x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Virginia
|
13-1872319
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
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190 Carondelet Plaza, Suite 1530, Clayton, MO
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63105
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(Address of principal executive offices)
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(Zip Code)
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TABLE OF CONTENTS FOR FORM 10-Q
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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March 31, 2019
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December 31, 2018
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March 31, 2018
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||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
105.7
|
|
|
$
|
178.8
|
|
|
$
|
109.1
|
|
Receivables, net
|
808.3
|
|
|
776.3
|
|
|
835.6
|
|
|||
Income taxes receivable
|
6.3
|
|
|
5.9
|
|
|
17.5
|
|
|||
Inventories, net
|
717.5
|
|
|
711.4
|
|
|
675.6
|
|
|||
Other current assets
|
46.7
|
|
|
35.0
|
|
|
61.2
|
|
|||
Total current assets
|
1,684.5
|
|
|
1,707.4
|
|
|
1,699.0
|
|
|||
Property, plant and equipment (less accumulated depreciation of $2,892.4, $2,781.0 and $2,444.2)
|
3,433.5
|
|
|
3,482.1
|
|
|
3,539.4
|
|
|||
Operating lease assets, net
|
275.1
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
31.7
|
|
|
26.3
|
|
|
39.4
|
|
|||
Other assets
|
1,131.4
|
|
|
1,150.4
|
|
|
1,197.0
|
|
|||
Intangible assets, net
|
494.2
|
|
|
511.6
|
|
|
565.1
|
|
|||
Goodwill
|
2,119.5
|
|
|
2,119.6
|
|
|
2,120.3
|
|
|||
Total assets
|
$
|
9,169.9
|
|
|
$
|
8,997.4
|
|
|
$
|
9,160.2
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current installments of long-term debt
|
$
|
126.1
|
|
|
$
|
125.9
|
|
|
$
|
0.7
|
|
Accounts payable
|
637.0
|
|
|
636.5
|
|
|
698.2
|
|
|||
Income taxes payable
|
13.0
|
|
|
22.6
|
|
|
16.0
|
|
|||
Current operating lease liabilities
|
69.4
|
|
|
—
|
|
|
—
|
|
|||
Accrued liabilities
|
294.4
|
|
|
333.3
|
|
|
256.1
|
|
|||
Total current liabilities
|
1,139.9
|
|
|
1,118.3
|
|
|
971.0
|
|
|||
Long-term debt
|
3,067.2
|
|
|
3,104.4
|
|
|
3,534.7
|
|
|||
Operating lease liabilities
|
206.0
|
|
|
—
|
|
|
—
|
|
|||
Accrued pension liability
|
660.2
|
|
|
674.3
|
|
|
628.7
|
|
|||
Deferred income taxes
|
525.9
|
|
|
518.9
|
|
|
498.4
|
|
|||
Other liabilities
|
733.1
|
|
|
749.3
|
|
|
764.3
|
|
|||
Total liabilities
|
6,332.3
|
|
|
6,165.2
|
|
|
6,397.1
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
||||||
Shareholders’ equity:
|
|
|
|
|
|
||||||
Common stock, par value $1 per share: authorized, 240.0 shares;
issued and outstanding, 164.9, 165.3 and 167.2 shares
|
164.9
|
|
|
165.3
|
|
|
167.2
|
|
|||
Additional paid-in capital
|
2,239.2
|
|
|
2,247.4
|
|
|
2,285.0
|
|
|||
Accumulated other comprehensive loss
|
(656.9
|
)
|
|
(651.0
|
)
|
|
(552.8
|
)
|
|||
Retained earnings
|
1,090.4
|
|
|
1,070.5
|
|
|
863.7
|
|
|||
Total shareholders’ equity
|
2,837.6
|
|
|
2,832.2
|
|
|
2,763.1
|
|
|||
Total liabilities and shareholders’ equity
|
$
|
9,169.9
|
|
|
$
|
8,997.4
|
|
|
$
|
9,160.2
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Sales
|
$
|
1,553.4
|
|
|
$
|
1,710.3
|
|
Operating expenses:
|
|
|
|
||||
Cost of goods sold
|
1,347.3
|
|
|
1,528.7
|
|
||
Selling and administration
|
107.0
|
|
|
100.5
|
|
||
Restructuring charges
|
4.0
|
|
|
4.0
|
|
||
Acquisition-related costs
|
—
|
|
|
0.3
|
|
||
Other operating income
|
0.1
|
|
|
8.1
|
|
||
Operating income
|
95.2
|
|
|
84.9
|
|
||
Earnings of non-consolidated affiliates
|
—
|
|
|
0.5
|
|
||
Interest expense
|
57.4
|
|
|
63.7
|
|
||
Interest income
|
0.2
|
|
|
0.4
|
|
||
Non-operating pension income
|
3.9
|
|
|
5.4
|
|
||
Other income
|
11.2
|
|
|
—
|
|
||
Income before taxes
|
53.1
|
|
|
27.5
|
|
||
Income tax provision
|
11.4
|
|
|
6.6
|
|
||
Net income
|
$
|
41.7
|
|
|
$
|
20.9
|
|
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.25
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.12
|
|
Dividends per common share
|
$
|
0.20
|
|
|
$
|
0.20
|
|
Average common shares outstanding:
|
|
|
|
||||
Basic
|
165.0
|
|
|
167.2
|
|
||
Diluted
|
166.1
|
|
|
169.2
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
41.7
|
|
|
$
|
20.9
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments, net
|
(8.3
|
)
|
|
12.4
|
|
||
Unrealized losses on derivative contracts, net
|
(3.3
|
)
|
|
(0.1
|
)
|
||
Amortization of prior service costs and actuarial losses, net
|
5.7
|
|
|
5.4
|
|
||
Total other comprehensive (loss) income, net of tax
|
(5.9
|
)
|
|
17.7
|
|
||
Comprehensive income
|
$
|
35.8
|
|
|
$
|
38.6
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Total Shareholders’ Equity
|
|||||||||||||
|
Shares Issued
|
|
Par Value
|
|||||||||||||||||||
Balance at January 1, 2018
|
167.1
|
|
|
$
|
167.1
|
|
|
$
|
2,280.9
|
|
|
$
|
(484.6
|
)
|
|
$
|
790.3
|
|
|
$
|
2,753.7
|
|
Income tax reclassification adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(85.9
|
)
|
|
85.9
|
|
|
—
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.9
|
|
|
20.9
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
17.7
|
|
|
—
|
|
|
17.7
|
|
|||||
Dividends paid:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock ($0.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.4
|
)
|
|
(33.4
|
)
|
|||||
Common stock issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Stock options exercised
|
0.1
|
|
|
0.1
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||
Other transactions
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|||||
Balance at March 31, 2018
|
167.2
|
|
|
$
|
167.2
|
|
|
$
|
2,285.0
|
|
|
$
|
(552.8
|
)
|
|
$
|
863.7
|
|
|
$
|
2,763.1
|
|
Balance at January 1, 2019
|
165.3
|
|
|
$
|
165.3
|
|
|
$
|
2,247.4
|
|
|
$
|
(651.0
|
)
|
|
$
|
1,070.5
|
|
|
$
|
2,832.2
|
|
Lease accounting adoption adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|
11.2
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41.7
|
|
|
41.7
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|
—
|
|
|
(5.9
|
)
|
|||||
Dividends paid:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock ($0.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.0
|
)
|
|
(33.0
|
)
|
|||||
Common stock repurchased and retired
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
(13.2
|
)
|
|||||
Common stock issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Stock options exercised
|
0.1
|
|
|
0.1
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||
Other transactions
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|||||
Balance at March 31, 2019
|
164.9
|
|
|
$
|
164.9
|
|
|
$
|
2,239.2
|
|
|
$
|
(656.9
|
)
|
|
$
|
1,090.4
|
|
|
$
|
2,837.6
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
41.7
|
|
|
$
|
20.9
|
|
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities:
|
|
|
|
||||
Gain on disposition of non-consolidated affiliate
|
(11.2
|
)
|
|
—
|
|
||
Earnings of non-consolidated affiliates
|
—
|
|
|
(0.5
|
)
|
||
Losses on disposition of property, plant and equipment
|
—
|
|
|
0.1
|
|
||
Stock-based compensation
|
3.3
|
|
|
3.1
|
|
||
Depreciation and amortization
|
152.9
|
|
|
146.7
|
|
||
Deferred income taxes
|
(3.0
|
)
|
|
(18.9
|
)
|
||
Qualified pension plan contributions
|
(0.1
|
)
|
|
(0.5
|
)
|
||
Qualified pension plan income
|
(2.0
|
)
|
|
(3.8
|
)
|
||
Change in:
|
|
|
|
||||
Receivables
|
(36.2
|
)
|
|
(102.5
|
)
|
||
Income taxes receivable/payable
|
(9.9
|
)
|
|
6.0
|
|
||
Inventories
|
(11.2
|
)
|
|
14.9
|
|
||
Other current assets
|
(12.4
|
)
|
|
(16.7
|
)
|
||
Accounts payable and accrued liabilities
|
(17.9
|
)
|
|
25.1
|
|
||
Other assets
|
2.9
|
|
|
3.1
|
|
||
Other noncurrent liabilities
|
6.4
|
|
|
0.3
|
|
||
Other operating activities
|
1.0
|
|
|
3.6
|
|
||
Net operating activities
|
104.3
|
|
|
80.9
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(102.2
|
)
|
|
(89.5
|
)
|
||
Proceeds from disposition of property, plant and equipment
|
—
|
|
|
0.1
|
|
||
Proceeds from disposition of non-consolidated affiliate
|
20.0
|
|
|
—
|
|
||
Net investing activities
|
(82.2
|
)
|
|
(89.4
|
)
|
||
Financing Activities
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
Borrowings
|
—
|
|
|
550.3
|
|
||
Repayments
|
(50.2
|
)
|
|
(609.9
|
)
|
||
Common stock repurchased and retired
|
(13.2
|
)
|
|
—
|
|
||
Stock options exercised
|
1.4
|
|
|
1.0
|
|
||
Dividends paid
|
(33.0
|
)
|
|
(33.4
|
)
|
||
Debt issuance costs
|
—
|
|
|
(8.5
|
)
|
||
Net financing activities
|
(95.0
|
)
|
|
(100.5
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(0.2
|
)
|
|
(0.3
|
)
|
||
Net decrease in cash and cash equivalents
|
(73.1
|
)
|
|
(109.3
|
)
|
||
Cash and cash equivalents, beginning of period
|
178.8
|
|
|
218.4
|
|
||
Cash and cash equivalents, end of period
|
$
|
105.7
|
|
|
$
|
109.1
|
|
Cash paid for interest and income taxes:
|
|
|
|
||||
Interest, net
|
$
|
52.3
|
|
|
$
|
41.4
|
|
Income taxes, net of refunds
|
$
|
17.8
|
|
|
$
|
14.5
|
|
Non-cash investing activities:
|
|
|
|
||||
Decrease in capital expenditures included in accounts payable and accrued liabilities
|
$
|
20.6
|
|
|
$
|
12.1
|
|
–
|
We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.
|
–
|
We elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements.
|
–
|
We elected the short-term practical expedient for all classes of lease assets, which allows us to not record leases with an initial term of 12 months or less on the balance sheet, and instead recognize the expense straight-line over the lease term.
|
–
|
We elected the practical expedient to not separate lease components from non-lease components for all asset classes.
|
|
Employee severance and related benefit costs
|
|
Lease and other contract termination costs
|
|
Facility exit costs
|
|
Total
|
||||||||
|
($ in millions)
|
||||||||||||||
Balance at January 1, 2018
|
$
|
1.8
|
|
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
Restructuring charges
|
—
|
|
|
0.4
|
|
|
3.6
|
|
|
4.0
|
|
||||
Amounts utilized
|
(0.5
|
)
|
|
(0.8
|
)
|
|
(1.5
|
)
|
|
(2.8
|
)
|
||||
Balance at March 31, 2018
|
$
|
1.3
|
|
|
$
|
2.9
|
|
|
$
|
2.1
|
|
|
$
|
6.3
|
|
Balance at January 1, 2019
|
$
|
1.5
|
|
|
$
|
6.0
|
|
|
$
|
0.7
|
|
|
$
|
8.2
|
|
Restructuring charges
|
1.4
|
|
|
0.1
|
|
|
2.5
|
|
|
4.0
|
|
||||
Amounts utilized
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(2.4
|
)
|
|
(3.7
|
)
|
||||
Balance at March 31, 2019
|
$
|
2.2
|
|
|
$
|
5.5
|
|
|
$
|
0.8
|
|
|
$
|
8.5
|
|
|
Chlor Alkali Products and Vinyls
|
|
Winchester
|
|
Total
|
||||||||||
|
Becancour
|
|
Capacity Reductions
|
|
|
||||||||||
|
($ in millions)
|
||||||||||||||
Write-off of equipment and facility
|
$
|
3.5
|
|
|
$
|
78.1
|
|
|
$
|
2.6
|
|
|
$
|
84.2
|
|
Employee severance and related benefit costs
|
2.7
|
|
|
5.9
|
|
|
2.7
|
|
|
11.3
|
|
||||
Facility exit costs
|
5.9
|
|
|
36.3
|
|
|
—
|
|
|
42.2
|
|
||||
Employee relocation costs
|
—
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
||||
Lease and other contract termination costs
|
6.1
|
|
|
40.2
|
|
|
0.3
|
|
|
46.6
|
|
||||
Total cumulative restructuring charges
|
$
|
18.2
|
|
|
$
|
162.2
|
|
|
$
|
5.6
|
|
|
$
|
186.0
|
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions)
|
||||||
Balance at beginning of year
|
$
|
132.4
|
|
|
$
|
182.3
|
|
Gross receivables sold
|
134.9
|
|
|
413.1
|
|
||
Payments received from customers on sold accounts
|
(170.5
|
)
|
|
(416.5
|
)
|
||
Balance at end of period
|
$
|
96.8
|
|
|
$
|
178.9
|
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions)
|
||||||
Balance at beginning of year
|
$
|
12.9
|
|
|
$
|
12.3
|
|
Provisions charged
|
0.5
|
|
|
1.1
|
|
||
Write-offs, net of recoveries
|
(0.1
|
)
|
|
—
|
|
||
Foreign currency translation adjustment
|
(0.1
|
)
|
|
—
|
|
||
Balance at end of period
|
$
|
13.2
|
|
|
$
|
13.4
|
|
|
March 31, 2019
|
|
December 31,
2018 |
|
March 31, 2018
|
||||||
|
($ in millions)
|
||||||||||
Supplies
|
$
|
70.3
|
|
|
$
|
66.4
|
|
|
$
|
65.7
|
|
Raw materials
|
73.5
|
|
|
66.7
|
|
|
75.3
|
|
|||
Work in process
|
145.6
|
|
|
139.6
|
|
|
139.8
|
|
|||
Finished goods
|
498.7
|
|
|
488.5
|
|
|
440.8
|
|
|||
|
788.1
|
|
|
761.2
|
|
|
721.6
|
|
|||
LIFO reserve
|
(70.6
|
)
|
|
(49.8
|
)
|
|
(46.0
|
)
|
|||
Inventories, net
|
$
|
717.5
|
|
|
$
|
711.4
|
|
|
$
|
675.6
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
|
($ in millions)
|
||||||||||
Supply contracts
|
$
|
1,090.1
|
|
|
$
|
1,099.5
|
|
|
$
|
1,127.7
|
|
Investments in non-consolidated affiliates
|
—
|
|
|
8.8
|
|
|
29.0
|
|
|||
Other
|
41.3
|
|
|
42.1
|
|
|
40.3
|
|
|||
Other assets
|
$
|
1,131.4
|
|
|
$
|
1,150.4
|
|
|
$
|
1,197.0
|
|
|
Chlor Alkali Products and Vinyls
|
|
Epoxy
|
|
Total
|
||||||
|
($ in millions)
|
||||||||||
Balance at January 1, 2018
|
$
|
1,832.9
|
|
|
$
|
287.1
|
|
|
$
|
2,120.0
|
|
Foreign currency translation adjustment
|
0.2
|
|
|
0.1
|
|
|
0.3
|
|
|||
Balance at March 31, 2018
|
$
|
1,833.1
|
|
|
$
|
287.2
|
|
|
$
|
2,120.3
|
|
Balance at January 1, 2019
|
$
|
1,832.6
|
|
|
$
|
287.0
|
|
|
2,119.6
|
|
|
Foreign currency translation adjustment
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Balance at March 31, 2019
|
$
|
1,832.5
|
|
|
$
|
287.0
|
|
|
$
|
2,119.5
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||||||||||||||||||||||||||
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||||||||
|
|
($ in millions)
|
||||||||||||||||||||||||||||||||||
Customers, customer contracts and relationships
|
|
$
|
673.3
|
|
|
$
|
(223.9
|
)
|
|
$
|
449.4
|
|
|
$
|
675.2
|
|
|
$
|
(211.9
|
)
|
|
$
|
463.3
|
|
|
$
|
682.0
|
|
|
$
|
(176.3
|
)
|
|
$
|
505.7
|
|
Trade name
|
|
7.0
|
|
|
(4.9
|
)
|
|
2.1
|
|
|
7.0
|
|
|
(4.6
|
)
|
|
2.4
|
|
|
7.1
|
|
|
(3.6
|
)
|
|
3.5
|
|
|||||||||
Acquired technology
|
|
85.1
|
|
|
(42.5
|
)
|
|
42.6
|
|
|
85.4
|
|
|
(39.6
|
)
|
|
45.8
|
|
|
86.5
|
|
|
(30.9
|
)
|
|
55.6
|
|
|||||||||
Other
|
|
0.7
|
|
|
(0.6
|
)
|
|
0.1
|
|
|
0.7
|
|
|
(0.6
|
)
|
|
0.1
|
|
|
2.3
|
|
|
(2.0
|
)
|
|
0.3
|
|
|||||||||
Total intangible assets
|
|
$
|
766.1
|
|
|
$
|
(271.9
|
)
|
|
$
|
494.2
|
|
|
$
|
768.3
|
|
|
$
|
(256.7
|
)
|
|
$
|
511.6
|
|
|
$
|
777.9
|
|
|
$
|
(212.8
|
)
|
|
$
|
565.1
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Computation of Income per Share
|
(In millions, except per share data)
|
||||||
Net income
|
$
|
41.7
|
|
|
$
|
20.9
|
|
Basic shares
|
165.0
|
|
|
167.2
|
|
||
Basic net income per share
|
$
|
0.25
|
|
|
$
|
0.13
|
|
Diluted shares:
|
|
|
|
||||
Basic shares
|
165.0
|
|
|
167.2
|
|
||
Stock-based compensation
|
1.1
|
|
|
2.0
|
|
||
Diluted shares
|
166.1
|
|
|
169.2
|
|
||
Diluted net income per share
|
$
|
0.25
|
|
|
$
|
0.12
|
|
|
|
March 31, 2019
|
||
Assets:
|
Balance sheet location:
|
($ in millions)
|
||
Operating
|
Operating lease assets, net
|
$
|
275.1
|
|
Finance
|
Property, plant and equipment, less accumulated depreciation
(1)
|
5.9
|
|
|
Total lease assets
|
|
$
|
281.0
|
|
Liabilities:
|
|
|
||
Current
|
|
|
||
Operating
|
Current operating lease liabilities
|
$
|
69.4
|
|
Finance
|
Current installments of long-term debt
|
1.1
|
|
|
Long-term
|
|
|
||
Operating
|
Operating lease liabilities
|
206.0
|
|
|
Finance
|
Long-term debt
|
4.7
|
|
|
Total lease liabilities
|
|
$
|
281.2
|
|
(1)
|
As of
March 31, 2019
, assets recorded under finance leases were
$9.4 million
and accumulated depreciation associated with finance leases was
$3.5 million
.
|
|
Three Months Ended March 31, 2019
|
||
Lease expense:
|
($ in millions)
|
||
Operating
|
$
|
22.2
|
|
Other operating lease expense
(1)
|
6.9
|
|
|
Finance:
|
|
||
Depreciation of leased assets
|
0.3
|
|
|
Interest on lease liabilities
|
0.1
|
|
|
Total lease expense
|
$
|
29.5
|
|
(1)
|
Includes costs associated with short-term leases and variable lease expenses.
|
|
March 31, 2019
|
||||||||||
|
Operating leases
|
|
Finance leases
|
|
Total
|
||||||
|
($ in millions)
|
||||||||||
2019
|
$
|
59.7
|
|
|
$
|
1.0
|
|
|
$
|
60.7
|
|
2020
|
62.9
|
|
|
2.1
|
|
|
65.0
|
|
|||
2021
|
45.6
|
|
|
0.8
|
|
|
46.4
|
|
|||
2022
|
32.3
|
|
|
0.8
|
|
|
33.1
|
|
|||
2023
|
23.8
|
|
|
0.6
|
|
|
24.4
|
|
|||
Thereafter
|
101.1
|
|
|
1.0
|
|
|
102.1
|
|
|||
Total lease payments
|
325.4
|
|
|
6.3
|
|
|
331.7
|
|
|||
Less: Imputed interest
(1)
|
(50.0
|
)
|
|
(0.5
|
)
|
|
(50.5
|
)
|
|||
Present value of lease liabilities
|
$
|
275.4
|
|
|
$
|
5.8
|
|
|
$
|
281.2
|
|
(1)
|
Calculated using the discount rate for each lease.
|
|
December 31, 2018
|
||
|
($ in millions)
|
||
2019
|
$
|
82.2
|
|
2020
|
61.4
|
|
|
2021
|
44.2
|
|
|
2022
|
31.8
|
|
|
2023
|
23.2
|
|
|
Thereafter
|
102.6
|
|
|
Total lease payments
|
$
|
345.4
|
|
|
Three Months Ended March 31, 2019
|
||
Supplemental cash flows information:
|
($ in millions)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
22.0
|
|
Operating cash flows from finance leases
|
0.1
|
|
|
Financing cash flows from finance leases
|
0.2
|
|
|
Non-cash increase in lease assets and lease liabilities:
|
|
||
Operating leases
|
$
|
3.6
|
|
Finance leases
|
1.9
|
|
|
Weighted-average remaining lease term:
|
March 31, 2019
|
||
Operating leases
|
9.3 years
|
|
|
Finance leases
|
3.8 years
|
|
|
Weighted-average discount rate:
|
|
||
Operating leases
|
3.33
|
%
|
|
Finance leases
|
3.34
|
%
|
|
Foreign Currency Translation Adjustment (net of taxes)
|
|
Unrealized Gains (Losses) on Derivative Contracts (net of taxes)
|
|
Pension and Other Postretirement Benefits (net of taxes)
|
|
Accumulated Other Comprehensive Loss
|
||||||||
|
($ in millions)
|
||||||||||||||
Balance at January 1, 2018
|
$
|
7.6
|
|
|
$
|
11.1
|
|
|
$
|
(503.3
|
)
|
|
$
|
(484.6
|
)
|
Unrealized gains
|
12.4
|
|
|
2.1
|
|
|
—
|
|
|
14.5
|
|
||||
Reclassification adjustments of (gains) losses into income
|
—
|
|
|
(2.3
|
)
|
|
9.4
|
|
|
7.1
|
|
||||
Tax benefit (provision)
|
—
|
|
|
0.1
|
|
|
(4.0
|
)
|
|
(3.9
|
)
|
||||
Net change
|
12.4
|
|
|
(0.1
|
)
|
|
5.4
|
|
|
17.7
|
|
||||
Income tax reclassification adjustment
|
15.3
|
|
|
2.4
|
|
|
(103.6
|
)
|
|
(85.9
|
)
|
||||
Balance at March 31, 2018
|
$
|
35.3
|
|
|
$
|
13.4
|
|
|
$
|
(601.5
|
)
|
|
$
|
(552.8
|
)
|
Balance at January 1, 2019
|
$
|
0.7
|
|
|
$
|
1.8
|
|
|
$
|
(653.5
|
)
|
|
$
|
(651.0
|
)
|
Unrealized losses
|
(8.3
|
)
|
|
(6.6
|
)
|
|
—
|
|
|
(14.9
|
)
|
||||
Reclassification adjustments of losses into income
|
—
|
|
|
2.2
|
|
|
7.4
|
|
|
9.6
|
|
||||
Tax benefit (provision)
|
—
|
|
|
1.1
|
|
|
(1.7
|
)
|
|
(0.6
|
)
|
||||
Net change
|
(8.3
|
)
|
|
(3.3
|
)
|
|
5.7
|
|
|
(5.9
|
)
|
||||
Balance at March 31, 2019
|
$
|
(7.6
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(647.8
|
)
|
|
$
|
(656.9
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Sales:
|
($ in millions)
|
||||||
Chlor Alkali Products and Vinyls
|
$
|
872.2
|
|
|
$
|
936.1
|
|
Epoxy
|
524.0
|
|
|
603.3
|
|
||
Winchester
|
157.2
|
|
|
170.9
|
|
||
Total sales
|
$
|
1,553.4
|
|
|
$
|
1,710.3
|
|
Income (loss) before taxes:
|
|
|
|
||||
Chlor Alkali Products and Vinyls
|
$
|
120.4
|
|
|
$
|
130.5
|
|
Epoxy
|
10.5
|
|
|
(22.1
|
)
|
||
Winchester
|
9.1
|
|
|
12.0
|
|
||
Corporate/other:
|
|
|
|
||||
Environmental expense
|
(1.8
|
)
|
|
(2.3
|
)
|
||
Other corporate and unallocated costs
|
(39.1
|
)
|
|
(36.5
|
)
|
||
Restructuring charges
|
(4.0
|
)
|
|
(4.0
|
)
|
||
Acquisition-related costs
|
—
|
|
|
(0.3
|
)
|
||
Other operating income
|
0.1
|
|
|
8.1
|
|
||
Interest expense
|
(57.4
|
)
|
|
(63.7
|
)
|
||
Interest income
|
0.2
|
|
|
0.4
|
|
||
Non-operating pension income
|
3.9
|
|
|
5.4
|
|
||
Other income
|
11.2
|
|
|
—
|
|
||
Income before taxes
|
$
|
53.1
|
|
|
$
|
27.5
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
|
Chlor Alkali Products and Vinyls
|
|
Epoxy
|
|
Winchester
|
|
Total
|
||||||||
Sales:
|
($ in millions)
|
||||||||||||||
United States
|
$
|
604.0
|
|
|
$
|
164.1
|
|
|
$
|
141.3
|
|
|
$
|
909.4
|
|
Europe
|
38.6
|
|
|
235.4
|
|
|
2.8
|
|
|
276.8
|
|
||||
Other foreign
|
229.6
|
|
|
124.5
|
|
|
13.1
|
|
|
367.2
|
|
||||
Total Sales
|
$
|
872.2
|
|
|
$
|
524.0
|
|
|
$
|
157.2
|
|
|
$
|
1,553.4
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
Chlor Alkali Products and Vinyls
|
|
Epoxy
|
|
Winchester
|
|
Total
|
||||||||
Sales:
|
($ in millions)
|
||||||||||||||
United States
|
$
|
608.1
|
|
|
$
|
180.4
|
|
|
$
|
158.6
|
|
|
$
|
947.1
|
|
Europe
|
45.8
|
|
|
278.5
|
|
|
1.0
|
|
|
325.3
|
|
||||
Other foreign
|
282.2
|
|
|
144.4
|
|
|
11.3
|
|
|
437.9
|
|
||||
Total Sales
|
$
|
936.1
|
|
|
$
|
603.3
|
|
|
$
|
170.9
|
|
|
$
|
1,710.3
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Sales:
|
($ in millions)
|
||||||
Chlor Alkali Products and Vinyls
|
|
|
|
||||
Caustic soda
|
$
|
462.1
|
|
|
$
|
536.9
|
|
Chlorine, chlorine-derivatives and other co-products
|
410.1
|
|
|
399.2
|
|
||
Total Chlor Alkali Products and Vinyls
|
872.2
|
|
|
936.1
|
|
||
Epoxy
|
|
|
|
||||
Aromatics and allylics
|
243.8
|
|
|
308.4
|
|
||
Epoxy resins
|
280.2
|
|
|
294.9
|
|
||
Total Epoxy
|
524.0
|
|
|
603.3
|
|
||
Winchester
|
|
|
|
||||
Commercial
|
106.4
|
|
|
111.2
|
|
||
Military and law enforcement
|
50.8
|
|
|
59.7
|
|
||
Total Winchester
|
157.2
|
|
|
170.9
|
|
||
Total Sales
|
$
|
1,553.4
|
|
|
$
|
1,710.3
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions)
|
||||||
Stock-based compensation
|
$
|
5.6
|
|
|
$
|
6.5
|
|
Mark-to-market adjustments
|
1.3
|
|
|
(3.2
|
)
|
||
Total expense
|
$
|
6.9
|
|
|
$
|
3.3
|
|
Grant date
|
2019
|
|
2018
|
||||
Dividend yield
|
3.05
|
%
|
|
2.43
|
%
|
||
Risk-free interest rate
|
2.51
|
%
|
|
2.72
|
%
|
||
Expected volatility
|
34
|
%
|
|
32
|
%
|
||
Expected life (years)
|
6.0
|
|
|
6.0
|
|
||
Weighted-average grant fair value (per option)
|
$
|
6.76
|
|
|
$
|
8.89
|
|
Weighted-average exercise price
|
$
|
26.26
|
|
|
$
|
32.94
|
|
Shares granted
|
1,575,900
|
|
|
927,000
|
|
|
Pension Benefits
|
|
Other Postretirement
Benefits |
||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Components of Net Periodic Benefit (Income) Cost
|
($ in millions)
|
||||||||||||||
Service cost
|
$
|
3.1
|
|
|
$
|
2.7
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Interest cost
|
23.6
|
|
|
21.6
|
|
|
0.4
|
|
|
0.4
|
|
||||
Expected return on plans’ assets
|
(35.3
|
)
|
|
(36.8
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized actuarial loss
|
6.8
|
|
|
8.8
|
|
|
0.6
|
|
|
0.6
|
|
||||
Net periodic benefit (income) cost
|
$
|
(1.8
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
1.3
|
|
|
$
|
1.3
|
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions)
|
||||||
Balance at beginning of year
|
$
|
33.8
|
|
|
$
|
36.3
|
|
Increases for current year tax positions
|
0.6
|
|
|
0.5
|
|
||
Balance at end of period
|
$
|
34.4
|
|
|
$
|
36.8
|
|
|
Tax Years
|
U.S. federal income tax
|
2013 - 2018
|
U.S. state income tax
|
2006 - 2018
|
Canadian federal income tax
|
2012 - 2018
|
Brazil
|
2014 - 2018
|
Germany
|
2015 - 2018
|
China
|
2014 - 2018
|
The Netherlands
|
2014 - 2018
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
|
($ in millions)
|
||||||||||
Natural gas
|
$
|
75.7
|
|
|
$
|
58.4
|
|
|
$
|
68.9
|
|
Other commodities
|
92.9
|
|
|
58.1
|
|
|
59.5
|
|
|||
Total notional
|
$
|
168.6
|
|
|
$
|
116.5
|
|
|
$
|
128.4
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
|
($ in millions)
|
||||||||||
Asset Derivatives:
|
|
|
|
|
|
||||||
Other current assets
|
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||
Interest rate contracts - gains
|
$
|
3.6
|
|
|
$
|
5.3
|
|
|
$
|
8.5
|
|
Commodity contracts - gains
|
3.2
|
|
|
—
|
|
|
7.2
|
|
|||
Commodity contracts - losses
|
(0.6
|
)
|
|
—
|
|
|
(1.2
|
)
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||||
Foreign exchange contracts - gains
|
0.6
|
|
|
0.9
|
|
|
1.1
|
|
|||
Foreign exchange contracts - losses
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(0.6
|
)
|
|||
Total other current assets
|
6.5
|
|
|
5.7
|
|
|
15.0
|
|
|||
Other assets
|
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||
Interest rate contracts - gains
|
—
|
|
|
—
|
|
|
3.7
|
|
|||
Commodity contracts - gains
|
2.2
|
|
|
0.9
|
|
|
0.4
|
|
|||
Commodity contracts - losses
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|||
Total other assets
|
2.1
|
|
|
0.7
|
|
|
4.0
|
|
|||
Total Asset Derivatives
(1)
|
$
|
8.6
|
|
|
$
|
6.4
|
|
|
$
|
19.0
|
|
Liability Derivatives:
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||
Commodity contracts - losses
|
$
|
9.8
|
|
|
$
|
4.9
|
|
|
$
|
1.0
|
|
Commodity contracts - gains
|
(0.6
|
)
|
|
(1.9
|
)
|
|
(0.2
|
)
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||||
Foreign exchange contracts - losses
|
0.2
|
|
|
0.6
|
|
|
—
|
|
|||
Foreign exchange contracts - gains
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Total accrued liabilities
|
9.4
|
|
|
3.5
|
|
|
0.8
|
|
|||
Other liabilities
|
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||
Interest rate contracts - losses
|
23.5
|
|
|
33.7
|
|
|
40.3
|
|
|||
Commodity contracts - losses
|
0.9
|
|
|
0.5
|
|
|
—
|
|
|||
Commodity contracts - gains
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Total other liabilities
|
24.4
|
|
|
34.1
|
|
|
40.3
|
|
|||
Total Liability Derivatives
(1)
|
$
|
33.8
|
|
|
$
|
37.6
|
|
|
$
|
41.1
|
|
(1)
|
Does not include the impact of cash collateral received from or provided to counterparties.
|
|
Fair Value Measurements
|
||||||||||||||
Balance at March 31, 2019
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
($ in millions)
|
||||||||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
Commodity contracts
|
—
|
|
|
4.7
|
|
|
—
|
|
|
4.7
|
|
||||
Foreign exchange contracts
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
||||
Total Assets
|
$
|
—
|
|
|
$
|
8.6
|
|
|
$
|
—
|
|
|
$
|
8.6
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
23.5
|
|
|
$
|
—
|
|
|
$
|
23.5
|
|
Commodity contracts
|
—
|
|
|
10.1
|
|
|
—
|
|
|
10.1
|
|
||||
Foreign exchange contracts
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
33.8
|
|
|
$
|
—
|
|
|
$
|
33.8
|
|
Balance at December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
||||||||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
5.3
|
|
|
$
|
—
|
|
|
$
|
5.3
|
|
Commodity contracts
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
||||
Foreign exchange contracts
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||
Total Assets
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
33.7
|
|
|
$
|
—
|
|
|
$
|
33.7
|
|
Commodity contracts
|
—
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
||||
Foreign exchange contracts
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
37.6
|
|
|
$
|
—
|
|
|
$
|
37.6
|
|
Balance at March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
12.2
|
|
|
$
|
—
|
|
|
$
|
12.2
|
|
Commodity contracts
|
—
|
|
|
6.3
|
|
|
—
|
|
|
6.3
|
|
||||
Foreign exchange contracts
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||
Total Assets
|
$
|
—
|
|
|
$
|
19.0
|
|
|
$
|
—
|
|
|
$
|
19.0
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
40.3
|
|
|
$
|
—
|
|
|
$
|
40.3
|
|
Commodity contracts
|
—
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
41.1
|
|
|
$
|
—
|
|
|
$
|
41.1
|
|
|
Fair Value Measurements
|
|
Amount recorded
on balance sheets |
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||||
|
($ in millions)
|
||||||||||||||||||
Balance at March 31, 2019
|
$
|
—
|
|
|
$
|
3,221.9
|
|
|
$
|
153.0
|
|
|
$
|
3,374.9
|
|
|
$
|
3,193.3
|
|
Balance at December 31, 2018
|
—
|
|
|
3,137.2
|
|
|
153.0
|
|
|
3,290.2
|
|
|
3,230.3
|
|
|||||
Balance at March 31, 2018
|
—
|
|
|
3,583.9
|
|
|
153.0
|
|
|
3,736.9
|
|
|
3,535.4
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|||||||||||||||||||
March 31, 2019
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
6.0
|
|
|
$
|
—
|
|
|
$
|
99.7
|
|
|
$
|
—
|
|
|
$
|
105.7
|
|
Receivables, net
|
99.0
|
|
|
—
|
|
|
709.3
|
|
|
—
|
|
|
808.3
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
2,664.7
|
|
|
(2,664.7
|
)
|
|
—
|
|
|||||
Income taxes receivable
|
0.3
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
|
6.3
|
|
|||||
Inventories, net
|
172.3
|
|
|
—
|
|
|
545.2
|
|
|
—
|
|
|
717.5
|
|
|||||
Other current assets
|
235.7
|
|
|
—
|
|
|
3.5
|
|
|
(192.5
|
)
|
|
46.7
|
|
|||||
Total current assets
|
513.3
|
|
|
—
|
|
|
4,028.4
|
|
|
(2,857.2
|
)
|
|
1,684.5
|
|
|||||
Property, plant and equipment, net
|
674.0
|
|
|
—
|
|
|
2,759.5
|
|
|
—
|
|
|
3,433.5
|
|
|||||
Operating lease assets, net
|
48.9
|
|
|
—
|
|
|
226.2
|
|
|
—
|
|
|
275.1
|
|
|||||
Investment in subsidiaries
|
7,024.5
|
|
|
4,339.5
|
|
|
—
|
|
|
(11,364.0
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
3.2
|
|
|
—
|
|
|
31.9
|
|
|
(3.4
|
)
|
|
31.7
|
|
|||||
Other assets
|
17.0
|
|
|
—
|
|
|
1,114.4
|
|
|
—
|
|
|
1,131.4
|
|
|||||
Long-term receivables—affiliates
|
—
|
|
|
1,169.9
|
|
|
—
|
|
|
(1,169.9
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
0.3
|
|
|
—
|
|
|
493.9
|
|
|
—
|
|
|
494.2
|
|
|||||
Goodwill
|
—
|
|
|
966.3
|
|
|
1,153.2
|
|
|
—
|
|
|
2,119.5
|
|
|||||
Total assets
|
$
|
8,281.2
|
|
|
$
|
6,475.7
|
|
|
$
|
9,807.5
|
|
|
$
|
(15,394.5
|
)
|
|
$
|
9,169.9
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current installments of long-term debt
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
125.0
|
|
|
$
|
—
|
|
|
$
|
126.1
|
|
Accounts payable
|
75.8
|
|
|
—
|
|
|
566.8
|
|
|
(5.6
|
)
|
|
637.0
|
|
|||||
Intercompany payables
|
2,664.7
|
|
|
—
|
|
|
—
|
|
|
(2,664.7
|
)
|
|
—
|
|
|||||
Income taxes payable
|
3.7
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
13.0
|
|
|||||
Current operating lease liabilities
|
8.0
|
|
|
—
|
|
|
61.4
|
|
|
—
|
|
|
69.4
|
|
|||||
Accrued liabilities
|
138.3
|
|
|
—
|
|
|
345.9
|
|
|
(189.8
|
)
|
|
294.4
|
|
|||||
Total current liabilities
|
2,891.6
|
|
|
—
|
|
|
1,108.4
|
|
|
(2,860.1
|
)
|
|
1,139.9
|
|
|||||
Long-term debt
|
1,370.3
|
|
|
1,696.9
|
|
|
—
|
|
|
—
|
|
|
3,067.2
|
|
|||||
Operating lease liabilities
|
42.0
|
|
|
—
|
|
|
164.0
|
|
|
—
|
|
|
206.0
|
|
|||||
Accrued pension liability
|
427.0
|
|
|
—
|
|
|
233.2
|
|
|
—
|
|
|
660.2
|
|
|||||
Deferred income taxes
|
—
|
|
|
6.1
|
|
|
523.2
|
|
|
(3.4
|
)
|
|
525.9
|
|
|||||
Long-term payables—affiliates
|
419.6
|
|
|
—
|
|
|
750.3
|
|
|
(1,169.9
|
)
|
|
—
|
|
|||||
Other liabilities
|
293.1
|
|
|
5.5
|
|
|
434.5
|
|
|
—
|
|
|
733.1
|
|
|||||
Total liabilities
|
5,443.6
|
|
|
1,708.5
|
|
|
3,213.6
|
|
|
(4,033.4
|
)
|
|
6,332.3
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
164.9
|
|
|
—
|
|
|
14.6
|
|
|
(14.6
|
)
|
|
164.9
|
|
|||||
Additional paid-in capital
|
2,239.2
|
|
|
4,125.7
|
|
|
4,808.2
|
|
|
(8,933.9
|
)
|
|
2,239.2
|
|
|||||
Accumulated other comprehensive loss
|
(656.9
|
)
|
|
—
|
|
|
(8.1
|
)
|
|
8.1
|
|
|
(656.9
|
)
|
|||||
Retained earnings
|
1,090.4
|
|
|
641.5
|
|
|
1,779.2
|
|
|
(2,420.7
|
)
|
|
1,090.4
|
|
|||||
Total shareholders’ equity
|
2,837.6
|
|
|
4,767.2
|
|
|
6,593.9
|
|
|
(11,361.1
|
)
|
|
2,837.6
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
8,281.2
|
|
|
$
|
6,475.7
|
|
|
$
|
9,807.5
|
|
|
$
|
(15,394.5
|
)
|
|
$
|
9,169.9
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|||||||||||||||||||
December 31, 2018
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
92.0
|
|
|
$
|
—
|
|
|
$
|
86.8
|
|
|
$
|
—
|
|
|
$
|
178.8
|
|
Receivables, net
|
99.7
|
|
|
—
|
|
|
676.6
|
|
|
—
|
|
|
776.3
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
2,558.2
|
|
|
(2,558.2
|
)
|
|
—
|
|
|||||
Income taxes receivable
|
2.6
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
|
5.9
|
|
|||||
Inventories, net
|
161.4
|
|
|
—
|
|
|
550.0
|
|
|
—
|
|
|
711.4
|
|
|||||
Other current assets
|
220.2
|
|
|
—
|
|
|
1.8
|
|
|
(187.0
|
)
|
|
35.0
|
|
|||||
Total current assets
|
575.9
|
|
|
—
|
|
|
3,876.7
|
|
|
(2,745.2
|
)
|
|
1,707.4
|
|
|||||
Property, plant and equipment, net
|
651.4
|
|
|
—
|
|
|
2,830.7
|
|
|
—
|
|
|
3,482.1
|
|
|||||
Investment in subsidiaries
|
6,943.3
|
|
|
4,286.9
|
|
|
—
|
|
|
(11,230.2
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
7.3
|
|
|
—
|
|
|
27.4
|
|
|
(8.4
|
)
|
|
26.3
|
|
|||||
Other assets
|
24.3
|
|
|
—
|
|
|
1,126.1
|
|
|
—
|
|
|
1,150.4
|
|
|||||
Long-term receivables—affiliates
|
—
|
|
|
1,247.2
|
|
|
—
|
|
|
(1,247.2
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
0.3
|
|
|
—
|
|
|
511.3
|
|
|
—
|
|
|
511.6
|
|
|||||
Goodwill
|
—
|
|
|
966.3
|
|
|
1,153.3
|
|
|
—
|
|
|
2,119.6
|
|
|||||
Total assets
|
$
|
8,202.5
|
|
|
$
|
6,500.4
|
|
|
$
|
9,525.5
|
|
|
$
|
(15,231.0
|
)
|
|
$
|
8,997.4
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current installments of long-term debt
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
125.0
|
|
|
$
|
—
|
|
|
$
|
125.9
|
|
Accounts payable
|
90.1
|
|
|
—
|
|
|
549.4
|
|
|
(3.0
|
)
|
|
636.5
|
|
|||||
Intercompany payables
|
2,558.2
|
|
|
—
|
|
|
—
|
|
|
(2,558.2
|
)
|
|
—
|
|
|||||
Income taxes payable
|
3.9
|
|
|
—
|
|
|
18.7
|
|
|
—
|
|
|
22.6
|
|
|||||
Accrued liabilities
|
150.3
|
|
|
—
|
|
|
367.5
|
|
|
(184.5
|
)
|
|
333.3
|
|
|||||
Total current liabilities
|
2,803.4
|
|
|
—
|
|
|
1,060.6
|
|
|
(2,745.7
|
)
|
|
1,118.3
|
|
|||||
Long-term debt
|
1,357.5
|
|
|
1,746.9
|
|
|
—
|
|
|
—
|
|
|
3,104.4
|
|
|||||
Accrued pension liability
|
439.1
|
|
|
—
|
|
|
235.2
|
|
|
—
|
|
|
674.3
|
|
|||||
Deferred income taxes
|
—
|
|
|
6.0
|
|
|
521.3
|
|
|
(8.4
|
)
|
|
518.9
|
|
|||||
Long-term payables—affiliates
|
469.6
|
|
|
—
|
|
|
777.6
|
|
|
(1,247.2
|
)
|
|
—
|
|
|||||
Other liabilities
|
300.7
|
|
|
5.5
|
|
|
443.1
|
|
|
—
|
|
|
749.3
|
|
|||||
Total liabilities
|
5,370.3
|
|
|
1,758.4
|
|
|
3,037.8
|
|
|
(4,001.3
|
)
|
|
6,165.2
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
165.3
|
|
|
—
|
|
|
14.6
|
|
|
(14.6
|
)
|
|
165.3
|
|
|||||
Additional paid-in capital
|
2,247.4
|
|
|
4,125.7
|
|
|
4,808.2
|
|
|
(8,933.9
|
)
|
|
2,247.4
|
|
|||||
Accumulated other comprehensive loss
|
(651.0
|
)
|
|
—
|
|
|
(6.9
|
)
|
|
6.9
|
|
|
(651.0
|
)
|
|||||
Retained earnings
|
1,070.5
|
|
|
616.3
|
|
|
1,671.8
|
|
|
(2,288.1
|
)
|
|
1,070.5
|
|
|||||
Total shareholders’ equity
|
2,832.2
|
|
|
4,742.0
|
|
|
6,487.7
|
|
|
(11,229.7
|
)
|
|
2,832.2
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
8,202.5
|
|
|
$
|
6,500.4
|
|
|
$
|
9,525.5
|
|
|
$
|
(15,231.0
|
)
|
|
$
|
8,997.4
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|||||||||||||||||||
March 31, 2018
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
3.6
|
|
|
$
|
—
|
|
|
$
|
105.5
|
|
|
$
|
—
|
|
|
$
|
109.1
|
|
Receivables, net
|
119.6
|
|
|
—
|
|
|
716.0
|
|
|
—
|
|
|
835.6
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
2,191.7
|
|
|
(2,191.7
|
)
|
|
—
|
|
|||||
Income taxes receivable
|
11.4
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|
17.5
|
|
|||||
Inventories, net
|
160.2
|
|
|
—
|
|
|
515.4
|
|
|
—
|
|
|
675.6
|
|
|||||
Other current assets
|
223.7
|
|
|
—
|
|
|
7.3
|
|
|
(169.8
|
)
|
|
61.2
|
|
|||||
Total current assets
|
518.5
|
|
|
—
|
|
|
3,542.0
|
|
|
(2,361.5
|
)
|
|
1,699.0
|
|
|||||
Property, plant and equipment, net
|
551.8
|
|
|
—
|
|
|
2,987.6
|
|
|
—
|
|
|
3,539.4
|
|
|||||
Investment in subsidiaries
|
6,720.1
|
|
|
4,114.5
|
|
|
—
|
|
|
(10,834.6
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
43.7
|
|
|
—
|
|
|
42.5
|
|
|
(46.8
|
)
|
|
39.4
|
|
|||||
Other assets
|
47.3
|
|
|
—
|
|
|
1,149.7
|
|
|
—
|
|
|
1,197.0
|
|
|||||
Long-term receivables—affiliates
|
—
|
|
|
1,537.5
|
|
|
—
|
|
|
(1,537.5
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
0.3
|
|
|
—
|
|
|
564.8
|
|
|
—
|
|
|
565.1
|
|
|||||
Goodwill
|
—
|
|
|
966.3
|
|
|
1,154.0
|
|
|
—
|
|
|
2,120.3
|
|
|||||
Total assets
|
$
|
7,881.7
|
|
|
$
|
6,618.3
|
|
|
$
|
9,440.6
|
|
|
$
|
(14,780.4
|
)
|
|
$
|
9,160.2
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current installments of long-term debt
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
Accounts payable
|
62.0
|
|
|
—
|
|
|
639.7
|
|
|
(3.5
|
)
|
|
698.2
|
|
|||||
Intercompany payables
|
2,191.7
|
|
|
—
|
|
|
—
|
|
|
(2,191.7
|
)
|
|
—
|
|
|||||
Income taxes payable
|
2.3
|
|
|
—
|
|
|
13.7
|
|
|
—
|
|
|
16.0
|
|
|||||
Accrued liabilities
|
115.0
|
|
|
—
|
|
|
308.7
|
|
|
(167.6
|
)
|
|
256.1
|
|
|||||
Total current liabilities
|
2,371.7
|
|
|
—
|
|
|
962.1
|
|
|
(2,362.8
|
)
|
|
971.0
|
|
|||||
Long-term debt
|
1,352.2
|
|
|
1,952.2
|
|
|
230.3
|
|
|
—
|
|
|
3,534.7
|
|
|||||
Accrued pension liability
|
391.4
|
|
|
—
|
|
|
237.3
|
|
|
—
|
|
|
628.7
|
|
|||||
Deferred income taxes
|
—
|
|
|
4.1
|
|
|
541.1
|
|
|
(46.8
|
)
|
|
498.4
|
|
|||||
Long-term payables—affiliates
|
680.0
|
|
|
—
|
|
|
857.5
|
|
|
(1,537.5
|
)
|
|
—
|
|
|||||
Other liabilities
|
323.3
|
|
|
5.6
|
|
|
435.4
|
|
|
—
|
|
|
764.3
|
|
|||||
Total liabilities
|
5,118.6
|
|
|
1,961.9
|
|
|
3,263.7
|
|
|
(3,947.1
|
)
|
|
6,397.1
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
167.2
|
|
|
—
|
|
|
14.6
|
|
|
(14.6
|
)
|
|
167.2
|
|
|||||
Additional paid-in capital
|
2,285.0
|
|
|
4,125.7
|
|
|
4,808.2
|
|
|
(8,933.9
|
)
|
|
2,285.0
|
|
|||||
Accumulated other comprehensive loss
|
(552.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
|
4.8
|
|
|
(552.8
|
)
|
|||||
Retained earnings
|
863.7
|
|
|
530.7
|
|
|
1,358.9
|
|
|
(1,889.6
|
)
|
|
863.7
|
|
|||||
Total shareholders’ equity
|
2,763.1
|
|
|
4,656.4
|
|
|
6,176.9
|
|
|
(10,833.3
|
)
|
|
2,763.1
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
7,881.7
|
|
|
$
|
6,618.3
|
|
|
$
|
9,440.6
|
|
|
$
|
(14,780.4
|
)
|
|
$
|
9,160.2
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|||||||||||||||||||
Three Months Ended March 31, 2019
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
332.8
|
|
|
$
|
—
|
|
|
$
|
1,327.7
|
|
|
$
|
(107.1
|
)
|
|
$
|
1,553.4
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of goods sold
|
304.1
|
|
|
—
|
|
|
1,150.3
|
|
|
(107.1
|
)
|
|
1,347.3
|
|
|||||
Selling and administration
|
51.8
|
|
|
—
|
|
|
55.2
|
|
|
—
|
|
|
107.0
|
|
|||||
Restructuring charges
|
1.4
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
4.0
|
|
|||||
Acquisition-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other operating (loss) income
|
(2.1
|
)
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
0.1
|
|
|||||
Operating (loss) income
|
(26.6
|
)
|
|
—
|
|
|
121.8
|
|
|
—
|
|
|
95.2
|
|
|||||
Equity income in subsidiaries
|
62.6
|
|
|
52.6
|
|
|
—
|
|
|
(115.2
|
)
|
|
—
|
|
|||||
Interest expense
|
17.4
|
|
|
36.1
|
|
|
5.2
|
|
|
(1.3
|
)
|
|
57.4
|
|
|||||
Interest income
|
0.6
|
|
|
—
|
|
|
0.9
|
|
|
(1.3
|
)
|
|
0.2
|
|
|||||
Non-operating pension income (expense)
|
5.4
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
3.9
|
|
|||||
Other income
|
11.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|||||
Income before taxes
|
35.8
|
|
|
16.5
|
|
|
116.0
|
|
|
(115.2
|
)
|
|
53.1
|
|
|||||
Income tax (benefit) provision
|
(5.9
|
)
|
|
(8.7
|
)
|
|
26.0
|
|
|
—
|
|
|
11.4
|
|
|||||
Net income
|
$
|
41.7
|
|
|
$
|
25.2
|
|
|
$
|
90.0
|
|
|
$
|
(115.2
|
)
|
|
$
|
41.7
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Sales
|
$
|
352.7
|
|
|
$
|
—
|
|
|
$
|
1,467.0
|
|
|
$
|
(109.4
|
)
|
|
$
|
1,710.3
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of goods sold
|
312.0
|
|
|
—
|
|
|
1,326.1
|
|
|
(109.4
|
)
|
|
1,528.7
|
|
|||||
Selling and administration
|
47.1
|
|
|
—
|
|
|
53.4
|
|
|
—
|
|
|
100.5
|
|
|||||
Restructuring charges
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
|||||
Acquisition-related costs
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
Other operating income
|
5.8
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
8.1
|
|
|||||
Operating (loss) income
|
(0.9
|
)
|
|
—
|
|
|
85.8
|
|
|
—
|
|
|
84.9
|
|
|||||
Earnings of non-consolidated affiliates
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Equity income in subsidiaries
|
28.4
|
|
|
22.2
|
|
|
—
|
|
|
(50.6
|
)
|
|
—
|
|
|||||
Interest expense
|
17.0
|
|
|
41.3
|
|
|
6.9
|
|
|
(1.5
|
)
|
|
63.7
|
|
|||||
Interest income
|
1.0
|
|
|
—
|
|
|
0.9
|
|
|
(1.5
|
)
|
|
0.4
|
|
|||||
Non-operating pension income (expense)
|
6.7
|
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
5.4
|
|
|||||
Income (loss) before taxes
|
18.7
|
|
|
(19.1
|
)
|
|
78.5
|
|
|
(50.6
|
)
|
|
27.5
|
|
|||||
Income tax (benefit) provision
|
(2.2
|
)
|
|
(9.9
|
)
|
|
18.7
|
|
|
—
|
|
|
6.6
|
|
|||||
Net income (loss)
|
$
|
20.9
|
|
|
$
|
(9.2
|
)
|
|
$
|
59.8
|
|
|
$
|
(50.6
|
)
|
|
$
|
20.9
|
|
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|||||||||||||||||||
Three Months Ended March 31, 2019
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Net income
|
$
|
41.7
|
|
|
$
|
25.2
|
|
|
$
|
90.0
|
|
|
$
|
(115.2
|
)
|
|
$
|
41.7
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments, net
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(8.3
|
)
|
|||||
Unrealized losses on derivative contracts, net
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|||||
Amortization of prior service costs and actuarial losses, net
|
5.1
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
5.7
|
|
|||||
Total other comprehensive income (loss), net of tax
|
1.8
|
|
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(5.9
|
)
|
|||||
Comprehensive income
|
$
|
43.5
|
|
|
$
|
25.2
|
|
|
$
|
82.3
|
|
|
$
|
(115.2
|
)
|
|
$
|
35.8
|
|
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Net income (loss)
|
$
|
20.9
|
|
|
$
|
(9.2
|
)
|
|
$
|
59.8
|
|
|
$
|
(50.6
|
)
|
|
$
|
20.9
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments, net
|
—
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
|
12.4
|
|
|||||
Unrealized losses on derivative contracts, net
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||
Amortization of prior service costs and actuarial losses, net
|
5.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.4
|
|
|||||
Total other comprehensive income, net of tax
|
5.3
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
|
17.7
|
|
|||||
Comprehensive income (loss)
|
$
|
26.2
|
|
|
$
|
(9.2
|
)
|
|
$
|
72.2
|
|
|
$
|
(50.6
|
)
|
|
$
|
38.6
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|||||||||||||||||||
Three Months Ended March 31, 2019
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Net operating activities
|
$
|
39.7
|
|
|
$
|
—
|
|
|
$
|
64.6
|
|
|
$
|
—
|
|
|
$
|
104.3
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(50.7
|
)
|
|
—
|
|
|
(51.5
|
)
|
|
—
|
|
|
(102.2
|
)
|
|||||
Proceeds from disposition of non-consolidated affiliate
|
20.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.0
|
|
|||||
Net investing activities
|
(30.7
|
)
|
|
—
|
|
|
(51.5
|
)
|
|
—
|
|
|
(82.2
|
)
|
|||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt repayments
|
(0.2
|
)
|
|
(50.0
|
)
|
|
—
|
|
|
—
|
|
|
(50.2
|
)
|
|||||
Common stock repurchased and retired
|
(13.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.2
|
)
|
|||||
Stock options exercised
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||
Dividends paid
|
(33.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.0
|
)
|
|||||
Intercompany financing activities
|
(50.0
|
)
|
|
50.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net financing activities
|
(95.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95.0
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(86.0
|
)
|
|
—
|
|
|
12.9
|
|
|
—
|
|
|
(73.1
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
92.0
|
|
|
—
|
|
|
86.8
|
|
|
—
|
|
|
178.8
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
6.0
|
|
|
$
|
—
|
|
|
$
|
99.7
|
|
|
$
|
—
|
|
|
$
|
105.7
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||
(In millions)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent Guarantor
|
|
Issuer
|
|
Subsidiary
Non-Guarantor |
|
Eliminations
|
|
Total
|
||||||||||
Net operating activities
|
$
|
69.3
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
|
$
|
80.9
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(41.7
|
)
|
|
—
|
|
|
(47.8
|
)
|
|
—
|
|
|
(89.5
|
)
|
|||||
Proceeds from disposition of property, plant and equipment
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||||
Net investing activities
|
(41.7
|
)
|
|
—
|
|
|
(47.7
|
)
|
|
—
|
|
|
(89.4
|
)
|
|||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings
|
550.0
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
550.3
|
|
|||||
Repayments
|
(20.2
|
)
|
|
(570.0
|
)
|
|
(19.7
|
)
|
|
—
|
|
|
(609.9
|
)
|
|||||
Stock options exercised
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||
Dividends paid
|
(33.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.4
|
)
|
|||||
Debt issuance costs
|
(8.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
|||||
Intercompany financing activities
|
(570.0
|
)
|
|
570.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net financing activities
|
(81.1
|
)
|
|
—
|
|
|
(19.4
|
)
|
|
—
|
|
|
(100.5
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(53.5
|
)
|
|
—
|
|
|
(55.8
|
)
|
|
—
|
|
|
(109.3
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
57.1
|
|
|
—
|
|
|
161.3
|
|
|
—
|
|
|
218.4
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
3.6
|
|
|
$
|
—
|
|
|
$
|
105.5
|
|
|
$
|
—
|
|
|
$
|
109.1
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions, except per share data)
|
||||||
Sales
|
$
|
1,553.4
|
|
|
$
|
1,710.3
|
|
Cost of goods sold
|
1,347.3
|
|
|
1,528.7
|
|
||
Gross margin
|
206.1
|
|
|
181.6
|
|
||
Selling and administration
|
107.0
|
|
|
100.5
|
|
||
Restructuring charges
|
4.0
|
|
|
4.0
|
|
||
Acquisition-related costs
|
—
|
|
|
0.3
|
|
||
Other operating income
|
0.1
|
|
|
8.1
|
|
||
Operating income
|
95.2
|
|
|
84.9
|
|
||
Earnings of non-consolidated affiliates
|
—
|
|
|
0.5
|
|
||
Interest expense
|
57.4
|
|
|
63.7
|
|
||
Interest income
|
0.2
|
|
|
0.4
|
|
||
Non-operating pension income
|
3.9
|
|
|
5.4
|
|
||
Other income
|
11.2
|
|
|
—
|
|
||
Income before taxes
|
53.1
|
|
|
27.5
|
|
||
Income tax provision
|
11.4
|
|
|
6.6
|
|
||
Net income
|
$
|
41.7
|
|
|
$
|
20.9
|
|
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.25
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.12
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Sales:
|
($ in millions)
|
||||||
Chlor Alkali Products and Vinyls
|
$
|
872.2
|
|
|
$
|
936.1
|
|
Epoxy
|
524.0
|
|
|
603.3
|
|
||
Winchester
|
157.2
|
|
|
170.9
|
|
||
Total sales
|
$
|
1,553.4
|
|
|
$
|
1,710.3
|
|
Income (loss) before taxes:
|
|
|
|
||||
Chlor Alkali Products and Vinyls
(1)
|
$
|
120.4
|
|
|
$
|
130.5
|
|
Epoxy
|
10.5
|
|
|
(22.1
|
)
|
||
Winchester
|
9.1
|
|
|
12.0
|
|
||
Corporate/other:
|
|
|
|
||||
Environmental expense
|
(1.8
|
)
|
|
(2.3
|
)
|
||
Other corporate and unallocated costs
(2)
|
(39.1
|
)
|
|
(36.5
|
)
|
||
Restructuring charges
|
(4.0
|
)
|
|
(4.0
|
)
|
||
Acquisition-related costs
|
—
|
|
|
(0.3
|
)
|
||
Other operating income
(3)
|
0.1
|
|
|
8.1
|
|
||
Interest expense
(4)
|
(57.4
|
)
|
|
(63.7
|
)
|
||
Interest income
|
0.2
|
|
|
0.4
|
|
||
Non-operating pension income
|
3.9
|
|
|
5.4
|
|
||
Other income
(5)
|
11.2
|
|
|
—
|
|
||
Income before taxes
|
$
|
53.1
|
|
|
$
|
27.5
|
|
(1)
|
Earnings (losses) of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were
$0.5 million
for the
three
months ended
March 31, 2018
.
|
(2)
|
Other corporate and unallocated costs for the
three
months ended
March 31, 2019
and
2018
included costs associated with the implementation of the Information Technology Project of
$14.1 million
and
$6.5 million
, respectively.
|
(3)
|
Other operating income for the
three
months ended
March 31, 2018
included an $8.0 million insurance recovery for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility.
|
(4)
|
Interest expense for the
three
months ended
March 31, 2019
and
2018
included
$4.0 million
and
$3.9 million
, respectively, of accretion expense related to the 2020 ethylene payment discount. Interest expense for the
three
months ended
March 31, 2018
also included $2.6 million for the write-off of unamortized deferred debt issuance costs associated with the prepayment of debt.
|
(5)
|
Other income for the
three
months ended
March 31, 2019
included a gain of $11.2 million on the sale of our equity interest in a non-consolidated affiliate.
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
($ in millions)
|
||||||
Balance at beginning of year
|
$
|
125.6
|
|
|
$
|
131.6
|
|
Charges to income
|
1.8
|
|
|
2.3
|
|
||
Remedial and investigatory spending
|
(2.0
|
)
|
|
(2.5
|
)
|
||
Foreign currency translation adjustments
|
0.1
|
|
|
(0.2
|
)
|
||
Balance at end of period
|
$
|
125.5
|
|
|
$
|
131.2
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Provided By (Used For)
|
($ in millions)
|
||||||
Net operating activities
|
$
|
104.3
|
|
|
$
|
80.9
|
|
Capital expenditures
|
(102.2
|
)
|
|
(89.5
|
)
|
||
Proceeds from disposition of non-consolidated affiliate
|
20.0
|
|
|
—
|
|
||
Net investing activities
|
(82.2
|
)
|
|
(89.4
|
)
|
||
Long-term debt repayments, net
|
(50.2
|
)
|
|
(59.6
|
)
|
||
Common stock repurchased and retired
|
(13.2
|
)
|
|
—
|
|
||
Stock options exercised
|
1.4
|
|
|
1.0
|
|
||
Debt issuance costs
|
—
|
|
|
(8.5
|
)
|
||
Net financing activities
|
(95.0
|
)
|
|
(100.5
|
)
|
•
|
sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and paper, and the migration by United States customers to foreign locations;
|
•
|
the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;
|
•
|
our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
|
•
|
higher-than-expected raw material, energy, transportation and/or logistics costs;
|
•
|
failure to control costs or to achieve targeted cost reductions;
|
•
|
new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
|
•
|
the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
|
•
|
complications resulting from our multiple enterprise resource planning systems and the conversion to a new system;
|
•
|
changes in, or failure to comply with, legislation or government regulations or policies;
|
•
|
the failure or an interruption of our information technology systems;
|
•
|
economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;
|
•
|
the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan;
|
•
|
unexpected litigation outcomes;
|
•
|
adverse changes in international markets, including economic, political or regulatory changes;
|
•
|
weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior credit facility;
|
•
|
failure to attract, retain and motivate key employees;
|
•
|
our substantial amount of indebtedness and significant debt service obligations;
|
•
|
costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
|
•
|
our long range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets; and
|
•
|
adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital.
|
(a)
|
Not Applicable.
|
(b)
|
Not Applicable.
|
Period
|
|
Total Number of Shares (or Units) Purchased
(1)
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|
|
|||
January 1-31, 2019
|
|
470,466
|
|
|
21.69
|
|
470,466
|
|
|
|
|
|
February 1-28, 2019
|
|
71,109
|
|
|
25.89
|
|
71,109
|
|
|
|
|
|
March 1-31, 2019
|
|
47,262
|
|
|
24.58
|
|
47,262
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
436,742,225
|
|
(1)
|
(1)
|
On April 26, 2018, our board of directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to
$500.0 million
. This program will terminate upon the purchase of
$500.0 million
of our common stock. Through
March 31, 2019
,
2,726,940
shares had been repurchased at a total value of
$63,257,775
and
$436,742,225
of common stock remained available for purchase under the program.
|
|
OLIN CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
/s/ Todd A. Slater
|
|
Vice President and Chief Financial Officer
(Authorized Officer)
|
a.
|
One-half (1/2) of the total target Performance Share Award shall be designated in TSR Performance Shares, and the remaining one-half in Net Income Performance Shares.
|
b.
|
The number of target TSR Performance Shares for each Participant shall be adjusted based upon a comparison of Olin’s TSR during the Performance Cycle with the TSR of the Performance Share Comparison Group over the same period, in accordance with the following chart:
|
c.
|
The number of target Net Income Performance Shares for each Participant shall be adjusted based upon a comparison of Olin’s actual Net Income for the relevant Performance Cycle with the target Net Income established by the Committee for such Performance Cycle, in accordance with the following chart:
|
If Olin’s Net Income for a Performance Cycle is:
|
The number of Net Income Performance Shares paid as a percentage of the target Net Income Performance Share Award will be:
|
At least 140% of the Net Income Goal
|
200%
|
More than 100% but less than 140% of the Net Income Goal
|
100% of the target number of Net Income Performance Shares plus a proportionate number of target Net Income Performance Shares determined using linear interpolation
|
100% of the Net Income Goal
|
100%
|
More than 60% but less than 100% of the Net Income Goal
|
50% of the target number of Net Income Performance Shares plus a proportionate number of target Net Income Performance Shares determined using linear interpolation
|
60% of the Net Income Goal
|
50%
|
Less than 60% of the Net Income Goal
|
0
|
d.
|
The Company shall use linear interpolation to determine the number of additional Net Income Performance Shares for performance between 60% and 100% and for 100% and 140% of the Net Income Goal. For example, if the Net Income Goal for a three-year Performance Cycle is $300 million, and a Participant’s target number of Net Income Performance Shares is 10,000, the Participant would receive the number of Net Income Performance Shares set forth below opposite the relevant Net Income for that Performance Cycle:
|
e.
|
As soon as practicable in the calendar year following the end of the Performance Cycle, the Company shall calculate the number of Performance Shares that vested (the “Final Share Number”) for all
|
a.
|
Except as otherwise provided by the Committee, the LTIP, this Program or the Performance Share Award certificate, an interest in a Performance Share Award shall vest only if the Participant is an employee of the Company or a subsidiary on the last day of the relevant Performance Cycle.
|
b.
|
If a Participant’s employment with the Company or a subsidiary terminates for cause or without the Company’s consent (other than as the result of the Participant’s death, disability or retirement) before a Performance Share Award has vested, his or her Performance Share Award shall terminate and all rights under such Award shall be forfeited.
|
c.
|
If a Participant’s employment with the Company or a subsidiary terminates as the result of his or her disability, (as that term is defined in Section 409A of the Code or any successor provision), or retirement under any of the Company’s retirement plans before a Performance Share Award has vested, the Participant shall be entitled to a pro rata Performance Share Award, payable solely in cash at the time that the Performance Share Award would otherwise be payable under Section 5. The cash payment shall be equal to the Final Share Number calculated in accordance with Sections 3 and 5 of this Program, multiplied by the Fair Market Value on the last day of the relevant Performance Cycle, multiplied by a fraction with a numerator equal to the number of months during the Performance Cycle the Participant was employed by the Company or a subsidiary (rounded up to the nearest whole month) and a denominator of 36.
|
d.
|
If a Participant’s employment with the Company or a subsidiary terminates as the result of his or her death before a Performance Share Award has vested, the Participant shall be entitled to a pro rata Performance Share Award, payable solely in cash within ninety (90) days of the Participant’s death. The cash payment shall be equal to the Participant’s target number of Performance Shares, as the case may be, multiplied by the Fair Market Value on the date of the Participant’s death (or the next trading day, if the Common Stock was not traded on such date), multiplied by a fraction with a numerator equal to the number of months during the Performance Cycle the Participant was employed by the Company or a subsidiary (rounded up to the nearest whole month) and a denominator of 36.
|
e.
|
If a Participant’s employment with the Company or a subsidiary terminates for any other reason, the Company shall determine the portion, if any, of the Performance Share Award that shall not be forfeited, and the form of payment (cash or shares or a combination) that the Participant shall receive. That determination shall be made by the Committee in the case of any officer, and by the Chairman of the Board, President, Chief Executive Officer, or any Vice President, in the case of any non-officer employee. Notwithstanding this Section 4, payment shall be made pursuant to Section 5.
|
a.
|
As soon as is administratively practicable after the determination of the Final Share Number, but not later than the last day of the calendar year following the Performance Cycle, the Company will (i) issue to each Participant a number of shares of the Common Stock equal to one-half of the Final Share Number, rounded down to the nearest whole share if such number is not a whole number, and (ii) pay the Participant in cash an amount equal to the Fair Market Value of one-half of the Final Share Number of shares of Common Stock on the last day of the Performance Cycle, rounded up to the nearest whole share if such number is not a whole number.
|
b.
|
No dividends or dividend equivalents shall be paid on any Performance Shares.
|
c.
|
In calculating the number of Performance Shares, all percentages and percentile numbers will be rounded to the nearest one-hundredth of a percent.
|
a.
|
By acceptance of the Performance Share Award, each Participant agrees that such Award is special compensation, and that any amount paid will not affect:
|
i.
|
the amount of any pension under any pension or retirement plan in which he or she participates as an employee of Olin,
|
ii.
|
the amount of coverage under any group life insurance plan in which he or she participates as an employee of Olin, or
|
iii.
|
the benefits under any other benefit plan of any kind heretofore or hereafter in effect, under which the availability or amount of benefits is related to compensation.
|
b.
|
The Company will withhold from the distribution of any cash pursuant to Performance Share Awards the amount necessary to satisfy the Participant’s federal, state and local withholding tax requirements. It is the Company’s intention that all income tax liability on Performance Share Awards be deferred in accordance with the applicable requirements of Code Section 409A, until the Participant actually receives such shares or payment thereof.
|
c.
|
To the extent any provision of the Program (or any Performance Share Award) or action by the Board of Directors or Committee would subject any Participant to liability for interest or additional taxes under Code Section 409A, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. It is intended that the Program (and any Performance Share Award) will comply with Code Section 409A, and the Program (and any Performance Share Award) shall be interpreted and construed on a basis consistent with such intent. The Program (and any Performance Share Award) may be amended in any respect deemed necessary (including retroactively) by the Committee in order to preserve compliance with Code Section 409A. The preceding shall not be construed as a guarantee of any particular tax effect for Program benefits or Performance Share Awards. Except as specifically provided in the LTIP, a Participant (or beneficiary) is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Participant (or beneficiary) in connection with any distributions to such Participant (or beneficiary) under the Program (including any taxes and penalties under Code Section 409A), and neither Olin nor any Affiliate shall have any obligation to indemnify or otherwise hold a Participant (or beneficiary) harmless from any or all of such taxes or penalties.
|
Date:
|
May 1, 2019
|
/s/ John E. Fischer
|
|
|
John E. Fischer
|
|
|
Chairman, President and Chief Executive Officer
|
Date:
|
May 1, 2019
|
/s/ Todd A. Slater
|
|
|
Todd A. Slater
|
|
|
Vice President and Chief Financial Officer
|
|
|
/s/ John E. Fischer
|
|
John E. Fischer
|
|
Chairman, President and Chief Executive Officer
|
|
Dated:
|
May 1, 2019
|
|
|
/s/ Todd A. Slater
|
|
Todd A. Slater
|
|
Vice President and Chief Financial Officer
|
|
Dated:
|
May 1, 2019
|