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EX-32.1 - EXHIBIT 32.1 - WESTLAKE CHEMICAL CORPexhibit321_20140930.htm
EX-31.1 - EXHIBIT 31.1 - WESTLAKE CHEMICAL CORPexhibit311_20140930.htm
EX-99.1 - EXHIBIT 99.1 - WESTLAKE CHEMICAL CORPexhibit991_20140930.htm
EXCEL - IDEA: XBRL DOCUMENT - WESTLAKE CHEMICAL CORPFinancial_Report.xls
EX-31.2 - EXHIBIT 31.2 - WESTLAKE CHEMICAL CORPexhibit312_20140930.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
 
Form 10-Q
 
 
 
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2014
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period from                    to                    
Commission File No. 001-32260
 
 
 
 
 
Westlake Chemical Corporation
(Exact name of Registrant as specified in its charter)
 
 
 
 
 

Delaware
 
76-0346924
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
2801 Post Oak Boulevard, Suite 600
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713) 960-9111
(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   ¨
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer
 
x
 
Accelerated filer
 
¨
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)     Yes   ¨     No   x
The number of shares outstanding of the registrant's sole class of common stock as of October 31, 2014 was 133,082,630 (on a post-split basis).



INDEX




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
September 30,
2014
 
December 31,
2013
 
 
 
 
 
 
 
(in thousands of dollars, except
par values and share amounts)
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
813,468

 
$
461,301

Marketable securities
 

 
239,388

Accounts receivable, net
 
592,964

 
428,457

Inventories
 
500,552

 
471,879

Prepaid expenses and other current assets
 
18,884

 
13,888

Deferred income taxes
 
26,080

 
34,169

Total current assets
 
1,951,948

 
1,649,082

Property, plant and equipment, net
 
2,710,475

 
2,088,014

Equity investments
 
70,828

 
66,875

Other assets, net
 
 
 
 
Intangible assets, net
 
222,728

 
159,046

Deferred charges and other assets, net
 
170,304

 
97,892

Total other assets, net
 
393,032

 
256,938

Total assets
 
$
5,126,283

 
$
4,060,909

LIABILITIES AND EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
263,365

 
$
249,613

Accrued liabilities
 
309,671

 
155,245

Total current liabilities
 
573,036

 
404,858

Long-term debt
 
763,968

 
763,879

Deferred income taxes
 
513,773

 
437,976

Other liabilities
 
153,158

 
35,593

Total liabilities
 
2,003,935

 
1,642,306

Commitments and contingencies (Notes 7 and 15)
 


 


Stockholders' equity
 
 
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized;
   no shares issued and outstanding
 

 

Common stock, $0.01 par value, 300,000,000 shares authorized;
   134,680,164 and 134,580,208 shares issued at September 30, 2014
   and December 31, 2013, respectively (Note 1)
 
1,347

 
1,346

Common stock, held in treasury, at cost; 1,220,544 and 1,252,922 shares
   at September 30, 2014 and December 31, 2013, respectively (Note 1)
 
(53,248
)
 
(46,220
)
Additional paid-in capital
 
527,992

 
511,432

Retained earnings
 
2,394,203

 
1,954,661

Accumulated other comprehensive loss
 
(36,433
)
 
(2,616
)
Total Westlake Chemical Corporation stockholders' equity
 
2,833,861

 
2,418,603

Noncontrolling interests
 
288,487

 

Total equity
 
3,122,348

 
2,418,603

Total liabilities and equity
 
$
5,126,283

 
$
4,060,909

The accompanying notes are an integral part of these consolidated financial statements.

1


WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
(in thousands of dollars, except per share data and share amounts)
Net sales
 
$
1,253,227

 
$
1,004,165

 
$
3,279,479

 
$
2,807,859

Cost of sales
 
891,707

 
699,694

 
2,324,978

 
2,002,092

Gross profit
 
361,520

 
304,471

 
954,501

 
805,767

Selling, general and administrative expenses
 
54,759

 
37,869

 
132,897

 
109,883

Income from operations
 
306,761

 
266,602

 
821,604

 
695,884

Other income (expense)
 
 
 
 
 
 
 
 
Interest expense
 
(9,486
)
 
(3,297
)
 
(28,182
)
 
(14,921
)
Other (expense) income, net
 
(2,670
)
 
(287
)
 
4,440

 
3,137

Income before income taxes
 
294,605

 
263,018

 
797,862

 
684,100

Provision for income taxes
 
124,449

 
92,728

 
300,231

 
244,647

Net income
 
170,156

 
170,290

 
497,631

 
439,453

Net income attributable to noncontrolling
   interests
 
2,399

 

 
2,399

 

Net income attributable to Westlake Chemical
   Corporation
 
$
167,757

 
$
170,290

 
$
495,232

 
$
439,453

Earnings per common share attributable to
   Westlake Chemical Corporation (Note 1):
 
 
 
 
 
 
 
 
Basic
 
$
1.26

 
$
1.28

 
$
3.71

 
$
3.29

Diluted
 
$
1.25

 
$
1.27

 
$
3.69

 
$
3.27

Weighted average common shares outstanding (Note 1):
 
 
 
 
 
 
 
 
Basic
 
133,299,458

 
133,257,494

 
133,199,304

 
133,256,054

Diluted
 
133,846,059

 
133,811,108

 
133,743,145

 
133,806,758

Dividends per common share (Note 1)
 
$
0.1650

 
$
0.1125

 
$
0.4170

 
$
0.3000

The accompanying notes are an integral part of these consolidated financial statements.

2


WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
(in thousands of dollars)
Net income
 
$
170,156

 
$
170,290

 
$
497,631

 
$
439,453

Other comprehensive income (loss), net of income taxes
 
 
 
 
 
 
 
 
Pension and other post-retirement benefits liability
 
 
 
 
 
 
 
 
Pension and other post-retirement reserves
   adjustment (excluding amortization)
 
(31
)
 
(489
)
 
(62
)
 
(978
)
Amortization of benefits liability
 
240

 
695

 
685

 
2,004

Income tax provision on pension and other
   post-retirement benefits liability
 
(81
)
 
(78
)
 
(240
)
 
(394
)
Foreign currency translation adjustments
 
(37,792
)
 
546

 
(37,882
)
 
(844
)
Available-for-sale investments
 
 
 
 
 
 
 
 
Unrealized holding gains on investments
 
2,129

 
205

 
6,960

 
205

Reclassification of net realized gains to
   net income
 

 

 
(1,212
)
 

Income tax provision on available-for-sale
   investments
 
(766
)
 
(74
)
 
(2,066
)
 
(74
)
Other comprehensive (loss) income
 
(36,301
)
 
805

 
(33,817
)
 
(81
)
Comprehensive income
 
133,855

 
171,095

 
463,814

 
439,372

Comprehensive income attributable to
   noncontrolling interests, net of tax
 
2,399

 

 
2,399

 

Comprehensive income attributable to
   Westlake Chemical Corporation
 
$
131,456

 
$
171,095

 
$
461,415

 
$
439,372

The accompanying notes are an integral part of these consolidated financial statements.

3


WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
 
 
Common Stock
 
Common Stock,
Held in Treasury
 
 
 
 
 
Accumulated Other Comprehensive 
Income (Loss)
 
 
 
 
 
 
Number of
Shares
 
Amount
 
Number of
Shares
 
At Cost
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Benefits
Liability, 
Net of Tax
 
Cumulative
Foreign
Currency
Exchange
 
Net
Unrealized
Holding
Gains on
Investments,
Net of Tax
 
Noncontrolling Interests
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands of dollars, except share amounts)
Balances at December 31, 2012
 
134,374,448

 
$
1,345

 
568,986

 
$
(13,302
)
 
$
495,581

 
$
1,399,472

 
$
(16,351
)
 
$
5,511

 
$

 
$

 
$
1,872,256

Net income
 

 

 

 

 

 
610,425

 

 

 

 

 
610,425

Other comprehensive
   (loss) income
 

 

 

 

 

 

 
9,655

 
(1,607
)
 
176

 

 
8,224

Common stock
   repurchased
 

 

 
683,936

 
(32,918
)
 

 

 

 

 

 

 
(32,918
)
Shares issued - stock-
   based compensation
 
225,924

 
1

 

 

 
3,436

 

 

 

 

 

 
3,437

Stock-based
   compensation, net of
   tax on stock options
   exercised
 
(20,164
)
 

 

 

 
12,415

 

 

 

 

 

 
12,415

Dividends paid
 

 

 

 

 

 
(55,236
)
 

 

 

 

 
(55,236
)
Balances at December 31, 2013
 
134,580,208

 
1,346

 
1,252,922

 
(46,220
)
 
511,432

 
1,954,661

 
(6,696
)
 
3,904

 
176

 

 
2,418,603

Net income
 

 

 

 

 

 
495,232

 

 

 

 
2,399

 
497,631

Other comprehensive
   income (loss)
 

 

 

 

 

 

 
383

 
(37,882
)
 
3,682

 

 
(33,817
)
Common stock
   repurchased
 

 

 
104,163

 
(9,495
)
 

 

 

 

 

 

 
(9,495
)
Shares issued - stock-
   based compensation
 
124,566

 
1

 
(136,541
)
 
2,467

 
3,034

 

 

 

 

 

 
5,502

Stock-based
   compensation, net of
   tax on stock options
   exercised
 
(24,610
)
 

 

 

 
13,526

 

 

 

 

 

 
13,526

Dividends paid
 

 

 

 

 
 
 
(55,690
)
 

 

 

 

 
(55,690
)
Issuance of Westlake
   Chemical Partners LP
   common units
 

 

 

 

 
 
 

 

 

 

 
286,088

 
286,088

Balances at September 30, 2014
 
134,680,164

 
$
1,347

 
1,220,544

 
$
(53,248
)
 
$
527,992

 
$
2,394,203

 
$
(6,313
)
 
$
(33,978
)
 
$
3,858

 
$
288,487

 
$
3,122,348

The accompanying notes are an integral part of these consolidated financial statements.

4


WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
 
 
 
 
 
 
(in thousands of dollars)
Cash flows from operating activities
 
 
 
 
Net income
 
$
497,631

 
$
439,453

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
Depreciation and amortization
 
148,394

 
116,294

Provision for doubtful accounts
 
295

 
3,600

Amortization of debt issuance costs
 
1,172

 
1,093

Stock-based compensation expense
 
6,856

 
4,804

Loss from disposition of fixed assets
 
2,635

 
4,679

Deferred income taxes
 
34,459

 
83,443

Windfall tax benefits from share-based payment arrangements
 
(6,670
)
 
(5,056
)
(Income) loss from equity method investments, net of dividends
 
(3,199
)
 
1,586

Other gains, net
 
(495
)
 

Changes in operating assets and liabilities
 
 
 
 
Accounts receivable
 
6,055

 
(18,874
)
Inventories
 
80,492

 
(26,325
)
Prepaid expenses and other current assets
 
458

 
(5,038
)
Accounts payable
 
(98,769
)
 
19,518

Accrued liabilities
 
111,965

 
(15,755
)
Other, net
 
(5,155
)
 
(55,922
)
Net cash provided by operating activities
 
776,124

 
547,500

Cash flows from investing activities
 
 
 
 
Acquisition of business, net of cash acquired
 
(611,087
)
 
(178,309
)
Additions to equity investments
 

 
(23,338
)
Additions to property, plant and equipment
 
(311,183
)
 
(498,290
)
Construction of assets pending sale-leaseback
 

 
(136
)
Proceeds from disposition of assets
 
145

 
78

Proceeds from repayment of loan acquired
 
45,923

 

Proceeds from repayment of loan to affiliate
 

 
167

Proceeds from sales and maturities of securities
 
342,045

 
239,764

Purchase of securities
 
(117,332
)
 
(232,286
)
Settlements of derivative instruments
 
(689
)
 
(2,297
)
Net cash used for investing activities
 
(652,178
)
 
(694,647
)
Cash flows from financing activities
 
 
 
 
Capitalized debt issuance costs
 
(1,167
)
 

Dividends paid
 
(55,690
)
 
(40,204
)
Net proceeds from issuance of Westlake Chemical Partners LP common units
 
286,088

 

Proceeds from exercise of stock options
 
5,502

 
3,182

Repurchase of common stock for treasury
 
(9,495
)
 
(19,409
)
Windfall tax benefits from share-based payment arrangements
 
6,670

 
5,056

Net cash provided by (used for) financing activities
 
231,908

 
(51,375
)
Effect of exchange rate changes on cash and cash equivalents
 
(3,687
)
 

Net increase (decrease) in cash and cash equivalents
 
352,167

 
(198,522
)
Cash and cash equivalents at beginning of period
 
461,301

 
790,078

Cash and cash equivalents at end of period
 
$
813,468

 
$
591,556

The accompanying notes are an integral part of these consolidated financial statements.

5

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands of dollars, except share amounts and per share data)


1. Basis of Financial Statements
The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the December 31, 2013 financial statements and notes thereto of Westlake Chemical Corporation (the "Company") included in the annual report on Form 10-K for the fiscal year ended December 31, 2013 (the "2013 Form 10-K"), filed with the SEC on February 21, 2014. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2013.
In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of September 30, 2014, its results of operations for the three and nine months ended September 30, 2014 and 2013 and the changes in its cash position for the nine months ended September 30, 2014 and 2013.
Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2014 or any other interim period. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
On February 14, 2014, the Company's Board of Directors authorized a two-for-one split of the Company's common stock. Stockholders of record as of February 28, 2014 were entitled to one additional share for every share outstanding, which was distributed on March 18, 2014. The total number of authorized common stock shares and associated par value were unchanged by this stock split. All share amounts and per share data included in the accompanying consolidated financial statements and related notes have been restated to reflect the effect of the stock split.
In March 2014, the Company formed Westlake Chemical Partners LP ("WLKP") to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, WLKP closed its initial public offering of 12,937,500 common units. See Note 19 for additional information. The Company consolidates WLKP and records a noncontrolling interest for the interest in WLKP not owned by the Company.
Recent Accounting Pronouncements
Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on a comprehensive new revenue recognition standard that will supersede the existing revenue recognition guidance. The new accounting guidance creates a framework by which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either "full retrospective" adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch-up as of the earliest period presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch-up as of the current period. The accounting standard will be effective for reporting periods beginning after December 15, 2016. The Company is in the process of evaluating the impact that the new accounting guidance will have on its consolidated financial position, results of operations and cash flows.
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
In August 2014, the FASB issued an accounting standards update on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern. The new accounting guidance requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The accounting standard will be effective for reporting periods

6

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

ending after December 15, 2016 and is not expected to have an impact on the Company's consolidated financial position, results of operations and cash flows.
2. Financial Instruments
Cash Equivalents
The Company had $747,008 and $263,967 of held-to-maturity securities with original maturities of three months or less, primarily consisting of corporate debt securities, classified as cash equivalents at September 30, 2014 and December 31, 2013, respectively. The Company's investments in held-to-maturity securities are held at amortized cost, which approximates fair value.
Available-for-Sale Marketable Securities
Investments in available-for-sale securities were classified as follows:
 
September 30,
2014
 
December 31,
2013
Current
$

 
$
239,388

Non-current
21,066

 

Total available-for-sale securities
$
21,066

 
$
239,388

The cost, gross unrealized gains, gross unrealized losses and fair value of the Company’s available-for-sale securities were as follows:
 
 
September 30, 2014
 
 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Equity securities
 
$
15,044

 
$
6,022

 
$

 
$
21,066

Total available-for-sale securities
 
$
15,044

 
$
6,022

 
$

 
$
21,066

 
 
December 31, 2013
 
 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
(1)
 
Fair Value
Debt securities
 
 
 
 
 
 
 
 
Corporate bonds
 
$
108,300

 
$
340

 
$
(69
)
 
$
108,571

U.S. government debt (2)
 
106,335

 
60

 
(79
)
 
106,316

Asset-backed securities
 
24,478

 
34

 
(11
)
 
24,501

Total available-for-sale securities
 
$
239,113

 
$
434

 
$
(159
)
 
$
239,388

_____________
(1)
All unrealized loss positions were held at a loss for less than 12 months.
(2)
U.S. Treasury obligations, U.S. government agency obligations and U.S government agency mortgage-backed securities.
As of September 30, 2014 and December 31, 2013, net unrealized gains on the Company's available-for-sale securities of $3,858 and $176, respectively, net of income tax expense of $2,164 and $99, respectively, were recorded in accumulated other comprehensive income. See Note 10 for the fair value hierarchy of the Company’s available-for-sale securities.

7

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

The proceeds from sales and maturities of available-for-sale securities and the gross realized gains and losses included in the consolidated statement of operations are reflected in the table below. The cost of securities sold was determined using the specific identification method. There were no sales or maturities of available-for-sale securities during the three and nine months ended September 30, 2013.
 
 
Nine Months Ended September 30,
 
 
2014
Proceeds from sales and maturities of securities
 
$
342,045

Gross realized gains
 
$
1,311

Gross realized losses
 
$
(99
)
3. Accounts Receivable
Accounts receivable consist of the following:
 
 
September 30,
2014
 
December 31,
2013
Trade customers
 
$
576,735

 
$
410,302

Affiliates
 
631

 
315

Allowance for doubtful accounts
 
(13,772
)
 
(11,741
)
 
 
563,594

 
398,876

Federal and state taxes
 
5,374

 
20,820

Other
 
23,996

 
8,761

Accounts receivable, net
 
$
592,964

 
$
428,457

4. Inventories
Inventories consist of the following:
 
 
September 30,
2014
 
December 31,
2013
Finished products
 
$
268,969

 
$
232,658

Feedstock, additives and chemicals
 
166,268

 
180,646

Materials and supplies
 
65,315

 
58,575

Inventories
 
$
500,552

 
$
471,879

5. Property, Plant and Equipment
As of September 30, 2014, the Company had property, plant and equipment, net totaling $2,710,475. The Company assesses these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, including when negative conditions such as significant current or projected operating losses exist. Other factors considered by the Company when determining if an impairment assessment is necessary include, but are not limited to, significant changes or projected changes in supply and demand fundamentals (which would have a negative impact on operating rates or margins), new technological developments, new competitors with significant raw material or other cost advantages, adverse changes associated with the U.S. and world economies and uncertainties associated with governmental actions. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Depreciation expense on property, plant and equipment of $45,080 and $32,460 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2014 and 2013, respectively. Depreciation expense on property, plant and equipment of $123,000 and $95,995 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2014 and 2013, respectively.

8

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

6. Other Assets
Amortization expense on intangible and other assets of $9,283 and $8,634 is included in the consolidated statements of operations for the three months ended September 30, 2014 and 2013, respectively. Amortization expense on intangible and other assets of $26,566 and $21,392 is included in the consolidated statements of operations for the nine months ended September 30, 2014 and 2013, respectively.
Goodwill
Goodwill for the Olefins segment was $29,990 at September 30, 2014 and December 31, 2013. Goodwill for the Vinyls segment was $32,026 at September 30, 2014 and December 31, 2013. There were no changes in the carrying amount of goodwill by operating segments for the nine months ended September 30, 2014.
7. Long-Term Debt
Long-term debt consists of the following:
 
 
September 30,
2014
 
December 31,
2013
3.60% senior notes due 2022
 
$
249,079

 
$
248,990

6 ½% senior notes due 2029
 
100,000

 
100,000

6 ¾% senior notes due 2032
 
250,000

 
250,000

6 ½% senior notes due 2035 (the "6 ½% GO Zone Senior Notes Due 2035")
 
89,000

 
89,000

6 ½% senior notes due 2035 (the "6 ½% IKE Zone Senior Notes Due 2035")
 
65,000

 
65,000

Loan related to tax-exempt waste disposal revenue bonds due 2027
 
10,889

 
10,889

Long-term debt, net
 
$
763,968

 
$
763,879

Revolving Credit Facility
The Company has a $400,000 senior secured revolving credit facility. In July 2014, the Company entered into a third amendment and restatement to the revolving credit facility. The amendment and restatement extended the scheduled maturity date of the facility from September 16, 2016 to July 17, 2019, reduced the interest rate and facility fee payable under the facility and amended the covenants restricting the Company’s ability to make distributions and acquisitions and make investments, among other things. The facility includes a provision permitting the Company to increase the size of the facility, up to four times, in increments of at least $25,000 each (up to a maximum of $200,000) under certain circumstances if lenders agree to commit to such an increase.
At September 30, 2014, the Company had no borrowings outstanding under the revolving credit facility. Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 1.75% to 1.25%, provided that so long as the Company is rated investment grade, the margin for LIBOR loans will not exceed 1.50%, or a base rate plus a spread ranging from 0.50% to 0.00%. The revolving credit facility also requires an unused commitment fee of 0.25% per annum. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on July 17, 2019. As of September 30, 2014, the Company had outstanding letters of credit totaling $32,399 and borrowing availability of $367,601 under the revolving credit facility. 
The Company's revolving credit facility generally restricts the Company's ability to make distributions unless, on a pro forma basis after giving effect to the distribution, the borrowing availability under the facility equals or exceeds the greater of (1) 20% of the commitments under the facility and (2) $80,000; or the borrowing availability under the facility equals or exceeds the greater of (1) 15% of the commitments under the facility and (2) $60,000, and the Company's fixed charge coverage ratio is at least 1.0:1. However, the Company may make specified distributions up to an aggregate of $75,000, to be increased by 5% in 2015, and in each fiscal year thereafter, on an aggregate basis, for each fiscal year.
In order to make acquisitions or investments, the Company's revolving credit facility generally provides that (1) the Company must maintain a minimum borrowing availability of at least the greater of $60,000 or 15% of the total bank commitments under its revolving credit facility or (2) the Company must maintain a minimum borrowing availability of at least the greater of $50,000 or 12.5% of the total bank commitments under its revolving credit facility and meet a minimum fixed charge coverage ratio of 1.0:1 under its revolving credit facility. Notwithstanding the foregoing, the Company may make investments in the aggregate up to the greater of $50,000 and 1.25% of tangible assets and acquisitions in the aggregate up to

9

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

the greater of $100,000 and 2.5% of tangible assets, if, on a pro forma basis after giving effect to the acquisition or investment, either (X) the borrowing availability under the facility equals or exceeds the greater of (A) 12.5% of the total bank commitments under the facility and (B) $50,000, but is less than the greater of (A) 15% of the total bank commitments and (B) $60,000, or (Y) the Company's fixed charge coverage ratio is at least 1.0:1.
The revolving credit facility contains other customary covenants and events of default that impose significant operating and financial restrictions on the Company. These restrictions, among other things, limit the occurrence of additional indebtedness and the Company's ability to create liens, to engage in certain affiliate transactions and to engage in sale-leaseback transactions.
8. Stock-Based Compensation
Under the Westlake Chemical Corporation 2013 Omnibus Incentive Plan (as amended and restated, the "2013 Plan"), all employees and nonemployee directors of the Company, as well as certain individuals who have agreed to become the Company's employees, are eligible for awards. Shares of common stock may be issued as authorized in the 2013 Plan. At the discretion of the administrator of the 2013 Plan, employees and nonemployee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards, restricted stock units or cash awards (any of which may be a performance award). Total stock-based compensation expense related to the 2013 Plan was $2,346 and $1,680 for the three months ended September 30, 2014 and 2013, respectively, and $6,856 and $4,804 for the nine months ended September 30, 2014 and 2013, respectively.
9. Derivative Instruments
Commodity Risk Management
The Company uses derivative instruments to reduce price volatility risk on raw materials and products as a substantial portion of its raw materials and products are commodities whose prices fluctuate as market supply and demand fundamentals change. Business strategies to protect against such instability include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. The Company does not use derivative instruments to engage in speculative activities.
For derivative instruments that are designated and qualify as fair value hedges, the gains or losses on the derivative instruments, as well as the offsetting losses or gains on the hedged items attributable to the hedged risk, were included in cost of sales in the consolidated statements of operations for the three and nine months ended September 30, 2013. The Company had no derivative instruments that were designated as fair value hedges for the three and nine months ended September 30, 2014.
Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in gross profit in the consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013.
The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).
Disclosures related to the Company's derivative assets and derivative liabilities subject to enforceable master netting arrangements have not been presented as they are not material to the Company's consolidated balance sheets at September 30, 2014 and December 31, 2013.

10

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:
 
 
Derivative Assets
 
 
Balance Sheet Location
 
Fair Value as of
 
 
September 30,
2014
 
December 31,
2013
Not designated as hedging instruments
 
 
 
 
 
 
Commodity forward contracts
 
Accounts receivable, net
 
$
451

 
$
296

Total derivative assets
 
 
 
$
451

 
$
296

 
 
Derivative Liabilities
 
 
Balance Sheet Location
 
Fair Value as of
 
 
September 30,
2014
 
December 31,
2013
Not designated as hedging instruments
 
 
 
 
 
 
Commodity forward contracts
 
Accrued liabilities
 
$
6,477

 
$
176

Total derivative liabilities
 
 
 
$
6,477

 
$
176

The following tables reflect the impact of derivative instruments designated as fair value hedges and the related hedged item on the Company's consolidated statements of operations. For the three and nine months ended September 30, 2013, there was no material ineffectiveness with regard to the Company's qualifying fair value hedges.
Derivatives in Fair Value
   Hedging Relationships
 
Location of Gain (Loss)
Recognized in 
Income on Derivative
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
 
2014
 
2013
Commodity forward contracts
 
Cost of sales
 
$

 
$
(232
)
 
$

 
$
(342
)
 
 
 
 
 
 
 
 
 
 
 
Hedged Items in Fair Value
   Hedging Relationships
 
Location of Gain (Loss)
Recognized in 
Income on Hedged Items
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
 
2014
 
2013
Firm commitment designated
   as the hedged item
 
Cost of sales
 
$

 
$
236

 
$

 
$
15

The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:
Derivatives Not Designated as
   Hedging Instruments
 
Location of Gain (Loss)
Recognized in 
Income on Derivative
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
 
2014
 
2013
Commodity forward contracts
 
Gross profit
 
$
(6,937
)
 
$
4,854

 
$
(7,308
)
 
$
9,897

See Note 10 for the fair value of the Company's derivative instruments.
10. Fair Value Measurements
The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

11

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

The following tables summarize, by level within the fair value hierarchy, the Company's assets and liabilities that were accounted for at fair value on a recurring basis:
 
 
September 30, 2014
 
 
Level 1
 
Level 2
 
Total
Derivative instruments
 
 
 
 
 
 
Risk management assets - Commodity forward contracts
 
$
428

 
$
23

 
$
451

Risk management liabilities - Commodity forward contracts
 
(119
)
 
(6,358
)
 
(6,477
)
Available-for-sale marketable securities
 
21,066

 

 
21,066

 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
Level 1
 
Level 2
 
Total
Derivative instruments
 
 
 
 
 
 
Risk management assets - Commodity forward contracts
 
$
48

 
$
248

 
$
296

Risk management liabilities - Commodity forward contracts
 

 
(176
)
 
(176
)
Available-for-sale marketable securities
 
91,595

 
147,793

 
239,388

The Level 2 measurements for the Company's commodity contracts are derived using forward curves supplied by industry-recognized and unrelated third-party services. The Level 2 measurements for the Company's available-for-sale securities are derived using market-based pricing provided by unrelated third-party services.
There were no transfers in or out of Levels 1 and 2 of the fair value hierarchy for the nine months ended September 30, 2014 and 2013.
In addition to the financial assets and liabilities above, the Company has other financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments. The carrying and fair values of the Company's long-term debt are summarized in the table below. The Company's long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company's long-term debt. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.
 
 
September 30, 2014
 
December 31, 2013
 
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
 
Fair
Value
3.60% senior notes due 2022
 
$
249,079

 
$
247,633

 
$
248,990

 
$
236,905

6 ½% senior notes due 2029
 
100,000

 
114,624

 
100,000

 
109,490

6 ¾% senior notes due 2032
 
250,000

 
275,313

 
250,000

 
265,148

6 ½% GO Zone Senior Notes Due 2035
 
89,000

 
101,855

 
89,000

 
94,606

6 ½% IKE Zone Senior Notes Due 2035
 
65,000

 
74,389

 
65,000

 
69,094

Loan related to tax-exempt waste disposal revenue
   bonds due 2027
 
10,889

 
10,889

 
10,889

 
10,889

11. Income Taxes
The effective income tax rate was 37.6% for the nine months ended September 30, 2014. The effective income tax rate for the 2014 period was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, partially offset by the domestic manufacturing deduction. The effective income tax rate was 35.8% for the nine months ended September 30, 2013. The effective income tax rate for the 2013 period was above the U.S. federal statutory rate of 35.0% primarily due to state income taxes, partially offset by the domestic manufacturing deduction.
There was no material change to the total gross unrecognized tax benefits for the nine months ended September 30, 2014. Management anticipates that all of the gross unrecognized tax benefits of $2,501 will be recognized within the next twelve

12

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

months due to expiring statutes of limitations. The impact from the recognition of these tax benefits on the Company's effective tax rate is expected to be immaterial.
The Company recognizes penalties and interest accrued related to unrecognized tax benefits in income tax expense. As of September 30, 2014, the Company had no material accrued interest and penalties related to uncertain tax positions.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is no longer subject to examinations by tax authorities before the year 2007.
12. Earnings per Share
The Company has unvested shares of restricted stock and restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. Basic earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share include the effect of certain stock options.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
Net income attributable to Westlake Chemical
   Corporation
 
$
167,757

 
$
170,290

 
$
495,232

 
$
439,453

Less:
 
 
 
 
 
 
 
 
Net income attributable to participating securities
 
(353
)
 
(587
)
 
(1,099
)
 
(1,691
)
Net income attributable to common shareholders
 
$
167,404

 
$
169,703

 
$
494,133

 
$
437,762

The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
Weighted average common shares—basic (1)
 
133,299,458

 
133,257,494

 
133,199,304

 
133,256,054

Plus incremental shares from:
 
 
 
 
 
 
 
 
Assumed exercise of options (1)
 
546,601

 
553,614

 
543,841

 
550,704

Weighted average common shares—diluted (1)
 
133,846,059

 
133,811,108

 
133,743,145

 
133,806,758

 
 
 
 
 
 
 
 
 
Earnings per common share attributable to
   Westlake Chemical Corporation : (1)
 
 
 
 
 
 
 
 
Basic
 
$
1.26

 
$
1.28

 
$
3.71

 
$
3.29

Diluted
 
$
1.25

 
$
1.27

 
$
3.69

 
$
3.27

_____________
(1)
Share amounts and per share data for the three and nine months ended September 30, 2013 have been restated to reflect the effect of a two-for-one stock split on March 18, 2014. See Note 1 for additional information.
There were no options excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2014. Excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2013 are options to purchase 137,324 and 115,518 shares of common stock, respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive.

13

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

13. Pension and Post-Retirement Benefit Costs
Components of net periodic benefit cost are as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
Pension
 
Post-retirement
Healthcare
 
Pension
 
Post-retirement
Healthcare
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Service cost
 
$
331

 
$
275

 
$
6

 
$
2

 
$
498

 
$
815

 
$
16

 
$
7

Interest cost
 
1,138

 
515

 
185

 
147

 
2,309

 
1,531

 
548

 
442

Expected return on
   plan assets
 
(777
)
 
(713
)
 

 

 
(2,363
)
 
(2,140
)
 

 

Amortization of prior
   service cost
 
74

 
74

 
13

 
21

 
223

 
223

 
38

 
63

Amortization of net loss
 
71

 
510

 
82

 
90

 
204

 
1,449

 
220

 
269

Net periodic benefit cost
 
$
837

 
$
661

 
$
286

 
$
260

 
$
871

 
$
1,878

 
$
822

 
$
781

The Company contributed $2,447 and $776 to the Salaried pension plan in the first nine months of 2014 and 2013, respectively, and contributed $916 and $640 to the Wage pension plan in the first nine months of 2014 and 2013, respectively. The Company expects to make additional contributions of $330 to the Salaried pension plan and $290 to the Wage pension plan during the fiscal year ending December 31, 2014.
14. Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2014 and 2013 were as follows:
 
 
Benefits
Liability,
Net of Tax
 
Cumulative
Foreign
Currency
Exchange
 
Net Unrealized
Holding Gains
on Investments,
Net of Tax
 
Total
Balances at December 31, 2013
 
$
(6,696
)
 
$
3,904

 
$
176

 
$
(2,616
)
Other comprehensive (loss) income before
   reclassifications
 
(39
)
 
(37,882
)
 
4,459

 
(33,462
)
Amounts reclassified from accumulated other
   comprehensive loss
 
422

 

 
(777
)
 
(355
)
Net other comprehensive income (loss) for the period
 
383

 
(37,882
)
 
3,682

 
(33,817
)
Balances at September 30, 2014
 
$
(6,313
)
 
$
(33,978
)
 
$
3,858

 
$
(36,433
)
 
 
Benefits
Liability,
Net of Tax
 
Cumulative
Foreign
Currency
Exchange
 
Net Unrealized
Holding Gains
on Investments,
Net of Tax
 
Total
Balances at December 31, 2012
 
$
(16,351
)
 
$
5,511

 
$

 
$
(10,840
)
Other comprehensive (loss) income before
   reclassifications
 
(601
)
 
(844
)
 
131

 
(1,314
)
Amounts reclassified from accumulated other
   comprehensive loss
 
1,233

 

 

 
1,233

Net other comprehensive income (loss) for the period
 
632

 
(844
)
 
131

 
(81
)
Balances at September 30, 2013
 
$
(15,719
)
 
$
4,667

 
$
131

 
$
(10,921
)

14

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

The following table provides the details of the amounts reclassified from accumulated other comprehensive income (loss) into net income in the consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013:
Details about Accumulated Other Comprehensive
   Income (Loss) Components
 
Location of Reclassification
(Income (Expense)) in
Consolidated Statements
of Operations
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Amortization of pension and
   other post-retirement items
 
 
 
 
 
 
 
 
 
 
Prior service costs
 
(1)
 
$
(87
)
 
$
(95
)
 
$
(261
)
 
$
(286
)
Net loss
 
(1)
 
(153
)
 
(600
)
 
(424
)
 
(1,718
)
 
 
 
 
(240
)
 
(695
)
 
(685
)
 
(2,004
)
 
 
Provision for income
   taxes
 
92

 
267

 
263

 
771

 
 
 
 
(148
)
 
(428
)
 
(422
)
 
(1,233
)
Net unrealized gains on
   available-for-sale
   investments
 
 
 
 
 
 
 
 
 
 
Realized gain on
   available-for-sale
   investments
 
Other income, net
 

 

 
1,212

 

 
 
Provision for income
   taxes
 

 

 
(435
)
 

 
 
 
 

 

 
$
777

 
$

Total reclassifications for
   the period
 
 
 
$
(148
)
 
$
(428
)
 
$
355

 
$
(1,233
)
_____________
(1)
These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. For additional information, please read Note 10 (Employee Benefits) to the financial statements included in the 2013 Form 10-K.
15. Commitments and Contingencies
The Company is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require it to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment. Under one law, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred. Because several of the Company's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Company.
Contract Disputes with Goodrich and PolyOne. In connection with the 1990 and 1997 acquisitions of the Goodrich Corporation ("Goodrich") chemical manufacturing complex in Calvert City, Kentucky, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company's operations. The soil and groundwater at the complex, which does not include the Company's nearby polyvinyl chloride ("PVC") facility, had been extensively contaminated under Goodrich's operations. In 1993, Goodrich spun off the predecessor of PolyOne Corporation ("PolyOne"), and that predecessor assumed Goodrich's indemnification obligations relating to preexisting contamination.
In 2003, litigation arose among the Company, Goodrich and PolyOne with respect to the allocation of the cost of remediating contamination at the site. The parties settled this litigation in December 2007 and the case was dismissed. In the settlement the parties agreed that, among other things: (1) PolyOne would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; (2) either the Company or PolyOne might, from time to time in the future (but not more than once every five years), institute an arbitration proceeding to adjust that percentage; and (3) the Company and PolyOne would negotiate a new environmental remediation utilities and services agreement to cover the Company's provision to, or on behalf of, PolyOne of certain environmental remediation services at the site. The current environmental remediation activities at the

15

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

Calvert City complex do not have a specified termination date but are expected to last for the foreseeable future. The costs incurred by the Company that have been invoiced to PolyOne to provide the environmental remediation services were $3,284 in 2013. By letter dated March 16, 2010, PolyOne notified the Company that it was initiating an arbitration proceeding under the settlement agreement. In this proceeding, PolyOne seeks to readjust the percentage allocation of costs and to recover approximately $1,400 from the Company in reimbursement of previously paid remediation costs. The arbitration is currently stayed.
State Administrative Proceedings. There are several administrative proceedings in Kentucky involving the Company, Goodrich and PolyOne related to the same manufacturing complex in Calvert City. In 2003, the Kentucky Environmental and Public Protection Cabinet (the "Cabinet") re-issued Goodrich's Resource Conservation and Recovery Act ("RCRA") permit which requires Goodrich to remediate contamination at the Calvert City manufacturing complex. Both Goodrich and PolyOne challenged various terms of the permit in an attempt to shift Goodrich's clean-up obligations under the permit to the Company. The Company intervened in the proceedings. The Cabinet has suspended all corrective action under the RCRA permit in deference to a remedial investigation and feasibility study ("RIFS") being conducted, under the auspices of the U.S. Environmental Protection Agency ("EPA"), pursuant to an Administrative Settlement Agreement ("AOC"), which became effective on December 9, 2009. See "Federal Administrative Proceedings" below. The proceedings have been postponed. Periodic status conferences will be held to evaluate whether additional proceedings will be required.
Federal Administrative Proceedings. In May 2009, the Cabinet sent a letter to the EPA requesting the EPA's assistance in addressing contamination at the Calvert City site under CERCLA. In its response to the Cabinet also in May 2009, the EPA stated that it concurred with the Cabinet's request and would incorporate work previously conducted under the Cabinet's RCRA authority into the EPA's cleanup efforts under CERCLA. Since 1983, the EPA has been addressing contamination at an abandoned landfill adjacent to the Company's plant which had been operated by Goodrich and which was being remediated pursuant to CERCLA. During the past three years, the EPA has directed Goodrich and PolyOne to conduct additional investigation activities at the landfill and at the Company's plant. In June 2009, the EPA notified the Company that the Company may have potential liability under section 107(a) of CERCLA at its plant site. Liability under section 107(a) of CERCLA is strict and joint and several. The EPA also identified Goodrich and PolyOne, among others, as potentially responsible parties at the plant site. The Company negotiated, in conjunction with the other potentially responsible parties, the AOC and an order to conduct the RIFS. On July 12, 2013, the parties submitted separate draft RIFS reports to the EPA. The EPA has hired a contractor to complete the remedial investigation report.
Monetary Relief. Except as noted above with respect to the settlement of the contract litigation among the Company, Goodrich and PolyOne, none of the court, the Cabinet nor the EPA has established any allocation of the costs of remediation among the various parties that are involved in the judicial and administrative proceedings discussed above. At this time, the Company is not able to estimate the loss or reasonable possible loss, if any, on the Company's financial statements that could result from the resolution of these proceedings. Any cash expenditures that the Company might incur in the future with respect to the remediation of contamination at the complex would likely be spread out over an extended period. As a result, the Company believes it is unlikely that any remediation costs allocable to it will be material in terms of expenditures made in any individual reporting period.
In addition to the matters described above, the Company is involved in various routine legal proceedings incidental to the conduct of its business. The Company does not believe that any of these routine legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.
16. Share Capital
Common Stock
On May 16, 2014, the stockholders of the Company approved an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the Company's authorized shares of common stock from 150,000,000 shares to 300,000,000 shares, par value $0.01 per share. The Company is now authorized to issue 300,000,000 shares of common stock, par value $0.01 per share, of which 134,680,164 and 134,580,208 shares (on a post-split basis) were issued as of September 30, 2014 and December 31, 2013, respectively. Each share of common stock entitles the holder to one vote on all matters on which holders are permitted to vote, including the election of directors.

16

WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(in thousands of dollars, except share amounts and per share data)

Stock Repurchase Program
In August 2011, the Company's Board of Directors authorized a stock repurchase program of the Company’s common stock totaling $100,000 (the "2011 Program"). Purchases under the 2011 Program began in September 2011. As of September 30, 2014 and December 31, 2013, the Company had repurchased 1,357,085 and 1,252,922 shares, respectively, of its common stock (on a post-split basis) under this program. Shares repurchased under the 2011 Program are held by the Company as treasury stock and may be used for general corporate purposes, including for the 2013 Omnibus Incentive Plan. Beginning in May 2014, the Company began issuing treasury shares to employees and nonemployee directors for options exercised and for the settlement of restricted stock units. The cost of treasury shares issued was determined using the specific identification method.
17. Supplemental Information
Other Liabilities
Other liabilities were $153,158 and $35,593 at September 30, 2014 and December 31, 2013, respectively. Non-current pension obligation, which is a component of other liabilities, was $117,293 and $8,710 at September 30, 2014 and December 31, 2013, respectively. No other component of other liabilities was more than five percent of total liabilities.
18. Segment Information
The Company operates in two principal operating segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
Net external sales
 
 
 
 
 
 
 
 
Olefins
 
 
 
 
 
 
 
 
Polyethylene
 
$
498,450

 
$
460,105

 
$
1,461,097

 
$
1,294,566

Styrene, feedstock and other
 
204,647

 
219,234

 
663,851

 
590,959

Total Olefins
 
703,097

 
679,339

 
2,124,948

 
1,885,525

Vinyls
 
 
 
 
 
 
 
 
PVC, caustic soda and other
 
416,771

 
212,041

 
776,060

 
612,391

Building products
 
133,359

 
112,785

 
378,471

 
309,943

Total Vinyls
 
550,130

 
324,826

 
1,154,531

 
922,334

 
 
$
1,253,227

 
$
1,004,165

 
$
3,279,479

 
$
2,807,859

 
 
 
 
 
 
 
 
 
Intersegment sales
 
 
 
 
 
 
 
 
Olefins
 
$
26,518

 
$
85,454

 
$
118,153

 
$
230,607

Vinyls
 
355

 
403

 
1,029

 
1,111

 
 
$
26,873

 
$
85,857

 
$
119,182

 
$
231,718

 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
 
 
 
 
 
 
 
Olefins
 
$
259,277

 
$
237,239

 
$
770,267

 
$
585,958

Vinyls
 
59,445

 
39,554

 
76,460

 
136,123

Corporate and other
 
(11,961
)
 
(10,191
)
 
(25,123
)
 
(26,197
)
 
 
$
306,761

 
$
266,602

 
$
821,604

 
$
695,884

 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
Olefins
 
$
26,443

 
$
26,515

 
$
79,811

 
$
76,415

Vinyls
 
27,336

 
14,089

 
68,127

 
39,507

Corporate and other
 
141

 
124

 
456

 
372

 
 
$
53,920

 
$
40,728

 
$
148,394

 
$
116,294

 
 
 
 
 
 
 
 
 
Other income (expense), net
 
 
 
 
 
 
 
 
Olefins
 
$
1,609

 
$
728

 
$
4,262

 
$
5,889

Vinyls
 
1,189

 
(742
)
 
942

 
(1,687
)
Corporate and other
 
(5,468
)
 
(273
)
 
(764
)
 
(1,065
)
 
 
$
(2,670
)
 
$
(287
)
 
$
4,440

 
$
3,137

 
 
 
 
 
 
 
 
 
Provision for (benefit from) income taxes
 
 
 
 
 
 
 
 
Olefins
 
$
105,030

 
$
82,553

 
$
282,082

 
$
208,170

Vinyls
 
21,761

 
10,710

 
22,121

 
44,120

Corporate and other
 
(2,342
)
 
(535
)
 
(3,972
)
 
(7,643
)
 
 
$
124,449

 
$
92,728

 
$
300,231

 
$
244,647

 
 
 
 
 
 
 
 
 
Capital expenditures
 
 
 
 
 
 
 
 
Olefins
 
$