x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 13-1872319 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
190 Carondelet Plaza, Suite 1530, Clayton, MO | 63105 |
(Address of principal executive offices) | (Zip Code) |
TABLE OF CONTENTS FOR FORM 10-Q | Page | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 156.7 | $ | 218.4 | $ | 255.9 | |||||
Receivables, net | 1,009.2 | 733.2 | 729.5 | ||||||||
Income taxes receivable | 12.8 | 16.9 | 15.9 | ||||||||
Inventories, net | 724.4 | 682.6 | 689.5 | ||||||||
Other current assets | 35.2 | 48.1 | 27.1 | ||||||||
Total current assets | 1,938.3 | 1,699.2 | 1,717.9 | ||||||||
Property, plant and equipment (less accumulated depreciation of $2,651.2, $2,333.1 and $2,222.8) | 3,456.7 | 3,575.8 | 3,579.2 | ||||||||
Deferred income taxes | 24.8 | 36.4 | 141.1 | ||||||||
Other assets | 1,159.6 | 1,208.4 | 1,215.6 | ||||||||
Intangible assets, net | 528.3 | 578.5 | 592.9 | ||||||||
Goodwill | 2,119.6 | 2,120.0 | 2,119.8 | ||||||||
Total assets | $ | 9,227.3 | $ | 9,218.3 | $ | 9,366.5 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current installments of long-term debt | $ | 0.9 | $ | 0.7 | $ | 81.7 | |||||
Accounts payable | 709.4 | 669.8 | 613.5 | ||||||||
Income taxes payable | 22.1 | 9.4 | 9.6 | ||||||||
Accrued liabilities | 341.3 | 274.4 | 294.5 | ||||||||
Total current liabilities | 1,073.7 | 954.3 | 999.3 | ||||||||
Long-term debt | 3,336.4 | 3,611.3 | 3,663.5 | ||||||||
Accrued pension liability | 589.6 | 635.9 | 618.7 | ||||||||
Deferred income taxes | 548.6 | 511.2 | 1,055.5 | ||||||||
Other liabilities | 756.1 | 751.9 | 731.0 | ||||||||
Total liabilities | 6,304.4 | 6,464.6 | 7,068.0 | ||||||||
Commitments and contingencies | |||||||||||
Shareholders’ equity: | |||||||||||
Common stock, par value $1 per share: authorized, 240.0 shares; issued and outstanding, 166.8, 167.1 and 166.4 shares | 166.8 | 167.1 | 166.4 | ||||||||
Additional paid-in capital | 2,276.9 | 2,280.9 | 2,267.7 | ||||||||
Accumulated other comprehensive loss | (571.3 | ) | (484.6 | ) | (470.0 | ) | |||||
Retained earnings | 1,050.5 | 790.3 | 334.4 | ||||||||
Total shareholders’ equity | 2,922.9 | 2,753.7 | 2,298.5 | ||||||||
Total liabilities and shareholders’ equity | $ | 9,227.3 | $ | 9,218.3 | $ | 9,366.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales | $ | 1,872.4 | $ | 1,554.9 | $ | 5,311.1 | $ | 4,648.5 | |||||||
Operating expenses: | |||||||||||||||
Cost of goods sold | 1,441.7 | 1,349.3 | 4,431.1 | 4,154.7 | |||||||||||
Selling and administration | 110.8 | 91.1 | 321.6 | 268.8 | |||||||||||
Restructuring charges | 3.3 | 9.2 | 13.7 | 25.9 | |||||||||||
Acquisition-related costs | 0.4 | 1.1 | 1.0 | 12.5 | |||||||||||
Other operating (expense) income | (1.7 | ) | — | 6.4 | (0.1 | ) | |||||||||
Operating income | 314.5 | 104.2 | 550.1 | 186.5 | |||||||||||
Earnings (losses) of non-consolidated affiliates | 0.4 | 0.5 | (20.2 | ) | 1.5 | ||||||||||
Interest expense | 59.2 | 53.1 | 184.0 | 158.0 | |||||||||||
Interest income | 0.3 | 0.4 | 1.1 | 1.0 | |||||||||||
Non-operating pension income | 5.4 | 8.4 | 16.2 | 25.5 | |||||||||||
Income before taxes | 261.4 | 60.4 | 363.2 | 56.5 | |||||||||||
Income tax provision (benefit) | 66.3 | 7.7 | 88.6 | (3.7 | ) | ||||||||||
Net income | $ | 195.1 | $ | 52.7 | $ | 274.6 | $ | 60.2 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 1.17 | $ | 0.32 | $ | 1.64 | $ | 0.36 | |||||||
Diluted | $ | 1.16 | $ | 0.31 | $ | 1.63 | $ | 0.36 | |||||||
Dividends per common share | $ | 0.20 | $ | 0.20 | $ | 0.60 | $ | 0.60 | |||||||
Average common shares outstanding: | |||||||||||||||
Basic | 167.0 | 166.3 | 167.1 | 166.0 | |||||||||||
Diluted | 168.6 | 168.5 | 168.9 | 168.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 195.1 | $ | 52.7 | $ | 274.6 | $ | 60.2 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments, net | (2.0 | ) | 9.8 | (15.7 | ) | 31.7 | |||||||||
Unrealized (losses) gains on derivative contracts, net | (3.6 | ) | 1.3 | (6.1 | ) | (4.4 | ) | ||||||||
Amortization of prior service costs and actuarial losses, net | 7.5 | 4.3 | 21.0 | 12.7 | |||||||||||
Total other comprehensive income (loss), net of tax | 1.9 | 15.4 | (0.8 | ) | 40.0 | ||||||||||
Comprehensive income | $ | 197.0 | $ | 68.1 | $ | 273.8 | $ | 100.2 |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||
Shares Issued | Par Value | |||||||||||||||||||||
Balance at January 1, 2017 | 165.4 | $ | 165.4 | $ | 2,243.8 | $ | (510.0 | ) | $ | 373.8 | $ | 2,273.0 | ||||||||||
Net income | — | — | — | — | 60.2 | 60.2 | ||||||||||||||||
Other comprehensive income | — | — | — | 40.0 | — | 40.0 | ||||||||||||||||
Dividends paid: | ||||||||||||||||||||||
Common stock ($0.60 per share) | — | — | — | — | (99.6 | ) | (99.6 | ) | ||||||||||||||
Common stock issued for: | ||||||||||||||||||||||
Stock options exercised | 1.0 | 1.0 | 17.5 | — | — | 18.5 | ||||||||||||||||
Other transactions | — | — | 1.7 | — | — | 1.7 | ||||||||||||||||
Stock-based compensation | — | — | 4.7 | — | — | 4.7 | ||||||||||||||||
Balance at September 30, 2017 | 166.4 | $ | 166.4 | $ | 2,267.7 | $ | (470.0 | ) | $ | 334.4 | $ | 2,298.5 | ||||||||||
Balance at January 1, 2018 | 167.1 | $ | 167.1 | $ | 2,280.9 | $ | (484.6 | ) | $ | 790.3 | $ | 2,753.7 | ||||||||||
Income tax reclassification adjustment | — | — | — | (85.9 | ) | 85.9 | — | |||||||||||||||
Net income | — | — | — | — | 274.6 | 274.6 | ||||||||||||||||
Other comprehensive loss | — | — | — | (0.8 | ) | — | (0.8 | ) | ||||||||||||||
Dividends paid: | ||||||||||||||||||||||
Common stock ($0.60 per share) | — | — | — | — | (100.3 | ) | (100.3 | ) | ||||||||||||||
Common stock repurchased and retired | (0.5 | ) | (0.5 | ) | (16.3 | ) | — | — | (16.8 | ) | ||||||||||||
Common stock issued for: | ||||||||||||||||||||||
Stock options exercised | 0.2 | 0.2 | 3.0 | — | — | 3.2 | ||||||||||||||||
Other transactions | — | — | 1.5 | — | — | 1.5 | ||||||||||||||||
Stock-based compensation | — | — | 7.8 | — | — | 7.8 | ||||||||||||||||
Balance at September 30, 2018 | 166.8 | $ | 166.8 | $ | 2,276.9 | $ | (571.3 | ) | $ | 1,050.5 | $ | 2,922.9 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Operating Activities | |||||||
Net income | $ | 274.6 | $ | 60.2 | |||
Adjustments to reconcile net income to net cash and cash equivalents provided by (used for) operating activities: | |||||||
Losses (earnings) of non-consolidated affiliates | 20.2 | (1.5 | ) | ||||
Losses on disposition of property, plant and equipment | 1.9 | 0.4 | |||||
Stock-based compensation | 9.2 | 6.4 | |||||
Depreciation and amortization | 451.0 | 411.4 | |||||
Deferred income taxes | 44.0 | (17.5 | ) | ||||
Qualified pension plan contributions | (1.3 | ) | (1.2 | ) | |||
Qualified pension plan income | (11.1 | ) | (20.3 | ) | |||
Change in: | |||||||
Receivables | (280.1 | ) | (48.5 | ) | |||
Income taxes receivable/payable | 17.1 | 10.6 | |||||
Inventories | (44.5 | ) | (46.7 | ) | |||
Other current assets | 4.5 | 3.1 | |||||
Accounts payable and accrued liabilities | 110.1 | 92.9 | |||||
Other assets | (2.0 | ) | 7.7 | ||||
Other noncurrent liabilities | (3.8 | ) | (13.6 | ) | |||
Other operating activities | (3.5 | ) | 11.7 | ||||
Net operating activities | 586.3 | 455.1 | |||||
Investing Activities | |||||||
Capital expenditures | (274.5 | ) | (210.0 | ) | |||
Payments under long-term supply contracts | — | (209.4 | ) | ||||
Proceeds from disposition of property, plant and equipment | 2.9 | 0.1 | |||||
Net investing activities | (271.6 | ) | (419.3 | ) | |||
Financing Activities | |||||||
Long-term debt: | |||||||
Borrowings | 570.0 | 2,035.0 | |||||
Repayments | (823.7 | ) | (1,907.4 | ) | |||
Common stock repurchased and retired | (16.8 | ) | — | ||||
Stock options exercised | 3.2 | 18.5 | |||||
Dividends paid | (100.3 | ) | (99.6 | ) | |||
Debt issuance costs | (8.5 | ) | (11.2 | ) | |||
Net financing activities | (376.1 | ) | 35.3 | ||||
Effect of exchange rate changes on cash and cash equivalents | (0.3 | ) | 0.3 | ||||
Net (decrease) increase in cash and cash equivalents | (61.7 | ) | 71.4 | ||||
Cash and cash equivalents, beginning of period | 218.4 | 184.5 | |||||
Cash and cash equivalents, end of period | $ | 156.7 | $ | 255.9 | |||
Cash paid for interest and income taxes: | |||||||
Interest, net | $ | 153.9 | $ | 138.7 | |||
Income taxes, net of refunds | $ | 31.9 | $ | 11.2 | |||
Non-cash investing activities: | |||||||
Decrease in capital expenditures included in accounts payable and accrued liabilities | $ | 7.0 | $ | 25.0 |
Employee severance and related benefit costs | Lease and other contract termination costs | Employee relocation costs | Facility exit costs | Total | |||||||||||||||
($ in millions) | |||||||||||||||||||
Balance at January 1, 2017 | $ | 3.4 | $ | 7.5 | $ | — | $ | 1.8 | $ | 12.7 | |||||||||
Restructuring charges: | |||||||||||||||||||
First quarter | — | 5.7 | 0.2 | 2.3 | 8.2 | ||||||||||||||
Second quarter | — | 5.8 | 0.1 | 2.6 | 8.5 | ||||||||||||||
Third quarter | — | 7.0 | — | 2.2 | 9.2 | ||||||||||||||
Amounts utilized | (3.0 | ) | (4.6 | ) | (0.3 | ) | (8.8 | ) | (16.7 | ) | |||||||||
Balance at September 30, 2017 | $ | 0.4 | $ | 21.4 | $ | — | $ | 0.1 | $ | 21.9 | |||||||||
Balance at January 1, 2018 | $ | 1.8 | $ | 3.3 | $ | — | $ | — | $ | 5.1 | |||||||||
Restructuring charges: | |||||||||||||||||||
First quarter | — | 0.4 | — | 3.6 | 4.0 | ||||||||||||||
Second quarter | 0.1 | 3.7 | — | 2.6 | 6.4 | ||||||||||||||
Third quarter | 0.3 | 0.3 | — | 2.7 | 3.3 | ||||||||||||||
Amounts utilized | (1.8 | ) | (1.6 | ) | — | (7.9 | ) | (11.3 | ) | ||||||||||
Balance at September 30, 2018 | $ | 0.4 | $ | 6.1 | $ | — | $ | 1.0 | $ | 7.5 |
Chlor Alkali Products and Vinyls | Winchester | Total | ||||||||||||||
Becancour | Capacity Reductions | |||||||||||||||
($ in millions) | ||||||||||||||||
Write-off of equipment and facility | $ | 3.5 | $ | 78.1 | $ | — | $ | 81.6 | ||||||||
Employee severance and related benefit costs | 2.7 | 5.9 | 14.7 | 23.3 | ||||||||||||
Facility exit costs | 5.9 | 30.7 | 2.3 | 38.9 | ||||||||||||
Pension and other postretirement benefits curtailment | — | — | 4.1 | 4.1 | ||||||||||||
Employee relocation costs | — | 1.7 | 6.0 | 7.7 | ||||||||||||
Lease and other contract termination costs | 5.3 | 40.0 | — | 45.3 | ||||||||||||
Total cumulative restructuring charges | $ | 17.4 | $ | 156.4 | $ | 27.1 | $ | 200.9 |
September 30, | |||||||
2018 | 2017 | ||||||
($ in millions) | |||||||
Balance at beginning of year | $ | 182.3 | $ | 126.1 | |||
Gross receivables sold | 1,199.8 | 1,224.1 | |||||
Payments received from customers on sold accounts | (1,247.7 | ) | (1,162.9 | ) | |||
Balance at end of period | $ | 134.4 | $ | 187.3 |
September 30, | |||||||
2018 | 2017 | ||||||
($ in millions) | |||||||
Balance at beginning of year | $ | 12.3 | $ | 10.1 | |||
Provisions charged | 1.6 | 1.3 | |||||
Foreign currency translation adjustment | (0.4 | ) | — | ||||
Balance at end of period | $ | 13.5 | $ | 11.4 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
($ in millions) | |||||||||||
Supplies | $ | 63.7 | $ | 66.1 | $ | 60.3 | |||||
Raw materials | 70.1 | 75.3 | 85.4 | ||||||||
Work in process | 155.9 | 127.8 | 120.6 | ||||||||
Finished goods | 493.6 | 462.6 | 470.7 | ||||||||
783.3 | 731.8 | 737.0 | |||||||||
LIFO reserve | (58.9 | ) | (49.2 | ) | (47.5 | ) | |||||
Inventories, net | $ | 724.4 | $ | 682.6 | $ | 689.5 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
($ in millions) | |||||||||||
Investments in non-consolidated affiliates | $ | 8.3 | $ | 28.5 | $ | 28.2 | |||||
Deferred debt issuance costs | 2.1 | 2.5 | 2.7 | ||||||||
Tax-related receivables | 4.9 | 10.2 | 13.1 | ||||||||
Derivative contracts | 1.6 | 3.6 | 3.7 | ||||||||
Supply contracts | 1,108.9 | 1,137.1 | 1,146.3 | ||||||||
Other | 33.8 | 26.5 | 21.6 | ||||||||
Other assets | $ | 1,159.6 | $ | 1,208.4 | $ | 1,215.6 |
Chlor Alkali Products and Vinyls | Epoxy | Total | |||||||||
($ in millions) | |||||||||||
Balance at January 1, 2017 | $ | 1,831.3 | $ | 286.7 | $ | 2,118.0 | |||||
Foreign currency translation adjustment | 1.4 | 0.4 | 1.8 | ||||||||
Balance at September 30, 2017 | $ | 1,832.7 | $ | 287.1 | $ | 2,119.8 | |||||
Balance at January 1, 2018 | $ | 1,832.9 | $ | 287.1 | 2,120.0 | ||||||
Foreign currency translation adjustment | (0.3 | ) | (0.1 | ) | (0.4 | ) | |||||
Balance at September 30, 2018 | $ | 1,832.6 | $ | 287.0 | $ | 2,119.6 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net | Gross Amount | Accumulated Amortization | Net | Gross Amount | Accumulated Amortization | Net | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||||||
Customers, customer contracts and relationships | $ | 676.2 | $ | (199.9 | ) | $ | 476.3 | $ | 679.5 | $ | (163.6 | ) | $ | 515.9 | $ | 678.0 | $ | (150.9 | ) | $ | 527.1 | |||||||||||||||
Trade name | 7.0 | (4.3 | ) | 2.7 | 7.1 | (3.2 | ) | 3.9 | 7.1 | (2.9 | ) | 4.2 | ||||||||||||||||||||||||
Acquired technology | 85.6 | (36.6 | ) | 49.0 | 86.1 | (27.7 | ) | 58.4 | 85.8 | (24.5 | ) | 61.3 | ||||||||||||||||||||||||
Other | 2.3 | (2.0 | ) | 0.3 | 2.3 | (2.0 | ) | 0.3 | 2.3 | (2.0 | ) | 0.3 | ||||||||||||||||||||||||
Total intangible assets | $ | 771.1 | $ | (242.8 | ) | $ | 528.3 | $ | 775.0 | $ | (196.5 | ) | $ | 578.5 | $ | 773.2 | $ | (180.3 | ) | $ | 592.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Computation of Income per Share | (In millions, except per share data) | ||||||||||||||
Net income | $ | 195.1 | $ | 52.7 | $ | 274.6 | $ | 60.2 | |||||||
Basic shares | 167.0 | 166.3 | 167.1 | 166.0 | |||||||||||
Basic net income per share | $ | 1.17 | $ | 0.32 | $ | 1.64 | $ | 0.36 | |||||||
Diluted shares: | |||||||||||||||
Basic shares | 167.0 | 166.3 | 167.1 | 166.0 | |||||||||||
Stock-based compensation | 1.6 | 2.2 | 1.8 | 2.2 | |||||||||||
Diluted shares | 168.6 | 168.5 | 168.9 | 168.2 | |||||||||||
Diluted net income per share | $ | 1.16 | $ | 0.31 | $ | 1.63 | $ | 0.36 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
($ in millions) | |||||||||||||||
Provisions (credited) charged to income | $ | (0.8 | ) | $ | 1.8 | $ | 5.9 | $ | 6.2 | ||||||
Insurance recoveries for costs incurred and expensed | (110.0 | ) | — | (110.0 | ) | — | |||||||||
Environmental (income) expense | $ | (110.8 | ) | $ | 1.8 | $ | (104.1 | ) | $ | 6.2 |
Foreign Currency Translation Adjustment (net of taxes) | Unrealized Gains (Losses) on Derivative Contracts (net of taxes) | Pension and Other Postretirement Benefits (net of taxes) | Accumulated Other Comprehensive Loss | ||||||||||||
($ in millions) | |||||||||||||||
Balance at January 1, 2017 | $ | (24.1 | ) | $ | 12.8 | $ | (498.7 | ) | $ | (510.0 | ) | ||||
Unrealized gains (losses): | |||||||||||||||
First quarter | 8.3 | (3.1 | ) | — | 5.2 | ||||||||||
Second quarter | 28.1 | (3.7 | ) | — | 24.4 | ||||||||||
Third quarter | 16.0 | 3.2 | — | $ | 19.2 | ||||||||||
Reclassification adjustments into income (gains) losses: | |||||||||||||||
First quarter | — | (0.1 | ) | 6.6 | 6.5 | ||||||||||
Second quarter | — | (2.3 | ) | 6.8 | 4.5 | ||||||||||
Third quarter | — | (1.2 | ) | 6.8 | $ | 5.6 | |||||||||
Tax (provision) benefit: | |||||||||||||||
First quarter | (2.3 | ) | 1.2 | (2.7 | ) | (3.8 | ) | ||||||||
Second quarter | (12.2 | ) | 2.3 | (2.3 | ) | (12.2 | ) | ||||||||
Third quarter | (6.2 | ) | (0.7 | ) | (2.5 | ) | $ | (9.4 | ) | ||||||
Net change | 31.7 | (4.4 | ) | 12.7 | 40.0 | ||||||||||
Balance at September 30, 2017 | $ | 7.6 | $ | 8.4 | $ | (486.0 | ) | $ | (470.0 | ) | |||||
Balance at January 1, 2018 | $ | 7.6 | $ | 11.1 | $ | (503.3 | ) | $ | (484.6 | ) | |||||
Unrealized gains (losses): | |||||||||||||||
First quarter | 12.4 | 2.1 | — | 14.5 | |||||||||||
Second quarter | (26.1 | ) | (0.4 | ) | — | (26.5 | ) | ||||||||
Third quarter | (2.0 | ) | (2.6 | ) | — | (4.6 | ) | ||||||||
Reclassification adjustments into income (gains) losses: | |||||||||||||||
First quarter | — | (2.3 | ) | 9.4 | 7.1 | ||||||||||
Second quarter | — | (2.7 | ) | 9.1 | 6.4 | ||||||||||
Third quarter | — | (2.2 | ) | 9.2 | 7.0 | ||||||||||
Tax benefit (provision): | |||||||||||||||
First quarter | — | 0.1 | (4.0 | ) | (3.9 | ) | |||||||||
Second quarter | — | 0.7 | (1.0 | ) | (0.3 | ) | |||||||||
Third quarter | — | 1.2 | (1.7 | ) | (0.5 | ) | |||||||||
Net change | (15.7 | ) | (6.1 | ) | 21.0 | (0.8 | ) | ||||||||
Income tax reclassification adjustment | 15.3 | 2.4 | (103.6 | ) | (85.9 | ) | |||||||||
Balance at September 30, 2018 | $ | 7.2 | $ | 7.4 | $ | (585.9 | ) | $ | (571.3 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales: | ($ in millions) | ||||||||||||||
Chlor Alkali Products and Vinyls | $ | 1,051.1 | $ | 881.2 | $ | 3,005.9 | $ | 2,583.2 | |||||||
Epoxy | 647.3 | 489.9 | 1,794.4 | 1,549.5 | |||||||||||
Winchester | 174.0 | 183.8 | 510.8 | 515.8 | |||||||||||
Total sales | $ | 1,872.4 | $ | 1,554.9 | $ | 5,311.1 | $ | 4,648.5 | |||||||
Income (loss) before taxes: | |||||||||||||||
Chlor Alkali Products and Vinyls | $ | 210.8 | $ | 129.7 | $ | 490.7 | $ | 270.0 | |||||||
Epoxy | 31.1 | (1.7 | ) | 33.8 | (11.0 | ) | |||||||||
Winchester | 10.3 | 17.2 | 34.1 | 61.3 | |||||||||||
Corporate/other: | |||||||||||||||
Environmental income (expense) | 110.8 | (1.8 | ) | 104.1 | (6.2 | ) | |||||||||
Other corporate and unallocated costs | (42.7 | ) | (28.4 | ) | (124.5 | ) | (87.6 | ) | |||||||
Restructuring charges | (3.3 | ) | (9.2 | ) | (13.7 | ) | (25.9 | ) | |||||||
Acquisition-related costs | (0.4 | ) | (1.1 | ) | (1.0 | ) | (12.5 | ) | |||||||
Other operating (expense) income | (1.7 | ) | — | 6.4 | (0.1 | ) | |||||||||
Interest expense | (59.2 | ) | (53.1 | ) | (184.0 | ) | (158.0 | ) | |||||||
Interest income | 0.3 | 0.4 | 1.1 | 1.0 | |||||||||||
Non-operating pension income | 5.4 | 8.4 | 16.2 | 25.5 | |||||||||||
Income before taxes | $ | 261.4 | $ | 60.4 | $ | 363.2 | $ | 56.5 |
Three Months Ended | |||||||||||||||
September 30, 2018 | |||||||||||||||
Chlor Alkali Products and Vinyls | Epoxy | Winchester | Total | ||||||||||||
Primary geographical markets: | ($ in millions) | ||||||||||||||
United States | $ | 682.8 | $ | 209.1 | $ | 155.5 | $ | 1,047.4 | |||||||
Europe | 40.1 | 289.3 | 1.8 | 331.2 | |||||||||||
Other foreign | 328.2 | 148.9 | 16.7 | 493.8 | |||||||||||
Total Sales | $ | 1,051.1 | $ | 647.3 | $ | 174.0 | $ | 1,872.4 |
Nine Months Ended | |||||||||||||||
September 30, 2018 | |||||||||||||||
Chlor Alkali Products and Vinyls | Epoxy | Winchester | Total | ||||||||||||
Primary geographical markets: | ($ in millions) | ||||||||||||||
United States | $ | 1,956.0 | $ | 589.9 | $ | 460.2 | $ | 3,006.1 | |||||||
Europe | 136.2 | 763.0 | 7.0 | 906.2 | |||||||||||
Other foreign | 913.7 | 441.5 | 43.6 | 1,398.8 | |||||||||||
Total Sales | $ | 3,005.9 | $ | 1,794.4 | $ | 510.8 | $ | 5,311.1 |
Three Months Ended | |||||||||||||||
September 30, 2017 | |||||||||||||||
Chlor Alkali Products and Vinyls | Epoxy | Winchester | Total | ||||||||||||
Primary geographical markets: | ($ in millions) | ||||||||||||||
United States | $ | 589.5 | $ | 159.8 | $ | 166.5 | $ | 915.8 | |||||||
Europe | 31.6 | 206.8 | 2.5 | 240.9 | |||||||||||
Other foreign | 260.1 | 123.3 | 14.8 | 398.2 | |||||||||||
Total Sales | $ | 881.2 | $ | 489.9 | $ | 183.8 | $ | 1,554.9 |
Nine Months Ended | |||||||||||||||
September 30, 2017 | |||||||||||||||
Chlor Alkali Products and Vinyls | Epoxy | Winchester | Total | ||||||||||||
Primary geographical markets: | ($ in millions) | ||||||||||||||
United States | $ | 1,706.6 | $ | 488.0 | $ | 463.8 | $ | 2,658.4 | |||||||
Europe | 92.7 | 685.1 | 8.2 | 786.0 | |||||||||||
Other foreign | 783.9 | 376.4 | 43.8 | 1,204.1 | |||||||||||
Total Sales | $ | 2,583.2 | $ | 1,549.5 | $ | 515.8 | $ | 4,648.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Major product lines: | ($ in millions) | ||||||||||||||
Chlor Alkali Products and Vinyls | |||||||||||||||
Caustic soda | $ | 539.2 | $ | 442.7 | $ | 1,571.1 | $ | 1,272.5 | |||||||
Chlorine, chlorine derivatives and other co-products | 511.9 | 438.5 | 1,434.8 | 1,310.7 | |||||||||||
Total Chlor Alkali Products and Vinyls | 1,051.1 | 881.2 | 3,005.9 | 2,583.2 | |||||||||||
Epoxy | |||||||||||||||
Phenolics and allylics | 345.6 | 227.1 | 891.8 | 759.1 | |||||||||||
Epoxy resins | 301.7 | 262.8 | 902.6 | 790.4 | |||||||||||
Total Epoxy | 647.3 | 489.9 | 1,794.4 | 1,549.5 | |||||||||||
Winchester | |||||||||||||||
Commercial | 118.2 | 128.8 | 335.3 | 364.2 | |||||||||||
Military and law enforcement | 55.8 | 55.0 | 175.5 | 151.6 | |||||||||||
Total Winchester | 174.0 | 183.8 | 510.8 | 515.8 | |||||||||||
Total Sales | $ | 1,872.4 | $ | 1,554.9 | $ | 5,311.1 | $ | 4,648.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
($ in millions) | |||||||||||||||
Stock-based compensation | $ | 4.1 | $ | 3.0 | $ | 15.0 | $ | 14.5 | |||||||
Mark-to-market adjustments | (1.4 | ) | 2.6 | (5.7 | ) | 3.9 | |||||||||
Total expense | $ | 2.7 | $ | 5.6 | $ | 9.3 | $ | 18.4 |
Grant date | 2018 | 2017 | |||||
Dividend yield | 2.43 | % | 2.69 | % | |||
Risk-free interest rate | 2.72 | % | 2.06 | % | |||
Expected volatility | 32 | % | 34 | % | |||
Expected life (years) | 6.0 | 6.0 | |||||
Weighted-average grant fair value (per option) | $ | 8.89 | $ | 7.78 | |||
Weighted-average exercise price | $ | 32.94 | $ | 29.82 | |||
Shares granted | 927,000 | 1,621,000 |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Components of Net Periodic Benefit (Income) Cost | ($ in millions) | ||||||||||||||
Service cost | $ | 3.3 | $ | 2.4 | $ | 0.3 | $ | 0.3 | |||||||
Interest cost | 21.5 | 21.8 | 0.3 | 0.3 | |||||||||||
Expected return on plans’ assets | (36.5 | ) | (37.3 | ) | — | — | |||||||||
Amortization of prior service cost | — | — | — | (0.6 | ) | ||||||||||
Recognized actuarial loss | 8.6 | 6.8 | 0.6 | 0.6 | |||||||||||
Net periodic benefit (income) cost | $ | (3.1 | ) | $ | (6.3 | ) | $ | 1.2 | $ | 0.6 |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Components of Net Periodic Benefit (Income) Cost | ($ in millions) | ||||||||||||||
Service cost | $ | 8.5 | $ | 6.9 | $ | 1.0 | $ | 0.9 | |||||||
Interest cost | 64.8 | 65.0 | 1.1 | 1.1 | |||||||||||
Expected return on plans’ assets | (109.9 | ) | (111.8 | ) | — | — | |||||||||
Amortization of prior service cost | — | — | — | (1.9 | ) | ||||||||||
Recognized actuarial loss | 25.9 | 20.2 | 1.8 | 1.9 | |||||||||||
Net periodic benefit (income) cost | $ | (10.7 | ) | $ | (19.7 | ) | $ | 3.9 | $ | 2.0 |
September 30, | |||||||
2018 | 2017 | ||||||
($ in millions) | |||||||
Balance at beginning of year | $ | 36.3 | $ | 38.4 | |||
Increases for prior year tax positions | — | 4.9 | |||||
Decreases for prior year tax positions | (4.6 | ) | (9.2 | ) | |||
Increases for current year tax positions | 1.6 | 2.0 | |||||
Settlement with taxing authorities | — | (1.0 | ) | ||||
Reductions due to statute of limitations | — | (0.1 | ) | ||||
Balance at end of period | $ | 33.3 | $ | 35.0 |
Tax Years | |
U.S. federal income tax | 2013 - 2017 |
U.S. state income tax | 2006 - 2017 |
Canadian federal income tax | 2012 - 2017 |
Brazil | 2014 - 2017 |
Germany | 2015 - 2017 |
China | 2014 - 2017 |
The Netherlands | 2014 - 2017 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
($ in millions) | |||||||||||
Natural gas | $ | 65.6 | $ | 39.2 | $ | 38.4 | |||||
Copper | 48.9 | 45.2 | 42.1 | ||||||||
Zinc | 8.3 | 8.4 | 8.0 |
September 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||
($ in millions) | |||||||||||
Asset Derivatives: | |||||||||||
Other current assets | |||||||||||
Derivatives designated as hedging instruments: | |||||||||||
Interest rate contracts - gains | $ | 7.6 | $ | 6.9 | $ | 5.0 | |||||
Commodity contracts - gains | 2.2 | 11.4 | 7.8 | ||||||||
Commodity contracts - losses | — | (0.1 | ) | (0.4 | ) | ||||||
Derivatives not designated as hedging instruments: | |||||||||||
Foreign exchange contracts - gains | 0.3 | 2.0 | 0.5 | ||||||||
Foreign exchange contracts - losses | (0.1 | ) | (1.0 | ) | (0.3 | ) | |||||
Total other current assets | 10.0 | 19.2 | 12.6 | ||||||||
Other assets | |||||||||||
Derivatives designated as hedging instruments: | |||||||||||
Interest rate contracts - gains | 1.6 | 3.6 | 3.7 | ||||||||
Total other assets | 1.6 | 3.6 | 3.7 | ||||||||
Total Asset Derivatives(1) | $ | 11.6 | $ | 22.8 | $ | 16.3 | |||||
Liability Derivatives: | |||||||||||
Accrued liabilities | |||||||||||
Derivatives designated as hedging instruments: | |||||||||||
Commodity contracts - losses | 3.7 | 3.8 | 2.6 | ||||||||
Commodity contracts - gains | (3.0 | ) | — | — | |||||||
Derivatives not designated as hedging instruments: | |||||||||||
Foreign exchange contracts - losses | 2.6 | — | 0.6 | ||||||||
Foreign exchange contracts - gains | (0.4 | ) | — | (0.5 | ) | ||||||
Total accrued liabilities | 2.9 | 3.8 | 2.7 | ||||||||
Other liabilities | |||||||||||
Derivatives designated as hedging instruments: | |||||||||||
Interest rate contracts - losses | 47.8 | 28.1 | 23.9 | ||||||||
Commodity contracts - losses | 0.9 | — | — | ||||||||
Commodity contracts - gains | (0.1 | ) | — | — | |||||||
Total other liabilities | 48.6 | 28.1 | 23.9 | ||||||||
Total Liability Derivatives(1) | $ | 51.5 | $ | 31.9 | $ | 26.6 |
(1) | Does not include the impact of cash collateral received from or provided to counterparties. |
Amount of (Loss) Gain | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Location of (Loss) Gain | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Derivatives – Cash Flow Hedges | ($ in millions) | ||||||||||||||||
Recognized in other comprehensive income (effective portion): | |||||||||||||||||
Commodity contracts | ——— | $ | (2.9 | ) | $ | 2.9 | $ | (5.4 | ) | $ | (4.5 | ) | |||||
Interest rate contracts | ——— | 0.3 | 0.3 | 4.5 | 0.9 | ||||||||||||
$ | (2.6 | ) | $ | 3.2 | $ | (0.9 | ) | $ | (3.6 | ) | |||||||
Reclassified from accumulated other comprehensive loss into income (effective portion): | |||||||||||||||||
Interest rate contracts | Interest expense | $ | 2.5 | $ | 1.2 | $ | 5.9 | $ | 1.7 | ||||||||
Commodity contracts | Cost of goods sold | (0.3 | ) | — | 1.3 | 1.9 | |||||||||||
$ | 2.2 | $ | 1.2 | $ | 7.2 | $ | 3.6 | ||||||||||
Derivatives – Fair Value Hedges | |||||||||||||||||
Interest rate contracts | Interest expense | $ | (0.6 | ) | $ | 0.5 | $ | (0.9 | ) | $ | 2.5 | ||||||
Derivatives Not Designated as Hedging Instruments | |||||||||||||||||
Foreign exchange contracts | Selling and administration | $ | 0.3 | $ | (0.2 | ) | $ | (0.3 | ) | $ | 0.4 |
Fair Value Measurements | |||||||||||||||
Balance at September 30, 2018 | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | ($ in millions) | ||||||||||||||
Interest rate swaps | $ | — | $ | 9.2 | $ | — | $ | 9.2 | |||||||
Commodity contracts | — | 2.2 | — | 2.2 | |||||||||||
Foreign exchange contracts | — | 0.2 | — | 0.2 | |||||||||||
Liabilities | |||||||||||||||
Interest rate swaps | $ | — | $ | 47.8 | $ | — | $ | 47.8 | |||||||
Commodity contracts | — | 1.5 | — | 1.5 | |||||||||||
Foreign exchange contracts | — | 2.2 | — | 2.2 | |||||||||||
Balance at December 31, 2017 | |||||||||||||||
Assets | |||||||||||||||
Interest rate swaps | $ | — | $ | 10.5 | $ | — | $ | 10.5 | |||||||
Commodity contracts | — | 11.3 | — | 11.3 | |||||||||||
Foreign exchange contracts | — | 1.0 | — | 1.0 | |||||||||||
Liabilities | |||||||||||||||
Interest rate swaps | $ | — | $ | 28.1 | $ | — | $ | 28.1 | |||||||
Commodity contracts | — | 3.8 | — | 3.8 | |||||||||||
Balance at September 30, 2017 | |||||||||||||||
Assets | |||||||||||||||
Interest rate swaps | $ | — | $ | 8.7 | $ | — | $ | 8.7 | |||||||
Commodity contracts | — | 7.4 | — | 7.4 | |||||||||||
Foreign exchange contracts | — | 0.2 | — | 0.2 | |||||||||||
Liabilities | |||||||||||||||
Interest rate swaps | $ | — | $ | 23.9 | $ | — | $ | 23.9 | |||||||
Commodity contracts | — | 2.6 | — | 2.6 | |||||||||||
Foreign exchange contracts | — | 0.1 | — | 0.1 |
Fair Value Measurements | Amount recorded on balance sheets | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
($ in millions) | |||||||||||||||||||
Balance at September 30, 2018 | $ | — | $ | 3,331.9 | $ | 153.0 | $ | 3,484.9 | $ | 3,337.3 | |||||||||
Balance at December 31, 2017 | — | 3,758.0 | 153.0 | 3,911.0 | 3,612.0 | ||||||||||||||
Balance at September 30, 2017 | — | 3,920.5 | 153.0 | 4,073.5 | 3,745.2 |
CONDENSED CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||
September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 23.1 | $ | — | $ | 133.6 | $ | — | $ | 156.7 | |||||||||
Receivables, net | 227.8 | — | 781.4 | — | 1,009.2 | ||||||||||||||
Intercompany receivables | — | — | 2,402.8 | (2,402.8 | ) | — | |||||||||||||
Income taxes receivable | 10.0 | — | 2.8 | — | 12.8 | ||||||||||||||
Inventories, net | 171.2 | — | 553.2 | — | 724.4 | ||||||||||||||
Other current assets | 211.9 | — | 3.6 | (180.3 | ) | 35.2 | |||||||||||||
Total current assets | 644.0 | — | 3,877.4 | (2,583.1 | ) | 1,938.3 | |||||||||||||
Property, plant and equipment, net | 597.6 | — | 2,859.1 | — | 3,456.7 | ||||||||||||||
Investment in subsidiaries | 6,862.8 | 4,192.8 | — | (11,055.6 | ) | — | |||||||||||||
Deferred income taxes | — | 1.0 | 31.1 | (7.3 | ) | 24.8 | |||||||||||||
Other assets | 23.6 | — | 1,136.0 | — | 1,159.6 | ||||||||||||||
Long-term receivables—affiliates | — | 1,330.5 | — | (1,330.5 | ) | — | |||||||||||||
Intangible assets, net | 0.3 | 5.7 | 522.3 | — | 528.3 | ||||||||||||||
Goodwill | — | 966.3 | 1,153.3 | — | 2,119.6 | ||||||||||||||
Total assets | $ | 8,128.3 | $ | 6,496.3 | $ | 9,579.2 | $ | (14,976.5 | ) | $ | 9,227.3 | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current installments of long-term debt | $ | 0.9 | $ | — | $ | — | $ | — | $ | 0.9 | |||||||||
Accounts payable | 72.3 | — | 640.9 | (3.8 | ) | 709.4 | |||||||||||||
Intercompany payables | 2,402.8 | — | — | (2,402.8 | ) | — | |||||||||||||
Income taxes payable | 0.4 | — | 21.7 | — | 22.1 | ||||||||||||||
Accrued liabilities | 157.5 | — | 361.7 | (177.9 | ) | 341.3 | |||||||||||||
Total current liabilities | 2,633.9 | — | 1,024.3 | (2,584.5 | ) | 1,073.7 | |||||||||||||
Long-term debt | 1,347.6 | 1,808.8 | 180.0 | — | 3,336.4 | ||||||||||||||
Accrued pension liability | 360.7 | — | 228.9 | — | 589.6 | ||||||||||||||
Deferred income taxes | 16.1 | 4.1 | 535.7 | (7.3 | ) | 548.6 | |||||||||||||
Long-term payables—affiliates | 536.6 | — | 793.9 | (1,330.5 | ) | — | |||||||||||||
Other liabilities | 310.5 | 5.5 | 440.1 | — | 756.1 | ||||||||||||||
Total liabilities | 5,205.4 | 1,818.4 | 3,202.9 | (3,922.3 | ) | 6,304.4 | |||||||||||||
Commitments and contingencies | |||||||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Common stock | 166.8 | — | 14.6 | (14.6 | ) | 166.8 | |||||||||||||
Additional paid-in capital | 2,276.9 | 4,125.7 | 4,808.2 | (8,933.9 | ) | 2,276.9 | |||||||||||||
Accumulated other comprehensive loss | (571.3 | ) | — | (6.3 | ) | 6.3 | (571.3 | ) | |||||||||||
Retained earnings | 1,050.5 | 552.2 | 1,559.8 | (2,112.0 | ) | 1,050.5 | |||||||||||||
Total shareholders’ equity | 2,922.9 | 4,677.9 | 6,376.3 | (11,054.2 | ) | 2,922.9 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 8,128.3 | $ | 6,496.3 | $ | 9,579.2 | $ | (14,976.5 | ) | $ | 9,227.3 |
CONDENSED CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||
December 31, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 57.1 | $ | — | $ | 161.3 | $ | — | $ | 218.4 | |||||||||
Receivables, net | 95.6 | — | 637.6 | — | 733.2 | ||||||||||||||
Intercompany receivables | — | — | 2,093.2 | (2,093.2 | ) | — | |||||||||||||
Income taxes receivable | 11.7 | — | 6.3 | (1.1 | ) | 16.9 | |||||||||||||
Inventories, net | 155.4 | — | 527.2 | — | 682.6 | ||||||||||||||
Other current assets | 206.2 | — | 5.3 | (163.4 | ) | 48.1 | |||||||||||||
Total current assets | 526.0 | — | 3,430.9 | (2,257.7 | ) | 1,699.2 | |||||||||||||
Property, plant and equipment, net | 544.4 | — | 3,031.4 | — | 3,575.8 | ||||||||||||||
Investment in subsidiaries | 6,680.4 | 4,092.3 | — | (10,772.7 | ) | — | |||||||||||||
Deferred income taxes | 38.1 | — | 34.5 | (36.2 | ) | 36.4 | |||||||||||||
Other assets | 45.9 | — | 1,162.5 | — | 1,208.4 | ||||||||||||||
Long-term receivables—affiliates | — | 2,132.1 | — | (2,132.1 | ) | — | |||||||||||||
Intangible assets, net | 0.3 | 5.7 | 572.5 | — | 578.5 | ||||||||||||||
Goodwill | — | 966.3 | 1,153.7 | — | 2,120.0 | ||||||||||||||
Total assets | $ | 7,835.1 | $ | 7,196.4 | $ | 9,385.5 | $ | (15,198.7 | ) | $ | 9,218.3 | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current installments of long-term debt | $ | 0.7 | $ | — | $ | — | $ | — | $ | 0.7 | |||||||||
Accounts payable | 83.2 | — | 590.0 | (3.4 | ) | 669.8 | |||||||||||||
Intercompany payables | 2,093.2 | — | — | (2,093.2 | ) | — | |||||||||||||
Income taxes payable | — | — | 10.5 | (1.1 | ) | 9.4 | |||||||||||||
Accrued liabilities | 117.7 | — | 318.1 | (161.4 | ) | 274.4 | |||||||||||||
Total current liabilities | 2,294.8 | — | 918.6 | (2,259.1 | ) | 954.3 | |||||||||||||
Long-term debt | 839.4 | 2,522.2 | 249.7 | — | 3,611.3 | ||||||||||||||
Accrued pension liability | 406.7 | — | 229.2 | — | 635.9 | ||||||||||||||
Deferred income taxes | — | 3.0 | 544.4 | (36.2 | ) | 511.2 | |||||||||||||
Long-term payables—affiliates | 1,250.0 | — | 882.1 | (2,132.1 | ) | — | |||||||||||||
Other liabilities | 290.5 | 5.6 | 455.8 | — | 751.9 | ||||||||||||||
Total liabilities | 5,081.4 | 2,530.8 | 3,279.8 | (4,427.4 | ) | 6,464.6 | |||||||||||||
Commitments and contingencies | |||||||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Common stock | 167.1 | — | 14.6 | (14.6 | ) | 167.1 | |||||||||||||
Additional paid-in capital | 2,280.9 | 4,125.7 | 4,808.2 | (8,933.9 | ) | 2,280.9 | |||||||||||||
Accumulated other comprehensive loss | (484.6 | ) | — | (4.6 | ) | 4.6 | (484.6 | ) | |||||||||||
Retained earnings | 790.3 | 539.9 | 1,287.5 | (1,827.4 | ) | 790.3 | |||||||||||||
Total shareholders’ equity | 2,753.7 | 4,665.6 | 6,105.7 | (10,771.3 | ) | 2,753.7 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 7,835.1 | $ | 7,196.4 | $ | 9,385.5 | $ | (15,198.7 | ) | $ | 9,218.3 |
CONDENSED CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 36.9 | $ | — | $ | 219.0 | $ | — | $ | 255.9 | |||||||||
Receivables, net | 106.0 | — | 623.5 | — | 729.5 | ||||||||||||||
Intercompany receivables | — | — | 1,948.4 | (1,948.4 | ) | — | |||||||||||||
Income taxes receivable | 13.4 | — | 4.6 | (2.1 | ) | 15.9 | |||||||||||||
Inventories, net | 172.2 | — | 517.3 | — | 689.5 | ||||||||||||||
Other current assets | 180.5 | — | 5.0 | (158.4 | ) | 27.1 | |||||||||||||
Total current assets | 509.0 | — | 3,317.8 | (2,108.9 | ) | 1,717.9 | |||||||||||||
Property, plant and equipment, net | 513.0 | — | 3,066.2 | — | 3,579.2 | ||||||||||||||
Investment in subsidiaries | 6,155.3 | 3,828.7 | — | (9,984.0 | ) | — | |||||||||||||
Deferred income taxes | 140.9 | — | 127.0 | (126.8 | ) | 141.1 | |||||||||||||
Other assets | 45.5 | — | 1,170.1 | — | 1,215.6 | ||||||||||||||
Long-term receivables—affiliates | — | 2,174.0 | — | (2,174.0 | ) | — | |||||||||||||
Intangible assets, net | 0.3 | 5.7 | 586.9 | — | 592.9 | ||||||||||||||
Goodwill | — | 966.3 | 1,153.5 | — | 2,119.8 | ||||||||||||||
Total assets | $ | 7,364.0 | $ | 6,974.7 | $ | 9,421.5 | $ | (14,393.7 | ) | $ | 9,366.5 | ||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current installments of long-term debt | $ | 0.7 | $ | 68.8 | $ | 12.2 | $ | — | $ | 81.7 | |||||||||
Accounts payable | 69.6 | — | 548.3 | (4.4 | ) | 613.5 | |||||||||||||
Intercompany payables | 1,948.4 | — | — | (1,948.4 | ) | — | |||||||||||||
Income taxes payable | — | — | 11.7 | (2.1 | ) | 9.6 | |||||||||||||
Accrued liabilities | 146.0 | — | 305.0 | (156.5 | ) | 294.5 | |||||||||||||
Total current liabilities | 2,164.7 | 68.8 | 877.2 | (2,111.4 | ) | 999.3 | |||||||||||||
Long-term debt | 944.1 | 2,470.1 | 249.3 | — | 3,663.5 | ||||||||||||||
Accrued pension liability | 405.7 | — | 213.0 | — | 618.7 | ||||||||||||||
Deferred income taxes | — | 250.5 | 931.8 | (126.8 | ) | 1,055.5 | |||||||||||||
Long-term payables—affiliates | 1,267.2 | — | 906.8 | (2,174.0 | ) | — | |||||||||||||
Other liabilities | 283.8 | 5.6 | 441.6 | — | 731.0 | ||||||||||||||
Total liabilities | 5,065.5 | 2,795.0 | 3,619.7 | (4,412.2 | ) | 7,068.0 | |||||||||||||
Commitments and contingencies | |||||||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Common stock | 166.4 | — | 14.6 | (14.6 | ) | 166.4 | |||||||||||||
Additional paid-in capital | 2,267.7 | 4,125.7 | 4,808.2 | (8,933.9 | ) | 2,267.7 | |||||||||||||
Accumulated other comprehensive loss | (470.0 | ) | — | (5.7 | ) | 5.7 | (470.0 | ) | |||||||||||
Retained earnings | 334.4 | 54.0 | 984.7 | (1,038.7 | ) | 334.4 | |||||||||||||
Total shareholders’ equity | 2,298.5 | 4,179.7 | 5,801.8 | (9,981.5 | ) | 2,298.5 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 7,364.0 | $ | 6,974.7 | $ | 9,421.5 | $ | (14,393.7 | ) | $ | 9,366.5 |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Sales | $ | 360.9 | $ | — | $ | 1,621.7 | $ | (110.2 | ) | $ | 1,872.4 | ||||||||
Operating expenses: | |||||||||||||||||||
Cost of goods sold | 208.3 | — | 1,343.6 | (110.2 | ) | 1,441.7 | |||||||||||||
Selling and administration | 51.4 | — | 59.4 | — | 110.8 | ||||||||||||||
Restructuring charges | — | — | 3.3 | — | 3.3 | ||||||||||||||
Acquisition-related costs | 0.4 | — | — | — | 0.4 | ||||||||||||||
Other operating (expense) income | (3.5 | ) | — | 1.8 | — | (1.7 | ) | ||||||||||||
Operating income | 97.3 | — | 217.2 | — | 314.5 | ||||||||||||||
Earnings of non-consolidated affiliates | 0.4 | — | — | — | 0.4 | ||||||||||||||
Equity income in subsidiaries | 122.2 | 85.2 | — | (207.4 | ) | — | |||||||||||||
Interest expense | 17.3 | 37.3 | 6.1 | (1.5 | ) | 59.2 | |||||||||||||
Interest income | 1.8 | — | — | (1.5 | ) | 0.3 | |||||||||||||
Non-operating pension income (expense) | 6.5 | — | (1.1 | ) | — | 5.4 | |||||||||||||
Income before taxes | 210.9 | 47.9 | 210.0 | (207.4 | ) | 261.4 | |||||||||||||
Income tax provision (benefit) | 15.8 | (9.1 | ) | 59.6 | — | 66.3 | |||||||||||||
Net income | $ | 195.1 | $ | 57.0 | $ | 150.4 | $ | (207.4 | ) | $ | 195.1 |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Sales | $ | 1,083.1 | $ | — | $ | 4,554.6 | $ | (326.6 | ) | $ | 5,311.1 | ||||||||
Operating expenses: | |||||||||||||||||||
Cost of goods sold | 853.2 | — | 3,904.5 | (326.6 | ) | 4,431.1 | |||||||||||||
Selling and administration | 151.7 | — | 169.9 | — | 321.6 | ||||||||||||||
Restructuring charges | — | — | 13.7 | — | 13.7 | ||||||||||||||
Acquisition-related costs | 1.0 | — | — | — | 1.0 | ||||||||||||||
Other operating (expense) income | (0.9 | ) | — | 7.3 | — | 6.4 | |||||||||||||
Operating income | 76.3 | — | 473.8 | — | 550.1 | ||||||||||||||
Losses of non-consolidated affiliates | (20.2 | ) | — | — | — | (20.2 | ) | ||||||||||||
Equity income in subsidiaries | 249.1 | 195.5 | — | (444.6 | ) | — | |||||||||||||
Interest expense | 52.4 | 116.4 | 19.6 | (4.4 | ) | 184.0 | |||||||||||||
Interest income | 4.7 | — | 0.8 | (4.4 | ) | 1.1 | |||||||||||||
Non-operating pension income (expense) | 19.9 | — | (3.7 | ) | — | 16.2 | |||||||||||||
Income before taxes | 277.4 | 79.1 | 451.3 | (444.6 | ) | 363.2 | |||||||||||||
Income tax provision (benefit) | 2.8 | (28.2 | ) | 114.0 | — | 88.6 | |||||||||||||
Net income | $ | 274.6 | $ | 107.3 | $ | 337.3 | $ | (444.6 | ) | $ | 274.6 |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Sales | $ | 348.0 | $ | — | $ | 1,321.8 | $ | (114.9 | ) | $ | 1,554.9 | ||||||||
Operating expenses: | |||||||||||||||||||
Cost of goods sold | 318.5 | — | 1,145.7 | (114.9 | ) | 1,349.3 | |||||||||||||
Selling and administration | 35.8 | — | 55.3 | — | 91.1 | ||||||||||||||
Restructuring charges | — | — | 9.2 | — | 9.2 | ||||||||||||||
Acquisition-related costs | 1.1 | — | — | — | 1.1 | ||||||||||||||
Other operating (expense) income | (2.6 | ) | — | 2.6 | — | — | |||||||||||||
Operating (loss) income | (10.0 | ) | — | 114.2 | — | 104.2 | |||||||||||||
Earnings of non-consolidated affiliates | 0.5 | — | — | — | 0.5 | ||||||||||||||
Equity income in subsidiaries | 54.5 | 54.7 | — | (109.2 | ) | — | |||||||||||||
Interest expense | 11.9 | 41.0 | 1.5 | (1.3 | ) | 53.1 | |||||||||||||
Interest income | 1.7 | — | — | (1.3 | ) | 0.4 | |||||||||||||
Non-operating pension income (expense) | 9.4 | — | (1.0 | ) | — | 8.4 | |||||||||||||
Income before taxes | 44.2 | 13.7 | 111.7 | (109.2 | ) | 60.4 | |||||||||||||
Income tax (benefit) provision | (8.5 | ) | (15.0 | ) | 31.2 | — | 7.7 | ||||||||||||
Net income | $ | 52.7 | $ | 28.7 | $ | 80.5 | $ | (109.2 | ) | $ | 52.7 |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Sales | $ | 1,000.9 | $ | — | $ | 3,976.9 | $ | (329.3 | ) | $ | 4,648.5 | ||||||||
Operating expenses: | |||||||||||||||||||
Cost of goods sold | 897.6 | — | 3,586.4 | (329.3 | ) | 4,154.7 | |||||||||||||
Selling and administration | 113.9 | — | 154.9 | — | 268.8 | ||||||||||||||
Restructuring charges | — | — | 25.9 | — | 25.9 | ||||||||||||||
Acquisition-related costs | 12.5 | — | — | — | 12.5 | ||||||||||||||
Other operating (expense) income | (7.1 | ) | — | 7.0 | — | (0.1 | ) | ||||||||||||
Operating (loss) income | (30.2 | ) | — | 216.7 | — | 186.5 | |||||||||||||
Earnings of non-consolidated affiliates | 1.5 | — | — | — | 1.5 | ||||||||||||||
Equity income in subsidiaries | 72.9 | 94.0 | — | (166.9 | ) | — | |||||||||||||
Interest expense | 33.3 | 123.8 | 5.5 | (4.6 | ) | 158.0 | |||||||||||||
Interest income | 4.7 | — | 0.9 | (4.6 | ) | 1.0 | |||||||||||||
Non-operating pension income (expense) | 28.5 | — | (3.0 | ) | — | 25.5 | |||||||||||||
Income (loss) before taxes | 44.1 | (29.8 | ) | 209.1 | (166.9 | ) | 56.5 | ||||||||||||
Income tax (benefit) provision | (16.1 | ) | (45.7 | ) | 58.1 | — | (3.7 | ) | |||||||||||
Net income | $ | 60.2 | $ | 15.9 | $ | 151.0 | $ | (166.9 | ) | $ | 60.2 |
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net income | $ | 195.1 | $ | 57.0 | $ | 150.4 | $ | (207.4 | ) | $ | 195.1 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Foreign currency translation adjustments, net | — | — | (2.0 | ) | — | (2.0 | ) | ||||||||||||
Unrealized losses on derivative contracts, net | (3.6 | ) | — | — | — | (3.6 | ) | ||||||||||||
Amortization of prior service costs and actuarial losses, net | 6.6 | — | 0.9 | — | 7.5 | ||||||||||||||
Total other comprehensive income (loss), net of tax | 3.0 | — | (1.1 | ) | — | 1.9 | |||||||||||||
Comprehensive income | $ | 198.1 | $ | 57.0 | $ | 149.3 | $ | (207.4 | ) | $ | 197.0 |
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net income | $ | 274.6 | $ | 107.3 | $ | 337.3 | $ | (444.6 | ) | $ | 274.6 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Foreign currency translation adjustments, net | — | — | (15.7 | ) | — | (15.7 | ) | ||||||||||||
Unrealized losses on derivative contracts, net | (6.1 | ) | — | — | — | (6.1 | ) | ||||||||||||
Amortization of prior service costs and actuarial losses, net | 19.7 | — | 1.3 | — | 21.0 | ||||||||||||||
Total other comprehensive income (loss), net of tax | 13.6 | — | (14.4 | ) | — | (0.8 | ) | ||||||||||||
Comprehensive income | $ | 288.2 | $ | 107.3 | $ | 322.9 | $ | (444.6 | ) | $ | 273.8 |
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net income | $ | 52.7 | $ | 28.7 | $ | 80.5 | $ | (109.2 | ) | $ | 52.7 | ||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||
Foreign currency translation adjustments, net | — | — | 9.8 | — | 9.8 | ||||||||||||||
Unrealized gains on derivative contracts, net | 1.3 | — | — | — | 1.3 | ||||||||||||||
Amortization of prior service costs and actuarial losses, net | 3.6 | — | 0.7 | — | 4.3 | ||||||||||||||
Total other comprehensive income, net of tax | 4.9 | — | 10.5 | — | 15.4 | ||||||||||||||
Comprehensive income | $ | 57.6 | $ | 28.7 | $ | 91.0 | $ | (109.2 | ) | $ | 68.1 |
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net income | $ | 60.2 | $ | 15.9 | $ | 151.0 | $ | (166.9 | ) | $ | 60.2 | ||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||
Foreign currency translation adjustments, net | — | — | 31.7 | — | 31.7 | ||||||||||||||
Unrealized losses on derivative contracts, net | (4.4 | ) | — | — | — | (4.4 | ) | ||||||||||||
Amortization of prior service costs and actuarial losses, net | 11.6 | — | 1.1 | — | 12.7 | ||||||||||||||
Total other comprehensive income, net of tax | 7.2 | — | 32.8 | — | 40.0 | ||||||||||||||
Comprehensive income | $ | 67.4 | $ | 15.9 | $ | 183.8 | $ | (166.9 | ) | $ | 100.2 |
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net operating activities | $ | 287.9 | $ | — | $ | 298.4 | $ | — | $ | 586.3 | |||||||||
Investing Activities | |||||||||||||||||||
Capital expenditures | (110.5 | ) | — | (164.0 | ) | — | (274.5 | ) | |||||||||||
Proceeds from disposition of property, plant and equipment | — | — | 2.9 | — | 2.9 | ||||||||||||||
Distributions from consolidated subsidiaries, net | 95.0 | 95.0 | — | (190.0 | ) | — | |||||||||||||
Net investing activities | (15.5 | ) | 95.0 | (161.1 | ) | (190.0 | ) | (271.6 | ) | ||||||||||
Financing Activities | |||||||||||||||||||
Long-term debt: | |||||||||||||||||||
Borrowings | 550.0 | — | 20.0 | — | 570.0 | ||||||||||||||
Repayments | (20.6 | ) | (713.4 | ) | (89.7 | ) | — | (823.7 | ) | ||||||||||
Common stock repurchased and retired | (16.8 | ) | — | — | — | (16.8 | ) | ||||||||||||
Stock options exercised | 3.2 | — | — | — | 3.2 | ||||||||||||||
Dividends paid | (100.3 | ) | (95.0 | ) | (95.0 | ) | 190.0 | (100.3 | ) | ||||||||||
Debt issuance costs | (8.5 | ) | — | — | — | (8.5 | ) | ||||||||||||
Intercompany financing activities | (713.4 | ) | 713.4 | — | — | — | |||||||||||||
Net financing activities | (306.4 | ) | (95.0 | ) | (164.7 | ) | 190.0 | (376.1 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (0.3 | ) | — | (0.3 | ) | ||||||||||||
Net decrease in cash and cash equivalents | (34.0 | ) | — | (27.7 | ) | — | (61.7 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 57.1 | — | 161.3 | — | 218.4 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 23.1 | $ | — | $ | 133.6 | $ | — | $ | 156.7 |
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Parent Guarantor | Issuer | Subsidiary Non-Guarantor | Eliminations | Total | |||||||||||||||
Net operating activities | $ | 290.3 | $ | — | $ | 164.8 | $ | — | $ | 455.1 | |||||||||
Investing Activities | |||||||||||||||||||
Capital expenditures | (64.5 | ) | — | (145.5 | ) | — | (210.0 | ) | |||||||||||
Payments under long-term supply contracts | — | — | (209.4 | ) | — | (209.4 | ) | ||||||||||||
Proceeds from disposition of property, plant and equipment | — | — | 0.1 | — | 0.1 | ||||||||||||||
Net investing activities | (64.5 | ) | — | (354.8 | ) | — | (419.3 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Long-term debt: | |||||||||||||||||||
Borrowings | 620.0 | 1,375.0 | 40.0 | — | 2,035.0 | ||||||||||||||
Repayments | (590.5 | ) | (1,316.9 | ) | — | — | (1,907.4 | ) | |||||||||||
Stock options exercised | 18.5 | — | — | — | 18.5 | ||||||||||||||
Dividends paid | (99.6 | ) | — | — | — | (99.6 | ) | ||||||||||||
Debt issuance costs | (8.3 | ) | (2.9 | ) | — | — | (11.2 | ) | |||||||||||
Intercompany financing activities | (154.2 | ) | (55.2 | ) | 209.4 | — | — | ||||||||||||
Net financing activities | (214.1 | ) | — | 249.4 | — | 35.3 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 0.3 | — | 0.3 | ||||||||||||||
Net increase in cash and cash equivalents | 11.7 | — | 59.7 | — | 71.4 | ||||||||||||||
Cash and cash equivalents, beginning of period | 25.2 | — | 159.3 | — | 184.5 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 36.9 | $ | — | $ | 219.0 | $ | — | $ | 255.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
($ in millions, except per share data) | |||||||||||||||
Sales | $ | 1,872.4 | $ | 1,554.9 | $ | 5,311.1 | $ | 4,648.5 | |||||||
Cost of goods sold | 1,441.7 | 1,349.3 | 4,431.1 | 4,154.7 | |||||||||||
Gross margin | 430.7 | 205.6 | 880.0 | 493.8 | |||||||||||
Selling and administration | 110.8 | 91.1 | 321.6 | 268.8 | |||||||||||
Restructuring charges | 3.3 | 9.2 | 13.7 | 25.9 | |||||||||||
Acquisition-related costs | 0.4 | 1.1 | 1.0 | 12.5 | |||||||||||
Other operating (expense) income | (1.7 | ) | — | 6.4 | (0.1 | ) | |||||||||
Operating income | 314.5 | 104.2 | 550.1 | 186.5 | |||||||||||
Earnings (losses) of non-consolidated affiliates | 0.4 | 0.5 | (20.2 | ) | 1.5 | ||||||||||
Interest expense | 59.2 | 53.1 | 184.0 | 158.0 | |||||||||||
Interest income | 0.3 | 0.4 | 1.1 | 1.0 | |||||||||||
Non-operating pension income | 5.4 | 8.4 | 16.2 | 25.5 | |||||||||||
Income before taxes | 261.4 | 60.4 | 363.2 | 56.5 | |||||||||||
Income tax provision (benefit) | 66.3 | 7.7 | 88.6 | (3.7 | ) | ||||||||||
Net income | $ | 195.1 | $ | 52.7 | $ | 274.6 | $ | 60.2 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 1.17 | $ | 0.32 | $ | 1.64 | $ | 0.36 | |||||||
Diluted | $ | 1.16 | $ | 0.31 | $ | 1.63 | $ | 0.36 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales: | ($ in millions) | ||||||||||||||
Chlor Alkali Products and Vinyls | $ | 1,051.1 | $ | 881.2 | $ | 3,005.9 | $ | 2,583.2 | |||||||
Epoxy | 647.3 | 489.9 | 1,794.4 | 1,549.5 | |||||||||||
Winchester | 174.0 | 183.8 | 510.8 | 515.8 | |||||||||||
Total sales | $ | 1,872.4 | $ | 1,554.9 | $ | 5,311.1 | $ | 4,648.5 | |||||||
Income (loss) before taxes: | |||||||||||||||
Chlor Alkali Products and Vinyls(1) | $ | 210.8 | $ | 129.7 | $ | 490.7 | $ | 270.0 | |||||||
Epoxy | 31.1 | (1.7 | ) | 33.8 | (11.0 | ) | |||||||||
Winchester | 10.3 | 17.2 | 34.1 | 61.3 | |||||||||||
Corporate/other: | |||||||||||||||
Environmental income (expense)(2) | 110.8 | (1.8 | ) | 104.1 | (6.2 | ) | |||||||||
Other corporate and unallocated costs(3) | (42.7 | ) | (28.4 | ) | (124.5 | ) | (87.6 | ) | |||||||
Restructuring charges(4) | (3.3 | ) | (9.2 | ) | (13.7 | ) | (25.9 | ) | |||||||
Acquisition-related costs(5) | (0.4 | ) | (1.1 | ) | (1.0 | ) | (12.5 | ) | |||||||
Other operating (expense) income(6) | (1.7 | ) | — | 6.4 | (0.1 | ) | |||||||||
Interest expense(7) | (59.2 | ) | (53.1 | ) | (184.0 | ) | (158.0 | ) | |||||||
Interest income | 0.3 | 0.4 | 1.1 | 1.0 | |||||||||||
Non-operating pension income(8) | 5.4 | 8.4 | 16.2 | 25.5 | |||||||||||
Income before taxes | $ | 261.4 | $ | 60.4 | $ | 363.2 | $ | 56.5 |
(1) | Earnings (losses) of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were $0.4 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $1.5 million for the nine months ended September 30, 2017. The losses of non-consolidated affiliates were $20.2 million for the nine months ended September 30, 2018, which reflect a $21.5 million non-cash impairment charge recorded during the second quarter. |
(2) | Environmental income (expense) for both the three and nine months ended September 30, 2018 included insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. Environmental income (expense) is included in cost of goods sold in the condensed statements of operations. |
(3) | Other corporate and unallocated costs for the three months ended September 30, 2018 and 2017 included $7.5 million and $2.9 million, respectively, and for the nine months ended September 30, 2018 and 2017 included $25.5 million and $2.9 million, respectively, of costs associated with the Information Technology Project. |
(4) | Restructuring charges for the three and nine months ended September 30, 2018 and 2017 were primarily associated with the March 2016 closure of 433,000 tons of chlor alkali capacity across three separate locations. |
(5) | Acquisition-related costs for the three and nine months ended September 30, 2018 and 2017 were related to the integration of the Acquired Business, and consisted of advisory, legal, accounting and other professional fees. |
(6) | Other operating (expense) income for both the three and nine months ended September 30, 2018 included a $1.7 million loss on the sale of land. Other operating (expense) income for the nine months ended September 30, 2018 also included an $8.0 million insurance recovery for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility. |
(7) | Interest expense for the three and nine months ended September 30, 2018 included $4.0 million and $11.9 million, respectively, of accretion expense related to the 2020 ethylene payment discount. |
(8) | Non-operating pension income reflects the adoption of ASU 2017-07 and includes all components of pension and other postretirement income (costs) other than service costs, which are allocated to the operating segments based on their respective estimated census data. Operating segment results for 2017 have been restated to reflect this accounting change. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
($ in millions) | |||||||||||||||
Provisions (credited) charged to income | $ | (0.8 | ) | $ | 1.8 | $ | 5.9 | $ | 6.2 | ||||||
Insurance recoveries for costs incurred and expensed | (110.0 | ) | — | (110.0 | ) | — | |||||||||
Environmental (income) expense | $ | (110.8 | ) | $ | 1.8 | $ | (104.1 | ) | $ | 6.2 |
September 30, | |||||||
2018 | 2017 | ||||||
($ in millions) | |||||||
Balance at beginning of year | $ | 131.6 | $ | 137.3 | |||
Charges to income | 5.9 | 6.2 | |||||
Remedial and investigatory spending | (8.4 | ) | (8.7 | ) | |||
Foreign currency translation adjustments | (0.1 | ) | 0.5 | ||||
Balance at end of period | $ | 129.0 | $ | 135.3 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Provided By (Used For) | ($ in millions) | ||||||
Net operating activities | $ | 586.3 | $ | 455.1 | |||
Capital expenditures | (274.5 | ) | (210.0 | ) | |||
Payments under long-term supply contracts | — | (209.4 | ) | ||||
Net investing activities | (271.6 | ) | (419.3 | ) | |||
Long-term debt (repayments) borrowings, net | (253.7 | ) | 127.6 | ||||
Common stock repurchased and retired | (16.8 | ) | — | ||||
Stock options exercised | 3.2 | 18.5 | |||||
Debt issuance costs | (8.5 | ) | (11.2 | ) | |||
Net financing activities | (376.1 | ) | 35.3 |
• | sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and paper, and the migration by United States customers to low-cost foreign locations; |
• | the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products; |
• | our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation; |
• | higher-than-expected raw material and energy, transportation and/or logistics costs; |
• | failure to control costs or to achieve targeted cost reductions; |
• | new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities; |
• | the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards; |
• | complications resulting from our multiple enterprise resource planning systems and the conversion to one single system; |
• | changes in, or failure to comply with, legislation or government regulations or policies; |
• | the failure or an interruption of our information technology systems; |
• | economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits; |
• | weak industry conditions could affect our ability to comply with the financial maintenance covenants in our Senior Credit Facility; |
• | the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan; |
• | fluctuations in foreign currency exchange rates; |
• | unexpected litigation outcomes; |
• | costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; |
• | our substantial amount of indebtedness and significant debt service obligations; |
• | the integration of the Acquired Business may not be successful in fully realizing the benefits of the anticipated synergies; |
• | failure to attract, retain and motivate key employees; |
• | our assumptions included in long range plans not realized causing a non-cash impairment charge of long-lived assets; |
• | adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital; and |
• | differences between the historical financial information of Olin and the Acquired Business and our future operating performance. |
(a) | Not Applicable. |
(b) | Not Applicable. |
Period | Total Number of Shares (or Units) Purchased(1) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||
July 1-31, 2018 | — | — | — | |||||||||
August 1-31, 2018 | 65,371 | 29.75 | 65,371 | |||||||||
September 1-30, 2018 | 204,115 | 28.40 | 204,115 | |||||||||
Total | 483,153,835 | (1) |
(1) | On April 26, 2018, our board of directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $500.0 million. This program will terminate upon the purchase of $500.0 million of our common stock. Through September 30, 2018, 547,448 shares had been repurchased at a total value of $16,846,165 and $483,153,835 of common stock remained available for purchase under the program. |
3.1 | ||
11 | ||
12 | ||
31.1 | ||
31.2 | ||
32 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
* | Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC file No. 1-1070 unless otherwise indicated. | |
OLIN CORPORATION | ||
(Registrant) | ||
By: | /s/ Todd A. Slater | |
Vice President and Chief Financial Officer (Authorized Officer) |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
Earnings: | ($ in millions) | |||||||
Income before taxes | $ | 363.2 | $ | 56.5 | ||||
Add (deduct): | ||||||||
Losses (earnings) of non-consolidated affiliates | 20.2 | (1.5 | ) | |||||
Amortization of capitalized interest | 1.5 | 1.5 | ||||||
Capitalized interest | (4.7 | ) | (3.0 | ) | ||||
Fixed charges as described below | 219.6 | 190.9 | ||||||
Total | $ | 599.8 | $ | 244.4 | ||||
Fixed charges: | ||||||||
Interest expensed and capitalized | $ | 188.7 | $ | 161.0 | ||||
Estimated interest factor in rent expense(1) | 30.9 | 29.9 | ||||||
Total | $ | 219.6 | $ | 190.9 | ||||
Ratio of earnings to fixed charges | 2.7 | 1.3 |
(1) | Amounts represent those portions of rent expense that are reasonable approximations of interest costs. |
Date: | October 30, 2018 | /s/ John E. Fischer |
John E. Fischer | ||
Chairman, President and Chief Executive Officer |
Date: | October 30, 2018 | /s/ Todd A. Slater |
Todd A. Slater | ||
Vice President and Chief Financial Officer |
/s/ John E. Fischer | |
John E. Fischer | |
Chairman, President and Chief Executive Officer | |
Dated: | October 30, 2018 |
/s/ Todd A. Slater | |
Todd A. Slater | |
Vice President and Chief Financial Officer | |
Dated: | October 30, 2018 |
Document And Entity Information - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Olin Corporation | |
Entity Central Index Key | 0000074303 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 166,835,332 | |
Entity Current Reporting Status | Yes | |
Entity Public Float | $ 5,008,796,298 |
Condensed Balance Sheets Parenthetical - USD ($) shares in Millions, $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
ASSETS | |||
Accumulated depreciation | $ 2,651.2 | $ 2,333.1 | $ 2,222.8 |
Shareholders' equity: | |||
Common stock, par value | $ 1.00 | $ 1.00 | $ 1.00 |
Common stock, authorized (in shares) | 240.0 | 240.0 | 240.0 |
Common stock, issued | 166.8 | 167.1 | 166.4 |
Common stock, outstanding | 166.8 | 167.1 | 166.4 |
Condensed Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Sales | $ 1,872.4 | $ 1,554.9 | $ 5,311.1 | $ 4,648.5 |
Operating expenses: | ||||
Cost of goods sold | 1,441.7 | 1,349.3 | 4,431.1 | 4,154.7 |
Selling and administration | 110.8 | 91.1 | 321.6 | 268.8 |
Restructuring charges | 3.3 | 9.2 | 13.7 | 25.9 |
Acquisition-related costs | 0.4 | 1.1 | 1.0 | 12.5 |
Other operating (expense) income | (1.7) | 0.0 | 6.4 | (0.1) |
Operating income | 314.5 | 104.2 | 550.1 | 186.5 |
Earnings (losses) of non-consolidated affiliates | 0.4 | 0.5 | (20.2) | 1.5 |
Interest expense | 59.2 | 53.1 | 184.0 | 158.0 |
Interest income | 0.3 | 0.4 | 1.1 | 1.0 |
Non-operating pension income | 5.4 | 8.4 | 16.2 | 25.5 |
Income before taxes | 261.4 | 60.4 | 363.2 | 56.5 |
Income tax provision (benefit) | 66.3 | 7.7 | 88.6 | (3.7) |
Net income | $ 195.1 | $ 52.7 | $ 274.6 | $ 60.2 |
Net income per common share: | ||||
Basic | $ 1.17 | $ 0.32 | $ 1.64 | $ 0.36 |
Diluted | 1.16 | 0.31 | 1.63 | 0.36 |
Dividends per common share | $ 0.20 | $ 0.20 | $ 0.60 | $ 0.60 |
Average common shares outstanding: | ||||
Basic | 167.0 | 166.3 | 167.1 | 166.0 |
Diluted | 168.6 | 168.5 | 168.9 | 168.2 |
Condensed Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net income | $ 195.1 | $ 52.7 | $ 274.6 | $ 60.2 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments, net | (2.0) | 9.8 | (15.7) | 31.7 |
Unrealized (losses) gains on derivative contracts, net | (3.6) | 1.3 | (6.1) | (4.4) |
Amortization of prior service costs and actuarial losses, net | 7.5 | 4.3 | 21.0 | 12.7 |
Total other comprehensive income (loss), net of tax | 1.9 | 15.4 | (0.8) | 40.0 |
Comprehensive income | $ 197.0 | $ 68.1 | $ 273.8 | $ 100.2 |
Condensed Statements of Shareholders' Equity Parenthetical - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends Paid, Common Stock, per share | $ 0.60 | $ 0.60 |
DESCRIPTION OF BUSINESS |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892, having its principal executive offices in Clayton, MO. We are a manufacturer concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride (EDC) and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a full range of epoxy materials, including allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and downstream products such as differentiated epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges. We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of the financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals), which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017. Certain reclassifications were made to prior year amounts to conform to the 2018 presentation. |
ACCOUNTING POLICIES |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | ACCOUNTING POLICIES Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which amends Accounting Standards Codification (ASC) 605 “Revenue Recognition” and creates a new topic, ASC 606 “Revenue from Contracts with Customers” (ASC 606). Subsequent to the issuance of ASU 2014-09, ASC 606 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. We adopted these updates on January 1, 2018 using the modified retrospective transition method. The cumulative effect of applying the updates did not have a material impact on our consolidated financial statements. The most significant impact the updates had was on our accounting policies and disclosures on revenue recognition. We derive our revenues primarily from the manufacturing and delivery of goods to customers. Revenues are recognized on sales of goods at the time when control of those goods is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. We primarily sell our goods directly to customers, and to a lesser extent, through distributors. Payment terms are typically 30 to 90 days from date of invoice. Our contracts do not typically have a significant financing component. Right to payment is determined at the point in time in which control has transferred to the customer. A performance obligation is a promise in a contract to transfer a distinct good to the customer. At contract inception, we assess the goods promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good (or bundle of goods) that is distinct. A contract’s transaction price is based on the price stated in the contract and allocated to each distinct performance obligation and revenue is recognized when the performance obligation is satisfied. The majority of our contracts have a single distinct performance obligation or multiple performance obligations which are distinct and represent individual promises within the contract. Substantially all of our performance obligations are satisfied at a single point in time, when control is transferred, which is generally upon shipment or delivery as stated in the contract terms. All taxes assessed by governmental authorities that are both imposed on and concurrent with our revenue-producing transactions and collected from our customers are excluded from the measurement of the transaction price. Shipping and handling fees billed to customers are included in revenue and are considered activities to fulfill the promise to transfer the good. Allowances for estimated returns, discounts and rebates are considered variable consideration, which may be constrained, and are estimated and recognized when sales are recorded. The estimates are based on various market data, historical trends and information from customers. Actual returns, discounts and rebates have not been materially different from estimates. For all contracts that have a duration of one year or less at contract inception, we do not adjust the promised amount of consideration for the effects of a significant financing component. Substantially all of our revenue is derived from contracts with an original expected length of time of one year or less and for which we recognize revenue for the amount in which we have the right to invoice at the point in time in which control has transferred to the customer. However, a portion of our revenue is derived from long-term contracts which have contract periods that vary between one to multi-year. Certain of these contracts represent contracts with minimum purchase obligations, which can be substantially different than the actual revenue recognized. Such contracts consist of varying types of products across our chemical businesses. Certain contracts include variable volumes and/or variable pricing with pricing provisions tied to commodity, consumer price or other indices. The transaction price allocated to the remaining performance obligations related to our contracts was excluded from the disclosure of our remaining performance obligations based on the following practical expedients that we elected to apply: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation; and (ii) contracts with an original expected duration of one year or less. Refer to the Note “Segment Information” for information regarding the disaggregation of revenue by primary geographical markets and major product lines. |
ACQUISITION |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Acquisition [Abstract] | |
ACQUISITION | ACQUISITION On October 5, 2015 (the Closing Date), we completed the acquisition (the Acquisition) from DowDuPont Inc. (DowDuPont) (f/k/a The Dow Chemical Company) of its U.S. Chlor Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses (collectively, the Acquired Business), whose operating results are included in the accompanying financial statements since the Closing Date. We incurred costs related to the integration of the Acquired Business which consisted of advisory, legal, accounting and other professional fees of $0.4 million and $1.1 million for the three months ended September 30, 2018 and 2017, respectively, and $1.0 million and $12.5 million for the nine months ended September 30, 2018 and 2017, respectively. |
RESTRUCTURING CHARGES |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations. Associated with this action, we have permanently closed our Henderson, NV chlor alkali plant with 153,000 tons of capacity and have reconfigured the site to manufacture bleach and distribute caustic soda and hydrochloric acid. Also, the capacity of our Niagara Falls, NY chlor alkali plant has been reduced from 300,000 tons to 240,000 tons and the chlor alkali capacity at our Freeport, TX facility was reduced by 220,000 tons. This 220,000 ton reduction was entirely from diaphragm cell capacity. For the three months ended September 30, 2018 and 2017, we recorded pretax restructuring charges of $3.3 million and $8.8 million respectively, for employee severance and related benefit costs, facility exit costs and lease and other contract termination costs related to these actions. For the nine months ended September 30, 2018 and 2017, we recorded pretax restructuring charges of $12.4 million and $23.7 million, respectively, for employee severance and related benefit costs, employee relocation costs, facility exit costs and lease and other contract termination costs related to these actions. We expect to incur additional restructuring charges through 2020 of approximately $14 million related to these capacity reductions. On December 12, 2014, we announced that we had made the decision to permanently close the portion of the Becancour, Canada chlor alkali facility that has been shut down since late June 2014. This action reduced the facility’s chlor alkali capacity by 185,000 tons. Subsequent to the shut down, the plant predominantly focuses on bleach and hydrochloric acid, which are value-added products, as well as caustic soda. For the three months ended September 30, 2018 and 2017, we recorded pretax restructuring charges of zero and $0.4 million, respectively, for facility exit costs related to this action. For the nine months ended September 30, 2018 and 2017, we recorded pretax restructuring charges of $1.3 million and $2.2 million, respectively, for facility exit costs related to this action. We expect to incur additional restructuring charges through 2018 of less than $1 million related to the shut down of this portion of the facility. On November 3, 2010, we announced that we made the decision to relocate the Winchester centerfire pistol and rifle ammunition manufacturing operations from East Alton, IL to Oxford, MS. Consistent with this decision in 2010, we initiated an estimated $110 million five-year project, which included approximately $80 million of capital spending. The capital spending was partially financed by $31 million of grants provided by the State of Mississippi and local governments. During 2016, the final rifle ammunition production equipment relocation was completed. The following table summarizes the 2018 and 2017 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of September 30, 2018 and 2017:
The following table summarizes the cumulative restructuring charges of these 2016, 2014 and 2010 restructuring actions by major component through September 30, 2018:
As of September 30, 2018, we have incurred cash expenditures of $107.3 million and non-cash charges of $86.1 million related to these restructuring actions. The remaining balance of $7.5 million is expected to be paid out through 2020. |
ACCOUNTS RECEIVABLE |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLES On December 20, 2016, we entered into a three-year, $250.0 million Receivables Financing Agreement with PNC Bank, National Association, as administrative agent (Receivables Financing Agreement). Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. In addition, the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the senior revolving credit facility. As of September 30, 2018, $418.0 million of our trade receivables were pledged as collateral and we had $180.0 million drawn under the agreement. As of September 30, 2018, we had $70.0 million additional borrowing capacity under the Receivables Financing Agreement. As of December 31, 2017, $340.9 million of our trade receivables were pledged as collateral and $249.7 million was drawn under the agreement. Olin also has trade accounts receivable factoring arrangements (AR Facilities) and pursuant to the terms of the AR Facilities, certain of our subsidiaries may sell their accounts receivable up to a maximum of $315.0 million. We will continue to service the outstanding accounts sold. These receivables qualify for sales treatment under ASC 860 “Transfers and Servicing” and, accordingly, the proceeds are included in net cash provided by operating activities in the condensed statements of cash flows. The following table summarizes the AR Facilities activity:
The factoring discount paid under the AR Facilities is recorded as interest expense on the condensed statements of operations. The factoring discount was $1.1 million and $1.4 million for the three months ended September 30, 2018 and 2017, respectively, and $3.9 million and $2.9 million for the nine months ended September 30, 2018 and 2017, respectively. The agreements are without recourse and therefore no recourse liability has been recorded as of September 30, 2018. Receivables, net includes $120.0 million of insurance recoveries for environmental costs incurred and expensed in prior periods, which was collected in October 2018. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES |
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Accounts Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES | ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES We evaluate the collectibility of accounts receivable based on a combination of factors. We estimate an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This estimate is periodically adjusted when we become aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While we have a large number of customers that operate in diverse businesses and are geographically dispersed, a general economic downturn in any of the industry segments in which we operate could result in higher than expected defaults, and, therefore, the need to revise estimates for the provision for doubtful accounts could occur. Allowance for doubtful accounts receivable consisted of the following:
Provisions charged (credited) to operations were $0.3 million and $(0.8) million for the three months ended September 30, 2018 and 2017, respectively. |
INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Inventories consisted of the following:
Inventories are valued at the lower of cost and net realizable value. For U.S. inventories, inventory costs are determined principally by the last-in, first-out (LIFO) method of inventory accounting while for international inventories, inventory costs are determined principally by the first-in, first-out (FIFO) method of inventory accounting. Cost for other inventories has been determined principally by the average-cost method (primarily operating supplies, spare parts and maintenance parts). Elements of costs in inventories included raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at September 30, 2018 reflect certain estimates relating to inventory quantities and costs at December 31, 2018. The replacement cost of our inventories would have been approximately $58.9 million, $49.2 million and $47.5 million higher than reported at September 30, 2018, December 31, 2017 and September 30, 2017, respectively. |
OTHER ASSETS |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS | OTHER ASSETS Included in other assets were the following:
For the nine months ended September 30, 2018, we recorded a $21.5 million non-cash impairment charge related to an adjustment to the value of our 9.1% limited partnership interest in Bay Gas Storage Company, Ltd. (BayGas). BayGas owns, leases and operates underground gas storage and related pipeline facilities which are used to provide storage in the McIntosh, AL area and delivery of natural gas. The general partner, Sempra Energy (Sempra), announced in the second quarter 2018 its plan to sell several assets including its 90.9% interest in BayGas. In connection with this decision, Sempra recorded an impairment charge related to BayGas adjusting the related assets’ carrying values to an estimated fair value. We recorded a reduction in our investment in the non-consolidated affiliate for the proportionate share of the non-cash impairment charge. Olin has no other non-consolidated affiliates. In connection with the Acquisition, Olin and DowDuPont entered into arrangements for the long-term supply of ethylene by DowDuPont to Olin, pursuant to which, among other things, Olin made upfront payments in order to receive ethylene at producer economics and for certain reservation fees and for the option to obtain additional ethylene at producer economics. During 2016, we exercised one of the options to reserve additional ethylene at producer economics. In September 2017, DowDuPont’s new Texas 9 ethylene cracker in Freeport, TX became operational. As a result, during the three months ended September 30, 2017, a payment of $209.4 million was made in connection with this option which increased the value of the long-term asset. On February 27, 2017, we exercised the remaining option to reserve additional ethylene at producer economics from DowDuPont. In connection with the exercise of this option, we also secured a long-term customer arrangement. As a result, an additional payment will be made to DowDuPont of between $440 million and $465 million on or about the fourth quarter of 2020. During 2017, as a result of DowDuPont’s new Texas 9 ethylene cracker becoming operational, Olin recognized a long-term asset and other liabilities of $389.2 million, which represents the present value of the additional estimated payment. The discounted amount of $51.8 million will be recorded as interest expense through the fourth quarter of 2020. For the three and nine months ended September 30, 2018, interest expense of $4.0 million and $11.9 million, respectively, was recorded for accretion on the 2020 payment discount. Amortization expense of $9.4 million and $6.3 million for the three months ended September 30, 2018 and 2017, respectively, and $28.2 million and $18.9 million for the nine months ended September 30, 2018 and 2017, respectively, was recognized within cost of goods sold related to these supply contracts and is reflected in depreciation and amortization on the condensed statements of cash flows. The long-term supply contracts are monitored for impairment each reporting period. |
GOODWILL AND INTANGIBLES |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES | GOODWILL AND INTANGIBLE ASSETS Changes in the carrying value of goodwill were as follows:
Intangible assets consisted of the following:
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EARNINGS PER SHARE |
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EARNINGS PER SHARE | EARNINGS PER SHARE Basic and diluted net income per share are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per share reflects the dilutive effect of stock-based compensation.
The computation of dilutive shares from stock-based compensation does not include 2.4 million and 1.6 million shares for the three months ended September 30, 2018 and 2017, respectively, and 2.4 million and 1.6 million shares for the nine months ended September 30, 2018 and 2017, respectively, as their effect would have been anti-dilutive. |
ENVIRONMENTAL |
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Environmental Remediation Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ENVIRONMENTAL | ENVIRONMENTAL We are party to various government and private environmental actions associated with past manufacturing facilities and former waste disposal sites. Environmental provisions (credited) charged to income, which are included in cost of goods sold, were as follows:
During the third quarter of 2018, we settled certain disputes with respect to insurance coverage for costs at various environmental remediation sites for $120.0 million. Environmental income (expense) for both the three and nine months ended September 30, 2018 include insurance recoveries for environmental costs incurred and expensed in prior periods of $110.0 million. The recoveries are reduced by estimated liabilities of $10.0 million associated with claims by subsequent owners of certain of the settled environmental sites. The condensed balance sheets included reserves for future environmental expenditures to investigate and remediate known sites amounting to $129.0 million, $131.6 million and $135.3 million at September 30, 2018, December 31, 2017 and September 30, 2017, respectively, of which $109.0 million, $111.6 million and $118.3 million, respectively, were classified as other noncurrent liabilities. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, changes in regulatory authorities, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other Potentially Responsible Parties (PRPs), our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position or results of operations. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We, and our subsidiaries, are defendants in various legal actions (including proceedings based on alleged exposures to asbestos) incidental to our past and current business activities. As of September 30, 2018, December 31, 2017 and September 30, 2017, our condensed balance sheets included accrued liabilities for these legal actions of $14.8 million, $24.8 million and $15.9 million, respectively. These liabilities do not include costs associated with legal representation. In addition to the aforementioned legal actions, we are party to a dispute relating to a contract at our Plaquemine, LA facility. The other party to the contract has filed a demand for arbitration alleging, among other things, that Olin breached the related agreement and claiming damages in excess of the amount Olin believes it is obligated to pay under the contract. Any additional losses related to this contract dispute are not currently estimable because of unresolved questions of fact and law. Based on our analysis, and considering the inherent uncertainties associated with litigation, we do not believe that it is reasonably possible that these legal actions will materially adversely affect our financial position, cash flows or results of operations. During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain contingency. In certain instances such as environmental projects, we are responsible for managing the cleanup and remediation of an environmental site. There exists the possibility of recovering a portion of these costs from other parties. We account for gain contingencies in accordance with the provisions of ASC 450 “Contingencies” and, therefore, do not record gain contingencies and recognize income until it is earned and realizable. |
SHAREHOLDERS' EQUITY |
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SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY On April 26, 2018, our board of directors authorized a share repurchase program for the purchase of shares of common stock at an aggregate price of up to $500.0 million. This program will terminate upon the purchase of $500.0 million of our common stock. For the nine months ended September 30, 2018, 0.5 million shares were repurchased and retired at a cost of $16.8 million. As of September 30, 2018, we had repurchased a total of $16.8 million of our common stock, representing 0.5 million shares, and $483.2 million of common stock remained authorized to be repurchased. We issued 0.2 million and 1.0 million shares representing stock options exercised for the nine months ended September 30, 2018 and 2017, respectively, with a total value of $3.2 million and $18.5 million, respectively. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (ASU 2018-02) which amends ASC 220 “Income Statement—Reporting Comprehensive Income.” This update allows a reclassification from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act (the 2017 Tax Act) during each fiscal year or quarter in which the effect of the lower tax rate is recorded. We adopted this update in March 2018 and reclassified $85.9 million related to the provisional deferred gain resulting from the 2017 Tax Act from accumulated other comprehensive loss to retained earnings. The following table represents the activity included in accumulated other comprehensive loss:
Net income and cost of goods sold included reclassification adjustments for realized gains and losses on derivative contracts from accumulated other comprehensive loss. Net income and non-operating pension income included the amortization of prior service costs and actuarial losses from accumulated other comprehensive loss. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION We define segment results as income (loss) before interest expense, interest income, other operating income (expense), non-operating pension income and income taxes, and includes the operating results of non-consolidated affiliates. Consistent with the guidance in ASC 280 “Segment Reporting,” we have determined it is appropriate to include the operating results of non-consolidated affiliates in the relevant segment financial results. We have three operating segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The three operating segments reflect the organization used by our management for purposes of allocating resources and assessing performance. Chlorine used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment. Sales and profits are recognized in the Chlor Alkali Products and Vinyls segment for all caustic soda generated and sold by Olin. Sales are attributed to geographic areas based on customer location.
Earnings (losses) of non-consolidated affiliates are included in the Chlor Alkali Products and Vinyls segment results consistent with management’s monitoring of the operating segments. The earnings of non-consolidated affiliates were $0.4 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $1.5 million for the nine months ended September 30, 2017. The losses of non-consolidated affiliates were $20.2 million for the nine months ended September 30, 2018, which reflect a $21.5 million non-cash impairment charge recorded during the second quarter. Environmental income (expense) for both the three and nine months ended September 30, 2018 included insurance recoveries for costs incurred and expensed in prior periods of $110.0 million. Environmental income (expense) is included in cost of goods sold in the condensed statements of operations. Other operating (expense) income for both the three and nine months ended September 30, 2018 included a $1.7 million loss on the sale of land. For the nine months ended September 30, 2018, we recognized an insurance recovery of $8.0 million in other operating (expense) income for a second quarter 2017 business interruption at our Freeport, TX vinyl chloride monomer facility.
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STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards and deferred directors’ compensation. Stock-based compensation expense was as follows:
The fair value of each stock option granted, which typically vests ratably over three years, but not less than one year, was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Dividend yield was based on our current dividend yield as of the option grant date. Risk-free interest rate was based on zero coupon U.S. Treasury securities rates for the expected life of the options. Expected volatility was based on our historical stock price movements, as we believe that historical experience is the best available indicator of the expected volatility. Expected life of the option grant was based on historical exercise and cancellation patterns, as we believe that historical experience is the best estimate of future exercise patterns. |
DEBT |
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Sep. 30, 2018 | |
Debt Instruments [Abstract] | |
DEBT | DEBT On January 19, 2018, Olin issued $550.0 million aggregate principal amount of 5.00% senior notes due February 1, 2030 (2030 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the 2030 Notes began accruing from January 19, 2018 and is paid semi-annually beginning on August 1, 2018. Proceeds from the 2030 Notes were used to redeem $550.0 million of debt under the $1,375.0 million term loan facility (Term Loan Facility). For the nine months ended September 30, 2018, we recognized interest expense of $2.6 million for the write-off of unamortized deferred debt issuance costs related to the redemption of $550.0 million of debt under the Term Loan Facility. For the nine months ended September 30, 2018, we paid debt issuance costs of $8.5 million for the issuance of the 2030 Notes. On March 9, 2017, we entered into a five-year $1,975.0 million senior credit facility, which amended and restated the existing $1,850.0 million senior credit facility. Pursuant to the agreement, the aggregate principal amount under the term loan facility was increased to $1,375.0 million, and the aggregate commitments under the senior revolving credit facility were increased from $500.0 million to $600.0 million (Senior Revolving Credit Facility and, together with the Term Loan Facility, the Senior Credit Facility). At September 30, 2018, we had $596.5 million available under our $600.0 million Senior Revolving Credit Facility because we had issued $3.5 million of letters of credit. In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing $1,350.0 million term loan facility of $1,282.5 million and a portion of the $800.0 million Sumitomo Credit Facility (Sumitomo Credit Facility). The maturity date for the Senior Credit Facility was extended from October 5, 2020 to March 9, 2022. The $600.0 million Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. The Term Loan Facility includes amortization payable in equal quarterly installments at a rate of 5.0% per annum for the first two years, increasing to 7.5% per annum for the following year and to 10.0% per annum for the last two years. In connection with the $550.0 million prepayment of the Term Loan Facility in January 2018, the required quarterly installments of the Term Loan Facility were eliminated. Under the Senior Credit Facility, we may select various floating rate borrowing options. The actual interest rate paid on borrowings under the Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter. The facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio). Compliance with these covenants is determined quarterly based on the operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of September 30, 2018, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As of September 30, 2018, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities. On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027 (2027 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility. For the nine months ended September 30, 2017, we recognized interest expense of $2.7 million for the write-off of unamortized deferred debt issuance costs related to the issuance of the Senior Credit Facility and the repayment of the Sumitomo Credit Facility. For the nine months ended September 30, 2017, we paid debt issuance costs of $11.2 million relating to the Senior Credit Facility and the 2027 Notes. |
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN |
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Sep. 30, 2018 | |
Defined Contribution Plan [Abstract] | |
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN | CONTRIBUTING EMPLOYEE OWNERSHIP PLAN The Contributing Employee Ownership Plan (CEOP) is a defined contribution plan available to essentially all domestic employees. We provide a contribution to an individual retirement contribution account maintained with the CEOP equal to an amount of between 5.0% and 7.5% of the employee’s eligible compensation. The defined contribution plan expense for the three months ended September 30, 2018 and 2017 was $6.7 million and $7.0 million, respectively, and for the nine months ended September 30, 2018 and 2017 was $22.0 million and $22.4 million, respectively. Company matching contributions are invested in the same investment allocation as the employee’s contribution. Our matching contributions for eligible employees for the three months ended September 30, 2018 and 2017 was $3.9 million and $3.0 million, respectively, and for the nine months ended September 30, 2018 and 2017 was $11.3 million and $8.7 million, respectively. |
PENSION PLANS AND RETIREMENT BENEFITS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION PLANS AND RETIREMENT BENEFITS | PENSION PLANS AND RETIREMENT BENEFITS We sponsor domestic and foreign defined benefit pension plans for eligible employees and retirees. Most of our domestic employees participate in defined contribution plans. However, a portion of our bargaining hourly employees continue to participate in our domestic qualified defined benefit pension plans under a flat-benefit formula. Our funding policy for the qualified defined benefit pension plans is consistent with the requirements of federal laws and regulations. Our foreign subsidiaries maintain pension and other benefit plans, which are consistent with local statutory practices. Our domestic qualified defined benefit pension plan provides that if, within three years following a change of control of Olin, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger, or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus (subject to applicable collective bargaining requirements). We also provide certain postretirement healthcare (medical) and life insurance benefits for eligible active and retired domestic employees. The healthcare plans are contributory with participants’ contributions adjusted annually based on medical rates of inflation and plan experience.
We made cash contributions to our international qualified defined benefit pension plans of $1.3 million and $1.2 million for the nine months ended September 30, 2018 and 2017, respectively. In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07) which amends ASC 715 “Compensation—Retirement Benefits.” The adoption of ASU 2017-07 resulted in a change in our net periodic benefit (income) costs within operating income, which was offset by a corresponding change in non-operating pension income to reflect the impact of presenting the interest cost, expected return on plan assets, amortization of prior service cost and net actuarial loss components of net periodic benefit (income) costs outside of operating income. We adopted this update on January 1, 2018 using the retrospective method. For the three and nine months ended September 30, 2017, the adoption of ASU 2017-07 resulted in a reclassification of $3.7 million and $11.3 million, respectively, from cost of goods sold and $4.7 million and $14.2 million, respectively, from selling and administration to non-operating pension income reflecting the aforementioned reclassification on our condensed statements of operations. The service cost component of net periodic benefit (income) costs continue to be included in the same income statement line item as other employee compensation costs arising from services rendered during the period. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The effective tax rate for the three months ended September 30, 2018 included a benefit associated with stock-based compensation, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. These factors resulted in a net $0.5 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2018 of 25.6% was higher than the 21% U.S. federal statutory rate, primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the three months ended September 30, 2017 included a benefit related to the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit associated with prior year tax positions and a benefit associated with stock-based compensation. These factors resulted in a net $6.7 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2017 of 23.8% was lower than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions. The effective tax rate for the nine months ended September 30, 2018 included a benefit associated with stock-based compensation, a benefit from a change in tax contingencies, a benefit related to a foreign dividend payment, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. These factors resulted in a net $2.7 million tax benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2018 of 25.1% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the nine months ended September 30, 2017 included a benefit related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008 and 2010 to 2012 tax examinations, a benefit related to the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit associated with stock-based compensation and a benefit associated with prior year tax positions. These factors resulted in a net $17.7 million tax benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2017 of 24.8% was lower than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions. The 2017 Tax Act was enacted on December 22, 2017 and included a broad range of provisions impacting the taxation of businesses. Included within the provisions, the 2017 Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on unremitted earnings of foreign subsidiaries that were previously tax deferred and transitions the U.S. from a worldwide tax system to a modified territorial tax system. The SEC Staff issued Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118), which provides guidance on accounting for the tax effects of the 2017 Tax Act. SAB 118 provides a measurement period of up to one year from the 2017 Tax Act’s enactment date for companies to complete the accounting under ASC 740 “Income Taxes” (ASC 740). In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the 2017 Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the 2017 Tax Act. At September 30, 2018, we have not completed our accounting for the tax effects of the 2017 Tax Act. The impact of the 2017 Tax Act is expected to require further adjustments in 2018 due to anticipated additional guidance from the U.S. Department of the Treasury, changes in our assumptions, completion of 2017 foreign tax returns and further information and interpretations that become available. As of September 30, 2018 we have substantially completed our U.S. tax return and accounted for updates to estimates of significant items including: (1) the effects on our existing deferred tax balances, (2) the remeasurement of deferred taxes on foreign unremitted earnings and (3) the one-time transition tax. We will make adjustments to these provisional estimates as new information becomes available during the one year measurement period. Our analyses of the 2017 Tax Act will continue throughout fourth quarter 2018 and will be completed when we file our remaining 2017 tax returns. In connection with our initial analysis of the 2017 Tax Act, we recognized a provisional deferred tax benefit of $437.9 million at December 31, 2017. This benefit included: (1) a provisional $315.8 million deferred tax benefit to reflect the reduction of the U.S. corporate tax rate from 35% to 21% and (2) a provisional $122.1 million deferred tax benefit to reflect an estimated reduction of $162.6 million in our deferred tax liability on unremitted foreign earnings partially offset by an estimate of the one-time transition tax of $40.5 million. We utilized existing U.S. federal net operating loss carryforwards and foreign tax credits to fully offset the cash tax impact of the one-time transition tax liability. For the three and nine months ended September 30, 2018, we decreased the provisional deferred tax benefit by $0.4 million and $0.1 million, respectively, as a result of additional guidance issued by the IRS. For the three and nine months ended September 30, 2018, we increased the provisional deferred tax benefit as a result of the estimated impact of filing the 2017 U.S. and foreign tax returns by $4.6 million and $2.9 million, respectively. A provision of the 2017 Tax Act establishes a minimum tax on certain foreign earnings (i.e. global intangible low-taxed income or GILTI). We have not yet completed our analysis of the GILTI tax rules and are still evaluating whether to make a policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on certain foreign differences between the financial statement and tax basis of foreign assets and liabilities. At September 30, 2018 and December 31, 2017, we did not record a deferred tax liability for these differences. We will continue to analyze the impact of GILTI as more guidance is issued and a decision will be made during 2018 on whether to treat the GILTI as a period cost or a deferred tax item. As of September 30, 2018, we had $33.3 million of gross unrecognized tax benefits, which would have a net $32.4 million impact on the effective tax rate, if recognized. As of September 30, 2017, we had $35.0 million of gross unrecognized tax benefits, of which $33.5 million would have impacted the effective tax rate, if recognized. The amount of unrecognized tax benefits was as follows:
As of September 30, 2018, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $6.9 million over the next twelve months. The anticipated reduction primarily relates to settlements with taxing authorities and the expiration of federal, state and foreign statutes of limitation. We operate globally and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. None of our U.S. federal income tax returns are currently under examination by the IRS. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS We are exposed to market risk in the normal course of our business operations due to our purchases of certain commodities, our ongoing investing and financing activities and our operations that use foreign currencies. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks. ASC 815 “Derivatives and Hedging” (ASC 815) requires an entity to recognize all derivatives as either assets or liabilities in the condensed balance sheets and measure those instruments at fair value. In accordance with ASC 815, we designate derivative contracts as cash flow hedges of forecasted purchases of commodities and forecasted interest payments related to variable-rate borrowings and designate certain interest rate swaps as fair value hedges of fixed-rate borrowings. We do not enter into any derivative instruments for trading or speculative purposes. Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility. Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations. The majority of our commodity derivatives expire within one year. We actively manage currency exposures that are associated with net monetary asset positions, currency purchases and sales commitments denominated in foreign currencies and foreign currency denominated assets and liabilities created in the normal course of business. We enter into forward sales and purchase contracts to manage currency risk to offset our net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of our operations. At September 30, 2018, we had outstanding forward contracts to buy foreign currency with a notional value of $166.2 million and to sell foreign currency with a notional value of $126.0 million. All of the currency derivatives expire within one year and are for U.S. dollar (USD) equivalents. The counterparties to the forward contracts are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. At December 31, 2017, we had outstanding forward contracts to buy foreign currency with a notional value of $135.5 million and to sell foreign currency with a notional value of $97.7 million. At September 30, 2017, we had outstanding forward contracts to buy foreign currency with a notional value of $106.1 million and to sell foreign currency with a notional value of $94.1 million. Cash flow hedges For derivative instruments that are designated and qualify as a cash flow hedge, the change in fair value of the derivative is recognized as a component of other comprehensive income (loss) until the hedged item is recognized in earnings. Gains and losses on the derivatives representing hedge ineffectiveness are recognized currently in earnings. We had the following notional amounts of outstanding commodity contracts that were entered into to hedge forecasted purchases:
As of September 30, 2018, the counterparties to these commodity contracts were Wells Fargo Bank, N.A. (Wells Fargo), Citibank, Merrill Lynch Commodities, Inc. and JPMorgan Chase Bank, National Association, all of which are major financial institutions. We use cash flow hedges for certain raw material and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations associated with forecasted purchases of raw materials and energy used in our manufacturing process. At September 30, 2018, we had open positions in futures contracts through 2022. If all open futures contracts had been settled on September 30, 2018, we would have recognized a pretax gain of $0.7 million. If commodity prices were to remain at September 30, 2018 levels, approximately $0.1 million of deferred gains would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual commodity prices when the forecasted transactions occur. We use interest rate swaps as a means of minimizing cash flow fluctuations that may arise from volatility in interest rates of our variable-rate borrowings. In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million, $900.0 million, and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017 and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo, PNC Bank, National Association and Toronto-Dominion Bank. These counterparties are large financial institutions; however, the risk of loss to us in the event of nonperformance by a counterparty could be significant to our financial position or results of operations. We have designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. Accordingly, the outstanding swap agreements have been recorded at their fair market value of $9.2 million and are included in other current assets and other assets on the accompanying condensed balance sheet as of September 30, 2018, with the corresponding gain deferred as a component of other comprehensive loss. For the three months ended September 30, 2018 and 2017, $2.5 million and $1.2 million, respectively, and for the nine months ended September 30, 2018 and 2017, $5.9 million and $1.7 million, respectively, of income was recorded to interest expense on the accompanying condensed statements of operations related to these swap agreements. At September 30, 2018, we had open interest rate swaps designated as cash flow hedges with maximum terms through 2019. If all open interest rate swap contracts had been settled on September 30, 2018, we would have recognized a pretax gain of $9.2 million. If interest rates were to remain at September 30, 2018 levels, $5.8 million of deferred gains would be reclassified into earnings during the next twelve months. The actual effect on earnings will be dependent on actual interest rates when the forecasted transactions occur. Fair value hedges We use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged items (fixed-rate borrowings) in the same line item, interest expense, as the offsetting loss or gain on the related interest rate swaps. As of September 30, 2018, December 31, 2017 and September 30, 2017, the total notional amounts of our interest rate swaps designated as fair value hedges were $500.0 million. In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions. In October 2016, we entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions. We have designated the April 2016 and October 2016 interest rate swap agreements as fair value hedges of the risk of changes in the value of fixed-rate debt due to changes in interest rates for a portion of our fixed-rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $47.8 million and are included in other long-term liabilities on the accompanying condensed balance sheet as of September 30, 2018, with a corresponding decrease in the carrying amount of the related debt. For the three and nine months ended September 30, 2018, $0.6 million and $0.9 million, respectively, of expense and for the three and nine months ended September 30, 2017, $0.5 million and $2.4 million, respectively, of income was recorded to interest expense on the accompanying condensed statements of operations related to these swap agreements. Financial statement impacts We present our derivative assets and liabilities in our condensed balance sheets on a net basis whenever we have a legally enforceable master netting agreement with the counterparty to our derivative contracts. We use these agreements to manage and substantially reduce our potential counterparty credit risk. The following table summarizes the location and fair value of the derivative instruments on our condensed balance sheets. The table disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis before giving effect to master netting arrangements:
The following table summarizes the effects of derivative instruments on our condensed statements of operations:
The ineffective portion of changes in fair value resulted in zero charged or credited to earnings for the three and nine months ended September 30, 2018 and 2017. Credit risk and collateral By using derivative instruments, we are exposed to credit and market risk. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair value gain in a derivative. Generally, when the fair value of a derivative contract is positive, this indicates that the counterparty owes us, thus creating a repayment risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, assume no repayment risk. We minimize the credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties. We monitor our positions and the credit ratings of our counterparties, and we do not anticipate nonperformance by the counterparties. Based on the agreements with our various counterparties, cash collateral is required to be provided when the net fair value of the derivatives, with the counterparty, exceeds a specific threshold. If the threshold is exceeded, cash is either provided by the counterparty to us if the value of the derivatives is our asset, or cash is provided by us to the counterparty if the value of the derivatives is our liability. As of September 30, 2018, December 31, 2017 and September 30, 2017, this threshold was not exceeded. In all instances where we are party to a master netting agreement, we offset the receivable or payable recognized upon payment of cash collateral against the fair value amounts recognized for derivative instruments that have also been offset under such master netting agreements. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties or the amount that would be paid to transfer a liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Assets and liabilities recorded at fair value in the condensed balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by ASC 820 “Fair Value Measurements and Disclosures” (ASC 820) are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows: Level 1 — Inputs were unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 — Inputs (other than quoted prices included in Level 1) were either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 — Inputs reflected management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration was given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. We are required to separately disclose assets and liabilities measured at fair value on a recurring basis, from those measured at fair value on a nonrecurring basis. Nonfinancial assets measured at fair value on a nonrecurring basis are intangible assets and goodwill, which are reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred. Determining which hierarchical level an asset or liability falls within requires significant judgment. We evaluate our hierarchy disclosures each quarter. The following table summarizes the assets and liabilities measured at fair value in the condensed balance sheets:
For the nine months ended September 30, 2018, there were no transfers into or out of Level 1, Level 2 or Level 3. Interest Rate Swaps Interest rate swap financial instruments were valued using the “income approach” valuation technique. This method used valuation techniques to convert future amounts to a single present amount. The measurement was based on the value indicated by current market expectations about those future amounts. We use interest rate swaps as a means of managing interest expense and floating interest rate exposure to optimal levels. Commodity Forward Contracts Commodity contract financial instruments were valued primarily based on prices and other relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for commodities. We use commodity derivative contracts for certain raw materials and energy costs such as copper, zinc, lead, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations. Foreign Currency Contracts Foreign currency contract financial instruments were valued primarily based on relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for currencies. We enter into forward sales and purchase contracts to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies. Financial Instruments The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximated fair values due to the short-term maturities of these instruments. The fair value of our long-term debt was determined based on current market rates for debt of similar risk and maturities. The following table summarizes the fair value measurements of debt and the actual debt recorded on our condensed balance sheets:
Nonrecurring Fair Value Measurements In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by ASC 820. There were no assets measured at fair value on a nonrecurring basis as of September 30, 2018, December 31, 2017 and September 30, 2017. |
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION |
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Supplemental Guarantor Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION | SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION In October 2015, Blue Cube Spinco LLC (the Issuer) issued $720.0 million aggregate principal amount of 9.75% senior notes due October 15, 2023 (2023 Notes) and $500.0 million aggregate principal amount of 10.00% senior notes due October 15, 2025 (2025 Notes and, together with the 2023 Notes, the Notes). During 2016, the Notes were registered under the Securities Act of 1933, as amended. The Issuer was formed on March 13, 2015 as a wholly owned subsidiary of DowDuPont and upon closing of the Acquisition became a 100% owned subsidiary of Olin (the Parent Guarantor). The Exchange Notes are fully and unconditionally guaranteed by the Parent Guarantor. The following condensed consolidating financial information presents the condensed consolidating balance sheets as of September 30, 2018, December 31, 2017 and September 30, 2017, the related condensed consolidating statements of operations, comprehensive income (loss) for each of the three and nine months ended September 30, 2018 and 2017, and the related statements of cash flows for the nine months ended September 30, 2018 and 2017, of (a) the Parent Guarantor, (b) the Issuer, (c) the non-guarantor subsidiaries, (d) elimination entries necessary to consolidate the Parent Guarantor with the Issuer and the non-guarantor subsidiaries and (e) Olin on a consolidated basis. Investments in consolidated subsidiaries are presented under the equity method of accounting.
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ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which amends Accounting Standards Codification (ASC) 605 “Revenue Recognition” and creates a new topic, ASC 606 “Revenue from Contracts with Customers” (ASC 606). Subsequent to the issuance of ASU 2014-09, ASC 606 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. We adopted these updates on January 1, 2018 using the modified retrospective transition method. The cumulative effect of applying the updates did not have a material impact on our consolidated financial statements. The most significant impact the updates had was on our accounting policies and disclosures on revenue recognition. We derive our revenues primarily from the manufacturing and delivery of goods to customers. Revenues are recognized on sales of goods at the time when control of those goods is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. We primarily sell our goods directly to customers, and to a lesser extent, through distributors. Payment terms are typically 30 to 90 days from date of invoice. Our contracts do not typically have a significant financing component. Right to payment is determined at the point in time in which control has transferred to the customer. A performance obligation is a promise in a contract to transfer a distinct good to the customer. At contract inception, we assess the goods promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good (or bundle of goods) that is distinct. A contract’s transaction price is based on the price stated in the contract and allocated to each distinct performance obligation and revenue is recognized when the performance obligation is satisfied. The majority of our contracts have a single distinct performance obligation or multiple performance obligations which are distinct and represent individual promises within the contract. Substantially all of our performance obligations are satisfied at a single point in time, when control is transferred, which is generally upon shipment or delivery as stated in the contract terms. All taxes assessed by governmental authorities that are both imposed on and concurrent with our revenue-producing transactions and collected from our customers are excluded from the measurement of the transaction price. Shipping and handling fees billed to customers are included in revenue and are considered activities to fulfill the promise to transfer the good. Allowances for estimated returns, discounts and rebates are considered variable consideration, which may be constrained, and are estimated and recognized when sales are recorded. The estimates are based on various market data, historical trends and information from customers. Actual returns, discounts and rebates have not been materially different from estimates. For all contracts that have a duration of one year or less at contract inception, we do not adjust the promised amount of consideration for the effects of a significant financing component. Substantially all of our revenue is derived from contracts with an original expected length of time of one year or less and for which we recognize revenue for the amount in which we have the right to invoice at the point in time in which control has transferred to the customer. However, a portion of our revenue is derived from long-term contracts which have contract periods that vary between one to multi-year. Certain of these contracts represent contracts with minimum purchase obligations, which can be substantially different than the actual revenue recognized. Such contracts consist of varying types of products across our chemical businesses. Certain contracts include variable volumes and/or variable pricing with pricing provisions tied to commodity, consumer price or other indices. The transaction price allocated to the remaining performance obligations related to our contracts was excluded from the disclosure of our remaining performance obligations based on the following practical expedients that we elected to apply: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation; and (ii) contracts with an original expected duration of one year or less. Refer to the Note “Segment Information” for information regarding the disaggregation of revenue by primary geographical markets and major product lines. |
RESTRUCTURING CHARGES (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the 2018 and 2017 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of September 30, 2018 and 2017:
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Cumulative Restructuring Charges by Type and Action | The following table summarizes the cumulative restructuring charges of these 2016, 2014 and 2010 restructuring actions by major component through September 30, 2018:
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ACCOUNTS RECEIVABLE (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AR Facilities [Table Text Block] | The following table summarizes the AR Facilities activity:
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ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Allowance for Doubtful Accounts Receivable | Allowance for doubtful accounts receivable consisted of the following:
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories Table | Inventories consisted of the following:
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OTHER ASSETS (Tables) |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Included in other assets were the following:
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GOODWILL AND INTANGIBLES (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying value of goodwill were as follows:
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Schedule of Finite-Lived Intangible Assets | Intangible assets consisted of the following:
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings Per Share Table |
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ENVIRONMENTAL (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Remediation Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Provisions (Credited) Charged to Income Table | Environmental provisions (credited) charged to income, which are included in cost of goods sold, were as follows:
|
SHAREHOLDERS' EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity included in accumulated other comprehensive loss table | The following table represents the activity included in accumulated other comprehensive loss:
|
SEGMENT INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
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Disaggregation of Revenue |
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STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | Stock-based compensation expense was as follows:
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Schedule of fair value of stock options granted | The fair value of each stock option granted, which typically vests ratably over three years, but not less than one year, was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:
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PENSION PLANS AND RETIREMENT BENEFITS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit (Income) Cost |
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INCOME TAXES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrecognized Tax Benefits | he amount of unrecognized tax benefits was as follows:
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Tax Returns Subject to Examination | For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | We had the following notional amounts of outstanding commodity contracts that were entered into to hedge forecasted purchases:
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Summary of location and fair value of derivative instruments on condensed balance sheets | The following table summarizes the location and fair value of the derivative instruments on our condensed balance sheets. The table disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis before giving effect to master netting arrangements:
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Summary of effects of derivative instruments on condensed statements of income | The following table summarizes the effects of derivative instruments on our condensed statements of operations:
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FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table of financial instruments measured at fair value | The following table summarizes the assets and liabilities measured at fair value in the condensed balance sheets:
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Fair value of debt table | The following table summarizes the fair value measurements of debt and the actual debt recorded on our condensed balance sheets:
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SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Tables) |
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Supplemental Guarantor Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Financial Information Balance Sheets |
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Supplemental Guarantor Financial Information Statement of Operations |
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Supplemental Guarantor Financial Information Statements Of Comprehensive Income |
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Supplemental Guarantor Financial Information Statements Of Cash Flows |
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ACQUISITION (Details Textuals) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Business Acquisition [Line Items] | ||||
Acquisition-related costs | $ 0.4 | $ 1.1 | $ 1.0 | $ 12.5 |
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Accounts Receivable, Net [Abstract] | ||||
Balance at beginning of year | $ 12.3 | $ 10.1 | ||
Provisions charged | $ 0.3 | $ (0.8) | 1.6 | 1.3 |
Foreign currency translation adjustment | (0.4) | 0.0 | ||
Balance at end of period | $ 13.5 | $ 11.4 | $ 13.5 | $ 11.4 |
INVENTORIES (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Supplies | $ 63.7 | $ 66.1 | $ 60.3 |
Raw materials | 70.1 | 75.3 | 85.4 |
Work in process | 155.9 | 127.8 | 120.6 |
Finished goods | 493.6 | 462.6 | 470.7 |
Inventories excluding LIFO reserve | 783.3 | 731.8 | 737.0 |
LIFO reserve | (58.9) | (49.2) | (47.5) |
Inventories, net | $ 724.4 | $ 682.6 | $ 689.5 |
GOODWILL AND INTANGIBLES (Details 1) - USD ($) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill [Line Items] | ||||
Goodwill | $ 2,119.6 | $ 2,119.8 | $ 2,120.0 | $ 2,118.0 |
Foreign currency translation adjustment | (0.4) | 1.8 | ||
Chlor Alkali Products and Vinyls Segment | ||||
Goodwill [Line Items] | ||||
Goodwill | 1,832.6 | 1,832.7 | 1,832.9 | 1,831.3 |
Foreign currency translation adjustment | (0.3) | 1.4 | ||
Epoxy Segment | ||||
Goodwill [Line Items] | ||||
Goodwill | 287.0 | 287.1 | $ 287.1 | $ 286.7 |
Foreign currency translation adjustment | $ (0.1) | $ 0.4 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Earnings Per Share [Abstract] | ||||
Net income | $ 195.1 | $ 52.7 | $ 274.6 | $ 60.2 |
Basic shares | 167.0 | 166.3 | 167.1 | 166.0 |
Basic net income per share | $ 1.17 | $ 0.32 | $ 1.64 | $ 0.36 |
Earnings Per Share, Diluted [Abstract] | ||||
Basic shares | 167.0 | 166.3 | 167.1 | 166.0 |
Stock-based compensation | 1.6 | 2.2 | 1.8 | 2.2 |
Diluted shares | 168.6 | 168.5 | 168.9 | 168.2 |
Diluted net income per share | $ 1.16 | $ 0.31 | $ 1.63 | $ 0.36 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2.4 | 1.6 | 2.4 | 1.6 |
ENVIRONMENTAL (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
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Environmental Remediation Obligations [Abstract] | |||||||
Gross Recoveries from Third Parties of Costs Incurred and Expensed in Prior Periods | $ 120.0 | $ 120.0 | |||||
Environmental Remediation Expense | (0.8) | $ 1.8 | 5.9 | $ 6.2 | |||
Recoveries From Third Parties Of Costs Incurred And Expensed | (110.0) | 0.0 | (110.0) | 0.0 | |||
Total Environmental Income Expense | (110.8) | $ 1.8 | (104.1) | $ 6.2 | |||
Environmental Possible Additional Contingent Environmental Liabilities | $ 10.0 | $ 10.0 | |||||
Reserves for future environmental expenditures - total | $ 129.0 | $ 131.6 | $ 135.3 | ||||
Reserves for future environmental expenditures - noncurrent | $ 109.0 | $ 111.6 | $ 118.3 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Commitments and Contingencies Disclosure [Abstract] | |||
Legal action accrued liabilities | $ 14.8 | $ 24.8 | $ 15.9 |
STOCK-BASED COMPENSATION (Details 1) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation | $ 4.1 | $ 3.0 | $ 15.0 | $ 14.5 |
Mark-to-market adjustments | (1.4) | 2.6 | (5.7) | 3.9 |
Total expense | $ 2.7 | $ 5.6 | $ 9.3 | $ 18.4 |
STOCK-BASED COMPENSATION (Details 2) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Dividend yield | 2.43% | 2.69% |
Risk-free interest rate | 2.72% | 2.06% |
Expected volatility | 32.00% | 34.00% |
Expected life (years) | 6 years | 6 years |
Weighted-average grant fair value (per option) | $ 8.89 | $ 7.78 |
Weighted-average exercise price | $ 32.94 | $ 29.82 |
Shares granted | 927,000 | 1,621,000 |
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
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Defined Contribution Plan Disclosure [Line Items] | |||||
Defined Contribution Plan, Employer Discretionary Contribution Amount | $ 6.7 | $ 7.0 | $ 22.0 | $ 22.4 | |
Employer matching contributions to employee ownership plan | $ 3.9 | $ 3.0 | $ 11.3 | $ 8.7 | |
Minimum | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Contribution To Individual Retirement Account Percentage Of Employees Eligible Compensation | 5.00% | ||||
Maximum | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Contribution To Individual Retirement Account Percentage Of Employees Eligible Compensation | 7.50% |
PENSION PLANS AND RETIREMENT BENEFITS (Details Textuals) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cost of Goods Sold Reclassification, ASU 2017-07 | $ 3.7 | $ 11.3 | |
Selling and Administration Reclassification, ASU 2017-07 | $ 4.7 | 14.2 | |
Foreign Plan [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 1.3 | $ 1.2 |
PENSION PLANS AND RETIREMENT BENEFITS (Details 1) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Pension Benefits | ||||
Service cost | $ 3.3 | $ 2.4 | $ 8.5 | $ 6.9 |
Interest cost | 21.5 | 21.8 | 64.8 | 65.0 |
Expected return on plans’ assets | (36.5) | (37.3) | (109.9) | (111.8) |
Amortization of prior service cost | 0.0 | 0.0 | 0.0 | 0.0 |
Recognized actuarial loss | 8.6 | 6.8 | 25.9 | 20.2 |
Net periodic benefit (income) cost | (3.1) | (6.3) | (10.7) | (19.7) |
Other Postretirement Benefits | ||||
Service cost | 0.3 | 0.3 | 1.0 | 0.9 |
Interest cost | 0.3 | 0.3 | 1.1 | 1.1 |
Expected return on plans’ assets | 0.0 | 0.0 | 0.0 | 0.0 |
Amortization of prior service cost | 0.0 | (0.6) | 0.0 | (1.9) |
Recognized actuarial loss | 0.6 | 0.6 | 1.8 | 1.9 |
Net periodic benefit (income) cost | $ 1.2 | $ 0.6 | $ 3.9 | $ 2.0 |
DERIVATIVE FINANCIAL INSTRUMENTS (Details 1) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Copper Commodity Forward Contracts | |||
Derivative [Line Items] | |||
Notional amount | $ 48.9 | $ 45.2 | $ 42.1 |
Zinc Commodity Forward Contracts | |||
Derivative [Line Items] | |||
Notional amount | 8.3 | 8.4 | 8.0 |
Natural Gas Commodity Forward Contracts | |||
Derivative [Line Items] | |||
Notional amount | $ 65.6 | $ 39.2 | $ 38.4 |
FAIR VALUE MEASUREMENTS (Details Textuals) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
|
Fair Value Disclosures [Abstract] | |||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | $ 0.0 | ||
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0.0 | ||
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0.0 | ||
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0.0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0.0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0.0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3 | 0.0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3 | 0.0 | ||
Assets, Fair Value Disclosure, Nonrecurring | $ 0.0 | $ 0.0 | $ 0.0 |
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Long-term Debt, Fair Value | $ 3,484.9 | $ 3,911.0 | $ 4,073.5 |
Notes Payable | 3,337.3 | 3,612.0 | 3,745.2 |
Fair Value, Inputs, Level 1 | |||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Long-term Debt, Fair Value | 0.0 | 0.0 | 0.0 |
Fair Value, Inputs, Level 2 | |||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Long-term Debt, Fair Value | 3,331.9 | 3,758.0 | 3,920.5 |
Fair Value, Inputs, Level 3 | |||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Long-term Debt, Fair Value | $ 153.0 | $ 153.0 | $ 153.0 |
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Detail Textuals) - USD ($) $ in Millions |
Jan. 19, 2018 |
Mar. 09, 2017 |
Oct. 05, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | 5.125% | |
2023 Notes | |||
Business Acquisition [Line Items] | |||
2023 Notes | $ 720.0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 9.75% | ||
2025 Notes | |||
Business Acquisition [Line Items] | |||
2025 Notes | $ 500.0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% |
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