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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2018
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Delaware
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76-0346924
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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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Name of each exchange on which registered
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Common Stock, $0.01 par value
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New York Stock Exchange, Inc.
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Large accelerated filer
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x
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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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•
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future operating rates, margins, cash flows and demand for our products;
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•
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industry market outlook, including the price of crude oil;
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•
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production capacities;
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currency devaluation;
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our ability to borrow additional funds under our credit agreement;
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our ability to meet our liquidity needs;
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our ability to meet debt obligations under our debt instruments;
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our intended quarterly dividends;
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future capacity additions and expansions in the industries in which we compete;
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•
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results of acquisitions, including our acquisition of NAKAN
TM
;
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timing, funding and results of capital projects, such as the construction of the LACC plant and associated facilities;
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•
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pension plan obligations, funding requirements and investment policies;
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•
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compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties that may come into force to limit or control carbon dioxide and other GHG emissions or to address other issues of climate change;
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•
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effects of pending legal proceedings; and
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timing of and amount of capital expenditures.
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general economic and business conditions;
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the cyclical nature of the chemical and building products industries;
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the availability, cost and volatility of raw materials and energy;
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uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere;
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current and potential governmental regulatory actions in the United States and other countries and political unrest in other areas;
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industry production capacity and operating rates;
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the supply/demand balance for our products;
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competitive products and pricing pressures;
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instability in the credit and financial markets;
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access to capital markets;
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terrorist acts;
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operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);
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changes in laws or regulations, including trade policies;
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technological developments;
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foreign currency exchange risks;
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our ability to implement our business strategies; and
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creditworthiness of our customers.
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Product
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Annual Capacity
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End Uses
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(Millions of pounds)
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Ethylene
(1)
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2,990
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Polyethylene, ethylene dichloride ("EDC"), styrene, ethylene oxide/ethylene glycol
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Low-Density Polyethylene ("LDPE")
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1,500
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High clarity packaging and bags, shrink films, food packaging, coated paper board, cup stock, paper folding cartons, lids, closures and general purpose molding
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Linear Low-Density Polyethylene ("LLDPE")
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1,070
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Heavy-duty films and bags, general purpose liners
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Styrene
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570
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Consumer disposables, packaging material, appliances, paints and coatings, resins and building materials
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(1)
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Production capacity owned by OpCo.
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Product
(1)
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Annual Capacity
(2)
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End Uses
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(Millions of pounds)
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Specialty PVC
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1,100
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Automotive sealants, cable sheathing, medical applications and other applications
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Commodity PVC
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6,030
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Construction materials including pipe, siding, profiles for windows and doors, film and sheet for packaging and other applications
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VCM
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7,480
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PVC, PVC Compounds
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Chlorine
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7,140
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VCM, organic/inorganic chemicals, bleach
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Caustic Soda
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7,860
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Pulp and paper, organic/inorganic chemicals, neutralization, alumina
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Chlorinated Derivative Products
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2,290
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Coatings, flavorants, films, refrigerants, water treatment applications, chemicals and pharmaceutical production
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Ethylene
(3)
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730
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VCM
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Building Products and PVC Compounds
(4)
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3,350
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Pipe: water and sewer, plumbing, irrigation, conduit; fittings; profiles and foundation building products; window and door components; fence and deck components; siding, trim and mouldings; film and sheet
Automotive interior, automotive exterior, stabilizers, medical applications, windows and door profiles, moldings, electrical products, casing and packaging
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(1)
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EDC, a VCM intermediate product, is not included in the table.
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(2)
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Includes capacity related to our
95%
and
60%
owned Asian joint ventures.
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(3)
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Production capacity owned by OpCo.
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(4)
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Includes production capacity of NAKAN, which we acquired on January 2, 2019.
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•
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In May 2013, an amendment to an existing consent order agreed to by the West Virginia Department of Environmental Protection and a predecessor of Axiall required that it, among other things, pay a penalty in the amount of $449,000 and continue certain corrective actions associated with discharges of hexachlorocyclohexane (commonly referred to as BHC) from the Natrium facility's effluent discharge outfalls. The penalty was paid and corrective actions required are on-going per a December 2018 agreement to extend the compliance date under the amended consent order. The amended consent order also imposes stipulated penalties for exceedances of the facility's interim effluent discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.
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During September 2010, our vinyls facilities in Lake Charles and Plaquemine each received a Consolidated Compliance Order and Notice of Potential Penalty, alleging violations of various requirements of those facilities' air permits, based largely on self-reported permit deviations related to record-keeping violations. We have been negotiating a possible global settlement of these and several other matters with the Louisiana Department of Environmental Quality ("LDEQ"). In May 2018, we reached an agreement in principal with the LDEQ to resolve these consolidated enforcement matters for a penalty of $162,500. The settlement agreement is being prepared and when finalized will be subject to public comment and approval by the Louisiana Attorney General.
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For several years, the EPA has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares. On April 21, 2014, we received a Clean Air Act Section 114 Information Request from the EPA which sought information regarding flares at the Calvert City facility and certain Lake Charles facilities. The EPA has informed us that the information provided leads the EPA to believe that some of the flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate us to take corrective actions relating to the alleged noncompliance. We believe the resolution of these matters may require the payment of a monetary sanction in excess of $100,000.
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Regional offices of the EPA have investigated, and in some cases inspected, our compliance with Risk Management Program requirements under the Clean Air Act at our Natrium and Geismar facilities. We believe the resolution of these matters may require the payment of a monetary sanction in excess of $100,000.
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On November 24, 2014, we entered into an agreed order with the Kentucky Energy and Environmental Cabinet ("KEEC") regarding our Kentucky Pollutant Discharge Elimination System permit limits for hexachlorobenzene and mercury at our Calvert City facility. On July 9, 2018, we and the KEEC entered into a new agreed order under which we will be subject to new interim discharge limits for hexachlorobenzene in addition to accompanying stipulated penalties for exceedances of those interim discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.
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Category
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Number
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Olefins segment
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850
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Vinyls segment
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7,680
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Corporate and other
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340
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•
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general economic conditions, including in the United States, Europe and Asia;
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new capacity additions in North America, Europe, Asia and the Middle East;
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the level of business activity in the industries that use our products;
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competitor action;
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technological innovations;
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currency fluctuations;
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increases in interest rates;
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international events and circumstances;
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war, sabotage, terrorism and civil unrest;
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governmental regulation, including in the United States, Europe and Asia;
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severe weather and natural disasters; and
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credit worthiness of customers and vendors.
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product price;
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balance of product supply/demand;
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material, technology and process innovation;
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technical support and customer service;
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quality;
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reliability of raw material and utility supply;
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availability of potential substitute materials; and
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product performance.
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the emergence of new domestic and international competitors;
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the rate of capacity additions by competitors;
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changes in customer base due to mergers;
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the intensification of price competition in our markets;
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the introduction of new or substitute products by competitors; and
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the technological innovations of competitors.
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pipeline leaks and ruptures;
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explosions;
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fires;
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•
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severe weather and natural disasters;
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mechanical failure;
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unscheduled downtime;
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labor difficulties;
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transportation interruptions;
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transportation accidents involving our products;
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remediation complications;
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chemical spills, discharges or releases of toxic or hazardous substances or gases;
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other environmental risks;
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sabotage;
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•
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terrorist attacks; and
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•
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political unrest.
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unexpectedly long delivery times for, or shortages of, key equipment, parts or materials;
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shortages of skilled labor and other personnel necessary to perform the work;
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delays and performance issues;
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failures or delays of third-party equipment vendors or service providers;
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unforeseen increases in the cost of equipment, labor and raw materials;
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work stoppages and other labor disputes;
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•
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unanticipated actual or purported change orders;
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disputes with contractors and suppliers;
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design and engineering problems;
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latent damages or deterioration to equipment and machinery in excess of engineering estimates and assumptions;
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•
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financial or other difficulties of our contractors and suppliers;
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•
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sabotage;
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•
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terrorist attacks;
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•
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interference from adverse weather conditions; and
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•
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difficulties in obtaining necessary permits or in meeting permit conditions.
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•
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a portion of our cash flows from operations will be dedicated to the payment of interest and principal on our debt and will not be available for other purposes;
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we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes;
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our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flows to improve their operations;
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we may be exposed to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates;
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we could be vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions; and
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•
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should we pursue additional expansions of existing assets or acquisition of third party assets, we may not be able to obtain additional liquidity at cost effective interest rates.
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pay dividends on, redeem or repurchase our capital stock;
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make investments and other restricted payments;
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incur additional indebtedness or issue preferred stock;
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create liens;
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permit dividend or other payment restrictions on our restricted subsidiaries;
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sell all or substantially all of our assets or consolidate or merge with or into other companies;
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engage in transactions with affiliates; and
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engage in sale-leaseback transactions.
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•
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shortages and inconsistent quality of equipment, materials, and labor;
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•
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labor costs and productivity;
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•
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work stoppages;
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•
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contractor or supplier delay or non-performance under construction or other agreements or non-performance by other major participants in construction projects;
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delays in or failure to receive necessary permits, approvals, tax credits, and other regulatory authorizations;
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delays associated with start-up activities, including major equipment failure, system integration, and operations, and/or unforeseen engineering problems;
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•
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changes in project design or scope;
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•
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impacts of new and existing laws and regulations, including environmental laws and regulations;
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•
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the outcome of legal challenges to projects, including legal challenges to regulatory approvals;
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•
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failure to construct in accordance with licensing requirements;
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•
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continued public and policymaker support for such projects;
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•
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adverse weather conditions or natural disasters;
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•
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sabotage;
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•
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terrorist attacks;
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•
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environmental and geological conditions;
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•
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delays or increased costs to interconnect facilities; and
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•
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other unanticipated cost increases.
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•
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we may fail to integrate the businesses we acquire into a cohesive, efficient enterprise;
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•
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our resources, including management resources, are limited and may be strained if we engage in a large acquisition or significant number of acquisitions, and acquisitions may divert our management's attention from initiating or carrying out programs to save costs or enhance revenues; and
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•
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our failure to retain key employees and contracts of the businesses we acquire.
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•
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the composition of our Board of Directors and, through the Board, any determination with respect to our business direction and policies, including the appointment and removal of officers and the determination of compensation;
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•
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any determinations with respect to mergers or other business combinations or the acquisition or disposition of assets;
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•
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our financing decisions, capital raising activities and the payment of dividends; and
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•
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amendments to our amended and restated certificate of incorporation or amended and restated bylaws.
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•
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business opportunities that may be presented to the principal stockholder affiliates and to our officers and directors associated with the principal stockholder affiliates, and competition between the principal stockholder affiliates and us within the same lines of business;
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•
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the solicitation and hiring of employees from each other; and
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•
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agreements with the principal stockholder affiliates relating to corporate services that may be material to our business.
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Location
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Principal Products
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Lake Charles, Louisiana
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Ethylene, polyethylene, styrene, VCM, chlorine, caustic soda, chlorinated derivative products, electricity
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Longview, Texas
(1)
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Polyethylene, polyethylene wax
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Calvert City, Kentucky
(2)
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PVC, VCM, chlorine, caustic soda, ethylene
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Plaquemine, Louisiana
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PVC, VCM, chlorine, caustic soda, electricity
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Geismar, Louisiana
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PVC, VCM, chlorine, caustic soda
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Gendorf, Bavaria, Germany
(1)
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PVC, VCM, chlorine, caustic soda
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Burghausen, Bavaria, Germany
(1)
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PVC
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Knapsack, North Rhine-Westphalia, Germany
(1)
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PVC, VCM, chlorine, caustic soda
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Cologne, North Rhine-Westphalia, Germany
(1)
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PVC
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Natrium, West Virginia
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Chlorine, caustic soda, chlorinated derivative products
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(1)
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We lease the land on which our facilities are located.
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(2)
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We lease a portion of the land on which our Calvert City facility is located.
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Period
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Total Number
of Shares
Purchased
(1)
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Average Price
Paid Per
Share
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Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
(2)
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|
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased Under the
Plans or Programs
(2)
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||||||
October 2018
|
|
88
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|
|
$
|
70.32
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|
|
—
|
|
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$
|
271,606,000
|
|
November 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
271,606,000
|
|
December 2018
|
|
853,028
|
|
|
$
|
66.51
|
|
|
853,028
|
|
|
$
|
214,872,000
|
|
Total
|
|
853,116
|
|
|
$
|
66.51
|
|
|
853,028
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(1)
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Includes
88
shares withheld during October 2018 in satisfaction of withholding taxes due upon the vesting of restricted stock units granted to our employees under the 2013 Plan.
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(2)
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In November 2014, our Board of Directors authorized a
$250 million
stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional
$150 million
. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional
$150 million
. As of
December 31, 2018
,
5,562,479
shares of our common stock had been acquired at an aggregate purchase price of approximately
$335 million
under the 2014 Program. Transaction fees and commissions are not reported in the average price paid per share in the table above. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.
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Plan Category
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Number of securities
to be issued upon
exercise of outstanding options,
warrants and rights
(a)
|
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Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
|
|
Number of securities
remaining available
for future issuance under equity
compensation plans
(excluding securities
reflected in column
(a))
(c)
|
||||
Equity compensation plans approved by security holders
|
|
1,818,743
|
|
|
$
|
33.64
|
|
|
4,551,620
|
|
Equity compensation plans not approved by security holders
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
|
1,818,743
|
|
|
$
|
33.64
|
|
|
4,551,620
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in millions, except share amounts, per share data and volume data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
8,635
|
|
|
$
|
8,041
|
|
|
$
|
5,076
|
|
|
$
|
4,463
|
|
|
$
|
4,415
|
|
Gross profit
(2)
|
|
1,987
|
|
|
1,761
|
|
|
983
|
|
|
1,190
|
|
|
1,319
|
|
|||||
Selling, general and administrative expenses
|
|
445
|
|
|
399
|
|
|
258
|
|
|
218
|
|
|
179
|
|
|||||
Amortization of intangibles
|
|
101
|
|
|
108
|
|
|
38
|
|
|
7
|
|
|
5
|
|
|||||
Transaction and integration-related costs
|
|
33
|
|
|
29
|
|
|
104
|
|
|
—
|
|
|
9
|
|
|||||
Income from operations
(2)
|
|
1,408
|
|
|
1,225
|
|
|
583
|
|
|
965
|
|
|
1,126
|
|
|||||
Interest expense
|
|
(126
|
)
|
|
(159
|
)
|
|
(79
|
)
|
|
(35
|
)
|
|
(37
|
)
|
|||||
Other income (expense), net
(2)
|
|
52
|
|
|
15
|
|
|
54
|
|
|
33
|
|
|
(5
|
)
|
|||||
Income before income taxes
|
|
1,334
|
|
|
1,081
|
|
|
558
|
|
|
963
|
|
|
1,084
|
|
|||||
Provision for (benefit from) income taxes
|
|
300
|
|
|
(258
|
)
|
|
138
|
|
|
298
|
|
|
399
|
|
|||||
Net income
|
|
1,034
|
|
|
1,339
|
|
|
420
|
|
|
665
|
|
|
685
|
|
|||||
Net income attributable to noncontrolling interests
|
|
38
|
|
|
35
|
|
|
21
|
|
|
19
|
|
|
6
|
|
|||||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
996
|
|
|
$
|
1,304
|
|
|
$
|
399
|
|
|
$
|
646
|
|
|
$
|
679
|
|
Earnings Per Share Attributable to Westlake Chemical Corporation:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
7.66
|
|
|
$
|
10.05
|
|
|
$
|
3.07
|
|
|
$
|
4.88
|
|
|
$
|
5.09
|
|
Diluted
|
|
$
|
7.62
|
|
|
$
|
10.00
|
|
|
$
|
3.06
|
|
|
$
|
4.86
|
|
|
$
|
5.07
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
129,401,823
|
|
|
129,087,043
|
|
|
129,367,712
|
|
|
131,823,707
|
|
|
133,111,230
|
|
|||||
Diluted
|
|
129,985,753
|
|
|
129,540,013
|
|
|
129,974,822
|
|
|
132,301,812
|
|
|
133,643,414
|
|
|||||
Balance Sheet Data (end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
753
|
|
|
$
|
1,531
|
|
|
$
|
459
|
|
|
$
|
663
|
|
|
$
|
881
|
|
Marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
520
|
|
|
—
|
|
|||||
Working capital
(3)
|
|
1,659
|
|
|
1,496
|
|
|
1,225
|
|
|
1,652
|
|
|
1,475
|
|
|||||
Total assets
|
|
11,602
|
|
|
12,076
|
|
|
10,890
|
|
|
5,569
|
|
|
5,208
|
|
|||||
Total long-term debt, net
|
|
2,668
|
|
|
3,127
|
|
|
3,679
|
|
|
758
|
|
|
758
|
|
|||||
Total Westlake Chemical Corporation stockholders' equity
|
|
5,590
|
|
|
4,874
|
|
|
3,524
|
|
|
3,266
|
|
|
2,912
|
|
|||||
Cash dividends declared per share
|
|
$
|
0.9200
|
|
|
$
|
0.8012
|
|
|
$
|
0.7442
|
|
|
$
|
0.6393
|
|
|
$
|
0.5820
|
|
Other Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
(4)
|
|
$
|
1,409
|
|
|
$
|
1,528
|
|
|
$
|
867
|
|
|
$
|
1,079
|
|
|
$
|
1,032
|
|
Investing activities
|
|
(754
|
)
|
|
(652
|
)
|
|
(2,563
|
)
|
|
(1,006
|
)
|
|
(773
|
)
|
|||||
Financing activities
(4)
|
|
(1,427
|
)
|
|
6
|
|
|
1,687
|
|
|
(287
|
)
|
|
165
|
|
|||||
Depreciation and amortization
|
|
641
|
|
|
601
|
|
|
378
|
|
|
246
|
|
|
208
|
|
|||||
Capital expenditures
|
|
702
|
|
|
577
|
|
|
629
|
|
|
491
|
|
|
431
|
|
|||||
EBITDA
(5)
|
|
2,101
|
|
|
1,841
|
|
|
1,015
|
|
|
1,244
|
|
|
1,329
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in millions, except share amounts, per share data and volume data)
|
||||||||||||||||||
External Sales Volume (millions of pounds):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Olefins Segment
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Polyethylene
|
|
2,438
|
|
|
2,363
|
|
|
2,392
|
|
|
2,445
|
|
|
2,364
|
|
|||||
Styrene, feedstock and other
|
|
671
|
|
|
828
|
|
|
794
|
|
|
1,182
|
|
|
941
|
|
|||||
Vinyls Segment
|
|
|
|
|
|
|
|
|
|
|
||||||||||
PVC, caustic soda and other
|
|
16,629
|
|
|
15,997
|
|
|
8,118
|
|
|
5,026
|
|
|
3,174
|
|
|||||
Building products
|
|
1,180
|
|
|
1,193
|
|
|
770
|
|
|
629
|
|
|
572
|
|
(1)
|
The historical selected financial and operational data should be read together with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8, Financial Statements and Supplementary Data included in this Form 10-K.
|
(2)
|
Immaterial reclassifications were made from cost of sales to other income, net, retrospectively, as a result of the adoption of accounting standard update ("ASU") No. 2017-07 effective January 1, 2018. See Note 1 to our consolidated financial statements included in Item 8 of this Form 10-K for more information.
|
(3)
|
Working capital equals current assets less current liabilities.
|
(4)
|
Amounts were retrospectively adjusted as a result of the adoption of ASU No. 2016-18 effective January 1, 2018. Upon adoption of this ASU, we retrospectively adjusted our financial statements to reflect restricted cash in the beginning and ending cash and restricted cash balances within the statements of cash flows. See Note 1 to our consolidated financial statements included in Item 8 of this Form 10-K for more information.
|
(5)
|
EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this Form 10-K because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flows and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this Form 10-K may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The following table reconciles EBITDA to net income, income from operations and net cash provided by operating activities.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||
Net cash provided by operating activities
(1)
|
|
$
|
1,409
|
|
|
$
|
1,528
|
|
|
$
|
867
|
|
|
$
|
1,079
|
|
|
$
|
1,032
|
|
Changes in operating assets and liabilities and other
(1)
|
|
(313
|
)
|
|
(723
|
)
|
|
(346
|
)
|
|
(374
|
)
|
|
(288
|
)
|
|||||
Deferred income taxes
|
|
(62
|
)
|
|
534
|
|
|
(101
|
)
|
|
(40
|
)
|
|
(59
|
)
|
|||||
Net income
|
|
1,034
|
|
|
1,339
|
|
|
420
|
|
|
665
|
|
|
685
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense), net
|
|
52
|
|
|
15
|
|
|
54
|
|
|
33
|
|
|
(5
|
)
|
|||||
Interest expense
|
|
(126
|
)
|
|
(159
|
)
|
|
(79
|
)
|
|
(35
|
)
|
|
(37
|
)
|
|||||
(Provision for) benefit from income taxes
|
|
(300
|
)
|
|
258
|
|
|
(138
|
)
|
|
(298
|
)
|
|
(399
|
)
|
|||||
Income from operations
|
|
1,408
|
|
|
1,225
|
|
|
583
|
|
|
965
|
|
|
1,126
|
|
|||||
Add:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
|
641
|
|
|
601
|
|
|
378
|
|
|
246
|
|
|
208
|
|
|||||
Other income (expense), net
|
|
52
|
|
|
15
|
|
|
54
|
|
|
33
|
|
|
(5
|
)
|
|||||
EBITDA
|
|
$
|
2,101
|
|
|
$
|
1,841
|
|
|
$
|
1,015
|
|
|
$
|
1,244
|
|
|
$
|
1,329
|
|
(1)
|
Amounts were retrospectively adjusted as a result of the adoption of ASU No. 2016-18 effective January 1, 2018. See Note 1 to our consolidated financial statements included in Item 8 of this Form 10-K for more information.
|
•
|
the availability of feedstock from shale gas and oil drilling;
|
•
|
supply and demand for crude oil;
|
•
|
shortages of raw materials due to increasing demand;
|
•
|
ethane and liquefied natural gas exports;
|
•
|
capacity constraints due to higher construction costs for investments, construction delays, strike action or involuntary shutdowns;
|
•
|
the general level of business and economic activity; and
|
•
|
the direct or indirect effect of governmental regulation.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(dollars in millions, except per share data)
|
||||||||||
Net external sales
|
|
|
|
|
|
|
||||||
Olefins
|
|
|
|
|
|
|
||||||
Polyethylene
|
|
$
|
1,519
|
|
|
$
|
1,518
|
|
|
$
|
1,463
|
|
Styrene, feedstock and other
|
|
500
|
|
|
533
|
|
|
431
|
|
|||
Total Olefins
|
|
2,019
|
|
|
2,051
|
|
|
1,894
|
|
|||
Vinyls
|
|
|
|
|
|
|
||||||
PVC, caustic soda and other
|
|
5,359
|
|
|
4,769
|
|
|
2,493
|
|
|||
Building products
|
|
1,257
|
|
|
1,221
|
|
|
689
|
|
|||
Total Vinyls
|
|
6,616
|
|
|
5,990
|
|
|
3,182
|
|
|||
Total
|
|
$
|
8,635
|
|
|
$
|
8,041
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
||||||
Income (loss) from operations
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
573
|
|
|
$
|
655
|
|
|
$
|
558
|
|
Vinyls
|
|
913
|
|
|
639
|
|
|
176
|
|
|||
Corporate and other
|
|
(78
|
)
|
|
(69
|
)
|
|
(151
|
)
|
|||
Total income from operations
|
|
1,408
|
|
|
1,225
|
|
|
583
|
|
|||
Interest expense
|
|
(126
|
)
|
|
(159
|
)
|
|
(79
|
)
|
|||
Other income, net
|
|
52
|
|
|
15
|
|
|
54
|
|
|||
Provision for (benefit from) income taxes
|
|
300
|
|
|
(258
|
)
|
|
138
|
|
|||
Net income
|
|
1,034
|
|
|
1,339
|
|
|
420
|
|
|||
Net income attributable to noncontrolling interests
|
|
38
|
|
|
35
|
|
|
21
|
|
|||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
996
|
|
|
$
|
1,304
|
|
|
$
|
399
|
|
Diluted earnings per share
|
|
$
|
7.62
|
|
|
$
|
10.00
|
|
|
$
|
3.06
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
||||||||
|
|
Average Sales
Price |
|
Volume
|
|
Average Sales
Price |
|
Volume
|
||||
Product sales price and volume percentage change from prior year
|
|
|
|
|
|
|
|
|
||||
Olefins
|
|
-1
|
%
|
|
—
|
%
|
|
+9
|
%
|
|
-1
|
%
|
Vinyls
|
|
+7
|
%
|
|
+4
|
%
|
|
+14
|
%
|
|
+74
|
%
|
Company average
|
|
+5
|
%
|
|
+3
|
%
|
|
+12
|
%
|
|
+46
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Average industry prices
(1)
|
|
|
|
|
|
|
|||
Ethane (cents/lb)
|
|
11.0
|
|
|
8.3
|
|
|
6.6
|
|
Propane (cents/lb)
|
|
20.8
|
|
|
18.1
|
|
|
11.4
|
|
Ethylene (cents/lb)
(2)
|
|
19.0
|
|
|
28.0
|
|
|
26.9
|
|
Polyethylene (cents/lb)
(3)
|
|
71.3
|
|
|
71.1
|
|
|
65.3
|
|
Styrene (cents/lb)
(4)
|
|
91.4
|
|
|
86.5
|
|
|
64.8
|
|
Caustic ($/short ton)
(5)
|
|
768.3
|
|
|
635.4
|
|
|
645.0
|
|
Chlorine ($/short ton)
(6)
|
|
343.8
|
|
|
323.8
|
|
|
297.7
|
|
PVC (cents/lb)
(7)
|
|
67.4
|
|
|
62.6
|
|
|
54.7
|
|
(1)
|
Industry pricing data was obtained through IHS Markit ("IHS"). We have not independently verified the data.
|
(2)
|
Represents average North American spot prices of ethylene over the period as reported by IHS.
|
(3)
|
Represents average North American net transaction prices of polyethylene low density GP-Film grade over the period as reported by IHS.
|
(4)
|
Represents average North American contract prices of styrene over the period as reported by IHS.
|
(5)
|
Represents average North American United States Gulf Coast undiscounted contract prices of caustic soda over the period as reported by IHS. During the first quarter of 2018, IHS discontinued the previous caustic soda index that we used. For comparability, the average 2017 caustic soda is based on the current index.
|
(6)
|
Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS.
|
(7)
|
Represents average North American contract prices of polyvinyl chloride (PVC) over the period as reported by IHS. Effective January 1, 2017, IHS made a non-market downward adjustment of 15 cents per pound to PVC prices. For comparability, we adjusted each prior-year period's PVC price downward by 15 cents per pound consistent with the IHS non-market adjustment.
|
|
|
Payment Due by Period
|
||||||||||||||||||
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||
Contractual Obligations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
|
$
|
2,715
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
2,465
|
|
Operating leases
|
|
515
|
|
|
106
|
|
|
159
|
|
|
98
|
|
|
152
|
|
|||||
Capital leases
|
|
19
|
|
|
3
|
|
|
5
|
|
|
4
|
|
|
7
|
|
|||||
Pension benefits funding
|
|
187
|
|
|
5
|
|
|
15
|
|
|
55
|
|
|
112
|
|
|||||
Post-retirement healthcare benefits
|
|
100
|
|
|
8
|
|
|
16
|
|
|
15
|
|
|
61
|
|
|||||
Purchase obligations
|
|
8,183
|
|
|
1,796
|
|
|
2,391
|
|
|
1,637
|
|
|
2,359
|
|
|||||
Interest payments
|
|
2,198
|
|
|
118
|
|
|
236
|
|
|
223
|
|
|
1,621
|
|
|||||
Asset retirement obligations
|
|
42
|
|
|
7
|
|
|
1
|
|
|
—
|
|
|
34
|
|
|||||
Investment in LACC
|
|
42
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
14,001
|
|
|
$
|
2,085
|
|
|
$
|
2,823
|
|
|
$
|
2,282
|
|
|
$
|
6,811
|
|
Other Commercial Commitments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Standby letters of credit
|
|
$
|
37
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
2018
|
||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
|
|
|
|
|
||||
|
|
(dollars in millions)
|
||||||
Projected benefit obligation, end of year
|
|
$
|
648
|
|
|
$
|
136
|
|
Discount rate increases by 100 basis points
|
|
(68
|
)
|
|
(19
|
)
|
||
Discount rate decreases by 100 basis points
|
|
81
|
|
|
24
|
|
|
Page
|
|
|
Management's Report on Internal Control over Financial Reporting
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
|
|
(in millions of dollars, except
par values and share amounts)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
753
|
|
|
$
|
1,531
|
|
Accounts receivable, net
|
|
1,037
|
|
|
1,001
|
|
||
Inventories
|
|
1,014
|
|
|
900
|
|
||
Prepaid expenses and other current assets
|
|
38
|
|
|
31
|
|
||
Total current assets
|
|
2,842
|
|
|
3,463
|
|
||
Property, plant and equipment, net
|
|
6,595
|
|
|
6,412
|
|
||
Goodwill
|
|
1,002
|
|
|
1,012
|
|
||
Customer relationships, net
|
|
525
|
|
|
616
|
|
||
Other intangible assets, net
|
|
134
|
|
|
161
|
|
||
Other assets, net
|
|
504
|
|
|
412
|
|
||
Total assets
|
|
$
|
11,602
|
|
|
$
|
12,076
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
507
|
|
|
$
|
600
|
|
Accrued liabilities
|
|
676
|
|
|
657
|
|
||
Current portion of long-term debt, net
|
|
—
|
|
|
710
|
|
||
Total current liabilities
|
|
1,183
|
|
|
1,967
|
|
||
Long-term debt, net
|
|
2,668
|
|
|
3,127
|
|
||
Deferred income taxes
|
|
1,159
|
|
|
1,111
|
|
||
Pension and other post-retirement benefits
|
|
337
|
|
|
344
|
|
||
Other liabilities
|
|
179
|
|
|
158
|
|
||
Total liabilities
|
|
5,526
|
|
|
6,707
|
|
||
Commitments and contingencies (Note 19)
|
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares
issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and
134,651,380 shares issued at December 31, 2018 and 2017, respectively
|
|
1
|
|
|
1
|
|
||
Common stock, held in treasury, at cost; 6,183,125 and 5,232,875 shares
at December 31, 2018 and 2017, respectively
|
|
(382
|
)
|
|
(302
|
)
|
||
Additional paid-in capital
|
|
556
|
|
|
555
|
|
||
Retained earnings
|
|
5,477
|
|
|
4,613
|
|
||
Accumulated other comprehensive income (loss)
|
|
(62
|
)
|
|
7
|
|
||
Total Westlake Chemical Corporation stockholders' equity
|
|
5,590
|
|
|
4,874
|
|
||
Noncontrolling interests
|
|
486
|
|
|
495
|
|
||
Total equity
|
|
6,076
|
|
|
5,369
|
|
||
Total liabilities and equity
|
|
$
|
11,602
|
|
|
$
|
12,076
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions of dollars,
except share amounts and per share data)
|
||||||||||
Net sales
|
|
$
|
8,635
|
|
|
$
|
8,041
|
|
|
$
|
5,076
|
|
Cost of sales
|
|
6,648
|
|
|
6,280
|
|
|
4,093
|
|
|||
Gross profit
|
|
1,987
|
|
|
1,761
|
|
|
983
|
|
|||
Selling, general and administrative expenses
|
|
445
|
|
|
399
|
|
|
258
|
|
|||
Amortization of intangibles
|
|
101
|
|
|
108
|
|
|
38
|
|
|||
Transaction and integration-related costs
|
|
33
|
|
|
29
|
|
|
104
|
|
|||
Income from operations
|
|
1,408
|
|
|
1,225
|
|
|
583
|
|
|||
Other income (expense)
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(126
|
)
|
|
(159
|
)
|
|
(79
|
)
|
|||
Other income, net
|
|
52
|
|
|
15
|
|
|
54
|
|
|||
Income before income taxes
|
|
1,334
|
|
|
1,081
|
|
|
558
|
|
|||
Provision for (benefit from) income taxes
|
|
300
|
|
|
(258
|
)
|
|
138
|
|
|||
Net income
|
|
1,034
|
|
|
1,339
|
|
|
420
|
|
|||
Net income attributable to noncontrolling interests
|
|
38
|
|
|
35
|
|
|
21
|
|
|||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
996
|
|
|
$
|
1,304
|
|
|
$
|
399
|
|
Earnings per common share attributable to Westlake Chemical Corporation:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
7.66
|
|
|
$
|
10.05
|
|
|
$
|
3.07
|
|
Diluted
|
|
$
|
7.62
|
|
|
$
|
10.00
|
|
|
$
|
3.06
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
129,401,823
|
|
|
129,087,043
|
|
|
129,367,712
|
|
|||
Diluted
|
|
129,985,753
|
|
|
129,540,013
|
|
|
129,974,822
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions of dollars)
|
||||||||||
Net income
|
|
$
|
1,034
|
|
|
$
|
1,339
|
|
|
$
|
420
|
|
Other comprehensive income (loss), net of income taxes
|
|
|
|
|
|
|
||||||
Pension and other post-retirement benefits
|
|
|
|
|
|
|
||||||
Pension and other post-retirement benefits reserves adjustment
|
|
(33
|
)
|
|
19
|
|
|
60
|
|
|||
Amortization of benefits liability
|
|
—
|
|
|
2
|
|
|
1
|
|
|||
Income tax benefit (provision) on pension and other post-retirement benefits
|
|
8
|
|
|
(7
|
)
|
|
(24
|
)
|
|||
Foreign currency translation adjustments
|
|
|
|
|
|
|
||||||
Foreign currency translation
|
|
(59
|
)
|
|
124
|
|
|
(34
|
)
|
|||
Income tax provision on foreign currency translation
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||
Available-for-sale investments
|
|
|
|
|
|
|
||||||
Unrealized holding gains on investments
|
|
—
|
|
|
—
|
|
|
62
|
|
|||
Reclassification of net realized gains to net income
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|||
Income tax provision on available-for-sale investments
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Other comprehensive income (loss), net of income taxes
|
|
(84
|
)
|
|
133
|
|
|
8
|
|
|||
Comprehensive income
|
|
950
|
|
|
1,472
|
|
|
428
|
|
|||
Comprehensive income attributable to noncontrolling interests,
net of tax of $4, $1 and $0 for 2018, 2017 and 2016, respectively
|
|
36
|
|
|
40
|
|
|
21
|
|
|||
Comprehensive income attributable to Westlake Chemical Corporation
|
|
$
|
914
|
|
|
$
|
1,432
|
|
|
$
|
407
|
|
|
|
Common Stock
|
|
Common Stock,
Held in Treasury
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Number of
Shares
|
|
Amount
|
|
Number of
Shares
|
|
At Cost
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive
Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in millions of dollars, except share amounts)
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2015
|
|
134,663,244
|
|
|
$
|
1
|
|
|
4,444,898
|
|
|
$
|
(258
|
)
|
|
$
|
542
|
|
|
$
|
3,110
|
|
|
$
|
(129
|
)
|
|
$
|
296
|
|
|
$
|
3,562
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
399
|
|
|
—
|
|
|
21
|
|
|
420
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||||
Common stock repurchased
|
|
—
|
|
|
—
|
|
|
1,511,109
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|||||||
Shares issued—stock-based compensation
|
|
(11,864
|
)
|
|
—
|
|
|
(117,019
|
)
|
|
3
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
(112,611
|
)
|
|
3
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
|||||||
Noncontrolling interests in acquired business
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
68
|
|
|||||||
Balances at December 31, 2016
|
|
134,651,380
|
|
|
1
|
|
|
5,726,377
|
|
|
(319
|
)
|
|
551
|
|
|
3,412
|
|
|
(121
|
)
|
|
368
|
|
|
3,892
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,304
|
|
|
—
|
|
|
35
|
|
|
1,339
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
5
|
|
|
133
|
|
|||||||
Shares issued—stock-based compensation
|
|
—
|
|
|
—
|
|
|
(493,502
|
)
|
|
17
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
—
|
|
|
(103
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
(28
|
)
|
|||||||
Issuance of Westlake Chemical Partners LP common units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
115
|
|
|
111
|
|
|||||||
Balances at December 31, 2017
|
|
134,651,380
|
|
|
1
|
|
|
5,232,875
|
|
|
(302
|
)
|
|
555
|
|
|
4,613
|
|
|
7
|
|
|
495
|
|
|
5,369
|
|
|||||||
Cumulative effect of accounting change
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Reclassification of certain tax effects to retained earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
13
|
|
|
—
|
|
|
—
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
996
|
|
|
—
|
|
|
38
|
|
|
1,034
|
|
|||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
|
(2
|
)
|
|
(84
|
)
|
|||||||
Common stock repurchased
|
|
—
|
|
|
—
|
|
|
1,368,881
|
|
|
(106
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
|||||||
Shares issued—stock-based compensation
|
|
—
|
|
|
—
|
|
|
(418,631
|
)
|
|
26
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
—
|
|
|
(120
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
|||||||
Balances at December 31, 2018
|
|
134,651,380
|
|
|
$
|
1
|
|
|
6,183,125
|
|
|
$
|
(382
|
)
|
|
$
|
556
|
|
|
$
|
5,477
|
|
|
$
|
(62
|
)
|
|
$
|
486
|
|
|
$
|
6,076
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in millions of dollars)
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
1,034
|
|
|
$
|
1,339
|
|
|
$
|
420
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
641
|
|
|
601
|
|
|
378
|
|
|||
Stock-based compensation expense
|
|
22
|
|
|
23
|
|
|
14
|
|
|||
Gain realized on previously held shares of Axiall common stock and from sales of securities
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|||
Loss from disposition of property, plant and equipment
|
|
44
|
|
|
22
|
|
|
9
|
|
|||
Deferred income taxes
|
|
62
|
|
|
(534
|
)
|
|
101
|
|
|||
Other losses (gains), net
|
|
(20
|
)
|
|
(3
|
)
|
|
5
|
|
|||
Changes in operating assets and liabilities, net of effect of business acquisitions
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(58
|
)
|
|
(40
|
)
|
|
50
|
|
|||
Inventories
|
|
(123
|
)
|
|
(32
|
)
|
|
(62
|
)
|
|||
Prepaid expenses and other current assets
|
|
(1
|
)
|
|
26
|
|
|
11
|
|
|||
Accounts payable
|
|
(100
|
)
|
|
86
|
|
|
12
|
|
|||
Accrued liabilities
|
|
(8
|
)
|
|
115
|
|
|
48
|
|
|||
Other, net
|
|
(84
|
)
|
|
(75
|
)
|
|
(65
|
)
|
|||
Net cash provided by operating activities
|
|
1,409
|
|
|
1,528
|
|
|
867
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Acquisition of business, net of cash acquired
|
|
—
|
|
|
(13
|
)
|
|
(2,438
|
)
|
|||
Additions to property, plant and equipment
|
|
(702
|
)
|
|
(577
|
)
|
|
(629
|
)
|
|||
Additions to investments in unconsolidated subsidiaries
|
|
(68
|
)
|
|
(66
|
)
|
|
(17
|
)
|
|||
Proceeds from sales and maturities of securities
|
|
—
|
|
|
—
|
|
|
663
|
|
|||
Purchase of securities
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|||
Other, net
|
|
16
|
|
|
4
|
|
|
(4
|
)
|
|||
Net cash used for investing activities
|
|
(754
|
)
|
|
(652
|
)
|
|
(2,563
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Debt issuance costs
|
|
—
|
|
|
(6
|
)
|
|
(36
|
)
|
|||
Dividends paid
|
|
(120
|
)
|
|
(103
|
)
|
|
(97
|
)
|
|||
Distributions to noncontrolling interests
|
|
(45
|
)
|
|
(28
|
)
|
|
(17
|
)
|
|||
Proceeds from notes payable and drawdown of revolver
|
|
14
|
|
|
978
|
|
|
2,037
|
|
|||
Net proceeds from issuance of Westlake Chemical Partners LP common units
|
|
—
|
|
|
111
|
|
|
—
|
|
|||
Repayment of term loan
|
|
—
|
|
|
(150
|
)
|
|
—
|
|
|||
Repayment of revolver
|
|
—
|
|
|
(550
|
)
|
|
(125
|
)
|
|||
Redemption and repayment of notes payable
|
|
(1,179
|
)
|
|
(257
|
)
|
|
(13
|
)
|
|||
Repurchase of common stock for treasury
|
|
(106
|
)
|
|
—
|
|
|
(67
|
)
|
|||
Other
|
|
9
|
|
|
11
|
|
|
5
|
|
|||
Net cash provided by (used for) financing activities
|
|
(1,427
|
)
|
|
6
|
|
|
1,687
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(7
|
)
|
|
26
|
|
|
(8
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(779
|
)
|
|
908
|
|
|
(17
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of the year
|
|
1,554
|
|
|
646
|
|
|
663
|
|
|||
Cash, cash equivalents and restricted cash at end of the year
|
|
$
|
775
|
|
|
$
|
1,554
|
|
|
$
|
646
|
|
Classification
|
|
Years
|
|
Buildings and improvements
|
|
40
|
|
Plant and equipment
|
|
10-25
|
|
Other
|
|
3-15
|
|
|
Final Purchase Consideration as of August 31, 2016
|
||
Closing stock purchase:
|
|
|
||
Offer per share
|
|
$
|
33.00
|
|
Multiplied by number of shares outstanding at acquisition (in thousands of shares)
|
|
67,277
|
|
|
Fair value of Axiall shares outstanding purchased by the Company
|
|
2,220
|
|
|
Plus:
|
|
|
||
Axiall debt repaid at acquisition
|
|
247
|
|
|
Seller's transaction costs paid by the Company
(1)
|
|
48
|
|
|
Total fair value of consideration transferred
|
|
2,515
|
|
|
|
|
|
||
Fair value of Axiall share-based awards attributed to pre-combination service
(2)
|
|
12
|
|
|
Additional settlement value of shares acquired
|
|
13
|
|
|
Purchase consideration
|
|
2,540
|
|
|
|
|
|
||
Fair value of previously held equity interest in Axiall
(3)
|
|
102
|
|
|
Total fair value allocated to net assets acquired
|
|
$
|
2,642
|
|
(1)
|
Transactions costs incurred by the seller included legal and advisory costs incurred for the benefit of Axiall's former shareholders and board of directors to evaluate the Company's initial merger proposals, explore strategic alternatives and negotiate the purchase price.
|
(2)
|
The fair value of share-based awards attributable to pre-combination service includes the ratio of the pre-combination service performed to the original service period of the Axiall restricted share units and options, including related dividend equivalent rights.
|
(3)
|
Prior to the Axiall Merger, the Company owned
3.1 million
shares in Axiall. The investment in Axiall was carried at estimated fair value with unrealized gains recorded as a component of accumulated other comprehensive loss in the consolidated balance sheet. The Company recognized a
$49
gain for the investment in other income, net in the consolidated statements of operations upon gaining control.
|
|
|
Pro Forma
|
||
|
|
Year Ended December 31, 2016
|
||
Net sales
|
|
$
|
7,081
|
|
|
|
|
||
Net income
(1)
|
|
$
|
397
|
|
Net income attributable to noncontrolling interests
|
|
23
|
|
|
Net income attributable to Westlake Chemical Corporation
(1)
|
|
$
|
374
|
|
Earnings per common share attributable to Westlake Chemical Corporation:
|
|
|
||
Basic
|
|
$
|
2.88
|
|
Diluted
|
|
$
|
2.86
|
|
(1)
|
The 2016 pro forma net income amounts include Axiall's historical charges recorded during the eight-month period prior to the closing of the Axiall Merger for (1) divestitures; (2) restructuring; and (3) legal and settlement claims, net, of
$27
,
$23
and
$23
, respectively. These amounts have not been eliminated for pro forma results because they do not relate to nonrecurring transaction-specific costs related to the Axiall Merger.
|
|
|
Year Ended December 31,
|
||
|
|
2016
|
||
Proceeds from sales and maturities of securities
|
|
$
|
663
|
|
Gross realized gains
|
|
54
|
|
|
|
2018
|
|
2017
|
||||
Trade customers
|
|
$
|
969
|
|
|
$
|
974
|
|
Affiliates
|
|
6
|
|
|
9
|
|
||
Allowance for doubtful accounts
|
|
(23
|
)
|
|
(22
|
)
|
||
|
|
952
|
|
|
961
|
|
||
Federal and state taxes
|
|
57
|
|
|
7
|
|
||
Other
|
|
28
|
|
|
33
|
|
||
Accounts receivable, net
|
|
$
|
1,037
|
|
|
$
|
1,001
|
|
|
|
2018
|
|
2017
|
||||
Finished products
|
|
$
|
657
|
|
|
$
|
549
|
|
Feedstock, additives, chemicals and other raw materials
|
|
203
|
|
|
221
|
|
||
Materials and supplies
|
|
154
|
|
|
130
|
|
||
Inventories
|
|
$
|
1,014
|
|
|
$
|
900
|
|
|
|
2018
|
|
2017
|
||||
Land
|
|
$
|
193
|
|
|
$
|
198
|
|
Buildings and improvements
|
|
544
|
|
|
495
|
|
||
Plant and equipment
|
|
7,568
|
|
|
7,281
|
|
||
Other
|
|
437
|
|
|
388
|
|
||
|
|
8,742
|
|
|
8,362
|
|
||
Less: Accumulated depreciation
|
|
(2,720
|
)
|
|
(2,338
|
)
|
||
|
|
6,022
|
|
|
6,024
|
|
||
Construction in progress
|
|
573
|
|
|
388
|
|
||
Property, plant and equipment, net
|
|
$
|
6,595
|
|
|
$
|
6,412
|
|
|
|
Olefins Segment
|
|
Vinyls Segment
|
|
Total
|
||||||
Balance at December 31, 2016
|
|
$
|
30
|
|
|
$
|
917
|
|
|
$
|
947
|
|
Measurement period adjustment
|
|
—
|
|
|
55
|
|
|
55
|
|
|||
Effects of changes in foreign exchange rates
|
|
—
|
|
|
10
|
|
|
10
|
|
|||
Balance at December 31, 2017
|
|
30
|
|
|
982
|
|
|
1,012
|
|
|||
Effects of changes in foreign exchange rates
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Balance at December 31, 2018
|
|
$
|
30
|
|
|
$
|
972
|
|
|
$
|
1,002
|
|
|
|
2018
|
|
2017
|
|
Weighted
Average
Life
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
|||||||||||||
Customer relationships
|
|
$
|
745
|
|
|
$
|
(220
|
)
|
|
$
|
525
|
|
|
$
|
754
|
|
|
$
|
(138
|
)
|
|
$
|
616
|
|
|
10
|
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Licenses and intellectual property
|
|
122
|
|
|
(65
|
)
|
|
57
|
|
|
124
|
|
|
(55
|
)
|
|
69
|
|
|
13
|
||||||
Trademarks
|
|
90
|
|
|
(26
|
)
|
|
64
|
|
|
93
|
|
|
(17
|
)
|
|
76
|
|
|
13
|
||||||
Other
|
|
35
|
|
|
(22
|
)
|
|
13
|
|
|
31
|
|
|
(15
|
)
|
|
16
|
|
|
11
|
||||||
Total other intangible assets
|
|
$
|
247
|
|
|
$
|
(113
|
)
|
|
$
|
134
|
|
|
$
|
248
|
|
|
$
|
(87
|
)
|
|
$
|
161
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net Long-Term Debt
|
|
Principal Amount
|
|
Unamortized Premium, Discount and Debt Issuance Costs
|
|
Net Long-Term Debt
|
||||||||||||
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes")
|
|
$
|
250
|
|
|
$
|
(1
|
)
|
|
$
|
249
|
|
|
$
|
250
|
|
|
$
|
(1
|
)
|
|
$
|
249
|
|
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")
|
|
750
|
|
|
(9
|
)
|
|
741
|
|
|
750
|
|
|
(10
|
)
|
|
740
|
|
||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027
|
|
11
|
|
|
—
|
|
|
11
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
6 ½% senior notes due 2029 (the "6 ½% 2029 GO Zone Senior Notes")
|
|
100
|
|
|
(1
|
)
|
|
99
|
|
|
100
|
|
|
(1
|
)
|
|
99
|
|
||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes")
|
|
89
|
|
|
(1
|
)
|
|
88
|
|
|
89
|
|
|
(1
|
)
|
|
88
|
|
||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes")
|
|
65
|
|
|
—
|
|
|
65
|
|
|
65
|
|
|
—
|
|
|
65
|
|
||||||
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")
|
|
700
|
|
|
(24
|
)
|
|
676
|
|
|
700
|
|
|
(25
|
)
|
|
675
|
|
||||||
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")
|
|
500
|
|
|
(9
|
)
|
|
491
|
|
|
500
|
|
|
(9
|
)
|
|
491
|
|
||||||
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes")
|
|
250
|
|
|
(2
|
)
|
|
248
|
|
|
250
|
|
|
(2
|
)
|
|
248
|
|
||||||
4.625% senior notes due 2021 (the "4.625% Westlake 2021 Senior Notes")
|
|
—
|
|
|
—
|
|
|
—
|
|
|
625
|
|
|
20
|
|
|
645
|
|
||||||
4.625% senior notes due 2021(the "4.625% Subsidiary 2021 Senior Notes")
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
2
|
|
|
65
|
|
||||||
4.875% senior notes due 2023 (the "4.875% Westlake 2023 Senior Notes")
|
|
—
|
|
|
—
|
|
|
—
|
|
|
434
|
|
|
11
|
|
|
445
|
|
||||||
4.875% senior notes due 2023 (the "4.875% Subsidiary 2023 Senior Notes")
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||||
Total Long-term debt
|
|
2,715
|
|
|
(47
|
)
|
|
2,668
|
|
|
3,853
|
|
|
(16
|
)
|
|
3,837
|
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current portion - 4.625% Westlake 2021 Senior Notes and 4.625% Subsidiary 2021 Senior Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
688
|
|
|
22
|
|
|
710
|
|
||||||
Long-term debt, net of current portion
|
|
$
|
2,715
|
|
|
$
|
(47
|
)
|
|
$
|
2,668
|
|
|
$
|
3,165
|
|
|
$
|
(38
|
)
|
|
$
|
3,127
|
|
|
|
Benefits
Liability,
Net of Tax
|
|
Cumulative
Foreign
Currency
Exchange
|
|
Total
|
||||||
Balances at December 31, 2016
|
|
$
|
29
|
|
|
$
|
(150
|
)
|
|
$
|
(121
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
12
|
|
|
114
|
|
|
126
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
2
|
|
|
—
|
|
|
2
|
|
|||
Net other comprehensive income attributable to Westlake Chemical Corporation
|
|
14
|
|
|
114
|
|
|
128
|
|
|||
Balances at December 31, 2017
|
|
43
|
|
|
(36
|
)
|
|
7
|
|
|||
Other comprehensive income (loss) before reclassifications
|
|
(14
|
)
|
|
(57
|
)
|
|
(71
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||
Reclassification of certain tax effects to retained earnings
(1)
|
|
9
|
|
|
4
|
|
|
13
|
|
|||
Net other comprehensive loss attributable to Westlake Chemical Corporation
|
|
(16
|
)
|
|
(53
|
)
|
|
(69
|
)
|
|||
Balances at December 31, 2018
|
|
$
|
27
|
|
|
$
|
(89
|
)
|
|
$
|
(62
|
)
|
(1)
|
The Company reclassified certain income tax effects to retained earnings upon adoption of ASU No. 2018-02. See Note 14 for additional information.
|
Details about Accumulated Other
Comprehensive Income (Loss) Components
|
|
Location of Reclassification
(Income (Expense)) in
Consolidated Statements
of Operations
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||
Amortization of pension and other post-retirement net loss
|
|
(1)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Pension settlement gain
|
|
(1)
|
|
14
|
|
|
—
|
|
|
—
|
|
|||
Income tax benefit (provision) on pension and other post-retirement benefits
|
|
Provision for (benefit from) income taxes
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|||
|
|
|
|
11
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Realized gain on available-for-sale investments
|
|
Other income, net
|
|
—
|
|
|
—
|
|
|
54
|
|
|||
Income tax provision on realized gain on available-for-sale investments
|
|
Provision for (benefit from) income taxes
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
|
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||
Total reclassifications for the period
|
|
|
|
$
|
11
|
|
|
$
|
(2
|
)
|
|
$
|
51
|
|
(1)
|
These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and reflected in other income, net in the consolidated statements of operations. See Note 11 for additional information on the pension settlement gain.
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation, beginning of year
|
|
$
|
807
|
|
|
$
|
142
|
|
|
$
|
799
|
|
|
$
|
125
|
|
Service cost
|
|
3
|
|
|
2
|
|
|
3
|
|
|
2
|
|
||||
Interest cost
|
|
24
|
|
|
3
|
|
|
25
|
|
|
3
|
|
||||
Actuarial loss (gain)
|
|
(43
|
)
|
|
—
|
|
|
41
|
|
|
—
|
|
||||
Benefits paid
|
|
(40
|
)
|
|
(4
|
)
|
|
(45
|
)
|
|
(3
|
)
|
||||
Settlements
|
|
(103
|
)
|
|
—
|
|
|
(16
|
)
|
|
(1
|
)
|
||||
Foreign exchange effects
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
16
|
|
||||
Benefit obligation, end of year
|
|
$
|
648
|
|
|
$
|
136
|
|
|
$
|
807
|
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets, beginning of year
|
|
$
|
650
|
|
|
$
|
18
|
|
|
$
|
614
|
|
|
$
|
16
|
|
Actual return
|
|
(22
|
)
|
|
—
|
|
|
97
|
|
|
1
|
|
||||
Employer contribution
|
|
3
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Benefits paid
|
|
(40
|
)
|
|
(1
|
)
|
|
(45
|
)
|
|
—
|
|
||||
Administrative expenses paid
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Settlements
|
|
(103
|
)
|
|
—
|
|
|
(16
|
)
|
|
(1
|
)
|
||||
Foreign exchange effects
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
||||
Fair value of plan assets, end of year
|
|
$
|
486
|
|
|
$
|
17
|
|
|
$
|
650
|
|
|
$
|
18
|
|
Funded status, end of year
|
|
$
|
(162
|
)
|
|
$
|
(119
|
)
|
|
$
|
(157
|
)
|
|
$
|
(124
|
)
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Amounts recognized in the consolidated balance sheet at December 31
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
Noncurrent liabilities
|
|
(160
|
)
|
|
(116
|
)
|
|
(155
|
)
|
|
(121
|
)
|
||||
Net amount recognized
|
|
$
|
(162
|
)
|
|
$
|
(119
|
)
|
|
$
|
(157
|
)
|
|
$
|
(124
|
)
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Amounts recognized in accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Net loss (gain)
|
|
$
|
(36
|
)
|
|
$
|
9
|
|
|
$
|
(71
|
)
|
|
$
|
9
|
|
Total before tax
(1)
|
|
$
|
(36
|
)
|
|
$
|
9
|
|
|
$
|
(71
|
)
|
|
$
|
9
|
|
(1)
|
After-tax totals for pension benefits were
$22
and
$43
for
2018
and
2017
, respectively, and are reflected in stockholders' equity as accumulated other comprehensive income (loss).
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
Information for pension plans with an accumulated benefit obligation in excess of plan assets
|
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
|
$
|
(648
|
)
|
|
$
|
(128
|
)
|
|
$
|
(807
|
)
|
|
$
|
(128
|
)
|
Accumulated benefit obligation
|
|
(648
|
)
|
|
(125
|
)
|
|
(807
|
)
|
|
(126
|
)
|
||||
Fair value of plan assets
|
|
486
|
|
|
10
|
|
|
650
|
|
|
5
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Administrative expenses
|
|
3
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||
Interest cost
|
|
24
|
|
|
3
|
|
|
25
|
|
|
2
|
|
|
9
|
|
|
2
|
|
||||||
Expected return on plan assets
|
|
(42
|
)
|
|
(1
|
)
|
|
(40
|
)
|
|
(1
|
)
|
|
(15
|
)
|
|
—
|
|
||||||
Net amortization
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
Settlement gain
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (gain)
|
|
$
|
(27
|
)
|
|
$
|
5
|
|
|
$
|
(9
|
)
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other changes in plan assets and benefit obligation recognized in other comprehensive income (OCI)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss (gain) emerging
|
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
(67
|
)
|
|
$
|
13
|
|
Settlement gain
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of net gain (loss)
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
||||||
Total recognized in OCI
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
(1
|
)
|
|
$
|
(68
|
)
|
|
$
|
13
|
|
Total net periodic benefit cost and OCI
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
(28
|
)
|
|
$
|
3
|
|
|
$
|
(69
|
)
|
|
$
|
17
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
|
U.S.
Plans
|
|
Non-U.S.
Plans
|
||||||
Weighted average assumptions used to determine benefit obligations at December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
4.1
|
%
|
|
2.0
|
%
|
|
3.4
|
%
|
|
1.8
|
%
|
|
3.8
|
%
|
|
1.8
|
%
|
Rate of compensation increase
|
|
—
|
%
|
|
2.6
|
%
|
|
—
|
%
|
|
2.6
|
%
|
|
—
|
%
|
|
2.6
|
%
|
Weighted average assumptions used to determine net periodic benefit costs for years ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate for benefit obligations
|
|
3.4
|
%
|
|
1.8
|
%
|
|
3.8
|
%
|
|
1.8
|
%
|
|
3.2
|
%
|
|
2.4
|
%
|
Discount rate for service cost
|
|
3.8
|
%
|
|
2.0
|
%
|
|
4.1
|
%
|
|
1.9
|
%
|
|
3.4
|
%
|
|
2.4
|
%
|
Discount rate for interest cost
|
|
3.3
|
%
|
|
2.0
|
%
|
|
3.2
|
%
|
|
2.0
|
%
|
|
2.9
|
%
|
|
2.4
|
%
|
Expected return on plan assets
|
|
7.0
|
%
|
|
3.8
|
%
|
|
6.8
|
%
|
|
3.8
|
%
|
|
6.8
|
%
|
|
4.6
|
%
|
Rate of compensation increase
|
|
—
|
%
|
|
2.6
|
%
|
|
—
|
%
|
|
2.6
|
%
|
|
—
|
%
|
|
2.6
|
%
|
|
|
2018
|
||||||||||||||||||||||
|
|
U.S. Plans
|
|
Non U.S. Plans
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Cash and common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Common stock
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Collective investment trust and
mutual funds—Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Large-cap funds
(1)
|
|
44
|
|
|
98
|
|
|
142
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Small-cap funds
(2)
|
|
6
|
|
|
13
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
International funds
(3)
|
|
64
|
|
|
38
|
|
|
102
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Collective investment trust and mutual funds—Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bond funds
(4)
|
|
96
|
|
|
102
|
|
|
198
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Short-term investment funds
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
223
|
|
|
$
|
263
|
|
|
$
|
486
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
17
|
|
|
|
2017
|
||||||||||||||||||||||
|
|
U.S. Plans
|
|
Non U.S. Plans
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Cash and common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Common stock
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Collective investment trust and mutual funds—Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Large-cap funds
(1)
|
|
49
|
|
|
173
|
|
|
222
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Small-cap funds
(2)
|
|
9
|
|
|
25
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
International funds
(3)
|
|
69
|
|
|
50
|
|
|
119
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Collective investment trust and mutual funds—Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bond funds
(4)
|
|
116
|
|
|
125
|
|
|
241
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Short-term investment funds
|
|
—
|
|
|
13
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
264
|
|
|
$
|
386
|
|
|
$
|
650
|
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
18
|
|
(1)
|
Substantially all of the assets of these funds are invested in large-cap U.S. companies. The remainder of the assets of these funds is invested in cash reserves.
|
(2)
|
Substantially all of the assets of these funds are invested in small-cap U.S. companies. The remainder of the assets of these funds is invested in cash reserves.
|
(3)
|
Substantially all of the assets of these funds are invested in international companies in developed markets (excluding the U.S.). The remainder of the assets of these funds is invested in cash reserves.
|
(4)
|
This category represents investment grade bonds of U.S. issuers, including U.S. Treasury notes.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
Non-U.S.
Plans
|
|
Non-U.S.
Plans
|
|
Non-U.S.
Plans
|
||||||
Contributions to multi-employer plans
(1)
|
|
$
|
7
|
|
|
$
|
8
|
|
|
$
|
5
|
|
(1)
|
The plan information for both the Pensionskasse der Mitarbeiter der Hoechst-Gruppe VVaG and Pensionskasse der Wacker-Chemie GmbH VVaG plans is publicly available. The plans provide fixed, monthly retirement payments on the basis of the credits earned by the participating employees. To the extent that the plans are underfunded, future contributions to the plans may increase and may be used to fund retirement benefits for employees related to other employers. The Company does not consider either of its multi-employer plans individually significant.
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation, beginning of year
|
|
$
|
73
|
|
|
$
|
3
|
|
|
$
|
80
|
|
|
$
|
3
|
|
Service cost
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Interest cost
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Actuarial gain
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Benefits paid
|
|
(8
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Benefit obligation, end of year
|
|
$
|
67
|
|
|
$
|
3
|
|
|
$
|
73
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets, beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Employer contribution
|
|
8
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Benefits paid
|
|
(8
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Fair value of plan assets, end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded status, end of year
|
|
$
|
(67
|
)
|
|
$
|
(3
|
)
|
|
$
|
(73
|
)
|
|
$
|
(3
|
)
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
||||||||
Amounts recognized in the consolidated balance sheet at December 31
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
Noncurrent liabilities
|
|
(59
|
)
|
|
(3
|
)
|
|
(65
|
)
|
|
(3
|
)
|
||||
Net amount recognized
|
|
$
|
(67
|
)
|
|
$
|
(3
|
)
|
|
$
|
(73
|
)
|
|
$
|
(3
|
)
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
||||||||
Amounts recognized in accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Net gain
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
Total before tax
(1)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
(1)
|
After-tax totals for post-retirement healthcare benefits were
$5
and
$0
for
2018
and
2017
, respectively, and are reflected in stockholders' equity as accumulated other comprehensive income (loss).
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||
Net amortization
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other changes in plan assets and benefit obligation recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net gain emerging
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
Total recognized in OCI
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
Total net periodic benefit cost and OCI
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
|
U.S. Plans
|
|
Non-U.S.
Plans
|
||||||
Weighted average assumptions used to determine benefit obligations at December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
3.7
|
%
|
|
3.9
|
%
|
|
3.0
|
%
|
|
4.0
|
%
|
|
3.3
|
%
|
|
4.0
|
%
|
Health care cost trend rate
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
- Initial rate
|
|
7.0
|
%
|
|
5.8
|
%
|
|
7.3
|
%
|
|
6.2
|
%
|
|
7.3
|
%
|
|
6.2
|
%
|
- Ultimate rate
|
|
4.5
|
%
|
|
4.0
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
- Years to ultimate
|
|
11
|
|
|
22
|
|
|
11
|
|
|
12
|
|
|
11
|
|
|
12
|
|
Weighted average assumptions used to determine net periodic benefit costs for years ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate for benefit obligations
|
|
3.0
|
%
|
|
3.6
|
%
|
|
3.3
|
%
|
|
3.3
|
%
|
|
2.6
|
%
|
|
3.3
|
%
|
Discount rate for service cost
|
|
3.4
|
%
|
|
3.6
|
%
|
|
3.8
|
%
|
|
3.3
|
%
|
|
3.1
|
%
|
|
3.3
|
%
|
Discount rate for interest cost
|
|
2.7
|
%
|
|
3.6
|
%
|
|
2.6
|
%
|
|
3.3
|
%
|
|
2.8
|
%
|
|
3.3
|
%
|
Health care cost trend rate
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
- Initial rate
|
|
7.0
|
%
|
|
6.1
|
%
|
|
6.8
|
%
|
|
6.8
|
%
|
|
7.0
|
%
|
|
6.8
|
%
|
- Ultimate rate
|
|
4.5
|
%
|
|
4.5
|
%
|
|
4.6
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
- Years to ultimate
|
|
10
|
|
|
11
|
|
|
11
|
|
|
12
|
|
|
12
|
|
|
13
|
|
|
|
Pension
Benefits
|
|
Other Post-
retirement
Benefits
|
||||
Estimated future benefit payments:
|
|
|
|
|
||||
Year 1
|
|
$
|
44
|
|
|
$
|
8
|
|
Year 2
|
|
44
|
|
|
8
|
|
||
Year 3
|
|
45
|
|
|
8
|
|
||
Year 4
|
|
46
|
|
|
8
|
|
||
Year 5
|
|
46
|
|
|
8
|
|
||
Years 6 to 10
|
|
233
|
|
|
25
|
|
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 31, 2017
|
|
1,269,601
|
|
|
$
|
41.04
|
|
|
|
|
|
||
Granted
|
|
173,195
|
|
|
107.75
|
|
|
|
|
|
|||
Exercised
|
|
(323,182
|
)
|
|
28.81
|
|
|
|
|
|
|||
Cancelled
|
|
(3,660
|
)
|
|
77.16
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
|
1,115,954
|
|
|
$
|
54.82
|
|
|
6.1
|
|
$
|
20
|
|
Exercisable at December 31, 2018
|
|
628,926
|
|
|
$
|
39.05
|
|
|
4.5
|
|
$
|
17
|
|
Range of Prices
|
|
Options
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
$7.12 - $30.05
|
|
272,632
|
|
|
1.9
|
$40.38 - $44.42
|
|
223,589
|
|
|
7.1
|
$45.70 - $61.87
|
|
300,549
|
|
|
7.5
|
$63.98 - $68.09
|
|
112,386
|
|
|
5.7
|
$68.18 - $107.75
|
|
206,798
|
|
|
8.6
|
|
|
Stock Option Grants
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted average fair value
|
|
$
|
28.94
|
|
|
$
|
15.84
|
|
|
$
|
11.67
|
|
Risk-free interest rate
|
|
2.7
|
%
|
|
2.1
|
%
|
|
1.4
|
%
|
|||
Expected life in years
|
|
5
|
|
|
5
|
|
|
5
|
|
|||
Expected volatility
|
|
27.6
|
%
|
|
29.2
|
%
|
|
32.9
|
%
|
|||
Expected dividend yield
|
|
0.7
|
%
|
|
1.2
|
%
|
|
1.6
|
%
|
|
|
Number of
Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Non-vested at December 31, 2017
|
|
663,866
|
|
|
$
|
56.86
|
|
Granted
|
|
146,811
|
|
|
106.58
|
|
|
Vested
|
|
(95,449
|
)
|
|
65.32
|
|
|
Forfeited
|
|
(12,439
|
)
|
|
74.46
|
|
|
Non-vested at December 31, 2018
|
|
702,789
|
|
|
$
|
65.79
|
|
|
|
Liability Classified Restricted Stock Awards
|
|||
|
|
Year Ended December 31, 2018
|
|||
Weighted average vesting period in years
|
|
0.3
|
|
||
Risk-free interest rate
|
|
2.5
|
%
|
||
Expected volatility
|
|
32.9
|
%
|
||
Expected dividend yield
|
|
1.5
|
%
|
|
|
Number of
Units
|
|
Weighted Average Fair Value
|
|||
Non-vested at December 31, 2017
|
|
100,992
|
|
|
$
|
106.53
|
|
Vested
|
|
(48,845
|
)
|
|
116.99
|
|
|
Cancelled
|
|
(2,619
|
)
|
|
99.50
|
|
|
Non-vested at December 31, 2018
|
|
49,528
|
|
|
$
|
66.46
|
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
3.60% 2022 Senior Notes
|
|
$
|
249
|
|
|
$
|
248
|
|
|
$
|
249
|
|
|
$
|
255
|
|
3.60% 2026 Senior Notes
|
|
741
|
|
|
692
|
|
|
740
|
|
|
757
|
|
||||
Loan related to tax-exempt waste disposal revenue bonds due 2027
|
|
11
|
|
|
11
|
|
|
11
|
|
|
11
|
|
||||
6 ½% 2029 GO Zone Senior Notes
|
|
99
|
|
|
106
|
|
|
99
|
|
|
111
|
|
||||
6 ½% 2035 GO Zone Senior Notes
|
|
88
|
|
|
95
|
|
|
88
|
|
|
99
|
|
||||
6 ½% 2035 IKE Zone Senior Notes
|
|
65
|
|
|
69
|
|
|
65
|
|
|
74
|
|
||||
5.0% 2046 Senior Notes
|
|
676
|
|
|
641
|
|
|
675
|
|
|
787
|
|
||||
4.375% 2047 Senior Notes
|
|
491
|
|
|
417
|
|
|
491
|
|
|
518
|
|
||||
3.50% 2032 GO Zone Refunding Senior Notes
|
|
248
|
|
|
233
|
|
|
248
|
|
|
256
|
|
||||
4.625% Westlake 2021 Senior Notes
(1)
|
|
—
|
|
|
—
|
|
|
645
|
|
|
639
|
|
||||
4.625% Subsidiary 2021 Senior Notes
(1)
|
|
—
|
|
|
—
|
|
|
65
|
|
|
65
|
|
||||
4.875% Westlake 2023 Senior Notes
|
|
—
|
|
|
—
|
|
|
445
|
|
|
449
|
|
||||
4.875% Subsidiary 2023 Senior Notes
|
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
(1)
|
The
4.625% Westlake 2021 Senior Notes
and
4.625% Subsidiary 2021 Senior Notes
were classified as a component of current liabilities in the consolidated balance sheet at
December 31, 2017
. For additional information, see Note 8.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
158
|
|
|
$
|
231
|
|
|
$
|
8
|
|
State
|
|
28
|
|
|
18
|
|
|
9
|
|
|||
Foreign
|
|
52
|
|
|
27
|
|
|
20
|
|
|||
|
|
238
|
|
|
276
|
|
|
37
|
|
|||
Deferred
|
|
|
|
|
|
|
||||||
Federal
|
|
59
|
|
|
(557
|
)
|
|
136
|
|
|||
State
|
|
(2
|
)
|
|
25
|
|
|
(33
|
)
|
|||
Foreign
|
|
5
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
|
|
62
|
|
|
(534
|
)
|
|
101
|
|
|||
Total provision for (benefit from) income taxes
|
|
$
|
300
|
|
|
$
|
(258
|
)
|
|
$
|
138
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Provision for federal income tax, at statutory rate
|
|
$
|
280
|
|
|
$
|
378
|
|
|
$
|
195
|
|
State income tax provision, net of federal income tax effect
|
|
28
|
|
|
26
|
|
|
1
|
|
|||
Foreign income tax rate differential
|
|
5
|
|
|
(33
|
)
|
|
(8
|
)
|
|||
Manufacturing deduction
|
|
—
|
|
|
(23
|
)
|
|
(2
|
)
|
|||
Depletion
|
|
(4
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|||
Noncontrolling interests
|
|
(6
|
)
|
|
(9
|
)
|
|
(7
|
)
|
|||
Tax on previously held shares of Axiall Corporation and certain other acquisition related items
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Tax Act related adjustment
|
|
—
|
|
|
(591
|
)
|
|
—
|
|
|||
Changes in state apportionment and other state adjustments
|
|
(6
|
)
|
|
2
|
|
|
(17
|
)
|
|||
Research and development expenditures and adjustments related to prior years' tax returns
|
|
(1
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|||
Other, net
|
|
4
|
|
|
—
|
|
|
(1
|
)
|
|||
|
|
$
|
300
|
|
|
$
|
(258
|
)
|
|
$
|
138
|
|
|
|
2018
|
|
2017
|
||||
Net operating loss carryforward
|
|
$
|
50
|
|
|
$
|
64
|
|
Credit carryforward
|
|
24
|
|
|
26
|
|
||
Accruals
|
|
64
|
|
|
53
|
|
||
Pension
|
|
76
|
|
|
79
|
|
||
Allowance for doubtful accounts
|
|
5
|
|
|
5
|
|
||
Inventories
|
|
13
|
|
|
11
|
|
||
Other
|
|
12
|
|
|
15
|
|
||
Deferred taxes assets—total
|
|
244
|
|
|
253
|
|
||
Property, plant and equipment
|
|
(948
|
)
|
|
(906
|
)
|
||
Intangibles
|
|
(148
|
)
|
|
(154
|
)
|
||
Turnaround costs
|
|
(20
|
)
|
|
(8
|
)
|
||
Basis difference—consolidated partnerships
|
|
(202
|
)
|
|
(209
|
)
|
||
Other
|
|
(27
|
)
|
|
(18
|
)
|
||
Deferred tax liabilities—total
|
|
(1,345
|
)
|
|
(1,295
|
)
|
||
Valuation allowance
|
|
(47
|
)
|
|
(56
|
)
|
||
Total net deferred tax liabilities
|
|
$
|
(1,148
|
)
|
|
$
|
(1,098
|
)
|
|
|
|
|
|
||||
Balance sheet classifications
|
|
|
|
|
||||
Noncurrent deferred tax asset
|
|
$
|
11
|
|
|
$
|
13
|
|
Noncurrent deferred tax liability
|
|
(1,159
|
)
|
|
(1,111
|
)
|
||
Total net deferred tax liabilities
|
|
$
|
(1,148
|
)
|
|
$
|
(1,098
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
996
|
|
|
$
|
1,304
|
|
|
$
|
399
|
|
Less:
|
|
|
|
|
|
|
||||||
Net income attributable to participating securities
|
|
(5
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|||
Net income attributable to common shareholders
|
|
$
|
991
|
|
|
$
|
1,297
|
|
|
$
|
397
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted average common shares—basic
|
|
129,401,823
|
|
|
129,087,043
|
|
|
129,367,712
|
|
|||
Plus incremental shares from:
|
|
|
|
|
|
|
||||||
Assumed exercise of options
|
|
583,930
|
|
|
452,970
|
|
|
607,110
|
|
|||
Weighted average common shares—diluted
|
|
129,985,753
|
|
|
129,540,013
|
|
|
129,974,822
|
|
|||
|
|
|
|
|
|
|
||||||
Earnings per common share attributable to Westlake Chemical Corporation:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
7.66
|
|
|
$
|
10.05
|
|
|
$
|
3.07
|
|
Diluted
|
|
$
|
7.62
|
|
|
$
|
10.00
|
|
|
$
|
3.06
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Dividends per common share
|
|
$
|
0.9200
|
|
|
$
|
0.8012
|
|
|
$
|
0.7442
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid for:
|
|
|
|
|
|
|
||||||
Interest paid, net of interest capitalized
|
|
$
|
140
|
|
|
$
|
154
|
|
|
$
|
46
|
|
Income taxes paid
|
|
376
|
|
|
84
|
|
|
3
|
|
|
|
Marginal Percentage Interest in Distributions
|
||||
Total Quarterly Distribution Per Unit
|
|
Unitholders
|
|
IDR Holders
|
||
Above $1.2938 up to $1.4063
|
|
85.0
|
%
|
|
15.0
|
%
|
Above $1.4063 up to $1.6875
|
|
75.0
|
%
|
|
25.0
|
%
|
Above $1.6875
|
|
50.0
|
%
|
|
50.0
|
%
|
|
|
Marginal Percentage Interest in Distributions
|
||||
Total Quarterly Distribution Per Unit
|
|
Unitholders
|
|
IDR Holders
|
||
Above $0.3163 up to $0.3438
|
|
85.0
|
%
|
|
15.0
|
%
|
Above $0.3438 up to $0.4125
|
|
75.0
|
%
|
|
25.0
|
%
|
Above $0.4125
|
|
50.0
|
%
|
|
50.0
|
%
|
|
|
Operating
Leases
|
|
Capital
Leases
|
||||
2019
|
|
$
|
94
|
|
|
$
|
3
|
|
2020
|
|
89
|
|
|
3
|
|
||
2021
|
|
70
|
|
|
2
|
|
||
2022
|
|
56
|
|
|
2
|
|
||
2023
|
|
42
|
|
|
2
|
|
||
Thereafter
|
|
152
|
|
|
7
|
|
||
Total minimum lease payments
|
|
$
|
503
|
|
|
$
|
19
|
|
Less: Imputed interest costs
|
|
|
|
(10
|
)
|
|||
Present value of net minimum lease payments
|
|
|
|
$
|
9
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net external sales
|
|
|
|
|
|
|
||||||
Olefins
|
|
|
|
|
|
|
||||||
Polyethylene
|
|
$
|
1,519
|
|
|
$
|
1,518
|
|
|
$
|
1,463
|
|
Styrene, feedstock and other
|
|
500
|
|
|
533
|
|
|
431
|
|
|||
Total olefins
|
|
2,019
|
|
|
2,051
|
|
|
1,894
|
|
|||
Vinyls
|
|
|
|
|
|
|
||||||
PVC, caustic soda and other
|
|
5,359
|
|
|
4,769
|
|
|
2,493
|
|
|||
Building products
|
|
1,257
|
|
|
1,221
|
|
|
689
|
|
|||
Total vinyls
|
|
6,616
|
|
|
5,990
|
|
|
3,182
|
|
|||
|
|
$
|
8,635
|
|
|
$
|
8,041
|
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
||||||
Intersegment sales
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
500
|
|
|
$
|
393
|
|
|
$
|
165
|
|
Vinyls
|
|
2
|
|
|
1
|
|
|
26
|
|
|||
|
|
$
|
502
|
|
|
$
|
394
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
||||||
Income (loss) from operations
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
573
|
|
|
$
|
655
|
|
|
$
|
558
|
|
Vinyls
|
|
913
|
|
|
639
|
|
|
176
|
|
|||
Corporate and other
|
|
(78
|
)
|
|
(69
|
)
|
|
(151
|
)
|
|||
|
|
$
|
1,408
|
|
|
$
|
1,225
|
|
|
$
|
583
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
138
|
|
|
$
|
145
|
|
|
$
|
136
|
|
Vinyls
|
|
491
|
|
|
449
|
|
|
238
|
|
|||
Corporate and other
|
|
12
|
|
|
7
|
|
|
4
|
|
|||
|
|
$
|
641
|
|
|
$
|
601
|
|
|
$
|
378
|
|
|
|
|
|
|
|
|
||||||
Other income, net
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
5
|
|
Vinyls
|
|
35
|
|
|
7
|
|
|
1
|
|
|||
Corporate and other
|
|
13
|
|
|
5
|
|
|
48
|
|
|||
|
|
$
|
52
|
|
|
$
|
15
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
128
|
|
|
$
|
63
|
|
|
$
|
175
|
|
Vinyls
|
|
212
|
|
|
(302
|
)
|
|
25
|
|
|||
Corporate and other
|
|
(40
|
)
|
|
(19
|
)
|
|
(62
|
)
|
|||
|
|
$
|
300
|
|
|
$
|
(258
|
)
|
|
$
|
138
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
|
|
|
|
|
||||||
Olefins
|
|
$
|
110
|
|
|
$
|
97
|
|
|
$
|
324
|
|
Vinyls
|
|
585
|
|
|
459
|
|
|
302
|
|
|||
Corporate and other
|
|
7
|
|
|
21
|
|
|
3
|
|
|||
|
|
$
|
702
|
|
|
$
|
577
|
|
|
$
|
629
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income from operations for reportable segments
|
|
$
|
1,408
|
|
|
$
|
1,225
|
|
|
$
|
583
|
|
Interest expense
|
|
(126
|
)
|
|
(159
|
)
|
|
(79
|
)
|
|||
Other income, net
|
|
52
|
|
|
15
|
|
|
54
|
|
|||
Income before income taxes
|
|
$
|
1,334
|
|
|
$
|
1,081
|
|
|
$
|
558
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Total assets
|
|
|
|
|
||||
Olefins
|
|
$
|
2,024
|
|
|
$
|
2,006
|
|
Vinyls
|
|
8,879
|
|
|
8,853
|
|
||
Corporate and other
|
|
699
|
|
|
1,217
|
|
||
|
|
$
|
11,602
|
|
|
$
|
12,076
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales to external customers
(1)
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
6,114
|
|
|
$
|
5,739
|
|
|
$
|
3,526
|
|
Foreign
|
|
|
|
|
|
|
||||||
Canada
|
|
649
|
|
|
653
|
|
|
317
|
|
|||
Germany
|
|
500
|
|
|
432
|
|
|
402
|
|
|||
China
|
|
155
|
|
|
104
|
|
|
87
|
|
|||
Italy
|
|
105
|
|
|
96
|
|
|
84
|
|
|||
Taiwan
|
|
102
|
|
|
96
|
|
|
25
|
|
|||
Other
|
|
1,010
|
|
|
921
|
|
|
635
|
|
|||
|
|
$
|
8,635
|
|
|
$
|
8,041
|
|
|
$
|
5,076
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Long-lived assets
|
|
|
|
|
||||
United States
|
|
$
|
5,829
|
|
|
$
|
5,668
|
|
Foreign
|
|
|
|
|
||||
Germany
|
|
528
|
|
|
504
|
|
||
Other
|
|
238
|
|
|
240
|
|
||
|
|
$
|
6,595
|
|
|
$
|
6,412
|
|
(1)
|
Net sales are attributed to countries based on location of customer.
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2018 |
|
June 30,
2018 |
|
September 30,
2018 |
|
December 31,
2018 |
||||||||
Net sales
|
|
$
|
2,150
|
|
|
$
|
2,235
|
|
|
$
|
2,255
|
|
|
$
|
1,995
|
|
Gross profit
|
|
542
|
|
|
552
|
|
|
539
|
|
|
354
|
|
||||
Income from operations
|
|
401
|
|
|
404
|
|
|
396
|
|
|
207
|
|
||||
Net income
|
|
297
|
|
|
288
|
|
|
318
|
|
|
131
|
|
||||
Net income attributable to Westlake Chemical Corporation
|
|
287
|
|
|
278
|
|
|
308
|
|
|
123
|
|
||||
Earnings per common share attributable to Westlake Chemical Corporation:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
2.21
|
|
|
$
|
2.13
|
|
|
$
|
2.36
|
|
|
$
|
0.95
|
|
Diluted
|
|
$
|
2.20
|
|
|
$
|
2.12
|
|
|
$
|
2.35
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2017 |
|
June 30,
2017 |
|
September 30,
2017 |
|
December 31,
2017 |
||||||||
Net sales
|
|
$
|
1,943
|
|
|
$
|
1,979
|
|
|
$
|
2,109
|
|
|
$
|
2,010
|
|
Gross profit
(2)
|
|
366
|
|
|
403
|
|
|
496
|
|
|
496
|
|
||||
Income from operations
(2)
|
|
234
|
|
|
264
|
|
|
364
|
|
|
363
|
|
||||
Net income
|
|
145
|
|
|
159
|
|
|
219
|
|
|
816
|
|
||||
Net income attributable to Westlake Chemical Corporation
|
|
138
|
|
|
153
|
|
|
211
|
|
|
802
|
|
||||
Earnings per common share attributable to Westlake Chemical Corporation:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.07
|
|
|
$
|
1.18
|
|
|
$
|
1.62
|
|
|
$
|
6.18
|
|
Diluted
|
|
$
|
1.06
|
|
|
$
|
1.17
|
|
|
$
|
1.61
|
|
|
$
|
6.15
|
|
(1)
|
Basic and diluted earnings per common share ("EPS") for each quarter is computed using the weighted average shares outstanding during that quarter, while EPS for the year is computed using the weighted average shares outstanding for the year. As a result, the sum of the EPS for each of the four quarters may not equal the EPS for the year.
|
(2)
|
Immaterial reclassifications were made from cost of sales to other income, net, retrospectively, as a result of the adoption of accounting standard update ("ASU") No. 2017-07 effective January 1, 2018. See Note 1 to the consolidated financial statements.
|
Name
|
|
Title
|
|
Long-Term Stock Performance Awards
(1)
|
||||||||||
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
||||||
Albert Chao
|
|
President and Chief Executive Officer
|
|
$
|
367,400
|
|
|
$
|
1,469,600
|
|
|
$
|
2,939,200
|
|
James Chao
|
|
Chairman
|
|
293,920
|
|
|
1,175,680
|
|
|
2,351,360
|
|
|||
M. Steven Bender
|
|
Executive Vice President and Chief Financial
Officer
|
|
95,190
|
|
|
380,760
|
|
|
761,520
|
|
|||
Robert F. Buesinger
|
|
Executive Vice President, Vinyls Products
|
|
77,446
|
|
|
309,785
|
|
|
619,570
|
|
|||
L. Benjamin
Ederington
|
|
Senior Vice President, General Counsel, Chief
Administrative Officer and Secretary
|
|
75,985
|
|
|
303,940
|
|
|
607,880
|
|
(1)
|
The PSUs are subject to a three-year performance period beginning on January 1, 2019 and ending on December 31, 2021. The final number of Performance Stock Units earned with respect to the award shall be calculated based on the Company's achievement of certain performance conditions (the "Performance Conditions"). The Performance Conditions for the 2019-2021 performance cycle shall be based on the greater of the average annual economic-value-added results for the Company (equal to net operating profit after tax less a capital charge based upon the weighted average cost of capital) and relative total shareholder return as compared to a peer group of companies. The PSUs shall vest on the date that the administrator of the 2013 Plan determines to what extent the Performance Conditions were satisfied. Fractional shares will be rounded for purposes of vesting in accordance with 2013 Plan policy.
|
(a)(1)
|
The financial statements listed in the Index to Consolidated Financial Statements in Item 8 of this Form 10-K are filed as part of this Form 10-K.
|
|
|
(a)(2)
|
All schedules are omitted because the information is not applicable, not required, or has been furnished in the Consolidated Financial Statements or Notes thereto in Item 8 of this Form 10-K.
|
|
|
(a)(3)
|
Exhibits
|
Exhibit No.
|
|
Exhibit Index
|
|
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
Exhibit No.
|
|
Exhibit Index
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
|
|
Westlake and its subsidiaries are party to other long-term debt instruments not filed herewith under which the total amount of securities authorized does not exceed 10% of the total assets of Westlake and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Westlake agrees to furnish a copy of such instruments to the SEC upon request.
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
Exhibit No.
|
|
Exhibit Index
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14+
|
|
|
|
|
|
10.15+
|
|
|
|
|
|
10.16+
|
|
|
|
|
|
10.17+
|
|
|
|
|
|
10.18+
|
|
|
|
|
|
10.19+
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22+
|
|
|
|
|
|
Exhibit No.
|
|
Exhibit Index
|
|
|
|
10.23+
|
|
|
|
|
|
10.24+
|
|
|
|
|
|
10.25†+
|
|
|
|
|
|
21†
|
|
|
|
|
|
23.1†
|
|
|
|
|
|
31.1†
|
|
|
|
|
|
31.2†
|
|
|
|
|
|
32.1††
|
|
|
|
|
|
101.INS†
|
|
XBRL Instance Document.
|
|
|
|
101.SCH†
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL†
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF†
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB†
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE†
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
†
|
Filed herewith.
|
††
|
Furnished herewith.
|
+
|
Management contract, compensatory plan or arrangement.
|
|
|
|
WESTLAKE CHEMICAL CORPORATION
|
|
|
|
|
Date:
|
February 20, 2019
|
|
/
S
/ A
LBERT
C
HAO
|
|
|
|
Albert Chao, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/S/
A
LBERT
C
HAO
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
February 20, 2019
|
Albert Chao
|
|
|||
|
|
|
||
/S/
M
.
S
TEVEN
B
ENDER
|
|
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
|
|
February 20, 2019
|
M. Steven Bender
|
|
|||
|
|
|
||
/S/
G
EORGE
J
.
M
ANGIERI
|
|
Senior Vice President and Chief Accounting
Officer (Principal Accounting Officer)
|
|
February 20, 2019
|
George J. Mangieri
|
|
|||
|
|
|
||
/S/
J
AMES
C
HAO
|
|
Chairman of the Board of Directors
|
|
February 20, 2019
|
James Chao
|
|
|||
|
|
|
||
/S/
R
OBERT
T
.
B
LAKELY
|
|
Director
|
|
February 20, 2019
|
Robert T. Blakely
|
|
|||
|
|
|
||
/S/
A
LBERT
C
HAO
|
|
Director
|
|
February 20, 2019
|
Albert Chao
|
|
|||
|
|
|
|
|
/S/
D
AVID
C
HAO
|
|
Director
|
|
February 20, 2019
|
David Chao
|
|
|||
|
|
|
||
/S/
J
OHN
C
HAO
|
|
Director
|
|
February 20, 2019
|
John Chao
|
|
|||
|
|
|
|
|
/S/
M
ICHAEL
J
.
G
RAFF
|
|
Director
|
|
February 20, 2019
|
Michael J. Graff
|
|
|||
|
|
|
||
/S/
M
ARIUS
H
AAS
|
|
Director
|
|
February 20, 2019
|
Marius Haas
|
|
|||
|
|
|
|
|
/S/
D
OROTHY
C
.
J
ENKINS
|
|
Director
|
|
February 20, 2019
|
Dorothy C. Jenkins
|
|
|||
|
|
|
||
/S/
M
AX
L.
L
UKENS
|
|
Director
|
|
February 20, 2019
|
Max L. Lukens
|
|
|||
|
|
|
||
/S/
M
ARK
A
.
M
CCOLLUM
|
|
Director
|
|
February 20, 2019
|
Mark A. McCollum
|
|
|||
|
|
|
|
|
/S/
R
.
B
RUCE
N
ORTHCUTT
|
|
Director
|
|
February 20, 2019
|
R. Bruce Northcutt
|
|
|||
|
|
|
|
|
/S/
H
.
J
OHN
R
ILEY, JR.
|
|
Director
|
|
February 20, 2019
|
H. John Riley, Jr.
|
|
|||
|
|
|
|
|
/S/
J
EFFREY
S
HEETS
|
|
Director
|
|
February 20, 2019
|
Jeffrey Sheets
|
|
1.
|
Relationship to Plan
. This Award is subject to all of the terms, conditions and provisions of the Westlake Chemical Corporation 2013 Omnibus Incentive Plan (the “Plan”) and administrative interpretations thereunder, if any, which have been adopted by the Administrator and are in effect on the date hereof. Except as defined herein, capitalized terms shall have the same meanings ascribed to them under the Plan.
|
2.
|
Vesting Schedule
.
|
(a)
|
the Company or any of its Subsidiaries from the Grant Date through the date this Award vests in order for the Award to vest. During the period of time between the Grant Date and the earlier of the date the Performance Stock Units vest or are forfeited, the Performance Stock Units will be evidenced by a book entry account in the Company’s records. Fractional shares will be rounded for purposes of vesting in accordance with Plan policy.
|
(b)
|
All Performance Stock Units subject to this Award shall vest at the target level, irrespective of the limitations set forth in subparagraph(a) above, in the event of your termination of employment with the Company or any of its Subsidiaries due to death. Performance Stock Units vesting pursuant to this subparagraph (b) shall be paid to your beneficiary within sixty (60) days following your death.
|
(c)
|
Irrespective of the limitations set forth in subparagraph (a) above, in the event of your termination of employment with the Company or any of its Subsidiaries due to Normal Retirement, you will remain eligible to earn a number of Performance Stock Units as determined by the Administrator based on the Performance Condition, with such amount multiplied by a fraction, the numerator of which is the number of days of employment with the Company or any of its Subsidiaries you completed during the Performance Cycle and prior to your Normal Retirement, and the denominator of which is the total number of days in the Performance Cycle. For purposes of this Award, “Normal Retirement” shall mean your termination from employment with the Company and its Subsidiaries for any reason after you have (a) attained at least 65 years of age, and (b) been employed by the Company or a Subsidiary for a continuous period of 10 years or more ending on the date of your termination. To the extent earned pursuant to this subparagraph (c), the earned Performance Stock Units shall be paid to you on March 15
th
of the year immediately following the end of the Performance Cycle.
|
3.
|
Forfeiture of Award
. If your employment with the Company and all of its Subsidiaries terminates other than by reason of death or Normal Retirement prior to the end of the Performance Cycle, all Performance Stock Units shall be forfeited as of the date of your termination.
|
4.
|
Distribution Following Performance Cycle
. Subject to the other provisions of this Award and the Plan, the Performance Stock Units shall vest to the extent determined as set forth in Paragraph 2 hereof, and shares of Common Stock shall be distributed to you (or your beneficiary) on March 15th of the year immediately following the end of the Performance Cycle. Distribution of Common Stock will be subject to withholding taxes as described in Paragraph 5, and may be in a form selected by the Company, in its discretion, including deposit into a custodial account or delivery of a stock certificate.
|
5.
|
Withholding
. Upon the settlement of the Performance Stock Units, you are authorized to surrender to the Company, or have withheld by the Company from the Common Stock that
|
6.
|
Assignment of Award.
Your rights under the Plan and this Award are personal; no assignment or transfer of your rights under and interest in this Award may be made by you other than by will or by the laws of descent and distribution.
|
7.
|
Dividend Equivalents.
If all or a portion of the Performance Stock Units are determined to be earned, you are entitled to receive Dividend Equivalents with respect to the number of earned Performance Stock Units for the period from the Grant Date until the date that Common Stock is delivered to you in satisfaction of this Award. Any such Dividend Equivalents will be paid in cash within sixty (60) days of the date that you receive Common Stock in settlement of the earned Performance Stock Units.
|
8.
|
Voting Rights.
You do not have voting rights with respect to the Performance Stock Units. You will be entitled to vote shares of Common Stock you retain that are issued to you in settlement of this Award.
|
9.
|
No Employment Guaranteed
. No provision of this Performance Stock Unit Award shall give you any right to continued employment with the Company or any Subsidiary.
|
10.
|
Requirements of Law and Stock Exchanges
. Your rights to the Performance Stock Units and the issuance and delivery of the Common Stock to which such Performance Stock Units relate are subject to compliance with all applicable requirements of law. In addition, the Company shall not be obligated to deliver any shares of Common Stock if counsel to the Company determines that such delivery would violate any applicable law or any rule or regulations of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted.
|
11.
|
Governing Law
. This Performance Stock Unit Award shall be governed by, construed, and enforced in accordance with the laws of the State of Texas.
|
12.
|
Clawback or Recoupment
. This Performance Stock Unit Award, any shares of Common Stock distributed hereunder and any profits realized on the sale of such shares are subject to clawback or recoupment as required by applicable law or Company policy.
|
13.
|
Section 409A of the Code
.
This Award is intended to be exempt from or to comply with the provisions of Section 409A of the Code (“Section 409A”) and the provisions of this Award shall be administered, interpreted and construed accordingly. Specifically, (i) any payments under Paragraph 2(b) of this Award are intended to be exempt from Section 409A by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4); (ii) if you are not Normal Retirement Eligible, the distribution of the Common Stock upon the time of payment specified in Paragraph 2(c) and Paragraph 4 is exempt from Section 409A as a short-term deferral in compliance with Treasury Regulation
|
1.
|
Definition of Performance Condition
. The Performance Condition for the 2019-2021 performance cycle shall be based on the greater of the average annual economic value added (“EVA”) results for Westlake Chemical Corporation and relative total shareholder return (“TSR”) as compared to a peer group of companies. EVA is equal to net operating profit after tax (“NOPAT”) less a capital charge based upon the weighted average cost of capital. TSR means stock price growth for a defined measurement period, with any dividends paid.
|
2.
|
Calculation of Final Award
. The amount of the Award that is earned shall be determined as set forth on the following chart:
|
1.
|
Adjustments
. If a change in control of the Company occurs, and as a result the Administrator determines that the relative TSR calculation would no longer be fairly representative of the Company's performance, the Administrator may make such adjustments to the Performance Condition as it deems necessary in the calculation of the Company’s TSR.
|
Name of Subsidiary
|
|
State or Other Jurisdiction
of Incorporation or
Organization
|
|
Names Doing Business
|
|
|
|
|
|
Axiall Canada, Inc.
|
|
Canada
|
|
Axiall Canada, Inc.
|
|
|
|
|
|
Axiall Corporation
|
|
Delaware
|
|
Axiall Corporation
|
|
|
|
|
|
Axiall Holdco, Inc.
|
|
Delaware
|
|
Axiall Holdco, Inc.
|
|
|
|
|
|
Axiall Limited Partnership
|
|
Ontario
|
|
Axiall Limited Partnership
|
|
|
|
|
|
Axiall Noteco, Inc.
|
|
Delaware
|
|
Axiall Noteco, Inc.
|
|
|
|
|
|
Axiall Taiwan Ltd.
|
|
Taiwan
|
|
Axiall Taiwan Ltd.
|
|
|
|
|
|
Axiall, LLC
|
|
Delaware
|
|
Axiall, LLC
|
|
|
|
|
|
Eagle Natrium LLC
|
|
Delaware
|
|
Eagle Natrium LLC
|
|
|
|
|
|
Eagle Spinco Inc.
|
|
Delaware
|
|
Eagle Spinco Inc.
|
|
|
|
|
|
Eagle US 2 LLC
|
|
Delaware
|
|
Eagle US 2 LLC
|
|
|
|
|
|
Lagoon LLC
|
|
Delaware
|
|
Lagoon LLC
|
|
|
|
|
|
North American Pipe Corporation
|
|
Delaware
|
|
North American Pipe Corporation
and NAPCO
|
|
|
|
|
|
North American Specialty Products LLC
|
|
Delaware
|
|
North American Specialty Products LLC
|
|
|
|
|
|
Plastic Trends, Inc.
|
|
Michigan
|
|
Plastic Trends, Inc.
|
|
|
|
|
|
Rome Acquisition Holding Corp.
|
|
Nova Scotia
|
|
Rome Acquisition Holding Corp.
|
|
|
|
|
|
Rome Delaware Corp.
|
|
Delaware
|
|
Rome Delaware Corp.
|
|
|
|
|
|
Royal Building Products (USA) Inc.
|
|
Delaware
|
|
Royal Building Products (USA) Inc.
|
|
|
|
|
|
Royal Group, Inc.
|
|
Canada
|
|
Royal Group, Inc.
|
|
|
|
|
|
Taiwan Chlorine Industries Ltd.
|
|
Taiwan
|
|
Taiwan Chlorine Industries Ltd.
|
|
|
|
|
|
Vinnolit Benelux-France B.V.B.A.
|
|
Dendermonde, Belgium
|
|
Vinnolit Benelux-France B.V.B.A.
|
|
|
|
|
|
Vinnolit GmbH & Co. KG
|
|
Ismaning, Germany
|
|
Vinnolit GmbH & Co. KG
|
|
|
|
|
|
Vinnolit Hillhouse Ltd.
|
|
Lancashire, England
|
|
Vinnolit Hillhouse Ltd.
|
|
|
|
|
|
Vinnolit Italia S.r.L.
|
|
Milan, Italy
|
|
Vinnolit Italia S.r.L.
|
|
|
|
|
|
Vinnolit Limited
|
|
United Kingdom
|
|
Vinnolit Limited
|
|
|
|
|
|
Vinnolit Monomer Geschäftsführungs GmbH
|
|
Ismaning, Germany
|
|
Vinnolit Monomer Geschäftsführungs GmbH
|
|
|
|
|
|
Vinnolit Schkopau GmbH
|
|
Ismaning, Germany
|
|
Vinnolit Schkopau GmbH
|
|
|
|
|
|
Westech Building Products, Inc.
|
|
Delaware
|
|
Westech Building Products, Inc.
|
|
|
|
|
|
Westlake Chemical Finance Corporation
|
|
Delaware
|
|
Westlake Chemical Finance Corporation
|
|
|
|
|
|
Westlake Chemical Investments, Inc.
|
|
Delaware
|
|
Westlake Chemical Investments, Inc.
|
|
|
|
|
|
Westlake Chemical OpCo LP
|
|
Delaware
|
|
Westlake Chemical OpCo LP
|
|
|
|
|
|
Westlake Chemical Partners GP LLC
|
|
Delaware
|
|
Westlake Chemical Partners GP LLC
|
|
|
|
|
|
Westlake Chemical Partners LP
|
|
Delaware
|
|
Westlake Chemical Partners LP
|
|
|
|
|
|
Westlake Development Corporation
|
|
Delaware
|
|
Westlake Development Corporation
|
|
|
|
|
|
Westlake International Holdings Cooperatief U.A.
|
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The Netherlands
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Westlake International Holdings Cooperatief U.A.
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Westlake International Holdings C.V.
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The Netherlands
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Westlake International Holdings C.V.
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Westlake International Holdings II C.V.
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The Netherlands
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Westlake International Holdings II C.V.
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Westlake Longview Corporation
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Delaware
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Westlake Longview Corporation
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Westlake Management Services, Inc.
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Delaware
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Westlake Management Services, Inc.
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Westlake Olefins LLC
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Delaware
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Westlake Olefins LLC
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Westlake Petrochemicals LLC
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Delaware
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Westlake Petrochemicals LLC,
Westlake Petrochemicals LP and WPE
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Westlake Polymers LLC
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Delaware
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Westlake Polymers LLC,
Westlake Polymers LP and WPE
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Westlake Styrene LLC
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Delaware
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Westlake Styrene LLC
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Westlake Vinyls Company LP
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Delaware
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Westlake Vinyls Company LP
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Westlake Vinyl Corporation
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Delaware
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Westlake Vinyl Corporation
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Westlake Vinyls, Inc.
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Delaware
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Westlake Vinyls, Inc.
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WPT LLC
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Delaware
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WPT LLC and WPT LP
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*
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Westlake has elected to omit the names of certain subsidiaries. None of the omitted subsidiaries, considered either alone or together with the other omitted subsidiaries of its immediate parent, constitutes a “Significant Subsidiary” as set forth in Section 601(b)(21) of Regulation S-K.
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1.
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I have reviewed this annual report on Form 10-K of Westlake Chemical Corporation;
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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(s) 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(s) 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 20, 2019
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/s/ A
LBERT
C
HAO
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Albert Chao
President and Chief Executive Officer
(Principal Executive Officer) |
1.
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I have reviewed this annual report on Form 10-K of Westlake Chemical Corporation;
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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(s) 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)
|
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(s) 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)
|
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 20, 2019
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/s/ M. S
TEVEN
B
ENDER
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M. Steven Bender
Executive Vice President and Chief Financial Officer
(Principal 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; 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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Date:
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February 20, 2019
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/s/ A
LBERT
C
HAO
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Albert Chao
President and Chief Executive Officer
(Principal Executive Officer) |
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Date:
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February 20, 2019
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/s/ M. S
TEVEN
B
ENDER
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M. Steven Bender
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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