What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 122 added, 114 removed, 565 unchanged (29% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of Sales

19 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Other Comprehensive Income:

11 unchanged sentences

(Dollars in thousands)

June 30, 2021

September 30, 2021

December 31, 2020

39 unchanged sentences

(In thousands)

Six Months Ended June 30

Nine Months Ended September 30

Cash Flows From Operating Activities

38 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading.

In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company’s financial position as of June 30, 2021, and its results of operations for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020, have been included.

These financial statements and related footnotes should be read in conjunction with the financial statements and related footnotes included in the Company’s 2020 Annual Report on Form 10-K.

In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company’s financial position as of September 30, 2021, and its results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020, have been included.

These financial statements and related footnotes should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Annual Report on Form 10-K).

RECONCILIATIONS OF EQUITY

Below are reconciliations of total equity, Company equity and equity attributable to noncontrolling interests for the three and six months ended June 30, 2021 and 2020:

Below are reconciliations of total equity, Company equity and equity attributable to noncontrolling interests for the three and nine months ended September 30, 2021 and 2020:

(In thousands, except share and per share amounts)

2 unchanged sentences

Noncontrolling

Balance at March 31, 2021

Balance at June 30, 2021

Issuance of 0 shares of common stock under stock option plan

4 unchanged sentences

Common stock ($ 0.305 per share)

Balance at June 30, 2021

Balance at September 30, 2021

(In thousands, except share and per share amounts)

9 unchanged sentences

Common stock ($ 0.915 per share)

Balance at June 30, 2021

Balance at September 30, 2021

(In thousands, except share and per share amounts)

2 unchanged sentences

Noncontrolling

Balance at March 31, 2020

Balance at June 30, 2020

Issuance of 40,435 shares of common stock under stock option plan

Purchase of 71,555 shares of common stock

Stock-based and deferred compensation

2 unchanged sentences

Common stock ($ 0.275 per share)

Balance at June 30, 2020

Balance at September 30, 2020

(In thousands, except share and per share amounts)

9 unchanged sentences

Common stock ($ 0.825 per share)

Balance at June 30, 2020

Balance at September 30, 2020

Reflects the noncontrolling interest in the Company’s China joint venture.

FAIR VALUE MEASUREMENTS

The following were the financial instruments held by the Company at June 30, 2021, and December 31, 2020, and the methods and assumptions used to estimate the instruments’ fair values:

The following were the financial instruments held by the Company at September 30, 2021, and December 31, 2020, and the methods and assumptions used to estimate the instruments’ fair values:

Cash and cash equivalents

2 unchanged sentences

Derivative assets and liabilities

Derivative assets and liabilities include the foreign currency exchange contracts discussed in Note 4, Derivate Instruments , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

Derivative assets and liabilities include the foreign currency exchange contracts discussed in Note 4, Derivative Instruments , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

Fair value and carrying value were the same because the contracts were recorded at fair value.

10 unchanged sentences

The Company’s fair value measurements for debt fall within Level 2 of the fair value hierarchy.

At June 30, 2021, and December 31, 2020, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $ 614,000 and $ 617,000 as of June 30, 2021 and December 31, 2020, respectively):

At September 30, 2021, and December 31, 2020, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $ 673,000 and $ 617,000 as of September 30, 2021 and December 31, 2020, respectively):

(In thousands)

September 30,

Carrying value

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of June 30, 2021, and December 31, 2020, and the level within the fair value hierarchy in which the fair value measurements fall:

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of September 30, 2021, and December 31, 2020, and the level within the fair value hierarchy in which the fair value measurements fall:

(In thousands)

September 30,

Mutual fund assets

19 unchanged sentences

Gains and losses arising from recording the foreign exchange contracts at fair value are reported in earnings as offsets to the losses and gains reported in earnings arising from the re-measurement of the asset and liability balances into the applicable functional currencies.

At June 30, 2021, and December 31, 2020, the Company had open forward foreign currency exchange contracts, all with durations of one to three months , to buy or sell foreign currencies with U.S.

At September 30, 2021, and December 31, 2020, the Company had open forward foreign currency exchange contracts, all with durations of one to three months , to buy or sell foreign currencies with U.S.

dollar equivalent amounts of $ 50,094,000 and $ 48,336,000 , respectively.

The fair values of the derivative instruments held by the Company on June 30, 2021, and December 31, 200, are disclosed in Note 3, Fair Value Measurements , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

Derivative instrument gains and losses for the three- and six-month periods ended June 30, 2021 and 2020, were immaterial.

For amounts reclassified out of accumulated other comprehensive income (loss) (AOCI) into earnings for the three- and six-month periods ended June 30, 2021 and 2020, see Note 11, Accumulated Other Comprehensive Income (Loss) , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

The fair values of the derivative instruments held by the Company on September 30, 2021, and December 31, 2020, are disclosed in Note 3, Fair Value Measurements , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

Derivative instrument gains and losses for the three- and nine-month periods ended September 30, 2021 and 2020, were immaterial.

For amounts reclassified out of accumulated other comprehensive income (loss) (AOCI) into earnings for the three- and nine-month periods ended September 30, 2021 and 2020, see Note 11, Accumulated Other Comprehensive Income (Loss) , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).

STOCK-BASED COMPENSATION

On June 30, 2021, the Company had stock options, stock awards and stock appreciation rights (SARs) outstanding under its 2011 Incentive Compensation Plan.

On September 30, 2021, the Company had stock options, stock awards and stock appreciation rights (SARs) outstanding under its 2011 Incentive Compensation Plan.

SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled.

Stock options and SARs granted prior to 2017 generally cliff vested after two years .

Starting in 2017, stock options and

SARs have a three-year graded vesting feature, with one-third of the awards vesting each year.

Starting in 2017, stock options and SARs have a three-year graded vesting feature, with one-third of the awards vesting each year.

The Company has elected the straight-line method of expense attribution for the stock options and SARs with the graded vesting feature.

2 unchanged sentences

Three Months Ended

Six Months Ended

The increase in stock-based compensation expense for the first six months of 2021 compared to the first six months of 2020 was primarily attributable to performance awards and cash-settled SARs.

Nine Months Ended

The decrease in stock-based compensation expense for the three months of 2021 versus the same period in 2020 was due to a decrease in cash-settled SARS compensation expense which reflects a decrease in the market value of Company stock during the third quarter of 2021 versus an increase in the market value of Company stock during the third quarter of 2020.

The increase in stock-based compensation expense for the first nine months of 2021 compared to the first nine months of 2020 was primarily attributable to performance awards.

The increase in performance awards compensation expense reflects management’s assessment of profitability performance targets.

The increase in cash-settled SARS compensation expense reflects an increase in the market value of Company stock during the first half of 2021 versus a decrease in the market value of Company stock during the first half of 2020.

Unrecognized compensation costs for stock options, stock awards and SARs were as follows:

(In thousands)

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

Stock awards (at target)

The unrecognized compensation costs at June 30, 2021, are expected to be recognized over weighted-average periods of 2.0 years for stock options, SARs and stock awards.

The composition of inventories at June 30, 2021, and December 31, 2020, was as follows:

The unrecognized compensation costs at September 30, 2021, are expected to be recognized over weighted-average periods of 1.8 years for stock options, SARs and stock awards.

The composition of inventories at September 30, 2021, and December 31, 2020, was as follows:

(In thousands)

September 30,

Finished goods

1 unchanged sentence

Total inventories

The Company’s operating leases are primarily comprised of railcar, real estate, storage tank, auto, trailer and manufacturing/office equipment leases.

Railcars and real estate comprise approximately 23 percent and 63 percent, respectively, of the Company’s consolidated ROU asset balance.

The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases.

Real estate and railcars comprise approximately 60 percent and 26 percent, respectively, of the Company’s consolidated right of use (ROU) asset balance.

Except for real estate, typical lease terms range from one to ten years .

Real estate lease terms typically range from one to fifty years .

The Company’s four principal real estate leases consist of the office lease for new corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana.

As of June 30, 2021, the Company had railcar leases, valued at approximately $ 3,154,000 , that had not commenced.

These leases will commence in the third quarter of 2021 and the first quarter of 2022.

The Company’s four principal real estate leases consist of the office lease for the corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana.

As of September 30, 2021, the Company had railcar, storage tank, and office equipment leases valued at approximately $ 2,049,000 , that had not commenced.

These leases will commence in the fourth quarter of 2021 and the first quarter of 2022.

As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments.

1 unchanged sentence

IBR was used for all other countries as the leases in these countries are not material.

The total value of

leases that reside in the five countries identified above represents approximately 98 percent of the Company’s consolidated ROU asset balance.

The total value of leases that reside in the five countries identified above represents approximately 98 percent of the Company’s consolidated ROU asset balance.

Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Condensed Consolidated Statements of Income .

1 unchanged sentence

Three months ended

June 30, 2021

Six months ended

June 30, 2021

September 30, 2021

Nine months ended

September 30, 2021

Operating lease cost

6 unchanged sentences

Right-of-use assets obtained in exchange for operating lease liabilities

The following table outlines maturities of lease liabilities as of June 30, 2021:

The following table outlines maturities of lease liabilities as of September 30, 2021:

(In thousands)

Undiscounted Cash Flows:

2021 (excluding the six months ended June 30, 2021)

2021 (excluding the nine months ended September 30, 2021)

Subsequent to 2025

13 unchanged sentences

Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations.

Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party (PRP) at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes.

In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites.

7 unchanged sentences

The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed.

As of June 30, 202 1 , the Company estimated a range of possible environmental losses and legal losses of $ 22,459,000 to $ 40,890,000 .

As of September 30, 2021, the Company estimated a range of possible environmental losses and legal losses of $ 22,892,000 to $ 41,264,000 .

Within the range of possible environmental losses and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range.

These accruals totaled $ 22,459,000 at June 30, 202 1 and $ 22,884,000 at December 31, 20 20 .

These accruals totaled $ 22,892,000 at September 30, 2021 and $ 22,884,000 at December 31, 2020.

Although the Company believes that its reserves are adequate for contingencies, it is possible due to the uncertainties noted above, that additional reserves could be required in the future.

Cash expenditures related to legal matters and environmental matters approximated $ 1,267,000 and $ 3,075,000 for the six-month periods ended June 30, 202 1 and 20 20 , respectively .

Cash expenditures related to legal matters and environmental matters approximated $ 2,530,000 and $ 3,781,000 for the nine-month periods ended September 30, 2021 and 2020, respectively.

For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions.

3 unchanged sentences

However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material.

Following are summaries of the Company’s major contingencies at June 30, 2021:

Following are summaries of the Company’s major contingencies at September 30, 2021:

Maywood, New Jersey Site

15 unchanged sentences

District Court for the District of New Jersey that involved the D’Imperio Site.

In 2020, the PRPs were provided with updated remediation cost estimates by the PRP group technical consultant and project manager, which the Company considered in its determination of its range of estimated possible losses and liability balance.

In 2020, the PRPs were

provided with updated remediation cost estimates by the PRP group technical consultant and project manager, which the Company considered in its determination of its range of estimated possible losses and liability balance.

The changes in range of possible losses and liability balance were immaterial.

Remediation work continues at the D’Imperio site.

Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of

remediation for the D’Imperio site.

Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site.

Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the current recorded liability .

3 unchanged sentences

Under the Company’s October 1, 1993, agreement with the current owner of the Wilmington site, once total site remediation costs exceed certain levels, the Company is obligated to contribute up to five percent of future response costs associated with this site with no limitation on the ultimate amount of contributions.

The Company has paid the current owner $ 3,105,000 for the Company’s portion of environmental response costs at the Wilmington site through June 30, 2021.

The Company has paid the current owner $ 3,149,000 for the Company’s portion of environmental response costs at the Wilmington site through September 30, 2021.

The Company has recorded a liability for its portion of the estimated remediation costs for the site.

6 unchanged sentences

Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs.

However, actual costs could differ materially from current recorded liability.

However, actual costs could differ materially from current recorded liabilities.

POSTRETIREMENT BENEFIT PLANS

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Interest cost

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Interest cost

5 unchanged sentences

qualified defined benefit plans.

Approximately $ 274,000 is expected to

be paid related to the unfunded non-qualified plans in 202 1 .

Of such amount, $ 171,000 had been paid related to the non-qualified plans as of June 30, 202 1 .

Approximately $ 274,000 is expected to be paid related to the unfunded non-qualified plans in 2021.

Of such amount, $ 223,000 had been paid related to the non-qualified plans as of September 30, 2021.

The Company’s U.K.

subsidiary expects to contribute approximately $ 495,000 to its defined benefit pension plan in 2021.

Of such amount, $ 272,000 had been contributed to the plan as of June 30, 2021.

Of such amount, $ 400,000 had been contributed to the plan as of September 30, 2021.

Defined Contribution Plans

1 unchanged sentence

The Company’s U.S.

retirement contributions plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan, and one non-qualified supplemental executive plan.

In the six months ended June 30, 2021 and 2020, the Company made contributions into the qualified retirement plans for U.S.

retirement contribution plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan, and one non-qualified supplemental executive plan.

In the nine months ended September 30, 2021 and 2020, the Company made contributions into the qualified retirement plans for U.S.

employees and for certain non-U.S.

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Retirement savings contributions

7 unchanged sentences

The liabilities related to the supplemental plans increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciates and decrease when the value of the trust assets declines (i.e., supplemental plan income is recognized).

At June 30, 2021, the balance of the trust assets was $ 2,111,000 , which equaled the balance of the supplemental plan liabilities.

At September 30, 2021, the balance of the trust assets was $ 2,087,000 , which equaled the balance of the supplemental plan liabilities.

See the long-term investments section in Note 3, Fair Value Measurements , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q) for further information regarding the Company’s mutual fund assets.

EARNINGS PER SHARE

Below are the computations of basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020:

Below are the computations of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020:

(In thousands, except per share amounts)

Three Months Ended

Six Months Ended

Nine Months Ended

Computation of Basic Earnings per Share

16 unchanged sentences

Diluted earnings per share

(1) No options/SARs to acquire shares of Company common stock were excluded from the computations of diluted earnings per share for the three and six months ended June 30, 2021, respectively.

Options/SARs to acquire 253,448 and 254,868 shares of Company common stock were excluded from the computations of diluted earnings per share for the three and six months ended June 30, 2020, respectively.

Inclusion of the instruments would have had an antidilutive effect on the computations of the earnings per share.

(1) 69,199 and 207,598 options/SARs to acquire shares of Company common stock were excluded from the computations of diluted earnings per share for the three and nine months ended September 30, 2021, respectively.

Options/SARs to acquire 169,912 shares of Company common stock were excluded from the computation of diluted earnings per share for the nine months ended September 30, 2020.

Inclusion of the instruments would have had an antidilutive effect on the computation of diluted earnings per share.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Below is the change in the Company’s AOCI balance by component (net of income taxes) for the three and six months ended June 30, 2021 and 2020:

Below is the change in the Company’s AOCI balance by component (net of income taxes) for the three and nine months ended September 30, 2021 and 2020:

(In thousands)

Balance at March 31, 2020

Balance at June 30, 2020

Other comprehensive income before reclassifications

1 unchanged sentence

Net current-period other comprehensive income

Balance at September 30, 2020

Balance at June 30, 2021

Balance at March 31, 2021

Other comprehensive income before reclassifications

1 unchanged sentence

Net current-period other comprehensive income

Balance at June 30, 2021

Balance at September 30, 2021

Balance at December 31, 2019

2 unchanged sentences

Net current-period other comprehensive income

Balance at June 30, 2020

Balance at September 30, 2020

Balance at December 31, 2020

2 unchanged sentences

Net current-period other comprehensive income

Balance at June 30, 2021

Information regarding the reclassifications out of AOCI for the three- and six-month periods ended June 30, 2021 and 2020, is displayed below:

Balance at September 30, 2021

Information regarding the reclassifications out of AOCI for the three- and nine-month periods ended September 30, 2021 and 2020, is displayed below:

(In thousands)

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Affected Line Item in

12 unchanged sentences

Surfactants, Polymers and Specialty Products.

Net sales by segment for the three and six months ended June 30, 2021 and 2020, were as follows:

Net sales by segment for the three and nine months ended September 30, 2021 and 2020, were as follows:

(In thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

Segment Net Sales

Specialty Products

Segment operating income and reconciliations of segment operating income to income before provision for income taxes for the three and six months ended June 30, 2021 and 2020, are summarized below:

Segment operating income and reconciliations of segment operating income to income before provision for income taxes for the three and nine months ended September 30, 2021 and 2020, are summarized below:

(In thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

Segment Operating Income

13 unchanged sentences

For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location.

As of June 30, 2021, the Company had $ 641,000 of contract liabilities and no contract assets.

As of September 30, 2021, the Company had $ 921,000 of contract liabilities and no contract assets.

A contract liability would typically arise when an advance or deposit is received from a customer before the Company recognizes revenue.

1 unchanged sentence

When such situations do arise, the Company would maintain a deferred revenue liability until the time a performance obligation has been satisfied.

The Company recognized $ 773,000 of revenue in the first six months of 2021 from pre-existing contract liabilities at December 31, 2020.

The Company recognized $ 773,000 of revenue in the first nine months of 2021 from pre-existing contract liabilities at December 31, 2020.

During 2020 the Company recognized $ 10,709,000 of long-term deferred revenue associated with a payment received to defray the cost of capital expenditures necessary to service a customer’s future product needs.

This deferred revenue will be recognized over the period of the contract.

As of June 30, 2021, no revenue has been recognized from this contract.

The tables below provide a geographic disaggregation of net sales for the three and six months ended June 30, 2021 and 2020.

As of September 30, 2021, no revenue has been recognized from this contract.

The tables below provide a geographic disaggregation of net sales for the three and nine months ended September 30, 2021 and 2020.

The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors.

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

(In thousands)

3 unchanged sentences

Latin America

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

(In thousands)

3 unchanged sentences

Latin America

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

(In thousands)

3 unchanged sentences

Latin America

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

(In thousands)

3 unchanged sentences

Latin America

At June 30, 2021, and December 31, 2020, debt was comprised of the following:

At September 30, 2021, and December 31, 2020, debt was comprised of the following:

(In thousands)

September 30,

Unsecured private placement notes

3 unchanged sentences

2.30% (net of unamortized debt issuance cost of $ 75 and $ 0 for 2021 and 2020, respectively)

2.37% (net of unamortized debt issuance cost of $ 85 and $ 0 for 2021 and 2020, respectively)

Revolving credit facility borrowing

Debt of foreign subsidiaries

2 unchanged sentences

Long-term debt

On June 10, 2021, the Company entered into a note purchase agreement pursuant to which it issued and sold $ 50,000,000 in aggregate principal amount of 2.30% Senior Notes, Series 2021-A, due June 10, 2028 (the Series 2021-A Notes).

On June 10, 2021, the Company entered into a note purchase agreement pursuant to which it issued and sold $ 50,000,000 in aggregate principal amount of its 2.30% Senior Notes, Series 2021-A, due June 10, 2028 (the Series 2021-A Notes).

The Series 2021-A Notes bear interest at a fixed rate of 2.30 %, with interest to be paid semi-annually and with equal annual principal payments beginning on June 10, 2024 and continuing through final maturity on June 10, 2028 .

1 unchanged sentence

This note purchase agreement requires the maintenance of certain financial ratios and covenants that are substantially similar to the Company’s existing long-term debt and provides for customary events of default.

In addition, on September 23, 2021, the Company entered into a note purchase agreement pursuant to which it issued and sold $ 50,000,000 in aggregate principal amount of its 2.37 % Senior Notes, Series 2021-B, due September 23, 2028 (the Series 2021-B Notes).

The Series 2021-B Notes bear interest at a fixed rate of 2.37 % with interest to be paid semi-annually and with equal annual principal payments beginning on September 23, 2024 and continuing through final maturity on September 23, 2028 .

The proceeds of the issuance of the Series 2021-B Notes are being used primarily for capital expenditures, to pay down existing debt and for other corporate purposes.

The Company has a committed $ 350,000,000 multi-currency revolving credit agreement that expires on January 30, 2023 .

The Company maintains import letters of credit, and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the revolving credit agreement.

As of June 30, 2021, the Company had outstanding letters of credit totaling $ 6,993,000 and no borrowings under the revolving credit agreement.

There was $ 343,007,000 available under the revolving credit agreement as of June 30, 2021.

As of September 30, 2021, the Company had outstanding borrowings totaling $ 6,000,000 and outstanding letters of credit totaling $ 7,067,000 .

There was $ 336,933,000 available under the revolving credit agreement as of September 30, 2021.

The Company’s loan agreements contain provisions which, among others, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends.

Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $ 434,265,000 and $ 373,884,000 at June 30, 2021 and December 31, 2020, respectively.

Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $ 458,266,000 and $ 373,884,000 at September 30, 2021 and December 31, 2020, respectively.

Other, net in the consolidated statements of income included the following:

1 unchanged sentence

Three Months Ended

Six Months Ended

Foreign exchange (losses) gains

Nine Months Ended

Foreign exchange gains

Investment income

Realized and unrealized gains on investments

Realized and unrealized (losses) gains on investments

Net periodic pension benefit cost

2 unchanged sentences

During the third quarter of 2018, the Company approved a plan to shut down Surfactant operations at its German plant site.

As of June 30, 2021, an aggregate of $ 2,392,000 shut down related expense has been recognized at the site.

As of September 30, 2021, an aggregate of $ 2,392,000 shut down related expense has been recognized at the site.

In the first quarter of 2020, the Company recognized $ 79,000 of decommissioning expenses at the site.

The Company finalized shut down of the plant in 2020 and no more expenses associated with the restructuring are expected.

The Company finalized shut down of Surfactant operations at the plant in 2020 and no more expenses associated with the restructuring are expected.

2016 Restructuring

3 unchanged sentences

Decommissioning of the assets is expected to continue throughout 2021.

As of June 30, 2021, $ 8,812,000 of aggregate restructuring expense has been recognized, reflecting $ 1,644,000 of termination benefits for approximately 30 employees and $ 7,168,000 for other expenses, principally site decommissioning costs.

The Company recognized $ 114,000 and $ 225,000 of decommissioning expenses in the second quarter of 2021 and 2020, respectively.

The Company recognized $ 195,000 and $ 503,000 of decommissioning expenses in the first six months of 2021 and 2020, respectively.

As of September 30, 2021, $ 8,884,000 of aggregate restructuring expense has been recognized, reflecting $ 1,644,000 of termination benefits for approximately 30 employees and $ 7,240,000 for other expenses, principally site decommissioning costs.

The Company recognized $ 72,000 and $ 126,000 of decommissioning expenses in the third quarter of 2021 and 2020, respectively.

The Company recognized $ 267,000 and $ 629,000 of decommissioning expenses in the first nine months of 2021 and 2020, respectively.

2021 Acquisitions

8 unchanged sentences

The working capital acquired included $ 5,900,000 of cash.

The acquisition has been accounted for as a business combination, and the acquired operations are included in the Company’s Polymer segment in the first six months of 2021.

The acquisition has been accounted for as a business combination, and the acquired operations are included in the Company’s Polymer segment in the first nine months of 2021.

The assets acquired and liabilities assumed as part of the acquisition were measured and recorded at estimated fair value.

The purchase price allocation remains preliminary as of June 30, 2021 pending finalization of the fair value of intangibles and property, plant and equipment.

The principle valuation techniques employed include cost and market approaches (PP&E), relief from royalty method under the income approach (trade name and technology/know) and multi-period excess earnings method under the income approach (customer relationships).

The following table summarizes the preliminary purchase price allocation for the major components of the acquisition:

The principle valuation techniques employed include cost and market approaches (PP&E), relief from royalty method under the income approach (trade name and technology/know-how) and multi-period excess earnings method under the income approach (customer relationships).

The Company finalized the purchase price allocation during the third quarter of 2021.

The following table summarizes the purchase price allocation for the major components of the acquisition:

(In thousands)

5 unchanged sentences

Identifiable intangible assets included technology and manufacturing know-how ($ 13,000,000 ), trademarks ($ 8,000,000 ) and customer relationships ($ 25,000,000 ).

The amortization periods for know-how and trademarks have initially been estimated to be in the range of 7 to 8 years.

The amortization period for customer relationships has initially been estimated to be in the range of 12 to 14 years.

As of June 30, 2021, in addition to the purchase price, the Company also paid $ 3,551,000 of acquisition-related expenses that primarily included legal, consulting, valuation and accounting services.

For the three and six months ended June 30, 2021, the

Company incurred $ 319,000 and $ 1,604,000 of acquisition-related expenses , respectively .

The amortization periods for know-how and trademarks have been estimated to be in the range of 7 to 8 years.

The amortization period for customer relationships has been estimated to be in the range of 12 to 14 years.

As of September 30, 2021, in addition to the purchase price, the Company also paid $ 4,025,000 of acquisition-related expenses that primarily included legal, consulting, valuation and accounting services.

For the three and nine months ended September 30, 2021, the Company incurred $ 474,000 and $ 2,078,000 of acquisition-related expenses, respectively.

These costs were included in the Administrative expenses line in the Company’s condensed consolidated statement of income.

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

1 unchanged sentence

The supplemental pro forma information is presented for illustrative purposes only and may not be indicative of the consolidated results that would have been achieved by the Company had the acquisition occurred on January 1, 2020.

Furthermore, future results may vary significantly from the results reflected in the pro forma information.

Furthermore, future results may vary materially from the results reflected in the pro forma information.

The pro forma results include adjustments primarily related to amortization of acquired intangible assets, depreciation of the fair value adjustment related to acquired plant assets, tax expense and management assumptions related to INVISTA’s legacy carved-out financial statements.

17 unchanged sentences

The purchase price of the acquisition was $ 14,000,000 , plus associated value-added taxes (VAT).

As of June 30, 2021, $ 13,519,000 , inclusive of $ 308,000 net VAT, had been paid with cash on hand.

As of September 30, 2021, $ 14,308,000 , inclusive of $ 308,000 net VAT, had been paid with cash on hand.

The acquisition was accounted for as a business combination and the assets were measured and recorded at their estimated fair value.

9 unchanged sentences

Total assets acquired

Other non-current liabilities

Total liabilities assumed

Net assets acquired

Logos Technologies Acquisition

23 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