Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 22, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Kraton Corp | |
Entity Central Index Key | 1,321,646 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | KRA | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 31,957,092 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 51,508 | $ 89,052 |
Receivables, net of allowances of $918 and $824 | 253,105 | 196,683 |
Inventories of products, net | 404,138 | 367,796 |
Inventories of materials and supplies, net | 27,758 | 25,643 |
Prepaid expenses | 12,167 | 13,963 |
Other current assets | 31,383 | 36,615 |
Total current assets | 780,059 | 729,752 |
Property, plant, and equipment, less accumulated depreciation of $579,651 and $526,759 | 931,629 | 958,723 |
Goodwill | 773,373 | 774,319 |
Intangible assets, less accumulated amortization of $234,163 and $197,318 | 371,661 | 406,863 |
Investment in unconsolidated joint venture | 12,082 | 12,380 |
Debt issuance costs | 1,463 | 2,340 |
Deferred income taxes | 5,175 | 8,462 |
Other long-term assets | 37,602 | 39,688 |
Total assets | 2,913,044 | 2,932,527 |
Current liabilities: | ||
Current portion of long-term debt | 50,689 | 42,647 |
Accounts payable-trade | 167,241 | 169,265 |
Other payables and accruals | 98,386 | 119,624 |
Due to related party | 18,710 | 19,176 |
Total current liabilities | 335,026 | 350,712 |
Long-term debt, net of current portion | 1,527,322 | 1,574,881 |
Deferred income taxes | 151,894 | 148,148 |
Other long-term liabilities | 175,377 | 192,267 |
Total liabilities | 2,189,619 | 2,266,008 |
Commitments and contingencies (note 10) | ||
Kraton stockholders' equity: | ||
Preferred stock, $0.01 par value; 100,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value; 500,000 shares authorized; 31,957 shares issued and outstanding at September 30, 2018; 31,605 shares issued and outstanding at December 31, 2017 | 320 | 316 |
Additional paid in capital | 385,545 | 377,957 |
Retained earnings | 403,104 | 356,503 |
Accumulated other comprehensive loss | (96,491) | (98,295) |
Total Kraton stockholders' equity | 692,478 | 636,481 |
Noncontrolling interest | 30,947 | 30,038 |
Total equity | 723,425 | 666,519 |
Total liabilities and equity | $ 2,913,044 | $ 2,932,527 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Receivables, allowances | $ 918 | $ 824 |
Accumulated depreciation | 579,651 | 526,759 |
Total accumulated amortization | $ 234,163 | $ 197,318 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 31,957,000 | 31,605,000 |
Common stock, shares outstanding (in shares) | 31,957,000 | 31,605,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 523,105 | $ 510,947 | $ 1,563,892 | $ 1,494,392 |
Cost of goods sold | 368,847 | 381,653 | 1,092,207 | 1,073,336 |
Gross profit | 154,258 | 129,294 | 471,685 | 421,056 |
Operating expenses: | ||||
Research and development | 10,597 | 10,212 | 31,868 | 30,096 |
Selling, general, and administrative | 36,150 | 42,421 | 116,848 | 123,967 |
Depreciation and amortization | 35,117 | 34,307 | 105,633 | 102,040 |
Operating income | 72,394 | 42,354 | 217,336 | 164,953 |
Other expense | (740) | (846) | (2,960) | (2,517) |
Loss on extinguishment of debt | 0 | (15,632) | (79,921) | (35,370) |
Earnings of unconsolidated joint venture | 100 | 125 | 357 | 370 |
Interest expense, net | (20,143) | (33,017) | (74,835) | (101,766) |
Income (loss) before income taxes | 51,611 | (7,016) | 59,977 | 25,670 |
Income tax benefit (expense) | (8,334) | 2,165 | (8,743) | (2,907) |
Consolidated net income (loss) | 43,277 | (4,851) | 51,234 | 22,763 |
Net (income) loss attributable to noncontrolling interest | (928) | 818 | (1,743) | 5,178 |
Net income (loss) attributable to Kraton | $ 42,349 | $ (4,033) | $ 49,491 | $ 27,941 |
Earnings (loss) per common share: | ||||
Basic (in dollars per share) | $ 1.33 | $ (0.13) | $ 1.55 | $ 0.90 |
Diluted (in dollars per share) | $ 1.31 | $ (0.13) | $ 1.53 | $ 0.88 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 31,459 | 30,625 | 31,381 | 30,548 |
Diluted (in share) | 31,834 | 30,625 | 31,810 | 31,006 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) attributable to Kraton | $ 42,349 | $ (4,033) | $ 49,491 | $ 27,941 |
Other comprehensive income: | ||||
Foreign currency translation adjustments, net of tax of $0 | (3,492) | 18,910 | (14,448) | 60,691 |
Unrealized gain (loss) on cash flow hedges, net of tax expense of $109, benefit of $382, expense of $599, and benefit of $412, respectively | 346 | (239) | 4,501 | (145) |
Reclassification of (gain) loss on cash flow hedge | 3 | 920 | (2,584) | 879 |
Unrealized gain on net investment hedge, net of tax expense of $539 and $1,364, respectively | 1,725 | 0 | 4,366 | 0 |
Decrease in benefit plans liability, net of tax expense of $3,114 | 9,969 | 0 | 9,969 | 0 |
Other comprehensive income, net of tax | 8,551 | 19,591 | 1,804 | 61,425 |
Comprehensive income attributable to Kraton | 50,900 | 15,558 | 51,295 | 89,366 |
Comprehensive income (loss) attributable to noncontrolling interest | 984 | (787) | 909 | (3,258) |
Consolidated comprehensive income | $ 51,884 | $ 14,771 | $ 52,204 | $ 86,108 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, tax effect | $ 0 | $ 0 | $ 0 | $ 0 |
Unrealized gain (loss) on cash flow hedges, tax effect | 109 | (382) | 599 | (412) |
Unrealized gain on net investment hedge, tax effect | 539 | 0 | 1,364 | 0 |
Decrease in benefit plans liability, tax effect | $ 3,114 | $ 0 | $ 3,114 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Total Kraton Stockholders' Equity | Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest |
Beginning balance at Dec. 31, 2016 | $ (158,530) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | $ 22,763 | ||||||
Ending balance at Sep. 30, 2017 | (97,105) | ||||||
Beginning balance at Dec. 31, 2017 | 666,519 | $ 636,481 | $ 316 | $ 377,957 | $ 356,503 | (98,295) | $ 30,038 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 51,234 | 49,491 | 49,491 | 1,743 | |||
Other comprehensive loss | 970 | 1,804 | 1,804 | (834) | |||
Retired treasury stock from employee tax withholdings | (6,051) | (6,051) | 1 | (3,162) | (2,890) | ||
Exercise of stock options | 3,133 | 3,133 | 2 | 3,131 | |||
Non-cash compensation related to equity awards | 7,620 | 7,620 | 1 | 7,619 | |||
Ending balance at Sep. 30, 2018 | $ 723,425 | $ 692,478 | $ 320 | $ 385,545 | $ 403,104 | $ (96,491) | $ 30,947 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Consolidated net income | $ 51,234 | $ 22,763 |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||
Depreciation and amortization | 105,633 | 102,040 |
Amortization of debt original issue discount | 1,938 | 4,926 |
Amortization of debt issuance costs | 4,571 | 6,309 |
Loss on disposal of property, plant, and equipment | 363 | 61 |
Loss on extinguishment of debt | 79,921 | 35,370 |
Earnings from unconsolidated joint venture, net of dividends received | 188 | 67 |
Deferred income tax provision (benefit) | 3,581 | (3,526) |
Share-based compensation | 7,620 | 7,366 |
Decrease (increase) in: | ||
Accounts receivable | (63,068) | (38,921) |
Inventories of products, materials, and supplies | (47,393) | (19,126) |
Other assets | 8,065 | (6,171) |
Increase (decrease) in: | ||
Accounts payable-trade | 5,869 | 2,267 |
Other payables and accruals | (19,057) | 26,851 |
Other long-term liabilities | (2,584) | (5,433) |
Due to related party | (292) | 606 |
Net cash provided by operating activities | 136,589 | 135,449 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Kraton purchase of property, plant, and equipment | (66,047) | (71,595) |
KFPC purchase of property, plant, and equipment | (1,592) | (11,790) |
Purchase of software and other intangibles | (4,630) | (4,959) |
Net cash used in investing activities | (72,269) | (88,344) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from debt | 731,540 | 739,167 |
Repayments of debt | (796,863) | (837,012) |
KFPC proceeds from debt | 24,918 | 39,898 |
KFPC repayments of debt | (48,084) | (16,244) |
Capital lease payments | (785) | (703) |
Purchase of treasury stock | (6,051) | (2,297) |
Proceeds from the exercise of stock options | 3,133 | 2,954 |
Settlement of interest rate swap | 2,584 | (879) |
Settlement of foreign currency hedges | 0 | (716) |
Debt issuance costs | (11,113) | (13,929) |
Net cash used in financing activities | (100,721) | (89,761) |
Effect of exchange rate differences on cash | (1,143) | 10,025 |
Net decrease in cash and cash equivalents | (37,544) | (32,631) |
Cash and cash equivalents, beginning of period | 89,052 | 121,749 |
Cash and cash equivalents, end of period | 51,508 | 89,118 |
Supplemental disclosures: | ||
Cash paid during the period for income taxes, net of refunds received | 2,398 | 12,030 |
Cash paid during the period for interest, net of capitalized interest | 78,067 | 72,288 |
Capitalized interest | 2,733 | 3,334 |
Supplemental non-cash disclosures: | ||
Property, plant, and equipment accruals | $ 15,620 | $ 17,268 |
General
General | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
General | General Description of our Business. We are a leading global specialty chemicals company that manufactures styrenic block copolymers (“SBCs”), specialty polymers, and high-value performance products primarily derived from pine wood pulping co-products. SBCs are highly-engineered synthetic elastomers, which we originally invented and commercialized. Our SBCs enhance the performance of numerous products by imparting greater flexibility, resilience, strength, durability, and processability, and are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, and paving and roofing products. We manufacture and sell isoprene rubber and isoprene rubber latex, which are non-SBC products primarily used in applications such as medical products, personal care, adhesives, tackifiers, paints, and coatings. We refine and further upgrade crude tall oil and crude sulfate turpentine, into value-added specialty chemicals. These pine-based specialty products are sold into adhesive and tire markets, and we produce and sell a broad range of performance chemicals (which we formerly referred to as chemical intermediates) into markets that include fuel additives, oilfield chemicals, coatings, metalworking fluids and lubricants, inks, flavors and fragrances, and mining. Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary, except our 50% investment in our joint venture, Kraton Formosa Polymers Corporation (“KFPC”), located in Mailiao, Taiwan. KFPC is a variable interest entity for which we have determined that we are the primary beneficiary and, therefore, have consolidated into our financial statements. Our 50% investment in our joint venture located in Kashima, Japan, is accounted for under the equity method of accounting. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective annual periods or any other interim period, in particular due to the effect of seasonal changes and weather conditions that typically affect our sales into paving, roadmarking, roofing, and construction applications. In particular, sales volumes into these applications are generally higher in the second and third quarter of the calendar year as warm and dry weather is more conducive to paving and roofing activity. Reclassifications. Certain amounts reported in the condensed consolidated financial statements and notes to the consolidated financial statements for the prior periods have been reclassified to conform to the current reporting presentation. Significant Accounting Policies. Our significant accounting policies have been disclosed in Note 1 Description of Business, Basis of Presentation, and Significant Accounting Policies in our most recent Annual Report on Form 10-K. Except for the changes below, the Company has consistently applied the accounting policies presented in the Condensed Consolidated Financial Statements. Revenue Recognition. The Company adopted Topic 606 Revenue from Contracts with Customers with a date of initial adoption of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition and applied Topic 606 using the modified retrospective basis. Typically, this approach would result in recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. The Company did not have a material change in financial position, results of operations, or cash flows and therefore there is no cumulative impact recorded to opening equity. There have been no other changes to the accounting policies, which are disclosed in our most recent Annual Report on Form 10-K. The accompanying unaudited Condensed Consolidated Financial Statements we present in this report have been prepared in accordance with our policies. Use of Estimates. The preparation of these Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include: • the useful lives of long-lived assets; • estimates of fair value for assets acquired and liabilities assumed in business combinations; • allowances for doubtful accounts and sales returns; • the valuation of derivatives, deferred tax assets, property, plant and equipment, intangible assets, inventory, investments, and share-based compensation; and • liabilities for employee benefit obligations, environmental matters, asset retirement obligations, income tax uncertainties, and other contingencies. Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these Condensed Consolidated Financial Statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction’s tax laws. We record our tax provision or benefit on an interim basis using the estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be realized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate. Valuation allowances are provided against the future tax benefits that arise from the losses in jurisdictions for which there is uncertainty that they may be realized. The effects of unusual and infrequent items are recognized in the impacted interim period as discrete items. The estimated annual effective tax rate may be significantly affected by nondeductible expenses and by our projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period during which such estimates are revised. We have established valuation allowances against a variety of deferred tax assets, including net operating loss carryforwards, foreign tax credits and other income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not to be recoverable. Our ability to realize these deferred tax assets is dependent on achieving our forecast of future taxable operating income over an extended period of time. We review our forecast in relation to actual results and expected trends on a quarterly basis. If we fail to achieve our operating income targets, we may change our assessment regarding the recoverability of our net deferred tax assets and such change could result in a valuation allowance being recorded against some or all of our net deferred tax assets. A change in our valuation allowance would impact our income tax benefit (expense) and our stockholders’ equity and could have a significant impact on our results of operations or financial condition in future periods. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Adopted in the Current Period We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers , updated by ASU No. 2015-14 Deferral of the Effective Date , which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. In August 2015, the effective date for the standard was deferred by one year and this standard became effective for us beginning January 1, 2018. Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time, when ownership and risk of loss transfers. These are largely un-impacted by the new standard. We completed our analysis during 2017 and there was no material change to our financial position, results of operations, and cash flows. We adopted ASU No. 2014-09 and its amendment on a modified retrospective basis effective January 1, 2018. Although there is no material impact, we have expanded disclosures in our notes to our condensed consolidated financial statements related to revenue recognition in accordance with the new standard. We have implemented changes to our accounting policies and practices, business processes, systems, and controls to support the new revenue recognition and disclosure requirements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. Our analysis of ASU 2016-15 was completed during 2017 and there is no material change to our financial position, results of operations, and cash flows. We adopted ASU 2016-15 effective January 1, 2018. In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost . The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted as of the beginning of a year for which financial statements (interim and annual) have not been issued. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component. Our service costs were $4.7 million and $4.8 million for the nine months ended September 30, 2018 and 2017 , respectively. We adopted ASU 2017-07 effective January 1, 2018 and net periodic benefit costs other than the service cost component have been included in Other expense on our Condensed Consolidated Statements of Operations for all reported periods. New Accounting Standards to be Adopted in Future Periods In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires that an entity must recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and early adoption is permitted. An entity may choose to use either its effective date or the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard using the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before the effective date. We are still analyzing the quantitative impact of adoption; therefore, the effects of this standard on our financial position, results of operations, and cash flows are not yet known. As we complete our overall assessment, we are identifying and preparing to implement changes to our accounting policies and practices, business processes, systems and controls to support the new standard and disclosure requirements. Our assessment will be completed during fiscal year 2018 and we expect to adopt ASU 2016-02 effective January 1, 2019. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This standard is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. Our evaluation of this standard is currently ongoing. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . This standard is effective for fiscal years beginning after December 15, 2018, and early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing and we expect to adopt ASU 2017-12 effective on January 1, 2019. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing and we expect to adopt ASU 2018-02 effective on January 1, 2019. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs at a point in time when the transfer of risk and title to the product transfers to the customer. Our standard terms of delivery are included in our contracts of sale, order confirmation documents, and invoices. As such, all revenue is considered revenue recognized from contracts with customers and we do not have other sources of revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized net of sales tax, value-added taxes, and other taxes. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Certain customers may receive cash-based incentives (including rebates, price supports, and sales commission), which are accounted for as variable consideration. We estimate rebates and price supports based on the expected amount to be provided to customers and reduce revenues recognized once the performance obligation has been met. Sales commissions are recorded as an increase in cost of goods sold once the performance obligation has been met. We do not expect to have significant changes in our estimates for variable considerations. We have deferred revenue of $14.4 million related to contractual commitments with customers for which the performance obligation will be satisfied over time, which will range from one to ten years. The revenue associated with these performance obligations is recognized as the obligation is satisfied, which occurs as a volume based metric over time when the transfer of risk and title of finished products transfer to the customer. Occasionally, we enter into bill-and-hold contracts, where we invoice the customer for products even though we retain possession of the products until a point in time in the future when the products will be shipped to the customer. In these contracts, the primary performance obligation is satisfied at a point in time when the product is segregated from our general inventory, it is ready for shipment to customer, and we do not have the ability to use the product or direct it to another customer. Additionally, we have a secondary performance obligation related to custodial costs, including storage and freight, which is satisfied over time once the product has been delivered to the customer. During the nine months ended September 30, 2018 , we recognized $4.5 million of revenue related to these arrangements. We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Performance Products $ 179,684 $ 175,968 $ 506,151 $ 508,820 Specialty Polymers 99,349 94,313 311,657 285,712 Cariflex 41,818 43,031 130,319 124,433 Other 114 847 59 1,260 Polymer Product Line Revenue $ 320,965 $ 314,159 $ 948,186 $ 920,225 Effective January 1, 2018, results for our Roads and Construction product line have been consolidated into our Adhesives and Performance Chemicals product lines to better align customer portfolio and end usage. We have adjusted the presentations for the three and nine months ended September 30, 2017 to conform to the respective 2018 presentations. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Adhesives $ 73,781 $ 75,018 $ 220,907 $ 226,008 Performance Chemicals 118,193 108,361 355,947 310,244 Tires 10,166 13,409 38,852 37,915 Chemical Product Line Revenue $ 202,140 $ 196,788 $ 615,706 $ 574,167 September 30, 2018 December 31, 2017 (In thousands) Contract receivables (1) $ 253,331 $ 196,951 Contract liabilities (2) $ 14,449 $ 16,257 ____________________________________________________ (1) Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets. (2) Our contract liability decreased by $1.3 million , as a result of meeting the performance obligation, which was recognized in our Specialty Polymers product line revenue, and decreased approximately $0.5 million due to the change in currency exchange rates. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation We account for share-based awards under the provisions of ASC 718, Compensation—Stock Compensation . Accordingly, share-based compensation cost is measured at the grant date based on the fair value of the award and we expense these costs using the straight-line method over the requisite service period. Share-based compensation expense was $2.5 million and $2.2 million for the three months ended September 30, 2018 and 2017 , respectively, and $7.6 million and $7.4 million for the nine months ended September 30, 2018 and 2017 , respectively. |
Detail of Certain Balance Sheet
Detail of Certain Balance Sheet Accounts | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Certain Balance Sheet Accounts | Detail of Certain Balance Sheet Accounts September 30, 2018 December 31, 2017 (In thousands) Inventories of products: Finished products $ 308,069 $ 270,562 Work in progress 6,025 6,925 Raw materials 98,440 100,594 Inventories of products, gross 412,534 378,081 Inventory reserves (8,396 ) (10,285 ) Total inventories of products, net $ 404,138 $ 367,796 Intangible assets: Contractual agreements $ 263,168 $ 264,581 Technology 145,907 146,449 Customer relationships 60,411 60,547 Tradenames/trademarks 80,520 80,138 Software 55,818 52,466 Intangible assets 605,824 604,181 Less accumulated amortization: Contractual agreements 60,621 44,435 Technology 59,796 53,086 Customer relationships 36,526 33,871 Tradenames/trademarks 41,049 35,770 Software 36,171 30,156 Total accumulated amortization 234,163 197,318 Intangible assets, net of accumulated amortization $ 371,661 $ 406,863 Other payables and accruals: Employee related $ 33,259 $ 41,250 Interest payable 13,318 23,615 Property, plant, and equipment accruals 10,436 10,404 Other 41,373 44,355 Total other payables and accruals $ 98,386 $ 119,624 Other long-term liabilities: Pension and other post-retirement benefits $ 128,055 $ 147,209 Other 47,322 45,058 Total other long-term liabilities $ 175,377 $ 192,267 Changes in accumulated other comprehensive income (loss) by component were as follows: Cumulative Foreign Currency Translation Gain (Loss) on Cash Flow Hedges Net Unrealized Gain (Loss) on Net Investment Hedges Benefit Plans Liability, Net of Tax Total (In thousands) December 31, 2016 $ (72,731 ) $ 515 $ (1,926 ) $ (84,388 ) $ (158,530 ) Other comprehensive income before reclassifications 60,691 (145 ) — — 60,546 Amounts reclassified from accumulated other comprehensive loss — 879 — — 879 Net other comprehensive income for the year 60,691 734 — — 61,425 September 30, 2017 $ (12,040 ) $ 1,249 $ (1,926 ) $ (84,388 ) $ (97,105 ) December 31, 2017 $ (9,654 ) $ 4,550 $ (1,926 ) $ (91,265 ) $ (98,295 ) Other comprehensive income (loss) before reclassifications (14,448 ) 4,501 4,366 9,969 4,388 Amounts reclassified from accumulated other comprehensive loss — (2,584 ) — — (2,584 ) Net other comprehensive income (loss) for the year (14,448 ) 1,917 4,366 9,969 1,804 September 30, 2018 $ (24,102 ) $ 6,467 $ 2,440 $ (81,296 ) $ (96,491 ) |
Earnings Per Share ("EPS")
Earnings Per Share ("EPS") | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share ("EPS") | Earnings Per Share (“EPS”) Basic EPS is computed by dividing net income attributable to Kraton by the weighted-average number of shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Kraton by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options, were exercised, settled or converted into common stock and were dilutive. The diluted weighted-average number of shares used in our diluted EPS calculation is determined using the treasury stock method. The calculations of basic and diluted EPS are as follows: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 42,349 31,896 $ (4,033 ) 31,223 Amounts allocated to unvested restricted shares (580 ) (437 ) 77 (598 ) Amounts available to common stockholders 41,769 31,459 $ 1.33 (3,956 ) 30,625 $ (0.13 ) Diluted: Amounts allocated to unvested restricted shares 580 437 (77 ) 598 Non participating share units — 137 — — Stock options added under the treasury stock method — 238 — — Amounts reallocated to unvested restricted shares (573 ) (437 ) 77 (598 ) Amounts available to stockholders and assumed conversions $ 41,776 31,834 $ 1.31 $ (3,956 ) 30,625 $ (0.13 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share (In thousands, except per share data) Basic: As reported $ 49,491 31,853 $ 27,941 31,151 Amounts allocated to unvested restricted shares (733 ) (472 ) (541 ) (603 ) Amounts available to common stockholders 48,758 31,381 $ 1.55 27,400 30,548 $ 0.90 Diluted: Amounts allocated to unvested restricted shares 733 472 541 603 Non participating share units — 180 — 175 Stock options added under the treasury stock method — 249 — 283 Amounts reallocated to unvested restricted shares (724 ) (472 ) (533 ) (603 ) Amounts available to stockholders and assumed conversions $ 48,767 31,810 $ 1.53 $ 27,408 31,006 $ 0.88 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following: September 30, 2018 December 31, 2017 Principal Discount Debt Issuance Costs Total Principal Discount Debt Issuance Costs Total (In thousands) USD Tranche $ 362,000 $ (7,660 ) $ (10,523 ) $ 343,817 $ 485,000 $ (13,373 ) $ (13,986 ) $ 457,641 Euro Tranche 347,790 — (4,955 ) 342,835 198,265 — (3,517 ) 194,748 10.5% Senior Notes — — — — 440,000 (13,267 ) (14,409 ) 412,324 7.0% Senior Notes 400,000 — (6,822 ) 393,178 400,000 — (7,424 ) 392,576 5.25% Senior Notes 336,197 — (5,660 ) 330,537 — — — — ABL Facility 35,000 — — 35,000 — — — — KFPC Loan Agreement 113,422 — (119 ) 113,303 149,919 — (196 ) 149,723 KFPC Revolving Facilities 18,040 — — 18,040 8,430 — — 8,430 Capital lease obligation 1,301 — — 1,301 2,086 — — 2,086 Total debt 1,613,750 (7,660 ) (28,079 ) 1,578,011 1,683,700 (26,640 ) (39,532 ) 1,617,528 Less current portion of total debt 50,689 — — 50,689 42,647 — — 42,647 Long-term debt $ 1,563,061 $ (7,660 ) $ (28,079 ) $ 1,527,322 $ 1,641,053 $ (26,640 ) $ (39,532 ) $ 1,574,881 Senior Secured Term Loan Facility. As of September 30, 2018 , we had outstanding borrowings under the U.S. dollar denominated tranche (the “USD Tranche”) of our senior secured term loan facility (the “Term Loan Facility”) of $362.0 million and outstanding borrowings under the Euro denominated tranche (the “Euro Tranche”) of the Term Loan Facility of €300.0 million , or approximately $347.8 million . On March 8, 2018 , we entered into a fifth amendment to the credit agreement governing the Term Loan Facility (the “Credit Agreement”) pursuant to which borrowings under the Euro Tranche were increased by €150.0 million , we reduced our USD Tranche interest rate applicable margin to 2.5% and alternative base rate applicable margin to 1.5% , we reduced our Euro Tranche interest rate applicable margin to 2.0% , and extended the maturity date of the Term Loan Facility by three years to March 8, 2025 . The proceeds from the additional borrowings under the Euro Tranche were used, together with available cash, to pay down $185.0 million of the then outstanding borrowings under the USD Tranche. On May 24, 2018, we entered into a sixth and seventh amendment to the Credit Agreement. The seventh amendment increased borrowings under the USD Tranche by $90.0 million , with the proceeds of such additional borrowing being used to fund a portion of the refinancing of the 10.5% Senior Notes discussed below. The sixth amendment provided for certain technical amendments to the Term Loan Facility to allow for greater flexibility in the repayment of unsecured indebtedness. For a summary of additional terms of the Term Loan Facility, see Note 8 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. As of the date of this filing, the effective interest rate for the USD Tranche is 4.2% and the effective interest rate for the Euro Tranche is 2.75% . The Term Loan Facility contains a number of customary affirmative and negative covenants and we were in compliance with those covenants as of the date of this filing. 10.5% Senior Notes due 2023. During the nine months ended September 30, 2018 , approximately $157.6 million of the 10.5% Senior Notes due 2023 (the “ 10.5% Senior Notes”) were repurchased in a cash tender offer for any and all of the outstanding $440.0 million aggregate principal amount of 10.5% Senior Notes. The 10.5% Senior Notes that remained outstanding following the tender offer were redeemed on June 13, 2018. The consideration and redemption price plus, in each case, accrued and unpaid interest for the tender offer and redemption, respectively, and the fees and expenses of refinancing the 10.5% Senior Notes were paid with the net proceeds of the offering of the 5.25% Senior Notes (as defined below) and the additional $90.0 million borrowings under our USD Tranche, together with $60.0 million borrowings under the ABL Facility (as defined below), and cash on hand. 7.0% Senior Notes due 2025. Kraton Polymers LLC and its wholly-owned financing subsidiary Kraton Polymers Capital Corporation issued $400.0 million aggregate principal amount of 7.0% Senior Notes due 2025 (the “ 7.0% Senior Notes”) in March 2017, which mature on April 15, 2025. The 7.0% Senior Notes are general unsecured, senior obligations, and are unconditionally guaranteed on a senior unsecured basis by each of Kraton Corporation and certain of our wholly-owned domestic subsidiaries. We pay interest on the Senior Notes at 7.0% per annum, semi-annually in arrears on January 15 and July 15 of each year. 5.25% Senior Notes due 2026. Kraton Polymers LLC and its wholly-owned financing subsidiary Kraton Polymers Capital Corporation issued €290.0 million , or approximately $336.2 million as of September 30, 2018 , aggregate principal amount of 5.25% Senior Notes due 2026 (the “ 5.25% Senior Notes”) in May 2018, which mature on May 15, 2026. The 5.25% Senior Notes are general unsecured, senior obligations, and are unconditionally guaranteed on a senior unsecured basis by each of Kraton Corporation and certain of our wholly-owned domestic subsidiaries. We will pay interest on the Senior Notes at 5.25% per annum, semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2018. The net proceeds of the offering of the 5.25% Senior Notes were used to fund a portion of the refinancing of the 10.5% Senior Notes discussed above. ABL Facility. Our asset-based revolving credit facility provides financing of up to $250.0 million (the “ABL Facility”). The ABL Facility also provides that we have the right at any time to request up to $100.0 million of additional commitments, provided that we satisfy certain additional conditions. During the nine months ended September 30, 2018 , we borrowed $60.0 million to fund a portion of the refinancing of the 10.5% Senior Notes discussed above. Our outstanding borrowings under the ABL facility were $35.0 million as of September 30, 2018 . Borrowing availability under the ABL Facility is subject to borrowing base limitations based on the level of receivables and inventory available for security. Revolver commitments under the ABL Facility consist of U.S. and Dutch revolving credit facility commitments, and the terms of the ABL Facility require the U.S. revolver commitment comprises at least 60.0% of the commitments under the ABL Facility. The ABL Facility contains a number of customary affirmative and negative covenants and we were in compliance with those covenants as of the date of this filing. For a summary of additional terms of the ABL Facility, see Note 8 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. KFPC Loan Agreement. As of September 30, 2018 , NTD 3.5 billion , or approximately $113.4 million , was drawn on KFPC's syndicated loan agreement (the “KFPC Loan Agreement”). For the three and nine months ended September 30, 2018 , our effective interest rate for borrowings on the KFPC Loan Agreement was 1.8% . The KFPC Loan Agreement contains certain financial covenants that change during the term of the KFPC Loan Agreement, and KFPC was in compliance with those covenants as of the date of this filing. For a summary of additional terms of the KFPC Loan Agreement, see Note 8 Long-Term Debt to the consolidated financial statements set forth in our most recently filed Annual Report on Form 10-K. KFPC Revolving Facilities. KFPC also has five revolving credit facilities (the “KFPC Revolving Facilities”) to provide funding for working capital requirements and/or general corporate purposes, which allow for total borrowings of up to NTD 2.2 billion , or approximately $70.5 million . All of the KFPC Revolving Facilities are subject to variable interest rates. As of September 30, 2018 , NTD 550.0 million , or approximately $18.0 million , was drawn on the KFPC Revolving Facilities. Debt Issuance Costs. We had net debt issuance cost of $30.7 million as of September 30, 2018 , of which $2.6 million related to the ABL Facility is recorded as an asset (of which $1.2 million was included in other current assets) and $28.1 million is recorded as a reduction to long-term debt. We amortized $1.2 million and $1.9 million for the three months ended September 30, 2018 and 2017 , respectively, and $4.6 million and $6.3 million during the nine months ended September 30, 2018 and 2017 , respectively. We capitalized $11.1 million of debt issuance costs for the nine months ended September 30, 2018 , of which $2.2 million , $3.1 million , and $5.9 million related to the Euro Tranche, USD Tranche, and 5.25% Senior Notes, respectively. We recorded a $79.9 million loss on extinguishment of debt during the nine months ended September 30, 2018 , which includes a write off of $18.7 million related to previously capitalized deferred financing costs, a write off of $17.4 million related to original issue discount on our Term Loan Facility, and a $46.4 million related to the cash tender offer and subsequent redemption of the outstanding 10.5% Senior Notes, all of which was partially offset by a $2.6 million gain on the settlement of the ineffective portion of interest rate swaps. Debt Maturities . The remaining principal payments on our outstanding total debt as of September 30, 2018 , are as follows: Principal Payments (In thousands) October 1, 2018 through September 30, 2019 $ 50,689 October 1, 2019 through September 30, 2020 81,193 October 1, 2020 through September 30, 2021 188 October 1, 2021 through September 30, 2022 35,199 October 1, 2022 through September 30, 2023 211 Thereafter 1,446,270 Total debt $ 1,613,750 See Note 8 Fair Value Measurements, Financial Instruments, and Credit Risk for fair value information related to our long-term debt. |
Fair Value Measurements, Financ
Fair Value Measurements, Financial Instruments, and Credit Risk | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value Measurements, Financial Instruments and Credit Risk | Fair Value Measurements, Financial Instruments, and Credit Risk ASC 820, Fair Value Measurements and Disclosures defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. ASC 820 requires entities to, among other things, maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. In accordance with ASC 820, these two types of inputs have created the following fair value hierarchy: • Level 1—Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in markets that are not active; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means; and • Level 3—Inputs that are unobservable and reflect our assumptions used in pricing the asset or liability based on the best information available under the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). Recurring Fair Value Measurements . The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 . These financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which judgment may affect the valuation of their fair value and placement within the fair value hierarchy levels. Fair Value Measurements at Reporting Date Using Balance Sheet Location September 30, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Derivative asset – current Other current assets $ 2,384 $ — $ 2,384 $ — Derivative asset – noncurrent Other long-term assets 5,562 — 5,562 — Retirement plan asset – noncurrent Other long-term asset 2,615 2,615 — — Derivative liability – current Other payables and accruals 638 — 638 — Total $ 11,199 $ 2,615 $ 8,584 $ — Fair Value Measurements at Reporting Date Using Balance Sheet Location December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Derivative asset – current Other current assets $ 1,629 $ — $ 1,629 $ — Derivative asset – noncurrent Other long-term assets 3,801 — 3,801 — Retirement plan asset – noncurrent Other long-term assets 2,435 2,435 — — Derivative liability – current Other payables and accruals 399 — 399 — Total $ 8,264 $ 2,435 $ 5,829 $ — The following table presents the carrying values and approximate fair values of our long-term debt. September 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value (In thousands) USD Tranche (significant other observable inputs – level 2) $ 362,000 $ 364,263 $ 485,000 $ 490,762 Euro Tranche (significant other observable inputs – level 2) $ 347,790 $ 349,529 $ 198,265 $ 200,495 10.5% Senior Notes (quoted prices in active market for identical assets – level 1) $ — $ — $ 440,000 $ 499,171 7.0% Senior Notes (quoted prices in active market for identical assets – level 1) $ 400,000 $ 414,320 $ 400,000 $ 432,028 5.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 336,197 $ 345,207 $ — $ — ABL Facility (significant other observable inputs – level 2) $ 35,000 $ 35,000 $ — $ — Capital lease obligation (significant other observable inputs – level 2) $ 1,301 $ 1,301 $ 2,086 $ 2,086 KFPC Loan Agreement (significant unobservable inputs – level 3) $ 113,422 $ 113,422 $ 149,919 $ 149,919 KFPC Revolving Facilities (significant unobservable inputs – level 3) $ 18,040 $ 18,040 $ 8,430 $ 8,430 The ABL Facility, Capital lease obligation, KFPC Loan Agreement, and KFPC Revolving Facilities are variable rate instruments, and as such, the fair value approximates the carrying value. Financial Instruments Interest Rate Swap Agreements. Periodically, we enter into interest rate swap agreements to hedge or otherwise protect against interest rate fluctuation on a portion of our variable rate debt. These interest rate swap agreements are designated as cash flow hedges on our exposure to the variability of future cash flows. In an effort to convert a substantial portion of our future interest payments pursuant to the USD Tranche to a fixed interest rate, in February and March 2016 we entered into several interest rate swap agreements with an aggregate notional value of $925.4 million , effective dates of January 3, 2017 and maturity dates of December 31, 2020. In May 2018 we entered into an interest rate swap agreement with a notional value of $90.0 million , effective date of June 4, 2018 and maturity date of December 31, 2018. We exited out of $653.4 million of our interest rate swaps as of September 30, 2018 . As a result, at September 30, 2018 the total notional value of our interest rate swaps was $362.0 million , which effectively hedges the outstanding USD Tranche, fixing LIBOR at 1.712% . We recorded an unrealized gain of $0.5 million and an unrealized gain of $1.1 million for the three months ended September 30, 2018 and 2017 , respectively, and an unrealized gain of $5.1 million and an unrealized gain of $1.1 million during the nine months ended September 30, 2018 and 2017 , respectively, in other comprehensive income related to the effective portion of these interest rate swap agreements. In addition, we reclassified out of other comprehensive income the settlement of a portion of our interest rate swap that amounted to $2.6 million gain for the nine months ended September 30, 2018 . Foreign Currency Hedges. Periodically, we enter into foreign currency agreements to hedge or otherwise protect against fluctuations in foreign currency exchange rates. These agreements do not qualify for hedge accounting and gains/losses resulting from both the up-front premiums and/or settlement of the hedges at expiration of the agreements are recognized in the period in which they are incurred. We settled these hedges and recorded a loss of $0.2 million and $2.2 million for the three months ended September 30, 2018 and 2017 , respectively, and a loss of $0.5 million and $0.9 million for the nine months ended September 30, 2018 and 2017 , respectively, which are recorded in cost of goods sold in the Condensed Consolidated Statements of Operations. These contracts are structured such that these gains/losses from the mark-to-market impact of the hedging instruments materially offset the underlying foreign currency exchange gains/losses to reduce the overall impact of foreign currency exchange movements throughout the period. Net Investment Hedge. During the nine months ended September 30, 2018 , we designated €290 million of euro-denominated borrowing as a hedge against a portion of our net investment in the Company's European operations. The mark to market of this instrument was a gain of $2.3 million and $5.7 million for the three and nine months ended September 30, 2018 , respectively, which is recorded within accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. Credit Risk The use of derivatives creates exposure to credit risk in the event that the counterparties to these instruments fail to perform their obligations under the contracts, which we seek to minimize by limiting our counterparties to major financial institutions with acceptable credit ratings and by monitoring the total value of positions with individual counterparties. We analyze our counterparties’ financial condition prior to extending credit, and we establish credit limits and monitor the appropriateness of those limits on an ongoing basis. We also obtain cash, letters of credit, or other acceptable forms of security from customers to provide credit support, where appropriate, based on our financial analysis of the customer and the contractual terms and conditions applicable to each transaction. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provision was an expense of $8.3 million and a benefit of $2.2 million for the three months ended September 30, 2018 and 2017 , respectively, and an expense of $8.7 million and $2.9 million for the nine months ended September 30, 2018 and 2017 , respectively. Our effective tax rate was 16.1% and 30.9% for the three months ended September 30, 2018 and 2017 , respectively, and 14.6% and 11.3% for the nine months ended September 30, 2018 and 2017 , respectively. During the nine months ended September 30, 2018 , our effective tax rate differed from the U.S. corporate statutory tax rate of 21.0% primarily due to the mix of our pretax income or loss generated in various foreign jurisdictions, the tax impact of certain permanent items, and our uncertain tax positions. During the three and nine months ended September 30, 2017 , our pretax earnings in the Netherlands, Sweden, and Finland impacted our effective tax rate due to the statutory rates in those jurisdictions of 25.0% , 22.0% , and 20.0% , respectively. The provision for income taxes differs from the amount computed by applying the U.S. corporate statutory income tax rate to income (loss) before income taxes for the reasons set forth below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Income taxes at the statutory rate $ (10,838 ) $ 2,455 $ (12,595 ) $ (8,985 ) State taxes, net of federal benefit (884 ) 25 (1,031 ) 117 Foreign tax rate differential 5,228 (3,403 ) 9,428 2,263 Permanent differences (1,581 ) 1,464 (1,440 ) 3,190 Uncertain tax positions (543 ) 1,821 (1,596 ) 666 Valuation allowance 329 13 (114 ) 330 Return to provision adjustments (45 ) (512 ) (1,395 ) (509 ) Other — 302 — 21 Income tax benefit (expense) $ (8,334 ) $ 2,165 $ (8,743 ) $ (2,907 ) Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We consider all available material evidence, both positive and negative, in assessing the appropriateness of a valuation allowance for our deferred tax assets. In determining whether a valuation allowance is required during the period, we evaluate primarily (a) cumulative earnings and losses in recent years, (b) historical taxable income or losses as it relates to our ability to utilize operating loss and tax credit carryforwards within the expiration period, (c) trends indicating earnings or losses expected in future years along with our ability in prior years to reasonably project these future trends or operating results, (d) length of the carryback and carryforward period, and (e) prudent and feasible tax-planning strategies, particularly related to operational changes and the impact on the timing or taxability of relative amounts. As of September 30, 2018 and December 31, 2017 , we recorded a valuation allowance of $51.4 million and $51.3 million , respectively, against our net operating loss carryforwards and other deferred tax assets. We decreased our valuation allowances by $0.3 million for the three months ended September 30, 2018 and increased by $0.1 million for the nine months ended September 30, 2018 , primarily related to current period net operating losses in the U.S. We did not have a material change in our valuation allowances for the three months ended September 30, 2017 . We decreased our valuation allowances by $0.3 million for the nine months ended September 30, 2017 , which represents utilization of net operating losses. On December 22, 2017, the U.S. Tax Cuts and Jobs Act (“Tax Act”) introduced significant changes to U.S. income tax law, which included a reduction to the U.S. statutory tax rate from 35.0% to 21.0% and a limitation on net operating loss carryforwards generated in 2018 and beyond. Additionally, the Tax Act extends bonus depreciation provisions and limits the amount of interest expense deductible in future years. In 2017, we were subject to a one-time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The Staff of the SEC issued Staff Accounting Bulletin No. 118, which provides registrants a measurement period to report the impact of the new U.S. tax law. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we have made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of December 31, 2017. As we collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018. Certain items or estimates that result in impacts of the Tax Act being provisional include: the deemed repatriation tax on post-1986 accumulated earnings and profits, the deferred tax rate change effect of the new law, certain deferred taxes related to employee compensation, valuation allowances on certain deferred taxes, deferred taxes related to outside basis differences in certain foreign investments, detailed foreign earnings calculation for the most recent period, project foreign cash balances for certain foreign subsidiaries, and finalized computations of foreign tax credit availability. In addition, our 2017 U.S. income tax returns will be finalized in the fourth quarter of 2018, and while historically this process has resulted in offsetting changes in estimates in current and deferred taxes for items which are timing related, the reduction of the U.S. tax rate will result in an adjustment to our income tax provision or benefit when recorded. Finally, we consider it likely that further technical guidance regarding the new Tax Act provisions, as well as clarity regarding state income tax conformity to current federal tax code, may be issued. In accordance with the Tax Act, our previously untaxed accumulated foreign earnings are subjected to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8.0% on the remaining earnings. We recorded a provisional amount for our one-time transitional tax liability and income tax expense of $46.3 million during the year ended December 31, 2017. We have recorded provisional amounts based on estimates of the effects of the Tax Act as the analysis requires significant data from our foreign subsidiaries that is not regularly collected or analyzed. The estimated impact of the Tax Act to our deferred taxes was a benefit of $95.0 million , of which $68.9 million relates to the reduction of the U.S. statutory tax rate from 35.0% to 21.0% for years after 2017 and the remaining relates to changes in our investments in foreign subsidiaries. We remeasured our deferred taxes as of December 31, 2017 to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized. Although the tax rate reduction is known, we have not collected the necessary data to complete our analysis of the effect of the Tax Act on the underlying deferred taxes and as such, the amounts recorded as of December 31, 2017 are provisional. As we complete our analysis of the Tax Act and incorporate additional guidance that may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, we may identify additional effects not reflected as of December 31, 2017. For the period ending December 31, 2017, a portion of the unremitted foreign earnings are permanently reinvested in the corresponding country of origin. Accordingly, we have not provided deferred taxes for the differences between the book basis and underlying tax basis in those subsidiaries or on the foreign currency translation adjustment amounts related to such operations. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. For our U.S. federal income tax returns, the statute of limitations has expired through the tax year ended December 31, 2003. As a result of net operating loss carryforwards from 2004, the statute remains open for all years subsequent to 2003. In addition, open tax years for state and foreign jurisdictions remain subject to examination. We recognize the tax impact of certain tax positions only when it is more likely than not those such positions are sustainable. The taxes are recorded in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes , which prescribes the minimum recognition threshold. As of September 30, 2018 and December 31, 2017 , we had total unrecognized tax benefits of $25.8 million and $24.4 million , respectively, related to uncertain tax positions, all of which, if recognized, would impact our effective tax rate. During the three and nine months ended September 30, 2018 , we had an increase of $0.5 million and $1.4 million , respectively, primarily related to our uncertain tax positions in the U.S. and Europe. During the three and nine months ended September 30, 2017 , we had a decrease of $1.5 million and $0.1 million , respectively, primarily related to our uncertain tax positions in the U.S. and Europe. We recorded interest and penalties related to unrecognized tax benefits within the provision for income taxes. As a result of the expiration of statute of limitations in various jurisdictions, we expect to release a $0.9 million reserve for the year ending December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Legal Proceedings We received an initial notice from the tax authorities in Brazil during the fourth quarter of 2012 in connection with tax credits that were generated from the purchase of certain goods which were subsequently applied by us against taxes owed. We received an additional tax assessment of R $1.6 million , or approximately $0.4 million during the nine months ended September 30, 2018 . The tax authorities are currently assessing R $9.2 million , or approximately $2.3 million . We have appealed the assertion by the tax authorities in Brazil that the goods purchased were not eligible to earn the credits. While the outcome of this proceeding cannot be predicted with certainty, we do not expect this matter to have a material adverse effect upon our financial position, results of operations or cash flows. We and certain of our subsidiaries, from time to time, are parties to various other legal proceedings, claims and disputes that have arisen in the ordinary course of business. These claims may involve significant amounts, some of which would not be covered by insurance. A substantial settlement payment or judgment in excess of our accruals could have a material adverse effect on our financial position, results of operations or cash flows. While the outcome of these proceedings cannot be predicted with certainty, we do not expect any of these existing matters, individually or in the aggregate, to have a material adverse effect upon our financial position, results of operations or cash flows. (b) Asset Retirement Obligations. The changes in the aggregate carrying amount of our asset retirement obligations are as follows: Nine Months Ended September 30, 2018 2017 (In thousands) Beginning balance $ 5,712 $ 8,863 Additional accruals — 439 Accretion expense 253 241 Obligations settled (66 ) (3,065 ) Foreign currency translation (186 ) 484 Ending balance $ 5,713 $ 6,962 Pursuant to the indemnity included in the February 2001 separation agreement from Shell Chemical, we recorded a receivable of $0.2 million and $1.4 million as of September 30, 2018 and 2017 , respectively. There have been no material changes to our Commitments and Contingencies disclosed in our most recently filed Annual Report on Form 10-K. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits The components of net periodic benefit costs related to pension benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans (In thousands) Service cost $ 626 $ 617 $ 799 $ 695 $ 2,419 $ 1,900 $ 2,399 $ 1,998 Interest cost 1,810 506 1,832 718 5,400 1,574 5,494 2,093 Expected return on plan assets (2,453 ) (655 ) (2,351 ) (811 ) (7,358 ) (2,039 ) (7,052 ) (2,371 ) Amortization of prior service cost — 3 905 55 — 10 2,715 160 Amortization of net actuarial loss 1,032 158 — — 3,484 489 — — Net periodic benefit cost $ 1,015 $ 629 $ 1,185 $ 657 $ 3,945 $ 1,934 $ 3,556 $ 1,880 The components of net periodic benefit costs other than the service cost component are included in Other expense on our Condensed Consolidated Statements of Operations. We made contributions of $10.7 million and $10.1 million to our pension plans in the nine months ended September 30, 2018 and 2017 , respectively. The components of net periodic benefit cost related to other post-retirement benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 U.S Plans U.S Plans U.S Plans U.S Plans (In thousands) Service cost $ 123 $ 130 $ 402 $ 420 Interest cost 306 348 985 1,028 Amortization of prior service cost (146 ) — (146 ) — Amortization of net actuarial loss 179 150 561 450 Net periodic benefit cost $ 462 $ 628 $ 1,802 $ 1,898 During the three months ended September 30, 2018 , we amended the post-retirement benefits plan for post- 65 retirees to provide an annual subsidy based on years of service. The annual subsidy replaces a company-sponsored medical plan. This plan modification resulted in a $13.1 million reduction in pension and other post-retirement liabilities during the three months ended September 30, 2018 . The components of net periodic benefit costs other than the service cost component are included in Other expense on our Condensed Consolidated Statements of Operations. |
Industry Segments and Foreign O
Industry Segments and Foreign Operations | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Industry Segment and Foreign Operations | Industry Segments and Foreign Operations Our operations are managed through two operating segments: (i) Polymer segment; and (ii) Chemical segment. In accordance with the provisions of ASC 280, Segment Reporting , our chief operating decision maker has been identified as our President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. • Polymer Segment is comprised of our SBCs and other engineered polymers business. • Chemical Segment is comprised of our pine-based specialty products business. Our chief operating decision maker uses operating income (loss) as the primary measure of each segment's operating results in order to allocate resources and in assessing the company's performance. In accordance with ASC 280, Segment Reporting , we have presented operating income for each segment. The following table summarizes our operating results by segment. We do not have sales between segments. Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 320,965 $ 202,140 $ 523,105 $ 314,159 $ 196,788 $ 510,947 Cost of goods sold 230,763 138,084 368,847 246,851 134,802 381,653 Gross profit 90,202 64,056 154,258 67,308 61,986 129,294 Operating expenses: Research and development 7,422 3,175 10,597 7,234 2,978 10,212 Selling, general, and administrative 20,327 15,823 36,150 24,001 18,420 42,421 Depreciation and amortization 17,554 17,563 35,117 17,342 16,965 34,307 Operating income $ 44,899 $ 27,495 72,394 $ 18,731 $ 23,623 42,354 Other expense (740 ) (846 ) Loss on extinguishment of debt — (15,632 ) Earnings of unconsolidated joint venture 100 125 Interest expense, net (20,143 ) (33,017 ) Income (loss) before income taxes $ 51,611 $ (7,016 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 948,186 $ 615,706 $ 1,563,892 $ 920,225 $ 574,167 $ 1,494,392 Cost of goods sold 666,779 425,428 1,092,207 677,418 395,918 1,073,336 Gross profit 281,407 190,278 471,685 242,807 178,249 421,056 Operating expenses: Research and development 22,255 9,613 31,868 21,357 8,739 30,096 Selling, general, and administrative 68,308 48,540 116,848 72,672 51,295 123,967 Depreciation and amortization 52,914 52,719 105,633 50,439 51,601 102,040 Operating income $ 137,930 $ 79,406 217,336 $ 98,339 $ 66,614 164,953 Other expense (2,960 ) (2,517 ) Loss on extinguishment of debt (79,921 ) (35,370 ) Earnings of unconsolidated joint venture 357 370 Interest expense, net (74,835 ) (101,766 ) Income before income taxes $ 59,977 $ 25,670 The following table presents long-lived assets including goodwill and total assets. September 30, 2018 December 31, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Property, plant, and equipment, net $ 538,604 $ 393,025 $ 931,629 $ 561,109 $ 397,614 $ 958,723 Investment in unconsolidated joint venture $ 12,082 $ — $ 12,082 $ 12,380 $ — $ 12,380 Goodwill $ — $ 773,373 $ 773,373 $ — $ 774,319 $ 774,319 Total assets $ 1,160,181 $ 1,752,863 $ 2,913,044 $ 1,125,626 $ 1,806,901 $ 2,932,527 For geographic reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. Long-lived assets consist primarily of property, plant, and equipment, which are attributed to the geographic location in which they are located and are presented at historical cost. Following is a summary of revenue by geographic region: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 111,996 $ 87,256 $ 199,252 $ 99,187 $ 82,695 $ 181,882 Germany 41,219 13,496 54,715 37,723 15,428 53,151 All other countries 167,750 101,388 269,138 177,249 98,665 275,914 $ 320,965 $ 202,140 $ 523,105 $ 314,159 $ 196,788 $ 510,947 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 325,985 $ 249,811 $ 575,796 $ 290,570 $ 240,606 $ 531,176 Germany 112,726 42,582 155,308 109,757 46,337 156,094 All other countries 509,475 323,313 832,788 519,898 287,224 807,122 $ 948,186 $ 615,706 $ 1,563,892 $ 920,225 $ 574,167 $ 1,494,392 Our capital expenditures for the Polymer segment, excluding capital expenditures by the KFPC joint venture, were $31.8 million and $37.4 million during the nine months ended September 30, 2018 and 2017 , respectively, and capital expenditures for our Chemical segment were $34.2 million and $34.2 million during the nine months ended September 30, 2018 and 2017 , respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We own a 50% equity investment in an SBC manufacturing joint venture in Kashima, Japan. Our outstanding payables were $18.1 million and $17.7 million as of September 30, 2018 and December 31, 2017 , respectively, which were recorded in “Due to related party” liability on the Condensed Consolidated Balance Sheets. Our total purchases from the joint venture were $11.3 million and $8.4 million for the three months ended September 30, 2018 and 2017 , respectively, and $27.6 million and $28.9 million for the nine months ended September 30, 2018 and 2017 , respectively. We own a 50% variable interest in KFPC, an HSBC manufacturing joint venture in Mailiao, Taiwan. The KFPC joint venture is fully consolidated in our financial statements, and our joint venture partner, Formosa Petrochemical Corporation (“FPCC”), is a related party affiliate. Under the terms of the joint venture agreement, FPCC is to provide certain site services and raw materials to KFPC. Additionally, we purchase certain raw materials from FPCC for our other manufacturing locations. Our outstanding payables were $0.6 million and $1.5 million as of September 30, 2018 and December 31, 2017 , respectively, which were recorded in “Due to related party” liability on the Condensed Consolidated Balance Sheets. Our total purchases from this joint venture were $12.9 million and $4.8 million for the three months ended September 30, 2018 and 2017 , respectively, and $35.0 million and $8.9 million for the nine months ended September 30, 2018 and 2017 , respectively. See Note 14 Variable Interest Entity, for further discussion related to the KFPC joint venture. |
Variable Interest Entity
Variable Interest Entity | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Variable Interest Entity | Variable Interest Entity 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 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 September 30, 2018 and December 31, 2017 for KFPC before intercompany eliminations. September 30, 2018 December 31, 2017 (In thousands) Cash and cash equivalents $ 5,718 $ 13,848 Other current assets 19,413 21,399 Property, plant, and equipment, net 163,082 173,363 Intangible assets 8,827 9,585 Other long-term assets 11,284 13,972 Total assets $ 208,324 $ 232,167 Current portion of long-term debt $ 50,446 $ 41,745 Current liabilities 15,087 13,938 Long-term debt 80,897 116,408 Total liabilities $ 146,430 $ 172,091 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Our Panama City, Florida, facility was damaged by Hurricane Michael. We are currently in the process of assessing the full extent of this damage, and at this time we do not know when the Panama City site will resume full operations. We are actively working to minimize the impact on our customers, including evaluating our ability to satisfy the needs of our customers through inventories on hand, and where possible, production from our other plant sites. At this time we are unable to estimate the financial effect of the event. We have evaluated events and transactions that occurred after the balance sheet date and determined that there were no significant events or transactions, other than described above, that would require recognition or disclosure in our condensed consolidated financial statements for the period ended September 30, 2018 . |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements presented in this report are for us and our consolidated subsidiaries, each of which is a wholly-owned subsidiary, except our 50% investment in our joint venture, Kraton Formosa Polymers Corporation (“KFPC”), located in Mailiao, Taiwan. KFPC is a variable interest entity for which we have determined that we are the primary beneficiary and, therefore, have consolidated into our financial statements. Our 50% investment in our joint venture located in Kashima, Japan, is accounted for under the equity method of accounting. All significant intercompany transactions have been eliminated. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly our results of operations and financial position. Amounts reported in our Condensed Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective annual periods or any other interim period, in particular due to the effect of seasonal changes and weather conditions that typically affect our sales into paving, roadmarking, roofing, and construction applications. In particular, sales volumes into these applications are generally higher in the second and third quarter of the calendar year as warm and dry weather is more conducive to paving and roofing activity. |
Reclassifications | Reclassifications. Certain amounts reported in the condensed consolidated financial statements and notes to the consolidated financial statements for the prior periods have been reclassified to conform to the current reporting presentation. |
Revenue Recognition | Revenue Recognition. The Company adopted Topic 606 Revenue from Contracts with Customers with a date of initial adoption of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition and applied Topic 606 using the modified retrospective basis. Typically, this approach would result in recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. The Company did not have a material change in financial position, results of operations, or cash flows and therefore there is no cumulative impact recorded to opening equity. |
Use of Estimates | Use of Estimates. The preparation of these Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include: • the useful lives of long-lived assets; • estimates of fair value for assets acquired and liabilities assumed in business combinations; • allowances for doubtful accounts and sales returns; • the valuation of derivatives, deferred tax assets, property, plant and equipment, intangible assets, inventory, investments, and share-based compensation; and • liabilities for employee benefit obligations, environmental matters, asset retirement obligations, income tax uncertainties, and other contingencies. |
Income Tax in Interim Periods | Income Tax in Interim Periods. We conduct operations in separate legal entities in different jurisdictions. As a result, income tax amounts are reflected in these Condensed Consolidated Financial Statements for each of those jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction’s tax laws. We record our tax provision or benefit on an interim basis using the estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be realized and the income tax effects of unusual and infrequent items are excluded from the estimated annual effective tax rate. Valuation allowances are provided against the future tax benefits that arise from the losses in jurisdictions for which there is uncertainty that they may be realized. The effects of unusual and infrequent items are recognized in the impacted interim period as discrete items. The estimated annual effective tax rate may be significantly affected by nondeductible expenses and by our projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period during which such estimates are revised. We have established valuation allowances against a variety of deferred tax assets, including net operating loss carryforwards, foreign tax credits and other income tax credits. Valuation allowances take into consideration our expected ability to realize these deferred tax assets and reduce the value of such assets to the amount that is deemed more likely than not to be recoverable. Our ability to realize these deferred tax assets is dependent on achieving our forecast of future taxable operating income over an extended period of time. We review our forecast in relation to actual results and expected trends on a quarterly basis. If we fail to achieve our operating income targets, we may change our assessment regarding the recoverability of our net deferred tax assets and such change could result in a valuation allowance being recorded against some or all of our net deferred tax assets. A change in our valuation allowance would impact our income tax benefit (expense) and our stockholders’ equity and could have a significant impact on our results of operations or financial condition in future periods. |
New Accounting Pronouncements | Accounting Standards Adopted in the Current Period We have implemented all new accounting pronouncements that are in effect and that management believes would materially affect our financial statements. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers , updated by ASU No. 2015-14 Deferral of the Effective Date , which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. In August 2015, the effective date for the standard was deferred by one year and this standard became effective for us beginning January 1, 2018. Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time, when ownership and risk of loss transfers. These are largely un-impacted by the new standard. We completed our analysis during 2017 and there was no material change to our financial position, results of operations, and cash flows. We adopted ASU No. 2014-09 and its amendment on a modified retrospective basis effective January 1, 2018. Although there is no material impact, we have expanded disclosures in our notes to our condensed consolidated financial statements related to revenue recognition in accordance with the new standard. We have implemented changes to our accounting policies and practices, business processes, systems, and controls to support the new revenue recognition and disclosure requirements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . The ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. Our analysis of ASU 2016-15 was completed during 2017 and there is no material change to our financial position, results of operations, and cash flows. We adopted ASU 2016-15 effective January 1, 2018. In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost . The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted as of the beginning of a year for which financial statements (interim and annual) have not been issued. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component. Our service costs were $4.7 million and $4.8 million for the nine months ended September 30, 2018 and 2017 , respectively. We adopted ASU 2017-07 effective January 1, 2018 and net periodic benefit costs other than the service cost component have been included in Other expense on our Condensed Consolidated Statements of Operations for all reported periods. New Accounting Standards to be Adopted in Future Periods In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires that an entity must recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and early adoption is permitted. An entity may choose to use either its effective date or the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We expect to adopt the new standard using the effective date as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before the effective date. We are still analyzing the quantitative impact of adoption; therefore, the effects of this standard on our financial position, results of operations, and cash flows are not yet known. As we complete our overall assessment, we are identifying and preparing to implement changes to our accounting policies and practices, business processes, systems and controls to support the new standard and disclosure requirements. Our assessment will be completed during fiscal year 2018 and we expect to adopt ASU 2016-02 effective January 1, 2019. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This standard is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. Our evaluation of this standard is currently ongoing. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . This standard is effective for fiscal years beginning after December 15, 2018, and early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing and we expect to adopt ASU 2017-12 effective on January 1, 2019. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for any interim period after issuance of the ASU. Our evaluation of this standard is currently ongoing and we expect to adopt ASU 2018-02 effective on January 1, 2019. |
Revenue from Contract with Customers | Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs at a point in time when the transfer of risk and title to the product transfers to the customer. Our standard terms of delivery are included in our contracts of sale, order confirmation documents, and invoices. As such, all revenue is considered revenue recognized from contracts with customers and we do not have other sources of revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized net of sales tax, value-added taxes, and other taxes. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Certain customers may receive cash-based incentives (including rebates, price supports, and sales commission), which are accounted for as variable consideration. We estimate rebates and price supports based on the expected amount to be provided to customers and reduce revenues recognized once the performance obligation has been met. Sales commissions are recorded as an increase in cost of goods sold once the performance obligation has been met. We do not expect to have significant changes in our estimates for variable considerations. We have deferred revenue of $14.4 million related to contractual commitments with customers for which the performance obligation will be satisfied over time, which will range from one to ten years. The revenue associated with these performance obligations is recognized as the obligation is satisfied, which occurs as a volume based metric over time when the transfer of risk and title of finished products transfer to the customer. Occasionally, we enter into bill-and-hold contracts, where we invoice the customer for products even though we retain possession of the products until a point in time in the future when the products will be shipped to the customer. In these contracts, the primary performance obligation is satisfied at a point in time when the product is segregated from our general inventory, it is ready for shipment to customer, and we do not have the ability to use the product or direct it to another customer. Additionally, we have a secondary performance obligation related to custodial costs, including storage and freight, which is satisfied over time once the product has been delivered to the customer. During the nine months ended September 30, 2018 , we recognized $4.5 million of revenue related to these arrangements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Performance Products $ 179,684 $ 175,968 $ 506,151 $ 508,820 Specialty Polymers 99,349 94,313 311,657 285,712 Cariflex 41,818 43,031 130,319 124,433 Other 114 847 59 1,260 Polymer Product Line Revenue $ 320,965 $ 314,159 $ 948,186 $ 920,225 Effective January 1, 2018, results for our Roads and Construction product line have been consolidated into our Adhesives and Performance Chemicals product lines to better align customer portfolio and end usage. We have adjusted the presentations for the three and nine months ended September 30, 2017 to conform to the respective 2018 presentations. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Adhesives $ 73,781 $ 75,018 $ 220,907 $ 226,008 Performance Chemicals 118,193 108,361 355,947 310,244 Tires 10,166 13,409 38,852 37,915 Chemical Product Line Revenue $ 202,140 $ 196,788 $ 615,706 $ 574,167 |
Schedule of Contract with Customer, Asset and Liability | September 30, 2018 December 31, 2017 (In thousands) Contract receivables (1) $ 253,331 $ 196,951 Contract liabilities (2) $ 14,449 $ 16,257 ____________________________________________________ (1) Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets. (2) Our contract liability decreased by $1.3 million , as a result of meeting the performance obligation, which was recognized in our Specialty Polymers product line revenue, and decreased approximately $0.5 million due to the change in currency exchange rates. |
Detail of Certain Balance She_2
Detail of Certain Balance Sheet Accounts (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of certain balance sheet accounts | September 30, 2018 December 31, 2017 (In thousands) Inventories of products: Finished products $ 308,069 $ 270,562 Work in progress 6,025 6,925 Raw materials 98,440 100,594 Inventories of products, gross 412,534 378,081 Inventory reserves (8,396 ) (10,285 ) Total inventories of products, net $ 404,138 $ 367,796 Intangible assets: Contractual agreements $ 263,168 $ 264,581 Technology 145,907 146,449 Customer relationships 60,411 60,547 Tradenames/trademarks 80,520 80,138 Software 55,818 52,466 Intangible assets 605,824 604,181 Less accumulated amortization: Contractual agreements 60,621 44,435 Technology 59,796 53,086 Customer relationships 36,526 33,871 Tradenames/trademarks 41,049 35,770 Software 36,171 30,156 Total accumulated amortization 234,163 197,318 Intangible assets, net of accumulated amortization $ 371,661 $ 406,863 Other payables and accruals: Employee related $ 33,259 $ 41,250 Interest payable 13,318 23,615 Property, plant, and equipment accruals 10,436 10,404 Other 41,373 44,355 Total other payables and accruals $ 98,386 $ 119,624 Other long-term liabilities: Pension and other post-retirement benefits $ 128,055 $ 147,209 Other 47,322 45,058 Total other long-term liabilities $ 175,377 $ 192,267 |
Schedule of accumulated other comprehensive income (loss) | Changes in accumulated other comprehensive income (loss) by component were as follows: Cumulative Foreign Currency Translation Gain (Loss) on Cash Flow Hedges Net Unrealized Gain (Loss) on Net Investment Hedges Benefit Plans Liability, Net of Tax Total (In thousands) December 31, 2016 $ (72,731 ) $ 515 $ (1,926 ) $ (84,388 ) $ (158,530 ) Other comprehensive income before reclassifications 60,691 (145 ) — — 60,546 Amounts reclassified from accumulated other comprehensive loss — 879 — — 879 Net other comprehensive income for the year 60,691 734 — — 61,425 September 30, 2017 $ (12,040 ) $ 1,249 $ (1,926 ) $ (84,388 ) $ (97,105 ) December 31, 2017 $ (9,654 ) $ 4,550 $ (1,926 ) $ (91,265 ) $ (98,295 ) Other comprehensive income (loss) before reclassifications (14,448 ) 4,501 4,366 9,969 4,388 Amounts reclassified from accumulated other comprehensive loss — (2,584 ) — — (2,584 ) Net other comprehensive income (loss) for the year (14,448 ) 1,917 4,366 9,969 1,804 September 30, 2018 $ (24,102 ) $ 6,467 $ 2,440 $ (81,296 ) $ (96,491 ) |
Earnings Per Share ("EPS") (Tab
Earnings Per Share ("EPS") (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Calculations of basic and diluted earnings per share | The calculations of basic and diluted EPS are as follows: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Loss Attributable to Kraton Weighted Average Shares Outstanding Loss Per Share (In thousands, except per share data) Basic: As reported $ 42,349 31,896 $ (4,033 ) 31,223 Amounts allocated to unvested restricted shares (580 ) (437 ) 77 (598 ) Amounts available to common stockholders 41,769 31,459 $ 1.33 (3,956 ) 30,625 $ (0.13 ) Diluted: Amounts allocated to unvested restricted shares 580 437 (77 ) 598 Non participating share units — 137 — — Stock options added under the treasury stock method — 238 — — Amounts reallocated to unvested restricted shares (573 ) (437 ) 77 (598 ) Amounts available to stockholders and assumed conversions $ 41,776 31,834 $ 1.31 $ (3,956 ) 30,625 $ (0.13 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share Net Income Attributable to Kraton Weighted Average Shares Outstanding Earnings Per Share (In thousands, except per share data) Basic: As reported $ 49,491 31,853 $ 27,941 31,151 Amounts allocated to unvested restricted shares (733 ) (472 ) (541 ) (603 ) Amounts available to common stockholders 48,758 31,381 $ 1.55 27,400 30,548 $ 0.90 Diluted: Amounts allocated to unvested restricted shares 733 472 541 603 Non participating share units — 180 — 175 Stock options added under the treasury stock method — 249 — 283 Amounts reallocated to unvested restricted shares (724 ) (472 ) (533 ) (603 ) Amounts available to stockholders and assumed conversions $ 48,767 31,810 $ 1.53 $ 27,408 31,006 $ 0.88 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following: September 30, 2018 December 31, 2017 Principal Discount Debt Issuance Costs Total Principal Discount Debt Issuance Costs Total (In thousands) USD Tranche $ 362,000 $ (7,660 ) $ (10,523 ) $ 343,817 $ 485,000 $ (13,373 ) $ (13,986 ) $ 457,641 Euro Tranche 347,790 — (4,955 ) 342,835 198,265 — (3,517 ) 194,748 10.5% Senior Notes — — — — 440,000 (13,267 ) (14,409 ) 412,324 7.0% Senior Notes 400,000 — (6,822 ) 393,178 400,000 — (7,424 ) 392,576 5.25% Senior Notes 336,197 — (5,660 ) 330,537 — — — — ABL Facility 35,000 — — 35,000 — — — — KFPC Loan Agreement 113,422 — (119 ) 113,303 149,919 — (196 ) 149,723 KFPC Revolving Facilities 18,040 — — 18,040 8,430 — — 8,430 Capital lease obligation 1,301 — — 1,301 2,086 — — 2,086 Total debt 1,613,750 (7,660 ) (28,079 ) 1,578,011 1,683,700 (26,640 ) (39,532 ) 1,617,528 Less current portion of total debt 50,689 — — 50,689 42,647 — — 42,647 Long-term debt $ 1,563,061 $ (7,660 ) $ (28,079 ) $ 1,527,322 $ 1,641,053 $ (26,640 ) $ (39,532 ) $ 1,574,881 |
Remaining principal payments on outstanding total debt | The remaining principal payments on our outstanding total debt as of September 30, 2018 , are as follows: Principal Payments (In thousands) October 1, 2018 through September 30, 2019 $ 50,689 October 1, 2019 through September 30, 2020 81,193 October 1, 2020 through September 30, 2021 188 October 1, 2021 through September 30, 2022 35,199 October 1, 2022 through September 30, 2023 211 Thereafter 1,446,270 Total debt $ 1,613,750 |
Fair Value Measurements, Fina_2
Fair Value Measurements, Financial Instruments, and Credit Risk (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of financial assets and liabilities accounted for at fair value on a recurring basis | The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 . These financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which judgment may affect the valuation of their fair value and placement within the fair value hierarchy levels. Fair Value Measurements at Reporting Date Using Balance Sheet Location September 30, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Derivative asset – current Other current assets $ 2,384 $ — $ 2,384 $ — Derivative asset – noncurrent Other long-term assets 5,562 — 5,562 — Retirement plan asset – noncurrent Other long-term asset 2,615 2,615 — — Derivative liability – current Other payables and accruals 638 — 638 — Total $ 11,199 $ 2,615 $ 8,584 $ — Fair Value Measurements at Reporting Date Using Balance Sheet Location December 31, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands) Derivative asset – current Other current assets $ 1,629 $ — $ 1,629 $ — Derivative asset – noncurrent Other long-term assets 3,801 — 3,801 — Retirement plan asset – noncurrent Other long-term assets 2,435 2,435 — — Derivative liability – current Other payables and accruals 399 — 399 — Total $ 8,264 $ 2,435 $ 5,829 $ — |
Schedule of carrying values and approximate fair values of long-term debt | The following table presents the carrying values and approximate fair values of our long-term debt. September 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value (In thousands) USD Tranche (significant other observable inputs – level 2) $ 362,000 $ 364,263 $ 485,000 $ 490,762 Euro Tranche (significant other observable inputs – level 2) $ 347,790 $ 349,529 $ 198,265 $ 200,495 10.5% Senior Notes (quoted prices in active market for identical assets – level 1) $ — $ — $ 440,000 $ 499,171 7.0% Senior Notes (quoted prices in active market for identical assets – level 1) $ 400,000 $ 414,320 $ 400,000 $ 432,028 5.25% Senior Notes (quoted prices in active market for identical assets – level 1) $ 336,197 $ 345,207 $ — $ — ABL Facility (significant other observable inputs – level 2) $ 35,000 $ 35,000 $ — $ — Capital lease obligation (significant other observable inputs – level 2) $ 1,301 $ 1,301 $ 2,086 $ 2,086 KFPC Loan Agreement (significant unobservable inputs – level 3) $ 113,422 $ 113,422 $ 149,919 $ 149,919 KFPC Revolving Facilities (significant unobservable inputs – level 3) $ 18,040 $ 18,040 $ 8,430 $ 8,430 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of effective tax rates | The provision for income taxes differs from the amount computed by applying the U.S. corporate statutory income tax rate to income (loss) before income taxes for the reasons set forth below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands) Income taxes at the statutory rate $ (10,838 ) $ 2,455 $ (12,595 ) $ (8,985 ) State taxes, net of federal benefit (884 ) 25 (1,031 ) 117 Foreign tax rate differential 5,228 (3,403 ) 9,428 2,263 Permanent differences (1,581 ) 1,464 (1,440 ) 3,190 Uncertain tax positions (543 ) 1,821 (1,596 ) 666 Valuation allowance 329 13 (114 ) 330 Return to provision adjustments (45 ) (512 ) (1,395 ) (509 ) Other — 302 — 21 Income tax benefit (expense) $ (8,334 ) $ 2,165 $ (8,743 ) $ (2,907 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in the aggregate carrying amount of ARO liability | The changes in the aggregate carrying amount of our asset retirement obligations are as follows: Nine Months Ended September 30, 2018 2017 (In thousands) Beginning balance $ 5,712 $ 8,863 Additional accruals — 439 Accretion expense 253 241 Obligations settled (66 ) (3,065 ) Foreign currency translation (186 ) 484 Ending balance $ 5,713 $ 6,962 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Components of net periodic benefit cost | The components of net periodic benefit cost related to other post-retirement benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 U.S Plans U.S Plans U.S Plans U.S Plans (In thousands) Service cost $ 123 $ 130 $ 402 $ 420 Interest cost 306 348 985 1,028 Amortization of prior service cost (146 ) — (146 ) — Amortization of net actuarial loss 179 150 561 450 Net periodic benefit cost $ 462 $ 628 $ 1,802 $ 1,898 The components of net periodic benefit costs related to pension benefits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans U.S Plans Non-U.S. Plans (In thousands) Service cost $ 626 $ 617 $ 799 $ 695 $ 2,419 $ 1,900 $ 2,399 $ 1,998 Interest cost 1,810 506 1,832 718 5,400 1,574 5,494 2,093 Expected return on plan assets (2,453 ) (655 ) (2,351 ) (811 ) (7,358 ) (2,039 ) (7,052 ) (2,371 ) Amortization of prior service cost — 3 905 55 — 10 2,715 160 Amortization of net actuarial loss 1,032 158 — — 3,484 489 — — Net periodic benefit cost $ 1,015 $ 629 $ 1,185 $ 657 $ 3,945 $ 1,934 $ 3,556 $ 1,880 |
Industry Segments and Foreign_2
Industry Segments and Foreign Operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Sales revenue for primary product lines | The following table summarizes our operating results by segment. We do not have sales between segments. Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 320,965 $ 202,140 $ 523,105 $ 314,159 $ 196,788 $ 510,947 Cost of goods sold 230,763 138,084 368,847 246,851 134,802 381,653 Gross profit 90,202 64,056 154,258 67,308 61,986 129,294 Operating expenses: Research and development 7,422 3,175 10,597 7,234 2,978 10,212 Selling, general, and administrative 20,327 15,823 36,150 24,001 18,420 42,421 Depreciation and amortization 17,554 17,563 35,117 17,342 16,965 34,307 Operating income $ 44,899 $ 27,495 72,394 $ 18,731 $ 23,623 42,354 Other expense (740 ) (846 ) Loss on extinguishment of debt — (15,632 ) Earnings of unconsolidated joint venture 100 125 Interest expense, net (20,143 ) (33,017 ) Income (loss) before income taxes $ 51,611 $ (7,016 ) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Revenue $ 948,186 $ 615,706 $ 1,563,892 $ 920,225 $ 574,167 $ 1,494,392 Cost of goods sold 666,779 425,428 1,092,207 677,418 395,918 1,073,336 Gross profit 281,407 190,278 471,685 242,807 178,249 421,056 Operating expenses: Research and development 22,255 9,613 31,868 21,357 8,739 30,096 Selling, general, and administrative 68,308 48,540 116,848 72,672 51,295 123,967 Depreciation and amortization 52,914 52,719 105,633 50,439 51,601 102,040 Operating income $ 137,930 $ 79,406 217,336 $ 98,339 $ 66,614 164,953 Other expense (2,960 ) (2,517 ) Loss on extinguishment of debt (79,921 ) (35,370 ) Earnings of unconsolidated joint venture 357 370 Interest expense, net (74,835 ) (101,766 ) Income before income taxes $ 59,977 $ 25,670 |
Schedule of assets by segment | The following table presents long-lived assets including goodwill and total assets. September 30, 2018 December 31, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) Property, plant, and equipment, net $ 538,604 $ 393,025 $ 931,629 $ 561,109 $ 397,614 $ 958,723 Investment in unconsolidated joint venture $ 12,082 $ — $ 12,082 $ 12,380 $ — $ 12,380 Goodwill $ — $ 773,373 $ 773,373 $ — $ 774,319 $ 774,319 Total assets $ 1,160,181 $ 1,752,863 $ 2,913,044 $ 1,125,626 $ 1,806,901 $ 2,932,527 |
Summary of revenue by geographic region | Following is a summary of revenue by geographic region: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 111,996 $ 87,256 $ 199,252 $ 99,187 $ 82,695 $ 181,882 Germany 41,219 13,496 54,715 37,723 15,428 53,151 All other countries 167,750 101,388 269,138 177,249 98,665 275,914 $ 320,965 $ 202,140 $ 523,105 $ 314,159 $ 196,788 $ 510,947 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Polymer Chemical Total Polymer Chemical Total (In thousands) (In thousands) Revenue: United States $ 325,985 $ 249,811 $ 575,796 $ 290,570 $ 240,606 $ 531,176 Germany 112,726 42,582 155,308 109,757 46,337 156,094 All other countries 509,475 323,313 832,788 519,898 287,224 807,122 $ 948,186 $ 615,706 $ 1,563,892 $ 920,225 $ 574,167 $ 1,494,392 |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Summary of carrying amounts of assets and liabilities | The following table summarizes the carrying amounts of assets and liabilities as of September 30, 2018 and December 31, 2017 for KFPC before intercompany eliminations. September 30, 2018 December 31, 2017 (In thousands) Cash and cash equivalents $ 5,718 $ 13,848 Other current assets 19,413 21,399 Property, plant, and equipment, net 163,082 173,363 Intangible assets 8,827 9,585 Other long-term assets 11,284 13,972 Total assets $ 208,324 $ 232,167 Current portion of long-term debt $ 50,446 $ 41,745 Current liabilities 15,087 13,938 Long-term debt 80,897 116,408 Total liabilities $ 146,430 $ 172,091 |
General (Details)
General (Details) | Sep. 30, 2018 |
KFPC | |
Schedule of Equity Method Investments [Line Items] | |
Percentage of investment in joint venture | 50.00% |
Styrenic Block Copolymer Joint Venture | |
Schedule of Equity Method Investments [Line Items] | |
Percentage of investment in joint venture | 50.00% |
New Accounting Pronouncements (
New Accounting Pronouncements (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Standards Update 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cost of services | $ 4.7 | $ 4.8 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||
Liability, revenue recognized | $ 4,500 | ||||
Contract receivables | $ 253,331 | 253,331 | $ 196,951 | ||
Contract liabilities | 14,449 | 14,449 | $ 16,257 | ||
Polymer | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 320,965 | $ 314,159 | 948,186 | $ 920,225 | |
Polymer | Performance Products | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 179,684 | 175,968 | 506,151 | 508,820 | |
Polymer | Specialty Polymers | |||||
Disaggregation of Revenue [Line Items] | |||||
Liability, revenue recognized | 1,300 | ||||
Revenue | 99,349 | 94,313 | 311,657 | 285,712 | |
Effect of exchange rate differences on cash | 500 | ||||
Polymer | Cariflex | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 41,818 | 43,031 | 130,319 | 124,433 | |
Polymer | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 114 | 847 | 59 | 1,260 | |
Chemical | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 202,140 | 196,788 | 615,706 | 574,167 | |
Chemical | Adhesives | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 73,781 | 75,018 | 220,907 | 226,008 | |
Chemical | Performance Chemicals | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 118,193 | 108,361 | 355,947 | 310,244 | |
Chemical | Tires | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | $ 10,166 | $ 13,409 | $ 38,852 | $ 37,915 |
Revenue Recognition - Obligatio
Revenue Recognition - Obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | 9 Months Ended |
Sep. 30, 2018 | |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation | 1 year |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation | 10 years |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Share-based compensation expense | $ 2.5 | $ 2.2 | $ 7.6 | $ 7.4 |
Detail of Certain Balance She_3
Detail of Certain Balance Sheet Accounts - Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventories of products: | ||
Finished products | $ 308,069 | $ 270,562 |
Work in progress | 6,025 | 6,925 |
Raw materials | 98,440 | 100,594 |
Inventories of products, gross | 412,534 | 378,081 |
Inventory reserves | (8,396) | (10,285) |
Total inventories of products, net | 404,138 | 367,796 |
Other payables and accruals: | ||
Employee related | 33,259 | 41,250 |
Interest payable | 13,318 | 23,615 |
Property, plant, and equipment accruals | 10,436 | 10,404 |
Other | 41,373 | 44,355 |
Total other payables and accruals | 98,386 | 119,624 |
Other long-term liabilities: | ||
Pension and other post-retirement benefits | 128,055 | 147,209 |
Other | 47,322 | 45,058 |
Total other long-term liabilities | 175,377 | 192,267 |
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 605,824 | 604,181 |
Less accumulated amortization | 234,163 | 197,318 |
Intangible assets, net of accumulated amortization | 371,661 | 406,863 |
Contractual agreements | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 263,168 | 264,581 |
Less accumulated amortization | 60,621 | 44,435 |
Technology | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 145,907 | 146,449 |
Less accumulated amortization | 59,796 | 53,086 |
Customer relationships | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 60,411 | 60,547 |
Less accumulated amortization | 36,526 | 33,871 |
Tradenames/trademarks | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 80,520 | 80,138 |
Less accumulated amortization | 41,049 | 35,770 |
Software | ||
Supplemental Balance Sheet Information [Line Items] | ||
Intangible assets | 55,818 | 52,466 |
Less accumulated amortization | $ 36,171 | $ 30,156 |
Detail of Certain Balance She_4
Detail of Certain Balance Sheet Accounts - Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 666,519 | |||
Other comprehensive income (loss) before reclassifications | 4,388 | $ 60,546 | ||
Amounts reclassified from accumulated other comprehensive loss | (2,584) | 879 | ||
Other comprehensive income, net of tax | $ 8,551 | $ 19,591 | 1,804 | 61,425 |
Ending balance | 723,425 | 723,425 | ||
Accumulated Other Comprehensive Loss | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (98,295) | (158,530) | ||
Ending balance | (96,491) | (97,105) | (96,491) | (97,105) |
Cumulative Foreign Currency Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (9,654) | (72,731) | ||
Other comprehensive income (loss) before reclassifications | (14,448) | 60,691 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Other comprehensive income, net of tax | (14,448) | 60,691 | ||
Ending balance | (24,102) | (12,040) | (24,102) | (12,040) |
Gain (Loss) on Cash Flow Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 4,550 | 515 | ||
Other comprehensive income (loss) before reclassifications | 4,501 | (145) | ||
Amounts reclassified from accumulated other comprehensive loss | (2,584) | 879 | ||
Other comprehensive income, net of tax | 1,917 | 734 | ||
Ending balance | 6,467 | 1,249 | 6,467 | 1,249 |
Net Unrealized Gain (Loss) on Net Investment Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (1,926) | (1,926) | ||
Other comprehensive income (loss) before reclassifications | 4,366 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Other comprehensive income, net of tax | 4,366 | 0 | ||
Ending balance | 2,440 | (1,926) | 2,440 | (1,926) |
Benefit Plans Liability, Net of Tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (91,265) | (84,388) | ||
Other comprehensive income (loss) before reclassifications | 9,969 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Other comprehensive income, net of tax | 9,969 | 0 | ||
Ending balance | $ (81,296) | $ (84,388) | $ (81,296) | $ (84,388) |
Earnings Per Share ("EPS") (Det
Earnings Per Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Income (Loss) Attributable to Kraton, Basic: | ||||
As reported | $ 42,349 | $ (4,033) | $ 49,491 | $ 27,941 |
Amounts allocated to unvested restricted shares | 580 | (77) | 733 | 541 |
Amounts available to common stockholders | 41,769 | (3,956) | 48,758 | 27,400 |
Net Income (Loss) Attributable to Kraton, Diluted: | ||||
Amounts allocated to unvested restricted shares | 580 | (77) | 733 | 541 |
Amounts reallocated to unvested restricted shares | (573) | 77 | (724) | (533) |
Amounts available to stockholders and assumed conversions | $ 41,776 | $ (3,956) | $ 48,767 | $ 27,408 |
Weighted Average Shares Outstanding, Basic: | ||||
As reported (in shares) | 31,896 | 31,223 | 31,853 | 31,151 |
Amounts allocated to unvested restricted shares (in shares) | (437) | (598) | (472) | (603) |
Amounts available to common stockholders (in shares) | 31,459 | 30,625 | 31,381 | 30,548 |
Weighted Average Shares Outstanding, Diluted: | ||||
Amounts allocated to unvested restricted shares (in shares) | (437) | (598) | (472) | (603) |
Non participating share units (in shares) | 137 | 0 | 180 | 175 |
Stock options added under the treasury stock method (in shares) | 238 | 0 | 249 | 283 |
Amounts available to stockholders and assumed conversions (in shares) | 31,834 | 30,625 | 31,810 | 31,006 |
Earnings (loss) per share, basic (in dollars per share) | $ 1.33 | $ (0.13) | $ 1.55 | $ 0.90 |
Earnings (loss) per share, diluted (in dollars per share) | $ 1.31 | $ (0.13) | $ 1.53 | $ 0.88 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) $ in Thousands, $ in Millions | Sep. 30, 2018USD ($) | Sep. 30, 2018TWD ($) | Jun. 29, 2018USD ($) | May 31, 2018 | Dec. 31, 2017USD ($) | Mar. 31, 2017 | Jan. 06, 2016 |
Debt Instrument [Line Items] | |||||||
Total debt | $ 1,613,750 | $ 1,683,700 | |||||
Discount | (7,660) | (26,640) | |||||
Debt Issuance Costs | (28,079) | (39,532) | |||||
Total | 1,578,011 | 1,617,528 | |||||
Capital lease obligation | 1,301 | 2,086 | |||||
Less current portion of total debt | 50,689 | 42,647 | |||||
Long-term debt, noncurrent maturities | 1,563,061 | 1,641,053 | |||||
Long-term debt | 1,527,322 | 1,574,881 | |||||
KFPC Loan Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 113,422 | $ 3,500 | 149,919 | ||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | (119) | (196) | |||||
Total | 113,303 | 149,723 | |||||
KFPC Revolving Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 18,040 | $ 550 | 8,430 | ||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | 0 | 0 | |||||
Total | 18,040 | 8,430 | |||||
5.25% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt Issuance Costs | (5,900) | ||||||
Debt instrument interest rate | 5.25% | ||||||
ABL Facility | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 35,000 | 0 | |||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | 0 | 0 | |||||
Total | 35,000 | 0 | |||||
Term Loan | USD Tranche | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 362,000 | 485,000 | |||||
Discount | (7,660) | (13,373) | |||||
Debt Issuance Costs | (10,523) | (13,986) | |||||
Total | 343,817 | 457,641 | |||||
Term Loan | Euro Tranche | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 347,790 | 198,265 | |||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | (4,955) | (3,517) | |||||
Total | 342,835 | 194,748 | |||||
Senior Notes | USD Tranche | |||||||
Debt Instrument [Line Items] | |||||||
Debt Issuance Costs | (3,100) | ||||||
Senior Notes | Euro Tranche | |||||||
Debt Instrument [Line Items] | |||||||
Debt Issuance Costs | (2,200) | ||||||
Senior Notes | 10.5% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 0 | $ 440,000 | 440,000 | ||||
Discount | 0 | (13,267) | |||||
Debt Issuance Costs | 0 | (14,409) | |||||
Total | 0 | 412,324 | |||||
Debt instrument interest rate | 10.50% | ||||||
Senior Notes | 7.0% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 400,000 | 400,000 | |||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | (6,822) | (7,424) | |||||
Total | 393,178 | 392,576 | |||||
Debt instrument interest rate | 7.00% | ||||||
Senior Notes | 5.25% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Total debt | 336,197 | 0 | |||||
Discount | 0 | 0 | |||||
Debt Issuance Costs | (5,660) | 0 | |||||
Total | $ 330,537 | $ 0 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Term Loan Facility (Details) | Mar. 08, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018EUR (€) | May 24, 2018USD ($) | Mar. 08, 2018EUR (€) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||
Outstanding amount | $ 1,613,750,000 | $ 1,683,700,000 | ||||
Term Loan | USD Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 362,000,000 | 485,000,000 | ||||
Increase in borrowing capacity | $ 90,000,000 | |||||
Term Loan | Euro Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 347,790,000 | $ 198,265,000 | ||||
Term Loan | Secured Debt | USD Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 362,000,000 | |||||
Extinguishment of debt, amount | $ 185,000,000 | |||||
Line of credit facility, fixed interest rate | 4.20% | |||||
Term Loan | Secured Debt | USD Tranche | LIBOR Rate Plus | ||||||
Debt Instrument [Line Items] | ||||||
Percentage added to basis | 2.50% | |||||
Term Loan | Secured Debt | USD Tranche | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate floor | 1.50% | |||||
Term Loan | Secured Debt | Euro Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | $ 347,800,000 | € 300,000,000 | ||||
Increase in borrowing capacity | € | € 150,000,000 | |||||
Line of credit facility, fixed interest rate | 2.75% | |||||
Term Loan | Secured Debt | Euro Tranche | EURIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Percentage added to basis | 2.00% |
Long-Term Debt - Senior Notes (
Long-Term Debt - Senior Notes (Details) - USD ($) | Sep. 30, 2018 | Jun. 29, 2018 | May 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Jan. 06, 2016 |
Debt Instrument [Line Items] | ||||||
Outstanding amount | $ 1,613,750,000 | $ 1,683,700,000 | ||||
5.25% Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate | 5.25% | |||||
Face amount | 336,200,000 | |||||
ABL Facility | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 35,000,000 | 0 | ||||
Revolving Credit Facility | ABL Facility | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 60,000,000 | |||||
Senior Notes | 10.5% Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate | 10.50% | |||||
Repurchase amount | 157,600,000 | |||||
Outstanding amount | 0 | $ 440,000,000 | 440,000,000 | |||
Senior Notes | 5.25% Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 336,197,000 | 0 | ||||
Senior Notes | 7.0% Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument interest rate | 7.00% | |||||
Outstanding amount | 400,000,000 | 400,000,000 | ||||
Face amount | $ 400,000,000 | |||||
Term Loan | USD Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | 362,000,000 | $ 485,000,000 | ||||
Term Loan | Secured Debt | USD Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding amount | $ 362,000,000 |
Long-Term Debt - ABL Facility (
Long-Term Debt - ABL Facility (Details) - USD ($) | Sep. 30, 2018 | Jun. 29, 2018 | Dec. 31, 2017 | Jan. 31, 2016 | Jan. 06, 2016 |
Debt Instrument [Line Items] | |||||
Outstanding amount | $ 1,613,750,000 | $ 1,683,700,000 | |||
ABL Facility | |||||
Debt Instrument [Line Items] | |||||
Outstanding amount | 35,000,000 | 0 | |||
ABL Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility, borrowing capacity | $ 250,000,000 | ||||
Right of maximum additional commitments | $ 100,000,000 | ||||
Outstanding amount | 60,000,000 | ||||
Unused borrowing capacity | 35,000,000 | ||||
Minimum percent required of federal outstanding commitments | 60.00% | ||||
10.5% Senior Notes | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Outstanding amount | $ 0 | $ 440,000,000 | $ 440,000,000 | ||
Debt instrument interest rate | 10.50% |
Long-Term Debt - KFPC Debt (Det
Long-Term Debt - KFPC Debt (Details) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2018TWD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||
Outstanding amount | $ 1,613,750 | $ 1,683,700 | |
KFPC Loan Agreement | |||
Debt Instrument [Line Items] | |||
Outstanding amount | $ 113,422 | $ 3,500,000,000 | 149,919 |
Interest rate during period | 1.80% | ||
KFPC Revolving Facilities | |||
Debt Instrument [Line Items] | |||
Outstanding amount | $ 18,040 | 550,000,000 | $ 8,430 |
Expires September 29, 2018 | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility, borrowing capacity | $ 70,500 | $ 2,150,000,000 |
Long-Term Debt - Debt Issuance
Long-Term Debt - Debt Issuance Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | May 31, 2018 | Dec. 31, 2017 | Jan. 06, 2016 | |
Debt Instrument [Line Items] | |||||||
Debt issuance costs | $ 30,700 | $ 30,700 | |||||
Debt issuance costs | 28,079 | 28,079 | $ 39,532 | ||||
Amortization of debt issuance costs | 1,200 | $ 1,900 | 4,571 | $ 6,309 | |||
Gain (loss) on extinguishment of debt | 0 | $ (15,632) | (79,921) | (35,370) | |||
Write off of previously capitalized deferred financing costs | 18,700 | ||||||
Gain (loss) due to repurchase of debt | (46,400) | ||||||
Interest Rate Swap | |||||||
Debt Instrument [Line Items] | |||||||
Gain (loss) on extinguishment of debt | $ 2,600 | ||||||
Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Amortization of debt issuance costs | 11,100 | ||||||
Term Loan | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Write off of original issue discount | 17,400 | ||||||
ABL Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 2,600 | 2,600 | |||||
Debt issuance costs | 0 | 0 | 0 | ||||
ABL Facility | Other current assets | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 1,200 | 1,200 | |||||
USD Tranche | Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 10,523 | 10,523 | 13,986 | ||||
USD Tranche | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 3,100 | 3,100 | |||||
Euro Tranche | Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 4,955 | 4,955 | 3,517 | ||||
Euro Tranche | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 2,200 | 2,200 | |||||
5.25% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 5,900 | 5,900 | |||||
Debt instrument interest rate | 5.25% | ||||||
5.25% Senior Notes | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 5,660 | 5,660 | 0 | ||||
10.5% Senior Notes | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | $ 0 | $ 0 | $ 14,409 | ||||
Debt instrument interest rate | 10.50% |
Long-Term Debt - Remaining Prin
Long-Term Debt - Remaining Principal Payments on Outstanding Total Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
October 1, 2018 through September 30, 2019 | $ 50,689 | |
October 1, 2019 through September 30, 2020 | 81,193 | |
October 1, 2020 through September 30, 2021 | 188 | |
October 1, 2021 through September 30, 2022 | 35,199 | |
October 1, 2022 through September 30, 2023 | 211 | |
Thereafter | 1,446,270 | |
Total debt | $ 1,613,750 | $ 1,683,700 |
Fair Value Measurements, Fina_3
Fair Value Measurements, Financial Instruments, and Credit Risk - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements at Reporting Date Using - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | $ 11,199 | $ 8,264 |
Other current assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – current | 2,384 | 1,629 |
Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – noncurrent | 5,562 | 3,801 |
Retirement plan asset – noncurrent | 2,615 | 2,435 |
Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | 638 | 399 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | 2,615 | 2,435 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other current assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – current | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – noncurrent | 0 | 0 |
Retirement plan asset – noncurrent | 2,615 | 2,435 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | 8,584 | 5,829 |
Significant Other Observable Inputs (Level 2) | Other current assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – current | 2,384 | 1,629 |
Significant Other Observable Inputs (Level 2) | Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – noncurrent | 5,562 | 3,801 |
Retirement plan asset – noncurrent | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | 638 | 399 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Other current assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – current | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Other long-term assets | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative asset – noncurrent | 0 | 0 |
Retirement plan asset – noncurrent | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Other payables and accruals | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability – current | $ 0 | $ 0 |
Fair Value Measurements, Fina_4
Fair Value Measurements, Financial Instruments, and Credit Risk - Carrying Values and Approximate Fair Values of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying Value | Significant Other Observable Inputs (Level 2) | ABL Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 35,000 | $ 0 |
Carrying Value | Significant Other Observable Inputs (Level 2) | Term Loan | USD Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 362,000 | 485,000 |
Carrying Value | Significant Other Observable Inputs (Level 2) | Term Loan | Euro Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 347,790 | 198,265 |
Carrying Value | Significant Other Observable Inputs (Level 2) | Capital lease obligation | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 1,301 | 2,086 |
Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 10.5% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 440,000 |
Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 7.0% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 400,000 | 400,000 |
Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 5.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 336,197 | 0 |
Carrying Value | Significant Unobservable Inputs (Level 3) | KFPC Loan Agreement | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 113,422 | 149,919 |
Carrying Value | Significant Unobservable Inputs (Level 3) | KFPC Revolving Facilities | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 18,040 | 8,430 |
Fair Value | Significant Other Observable Inputs (Level 2) | ABL Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 35,000 | 0 |
Fair Value | Significant Other Observable Inputs (Level 2) | Term Loan | USD Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 364,263 | 490,762 |
Fair Value | Significant Other Observable Inputs (Level 2) | Term Loan | Euro Tranche | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 349,529 | 200,495 |
Fair Value | Significant Other Observable Inputs (Level 2) | Capital lease obligation | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 1,301 | 2,086 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 10.5% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 499,171 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 7.0% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 414,320 | 432,028 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | 5.25% Senior Notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 345,207 | 0 |
Fair Value | Significant Unobservable Inputs (Level 3) | KFPC Loan Agreement | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 113,422 | 149,919 |
Fair Value | Significant Unobservable Inputs (Level 3) | KFPC Revolving Facilities | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 18,040 | $ 8,430 |
Fair Value Measurements, Fina_5
Fair Value Measurements, Financial Instruments, and Credit Risk - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 04, 2018USD ($) | May 31, 2018EUR (€) | Jan. 03, 2017USD ($) | |
Derivative [Line Items] | |||||||
Reclassification of gain on cash flow hedge | $ (3,000) | $ (920,000) | $ 2,584,000 | $ (879,000) | |||
Europe | |||||||
Derivative [Line Items] | |||||||
Face amount | € | € 290,000,000 | ||||||
Mark to market gain recorded in accumulated other comprehensive loss | 2,300,000 | 5,700,000 | |||||
Interest Rate Swap | |||||||
Derivative [Line Items] | |||||||
Notional amount | 362,000,000 | 362,000,000 | $ 90,000,000 | $ 925,400,000 | |||
Unrealized gain on derivatives | $ 500,000 | 1,100,000 | 5,100,000 | 1,100,000 | |||
Reclassification of gain on cash flow hedge | $ 2,600,000 | ||||||
Interest Rate Swap | LIBOR Rate Plus | |||||||
Derivative [Line Items] | |||||||
Derivative, variable interest rate | 1.712% | 1.712% | |||||
Interest Rate Swap | Short | |||||||
Derivative [Line Items] | |||||||
Notional amount | $ 653,400,000 | $ 653,400,000 | |||||
Foreign Currency Hedges | |||||||
Derivative [Line Items] | |||||||
Aggregate loss on settlement of hedges | $ 200,000 | $ 2,200,000 | $ 500,000 | $ 900,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | ||||||
Income tax expense (benefit) | $ 8,334 | $ (2,165) | $ 8,743 | $ 2,907 | ||
Effective tax rate | 16.10% | 30.90% | 14.60% | 11.30% | ||
Valuation allowance for deferred tax assets | $ 51,400 | $ 51,400 | $ 51,300 | |||
Increase (decrease) in valuation allowance | (300) | $ 100 | $ (300) | |||
Transition tax on accumulated foreign earnings, percent | 15.50% | |||||
Transition tax on accumulated foreign earnings, remaining earnings, percent | 8.00% | |||||
Transition tax for accumulated foreign earnings, provisional liability | 46,300 | |||||
Change in tax rate, deferred tax asset, income tax expense (benefit) | $ 95,000 | |||||
Unrecognized tax benefits | 25,800 | 25,800 | $ 24,400 | |||
Increase (decrease) in uncertain tax positions | $ 500 | $ (1,500) | 1,400 | $ (100) | ||
Scenario, Forecast | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Release of Valuation Allowance | $ 900 | |||||
Federal Tax Administration (FTA) | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Change in tax rate, deferred tax asset, income tax expense (benefit) | $ 68,900 | |||||
Netherlands | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Income taxes at the statutory rate | 25.00% | |||||
Sweden | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Income taxes at the statutory rate | 22.00% | |||||
Finland | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Income taxes at the statutory rate | 20.00% |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate, Amount (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Income taxes at the statutory rate | $ (10,838) | $ 2,455 | $ (12,595) | $ (8,985) |
State taxes, net of federal benefit | (884) | 25 | (1,031) | 117 |
Foreign tax rate differential | 5,228 | (3,403) | 9,428 | 2,263 |
Permanent differences | (1,581) | 1,464 | (1,440) | 3,190 |
Uncertain tax positions | (543) | 1,821 | (1,596) | 666 |
Valuation allowance | 329 | 13 | (114) | 330 |
Return to provision adjustments | (45) | (512) | (1,395) | (509) |
Other | 0 | 302 | 0 | 21 |
Income tax benefit (expense) | $ (8,334) | $ 2,165 | $ (8,743) | $ (2,907) |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) R$ in Millions, $ in Millions | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2018BRL (R$) | Sep. 30, 2018BRL (R$) | Dec. 31, 2017USD ($) | |
Loss Contingencies [Line Items] | ||||
Additional tax assessment | $ 0.4 | R$ 1.6 | ||
Tax credits generated from purchase of certain goods | 2.3 | R$ 9.2 | ||
Shell Chemicals | ||||
Loss Contingencies [Line Items] | ||||
Receivables | $ 0.2 | $ 1.4 |
Commitments and Contingencies_2
Commitments and Contingencies - Changes in Aggregate Carrying Amount of Asset Retirement Obligation Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Beginning balance | $ 5,712 | $ 8,863 |
Additional accruals | 0 | 439 |
Accretion expense | 253 | 241 |
Obligations settled | (66) | (3,065) |
Foreign currency translation | (186) | 484 |
Ending balance | $ 5,713 | $ 6,962 |
Employee Benefits - Components
Employee Benefits - Components of Net Periodic Benefit Cost Related to U.S Pension Benefits (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
U.S Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 626 | $ 799 | $ 2,419 | $ 2,399 |
Interest cost | 1,810 | 1,832 | 5,400 | 5,494 |
Expected return on plan assets | (2,453) | (2,351) | (7,358) | (7,052) |
Amortization of prior service cost | 0 | 905 | 0 | 2,715 |
Amortization of net actuarial loss | 1,032 | 0 | 3,484 | 0 |
Net periodic benefit cost | 1,015 | 1,185 | 3,945 | 3,556 |
Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 617 | 695 | 1,900 | 1,998 |
Interest cost | 506 | 718 | 1,574 | 2,093 |
Expected return on plan assets | (655) | (811) | (2,039) | (2,371) |
Amortization of prior service cost | 3 | 55 | 10 | 160 |
Amortization of net actuarial loss | 158 | 0 | 489 | 0 |
Net periodic benefit cost | $ 629 | $ 657 | $ 1,934 | $ 1,880 |
Employee Benefits - Additional
Employee Benefits - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |||
Employer contributions | $ 10.7 | $ 10.1 | |
Employees retirement age | 65 years | ||
Reduction in pension and other post-retirement liabilities | $ 13.1 |
Employee Benefits - Component_2
Employee Benefits - Components of Net Periodic Cost Related to Other Post-Retirement Benefits (Details) - Other Postretirement Benefits Plan - U.S Plans - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 123 | $ 130 | $ 402 | $ 420 |
Interest cost | 306 | 348 | 985 | 1,028 |
Amortization of prior service cost | (146) | 0 | (146) | 0 |
Amortization of net actuarial loss | 179 | 150 | 561 | 450 |
Net periodic benefit cost | $ 462 | $ 628 | $ 1,802 | $ 1,898 |
Industry Segments and Foreign_3
Industry Segments and Foreign Operations - Additional Information (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 2 | |
Capital expenditures | $ 66,047 | $ 71,595 |
Polymer | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 31,800 | 37,400 |
Chemical | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 34,200 | $ 34,200 |
Industry Segments and Foreign_4
Industry Segments and Foreign Operations - Sales Revenue by Product Groups (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 523,105 | $ 510,947 | $ 1,563,892 | $ 1,494,392 |
Cost of goods sold | 368,847 | 381,653 | 1,092,207 | 1,073,336 |
Gross profit | 154,258 | 129,294 | 471,685 | 421,056 |
Operating expenses: | ||||
Research and development | 10,597 | 10,212 | 31,868 | 30,096 |
Selling, general, and administrative | 36,150 | 42,421 | 116,848 | 123,967 |
Depreciation and amortization | 35,117 | 34,307 | 105,633 | 102,040 |
Operating income | 72,394 | 42,354 | 217,336 | 164,953 |
Other expense | (740) | (846) | (2,960) | (2,517) |
Loss on extinguishment of debt | 0 | (15,632) | (79,921) | (35,370) |
Earnings of unconsolidated joint venture | 100 | 125 | 357 | 370 |
Interest expense, net | (20,143) | (33,017) | (74,835) | (101,766) |
Income (loss) before income taxes | 51,611 | (7,016) | 59,977 | 25,670 |
Polymer | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 320,965 | 314,159 | 948,186 | 920,225 |
Cost of goods sold | 230,763 | 246,851 | 666,779 | 677,418 |
Gross profit | 90,202 | 67,308 | 281,407 | 242,807 |
Operating expenses: | ||||
Research and development | 7,422 | 7,234 | 22,255 | 21,357 |
Selling, general, and administrative | 20,327 | 24,001 | 68,308 | 72,672 |
Depreciation and amortization | 17,554 | 17,342 | 52,914 | 50,439 |
Operating income | 44,899 | 18,731 | 137,930 | 98,339 |
Chemical | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 202,140 | 196,788 | 615,706 | 574,167 |
Cost of goods sold | 138,084 | 134,802 | 425,428 | 395,918 |
Gross profit | 64,056 | 61,986 | 190,278 | 178,249 |
Operating expenses: | ||||
Research and development | 3,175 | 2,978 | 9,613 | 8,739 |
Selling, general, and administrative | 15,823 | 18,420 | 48,540 | 51,295 |
Depreciation and amortization | 17,563 | 16,965 | 52,719 | 51,601 |
Operating income | $ 27,495 | $ 23,623 | $ 79,406 | $ 66,614 |
Industry Segments and Foreign_5
Industry Segments and Foreign Operations - Long-lived Assets Including Goodwill and Total Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | $ 931,629 | $ 958,723 |
Investment in unconsolidated joint venture | 12,082 | 12,380 |
Goodwill | 773,373 | 774,319 |
Total assets | 2,913,044 | 2,932,527 |
Polymer | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | 538,604 | 561,109 |
Investment in unconsolidated joint venture | 12,082 | 12,380 |
Goodwill | 0 | 0 |
Total assets | 1,160,181 | 1,125,626 |
Chemical | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | 393,025 | 397,614 |
Investment in unconsolidated joint venture | 0 | 0 |
Goodwill | 773,373 | 774,319 |
Total assets | $ 1,752,863 | $ 1,806,901 |
Industry Segments and Foreign_6
Industry Segments and Foreign Operations - Sales Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | $ 523,105 | $ 510,947 | $ 1,563,892 | $ 1,494,392 |
U.S Plans | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 199,252 | 181,882 | 575,796 | 531,176 |
Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 54,715 | 53,151 | 155,308 | 156,094 |
All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 269,138 | 275,914 | 832,788 | 807,122 |
Polymer | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 320,965 | 314,159 | 948,186 | 920,225 |
Polymer | Reportable Geographic Regions | U.S Plans | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 111,996 | 99,187 | 325,985 | 290,570 |
Polymer | Reportable Geographic Regions | Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 41,219 | 37,723 | 112,726 | 109,757 |
Polymer | Reportable Geographic Regions | All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 167,750 | 177,249 | 509,475 | 519,898 |
Chemical | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 202,140 | 196,788 | 615,706 | 574,167 |
Chemical | Reportable Geographic Regions | U.S Plans | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 87,256 | 82,695 | 249,811 | 240,606 |
Chemical | Reportable Geographic Regions | Germany | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | 13,496 | 15,428 | 42,582 | 46,337 |
Chemical | Reportable Geographic Regions | All other countries | ||||
Segment Reporting Revenue Reconciling Item [Line Items] | ||||
Revenue | $ 101,388 | $ 98,665 | $ 323,313 | $ 287,224 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Variable Interest Entity, Primary Beneficiary | KFPC | |||||
Related Party Transaction [Line Items] | |||||
Outstanding payables | $ 0.6 | $ 0.6 | $ 1.5 | ||
Variable interest entity, ownership percentage | 50.00% | ||||
Purchases from related party | $ 12.9 | $ 4.8 | $ 35 | $ 8.9 | |
Styrenic Block Copolymer Joint Venture | |||||
Related Party Transaction [Line Items] | |||||
Percentage of equity investment | 50.00% | 50.00% | |||
Outstanding payables | $ 18.1 | $ 18.1 | $ 17.7 | ||
Related party liability | $ 11.3 | $ 8.4 | $ 27.6 | $ 28.9 |
Variable Interest Entity - Addi
Variable Interest Entity - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2018kt | |
KFPC | Variable Interest Entity, Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Variable interest entity, ownership percentage | 50.00% |
Minimum purchase commitment of plant production (as a percent) | 80.00% |
Joint venture | Taiwan | Formosa Petrochemical Corporation | |
Variable Interest Entity [Line Items] | |
Capacity of HSBC plant | 30 |
Variable Interest Entity - Summ
Variable Interest Entity - Summary of Carrying Amounts of Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Noncontrolling Interest [Line Items] | ||||
Cash and cash equivalents | $ 51,508 | $ 89,052 | $ 89,118 | $ 121,749 |
Other current assets | 31,383 | 36,615 | ||
Property, plant, and equipment, net | 931,629 | 958,723 | ||
Intangible assets | 371,661 | 406,863 | ||
Other long-term assets | 37,602 | 39,688 | ||
Total assets | 2,913,044 | 2,932,527 | ||
Current portion of long-term debt | 50,689 | 42,647 | ||
Current liabilities | 335,026 | 350,712 | ||
Long-term debt | 1,527,322 | 1,574,881 | ||
Total liabilities | 2,189,619 | 2,266,008 | ||
KFPC | ||||
Noncontrolling Interest [Line Items] | ||||
Cash and cash equivalents | 5,718 | 13,848 | ||
Other current assets | 19,413 | 21,399 | ||
Property, plant, and equipment, net | 163,082 | 173,363 | ||
Intangible assets | 8,827 | 9,585 | ||
Other long-term assets | 11,284 | 13,972 | ||
Total assets | 208,324 | 232,167 | ||
Current portion of long-term debt | 50,446 | 41,745 | ||
Current liabilities | 15,087 | 13,938 | ||
Long-term debt | 80,897 | 116,408 | ||
Total liabilities | $ 146,430 | $ 172,091 |