TAMINCO Corp - FORM 10-Q - November 6, 2014

Attached files

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EX-32.2 - EXHIBIT 32.2 - TAMINCO Corp	ex32209302014.htm
EX-31.2 - EXHIBIT 31.2 - TAMINCO Corp	ex31209302014.htm
EX-31.1 - EXHIBIT 31.1 - TAMINCO Corp	ex31109302014.htm
EX-32.1 - EXHIBIT 32.1 - TAMINCO Corp	ex32109302014.htm
EXCEL - IDEA: XBRL DOCUMENT - TAMINCO Corp	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

Commission file number 001-35875

TAMINCO CORPORATION

(Exact name of registrant as specified in its charter)



Delaware	45-4031468
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

Two Windsor Plaza, Suite 411

7540 Windsor Drive

Allentown, Pennsylvania 18195

(Address of principal executive offices)

(610) 366-6730

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “accelerated filer, large accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Small reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were approximately 66,536,149 shares of common stock outstanding as of November 6, 2014.

TAMINCO CORPORATION

Table of Contents



Part I — Financial Information
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income (Loss)	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Cash Flows	6
		Condensed Consolidated Statements of Equity (Deficit)	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
	Item 4.	Controls and Procedures	34

Part II — Other Information
	Item 1.	Legal Proceedings	35
	Item 1A.	Risk Factors	35
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
	Item 3.	Defaults on Senior Securities	35
	Item 4.	Mine Safety Disclosures	35
	Item 5.	Other Information	35
	Item 6.	Exhibits	35
Signature			36
Exhibit Index			37

Forward-Looking Statements

Any statements made in this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements within the meaning of the federal securities laws, and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” and other similar expressions. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this report, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties and assumptions and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections. Any forward-looking statements should be considered in light of the risks referenced in "Part 1. Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. If we do update one or more forward-looking statements, there should be no inference that we will make additional updates with respect to those or other forward looking statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TAMINCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, except share amounts)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net sales	$	369		$	302		$	1,058		$	917
Cost of sales	307			247			879			750
Gross profit	62			55			179			167
Selling, general and administrative expense	21			17			58			46
Research and development expense	3			3			8			9
Other operating (income) expense	7			—			13			39
Operating income (loss)	31			35			100			73
Interest expense, net	18			18			53			66
Loss on early extinguishment of debt	—			—			—			12
Other non-operating (income) expense, net	(3		)	4			(4		)	2
Income (loss) before income taxes and equity in (income) losses	16			13			51			(7		)
Income tax expense (benefit)	(13		)	8			(3		)	(8		)
Income (loss) before results from equity in losses	29			5			54			1
Equity in (income) losses of unconsolidated entities	—			(1		)	1			—
Net income for the period	$	29		$	6		$	53		$	1
Net income per common share:
Basic	$	0.44		$	0.09		$	0.80		$	0.02
Diluted	$	0.43		$	0.09		$	0.79		$	0.02
Weighted average number of common shares outstanding
Basic	66,513,630			66,398,804			66,447,249			59,549,283
Diluted	67,002,234			66,857,732			66,889,237			59,750,833

See accompanying notes to condensed consolidated financial statements

TAMINCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Millions)

(Unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Net income (loss) for the period	$	29		$	6	$	53		$	1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(31		)	9		(35		)	7
Net pension and other postretirement benefit adjustments	—			—		—			—
Other comprehensive income (loss), net of tax	(31		)	9		(35		)	7
Total comprehensive income (loss)	$	(2	)	$	15	$	18		$	8

See accompanying notes to condensed consolidated financial statements

TAMINCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions)

(Unaudited)



	September 30, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	85		$	88
Trade receivables, net of allowance for doubtful accounts of $1.1 million in both 2014 and 2013	87			62
Related parties receivables	—			1
Inventories	143			138
Deferred income taxes	6			4
Prepaid expenses and other current assets	14			10
Income tax receivable	4			8
Total current assets	339			311
Property, plant and equipment, net	583			470
Equity method investments	19			22
Intangible assets, net	498			539
Goodwill	467			466
Deferred income taxes	15			2
Capitalized debt issuance costs, net	42			46
Total assets	$	1,963		$	1,856
Liabilities and Equity
Current liabilities:
Current installments of long-term debt	$	7		$	6
Trade payables	110			103
Income taxes payable	4			1
Other current liabilities	41			42
Deferred income taxes	2			3
Total current liabilities	164			155
Long-term debt	1,015			908
Deferred income taxes	212			241
Long-term pension and post retirement benefit obligations	21			20
Other liabilities	7			7
Total liabilities	1,419			1,331
Common stock ($0.001 par value, 250,000,000 shares authorized, 66,536,149 shares issued and outstanding at September 30, 2014 and 66,411,193 shares issued and outstanding at December 31, 2013)	—			—
Additional paid-in capital	535			534
Retained earnings (deficit)	18			(35		)
Accumulated other comprehensive income (loss)	(9		)	26
Total stockholders’ equity	544			525
Total liabilities and equity	$	1,963		$	1,856

See accompanying notes to condensed consolidated financial statements

TAMINCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

(Unaudited)



	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Cash flows provided by (used in) operating activities
Net income	$	53		$	1
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	101			85
Deferred tax provision	(34		)	(24		)
Stock based compensation	1			1
Other non-cash adjustments:
Loss on early extinguishment of debt	—			5
Loss from equity method investment	1			—
Amortization of debt-related costs	7			7
Net change in assets and liabilities:
(Increase)/Decrease in accounts receivable	(6		)	(11		)
(Increase)/Decrease in inventories	11			(4		)
Increase/(Decrease) in accounts payable	(3		)	4
(Increase)/Decrease in other current assets	1			5
Increase/(Decrease) in other current liabilities	—			(12		)
Increase/(Decrease) in other non-current liabilities	—			(5		)
Net cash flows provided by (used in) operating activities	132			52
Cash flows used in investing activities
Formic Acid Solutions Acquisition, net of cash acquired	(179		)	—
Purchase of property, plant and equipment	(72		)	(43		)
Purchase of intangible assets	(9		)	(5		)
Net cash flows used in investing activities	(260		)	(48		)
Cash flows provided by (used in) financing activities
Proceeds from borrowings	137			—
Repayments of borrowings	(6		)	(253		)
Return of capital	—			(7		)
Sale of common stock	—			233
Payments of debt issuance costs	(3		)	(2		)
Net cash flows provided by (used in) financing activities	128			(29		)
Effect of exchange rate change on cash and cash equivalents	(3		)	3
Net increase (decrease) in cash and cash equivalents	(3		)	(22		)
Cash and cash equivalents, beginning of period	88			67
Cash and cash equivalents, end of period	$	85		$	45
Supplemental Cash Flow Information:
Interest paid	$	49		$	66
Income tax payments, net	$	23		$	10
Non-cash investing activity:
Capital expenditures acquired but unpaid as of period end	$	1		$	—

See accompanying notes to condensed consolidated financial statements

TAMINCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In Millions)

(Unaudited)



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

Balance at December 31, 2013	$	525		$	(35	)	$	26		$	—	$	534
Net income	53			53			—			—		—
Issuance of common stock	—			—			—			—		—
Compensation cost for stock option grants	1			—			—			—		1
Other comprehensive income (loss), net of tax	(35		)	—			(35		)	—		—
Balance at September 30, 2014	$	544		$	18		$	(9	)	$	—	$	535

See accompanying notes to condensed consolidated financial statements

TAMINCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Background and Basis of Preparation

Taminco Corporation, a Delaware corporation (“Taminco”), formerly known as Taminco Acquisition Corporation, incorporated on December 12, 2011, is a holding company for its wholly owned subsidiary, Taminco Intermediate Corporation (“TIC”). TIC is a holding company for its wholly owned subsidiary, Taminco Global Chemical Corporation, a Delaware corporation (“TGCC”), and its subsidiaries (Taminco, TIC and TGCC and its subsidiaries being referred to herein collectively as the “Company”). Taminco and TIC derive all of their operating income and cash flows from TGCC and its subsidiaries.

The principal activity of the Company is to produce alkylamines and derivatives, key building blocks in an array of chemical products that have a wide range of applications. These alkylamines and alkylamine derivatives are used by Taminco’s customers in the manufacturing of products, primarily for the agriculture, water treatment, personal and home care, animal nutrition and oil and gas end-markets.

The Company currently operates eight plants worldwide dedicated to the production of alkylamines and alkylamine derivatives, including two larger facilities in each of the United States and Europe, a recently purchased formic acid solutions facility in Finland, a joint venture facility with Mitsubishi Gas Chemical Company and certain of its affiliates (the “MGC Group”) in China, and two other 100% Taminco-owned facilities in China.

2. Significant Accounting Policies

In management’s opinion, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2014 and December 31, 2013 and the results of operations and comprehensive income/(loss) for the three and nine months ended September 30, 2014 and 2013 and cash flows for the nine months ended September 30, 2014 and 2013. The condensed consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s audited financial statements for the fiscal year ended December 31, 2013, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014. The December 31, 2013 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Earnings Per Common Share

Basic earnings per share is calculated by dividing net earnings by the weighted average number of shares outstanding for the period. Diluted earnings per share is calculated by dividing net earnings by the weighted average number of shares outstanding for the period, adjusted for the effect of an assumed exercise of all dilutive options outstanding at the end of the period.

The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2014 and 2013 (in millions except share data):



Basic Earnings Per Common Share Computation
	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Net income for the period	$	29	$	6	$	53	$	1
Weighted average common shares outstanding	66,513,630		66,398,804		66,447,249		59,549,283
Earnings per common share—Basic	$	0.44	$	0.09	$	0.80	$	0.02



Diluted Earnings Per Common Share Computation
	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Net income for the period	$	29	$	6	$	53	$	1
Weighted average common shares outstanding—Basic	66,513,630		66,398,804		66,447,249		59,549,283
Incremental shares from assumed exercise of dilutive options from stock-based compensation awards	488,604		458,928		441,988		201,550
Weighted average common shares outstanding—Diluted	67,002,234		66,857,732		66,889,237		59,750,833
Earnings per common share—Diluted	$	0.43	$	0.09	$	0.79	$	0.02

Time vesting options to purchase 0.12 million shares of common stock outstanding for both the three and nine months ended September 30, 2014, 0.09 million shares of common stock outstanding for the nine months ended September 30, 2013, and 0.01 million shares of common stock outstanding for the three months ended September 30, 2013, respectively, were not included in the computation of diluted earnings per common share as the effect would be anti-dilutive. In addition, performance vesting options to purchase 2.0 million shares of common stock outstanding for both the three and nine months ended September 30, 2014 and 2.2 million shares of common stock outstanding for both the three and nine months ended September 30, 2013, respectively, were not included in the computation of diluted earnings per common share as the performance condition necessary to exercise the options was not met during or as of the end of the period presented.

3. Reclassifications From Accumulated Other Comprehensive Income (Loss)



(In millions)	Foreign Currency Translation Adjustments			Pension Liability Adjustments			Total
Balance at December 31, 2012	$	2		$	(1	)	$	1
Other comprehensive income (loss) before reclassifications	7			—			7
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			—
Net decrease in other comprehensive income (loss)	7			—			7
Balance at September 30, 2013	$	9		(1		)	$	8


(In millions)	Foreign Currency Translation Adjustments			Pension Liability Adjustments			Total
Balance at December 31, 2013	$	28		$	(2	)	$	26
Other comprehensive income (loss) before reclassifications	(35		)	—			(35		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			—
Net increase in other comprehensive income (loss)	(35		)	—			(35		)
Balance at September 30, 2014	$	(7	)	$	(2	)	$	(9	)

There were no reclassifications out of Accumulated Other Comprehensive Income (Loss) for both the three and nine months ended September 30, 2014 and 2013.

4. Initial Public Offering

professional fees of $10 million were incurred resulting in $230 million of net IPO proceeds. The primary use of these proceeds was the early extinguishment of the $250 million face value Senior PIK Toggle 9.125% Notes.

5. Mergers and Acquisitions

Eastman Chemical Company Merger

On September 11, 2014, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Stella Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman. Pursuant to the Merger Agreement, Merger Sub will merge with and into Taminco Corporation, on the terms and subject to the conditions set forth in the Merger Agreement, with Taminco surviving the merger as a wholly owned subsidiary of Eastman (the “Merger”). At the effective time of the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of common stock, par value $0.001 per share, of Taminco outstanding immediately prior to the effective time, other than any canceled shares or dissenting shares (each as defined in the Merger Agreement), will be converted into the right to receive $26.00 per share in cash, without interest.

The Consumation of the Merger is subject to a number of customary closing conditions under the Merger Agreement, including, among others: (i) Taminco and Eastman receiving duly executed copies of the Written Consent (as defined in the Merger Agreement); (ii) no injunction by any court or other tribunal of competent jurisdiction which prohibits the consummation of the Merger having been entered and continuing to be in effect and no Governmental Entity (as defined in the Merger Agreement) of competent jurisdiction having enacted or enforced any statute, rule, regulation, executive order, decree or other order (whether temporary, preliminary or permanent), which (a) is in effect and (b) has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger; (iii) the Regulatory Consents (as defined in the Merger Agreement) under each of (a) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (b) the foreign antitrust or competition clearances set forth in the Merger Agreement; and (c) any other foreign antitrust or competition clearances in any foreign country in which Eastman and the Company mutually agree is required in connection with the Merger, in each case, will have been obtained; and (iv) twenty (20) days will have elapsed since the Information Statement (as defined in the Merger Agreement) will have been mailed to the Company’s stockholders, and the consummation of the Merger will be permitted by Regulation 14C of the Securities and Exchange Act of 1934 (the “Exchange Act”) (including Rule 14c-2 promulgated under the Exchange Act). Eastman has entered into a support agreement (the “Support Agreement”) with certain affiliated investment funds of Apollo, who own a majority of Taminco’s common stock, pursuant to which Apollo has agreed, on the terms and subject to the conditions set forth in the Support Agreement, to act by written consent to approve and adopt the Merger Agreement and the transactions contemplated thereby. Each party’s obligation to consummate the Merger is also subject to certain customary representations and warranties of Eastman, Merger Sub and the Company and the compliance with certain covenants by the parties to the Merger Agreement and is also subject to there not having occurred, since June 30, 2014 through the date of the Merger Agreement, a Company Material Adverse Effect (as defined in the Merger Agreement). Taminco has agreed to conduct its business and the business of its subsidiaries in the ordinary course of business and to use commercially reasonable efforts to preserve intact its business organization and the organization of its subsidiaries and preserve intact their relationships with significant customers, suppliers and employees until the earlier of the consummation of the Merger or the termination of the Merger Agreement.

The Merger Agreement contains certain termination rights for each of Taminco and Eastman and further provides that we will be required to pay Eastman a termination fee under certain specified circumstances.

In connection with the Merger Agreement, we incurred $6 million of merger-related expenses, including legal, financial advisor and accounting fees, during the three and nine months ended September 30, 2014. These costs were recorded to Other Operating Expenses in the Condensed Consolidated Statements of Operations.

Formic Acid Solutions Acquisition

On December 22, 2013, the Company entered into a Share Purchase Agreement to acquire the formic acid business of Kemira Oyj (the “Formic Acid Solutions Acquisition” or "Acquisition"). The Acquisition was consummated on March 6, 2014 for an initial purchase price of €135 million. The formic acid business serves a number of end-markets driven by key global “mega-trends," such as animal nutrition, water treatment and energy. As a result of this transaction, the Company acquired a manufacturing facility for formic acid and derivatives located in Oulu, Finland and added approximately 160 employees across Finland, the Netherlands, Germany, China, the U.S. and Brazil.

Preliminary Purchase Price Allocation

We accounted for the Formic Acid Solutions Acquisition in accordance with the provisions of FASB Accounting Standards Codification (“ASC”) 805, “Business Combinations”, whereby the acquired assets and liabilities assumed are initially recorded at fair value.

In accordance with the provisions of ASC 805, the total purchase price was assigned to the Company’s net tangible and identifiable intangible assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill.

On July 11, 2014, the Company and Kemira Oyj entered into an agreement to reduce the purchase price of the Acquisition by approximately $5 million to reflect an adjustment to the working capital amounts. This adjustment was remitted to the Company from Kemira Oyj on July 15, 2014 and is reflected in the preliminary fair values below. The Company expects to evaluate any additional impact on the purchase price allocation and finalize the opening balance sheet within the acquisition period.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of Formic Acid Solutions Acquisition inclusive of the adjustments made during the second quarter (in millions):



Cash	$	2
Inventory	23
Accounts receivable	24
Prepaid expenses and other current assets	1
Property, plant and equipment	119
Intangible assets	27
Goodwill	24
Other long term assets	7
Total assets acquired	227
Current liabilities	25
Other long term liabilities	21
Total liabilities assumed	46
Net assets acquired	$	181

Other long-term liabilities assumed are primarily comprised of net non-current deferred tax liabilities of $19 million and other accruals of $2 million.

Inventory acquired by the Company includes a preliminary fair value adjustment of $3 million.

Property, plant and equipment includes a preliminary fair value adjustment of $67 million and consists of land, buildings, machinery and equipment. Depreciable lives average 8 years for the property, plant and equipment acquired.

The preliminary fair values assigned to intangible assets were determined through the use of the income approach, specifically the relief from royalty method and the multi-period excess earnings method. Both valuation methods rely on management’s judgments, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, peer group cost of capital and royalty rates as well as other factors. The valuation of tangible assets was derived using a combination of the income approach, the market approach and the cost approach. Significant judgments used in valuing tangible assets include estimated reproduction or replacement cost, useful lives of assets, estimated selling prices, costs to complete and reasonable profit.

The Acquisition related intangible asset preliminary valuations are as follows ($ in millions):



	Estimated Useful Lives	As of the Acquisition
Customer relationships	18 years	14
Technology, patents, trademarks and license costs	10 years	13
Total Intangible Assets at Acquisition		$	27

Supplementary Pro Forma Information

The unaudited pro forma combined statements of operations for the three and nine months ended September 30, 2014 and 2013 have been derived from our historical condensed consolidated financial statements and have been prepared to give effect to the Acquisition, as if it had occurred on January 1, 2013.

The Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2014 includes $32 million and $81 million of revenue, respectively, and $0 million and $1 million of net losses for the three and nine months ended September 30, 2014, for the Formic Acid Solutions business from the date of the Acquisition through September 30, 2014.

The unaudited pro forma combined statements of operations for the three and nine month periods ended September 30, 2014 and 2013 have been adjusted to reflect:

•additional depreciation and amortization that resulted from changes in the estimated fair value of assets and liabilities;

•increase of the interest expense resulting from new indebtedness incurred in connection with the Formic Acid Solutions Acquisition;

•transaction expenses that were incurred as a result of the Acquisition.

The Company's pro forma net sales and net income of the combined entity assuming the Acquisition had been consummated on January 1, 2013 are as follows:




(In millions, except per share amounts)	Three Months Ended September 30, 2014		Three Months Ended September 30, 2013		Nine Months Ended September 30, 2014		Nine Months Ended September 30, 2013
Net sales	$	369	$	340	$	1,084	$	1,055
Net income (loss)	$	29	$	5	$	54	$	3
Net income (loss) per common share:
Basic	$	0.44	$	0.08	$	0.81	$	0.05
Diluted	$	0.43	$	0.08	$	0.81	$	0.05

The pro forma amounts for the nine months ended September 30, 2014 were adjusted to exclude $2 million of acquisition costs, net of tax, that were actually incurred by the Company during the period and $3 million of expense, net of tax, related to the fair value adjustment of acquired inventory. The pro forma amounts for the nine months ended September 30, 2013 were adjusted to include $2 million of acquisition costs, net of tax, and $3 million of expense, net of tax, related to the fair value adjustment of acquired inventory.

The pro forma combined financial information is based on the Company’s assignment of purchase price. Pro forma results do not include any anticipated synergies or other anticipated benefits of the Formic Acid Solutions Acquisition. Accordingly, the unaudited pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the Formic Acid Solutions Acquisition occurred on January 1, 2013.

6. Accounts Receivable

Allowances for doubtful accounts was $1.1 million at both September 30, 2014 and December 31, 2013, respectively. The company did not adjust its allowance for doubtful accounts related to bad debt expense for either the three or nine months ended September 30, 2014. The company reduced its allowance for doubtful accounts by $0.1 million and $0.7 million for the three and nine months ended September 30, 2013, respectively, based upon favorable customer payment experience.

We make use of Non-Recourse Factoring Facilities to manage fluctuations in our trade working capital. Our Factoring Facilities have a combined limit of $199 million (the U.S. Dollar equivalent of the €158 million commitment amounts as of September 30, 2014) and applies to the eligible accounts receivable in the United States, Belgium, Germany, and Finland. The arrangements contain limitations as to the amount of eligible receivables that any one debtor can be factored at any moment in time. The limit is usually 15% of the amount of outstanding eligible receivables with the exception of certain specific debtors, where this limit is 30%. The Non-Recourse Factoring Facilities are committed until December 31, 2017 with a provision for indefinite extension and a notice period prior to termination of one year. Financing was approved on 85% of the relevant outstanding accounts receivable.

The total amount of eligible receivables insured by the third parties and sold by the Company during the three and nine months ended September 30, 2014 was $297 million and $806 million, respectively. The total amount of eligible receivables insured by the third parties and sold by the Company during the three and nine months ended September 30, 2013 was $208 million and $645 million, respectively. The Company sells the receivables at face value but receives actual funding net of a deposit account (approximately 85% of the face value) until collections are received from customers for the receivables sold.

The costs associated with the Non-Recourse Factoring Facilities consist of a commission fee on the factored receivables and an interest charge on the amount drawn under the facilities. The total commission fees on the factored receivables for the three and nine months ended September 30, 2014 was $0.4 million and $1.0 million, respectively. The total commission fees on the factored receivables for the three and nine months ended September 30, 2013 was $0.2 million and $0.8 million, respectively. The interest charge for the three and nine months ended September 30, 2014 was $0.5 million and $1.3 million, respectively. The interest charge for the three and nine months ended September 30, 2013 was $0.3 million and $1.1 million, respectively. The commission fee is included in "Selling, general and administrative expense" and the interest charge is included in "Interest expense" on the Condensed Consolidated Statements of Operations. The factored receivables are removed from the accounts receivables balance in accordance with guidance under ASC topic 860, Transfers and Servicing. The amount drawn under the Non-Recourse Factoring Facilities was $129 million at September 30, 2014 and $103 million at December 31, 2013.

As part of the program, the Company continues to service the receivables. The fair value of the receivables sold equaled the carrying value at the time of the sale, and no gain or loss was recorded. The Company estimates the fair value using inputs based on historical and anticipated performance of similar receivables, including historical and anticipated credit losses. The Company is exposed to credit losses on sold receivables up to the amount of the deposit amount. Credit losses for receivables sold and past due amounts outstanding for the three and nine months ended September 30, 2014 and 2013 were immaterial.

7. Inventories

Inventories consisted of the following components (in millions):



	September 30, 2014		December 31, 2013
Finished goods and work-in-process	$	108	$	111
Raw materials and supplies	35		27
Total Inventories	$	143	$	138

Total inventories are presented net of an allowance for excess and obsolete inventory of $3 million and $2 million at September 30, 2014 and December 31, 2013, respectively. There was $0 million expense charged for excess and obsolete inventory for both the three and nine months ended September 30, 2014 and 2013.

8. Property, Plant and Equipment

Property, plant and equipment, at cost, and the related accumulated depreciation were as follows (in millions):



	September 30, 2014			December 31, 2013
Land and improvements	$	31		$	35
Buildings, structures and related improvements	50			40
Plant, machinery and equipment	558			410
Furniture and vehicles	4			3
Construction-in-process	48			52
Software applications	13			9
	704			549
Less accumulated depreciation	(121		)	(79		)
Total Property, Plant and Equipment, Net	$	583		$	470

Total depreciation expense (excluding capital lease depreciation) for the three months ended September 30, 2014 and 2013 was $17 million and $12 million, respectively. Total depreciation expense (excluding capital lease depreciation) for the nine months ended September 30, 2014 and 2013 was $47 million and $34 million, respectively. Depreciation expense is included in cost of sales, selling, general and administrative expense, and research and development expense on the Condensed Consolidated Statements of Operations.

9. Goodwill and Intangible Assets

Goodwill by segment and changes in the carrying amount are as follows (in millions):



	Functional Amines			Specialty Amines			Crop Protection			Total
Balance at December 31, 2012	$	166		$	153		$	134		$	453
Foreign currency translation	4			5			4			13
Balance at December 31, 2013	170			158			138			466
Business acquisition (1)	—			24			—			24
Foreign currency translation	(8		)	(9		)	(6		)	(23		)
Balance at September 30, 2014	$	162		$	173		$	132		$	467


(1)	Represents the goodwill established as a result of the Formic Acid Solution Acquisition - see Note 5.

Intangible assets are as follows (in millions):



		September 30, 2014							December 31, 2013
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Leasehold interest	44 years	$	4	$	—		$	4	$	4	$	—		$	4
Regulatory costs	3 years	21		(7		)	14		14		(2		)	12
Customer relationships	12 years	350		(73		)	277		358		(55		)	303
Technology, patents and license costs	10 years	104		(25		)	79		96		(18		)	78
Various contracts	8 years	186		(62		)	124		186		(44		)	142
Total intangible assets		$	665	$	(167	)	$	498	$	658	$	(119	)	$	539

Intangible asset amortization expense is as follows (in millions):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Regulatory costs	$	1	$	2	$	5	$	4
Customer relationships	8		7		23		22
Technology, patents and license costs	3		2		8		7
Various Contracts	6		6		18		18
Total Amortization Expense	$	18	$	17	$	54	$	51

Based on the Company’s amortizable intangible assets as of September 30, 2014, the Company expects related amortization expense for the five succeeding years to be approximately $74 million annually.

10. Other Current Liabilities

Other current liabilities consisted of the following (in millions):



	September 30, 2014		December 31, 2013
Payroll and benefits	$	13	$	12
Accrued interest	—		10
Accrued rebates	9		6
Accrued charges	19		14
Total other current liabilities	$	41	$	42

11. Restructuring Reserve

The following table sets forth the changes in the restructuring reserve, which is included in other non-current liabilities in the Condensed Consolidated Balance Sheets (in millions):



	Total
Balance at December 31, 2012	$	6
Incurred and charged to expense	—
Cash payments	(2		)
Balance at December 31, 2013	4
Incurred and charged to expense	—
Cash payments	—
Balance at September 30, 2014	$	4

The remaining reserve of $4 million primarily relates to a restructuring provision following the decision in August 2011 to close the monoisopropylamine (“MIPA”) production facility of Taminco Comércio e Industría de Aminas Ltda. located in Camaçari, Bahia, Brazil. The provision is an estimate for all costs related to the closure such as employee termination indemnities and early termination indemnity of raw material and utilities supply contracts. The operating business of the MIPA facility has moved to the

production facility in St. Gabriel, Louisiana. The MIPA business is now managed through the North American business. The 2011 restructuring affected the Functional Amines segment.

During the third quarter of 2014, the Company sold the land at Camacari and recognized a gain of $0.5 million. This gain is included in Non-operating (income) expense, net on the Condensed Consolidated Statements of Operations.

The restructuring reserve at September 30, 2014 consists of the following amounts (in millions):



Supplier termination expense	$	1
Severance liabilities	2
Other expenditures	1
Total	$	4

12. Short and Long-Term Debt

On February 5, 2014, the Company refinanced the Senior Secured Credit Facilities. As part of this refinancing, the applicable rate was lowered by 0.75% and the alternate base rate was lowered by 0.25% on both the USD loan and the Euro loan. There were no changes to the terms of the loans. The transaction was treated as a debt modification and the financing costs of $0.3 million were capitalized and will be amortized over the life of the loan to interest expense.

On March 6, 2014 in connection with the Formic Acid Solutions Acquisition, the Company borrowed additional amounts under the Senior Secured Credit Facilities. The USD loan was increased by $43 million, and the EUR loan was increased by €68 million. There were no changes to the original maturity dates of February 15, 2019. The financing costs of $2.5 million were capitalized and will be amortized over the life of the loan to interest expense. In connection with this, our financial covenant was updated such that if we have indebtedness under the revolving credit facility or if more than $20 million of letters of credit that are not cash-collateralized are outstanding, the Company is required to maintain a maximum net first lien coverage ratio of 4.50 to 1.00, as compared to 3.75 to 1.00 required previously, that is tested quarterly and upon each credit extension.

Total indebtedness is as follows (in millions):



	September 30, 2014			December 31, 2013
Senior Secured Credit Facilities
Term loan credit facility—USD	$	384		$	344
Term loan credit facility—EUR	232			163
Second-Priority senior secured 9.75% notes due 2020	400			400
Capital and financing lease obligations	6			7
Total	1,022			914
Less current maturities	(7		)	(6		)
Total long-term debt	$	1,015		$	908

As of September 30, 2014, the total capacity and available capacity under the Company’s borrowing arrangements were as follows (in millions):



	Interest Rate			Expiration Date	Total Capacity		Available Capacity
Credit Facilities
Revolving credit facility	(1	)	(2)	February 15, 2017	$	200	$	198
Term loan credit facility—USD	(1	)	(3)	February 15, 2019	384		—
Term loan credit facility—EUR	(1	)	(4)	February 15, 2019	232		—
Second-Priority senior secured notes	9.75	%		March 31, 2020	400		—
					$	1,216	$	198


(1)	Alternate base rate is 0.75%.


(2)	The applicable rate is determined by the First Lien Leverage Ratio. The table below summarizes the applicable rate for the revolving credit facility which applies if the revolver is drawn:



Revolving Credit Facility First Lien Leverage Ratio	ABR Spread for Revolving Loans		Eurocurrency Spread for Revolving Loans
Greater than or equal to 1.50 to 1.00	2.25	%	3.25	%
Less than 1.50 to 1.00 and greater than or equal to 1.00 to 1.00	2.00	%	3.00	%
Less than 1.00 to 1.00	1.75	%	2.75	%


(3)	The applicable rate for the USD term loan is 2.50% per annum.


(4)	The applicable rate for the EUR term loan is 2.75% per annum.

Hedges of Net Investments in Foreign Operations

The Company has significant investments in foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. Currently, the Company uses Euro denominated debt to hedge some of this exposure. Translation gains and losses related to the net assets of the foreign subsidiaries are partially offset by gains and losses in the non-derivative financial instruments designated as hedges of net investments, which are included in Accumulated Other Comprehensive Income (Loss). For the nine months ended September 30, 2014, $0 million of net gains related to foreign-currency denominated debt were included in the cumulative translation adjustment. For the same period, no amounts were recorded in earnings as a result of hedge ineffectiveness.

13. Stock-Based Compensation

A summary of our stock-based compensation activity is presented below (number of shares in millions):



	Time Vesting Options		Performance Vesting Options
Outstanding at December 31, 2013	1.38		2.15
Granted	0.11		—
Exercised	(0.13	)	—
Forfeited	(0.05	)	(0.12	)
Outstanding at September 30, 2014	1.31		2.03

At September 30, 2014 and 2013, there were 0.6 million and 0.4 million options exercisable, respectively.

The total stock based compensation expense for stock options for the three and nine months ended September 30, 2014 was $0.2 million and $0.6 million, respectively. The total stock based compensation expense for stock options for the three and nine months ended September 30, 2013 was $0.2 million and $0.6 million, respectively.

As of September 30, 2014, there was approximately $5 million of unrecognized compensation cost related to the time vesting options and approximately $2 million of unrecognized compensation cost related to performance based options issued. Unrecognized cost for the time vesting options will be recorded in future periods as compensation expense as the awards vest over the period from the date of grant with a remaining weighted average period of approximately 6 years. The unrecognized cost for the performance based options will be recorded when the achievement of the target internal rate of return measures is probable of occurring.

14. Financial Instruments and Derivatives

During the three and nine months ended September 30, 2014 and 2013, the Company did not have any financial instruments or derivatives that were required to be valued at fair value on a recurring basis.

The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.



Level Input:		Input Definition:
Level I		Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level II		Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

Level III		Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The availability of observable inputs can vary from asset to asset and is affected by a wide variety of factors, including, for example, the type of asset, whether the asset is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level III. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table summarizes the carrying amount of the Company’s indebtedness compared to the estimated fair value, determined by quoted market values, for the periods presented (in millions):



	September 30, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value(a)		Carrying Amount		Estimated Fair Value(a)
Credit Facilities
Revolving credit facility—USD	$	—	$	—	$	—	$	—
Term loan credit facility—USD	384		382		344		346
Term loan credit facility—EUR	232		231		163		164
Second-Priority senior secured notes	400		442		400		458


(a)	The fair value of the Company’s indebtedness is categorized as Level II.

15. Related Parties

On December 15, 2011, an affiliate of Apollo Global Management, LLC ("Apollo") entered into a share purchase agreement with the previous sponsor pursuant to which Taminco Global Chemical Corporation acquired all of the issued share capital of Taminco Group Holdings S.à r.l. and its subsidiaries ("Apollo Acquisition"). The Apollo Acquisition was consummated on February 15, 2012. In April 2013 as part of the Company's IPO and in December 2013 as part of a Secondary offering, shares of the Company were sold into the public market which reduced Apollo's ownership percentage to 54%.

Transactions with Related Parties (Apollo Affiliates)

The Company has entered into certain transactions in the normal course of business with entities that are owned by affiliates of Apollo. For the three and nine months ended September 30, 2014, net sales to related parties were $0 million and $1 million, respectively. For the three and nine months ended September 30, 2013, net sales to related parties were $2 million and $6 million, respectively. For the three and nine months ended September 30, 2014, the cost of sales pertaining to purchases from related parties was $0 million and $1 million, respectively. For the three and nine months ended September 30, 2013, the cost of sales pertaining to purchases from related parties was $1 million and $2 million, respectively.

Apollo Management Fee Agreement

In connection with the Apollo Acquisition, Apollo Management VII, LP entered into a management fee agreement with the Company, which allowed Apollo and its affiliates to provide certain management consulting services to the Company. The Company paid Apollo an annual management fee for this service of approximately $4 million plus out-of-pocket costs and expenses in connection therewith.

For the three and nine month periods ended September 30, 2013, the Company expensed approximately $0 million and $4 million in Apollo management fees, respectively.

In connection with the IPO, Apollo gave notice to the Company to terminate its management service agreement, and pay a $35 million termination fee, in accordance with the terms of the agreement. This termination fee was paid in May 2013. As a result, there were no Apollo management fees expensed during the three and nine month periods ended September 30, 2014.

16. Other Operating Expense

Other operating expense for the three and nine months ended September 30, 2014 was $7 million and $13 million, respectively. Other operating expense for the three and nine months ended September 30, 2013 was $0 million and $39 million, respectively. For both the three and nine months ended September 30, 2014, this amount primarily consists of transaction and integration costs related to the Formic Acid Solutions Acquisition and transaction costs related to the pending acquisition by Eastman. For the three and nine months ended September 30, 2013, the amount primarily includes fees paid to Apollo.

17. Other Non-Operating (Income) Expense

Other non-operating (income) expense for the three and nine months ended September 30, 2014 consisted of $3 million and $4 million, respectively, primarily related to foreign exchange gains. Other non-operating (income) expense for the three and nine months ended September 30, 2013 consisted of $4 million and $2 million, respectively, in foreign exchange losses.

18. Income Tax Expense (Benefit)

Income tax expense (benefit) for the three and nine months ended September 30, 2014 was a benefit of $13 million and $3 million, respectively. Income tax expense (benefit) for the three and nine months ended September 30, 2013 was an expense of $8 million and a benefit of $8 million, respectively. Taminco calculates the tax provision for interim periods using an estimated annual effective tax rate methodology which is based on a current projection of full-year earnings before taxes amongst different taxing jurisdiction and adjusted for the impact of discrete quarterly items. The estimated annual effective tax rate differs from the U.S. statutory rate of 35% due to state taxes, the domestic manufacturing deduction, differential tax rates in various non-U.S. jurisdictions in which the Company operates, and operations in non-U.S. jurisdictions where the Company is not able to defer taxation in the U.S. The Company has incurred pretax income for the period from January 1, 2014 to September 30, 2014, however, has recorded certain discrete items that have significantly impacted the tax rate. During the third quarter of 2014, the Company’s evaluation of our tax position as well as completion of our 2013 Federal tax returns resulted in the Company claiming foreign tax credits rather than deducting foreign taxes. Consequently, the Company recorded a benefit for the current and prior year foreign tax credits and in addition revalued certain of its deferred tax assets and liabilities related to entities where it cannot defer U.S. taxation to reflect this change. This resulted in a discrete benefit of $21 million to be recorded during the third quarter of 2014. This benefit is the primary driver of the change in effective tax rate during both the three and nine months ended September 30, 2014. During the nine months ended September 30, 2013, the Company incurred a pretax loss and has recorded a tax benefit. The tax benefit in 2013 also reflects certain discrete items including legislative changes enacted during the period. The income tax expense for the three month period ended September 30, 2013 was also impacted by an out of period adjustment related to non-cash foreign exchange gains and losses on intercompany debt of $3 million. The Company does not believe that this out of period adjustment is material to the condensed consolidated financial statements.

19. Equity Method Investments

Activity related to the Company’s 50% joint venture with MGC Group for the nine months ended September 30, 2014 is as follows:




(In millions)	September 30, 2014
Beginning balance at January 1, 2014	$	22
Income (loss) from equity investments	(1		)
Effects of foreign currency exchange rates	(2		)
Ending balance at September 30, 2014	$	19

20. Segment Information

The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net sales and Adjusted EBITDA (a non-GAAP measure). Adjusted EBITDA consists of EBITDA, which is defined as net income (loss) before depreciation and amortization, interest (income) expense and income taxes, each of which is presented in the Company’s Condensed Consolidated Statements of Operations and adjusted for certain items as discussed below. The Company’s presentation of Adjusted EBITDA may not be comparable to similar measures used by other companies. Business segment assets are the owned or allocated assets used by each business.

The Company is organized into three segments: Functional Amines, Specialty Amines, and Crop Protection.

•

Functional Amines. This segment serves the needs of external customers that use our alkylamines products as the integral element in their chemical processes for the production of formulated products applied in a variety of end-markets such as agriculture, personal & home care, animal nutrition, and oil & gas. Through this segment, we also produce basic amines, which are captively used as building blocks to produce our downstream derivatives through our Specialty Amines and Crop Protection segments, serving a variety of attractive, non-cyclical end-markets. Approximately 30% of the Functional Amines production is used internally and forms the basis of our vertically integrated model.

•

Specialty Amines. This segment sells alkylamine derivatives for use in the water treatment, personal & home care, oil & gas and animal nutrition end-markets, and specialty additives for use in the pharmaceutical, industrial coatings and metal working fluid end-markets. This segment is downstream from the Functional Amines segment and uses that segment’s production as one of its key raw materials. The Specialty Amines segment’s customers are typically large, multinational enterprises who are leading players in their industry. Additionally, the Formic Acid Solutions business is part of this segment since the acquisition date of March 6, 2014.


•	Crop Protection. This segment sells alkylamine derivatives, active ingredients and formulated products for use in the agriculture and crop protection end-markets. The majority of the segment’s customers range from multinational crop protection and agricultural enterprises to large local farms.

The Company presents Adjusted EBITDA to enhance a prospective investor’s understanding of the results of operations and financial condition. EBITDA consists of profit for the period before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of EBITDA and eliminates (i) transaction and integration costs, (ii) restructuring charges, (iii) foreign currency exchange gains/losses, (iv) non-cash equity in earnings/losses of unconsolidated affiliates net of cash dividends received (v) stock option compensation, (vi) shutdown costs associated with plant expansion, and (vii) Apollo management and director fees and expenses. The Company believes that making such adjustments provides investors meaningful information to understand the operating results and the ability to analyze financial and business trends on a period-to-period basis consistent with how management views the business.



	Net Sales (1)
	Three months ended September 30,				Nine months ended September 30,
(In millions)	2014		2013		2014		2013
Functional amines	$	138	$	133	$	407	$	410
Specialty amines	192		132		531		396
Crop protection	39		37		120		111
Total Company Sales	$	369	$	302	$	1,058	$	917

(1)

No intersegment sales exist because the majority of the product is transferred at cost and is not sold between segments with a profit. Products are transferred from the Functional Amines segment to the Specialty Amines segment at cost and therefore are not recorded as a sale. Accordingly, the Functional Amines segment does not reflect profit on products transferred to the Specialty Amines segment. Products are transferred from the Functional Amines segment to the Crop Protection segment on a basis intended to reflect as nearly as practicable, the market value of the products.



	Adjusted EBITDA
	Three months ended September 30,						Nine months ended September 30,
(In millions)	2014			2013			2014			2013
Functional amines	$	32		$	32		$	91		$	96
Specialty amines	32			23			90			68
Crop protection	12			11			42			34
Total Company Adjusted EBITDA	$	76		$	66		$	223		$	198
Reconciling items:
Transaction and integration costs	(9		)	—			(18		)	—
Foreign currency exchange gains/(losses)	2			(5		)	4			(2		)
Income (loss) of equity method investment	—			1			(1		)	—
Stock option compensation	—			(1		)	(1		)	(1		)
Loss on early debt extinguishment	—			—			—			(12		)
Shutdown costs associated with plant expansion	—			—			(3		)	—
Apollo fees	—			—			—			(39		)
Depreciation and amortization	(35		)	(29		)	(101		)	(85		)
Interest expense, net	(18		)	(18		)	(53		)	(66		)
Income tax (expense) benefit	13			(8		)	3			8
Net income (loss) for the period	$	29		$	6		$	53		$	1

The following table is depreciation and amortization by segment:



	Depreciation and Amortization
	Three months ended September 30,				Nine months ended September 30,
(In millions)	2014		2013		2014		2013
Functional amines	$	12	$	11	$	34	$	32
Specialty amines	16		11		44		33
Crop protection	7		7		23		20
Total depreciation and amortization	$	35	$	29	$	101	$	85

The following table is total assets by segment:



	Total Assets
(In millions)	September 30, 2014		December 31, 2013
Functional Amines	$	671	$	697
Specialty Amines	763		607
Crop Protection	345		371
Corporate	184		181
Total Assets	$	1,963	$	1,856

The assets per segment include investments in equity method investees and expenditures for long lived assets.

21. Commitments and Contingencies

The Company is, from time to time, subject to a variety of litigation and similar proceedings incidental to its business. These legal matters primarily involve claims for damages arising out of the use of the Company’s products and services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, competition and sales and trading practices, personal injury and insurance coverage. The Company may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, divested businesses. Some of these lawsuits may include claims for punitive and consequential, as well as compensatory damages. Based upon the Company’s experience, current information and applicable law, it does not believe that

these proceedings and claims will have a material adverse effect on its consolidated results of operations, financial position or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or liquidity.

In July 2014, the Company received a subpoena from the United States Attorney’s Office for the Eastern District of Pennsylvania requesting documents and information concerning export shipments of monomethylamines (MMA) to a former customer in Mexico, a portion of which was diverted and subsequently seized by the US Drug Enforcement Agency in 2011. The Company has been cooperating with the government in its investigation. The Company cannot predict the outcome of this matter at this time.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and accompanying notes thereto included elsewhere herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements.

Overview

We believe we are the world’s largest integrated producer of alkylamines and alkylamine derivatives. Our products are used by our customers in the manufacturing of everyday products primarily for the agriculture, water treatment, personal & home care, animal nutrition and oil & gas end-markets. Our products provide these goods with a variety of ancillary characteristics required for optimal performance, such as neutralizing acidity, and removing contaminants. We have an extensive offering of differentiated value-added products that typically represent a small portion of our customers’ overall costs and are sold into diversified, global end-markets that benefit from favorable underlying economic and population growth trends. We currently operate in 20 countries with 8 production facilities and, as of September 30, 2014, had an installed production capacity of 1,508 kt. During the nine months ended September 30, 2014, eight of our products accounted for 57% of our revenue, with six of the eight products holding a leading global market position. During the nine months ended September 30, 2014, through our worldwide network of production facilities, we sold 45% of our net sales in North America, 40% of our net sales in Europe, and 15% of our net sales in the emerging markets (7% in Latin America and 8% in Asia). As a result of our leading market positions, attractive end-markets, and significant recent capital investments, we believe we are well positioned for significant growth over the coming years. In the nine months ended September 30, 2014, we generated revenue of $1,058 million, Adjusted EBITDA of $223 million, and Adjusted EBITDA margin, reflecting Adjusted EBITDA as a percentage of net sales, of 21%. Please see footnote 20 “Segment Information” to the condensed consolidated financial statements for a reconciliation of Adjusted EBITDA to Net Income.

We currently operate eight plants worldwide dedicated to the production of alkylamines and alkylamine derivatives, including two larger facilities in each of the United States and Europe, that are among the world’s largest methylamine and higher alkylamines production facilities, a recently purchased formic acid solutions facility in Finland, a joint venture facility with the MGC Group in China, and two other 100% Taminco-owned facilities in China.

On September 11, 2014, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Stella Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman. Pursuant to the Merger Agreement, Merger Sub will merge with and into Taminco, on the terms and subject to the conditions set forth in the Merger Agreement, with Taminco surviving the Merger as a wholly owned subsidiary of Eastman (the “Merger”). At the effective time of the Merger, each issued and outstanding share of common stock, par value $0.001 per share, of Taminco, outstanding immediately prior to the effective time other than any canceled or dissenting shares (as defined in the Merger Agreement) will be converted automatically into the right to receive $26.00 per share in cash, without interest. The consumation of the Merger remains subject to receipt of required regulatory approvals as well as other customary closing conditions. The transaction is expected to close before the end of 2014.

We are also in the process of pursuing numerous growth projects to further bolster our global footprint and leverage our strategic advantages. In total, we have spent $149 million in growth-related capital expenditures over the past three full years, which is more than we have spent in any similar historical period. We continue to realize growth from these investments.

We are organized into three segments: Functional Amines, Specialty Amines, and Crop Protection.


•	Functional Amines. This segment serves the needs of external customers that use our alkylamine products as the integral element in their chemical processes for the production of formulated products applied in a variety of end-markets such as agriculture, personal and home care, animal nutrition, and oil and gas. Through this segment, we also

produce basic amines, which are captively used as building blocks to produce our downstream derivatives through our Specialty Amines and Crop Protection segments, serving a variety of attractive, non-cyclical end-markets. Approximately 30% of the Functional Amines production is used internally and forms the basis of our vertically integrated model. In the nine months ended September 30, 2014, the Functional Amines segment accounted for 41% of Adjusted EBITDA.

•

Specialty Amines. This segment sells alkylamine derivatives for use in the water treatment, personal and home care, oil and gas and animal nutrition end-markets, and specialty additives for use in the pharmaceutical, industrial coatings and metal working fluid end-markets. This segment is downstream from the Functional Amines segment and uses that segment’s production as one of its key raw materials. The Specialty Amines segment’s customers are typically large, multinational enterprises who are leading players in their industry. Additionally, the recently acquired Formic Acid Solutions business is part of this segment since the acquisition date of March 6, 2014. In the nine months ended September 30, 2014, the Specialty Amines segment accounted for 40% of Adjusted EBITDA.


•	Crop Protection. This segment sells alkylamine derivatives for use in the agriculture and crop protection end-markets. The majority of the segment’s customers range from multinational crop protection and agricultural enterprises to large local farms. In the nine months ended September 30, 2014, the Crop Protection segment accounted for 19% of Adjusted EBITDA.

Initial Public Offering

On April 18, 2013, subsequent to its initial public offering (“IPO”) of 15,789,474 shares of common stock at a price to the public of $15.00 per share, the Company’s common stock began trading on the New York Stock Exchange under the symbol “TAM." In May 2013, underwriters exercised their option to purchase 1,170,603 additional shares at the IPO price less underwriting discounts and commissions. No selling stockholders participated in the offering. The proceeds from the sale of Company stock generated by this IPO were $240 million after the payment of $14 million in underwriting fees. In addition, professional fees of $10 million were incurred resulting in $230 million of net IPO proceeds. The primary use of these proceeds was the early extinguishment of the $250 million face value Senior PIK Toggle 9.125% Notes (“PIK Toggle Notes”) and payment of underwriting fees.

Basis of Presentation

We prepared the condensed consolidated financial statements following the requirements of the U.S. Securities and Exchange Commission (the "SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (U.S. GAAP) can be condensed or omitted.

We are responsible for the unaudited financial statements included in this Quarterly Report on Form 10-Q. The financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and results of operations. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2014.

Key Performance Indicators

Adjusted EBITDA

EBITDA consists of profit for the period before interest, taxes, depreciation and amortization (“EBITDA”). We present Adjusted EBITDA to enhance an investor’s understanding of our results of operations and financial condition. Adjusted EBITDA consists of EBITDA and eliminates (i) transaction and integration costs, (ii) restructuring charges, (iii) foreign currency exchange gains/losses, (iv) non-cash equity in earnings/losses of unconsolidated affiliates net of cash dividends received (v) stock option compensation, (vi) shutdown costs associated with plant expansion, and (vii) Sponsor management and director fees and expenses. We believe that making such adjustments provides investors meaningful information to understand our operating results and ability to analyze financial and business trends on a period-to-period basis. Adjusted EBITDA for the three and nine months ended September 30, 2014 and 2013 are calculated in the same manner.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and provides greater transparency into our consolidated results of operations. Adjusted EBITDA is a measure used by our management, including our chief operating decision maker, to perform such evaluation, and is a factor in measuring compliance with debt covenants relating to certain of our borrowing arrangements, including our Senior Secured Credit Facilities and the indenture governing our 2020 Notes.

You should not consider Adjusted EBITDA in isolation or as an alternative to (a) operating profit or profit for the period (as reported in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), (b) cash flows from operating, investing and financing activities as a measure to meet our cash needs or (c) any other measures of performance under U.S. GAAP. You should exercise caution in comparing Adjusted EBITDA as reported by us to similar measures of other companies. In evaluating Adjusted EBITDA, you should be aware that we are likely to incur expenses similar to the adjustments in this presentation in the future and that certain of these items could be considered recurring in nature. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by non-recurring items. For a discussion of trends affecting Adjusted EBITDA, see “— Results of Operations — Segment Level Financial Results.”

The following table presents our net sales and Adjusted EBITDA for the periods presented.



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2014		2013		2014		2013
Net sales	$	369	$	302	$	1,058	$	917
Adjusted EBITDA	76		66		223		198

Significant Factors Affecting Our Results of Operations

Volume, Product Mix and Pricing

Volume and our ability to control margins by passing the cost of raw materials onto customers through our pricing strategy are important variables in explaining our financial performance. We believe we occupy strong positions in growing niche markets with a relatively small group of suppliers. We enjoy positive gross margins across most of our product portfolio. In addition, a substantial portion of our sales is made pursuant to cost pass through contracts (“CPT Contracts”) under which the prices we receive for our products are automatically adjusted on a quarterly basis to reflect changes in key raw material prices. An equally substantial portion of our sales are made pursuant to contracts under which sales prices are renegotiated quarterly, generally permitting us to incorporate any increases in key raw material costs in revised sales prices. With respect to both types of contracts, however, price adjustments are made based on the experience of the previous quarter. Accordingly, changes to selling prices will lag behind changes in key raw material costs incurred. This means that in an environment of rising key raw material prices, we will not recover our increased key raw material costs in full until prices stabilize or fall. Conversely, in an environment of falling key raw materials prices, the sales prices we achieve may generate high gross margin and Adjusted EBITDA until prices stabilize or increase. Product mix also significantly impacts our results of operations as the average selling price and gross margin associated with our products varies significantly. For instance, due to the different cost structure and market prices, the selling prices in our Functional Amines business are significantly lower than prices in our Specialty Amines and Crop Protection businesses. On a volume basis for the nine months ended September 30, 2014, Functional Amines represented approximately 41% of total volume, Specialty Amines represented approximately 51% and Crop Protection represented approximately 8%. Changes in the share by segment will impact the average selling price and, consequently, gross margin. As a result, although we may experience significant top line growth, the ultimate profitability of our operations will be dependent upon our efforts to promote our higher margin products or increase volumes associated with those that produce lower margins.

Raw Materials

The majority of our operating expenses are comprised of costs for raw materials and consumables. Our most significant raw materials, in order of importance based on volume, are methanol, ammonia, ethylene oxide and acetone. Energy, primarily natural gas, also represents a material operating expense to us. Generally, all of our main raw materials are readily available commodity chemicals with multiple suppliers, and are bought in low volumes relative to total global capacities. Prices fluctuate widely, and our raw materials and consumables expenses are highly variable from year to year. As discussed above, the contracts under which we sell our products help to insulate us, via CPT Contracts and quarterly contract repricing provisions, from the negative impact of fluctuations in raw material prices.

Results of Operations

The following table presents our consolidated results for the periods presented (in millions):



	Three Months Ended September 30,
	2014			2013
Net sales	$	369		$	302
Cost of sales	307			247
Selling, general and administrative expense	21			17
Research and development expense	3			3
Other operating expense	7			—
Interest expense, net	18			18
Loss on early extinguishment of debt	—			—
Other non-operating (income) expense, net	(3		)	4
Income tax expense	(13		)	8
(Income) Loss from companies consolidated under the equity method	—			(1		)
Net income for the period	$	29		$	6

Three Months Ended September 30, 2014 vs. Three Months Ended September 30, 2013

Net sales for the three months ended September 30, 2014 were $369 million compared to $302 million in the comparative period ended September 30, 2013, which represents an increase of $67 million or 22%. Of the total increase, $60 million is related to the Specialty Amines business and is mainly due to additional net sales as a result of the Formic Acid Solutions Acquisition, supplemented by a $5 million increase in revenue from the Functional Amines business and a $2 million increase in revenue from the Crop Protection business.

Cost of sales for the three months ended September 30, 2014 were $307 million compared to $247 million in the comparative period ended September 30, 2013, which represents an increase of $60 million or 24%. The increase was due to the corresponding increase in sales. Gross profit margins in the three months ended September 30, 2014 were 16.8% compared to gross profit margins in the corresponding period of 18.2% primarily due to movements in the product mix.

Selling, general and administrative expense for the three months ended September 30, 2014 was $21 million compared to $17 million in the comparative period ended September 30, 2013, which represents an increase of $4 million or 24%. This increase was due to additional costs from the Formic Acid Solutions Acquisition and higher expenditures within our support functions in order to support additional growth demands.

Other operating expense for the three months ended September 30, 2014 was $7 million compared to $0 million in the comparative period ended September 30, 2013, which represents a increase of $7 million. This increase was related to the integration costs resulting from our Formic Acid Solutions Acquisition in 2014 as well as transaction costs related to the pending acquisition by Eastman.

Interest expense, net for the both the three months ended September 30, 2014 and 2013 was $18 million. Interest was impacted by the incremental debt borrowings to fund the Formic Acid Solutions Acquisition, offset by a reduction in interest expense due to the repricing of our interest rate on both the USD and EUR term loans.

Other non-operating (income) expense, net for the three months ended September 30, 2014 was income of $3 million compared to expense of $4 million in the comparative period ended September 30, 2013, which represents a change of $7 million. This balances primarily represents realized foreign exchange gains and losses and the primary driver of the change relates to the movement in the Euro to US dollar conversion during the periods.

Income tax expense (benefit) was a benefit of $13 million for the three months ended September 30, 2014 compared to expense of $8 million in the comparable period ended September 30, 2013, which represents a change of $21 million or 263%. Although the Company incurred pretax income for the three months ended September 30, 2014, there were certain discrete items recorded that have significantly impacted the tax rate. During the third quarter of 2014, the Company’s evaluation of our tax position as well as completion of our 2013 Federal tax returns resulted in the Company claiming foreign tax credits rather than deducting foreign taxes. Consequently, the Company recorded a benefit for the current and prior year foreign tax credits and in addition revalued certain of its deferred tax assets and liabilities related to entities where it cannot defer U.S. taxation to reflect this change. This resulted in a discrete benefit of $21 million to be recorded during the third quarter of 2014. This benefit is the primary driver of the change in effective tax rate during the three months ended September 30, 2014. The income tax expense for the three month period ended September 30, 2013 reflects certain discrete items including legislative changes enacted during the

period and was also impacted by an out of period adjustment related to non-cash foreign exchange gains and losses on intercompany debt.

The following table presents our consolidated results for the periods presented (in millions):



	Nine Months Ended September 30,
	2014			2013
Net sales	$	1,058		$	917
Cost of sales	879			750
Selling, general and administrative expense	58			46
Research and development expense	8			9
Other operating expense	13			39
Interest expense, net	53			66
Loss on early extinguishment of debt	—			12
Other non-operating (income) expense, net	(4		)	2
Income tax expense (benefit)	(3		)	(8		)
Loss from companies consolidated under the equity method	1			—
Net income for the period	$	53		$	1

Nine Months Ended September 30, 2014 vs. Nine Months Ended September 30, 2013

Net sales for the nine months ended September 30, 2014 were $1,058 million compared to $917 million in the comparative period ended September 30, 2013, which represents an increase of $141 million or 15%. Of the total increase, $135 million is related to the Specialty Amines business and is mainly due to additional net sales as a result of the Formic Acid Solutions Acquisition. Crop Protection also saw an increase of $9 million, offset by an $3 million reduction in revenue from the Functional Amines business.

Cost of sales for the nine months ended September 30, 2014 were $879 million compared to $750 million in the comparative period ended September 30, 2013, which represents an increase of $129 million or 17%. The increase was due to the corresponding increase in sales. Gross profit margins in the nine months ended September 30, 2014 were 16.9% compared to gross profit margins in the corresponding period of 18.2% due to movements in the product mix and due to shutdown costs related to the Methyls plant expansion at our Pace facility.

Selling, general and administrative expense for the nine months ended September 30, 2014 was $58 million compared to $46 million in the comparative period ended September 30, 2013, which represents an increase of $12 million or 26%. This increase was due to additional costs from the Formic Acid Solutions Acquisition, higher expenditures within our support functions in order to support additional growth demands, and additional legal and accounting fees.

Other operating expense for the nine months ended September 30, 2014 was $13 million compared to $39 million in the comparative period ended September 30, 2013, which represents an decrease of $26 million or 67%. This decrease was related to the $35 million Termination Fee paid to Apollo in May 2013 and the remainder of the 2013 management fee, partially offset by the transaction and integration costs resulting from the Formic Acid Solutions Acquisition and transaction costs related to the pending acquisition by Eastman.

Interest expense, net for the nine months ended September 30, 2014 was $53 million compared to $66 million in the comparative period ended September 30, 2013, which represents a decrease of $13 million or 20%. This decrease was due to the additional interest in 2013 on the PIK Toggle Notes issued in December 2012, which were redeemed in April and May 2013. Additionally in the nine months ended September 30, 2014, we incurred additional interest expense as a result of the incremental debt borrowings to fund the Formic Acid Solutions Acquisition, offset by a reduction in interest expense due to the repricing of our interest rate on both the USD and EUR term loans.

Other non-operating (income) expense, net for the nine months ended September 30, 2014 was income of $4 million compared to expense of $2 million in the comparative period ended September 30, 2013, which represents a change of $6 million or 300%. This balances primarily represents realized foreign exchange gains and losses and the primary driver of the change relates to the movement in the Euro to US dollar conversion during the periods.

Income tax expense (benefit) was a benefit of $3 million for the nine months ended September 30, 2014 compared to a benefit of $8 million in the comparable period ended September 30, 2013, which represents a change of $5 million or 63%. The Company has incurred pretax income for the period from January 1, 2014 to September 30, 2014, however, has recorded certain discrete items that have significantly impacted the tax rate. During the third quarter of 2014, the Company’s evaluation of our tax position as well as completion of our 2013 Federal tax returns resulted in the Company claiming foreign tax credits rather than deducting foreign taxes. Consequently, the Company recorded a benefit for the current and prior year foreign tax credits and in addition revalued certain of its deferred tax assets and liabilities related to entities where it cannot defer U.S. taxation to reflect this change. This resulted in a discrete benefit of $21 million to be recorded during the third quarter of 2014. This benefit is the primary driver of the change in effective tax rate during the nine months ended September 30, 2014. During the nine months ended September 30, 2013, the Company incurred a pretax loss and has recorded a tax benefit. The tax benefit in 2013 also reflects certain discrete items including legislative changes enacted during the period.

Segment Level Financial Results

The following table and related text is a more detailed discussion of the results of each of our reportable segments during the three months ended September 30, 2014 and 2013:



	Three Months Ended September 30,
(In millions)	2014		2013
Functional amines	$	138	$	133
Specialty amines	192		132
Crop protection	39		37
Total Company Sales	$	369	$	302



	Adjusted EBITDA
	Three Months Ended September 30,
(In millions)	2014			2013
Functional amines	$	32		$	32
Specialty amines	32			23
Crop protection	12			11
Total Company Adjusted EBITDA	$	76		$	66
Reconciling items:
Transaction and integration costs	(9		)	—
Foreign currency exchange gains/(losses)	2			(5		)
Losses of equity method investment	—			1
Stock option compensation	—			(1		)
Loss on early debt extinguishment	—			—
Shutdown costs associated with plant expansion	—			—
Apollo fees	—			—
Depreciation and amortization	(35		)	(29		)
Interest expense, net	(18		)	(18		)
Income tax (expense) benefit	13			(8		)
Net income (loss) for the period	$	29		$	6

Net Sales

Net sales derived from the Functional Amines segment was $138 million for the three months ended September 30, 2014, which was an increase of $5 million or 4% compared to the three months ended September 30, 2013. The increase was primarily due an increase in volumes particularly in methylamines.

Net sales derived from the Specialty Amines segment was $192 million for the three months ended September 30, 2014, an increase of $60 million or 45% compared to the three months ended September 30, 2013. The increase was primarily due to

additional net sales from the recently acquired Formic Acid Solutions business as well as an increase in volume related to surfactants and the water treatment end market.

Net sales derived from the Crop Protection segment for the three months ended September 30, 2014 were $39 million, which was an increase of $2 million or 5% compared to the three months ended September 30, 2013. This increase is due to higher pricing as well as an increase in volumes.

Adjusted EBITDA

Adjusted EBITDA derived from the Functional Amines segment remained consistent at $32 million for both the three months ended September 30, 2014 and the three months ended September 30, 2013.

Adjusted EBITDA derived from the Specialty Amines segment increased by $9 million to $32 million for the three months ended September 30, 2014 from $23 million in the three months ended September 30, 2013. The increase was primarily related to the Formic Acid Solutions Acquisition as well as higher pricing and product mix effects.

Adjusted EBITDA derived from the Crop Protection segment increased by $1 million to $12 million for the three months ended September 30, 2014 from $11 million in the three months ended September 30, 2013. The increase was primarily due to higher pricing and product mix effects.

Total Adjusted EBITDA for the three months ended September 30, 2014 was $76 million, compared to $66 million in the three months ended September 30, 2013, which represented an increase of $10 million or 15%. The increase was due to the strong performance in the Crop Protection segment as well as a full quarter contribution from the Formic Acid Solutions business. In addition, there was continued growth in our Specialty Amines segment serving the personal and home care, water treatment and energy end-markets.

The following table and related text is a more detailed discussion of the results of each of our reportable segments during the nine months ended September 30, 2014 and 2013:



	Nine Months Ended September 30,
(In millions)	2014		2013
Functional amines	$	407	$	410
Specialty amines	531		396
Crop protection	120		111
Total Company Sales	$	1,058	$	917



	Adjusted EBITDA
	Nine Months Ended September 30,
(In millions)	2014			2013
Functional amines	$	91		$	96
Specialty amines	90			68
Crop protection	42			34
Total Company Adjusted EBITDA	$	223		$	198
Reconciling items:
Transaction and integration costs	(18		)	—
Foreign currency exchange gains/(losses)	4			(2		)
Losses of equity method investment	(1		)	—
Stock option compensation	(1		)	(1		)
Loss on early debt extinguishment	—			(12		)
Shutdown costs associated with plant expansion	(3		)	—
Apollo fees	—			(39		)
Depreciation and amortization	(101		)	(85		)
Interest expense, net	(53		)	(66		)
Income tax (expense) benefit	3			8
Net income (loss) for the period	$	53		$	1

Net Sales

Net sales derived from the Functional Amines segment was $407 million for the nine months ended September 30, 2014, which was a decrease of $3 million or 1% compared to the nine months ended September 30, 2013. The decrease was primarily due to adverse weather conditions during the first quarter of 2014 which negatively impacted the U.S. agrochemical business.

Net sales derived from the Specialty Amines segment was $531 million for the nine months ended September 30, 2014, an increase of $135 million or 34% compared to the nine months ended September 30, 2013. The increase was primarily due to additional net sales from the Formic Acid Solutions business acquired during 2014 as well as an increase in volume in the personal and home care, water treatment and energy end markets business.

Net sales derived from the Crop Protection segment for the nine months ended September 30, 2014 were $120 million, which was an increase of $9 million or 8% compared to the nine months ended September 30, 2013. This increase is due to favorable product mix.

Adjusted EBITDA

Adjusted EBITDA derived from the Functional Amines segment decreased by $5 million to $91 million for the nine months ended September 30, 2014 from $96 million in the nine months ended September 30, 2013. The decrease was mainly due to reduced volumes as a result of adverse weather conditions in the U.S. during the first quarter of 2014, which negatively impacted the agrochemical business, partially offset by improved product mix.

Adjusted EBITDA derived from the Specialty Amines segment increased by $22 million to $90 million for the nine months ended September 30, 2014 from $68 million in the nine months ended September 30, 2013. The increase was primarily related to the Formic Acid Solutions Acquisition and strong demand in the personal and home care, water treatment, and energy end markets.

Adjusted EBITDA derived from the Crop Protection segment increased by $8 million to $42 million for the nine months ended September 30, 2014 from $34 million in the nine months ended September 30, 2013. The increase was primarily due to higher pricing and product mix effects.

Total Adjusted EBITDA for the nine months ended September 30, 2014 was $223 million, compared to $198 million in the nine months ended September 30, 2013, which represented an increase of $25 million or 13%. The increase was primarily due to the contribution from the Formic Acid Solutions business and strong performance in the Crop Protection segment. In addition, there was continued growth in our Specialty Amines segment serving the personal and home care, water treatment and energy end-markets, partially offset by a decline in the agrochemicals business which saw negative impacts from the weather in the U.S.

Liquidity and Capital Resources

Our principal sources of liquidity are cash from operations and short-term and long-term borrowings. We also make use of off-balance sheet, non-recourse factoring facilities (the “Non-Recourse Factoring Facilities”) to help manage fluctuations in our trade working capital. Our Factoring Facilities have a combined limit of $199 million (the U.S. Dollar equivalent of the €158 million commitment amounts as of September 30, 2014) and applies to the eligible accounts receivable in the United States, Belgium, Germany, and Finland. The arrangements contains limitations as to the amount of eligible receivables that any one debtor can be factored at any moment in time. The limit is usually 15% of the amount of outstanding eligible receivables with the exception of certain specific debtors, where this limit is 30%. The Non-Recourse Factoring Facilities are committed until December 31, 2017 with a provision for indefinite extension and a notice period prior to termination of one year. Financing was approved on 85% of the relevant outstanding accounts receivable.

The costs associated with the Non-Recourse Factoring Facilities consist of a commission fee on the factored receivables and an interest charge on the amount drawn under the facilities. The total commission fees on the factored receivables for the three and nine months ended September 30, 2014 was $0.4 million and $1.0 million, respectively. The total commission fees on the factored receivables for the three and nine months ended September 30, 2013 was $0.2 million and $0.8 million, respectively. The interest charge for the three and nine months ended September 30, 2014 was $0.5 million and $1.3 million, respectively. The interest charge for the three and nine months ended September 30, 2013 was $0.3 million and $1.1 million, respectively. The amount drawn under the Non-Recourse Factoring Facilities was $129 million at September 30, 2014 and $103 million at December 31, 2013.

We also have senior secured credit facilities totaling $816 million consisting of a revolving credit facility, none of which was drawn as of September 30, 2014, a USD term loan facility and a Euro term loan facility (the "Senior Secured Credit Facilities"). In addition, we have $400 million in aggregate principal amount outstanding of 9.75% second-priority notes due 2020 (the “2020 Notes”) (the “Notes”). The Senior Secured Credit Facilities and the indenture governing the Notes contain customary covenants. We may be required to comply with a specific financial ratio under our revolving credit facility. Under the revolving credit facility, if we have indebtedness under the revolving credit facility or if more than $20 million of letters of credit that are not cash-collateralized are outstanding, we must maintain a maximum net first lien coverage ratio of 4.50 to 1.00, tested quarterly and upon each credit extension. As of September 30, 2014, there were no amounts drawn under our revolving credit facility and we had a net first lien coverage ratio of 1.80 to 1.00, which would have been in compliance with the ratio requirement if we were under an obligation to comply. This restriction may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.

Future Cash Needs

Our primary future cash needs will be used to meet debt service requirements, working capital requirements, capital commitments and capital expenditures. Capital expenditures in 2014 are expected to be approximately $85 million (of which $54 million is for growth capital expenditures). We may also pursue strategic acquisition opportunities which may impact our future cash requirements. We believe that our cash flows from operations, combined with availability under our revolving credit facility and our factoring facility, will be sufficient to meet our presently anticipated future cash needs.

We or our affiliates may from time to time seek to retire the Notes or loans through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tenders or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Cash Flows

Cash and cash equivalents decreased from $88 million at December 31, 2013 to $85 million at September 30, 2014. This decrease was primarily attributable to the $179 million Formic Acid Solutions Acquisition and $81 million in capital spending offset by $137 million in debt borrowings and $132 million from cash generated from operating activities. Of the total cash balance, the majority is in the United States and Belgium, which is where the cash is needed.

Cash flows from operating, investing and financing activities are presented in the following table:



	Nine Months Ended September 30,
(In millions)	2014			2013
Cash provided by (used in):
Operating activities	$	132		$	52
Investing activities	(260		)	(48		)
Financing activities	128			(29		)
Effects of change in exchange rates on cash and cash equivalents	(3		)	3
Net change in cash and cash equivalents	$	(3	)	$	(22	)

Net cash flows from operating activities consist of profit after tax adjusted for changes in net working capital and non-cash items such as depreciation, amortization and write-offs, and movements in provisions and pensions. For the nine months ended September 30, 2014, cash from operating activities was $132 million, which was an increase of $80 million compared to the nine months ended September 30, 2013. The primary driver of this increase was the positive net income adjusted for the non-cash depreciation related to the step-up of the assets related to the 2014 Formic Acid Solutions Acquisition.

Trade Working Capital

Trade working capital represents trade receivables plus inventories less trade payables as presented on our Condensed Consolidated Balance Sheets. Trade working capital margin represents trade working capital as a percentage of net sales. We use the Non-Recourse Factoring Facilities to manage fluctuations in our trade working capital. The following table presents trade working capital as of the periods presented:



(In millions)	September 30, 2014			December 31, 2013
Trade receivables	$	87		$	63
Inventory	143			138
Trade payables	(110		)	(103		)
Trade working capital	$	120		$	98

Trade working capital at September 30, 2014 was $120 million, up by $22 million from $98 million at the end of 2013. The increase was primarily due to accounts receivable, inventory and accounts payable acquired in connection with the Formic Acid Solutions Acquisition.

Trade Receivables

Trade receivables at September 30, 2014 were $87 million, an increase of $24 million from $63 million at the end of 2013. The increase was primarily driven by accounts receivable related to the Formic Acid Solutions business and higher revenues in the three months ended September 30, 2014 compared to revenues in the three month period ending December 31, 2013 due to seasonality.

Inventories

Inventories at September 30, 2014 were $143 million, an increase of $5 million from $138 million at the end of 2013. The increase was primarily driven by inventory acquired in connection with the Formic Acid Solutions Acquisition.

Trade Payables

Trade payables at September 30, 2014 were $110 million, an increase of $7 million from $103 million at the end of 2013. The increase was primarily driven by payables related to the the Formic Acid Solutions business.

Cash used in investing activities was $260 million for the nine months ended September 30, 2014, primarily due to the Formic Acid Solutions Acquisition and capital expenditures related to the Methyls project at our Pace location. Cash used in investing activities was $48 million for the nine months ended September 30, 2013, primarily due to ongoing capital expenditures at the plant sites.

Capital Expenditures

The table below sets forth information with respect to our capital expenditures for the nine months ended September 30, 2014 and 2013:



(In millions)	Nine Months Ended September 30, 2014		Nine Months Ended September 30, 2013
Tangible capital expenditures	$	72	$	43
Growth and optimization	50		29
Maintenance	22		14
Intangible capital expenditures	9		5
Total capital expenditures	$	81	$	48

Generally, our capital expenditures are directed to one of two main categories of tangible assets, growth and optimization projects and capital improvements. A relatively small part of our capital expenditures are spent on intangible assets, including information and communications technology and toxicological and regulatory studies in connection with product registrations and re-registrations. The nine months ended September 30, 2014 includes our methylamine expansion project in Pace, Florida.

Cash provided by financing activities was $128 million for the nine months ended September 30, 2014 primarily due to the borrowing of additional debt to finance the Formic Acid Solutions Acquisition. Cash used in financing activities for the nine months ended September 30, 2013 was $29 million as a result of the early extinguishment of the face value of $250 million of the PIK Toggle Notes, as well as the remaining $7 million payment related to the shareholder distribution from December 2012, partially offset by $233 million of net funds raised from the sale of common stock, primarily in the Company's IPO.

Non-Current Interest-bearing Loans and Borrowings

Interest-bearing loans and borrowings increased by $107 million to $1,015 million between December 31, 2013 and September 30, 2014, due to the additional debt borrowings to fund the Formic Acid Solutions Acquisition, partially offset by principal payments on existing loans.

Contractual Obligations

The following table summarizes our future contractual obligations as of September 30, 2014:



(In millions)	2014		2015		2016		2017		2018		Thereafter		Total
Senior Secured Credit Facilities:
Revolving credit facility	$	—	$	—	$	—	$	—	$	—	$	—	$	—
USD term loan credit facility (a)	1		4		4		4		4		367		384
EUR term loan credit facility (a)	1		2		2		2		2		223		232
Second-Priority senior secured notes	—		—		—		—		—		400		400
Interest expense	15		61		60		60		60		53		309
Operating leases	3		10		9		8		6		10		46
Capital leases	—		1		1		1		2		1		6
Purchase commitments (b)	1		3		3		2		3		13		25
Total	$	21	$	81	$	79	$	77	$	77	$	1,067	$	1,402


(a)	Our term loans bear interest at variable rates, which are assumed to reflect the LIBOR currently in effect for purposes of this table; actual rates could differ materially.

(b)

We are a party to certain obligations to purchase products and services, principally related to the purchase of raw materials. These commitments are designed to assure sources of supply which historically have not been, and are not expected to be, in excess of our manufacturing requirements. Under a limited number of these obligations, which are structured as take-or-pay contracts, we are obligated to make minimum payments whether or not we take the contractual minimum. The amounts disclosed in the above table represent these minimum payments to be made in accordance with the contracts in place. We have historically always required the minimum levels in each of these contracts.

Off-Balance Sheet Arrangements

Our primary off-balance sheet commitments are the Non-Recourse Factoring Facilities described above under “Liquidity and Capital Resources.”

Critical Accounting Policies

There have been no significant material changes to the critical accounting policies as disclosed in the Company’s consolidated financial statements for the year ended December 31, 2013 included within our Annual Report on Form 10-K for the year ended December 31, 2013, as filed on February 28, 2014.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant material changes to the market risks as disclosed in the Company’s consolidated financial statements for the year ended December 31, 2013 included within our Annual Report on Form 10-K for the year ended December 31, 2013, as filed on February 28, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

We have begun to formally document and test our internal control over financial reporting in order to report on the effectiveness of our internal controls as of December 31, 2014, as required following our IPO.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not involved in any other pending governmental, judicial or arbitral proceeding, including any pending or threatened proceeding of which we are aware, that we believe may have, or has had, a material effect on our financial position or profitability. We are either a plaintiff or a defendant in other pending legal matters in the normal course of business. Management believes none of these other legal matters will have a material adverse effect on our business, financial condition or cash flow upon their final disposition.

Item 1A. Risk Factors

There were no material changes in the Company’s risk factors from the risks disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults on Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See the Index to Exhibits on Page 36.

* * * * *

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized in the City of Ghent, Belgium, on November 6, 2014.



TAMINCO CORPORATION

By:	/s/ Laurent Lenoir
	Name: Laurent Lenoir Title: Chief Executive Officer

EXHIBIT INDEX



Exhibit No.	Description

31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**	XBRL Instance Document

101.SCH**	XBRL Taxonomy Extension Schema Document

101.CAL**	XBRLTaxonomy Extension Calculation Linkbase Document

101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**	XBRL Taxonomy Extension Label Linkbase Document

101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document



*	This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange ct of 1934.
**	Furnished with this Report. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933 and are deemed not filed for purposes of section 18 of the Exchange Act.

Attached files

TAMINCO Corp Reports

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