Variable Interest Entity

3 Months Ended

Mar. 31, 2019

We hold a variable interest in a joint venture with FPCC to own and operate a 30 kiloton HSBC plant at FPCC’s petrochemical site in Mailiao, Taiwan. Included in the below lease assets and liabilities is a land lease with FPCC to support our operations at the HSBC plant. 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, following a ramp-up period, the agreement requires us to purchase a minimum of 80% 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 March 31, 2019 and December 31, 2018 for KFPC before intercompany eliminations.



	March 31, 2019		December 31, 2018
	(In thousands)
Cash and cash equivalents	$	5,007	$	6,640
Other current assets	19,896		18,363
Property, plant, and equipment, net	157,697		159,893
Intangible assets	8,397		8,590
Long-term operating lease assets, net	6,509		—
Other long-term assets	10,096		11,838
Total assets	$	207,602	$	205,324

Current portion of long-term debt	$	120,013	$	45,152
Current liabilities	14,488		14,996
Long-term debt	—		80,255
Long-term operating lease liabilities	$	6,509	$	—
Total liabilities	$	141,010	$	140,403