☒
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Virginia
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54-1692118
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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COMMON STOCK, $.01 Par Value
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ALB
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Item 1.
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Business.
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Item 1A.
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Risk Factors.
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•
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fluctuations in foreign currency exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services we provide in international markets where payment for our products and services is made in the local currency;
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transportation and other shipping costs may increase, or transportation may be inhibited;
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increased cost or decreased availability of raw materials;
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changes in foreign laws and tax rates or U.S. laws and tax rates with respect to foreign income may unexpectedly increase the rate at which our income is taxed, impose new and additional taxes on remittances, repatriation or other payments by subsidiaries, or cause the loss of previously recorded tax benefits;
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foreign countries in which we do business may adopt other restrictions on foreign trade or investment, including currency exchange controls;
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trade sanctions by or against these countries could result in our losing access to customers and suppliers in those countries;
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unexpected adverse changes in foreign laws or regulatory requirements may occur;
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our agreements with counterparties in foreign countries may be difficult for us to enforce and related receivables may be difficult for us to collect;
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compliance with the variety of foreign laws and regulations may be unduly burdensome;
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compliance with anti-bribery and anti-corruption laws (such as the Foreign Corrupt Practices Act) as well as anti-money-laundering laws may be costly;
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unexpected adverse changes in export duties, quotas and tariffs and difficulties in obtaining export licenses may occur;
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general economic conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries;
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our foreign operations may experience staffing difficulties and labor disputes;
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termination or substantial modification of international trade agreements may adversely affect our access to raw materials and to markets for our products outside the U.S.;
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foreign governments may nationalize or expropriate private enterprises;
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increased sovereign risk (such as default by or deterioration in the economies and credit worthiness of local governments) may occur; and
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political or economic repercussions from terrorist activities, including the possibility of hyperinflationary conditions and political instability, may occur in certain countries in which we do business.
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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•
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potential disruption of our ongoing business and distraction of management;
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•
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unforeseen claims and liabilities, including unexpected environmental exposures;
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unforeseen adjustments, charges and write-offs;
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problems enforcing the indemnification obligations of sellers of businesses or joint venture partners for claims and liabilities;
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unexpected losses of customers of, or suppliers to, the acquired business;
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difficulty in conforming the acquired businesses’ standards, processes, procedures and controls with our operations;
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in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;
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variability in financial information arising from the implementation of purchase price accounting;
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inability to coordinate new product and process development;
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loss of senior managers and other critical personnel and problems with new labor unions and cultural challenges associated with integrating employees from the acquired company into our organization; and
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challenges arising from the increased scope, geographic diversity and complexity of our operations.
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reducing flexibility in planning for, or reacting to, changes in our businesses, the competitive environment and the industries in which we operate, and to technological and other changes;
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lowering credit ratings;
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reducing access to capital and increasing borrowing costs generally or for any additional indebtedness to finance future operating and capital expenses and for general corporate purposes;
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reducing funds available for operations, capital expenditures, share repurchases, dividends and other activities; and
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creating competitive disadvantages relative to other companies with lower debt levels.
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Albemarle Corporation and Subsidiaries
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Location
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Business Segment
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Principal Use
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Owned/Leased
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Amsterdam, the Netherlands
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Catalysts
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Production of refinery catalysts, research and product development activities
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Owned
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Baton Rouge, Louisiana
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Bromine Specialties
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Research and product development activities, and production of flame retardants
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Leased
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Bitterfeld, Germany
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Catalysts
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Refinery catalyst regeneration, rejuvenation, and sulfiding
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Greenbushes, Australia
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Lithium
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Production of lithium spodumene minerals and lithium concentrate
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Owned by Windfield Holdings Pty Ltd, a joint venture in which we own 49%, and Sichuan Tianqi Lithium Industries Inc. which owns the remaining interest
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Jubail, Saudi Arabia
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Catalysts
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Manufacturing and marketing of organometallics
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Owned by Saudi Organometallic Chemicals Company LLC, a joint venture owned 50% by each of Saudi Specialty Chemicals Company (a SABIC affiliate) and us
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Kings Mountain, North Carolina
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Lithium
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Production of technical and battery-grade lithium hydroxide, lithium salts and battery-grade lithium metal products
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Owned
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La Negra, Chile
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Lithium
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Production of lithium carbonate and lithium chloride
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Owned
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Langelsheim, Germany
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Lithium
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Production of butyllithium, lithium chloride, specialty products, lithium hydrides, cesium and special metals
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Owned
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Louvain-la-Neuve, Belgium
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Lithium; Bromine Specialties; Catalysts; All Other
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Regional offices and research and customer technical service activities
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Owned
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La Voulte, France
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Catalysts
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Refinery catalysts regeneration and treatment, research and development activities
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Magnolia, Arkansas
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Bromine Specialties
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Production of flame retardants, bromine, inorganic bromides, agricultural intermediates and tertiary amines
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Owned
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McAlester, Oklahoma
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Catalysts
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Refinery catalyst regeneration, rejuvenation, pre-reclaim burn off, as well as specialty zeolites and additives marketing activities
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Meishan, China
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Lithium
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Production of lithium carbonate and lithium hydroxide
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Owned
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Albemarle Corporation and Subsidiaries
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Location
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Business Segment
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Principal Use
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Owned/Leased
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Mobile, Alabama
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Catalysts
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Production of tin stabilizers
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Owned by PMC Group, Inc. which operates the plant for Stannica LLC, a joint venture owned 50% by each of PMC Group Inc. and us
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New Johnsonville, Tennessee
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Lithium
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Production of specialty products
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Owned
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Niihama, Japan
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Catalysts
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Production of refinery catalysts
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Leased by Nippon Ketjen Company Limited, a joint venture owned 50% by each of Sumitomo Metal Mining Company Limited and us
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Pasadena, Texas
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Catalysts; All Other
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Production of aluminum alkyls, orthoalkylated anilines, and other specialty chemicals
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Owned
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Pasadena, Texas
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Catalysts
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Production of refinery catalysts, research and development activities
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Owned
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Pasadena, Texas
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Catalysts
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Refinery catalysts regeneration services
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Owned by Eurecat U.S. Incorporated, a joint venture in which we own a 57.5% interest and a consortium of entities in various proportions owns the remaining interest
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Safi, Jordan
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Bromine Specialties
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Production of bromine and derivatives and flame retardants
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Owned and leased by JBC, a joint venture owned 50% by each of Arab Potash Company Limited and us
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Salar de Atacama, Chile
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Lithium
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Production of lithium brine and potash
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Owned; however ownership will revert to the Chilean government once we have sold all remaining amounts under our contract with the Chilean government pursuant to which we obtain lithium brine in Chile
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Santa Cruz, Brazil
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Catalysts
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Production of catalysts, research and product development activities
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Owned by Fábrica Carioca de Catalisadores S.A, a joint venture owned 50% by each of Petrobras Química S.A.—PETROQUISA and us
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Silver Peak, Nevada
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Lithium
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Production of lithium brine and lithium carbonate
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Owned
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South Haven, Michigan
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All Other
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Production of custom fine chemistry products including pharmaceutical actives
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Owned
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Taichung, Taiwan
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Lithium
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Production of butyllithium
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Owned
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Takaishi City, Osaka, Japan
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Catalysts
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Production of aluminum alkyls
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Owned by Nippon Aluminum Alkys, a joint venture owned 50% by each of Mitsui Chemicals, Inc. and us
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Twinsburg, Ohio
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Bromine Specialties
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Production of bromine-activated carbon
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Leased
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Tyrone, Pennsylvania
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All Other
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Production of custom fine chemistry products, agricultural intermediates, performance polymer products and research and development activities
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Owned
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Wodgina, Australia(a)
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Lithium
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Production of lithium spodumene minerals
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Owned 60% via an undivided interest, with MRL, our co-participant in the MARBL joint venture, owning the remaining 40%
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Albemarle Corporation and Subsidiaries
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Location
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Business Segment
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Principal Use
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Owned/Leased
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Xinyu, China
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Lithium
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Production of lithium carbonate and lithium hydroxide
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Owned
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(a)
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Based on current market conditions, the Wodgina mine has idled production of spodumene until market demand supports bringing the mine back into production.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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Name
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Age
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Position
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Luther C. Kissam IV
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55
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Chairman, President and Chief Executive Officer
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Karen G. Narwold
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60
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Executive Vice President, Chief Administrative Officer, Corporate Secretary
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Scott A. Tozier
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54
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Executive Vice President, Chief Financial Officer
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John C. Barichivich III
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52
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Vice President, Corporate Controller, Chief Accounting Officer
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Raphael Crawford
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44
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President, Catalysts Global Business Unit
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Netha Johnson
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49
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President, Bromine Specialties Global Business Unit
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DeeAnne Marlow
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54
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Senior Vice President, Chief Human Resources Officer
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Eric Norris
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53
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President, Lithium Global Business Unit
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David Ryan
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50
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Vice President, Corporate Strategy and Investor Relations
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Item 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Albemarle Corporation and Subsidiaries
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Item 6.
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Selected Financial Data.
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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•
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changes in economic and business conditions;
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•
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changes in financial and operating performance of our major customers and industries and markets served by us;
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•
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the timing of orders received from customers;
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•
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the gain or loss of significant customers;
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•
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competition from other manufacturers;
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•
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changes in the demand for our products or the end-user markets in which our products are sold;
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•
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limitations or prohibitions on the manufacture and sale of our products;
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•
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availability of raw materials;
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•
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increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;
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•
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changes in our markets in general;
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•
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fluctuations in foreign currencies;
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Albemarle Corporation and Subsidiaries
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•
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changes in laws and government regulation impacting our operations or our products;
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•
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the occurrence of regulatory actions, proceedings, claims or litigation;
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•
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the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change;
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•
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hazards associated with chemicals manufacturing;
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•
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the inability to maintain current levels of product or premises liability insurance or the denial of such coverage;
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•
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political unrest affecting the global economy, including adverse effects from terrorism or hostilities;
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political instability affecting our manufacturing operations or joint ventures;
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•
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changes in accounting standards;
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the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs;
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changes in the jurisdictional mix of our earnings and changes in tax laws and rates;
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changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations;
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volatility and uncertainties in the debt and equity markets;
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technology or intellectual property infringement, including through cyber-security breaches, and other innovation risks;
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decisions we may make in the future;
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the ability to successfully execute, operate and integrate acquisitions and divestitures; and
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the other factors detailed from time to time in the reports we file with the SEC.
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In the first quarter, we increased our quarterly dividend for the 25th consecutive year, to $0.3675 per share. As a result, in February 2020, we were recognized by being named to the S&P 500 Dividend Aristocrats Index.
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Albemarle Corporation and Subsidiaries
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•
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On August 14, 2019, the Company entered into a $1.2 billion unsecured credit facility with several banks and other financial institutions. Borrowings under this facility bear interest at variable rates based on an average London inter-bank offered rate (“LIBOR”), plus an applicable margin that depends on certain credit ratings of the Company. Upon the closing of the credit facility, the applicable margin over LIBOR was 1.125%. In October 2019, we borrowed $1.0 billion under this credit facility to fund the cash portion of the acquisition of a 60% interest in the Wodgina Project. This balance was repaid in full with proceeds from notes issued in November 2019 (see below for further details).
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On October 31, 2019, we completed the acquisition of a 60% interest in MRL’s Wodgina Project and formed a 60%-40% unincorporated joint venture with MRL to operate the mine and battery-grade lithium hydroxide production facilities. Albemarle paid $820 million in cash and transferred a 40% interest in certain lithium hydroxide conversion assets being built in Kemerton, Western Australia.
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On November 25, 2019, we closed the offerings on notes totaling $500.0 million and €1.0 billion. Net proceeds from these offerings were used to repay 1) the $1.0 billion balance of the credit facility entered into on August 14, 2019, 2) a large portion of approximately $370 million of commercial paper notes and 3) the remaining balance of $175.2 million of the senior notes issued in December 2010, and for general corporate purposes.
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In collaboration with ExxonMobil, we created the Galexia™ platform, a transformative hydroprocessing suite of catalyst and service solutions for the refining industry. The platform enables an improved way of doing business, ensuring customer demands are better addressed at every stage throughout the value chain.
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•
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Announced a cost-reduction program expected to deliver a run rate of over $100 million in sustainable savings by the end of 2021.
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We achieved earnings of $533.2 million during 2019 as compared to $693.6 million for 2018. Cash flows from operations in 2019 were $719.4 million up 32% from 2018. Earnings for 2018 included a $169.9 million after-tax gain from the Polyolefin Catalysts Divestiture. In addition, earnings for 2019 includes pension and other postretirement benefit (“OPEB”) actuarial losses of $21.1 million after income taxes, compared to pension and OPEB actuarial losses of $10.6 million after income taxes in 2018.
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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In thousands
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2019
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2018
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$ Change
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% Change
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||||
Net sales
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3,589,427
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|
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3,374,950
|
|
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214,477
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6
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%
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•
$213.1 million of higher sales volume, driven primarily by Lithium, Bromine Specialties and Fine Chemistry Services, and $76.5 million of favorable pricing impacts across all businesses
•
$48.1 million of unfavorable currency exchange resulting from a stronger U.S. Dollar against various currencies
•
$27.1 million related to the Polyolefin Catalysts Divestiture
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In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Gross profit
|
$
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1,257,778
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$
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1,217,256
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$
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40,522
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|
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3
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%
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Gross profit margin
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35.0
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%
|
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36.1
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%
|
|
|
|
|
|||||
•
Higher sales volume, driven primarily by Lithium, Bromine Specialties and Fine Chemistry Services, and favorable pricing impacts across all businesses
•
Higher input costs in our Lithium segment, resulting from increased toll feedstock, higher tolled volume and investments in operational excellence
•
Higher raw material costs, primarily in our Lithium and Bromine Specialties segments
•
$10.7 million related to the Polyolefin Catalysts Divestiture
•
Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies
•
Charges of $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements and $4.9 million for the write-off of fixed assets in our Jordanian joint venture in 2018
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In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Selling, general and administrative expenses
|
$
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533,368
|
|
|
$
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446,090
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|
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$
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87,278
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|
|
20
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%
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Percentage of Net sales
|
14.9
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%
|
|
13.2
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%
|
|
|
|
|
|||||
•
$64.8 million of stamp duties levied on assets purchased related to the Wodgina Project in 2019
•
Higher professional fees to support planned projects
•
$7.4 million of increased acquisition and integration related costs, driven by the Wodgina Project, and increased severance payments as part of a business reorganization plan
•
$16.2 million of charitable contributions in 2018 beyond the Company’s ordinary, recurring charitable contributions
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In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Research and development expenses
|
$
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58,287
|
|
|
$
|
70,054
|
|
|
$
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(11,767
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)
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|
(17
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)%
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Percentage of Net sales
|
1.6
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%
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|
2.1
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%
|
|
|
|
|
|||||
•
Lower spend in our Lithium and Catalysts segments, including the impact of the Polyolefin Catalysts Divestiture
|
In thousands
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2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Gain on sale of business
|
$
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—
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|
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$
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(210,428
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)
|
|
$
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210,428
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|
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(100
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)%
|
•
Gain related to the Polyolefin Catalysts Divestiture, which closed in the second quarter of 2018
|
Albemarle Corporation and Subsidiaries
|
||
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Interest and financing expenses
|
$
|
(57,695
|
)
|
|
$
|
(52,405
|
)
|
|
$
|
(5,290
|
)
|
|
10
|
%
|
•
Increased debt balance in 2019, primarily related to the funding of the Wodgina Project acquisition
•
2019 included a loss on early extinguishment of debt of $4.8 million representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of the senior notes issued in 2010
•
The increase was partially offset by higher capitalized interest from an increase in capital expenditures in 2019
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Other expenses, net
|
$
|
(45,478
|
)
|
|
$
|
(64,434
|
)
|
|
$
|
18,956
|
|
|
(29
|
)%
|
•
$11.1 million gain related to the sale of land in Pasadena, Texas in 2019
•
$27.0 million of legal expenses in 2018, related to products that Albemarle no longer manufactures and a previously disposed business
•
$15.6 million in 2018 related to environmental charges related to a site formerly owned by Albemarle
•
Decrease of $16.5 million in losses related to adjustments to indemnification liabilities of previously disposed businesses
•
Decrease in interest income of $5.4 million from lower cash balances
•
Increase in foreign exchange losses of $15.3 million
•
$4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities
•
$27.0 million of pension and OPEB costs (including mark-to-market actuarial losses of $29.3 million) as compared to $5.3 million of pension and OPEB costs (including mark-to-market actuarial losses of $14.0 million) in 2018
•
The mark-to-market actuarial loss in 2019 is primarily attributable to a decrease in the weighted-average discount rate to 3.56% from 4.59% for our U.S. pension plans and to 1.33% from 2.15% for our foreign pension plans to reflect market conditions as of the December 31, 2019 measurement date. This was partially offset by a higher return on pension plan assets in 2019 than was expected, as a result of overall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was 15.82% versus an expected return of 6.72%.
•
The mark-to-market actuarial loss in 2018 is primarily attributable to a lower return on pension plan assets in 2018 than was expected, as a result of overall market and investment portfolio performance. The weighted-average actual return on our U.S. and foreign pension plan assets was (4.55%) versus an expected return of 6.73%. This was partially offset by an increase in the weighted-average discount rate to 4.59% from 4.03% for our U.S. pension plans and to 2.15% from 1.94% for our foreign pension plans to reflect market conditions as of the December 31, 2018 measurement date.
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Income Tax Expense
|
$
|
88,161
|
|
|
$
|
144,826
|
|
|
$
|
(56,665
|
)
|
|
(39
|
)%
|
Effective income tax rate
|
15.7
|
%
|
|
18.2
|
%
|
|
|
|
|
|||||
•
Change in geographic mix of earnings, mainly attributable to our share of income of our JBC joint venture, a Free Zones company under the laws of the Hashemite Kingdom of Jordan and tax discretes
•
The discrete net tax benefits in 2019 of $15.0 million related to uncertain tax positions, primarily from seeking treaty relief from the competent authority to prevent double taxation
|
Albemarle Corporation and Subsidiaries
|
||
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net income attributable to noncontrolling interests
|
$
|
(71,129
|
)
|
|
$
|
(45,577
|
)
|
|
$
|
(25,552
|
)
|
|
56
|
%
|
•
Increase in consolidated income related to our JBC joint venture resulting from the full year impact of the Tetrabrom expansion completed in second quarter 2018.
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net income attributable to Albemarle Corporation
|
$
|
533,228
|
|
|
$
|
693,562
|
|
|
$
|
(160,334
|
)
|
|
(23
|
)%
|
Percentage of Net Sales
|
14.9
|
%
|
|
20.6
|
%
|
|
|
|
|
|||||
Basic earnings per share
|
$
|
5.03
|
|
|
$
|
6.40
|
|
|
$
|
(1.37
|
)
|
|
(21
|
)%
|
Diluted earnings per share
|
$
|
5.02
|
|
|
$
|
6.34
|
|
|
$
|
(1.32
|
)
|
|
(21
|
)%
|
•
Decrease primarily due to gain related to the Polyolefin Catalysts Divestiture in 2018 and increased charges resulting from the acquisition of a 60% interest in the Wodgina Project during 2019, as well as other items noted above.
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Other comprehensive loss, net of tax
|
$
|
(45,520
|
)
|
|
$
|
(125,195
|
)
|
|
$
|
79,675
|
|
|
(64
|
)%
|
•
Foreign currency translation
|
$
|
(62,031
|
)
|
|
$
|
(150,258
|
)
|
|
$
|
88,227
|
|
|
(59
|
)%
|
•
2019 included unfavorable movements in the Euro of approximately $52 million, the Chinese Renminbi of approximately $6 million, the Brazilian Real of approximately $4 million and a net unfavorable variance in various other currencies totaling approximately less than $1 million
|
||||||||||||||
•
2018 included unfavorable movements in the Euro of approximately $114 million, the Chinese Renminbi of approximately $14 million, the Brazilian Real of approximately $12 million, the Korean Won of approximately $5 million and a net unfavorable variance in various other currencies totaling approximately $5 million
|
||||||||||||||
•
Net investment hedge
|
$
|
8,441
|
|
|
$
|
25,786
|
|
|
$
|
(17,345
|
)
|
|
(67
|
)%
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
Year Ended December 31,
|
|
Percentage Change
|
|||||||||||||
|
|
2019
|
|
%
|
|
2018
|
|
%
|
|
2019 vs. 2018
|
|||||||
|
|
(In thousands, except percentages)
|
|||||||||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lithium
|
|
$
|
1,358,170
|
|
|
37.8
|
%
|
|
$
|
1,228,171
|
|
|
36.4
|
%
|
|
11
|
%
|
Bromine Specialties
|
|
1,004,216
|
|
|
28.0
|
%
|
|
917,880
|
|
|
27.2
|
%
|
|
9
|
%
|
||
Catalysts
|
|
1,061,817
|
|
|
29.6
|
%
|
|
1,101,554
|
|
|
32.6
|
%
|
|
(4
|
)%
|
||
All Other
|
|
165,224
|
|
|
4.6
|
%
|
|
127,186
|
|
|
3.8
|
%
|
|
30
|
%
|
||
Corporate
|
|
—
|
|
|
—
|
%
|
|
159
|
|
|
—
|
%
|
|
(100
|
)%
|
||
Total net sales
|
|
$
|
3,589,427
|
|
|
100.0
|
%
|
|
$
|
3,374,950
|
|
|
100.0
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lithium
|
|
$
|
524,934
|
|
|
50.6
|
%
|
|
$
|
530,773
|
|
|
52.7
|
%
|
|
(1
|
)%
|
Bromine Specialties
|
|
328,457
|
|
|
31.7
|
%
|
|
288,116
|
|
|
28.6
|
%
|
|
14
|
%
|
||
Catalysts
|
|
270,624
|
|
|
26.1
|
%
|
|
284,307
|
|
|
28.3
|
%
|
|
(5
|
)%
|
||
All Other
|
|
49,628
|
|
|
4.8
|
%
|
|
14,091
|
|
|
1.4
|
%
|
|
252
|
%
|
||
Corporate
|
|
(136,862
|
)
|
|
(13.2
|
)%
|
|
(110,623
|
)
|
|
(11.0
|
)%
|
|
24
|
%
|
||
Total adjusted EBITDA
|
|
$
|
1,036,781
|
|
|
100.0
|
%
|
|
$
|
1,006,664
|
|
|
100.0
|
%
|
|
3
|
%
|
Albemarle Corporation and Subsidiaries
|
||
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
Reportable Segments Total
|
|
All Other
|
|
Corporate
|
|
Consolidated Total
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
341,767
|
|
|
$
|
279,945
|
|
|
$
|
219,686
|
|
|
$
|
841,398
|
|
|
$
|
41,188
|
|
|
$
|
(349,358
|
)
|
|
$
|
533,228
|
|
Depreciation and amortization
|
99,424
|
|
|
47,611
|
|
|
50,144
|
|
|
197,179
|
|
|
8,440
|
|
|
7,865
|
|
|
213,484
|
|
|||||||
Restructuring and other(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,877
|
|
|
5,877
|
|
|||||||
Acquisition and integration related costs(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,684
|
|
|
20,684
|
|
|||||||
Gain on sale of property(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,411
|
)
|
|
(14,411
|
)
|
|||||||
Interest and financing expenses(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,695
|
|
|
57,695
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,161
|
|
|
88,161
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,970
|
|
|
26,970
|
|
|||||||
Stamp duty(e)
|
64,766
|
|
|
—
|
|
|
—
|
|
|
64,766
|
|
|
—
|
|
|
—
|
|
|
64,766
|
|
|||||||
Windfield tax settlement(f)
|
17,292
|
|
|
—
|
|
|
—
|
|
|
17,292
|
|
|
—
|
|
|
—
|
|
|
17,292
|
|
|||||||
Other(g)
|
1,685
|
|
|
901
|
|
|
794
|
|
|
3,380
|
|
|
—
|
|
|
19,655
|
|
|
23,035
|
|
|||||||
Adjusted EBITDA
|
$
|
524,934
|
|
|
$
|
328,457
|
|
|
$
|
270,624
|
|
|
$
|
1,124,015
|
|
|
$
|
49,628
|
|
|
$
|
(136,862
|
)
|
|
$
|
1,036,781
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
428,212
|
|
|
$
|
246,509
|
|
|
$
|
445,604
|
|
|
$
|
1,120,325
|
|
|
$
|
6,018
|
|
|
$
|
(432,781
|
)
|
|
$
|
693,562
|
|
Depreciation and amortization
|
95,193
|
|
|
41,607
|
|
|
49,131
|
|
|
185,931
|
|
|
8,073
|
|
|
6,694
|
|
|
200,698
|
|
|||||||
Restructuring and other(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838
|
|
|
3,838
|
|
|||||||
Gain on sale of business(h)
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|
(210,428
|
)
|
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|||||||
Acquisition and integration related costs(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,377
|
|
|
19,377
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,405
|
|
|
52,405
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144,826
|
|
|
144,826
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
5,285
|
|
|||||||
Legal accrual(i)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,027
|
|
|
27,027
|
|
|||||||
Environmental accrual(j)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,597
|
|
|
15,597
|
|
|||||||
Albemarle Foundation contribution(k)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|||||||
Indemnification adjustments(l)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,240
|
|
|
25,240
|
|
|||||||
Other(m)
|
7,368
|
|
|
—
|
|
|
—
|
|
|
7,368
|
|
|
—
|
|
|
6,869
|
|
|
14,237
|
|
|||||||
Adjusted EBITDA
|
$
|
530,773
|
|
|
$
|
288,116
|
|
|
$
|
284,307
|
|
|
$
|
1,103,196
|
|
|
$
|
14,091
|
|
|
$
|
(110,623
|
)
|
|
$
|
1,006,664
|
|
(a)
|
Severance payments as part of a business reorganization plan, $5.9 million recorded in Selling, general and administrative expenses for the year ended December 31, 2019 and $0.1 million and $3.7 million recorded in Cost of goods sold and Selling, general and administrative expenses for the year ended December 31, 2018.
|
(b)
|
Included amounts for the years ended December 31, 2019 and 2018 recorded in (1) Cost of goods sold of $1.0 million and $3.7 million, respectively; and (2) Selling, general and administrative expenses of $19.7 million and $15.7 million, respectively, relating to various significant projects, including the acquisition of the 60% interest Wodgina Project.
|
(c)
|
Gain of $3.3 million recorded in Selling, general and administrative expenses related to the release of liabilities as part of the sale of a property and $11.1 million gain recorded in Other expenses, net related to the sale of land in Pasadena, Texas not used as part of our operations.
|
(d)
|
Included in Interest and financing expenses is a loss on early extinguishment of debt of $4.8 million. See Note 14, “Long-Term Debt,” to our consolidated financial statements included in Part II, Item 8 of this report for additional information.
|
(e)
|
See “Selling, general and administrative expenses” on page 32 for a description of these costs.
|
(f)
|
Represents our 49% share of a tax settlement between our Windfield joint venture and an Australian taxing authority, recorded in Equity in net income of unconsolidated investments (net of tax).
|
(g)
|
Included amounts for the year ended December 31, 2019 recorded in:
|
•
|
Cost of goods sold - $0.7 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
Selling, general and administrative expenses - $1.8 million of shortfall contributions for our multiemployer plan financial improvement plan, $0.9 million of a write off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment, $1.0 million related to the settlement of terminated agreements, primarily in the Catalysts segment, and $0.8 million related to the settlement of an ongoing audit in the Lithium segment.
|
•
|
Other expenses, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, $9.8 million of a net loss primarily resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses or purchase accounting, $3.6 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, and $1.2 million of non-operating pension costs from our 50% interest in JBC.
|
(h)
|
See “Gain on Sale of Business” on page 32 for a description of this gain.
|
(i)
|
Included in Other expenses, net is a $16.2 million expense resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures and a $10.8 million expense resulting from a settlement of a legal matter related to guarantees from a previously disposed business.
|
(j)
|
Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
(k)
|
Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the ordinary annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.
|
(l)
|
Included in Other expenses, net is $19.7 million related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and $5.5 million related to the adjustment of indemnifications previously recorded from disposed businesses.
|
(m)
|
Included amounts for the year ended December 31, 2018 recorded in:
|
•
|
Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
•
|
Selling, general and administrative expenses - $2.3 million of shortfall contributions for our multiemployer plan financial improvement plan and a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year.
|
•
|
Other expenses, net - $1.5 million gain related to the reversal of previously recorded liabilities of disposed businesses.
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
1,358,170
|
|
|
$
|
1,228,171
|
|
|
$
|
129,999
|
|
|
11
|
%
|
•
$151.6 million in higher sales volume, primarily in battery-grade lithium hydroxide due to continued strong demand
•
Pricing was effectively flat due to favorable price/mix in battery-grade hydroxide, offset by the impact of lower prices in China on battery-grade and technical- grade sales
•
$22.5 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
|
||||||||||||||
Adjusted EBITDA
|
$
|
524,934
|
|
|
$
|
530,773
|
|
|
$
|
(5,839
|
)
|
|
(1
|
)%
|
•
Increased cost of goods sold, mainly related to higher tolled product volumes to meet customer commitments
•
Higher sales volume, primarily in battery-grade lithium hydroxide
•
$8.7 million of favorable currency translation resulting from a weaker Chilean Peso
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
1,004,216
|
|
|
$
|
917,880
|
|
|
$
|
86,336
|
|
|
9
|
%
|
•
$46.7 million in higher sales volume and $48.5 million in favorable pricing impacts in flame retardants and other bromine derivatives due to continued strong demand
•
$8.8 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
|
||||||||||||||
Adjusted EBITDA
|
$
|
328,457
|
|
|
$
|
288,116
|
|
|
$
|
40,341
|
|
|
14
|
%
|
•
Higher sales volume and favorable pricing impacts
•
Higher production and raw material costs
•
$5.8 million of unfavorable currency translation
|
Albemarle Corporation and Subsidiaries
|
||
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
1,061,817
|
|
|
$
|
1,101,554
|
|
|
$
|
(39,737
|
)
|
|
(4
|
)%
|
•
$27.1 million impact of the Polyolefin Catalysts Divestiture
•
$16.9 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
•
$21.4 million of lower sales volume, primarily related to delays in the start-up of new FCC units and the loss of certain customers in PCS, partially offset by sales volume increases in CFT
•
$25.4 million of favorable pricing impacts, primarily in FCC and CFT
|
||||||||||||||
Adjusted EBITDA
|
$
|
270,624
|
|
|
$
|
284,307
|
|
|
$
|
(13,683
|
)
|
|
(5
|
)%
|
•
$10.9 million impact of the Polyolefin Catalysts Divestiture
•
Higher raw material costs in our CFT division, as well as lower sales volume in FCC and PCS
•
$10.9 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
•
Favorable pricing impacts
•
Partial insurance claim reimbursement of $4.2 million received in 2018
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Net sales
|
$
|
165,224
|
|
|
$
|
127,186
|
|
|
$
|
38,038
|
|
|
30
|
%
|
•
Higher sales volume and favorable pricing impacts in our fine chemistry services business
|
||||||||||||||
Adjusted EBITDA
|
$
|
49,628
|
|
|
$
|
14,091
|
|
|
$
|
35,537
|
|
|
252
|
%
|
•
Higher sales volume and favorable pricing impacts in our fine chemistry services business
•
$4.4 million decrease from the remeasurement of the fair value of our investment in private equity securities
|
In thousands
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Adjusted EBITDA
|
$
|
(136,862
|
)
|
|
$
|
(110,623
|
)
|
|
$
|
(26,239
|
)
|
|
24
|
%
|
•
Higher selling, general and administrative spending related to professional fees to support planned projects
•
$18.9 million of unfavorable currency exchange impacts
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
All sales and other pass-through taxes are excluded from contract value;
|
•
|
In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;
|
•
|
We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the sales price to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more than one year;
|
•
|
If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicing right; and
|
•
|
We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipments for contracts where the amortization period for such costs would otherwise be one year or less.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.
|
•
|
Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types of investments held by the plans as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the net benefit costs recorded currently.
|
•
|
Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.
|
Albemarle Corporation and Subsidiaries
|
||
|
|
(Favorable) Unfavorable
|
||||||||||||||
|
1% Increase
|
|
1% Decrease
|
||||||||||||
|
Increase (Decrease)
in Benefit Obligation
|
|
Increase (Decrease)
in Benefit Cost
|
|
Increase (Decrease)
in Benefit Obligation
|
|
Increase (Decrease)
in Benefit Cost
|
||||||||
Actuarial Assumptions
|
|
|
|
|
|
|
|
||||||||
Discount Rate:
|
|
|
|
|
|
|
|
||||||||
Pension
|
$
|
(103,167
|
)
|
|
$
|
4,733
|
|
|
$
|
125,286
|
|
|
$
|
(6,286
|
)
|
Other postretirement benefits
|
$
|
(5,070
|
)
|
|
$
|
289
|
|
|
$
|
6,058
|
|
|
$
|
(363
|
)
|
Expected return on plan assets:
|
|
|
|
|
|
|
|
||||||||
Pension
|
*
|
|
|
$
|
(6,183
|
)
|
|
*
|
|
|
$
|
6,183
|
|
||
Other postretirement benefits
|
*
|
|
|
$
|
—
|
|
|
*
|
|
|
$
|
—
|
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Issue Month/Year
|
|
Principal (in millions)
|
|
Interest Rate
|
|
Interest Payment Dates
|
|
Maturity Date
|
|
November 2019
|
|
€500.0
|
|
1.125%
|
|
November 25
|
|
November 25, 2025
|
|
November 2019
|
|
€500.0
|
|
1.625%
|
|
November 25
|
|
November 25, 2028
|
|
November 2019(a)
|
|
$300.0
|
|
3.45%
|
|
May 15 and November 15
|
|
November 15, 2029
|
|
November 2019(b)
|
|
$200.0
|
|
Floating Rate
|
|
February 15, May 15, August 15 and November 15
|
|
November 15, 2022
|
|
December 2014(a)
|
|
€393.0
|
|
1.875%
|
|
December 8
|
|
December 8, 2021
|
|
November 2014(a)
|
|
$425.0
|
|
4.15%
|
|
June 1 and December 1
|
|
December 1, 2024
|
|
November 2014(a)
|
|
$350.0
|
|
5.45%
|
|
June 1 and December 1
|
|
December 1, 2044
|
(a)
|
Denotes senior notes.
|
Albemarle Corporation and Subsidiaries
|
||
|
(b)
|
Borrowings bear interest at a floating rate based on the 3-month LIBOR plus 105 basis points. The floating interest rate for the initial interest period is 2.9595%, with the interest rate reset on each interest payment date.
|
Albemarle Corporation and Subsidiaries
|
||
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||
Long-term debt obligations(a)
|
$
|
187,336
|
|
|
$
|
436,072
|
|
|
$
|
200,000
|
|
|
$
|
—
|
|
|
$
|
425,000
|
|
|
$
|
1,825,984
|
|
Expected interest payments on long-term debt obligations(b)
|
76,515
|
|
|
76,515
|
|
|
68,134
|
|
|
62,215
|
|
|
60,745
|
|
|
473,065
|
|
||||||
Operating lease obligations (rental)
|
28,333
|
|
|
15,306
|
|
|
13,153
|
|
|
12,433
|
|
|
11,850
|
|
|
94,002
|
|
||||||
Take or pay / throughput agreements(c)
|
62,568
|
|
|
20,860
|
|
|
7,690
|
|
|
5,628
|
|
|
4,830
|
|
|
10,907
|
|
||||||
Letters of credit and guarantees
|
49,152
|
|
|
11,383
|
|
|
1,303
|
|
|
1,190
|
|
|
—
|
|
|
19,305
|
|
||||||
Transition tax on foreign earnings(d)
|
10,540
|
|
|
30,442
|
|
|
30,442
|
|
|
44,578
|
|
|
67,177
|
|
|
130,850
|
|
||||||
Capital projects
|
500,975
|
|
|
96,343
|
|
|
3,473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
915,419
|
|
|
$
|
686,921
|
|
|
$
|
324,195
|
|
|
$
|
126,044
|
|
|
$
|
569,602
|
|
|
$
|
2,554,113
|
|
(a)
|
Amounts represent the expected principal payments of our long-term debt and do not include any fair value adjustments, premiums or discounts. Obligations in 2020 include our outstanding Commercial Paper Notes of $186.7 million with a weighted average maturity of 39 days.
|
(b)
|
Interest on our fixed rate borrowings was calculated based on the stated rates of such borrowings. A weighted average interest rate of approximately 2.87% was used for our remaining long-term debt obligations.
|
(c)
|
These amounts primarily relate to contracts entered into with certain third party vendors in the normal course of business to secure raw materials for our production processes. In order to secure materials, sometimes for long durations, these contracts mandate a minimum amount of product to be purchased at predetermined rates over a set timeframe.
|
Albemarle Corporation and Subsidiaries
|
||
|
(d)
|
In December 2017, the TCJA was signed into law imposing a one-time transition tax on foreign earnings, payable over an eight-year period. The one-time transition tax imposed by the TCJA is based on our total post-1986 earnings and profits that we previously deferred from U.S. income taxes.
|
Albemarle Corporation and Subsidiaries
|
||
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
/S/ LUTHER C. KISSAM IV
|
|
Luther C. Kissam IV
|
Chairman, President and Chief Executive Officer
|
(principal executive officer)
|
February 26, 2020
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
/s/ PricewaterhouseCoopers LLP
|
Charlotte, North Carolina
|
February 26, 2020
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF INCOME
|
(In Thousands, Except Per Share Amounts)
|
|||||||||||
Year Ended December 31
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
3,589,427
|
|
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
Cost of goods sold
|
2,331,649
|
|
|
2,157,694
|
|
|
1,965,700
|
|
|||
Gross profit
|
1,257,778
|
|
|
1,217,256
|
|
|
1,106,276
|
|
|||
Selling, general and administrative expenses
|
533,368
|
|
|
446,090
|
|
|
450,286
|
|
|||
Research and development expenses
|
58,287
|
|
|
70,054
|
|
|
84,330
|
|
|||
Gain on sale of business
|
—
|
|
|
(210,428
|
)
|
|
—
|
|
|||
Operating profit
|
666,123
|
|
|
911,540
|
|
|
571,660
|
|
|||
Interest and financing expenses
|
(57,695
|
)
|
|
(52,405
|
)
|
|
(115,350
|
)
|
|||
Other expenses, net
|
(45,478
|
)
|
|
(64,434
|
)
|
|
(9,512
|
)
|
|||
Income before income taxes and equity in net income of unconsolidated investments
|
562,950
|
|
|
794,701
|
|
|
446,798
|
|
|||
Income tax expense
|
88,161
|
|
|
144,826
|
|
|
431,817
|
|
|||
Income before equity in net income of unconsolidated investments
|
474,789
|
|
|
649,875
|
|
|
14,981
|
|
|||
Equity in net income of unconsolidated investments (net of tax)
|
129,568
|
|
|
89,264
|
|
|
84,487
|
|
|||
Net income
|
604,357
|
|
|
739,139
|
|
|
99,468
|
|
|||
Net income attributable to noncontrolling interests
|
(71,129
|
)
|
|
(45,577
|
)
|
|
(44,618
|
)
|
|||
Net income attributable to Albemarle Corporation
|
$
|
533,228
|
|
|
$
|
693,562
|
|
|
$
|
54,850
|
|
Basic earnings per share
|
$
|
5.03
|
|
|
$
|
6.40
|
|
|
$
|
0.49
|
|
Diluted earnings per share
|
$
|
5.02
|
|
|
$
|
6.34
|
|
|
$
|
0.49
|
|
Weighted-average common shares outstanding—basic
|
105,949
|
|
|
108,427
|
|
|
110,914
|
|
|||
Weighted-average common shares outstanding—diluted
|
106,321
|
|
|
109,458
|
|
|
112,380
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In Thousands)
|
|||||||||||
Year Ended December 31
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
604,357
|
|
|
$
|
739,139
|
|
|
$
|
99,468
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation
|
(62,031
|
)
|
|
(150,258
|
)
|
|
227,439
|
|
|||
Pension and postretirement benefits
|
632
|
|
|
(138
|
)
|
|
(97
|
)
|
|||
Net investment hedge
|
8,441
|
|
|
25,786
|
|
|
(41,827
|
)
|
|||
Cash flow hedge
|
4,847
|
|
|
—
|
|
|
—
|
|
|||
Interest rate swap
|
2,591
|
|
|
(585
|
)
|
|
2,116
|
|
|||
Total other comprehensive (loss) income, net of tax
|
(45,520
|
)
|
|
(125,195
|
)
|
|
187,631
|
|
|||
Comprehensive income
|
558,837
|
|
|
613,944
|
|
|
287,099
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
(70,662
|
)
|
|
(45,396
|
)
|
|
(45,505
|
)
|
|||
Comprehensive income attributable to Albemarle Corporation
|
$
|
488,175
|
|
|
$
|
568,548
|
|
|
$
|
241,594
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED BALANCE SHEETS
|
(In Thousands)
|
|||||||
December 31
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
613,110
|
|
|
$
|
555,320
|
|
Trade accounts receivable, less allowance for doubtful accounts (2019—$3,711; 2018—$4,460)
|
612,651
|
|
|
605,712
|
|
||
Other accounts receivable
|
67,551
|
|
|
52,059
|
|
||
Inventories
|
768,984
|
|
|
700,540
|
|
||
Other current assets
|
162,813
|
|
|
84,790
|
|
||
Total current assets
|
2,225,109
|
|
|
1,998,421
|
|
||
Property, plant and equipment, at cost
|
6,817,843
|
|
|
4,799,063
|
|
||
Less accumulated depreciation and amortization
|
1,908,370
|
|
|
1,777,979
|
|
||
Net property, plant and equipment
|
4,909,473
|
|
|
3,021,084
|
|
||
Investments
|
579,813
|
|
|
528,722
|
|
||
Other assets
|
213,061
|
|
|
80,135
|
|
||
Goodwill
|
1,578,785
|
|
|
1,567,169
|
|
||
Other intangibles, net of amortization
|
354,622
|
|
|
386,143
|
|
||
Total assets
|
$
|
9,860,863
|
|
|
$
|
7,581,674
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
574,138
|
|
|
$
|
522,516
|
|
Accrued expenses
|
553,160
|
|
|
257,323
|
|
||
Current portion of long-term debt
|
187,336
|
|
|
307,294
|
|
||
Dividends payable
|
38,764
|
|
|
35,169
|
|
||
Current operating lease liability
|
23,137
|
|
|
—
|
|
||
Income taxes payable
|
32,461
|
|
|
60,871
|
|
||
Total current liabilities
|
1,408,996
|
|
|
1,183,173
|
|
||
Long-term debt
|
2,862,921
|
|
|
1,397,916
|
|
||
Postretirement benefits
|
50,899
|
|
|
46,157
|
|
||
Pension benefits
|
292,073
|
|
|
285,396
|
|
||
Other noncurrent liabilities
|
754,536
|
|
|
526,942
|
|
||
Deferred income taxes
|
397,858
|
|
|
382,982
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Albemarle Corporation shareholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value (authorized 150,000 shares), issued and outstanding — 106,040 in 2019 and 105,616 in 2018
|
1,061
|
|
|
1,056
|
|
||
Additional paid-in capital
|
1,383,446
|
|
|
1,368,897
|
|
||
Accumulated other comprehensive loss
|
(395,735
|
)
|
|
(350,682
|
)
|
||
Retained earnings
|
2,943,478
|
|
|
2,566,050
|
|
||
Total Albemarle Corporation shareholders’ equity
|
3,932,250
|
|
|
3,585,321
|
|
||
Noncontrolling interests
|
161,330
|
|
|
173,787
|
|
||
Total equity
|
4,093,580
|
|
|
3,759,108
|
|
||
Total liabilities and equity
|
$
|
9,860,863
|
|
|
$
|
7,581,674
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
(In Thousands, Except Share Data)
|
|||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Retained Earnings
|
|
Total Albemarle
Shareholders’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||||
Shares
|
|
Amounts
|
|
||||||||||||||||||||||||||||
Balance at January 1, 2017
|
|
112,523,790
|
|
|
$
|
1,125
|
|
|
$
|
2,084,418
|
|
|
$
|
(412,412
|
)
|
|
$
|
2,121,931
|
|
|
$
|
3,795,062
|
|
|
$
|
147,542
|
|
|
$
|
3,942,604
|
|
Net income
|
|
|
|
|
|
|
|
|
|
54,850
|
|
|
54,850
|
|
|
44,618
|
|
|
99,468
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
186,744
|
|
|
|
|
186,744
|
|
|
887
|
|
|
187,631
|
|
|||||||||||
Cash dividends declared, $1.28 per common share
|
|
|
|
|
|
|
|
|
|
(141,618
|
)
|
|
(141,618
|
)
|
|
(36,756
|
)
|
|
(178,374
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
16,505
|
|
|
|
|
|
|
16,505
|
|
|
|
|
16,505
|
|
||||||||||||
Exercise of stock options
|
|
210,432
|
|
|
2
|
|
|
8,236
|
|
|
|
|
|
|
8,238
|
|
|
|
|
8,238
|
|
||||||||||
Shares repurchased
|
|
(2,341,083
|
)
|
|
(23
|
)
|
|
(249,977
|
)
|
|
|
|
|
|
(250,000
|
)
|
|
|
|
(250,000
|
)
|
||||||||||
Issuance of common stock, net
|
|
243,024
|
|
|
2
|
|
|
(2
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Termination of Tianqi Lithium Corporation option agreement
|
|
|
|
|
|
13,144
|
|
|
|
|
|
|
13,144
|
|
|
(13,144
|
)
|
|
—
|
|
|||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(89,489
|
)
|
|
(1
|
)
|
|
(8,375
|
)
|
|
|
|
|
|
(8,376
|
)
|
|
|
|
(8,376
|
)
|
||||||||||
Balance at December 31, 2017
|
|
110,546,674
|
|
|
$
|
1,105
|
|
|
$
|
1,863,949
|
|
|
$
|
(225,668
|
)
|
|
$
|
2,035,163
|
|
|
$
|
3,674,549
|
|
|
$
|
143,147
|
|
|
$
|
3,817,696
|
|
Balance at January 1, 2018
|
|
110,546,674
|
|
|
$
|
1,105
|
|
|
$
|
1,863,949
|
|
|
$
|
(225,668
|
)
|
|
$
|
2,035,163
|
|
|
$
|
3,674,549
|
|
|
$
|
143,147
|
|
|
$
|
3,817,696
|
|
Net income
|
|
|
|
|
|
|
|
|
|
693,562
|
|
|
693,562
|
|
|
45,577
|
|
|
739,139
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(125,014
|
)
|
|
|
|
(125,014
|
)
|
|
(181
|
)
|
|
(125,195
|
)
|
|||||||||||
Cash dividends declared, $1.34 per common share
|
|
|
|
|
|
|
|
|
|
(144,601
|
)
|
|
(144,601
|
)
|
|
(14,756
|
)
|
|
(159,357
|
)
|
|||||||||||
Cumulative adjustments from adoption of income tax standard updates
|
|
|
|
|
|
|
|
|
|
(18,074
|
)
|
|
(18,074
|
)
|
|
|
|
(18,074
|
)
|
||||||||||||
Stock-based compensation
|
|
|
|
|
|
18,506
|
|
|
|
|
|
|
18,506
|
|
|
|
|
18,506
|
|
||||||||||||
Exercise of stock options
|
|
94,031
|
|
|
1
|
|
|
3,632
|
|
|
|
|
|
|
3,633
|
|
|
|
|
3,633
|
|
||||||||||
Shares repurchased
|
|
(5,262,654
|
)
|
|
(53
|
)
|
|
(499,947
|
)
|
|
|
|
|
|
|
(500,000
|
)
|
|
|
|
(500,000
|
)
|
|||||||||
Issuance of common stock, net
|
|
383,974
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(145,997
|
)
|
|
(1
|
)
|
|
(17,239
|
)
|
|
|
|
|
|
(17,240
|
)
|
|
|
|
(17,240
|
)
|
||||||||||
Balance at December 31, 2018
|
|
105,616,028
|
|
|
$
|
1,056
|
|
|
$
|
1,368,897
|
|
|
$
|
(350,682
|
)
|
|
$
|
2,566,050
|
|
|
$
|
3,585,321
|
|
|
$
|
173,787
|
|
|
$
|
3,759,108
|
|
Balance at January 1, 2019
|
|
105,616,028
|
|
|
$
|
1,056
|
|
|
$
|
1,368,897
|
|
|
$
|
(350,682
|
)
|
|
$
|
2,566,050
|
|
|
$
|
3,585,321
|
|
|
$
|
173,787
|
|
|
$
|
3,759,108
|
|
Net income
|
|
|
|
|
|
|
|
|
|
533,228
|
|
|
533,228
|
|
|
71,129
|
|
|
604,357
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(45,053
|
)
|
|
|
|
(45,053
|
)
|
|
(467
|
)
|
|
(45,520
|
)
|
|||||||||||
Cash dividends declared, $1.47 per common share
|
|
|
|
|
|
|
|
|
|
(155,800
|
)
|
|
(155,800
|
)
|
|
(83,187
|
)
|
|
(238,987
|
)
|
|||||||||||
Stock-based compensation
|
|
|
|
|
|
21,284
|
|
|
|
|
|
|
21,284
|
|
|
|
|
21,284
|
|
||||||||||||
Exercise of stock options
|
|
161,909
|
|
|
2
|
|
|
4,812
|
|
|
|
|
|
|
4,814
|
|
|
|
|
4,814
|
|
||||||||||
Issuance of common stock, net
|
|
396,269
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Increase in ownership interest of noncontrolling interest
|
|
|
|
|
|
(513
|
)
|
|
|
|
|
|
(513
|
)
|
|
68
|
|
|
(445
|
)
|
|||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(133,991
|
)
|
|
(1
|
)
|
|
(11,030
|
)
|
|
|
|
|
|
(11,031
|
)
|
|
|
|
(11,031
|
)
|
||||||||||
Balance at December 31, 2019
|
|
106,040,215
|
|
|
$
|
1,061
|
|
|
$
|
1,383,446
|
|
|
$
|
(395,735
|
)
|
|
$
|
2,943,478
|
|
|
$
|
3,932,250
|
|
|
$
|
161,330
|
|
|
$
|
4,093,580
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In Thousands)
|
|||||||||||
Year Ended December 31
|
2019
|
|
2018
|
|
2017
|
||||||
Cash and cash equivalents at beginning of year
|
$
|
555,320
|
|
|
$
|
1,137,303
|
|
|
$
|
2,269,756
|
|
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
604,357
|
|
|
739,139
|
|
|
99,468
|
|
|||
Adjustments to reconcile net income to cash flows from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
213,484
|
|
|
200,698
|
|
|
196,928
|
|
|||
Gain on acquisition
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|||
Gain on sale of business
|
—
|
|
|
(210,428
|
)
|
|
—
|
|
|||
Gain on sale of property
|
(14,411
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation and other
|
19,680
|
|
|
15,228
|
|
|
19,404
|
|
|||
Equity in net income of unconsolidated investments (net of tax)
|
(129,568
|
)
|
|
(89,264
|
)
|
|
(84,487
|
)
|
|||
Dividends received from unconsolidated investments and nonmarketable securities
|
71,746
|
|
|
57,415
|
|
|
39,386
|
|
|||
Pension and postretirement expense (benefit)
|
31,515
|
|
|
10,410
|
|
|
(12,436
|
)
|
|||
Pension and postretirement contributions
|
(16,478
|
)
|
|
(15,236
|
)
|
|
(13,341
|
)
|
|||
Unrealized gain on investments in marketable securities
|
(2,809
|
)
|
|
(527
|
)
|
|
(3,135
|
)
|
|||
Loss on early extinguishment of debt
|
4,829
|
|
|
—
|
|
|
52,801
|
|
|||
Deferred income taxes
|
14,394
|
|
|
49,164
|
|
|
(41,941
|
)
|
|||
Changes in current assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
|
|
||||||
(Increase) in accounts receivable
|
(18,220
|
)
|
|
(97,448
|
)
|
|
(74,545
|
)
|
|||
(Increase) in inventories
|
(46,304
|
)
|
|
(124,067
|
)
|
|
(101,545
|
)
|
|||
(Increase) in other current assets
|
(32,941
|
)
|
|
(2,181
|
)
|
|
(213
|
)
|
|||
(Decrease) increase in accounts payable
|
(12,234
|
)
|
|
73,730
|
|
|
53,421
|
|
|||
(Decrease) in accrued expenses and income taxes payable
|
(4,640
|
)
|
|
(1,999
|
)
|
|
(269,381
|
)
|
|||
Other, net
|
36,974
|
|
|
(58,469
|
)
|
|
449,816
|
|
|||
Net cash provided by operating activities
|
719,374
|
|
|
546,165
|
|
|
303,979
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
(820,000
|
)
|
|
(11,403
|
)
|
|
(44,367
|
)
|
|||
Capital expenditures
|
(851,796
|
)
|
|
(699,991
|
)
|
|
(317,703
|
)
|
|||
Cash proceeds from divestitures, net
|
—
|
|
|
413,569
|
|
|
6,857
|
|
|||
Proceeds from sale of property and equipment
|
10,356
|
|
|
—
|
|
|
—
|
|
|||
Sales of (investments in) marketable securities, net
|
384
|
|
|
(270
|
)
|
|
(275
|
)
|
|||
Repayments from joint ventures
|
—
|
|
|
—
|
|
|
1,250
|
|
|||
Investments in equity and other corporate investments
|
(2,569
|
)
|
|
(5,600
|
)
|
|
(3,565
|
)
|
|||
Net cash used in investing activities
|
(1,663,625
|
)
|
|
(303,695
|
)
|
|
(357,803
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings of other long-term debt
|
1,597,807
|
|
|
—
|
|
|
27,000
|
|
|||
Repayments of long-term debt
|
(175,215
|
)
|
|
—
|
|
|
(778,209
|
)
|
|||
Other (repayments) borrowings, net
|
(126,364
|
)
|
|
(113,567
|
)
|
|
138,751
|
|
|||
Fees related to early extinguishment of debt
|
(4,419
|
)
|
|
—
|
|
|
(46,959
|
)
|
|||
Dividends paid to shareholders
|
(152,204
|
)
|
|
(144,596
|
)
|
|
(140,557
|
)
|
|||
Dividends paid to noncontrolling interests
|
(83,187
|
)
|
|
(14,756
|
)
|
|
(36,756
|
)
|
|||
Repurchases of common stock
|
—
|
|
|
(500,000
|
)
|
|
(250,000
|
)
|
|||
Proceeds from exercise of stock options
|
4,814
|
|
|
3,633
|
|
|
8,238
|
|
|||
Withholding taxes paid on stock-based compensation award distributions
|
(11,031
|
)
|
|
(17,240
|
)
|
|
(8,376
|
)
|
|||
Debt financing costs
|
(7,514
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
1,042,687
|
|
|
(786,526
|
)
|
|
(1,086,868
|
)
|
|||
Net effect of foreign exchange on cash and cash equivalents
|
(40,646
|
)
|
|
(37,927
|
)
|
|
8,239
|
|
|||
Increase (decrease) in cash and cash equivalents
|
57,790
|
|
|
(581,983
|
)
|
|
(1,132,453
|
)
|
|||
Cash and cash equivalents at end of year
|
$
|
613,110
|
|
|
$
|
555,320
|
|
|
$
|
1,137,303
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
All sales and other pass-through taxes are excluded from contract value;
|
•
|
In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;
|
•
|
We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the sales price to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more than one year;
|
•
|
If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicing right; and
|
•
|
We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipments for contracts where the amortization period for such costs would otherwise be one year or less.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.
|
•
|
Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types of investments held by the plans, as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the net benefit costs recorded currently.
|
•
|
Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(a)
|
Represents 60% ownership interest in finance lease acquired. See Note 18, “Leases,” for further information on the Company’s leases.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Income taxes (net of refunds of $7,438, $21,459 and $17,522 in 2019, 2018 and 2017, respectively)(a)
|
$
|
170,450
|
|
|
$
|
157,758
|
|
|
$
|
320,222
|
|
Interest (net of capitalization)
|
$
|
45,532
|
|
|
$
|
49,762
|
|
|
$
|
61,243
|
|
|
|
|
|
|
|
||||||
Supplemental non-cash disclosures related to investing activities:
|
|
|
|
|
|
||||||
Capital expenditures included in Accounts payable
|
$
|
199,451
|
|
|
$
|
134,784
|
|
|
$
|
89,188
|
|
(a)
|
Includes approximately $41 million of income taxes paid in 2018 from the gain on sale of the Polyolefin Catalysts Divestiture, and $257 million of income taxes paid in 2017 from the gain on sale of the Chemetall Surface Treatment business.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Basic earnings per share
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Albemarle Corporation
|
$
|
533,228
|
|
|
$
|
693,562
|
|
|
$
|
54,850
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares for basic earnings per share
|
105,949
|
|
|
108,427
|
|
|
110,914
|
|
|||
Basic earnings per share
|
$
|
5.03
|
|
|
$
|
6.40
|
|
|
$
|
0.49
|
|
Diluted earnings per share
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Albemarle Corporation
|
$
|
533,228
|
|
|
$
|
693,562
|
|
|
$
|
54,850
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares for basic earnings per share
|
105,949
|
|
|
108,427
|
|
|
110,914
|
|
|||
Incremental shares under stock compensation plans
|
372
|
|
|
1,031
|
|
|
1,466
|
|
|||
Weighted-average common shares for diluted earnings per share
|
106,321
|
|
|
109,458
|
|
|
112,380
|
|
|||
Diluted earnings per share
|
$
|
5.02
|
|
|
$
|
6.34
|
|
|
$
|
0.49
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Value added tax/consumption tax
|
$
|
52,059
|
|
|
$
|
40,480
|
|
Other
|
15,492
|
|
|
11,579
|
|
||
Total
|
$
|
67,551
|
|
|
$
|
52,059
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Finished goods(a)
|
$
|
495,639
|
|
|
$
|
482,355
|
|
Raw materials and work in process(b)
|
205,781
|
|
|
158,290
|
|
||
Stores, supplies and other
|
67,564
|
|
|
59,895
|
|
||
Total
|
$
|
768,984
|
|
|
$
|
700,540
|
|
(a)
|
Included $44.3 million and $104.3 million at December 31, 2019 and 2018, respectively, of chemical grade spodumene in our Lithium segment, most of which is converted to battery-grade products either internally or through our tolling agreements.
|
(b)
|
Included $109.3 million and $71.4 million at December 31, 2019 and 2018, respectively, of work in process in our Lithium segment.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Income tax receivables
|
$
|
72,246
|
|
|
$
|
40,116
|
|
Prepaid expenses
|
83,637
|
|
|
43,172
|
|
||
Other
|
6,930
|
|
|
1,502
|
|
||
Total
|
$
|
162,813
|
|
|
$
|
84,790
|
|
|
|
Useful
Lives
(Years)
|
|
December 31,
|
||||||
2019
|
|
2018
|
||||||||
Land
|
|
—
|
|
$
|
116,728
|
|
|
$
|
123,518
|
|
Land improvements
|
|
10 – 30
|
|
83,256
|
|
|
63,349
|
|
||
Buildings and improvements
|
|
10 – 50
|
|
337,728
|
|
|
251,980
|
|
||
Machinery and equipment(a)
|
|
2 – 45
|
|
3,355,519
|
|
|
2,780,478
|
|
||
Mineral rights and reserves
|
|
7 – 60
|
|
1,764,067
|
|
|
696,033
|
|
||
Construction in progress
|
|
—
|
|
1,160,545
|
|
|
883,705
|
|
||
Total
|
|
|
|
$
|
6,817,843
|
|
|
$
|
4,799,063
|
|
(a)
|
Consists primarily of (1) short-lived production equipment components, office and building equipment and other equipment with estimated lives ranging 2 – 7 years, (2) production process equipment (intermediate components) with estimated lives ranging 8 – 19 years, (3) production process equipment (major unit components) with estimated lives ranging 20 – 29 years, and (4) production process equipment (infrastructure and other) with estimated lives ranging 30 – 45 years.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Joint ventures
|
|
$
|
534,430
|
|
|
$
|
486,032
|
|
Nonmarketable securities
|
|
11,746
|
|
|
9,177
|
|
||
Marketable equity securities
|
|
33,637
|
|
|
33,513
|
|
||
Total
|
|
$
|
579,813
|
|
|
$
|
528,722
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
December 31,
|
|||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|||
*
|
|
Windfield Holdings Pty. Ltd. - a joint venture with Sichuan Tianqi Lithium Industries, Inc., that mines lithium ore and produces lithium concentrate
|
49
|
%
|
|
49
|
%
|
|
49
|
%
|
*
|
|
Nippon Aluminum Alkyls - a joint venture with Mitsui Chemicals, Inc. that produces aluminum alkyls
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Nippon Ketjen Company Limited - a joint venture with Sumitomo Metal Mining Company Limited that produces refinery catalysts
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Eurecat S.A. - a joint venture with Axens Group for refinery catalysts regeneration services
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Fábrica Carioca de Catalisadores S.A. - a joint venture with Petrobras Quimica S.A. - PETROQUISA that produces catalysts and includes catalysts research and product development activities
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Summary of Balance Sheet Information:
|
|
|
|
|
||||
Current assets
|
|
$
|
473,426
|
|
|
$
|
476,460
|
|
Noncurrent assets
|
|
1,404,765
|
|
|
1,159,866
|
|
||
Total assets
|
|
$
|
1,878,191
|
|
|
$
|
1,636,326
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
201,792
|
|
|
$
|
191,971
|
|
Noncurrent liabilities
|
|
583,839
|
|
|
422,769
|
|
||
Total liabilities
|
|
$
|
785,631
|
|
|
$
|
614,740
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Summary of Statements of Income Information:
|
|
|
|
|
|
|
||||||
Net sales
|
|
$
|
910,891
|
|
|
$
|
829,590
|
|
|
$
|
687,561
|
|
Gross profit
|
|
$
|
496,150
|
|
|
$
|
456,518
|
|
|
$
|
353,577
|
|
Income before income taxes
|
|
$
|
384,690
|
|
|
$
|
332,632
|
|
|
$
|
267,805
|
|
Net income
|
|
$
|
229,733
|
|
|
$
|
225,791
|
|
|
$
|
184,777
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred income taxes(a)
|
$
|
15,275
|
|
|
$
|
17,029
|
|
Assets related to unrecognized tax benefits(a)
|
26,127
|
|
|
12,984
|
|
||
Operating leases(b)
|
133,864
|
|
|
—
|
|
||
Other(c)
|
37,795
|
|
|
50,122
|
|
||
Total
|
$
|
213,061
|
|
|
$
|
80,135
|
|
(a)
|
See Note 1, “Summary of Significant Accounting Policies” and Note 21, “Income Taxes.”
|
(b)
|
See Note 18, “Leases.”
|
(c)
|
As of December 31, 2019 and 2018, a $28.7 million reserve was recorded against a note receivable on one of our European entities no longer deemed probable of collection.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
All Other
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
1,389,089
|
|
|
$
|
20,319
|
|
|
$
|
194,361
|
|
|
$
|
6,586
|
|
|
$
|
1,610,355
|
|
Foreign currency translation adjustments and other
|
(34,310
|
)
|
|
—
|
|
|
(8,876
|
)
|
|
—
|
|
|
(43,186
|
)
|
|||||
Balance at December 31, 2018
|
1,354,779
|
|
|
20,319
|
|
|
185,485
|
|
|
6,586
|
|
|
1,567,169
|
|
|||||
Acquisitions(a)
|
31,762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,762
|
|
|||||
Foreign currency translation adjustments and other
|
(15,695
|
)
|
|
—
|
|
|
(4,451
|
)
|
|
—
|
|
|
(20,146
|
)
|
|||||
Balance at December 31, 2019
|
$
|
1,370,846
|
|
|
$
|
20,319
|
|
|
$
|
181,034
|
|
|
$
|
6,586
|
|
|
$
|
1,578,785
|
|
(a)
|
Represents preliminary purchase price adjustments for the Wodgina Project acquisition recorded for the year ended December 31, 2019. See Note 2, “Acquisitions,” for additional information.
|
|
Customer Lists and Relationships
|
|
Trade Names and Trademarks(a)
|
|
Patents and Technology
|
|
Other
|
|
Total
|
||||||||||
Gross Asset Value
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2017
|
$
|
439,312
|
|
|
$
|
18,981
|
|
|
$
|
61,618
|
|
|
$
|
37,256
|
|
|
$
|
557,167
|
|
Foreign currency translation adjustments and other
|
(10,940
|
)
|
|
(528
|
)
|
|
(5,817
|
)
|
|
6,452
|
|
|
(10,833
|
)
|
|||||
Balance at December 31, 2018
|
428,372
|
|
|
18,453
|
|
|
55,801
|
|
|
43,708
|
|
|
546,334
|
|
|||||
Foreign currency translation adjustments and other
|
(5,910
|
)
|
|
(366
|
)
|
|
(781
|
)
|
|
(2,426
|
)
|
|
(9,483
|
)
|
|||||
Balance at December 31, 2019
|
$
|
422,462
|
|
|
$
|
18,087
|
|
|
$
|
55,020
|
|
|
$
|
41,282
|
|
|
$
|
536,851
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2017
|
$
|
(74,704
|
)
|
|
$
|
(8,295
|
)
|
|
$
|
(35,203
|
)
|
|
$
|
(17,462
|
)
|
|
$
|
(135,664
|
)
|
Amortization
|
(23,402
|
)
|
|
—
|
|
|
(1,450
|
)
|
|
(3,127
|
)
|
|
(27,979
|
)
|
|||||
Foreign currency translation adjustments and other
|
2,309
|
|
|
119
|
|
|
1,405
|
|
|
(381
|
)
|
|
3,452
|
|
|||||
Balance at December 31, 2018
|
(95,797
|
)
|
|
(8,176
|
)
|
|
(35,248
|
)
|
|
(20,970
|
)
|
|
(160,191
|
)
|
|||||
Amortization
|
(23,020
|
)
|
|
—
|
|
|
(1,388
|
)
|
|
(2,714
|
)
|
|
(27,122
|
)
|
|||||
Foreign currency translation adjustments and other
|
2,068
|
|
|
238
|
|
|
439
|
|
|
2,339
|
|
|
5,084
|
|
|||||
Balance at December 31, 2019
|
$
|
(116,749
|
)
|
|
$
|
(7,938
|
)
|
|
$
|
(36,197
|
)
|
|
$
|
(21,345
|
)
|
|
$
|
(182,229
|
)
|
Net Book Value at December 31, 2018
|
$
|
332,575
|
|
|
$
|
10,277
|
|
|
$
|
20,553
|
|
|
$
|
22,738
|
|
|
$
|
386,143
|
|
Net Book Value at December 31, 2019
|
$
|
305,713
|
|
|
$
|
10,149
|
|
|
$
|
18,823
|
|
|
$
|
19,937
|
|
|
$
|
354,622
|
|
(a)
|
Net Book Value includes only indefinite-lived intangible assets.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Estimated Amortization Expense
|
||
2020
|
$
|
25,356
|
|
2021
|
$
|
24,747
|
|
2022
|
$
|
24,153
|
|
2023
|
$
|
23,586
|
|
2024
|
$
|
22,787
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Employee benefits, payroll and related taxes
|
$
|
82,028
|
|
|
$
|
77,814
|
|
Wodgina Project acquisition consideration obligation(a)
|
260,686
|
|
|
—
|
|
||
Other(b)
|
210,446
|
|
|
179,509
|
|
||
Total
|
$
|
553,160
|
|
|
$
|
257,323
|
|
(a)
|
Represents the 40% interest in the Kemerton assets, which are under construction, expected to be transferred to MRL in the next twelve months as part of the consideration paid for the Wodgina Project acquisition, as well as the $64.8 million of stamp duties levied on the assets purchased. See Note 2, “Acquisitions,” for further details.
|
(b)
|
No individual component exceeds 5% of total current liabilities.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
1.125% notes, net of unamortized discount and debt issuance costs of $5,659 at December 31, 2019
|
$
|
549,241
|
|
|
$
|
—
|
|
1.625% notes, net of unamortized discount and debt issuance costs of $5,696 at December 31, 2019
|
549,204
|
|
|
—
|
|
||
1.875% Senior notes, net of unamortized discount and debt issuance costs of $1,831 at December 31, 2019 and $2,841 at December 31, 2018
|
434,241
|
|
|
444,155
|
|
||
3.45% Senior notes, net of unamortized discount and debt issuance costs of $3,533 at December 31, 2019
|
296,467
|
|
|
—
|
|
||
4.15% Senior notes, net of unamortized discount and debt issuance costs of $2,398 at December 31, 2019 and $2,884 at December 31, 2018
|
422,603
|
|
|
422,116
|
|
||
4.50% Senior notes, net of unamortized discount and debt issuance costs of $589 at December 31, 2018
|
—
|
|
|
174,626
|
|
||
5.45% Senior notes, net of unamortized discount and debt issuance costs of $3,850 at December 31, 2019 and $4,004 at December 31, 2018
|
346,150
|
|
|
345,996
|
|
||
Floating rate notes, net of unamortized debt issuance costs of $1,169 at December 31, 2019
|
198,831
|
|
|
—
|
|
||
Commercial paper notes
|
186,700
|
|
|
306,606
|
|
||
Variable-rate foreign bank loans
|
7,296
|
|
|
7,216
|
|
||
Finance lease obligations
|
59,524
|
|
|
4,495
|
|
||
Total long-term debt
|
3,050,257
|
|
|
1,705,210
|
|
||
Less amounts due within one year
|
187,336
|
|
|
307,294
|
|
||
Long-term debt, less current portion
|
$
|
2,862,921
|
|
|
$
|
1,397,916
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
$200.0 million aggregate principal amount of notes, bearing interest at a floating rate payable quarterly on February 15, May 15, August 15 and November 15 of each year, beginning in 2020 (“Floating Rate Notes”), with the interest rate reset on each interest payment date. Borrowings under these notes bear interest at a floating rate based on the 3-month London inter-bank offered rate (“LIBOR”) plus 105 basis points. The floating interest rate for the initial interest period is 2.9595%. These notes mature on November 15, 2022.
|
•
|
€500.0 million aggregate principal amount of notes, bearing interest at a rate of 1.125% payable annually on November 25 of each year, beginning in 2020. The effective interest rate on these notes is approximately 1.30%. These notes mature on November 25, 2025.
|
•
|
€500.0 million aggregate principal amount of notes, bearing interest at a rate of 1.625% payable annually on November 25 of each year, beginning in 2020. The effective interest rate on these notes is approximately 1.74%. These notes mature on November 25, 2028.
|
•
|
$300.0 million aggregate principal amount of senior notes, bearing interest at a rate of 3.45% payable semi-annually on May 15 and November 15 of each year, beginning in 2020. The effective interest rate on these senior notes is approximately 3.58%. These senior notes mature on November 15, 2029.
|
•
|
€393.0 million aggregate principal amount of senior notes, issued on December 8, 2014, bearing interest at a rate of 1.875% payable annually on December 8 of each year, beginning in 2015. The effective interest rate on these senior notes is approximately 2.10%. These senior notes mature on December 8, 2021.
|
•
|
$425.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 4.15% payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.06%. These senior notes mature on December 1, 2024.
|
•
|
$350.0 million aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of 5.45% payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately 5.50%. These senior notes mature on December 1, 2044.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31, 2019
|
|
Year Ended December 31, 2018
|
||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||
Change in benefit obligations:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at January 1
|
$
|
635,866
|
|
|
$
|
240,303
|
|
|
$
|
685,963
|
|
|
$
|
275,006
|
|
Service cost
|
730
|
|
|
3,680
|
|
|
1,043
|
|
|
3,919
|
|
||||
Interest cost
|
28,199
|
|
|
4,998
|
|
|
26,804
|
|
|
5,144
|
|
||||
Plan amendments
|
—
|
|
|
—
|
|
|
—
|
|
|
233
|
|
||||
Actuarial loss (gain)
|
56,108
|
|
|
21,588
|
|
|
(36,844
|
)
|
|
(17,885
|
)
|
||||
Benefits paid
|
(42,183
|
)
|
|
(10,088
|
)
|
|
(41,100
|
)
|
|
(9,974
|
)
|
||||
Employee contributions
|
—
|
|
|
133
|
|
|
—
|
|
|
182
|
|
||||
Foreign exchange gain
|
—
|
|
|
(1,772
|
)
|
|
—
|
|
|
(12,632
|
)
|
||||
Settlements/curtailments
|
—
|
|
|
(398
|
)
|
|
—
|
|
|
(3,628
|
)
|
||||
Other
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
(62
|
)
|
||||
Benefit obligation at December 31
|
$
|
678,720
|
|
|
$
|
258,374
|
|
|
$
|
635,866
|
|
|
$
|
240,303
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at January 1
|
$
|
513,075
|
|
|
$
|
70,584
|
|
|
$
|
580,396
|
|
|
$
|
79,478
|
|
Actual return on plan assets
|
82,926
|
|
|
9,417
|
|
|
(28,457
|
)
|
|
(1,593
|
)
|
||||
Employer contributions
|
2,865
|
|
|
10,572
|
|
|
2,236
|
|
|
10,700
|
|
||||
Benefits paid
|
(42,183
|
)
|
|
(10,088
|
)
|
|
(41,100
|
)
|
|
(9,974
|
)
|
||||
Employee contributions
|
—
|
|
|
133
|
|
|
—
|
|
|
182
|
|
||||
Foreign exchange gain (loss)
|
—
|
|
|
1,316
|
|
|
—
|
|
|
(4,519
|
)
|
||||
Settlements/curtailments
|
—
|
|
|
(398
|
)
|
|
—
|
|
|
(3,628
|
)
|
||||
Other
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
(62
|
)
|
||||
Fair value of plan assets at December 31
|
$
|
556,683
|
|
|
$
|
81,466
|
|
|
$
|
513,075
|
|
|
$
|
70,584
|
|
|
|
|
|
|
|
|
|
||||||||
Funded status at December 31
|
$
|
(122,037
|
)
|
|
$
|
(176,908
|
)
|
|
$
|
(122,791
|
)
|
|
$
|
(169,719
|
)
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||
Current liabilities (accrued expenses)
|
$
|
(1,224
|
)
|
|
$
|
(5,648
|
)
|
|
$
|
(1,342
|
)
|
|
$
|
(5,772
|
)
|
Noncurrent liabilities (pension benefits)
|
(120,813
|
)
|
|
(171,260
|
)
|
|
(121,449
|
)
|
|
(163,947
|
)
|
||||
Net pension liability
|
$
|
(122,037
|
)
|
|
$
|
(176,908
|
)
|
|
$
|
(122,791
|
)
|
|
$
|
(169,719
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized in accumulated other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
$
|
—
|
|
|
$
|
224
|
|
|
$
|
—
|
|
|
$
|
(409
|
)
|
Net amount recognized
|
$
|
—
|
|
|
$
|
224
|
|
|
$
|
—
|
|
|
$
|
(409
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.56
|
%
|
|
1.33
|
%
|
|
4.59
|
%
|
|
2.15
|
%
|
||||
Rate of compensation increase
|
—
|
%
|
|
3.72
|
%
|
|
—
|
%
|
|
3.63
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||
Change in benefit obligations:
|
|
|
|
||||
Benefit obligation at January 1
|
$
|
50,390
|
|
|
$
|
56,647
|
|
Service cost
|
98
|
|
|
117
|
|
||
Interest cost
|
2,197
|
|
|
2,168
|
|
||
Actuarial loss (gain)
|
5,445
|
|
|
(5,661
|
)
|
||
Benefits paid
|
(3,041
|
)
|
|
(2,881
|
)
|
||
Benefit obligation at December 31
|
$
|
55,089
|
|
|
$
|
50,390
|
|
|
|
|
|
||||
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at January 1
|
$
|
—
|
|
|
$
|
834
|
|
Actual return on plan assets
|
—
|
|
|
(253
|
)
|
||
Employer contributions
|
3,041
|
|
|
2,300
|
|
||
Benefits paid
|
(3,041
|
)
|
|
(2,881
|
)
|
||
Fair value of plan assets at December 31
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||||
Funded status at December 31
|
$
|
(55,089
|
)
|
|
$
|
(50,390
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
||||
Current liabilities (accrued expenses)
|
$
|
(4,190
|
)
|
|
$
|
(4,233
|
)
|
Noncurrent liabilities (postretirement benefits)
|
(50,899
|
)
|
|
(46,157
|
)
|
||
Net postretirement liability
|
$
|
(55,089
|
)
|
|
$
|
(50,390
|
)
|
|
|
|
|
||||
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
||||
Discount rate
|
3.53
|
%
|
|
4.55
|
%
|
||
Rate of compensation increase
|
3.50
|
%
|
|
3.50
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||||||
Service cost
|
$
|
730
|
|
|
$
|
3,680
|
|
|
$
|
1,043
|
|
|
$
|
3,919
|
|
|
$
|
985
|
|
|
$
|
2,547
|
|
Interest cost
|
28,199
|
|
|
4,998
|
|
|
26,804
|
|
|
5,144
|
|
|
28,614
|
|
|
5,128
|
|
||||||
Expected return on assets
|
(33,926
|
)
|
|
(3,837
|
)
|
|
(38,621
|
)
|
|
(4,204
|
)
|
|
(36,243
|
)
|
|
(4,441
|
)
|
||||||
Actuarial loss (gain)
|
7,106
|
|
|
16,784
|
|
|
30,234
|
|
|
(10,833
|
)
|
|
(13,910
|
)
|
|
483
|
|
||||||
Amortization of prior service benefit
|
—
|
|
|
37
|
|
|
60
|
|
|
34
|
|
|
75
|
|
|
56
|
|
||||||
Total net pension benefits cost (credit)
|
$
|
2,109
|
|
|
$
|
21,662
|
|
|
$
|
19,520
|
|
|
$
|
(5,940
|
)
|
|
$
|
(20,479
|
)
|
|
$
|
3,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average assumption percentages:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
4.59
|
%
|
|
2.15
|
%
|
|
4.03
|
%
|
|
1.94
|
%
|
|
4.43
|
%
|
|
2.00
|
%
|
||||||
Expected return on plan assets
|
6.89
|
%
|
|
5.51
|
%
|
|
6.89
|
%
|
|
5.52
|
%
|
|
6.89
|
%
|
|
6.16
|
%
|
||||||
Rate of compensation increase
|
—
|
%
|
|
3.63
|
%
|
|
—
|
%
|
|
3.18
|
%
|
|
—
|
%
|
|
3.18
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||||
Service cost
|
$
|
98
|
|
|
$
|
117
|
|
|
$
|
121
|
|
Interest cost
|
2,197
|
|
|
2,168
|
|
|
2,340
|
|
|||
Expected return on assets
|
—
|
|
|
(7
|
)
|
|
(110
|
)
|
|||
Actuarial loss (gain)
|
5,449
|
|
|
(5,400
|
)
|
|
2,014
|
|
|||
Amortization of prior service benefit
|
—
|
|
|
(48
|
)
|
|
(95
|
)
|
|||
Total net postretirement benefits cost (credit)
|
$
|
7,744
|
|
|
$
|
(3,170
|
)
|
|
$
|
4,270
|
|
|
|
|
|
|
|
||||||
Weighted-average assumption percentages:
|
|
|
|
|
|
||||||
Discount rate
|
4.55
|
%
|
|
3.99
|
%
|
|
4.35
|
%
|
|||
Expected return on plan assets
|
—
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
|||
Rate of compensation increase
|
3.50
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities
|
|
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
|
|
|
Level 3
|
Unobservable inputs for the asset or liability
|
|
December 31, 2019
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Pension Assets:
|
|
|
|
|
|
|
|
||||||||
Domestic Equity(a)
|
$
|
119,842
|
|
|
$
|
118,255
|
|
|
$
|
1,587
|
|
|
$
|
—
|
|
International Equity(b)
|
126,828
|
|
|
95,246
|
|
|
31,582
|
|
|
—
|
|
||||
Fixed Income(c)
|
317,667
|
|
|
279,731
|
|
|
37,936
|
|
|
—
|
|
||||
Absolute Return Measured at Net Asset Value(d)
|
73,777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash
|
35
|
|
|
35
|
|
|
—
|
|
|
—
|
|
||||
Total Pension Assets
|
$
|
638,149
|
|
|
$
|
493,267
|
|
|
$
|
71,105
|
|
|
$
|
—
|
|
|
December 31, 2018
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Pension Assets:
|
|
|
|
|
|
|
|
||||||||
Domestic Equity(a)
|
$
|
113,355
|
|
|
$
|
111,665
|
|
|
$
|
1,690
|
|
|
$
|
—
|
|
International Equity(b)
|
114,554
|
|
|
90,651
|
|
|
23,903
|
|
|
—
|
|
||||
Fixed Income(c)
|
254,437
|
|
|
219,124
|
|
|
35,313
|
|
|
—
|
|
||||
Absolute Return Measured at Net Asset Value(d)
|
71,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash
|
29,326
|
|
|
29,326
|
|
|
—
|
|
|
—
|
|
||||
Total Pension Assets
|
$
|
583,659
|
|
|
$
|
450,766
|
|
|
$
|
60,906
|
|
|
$
|
—
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(a)
|
Consists primarily of U.S. stock funds that track or are actively managed and measured against the S&P 500 index.
|
(b)
|
Consists primarily of international equity funds which invest in common stocks and other securities whose value is based on an international equity index or an underlying equity security or basket of equity securities.
|
(c)
|
Consists primarily of debt obligations issued by governments, corporations, municipalities and other borrowers. Also includes insurance policies.
|
(d)
|
Consists primarily of funds with holdings in private investment companies. See additional information about the Absolute Return investments below. Holdings in private investment companies are measured at fair value using the net asset value per share as a practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts of $73.8 million and $72.0 million as of December 31, 2019 and 2018, respectively, are included in this table to permit reconciliation to the reconciliation of plan assets table above.
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
Other Postretirement Benefits
|
||||||
2020
|
$
|
42.3
|
|
|
$
|
10.6
|
|
|
$
|
4.2
|
|
2021
|
$
|
47.8
|
|
|
$
|
10.0
|
|
|
$
|
4.0
|
|
2022
|
$
|
48.4
|
|
|
$
|
9.5
|
|
|
$
|
3.9
|
|
2023
|
$
|
48.9
|
|
|
$
|
12.3
|
|
|
$
|
3.9
|
|
2024
|
$
|
49.0
|
|
|
$
|
10.4
|
|
|
$
|
3.8
|
|
2025-2029
|
$
|
240.9
|
|
|
$
|
54.6
|
|
|
$
|
17.5
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Transition tax on foreign earnings(a)
|
$
|
303,490
|
|
|
$
|
317,745
|
|
Wodgina Project acquisition consideration obligation(b)
|
120,800
|
|
|
—
|
|
||
Operating leases(c)
|
114,686
|
|
|
—
|
|
||
Liabilities related to uncertain tax positions(d)
|
21,169
|
|
|
22,877
|
|
||
Executive deferred compensation plan obligation
|
28,715
|
|
|
26,292
|
|
||
Environmental liabilities(e)
|
33,058
|
|
|
40,376
|
|
||
Asset retirement obligations(e)
|
55,848
|
|
|
41,489
|
|
||
Tax indemnification liability(f)
|
30,993
|
|
|
45,347
|
|
||
Other(g)
|
45,777
|
|
|
32,816
|
|
||
Total
|
$
|
754,536
|
|
|
$
|
526,942
|
|
(a)
|
Noncurrent portion of one-time transition tax on foreign earnings. See Note 21, “Income Taxes,” for additional information.
|
(b)
|
Represents the 40% interest in the Kemerton assets, which are under construction, expected to be transferred to MRL as part of the consideration paid for the Wodgina Project acquisition. See Note 2, “Acquisitions,” for further details.
|
(c)
|
See Note 18, “Leases.”
|
(d)
|
See Note 21, “Income Taxes.”
|
(e)
|
See Note 17, “Commitments and Contingencies.”
|
(f)
|
Indemnification of certain income and non-income tax liabilities associated with the Chemetall Surface Treatment entities sold. The December 31, 2018 balance also includes the settlement of an ongoing audit of a previously disposed business in Germany.
|
(g)
|
No individual component exceeds 5% of total liabilities.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
49,569
|
|
|
$
|
39,808
|
|
|
$
|
34,919
|
|
Expenditures
|
(6,037
|
)
|
|
(6,885
|
)
|
|
(1,818
|
)
|
|||
Accretion of discount
|
1,030
|
|
|
1,283
|
|
|
896
|
|
|||
Additions and changes in estimates(a)
|
1,129
|
|
|
17,039
|
|
|
3,344
|
|
|||
Foreign currency translation adjustments and other
|
(3,099
|
)
|
|
(1,676
|
)
|
|
2,467
|
|
|||
Balance, end of year
|
42,592
|
|
|
49,569
|
|
|
39,808
|
|
|||
Less amounts reported in Accrued expenses
|
9,534
|
|
|
9,193
|
|
|
2,290
|
|
|||
Amounts reported in Other noncurrent liabilities
|
$
|
33,058
|
|
|
$
|
40,376
|
|
|
$
|
37,518
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(a)
|
Increase in additions in 2018 primarily related to the indemnification of the buyer of a formerly owned site. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Balance, beginning of year
|
$
|
41,489
|
|
|
$
|
40,450
|
|
Acquisitions(a)
|
4,650
|
|
|
—
|
|
||
Additions and changes in estimates(b)
|
14,734
|
|
|
740
|
|
||
Accretion of discount
|
2,035
|
|
|
1,500
|
|
||
Liabilities settled
|
(3,289
|
)
|
|
(786
|
)
|
||
Foreign currency translation adjustments and other
|
627
|
|
|
(415
|
)
|
||
Balance, end of year
|
$
|
60,246
|
|
|
$
|
41,489
|
|
Less amounts reported in Accrued expenses
|
4,398
|
|
|
—
|
|
||
Amounts reported in Other noncurrent liabilities
|
$
|
55,848
|
|
|
$
|
41,489
|
|
(a)
|
Represents preliminary purchase price adjustments for the Wodgina Project acquisition recorded for the year ended December 31, 2019. See Note 2, “Acquisitions,” for additional information.
|
(b)
|
Increase in additions in 2019 related to $11.1 million of new asset retirement obligations in Chile and Australia and $3.6 million of charges related to the update of an estimate at a site formerly owned by Albemarle.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||
Letters of credit and other guarantees
|
$
|
49,152
|
|
|
$
|
11,383
|
|
|
$
|
1,303
|
|
|
$
|
1,190
|
|
|
$
|
—
|
|
|
$
|
19,305
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31, 2019
|
||
Operating lease cost
|
$
|
35,335
|
|
Finance lease cost:
|
|
||
Amortization of right of use assets
|
625
|
|
|
Interest on lease liabilities
|
117
|
|
|
Total finance lease cost
|
742
|
|
|
|
|
||
Short-term lease cost
|
6,655
|
|
|
Variable lease cost
|
6,198
|
|
|
Total lease cost
|
$
|
48,930
|
|
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
29,946
|
|
Operating cash flows from finance leases
|
117
|
|
|
Financing cash flows from finance leases
|
678
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
24,687
|
|
|
Finance leases(a)
|
55,806
|
|
(a)
|
Represents 60% ownership interest in finance lease acquired as part of the Wodgina Project acquisition. See Note 2, “Acquisitions,” for further details.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31, 2019
|
||
Operating leases:
|
|
||
Other assets
|
$
|
133,864
|
|
|
|
||
Current operating lease liability
|
23,137
|
|
|
Other noncurrent liabilities
|
114,686
|
|
|
Total operating lease liabilities
|
137,823
|
|
|
Finance leases:
|
|
||
Net property, plant and equipment
|
59,494
|
|
|
|
|
||
Current portion of long-term debt
|
636
|
|
|
Long-term debt
|
58,888
|
|
|
Total finance lease liabilities
|
59,524
|
|
|
Weighted average remaining lease term (in years):
|
|
||
Operating leases
|
11.4
|
|
|
Finance leases
|
28.3
|
|
|
Weighted average discount rate (%):
|
|
||
Operating leases
|
3.84
|
%
|
|
Finance leases
|
4.56
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
$
|
28,333
|
|
|
$
|
2,229
|
|
2021
|
15,306
|
|
|
2,140
|
|
||
2022
|
13,153
|
|
|
4,431
|
|
||
2023
|
12,433
|
|
|
4,431
|
|
||
2024
|
11,850
|
|
|
4,431
|
|
||
Thereafter
|
94,002
|
|
|
94,788
|
|
||
Total lease payments
|
175,077
|
|
|
112,450
|
|
||
Less imputed interest
|
37,254
|
|
|
52,926
|
|
||
Total
|
$
|
137,823
|
|
|
$
|
59,524
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
1,316,733
|
|
|
$
|
59.55
|
|
|
4.3
|
|
$
|
26,438
|
|
Granted
|
95,639
|
|
|
91.00
|
|
|
|
|
|
|||
Exercised
|
(161,909
|
)
|
|
29.73
|
|
|
|
|
|
|||
Forfeited
|
(5,932
|
)
|
|
95.47
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
1,244,531
|
|
|
$
|
65.67
|
|
|
4.2
|
|
$
|
14,593
|
|
Exercisable at December 31, 2019
|
980,865
|
|
|
$
|
59.47
|
|
|
3.3
|
|
$
|
13,583
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Dividend yield
|
1.58
|
%
|
|
1.44
|
%
|
|
1.56
|
%
|
|||
Volatility
|
32.50
|
%
|
|
32.48
|
%
|
|
32.70
|
%
|
|||
Average expected life (years)
|
6
|
|
|
6
|
|
|
6
|
|
|||
Risk-free interest rate
|
2.81
|
%
|
|
3.06
|
%
|
|
2.51
|
%
|
|||
Fair value of options granted
|
$
|
27.71
|
|
|
$
|
37.35
|
|
|
$
|
27.99
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Nonvested, beginning of period
|
317,437
|
|
|
$
|
97.39
|
|
Granted
|
100,288
|
|
|
107.68
|
|
|
Vested
|
(139,034
|
)
|
|
66.93
|
|
|
Forfeited
|
(18,958
|
)
|
|
124.45
|
|
|
Nonvested, end of period
|
259,733
|
|
|
115.69
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Volatility
|
30.11
|
%
|
|
29.92
|
%
|
|
30.34
|
%
|
Risk-free interest rate
|
2.43
|
%
|
|
2.36
|
%
|
|
1.34
|
%
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Nonvested, beginning of period
|
257,518
|
|
|
$
|
85.44
|
|
Granted
|
131,365
|
|
|
79.27
|
|
|
Vested
|
(89,548
|
)
|
|
73.61
|
|
|
Forfeited
|
(26,775
|
)
|
|
89.23
|
|
|
Nonvested, end of period
|
272,560
|
|
|
85.98
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign
Currency Translation
|
|
Pension and Post-Retirement Benefits(a)
|
|
Net Investment Hedge
|
|
Cash Flow Hedge(b)
|
|
Interest Rate Swap(c)
|
|
Total
|
||||||||||||
Accumulated other comprehensive (loss) income - balance at December 31, 2016
|
$
|
(484,121
|
)
|
|
$
|
76
|
|
|
$
|
88,378
|
|
|
$
|
—
|
|
|
$
|
(16,745
|
)
|
|
$
|
(412,412
|
)
|
Other comprehensive income (loss) before reclassifications
|
227,439
|
|
|
—
|
|
|
(41,827
|
)
|
|
—
|
|
|
—
|
|
|
185,612
|
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
2,116
|
|
|
2,019
|
|
||||||
Other comprehensive income (loss), net of tax
|
227,439
|
|
|
(97
|
)
|
|
(41,827
|
)
|
|
—
|
|
|
2,116
|
|
|
187,631
|
|
||||||
Other comprehensive income attributable to noncontrolling interests
|
(887
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(887
|
)
|
||||||
Accumulated other comprehensive (loss) income - balance at December 31, 2017
|
$
|
(257,569
|
)
|
|
$
|
(21
|
)
|
|
$
|
46,551
|
|
|
$
|
—
|
|
|
$
|
(14,629
|
)
|
|
$
|
(225,668
|
)
|
Other comprehensive (loss) income before reclassifications
|
(150,258
|
)
|
|
—
|
|
|
15,695
|
|
|
—
|
|
|
—
|
|
|
(134,563
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss(d)
|
—
|
|
|
(138
|
)
|
|
10,091
|
|
|
—
|
|
|
(585
|
)
|
|
9,368
|
|
||||||
Other comprehensive (loss) income, net of tax
|
(150,258
|
)
|
|
(138
|
)
|
|
25,786
|
|
|
—
|
|
|
(585
|
)
|
|
(125,195
|
)
|
||||||
Other comprehensive loss attributable to noncontrolling interests
|
181
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181
|
|
||||||
Accumulated other comprehensive (loss) income - balance at December 31, 2018
|
$
|
(407,646
|
)
|
|
$
|
(159
|
)
|
|
$
|
72,337
|
|
|
$
|
—
|
|
|
$
|
(15,214
|
)
|
|
$
|
(350,682
|
)
|
Other comprehensive (loss) income before reclassifications
|
(62,031
|
)
|
|
576
|
|
|
8,441
|
|
|
4,847
|
|
|
—
|
|
|
(48,167
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
2,591
|
|
|
2,647
|
|
||||||
Other comprehensive (loss) income, net of tax
|
(62,031
|
)
|
|
632
|
|
|
8,441
|
|
|
4,847
|
|
|
2,591
|
|
|
(45,520
|
)
|
||||||
Other comprehensive loss attributable to noncontrolling interests
|
467
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
467
|
|
||||||
Accumulated other comprehensive (loss) income - balance at December 31, 2019
|
$
|
(469,210
|
)
|
|
$
|
473
|
|
|
$
|
80,778
|
|
|
$
|
4,847
|
|
|
$
|
(12,623
|
)
|
|
$
|
(395,735
|
)
|
(a)
|
The pre-tax portion of amounts reclassified from accumulated other comprehensive loss consists of amortization of prior service benefit, which is a component of pension and postretirement benefits cost (credit). See Note 15, “Pension Plans and Other Postretirement Benefits,” for additional information.
|
(b)
|
We entered into a foreign currency forward contract in the fourth quarter of 2019, which was designated and accounted for as a cash flow hedge under ASC 815, Derivatives and Hedging. See Note 22, “Fair Value of Financial Instruments,” for additional information.
|
(c)
|
The pre-tax portion of amounts reclassified from accumulated other comprehensive loss is included in interest expense.
|
(d)
|
Amounts reclassified from accumulated other comprehensive loss include a net benefit of $6.9 million, which was reclassified to Retained earnings for stranded tax effects caused by the TCJA.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign Currency Translation
|
|
Pension and Postretirement Benefits
|
|
Net Investment Hedge
|
|
Cash Flow Hedge
|
|
Interest Rate Swap
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income, before tax
|
$
|
(62,030
|
)
|
|
$
|
633
|
|
|
$
|
10,867
|
|
|
$
|
4,847
|
|
|
$
|
3,336
|
|
Income tax expense
|
(1
|
)
|
|
(1
|
)
|
|
(2,426
|
)
|
|
—
|
|
|
(745
|
)
|
|||||
Other comprehensive (loss) income, net of tax
|
$
|
(62,031
|
)
|
|
$
|
632
|
|
|
$
|
8,441
|
|
|
$
|
4,847
|
|
|
$
|
2,591
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income, before tax
|
$
|
(150,262
|
)
|
|
$
|
(128
|
)
|
|
$
|
20,424
|
|
|
$
|
—
|
|
|
$
|
3,336
|
|
Income tax benefit (expense)
|
4
|
|
|
(10
|
)
|
|
5,362
|
|
|
—
|
|
|
(3,921
|
)
|
|||||
Other comprehensive (loss) income, net of tax
|
$
|
(150,258
|
)
|
|
$
|
(138
|
)
|
|
$
|
25,786
|
|
|
$
|
—
|
|
|
$
|
(585
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss), before tax
|
$
|
228,508
|
|
|
$
|
(96
|
)
|
|
$
|
(65,958
|
)
|
|
$
|
—
|
|
|
$
|
3,336
|
|
Income tax (expense) benefit
|
(1,069
|
)
|
|
(1
|
)
|
|
24,131
|
|
|
—
|
|
|
(1,220
|
)
|
|||||
Other comprehensive income (loss), net of tax
|
$
|
227,439
|
|
|
$
|
(97
|
)
|
|
$
|
(41,827
|
)
|
|
$
|
—
|
|
|
$
|
2,116
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income before income taxes and equity in net income of unconsolidated investments:
|
|
|
|
|
|
||||||
Domestic
|
$
|
190,195
|
|
|
$
|
223,702
|
|
|
$
|
(8,293
|
)
|
Foreign
|
372,755
|
|
|
570,999
|
|
|
455,091
|
|
|||
Total
|
$
|
562,950
|
|
|
$
|
794,701
|
|
|
$
|
446,798
|
|
Current income tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
21,258
|
|
|
$
|
(2,712
|
)
|
|
$
|
394,747
|
|
State
|
5,453
|
|
|
6,793
|
|
|
323
|
|
|||
Foreign
|
47,056
|
|
|
91,581
|
|
|
78,688
|
|
|||
Total
|
$
|
73,767
|
|
|
$
|
95,662
|
|
|
$
|
473,758
|
|
Deferred income tax (benefit) expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
13,255
|
|
|
$
|
15,573
|
|
|
$
|
(58,640
|
)
|
State
|
(7,369
|
)
|
|
1,614
|
|
|
(2,288
|
)
|
|||
Foreign
|
8,508
|
|
|
31,977
|
|
|
18,987
|
|
|||
Total
|
$
|
14,394
|
|
|
$
|
49,164
|
|
|
$
|
(41,941
|
)
|
|
|
|
|
|
|
||||||
Total income tax expense
|
$
|
88,161
|
|
|
$
|
144,826
|
|
|
$
|
431,817
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
% of Income Before Income Taxes
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State taxes, net of federal tax benefit
|
(0.5
|
)
|
|
0.9
|
|
|
(0.5
|
)
|
Change in valuation allowance (a)
|
1.9
|
|
|
0.7
|
|
|
(1.4
|
)
|
Impact of foreign earnings, net(b)
|
(3.7
|
)
|
|
(0.3
|
)
|
|
(13.5
|
)
|
Global intangible low tax inclusion
|
1.8
|
|
|
0.8
|
|
|
—
|
|
Change in U.S. federal statutory rate(c)
|
—
|
|
|
0.1
|
|
|
(14.0
|
)
|
Transition tax on deferred foreign earnings(d)
|
—
|
|
|
(5.3
|
)
|
|
96.1
|
|
Subpart F income
|
0.6
|
|
|
0.9
|
|
|
2.0
|
|
Undistributed earnings of foreign subsidiaries
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Stock-based compensation
|
(0.6
|
)
|
|
(0.7
|
)
|
|
(1.9
|
)
|
Depletion
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(1.4
|
)
|
Revaluation of unrecognized tax benefits/reserve requirements
|
(2.7
|
)
|
|
—
|
|
|
(0.7
|
)
|
Other items, net
|
(1.4
|
)
|
|
0.7
|
|
|
(0.9
|
)
|
Effective income tax rate
|
15.7
|
%
|
|
18.2
|
%
|
|
96.6
|
%
|
(a)
|
The year ended December 31, 2019 includes a $2.1 million benefit due to the release of a foreign valuation allowance due to changes in expected profitability. 2018 includes an $8.2 million expense due to the establishment of a valuation allowance due to a foreign restructuring plan and a $1.5 million benefit due to the release of a foreign valuation allowance due to changes in expected profitability. 2017 includes a $10.9 million benefit from the release of valuation allowances due to a foreign restructuring plan.
|
(b)
|
Our statutory rate is decreased by of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions of the Jordanian law, and applicable regulations thereunder, do not have a termination provision and the exemption is indefinite. As a Free Zones company, JBC is not subject to income taxes on the profits of products exported from Jordan, and currently, substantially all of the profits are from exports. This resulted in a rate benefit of 8.0%, 3.3%, and 8.9% for 2019, 2018, and 2017, respectively.
|
(c)
|
At December 31, 2017 we made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and recorded a provisional tax benefit of $62.3 million related to the remeasurement of our deferred tax assets and liabilities for the reduction in the Federal statutory tax rate from 35% to 21%. In 2018, the updates to our calculation of the remeasurement of deferred tax assets and liabilities resulted in income tax expense of $0.4 million.
|
(d)
|
At December 31, 2017 we made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and recognized a provisional tax expense of $429.2 million for the one-time transition tax. During 2018, the impact of the refined one-time transition tax calculation was an income tax benefit of $42.3 million.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued employee benefits
|
$
|
17,462
|
|
|
$
|
18,462
|
|
Operating loss carryovers
|
1,134,410
|
|
|
1,210,377
|
|
||
Pensions
|
64,230
|
|
|
61,308
|
|
||
Tax credit carryovers
|
1,497
|
|
|
1,270
|
|
||
Other
|
64,955
|
|
|
35,895
|
|
||
Gross deferred tax assets
|
1,282,554
|
|
|
1,327,312
|
|
||
Valuation allowance
|
(1,148,268
|
)
|
|
(1,213,750
|
)
|
||
Deferred tax assets
|
134,286
|
|
|
113,562
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(349,264
|
)
|
|
(337,503
|
)
|
||
Intangibles
|
(88,934
|
)
|
|
(88,871
|
)
|
||
Hedge of net investment of foreign subsidiary
|
(23,498
|
)
|
|
(21,854
|
)
|
||
Other
|
(55,173
|
)
|
|
(31,287
|
)
|
||
Deferred tax liabilities
|
(516,869
|
)
|
|
(479,515
|
)
|
||
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(382,583
|
)
|
|
$
|
(365,953
|
)
|
Classification in the consolidated balance sheets:
|
|
|
|
||||
Noncurrent deferred tax assets
|
$
|
15,275
|
|
|
$
|
17,029
|
|
Noncurrent deferred tax liabilities
|
(397,858
|
)
|
|
(382,982
|
)
|
||
Net deferred tax liabilities
|
$
|
(382,583
|
)
|
|
$
|
(365,953
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
(1,213,750
|
)
|
|
$
|
(458,288
|
)
|
|
$
|
(69,900
|
)
|
Additions(a)
|
(24,986
|
)
|
|
(766,012
|
)
|
|
(408,252
|
)
|
|||
Deductions
|
90,468
|
|
|
10,550
|
|
|
19,864
|
|
|||
Balance at December 31
|
$
|
(1,148,268
|
)
|
|
$
|
(1,213,750
|
)
|
|
$
|
(458,288
|
)
|
(a)
|
During 2018, the Company recognized intercompany losses at a foreign entity related to international restructuring resulting in an increase to the deferred tax asset for net operating losses and an associated and equal valuation allowance of $749.8 million.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
19,742
|
|
|
$
|
21,438
|
|
|
$
|
25,384
|
|
Additions for tax positions related to prior years
|
2,235
|
|
|
874
|
|
|
—
|
|
|||
Reductions for tax positions related to prior years
|
—
|
|
|
—
|
|
|
(1,933
|
)
|
|||
Additions for tax positions related to current year
|
—
|
|
|
1,091
|
|
|
1,132
|
|
|||
Lapses in statutes of limitations/settlements
|
(4,494
|
)
|
|
(3,578
|
)
|
|
(4,198
|
)
|
|||
Foreign currency translation adjustment
|
65
|
|
|
(83
|
)
|
|
1,053
|
|
|||
Balance at December 31
|
$
|
17,548
|
|
|
$
|
19,742
|
|
|
$
|
21,438
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Recorded Amount
|
|
Fair Value
|
|
Recorded Amount
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Long-term debt
|
$
|
3,069,417
|
|
|
$
|
3,173,341
|
|
|
$
|
1,712,003
|
|
|
$
|
1,731,271
|
|
|
Assets
|
|
Liabilities
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Designated as hedging instruments(a)
|
$
|
5,369
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Not designated as hedging instruments(b)
|
2,032
|
|
|
431
|
|
|
3,613
|
|
|
—
|
|
||||
Total
|
$
|
7,401
|
|
|
$
|
431
|
|
|
$
|
3,613
|
|
|
$
|
—
|
|
(a)
|
Included $3.7 million in Other current assets and $1.7 million in Other assets at December 31, 2019.
|
(b)
|
Included $2.0 million in Other current assets and $3.6 million in Accrued expenses at December 31, 2019 and $0.4 million in Other accounts receivable at December 31, 2018.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Designated as hedging instruments:
|
|
|
|
|
|
||||||
Gain recognized in Other comprehensive (loss) income
|
$
|
4,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Not designated as hedging instruments:
|
|
|
|
|
|
||||||
(Losses) gains recognized in Other expenses, net(a)
|
$
|
(25,765
|
)
|
|
$
|
(19,851
|
)
|
|
$
|
4,588
|
|
(a)
|
Fluctuations in the value of our foreign currency forward contracts not designated as hedging instruments are generally expected to be offset by changes in the value of the underlying exposures being hedged, which are also reported in Other expenses, net.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities
|
|
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
|
|
|
Level 3
|
Unobservable inputs for the asset or liability
|
|
December 31, 2019
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments under executive deferred compensation plan(a)
|
$
|
28,715
|
|
|
$
|
28,715
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities(b)
|
$
|
32
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities measured at net asset value(b)(c)
|
$
|
4,890
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts(d)
|
$
|
7,401
|
|
|
$
|
—
|
|
|
$
|
7,401
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Obligations under executive deferred compensation plan (a)
|
$
|
28,715
|
|
|
$
|
28,715
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts(d)
|
$
|
3,613
|
|
|
$
|
—
|
|
|
$
|
3,613
|
|
|
$
|
—
|
|
|
December 31, 2018
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments under executive deferred compensation plan(a)
|
$
|
26,292
|
|
|
$
|
26,292
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities(b)
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities measured at net asset value(b)(c)
|
$
|
7,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts (d)
|
$
|
431
|
|
|
$
|
—
|
|
|
$
|
431
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Obligations under executive deferred compensation plan (a)
|
$
|
26,292
|
|
|
$
|
26,292
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
We maintain an EDCP that was adopted in 2001 and subsequently amended. The purpose of the EDCP is to provide current tax planning opportunities as well as supplemental funds upon the retirement or death of certain of our employees. The EDCP is intended to aid in attracting and retaining employees of exceptional ability by providing them with these benefits. We also maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of the EDCP, subject to the claims of our creditors in the event of our insolvency. Assets of the Trust are consolidated in accordance with authoritative guidance. The assets of the Trust consist primarily of mutual fund investments (which are accounted for as trading securities and are marked-to-market on a
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(b)
|
Primarily consists of private equity securities classified as available-for-sale and are reported in Investments in the consolidated balance sheets. The changes in fair value are reported in Other expenses, net, in our consolidated statements of income.
|
(c)
|
Holdings in private equity securities are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts of $4.9 million and $7.2 million as of December 31, 2019 and 2018, respectively, are included in this table to permit reconciliation to the marketable equity securities presented in Note 10, “Investments.”
|
(d)
|
As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign currency exchange rates, which may adversely affect our operating results and financial position. When deemed appropriate, we minimize our risks from foreign currency exchange rate fluctuations through the use of foreign currency forward contracts. The foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within Level 2. See Note 22, “Fair Value of Financial Instruments,” for further details about our foreign currency forward contracts.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Sales to unconsolidated affiliates
|
$
|
20,068
|
|
|
$
|
35,094
|
|
|
$
|
29,514
|
|
Purchases from unconsolidated affiliates(a)
|
$
|
210,351
|
|
|
$
|
256,701
|
|
|
$
|
209,266
|
|
(a)
|
Purchases from unconsolidated affiliates primarily relate to purchases from our Windfield joint venture.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Receivables from related parties
|
$
|
7,163
|
|
|
$
|
14,348
|
|
Payables to related parties
|
$
|
35,502
|
|
|
$
|
68,357
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In thousands)
|
||||||||||
Net sales:
|
|
|
|
|
|
||||||
Lithium
|
$
|
1,358,170
|
|
|
$
|
1,228,171
|
|
|
$
|
1,018,885
|
|
Bromine Specialties
|
1,004,216
|
|
|
917,880
|
|
|
855,143
|
|
|||
Catalysts
|
1,061,817
|
|
|
1,101,554
|
|
|
1,067,572
|
|
|||
All Other
|
165,224
|
|
|
127,186
|
|
|
128,914
|
|
|||
Corporate
|
—
|
|
|
159
|
|
|
1,462
|
|
|||
Total net sales
|
$
|
3,589,427
|
|
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA:
|
|
|
|
|
|
||||||
Lithium
|
$
|
524,934
|
|
|
$
|
530,773
|
|
|
$
|
446,652
|
|
Bromine Specialties
|
328,457
|
|
|
288,116
|
|
|
258,901
|
|
|||
Catalysts
|
270,624
|
|
|
284,307
|
|
|
283,883
|
|
|||
All Other
|
49,628
|
|
|
14,091
|
|
|
13,878
|
|
|||
Corporate
|
(136,862
|
)
|
|
(110,623
|
)
|
|
(117,834
|
)
|
|||
Total adjusted EBITDA
|
$
|
1,036,781
|
|
|
$
|
1,006,664
|
|
|
$
|
885,480
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
Reportable Segments Total
|
|
All Other
|
|
Corporate
|
|
Consolidated Total
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
341,767
|
|
|
$
|
279,945
|
|
|
$
|
219,686
|
|
|
$
|
841,398
|
|
|
$
|
41,188
|
|
|
$
|
(349,358
|
)
|
|
$
|
533,228
|
|
Depreciation and amortization
|
99,424
|
|
|
47,611
|
|
|
50,144
|
|
|
197,179
|
|
|
8,440
|
|
|
7,865
|
|
|
213,484
|
|
|||||||
Restructuring and other(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,877
|
|
|
5,877
|
|
|||||||
Acquisition and integration related costs(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,684
|
|
|
20,684
|
|
|||||||
Gain on sale of property(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,411
|
)
|
|
(14,411
|
)
|
|||||||
Interest and financing expenses(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,695
|
|
|
57,695
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,161
|
|
|
88,161
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,970
|
|
|
26,970
|
|
|||||||
Stamp duty(b)
|
64,766
|
|
|
—
|
|
|
—
|
|
|
64,766
|
|
|
—
|
|
|
—
|
|
|
64,766
|
|
|||||||
Windfield tax settlement(e)
|
17,292
|
|
|
—
|
|
|
—
|
|
|
17,292
|
|
|
—
|
|
|
—
|
|
|
17,292
|
|
|||||||
Other(f)
|
1,685
|
|
|
901
|
|
|
794
|
|
|
3,380
|
|
|
—
|
|
|
19,655
|
|
|
23,035
|
|
|||||||
Adjusted EBITDA
|
$
|
524,934
|
|
|
$
|
328,457
|
|
|
$
|
270,624
|
|
|
$
|
1,124,015
|
|
|
$
|
49,628
|
|
|
$
|
(136,862
|
)
|
|
$
|
1,036,781
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
428,212
|
|
|
$
|
246,509
|
|
|
$
|
445,604
|
|
|
$
|
1,120,325
|
|
|
$
|
6,018
|
|
|
$
|
(432,781
|
)
|
|
$
|
693,562
|
|
Depreciation and amortization
|
95,193
|
|
|
41,607
|
|
|
49,131
|
|
|
185,931
|
|
|
8,073
|
|
|
6,694
|
|
|
200,698
|
|
|||||||
Restructuring and other(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838
|
|
|
3,838
|
|
|||||||
Gain on sale of business(g)
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|
(210,428
|
)
|
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|||||||
Acquisition and integration related costs(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,377
|
|
|
19,377
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,405
|
|
|
52,405
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144,826
|
|
|
144,826
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
5,285
|
|
|||||||
Legal accrual(h)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,027
|
|
|
27,027
|
|
|||||||
Environmental accrual(i)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,597
|
|
|
15,597
|
|
|||||||
Albemarle Foundation contribution(j)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|||||||
Indemnification adjustments(k)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,240
|
|
|
25,240
|
|
|||||||
Other(l)
|
7,368
|
|
|
—
|
|
|
—
|
|
|
7,368
|
|
|
—
|
|
|
6,869
|
|
|
14,237
|
|
|||||||
Adjusted EBITDA
|
$
|
530,773
|
|
|
$
|
288,116
|
|
|
$
|
284,307
|
|
|
$
|
1,103,196
|
|
|
$
|
14,091
|
|
|
$
|
(110,623
|
)
|
|
$
|
1,006,664
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
342,992
|
|
|
$
|
218,839
|
|
|
$
|
230,665
|
|
|
$
|
792,496
|
|
|
$
|
5,521
|
|
|
$
|
(743,167
|
)
|
|
$
|
54,850
|
|
Depreciation and amortization
|
87,879
|
|
|
40,062
|
|
|
54,468
|
|
|
182,409
|
|
|
8,357
|
|
|
6,162
|
|
|
196,928
|
|
|||||||
Utilization of inventory markup(m)
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|||||||
Restructuring and other(n)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,056
|
|
|
17,056
|
|
|||||||
Gain on acquisition(o)
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|||||||
Acquisition and integration related costs(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,954
|
|
|
33,954
|
|
|||||||
Interest and financing expenses(p)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,350
|
|
|
115,350
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431,817
|
|
|
431,817
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,125
|
)
|
|
(16,125
|
)
|
|||||||
Note receivable reserve(q)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,730
|
|
|
28,730
|
|
|||||||
Other(r)
|
(1,093
|
)
|
|
—
|
|
|
(1,250
|
)
|
|
(2,343
|
)
|
|
—
|
|
|
8,389
|
|
|
6,046
|
|
|||||||
Adjusted EBITDA
|
$
|
446,652
|
|
|
$
|
258,901
|
|
|
$
|
283,883
|
|
|
$
|
989,436
|
|
|
$
|
13,878
|
|
|
$
|
(117,834
|
)
|
|
$
|
885,480
|
|
(a)
|
Severance payments as part of a business reorganization plan, $5.9 million recorded in Selling, general and administrative expenses for the year ended December 31, 2019 and $0.1 million and $3.7 million recorded in Cost of goods sold and Selling, general and administrative expenses, respectively, for the year ended December 31, 2018.
|
(b)
|
See Note 2, “Acquisitions,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(c)
|
Gain of $3.3 million recorded in Selling, general and administrative expenses related to the release of liabilities as part of the sale of a property and $11.1 million gain recorded in Other expenses, net related to the sale of land in Pasadena, Texas not used as part of our operations.
|
(d)
|
Included in Interest and financing expenses is a loss on early extinguishment of debt of $4.8 million. See Note 14, “Long-Term Debt,” for additional information.
|
(e)
|
Represents our 49% share of a tax settlement between our Windfield joint venture and an Australian taxing authority, recorded in Equity in net income of unconsolidated investments (net of tax). This is offset in Income tax expense by a discrete tax benefit related to seeking treaty relief from the competent authority to prevent double taxation.
|
(f)
|
Included amounts for the year ended December 31, 2019 recorded in:
|
•
|
Cost of goods sold - $0.7 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
•
|
Selling, general and administrative expenses - $1.8 million of shortfall contributions for our multiemployer plan financial improvement plan, $0.9 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment, $1.0 million related to the settlement of terminated agreements, primarily in the Catalysts segment, and $0.8 million related to the settlement of an ongoing audit in the Lithium segment.
|
•
|
Other expenses, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, $9.8 million of a net loss primarily resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses or purchase accounting, $3.6 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, and $1.2 million of non-operating pension costs from our 50% interest in JBC.
|
(g)
|
See Note 3, “Divestitures,” for additional information.
|
(h)
|
Included in Other expenses, net. See Note 17, “Commitments and Contingencies,” for additional information.
|
(i)
|
Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
(j)
|
Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the normal annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.
|
(k)
|
Included in Other expenses, net is $19.7 million related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and $5.5 million related to the adjustment of indemnifications previously recorded from disposed businesses.
|
(l)
|
Included amounts for the year ended December 31, 2018 recorded in:
|
•
|
Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
•
|
Selling, general and administrative expenses - $2.3 million of shortfall contributions for our multiemployer plan financial improvement plan and a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year.
|
•
|
Other expenses, net - $1.5 million gain related to the reversal of previously recorded liabilities of disposed businesses.
|
(m)
|
In connection with the acquisition of Jiangli New Materials, completed on December 31, 2016, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately $23.1 million. The utilization of this inventory markup was included in Costs of goods sold during the year ended December 31, 2017, the estimated remaining selling period.
|
(n)
|
During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses, and $5.7 million in Research and development expenses, primarily related to expected severance payments.
|
(o)
|
Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” for additional information.
|
(p)
|
During the first quarter of 2017, we repaid the 3.00% Senior notes in full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50% Senior notes, as well as related tender premiums of $45.2 million. As a result, included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million, representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of these senior notes.
|
(q)
|
Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.
|
(r)
|
Included amounts for the year ended December 31, 2017 recorded in:
|
•
|
Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.
|
•
|
Selling, general and administrative expenses - $3.3 million of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by $1.0 million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Other expenses, net - $3.2 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, losses of $8.7 million related to adjustments of settlements and indemnifications of previously disposed businesses, the adjustment of tax indemnification expenses of $3.7 million primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and $1.0 million related to the settlement of a legal claim. This is partially offset by gains of $10.6 million and $1.1 million related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition and the previous disposal of a property, respectively.
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Identifiable assets:
|
|
|
|
|
|
||||||
Lithium(a)
|
$
|
6,570,791
|
|
|
$
|
4,605,070
|
|
|
$
|
3,979,615
|
|
Bromine Specialties
|
799,456
|
|
|
753,157
|
|
|
745,007
|
|
|||
Catalysts
|
1,163,590
|
|
|
1,134,975
|
|
|
1,332,599
|
|
|||
All Other
|
146,211
|
|
|
128,185
|
|
|
126,486
|
|
|||
Corporate(b)
|
1,180,815
|
|
|
960,287
|
|
|
1,567,065
|
|
|||
Total identifiable assets
|
$
|
9,860,863
|
|
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
(a)
|
Increase in Lithium identifiable assets at December 31, 2019 primarily due to the acquisition of 60% interest in MRL’s Wodgina Project assets, as well as capital expenditures for growth and capacity increases.
|
(b)
|
Decrease in Corporate identifiable assets at December 31, 2018 primarily due to the net use of cash and cash equivalents for items such as capital expenditures, share repurchases and commercial paper repayments.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Lithium
|
$
|
99,424
|
|
|
$
|
95,193
|
|
|
$
|
87,879
|
|
Bromine Specialties
|
47,611
|
|
|
41,607
|
|
|
40,062
|
|
|||
Catalysts
|
50,144
|
|
|
49,131
|
|
|
54,468
|
|
|||
All Other
|
8,440
|
|
|
8,073
|
|
|
8,357
|
|
|||
Corporate
|
7,865
|
|
|
6,694
|
|
|
6,162
|
|
|||
Total depreciation and amortization
|
$
|
213,484
|
|
|
$
|
200,698
|
|
|
$
|
196,928
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
Lithium
|
$
|
665,585
|
|
|
$
|
500,849
|
|
|
$
|
192,318
|
|
Bromine Specialties
|
82,208
|
|
|
79,357
|
|
|
46,427
|
|
|||
Catalysts
|
57,939
|
|
|
52,019
|
|
|
46,808
|
|
|||
All Other
|
7,309
|
|
|
5,232
|
|
|
3,657
|
|
|||
Corporate
|
38,755
|
|
|
62,534
|
|
|
28,493
|
|
|||
Total capital expenditures
|
$
|
851,796
|
|
|
$
|
699,991
|
|
|
$
|
317,703
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Net Sales(a):
|
|
|
|
|
|
||||||
United States
|
$
|
858,084
|
|
|
$
|
887,416
|
|
|
$
|
840,589
|
|
Foreign(b)
|
2,731,343
|
|
|
2,487,534
|
|
|
2,231,387
|
|
|||
Total
|
$
|
3,589,427
|
|
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
(a)
|
Net sales are attributed to countries based upon shipments to final destination.
|
(b)
|
In 2019, net sales to Korea, China and Japan represented 17%, 13%, and 12%, respectively, of total net sales. In 2018, net sales to Korea, China and Japan represented 13%, 12%, and 10%, respectively, of total net sales. In 2017, net sales to China represented 15% of total net sales. No net sales in any other foreign country exceed 10% of total net sales.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Long-Lived Assets(a):
|
|
|
|
|
|
||||||
United States
|
$
|
1,003,496
|
|
|
$
|
929,291
|
|
|
$
|
833,002
|
|
Australia
|
1,981,642
|
|
|
407,141
|
|
|
364,624
|
|
|||
Chile
|
1,687,090
|
|
|
1,406,478
|
|
|
1,069,859
|
|
|||
Jordan
|
256,363
|
|
|
254,800
|
|
|
242,626
|
|
|||
Netherlands
|
165,782
|
|
|
166,853
|
|
|
171,980
|
|
|||
China
|
109,235
|
|
|
91,160
|
|
|
50,532
|
|
|||
Germany
|
89,568
|
|
|
101,168
|
|
|
115,305
|
|
|||
France
|
44,936
|
|
|
43,698
|
|
|
40,852
|
|
|||
Brazil
|
37,165
|
|
|
40,464
|
|
|
47,255
|
|
|||
Other foreign countries
|
68,499
|
|
|
65,937
|
|
|
60,626
|
|
|||
Total
|
$
|
5,443,776
|
|
|
$
|
3,506,990
|
|
|
$
|
2,996,661
|
|
(a)
|
Long-lived assets are comprised of the Company’s Property, plant and equipment and joint ventures included in Investments.
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
832,064
|
|
|
$
|
885,052
|
|
|
$
|
879,747
|
|
|
$
|
992,564
|
|
Gross profit(a)
|
$
|
283,486
|
|
|
$
|
325,914
|
|
|
$
|
309,867
|
|
|
$
|
338,511
|
|
Net income
|
$
|
151,526
|
|
|
$
|
174,970
|
|
|
$
|
171,618
|
|
|
$
|
106,243
|
|
Net income attributable to noncontrolling interests
|
(17,957
|
)
|
|
(20,772
|
)
|
|
(16,548
|
)
|
|
(15,852
|
)
|
||||
Net income attributable to Albemarle Corporation
|
$
|
133,569
|
|
|
$
|
154,198
|
|
|
$
|
155,070
|
|
|
$
|
90,391
|
|
Basic earnings per share
|
$
|
1.26
|
|
|
$
|
1.46
|
|
|
$
|
1.46
|
|
|
$
|
0.85
|
|
Shares used to compute basic earnings per share
|
105,799
|
|
|
105,961
|
|
|
105,999
|
|
|
106,037
|
|
||||
Diluted earnings per share
|
$
|
1.26
|
|
|
$
|
1.45
|
|
|
$
|
1.46
|
|
|
$
|
0.85
|
|
Shares used to compute diluted earnings per share
|
106,356
|
|
|
106,316
|
|
|
106,299
|
|
|
106,314
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
821,629
|
|
|
$
|
853,874
|
|
|
$
|
777,748
|
|
|
$
|
921,699
|
|
Gross profit
|
$
|
304,979
|
|
|
$
|
311,356
|
|
|
$
|
280,537
|
|
|
$
|
320,384
|
|
(Gain) loss on sale of business, net(b)
|
$
|
—
|
|
|
$
|
(218,705
|
)
|
|
$
|
—
|
|
|
$
|
8,277
|
|
Net income
|
$
|
138,925
|
|
|
$
|
310,686
|
|
|
$
|
143,479
|
|
|
$
|
146,049
|
|
Net income attributable to noncontrolling interests
|
(7,165
|
)
|
|
(8,225
|
)
|
|
(13,734
|
)
|
|
(16,453
|
)
|
||||
Net income attributable to Albemarle Corporation
|
$
|
131,760
|
|
|
$
|
302,461
|
|
|
$
|
129,745
|
|
|
$
|
129,596
|
|
Basic earnings per share
|
$
|
1.19
|
|
|
$
|
2.76
|
|
|
$
|
1.21
|
|
|
$
|
1.22
|
|
Shares used to compute basic earnings per share
|
110,681
|
|
|
109,671
|
|
|
107,315
|
|
|
106,042
|
|
||||
Diluted earnings per share
|
$
|
1.18
|
|
|
$
|
2.73
|
|
|
$
|
1.20
|
|
|
$
|
1.21
|
|
Shares used to compute diluted earnings per share
|
111,867
|
|
|
110,659
|
|
|
108,302
|
|
|
107,005
|
|
(a)
|
Cost of goods sold for the third quarter of 2019 included expense of $7.0 million due to the correction of an out-of-period error regarding carbonate inventory values related to the second quarter of 2019.
|
(b)
|
Represents the gain (loss) on the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Albemarle Corporation and Subsidiaries
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
Albemarle Corporation and Subsidiaries
|
||
|
(a)(3)
|
|
Exhibits
|
|
|
|
|
|
The following documents are filed as exhibits to this Annual Report on Form 10-K pursuant to Item 601 of Regulation S-K:
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
*101
|
|
Interactive Data Files (Annual Report on Form 10-K, for the fiscal year ended December 31, 2019, furnished in XBRL (eXtensible Business Reporting Language)).
|
|
|
|
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for the fiscal years ended December 31, 2019, 2018 and 2017, (ii) the Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2019, 2018 and 2017, (iii) the Consolidated Balance Sheets at December 31, 2019 and 2018, (iv) the Consolidated Statements of Changes in Equity for the fiscal years ended December 31, 2019, 2018 and 2017, (v) the Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2019, 2018 and 2017 and (vi) the Notes to Consolidated Financial Statements.
|
#
|
Management contract or compensatory plan or arrangement.
|
*
|
Included with this filing.
|
Item 16.
|
Form 10-K Summary.
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
|
ALBEMARLE CORPORATION
(Registrant)
|
||
|
|
|
By:
|
|
/S/ LUTHER C. KISSAM IV
|
|
|
(Luther C. Kissam IV)
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
/S/ LUTHER C. KISSAM IV
|
|
Chairman, President and Chief Executive Officer (principal executive
|
(Luther C. Kissam IV)
|
|
officer)
|
|
|
|
/S/ SCOTT A. TOZIER
|
|
Executive Vice President, Chief Financial Officer (principal financial
|
(Scott A. Tozier)
|
|
officer)
|
|
|
|
/S/ JOHN BARICHIVICH
|
|
Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer)
|
(John Barichivich)
|
|
|
|
|
|
/S/ LAURIE BRLAS
|
|
Director
|
(Laurie Brlas)
|
|
|
|
|
|
/S/ WILLIAM H. HERNANDEZ
|
|
Director
|
(William H. Hernandez)
|
|
|
|
|
|
/S/ DOUGLAS L. MAINE
|
|
Director
|
(Douglas L. Maine)
|
|
|
|
|
|
/S/ J. KENT MASTERS
|
|
Director
|
(J. Kent Masters)
|
|
|
|
|
|
/S/ GLENDA MINOR
|
|
Director
|
(Glenda Minor)
|
|
|
|
|
|
/S/ JAMES J. O’BRIEN
|
|
Director
|
(James J. O’Brien)
|
|
|
|
|
|
/S/ DIARMUID B. O’CONNELL
|
|
Director
|
(Diarmuid B. O’Connell)
|
|
|
|
|
|
/S/ DEAN L. SEAVERS
|
|
Director
|
(Dean L. Seavers)
|
|
|
|
|
|
/S/ GERALD A. STEINER
|
|
Director
|
(Gerald A. Steiner)
|
|
|
|
|
|
/S/ HARRIETT TEE TAGGART
|
|
Director
|
(Harriett Tee Taggart)
|
|
|
|
|
|
/S/ HOLLY VAN DEURSEN
|
|
Director
|
(Holly Van Deursen)
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
|
/S/ ALEJANDRO D. WOLFF
|
|
Director
|
(Alejandro D. Wolff)
|
|
|
•
|
a merger, a share exchange or material dispositions of corporate assets not in the ordinary course of business, to or with an interested shareholder, or any material guarantee of any indebtedness of any interested shareholder (defined as any holder of more than 10% of any class of outstanding voting shares);
|
•
|
certain sales or other dispositions to an interested shareholder of voting shares of Albemarle or any of its subsidiaries having an aggregate fair market value greater than 5% of the aggregate fair market value of all outstanding voting shares;
|
•
|
any dissolution of the corporation proposed by or on behalf of an interested shareholder; or
|
•
|
any reclassification, including reverse stock splits, recapitalizations or mergers of Albemarle with any of its subsidiaries, that increases the percentage of the outstanding voting shares of Albemarle or any of its subsidiaries, owned beneficially by any interested shareholder by more than 5%.
|
•
|
75% supermajority voting requirements to approve affiliated transactions or an amendment to the provisions in Albemarle’s amended and restated articles of incorporation relating to this supermajority voting requirement;
|
•
|
prohibition on shareholders calling a special meeting of shareholders;
|
•
|
inability of shareholders to act by less-than-unanimous written consent;
|
•
|
requirements for advance notice for proposing business or making director nominations at shareholder meetings;
|
•
|
removal of directors only for cause; and
|
•
|
ability of the Albemarle board of directors to increase the size of the board of directors and fill vacancies on the board of directors.
|
•
|
a majority of (but not fewer than two) disinterested directors on the board of directors of the corporation and the holders of two-thirds of the voting shares, other than the shares beneficially owned by the interested shareholder, approve the affiliated transaction; or
|
•
|
before the date the person became an interested shareholder, a majority of the disinterested directors on the board of directors approved the transaction that resulted in the shareholder becoming an interested shareholder.
|
•
|
the voting rights are granted by a majority vote of all outstanding shares other than those held by the acquiring person or any officer or employee director of the corporation; or
|
•
|
the articles of incorporation or bylaws of the corporation provide that these Virginia law provisions do not apply to acquisitions of its shares.
|
NAME
|
|
PLACE OF FORMATION
|
ACI Cyprus, L.L.C.
|
|
Delaware
|
Albemarle Argentina SRL
|
|
Argentina
|
Albemarle Brazil Holdings LTDA.
|
|
Brazil
|
Albemarle Care Fund
|
|
Virginia
|
Albemarle Catalysts Company B.V.
|
|
Netherlands
|
Albemarle Chemical Canada Ltd.
|
|
Canada
|
Albemarle Chemicals (Shanghai) Company Limited
|
|
China
|
Albemarle Chemicals Ltd.
|
|
Cyprus
|
Albemarle Chemicals Private Limited
|
|
India
|
Albemarle Chemicals S.A.S.
|
|
France
|
Albemarle Chemicals South Africa (PTY) Ltd.
|
|
South Africa
|
Albemarle de Venezuela C.A.
|
|
Venezuela
|
Albemarle Delaware Holdings 1 LLC
|
|
Delaware
|
Albemarle Delaware Holdings 2 LLC
|
|
Delaware
|
Albemarle Dutch Holdings B.V.
|
|
Netherlands
|
Albemarle Dutch Holdings 2 B.V.
|
|
Netherlands
|
Albemarle Europe Sprl
|
|
Belgium
|
Albemarle Finance Company B.V.
|
|
Netherlands
|
Albemarle Foundation
|
|
Virginia
|
Albemarle Germany Gmbh
|
|
Germany
|
Albemarle Hilfe GmbH Unterstutzungskasse
|
|
Germany
|
Albemarle Holdings Company Limited
|
|
Turks & Caicos Islands
|
Albemarle Holdings Limited
|
|
Hong Kong
|
Albemarle Hungary Ltd.
|
|
Hungary
|
Albemarle Italy S.R.L.
|
|
Italy
|
Albemarle Japan Corporation
|
|
Japan
|
Albemarle Japan Holdings B.V.
|
|
Netherlands
|
Albemarle Knight Lux 1 Holdings Corporation
|
|
Delaware
|
Albemarle Korea Corporation
|
|
Korea
|
Albemarle Limitada
|
|
Chile
|
Albemarle Lithium Holding Corporation
|
|
Delaware
|
Albemarle Lithium Holding GmbH
|
|
Germany
|
Albemarle Lithium Pty Ltd
|
|
Australia
|
Albemarle Malaysia Sdn Bhd
|
|
Malaysia
|
Albemarle Management (Shanghai) Co., Ltd.
|
|
China
|
Albemarle Middle East Corporation FZE
|
|
United Arab Emirates
|
Albemarle Netherlands B.V.
|
|
Netherlands
|
Albemarle New Holding GmbH
|
|
Germany
|
Albemarle Overseas Employment Corporation
|
|
Virginia
|
Albemarle Quimica LTDA
|
|
Brazil
|
Albemarle Saudi Trading Company
|
|
Saudi Arabia
|
Albemarle Singapore PTE LTD
|
|
Singapore
|
Albemarle Spain S.L.
|
|
Spain
|
NAME
|
|
PLACE OF FORMATION
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Albemarle (Thailand) Co., Ltd.
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Thailand
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Albemarle Taiwan Limited
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Taiwan
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Albemarle U.S., Inc.
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Delaware
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Albemarle Vietnam Limited Liability Company
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Vietnam
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Albemarle Wodgina Pty Ltd
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Australia
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Dynamit Nobel GmbH
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Germany
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Dynamit Nobel Unterstützungsfonds GmbH
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Germany
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Excalibur Realty Company
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Delaware
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Excalibur II Realty Company
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Delaware
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Foote Chile Holding Company
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Delaware
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Foote Minera e Inversiones Ltda.
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Chile
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Jiangxi Albemarle Lithium Co., Ltd.
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China
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Jordan Bromine Company Limited
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Jordan
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Knight Lux 1 S.à r.l.
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Luxembourg
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Knight Lux 2 S.à r.l.
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Luxembourg
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MARBL Lithium Operations Pty Ltd
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Australia
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Metalon Environmental Management & Solutions GmbH
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Germany
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PT Albemarle Chemicals Indonesia
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Indonesia
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Rockwood Holdings, Inc.
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Delaware
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Rockwood Lithium India Pvt. Ltd.
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India
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Rockwood Lithium Japan K.K.
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Japan
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Rockwood Lithium Korea LLC
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South Korea
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Rockwood Lithium Shanghai Co., Ltd.
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China
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Rockwood Lithium Taiwan Co., Ltd.
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Taiwan
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Rockwood Specialties GmbH
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Germany
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Rockwood Specialties Group, LLC
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Delaware
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Rockwood Specialties LLC
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Delaware
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Rockwood Specialties Limited
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United Kingdom
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RT Lithium Limited
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United Kingdom
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RSG Immobilien GmbH
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Germany
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Sales de Magnesio Limitada
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Chile
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Shandong Sinobrom Albemarle Bromine Chemicals Company Limited
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China
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Sichuan Guorun New Material Co., Ltd.
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China
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1.
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I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended December 31, 2019;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 26, 2020
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/s/ LUTHER C. KISSAM IV
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Luther C. Kissam IV
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Chairman, President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended December 31, 2019;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 26, 2020
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/s/ SCOTT A. TOZIER
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Scott A. Tozier
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Executive Vice President and Chief Financial Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ LUTHER C. KISSAM IV
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Luther C. Kissam IV
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Chairman, President and Chief Executive Officer
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February 26, 2020
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ SCOTT A. TOZIER
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Scott A. Tozier
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Executive Vice President and Chief Financial Officer
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February 26, 2020
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FIVE-YEAR SUMMARY
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||||||||||
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||||||||||
(In Thousands, Except for Per Share Amounts and Footnote Data)
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||||||||||||||||||||
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||||||||||
Year Ended December 31
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2019(a)
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2018
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2017(b)
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2016(b)(c)
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2015(b)(c)(d)
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||||||||||
Results of Operations
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||||||||||
Net sales
|
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$
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3,589,427
|
|
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$
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3,374,950
|
|
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$
|
3,071,976
|
|
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$
|
2,677,203
|
|
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$
|
2,826,429
|
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Costs and expenses(e)
|
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2,923,304
|
|
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2,463,410
|
|
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2,500,316
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|
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2,076,223
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|
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2,516,596
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|
|||||
Operating profit
|
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666,123
|
|
|
911,540
|
|
|
571,660
|
|
|
600,980
|
|
|
309,833
|
|
|||||
Interest and financing expenses
|
|
(57,695
|
)
|
|
(52,405
|
)
|
|
(115,350
|
)
|
|
(65,181
|
)
|
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(81,650
|
)
|
|||||
Other (expenses) income, net
|
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(45,478
|
)
|
|
(64,434
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)
|
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(9,512
|
)
|
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(20,535
|
)
|
|
82,561
|
|
|||||
Income from continuing operations before income taxes and equity in net income of unconsolidated investments
|
|
562,950
|
|
|
794,701
|
|
|
446,798
|
|
|
515,264
|
|
|
310,744
|
|
|||||
Income tax expense
|
|
88,161
|
|
|
144,826
|
|
|
431,817
|
|
|
96,263
|
|
|
11,134
|
|
|||||
Income from continuing operations before equity in net income of unconsolidated investments
|
|
474,789
|
|
|
649,875
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|
|
14,981
|
|
|
419,001
|
|
|
299,610
|
|
|||||
Equity in net income of unconsolidated investments (net of tax)
|
|
129,568
|
|
|
89,264
|
|
|
84,487
|
|
|
59,637
|
|
|
27,978
|
|
|||||
Net income from continuing operations
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604,357
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|
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739,139
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|
|
99,468
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|
|
478,638
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|
|
327,588
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|
|||||
Income from discontinued operations (net of tax)(f)
|
|
—
|
|
|
—
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|
|
—
|
|
|
202,131
|
|
|
32,476
|
|
|||||
Net income
|
|
604,357
|
|
|
739,139
|
|
|
99,468
|
|
|
680,769
|
|
|
360,064
|
|
|||||
Net income attributable to noncontrolling interests
|
|
(71,129
|
)
|
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(45,577
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)
|
|
(44,618
|
)
|
|
(37,094
|
)
|
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(25,158
|
)
|
|||||
Net income attributable to Albemarle Corporation
|
|
$
|
533,228
|
|
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$
|
693,562
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|
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$
|
54,850
|
|
|
$
|
643,675
|
|
|
$
|
334,906
|
|
Financial Position and Other Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets(g)
|
|
$
|
9,860,863
|
|
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
|
$
|
8,161,207
|
|
|
$
|
9,597,954
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
816,113
|
|
|
$
|
815,248
|
|
|
$
|
1,276,638
|
|
|
$
|
2,166,515
|
|
|
$
|
214,317
|
|
Current ratio
|
|
1.58
|
|
|
1.69
|
|
|
2.06
|
|
|
2.90
|
|
|
1.13
|
|
|||||
Depreciation and amortization
|
|
$
|
213,484
|
|
|
$
|
200,698
|
|
|
$
|
196,928
|
|
|
$
|
226,169
|
|
|
$
|
260,076
|
|
Capital expenditures
|
|
$
|
851,796
|
|
|
$
|
699,991
|
|
|
$
|
317,703
|
|
|
$
|
196,654
|
|
|
$
|
227,649
|
|
Acquisitions, net of cash acquired
|
|
$
|
820,000
|
|
|
$
|
11,403
|
|
|
$
|
44,367
|
|
|
$
|
208,734
|
|
|
$
|
2,100,490
|
|
Cash proceeds from divestitures, net
|
|
$
|
—
|
|
|
$
|
413,569
|
|
|
$
|
6,857
|
|
|
$
|
3,325,571
|
|
|
$
|
8,883
|
|
Research and development expenses
|
|
$
|
58,287
|
|
|
$
|
70,054
|
|
|
$
|
84,330
|
|
|
$
|
80,475
|
|
|
$
|
89,187
|
|
Gross profit as a % of net sales
|
|
35.0
|
|
|
36.1
|
|
|
36.0
|
|
|
36.2
|
|
|
30.4
|
|
|||||
Total long-term debt(g)
|
|
$
|
3,050,257
|
|
|
$
|
1,705,210
|
|
|
$
|
1,837,372
|
|
|
$
|
2,369,262
|
|
|
$
|
3,817,157
|
|
Total equity(h)
|
|
$
|
4,093,580
|
|
|
$
|
3,759,108
|
|
|
$
|
3,817,696
|
|
|
$
|
3,942,604
|
|
|
$
|
3,401,313
|
|
Total long-term debt as a % of total capitalization
|
|
42.7
|
|
|
31.2
|
|
|
32.5
|
|
|
37.5
|
|
|
52.9
|
|
|||||
Net debt as a % of total capitalization(i)
|
|
37.3
|
|
|
23.4
|
|
|
15.5
|
|
|
2.5
|
|
|
51.4
|
|
|||||
Common Stock
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
5.03
|
|
|
$
|
6.40
|
|
|
$
|
0.49
|
|
|
$
|
3.93
|
|
|
$
|
2.72
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.80
|
|
|
$
|
0.29
|
|
Shares used to compute basic earnings per share
|
|
105,949
|
|
|
108,427
|
|
|
110,914
|
|
|
112,379
|
|
|
111,182
|
|
|||||
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
5.02
|
|
|
$
|
6.34
|
|
|
$
|
0.49
|
|
|
$
|
3.90
|
|
|
$
|
2.71
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.78
|
|
|
$
|
0.29
|
|
Shares used to compute diluted earnings per share
|
|
106,321
|
|
|
109,458
|
|
|
112,380
|
|
|
113,239
|
|
|
111,556
|
|
|||||
Cash dividends declared per share
|
|
$
|
1.47
|
|
|
$
|
1.34
|
|
|
$
|
1.28
|
|
|
$
|
1.22
|
|
|
$
|
1.16
|
|
Total equity per share(h)
|
|
$
|
38.60
|
|
|
$
|
35.59
|
|
|
$
|
34.53
|
|
|
$
|
35.04
|
|
|
$
|
30.31
|
|
Return on average total equity
|
|
13.6
|
%
|
|
18.3
|
%
|
|
1.4
|
%
|
|
17.5
|
%
|
|
13.7
|
%
|
(a)
|
On October 31, 2019, we completed the acquisition of a 60% interest in Mineral Resources Limited’s Wodgina hard rock lithium mine project (“Wodgina Project”). Results for 2019 include the operations of the Wodgina Project commencing on November 1, 2019.
|
(b)
|
As a result of the adoption of new accounting guidance effective January 1, 2018, on a retrospective basis, all components of net benefit cost (credit), other than service cost, are to be shown outside of operations on the consolidated statements of income. We recast these components of net benefit cost (credit), which resulted in an increase (reduction) of $3.7 million, $0.3 million and $3.7 million in Cost of goods sold, respectively, and $12.4 million, ($26.7) million and $31.6 million million in Selling, general and administrative expenses, respectively, with an offsetting impact of $16.1 million, ($26.4) million and $35.3 million in Other (expenses) income, net, respectively, for the years ended December 31, 2017, 2016 and 2015. There was no impact to Net income attributable to Albemarle Corporation.
|
(c)
|
On December 14, 2016 the Company sold the Chemetall Surface Treatment business, which qualifies for discontinued operations treatment because it represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, in the second quarter of 2016, the Company began accounting for this business as discontinued operations in the consolidated statements of income and excluded the business from segment results for the years ended December 31, 2016 and 2015, the periods this business was owned by Albemarle. Related assets and liabilities are classified as held for sale for 2015.
|
(d)
|
On January 12, 2015, we completed the acquisition of Rockwood Holdings, Inc. Results for 2015 include the operations of Rockwood commencing on January 13, 2015.
|
(e)
|
The year ended December 31, 2018 included a gain before income taxes of $210.4 million related to the sale of the polyolefin catalysts and components portion of the Performance Catalysts Solutions business. The year ended December 31, 2016 included gains before income taxes of $11.5 million and $112.3 million related to the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals business, respectively.
|
(f)
|
Included in Income from discontinued operations (net of tax) for the year ended December 31, 2016 is a pre-tax gain of $388.0 million ($135.0 million after income taxes) related to the sale of the Chemetall Surface Treatment business.
|
(g)
|
As a result of the adoption of new accounting guidance effective January 1, 2016 on a retrospective basis, unamortized debt issuance costs are now deducted from the carrying amount of the associated debt liability on the balance sheet. The reclassification of these unamortized debt issuance costs resulted in reductions of Long-term debt and Other assets on the consolidated balance sheets of $17.1 million in 2015.
|
(h)
|
Equity reflects the repurchase of common shares amounting to: 2019—0; 2018—5,262,654; 2017—2,341,083; 2016—0; and 2015—0. 2015 also includes the impact of 34,113,064 shares of common stock issued in connection with the acquisition of Rockwood.
|
(i)
|
We define net debt as total debt plus the portion of outstanding joint venture indebtedness guaranteed by us (or less the portion of outstanding joint venture indebtedness consolidated but not guaranteed by us), less cash and cash equivalents.
|