Variable Interest Entity

9 Months Ended

Sep. 30, 2017

We hold a variable interest in a joint venture with FPCC to build, own and operate a 30 kiloton HSBC plant at FPCC’s petrochemical site in Mailiao, Taiwan. Kraton and FPCC are each 50% owners of the joint venture company, KFPC. Under the provisions of an offtake agreement with KFPC, we have exclusive rights to purchase all production from KFPC. Additionally, the agreement requires us to purchase a minimum of eighty percent of the plant production capacity each year at a defined fixed margin. This offtake agreement represents a variable interest that provides us the power to direct the most significant activities of KFPC and exposes us to the economic variability of the joint venture. As such, we have determined that we are the primary beneficiary of this variable interest entity. As a result, we have consolidated KFPC in our financial statements and reflected FPCC’s 50% ownership as a noncontrolling interest.

The following table summarizes the carrying amounts of assets and liabilities as of September 30, 2017 and December 31, 2016 for KFPC before intercompany eliminations. See Note 6 Long-Term Debt, for further discussion related to the KFPC Loan Agreement executed on July 17, 2014.



	September 30, 2017		December 31, 2016
	(In thousands)
Cash and cash equivalents	$	9,811	$	14,150
Other current assets	21,899		13,385
Property, plant, and equipment, net	171,796		167,579
Intangible assets	9,529		9,403
Other long-term assets	10,954		2,495
Total assets	$	223,989	$	207,012

Current portion of long-term debt	$	32,545	$	11,585
Current liabilities	19,597		26,743
Long-term debt	113,691		104,012
Total liabilities	$	165,833	$	142,340