16. Supplemental Guarantor Information

Kraton Polymers LLC and Kraton Polymers Capital Corporation, a financing subsidiary, collectively, (“the Issuers”), are co-issuers of the 6.75% senior notes due March 1, 2019. Kraton Performance Polymers, Inc. and Elastomers Holdings LLC, a U.S. holding company and wholly-owned subsidiary of Kraton Polymers LLC, collectively, (“the Guarantors”), fully and unconditionally guarantee on a joint and several basis, the Issuers’ obligations under the 6.75% senior notes. Our remaining subsidiaries are not guarantors of the 6.75% senior notes. We do not believe that separate financial statements and other disclosures concerning the guarantor subsidiaries would provide any additional information that would be material to investors in making an investment decision.

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2014

(Unaudited)

(In thousands, except par value)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	427		$	5,711		$	56,149		$	—		$	62,287
Receivables, net of allowances		—		266			45,888			88,156			—			134,310
Inventories of products		—		(800	)		197,310			149,321			—			345,831
Inventories of materials and supplies		—		—			9,260			1,915			—			11,175
Deferred income taxes		—		—			3,953			5,366			—			9,319
Other current assets		—		4,580			712			18,752			—			24,044
Total current assets		—		4,473			262,834			319,659			—			586,966
Property, plant and equipment, less accumulated depreciation		—		48,239			250,187			151,066			—			449,492
Intangible assets, less accumulated amortization		—		48,127			4,219			202			—			52,548
Investment in consolidated subsidiaries		563,784		1,401,978			—			—			(1,965,762	)		—
Investment in unconsolidated joint venture		—		813			—			12,194			—			13,007
Debt issuance costs		—		5,037			1,441			1,398			—			7,876
Deferred income taxes		—		453			—			1,141			—			1,594
Other long-term assets		—		(59	)		578,159			101,986			(654,890	)		25,196
Total assets	$	563,784	$	1,509,061		$	1,096,840		$	587,646		$	(2,620,652	)	$	1,136,679
LIABILITIES AND STOCKHOLDERS' AND MEMBER'S EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—		$	49		$	—		$	—		$	49
Accounts payable-trade		—		1,276			35,493			44,443			—			81,212
Other payables and accruals		—		13,342			14,969			15,545			—			43,856
Deferred income taxes		—		—			—			332			—			332
Due to related party		—		—			—			15,288			—			15,288
Total current liabilities		—		14,618			50,511			75,608			—			140,737
Long-term debt, net of current portion		—		350,867			982			—			—			351,849
Deferred income taxes		—		8,909			3,953			3,120			—			15,982
Other long-term liabilities		—		571,950			61,032			93,709			(654,890	)		71,801
Total liabilities		—		946,344			116,478			172,437			(654,890	)		580,369
Commitments and contingencies (note 10)
Stockholders' and member's equity:
Preferred stock, $0.01 par value; 100,000 shares authorized; none issued		—		—			—			—			—			—
Common stock, $0.01 par value; 500,000 shares authorized		328		—			—			—			—			328
Additional paid in capital		372,780		—			—			—			—			372,780
Member's equity		—		563,784			1,016,337			385,641			(1,965,762	)		—
Retained earnings		190,676		—			—			—			—			190,676
Accumulated other comprehensive loss		—		(1,067	)		(35,975	)		(9,861	)		—			(46,903	)
Kraton stockholders' and member's equity		563,784		562,717			980,362			375,780			(1,965,762	)		516,881
Noncontrolling interest		—		—			—			39,429			—			39,429
Total stockholders' and member's equity		563,784		562,717			980,362			415,209			(1,965,762	)		556,310
Total liabilities and stockholders' and member's equity	$	563,784	$	1,509,061		$	1,096,840		$	587,646		$	(2,620,652	)	$	1,136,679

(1)

Kraton Polymers LLC and Kraton Polymers Capital Corporation, a financing subsidiary, collectively, the Issuers, are co-issuers of the 6.75% senior notes due March 1, 2019. Kraton Polymers Capital Corporation has minimal assets and income. We do not believe that separate financial information concerning the Issuers would provide additional information that would be material to investors in making an investment decision.

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013

(In thousands, except par value)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—		$	11,792		$	164,080	$	—		$	175,872
Receivables, net of allowances		—		80			45,971			83,305		—			129,356
Inventories of products		—		—			176,823			151,949		—			328,772
Inventories of materials and supplies		—		—			8,898			2,049		—			10,947
Deferred income taxes		—		—			3,952			3,644		—			7,596
Other current assets		—		2,071			1,541			17,053		—			20,665
Total current assets		—		2,151			248,977			422,080		—			673,208
Property, plant and equipment, less accumulated depreciation		—		47,157			241,650			125,450		—			414,257
Intangible assets, less accumulated amortization		—		34,208			23,280			—		—			57,488
Investment in consolidated subsidiaries		534,742		1,325,811			—			—		(1,860,553	)		—
Investment in unconsolidated joint venture		—		813			—			13,261		—			14,074
Debt issuance costs		—		6,000			1,874			1,339		—			9,213
Deferred income taxes		—		536			—			790		—			1,326
Other long-term assets		—		612			563,305			108,393		(647,079	)		25,231
Total assets	$	534,742	$	1,417,288		$	1,079,086		$	671,313	$	(2,507,632	)	$	1,194,797
LIABILITIES AND STOCKHOLDERS' AND MEMBER'S EQUITY
Current liabilities:
Accounts payable-trade	$	—	$	104		$	48,259		$	67,373	$	—		$	115,736
Other payables and accruals		—		7,875			25,970			20,694		—			54,539
Deferred income taxes		—		—			—			182		—			182
Due to related party		—		—			—			24,603		—			24,603
Total current liabilities		—		7,979			74,229			112,852		—			195,060
Long-term debt, net of current portion		—		350,989			—			—		—			350,989
Deferred income taxes		—		10,553			3,953			3,853		—			18,359
Other long-term liabilities		—		513,560			64,394			145,116		(647,079	)		75,991
Total liabilities		—		883,081			142,576			261,821		(647,079	)		640,399
Commitments and contingencies (note 10)
Stockholders' and member's equity:
Preferred stock, $0.01 par value; 100,000 shares authorized; none issued		—		—			—			—		—			—
Common stock, $0.01 par value; 500,000 shares authorized		325		—			—			—		—			325
Additional paid in capital		363,590		—			—			—		—			363,590
Member's equity		—		534,742			972,485			353,326		(1,860,553	)		—
Retained earnings		170,827		—			—			—		—			170,827
Accumulated other comprehensive income (loss)		—		(535	)		(35,975	)		15,258		—			(21,252	)
Kraton stockholders' and member's equity		534,742		534,207			936,510			368,584		(1,860,553	)		513,490
Noncontrolling interest		—		—			—			40,908		—			40,908
Total stockholders' and member's equity		534,742		534,207			936,510			409,492		(1,860,553	)		554,398
Total liabilities and stockholders' and member's equity	$	534,742	$	1,417,288		$	1,079,086		$	671,313	$	(2,507,632	)	$	1,194,797

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three months ended September 30, 2014

(Unaudited)

(In thousands)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales revenue	$	—	$	—		$	154,297		$	205,428		$	(40,754	)	$	318,971
Cost of goods sold		—		(4,000	)		127,178			172,723			(40,754	)		255,147
Gross profit		—		4,000			27,119			32,705			—			63,824
Operating expenses:
Research and development		—		3,566			821			3,053			—			7,440
Selling, general and administrative		—		8,741			137			7,496			—			16,374
Depreciation and amortization		—		5,746			7,390			3,416			—			16,552
Total operating expenses		—		18,053			8,348			13,965			—			40,366
Earnings in consolidated subsidiaries		16,317		35,993			—			—			(52,310	)		—
Earnings of unconsolidated joint venture		—		—			—			80			—			80
Interest expense (income), net		—		6,183			(85	)		1			—			6,099
Income before income taxes		16,317		15,757			18,856			18,819			(52,310	)		17,439
Income tax expense (benefit)		—		(560	)		196			1,486			—			1,122
Consolidated net income		16,317		16,317			18,660			17,333			(52,310	)		16,317
Net loss attributable to noncontrolling interest		—		—			—			(298	)		—			(298	)
Net income attributable to Kraton	$	16,317	$	16,317		$	18,660		$	17,631		$	(52,310	)	$	16,615

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three months ended September 30, 2013

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales revenue	$	—		$	—		$	156,550		$	210,570		$	(40,011	)	$	327,109
Cost of goods sold		—			(244	)		134,863			185,051			(40,011	)		279,659
Gross profit		—			244			21,687			25,519			—			47,450
Operating expenses:
Research and development		—			—			4,307			3,106			—			7,413
Selling, general and administrative		—			6			15,268			7,156			—			22,430
Depreciation and amortization		—			4,080			7,902			3,832			—			15,814
Total operating expenses		—			4,086			27,477			14,094			—			45,657
Earnings (loss) in consolidated subsidiaries		(5,852	)		6,621			—			—			(769	)		—
Earnings of unconsolidated joint venture		—			—			—			117			—			117
Interest expense (income), net		—			9,381			(3,766	)		126			—			5,741
Income (loss) before income taxes		(5,852	)		(6,602	)		(2,024	)		11,416			(769	)		(3,831	)
Income tax expense (benefit)		—			(750	)		11			2,760			—			2,021
Consolidated net income (loss)		(5,852	)		(5,852	)		(2,035	)		8,656			(769	)		(5,852	)
Net loss attributable to noncontrolling interest		—			—			—			(254	)		—			(254	)
Net income (loss) attributable to Kraton	$	(5,852	)	$	(5,852	)	$	(2,035	)	$	8,910		$	(769	)	$	(5,598	)

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine months ended September 30, 2014

(Unaudited)

(In thousands)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales revenue	$	—	$	—		$	485,368	$	596,210		$	(127,184	)	$	954,394
Cost of goods sold		—		(19,414	)		391,743		516,272			(127,184	)		761,417
Gross profit		—		19,414			93,625		79,938			—			192,977
Operating expenses:
Research and development		—		12,115			1,758		9,863			—			23,736
Selling, general and administrative		—		55,208			262		23,402			—			78,872
Depreciation and amortization		—		16,870			21,912		10,848			—			49,630
Total operating expenses		—		84,193			23,932		44,113			—			152,238
Earnings in consolidated subsidiaries		18,991		100,871			—		—			(119,862	)		—
Earnings of unconsolidated joint venture		—		—			—		324			—			324
Interest expense (income), net		—		18,661			79		(73	)		—			18,667
Income before income taxes		18,991		17,431			69,614		36,222			(119,862	)		22,396
Income tax expense (benefit)		—		(1,560	)		201		4,764			—			3,405
Consolidated net income		18,991		18,991			69,413		31,458			(119,862	)		18,991
Net loss attributable to noncontrolling interest		—		—			—		(858	)		—			(858	)
Net income attributable to Kraton	$	18,991	$	18,991		$	69,413	$	32,316		$	(119,862	)	$	19,849

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Nine months ended September 30, 2013

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales revenue	$	—		$	—		$	498,775		$	624,015		$	(121,031	)	$	1,001,759
Cost of goods sold		—			1,720			407,224			546,624			(121,031	)		834,537
Gross profit (loss)		—			(1,720	)		91,551			77,391			—			167,222
Operating expenses:
Research and development		—			—			13,087			10,685			—			23,772
Selling, general and administrative		—			154			50,840			22,554			—			73,548
Depreciation and amortization		—			12,239			23,521			10,893			—			46,653
Total operating expenses		—			12,393			87,448			44,132			—			143,973
Earnings (loss) in consolidated subsidiaries		(5,699	)		41,165			—			—			(35,466	)		—
Earnings of unconsolidated joint venture		—			—			—			372			—			372
Interest expense (income), net		—			34,315			(10,886	)		1,519			—			24,948
Income (loss) before income taxes		(5,699	)		(7,263	)		14,989			32,112			(35,466	)		(1,327	)
Income tax expense (benefit)		—			(1,564	)		32			5,904			—			4,372
Consolidated net income (loss)		(5,699	)		(5,699	)		14,957			26,208			(35,466	)		(5,699	)
Net loss attributable to noncontrolling interest		—			—			—			(182	)		—			(182	)
Net income (loss) attributable to Kraton	$	(5,699	)	$	(5,699	)	$	14,957		$	26,390		$	(35,466	)	$	(5,517	)

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three months ended September 30, 2014

(Unaudited)

(In thousands)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income attributable to Kraton	$	16,317	$	16,317		$	18,660	$	17,631		$	(52,310	)	$	16,615
Other comprehensive loss:
Foreign currency translation adjustments, net of tax		—		(264	)		—		(28,323	)		—			(28,587	)
Other comprehensive loss, net of tax		—		(264	)		—		(28,323	)		—			(28,587	)
Comprehensive income (loss) attributable to Kraton		16,317		16,053			18,660		(10,692	)		(52,310	)		(11,972	)
Comprehensive loss attributable to noncontrolling interest		—		—			—		(1,092	)		—			(1,092	)
Consolidated comprehensive income (loss)	$	16,317	$	16,053		$	18,660	$	(11,784	)	$	(52,310	)	$	(13,064	)

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three months ended September 30, 2013

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss) attributable to Kraton	$	(5,852	)	$	(5,852	)	$	(2,035	)	$	8,910		$	(769	)	$	(5,598	)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		—			(201	)		—			9,712			—			9,511
Unrealized income (loss) from net investment hedge, net of tax		—			36			—			(301	)		—			(265	)
Other comprehensive income (loss), net of tax		—			(165	)		—			9,411			—			9,246
Comprehensive income (loss) attributable to Kraton		(5,852	)		(6,017	)		(2,035	)		18,321			(769	)		3,648
Comprehensive income attributable to noncontrolling interest		—			—			—			178			—			178
Consolidated comprehensive income (loss)	$	(5,852	)	$	(6,017	)	$	(2,035	)	$	18,499		$	(769	)	$	3,826

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Nine months ended September 30, 2014

(Unaudited)

(In thousands)

	Kraton		Kraton Polymers LLC (1)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income attributable to Kraton	$	18,991	$	18,991		$	69,413	$	32,316		$	(119,862	)	$	19,849
Other comprehensive loss:
Foreign currency translation adjustments, net of tax		—		(532	)		—		(25,119	)		—			(25,651	)
Other comprehensive loss, net of tax		—		(532	)		—		(25,119	)		—			(25,651	)
Comprehensive income (loss) attributable to Kraton		18,991		18,459			69,413		7,197			(119,862	)		(5,802	)
Comprehensive loss attributable to noncontrolling interest		—		—			—		(1,479	)		—			(1,479	)
Consolidated comprehensive income (loss)	$	18,991	$	18,459		$	69,413	$	5,718		$	(119,862	)	$	(7,281	)

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Nine months ended September 30, 2013

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss) attributable to Kraton	$	(5,699	)	$	(5,699	)	$	14,957	$	26,390		$	(35,466	)	$	(5,517	)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		—			(203	)		—		(3,532	)		—			(3,735	)
Realized gain from interest rate swap, net of tax		—			837			—		—			—			837
Unrealized loss from net investment hedge, net of tax		—			(189	)		—		(301	)		—			(490	)
Other comprehensive income (loss), net of tax		—			445			—		(3,833	)		—			(3,388	)
Comprehensive income (loss) attributable to Kraton		(5,699	)		(5,254	)		14,957		22,557			(35,466	)		(8,905	)
Comprehensive income attributable to noncontrolling interest		—			—			—		111			—			111
Consolidated comprehensive income (loss)	$	(5,699	)	$	(5,254	)	$	14,957	$	22,668		$	(35,466	)	$	(8,794	)

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine months ended September 30, 2014

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	—		$	(25,208	)	$	64,822		$	(58,391	)	$	—		$	(18,777	)
Cash flows provided by (used in) investing activities:
Proceeds from intercompany loans		—			27,679			—			—			(27,679	)		—
Kraton purchase of property, plant and equipment		—			(725	)		(36,513	)		(10,301	)		—			(47,539	)
KFPC purchase of property, plant and equipment		—			—			—			(33,807	)		—			(33,807	)
Purchase of software and other intangibles		—			(2,724	)		—			—			—			(2,724	)
Net cash provided by (used in) investing activities		—			24,230			(36,513	)		(44,108	)		(27,679	)		(84,070	)
Cash flows provided by (used in) financing activities:
Proceeds from debt		—			—			29,000			—			—			29,000
Repayments of debt		—			—			(29,000	)		—			—			(29,000	)
Capital lease payments		—			—			(6,007	)		—			—			(6,007	)
Purchase of treasury stock		(704	)		—			—			—			—			(704	)
Cash contributions from member		—			—			(704	)		—			704			—
Cash distributions to member		(725	)		1,429			—			—			(704	)		—
Proceeds from the exercise of stock options		1,429			—			—			—			—			1,429
Debt issuance costs		—			(24	)		—			(461	)		—			(485	)
Payments on intercompany loans		—			—			(27,679	)		—			27,679			—
Net cash provided by (used in) financing activities		—			1,405			(34,390	)		(461	)		27,679			(5,767	)
Effect of exchange rate differences on cash		—			—			—			(4,971	)		—			(4,971	)
Net increase (decrease) in cash and cash equivalents		—			427			(6,081	)		(107,931	)		—			(113,585	)
Cash and cash equivalents, beginning of period		—			—			11,792			164,080			—			175,872
Cash and cash equivalents, end of period	$	—		$	427		$	5,711		$	56,149		$	—		$	62,287

(1)

KRATON PERFORMANCE POLYMERS, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine months ended September 30, 2013

(Unaudited)

(In thousands)

	Kraton			Kraton Polymers LLC (1)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	—		$	14,859		$	(65,805	)	$	109,033		$	—		$	58,087
Cash flows provided by (used in) investing activities:
Repayments of intercompany loans		—			68,962			—			—			(68,962	)		—
Kraton purchase of property, plant and equipment		—			—			(26,414	)		(23,224	)		—			(49,638	)
KFPC purchase of property, plant and equipment		—			—			—			(8,284	)		—			(8,284	)
Purchase of software and other intangibles		—			—			(2,861	)		(245	)		—			(3,106	)
Settlement of net investment hedge		—			(2,490	)		—			—			—			(2,490	)
Net cash provided by (used in) investing activities		—			66,472			(29,275	)		(31,753	)		(68,962	)		(63,518	)
Cash flows provided by (used in) financing activities:
Proceeds from debt		—			—			40,000			—			—			40,000
Repayments of debt		—			(96,875	)		(40,000	)		—			—			(136,875	)
Capital lease payments		—			—			(950	)		—			—			(950	)
Cash contributions from member		—			15,544			—			(15,544	)		—			—
Cash distributions to member		(310	)		—			—			310			—			—
Contribution from noncontrolling interest		—			—			—			30,216			—			30,216
Proceeds from the exercise of stock options		310			—			—			—			—			310
Debt issuance costs		—			—			(3,310	)		(1,484	)		—			(4,794	)
Proceeds from (repayments of) intercompany loans		—			—			28,891			(97,853	)		68,962			—
Net cash provided by (used in) financing activities		—			(81,331	)		24,631			(84,355	)		68,962			(72,093	)
Effect of exchange rate differences on cash		—			—			—			(1,012	)		—			(1,012	)
Net decrease in cash and cash equivalents		—			—			(70,449	)		(8,087	)		—			(78,536	)
Cash and cash equivalents, beginning of period		—			—			80,903			142,263			—			223,166
Cash and cash equivalents, end of period	$	—		$	—		$	10,454		$	134,176		$	—		$	144,630

(1)Kraton Polymers LLC and Kraton Polymers Capital Corporation, a financing subsidiary, collectively, the Issuers, are co-issuers of the 6.75% senior notes due March 1, 2019. Kraton Polymers Capital Corporation has minimal assets and income. We do not believe that separate financial information concerning the Issuers would provide additional information that would be material to investors in making an investment decision.