What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 171 added, 119 removed, 584 unchanged (33% of the section changed)

1 unchanged sentence

KOPPERS HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions, except per share amounts)

7 unchanged sentences

Interest expense

Income from continuing operations before income taxes

Income tax provision (benefit)

Income from continuing operations before income

Income tax provision

Income from continuing operations

Loss from discontinued operations, net of

Income (loss) from discontinued operations, net of

tax benefit of $ 0.1 , $ 0.2 , $ 0.1 and $ 1.0

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Koppers

Earnings (loss) per common share attributable to Koppers

common shareholders:

Gain on sale of discontinued operations

Net income (loss) attributable to noncontrolling

Net income attributable to Koppers

Earnings (loss) per common share attributable to

Koppers common shareholders:

Continuing operations

Discontinued operations

Earnings (loss) per basic common share

Earnings per basic common share

Continuing operations

Discontinued operations

Earnings (loss) per diluted common share

Comprehensive income (loss)

Comprehensive loss attributable to noncontrolling

Comprehensive income (loss) attributable to Koppers

Earnings per diluted common share

Comprehensive income

Comprehensive income (loss) attributable to

noncontrolling interests

Comprehensive income attributable to Koppers

Weighted average shares outstanding (in thousands):

42 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

Cash provided by (used in) operating activities:

Net income (loss)

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

11 unchanged sentences

Other working capital

Net cash used in operating activities

Net cash provided by operating activities

Cash (used in) provided by investing activities:

Capital expenditures

Net cash provided by sale of assets

Cash provided by sale of assets

Net cash used in investing activities

42 unchanged sentences

and measurement of cash incentive plans.

Events and changes in circumstances arising after March 31, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Events and changes in circumstances arising after June 30, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

New Accounting Pronouncements

4 unchanged sentences

The guidance was effective upon issuance and may be applied prospectively to contract modifications made, hedging relationships entered into, and other transactions affected by reference rate reform, evaluated on or before December 31, 2022, beginning during the reporting period in which the guidance has been elected.

The Company’s debt agreements include the use of alternate rates when LIBOR is not available.

We do not expect the change from LIBOR to an alternate rate will have a material impact to our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.

The Company’s debt agreements include the use of alternate rates when LIBOR is not available and the Company does not maintain hedging relationships applicable to this ASU.

We do not expect the application of this update to have a material impact on our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.

Plant Closures and Divestitures

1 unchanged sentence

Recent closure activities include:

In February 2021, we sold our Follansbee, West Virginia coal tar distillation facility and we recorded a gain on sale of $ 5.7 million, consisting of $ 2.6 million from cash proceeds in addition to the assumption of certain liabilities by the buyer.

In June 2021, we sold a subsidiary related to our closed CMC facility located in Uithoorn, the Netherlands and we recorded a gain on sale of $ 0.3 million .

In April 2014, we had ceased coal tar distillation activities at the facility.

In February 2021, we sold our closed Follansbee, West Virginia coal tar distillation facility and we recorded a gain on sale of $ 5.7 million, consisting of $ 2.6 million from cash proceeds in addition to the assumption of certain liabilities by the buyer.

In September 2020, we sold Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) .

15 unchanged sentences

Reversal of accrued charges

Reserve at March 31, 2021

Sale of subsidiary

Reserve at June 30, 2021

Discontinued Operations

1 unchanged sentence

KJCC was located in Pizhou, Jiangsu Province, China and was a 75 percent-owned coal tar distillation company which was part of our CMC segment.

Included in the cash proceeds is restricted cash of $ 2.3 million which is being held in an escrow account and is recorded within cash and cash equivalents as of March 31, 2021 to cover potential customary indemnity claims by the buyers for a remaining period of 12 months.

In addition, an amount of $ 5.6 million is recorded in accrued liabilities as of March 31, 2021 and December 31, 2020 in anticipation of final post-closing working capital adjustments payable to the buyers.

The sale of KJCC represented a strategic shift that had a major effect on our operations and financial results in 2020 and were, therefore, classified as discontinued operations in our condensed consolidated financial statements and notes, which were restated accordingly in the prior year.

Net sales and operating loss from discontinued operations for the three months ended March 31, 2020 consisted of the following amounts:

Three Months Ended March 31,

Included in the cash proceeds is restricted cash of $ 2.3 million which is being held in an escrow account and is recorded within cash and cash equivalents as of June 30, 2021 to cover potential customary indemnity claims by the buyers for a remaining period of 9 months.

In addition, an amount of $ 5.6 million is recorded in accrued liabilities as of June 30, 2021 and December 31, 2020 in anticipation of final post-closing working capital adjustments payable to the buyers.

Net sales and operating loss from discontinued operations for the three and six months ended June 30, 2020 consisted of the following amounts:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

1 unchanged sentence

In addition, we ceased carbon black production at our CMC facility located in Kurnell, Australia during 2011.

Costs associated with this closure are also included in loss from discontinued operations on the condensed consolidated statement of operations and comprehensive income (loss).

Costs associated with this closure are also included in income (loss) from discontinued operations on the condensed consolidated statement of operations and comprehensive income.

Fair Value Measurements

Carrying amounts and the related estimated fair values of our financial instruments as of March 31, 2021 and December 31, 2020 are as follows:

March 31, 2021

Carrying amounts and the related estimated fair values of our financial instruments as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 2021

December 31, 2020

8 unchanged sentences

The fair value of our Credit Facility approximates carrying value due to the variable rate nature of this instrument.

Comprehensive Income (Loss) and Equity

Total comprehensive income (loss) for the three months ended March 31, 2021 and 2020 is summarized in the table below:

Three Months Ended March 31,

Comprehensive Income and Equity

Total comprehensive income for the three and six months ended June 30 , 2021 and 2020 is summarized in the table below:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

Net income (loss)

Changes in other comprehensive income (loss):

Changes in other comprehensive income:

Currency translation adjustment

Unrealized gains and losses on cash flow hedges, net

of tax (expense) benefit of $( 4.5 ) and $ 11.3

Unrealized gains on cash flow hedges, net

of tax expense of $ 0.1 , $ 11.6 , $ 4.6 and $ 1.7

Unrecognized pension net loss, net of tax

expense of $ 0.1 , $ 0.0 , $ 0.2 and $ 0.1

Total comprehensive income (loss)

Comprehensive loss attributable to

Total comprehensive income

Comprehensive income (loss) attributable to

noncontrolling interests

Comprehensive income (loss) attributable to Koppers

Comprehensive income attributable to Koppers

Amounts reclassified from accumulated other comprehensive loss to net income consist of amounts shown for changes in or amortization of unrecognized pension net loss.

This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost as disclosed in Note 13 – “Pensions and Post-Retirement Benefit Plans.” Other amounts reclassified from accumulated other comprehensive loss related to derivative financial instruments, net of tax, of $ 7.2 million for the three months ended March 31, 2021, and $ 1.1 million for the three months ended March 31, 2020.

The following tables present the change in equity for the three months ended March 31, 2021 and 2020, respectively:

This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost as disclosed in Note 13 – “Pensions and Post-Retirement Benefit Plans.” Other amounts reclassified from accumulated other comprehensive loss related to derivative financial instruments, net of tax, of $ 12.7 million and $ 19.9 million for the three and six months ended June 30, 2021, respectively, and $ 2.3 million and $ 3.4 million for the three and six months ended June 30, 2020, respectively.

The following tables present the change in equity for the three months ended June 30, 2021 and 2020, respectively:

(Dollars in millions)

4 unchanged sentences

Noncontrolling

Balance at December 31,

Net income (loss)

Balance at March 31,

Issuance of common stock

1 unchanged sentence

Other comprehensive

(loss) income

income (loss)

Currency translation

Cumulative translation

adjustment loss on

sale of subsidiary

Unrealized gain on cash

1 unchanged sentence

Repurchases of common

Balance at June 30,

(Dollars in millions)

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Treasury Stock

Noncontrolling

Balance at March 31,

Issuance of common stock

Employee stock plans

Other comprehensive

Currency translation

Unrealized gain on

cash flow hedges

Unrecognized pension

Balance at June 30,

The following tables present the change in equity for the six months ended June 30, 2021 and 2020, respectively:

(Dollars in millions)

8 unchanged sentences

Other comprehensive

(loss) income

income (loss)

Currency translation

Unrealized loss on

Cumulative translation

adjustment loss on

sale of subsidiary

Unrealized gain on cash

Unrecognized pension

Repurchases of common

Balance at June 30,

(Dollars in millions)

Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Treasury Stock

Noncontrolling

Balance at December 31,

Issuance of common stock

Employee stock plans

Other comprehensive

income (loss)

Currency translation

Unrealized gain on

cash flow hedges

1 unchanged sentence

Repurchases of common

Balance at March 31,

Balance at June 30,

Earnings per Common Share

3 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per common share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions, except share amounts, in thousands)

Net income (loss) attributable to Koppers

Loss from discontinued operations, net of tax

Loss from noncontrolling interests

Net income attributable to Koppers

Income (loss) from discontinued operations, net of tax

Gain on sale of discontinued operations

Noncontrolling interest related to discontinued

Income from continuing operations attributable to Koppers

7 unchanged sentences

Stock-based Compensation

We have outstanding stock-based compensation awards that were granted under the amended and restated 2005 Long-Term Incentive Plan (the “2005 LTIP”), the 2018 Long-Term Incentive Plan (the “2018 LTIP”) and the 2020 Long-Term Incentive Plan (the “2020 LTIP”).

The 2005 LTIP, the 2018 LTIP and the 2020 LTIP are collectively referred to as the “LTIP”.

The LTIP provides for the grant to eligible persons of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares , performance awards, dividend equivalents and other stock-based awards, which are collectively referred to as the “awards.” On May 6, 2021, the shareholders approved an amendment to our 2020 LTIP to increase the number of shares available for grant by 1,500,000 .

The LTIP provides for the grant to eligible persons of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares , performance awards, dividend equivalents and other stock-based awards, which are collectively referred to as the “awards.” On May 6, 2021, the shareholders approved an amendment to our 2020 LTIP and an Amended and Restated Employee Stock Purchase Plan to increase the number of shares available for grant by 1,500,000 and 300,000 , respectively.

Restricted Stock Units and Performance Stock Units

14 unchanged sentences

March 2019 Grant

May 2018 Grant

Grant date price per share of

performance award

Expected dividend yield per

Grant date price per share of performance

Expected dividend yield per share

Expected volatility

6 unchanged sentences

There are special vesting provisions for the stock units related to a change in control.

The following table shows a summary of the performance stock units as of March 31, 2021:

The following table shows a summary of the performance stock units as of June 30, 2021:

Performance Period

Performance stock units granted in March 2018 for the 2018 – 2020 performance period did not meet the minimum performance criteria and did not vest in March 2021.

The following table shows a summary of the status and activity of non-vested stock units for the three months ended March 31, 2021:

The following table shows a summary of the status and activity of non-vested stock units for the six months ended June 30, 2021:

Weighted Average

2 unchanged sentences

Non-vested at December 31, 2020

Non-vested at March 31, 2021

Performance share adjustment

Non-vested at June 30, 2021

Stock Options

21 unchanged sentences

Treasury bill rates for the expected life of the option.

The following table shows a summary of the status and activity of stock options for the three months ended March 31, 2021:

The following table shows a summary of the status and activity of stock options for the six months ended June 30, 2021:

Weighted Average

5 unchanged sentences

Outstanding at December 31, 2020

Outstanding at March 31, 2021

Exercisable at March 31, 2021

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Stock Compensation Expense

Total stock-based compensation expense recognized under our LTIP and employee stock purchase plan for the three months ended March 31, 2021 and 2020 is as follows:

Three Months Ended March 31,

Total stock-based compensation expense recognized under our LTIP and employee stock purchase plan for the three months ended June 30, 2021 and 2020 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

5 unchanged sentences

Cash received from the exercise of stock options

As of March 31, 2021 , total future compensation expense related to non-vested stock-based compensation arrangements totaled $ 24.7 million and the weighted-average period over which this expense is expected to be recognized is approximately 32 months .

As of June 30, 2021 , total future compensation expense related to non-vested stock-based compensation arrangements is expected to total $ 22.5 million and the weighted-average period over which this expense is expected to be recognized is approximately 29 months .

Segment Information

We have three reportable segments:

Railroad and Utility Products and Services, Performance Chemicals and Carbon Materials and Chemicals.

Railroad and Utility Products and Services, Performance Chemicals (“PC”) and Carbon Materials and Chemicals.

Our reportable segments contain multiple aggregated business units since management believes the long-term financial performance of these business units is affected by similar economic conditions.

3 unchanged sentences

Utility products include transmission and distribution poles and pilings.

The segment also operates a railroad services business that conducts engineering, design, repair and inspection services for railroad bridges and a business related to the recovery of used crossties.

The segment also operates a railroad services business that conducts engineering, design, repair and inspection services for railroad bridges, a business related to the recovery of used crossties and a business related to the inspection of utility poles.

Our PC segment develops, manufactures, and markets wood preservation chemicals and wood treatment technologies and services a diverse range of end-markets including infrastructure, residential and commercial construction, and agriculture .

5 unchanged sentences

We evaluate performance and determine resource allocations based on a number of factors, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and operating profit or loss from operations.

Operating profit does not include other loss, interest expense, income taxes or operating costs of Koppers Holdings Inc.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Intersegment transactions are eliminated in consolidation.

Operating profit or loss does not include other income or loss, interest expense, income taxes or operating costs of Koppers Holdings Inc.

Contract Balances

The timing of revenue recognition in accordance with ASC 606 results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet.

Contract assets of $ 7.8 million and $ 5.8 million are recorded within accounts receivable, net of allowance within the condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020, respectively.

The timing of revenue recognition results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet.

Contract assets of $ 9.8 million and $ 5.8 million are recorded within accounts receivable, net of allowance within the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020, respectively.

The following table sets forth certain sales and operating data, net of all intersegment transactions, for our segments for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

14 unchanged sentences

Carbon Materials and Chemicals (c)

Revenue excludes KJCC discontinued operations of $ 9.9 million for the three months ended March 31, 2020.

Depreciation and amortization expense excludes KJCC discontinued operations of $ 1.0 million for the three months ended March 31, 2020.

Operating profit (loss) excludes KJCC discontinued operations of $( 5.1 ) million for the three months ended March 31, 2020.

Revenue excludes KJCC revenue of $ 12.9 million and $ 22.8 million for the three and six months ended June 30, 2020, respectively.

Depreciation and amortization expense excludes KJCC expenses of $( 0.4 ) million and $ 0.5 million for the three and six months ended June 30, 2020, respectively.

Operating profit (loss) excludes KJCC amounts of $( 0.2 ) million and $( 5.3 ) million for the three and six months ended June 30, 2020, respectively.

The following table sets forth revenues for significant product lines, net of all intersegment transactions, for our segments for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

25 unchanged sentences

Entities that have historical pre-tax losses and current year estimated pre-tax losses that are not projected to generate a future benefit are excluded from the estimated annual effective income tax rate.

The estimated annual effective income tax rate, excluding discrete items discussed above, was 25.8 percent and 30.7 percent for the three months ended March 31, 2021 and 2020, respectively.

The estimated annual effective income tax rate, excluding discrete items discussed above, was 25.8 percent and 27.8 percent for the three months ended June 30, 2021 and 2020, respectively.

The estimated annual effective income tax rate differs from the U.S.

4 unchanged sentences

State income taxes, net of federal tax benefit

GILTI inclusion, net of foreign tax credits

Change in tax contingency reserves

GILTI inclusion, net of foreign tax credits

Estimated annual effective income tax rate

Income taxes as a percentage of pretax income were 24.5 percent for the three months ended March 31, 2021.

Income taxes as a percentage of pretax income were 26.0 percent for the three months ended June 30, 2021.

This is slightly higher than the estimated annual effective income tax rate due to minor discrete items .

Income taxes as a percentage of pretax income were 21.4 percent for the three months ended June 30, 2020.

This was lower than the estimated annual effective income tax rate due to discrete items, which were a net benefit of $ 2.4 million.

Discrete items were primarily related to a benefit for the release of a valuation allowance that was recorded for interest expense deduction limitations that were previously not expected to be realized.

Income taxes as a percentage of pretax income were 25.3 percent for the six months ended June 30, 2021.

This is lower than the estimated annual effective income tax rate due to discrete items , principally an excess tax deduction for vested stock awards.

Income taxes as a percentage of pretax income for the three months ended March 31, 2020 were lower than the estimated annual effective income tax rate due to discrete items, which were a net benefit of $ 1.8 million.

Discrete items included the tax benefit due to the enactment of the CARES Act which is discussed below.

This benefit was offset by a reduction of our tax deduction for vested stock awards.

Income taxes as a percentage of pretax income were 16.5 percent for the six months ended June 30, 2020.

This was lower than the estimated annual effective income tax rate due to discrete items, which were a net benefit of $ 4.2 million.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and a provision of the CARES Act temporarily increased the allowable business interest expense deduction from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, retroactively to January 1, 2019.

Any such limitation that is disallowed in a year could be carried forward to future years.

Due to the temporary change to the limitation, in the three months ended March 31, 2020, we recorded a tax benefit of $ 2.9 million to reverse a portion of a previously recorded valuation allowance for carryforward amounts that we determined would be utilized.

Due to the temporary change to the limitation, in the three and six months ended June 30, 2020 we recorded an income tax benefit of $ 2.5 million and $ 4.4 million, respectively, to reverse a portion of a previously recorded valuation allowance for carryforward amounts that we determined would be utilized.

Effective January 1, 2021, the limitation on the deduction was restored to 30 percent.

During the year, management regularly updates estimates of pre-tax income and income tax expense based on changes in pre-tax income projections by taxable jurisdiction, repatriation of foreign earnings, unrecognized tax benefits and other tax matters.

To the extent that actual results vary from these estimates, the actual annual effective income tax rate at the end of the year could be materially different from the estimated annual effective income tax rate for the three months ended March 31, 2021.

Unrecognized Tax Benefits

7 unchanged sentences

income tax examinations by tax authorities for years prior to 2016.

Unrecognized tax benefits totaled $ 2.5 million as of March 31, 2021 and December 31, 2020.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate, was approximately $ 2.4 million as of March 31, 2021 and December 31, 2020.

Unrecognized tax benefits totaled $ 2.5 million as of June 30, 2021 and December 31, 2020.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate, was approximately $ 2.5 million as of June 30, 2021 and December 31, 2020.

We recognize interest expense and any related penalties from unrecognized tax benefits in income tax expense.

As of March 31, 2021 and December 31, 2020, we had accrued approximately $ 0.9 million and $ 0.8 million for interest and penalties, respectively.

As of June 30, 2021 and December 31, 2020, we had accrued approximately $ 0.9 million and $ 0.8 million for interest and penalties, respectively.

We do not anticipate material changes to the amount of unrecognized tax benefits within the next twelve months.

Net inventories as of March 31, 2021 and December 31, 2020 are summarized in the table below:

Net inventories as of June 30, 2021 and December 31, 2020 are summarized in the table below:

(Dollars in millions)

4 unchanged sentences

Property, Plant and Equipment

Property, plant and equipment as of March 31, 2021 and December 31, 2020 are summarized in the table below:

Property, plant and equipment as of June 30, 2021 and December 31, 2020 are summarized in the table below:

(Dollars in millions)

12 unchanged sentences

For salaried employees, the retiree medical and retiree insurance plans have been closed to new participants.

The following table provides the components of net periodic benefit cost for the pension plans for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table provides the components of net periodic benefit cost for the pension plans for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

4 unchanged sentences

Defined contribution plan expense

Debt as of March 31, 2021 and December 31, 2020 was as follows:

Debt as of June 30, 2021 and December 31, 2020 was as follows:

Interest Rate

15 unchanged sentences

and its restricted subsidiaries to meet certain financial ratios.

As of March 31, 2021, we had $ 283.7 million of unused revolving credit availability for working capital purposes after restrictions from certain letter of credit commitments and other covenants.

As of March 31, 2021, $ 7.7 million of commitments were utilized by outstanding letters of credit.

As of June 30, 2021, we had $ 286.3 million of unused revolving credit availability for working capital purposes after restrictions from certain letter of credit commitments and other covenants.

As of June 30, 2021, $ 7.7 million of commitments were utilized by outstanding letters of credit.

Senior Notes due 2025

30 unchanged sentences

Variable lease expense is recognized in the period in which the obligation for those payments is incurred.

Operating lease costs were $ 7.7 million and $ 7.8 million and variable lease costs were $ 0.8 million and $ 1.0 million during the three months ended March 31, 2021 and 2020, respectively.

The following table presents information about the amount and timing of cash flows arising from our operating leases as of March 31, 2021:

Operating lease costs were $ 7.6 million and $ 15.3 million during the three and six months ended June 30, 2021, respectively, and $ 7.4 million and $ 15.2 million during the three and six months ended June 30, 2020, respectively.

Variable lease costs were $ 0.8 million and $ 1.6 million during the three and six months ended June 30, 2021, respectively, and $ 0.8 million and $ 1.8 million during the three and six months ended June 30, 2020, respectively.

The following table presents information about the amount and timing of cash flows arising from our operating leases as of June 30, 2021:

(Dollars in millions)

22 unchanged sentences

In accordance with ASC Topic 815-10, we designate certain of our commodity swaps as cash flow hedges of forecasted purchases of commodities.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings.

For those commodity swaps where hedge accounting is not elected, the fair value of the commodity swap is recognized as an asset or liability in the consolidated balance sheet and the related gain or loss on the derivative is reported in current earnings.

These amounts are classified in cost of sales in the condensed consolidated statement of operations.

As of March 31, 2021 and December 31, 2020, we had outstanding copper swap contracts of the following amounts:

As of June 30, 2021 and December 31, 2020, we had outstanding copper swap contracts of the following amounts:

Units Outstanding (in Pounds)

3 unchanged sentences

Contracts where hedge accounting was not

As of March 31, 2021 and December 31, 2020, the fair value of the outstanding copper swap contracts is recorded in the balance sheet as follows:

As of June 30, 2021 and December 31, 2020, the fair value of the outstanding copper swap contracts is recorded in the balance sheet as follows:

(Dollars in millions)

4 unchanged sentences

In the next twelve months , we estimate that $ 39.9 million of unrealized gains, net of tax, related to commodity price hedging will be reclassified from other comprehensive income into earnings .

See Note 6 – “Comprehensive Income (Loss) and Equity”, for amounts recorded in other comprehensive income (loss) and for amounts reclassified from accumulated other comprehensive loss into net income (loss) for the periods specified below.

For the three months ended March 31, 2021 and 2020, the unrealized gain (loss) from contracts where hedge accounting was not elected is as follows:

Three Months Ended March 31,

See Note 6 – “Comprehensive Income and Equity”, for amounts recorded in other comprehensive income and for amounts reclassified from accumulated other comprehensive loss into net income (loss) for the periods specified below.

For the three and six months ended June 30, 2021 and 2020, the unrealized gain (loss) from contracts where hedge accounting was not elected is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

Gain (loss) from contracts where hedge accounting was not elected

Gain (loss) from contracts where hedge accounting was not

The fair value associated with forward contracts related to foreign currency that are not designated as hedges are immediately charged to earnings.

These amounts are classified in cost of sales in the condensed consolidated statement of operations and comprehensive income (loss).

As of March 31, 2021 and December 31, 2020, the fair value of outstanding foreign currency forward contracts is recorded in the balance sheet as follows:

These amounts are classified in cost of sales in the condensed consolidated statement of operations and comprehensive income.

As of June 30, 2021 and December 31, 2020, the fair value of outstanding foreign currency forward contracts is recorded in the balance sheet as follows:

(Dollars in millions)

2 unchanged sentences

Net (liability) asset on balance sheet

As of March 31, 2021 and December 31, 2020, the net currency units outstanding for these contracts were:

As of June 30, 2021 and December 31, 2020, the net currency units outstanding for these contracts were:

(In millions)

8 unchanged sentences

is one of several defendants in lawsuits filed in two states in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch sold by the defendants.

There were 63 plaintiffs in 33 cases pending as of March 31, 2021, compared to 64 plaintiffs in 34 cases pending as of December 31, 2020.

As of March 31, 2021, there were 32 cases pending in the Court of Common Pleas of Allegheny County, Pennsylvania, and one case pending in the Circuit Court of Knox County, Tennessee.

There were 61 plaintiffs in 32 cases pending as of June 30, 2021, compared to 64 plaintiffs in 34 cases pending as of December 31, 2020.

As of June 30, 2021, there were 31 cases pending in the Court of Common Pleas of Allegheny County, Pennsylvania, and one case pending in the Circuit Court of Knox County, Tennessee.

The plaintiffs in all 32 pending cases seek to recover compensatory damages.

76 unchanged sentences

is a de minimis party at this site.

We have accrued the estimated costs of participating in the PRP group at the Portland Harbor and Newark Bay CERCLA sites as a de minimis contributor and estimated such settlement amounts at the sites totaling $ 3.6 million as of March 31, 2021.

The actual cost could be materially higher as there has not been a determination of how those costs will be allocated among the PRPs at the sites.

1 unchanged sentence

There are two plant sites related to the Performance Chemicals business and one plant site related to the Utility and Industrial Products business in the United States where we have recorded environmental remediation liabilities for soil and groundwater contamination which occurred prior to our acquisition of the businesses.

As of March 31, 2021, our estimated environmental remediation liability for these acquired sites totals $ 4.2 million.

As of June 30, 2021, our estimated environmental remediation liability for these acquired sites totals $ 4.2 million.

Foreign Environmental Matters .

There is one plant site related to the Performance Chemicals business located in Australia where we have recorded an environmental remediation liability for soil and groundwater contamination which occurred prior to the acquisition of the site.

As of March 31, 2021, our estimated environmental remediation liability for the site totals $ 1.5 million.

As of June 30, 2021, our estimated environmental remediation liability for the site totals $ 1.4 million.

Environmental Reserves Rollforward.

The following table reflects changes in the accrual for environmental remediation.

A total of $ 2.8 million and $ 2.9 million are classified as current liabilities as of March 31, 2021 and December 31, 2020 respectively:

A total of $ 2.9 million are classified as current liabilities as of June 30, 2021 and December 31, 2020:

(Dollars in millions)

Balance at beginning of year

Reversal of reserves

Cash expenditures

2 unchanged sentences

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