NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
For a complete discussion of our significant accounting policies, refer to the notes to our audited consolidated financial statements included in our Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on February 26, 2019.
Basis of Consolidation – LSB Industries, Inc. (“LSB”) and its subsidiaries (the “Company”, “We”, “Us”, or “Our”) are consolidated in the accompanying condensed consolidated financial statements. LSB is a holding company with no significant operations or assets other than cash, cash equivalents, and investments in its subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.
Nature of Business – We are engaged in the manufacture and sale of chemical products. The chemical products we primarily manufacture, market and sell are ammonia, fertilizer grade ammonium nitrate (“HDAN”), urea ammonium nitrate (“UAN”), and ammonium nitrate (“AN”) solution for agricultural applications, high purity and commercial grade ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, carbon dioxide, and diesel exhaust fluid for industrial applications, and industrial grade AN (“LDAN”) and solutions for the mining industry. We manufacture and distribute our products in four facilities; three of which we own and are located in El Dorado, Arkansas (the “El Dorado Facility”); Cherokee, Alabama (the “Cherokee Facility”); and Pryor, Oklahoma (the “Pryor Facility”); and one of which we operate on behalf of a global chemical company in Baytown, Texas (the “Baytown Facility”).
Sales to customers include farmers, ranchers, fertilizer dealers and distributors primarily in the ranch land and grain production markets in the United States (“U.S.”); industrial users of acids throughout the U.S. and parts of Canada; and explosive manufacturers in the U.S.
In 2016, LSB completed the sale of all of the stock of the Climate Control Group, Inc. (an indirect subsidiary that conducted LSB’s Climate Control Business) pursuant to the terms of a stock purchase agreement. During the first quarter of 2018, we received the remaining proceeds held in a related indemnity escrow account of $2.7 million.
In our opinion, the unaudited condensed consolidated financial statements of the Company as of September 30, 2019 and for the three and nine months ended September 30, 2019 and 2018 include all adjustments and accruals, consisting of normal, recurring accrual adjustments, which are necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year due, in part, to the seasonality of our sales of agricultural products and the timing of performing our major plant maintenance activities. Our selling seasons for agricultural products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in connection with our audited consolidated financial statements and notes thereto included in our 2018 Form 10-K.
Use of Estimates – The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. We establish valuation allowances if we believe it is more-likely-than-not that some or all of deferred tax assets will not be realized. Significant judgment is applied in evaluating the need for and the magnitude of appropriate valuation allowances against deferred tax assets.
In addition, we do not recognize a tax benefit unless we conclude that it is more likely than not that the benefit will be sustained on audit by the relevant taxing authorities based solely on the technical merits of the associated tax position. If the recognition threshold is met, we recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is greater than 50% likely to be realized. We record interest related to unrecognized tax positions in interest expense and penalties in operating other expense.
8
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies (continued)
Income tax benefits associated with amounts that are deductible for income tax purposes are recorded through the statement of operations. These benefits are principally generated from exercises of non-qualified stock options and restricted stock. We reduce income tax expense for investment tax credits in the period the credit arises and is earned.
Contingencies – Certain conditions may exist which may result in a loss, but which will only be resolved when future events occur. We and our legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, we would accrue for such contingent losses when such losses can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Loss contingency liabilities are included in current and noncurrent accrued and other liabilities and are based on current estimates that may be revised in the near term. In addition, we recognize contingent gains when such gains are realized or when the contingencies have been resolved (generally at the time a settlement has been reached).
Redeemable Preferred Stocks – Our redeemable preferred stocks that are redeemable outside of our control are classified as temporary/mezzanine equity. The redeemable preferred stocks were recorded at fair value upon issuance, net of issuance costs or discounts. In addition, certain embedded features included in the Series E Redeemable Preferred required bifurcation and are classified as derivative liabilities. The carrying values of the redeemable preferred stocks are being increased by periodic accretions (including the amount for dividends earned but not yet declared or paid) using the interest method so that the carrying amount will equal the redemption value as of October 25, 2023, the earliest possible redemption date by the holder. The accretion was recorded to retained earnings. However, this accretion will change if the expected redemption date changes.
Recently Adopted Accounting Pronouncements
ASU 2016-02 and related ASUs – In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease requirements in Topic 840, Leases. In addition, the FASB issued various other ASUs further amending lease accounting guidance (together “ASC 842”). On January 1, 2019, we adopted ASC 842 as discussed in Note 2.
2. Adoption of ASC 842
On January 1, 2019, we adopted ASC 842 using the additional transition method option provided by ASU 2018-11. Under this transition method, we applied the new accounting guidance on the date of adoption. Upon adoption, a cumulative effect adjustment was not required; however, the effect of this guidance on our consolidated financial statements impacted our balance sheet presentation by increasing the amount of our noncurrent assets for the inclusion of right-of-use assets of $15.9 million and increasing the amount of our liabilities for the inclusion of the associated lease obligations of $15.9 million, most of which were classified as noncurrent.
Under the transition option we elected, ASC 842 is applied only to the most current period presented in the financial statements and our reporting for the comparative periods presented in the financial statements continue to be in accordance with Topic 840, including disclosures. Upon adoption, we elected the following accounting policies or practical expedients related to ASC 842:
|
•
|
not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for any existing leases;
|
|
•
|
apply accounting similar to Topic 840 operating leases accounting to leases that meet the definition of short-term leases; and
|
|
•
|
not evaluate land easements that exist or expired before January 1, 2019 and that were not previously accounted for as leases under Topic 840.
|
We determine if an arrangement is a lease at inception. Since our leases generally do not provide an implicit rate, we use our incremental borrowing rate based on the lease term and other information available at the commencement date in determining the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Currently, most of our leases are classified as operating leases under which we are the lessee and primarily relate to railcars, other equipment and office space. In addition, our leases that are classified as finance leases (previously classified as capital leases) and other leases under which we are the lessor are not material. Most of our leases do not include options to extend or terminate the lease prior to the end of the term. As of September 30, 2019, we did not have any material operating leases with lease terms greater than one year that have not yet commenced.
9
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Adoption of ASC 842 (continued)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2019
|
|
|
September 30, 2019
|
|
|
|
(Dollars In Thousands)
|
|
Components of lease expense:
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
1,637
|
|
|
$
|
5,391
|
|
Short-term lease cost
|
|
|
668
|
|
|
|
1,923
|
|
Other cost (1)
|
|
|
16
|
|
|
|
49
|
|
Total lease cost
|
|
$
|
2,321
|
|
|
$
|
7,363
|
|
Supplemental cash flow information related to leases:
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
|
|
|
|
$
|
5,757
|
|
Operating cash flows from finance leases
|
|
|
|
|
|
|
12
|
|
Financing cash flows from finance leases
|
|
|
|
|
|
|
53
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
$
|
5,822
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
|
|
|
|
|
$
|
5,070
|
|
Other lease-related information:
|
|
|
|
|
|
|
|
|
Weighted-average remaining lease term - operating leases (in years)
|
|
|
|
|
|
|
4.5
|
|
Weighted-average remaining lease term - finance leases (in years)
|
|
|
|
|
|
|
4.0
|
|
Weighted-average discount rate - operating leases
|
|
|
|
|
|
|
8.81
|
%
|
Weighted-average discount rate - finance leases
|
|
|
|
|
|
|
8.94
|
%
|
|
(1)
|
Includes variable and finance lease costs.
|
Maturities of operating lease liabilities as of September 30, 2019 are as follows:
|
|
Operating Leases
|
|
|
|
(In Thousands)
|
|
For the remainder of 2019
|
|
$
|
1,947
|
|
2020
|
|
|
4,999
|
|
2021
|
|
|
3,742
|
|
2022
|
|
|
3,071
|
|
2023
|
|
|
2,758
|
|
Thereafter
|
|
|
3,103
|
|
Total lease payments
|
|
|
19,620
|
|
Less imputed interest
|
|
|
(3,431
|
)
|
Present value of lease liabilities
|
|
$
|
16,189
|
|
As previously disclosed in our 2018 Form 10-K and under Topic 840, future minimum lease payments on operating leases having initial or remaining terms one year or more at December 31, 2018 were as follows:
|
|
Operating Leases
|
|
|
|
(In Thousands)
|
|
2019
|
|
$
|
6,674
|
|
2020
|
|
|
3,547
|
|
2021
|
|
|
2,364
|
|
2022
|
|
|
1,949
|
|
2023
|
|
|
1,696
|
|
Thereafter
|
|
|
2,530
|
|
Total minimum lease payments
|
|
$
|
18,760
|
|
10
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Adoption of ASC 842 (continued)
Additionally, under Topic 840, expenses associated with our operating lease agreements, including month-to-month leases, for the three and nine months ending September 30, 2018 were approximately $2.6 million and $7.5 million, respectively.
3. Loss Per Common Share
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars In Thousands, Except Per Share Amounts)
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(30,794
|
)
|
|
$
|
(26,084
|
)
|
|
$
|
(35,703
|
)
|
|
$
|
(59,181
|
)
|
Adjustments for basic net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend requirements on Series E Redeemable
Preferred
|
|
|
(7,764
|
)
|
|
|
(6,782
|
)
|
|
|
(22,609
|
)
|
|
|
(19,748
|
)
|
Dividend requirements on Series B Preferred
|
|
|
(60
|
)
|
|
|
(60
|
)
|
|
|
(180
|
)
|
|
|
(180
|
)
|
Dividend requirements on Series D Preferred
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
(45
|
)
|
|
|
(45
|
)
|
Accretion of Series E Redeemable Preferred
|
|
|
(500
|
)
|
|
|
(481
|
)
|
|
|
(1,493
|
)
|
|
|
(2,882
|
)
|
Numerator for basic and dilutive net loss per common
share - net loss attributable to common stockholders
|
|
$
|
(39,133
|
)
|
|
$
|
(33,422
|
)
|
|
$
|
(60,030
|
)
|
|
$
|
(82,036
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic and dilutive net loss per
common share - adjusted weighted-average
shares (1)
|
|
|
28,065,519
|
|
|
|
27,500,323
|
|
|
|
28,025,130
|
|
|
|
27,484,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and dilutive net loss per common share
|
|
$
|
(1.39
|
)
|
|
$
|
(1.22
|
)
|
|
$
|
(2.14
|
)
|
|
$
|
(2.98
|
)
|
|
(1)
|
Excludes the weighted-average shares of unvested restricted stock that are contingently issuable.
|
The following weighted-average shares of securities were not included in the computation of diluted net loss per common share as their effect would have been antidilutive:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Convertible preferred stocks
|
|
|
916,666
|
|
|
|
916,666
|
|
|
|
916,666
|
|
|
|
916,666
|
|
Restricted stock and stock units
|
|
|
803,611
|
|
|
|
1,186,429
|
|
|
|
846,902
|
|
|
|
1,182,143
|
|
Series E Redeemable Preferred - embedded derivative
|
|
|
303,646
|
|
|
|
303,646
|
|
|
|
303,646
|
|
|
|
303,646
|
|
Stock options
|
|
|
124,000
|
|
|
|
169,710
|
|
|
|
124,000
|
|
|
|
182,047
|
|
|
|
|
2,147,923
|
|
|
|
2,576,451
|
|
|
|
2,191,214
|
|
|
|
2,584,502
|
|
11
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Current and Noncurrent Accrued and Other Liabilities
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In Thousands)
|
|
Accrued interest
|
|
$
|
17,523
|
|
|
$
|
6,505
|
|
Accrued payroll and benefits
|
|
|
6,046
|
|
|
|
7,259
|
|
Current portion of operating lease liabilities
|
|
|
4,748
|
|
|
|
—
|
|
Deferred revenue
|
|
|
3,811
|
|
|
|
5,216
|
|
Accrued death and other executive benefits
|
|
|
2,568
|
|
|
|
2,777
|
|
Series E Redeemable Preferred - embedded derivative
|
|
|
1,521
|
|
|
|
1,642
|
|
Accrued health and worker compensation insurance claims
|
|
|
861
|
|
|
|
1,107
|
|
Customer deposits
|
|
|
6
|
|
|
|
1,783
|
|
Accrued litigation settlement (see Note 6)
|
|
|
—
|
|
|
|
18,450
|
|
Other
|
|
|
9,226
|
|
|
|
6,251
|
|
|
|
|
46,310
|
|
|
|
50,990
|
|
Less noncurrent portion
|
|
|
7,001
|
|
|
|
8,861
|
|
Current portion of accrued and other liabilities
|
|
$
|
39,309
|
|
|
$
|
42,129
|
|
5. Long-Term Debt
Our long-term debt consists of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In Thousands)
|
|
Working Capital Revolver Loan, with a current interest
rate of 5.5% (A)
|
|
$
|
—
|
|
|
$
|
10,000
|
|
Senior Secured Notes due 2023 (B)
|
|
|
435,000
|
|
|
|
400,000
|
|
Secured Promissory Note due 2021, with an interest
rate of 5.25% (C)
|
|
|
5,599
|
|
|
|
8,090
|
|
Secured Promissory Note due 2023, with a current interest
rate of 6.35% (D)
|
|
|
13,200
|
|
|
|
14,685
|
|
Secured Financing due 2023, with an interest
rate of 8.32% (E)
|
|
|
14,128
|
|
|
|
—
|
|
Secured Promissory Note due 2019 (E)
|
|
|
—
|
|
|
|
7,165
|
|
Other (F)
|
|
|
1,998
|
|
|
|
221
|
|
Unamortized discount, net of premium and debt issuance
costs
|
|
|
(13,172
|
)
|
|
|
(14,962
|
)
|
|
|
|
456,753
|
|
|
|
425,199
|
|
Less current portion of long-term debt
|
|
|
9,090
|
|
|
|
12,518
|
|
Long-term debt due after one year, net
|
|
$
|
447,663
|
|
|
$
|
412,681
|
|
(A) As amended in February 2019, our revolving credit facility (the “Working Capital Revolver Loan”) provides for advances up to $75 million, based on specific percentages of eligible accounts receivable and inventories and up to $10 million of letters of credit, the outstanding amount of which reduces the available for borrowing under the Working Capital Revolver Loan. At September 30, 2019, our available borrowings under our Working Capital Revolver Loan were approximately $33.8 million, based on our eligible collateral, less outstanding letters of credit. The maturity date of the Working Capital Revolver Loan is February 26, 2024. The Working Capital Revolver Loan also provides for a springing financial covenant (the “Financial Covenant”), which requires that, if the borrowing availability is less than 10.0% of the total revolver commitments, then the borrowers must maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Financial Covenant, if triggered, is tested monthly.
(B) On April 25, 2018, LSB completed the issuance and sale of $400 million aggregate principal amount of its 9.625% Senior Secured Notes due 2023 (the “Notes”), pursuant to an indenture (the “Indenture”), dated as of April 25, 2018. The Notes were issued at a price equal to 99.509% of their face value.
12
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Long-Term Debt (continued)
On June 21, 2019, LSB completed the issuance and sale of $35 million aggregate principal amount of its 9.625% Senior Secured Notes due 2023 (the “New Notes”). The New Notes were issued pursuant to the Indenture (the Notes together with the New Notes, the “Senior Secured Notes”). The New Notes were issued at a price equal to 102.125% of their face value, plus accrued interest from May 1, 2019 to June 21, 2019, in a transaction exempt from the registration requirements under the Securities Act of 1933 (the “Securities Act”) sold to eligible purchasers in reliance on Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S under the Securities Act. Interest on the New Notes accrues from May 1, 2019.
The Senior Secured Notes mature on May 1, 2023. Interest is to be paid semiannually in arrears on May 1st and November 1st.
As it relates to the issuance of the Notes in April 2018, a portion of the net proceeds from the Notes were used to purchase/redeem the previously outstanding $375 million aggregate principal amount of senior secured notes scheduled to mature in 2019. The remaining net proceeds were primarily used to pay related transaction fees and expenses, redemption premiums, and accrued interest on the senior secured notes purchased/redeemed. A portion of this transaction was accounted for as an extinguishment of debt and a portion was accounted for as a non-substantial debt modification. As a result, approximately $15.2 million of the fees/redemption premiums/discount was deferred and included in discount and debt issuance costs and approximately $0.9 million of fees were expensed as incurred and were included in interest expense in 2018. In addition, we recognized a loss on extinguishment of debt of approximately $6.0 million in 2018, primarily consisting of a portion of the redemption premiums paid and the expensing of a portion of debt issuance costs associated with the senior secured notes purchased/redeemed.
(C) El Dorado Chemical Company (EDC), one of our subsidiaries, is party to a secured promissory note due in March 2021. Principal and interest are payable in monthly installments.
(D) El Dorado Ammonia L.L.C. (“EDA”), one of our subsidiaries, is party to a secured promissory note due in May 2023. Principal and interest are payable in equal monthly installments with a final balloon payment of approximately $6.1 million.
(E) On May 28, 2019, EDC entered into a $15 million secured financing arrangement with an affiliate of LSB Funding L.L.C. (“LSB Funding”) with an interest rate of 8.32%. Beginning in June 2019, principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due on June 1, 2023. This financing arrangement is secured by the cogeneration facility equipment and is guaranteed by LSB. A portion of the proceeds from this secured financing arrangement was used to pay off the Secured Promissory Note that was scheduled to mature in June 2019.
(F) Includes $1.8 million relating to a secured loan agreement EDC entered during the first quarter of 2019 with an affiliate of LSB Funding. Under the terms of the agreement, EDC has up to $7.5 million of available borrowings (the “Interim Loan”) during the construction of certain equipment (the “Interim Loan Period), subject to certain conditions. During the Interim Loan Period, interest only is payable in monthly installments. The Interim Loan will be replaced by a term loan upon completion of the construction, which is expected to be during the fourth quarter of 2019. Principal and interest will be payable in 60 equal monthly installments under the term loan.
6. Commitments and Contingencies
Natural Gas Purchase Commitments – At September 30, 2019, our natural gas contracts, which qualify as normal purchases under GAAP and thus are not mark-to-market, included volume purchase commitments with fixed costs of approximately 4.6 million MMBtus of natural gas. These contracts extend through December 2019 at a weighted-average cost of $2.50 per MMBtu ($11.5 million) and a weighted-average market value of $2.12 per MMBtu ($9.7 million).
Legal Matters - Following is a summary of certain legal matters involving the Company:
A. Environmental Matters
Our facilities and operations are subject to numerous federal, state and local environmental laws and to other laws regarding health and safety matters (collectively, the “Environmental and Health Laws”), many of which provide for certain performance obligations, substantial fines and criminal sanctions for violations. Certain Environmental and Health Laws impose strict liability as well as joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We may be required to remediate contaminated properties currently or formerly owned or operated by us or facilities of third parties that received waste generated by our operations regardless of whether such contamination resulted from the conduct of others or from consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken. In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses. In certain instances, citizen groups also have the ability to bring legal proceedings against us if we are not in compliance with environmental laws, or to challenge our ability to receive environmental permits that we need to operate. In addition, claims for damages to persons or property, including natural resources, may result from the environmental, health and safety effects of our operations.
13
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Commitments and Contingencies (continued)
There can be no assurance that we will not incur material costs or liabilities in complying with such laws or in paying fines or penalties for violation of such laws. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. The Environmental and Health Laws and related enforcement policies have in the past resulted, and could in the future result, in significant compliance expenses, cleanup costs (for our sites or third-party sites where our wastes were disposed of), penalties or other liabilities relating to the handling, manufacture, use, emission, discharge or disposal of hazardous or toxic materials at or from our facilities or the use or disposal of certain of its chemical products. Further, a number of our facilities are dependent on environmental permits to operate, the loss or modification of which could have a material adverse effect on their operations and our financial condition.
Historically, significant capital expenditures have been incurred by our subsidiaries in order to comply with the Environmental and Health Laws, and significant capital expenditures are expected to be incurred in the future. We will also be obligated to manage certain discharge water outlets and monitor groundwater contaminants at our facilities should we discontinue the operations of a facility. We did not operate the natural gas wells where we previously owned a working interest and compliance with Environmental and Health Laws was controlled by others. We were responsible for our working interest proportionate share of the costs involved.
As of September 30, 2019, our accrued liabilities for environmental matters totaled $183,000 relating primarily to the matters discussed below.
1. Discharge Water Matters
Each of our manufacturing facilities generates process wastewater, which may include cooling tower and boiler water quality control streams, contact storm water and miscellaneous spills and leaks from process equipment. The process water discharge, storm-water runoff and miscellaneous spills and leaks are governed by various permits generally issued by the respective state environmental agencies as authorized and overseen by the U.S. Environmental Protection Agency. These permits limit the type and amount of effluents that can be discharged and control the method of such discharge.
In October 2017, PCC filed a Permit Renewal Application for its Non-Hazardous Injection Well Permit at the Pryor Facility. Although the Injection Well Permit expired in 2018, PCC continues to operate the injection well pending the Oklahoma Department of Environmental Quality (“ODEQ”) action on the Permit Renewal Application. PCC and ODEQ are engaged in ongoing discussions related to the renewal of the injection well to address the wastewater stream.
Our El Dorado Facility is subject to a National Pollutant Discharge Elimination System (“NPDES”) permit issued by the Arkansas Department of Environmental Quality (“ADEQ”) in 2004. In 2010, the ADEQ issued a draft NPDES permit renewal for the El Dorado Facility, which contains more restrictive discharge limits than the previous 2004 permit. In August 2017, ADEQ issued a final NPDES permit with new dissolved mineral limits. EDC filed an appeal in September 2017 and a Permit Appeal Resolution (“PAR”) was signed in July 2018. EDC is in compliance with the revised permit limits agreed upon in the PAR.
In November 2006, the El Dorado Facility entered into a Consent Administrative Order (“CAO”) that recognizes the presence of nitrate contamination in the shallow groundwater. The CAO requires EDC to perform semi-annual groundwater monitoring, continue operation of a groundwater recovery system, submit a human health and ecological risk assessment, and submit a remedial action plan. The risk assessment was submitted in August 2007. In February 2015, the ADEQ stated that El Dorado Chemical was meeting the requirements of the CAO and should continue semi-annual monitoring. Subsequent to the PAR mentioned previously, a new CAO was signed in October 2018, which required an Evaluation Report of the data and effectiveness of the groundwater remedy for nitrate contamination. In February 2019, the Evaluation Report was submitted to the ADEQ, which the ADEQ approved the report in August 2019.
No liability has been established at September 30, 2019, in connection with this ADEQ matter.
2. Other Environmental Matters
In 2002, certain of our subsidiaries sold substantially all of their operating assets relating to a Kansas chemical facility (the “Hallowell Facility”) but retained ownership of the real property where the facility is located. Our subsidiary retained the obligation to be responsible for, and perform the activities under, a previously executed consent order to investigate the surface and subsurface contamination at the real property and develop a corrective action strategy based on the investigation. In addition, certain of our subsidiaries agreed to indemnify the buyer of such assets for these environmental matters.
14
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Commitments and Contingencies (continued)
As the successor to a prior owner of the Hallowell Facility, Chevron Environmental Management Company (“Chevron”) has agreed in writing, within certain limitations, to pay and has been paying one-half of the costs of the investigation and interim measures relating to this matter as approved by the Kansas Department of Health and Environment (the “KDHE”), subject to reallocation.
Our subsidiary and Chevron have retained an environmental consultant to prepare and perform a corrective action study work plan as to the appropriate method to remediate the Hallowell Facility. The proposed strategy includes long-term surface and groundwater monitoring to track the natural decline in contamination. The KDHE is currently evaluating the corrective action strategy, and, thus, it is unknown what additional work the KDHE may require, if any, at this time.
We accrued our allocable portion of costs primarily for the additional testing, monitoring and risk assessments that could be reasonably estimated, which is included in our accrued liabilities for environmental matters discussed above. The estimated amount is not discounted to its present value. As more information becomes available, our estimated accrual will be refined.
B. Other Pending, Threatened or Settled Litigation
In 2013, an explosion and fire occurred at the West Fertilizer Co. (“West Fertilizer”) located in West, Texas, causing death, bodily injury and substantial property damage. West Fertilizer is not owned or controlled by us, but West Fertilizer was a customer of EDC, and purchased AN from EDC from time to time. LSB and EDC received letters from counsel purporting to represent subrogated insurance carriers, personal injury claimants and persons who suffered property damages informing LSB and EDC that their clients are conducting investigations into the cause of the explosion and fire to determine, among other things, whether AN manufactured by EDC and supplied to West Fertilizer was stored at West Fertilizer at the time of the explosion and, if so, whether such AN may have been one of the contributing factors of the explosion. Initial lawsuits filed named West Fertilizer and another supplier of AN as defendants.
In 2014, EDC and LSB were named as defendants, together with other AN manufacturers and brokers that arranged the transport and delivery of AN to West Fertilizer, in the case styled City of West, Texas vs. CF Industries, Inc., et al., in the District Court of McLennan County, Texas. The plaintiffs allege, among other things, that LSB and EDC were negligent in the production and marketing of fertilizer products sold to West Fertilizer, resulting in death, personal injury and property damage. EDC retained a firm specializing in cause and origin investigations with particular experience with fertilizer facilities, to assist EDC in its own investigation. LSB and EDC placed its liability insurance carrier on notice, and the carrier is handling the defense for LSB and EDC concerning this matter.
Our product liability insurance policies have aggregate limits of general liability totaling $100 million, with a self-insured retention of $250,000, which retention limit has been met relating to this matter. In August 2015, the trial court dismissed plaintiff’s negligence claims against us and EDC based on a duty to inspect but allowed the plaintiffs to proceed on claims for design defect and failure to warn.
Subsequently, we and EDC have entered into confidential settlement agreements (with approval of our insurance carriers) with several plaintiffs that had claimed wrongful death and bodily injury and insurance companies asserting subrogation claims for damages from the explosion. These settlements have been paid by the insurer as of September 30, 2019. While these settlements resolve the claims of a number of the claimants in this matter for us, we continue to be party to litigation related to this explosion by other plaintiffs, in addition to indemnification or defense obligations we may have to other defendants. We continue to defend these lawsuits vigorously and we are unable to estimate a possible range of loss at this time if there is an adverse outcome in this matter as to EDC. As of September 30, 2019, no liability reserve has been established in connection with this matter.
In 2015, a case styled Dennis Wilson vs. LSB Industries, Inc., et al., was filed in the United States District Court for the Southern District of New York. The plaintiff purports to represent a class of our shareholders and asserts that we violated federal securities laws by allegedly making material misstatements and omissions about delays and cost overruns at our El Dorado Chemical Company manufacturing facility and about our financial well-being and prospects. The lawsuit, which also names certain current and former officers, sought an unspecified amount of damages.
In October 2018, LSB entered into a preliminary, binding term sheet to settle Dennis Wilson vs. LSB Industries, Inc., et al., which was subject to approval by the court. On January 17, 2019, the parties entered into a Stipulation and Agreement of Settlement (the “Wilson Settlement Agreement”), pursuant to which the settlement amount of approximately $18.5 million was paid in March by our insurers on behalf of LSB and certain current and former officers in exchange for, among other things, a release of all claims. On May 23, 2019, one request for exclusion from the settlement class was made. On June 28, 2019, the court held a settlement hearing and entered a Judgement Approving Class Action Settlement, which includes a provision whereby the party requesting exclusion may withdraw its exclusion from the settlement and file by July 23, 2019 to rejoin the class. On July 23, 2019, LSB reached a preliminary settlement and the requesting party withdrew its request for exclusion from the class. Subsequently, during the third quarter of 2019, this additional settlement was executed, and the settlement amount was paid to the requesting party by our insurers on behalf of LSB and certain current and former officers in exchange for, among other things, an appropriate release of claims. As a result, no liability in relation to this matter remains outstanding as of September 30, 2019.
15
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Commitments and Contingencies (continued)
In 2015, we and EDA received formal written notice from Global Industrial, Inc. (“Global”) of Global’s intention to assert mechanic liens for labor, service, or materials furnished under certain subcontract agreements for the improvement of the new ammonia plant at our El Dorado Facility. Global is a subcontractor of Leidos Constructors, LLC (“Leidos”), the general contractor for EDA for the construction for the ammonia plant. Leidos terminated the services of Global with respect to their work performed at our El Dorado Facility.
LSB and EDA intend to pursue recovery of any damage or loss caused by Global’s work performed at our El Dorado Facility. In March 2016, EDC and we were served a summons in a case styled Global Industrial, Inc. d/b/a Global Turnaround vs. Leidos Constructors, LLC et al., in the Circuit court of Union County, Arkansas, wherein Global seeks damages under breach of contract and other claims. We have requested indemnifications from Leidos under the terms of our contracts which they have denied, and we intend to vigorously defend against the allegation made by Global and seek reimbursement of legal expenses from Leidos under our contracts. We are also seeking damages from Leidos for their wrongdoing during the expansion, including breach of contract, fraud, gross negligence, professional negligence and gross negligence.
Except for the invoices totaling approximately $3.5 million that were not approved by Leidos for payment that are included in our accounts payable, no liability has been established in connection with the claims asserted by Global. On September 25, 2018, the Court bifurcated the case into: (1) Global’s claims against Leidos and LSB, and (2) the cross-claims between Leidos and LSB. Part (1) of the case was tried to the Court during the fall of 2018. The Court took the matter under advisement, will consider the evidence and render judgment. LSB intends to vigorously prosecute its claims against Leidos in Part (2) of the matter. Trial is scheduled for Part (2) of the matter in February of 2020.
We are also involved in various other claims and legal actions (including matters involving gain contingencies). It is possible that the actual future development of claims could be different from our estimates but, after consultation with legal counsel, we believe that changes in our estimates will not have a material effect on our business, financial condition, results of operations or cash flows.
7. Income Taxes
In December 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the “Act”), making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate of 21%, additional limitations on executive compensation, and limitations on the deductibility of interest.
The FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act.
For the first nine months of 2018, we recorded provisional amounts for certain enactment-date effects of the Act by applying the guidance in SAB 118 because we had not yet completed our enactment-date accounting for these effects. In 2018, we recorded tax expense related to these effects including the decrease in the federal corporate tax rate, additional limitations on executive compensation, and limitations on the deductibility of interest. During the fourth quarter of 2018, we completed the accounting for tax reform and there was no adjustment to provisional amounts recorded.
Provision (benefit) for income taxes is as follows:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(In Thousands)
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
|
24
|
|
|
|
1
|
|
|
|
(19
|
)
|
|
|
(39
|
)
|
Total Current
|
|
$
|
24
|
|
|
$
|
1
|
|
|
$
|
(19
|
)
|
|
$
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(668
|
)
|
|
$
|
(2,004
|
)
|
|
$
|
(501
|
)
|
|
$
|
1,844
|
|
State
|
|
|
161
|
|
|
|
(423
|
)
|
|
|
(5,296
|
)
|
|
|
(829
|
)
|
Total Deferred
|
|
$
|
(507
|
)
|
|
$
|
(2,427
|
)
|
|
$
|
(5,797
|
)
|
|
$
|
1,015
|
|
Provision (benefit) for income taxes
|
|
$
|
(483
|
)
|
|
$
|
(2,426
|
)
|
|
$
|
(5,816
|
)
|
|
$
|
976
|
|
16
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. Income Taxes (continued)
For the three and nine months ended September 30, 2019 and 2018, the current provision (benefit) for state income taxes shown above includes regular state income tax and provisions for uncertain state income tax positions, the impact of state tax law changes and other similar adjustments.
Our estimated annual effective rate for 2019 includes the impact of permanent tax differences, limits on deductible compensation, state tax law changes, valuation allowances and other permanent items.
We considered both positive and negative evidence in our determination of the need for valuation allowances for deferred tax assets. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. In the second quarter of 2018, we established a valuation allowance on a portion of our federal deferred tax assets. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of the recent financing activities and our quarterly results. Based on our analysis, we currently believe that it is more-likely-than-not that a portion of our federal deferred tax assets will not be able to be utilized and we estimate the valuation allowance to be recorded during 2019 to be approximately $8.9 million. We have also determined it was more-likely-than-not that a portion of our state deferred tax assets would not be able to be utilized and we estimate the valuation allowance associated with these state deferred tax assets to be recorded during 2019 will be approximately $3.8 million.
We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. Changes in positive and negative evidence, including differences between estimated and actual results and additional guidance for various provisions of the Act, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.
The tax benefit for the nine months ended September 30, 2019 was $5.8 million (14% benefit on pre-tax loss) and the tax provision for the nine months ended September 30, 2018 was $1.0 million (2% provision on pre-tax loss). For the first nine months of 2019, the effective tax rate is less than the statutory tax rate primarily due to the impact of the valuation allowances and impact of state tax law changes. During the second quarter of 2019, changes in tax laws were enacted by certain states resulting in an income tax benefit. The increase in the benefit is primarily due to the adjustments on the deferred tax assets and liabilities from the newly enacted state tax law changes.
LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the 2015-2018 years remain open for all purposes of examination by the U.S. Internal Revenue Service and other major tax jurisdictions.
8. Redeemable Preferred Stocks
Series E and Series F Redeemable Preferred
As of September 30, 2019, the Series E Redeemable Preferred has a 14% annual dividend rate and a participating right in dividends and liquidating distributions equal to 303,646 shares of common stock (participation rights value). Dividends accrue semi-annually in arrears and are compounded. Pursuant to the terms of the Series E Redeemable Preferred, the annual dividend rate will increase (a) by 0.50% in April 2021 (b) by an additional 0.50% in April 2022 and (c) by an additional 1.0% in April 2023. The Series E Redeemable Preferred contains redemption features and a participation rights value that are being accounted for as derivative instruments and have been bifurcated from the Series E Redeemable Preferred as discussed below under Embedded Derivative.
As of September 30, 2019, the Series F Redeemable Preferred has voting rights (the “Series F Voting Rights”) to vote as a single class on all matters which the common stock have the right to vote and is entitled to a number of votes equal to 456,225 shares of our common stock.
17
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Redeemable Preferred Stocks (continued)
Changes in our Series E and Series F Redeemable Preferred are as follows:
|
|
Series E Redeemable Preferred
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
(Dollars In Thousands)
|
|
Balance at December 31, 2018
|
|
|
139,768
|
|
|
$
|
202,169
|
|
Accretion relating to liquidation preference on
preferred stock
|
|
|
—
|
|
|
|
798
|
|
Accretion for discount and issuance costs on
preferred stock
|
|
|
—
|
|
|
|
695
|
|
Accumulated dividends
|
|
|
—
|
|
|
|
22,609
|
|
Balance at September 30, 2019
|
|
|
139,768
|
|
|
$
|
226,271
|
|
Embedded Derivative
Certain embedded features (“embedded derivative”) relating to the redemption of the Series E Redeemable Preferred, which includes certain contingent redemption features and the participation rights value have been bifurcated from the Series E Redeemable Preferred and recorded as a liability. As September 30, 2019 and December 31, 2018, we estimate that the contingent redemption features have fair value since we estimate that it is probable that a portion of the shares of this preferred stock would be redeemed prior to October 25, 2023. For certain other embedded features, we estimated no fair value based on our assessment that there is a remote probability that these features will be exercised.
The fair value of the embedded derivative was valued using discounted cash flow models and primarily based on the difference in the present value of estimated future cash flows with no redemptions prior to October 25, 2023 compared to certain redemptions deemed probable during the same period and applying the effective dividend rate of the Series E Redeemable Preferred. In addition, at September 30, 2019 and December 31, 2018, the fair value of the embedded derivative included the valuation of the participation rights, which was based on the equivalent of 303,646 shares of our common stock at $5.18 and $5.52 per share, respectively.
The valuations of the embedded derivative are classified as Level 3. This derivative is valued using market information, management’s redemption assumptions, the underlying number of shares as defined in the terms of the Series E Redeemable Preferred, and the market price of our common stock. In addition, no valuation input adjustments were considered necessary relating to nonperformance risk for the embedded derivative. A Level 3 valuation is based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.
At September 30, 2019 and December 31, 2018, the fair value of the embedded derivative was $1.5 million and $1.6 million, respectively, and are included in our noncurrent accrued and other liabilities. For the three months ended September 30, 2019 and 2018, we recognized an unrealized loss of approximately $0.4 million and approximately $1.1 million, respectively, due to the change in fair value of the embedded derivative. For the nine months ended September 30, 2019 and 2018, the unrealized gain and loss were minimal. These unrealized gains and losses are included in non-operating income and expense.
18
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. Net Sales
Disaggregated Net Sales
As discussed in Note 1, we primarily derive our revenues from the sales of various chemical products. The following table presents our net sales disaggregated by our principal markets, which disaggregation is consistent with other financial information utilized or provided outside of our consolidated financial statements:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars In Thousands)
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural products
|
|
$
|
35,494
|
|
|
$
|
35,998
|
|
|
$
|
154,790
|
|
|
$
|
146,291
|
|
Industrial acids and other chemical products
|
|
|
30,552
|
|
|
|
34,788
|
|
|
|
105,579
|
|
|
|
105,700
|
|
Mining products
|
|
|
9,449
|
|
|
|
8,995
|
|
|
|
30,805
|
|
|
|
31,439
|
|
Total net sales
|
|
$
|
75,495
|
|
|
$
|
79,781
|
|
|
$
|
291,174
|
|
|
$
|
283,430
|
|
Transaction Price Constraints and Variable Consideration
For most of our contracts within the scope of Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), the transaction price from the inception of a contract is constrained to a short period of time (generally one month) as these contracts contain terms with variable consideration related to both price and quantity. These contract prices are often based on commodity indexes (such as NYMEX natural gas index) published monthly and the contract quantities are typically based on estimated ranges. The quantities become fixed and determinable over a period of time as each sale order is received from the customer.
The nature of our contracts also gives rise to other types of variable consideration, including volume discounts and rebates, make-whole provisions, other pricing concessions, and short-fall charges. We estimate these amounts based on the expected amount to be provided to customers, which result in a transaction price adjustment reducing revenue (net sales) with the offset increasing contract or refund liabilities. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We reassess these estimates on a quarterly basis.
The aforementioned constraints over transaction prices in conjunction with the variable consideration included in our material contracts prevent a practical assignment of a specific dollar amount to performance obligations at the beginning and end of the period. Therefore, we have applied the variable consideration allocation exception.
Future revenues to be earned from the satisfaction of performance obligations will be recognized when control transfers as goods are loaded and weighed or services are performed over the remaining duration of our contracts. Although most of our contracts have an original expected duration of one year or less, for our contracts with a duration greater than one year, the average remaining expected duration was approximately 14 months at September 30, 2019.
Contract Assets, Liabilities and Other Information
Our contract assets consist of receivables from contracts with customers. Our accounts receivable primarily relate to these contract assets and are presented in our consolidated balance sheets. Customer payments are generally due thirty to sixty days after the invoice date.
Our contract liabilities primarily relate to deferred revenue and customer deposits associated with cash payments received in advance from customers for volume shortfall charges and product shipments. We had approximately $3.8 million and $7.0 million of contract liabilities as of September 30, 2019 and December 31, 2018, respectively. For the three and nine months ended September 30, 2019, revenues of $1.2 million and $3.2 million, respectively, were recognized and included in the balance at the beginning of the respective period. For the three and nine months ended September 30, 2018, revenues of $0.8 million and $4.1 million were recognized and included in the balance at the beginning of each period.
Revenue recognized in the current period from performance obligations related to prior periods (for example, due to changes in transaction price) was not material.
19
LSB INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10. Related Party Transactions
During the first nine months of 2019, we entered into two separate financing arrangements with an affiliate of LSB Funding as discussed in footnotes (E) and (F) of Note 5, which transactions included debt issuance costs totaling approximately $0.1 million paid to this affiliate. In June 2019, we incurred a consent fee of approximately $0.3 million from LSB Funding associated with the issuance of the New Notes discussed in footnote (B) of Note 5. Also, an affiliate of LSB Funding holds $50 million of our Senior Secured Notes discussed in footnote (B) of Note 5. In addition, LSB Funding holds all outstanding shares of the Series E and Series F Redeemable Preferred discussed in Note 8.
The Golsen Holders hold all outstanding shares of the Series B Preferred and Series D Preferred, which accumulated dividends on such shares totaled approximately $1.2 million at September 30, 2019.
11. Supplemental Cash Flow Information
The following provides additional information relating to cash flow activities:
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In Thousands)
|
|
Cash refunds for:
|
|
|
|
|
|
|
|
|
Income taxes, net
|
|
$
|
(66
|
)
|
|
$
|
(1,141
|
)
|
Noncash continuing investing and financing activities:
|
|
|
|
|
|
|
|
|
Dividends accrued on Series E Redeemable Preferred
|
|
$
|
22,609
|
|
|
$
|
19,748
|
|
Supplies, accounts payable and accrued liabilities
associated with additions of property, plant and
equipment
|
|
$
|
21,251
|
|
|
$
|
14,609
|
|
Accretion of Series E Redeemable Preferred
|
|
$
|
1,493
|
|
|
$
|
2,882
|
|
20