TRINSEO S.A., 10-K filed on 2/22/2021
Annual Report
v3.20.4
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2020
Feb. 16, 2021
Jun. 30, 2020
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Document Transition Report false    
Entity File Number 001-36473    
Entity Registrant Name Trinseo S.A.    
Entity Incorporation, State or Country Code N4    
Entity Tax Identification Number 00-0000000    
Entity Address, Address Line One 1000 Chesterbrook Boulevard, Suite 300    
Entity Address, Address Line Two Berwyn    
Entity Address, City or Town Berwyn, PA 19312    
Entity Address, State or Province PA    
Entity Address, Postal Zip Code 19312    
City Area Code 610    
Local Phone Number 240-3200    
Title of 12(b) Security Ordinary Shares, par value $0.01 per share    
Trading Symbol tse    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 833,032,870
Entity Common Stock, Shares Outstanding   38,440,043  
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001519061    
Current Fiscal Year End Date --12-31    
Amendment Flag false    
v3.20.4
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Current assets    
Cash and cash equivalents $ 588.7 $ 456.2
Accounts receivable, net of allowance 529.2 570.8
Inventories 384.1 438.2
Other current assets 15.1 25.9
Total current assets 1,517.1 1,491.1
Investments in unconsolidated affiliates 240.1 188.1
Property, plant and equipment, net 601.4 625.8
Other assets    
Goodwill 74.2 67.7
Other intangible assets, net 182.8 191.5
Right of use assets - operating, net 78.3 71.4
Deferred income tax assets 90.2 67.5
Deferred charges and other assets 61.1 55.7
Total other assets 486.6 453.8
Total assets 2,845.2 2,758.8
Current liabilities    
Short-term borrowings and current portion of long-term debt 12.3 11.1
Accounts payable 355.4 343.0
Current lease liabilities - operating 15.8 14.1
Income taxes payable 10.0 5.0
Accrued expenses and other current liabilities 139.8 154.4
Total current liabilities 533.3 527.6
Noncurrent liabilities    
Long-term debt, net of unamortized deferred financing fees 1,158.7 1,162.6
Noncurrent lease liabilities - operating 65.7 58.0
Deferred income tax liabilities 60.7 41.5
Other noncurrent obligations 436.5 300.2
Total noncurrent liabilities 1,721.6 1,562.3
Commitments and contingencies (Note 15)
Shareholders' equity    
Ordinary shares, $0.01 nominal value, 50,000.0 shares authorized (December 31, 2020: 48.8 shares issued and 38.4 shares outstanding; December 31, 2019: 48.8 shares issued and 39.0 shares outstanding) 0.5 0.5
Additional paid-in-capital 579.6 574.7
Treasury shares, at cost (December 31, 2020: 10.4 shares; December 31, 2019: 9.8 shares) (542.9) (524.9)
Retained earnings 739.2 781.0
Accumulated other comprehensive loss (186.1) (162.4)
Total shareholders' equity 590.3 668.9
Total liabilities and shareholders' equity $ 2,845.2 $ 2,758.8
v3.20.4
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
Condensed Consolidated Balance Sheets    
Ordinary shares, nominal value $ 0.01 $ 0.01
Ordinary shares, shares authorized 50,000,000,000.0 50,000,000,000.0
Ordinary shares, shares issued 48,800,000 48,800,000
Ordinary shares, shares outstanding 38,400,000 39,000,000.0
Treasury stock, shares 10,400,000 9,800,000
v3.20.4
Condensed Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Condensed Consolidated Statements of Operations      
Net sales $ 3,035.5 $ 3,775.8 $ 4,622.8
Cost of sales 2,719.9 3,446.9 4,094.0
Gross profit (loss) 315.6 328.9 528.8
Selling, general and administrative expenses 252.4 300.0 257.0
Equity in earnings of unconsolidated affiliates 67.0 119.0 144.1
Impairment charges 39.1   1.5
Operating income (loss) 91.1 147.9 414.4
Interest expense, net 43.6 39.3 46.4
Other expense, net 1.8 4.0 3.7
Income (loss) before income taxes 45.7 104.6 364.3
Provision for (benefit from) income taxes 37.8 12.6 71.8
Net income (loss) $ 7.9 $ 92.0 $ 292.5
Weighted average shares- basic 38.3 40.3 42.8
Net income (loss) per share- basic $ 0.20 $ 2.28 $ 6.83
Weighted average shares- diluted 38.6 40.7 43.7
Net income (loss) per share- diluted $ 0.20 $ 2.26 $ 6.70
v3.20.4
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Condensed Consolidated Statements of Comprehensive Income (Loss)      
Net income (loss) $ 7.9 $ 92.0 $ 292.5
Other comprehensive income (loss), net of tax      
Cumulative translation adjustments (2.3) 5.1 (17.3)
Net gain (loss) on cash flow hedges (5.8) (8.3) 15.0
Pension and other postretirement benefit plans:      
Prior service credit arising during period (net of tax of $0.0, $0.0, and $0.2)     0.7
Net gain (loss) during period (net of tax of: $(7.3), $(8.9), and $0.3) (18.3) (19.0) 1.8
Amounts reclassified from accumulated other comprehensive income 2.7 2.1 3.1
Total other comprehensive income (loss), net of tax (23.7) (20.1) 3.3
Comprehensive income (loss) $ (15.8) $ 71.9 $ 295.8
v3.20.4
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Condensed Consolidated Statements of Comprehensive Income (Loss)      
Prior service credit arising during period, tax $ (0.0) $ (0.0) $ 0.2
Net gain (loss) during period, tax (benefit) expense $ (7.3) $ (8.9) $ 0.3
v3.20.4
Condensed Consolidated Statements of Shareholders' Equity - USD ($)
shares in Millions, $ in Millions
Ordinary Shares
Additional Paid-In Capital
Treasury Shares
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Total
Balance at beginning of period at Dec. 31, 2017 $ 0.5 $ 578.8 $ (286.8) $ (145.6) $ 527.9 $ 674.8
Balance at beginning of period, shares at Dec. 31, 2017 43.4   5.4      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income (loss)         292.5 292.5
Other comprehensive income (loss)       3.3   3.3
Share-based compensation   (3.4) $ 13.7     10.3
Share-based compensation, shares 0.4   (0.4)      
Purchase of treasury shares     $ (145.0)     (145.0)
Purchase of treasury shares, shares (2.2)   2.2      
Dividends on ordinary shares         (67.2) (67.2)
Balance at end of period at Dec. 31, 2018 $ 0.5 575.4 $ (418.1) (142.3) 753.2 768.7
Balance at end of period, shares at Dec. 31, 2018 41.6   7.2      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income (loss)         92.0 92.0
Other comprehensive income (loss)       (20.1)   (20.1)
Share-based compensation   (0.7) $ 9.6     8.9
Share-based compensation, shares 0.2   (0.2)      
Purchase of treasury shares     $ (116.4)     (116.4)
Purchase of treasury shares, shares (2.8)   2.8      
Dividends on ordinary shares         (64.2) (64.2)
Balance at end of period at Dec. 31, 2019 $ 0.5 574.7 $ (524.9) (162.4) 781.0 $ 668.9
Balance at end of period, shares at Dec. 31, 2019 39.0   9.8     39.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income (loss)         7.9 $ 7.9
Other comprehensive income (loss)       (23.7)   (23.7)
Share-based compensation   4.9 $ 7.0     11.9
Share-based compensation, shares 0.2   (0.2)      
Purchase of treasury shares     $ (25.0)     (25.0)
Purchase of treasury shares, shares (0.8)   0.8      
Dividends on ordinary shares         (49.7) (49.7)
Balance at end of period at Dec. 31, 2020 $ 0.5 $ 579.6 $ (542.9) $ (186.1) $ 739.2 $ 590.3
Balance at end of period, shares at Dec. 31, 2020 38.4   10.4     38.4
v3.20.4
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical)) - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Condensed Consolidated Statement of Stockholders' Equity      
Dividends on ordinary shares $ 1.28 $ 1.60 $ 1.56
v3.20.4
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities      
Net income (loss) $ 7.9 $ 92.0 $ 292.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities      
Depreciation and amortization 134.3 136.0 130.2
Amortization of deferred financing fees, issuance discount, and excluded component of hedging instruments 4.0 (0.5) 0.6
Deferred income tax 8.0 (37.4) 5.3
Share-based compensation expense 11.4 13.5 15.8
Earnings of unconsolidated affiliates, net of dividends (52.0) (9.0) (26.6)
Unrealized net (gain) loss on foreign exchange forward contracts (4.4) 3.0 (0.9)
Gain on sale of businesses and other assets (0.4) (0.7) (1.0)
Asset impairment charges or write-offs 39.7 0.2 1.9
Gain on bargain purchase   (4.7)  
Pension curtailment and settlement loss 0.7 0.8 0.6
Changes in assets and liabilities      
Accounts receivable 57.4 66.6 21.2
Inventories 69.8 70.7 (16.0)
Accounts payable and other current liabilities 2.1 (1.7) (43.8)
Income taxes payable 6.0 (10.9) (19.7)
Other assets, net (12.2) (0.2) (4.4)
Other liabilities, net (16.9) 4.8 10.8
Cash provided by operating activities 255.4 322.5 366.5
Cash flows from investing activities      
Capital expenditures (82.3) (110.1) (121.4)
Net cash received for asset and business acquisitions 0.1 0.1  
Proceeds from capital expenditures subsidy     1.0
Proceeds from the sale of businesses and other assets 11.9 0.7 1.7
Cash paid for cost method investment (5.5)    
Proceeds from the settlement of hedging instruments 51.6    
Cash used in investing activities (24.2) (109.3) (118.7)
Cash flows from financing activities      
Deferred financing fees     (0.6)
Short-term borrowings, net (12.6) (10.6) (0.3)
Purchase of treasury shares (25.0) (119.7) (142.9)
Dividends paid (61.8) (65.7) (66.0)
Proceeds from exercise of option awards 2.6 0.9 2.8
Withholding taxes paid on restricted share units (0.6) (4.6) (8.2)
Net proceeds from issuance of Term Loan B     696.5
Repayments of 2024 Term Loan B (6.9) (7.0) (703.5)
Proceeds from draw on 2022 Revolving Facility 100.0    
Repayments of Revolving Facility (100.0)    
Cash used in financing activities (104.3) (206.7) (222.2)
Effect of exchange rates on cash 4.4 (1.4) (6.1)
Net change in cash, cash equivalents and restricted cash 131.3 5.1 19.5
Cash, cash equivalents and restricted cash, beginning of period 457.4 452.3 432.8
Cash, cash equivalents and restricted cash, end of period 588.7 457.4 $ 452.3
Restricted cash $ 0.0 $ (1.2)  
Restricted Cash and Cash Equivalents, Current, Asset, Statement of Financial Position [Extensible List] Other Assets, Current Other Assets, Current Other Assets, Current
Cash and cash equivalents, end of period $ 588.7 $ 456.2 $ 452.3
Supplemental disclosure of cash flow information      
Cash paid for income taxes, net of refunds 10.3 66.3 85.2
Cash paid for interest, net of amounts capitalized 39.5 39.7 50.7
Accrual for property, plant and equipment $ 6.8 $ 17.2 $ 10.2
v3.20.4
Organization and Business Activities
12 Months Ended
Dec. 31, 2020
Basis of Presentation  
Organization and Business Activities

NOTE 1—ORGANIZATION AND BUSINESS ACTIVITIES

Organization

Trinseo S.A. (“Trinseo,” and together with its subsidiaries, the “Company”) is a public limited liability company (société anonyme) formed in 2010 and existing under the laws of Luxembourg. Prior to the Company’s formation, the Company’s business was wholly owned by The Dow Chemical Company (together with its affiliates, “Dow”). In 2010, investment funds advised or managed by affiliates of Bain Capital Partners, LP (“Bain Capital,” referred to as “the former Parent”) acquired the Styron business and Dow Europe Holding B.V. (the “Acquisition”). During 2016, Bain Capital divested its entire ownership in the Company in a series of secondary offerings to the market.

Business Activities

The Company is a leading global materials company and manufacturer of plastics, latex binders, and synthetic rubber, including various advanced specialty products and sustainable solutions. The Company has leading market positions in many of the markets in which it competes. The Company’s products are incorporated into a wide range of its customers’ products throughout the world, including products for automotive applications, tires, carpet and artificial turf backing, coated paper, specialty paper and packaging board, food packaging, appliances, medical devices, consumer electronics and construction applications, among others.

The Company’s operations are located in Europe, North America, and Asia Pacific, supplemented by Americas Styrenics, a styrenics joint venture with Chevron Phillips Chemical Company LP. Refer to Note 5 for further information regarding the Company’s investment in Americas Styrenics.

The Company has significant manufacturing and production operations around the world, which allow service to its global customer base. As of December 31, 2020, the Company’s production facilities included 32 manufacturing plants (which included a total of 75 production units) at 24 sites across 12 countries, including its joint venture. Additionally, as of December 31, 2020, the Company operated 9 research and development (“R&D”) facilities globally, including mini plants, development centers, and pilot coaters.

The Company’s Chief Executive Officer, who is the chief operating decision maker, manages the Company’s operations under seven segments, Latex Binders, Synthetic Rubber, Engineered Materials, Base Plastics, Polystyrene, Feedstocks, and Americas Styrenics following the Company’s resegmentation effective October 1, 2020, as described in Note 19.

v3.20.4
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Basis of Presentation  
Basis of Presentation and Summary of Significant Accounting Policies

NOTE 2—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements of the Company contain the accounts of all entities that are controlled and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. A VIE is defined as a legal entity that has equity investors that do not have sufficient equity at risk for the entity to support its activities without additional subordinated financial support or, as a group, the holders of the equity at risk lack (i) the power to direct the entity’s activities or (ii) the obligation to absorb the expected losses or the right to receive the expected residual returns of the entity. A VIE is required to be consolidated by a company if that company is the primary beneficiary. Refer to Note 11 for further discussion of the Company’s Accounts Receivable Securitization Facility, which qualifies as a VIE and is consolidated within the Company’s financial statements.

All intercompany balances and transactions are eliminated. Joint ventures over which the Company has the ability to exercise significant influence that are not consolidated are accounted for by the equity method.

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications pertain primarily to the Company’s separate presentation of the line item “Impairment charges” on its consolidated statements of operations and the Company’s resegmentation effective October 1, 2020. Refer to Notes 3, 9, 13, and 19 for further information.

Use of Estimates in Financial Statement Preparation

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts could differ from these estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and accounts receivable. The Company uses major financial institutions with high credit ratings to engage in transactions involving cash equivalents. The Company minimizes credit risk in its receivables by selling products to a diversified portfolio of customers in a variety of markets located throughout the world.

The Company performs ongoing evaluations of its customers’ credit and generally does not require collateral. The Company maintains an allowance for doubtful accounts for losses resulting from the inability of specific customers to meet their financial obligations, representing its best estimate of probable credit losses in existing trade accounts receivable. A specific reserve for doubtful receivables is recorded against the amount due from these customers. For all other customers, the Company recognizes reserves for doubtful receivables based on historical experience.

Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued and other current liabilities, approximate fair value due to their generally short maturities.

The estimated fair values of the Company’s 2024 Term Loan B and 2025 Senior Notes and, when outstanding, borrowings under its 2022 Revolving Facility and Accounts Receivable Securitization Facility (all of which are defined in Note 11) are determined using Level 2 inputs within the fair value hierarchy. The carrying amounts of borrowings under the 2022 Revolving Facility and Accounts Receivable Securitization Facility approximate fair value as these borrowings bear interest based on prevailing variable market rates.

At times, the Company manages its exposure to changes in foreign currency exchange rates, where possible, by entering into foreign exchange forward contracts. Additionally, the Company manages its exposure to variability in interest payments associated with its variable rate debt by entering into interest rate swap agreements. When outstanding, all derivatives, whether designated in hedging relationships or not, are required to be recorded on the consolidated balance sheets at fair value. The fair value of the derivatives is determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments. The fair value of derivatives also considers the credit default risk of the parties involved.

If the derivative is not designated for hedge accounting treatment, changes in the fair value of the underlying instrument and settlements are recognized in earnings. If the derivative is designated as a fair value hedge, changes in the fair value of the derivative and the hedged item are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative will be recorded in accumulated other comprehensive income or loss (“AOCI”) and will be recognized in the consolidated statements of operations when the hedged item affects earnings or it becomes probable that the forecasted transaction will not occur. If the derivative is designated as a net investment hedge, to the extent it is deemed to be effective, the change in the fair value of the derivative will be recorded within the cumulative translation adjustment account as a component of AOCI and the resulting gains or losses will be recognized in the consolidated statements of operations when the hedged net investment is either sold or substantially liquidated.

As of December 31, 2020 and 2019, the Company had certain foreign exchange forward contracts outstanding that were not designated for hedge accounting treatment and certain foreign exchange forward contracts and interest rate swap agreements that were designated as cash flow hedges. As of December 31, 2020 and 2019, the Company also had

certain fixed-for-fixed cross currency swaps (“CCS”) outstanding, which swap U.S. dollar principal and interest payments on the Company’s 2025 Senior Notes for euro-denominated payments. The Company’s CCS have been designated as a hedge of its net investment in certain European subsidiaries.

Forward contracts, interest rate swaps, and cross currency swaps are entered into with a limited number of counterparties, each of which allows for net settlement of all contracts through a single payment in a single currency in the event of a default on or termination of any one contract. The Company records these derivative instruments on a net basis, by counterparty within the consolidated balance sheets.

The Company presents the cash receipts and payments from hedging activities in the same category as the cash flows from the items subject to hedging relationships. As the items subject to economic hedging relationships are the Company’s operating assets and liabilities, the related cash flows are classified within operating activities in the consolidated statements of cash flows.

Refer to Notes 12 and 13 for further information on the Company’s derivative instruments and their fair value measurements.

Foreign Currency Translation

For the majority of the Company’s subsidiaries, the local currency has been identified as the functional currency. For remaining subsidiaries, the U.S. dollar has been identified as the functional currency due to the significant influence of the U.S. dollar on their operations. Gains and losses resulting from the translation of various functional currencies into U.S. dollars are recorded within the cumulative translation adjustment account as a component of AOCI in the consolidated balance sheets. The Company translates asset and liability balances at exchange rates in effect at the end of the period and income and expense transactions at the average exchange rates in effect during the period. Gains and losses resulting from foreign currency transactions are recorded within “Other expense, net” in the consolidated statements of operations.

For the year ended December 31, 2020, the Company recognized net foreign exchange transaction gains of $23.9 million, while for the years ended December 31, 2019 and 2018, the Company recognized net foreign exchange transaction losses of $6.2 million and $15.8 million, respectively. These amounts exclude the impacts of foreign exchange forward contracts discussed above.

Environmental Matters

Accruals for environmental matters are recorded when it is considered probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. These accruals are adjusted periodically as assessment and remediation efforts progress, or as additional technical or legal information become available. Accruals for environmental liabilities are recorded within “Other noncurrent obligations” in the consolidated balance sheets at undiscounted amounts. As of December 31, 2020 and 2019, there were no accruals for environmental liabilities recorded.

Environmental costs are capitalized in recognition of legal asset retirement obligations resulting from the acquisition, construction or normal operation of a long-lived asset. Any costs related to environmental contamination treatment and clean-ups are charged to expense.

Cash and Cash Equivalents

Cash and cash equivalents generally include time deposits or highly liquid investments with original maturities of three months or less and no material liquidity fee or redemption gate restrictions.

Inventories

Inventories are stated at the lower of cost or net realizable value (“NRV”), with cost being determined on the first-in, first-out (“FIFO”) method. NRV is calculated as the estimated selling price less reasonably predictable costs of completion, disposal, and transportation. The Company periodically reviews its inventory for excess or obsolete inventory, and will write-down the excess or obsolete inventory value to its NRV, if applicable.

Property, Plant and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation and impairment, if applicable, and are depreciated over their estimated useful lives using the straight-line method.

Expenditures for maintenance and repairs are recorded in the consolidated statements of operations as incurred. Expenditures that significantly increase asset value, extend useful asset lives or adapt property to a new or different use are capitalized. These expenditures include planned major maintenance activity, or turnaround activities, that increase the Company’s manufacturing plants’ output and improve production efficiency as compared to pre-turnaround operations. As of December 31, 2020 and 2019, $43.9 million and $23.1 million, respectively, of the Company’s net costs related to turnaround activities were capitalized within “Deferred charges and other assets” in the consolidated balance sheets, and are being amortized over the period until the next scheduled turnaround.

The Company periodically evaluates actual experience to determine whether events and circumstances have occurred that may warrant revision of the estimated useful lives of property, plant and equipment. Engineering and other costs directly related to the construction of property, plant and equipment are capitalized as construction in progress until construction is complete and such property, plant and equipment is ready and available to perform its specifically assigned function. The Company also capitalizes interest as a component of the cost of capital assets constructed for its own use. Upon retirement or other disposal, the asset cost and related accumulated depreciation are removed from the accounts and the net amount, less any proceeds, is charged or credited to income.

Impairment and Disposal of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. When undiscounted future cash flows are not expected to be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value based on a discounted cash flow analysis utilizing market participant assumptions. Refer to Note 13 for further information on the Company’s impairment charges recorded for the year ended December 31, 2020.

Long-lived assets to be disposed of by sale are classified as held-for-sale and are reported at the lower of carrying amount or fair value less cost to sell, and depreciation is ceased. Long-lived assets to be disposed of in a manner other than by sale are classified as held-and-used until they are disposed. As of December 31, 2020, the Company had no assets classified as held-for-sale. As of December 31, 2019, the Company’s land in Livorno, Italy, on which it formerly had a latex binders manufacturing facility, and the associated net deferred tax liability related to that land classified were classified as held-for-sale and recorded at values of $11.8 million within “Other current assets” and $2.8 million within “Accrued expenses and other current liabilities,” respectively. The land was sold in January 2020, as described in further detail in Note 20.

Goodwill and Other Intangible Assets

The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is tested for impairment at the reporting unit level annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. The Company utilizes a market approach and an income approach (under the discounted cash flow method) to calculate the fair value of its reporting units. When supportable, the Company employs the qualitative assessment of goodwill impairment prescribed by Accounting Standards Codification (“ASC”) 350. The annual impairment assessment is completed using a measurement date of October 1. No goodwill impairment losses were recorded in the years ended December 31, 2020, 2019, and 2018.

Finite-lived intangible assets, such as developed technology, customer relationships, manufacturing capacity rights, and computer software for internal use are amortized on a straight-line basis over their estimated useful life and are reviewed for impairment or obsolescence if events or changes in circumstances indicate that their carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows. No intangible asset impairment losses were recorded in the years ended December 31, 2020, 2019, and 2018.

Acquired developed technology is recorded at fair value upon acquisition and is amortized using the straight-line method over the estimated useful life ranging from 9 years to 15 years. The Company determines amortization periods for developed technology based on its assessment of various factors impacting estimated useful lives and timing and

extent of estimated cash flows of the acquired assets. This includes estimates of expected period of future economic benefit and competitive advantage related to existing processes and procedures at the date of acquisition. Significant changes to any of these factors may result in a reduction in the useful life of these assets.

Customer relationships are recorded at fair value upon acquisition and are amortized using the straight-line method over the estimated useful life of 19 years. The Company determines amortization periods for customer relationships based on its assessment of various factors impacting estimated useful lives and timing and extent of estimated cash flows of the acquired assets. This includes estimates of expected period of future economic benefit and customer retention rates. Significant changes to any of these factors may result in a reduction in the useful life of these assets.

Leases

The Company accounts for its lease arrangements in accordance with ASC 842, which it adopted effective January 1, 2019 using the modified retrospective approach. The Company has leases for certain of its plant and warehouse sites, office spaces, rail cars, storage facilities, and equipment. The Company determines if an arrangement includes a lease at inception of the contract. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The lease term represents the non-cancelable period of the lease, including any lessee options to renew, extend, or terminate which are considered to be reasonably certain of exercise. As the interest rate implicit in the Company’s lease contract is typically not readily available, the Company uses its incremental borrowing rate based on relevant information available at the lease commencement date to determine the weighted average discount rate used to calculate the net present value of lease payments. The Company recognizes lease expense for fixed lease payments on operating leases on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. For leases across all asset classes in which the Company is a lessee, the Company does not separate non-lease components from lease components. Refer to Note 23 for further information on the Company’s leases.

Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliates in which the Company has the ability to exercise significant influence (generally, 20% to 50%-owned companies) are accounted for using the equity method. Investments are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is recorded whenever a decline in fair value of an investment in an unconsolidated affiliate below its carrying amount is determined to be other-than-temporary.

The Company uses the cumulative earnings approach for presenting distributions received from equity method investees in the consolidated statements of cash flows.

Deferred Financing Fees

Capitalized fees and costs incurred in connection with the Company’s recognized debt liabilities are presented in the consolidated balance sheets as a direct reduction from the carrying value of those debt liabilities, consistent with debt discounts. Deferred financing fees related to the Company’s revolving debt facilities are included within “Deferred charges and other assets” in the consolidated balance sheets.

Deferred financing fees on the Company’s term loan and senior note financing arrangements are amortized using the effective interest method over the term of the respective agreement. Deferred financing fees on the Company’s revolving facilities and the Accounts Receivable Securitization Facility are amortized using the straight-line method over the term of the respective facility. Amortization of deferred financing fees is recorded in “Interest expense, net” within the consolidated statements of operations.

Restricted Cash and Cash Equivalents

Restrictions on the Company’s cash and cash equivalents are primarily related to customs requirements. As of December 31, 2020, the Company had no amounts recorded as restricted cash and cash equivalents, while as of December 31, 2019, the Company had restricted cash and cash equivalents $1.2 million included within “Other current assets” in the consolidated balance sheets.

Sales

For all material contracts with customers, sales are recognized and control is transferred at a point in time when the Company satisfies the performance obligations according to the terms of the contract, and when title and the risk of loss is passed to the customer. Title and risk of loss varies by region and customer and is determined based upon the purchase order received from the customer and the applicable contractual terms or jurisdictional standards. The Company receives cash equal to the invoice price for most product sales, subject to cash sales incentives with certain customers, with payment terms generally ranging from 10 to 90 days (with an approximate weighted average of 56 days as of December 31, 2020), also varying by segment and region.

Certain of the Company’s contracts with customers contain multiple performance obligations, most commonly due to the sale of multiple distinct products. The transaction price within these contracts is allocated between these separate and distinct products based on their stand-alone selling prices, as defined within the contract. The Company’s products are typically sold at observable stand-alone sales values, which are used to determine the estimated stand-alone selling price. The stand-alone selling prices of the Company’s products are generally based, in part, on the current or forecasted costs of key raw materials, but are often subject to a predetermined lag period for the pass through of these costs. As such, contracts with customers typically include provisions that allow for the changes in stand-alone selling prices to reflect the pass through of changes in raw material costs, often using pricing formulas that utilize commodity indices.

In cases where the Company’s transaction price is considered variable at the point of revenue recognition, the ‘most likely amount’ method is used to estimate the effect of any related uncertainty. In formulating this estimate, the Company considers all historical, current, and forecasted information that is reasonably available to identify a reasonable number of possible consideration amounts. Once the transaction price, including impacts of variable consideration, is estimated, revenue is recognized only to the extent that it is probable that a subsequent change in the estimate would not result in a significant revenue reversal. Furthermore, if the Company is not able to rely on observable stand-alone selling prices, the ‘expected cost plus a margin approach’ is utilized to estimate the stand-alone selling price of each performance obligation, primarily utilizing historical experience. During the year ended December 31, 2020, the impact of recognizing changes in selling prices related to prior periods was immaterial.

Standard terms of delivery are included in contracts of sale, order confirmation documents, and invoices. Sales and other taxes that the Company collects concurrent with sales-producing activities are excluded from “Net sales” and included as a component of “Cost of sales” in the consolidated statements of operations. Additionally, freight and any directly related costs of transporting finished products to customers are accounted for as fulfillment costs and are also included within “Cost of sales.”

The amount of net sales recognized varies with changes in returns, rebates, cash sales incentives, and other allowances offered to customers based on the Company's experience. For arrangements where the period between customer payment and transfer of goods/services is determined to be one year or less at contract inception, the Company applies the practical expedient exception available under ASC 606 and does not adjust the promised amount of consideration under the contract for the effects of a significant financing component. Additionally, the Company’s incremental costs of obtaining contracts are expensed as incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less, and are included within “Selling, general and administrative expenses” in the consolidated statements of operations, pursuant to the practical expedient in ASC 606.

Cost of Sales

The Company classifies the costs of manufacturing and distributing its products as cost of sales. Manufacturing costs include raw materials, utilities, packaging, employee salary and benefits, and fixed manufacturing costs associated with production. Fixed manufacturing costs include such items as plant site operating costs and overhead, production planning, depreciation and amortization, repairs and maintenance, environmental, and engineering costs. Distribution costs include shipping and handling costs. Freight and any directly related costs of transporting finished products to customers are also included within cost of sales. As discussed above, inventory costs are recorded within cost of sales utilizing the FIFO method.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses are generally charged to expense as incurred. SG&A expenses are the cost of services performed by the marketing and sales functions (including sales managers, field sellers, marketing research, marketing communications and promotion and advertising materials) and by administrative functions (including product management, R&D, business management, customer invoicing, human resources, information technology, legal and finance services, such as accounting and tax). Salary and benefit costs, including share-based compensation, for these sales personnel and administrative staff are included within SG&A expenses. R&D expenses include the cost of services performed by the R&D function, including technical service and development, process research including pilot plant operations, and product development. The Company also includes restructuring charges within SG&A expenses.

Total R&D costs included in SG&A expenses were $60.4 million, $54.6 million, and $56.0 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The Company expenses promotional and advertising costs as incurred to SG&A expenses. Total promotional and advertising expenses were $1.4 million, $1.8 million, and $1.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Restructuring charges included within SG&A expenses were $11.7 million, $18.6 million, and $9.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. Refer to Note 20 for further information.

Pension and Postretirement Benefits Plans

The Company has several defined benefit plans, under which participants earn a retirement benefit based upon a formula set forth in the plan. The Company also provides certain health care and life insurance benefits to retired employees in the United States. The U.S.-based plan provides health care benefits, including hospital, physicians’ services, drug and major medical expense coverage, and life insurance benefits.

Accounting for defined benefit pension plans and other postretirement benefit plans, and any curtailments and settlements thereof, requires various assumptions, including, but not limited to, discount rates, expected rates of return on plan assets, and future compensation growth rates. The Company evaluates these assumptions at least once each year, or as facts and circumstances dictate, and makes changes as conditions warrant.

A settlement is a transaction that is an irrevocable action that relieves the employer (or the plan) of primary responsibility for a pension or postretirement benefit obligation, and that eliminates significant risks related to the obligation and the assets used to effect the settlement. When a settlement occurs, the Company does not record settlement gains or losses during interim periods when the cost of all settlements in a year is less than or equal to the sum of the service cost and interest cost components of net periodic benefit cost for the plan in that year.

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The Company is subject to income taxes in Luxembourg, the United States and numerous foreign jurisdictions, and is subject to audit within these jurisdictions. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. For each tax jurisdiction in which the Company operates, deferred tax assets and liabilities are offset against one another and are presented as a single noncurrent amount within the consolidated balance sheets.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Provision is made for income taxes on unremitted earnings of subsidiaries and affiliates, unless such earnings are deemed to be indefinitely invested.

The Company recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. The Company accrues for other tax contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the

contingency can be reasonably estimated. Interest accrued related to unrecognized tax and income tax related penalties are included in the provision for income taxes. The current portion of uncertain income taxes positions is recorded in “Income taxes payable,” while the long-term portion is recorded in “Other noncurrent obligations” in the consolidated balance sheets.

Share-based Compensation

Refer to Note 17 for detailed discussion regarding the Company’s share-based compensation award programs. In connection with the Company’s initial public offering (“IPO”), the Company’s board of directors approved the 2014 Omnibus Plan. Since that time, certain equity grants have been awarded, comprised of restricted share units (“RSUs”), options to purchase shares (“option awards”), and performance share units (“PSUs”). Share-based compensation expense recognized in the consolidated financial statements is based on awards that are expected to vest as of their date of grant. The Company’s policy election is to recognize forfeitures as incurred.

Compensation costs for the RSUs are measured at the grant date based on the fair value of the award and are recognized ratably as expense over the applicable vesting term. The fair value of RSUs is equal to the fair market value of the Company’s ordinary shares based on the closing price on the date of grant. Dividend equivalents accumulate on RSUs during the vesting period, are payable in cash, and do not accrue interest. Award holders have no right to receive the dividend equivalents unless and until the associated RSUs vest.

Compensation costs for the option awards are measured at the grant date based on the fair value of the award and are recognized as expense over the appropriate service period utilizing graded vesting. The fair value for option awards is computed using the Black-Scholes pricing model, which uses inputs and assumptions determined as of the date of grant.

Compensation costs for the PSUs are measured at the grant date based on the fair value of the award, which is computed using a Monte Carlo valuation model, and are recognized ratably as expense over the applicable vesting term. Dividend equivalents accumulate on PSUs during the vesting period, are payable in cash, and do not accrue interest. Award holders have no right to receive the dividend equivalents unless and until the associated PSUs vest.

Treasury Shares

The Company may, from time to time, repurchase its ordinary shares at prevailing market rates. Share repurchases are recorded at cost in “Treasury shares” within shareholders’ equity in the consolidated balance sheets. It is the Company’s policy that, as RSUs, PSUs, and option awards vest or are exercised, ordinary shares will be issued from the existing pool of treasury shares on a first-in-first-out basis. Refer to Note 17 for details of vesting for RSUs and PSUs as well as the exercises of option awards.

Recent Accounting Guidance

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance which aligns the requirements for capitalizing implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard prospectively, effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes. The amended guidance includes removal of certain exceptions to the general principles of Accounting Standards Codification 740, Income Taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. This guidance is effective for public business entities for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. The Company has not adopted the guidance as of December 31, 2020, however it has assessed the guidance and determined that adoption will not have a material impact on its consolidated financial statements.

In March 2020 and January 2021, the FASB issued optional guidance for a limited period of time to ease the potential burden in accounting for the effects of the transition away from London Interbank Offered Rate (“LIBOR”) and other reference rates. The Company adopted both rounds of guidance upon issuance, noting that they did not have a

material impact on the Company’s consolidated financial statements.

v3.20.4
Net Sales
12 Months Ended
Dec. 31, 2020
Revenue from Contract with Customer [Abstract]  
Net Sales

NOTE 3—NET SALES

The following table provides disclosure of net sales to external customers by primary geographical market (based on the location where the sales originated), by segment for the years ended December 31, 2020, 2019, and 2018. Prior period amounts in this table have been recast in conjunction with the segment realignment that occurred during the fourth quarter of 2020. Refer to Note 19 for further information.

Latex

Synthetic

Engineered

Base

 

Year Ended

Binders

Rubber

Materials

Plastics

Polystyrene

Feedstocks

Total

 

December 31, 2020

United States

$

219.2

$

$

35.8

$

203.3

$

$

8.3

$

466.6

Europe

 

340.9

 

297.0

 

55.3

 

513.7

 

408.0

 

106.3

 

1,721.2

Asia-Pacific

 

200.1

 

22.7

 

103.3

 

136.9

 

290.9

 

22.2

 

776.1

Rest of World

 

6.9

 

0.4

 

64.3

 

 

 

71.6

Total

$

767.1

$

319.7

$

194.8

$

918.2

$

698.9

$

136.8

$

3,035.5

December 31, 2019

United States

$

263.7

$

$

38.2

$

267.7

$

$

10.7

$

580.3

Europe

 

388.5

 

441.3

 

60.3

675.6

 

448.8

 

148.8

 

2,163.3

Asia-Pacific

 

239.3

 

 

111.3

126.9

 

360.6

 

96.6

934.7

Rest of World

 

11.3

 

 

0.1

86.1

 

 

 

97.5

Total

$

902.8

$

441.3

$

209.9

$

1,156.3

$

809.4

$

256.1

$

3,775.8

December 31, 2018

United States

$

288.2

$

$

40.9

$

285.5

$

0.2

$

12.5

$

627.3

Europe

 

459.4

 

572.5

 

64.0

867.2

 

607.8

 

211.7

 

2,782.6

Asia-Pacific

 

306.6

 

 

105.8

120.4

 

409.1

 

162.4

 

1,104.3

Rest of World

 

14.8

 

93.8

 

 

 

108.6

Total

$

1,069.0

$

572.5

$

210.7

$

1,366.9

$

1,017.1

$

386.6

$

4,622.8

v3.20.4
Acquisitions and Divestitures
12 Months Ended
Dec. 31, 2020
Acquisitions and Divestitures  
Acquisitions and Divestitures

NOTE 4—ACQUISITIONS AND DIVESTITURES

Proposed Acquisition of Arkema Business

On December 14, 2020, the Company entered into a binding offer to acquire from Arkema S.A. (“Arkema”), a leader in specialty chemicals, the Arkema polymethyl methacrylates (“PMMA”) and activated methyl methacrylates (“MMA”) businesses (together, referred to herein as the “Arkema business”) for a purchase price of €1.137 billion (approximately $1.36 billion). PMMA is a transparent and rigid plastic with a wide range of end uses, and is an attractive adjacent chemistry which complements Trinseo’s existing offerings across several end markets including automotive, building & construction, medical and consumer electronics. The Company expects to fund the acquisition with up to $250.0 million of existing cash with the remainder from new debt financing. The transaction is expected to close in mid-2021 subject to customary closing conditions and regulatory approvals, including prior consultations with certain of Arkema’s works councils. In connection with the agreement with Arkema, the Company entered into a debt commitment letter on December 14, 2020, pursuant to which it will obtain financing for the transaction consisting of a $400.0 million senior secured credit facility, a $350.0 million secured bridge facility, and a $450.0 million unsecured bridge facility.

Acquisition of Latex Binders Assets in Germany

On October 1, 2019, the Company completed the acquisition from Dow of its latex binder production facilities and related infrastructure in Rheinmünster, Germany. The transaction included full ownership and operational control of latex production facilities, site infrastructure, and service contracts, as well as certain employees transferring from Dow to Trinseo. This acquisition provided Trinseo with manufacturing assets supporting its strategy to grow its Latex Binders

business in applications serving the coatings, adhesives, specialty paper, and sealants markets. The transaction, which was accounted for as a business combination, did not require any upfront cash outlay from Trinseo. The Company assumed net liabilities of $2.0 million as well as employees transferred in connection with the acquisition during the year ended December 31, 2019. In exchange for the net liabilities assumed, Trinseo received net cash of $6.7 million during the year ended December 31, 2019, and an additional $0.2 million during the year ended December 31, 2020.

The Company allocated the purchase price of the acquisition, which was represented by the value of the pension liabilities assumed net of cash and net assets received in connection with the transaction, to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. There was an excess in the aggregate fair value of the identifiable net assets acquired over the purchase price, which was recorded as a bargain purchase gain of $4.7 million included within “Other expense, net” in the consolidated statements of operations for the year ended December 31, 2019. During the year ended December 31, 2020, there were no changes to the purchase price allocation for the acquisition and in the fourth quarter of 2020, the Company finalized the purchase price allocation for the acquisition. Refer to the Company’s Form 10-K filed on February 28, 2020 for more information on the transaction.

v3.20.4
Investments in Unconsolidated Affiliates
12 Months Ended
Dec. 31, 2020
Investments in Unconsolidated Affiliates  
Investments in Unconsolidated Affiliates

NOTE 5—INVESTMENTS IN UNCONSOLIDATED AFFILIATES

During the year ended December 31, 2020, the Company had one joint venture: Americas Styrenics, a styrene and polystyrene joint venture with Chevron Phillips Chemical Company LP. Investments held in unconsolidated affiliates in which the Company has the ability to exercise significant influence (generally, 20% to 50%-owned companies) are accounted for by the equity method. The results of Americas Styrenics are included within its own reporting segment.

Equity in earnings from unconsolidated affiliates was $67.0 million, $119.0 million, and $144.1 million for the years ended December 31, 2020, 2019, and 2018, respectively.

The Company’s unconsolidated affiliates are privately held companies; therefore, quoted market prices for their equity interests are not available. The summarized financial information of the Company’s unconsolidated affiliates is shown below.

December 31,

 

2020

2019

 

Current assets

    

$

339.5

    

$

326.6

Noncurrent assets

 

266.1

 

247.7

Total assets

$

605.6

$

574.3

Current liabilities

$

123.9

$

158.8

Noncurrent liabilities

 

33.9

 

18.5

Total liabilities

$

157.8

$

177.3

Year Ended

 

December 31, 

 

    

2020

    

2019

    

2018

 

Sales

$

1,115.6

    

$

1,486.1

$

1,825.7

Gross profit

$

130.4

$

243.2

$

310.2

Net income

$

80.5

$

192.5

$

260.2

There were no sales to unconsolidated affiliates for the years ended December 31, 2020, 2019, and 2018. Purchases from unconsolidated affiliates were $51.2 million, $81.9 million, and $91.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

As of December 31, 2020 and 2019, respectively, there were no amounts due from unconsolidated affiliates included in “Accounts receivable, net of allowance” and $5.8 million and $6.3 million due to unconsolidated affiliates was included in “Accounts payable” in the consolidated balance sheets.

As of December 31, 2020 and 2019, respectively, the Company’s investment in Americas Styrenics was $240.1 million and $188.1 million, which was $16.3 million, and $10.3 million less than the Company’s 50% share of Americas Styrenics’ underlying net assets. These amounts represent the difference between the book value of assets contributed to the joint venture at the time of formation (May 1, 2008) and the Company’s 50% share of the total recorded value of the

joint venture’s assets and certain adjustments to conform with the Company’s accounting policies. This difference is being amortized over a weighted average remaining useful life of the contributed assets of approximately 2.7 years as of December 31, 2020. The Company received dividends from Americas Styrenics of $15.0 million, $110.0 million, and $117.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

v3.20.4
Accounts Receivable
12 Months Ended
Dec. 31, 2020
Accounts Receivable [Abstract]  
Accounts Receivable

NOTE 6—ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

December 31,

 

2020

2019

 

Trade receivables

    

$

444.6

    

$

455.0

Non-income tax receivables

 

48.0

 

63.4

Other receivables

 

42.4

 

57.7

Less: allowance for doubtful accounts

 

(5.8)

 

(5.3)

Total

$

529.2

$

570.8

For the years ended December 31, 2020, 2019, and 2018, the Company recognized bad debt expense (benefit) of $0.2 million, $(0.7) million, and $0.6 million, respectively.

v3.20.4
Inventories
12 Months Ended
Dec. 31, 2020
Inventories  
Inventories

NOTE 7—INVENTORIES

Inventories consisted of the following:

December 31,

    

2020

2019

Finished goods

    

$

174.0

    

$

210.8

Raw materials and semi-finished goods

 

169.1

 

190.1

Supplies

 

41.0

 

37.3

Total

$

384.1

$

438.2

v3.20.4
Property, Plant and Equipment
12 Months Ended
Dec. 31, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment

NOTE 8—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

Estimated Useful

December 31,

 

Lives (Years)

2020

2019

 

Land

    

N/A

    

$

56.7

    

$

53.0

Land and waterway improvements

 

1 - 20

 

28.0

 

26.9

Buildings

 

10 - 50

 

121.1

 

110.7

Machinery and equipment

 

3 - 10

 

1,094.8

 

955.5

Leasehold interests

 

9 - 40

 

43.8

 

41.6

Other property

 

1 - 20

 

54.7

 

47.4

Construction in process

N/A

 

33.8

 

56.4

Property, plant and equipment

 

1,432.9

 

1,291.5

Less: accumulated depreciation

 

(831.5)

 

(665.7)

Property, plant and equipment, net

$

601.4

$

625.8

Year Ended

 

December 31,

 

2020

2019

2018

 

Depreciation expense

    

$

88.1

    

$

96.9

    

$

95.7

Capitalized interest

$

2.1

$

3.0

$

3.6

v3.20.4
Goodwill and Intangible Assets
12 Months Ended
Dec. 31, 2020
Goodwill.  
Goodwill and Intangible Assets

NOTE 9—GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table shows the annual changes in the carrying amount of goodwill, by segment, from December 31, 2018 through December 31, 2020. Prior period amounts in this table have been recast in conjunction with the segment realignment that occurred during the fourth quarter of 2020. Refer to Note 19 for further information.

Latex

Synthetic

Engineered

Base

Americas

 

    

Binders

    

Rubber

Materials

    

Plastics

    

Polystyrene

    

Feedstocks

    

Styrenics

    

Total

 

Balance at December 31, 2018

    

$

15.9

$

11.3

$

14.9

$

22.4

$

4.5

$

$

$

69.0

Foreign currency impact

 

(0.3)

(0.3)

(0.3)

(0.3)

(0.1)

(1.3)

Balance at December 31, 2019

$

15.6

$

11.0

$

14.6

$

22.1

$

4.4

$

$

$

67.7

Foreign currency impact

 

1.5

1.1

1.4

2.1

0.4

 

6.5

Balance at December 31, 2020

$

17.1

$

12.1

$

16.0

$

24.2

$

4.8

$

$

$

74.2

Goodwill impairment testing is performed annually as of October 1. In 2020, the Company performed its annual impairment test for goodwill and determined that the estimated fair value of each reporting unit was in excess of the carrying value indicating that none of the Company’s goodwill was impaired. The Company concluded there were no goodwill impairments or triggering events for the years ended December 31, 2020, 2019, and 2018.

 

Other Intangible Assets

The following table provides information regarding the Company’s other intangible assets as of December 31, 2020 and 2019:

December 31, 2020

December 31, 2019

 

Estimated Useful

Gross Carrying

Accumulated

Gross Carrying

Accumulated

 

   

Life (Years)

   

Amount

   

Amortization

   

Net

   

Amount

   

Amortization

   

Net

 

Developed Technology

9 - 15

$

206.5

$

(142.8)

$

63.7

$

188.6

$

(117.2)

$

71.4

Customer Relationships

 

19

 

15.2

 

(2.8)

 

12.4

 

13.8

 

(1.8)

 

12.0

Manufacturing Capacity Rights

6

25.1

(23.8)

1.3

22.1

(20.0)

2.1

Software

 

5 - 10

 

164.8

 

(71.4)

 

93.4

 

119.2

 

(50.0)

 

69.2

Software in development

 

N/A

 

11.1

 

 

11.1

 

34.7

 

 

34.7

Other

 

1 - 3

 

3.8

 

(2.9)

 

0.9

 

4.3

 

(2.2)

 

2.1

Total

$

426.5

$

(243.7)

$

182.8

$

382.7

$

(191.2)

$

191.5

Amortization expense related to finite-lived intangible assets totaled $33.0 million, $33.0 million, and $29.7 million, for the years ended December 31, 2020, 2019, and 2018, respectively.

The following table details the Company’s estimated amortization expense for the next five years, excluding any amortization expense related to software currently in development:

Estimated Amortization Expense for the Next Five Years

 

2021

2022

2023

2024

2025

 

$

36.0

    

$

33.8

    

$

33.4

    

$

32.9

    

$

17.8

v3.20.4
Accounts Payable
12 Months Ended
Dec. 31, 2020
Payables and Accruals [Abstract]  
Accounts Payable

NOTE 10—ACCOUNTS PAYABLE

Accounts payable consisted of the following:

December 31,

 

2020

2019

 

Trade payables

    

$

313.9

    

$

304.6

Other payables

 

41.5

 

38.4

Total

$

355.4

$

343.0

v3.20.4
Debt
12 Months Ended
Dec. 31, 2020
Debt  
Debt

NOTE 11—DEBT

Refer to discussion below for details and definitions of the Company’s debt facilities. The Company was in compliance with all debt related covenants as of December 31, 2020 and 2019.

December 31, 2020

   

Interest Rate as of
December 31, 2020

   

Maturity Date

   

Carrying Amount

   

Unamortized Deferred Financing Fees(1)

    

Total Debt, Less Unamortized Deferred Financing Fees

   

Senior Credit Facility

2024 Term Loan B

2.146%

September 2024

$

677.3

$

(10.8)

$

666.5

2022 Revolving Facility(2)

Various

September 2022

2025 Senior Notes

5.375%

September 2025

500.0

(6.2)

493.8

Accounts Receivable Securitization Facility(3)

Various

September 2021

Other indebtedness

Various

Various

10.7

10.7

Total debt

$

1,188.0

$

(17.0)

$

1,171.0

Less: current portion(4)

(12.3)

Total long-term debt, net of unamortized deferred financing fees

$

1,158.7

December 31, 2019

Interest Rate as of December 31, 2019

    

Maturity
Date

    

Carrying
Amount

    

Unamortized Deferred
Financing Fees
(1)

    

Total Debt, Less
Unamortized
Deferred
Financing Fees

    

Senior Credit Facility

    

2024 Term Loan B

3.799%

September 2024

$

684.3

$

(13.7)

$

670.6

2022 Revolving Facility(2)

Various

September 2022

2025 Senior Notes

5.375%

September 2025

500.0

(7.3)

492.7

Accounts Receivable Securitization Facility(3)

Various

September 2021

 

Other indebtedness

Various

Various

 

10.4

10.4

Total debt

$

1,194.7

$

(21.0)

$

1,173.7

Less: current portion(4)

 

(11.1)

Total long-term debt, net of unamortized deferred financing fees

$

1,162.6

(1)This caption does not include unamortized deferred financing fees of $1.6 million and $2.6 million as of December 31, 2020 and 2019, respectively, related to the Company’s revolving facilities, which are included within “Deferred charges and other assets” on the consolidated balance sheets.
(2)On April 3, 2020, the Company drew down $100.0 million from the 2022 Revolving Facility, which it repaid on July 24, 2020. The Company had $360.0 million (net of $15.0 million outstanding letters of credit) of funds available for borrowing under this facility as of December 31, 2020. Additionally, the Company is required to
pay a quarterly commitment fee in respect of any unused commitments under this facility equal to 0.375% per annum.
(3)As of December 31, 2020, the Company had $135.2 million of accounts receivable available to support this facility, based on the pool of eligible accounts receivable. In regard to outstanding borrowings, fixed interest charges are 1.95% plus variable commercial paper rates, while for available, but undrawn commitments, fixed charges are 1.00%.
(4)As of December 31, 2020 and 2019, the current portion of long-term debt is primarily related to $7.0 million of scheduled future principal payments on the 2024 Term Loan B.

Total interest expense, net recognized during the years ended December 31, 2020, 2019, and 2018, was $43.6 million, $39.3 million, and $46.4 million, respectively, of which $4.8 million, $4.7 million, and $4.5 million, respectively, represented amortization of deferred financing fees and debt discounts. Total accrued interest on outstanding debt as of December 31, 2020 and 2019 was $4.4 million, excluding the impact of the CCS (see Note 12). Accrued interest is recorded within “Accrued expenses and other current liabilities” on the consolidated balance sheets.

 

Senior Credit Facility

On September 6, 2017, the Issuers entered into a senior secured credit agreement (the “Credit Agreement”), which provides senior secured financing of up to $1,075.0 million (the “Senior Credit Facility”). The Senior Credit Facility provides for senior secured financing consisting of a (i) $375.0 million revolving credit facility, with a $25.0 million swingline subfacility and a $35.0 million letter of credit subfacility maturing in September 2022 (the “2022 Revolving Facility”) and a (ii) $700.0 million senior secured term loan B facility maturing in September 2024 (the “2024 Term Loan B”). Amounts under the 2022 Revolving Facility are available in U.S. dollars and euros.

Fees incurred in connection with the issuance of the 2024 Term Loan B were $12.3 million. A portion of the 2024 Term Loan B met the criteria for modification accounting; thus, $1.2 million of these fees were expensed and included within “Other expense, net” in the consolidated stateme