Consolidating Guarantor Financial Information

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidating Guarantor Financial Information

Consolidating Guarantor Financial Information:

The 2014 Senior Notes issued by Albemarle Corporation (the “Issuer”) are fully and unconditionally guaranteed, jointly and severally, on an unsecured and unsubordinated basis by Rockwood Holdings, Inc. (“RHI”) and Rockwood Specialties Group, Inc. (“RSGI”) (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries are 100% owned subsidiaries of the Issuer. The guarantees are general senior unsecured obligations of the Guarantor Subsidiaries and rank equally in right of payment with all existing and future senior unsecured indebtedness and other obligations of the Guarantor Subsidiaries that are not, by their terms, otherwise expressly subordinated. The note guarantees will be released when the 4.625% senior notes assumed by Albemarle upon the acquisition of Rockwood are repaid or otherwise discharged.

The Company applies the equity method of accounting to its subsidiaries. For cash management purposes, the Company transfers cash among the Issuer, Guarantor Subsidiaries and all other non-guarantor subsidiaries (the “Non-Guarantor Subsidiaries”) through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Company’s outstanding debt, common stock dividends and common stock repurchases. The consolidating statements of cash flows for the periods included herein present such intercompany financing activities, contributions and dividends consistent with how such activity would be presented in a stand-alone statement of cash flows. There are no significant restrictions on the ability of the Issuer or the Guarantor Subsidiaries to obtain funds from subsidiaries by dividend or loan.

The following consolidating financial information presents the financial condition, results of operations and cash flows of the Issuer, Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries, together with consolidating adjustments necessary to present Albemarle’s results on a consolidated basis, and should be read in conjunction with the notes to the condensed consolidated financial statements. Each entity in the consolidating financial information follows the same accounting policies as described herein and in our Annual Report on Form 10-K for the year ended December 31, 2014.

Condensed Consolidating Statement of Income

Three Months Ended June 30, 2015

(In Thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	374,220		$	—		$	732,025		$	(174,760	)	$	931,485
Cost of goods sold	256,868			—			548,811			(174,760		)	630,919
Gross profit	117,352			—			183,214			—			300,566
Selling, general and administrative expenses	46,353			46			101,313			—			147,712
Research and development expenses	12,901			—			12,435			—			25,336
Acquisition and integration related costs	19,289			—			4,877			—			24,166
Intercompany service fee	5,978			—			(5,978		)	—			—
Operating profit (loss)	32,831			(46		)	70,567			—			103,352
Interest and financing expenses	(21,865		)	(12,940		)	1,623			—			(33,182		)
Intergroup interest and financing expenses	(8,532		)	16,654			(8,122		)	—			—
Other income (expenses), net	(19,624		)	18,832			1,333			—			541
Income (loss) from continuing operations before income taxes and equity in net income of unconsolidated investments	(17,190		)	22,500			65,401			—			70,711
Income tax expense (benefit)	(2,549		)	9,900			9,788			—			17,139
Income (loss) from continuing operations before equity in net income of unconsolidated investments	(14,641		)	12,600			55,613			—			53,572
Equity in net income of unconsolidated investments (net of tax)	1,738			—			4,056			—			5,794
Net income (loss) from continuing operations	(12,903		)	12,600			59,669			—			59,366
Income (loss) from discontinued operations (net of tax)	—			—			—			—			—
Equity in undistributed earnings of subsidiaries	65,050			21,052			16,826			(102,928		)	—
Net income	52,147			33,652			76,495			(102,928		)	59,366
Net income attributable to noncontrolling interests	—			—			(7,219		)	—			(7,219		)
Net income attributable to Albemarle Corporation	$	52,147		$	33,652		$	69,276		$	(102,928	)	$	52,147

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended June 30, 2015

(In Thousands)	Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	52,147	$	33,652	$	76,495		$	(102,928	)	$	59,366
Total other comprehensive income, net of tax	45,876		61,825		90,870			(152,746		)	45,825
Comprehensive income	98,023		95,477		167,365			(255,674		)	105,191
Comprehensive income attributable to noncontrolling interests	—		—		(7,168		)	—			(7,168		)
Comprehensive income attributable to Albemarle Corporation	$	98,023	$	95,477	$	160,197		$	(255,674	)	$	98,023

Condensed Consolidating Statement of Income

Six Months Ended June 30, 2015

(In Thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	752,392		$	—		$	1,419,640		$	(356,143	)	$	1,815,889
Cost of goods sold	514,992			—			1,095,587			(353,722		)	1,256,857
Gross profit	237,400			—			324,053			(2,421		)	559,032
Selling, general and administrative expenses	86,870			46			196,561			—			283,477
Research and development expenses	26,269			—			25,559			—			51,828
Acquisition and integration related costs	58,169			—			25,520			—			83,689
Intercompany service fee	11,643			—			(11,643		)	—			—
Operating profit (loss)	54,449			(46		)	88,056			(2,421		)	140,038
Interest and financing expenses	(48,521		)	(23,711		)	3,304			—			(68,928		)
Intergroup interest and financing expenses	(14,446		)	25,715			(11,269		)	—			—
Other income (expenses), net	8,944			(31,220		)	72,774			—			50,498
Income (loss) from continuing operations before income taxes and equity in net income of unconsolidated investments	426			(29,262		)	152,865			(2,421		)	121,608
Income tax expense	8,343			2,972			20,856			(892		)	31,279
Income (loss) from continuing operations before equity in net income of unconsolidated investments	(7,917		)	(32,234		)	132,009			(1,529		)	90,329
Equity in net income of unconsolidated investments (net of tax)	3,757			—			12,429			—			16,186
Net income (loss) from continuing operations	(4,160		)	(32,234		)	144,438			(1,529		)	106,515
Income (loss) from discontinued operations (net of tax)	—			—			—			—			—
Equity in undistributed earnings of subsidiaries	99,422			83,682			25,724			(208,828		)	—
Net income	95,262			51,448			170,162			(210,357		)	106,515
Net income attributable to noncontrolling interests	—			—			(11,253		)	—			(11,253		)
Net income attributable to Albemarle Corporation	$	95,262		$	51,448		$	158,909		$	(210,357	)	$	95,262

Condensed Consolidating Statement of Comprehensive Loss

Six Months Ended June 30, 2015

(In Thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	95,262		$	51,448		$	170,162		$	(210,357	)	$	106,515
Total other comprehensive loss, net of tax	(253,993		)	(434,674		)	(544,565		)	979,088			(254,144		)
Comprehensive loss	(158,731		)	(383,226		)	(374,403		)	768,731			(147,629		)
Comprehensive income attributable to noncontrolling interests	—			—			(11,102		)	—			(11,102		)
Comprehensive loss attributable to Albemarle Corporation	$	(158,731	)	$	(383,226	)	$	(385,505	)	$	768,731		$	(158,731	)

Condensed Consolidating Statement of Income (Loss)

Three Months Ended June 30, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	419,135		$	—	$	361,253		$	(175,667	)	$	604,721
Cost of goods sold	267,984			—		308,216			(178,842		)	397,358
Gross profit	151,151			—		53,037			3,175			207,363
Selling, general and administrative expenses	42,806			—		24,205			—			67,011
Research and development expenses	13,657			—		8,280			—			21,937
Restructuring and other charges, net	7,246			—		(3,914		)	—			3,332
Acquisition and integration related costs	4,843			—		—			—			4,843
Intercompany service fee	6,938			—		(6,938		)	—			—
Operating profit	75,661			—		31,404			3,175			110,240
Interest and financing expenses	(8,731		)	—		(2		)	—			(8,733		)
Intergroup interest and financing expenses	6,010			—		(6,010		)	—			—
Other income (expenses), net	782			—		(1,761		)	—			(979		)
Income from continuing operations before income taxes and equity in net income of unconsolidated investments	73,722			—		23,631			3,175			100,528
Income tax expense (benefit)	22,149			—		(1,536		)	1,160			21,773
Income from continuing operations before equity in net income of unconsolidated investments	51,573			—		25,167			2,015			78,755
Equity in net income of unconsolidated investments (net of tax)	1,993			—		8,656			—			10,649
Net income from continuing operations	53,566			—		33,823			2,015			89,404
Loss from discontinued operations (net of tax)	(20,744		)	—		(39,281		)	—			(60,025		)
Equity in undistributed earnings of subsidiaries	(10,375		)	—		—			10,375			—
Net income (loss)	22,447			—		(5,458		)	12,390			29,379
Net income attributable to noncontrolling interests	—			—		(6,932		)	—			(6,932		)
Net income (loss) attributable to Albemarle Corporation	$	22,447		$	—	$	(12,390	)	$	12,390		$	22,447

Condensed Consolidating Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net income (loss)	$	22,447		$	—	$	(5,458	)	$	12,390	$	29,379
Total other comprehensive loss, net of tax	(7,283		)	—		(797		)	736		(7,344		)
Comprehensive income (loss)	15,164			—		(6,255		)	13,126		22,035
Comprehensive income attributable to noncontrolling interests	—			—		(6,871		)	—		(6,871		)
Comprehensive income (loss) attributable to Albemarle Corporation	$	15,164		$	—	$	(13,126	)	$	13,126	$	15,164

Condensed Consolidating Statement of Income

Six Months Ended June 30, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	795,459		$	—	$	745,084		$	(335,979	)	$	1,204,564
Cost of goods sold	529,577			—		611,577			(339,552		)	801,602
Gross profit	265,882			—		133,507			3,573			402,962
Selling, general and administrative expenses	98,575			—		46,540			—			145,115
Research and development expenses	27,813			—		16,696			—			44,509
Restructuring and other charges, net	10,246			—		10,086			—			20,332
Acquisition and integration related costs	4,843			—		—			—			4,843
Intercompany service fee	12,008			—		(12,008		)	—			—
Operating profit	112,397			—		72,193			3,573			188,163
Interest and financing expenses	(17,529		)	—		23			—			(17,506		)
Intergroup interest and financing expenses	6,010			—		(6,010		)	—			—
Other income (expenses), net	990			—		(826		)	—			164
Income from continuing operations before income taxes and equity in net income of unconsolidated investments	101,868			—		65,380			3,573			170,821
Income tax expense	32,520			—		1,138			1,305			34,963
Income from continuing operations before equity in net income of unconsolidated investments	69,348			—		64,242			2,268			135,858
Equity in net income of unconsolidated investments (net of tax)	3,929			—		15,621			—			19,550
Net income from continuing operations	73,277			—		79,863			2,268			155,408
Loss from discontinued operations (net of tax)	(21,157		)	—		(40,637		)	—			(61,794		)
Equity in undistributed earnings of subsidiaries	26,910			—		—			(26,910		)	—
Net income	79,030			—		39,226			(24,642		)	93,614
Net income attributable to noncontrolling interests	—			—		(14,584		)	—			(14,584		)
Net income attributable to Albemarle Corporation	$	79,030		$	—	$	24,642		$	(24,642	)	$	79,030

Condensed Consolidating Statement of Comprehensive Income

Six Months Ended June 30, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	79,030		$	—	$	39,226		$	(24,642	)	$	93,614
Total other comprehensive loss, net of tax	(16,601		)	—		(6,059		)	5,781			(16,879		)
Comprehensive income	62,429			—		33,167			(18,861		)	76,735
Comprehensive income attributable to noncontrolling interests	—			—		(14,306		)	—			(14,306		)
Comprehensive income attributable to Albemarle Corporation	$	62,429		$	—	$	18,861		$	(18,861	)	$	62,429

Condensed Consolidating Balance Sheet

June 30, 2015

(In Thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	1,983		$	1,184		$	204,071		$	—		$	207,238
Trade accounts receivable, less allowance for doubtful accounts	109,672			—			528,667			—			638,339
Other accounts receivable	11,227			23,749			37,265			—			72,241
Intergroup receivable	65,276			7,028			117,287			(189,591		)	—
Inventories	200,502			—			414,786			(13,263		)	602,025
Other current assets	132,768			—			103,100			(101,630		)	134,238
Total current assets	521,428			31,961			1,405,176			(304,484		)	1,654,081
Property, plant and equipment, at cost	1,754,607			—			2,319,115			—			4,073,722
Less accumulated depreciation and amortization	1,075,510			—			379,675			—			1,455,185
Net property, plant and equipment	679,097			—			1,939,440			—			2,618,537
Investments	75,826			4,891			524,725			—			605,442
Investment in subsidiaries	7,071,155			11,212,885			6,414,305			(24,698,345		)	—
Other assets	27,847			9,026			152,852			(5,776		)	183,949
Goodwill	49,212			—			2,720,407			—			2,769,619
Other intangibles, net of amortization	19,732			—			1,919,449			—			1,939,181
Intergroup receivable	—			3,295,790			1,841,271			(5,137,061		)	—
Total assets	$	8,444,297		$	14,554,553		$	16,917,625		$	(30,145,666	)	$	9,770,809
Liabilities and Equity
Current liabilities:
Accounts payable	$	118,214		$	—		$	224,268		$	—		$	342,482
Intergroup payable	181,822			157			7,612			(189,591		)	—
Accrued expenses	153,854			119,034			232,420			—			505,308
Current portion of long-term debt	418,455			—			9,545			—			428,000
Dividends payable	32,288			—			—			—			32,288
Income taxes payable	—			101,628			60,892			(102,520		)	60,000
Total current liabilities	904,633			220,819			534,737			(292,111		)	1,368,078
Long-term debt	2,231,467			1,289,543			41,298			—			3,562,308
Postretirement benefits	55,727			—			—			—			55,727
Pension benefits	123,131			—			332,533			—			455,664
Intergroup payable	1,804,806			1,019,292			2,312,963			(5,137,061		)	—
Other noncurrent liabilities	54,448			57,900			134,061			—			246,409
Deferred income taxes	91,008			—			681,482			(5,777		)	766,713
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
Common stock	1,122			—			6,808			(6,808		)	1,122
Additional paid-in capital	2,053,516			12,350,226			12,139,318			(24,489,544		)	2,053,516
Accumulated other comprehensive loss	(316,406		)	(434,675		)	(595,513		)	1,030,188			(316,406		)
Retained earnings	1,440,845			51,448			1,193,105			(1,244,553		)	1,440,845
Total Albemarle Corporation shareholders’ equity	3,179,077			11,966,999			12,743,718			(24,710,717		)	3,179,077
Noncontrolling interests	—			—			136,833			—			136,833
Total equity	3,179,077			11,966,999			12,880,551			(24,710,717		)	3,315,910
Total liabilities and equity	$	8,444,297		$	14,554,553		$	16,917,625		$	(30,145,666	)	$	9,770,809

Condensed Consolidating Balance Sheet

December 31, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	1,930,802		$	—	$	558,966		$	—		$	2,489,768
Trade accounts receivable, less allowance for doubtful accounts	91,849			—		293,363			—			385,212
Other accounts receivable	19,033			—		30,390			—			49,423
Intergroup receivable	74,102			—		18,097			(92,199		)	—
Inventories	201,006			—		171,543			(14,188		)	358,361
Other current assets	45,901			—		25,111			(4,926		)	66,086
Total current assets	2,362,693			—		1,097,470			(111,313		)	3,348,850
Property, plant and equipment, at cost	1,726,690			—		893,980			—			2,620,670
Less accumulated depreciation and amortization	1,047,372			—		341,430			—			1,388,802
Net property, plant and equipment	679,318			—		552,550			—			1,231,868
Investments	73,500			—		120,542			—			194,042
Investment in subsidiaries	1,551,071			—		—			(1,551,071		)	—
Other assets	35,837			—		125,119			—			160,956
Goodwill	49,212			—		194,050			—			243,262
Other intangibles, net of amortization	20,834			—		23,291			—			44,125
Total assets	$	4,772,465		$	—	$	2,113,022		$	(1,662,384	)	$	5,223,103
Liabilities and Equity
Current liabilities:
Accounts payable	$	122,479		$	—	$	109,226		$	—		$	231,705
Intergroup payable	18,097			—		74,102			(92,199		)	—
Accrued expenses	84,619			—		81,555			—			166,174
Current portion of long-term debt	692,280			—		18,816			—			711,096
Dividends payable	21,458			—		—			—			21,458
Income taxes payable	1,396			—		7,944			113			9,453
Total current liabilities	940,329			—		291,643			(92,086		)	1,139,886
Long-term debt	2,214,755			—		8,280			—			2,223,035
Postretirement benefits	56,424			—		—			—			56,424
Pension benefits	128,238			—		42,296			—			170,534
Other noncurrent liabilities	51,936			—		35,769			—			87,705
Deferred income taxes	21,318			—		35,566			—			56,884
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
Common stock	780			—		6,808			(6,808		)	780
Additional paid-in capital	10,447			—		553,172			(553,172		)	10,447
Accumulated other comprehensive loss	(62,413		)	—		(51,073		)	51,073			(62,413		)
Retained earnings	1,410,651			—		1,061,391			(1,061,391		)	1,410,651
Total Albemarle Corporation shareholders’ equity	1,359,465			—		1,570,298			(1,570,298		)	1,359,465
Noncontrolling interests	—			—		129,170			—			129,170
Total equity	1,359,465			—		1,699,468			(1,570,298		)	1,488,635
Total liabilities and equity	$	4,772,465		$	—	$	2,113,022		$	(1,662,384	)	$	5,223,103

Condensed Consolidating Statement Of Cash Flows

Six Months Ended June 30, 2015

(In Thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Cash and cash equivalents at beginning of year	$	1,930,802		$	—		$	558,966		$	—		$	2,489,768
Cash flows from operating activities:
Net cash provided by (used in) operating activities	163,838			(56,599		)	49,191			(23,247		)	133,183
Cash flows from investing activities:
Acquisition of Rockwood, net of cash acquired	(3,597,083		)	159,409			1,386,029			—			(2,051,645		)
Other acquisitions, net of cash acquired	—			—			(48,845		)	—			(48,845		)
Capital expenditures	(36,542		)	—			(75,181		)	—			(111,723		)
Decrease in restricted cash	—			—			57,550			—			57,550
Sales of (investments in) marketable securities, net	1,435			—			(2		)	—			1,433
Proceeds from repayment of advance to joint venture	2,156			—			—			—			2,156
Proceeds from intercompany investing related activity	—			1,044,810			82			(1,044,892		)	—
Intercompany investing related payments	—			(1,148,029		)	(1,198,221		)	2,346,250			—
Net cash (used in) provided by investing activities	(3,630,034		)	56,190			121,412			1,301,358			(2,151,074		)
Cash flows from financing activities:
Repayments of long-term debt	(1,325,101		)	—			(6,547		)	—			(1,331,648		)
Proceeds from borrowings of long-term debt	1,000,000			—			—			—			1,000,000
Other borrowings (repayments), net	135,965			—			(2,266		)	—			133,699
Dividends paid to shareholders	(54,238		)	—			—			—			(54,238		)
Dividends paid to noncontrolling interests	—			—			(8,282		)	—			(8,282		)
Intercompany dividends paid	—			—			(23,247		)	23,247			—
Proceeds from exercise of stock options	342			—			—			—			342
Excess tax benefits realized from stock-based compensation arrangements	59			—			—			—			59
Withholding taxes paid on stock-based compensation award distributions	(1,218		)	—			—			—			(1,218		)
Debt financing costs	(1,164		)	—			—			—			(1,164		)
Other	—			—			(3,882		)	—			(3,882		)
Proceeds from intercompany financing related activity	1,845,770			—			500,480			(2,346,250		)	—
Intercompany financing related payments	(62,039		)	(82		)	(982,771		)	1,044,892			—
Net cash provided by (used in) financing activities	1,538,376			(82		)	(526,515		)	(1,278,111		)	(266,332		)
Net effect of foreign exchange on cash and cash equivalents	(999		)	1,675			1,017			—			1,693
(Decrease) increase in cash and cash equivalents	(1,928,819		)	1,184			(354,895		)	—			(2,282,530		)
Cash and cash equivalents at end of period	$	1,983		$	1,184		$	204,071		$	—		$	207,238

Condensed Consolidating Statement Of Cash Flows

Six Months Ended June 30, 2014

(In Thousands)	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Cash and cash equivalents at beginning of year	$	88,476		$	—	$	388,763		$	—		$	477,239
Cash flows from operating activities:
Net cash provided by operating activities	148,261			—		152,896			(6,010		)	295,147
Cash flows from investing activities:
Capital expenditures	(31,749		)	—		(14,921		)	—			(46,670		)
Sales of (investments in) marketable securities, net	660			—		(18		)	—			642
Net cash used in investing activities	(31,089		)	—		(14,939		)	—			(46,028		)
Cash flows from financing activities:
Repayments of long-term debt	(101		)	—		(2,915		)	—			(3,016		)
Other borrowings (repayments), net	—			—		(13,083		)	—			(13,083		)
Dividends paid to shareholders	(41,316		)	—		—			—			(41,316		)
Intercompany dividends paid	—			—		(6,010		)	6,010			—
Repurchases of common stock	(150,000		)	—		—			—			(150,000		)
Proceeds from exercise of stock options	2,355			—		—			—			2,355
Excess tax benefits realized from stock-based compensation arrangements	767			—		—			—			767
Withholding taxes paid on stock-based compensation award distributions	(3,150		)	—		—			—			(3,150		)
Debt financing costs	(1,372		)	—		—			—			(1,372		)
Net cash used in financing activities	(192,817		)	—		(22,008		)	6,010			(208,815		)
Net effect of foreign exchange on cash and cash equivalents	—			—		(2,424		)	—			(2,424		)
(Decrease) increase in cash and cash equivalents	(75,645		)	—		113,525			—			37,880
Cash and cash equivalents at end of period	$	12,831		$	—	$	502,288		$	—		$	515,119

The 4.625% senior notes issued in September 2012 by RSGI (the “Issuer”) are fully and unconditionally guaranteed, jointly and severally, on an unsecured and unsubordinated basis by Albemarle Corporation (the “Parent Company Guarantor”) and RHI (the “Guarantor Subsidiary,” and together with the Parent Company Guarantor, the “Guarantors”). The guarantees are general senior unsecured obligations of the Guarantors and rank equally in right of payment with all existing and future senior unsecured indebtedness and other obligations of the Guarantors that are not, by their terms, otherwise expressly subordinated. The note guarantees will be released when the 4.625% senior notes are repaid or otherwise discharged.

The Company applies the equity method of accounting to its subsidiaries. For cash management purposes, the Company transfers cash among Parent Company Guarantor, Issuer, Guarantor Subsidiary and all other non-guarantor subsidiaries (the “Non-Guarantor Subsidiaries”) through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Company’s outstanding debt, common stock dividends and common stock repurchases. The consolidating statements of cash flows for the periods included herein present such intercompany financing activities, contributions and dividends consistent with how such activity would be presented in a stand-alone statement of cash flows. There are no significant restrictions on the ability of the Issuer or the Guarantors to obtain funds from subsidiaries by dividend or loan.

The following consolidating financial information presents the financial condition, results of operations and cash flows of the Parent Company Guarantor, Issuer, Guarantor Subsidiary, and the Non-Guarantor Subsidiaries, together with consolidating adjustments necessary to present Albemarle’s results on a consolidated basis, and should be read in conjunction with the notes to the condensed consolidated financial statements. Each entity in the consolidating financial information follows the same accounting policies as described herein and in our Annual Report on Form 10-K for the year ended December 31, 2014.

Condensed Consolidating Statement of Income

Three Months Ended June 30, 2015

(In Thousands)	Parent Company Guarantor			Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	374,220		$	—		$	—	$	732,025		$	(174,760	)	$	931,485
Cost of goods sold	256,868			—			—		548,811			(174,760		)	630,919
Gross profit	117,352			—			—		183,214			—			300,566
Selling, general and administrative expenses	46,353			46			—		101,313			—			147,712
Research and development expenses	12,901			—			—		12,435			—			25,336
Acquisition and integration related costs	19,289			—			—		4,877			—			24,166
Intercompany service fee	5,978			—			—		(5,978		)	—			—
Operating profit (loss)	32,831			(46		)	—		70,567			—			103,352
Interest and financing expenses	(21,865		)	(12,940		)	—		1,623			—			(33,182		)
Intergroup interest and financing expenses	(8,532		)	16,654			—		(8,122		)	—			—
Other income (expenses), net	(19,624		)	18,832			—		1,333			—			541
Income (loss) from continuing operations before income taxes and equity in net income of unconsolidated investments	(17,190		)	22,500			—		65,401			—			70,711
Income tax expense (benefit)	(2,549		)	9,900			—		9,788			—			17,139
Income (loss) from continuing operations before equity in net income of unconsolidated investments	(14,641		)	12,600			—		55,613			—			53,572
Equity in net income of unconsolidated investments (net of tax)	1,738			—			—		4,056			—			5,794
Net income (loss) from continuing operations	(12,903		)	12,600			—		59,669			—			59,366
Income (loss) from discontinued operations (net of tax)	—			—			—		—			—			—
Equity in undistributed earnings of subsidiaries	65,050			4,226			16,826		16,826			(102,928		)	—
Net income	52,147			16,826			16,826		76,495			(102,928		)	59,366
Net income attributable to noncontrolling interests	—			—			—		(7,219		)	—			(7,219		)
Net income attributable to Albemarle Corporation	$	52,147		$	16,826		$	16,826	$	69,276		$	(102,928	)	$	52,147

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended June 30, 2015

(In Thousands)	Parent Company Guarantor		Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	52,147	$	16,826	$	16,826	$	76,495		$	(102,928	)	$	59,366
Total other comprehensive income, net of tax	45,876		30,912		30,912		90,871			(152,746		)	45,825
Comprehensive income	98,023		47,738		47,738		167,366			(255,674		)	105,191
Comprehensive income attributable to noncontrolling interests	—		—		—		(7,168		)	—			(7,168		)
Comprehensive income attributable to Albemarle Corporation	$	98,023	$	47,738	$	47,738	$	160,198		$	(255,674	)	$	98,023

Condensed Consolidating Statement of Income

Six Months Ended June 30, 2015

(In Thousands)	Parent Company Guarantor			Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	752,392		$	—		$	—	$	1,419,640		$	(356,143	)	$	1,815,889
Cost of goods sold	514,992			—			—		1,095,587			(353,722		)	1,256,857
Gross profit	237,400			—			—		324,053			(2,421		)	559,032
Selling, general and administrative expenses	86,870			46			—		196,561			—			283,477
Research and development expenses	26,269			—			—		25,559			—			51,828
Acquisition and integration related costs	58,169			—			—		25,520			—			83,689
Intercompany service fee	11,643			—			—		(11,643		)	—			—
Operating profit (loss)	54,449			(46		)	—		88,056			(2,421		)	140,038
Interest and financing expenses	(48,521		)	(23,711		)	—		3,304			—			(68,928		)
Intergroup interest and financing expenses	(14,446		)	25,715			—		(11,269		)	—			—
Other income (expenses), net	8,944			(31,220		)	—		72,774			—			50,498
Income (loss) from continuing operations before income taxes and equity in net income of unconsolidated investments	426			(29,262		)	—		152,865			(2,421		)	121,608
Income tax expense	8,343			2,972			—		20,856			(892		)	31,279
Income (loss) from continuing operations before equity in net income of unconsolidated investments	(7,917		)	(32,234		)	—		132,009			(1,529		)	90,329
Equity in net income of unconsolidated investments (net of tax)	3,757			—			—		12,429			—			16,186
Net income (loss) from continuing operations	(4,160		)	(32,234		)	—		144,438			(1,529		)	106,515
Income (loss) from discontinued operations (net of tax)	—			—			—		—			—			—
Equity in undistributed earnings of subsidiaries	99,422			57,958			25,724		25,724			(208,828		)	—
Net income	95,262			25,724			25,724		170,162			(210,357		)	106,515
Net income attributable to noncontrolling interests	—			—			—		(11,253		)	—			(11,253		)
Net income attributable to Albemarle Corporation	$	95,262		$	25,724		$	25,724	$	158,909		$	(210,357	)	$	95,262

Condensed Consolidating Statement of Comprehensive Loss

Six Months Ended June 30, 2015

(In Thousands)	Parent Company Guarantor			Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	95,262		$	25,724		$	25,724		$	170,162		$	(210,357	)	$	106,515
Total other comprehensive loss, net of tax	(253,993		)	(217,337		)	(217,338		)	(544,565		)	979,089			(254,144		)
Comprehensive loss	(158,731		)	(191,613		)	(191,614		)	(374,403		)	768,732			(147,629		)
Comprehensive income attributable to noncontrolling interests	—			—			—			(11,102		)	—			(11,102		)
Comprehensive loss attributable to Albemarle Corporation	$	(158,731	)	$	(191,613	)	$	(191,614	)	$	(385,505	)	$	768,732		$	(158,731	)

Condensed Consolidating Statement of Income (Loss)

Three Months Ended June 30, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	419,135		$	—	$	—	$	361,253		$	(175,667	)	$	604,721
Cost of goods sold	267,984			—		—		308,216			(178,842		)	397,358
Gross profit	151,151			—		—		53,037			3,175			207,363
Selling, general and administrative expenses	42,806			—		—		24,205			—			67,011
Research and development expenses	13,657			—		—		8,280			—			21,937
Restructuring and other charges, net	7,246			—		—		(3,914		)	—			3,332
Acquisition and integration related costs	4,843			—		—		—			—			4,843
Intercompany service fee	6,938			—		—		(6,938		)	—			—
Operating profit	75,661			—		—		31,404			3,175			110,240
Interest and financing expenses	(8,731		)	—		—		(2		)	—			(8,733		)
Intergroup interest and financing expenses	6,010			—		—		(6,010		)	—			—
Other income (expenses), net	782			—		—		(1,761		)	—			(979		)
Income from continuing operations before income taxes and equity in net income of unconsolidated investments	73,722			—		—		23,631			3,175			100,528
Income tax expense (benefit)	22,149			—		—		(1,536		)	1,160			21,773
Income from continuing operations before equity in net income of unconsolidated investments	51,573			—		—		25,167			2,015			78,755
Equity in net income of unconsolidated investments (net of tax)	1,993			—		—		8,656			—			10,649
Net income from continuing operations	53,566			—		—		33,823			2,015			89,404
Loss from discontinued operations (net of tax)	(20,744		)	—		—		(39,281		)	—			(60,025		)
Equity in undistributed earnings of subsidiaries	(10,375		)	—		—		—			10,375			—
Net income (loss)	22,447			—		—		(5,458		)	12,390			29,379
Net income attributable to noncontrolling interests	—			—		—		(6,932		)	—			(6,932		)
Net income (loss) attributable to Albemarle Corporation	$	22,447		$	—	$	—	$	(12,390	)	$	12,390		$	22,447

Condensed Consolidating Statement of Comprehensive Income (Loss)

Three Months Ended June 30, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net income (loss)	$	22,447		$	—	$	—	$	(5,458	)	$	12,390	$	29,379
Total other comprehensive loss, net of tax	(7,283		)	—		—		(797		)	736		(7,344		)
Comprehensive income (loss)	15,164			—		—		(6,255		)	13,126		22,035
Comprehensive income attributable to noncontrolling interests	—			—		—		(6,871		)	—		(6,871		)
Comprehensive income (loss) attributable to Albemarle Corporation	$	15,164		$	—	$	—	$	(13,126	)	$	13,126	$	15,164

Condensed Consolidating Statement of Income

Six Months Ended June 30, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net sales	$	795,459		$	—	$	—	$	745,084		$	(335,979	)	$	1,204,564
Cost of goods sold	529,577			—		—		611,577			(339,552		)	801,602
Gross profit	265,882			—		—		133,507			3,573			402,962
Selling, general and administrative expenses	98,575			—		—		46,540			—			145,115
Research and development expenses	27,813			—		—		16,696			—			44,509
Restructuring and other charges, net	10,246			—		—		10,086			—			20,332
Acquisition and integration related costs	4,843			—		—		—			—			4,843
Intercompany service fee	12,008			—		—		(12,008		)	—			—
Operating profit	112,397			—		—		72,193			3,573			188,163
Interest and financing expenses	(17,529		)	—		—		23			—			(17,506		)
Intergroup interest and financing expenses	6,010			—		—		(6,010		)	—			—
Other income (expenses), net	990			—		—		(826		)	—			164
Income from continuing operations before income taxes and equity in net income of unconsolidated investments	101,868			—		—		65,380			3,573			170,821
Income tax expense	32,520			—		—		1,138			1,305			34,963
Income from continuing operations before equity in net income of unconsolidated investments	69,348			—		—		64,242			2,268			135,858
Equity in net income of unconsolidated investments (net of tax)	3,929			—		—		15,621			—			19,550
Net income from continuing operations	73,277			—		—		79,863			2,268			155,408
Loss from discontinued operations (net of tax)	(21,157		)	—		—		(40,637		)	—			(61,794		)
Equity in undistributed earnings of subsidiaries	26,910			—		—		—			(26,910		)	—
Net income	79,030			—		—		39,226			(24,642		)	93,614
Net income attributable to noncontrolling interests	—			—		—		(14,584		)	—			(14,584		)
Net income attributable to Albemarle Corporation	$	79,030		$	—	$	—	$	24,642		$	(24,642	)	$	79,030

Condensed Consolidating Statement of Comprehensive Income

Six Months Ended June 30, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Net income	$	79,030		$	—	$	—	$	39,226		$	(24,642	)	$	93,614
Total other comprehensive loss, net of tax	(16,601		)	—		—		(6,059		)	5,781			(16,879		)
Comprehensive income	62,429			—		—		33,167			(18,861		)	76,735
Comprehensive income attributable to noncontrolling interests	—			—		—		(14,306		)	—			(14,306		)
Comprehensive income attributable to Albemarle Corporation	$	62,429		$	—	$	—	$	18,861		$	(18,861	)	$	62,429

Condensed Consolidating Balance Sheet

June 30, 2015

(In Thousands)	Parent Company Guarantor			Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	1,983		$	1,184		$	—		$	204,071		$	—		$	207,238
Trade accounts receivable, less allowance for doubtful accounts	109,672			—			—			528,667			—			638,339
Other accounts receivable	11,227			23,749			—			37,265			—			72,241
Intergroup receivable	65,276			7,028			—			117,287			(189,591		)	—
Inventories	200,502			—			—			414,786			(13,263		)	602,025
Other current assets	132,768			—			—			103,100			(101,630		)	134,238
Total current assets	521,428			31,961			—			1,405,176			(304,484		)	1,654,081
Property, plant and equipment, at cost	1,754,607			—			—			2,319,115			—			4,073,722
Less accumulated depreciation and amortization	1,075,510			—			—			379,675			—			1,455,185
Net property, plant and equipment	679,097			—			—			1,939,440			—			2,618,537
Investments	75,826			4,891			—			524,725			—			605,442
Investment in subsidiaries	7,071,155			4,798,580			6,414,305			6,414,305			(24,698,345		)	—
Other assets	27,847			9,026			—			152,852			(5,776		)	183,949
Goodwill	49,212			—			—			2,720,407			—			2,769,619
Other intangibles, net of amortization	19,732			—			—			1,919,449			—			1,939,181
Intergroup receivable	—			3,293,563			2,227			1,841,271			(5,137,061		)	—
Total assets	$	8,444,297		$	8,138,021		$	6,416,532		$	16,917,625		$	(30,145,666	)	$	9,770,809
Liabilities and Equity
Current liabilities:
Accounts payable	$	118,214		$	—		$	—		$	224,268		$	—		$	342,482
Intergroup payable	181,822			75			82			7,612			(189,591		)	—
Accrued expenses	153,854			119,034			—			232,420			—			505,308
Current portion of long-term debt	418,455			—			—			9,545			—			428,000
Dividends payable	32,288			—			—			—			—			32,288
Income taxes payable	—			101,628			—			60,892			(102,520		)	60,000
Total current liabilities	904,633			220,737			82			534,737			(292,111		)	1,368,078
Long-term debt	2,231,467			1,289,543			—			41,298			—			3,562,308
Postretirement benefits	55,727			—			—			—			—			55,727
Pension benefits	123,131			—			—			332,533			—			455,664
Intergroup payable	1,804,806			155,535			863,757			2,312,963			(5,137,061		)	—
Other noncurrent liabilities	54,448			57,900			—			134,061			—			246,409
Deferred income taxes	91,008			—			—			681,482			(5,777		)	766,713
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
Common stock	1,122			—			—			6,808			(6,808		)	1,122
Additional paid-in capital	2,053,516			6,605,919			5,744,307			12,139,318			(24,489,544		)	2,053,516
Accumulated other comprehensive loss	(316,406		)	(217,337		)	(217,338		)	(595,513		)	1,030,188			(316,406		)
Retained earnings	1,440,845			25,724			25,724			1,193,105			(1,244,553		)	1,440,845
Total Albemarle Corporation shareholders’ equity	3,179,077			6,414,306			5,552,693			12,743,718			(24,710,717		)	3,179,077
Noncontrolling interests	—			—			—			136,833			—			136,833
Total equity	3,179,077			6,414,306			5,552,693			12,880,551			(24,710,717		)	3,315,910
Total liabilities and equity	$	8,444,297		$	8,138,021		$	6,416,532		$	16,917,625		$	(30,145,666	)	$	9,770,809

Condensed Consolidating Balance Sheet

December 31, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	1,930,802		$	—	$	—	$	558,966		$	—		$	2,489,768
Trade accounts receivable, less allowance for doubtful accounts	91,849			—		—		293,363			—			385,212
Other accounts receivable	19,033			—		—		30,390			—			49,423
Intergroup receivable	74,102			—		—		18,097			(92,199		)	—
Inventories	201,006			—		—		171,543			(14,188		)	358,361
Other current assets	45,901			—		—		25,111			(4,926		)	66,086
Total current assets	2,362,693			—		—		1,097,470			(111,313		)	3,348,850
Property, plant and equipment, at cost	1,726,690			—		—		893,980			—			2,620,670
Less accumulated depreciation and amortization	1,047,372			—		—		341,430			—			1,388,802
Net property, plant and equipment	679,318			—		—		552,550			—			1,231,868
Investments	73,500			—		—		120,542			—			194,042
Investment in subsidiaries	1,551,071			—		—		—			(1,551,071		)	—
Other assets	35,837			—		—		125,119			—			160,956
Goodwill	49,212			—		—		194,050			—			243,262
Other intangibles, net of amortization	20,834			—		—		23,291			—			44,125
Total assets	$	4,772,465		$	—	$	—	$	2,113,022		$	(1,662,384	)	$	5,223,103
Liabilities and Equity
Current liabilities:
Accounts payable	$	122,479		$	—	$	—	$	109,226		$	—		$	231,705
Intergroup payable	18,097			—		—		74,102			(92,199		)	—
Accrued expenses	84,619			—		—		81,555			—			166,174
Current portion of long-term debt	692,280			—		—		18,816			—			711,096
Dividends payable	21,458			—		—		—			—			21,458
Income taxes payable	1,396			—		—		7,944			113			9,453
Total current liabilities	940,329			—		—		291,643			(92,086		)	1,139,886
Long-term debt	2,214,755			—		—		8,280			—			2,223,035
Postretirement benefits	56,424			—		—		—			—			56,424
Pension benefits	128,238			—		—		42,296			—			170,534
Other noncurrent liabilities	51,936			—		—		35,769			—			87,705
Deferred income taxes	21,318			—		—		35,566			—			56,884
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
Common stock	780			—		—		6,808			(6,808		)	780
Additional paid-in capital	10,447			—		—		553,172			(553,172		)	10,447
Accumulated other comprehensive loss	(62,413		)	—		—		(51,073		)	51,073			(62,413		)
Retained earnings	1,410,651			—		—		1,061,391			(1,061,391		)	1,410,651
Total Albemarle Corporation shareholders’ equity	1,359,465			—		—		1,570,298			(1,570,298		)	1,359,465
Noncontrolling interests	—			—		—		129,170			—			129,170
Total equity	1,359,465			—		—		1,699,468			(1,570,298		)	1,488,635
Total liabilities and equity	$	4,772,465		$	—	$	—	$	2,113,022		$	(1,662,384	)	$	5,223,103

Condensed Consolidating Statement Of Cash Flows

Six Months Ended June 30, 2015

(In Thousands)	Parent Company Guarantor			Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Cash and cash equivalents at beginning of year	$	1,930,802		$	—		$	—		$	558,966		$	—		$	2,489,768
Cash flows from operating activities:
Net cash provided by (used in) operating activities	163,838			(56,681		)	82			49,191			(23,247		)	133,183
Cash flows from investing activities:
Acquisition of Rockwood, net of cash acquired	(3,597,083		)	159,409			—			1,386,029			—			(2,051,645		)
Other acquisitions, net of cash acquired	—			—			—			(48,845		)	—			(48,845		)
Capital expenditures	(36,542		)	—			—			(75,181		)	—			(111,723		)
Decrease in restricted cash	—			—			—			57,550			—			57,550
Sales of (investments in) marketable securities, net	1,435			—			—			(2		)	—			1,433
Proceeds from repayment of advance to joint venture	2,156			—			—			—			—			2,156
Proceeds from intercompany investing related activity	—			1,044,810			—			82			(1,044,892		)	—
Intercompany investing related payments	—			(1,148,029		)	—			(1,198,221		)	2,346,250			—
Net cash (used in) provided by investing activities	(3,630,034		)	56,190			—			121,412			1,301,358			(2,151,074		)
Cash flows from financing activities:
Repayments of long-term debt	(1,325,101		)	—			—			(6,547		)	—			(1,331,648		)
Proceeds from borrowings of long-term debt	1,000,000			—			—			—			—			1,000,000
Other borrowings (repayments), net	135,965			—			—			(2,266		)	—			133,699
Dividends paid to shareholders	(54,238		)	—			—			—			—			(54,238		)
Dividends paid to noncontrolling interests	—			—			—			(8,282		)	—			(8,282		)
Intercompany dividends paid	—			—			—			(23,247		)	23,247			—
Proceeds from exercise of stock options	342			—			—			—			—			342
Excess tax benefits realized from stock-based compensation arrangements	59			—			—			—			—			59
Withholding taxes paid on stock-based compensation award distributions	(1,218		)	—			—			—			—			(1,218		)
Debt financing costs	(1,164		)	—			—			—			—			(1,164		)
Other	—			—			—			(3,882		)	—			(3,882		)
Proceeds from intercompany financing related activity	1,845,770			—			—			500,480			(2,346,250		)	—
Intercompany financing related payments	(62,039		)	—			(82		)	(982,771		)	1,044,892			—
Net cash provided by (used in) financing activities	1,538,376			—			(82		)	(526,515		)	(1,278,111		)	(266,332		)
Net effect of foreign exchange on cash and cash equivalents	(999		)	1,675			—			1,017			—			1,693
(Decrease) increase in cash and cash equivalents	(1,928,819		)	1,184			—			(354,895		)	—			(2,282,530		)
Cash and cash equivalents at end of period	$	1,983		$	1,184		$	—		$	204,071		$	—		$	207,238

Condensed Consolidating Statement Of Cash Flows

Six Months Ended June 30, 2014

(In Thousands)	Parent Company Guarantor			Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Cash and cash equivalents at beginning of year	$	88,476		$	—	$	—	$	388,763		$	—		$	477,239
Cash flows from operating activities:
Net cash provided by operating activities	148,261			—		—		152,896			(6,010		)	295,147
Cash flows from investing activities:
Capital expenditures	(31,749		)	—		—		(14,921		)	—			(46,670		)
Sales of (investments in) marketable securities, net	660			—		—		(18		)	—			642
Net cash used in investing activities	(31,089		)	—		—		(14,939		)	—			(46,028		)
Cash flows from financing activities:
Repayments of long-term debt	(101		)	—		—		(2,915		)	—			(3,016		)
Other borrowings (repayments), net	—			—		—		(13,083		)	—			(13,083		)
Dividends paid to shareholders	(41,316		)	—		—		—			—			(41,316		)
Intercompany dividends paid	—			—		—		(6,010		)	6,010			—
Repurchases of common stock	(150,000		)	—		—		—			—			(150,000		)
Proceeds from exercise of stock options	2,355			—		—		—			—			2,355
Excess tax benefits realized from stock-based compensation arrangements	767			—		—		—			—			767
Withholding taxes paid on stock-based compensation award distributions	(3,150		)	—		—		—			—			(3,150		)
Debt financing costs	(1,372		)	—		—		—			—			(1,372		)
Net cash used in financing activities	(192,817		)	—		—		(22,008		)	6,010			(208,815		)
Net effect of foreign exchange on cash and cash equivalents	—			—		—		(2,424		)	—			(2,424		)
(Decrease) increase in cash and cash equivalents	(75,645		)	—		—		113,525			—			37,880
Cash and cash equivalents at end of period	$	12,831		$	—	$	—	$	502,288		$	—		$	515,119