Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 22, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | SCL | |
Entity Registrant Name | STEPAN CO | |
Entity Central Index Key | 94,049 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 22,516,077 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - 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] | |||||||
Net Sales | $ 507,997 | $ 487,814 | $ 1,527,198 | $ 1,451,184 | |||
Cost of Sales | [1] | 423,872 | 412,238 | 1,264,223 | 1,193,501 | ||
Gross Profit | [1] | 84,125 | 75,576 | 262,975 | 257,683 | ||
Operating Expenses: | |||||||
Selling | [1] | 14,613 | 13,710 | 42,872 | 40,396 | ||
Administrative | [1] | 21,904 | 18,480 | 59,441 | 54,141 | ||
Research, development and technical services | [1] | 13,977 | 12,655 | 41,311 | 40,288 | ||
Deferred compensation expense | 4,222 | (129) | 4,971 | 5,263 | |||
Total Operating expenses | 54,716 | 44,716 | 148,595 | 140,088 | |||
Business restructuring expenses (Note 15) | (1,715) | (426) | [2] | (2,346) | (1,798) | [2] | |
Operating Income | [1] | 27,694 | 30,434 | [2] | 112,034 | 115,797 | [2] |
Other Income (Expense): | |||||||
Interest, net | (2,797) | (2,763) | [2] | (8,620) | (8,618) | [2] | |
Other, net (Note 14) | [1] | 346 | 1,641 | [2] | 1,990 | 3,526 | [2] |
Nonoperating Income (Expense), Total | (2,451) | (1,122) | (6,630) | (5,092) | |||
Income Before Provision for Income Taxes | 25,243 | 29,312 | [2] | 105,404 | 110,705 | [2] | |
Provision for Income Taxes (Note 17) | 3,075 | 7,459 | 19,597 | 29,044 | |||
Net Income | 22,168 | 21,853 | 85,807 | 81,661 | |||
Net Loss Attributable to Noncontrolling Interests (Note 2) | 46 | 9 | 33 | ||||
Net Income Attributable to Stepan Company | $ 22,168 | $ 21,899 | $ 85,816 | $ 81,694 | |||
Net Income Per Common Share Attributable to Stepan Company (Note 9): | |||||||
Basic | $ 0.96 | $ 0.95 | $ 3.73 | $ 3.56 | |||
Diluted | $ 0.95 | $ 0.94 | $ 3.68 | $ 3.50 | |||
Shares Used to Compute Net Income Per Common Share Attributable to Stepan Company (Note 9): | |||||||
Basic | 22,986 | 22,971 | 23,036 | 22,941 | |||
Diluted | 23,288 | 23,374 | 23,324 | 23,361 | |||
Dividends Declared Per Common Share | $ 0.23 | $ 0.21 | $ 0.68 | $ 0.62 | |||
[1] | The 2017 amounts for the noted line items have been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of Accounting Standards Update (ASU) No. 2017-7, Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. | ||||||
[2] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 22,168 | $ 21,853 | $ 85,807 | $ 81,661 |
Other comprehensive income : | ||||
Foreign currency translation adjustments (Note 10) | (2,534) | 9,837 | (28,776) | 26,288 |
Defined benefit pension adjustments, net of tax (Note 10) | 788 | 539 | 2,293 | 1,671 |
Derivative instrument activity, net of tax (Note 10) | (2) | (2) | (7) | (7) |
Total other comprehensive income | (1,748) | 10,374 | (26,490) | 27,952 |
Comprehensive income (loss) | 20,420 | 32,227 | 59,317 | 109,613 |
Comprehensive (income) loss attributable to noncontrolling interests (Note 2) | 31 | 20 | 55 | (26) |
Comprehensive income (loss) attributable to Stepan Company | $ 20,451 | $ 32,247 | $ 59,372 | $ 109,587 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 273,988 | $ 298,894 |
Receivables, net | 323,059 | 293,541 |
Inventories (Note 6) | 195,169 | 172,748 |
Other current assets | 22,816 | 23,553 |
Total current assets | 815,032 | 788,736 |
Property, Plant and Equipment: | ||
Cost | 1,648,841 | 1,603,286 |
Less: Accumulated depreciation | (1,050,126) | (1,004,843) |
Property, plant and equipment, net | 598,715 | 598,443 |
Goodwill, net | 22,480 | 25,118 |
Other intangible assets, net | 14,988 | 18,538 |
Long-term investments (Note 3) | 28,055 | 28,270 |
Other non-current assets | 12,961 | 11,756 |
Total assets | 1,492,231 | 1,470,861 |
Current Liabilities: | ||
Current maturities of long-term debt (Note 13) | 23,686 | 22,500 |
Accounts payable | 209,302 | 204,977 |
Accrued liabilities | 93,895 | 92,776 |
Total current liabilities | 326,883 | 320,253 |
Deferred income taxes | 18,798 | 10,962 |
Long-term debt, less current maturities (Notes 13) | 262,551 | 268,299 |
Other non-current liabilities | 105,585 | 130,433 |
Commitments and Contingencies (Note 7) | ||
Equity: | ||
Common stock, $1 par value; authorized 60,000,000 shares; 26,286,587 issued shares in 2018 and 26,070,787 issued shares in 2017 | 26,287 | 26,071 |
Additional paid-in capital | 180,368 | 170,408 |
Accumulated other comprehensive loss (Note 10) | (126,007) | (99,563) |
Retained earnings | 792,134 | 721,741 |
Less: Common treasury stock, at cost, 3,773,946 shares in 2018 and 3,561,509 shares in 2017 | (95,131) | (78,561) |
Total Stepan Company stockholders’ equity | 777,651 | 740,096 |
Noncontrolling interests (Note 2) | 763 | 818 |
Total equity | 778,414 | 740,914 |
Total liabilities and equity | $ 1,492,231 | $ 1,470,861 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 26,286,587 | 26,070,787 |
Treasury stock, shares | 3,773,946 | 3,561,509 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities | ||
Net income | $ 85,807 | $ 81,661 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 60,778 | 57,121 |
Deferred compensation | 4,971 | 5,263 |
Realized and unrealized gains on long-term investments | (1,241) | (3,677) |
Stock-based compensation | 6,722 | 6,248 |
Deferred income taxes | 6,410 | 7,132 |
Other non-cash items | 1,370 | 3,738 |
Changes in assets and liabilities: | ||
Receivables, net | (34,807) | (37,713) |
Inventories | (21,586) | 14,789 |
Other current assets | 727 | (631) |
Accounts payable and accrued liabilities | (6,906) | (5,872) |
Pension liabilities | (5,059) | (2,141) |
Environmental and legal liabilities | (763) | (392) |
Deferred revenues | (243) | (843) |
Net Cash Provided By Operating Activities | 96,180 | 124,683 |
Cash Flows From Investing Activities | ||
Expenditures for property, plant and equipment | (62,895) | (57,902) |
Business acquisition (Note 16) | (21,475) | (4,339) |
Other, net | 1,684 | (759) |
Net Cash Used In Investing Activities | (82,686) | (63,000) |
Cash Flows From Financing Activities | ||
Revolving debt and bank overdrafts, net | 1,379 | (7,309) |
Other debt repayments | (5,714) | (5,714) |
Dividends paid | (15,225) | (13,841) |
Company stock repurchased | (13,500) | (4,500) |
Stock option exercises | 3,488 | 3,127 |
Other, net | (4,504) | (1,649) |
Net Cash Used In Financing Activities | (34,076) | (29,886) |
Effect of Exchange Rate Changes on Cash | (4,324) | 6,560 |
Net Decrease in Cash and Cash Equivalents | (24,906) | 38,357 |
Cash and Cash Equivalents at Beginning of Period | 298,894 | 225,743 |
Cash and Cash Equivalents at End of Period | 273,988 | 264,100 |
Supplemental Cash Flow Information | ||
Cash payments of income taxes, net of refunds/payments | 25,190 | 22,377 |
Cash payments of interest | $ 8,553 | $ 9,113 |
Condensed Consolidated Financia
Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Condensed Consolidated Financial Statements | 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements included herein have been prepared by Stepan Company (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company’s financial position as of September 30, 2018, results of operations for the three and nine months ended September 30, 2018 and 2017, and cash flows for the nine months ended September 30, 2018 and 2017, have been included. These financial statements and related footnotes should be read in conjunction with the financial statements and related footnotes included in the Company’s 2017 Annual Report on Form 10-K. |
Reconciliations of Equity
Reconciliations of Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Reconciliations of Equity | 2. RECONCILIATIONS OF EQUITY Below are reconciliations of total equity, Company equity and equity attributable to noncontrolling interests for the nine months ended September 30, 2018 and 2017: (In thousands) Total Equity Stepan Company Equity Noncontrolling Interests’ Equity (3) Balance at January 1, 2018 $ 740,914 $ 740,096 $ 818 Net income 85,807 85,816 (9 ) Dividends (15,225 ) (15,225 ) — Common stock purchases (1) (16,756 ) (16,756 ) — Stock option exercises 3,488 3,488 — Defined benefit pension adjustments, net of tax 2,293 2,293 — Translation adjustments (28,776 ) (28,730 ) (46 ) Derivative instrument activity, net of tax (7 ) (7 ) — Other (2) 6,676 6,676 — Balance at September 30, 2018 $ 778,414 $ 777,651 $ 763 (In thousands) Total Equity Stepan Company Equity Noncontrolling Interests’ Equity (3) Balance at January 1, 2017 $ 635,916 $ 634,604 $ 1,312 Net income 81,661 81,694 (33 ) Dividends (13,841 ) (13,841 ) — Common stock purchases (1) (6,255 ) (6,255 ) — Stock option exercises 3,127 3,127 — Defined benefit pension adjustments, net of tax 1,671 1,671 — Translation adjustments 26,288 26,229 59 Derivative instrument activity, net of tax (7 ) (7 ) — Other (2) 7,711 7,711 — Balance at September 30, 2017 $ 736,271 $ 734,933 $ 1,338 (1) (2) Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (3) |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. FAIR VALUE MEASUREMENTS The following were the financial instruments held by the Company at September 30, 2018, and December 31, 2017, and the methods and assumptions used to estimate the instruments’ fair values: Cash and cash equivalents Carrying value approximated fair value because of the short maturity of the instruments. Derivative assets and liabilities Derivative assets and liabilities included the foreign currency exchange contracts discussed in Note 4. Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. See the table that follows the financial instrument descriptions for the reported fair values of derivative assets and liabilities. Long-term investments Long-term investments included the mutual fund assets the Company held to fund a portion of its deferred compensation liabilities and all of its non-qualified supplemental executive defined contribution obligations (see the defined contribution plans section of Note 8). Fair value and carrying value were the same because the mutual fund assets were recorded at fair value. Fair values for the mutual funds were calculated using the published market price per unit at the reporting date multiplied by the number of units held at the reporting date. See the table that follows the financial instrument descriptions for the reported fair value of long-term investments. Debt obligations The fair value of debt with original maturities greater than one year comprised the combined present values of scheduled principal and interest payments for each of the various loans, individually discounted at rates equivalent to those which could be obtained by the Company for new debt issues with durations equal to the average life to maturity of each loan. The fair values of the remaining Company debt obligations approximated their carrying values due to the short-term nature of the debt. The Company’s fair value measurements for debt fall within level 2 of the fair value hierarchy. At September 30, 2018, and December 31, 2017, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $1,021,000 and $987,000 as of September 30, 2018 and December 31, 2017, respectively): (In thousands) September 30, 2018 December 31, 2017 Fair value $ 282,123 $ 293,272 Carrying value 287,258 291,786 The following tables present financial assets and liabilities measured on a recurring basis at fair value as of September 30, 2018, and December 31, 2017, and the level within the fair value hierarchy in which the fair value measurements fall: (In thousands) September 30, 2018 Level 1 Level 2 Level 3 Mutual fund assets $ 28,055 $ 28,055 $ — $ — Derivative assets: Foreign currency contracts 248 — 248 — Total assets at fair value $ 28,303 $ 28,055 $ 248 $ — Derivative liabilities: Foreign currency contracts $ 71 $ — $ 71 $ — (In thousands) December 31, 2017 Level 1 Level 2 Level 3 Mutual fund assets $ 28,270 $ 28,270 $ — $ — Derivative assets: Foreign currency contracts 335 — 335 — Total assets at fair value $ 28,605 $ 28,270 $ 335 $ — Derivative liabilities : Foreign currency contracts $ 94 $ — $ 94 $ — |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 4. DERIVATIVE INSTRUMENTS The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by the use of derivative instruments is foreign currency exchange risk. The Company holds forward foreign currency exchange contracts that are not designated as any type of accounting hedge as defined by GAAP. The Company uses these contracts to manage its exposure to exchange rate fluctuations on certain Company subsidiary cash, accounts receivable, accounts payable and other obligation balances that are denominated in currencies other than the entities’ functional currencies. The forward foreign exchange contracts are recognized on the balance sheet as either an asset or a liability measured at fair value. Gains and losses arising from recording the foreign exchange contracts at fair value are reported in earnings as offsets to the losses and gains reported in earnings arising from the re-measurement of the asset and liability balances into the applicable functional currencies. At September 30, 2018, and December 31, 2017, the Company had open forward foreign currency exchange contracts, all with durations of one to three months, to buy or sell foreign currencies with U.S. dollar equivalent amounts of $90,349,000 and $41,197,000, respectively. The fair values of the derivative instruments held by the Company on September 30, 2018, and December 31, 2017, are disclosed in Note 3. Derivative instrument gains and losses for the three- and nine- month periods ending September 30, 2018 and 2017 were immaterial. For amounts reclassified out of accumulated other comprehensive income (loss) (AOCI) into earnings for the three- and nine- month periods ended September 30, 2018 and 2017, see Note 10. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 5. STOCK-BASED COMPENSATION On September 30, 2018, the Company had stock options and stock awards outstanding under its 2006 Incentive Compensation Plan and stock options, stock awards and stock appreciation rights (SARs) outstanding under its 2011 Incentive Compensation Plan. SARs granted prior to 2015 are cash-settled, and SARs granted after 2014 are stock-settled. Stock options and SARs granted prior to 2017 generally cliff vested after two years. Starting in 2017, stock options and SARs have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the stock options and SARs with the graded vesting feature. Compensation expense recorded for all stock options, stock awards and SARs was as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 $ 3,335 $ 1,697 $ 6,722 $ 6,248 The year-over-year and quarter-over-quarter increase in stock-based compensation expense was primarily attributable to cash-settled SARs. SARs compensation expense increased due to an increase in the fair values of cash-settled SARs that resulted from an increase in the market value of Company common stock in the third quarter of 2018 and first nine months of 2018 versus the same periods in 2017. Unrecognized compensation costs for stock options, stock awards and SARs were as follows: (In thousands) September 30, 2018 December 31, 2017 Stock options $ 1,917 $ 1,179 Stock awards 3,987 3,737 SARs 4,155 2,398 The increases in unrecognized compensation costs for stock options, stock awards and SARs reflected the 2018 grants of: Shares Stock options 77,038 Stock awards (at target) 49,426 SARs 171,131 The unrecognized compensation costs at September 30, 2018, are expected to be recognized over weighted-average periods of 2.0 years, 1.8 years and 2.0 years |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | 6. INVENTORIES The composition of inventories at September 30, 2018, and December 31, 2017, was as follows: (In thousands) September 30, 2018 December 31, 2017 Finished goods $ 136,717 $ 117,529 Raw materials 58,452 55,219 Total inventories $ 195,169 $ 172,748 Inventories are priced primarily using the last-in, first-out inventory valuation method. If the first-in, first-out inventory valuation method had been used for all inventories, inventory balances would have been approximately $35,298,000 and $33,518,000 higher than reported at September 30, 2018, and December 31, 2017, respectively. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Contingencies | 7. CONTINGENCIES There are a variety of legal proceedings pending or threatened against the Company. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as similar regulations in other countries where the Company operates. Over the years, the Company has received requests for information related to or has been named by the government as a potentially responsible party (PRP) at a number of waste disposal sites where cleanup costs have been or may be incurred under CERCLA and similar state statutes. In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites and in other commercial disputes. The Company believes that it has made adequate provisions for the costs it may incur with respect to these matters. As of September 30, 2018, the Company estimated a range of possible environmental and legal losses of $24.0 million to $45.5 million. At September 30, 2018, and December 31, 2017, the Company’s accrued liability for such losses, which represented the Company’s best estimate within the estimated range of possible environmental and legal losses, was $24.0 million and $24.2 million, respectively. Cash outlays related to legal and environmental matters approximated $1.0 million and $1.4 million for the nine-month periods ended September 30, 2018 and 2017, respectively. For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Given the information available, management believes the Company has no liability at these sites. Based upon the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, the Company believes that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material. Following are summaries of the material contingencies at September 30, 2018: Maywood, New Jersey Site The Company’s property in Maywood, New Jersey and property formerly owned by the Company adjacent to its current site and other nearby properties (Maywood site) were listed on the National Priorities List in September 1983 pursuant to the provisions of CERCLA because of certain alleged chemical contamination. Pursuant to an Administrative Order on Consent entered into between the U.S. Environmental Protection Agency (USEPA) and the Company for property formerly owned by the Company, and the issuance of an order by USEPA to the Company for property currently owned by the Company, the Company has completed various Remedial Investigation Feasibility Studies, and in September, 2014, the USEPA issued its Record of Decision (ROD) for chemically-contaminated soil. The USEPA has not yet issued a ROD for chemically-contaminated groundwater for the Maywood site. Based on the most current information available, the Company believes its recorded liability represents its best estimate of the cost of remediation for the Maywood site. The best estimate of the cost of remediation for the Maywood site could change as the Company continues to hold discussions with the USEPA, as the design of the remedial action progresses, if a groundwater ROD is issued or if other PRPs are identified. The ultimate amount for which the Company is liable could differ from the Company’s current recorded liability. In April 2015, the Company entered into an Administrative Settlement Agreement and Administrative Order on Consent with the USEPA which requires payment of certain costs and performance of certain investigative and design work for chemically-contaminated soil. Based on the Company’s review and analysis of this order, no changes to the Company’s recorded liability for claims associated with soil remediation of chemical contamination were required. In addition, under the terms of a settlement agreement reached on November 12, 2004, the U. S. Department of Justice and the Company agreed to fulfill the terms of a Cooperative Agreement reached in 1985 under which the United States will take title to and responsibility for radioactive waste removal at the Maywood site, including past and future remediation costs incurred by the United States. As such, the Company recorded no liability related to this settlement agreement. D’Imperio Property Site During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances at several sites in New Jersey. The Company was named as a PRP in a lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio Property Site located in New Jersey. In 2016, the PRPs were provided with updated remediation cost estimates which were considered in the Company’s determination of its range of estimated possible losses and liability balance. The changes in range of possible losses and liability balance were immaterial. Remediation work is continuing at this site. Based on current information, the Company believes that its recorded liability represents its best estimate of the cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ from the current estimates. Wilmington Site The Company is currently contractually obligated to contribute to the response costs associated with the Company’s formerly-owned site in Wilmington, Massachusetts. Remediation at this site is being managed by its current owner, to whom the Company sold the property in 1980. Under the agreement, once total site remediation costs exceed certain levels, the Company is obligated to contribute up to five percent of future response costs associated with this site with no limitation on the ultimate amount of contributions. The Company has paid the current owner $2.6 million for the Company’s portion of environmental response costs through September 30, 2018. The Company has recorded a liability for its portion of the estimated remediation costs for the site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ from the current estimates. The Company and other prior owners also entered into an agreement in April 2004 waiving certain statute of limitations defenses for claims which may be filed by the Town of Wilmington, Massachusetts, in connection with this site. While the Company has denied any liability for any such claims, the Company agreed to this waiver while the parties continue to discuss the resolution of any potential claim which may be filed. Other U.S. Sites Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at two of its U.S. plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. In the fourth quarter of 2016, the Company recognized a charge for the estimated cost of remediating the sites. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas represents its best estimate of expected costs. However, actual costs could differ from current estimates. |
Postretirement Benefit Plans
Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |
Postretirement Benefit Plans | 8. POSTRETIREMENT BENEFIT PLANS Defined Benefit Pension Plans The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The U.S. and U.K. defined benefit pension plans are frozen and service benefits are no longer being accrued. Components of Net Periodic Benefit Cost UNITED STATES (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Interest cost $ 1,566 $ 1,665 $ 4,645 $ 4,988 Expected return on plan assets (2,320 ) (2,323 ) (6,962 ) (6,966 ) Amortization of net actuarial loss 987 738 2,860 2,314 Net periodic benefit cost $ 233 $ 80 $ 543 $ 336 UNITED KINGDOM (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Interest cost $ 138 $ 151 $ 430 $ 441 Expected return on plan assets (216 ) (203 ) (673 ) (593 ) Amortization of net actuarial loss 53 97 166 284 Net periodic benefit cost (income) $ (25 ) $ 45 $ (77 ) $ 132 In the first quarter of 2018, the Company implemented ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Employer Contributions U.S. Plans The Company made a $5,000,000 voluntary contribution to its funded U.S. qualified defined benefit plans in the three- and nine-month periods ended September 30, 2018. No further contributions are expected to be made to the funded plans in 2018. As a result of pension funding relief provisions included in the Highway and Transportation Funding Act of 2014, the Company is not required to make contributions to the funded U.S. qualified defined benefit plans during 2018. Approximately $312,000 is expected to be contributed to the unfunded non-qualified plans in 2018. Of such amount, $256,000 had been contributed to the non-qualified plans as of September 30, 2018. U.K. Plan The Company’s U.K. subsidiary expects to contribute approximately $497,000 to its defined benefit pension plan in 2018. Of such amount, $372,000 had been contributed to the plan as of September 30, 2018. Defined Contribution Plans The Company sponsors retirement savings defined contribution plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan, and one non-qualified supplemental executive plan. Historically, the Company made profit sharing contributions into the qualified retirement plans for its U.S. employees. Profit sharing contributions were determined each year using a formula that was applied to Company earnings. The contributions, which were made partly in cash paid to the 401(k) plan and partly in Company common stock, are allocated to participant accounts on the basis of participant base earnings. Effective January 1, 2018, the Company amended its U.S. retirement saving plan and profit sharing formula, which resulted in a higher potential contribution percentage to the U.S. retirement savings plan and a lower potential profit sharing contribution percentage relative to prior years. Defined contribution plan expenses for the Company’s retirement savings plans and profit sharing were as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Retirement savings plans $ 1,738 $ 1,275 $ 5,201 $ 3,758 Profit sharing plan 759 1,308 2,769 5,259 Total defined contribution expense $ 2,497 $ 2,583 $ 7,970 $ 9,017 The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust comprises various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s consolidated balance sheets. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the consolidated statements of income. The liabilities related to the supplemental plans increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciates and decrease when the value of the trust assets declines (i.e., supplemental plan income is recognized). At September 30, 2018, the balance of the trust assets was $1,617,000, which equaled the balance of the supplemental plan liabilities (see the long-term investments section in Note 3 for further information regarding the Company’s mutual fund assets). |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 9. EARNINGS PER SHARE Below are the computations of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017: (In thousands, except per share amounts) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Computation of Basic Earnings per Share Net income attributable to Stepan Company $ 22,168 $ 21,899 $ 85,816 $ 81,694 Weighted-average number of common shares outstanding 22,986 22,971 23,036 22,941 Basic earnings per share $ 0.96 $ 0.95 $ 3.73 $ 3.56 Computation of Diluted Earnings per Share Net income attributable to Stepan Company $ 22,168 $ 21,899 $ 85,816 $ 81,694 Weighted-average number of shares outstanding 22,986 22,971 23,036 22,941 Add weighted-average net shares from assumed exercise of options (under treasury stock method) (1) 103 147 103 167 Add weighted-average net shares related to unvested stock awards (under treasury stock method) 3 8 2 8 Add weighted-average net shares from assumed exercise of SARs (under treasury stock method) (1) 113 140 111 142 Add weighted-average contingently issuable net shares related to performance stock awards (under treasury stock method) 83 108 72 103 Weighted-average shares applicable to diluted earnings 23,288 23,374 23,324 23,361 Diluted earnings per share $ 0.95 $ 0.94 $ 3.68 $ 3.50 (1) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Below is the change in the Company’s AOCI balance by component (net of income taxes) for the three and nine months ended September 30, 2018 and 2017: (In thousands) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Adjustments Cash Flow Hedge Adjustments Total Balance at June 30, 2017 $ (80,357 ) $ (29,658 ) $ 95 $ (109,920 ) Other comprehensive income before reclassifications 9,811 — — 9,811 Amounts reclassified from AOCI — 539 (2 ) 537 Net current-period other comprehensive income 9,811 539 (2 ) 10,348 Balance at June 30, 2017 $ (70,546 ) $ (29,119 ) $ 93 $ (99,572 ) Balance at June 30, 2018 $ (96,788 ) $ (27,588 ) $ 86 $ (124,290 ) Other comprehensive income before reclassifications (2,503 ) — — (2,503 ) Amounts reclassified from AOCI — 788 (2 ) 786 Net current-period other comprehensive income (2,503 ) 788 (2 ) (1,717 ) Balance at September 30, 2018 $ (99,291 ) $ (26,800 ) $ 84 $ (126,007 ) Balance at December 31, 2016 $ (96,775 ) $ (30,790 ) $ 100 $ (127,465 ) Other comprehensive income before reclassifications 26,229 — — 26,229 Amounts reclassified from AOCI — 1,671 (7 ) 1,664 Net current-period other comprehensive income 26,229 1,671 (7 ) 27,893 Balance at September 30, 2017 $ (70,546 ) $ (29,119 ) $ 93 $ (99,572 ) Balance at December 31, 2017 $ (70,561 ) $ (29,093 ) $ 91 $ (99,563 ) Other comprehensive income before reclassifications (28,730 ) — — (28,730 ) Amounts reclassified from AOCI — 2,293 (7 ) 2,286 Net current-period other comprehensive income (28,730 ) 2,293 (7 ) (26,444 ) Balance at September 30, 2018 $ (99,291 ) $ (26,800 ) $ 84 $ (126,007 ) Information regarding the reclassifications out of AOCI for the three and nine month periods ended September 30, 2018 and 2017, is displayed below: (In thousands) Amount Reclassified from AOCI (a) Affected Line Item in AOCI Components Three Months Ended September 30 Nine Months Ended September 30 Consolidated Statements of Income 2018 2017 2018 2017 Amortization of defined benefit pension actuarial losses $ (1,040 ) $ (835 ) $ (3,026 ) $ (2,598 ) (b) 252 296 733 927 Tax benefit $ (788 ) $ (539 ) $ (2,293 ) $ (1,671 ) Net of tax Gains and losses on cash flow hedges: Foreign exchange contracts 2 2 7 7 Cost of sales 2 2 7 7 Total before tax — — — — Tax benefit $ 2 $ 2 $ 7 $ 7 Net of tax Total reclassifications for the period $ (786 ) $ (537 ) $ (2,286 ) $ (1,664 ) Net of tax (a) Amounts in parentheses denote expense to statement of income. (b) This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 8 for additional details). |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | 11. SEGMENT REPORTING The Company has three reportable segments: Surfactants, Polymers and Specialty Products. Net sales by segment for the three and nine months ended September 30, 2018 and 2017, were as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Segment Net Sales Surfactants $ 346,884 $ 321,444 $ 1,062,708 $ 973,381 Polymers 141,646 147,754 404,446 415,551 Specialty Products 19,467 18,616 60,044 62,252 Total $ 507,997 $ 487,814 $ 1,527,198 $ 1,451,184 Segment operating income and reconciliations of segment operating income to consolidated income before income taxes for the three and nine months ended September 30, 2018 and 2017, are summarized below: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Segment Operating Income Surfactants $ 31,201 $ 22,559 $ 105,670 $ 92,080 Polymers 17,431 21,146 53,783 63,884 Specialty Products 2,653 990 6,543 7,711 Segment operating income 51,285 44,695 165,996 163,675 Business restructuring (1,715 ) (426 ) (2,346 ) (1,798 ) Unallocated corporate expenses (1) (21,876 ) (13,835 ) (51,616 ) (46,080 ) Consolidated operating income 27,694 30,434 112,034 115,797 Interest expense, net (2,797 ) (2,763 ) (8,620 ) (8,618 ) Other, net 346 1,641 1,990 3,526 Consolidated income before income taxes $ 25,243 $ 29,312 $ 105,404 $ 110,705 (1) Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance. (2) The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenue from Contracts with Customers | 12. REVENUE FROM CONTRACTS WITH CUSTOMERS In the majority of instances the Company deems a contract with a customer to exist when a purchase order is received from a customer for a specified quantity of product or products and the Company acknowledges receipt of such purchase order. In some instances the Company has entered into manufacturing supply agreements with customers but these agreements typically do not bind a customer to any purchase volume requirements and thus an obligation is not created until the customer submits a purchase order to the Company. The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location. Revenue is recognized when performance obligations under terms of a contract with a customer have been satisfied, which is predominantly at a point in time. With the 2018 adoption of ASU 2014-09, revenue is currently recognized when a customer obtains control of a product as compared to the “risk and rewards” criteria used in prior years. However, the adoption of ASU 2014-09 did not have a material impact on the Company’s financial position or results of operations during the first nine months of 2018. Payment terms on sales of product typically range from 30 to 60 days. As a result, the Company has concluded it does not provide any significant benefits of financing to its customers. The Company has elected to account for shipping and handling as activities to fulfill a promise to transfer the good. As such, shipping and handling fees billed to customers in a sales transaction are recorded in Net Sales and shipping and handling costs incurred are recorded in Cost of Sales. The Company has elected to exclude from Net Sales any value added, sales and other taxes that it collects concurrently with revenue producing activities. These accounting policy elections are consistent with the manner in which the Company has historically recorded shipping and handling fees and taxes. In some instances, a customer may qualify for a rebate based on the volume of purchases made over a specified period of time, typically a quarterly or annual period. The Company estimates the expected volume of total purchases using actual volumes, customer projections and historical order patterns and accrues for these rebates based on the best available information at the time. These estimated rebates are treated as a reduction to Net Sales with the offset being recognized within Current Liabilities. This methodology is consistent with the manner in which the Company has historically estimated and recorded volume based rebates. In other instances, discounts for early payments are offered to certain customers. These discounts are principally accrued for based on a customer’s historical use of discounts. These estimated early payment discounts are accounted for similarly to volume rebates. These forms of variable consideration are considered part of the transaction price. The Company warrants its products from defects. The Company has concluded that these represent assurance-type warranties as opposed to service-type warranties. Product defects are rare in occurrence. As a result, the Company does not maintain any warranty accruals until such time as it is probable a product defect exists. As of September 30, 2018, the Company did not have any contract assets or contract liabilities. A contract liability would typically arise when an advance or deposit is received from a customer before the Company recognizes revenue. In practice, this is extremely rare as it would require a customer to make a payment prior to a performance obligation being satisfied. If such a situation did arise the Company would maintain a deferred revenue liability until the time a performance obligation has been satisfied. The Company did not recognize any revenue in the current period from any pre-existing contract liability balance. The tables below provide a geographic disaggregation of net sales for the three and nine months ended September 30, 2018 and 2017. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors. This regional data is the predominant information used by senior management to assess the financial performance of operating segments and make resource allocation decisions. For the Three Months Ended September 30, 2018 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 205,032 $ 87,720 $ 16,877 $ 309,629 Europe 68,120 45,780 2,590 116,490 Latin America 58,560 978 — 59,538 Asia 15,172 7,168 — 22,340 Total $ 346,884 $ 141,646 $ 19,467 $ 507,997 For the Three Months Ended September 30, 2017 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 184,889 $ 86,002 $ 15,215 $ 286,106 Europe 69,325 53,008 3,401 125,734 Latin America 51,241 1,318 — 52,559 Asia 15,989 7,426 — 23,415 Total $ 321,444 $ 147,754 $ 18,616 $ 487,814 For the Nine Months Ended September 30, 2018 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ — Europe — Latin America — — Asia — — Total $ — $ — $ — $ — For the Nine Months Ended September 30, 2017 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 582,148 $ 251,291 $ 46,353 $ 879,792 Europe 198,037 142,265 15,899 356,201 Latin America 143,305 3,576 — 146,881 Asia 49,891 18,419 — 68,310 Total $ 973,381 $ 415,551 $ 62,252 $ 1,451,184 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 13. DEBT At September 30, 2018, and December 31, 2017, debt comprised the following: (In thousands) Maturity Dates September 30, 2018 December 31, 2017 Unsecured private placement notes 3.95% (net of unamortized debt issuance cost of $371 and $346 for 2018 and 2017, respectively) 2021-2027 $ 99,630 $ 99,654 3.86% (net of unamortized debt issuance cost of $361 and $343 for 2018 and 2017, respectively) 2019-2025 99,639 99,657 4.86% (net of unamortized debt issuance cost of $195 and $191 for 2018 and 2017, respectively) 2018-2023 55,519 55,523 5.88% (net of unamortized debt issuance cost of $93 and $95 for 2018 and 2017, respectively) 2018-2022 22,764 28,476 5.69% (net of unamortized debt issuance cost of $1 and $12 for 2018 and 2017, respectively) 2018 5,713 5,703 Debt of foreign subsidiaries Unsecured bank debt, foreign currency 2018 2,972 1,786 Total debt $ 286,237 $ 290,799 Less current maturities 23,686 22,500 Long-term debt $ 262,551 $ 268,299 On January 30, 2018, the Company entered into a five year committed $350 million multi-currency revolving credit facility that matures on January 30, 2023 with a syndicate of banks. This credit facility replaced the Company’s prior $125 million credit agreement. The Company’s outstanding Note Purchase Agreements were amended effective January 30, 2018 to make certain covenants consistent with those included in the revolving credit agreement. The Company maintains standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the revolving credit agreement. As of September 30, 2018, the Company had outstanding letters of credit totaling $5,041,000 and no outstanding debt under the revolving credit agreement. There was $344,959,000 available under the revolving credit agreement as of September 30, 2018. The Company’s loan agreements contain provisions which, among others, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $169,388,000 and $190,495,000 at September 30, 2018 and December 31, 2017, respectively. |
Other, Net
Other, Net | 9 Months Ended |
Sep. 30, 2018 | |
Other Income And Expenses [Abstract] | |
Other, Net | 14. OTHER, NET Other, net in the consolidated statements of income included the following: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Foreign exchange gains (losses) $ (274 ) $ 596 $ 895 $ 97 Investment income 91 69 320 220 Realized and unrealized gains on investments 737 1,101 1,241 3,677 Net periodic benefit cost (208 ) (125 ) (466 ) (468 ) Other, net $ 346 $ 1,641 $ 1,990 $ 3,526 Based on requirements of ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, . |
Business Restructuring
Business Restructuring | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Business Restructuring | 15. BUSINESS RESTRUCTURING During the third quarter of 2018, the Company approved a plan to shut down Surfactants operations at its German plant site. As of September 30, the Company recognized restructuring costs of $1,410,000 comprised of asset and spare part write-downs. The shutdown decision was made in order to reduce the Company’s fixed cost base, facilitate a refocusing of Surfactant resources on higher margin end markets and allow for select assets to be repurposed to support future polyol growth. Decommissioning expenses associated with the shutdown will be incurred throughout 2019. In June 2017, the Company eliminated 11 positions from manufacturing operations at its Singapore plant, which is part of the Company’s Surfactant segment. The reduction in positions was made to better align the number of personnel with business requirements and to reduce costs at that site. As a result of the reduction in workforce, termination expense of $132,000 was recognized in the consolidated statements of income for the nine months ended September 30, 2017. There is no more termination liability remaining for this site. In May 2016, the Company announced plans to shut down its Longford Mills, Ontario, Canada (Longford Mills) manufacturing facility, a part of the Surfactant reportable segment, by December 31, 2016. The shutdown plan was developed as an effort to improve the Company’s asset utilization in North America and to reduce the Company’s fixed cost base. Manufacturing operations at the Longford Mills plant ceased by the end of 2016, and production of goods manufactured at the facility was transferred to other Company production sites in the United States. Decommissioning activities are expected to continue throughout the remainder of 2018 and 2019. As of September 30, 2018, $5,775,000 of aggregate restructuring expense has been recognized, reflecting $1,594,000 of termination benefits for approximately 30 employees and $4,181,000 for other expenses, principally asset decommissioning costs. Below is a reconciliation of the December 31, 2017 and the September 30, 2018 restructuring liabilities: (In thousands) Termination Benefits Other Expense Total Restructuring liability at December 31, 2017 $ 592 $ 99 $ 691 Expense recognized — 358 358 Amounts paid (140 ) (409 ) (549 ) Foreign currency translation (3 ) (4 ) (7 ) Restructuring liability at March 31, 2018 $ 449 $ 44 $ 493 Expense recognized — 273 273 Amounts paid (79 ) (226 ) (305 ) Foreign currency translation (7 ) (2 ) (9 ) Restructuring liability at June 30, 2018 $ 363 $ 89 $ 452 Expense recognized — 305 305 Amounts paid (61 ) (306 ) (367 ) Foreign currency translation 6 1 7 Restructuring liability at September 30, 2018 $ 308 $ 89 $ 397 |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition | 16. ACQUISITION On March 26, 2018, the Company, through a subsidiary in Mexico, acquired BASF Mexicana, S.A.DE C.V.’s (BASF) production facility in Ecatepec, Mexico and a portion of its related surfactants business. The facility, which is near Mexico City, has over 50,000 metric tons of capacity, 124,000 square feet of warehouse space, a large laboratory and office space. The acquired assets and business are included in the Company’s Surfactants segment. The initial purchase price of the acquisition was $21,475,000 and was paid with cash on hand. The primary assets acquired were land, buildings, machinery and equipment and inventory. In the third quarter of 2018 the Company reached alignment with BASF on the final value of inventory acquired. The incremental inventory and related value-added taxes totaled $1,377,000 and increased the total assets acquired in the transaction from $21,475,000 to $22,852,000 as of September 30, 2018. The final inventory settlement payment is anticipated to be made in the fourth quarter of 2018. The purchase price allocation remains preliminary as of September 30, 2018. The acquisition was accounted for as a business combination, and, accordingly, the assets acquired were measured and recorded at their estimated fair values. The following table summarizes the assets acquired as a result of the acquisition: (In thousands) Assets: Property, plant and equipment $ 14,464 Inventory 5,687 Other Receivable 2,701 Total assets acquired $ 22,852 The acquired business is expected to have minimal impact on the Company’s 2018 financial results. Pro forma financial information for the first nine months of 2017 and 2018 has not been included because revenues and earnings of the Company would not have been significantly different than reported had the acquisition date been January 1, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 17. INCOME TAXES The Company’s effective tax rate was 12.2 percent for the third quarter of 2018 compared to 25.4 percent for the third quarter of 2017. The Company’s effective tax rate was 18.6 percent for the first nine months of 2018 compared to 26.2 percent for the first nine months of 2017. Both the third quarter and nine months decreases were primarily attributable to a lower U.S. statutory tax rate of 21 percent in 2018 versus 35 percent in 2017. This benefit was partially offset by: (a) certain unfavorable U.S. tax reform changes that became effective on January 1, 2018 (i.e. global intangible low taxed income, non-deductible executive compensation and the repeal of the domestic production activities deduction), and (b) lower excess tax benefits derived from stock based compensation awards exercised or distributed in 2018 versus 2017. In addition, during the third quarter of 2018, the Company filed applications to automatically change certain tax accounting methods related to the 2017 tax year. These method changes provided a favorable tax benefit that was partially offset by the negative tax impact recognized as a result of the Company’s plan to repatriate approximately $100 million of foreign cash in the fourth quarter of 2018. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act made broad and complex changes to the U.S. tax code. Our accounting for the following elements of the Tax Act is complete: Deemed Repatriation Transition Tax: The Transition Tax is a tax on previously untaxed accumulated and current earnings and profits of our foreign subsidiaries. We were able to reasonably estimate the Transition Tax and recorded a provisional Transition Tax obligation of $19.4 million, with a corresponding adjustment of $19.4 million to income tax expense for the year ended December 31, 2017. On the basis of revised earnings and profits computations that were completed during the third quarter, we recognized a favorable measurement-period adjustment of $0.4 million to the Transition Tax obligation, with a corresponding favorable adjustment of $0.4 million to income tax expense during the third quarter of 2018. The effect of the measurement-period adjustment on the 2018 effective tax rate was a reduction of approximately 0.4 percent. The Transition Tax, which has now been determined to be complete, resulted in recording a total Transition Tax obligation of $19.0 million, with a corresponding adjustment of $19.0 million to income tax expense. Pursuant to the Tax Act, the Company’s foreign earnings have been subject to U.S. federal taxes. The Company now has the ability to repatriate to the U.S. parent the cash associated with these foreign earnings with little additional U.S. federal taxes. This cash may, however, be subject to foreign income and/or local country taxes if repatriated to the United States. In addition, repatriation of some foreign cash balances may be further restricted by local laws. During the quarter, the Company completed analyzing its foreign capital structure and determined the amount of cash at its foreign subsidiaries that can be repatriated to the United States with minimal additional taxes. In our analysis, the Company considered the future operating and liquidity needs of the Company and its foreign subsidiaries, while also considering the Company’s past assertion of indefinite reinvestment in its foreign earnings. The Company recorded $1.9 million of additional income tax expense during the third quarter of 2018. The effect of the adjustment on the 2018 effective tax rate was an increase of approximately 1.8 percent. With regard to the cash remaining at the Company’s foreign subsidiaries after the repatriation, the Company maintains its assertion of indefinite reinvestment in its foreign earnings. Reduction of U.S. federal corporate tax rate: The Tax Act reduced the corporate tax rate to 21 percent, effective January 1, 2018. We were able to reasonably estimate the impact to our deferred tax assets and liabilities and recorded a provisional net adjustment of $4.5 million for the year ended December 31, 2017. On the basis of revised temporary differences that were completed during the third quarter of 2018, we recognized a favorable measurement-period adjustment of $5.2 million. The effect of the measurement-period adjustment on the 2018 effective tax rate was a reduction of approximately 4.9 percent. The reduction of the U.S. federal corporate tax rate, which has now been determined to be complete, resulted in recording a total deferred income tax benefit of $9.7 million as a result of revaluing the Company’s deferred tax assets and liabilities. Cost recovery: The Company is able to claim bonus depreciation to accelerate the expensing of the cost of certain qualified property acquired and placed in service after September 27, 2017 and before January 1, 2024. For the first five-year period (through 2022), the Company can deduct 100 percent of the cost of qualified property. Starting in 2023, the additional bonus depreciation is gradually phased out by 20 percent each year through 2027. We have completed the computations necessary and completed an inventory of our 2017 expenditures for property that was placed into service after September 27, 2017 through December 31, 2017 and that qualifies for immediate expensing. We concluded the impact of the true-up adjustment from this analysis, which has now been determined to be complete, was immaterial . Valuation allowances: The Company must assess whether valuation allowances assessments are affected by various aspects of the Tax Act (e.g., GILTI inclusions and new categories of foreign tax credits). The Tax Act did not result in any additional valuation allowances for the Company. Our accounting for the following elements of the Tax Act is incomplete. As noted at year-end, we were not yet able to reasonably estimate the effects for the items set forth below. Therefore, no provisional adjustments were recorded. The Company expects to finalize its computations for these items in the fourth quarter of 2018. Global intangible low taxed income (GILTI): The Tax Act requires the Company to include certain income (GILTI) of its foreign subsidiaries in gross income. The amount of this inclusion is determined under complex rules, and depends, in part, on the character of income earned by the foreign subsidiaries, the tax bases of those subsidiaries’ assets and the amount of certain interest expenses. Under GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future income inclusions related to GILTI as a current-period expense when incurred (the period cost method) or (2) accounting for such amounts in measuring deferred taxes (the deferred method). Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future income inclusions related to GILTI and, if so, what the impact is expected to be. These determinations depend not only on our current structure and estimated future results of global operations but also our intent and ability to modify our structure and/or our business. Therefore, we have not made any adjustments or estimates related to any potential deferred tax liabilities related to GILTI in our financial statements and have not made a policy decision regarding whether to record deferred tax liabilities related to GILTI. Deductibility of Executive Compensation: The Tax Act amended certain aspects of Section 162(m) of the Internal Revenue Code (Section 162(m)), which generally disallows a tax deduction for annual compensation paid to “covered employees” in excess of $1 million, including eliminating an exception to the deduction limit for “qualified performance-based compensation,” effective for tax years beginning after December 31, 2017. The Tax Act provides for a grandfather provision, pursuant to which remuneration that is provided pursuant to a written binding contract in effect on November 2, 2017, and which has not been modified in any material respect on or after that date, will not be subject to the amendments made to Section 162(m) by the Tax Act and will remain eligible for deduction as qualified performance-based compensation. For compensation not yet paid or incurred related to services performed before January 1, 2018, to the extent available, we intend to continue to treat as “qualified performance-based compensation” that is grandfathered under the Tax Act which is deductible compensation. However, we have not yet completed our evaluation of our existing compensation arrangements to determine whether any amounts payable to our Section 162(m) covered employees may continue to constitute qualified performance-based compensation under Section 162(m) and qualify under the grandfather provision. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 18. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) Leases (Topic 842): Targeted Improvements, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In January 2017, the FASB issued ASU No. 2017-4, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU No. 2017-1, Business Combination (Topic 805): Clarifying the Definition of a Business, In March 2017, the FASB issued ASU No. 2017-7, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In January 2018, the FASB issued ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) Leases (Topic 842): Targeted Improvements, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory In January 2017, the FASB issued ASU No. 2017-4, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU No. 2017-1, Business Combination (Topic 805): Clarifying the Definition of a Business, In March 2017, the FASB issued ASU No. 2017-7, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In January 2018, the FASB issued ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract |
Reconciliations of Equity (Tabl
Reconciliations of Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Reconciliations of Total Equity | Below are reconciliations of total equity, Company equity and equity attributable to noncontrolling interests for the nine months ended September 30, 2018 and 2017: (In thousands) Total Equity Stepan Company Equity Noncontrolling Interests’ Equity (3) Balance at January 1, 2018 $ 740,914 $ 740,096 $ 818 Net income 85,807 85,816 (9 ) Dividends (15,225 ) (15,225 ) — Common stock purchases (1) (16,756 ) (16,756 ) — Stock option exercises 3,488 3,488 — Defined benefit pension adjustments, net of tax 2,293 2,293 — Translation adjustments (28,776 ) (28,730 ) (46 ) Derivative instrument activity, net of tax (7 ) (7 ) — Other (2) 6,676 6,676 — Balance at September 30, 2018 $ 778,414 $ 777,651 $ 763 (In thousands) Total Equity Stepan Company Equity Noncontrolling Interests’ Equity (3) Balance at January 1, 2017 $ 635,916 $ 634,604 $ 1,312 Net income 81,661 81,694 (33 ) Dividends (13,841 ) (13,841 ) — Common stock purchases (1) (6,255 ) (6,255 ) — Stock option exercises 3,127 3,127 — Defined benefit pension adjustments, net of tax 1,671 1,671 — Translation adjustments 26,288 26,229 59 Derivative instrument activity, net of tax (7 ) (7 ) — Other (2) 7,711 7,711 — Balance at September 30, 2017 $ 736,271 $ 734,933 $ 1,338 (1) (2) Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (3) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Values and Related Carrying Values of Debt | At September 30, 2018, and December 31, 2017, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $1,021,000 and $987,000 as of September 30, 2018 and December 31, 2017, respectively): (In thousands) September 30, 2018 December 31, 2017 Fair value $ 282,123 $ 293,272 Carrying value 287,258 291,786 |
Financial Assets and Liabilities Measured on a Recurring Basis at Fair Value | The following tables present financial assets and liabilities measured on a recurring basis at fair value as of September 30, 2018, and December 31, 2017, and the level within the fair value hierarchy in which the fair value measurements fall: (In thousands) September 30, 2018 Level 1 Level 2 Level 3 Mutual fund assets $ 28,055 $ 28,055 $ — $ — Derivative assets: Foreign currency contracts 248 — 248 — Total assets at fair value $ 28,303 $ 28,055 $ 248 $ — Derivative liabilities: Foreign currency contracts $ 71 $ — $ 71 $ — (In thousands) December 31, 2017 Level 1 Level 2 Level 3 Mutual fund assets $ 28,270 $ 28,270 $ — $ — Derivative assets: Foreign currency contracts 335 — 335 — Total assets at fair value $ 28,605 $ 28,270 $ 335 $ — Derivative liabilities : Foreign currency contracts $ 94 $ — $ 94 $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Compensation Expense Recorded for All Stock Options, Stock Awards and SARs | Compensation expense recorded for all stock options, stock awards and SARs was as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 $ 3,335 $ 1,697 $ 6,722 $ 6,248 |
Unrecognized Compensation Costs for Stock Options, Stock Awards and SARs | Unrecognized compensation costs for stock options, stock awards and SARs were as follows: (In thousands) September 30, 2018 December 31, 2017 Stock options $ 1,917 $ 1,179 Stock awards 3,987 3,737 SARs 4,155 2,398 |
Share Based Payment Awards Granted in Period | The increases in unrecognized compensation costs for stock options, stock awards and SARs reflected the 2018 grants of: Shares Stock options 77,038 Stock awards (at target) 49,426 SARs 171,131 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Composition of Inventories | The composition of inventories at September 30, 2018, and December 31, 2017, was as follows: (In thousands) September 30, 2018 December 31, 2017 Finished goods $ 136,717 $ 117,529 Raw materials 58,452 55,219 Total inventories $ 195,169 $ 172,748 |
Postretirement Benefit Plans (T
Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |
Components of Net Periodic Benefit Cost | Components of Net Periodic Benefit Cost UNITED STATES (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Interest cost $ 1,566 $ 1,665 $ 4,645 $ 4,988 Expected return on plan assets (2,320 ) (2,323 ) (6,962 ) (6,966 ) Amortization of net actuarial loss 987 738 2,860 2,314 Net periodic benefit cost $ 233 $ 80 $ 543 $ 336 UNITED KINGDOM (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Interest cost $ 138 $ 151 $ 430 $ 441 Expected return on plan assets (216 ) (203 ) (673 ) (593 ) Amortization of net actuarial loss 53 97 166 284 Net periodic benefit cost (income) $ (25 ) $ 45 $ (77 ) $ 132 |
Defined Contribution Plan Expenses for Company's Retirement Savings Plans and Profit Sharing | Defined contribution plan expenses for the Company’s retirement savings plans and profit sharing were as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Retirement savings plans $ 1,738 $ 1,275 $ 5,201 $ 3,758 Profit sharing plan 759 1,308 2,769 5,259 Total defined contribution expense $ 2,497 $ 2,583 $ 7,970 $ 9,017 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | Below are the computations of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017: (In thousands, except per share amounts) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Computation of Basic Earnings per Share Net income attributable to Stepan Company $ 22,168 $ 21,899 $ 85,816 $ 81,694 Weighted-average number of common shares outstanding 22,986 22,971 23,036 22,941 Basic earnings per share $ 0.96 $ 0.95 $ 3.73 $ 3.56 Computation of Diluted Earnings per Share Net income attributable to Stepan Company $ 22,168 $ 21,899 $ 85,816 $ 81,694 Weighted-average number of shares outstanding 22,986 22,971 23,036 22,941 Add weighted-average net shares from assumed exercise of options (under treasury stock method) (1) 103 147 103 167 Add weighted-average net shares related to unvested stock awards (under treasury stock method) 3 8 2 8 Add weighted-average net shares from assumed exercise of SARs (under treasury stock method) (1) 113 140 111 142 Add weighted-average contingently issuable net shares related to performance stock awards (under treasury stock method) 83 108 72 103 Weighted-average shares applicable to diluted earnings 23,288 23,374 23,324 23,361 Diluted earnings per share $ 0.95 $ 0.94 $ 3.68 $ 3.50 (1) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income | Below is the change in the Company’s AOCI balance by component (net of income taxes) for the three and nine months ended September 30, 2018 and 2017: (In thousands) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Adjustments Cash Flow Hedge Adjustments Total Balance at June 30, 2017 $ (80,357 ) $ (29,658 ) $ 95 $ (109,920 ) Other comprehensive income before reclassifications 9,811 — — 9,811 Amounts reclassified from AOCI — 539 (2 ) 537 Net current-period other comprehensive income 9,811 539 (2 ) 10,348 Balance at June 30, 2017 $ (70,546 ) $ (29,119 ) $ 93 $ (99,572 ) Balance at June 30, 2018 $ (96,788 ) $ (27,588 ) $ 86 $ (124,290 ) Other comprehensive income before reclassifications (2,503 ) — — (2,503 ) Amounts reclassified from AOCI — 788 (2 ) 786 Net current-period other comprehensive income (2,503 ) 788 (2 ) (1,717 ) Balance at September 30, 2018 $ (99,291 ) $ (26,800 ) $ 84 $ (126,007 ) Balance at December 31, 2016 $ (96,775 ) $ (30,790 ) $ 100 $ (127,465 ) Other comprehensive income before reclassifications 26,229 — — 26,229 Amounts reclassified from AOCI — 1,671 (7 ) 1,664 Net current-period other comprehensive income 26,229 1,671 (7 ) 27,893 Balance at September 30, 2017 $ (70,546 ) $ (29,119 ) $ 93 $ (99,572 ) Balance at December 31, 2017 $ (70,561 ) $ (29,093 ) $ 91 $ (99,563 ) Other comprehensive income before reclassifications (28,730 ) — — (28,730 ) Amounts reclassified from AOCI — 2,293 (7 ) 2,286 Net current-period other comprehensive income (28,730 ) 2,293 (7 ) (26,444 ) Balance at September 30, 2018 $ (99,291 ) $ (26,800 ) $ 84 $ (126,007 ) |
Summary of Amounts Reclassifications Out of Accumulated Other Comprehensive Income | Information regarding the reclassifications out of AOCI for the three and nine month periods ended September 30, 2018 and 2017, is displayed below: (In thousands) Amount Reclassified from AOCI (a) Affected Line Item in AOCI Components Three Months Ended September 30 Nine Months Ended September 30 Consolidated Statements of Income 2018 2017 2018 2017 Amortization of defined benefit pension actuarial losses $ (1,040 ) $ (835 ) $ (3,026 ) $ (2,598 ) (b) 252 296 733 927 Tax benefit $ (788 ) $ (539 ) $ (2,293 ) $ (1,671 ) Net of tax Gains and losses on cash flow hedges: Foreign exchange contracts 2 2 7 7 Cost of sales 2 2 7 7 Total before tax — — — — Tax benefit $ 2 $ 2 $ 7 $ 7 Net of tax Total reclassifications for the period $ (786 ) $ (537 ) $ (2,286 ) $ (1,664 ) Net of tax (a) Amounts in parentheses denote expense to statement of income. (b) This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 8 for additional details). |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Operating Segment | The Company has three reportable segments: Surfactants, Polymers and Specialty Products. Net sales by segment for the three and nine months ended September 30, 2018 and 2017, were as follows: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Segment Net Sales Surfactants $ 346,884 $ 321,444 $ 1,062,708 $ 973,381 Polymers 141,646 147,754 404,446 415,551 Specialty Products 19,467 18,616 60,044 62,252 Total $ 507,997 $ 487,814 $ 1,527,198 $ 1,451,184 |
Reconciliation of Segment Information to Consolidated Financial Statements | Segment operating income and reconciliations of segment operating income to consolidated income before income taxes for the three and nine months ended September 30, 2018 and 2017, are summarized below: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Segment Operating Income Surfactants $ 31,201 $ 22,559 $ 105,670 $ 92,080 Polymers 17,431 21,146 53,783 63,884 Specialty Products 2,653 990 6,543 7,711 Segment operating income 51,285 44,695 165,996 163,675 Business restructuring (1,715 ) (426 ) (2,346 ) (1,798 ) Unallocated corporate expenses (1) (21,876 ) (13,835 ) (51,616 ) (46,080 ) Consolidated operating income 27,694 30,434 112,034 115,797 Interest expense, net (2,797 ) (2,763 ) (8,620 ) (8,618 ) Other, net 346 1,641 1,990 3,526 Consolidated income before income taxes $ 25,243 $ 29,312 $ 105,404 $ 110,705 (1) Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance. (2) The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Geographic Disaggregation of Net Sales | The tables below provide a geographic disaggregation of net sales for the three and nine months ended September 30, 2018 and 2017. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors. This regional data is the predominant information used by senior management to assess the financial performance of operating segments and make resource allocation decisions. For the Three Months Ended September 30, 2018 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 205,032 $ 87,720 $ 16,877 $ 309,629 Europe 68,120 45,780 2,590 116,490 Latin America 58,560 978 — 59,538 Asia 15,172 7,168 — 22,340 Total $ 346,884 $ 141,646 $ 19,467 $ 507,997 For the Three Months Ended September 30, 2017 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 184,889 $ 86,002 $ 15,215 $ 286,106 Europe 69,325 53,008 3,401 125,734 Latin America 51,241 1,318 — 52,559 Asia 15,989 7,426 — 23,415 Total $ 321,444 $ 147,754 $ 18,616 $ 487,814 For the Nine Months Ended September 30, 2018 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ — Europe — Latin America — — Asia — — Total $ — $ — $ — $ — For the Nine Months Ended September 30, 2017 (In thousands) Surfactants Polymers Specialty Products Total Geographic Market North America $ 582,148 $ 251,291 $ 46,353 $ 879,792 Europe 198,037 142,265 15,899 356,201 Latin America 143,305 3,576 — 146,881 Asia 49,891 18,419 — 68,310 Total $ 973,381 $ 415,551 $ 62,252 $ 1,451,184 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | At September 30, 2018, and December 31, 2017, debt comprised the following: (In thousands) Maturity Dates September 30, 2018 December 31, 2017 Unsecured private placement notes 3.95% (net of unamortized debt issuance cost of $371 and $346 for 2018 and 2017, respectively) 2021-2027 $ 99,630 $ 99,654 3.86% (net of unamortized debt issuance cost of $361 and $343 for 2018 and 2017, respectively) 2019-2025 99,639 99,657 4.86% (net of unamortized debt issuance cost of $195 and $191 for 2018 and 2017, respectively) 2018-2023 55,519 55,523 5.88% (net of unamortized debt issuance cost of $93 and $95 for 2018 and 2017, respectively) 2018-2022 22,764 28,476 5.69% (net of unamortized debt issuance cost of $1 and $12 for 2018 and 2017, respectively) 2018 5,713 5,703 Debt of foreign subsidiaries Unsecured bank debt, foreign currency 2018 2,972 1,786 Total debt $ 286,237 $ 290,799 Less current maturities 23,686 22,500 Long-term debt $ 262,551 $ 268,299 |
Other, Net (Tables)
Other, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Income And Expenses [Abstract] | |
Other Net in Consolidated Statements of Income | Other, net in the consolidated statements of income included the following: (In thousands) Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Foreign exchange gains (losses) $ (274 ) $ 596 $ 895 $ 97 Investment income 91 69 320 220 Realized and unrealized gains on investments 737 1,101 1,241 3,677 Net periodic benefit cost (208 ) (125 ) (466 ) (468 ) Other, net $ 346 $ 1,641 $ 1,990 $ 3,526 |
Business Restructuring (Tables)
Business Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Reconciliation of Restructuring Liabilities | Below is a reconciliation of the December 31, 2017 and the September 30, 2018 restructuring liabilities: (In thousands) Termination Benefits Other Expense Total Restructuring liability at December 31, 2017 $ 592 $ 99 $ 691 Expense recognized — 358 358 Amounts paid (140 ) (409 ) (549 ) Foreign currency translation (3 ) (4 ) (7 ) Restructuring liability at March 31, 2018 $ 449 $ 44 $ 493 Expense recognized — 273 273 Amounts paid (79 ) (226 ) (305 ) Foreign currency translation (7 ) (2 ) (9 ) Restructuring liability at June 30, 2018 $ 363 $ 89 $ 452 Expense recognized — 305 305 Amounts paid (61 ) (306 ) (367 ) Foreign currency translation 6 1 7 Restructuring liability at September 30, 2018 $ 308 $ 89 $ 397 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of Assets Acquired Measured and Recorded at Estimated Fair Values | The following table summarizes the assets acquired as a result of the acquisition: (In thousands) Assets: Property, plant and equipment $ 14,464 Inventory 5,687 Other Receivable 2,701 Total assets acquired $ 22,852 |
Reconciliations of Equity - Rec
Reconciliations of Equity - Reconciliations of Total Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Reconciliations of total equity | |||||
Beginning Balance | $ 740,914 | $ 635,916 | |||
Net income | $ 22,168 | $ 21,853 | 85,807 | 81,661 | |
Dividends | (15,225) | (13,841) | |||
Common stock purchases | [1] | (16,756) | (6,255) | ||
Stock option exercises | 3,488 | 3,127 | |||
Defined benefit pension adjustments, net of tax | 788 | 539 | 2,293 | 1,671 | |
Translation adjustments | (2,534) | 9,837 | (28,776) | 26,288 | |
Derivative instrument activity, net of tax | (2) | (2) | (7) | (7) | |
Other | [2] | 6,676 | 7,711 | ||
Ending Balance | 778,414 | 736,271 | 778,414 | 736,271 | |
Stepan Company Equity [Member] | |||||
Reconciliations of total equity | |||||
Beginning Balance | 740,096 | 634,604 | |||
Net income | 85,816 | 81,694 | |||
Dividends | (15,225) | (13,841) | |||
Common stock purchases | [1] | (16,756) | (6,255) | ||
Stock option exercises | 3,488 | 3,127 | |||
Defined benefit pension adjustments, net of tax | 2,293 | 1,671 | |||
Translation adjustments | (28,730) | 26,229 | |||
Derivative instrument activity, net of tax | (7) | (7) | |||
Other | [2] | 6,676 | 7,711 | ||
Ending Balance | 777,651 | 734,933 | 777,651 | 734,933 | |
Noncontrolling Interests' Equity [Member] | |||||
Reconciliations of total equity | |||||
Beginning Balance | [3] | 818 | 1,312 | ||
Net income | [3] | (9) | (33) | ||
Translation adjustments | [3] | (46) | 59 | ||
Ending Balance | [3] | $ 763 | $ 1,338 | $ 763 | $ 1,338 |
[1] | Includes the value of Company common stock purchased in the open market and from the Company’s retirement plans and the value of Company common stock tendered by employees to settle statutory withholding taxes related to distributions of deferred performance awards and deferred management incentive compensation and exercises of stock appreciation rights. | ||||
[2] | Primarily comprised of activity related to stock-based compensation and deferred compensation. Beginning in 2018, also includes beginning retained earnings adjustment as a result of the Company’s first quarter 2018 adoption of ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. | ||||
[3] | Reflects the noncontrolling interest in the Company’s China joint venture. |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Unamortized debt issuance cost | $ 1,021,000 | $ 987,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Values and Related Carrying Values of Debt (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Carrying value | $ 287,258 | $ 291,786 |
Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value | $ 282,123 | $ 293,272 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Measured on a Recurring Basis at Fair Value (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Mutual fund assets | $ 28,055 | $ 28,270 |
Derivative assets: | ||
Foreign currency contracts | 248 | 335 |
Total assets at fair value | 28,303 | 28,605 |
Derivative liabilities: | ||
Foreign currency contracts | 71 | 94 |
Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Mutual fund assets | 28,055 | 28,270 |
Derivative assets: | ||
Total assets at fair value | 28,055 | 28,270 |
Level 2 [Member] | ||
Derivative assets: | ||
Foreign currency contracts | 248 | 335 |
Total assets at fair value | 248 | 335 |
Derivative liabilities: | ||
Foreign currency contracts | $ 71 | $ 94 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative notional amount | $ 90,349,000 | $ 41,197,000 |
Minimum [Member] | ||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative foreign currency exchange contracts durations | 1 month | |
Maximum [Member] | ||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative foreign currency exchange contracts durations | 3 months |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2018 | |
Stock Option and Stock Appreciation Rights (SARs) Granted Prior to 2017 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Vesting period | 2 years |
Stock Option and Stock Appreciation Rights (SARS) Granted in 2017 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Vesting period | 3 years |
Percentage of awards vesting in each year | 33.33% |
Stock Option [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Weighted average period for amortization of unrecognized compensation cost | 2 years |
Stock Awards [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Weighted average period for amortization of unrecognized compensation cost | 1 year 9 months 18 days |
SARs [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Weighted average period for amortization of unrecognized compensation cost | 2 years |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense Recorded for All Stock Options, Stock Awards and SARs (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Compensation expense | $ 3,335 | $ 1,697 | $ 6,722 | $ 6,248 |
Stock-Based Compensation - Unre
Stock-Based Compensation - Unrecognized Compensation Costs for Stock Options, Stock Awards and SARs (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Stock Option [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Unrecognized compensation costs for stock options, stock awards and SARs | $ 1,917 | $ 1,179 |
Stock Awards [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Unrecognized compensation costs for stock options, stock awards and SARs | 3,987 | 3,737 |
SARs [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Unrecognized compensation costs for stock options, stock awards and SARs | $ 4,155 | $ 2,398 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Share Based Payment Awards Granted in Period (Detail) | 9 Months Ended |
Sep. 30, 2018shares | |
Stock Option [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Stock options granted in period | 77,038 |
Stock Awards (at target) [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Awards granted in period | 49,426 |
SARs [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Awards granted in period | 171,131 |
Inventories - Composition of In
Inventories - Composition of Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 136,717 | $ 117,529 |
Raw materials | 58,452 | 55,219 |
Total inventories | $ 195,169 | $ 172,748 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
LIFO reserve | $ 35,298,000 | $ 33,518,000 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Site Contingency [Line Items] | |||
Environmental and legal losses | $ 24,000,000 | $ 24,200,000 | |
Cash outlays related to legal and environmental matters | $ 1,000,000 | $ 1,400,000 | |
Contribution for future response costs | 5.00% | ||
Wilmington Site [Member] | |||
Site Contingency [Line Items] | |||
Payment of environmental response costs | $ 2,600,000 | ||
Minimum [Member] | |||
Site Contingency [Line Items] | |||
Environmental and legal losses | 24,000,000 | ||
Maximum [Member] | |||
Site Contingency [Line Items] | |||
Environmental and legal losses | $ 45,500,000 |
Postretirement Benefit Plans -
Postretirement Benefit Plans - Components of Net Periodic Benefit Cost (Detail) - 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] | ||||
Net periodic benefit cost (income) | $ 208 | $ 125 | $ 466 | $ 468 |
United States [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 1,566 | 1,665 | 4,645 | 4,988 |
Expected return on plan assets | (2,320) | (2,323) | (6,962) | (6,966) |
Amortization of net actuarial loss | 987 | 738 | 2,860 | 2,314 |
Net periodic benefit cost (income) | 233 | 80 | 543 | 336 |
United Kingdom [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 138 | 151 | 430 | 441 |
Expected return on plan assets | (216) | (203) | (673) | (593) |
Amortization of net actuarial loss | 53 | 97 | 166 | 284 |
Net periodic benefit cost (income) | $ (25) | $ 45 | $ (77) | $ 132 |
Postretirement Benefit Plans _2
Postretirement Benefit Plans - Defined Benefit Pension Plans - Additional Information (Detail) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) | |
Defined Contribution Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Balance of trust assets | $ 1,617,000 | $ 1,617,000 |
United States [Member] | Funded Plan [Member] | Qualified Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | 5,000,000 | 5,000,000 |
Expected contribution to defined benefit plans | 0 | 0 |
United States [Member] | Unfunded Plan [Member] | Non-qualified Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | 256,000 | |
Expected contribution to defined benefit plans | 312,000 | 312,000 |
U.K Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | 372,000 | |
Expected contribution to defined benefit plans | $ 497,000 | $ 497,000 |
Postretirement Benefit Plans _3
Postretirement Benefit Plans - Defined Contribution Plan Expenses for the Company's Retirement Savings Plans and Profit Sharing (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Defined Contribution Plan Disclosure [Line Items] | ||||
Total defined contribution expense | $ 2,497 | $ 2,583 | $ 7,970 | $ 9,017 |
Retirement Savings Plans [Member] | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Total defined contribution expense | 1,738 | 1,275 | 5,201 | 3,758 |
Profit Sharing Plan [Member] | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Total defined contribution expense | $ 759 | $ 1,308 | $ 2,769 | $ 5,259 |
Earnings Per Share - Computatio
Earnings Per Share - Computations of Basic and Diluted Earnings Per Share (Detail) - 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 | ||
Computation of Basic Earnings per Share | |||||
Net income attributable to Stepan Company | $ 22,168 | $ 21,899 | $ 85,816 | $ 81,694 | |
Weighted-average number of common shares outstanding | 22,986 | 22,971 | 23,036 | 22,941 | |
Basic earnings per share | $ 0.96 | $ 0.95 | $ 3.73 | $ 3.56 | |
Computation of Diluted Earnings per Share | |||||
Net income attributable to Stepan Company | $ 22,168 | $ 21,899 | $ 85,816 | $ 81,694 | |
Weighted-average number of common shares outstanding | 22,986 | 22,971 | 23,036 | 22,941 | |
Add weighted-average net shares from assumed exercise of options (under treasury stock method) | [1] | 103 | 147 | 103 | 167 |
Add weighted-average net shares related to unvested stock awards (under treasury stock method) | 3 | 8 | 2 | 8 | |
Weighted-average shares applicable to diluted earnings | 23,288 | 23,374 | 23,324 | 23,361 | |
Diluted earnings per share | $ 0.95 | $ 0.94 | $ 3.68 | $ 3.50 | |
Stock Appreciation Rights (SARs) [Member] | |||||
Computation of Diluted Earnings per Share | |||||
Add weighted-average net shares from assumed exercise of options (under treasury stock method) | [1] | 113 | 140 | 111 | 142 |
Performance Stock Award [Member] | |||||
Computation of Diluted Earnings per Share | |||||
Add weighted-average net shares from assumed exercise of options (under treasury stock method) | 83 | 108 | 72 | 103 | |
[1] | Options/SARs to acquire 65,919 shares of Company common stock were excluded from the computations of diluted earnings per share for the nine months ended September 30, 2018. Options/SARs to acquire 24,840 shares of Company common stock were excluded from the computations of diluted earnings per share for the nine months ended September 30, 2017. Inclusion of the instruments would have had antidilutive effects on the computations of the earnings per share. |
Earnings Per Share - Computat_2
Earnings Per Share - Computations of Basic and Diluted Earnings Per Share (Parenthetical) (Detail) - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Options and Stock Appreciation Rights (SARs) [Member] | ||
Earnings Per Share Basic [Line Items] | ||
Options to purchase shares of common stock were excluded from the computations of diluted earnings per share | 65,919 | 24,840 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | $ 740,096 | |||
Other comprehensive income before reclassifications | $ (2,503) | $ 9,811 | (28,730) | $ 26,229 |
Amounts reclassified from AOCI | 786 | 537 | 2,286 | 1,664 |
Net current-period other comprehensive income | (1,717) | 10,348 | (26,444) | 27,893 |
Ending Balance | 777,651 | 777,651 | ||
Foreign Currency Translation Adjustments [Member] | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (96,788) | (80,357) | (70,561) | (96,775) |
Other comprehensive income before reclassifications | (2,503) | 9,811 | (28,730) | 26,229 |
Net current-period other comprehensive income | (2,503) | 9,811 | (28,730) | 26,229 |
Ending Balance | (99,291) | (70,546) | (99,291) | (70,546) |
Defined Benefit Pension Plan Adjustments [Member] | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (27,588) | (29,658) | (29,093) | (30,790) |
Amounts reclassified from AOCI | 788 | 539 | 2,293 | 1,671 |
Net current-period other comprehensive income | 788 | 539 | 2,293 | 1,671 |
Ending Balance | (26,800) | (29,119) | (26,800) | (29,119) |
Cash Flow Hedge Adjustments [Member] | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | 86 | 95 | 91 | 100 |
Amounts reclassified from AOCI | (2) | (2) | (7) | (7) |
Net current-period other comprehensive income | (2) | (2) | (7) | (7) |
Ending Balance | 84 | 93 | 84 | 93 |
AOCI Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (124,290) | (109,920) | (99,563) | (127,465) |
Ending Balance | $ (126,007) | $ (99,572) | $ (126,007) | $ (99,572) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Summary of Amounts Reclassifications Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||||
Income Before Provision for Income Taxes | $ 25,243 | $ 29,312 | [1] | $ 105,404 | $ 110,705 | [1] | |
Tax benefit | (3,075) | (7,459) | (19,597) | (29,044) | |||
Cost of Sales | [2] | 423,872 | 412,238 | 1,264,223 | 1,193,501 | ||
Defined Benefit Pension Plan Adjustments [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member] | |||||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||||
Amortization of defined benefit pension actuarial losses | [3],[4] | (1,040) | (835) | (3,026) | (2,598) | ||
Tax benefit | [3] | 252 | 296 | 733 | 927 | ||
Income applicable to common stock | [3] | (788) | (539) | (2,293) | (1,671) | ||
Cash Flow Hedge Adjustments [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member] | |||||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||||
Income Before Provision for Income Taxes | [3] | 2 | 2 | 7 | 7 | ||
Income applicable to common stock | [3] | 2 | 2 | 7 | 7 | ||
Cash Flow Hedge Adjustments [Member] | Foreign exchange contracts [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member] | |||||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||||
Cost of Sales | [3] | 2 | 2 | 7 | 7 | ||
Accumulated Other Comprehensive Income (Loss) [Member] | |||||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | |||||||
Income applicable to common stock | [3] | $ (786) | $ (537) | $ (2,286) | $ (1,664) | ||
[1] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost | ||||||
[2] | The 2017 amounts for the noted line items have been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of Accounting Standards Update (ASU) No. 2017-7, Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. | ||||||
[3] | Amounts in parentheses denote expense to statement of income. | ||||||
[4] | This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 8 for additional details). |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2018Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Reporting - Operating S
Segment Reporting - Operating Segment (Detail) - 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] | ||||
Net Sales | $ 507,997 | $ 487,814 | $ 1,527,198 | $ 1,451,184 |
Surfactants [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 346,884 | 321,444 | 1,062,708 | 973,381 |
Polymers [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | 141,646 | 147,754 | 404,446 | 415,551 |
Specialty Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net Sales | $ 19,467 | $ 18,616 | $ 60,044 | $ 62,252 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Segment Information to Consolidated Financial Statements (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | [2] | Sep. 30, 2018 | Sep. 30, 2017 | [2] | ||
Segment Reporting Information [Line Items] | |||||||
Operating income | [1] | $ 27,694 | $ 30,434 | $ 112,034 | $ 115,797 | ||
Business restructuring expenses (Note 15) | (1,715) | (426) | (2,346) | (1,798) | |||
Interest expense, net | (2,797) | (2,763) | (8,620) | (8,618) | |||
Other, net | [1] | 346 | 1,641 | 1,990 | 3,526 | ||
Income Before Provision for Income Taxes | 25,243 | 29,312 | 105,404 | 110,705 | |||
Operating Segments [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating income | 51,285 | 44,695 | 165,996 | 163,675 | |||
Operating Segments [Member] | Surfactants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating income | 31,201 | 22,559 | 105,670 | 92,080 | |||
Operating Segments [Member] | Polymers [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating income | 17,431 | 21,146 | 53,783 | 63,884 | |||
Operating Segments [Member] | Specialty Products [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating income | 2,653 | 990 | 6,543 | 7,711 | |||
Segment Reconciling Items [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Unallocated corporate expenses | [3] | $ (21,876) | $ (13,835) | $ (51,616) | $ (46,080) | ||
[1] | The 2017 amounts for the noted line items have been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of Accounting Standards Update (ASU) No. 2017-7, Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. | ||||||
[2] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost | ||||||
[3] | Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance. |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Disaggregation Of Revenue [Line Items] | |
Contract assets | $ 0 |
Contract liabilities | $ 0 |
Minimum [Member] | |
Disaggregation Of Revenue [Line Items] | |
Payment terms on sales of product | 30 days |
Maximum [Member] | |
Disaggregation Of Revenue [Line Items] | |
Payment terms on sales of product | 60 days |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Summary of Geographic Disaggregation of Net Sales (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 507,997 | $ 487,814 | $ 1,527,198 | $ 1,451,184 |
North America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 309,629 | 286,106 | 879,792 | |
Europe [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 116,490 | 125,734 | 356,201 | |
Latin America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 59,538 | 52,559 | 146,881 | |
Asia [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 22,340 | 23,415 | 68,310 | |
Surfactants [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 346,884 | 321,444 | 1,062,708 | 973,381 |
Surfactants [Member] | North America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 205,032 | 184,889 | 582,148 | |
Surfactants [Member] | Europe [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 68,120 | 69,325 | 198,037 | |
Surfactants [Member] | Latin America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 58,560 | 51,241 | 143,305 | |
Surfactants [Member] | Asia [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 15,172 | 15,989 | 49,891 | |
Polymers [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 141,646 | 147,754 | 404,446 | 415,551 |
Polymers [Member] | North America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 87,720 | 86,002 | 251,291 | |
Polymers [Member] | Europe [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 45,780 | 53,008 | 142,265 | |
Polymers [Member] | Latin America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 978 | 1,318 | 3,576 | |
Polymers [Member] | Asia [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 7,168 | 7,426 | 18,419 | |
Specialty Products [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 19,467 | 18,616 | $ 60,044 | 62,252 |
Specialty Products [Member] | North America [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 16,877 | 15,215 | 46,353 | |
Specialty Products [Member] | Europe [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 2,590 | $ 3,401 | $ 15,899 |
Debt - Debt (Detail)
Debt - Debt (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Total debt | $ 286,237 | $ 290,799 |
Less current maturities | 23,686 | 22,500 |
Long-term debt | 262,551 | 268,299 |
Unsecured private placement 3.95% note [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 99,630 | $ 99,654 |
Debt instrument interest rate percentage | 3.95% | 3.95% |
Unsecured private placement 3.95% note [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,021 | 2,021 |
Unsecured private placement 3.95% note [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,027 | 2,027 |
Unsecured private placement 3.86% note [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 99,639 | $ 99,657 |
Debt instrument interest rate percentage | 3.86% | 3.86% |
Unsecured private placement 3.86% note [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,019 | 2,019 |
Unsecured private placement 3.86% note [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,025 | 2,025 |
Unsecured private placement 4.86% note [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 55,519 | $ 55,523 |
Debt instrument interest rate percentage | 4.86% | 4.86% |
Unsecured private placement 4.86% note [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,018 | 2,018 |
Unsecured private placement 4.86% note [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,023 | 2,023 |
Unsecured private placement 5.88% note [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 22,764 | $ 28,476 |
Debt instrument interest rate percentage | 5.88% | 5.88% |
Unsecured private placement 5.88% note [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,018 | 2,018 |
Unsecured private placement 5.88% note [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Maturity Dates | 2,022 | 2,022 |
Unsecured private placement 5.69% note [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 5,713 | $ 5,703 |
Debt instrument interest rate percentage | 5.69% | 5.69% |
Maturity Dates | 2,018 | 2,018 |
Debt of foreign subsidiaries Unsecured bank debt, foreign currency [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 2,972 | $ 1,786 |
Maturity Dates | 2,018 | 2,018 |
Debt - Debt (Parenthetical) (De
Debt - Debt (Parenthetical) (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | $ 1,021,000 | $ 987,000 |
Unsecured private placement 3.95% note [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | 371,000 | 346,000 |
Unsecured private placement 3.86% note [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | 361,000 | 343,000 |
Unsecured private placement 4.86% note [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | 195,000 | 191,000 |
Unsecured private placement 5.88% note [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | 93,000 | 95,000 |
Unsecured private placement 5.69% note [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance cost | $ 1,000 | $ 12,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) - Multi currency revolving credit agreement [Member] - USD ($) | Jan. 30, 2018 | Sep. 30, 2018 | Jan. 29, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Revolving credit agreement term | 5 years | |||
Revolving credit agreement | $ 350,000,000 | $ 125,000,000 | ||
Credit agreement secured date | Jan. 30, 2023 | |||
Letters of Credit Outstanding | $ 5,041,000 | |||
Debt Outstanding | 0 | |||
Unused Revolving credit | 344,959,000 | |||
Unrestricted retained earnings | $ 169,388,000 | $ 190,495,000 |
Other, Net - Other Net in Conso
Other, Net - Other Net in Consolidated Statements of Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Other Nonoperating Income Expense [Abstract] | |||||||
Foreign exchange gains (losses) | $ (274) | $ 596 | $ 895 | $ 97 | |||
Investment income | 91 | 69 | 320 | 220 | |||
Realized and unrealized gains on investments | 737 | 1,101 | 1,241 | 3,677 | |||
Net periodic benefit cost | (208) | (125) | (466) | (468) | |||
Other, net | [1] | $ 346 | $ 1,641 | [2] | $ 1,990 | $ 3,526 | [2] |
[1] | The 2017 amounts for the noted line items have been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of Accounting Standards Update (ASU) No. 2017-7, Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. | ||||||
[2] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Business Restructuring - Additi
Business Restructuring - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2017Employees | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | [1] | Sep. 30, 2018USD ($)Employees | Sep. 30, 2017USD ($) | ||
Restructuring Cost And Reserve [Line Items] | |||||||
Business restructuring | $ 1,715,000 | $ 426,000 | $ 2,346,000 | $ 1,798,000 | [1] | ||
Germany [Member] | Surfactants [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Restructuring costs | 1,410,000 | ||||||
Singapore [Member] | Surfactants [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Number positions eliminated | Employees | 11 | ||||||
Restructuring liability | $ 0 | $ 0 | |||||
Singapore [Member] | Surfactants [Member] | Termination Benefits [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Business restructuring | $ 132,000 | ||||||
Longford Mills [Member] | Surfactants [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Number positions eliminated | Employees | 30 | ||||||
Business restructuring | $ 5,775,000 | ||||||
Longford Mills [Member] | Surfactants [Member] | Termination Benefits [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Business restructuring | 1,594,000 | ||||||
Longford Mills [Member] | Surfactants [Member] | Other Expense [Member] | |||||||
Restructuring Cost And Reserve [Line Items] | |||||||
Business restructuring | $ 4,181,000 | ||||||
[1] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Business Restructuring - Reconc
Business Restructuring - Reconciliation of Restructuring Liabilities (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | [1] | Sep. 30, 2018 | Sep. 30, 2017 | [1] | |
Restructuring Cost And Reserve [Line Items] | ||||||||
Expense recognized | $ 1,715 | $ 426 | $ 2,346 | $ 1,798 | ||||
Canada [Member] | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Restructuring liability | 452 | $ 493 | $ 691 | 691 | ||||
Expense recognized | 305 | 273 | 358 | |||||
Amounts paid | (367) | (305) | (549) | |||||
Foreign currency translation | 7 | (9) | (7) | |||||
Restructuring liability | 397 | 452 | 493 | 397 | ||||
Canada [Member] | Termination Benefits [Member] | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Restructuring liability | 363 | 449 | 592 | 592 | ||||
Amounts paid | (61) | (79) | (140) | |||||
Foreign currency translation | 6 | (7) | (3) | |||||
Restructuring liability | 308 | 363 | 449 | 308 | ||||
Canada [Member] | Other Expense [Member] | ||||||||
Restructuring Cost And Reserve [Line Items] | ||||||||
Restructuring liability | 89 | 44 | 99 | 99 | ||||
Expense recognized | 305 | 273 | 358 | |||||
Amounts paid | (306) | (226) | (409) | |||||
Foreign currency translation | 1 | (2) | (4) | |||||
Restructuring liability | $ 89 | $ 89 | $ 44 | $ 89 | ||||
[1] | The 2017 data has been immaterially changed from the amounts originally reported as a result of the Company’s first quarter 2018 adoption of ASU No. 2017-7, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost |
Acquisition - Additional Inform
Acquisition - Additional Information (Detail) | Mar. 26, 2018USD ($)ft²T | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Business Acquisition [Line Items] | |||
Paid from cash on hand | $ 21,475,000 | $ 4,339,000 | |
BASF Mexicana, S.A. DE C.V. [Member] | |||
Business Acquisition [Line Items] | |||
Total assets acquired | $ 22,852,000 | ||
BASF Mexicana, S.A. DE C.V. [Member] | Surfactants [Member] | Ecatepec, Mexico [Member] | |||
Business Acquisition [Line Items] | |||
Incremental inventory and related value-added taxes | 1,377,000 | ||
Capacity of production facility expected to be acquired | T | 50,000 | ||
Warehouse space, laboratory and office space currently expected to be acquired | ft² | 124,000 | ||
Paid from cash on hand | $ 21,475,000 | ||
Total assets acquired | $ 22,852,000 |
Acquisition - Summary of Assets
Acquisition - Summary of Assets Acquired Measured and Recorded at Estimated Fair Values (Detail) - BASF Mexicana, S.A. DE C.V. [Member] $ in Thousands | Mar. 26, 2018USD ($) |
Assets: | |
Property, plant and equipment | $ 14,464 |
Inventory | 5,687 |
Other Receivable | 2,701 |
Total assets acquired | $ 22,852 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 12.20% | 25.40% | 18.60% | 26.20% | |
Corporate tax rate | 21.00% | 35.00% | |||
Expects repatriate | $ 100,000,000 | ||||
Provisional transition tax obligation | $ 400,000 | 19,000,000 | $ 19,400,000 | ||
Income tax expense | $ 400,000 | $ 19,000,000 | 19,400,000 | ||
Measurement-period adjustment reduction of rate | 0.40% | 4.90% | |||
Additional income tax expense | $ 1,900,000 | ||||
Increase in effective tax rate | 1.80% | ||||
Deferred income tax benefit | $ 4,500,000 | ||||
Favorable measurement-period adjustment | $ 5,200,000 | ||||
Tax Cuts And Jobs Act Of 2017 Income Tax Expense Benefit | $ 9,700,000 | ||||
Deduction percent of qualified property | 100.00% | ||||
Additional bonus depreciation | 20.00% | ||||
Addition in valuation allowance | 0 | $ 0 | |||
Change in valuation allowance | $ 0 | $ 0 |