credit Decision | 23 | |
SECTION 12.7 | Indemnification | 23 | |
SECTION 12.8 | Agent in Individual Capacity | 24 | |
SECTION 12.9 | Successor Agent | 24 | |
SECTION 12.10 | Collateral Matters | 24 | |
SECTION 12.11 | Restrictions on Actions by Lenders; Sharing of Payments | 25 | |
SECTION 12.12 | Agency for Perfection | 25 |
SECTION 12.13 | Payments by Agent to Lenders | 25 | |
SECTION 12.14 | Settlement | 25 | |
SECTION 12.15 | Concerning the Collateral and the Related Loan Documents | 26 | |
SECTION 12.16 | Relation Among Lenders | 26 | |
ARTICLE XIII | |||
MISCELLANEOUS | |||
SECTION 13.1 | No Waivers; Cumulative Remedies | 26 | |
SECTION 13.2 | Severability | 27 | |
SECTION 13.3 | Governing Law; Choice of Forum; Service of Process | 27 | |
SECTION 13.4 | WAIVER OF JURY TRAIL | 28 | |
SECTION 13.5 | Survival of Representations and Warranties | 28 | |
SECTION 13.6 | Limited Recourse | 28 | |
SECTION 13.7 | Fees and Expenses | 28 | |
SECTION 13.8 | Notices | 28 | |
SECTION 13.9 | Waiver of Notices | 30 | |
SECTION 13.10 | Binding Effect | 30 | |
SECTION 13.11 | Indemnity of the Agent and the Lenders by the Borrower | 30 | |
SECTION 13.12 | Limitation of Liability | 30 | |
SECTION 13.13 | No Advisory or Fiduciary Responsibility | 31 | |
SECTION 13.14 | Final Agreement | 31 | |
SECTION 13.15 | Counterparts | 31 | |
SECTION 13.16 | Captions | 31 | |
SECTION 13.17 | Right of Setoff | 31 | |
SECTION 13.18 | Confidentiality | 32 | |
SECTION 13.19 | Conflicts with Other Loan Documents | 32 | |
SECTION 13.20 | Patriot Act Notice | 32 | |
SECTION 13.21 | Electronic Execution | 32 | |
SECTION 13.22 | Judgment Currency | 32 | |
SECTION 13.23 | Acknowledgment and Consent to Bail-In of EEA Financial Institutions | 33 | |
By: | /s/ Albert Chao |
By: | /s/ Lindsay Kim Name: Lindsay Kim Title: Vice President |
By: | /s/ Lindsay Kim Name: Lindsay Kim Title: Vice President |
LIBOR Rate = | Offshore Base Rate |
1.00 - Eurodollar Reserve Percentage |
By: | __________________________________________ |
To: | BANK OF AMERICA, N.A., individually as a Lender and as agent for itself and the other Lenders (the “Agent”) under that certain Credit Agreement dated as of August 10, 2016 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the “Credit Agreement”), by and among the Agent, Westlake International Holding II C.V. (the “Borrower”), acting through Westlake Olefins Corporation, its general partner, and the Lenders party thereto. |
1. | The Business Day of the proposed Borrowing is ______ __, 20__. |
2. | The aggregate amount of the proposed Borrowing is $ _________. |
3. | The Borrowing is to be comprised of $ ______ of Base Rate and $ ______ of LIBOR Rate Loans. |
By: | __________________________________________ |
To: | BANK OF AMERICA, N.A., individually as a Lender and as agent for itself and the other Lenders (the “Agent”) under that certain Credit Agreement dated as of August 10, 2016 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the “Credit Agreement”), by and among the Agent, Westlake International Holdings II C.V. (the “Borrower”), acting through Westlake Olefins Corporation, its general partner, and the Lenders party thereto. |
1. | The Continuation/Conversion Date is ______, 20__. |
2. | The aggregate amount of the Loans to be [converted] [continued] is $ _________. |
3. | The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base Rate] Loans. |
By: | __________________________________________ |
By: | __________________________________________ Title: Address: |
By: | __________________________________________ Title: Address: |
1. | We hereby give the Agent notice of, and request the Agent’s consent to, the assignment by __________________ (the “Assignor”) to __________________ (the “Assignee”) of _____% of the right, title, and interest of the Assignor in and to the Credit Agreement (including the right, title, and interest of the Assignor in and to the Revolving Commitment of the Assignor to make Loans, all outstanding Loans made by the Assignor, pursuant to the Assignment and Acceptance Agreement attached hereto (the “Assignment and Acceptance”). We understand and agree that the Assignor’s Revolving Commitment to make Loans, as of ______ __, 20__, is $__________, the aggregate amount of its outstanding Loans is $__________. |
2. | The Assignee agrees that, upon receiving the consent of the Agent to such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest in the Credit Agreement. |
3. | The following administrative details apply to the Assignee: |
Account No.: | ||
At: | ||
Reference: | ||
Attention: |
4. | The Agent is entitled to rely upon the representations, warranties, and covenants of each of the Assignor and Assignee contained in the Assignment and Acceptance. |
By: | __________________________________________ Title: |
By: | __________________________________________ Title: |
By: | __________________________________________ Name: Title: |
By: | __________________________________________ Name: Title: |
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 9, 2016 | /S/ ALBERT CHAO | |||||
Albert Chao | |||||||
President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 9, 2016 | /S/ M. STEVEN BENDER | |||||
M. Steven Bender | |||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company. |
Date: | November 9, 2016 | /S/ ALBERT CHAO | |||||
Albert Chao | |||||||
President and Chief Executive Officer (Principal Executive Officer) | |||||||
Date: | November 9, 2016 | /S/ M. STEVEN BENDER | |||||
M. Steven Bender | |||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 02, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | WLK | |
Entity Registrant Name | WESTLAKE CHEMICAL CORP | |
Entity Central Index Key | 0001262823 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 128,903,141 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value, in dollars per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value, in dollars per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 134,651,380 | 134,663,244 |
Common stock, held in treasury | 5,752,377 | 4,444,898 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Net sales | $ 1,279,028 | $ 1,188,037 | $ 3,340,276 | $ 3,476,570 |
Cost of sales | 1,076,895 | 876,761 | 2,641,192 | 2,527,567 |
Gross profit | 202,133 | 311,276 | 699,084 | 949,003 |
Selling, general and administrative expenses | 72,729 | 57,248 | 179,757 | 170,321 |
Transaction and integration-related costs | 82,841 | 0 | 90,550 | 0 |
Income from operations | 46,563 | 254,028 | 428,777 | 778,682 |
Other income (expense) | ||||
Interest expense | (24,366) | (8,211) | (36,966) | (26,760) |
Other income, net | 41,265 | 2,636 | 52,091 | 33,790 |
Income before income taxes | 63,462 | 248,453 | 443,902 | 785,712 |
(Benefit from) provision for income taxes | (6,552) | 60,033 | 129,332 | 236,824 |
Net income | 70,014 | 188,420 | 314,570 | 548,888 |
Net income attributable to noncontrolling interests | 4,352 | 4,816 | 14,656 | 13,847 |
Net income attributable to Westlake Chemical Corporation | $ 65,662 | $ 183,604 | $ 299,914 | $ 535,041 |
Earnings per common share attributable to Westlake Chemical Corporation: | ||||
Basic (usd per share) | $ 0.51 | $ 1.39 | $ 2.31 | $ 4.04 |
Diluted (usd per share) | $ 0.51 | $ 1.39 | $ 2.29 | $ 4.02 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 128,793,661 | 131,664,296 | 129,519,577 | 132,301,814 |
Diluted (in shares) | 129,379,956 | 132,121,235 | 130,103,897 | 132,786,534 |
Dividends per common share (usd per share) | $ 0.1906 | $ 0.1815 | $ 0.5536 | $ 0.5115 |
Basis of Financial Statements |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Financial Statements | Basis of Financial Statements The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the December 31, 2015 financial statements and notes thereto of Westlake Chemical Corporation (the "Company") included in the annual report on Form 10-K for the fiscal year ended December 31, 2015 (the "2015 Form 10-K"), filed with the SEC on February 24, 2016. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2015. In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of September 30, 2016, its results of operations for the three and nine months ended September 30, 2016 and 2015 and the changes in its cash position for the nine months ended September 30, 2016 and 2015. Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2016 or any other interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Certain prior period amounts have been reclassified in the consolidated balance sheet and consolidated statements of operations to conform to current presentation. Recent Accounting Pronouncements Revenue from Contracts with Customers (ASU No. 2014-09) In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on a comprehensive new revenue recognition standard that will supersede the existing revenue recognition guidance. The new accounting guidance creates a framework by which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either "full retrospective" adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch-up as of the earliest period presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch-up as of the current period. In 2016, the FASB issued various additional authoritative guidance for the new revenue recognition standard. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting standard will have on its consolidated financial position, results of operations and cash flows. Recognition and Measurement of Financial Assets and Financial Liabilities (ASU No. 2016-01) In January 2016, the FASB issued an accounting standards update making certain changes principally to the current guidance for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. Among other things, the guidance (1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income; (2) provide entities with a policy election to record equity investments without readily determinable fair values at cost, less impairment, and subsequent adjustments for observable price changes (changes in the basis of these equity investments to be reported in net income); (3) requires an entity that has elected the fair value option for financial liabilities to recognize changes in fair value due to instrument-specific credit risk separately in other comprehensive income; (4) clarified current guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities; and (5) requires specific disclosure pertaining to financial assets and financial liabilities in the financial statements. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Leases (ASU No. 2016-02) In February 2016, the FASB issued an accounting standards update on a new lease standard that will supersede the existing lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that are classified as operating leases under current guidance on its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures related to leases. The accounting standard will be effective for reporting periods beginning after December 15, 2018. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Investments-Equity Method and Joint Ventures (ASU No. 2016-07) In March 2016, the FASB issued an accounting standards update providing new guidance for the accounting for equity method investments. The new guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. In addition, the guidance requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The accounting standard will be effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Stock Compensation (ASU No. 2016-09) In March 2016, the FASB issued an accounting standards update to simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classifications of awards as either equity or liabilities and certain related classifications on the statement of cash flows. In addition, the new guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. The accounting standard will be effective for reporting periods beginning after December 15, 2016 and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows. Credit Losses (ASU No. 2016-13) In June 2016, the FASB issued an accounting standards update providing new guidance for the accounting for credit losses on loans and other financial instruments. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The standard also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The accounting standard will be effective for reporting periods beginning after December 15, 2019. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Cash Flows (ASU No. 2016-16) In August 2016, the FASB issued an accounting standards update providing new guidance on the classification of certain cash receipts and payments including debt extinguishment costs, debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments, proceeds from the settlement of insurance claims and life insurance policies and distributions received from equity method investees in the statement of cash flows. This update is required to be applied using the retrospective transition method to each period presented unless it is impracticable to be applied retrospectively. In such situation, this guidance is to be applied prospectively. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Recently Adopted Accounting Standards Amendments to the Consolidation Analysis (ASU No. 2015-02) In February 2015, the FASB issued an accounting standards update making certain changes to the current consolidation guidance. The amendments affect both the variable interest entity and voting interest entity consolidation models. The new standard changes the consideration of substantive rights, related party interests and fees paid to the decision maker when applying the variable interest entity consolidation model and eliminates certain guidance for limited partnerships and similar entities under the voting interest consolidation model. The accounting standard is effective for annual periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016 and the adoption did not have an impact on the Company's consolidated financial position, results of operations and cash flows. Simplifying the Presentation of Debt Issuance Costs (ASU No. 2015-03) In April 2015, the FASB issued an accounting standards update on simplifying the presentation of debt issuance costs, which requires all costs incurred to issue debt to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The accounting standard is effective for reporting periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016. As a result, Other assets, net—Deferred charges and other assets, net and Long-term debt on the consolidated balance sheet as of December 31, 2015 have been adjusted to $176,625 and $758,148, respectively, from the originally reported $173,384 and $764,115, respectively, to reflect the retrospective application of the new accounting guidance. The adoption of this accounting standard did not have an impact on the Company's results of operations and cash flows. Intangibles—Goodwill and Other—Internal use software (ASU No. 2015-05) In April 2015, the FASB issued an accounting standards update to provide clarification on accounting for cloud computing arrangements which include a software license. The accounting standard is effective for annual periods beginning after December 15, 2015. The Company adopted this accounting standard, to be applied prospectively, effective January 1, 2016. Consistent with the prospective application of this accounting standard, prior period comparative information was not adjusted. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows. Simplifying the Accounting for Measurement-Period Adjustments (ASU No. 2015-16) In September 2015, the FASB issued an accounting standards update that requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance requires that the acquirer record, in the same period's financial statements, 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. The new guidance further requires specific disclosure pertaining to the measurement period adjustments. The accounting standard is effective for reporting periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016 and the adoption did not have an impact on the Company's consolidated financial position, results of operations and cash flows. Balance Sheet Classification of Deferred Taxes (ASU No. 2015-17) In November 2015, the FASB issued an accounting standards update that requires all deferred tax assets and liabilities, along with any related valuation allowance, to be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The new guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The accounting standard is required to be adopted for reporting periods beginning after December 15, 2016; however, early adoption of this standard is permitted. The Company elected to early adopt this accounting standard, to be applied prospectively, effective January 1, 2016. Consistent with the prospective application of this accounting standard, prior period comparative information was not adjusted. The early adoption of this accounting standard did not have an impact on the Company's results of operations and cash flows. |
Acquisition |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition On August 31, 2016, the Company completed its previously announced acquisition of, and acquired all the remaining equity interest in, Axiall Corporation ("Axiall"), a Delaware corporation. Prior to the acquisition, the Company held 3.1 million shares in Axiall. Pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 10, 2016, by and among Westlake, Axiall and Lagoon Merger Sub, Inc., a Delaware corporation that is a wholly-owned subsidiary of Westlake ("Merger Sub"), the Company acquired all of the issued and outstanding shares of common stock of Axiall for $33.00 per share in cash. Pursuant to the Merger Agreement, Merger Sub was merged with and into Axiall (the "Merger"), and Axiall survived the Merger as a wholly-owned subsidiary of the Company. The combined company is the third-largest global chlor-alkali producer and the third-largest global polyvinyl chloride ("PVC") producer. The Company's management believes that this strategic acquisition will enhance its strategy of integration and will further strengthen its role in the North American markets. Axiall produces a highly integrated chain of chlor-alkali and derivative products, including chlorine, caustic soda, vinyl chloride monomer ("VCM"), vinyl resins, ethylene dichloride (OR 1, 2 dichloroethane), chlorinated solvents, calcium hypochlorite and hydrochloric acid, and compound products. Axiall also manufactures and sells building products, including interior and exterior trim and mouldings products, deck products, siding, pipe and pipe fittings. Substantially all of the vinyl resin used to manufacture Axiall's building products is sourced internally. Total consideration transferred for the Axiall Merger was $2,526,080. The Merger is being accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company's Vinyls segment. The acquired business contributed net sales and net loss of $257,407 and ($47,164), respectively, to the Company for the period from August 31, 2016 to September 30, 2016. The net loss for the period from August 31, 2016 to September 30, 2016 included integration-related costs and the negative impact of selling higher cost Axiall inventory recorded at fair value. The following unaudited consolidated pro forma information presents consolidated information as if the Merger had occurred on January 1, 2015:
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The pro forma amounts above have been calculated after applying the Company's accounting policies and adjusting the Axiall results to reflect (1) the increase to depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2015; (2) the elimination of net sales and cost of sales between the Company and Axiall; (3) additional pension service costs; (4) amortization of debt premium and accretion of asset retirement obligations and environmental liabilities as part of the Company's adjustments to fair value; (5) incremental interest expense that would have been incurred assuming the financing arrangements entered by the Company and repayment of a portion of Axiall's outstanding debt had occurred on January 1, 2015; (6) the elimination of transaction-related costs; (7) the elimination of Axiall's goodwill impairment charges for the nine months ended September 30, 2015 and (8) an adjustment to tax-effect the aforementioned pro forma adjustments using an estimated aggregate statutory income tax rate of the jurisdictions to which the above adjustments relate. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Merger, are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the Merger had occurred as of January 1, 2015 or of future operating performance. For the nine months ended September 30, 2016, the Company recognized $90,550 of transaction and integration-related costs. This included acquisition-related costs of $43,895 for advisory, consulting and professional fees and other expenses. Transaction and integration-related costs for the nine months ended September 30, 2016 also included $46,655 related to settlement of Axiall share-based awards, retention agreement costs and severance benefits provided to former Axiall executives in connection with the Merger. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of the consideration transferred is based on management's estimates, judgments and assumptions. When determining the fair values of assets acquired, liabilities assumed and noncontrolling interests of the acquiree, management made significant estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $863,144 was recorded. The goodwill recognized is primarily attributable to synergies related to the Company's vinyls integration strategy that are expected to arise from the Merger. All of the goodwill is assigned to the Company's Vinyls segment. As a portion of the goodwill arising from the Merger is attributable to foreign operations, there will be a continuing foreign currency impact to goodwill on the financial statements.
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The final allocation of purchase consideration, based on final valuations, could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) equity investments; (4) customer relationships, trade names, developed technologies and other intangibles; (5) deferred income taxes; (6) all contingencies; (7) asset retirement obligations; and (8) noncontrolling interests. The assumed contingencies relate to environmental liabilities, legal liabilities, asset retirement obligations and warranty reserves that are provisionally recorded based on estimated fair value. The information below represents the preliminary purchase price allocation:
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Financial Instruments |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Cash Equivalents The Company had $1,942 and $221,918 of held-to-maturity securities with original maturities of three months or less, primarily consisting of corporate debt securities, classified as cash equivalents at September 30, 2016 and December 31, 2015, respectively. The Company's investments in held-to-maturity securities are held at amortized cost, which approximates fair value. Restricted Cash The Company had restricted cash and cash equivalents of $195,705 at September 30, 2016, which are primarily related to the balances deposited with and held as security by the lender under the Company's current term loan facility and for distributions to certain of Axiall's current and former employees. The current and non-current restricted cash and cash equivalents of $169,320 and $26,385, respectively, is reflected under current assets and as a component of other assets, net—Deferred charges and other assets, net, respectively, on the consolidated balance sheet. The Company had no restricted cash balances at December 31, 2015. Available-for-Sale Marketable Securities The Company had no available-for-sale securities at September 30, 2016. Investments in available-for-sale securities at December 31, 2015 were classified as follows:
The cost, gross unrealized gains, gross unrealized losses and fair value of the Company's available-for-sale securities were as follows:
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As of December 31, 2015, net unrealized losses on the Company's available-for-sale securities of $4,995, net of income tax benefit of $2,801, were recorded in accumulated other comprehensive loss. The proceeds from sales and maturities of available-for-sale securities included in the consolidated statements of cash flows and the gross realized gains and losses included in the consolidated statements of operations are reflected in the table below. The cost of securities sold was determined using the specific identification method.
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Accounts Receivable |
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Accounts Receivable | Accounts Receivable Accounts receivable consist of the following:
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Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following:
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Property, Plant and Equipment |
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Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment As of September 30, 2016, the Company had property, plant and equipment, net totaling $6,450,947. The Company assesses these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, including when negative conditions such as significant current or projected operating losses exist. Other factors considered by the Company when determining if an impairment assessment is necessary include, but are not limited to, significant changes or projected changes in supply and demand fundamentals (which would have a negative impact on operating rates or margins), new technological developments, new competitors with significant raw material or other cost advantages, adverse changes associated with the U.S. and world economies and uncertainties associated with governmental actions. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Depreciation expense on property, plant and equipment of $75,143 and $52,208 is primarily included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2016 and 2015, respectively. Depreciation expense on property, plant and equipment of $189,114 and $153,129 is primarily included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2016 and 2015, respectively. |
Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Amortization expense on intangible and other assets of $19,175 and $9,419 is included in the consolidated statements of operations for the three months ended September 30, 2016 and 2015, respectively. Amortization expense on intangible and other assets of $38,340 and $28,235 is included in the consolidated statements of operations for the nine months ended September 30, 2016 and 2015, respectively. Goodwill The gross carrying amounts of goodwill and the changes in the carrying amount of goodwill for the nine months ended September 30, 2016 were as follows:
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Accounts and Notes Payable |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Notes Payable | Accounts and Notes Payable Accounts and notes payable consist of the following:
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Term Loan |
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Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Term Loan | Term Loan On August 10, 2016, an indirect subsidiary of the Company, Westlake International Holdings II C.V., a limited partnership organized under the laws of the Netherlands (the "CV Borrower"), entered into a credit agreement with Bank of America, N.A., as agent and lender, providing the CV Borrower with a $150,000 term loan facility. The term loan facility matures on March 31, 2017. The loans thereunder bear interest at a floating interest rate equal to LIBOR plus 2.0% per annum, payable in arrears on the last day of each three-month period following the date of funding and at maturity. The CV Borrower may elect to convert the interest rate to a base rate with a 1.0% spread. The interest rate on the outstanding term loan was 2.82% at September 30, 2016. The facility contains customary covenants and events of default that impose certain operating and financial restrictions on the CV Borrower and certain of its subsidiaries. These restrictions, among other things, provide limitations on the incurrence of additional indebtedness and liens and the ability to engage in certain transactions with affiliates. Pursuant to the credit agreement, all of the non-U.S. subsidiaries of the Company are to remain owned, directly or indirectly, by the CV Borrower and its wholly owned subsidiary, Westlake International II LLC, a Delaware limited liability company ("WII LLC"). The CV Borrower is also required, together with its subsidiaries, to maintain at all times unencumbered cash and cash equivalents in a U.S. dollar equivalent of not less than $150,000, which amount shall be increased by 5% to the extent maintained in non-U.S. currencies. In connection therewith, an amount of cash and cash equivalents for the period (a) from the closing date until the date 30 days thereafter, not less than $50,000, and (b) thereafter, not less than $75,000, shall be maintained by the CV Borrower and its subsidiaries in accounts at Bank of America, N.A., in accordance with existing cash management agreements. Obligations under the term loan facility are secured by a pledge of 65% of the membership interests of WII LLC as well as rights under the partnership agreement of Westlake International Holdings C.V., a limited partnership organized under the laws of the Netherlands, held by WII LLC and the CV Borrower. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt The Company adopted an accounting standards update to simplify the presentation of debt issuance costs effective January 1, 2016. The standard requires, on a retrospective basis, all costs incurred to issue debt, excluding line-of-credit arrangements, to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. As a result, Other assets, net—Deferred charges and other assets, net and Long-term debt on the consolidated balance sheet as of December 31, 2015 have been adjusted to $176,625 and $758,148, respectively, from the originally reported $173,384 and $764,115, respectively, to reflect the retrospective application of the new accounting guidance. Long-term debt consists of the following:
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Credit Agreement On August 23, 2016, the Company and certain of its subsidiaries entered into an unsecured revolving credit facility (the "Credit Agreement"), by and among the Company, the other borrowers and guarantors referred to therein, the lenders from time to time party thereto (collectively, the "Lenders"), the issuing banks party thereto and JPMorgan Chase Bank, National Association, as Administrative Agent. Under the Credit Agreement, the Lenders have committed to provide an unsecured five-year revolving credit facility in an aggregate principal amount of up to $1,000,000. The Credit Agreement replaced the Company's existing $400,000 senior secured third amended and restated credit facility, dated as of July 17, 2014, by and among the Company, the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, and the Company and certain of its subsidiaries, as borrowers. The Credit Agreement includes a $150,000 sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The Credit Agreement also provides for a discretionary $50,000 commitment for swing line loans to be provided on a same-day basis. The Company may also increase the size of the facility, in increments of at least $25,000, up to a maximum of $500,000, subject to certain conditions and if certain Lenders agree to commit to such an increase. At September 30, 2016, the Company had $325,000 of borrowings outstanding under the Credit Agreement. Borrowings under the Credit Agreement will bear interest, at the Company's option, at either (a) LIBOR plus a spread ranging from 1.0% to 1.75% that will vary depending on the credit rating of the Company or (b) Alternate Base Rate plus a spread ranging from 0.0% to 0.75% that will vary depending on the credit rating of the Company. The Credit Agreement also requires an undrawn commitment fee ranging from 0.10% to 0.25% that will vary depending on the credit rating of the Company. The interest rate on the outstanding revolving credit facility was 2.05% at September 30, 2016. The Credit Agreement matures on August 23, 2021. As of September 30, 2016, the Company had outstanding letters of credit totaling $76,581 and borrowing availability of $598,419 under the Credit Agreement. The obligations of the Company under the Credit Agreement are guaranteed by current and future material domestic subsidiaries of the Company, subject to customary exceptions. The Credit Agreement contains customary affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. The Credit Agreement also contains customary events of default and if and for so long as an event of default has occurred and is continuing, any amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the Lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the Lenders. As of September 30, 2016, the Company is in compliance with the total leverage ratio financial maintenance covenant. 3.60% Senior Notes due 2026 and 5.0% Senior Notes due 2046 On August 10, 2016, the Company completed its private offering of $750,000 aggregate principal amount of 3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes") and $700,000 aggregate principal amount of 5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes"). The 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes are the Company's senior obligations and are guaranteed on a senior basis by certain of the Company's existing and future domestic subsidiaries. The 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes and guarantees are unsecured and rank equally with the Company's existing and future senior unsecured obligations and each guarantor's existing and future senior unsecured obligations. The Company has entered into a registration rights agreement in which it has agreed to file an exchange offer registration statement or, under specified circumstances, a shelf registration statement, with the SEC with respect to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes. The net proceeds from the offering were used to finance the Merger and to repay amounts under the term loan facility dated February 27, 2015 entered into by Axiall Holdco, Inc. (a wholly-owned subsidiary of Axiall), as the borrower, with the financial institutions party thereto. The indenture governing the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes contains customary events of default and covenants that will restrict the Company's and certain of its subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of the Company's or their assets. Exchange Offers On September 7, 2016, the Company completed offers to exchange (the "Axiall Exchange Offers") any and all of the $688,000 aggregate principal amount of the outstanding 4.625% senior notes due 2021 (the "4.625% Subsidiary 2021 Senior Notes") issued by Eagle Spinco Inc. ("Eagle Spinco"), a wholly-owned subsidiary of Axiall, and the $450,000 aggregate principal amount of the outstanding 4.875% senior notes due 2023 (the "4.875% Subsidiary 2023 Senior Notes" and, together with the 4.625% Subsidiary 2021 Senior Notes, the "Subsidiary Notes") issued by Axiall for new senior notes issued by the Company having the same maturity and interest rates as the Subsidiary Notes. The 4.625% Subsidiary 2021 Senior Notes and the 4.875% Subsidiary 2023 Senior Notes were assumed at fair value, which resulted in a premium on the Subsidiary Notes of $33,540 and $15,750, respectively. In the Axiall Exchange Offers, $624,793 aggregate principal amount of the 4.625% Subsidiary 2021 Senior Notes and $433,793 aggregate principal amount of the 4.875% Subsidiary 2023 Senior Notes were exchanged, respectively, for $624,793 aggregate principal amount of 4.625% senior notes due 2021 (the "4.625% Westlake 2021 Senior Notes") and $433,793 aggregate principal amount of 4.875% senior notes due 2023 (the "4.875% Westlake 2023 Senior Notes") issued by the Company, leaving outstanding $63,207 aggregate principal amount of the 4.625% Subsidiary 2021 Senior Notes and $16,207 aggregate principal amount of the 4.875% Subsidiary 2023 Senior Notes. The Subsidiary Notes are the senior unsecured obligations of Axiall and Eagle Spinco, respectively. The 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes are the Company's senior obligations and are guaranteed on a senior basis by certain of the Company's existing and future domestic subsidiaries. The 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes and guarantees are unsecured and rank equally with the Company's existing and future senior unsecured obligations and each guarantor's existing and future senior unsecured obligations. The Company has entered into a registration rights agreement in which it has agreed to file an exchange offer registration statement or, under specified circumstances, a shelf registration statement, with the SEC with respect to the 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes. The indenture governing the 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes contains customary events of default and covenants that will restrict the Company's and certain of its subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of the Company's or their assets. Bridge Loan Agreement In June 2016, in connection with the Axiall acquisition, the Company entered into a commitment letter with various lenders pursuant to which such lenders agreed to provide for a senior unsecured bridge loan facility of up to $1,765,000 in the aggregate. Also in June 2016, the Company paid structuring and other fees of approximately $9,700 in connection with the senior unsecured bridge loan facility. On August 26, 2016, the Company terminated the senior unsecured bridge loan facility and expensed the remaining $8,900 of structuring and other fees paid for the senior unsecured bridge loan facility. This amount is included in other income, net, in the consolidated statements of operations for the three and nine months ended September 30, 2016. |
Pension and Post-Retirement Benefits |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Post-Retirement Benefits | Pension and Post-Retirement Benefits In connection with the Merger, the Company assumed certain U.S. and non-U.S. pension plans and other post-retirement benefit plans covering Axiall employees. The Axiall pension plans are closed to new participants and provide benefits to certain employees and retirees. The other post-retirement benefit plans are unfunded and provide medical and life insurance benefits for certain employees and their dependents. See Note 2 for the fair value of pension and other post-retirement obligations assumed in the Merger. Defined Benefit Plans Components of net periodic benefit cost for the Company's pension plans are as follows:
The Company made no contribution to its U.S. pension plans in the first nine months of 2016. The Company contributed $349 to its U.S. pension plans in the first nine months of 2015. The Company's funding policy for its U.S. plans is consistent with the minimum funding requirements of federal law and regulations, and based on preliminary estimates, the Company does not expect to make contributions to its U.S. pension plans for the remainder of fiscal year ending December 31, 2016. The Company expects to make contributions of approximately $200 for its non-U.S. pension plans during the remainder of the fiscal year ending December 31, 2016. Other Post-retirement Benefits Components of net periodic benefit cost for the Company's other post-retirement benefits are as follows:
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Stockholders Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Changes in stockholders' equity for the nine months ended September 30, 2016 and 2015 were as follows:
Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2016 and 2015 were as follows:
_____________
The following table provides the details of the amounts reclassified from accumulated other comprehensive income (loss) into net income in the consolidated statements of operations for the nine months ended September 30, 2016 and 2015:
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Stock-Based Compensation |
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Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Under the Westlake Chemical Corporation 2013 Omnibus Incentive Plan (as amended and restated, the "2013 Plan"), all employees and non-employee directors of the Company, as well as certain individuals who have agreed to become the Company's employees, are eligible for awards. Shares of common stock may be issued as authorized in the 2013 Plan. At the discretion of the administrator of the 2013 Plan, employees and non-employee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards, restricted stock units or cash awards (any of which may be a performance award). Total stock-based compensation expense related to the 2013 Plan was $1,502 and $2,639 for the three months ended September 30, 2016 and 2015, respectively, and $6,588 and $7,544 for the nine months ended September 30, 2016 and 2015, respectively. Under the Merger Agreement, all outstanding Axiall restricted stock units were assumed by the Company and converted into restricted stock units in respect of the Company's common stock, with the same terms and conditions except that upon settlement the award holders will receive the greater of (1) the value of $33.00 per Axiall restricted stock unit that was converted into a restricted stock unit in respect of the Company's common stock and (2) the value of the Company's common stock. The awards are classified as liability awards for financial accounting purposes and are re-measured at each reporting date until they vest. The portion of the replacement award that is attributable to pre-combination service by the employee is included in the measure of consideration transferred to acquire Axiall. The remaining fair value of the replacement awards will be recognized as stock-based compensation expense over the remainder of the vesting period. Total stock-based compensation expense recognized related to the Merger Agreement for the three and nine months ended September 30, 2016 was $34,915, of which $32,644 is included in transaction and integration-related costs in the consolidated statements of operations. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Commodity Risk Management The Company uses derivative instruments to reduce price volatility risk on raw materials and products as a substantial portion of its raw materials and products are commodities whose prices fluctuate as market supply and demand fundamentals change. Business strategies to protect against such instability include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. The Company does not use derivative instruments to engage in speculative activities. Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in gross profit in the consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015. The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty). The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:
The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:
See Note 15 for the fair value of the Company's derivative instruments. Disclosure about Offsetting Asset and Liability Derivatives Certain of the Company's derivative instruments are executed under an International Swaps and Derivatives Association ("ISDA") Master Agreement, which permits the Company and a counterparty to aggregate the amounts owed by each party under multiple transactions and replace them with a single net amount payable by one party to the other. The following tables present the Company's derivative assets and derivative liabilities reported on the consolidated balance sheets and derivative assets and derivative liabilities subject to enforceable master netting arrangements.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company reports certain assets and liabilities at fair value, which 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 (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The following tables summarize, by level within the fair value hierarchy, the Company's assets and liabilities that were accounted for at fair value on a recurring basis:
The Level 2 measurements for the Company's commodity contracts are derived using forward curves supplied by industry-recognized and unrelated third-party services. The Level 2 measurements for the Company's available-for-sale securities are derived using market-based pricing provided by unrelated third-party services. There were no transfers in or out of Levels 1 and 2 of the fair value hierarchy for the nine months ended September 30, 2016 and 2015. In addition to the financial assets and liabilities above, the Company has other financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts and notes payable and current and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net, accounts and notes payable and current term loan approximate their fair value due to the short maturities of these instruments. The carrying and fair values of the Company's long-term debt are summarized in the table below. The fair value of the Company's long-term debt instruments is determined using a market approach, based upon quotes from financial reporting services. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.
The carrying values of the Company's long-term debt as of December 31, 2015 have been adjusted to reflect the retrospective application of the accounting standards update on simplifying the presentation of debt issuance costs discussed in Note 10. |
Income Taxes |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company elected to early adopt an accounting standards update requiring the noncurrent classification of all deferred tax assets and liabilities, along with any related valuation allowance, effective January 1, 2016. As a result, the Company's deferred tax assets and liabilities have been classified, by jurisdiction, as a net noncurrent deferred tax asset or liability on the consolidated balance sheet. Consistent with the prospective application of this accounting standard, prior period comparative information was not adjusted. The effective income tax rate was (10.3)% for the three months ended September 30, 2016. The effective tax rate for the 2016 period was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax related to the gain recognized on previously held outstanding shares of common stock of Axiall, the benefit in prior years' and current-year tax credits for increased research and development expenditures and adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger. The effective income tax rate was 24.2% for the three months ended September 30, 2015. The effective income tax rate for the 2015 period was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, income attributable to noncontrolling interests, the foreign earnings rate differential, the increased benefit in certain prior years' deductions due to a change in the calculation methodology of the domestic manufacturing deduction and adjustments related to prior years' tax returns as filed, partially offset by state income taxes. The effective income tax rate was 29.1% for the nine months ended September 30, 2016. The effective tax rate for the 2016 period was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax related to the gain recognized on previously held outstanding shares of common stock of Axiall, the benefit in prior years' and current-year tax credits for increased research and development expenditures and adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger. The effective income tax rate was 30.1% for the nine months ended September 30, 2015. The effective income tax rate for the 2015 period was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, income attributable to noncontrolling interests, the non-recognition of tax related to the bargain purchase of a controlling interest in Suzhou Huasu Plastics Co., Ltd., the increased benefit in certain prior years' deductions due to a change in the calculation methodology of the domestic manufacturing deduction and adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes. There are total gross unrecognized tax benefits of $8,818 for the nine months ended September 30, 2016. The Company recognizes penalties and interest accrued related to unrecognized tax benefits in income tax expense. The majority of the total unrecognized tax benefits relate to historical balances reported by Axiall prior to the Merger. For the three months ended September 30, 2016, the Company accrued interest and penalties in the amount of $206 related to uncertain tax positions. Reconciliations of the unrecognized tax benefits for the three months ended September 30, 2016 are set forth in the table below:
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is no longer subject to examinations by tax authorities before the year 2010. For the nine months ended September 30, 2016, the Company is not permanently reinvested with respect to the outside basis difference for all of its foreign subsidiaries. The Company is asserting under ASC 740-30 that the unremitted earnings of some of its foreign subsidiaries are permanently reinvested outside the U.S. For these foreign subsidiaries, the earnings and profits (E&P) is estimated to be $204,154 at December 31, 2016. If no assertion were made to permanently reinvest any of these unremitted foreign earnings, U.S. income tax expense of approximately $32,272 relating to U.S. tax would be recorded. Such expense takes into account utilization of foreign tax credits. The Company is not asserting under ASC 740-30 for certain other foreign subsidiaries. As such, the Company recorded a deferred tax liability (and related tax expense) of $1,837. Of this amount, $1,169 has been recorded to recognize the foreign taxes that would result if earnings in lower-tier foreign subsidiaries would be distributed up the foreign ownership chain to a subsidiary where an assertion is made. In addition, $668 has been recorded to recognize the U.S. tax impact of the unremitted foreign earnings of the Company's Taiwanese subsidiary based on four months of activity from acquisition date to the year ended December 31, 2016. The Taiwanese subsidiary is expected to make annual distributions to the Company. |
Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share The Company has unvested shares of restricted stock and restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. Basic earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share include the effect of certain stock options.
The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:
Excluded from the computation of diluted earnings per share are options to purchase 620,010 and 315,285 shares of common stock for the three months ended September 30, 2016 and 2015, respectively, and 577,254 and 295,825 shares of common stock for the nine months ended September 30, 2016 and 2015, respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive. |
Supplemental Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information | Supplemental Information Accrued Liabilities Accrued liabilities were $552,581 and $287,313 at September 30, 2016 and December 31, 2015, respectively. Accrued rebates, which is a component of accrued liabilities, was $73,798 and $46,460 at September 30, 2016 and December 31, 2015, respectively. No other component of accrued liabilities was more than five percent of total current liabilities. Other Income, Net
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Insurance Recovery |
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Sep. 30, 2016 | |
Insurance Recovery [Abstract] | |
Insurance Recovery | Insurance Recovery During the second and third quarters of 2015, the Company's production rates and operating costs at its Knapsack, Germany and Cologne, Germany facilities were negatively impacted due to an interruption of feedstock supply as a result of a fire at a third-party supplier's ethylene production facility. During the nine months ended September 30, 2016, the Company received a final insurance recovery of approximately $2,670 related to business interruption costs. The insurance recovery is included in cost of sales in the consolidated statement of operations. The Company had received and recognized approximately $7,809 as a partial insurance recovery during the year ended December 31, 2015. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies The Company is involved in a number of legal and regulatory matters, principally environmental in nature, that are incidental to the normal conduct of its business, including lawsuits, investigations and claims. The outcome of these matters are inherently unpredictable. The Company believes that, in the aggregate, the outcome of all known legal and regulatory matters will not have a material adverse effect on its consolidated financial statements; however, specific outcomes with respect to such matters may be material to the Company's consolidated statements of operations in any particular period in which costs, if any, are recognized. The Company's assessment of the potential impact of environmental matters, in particular, is subject to uncertainty due to the complex, ongoing and evolving process of investigation and remediation of such environmental matters, and the potential for technological and regulatory developments. In addition, the impact of evolving claims and programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs creates further uncertainty of the ultimate resolution of these matters. The Company anticipates that the resolution of many legal and regulatory matters, and in particular environmental matters, will occur over an extended period of time. Environmental. As of September 30, 2016 and December 31, 2015, the Company had reserves for environmental contingencies totaling approximately $60,693 (primarily as a result of the Axiall acquisition) and $1,095, respectively, most of which was classified as noncurrent liabilities. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments. From time to time the Company receives notices or inquiries from government entities regarding alleged violations of environmental laws and regulations pertaining to, among other things, the disposal, emission and storage of chemical substances, including hazardous wastes. Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions, unless the Company reasonably believes such sanctions would not exceed $100.
The Company does not believe that resolutions of any or all of these matters will have a material adverse effect on the Company's financial condition, results of operations or cash flows. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company operates in two principal operating segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.
A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:
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Subsequent Events |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent events were evaluated through the date on which the financial statements were issued. |
Guarantor Disclosures |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Disclosures | Guarantor Disclosures The Company's payment obligations under the 3.60% senior notes due 2022 are fully and unconditionally guaranteed by each of its current and future domestic subsidiaries that guarantee other debt of the Company or of another guarantor of the 3.60% senior notes due 2022 in excess of $5,000 (the "Guarantor Subsidiaries"). Each Guarantor Subsidiary is 100% owned by Westlake Chemical Corporation (the "100% Owned Guarantor Subsidiaries"). These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the 100% owned Guarantor Subsidiaries, and the remaining subsidiaries that do not guarantee the 3.60% senior notes due 2022 (the "Non-Guarantor Subsidiaries"), together with consolidating eliminations necessary to present the Company's results on a consolidated basis. In August 2016, certain of the Company's subsidiary guarantors were released from their guarantees of the Company's 3.60% senior notes due 2022 in connection with the replacement of the Company's revolving credit facility. Westlake Chemical OpCo LP, which was previously separately presented as a less than 100% owned guarantor, and certain of the Company's other 100% owned subsidiaries that were previously presented as guarantors, are now reflected as Non-Guarantor Subsidiaries in the condensed consolidating guarantor financial information. Prior periods were retrospectively adjusted to conform to the current presentation of Guarantor Subsidiaries and Non-Guarantor Subsidiaries. Condensed Consolidating Financial Information as of September 30, 2016
Condensed Consolidating Financial Information as of December 31, 2015
Condensed Consolidating Financial Information for the Three Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Three Months Ended September 30, 2015
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2015
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2015
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Basis of Financial Statements (Policies) |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Financial Statements | Basis of Financial Statements The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the December 31, 2015 financial statements and notes thereto of Westlake Chemical Corporation (the "Company") included in the annual report on Form 10-K for the fiscal year ended December 31, 2015 (the "2015 Form 10-K"), filed with the SEC on February 24, 2016. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2015. In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of September 30, 2016, its results of operations for the three and nine months ended September 30, 2016 and 2015 and the changes in its cash position for the nine months ended September 30, 2016 and 2015. Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2016 or any other interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue from Contracts with Customers (ASU No. 2014-09) In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on a comprehensive new revenue recognition standard that will supersede the existing revenue recognition guidance. The new accounting guidance creates a framework by which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either "full retrospective" adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch-up as of the earliest period presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch-up as of the current period. In 2016, the FASB issued various additional authoritative guidance for the new revenue recognition standard. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting standard will have on its consolidated financial position, results of operations and cash flows. Recognition and Measurement of Financial Assets and Financial Liabilities (ASU No. 2016-01) In January 2016, the FASB issued an accounting standards update making certain changes principally to the current guidance for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. Among other things, the guidance (1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income; (2) provide entities with a policy election to record equity investments without readily determinable fair values at cost, less impairment, and subsequent adjustments for observable price changes (changes in the basis of these equity investments to be reported in net income); (3) requires an entity that has elected the fair value option for financial liabilities to recognize changes in fair value due to instrument-specific credit risk separately in other comprehensive income; (4) clarified current guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities; and (5) requires specific disclosure pertaining to financial assets and financial liabilities in the financial statements. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Leases (ASU No. 2016-02) In February 2016, the FASB issued an accounting standards update on a new lease standard that will supersede the existing lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that are classified as operating leases under current guidance on its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures related to leases. The accounting standard will be effective for reporting periods beginning after December 15, 2018. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Investments-Equity Method and Joint Ventures (ASU No. 2016-07) In March 2016, the FASB issued an accounting standards update providing new guidance for the accounting for equity method investments. The new guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. In addition, the guidance requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The accounting standard will be effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Stock Compensation (ASU No. 2016-09) In March 2016, the FASB issued an accounting standards update to simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classifications of awards as either equity or liabilities and certain related classifications on the statement of cash flows. In addition, the new guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. The accounting standard will be effective for reporting periods beginning after December 15, 2016 and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows. Credit Losses (ASU No. 2016-13) In June 2016, the FASB issued an accounting standards update providing new guidance for the accounting for credit losses on loans and other financial instruments. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The standard also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The accounting standard will be effective for reporting periods beginning after December 15, 2019. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Cash Flows (ASU No. 2016-16) In August 2016, the FASB issued an accounting standards update providing new guidance on the classification of certain cash receipts and payments including debt extinguishment costs, debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments, proceeds from the settlement of insurance claims and life insurance policies and distributions received from equity method investees in the statement of cash flows. This update is required to be applied using the retrospective transition method to each period presented unless it is impracticable to be applied retrospectively. In such situation, this guidance is to be applied prospectively. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows. Recently Adopted Accounting Standards Amendments to the Consolidation Analysis (ASU No. 2015-02) In February 2015, the FASB issued an accounting standards update making certain changes to the current consolidation guidance. The amendments affect both the variable interest entity and voting interest entity consolidation models. The new standard changes the consideration of substantive rights, related party interests and fees paid to the decision maker when applying the variable interest entity consolidation model and eliminates certain guidance for limited partnerships and similar entities under the voting interest consolidation model. The accounting standard is effective for annual periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016 and the adoption did not have an impact on the Company's consolidated financial position, results of operations and cash flows. Simplifying the Presentation of Debt Issuance Costs (ASU No. 2015-03) In April 2015, the FASB issued an accounting standards update on simplifying the presentation of debt issuance costs, which requires all costs incurred to issue debt to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The accounting standard is effective for reporting periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016. As a result, Other assets, net—Deferred charges and other assets, net and Long-term debt on the consolidated balance sheet as of December 31, 2015 have been adjusted to $176,625 and $758,148, respectively, from the originally reported $173,384 and $764,115, respectively, to reflect the retrospective application of the new accounting guidance. The adoption of this accounting standard did not have an impact on the Company's results of operations and cash flows. Intangibles—Goodwill and Other—Internal use software (ASU No. 2015-05) In April 2015, the FASB issued an accounting standards update to provide clarification on accounting for cloud computing arrangements which include a software license. The accounting standard is effective for annual periods beginning after December 15, 2015. The Company adopted this accounting standard, to be applied prospectively, effective January 1, 2016. Consistent with the prospective application of this accounting standard, prior period comparative information was not adjusted. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows. Simplifying the Accounting for Measurement-Period Adjustments (ASU No. 2015-16) In September 2015, the FASB issued an accounting standards update that requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance requires that the acquirer record, in the same period's financial statements, 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. The new guidance further requires specific disclosure pertaining to the measurement period adjustments. The accounting standard is effective for reporting periods beginning after December 15, 2015. The Company adopted this accounting standard effective January 1, 2016 and the adoption did not have an impact on the Company's consolidated financial position, results of operations and cash flows. Balance Sheet Classification of Deferred Taxes (ASU No. 2015-17) In November 2015, the FASB issued an accounting standards update that requires all deferred tax assets and liabilities, along with any related valuation allowance, to be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The new guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The accounting standard is required to be adopted for reporting periods beginning after December 15, 2016; however, early adoption of this standard is permitted. The Company elected to early adopt this accounting standard, to be applied prospectively, effective January 1, 2016. Consistent with the prospective application of this accounting standard, prior period comparative information was not adjusted. The early adoption of this accounting standard did not have an impact on the Company's results of operations and cash flows. |
Acquisition (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Information | The net loss for the period from August 31, 2016 to September 30, 2016 included integration-related costs and the negative impact of selling higher cost Axiall inventory recorded at fair value. The following unaudited consolidated pro forma information presents consolidated information as if the Merger had occurred on January 1, 2015:
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Schedule of Business Acquisitions | The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of the consideration transferred is based on management's estimates, judgments and assumptions. When determining the fair values of assets acquired, liabilities assumed and noncontrolling interests of the acquiree, management made significant estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $863,144 was recorded. The goodwill recognized is primarily attributable to synergies related to the Company's vinyls integration strategy that are expected to arise from the Merger. All of the goodwill is assigned to the Company's Vinyls segment. As a portion of the goodwill arising from the Merger is attributable to foreign operations, there will be a continuing foreign currency impact to goodwill on the financial statements.
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The information below represents the preliminary purchase price allocation:
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Financial Instruments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Investments in available-for-sale securities at December 31, 2015 were classified as follows:
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Available-for-sale Securities | The cost, gross unrealized gains, gross unrealized losses and fair value of the Company's available-for-sale securities were as follows:
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Schedule of Realized Gain (Loss) | The proceeds from sales and maturities of available-for-sale securities included in the consolidated statements of cash flows and the gross realized gains and losses included in the consolidated statements of operations are reflected in the table below. The cost of securities sold was determined using the specific identification method.
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Accounts Receivable (Tables) |
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Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accounts Receivable | Accounts receivable consist of the following:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Inventory | Inventories consist of the following:
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Other Assets (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The gross carrying amounts of goodwill and the changes in the carrying amount of goodwill for the nine months ended September 30, 2016 were as follows:
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Accounts and Notes Payable (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities | Accounts and notes payable consist of the following:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Long-Term Debt | Long-term debt consists of the following:
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Pension and Post-Retirement Benefits (Tables) |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Components of net periodic benefit cost for the Company's pension plans are as follows:
Components of net periodic benefit cost for the Company's other post-retirement benefits are as follows:
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Stockholders' Equity (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | Changes in stockholders' equity for the nine months ended September 30, 2016 and 2015 were as follows:
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Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2016 and 2015 were as follows:
_____________
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following table provides the details of the amounts reclassified from accumulated other comprehensive income (loss) into net income in the consolidated statements of operations for the nine months ended September 30, 2016 and 2015:
_____________
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Derivative Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Derivatives Instruments in Consolidated Balance Sheets | The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:
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Impact of Derivative Instruments Not Designated as Fair Value Hedges | The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:
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Offsetting Assets | The following tables present the Company's derivative assets and derivative liabilities reported on the consolidated balance sheets and derivative assets and derivative liabilities subject to enforceable master netting arrangements.
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Offsetting Liabilities |
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Fair Value Measurements (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Assets And Liabilities Accounted At Fair Value On A Recurring Basis | The following tables summarize, by level within the fair value hierarchy, the Company's assets and liabilities that were accounted for at fair value on a recurring basis:
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Summary Of Carrying And Fair Values Of Long-Term Debt | The carrying and fair values of the Company's long-term debt are summarized in the table below. The fair value of the Company's long-term debt instruments is determined using a market approach, based upon quotes from financial reporting services. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of Income Tax Examinations | Reconciliations of the unrecognized tax benefits for the three months ended September 30, 2016 are set forth in the table below:
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Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Net Income Attributable To Common Stockholders |
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Reconciliation Of Denominator For Basic And Diluted Earnings Per Share | The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:
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Supplemental Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income, Net | Other Income, Net
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Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information |
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Reconciliation Of Total Segment Income From Operations To Consolidated Income Before Income Taxes | A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:
|
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Total Assets |
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Guarantor Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information Balance Sheet | Condensed Consolidating Financial Information as of September 30, 2016
Condensed Consolidating Financial Information as of December 31, 2015
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Condensed Consolidating Financial Information Statement Of Operations | Condensed Consolidating Financial Information for the Three Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Three Months Ended September 30, 2015
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2015
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Condensed Consolidating Financial Information Statement Of Cash Flows | Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2016
Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2015
|
Acquisition (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions |
1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2016 |
Aug. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Aug. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||||||||
Transaction and integration-related costs | $ 82,841 | $ 0 | $ 90,550 | $ 0 | |||||
Goodwill | $ 925,700 | 925,700 | 925,700 | $ 62,016 | |||||
Axiall Corporation [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest in acquiree held prior to combination, shares | 3.1 | ||||||||
Offer price per share (usd per share) | $ 33.00 | ||||||||
Purchase price | $ 2,526,080 | ||||||||
Contribution to net sales | 257,407 | ||||||||
Contribution to net loss | (47,164) | ||||||||
Divestitures | $ 26,666 | ||||||||
Restructuring | 22,881 | ||||||||
Legal and settlement claims, net | $ 23,376 | ||||||||
Transaction and integration-related costs | 90,550 | ||||||||
Professional fees | $ 43,895 | $ 43,895 | 43,895 | ||||||
Change-in-control severance and other benefit costs | $ 46,655 | ||||||||
Goodwill | $ 863,144 |
Acquisition (Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business Combinations [Abstract] | ||
Net sales | $ 5,345,365 | $ 6,053,330 |
Net income | 284,324 | 595,442 |
Net income (loss) attributable to noncontrolling interest | 16,404 | (5,953) |
Net income attributable to Westlake Chemical Corporation | $ 267,920 | $ 601,395 |
Basic (in dollars per share) | $ 2.06 | $ 4.54 |
Diluted (in dollars per share) | $ 2.05 | $ 4.52 |
Acquisition (Allocation of Purchase Consideration) (Details) - Axiall Corporation [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
Aug. 31, 2016 |
Aug. 30, 2016 |
---|---|---|
Business Acquisition [Line Items] | ||
Offer price per share (usd per share) | $ 33.00 | |
Multiplied by number of shares outstanding at acquisition | 67,277 | |
Fair value of Axiall shares outstanding purchased by the Company | $ 2,220,141 | |
Axiall debt repaid at acquisition | 247,135 | |
Fair value of Axiall share-based awards attributed to pre-combination service | 11,346 | |
Seller's transaction costs paid by the Company | 47,458 | |
Purchase price | 2,526,080 | |
Fair value of previously held equity interest in Axiall | 102,300 | |
Total fair value allocated to net assets acquired | 2,628,380 | |
Equity interest in acquiree held prior to combination, shares | 3,100 | |
Step acquisition, equity interest in acquiree, remeasurement gain (loss), net | $ 49,080 |
Financial Instruments (Cash Equivalents) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Cash Equivalents [Line Items] | ||
Restricted cash | $ 195,705 | $ 0 |
Current | 169,320 | 0 |
Noncurrent | 26,385 | |
Held-to-maturity Securities [Member] | ||
Cash Equivalents [Line Items] | ||
Cash equivalents | $ 1,942 | $ 221,918 |
Financial Instruments (Marketable Securities) (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Investments, Debt and Equity Securities [Abstract] | |
Current | $ 520,144 |
Non-current | 48,081 |
Total available-for-sale securities | $ 568,225 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts Receivable, Net [Abstract] | ||
Trade customers | $ 923,499 | $ 438,538 |
Allowance for doubtful accounts | (15,322) | (14,095) |
Accounts receivable from trade customers, net | 908,177 | 424,443 |
Federal and state taxes | 134,733 | 60,748 |
Other | 27,591 | 23,341 |
Accounts receivable, net | $ 1,070,501 | $ 508,532 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 466,165 | $ 253,338 |
Feedstock, additives and chemicals | 199,827 | 106,435 |
Materials and supplies | 78,544 | 74,287 |
Inventories | $ 744,536 | $ 434,060 |
Property, Plant and Equipment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Abstract] | |||||
Property, plant and equipment, net | $ 6,450,947 | $ 6,450,947 | $ 3,004,067 | ||
Depreciation expense on property, plant and equipment | $ 75,143 | $ 52,208 | $ 189,114 | $ 153,129 |
Other Assets (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Other assets, net [Member] | ||||
Other Assets [Line Items] | ||||
Amortization expense | $ 19,175 | $ 9,419 | $ 38,340 | $ 28,235 |
Other Assets (Changes in Goodwill) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning Balance | $ 62,016 |
Goodwill acquired during the period | 863,144 |
Effects of changes in foreign exchange rates | 540 |
Ending Balance | 925,700 |
Olefins [Member] | |
Goodwill [Roll Forward] | |
Beginning Balance | 29,990 |
Goodwill acquired during the period | 0 |
Effects of changes in foreign exchange rates | 0 |
Ending Balance | 29,990 |
Vinyls [Member] | |
Goodwill [Roll Forward] | |
Beginning Balance | 32,026 |
Goodwill acquired during the period | 863,144 |
Effects of changes in foreign exchange rates | 540 |
Ending Balance | $ 895,710 |
Accounts and Notes Payable (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 502,378 | $ 229,219 |
Notes payable to banks | 1,010 | 6,110 |
Accounts and notes payable | $ 503,388 | $ 235,329 |
Long-Term Debt (Senior Notes) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Aug. 10, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Principal amount | $ 3,677,889 | $ 764,889 | |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 10,889 | $ 10,889 | |
Senior Notes [Member] | 3.60% Percentage Senior Notes Due 2026 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 750,000 | ||
Stated interest rate (percent) | 3.60% | ||
Senior Notes [Member] | 5.0% Percentage Senior Notes Due 2046 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 700,000 | ||
Stated interest rate (percent) | 5.00% |
Long-Term Debt (Bridge Financing Agreement) (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 26, 2016 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Short-term Debt [Line Items] | ||||
Debt issuance costs | $ 35,207 | $ 0 | ||
Expense structuring and other fees | $ 8,900 | $ 1,018 | $ 1,504 | |
Axiall Corporation [Member] | ||||
Short-term Debt [Line Items] | ||||
Bridge facility | $ 1,765,000 | |||
Debt issuance costs | $ 9,700 |
Pension and Post-Retirement Benefits (Additional Information) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
US Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contribution | $ 0 | $ 349 |
Non-US Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated future employer contributions in current fiscal year | $ 200 |
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Aug. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 1,502 | $ 2,639 | $ 6,588 | $ 7,544 | |
Axiall Corporation [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | 34,915 | 34,915 | |||
Axiall Corporation [Member] | Transaction and Integration Related Costs [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 32,644 | $ 32,644 | |||
Axiall Corporation [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share price (in usd per share) | $ 33.00 |
Derivative Instruments (Fair Values of Derivative Instruments in Consolidated Balance Sheets) (Details) - Not Designated as Hedging Instrument [Member] - Commodity Forward Contracts [Member] - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | $ 5,895 | $ 5,553 |
Fair value of derivative liabilities | 10,007 | 21,762 |
Accounts receivable, net [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 2,221 | 3,465 |
Other assets, net [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative assets | 3,674 | 2,088 |
Accrued liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | 3,196 | 9,325 |
Other liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative liabilities | $ 6,811 | $ 12,437 |
Derivative Instruments (Impact of Derivative Instruments on Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Not Designated as Hedging Instrument [Member] | Commodity Forward Contracts [Member] | Cost of Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in Income on Derivative | $ (7,840) | $ (9,314) | $ 7,784 | $ (4,478) |
Derivative Instruments Derivative Commodity Instruments (Offsetting Asset) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Offsetting Assets [Line Items] | ||
Derivative assets subject to enforceable master netting arrangements | $ 0 | $ 0 |
Derivative assets not subject to enforceable master netting arrangements | 3,560 | 462 |
Total derivative assets | 3,560 | 462 |
Commodity Forward Contracts [Member] | ||
Offsetting Assets [Line Items] | ||
Derivative assets subject to enforceable master netting arrangements | 0 | 0 |
Gross amounts of recognized assets | 2,335 | 5,091 |
Gross amount offset in the consolidated balance sheet | $ (2,335) | $ (5,091) |
Income Taxes (Narrative) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2016 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||||
Effective income tax rate | (10.30%) | 24.20% | 29.10% | 30.10% | ||
U.S. federal statutory income tax rate | 35.00% | 35.00% | ||||
Unrecognized tax benefits | $ 8,818 | $ 8,818 | $ 0 | |||
Accrued interest and penalties on tax | $ 206 | $ 206 | ||||
Scenario, Forecast [Member] | ||||||
Income Tax Examination [Line Items] | ||||||
Undistributed earnings of foreign subsidiaries | $ 204,154 | |||||
Unremitted foreign earnings income tax expense | 32,272 | |||||
Deferred tax liability | 1,837 | |||||
Scenario, Forecast [Member] | Foreign Tax Authority [Member] | ||||||
Income Tax Examination [Line Items] | ||||||
Deferred tax liability | 1,169 | |||||
Scenario, Forecast [Member] | Taiwan [Member] | ||||||
Income Tax Examination [Line Items] | ||||||
Deferred tax liability | $ 668 |
Income Taxes (Reconciliation of Unrecognized Tax Benefits) (Details) $ in Thousands |
3 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Beginning Balance | $ 0 |
Amounts attributable to Axiall pre-acquistion | 5,471 |
Additions during the three months ended September 30, 2016 | 3,444 |
Reduction during the three months ended September 30, 2016 due to expiration of statute of limitations | (92) |
Foreign currency translation | (5) |
Ending Balance | $ 8,818 |
Earnings per Share (Schedule of Net Income Attributable to Common Stockholders) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to Westlake Chemical Corporation | $ 65,662 | $ 183,604 | $ 299,914 | $ 535,041 |
Less: Net income attributable to participating securities | (294) | (195) | (1,347) | (653) |
Net income attributable to common shareholders | $ 65,368 | $ 183,409 | $ 298,567 | $ 534,388 |
Earnings per Share (Reconciliation of Denominator for Basic and Diluted Earnings Per Share) (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Weighted average common shares—basic | 128,793,661 | 131,664,296 | 129,519,577 | 132,301,814 |
Incremental shares from assumed exercise of options | 586,295 | 456,939 | 584,320 | 484,720 |
Weighted average common shares-diluted | 129,379,956 | 132,121,235 | 130,103,897 | 132,786,534 |
Earnings per share: Basic (usd per share) | $ 0.51 | $ 1.39 | $ 2.31 | $ 4.04 |
Earnings per share: Diluted (usd per share) | $ 0.51 | $ 1.39 | $ 2.29 | $ 4.02 |
Earnings per Share (Additional Information) (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Number of options excluded from computation of diluted earnings per share | 620,010 | 315,285 | 577,254 | 295,825 |
Supplemental Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Accrued Liabilities [Abstract] | |||||
Accrued liabilities | $ 552,581 | $ 552,581 | $ 287,313 | ||
Accrued rebates | 73,798 | 73,798 | $ 46,460 | ||
Other Income, Net [Abstract] | |||||
Interest income | 537 | $ 1,631 | 6,899 | $ 3,383 | |
Dividend income | 868 | 0 | 5,142 | 3,328 | |
Acquisition-related financing costs | (11,420) | 0 | (12,220) | 0 | |
Foreign exchange currency (losses) gains, net | (1,281) | (731) | (2,435) | 1,140 | |
Impairment of equity method investment | 0 | 0 | 0 | (4,925) | |
Gain realized on previously held shares of Axiall common stock | 49,080 | 0 | 49,080 | 0 | |
Gain on acquisition and related expenses, net | 0 | 0 | 0 | 20,430 | |
Gain from sales of equity securities | 3,321 | 0 | 4,640 | 3,795 | |
Other | 160 | 1,736 | 985 | 6,639 | |
Other income, net | $ 41,265 | $ 2,636 | $ 52,091 | $ 33,790 |
Insurance Recovery (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Insurance Recovery [Abstract] | ||
Insurance recovery | $ 2,670 | $ 7,809 |
Commitments and Contingencies (Additional Information) (Detail) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2016
USD ($)
settlement
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Loss contingency accrual | $ 60,693 | $ 1,095 | |
Settled Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Payments for environmental loss contingencies | $ 449 | ||
Number of claims settled | settlement | 2 | ||
Amount of settlement for compliance violations | $ 192 | ||
Pending Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Damages sought | 167 | ||
LDEQ [Member] | Pending Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Damages sought | $ 100 | ||
Axiall Corporation [Member] | Settled Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Amount of settlement for compliance violations | $ 900 |
Segment Information (Additional Information) (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2016
Segment
| |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Segment Information (Reconciliation of Total Segment Income from Operations to Consolidated Income before Income Taxes) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Segment Reporting [Abstract] | ||||
Income from operations | $ 46,563 | $ 254,028 | $ 428,777 | $ 778,682 |
Interest expense | (24,366) | (8,211) | (36,966) | (26,760) |
Other income, net | 41,265 | 2,636 | 52,091 | 33,790 |
Income before income taxes | $ 63,462 | $ 248,453 | $ 443,902 | $ 785,712 |
Segment Information (Total Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 10,897,049 | $ 5,569,285 |
Operating Segments [Member] | Olefins [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 2,094,163 | 1,869,888 |
Operating Segments [Member] | Vinyls [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 8,262,971 | 2,638,833 |
Corporate and other [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 539,915 | $ 1,060,564 |
Pending Acquisition (Details) - Axiall Corporation [Member] - USD ($) $ / shares in Units, $ in Thousands |
Aug. 31, 2016 |
Jun. 30, 2016 |
---|---|---|
Business Acquisition [Line Items] | ||
Offer price per share (usd per share) | $ 33.00 | |
Transaction value | $ 1,833,236 | |
Bridge facility | $ 1,765,000 |
Guarantor Disclosures (Additional Information) (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Condensed Financial Statements, Captions [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% |
3.60% Senior Notes Due 2022 [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Stated interest rate (percent) | 3.60% |
Maturity date | 2022 |
Minimum debt amount guaranteed by subsidiaries | $ 5,000 |
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