What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-02 compared with 2021-03-02 · 75 added, 128 removed, 668 unchanged (23% of the section changed)

2 unchanged sentences

Management's Report on Internal Control over Financial Reporting 44

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated F inancial Statements:

36 unchanged sentences

A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

5 unchanged sentences

Revenue from the Ethylene Sales Agreement

As described in Notes 2 and 11 to the consolidated financial statements, the Partnership recognized net sales to Westlake Chemical Corporation ("Westlake") of $888 million for the year ended December 31, 2020, including a buyer deficiency fee of $70 million.

As described in Notes 2 and 11 to the consolidated financial statements, the Partnership recognized net sales to Westlake Chemical Corporation ("Westlake") of $1,027 million for the year ended December 31, 2021, including a buyer deficiency fee of $51 million and a shortfall of $59 million.

The Ethylene Sales Agreement requires Westlake to purchase a minimum volume of ethylene each year equal to 95% of Westlake Chemical OpCo LP's ("OpCo") planned ethylene production per year, subject to certain exceptions and a maximum commitment of 3.8 billion pounds per year.

The fee for each pound of ethylene purchased by Westlake from OpCo will equal (i) the actual price OpCo pays Westlake to purchase ethane, (ii) plus the actual price OpCo pays Westlake to purchase natural gas, (iii) plus OpCo's estimated operating costs divided by OpCo's planned ethylene production for the year, (iv) plus a five-year average of OpCo's expected future maintenance capital expenditures and other turnaround expenditures divided by OpCo's planned ethylene production capacity for the year, (v) less the proceeds received by OpCo from the sale of co-products associated with producing the ethylene purchased by Westlake, (vi) plus a $0.10 per pound margin.

Two of the Partnership's facilities were impacted by Hurricanes Laura and Delta, which resulted in force majeure events under the Ethylene Sales Agreement.

As a result of the force majeure events, the Partnership recognized a buyer deficiency fee.

The buyer deficiency fee represents fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure event.

The principal considerations for our determination that performing procedures relating to revenue from the Ethylene Sales Agreement is a critical audit matter are the significant audit effort in performing procedures and evaluating the calculation of the fee for each pound of ethylene and the buyer deficiency fee.

The result of the fee structure is that OpCo should generally recover the portion of its total operating costs and maintenance capital expenditures and other turnaround expenditures corresponding to the portion of OpCo's aggregate production that is purchased by Westlake.

Any shortfall in recovery of such costs is generally recognized during the period in which the related operating, maintenance or turnaround activities occur and is recoverable from Westlake in the subsequent year.

Under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95% of the actual production costs incurred by OpCo during the contract year, OpCo is entitled to recover the shortfall in such production costs (proportionate to the volume sold to Westlake) in the subsequent year ("Shortfall").

As a result of force majeure events during 2021, the Partnership recognized a buyer deficiency fee and Shortfall.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the accuracy of the fees used to determine revenue from the Ethylene Sales Agreement.

These procedures also included, among others, testing the completeness and accuracy of underlying inputs used in the price and buyer deficiency fee calculation, and testing the accuracy of the minimum volume of ethylene purchased by Westlake as part of the Ethylene Sales Agreement.

These procedures also included, among others, testing the completeness and accuracy of underlying inputs used in the price, buyer deficiency fee and Shortfall calculation, and testing the accuracy of the minimum volume of ethylene purchased by Westlake as part of the Ethylene Sales Agreement.

/s/ PricewaterhouseCoopers LLP

77 unchanged sentences

Westlake General

Westlake Accumulated

Comprehensive

Income Noncontrolling Interest

Westlake Noncontrolling Interest

in OpCo Total

2 unchanged sentences

Net income 35,978 25,003 — 271,914 332,895

Net effect of cash flow hedge — — — ( 279 ) — ( 279 )

Units issued for vested phantom units 146 — — — 146

Net proceeds from private placement of common units

62,661 — — — 62,661

5 unchanged sentences

Units issued for vested phantom units 81 — — — 81

Net proceeds from private placement of common units

62,661 — — — — 62,661

Quarterly distribution to unitholders ( 39,734 ) ( 26,629 ) — — ( 66,363 )

35 unchanged sentences

Agreement 293,000 388,000 515,445

Other ( 130 ) — —

Net cash provided by (used for) investing activities ( 64,301 ) 2,032 ( 57,707 )

18 unchanged sentences

On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests.

In connection with the IPO, the Partnership acquired a 10.6 % interest in Westlake Chemical OpCo LP ("OpCo") and a 100 % interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo.

OpCo owns three ethylene production facilities and a common carrier ethylene pipeline (collectively, the "Contributed Assets").

As of December 31, 2018, the Partnership had an aggregate 18.3 % limited partner interest in OpCo.

On March 29, 2019, the Partnership purchased an additional 4.5 % newly-issued limited partner interest in OpCo for approximately $ 201,445 , resulting in an aggregate 22.8 % limited partner interest in OpCo, effective January 1, 2019.

The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Chemical Corporation.

References to "Westlake" refer collectively to Westlake Chemical Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP.

In connection with the IPO, the Partnership acquired a 10.6 % limited partner interest in Westlake Chemical OpCo LP ("OpCo") and a 100 % interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo.

OpCo owns three ethylene production facilities and one common carrier ethylene pipeline (collectively, the "Contributed Assets").

Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo.

Most recently, on March 29, 2019, the Partnership purchased an additional 4.5 % newly-issued limited partner interest in OpCo for approximately $ 201,445 , resulting in an aggregate 22.8 % limited partner interest in OpCo, effective January 1, 2019.

The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Corporation.

References to "Westlake" refer collectively to Westlake Corporation (formerly known as Westlake Corporation) and its subsidiaries, other than the Partnership, OpCo and OpCo GP.

OpCo and Westlake entered into an ethylene sales agreement (the "Ethylene Sales Agreement") pursuant to which the Partnership generates a substantial majority of its revenue.

11 unchanged sentences

Westlake's retained interest of 77.2 % is recorded as noncontrolling interest in the Partnership's consolidated financial statements.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Cash and Cash Equivalents

5 unchanged sentences

Past due balances over 90 days and high risk accounts, as determined by the analysis of financial strength of customers, are reviewed individually for collectability.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Inventories primarily include product, material and supplies.

18 unchanged sentences

Ethylene pipeline 35

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Impairment of Long-Lived Assets

11 unchanged sentences

See Note 6 for more information on the Partnership's annual goodwill impairment test.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Turnaround Costs

19 unchanged sentences

The Partnership does not disclose the value of unsatisfied performance obligations because its contracts with customers (1) have an original expected duration of one year or less or (2) have only variable consideration which is allocated to wholly unsatisfied performance obligations that is calculated based on market prices at a specified date and is allocated to wholly unsatisfied performance obligations.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

The Partnership generates a substantial majority of its revenue from sales to Westlake under the Ethylene Sales Agreement.

11 unchanged sentences

Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings currently.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Environmental Costs

14 unchanged sentences

Actual results could differ from those estimates.

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (COVID-19) outbreak a pandemic and recommended containment and mitigation measures worldwide.

The COVID pandemic resulted in widespread adverse impacts on the global economy and on our employees, customers and suppliers in 2020.

The Partnership did not experience significant disruptions to its business operations in 2020 and does not expect significant disruptions.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the ultimate duration, geographic spread and severity of the virus, the actions to contain the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments and vaccines and their roll out, the impact on the operation of OpCo facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

Other Comprehensive Income

The Partnership has not reported consolidated statements of comprehensive income for the years ended December 31, 2020, 2019 and 2018 due to immateriality of the components of other comprehensive income.

Recent Accounting Pronouncements

Reference Rate Reform (ASU No.

In March 2020, the FASB issued an accounting standards update to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform, if certain criteria are met.

The amendments in this update are effective for all entities from January 1, 2020 through December 31, 2022.

The Partnership is in the process of evaluating the adoption of this optional accounting standards update as certain exceptions provided under this guidance may be applicable to future reference rate reform related transitions.

The COVID pandemic resulted in widespread adverse impacts on the global economy in 2020.

The Partnership has not experienced significant disruptions to its business operations for the fiscal years ended December 31, 2020 and 2021 and does not expect significant disruptions to its business operations resulting from COVID-19.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the timing and logistics with respect to the distribution of vaccines (including with respect to the more recent variants of COVID-19) and other treatments, the ultimate duration of the pandemic, geographic spread and severity of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the impact on the operation of OpCo's facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

(in thousands of dollars, except unit amounts and per unit data)

Other Comprehensive Income

The Partnership has not reported consolidated statements of comprehensive income for the years ended December 31, 2021, 2020 and 2019 due to immateriality of the components of other comprehensive income.

Recently Adopted Accounting Standards

Credit Losses (ASU No.

In June 2016, the FASB issued an accounting standards update providing new guidance for the accounting for credit losses on loans and other financial instruments.

The new guidance introduces an approach based on expected losses to estimate credit losses on trade receivables and certain types of financial instruments.

The standard also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

The accounting standard became effective for reporting periods beginning after December 15, 2019.

The Partnership adopted this accounting standard effective January 1, 2020 and the adoption did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Fair Value Measurement (ASU No.

In August 2018, the FASB issued an accounting standards update to modify the disclosure requirements on fair value measurements.

The amendments became effective for reporting periods beginning after December 15, 2019.

An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until the effective date.

Most amendments should be applied retrospectively but certain amendments should be applied prospectively.

The Partnership adopted the accounting standard effective January 1, 2020 and the adoption did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Reference Rate Reform (ASU No.

The amendments in this update are effective for all entities from March 12, 2020 through December 31, 2022.

The Partnership adopted this accounting standard effective October 1, 2021, and the adoption did not have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Agreements with Westlake and Related Parties

16 unchanged sentences

Under the Ethylene Sales Agreement OpCo has the option to curtail up to approximately 5% of its ethylene production annually in the event OpCo reasonably determines that its sales of such ethylene to third parties during the relevant period would be uneconomic.

Pursuant to the Ethylene Sales Agreement, Westlake's obligation to pay for the annual minimum commitment ( 95 % of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for the first 45 days of a force majeure event, but is reduced for the portion of a force majeure event extending beyond the 45th day.

Pursuant to the Ethylene Sales Agreement, Westlake's obligation to pay for the annual minimum commitment ( 95 % of OpCo's budgeted ethylene production), which is measured on an annual basis, is not reduced for a force majeure event lasting fewer than 45 consecutive days.

In the event of a force majeure event, the Partnership recognizes buyer deficiency fees representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure event.

87 unchanged sentences

Long-Term Debt

Long-term debt consists of the following:

Long-term debt payable to Westlake consists of the following:

OpCo Revolver (variable interest rate of London Interbank Offered Rate ("LIBOR") plus

11 unchanged sentences

On March 19, 2020, the Partnership entered into an amendment to the MLP Revolver, to extend the maturity date to March 19, 2023 and add a phase-out provision for LIBOR, which is to be replaced by an alternate benchmark rate.

The amended Credit Agreement bears interest at a variable rate of either (a) LIBOR plus 2.0% or, if LIBOR is no longer available, (b) Alternate Base Rate plus 1.0%.

Pursuant to the amended credit agreement, borrowings under the MLP Revolver bear interest at a variable rate of either (a) LIBOR plus 2.0% or, if LIBOR is no longer available, (b) Alternate Base Rate plus 1.0%.

The MLP Revolver bears interest at LIBOR plus a spread ranging from 2.0 % to 3.0 % (depending on the Partnership's consolidated leverage ratio), payable quarterly.

21 unchanged sentences

Distributions declared with respect to the incentive distribution rights — — —

Distribution in excess of net income $ ( 198 ) $ ( 3,737 ) $ ( 4,902 )

Net income in excess of distribution (Distribution in excess of net income) $ 16,159 $ ( 198 ) $ ( 3,737 )

Net income per unit applicable to common limited partner units and to subordinated limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units and subordinated units outstanding for the period.

9 unchanged sentences

Distribution $ 66,388 $ — $ 66,388

Distribution in excess of net income ( 198 ) — ( 198 )

Net income in excess of distribution 16,159 — 16,159

Net income $ 82,547 $ — $ 82,547

47 unchanged sentences

On March 29, 2019, the Partnership completed the issuance and sale of 2,940,818 common units at a price of $ 21.40 per unit through a private placement.

Net proceeds to the Partnership from the sale of the units were approximately $ 62,661 .

TTWF LP, Westlake's principal stockholder and a related party, acquired 1,401,869 common units out of 2,940,818 common units issued in the private placement.

14 unchanged sentences

On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certain of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.

During the year ended December 31, 2020, the Lake Charles Petro 1 and Petro 2 facilities were impacted by Hurricanes Laura and Delta, which resulted in force majeure events under the Ethylene Sales Agreement.

As a result of the force majeure events, the Partnership recognized a buyer deficiency fee of $ 69,555 as a component of net sales for the year ended December 31, 2020, representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses per pound of volume committed by Westlake during the force majeure events.

OpCo declared force majeure events in 2021 related to the flash fire at the Petro 2 facility, OpCo's Petro 1 facility outage, and due to the severe winter storm.

As a result of these events, the Partnership recognized revenue for a buyer deficiency fee and Shortfall in 2021.

The buyer deficiency fee is measured periodically based upon the lower of the actual production deficiency at period end or the estimated annual production deficiency based upon OpCo's annual anticipated production.

These periodic estimates are updated at the end of the year based on actual annual production.

Based upon OpCo's 2021 production, the Partnership recognized buyer deficiency fees of $ 51,395 and Shortfall of $ 58,906 during 2021.

The buyer deficiency fees and Shortfall are classified as a component of net sales.

The buyer deficiency fee was collected from Westlake in January 2022 and Shortfall recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement.

During 2020, the Lake Charles Petro 1 and Petro 2 facilities were impacted by Hurricanes Laura and Delta, which resulted in force majeure events under the Ethylene Sales Agreement.

As a result of the force majeure events, the Partnership recognized a buyer deficiency fee of $ 69,555 as a component of net sales in 2020.

Payment for the buyer deficiency fee was received by the Partnership in January 2021.

7 unchanged sentences

Total $ 534,900 $ 359,183 $ 472,595

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Services from Related Parties Included in Selling, General and Administrative Expenses

5 unchanged sentences

administrative expenses $ 28,577 $ 22,162 $ 26,946

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Goods and Services from Related Parties Capitalized as Assets

5 unchanged sentences

Receivable under the Investment Management Agreement

On August 1, 2017, the Partnership, OpCo and Westlake executed an investment management agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership and OpCo's excess cash with Westlake for a term of up to a maximum of nine months.

On August 1, 2017, the Partnership, OpCo and Westlake executed an investment management agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership's and OpCo's excess cash with Westlake for a term of up to a maximum of nine months.

Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo.

Accrued interest of $ 71 and $ 56 was included in the receivable under the Investment Management Agreement balance at December 31, 2021 and 2020, respectively.

The interest earned related to the Investment Management Agreement was $ 932 , $ 3,289 and $ 2,646 for the years ended December 31, 2020, 2019 and 2018, respectively.

Total interest earned related to the Investment Management Agreement was $ 296 , $ 932 and $ 3,289 for the years ended December 31, 2021, 2020 and 2019, respectively.

The Partnership's receivable under the Investment Management Agreement was as follows:

1 unchanged sentence

Accounts Receivable from Related Parties

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake, any shortfall recoverable from Westlake and any buyer deficiency fees, in each case under the Ethylene Sales Agreement.

Under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95 % of the actual production costs incurred by OpCo during the year, OpCo is entitled to recover the shortfall in the subsequent year.

The shortfall is recognized in the period when such production activities occur.

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake and any buyer deficiency fee and Shortfall recognized under the Ethylene Sales Agreement.

As discussed above under "Sales to Related Parties", the buyer deficiency fee for the year ended December 31, 2021 was received by the Partnership in January 2022 and the Shortfall recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement.

Payment for the buyer deficiency fee recognized during 2020 was received by the Partnership in January 2021.

The Partnership's accounts receivable from Westlake were as follows:

Accounts receivable—Westlake $ 142,791 $ 108,028

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Accounts Payable to Related Parties

2 unchanged sentences

Accounts payable—Westlake $ 10,796 $ 7,855

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Debt Payable to Related Parties

1 unchanged sentence

Interest on related party debt payable balances, net of capitalized interest, for the years ended December 31, 2021, 2020 and 2019 was $ 8,816 , $ 12,038 and $ 19,623 , respectively, and is reflected as a component of other income (expense) in the consolidated and statements of operations.

Interest capitalized as a component of property, plant and equipment on related party debt was zero for the years ended December 31, 2020 and 2019, respectively.

At December 31, 2021, 2020 and 2019, accrued interest on related party debt was $ 2,176 , $ 2,336 and $ 4,187 , and is reflected as a component of accrued liabilities in the consolidated balance sheets.

10 unchanged sentences

See Note 10 above for an additional related party transaction.

Derivative Commodity Instruments

From time to time, the Partnership uses derivative instruments to reduce price volatility risk on commodities, primarily ethane and ethylene.

The Partnership does not use derivative instruments to engage in speculative activities.

The Partnership had no derivatives that were designated as fair value hedges during the years ended December 31, 2020, 2019 and 2018.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market price declines below the established fixed price.

In such case, the Partnership would lose the benefit of the derivative differential on the volume of the commodities covered.

In any event, the Partnership would continue to receive the market price on the actual volume hedge.

The Partnership also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).

As of December 31, 2020, all non-hedge designated derivatives had been settled.

The Partnership had non-hedge designated derivatives covering approximately 39.1 million gallons and 93.0 million pounds of commodities as of December 31, 2019.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

(in thousands of dollars, except unit amounts and per unit data)

At December 31, 2019, the fair value of these derivative instruments recorded as accrued liabilities and accounts receivable, net were $ 1,959 and $ 597 , respectively.

The loss related to these derivatives recognized in net sales was $ 805 for the year ended December 31, 2020 and the gain related to these derivatives recognized in net sales was $ 836 for the year ended December 31, 2019.

The gain recognized in cost of sales was $ 228 for the year ended December 31, 2020 and the loss recognized in cost of sales was $ 3,335 for the year ended December 31, 2019.

The Partnership's commodity contracts are measured using forward curves supplied by industry recognized sources and unrelated third-party services and classified as Level 2 under the fair value measurement guidance.

Unit-based Compensation

8 unchanged sentences

There were no forfeitures under the Plan during 2021, 2020 and 2019.

During each of the year 2020 and 2019, the vesting of 4,638 phantom units were accelerated in connection with the retirement of one of the Partnership's non-employee directors.

During each of the years 2020 and 2019, the vesting of 4,638 phantom units were accelerated in connection with the retirement of one of the Partnership's non-employee directors.

The total fair value of phantom units that vested during the year ended December 31, 2021 was $ 542 .

13 unchanged sentences

The total units available for grant at December 31, 2021 were 1,219,956 .

The total compensation cost recognized during the years ended December 31, 2020, 2019 and 2018 was $ 375 , $ 387 and $ 363 , respectively, and is included in selling, general and administrative expenses and classified as a liability in the consolidated financial statements of the Partnership.

The total compensation cost recognized during the years ended December 31, 2021, 2020 and 2019 was $ 436 , $ 375 and $ 387 , respectively, and is included in selling, general and administrative expenses and the related liability is classified as accrued and other liability in the consolidated financial statements of the Partnership.

The unrecognized compensation cost associated with all grants under the Plan at December 31, 2021 was $ 182 and the weighted average remaining term of the units at December 31, 2021 was 0.62 years.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

Fair Value Measurements

4 unchanged sentences

Unobservable inputs that are not corroborated by market data.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(in thousands of dollars, except unit amounts and per unit data)

The Partnership has financial assets and liabilities subject to fair value measures.

37 unchanged sentences

Supplemental Information

Accrued Liabilities

Accrued liabilities were $ 18,768 and $ 17,507 at December 31, 2020 and 2019, respectively.

Accruals related to interest expense, maintenance expenses, taxes, and capital expenditures, which are components of accrued liabilities, were $ 2,336 , $ 3,905 , $ 6,207 and $ 2,286 at December 31, 2020, respectively, and were $ 4,186 , $ 3,225 , $ 2,611 and $ 2,375 at December 31, 2019, respectively.

Accrued and Other Liabilities

Accrued and Other liabilities were $ 60,895 and $ 18,768 at December 31, 2021 and 2020, respectively.

Accruals related to maintenance expenses, turnaround costs, and capital expenditures, which are components of accrued liabilities, were $ 5,597 , $ 40,250 and $ 7,491 at December 31, 2021, respectively, and were $ 3,905 , $ 0 and $ 2,286 at December 31, 2020, respectively.

No other component of accrued liabilities was more than five percent of total current liabilities.

1 unchanged sentence

Non-cash Investing Activity

The change in capital expenditure accrual resulted in a decrease in additions to property, plant and equipment by $ 2,490 for the year ended December 31, 2020.

The change in capital expenditure accrual resulted in a decrease in additions to property, plant and equipment by $ 232 for the year ended December 31, 2019.

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 14,415 , $ 6,854 , and $ 4,364 at December 31, 2021, 2020, and 2019, respectively.

Interest and Income Taxes

7 unchanged sentences

Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014.

The Partnership is involved in various legal proceedings incidental to the conduct of its business.

On September 27, 2021, shortly after the turnaround on Petro 2 commenced, there was a flash fire at the quench tower of the Petro 2 facility.

Several contractors working on the quench tower were injured.

There are lawsuits pending in connection with the flash fire.

We expect insurance to cover most of the costs associated with these lawsuits.

The Partnership is also involved in other legal proceedings incidental to the conduct of its business.

The Partnership does not believe that any of these legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

4 unchanged sentences

The Partnership has various purchase commitments for its capital projects and for materials, supplies and services incident to the ordinary conduct of business.

Quarterly Financial Information (Unaudited)

Three Months Ended

2020 June 30,

2020 September 30,

2020 December 31,

Net sales $ 250,549 $ 238,500 $ 231,969 $ 245,652

Gross profit 103,548 90,030 100,391 84,914

Income from operations 97,352 83,891 94,136 77,609

Net income 93,770 80,377 91,848 75,124

Net income attributable to Westlake Chemical Partners LP

17,747 14,860 18,535 15,025

Net income attributable to Westlake Chemical Partners LP (1)

Basic and diluted earnings per common unitholder $ 0.50 $ 0.43 $ 0.53 $ 0.43

Weighted average limited partner units outstanding (basic

35,194,545 35,194,545 35,194,545 35,197,435

Three Months Ended

2019 June 30,

2019 September 30,

2019 December 31,

Net sales $ 299,086 $ 270,062 $ 249,925 $ 272,798

Gross profit 90,654 91,958 93,219 103,597

Income from operations 83,681 84,319 86,397 95,753

Net income 78,396 80,110 82,479 91,910

Net income attributable to Westlake Chemical Partners LP 14,955 13,733 14,922 17,371

Net income attributable to Westlake Chemical Partners LP (1)

Basic and diluted earnings per common unitholder $ 0.46 $ 0.39 $ 0.42 $ 0.49

Weighted average limited partner units outstanding (basic

32,345,398 35,188,189 35,188,189 35,191,487

______________________________

(1) Basic and diluted earnings per common unit ("EPU") for each quarter is computed using the weighted average units outstanding during that quarter, while EPU for the year is computed using the weighted average units outstanding for the year.

As a result, the sum of the EPU for each of the four quarters may not equal the EPU for the year.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data