Print PageClose Window

10-Q
KOPPERS HOLDINGS INC. filed this Form 10-Q on 11/09/2017
Entire Document
 

 

See Note 6 – Comprehensive Income and Equity (Deficit), for amounts recorded in other comprehensive income and for amounts reclassified from accumulated other comprehensive income to net income for the periods specified below. For the three and nine months ended September 30, 2017 and 2016, the following amounts were recognized in earnings related to copper swap contracts:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) from ineffectiveness of cash flow hedges

 

$

(2.5

)

 

$

(0.4

)

 

$

0.5

 

 

$

(0.5

)

Gain (loss) from contracts not designated as hedges

 

 

1.0

 

 

 

0.0

 

 

 

2.0

 

 

 

(0.3

)

Net

 

$

(1.5

)

 

$

(0.4

)

 

$

2.5

 

 

$

(0.8

)

 

As of September 30, 2017, the Company has $12.1 million of U.S. dollar-denominated forward contracts related to foreign currency, which are designated as cash flow hedges. The fair value of these forward contracts, which expire in the next twelve months, is $1.1 million which has been credited to other comprehensive income for the three and nine months ended September 30, 2017. The fair value associated with forward contracts related to foreign currency that are not designated as hedges and the fair value changes associated with these contracts are immediately charged to earnings.  These amounts are classified in cost of sales in the Condensed Consolidated Statement of Operations and Comprehensive Income. As of September 30, 2017, the Company has outstanding foreign currency forward contracts consisting of a gross derivative liability of $0.9 million (recognized in accrued liabilities in the balance sheet) and a gross derivative asset of $0.9 million (recognized in other current assets in the balance sheet). As of December 31, 2016, the Company has outstanding currency forward contracts with a net fair value totaling $1.0 million, consisting of a gross derivative liability of $0.9 million (recognized in accrued liabilities in the balance sheet) and a gross derivative asset of $1.9 million (recognized in other current assets in the balance sheet).   

As of September 30, 2017 and December 31, 2016, the net currency units outstanding for these contracts were:

 

 

 

September 30,

2017

 

December 31,

2016

 

(In millions)

 

 

 

 

 

 

British Pounds

 

GBP 8.0

 

 

GBP 7.3

 

New Zealand Dollars

 

NZD 15.5

 

 

NZD 15.5

 

United States Dollars

 

USD 16.8

 

 

USD 24.7

 

Canadian Dollars

 

CAD 0.8

 

 

CAD 0.3

 

 

 

18. Commitments and Contingent Liabilities

The Company and its subsidiaries are involved in litigation and various proceedings relating to environmental laws and regulations and toxic tort, product liability and other matters. Certain of these matters are discussed below. The ultimate resolution of these contingencies is subject to significant uncertainty and should the Company or its subsidiaries fail to prevail in any of these legal matters or should several of these legal matters be resolved against the Company or its subsidiaries in the same reporting period, these legal matters could, individually or in the aggregate, be material to the consolidated financial statements.

Legal Proceedings

Coal Tar Pitch Cases. Koppers Inc. is one of several defendants in lawsuits filed in two states in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch sold by the defendants. There are 88 plaintiffs in 50 cases pending as of September 30, 2017, compared to 99 plaintiffs in 55 cases as of December 31, 2016. As of September 30, 2017, there are 49 cases pending in state court in Pennsylvania, and one case pending in state court in Tennessee.

The plaintiffs in all 50 pending cases seek to recover compensatory damages. Plaintiffs in 46 of those cases also seek to recover punitive damages. The plaintiffs in the 49 cases filed in Pennsylvania seek unspecified damages in excess of the court’s minimum jurisdictional limit. The plaintiff in the Tennessee state court case seeks damages of $15.0 million. The other defendants in these lawsuits vary from case to case and include companies such as Beazer East, Inc. (“Beazer East”), Honeywell International Inc., Graftech International Holdings, Dow Chemical Company, UCAR Carbon Company, Inc., and SGL Carbon Corporation. Discovery is proceeding in these cases. No trial dates have been set in any of these cases.

The Company has not provided a reserve for these lawsuits because, at this time, the Company cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. The timing of resolution of these cases cannot be reasonably determined. Although Koppers Inc. is vigorously defending these cases,

18