Variable Interest Entity

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 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, 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, and therefore, we have consolidated KFPC in our financial statements and reflected FPCC’s 50% percent ownership as a noncontrolling interest.

During the year ended December 31, 2021, KFPC declared a dividend to Kraton and FPCC in aggregate of $0.2 million. The dividend was paid in the fourth quarter of 2021.

The following table summarizes the carrying amounts of assets and liabilities as of December 31, 2021 and 2020 for KFPC before intercompany eliminations. See Note 8 Long Term Debt, for further discussion related to the KFPC Loan Agreement executed on July 17, 2014.


	December 31, 2021		December 31, 2020
	(In thousands)
Cash and cash equivalents	$	9,890	$	3,097
Other current assets	14,814		17,304
Property, plant, and equipment	142,790		150,838
Intangible assets	7,355		7,959
Long-term operating lease assets, net	6,938		7,178
Other long-term assets	2,683		6,510
Total assets	$	184,470	$	192,886

Current portion of long-term debt	$	67,726	$	72,156
Current liabilities	8,273		5,209
Long-term debt	—		17,559
Deferred income taxes	675		1,984
Long-term operating lease liabilities	6,445		6,700
Total liabilities	$	83,119	$	103,608