See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
Notes to the Unaudited Condensed Consolidated Financial Statements
1. NEW DEVELOPMENTS AND BASIS OF PRESENTATION
Pending Merger
On June 10, 2016, the Company entered into an Agreement and
Plan of Merger (the Merger Agreement) with Westlake Chemical Corporation (Westlake) and Lagoon Merger Sub, Inc., a newly formed wholly owned subsidiary of Westlake (Merger Sub). The Merger Agreement provides,
among other things and subject to the terms and conditions set forth therein, for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly owned subsidiary of Westlake in a
transaction in which each share of the Companys common stock (Company Common Stock), issued and outstanding immediately prior to the time the Merger becomes effective, other than certain excluded shares as further described in the
Merger Agreement, will be converted automatically into the right to receive $33.00 in cash, without interest (the Merger Consideration). The Merger is expected to be completed by the fourth quarter of 2016.
Each of the Companys and Westlakes obligation to consummate the Merger is subject to a number of conditions specified in the Merger Agreement, including,
among others, (i) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of all outstanding shares of the Company Common Stock, (ii) the receipt of required regulatory approvals, including expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of required approval under the Canadian Competition Act, (iii) the absence of an order, judgment, injunction or law prohibiting the consummation of the
Merger, (iv) the accuracy of the other partys representations and warranties contained in the Merger Agreement (subject to certain materiality standards set forth in the Merger Agreement), and (v) the other partys compliance with or
performance of its covenants and agreements contained in the Merger Agreement in all material respects. The consummation of the Merger is not subject to a financing condition.
The Merger Agreement contains certain termination rights for each party. In addition, the Merger Agreement, in certain circumstances, provides for the payment of a
termination fee by the Company to Westlake in the amount of $77.7 million.
In connection with the unsolicited offer and subsequent Merger Agreement, we incurred
$8.4 million and $13.6 million of expenses during the three and six months ended June 30, 2016, respectively, including legal, financial advisor and accounting fees that are reflected in fees associated with unsolicited offer and strategic
alternatives in our unaudited condensed consolidated statements of operations.
On August 1, 2016, we filed a definitive proxy statement with the SEC in order to
notify the Companys shareholders of a special meeting to be held on August 30, 2016 to vote on the Merger and to seek proxies from the Companys shareholders in connection with such vote. Axiall and Westlake have received all
regulatory approvals required for the Merger, including approvals required by U.S. and Canadian competition laws.
The Company has terminated its previously
announced sale process for its Building Products business.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (GAAP) for interim financial information and with the instructions to
Form 10-Q
and Article 10 of
Regulation S-X.
Accordingly, they do not
Page 7 of 70
include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments
that, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the interim periods reported. Such adjustments are of a normal, recurring nature.
Our financial condition as of, and our operating results for, the three and six month periods ended June 30, 2016 are not necessarily indicative of the financial
condition and results that may be expected for the full year ending December 31, 2016 or any other interim period.
On September 30, 2015, the Company entered into
and consummated the transactions contemplated by an asset purchase agreement between INEOS Americas LLC (INEOS) and Axiall LLC, a wholly-owned subsidiary of the Company, pursuant to which the Company sold its aromatics business to INEOS.
The Company has concluded that it met the accounting requirements for reporting the financial position, results of operations and cash flows of its former aromatics business as discontinued operations when the sale was consummated.
On February 24, 2016, the Company entered into an asset purchase agreement among Royal Group, Inc. (RGI), Royal Window and Door Profiles Plant 13 Inc.,
Royal Window and Door Profiles Plant 14 Inc., and Axiall Corporation, as sellers, and North American Profiles Canada, LTD (NAPC), as purchaser, pursuant to which the Company sold its window and door profiles business and its Concord,
Ontario compounding operations to NAPC on March 31, 2016 for net proceeds of approximately $29.2 million, subject to certain working capital and other adjustments and future performance-based payments. The Company concluded that it met the
accounting requirements for reporting the financial position, results of operations and cash flows of its former window and door profiles business as discontinued operations when the sale was consummated. The sale of our Concord, Ontario compounding
operations did not meet the criteria for classification as discontinued operations.
The accompanying unaudited condensed consolidated balance sheets as of June 30,
2016 and December 31, 2015, and statements of operations and statements of cash flows for the three and six months ended June 30, 2016 and 2015, and the related notes to the unaudited condensed consolidated financial statements, have been
adjusted to reflect the presentation of the results of operations and cash flows of the former aromatics and window and door profiles businesses as discontinued operations. These adjustments relating to the discontinued operations of our aromatics
and window and door profiles businesses did not impact the Companys consolidated net income (loss) attributable to Axiall. Refer to Note 3 for additional information relating to these sales.
Certain prior period amounts have been reclassified to conform to the current periods presentation. These reclassifications are of a normal recurring nature and
did not impact the Companys operating income (loss) or consolidated net income (loss).
There have been no material changes in the significant accounting
policies followed by us during the three and six months ended June 30, 2016 from those disclosed in our Annual Report on Form
10-K
for the year ended December 31, 2015 (the 2015 Annual
Report).
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and notes to the audited consolidated financial statements included in the 2015 Annual Report, which have not been revised to reflect the discontinued operations of our window and door profiles business. Unless the context otherwise
requires, references to Axiall, the Company, we, our or us, means Axiall Corporation and its consolidated subsidiaries.
Page 8 of 70
2. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share from continuing operations attributable to Axiall is based on the weighted-average number of common shares outstanding during the three
and six month periods ended June 30, 2016 and 2015. Diluted earnings (loss) per share from continuing operations attributable to Axiall is based on the weighted-average number of common shares outstanding during the three and six month periods ended
June 30, 2016 and 2015, adjusted for the dilutive effect of employee share-based compensation and other share-based compensation awards.
Due to the net loss
from continuing operations in the three and six month periods ended June 30, 2016, common stock equivalents of 0.4 million shares and 0.3 million shares, respectively, were excluded from the computation of diluted loss per share in both periods due
to their anti-dilutive effect. Certain of our restricted stock units participate in dividend distributions; however, the distributions for these restricted stock units do not have a material impact on our earnings (loss) per share calculation.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted earnings (loss) per share from continuing
operations attributable to Axiall and discontinued operations for the three and six month periods ended June 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
(In millions, except per share data)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(27.3)
|
|
|
$
|
22.8
|
|
|
$
|
(57.6)
|
|
|
$
|
20.4
|
|
Less: net income attributable to noncontrolling interest
|
|
|
0.5
|
|
|
|
1.3
|
|
|
|
0.8
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to Axiall
|
|
|
(27.8)
|
|
|
|
21.5
|
|
|
|
(58.4)
|
|
|
|
17.3
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
(0.9)
|
|
|
|
(23.0)
|
|
|
|
(7.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss) attributable to Axiall
|
|
$
|
(27.8)
|
|
|
$
|
20.6
|
|
|
$
|
(81.4)
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic
|
|
|
70.6
|
|
|
|
70.4
|
|
|
|
70.6
|
|
|
|
70.3
|
|
Dilutive impact of stock options and other share-based awards
|
|
|
-
|
|
|
|
0.5
|
|
|
|
-
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, diluted
|
|
|
70.6
|
|
|
|
70.9
|
|
|
|
70.6
|
|
|
|
70.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to Axiall:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share from continuing operations
|
|
$
|
(0.39)
|
|
|
$
|
0.30
|
|
|
$
|
(0.83)
|
|
|
$
|
0.25
|
|
Basic loss per share from discontinued operations
|
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.32)
|
|
|
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to Axiall
|
|
$
|
(0.39)
|
|
|
$
|
0.29
|
|
|
$
|
(1.15)
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to Axiall:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share from continuing operations
|
|
$
|
(0.39)
|
|
|
$
|
0.30
|
|
|
$
|
(0.83)
|
|
|
$
|
0.25
|
|
Diluted loss per share from discontinued operations
|
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.32)
|
|
|
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to Axiall
|
|
$
|
(0.39)
|
|
|
$
|
0.29
|
|
|
$
|
(1.15)
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. DISCONTINUED OPERATIONS
Sale of Building Products Window and Door Profiles Business
On February 24,
2016, the Company entered into an asset purchase agreement among RGI, Royal Window and Door Profiles Plant 13 Inc., Royal Window and Door Profiles Plant 14 Inc., and Axiall Corporation, as sellers, and NAPC, as purchaser, pursuant to which the
Company sold its window and door profiles business, and its Concord, Ontario compounding operations to NAPC for net proceeds of approximately $29.2 million, subject to certain working capital and other adjustments and future performance-based
payments. The sale was consummated on March 31, 2016. The Company concluded that it met the accounting requirements for reporting the financial position, results of operations and cash flows of its former window and door profiles business as
discontinued operations when the sale was consummated and recognized a loss on sale of $25.2
Page 9 of 70
million reflected in loss from discontinued operations in the unaudited condensed consolidated statements of operations. The Company concluded that the sale of its Concord, Ontario
compounding operations did not meet the criteria for classification as discontinued operations. In connection with the sale of the Concord, Ontario compounding operations, the Company recognized a loss on the sale of assets of $4.0 million that
is reflected in restructuring and divestiture costs in its unaudited condensed consolidated statements of operations. The net cash proceeds of approximately $27.5 million received from the sale of our window and door profiles business is
included in cash flows from investing activities discontinued operations in the unaudited condensed consolidated statements of cash flows. The Company has terminated its previously announced sale process for the remainder of the Building
Products businesses.
Sale of Aromatics Business: Discontinued Operations
On September 30, 2015, the Company entered into and consummated the transactions contemplated by an asset purchase agreement between INEOS and Axiall LLC, a
wholly-owned subsidiary of the Company. Pursuant to such asset purchase agreement, INEOS acquired certain assets used in the Companys aromatics business, including but not limited to, its cumene production facility located in Pasadena, Texas.
The Company retained the land and plant at its phenol, acetone and alpha-methylstyrene production facility located in Plaquemine, Louisiana (the Plaquemine Phenol Facility), which is part of a broader set of other Axiall facilities
located in Plaquemine. In addition, the Company retained the following assets associated with its aromatics business: (i) cash and cash equivalents; (ii) accounts receivable; and (iii) inventory, other than certain raw materials and
work-in-process inventory at its Pasadena facility. The Company has discontinued the manufacture of products at its Plaquemine Phenol Facility and expects to decommission and dismantle that facility by the end of 2016.
At closing, the Company received $52.4 million in cash, which consisted of: (i) the sale price of $47.4 million; and (ii) a $5.0 million advance toward the
cost of decommissioning and dismantling our Plaquemine Phenol Facility. That advance was recorded as a liability in our unaudited condensed consolidated balance sheets. During the fourth quarter of 2015, the Company met certain terms and conditions
set forth in the asset purchase agreement that entitled it to receive $5.5 million of contingent consideration, pursuant to which it recorded $5.3 million, as a gain, net of a $0.2 million working capital adjustment, related to the sale. Further,
the Company may receive an additional $5.0 million from INEOS to help defray the costs of decommissioning and dismantling the Plaquemine Phenol Facility. The Companys receipt of all or any portion of the remaining $5.0 million that INEOS may
be required to pay and our right to retain the $5.0 million advance payment will depend on the amount of costs incurred by us to decommission and dismantle the Plaquemine Phenol Facility.
The following represents major classes of assets and liabilities related to the discontinued operations included in our unaudited condensed consolidated balance sheets
as of the following dates:
Page 10 of 70
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
Receivables, net
|
|
$
|
-
|
|
|
$
|
17.6
|
|
Inventories
|
|
|
0.8
|
|
|
|
18.5
|
|
Prepaid expenses and other
|
|
|
-
|
|
|
|
0.8
|
|
Property, plant and equipment, net
|
|
|
-
|
|
|
|
61.1
|
|
Other assets, net
|
|
|
-
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
0.8
|
|
|
$
|
98.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
5.7
|
|
|
$
|
3.2
|
|
Accrued compensation
|
|
|
-
|
|
|
|
2.0
|
|
Other accrued liabilities
|
|
|
1.1
|
|
|
|
10.3
|
|
Lease financing obligation
|
|
|
-
|
|
|
|
35.6
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
6.8
|
|
|
$
|
51.1
|
|
|
|
|
|
|
|
|
|
|
Net assets (liabilities)
|
|
$
|
(6.0)
|
|
|
$
|
47.8
|
|
Operating results of the discontinued operations for the three and six month periods ended June 30, 2016 and 2015 are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net sales
|
|
$
|
1.3
|
|
|
$
|
189.3
|
|
|
$
|
33.6
|
|
|
$
|
352.3
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
2.6
|
|
|
|
184.2
|
|
|
|
35.7
|
|
|
|
348.3
|
|
Selling, general and administrative expenses
|
|
|
0.4
|
|
|
|
5.4
|
|
|
|
4.5
|
|
|
|
10.7
|
|
Restructuring and divestiture costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
3.0
|
|
|
|
189.6
|
|
|
|
40.2
|
|
|
|
359.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss from discontinued operations
|
|
|
(1.7)
|
|
|
|
(0.3)
|
|
|
|
(6.6)
|
|
|
|
(7.0)
|
|
Interest expense, net
|
|
|
-
|
|
|
|
(1.2)
|
|
|
|
(1.1)
|
|
|
|
(2.3)
|
|
Foreign currency exchange gain (loss)
|
|
|
-
|
|
|
|
(0.2)
|
|
|
|
(0.3)
|
|
|
|
0.4
|
|
Net loss from the sale of business
|
|
|
-
|
|
|
|
-
|
|
|
|
(25.1)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
(1.7)
|
|
|
|
(1.7)
|
|
|
|
(33.1)
|
|
|
|
(8.9)
|
|
Benefit from income taxes of discontinued operations
|
|
|
(1.7)
|
|
|
|
(0.8)
|
|
|
|
(10.1)
|
|
|
|
(1.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
$
|
-
|
|
|
$
|
(0.9)
|
|
|
$
|
(23.0)
|
|
|
$
|
(7.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain information pertaining to depreciation and amortization as well as capital expenditures associated with our discontinued
operations for the three and six month periods ended June 30, 2016 and 2015 are included below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
(In millions)
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
Depreciation and amortization
|
|
$
|
-
|
|
|
$
|
2.9
|
|
|
$
|
2.1
|
|
|
$
|
5.7
|
|
Capital expenditures
|
|
|
-
|
|
|
|
1.9
|
|
|
|
1.0
|
|
|
|
3.6
|
|
4. RESTRUCTURING AND DIVESTITURE COSTS
During the three and six month periods ended June 30, 2016, the Company had restructuring and divestiture costs pertaining to: (i) the sale of certain assets of its
compound additives business, known as Solucor, and its manufacturing facility located in Concord, Ontario, in its chlorovinyls segment; (ii) the reorganization of its building products segment, including the sale of our window and door profiles
reporting unit; (iii) the sale of its
Page 11 of 70
aromatics business; and (iv) workforce and other expense reductions to drive cost savings throughout the Company.
Chlorovinyls
During the three and six month periods ended June 30, 2016,
our chlorovinyls segment incurred restructuring costs of $0.3 million and $10.4 million, respectively, primarily relating to severance and related payments in conjunction with our February 2016 workforce reduction activities and cost savings
initiatives, and divestiture costs of $0.9 million and $20.8 million, respectively, primarily relating to the sales of its Solucor business and its Concord, Ontario manufacturing operations. During both the three and six month periods ended
June 30, 2015, the Company recorded $0.4 million related to the sale of its specialty phosgene derivatives business.
On February 24, 2016, the Company entered into
an asset purchase agreement among RGI and Axiall Corporation, as sellers, and Galata Chemicals (Canada) Inc., as Purchaser, for the sale of certain assets of its compound additives business, known as Solucor, and its manufacturing facility located
in Bradford, Ontario, for a price of approximately $9.2 million, subject to adjustment based upon the amount of inventory of the Solucor business on the closing date of the transaction, which was February 29, 2016. The Company recognized a loss
on the sale of $15.5 million that is recorded in restructuring and divestiture costs in our unaudited condensed consolidated statements of operations for the six months ended June 30, 2016. Also, in conjunction with the sale of our window and door
profiles business in our building products segment, the sale of our Concord, Ontario compounding operations resulted in a loss on sale of $4.0 million that is recorded in restructuring and divestiture costs in our unaudited condensed consolidated
statements of operations for the six months ended June 30, 2016.
Building Products
During the three and six months ended June 30, 2016, our building products segment incurred restructuring costs of $0.6 million and $2.7 million, respectively,
primarily relating to severance payments in conjunction with our workforce reduction activities and cost savings initiatives, and divestiture costs of $0.7 million and $1.1 million, respectively, primarily related to the strategic review of our
building products segment, which we terminated subsequent to the announced Merger between Axiall and Westlake. During the three and six month periods ended June 30, 2015, our building products segment did not incur material restructuring and
divestiture charges. During the six months ended June 30, 2015 our building products segment incurred $0.3 million of long-lived asset impairment charges pertaining to its window and door profiles reporting unit.
Corporate
Restructuring charges primarily related to severance payments in
conjunction with our workforce reduction activities and cost savings initiatives. Restructuring costs in corporate, unallocated totaled $0.8 million and $2.6 million for the three and six month periods ended June 30, 2016, respectively. There
were no similar costs during the three and six month periods ended June 30, 2015. Also, as of June 30, 2016, we made cash payments of $3.2 million related to the separation of executives under the terms of the Companys severance plans and
policies. As of June 30, 2016, we had remaining payments of $0.9 million that are expected to conclude by November 2016.
Divestiture charges primarily related to
costs associated with the strategic review of our building products segment as announced in the third quarter of 2015 and the sale of certain non-core business operations. The Company has terminated its strategic review of the building products
segment subsequent to the announced execution of the Merger Agreement between Axiall and Westlake. Divestiture costs in corporate, unallocated
Page 12 of 70
were $1.2 million and $3.6 million during the three and six month periods ended June 30, 2016. There were no similar costs during the three and six months ended June 30, 2015.
5. NEW ACCOUNTING PRONOUNCEMENTS
In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or Update)
2016-09
CompensationStock Compensation (Topic 718)
. The amendments in this Update are designed to simplify several aspects of accounting for share-based payment transactions, including the income
tax consequences, classification of awards as either equity or liabilities, forfeitures and classification on the statements of cash flows. The amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Management is currently evaluating this Update and does not anticipate a material impact on our unaudited condensed consolidated financial statements.
In March 2016, the FASB issued ASU
2016-07
InvestmentsEquity Method and Joint Ventures (Topic 323)
. The
amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results
of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments of this Update require that the equity method
investor add the cost of acquiring the additional interest in the investee to the current basis of the investors previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity
method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2016. Management is currently evaluating this Update and does not anticipate a material impact on our unaudited condensed consolidated financial statements.
In March 2016, the FASB issued ASU
2016-05
Derivatives and Hedging (Topic 815)
. The amendments in this Update
clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under
Topic 815
does not, in and of itself, require de-designation of that hedging relationship provided that all other
hedge accounting requirements continue to be met. The amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We have adopted the amendments of this
Update and there was no impact on our unaudited condensed consolidated financial statements.
In February 2016, the FASB issued ASU
2016-02
Leases (Topic 842)
. The core principle of
Topic 842
is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability
for the lessee and, therefore, recognition of those leased assets and leased liabilities represents an improvement over previous GAAP, which did not require leased assets and leased liabilities to be recognized for most leases. The amendments in
this Update are effective for annual periods, including interim periods, beginning after December 15, 2018, and early adoption is permitted. We are evaluating the amendments in this Update and have not yet determined the impact on our unaudited
condensed consolidated financial statements.
In May 2014, the FASB issued ASU
2014-09
Revenue from Contracts with
Customers (Topic 606)
. The Update outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance issued by the FASB, including
industry specific guidance. The Update also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. In August 2015, the FASB issued
ASU 2015-14
Revenue from Contracts with Customers: Deferral of
Page 13 of 70
the Effective Date
. This Update provides for a one year deferral of the effective date of ASU 2014-09. As a result, the Company expects that it will apply the new revenue standard to
annual and interim reporting periods beginning after December 15, 2017. The new standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The
modified retrospective approach requires that the new standard be applied to all new and existing contracts as of the date of adoption, with a cumulative
catch-up
adjustment recorded to the opening balance of
retained earnings at the effective date for existing contracts that still require performance by the entity. Under the modified retrospective approach, amounts reported prior to the date of adoption will be presented under existing guidance. The
Update also requires entities to disclose both quantitative and qualitative information to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. We have not yet determined the impact of adopting the standard on our unaudited condensed consolidated financial statements, nor have we determined whether we will utilize the full retrospective or modified retrospective approach.
In 2016, FASB issued additional ASUs containing implementation guidance relating to ASU 2014-09, including: ASU 2016-08
Revenue from Contracts with Customers
(Topic 606) Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU
2016-10
Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing
, which is intended to clarify two aspects of Topic 606: (i) identifying performance
obligations; and (ii) the identifying the licensing implementation guidance; and ASU 2016-12
Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients
, which contains certain provisions
and practical expedients in response to identified implementation issues. The effective date for these ASUs is the same as the effective date for ASU 2014-09.
6. INVENTORIES
As of June 30, 2016 and December 31, 2015, the major classes of inventories were as follows:
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
|
|
|
Raw materials
|
|
$
|
69.4
|
|
|
$
|
84.2
|
|
|
|
|
Work-in-process
|
|
|
0.9
|
|
|
|
1.6
|
|
|
|
|
Finished goods
|
|
|
205.7
|
|
|
|
195.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
$
|
276.0
|
|
|
$
|
280.9
|
|
|
|
|
|
|
|
|
|
|
Page 14 of 70
7. PROPERTY, PLANT AND EQUIPMENT, NET
As of June 30, 2016 and December 31, 2015, property, plant and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
Chemical manufacturing plants
|
|
$
|
1,317.0
|
|
|
$
|
1,308.8
|
|
Machinery and equipment
|
|
|
1,117.8
|
|
|
|
1,080.4
|
|
Buildings
|
|
|
138.9
|
|
|
|
134.7
|
|
Land and land improvements
|
|
|
154.2
|
|
|
|
156.6
|
|
Construction-in-progress
|
|
|
104.7
|
|
|
|
112.5
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
2,832.6
|
|
|
|
2,793.0
|
|
Less: accumulated depreciation
|
|
|
1,273.8
|
|
|
|
1,236.5
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
1,558.8
|
|
|
$
|
1,556.5
|
|
|
|
|
|
|
|
|
|
|
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Our intangible assets consist of goodwill, customer relationships, supply contracts, technology, and trade names. Goodwill is the excess of the cost of an acquired
entity over the fair value of tangible and intangible assets acquired (including, but not limited to, customer relationships, supply contracts, technology, and trade names) and liabilities assumed under acquisition accounting for business
combinations.
As of June 30, 2016, our chlorovinyls segment includes goodwill in its
chlor-alkali
and derivatives and
compound reporting units and our building products segment includes goodwill primarily in its siding reporting unit.
Valuation of Goodwill and Indefinite-Lived
Intangible Assets.
The carrying values of our goodwill and indefinite-lived intangible assets are tested for impairment annually in the fourth quarter, using a measurement date of October 1. In addition, we evaluate the carrying values of
these assets for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such events and indicators may include,
without limitation, significant declines in the industries in which our products are used, significant changes in the estimated future cash flows of our reporting units, significant changes in capital market conditions and significant changes in our
market capitalization.
Impairment testing for goodwill is a two-step test performed at the reporting unit level. The first step of the impairment analysis involves
comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit exceeds the carrying value, goodwill is not considered impaired. If the carrying value exceeds the fair value, the
second step of the impairment analysis is performed, in which we measure the amount of impairment. Our goodwill evaluations utilize discounted cash flow analyses (the income approach) and market multiple analyses (the market
approach), in estimating fair values. Inherent in our fair value determinations are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market conditions, overall
economic conditions and our strategic and operational plans with regard to our business units. In addition, to the extent significant changes occur in market conditions, overall economic conditions or our strategic or operational plans, it is
possible that goodwill not currently impaired, may become impaired in the future.
Page 15 of 70
Goodwill.
During the six months ended June 30, 2016, we wrote-off $3.3 million of goodwill pertaining to the sale of
our Solucor business and our Concord, Ontario compounding operations in our chlorovinyls segment, which was recognized as a component of the loss on sales of assets in the restructuring and divestiture costs in our unaudited condensed consolidated
statements of operations during the six months ended June 30, 2016. The following table provides the detail of the changes made to goodwill during the six months ended June 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Chlorovinyls
|
|
|
Building
Products
|
|
|
Total
|
|
Gross goodwill at December 31, 2015
|
|
$
|
1,766.0
|
|
|
$
|
160.2
|
|
|
$
|
1,926.2
|
|
Accumulated impairment losses
|
|
|
(923.7)
|
|
|
|
(150.4)
|
|
|
|
(1,074.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net goodwill at December 31, 2015
|
|
$
|
842.3
|
|
|
$
|
9.8
|
|
|
$
|
852.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross goodwill at December 31, 2015
|
|
$
|
1,766.0
|
|
|
$
|
160.2
|
|
|
$
|
1,926.2
|
|
Goodwill write-downs from sales of assets
|
|
|
(3.3)
|
|
|
|
-
|
|
|
|
(3.3)
|
|
Cumulative foreign currency translation adjustments
|
|
|
7.6
|
|
|
|
-
|
|
|
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross goodwill at June 30, 2016
|
|
|
1,770.3
|
|
|
|
160.2
|
|
|
|
1,930.5
|
|
Accumulated impairment losses
|
|
|
(923.7)
|
|
|
|
(150.4)
|
|
|
|
(1,074.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net goodwill at June 30, 2016
|
|
$
|
846.6
|
|
|
$
|
9.8
|
|
|
$
|
856.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite
-lived
intangible assets.
As of June 30, 2016 and December 31,
2015, our
indefinite-lived
intangible assets consisted of certain trade names with a carrying value of $5.6 million and $5.9 million, respectively, net of cumulative foreign currency translation adjustments.
In connection with the sale of our Solucor business and our Concord, Ontario compounding operations in our chlorovinyls segment, during the six months ended June 30, 2016, we wrote-off $0.3 million of indefinite-lived intangible assets.
Definite
-lived
intangible assets.
As of June 30, 2016 and December 31, 2015, we had
definite-lived
intangible assets related to: (i) customer relationships, supply contracts, technology and trade names in our chlorovinyls segment; and (ii) customer relationships and technology in our building
products segment. During the six months ended June 30, 2016, we wrote-off $4.8 million of definite-lived intangible assets and the associated accumulated amortization pertaining to the sale of our window and door profiles business in our building
products segment. All prior period amounts have been reclassified to reflect the sale as a discontinued operations in our unaudited condensed consolidated balance sheets. The following table provides the
definite-lived
intangible assets, by reportable segment, as of June 30, 2016 and December 31, 2015.
Page 16 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chlorovinyls
|
|
|
Building Products
|
|
|
Total
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
Gross carrying amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
1,142.3
|
|
|
$
|
1,142.3
|
|
|
$
|
27.4
|
|
|
$
|
27.4
|
|
|
$
|
1,169.7
|
|
|
$
|
1,169.7
|
|
Supply contracts
|
|
|
42.6
|
|
|
|
42.6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42.6
|
|
|
|
42.6
|
|
Technology
|
|
|
14.9
|
|
|
|
14.9
|
|
|
|
17.4
|
|
|
|
17.4
|
|
|
|
32.3
|
|
|
|
32.3
|
|
Trade names
|
|
|
6.0
|
|
|
|
6.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6.0
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,205.8
|
|
|
|
1,205.8
|
|
|
|
44.8
|
|
|
|
44.8
|
|
|
|
1,250.6
|
|
|
|
1,250.6
|
|
Accumulated impairment charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
(2.9)
|
|
|
|
(2.9)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.9)
|
|
|
|
(2.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(2.9)
|
|
|
|
(2.9)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.9)
|
|
|
|
(2.9)
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
(213.8)
|
|
|
|
(182.9)
|
|
|
|
(9.7)
|
|
|
|
(8.9)
|
|
|
|
(223.5)
|
|
|
|
(191.8)
|
|
Supply contracts
|
|
|
(7.3)
|
|
|
|
(6.3)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7.3)
|
|
|
|
(6.3)
|
|
Technology
|
|
|
(2.3)
|
|
|
|
(2.0)
|
|
|
|
(14.9)
|
|
|
|
(14.1)
|
|
|
|
(17.2)
|
|
|
|
(16.1)
|
|
Trade names
|
|
|
(1.2)
|
|
|
|
(1.0)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.2)
|
|
|
|
(1.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(224.6)
|
|
|
|
(192.2)
|
|
|
|
(24.6)
|
|
|
|
(23.0)
|
|
|
|
(249.2)
|
|
|
|
(215.2)
|
|
Foreign currency translation adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
(20.1)
|
|
|
|
(24.6)
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(20.1)
|
|
|
|
(24.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(20.1)
|
|
|
|
(24.6)
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(20.1)
|
|
|
|
(24.7)
|
|
Net carrying amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
905.5
|
|
|
|
931.9
|
|
|
|
17.7
|
|
|
|
18.4
|
|
|
|
923.2
|
|
|
|
950.3
|
|
Supply contracts
|
|
|
35.3
|
|
|
|
36.3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35.3
|
|
|
|
36.3
|
|
Technology
|
|
|
12.6
|
|
|
|
12.9
|
|
|
|
2.5
|
|
|
|
3.3
|
|
|
|
15.1
|
|
|
|
16.2
|
|
Trade names
|
|
|
4.8
|
|
|
|
5.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.8
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
958.2
|
|
|
$
|
986.1
|
|
|
$
|
20.2
|
|
|
$
|
21.7
|
|
|
$
|
978.4
|
|
|
$
|
1,007.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average estimated useful lives remaining for
definite-lived
customer
relationships, supply contracts, technology and trade names are approximately 15 years, 17 years, 16 years and 14 years, respectively, as of June 30, 2016. Amortization expense for the
definite-lived
intangible assets was $17.1 million and $17.2 million for the three months ended June 30, 2016 and 2015, respectively, and $34.1 million and $34.3 million for the six months ended June 30, 2016 and 2015, respectively. The estimated annual
amortization expense for
definite-lived
intangible assets for the next five fiscal years is approximately $68.0 million per year.
9. OTHER ASSETS, NET
As of
June 30, 2016 and December 31, 2015, other assets, net of accumulated amortization, consisted of the following:
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
Deferred financing costs, net
|
|
$
|
6.0
|
|
|
$
|
7.1
|
|
Deferred income taxes
|
|
|
17.8
|
|
|
|
17.8
|
|
Advances to and investments in joint ventures, net
|
|
|
53.5
|
|
|
|
33.4
|
|
Other
|
|
|
4.4
|
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
|
Total other assets, net
|
|
$
|
81.7
|
|
|
$
|
65.1
|
|
|
|
|
|
|
|
|
|
|
Page 17 of 70
10.
LONG-TERM
DEBT AND LEASE FINANCING OBLIGATION
As of June 30, 2016 and December 31, 2015, our
long-term
debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Maturity Date
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
4.625 Notes (net of debt issuance costs
totaling $8.8 million and $9.6 million at June 30, 2016 and December 31, 2015, respectively)
|
|
February 15, 2021
|
|
$
|
679.2
|
|
|
$
|
678.4
|
|
4.875 Notes (net of debt issuance costs
totaling $5.4 million and $5.8 million at June 30, 2016 and December 31, 2015, respectively)
|
|
May 15, 2023
|
|
|
444.6
|
|
|
|
444.2
|
|
New Term Loan Facility (net of deferred
financing fees totaling $2.8 million and $3.1 million at June 30, 2016 and December 31, 2015, respectively)
|
|
February 27, 2022
|
|
|
243.5
|
|
|
|
244.4
|
|
ABL Revolver
|
|
December 17, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
1,367.3
|
|
|
|
1,367.0
|
|
Less: current portion of long-term
debt
|
|
|
|
|
(2.5)
|
|
|
|
(2.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
|
$
|
1,364.8
|
|
|
$
|
1,364.5
|
|
|
|
|
|
|
|
|
|
|
|
|
4.625 Notes
The Company and certain
of its subsidiaries guarantee $688.0 million in aggregate principal amount of 4.625 percent senior unsecured notes due 2021 (the 4.625 Notes) that were issued by a wholly-owned subsidiary, Eagle Spinco Inc. (Spinco), on
January 28, 2013. Interest payments on the 4.625 Notes commenced on August 15, 2013 and interest is payable semi-annually in arrears on February 15 and August 15 of each year. The 4.625 Notes are fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by the Company and by its existing and future domestic subsidiaries, other than certain excluded subsidiaries.
4.875 Notes
On February 1, 2013, the Company issued $450.0
million in aggregate principal amount of 4.875 percent senior unsecured notes due 2023 (the 4.875 Notes). Interest payments on the 4.875 Notes commenced on May 15, 2013 and interest is payable semi-annually in arrears on May 15
and November 15 of each year. The 4.875 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries, other than certain excluded subsidiaries.
Term Loan
On February 27, 2015, Axiall Holdco, Inc., a
wholly-owned subsidiary of the Company (Axiall Holdco), entered into a credit agreement with a syndicate of financial institutions (the Term Loan Agreement) for a new $250 million term loan facility (the New Term Loan
Facility) to refinance the principal amount outstanding under the Companys existing term loan facility, to pay related fees and expenses, and for general corporate purposes. Obligations under the New Term Loan Facility are fully and
unconditionally guaranteed, on a senior secured basis, by the Company and by each of the Companys existing and future wholly-owned domestic subsidiaries, other than certain excluded subsidiaries. The obligations under the New Term Loan
Facility are secured by substantially all of the assets of Axiall Holdco, Axiall Corporation and the subsidiary guarantors.
Page 18 of 70
The New Term Loan Facility contains an accordion feature that permits Axiall Holdco, subject to certain conditions and to
obtaining lender commitments, to incur additional term loans under the New Term Loan Facility in an amount up to the greater of: (i) $250 million; and (ii) an amount that would not result in the Companys consolidated secured debt
ratio being greater than 2.50 to 1.00.
At the election of Axiall Holdco, the New Term Loan Facility bears interest at a rate equal to: (i) the Base Rate (as
defined in the Term Loan Agreement) plus 1.50 percent per annum; or (ii) LIBOR (as defined in the Term Loan Agreement) plus 3.25 percent per annum; provided that at no time will the Base Rate be deemed to be less than 2.00 percent per annum or
LIBOR be deemed to be less than 0.75 percent per annum. As of June 30, 2016, outstanding borrowings under the New Term Loan Facility had a stated interest rate of 4.00 percent per annum.
The Term Loan Agreement contains customary covenants (subject to exceptions), including certain restrictions on the Company and its subsidiaries to pay dividends and
repurchase shares of Company Common Stock.
ABL Revolver
The
Companys second amended and restated asset based revolving credit facility (the ABL Revolver), which the Company entered into on December 17, 2014, provides for a maximum of $600.0 million of revolving credit, subject to applicable
borrowing base limitations and certain other conditions. The credit agreement governing the ABL Revolver (the ABL Credit Agreement) contains customary covenants, including certain restrictions on the Company and its subsidiaries to pay
dividends and repurchase shares of Company Common Stock. These covenants are subject to certain exceptions and qualifications. Under the ABL Revolver, dividend payments and repurchases of Company Common Stock in an aggregate amount not to exceed
$150 million in any fiscal year may be made if both borrowing availability under the ABL Revolver would have exceeded $75 million at all times during the thirty days immediately preceding any such restricted payment and our consolidated fixed charge
coverage ratio (as defined in the ABL Revolver) is equal to or exceeds 1.00 to 1.00, each on a pro forma basis after giving effect to any such proposed restricted payment. In addition, under the ABL Revolver, additional cash dividend payments and
repurchases of Company Common Stock may be made if both borrowing availability under the ABL Revolver then exceeds $100 million and our consolidated fixed charge coverage ratio (as defined in the ABL Revolver) is equal to or exceeds 1.10 to 1.00,
each on a pro forma basis after giving effect to the proposed restricted payment. On December 30, 2015, we amended our ABL Credit Agreement to, among other things, provide additional flexibility to pay dividends and consummate stock repurchases,
modify the definition of consolidated EBITDA to include certain additional add backs and reductions to net income in determining consolidated EBITDA (as defined in the ABL Revolver), revise the definition of consolidated capital expenditures to
exclude capital expenditures made in connection with the proposed ethane cracker (ethylene manufacturing plant) located in Lake Charles, Louisiana (the Plant), and provide for a reduction in the amount of its basket for investments in
such a plant by the amount of such capital expenditures that are excluded from the definition of consolidated capital expenditures.
As of June 30, 2016 and
December 31, 2015, we had no outstanding balance under our ABL Revolver. Our availability under the ABL Revolver at June 30, 2016 was approximately $383.9 million, net of outstanding letters of credit totaling $72.9 million. As of June 30, 2016,
depending on the duration of the loan, the applicable rate for future borrowings would have been between 2.15 percent to 4.00 percent based on LIBOR or the Prime Rate.
As of June 30, 2016, we were in compliance with the covenants under our ABL Credit Agreement, the Term Loan Agreement and the indentures governing the 4.625 Notes and
the 4.875 Notes.
Page 19 of 70
Lease Financing Obligation
As
of June 30, 2016 and December 31, 2015, we had a lease financing obligation of $46.8 million and $44.0 million, respectively. The lease financing obligation is a result of the sale and concurrent leaseback of certain land and buildings in Canada in
2007 for an original term of ten years. In connection with this transaction, certain terms and conditions, including the requirement to execute a collateralized letter of credit in favor of the
buyer-lessor,
resulted in the transaction being recorded as a financing transaction rather than a sale for GAAP purposes. As a result, the land, building and related accounts continue to be recognized in the unaudited condensed consolidated balance sheets. The
collateralized letter of credit expired on February 2, 2015 and is no longer required.
In connection with the sale of our window and door profiles business, on
March 31, 2016, we assigned the leases associated with two of the four properties that were recorded as part of such sale-leaseback transaction on our unaudited condensed consolidated balance sheets and extended the lease term for one of the
remaining properties through 2019. Consequently, we are no longer the primary obligor under the two assigned leases and we derecognized $25.6 million from property plant and equipment, net and decreased our lease financing obligation by $37.5
million on our unaudited condensed consolidated balance sheets as of June 30, 2016. The deferred gain of $11.9 million associated with these two assigned leased properties was recognized and offset against the loss on sale of our window and
door profiles business in discontinued operations during the six months ended June 30, 2016, all of which was a non-cash transaction.
The sale of our window and
door profiles business was classified as discontinued operations and, therefore, all prior period amounts pertaining to these two properties were reclassified. The change from the December 31, 2015 balance, excluding the reclassification of the
two properties, is due to the change in the Canadian dollar exchange rate as of June 30, 2016. We are not obligated to repay the lease financing obligation amount of $46.8 million. Our obligation is for the future minimum lease payments under the
terms of the related lease agreements. The future minimum lease payments under the terms of the related lease agreements as of June 30, 2016 are $1.7 million in 2016, $2.5 million in 2017, $2.2 million in 2018 and $0.6 million in 2019, the
final year of the lease agreements.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, commodity purchase contracts and
long-term
debt. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values because of the nature of such instruments. The fair values
of our outstanding notes, as shown in the table below, are based on quoted market values. The fair value of our New Term Loan Facility is based on present rates for indebtedness with similar amounts, durations and credit risk. Our commodity purchase
contracts are fair valued with Level 2 inputs based on quoted market values for similar but not identical financial instruments. When computed for the purposes of impairment testing, the fair values of our goodwill and other acquired intangible
assets are determined using Level 3 inputs. For further details concerning the fair value of goodwill and other intangible assets, see Note 8 of the notes to the unaudited condensed consolidated financial statements.
Page 20 of 70
The FASBs ASC
820-10
establishes a fair value hierarchy that prioritizes
observable and unobservable inputs to valuation techniques used to measure fair value. These levels, in order of highest to lowest priority, are described below:
|
|
|
Level 1
|
|
Quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.
|
|
|
Level 2
|
|
Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
|
|
|
Level 3
|
|
Prices that are unobservable for the asset or liability and are developed based on the best information available under the circumstances, which might include the Companys own data.
|
The following is a summary of the carrying amounts and estimated fair values of our
long-term
debt and commodity purchase contracts as of June 30, 2016 and December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
(In millions)
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.625 Notes (net of debt issuance costs
totaling $8.8 million and $9.6 million at June 30, 2016 and December 31, 2015, respectively)
|
|
$
|
679.2
|
|
|
$
|
703.5
|
|
|
$
|
678.4
|
|
|
$
|
635.1
|
|
|
|
|
|
|
4.875 Notes (net of debt issuance costs totaling $5.4 million and $5.8 million at June 30, 2016 and
December 31, 2015, respectively)
|
|
$
|
444.6
|
|
|
$
|
461.3
|
|
|
$
|
444.2
|
|
|
$
|
408.4
|
|
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Term Loan Facility (net of deferred
financing fees totaling $2.8 million and $3.1 million at June 30, 2016 and December 31, 2015, respectively)
|
|
$
|
243.5
|
|
|
$
|
246.6
|
|
|
$
|
244.4
|
|
|
$
|
247.8
|
|
|
|
|
|
|
Derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity purchase contracts
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
(0.4)
|
|
|
$
|
(0.4)
|
|
Derivative Financial Instruments.
The Company is directly and indirectly affected by changes in certain market conditions and
market risks. When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks that may be managed by the Company through the use of derivative instruments are
foreign currency exchange rate risk, commodity price risk and interest rate risk. As an integral part of our risk management program, we may manage our financial exposures to reduce the potentially adverse effect that the volatility of the commodity
markets may have on our operating results. We do not engage in speculative transactions nor do we hold or issue financial instruments for trading purposes.
All
derivative financial instruments are carried at fair value in our unaudited condensed consolidated balance sheets. If the derivative financial instrument qualifies for hedge accounting treatment, changes in the fair value are either offset against
the change in fair value of assets, liabilities or firm commitments through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings.
Page 21 of 70
We also enter into derivative financial instruments that are designed to hedge risks but are not designated as hedging
instruments. Changes in the fair values of these
non-designated
hedging instruments are adjusted to fair values through earnings in our unaudited condensed consolidated statements of operations.
We formally document hedging instruments and hedging transactions, as well as our risk management objective and strategy for undertaking hedged transactions. This
process includes linking derivative financial instruments that are designated as cash flow hedges to specific assets or liabilities on the unaudited condensed consolidated balance sheets or linking derivatives to forecasted transactions. We also
formally assess, both at inception and on an ongoing basis, whether the derivative financial instruments used in hedging transactions are highly effective in offsetting changes in the fair values or cash flows of hedged transactions. When it is
determined that a derivative is not highly effective or the derivative is expired, sold, terminated, exercised, discontinued, or otherwise settled because it is unlikely that a forecasted transaction will occur, we discontinue the use of hedge
accounting for that specific hedge derivative financial instrument.
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
. We are involved in a number of contingencies incidental to the normal conduct of our business, including lawsuits, claims and environmental
contingencies. The outcome of these contingencies is inherently unpredictable. We believe that, in the aggregate, the outcome of all known contingencies including lawsuits, claims and environmental contingencies will not have a material adverse
effect on our unaudited condensed consolidated financial statements; however, specific outcomes with respect to such contingencies may be material to the unaudited condensed consolidated financial statements of any particular period in which costs,
if any, are recognized. Our assessment of the potential impact of environmental contingencies is subject to uncertainty due to the complex, ongoing and evolving process of investigation and remediation of such environmental contingencies, and the
potential for technological and regulatory developments. In addition, the impact of evolving programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs creates further uncertainty of the
ultimate resolution of these environmental contingencies. We anticipate that the resolution of many contingencies, and in particular environmental contingencies, will occur over an extended period of time.
On December 20, 2013, a fire occurred at our PHH Monomers, LLC (PHH) vinyl chloride monomer (VCM) manufacturing plant in Lake Charles,
Louisiana. As of June 30, 2016, approximately 2,607 individuals have filed lawsuits against the Company alleging personal injury or property damage related to the incident. We do not expect any other individuals to file lawsuits regarding this
matter, as the prescribed deadline for doing so has expired. We have not recorded an accrual in connection with any of these lawsuits because, at this time, we are unable to reasonably determine whether any potential loss is probable or estimable.
In addition, we currently are unable to provide a reasonable estimate of the potential loss or range of loss, if any, expected to result from this contingency. We are unable to make these determinations due to a number of variables, including
without limitation, uncertainties related to: (i) the fact that no written or oral discovery has been conducted by the Company in any of these lawsuits; (ii) the parties respective litigation strategies; (iii) the fact that none
of the complaints have alleged specific injuries or a specific amount of damages; (iv) any symptoms experienced by any of the plaintiffs, and whether there will be any reliable information, documentation or other discovery related thereto;
(v) the pre- and post-fire medical or physical condition of the plaintiffs, and whether there will be any reliable information, documentation or other discovery related thereto; and (vi) the location of any plaintiff at the time of the
fire, and the duration of any exposure related thereto, and whether there will be any reliable information, documentation or other discovery related thereto.
On
September 19, 2014, three employees at our Natrium, West Virginia facility (the Natrium Facility) were injured while changing a valve on a caustic line in the manufacturing plant at such facility. One of the employees eventually
died of his injuries. The estate of our deceased employee, and the other two injured
Page 22 of 70
employees, have filed lawsuits against one of our subsidiaries, Eagle Natrium LLC, seeking damages for personal injury, death and pain and suffering. Following discovery and court ordered
mediation of these lawsuits, we have recorded accruals for these lawsuits of $34.5 million in the aggregate in other accrued liabilities on our unaudited condensed consolidated balance sheets. Liability relating to these lawsuits in excess of
$25 million is expected to be reimbursed to us pursuant to the indemnity provisions of our excess liability insurance policies and, as such, we also have recorded an offsetting receivable from our insurance carriers of $9.5 million in prepaid
expenses and other on our unaudited condensed consolidated balance sheets.
Environmental Remediation.
Our operations and assets are subject to extensive
environmental, health and safety regulations, including laws and regulations related to air emissions, water discharges, waste disposal and remediation of contaminated sites, at both the national and local levels in the United States. We are also
subject to similar laws and regulations in Canada and other jurisdictions in which we operate. The nature of the chemical and building products industries exposes us to risks of liability under these laws and regulations due to the production,
storage, use, transportation and sale of materials that can cause contamination or personal injury, including, in the case of chemicals, potential releases into the environment. Environmental laws may have a significant effect on the costs of use,
transportation and storage of raw materials and finished products, as well as the costs of the storage and disposal of wastes. We have incurred and will continue to incur substantial operating and capital costs to comply with environmental laws and
regulations. In addition, we may incur substantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations for violations arising under these laws and regulations.
As of June 30, 2016 and December 31, 2015, we had reserves for environmental contingencies totaling approximately $39 million and $41 million, respectively, of which
approximately $1 million, was classified as current liabilities as of both June 30, 2016 and December 31, 2015. Our assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex,
ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.
Some of our significant environmental contingencies include the following matters:
|
|
|
We have entered into a Cooperative Agreement with the Louisiana Department of Environmental Quality (LDEQ) and various other parties for the environmental remediation of a portion of the Bayou dInde
area of the Calcasieu River Estuary in Lake Charles, Louisiana. Remedy implementation began in the fourth quarter of 2014 and is expected to be completed during 2016 with a period of monitoring for remedy effectiveness to follow remediation. As of
June 30, 2016 and December 31, 2015, we had reserved approximately $3 million and $4 million, respectively, for the costs associated with this matter.
|
|
|
|
As of both June 30, 2016 and December 31, 2015 we had reserved approximately $12 million for environmental contingencies related to on-site remediation at the Lake Charles South Facility, principally for ongoing
remediation of groundwater and soil in connection with our corrective action permit issued pursuant to the Hazardous and Solid Waste Amendments of the Resource Conservation and Recovery Act. The remedial activity is primarily related to the
operation of a series of well water treatment systems across the Lake Charles South Facility. In addition, remediation of possible soil contamination will be conducted in certain areas. These remedial activities are expected to continue for an
extended period of time.
|
|
|
|
As of both June 30, 2016 and December 31, 2015, we had reserved approximately $18 million, for environmental contingencies
related to remediation activities at the Natrium Facility. The remedial
|
Page 23 of 70
|
actions address National Pollutant Discharge Elimination System permit requirements related primarily to hexachlorocyclohexane (commonly referred to as BHC) and mercury. We expect that these
remedial actions will be in place for an extended period of time.
|
Environmental Laws and Regulations.
Due to the nature of environmental
laws, regulations and liabilities, it is possible that we may not have identified all potentially adverse conditions. Such conditions may not currently exist or be detectable through reasonable methods, or may not be estimable. For example, our
Natrium Facility and Lake Charles South Facility have both been in operation for over 65 years. There may be significant latent liabilities or future claims arising from the operation of facilities of this age, and we may be required to incur
material future remediation or other costs in connection with future actions or developments at these or other facilities.
We expect to be continually subjected to
increasingly stringent environmental and health and safety laws and regulations, and that continued compliance will require increased capital expenditures and increased operating costs or may impose restrictions on our present or future operations.
It is difficult to predict the future interpretation and development of these laws and regulations or their impact on our future earnings and operations. Any increase in these costs, or any material restrictions on our ability to operate or the
manner in which we operate, could materially adversely affect our liquidity, financial condition and results of operations. However, estimated costs for future environmental compliance and remediation may be materially lower than actual costs, or we
may not be able to quantify potential costs in advance. Actual costs related to any environmental compliance in excess of estimated costs could have a material adverse effect on our financial condition in one or more future periods.
Heightened interest in environmental regulation, such as climate change issues, has the potential to materially impact our costs and present and future operations. We,
and other chemical companies, are currently required to file certain governmental reports relating to greenhouse gas (GHG) emissions. The U.S. Government has considered, and may in the future implement, restrictions or other controls on
GHG emissions, any of which could require us to incur significant capital expenditures or further restrict our present or future operations.
In addition to GHG
regulations, the United States Environmental Protection Agency (the EPA) has recently taken certain actions to limit or control certain pollutants created by companies such as ours. For example:
|
|
|
In January 2013, the EPA issued Clean Air Act emission standards for boilers and incinerators (the Boiler MACT regulations), which are aimed at controlling emissions of toxic air contaminants at covered
facilities. The coal fired power plant at our Natrium Facility is our source most significantly impacted by the Boiler MACT regulations. Pursuant to an extension granted by the West Virginia Department of Environmental Protection (WVDEP), we expect
to comply with the requirements of the Boiler MACT regulations on or before December 2016.
|
|
|
|
In April 2012, the EPA issued final regulations to update emissions limits for polyvinyl chloride (PVC) and
copolymer production (the PVC MACT regulation). The PVC MACT regulation sets standards for major sources of PVC production and establishes certain working practices, as well as monitoring, reporting and record-keeping requirements.
Following the issuance of the PVC MACT regulation, a variety of legal challenges were filed by the vinyl industrys trade organization, several vinyl manufacturers and several environmental groups. Most of these challenges have been resolved;
however, there are several petitions to reconsider certain provisions in the rule that are still pending. We anticipate that some of these provisions will likely be changed as a result of these petitions, and there could be significant changes from
the currently existing PVC MACT regulation after all legal
|
Page 24 of 70
|
challenges have been exhausted. These changes could require us to incur further capital expenditures, or increase our operating costs, to levels significantly higher than what we have previously
estimated.
|
|
|
|
In March 2011, the EPA proposed amendments to the emission standards for hazardous air pollutants for mercury emissions from mercury cell chlor-alkali plants. These proposed amendments would require improvements in work
practices to reduce fugitive mercury emissions and would result in reduced levels of mercury emissions while still allowing the mercury cell facilities to continue to operate. We operate a mercury cell production unit at our Natrium Facility. No
assurances as to the timing or content of the final regulation, or its ultimate cost to, or impact on us, can be provided.
|
|
|
|
In May and September 2013, the EPA conducted inspections at our Plaquemine facility pursuant to requirements of the federal Clean Air Act Section 112 (r) Risk Management Program and Title V. As a result of the
inspections, the EPA identified areas of concern and the Company has subsequently engaged in negotiations, which are anticipated to result in penalties in excess of $100,000. These negotiations are expected to conclude in 2016.
|
The potential impact of these and/or unrelated future, legislative or regulatory actions on our current or future operations cannot be predicted at this time but could
be significant. Such impacts could include the potential for significant compliance costs, including capital expenditures, which could result in operating restrictions or could require us to incur significant legal or other costs related to
compliance or other activities. For example, a recent revision to ambient air quality standards for ozone may, in the future, result in significant operating costs, compliance costs, and capital expenditures at some of our facilities. Any increase
in the costs related to these initiatives, or restrictions on our operations, could materially adversely affect our liquidity, financial condition or results of operations.
Environmental Remediation: Reasonably Possible Matters.
Our assessment of the potential impact of environmental contingencies is subject to considerable
uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments. As such, in addition to the amounts
currently reserved, we may be subject to reasonably possible loss contingencies related to environmental matters in the range of $40 million to $80 million.
13.
SHARE-BASED
COMPENSATION
We have granted various types of
share-based
payment awards to participants in the form of time-based restricted stock units (RSUs), performance-based restricted stock units (PRSUs) and stock option grants. The key terms of our RSUs, PRSUs and our stock option grants,
including all financial disclosures, are set forth in the 2015 Annual Report. These various types of share-based payment awards are subject to certain accelerated vesting clauses that vary by the award.
Time-based Restricted Stock Units and Performance-based Restricted Stock Units
In March 2016, we granted PRSUs to our executive officers for which the number of shares ultimately earned depends on our Companys relative total shareholder
return (TSR), as compared to a group of peer companies. The number of shares of Company Common Stock to be awarded in connection with the vesting of those PRSUs ranges from 0 percent to 200 percent, with the percentage to be
used in such vesting calculation based on the TSR performance metric. One-half of those executive officer PRSUs are scheduled to vest on the third anniversary of the grant date and the other one-half of those executive officer PRSUs are scheduled to
vest on the fourth anniversary of the grant date, in each case so long as the executive officer remains employed with the Company through the applicable vesting date and subject to achievement of the
Page 25 of 70
performance metric. Also in March 2016, we granted PRSUs to certain of our executive officers for which the vesting depends on the Company having a positive Adjusted EBITDA for its 2016 fiscal
year. Those PRSUs are scheduled to vest in three equal installments on each of the first, second and third anniversaries of the grant date, so long as the executive officer remains employed with the Company through the applicable vesting date and
the Company achieves positive Adjusted EBITDA for its 2016 fiscal year. In addition, in March 2016, we granted time-based RSUs to certain of our executive officers, for which there is no performance metric, some of which are scheduled to vest in
three equal installments on each of the first, second and third anniversaries of the grant date and the remainder of which are scheduled to vest in four equal installments on each of the first, second, third and fourth anniversaries of the grant
date, provided, in each case, that the executive officer remains employed by the Company through the applicable vesting date. Also in March 2016, we granted time-based RSUs to non-officer employees, all of which are scheduled to vest in three
equal installments on each of the first, second and third anniversaries of the grant date, so long as the employee remains employed with the Company through the applicable vesting date, and for which there is no performance metric
.
Effect of the Merger on Share-based Compensation Awards
The Merger
Agreement provides that, upon closing of the Merger, any outstanding and unexercised Company stock options, whether or not vested, will be converted into the right to receive a cash payment equal to the Merger Consideration minus the exercise prices
of such options. Any outstanding or payable Company awards (other than Company stock options) under any Company stock plans will be assumed by Westlake and converted into restricted stock units in respect of Westlake common stock (Westlake
Common Stock), with substantially the same terms and conditions (including with respect to dividend equivalent rights, if any), except that upon settlement the award holder will receive the greater of (i) the value of the Merger Consideration
with respect to the shares of Company Common Stock related to the award prior to closing of the Merger and (ii) the value of the Westlake Common Stock. Any account balances under any Company benefit plan that provides for the deferral of
compensation and represents amounts notionally invested in Company Common Stock or provides for distributions or benefits calculated based on the value of Company Common Stock will be converted into the right to receive an amount in cash calculated
based on the Merger Consideration.
Share-based Compensation Expense
Information regarding our share-based compensation expense for the three and six months ended June 30, 2016 and 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Share-based compensation expense
|
|
$
|
4.1
|
|
|
$
|
3.8
|
|
|
$
|
6.1
|
|
|
$
|
7.7
|
|
Income tax provision related to share-based compensation expense
|
|
|
(1.4)
|
|
|
|
(1.1)
|
|
|
|
(2.1)
|
|
|
|
(2.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After tax share-based compensation expense
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
4.0
|
|
|
$
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three and six months ended June 30, 2016, we reversed approximately $0.3 million and $1.3 million, respectively, of expense
related to share-based compensation due to the forfeiture of RSUs and PRSUs held by certain employees of the Company whose employment with the Company terminated prior to the vesting of those RSUs and PRSUs.
Page 26 of 70
14. EMPLOYEE RETIREMENT PLANS
Defined Benefit Pension and OPEB Welfare Plans
The Company sponsors
and contributes to pension plans (Pension Plans) and other post-retirement employment benefit (OPEB) plans covering many of our United States (U.S.) employees, in whole or in part based on meeting certain
eligibility criteria. In addition, the Companys subsidiaries have various Pension Plans and other forms of post-retirement arrangements outside the U.S., namely in Canada and Taiwan.
The Pension Plans provide benefits to certain employees and retirees and are closed to new hires. Effective January 31, 2014, amendments to the Pension Plans for
U.S.
non-bargained
employees froze all future benefit accruals for
non-bargained
employees who were not already frozen.
The OPEB plans are unfunded and provide medical and life insurance benefits for certain employees and their dependents.
The U.S. nonqualified pension plan was remeasured on February 29, 2016 following the February 2016 workforce reduction implemented as part of our cost savings
initiatives. This event reduced the plans benefit obligation by $0.7 million and was recognized fully through a $0.7 million adjustment to Other Comprehensive Income. The plans net periodic benefit cost for 2016 has been
adjusted to reflect the remeasurement due to the resulting curtailment event.
In the third quarter of 2015, we changed the method we use to estimate the service
and interest components of net periodic benefit cost for U.S. pension and other postretirement benefits. This new estimation approach discounts the individual expected cash flows underlying the service cost and interest cost using the applicable
spot rates derived from the yield curve used to discount the cash flows used to measure the benefit obligation. Historically, we estimated these service and interest cost components utilizing a single weighted-average discount rate derived from the
yield curve used to measure the benefit obligation at the beginning of the period.
We made this change to provide a more precise measurement of service and
interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. We have accounted for this change as a change in accounting estimate that is inseparable from a change in accounting
principle and accordingly have accounted for it prospectively. This change in accounting estimate was first reflected in benefit cost for the third quarter of 2015 for the OPEB plans and in 2016 for the Pension Plans.
The following table details the pension and postretirement benefit income, for the three and six month periods ended June 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
Three Months Ended June 30,
|
|
|
OPEB
Three Months Ended June 30,
|
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Components of net periodic benefit income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
(6.5)
|
|
|
$
|
(7.7)
|
|
|
$
|
(0.5)
|
|
|
$
|
(1.1)
|
|
Service cost
|
|
|
(0.9)
|
|
|
|
(1.1)
|
|
|
|
(0.2)
|
|
|
|
(0.2)
|
|
Expected return on assets
|
|
|
10.5
|
|
|
|
11.4
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service credit
|
|
|
-
|
|
|
|
-
|
|
|
|
3.1
|
|
|
|
2.3
|
|
Actuarial loss
|
|
|
(0.7)
|
|
|
|
(0.7)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic benefit income
|
|
$
|
2.4
|
|
|
$
|
1.9
|
|
|
$
|
2.4
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 27 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
Six Months Ended June 30,
|
|
|
OPEB
Six Months Ended June 30,
|
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Components of net periodic benefit income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
(13.0)
|
|
|
$
|
(15.4)
|
|
|
$
|
(1.0)
|
|
|
$
|
(2.2)
|
|
Service cost
|
|
|
(1.8)
|
|
|
|
(2.2)
|
|
|
|
(0.4)
|
|
|
|
(0.4)
|
|
Expected return on assets
|
|
|
21.0
|
|
|
|
22.8
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service credit
|
|
|
-
|
|
|
|
-
|
|
|
|
6.2
|
|
|
|
4.6
|
|
Actuarial loss
|
|
|
(1.4)
|
|
|
|
(1.4)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic benefit income
|
|
$
|
4.8
|
|
|
$
|
3.8
|
|
|
$
|
4.8
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
There were no significant
contributions to the pension plan trusts during the three and six months ended June 30, 2016 and 2015. We estimate that we will make payments of approximately $2.1 million for benefit payments and contributions related to our Pension Plans and
$7.3 million for benefit payments related to the OPEB plans for the year ending December 31, 2016.
Defined Contribution Plans
Most of our employees participate in defined contribution plans under which we make contributions to individual employee accounts. Our expense related to our defined
contribution plans was approximately $3.3 million and $3.4 million for the three months ended June 30, 2016 and 2015, respectively, and $7.3 million for both the six month periods ended June 30, 2016 and 2015.
15. ACCUMULATED OTHER COMPREHENSIVE LOSS AND OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss
includes: (i) foreign currency translation of assets and liabilities of foreign subsidiaries and the effects of exchange rate changes on intercompany balances of a
long-term
nature; (ii) unrealized
gains or losses on derivative financial instruments designated as cash flow hedges; (iii) equity investees other comprehensive income or loss items; and (iv) adjustments to pension and OPEB plan liabilities. Amounts recorded in
accumulated other comprehensive loss, net of tax, as of June 30, 2016 and December 31, 2015, and changes within those periods are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Foreign
Currency
Items
|
|
|
Derivative Cash
Flow Hedges
|
|
|
Accrued
Pension and
OPEB Plan
Liabilities
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
$
|
(89.4)
|
|
|
$
|
0.5
|
|
|
$
|
(29.1)
|
|
|
$
|
(118.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassifications
|
|
|
23.4
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
23.8
|
|
Amounts reclassified from accumulated other
comprehensive loss, net of tax
|
|
|
-
|
|
|
|
0.7
|
|
|
|
(3.0)
|
|
|
|
(2.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss)
|
|
|
23.4
|
|
|
|
0.9
|
|
|
|
(2.8)
|
|
|
|
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2016
|
|
$
|
(66.0)
|
|
|
$
|
1.4
|
|
|
$
|
(31.9)
|
|
|
$
|
(96.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss)
Other
comprehensive income (loss) is derived from adjustments to reflect: (i) changes in foreign currency translation adjustments; (ii) the unrealized gains or losses on derivative financial instruments designated as cash flow hedges; (iii) changes in
equity investees other comprehensive income or loss; and (iv) adjustments
Page 28 of 70
to pension and OPEB plan liabilities. The components of other comprehensive income (loss) for the three and six month periods ended June 30, 2016 and 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Change in foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
$
|
0.1
|
|
|
$
|
11.5
|
|
|
$
|
28.8
|
|
|
$
|
(23.5)
|
|
Tax expense (benefit)
|
|
|
-
|
|
|
|
1.7
|
|
|
|
3.4
|
|
|
|
(1.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net of tax
|
|
$
|
0.1
|
|
|
$
|
9.8
|
|
|
$
|
25.4
|
|
|
$
|
(21.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in derivative cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity hedge contracts
|
|
$
|
1.6
|
|
|
$
|
2.0
|
|
|
$
|
1.6
|
|
|
$
|
7.2
|
|
Equity interest in investees other comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax amount
|
|
|
1.6
|
|
|
|
2.0
|
|
|
|
1.5
|
|
|
|
11.1
|
|
Tax expense
|
|
|
0.6
|
|
|
|
0.7
|
|
|
|
0.6
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative cash flow hedges, net of tax
|
|
$
|
1.0
|
|
|
$
|
1.3
|
|
|
$
|
0.9
|
|
|
$
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in pension and OPEB liability adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss and prior service credit
|
|
$
|
(2.4)
|
|
|
$
|
(1.6)
|
|
|
$
|
(4.8)
|
|
|
$
|
(3.2)
|
|
Other pension and OPEB plan adjustments
|
|
|
0.1
|
|
|
|
-
|
|
|
|
0.3
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax amount
|
|
|
(2.3)
|
|
|
|
(1.6)
|
|
|
|
(4.5)
|
|
|
|
(2.8)
|
|
Tax benefit
|
|
|
(0.9)
|
|
|
|
(0.6)
|
|
|
|
(1.7)
|
|
|
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and OPEB liability adjustments, net of tax
|
|
$
|
(1.4)
|
|
|
$
|
(1.0)
|
|
|
$
|
(2.8)
|
|
|
$
|
(1.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), before income taxes
|
|
$
|
(0.6)
|
|
|
$
|
11.9
|
|
|
$
|
25.8
|
|
|
$
|
(15.2)
|
|
Tax expense (benefit) for the period
|
|
|
(0.3)
|
|
|
|
1.8
|
|
|
|
2.3
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax
|
|
$
|
(0.3)
|
|
|
$
|
10.1
|
|
|
$
|
23.5
|
|
|
$
|
(16.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of other comprehensive income (loss) that have been reclassified during the three and six month periods ended June 30,
2016 and 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
Affected Line Items
on the Unaudited
Condensed Consolidated
Statements of Operations
|
(In millions)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Details about other comprehensive income (loss) components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in derivative cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative cash flow hedges
|
|
$
|
0.8
|
|
|
$
|
(1.3)
|
|
|
$
|
1.2
|
|
|
$
|
(8.7)
|
|
|
Cost of sales
|
Tax expense (benefit)
|
|
|
0.3
|
|
|
|
(0.5)
|
|
|
|
0.5
|
|
|
|
(3.3)
|
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassifications for the period, net of tax
|
|
$
|
0.5
|
|
|
$
|
(0.8)
|
|
|
$
|
0.7
|
|
|
$
|
(5.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in pension and OPEB liability adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss and prior service credit
|
|
$
|
(2.4)
|
|
|
$
|
(1.6)
|
|
|
$
|
(4.8)
|
|
|
$
|
(3.2)
|
|
|
Cost of sales and selling, general and administrative expenses
|
Tax benefit
|
|
|
(0.9)
|
|
|
|
(0.6)
|
|
|
|
(1.8)
|
|
|
|
(1.2)
|
|
|
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassifications for the period, net of tax
|
|
$
|
(1.5)
|
|
|
$
|
(1.0)
|
|
|
$
|
(3.0)
|
|
|
$
|
(2.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. INVESTMENTS
We own an interest in several manufacturing joint ventures in our chlorovinyls segment. In our chlorovinyls segment, we have a 50 percent ownership interest in RS
Cogen, LLC (RS Cogen), which produces electricity and steam that are primarily sold to Axiall and its joint venture partner under
take-or-pay
contracts
with terms
Page 29 of 70
that extend to 2022 and is reported in our chlorovinyls segment. The joint venture was formed with a
wholly-owned
subsidiary of Entergy Corporation
(Entergy) in 2000 for the construction and operation of a 425 megawatt combined cycle, natural
gas-fired
cogeneration facility in Lake Charles, Louisiana, the majority of which was financed by
loans having terms that extend to 2022 from a syndicate of banks. Axialls future commitment to purchase electricity and steam from the joint venture per the
take-or-pay
contracts approximates $23.5 million per year subject to contractually defined inflation adjustments. As of June 30, 2016, our future commitment under
the
take-or-pay
arrangement approximates $147.5 million in the aggregate, with purchases during the three and six months ended June 30, 2016 totaling $6.6 million and
$13.2 million, respectively, and purchases during the three and six months ended June 30, 2015 totaling $6.4 million and $12.9 million, respectively.
RS Cogen
is a variable interest entity under GAAP. The daily operations of the cogeneration facility are the activities of RS Cogen that most significantly impact its economic performance. These activities are directed by a management team with oversight by
a management committee that has equal representation from Axiall and Entergy. By the terms of the joint venture agreement, all decisions of the management committee require approval by a majority of its members. Accordingly, the power to direct the
activities of RS Cogen is equally shared between RS Cogens two owners and, thus, Axiall does not consider itself to be the joint ventures primary beneficiary. Accordingly, Axiall accounts for its investment in RS Cogen under the equity
method of accounting. We have recorded our investment in RS Cogen in other assets in the accompanying unaudited condensed consolidated balance sheets and our share of investee earnings in cost of goods sold in the unaudited condensed consolidated
statements of operations.
The following table summarizes our maximum exposure to loss associated with RS Cogen as of June 30, 2016 and December 31, 2015:
|
|
|
|
|
|
|
|
|
(In millions)
|
|
June 30,
2016
|
|
|
December 31,
2015
|
|
Investment in and net advances to RS
Cogen
|
|
$
|
9.9
|
|
|
$
|
9.5
|
|
Supply contracts
|
|
|
35.3
|
|
|
|
36.3
|
|
|
|
|
|
|
|
|
|
|
Maximum exposure to loss
|
|
$
|
45.2
|
|
|
$
|
45.8
|
|
|
|
|
|
|
|
|
|
|
We produce chlorine, caustic soda, hydrogen, hydrochloric acid, also known as muriatic acid (HCL), and sodium hypochlorite
(bleach) at our Kaohsiung, Taiwan facility. The Kaohsiung, Taiwan facility is operated by Taiwan Chlorine Industries, Ltd. (TCI), a joint venture in which we own a 60 percent interest and consolidate in our unaudited condensed
consolidated financial statements in our chlorovinyls segment. The following table presents a reconciliation of our minority partners ownership interest, reported as noncontrolling interest:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
(In
millions)
|
|
2016
|
|
|
2015
|
|
Noncontrolling interest - beginning of period
|
|
$
|
74.8
|
|
|
$
|
107.9
|
|
Net income attributable to noncontrolling interest
|
|
|
0.8
|
|
|
|
3.1
|
|
Other comprehensive income attributable to noncontrolling interest
|
|
|
2.0
|
|
|
|
3.0
|
|
Distribution to noncontrolling interest
|
|
|
(7.1)
|
|
|
|
(8.4)
|
|
Other
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest - end of period
|
|
$
|
70.5
|
|
|
$
|
105.5
|
|
|
|
|
|
|
|
|
|
|
On June 17, 2015, Eagle US 2 LLC (Eagle), a wholly-owned subsidiary of the Company, entered into an amended and
restated limited liability company agreement with Lotte Chemical USA Corporation (Lotte) related to the formation of LACC, LLC (LACC), which was formed by Eagle and Lotte to design, build and operate a state-of-the-art 1.0
million metric tons per annum ethane cracker (ethylene manufacturing plant) in the Plant. On December 17, 2015, Axiall and Lotte reached a final investment decision to construct the Plant
Page 30 of 70
and LACC entered into the engineering, procurement and construction agreement with CB&I Inc., the construction contractor. The Plant is being built adjacent to Axialls largest
chlor-alkali chemical facility, located in Lake Charles, Louisiana, to take advantage of Axialls existing infrastructure, access to competitive feedstock resources, and ethylene distribution infrastructure. The anticipated start-up for the
Plant is expected to be the beginning of 2019.
The Plant will provide partial backward integration for Axialls vinyls business and will supply a new
monoethylene glycol (MEG) facility being built by Lotte. Pursuant to a contribution and subscription agreement, dated as of June 17, 2015, between the Company, Eagle and LACC, Eagle has agreed to make a maximum capital commitment to
LACC of up to $225 million to fund the construction costs of the Plant. Eagles investment is expected to represent approximately 10 percent of the interests of LACC. Eagle and Lotte also entered into a call option agreement, dated as of
June 17, 2015, pursuant to which Eagle has the right, but not the obligation, until the third anniversary of the substantial completion of the Plant, to acquire up to a 50 percent ownership interest in LACC from Lotte.
As of June 30, 2016 and December 31, 2015, our investment in LACC is $34.4 million and $14.9 million, respectively, and is reflected in other assets in our unaudited
condensed consolidated balance sheets. Our investment in LACC is accounted for under the cost method.
17. SEGMENT INFORMATION
We manage our operating activities in two reportable segments: (i) chlorovinyls and (ii) building products. These two segments reflect the organization used
by our management to allocate resources and for internal reporting purposes. Our chlorovinyls segment produces a highly integrated chain of chlor-alkali and derivative products (chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl
resins, ethylene dichloride, chlorinated solvents, calcium hypochlorite, and hydrochloric acid, also known as muriatic acid, and compound products (vinyl compounds and plasticizers)). Our building products segment manufactures and distributes
interior and exterior trim and mouldings products, deck products, siding, pipe and pipe fittings.
Earnings of our segments exclude interest income and expense,
unallocated corporate expenses and general plant services and provision for (benefit from) income taxes. Transactions between operating segments are valued at market based prices. The revenues generated by these transfers and reconciliations from
consolidated operating income (loss) to consolidated income (loss) from continuing operations before income taxes for the three and six month periods ended June 30, 2016 and 2015 are provided in the tables below.
Page 31 of 70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Chlorovinyls
|
|
|
Building
Products
|
|
|
Eliminations,
Unallocated
and Other
|
|
|
Total
|
|
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
578.4
|
|
|
$
|
197.7
|
|
|
$
|
-
|
|
|
$
|
776.1
|
|
Intersegment revenues
|
|
|
38.0
|
|
|
|
-
|
|
|
|
(38.0)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
616.4
|
|
|
|
197.7
|
|
|
|
(38.0)
|
|
|
$
|
776.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
(37.1)
|
|
|
|
26.7
|
|
|
|
(27.2)
|
(1)
|
|
$
|
(37.6)
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18.0)
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(55.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
666.1
|
|
|
$
|
203.1
|
|
|
$
|
-
|
|
|
$
|
869.2
|
|
Intersegment revenues
|
|
|
61.1
|
|
|
|
-
|
|
|
|
(61.1)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
727.2
|
|
|
|
203.1
|
|
|
|
(61.1)
|
|
|
$
|
869.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
37.8
|
|
|
|
23.3
|
|
|
|
(18.0)
|
(1)
|
|
$
|
43.1
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18.3)
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes shared services, administrative and legal expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Chlorovinyls
|
|
|
Building
Products
|
|
|
Eliminations,
Unallocated
and Other
|
|
|
Total
|
|
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,134.5
|
|
|
$
|
340.8
|
|
|
$
|
-
|
|
|
$
|
1,475.3
|
|
Intersegment revenues
|
|
|
93.3
|
|
|
|
0.1
|
|
|
|
(93.4)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
1,227.8
|
|
|
|
340.9
|
|
|
|
(93.4)
|
|
|
$
|
1,475.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
(46.7)
|
|
|
|
30.8
|
|
|
|
(56.9)
|
(1)
|
|
$
|
(72.8)
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35.0)
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(108.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,314.5
|
|
|
$
|
339.3
|
|
|
$
|
-
|
|
|
$
|
1,653.8
|
|
Intersegment revenues
|
|
|
117.2
|
|
|
|
-
|
|
|
|
(117.2)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
1,431.7
|
|
|
|
339.3
|
|
|
|
(117.2)
|
|
|
$
|
1,653.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
81.6
|
|
|
|
19.8
|
|
|
|
(36.2)
|
(1)
|
|
$
|
65.2
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35.9)
|
|
Debt refinancing costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.2)
|
|
Foreign exchange loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes shared services, administrative and legal expenses.
18. INCOME TAXES
Our continuing operations
effective income tax rates for the three and six months ended June 30, 2016 were 51.0 percent and 47.1 percent, respectively compared to 7.7 percent and 19.4 percent, respectively, for the three and six months ended June 30, 2015. The
continuing operations effective income tax rates were determined using the estimated annual effective income tax rates after considering discrete income tax items for each respective period. The continuing operations effective income tax rates for
the three and six months ended June 30, 2016 were higher than the United States statutory federal income tax rates primarily due to various favorable permanent differences including deductions for depletion. The continuing operations effective
income tax rates for the three and six months ended June 30, 2015 were lower than the United States statutory federal income tax rates primarily due to various favorable permanent differences including deductions for depletion and manufacturing
activities.
Page 32 of 70
19. SUBSEQUENT EVENTS
On August 1, 2016, we filed a definitive proxy statement with the SEC in order to notify the Companys shareholders of a special meeting to be held on August 30,
2016 to vote on the Merger and to seek proxies from the Companys shareholders in connection with such vote.
20. GUARANTOR
INFORMATION
Axiall Corporation is primarily a holding company for its 100-percent and majority owned subsidiaries. Payment obligations under the indentures for
the 4.875 Notes issued by Axiall Corporation, the 4.625 Notes issued by Spinco and the Term Loan Credit Agreement under which Axiall Holdco is the borrower, as described in Note 10 of the notes to the unaudited condensed consolidated financial
statements, are guaranteed by each of Axiall Corporations 100-percent owned domestic subsidiaries (including Spinco in the case of the 4.875 Notes), other than certain excluded subsidiaries. Axiall Corporation is also a guarantor under
the 4.625 Notes issued by Spinco, and the Term Loan Credit Agreement.
As of June 30, 2016, payment obligations under the indenture for the 4.875 Notes issued
by Axiall Corporation are guaranteed by Axiall Noteco, Inc., Axiall Holdco, Inc., Axiall, LLC, Georgia Gulf Lake Charles, LLC, Royal Building Products (USA) Inc., Royal Window and Door Profiles Plant 13 Inc., Royal Window and Door
Profiles Plant 14 Inc., Plastic Trends, Inc., Rome Delaware Corporation, Royal Plastics Group (U.S.A.) Limited, PHH Monomers, LLC, Eagle Holdco 3 LLC, Eagle US 2 LLC, Axiall Ohio, Inc., Eagle Natrium LLC, and Eagle Pipeline, Inc. (collectively, the
Guarantor Subsidiaries) and Spinco. As of June 30, 2016, payment obligations under the indenture for the 4.625 percent Notes issued by Spinco are guaranteed by Axiall Corporation and each of the Guarantor Subsidiaries.
Each of Spinco and the Guarantor Subsidiaries is a direct or indirect 100-percent owned subsidiary of Axiall Corporation. The guarantees made by each of Axiall
Corporation, Spinco and the other Guarantor Subsidiaries are full, unconditional and joint and several. Except as disclosed in Note10 of the notes to the unaudited condensed consolidated financial statements, there are no restrictions on the ability
of Axiall Corporation, Spinco or any other Guarantor Subsidiary to obtain funds from any of its direct or indirect 100-percent owned subsidiaries through dividends, loans or advances as a result of the issuance of the 4.625 Notes or the
4.875 Notes. Separate financial statements and other disclosures with respect to Spinco or the Guarantor Subsidiaries have not been provided as management believes the following information is sufficient. Investments in subsidiaries in the
guarantor financial statements reflect investments in 100-percent owned entities within Axiall under the equity accounting method. This presentation of Spinco, the Guarantor Subsidiaries and the
non-guarantor
subsidiaries of Axiall Corporation (the
Non-Guarantor
Subsidiaries) is not included to present the Companys financial condition, results of operations or cash flows for any purpose other than
to comply with the specific requirements for subsidiary issuer and subsidiary guarantor reporting.
The following tables present the (i) guarantor unaudited
condensed consolidating balance sheets as of June 30, 2016 and December 31, 2015, (ii) guarantor unaudited condensed consolidating statements of operations and comprehensive income (loss) for the three and six month periods ended June 30, 2016
and 2015, and (iii) guarantor unaudited condensed consolidating statements of cash flows for the six months ended June 30, 2016 and 2015, of each of Axiall Corporation (as parent issuer), Spinco (as subsidiary issuer), the Guarantor
Subsidiaries (which excludes Spinco), the Guarantor Subsidiaries, including Spinco (which also includes entries necessary to eliminate Spincos investment in such Guarantor Subsidiaries and other intercompany account balances) and the
Non-Guarantor Subsidiaries.
Page 33 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Balance Sheet
As of June 30, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
24.9
|
|
|
$
|
24.9
|
|
|
$
|
103.5
|
|
|
$
|
-
|
|
|
$
|
128.4
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
49.4
|
|
|
|
9.1
|
|
|
|
515.7
|
|
|
|
515.7
|
|
|
|
85.5
|
|
|
|
(195.6)
|
|
|
|
455.0
|
|
Inventories
|
|
|
-
|
|
|
|
-
|
|
|
|
218.2
|
|
|
|
218.2
|
|
|
|
57.8
|
|
|
|
-
|
|
|
|
276.0
|
|
Prepaid expenses and other
|
|
|
0.5
|
|
|
|
-
|
|
|
|
92.1
|
|
|
|
92.1
|
|
|
|
7.9
|
|
|
|
-
|
|
|
|
100.5
|
|
Current assets of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
49.9
|
|
|
|
9.1
|
|
|
|
851.7
|
|
|
|
851.7
|
|
|
|
254.7
|
|
|
|
(195.6)
|
|
|
|
960.7
|
|
Property, plant and equipment, net
|
|
|
10.1
|
|
|
|
-
|
|
|
|
1,380.3
|
|
|
|
1,380.3
|
|
|
|
168.4
|
|
|
|
-
|
|
|
|
1,558.8
|
|
Long-term receivablesaffiliates
|
|
|
900.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(900.0)
|
|
|
|
-
|
|
Goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
707.8
|
|
|
|
707.8
|
|
|
|
148.6
|
|
|
|
-
|
|
|
|
856.4
|
|
Customer relationships, net
|
|
|
-
|
|
|
|
-
|
|
|
|
795.6
|
|
|
|
795.6
|
|
|
|
127.6
|
|
|
|
-
|
|
|
|
923.2
|
|
Other intangible assets, net
|
|
|
-
|
|
|
|
-
|
|
|
|
60.8
|
|
|
|
60.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60.8
|
|
Other assets, net
|
|
|
4.5
|
|
|
|
1.7
|
|
|
|
73.9
|
|
|
|
73.9
|
|
|
|
3.3
|
|
|
|
-
|
|
|
|
81.7
|
|
Investment in subsidiaries
|
|
|
1,177.0
|
|
|
|
1,795.1
|
|
|
|
467.9
|
|
|
|
467.9
|
|
|
|
-
|
|
|
|
(1,644.9)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,141.5
|
|
|
$
|
1,805.9
|
|
|
$
|
4,338.0
|
|
|
$
|
4,338.0
|
|
|
$
|
702.6
|
|
|
$
|
(2,740.5)
|
|
|
$
|
4,441.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2.5
|
|
|
$
|
2.5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2.5
|
|
Accounts payable
|
|
|
127.1
|
|
|
|
49.3
|
|
|
|
236.3
|
|
|
|
276.5
|
|
|
|
48.3
|
|
|
|
(195.6)
|
|
|
|
256.3
|
|
Interest payable
|
|
|
3.1
|
|
|
|
12.1
|
|
|
|
-
|
|
|
|
12.1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15.2
|
|
Income taxes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2.4
|
|
|
|
-
|
|
|
|
2.4
|
|
Accrued compensation
|
|
|
1.3
|
|
|
|
-
|
|
|
|
51.6
|
|
|
|
51.6
|
|
|
|
7.3
|
|
|
|
-
|
|
|
|
60.2
|
|
Other accrued liabilities
|
|
|
34.4
|
|
|
|
-
|
|
|
|
79.6
|
|
|
|
79.6
|
|
|
|
21.9
|
|
|
|
-
|
|
|
|
135.9
|
|
Current liabilities of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
6.8
|
|
|
|
6.8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
165.9
|
|
|
|
61.4
|
|
|
|
376.8
|
|
|
|
429.1
|
|
|
|
79.9
|
|
|
|
(195.6)
|
|
|
|
479.3
|
|
Long-term debt, excluding the current portion of long-term debt
|
|
|
444.6
|
|
|
|
679.2
|
|
|
|
240.9
|
|
|
|
920.2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,364.8
|
|
Long-term payablesaffiliates
|
|
|
-
|
|
|
|
900.0
|
|
|
|
-
|
|
|
|
900.0
|
|
|
|
-
|
|
|
|
(900.0)
|
|
|
|
-
|
|
Lease financing obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46.8
|
|
|
|
-
|
|
|
|
46.8
|
|
Deferred income taxes
|
|
|
19.3
|
|
|
|
-
|
|
|
|
612.1
|
|
|
|
610.3
|
|
|
|
31.5
|
|
|
|
-
|
|
|
|
661.1
|
|
Pension and other post-retirement benefits
|
|
|
3.3
|
|
|
|
-
|
|
|
|
179.7
|
|
|
|
179.7
|
|
|
|
6.7
|
|
|
|
-
|
|
|
|
189.7
|
|
Other non-current liabilities
|
|
|
11.3
|
|
|
|
-
|
|
|
|
121.9
|
|
|
|
121.9
|
|
|
|
8.6
|
|
|
|
(9.5)
|
|
|
|
132.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
644.4
|
|
|
|
1,640.6
|
|
|
|
1,531.4
|
|
|
|
3,161.2
|
|
|
|
173.5
|
|
|
|
(1,105.1)
|
|
|
|
2,874.0
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Axiall stockholders equity
|
|
|
1,497.1
|
|
|
|
165.3
|
|
|
|
2,806.6
|
|
|
|
1,176.8
|
|
|
|
458.6
|
|
|
|
(1,635.4)
|
|
|
|
1,497.1
|
|
Noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70.5
|
|
|
|
-
|
|
|
|
70.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
1,497.1
|
|
|
|
165.3
|
|
|
|
2,806.6
|
|
|
|
1,176.8
|
|
|
|
529.1
|
|
|
|
(1,635.4)
|
|
|
|
1,567.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
2,141.5
|
|
|
$
|
1,805.9
|
|
|
$
|
4,338.0
|
|
|
$
|
4,338.0
|
|
|
$
|
702.6
|
|
|
$
|
(2,740.5)
|
|
|
$
|
4,441.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 34 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Balance Sheet
As of December 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
0.3
|
|
|
$
|
-
|
|
|
$
|
161.7
|
|
|
$
|
161.7
|
|
|
$
|
96.0
|
|
|
$
|
-
|
|
|
$
|
258.0
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
27.1
|
|
|
|
5.5
|
|
|
|
377.8
|
|
|
|
377.8
|
|
|
|
48.0
|
|
|
|
(97.6)
|
|
|
|
355.3
|
|
Inventories
|
|
|
-
|
|
|
|
-
|
|
|
|
217.6
|
|
|
|
217.6
|
|
|
|
63.3
|
|
|
|
-
|
|
|
|
280.9
|
|
Prepaid expenses and other
|
|
|
0.7
|
|
|
|
-
|
|
|
|
55.9
|
|
|
|
55.9
|
|
|
|
2.7
|
|
|
|
(0.4)
|
|
|
|
58.9
|
|
Current assets of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
19.3
|
|
|
|
19.3
|
|
|
|
17.6
|
|
|
|
-
|
|
|
|
36.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
28.1
|
|
|
|
5.5
|
|
|
|
832.3
|
|
|
|
832.3
|
|
|
|
227.6
|
|
|
|
(98.0)
|
|
|
|
990.0
|
|
Property, plant and equipment, net
|
|
|
11.0
|
|
|
|
-
|
|
|
|
1,357.9
|
|
|
|
1,357.9
|
|
|
|
187.6
|
|
|
|
-
|
|
|
|
1,556.5
|
|
Long-term receivablesaffiliates
|
|
|
900.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(900.0)
|
|
|
|
-
|
|
Goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
707.8
|
|
|
|
707.8
|
|
|
|
144.3
|
|
|
|
-
|
|
|
|
852.1
|
|
Customer relationships, net
|
|
|
-
|
|
|
|
-
|
|
|
|
823.1
|
|
|
|
823.1
|
|
|
|
127.2
|
|
|
|
-
|
|
|
|
950.3
|
|
Other intangible assets, net
|
|
|
-
|
|
|
|
-
|
|
|
|
63.1
|
|
|
|
63.1
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
63.4
|
|
Non-current assets of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
18.4
|
|
|
|
18.4
|
|
|
|
43.6
|
|
|
|
-
|
|
|
|
62.0
|
|
Other assets, net
|
|
|
5.6
|
|
|
|
1.7
|
|
|
|
56.2
|
|
|
|
56.2
|
|
|
|
3.3
|
|
|
|
-
|
|
|
|
65.1
|
|
Investment in subsidiaries
|
|
|
1,235.5
|
|
|
|
1,833.3
|
|
|
|
473.2
|
|
|
|
473.2
|
|
|
|
-
|
|
|
|
(1,708.7)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,180.2
|
|
|
$
|
1,840.5
|
|
|
$
|
4,332.0
|
|
|
$
|
4,332.0
|
|
|
$
|
733.9
|
|
|
$
|
(2,706.7)
|
|
|
$
|
4,539.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2.5
|
|
|
$
|
2.5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2.5
|
|
Accounts payable
|
|
|
81.7
|
|
|
|
27.0
|
|
|
|
214.9
|
|
|
|
236.4
|
|
|
|
24.3
|
|
|
|
(97.6)
|
|
|
|
244.8
|
|
Interest payable
|
|
|
3.2
|
|
|
|
12.2
|
|
|
|
-
|
|
|
|
12.2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15.4
|
|
Income taxes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
2.2
|
|
|
|
(0.4)
|
|
|
|
2.2
|
|
Accrued compensation
|
|
|
9.5
|
|
|
|
-
|
|
|
|
23.7
|
|
|
|
23.7
|
|
|
|
7.8
|
|
|
|
-
|
|
|
|
41.0
|
|
Other accrued liabilities
|
|
|
16.2
|
|
|
|
-
|
|
|
|
45.6
|
|
|
|
45.6
|
|
|
|
32.9
|
|
|
|
-
|
|
|
|
94.7
|
|
Current liabilities of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
9.3
|
|
|
|
9.3
|
|
|
|
6.2
|
|
|
|
-
|
|
|
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
110.6
|
|
|
|
39.2
|
|
|
|
296.4
|
|
|
|
330.1
|
|
|
|
73.4
|
|
|
|
(98.0)
|
|
|
|
416.1
|
|
Long-term debt, excluding the current portion of long-term debt
|
|
|
444.2
|
|
|
|
678.4
|
|
|
|
241.9
|
|
|
|
920.3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,364.5
|
|
Long-term payablesaffiliates
|
|
|
-
|
|
|
|
900.0
|
|
|
|
-
|
|
|
|
900.0
|
|
|
|
-
|
|
|
|
(900.0)
|
|
|
|
-
|
|
Lease financing obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44.0
|
|
|
|
-
|
|
|
|
44.0
|
|
Deferred income taxes
|
|
|
18.0
|
|
|
|
-
|
|
|
|
636.1
|
|
|
|
634.4
|
|
|
|
30.6
|
|
|
|
-
|
|
|
|
683.0
|
|
Pension and other post-retirement benefits
|
|
|
3.6
|
|
|
|
-
|
|
|
|
189.9
|
|
|
|
189.9
|
|
|
|
9.3
|
|
|
|
-
|
|
|
|
202.8
|
|
Non-current liabilities of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35.6
|
|
|
|
-
|
|
|
|
35.6
|
|
Other non-current liabilities
|
|
|
25.5
|
|
|
|
-
|
|
|
|
113.2
|
|
|
|
113.2
|
|
|
|
8.8
|
|
|
|
(7.2)
|
|
|
|
140.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
601.9
|
|
|
|
1,617.6
|
|
|
|
1,477.5
|
|
|
|
3,087.9
|
|
|
|
201.7
|
|
|
|
(1,005.2)
|
|
|
|
2,886.3
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Axiall stockholders equity
|
|
|
1,578.3
|
|
|
|
222.9
|
|
|
|
2,854.5
|
|
|
|
1,244.1
|
|
|
|
457.4
|
|
|
|
(1,701.5)
|
|
|
|
1,578.3
|
|
Noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74.8
|
|
|
|
-
|
|
|
|
74.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
1,578.3
|
|
|
|
222.9
|
|
|
|
2,854.5
|
|
|
|
1,244.1
|
|
|
|
532.2
|
|
|
|
(1,701.5)
|
|
|
|
1,653.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
2,180.2
|
|
|
$
|
1,840.5
|
|
|
$
|
4,332.0
|
|
|
$
|
4,332.0
|
|
|
$
|
733.9
|
|
|
$
|
(2,706.7)
|
|
|
$
|
4,539.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 35 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Operations and
Comprehensive Income (Loss)
For the Three
Months Ended June 30, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
670.7
|
|
|
$
|
670.7
|
|
|
$
|
136.9
|
|
|
$
|
(31.5)
|
|
|
$
|
776.1
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
630.2
|
|
|
|
630.2
|
|
|
|
106.8
|
|
|
|
(31.5)
|
|
|
|
705.5
|
|
Selling, general and administrative expenses
|
|
|
14.4
|
|
|
|
-
|
|
|
|
42.9
|
|
|
|
42.9
|
|
|
|
12.5
|
|
|
|
-
|
|
|
|
69.8
|
|
Restructuring and divestiture costs
|
|
|
2.0
|
|
|
|
-
|
|
|
|
1.8
|
|
|
|
1.8
|
|
|
|
0.7
|
|
|
|
-
|
|
|
|
4.5
|
|
Integration-related costs and other, net
|
|
|
0.4
|
|
|
|
-
|
|
|
|
1.7
|
|
|
|
1.7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2.1
|
|
Legal and settlement claims, net
|
|
|
-
|
|
|
|
-
|
|
|
|
23.4
|
|
|
|
23.4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23.4
|
|
Fees associated with unsolicited offer and strategic alternatives
|
|
|
8.4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
25.2
|
|
|
|
-
|
|
|
|
700.0
|
|
|
|
700.0
|
|
|
|
120.0
|
|
|
|
(31.5)
|
|
|
|
813.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(25.2)
|
|
|
|
-
|
|
|
|
(29.3)
|
|
|
|
(29.3)
|
|
|
|
16.9
|
|
|
|
-
|
|
|
|
(37.6)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
4.7
|
|
|
|
(19.8)
|
|
|
|
(1.9)
|
|
|
|
(21.7)
|
|
|
|
(1.0)
|
|
|
|
-
|
|
|
|
(18.0)
|
|
Foreign currency exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1)
|
|
Equity in income (loss) of subsidiaries
|
|
|
(16.8)
|
|
|
|
(22.0)
|
|
|
|
17.2
|
|
|
|
17.2
|
|
|
|
-
|
|
|
|
(0.4)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(37.3)
|
|
|
|
(41.8)
|
|
|
|
(14.1)
|
|
|
|
(33.9)
|
|
|
|
15.9
|
|
|
|
(0.4)
|
|
|
|
(55.7)
|
|
Benefit from income taxes
|
|
|
(9.5)
|
|
|
|
(9.1)
|
|
|
|
(7.9)
|
|
|
|
(17.0)
|
|
|
|
(1.9)
|
|
|
|
-
|
|
|
|
(28.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(27.8)
|
|
|
|
(32.7)
|
|
|
|
(6.2)
|
|
|
|
(16.9)
|
|
|
|
17.8
|
|
|
|
(0.4)
|
|
|
|
(27.3)
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.6)
|
|
|
|
(1.6)
|
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
(1.7)
|
|
Less: Benefit from income taxes of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.7)
|
|
|
|
(1.7)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
(27.8)
|
|
|
|
(32.7)
|
|
|
|
(6.1)
|
|
|
|
(16.8)
|
|
|
|
17.7
|
|
|
|
(0.4)
|
|
|
|
(27.3)
|
|
Less: net income attributable to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.5
|
|
|
|
-
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Axiall
|
|
$
|
(27.8)
|
|
|
$
|
(32.7)
|
|
|
$
|
(6.1)
|
|
|
$
|
(16.8)
|
|
|
$
|
17.2
|
|
|
$
|
(0.4)
|
|
|
$
|
(27.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Axiall
|
|
$
|
(28.2)
|
|
|
$
|
(34.6)
|
|
|
$
|
(6.6)
|
|
|
$
|
(17.3)
|
|
|
$
|
17.3
|
|
|
$
|
-
|
|
|
$
|
(28.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 36 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Operations and
Comprehensive Loss
For the Three Months
Ended June 30, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
756.9
|
|
|
$
|
756.9
|
|
|
$
|
167.9
|
|
|
$
|
(55.6)
|
|
|
$
|
869.2
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
670.1
|
|
|
|
670.1
|
|
|
|
131.2
|
|
|
|
(55.6)
|
|
|
|
745.7
|
|
Selling, general and administrative expenses
|
|
|
13.9
|
|
|
|
-
|
|
|
|
44.3
|
|
|
|
44.3
|
|
|
|
17.6
|
|
|
|
-
|
|
|
|
75.8
|
|
Restructuring and divestiture costs
|
|
|
0.5
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
Integration-related costs and other, net
|
|
|
2.0
|
|
|
|
-
|
|
|
|
2.2
|
|
|
|
2.2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
16.4
|
|
|
|
-
|
|
|
|
716.5
|
|
|
|
716.5
|
|
|
|
148.8
|
|
|
|
(55.6)
|
|
|
|
826.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(16.4)
|
|
|
|
-
|
|
|
|
40.4
|
|
|
|
40.4
|
|
|
|
19.1
|
|
|
|
-
|
|
|
|
43.1
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
4.5
|
|
|
|
(19.8)
|
|
|
|
(1.9)
|
|
|
|
(21.7)
|
|
|
|
(1.1)
|
|
|
|
-
|
|
|
|
(18.3)
|
|
Foreign currency exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
(0.1)
|
|
Equity in income (loss) of subsidiaries
|
|
|
32.5
|
|
|
|
(5.2)
|
|
|
|
15.2
|
|
|
|
15.2
|
|
|
|
-
|
|
|
|
(47.7)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
20.6
|
|
|
|
(25.0)
|
|
|
|
53.7
|
|
|
|
33.9
|
|
|
|
17.9
|
|
|
|
(47.7)
|
|
|
|
24.7
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
0.4
|
|
|
|
1.4
|
|
|
|
1.8
|
|
|
|
0.1
|
|
|
|
-
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
20.6
|
|
|
|
(25.4)
|
|
|
|
52.3
|
|
|
|
32.1
|
|
|
|
17.8
|
|
|
|
(47.7)
|
|
|
|
22.8
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.4)
|
|
|
|
(0.4)
|
|
|
|
(1.3)
|
|
|
|
-
|
|
|
|
(1.7)
|
|
Less: Benefit from income taxes of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.8)
|
|
|
|
(0.8)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
(1.3)
|
|
|
|
-
|
|
|
|
(0.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
20.6
|
|
|
|
(25.4)
|
|
|
|
52.7
|
|
|
|
32.5
|
|
|
|
16.5
|
|
|
|
(47.7)
|
|
|
|
21.9
|
|
Less: net income attributable to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.3
|
|
|
|
-
|
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Axiall
|
|
$
|
20.6
|
|
|
$
|
(25.4)
|
|
|
$
|
52.7
|
|
|
$
|
32.5
|
|
|
$
|
15.2
|
|
|
$
|
(47.7)
|
|
|
$
|
20.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Axiall
|
|
$
|
29.0
|
|
|
$
|
(15.7)
|
|
|
$
|
61.1
|
|
|
$
|
40.9
|
|
|
$
|
25.1
|
|
|
$
|
(66.0)
|
|
|
$
|
29.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 37 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Operations and
Comprehensive Income (Loss)
For the Six
Months Ended June 30, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,298.0
|
|
|
$
|
1,298.0
|
|
|
$
|
249.1
|
|
|
$
|
(71.8)
|
|
|
$
|
1,475.3
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
1,197.9
|
|
|
|
1,197.9
|
|
|
|
198.4
|
|
|
|
(71.8)
|
|
|
|
1,324.5
|
|
Selling, general and administrative expenses
|
|
|
27.3
|
|
|
|
-
|
|
|
|
87.2
|
|
|
|
87.2
|
|
|
|
25.4
|
|
|
|
-
|
|
|
|
139.9
|
|
Restructuring and divestiture costs
|
|
|
7.5
|
|
|
|
-
|
|
|
|
11.3
|
|
|
|
11.3
|
|
|
|
22.4
|
|
|
|
-
|
|
|
|
41.2
|
|
Integration-related costs and other, net
|
|
|
0.9
|
|
|
|
-
|
|
|
|
4.6
|
|
|
|
4.6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5.5
|
|
Legal and settlement claims, net
|
|
|
-
|
|
|
|
-
|
|
|
|
23.4
|
|
|
|
23.4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23.4
|
|
Fees associated with unsolicited offer and strategic alternatives
|
|
|
13.6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
49.3
|
|
|
|
-
|
|
|
|
1,324.4
|
|
|
|
1,324.4
|
|
|
|
246.2
|
|
|
|
(71.8)
|
|
|
|
1,548.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(49.3)
|
|
|
|
-
|
|
|
|
(26.4)
|
|
|
|
(26.4)
|
|
|
|
2.9
|
|
|
|
-
|
|
|
|
(72.8)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
9.4
|
|
|
|
(39.6)
|
|
|
|
(2.9)
|
|
|
|
(42.5)
|
|
|
|
(1.9)
|
|
|
|
-
|
|
|
|
(35.0)
|
|
Foreign currency exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
(0.9)
|
|
|
|
-
|
|
|
|
(1.0)
|
|
Equity in loss of subsidiaries
|
|
|
(61.8)
|
|
|
|
(32.4)
|
|
|
|
(5.3)
|
|
|
|
(5.3)
|
|
|
|
-
|
|
|
|
67.1
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(101.7)
|
|
|
|
(72.0)
|
|
|
|
(34.7)
|
|
|
|
(74.3)
|
|
|
|
0.1
|
|
|
|
67.1
|
|
|
|
(108.8)
|
|
Benefit from income taxes
|
|
|
(20.3)
|
|
|
|
(20.1)
|
|
|
|
(10.0)
|
|
|
|
(30.1)
|
|
|
|
(0.8)
|
|
|
|
-
|
|
|
|
(51.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(81.4)
|
|
|
|
(51.9)
|
|
|
|
(24.7)
|
|
|
|
(44.2)
|
|
|
|
0.9
|
|
|
|
67.1
|
|
|
|
(57.6)
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(27.8)
|
|
|
|
(27.8)
|
|
|
|
(5.3)
|
|
|
|
-
|
|
|
|
(33.1)
|
|
Less: Benefit from income taxes of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(10.1)
|
|
|
|
(10.1)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(17.7)
|
|
|
|
(17.7)
|
|
|
|
(5.3)
|
|
|
|
-
|
|
|
|
(23.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net loss
|
|
|
(81.4)
|
|
|
|
(51.9)
|
|
|
|
(42.4)
|
|
|
|
(61.9)
|
|
|
|
(4.4)
|
|
|
|
67.1
|
|
|
|
(80.6)
|
|
Less: net income attributable to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Axiall
|
|
$
|
(81.4)
|
|
|
$
|
(51.9)
|
|
|
$
|
(42.4)
|
|
|
$
|
(61.9)
|
|
|
$
|
(5.2)
|
|
|
$
|
67.1
|
|
|
$
|
(81.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Axiall
|
|
$
|
(59.9)
|
|
|
$
|
(49.3)
|
|
|
$
|
(21.0)
|
|
|
$
|
(40.5)
|
|
|
$
|
21.6
|
|
|
$
|
18.9
|
|
|
$
|
(59.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 38 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Operations and
Comprehensive Loss
For the Six Months Ended
June 30, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco
Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-
Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Net sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,469.7
|
|
|
$
|
1,469.7
|
|
|
$
|
287.9
|
|
|
$
|
(103.8)
|
|
|
$
|
1,653.8
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
1,296.5
|
|
|
|
1,296.5
|
|
|
|
233.7
|
|
|
|
(103.8)
|
|
|
|
1,426.4
|
|
Selling, general and administrative expenses
|
|
|
26.3
|
|
|
|
-
|
|
|
|
91.4
|
|
|
|
91.4
|
|
|
|
34.1
|
|
|
|
-
|
|
|
|
151.8
|
|
Restructuring and divestiture costs
|
|
|
1.1
|
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
0.1
|
|
|
|
-
|
|
|
|
1.1
|
|
Integration-related costs and other, net
|
|
|
5.4
|
|
|
|
-
|
|
|
|
3.3
|
|
|
|
3.3
|
|
|
|
0.6
|
|
|
|
-
|
|
|
|
9.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
32.8
|
|
|
|
-
|
|
|
|
1,391.1
|
|
|
|
1,391.1
|
|
|
|
268.5
|
|
|
|
(103.8)
|
|
|
|
1,588.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(32.8)
|
|
|
|
-
|
|
|
|
78.6
|
|
|
|
78.6
|
|
|
|
19.4
|
|
|
|
-
|
|
|
|
65.2
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
10.5
|
|
|
|
(40.7)
|
|
|
|
(1.9)
|
|
|
|
(42.6)
|
|
|
|
(3.8)
|
|
|
|
-
|
|
|
|
(35.9)
|
|
Debt refinancing costs
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
(3.1)
|
|
|
|
(3.2)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3.2)
|
|
Foreign currency exchange gain (loss)
|
|
|
(0.1)
|
|
|
|
0.1
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
(0.6)
|
|
|
|
-
|
|
|
|
(0.8)
|
|
Equity in income (loss) of subsidiaries
|
|
|
29.6
|
|
|
|
(12.1)
|
|
|
|
10.7
|
|
|
|
10.7
|
|
|
|
-
|
|
|
|
(40.3)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
7.2
|
|
|
|
(52.8)
|
|
|
|
84.2
|
|
|
|
43.4
|
|
|
|
15.0
|
|
|
|
(40.3)
|
|
|
|
25.3
|
|
Provision for (benefit from) income taxes
|
|
|
(2.8)
|
|
|
|
(5.2)
|
|
|
|
11.9
|
|
|
|
6.7
|
|
|
|
1.0
|
|
|
|
-
|
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
10.0
|
|
|
|
(47.6)
|
|
|
|
72.3
|
|
|
|
36.7
|
|
|
|
14.0
|
|
|
|
(40.3)
|
|
|
|
20.4
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.9)
|
|
|
|
(2.9)
|
|
|
|
(6.0)
|
|
|
|
-
|
|
|
|
(8.9)
|
|
Less: Benefit from income taxes of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.6)
|
|
|
|
(1.6)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.3)
|
|
|
|
(1.3)
|
|
|
|
(6.0)
|
|
|
|
-
|
|
|
|
(7.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
10.0
|
|
|
|
(47.6)
|
|
|
|
71.0
|
|
|
|
35.4
|
|
|
|
8.0
|
|
|
|
(40.3)
|
|
|
|
13.1
|
|
Less: net income attributable to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.1
|
|
|
|
-
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Axiall
|
|
$
|
10.0
|
|
|
$
|
(47.6)
|
|
|
$
|
71.0
|
|
|
$
|
35.4
|
|
|
$
|
4.9
|
|
|
$
|
(40.3)
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to Axiall
|
|
$
|
(9.4)
|
|
|
$
|
(22.6)
|
|
|
$
|
49.1
|
|
|
$
|
13.5
|
|
|
$
|
(31.9)
|
|
|
$
|
18.4
|
|
|
$
|
(9.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 39 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Parent
Company
(a)
|
|
|
Eagle
Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Excluding
Eagle Spinco Inc.
|
|
|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
|
|
Non-Guarantor
Subsidiaries
(c)
|
|
|
Eliminations
(d)
|
|
|
Consolidated
(a)+(b)+(c)+(d)
|
|
Cash provided by (used in) operating activities - continuing operations
|
|
$
|
38.5
|
|
|
$
|
8.5
|
|
|
$
|
(19.7)
|
|
|
$
|
(19.7)
|
|
|
$
|
6.9
|
|
|
$
|
(37.1)
|
|
|
$
|
(11.4)
|
|
Cash provided by (used in) operating activities - discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
9.4
|
|
|
|
9.4
|
|
|
|
(4.2)
|
|
|
|
-
|
|
|
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
38.5
|
|
|
|
8.5
|
|
|
|
(10.3)
|
|
|
|
(10.3)
|
|
|
|
2.7
|
|
|
|
(37.1)
|
|
|
|
(6.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
(115.0)
|
|
|
|
(115.0)
|
|
|
|
(4.5)
|
|
|
|
-
|
|
|
|
(119.6)
|
|
Proceeds from the sales of business assets
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
11.1
|
|
|
|
-
|
|
|
|
11.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities - continuing operations
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
(114.6)
|
|
|
|
(114.6)
|
|
|
|
6.6
|
|
|
|
-
|
|
|
|
(108.1)
|
|
Cash provided by investing activities - discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
7.3
|
|
|
|
7.3
|
|
|
|
19.5
|
|
|
|
-
|
|
|
|
26.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(0.1)
|
|
|
|
-
|
|
|
|
(107.3)
|
|
|
|
(107.3)
|
|
|
|
26.1
|
|
|
|
-
|
|
|
|
(81.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt payments
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.7)
|
|
|
|
(1.7)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1.7)
|
|
Deferred acquisition payments
|
|
|
(15.0)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15.0)
|
|
Dividends paid
|
|
|
(22.8)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(22.8)
|
|
Distribution to noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7.1)
|
|
|
|
-
|
|
|
|
(7.1)
|
|
Share-based compensation plan activity
|
|
|
(0.9)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.9)
|
|
Distribution to affiliate
|
|
|
-
|
|
|
|
(8.5)
|
|
|
|
(17.5)
|
|
|
|
(17.5)
|
|
|
|
(19.6)
|
|
|
|
37.1
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(38.7)
|
|
|
|
(8.5)
|
|
|
|
(19.2)
|
|
|
|
(19.2)
|
|
|
|
(26.7)
|
|
|
|
37.1
|
|
|
|
(47.5)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5.4
|
|
|
|
-
|
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(0.3)
|
|
|
|
-
|
|
|
|
(136.8)
|
|
|
|
(136.8)
|
|
|
|
7.5
|
|
|
|
-
|
|
|
|
(129.6)
|
|
Cash and cash equivalents at beginning of period
|
|
|
0.3
|
|
|
|
-
|
|
|
|
161.7
|
|
|
|
161.7
|
|
|
|
96.0
|
|
|
|
-
|
|
|
|
258.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
24.9
|
|
|
$
|
24.9
|
|
|
$
|
103.5
|
|
|
$
|
-
|
|
|
$
|
128.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 40 of 70
AXIALL CORPORATION
Guarantor Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(In millions)
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Parent
Company
(a)
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|
Eagle
Spinco Inc.
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|
Guarantor
Subsidiaries
E
xcluding
Eagle Spinco Inc.
|
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|
Guarantor
Subsidiaries
Including
Eagle Spinco Inc.
(b)
|
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Non-Guarantor
Subsidiaries
(c)
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Eliminations
(d)
|
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Consolidated
(a)+(b)+(c)+(d)
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|
Cash provided by (used in) operating activities - continuing operations
|
|
$
|
40.0
|
|
|
$
|
10.1
|
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|
$
|
30.5
|
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|
$
|
30.5
|
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|
$
|
(2.7)
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$
|
(22.7)
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|
$
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45.1
|
|
Cash used in operating activities - discontinued operations
|
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|
-
|
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|
-
|
|
|
|
(1.7)
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(1.7)
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(7.2)
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-
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(8.9)
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Net cash provided by (used in) operating activities
|
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40.0
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10.1
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28.8
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28.8
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|
(9.9)
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(22.7)
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36.2
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Cash flows from investing activities:
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Capital expenditures
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(0.4)
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-
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(69.3)
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(69.3)
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(4.2)
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-
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(73.9)
|
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Proceeds from sales of business assets
|
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-
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|
-
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5.6
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5.6
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0.7
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-
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6.3
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Cash used in investing activities - continuing operations
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(0.4)
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-
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(63.7)
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(63.7)
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(3.5)
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-
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(67.6)
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Cash provided by (used in) investing activities - discontinued operations
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-
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-
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(1.6)
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(1.6)
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0.7
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-
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(0.9)
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Net cash used in investing activities
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(0.4)
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-
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(65.3)
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(65.3)
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(2.8)
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-
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(68.5)
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Cash flows from financing activities:
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Issuance of long-term debt
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-
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-
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248.8
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248.8
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-
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-
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248.8
|
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Long-term debt payments
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-
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(194.4)
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(1.7)
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(196.1)
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-
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-
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(196.1)
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Intercompany financing
|
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-
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194.4
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(194.4)
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-
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-
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-
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-
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Fees paid related to financing activities
|
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(0.3)
|
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|
-
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(3.2)
|
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(3.2)
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-
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-
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(3.5)
|
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Deferred acquisition payments
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(10.0)
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-
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-
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-
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-
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-
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(10.0)
|
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Dividends paid
|
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(23.1)
|
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-
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-
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-
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-
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-
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(23.1)
|
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Distribution to noncontrolling interest
|
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-
|
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|
-
|
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|
-
|
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|
-
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(8.4)
|
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-
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(8.4)
|
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Share-based compensation plan activities
|
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(6.2)
|
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|
-
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|
-
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-
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-
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|
-
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(6.2)
|
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Distribution to affiliate
|
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|
-
|
|
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|
(10.1)
|
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(10.1)
|
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(10.1)
|
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(12.6)
|
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|
22.7
|
|
|
|
-
|
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|
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|
|
|
|
|
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|
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Net cash provided by (used in) financing activities
|
|
|
(39.6)
|
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|
(10.1)
|
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|
39.4
|
|
|
|
39.4
|
|
|
|
(21.0)
|
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|
22.7
|
|
|
|
1.5
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4.6)
|
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|
-
|
|
|
|
(4.6)
|
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|
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|
|
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|
|
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|
|
|
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|
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|
|
Net change in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
2.9
|
|
|
|
2.9
|
|
|
|
(38.3)
|
|
|
|
-
|
|
|
|
(35.4)
|
|
Cash and cash equivalents at beginning of period
|
|
|
-
|
|
|
|
-
|
|
|
|
78.2
|
|
|
|
78.2
|
|
|
|
88.6
|
|
|
|
-
|
|
|
|
166.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
81.1
|
|
|
$
|
81.1
|
|
|
$
|
50.3
|
|
|
$
|
-
|
|
|
$
|
131.4
|
|
|
|
|
|
|
|
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Page 41 of 70