What changed in this filing

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Item 1. Financial Statements

2021-04-30 compared with 2020-10-30 · 121 added, 327 removed, 314 unchanged (59% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Sales $ 376,383 $ 302,713

5 unchanged sentences

Total costs, expenses and other 338,981 290,473

Income (loss) before taxes ( 1,672 ) 9,434 24,270 57,058

Income tax expense (benefit) ( 980 ) 1,513 4,957 13,617

Net income (loss) $ ( 692 ) $ 7,921 $ 19,313 $ 43,441

Earnings (loss) per common share

Income before taxes 37,402 12,240

Income tax expense 9,271 3,664

Net income $ 28,131 $ 8,576

Earnings per common share

Basic $ 1.00 $ 0.31

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net income (loss) $ ( 692 ) $ 7,921 $ 19,313 $ 43,441

Net income $ 28,131 $ 8,576

Foreign exchange translation adjustment ( 70 ) ( 57 )

Cash-flow hedges 483 ( 1,836 )

Pension obligation adjustments — —

Other comprehensive income (loss), net of tax 413 ( 1,893 )

Comprehensive income (loss) $ ( 356 ) $ 7,462 $ 17,683 $ 42,364

Comprehensive income $ 28,544 $ 6,683

See accompanying notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(Dollars in thousands, except share and per share amounts)

September 30,

2021 December 31,

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200,000,000 shares authorized;

31,622,910 shares issued and 28,030,271 outstanding at September 30, 2020;

31,660,339 shares issued and 28,051,056 outstanding at March 31, 2021;

31,627,139 shares issued and 28,033,227 outstanding at December 31, 2020

Preferred stock, par value $ 0.01 ;

50,000,000 shares authorized and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019

Treasury stock at par ( 3,592,639 shares at September 30, 2020;

50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020

Treasury stock at par ( 3,609,283 shares at March 31, 2021;

3,593,912 shares at December 31, 2020)

9 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income $ 28,131 $ 8,576

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

Depreciation and amortization 16,104 14,432

3 unchanged sentences

Accretion of deferred financing fees 141 130

Restructuring charges — 12,623

Changes in assets and liabilities:

Changes in assets and liabilities, net of business acquisitions:

Accounts and other receivables ( 25,119 ) ( 8,746 )

8 unchanged sentences

Expenditures for property, plant and equipment ( 14,177 ) ( 34,100 )

Acquisition of business ( 9,523 ) —

Other investing activities ( 231 ) ( 385 )

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Issuance of common stock 1 2

Net cash provided by financing activities 14,011 8,293

Net cash provided by (used for) financing activities ( 29,641 ) 38,470

Net change in cash and cash equivalents 3,518 23,704

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Balance at March 31, 2021 31,660,339 $ 317 $ 186,652 $ 303,374 $ ( 36 ) $ ( 15,719 ) $ 474,588

Net Income — — — 11,429 — — 11,429

Comprehensive income

Foreign exchange translation adjustments — — — — — — —

Cash-flow Hedges — — — — — ( 73 ) ( 73 )

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 73 ) ( 73 )

Issuance of common stock 44,517 — — — — — —

Purchase of treasury stock ( 10,361 shares)

— — ( 107 ) — — — ( 107 )

Stock-based compensation — — 1,702 — — — 1,702

Balance at June 30, 2020 31,622,910 316 182,753 249,171 ( 36 ) ( 11,417 ) 420,787

Net Loss — — — ( 692 ) — — ( 692 )

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 10 ) ( 10 )

Cash-flow Hedges — — — — — 346 346

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — 336 336

Issuance of common stock — — — — — — —

Purchase of treasury stock ( 0 shares)

— — — — — — —

Stock-based compensation — — 603 — — — 603

Balance at September 30, 2020 31,622,910 $ 316 $ 183,356 $ 248,479 $ ( 36 ) $ ( 11,081 ) $ 421,034

ADVANSIX INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands)

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Equity

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Balance at March 31, 2020 31,578,393 $ 316 $ 181,158 $ 237,742 $ ( 36 ) $ ( 11,344 ) $ 407,836

Net Income — — — 15,346 — — 15,346

Comprehensive income

Foreign exchange translation adjustments — — — — — 4 4

Cash-flow Hedges — — — — — ( 429 ) ( 429 )

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 425 ) ( 425 )

Issuance of common stock 13,260 — — — — — —

Purchase of treasury stock ( 578,045 shares)

— — ( 16,408 ) — ( 6 ) — ( 16,414 )

Stock-based compensation — — 2,812 — — — 2,812

Balance at June 30, 2019 30,591,472 306 200,036 223,339 ( 26 ) ( 3,092 ) 420,563

Net Income — — — 7,921 — — 7,921

Comprehensive income

Foreign exchange translation adjustments — — — — — ( 20 ) ( 20 )

Cash-flow Hedges — — — — — ( 439 ) ( 439 )

Pension obligation adjustments — — — — — — —

Other comprehensive income (loss), net of tax — — — — — ( 459 ) ( 459 )

Issuance of common stock 9,236 — — — — — —

Purchase of treasury stock ( 537,033 shares)

— — ( 12,795 ) — ( 5 ) — ( 12,800 )

Stock-based compensation — — 2,001 — — — 2,001

Balance at September 30, 2019 30,600,708 $ 306 $ 189,242 $ 231,260 $ ( 31 ) $ ( 3,551 ) $ 417,226

See accompanying notes to Condensed Consolidated Financial Statements.

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AdvanSix Inc.

(“AdvanSix”, the “Company”, "we" or "our") is an integrated manufacturer of Nylon 6, a polymer resin which is a synthetic material used by our customers to produce fibers, filaments, engineered plastics and films that, in turn, are used in such end-products as carpets, automotive and electronic components, sports apparel, food packaging and other industrial applications.

As a result of our backward integration and the configuration of our manufacturing facilities, we also sell a variety of other products, all of which are produced within unit operations across our manufacturing value chain, including caprolactam, ammonium sulfate fertilizers, acetone and other chemical intermediates.

("AdvanSix," the "Company," "we" or "our") plays a critical role in global supply chains, innovating and delivering essential products for our customers in a wide variety of end markets and applications that touch people’s lives, such as building and construction, fertilizers, plastics, solvents, packaging, paints, coatings, adhesives and electronics.

Our reliable and sustainable supply of quality products emerges from the vertically integrated value chain of our three U.S.-based manufacturing facilities.

AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, chemical intermediates, and plant nutrients, guided by our core values of Safety, Integrity, Accountability and Respect.

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a global pandemic with numerous countries around the world declaring national emergencies, including the United States.

Since early 2020, COVID-19 has continued to spread rapidly, with most countries and territories worldwide having confirmed cases, and with certain jurisdictions experiencing resurgences.

The spread has resulted in authorities implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns.

The pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional and national economies, including disruptions to supply chains, reduced demand and production across most industries, declines and volatility within global financial markets and decreased workforces causing increased unemployment.

Although countries and regions are in various phases of re-opening, certain jurisdictions have returned to certain restrictions in light of new COVID-19 cases.

Department of Homeland Security designated our industry as "essential critical infrastructure" during the response to COVID-19 for both public health and safety as well as community well-being, and we continue to execute our business continuity plans to maintain operations and meet customer demand.

The Company continues to evaluate the potential impact of The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” ), enacted on March 27, 2020.

The CARES Act, and other government stimulus programs are intended to provide economic relief resulting from the COVID-19 pandemic which includes, but is not limited to, provisions for taxes, employment related costs, deferral of pension payments and options for liquidity.

See "Note 11.

Income Taxes" below for a further discussion of the CARES Act.

The Company’s Condensed Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and reported amounts of revenue and expenses during the periods presented.

The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there was no material impact on the Company’s first quarter 2020 results of operations.

In the second quarter of 2020, the Company experienced lower demand, resulting in a reduction of plant utilization rates and a decrease in overall sales volume compared to the prior year period, primarily related to global markets and the economic impact of COVID-19.

During the third quarter, the Company experienced an improvement of demand to approximately pre-COVID-19 levels.

The situation surrounding COVID-19 remains fluid and unpredictable, and the potential for a continued material impact on the Company increases the longer the social and economic restrictions which impact the overall level of consumer and business activity in the United States and globally, remain in place or are reinstituted.

For this reason, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity.

The spread resulted in authorities implementing numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns.

The pandemic and these containment measures have had a substantial impact on businesses around the world and on global, regional and national economies, including disruptions to supply chains, reduced demand, production and sales across most industries, declines and volatility within global financial markets, and decreased workforces causing increased unemployment.

The continuously evolving nature of this pandemic and the pace of recovery may continue to have an impact on the United States and global economies.

The Company’s Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting periods presented.

The Company continues to consider the impact of COVID-19 on the estimates and assumptions used for the financial statements.

As previously disclosed, the Company experienced a material impact on its second quarter 2020 results of operations associated with lower demand, particularly in nylon, caprolactam and phenol, and a decrease in overall sales volume related to global markets and the economic impact of COVID-19.

During the second half of 2020, and through the first quarter of 2021, demand improved to pre-COVID-19 levels with states, regions and countries in various phases of re-opening and continued administration of vaccines for COVID-19, although there is no assurance demand recovery will continue given the potential for surges in infection rates and newly identified strains of COVID-19.

The Company will continue to monitor developments and execute our operational and safety mitigation plans as previously disclosed.

As the situation surrounding COVID-19 remains fluid and unpredictable, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity.

Basis of Presentation

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GAAP for complete financial statements.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of September 30, 2020, and its results of operations for the three and nine months ended

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of March 31, 2021, and its results of operations for the three months ended March 31, 2021 and 2020 and cash flows for the three months ended March 31, 2021 and 2020.

The year-end Condensed Consolidated Balance Sheet data were derived from audited financial statements but does not include all disclosures required by U.S.

3 unchanged sentences

Certain prior period amounts have been reclassified for consistency with the current period presentation.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes.

1 unchanged sentence

In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures.

Our actual closing dates for the three and nine months ended September 30, 2020 and 2019 wer e September 26, 2020 and September 28, 2019, respe ctively.

Liabilities to creditors to whom we have issued checks that remained outstanding at September 30, 2020 and December 31, 2019 aggregated $ 2.1 million and $ 1.7 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

Our actual closing dates for the three months ended March 31, 2021 and 2020 wer e April 3, 2021 and March 28, 2020, respe ctively.

Liabilities to creditors to whom we have issued checks that remained outstanding at March 31, 2021 and December 31, 2020 aggregated $ 1.0 million and $ 7.2 million, respectively, and were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

On May 4, 2018, the Company announced that its Board of Directors (the “Board”) authorized a share repurchase program of up to $ 75 million of the Company’s common stock.

4 unchanged sentences

The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of September 30, 2020, the Company had repurchased 3,592,639 shares of common stock, including 502,877 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 101.7 million at a weighted average market price of $ 28.31 per share.

As of September 30, 2020, $ 59.6 million remained available for share repurchases under the current authorization.

During the period October 1, 2020 through October 23, 2020, no additional shares were repurchased under the currently authorized repurchase program.

As of March 31, 2021, the Company had repurchased 3,609,283 shares of common stock, including 519,521 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $ 102.2 million at a weighted average market price of $ 28.30 per share.

As of March 31, 2021, $ 59.6 million remained available for share repurchases under the current authorization.

During the period April 1, 2021 through April 23, 2021, no additional shares were repurchased under the currently authorized repurchase program.

Recent Accounting Pronouncements

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ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

On August 5, 2020, the FASB issued ASU No.

2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40).

The amendments in the ASU remove certain separation models for convertible debt instruments and convertible preferred stock that require the separation of a convertible debt instrument into a debt component and an equity or derivative component.

Therefore, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital.

This will result in more convertible debt instruments being accounted for as a single liability measured at its amortized cost and more convertible preferred stock being accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives.

The ASU also amends the derivative scope exception guidance for contracts in an entity’s own equity.

The amendments remove three settlement conditions that are required for equity contracts to qualify for the derivative scope exception.

The guidance is effective for public business entities for fiscal years, and interim terms within those fiscal years, beginning after December 15, 2021.

Early adoption of the amendments in this update is permitted, but no earlier than fiscal years, including interim periods within those fiscal years, beginning after December 15, 2020.

The Company is evaluating the impact that the amendments of this standard would have on the Company's consolidated financial position or results of operations upon adoption.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

In March 2020, the FASB issued ASU No.

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Early adoption of the amendments in this update is permitted, including adoption in any interim period.

The Company is evaluating these changes and does not anticipate any material impact on the Company’s consolidated financial position or results of operations upon adoption.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments of ASU No.

2018-13 are effective for companies for fiscal years beginning after December 15, 2019.

The Company adopted ASU 2018-13 effective January 1, 2020, which did not have a material impact on the Company's consolidated financial position or results of operations upon adoption.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment, which eliminates step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill, from the goodwill impairment test.

The amendments of ASU No.

2017-04 are effective for companies for fiscal years beginning after December 15, 2019 and requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The Company adopted ASU 2019-12 effective January 1, 2021, which did not have a material impact on the Company’s consolidated financial position or results of operations upon adoption.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

The amendments of ASU No.

2016-13 are effective for companies for fiscal years beginning after December 15, 2019 and modify existing guidance related to the measurement of credit losses on financial instruments, including trade and loan receivables.

The new guidance requires impairments to be measured based on expected losses over the life of the asset rather than incurred losses.

The Company adopted ASU 2016-13 effective January 1, 2020, using a modified retrospective approach, which did not have a material impact on the Company's consolidated financial position or results of operations upon adoption.

Revenue Recognition

We serve approximately 400 customers annually in more than 50 countries and across a wide variety of industries.

For the three months ended September 30, 2020 and 2019, the Company's ten largest customers accounted for approximately 48 % and 51 % of total sales, respectively.

For the nine months ended September 30, 2020 and 2019, the Company's ten largest customers accounted for approximately 43 % and 47 % of total sales, respectively.

We serve approximately 400 customers annually in approximately 50 countries and across a wide variety of industries.

For the three months ended March 31, 2021 and 2020 the Company's ten largest customers accounted for approximately 38 % and 43 % of total sales, respectively.

We typically sell to customers under master service agreements, with primarily one-year terms, or by purchase orders.

We have historically experienced low customer turnover and have long-standing customer relationships, which span decades.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

customer is Shaw Industries Group Inc.

Our largest customer is Shaw Industries Group Inc.

(“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement.

For the three months ended September 30, 2020 and 2019, our sales to Shaw were 14 % and 23 %, respectively, of our total sales.

For the nine months ended September 30, 2020 and 2019, our sales to Shaw were 13 % and 21 %, respectively, of our total sales.

Each of the Company’s product lines represented the following approximate percentage of total sales for the three and nine months ended September 30, 2020 and 2019:

For the three months ended March 31, 2021 and 2020, our sales to Shaw were 12 % and 17 %, respectively, of our total sales.

Each of the Company’s product lines represented the following approximate percentage of total sales for the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Nylon 22 % 26 %

Caprolactam 21 % 22 %

Ammonium Sulfate Fertilizers 22 % 20 % 26 % 23 %

Chemical Intermediates 38 % 29 %

100 % 100 % 100 % 100 %

The Company's revenues by geographic area for the three and nine months ended September 30, 2020 and 2019 were as follows:

Ammonium Sulfate 19 % 23 %

The Company's revenues by geographic area for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

United States $ 300,672 $ 230,443

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Customer advances relate primarily to sales from the ammonium sulfate business.

Below is a roll-forward of Deferred income and customer advances for the nine months ended September 30, 2020:

Below is a roll-forward of Deferred income and customer advances for the three months ended March 31, 2021:

Opening balance January 1, 2021 $ 26,379

Additions to deferred income and customer advances 9,673

Additional cash advances 1,016

Less amounts recognized in revenues ( 7,819 )

Ending balance September 30, 2020 $ 6,176

The Company expects to recognize as revenue the September 30, 2020 ending balance of Deferred income and customer advances within one year or less.

Ending balance March 31, 2021 $ 19,576

The Company expects to recognize as revenue the March 31, 2021 ending balance of Deferred income and customer advances within one year or less.

Earnings (Loss) Per Share

The computation of basic and diluted earnings (loss) per share ("EPS") is based on Net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.

The details of the basic and diluted EPS calculations for the three and nine months ended September 30, 2020 and 2019 were a s follows:

ADVANSIX INC.

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(Dollars in thousands, except share and per share amounts and as otherwise noted)

The details of the basic and diluted EPS calculations for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net Income (loss) $ 28,131 $ 8,576

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EPS – Diluted $ 0.98 $ 0.31

Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents (which includes units allocated to the AdvanSix stock unit fund under the AdvanSix Inc.

Deferred Compensation Plan) using the treasury stock method and the average market price of our common stock for the year.

Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year.

The diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period.

The anti-dilutive common stock equivalents outstanding at the three and nine months ended September 30, 2020 and 2019 were as follows:

The anti-dilutive common stock equivalents outstanding at the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Options and stock equivalents 861,376 935.402

Accounts and Other Receivables – Net

September 30,

2021 December 31,

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Total accounts and other receivables – net $ 149,461 $ 123,554

September 30,

2021 December 31,

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Reduction to LIFO cost basis ( 7,538 ) ( 35,361 )

Total inventories – net $ 173,873 $ 171,710

Total inventories $ 141,810 $ 180,085

Postretirement Benefit Cost

The components of Net periodic benefit cost of the Company’s pension plan are as follows:

ADVANSIX INC.

1 unchanged sentence

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The components of Net periodic benefit cost of the Company’s pension plan are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Service cost $ 1,954 $ 2,005

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Expected return on plan assets ( 731 ) ( 524 )

Amortization of actuarial net losses 86 —

Net periodic benefit cost $ 1,827 $ 2,025

The Company made cash contributions to the defined benefit pension plan of $ 1.7 million during the nine months ended September 30, 2020 with $ 1.7 million in the first quarter of 2020 and no contributions in the second or third quarters of 2020.

The Company made an additional cash contribution of $ 6.4 million in the fourth quarter of 2020 for a total of $ 8.1 million for the full year of 2020.

The Company does not anticipate making any further contributions for the remainder of 2020 but anticipates making additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

The Company made cash contributions to the defined benefit pension plan of $ 1.2 million during the three months ended March 31, 2021.

The Company currently plans to make pension plan contributions during 2021 sufficient to satisfy funding requirements under the AdvanSix Retirement Earnings Plan in an aggregate amount of approximately $ 9.0 million to $ 11.0 million.

We anticipate making additional contributions in future years sufficient to satisfy pension funding requirements in those periods.

The pension plan assets are invested through a master trust fund.

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The Investment Committee establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk.

Long-term Debt and Credit Agreement

At September 30, 2020, the Company assessed the amount recorded under the Revolving Credit Facility (defined below) and determined that such amounts approximate fair value.

Since a floating rate interest is applied to all borrowings from our Revolving Credit Facility, the fair value of our debt closely approximates the carrying value and is therefore classified as Level 2 within the valuation hierarchy.

Credit Agreement

On September 30, 2016, in connection with the consummation of the Spin-Off, the Company as the borrower, entered into a Credit Agreement with Bank of America, as administrative agent (the “Original Credit Agreement”).

The Original Credit Agreement consisted of a $ 270 million term loan (the “Original Term Loan”) and a $ 155 million revolving loan facility (the “Original Revolving Credit Facility”).

The Original Revolving Credit Facility included a $ 25 million letter-of-credit sub-facility and a $ 20 million Swing-Line Loan sub-facility, issuances against which reduce the available capacity for borrowing.

On February 21, 2018 (the “First Amendment Date”), the Company entered into Amendment No.

1 (the “First Amendment”) to the Credit Agreement among the Company, the guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent (the Original Credit Agreement, after giving effect to the First Amendment, the “First Amended and Restated Credit Agreement”).

As discussed above, the credit facilities under the Original Credit Agreement consisted of a senior secured term loan in an aggregate principal amount of $ 270 million, of which $ 267 million was outstanding just prior to entering into the First Amendment, and a senior secured revolving credit facility in a principal amount of $ 155 million.

Pursuant to the First Amendment, (i) the term loan facility under the Original Credit Agreement was terminated and the entire outstanding balance of the term loan facility (the “Term Loan”) thereunder was paid in full and (ii) the maximum aggregate principal amount of the senior secured revolving credit facility (the “Revolving Credit Facility”) was increased to $ 425 million.

On the First Amendment Date, the Company borrowed $ 242 million under the Revolving Credit Facility.

The proceeds of such loans, as well as cash on hand, were used to repay the outstanding Term Loan under the Original Credit Agreement.

The Revolving Credit Facility under the First Amended and Restated Credit Agreement has a 5 -year term with a scheduled maturity date of February 21, 2023.

The First Amendment resulted in an increase in the Revolving Credit Facility to replace the Term Loan and provided increased borrowing flexibility and reduced overall borrowing costs with an approximate 50 basis point reduction in the interest rate spread.

The First Amended and Restated Credit Agreement permits the Company to utilize up to $ 40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $ 40 million for swing line loans.

The Company has the option to incur

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

incremental term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $ 175 million plus (y) an amount such that the Company’s Consolidated Senior Secured Leverage Ratio (as defined in the First Amended and Restated Credit Agreement) would not be greater than 1.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the First Amended and Restated Credit Agreement, commits to be a lender for such amount.

Borrowings under the First Amended and Restated Credit Agreement bore interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.50 % to 1.50 % or the sum of a Eurodollar rate plus a margin ranging from 1.50 % to 2.50 %, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the First Amended and Restated Credit Agreement).

The Company was also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.20 % to 0.40 % per annum depending on the Company’s Consolidated Leverage Ratio.

The initial margin under the First Amended and Restated Credit Agreement was 0.75 % for base rate loans and 1.75 % for Eurodollar rate loans and the initial commitment fee rate was 0.25 % per annum.

The First Amended and Restated Credit Agreement contained customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets.

The First Amended and Restated Credit Agreement also contained financial covenants that required the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the First Amended and Restated Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (i) 3.50 to 1.00 or less for the fiscal quarter ending March 31, 2018, through and including the fiscal quarter ending December 31, 2019, (ii) 3.25 to 1.00 or less for the fiscal quarter ending March 31, 2020, through and including the fiscal quarter ending December 31, 2020, (iii) 3.00 to 1.00 or less for the fiscal quarter ending March 31, 2021, through and including the fiscal quarter ending December 31, 2021, and (iv) 2.75 to 1.00 or less for the fiscal quarter ending March 31, 2022 and each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

The Company was in compliance with all related covenants at December 31, 2019.

On February 19, 2020, the Company entered into Amendment No.

2 (the “Second Amendment”) to the First Amended and Restated Credit Agreement (after giving effect to the Second Amendment, the “Second Amended and Restated Credit Agreement”).

The Second Amendment amended the Consolidated Leverage Ratio financial covenant of the Credit Agreement and requires the Company to maintain a Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement) of (i) 3.50 to 1.00 or less for the fiscal quarter ended March 31, 2020, (ii) 4.50 to 1.00 or less for the fiscal quarter ending June 30, 2020, (iii) 4.25 to 1.00 or less for the fiscal quarter ending September 30, 2020, (iv) 3.50 to 1.00 or less for the fiscal quarter ending December 31, 2020, (v) 3.25 to 1.00 or less for the fiscal quarter ending March 31, 2021 through and including the fiscal quarter ending December 31, 2021, and (vi) 3.00 to 1.00 or less for the fiscal quarter ending March 31, 2022 and each fiscal quarter thereafter (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

The Consolidated Interest Coverage Ratio financial covenant of the First Amended and Restated Credit Agreement was not changed and continues to require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Second Amended and Restated Credit Agreement) of not less than 3.00 to 1.00.

If the Company does not comply with the covenants in the Second Amended and Restated Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility.

The Company was in compliance with all related covenants at September 30, 2020.

Borrowings under the Second Amended and Restated Credit Agreement bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.50 % to 2.00 % or the sum of a Eurodollar rate plus a margin ranging from 1.50 % to 3.00 %, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement).

The Company is also required to pay a commitment fee in respect of unused commitments under the credit facility, if any, at a rate ranging from 0.20 % to 0.50 % per annum depending on the Company’s Consolidated Leverage Ratio.

The initial margin under the Second Amended and Restated Credit Agreement was 1.25 % for base rate loans and 2.25 % for Eurodollar rate loans and the applicable commitment fee rate was 0.35 % per annum.

In addition, the Second Amendment also amended certain administrative provisions associated with the LIBOR Successor Rate (as defined in the Second Amended and Restated Credit Agreement).

The obligations under the Second Amended and Restated Credit Agreement are secured by a pledge of assets and liens on substantially all of the assets of AdvanSix.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Since the start of 2020, the Company has borrowed an incremental $ 268.5 million for liquidity and working capital purposes under the Revolving Credit Facility and repaid $ 252.5 million to bring the balance under the Revolving Credit Facility to $ 313.0 million at September 30, 2020.

The Company had approximately $ 1.0 million of letter of credit agreements outstanding under the Revolving Credit Facility at September 30, 2020, as well as an immaterial amount associated with bilateral letters of credit outside the Revolving Credit Facility.

We determine if an arrangement is a lease at inception.

1 unchanged sentence

Finance leases are included in Property, plant and equipment – net, Accounts payable, and Other liabilities in our Condensed Consolidated Balance Sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

We use the implicit rate when readily determinable.

The operating lease ROU asset also includes any lease pre-payments made and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease and, when it is reasonably certain that such an option will be exercised, it is included in the determination of the corresponding assets and liabilities.

Short-term leases are not recognized on our unaudited Condensed Consolidated Balance Sheets.

Lease expense for all operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has entered into agreements to lease transportation equipment, storage facilities, office space, dock access and other equipment.

The leases have initial terms of up to 20 years with some containing renewal options subject to customary conditions.

The term and length of the various agreements, as well as the timing of any renewals, will impact the ROU asset calculation and related liability.

The components of lease expense were as follows:

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020

Three Months Ended

Finance lease cost:

4 unchanged sentences

Short-term lease cost 1,913 1,873

Variable lease cost — —

Total lease cost $ 13,675 $ 13,113

Supplemental cash flow information related to leases was as follows:

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Nine Months Ended September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 33,046

Operating cash flows from finance leases 41

Financing cash flows from finance leases 534

Non-cash information:

Right-of-use assets obtained in exchange for lease obligations:

Operating leases 2,785

Finance leases 16

Supplemental balance sheet information related to leases was as follows:

September 30,

Operating Leases

Operating lease right-of-use assets $ 110,360

Operating lease liabilities – short-term 31,724

Operating lease liabilities – long-term 79,085

Total operating lease liabilities $ 110,809

Finance Leases

Property, plant and equipment – gross $ 1,992

Accumulated depreciation ( 1,101 )

Property, plant and equipment – net $ 891

Accounts payable 581

Other liabilities 320

Total finance lease liabilities $ 901

Weighted Average Remaining Lease Term

Operating leases 9.9 years

Finance leases 1.7 years

Weighted Average Discount Rate

Operating leases 5.92 %

Finance leases 4.69 %

Maturities of lease liabilities are as follows:

Year Ending December 31, Operating Leases Finance Leases

2020 (remainder) $ 11,092 $ 186

2021 33,182 531

2022 23,099 199

2023 13,620 13

2024 11,754 8

Thereafter 62,376 —

Total lease payments 155,123 937

Less imputed interest ( 44,314 ) ( 36 )

Total $ 110,809 $ 901

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

As of March 31, 2021, we have additional operating leases that have not yet commenced for approximately $ 24.4 million.

These leases commence during 2021 with lease terms of up to 6 years.

Commitments and Contingencies

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The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters.

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Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations.

The CARES Act includes various modifications to current tax law and is intended to provide economic relief in response to the COVID-19 pandemic.

One provision included in the CARES Act allows for a five-year carryback of Federal net operating losses (NOLs) generated in tax years beginning in 2018, 2019 and 2020.

The Company finalized its 2019 U.S.

federal income tax return in July 2020 which reflected a net operating loss, on a tax basis, and certain tax credits which were carried back to earlier tax years.

This carryback claim generated a refund of previously paid taxes in the amount of $ 12.2 million which is currently reflected in Taxes receivable.

We anticipate receiving the refund in the fourth quarter of 2020.

The provision for income taxes was $ 9.3 million and $ 3.7 million for the three months ended March 31, 2021 and 2020, respectively, resulting in an effective tax rate of 24.8 % and 29.9 %, respectively.

Under a provision included in the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, the Company filed a Federal net operating loss (NOL) carryback claim in July 2020 which generated a refund of previously paid taxes in the amount of $ 12.3 million.

The refund was received in the first quarter of 2021.

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter.

The Company recorded a net Income tax benefit of $ 0.2 million as a discrete item for the quarter ended September 30, 2020 related to 2019 state return-to-provision adjustments, and a net Income tax benefit of $ 0.8 million as discrete items for the nine months ended September 30, 2020.

The year to date discrete items primarily relate to the impact of the CARES Act, additional research tax credits claimed on the Company's 2019 U.S.

federal income tax return, tax deficiencies on vesting of equity compensation and the impact of changes in the Company's geographical sales mix on state tax.

In the quarter ended June 30, 2020, we recorded a liability for unrecognized tax benefits ("UTB"), in the amount of $ 3.8 million, all of which, if recognized, would impact our effective tax rate.

The UTB relates to an energy credit claimed on the Company's 2019 U.S.

federal income tax return associated with the installation of natural gas boilers at our Hopewell manufacturing plant.

As of September 30, 2020, we have not recorded any interest and penalties associated with uncertain tax positions.

The benefit from income taxes was $( 1.0 ) million for the three months ended September 30, 2020 and the provision for income taxes was $ 1.5 million for the three months ended September 30, 2019, respectively.

The Company’s estimated annual effective tax rate applied against the three months ended March 31, 2021 and 2020 was higher compared to the U.S.

federal statutory rate, due primarily to state taxes and executive compensation deduction limitations, partially offset by tax credits.

Additionally, for interim reporting purposes, the Company recorded Income tax expense of $ 0.1 million and $ 0.6 million as discrete items for the three months ended March 31, 2021 and 2020, respectively, resulting in an increase in the effective tax rate of 0.3 % and 4.5 %, respectively.

The discrete tax adjustments in the prior year period relate to tax deficiencies on the vesting of equity compensation and the loss of 2018 foreign-derived intangible income tax benefits related to the Federal NOL carryback claim.

On March 11, 2021, the American Rescue Plan Act ("ARPA") was signed into law.

The ARPA is aimed at addressing the continuing economic and health impacts of the COVID-19 pandemic.

This legislative relief, along with the previous governmental relief packages, provide for numerous changes to current tax law.

The ARPA did not have a material impact on our financial statements in the first quarter of 2021, and we do not anticipate that it will have a material impact on our financial statements throughout the remainder of 2021.

Fair Value Measurements

Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

During the fourth quarter of 2018, the Company acquired a royalty stream which has been treated as an asset acquisition.

The purchase price of the royalty stream for $ 1.0 million approximated its fair value at December 31, 2018 and is considered a Level 3 asset.

The fair value measurement is based on the expected future cash flows and, as there is no reason to believe that the asset is impaired, it is assumed that the valuation remains unchanged at

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

September 30, 2020.

In November 2018 and July 2019, the Company entered into two interest rate swap transactions related to its credit agreement.

The fair value of the interest rate swaps at September 30, 2020 was a loss of approximately $ 3.8 million and is considered a Level 2 liability.

The fair value of the interest rate swaps at March 31, 2021 was a loss of approximately $ 2.4 million and is considered a Level 2 liability.

The pension plan assets are invested in collective investment trust funds.

2 unchanged sentences

The Company’s Condensed Consolidated Balance Sheets also include Cash and cash equivalents, Accounts receivable and Accounts payable all of which are recorded at amounts which approximate fair value.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The Company also has assets that are required to be recorded at fair value on a non-recurring basis.

13 unchanged sentences

The terms and conditions of credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

The Company had one customer that accounted for approximately 13 % of trade accounts receivable - net at September 30, 2020, and did not have any customers accounting for a significant percentage of trade accounts receivable - net at December 31, 2019.

The Company did not have any customers with significant concentrations of trade accounts receivable – net at March 31, 2021 or December 31, 2020.

Allowance for doubtful accounts is calculated based upon the Company's estimate of expected credit losses over the life of exposure based upon both historical information as well as future expected losses.

4 unchanged sentences

Forward commodity contracts are marked-to-market, with the resulting gains and losses recognized in earnings, in the same category as the items being hedged, when the hedged transaction is recognized.

At September 30, 2020 and 2019, we had no financial contracts related to forward commodity agreements.

At March 31, 2021 and 2020, we had no financial contracts related to forward commodity agreements.

Interest Rate Risk Management – The Company has entered into two interest rate swap agreements for a total notional amount of $ 100 million to exchange floating for fixed rate interest payments for our LIBOR-based borrowings.

These interest rate swaps had a fair value of zero at inception and were effective November 30, 2018 and July 31, 2019 with respective maturity dates of November 30, 2021 and February 21, 2023.

In accordance with FASB Accounting Standards Codification (“ASC”) ASC 815, the Company designated the interest rate swaps as cash flow hedges of floating-rate borrowings.

In accordance with FASB Accounting Standards Codification (“ASC”) 815, the Company designated the interest rate swaps as cash flow hedges of floating-rate borrowings.

The interest rate swaps convert the Company’s interest rate payments on the first $ 100 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate.

These interest rate swaps involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the interest rate swap without an exchange of the underlying principal amount.

ADVANSIX INC.

1 unchanged sentence

(Dollars in thousands, except share and per share amounts and as otherwise noted)

interest rate swaps convert the Company’s interest rate payments on the first $ 100 million of variable-rate, 1-month LIBOR-based debt to a fixed interest rate.

Liability Derivatives

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value

3 unchanged sentences

The following table summarizes adjustments related to cash flow hedge included in Cash-flow hedges, in the Condensed Consolidated Statements of Comprehensive Income:

September 30,

Loss on derivative instruments included in Accumulated other comprehensive income (loss) at December 31, 2019 $ ( 1,718 )

Loss on derivative instruments included in Accumulated other comprehensive income at December 31, 2020 $ ( 3,063 )

Fair value adjustment 644

Loss on derivative instruments included in Accumulated other comprehensive income (loss) at September 30, 2020 $ ( 3,801 )

At September 30, 2020, the Company expects to reclassify approximately $ 2.4 million of net losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months due to the payment of variable interest associated with the floating rate debt with the remainder recognized in future periods through the expiration date.

Loss on derivative instruments included in Accumulated other comprehensive income at March 31, 2021 $ ( 2,419 )

At March 31, 2021, the Company expects to reclassify approximately $ 1.7 million of net losses on derivative instruments from Accumulated other comprehensive income ("AOCI") to earnings during the next 12 months due to the payment of variable interest associated with the floating rate debt with the remainder recognized in future periods through the expiration date.

The following table summarizes the reclassification of net losses on derivative instruments from AOCI into earnings:

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Interest Rate Contracts $ 557 $ 501

Total Derivatives $ 557 501

Restructuring

On May 2, 2019, the Company approved the closure of its Pottsville, Pennsylvania films plant as part of its broader strategic efforts to improve the Company’s competitive position in providing quality film products and services to its customers.

The Company also announced a strategic alliance with Oben Holding Group S.A.

(“Oben”), a third-party producer of films for the flexible packaging industry, leveraging the Company's sales channels and Nylon 6 supply with Oben's new state-of-the-art manufacturing facility.

The Company ceased operations at the Pottsville, Pennsylvania plant in July 2019.

Restructuring costs consist of long-lived asset impairments, facility exit costs, employee separations and inventory write-downs.

Facility exit costs include demolition, equipment relocation, contract terminations and project management costs.

We actively target potential acquisitions that build on our competitive advantage and core capabilities, create opportunities for broader expansion and value chain integration, portfolio diversification, increased exposure to attractive end markets and the potential for long-term value creation.

In January 2021, the Company acquired certain assets associated with ammonium sulfate packaging, warehousing and logistics services in Virginia from Commonwealth Industrial Services, Inc.

for approximately $ 9.5 million.

This acquisition will enable the Company to expand its product offerings by directly supplying packaged ammonium sulfate to customers, primarily in North and South America.

It diversifies and optimizes our product offerings to include spray-grade adjuvant to support crop protection, as well as other specialty fertilizer and products for industrial use.

The Company also expects the addition of packaging and warehousing capabilities to bolster logistics and operational efficiency in the Richmond, Virginia area plants.

The Company did not make any acquisitions during the three months ended March 31, 2020.

In accordance with ASC 805, this transaction has been accounted for as a business combination.

The Company used its best estimates and assumptions to assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed

ADVANSIX INC.

1 unchanged sentence

(Dollars in thousands, except share and per share amounts and as otherwise noted)

costs are included in Costs of goods sold in the Condensed Consolidated Statements of Operations.

The Company recorded a restructuring charge of $ 12.6 million in the second quarter of 2019 which was reduced to $ 11.0 million in the fourth quarter of 2019.

As of September 30, 2020, all related restructuring liabilities have been paid.

The following table summarizes the components of restructuring activities and the remaining balances of accrued restructuring charges as of September 30, 2020:

Employee Separation Benefits Facility Exit Costs Total

Accrual balance at December 31, 2019 $ 127 $ 410 $ 537

Charges — — —

Cash payments ( 127 ) ( 410 ) ( 537 )

Accrual balance at September 30, 2020

at the acquisition date based on the information that was available as of the acquisition date.

The transaction resulted in the Company acquiring tangible assets and a finite-lived intangible asset, comprised of customer relationships which reflects the value of the benefit derived from incremental revenue and related cash flows as a direct result of the customer relationships.

This intangible asset is being amortized on a straight-line basis over its estimated useful life of 15 years.

The residual amount of the purchase price in excess of the value of the tangible and definite-lived intangible assets was allocated to goodwill.

Pro forma financial information related to the acquisition has not been included as the impact on the Company's consolidated results of operations was not considered material.

The preliminary measurements of fair value set forth herein are subject to change and such changes could be material.

The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

The following table summarizes the current allocation of the purchase price consideration as of the acquisition date:

Three Months Ended

March 31, 2021

Accounts receivable $ 858

Inventories 712

Property, plant and equipment 1,875

Intangible assets 3,920

Accounts payable and accrued liabilities ( 429 )

Net tangible and intangible assets 6,936

Goodwill 2,587

Total purchase price $ 9,523

Cash paid to date, net of cash acquired $ 9,523

Due to seller —

Total purchase price $ 9,523

Goodwill deductible for tax purposes $ 2,587

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements