x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2015 | |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to | |
Delaware | 76-0346924 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Item | Page |
March 31, 2015 | December 31, 2014 | |||||||
(in thousands of dollars, except par values and share amounts) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 945,649 | $ | 880,601 | ||||
Accounts receivable, net | 527,127 | 560,666 | ||||||
Inventories | 480,380 | 525,776 | ||||||
Prepaid expenses and other current assets | 18,018 | 11,807 | ||||||
Deferred income taxes | 30,988 | 32,437 | ||||||
Total current assets | 2,002,162 | 2,011,287 | ||||||
Property, plant and equipment, net | 2,751,486 | 2,757,557 | ||||||
Equity investments | 64,721 | 61,305 | ||||||
Other assets, net | ||||||||
Intangible assets, net | 207,254 | 218,431 | ||||||
Deferred charges and other assets, net | 154,162 | 165,410 | ||||||
Total other assets, net | 361,416 | 383,841 | ||||||
Total assets | $ | 5,179,785 | $ | 5,213,990 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 247,493 | $ | 261,062 | ||||
Accrued liabilities | 205,714 | 276,118 | ||||||
Total current liabilities | 453,207 | 537,180 | ||||||
Long-term debt | 764,027 | 763,997 | ||||||
Deferred income taxes | 534,679 | 536,066 | ||||||
Other liabilities | 157,130 | 174,859 | ||||||
Total liabilities | 1,909,043 | 2,012,102 | ||||||
Commitments and contingencies (Notes 7 and 16) | ||||||||
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; 134,679,064 and 134,679,064 shares issued at March 31, 2015 and December 31, 2014, respectively | 1,347 | 1,347 | ||||||
Common stock, held in treasury, at cost; 1,817,122 and 1,787,546 shares at March 31, 2015 and December 31, 2014, respectively | (98,275 | ) | (96,372 | ) | ||||
Additional paid-in capital | 534,542 | 530,441 | ||||||
Retained earnings | 2,679,906 | 2,555,528 | ||||||
Accumulated other comprehensive loss | (137,662 | ) | (79,433 | ) | ||||
Total Westlake Chemical Corporation stockholders' equity | 2,979,858 | 2,911,511 | ||||||
Noncontrolling interests | 290,884 | 290,377 | ||||||
Total equity | 3,270,742 | 3,201,888 | ||||||
Total liabilities and equity | $ | 5,179,785 | $ | 5,213,990 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(in thousands of dollars, except per share data and share amounts) | ||||||||
Net sales | $ | 1,103,531 | $ | 1,027,676 | ||||
Cost of sales | 818,985 | 740,666 | ||||||
Gross profit | 284,546 | 287,010 | ||||||
Selling, general and administrative expenses | 55,266 | 38,955 | ||||||
Income from operations | 229,280 | 248,055 | ||||||
Other income (expense) | ||||||||
Interest expense | (9,591 | ) | (9,157 | ) | ||||
Other income, net | 9,096 | 2,509 | ||||||
Income before income taxes | 228,785 | 241,407 | ||||||
Provision for income taxes | 78,378 | 83,375 | ||||||
Net income | 150,407 | 158,032 | ||||||
Net income attributable to noncontrolling interests | 4,065 | — | ||||||
Net income attributable to Westlake Chemical Corporation | $ | 146,342 | $ | 158,032 | ||||
Earnings per common share attributable to Westlake Chemical Corporation: | ||||||||
Basic | $ | 1.10 | $ | 1.18 | ||||
Diluted | $ | 1.10 | $ | 1.18 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 132,714,566 | 133,072,254 | ||||||
Diluted | 133,205,306 | 133,612,924 | ||||||
Dividends per common share | $ | 0.1650 | $ | 0.1260 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(in thousands of dollars) | ||||||||
Net income | $ | 150,407 | $ | 158,032 | ||||
Other comprehensive income (loss), net of income taxes | ||||||||
Pension and other post-retirement benefits liability | ||||||||
Amortization of benefits liability | 652 | 219 | ||||||
Income tax provision on pension and other post-retirement benefits liability | (225 | ) | (84 | ) | ||||
Foreign currency translation adjustments | (59,698 | ) | (898 | ) | ||||
Available-for-sale investments | ||||||||
Unrealized holding gains on investments | 1,626 | 2,467 | ||||||
Reclassification of net realized loss to net income | — | 25 | ||||||
Income tax provision on available-for-sale investments | (584 | ) | (895 | ) | ||||
Other comprehensive (loss) income | (58,229 | ) | 834 | |||||
Comprehensive income | 92,178 | 158,866 | ||||||
Comprehensive income attributable to noncontrolling interests, net of tax | 4,065 | — | ||||||
Comprehensive income attributable to Westlake Chemical Corporation | $ | 88,113 | $ | 158,866 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(in thousands of dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 150,407 | $ | 158,032 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 58,641 | 45,972 | ||||||
Recovery of doubtful accounts | (9 | ) | (144 | ) | ||||
Amortization of debt issuance costs | 501 | 365 | ||||||
Stock-based compensation expense | 2,340 | 2,222 | ||||||
Loss from disposition of fixed assets | 133 | 855 | ||||||
Deferred income taxes | 5,331 | 8,275 | ||||||
Windfall tax benefits from share-based payment arrangements | (1,701 | ) | (3,512 | ) | ||||
Income from equity method investments, net of dividends | (3,416 | ) | (685 | ) | ||||
Other (losses) gains, net | (554 | ) | 444 | |||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | 18,517 | 5,332 | ||||||
Inventories | 35,979 | 32,870 | ||||||
Prepaid expenses and other current assets | (6,202 | ) | (1,478 | ) | ||||
Accounts payable | (3,625 | ) | (29,706 | ) | ||||
Accrued liabilities | (59,585 | ) | (4,952 | ) | ||||
Other, net | (6,201 | ) | (1,385 | ) | ||||
Net cash provided by operating activities | 190,556 | 212,505 | ||||||
Cash flows from investing activities | ||||||||
Additions to property, plant and equipment | (95,822 | ) | (110,741 | ) | ||||
Proceeds from disposition of assets | — | 12 | ||||||
Proceeds from sales and maturities of securities | — | 30,119 | ||||||
Purchase of securities | — | (49,025 | ) | |||||
Settlements of derivative instruments | (833 | ) | (409 | ) | ||||
Net cash used for investing activities | (96,655 | ) | (130,044 | ) | ||||
Cash flows from financing activities | ||||||||
Dividends paid | (21,964 | ) | (16,789 | ) | ||||
Distributions to noncontrolling interests | (3,558 | ) | — | |||||
Proceeds from exercise of stock options | 157 | 2,158 | ||||||
Repurchase of common stock for treasury | (2,000 | ) | — | |||||
Windfall tax benefits from share-based payment arrangements | 1,701 | 3,512 | ||||||
Net cash used for financing activities | (25,664 | ) | (11,119 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (3,189 | ) | — | |||||
Net increase in cash and cash equivalents | 65,048 | 71,342 | ||||||
Cash and cash equivalents at beginning of period | 880,601 | 461,301 | ||||||
Cash and cash equivalents at end of period | $ | 945,649 | $ | 532,643 | ||||
March 31, 2015 | December 31, 2014 | ||||||
Non-current | $ | 17,033 | $ | 15,414 | |||
Total available-for-sale securities | $ | 17,033 | $ | 15,414 | |||
March 31, 2015 | ||||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Equity securities | $ | 15,043 | $ | 1,990 | $ | — | $ | 17,033 | ||||||||
Total available-for-sale securities | $ | 15,043 | $ | 1,990 | $ | — | $ | 17,033 | ||||||||
December 31, 2014 | ||||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Equity securities | $ | 15,050 | $ | 364 | $ | — | $ | 15,414 | ||||||||
Total available-for-sale securities | $ | 15,050 | $ | 364 | $ | — | $ | 15,414 | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Proceeds from sales and maturities of securities | $ | — | $ | 30,119 | ||||
Gross realized gains | — | 13 | ||||||
Gross realized losses | — | (38 | ) | |||||
March 31, 2015 | December 31, 2014 | |||||||
Trade customers | $ | 500,262 | $ | 525,546 | ||||
Affiliates | 449 | 437 | ||||||
Allowance for doubtful accounts | (13,259 | ) | (13,468 | ) | ||||
487,452 | 512,515 | |||||||
Federal and state taxes | 21,289 | 8,919 | ||||||
Other | 18,386 | 39,232 | ||||||
Accounts receivable, net | $ | 527,127 | $ | 560,666 | ||||
March 31, 2015 | December 31, 2014 | |||||||
Finished products | $ | 278,501 | $ | 300,909 | ||||
Feedstock, additives and chemicals | 135,903 | 158,635 | ||||||
Materials and supplies | 65,976 | 66,232 | ||||||
Inventories | $ | 480,380 | $ | 525,776 | ||||
March 31, 2015 | December 31, 2014 | |||||||
3.60% senior notes due 2022 | $ | 249,138 | $ | 249,108 | ||||
6 ½% senior notes due 2029 | 100,000 | 100,000 | ||||||
6 ¾% senior notes due 2032 | 250,000 | 250,000 | ||||||
6 ½% senior notes due 2035 (the "6 ½% GO Zone Senior Notes Due 2035") | 89,000 | 89,000 | ||||||
6 ½% senior notes due 2035 (the "6 ½% IKE Zone Senior Notes Due 2035") | 65,000 | 65,000 | ||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027 | 10,889 | 10,889 | ||||||
Long-term debt, net | $ | 764,027 | $ | 763,997 | ||||
Common Stock | Common Stock, Held in Treasury | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total | ||||||||||||||||||||||
Balances at December 31, 2014 | $ | 1,347 | $ | (96,372 | ) | $ | 530,441 | $ | 2,555,528 | $ | (79,433 | ) | $ | 290,377 | $ | 3,201,888 | ||||||||||||
Net income | — | — | — | 146,342 | — | 4,065 | 150,407 | |||||||||||||||||||||
Other comprehensive income (loss), net of income taxes: | ||||||||||||||||||||||||||||
Pension and other post- retirement benefits liability | — | — | — | — | 427 | — | 427 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | (59,698 | ) | — | (59,698 | ) | |||||||||||||||||||
Net unrealized holding gains on investments | — | — | — | — | 1,042 | — | 1,042 | |||||||||||||||||||||
Common stock repurchased | — | (2,000 | ) | — | — | — | — | (2,000 | ) | |||||||||||||||||||
Shares issued—stock- based compensation | — | 97 | 60 | — | — | — | 157 | |||||||||||||||||||||
Stock-based compensation, net of tax on stock options exercised | — | — | 4,041 | — | — | — | 4,041 | |||||||||||||||||||||
Dividends paid | — | — | — | (21,964 | ) | — | — | (21,964 | ) | |||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (3,558 | ) | (3,558 | ) | |||||||||||||||||||
Balances at March 31, 2015 | $ | 1,347 | $ | (98,275 | ) | $ | 534,542 | $ | 2,679,906 | $ | (137,662 | ) | $ | 290,884 | $ | 3,270,742 | ||||||||||||
Common Stock | Common Stock, Held in Treasury | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balances at December 31, 2013 | $ | 1,346 | $ | (46,220 | ) | $ | 511,432 | $ | 1,954,661 | $ | (2,616 | ) | $ | 2,418,603 | ||||||||||
Net income | — | — | — | 158,032 | — | 158,032 | ||||||||||||||||||
Other comprehensive income (loss), net of income taxes: | ||||||||||||||||||||||||
Pension and other post-retirement benefits liability | — | — | — | — | 135 | 135 | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | (898 | ) | (898 | ) | ||||||||||||||||
Net unrealized holding gains on investments | — | — | — | — | 1,597 | 1,597 | ||||||||||||||||||
Shares issued—stock-based compensation | 1 | — | 2,157 | — | — | 2,158 | ||||||||||||||||||
Stock-based compensation, net of tax on stock options exercised | — | — | 5,734 | — | — | 5,734 | ||||||||||||||||||
Dividends paid | — | — | — | (16,789 | ) | — | (16,789 | ) | ||||||||||||||||
Balances at March 31, 2014 | $ | 1,347 | $ | (46,220 | ) | $ | 519,323 | $ | 2,095,904 | $ | (1,782 | ) | $ | 2,568,572 | ||||||||||
Benefits Liability, Net of Tax | Cumulative Foreign Currency Exchange | Net Unrealized Holding Gains on Investments, Net of Tax | Total | |||||||||||||
Balances at December 31, 2014 | $ | (23,442 | ) | $ | (56,224 | ) | $ | 233 | $ | (79,433 | ) | |||||
Other comprehensive (loss) income before reclassifications | — | (59,698 | ) | 1,042 | (58,656 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | 427 | — | — | 427 | ||||||||||||
Net other comprehensive income (loss) for the period | 427 | (59,698 | ) | 1,042 | (58,229 | ) | ||||||||||
Balances at March 31, 2015 | $ | (23,015 | ) | $ | (115,922 | ) | $ | 1,275 | $ | (137,662 | ) | |||||
Benefits Liability, Net of Tax | Cumulative Foreign Currency Exchange | Net Unrealized Holding Gains on Investments, Net of Tax | Total | |||||||||||||
Balances at December 31, 2013 | $ | (6,696 | ) | $ | 3,904 | $ | 176 | $ | (2,616 | ) | ||||||
Other comprehensive (loss) income before reclassifications | — | (898 | ) | 1,581 | 683 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 135 | — | 16 | 151 | ||||||||||||
Net other comprehensive income (loss) for the period | 135 | (898 | ) | 1,597 | 834 | |||||||||||
Balances at March 31, 2014 | $ | (6,561 | ) | $ | 3,006 | $ | 1,773 | $ | (1,782 | ) | ||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Location of Reclassification (Income (Expense)) in Consolidated Statements of Operations | Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||||
Amortization of pension and other post-retirement items | ||||||||||
Prior service costs | (1) | $ | — | $ | (87 | ) | ||||
Net loss | (1) | (652 | ) | (132 | ) | |||||
(652 | ) | (219 | ) | |||||||
Provision for income taxes | 225 | 84 | ||||||||
(427 | ) | (135 | ) | |||||||
Net unrealized gains on available-for-sale investments | ||||||||||
Realized loss on available-for-sale investments | Other income, net | — | (25 | ) | ||||||
Provision for income taxes | — | 9 | ||||||||
— | (16 | ) | ||||||||
Total reclassifications for the period | $ | (427 | ) | $ | (151 | ) | ||||
(1) | These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. For additional information, please read Note 10 (Employee Benefits) to the financial statements included in the 2014 Form 10-K. |
Three Months Ended March 31, | ||||||||||||
2015 | 2014 | |||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | ||||||||||
Service cost | $ | 28 | $ | 422 | $ | 84 | ||||||
Interest cost | 544 | 535 | 595 | |||||||||
Expected return on plan assets | (819 | ) | — | (809 | ) | |||||||
Amortization of prior service cost | — | — | 74 | |||||||||
Amortization of net loss | 290 | 266 | 63 | |||||||||
Net periodic benefit cost | $ | 43 | $ | 1,223 | $ | 7 | ||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
U.S. Plans | U.S. Plans | |||||||
Service cost | $ | 6 | $ | 5 | ||||
Interest cost | 149 | 181 | ||||||
Amortization of prior service cost | — | 13 | ||||||
Amortization of net loss | 96 | 69 | ||||||
Net periodic benefit cost | $ | 251 | $ | 268 | ||||
Derivative Assets | ||||||||||
Balance Sheet Location | Fair Value as of | |||||||||
March 31, 2015 | December 31, 2014 | |||||||||
Not designated as hedging instruments | ||||||||||
Commodity forward contracts | Accounts receivable, net | $ | 2,927 | $ | 3,145 | |||||
Commodity forward contracts | Deferred charges and other assets, net | 1,557 | — | |||||||
Total derivative assets | $ | 4,484 | $ | 3,145 | ||||||
Derivative Liabilities | ||||||||||
Balance Sheet Location | Fair Value as of | |||||||||
March 31, 2015 | December 31, 2014 | |||||||||
Not designated as hedging instruments | ||||||||||
Commodity forward contracts | Accrued liabilities | $ | 5,060 | $ | 6,549 | |||||
Commodity forward contracts | Other liabilities | 1,801 | 3,559 | |||||||
Total derivative liabilities | $ | 6,861 | $ | 10,108 | ||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||||
Commodity forward contracts | Gross profit | $ | 4,241 | $ | (611 | ) | ||||
March 31, 2015 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Derivative instruments | ||||||||||||
Risk management assets—Commodity forward contracts | $ | 4,209 | $ | 275 | $ | 4,484 | ||||||
Risk management liabilities—Commodity forward contracts | (17 | ) | (6,844 | ) | (6,861 | ) | ||||||
Marketable securities | ||||||||||||
Available-for-sale securities | 17,033 | — | 17,033 | |||||||||
December 31, 2014 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Derivative instruments | ||||||||||||
Risk management assets—Commodity forward contracts | $ | 3,143 | $ | 2 | $ | 3,145 | ||||||
Risk management liabilities—Commodity forward contracts | — | (10,108 | ) | (10,108 | ) | |||||||
Marketable securities | ||||||||||||
Available-for-sale securities | 15,414 | — | 15,414 | |||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
3.60% senior notes due 2022 | $ | 249,138 | $ | 253,240 | $ | 249,108 | $ | 248,630 | ||||||||
6 ½% senior notes due 2029 | 100,000 | 118,493 | 100,000 | 116,384 | ||||||||||||
6 ¾% senior notes due 2032 | 250,000 | 280,285 | 250,000 | 285,545 | ||||||||||||
6 ½% GO Zone Senior Notes Due 2035 | 89,000 | 105,298 | 89,000 | 106,504 | ||||||||||||
6 ½% IKE Zone Senior Notes Due 2035 | 65,000 | 76,903 | 65,000 | 77,784 | ||||||||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027 | 10,889 | 10,889 | 10,889 | 10,889 | ||||||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net income attributable to Westlake Chemical Corporation | $ | 146,342 | $ | 158,032 | ||||
Less: | ||||||||
Net income attributable to participating securities | (200 | ) | (384 | ) | ||||
Net income attributable to common shareholders | $ | 146,142 | $ | 157,648 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Weighted average common shares—basic | 132,714,566 | 133,072,254 | ||||||
Plus incremental shares from: | ||||||||
Assumed exercise of options | 490,740 | 540,670 | ||||||
Weighted average common shares—diluted | 133,205,306 | 133,612,924 | ||||||
Earnings per common share attributable to Westlake Chemical Corporation : | ||||||||
Basic | $ | 1.10 | $ | 1.18 | ||||
Diluted | $ | 1.10 | $ | 1.18 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net external sales | ||||||||
Olefins | ||||||||
Polyethylene | $ | 409,432 | $ | 487,144 | ||||
Styrene, feedstock and other | 173,645 | 235,654 | ||||||
Total Olefins | 583,077 | 722,798 | ||||||
Vinyls | ||||||||
PVC, caustic soda and other | 416,988 | 190,527 | ||||||
Building products | 103,466 | 114,351 | ||||||
Total Vinyls | 520,454 | 304,878 | ||||||
$ | 1,103,531 | $ | 1,027,676 | |||||
Intersegment sales | ||||||||
Olefins | $ | 23,462 | $ | 56,853 | ||||
Vinyls | 370 | 343 | ||||||
$ | 23,832 | $ | 57,196 | |||||
Income (loss) from operations | ||||||||
Olefins | $ | 191,103 | $ | 272,333 | ||||
Vinyls | 47,086 | (21,114 | ) | |||||
Corporate and other | (8,909 | ) | (3,164 | ) | ||||
$ | 229,280 | $ | 248,055 | |||||
Depreciation and amortization | ||||||||
Olefins | $ | 26,939 | $ | 26,647 | ||||
Vinyls | 31,584 | 19,168 | ||||||
Corporate and other | 118 | 157 | ||||||
$ | 58,641 | $ | 45,972 | |||||
Other income (expense), net | ||||||||
Olefins | $ | 2,552 | $ | 1,454 | ||||
Vinyls | 5,503 | (34 | ) | |||||
Corporate and other | 1,041 | 1,089 | ||||||
$ | 9,096 | $ | 2,509 | |||||
Provision for (benefit from) income taxes | ||||||||
Olefins | $ | 66,457 | $ | 93,550 | ||||
Vinyls | 12,805 | (10,070 | ) | |||||
Corporate and other | (884 | ) | (105 | ) | ||||
$ | 78,378 | $ | 83,375 | |||||
Capital expenditures | ||||||||
Olefins | $ | 55,300 | $ | 29,074 | ||||
Vinyls | 36,855 | 81,120 | ||||||
Corporate and other | 3,667 | 547 | ||||||
$ | 95,822 | $ | 110,741 | |||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Income from operations | $ | 229,280 | $ | 248,055 | ||||
Interest expense | (9,591 | ) | (9,157 | ) | ||||
Other income, net | 9,096 | 2,509 | ||||||
Income before income taxes | $ | 228,785 | $ | 241,407 | ||||
March 31, 2015 | December 31, 2014 | |||||||
Total assets | ||||||||
Olefins | $ | 1,783,845 | $ | 1,785,895 | ||||
Vinyls | 2,510,470 | 2,618,646 | ||||||
Corporate and other | 885,470 | 809,449 | ||||||
$ | 5,179,785 | $ | 5,213,990 | |||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 701,622 | $ | 2,606 | $ | 143,005 | $ | 98,416 | $ | — | $ | 945,649 | ||||||||||||
Accounts receivable, net | 11,605 | 1,497,572 | 54,979 | 128,116 | (1,165,145 | ) | 527,127 | |||||||||||||||||
Inventories | — | 395,664 | 4,564 | 80,152 | — | 480,380 | ||||||||||||||||||
Prepaid expenses and other current assets | 92 | 18,236 | 122 | 2,160 | (2,592 | ) | 18,018 | |||||||||||||||||
Deferred income taxes | 409 | 29,832 | — | 747 | — | 30,988 | ||||||||||||||||||
Total current assets | 713,728 | 1,943,910 | 202,670 | 309,591 | (1,167,737 | ) | 2,002,162 | |||||||||||||||||
Property, plant and equipment, net | — | 1,500,234 | 866,546 | 384,706 | — | 2,751,486 | ||||||||||||||||||
Equity investments | 4,123,427 | 1,232,093 | — | 351,048 | (5,641,847 | ) | 64,721 | |||||||||||||||||
Other assets, net | 31,209 | 415,180 | 53,832 | 124,633 | (263,438 | ) | 361,416 | |||||||||||||||||
Total assets | $ | 4,868,364 | $ | 5,091,417 | $ | 1,123,048 | $ | 1,169,978 | $ | (7,073,022 | ) | $ | 5,179,785 | |||||||||||
Current liabilities | ||||||||||||||||||||||||
Accounts payable | $ | 1,118,864 | $ | 153,645 | $ | 27,395 | $ | 89,383 | $ | (1,141,794 | ) | $ | 247,493 | |||||||||||
Accrued liabilities | 16,504 | 150,074 | 6,104 | 58,975 | (25,943 | ) | 205,714 | |||||||||||||||||
Total current liabilities | 1,135,368 | 303,719 | 33,499 | 148,358 | (1,167,737 | ) | 453,207 | |||||||||||||||||
Long-term debt | 753,138 | 10,889 | 257,829 | — | (257,829 | ) | 764,027 | |||||||||||||||||
Deferred income taxes | — | 503,540 | 1,902 | 34,846 | (5,609 | ) | 534,679 | |||||||||||||||||
Other liabilities | — | 38,625 | — | 118,505 | — | 157,130 | ||||||||||||||||||
Total liabilities | 1,888,506 | 856,773 | 293,230 | 301,709 | (1,431,175 | ) | 1,909,043 | |||||||||||||||||
Total Westlake Chemical Corporation stockholders' equity | 2,979,858 | 4,234,644 | 829,818 | 577,385 | (5,641,847 | ) | 2,979,858 | |||||||||||||||||
Noncontrolling interests | — | — | — | 290,884 | — | 290,884 | ||||||||||||||||||
Total equity | 2,979,858 | 4,234,644 | 829,818 | 868,269 | (5,641,847 | ) | 3,270,742 | |||||||||||||||||
Total liabilities and equity | $ | 4,868,364 | $ | 5,091,417 | $ | 1,123,048 | $ | 1,169,978 | $ | (7,073,022 | ) | $ | 5,179,785 | |||||||||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Balance Sheet | ||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 655,947 | $ | 3,057 | $ | 131,545 | $ | 90,052 | $ | — | $ | 880,601 | ||||||||||||
Accounts receivable, net | 8,451 | 1,454,709 | 56,049 | 135,133 | (1,093,676 | ) | 560,666 | |||||||||||||||||
Inventories | — | 414,975 | 6,634 | 104,167 | — | 525,776 | ||||||||||||||||||
Prepaid expenses and other current assets | 172 | 9,485 | 212 | 1,938 | — | 11,807 | ||||||||||||||||||
Deferred income taxes | 409 | 29,832 | — | 2,196 | — | 32,437 | ||||||||||||||||||
Total current assets | 664,979 | 1,912,058 | 194,440 | 333,486 | (1,093,676 | ) | 2,011,287 | |||||||||||||||||
Property, plant and equipment, net | — | 1,477,515 | 842,057 | 437,985 | — | 2,757,557 | ||||||||||||||||||
Equity investments | 4,033,378 | 1,237,080 | — | 352,550 | (5,561,703 | ) | 61,305 | |||||||||||||||||
Other assets, net | 30,543 | 387,325 | 57,733 | 141,948 | (233,708 | ) | 383,841 | |||||||||||||||||
Total assets | $ | 4,728,900 | $ | 5,013,978 | $ | 1,094,230 | $ | 1,265,969 | $ | (6,889,087 | ) | $ | 5,213,990 | |||||||||||
Current liabilities | ||||||||||||||||||||||||
Accounts payable | $ | 1,055,527 | $ | 160,834 | $ | 17,680 | $ | 95,856 | $ | (1,068,835 | ) | $ | 261,062 | |||||||||||
Accrued liabilities | 8,754 | 203,608 | 11,225 | 77,372 | (24,841 | ) | 276,118 | |||||||||||||||||
Total current liabilities | 1,064,281 | 364,442 | 28,905 | 173,228 | (1,093,676 | ) | 537,180 | |||||||||||||||||
Long-term debt | 753,108 | 10,889 | 227,638 | — | (227,638 | ) | 763,997 | |||||||||||||||||
Deferred income taxes | — | 497,919 | 1,848 | 42,369 | (6,070 | ) | 536,066 | |||||||||||||||||
Other liabilities | — | 43,452 | — | 131,407 | — | 174,859 | ||||||||||||||||||
Total liabilities | 1,817,389 | 916,702 | 258,391 | 347,004 | (1,327,384 | ) | 2,012,102 | |||||||||||||||||
Total Westlake Chemical Corporation stockholders' equity | 2,911,511 | 4,097,276 | 835,839 | 628,588 | (5,561,703 | ) | 2,911,511 | |||||||||||||||||
Noncontrolling interests | — | — | — | 290,377 | — | 290,377 | ||||||||||||||||||
Total equity | 2,911,511 | 4,097,276 | 835,839 | 918,965 | (5,561,703 | ) | 3,201,888 | |||||||||||||||||
Total liabilities and equity | $ | 4,728,900 | $ | 5,013,978 | $ | 1,094,230 | $ | 1,265,969 | $ | (6,889,087 | ) | $ | 5,213,990 | |||||||||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Statement of Operations | ||||||||||||||||||||||||
Net sales | $ | — | $ | 903,492 | $ | 258,391 | $ | 245,643 | $ | (303,995 | ) | $ | 1,103,531 | |||||||||||
Cost of sales | — | 727,399 | 162,164 | 228,269 | (298,847 | ) | 818,985 | |||||||||||||||||
Gross profit | — | 176,093 | 96,227 | 17,374 | (5,148 | ) | 284,546 | |||||||||||||||||
Selling, general and administrative expenses | 413 | 43,684 | 5,046 | 11,271 | (5,148 | ) | 55,266 | |||||||||||||||||
(Loss) income from operations | (413 | ) | 132,409 | 91,181 | 6,103 | — | 229,280 | |||||||||||||||||
Interest expense | (10,752 | ) | (1 | ) | (1,376 | ) | (42 | ) | 2,580 | (9,591 | ) | |||||||||||||
Other income, net | 6,612 | 2,827 | 5 | 2,232 | (2,580 | ) | 9,096 | |||||||||||||||||
(Loss) income before income taxes | (4,553 | ) | 135,235 | 89,810 | 8,293 | — | 228,785 | |||||||||||||||||
(Benefit from) provision for income taxes | (1,578 | ) | 77,999 | 467 | 1,490 | — | 78,378 | |||||||||||||||||
Equity in net income of subsidiaries | 149,317 | 79,891 | — | 9,452 | (238,660 | ) | — | |||||||||||||||||
Net income | 146,342 | 137,127 | 89,343 | 16,255 | (238,660 | ) | 150,407 | |||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | 4,065 | — | 4,065 | ||||||||||||||||||
Net income attributable to Westlake Chemical Corporation | $ | 146,342 | $ | 137,127 | $ | 89,343 | $ | 12,190 | $ | (238,660 | ) | $ | 146,342 | |||||||||||
Comprehensive income (loss) attributable to Westlake Chemical Corporation | $ | 88,113 | $ | 137,365 | $ | 89,343 | $ | (47,319 | ) | $ | (179,389 | ) | $ | 88,113 | ||||||||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Statement of Operations | ||||||||||||||||||||||||
Net sales | $ | — | $ | 844,342 | $ | 560,014 | $ | 9,117 | $ | (385,797 | ) | $ | 1,027,676 | |||||||||||
Cost of sales | — | 790,577 | 327,700 | 8,186 | (385,797 | ) | 740,666 | |||||||||||||||||
Gross profit | — | 53,765 | 232,314 | 931 | — | 287,010 | ||||||||||||||||||
Selling, general and administrative expenses | 546 | 29,285 | 7,778 | 1,346 | — | 38,955 | ||||||||||||||||||
(Loss) income from operations | (546 | ) | 24,480 | 224,536 | (415 | ) | — | 248,055 | ||||||||||||||||
Interest expense | (8,947 | ) | (210 | ) | (3,591 | ) | — | 3,591 | (9,157 | ) | ||||||||||||||
Other income (expense), net | 5,006 | 456 | 1,252 | (614 | ) | (3,591 | ) | 2,509 | ||||||||||||||||
(Loss) income before income taxes | (4,487 | ) | 24,726 | 222,197 | (1,029 | ) | — | 241,407 | ||||||||||||||||
(Benefit from) provision for income taxes | (1,558 | ) | 6,787 | 78,323 | (177 | ) | — | 83,375 | ||||||||||||||||
Equity in net income of subsidiaries | 160,961 | 143,874 | — | — | (304,835 | ) | — | |||||||||||||||||
Net income (loss) attributable to Westlake Chemical Corporation | $ | 158,032 | $ | 161,813 | $ | 143,874 | $ | (852 | ) | $ | (304,835 | ) | $ | 158,032 | ||||||||||
Comprehensive income (loss) attributable to Westlake Chemical Corporation | $ | 158,866 | $ | 161,948 | $ | 143,874 | $ | (1,750 | ) | $ | (304,072 | ) | $ | 158,866 | ||||||||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Statement of Cash Flows | ||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income | $ | 146,342 | $ | 137,127 | $ | 89,343 | $ | 16,255 | $ | (238,660 | ) | $ | 150,407 | |||||||||||
Adjustments to reconcile net income to net cash (used for) provided by operating activities | ||||||||||||||||||||||||
Depreciation and amortization | 501 | 29,592 | 19,803 | 9,246 | — | 59,142 | ||||||||||||||||||
Deferred income taxes | (124 | ) | 6,431 | 54 | (1,030 | ) | — | 5,331 | ||||||||||||||||
Net changes in working capital and other | (151,572 | ) | (114,779 | ) | 6,973 | (3,606 | ) | 238,660 | (24,324 | ) | ||||||||||||||
Net cash (used for) provided by operating activities | (4,853 | ) | 58,371 | 116,173 | 20,865 | — | 190,556 | |||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Additions to property, plant and equipment | — | (47,385 | ) | (39,540 | ) | (8,897 | ) | — | (95,822 | ) | ||||||||||||||
Settlements of derivative instruments | — | (833 | ) | — | — | — | (833 | ) | ||||||||||||||||
Net cash used for investing activities | — | (48,218 | ) | (39,540 | ) | (8,897 | ) | — | (96,655 | ) | ||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Intercompany financing | 72,634 | (99,765 | ) | 30,191 | (3,060 | ) | — | — | ||||||||||||||||
Dividends paid | (21,964 | ) | — | — | — | — | (21,964 | ) | ||||||||||||||||
Distributions paid | — | 89,161 | (95,364 | ) | 2,645 | — | (3,558 | ) | ||||||||||||||||
Proceeds from exercise of stock options | 157 | — | — | — | — | 157 | ||||||||||||||||||
Repurchase of common stock for treasury | (2,000 | ) | — | — | — | — | (2,000 | ) | ||||||||||||||||
Windfall tax benefits from share-based payment arrangements | 1,701 | — | — | — | — | 1,701 | ||||||||||||||||||
Net cash provided by (used for) financing activities | 50,528 | (10,604 | ) | (65,173 | ) | (415 | ) | — | (25,664 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (3,189 | ) | — | (3,189 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 45,675 | (451 | ) | 11,460 | 8,364 | — | 65,048 | |||||||||||||||||
Cash and cash equivalents at beginning of period | 655,947 | 3,057 | 131,545 | 90,052 | — | 880,601 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 701,622 | $ | 2,606 | $ | 143,005 | $ | 98,416 | $ | — | $ | 945,649 | ||||||||||||
Westlake Chemical Corporation | 100% Owned Guarantor Subsidiaries | OpCo (Less Than 100% Owned Guarantor Subsidiary) | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
Statement of Cash Flows | ||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income (loss) | $ | 158,032 | $ | 161,813 | $ | 143,874 | $ | (852 | ) | $ | (304,835 | ) | $ | 158,032 | ||||||||||
Adjustments to reconcile net income (loss) to net cash (used for) provided by operating activities | ||||||||||||||||||||||||
Depreciation and amortization | 365 | 26,394 | 19,014 | 564 | — | 46,337 | ||||||||||||||||||
Deferred income taxes | (162 | ) | 5,220 | 3,267 | (50 | ) | — | 8,275 | ||||||||||||||||
Net changes in working capital and other | (165,553 | ) | (169,342 | ) | 31,731 | (1,810 | ) | 304,835 | (139 | ) | ||||||||||||||
Net cash (used for) provided by operating activities | (7,318 | ) | 24,085 | 197,886 | (2,148 | ) | — | 212,505 | ||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Additions to property, plant and equipment | — | (59,254 | ) | (51,305 | ) | (182 | ) | — | (110,741 | ) | ||||||||||||||
Proceeds from disposition of assets | — | 12 | — | — | — | 12 | ||||||||||||||||||
Proceeds from sales and maturities of securities | 30,119 | — | — | — | — | 30,119 | ||||||||||||||||||
Purchase of securities | (49,025 | ) | — | — | — | — | (49,025 | ) | ||||||||||||||||
Settlements of derivative instruments | — | — | (409 | ) | — | — | (409 | ) | ||||||||||||||||
Net cash used for investing activities | (18,906 | ) | (59,242 | ) | (51,714 | ) | (182 | ) | — | (130,044 | ) | |||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Intercompany financing | 106,903 | (155,387 | ) | 46,041 | 2,443 | — | — | |||||||||||||||||
Net distributions prior to Westlake Partners initial public offering | — | 192,213 | (192,213 | ) | — | — | — | |||||||||||||||||
Dividends paid | (16,789 | ) | — | — | — | — | (16,789 | ) | ||||||||||||||||
Proceeds from exercise of stock options | 2,158 | — | — | — | — | 2,158 | ||||||||||||||||||
Windfall tax benefits from share-based payment arrangements | 3,512 | — | — | — | — | 3,512 | ||||||||||||||||||
Net cash provided by (used for) financing activities | 95,784 | 36,826 | (146,172 | ) | 2,443 | — | (11,119 | ) | ||||||||||||||||
Net increase in cash and cash equivalents | 69,560 | 1,669 | — | 113 | — | 71,342 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 420,948 | 6,227 | — | 34,126 | — | 461,301 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 490,508 | $ | 7,896 | $ | — | $ | 34,239 | $ | — | $ | 532,643 | ||||||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(dollars in thousands, except per share data) | ||||||||
Net external sales | ||||||||
Olefins | ||||||||
Polyethylene | $ | 409,432 | $ | 487,144 | ||||
Styrene, feedstock and other | 173,645 | 235,654 | ||||||
Total Olefins | 583,077 | 722,798 | ||||||
Vinyls | ||||||||
PVC, caustic soda and other | 416,988 | 190,527 | ||||||
Building products | 103,466 | 114,351 | ||||||
Total Vinyls | 520,454 | 304,878 | ||||||
Total | $ | 1,103,531 | $ | 1,027,676 | ||||
Income (loss) from operations | ||||||||
Olefins | $ | 191,103 | $ | 272,333 | ||||
Vinyls | 47,086 | (21,114 | ) | |||||
Corporate and other | (8,909 | ) | (3,164 | ) | ||||
Total income from operations | 229,280 | 248,055 | ||||||
Interest expense | (9,591 | ) | (9,157 | ) | ||||
Other income, net | 9,096 | 2,509 | ||||||
Provision for income taxes | 78,378 | 83,375 | ||||||
Net income | 150,407 | 158,032 | ||||||
Net income attributable to noncontrolling interests | 4,065 | — | ||||||
Net income attributable to Westlake Chemical Corporation | $ | 146,342 | $ | 158,032 | ||||
Diluted earnings per share | $ | 1.10 | $ | 1.18 | ||||
Three Months Ended March 31, 2015 | ||||||||
Average Sales Price | Volume | |||||||
Product sales price and volume percentage change from prior-year period | ||||||||
Olefins | -26.9 | % | +7.6 | % | ||||
Vinyls | -9.0 | % | +79.7 | % | ||||
Company average | -21.6 | % | +29.0 | % | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Average industry prices (1) | ||||||||
Ethane (cents/lb) | 6.3 | 11.4 | ||||||
Propane (cents/lb) | 12.6 | 30.8 | ||||||
Ethylene (cents/lb) (2) | 36.6 | 55.1 | ||||||
Polyethylene (cents/lb) (3) | 76.7 | 107.7 | ||||||
Styrene (cents/lb) (4) | 54.3 | 86.9 | ||||||
Caustic soda ($/short ton) (5) | 588.3 | 579.2 | ||||||
Chlorine ($/short ton) (6) | 239.2 | 236.7 | ||||||
PVC (cents/lb) (7) | 65.5 | 66.5 | ||||||
(1) | Industry pricing data was obtained from IHS Chemical. We have not independently verified the data. |
(2) | Represents average North American spot prices of ethylene over the period as reported by IHS Chemical. |
(3) | Represents average North American contract prices of polyethylene low density film over the period as reported by IHS Chemical. |
(4) | Represents average North American contract prices of styrene over the period as reported by IHS Chemical. |
(5) | Represents average North American undiscounted contract prices of caustic soda over the period as reported by IHS Chemical. |
(6) | Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical. |
(7) | Represents average North American contract prices of PVC over the period as reported by IHS Chemical. |
• | future operating rates, margins, cash flow and demand for our products; |
• | industry market outlook, including the price of crude oil; |
• | production capacities; |
• | currency devaluation; |
• | our ability to borrow additional funds under our credit facility; |
• | our ability to meet our liquidity needs; |
• | our intended quarterly dividends; |
• | future capacity additions and expansions in the industry; |
• | timing, funding and results of capital projects, such as the expansion program at our Lake Charles facility; |
• | results of acquisitions; |
• | pension plan obligations, funding requirements and investment policies; |
• | 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 greenhouse gases emissions or to address other issues of climate change; |
• | effects of pending legal proceedings; and |
• | timing of and amount of capital expenditures. |
• | general economic and business conditions; |
• | the cyclical nature of the chemical industry; |
• | the availability, cost and volatility of raw materials and energy; |
• | uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East, the Commonwealth of Independent States (including Ukraine) and elsewhere; |
• | current and potential governmental regulatory actions in the United States and Europe and regulatory actions and political unrest in other countries; |
• | industry production capacity and operating rates; |
• | the supply/demand balance for our products; |
• | competitive products and pricing pressures; |
• | instability in the credit and financial markets; |
• | access to capital markets; |
• | terrorist acts; |
• | operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); |
• | changes in laws or regulations; |
• | technological developments; |
• | our ability to integrate acquired businesses; |
• | foreign currency exchange risks; |
• | our ability to implement our business strategies; and |
• | creditworthiness of our customers. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (1) (2) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||
January 2015 | 34,193 | $ | 58.79 | 34,025 | $ | 249,150,000 | ||||||||
February 2015 | 34,622 | $ | 66.79 | — | $ | 249,150,000 | ||||||||
March 2015 | — | $ | — | — | $ | 249,150,000 | ||||||||
68,815 | $ | 62.81 | 34,025 | |||||||||||
(1) | Represents shares withheld in satisfaction of withholding taxes due upon the vesting of restricted stock and restricted stock units granted to our employees under the 2013 Plan. |
(2) | On August 22, 2011, we announced the authorization by our Board of Directors of a $100.0 million stock repurchase program (the "2011 Program"). In the first quarter of 2015, the Company repurchased 19,448 shares under the 2011 Program, bringing the total number of shares repurchased under this program to 1,944,161 at an aggregate purchase price of $100.0 million, the full amount of the 2011 Program. On November 21, 2014, the Company's Board of Directors approved an additional $250.0 million share repurchase program (the "2014 Program"). As of March 31, 2015, 14,577 |
Item 6. | Exhibits |
Exhibit No. | ||
10.1 | Senior Unsecured Revolving Credit Agreement between Westlake Chemical OpCo LP and Westlake Development Corporation (incorporated by reference to Exhibit 10.13 to Westlake Chemical Partners LP's Registration Statement on Form S-1 filed on June 30, 2014, File No. 1-36567) | |
10.2 | Senior Unsecured Revolving Credit Agreement by and among Westlake Chemical Partners GP LLC and Westlake Chemical Finance Corporation, dated as of April 29, 2015 (incorporated by reference to Exhibit 10.1 to Westlake Chemical Partners LP's Current Report on Form 8-K filed on April 30, 2015, File No. 1-36567) | |
10.3† | Form of Stock Option Award Letter for 2015 Executive Officer Awards | |
10.4† | Form of Restricted Stock Units Award Letter for 2015 Executive Officer Awards | |
10.5† | Form of Long-Term Cash Performance Award Letter for 2015 Executive Officer Awards | |
31.1† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer) | |
31.2† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer) | |
32.1# | Section 1350 Certification (Principal Executive Officer and Principal Financial Officer) | |
99.1# | Unaudited Financial Statements of Non Wholly-Owned Subsidiary Guarantor (Westlake Chemical OpCo LP) | |
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. |
WESTLAKE CHEMICAL CORPORATION | ||||||
Date: | May 6, 2015 | By: | /S/ ALBERT CHAO | |||
Albert Chao | ||||||
President and Chief Executive Officer (Principal Executive Officer) | ||||||
Date: | May 6, 2015 | By: | /S/ M. STEVEN BENDER | |||
M. Steven Bender | ||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | ||||||
Exhibit No. | Exhibit | |
10.1 | Senior Unsecured Revolving Credit Agreement between Westlake Chemical OpCo LP and Westlake Development Corporation (incorporated by reference to Exhibit 10.13 to Westlake Chemical Partners LP's Registration Statement on Form S-1 filed on June 30, 2014, File No. 1-36567) | |
10.2 | Senior Unsecured Revolving Credit Agreement by and among Westlake Chemical Partners GP LLC and Westlake Chemical Finance Corporation, dated as of April 29, 2015 (incorporated by reference to Exhibit 10.1 to Westlake Chemical Partners LP's Current Report on Form 8-K filed on April 30, 2015, File No. 1-36567) | |
10.3† | Form of Stock Option Award Letter for 2015 Executive Officer Awards | |
10.4† | Form of Restricted Stock Units Award Letter for 2015 Executive Officer Awards | |
10.5† | Form of Long-Term Cash Performance Award Letter for 2015 Executive Officer Awards | |
31.1† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer) | |
31.2† | Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer) | |
32.1# | Section 1350 Certification (Principal Executive Officer and Principal Financial Officer) | |
99.1# | Unaudited Financial Statements of Non Wholly-Owned Subsidiary Guarantor (Westlake Chemical OpCo LP) | |
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. |
Re: | WESTLAKE CHEMICAL CORPORATION |
Period Beginning | Per Cent of Shares Purchasable |
February 20, 2016 February 20, 2017 February 20, 2018 | 33% 33% 34% |
1. | Grant Price |
2. | Term of Option |
3. | Earn-out of Option |
(a) | Unless it becomes vested and exercisable on an earlier date as provided in Paragraph 6 below, your Option will become vested and exercisable in cumulative installments as set forth in the Schedule in your Award Letter. |
(b) | To the extent your Option has become vested and exercisable, you may exercise the Option as to all or any part of the shares covered by the Option, at any time on or before the date the Option expires or terminates, subject to any limitations imposed by law or by Company policy regarding transactions in Common Stock. |
4. | Exercise of Option |
5. | Satisfaction of Grant Price |
(a) | Payment of Cash or Common Stock. Your Option may be exercised by payment in cash (including check, bank draft, money order or wire transfer payable to the Company), in Common Stock, in a combination of cash and Common Stock or in such other manner as the Administrator in its discretion may provide. Payment in Common Stock shall only be permitted if and to the extent authorized by the Administrator. |
(b) | Payment of Common Stock. The Fair Market Value of any shares of Common Stock tendered as all or part of the Grant Price shall be determined as provided in the Plan. The certificates evidencing shares of Common Stock tendered must be duly endorsed or accompanied by appropriate stock powers. Only stock certificates issued solely in your name may be tendered in exercise of your Option. Fractional shares may not be tendered in satisfaction of the Grant Price; any portion of the Grant Price which is in excess of the aggregate Fair Market Value of the number of whole shares tendered must be paid in cash. If a certificate tendered in exercise of the Option evidences more shares than are required pursuant to the immediately preceding sentence for satisfaction of the portion of the Grant Price being paid in Common Stock, an appropriate replacement certificate will be issued to you for the number of excess shares. |
(c) | Broker-Assisted Exercise. At your request or the request of another person entitled to exercise this Option, and to the extent permitted by applicable law, the Administrator in its discretion may selectively approve "cashless exercise" arrangements with a brokerage firm under which such brokerage firm, on behalf of you or such other person exercising the Option, shall pay to the Company or its designee the Grant Price of the Option or of the portion being exercised, and the Company or its designee, pursuant to an irrevocable notice from you or such other person exercising the Option, shall promptly deliver the shares being purchased to such firm. |
6. | Termination of Employment |
(a) | General. The following rules apply to your Option in the event of your death, disability or other termination of employment. |
(i) | Involuntary Termination Without Cause. If your employment with the Company or a Subsidiary is terminated by the Company or any such Subsidiary without Cause, your Option shall be exercisable to the extent vested on the date of your termination and shall become exercisable with respect to a portion of the previously unexercisable shares that were scheduled to become exercisable on the next vesting date, prorated for the number of full months you were employed from the most recent vesting date until the date of your termination. To the extent vested, regardless whether vested as a result of your termination of employment or vested prior thereto, your Option shall remain exercisable for the longer of (i) 30 days following your termination date or (ii) the period during which you receive salary continuation under any separation agreement, policy, plan or other arrangement with the Company or any of its Subsidiaries, but not to exceed 180 days following your termination date; provided, however, that in no event shall the Option be exercisable after the Expiration Date. Upon expiration of the foregoing period, your Option shall terminate in all respects. |
(ii) | Voluntary Termination. Except as provided in Paragraph 6(a)(vi), if you voluntarily terminate employment with the Company or a Subsidiary, your Option shall be exercisable to the extent vested on the date of your termination. To the extent vested, your Option shall remain exercisable until the first to occur of (i) 30 days following your termination date, or (ii) the Expiration Date. Upon expiration of the foregoing period, your Option shall terminate in all respects. |
(iii) | Termination with Cause. If your employment with the Company or a Subsidiary is terminated for Cause, your Option shall immediately terminate and shall no longer be exercisable. You forfeit any previously vested and unexercised portion of your Option. |
(iv) | Termination by Reason of Death. If your employment terminates by reason of death, your Option will become fully vested and exercisable and will remain exercisable until the first to occur of (i) one year after the date of your termination, or (ii) the Expiration Date. |
(v) | Termination by Reason of Disability. If your employment terminates by reason of total and permanent disability (as determined by the Administrator), your Option will be exercisable to the extent vested on |
(vi) | Termination by Reason of Normal Retirement. If you voluntarily terminate employment due to Normal Retirement, your Option shall be exercisable to the extent vested on the date of your termination and shall become exercisable with respect to a portion of the previously unexercisable shares, prorated for the number of days you were employed from the Award Date until the date of your termination. With respect to all vested shares, regardless whether vested as a result of your Normal Retirement or vested prior thereto, your Option shall remain exercisable for 30 days following your termination date; provided, however, that in no event shall the Option be exercisable after the Expiration Date. Upon expiration of the foregoing period, your Option shall terminate in all respects. |
(vii) | Adjustments by the Administrator. The Administrator may, in its sole discretion, exercised before or after your termination of employment, declare all or any portion of your Option immediately vested and exercisable and/or permit all or any part of your Option to remain exercisable for such period designated by it after the time when the Option would have otherwise terminated as provided in the applicable portion of this Paragraph 6(a), but not beyond the Expiration Date of your Option. |
(b) | Administrator Determinations. The Administrator shall have absolute discretion to determine the date and circumstances of termination of your employment, and its determination shall be final, conclusive and binding upon you. |
(c) | Cause. For purposes of this Appendix A, Cause shall mean any of the following: |
(i) | your conviction by a court of competent jurisdiction of any felony or a crime involving moral turpitude; |
(ii) | your knowing failure or refusal to follow reasonable instructions given to you on behalf of the Company or reasonable policies, standards and regulations of the Company or any Subsidiary; |
(iii) | your continued failure or refusal to faithfully and diligently perform the usual, customary duties of your employment with the Company or any Subsidiary; |
(iv) | continuously conducting yourself in an unprofessional, unethical or immoral manner; or |
(v) | any fraudulent conduct or conduct which discredits the Company or any Subsidiary or is detrimental to the reputation, character and standing of the Company or any Subsidiary. |
(d) | Normal Retirement. For purposes of this Appendix A, "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. |
7. | Tax Consequences and Withholding |
(a) | You are urged to consult your own tax advisor regarding the application of the tax laws to your particular situation. |
(b) | The Option is not intended to be an "incentive stock option," as defined in Section 422 of the Code. |
(c) | You must make arrangements satisfactory to the Company to satisfy any applicable federal, state or local withholding tax liability arising from the grant or exercise of your Option. You can either make a cash payment to the Company of the required amount or you can elect to satisfy your withholding obligation by having the Company retain shares of Common Stock having a Fair Market Value (as prescribed by the Plan) equal to the amount of your withholding obligation from the shares otherwise deliverable to you upon the exercise of your Option. You may not elect to have the Company withhold shares of Common Stock having a Fair Market Value in excess of the minimum statutory withholding tax liability. |
8. | Restrictions on Resale |
9. | Effect on Other Benefits |
Re: | WESTLAKE CHEMICAL CORPORATION |
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) | This Award shall vest in accordance with the following schedule: |
Period Beginning | Per Cent of Shares Vested |
February 20, 2018 | 100% |
(b) | All Restricted Stock Units subject to this Award shall vest, 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. |
(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, the Restricted Stock Units subject to this Award shall immediately vest, 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 after the Grant Date and prior to your Normal Retirement, and the denominator of which is the total number of days in the period from the Grant Date to the date this Award is scheduled to vest. For purposes of this Award, (i) "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. |
3. | Forfeiture of Award. If your employment terminates other than by reason of death or Normal Retirement, all unvested Restricted Stock Units as of the termination date shall be forfeited. |
4. | Distribution Following Termination of Restrictions. Subject to the other provisions of this Award and the Plan, the Restricted Stock Units shall vest as set forth in Paragraph 2, and shares of Common Stock shall be distributed to you (or your beneficiary) as soon as practicable after the Restricted Stock Units vest, but in no event later than March 15th of the year following the year in which the Restricted Stock Units vest. 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. At the time of issuance of Common Stock upon the vesting of the Restricted Stock Units, the Company shall withhold an appropriate number of shares of Common Stock, having a Fair Market Value determined in accordance with the Plan, equal to the amount necessary to satisfy the minimum federal, state and local tax withholding obligation with respect to this Award. The distribution of Common Stock described in Paragraph 4 will be net of such shares of Common Stock that are withheld to satisfy applicable taxes pursuant to this Paragraph. In lieu of withholding of shares of Common Stock, the Administrator may, in its discretion, authorize tax withholding to be satisfied by a cash payment to the Company, by withholding an appropriate amount of cash from base pay, or by such other method as the Administrator determines may be appropriate to satisfy all obligations for withholding of such taxes. |
6. | Assignment of Award. Your rights under the Plan and this Restricted Stock Unit 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. You are entitled to receive Dividend Equivalents paid in cash with respect to the Restricted Stock Units from the Grant Date until the earlier of the date that Common Stock is delivered to you in satisfaction of this Award or the date this Award is forfeited. |
8. | Voting Rights. You do not have voting rights with respect to the Restricted 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 Restricted 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 Restricted Stock Units and the issuance and delivery of the Common Stock to which such Restricted 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 Restricted Stock Unit Award shall be governed by, construed, and enforced in accordance with the laws of the State of Texas. |
12. | 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) if you are not Normal Retirement Eligible, the distribution of the Common Stock upon the time of payment specified in Paragraph 4 is exempt from Section 409A as a short-term deferral in compliance with Treasury Regulation Section 1.409A-1(b)(4), and (ii) if you are Normal Retirement Eligible, the time of payment specified with respect to Paragraph 4 is compliant with Treasury Regulation Section 1.409A-3(c)(2) and is complaint with Section 409A as being paid pursuant to a specified time or fixed schedule under Treasury Regulation Section 1.409A-3(i). You will not be considered to have a termination from employment unless such termination meets the requirements for a "separation from service" within the meaning of U.S. Treasury Regulation Section 1.409A-1(h), if applicable. If you are Normal Retirement Eligible and the issuance |
Re: | WESTLAKE CHEMICAL CORPORATION |
1. | Relationship to Plan. This Performance 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. | Payment Schedule. |
(a) | The amount of the Performance Award shall be calculated based on the Company's achievement of certain performance conditions, as set forth on Exhibit A (the "Performance Condition") during the 2015-2017 performance cycle, which is the period from January 1, 2015 through December 31, 2017 (the "Performance Cycle"). The Performance Award shall be paid to you in cash as soon as practicable following the date the Administrator determines to what extent the Performance Conditions were satisfied, provided, however, that you are employed by the Company or any of its Subsidiaries on such payment date. |
(b) | The Performance Award shall be paid to you 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, 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 death, and the denominator of which is the total number of days in the Performance Cycle. Such Performance Award shall be paid to your beneficiary within 70 days following your death. |
(c) | The Performance Award shall be paid to you, 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, 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. To the extent earned based on the Performance Condition, such Performance Award shall be paid to you on March 15th of the year immediately following the end of the Performance Cycle. For purposes of this Performance Award, "Normal Retirement" shall mean your termination from employment with the Company and its Subsidiaries for any reason after you |
3. | Forfeiture of Performance Award. If your employment with the Company or any of its Subsidiaries terminates other than by reason of death or your Normal Retirement, your Performance Award shall be forfeited. |
4. | Withholding. At the time of the payment of the Performance Award, the Company shall withhold an amount of cash equal to the amount necessary to satisfy the minimum federal, state and local tax withholding obligation with respect to this Performance Award. |
5. | Assignment of Performance Award. Your rights under the Plan and this Performance Award are personal; no assignment or transfer of your rights under and interest in this Performance Award may be made by you other than by will or by the laws of descent and distribution. |
6. | No Employment Guaranteed. No provision of this Performance Award shall give you any right to continued employment with the Company or any Subsidiary. |
7. | Governing Law. This Performance Award shall be governed by, construed, and enforced in accordance with the laws of the State of Texas. |
8. | Section 409A. Any payments under Paragraph 2(a) or 2(b) of this Performance Award are intended to be exempt from Section 409A of the Code, by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4). Any payment under Paragraph 2(c) of this Performance Award is intended to be compliant with Code Section 409A as being paid pursuant to a specified time or fixed schedule under Treas. Reg. § 1.409A-3(i). The provisions of this Performance Award shall be administered, interpreted and construed accordingly. |
1. | Definition of Performance Condition. The Performance Condition for the 2015-2017 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 Performance Award. The amount of the Performance Award shall be determined as set forth on the following chart: |
Threshold Performance | Target Performance | Maximum Performance | |
Payment Rate | 25% of target value | 100% of target value | 200% of target value |
Performance Rate (relative TSR) | 33.3% ile | 50% ile | 75% ile |
Performance Rate (Westlake EVA) * "1X" equals returns equivalent to the cost of capital | .5X | 1X* | >2X |
3. | 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. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Corporation; |
2. | 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; |
3. | 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; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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; | |
b) | 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; | |
c) | 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 | |
d) | 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 | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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 | |
b) | 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. | |
Date: | May 6, 2015 | /S/ ALBERT CHAO | |||||
Albert Chao | |||||||
President and Chief Executive Officer (Principal Executive Officer) | |||||||
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Corporation; |
2. | 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; |
3. | 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; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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; | |
b) | 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; | |
c) | 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 | |
d) | 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 | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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 | |
b) | 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. | |
Date: | May 6, 2015 | /S/ M. STEVEN BENDER | |||||
M. Steven Bender | |||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company. |
Date: | May 6, 2015 | /S/ ALBERT CHAO | |||||
Albert Chao | |||||||
President and Chief Executive Officer (Principal Executive Officer) | |||||||
Date: | May 6, 2015 | /S/ M. STEVEN BENDER | |||||
M. Steven Bender | |||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
March 31, 2015 | December 31, 2014 | |||||||
(in thousands of dollars) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 143,005 | $ | 131,545 | ||||
Accounts receivable, net—Westlake Chemical Corporation ("Westlake") | 37,982 | 18,529 | ||||||
Accounts receivable, net—third parties | 16,997 | 37,520 | ||||||
Inventories | 4,564 | 6,634 | ||||||
Prepaid expenses and other current assets | 122 | 212 | ||||||
Total current assets | 202,670 | 194,440 | ||||||
Property, plant and equipment, net | 866,546 | 842,057 | ||||||
Other assets, net | ||||||||
Goodwill | 5,814 | 5,814 | ||||||
Deferred charges and other assets, net | 48,018 | 51,919 | ||||||
Total other assets, net | 53,832 | 57,733 | ||||||
Total assets | $ | 1,123,048 | $ | 1,094,230 | ||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable—Westlake | $ | 11,827 | $ | 5,332 | ||||
Accounts payable—third parties | 15,568 | 12,348 | ||||||
Accrued liabilities | 6,104 | 11,225 | ||||||
Total current liabilities | 33,499 | 28,905 | ||||||
Long-term debt payable to Westlake | 257,829 | 227,638 | ||||||
Deferred income taxes | 1,902 | 1,848 | ||||||
Total liabilities | 293,230 | 258,391 | ||||||
Commitments and contingencies (Notes 8 and 13) | ||||||||
EQUITY | ||||||||
Limited partners interest—Westlake | 499,467 | 504,854 | ||||||
Limited partner interest—Westlake Chemical Partners LP | 330,351 | 330,985 | ||||||
Total equity | 829,818 | 835,839 | ||||||
Total liabilities and equity | $ | 1,123,048 | $ | 1,094,230 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
(in thousands of dollars) | ||||||||
Revenue | ||||||||
Net sales—Westlake | $ | 208,913 | $ | 383,927 | ||||
Net co-product, ethylene and feedstock sales—third parties | 49,478 | 176,087 | ||||||
Total net sales | 258,391 | 560,014 | ||||||
Cost of sales | 162,164 | 327,700 | ||||||
Gross profit | 96,227 | 232,314 | ||||||
Selling, general and administrative expenses | 5,046 | 7,778 | ||||||
Income from operations | 91,181 | 224,536 | ||||||
Other income (expense) | ||||||||
Interest expense—Westlake | (1,376 | ) | (3,591 | ) | ||||
Other income, net | 5 | 1,252 | ||||||
Income before income taxes | 89,810 | 222,197 | ||||||
Provision for income taxes | 467 | 78,323 | ||||||
Net income | $ | 89,343 | $ | 143,874 | ||||
Predecessor | Westlake Chemical OpCo LP | |||||||||||||||
Net Investment | Limited Partners Interest—Westlake | Limited Partner Interest—Westlake Chemical Partners LP | Total | |||||||||||||
(in thousands of dollars) | ||||||||||||||||
Balance as of December 31, 2013 | $ | 455,432 | $ | — | $ | — | $ | 455,432 | ||||||||
Net income | 143,874 | — | — | 143,874 | ||||||||||||
Net distributions to Westlake | (192,213 | ) | — | — | (192,213 | ) | ||||||||||
Balance as of March 31, 2014 | $ | 407,093 | $ | — | $ | — | $ | 407,093 | ||||||||
Balance as of December 31, 2014 | $ | — | $ | 504,854 | $ | 330,985 | $ | 835,839 | ||||||||
Net income | — | 79,890 | 9,453 | 89,343 | ||||||||||||
Quarterly distribution for the period from October 1, 2014 to December 31, 2014 | — | (85,277 | ) | (10,087 | ) | (95,364 | ) | |||||||||
Balance as of March 31, 2015 | $ | — | $ | 499,467 | $ | 330,351 | $ | 829,818 | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
(in thousands of dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 89,343 | $ | 143,874 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization | 19,803 | 19,014 | ||||||
Recovery of doubtful accounts | — | (60 | ) | |||||
Loss from disposition of fixed assets | 1 | 353 | ||||||
Deferred income taxes | 54 | 3,267 | ||||||
Income from equity method investment, net of dividends | — | 72 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable—third parties | 20,523 | 15,493 | ||||||
Net accounts receivable—Westlake | (12,958 | ) | — | |||||
Inventories | 2,070 | 30,707 | ||||||
Prepaid expenses and other current assets | 90 | 83 | ||||||
Accounts payable | 855 | (19,198 | ) | |||||
Accrued and other liabilities | (3,301 | ) | 877 | |||||
Other, net | (307 | ) | 3,404 | |||||
Net cash provided by operating activities | 116,173 | 197,886 | ||||||
Cash flows from investing activities | ||||||||
Additions to property, plant and equipment | (39,540 | ) | (51,305 | ) | ||||
Settlements of derivative instruments | — | (409 | ) | |||||
Net cash used for investing activities | (39,540 | ) | (51,714 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from debt payable to Westlake | 30,191 | 46,041 | ||||||
Quarterly distribution for the period from October 1, 2014 to December 31, 2014 | (95,364 | ) | — | |||||
Net distributions to Westlake prior to initial public offering | — | (192,213 | ) | |||||
Net cash used for financing activities | (65,173 | ) | (146,172 | ) | ||||
Net increase in cash and cash equivalents | 11,460 | — | ||||||
Cash and cash equivalents at beginning of period | 131,545 | — | ||||||
Cash and cash equivalents at end of period | $ | 143,005 | $ | — | ||||
March 31, 2015 | December 31, 2014 | |||||||
Trade customers | $ | 16,997 | $ | 37,514 | ||||
Allowance for doubtful accounts | — | — | ||||||
16,997 | 37,514 | |||||||
Other | — | 6 | ||||||
Accounts receivable, net—third parties | $ | 16,997 | $ | 37,520 | ||||
March 31, 2015 | December 31, 2014 | |||||||
Finished products | $ | 4,264 | $ | 6,257 | ||||
Feedstock, additives and chemicals | 300 | 377 | ||||||
Inventories | $ | 4,564 | $ | 6,634 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
Net sales—Westlake | $ | 208,913 | $ | 383,927 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
Feedstock purchased from Westlake and included in cost of sales | $ | 80,819 | $ | — | ||||
Other charges from Westlake and included in cost of sales | 13,896 | 16,587 | ||||||
Total | $ | 94,715 | $ | 16,587 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
Services received from Westlake and included in selling, general and administrative expenses | $ | 5,148 | $ | 6,476 | ||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Predecessor | ||||||||
Goods and services purchased from Westlake and capitalized as assets | $ | 962 | $ | 1,830 | ||||
March 31, 2015 | December 31, 2014 | |||||||
Accounts receivable, net—Westlake | $ | 37,982 | $ | 18,529 | ||||
Accounts payable—Westlake | (11,827 | ) | (5,332 | ) | ||||
March 31, 2015 | December 31, 2014 | |||||||
Long-term debt payable to Westlake | $ | 257,829 | $ | 227,638 | ||||
March 31, 2015 | December 31, 2014 | |||||||
August 2013 Promissory Notes (variable interest rate of prime plus 1.5%, original scheduled maturity of August 1, 2023) | $ | 167,116 | $ | 167,116 | ||||
Senior unsecured revolving credit facility (variable interest rate of LIBOR plus 3.0%, original scheduled maturity of August 4, 2019) | 90,713 | 60,522 | ||||||
$ | 257,829 | $ | 227,638 | |||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
August 2013 Promissory Notes | $ | 167,116 | $ | 167,116 | $ | 167,116 | $ | 167,116 | ||||||||
Senior unsecured revolving credit facility | 90,713 | 103,326 | 60,522 | 60,522 | ||||||||||||
|
Financial Instruments (Marketable Securities) (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2015
|
Dec. 31, 2014
|
|---|---|---|
| Investments, Debt and Equity Securities [Abstract] | ||
| Noncurrent | $ 17,033 | $ 15,414 |
| Total available-for-sale securities | $ 17,033 | $ 15,414 |
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