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10-Q
KOPPERS HOLDINGS INC. filed this Form 10-Q on 08/03/2017
Entire Document
 

 

Under a registration statement on Form S-3, Koppers Holdings may sell a combination of securities, including common stock, debt securities, preferred stock, depository shares, warrants, purchase contracts and units, from time to time in one or more offerings. In addition, Koppers Inc. may sell debt securities from time to time under the registration statement. Debt securities may be fully and unconditionally guaranteed, on a joint and several basis, by Koppers Holdings, Koppers Inc. and/or each of Koppers Inc.’s 100 percent-owned material domestic subsidiaries other than Koppers Assurance, Inc. The domestic guarantor subsidiaries are the same as those which guarantee the 2025 Notes. Non-guarantor subsidiaries are owned directly or indirectly by Koppers Inc. or are owned directly or indirectly by Koppers World-Wide Ventures Corporation. The guarantor subsidiaries that issue guarantees, if any, will be determined when a debt offering actually occurs under the registration statement and accordingly, the condensed consolidating financial information for subsidiary guarantors will be revised to identify the subsidiaries that actually provided guarantees. These guarantees will be governed pursuant to a supplement indenture which the trustee and the issuing company would enter into concurrent with the debt offering.

Reliance of Koppers Holdings on Earnings of Koppers Inc. and its Subsidiaries

Koppers Holdings depends on the dividends from the earnings of Koppers Inc. and its subsidiaries to generate the funds necessary to meet its financial obligations, including the payment of any declared dividend of Koppers Holdings. The Revolving Credit Facility prohibits Koppers Inc. from making dividend payments to Koppers Holdings unless (1) such dividend payments are permitted by the indenture governing Koppers Inc.’s 2025 Notes, (2) no event of default or potential default has occurred or is continuing under the credit agreement, and (3) we are in pro forma compliance with our fixed charge coverage ratio covenant after giving effect to such dividend. The indenture governing the 2025 Notes restricts Koppers Inc.’s ability to finance our payment of dividends if (1) a default has occurred or would result from such financing, (2) Koppers Inc., or a restricted subsidiary of Koppers Inc. which is not a guarantor under the applicable indenture, is not able to incur additional indebtedness (as defined in the applicable indenture), and (3) the sum of all restricted payments (as defined in the applicable indenture) have exceeded the permitted amount (which we refer to as the “basket”) at such point in time.

The Koppers Inc. Revolving Credit Facility provides for a revolving credit facility of up to $400.0 million at variable rates. Borrowings under the Revolving Credit Facility are secured by a first priority lien on substantially all of the assets of Koppers Inc. and its material domestic subsidiaries. The Revolving Credit Facility contains certain covenants for Koppers Inc. and its restricted subsidiaries that limit capital expenditures, additional indebtedness, liens, dividends and investments or acquisitions. In addition, such covenants give rise to events of default upon the failure by Koppers Inc. and its restricted subsidiaries to meet certain financial ratios.

As of June 30, 2017, Koppers Inc.’s assets exceeded its liabilities by $72.0 million. There are no net assets unavailable for distribution to Koppers Holdings Inc. by Koppers Inc. as of June 30, 2017. Cash dividends paid to Koppers Holdings Inc. by its subsidiaries totaled $2.0 million and $0.7 million for the six months ended June 30, 2017 and 2016, respectively.

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2017

 

 

 

Parent

 

 

Koppers Inc.

 

 

Domestic

Guarantor

Subsidiaries

 

 

Non-Guarantor

Subsidiaries

 

 

Consolidating

Adjustments

 

 

Consolidated

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

0.0

 

 

$

153.2

 

 

$

94.2

 

 

$

151.8

 

 

$

(21.2

)

 

$

378.0

 

Cost of sales including depreciation

   and amortization

 

 

0.0

 

 

 

141.9

 

 

 

65.1

 

 

 

123.0

 

 

 

(21.5

)

 

 

308.5

 

Selling, general and administrative

 

 

0.5

 

 

 

11.3

 

 

 

10.1

 

 

 

10.0

 

 

 

0.0

 

 

 

31.9

 

Operating profit (loss)

 

 

(0.5

)

 

 

0.0

 

 

 

19.0

 

 

 

18.8

 

 

 

0.3

 

 

 

37.6

 

Other income

 

 

0.0

 

 

 

0.1

 

 

 

0.6

 

 

 

0.3

 

 

 

(0.3

)

 

 

0.7

 

Equity income (loss) of subsidiaries

 

 

20.0

 

 

 

25.5

 

 

 

12.9

 

 

 

(0.1

)

 

 

(58.3

)

 

 

0.0

 

Interest expense

 

 

0.0

 

 

 

10.0

 

 

 

(0.1

)

 

 

1.2

 

 

 

(0.3

)

 

 

10.8

 

Income taxes

 

 

(0.2

)

 

 

(4.4

)

 

 

7.2

 

 

 

4.0

 

 

 

0.0

 

 

 

6.6

 

Income from continuing operations

 

 

19.7

 

 

 

20.0

 

 

 

25.4

 

 

 

13.8

 

 

 

(58.0

)

 

 

20.9

 

Discontinued operations

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(1.1

)

 

 

0.0

 

 

 

(1.1

)

Noncontrolling interests

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.1

 

 

 

0.0

 

 

 

0.1

 

Net income attributable to Koppers

 

$

19.7

 

 

$

20.0

 

 

$

25.4

 

 

$

12.6

 

 

$

(58.0

)

 

$

19.7

 

Comprehensive income

   attributable to Koppers

 

$

24.5

 

 

$

24.8

 

 

$

29.9

 

 

$

18.5

 

 

$

(73.2

)

 

$

24.5

 

 

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