Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. BACKGROUND AND BASIS OF PRESENTATION
Background
Platform Specialty Products Corporation, a global diversified producer of high-technology specialty chemical products, was incorporated in Delaware in January 2014 and its common stock, par value
$0.01
per share, trades on the NYSE under the ticker symbol “PAH.” Platform's chemistry combines a number of ingredients to produce proprietary formulations. The Company operates in a wide variety of niche markets across multiple industries, including automotive, agricultural, animal health, electronics, graphic arts, and offshore oil and gas production and drilling. Platform delivers its products to customers through its sales and service workforce, regional distributors and manufacturing representatives.
As its name implies, Platform is an acquisition vehicle with a strategy of acquiring and maintaining leading positions in niche segments of high-growth markets. As such, the Company continually seeks opportunities to act as an acquirer and consolidator of specialty chemical businesses on a global basis, particularly those meeting its “Asset-Lite, High-Touch” philosophy, which involves prioritizing resources to research and development, offering highly technical sales and customer service, and managing conservatively its investments in fixed assets and capital expenditures.
Basis of Presentation
The accompanying unaudited interim Condensed Consolidated Financial Statements and related information in this Quarterly Report include the accounts of Platform and all of its respective controlled subsidiaries, and have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report. In the opinion of management, these unaudited interim Condensed Consolidated Financial Statements reflect all adjustments that are normal, recurring, and necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations that may be expected for the fiscal year ended December 31, 2017 due to seasonal and other factors. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the related notes thereto included in the Company’s Annual Report.
The process of preparing the Company’s unaudited interim Condensed Consolidated Financial Statements requires the use of estimates and judgments that affect the reported amount of assets, liabilities, net sales, and expenses. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and revised when necessary. Actual amounts may differ materially from these estimates.
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements Not Yet Adopted
Intangibles - Goodwill and Other (Topic 350)
- In January 2017, the FASB issued ASU No. 2017-04, “
Simplifying the Test for Goodwill Impairment.”
This ASU simplifies the testing for goodwill impairments by eliminating "Step 2" from the goodwill impairment test. Under the new guidance, goodwill impairment losses are calculated based on the "Step 1" computation with the impairment loss being equal to the amount by which a reporting unit's carrying amount exceeds its implied fair value, limited to the amount of goodwill allocated to the reporting unit. The guidance is effective prospectively as of January 1, 2020, with early adoption permitted. This ASU may impact the conclusion about whether there is an impairment of goodwill and the amount of the impairment may be different than current guidance once this standard is adopted.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Income Taxes (Topic 740)
- In October 2016, the FASB issued ASU No. 2016-16, "
Intra-Entity Transfers of Assets Other than Inventory.
" This ASU requires the recognition of income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs and removes the exception to postpone recognition until the asset has been sold to an outside party. The guidance is effective on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of January 1, 2018. The Company continues to evaluate the impact of this ASU.
Statement of Cash Flows (Topic 230)
- In August 2016, the FASB issued ASU No. 2016-15, "
Classification of Certain Cash Receipts and Cash Payments.
" This ASU was issued to reduce diversity in practice for how certain cash receipts and cash payments are classified and presented in the statement of cash flows. The eight specific cash flow issues addressed include: debt prepayment and extinguishment costs, zero coupon bond settlement, contingent consideration payments, insurance claim settlements, company-owned life insurance receipts/payments, distributions from equity method investments, beneficial interests in securitization transactions, and separately identifiable cash flows. The guidance is effective on a retrospective basis as of January 1, 2018, with early adoption permitted. The Company continues to evaluate the impact of the ASU.
Leases (Topic 842)
- In February 2016, the FASB issued ASU No. 2016-02,
“Leases.”
This ASU requires lessees to recognize most leases on their balance sheets, but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective on a modified retrospective basis as of January 1, 2019, with early adoption permitted. The Company continues to evaluate the impact of this ASU.
Revenue from Contracts with Customers (Topic 606)
- In May 2014, the FASB issued ASU 2014-09, "
Revenue from Contracts with Customers,
" as a new Topic, ASC Topic 606. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance will require expanded disclosures of qualitative and quantitative information about the Company's revenues from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14,
“Deferral of the Effective Date,”
which deferred the effective date to January 1, 2018. This standard can be adopted either retrospectively or as a cumulative-effect adjustment as of the date of adoption.
The Company assembled a project implementation team and is assessing the impact of the guidance by reviewing its current accounting policies and practices to identify potential differences that would result from applying the new requirements to its revenue contracts, including evaluating its performance obligations, principal versus agent considerations, contract costs, and variable consideration. The Company continues to make significant progress on its contract reviews and is also in the process of evaluating the impact, if any, on changes to its business processes, systems, and controls to support recognition and disclosure under the new guidance. Based on the foregoing, the Company currently does not expect this guidance to have a material impact on its financial statements as the timing and pattern of revenue recognition will predominantly continue to be recognized as the Company’s performance obligation to ship or deliver its products is completed and the transfer of control has passed to the customer in accordance with the new standard. The Company is continuing with its implementation plan and intends to adopt the new guidance effective January 1, 2018 using the modified retrospective method. Under this method, companies would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application.
3. ACQUISITIONS OF BUSINESSES
OMG Malaysia Acquisition
On January 31, 2016, the Company completed the OMG Malaysia Acquisition for approximately
$124 million
, net of acquired cash and closing working capital adjustments. The Company acquired OMG Malaysia by issuing a note payable for
$125 million
which was offset against a note receivable from the seller of the same amount. The Company acquired OMG Malaysia to further enhance its Performance Solutions segment in which OMG Malaysia is included. The impact of this acquisition on the Company's results of operations was not material.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
4. ACCOUNTS RECEIVABLE
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
June 30,
2017
|
|
December 31,
2016
|
Total accounts receivable, net
|
$
|
1,184.6
|
|
|
$
|
1,058.0
|
|
Non-current accounts receivable, net
|
(16.4
|
)
|
|
(3.2
|
)
|
Current accounts receivable, net
|
$
|
1,168.2
|
|
|
$
|
1,054.8
|
|
Total accounts receivable are net of an allowance for doubtful accounts of
$47.1 million
and
$36.7 million
at
June 30, 2017
and
December 31, 2016
, respectively. Accounts receivable classified as non-current at
June 30, 2017
and
December 31, 2016
were recorded in "Other assets" in the Condensed Consolidated Balance Sheets.
5. INVENTORIES
The major components of inventory, on a net basis, were as follows:
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
June 30,
2017
|
|
December 31,
2016
|
Finished goods
|
$
|
357.7
|
|
|
$
|
273.8
|
|
Work in process
|
40.7
|
|
|
37.1
|
|
Raw materials and supplies
|
159.2
|
|
|
135.9
|
|
Total inventory, net
|
557.6
|
|
|
446.8
|
|
Non-current inventory, net
|
(21.0
|
)
|
|
(30.4
|
)
|
Current inventory, net
|
$
|
536.6
|
|
|
$
|
416.4
|
|
Inventory classified as non-current at
June 30, 2017
and
December 31, 2016
was recorded in "Other assets" in the Condensed Consolidated Balance Sheets.
In connection with the Alent and OMG Malaysia Acquisitions, the value of finished goods inventory was increased at the respective dates of acquisition to reflect fair value. For the
six
months ended
June 30, 2016
,
$11.7 million
of the inventory step-up was amortized to "Cost of sales" in the Condensed Consolidated Statements of Operations based on inventory turnover. The amount was immaterial for the three months ended June 30, 2016.
6. PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment were as follows:
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
June 30,
2017
|
|
December 31,
2016
|
Land and leasehold improvements
|
$
|
108.2
|
|
|
$
|
103.4
|
|
Buildings and improvements
|
146.9
|
|
|
147.5
|
|
Machinery, equipment, fixtures and software
|
318.3
|
|
|
293.3
|
|
Construction in process
|
33.0
|
|
|
36.7
|
|
Total property, plant and equipment
|
606.4
|
|
|
580.9
|
|
Accumulated depreciation
|
(150.6
|
)
|
|
(120.4
|
)
|
Property, plant and equipment, net
|
$
|
455.8
|
|
|
$
|
460.5
|
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
For the three months ended June 30, 2017
and
2016
, the Company recorded depreciation expense of
$19.7 million
and
$18.8 million
, respectively.
For the six months ended June 30, 2017
and
2016
the Company recorded depreciation expense of
$37.1 million
and
$37.0 million
, respectively.
7. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill by segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
|
|
Performance
Solutions
|
|
Agricultural
Solutions
|
|
Total
|
December 31, 2016
|
(*)
|
|
$
|
2,132.4
|
|
|
$
|
2,046.5
|
|
|
$
|
4,178.9
|
|
Foreign currency translation and other
|
|
|
60.8
|
|
|
35.0
|
|
|
95.8
|
|
June 30, 2017
|
(*)
|
|
$
|
2,193.2
|
|
|
$
|
2,081.5
|
|
|
$
|
4,274.7
|
|
(*)
Includes accumulated impairment losses totaling
$46.6 million
associated with the Company's Performance Solutions segment.
The carrying value of indefinite-lived intangible assets other than goodwill, which consists solely of tradenames, was
$382 million
and
$377 million
at
June 30, 2017
and
December 31, 2016
, respectively.
Intangible assets subject to amortization were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
(amounts in millions)
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
Customer lists
|
$
|
1,273.7
|
|
|
$
|
(216.0
|
)
|
|
$
|
1,057.7
|
|
|
$
|
1,245.9
|
|
|
$
|
(174.5
|
)
|
|
$
|
1,071.4
|
|
Developed technology
|
2,178.0
|
|
|
(452.0
|
)
|
|
1,726.0
|
|
|
2,022.1
|
|
|
(254.9
|
)
|
|
1,767.2
|
|
Tradenames
|
29.1
|
|
|
(10.9
|
)
|
|
18.2
|
|
|
25.1
|
|
|
(8.2
|
)
|
|
16.9
|
|
Non-compete agreements
|
1.7
|
|
|
(0.9
|
)
|
|
0.8
|
|
|
1.9
|
|
|
(1.1
|
)
|
|
0.8
|
|
Total
|
$
|
3,482.5
|
|
|
$
|
(679.8
|
)
|
|
$
|
2,802.7
|
|
|
$
|
3,295.0
|
|
|
$
|
(438.7
|
)
|
|
$
|
2,856.3
|
|
For the three months ended June 30, 2017
and
2016
, the Company recorded amortization expense on intangible assets of
$67.3 million
and
$66.6 million
, respectively.
For the six months ended June 30, 2017
and
2016
, the Company recorded amortization expense on intangible assets of
$136 million
and
$131 million
, respectively.
8. LONG-TERM COMPENSATION PLANS
At
June 30, 2017
, a total of
466,734
shares of common stock had been issued and
3,742,171
awarded RSUs and stock options were outstanding under the 2013 Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017
|
|
Total
|
|
RSUs
|
|
Stock Options
|
|
|
Equity
Classified
|
|
Liability
Classified
|
|
Outstanding at December 31, 2016
|
3,003,003
|
|
|
2,117,493
|
|
|
320,312
|
|
|
565,198
|
|
Granted
|
1,325,965
|
|
|
1,069,763
|
|
|
—
|
|
|
256,202
|
|
Exercised/Issued
|
(93,300
|
)
|
|
(93,300
|
)
|
|
—
|
|
|
—
|
|
Forfeited
|
(318,497
|
)
|
|
(243,979
|
)
|
|
(634
|
)
|
|
(73,884
|
)
|
Outstanding at June 30, 2017
|
3,917,171
|
|
|
2,849,977
|
|
|
319,678
|
|
|
747,516
|
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Equity Classified RSUs
During the
six
months ended
June 30, 2017
, the Company granted RSUs under the 2013 Plan as follows:
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
Weighted average grant date fair value
|
|
Weighted average vesting period (months)
|
RSUs granted
|
1,069,763
|
|
|
$
|
16.32
|
|
|
32.1
|
Certain of the RSUs granted during the period contain performance or market vesting conditions in addition to a service vesting condition. RSUs granted with service or performance vesting conditions were valued at the grant date stock price. The grant date fair value of RSUs containing a market vesting condition were estimated using a Monte Carlo simulation of the performance of the Company's common stock relative to the S&P MidCap 400. Certain of the RSUs with performance or market vesting conditions also contain provisions for additional share awards in the event certain performance or market conditions are met at the end of certain applicable measurement periods. These conditions are generally based on ROIC or TSR targets.
The following assumptions were used to estimate the grant date fair value of RSUs containing a market vesting condition:
|
|
|
|
Monte Carlo input assumptions
|
Weighted average expected term (years)
(1)
|
3.00
|
Expected volatility
(2)
|
52.1%
|
Risk-free rate
(3)
|
1.50%
|
|
|
(1)
|
Weighted average expected term is calculated based on the award service period.
|
|
|
(2)
|
Expected volatility is calculated based on a blend of the implied and historical equity volatility of an index of comparable companies over a period equal to the expected term.
|
|
|
(3)
|
Risk-free rate of return is based on an interpolation of U.S. Treasury rates to reflect an expected term of
three years
at the date of grant.
|
At
June 30, 2017
, the following equity classified RSUs were outstanding:
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
Vesting Conditions:
|
Outstanding
|
|
Weighted average remaining service period (months)
|
|
Potential additional awards
|
Service-based
|
1,012,913
|
|
|
22.5
|
|
—
|
|
Performance-based
|
1,018,161
|
|
|
22.9
|
|
683,954
|
|
Market-based
|
818,903
|
|
|
26.8
|
|
1,589,720
|
|
Total
|
2,849,977
|
|
|
23.9
|
|
2,273,674
|
|
In addition, the Board had approved
83,333
RSUs under the 2013 Plan which are subject to achieving the 2018 adjusted EBITDA performance target, with a maximum payoff of
100%
. The performance target will be established as a part of the 2018 planning process and, therefore, these RSUs have been excluded from the above grant activity until the target is set.
For the three months ended June 30, 2017
and
2016
, total compensation expense associated with RSUs classified as equity totaled
$2.9 million
and
$1.7 million
, respectively.
For the six months ended June 30, 2017
and
2016
, total compensation expense associated with RSUs classified as equity totaled
$5.3 million
and
$2.6 million
, respectively.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Stock Options
During the
six
months ended
June 30, 2017
, the Company granted non-qualified stock options under the 2013 Plan as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Weighted average strike price per share
|
|
Weighted average grant date fair value per share
|
Stock options granted
|
256,202
|
|
|
$
|
13.30
|
|
|
$
|
6.05
|
|
Stock options are subject to graded vesting over a
three
-year period and have contractual lives of
ten
years from the grant date. Fair value of the grants is calculated using the Black-Scholes option pricing model at the grant date.
The following table provides the range of assumptions used in valuing stock option grants using the Black-Scholes option pricing method:
|
|
|
|
Black-Scholes input assumptions
|
Weighted average expected term (years)
(1)
|
6.0
|
Expected volatility
(2)
|
45.0%
|
Risk-free rate
(3)
|
2.09%
|
Expected dividend rate
|
—%
|
|
|
(1)
|
Weighted average expected term is calculated based on the simplified method for plain vanilla options as the Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term and certain alternative information to assist with estimating it is not easily obtainable.
|
|
|
(2)
|
Expected volatility is calculated based on a blend of the implied and historical equity volatility of an index of comparable companies over a period equal to the expected term.
|
|
|
(3)
|
Risk-free rate of return is based on an interpolation of U.S. Treasury rates to reflect an expected term of
six years
at the date of grant.
|
For the three months ended June 30, 2017
and
2016
, compensation expense associated with stock options was
$0.2 million
and
$0.1 million
, respectively.
For the six months ended June 30, 2017
and
2016
, compensation expense associated with stock options was
$0.3 million
and
$0.2 million
, respectively.
9. PENSION AND POST-RETIREMENT PLANS
The components of net periodic pension and post-retirement benefit costs for the
three and six
months ended
June 30, 2017
and
2016
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Pension & SERP Benefits
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
Service cost
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
Interest cost on the projected benefit obligation
|
2.2
|
|
|
0.6
|
|
|
2.5
|
|
|
0.8
|
|
|
4.4
|
|
|
1.2
|
|
|
5.1
|
|
|
1.5
|
|
Expected return on plan assets
|
(2.5
|
)
|
|
(0.5
|
)
|
|
(2.9
|
)
|
|
(0.7
|
)
|
|
(5.0
|
)
|
|
(1.0
|
)
|
|
(5.8
|
)
|
|
(1.3
|
)
|
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
Amortization of actuarial net loss
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
Net periodic (benefit) cost
|
$
|
(0.3
|
)
|
|
$
|
0.6
|
|
|
$
|
(0.4
|
)
|
|
$
|
0.7
|
|
|
$
|
(0.6
|
)
|
|
$
|
1.2
|
|
|
$
|
(0.7
|
)
|
|
$
|
1.4
|
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Post-retirement Benefits
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
Service cost
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost on the projected benefit obligation
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
Net periodic cost
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
$
|
0.1
|
|
The Company expects to make contributions totaling approximately
$6.5 million
to its pension and other post-retirement benefit plans during 2017, of which approximately
$1.3 million
was contributed at
June 30, 2017
.
10. DEBT, FACTORING AND CUSTOMER FINANCING ARRANGEMENTS
The Company’s debt and capital lease obligations consisted of the following:
|
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
|
June 30,
2017
|
|
December 31,
2016
|
USD Senior Notes due 2022,
interest at 6.5%
|
(1)
|
$
|
1,084.6
|
|
|
$
|
1,083.2
|
|
EUR Senior Notes due 2023,
interest at 6.00%
|
(1)
|
394.6
|
|
|
362.4
|
|
USD Senior Notes due 2021,
interest at 10.375%
|
(1)
|
490.1
|
|
|
489.0
|
|
First Lien Credit Facility - U.S. Dollar Term Loans due 2020,
interest at the greater of 4.50% or LIBOR plus 3.50%
|
(2)
|
583.0
|
|
|
582.5
|
|
First Lien Credit Facility - U.S. Dollar Term Loans due 2021,
interest at the greater of 5.00% or LIBOR plus 4.00%
|
(2) (3)
|
—
|
|
|
1,444.2
|
|
First Lien Credit Facility - U.S. Dollar Term Loans due 2021,
interest at the greater of 4.00% or LIBOR plus 3.00%
|
(2) (3)
|
1,210.9
|
|
|
—
|
|
First Lien Credit Facility - Euro Term Loans due 2020,
interest at the greater of 4.25% or EURIBOR plus 3.25%
|
(2)
|
786.5
|
|
|
726.5
|
|
First Lien Credit Facility - Euro Term Loans due 2021,
interest at the greater of 4.75% or EURIBOR plus 3.75%
|
(2) (3)
|
—
|
|
|
450.7
|
|
First Lien Credit Facility - Euro Term Loans due 2021,
interest at the greater of 3.5% or EURIBOR plus 2.75%
|
(2) (3)
|
737.0
|
|
|
—
|
|
Borrowings under the Revolving Credit Facility
|
(4)
|
105.0
|
|
|
—
|
|
Borrowings under lines of credit
|
(4)
|
49.7
|
|
|
86.0
|
|
Other
|
|
18.5
|
|
|
14.5
|
|
Total debt and capital lease obligations
|
|
5,459.9
|
|
|
5,239.0
|
|
Less: current installments of long-term debt and revolving credit facilities
|
|
(188.8
|
)
|
|
(116.1
|
)
|
Total long-term debt and capital lease obligations
|
|
$
|
5,271.1
|
|
|
$
|
5,122.9
|
|
|
|
(1)
|
Net of unamortized premium, discounts, and debt issuance costs of
$30.5 million
and
$33.4 million
at
June 30, 2017
and
December 31, 2016
, respectively. Weighted average effective interest rate of
7.78%
and
7.81%
at
June 30, 2017
and
December 31, 2016
, respectively.
|
|
|
(2)
|
First Lien Credit Facility term loans net of unamortized discounts and debt issuance costs of
$50.2 million
and
$64.0 million
at
June 30, 2017
and
December 31, 2016
, respectively. Weighted average effective interest rate of
4.95%
and
5.64%
at
June 30, 2017
and
December 31, 2016
, respectively, including the effects of interest rate swaps. See Note 11, Derivative Instruments, to our unaudited interim Condensed Consolidated Financial Statements included in this Quarterly Report for further information regarding the Company's interest rate swaps.
|
|
|
(3)
|
The maturity date will extend to June 7, 2023, provided that the Company is able to prepay, redeem or otherwise retire and/or refinance in full its
$1.10 billion
6.50%
USD Senior Notes due 2022, as permitted under the Amended and Restated Credit Agreement, on or prior to November 2, 2021.
|
|
|
(4)
|
Weighted average interest rate of
5.64%
and
4.48%
at
June 30, 2017
and
December 31, 2016
, respectively.
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Amended and Restated Credit Agreement
The Company is party to the Amended and Restated Credit Agreement, which governs the First Lien Credit Facility and the Revolving Credit Facility (in U.S. Dollar or multicurrency). A portion of the Revolving Credit Facility not in excess of
$30.0 million
is available for the issuance of letters of credit. At
June 30, 2017
, the maximum borrowing capacity under the Amended and Restated Credit Agreement totaled
$500 million
, which consisted of (i) an aggregate principal amount of up to
$250 million
under the Revolving Credit Facility to be denominated in U.S. Dollars, and (ii) an aggregate principal amount of up to
$250 million
under the Revolving Credit Facility to be denominated in multicurrency. Loans under the Revolving Credit Facility bear interest at a rate per annum equal to
3.00%
plus an adjusted eurocurrency rate, or
2.00%
plus an adjusted base rate, each as calculated as set forth in the Amended and Restated Credit Agreement. The Revolving Credit Facility will mature on June 7, 2018, and for lenders that consented to an extension, June 7, 2019. The Company is required to pay a quarterly commitment fee of
0.50%
on the unused balance of the Revolving Credit Facility.
The Amended and Restated Credit Agreement also provides the Company with the ability to incur certain amounts of additional incremental term loans in the future, subject to pro-forma compliance with a financial maintenance covenant and certain other requirements.
On April 18, 2017, the Company entered into Amendment No. 7 to the Second Amended and Restated Credit Agreement, which provided for the prepayment in full of previously existing tranche B-4 term loans denominated in U.S. Dollars and tranche C-3 term loans denominated in Euros with the aggregate proceeds of newly created tranche B-6 term loans denominated in U.S. Dollars in an aggregate principal amount of
$1.23 billion
and tranche C-5 term loans denominated in Euros in an aggregate principal amount of
€650 million
. The refinanced term loans were created in connection with the Company's repricing, extension and amendment closed on October 14, 2016. The amendment effectively reduced interest rates by
100 basis points
for each of the new U.S. Dollar denominated term loans and the new Euro denominated term loans. In addition, the EURIBOR floor was reduced from
1.00%
to
0.75%
on the new Euro denominated term loans. The new tranche B-6 term loans bear interest at
3.0%
per annum, plus an applicable eurocurrency rate, or
2.0%
plus and applicable base rate, and the new Euro tranche C-5 term loans bear interest at
2.75%
per annum, plus an applicable eurocurrency rate, in each case as calculated in the Amended and Restated Credit Agreement. In the event the Company is able to prepay, redeem or otherwise retire and/or refinance in full its
$1.10 billion
,
6.50%
USD Senior Notes due 2022, as permitted under the Amended and Restated Credit Agreement, on or prior to November 2, 2021, the maturity date of the new term loans will be extended to June 7, 2023 from November 2, 2021. In connection with this term loan refinancing, the Company wrote-off
$8.5 million
, consisting primarily of deferred financing fees and original issuance discounts on the modification of the existing debt, which was recorded in "Other income (expense) net" in the Condensed Consolidated Statement of Operations, and expensed
$5.3 million
of debt issuance costs, which was recorded in "Selling, technical, general and administrative" expenses in the Condensed Consolidated Statement of Operations.
Except as set forth in Amendment No. 7 and above, the new USD tranche B-6 term loans have identical terms as the existing U.S. Dollar denominated tranche B-5 term loans and the new Euro tranche C-5 term loans have identical terms as the existing Euro denominated tranche C-4 term loans and are, in each case, otherwise subject to the provisions of the Amended and Restated Credit Agreement.
The obligations incurred under the Amended and Restated Credit Agreement are guaranteed by substantially all of the Company’s domestic subsidiaries and, with respect to the obligations denominated in Euros, the Company and certain of its international subsidiaries. Substantially all of the Company’s domestic subsidiaries, and certain of its international subsidiaries, have also granted security interests in substantially all of their assets in connection with such guarantees, including, but not limited to, the equity interests and personal property of such subsidiaries.
Covenants and Events of Default
The Amended and Restated Credit Agreement contains customary representations and warranties, and affirmative and negative covenants, including limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions, and dispositions. The Restricted Payments basket, as defined in the Amended and Restated Credit Agreement, limits select forms of restricted payments if such payments would cause the total net leverage ratio, calculated as set forth in the Amended and Restated Credit Agreement, to exceed
6.0
to
1.0
. The Revolving Credit Facility also imposes a financial covenant to maintain a first lien net leverage ratio of
6.25
to
1.0
, subject to a
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
right to cure. A violation of this financial covenant can become an event of default under the Credit Facilities and result in the acceleration of all of the Company's indebtedness. Borrowings under the Amended and Restated Credit Agreement are subject to mandatory prepayment from the proceeds of certain dispositions of assets and from certain insurance and condemnation proceeds, excess cash flow and debt incurrences, in each case, subject to customary carve-outs and exceptions.
The Amended and Restated Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of certain covenants, inaccuracy of representations and warranties, failure to make payment on, or defaults with respect to, certain other material indebtedness, bankruptcy and insolvency events, material judgments, and change of control provisions. Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the Amended and Restated Credit Agreement may be accelerated and the Company's lenders could foreclose on their security interests in the Company's assets, which may have a material adverse effect on the consolidated financial condition, results of operation or cash flows of the Company. Borrowings under the Amended and Restated Credit Agreement are also subject to mandatory prepayment provisions in the case of excess cash flow, calculated as set forth in the Amended and Restated Credit Agreement, of
75%
with step-downs to
50%
,
25%
and
0%
based on the applicable first lien net leverage ratio on the prepayment date.
In addition, the Amended and Restated Credit Agreement contains a yield protection provision wherein the yield on any current indebtedness issued under the Amended and Restated Credit Agreement would be increased to within
50 basis points
of the yield on any additional incremental term loan(s), in the event the incremental term loan(s) provided an initial yield, including original issue discount (OID), subject to the yield calculation provisions, as defined, is in excess of
50 basis points
of the yield on existing term loan indebtedness.
At
June 30, 2017
, the Company was in compliance with the debt covenants contained in the Credit Facilities and, in accordance with such debt covenants, had full availability of its unused borrowing capacity of
$376 million
, net of letters of credit, under the Revolving Credit Facility.
Senior Notes
The Senior Notes are governed by indentures which provide, among other things, for customary affirmative and negative covenants, events of default, and other customary provisions. The Company also has the option to redeem the Senior Notes prior to their maturity, subject to, in certain cases, the payment of an applicable make-whole premium. The Senior Notes are unsecured and are fully and unconditionally guaranteed on a senior unsecured basis by generally all of the Company’s domestic subsidiaries that guarantee the Amended and Restated Credit Agreement.
Lines of Credit and Other Debt Facilities
The Company has access to various revolving lines of credit, short-term debt facilities, and overdraft facilities worldwide which are used to fund short-term cash needs. At
June 30, 2017
and
December 31, 2016
, the aggregate principal amount outstanding under such facilities totaled
$155 million
and
$86.0 million
, respectively. The Company also had letters of credit outstanding of
$29.6 million
and
$32.6 million
at
June 30, 2017
and
December 31, 2016
, respectively, of which
$19.0 million
and
$11.8 million
at
June 30, 2017
and
December 31, 2016
, respectively, reduced the borrowings available under the various facilities. At
June 30, 2017
and
December 31, 2016
, the availability under these facilities was approximately
$473 million
and
$561 million
, respectively, net of outstanding letters of credit.
Accounts Receivable Factoring Arrangements
Off-balance sheet arrangements
The Company has arrangements to sell trade receivables to third parties without recourse to the Company. Under these arrangements, the Company had capacity to sell approximately
$327 million
and
$256 million
of eligible trade receivables at
June 30, 2017
and
December 31, 2016
, respectively. The Company had utilized approximately
$91.7 million
and
$167 million
of these arrangements at
June 30, 2017
and
December 31, 2016
, respectively. The receivables under these arrangements are excluded from the Consolidated Balance Sheets and the proceeds are included in "Operating Activities" in the Condensed Consolidated Statements of Cash Flows. Costs associated with these programs are included in "Selling, technical, general and administrative" expenses in the Condensed Consolidated Statements of Operations.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
On-balance sheet arrangements
The Company has arrangements to sell trade receivables to a third party with recourse to the Company. Under these arrangements, the Company had capacity to sell approximately
$65.2 million
and
$65.3 million
of eligible trade receivables at
June 30, 2017
and
December 31, 2016
, respectively. The Company had utilized approximately
$42.9 million
and
$38.3 million
at
June 30, 2017
and
December 31, 2016
, respectively. The proceeds from these arrangements are accounted for as "Financing activities" in the Condensed Consolidated Statements of Cash Flows. Costs associated with these programs are included in "Interest expense, net" in the Condensed Consolidated Statements of Operations.
Certain subsidiaries of the Company in the United States and the Netherlands periodically enter into arrangements with financial institutions for consignment and/or purchase of precious metals. The present and future indebtedness and liability relating to such arrangements are guaranteed by the Company. The Company’s maximum guarantee liability under these arrangements is limited to an aggregate of
$18.0 million
.
11. DERIVATIVE INSTRUMENTS
In the normal course of business, the Company is exposed to risks relating to changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as foreign currency exchange forward contracts, interest rate swaps, and commodities futures contracts are used to manage the risks associated with changes in foreign markets conditions. All derivatives are recognized in the Condensed Consolidated Balance Sheets at fair value at the end of each period. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company continually monitors its positions and the credit ratings of its counterparties, and currently does not anticipate nonperformance by any counterparties.
Foreign Currency
The Company conducts a significant portion of its business in currencies other than the U.S. Dollar and a portion of its business in currencies other than the functional currencies of its subsidiaries. As a result, the Company’s operating results are impacted by foreign currency exchange rate volatility.
At
June 30, 2017
, the Company held foreign currency forward contracts to purchase and sell various currencies primarily with the U.S. Dollar and Euro, with less significant amounts with Japanese Yen. The Company has not designated any foreign currency exchange forward contracts as eligible for hedge accounting. The total notional value of foreign currency exchange forward contracts held at
June 30, 2017
and
December 31, 2016
were approximately
$566 million
and
$552 million
, respectively, and generally have settlement dates within
one year
.
The following table details the notional value of the Company's significant outstanding foreign exchange derivative contracts at
June 30, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Traded against USD
|
|
Traded against Euro
(USD equivalent)
|
Currency
|
Purchasing
|
|
Selling
|
|
Purchasing
|
|
Selling
|
Euro
|
$
|
70.9
|
|
|
$
|
86.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Brazilian Real
|
47.7
|
|
|
118.8
|
|
|
—
|
|
|
2.3
|
|
Japanese Yen
|
44.4
|
|
|
11.1
|
|
|
2.5
|
|
|
1.9
|
|
British Pound
|
16.0
|
|
|
—
|
|
|
86.5
|
|
|
—
|
|
Other
|
37.4
|
|
|
27.7
|
|
|
—
|
|
|
1.0
|
|
Total
|
$
|
216.4
|
|
|
$
|
244.1
|
|
|
$
|
89.0
|
|
|
$
|
5.2
|
|
Changes in the fair value of foreign currency forward contracts are recorded in "Other income (expense), net" in the Condensed Consolidated Statements of Operations.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Interest Rates
The Company entered into interest rate swaps to effectively fix the floating base rate portion of its interest payments on approximately
$1.14 billion
of USD denominated debt and
€280 million
of Euro denominated debt at
1.96%
and
1.20%
, respectively, through June 2020.
Changes in the fair value of a derivative that is designated as, and meets all the required criteria of, a cash flow hedge are recorded in "Other comprehensive income (loss)" and reclassified from "Accumulated other comprehensive income (loss)" into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to the interest rate swaps are included in "Interest expense, net" in the Condensed Consolidated Statements of Operations.
Commodities
As part of its risk management policy, the Company enters into commodities futures contracts on an ongoing basis for the purpose of mitigating its exposure to fluctuations in prices of certain metals it uses in the production of its finished goods. The Company held futures contracts to purchase and sell various metals, primarily tin and silver, with a notional value of
$38.7 million
and
$42.0 million
at
June 30, 2017
and
December 31, 2016
, respectively. Substantially all contracts outstanding at
June 30, 2017
have delivery dates within
one year
. The change in the fair value of the commodities futures contracts is recorded in "Other income (expense), net" in the Condensed Consolidated Statements of Operations.
Certain subsidiaries of the Company have entered into supply agreements with a third party that have been deemed to constitute financing agreements with an embedded derivative feature whose fair value is determined by the change in the market value of the underlying metals between delivery date and measurement date. Amounts associated with these supply agreements, which serve as the notional value of the embedded derivative, have been recorded in "Inventories" and "Current installments of long-term debt and revolving credit facilities" in the Condensed Consolidated Balance Sheets and totaled
$13.0 million
and
$9.9 million
at
June 30, 2017
and
December 31, 2016
, respectively, and primarily relate to gold and palladium purchases. The fair value of these contracts has been bifurcated and recorded as a derivative liability in "Accrued expenses and other current liabilities" in the Condensed Consolidated Balance Sheets and was immaterial at
June 30, 2017
and
December 31, 2016
.
Fair Value of Derivative Instruments
The following table summarizes the fair value of derivative instruments reported in the Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
|
Balance sheet location
|
|
June 30,
2017
|
|
December 31, 2016
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
Interest rate swaps
|
|
Accrued expenses and other current liabilities
|
|
$
|
7.3
|
|
|
$
|
10.2
|
|
Interest rate swaps
|
|
Other liabilities
|
|
3.1
|
|
|
—
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign exchange and metals contracts
|
|
Other current assets
|
|
7.4
|
|
|
8.5
|
|
Foreign exchange and metals contracts
|
|
Accrued expenses and other current liabilities
|
|
8.5
|
|
|
10.7
|
|
Net derivative contract liability
|
|
|
|
$
|
(11.5
|
)
|
|
$
|
(12.4
|
)
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
For the
three and six
months ended
June 30, 2017
and
2016
, the Company recorded the following realized and unrealized losses associated with derivative contracts designated as hedging instruments and made the following reclassifications from "Accumulated other comprehensive income:"
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of loss recognized in Other Comprehensive Income
|
|
|
|
Amount of loss reclassified from Accumulated Other Comprehensive Income into income
|
(amounts in millions)
|
|
Three Months Ended
June 30,
|
|
Location of loss reclassified from Accumulated Other Comprehensive Income
|
|
Three Months Ended
June 30,
|
Derivatives designated as hedging instruments:
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
Interest rate swaps
|
|
$
|
4.8
|
|
|
$
|
8.8
|
|
|
Interest expense, net
|
|
$
|
3.0
|
|
|
$
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of loss recognized in Other Comprehensive Income
|
|
|
|
Amount of loss reclassified from Accumulated Other Comprehensive Income into income
|
(amounts in millions)
|
|
Six Months Ended
June 30,
|
|
Location of loss reclassified from Accumulated Other Comprehensive Income
|
|
Six Months Ended
June 30,
|
Derivatives designated as hedging instruments:
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
Interest rate swaps
|
|
$
|
6.2
|
|
|
$
|
22.7
|
|
|
Interest expense, net
|
|
$
|
6.0
|
|
|
$
|
5.9
|
|
The interest rate swaps were deemed highly effective, with no ineffective portions, for the three and six months ended
June 30, 2017
. During the next twelve months, the Company expects to reclassify
$7.3 million
from "Accumulated other comprehensive income" to "Interest expense, net" in the Condensed Consolidated Statements of Operations.
For the
three and six
months ended
June 30, 2017
and
2016
, the Company recorded the following realized and unrealized losses associated with derivative contracts not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of loss recognized in income on derivatives
|
(amounts in millions)
|
|
Location of loss recognized in income on derivatives
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
Derivatives not designated as hedging
instruments:
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Foreign exchange and metals contracts
|
|
Other income (expense) net
|
|
$
|
1.1
|
|
|
$
|
5.4
|
|
|
$
|
2.5
|
|
|
$
|
10.7
|
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Master Netting Arrangements
In the normal course of business, the Company enters into contracts with certain counterparties to purchase and sell foreign currency exchange forwards and metal futures that contain master netting arrangements, typically in the form of an International Swaps and Derivatives Association (ISDA) or similar agreements. The right to set-off within these agreements is limited to certain termination events, such as bankruptcy or default of either party to the agreement. The Company has made an accounting policy decision not to offset and recognizes gross derivative asset and liability balances in the Condensed Consolidated Balance Sheets.
The following tables present recognized derivative assets and liabilities that are subject to master netting arrangements but not offset, at
June 30, 2017
and
December 31, 2016
. The "Net" column shows what the net impact would have been on the Condensed Consolidated Balance Sheets should all set-off rights had been exercised:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
(amounts in millions)
|
Amounts offset
|
|
Amounts not offset
|
|
Net
|
|
Gross
|
|
Gross offset
|
|
Net amounts presented
|
|
Financial instruments
|
|
Cash collateral paid
|
|
|
Derivative assets
|
$
|
7.1
|
|
|
$
|
—
|
|
|
$
|
7.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
6.9
|
|
Derivative liabilities
|
7.7
|
|
|
—
|
|
|
7.7
|
|
|
(4.6
|
)
|
|
(0.7
|
)
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
(amounts in millions)
|
Amounts offset
|
|
Amounts not offset
|
|
Net
|
|
Gross
|
|
Gross offset
|
|
Net amounts presented
|
|
Financial instruments
|
|
Cash collateral paid
|
|
|
Derivative assets
|
$
|
6.3
|
|
|
$
|
—
|
|
|
$
|
6.3
|
|
|
$
|
(2.5
|
)
|
|
$
|
—
|
|
|
$
|
3.8
|
|
Derivative liabilities
|
8.9
|
|
|
—
|
|
|
8.9
|
|
|
(2.6
|
)
|
|
(1.0
|
)
|
|
5.3
|
|
Collateral paid to counterparties is recorded in "Other current assets" in the Condensed Consolidated Balance Sheets.
12. FAIR VALUE MEASUREMENTS
Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. The basis for fair value measurements for each level within the hierarchy is described below, with Level 1 having the highest priority, and Level 3 having the lowest. The three levels of the fair value hierarchy are as follows:
|
|
•
|
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
|
|
•
|
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model-derived valuations whose inputs are observable or whose significant valuation drivers are observable.
|
|
|
•
|
Level 3 – significant inputs to the valuation model are unobservable and/or reflect the Company’s market assumptions.
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The following tables present the Company’s financial instruments, assets and liabilities that are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
(amounts in millions)
|
June 30,
2017
|
|
Quoted prices in
active markets
(Level 1)
|
|
Significant
other observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
Asset Category
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
78.6
|
|
|
$
|
—
|
|
|
$
|
78.6
|
|
|
$
|
—
|
|
Available for sale equity securities
|
5.3
|
|
|
4.7
|
|
|
0.6
|
|
|
—
|
|
Derivatives
|
7.4
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
Total
|
$
|
91.3
|
|
|
$
|
4.7
|
|
|
$
|
86.6
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Liability Category
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
18.9
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
|
$
|
—
|
|
Long-term contingent consideration
|
78.0
|
|
|
—
|
|
|
—
|
|
|
78.0
|
|
Total
|
$
|
96.9
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
|
$
|
78.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
(amounts in millions)
|
December 31,
2016
|
|
Quoted prices in
active markets
(Level 1)
|
|
Significant
other observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
Asset Category
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
48.2
|
|
|
$
|
—
|
|
|
$
|
48.2
|
|
|
$
|
—
|
|
Available for sale equity securities
|
5.7
|
|
|
5.1
|
|
|
0.6
|
|
|
—
|
|
Derivatives
|
8.5
|
|
|
—
|
|
|
8.5
|
|
|
—
|
|
Total
|
$
|
62.4
|
|
|
$
|
5.1
|
|
|
$
|
57.3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Liability Category
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
20.9
|
|
|
$
|
—
|
|
|
$
|
20.9
|
|
|
$
|
—
|
|
Long-term contingent consideration
|
75.8
|
|
|
—
|
|
|
—
|
|
|
75.8
|
|
Total
|
$
|
96.7
|
|
|
$
|
—
|
|
|
$
|
20.9
|
|
|
$
|
75.8
|
|
The following methods and assumptions were used to estimate the fair value of each class of the Company’s financial instruments, assets and liabilities:
Cash equivalents -
Cash equivalents primarily comprise certificates of deposits issued by financial institutions. These funds are not publicly traded, but historically have been highly liquid. The Company records certificates of deposit at amortized cost in the Condensed Consolidated Balance Sheets. Given the relatively short maturities of these instruments, the Company believes amortized cost approximates fair value. The Company classifies these instruments as Level 2.
Available for sale equity securities
-
Equity securities classified as available for sale are measured using quoted market prices at the reporting date multiplied by the quantity held and, accordingly, are classified as Level 1 assets. Level 2 equity securities are measured using quoted prices for similar instruments in active markets. Available for sale securities are included in "Other assets" in the Condensed Consolidated Balance Sheets.
Derivatives
-
Derivative assets and liabilities include foreign currency, metals, and interest rate derivatives. The values are determined using pricing models based upon observable market inputs, such as market spot and futures prices on over-the-counter derivative instruments, market interest rates, and consideration of counterparty credit risk.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Long-term contingent consideration
-
The long-term contingent consideration represents a potential liability of up to
$100 million
tied to achievement of adjusted EBITDA and common stock trading price performance metrics over a
seven
-year period ending December 2020 which was agreed upon in connection with the MacDermid Acquisition. The common stock performance metric has been satisfied. The estimated fair value of the adjusted EBITDA performance metric is derived using the income approach with unobservable inputs, based on future forecasts and present value assumptions which include a discount rate of approximately
9.50%
and expected future value of payments of
$60.0 million
calculated using a probability weighted adjusted EBITDA assessment with higher probability associated with the Company achieving the maximum adjusted EBITDA targets. Changes in the estimated fair value of the long-term contingent consideration are recorded in "Selling, technical, general and administrative expenses" in the Condensed Consolidated Statements of Operations. Relative to the share price metric, an increase or decrease in the discount rate of
1%
changes the fair value measure of the metric by approximately
$1.4 million
. Relative to the adjusted EBITDA metric, an increase or a decrease in the discount rate of
1%
, within a range of probability between
80%
and
100%
, changes the estimated fair value measure of the metric by approximately
$1.7 million
. During the
six months ended
June 30, 2017
, the long-term contingent consideration was adjusted to reflect the change in estimated fair value. There were
no
other changes to the Company's Level 3 instruments, including transfers, purchases, sales, or settlements.
There were no significant transfers between the fair value hierarchy levels for the
six months ended
June 30, 2017
.
The carrying value and estimated fair value of the Company’s long-term debt and capital lease obligations totaled
$5.29 billion
and
$5.51 billion
, respectively, at
June 30, 2017
, and
$5.14 billion
and
$5.35 billion
, respectively, at
December 31, 2016
. The carrying values noted above include unamortized premiums, discounts and debt issuance costs. The estimated fair value of long-term debt and capital lease obligations is measured using quoted market prices at the reporting date multiplied by the gross carrying amount of the related debt, which excludes unamortized premiums, discounts and debt issuance costs. Such instruments are valued using Level 2 inputs.
13. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue
5,000,000
shares of preferred stock. The Board has designated
2,000,000
of those shares as "Series A Preferred Stock." At
June 30, 2017
and
December 31, 2016
, a total of
2,000,000
shares of Series A Preferred Stock were issued and outstanding. Shares of preferred stock have no voting rights, except in respect of any amendment to the Company's Certificate of Incorporation, as amended, that would alter or change their rights or privileges. Each share of Series A Preferred Stock is convertible into
one
share of common stock at the option of the holders until December 31, 2020. All outstanding shares of Series A Preferred Stock will be automatically converted into shares of common stock on a
one
-for-one basis (i) in the event of a change of control of the Company following an acquisition or (ii) December 31, 2020 (which may be extended by the Board for
three
additional years).
As holders of the Series A Preferred Stock, the Founder Entities are entitled to receive dividends in the form of shares of common stock. The dividend amount is calculated based on the appreciated stock price compared to the highest dividend price previously used in calculating the Series A Preferred Stock dividends, which is currently
$22.85
per share.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Non-Controlling Interest
In connection with the MacDermid Acquisition, approximately
$97.5 million
was raised in new equity consisting of shares of PDH Common Stock. Since October 31, 2014, all shares of PDH Common Stock are convertible, at the option of the holder, into a like number of shares of the Company's common stock, the sale of which is subject to a contractual lock-up of
25%
per year over a
four
-year period, which started on October 31, 2013. Since October 31, 2016, which corresponded to the third anniversary of the MacDermid Acquisition, all shares of PDH Common Stock, except those held by Tartan, remain subject to a contractual lock-up with respect to
25%
of the total shares of PDH Common Stock initially received by their holders. Since October 31, 2016, Tartan members, who hold approximately
5.1 million
shares of PDH Common Stock, are no longer subject to any contractual lock-up. In addition, until the earlier of (i) the seventh anniversary of the MacDermid Acquisition (that is October 31, 2020), and (ii) such date on which all shares of PDH Common Stock held by Tartan have been exchanged for common stock, Platform has agreed, among certain other covenants, to obtain written consent from Tartan prior to issuing additional securities, or instruments convertible, exchangeable or exercisable for common stock.
The PDH Common Stock is classified as a non-controlling interest on the Condensed Consolidated Balance Sheets at
June 30, 2017
and
December 31, 2016
and will continue to be until such time as it is fully converted into shares of the Company's common stock. The total number of shares of common stock originally issuable upon the exchange of PDH Common Stock pursuant to the RHSA was approximately
8.8 million
, against which
3.0 million
shares have been issued at
June 30, 2017
.
For the three months ended
June 30, 2016
, approximately
$1.5 million
of net loss has been allocated to the Retaining Holders, as included in the Condensed Consolidated Statements of Operations. For the three months ended
June 30, 2017
, the net income (loss) allocated to the Retaining Holders was immaterial. At
June 30, 2017
and
2016
, non-controlling interest totaled
4.60%
and
6.21%
, respectively.
For the six months ended
June 30, 2017
and
2016
, approximately
$1.9 million
and
$(2.7) million
, respectively, of net income (loss) has been allocated to the Retaining Holders, as included in the Condensed Consolidated Statements of Operations
14. LOSS PER SHARE
A computation of loss per share and weighted average shares of common stock outstanding for the
three and six
months ended
June 30, 2017
and
2016
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in millions, except per share amounts)
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net loss attributable to common stockholders
|
|
|
$
|
(61.1
|
)
|
|
$
|
(8.8
|
)
|
|
$
|
(85.5
|
)
|
|
$
|
(143.6
|
)
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common stock outstanding
|
|
|
286.1
|
|
|
229.6
|
|
|
285.3
|
|
|
229.5
|
|
Share adjustments
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Dilutive weighted average common stock outstanding
|
|
|
286.1
|
|
|
229.6
|
|
|
285.3
|
|
|
229.5
|
|
Loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.21
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.63
|
)
|
Diluted
|
|
|
$
|
(0.21
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.63
|
)
|
|
|
|
|
|
|
|
|
|
|
Dividends per share paid to common stockholders
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
*
|
For the
three and six
months ended
June 30, 2017
and
2016
,
no
share adjustments were included in the dilutive weighted average shares outstanding computation as their effect would have been anti-dilutive. For more information about such dilutive shares outstanding, refer to the table below.
|
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
For the
three and six
months ended
June 30, 2017
and
2016
, the following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because performance targets were not yet achieved for awards contingent upon performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Shares issuable upon conversion of PDH Common Stock
|
6,021
|
|
|
8,014
|
|
|
6,759
|
|
|
8,033
|
|
Shares issuable upon conversion of Series A Preferred Stock
|
2,000
|
|
|
2,000
|
|
|
2,000
|
|
|
2,000
|
|
Shares issuable upon conversion of Series B Convertible Preferred Stock
|
—
|
|
|
22,108
|
|
|
—
|
|
|
22,108
|
|
Shares contingently issuable for the contingent consideration
|
6,321
|
|
|
8,490
|
|
|
6,231
|
|
|
8,599
|
|
Stock options
|
83
|
|
|
—
|
|
|
66
|
|
|
—
|
|
RSUs
|
875
|
|
|
144
|
|
|
793
|
|
|
72
|
|
Shares issuable under the ESPP
|
1
|
|
|
2
|
|
|
3
|
|
|
2
|
|
|
15,301
|
|
|
40,758
|
|
|
15,852
|
|
|
40,814
|
|
15. CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS
Asset Retirement Obligations
The Company has recognized AROs for properties where it can make a reasonable estimate of the future expenditures necessary to satisfy the related obligations. The Company considers identified legally-enforceable obligations, estimated settlement dates and appropriate discount and inflation rates in calculating the fair value of its AROs.
The Company's ARO liability is included in "Accrued expenses and other current liabilities" and "Other liabilities" in the Condensed Consolidated Balance Sheets and totaled
$22.5 million
and
$19.8 million
at
June 30, 2017
and
December 31, 2016
, respectively.
Environmental
The Company is involved in various claims relating to environmental matters at a number of current and former plant sites and waste management sites. The Company engages or participates in remedial and other environmental compliance activities at certain of these sites. At other sites, it has been named as a potential responsible party pursuant to the federal Superfund Act and/or state Superfund laws comparable to the federal law for site remediation. The Company analyzes each individual site, considering the number of parties involved, the level of its potential liability or contribution relating to the other parties, the nature and magnitude of the hazardous wastes involved, the method and extent of remediation, the potential insurance coverage, the estimated legal and consulting expense with respect to each site, and the time period over which any costs would likely be incurred. Based on the above analysis, the Company estimates the clean-up costs and related claims for each site. The estimates are based in part on discussions with other potential responsible parties, governmental agencies, and engineering firms.
The Company accrues for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current laws and existing technologies. The accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. While uncertainty exists with respect to the amount and timing of its ultimate environmental liabilities, the Company does not currently anticipate any material losses in excess of the amount recorded. However, it is possible that new information about these sites, such as results of investigations, could make it necessary for the Company to reassess its potential exposure related to these environmental matters.
The Company's environmental liability is included in "Accrued expenses and other current liabilities" and "Other liabilities" in the Condensed Consolidated Balance Sheets, and totaled
$31.4 million
and
$32.6 million
at
June 30, 2017
and
December 31, 2016
, respectively, primarily in connection with environmental remediation, clean-up costs, and monitoring of sites that were either closed or disposed of in prior years by Alent plc, which the Company acquired in December 2015. As of the date hereof, management does not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of the
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Company's recorded liabilities, and is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters.
Legal Proceedings
From time to time, the Company is involved in various legal proceedings in the normal course of its business. The Company believes that the resolution of these claims, to the extent not covered by insurance, will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. The Company's accruals for its outstanding legal proceedings are included in "Accrued expenses and other current liabilities" in the Condensed Consolidated Balance Sheets, and totaled
$6.9 million
and
$3.7 million
at
June 30, 2017
and
December 31, 2016
, respectively.
The following is a description of certain litigation matters:
Product liability and/or personal injury claims for, or relating to, products the Company sells under its Agricultural Solutions segment are complex in nature and have outcomes that are difficult to predict. Since these products are used in the food chain on a global basis, any such product liability or personal injury claim could lead to litigation in multiple jurisdictions. In September 2014, Agricola Colonet, SA de CV filed a complaint with the 1st Civil Court in San Quintin (Baja California) where it alleged that certain Arysta products purchased from a retail distributor in Mexico were contaminated, requiring treated crops to be destroyed. Agricola Colonet, SA de CV is seeking compensation of approximately MXN
186 million
(
$10.2 million
). A related complaint was filed in June 2016 in the U.S. District Court for the Southern District of California by Fresh Pac International, Inc., a distributor of produce for Agricola Colonet, SA de CV, naming the Company as a defendant. This complaint was later dismissed and such dismissal was then reduced to a judgment, which was not appealed by the plaintiff within the time permitted for appeal. With respect to the remaining complaint before the 1st Civil Court in San Quintin (Baja California), the Company believes that it has adequate defenses and intends to vigorously defend against this claim. Under its risk management policies, the Company maintains certain insurance policies under which such claim may be covered.
In June 2009, a lawsuit was filed in the District Court for the City of Ulianópolis in the State of Pará, Brazil by a private individual against Arysta LifeScience do Brasil Industria Química e Agropecuária Ltda, or Arysta Brazil, and
25
other defendants, and in November 2011, a claim was filed, also in the District Court for the City of Ulianópolis in the State of Pará, Brazil, against Arysta Brazil and
five
other defendants by the city of Ulianópolis, in each case in connection with materials sent by Arysta Brazil and others to an incineration site owned and operated by an unaffiliated third party in the state of Pará, Brazil. Arysta Brazil was summoned and has filed its answer in connection with both cases. Proceedings have been suspended indefinitely in order to allow the Pará State Attorney to conduct civil inquiries to determine the extent of contamination and the appropriate remediation, and to identify potentially responsible parties. Damages sought in the private lawsuit include a penalty of BRL
50.0 million
(
$15.1 million
), plus interest and the cost of remediation. The cost of remediation in the case brought by the city of Ulianopolis was previously estimated by the city to be BRL
70.9 million
(
$21.4 million
). In addition,
29
former employees of the incineration facility have brought actions in the Labor Court of Paragominas in the State of Pará, Brazil naming
80
defendants, including Arysta Brazil, seeking compensation in an aggregate amount of BRL
387 million
(
$117 million
) for health problems allegedly contracted as a result of their employment at the incineration site.
From time to time, in the ordinary course of business, the Company contests tax assessments received by its subsidiaries in various jurisdictions. The Company's contested tax assessments have been most prevalent in Brazil, where the tax regime is complex, and the administrative and judicial procedures for resolving disputed tax assessments are expensive and time-consuming. In addition, short of simply paying the entire amount demanded, including penalties, interest, and attorney’s fees, it is not possible to settle disputed tax assessments other than by submission for inclusion in formal tax amnesty programs announced by the Brazilian federal or state governments from time to time at irregular intervals. The terms of such amnesty programs vary, but generally offer the possibility of reduced interest and penalties. Historically, Arysta has submitted selected contested tax matters for inclusion in such amnesty programs in Brazil, when it appeared prudent to management to do so. The Company is currently contesting several tax assessments at various stages of the applicable administrative and judicial processes, with a combined amount at issue, including interest and penalties, of approximately BRL
89.3 million
(
$27.0 million
). Because tax matters in Brazil historically take many years to resolve, it is very difficult to estimate when these matters will be finally resolved. Based on management's judgments, the Company does not expect it will incur a material loss in excess of accrued liabilities.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
As previously disclosed, MacDermid Printing has been involved in various lawsuits with DuPont and Cortron involving MacDermid Printing's flexographic printing technology and related business. On June 27, 2017, MacDermid Printing and DuPont reached an agreement to settle and dismiss their respective lawsuits against each other, as well as MacDermid Printing's lawsuit against Cortron. In connection with the settlement, on July 14, 2017, DuPont made a payment of
$20.0 million
to MacDermid Printing, and the Company recorded a net settlement gain of
$10.6 million
in "Other income (expense), net" in the Condensed Consolidated Statement of Operations. This settlement resolves all outstanding litigation between MacDermid Printing, DuPont, and Cortron. Proceeds from the settlement agreement are subject to the pending litigation provisions of the Business Combination Agreement and Plan of Merger dated as of October 10, 2013.
16. INCOME TAXES
The Company's quarterly tax provision is measured using an estimated annual effective tax rate, adjusted for discrete items within the periods presented. The comparison of the Company's effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction, foreign income tax rate differentials and discrete items. For the three months ended
June 30, 2017
and
2016
, income tax expense totaled
$11.1 million
and
$26.9 million
, respectively. The difference between the U.S. statutory rate and effective tax rate for the three months ended
June 30, 2017
and
2016
primarily related to the recognition of a valuation allowance on net operating losses that may not be recoverable for U.S. and foreign companies.
For the
six
months ended
June 30, 2017
and
2016
, income tax expense totaled
$29.8 million
and
$45.3 million
, respectively. The difference between the U.S. statutory rate and effective tax rate for the six months ended
June 30, 2017
and
2016
primarily related to the recognition of a valuation allowance on net operating losses that may not be recoverable for U.S. and foreign companies.
17. RELATED PARTY TRANSACTIONS
The Company is party to an Advisory Services Agreement with Mariposa Capital, LLC, an affiliate of one of its founder directors, whereby Mariposa Capital, LLC is entitled to receive an annual fee equal to
$2.0 million
, which is accrued quarterly and payable in quarterly installments. This agreement is automatically renewed for successive
one
-year terms unless either party notifies the other party in writing of its intention not to renew no later than
90
days prior to the expiration of the applicable term.
18. SEGMENT INFORMATION
The Company's operations are organized into
two
reportable segments: Performance Solutions and Agricultural Solutions. The reporting segments represent businesses for which separate financial information is utilized by the CODM for purpose of allocating resources and evaluating performance. Each of the reportable segments has its own president, who reports to the CODM.
Segment Performance
The Company allocates resources and evaluates the performance of its operating segments based on net sales and adjusted EBITDA. Adjusted EBITDA for each segment is defined as earnings before interest, taxes, depreciation, and amortization, as further adjusted for additional items included in earnings that are not considered to be representative or indicative of each segment's ongoing business. Adjusted EBITDA for each segment also includes an allocation of corporate costs, such as compensation expense and professional fees.
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes financial information regarding each reportable segment’s results of operations for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Sales:
|
|
|
|
|
|
|
|
Performance Solutions
|
$
|
462.3
|
|
|
$
|
438.0
|
|
|
$
|
909.4
|
|
|
$
|
858.0
|
|
Agricultural Solutions
|
478.8
|
|
|
483.6
|
|
|
893.5
|
|
|
887.4
|
|
Consolidated net sales
|
$
|
941.1
|
|
|
$
|
921.6
|
|
|
$
|
1,802.9
|
|
|
$
|
1,745.4
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
Performance Solutions
|
$
|
102.7
|
|
|
$
|
97.9
|
|
|
$
|
205.0
|
|
|
$
|
180.8
|
|
Agricultural Solutions
|
102.5
|
|
|
95.0
|
|
|
193.3
|
|
|
180.5
|
|
Consolidated adjusted EBITDA
|
$
|
205.2
|
|
|
$
|
192.9
|
|
|
$
|
398.3
|
|
|
$
|
361.3
|
|
The following table reconciles net loss attributable to common stockholders to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six Months Ended June 30,
|
(amounts in millions)
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net loss attributable to common stockholders
|
|
|
$
|
(61.1
|
)
|
|
$
|
(8.8
|
)
|
|
$
|
(85.5
|
)
|
|
$
|
(143.6
|
)
|
Net income attributable to the non-controlling interests
|
|
|
1.1
|
|
|
0.7
|
|
|
1.9
|
|
|
1.2
|
|
Income tax expense
|
|
|
11.1
|
|
|
26.9
|
|
|
29.8
|
|
|
45.3
|
|
(Loss) income before income taxes and non-controlling interests
|
|
|
(48.9
|
)
|
|
18.8
|
|
|
(53.8
|
)
|
|
(97.1
|
)
|
Adjustments to reconcile to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
85.0
|
|
|
97.4
|
|
|
174.4
|
|
|
191.2
|
|
Depreciation expense
|
|
|
19.7
|
|
|
18.8
|
|
|
37.1
|
|
|
37.0
|
|
Amortization expense
|
|
|
67.3
|
|
|
66.6
|
|
|
135.8
|
|
|
131.0
|
|
Long-term compensation issued in connection with acquisitions
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.4
|
|
Restructuring expense
|
|
|
9.3
|
|
|
7.1
|
|
|
11.6
|
|
|
12.2
|
|
Amortization of inventory step-up
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
11.7
|
|
Acquisition and integration costs
|
|
|
0.4
|
|
|
5.2
|
|
|
4.0
|
|
|
24.2
|
|
Non-cash change in fair value of contingent consideration
|
|
|
1.2
|
|
|
1.3
|
|
|
2.2
|
|
|
4.1
|
|
Legal settlements
|
*
|
|
(10.6
|
)
|
|
(2.8
|
)
|
|
(10.6
|
)
|
|
(2.8
|
)
|
Foreign exchange loss (gain) on foreign denominated external and internal long-term debt
|
|
|
57.2
|
|
|
(19.3
|
)
|
|
69.0
|
|
|
46.8
|
|
Debt refinancing costs
|
|
|
12.8
|
|
|
—
|
|
|
13.9
|
|
|
—
|
|
Other, net
|
|
|
11.7
|
|
|
—
|
|
|
14.6
|
|
|
2.6
|
|
Adjusted EBITDA
|
|
|
$
|
205.2
|
|
|
$
|
192.9
|
|
|
$
|
398.3
|
|
|
$
|
361.3
|
|
|
|
*
|
During the three and six months ended June 30, 2017, the Company recorded a net gain of
$10.6 million
related to a settlement agreement reached between MacDermid Printing and DuPont. For additional information regarding the settlement, see Note 15, Contingencies, Environmental and Legal Matters, to the unaudited interim Condensed Consolidated Financial Statements included in this Quarterly Report.
|