Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2018 |
Feb. 25, 2019 |
Jun. 30, 2018 |
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Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Trinseo S.A. | ||
Entity Central Index Key | 0001519061 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Common Stock, Shares Outstanding | 41,289,829 | ||
Entity Public Float | $ 3,038,601,050 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Consolidated Balance Sheets | ||
Ordinary shares, nominal value | $ 0.01 | $ 0.01 |
Ordinary shares, shares authorized | 50,000,000,000 | 50,000,000,000 |
Ordinary shares, shares issued | 48,800,000 | 48,800,000 |
Ordinary shares, shares outstanding | 41,600,000 | 43,400,000 |
Treasury stock, shares | 7,200,000 | 5,400,000 |
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
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Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Consolidated Statements of Operations | |||||||||||
Net sales | $ 1,065.0 | $ 1,199.7 | $ 1,236.6 | $ 1,121.6 | $ 4,622.8 | $ 4,448.1 | $ 3,716.6 | ||||
Cost of sales | 4,094.0 | 3,807.8 | 3,124.4 | ||||||||
Gross profit | 59.3 | 131.6 | 162.7 | 175.2 | $ 166.3 | $ 148.5 | $ 126.5 | $ 199.0 | 528.8 | 640.3 | 592.2 |
Selling, general and administrative expenses | 258.5 | 239.0 | 238.7 | ||||||||
Equity in earnings of unconsolidated affiliates | 30.8 | 34.5 | 33.2 | 45.5 | 30.7 | 43.8 | 29.9 | 19.3 | 144.1 | 123.7 | 144.7 |
Operating income | 17.7 | 106.1 | 134.2 | 156.3 | 137.3 | 127.3 | 101.7 | 158.7 | 414.4 | 525.0 | 498.2 |
Interest expense, net | 46.4 | 70.1 | 75.0 | ||||||||
Loss on extinguishment of long-term debt | 65.3 | 0.2 | 65.3 | ||||||||
Other expense (income), net | 3.5 | (21.5) | 17.9 | ||||||||
Income before income taxes | 6.4 | 93.9 | 118.7 | 145.2 | 144.0 | 41.5 | 79.0 | 146.6 | 364.3 | 411.1 | 405.3 |
Provision for income taxes | 71.8 | 82.8 | 87.0 | ||||||||
Net income | $ (0.9) | $ 74.7 | $ 98.3 | $ 120.3 | $ 117.6 | $ 33.2 | $ 60.2 | $ 117.3 | $ 292.5 | $ 328.3 | $ 318.3 |
Weighted average shares- basic | 42.8 | 43.8 | 46.5 | ||||||||
Net income (loss) per share- basic | $ (0.02) | $ 1.75 | $ 2.28 | $ 2.77 | $ 2.69 | $ 0.76 | $ 1.37 | $ 2.66 | $ 6.83 | $ 7.49 | $ 6.84 |
Weighted average shares- diluted | 43.7 | 45.0 | 47.5 | ||||||||
Net income (loss) per share- diluted | $ (0.02) | $ 1.72 | $ 2.24 | $ 2.71 | $ 2.63 | $ 0.74 | $ 1.34 | $ 2.59 | $ 6.70 | $ 7.30 | $ 6.70 |
Dividends on ordinary shares | $ 1.56 | $ 1.38 | $ 0.9 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Consolidated Statements of Comprehensive Income (Loss) | |||
Net income | $ 292.5 | $ 328.3 | $ 318.3 |
Other comprehensive income (loss), net of tax | |||
Cumulative translation adjustments | (17.3) | 24.5 | (9.8) |
Net gain (loss) on cash flow hedges | 15.0 | (18.4) | 6.7 |
Pension and other postretirement benefit plans: | |||
Prior service credit arising during period (net of tax of $0.2, $0, and $0) | 0.7 | ||
Net gain (loss) arising during period (net of tax of: $0.3, $10.8, and $(7.3)) | 1.8 | 31.8 | (20.6) |
Amounts reclassified from accumulated other comprehensive income (loss) | 3.1 | (13.3) | 3.3 |
Total other comprehensive income (loss), net of tax | 3.3 | 24.6 | (20.4) |
Comprehensive income | $ 295.8 | $ 352.9 | $ 297.9 |
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Consolidated Statements of Comprehensive Income (Loss) | |||
Prior service credit arising during period, tax | $ 0.2 | $ 0.0 | $ 0.0 |
Net loss arising during period, tax (benefit) expense | $ 0.3 | $ 10.8 | $ (7.3) |
Consolidate Statements of Shareholders' Equity (Parenthetical)) - $ / shares |
12 Months Ended | ||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Consolidated Statement of Stockholders' Equity | |||
Dividends on ordinary shares | $ 1.56 | $ 1.38 | $ 0.9 |
Organization and Business Activities |
12 Months Ended |
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Dec. 31, 2018 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Organization and Business Activities | NOTE 1—ORGANIZATION AND BUSINESS ACTIVITIES Organization On June 3, 2010, Bain Capital Everest Manager Holding SCA, an affiliate of Bain Capital (which is referred to as “the former Parent”), was formed through investment funds advised or managed by Bain Capital. Dow Europe Holding B.V. (together with The Dow Chemical Company, “Dow”) retained an indirect ownership interest in the former Parent. Trinseo S.A. (“Trinseo,” and together with its subsidiaries, the “Company”) was also formed on June 3, 2010, incorporated under the existing laws of the Grand Duchy of Luxembourg. At that time, all ordinary shares of Trinseo were owned by the former Parent. On June 17, 2010, Trinseo acquired 100% of the former Styron business from Dow (the “Acquisition”), at which time the Company commenced operations. During the year ended December 31, 2016, the former Parent sold 37,269,567 ordinary shares of the Company in a series of secondary offerings to the market. As such, the former Parent no longer holds an ownership interest in the Company. Business Activities The Company is a leading global materials company engaged in the manufacturing and marketing of synthetic rubber, latex binders, and plastics, including various specialty and technologically differentiated products. The Company develops synthetic rubber, latex binders, and plastics products that are incorporated into a wide range of products throughout the world, including tires and other products for automotive applications, carpet and artificial turf backing, coated 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, 2018, the Company’s production facilities included 30 manufacturing plants (which included a total of 75 production units) at 23 sites across 12 countries, including its joint venture. Additionally, as of December 31, 2018, the Company operated 10 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 six segments, Latex Binders, Synthetic Rubber, Performance Plastics, Polystyrene, Feedstocks, and Americas Styrenics. These segments were realigned effective January 1, 2018 from the Company’s prior segmentation. Refer to Note 19 for further information regarding the Company’s segments. |
Basis of Presentation and Summary of Significant Accounting Policies |
12 Months Ended |
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Dec. 31, 2018 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
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, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 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 did not have a material impact on the Company’s financial position, results of operations, or cash flows. Refer to the discussion below under “Recent Accounting Guidance” as well as to Notes 9 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, 2018 and 2017, 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, 2018 and 2017, 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. The CCS were initially designated as a hedge effective September 1, 2017 and were subsequently re-designated as a net investment hedge in conjunction with the Company’s adoption of the new hedge accounting guidance effective April 1, 2018, as described below in the section “Recent Accounting Guidance.” 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 (income), net” in the consolidated statements of operations. For the years ended December 31, 2018 and 2016, the Company recognized net foreign exchange transaction losses of $15.8 million and $5.5 million, respectively, while for the year ended December 31, 2017, the Company recognized net foreign exchange transaction gains of $20.6 million. 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, 2018 and 2017, 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. Estimated future incremental operations, maintenance, and management costs directly related to remediation are accrued when such costs are probable and reasonably estimable.
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 less 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, 2018 and 2017, $15.1 million and $11.6 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. 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. The Company also capitalizes interest as a component of the cost of capital assets constructed for its own use.
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. 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. Refer to Note 20 for information on the Company’s assets classified as held-for-sale as of December 31, 2018.
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 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, 2018, 2017, and 2016. 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, 2018, 2017, and 2016. 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. 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.
Sales As described below in the section “Recent Accounting Guidance,” effective January 1, 2018, the Company adopted accounting guidance on the recognition of revenue from contracts with customers, which impacted the Company’s accounting policies related to its recognition of sales and certain other revenues. Sales are recognized at a point when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services when the Company’s related performance obligation is satisfied under the terms of the contract. 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 fulfilment 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.
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 $56.0 million, $54.3 million, and $50.1 million for the years ended December 31, 2018, 2017, and 2016, respectively. The Company expenses promotional and advertising costs as incurred to SG&A expenses. Total promotional and advertising expenses were $1.6 million, $1.5 million, and $3.0 million for the years ended December 31, 2018, 2017, and 2016, respectively. Restructuring charges included within SG&A expenses were $9.3 million, $8.0 million, and $23.9 million for the years ended December 31, 2018, 2017, and 2016, 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. Prior to the divestiture of its latex binders and polycarbonate (“PC”) & compounding businesses in Brazil in 2016, as described in Note 4, the Company also provided health care and life insurance benefits to retired employees in Brazil. 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 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 ultimately expected to vest. The Company’s policy election is to recognize forfeitures as incurred, rather than estimating forfeitures in advance. 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 is 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 is 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 May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) jointly issued guidance (“Topic 606”) which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance, which the FASB issued certain clarifying updates for, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted Topic 606 effective January 1, 2018, electing to apply the modified retrospective approach only to contracts that were not completed as of the date of initial application at the individual contract level, rather than applying the portfolio approach. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting standards (“Topic 605”). As a result of the Company’s implementation procedures, the Company has determined that the cumulative effect to retained earnings from initially applying Topic 606 was immaterial and therefore, no adjustment was recorded. Furthermore, based on current contracts with customers, the Company does not expect the adoption of the new revenue standard to have a material impact to its financial statements on an ongoing basis. Refer to Note 3 for disclosure requirements in effect as a result of this adoption. In February 2016, the FASB issued guidance related to leases that outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize on the consolidated balance sheets lease liabilities and corresponding right-of-use assets for all leases with terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. Although early adoption is permitted, the Company will adopt this new guidance on the effective date for public companies of January 1, 2019. The Company has completed its risk assessment and scoping procedures for the adoption of this guidance through a number of procedures, including conducting surveys with relevant stakeholders in the business, evaluating its known lease population and data constraints, and is in the process of assessing new disclosure requirements and completing the implementation of a third-party software solution to facilitate compliance with accounting and reporting requirements. The Company continues to review existing agreements for potential lease arrangements and to enhance and update business processes and controls related to the new guidance for leases. Collectively, these activities are expected to facilitate the Company's ability to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019. The new lease guidance requires a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial adoption. The Company has elected to apply the transition requirements at the January 1, 2019, effective date rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, the Company has elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, the Company, as a lessee, will account for non-lease and lease components in a contract as a single lease component for all asset classes. Additionally, the Company has not elected to exclude short term leases (term of 12 months or less) from its balance sheet presentation. While its evaluation is still being finalized, the Company estimates an increase of lease-related assets and liabilities ranging from $70.0 million to $100.0 million in the consolidated balance sheets as of January 1, 2019. The impact to the Company's consolidated statements of operations and consolidated statements of cash flows is not expected to be material. In March 2017, the FASB issued guidance that requires employers to present the service cost component of net periodic benefit cost in the same statement of operations line item as other employee compensation costs arising from services rendered during the period. The other components of net periodic benefit cost are to be presented outside of any subtotal of operating income. The Company adopted this guidance effective January 1, 2018 on a retrospective basis. As a result of this adoption, the Company reclassified $13.7 million of net periodic benefit income for the year ended December 31, 2017 and $7.4 million of net periodic benefit cost for the year ended December 31, 2016 from “Cost of sales” and “Selling, general and administrative expenses,” collectively, to “Other expense (income), net” within the consolidated statements of operations. In August 2017, the FASB issued significant amendments to existing hedge accounting guidance. Among other things, this guidance intends to make more financial and nonfinancial hedging strategies eligible for hedge accounting, amends presentation and disclosure requirements, and changes how companies assess effectiveness. Specifically, the guidance eliminates the requirement to separately measure and record ineffectiveness for cash flow and net investment hedges. The Company adopted this guidance effective April 1, 2018. Based upon the Company’s hedging portfolio, this adoption did not result in any cumulative-effect adjustments to retained earnings. The amended presentation and disclosure guidance will be applied prospectively. Refer to Note 12 for further information regarding the impacts of this adoption as well as additional disclosures required by this standard. In February 2018, the FASB issued guidance to address certain stranded income tax effects in AOCI resulting from the enactment of the U.S. “Tax Cuts and Jobs Act” signed into law on December 22, 2017. The amendment provides financial statement preparers with an option to reclassify stranded tax effects within AOCI, resulting from the reduction of the U.S. federal corporate income tax rate, to retained earnings. The Company adopted this guidance effective October 1, 2018, applying the available accounting policy election to reclassify the stranded tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings in the period of adoption. As a result, the Company recorded a one-time reclassification of less than $0.1 million of stranded tax amounts from “Accumulated other comprehensive loss” to “Retained earnings” in the consolidated balance sheet as of December 31, 2018. In August 2018, the FASB issued guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension plans or other postretirement plans. This amendment is effective for public companies for fiscal years ending after December 15, 2020. Early adoption is permitted, and the provisions of the amendment should be applied on a retrospective basis to all periods presented. The Company is currently assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the 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. This standard update is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Entities may choose to adopt the new guidance either retrospectively or prospectively to eligible costs incurred on or after the date first applied. The Company is currently assessing the impact of adopting this guidance on its consolidated financial statements. |
Net Sales |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales | NOTE 3—NET SALES As discussed in Note 2, effective January 1, 2018, the Company adopted accounting guidance, Topic 606, issued by the FASB related to the recognition of revenue from contracts with customers. The Company’s accounting policy and practical expedient elections related to revenue recognition, including those elected as a result of the adoption of Topic 606, are summarized as follows. Sales are recognized at a point when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, and when the Company’s related performance obligation is satisfied under the terms of the contract. 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 fulfilment 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. The Company has elected to apply the following practical expedients as allowed under Topic 606:
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, 2018, 2017, and 2016.
(1) As the Company has adopted Topic 606 utilizing the modified retrospective approach, amounts for the years ended December 31, 2017 and 2016 above are disclosed as recognized under Topic 605. For all material contracts with customers, control is transferred and sales are recognized 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, 2018), 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, 2018, the impact of recognizing changes in selling prices related to prior periods was immaterial. |
Acquisitions and Divestitures |
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Acquisitions and Divestitures | NOTE 4—ACQUISITIONS AND DIVESTITURES The Acquisition The Company accounted for the Acquisition (as discussed in Note 1) under the purchase method of accounting, whereby the purchase price paid, net of working capital adjustments, was allocated to the acquired assets and liabilities at fair value. As part of the Acquisition, the Company has been indemnified for various tax matters, including income tax and value add taxes, as well as legal liabilities which have been incurred prior to the Acquisition. Conversely, certain tax matters which the Company has benefitted from are subject to reimbursement by Trinseo to Dow. These amounts have been estimated and provisional amounts have been recorded based on the information known during the measurement period; however, these amounts remain subject to change based on the completion of the Company’s annual statutory filings, tax authority review as well as a final resolution with Dow on amounts due to and due from the Company. Management believes the Company’s estimates and assumptions are reasonable under the circumstances; however, settlement negotiations or changes in estimates around pre-acquisition indemnifications could result in a material impact on the consolidated financial statements. Acquisition of API Plastics On July 10, 2017, the Company acquired 100% of the equity interest of API Applicazioni Plastiche Industriali S.p.A (“API Plastics”) a privately held company. The gross purchase price for the acquisition was $90.6 million, inclusive of $8.4 million of cash acquired, yielding a net purchase price of $82.3 million, all of which was paid for in the year ended December 31, 2017. API Plastics, based in Mussolente, Italy, is a manufacturer of soft-touch polymers and bioplastics, such as thermoplastic elastomers (“TPEs”). TPEs can be molded over rigid plastics such as acrylonitrile-butadiene-styrene (“ABS”) and PC/ABS, which presents opportunities for complementary technology product offerings within the Performance Plastics segment. The acquisition was funded through existing cash on hand. The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill. The Company calculated the fair value of the assets acquired using the income and cost approaches (or a combination thereof). Fair values were determined based on Level 3 inputs including estimated future cash flows, discount rates, royalty rates, growth rates, sales projections, retention rates and terminal values, all of which require significant management judgment. During the third quarter of 2018, the Company finalized the purchase price allocation for API Plastics, which is summarized in the table below.
Divestiture of Brazil Business During the second quarter of 2016, the Company signed a definitive agreement to sell Trinseo do Brasil Comercio de Produtos Quimicos Ltda. (“Trinseo Brazil”), its primary operating entity in Brazil which included both a latex binders and PC & Compounding business. Under the agreement of sale, which closed on October 1, 2016, Trinseo Brazil was sold to a single counterparty, for a selling price that is subject to certain contingent consideration payments, which could be paid by the buyer over a five-year period subsequent to the closing date, based on the results of the Trinseo Brazil latex binders business during that time. During the year ended December 31, 2018, the Company recognized $1.0 million of consideration earned for the performance of the transferred latex binders business, of which $0.5 million was received in cash. As a result of this agreement, during the year ended December 31, 2016, the Company recorded impairment charges for the estimated loss on sale of $15.1 million within “Other expense (income), net” in the consolidated statement of operations. The $15.1 million charge primarily related to the unrecoverable net book value of property, plant and equipment along with certain working capital balances, and also included $0.4 million of goodwill written off with the sale (entirely attributable to the Latex Binders segment). This charge was allocated as $9.4 million, $4.9 million, and $0.7 million to the Performance Plastics segment, the Latex Binders segment, and Corporate, respectively. During the years ended December 31, 2017 and 2016, the Company received $1.7 million and $1.8 million, respectively, in proceeds from the sale of these businesses.
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Investments in Unconsolidated Affiliates |
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Investments in Unconsolidated Affiliates | NOTE 5—INVESTMENTS IN UNCONSOLIDATED AFFILIATES During the year ended December 31, 2018, the Company had one joint venture: Americas Styrenics, a styrene and polystyrene joint venture with Chevron Phillips Chemical Company LP. Previously, the Company also had a 50% share in Sumika Styron Polycarbonate Limited (“Sumika Styron Polycarbonate,” a PC joint venture with Sumitomo Chemical Company Limited), until the sale of the Company’s investment in the joint venture during the first quarter of 2017, as discussed further below. Investments held in unconsolidated affiliates are accounted for by the equity method. The results of Americas Styrenics are included within its own reporting segment. The results of Sumika Styron Polycarbonate were included within the Performance Plastics segment prior to the sale of this investment. Equity in earnings from unconsolidated affiliates was $144.1 million, $123.7 million, and $144.7 million for the years ended December 31, 2018, 2017, and 2016, respectively. Both of the unconsolidated affiliates are privately held companies; therefore, quoted market prices for their stock are not available. The summarized financial information of the Company’s unconsolidated affiliates is shown below. This table includes summarized financial information for Sumika Styron Polycarbonate through the date of sale in January 2017.
Sales to unconsolidated affiliates for the years ended December 31, 2018, 2017, and 2016 were $0.0 million, $3.6 million, and $4.2 million, respectively. Purchases from unconsolidated affiliates were $91.5 million, $78.8 million, and $157.4 million for the years ended December 31, 2018, 2017, and 2016, respectively. As of December 31, 2018 and 2017, respectively, $0.1 million and $0.1 million due from unconsolidated affiliates was included in “Accounts receivable, net of allowance” and $5.4 million and $4.7 million due to unconsolidated affiliates was included in “Accounts payable” in the consolidated balance sheets. Americas Styrenics As of December 31, 2018 and 2017, respectively, the Company’s investment in Americas Styrenics was $179.1 million and $152.5 million, which was $33.3 million, and $46.4 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 1.9 years as of December 31, 2018. The Company received dividends from Americas Styrenics of $117.5 million, $120.0 million, and $130.0 million for the years ended December 31, 2018, 2017, and 2016, respectively. Sumika Styron Polycarbonate On January 31, 2017, the Company completed the sale of its 50% share in Sumika Styron Polycarbonate to Sumitomo Chemical Company Limited for total sales proceeds of $42.1 million. As a result, the Company recorded a gain on sale of $9.3 million during the year ended December 31, 2017, which was included within “Other expense (income), net” in the consolidated statement of operations and was allocated entirely to the Performance Plastics segment. In addition, the parties have entered into a long-term agreement to continue sourcing PC resin from Sumika Styron Polycarbonate to the Company’s Performance Plastics segment. Due to the sale in January 2017, the Company no longer had an investment in Sumika Styron Polycarbonate as of December 31, 2017. The Company received dividends from Sumika Styron Polycarbonate of $9.8 million and $6.2 million for the years ended December 31, 2017 and 2016, respectively. |
Accounts Receivable |
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Accounts Receivable | NOTE 6—ACCOUNTS RECEIVABLE Accounts receivable consisted of the following:
For the years ended December 31, 2018, 2017, and 2016, the Company recognized bad debt expense of $0.6 million, $1.5 million, and $1.0 million, respectively. |
Inventories |
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Inventories | NOTE 7—INVENTORIES Inventories consisted of the following:
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Property, Plant and Equipment | NOTE 8—PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following:
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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, 2016 through December 31, 2018:
Goodwill impairment testing is performed annually as of October 1. In 2018, 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, 2018, 2017, and 2016.
Other Intangible Assets The following table provides information regarding the Company’s other intangible assets as of December 31, 2018 and 2017:
Amortization expense related to finite-lived intangible assets totaled $29.7 million, $27.0 million, and $21.3 million, for the years ended December 31, 2018, 2017, and 2016, 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:
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Accounts Payable | NOTE 10—ACCOUNTS PAYABLE Accounts payable consisted of the following:
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Debt |
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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, 2018 and 2017.
Total interest expense, net recognized during the years ended December 31, 2018, 2017, and 2016, was $46.4 million, $70.1 million, and $75.0 million, respectively, of which $4.5 million, $5.1 million, and $5.8 million, respectively, represented amortization of deferred financing fees and debt discounts. Total accrued interest on outstanding debt as of December 31, 2018 and 2017 was $4.4 million and $9.3 million, respectively, excluding the impact of the CCS. Accrued interest is recorded within “Accrued expenses and other current liabilities” on the consolidated balance sheets.
2020 Senior Credit Facility On May 5, 2015, Trinseo Materials Operating S.C.A. and Trinseo Materials Finance, Inc. (together, the “Issuers” or the “Borrowers”), both wholly-owned subsidiaries of the Company, entered into a senior secured credit agreement, which provided senior secured financing of up to $825.0 million (the “2020 Senior Credit Facility”). The 2020 Senior Credit Facility provided for senior secured financing consisting of a (i) $325.0 million revolving credit facility, with a $25.0 million swingline subfacility and a $35.0 million letter of credit subfacility (the “2020 Revolving Facility”) maturing in May 2020 and (ii) $500.0 million senior secured term loan B facility maturing in November 2021 (the “2021 Term Loan B”). In September 2017, upon completion of the refinancing transactions discussed below, the Company terminated the 2020 Senior Credit Facility. Prior to this termination, the Company had no outstanding borrowings under the 2020 Revolving Facility and had $490.0 million outstanding under the 2021 Term Loan B, excluding the unamortized original issue discount. As a result of this termination, the Company recognized a $0.8 million loss on extinguishment of long-term debt during the year ended December 31, 2017, comprised entirely of the write-off of a portion of the existing unamortized deferred financing fees and unamortized original issue discount related to the 2021 Term Loan B. The remaining unamortized deferred financing fees and unamortized original issue discount for both the 2020 Revolving Facility and 2021 Term Loan B remain capitalized and are being amortized along with new deferred financing fees over the life of the new facilities, as discussed in further detail below. Senior Credit Facility On September 6, 2017, the Issuers entered into a new 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 (income), net” in the consolidated statement of operations. The remaining $11.1 million of fees were capitalized and recorded within “Long-term debt, net of unamortized deferred financing fees” on the consolidated balance sheets. The capitalized fees are being amortized along with the remaining $8.1 million of unamortized deferred financing fees from the 2021 Term Loan B (defined below) over the seven-year term of the 2024 Term Loan B using the effective interest method. Fees incurred in connection with the issuance of the 2022 Revolving Facility were $0.8 million, which were capitalized and recorded within “Deferred charges and other assets” on the consolidated balance sheets, and are being amortized along with the remaining $4.0 million of unamortized deferred financing fees from the 2020 Revolving Facility over the five-year term of the 2022 Revolving Facility using the straight-line method. As of December 31, 2018, the 2024 Term Loan B bears an interest rate of the London Interbank Offered Rate (“LIBOR”) plus 2.00%, subject to a 0.00% LIBOR floor, which has been the effective rate since May 22, 2018, when the Issuers repriced the interest rate from the initial rate of LIBOR plus 2.50%, subject to a 0.00% LIBOR floor. The repricing did not affect any of the other terms of the 2024 Term Loan B; however, as a result of the repricing, the Company recognized a $0.2 million loss on extinguishment of long-term debt during the year ended December 31, 2018, comprised entirely of the write-off of a portion of the existing unamortized deferred financing fees related to the 2024 Term Loan B. Fees incurred in connection with the repricing were $1.1 million, of which $0.5 million were expensed and included within “Other expense (income), net” in the consolidated statement of operations during the year ended December 31, 2018 and the remaining $0.6 million were capitalized and recorded within “Long-term debt, net of unamortized deferred financing fees” on the consolidated balance sheets. The capitalized fees associated with the repricing are being amortized along with the remaining unamortized deferred financing fees related to the 2024 Term Loan B over its original seven-year term. The 2024 Term Loan B requires scheduled quarterly payments in amounts equal to 0.25% of the original principal amount of the 2024 Term Loan B, with the balance to be paid at maturity. As of December 31, 2018 and 2017, $7.0 million of the scheduled future payments related to this facility were classified as current debt on the Company’s consolidated balance sheets. Loans under the 2022 Revolving Facility, at the Borrowers’ option, may be maintained as (a) LIBOR loans, which bear interest at a rate per annum equal to LIBOR plus the applicable margin (as defined in the Credit Agreement), if applicable, or (b) base rate loans which bear interest at a rate per annum equal to the base rate plus the applicable margin (as defined in the Credit Agreement). The Senior Credit Facility is collateralized by a security interest in substantially all of the assets of the Borrowers, and the guarantors thereunder, including Trinseo Materials S.à r.l., certain Luxembourg subsidiaries and certain foreign subsidiaries organized in the United States, The Netherlands, Hong Kong, Singapore, Ireland, Germany, and Switzerland. The Senior Credit Facility requires the Borrowers and their restricted subsidiaries to comply with customary affirmative, negative, and financial covenants, including limitations on their abilities to incur liens; make certain loans and investments; incur additional debt (including guarantees or other contingent obligations); merge, consolidate liquidate or dissolve; transfer or sell assets; pay dividends and other distributions to shareholders or make certain other restricted payments; enter into transactions with affiliates; restrict any restricted subsidiary from paying dividends or making other distributions or agree to certain negative pledge clauses; materially alter the business they conduct; prepay certain other indebtedness; amend certain material documents; and change their fiscal year. The 2022 Revolving Facility contains a financial covenant that requires compliance with a springing first lien net leverage ratio test. If the outstanding balance under the 2022 Revolving Facility exceeds 30% of the $375.0 million borrowing capacity (excluding undrawn letters of credit up to $10.0 million and cash collateralized letters of credit) at a quarter end, then the Borrowers’ first lien net leverage ratio may not exceed 2.00 to 1.00. 2022 Senior Notes On May 5, 2015, the Issuers executed an indenture pursuant to which they issued $300.0 million aggregate principal amount of 6.750% senior notes due May 1, 2022 (the “USD Notes”) and €375.0 million aggregate principal amount of 6.375% senior notes due May 1, 2022 (the “Euro Notes,” and together with the USD Notes, the “2022 Senior Notes”). On September 7, 2017, using the net proceeds from the issuance of the 2024 Term Loan B discussed above, together with the net proceeds from the issuance of the 2025 Senior Notes (defined and discussed below), and available cash, the Company redeemed all outstanding borrowings under the 2022 Senior Notes, totaling $746.0 million in USD-equivalent principal, together with a total combined call premium of $53.0 million (with a redemption price of approximately 106.572% on the USD Notes and a redemption price of approximately 107.459% on the Euro Notes), and accrued and unpaid interest thereon of $17.0 million. As a result of this redemption, the Company recorded a loss on extinguishment of long-term debt of $64.5 million during the year ended December 31, 2017, which was comprised of the $53.0 million call premium and the write-off of $11.5 million of unamortized deferred financing fees related to the 2022 Senior Notes. 2025 Senior Notes On August 29, 2017, the Issuers executed an indenture (the “Indenture”) pursuant to which they issued $500.0 million aggregate principal amount of 5.375% senior notes due 2025 (the “2025 Senior Notes”) in a 144A private transaction exempt from the registration requirements of the Securities Act of 1933, as amended. Interest on the 2025 Senior Notes is payable semi-annually on May 3 and November 3 of each year, commencing on May 3, 2018. The 2025 Senior Notes mature on September 1, 2025. Fees and expenses incurred in connection with the issuance of the 2025 Senior Notes in 2017 were $9.7 million, which were capitalized and recorded within “Long-term debt, net of unamortized deferred financing fees” on the consolidated balance sheets, and are being amortized over the eight-year term of the 2025 Senior Notes using the effective interest method. At any time prior to September 1, 2020, the Issuers may redeem the 2025 Senior Notes in whole or in part, at their option, at a redemption price equal to 100% of the principal amount of such notes plus the relevant applicable premium as of, and accrued and unpaid interest to, but not including, the redemption date. At any time and from time to time after September 1, 2020, the Issuers may redeem the 2025 Senior Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, on the notes redeemed to, but not including, the redemption date:
At any time prior to September 1, 2020, the Issuers may redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes at a redemption price equal to 105.375%, plus accrued and unpaid interest to, but not including, the redemption date, with the aggregate gross proceeds from certain equity offerings. The 2025 Senior Notes are the Issuers’ senior unsecured obligations and rank equally in right of payment with all of the Issuers’ existing and future indebtedness that is not expressly subordinated in right of payment thereto. The 2025 Senior Notes will be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto and effectively junior to (a) the Issuers’ existing and future secured indebtedness, including the Company’s Accounts Receivable Securitization Facility (defined below) and the Issuers’ Senior Credit Facility, to the extent of the value of the collateral securing such indebtedness and (b) all existing and future liabilities of the Issuers’ non-guarantor subsidiaries. The Indenture contains customary covenants that, among other things, limit the Issuers’ and certain of their subsidiaries’ ability to incur additional indebtedness and guarantee indebtedness; pay dividends on, redeem or repurchase capital shares; make investments; prepay certain indebtedness; create liens; enter into transactions with the Issuers’ affiliates; designate the Issuers’ subsidiaries as Unrestricted Subsidiaries (as defined in the Indenture); and consolidate, merge, or transfer all or substantially all of the Issuers’ assets. The covenants are subject to a number of exceptions and qualifications. Certain of these covenants will be suspended during any period of time that (1) the 2025 Senior Notes have investment grade ratings (as defined in the Indenture) and (2) no default has occurred and is continuing under the Indenture. In the event that the 2025 Senior Notes are downgraded to below an investment grade rating, the Issuers and certain subsidiaries will again be subject to the suspended covenants with respect to future events. Accounts Receivable Securitization Facility In 2010, Styron Receivable Funding Ltd. (“SRF”), a VIE in which the Company is the primary beneficiary, executed an agreement for an accounts receivable securitization facility (the “Accounts Receivable Securitization Facility”). As of December 31, 2018, the Accounts Receivable Securitization Facility permits borrowings by two of the Company’s subsidiaries, Trinseo Europe GmbH (“TE”) and Trinseo Export GmbH (“Trinseo Export”), up to a total of $150.0 million and, pursuant to an amendment executed in September 2018, matures in September 2021. Under the Accounts Receivable Securitization Facility, TE and Trinseo Export sell their accounts receivable to SRF. In turn, SRF may utilize these receivables as collateral to borrow from commercial paper conduits in exchange for cash. The Company has agreed to continue servicing the receivables for SRF. If utilized as collateral by SRF, the conduits have a first priority perfected security interest in such receivables and, as a result, the receivables will not be available to the creditors of the Company or its other subsidiaries. |
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Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | NOTE 12—DERIVATIVE INSTRUMENTS The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates and interest rate risk. To manage these risks, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts and interest rate swap agreements. The Company does not hold or enter into financial instruments for trading or speculative purposes. All derivatives are recorded in the consolidated balance sheets at fair value. Refer to Note 13 for fair value disclosures related to these instruments. As discussed in Note 2, the Company adopted new hedge accounting guidance effective April 1, 2018. The impacts of this adoption are discussed further below. Foreign Exchange Forward Contracts Certain subsidiaries have assets and liabilities denominated in currencies other than their respective functional currencies, which creates foreign exchange risk. The Company’s principal strategy in managing its exposure to changes in foreign currency exchange rates is to naturally hedge the foreign currency-denominated liabilities on its consolidated balance sheets against corresponding assets of the same currency such that any changes in liabilities due to fluctuations in exchange rates are offset by changes in their corresponding foreign currency assets. In order to further reduce its exposure, the Company also uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on its assets and liabilities denominated in certain foreign currencies. These derivative contracts are not designated for hedge accounting treatment. As of December 31, 2018, the Company had open foreign exchange forward contracts with a notional U.S. dollar equivalent absolute value of $444.0 million. The following table displays the notional amounts of the most significant net foreign exchange hedge positions outstanding as of December 31, 2018:
Open foreign exchange forward contracts as of December 31, 2018 have maturities occurring over a period of two months. Foreign Exchange Cash Flow Hedges The Company also enters into forward contracts with the objective of managing the currency risk associated with forecasted U.S. dollar-denominated raw materials purchases by one of its subsidiaries whose functional currency is the euro. By entering into these forward contracts, which are designated as cash flow hedges, the Company buys a designated amount of U.S. dollars and sells euros at the prevailing market rate to mitigate the risk associated with the fluctuations in the euro-to-U.S. dollar foreign currency exchange rate. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in AOCI to the extent effective, and reclassified to cost of sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. Open foreign exchange cash flow hedges as of December 31, 2018 have maturities occurring over a period of twelve months, and have a net notional U.S. dollar equivalent of $142.8 million. Interest Rate Swaps On September 6, 2017, the Company issued the 2024 Term Loan B, which bears an interest rate of LIBOR plus 2.00%, subject to a 0.00% LIBOR floor. In order to reduce the variability in interest payments associated with the Company’s variable rate debt, during the third quarter of 2017, the Company entered into certain interest rate swap agreements to convert a portion of these variable rate borrowings into a fixed rate obligation. These interest rate swap agreements are designated as cash flow hedges, and as such, the contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in AOCI to the extent effective, and reclassified to interest expense in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. As of December 31, 2018, the Company had open interest rate swap agreements with a net notional U.S. dollar equivalent of $200.0 million, which had an effective date of September 29, 2017 and mature over a period of five years. Under the terms of the swap agreements, the Company is required to pay the counterparties a stream of fixed interest payments at a rate of 1.81%, and in turn, receives variable interest payments based on one-month LIBOR (2.52% as of December 31, 2018) from the counterparties. Net Investment Hedge Through August 31, 2017, the Company had designated a portion (€280.0 million) of the original principal amount of the Company’s previous €375.0 million Euro Notes as a hedge of the foreign currency exposure of the Issuers’ net investment in certain European subsidiaries. Effective September 1, 2017, the Company de-designated the Euro Notes as a net investment hedge of the Issuers’ net investment in certain European subsidiaries, as the Euro Notes were redeemed on September 7, 2017 (refer to Note 11 for further information). Through the date of de-designation, this hedge was deemed to be highly effective, and changes in the Euro Notes’ carrying value resulting from fluctuations in the euro exchange rate were recorded as a cumulative foreign currency translation loss of $24.1 million within AOCI as of December 31, 2017. On August 29, 2017, the Issuers executed an indenture pursuant to which they issued the $500.0 million 5.375% 2025 Senior Notes. Subsequently, on September 1, 2017, the Company entered into certain fixed-for-fixed CCS, swapping U.S. dollar principal and interest payments on the newly issued 2025 Senior Notes for euro-denominated payments. Under the terms of the CCS, the Company notionally exchanged $500.0 million at an interest rate of 5.375% for €420.0 million at a weighted-average interest rate of 3.45% for approximately five years. On September 1, 2017, the Company designated the full notional amount of the CCS (€420.0 million) as a hedge of the Issuers’ net investment in certain European subsidiaries under the forward method, with all changes in the fair value of the CCS recorded as a component of AOCI, as the CCS were deemed to be highly effective hedges. A cumulative foreign currency translation loss of $38.0 million was recorded within AOCI related to the CCS through March 31, 2018. Effective April 1, 2018, in conjunction with the adoption of recently issued hedging accounting guidance (see Note 2 for further information), the Company elected as an accounting policy to re-designate the CCS as a net investment hedge (and any future similar hedges) under the spot method. As such, changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within AOCI, and will remain in AOCI until either the sale or substantially complete liquidation of the subsidiary. As of December 31, 2018, no gains or losses have been reclassified from AOCI into income related to the sale or substantially complete liquidation of the relevant subsidiaries. As an additional accounting policy election applied to similar hedges under this new standard, the initial value of any component excluded from the assessment of effectiveness is recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in the fair value of the excluded component and amounts recognized in income under that systematic and rational method is recognized in AOCI. Prior to the adoption of the new hedging accounting guidance on April 1, 2018, no components were excluded from the assessment of effectiveness for any of the Company’s existing net investment hedges. As of April 1, 2018, the initial excluded component value related to the CCS was $23.6 million, which is being amortized as a reduction of “Interest expense, net” in the consolidated statements of operations using the straight-line method over the remaining term of the CCS. Additionally, the periodic U.S. dollar and euro-denominated interest receipts and payments under the terms of the CCS are being accrued within “Interest expense, net” in the consolidated statements of operations. Summary of Derivative Instruments The following table presents the effect of the Company’s derivative instruments, including those not designated for hedge accounting treatment, on the consolidated statements of operations for the years ended December 31, 2018, 2017, and 2016:
The following table presents the effect of cash flow and net investment hedge accounting on AOCI for the years ended December 31, 2018, 2017, and 2016:
The Company recorded gains of $21.0 million and $3.7 million during the years ended December 31, 2018 and 2016, respectively, and losses of $19.2 million during the year ended December 31, 2017 from settlements and changes in the fair value of outstanding forward contracts (not designated as hedges). The gains and losses from these forward contracts offset net foreign exchange transaction losses of $15.8 million and $5.5 million during the years ended December 31, 2018 and 2016, respectively, and gains of $20.6 million during the year ended December 31, 2017, which resulted from the remeasurement of the Company’s foreign currency denominated assets and liabilities. The cash settlements of these foreign exchange forward contracts are included within operating activities in the consolidated statements of cash flows. The Company expects to reclassify in the next twelve months an approximate $3.4 million net gain from AOCI into earnings related to the Company’s outstanding foreign exchange cash flow hedges and interest rate swaps as of December 31, 2018 based on current foreign exchange rates. The following tables summarize the net unrealized gains and losses and balance sheet classification of outstanding derivatives recorded in the consolidated balance sheets:
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. As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis by counterparty within the consolidated balance sheets. Refer to Notes 13 and 21 for further information regarding the fair value of the Company’s derivative instruments and the related changes in AOCI. |
Fair Value Measurements |
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Fair Value Measurements | NOTE 13—FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date. Level 1—Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
The following tables summarize the basis used to measure certain assets and liabilities at fair value on a recurring basis in the consolidated balance sheets at December 31, 2018 and 2017:
The Company uses an income approach to value its derivative instruments, utilizing discounted cash flow techniques, considering the terms of the contract and observable market information available as of the reporting date, such as interest rate yield curves and currency spot and forward rates. Significant inputs to the valuation for these derivative instruments are obtained from broker quotations or from listed or over-the-counter market data, and are classified as Level 2 in the fair value hierarchy. Fair Value of Debt Instruments The following table presents the estimated fair value of the Company’s outstanding debt not carried at fair value as of December 31, 2018 and 2017:
The fair value of the Company’s debt facilities above (each Level 2 securities) is determined using over-the-counter market quotes and benchmark yields received from independent vendors. There were no other significant financial instruments outstanding as of December 31, 2018 and 2017. |
Income Taxes |
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Income Taxes | NOTE 14—INCOME TAXES Income before income taxes earned within and outside the United States is shown below:
The provision for income taxes is composed of:
The effective tax rate on pre-tax income differs from the U.S. statutory rate due to the following:
Deferred income taxes reflect temporary differences between the valuation of assets and liabilities for financial and tax reporting:
As of December 31, 2018 and 2017, all undistributed earnings of foreign subsidiaries and affiliates are expected to be repatriated. Operating loss carryforwards amounted to $601.7 million in 2018 and $535.6 million in 2017. As of December 31, 2018, $32.5 million of the operating loss carryforwards were subject to expiration in 2019 through 2023, and $569.2 million of the operating loss carryforwards expire in years beyond 2023 or have an indefinite carryforward period. The Company had valuation allowances which were related to the realization of recorded tax benefits on tax loss carryforwards, as well as other net deferred tax assets, primarily from subsidiaries in Luxembourg and China, of $167.6 million as of December 31, 2018 and $149.6 million as of December 31, 2017. For the years presented, a reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:
In regard to unrecognized tax benefits, the Company recognized expense related to interest and penalties of $0.2 million and $0.6 million during the years ended December 31, 2018 and 2016, respectively, whereas the Company recognized a benefit related to interest and penalties of $2.4 million during the year ended December 31, 2017. Interest and penalties related to unrecognized tax benefits was included as a component of income tax expense in the consolidated statements of operations. As of December 31, 2018 and 2017, the Company had $1.0 million and $0.9 million, respectively, accrued for interest and penalties. To the extent that the unrecognized tax benefits are recognized in the future, $4.4 million will impact the Company’s effective tax rate. As of December 31, 2018, the Company anticipates that it is reasonably possible that less than $1.0 million of unrecognized tax benefits, including the impact relating to accrued interest and penalties, could be realized within the next twelve months due to the expiration of the statute of limitations in certain jurisdictions. During the year ended December 31, 2017, the Company recorded a previously unrecognized tax benefit in the amount of $8.5 million, including interest and penalties, upon completion of the 2010 through 2013 audit with the German taxing authority. Tax years that remain subject to examination for the Company’s major tax jurisdictions are shown below.
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Commitments and Contingencies |
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Commitments and Contingencies | NOTE 15—COMMITMENTS AND CONTINGENCIES Leased Property The Company routinely leases premises for use as sales and administrative offices, warehouses and tanks for product storage, railcars, motor vehicles, and other equipment under operating leases. Rental expense for these leases was $18.5 million, $16.2 million, and $16.0 million during the years ended December 31, 2018, 2017, and 2016, respectively. Future minimum rental payments under operating leases with remaining non-cancelable terms in excess of one year are as follows:
Environmental Matters Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law, existing technologies and other information. As of December 31, 2018 and 2017, the Company had no accrued obligations for environmental remediation and restoration costs. Pursuant to the terms of the Acquisition, the pre-closing environmental conditions were retained by Dow and the Company has been indemnified by Dow from and against all environmental liabilities incurred or relating to the predecessor periods. There are several properties which the Company now owns on which Dow has been conducting investigation, monitoring, or remediation to address historical contamination. Those properties include Allyn’s Point, Connecticut, Dalton, Georgia, and Livorno, Italy. There are other properties with historical contamination that are owned by Dow that the Company leases for its operations, including its facilities in Midland, Michigan, Schkopau, Germany, and Terneuzen, The Netherlands. No environmental claims have been asserted or threatened against the Company, and the Company is not a potentially responsible party at any Superfund sites. Inherent uncertainties exist in the Company’s potential environmental liabilities primarily due to unknown conditions, whether future claims may fall outside the scope of the indemnity, changing governmental regulations and legal standards regarding liability, and evolving technologies for handling site remediation and restoration. In connection with the Company’s existing indemnification, the possibility is considered remote that environmental remediation costs will have a material adverse impact on the consolidated financial statements. Purchase Commitments In the normal course of business, the Company has certain raw material purchase contracts where it is required to purchase certain minimum volumes at current market prices. These commitments range from one to three years. The following table presents the fixed and determinable portion (based on current pricing indexes) of the minimum obligation under the Company’s purchase commitments as of December 31, 2018:
In certain raw material purchase contracts, the Company has the right to purchase less than the required minimums and pay a liquidated damages fee, or, in case of a permanent plant shutdown, to terminate the contracts. In such cases, these obligations would be less than the obligations shown in the table above. The Company has service agreements with Dow, some of which contain fixed annual fees. Refer to Note 18 for further information. Litigation Matters From time to time, the Company may be subject to various legal claims and proceedings incidental to the normal conduct of business, relating to such matters as product liability, antitrust/competition, past waste disposal practices and release of chemicals into the environment. While it is impossible at this time to determine with certainty the ultimate outcome of these routine claims, the Company does not believe that the ultimate resolution of these claims will have a material adverse effect on the Company’s results of operations, financial condition or cash flow. Legal costs, including those legal costs expected to be incurred in connection with a loss contingency, are expensed as incurred. European Commission Request for Information On June 6, 2018, Trinseo Europe GmbH, a subsidiary of the Company, received a Request for Information in the form of a letter from the European Commission Directorate General for Competition (the “European Commission”) related to styrene monomer commercial activity in the European Economic Area. In addition, the Company commenced an internal investigation into the matter and has discovered instances of inappropriate activity. The Company is fully cooperating with the European Commission and has delivered all requested documents responsive to its information request. Notwithstanding the delivery of the Company’s response to the European Commission, this matter remains open with the European Commission. Based on its findings, the European Commission may decide to: (i) require further information; (ii) conduct unannounced raids of the Company’s premises; (iii) adopt decisions imposing fines, interim measures to halt immediately any anti-competitive behavior, orders for the Company to cease anti-competitive activities, and/or certain behavioral or structural commitments from the Company; or (iv) take no further action. As a result of the above factors, the Company is unable to predict the ultimate outcome of this matter or estimate the range of reasonably possible losses that could be incurred. However, any potential losses incurred could be material to the Company’s results of operations, balance sheet, and cash flows for the period in which they are resolved or become probable and reasonably estimable. |
Pension Plans and Other Postretirement Benefits |
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Pension Plans and Other Postretirement Benefits | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans and Other Postretirement Benefits | NOTE 16—PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS Defined Benefit Pension Plans Many of the Company’s employees are participants in various defined benefit pension plans which are administered and sponsored by the Company and are primarily in Germany, Switzerland, The Netherlands, Belgium, China, Indonesia, Taiwan, and Japan. Company employees who were not previously associated with the acquired pension and postretirement plans are not eligible for enrollment in a number of these plans. Pension benefits are typically based on length of service and the employee’s final average compensation. Other Postretirement Benefits The Company provides certain health care and life insurance benefits to Dow-heritage employees in the United States when they retire. Prior to the 2016 divestiture of the Company’s latex binders and PC & Compounding businesses in Brazil (refer to Note 4 for more information), the Company also provided health care and life insurance benefits to retired employees in Brazil. In the U.S., the plan provides for health care benefits, including hospital, physicians’ services, drug and major medical expense coverage. In general, the plan applies to employees hired by Dow before January 1, 2008 and transferred to the Company in connection with the Acquisition, and who are at least 50 years old with 10 years of service. The plan allows for spouse coverage as well. If an employee was hired on or before January 1, 1993, the coverage extends past age 65. For employees hired after January 1, 1993 but before January 1, 2008, coverage ends at age 65. The Company reserves the right to modify the provisions of the plan at any time, including the right to terminate, and does not guarantee the continuation of the plan or its provisions. Prior to the divestiture of operations in Brazil in 2016, the Company provided an insured medical benefit to all employees and eligible dependents under Brazil’s healthcare legislation, which grants the right to employees (and their beneficiaries) who have contributed towards the medical plan to extend medical coverage upon retirement or in case of involuntary dismissal. The extended medical plan must include the same level of coverage and other conditions offered to active employees, whereas former employees must assume 100% of the premium cost. Assumptions The weighted-average assumptions used to determine pension plan obligations and net periodic benefit costs are provided below:
The weighted-average assumptions used to determine other postretirement benefit (“OPEB”) obligations and net periodic benefit costs are provided below:
The Company determines the discount rate used to measure plan liabilities as of the December 31 measurement date for the pension and postretirement benefit plans. The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year. The Company sets its rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits. The Company uses a full yield curve approach in the estimation of the future service and interest cost components of net periodic benefit cost for its defined benefit pension and other postretirement benefit plans by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The expected long-term rate of return on plan assets is determined by performing a detailed analysis of key economic and market factors impacting historical returns for each asset class and formulating a projected return based on factors in the current environment. Factors considered include, but are not limited to, inflation, real economic growth, interest rate yield, interest rate spreads, and other valuation measures and market metrics. The expected long-term rate of return for each asset class is then weighted based on the strategic asset allocation approved by the governing body for each plan. The historical experience with the pension fund asset performance is also considered. A 1% change in the assumed health care cost trend rate would have had a nominal effect on both service and interest costs, but would have resulted in an approximate $0.3 million impact to the projected benefit obligation. The net periodic benefit costs for the pension and other postretirement benefit plans for the years ended December 31, 2018, 2017, and 2016 were as follows:
The changes in the pension benefit obligations and the fair value of plan assets and the funded status of all significant plans for the years ended December 31, 2018 and 2017 were as follows:
The net amounts recognized in the consolidated balance sheets as of December 31, 2018 and 2017 were as follows:
Approximately $3.1 million and $1.1 million of net loss and net prior service credit, respectively, for the defined benefit pension plans and $0.4 million and less than $0.1 million of net gain and net prior service credit, respectively, for other postretirement benefit plans will be amortized from AOCI to net periodic benefit cost in 2019. The estimated future benefit payments, reflecting expected future service, as appropriate, are presented in the following table:
The Company estimates it will make cash contributions, including benefit payments for unfunded plans, of $6.1 million in 2019 to the defined benefit pension plans. The following information relates to pension plans with projected and accumulated benefit obligations in excess of the fair value of plan assets as of December 31, 2018 and 2017:
Plan Assets As of December 31, 2018 and 2017, plan assets totaled $138.5 million and $140.1 million, respectively, consisting of investments in insurance contracts. Investments in the pension plan insurance were valued utilizing unobservable inputs, which are contractually determined based on cash surrender values, returns, fees, and the present value of the future cash flows of the contracts. Insurance contracts are classified as Level 3 investments. Changes in the fair value of these Level 3 investments during the years ended December 31, 2018 and 2017 are included in the “Change in plan assets” table above. Concentration of Risk The Company mitigates the credit risk of investments by establishing guidelines with investment managers that limit investment in any single issue or issuer to an amount that is not material to the portfolio being managed. These guidelines are monitored for compliance both by the Company and external managers. Credit risk related to derivative activity is mitigated by utilizing multiple counterparties and through collateral support agreements. Supplemental Employee Retirement Plan The Company established a non-qualified supplemental employee retirement plan in 2010. The net benefit costs recognized for this plan during the years ended December 31, 2018, 2017, and 2016 were $0.8 million, $1.1 million, and $1.1 million, respectively. Benefit obligations under this plan were $15.5 million and $15.3 million as of December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, the amounts of net loss included in AOCI were $0.3 million and $0.9 million, respectively, with $0.5 million and $0.9 million amortized from AOCI into net periodic benefit costs during the years ended December 31, 2018 and 2017, respectively. Approximately $0.3 million is expected to be amortized from AOCI into net periodic benefit cost in 2019. Based on the Company’s current estimates, the estimated future benefit payments under this plan, reflecting expected future service, as appropriate, are presented in the following table:
Defined Contribution Plans The Company also offers defined contribution plans to eligible employees in the U.S. and in other countries, including Hong Kong, Korea, The Netherlands, Indonesia, and the United Kingdom. The defined contribution plans are comprised of a non-discretionary elective matching contribution component as well as a discretionary non-elective contribution component. Employees participate in the non-discretionary component by contributing a portion of their eligible compensation to the plan, which is partially matched by the Company. Non-elective contributions are made at the discretion of the Company and are based on a combination of eligible employee compensation and performance award targets. During the years ended December 31, 2018, 2017, and 2016, the Company contributed $7.9 million, $8.4 million, and $8.6 million, respectively, to the defined contribution plans. Multiemployer Plans The Company also has a multiemployer plan in The Netherlands for a closed population of employees. The Company’s contributions to the plan are generally determined as a percentage of the participants’ salaries. During the year ended December 31, 2018, the Company recorded expense of $4.5 million related to the plan and made contributions of $3.8 million to the plan. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | NOTE 17—SHARE-BASED COMPENSATION Summary of Share-based Compensation Expense Share-based compensation expense, which is recorded within “Selling, general and administrative expenses” in the consolidated statements of operations, was as follows for the years ended December 31, 2018, 2017, and 2016. Share amounts in the tables below are in whole numbers, unless otherwise indicated.
2014 Omnibus Plan In connection with the IPO, the Company’s board of directors approved the 2014 Omnibus Plan, adopted on May 28, 2014, under which 4.5 million ordinary shares is the maximum number that may be delivered upon satisfaction of awards granted. Following the IPO, all equity-based awards granted by the Company have been granted under the 2014 Omnibus Plan, which provides for awards of share options, share appreciation rights, restricted shares, unrestricted shares, share units, performance awards, cash awards and other awards convertible into or otherwise based on ordinary shares of the Company. Since the IPO, the board of directors of the Company has approved equity award grants for certain directors, executives, and employees, including RSUs, option awards, and PSUs. Restricted Share Units The RSUs granted to executives and employees vest in full on the third anniversary of the date of grant, generally subject to the employee remaining continuously employed by the Company through the vesting date. RSUs granted to directors of the Company vest in full on the first anniversary of the date of grant. Upon a termination of employment due to an employee’s death or retirement or a termination of employment by the Company without cause in connection with a restructuring or redundancy or due to the employee’s disability prior to the vesting date, the RSUs will vest in full or in part, depending on the type of termination. In the event employment is terminated for cause, all unvested RSUs will be forfeited. When RSUs vest, shares are issued from the existing pool of treasury shares. Compensation cost for RSUs is measured at grant date based on the fair value of the award and is 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. Prior to November 2016, dividend and dividend equivalents did not accumulate on unvested RSUs. In November 2016, the board of directors approved an amendment to all outstanding RSUs, entitling each award holder to an amount equal to any cash dividend paid by the Company upon one ordinary share for each RSU held by the award holder (“dividend equivalents”). The dividend equivalents earned on the RSUs only include dividends paid after this amendment and the award holders have no right to receive the dividend equivalents unless and until the associated RSUs vest. The dividend equivalents are payable in cash and do not accrue interest. The impact of this amendment is immaterial to the consolidated financial statements. The following table summarizes the activity for RSUs during the year ended December 31, 2018:
The following table summarizes the weighted-average grant date fair value per share of RSUs granted during the years ended December 31, 2018, 2017, and 2016 as well as the total fair value of awards vested during those periods:
Option Awards The option awards, which contain an exercise term of nine years from the date of grant, vest in three equal annual installments beginning on the first anniversary of the date of grant, generally subject to the employee remaining continuously employed on the applicable vesting date. Upon a termination of employment due to the employee’s death or retirement or a termination of employment by the Company without cause in connection with a restructuring or redundancy or due to the employee’s disability prior to a vesting date, the option awards will vest in full or will continue to vest on the original vesting schedule, depending on the type of termination. In the event employment is terminated for cause, all vested and unvested option awards will be forfeited. When option awards are exercised, shares are issued from the existing pool of treasury shares. Compensation cost for option awards is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate service period utilizing graded vesting. The following table summarizes the activity for option awards during the year ended December 31, 2018:
During the years ended December 31, 2018, 2017, and 2016, the total intrinsic value of option awards exercised was $6.7 million, $21.4 million, and $0.4 million, respectively. The fair value for option awards is computed using the Black-Scholes pricing model, whose inputs and assumptions are determined as of the date of grant. Determining the fair value of the option awards requires considerable judgment, including estimating the expected term of said awards and the expected volatility of the price of the Company’s ordinary shares. Since the Company’s equity interests were privately held prior to the IPO in June 2014, there is limited publicly traded history of the Company’s ordinary shares. Until such time that the Company can determine expected volatility based solely on the publicly traded history of its ordinary shares, expected volatility used in the Black-Scholes model for option awards granted is based on a combination of the Company’s historical volatility and similar companies’ shares that are publicly traded. The expected term of option awards represents the period of time that option awards granted are expected to be outstanding. For all grants of option awards presented herein, the simplified method was used to calculate the expected term, given the Company’s limited historical exercise data. The risk-free interest rate for the periods within the expected term of option awards is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is estimated based on historical and expected dividend activity. The following are the weighted-average assumptions used within the Black-Scholes pricing model for grants during the years ended December 31, 2018, 2017, and 2016:
Utilizing the above assumptions, the weighted-average grant date fair value per option award granted in the years ended December 31, 2018, 2017, and 2016 was $22.29, $20.61, and $10.10, respectively. Performance Share Units PSUs, which are granted to executives, cliff vest on the third anniversary of the date of grant, generally subject to the executive remaining continuously employed by the Company through the vesting date and achieving certain performance conditions. The number of the PSUs that vest upon completion of the service period can range from 0% to 200% of the original grant, subject to certain limitations, contingent upon the Company’s total shareholder return during the performance period relative to a pre-defined set of industry peer companies. Upon a termination of employment due to the executive’s death or retirement, or termination in connection with a change in control or other factors prior to the vesting date, the PSUs will vest in full or in part, depending on the type of termination and the achievement of the performance conditions. Dividend equivalents accumulate on PSUs during the vesting period, are payable in cash, and do not accrue interest. When PSUs vest, shares will be issued from the existing pool of treasury shares. The following table summarizes the activity for PSUs during the year ended December 31, 2018:
The fair value for PSU awards is computed using a Monte Carlo valuation model, whose inputs and assumptions are determined as of the date of grant. Determining the fair value of the PSU awards requires considerable judgment, including estimating the expected volatility of the price of the Company’s ordinary shares, the correlation between the Company’s share price and that of its peer companies, and the expected rate of interest. The expected volatility for each grant is determined based on the historical volatility of the Company’s ordinary shares. The expected term of PSU awards represents the length of the performance period. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a duration equivalent to the performance period. The share price is the closing price of the Company’s ordinary shares on the grant date. The following are the weighted-average assumptions used within the Monte Carlo valuation model for grants during the years ended December 31, 2018 and 2017:
Utilizing the above assumptions, the total grant date fair value for PSU awards granted in the years ended December 31, 2018 and 2017 was $6.1 million and $3.9 million, respectively. Restricted Share Awards issued by the former Parent On June 17, 2010, the former Parent authorized the issuance of up to 750,000 of its shares in restricted share awards to certain key members of management. Any related compensation associated with these awards has since been allocated to the Company from the former Parent. Since the adoption of the 2014 Omnibus Plan in May 2014, discussed further above, restricted share awards are no longer issued by the former Parent on behalf of the Company. During the year ended December 31, 2016, the former Parent completed the sale of its ordinary shares of the Company through secondary offerings, and as a result, no longer holds an ownership interest in the Company. Given that the former Parent sold its interest in the substantive assets of the Company, under the terms of the related securityholder agreements, vesting of all outstanding restricted share awards was fully accelerated into the year ended December 31, 2016. There will be no additional grants or expense related to these awards in future periods. Time-based Restricted Share Awards Prior to the full acceleration of vesting in 2016 noted above, the time-based restricted share awards issued by the former Parent contained a service-based condition that required continued employment with the Company. Generally, these awards were to vest over three to five years of service, with a portion (20% to 40%) cliff vesting after the first one or two years, and the remaining portion vesting ratably over the subsequent service period. Compensation cost for the time-based restricted share awards was measured at the grant date based on the fair value of the award and was recognized as expense over the appropriate service period utilizing graded vesting. The total fair value of time-based restricted share awards vested during the year ended December 31, 2016 was $4.7 million and there were no grants of time-based restricted share awards by the former Parent during the year ended December 31, 2016 as a result of the adoption of the 2014 Omnibus Plan. Modified Time-based Restricted Share Awards Prior to June 2014, the former Parent had issued performance-based restricted share awards that contained provisions wherein vesting was subject to the full satisfaction of both time and performance vesting criterion. On June 10, 2014, prior to the completion of the Company’s IPO, the former Parent entered into agreements to modify the outstanding performance-based restricted share awards to remove the performance-based vesting condition associated with such awards related to the achievement of certain investment returns (while maintaining the requirement for a change in control or IPO). This modification also changed the time-based vesting requirement associated with such awards to provide that any shares which would have satisfied the time-based vesting condition previously applicable on or prior to June 30, 2017 to instead vest on June 30, 2017, subject to the holder remaining continuously employed by the Company through such date. Any such awards that were subject to a time-based vesting condition beyond June 30, 2017 remained subject to those previous conditions. Henceforth, these awards have been described as modified time-based restricted share awards. With the completion of the Company’s IPO in June 2014, the remaining performance condition associated with these modified time-based restricted share awards was achieved. As a result, the Company began recognizing compensation expense on these awards, which was measured at the modification date based on their fair value. Prior to the full acceleration of vesting in 2016 noted above, compensation expense on these awards was being recognized over the appropriate service period utilizing graded vesting. The total fair value of modified time-based restricted share awards vested during the year ended December 31, 2016 was $8.5 million and there were no grants of modified time-based restricted share awards by the former Parent during the year ended December 31, 2016 as a result of the adoption of the 2014 Omnibus Plan. |
Related Party and Dow Transactions |
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Related Party and Dow Transactions | NOTE 18—RELATED PARTY AND DOW TRANSACTIONS Related Party Transactions During the year ended December 31, 2016, the former Parent sold 37,269,567 ordinary shares pursuant to the Company’s shelf registration statement filed with the SEC. As such, the former Parent no longer holds an ownership interest in the Company. In connection with these offerings, the Company incurred advisory, accounting, legal and printing expenses on behalf of the former Parent of $2.5 million during the year ended December 31, 2016. These expenses were included within “Selling, general and administrative expenses” in the consolidated statement of operations. Dow Transactions The Company has entered into certain agreements with Dow, including the Second Amended and Restated Master Outsourcing Services Agreement, which was modified on June 1, 2013 (“SAR MOSA”), site and operating services agreements, and supply agreements. The SAR MOSA provides for ongoing worldwide services from Dow in areas such as information technology, enterprise resource planning, finance, environmental health and safety, training, customer service, marketing and sales support, supply chain and certain sourcing and transactional procurement services. This agreement is effective through December 31, 2020, with automatic two-year renewals, barring six-months’ notice of non-renewal provided by either party. The Company has the ability to terminate all or a portion of the services under the SAR MOSA, subject to payment of termination charges, with certain ‘highly integrated’ services following a separate process for evaluation and termination. Either party may terminate for cause or for material breach which is not cured. Dow has the right to terminate the agreement in the event of failure by the Company to pay for the services or in the event of a change of control, as defined in the agreement. During 2018, the Company began efforts to insource, and in some cases outsource to other vendors, certain information technology, procurement, supply chain, and enterprise resource planning services and systems currently provided by Dow. During 2018, the Company incurred $26.1 million in costs related to its transition of these services away from Dow and expects to incur further significant costs related to transitioning additional services away from Dow. As of December 31, 2018, the Company’s estimated remaining minimum contractual obligations under the SAR MOSA are approximately $11.3 million. In addition, the Company entered into various site service agreements with Dow, as amended June 1, 2013 (the “Second Amended and Restated Site Services Agreements,” or “SAR SSAs”). Under the SAR SSAs, general site services are provided at specific facilities co-located with Dow including utilities, site administration, environmental health and safety, site maintenance and supply chain. Conversely, the Company entered into similar agreements with Dow, where at Company-owned sites, it provides such services to Dow. These agreements generally have 25-year terms from the date amended, with options to renew. These agreements may be terminated at any time by agreement of the parties, or, by either party, for cause, including a bankruptcy, liquidation or similar proceeding by the other party, or under certain circumstances for a material breach which is not cured. In addition, the Company may terminate for convenience any services that Dow has agreed to provide that are identified in any site services agreement as “terminable” with 12-months’ prior notice to Dow, dependent upon whether the service is highly integrated into Dow operations. Highly integrated services are agreed to be nonterminable. With respect to “nonterminable” services that Dow has agreed to provide to the Company, such as electricity and steam, the Company generally cannot terminate such services prior to the termination date unless the Company experiences a production unit shut down for which Dow is provided with 15-months’ prior notice, or upon payment of a shutdown fee. Upon expiration or termination, the Company would be obligated to pay a monthly fee to Dow, which obligation extends for a period of 45 (in the case of expiration) to 60 months (in the case of termination) following the respective event of each site services agreement. The agreements under which Dow receives services from the Company may be terminated under the same circumstances and conditions. The following tables detail expenses incurred during the years ended December 31, 2018, 2017, and 2016 under the SAR MOSA and SAR SSAs by financial statement line item:
The Company has transactions in the normal course of business with Dow and its affiliates. For the years ended December 31, 2018, 2017, and 2016, sales to Dow and its affiliated companies were approximately $248.4 million, $235.2 million, and $203.5 million, respectively. For the years ended December 31, 2018, 2017, and 2016, purchases from Dow and its affiliated companies were approximately $1,410.6 million, $1,357.2 million, and $1,090.4 million, respectively. |
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Segments | NOTE 19—SEGMENTS Through December 31, 2017, the Company operated under two divisions: Performance Materials and Basic Plastics & Feedstocks. The Performance Materials division included the following reporting segments: Latex Binders, Synthetic Rubber, and Performance Plastics. The Basic Plastics & Feedstocks division included the following reporting segments: Basic Plastics, Feedstocks, and Americas Styrenics. Effective January 1, 2018, the Company realigned its reporting segments to reflect the new model under which the business is being managed and results are being reviewed by the Chief Executive Officer, who is the Company’s chief operating decision maker. Under this new segmentation, the Company no longer has divisions, but continues to report operating results for six segments, four of which remain unchanged from the Company’s prior segmentation: Latex Binders, Synthetic Rubber, Feedstocks, and Americas Styrenics. The results of the Company’s Polystyrene business, which were previously included within the Basic Plastics segment, are now reported as a stand-alone segment. Performance Plastics, which previously consisted of compounds, blends, and ABS products sold to the automotive market, now includes the remaining portion of the Company’s ABS business, as well as the results of the Company’s styrene-acrylonitrile (“SAN”) and PC businesses. This segmentation change provides enhanced clarity to investors by concentrating the Company’s more specialized plastics into a single reporting segment, while also reducing complexity as PC and ABS are the primary inputs into the downstream production of the Company’s compounds and blends. The information in the tables below has been retroactively adjusted to reflect the changes in reporting segments. The Latex Binders segment produces styrene-butadiene latex (“SB latex”) and other latex polymers and binders, primarily for coated paper and packaging board, carpet and artificial turf backings, as well as a number of performance latex binders applications, such as adhesive, building and construction and the technical textile paper market. The Synthetic Rubber segment produces synthetic rubber products used predominantly in high-performance tires, impact modifiers and technical rubber products, such as conveyer belts, hoses, seals and gaskets. The Performance Plastics segment produces highly engineered compounds and blends, and also includes the Company’s ABS, SAN, and PC businesses. The Performance Plastics segment also included the results of the Company’s previously 50%-owned joint venture, Sumika Styron Polycarbonate, until the Company sold its share in the entity in January 2017 (refer to Note 5 for further information). Polystyrene is a stand-alone reporting segment, and includes a variety of general purpose polystyrenes (“GPPS”) and polystyrene that has been modified with polybutadiene rubber to increase its impact resistant properties (“HIPS”). The Feedstocks segment includes the Company’s production and procurement of styrene monomer outside of North America, which is used as a key raw material in many of the Company’s products, such as polystyrene, SB latex, ABS resins, and solution styrene-butadiene rubber (“SSBR”). Lastly, the Americas Styrenics segment consists solely of the operations of the Company’s 50%-owned joint venture, Americas Styrenics, a producer of both styrene monomer and polystyrene in North America. Asset and intersegment sales information by reporting segment is not reviewed or included with the Company’s reporting to the chief operating decision maker. Therefore, this information has not been disclosed below.
The reconciliation of income before income taxes to Segment Adjusted EBITDA is as follows:
(3)Corporate unallocated includes corporate overhead costs and certain other income and expenses. (4)Adjusted EBITDA addbacks for the years ended December 31, 2018, 2017, and 2016 are as follows:
Geographic Information As of December 31, 2018, the Company operates 30 manufacturing plants (which include a total of 75 production units) at 23 sites in 12 countries, inclusive of its joint venture. It also operates 10 R&D facilities globally, including mini plants, development centers and pilot coaters. Sales are attributed to geographic areas based on the location where sales originated; long-lived assets are attributed to geographic areas based on asset location. The Company is incorporated under the existing laws of the Grand Duchy of Luxembourg, as discussed in Note 1, which therefore represents its country of domicile. The Company has no existing long-lived assets or sales generated from this country.
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Restructuring | NOTE 20—RESTRUCTURING Refer to the narrative below for discussion of the Company’s restructuring activities included in the tables below. Restructuring charges are included within “Selling, general and administrative expenses” in the consolidated statements of operations. The following table provides detail of the Company’s restructuring charges for the years ended December 31, 2018, 2017, and 2016:
The following tables provides a rollforward of the liability balances associated with the Company’s restructuring activities as of December 31, 2018 and 2017. Employee termination benefit and contract termination charges are recorded within “Accrued expenses and other current liabilities” in the consolidated balance sheets. No individual restructuring activity had a material liability balance as of December 31, 2018 or 2017.
Synthetic Rubber Restructuring In December 2018, the Company announced a reduction in force within its Synthetic Rubber segment in order to more closely align the cost structure of the Synthetic Rubber segment with the current tire market environment. The Company, however, remains committed to providing innovative technologies and solutions to serve the performance tire market. As a result of this restructuring action, during the fourth quarter of 2018, the Company incurred employee termination benefit charges of $5.5 million, the majority of which are expected to be paid during the first half of 2019. Terneuzen Compounding Restructuring In March 2017, the Company announced plans to upgrade its production capability for compounded resins with the construction of a new state-of-the art compounding facility to replace its existing compounding facility in Terneuzen, The Netherlands. As of December 31, 2018, the new facility is substantially complete and operational, with ongoing customer qualifications continuing into early 2019. Substantive production at the existing facility is expected to cease during the first half of 2019, followed by decommissioning activities in 2019 and 2020. The Company expects to incur estimated decommissioning and other charges of approximately $0.6 million throughout 2019, the majority of which are expected to be paid throughout 2019. Livorno Plant Restructuring In August 2016, the Company announced its plan to cease manufacturing activities at its latex binders manufacturing facility in Livorno, Italy. This was a result of declining demand for graphical paper and is expected to provide improved asset utilization, as well as cost reductions within the Company’s European latex binders business. Production at the facility ceased in October 2016, followed by decommissioning activities which began in the fourth quarter of 2016. In June 2018, the Company entered into a preliminary agreement to sell the land where the former facility is located, subject to certain activities being completed prior to closing. The sale is considered probable to close within one year following the balance sheet date; therefore, as of December 31, 2018, the $12.0 million of land is recorded as held-for-sale within “Other current assets” and a deferred tax liability associated with that land of $2.9 million is recorded as held-for-sale within “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets. In conjunction with the execution of this agreement, the Company received $1.3 million of the purchase price as a prepayment, which is recorded within “Accrued expenses and other current liabilities” on the consolidated balance sheet as of December 31, 2018. The Company expects to incur a limited amount of additional decommissioning costs associated with this plant shutdown through the closing date of the sale, which will be expensed as incurred. Allyn’s Point Plant Shutdown In September 2015, the Company approved the plan to close its Allyn’s Point latex binders manufacturing facility in Gales Ferry, Connecticut. This restructuring plan was a strategic business decision to improve the results of the overall Latex Binders segment due to continuing declines in the coated paper industry in North America. Production at the facility ceased at the end of 2015, followed by decommissioning activities which began in 2016. The Company expects to incur a limited amount of decommissioning costs associated with this plant shutdown in 2019, which will be expensed as incurred. |
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Accumulated Other Comprehensive Income (Loss) | NOTE 21—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss), net of income taxes, consisted of:
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Earnings Per Share |
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Earnings Per Share | NOTE 22—EARNINGS PER SHARE Basic earnings per ordinary share (“basic EPS”) is computed by dividing net income available to ordinary shareholders by the weighted-average number of the Company’s ordinary shares outstanding for the applicable period. Diluted earnings per ordinary share (“diluted EPS”) is calculated using net income available to ordinary shareholders divided by diluted weighted-average ordinary shares outstanding during each period, which includes unvested RSUs, option awards, and PSUs. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential ordinary shares would have an anti-dilutive effect. The following table presents basic EPS and diluted EPS for the years ended December 31, 2018, 2017, and 2016.
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Selected Quarterly Financial Data |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data |
NOTE 23—SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
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Schedule II-Financial Statement Schedule Valuation and Qualifying Accounts |
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Schedule II-Financial Statement Schedule Valuation and Qualifying Accounts | TRINSEO S.A. SCHEDULE II—FINANCIAL STATEMENT SCHEDULE VALUATION AND QUALIFYING ACCOUNTS (In Millions)
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 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 did not have a material impact on the Company’s financial position, results of operations, or cash flows. Refer to the discussion below under “Recent Accounting Guidance” as well as to Notes 9 and 19 for further information. |
Use of Estimates in Financial Statement Preparation | 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 | 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 | 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, 2018 and 2017, 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, 2018 and 2017, 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. The CCS were initially designated as a hedge effective September 1, 2017 and were subsequently re-designated as a net investment hedge in conjunction with the Company’s adoption of the new hedge accounting guidance effective April 1, 2018, as described below in the section “Recent Accounting Guidance.” 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 | 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 (income), net” in the consolidated statements of operations. For the years ended December 31, 2018 and 2016, the Company recognized net foreign exchange transaction losses of $15.8 million and $5.5 million, respectively, while for the year ended December 31, 2017, the Company recognized net foreign exchange transaction gains of $20.6 million. These amounts exclude the impacts of foreign exchange forward contracts discussed above. |
Environmental Matters | 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, 2018 and 2017, 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. Estimated future incremental operations, maintenance, and management costs directly related to remediation are accrued when such costs are probable and reasonably estimable. |
Cash and Cash Equivalents | 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 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 Property, plant and equipment are carried at cost less accumulated depreciation and less 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, 2018 and 2017, $15.1 million and $11.6 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. 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. The Company also capitalizes interest as a component of the cost of capital assets constructed for its own use. |
Impairment and Disposal of Long-Lived Assets | 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. 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. Refer to Note 20 for information on the Company’s assets classified as held-for-sale as of December 31, 2018. |
Goodwill and Other Intangible Assets | 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 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, 2018, 2017, and 2016. 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, 2018, 2017, and 2016. 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. |
Investments in Unconsolidated Affiliates | 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 | 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. |
Sales | Sales As described below in the section “Recent Accounting Guidance,” effective January 1, 2018, the Company adopted accounting guidance on the recognition of revenue from contracts with customers, which impacted the Company’s accounting policies related to its recognition of sales and certain other revenues. Sales are recognized at a point when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services when the Company’s related performance obligation is satisfied under the terms of the contract. 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 fulfilment 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. |
Cost of Sales | 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 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 $56.0 million, $54.3 million, and $50.1 million for the years ended December 31, 2018, 2017, and 2016, respectively. The Company expenses promotional and advertising costs as incurred to SG&A expenses. Total promotional and advertising expenses were $1.6 million, $1.5 million, and $3.0 million for the years ended December 31, 2018, 2017, and 2016, respectively. Restructuring charges included within SG&A expenses were $9.3 million, $8.0 million, and $23.9 million for the years ended December 31, 2018, 2017, and 2016, respectively. Refer to Note 20 for further information.
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Pension and Postretirement Benefits Plans | 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. Prior to the divestiture of its latex binders and polycarbonate (“PC”) & compounding businesses in Brazil in 2016, as described in Note 4, the Company also provided health care and life insurance benefits to retired employees in Brazil. 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.
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Income Taxes | 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 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.
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Stock-based Compensation | 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 ultimately expected to vest. The Company’s policy election is to recognize forfeitures as incurred, rather than estimating forfeitures in advance. 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 is 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 is 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.
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Treasury Shares Policy Text Block | 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.
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Recent Accounting Guidance | Recent Accounting Guidance In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) jointly issued guidance (“Topic 606”) which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). The core principle of the guidance, which the FASB issued certain clarifying updates for, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted Topic 606 effective January 1, 2018, electing to apply the modified retrospective approach only to contracts that were not completed as of the date of initial application at the individual contract level, rather than applying the portfolio approach. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting standards (“Topic 605”). As a result of the Company’s implementation procedures, the Company has determined that the cumulative effect to retained earnings from initially applying Topic 606 was immaterial and therefore, no adjustment was recorded. Furthermore, based on current contracts with customers, the Company does not expect the adoption of the new revenue standard to have a material impact to its financial statements on an ongoing basis. Refer to Note 3 for disclosure requirements in effect as a result of this adoption. In February 2016, the FASB issued guidance related to leases that outlines a comprehensive lease accounting model and supersedes the current lease guidance. The new guidance requires lessees to recognize on the consolidated balance sheets lease liabilities and corresponding right-of-use assets for all leases with terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. Although early adoption is permitted, the Company will adopt this new guidance on the effective date for public companies of January 1, 2019. The Company has completed its risk assessment and scoping procedures for the adoption of this guidance through a number of procedures, including conducting surveys with relevant stakeholders in the business, evaluating its known lease population and data constraints, and is in the process of assessing new disclosure requirements and completing the implementation of a third-party software solution to facilitate compliance with accounting and reporting requirements. The Company continues to review existing agreements for potential lease arrangements and to enhance and update business processes and controls related to the new guidance for leases. Collectively, these activities are expected to facilitate the Company's ability to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019. The new lease guidance requires a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial adoption. The Company has elected to apply the transition requirements at the January 1, 2019, effective date rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, the Company has elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, the Company, as a lessee, will account for non-lease and lease components in a contract as a single lease component for all asset classes. Additionally, the Company has not elected to exclude short term leases (term of 12 months or less) from its balance sheet presentation. While its evaluation is still being finalized, the Company estimates an increase of lease-related assets and liabilities ranging from $70.0 million to $100.0 million in the consolidated balance sheets as of January 1, 2019. The impact to the Company's consolidated statements of operations and consolidated statements of cash flows is not expected to be material. In March 2017, the FASB issued guidance that requires employers to present the service cost component of net periodic benefit cost in the same statement of operations line item as other employee compensation costs arising from services rendered during the period. The other components of net periodic benefit cost are to be presented outside of any subtotal of operating income. The Company adopted this guidance effective January 1, 2018 on a retrospective basis. As a result of this adoption, the Company reclassified $13.7 million of net periodic benefit income for the year ended December 31, 2017 and $7.4 million of net periodic benefit cost for the year ended December 31, 2016 from “Cost of sales” and “Selling, general and administrative expenses,” collectively, to “Other expense (income), net” within the consolidated statements of operations. In August 2017, the FASB issued significant amendments to existing hedge accounting guidance. Among other things, this guidance intends to make more financial and nonfinancial hedging strategies eligible for hedge accounting, amends presentation and disclosure requirements, and changes how companies assess effectiveness. Specifically, the guidance eliminates the requirement to separately measure and record ineffectiveness for cash flow and net investment hedges. The Company adopted this guidance effective April 1, 2018. Based upon the Company’s hedging portfolio, this adoption did not result in any cumulative-effect adjustments to retained earnings. The amended presentation and disclosure guidance will be applied prospectively. Refer to Note 12 for further information regarding the impacts of this adoption as well as additional disclosures required by this standard. In February 2018, the FASB issued guidance to address certain stranded income tax effects in AOCI resulting from the enactment of the U.S. “Tax Cuts and Jobs Act” signed into law on December 22, 2017. The amendment provides financial statement preparers with an option to reclassify stranded tax effects within AOCI, resulting from the reduction of the U.S. federal corporate income tax rate, to retained earnings. The Company adopted this guidance effective October 1, 2018, applying the available accounting policy election to reclassify the stranded tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings in the period of adoption. As a result, the Company recorded a one-time reclassification of less than $0.1 million of stranded tax amounts from “Accumulated other comprehensive loss” to “Retained earnings” in the consolidated balance sheet as of December 31, 2018. In August 2018, the FASB issued guidance which modifies the disclosure requirements for employers that sponsor defined benefit pension plans or other postretirement plans. This amendment is effective for public companies for fiscal years ending after December 15, 2020. Early adoption is permitted, and the provisions of the amendment should be applied on a retrospective basis to all periods presented. The Company is currently assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the 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. This standard update is effective for public companies for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Entities may choose to adopt the new guidance either retrospectively or prospectively to eligible costs incurred on or after the date first applied. The Company is currently assessing the impact of adopting this guidance on its consolidated financial statements. |
Net Sales (Tables) |
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Disaggregation of Revenue [Table Text Block] | 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, 2018, 2017, and 2016.
(1) As the Company has adopted Topic 606 utilizing the modified retrospective approach, amounts for the years ended December 31, 2017 and 2016 above are disclosed as recognized under Topic 605. |
Acquisitions and Divestitures (Tables) |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] |
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Investments in Unconsolidated Affiliates (Tables) |
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Summarized Financial Information of Unconsolidated Affiliates |
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Accounts Receivable (Tables) |
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Inventories (Tables) |
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Property, Plant and Equipment (Tables) |
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Schedule of Property, Plant and Equipment |
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Schedule of Other Items Related to Property Plant and Equipment |
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Goodwill and Intangible Assets (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill, by Segment |
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Schedule of Other Intangible Assets |
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Estimated Amortization Expense for Next Five Years |
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Accounts Payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable |
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Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] |
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Redemption Price as Percentage of Principal Amount to Applicable Date of Redemption |
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Derivative Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Amounts of Most Significant Net Foreign Exchange Hedge Positions Outstanding |
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Schedule of Effect of Derivative Instruments on Statements of Operations |
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Schedule of Effect of Hedges on AOCI |
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Net Unrealized Gains and Losses and Balance Sheet Classifications of Outstanding Derivatives |
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities at Fair Value on Recurring Basis |
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Estimated Fair Value of Outstanding Debt Not Carried at Fair Value |
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Income Taxes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (Loss) before Income Taxes Earned within and outside the United States |
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Provision for (Benefit from) Income Taxes |
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Schedule of Effective Tax Rate |
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Schedule of Temporary Differences Comprising Deferred Income Taxes |
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Schedule of Reconciliation of Unrecognized Tax Benefits |
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Summary of Income Tax Examinations [Table Text Block] |
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments under Operating Leases with Remaining Non-Cancelable Terms |
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Schedule of Fixed and Determinable Portion of Obligation under Purchase Commitments (in millions) |
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Pension Plans and Other Postretirement Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Costs |
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Schedule of Changes in Pension Benefit Obligations and Fair Value of Plan Assets and Funded Status of All Significant Plans |
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Schedule of Net Amounts Recognized in Balance Sheet |
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Schedule of Estimated Future Benefit Payments, Reflecting Expected Future Service |
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Schedule of Pension Plans with Projected and Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets |
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Defined Benefit Pension Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted-average Assumptions on Pension Plan Obligations, Other Postretirement Benefit ("OPEB") and Net Periodic Benefit Costs |
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Other Postretirement Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted-average Assumptions on Pension Plan Obligations, Other Postretirement Benefit ("OPEB") and Net Periodic Benefit Costs |
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Supplemental Employee Retirement Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Future Benefit Payments, Reflecting Expected Future Service |
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Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-Based Compensation Expense and Unrecognized Compensation Cost |
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Schedule of Option Awards Activity |
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Restricted Share Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock, RSU and PSU Award Activity |
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Summary of Weighted-average Grant Date Fair Value per Share |
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Option Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Weighted-average Assumptions |
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Performance Share Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock, RSU and PSU Award Activity |
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Summary of Weighted-average Assumptions |
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Related Party And Dow Transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Expenses |
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Segments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Reconciliation of IBT to Adjusted EBITDA |
(3)Corporate unallocated includes corporate overhead costs and certain other income and expenses. (4)Adjusted EBITDA addbacks for the years ended December 31, 2018, 2017, and 2016 are as follows:
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Schedule of Sales Attributed to Geographical Areas Based on Location of Sales and Long-lived Assets Attributed to Geographical Areas Based on Asset Location |
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Restructuring (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detail of Restructuring Charges |
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Rollforward of Liability Balances |
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Accumulated Other Comprehensive Income (Loss) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of AOCI, Net of Income Taxes | of accumulated other comprehensive income (loss), net of income taxes, consisted of:
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Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] |
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Earnings Per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings per Share Basic and Diluted |
. |
Selected Quarterly Financial Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Selected Quarterly Financial Data |
. |
Organization and Business Activities (Details) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2018
division
country
site
facility
|
Dec. 31, 2018
country
site
facility
segment
|
Dec. 31, 2018
country
site
facility
Plant
|
Dec. 31, 2018
country
site
facility
item
|
Dec. 31, 2017
segment
|
Dec. 31, 2016
shares
|
Jun. 17, 2010 |
|
Organization and Business Activities | |||||||
Shares sold by former parent | shares | 37,269,567 | ||||||
Number of manufacturing plants | Plant | 30 | ||||||
Number of production units | item | 75 | ||||||
Number of sites | site | 23 | 23 | 23 | 23 | |||
Number of countries | country | 12 | 12 | 12 | 12 | |||
Number of research and development facilities | facility | 10 | 10 | 10 | 10 | |||
Number of operating segments | 6 | 6 | |||||
Number of reportable segments | segment | 6 | 2 | |||||
Styron Holdcos [Member] | |||||||
Organization and Business Activities | |||||||
Business acquisition, ownership percentage | 100.00% |
Basis of Presentation and Policies - Financial Instruments and Foreign Currency (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Foreign exchange transaction gains (losses) | $ (15.8) | $ 20.6 | $ (5.5) |
Foreign Exchange Forward Contracts | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Gain (loss) from settlements and changes in fair value | $ 21.0 | $ (19.2) | $ 3.7 |
Basis of Presentation and Policies - SG&A, Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Restructuring charges | $ 7.8 | $ 6.7 | |
Selling, General and Administrative Expenses | |||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||
Research and development costs | 56.0 | 54.3 | $ 50.1 |
Promotional and advertising expenses | 1.6 | 1.5 | 3.0 |
Restructuring charges | $ 9.3 | $ 8.0 | $ 23.9 |
Acquisitions and Divestitures - Divestitures (Details) - Brazil Latex and Automotive Businesses [Member] - Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosures by disposal group | ||||
Period subsequent to closing contingent consideration payments may be made by buyer | 5 years | |||
Impairment charge related to loss on sale of business | $ 15.1 | |||
Proceeds received | $ 1.0 | |||
Sales proceeds | $ 0.5 | $ 1.7 | 1.8 | |
Latex Binders Segment | ||||
Disclosures by disposal group | ||||
Impairment charge related to loss on sale of business | 4.9 | |||
Goodwill written off | 0.4 | |||
Performance Plastics Segment [Member] | ||||
Disclosures by disposal group | ||||
Impairment charge related to loss on sale of business | 9.4 | |||
Corporate Unallocated [Member] | ||||
Disclosures by disposal group | ||||
Impairment charge related to loss on sale of business | $ 0.7 |
Investments in Unconsolidated Affiliates (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018
USD ($)
item
|
Sep. 30, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2018
USD ($)
item
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Jan. 31, 2017 |
|
Investments in Unconsolidated Affiliates | ||||||||||||
Number of joint ventures | item | 1 | 1 | ||||||||||
Equity in earnings of unconsolidated affiliates | $ | $ 30.8 | $ 34.5 | $ 33.2 | $ 45.5 | $ 30.7 | $ 43.8 | $ 29.9 | $ 19.3 | $ 144.1 | $ 123.7 | $ 144.7 | |
Americas Styrenics | ||||||||||||
Investments in Unconsolidated Affiliates | ||||||||||||
Percentage of ownership underlying net assets | 50.00% | 50.00% | ||||||||||
Sumika Styron Polycarbonate | ||||||||||||
Investments in Unconsolidated Affiliates | ||||||||||||
Percentage of ownership underlying net assets | 50.00% |
Investments in Unconsolidated Affiliates - Summarized Financial Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Summarized Financial Information, Assets | |||
Current assets | $ 373.4 | $ 364.0 | |
Noncurrent assets | 236.2 | 236.2 | |
Total assets | 609.6 | 600.2 | |
Summarized Financial Information, Liabilities | |||
Current liabilities | 167.2 | 184.3 | |
Noncurrent liabilities | 17.4 | 17.9 | |
Total liabilities | 184.6 | 202.2 | |
Summarized Financial Information, Net Income | |||
Sales | 1,825.7 | 1,798.1 | $ 1,649.4 |
Gross profit | 310.2 | 244.3 | 319.2 |
Net income | 260.2 | 196.3 | 249.2 |
Sales to unconsolidated affiliates | 0.0 | 3.6 | 4.2 |
Purchases from unconsolidated affiliates | 91.5 | 78.8 | $ 157.4 |
Accounts receivable due from unconsolidated affiliates | 0.1 | 0.1 | |
Accounts payable due to unconsolidated affiliate | $ 5.4 | $ 4.7 |
Investments in Unconsolidated Affiliates - Detail (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jan. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Investments in Unconsolidated Affiliates | |||||
Investments in unconsolidated affiliates | $ 179.1 | $ 152.5 | $ 191.4 | ||
Gain on sale | $ 9.3 | ||||
Americas Styrenics | |||||
Investments in Unconsolidated Affiliates | |||||
Investments in unconsolidated affiliates | 179.1 | 152.5 | |||
Investment in unconsolidated affiliates-difference between carrying amount and underlying equity | $ 33.3 | 46.4 | |||
Percentage of ownership underlying net assets | 50.00% | ||||
Amortized weighted average remaining useful life | P1Y10M24D | ||||
Dividends received from operating activities | $ 117.5 | 120.0 | 130.0 | ||
Sumika Styron Polycarbonate | |||||
Investments in Unconsolidated Affiliates | |||||
Percentage of ownership underlying net assets | 50.00% | ||||
Sales proceeds | $ 42.1 | ||||
Gain on sale | 9.3 | ||||
Dividends received from operating and investing activities | $ 9.8 | $ 6.2 |
Accounts Receivable (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounts Receivable [Abstract] | |||
Trade receivables | $ 535.4 | $ 570.3 | |
Non-income tax receivables | 74.6 | 79.3 | |
Other receivables | 44.2 | 41.5 | |
Less: allowance for doubtful accounts | (6.1) | (5.6) | |
Total | 648.1 | 685.5 | |
Recognized bad debt expense | $ 0.6 | $ 1.5 | $ 1.0 |
Inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventories | ||
Finished goods | $ 269.8 | $ 250.9 |
Raw materials and semi-finished goods | 205.8 | 226.7 |
Supplies | 34.8 | 32.8 |
Total | $ 510.4 | $ 510.4 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill [Roll Forward] | |||
Beginning Balance | $ 72.5 | $ 38.0 | |
Acquisition | 28.7 | ||
Foreign currency impact | (3.5) | (5.8) | |
Ending Balance | 69.0 | 72.5 | $ 38.0 |
Impairment of goodwill | 0.0 | 0.0 | 0.0 |
Latex Binders Segment | |||
Goodwill [Roll Forward] | |||
Beginning Balance | 16.5 | 14.8 | |
Foreign currency impact | (0.6) | (1.7) | |
Ending Balance | 15.9 | 16.5 | 14.8 |
Synthetic Rubber Segment | |||
Goodwill [Roll Forward] | |||
Beginning Balance | 11.7 | 10.6 | |
Foreign currency impact | (0.4) | (1.1) | |
Ending Balance | 11.3 | 11.7 | 10.6 |
Performance Plastics Segment [Member] | |||
Goodwill [Roll Forward] | |||
Beginning Balance | 39.6 | 8.4 | |
Acquisition | 28.7 | ||
Foreign currency impact | (2.3) | (2.5) | |
Ending Balance | 37.3 | 39.6 | 8.4 |
Basic Plastics Segment [Member] | |||
Goodwill [Roll Forward] | |||
Beginning Balance | 4.7 | 4.2 | |
Foreign currency impact | (0.2) | (0.5) | |
Ending Balance | $ 4.5 | $ 4.7 | $ 4.2 |
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill. | |||
Amortization expense related to finite-lived intangible assets | $ 29.7 | $ 27.0 | $ 21.3 |
Estimated Amortization Expense, 2019 | 30.5 | ||
Estimated Amortization Expense, 2020 | 27.3 | ||
Estimated Amortization Expense, 2021 | 24.6 | ||
Estimated Amortization Expense, 2022 | 23.7 | ||
Estimated Amortization Expense, 2023 | $ 22.8 |
Accounts Payable (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade payables | $ 319.9 | $ 387.3 |
Other payables | 34.3 | 49.5 |
Total | $ 354.2 | $ 436.8 |
Debt - Accounts Receivable Securitization Facility and Other (Details) - Accounts Receivable Securitization Facility [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
item
| |
Debt Instruments | |
Number of subsidiaries participating | item | 2 |
Maximum borrowing capacity | $ | $ 150.0 |
Derivative Instruments - Effect on AOCI (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Derivative Instruments | |||
Gain (Loss) Recognized in AOCI, Cash flow hedges | $ 15.0 | $ (18.4) | $ 6.7 |
Gain (Loss) Recognized in AOCI, Net investment hedges | 23.7 | 21.1 | 14.1 |
Foreign Exchange Forward Contracts | |||
Derivative Instruments | |||
Gain (Loss) Recognized in AOCI, Cash flow hedges | 13.3 | (21.3) | 6.7 |
Cross Currency Swap | |||
Derivative Instruments | |||
Gain (Loss) Recognized in AOCI, Net investment hedges | 23.7 | (17.5) | |
Debt Instrument Hedge | |||
Derivative Instruments | |||
Gain (Loss) Recognized in AOCI, Net investment hedges | 38.6 | $ 14.1 | |
Interest Rate Swap | |||
Derivative Instruments | |||
Gain (Loss) Recognized in AOCI, Cash flow hedges | $ 1.7 | $ 2.9 |
Derivative Instruments - Gains and Losses (Details) - USD ($) $ in Millions |
7 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Foreign exchange transaction gains (losses) | $ (15.8) | $ 20.6 | $ (5.5) | |
Cash Flow Hedges | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Reclassification expected during next 12 months | (3.4) | |||
Net Investment Hedges | ||||
Information regarding changes in fair value of derivatives | ||||
Current foreign currency translation gain | $ (38.0) | |||
Foreign Exchange Forward Contracts | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Gain (loss) from settlements and changes in fair value | $ 21.0 | $ (19.2) | $ 3.7 |
Fair Value Measurements - Items not at Fair Value (Details) - Significant Other Observable Inputs (Level 2) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value of Debt Instruments | ||
Total fair value of long term debt | $ 1,097.2 | $ 1,224.5 |
2025 Senior Notes | ||
Fair Value of Debt Instruments | ||
Total fair value of long term debt | 438.3 | 518.8 |
2024 Term Loan B | ||
Fair Value of Debt Instruments | ||
Total fair value of long term debt | $ 658.9 | $ 705.7 |
Income Taxes - Income (Loss) Earned by location (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Provision for Income Taxes | |||||||||||
United States | $ 147.0 | $ 138.0 | $ 137.2 | ||||||||
Outside of the United States | 217.3 | 273.1 | 268.1 | ||||||||
Income before income taxes | $ 6.4 | $ 93.9 | $ 118.7 | $ 145.2 | $ 144.0 | $ 41.5 | $ 79.0 | $ 146.6 | $ 364.3 | $ 411.1 | $ 405.3 |
Income Taxes - Provision for (Benefit from) Income Taxes (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax [Line Items] | |||
Current | $ 66.5 | $ 68.0 | $ 70.9 |
Deferred | 5.3 | 14.8 | 16.1 |
Total Provision for (benefit from) income taxes | 71.8 | 82.8 | 87.0 |
U.S. Federal [Member] | |||
Income Tax [Line Items] | |||
Current | 22.8 | 33.5 | 24.8 |
Deferred | 5.9 | 6.9 | 15.6 |
Total Provision for (benefit from) income taxes | 28.7 | 40.4 | 40.4 |
U.S. State and Other [Member] | |||
Income Tax [Line Items] | |||
Current | 4.1 | 4.8 | 4.0 |
Deferred | 1.0 | 1.4 | |
Total Provision for (benefit from) income taxes | 5.1 | 4.8 | 5.4 |
Non - U.S. [Member] | |||
Income Tax [Line Items] | |||
Current | 39.6 | 29.7 | 42.1 |
Deferred | (1.6) | 7.9 | (0.9) |
Total Provision for (benefit from) income taxes | $ 38.0 | $ 37.6 | $ 41.2 |
Income Taxes - Deferred Tax Assets and Liabilities, Operating loss cfwds (Detail) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Tax Assets, Net of Valuation Allowance [Abstract] | ||
Tax loss and credit carry forwards | $ 157.8 | $ 137.3 |
Other accruals and reserves | 0.7 | 2.2 |
Deferred financing fees | 7.7 | 12.9 |
Employee benefits | 35.0 | 36.4 |
Deferred tax assets, gross | 201.2 | 188.8 |
Valuation allowance | (167.6) | (149.6) |
Deferred tax assets, net | 33.6 | 39.2 |
Deferred Tax Liabilities, Gross [Abstract] | ||
Unremitted earnings | 19.4 | 17.2 |
Unconsolidated affiliates | 5.9 | 0.1 |
Property, plant and equipment | 26.1 | 34.4 |
Goodwill and other intangible assets | 0.9 | 1.2 |
Deferred tax liabilities, gross | 52.3 | 52.9 |
Deferred tax liabilities, net | 52.3 | 52.9 |
Operating loss carryforwards | 601.7 | $ 535.6 |
2018 thru 2022 | ||
Deferred Tax Liabilities, Gross [Abstract] | ||
Operating loss carryforwards | 32.5 | |
Beyond 2022 | ||
Deferred Tax Liabilities, Gross [Abstract] | ||
Operating loss carryforwards | $ 569.2 |
Commitments and Contingencies (Details) item in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
item
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Commitments and Contingencies Disclosure | |||
Rental expense for leases | $ 18.5 | $ 16.2 | $ 16.0 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2019 | 17.5 | ||
2020 | 14.4 | ||
2021 | 9.0 | ||
2022 | 10.6 | ||
2023 | 5.4 | ||
Thereafter | 16.0 | ||
Total | 72.9 | ||
Accrued obligations for environmental remediation and restoration costs | $ 0.0 | $ 0.0 | |
Environmental claims asserted | item | 0 |
Commitments and Contingencies - Purchase Commitments (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |
2019 | $ 1,292.2 |
2020 | 825.9 |
2021 | 12.4 |
Total | $ 2,130.5 |
Maximum | |
Loss Contingencies [Line Items] | |
Purchase commitment period | 3 years |
Minimum | |
Loss Contingencies [Line Items] | |
Purchase commitment period | 1 year |
Pension Plans and Other Postretirement Benefits (Detail) - Other Postretirement Plans |
12 Months Ended |
---|---|
Dec. 31, 2018
age
| |
Defined Benefit Plan Disclosure [Line Items] | |
Years of service | 10 years |
Postretirement Medical Plan portion of premium paid by insured | 100.00% |
Minimum | |
Defined Benefit Plan Disclosure [Line Items] | |
Insurance coverage age limit | 50 |
Maximum | |
Defined Benefit Plan Disclosure [Line Items] | |
Insurance coverage age limit | 65 |
Pension Plans and Other Postretirement Benefits - Future Benefits, Contribution (Detail) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Defined Benefit Plan Disclosure [Line Items] | |
2018 | $ 5.2 |
2019 | 5.4 |
2020 | 5.8 |
2021 | 7.0 |
2022 | 9.4 |
2023 through 2027 | 54.0 |
Total | 86.8 |
Estimated contributions to defined benefit pension plans | 6.1 |
Defined Benefit Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | 5.2 |
2019 | 5.3 |
2020 | 5.7 |
2021 | 6.8 |
2022 | 9.1 |
2023 through 2027 | 51.5 |
Total | 83.6 |
Other Postretirement Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | 0.1 |
2020 | 0.1 |
2021 | 0.2 |
2022 | 0.3 |
2023 through 2027 | 2.5 |
Total | 3.2 |
Supplemental Employee Retirement Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | 16.0 |
Total | $ 16.0 |
Pension Plans and Other Postretirement Benefits - Benefit Obligations in Excess of Fair Value (Detail) - Defined Benefit Pension Plans - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Projected Benefit Obligation Exceeds the Fair Value of Plan Assets | ||
Projected benefit obligations | $ 239.7 | $ 237.3 |
Fair value of plan assets | 56.3 | 55.8 |
Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets | ||
Accumulated benefit obligations | 210.8 | 206.4 |
Fair value of plan assets | $ 50.3 | $ 50.0 |
Pension Plans and Other Postretirement Benefits - Supplemental (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Supplemental Employee Retirement Plan | |||
Estimated future benefit payments | $ 86.8 | ||
Supplemental Employee Retirement Plan [Member] | |||
Supplemental Employee Retirement Plan | |||
Benefit obligations | 15.5 | $ 15.3 | |
Amounts of net loss included in AOCI | 0.3 | 0.9 | |
Net loss to be amortized | (0.3) | ||
Estimated future benefit payments | 16.0 | ||
Net benefit costs recognized | 0.8 | 1.1 | $ 1.1 |
Amortization from AOCI into net periodic benefit costs | $ 0.5 | $ 0.9 |
Pension Plans and Other Postretirement Benefits - Defined Contribution and Multiemployer Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Contribution Plan Disclosure [Line Items] | |||
Contribution made to defined contribution plans | $ 7.9 | $ 8.4 | $ 8.6 |
Trinseo Netherlands Multiemployer Plan [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Benefit expense | 4.5 | ||
Multiemployer Plan, Contributions by Employer | $ 3.8 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings: | |||||||||||
Net income (loss) | $ (0.9) | $ 74.7 | $ 98.3 | $ 120.3 | $ 117.6 | $ 33.2 | $ 60.2 | $ 117.3 | $ 292.5 | $ 328.3 | $ 318.3 |
Shares: | |||||||||||
Weighted average ordinary shares outstanding | 42,800,000 | 43,800,000 | 46,500,000 | ||||||||
Dilutive effect of RSUs and option awards | 900,000 | 1,200,000 | 1,000,000 | ||||||||
Diluted weighted average ordinary shares outstanding | 43,700,000 | 45,000,000 | 47,500,000 | ||||||||
Income (loss) per share: | |||||||||||
Income per share- basic | $ (0.02) | $ 1.75 | $ 2.28 | $ 2.77 | $ 2.69 | $ 0.76 | $ 1.37 | $ 2.66 | $ 6.83 | $ 7.49 | $ 6.84 |
Income per share- diluted | $ (0.02) | $ 1.72 | $ 2.24 | $ 2.71 | $ 2.63 | $ 0.74 | $ 1.34 | $ 2.59 | $ 6.70 | $ 7.30 | $ 6.70 |
Anti-dilutive shares excluded | 400,000 | 200,000 | 0 |
Selected Quarterly Financial Data - Schedule of Selected Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | $ 1,065.0 | $ 1,199.7 | $ 1,236.6 | $ 1,121.6 | $ 4,622.8 | $ 4,448.1 | $ 3,716.6 | ||||
Gross profit | 59.3 | 131.6 | 162.7 | 175.2 | $ 166.3 | $ 148.5 | $ 126.5 | $ 199.0 | 528.8 | 640.3 | 592.2 |
Equity in earnings of unconsolidated affiliates | 30.8 | 34.5 | 33.2 | 45.5 | 30.7 | 43.8 | 29.9 | 19.3 | 144.1 | 123.7 | 144.7 |
Operating Income | 17.7 | 106.1 | 134.2 | 156.3 | 137.3 | 127.3 | 101.7 | 158.7 | 414.4 | 525.0 | 498.2 |
Income before income taxes | 6.4 | 93.9 | 118.7 | 145.2 | 144.0 | 41.5 | 79.0 | 146.6 | 364.3 | 411.1 | 405.3 |
Net income | $ (0.9) | $ 74.7 | $ 98.3 | $ 120.3 | $ 117.6 | $ 33.2 | $ 60.2 | $ 117.3 | $ 292.5 | $ 328.3 | $ 318.3 |
Net income (loss) per share- basic | $ (0.02) | $ 1.75 | $ 2.28 | $ 2.77 | $ 2.69 | $ 0.76 | $ 1.37 | $ 2.66 | $ 6.83 | $ 7.49 | $ 6.84 |
Net income (loss) per share- diluted | $ (0.02) | $ 1.72 | $ 2.24 | $ 2.71 | $ 2.63 | $ 0.74 | $ 1.34 | $ 2.59 | $ 6.70 | $ 7.30 | $ 6.70 |
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net sales | $ 1,101.8 | $ 1,096.6 | $ 1,145.2 | $ 1,104.5 | $ 4,448.1 | $ 3,716.6 |
Selected Quarterly Financial Data - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information [Abstract] | ||||||
Gain on sale | $ 9.3 | |||||
Loss on extinguishment of debt | $ 65.3 | $ 0.2 | $ 65.3 | |||
Defined benefit curtailment gain | $ 21.6 | 21.6 | ||||
Increases related to current year tax positions | $ 8.5 | $ 0.1 | ||||
Restructuring charges | $ 7.8 | $ 6.7 | ||||
Income from settlement of value added tax liabilities | 6.9 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Brazil Latex and Automotive Businesses [Member] | ||||||
Selected Quarterly Financial Information [Abstract] | ||||||
Loss related to impairment | 15.1 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Brazil Latex and Automotive Businesses [Member] | Latex Binders Segment | ||||||
Selected Quarterly Financial Information [Abstract] | ||||||
Loss related to impairment | $ 4.9 |
Schedule II - Financial Statement Schedule Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-09, Allowance, Credit Loss [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of the Period | $ 5.6 | $ 3.1 | $ 2.4 |
Additions, Charged to Cost and Expense | 0.6 | 1.5 | 1.0 |
Deduction from Reserves | (0.4) | (0.1) | (0.1) |
Currency Translation Adjustments | 0.3 | 1.1 | (0.2) |
Balance at End of the Period | 6.1 | 5.6 | 3.1 |
Amounts written off, net of recoveries | 0.4 | 0.1 | 0.1 |
Valuation Allowance of Deferred Tax Assets [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of the Period | 149.6 | 112.6 | 85.1 |
Additions, Charged to Cost and Expense | 19.5 | 35.6 | 27.7 |
Deduction from Reserves | (0.9) | ||
Currency Translation Adjustments | (0.6) | 1.4 | (0.2) |
Balance at End of the Period | 167.6 | $ 149.6 | $ 112.6 |
Amounts written off, net of recoveries | $ 0.9 |