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, ~~2017~~2019



¨☐	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, Texas77056

(Address of principal executive offices, including zip code)

~~(713)~~ (713) 960-9111

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	WLK	The New York Stock Exchange

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. YesxNo¨

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). YesxNo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated ~~filer",~~filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes¨ ☐ Nox

The number of shares outstanding of the registrant's sole class of common stock as of October ~~31, 2017~~30, 2019 was ~~129,107,447.~~128,340,050.

INDEX

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	September 30, 2019			December 31, 2018

	(in millions of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	1,437		$	753
Accounts receivable, net	1,094			1,037
Inventories	906			1,014
Prepaid expenses and other current assets	45			38
Total current assets	3,482			2,842
Property, plant and equipment, net	6,842			6,595
Operating lease right-of-use assets	417			—
Goodwill	1,069			1,002
Customer relationships, net	541			525
Other intangible assets, net	191			134
Other assets, net	565			504
Total assets	$	13,107		$	11,602
LIABILITIES AND EQUITY
Current liabilities
Accounts and notes payable	$	496		$	507
Accrued and other liabilities	742			676
Total current liabilities	1,238			1,183
Long-term debt, net	3,424			2,668
Deferred income taxes	1,230			1,159
Pension and other post-retirement benefits	328			337
Operating lease liabilities	330			—
Other liabilities	195			179
Total liabilities	6,745			5,526
Commitments and contingencies (Note 16)
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;134,651,380 and 134,651,380 shares issued at September 30, 2019 and December 31, 2018, respectively	1			1
Common stock, held in treasury, at cost; 6,515,203 and 6,183,125 shares at September 30, 2019 and December 31, 2018, respectively	(396		)	(382		)
Additional paid-in capital	561			556
Retained earnings	5,724			5,477
Accumulated other comprehensive loss	(66		)	(62		)
Total Westlake Chemical Corporation stockholders' equity	5,824			5,590
Noncontrolling interests	538			486
Total equity	6,362			6,076
Total liabilities and equity	$	13,107		$	11,602

September 30,
2017 December 31,
2016

(in thousands of dollars, except
par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents $ 678,233
$ 459,453
Accounts receivable, net 1,142,979
938,743
Inventories 834,835
801,100
Prepaid expenses and other current assets 34,860
48,493
Restricted cash 8,626
160,527
Total current assets 2,699,533
2,408,316
Property, plant and equipment, net 6,343,637
6,420,062
Other assets, net
Goodwill 1,011,342
946,553
Customer relationships, net 635,884
611,615
Other intangible assets, net 166,166
175,839
Deferred charges and other assets, net 387,563
327,868
Total other assets, net 2,200,955
2,061,875
Total assets $ 11,244,125
$ 10,890,253
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 560,804
$ 496,259
Accrued liabilities 609,472
537,483
Term loan —
149,341
Total current liabilities 1,170,276
1,183,083
Long-term debt, net 3,349,402
3,678,654
Deferred income taxes 1,660,914
1,650,575
Pension and other post-retirement benefits 367,705
364,819
Other liabilities 144,329
121,077
Total liabilities 6,692,626
6,998,208
Commitments and contingencies (Note 18)

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; 134,651,380 and
134,651,380 shares issued at September 30, 2017 and December 31, 2016,
respectively
1,347
1,347
Common stock, held in treasury, at cost; 5,551,693 and 5,726,377 shares at
September 30, 2017 and December 31, 2016, respectively
(314,694 ) (319,339 )
Additional paid-in capital 558,423
550,641
Retained earnings 3,837,644
3,412,286
Accumulated other comprehensive loss (13,946 ) (121,306 )
Total Westlake Chemical Corporation stockholders' equity 4,068,774
3,523,629
Noncontrolling interests 482,725
368,416
Total equity 4,551,499
3,892,045
Total liabilities and equity $ 11,244,125
$ 10,890,253

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

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018

	(in thousands of dollars, except per share data and share amounts)												(in millions of dollars, except per share data and share amounts)
Net sales	$	2,108,889		$	1,279,028		$	6,030,666		$	3,340,276		$	2,066		$	2,255		$	6,235		$	6,640
Cost of sales	1,610,837			1,076,895			4,759,637			2,641,192			1,695			1,716			5,225			5,007
Gross profit	498,052			202,133			1,271,029			699,084			371			539			1,010			1,633
Selling, general and administrative expenses	125,642			72,729			379,919			179,757			110			114			343			337
Transaction and integration-related costs	6,663			82,841			22,949			90,550
Amortization of intangibles													27			24			81			75
Restructuring, transaction and integration-related costs													8			5			32			20
Income from operations	365,747			46,563			868,161			428,777			226			396			554			1,201
Other income (expense)
Interest expense	(40,036		)	(24,366		)	(118,784		)	(36,966		)	(31		)	(28		)	(89		)	(96		)
Other income, net	2,058			41,265			6,591			52,091			21			23			32			53
Income before income taxes	327,769			63,462			755,968			443,902			216			391			497			1,158
Provision for (benefit from) income taxes	108,619			(6,552		)	232,690			129,332
Provision for income taxes													50			73			120			255
Net income	219,150			70,014			523,278			314,570			166			318			377			903
Net income attributable to noncontrolling interests	8,318			4,352			21,429			14,656			8			10			28			30
Net income attributable to Westlake Chemical Corporation	$	210,832		$	65,662		$	501,849		$	299,914		$	158		$	308		$	349		$	873
Earnings per common share attributable to Westlake Chemical Corporation:
Basic	$	1.62		$	0.51		$	3.87		$	2.31		$	1.22		$	2.36		$	2.70		$	6.70
Diluted	$	1.61		$	0.51		$	3.85		$	2.29		$	1.22		$	2.35		$	2.69		$	6.67
Weighted average common shares outstanding:
Basic	129,069,186			128,793,661			129,033,597			129,519,577			128,216,105			129,427,328			128,408,841			129,512,097
Diluted	129,888,968			129,379,956			129,789,965			130,103,897			128,552,360			130,052,292			128,770,944			130,183,201
Dividends per common share	$	0.2100		$	0.1906		$	0.5912		$	0.5536

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

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017
2016

(in thousands of dollars)
Net income $ 219,150
$ 70,014
$ 523,278
$ 314,570
Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability
Pension and other post-retirement reserves
   adjustment (excluding amortization)
—
(206 ) —
(412 )
Amortization of benefits liability 529
369
1,600
1,072
Income tax provision on pension and other post-
   retirement benefits liability
(193 ) (60 ) (543 ) (251 )
Foreign currency translation adjustments
Foreign currency translation 39,714
6,453
108,166
15,758
Income tax provision on foreign currency
   translation
(76 ) —
(1,603 ) —
Net unrealized holding gains (losses) on investments
Unrealized holding gains on investments —
1,550
—
61,524
Reclassification of net realized gains to net
   income
—
(52,401 ) —
(53,720 )
Income tax provision on available-for-sale
   investments
—
18,270
—
(2,805 )
Other (96 ) —
(260 ) —
Other comprehensive income (loss), net of income taxes 39,878
(26,025 ) 107,360
21,166
Comprehensive income 259,028
43,989
630,638
335,736
Comprehensive income attributable to
   noncontrolling interests, net of tax of $846 and
   $0 for the three months ended September 30, 2017
   and 2016, respectively; and $2,467 and $0 for
   the nine months ended September 30, 2017 and
   2016, respectively.
4,628
4,352
17,288
14,656
Comprehensive income attributable to Westlake
   Chemical Corporation
$ 254,400
$ 39,637
$ 613,350
$ 321,080



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018

	(in millions of dollars)
Net income	$	166		$	318		$	377		$	903
Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability
Pension and other post-retirement benefits reserves adjustment	—			12			—			12
Income tax provision on pension and other post-retirement benefits liability	—			(3		)	—			(3		)
Foreign currency translation adjustments
Foreign currency translation	(9		)	—			4			(43		)
Income tax benefit (provision) on foreign currency translation	(7		)	—			(9		)	1
Other comprehensive income (loss), net of income taxes	(16		)	9			(5		)	(33		)
Comprehensive income	150			327			372			870
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended September 30, 2019 and 2018; and net of tax of $2 and $3 for the nine months ended September 30, 2019 and 2018, respectively	8			10			27			28
Comprehensive income attributable to Westlake Chemical Corporation	$	142		$	317		$	345		$	842

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

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)



	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares		At Cost			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total

	(in millions of dollars, except share amounts)
Balances at December 31, 2018	134,651,380	$	1	6,183,125		$	(382	)	$	556		$	5,477		$	(62	)	$	486		$	6,076
Net income	—	—		—		—			—			72			—			10			82
Other comprehensive loss	—	—		—		—			—			—			(2		)	—			(2		)
Shares issued—stock-based compensation	—	—		(124,052	)	11			(8		)	(3		)	—			—			—
Stock-based compensation	—	—		—		—			7			—			—			—			7
Dividends declared	—	—		—		—			—			(33		)	—			—			(33		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(8		)	(8		)
Issuance of Westlake Chemical Partners LP common units	—	—		—		—			(2		)	—			—			65			63
Balances at March 31, 2019	134,651,380	1		6,059,073		(371		)	553			5,513			(64		)	553			6,185
Net income	—	—		—		—			—			119			—			10			129
Other comprehensive income (loss)	—	—		—		—			—			—			14			(1		)	13
Common stock repurchased	—	—		342,740		(20		)	—			—			—			—			(20		)
Shares issued—stock-based compensation	—	—		(19,173	)	1			(1		)	—			—			—			—
Stock-based compensation	—	—		—		—			6			—			—			—			6
Dividends declared	—	—		—		—			—			(32		)	—			—			(32		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(22		)	(22		)
Balances at June 30, 2019	134,651,380	1		6,382,640		(390		)	558			5,600			(50		)	540			6,259

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)



	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares		At Cost			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total

	(in millions of dollars, except share amounts)
Net income	—	—		—		—			—			158			—			8			166
Other comprehensive income (loss)	—	—		—		—			—			—			(16		)	—			(16		)
Common stock repurchased	—	—		174,972		(10		)	—			—			—			—			(10		)
Shares issued—stock-based compensation	—	—		(42,409	)	4			(3		)	(1		)	—			—			—
Stock-based compensation	—	—		—		—			6			—			—			—			6
Dividends declared	—	—		—		—			—			(33		)	—			—			(33		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(10		)	(10		)
Balances at September 30, 2019	134,651,380	$	1	6,515,203		$	(396	)	$	561		$	5,724		$	(66	)	$	538		$	6,362

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)



	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares		At Cost			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total

	(in millions of dollars, except share amounts)
Balances at December 31, 2017	134,651,380	$	1	5,232,875		$	(302	)	$	555		$	4,613		$	7		$	495		$	5,369
Cumulative effect of accounting change	—	—		—		—			—			1			—			—			1
Net income	—	—		—		—			—			287			—			10			297
Other comprehensive income (loss)	—	—		—		—			—			—			(4		)	2			(2		)
Shares issued—stock-based compensation	—	—		(175,143	)	10			(4		)	—			—			—			6
Stock-based compensation	—	—		—		—			4			—			—			—			4
Dividends declared	—	—		—		—			—			(27		)	—			—			(27		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(7		)	(7		)
Balances at March 31, 2018	134,651,380	1		5,057,732		(292		)	555			4,874			3			500			5,641
Net income	—	—		—		—			—			278			—			10			288
Other comprehensive loss	—	—		—		—			—			—			(36		)	(4		)	(40		)
Shares issued—stock-based compensation	—	—		(57,967	)	3			(1		)	—			—			—			2
Stock-based compensation	—	—		—		—			4			—			—			—			4
Dividends declared	—	—		—		—			—			(27		)	—			—			(27		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(22		)	(22		)
Balances at June 30, 2018	134,651,380	1		4,999,765		(289		)	558			5,125			(33		)	484			5,846

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)



	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares		At Cost			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total

Net income	—	—		—		—			—			308			—			10			318
Other comprehensive income	—	—		—		—			—			—			9			—			9
Common stock repurchased	—	—		515,853		(49		)	—			—			—			—			(49		)
Shares issued—stock-based compensation	—	—		(29,454	)	1			(1		)	—			—			—			—
Stock-based compensation	—	—		—		—			5			—			—			—			5
Dividends declared	—	—		—		—			—			(33		)	—			—			(33		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(8		)	(8		)
Balances at September 30, 2018	134,651,380	$	1	5,486,164		$	(337	)	$	562		$	5,400		$	(24	)	$	486		$	6,088

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

Table of Contents

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,
2017 2016

(in thousands of dollars)
Cash flows from operating activities
Net income $ 523,278
$ 314,570
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 448,533
227,193
Provision for doubtful accounts 3,771
1,176
Amortization of debt issuance costs 3,471
1,018
Stock-based compensation expense 16,740
6,588
Loss from disposition of property, plant and equipment 14,319
6,541
Gains realized on previously held shares of Axiall common stock and from sales of securities —
(53,720 )
Write-off of debt issuance costs 659
—
Deferred income taxes 23,294
105,910
Windfall tax benefits from share-based payment arrangements —
(1,190 )
Dividends in excess of income from equity method investments (2,132 ) (61 )
Gain on involuntary conversion of assets (1,672 ) —
Other losses (gains), net (6,659 ) 833
Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable (185,153 ) (92,311 )
Inventories 23,945
(6,124 )
Prepaid expenses and other current assets 16,788
1,631
Accounts payable 60,899
34,109
Accrued liabilities 57,419
73,157
Other, net (34,836 ) (75,160 )
Net cash provided by operating activities 962,664
544,160
Cash flows from investing activities
Acquisition of business, net of cash acquired —
(2,437,829 )
Additions to property, plant and equipment (414,271 ) (467,330 )
Additions to cost method investment (47,000 ) (4,000 )
Proceeds from disposition of assets 171
213
Proceeds from involuntary conversion of assets 1,672
—
Proceeds from sales and maturities of securities —
662,938
Purchase of securities —
(138,422 )
Settlements of derivative instruments (7 ) (4,655 )
Net cash used for investing activities (459,435 ) (2,389,085 )
Cash flows from financing activities
Debt issuance costs (376 ) (35,207 )
Dividends paid (76,491 ) (71,933 )
Distributions to noncontrolling interests (20,767 ) (12,300 )
Net proceeds from issuance of Westlake Chemical Partners LP common units 110,739
—
Proceeds from debt issuance —
1,428,512
Proceeds from issuance of notes payable 5,946
5,597
Proceeds from term loan and drawdown of revolver 225,000
600,000
Restricted cash associated with term loan 154,000
(154,000 )
Repayment of term loan (150,000 ) —
Repayment of notes payable (6,695 ) (10,602 )
Repayment of revolver (550,000 ) (125,000 )
Repurchase of common stock for treasury —
(67,406 )
Other 2,204
2,840
Net cash provided by (used for) financing activities (306,440 ) 1,560,501
Effect of exchange rate changes on cash and cash equivalents 21,991
2,418
Net increase (decrease) in cash and cash equivalents 218,780
(282,006 )
Cash and cash equivalents at beginning of period 459,453
662,525
Cash and cash equivalents at end of period $ 678,233
$ 380,519



	Nine Months Ended September 30,
	2019			2018

	(in millions of dollars)
Cash flows from operating activities
Net income	$	377		$	903
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	525			473
Stock-based compensation expense	19			16
Loss from disposition and write-off of property, plant and equipment	32			26
Deferred income taxes	34			74
Other losses (gains), net	4			(20		)
Changes in operating assets and liabilities
Accounts receivable	(5		)	(252		)
Inventories	136			(42		)
Prepaid expenses and other current assets	(7		)	(3		)
Accounts payable	(49		)	36
Accrued and other liabilities	(34		)	9
Other, net	(64		)	(65		)
Net cash provided by operating activities	968			1,155
Cash flows from investing activities
Acquisition of businesses, net of cash acquired	(314		)	—
Additions to property, plant and equipment	(604		)	(507		)
Additions to investments in unconsolidated subsidiaries	(45		)	(63		)
Other, net	15			9
Net cash used for investing activities	(948		)	(561		)
Cash flows from financing activities
Debt issuance costs	(7		)	—
Dividends paid	(98		)	(87		)
Distributions to noncontrolling interests	(40		)	(37		)
Proceeds from debt issuance, net	784			—
Proceeds from notes payable	13			11
Proceeds from issuance of Westlake Chemical Partners LP common units	63			—
Redemption and repayment of notes payable	(19		)	(1,177		)
Repurchase of common stock for treasury	(30		)	(49		)
Other	3			8
Net cash provided by (used for) financing activities	669			(1,331		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(5		)	(6		)
Net increase (decrease) in cash, cash equivalents and restricted cash	684			(743		)
Cash, cash equivalents and restricted cash at beginning of period	775			1,554
Cash, cash equivalents and restricted cash at end of period	$	1,459		$	811

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

Table of Contents

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in ~~thousands~~millions 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, 2016~~ consolidated 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, ~~2016~~2018 (the "~~2016~~2018 Form 10-K"), filed with the SEC on February ~~22, 2017.~~20, 2019. These consolidated 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, ~~2016.~~2018 with the exception of those accounting standards adopted in 2019 as discussed in Note 1.

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, ~~2017~~2019, its results of operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018, and the changes in its cash position for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018.

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, ~~2017~~2019 or any other interim period. The preparation of consolidated 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.

Recent Accounting Pronouncements

~~Revenue from Contracts with Customers (ASU No. 2014-09)~~

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. In 2016, the FASB issued various additional authoritative guidance for the new revenue recognition standard. The accounting standard will be effective for reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact that the new accounting standard will have on its consolidated financial position, results of operations and cash flows. The Company has completed a preliminary assessment including detailed review of a representative sample of contracts with customers. The Company does not believe that adoption of the new accounting standard will materially impact timing or amounts of revenue recognized for the majority of its sales. The Company intends to elect the modified retrospective method of adoption.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities (ASU No. 2016-01)~~

In January 2016, the FASB issued an accounting standards update making certain changes principally to the current guidance for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. Among other things, the guidance (1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income; (2) provide entities with a policy election to record equity investments without readily determinable fair values at cost, less impairment, and subsequent adjustments for observable price changes (changes in the basis of these equity investments to be reported in net income); (3) requires an entity that has elected the fair value option for financial liabilities to recognize changes in fair value due to instrument-specific credit risk separately in other comprehensive income; (4) clarified current guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities; and (5) requires specific disclosure pertaining to financial assets and financial liabilities in the financial statements. The accounting standard will be effective for reporting periods beginning after December 15, 2017. 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.

~~Leases (ASU No. 2016-02)~~

In February 2016, the FASB issued an accounting standards update on a new lease standard that will supersede the existing lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that are classified as operating leases under current guidance on its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures related to leases. The accounting standard will be effective for reporting periods beginning after December 15, 2018. The Company is in the process of evaluating the impact that the new accounting guidance will have on the Company's consolidated financial position, results of operations and cash flows.

Credit Losses (ASU No. 2016-13)

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued an accounting standards update providing new guidance for the accounting for credit losses on loans and other financial instruments. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The standard also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The accounting standard will be effective for reporting periods beginning after December 15, 2019 ~~and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.~~

~~Cash Flows (ASU No. 2016-15)~~

In August 2016, the FASB issued an accounting standards update providing new guidance on the classification of certain cash receipts and payments including debt extinguishment costs, debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments, proceeds from the settlement of insurance claims and life insurance policies and distributions received from equity method investees in the statement of cash flows. This update is required to be applied using the retrospective transition method to each period presented unless it is impracticable to be applied retrospectively. In such situation, this guidance is to be applied prospectively. The accounting standard will be effective for reporting periods beginning after December 15, 2017 and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Cash Flows (ASU No. 2016-18)~~

In November 2016, the FASB issued an accounting standards update to clarify certain existing principles in Accounting Standards Codification ("ASC") 230, Cash flows, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. The accounting standard will be effective for reporting periods beginning after December 15, 2017. Upon adoption of the accounting standards update, the Company will retrospectively adjust its financial statements to reflect restricted cash in the beginning and ending cash and restricted cash balances within the statements of cash flows. Transfers between cash and restricted cash will be excluded from net changes in cash and cash equivalents within the statements of cash flows.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Business Combinations (ASU No. 2017-01)~~

In January 2017, the FASB issued an accounting standards update to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in the ASC 606, Revenue from contracts with customers. The accounting standard will be effective for reporting periods beginning after December 15, 2017 and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

Intangibles - Goodwill and Other (ASU No. 2017-04)

In January 2017, the FASB issued an accounting standards update to simplify the subsequent measurement of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The accounting standard will be effective for reporting periods beginning after December 15, 2019 and is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets~~Fair Value Measurement (ASU No. ~~2017-05)~~2018-13)

In ~~February 2017,~~August 2018, the FASB issued an accounting standards update to ~~clarify~~modify the ~~scope of guidance related to other income~~—gains and losses from the derecognition of nonfinancial assets, and to add guidance for partial sales of nonfinancial assets. The new guidance clarifies that an in substance nonfinancial asset is an asset or group of assets for which substantially all of thedisclosure requirements on fair value ~~consists of nonfinancial assets and the group or subsidiary is not a business.~~measurements. The guidance also outlines that when an entity transfers its controlling interest in a nonfinancial asset, but retains a noncontrolling interest, it will measure the retained interest at fair value resulting in full gain or loss recognition upon sale of the controlling interest. The accounting standard will beamendments are effective for ~~reporting~~ periods beginning after December 15, ~~2017~~2019. An entity is permitted to early adopt any removed or modified disclosures and ~~is not expected to have a material impact on~~delay adoption of the ~~Company's consolidated financial position, results of operations and cash flows.~~

~~Compensation - Retirement Benefits (ASU No. 2017-07)~~

~~In March 2017,~~additional disclosures until the FASB issued an accounting standards update to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires employers to disaggregate the service cost component from the other components of net periodic benefit cost and report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Theeffective date. Most amendments ~~also allow only the service cost component to~~should be ~~eligible for capitalization when applicable. The accounting standard~~applied retrospectively, but certain amendments will be ~~effective for reporting periods beginning after December 15, 2017.~~applied prospectively. The Company is in the process of ~~evaluating~~assessing the impact ~~that~~of the ~~new accounting guidance will have~~standard on ~~its consolidated financial position, results of operations and cash flows.~~

~~Compensation - Stock Compensation (ASU No. 2017-09)~~

~~In May 2017,~~ the FASB issued the accounting standards update to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require the application of modification accounting in Topic 718. Essentially, an entity will not have to account for the effects of a modification if: (1) theCompany's fair value ofdisclosures. However, the ~~modified award~~standard is the same immediately before and after the modification; (2) the vesting conditions of the modified award are the same immediately before and after the modification; and (3) the classification of the modified award as eithernot expected to have an equity instrument or liability instrument is the same immediately before and after the modification. This update is to be applied prospectively to an award modified on or after the adoption date. The accounting standard will be effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. 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.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities (ASU No. 2017-12)~~

In August 2017, the FASB issued an accounting standards update to improve financial reporting of hedging relationships, to better portray the economic results of an entity's risk management activities in the financial statements and to simplify application of hedge accounting guidance. The accounting standard eliminates certain hedge effectiveness measurement and reporting requirements and expands the types of permissible hedging strategies. The accounting standard will be effective for reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance, to be applied retrospectively to the beginning of the fiscal year. 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.

~~Recently Adopted Accounting Standards~~

~~Investments - Equity Method and Joint Ventures (ASU No. 2016-07)~~

In March 2016, the FASB issued an accounting standards update providing new guidance for the accounting for equity method investments. The new guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. In addition, the guidance requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The accounting standard became effective for reporting periods beginning after December 15, 2016. The Company adopted this accounting standard effective January 1, 2017 and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Stock Compensation (ASU No. 2016-09)~~

In March 2016, the FASB issued an accounting standards update to simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classifications of awards as either equity or liabilities and certain related classifications on the statement of cash flows. In addition, the new guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required prior to adoption of the accounting standards update, or recognized when they occur. The accounting standard became effective for reporting periods beginning after December 15, 2016. The Company adopted this accounting standard effective January 1, 2017 and elected to continue estimating forfeitures as required prior to adoption of the accounting standards update. The adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Amendments to the Consolidation Analysis (ASU No. 2016-17)~~

In October 2016, the FASB issued an accounting standards update making certain changes to the current consolidation guidance. The amendments affect reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. Specifically, the amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The amendments became effective for annual periods beginning after December 15, 2016. The Company adopted this accounting standard, to be applied prospectively, effective January 1, 2017, and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~2. Acquisition~~Recently Adopted Accounting Standards

~~On August 31,~~Leases (ASU No. 2016-02)

In February 2016, the FASB issued an accounting standards update on lease accounting that supersedes the previously issued leases guidance. The new standard requires lessees to recognize assets and liabilities for all long-term operating leases. An asset is recognized for the right to use an underlying leased asset and a liability is recognized for the obligation to make payments over the lease term. The standard also requires expanded lease disclosures. The standard requires a modified retrospective adoption approach and allows for the election of certain transition expedients.

The Company ~~completed its acquisition of, and acquired all~~adopted the ~~remaining equity interest in, Axiall Corporation ("Axiall"),~~standard January 1, 2019 using the optional transition method which allows entities to recognize a ~~Delaware corporation. Prior~~cumulative adjustment to the ~~acquisition,~~opening balance sheet in the period of adoption. The Company elected the package of optional transition expedients and was not required to reassess (1) whether any existing contracts are or contain leases, (2) classification of existing leases as operating or capital or (3) whether initial direct costs for existing leases qualify for capitalization under the new accounting standard. The Company did not elect the use of hindsight to determine the lease term when considering lease renewal or termination options. Additionally, the Company ~~held 3.1 million shares~~elected to continue accounting for existing land easements under its accounting policies that were in ~~Axiall. Pursuant~~effect prior to ~~the terms~~adoption of the Agreement and Plan of Merger, dated as of June 10, 2016, by and among Westlake, Axiall and Lagoon Merger Sub, Inc., a Delaware corporation that is a wholly-owned subsidiary of Westlake ("Merger Sub"), the Company acquired all of the remaining issued and outstanding shares of common stock of Axiall for $33.00 per share in cash. Pursuant to the Merger Agreement, Merger Sub was merged with and into Axiall and Axiall survived the merger as a wholly-owned subsidiary of the Company (the "Merger"). The combined company is the third-largest global chlor-alkali producer and the third-largest global polyvinyl chloride ("PVC") producer. The Company's management believes that this strategic acquisition will enhance its strategy of integration and will further strengthen its role in the North American markets.

Axiall produces a highly integrated chain of chlor-alkali and derivative products, including chlorine, caustic soda, vinyl chloride monomer ("VCM"), PVC resin, PVC compounds and chlorinated derivative products. Axiall also manufactures and sells building products, including siding, trim, mouldings, pipe and pipe fittings.

Total consideration transferred for the Merger was $2,539,360. The Merger was accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company's Vinyls segment.

For the nine months ended September 30, 2016, the Company recognized $90,550 of transaction and integration-related costs. This included acquisition-related costs of $43,895 for advisory, consulting and professional fees and other expenses during the nine months ended September 30, 2016. Transaction and integration-related costs also included $46,655 during the nine months ended September 30, 2016 related to the settlement of Axiall share-based awards, retention agreement costs and severance benefits provided to former Axiall employees in connection with the Merger.new lease standard.

The following ~~table summarizes~~amounts were recorded as a result of adopting the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The allocation of the consideration transferred is based on management's estimates, judgments and assumptions. When determining the fair values of assets acquired, liabilities assumed and noncontrolling interests of the acquiree, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $942,096 was recorded. The goodwill recognized is primarily attributable to synergies related to the Company's vinyls integration strategy that are expected to arise from the Merger. All of the goodwill is assigned to the Company's Vinyls segment. As a portion of the goodwill arising from the Merger is attributable to foreign operations, there will be a continuing foreign currency impact to goodwill in the consolidated financial statements.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Final Purchase Consideration as of August 31, 2016
Closing stock purchase:
Offer per share $ 33.00
Multiplied by number of shares outstanding at acquisition (in thousands of shares) 67,277
Fair value of Axiall shares outstanding purchased by the Company 2,220,141
Plus:
Axiall debt repaid at acquisition 247,135
Seller's transaction costs paid by the Company ⁽¹⁾
47,458
Total fair value of consideration transferred 2,514,734

Fair value of Axiall share-based awards attributed to pre-combination service ⁽²⁾
11,346
Additional settlement value of shares acquired 13,280
Purchase consideration 2,539,360

Fair value of previously held equity interest in Axiall ⁽³⁾
102,300
Total fair value allocated to net assets acquired $ 2,641,660

~~_____________~~


~~(1)~~	Transaction costs incurred by the seller included legal and advisory costs incurred for the benefit of Axiall's former shareholders and board of directors to evaluate the Company's initial Merger proposals, explore strategic alternatives and negotiate the purchase price.


~~(2)~~	The fair value of share-based awards attributable to pre-combination service includes the ratio of the pre-combination service performed to the original service period of the Axiall restricted share units and options, including related dividend equivalent rights.


~~(3)~~	Prior to the Merger, the Company owned 3.1 million shares in Axiall. The investment in Axiall was carried at estimated fair value with unrealized gains recorded as a component of accumulated other comprehensive loss in the consolidated balance sheet. The Company recognized a $49,080 gain for the investment in other income, net in the consolidated statements of operations upon gaining control.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~The following table summarizes the purchase price allocation:~~

Net Assets Acquired as of August 31, 2016
Cash $ 88,251
Accounts receivable ⁽¹⁾
422,274
Income tax receivable 50,980
Inventories ⁽²⁾
349,205
Prepaid expenses and other current assets 55,462
Property, plant and equipment ⁽²⁾
2,942,162
Customer relationships (weighted average lives of 9.8 years) ⁽³⁾
670,000
Other intangible assets:
Trade name (weighted average lives of 6.8 years) 50,000
Technology (weighted average lives of 5.4 years) 41,500
Supply contracts and leases (weighted average lives of 6.3 years) 27,288
Other assets 93,875
Total assets acquired 4,790,997
Accounts and notes payable 254,041
Interest payable 8,154
Income tax payable 1,607
Accrued compensation 44,186
Accrued liabilities 154,290
Deferred income taxes ⁽⁴⁾
958,304
Tax reserve non-current 3,130
Pension and other post-retirement obligations 311,106
Other liabilities 101,325
Long-term debt 1,187,290
Total liabilities assumed 3,023,433
Total identifiable net assets acquired 1,767,564
Noncontrolling interest (68,000 )
Goodwill 942,096
Total fair value allocated to net assets acquired $ 2,641,660


~~(1)~~	~~The fair value of accounts receivable acquired was $422,274, with the gross contractual amount being $434,834. The Company expects $12,560 to be uncollectible.~~


~~(2)~~	The Company obtained additional information related to its inventories and property, plant and equipment which led to an increase in inventories of $43,047, a decrease in property, plant and equipment of $192,579 and a corresponding increase in goodwill of $149,532 compared to the estimated fair values included in the 2016 Form 10-K.


~~(3)~~	The Company obtained additional information related to its customer relationship balances which led to an increase in customer relationships of $80,000 and a corresponding decrease in goodwill compared to the estimated fair values included in the 2016 Form 10-K.


~~(4)~~	~~Decreases in the estimated fair values of identified assets acquired led to a decrease in deferred income taxes of $26,824 compared to the estimated fair values included in the 2016 Form 10-K.~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~The pro forma information for the nine months ended September 30, 2016 was as follows:~~

Pro Forma Nine Months Ended September 30, 2016
Net sales $ 5,345,365
Net income ⁽¹⁾
$ 277,567
Net income attributable to noncontrolling interest 16,404
Net income attributable to Westlake Chemical Corporation ⁽¹⁾
$ 261,163
Earnings per common share attributable to Westlake Chemical Corporation
Basic $ 2.01
Diluted $ 2.00

~~_____________~~

~~(1)~~

The pro forma net income amounts include Axiall's historical charges recorded during the eight-month period prior to the closing of the Merger for (1) divestitures; (2) restructuring; and (3) legal and settlement claims, net, of $26,666, $22,881 and $23,376, respectively. These amounts have not been eliminated for pro forma purposes because they do not relate to nonrecurring, transaction specific costs related to the Merger.

The pro forma amounts above have been calculated after applying the Company's accounting policies and adjusting the Axiall results to reflect (1) the increase to depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2016; (2) the elimination of net sales and cost of sales between the Company and Axiall; (3) additional pension service costs; (4) amortization of debt premium and accretion of asset retirement obligations and environmental liabilities as part of the Company's adjustments to fair value; (5) incremental interest expense that would have been incurred assuming the financing arrangements entered by the Company and repayment of a portion of Axiall's outstanding debt had occurrednew lease standard on January 1, 2016; (6) the elimination of transaction-related costs; and (7) an adjustment to tax-effect the aforementioned pro forma adjustments using an estimated aggregate statutory income tax rate of the jurisdictions to which the above adjustments relate. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Merger, are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the Merger had occurred as of January 1, 2016 or of future operating performance.2019:



Operating Lease Assets and Liabilities	Balance Sheet Location	Amounts Recorded in the Consolidated Balance Sheet January 1, 2019
Right-of-use assets	Operating lease right-of-use assets	$	421
Current lease liabilities	Accrued and other liabilities	(94		)
Non-current lease liabilities	Operating lease liabilities	(331		)
Deferred rent	Other liabilities	4

3.2. Financial Instruments

Cash Equivalents

The Company had $249 and $10 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, 2019 and December 31, 2018, respectively. The Company's investments in held-to-maturity securities were held at amortized cost, which approximates fair value.

Restricted Cash and Cash Equivalents

The Company had restricted cash and cash equivalents of ~~$31,682~~$22 and $22 at September 30, ~~2017, which was primarily~~2019 and December 31, 2018. The Company's restricted cash and cash equivalents are related to balances that are restricted for payment of distributions to certain of the Company's current and former ~~employees. The Company had restricted cash~~employees and ~~cash equivalents of $186,216 at December 31, 2016, which was~~are reflected primarily related to balances deposited with and held as security by the lender under the Company's term loan facility and for distributions to certain of the Company's current and former employees. The current portion of restricted cash and cash equivalents was $8,626 and $160,527 at September 30, 2017 and December 31, 2016, respectively. The noncurrent portion of restricted cash and cash equivalents was $23,056 and $25,689 at September 30, 2017 and December 31, 2016, respectively, and is reflected in ~~deferred charges and~~ other assets, net in the consolidated balance sheets.

~~Available-for-Sale Marketable Securities~~

3. Accounts Receivable

Accounts receivable consist of the following:



	September 30, 2019			December 31, 2018
Trade customers	$	1,052		$	969
Related parties	6			6
Allowance for doubtful accounts	(21		)	(23		)
	1,037			952
Federal and state taxes	29			57
Other	28			28
Accounts receivable, net	$	1,094		$	1,037

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

4. Inventories

Inventories consist of the following:



	September 30, 2019		December 31, 2018
Finished products	$	541	$	657
Feedstock, additives, chemicals and other raw materials	210		203
Materials and supplies	155		154
Inventories	$	906	$	1,014

5. Leases

The Company ~~had no available-for-sale securities~~is obligated under various long-term and short-term operating leases for rail cars, buildings, land and other transportation and storage assets. The Company determines whether an arrangement is, or contains, a lease at ~~September 30, 2017 or~~contract inception. Some of the Company's arrangements contain both lease and non-lease components. For certain transportation equipment leases, the Company accounts for the lease and non-lease components as a single lease component. The Company records right-of-use assets and corresponding lease liabilities for operating leases with terms greater than one year. Operating lease right-of-use assets and liabilities are recorded at ~~December 31, 2016.~~

~~There were no sales or maturities~~the present value of ~~available-for-sale securities during~~ the ~~three~~fixed lease payments over the life of the lease. The majority of the Company's leases do not provide an implicit rate. Therefore, the Company uses its incremental borrowing rate at lease commencement to measure operating lease right-of-use assets and ~~nine months ended September 30, 2017. The proceeds from sales~~lease liabilities. Certain of the Company's leases provide for renewal and ~~maturities of available-for-sale securities~~purchase options. Renewal and purchase options are evaluated at lease commencement and included in the lease term if they are reasonably certain to be exercised. Short-term leases are recognized in rental expense on a straight-line basis over the lease term and are not recorded in the consolidated ~~statement~~balance sheets. The Company's finance leases are not material to the consolidated financial statements.

Lease related asset and liability balances were as follows:



	September 30, 2019
Operating Leases
Right-of-use assets	$	417

Accrued and other liabilities	$	92
Operating lease liabilities	330
Total operating lease liabilities	$	422

Weighted Average Remaining Term (in years)	7
Weighted Average Lease Discount Rate	3.6		%

The Company's operating lease cost is comprised of ~~cash flows~~payments related to operating leases recorded in the consolidated balance sheet and short-term rental payments for leases that are not recorded in the ~~gross realized gains and losses included in~~consolidated balance sheet. Variable operating lease cost was not material to the consolidated statement of operations for the three and nine months ended September 30, ~~2016 are reflected in the table below.~~2019. The ~~cost~~components of ~~securities sold was determined using the specific identification method.~~operating lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2016 2016
Proceeds from sales and maturities of securities $ 360,506
$ 662,938
Gross realized gains 52,414
53,755
Gross realized losses (13 ) (35 )



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ⁽¹⁾	$	29	$	85
Short-term lease cost	15		43
Total operating lease cost	$	44	$	128

_____________


(1)	Includes fixed lease payments for operating leases recorded in the consolidated balance sheet.

~~4. Accounts Receivable~~

~~Accounts receivable consist of the following:~~

September 30,
2017 December 31,
2016
Trade customers $ 1,111,563
$ 819,739
Affiliates 7,601
7,982
Allowance for doubtful accounts (21,961 ) (17,991 )
1,097,203
809,730
Federal and state taxes 16,657
90,414
Other 29,119
38,599
Accounts receivable, net $ 1,142,979
$ 938,743

~~5. Inventories~~

~~Inventories consist of the following:~~

September 30,
2017 December 31,
2016
Finished products $ 488,061
$ 500,861
Feedstock, additives and chemicals 213,144
216,877
Materials and supplies 133,630
83,362
Inventories $ 834,835
$ 801,100

~~6. Property, Plant and Equipment~~

~~As of~~ ~~September 30, 2017~~, the Company had property, plant and equipment, net totaling $6,343,637. 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.

1211

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~Depreciation expense on property, plant and equipment~~Maturities of ~~$116,160~~ ~~and~~ ~~$75,143~~ ~~is primarily included in cost of sales in the consolidated statements of operations for the~~ ~~three months ended~~lease liabilities were as follows at September 30, ~~2017 and 2016, respectively. Depreciation expense on property, plant and equipment~~2019:



	Operating Leases
2019 (excluding the nine months ended September 30, 2019)	$	28
2020	100
2021	78
2022	64
2023	50
Thereafter	189
Total lease payments	509
Less: imputed interest	(87		)
Present value of lease liabilities	$	422

Future lease commitments for operating lease obligations were as follows at December 31, 2018:



	Operating Leases
2019	$	94
2020	89
2021	70
2022	56
2023	42
Thereafter	152
Total lease payments	$	503

Related Party Leases

The Company leases certain assets under operating leases with related parties. As of ~~$334,545 and $189,114 is primarily included in cost of sales in the consolidated statements of operations for the nine months ended~~ September 30, ~~2017~~2019, right-of-use assets and ~~2016, respectively.~~

~~7. Other Assets~~

~~Amortization expense on intangible~~the associated operating lease liabilities for related party operating leases were approximately $51. The Company recognized operating lease cost for fixed lease payments to related parties of $4 and ~~other assets included in cost of sales and selling, general and administrative expenses in the consolidated statements of operations~~$13 for the three and nine months ended September 30, ~~2017 and 2016 were as follows:~~2019, respectively.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Cost of sales $ 10,834
$ 10,061
$ 33,121
$ 24,452
Selling, general and administrative 26,792
9,114
81,323
13,888
Total amortization expense $ 37,626
$ 19,175
$ 114,444
$ 38,340

6. Goodwill

The gross carrying amounts ~~of goodwill~~ and ~~the~~ changes in the carrying amount of goodwill for the nine months ended September 30, ~~2017~~2019 were as follows:



	Olefins Segment		Vinyls Segment		Total
Balances at December 31, 2018	$	30	$	972	$	1,002
Goodwill acquired during the period	—		67		67
Effects of changes in foreign exchange rates	—		—		—
Balances at September 30, 2019	$	30	$	1,039	$	1,069

Olefins Segment Vinyls Segment Total
Balance at December 31, 2016 $ 29,990
$ 916,563
$ 946,553
Goodwill acquired during the period —
—
—
Measurement period adjustment —
54,605
54,605
Effects of changes in foreign exchange rates —
10,184
10,184
Balance at September 30, 2017 $ 29,990
$ 981,352
$ 1,011,342

The Company performed its annual impairment ~~tests~~assessment for the Vinyls reporting units induring the second quarter of ~~2017~~2019 and did not identify any impairment.

~~8. Term Loan~~

On August 10, 2016, an indirect subsidiary of the Company, Westlake International Holdings II C.V., a limited partnership organized under the laws of the Netherlands (the "CV Borrower"), entered into a credit agreement with Bank of America, N.A., as agent and lender, providing the CV Borrower with a $150,000 term loan facility. The term loan facility had a maturity date of March 31, 2017. The term loan was fully repaid in January 2017. The loans thereunder bore interest at a floating interest rate equal to LIBOR plus 2% per annum, payable in arrears on the last day of each three-month period following the date of funding and at maturity.

1312

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

7. LACC, LLC Joint Venture

In 2015, Eagle US 2 LLC ("Eagle"), a wholly-owned subsidiary of the Company, and Lotte Chemical USA Corporation, a subsidiary of Lotte Chemical Corporation ("Lotte"), formed a joint venture, LACC, LLC ("LACC"), to design, build and operate an ethylene facility with 2.2 billion pounds per year of ethylene production capacity. Pursuant to a contribution and subscription agreement between Eagle and LACC, Eagle contributed $225 to LACC to fund construction costs of the ethylene plant, representing approximately 12% membership interests in LACC.

On October 29, 2019, Eagle entered into a securities purchase agreement with Lotte, to purchase at least an additional 34.787% of the membership interests in LACC from Lotte for approximately $817 (the "Transaction"), pursuant to Eagle's exercise of a call option. The closing of the Transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and customary closing conditions. Eagle may receive additional membership interests in LACC subject to potential adjustments based upon the finalization of an audit and further negotiations between the parties concerning the purchase price.

The ethylene plant was built adjacent to the Company's chlor-alkali facility in Lake Charles. During the third quarter of 2019, the ethylene plant began commercial operations.

The Company accounts for its investment in LACC under the equity method of accounting. The LACC joint venture is a cost-sharing arrangement between the members of LACC. The members of LACC receive their proportionate shares of ethylene offtake each month and fund cash operating costs, excluding depreciation and amortization. As a result, LACC recognizes net losses equal to depreciation and amortization each period. The Company's equity in losses from LACC, which is equal to its share of depreciation and amortization expenses, is recognized in cost of sales in the consolidated statements of operations. The Company's investment in LACC is recorded as a component of other assets, net in the consolidated balance sheets. The Company's capital contributions to fund its share of capital expenditures are classified within investing activities in the consolidated statements of cash flows.

The Company's ethylene offtake from LACC was approximately 55 million pounds during the three months ended September 30, 2019.

Changes in the Company's investment in LACC for the nine months ended September 30, 2019 were as follows:



	Investment in LACC
Balance at December 31, 2018	$	183
Cash contributions	45
Depreciation and amortization	(1		)
Balance at September 30, 2019	$	227

Services Provided to LACC and Lotte

The Company provides certain utilities and other services to LACC and Lotte. Pursuant to a construction and reimbursement agreement, LACC and Lotte agreed to reimburse the Company for construction costs over a 6.5-year period beginning in 2020. In addition to the reimbursements for construction costs, the Company charges LACC and Lotte certain fixed fees under an operating, maintenance and logistics agreement. The Company accounts for the reimbursement of construction costs and the fixed fees as components of the total transaction price and recognize it ratably in net sales over approximately 25 years. The remaining performance obligations at September 30, 2019, representing these fixed components of the transaction price, was $61 and $84 from LACC and Lotte, respectively. In addition to the reimbursements for construction costs and other fixed fees, the Company charges LACC and Lotte certain variable fees.

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

8. Accounts and Notes Payable

Accounts and notes payable consist of the following:



	September 30, 2019		December 31, 2018
Accounts payable—third parties	$	475	$	504
Accounts payable to related parties	4		2
Notes payable	17		1
Accounts and notes payable	$	496	$	507

9. Long-Term Debt

Long-term debt consists of the following:

September 30, 2017 December 31, 2016
Principal
Amount
Unamortized
Premium,
Discount
and Debt
Issuance
Costs
Net
Long-term
Debt Principal
Amount Unamortized
Premium,
Discount
and Debt
Issuance
Costs Net
Long-term
Debt
Revolving credit facility $ —
$ —
$ —
$ 325,000
$ —
$ 325,000
4.625% senior notes due 2021 (the
   "4.625% Westlake 2021 Senior
   Notes")
624,793
21,881
646,674
624,793
26,837
651,630
4.625% senior notes due 2021
   (the "4.625% Subsidiary 2021 Senior
   Notes")
63,207
2,343
65,550
63,207
2,862
66,069
3.60% senior notes due 2022 250,000
(1,635 ) 248,365
250,000
(1,891 ) 248,109
4.875% senior notes due 2023 (the
   "4.875% Westlake 2023 Senior
   Notes")
433,793
11,791
445,584
433,793
13,431
447,224
4.875% senior notes due 2023
   (the "4.875% Subsidiary 2023 Senior
   Notes")
16,207
477
16,684
16,207
540
16,747
3.60% senior notes due 2026
   (the "3.60% 2026 Senior Notes")
750,000
(10,031 ) 739,969
750,000
(10,757 ) 739,243
Loan related to tax-exempt waste
   disposal revenue bonds due 2027
10,889
—
10,889
10,889
—
10,889
6 ½% tax-exempt senior notes due 2029 100,000
(861 ) 99,139
100,000
(916 ) 99,084
6 ¾% tax-exempt senior notes due 2032 250,000
(605 ) 249,395
250,000
(1,883 ) 248,117
6 ½% tax-exempt senior notes due 2035
   (the "6 ½% 2035 GO Zone Senior
   Notes")
89,000
(806 ) 88,194
89,000
(839 ) 88,161
6 ½% tax-exempt senior notes due 2035
   (the "6 ½% 2035 IKE Zone Senior
   Notes")
65,000
(578 ) 64,422
65,000
(602 ) 64,398
5.0% senior notes due 2046 (the "5.0%
   2046 Senior Notes")
700,000
(25,463 ) 674,537
700,000
(26,017 ) 673,983
Long-term debt, net $ 3,352,889
$ (3,487 ) $ 3,349,402
$ 3,677,889
$ 765
$ 3,678,654



	September 30, 2019							December 31, 2018
	Principal Amount		Unamortized Discount and Debt Issuance Costs			Net Long-term Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs			Net Long-term Debt
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes")	$	250	$	(1	)	$	249	$	250	$	(1	)	$	249
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")	750		(8		)	742		750		(9		)	741
Loan related to tax-exempt waste disposal revenue bonds due 2027	11		—			11		11		—			11
6 ½% senior notes due 2029 (the "6 ½% 2029 GO Zone Senior Notes")	100		(1		)	99		100		(1		)	99
6 ½% senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes")	89		(1		)	88		89		(1		)	88
6 ½% senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes")	65		—			65		65		—			65
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")	700		(24		)	676		700		(24		)	676
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")	500		(9		)	491		500		(9		)	491
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes")	250		(1		)	249		250		(2		)	248
1.625% senior notes due 2029 (the "1.625% 2029 Senior Notes")	764		(10		)	754		—		—			—
Total Long-term debt	$	3,479	$	(55	)	$	3,424	$	2,715	$	(47	)	$	2,668

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Credit Agreement

The Company has a ~~$1,000,000~~$1,000 revolving credit facility that ~~matures~~is scheduled to mature on ~~August 23, 2021~~July 24, 2023 (the "Credit Agreement"). The Credit Agreement bears interest at either (a) LIBOR plus a spread ranging from 1.00% to 1.75% or (b) Alternate Base Rate plus a spread ranging from 0.00% to 0.75% in each case depending on the credit rating of the Company. At September 30, ~~2017,~~2019, the Company had no0 borrowings outstanding under the Credit Agreement. As of September 30, ~~2017,~~2019, the Company had 0 outstanding letters of credit ~~totaling $45,414~~ and borrowing availability of ~~$954,586~~$1,000 under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of September 30, ~~2017,~~2019, the Company was in compliance with the total leverage ratio financial maintenance covenant. The Credit Agreement also contains certain events of default and if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the lenders. None of the Company's subsidiaries are required to guarantee the obligations of the Company under the Credit Agreement.

The Credit Agreement includes a $150 sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The Credit Agreement also provides for a discretionary $50 commitment for swingline loans to be provided on a same-day basis. The Company may also increase the size of the facility, in increments of at least $25, up to a maximum of $500, subject to certain conditions and if certain lenders agree to commit to such an increase.

1.625% Senior Notes due 2029

On July 17, 2019, the Company completed the registered public offering of €700 million aggregate principal amount of 1.625% Senior Notes due July 17, 2029 (the "1.625% 2029 Senior Notes"). The 1.625% 2029 Senior Notes will accrue interest from July 17, 2019 at a rate of 1.625% per annum, payable annually in arrears on July 17 of each year, beginning July 17, 2020. The indenture governing the 1.625% 2029 Senior Notes contains customary events of default and covenants that will restrict the Company and certain of its subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of its assets. The Company designated this euro-denominated debt as a non-derivative net investment hedge of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

As of September 30, 2019, the Company was in compliance with all of its long-term debt covenants.

Unamortized debt issuance costs on long-term debt were $30 and $25 at September 30, 2019 and December 31, 2018, respectively.

1415

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~3.60% Senior Notes due 2026 and 5.0% Senior Notes due 2046~~

In August 2016, the Company issued $750,000 aggregate principal amount of 3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes") and $700,000 aggregate principal amount of 5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes"). On March 27, 2017, the Company commenced registered exchange offers to exchange the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes for new notes that are identical in all material respects to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes, except that the offer and issuance of the new SEC-registered notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”). The exchange offers expired on April 24, 2017, and approximately 99.97% of the 3.60% 2026 Senior Notes and 100.00% of the 5.0% 2046 Senior Notes were exchanged. The 3.60% 2026 Senior Notes that were not exchanged pursuant to the exchange offers have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities law.

~~4.625% Senior Notes due 2021 and 4.875% Senior Notes due 2023~~

In September 2016, the Company issued $624,793 aggregate principal amount of 4.625% senior notes due 2021 (the “4.625% Westlake 2021 Senior Notes”) and $433,793 aggregate principal amount of 4.875% senior notes due 2023 (the “4.875% Westlake 2023 Senior Notes”) upon the closing of the Company's offers to exchange any and all of the $688,000 aggregate principal amount of the outstanding 4.625% senior notes due 2021 issued by Eagle Spinco Inc., a wholly-owned subsidiary of Axiall (“Eagle Spinco”), and the $450,000 aggregate principal amount of the outstanding 4.875% senior notes due 2023 issued by Axiall. In the exchange offers, $624,793 aggregate principal amount of 4.625% Westlake 2021 Senior Notes and $433,793 aggregate principal amount of 4.875% Westlake 2023 Senior Notes were issued by the Company, leaving outstanding $63,207 aggregate principal amount of the 4.625% 2021 senior notes (the "4.625% Subsidiary 2021 Senior Notes") and $16,207 aggregate principal amount of the 4.875% 2023 senior notes (the " 4.875% Subsidiary 2023 Senior Notes"). On March 27, 2017, the Company commenced registered exchange offers to exchange the 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes for new SEC-registered notes that are identical in all material respects to the 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes, except that the offer and issuance of the new notes have been registered under the Securities Act. The exchange offers expired on April 24, 2017, and 100.00% of both the 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes were exchanged.

~~GO Zone Bonds~~

During September 2017, the Company directed the Louisiana Local Government Authority Environmental Facilities and Community Development Authority (the “Authority”) to optionally redeem in full $250,000 aggregate principal amount of the 2007 Series revenue bonds (the “GO Zone Bonds”) on November 1, 2017. The GO Zone Bonds were issued by the Authority in December 2007 under the Gulf Opportunity Zone Act of 2005 (GO Zone Act) for the benefit of the Company and were subject to optional redemption by the Authority upon the direction of the Company at any time on or after November 1, 2017 for 100% of the principal plus accrued interest. In connection with the redemption of the Go Zone Bonds, the Authority is required to cause the GO Zone Bonds trustee to surrender the 6 ¾% tax exempt senior notes due November 2032 to the Senior Notes trustee for cancellation. The Company used cash on hand to fund the redemption of the GO Zone Bonds.

As of September 30, 2017, the Company was in compliance with all of the covenants with respect to the Credit Agreement, 3.60% 2026 Senior Notes, 5.0% 2046 Senior Notes, 4.625% Westlake 2021 Senior Notes, 4.875% Westlake 2023 Senior Notes, 3.60% Senior Notes Due 2022, 6 ½% tax-exempt senior notes due 2029, the 6 ¾% tax-exempt senior notes due 2032, the 6 ½% 2035 GO Zone Senior Notes, the 6 ½% 2035 IKE Zone Senior Notes and the waste disposal revenue bonds.

~~Unamortized debt issuance costs on Long-term debt were $21,547 and $24,113 at September 30, 2017 and December 31, 2016, respectively.~~

10. ~~Pension and Post-Retirement Benefits~~

In connection with the Merger, the Company assumed certain U.S. and non-U.S. pension plans and other post-retirement benefit plans covering Axiall employees. The Axiall pension plans are closed to new participants and provide benefits to certain employees and retirees. The other post-retirement benefit plans are unfunded and provide medical and life insurance benefits for certain employees and their dependents. See Note 2 for the fair value of pension and other post-retirement obligations assumed in the Merger.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Defined Benefit Plans~~

~~Components of net periodic benefit cost (income) for the Company's pension plans are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans
Service cost $ 1,336
$ 528
$ 315
$ 318
$ 4,007
$ 1,509
$ 315
$ 777
Expected administrative
expenses
—
—
730
—
—
—
730
—
Interest cost 6,198
615
2,191
622
18,594
1,754
1,553
1,763
Expected return on plan assets (9,976 ) (162 ) (3,800 ) (50 ) (29,928 ) (466 ) (5,260 ) (50 )
Amortization of net loss 297
217
338
—
892
663
978
—
Net periodic benefit cost
(income)
$ (2,145 ) $ 1,198
$ (226 ) $ 890
$ (6,435 ) $ 3,460
$ (1,684 ) $ 2,490

~~The Company made $8,108 of contributions to its U.S. pension plans and $659 of contributions to its non-U.S. pension plans during the~~ ~~first nine months of 2017. The Company made no contributions to its U.S. and non-U.S. pension plans during the first nine months of 2016.~~

The Company's funding policy for its U.S. plans is consistent with the minimum funding requirements of federal law and regulations, and, based on preliminary estimates, the Company expects to make contributions of approximately $2,569 to its U.S. pension plans and approximately $143 to its non-U.S. pension plans during the remainder of the fiscal year ending December 31, 2017.

~~Other Post-retirement Benefits~~

~~Components of net periodic benefit cost for the Company's other post-retirement benefits are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans U.S.
Plans Non-U.S.
Plans
Service cost $ 163
$ 14
$ 72
$ 1
$ 489
$ 41
$ 81
$ 1
Interest cost 500
35
250
3
1,499
100
540
3
Amortization of net loss 15
—
31
—
45
—
94
—
Net periodic benefit cost $ 678
$ 49
$ 353
$ 4
$ 2,033
$ 141
$ 715
$ 4

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~11. Stockholders' Equity~~

~~Changes in stockholders' equity for the~~ ~~nine months ended September 30, 2017 and 2016~~ ~~were as follows:~~

Common
Stock

Common
Stock,
Held in
Treasury

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests
Total
Balances at December 31,
   2016
$ 1,347
$ (319,339 ) $ 550,641
$ 3,412,286
$ (121,306 ) $ 368,416
$ 3,892,045
Net income —
—
—
501,849
—
21,429
523,278
Other comprehensive income
   (loss), net of income taxes:

Pension and other post-
   retirement benefits
   liability
—
—
—
—
1,057
(44 ) 1,013
Foreign currency
   translation adjustments
—
—
—
—
106,563
2,952
109,515
Other —
—
—
—
(260 ) —
(260 )
Shares issued—stock-
   based compensation
—
4,645
(2,441 ) —
—
—
2,204
Stock-based compensation,
   net of tax on stock options
   exercised
—
—
10,223
—
—
—
10,223
Dividends declared —
—
—
(76,491 ) —
—
(76,491 )
Distributions to
   noncontrolling interests
—
—
—
—
—
(20,767 ) (20,767 )
Issuance of Westlake
   Chemical Partners LP
   common units
—
—
—
—
—
110,739
110,739
Balances at September 30,
   2017
$ 1,347
$ (314,694 ) $ 558,423
$ 3,837,644
$ (13,946 ) $ 482,725
$ 4,551,499

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Common
Stock

Common
Stock,
Held in
Treasury

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests
Total
Balances at December 31,
   2015
$ 1,347
$ (258,312 ) $ 542,148
$ 3,109,987
$ (129,292 ) $ 296,053
$ 3,561,931
Net income —
—
—
299,914
—
14,656
314,570
Other comprehensive income
   (loss), net of income taxes

Pension and other post-
   retirement benefits
   liability
—
—
—
—
409
—
409
Foreign currency
   translation adjustments
—
—
—
—
15,758
—
15,758
Net unrealized holding
   gains on investments
—
—
—
—
4,999
—
4,999
Common stock repurchased —
(66,725 ) —
—
—
—
(66,725 )
Shares issued—stock-
   based compensation
—
5,057
(3,407 ) —
—
—
1,650
Stock-based compensation,
   net of tax on stock options
   exercised
—
—
7,778
—
—
—
7,778
Dividends declared —
—
—
(71,933 ) —
—
(71,933 )
Distributions to
   noncontrolling interests
—
—
—
—
—
(12,300 ) (12,300 )
Noncontrolling interest in
   acquired business
—
—
—
—
—
68,000
68,000
Balances at September 30,
   2016
$ 1,347
$ (319,980 ) $ 546,519
$ 3,337,968
$ (108,126 ) $ 366,409
$ 3,824,137

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 were as follows:



	Benefits Liability, Net of Tax			Cumulative Foreign Currency Exchange, Net of Tax			Total
Balances at December 31, 2017	$	43		$	(36	)	$	7
Other comprehensive income (loss) before reclassifications	20			(40		)	(20		)
Amounts reclassified from accumulated other comprehensive income (loss)	(11		)	—			(11		)
Net other comprehensive income (loss) attributable to Westlake Chemical Corporation	9			(40		)	(31		)
Balances at September 30, 2018	$	52		$	(76	)	$	(24	)

Balances at December 31, 2018	$	27		$	(89	)	$	(62	)
Other comprehensive income (loss) before reclassifications	—			(4		)	(4		)
Net other comprehensive income (loss) attributable to Westlake Chemical Corporation	—			(4		)	(4		)
Balances at September 30, 2019	$	27		$	(93	)	$	(66	)

Benefits
Liability,
Net of Tax

Cumulative
Foreign
Currency
Exchange,
Net of Tax

Net Unrealized
Holding Gains
(Losses) on
Investments,
Net of Tax
Total
Balances at December 31, 2016 $ 28,945
$ (150,202 ) $ (49 ) $ (121,306 )
Other comprehensive income (loss) before
reclassifications
—
106,563
(260 ) 106,303
Amounts reclassified from accumulated other
comprehensive loss
1,057
—
—
1,057
Net other comprehensive income (loss) for the period 1,057
106,563
(260 ) 107,360
Balances at September 30, 2017 $ 30,002
$ (43,639 ) $ (309 ) $ (13,946 )

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Benefits
Liability,
Net of Tax

Cumulative
Foreign
Currency
Exchange,
Net of Tax

Net Unrealized
Holding Gains
(Losses) on
Investments,
Net of Tax
Total
Balances at December 31, 2015 $ (8,607 ) $ (115,690 ) $ (4,995 ) $ (129,292 )
Other comprehensive income (loss) before
reclassifications
(252 ) 15,758
57,550
73,056
Amounts reclassified from accumulated other
comprehensive loss (income)
661
—
(52,551 ) (51,890 )
Net other comprehensive income for the period 409
15,758
4,999
21,166
Balances at September 30, 2016 $ (8,198 ) $ (99,932 ) $ 4
$ (108,126 )

~~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, 2017 and 2016~~:

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,
2017 2016 2017 2016
Amortization of pension and
   other post-retirement items

Net loss (1) $ (529 ) $ (369 ) $ (1,600 ) $ (1,072 )

Benefit from
   income taxes
193
141
543
411
(336 ) (228 ) (1,057 ) (661 )
Net unrealized gains on
   available-for-sale
   investments

Realized gain on available-for-sale investments Other income, net —
52,401
—
53,720

Provision for
   income taxes
—
(696 ) —
(1,169 )
—
51,705
—
52,551
Total reclassifications for the
   period
$ (336 ) $ 51,477
$ (1,057 ) $ 51,890

~~_____________~~


~~(1)~~	These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. For additional information, please read Note 13 (Employee Benefits) to the consolidated financial statements included in the ~~2016~~ ~~Form 10-K.~~

~~12. Stock-Based Compensation~~

Under the Westlake Chemical Corporation 2013 Omnibus Incentive Plan (as amended and restated, the "2013 Plan"), all employees and non-employee 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 non-employee 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 $5,972 and $1,502 for the three months ended September 30, 2017 and 2016,~~respectively, and $16,740 and $6,588 for the nine months ended September 30, 2017 and 2016, respectively.~~

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Under the Merger Agreement, all outstanding Axiall restricted stock units were assumed by the Company and converted into restricted stock units in respect of the Company's common stock, with the same terms and conditions except that upon settlement the award holders will receive the greater of (1) the value of $33.00 per Axiall restricted stock unit that was converted into a restricted stock unit in respect of the Company's common stock and (2) the value of the Company's common stock. The awards are classified as liability awards for financial accounting purposes and are re-measured at each reporting date until they vest.

~~13. Derivative Instruments~~

~~Commodity Risk Management~~

The Company uses derivative instruments to reduce price volatility risk on commodities, primarily ethane and natural gas. The Company does not use derivative instruments to engage in speculative activities. The Company had no derivative instruments that were designated as fair value hedges during the three and nine months ended September 30, 2017 and 2016.

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). The Company had non-hedge designated feedstock forward contracts for approximately 138,600,000 gallons and 12,500,000 MMBtu as of September 30, 2017 and for approximately 257,000,000 gallons and 8,500,000 MMBtu as of December 31, 2016.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Certain of the Company's derivative instruments are executed under an International Swaps and Derivatives Association ("ISDA") Master Agreement, which permits the Company and a counterparty to aggregate the amounts owed by each party under multiple transactions and replace them with a single net amount payable by one party to the other. The following tables present the Company's derivative assets and derivative liabilities reported in the consolidated balance sheets and derivative assets and derivative liabilities subject to enforceable master netting arrangements.

September 30, 2017
Net Presentation Gross Presentation
Net Assets (Liabilities) Presented in the Consolidated Balance Sheets Risk management assets—Commodity forward contracts Risk management liabilities—Commodity forward contracts
Accounts receivable, net
Derivative positions subject to enforceable master netting
   arrangements
$ 793
$ 2,778
$ (1,985 )
Derivative positions not subject to enforceable master netting
   arrangements
4,557
4,557
—
5,350
7,335
(1,985 )
Deferred charges and other assets, net
Derivative positions subject to enforceable master netting
arrangements —
—
—
Derivative positions not subject to enforceable master netting
arrangements 4,336
4,336
—
4,336
4,336
—
Accrued liabilities
Derivative positions subject to enforceable master netting
arrangements —
—
—
Derivative positions not subject to enforceable master netting
arrangements (704 ) —
(704 )
(704 ) —
(704 )
Other liabilities
Derivative positions subject to enforceable master netting
arrangements (1,410 ) 745
(2,155 )
Derivative positions not subject to enforceable master netting
arrangements (2,774 ) —
(2,774 )
(4,184 ) 745
(4,929 )
Risk management assets (liabilities)—Commodity forward
   contracts
$ 12,416
$ (7,618 )

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

December 31, 2016
Net Presentation Gross Presentation
Net Assets (Liabilities) Presented in the Consolidated Balance Sheets Risk management assets—Commodity forward contracts Risk management liabilities—Commodity forward contracts
Accounts receivable, net
Derivative positions subject to enforceable master netting
arrangements $ 1,498
$ 1,636
$ (138 )
Derivative positions not subject to enforceable master netting
arrangements 6,091
6,091
—
7,589
7,727
(138 )
Deferred charges and other assets, net
Derivative positions subject to enforceable master netting
arrangements —
—
—
Derivative positions not subject to enforceable master netting
arrangements 5,249
5,249
—
5,249
5,249
—
Accrued liabilities
Derivative positions subject to enforceable master netting
arrangements —
—
—
Derivative positions not subject to enforceable master netting
arrangements (1,349 ) —
(1,349 )
(1,349 ) —
(1,349 )
Other liabilities
Derivative positions subject to enforceable master netting
arrangements (436 ) 2,010
(2,446 )
Derivative positions not subject to enforceable master netting
arrangements (3,288 ) —
(3,288 )
(3,724 ) 2,010
(5,734 )
Risk management assets (liabilities)—Commodity forward
contracts
$ 14,986
$ (7,221 )

~~The impacts 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,
2017 2016 2017 2016
Commodity forward contracts Cost of sales $ 6,846
$ (7,840 ) $ (2,756 ) $ 7,784

~~See Note 14 for the fair value of the Company's derivative instruments.~~

~~14.~~11. 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.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Level 3: Unobservable inputs that are not corroborated by market 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, 2017
Level 1 Level 2 Total
Derivative instruments
Risk management assets—Commodity forward contracts $ 233
$ 12,183
$ 12,416
Risk management liabilities—Commodity forward contracts (6,183 ) (1,435 ) (7,618 )

December 31, 2016
Level 1 Level 2 Total
Derivative instruments
Risk management assets—Commodity forward contracts $ 878
$ 14,108
$ 14,986
Risk management liabilities—Commodity forward contracts (6,854 ) (367 ) (7,221 )

~~The Level 2 measurements for the Company's commodity contracts are derived using forward curves supplied by industry-recognized and 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, 2017 and 2016~~.

~~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 current~~ 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 ~~and current term loan~~ approximate their fair ~~values~~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 fair value of the~~ Company's long-term debt instruments ~~is determined using a~~are publicly-traded. A market approach, based upon quotes from financial reporting ~~services.~~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. The carrying and fair values of the Company's long-term debt are summarized in the table below.

September 30, 2017 December 31, 2016

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value
Revolving credit facility $ —
$ —
$ 325,000
$ 325,000
4.625% Westlake 2021 Senior Notes 646,674
646,486
651,630
650,847
4.625% Subsidiary 2021 Senior Notes 65,550
62,983
66,069
65,775
3.60% senior notes due 2022 248,365
255,733
248,109
251,725
4.875% Westlake 2023 Senior Notes 445,584
452,004
447,224
451,301
4.875% Subsidiary 2023 Senior Notes 16,684
16,842
16,747
16,501
3.60% 2026 Senior Notes 739,969
749,570
739,243
722,055
Loan related to tax-exempt waste disposal revenue bonds
due 2027
10,889
10,889
10,889
10,889
6 ½% tax-exempt senior notes due 2029 99,139
113,789
99,084
112,433
6 ¾% tax-exempt senior notes due 2032 249,395
251,250
248,117
258,818
6 ½% 2035 GO Zone Senior Notes 88,194
100,936
88,161
100,323
6 ½% 2035 IKE Zone Senior Notes 64,422
73,908
64,398
73,270
5.0% 2046 Senior Notes 674,537
760,739
673,983
691,712

2316

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~15.~~



	September 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.60% 2022 Senior Notes	$	249	$	255	$	249	$	248
3.60% 2026 Senior Notes	742		775		741		692
Loan related to tax-exempt waste disposal revenue bonds due 2027	11		11		11		11
6 ½% 2029 GO Zone Senior Notes	99		104		99		106
6 ½% 2035 GO Zone Senior Notes	88		94		88		95
6 ½% 2035 IKE Zone Senior Notes	65		68		65		69
5.0% 2046 Senior Notes	676		756		676		641
4.375% 2047 Senior Notes	491		493		491		417
3.50% 2032 GO Zone Refunding Senior Notes	249		266		248		233
1.625% 2029 Senior Notes	754		785		—		—

12. Income Taxes

The effective income tax ~~rate was 33.1%~~rates were 23.1% and 18.7% for the ~~third quarter of 2017.~~three months ended September 30, 2019 and 2018, respectively. The effective income tax rate for the ~~third quarter~~three months ended September 30, 2019 was above the statutory rate of ~~2017~~21.0% primarily due to state and foreign taxes. The effective income tax rate for the three months ended September 30, 2018 was below the U.S. federal statutory rate of ~~35.0%~~21.0% primarily due to ~~a higher domestic manufacturing deduction, depletion deductions,~~certain discrete tax benefit adjustments related to the remeasurement of state deferred tax balances and changes in income ~~attributable~~tax estimates due to ~~noncontrolling interests, research and development credits and~~ the ~~foreign earnings rate differential, partially offset by state income taxes.~~filing of the Company's 2017 U.S. federal tax return. The effective income tax rate, which was a benefit, was (10.3)% for three months ended September 30, 2016. The effective income tax rate for the third quarter of 2016 was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax related to the gain recognized on previously held outstanding shares of common stock of Axiall, the benefit in prior years'rates were 24.1% and current-year tax credits for increased research and development expenditures and adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger.

~~The effective income tax rate was 30.8%~~22.0% for the nine months ended September 30, ~~2017.~~2019 and 2018, respectively. The effective income tax rate for the nine months ended September 30, ~~2017~~2019 was ~~below~~above the ~~U.S. federal~~ statutory rate of ~~35.0%~~21.0% primarily due to ~~certain discrete adjustments, a higher domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, research~~state and ~~development credits and the~~ foreign ~~earnings rate differential, partially offset by state income~~ taxes. The effective income tax rate ~~was 29.1%~~ for the nine months ended September 30, ~~2016. The effective income tax rate for the 2016 period~~2018 was ~~below~~above the U.S. federal statutory rate of ~~35.0%~~21.0% primarily due to ~~the benefit of~~ state tax credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax related to the gain recognized on previously held outstanding shares of common stock of Axiall, the benefit in prior years' and current-year tax credits for increased research and development expenditures and adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger.

~~The Company files income tax returns in the U.S. federal jurisdiction and in various states~~ and foreign ~~jurisdictions. During the second quarter of 2017, the Internal Revenue Service began an audit of the Company for the tax years 2012 to 2014.~~taxes.

~~16.~~ 13. Earnings and Dividends per Share

Earnings per Share

The Company has unvested restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. ~~Basic~~The computation of basic earnings per share ~~for the periods are~~is based upon the weighted average number of shares of common stock outstanding during ~~the periods.~~each period. Diluted earnings per share ~~include~~includes the ~~effect~~effects of certain stock ~~options.~~options and performance stock units.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income attributable to Westlake Chemical Corporation	$	158		$	308		$	349		$	873
Less:
Net income attributable to participating securities	(1		)	(1		)	(2		)	(4		)
Net income attributable to common shareholders	$	157		$	307		$	347		$	869

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to Westlake Chemical
Corporation
$ 210,832
$ 65,662
$ 501,849
$ 299,914
Less:
Net income attributable to participating securities (1,117 ) (294 ) (2,630 ) (1,347 )
Net income attributable to common shareholders $ 209,715
$ 65,368
$ 499,219
$ 298,567

2417

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

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,
	2019		2018		2019		2018
Weighted average common shares—basic	128,216,105		129,427,328		128,408,841		129,512,097
Plus incremental shares from:
Assumed exercise of options and vesting of performance stock units	336,255		624,964		362,103		671,104
Weighted average common shares—diluted	128,552,360		130,052,292		128,770,944		130,183,201

Earnings per common share attributable to Westlake Chemical Corporation:
Basic	$	1.22	$	2.36	$	2.70	$	6.70
Diluted	$	1.22	$	2.35	$	2.69	$	6.67

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Weighted average common shares—basic 129,069,186
128,793,661
129,033,597
129,519,577
Plus incremental shares from:
Assumed exercise of options 819,782
586,295
756,368
584,320
Weighted average common shares—diluted 129,888,968
129,379,956
129,789,965
130,103,897

Earnings per common share attributable to
Westlake Chemical Corporation:

Basic $ 1.62
$ 0.51
$ 3.87
$ 2.31
Diluted $ 1.61
$ 0.51
$ 3.85
$ 2.29

Excluded from the computation of diluted earnings per share are options to purchase ~~335,276~~805,878 and ~~620,010~~172,194 shares of common stock for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~291,888~~564,676 and ~~577,254~~143,439 shares of common stock for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive.

Dividends per Share

Dividends per common share for the three and nine months ended September 30, 2019 and 2018 were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Dividends per common share	$	0.2625	$	0.2500	$	0.7625	$	0.6700

~~17.~~14. Supplemental Information

Accrued and Other Liabilities

Accrued and other liabilities were ~~$609,472~~$742 and ~~$537,483~~$676 at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively. Accrued rebates, ~~and accrued income taxes,~~ which are ~~components~~a component of accrued and other liabilities, were ~~$110,862~~$108 and ~~$72,187, respectively,~~$125 at September 30, ~~2017~~2019 and ~~$77,985 and $10,891, respectively, at~~ December 31, ~~2016. No~~2018, respectively. Other than the lease liability disclosed in Note 5, no other component of accrued and other liabilities was more than five percent of total current liabilities. Accrued liabilities with ~~affiliates~~related parties were ~~$30,609~~$26 and ~~$10,551~~$54 at September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.

~~Non-cash Investing Activity~~Restructuring, Transaction and Integration-related Costs

~~The change in capital expenditure accrual increasing additions~~For the three months ended September 30, 2019, the restructuring, transaction and integration-related costs of $8 primarily consisted of restructuring expenses of $3 related to ~~property, plant~~certain Vinyls segment operations and ~~equipment was $8,082 for~~integration-related consulting fees and costs associated with acquisitions of $5. For the three months ended September 30, 2018, the restructuring, transaction and integration-related costs of $5 primarily consisted of integration-related consulting fees.

For the nine months ended September 30, ~~2017.~~2019, the restructuring, transaction and integration-related costs of $32 primarily consisted of restructuring expenses of $22 related to certain Vinyls segment operations and integration-related consulting fees and costs associated with acquisitions of $10. The ~~change in capital expenditure accrual increasing additions to property, plant and equipment was $23,878 for~~restructuring expenses consisted of charges associated with the write-off of certain assets. For the nine months ended September 30, ~~2016.~~2018, the restructuring, transaction and integration-related costs of $20 primarily consisted of integration-related consulting fees and acquisition costs.

~~Other Income, Net~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Interest income $ 644
$ 537
$ 1,578
$ 6,900
Dividend income 127
574
250
1,499
Acquisition-related financing costs —
(11,420 ) —
(12,220 )
Foreign exchange currency loss, net (3,197 ) (1,281 ) (9,483 ) (2,435 )
Gain realized on previously held shares of Axiall
common stock
—
49,080
—
49,080
Gains from sales of securities, net —
3,321
—
4,640
Income from non-consolidated subsidiaries 3,855
1,475
11,066
7,213
Other 629
(1,021 ) 3,180
(2,586 )
Other income, net $ 2,058
$ 41,265
$ 6,591
$ 52,091

2518

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~18.~~Other Income, Net

For the three months ended September 30, 2019, other income, net included income from unconsolidated subsidiaries, an insurance recovery and interest income on cash and cash equivalents of $7, $5 and $8, respectively. For the three months ended September 30, 2018, other income, net included income from pension and postretirement plans (including a one-time settlement gain), income from unconsolidated subsidiaries and interest income on cash and cash equivalents of $16, $5 and $4, respectively.

For the nine months ended September 30, 2019, other income, net included income from unconsolidated subsidiaries, an insurance recovery and interest income on cash and cash equivalents of $12, $5 and $16, respectively. For the nine months ended September 30, 2018, other income, net included income from pension and postretirement plans (including a one-time settlement gain), income from unconsolidated subsidiaries, gain on redemption of senior notes and interest income on cash and cash equivalents of $23, $17, $6 and $13, respectively.

Non-cash Investing Activity

The change in capital expenditure accrual resulted in an increase in additions to property, plant and equipment by $24 for the nine months ended September 30, 2019. The change in capital expenditure accrual resulted in a decrease in additions to property, plant and equipment by $8 for the nine months ended September 30, 2018.

Operating Lease Supplemental Cash Flow

Supplemental cash flow information related to leases was as follows:



	Nine Months Ended September 30, 2019
Operating cash flows from operating leases ⁽¹⁾	$	83
Right-of-use assets obtained in exchange for operating lease obligations	70

_____________


(1)	Includes cash paid for amounts included in the measurement of operating lease liabilities recorded in the consolidated balance sheets. For the nine months ended September 30, 2019, finance lease related cash flows used for operating and financing activities were not material to the consolidated statement of cash flows.

15. Acquisition

NAKAN^TM

On January 2, 2019, the Company acquired all of the outstanding equity interests in the parent entity of the NAKAN^TMglobal compounding solutions business. NAKAN's products are used in a wide-variety of applications, including in the automotive, building and construction, and medical industries.

The closing purchase price of $249 was paid with available cash on hand. The acquisition is being accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of NAKAN are included in the Vinyls segment.

NAKAN's net sales and earnings since the acquisition date were not material to the Company's consolidated statement of operations for the nine months ended September 30, 2019. The acquisition-related costs recognized in the consolidated statement of operation for the nine months ended September 30, 2019 were not material. The pro forma impact of this business combination has not been presented as it is not material to the Company's consolidated statements of operations for the nine months ended September 30, 2019 and 2018.

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

The following table summarizes the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of consideration transferred is based on management's estimates, judgments and assumptions. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $40 was recorded. The goodwill recognized is primarily attributable to the expected values to be achieved from the acquisition.

The information below represents the preliminary purchase price allocation:



Cash	$	10
Accounts receivable	53
Inventories	40
Prepaid expenses and other current assets	7
Property, plant and equipment	75
Operating lease right-of-use assets	3
Intangible assets:
Customer relationships (weighted average lives of 17 years)	65
Technology (weighted average lives of 14 years)	40
Trade name (life of 15 years)	25
Other assets	12
Total assets acquired	330
Accounts and notes payable	57
Accrued and other liabilities	18
Deferred income taxes	31
Pension and other post-retirement benefits	4
Operating lease liabilities	3
Other long-term liabilities	8
Total liabilities assumed	121
Total identifiable net assets acquired	209
Goodwill	40
Total purchase consideration	$	249

16. Commitments and Contingencies

The Company is involved in a number of legal and regulatory matters, principally environmental in nature, that are incidental to the normal conduct of its business, including lawsuits, investigations and claims. The ~~outcomes~~outcome of these matters are inherently unpredictable. The Company believes that, in the aggregate, the outcome of all known legal and regulatory matters will not have a material adverse effect on its consolidated financial statements; however, under certain circumstances, if required to recognize costs in a specific period, when combined with other factors, outcomes with respect to such matters may be material to the Company's consolidated statements of operations in ~~any particular period in which costs, if any, are recognized.~~such period. The Company's assessment of the potential impact of environmental matters, in particular, is subject to uncertainty due to the complex, ongoing and evolving process of investigation and remediation of such environmental matters, and the potential for technological and regulatory developments. In addition, the impact of evolving claims and programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs creates further uncertainty of the ultimate resolution of these matters. The Company anticipates that the resolution of many legal and regulatory matters, and in particular environmental matters, will occur over an extended period of time.

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

The Company and other caustic soda producers were named as defendants in multiple purported class action civil lawsuits filed since March 2019 in the U.S. District Court for the Western District of New York. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. The other defendants named in the lawsuits are Olin Corporation, K.A. Steel Chemicals (a wholly owned subsidiary of Olin), Occidental Petroleum Corporation, Occidental Chemical Corporation d/b/a OxyChem, Shin-Etsu Chemical Co., Ltd., Shintech Incorporated, Formosa Plastics Corporation, and Formosa Plastics Corporation, U.S.A. Each of the lawsuits is filed on behalf of the respective named plaintiff or plaintiffs and a putative class comprised of either direct purchasers or indirect purchasers of caustic soda in the U.S. Plaintiffs seek an unspecified amount of damages and injunctive relief. The Company has already moved to dismiss the majority of the lawsuits filed and plan to file similar motions with respect to the remaining lawsuits. At this time, the Company is not able to estimate the impact, if any, that these lawsuits could have on the Company's consolidated financial statements either in the current period or in future periods.

Environmental. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company had reserves for environmental contingencies totaling approximately ~~$47,409~~$46 and ~~$48,817,~~$54, respectively, most of which was classified as noncurrent liabilities. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.

From time to time the Company receives notices or inquiries from government entities regarding alleged violations of environmental laws and regulations pertaining to, among other things, the disposal, emission and storage of chemical substances, including hazardous wastes. Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions, unless the Company reasonably believes such sanctions would not exceed $100.

In May 2013, an amendment to an existing consent order agreed to by the West Virginia Department of Environmental Protection and a predecessor of Axiall required that it, among other things, pay a penalty in the amount of $449 and continue certain corrective action associated with discharges of hexachlorocyclohexane (commonly referred to as BHC) from the Natrium, West Virginia facility's effluent discharge outfalls. The penalty was paid and corrective actions required are on-going per a December 2016 agreement to extend the compliance date under the amended consent order.

~~In May 2013 and September 2013,~~Calvert City Proceedings. For several years, the Environmental Protection Agency (the "EPA") ~~conducted inspections~~has been conducting remedial investigation and feasibility studies at the Company's ~~Plaquemine, Louisiana~~Calvert City, Kentucky facility pursuant to ~~requirements~~the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). As the current owner of the ~~federal Clean Air Act Section 112(r) Risk Management Program~~Calvert City facility, the Company was named by the EPA as a potentially responsible party ("PRP") along with Goodrich Corporation ("Goodrich") and ~~Title V. As~~its successor-in-interest, PolyOne Corporation ("PolyOne"). On November 30, 2017, the EPA published a ~~result~~draft Proposed Plan, incorporating by reference an August 2015 draft Remedial Investigation ("RI") report, an October 2017 draft Feasibility Study ("FS") report and a new Technical Impracticability Waiver document dated December 19, 2017. On June 18, 2018, the EPA published an amendment to its Proposed Plan. The amended Proposed Plan describes a final remedy for the onshore portion of the ~~inspections,~~site comprised of a containment wall, targeted treatment and supplemental hydraulic containment. The amended Proposed Plan also describes an interim approach to address the contamination under the river that would include recovery of any mobile contaminants by an extraction well along with further study of the extent of the contamination and potential treatment options. The EPA's estimated cost of implementation is $107, with an estimated $1 to $3 in annual operation and maintenance ("O&M") costs. In September 2018, the EPA ~~identified areas~~published the Record of ~~concern~~Decision ("ROD") for the site, formally selecting the preferred final and interim remedies outlined in the amended Proposed Plan. In October 2018, EPA issued Special Notice letters to the PRPs for the remedial design phase of work under the ROD. In April 2019, the PRPs and the ~~Company subsequently engaged in negotiations to resolve alleged violations. A Consent~~EPA entered into an Administrative Settlement Agreement and ~~Final~~ Order ~~(“CAFO”) was filed in~~on Consent for Remedial Design. In October ~~2016, pursuant to which~~2019, the PRPs received a special notice letter from the EPA requesting that the parties begin negotiations regarding a Consent Decree for the Remedial Action at the Calvert City site. The Company's allocation of liability for remedial and O&M costs at the Calvert City site, if any, is governed by a series of agreements between the Company, ~~paid civil penalties in the amount of $167.~~

~~The LDEQ has issued notices of violations ("NOVs") regarding the Company's olefins facilities in Lake Charles, Louisiana for various air~~Goodrich and ~~water compliance issues. The Company has reached an agreement with the LDEQ to settle certain of the NOVs along with other alleged violations not made~~PolyOne. These agreements are the subject of ~~any specific NOV~~further litigation as described below.

In connection with the 1990 and 1997 acquisitions of the Goodrich chemical manufacturing complex in ~~two separate settlement agreements, pursuant~~Calvert City, Goodrich agreed to ~~which~~indemnify the Company ~~paid $192 in civil penalties.~~

~~During September 2010,~~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 ~~vinyls facilities~~operations. The soil and groundwater at the complex, which does not include the Company's nearby PVC facility, had been extensively contaminated by Goodrich's operations. In 1993, Goodrich spun off the predecessor of 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 ~~north Lake Charles~~December 2007 and ~~Plaquemine each received~~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; and (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. In May 2017, PolyOne filed a ~~Consolidated Compliance Order~~demand for arbitration. In this proceeding, PolyOne sought to readjust the percentage allocation of future costs and ~~Notice of Potential Penalty, alleging violations of various requirements of those facilities' air permits, based largely on self-reported permit deviations related~~ to record-keeping violations. The Company has been negotiating a possible global settlement of these and several other matters with the LDEQ. The Company believes the resolution of these matters may require the payment of a monetary sanction in excess of $100.

~~In April 2015, Axiall received a communication~~recover approximately $11 from the ~~EPA related to, among other things,~~Company in reimbursement of previously paid remediation costs. The Company's cross demand for arbitration seeking unreimbursed remediation costs incurred during the ~~EPA's investigation~~relevant period was dismissed from the proceedings when PolyOne made payment in full at the beginning of the 2012 and 2013 fires that occurred at its VCM plant in Lake Charles. In late 2015, Axiall settled this matter with the EPA, with such settlement including on-going supplemental environmental projects and a penalty payment of $878.arbitration hearing.

2621

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

~~For several years, the EPA has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares.~~ On ~~April 21, 2014,~~July 10, 2018, PolyOne sued the Company ~~received a Clean Air Act Section 114 Information Request from~~in the ~~EPA which~~U.S. District Court for the Western District of Kentucky, and sought ~~information regarding flares~~to invalidate the arbitration provisions in the parties' 2007 settlement agreement and enjoin the arbitration it had initiated in 2017. On July 30, 2018, the district court refused to enjoin the arbitration and, on January 15, 2019, the court granted the Company's motion to dismiss PolyOne's suit. On February 13, 2019, PolyOne appealed those decisions to the U.S. Court of Appeals for the Sixth Circuit. The court of appeals issued an opinion and final order on September 6, 2019, affirming the district court.

The arbitration hearing began in August 2018 and concluded in December 2018. On May 22, 2019, the arbitration panel issued its final award. It determined that PolyOne was responsible for 100% of the allocable costs at issue in the proceeding and that PolyOne would remain responsible for 100% of the costs to operate the existing groundwater remedy at the Calvert City site. In August 2019, PolyOne filed a motion to vacate before the U.S. District Court for the Western District of Kentucky, ~~and certain Lake Charles facilities.~~seeking to invalidate the final award under the Federal Arbitration Act. The ~~EPA has informed~~Company filed a motion to confirm the final award in that same action. The action is currently pending.

At this time, the Company is not able to estimate the impact, if any, that the ~~information provided leads the EPA to believe that some~~issuance of the ~~flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate~~final award in the ~~Company to take corrective actions relating to the alleged noncompliance. The Company believes the resolution of these matters may require the payment of a monetary sanction in excess of $100.~~

~~The Company does not believe that resolutions of~~arbitration proceeding, or any ~~or all of these matters will~~subsequent judicial proceeding, could have ~~a material adverse effect~~ on the Company's consolidated financial ~~condition, results~~statements either in the current period or in later periods. Any cash expenditures that the Company might incur in the future with respect to the remediation of ~~operations or cash flows.~~contamination at the Calvert City 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.

Environmental Remediation: Reasonably Possible Matters. The Company's assessment of the potential impact of environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments. As such, in addition to the amounts currently reserved, the Company may be subject to reasonably possible loss contingencies related to environmental matters in the range of ~~$40,000~~$65 to ~~$80,000.~~

~~Commitments.~~ In connection with the Merger, the Company became a party to a joint venture investment with Lotte Chemical USA Corporation to build an ethylene facility, LACC, LLC ("LACC"). The ethylene facility is located adjacent to the Company's vinyls facility in Lake Charles. Pursuant to the contribution and subscription agreement, the Company agreed to make a maximum capital commitment to LACC of up to $225,000 to fund the construction costs of the ethylene plant, which represents approximately 10.0% of the interests in LACC. The construction of the ethylene plant commenced in January 2016, with an anticipated start-up in 2019. As of September 30, 2017, the Company had funded approximately $106,405 of the Company's portion of the construction costs of the ethylene plant.$130.

~~19.~~17. Segment Information

The Company operates in ~~two~~2 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,				Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Net external sales
Olefins
Polyethylene	$	377,269	$	380,810	$	1,121,603	$	1,098,500	$	315	$	396	$	997	$	1,152
Styrene, feedstock and other	124,974		116,555		412,869		324,369		133		145		387		374
Total Olefins	502,243		497,365		1,534,472		1,422,869		448		541		1,384		1,526
Vinyls
PVC, caustic soda and other	1,252,963		599,276		3,541,409		1,492,650		1,253		1,372		3,879		4,126
Building products	353,683		182,387		954,785		424,757		365		342		972		988
Total Vinyls	1,606,646		781,663		4,496,194		1,917,407		1,618		1,714		4,851		5,114
	$	2,108,889	$	1,279,028	$	6,030,666	$	3,340,276	$	2,066	$	2,255	$	6,235	$	6,640

Intersegment sales
Olefins	$	106,722	$	30,614	$	290,658	$	85,856	$	72	$	136	$	238	$	368
Vinyls	260		2,130		871		2,719		—		—		1		1
	$	106,982	$	32,744	$	291,529	$	88,575	$	72	$	136	$	239	$	369

2722

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Income (loss) from operations
Olefins	$	165,438		$	118,475		$	488,532		$	408,274		$	92		$	162		$	211		$	483
Vinyls	216,515			22,235			431,276			136,559			153			251			383			788
Corporate and other	(16,206		)	(94,147		)	(51,647		)	(116,056		)	(19		)	(17		)	(40		)	(70		)
	$	365,747		$	46,563		$	868,161		$	428,777		$	226		$	396		$	554		$	1,201

Depreciation and amortization
Olefins	$	35,029		$	36,649		$	111,244		$	95,582		$	35		$	35		$	106		$	102
Vinyls	117,490			56,136			331,585			128,691			141			124			413			362
Corporate and other	1,115			1,444			5,704			2,920			2			2			6			9
	$	153,634		$	94,229		$	448,533		$	227,193		$	178		$	161		$	525		$	473

Other income (expense), net
Other income, net
Olefins	$	(184	)	$	1,101		$	1,555		$	3,706		$	1		$	1		$	4		$	4
Vinyls	(970		)	(1,226		)	1,087			1,722			12			16			18			32
Corporate and other	3,212			41,390			3,949			46,663			8			6			10			17
	$	2,058		$	41,265		$	6,591		$	52,091		$	21		$	23		$	32		$	53

Provision for (benefit from) income taxes
Olefins	$	58,218		$	31,956		$	152,482		$	136,429		$	18		$	34		$	45		$	107
Vinyls	60,784			(3,912		)	114,979			29,655			31			44			76			174
Corporate and other	(10,383		)	(34,596		)	(34,771		)	(36,752		)	1			(5		)	(1		)	(26		)
	$	108,619		$	(6,552	)	$	232,690		$	129,332		$	50		$	73		$	120		$	255

Capital expenditures
Olefins	$	20,960		$	96,469		$	70,043		$	285,359		$	25		$	33		$	87		$	81
Vinyls	107,515			83,523			329,968			180,392			165			162			511			420
Corporate and other	4,894			178			14,260			1,579			3			—			6			6
	$	133,369		$	180,170		$	414,271		$	467,330		$	193		$	195		$	604		$	507

A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Income from operations	$	226		$	396		$	554		$	1,201
Interest expense	(31		)	(28		)	(89		)	(96		)
Other income, net	21			23			32			53
Income before income taxes	$	216		$	391		$	497		$	1,158

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Income from operations $ 365,747
$ 46,563
$ 868,161
$ 428,777
Interest expense (40,036 ) (24,366 ) (118,784 ) (36,966 )
Other income (expense), net 2,058
41,265
6,591
52,091
Income before income taxes $ 327,769
$ 63,462
$ 755,968
$ 443,902



	September 30, 2019		December 31, 2018
Total assets
Olefins	$	2,026	$	2,024
Vinyls	9,683		8,879
Corporate and other	1,398		699
	$	13,107	$	11,602

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in ~~thousands~~millions of dollars, except share amounts and per share data)

September 30,
2017 December 31,
2016
Total assets
Olefins $ 2,015,888
$ 2,092,617
Vinyls 8,695,509
8,287,204
Corporate and other 532,728
510,432
$ 11,244,125
$ 10,890,253

~~20.~~18. Westlake Chemical Partners LP ~~Offerings~~

In ~~March~~ 2014, wethe Company formed Westlake Chemical Partners LP ("WLKP") to operate, acquire and develop ethylene production facilities and related assets. ~~On August 4,~~Also in 2014, WLKP completed its initial public offering ~~(the "IPO")~~ of 12,937,500 common ~~units at a price of $24.00 per unit. Net proceeds to~~units.

On March 29, 2019, WLKP from the sale of the units was approximately $286,100, net of underwriting discounts, structuring fees and estimated offering expenses of approximately $24,400. At the consummation of the IPO, WLKP's assets consisted of a 10.6%purchased an additional 4.5% newly issued limited partner interest in Westlake Chemical OpCo LP ("OpCo")~~, as well as~~ for approximately $201 and completed a private placement of 2,940,818 common units at a price of $21.40 per common unit for total proceeds of approximately $63. TTWF LP, the ~~general~~Company's principal stockholder and a related party, acquired 1,401,869 units out of 2,940,818 common units issued in the private placement.

At September 30, 2019, WLKP had a 22.8% limited partner interest in ~~OpCo. Immediately after the IPO,~~OpCo, and the Company retained ~~an 89.4%~~a 77.2% limited partner interest in OpCo and a significant interest in ~~WLKP. The initial public offering represented~~WLKP through the ~~sale~~Company's ownership of ~~47.8%~~WLKP's general partner, 40.1% of ~~the common units in WLKP.~~

~~On April 29, 2015, WLKP purchased an additional 2.7% newly-issued~~ limited partner interest ~~in OpCo. On September 29, 2017, WLKP purchased an additional 5.0% newly-issued limited partner interest in OpCo.~~

~~On September 29, 2017, WLKP completed a secondary offering~~(consisting of ~~5,175,000~~14,122,230 common ~~units at a price of $22.00 per unit. Net proceeds to WLKP from the sale of the units was $110,739, net of underwriting discounts, structuring fees~~units) and estimated offering expenses of approximately $3,111. At September 30, 2017, WLKP had a 18.3% limited partner interest in OpCo, and the Company retained a 81.7% limited partner interest in OpCo and a significant interest in WLKP.incentive distribution rights.

~~21.~~19. Subsequent ~~Events~~Event

~~Subsequent events were evaluated~~On October 29, 2019, the Company, through one of its subsidiaries, Eagle US 2 LLC ("Eagle"), entered into a securities purchase agreement with Lotte, to purchase at least an additional 34.787% of the ~~date on which~~membership interests in LACC from Lotte for approximately $817 pursuant to Eagle's exercise of a call option (the "Transaction"). Prior to the ~~consolidated financial statements were issued.~~Transaction, Eagle owned approximately 12% of the membership interests in LACC. See Note 7 for additional information.

~~22. Guarantor Disclosures~~

The Company's payment obligations under the 3.60% senior notes due 2022, the 3.60% 2026 Senior Notes, the 5.0% 2046 Senior Notes, 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes are fully and unconditionally guaranteed by each of its current and future domestic subsidiaries that guarantee other debt of the Company or of another guarantor of those notes in excess of ~~$5,000~~ (the "Guarantor Subsidiaries"). Each Guarantor Subsidiary is 100% owned by Westlake Chemical Corporation (the "100% Owned Guarantor Subsidiaries"). In October 2016, the Company executed a Joinder Agreement with the Administrative Agent of the Credit Agreement, whereby certain subsidiaries of the Company were added as Guarantor Subsidiaries. These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the 100% owned Guarantor Subsidiaries, and the remaining subsidiaries that do not guarantee the 3.60% senior notes due 2022 , the 3.60% 2026 Senior Notes, the 5.0% 2046 Senior Notes, 4.625% Westlake 2021 Senior Notes and the 4.875% Westlake 2023 Senior Notes (the "Non-Guarantor Subsidiaries"), together with consolidating eliminations necessary to present the Company's results on a consolidated basis.

In August 2016, certain of the Company's subsidiary guarantors were released from their guarantees of the Company's 3.60% senior notes due 2022 in connection with the replacement of the Company's revolving credit facility. Westlake Chemical OpCo LP, which was previously separately presented as a less than 100% owned guarantor, and certain of the Company's other 100% owned subsidiaries that were previously presented as guarantors, are now reflected as Non-Guarantor Subsidiaries in the condensed consolidating guarantor financial information. Prior periods were retrospectively adjusted to conform to the current presentation of Guarantor Subsidiaries and Non-Guarantor Subsidiaries.

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information as of September 30, 2017~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Balance Sheet
Current assets
Cash and cash equivalents $ 334,111
$ 33,089
$ 311,033
$ —
$ 678,233
Accounts receivable, net 3,060,591
4,048,824
432,238
(6,398,674 ) 1,142,979
Inventories —
631,322
203,513
—
834,835
Prepaid expenses and other current assets 16,616
31,785
22,365
(35,906 ) 34,860
Restricted cash —
1,275
7,351
—
8,626
Total current assets 3,411,318
4,746,295
976,500
(6,434,580 ) 2,699,533
Property, plant and equipment, net —
4,330,104
2,013,533
—
6,343,637
Other assets, net
Goodwill —
854,896
156,446
—
1,011,342
Customer relationships, net —
493,960
141,924
—
635,884
Other intangible assets, net —
92,155
74,011
—
166,166
Deferred charges and other assets, net 9,890,164
551,732
1,372,070
(11,426,403 ) 387,563
Total other assets, net 9,890,164
1,992,743
1,744,451
(11,426,403 ) 2,200,955
Total assets $ 13,301,482
$ 11,069,142
$ 4,734,484
$ (17,860,983 ) $ 11,244,125
Current liabilities
Accounts payable $ 5,821,323
$ 830,824
$ 128,673
$ (6,220,016 ) $ 560,804
Accrued liabilities 155,106
436,816
232,114
(214,564 ) 609,472
Total current liabilities 5,976,429
1,267,640
360,787
(6,434,580 ) 1,170,276
Long-term debt, net 3,256,280
4,334,142
223,578
(4,464,598 ) 3,349,402
Deferred income taxes —
1,577,209
106,587
(22,882 ) 1,660,914
Pension and other liabilities —
364,011
148,023
—
512,034
Total liabilities 9,232,709
7,543,002
838,975
(10,922,060 ) 6,692,626
Total Westlake Chemical Corporation
stockholders' equity
4,068,773
3,526,140
3,412,784
(6,938,923 ) 4,068,774
Noncontrolling interests —
—
482,725
—
482,725
Total equity 4,068,773
3,526,140
3,895,509
(6,938,923 ) 4,551,499
Total liabilities and equity $ 13,301,482
$ 11,069,142
$ 4,734,484
$ (17,860,983 ) $ 11,244,125

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information as of December 31,~~ ~~2016~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Consolidated
Balance Sheet
Current assets
Cash and cash equivalents $ 146,990
$ 53,006
$ 259,457
$ —
$ 459,453
Accounts receivable, net 2,117,540
3,329,871
323,931
(4,832,599 ) 938,743
Inventories —
597,819
203,281
—
801,100
Prepaid expenses and other current assets 30,748
41,755
12,494
(36,504 ) 48,493
Restricted cash —
—
160,527
—
160,527
Total current assets 2,295,278
4,022,451
959,690
(4,869,103 ) 2,408,316
Property, plant and equipment, net —
4,475,943
1,944,119
—
6,420,062
Other assets, net
Goodwill —
791,706
154,847
—
946,553
Customer relationships, net —
468,645
142,970
—
611,615
Other intangible assets, net —
130,243
71,177
(25,581 ) 175,839
Deferred charges and other assets, net 9,170,042
874,003
1,115,877
(10,832,054 ) 327,868
Total other assets, net 9,170,042
2,264,597
1,484,871
(10,857,635 ) 2,061,875
Total assets $ 11,465,320
$ 10,762,991
$ 4,388,680
$ (15,726,738 ) $ 10,890,253
Current liabilities
Accounts payable $ 4,330,375
$ 748,364
$ 225,300
$ (4,807,780 ) $ 496,259
Accrued liabilities 26,367
389,216
183,223
(61,323 ) 537,483
Term loan —
—
149,341
—
149,341
Total current liabilities 4,356,742
1,137,580
557,864
(4,869,103 ) 1,183,083
Long-term debt, net 3,584,949
4,090,775
—
(3,997,070 ) 3,678,654
Deferred income taxes —
1,581,260
91,809
(22,494 ) 1,650,575
Pension and other liabilities —
360,622
125,274
—
485,896
Total liabilities 7,941,691
7,170,237
774,947
(8,888,667 ) 6,998,208
Total Westlake Chemical Corporation
stockholders' equity
3,523,629
3,592,754
3,245,317
(6,838,071 ) 3,523,629
Noncontrolling interests —
—
368,416
—
368,416
Total equity 3,523,629
3,592,754
3,613,733
(6,838,071 ) 3,892,045
Total liabilities and equity $ 11,465,320
$ 10,762,991
$ 4,388,680
$ (15,726,738 ) $ 10,890,253

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the~~ ~~Three Months Ended September 30, 2017~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 1,704,086
$ 837,536
$ (432,733 ) $ 2,108,889
Cost of sales —
1,371,813
665,124
(426,100 ) 1,610,837
Gross profit —
332,273
172,412
(6,633 ) 498,052
Selling, general and administrative expenses 1,509
93,149
37,617
(6,633 ) 125,642
Transaction and integration-related costs —
6,387
276
—
6,663
Income (loss) from operations (1,509 ) 232,737
134,519
—
365,747
Other income (expense)
Interest expense (38,811 ) (44,381 ) (1,635 ) 44,791
(40,036 )
Other income, net 37,563
2,517
6,769
(44,791 ) 2,058
Income (loss) before income taxes (2,757 ) 190,873
139,653
—
327,769
Provision for (benefit from) income taxes (599 ) 92,597
16,621
—
108,619
Equity in net income of subsidiaries 212,989
—
—
(212,989 ) —
Net income 210,831
98,276
123,032
(212,989 ) 219,150
Net income attributable to noncontrolling
   interests
—
—
8,318
—
8,318
Net income attributable to Westlake Chemical
   Corporation
$ 210,831
$ 98,276
$ 114,714
$ (212,989 ) $ 210,832
Comprehensive income attributable to
   Westlake Chemical Corporation
$ 254,400
$ 98,455
$ 158,160
$ (256,615 ) $ 254,400

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the~~ ~~Three Months Ended September 30, 2016~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 984,937
$ 611,983
$ (317,892 ) $ 1,279,028
Cost of sales —
892,198
497,460
(312,763 ) 1,076,895
Gross profit —
92,739
114,523
(5,129 ) 202,133
Selling, general and administrative expenses 2,092
47,952
27,814
(5,129 ) 72,729
Transactions and integration-related costs —
82,687
154
—
82,841
Income (loss) from operations (2,092 ) (37,900 ) 86,555
—
46,563
Other income (expense)
Interest expense (22,130 ) (22,207 ) (908 ) 20,879
(24,366 )
Other income (expense), net 35,405
(15,189 ) 41,928
(20,879 ) 41,265
Income (loss) before income taxes 11,183
(75,296 ) 127,575
—
63,462
Provision for (benefit from) income taxes (2,088 ) (11,080 ) 6,616
—
(6,552 )
Equity in net income of subsidiaries 52,391
—
—
(52,391 ) —
Net income 65,662
(64,216 ) 120,959
(52,391 ) 70,014
Net income attributable to noncontrolling
   interests
—
—
4,352
—
4,352
Net income attributable to Westlake Chemical
   Corporation
$ 65,662
$ (64,216 ) $ 116,607
$ (52,391 ) $ 65,662
Comprehensive income attributable to
   Westlake Chemical Corporation
$ 39,636
$ (64,113 ) $ 104,129
$ (40,015 ) $ 39,637

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2017~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 4,880,682
$ 2,377,862
$ (1,227,878 ) $ 6,030,666
Cost of sales —
4,077,633
1,889,571
(1,207,567 ) 4,759,637
Gross profit —
803,049
488,291
(20,311 ) 1,271,029
Selling, general and administrative expenses 2,429
281,412
116,389
(20,311 ) 379,919
Transaction and integration-related costs —
22,611
338
—
22,949
Income (loss) from operations (2,429 ) 499,026
371,564
—
868,161
Other income (expense)
Interest expense (115,156 ) (133,048 ) (5,623 ) 135,043
(118,784 )
Other income, net 112,002
2,944
26,688
(135,043 ) 6,591
Income (loss) before income taxes (5,583 ) 368,922
392,629
—
755,968
Provision for (benefit from) income taxes (1,451 ) 198,054
36,087
—
232,690
Equity in net income of subsidiaries 505,981
—
—
(505,981 ) —
Net income 501,849
170,868
356,542
(505,981 ) 523,278
Net income attributable to noncontrolling
   interests
—
—
21,429
—
21,429
Net income attributable to Westlake Chemical
   Corporation
$ 501,849
$ 170,868
$ 335,113
$ (505,981 ) $ 501,849
Comprehensive income attributable to
   Westlake Chemical Corporation
$ 613,350
$ 171,413
$ 233,030
$ (404,443 ) $ 613,350

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2016~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Operations
Net sales $ —
$ 2,567,232
$ 1,734,611
$ (961,567 ) $ 3,340,276
Cost of sales —
2,233,395
1,353,764
(945,967 ) 2,641,192
Gross profit —
333,837
380,847
(15,600 ) 699,084
Selling, general and administrative expenses 3,648
121,261
70,448
(15,600 ) 179,757
Transaction and integration-related costs —
90,396
154
—
90,550
Income (loss) from operations (3,648 ) 122,180
310,245
—
428,777
Other income (expense)
Interest expense (43,228 ) (39,693 ) (1,054 ) 47,009
(36,966 )
Other income (expense), net 40,807
(22,291 ) 80,584
(47,009 ) 52,091
Income (loss) before income taxes (6,069 ) 60,196
389,775
—
443,902
Provision for (benefit from) income taxes (8,268 ) 106,792
30,808
—
129,332
Equity in net income of subsidiaries 297,715
—
—
(297,715 ) —
Net income 299,914
(46,596 ) 358,967
(297,715 ) 314,570
Net income attributable to noncontrolling
   interests
—
—
14,656
—
14,656
Net income attributable to Westlake Chemical
   Corporation
$ 299,914
$ (46,596 ) $ 344,311
$ (297,715 ) $ 299,914
Comprehensive income attributable to
   Westlake Chemical Corporation
$ 321,079
$ (46,187 ) $ 364,402
$ (318,214 ) $ 321,080

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the Nine Months Ended September 30, 2017~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income $ 501,849
$ 170,868
$ 356,542
$ (505,981 ) $ 523,278
Adjustments to reconcile net income to net
   cash provided by (used for) operating
   activities

Depreciation and amortization —
294,227
154,306
—
448,533
Deferred income taxes (217 ) 20,299
3,212
—
23,294
Net changes in working capital and other (532,120 ) (129,330 ) 123,028
505,981
(32,441 )
Net cash provided by (used for)
   operating activities
(30,488 ) 356,064
637,088
—
962,664
Cash flows from investing activities
Additions to property, plant and equipment —
(294,138 ) (120,133 ) —
(414,271 )
Additions to cost method investment —
(47,000 ) —
—
(47,000 )
Proceeds from disposition of assets —
25
146
—
171
Proceeds from involuntary conversion of
   assets
—
—
1,672
—
1,672
Receivable under the investment management
   agreement
—
—
(119,000 ) 119,000
—
Settlements of derivative instruments —
(7 ) —
—
(7 )
Net cash used for investing activities —
(341,120 ) (237,315 ) 119,000
(459,435 )
Cash flows from financing activities
Intercompany financing 498,272
(313,276 ) (184,996 ) —
—
Receivable under the investment management
   agreement
119,000
—
—
(119,000 ) —
Debt issuance costs (376 ) —
—
—
(376 )
Dividends paid (76,491 ) —
—
—
(76,491 )
Distributions to noncontrolling interests —
279,203
(299,970 ) —
(20,767 )
Net proceeds from issuance of Westlake
   Chemical Partners LP common units
—
—
110,739
—
110,739
Proceeds from issuance of notes payable —
—
5,946
—
5,946
Proceeds from drawdown of revolver 225,000
—
—
—
225,000
Restricted cash associated with term loan —
—
154,000
—
154,000
Repayment of term loan —
—
(150,000 ) —
(150,000 )
Repayment of notes payable —
(788 ) (5,907 ) —
(6,695 )
Repayment of revolver (550,000 ) —
—
—
(550,000 )
Other 2,204
—
—
—
2,204
Net cash provided by (used for)
   financing activities
217,609
(34,861 ) (370,188 ) (119,000 ) (306,440 )

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS��Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Effect of exchange rate changes on cash and
   cash equivalents
—
—
21,991
—
21,991
Net increase (decrease) in cash and cash
   equivalents
187,121
(19,917 ) 51,576
—
218,780
Cash and cash equivalents at beginning of
   period
146,990
53,006
259,457
—
459,453
Cash and cash equivalents at end of period $ 334,111
$ 33,089
$ 311,033
$ —
$ 678,233

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands of dollars, except share amounts and per share data)~~

~~Condensed Consolidating Financial Information for the~~ ~~Nine Months Ended September 30, 2016~~

Westlake
Chemical
Corporation

100% Owned
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income $ 299,914
$ (46,596 ) $ 358,967
$ (297,715 ) $ 314,570
Adjustments to reconcile net income (loss) to
   net cash provided by (used for) operating
   activities

Depreciation and amortization —
118,645
108,548
—
227,193
Deferred income taxes (5,178 ) 100,908
10,180
—
105,910
Net changes in working capital and other (313,676 ) (39,859 ) (47,693 ) 297,715
(103,513 )
Net cash provided by (used for)
   operating activities
(18,940 ) 133,098
430,002
—
544,160
Cash flows from investing activities
Acquisition of business, net of cash acquired —
(2,437,829 ) —
—
(2,437,829 )
Additions to property, plant and equipment —
(162,288 ) (305,042 ) —
(467,330 )
Additions to cost method investment —
(4,000 ) —
—
(4,000 )
Proceeds from disposition of assets —
48
165
—
213
Proceeds from sales and maturities of
   securities
658,338
—
4,600
—
662,938
Purchase of securities (138,422 ) —
—
—
(138,422 )
Settlements of derivative instruments —
(4,655 ) —
—
(4,655 )
Net cash provided by (used for)
   investing activities
519,916
(2,608,724 ) (300,277 ) —
(2,389,085 )
Cash flows from financing activities
Intercompany financing (2,242,604 ) 2,289,200
(46,596 ) —
—
Debt issuance costs (33,617 ) —
(1,590 ) —
(35,207 )
Dividends paid (71,933 ) —
—
—
(71,933 )
Distributions to noncontrolling interests —
202,210
(214,510 ) —
(12,300 )
Proceeds from debt issuance 1,428,512
—
—
—
1,428,512
Proceeds from issuance of notes payable —
—
5,597
—
5,597
Proceeds from term loan and drawdown of
   revolver
450,000
—
150,000
—
600,000
Restricted cash associated with term loan —
—
(154,000 ) —
(154,000 )
Repayment of notes payable —
—
(10,602 ) —
(10,602 )
Repayment of revolver (125,000 ) —
—
—
(125,000 )
Repurchase of common stock for treasury (67,406 ) —
—
—
(67,406 )
Other 2,840
—
—
—
2,840
Net cash provided by (used for)
   financing activities
(659,208 ) 2,491,410
(271,701 ) —
1,560,501
Effect of exchange rate changes on cash and
   cash equivalents
—
—
2,418
—
2,418
Net increase (decrease) in cash and cash
   equivalents
(158,232 ) 15,784
(139,558 ) —
(282,006 )
Cash and cash equivalents at beginning of
   period
303,131
6,818
352,576
—
662,525
Cash and cash equivalents at end of period $ 144,899
$ 22,602
$ 213,018
$ —
$ 380,519

~~Table of Contents~~


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

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

This discussion and analysis should be read in conjunction with information contained in the accompanying unaudited consolidated interim financial statements of Westlake Chemical Corporation ("Westlake" or the "Company") and the notes thereto and the consolidated financial statements and notes thereto of Westlake Chemical Corporation included in Westlake Chemical Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2018 (the "~~2016~~2018 Form 10-K"). The following discussion contains forward-looking statements. Please read "Forward-Looking Statements" for a discussion of limitations inherent in such statements.

We are a vertically integrated global manufacturer and marketer of ~~petrochemicals,~~chemicals, polymers and building products. Our two principal operating segments are Olefins and Vinyls. We use athe majority of our internally-produced basic chemicals to produce higher value-added chemicals and building products.

~~Since 2009~~Consumption of the basic chemicals that we manufacture in the commodity portions of our olefins and ~~continuing through~~vinyls processes has increased significantly since we began operations in 1986. Our olefins and vinyls products are some of the ~~third quarter~~most widely used chemicals in the world and are upgraded into a wide variety of ~~2017,~~higher value-added chemical products used in many end-markets. Petrochemicals are typically manufactured in large volume by a number of different producers using widely available technologies. The petrochemical industry exhibits cyclical commodity characteristics, and margins are influenced by changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. The cycle is generally characterized by periods of tight supply, leading to high operating rates and margins, followed by a decline in operating rates and margins primarily as a result of excess new capacity additions.

Table of Contents

Ethane-based ethylene producers have in the recent past experienced a cost advantage ~~for ethane-based ethylene producers~~ over naphtha-based ethylene producers during periods of higher crude oil prices. This cost advantage has ~~allowed~~resulted in a strong export market for polyethylene and other ethylene derivatives and higher margins for North American chemical producers, including Westlake. However, the falling crude oil prices in recent years have resulted in reduced prices and margins. Continued strong global demand for polyethylene has ~~resulted in improved~~benefited operating margins and cash flows for our Olefins segment ~~in recent years.~~during such periods. However, we have seen a significant reduction in the cost advantage enjoyed by North American ethane-based ethylene producers due to lower crude oil prices ~~beginning in~~from the third quarter of 2014 ~~and continuing~~ through the third quarter of ~~2017.~~2019, which has resulted in reduced prices and lower margins for our Olefins segment. Further, our Olefins segment has experienced lower profitability in recent periods due to several new ethylene and polyethylene capacity additions in North America and Asia that have led to additional supply and lower prices of ethylene and polyethylene. In recent months, we have seen volatility in ethane and ethylene prices, primarily due to changes in the anticipated timing for some of the new ethylene capacity additions and availability of natural gas liquids as well as fluctuation in crude oil prices. Looking forward, new ethylene and polyethylene capacity additions in North America, Asia and the Middle East will add additional supply and ~~a number of new capacities announced in recent years,~~ may ~~lead~~continue to contribute to periods of ~~over-supply and~~ lower ~~profitability. As a result,~~profitability in our Olefins ~~segment operating margins may be negatively impacted.~~segment.

Since the 2008 housing market collapse, continued slow recovery in the U.S. construction markets and budgetary constraints in municipal spending have contributed to lower North American demand for our vinyls products, which have negatively impacted our Vinyls segment operating rates and margins. However, since late 2010, the PVC industry in the U.S. has experienced an increase in PVC resin exports, driven largely by more competitive feedstock and energy cost positions in the U.S. As a consequence, the U.S. PVC resin industry operating rates have improved since 2010. In addition, our ~~July~~ 2014 acquisition of Vinnolit Holdings GmbH and its subsidiary companies, ~~("Vinnolit"),~~ an integrated global leader in specialty PVC resins, has contributed to improved operating margins and cash flows for our Vinyls segment. The acquisition of Axiall Corporation ("Axiall") in 2016 contributed to a significant increase in our chlor-alkali and PVC resin production capacities. Westlake is the second-largest chlor-alkali producer and the second-largest PVC producer in the world. Globally, there were large chlor-alkali capacity additions between 2008 and 2015 resulting in excess capacity and lower industry operating rates which exerted downward pressure on caustic soda pricing. ~~Announced~~From 2015 through the end of 2018, the capacity ~~is now complete and increasing~~additions have been outpaced by an increase in demand driven by ~~the~~ improving economic growth and U.S. producers' competitive export position, ~~is expected to result~~which has resulted in improved operating rates and caustic soda pricing. ~~On August 31, 2016, we completed~~

Since the ~~acquisition~~end of ~~Axiall Corporation ("Axiall")~~2018, the uncertainties surrounding international trade have impacted both domestic and export prices for $33.00 per share in an all-cash transaction (the "Merger"). The combined company is the third-largest global chlor-alkali producer and the third-largest PVC producer in the world. Westlake is the second-largest purchaser of ethylene in the U.S. and lower prices could positively impact our ~~Vinyls segment.~~

~~The economic environment in the U. S. and globally appears to be improving. However, depending~~products. Depending on the performance of the global economy, the potential changes in international trade and tariffs policies, the trend of crude oil prices and the timing of the new ethylene capacity additions in the remainder of ~~2017~~2019 and beyond, our financial condition, results of operations or cash flows could be negatively or positively impacted.

Non-GAAP Financial Measures

The body of accounting principles generally accepted in the United States is commonly referred to as ~~"U.S. GAAP.~~"GAAP." For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as one that purports to measure historical or future financial performance, financial position or cash flows ~~but~~that (1) excludes amounts, or ~~includes~~is subject to adjustments that have the effect of excluding amounts, that ~~would not be so adjusted~~are included in the most directly comparable measure calculated and presented in accordance with GAAP ~~measures.~~in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this report, we disclose non-GAAP financial measures, primarily earnings before interest, taxes, depreciation and amortization ("EBITDA"). We define EBITDA ~~is calculated~~ as net income before interest expense, income taxes, depreciation and amortization. The non-GAAP financial measures described in this Form 10-Q are not substitutes for the GAAP measures of earnings and cash ~~flow.~~

~~Table of Contents~~

flows.

EBITDA is included in this Form 10-Q because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of ~~earnings or of~~net income, income from operations and net cash ~~flow~~provided by operating activities and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented for us may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization and income taxes.

Table of Contents

A reconciliation of EBITDA to net income, income from operations and net cash provided by operating activities is included in the "Results of Operations" section below.

Recent Developments

On ~~September~~October 29, ~~2017, Westlake~~2019, we, through one of our subsidiaries, Eagle US 2 LLC ("Eagle"), entered into a securities purchase agreement with Lotte Chemical ~~Partners, LP~~USA Corporation, a subsidiary of Lotte Chemical Corporation ("~~WLKP"~~Lotte"), to purchase at least an additional 34.787% of the membership interests in LACC, LLC ("LACC") from Lotte for approximately $817 million (the "Transaction"), pursuant to Eagle's exercise of a call option. Prior to the Transaction, Eagle owned approximately 12% of the membership interests in LACC.

The closing of the Transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and customary closing conditions. In addition, Eagle may receive additional membership interests in LACC subject to potential adjustments based upon the finalization of an audit and further negotiations between the parties concerning the purchase price.

On July 17, 2019, we completed ~~a secondary~~the registered public offering of 5,175,000 common units at a price of $22.00 per unit and purchased an additional 5.0% newly-issued limited partner interest in Westlake Chemical OpCo LP ("OpCo") for approximately $229.2 million resulting in an aggregate 18.3% limited partner interest in OpCo effective July 1, 2017. Net proceeds to WLKP from the sale of the units was $110.7 million, net of underwriting discounts, structuring fees and estimated offering expenses of approximately $3.1 million. WLKP used the proceeds from the offering and the existing revolving credit facility with Westlake Chemical Finance Corporation, our subsidiary, to fund the purchase of the additional 5.0% interest in OpCo.

~~During September 2017, we directed the Louisiana Local Government Authority Environmental Facilities and Community Development Authority (the “Authority”) to optionally redeem in full $250.0~~€700 million aggregate principal amount of the ~~2007 Series revenue bonds (the “GO Zone Bonds”) on November 1, 2017 at a redemption price of par, plus accrued~~1.625% 2029 Senior Notes. See "Liquidity and ~~unpaid interest, if any,~~Capital Resources—Debt" below and Note 9 to the ~~redemption date. The GO Zone Bonds were issued by the Authority~~consolidated financial statements included in ~~December 2007 under the Gulf Opportunity Zone Act of 2005 (GO Zone Act)~~this Form 10-Q for the benefit of the Company and were subject to optional redemption by the Authority at any time on or after November 1, 2017 for 100.0% of the principal plus accrued unpaid interest, if any. In connection with the redemption of the Go Zone Bonds, the Authority is required to cause the GO Zone Bonds trustee to surrender the 6 ¾% tax exempt senior notes due November 2032 of $250.0 million, to the Senior Notes trustee for cancellation. We used cash on hand to fund the redemption of the GO Zone Bonds.more information.

On August 30, 2017, following WLKP's cash distribution for the second quarter of 2017, the requirement under WLKP's partnership agreement for the conversion of all subordinated units was satisfied. As a result, effective August 30, 2017, the 12,686,115 subordinated units owned by us were converted into common units on a one-for-one basis and thereafter participate on terms equal with all other common units in distributions of available cash.

On August 1, 2017, the Company, WLKP and OpCo executed an Investment Management Agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership's and OpCo's excess cash.

On August 1, 2017, our wholly owned subsidiary, Westlake Chemical Finance Corporation, entered into an amendment to the revolving credit facility with WLKP, resulting in the extension of the credit facility's maturity date from April 29, 2018 to April 29, 2021.

4026

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Results of Operations


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018

	(dollars in thousands, except per share data)												(dollars in millions, except per share data)
Net external sales
Olefins
Polyethylene	$	377,269		$	380,810		$	1,121,603		$	1,098,500		$	315		$	396		$	997		$	1,152
Styrene, feedstock and other	124,974			116,555			412,869			324,369			133			145			387			374
Total Olefins	502,243			497,365			1,534,472			1,422,869			448			541			1,384			1,526
Vinyls
PVC, caustic soda and other	1,252,963			599,276			3,541,409			1,492,650			1,253			1,372			3,879			4,126
Building products	353,683			182,387			954,785			424,757			365			342			972			988
Total Vinyls	1,606,646			781,663			4,496,194			1,917,407			1,618			1,714			4,851			5,114
Total	$	2,108,889		$	1,279,028		$	6,030,666		$	3,340,276		$	2,066		$	2,255		$	6,235		$	6,640

Income (loss) from operations
Olefins	$	165,438		$	118,475		$	488,532		$	408,274		$	92		$	162		$	211		$	483
Vinyls	216,515			22,235			431,276			136,559			153			251			383			788
Corporate and other	(16,206		)	(94,147		)	(51,647		)	(116,056		)	(19		)	(17		)	(40		)	(70		)
Total income from operations	365,747			46,563			868,161			428,777			226			396			554			1,201
Interest expense	(40,036		)	(24,366		)	(118,784		)	(36,966		)	(31		)	(28		)	(89		)	(96		)
Other income, net	2,058			41,265			6,591			52,091			21			23			32			53
Provision for (benefit from) income taxes	108,619			(6,552		)	232,690			129,332
Provision for income taxes													50			73			120			255
Net income	219,150			70,014			523,278			314,570			166			318			377			903
Net income attributable to noncontrolling interests	8,318			4,352			21,429			14,656			8			10			28			30
Net income attributable to Westlake Chemical Corporation	$	210,832		$	65,662		$	501,849		$	299,914		$	158		$	308		$	349		$	873
Diluted earnings per share	$	1.61		$	0.51		$	3.85		$	2.29		$	1.22		$	2.35		$	2.69		$	6.67
EBITDA ⁽¹⁾	$	521,439		$	182,057		$	1,323,285		$	708,061		$	425		$	580		$	1,111		$	1,727

_____________


(1)	See "Reconciliation of EBITDA to Net Income, Income from Operations and to Net Cash Provided by Operating Activities" below.

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Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Average
Sales Price Volume Average
Sales Price Volume
Product sales price and volume percentage change
from prior-year period

Olefins +1.8 % -0.8 % +9.2 % -1.3 %
Vinyls +18.7 % +86.8 % +17.8 % +116.7 %
Company average +12.1 % +52.8 % +14.1 % +66.4 %

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Average industry prices ⁽¹⁾

Ethane (cents/lb) 8.8
6.3
8.3
6.2
Propane (cents/lb) 18.2
11.2
16.6
10.7
Ethylene (cents/lb) ⁽²⁾
24.7
32.5
27.8
26.5
Polyethylene (cents/lb) ⁽³⁾
70.7
68.7
69.0
65.3
Styrene (cents/lb) ⁽⁴⁾
85.1
66.8
85.0
63.3
Caustic soda ($/short ton) ⁽⁵⁾
811.7
660.8
777.8
618.3
Chlorine ($/short ton) ⁽⁶⁾
332.5
304.2
320.8
295.3
PVC (cents/lb) ⁽⁷⁾
62.5
56.5
61.7
53.9



	Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019
	Average Sales Price		Volume		Average Sales Price		Volume
Product sales price and volume percentage change from prior-year period
Olefins	-21.8	%	+4.7	%	-22.0	%	+12.7	%
Vinyls	-8.9	%	+3.2	%	-6.9	%	+1.7	%
Company	-12.0	%	+3.6	%	-10.4	%	+4.3	%

Average Industry Prices ⁽¹⁾
	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Average domestic prices
Ethane (cents/lb) ⁽²⁾	5.8		14.3		7.6		10.8
Propane (cents/lb) ⁽³⁾	10.3		23.5		13.0		21.5
Ethylene (cents/lb) ⁽⁴⁾	20.7		17.3		17.1		18.6
Polyethylene (cents/lb) ⁽⁵⁾	59.0		70.0		60.7		72.4
Styrene (cents/lb) ⁽⁶⁾	79.9		90.3		79.8		93.8
Caustic soda ($/short ton) ⁽⁷⁾	692		782		702		775
Chlorine ($/short ton) ⁽⁸⁾	175		175		175		170
PVC (cents/lb) ⁽⁹⁾	68.8		67.5		68.6		67.4

Average export prices
Polyethylene (cents/lb) ⁽¹⁰⁾	39.7		53.5		42.2		58.1
Caustic soda ($/short ton) ⁽¹¹⁾	217		564		314		627
PVC (cents/lb) ⁽¹²⁾	35.1		36.5		35.4		37.8

_____________


(1)	Industry pricing data was obtained ~~from~~through IHS ~~Chemical.~~Markit ("IHS"). We have not independently verified the data.


(2)	~~Represents average~~Average Mont Belvieu spot prices of purity ethane over the period.


(3)	Average Mont Belvieu spot prices of non-TET propane over the period.


(4)	Average North American spot prices of ethylene over the ~~period as reported by IHS Chemical.~~period.


~~(3)~~(5)	~~Represents average~~Average North American ~~net transaction~~Net Transaction prices of polyethylene low density GP-Film grade over the ~~period as reported by IHS Chemical.~~period.


~~(4)~~(6)	~~Represents average~~Average North American contract prices of styrene over the ~~period as reported by IHS Chemical.~~


~~(5)~~	~~Represents average North American undiscounted contract prices of caustic soda over the period as reported by IHS Chemical.~~


~~(6)~~	~~Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical.~~period.

(7)

~~Represents~~Average USGC-CSLi index values for caustic soda over the period. As stated by IHS, "the caustic soda price listing represents the USGC-CSLi values. USGC-CSLi does not reflect contract price discounts, implementation lags, caps or other adjustments factors. Additionally, it is not intended to represent a simple arithmetic average of all market transactions occurring during the month. Rather, the USGC-CSLi is most representative of the month-to-month caustic soda price movement for contract volumes of liquid 50% caustic soda rather than the absolute value of contract prices at a particular point in time. It is intended to serve only as a benchmark."

(8)

Average North American contract prices of ~~polyvinyl chloride (PVC)~~chlorine over the ~~period as reported by IHS Chemical.~~period. Effective January 1, ~~2017,~~2019, IHS ~~Chemical~~ made a non-market average downward adjustment of ~~15 cents~~$172.50 per ~~pound~~short ton to ~~PVC~~chlorine prices. For comparability, we adjusted ~~each prior-year~~the prior period's ~~PVC~~chlorine price downward by ~~15 cents~~$172.50 per ~~pound~~short ton consistent with the IHS ~~Chemical~~ non-market adjustment.


(9)	Average North American contract prices of pipe grade polyvinyl chloride ("PVC") over the period. As stated by IHS, "the contract resin prices posted reflect an "index" or "market" for prices before discounts, rebates, incentives, etc."


(10)	Average North American export price for low density polyethylene GP-Film grade over the period.


(11)	Average North American low spot export prices of caustic soda over the period.


(12)	Average North American spot export prices of PVC over the period.

Table of Contents

Reconciliation of EBITDA to Net Income, Income from Operations and to Net Cash Provided by Operating Activities

The following table presents the reconciliation of EBITDA to net income, income from operations and to net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018

	(dollars in thousands)												(dollars in millions)
Net cash provided by operating activities	$	482,950		$	174,268		$	962,664		$	544,160		$	501		$	606		$	968		$	1,155
Changes in operating assets and liabilities and other	(255,468		)	(101,334		)	(416,092		)	(123,680		)	(316		)	(259		)	(557		)	(178		)
Deferred income taxes	(8,332		)	(2,920		)	(23,294		)	(105,910		)	(19		)	(29		)	(34		)	(74		)
Net income	219,150			70,014			523,278			314,570			166			318			377			903
Less:
Other income, net													21			23			32			53
Interest expense													(31		)	(28		)	(89		)	(96		)
Provision for income taxes													(50		)	(73		)	(120		)	(255		)
Income from operations													226			396			554			1,201
Add:
Depreciation and amortization	153,634			94,229			448,533			227,193			178			161			525			473
Interest expense	40,036			24,366			118,784			36,966
Provision for (benefit from) income taxes	108,619			(6,552		)	232,690			129,332
Other income, net													21			23			32			53
EBITDA	$	521,439		$	182,057		$	1,323,285		$	708,061		$	425		$	580		$	1,111		$	1,727

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Summary

For the quarter ended September 30, ~~2017,~~2019, net income attributable to Westlake ~~Chemical Corporation~~ was ~~$210.8~~$158 million, or ~~$1.61~~$1.22 per diluted share, on net sales of ~~$2,108.9~~$2,066 million. This represents ~~an increase~~a decrease in net income attributable to Westlake ~~Chemical Corporation~~ of ~~$145.1~~$150 million, or ~~$1.10~~$1.13 per diluted share, compared to the third quarter of ~~2016~~2018 net income attributable to Westlake ~~Chemical Corporation~~ of ~~$65.7~~$308 million, or ~~$0.51~~$2.35 per diluted share, on net sales of ~~$1,279.0~~$2,255 million. ~~Net income~~Income from operations for the third quarter of ~~2017 increased~~2019 was $226 million, a $170 million decrease from income from operations of $396 million for the third quarter of 2018. The decreases in net income and income from operations versus the prior-year period were primarily due to ~~(1) earnings contributed by Axiall, which was acquired on August 31, 2016; (2)~~ lower ~~transaction and integration-related costs associated with the acquisition; and (3) higher~~ sales prices for our major products resulting ~~in improved margins. These increases, as compared to~~from the ~~third quarter of 2016, were~~ongoing international trade uncertainties and slower global economic growth, partially offset by (1) higher interest expense due to the increased debt balance as a result of the Axiall acquisition; (2) a third quarter 2016 realized gain of $49.1 million from the previously held common stock of Axiall;lower ethane feedstock and ~~(3) a higher effective tax rate.~~fuel costs. Net sales for the third quarter of ~~2017 increased~~2019 decreased by ~~$829.9~~$189 million compared to net sales for the third quarter of ~~2016,~~2018, mainly due to ~~higher sales contributed by Axiall and higher~~lower sales prices for our major ~~products. Income from operations was $365.7 million~~products and lower sales volumes for ~~the third quarter of 2017 as compared to $46.6 million for the third quarter of 2016. The~~PVC resin, partially offset by an increase in ~~income from operations~~sales volumes for ~~the third quarter of 2017 was mainly a result of earnings contributed by Axiall, lower~~building products and PVC compounds. Restructuring, transaction ~~and integration-related costs and higher sales prices as compared to the third quarter of 2016. Transaction~~ and integration-related costs in the third quarter of ~~2017~~2019 were ~~$6.7~~$8 million, or $0.03 per diluted share.

For the nine months ended September 30, ~~2017,~~2019, net income attributable to Westlake ~~Chemical Corporation~~ was ~~$501.8~~$349 million, or ~~$3.85~~$2.69 per diluted share, on net sales of ~~$6,030.7~~$6,235 million. This represents ~~an increase~~a decrease in net income attributable to Westlake ~~Chemical Corporation~~ of ~~$201.9~~$524 million, or ~~$1.56~~$3.98 per diluted share, compared to the nine months ended September 30, ~~2016~~2018 net income attributable to Westlake ~~Chemical Corporation~~ of ~~$299.9~~$873 million, or ~~$2.29~~$6.67 per diluted share, on net sales of ~~$3,340.3~~$6,640 million. ~~Net income~~Income from operations for the nine months ended September 30, ~~2017 increased versus~~2019 was $554 million, a $647 million decrease from income from operations of $1,201 million for the ~~prior-year period~~nine months ended September 30, 2018. The decreases in net income and income from operations were primarily due to ~~(1) earnings contributed by Axiall; (2) higher~~lower sales prices for our major products, ~~resulting in improved margins; and (3) lower transaction and integration-related costs associated with the integration of Axiall. These increases versus the prior-year period were~~ partially offset by lower ethane feedstock, purchased ethylene and fuel costs and higher ~~interest expense due to the increased debt balance and the realized gain in the nine months ended September 30, 2016 of $49.1 million from the previously held common stock of Axiall.~~polyethylene sales volume. Net sales for the nine months ended September 30, ~~2017 increased~~2019 decreased by ~~$2,690.4~~$405 million compared to net sales for the nine months ended September 30, ~~2016,~~2018, mainly due to higher sales contributed by Axiall, which was acquired on August 31, 2016, and higher sales prices for our major products. Income from operations was $868.2 million for the nine months ended September 30, 2017 as compared to $428.8 million for the nine months ended September 30, 2016. The increase in income from operations was mainly a result of earnings contributed by Axiall, higherlower sales prices for our major products and lower sales volumes for PVC resins, partially offset by an increase in sales volumes for polyethylene, styrene and PVC compounds. Restructuring, transaction and integration-related ~~costs. Transaction and integration-related~~ costs infor the nine months ended September 30, ~~2017~~2019 were ~~$22.9~~$32 million, or ~~$0.12~~$0.20 per diluted share.

RESULTS OF OPERATIONS

Third Quarter ~~2017~~2019 Compared with Third Quarter ~~2016~~2018

Net Sales. Net sales ~~increased~~decreased by ~~$829.9~~$189 million, or ~~64.9%~~8%, to ~~$2,108.9~~$2,066 million in the third quarter of ~~2017~~2019 from ~~$1,279.0~~$2,255 million in the third quarter of ~~2016,~~2018, primarily attributable to lower sales ~~contributed~~prices for our major products and lower sales volumes for PVC resins, partially offset by ~~Axiall, which was acquired on August 31, 2016, and~~ higher sales ~~prices.~~volumes for building products and PVC compounds. Average sales prices for the third quarter of ~~2017 increased~~2019 decreased by ~~12.1%~~12% as compared to the third quarter of ~~2016. Overall sales volumes~~2018. Sales volume increased by ~~52.8%~~4% for the third quarter of 2019 as compared to the third quarter of ~~2016, primarily attributable to sales contributed by Axiall, as compared to the prior-year period.~~2018.

Gross Profit. Gross profit margin percentage ~~increased~~decreased to ~~23.6%~~18% in the third quarter of ~~2017~~2019 from ~~15.8%~~24% in the third quarter of ~~2016.~~2018. The third quarter of ~~2017~~2019 gross profit margin ~~was higher~~decreased primarily due to ~~higher sales volumes for caustic soda and PVC resin contributed by Axiall and an increase in~~lower sales prices for our major products (resulting in lower margins), partially offset by lower ethane feedstock and fuel costs, as compared to the third quarter of ~~2016. The increase was partially offset by higher feedstock costs and higher energy prices, as compared to the third quarter of 2016.~~2018.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ~~increased~~decreased by ~~$52.9~~$4 million to ~~$125.6~~$110 million in the third quarter of ~~2017~~2019 as compared to ~~$72.7~~$114 million in the third quarter of ~~2016.~~2018. This ~~increase~~decrease was mainly due to lower professional consulting fees, partially offset by the selling, general and administrative expenses related to NAKAN, which was acquired in January 2019.

Amortization of ~~Axiall which were primarily comprised of the amortization of intangible assets acquired on acquisition.~~

~~Table of Contents~~

~~Transaction and Integration-related Costs. The transactions and integration-related costs were $6.7~~Intangibles. Amortization expense was $27 million in the third quarter of ~~2017~~2019, as compared to ~~$82.8~~$24 million in the third quarter of ~~2016.~~2018. The increase in amortization expense was primarily due to intangible assets related to NAKAN.

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs ~~were lower by $76.1~~of $8 million in the third quarter of ~~2017~~2019 were higher as compared to ~~the third quarter of 2016 predominantly because significant transaction and integration-related costs were incurred at the time of the Merger~~$5 million in the third quarter of ~~2016.~~2018. The transaction and integration costs for the third quarter of 2017 primarily consisted of severance benefits provided to former Axiall employees in conjunction with the Merger and integration costs and consulting fees related to the Merger. Therestructuring, transaction and integration-related costs for the 2019 period primarily consisted of restructuring expenses of $3 million and costs associated with acquisitions. The restructuring expenses represent charges associated with the write-off of certain assets. For the third quarter of ~~2016~~2019, the restructuring, transaction and integration-related costs of $5 million primarily consisted of severance benefits provided to former Axiall executives in conjunction with the Merger, including the conversion of Axiall restricted stock units into our restricted stock units, transitional service expenses for certain former Axiall employees, retention agreement costs andintegration-related consulting ~~and professional fees related to the Merger.~~fees.

Interest Expense. Interest expense increased by ~~$15.6~~$3 million to ~~$40.0~~$31 million in the third quarter of ~~2017~~2019 from ~~$24.4~~$28 million in the third quarter of ~~2016~~2018, primarily as a result of higher average debt outstanding ~~for the period as well as decreased capitalized interest on major capital projects~~ in the third quarter of ~~2017~~2019 as compared to the third quarter of ~~2016.~~2018. The higher average debt balance ~~increased~~ in ~~August 2016~~the third quarter of 2019 was due to ~~finance~~ the ~~Merger.~~issuance of the 1.625% 2029 Senior Notes in July 2019. See "Liquidity and Capital Resources—Debt" below and Note 9 to the consolidated financial statements included in this Form 10-Q for further discussion onof our indebtedness.

Table of Contents

Other Income, ~~(Expense),~~ Net. Other income, net decreased by ~~$39.2~~$2 million to ~~income of $2.1~~$21 million in the third quarter of ~~2017~~2019 from ~~income of $41.3~~$23 million in the third quarter of ~~2016. The decrease was primarily attributable to~~2018. In the ~~realized~~third quarter of 2018, we recognized a one-time pension settlement gain of $14 million. In the third quarter of 2019, we recognized insurance proceeds of $5 million. In addition, interest income in the third quarter of ~~2016~~2019 was higher as compared to the third quarter of ~~$49.1 million from the previously held common stock of Axiall.~~2018.

Income Taxes. The effective income tax rate was ~~33.1%~~23.1% for the third quarter of ~~2017. The effective income tax rate~~2019 as compared to 18.7% for the third quarter of 2017 was below the U.S. federal statutory rate of 35.0% primarily due to a higher domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, research and development credits and the foreign earnings rate differential, partially offset by state income taxes.2018. The effective tax rate ~~which was a benefit, was (10.3)% for the three months ended September 30, 2016. The effective income tax rate for~~in the third quarter of ~~2016~~2019 was ~~below~~higher as compared to the ~~U.S. federal statutory rate~~third quarter of ~~35.0%~~2018 primarily due to ~~the benefit of state~~discrete tax ~~credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax~~adjustments related to the ~~gain recognized~~remeasurement of state deferred tax balances in the third quarter of 2018 and changes in income tax estimates based on ~~previously held outstanding shares~~the filing of ~~common stock of Axiall,~~ the ~~benefit~~Company's prior-year U.S. federal tax return in prior years' and current-year tax credits for increased research and development expenditures, adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger.each period.

Olefins Segment

Net Sales. Net sales for the Olefins segment ~~increased~~decreased by ~~$4.8~~$93 million, or ~~1.0%~~17%, to ~~$502.2~~$448 million in the third quarter of ~~2017~~2019 from ~~$497.4~~$541 million in the third quarter of 2016, primarily due to higher sales prices. Average sales volumes for the Olefins segment decreased by 0.8% in the third quarter of 2017 as compared to the third quarter of 2016. Average sales prices for the Olefins segment increased by 1.8% in the third quarter of 2017 as compared to the third quarter of 2016.

~~Income from Operations~~. Income from operations for the Olefins segment increased by $46.9 million to $165.4 million in the third quarter of 2017 from $118.5 million in the third quarter of 2016. This increase was mainly attributable to higher sales prices and higher overall operating rates. These increases were partially offset by higher feedstock and energy costs. Trading activity in the third quarter of 2017 resulted in a gain of $6.8 million as compared to a loss of $7.8 million in the third quarter of 2016.

~~Vinyls Segment~~

~~Net Sales~~. Net sales for the Vinyls segment increased by $824.9 million, or 105.5%, to $1,606.6 million in the third quarter of 2017 from $781.7 million in the third quarter of 2016. This increase was mainly attributable to higher sales contributed by Axiall and higher sales prices for our major products. Net sales for the three months ended September 30, 2017 were higher as compared to the prior-year period primarily because a full three months of Axiall's operations were included as compared to only one month of Axiall's operations included in the prior-year period. Average sales prices for the Vinyls segment increased by 18.7% in the third quarter of 2017 as compared to the third quarter of 2016. Average sales volumes for the Vinyls segment increased by 86.8% in the third quarter of 2017 as compared to the third quarter of 2016, primarily attributable to sales contributed by Axiall, as compared to the prior-year period.

~~Income from Operations.~~ Income from operations for the Vinyls segment increased by $194.3 million to $216.5 million in the third quarter of 2017 from $22.2 million in the third quarter of 2016. This increase was mainly attributable to earnings contributed by Axiall and higher sales prices for our major products. These increases were partially offset by higher energy prices during the quarter ended September 30, 2017, as compared to the prior-year period.

~~Table of Contents~~

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

~~Net Sales~~. Net sales increased by $2,690.4 million, or 80.5%, to $6,030.7 million for the nine months ended September 30, 2017 from $3,340.3 million for the nine months ended September 30, 2016, primarily attributable to higher sales contributed by Axiall, which was acquired on August 31, 2016, and higher sales prices for our major products, as compared to the nine months ended September 30, 2016. Average sales prices for the nine months ended September 30, 2017 increased by 14.1% as compared to the nine months ended September 30, 2016. Overall sales volumes increased by 66.4% as compared to the nine months ended September 30, 2016, primarily attributable to sales contributed by Axiall, as compared to the prior-year period.

~~Gross Profit. Gross profit margin percentage increased to 21.1% for the nine months ended September 30, 2017 from 20.9% for the nine months ended September 30, 2016.~~2018. The gross profit margin for the nine months ended September 30, 2017 was slightly higher primarily due to higher sales volumes for caustic soda and PVC resin contributed by Axiall and higher sales prices for our major products, as compared to the nine months ended September 30, 2016. These increases were substantially offset by a proportionately larger sales volume for the Vinyls segment as compared to the Olefins segment, Vinyls segment industry margins were lower as compared to those of the Olefins segment industry for the nine months ended September 30, 2017 and the nine months ended September 30, 2016.

~~Selling, General and Administrative Expenses~~. Selling, general and administrative expenses increased by $200.1 million to $379.9 million for the nine months ended September 30, 2017 as compared to $179.8 million in the nine months ended September 30, 2016. This increasedecrease was mainly due to ~~selling, general and administrative expenses of Axiall which were primarily comprised of the amortization of intangible assets acquired on acquisition.~~

~~Transaction and Integration-related Costs~~. Transaction and integration-related costs were $22.9 million for the nine months ended September 30, 2017 as compared to $90.6 million for the nine months ended September 30, 2016. Transaction and integration-related costs were $67.7 million lower in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 predominantly because significant transaction and integration-costs were incurred at the time of the Merger in 2016. The transaction and integration costs for the nine months ended September 30, 2017 primarily consisted of severance benefits provided to former Axiall employees in conjunction with the Merger and integration costs and consulting fees related to the Merger. The transaction and integration costs for the nine months ended September 30, 2016 primarily consisted of severance benefits provided to former Axiall executives in conjunction with the Merger, including the conversion of Axiall restricted stock units into our restricted stock units, transitional service expenses for certain former Axiall employees, retention agreement costs and consulting and professional fees related to the Merger.

~~Interest Expense~~. Interest expense increased by $81.8 million to $118.8 million for the nine months ended September 30, 2017 from $37.0 million for the nine months ended September 30, 2016 primarily as a result of higher average debt outstanding for the period as well as decreased capitalized interest on major capital projects in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The debt balance increased in August 2016 to finance the Merger. See "Liquidity and Capital Resources—Debt" below for further discussion on our indebtedness.

~~Other Income, Net~~. Other income, net decreased by $45.5 million to $6.6 million in the nine months ended September 30, 2017 from $52.1 million in the nine months ended September 30, 2016. The decrease was mainly attributable to the realized gain in the 2016 period of $49.1 million from the previously held common stock of Axiall.

~~Income Taxes.~~ The effective income tax rate was 30.8% for the nine months ended September 30, 2017. The effective income tax rate for the nine months ended September 30, 2017 was below the U.S. federal statutory rate of 35.0% primarily due to certain discrete adjustments, a higher domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, research and development credits and the foreign earnings rate differential, partially offset by state income taxes. The effective income tax rate was 29.1% for the nine months ended September 30, 2016. The effective income tax rate for the nine months ended September 30, 2016 was below the U.S. federal statutory rate of 35.0% primarily due to the benefit of state tax credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax related to the gain recognized on previously held outstanding shares of common stock of Axiall, the benefit in prior years' and current-year tax credits for increased research and development expenditures, adjustments related to prior years' tax returns as filed and the foreign earnings rate differential, partially offset by state income taxes and nondeductible transaction costs related to the Merger.

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~~Olefins Segment~~

~~Net Sales~~. Net sales for the Olefins segment increased by $111.6 million, or 7.8%, to $1,534.5 million in the nine months ended September 30, 2017 from $1,422.9 million in the nine months ended September 30, 2016, primarily due to higher sales prices for our major products. Average sales prices for the Olefins segment ~~increased~~decreased by ~~9.2%~~22% in the ~~nine months ended September 30, 2017~~third quarter of 2019 as compared to the ~~nine months ended September 30, 2016. Average sales~~third quarter of 2018, primarily due to increased olefins production from new industry capacity. Sales volumes for the Olefins segment ~~decreased~~increased by ~~1.3%~~5% in the ~~nine months ended September 30, 2017~~third quarter of 2019 as compared to the ~~nine months ended September 30, 2016.~~third quarter of 2018.

Income from Operations. Income from operations for the Olefins segment ~~increased~~decreased by ~~$80.2~~$70 million to ~~$488.5~~$92 million in the ~~nine months ended September 30, 2017~~third quarter of 2019 from ~~$408.3~~$162 million in the ~~nine months ended September 30, 2016.~~third quarter of 2018. This ~~increase~~decrease in income from operations was ~~mainly attributable to higher olefins integrated product margins,~~ primarily due to ~~higher~~lower sales prices for our major products ~~higher operating rates and lower costs associated with turnarounds and outages~~ as ~~compared to the prior-year period. These increases were~~a result of increased olefins production from new industry capacity, partially offset by ~~higher energy prices. The nine months ended September 30, 2016 were negatively impacted by the planned turnaround~~lower feedstock and ~~expansion of the Lake Charles Petro 1 ethylene unit along with other unplanned outages.~~fuel costs. Trading activity infor the ~~nine months ended September 30, 2017~~third quarter of 2019 resulted in a loss of ~~$2.8~~approximately $15 million as compared to a gain of ~~$7.8~~$4 million infor the ~~nine months ended September 30, 2016.~~third quarter of 2018.

Vinyls Segment

Net Sales. Net sales for the Vinyls segment ~~increased~~decreased by ~~$2,578.8~~$96 million, or ~~134.5%~~6%, ~~to $4,496.2 million~~ in the ~~nine months ended September 30, 2017 from $1,917.4 million in the nine months ended September 30, 2016. This increase was mainly attributable~~third quarter of 2019 due to ~~sales contributed by Axiall and higher~~lower sales prices ~~and volumes~~ for our major ~~products. The net~~products and lower sales volumes for ~~the nine months ended September 30, 2017 was~~PVC resins, partially offset by higher sales volumes for building products and PVC compounds, as compared to ~~the prior-year period primarily because nine months of Axiall's operations were included in the current period as compared to one month of Axiall operations included in~~ the prior-year period. Average sales prices for the Vinyls segment decreased by 9% in the third quarter of 2019, as compared to the third quarter of 2018. Sales volumes for the Vinyls segment increased by ~~17.8%~~3% in the third quarter of 2019 as compared to the third quarter of 2018.

Income from Operations. Income from operations for the Vinyls segment decreased by $98 million to $153 million in the third quarter of 2019 from $251 million in the third quarter of 2018. This decrease in income from operations was primarily due to lower sales prices for caustic soda and PVC resins resulting from slower global economic growth and ongoing international trade uncertainties, partially offset by lower ethane feedstock and fuel costs.

Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018

Net Sales. Net sales decreased by $405 million, or 6%, to $6,235 million for the nine months ended September 30, ~~2017~~2019 from $6,640 million for the nine months ended September 30, 2018, primarily attributable to lower sales prices for our major products and lower sales volumes for PVC resins, partially offset by higher sales volumes for polyethylene, styrene and PVC compounds. Average sales prices for the nine months ended September 30, 2019 decreased by 10% as compared to the nine months ended September 30, ~~2016. Average sales volumes for the Vinyls segment~~2018. Sales volume increased by ~~116.7% in~~4% for the nine months ended September 30, ~~2017~~2019 as compared to the nine months ended September 30, ~~2016,~~2018.

Gross Profit. Gross profit margin percentage decreased to 16% for the nine months ended September 30, 2019 from 25% in the nine months ended September 30, 2018. The gross profit margin decreased primarily ~~attributable~~due to lower sales ~~contributed~~prices for our major products (resulting in lower margins), partially offset by ~~Axiall,~~lower ethane feedstock, purchased ethylene and fuel costs, as compared to the ~~prior-year period.~~nine months ended September 30, 2018.

~~Income from Operations.~~ ~~Income from operations~~Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $6 million to $343 million for the ~~Vinyls segment increased by $294.7 million~~nine months ended September 30, 2019, as compared to ~~$431.3~~$337 million in the nine months ended September 30, ~~2017~~2018. This increase was mainly due to selling, general and administrative expenses related to NAKAN, partially offset by lower employee compensation and lower professional consulting fees.

Amortization of Intangibles. Amortization expense was $81 million for the nine months ended September 30, 2019, as compared to $75 million for the nine months ended September 30, 2018. The increase in amortization expense was primarily due to intangible assets related to NAKAN.

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Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs of $32 million for the nine months ended September 30, 2019 were higher as compared to $20 million for the nine months ended September 30, 2018. The restructuring, transaction and integration-related costs for the 2019 period primarily consisted of restructuring expenses of $22 million and acquisition costs. The restructuring expenses represent charges associated with the write-off of certain assets. For the nine months ended September 30, 2018, the restructuring, transaction and integration-related costs of $20 million primarily consisted of integration-related consulting fees and acquisition costs.

Interest Expense. Interest expense decreased by $7 million to $89 million for the nine months ended September 30, 2019 from ~~$136.6~~$96 million for the nine months ended September 30, 2018, primarily as a result of lower average debt outstanding for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. The lower average debt balance for the nine months ended September 30, 2019 was mainly due to the redemption of senior notes in May 2018 and in February 2018, partially offset by the issuance of the 1.625% 2029 Senior Notes in July 2019. See "Liquidity and Capital Resources—Debt" below and Note 9 to the consolidated financial statements included in this Form 10-Q for further discussion of our indebtedness.

Other Income, Net. Other income, net decreased by $21 million to $32 million for the nine months ended September 30, 2019 from $53 million for the nine months ended September 30, 2018. The decrease was primarily due to lower income from unconsolidated subsidiaries. Additionally, a one-time pension settlement gain of $14 million was recognized in the nine months ended September 30, 2018.

Income Taxes. The effective income tax rate was 24.1% for the nine months ended September 30, 2019 as compared to 22.0% for the nine months ended September 30, 2018. The effective tax rate for the nine months ended September 30, 2019 was higher as compared to the nine months ended September 30, 2018 primarily due to discrete tax adjustments related to the remeasurement of state deferred tax balances in the third quarter of 2018 and changes in income tax estimates based on the filing of the Company's prior-year U.S. federal tax return in each period.

Olefins Segment

Net Sales. Net sales for the Olefins segment decreased by $142 million, or 9%, to $1,384 million for the nine months ended September 30, 2019 from $1,526 million for the nine months ended September 30, 2018. The decrease was mainly due to lower sales prices for our major products, partially offset by higher polyethylene and styrene sales volumes. Average sales prices for the Olefins segment decreased by 22% for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018 primarily due to increased olefins production from new industry capacity and the sharp drop in global crude oil prices in late 2018. Sales volumes for the Olefins segment increased by 13% in the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

Income from Operations. Income from operations for the Olefins segment decreased by $272 million to $211 million for the nine months ended September 30, 2019 from $483 million for the nine months ended September 30, 2018. This decrease in income from operations was primarily due to the lower sales prices for our major products, partially offset by higher polyethylene sales volumes and lower feedstock and fuel costs. Trading activity for the nine months ended September 30, 2019 resulted in a loss of approximately $26 million as compared to a gain of $6 million for the nine months ended September 30, 2018.

Vinyls Segment

Net Sales. Net sales for the Vinyls segment decreased by $263 million, or 5%, due to lower sales prices for our major products as compared to the prior-year period. Average sales prices for the Vinyls segment decreased by 7% in the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, mainly due to lower sales prices for caustic soda and lower sales prices and volumes for PVC resins, partially offset by higher PVC compounds sales volumes. Sales volumes for the Vinyls segment increased by 2% in the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

Income from Operations. Income from operations for the Vinyls segment decreased by $405 million to $383 million in the nine months ended September 30, 2016. This increase was mainly attributable to earnings contributed by Axiall and higher sales prices and volumes for our major products. These increases were partially offset by unabsorbed fixed manufacturing costs and other costs associated with the planned turnaround and expansion at the Calvert City facility and other planned and unplanned turnarounds as well as higher energy prices during2019 from $788 million in the nine months ended September 30, ~~2017, as compared~~2018. This decrease in income from operations was primarily due to ~~the prior-year period.~~lower caustic soda and PVC resin sales prices, partially offset by lower purchased ethylene, ethane feedstock and fuel costs.

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CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2019 AND ~~2016~~2018

Cash Flows

Operating Activities

Operating activities provided cash of ~~$962.7~~$968 million in the first nine months of ~~2017~~2019 compared to cash provided by operating activities of ~~$544.2~~$1,155 million in the first nine months of ~~2016.~~2018. The ~~$418.5~~$187 million ~~increase~~decrease in cash flows from operating activities was mainly due to ~~an increase~~the decrease in income from operations ~~and lower turnaround related expenditures~~ during the first nine months ~~ended September 30, 2017~~of 2019 as compared to the first nine months of ~~2016,~~2018, partially offset by ~~an increase~~a decrease in working capital requirements. The ~~increase~~decrease in ~~net~~ income from operations ~~for the first nine months of 2017~~ was ~~mainly as a result of higher~~primarily due to lower sales prices for our major products and ~~volumes, resulting~~other factors as discussed in ~~a higher margin, and earnings contributed by Axiall, which was acquired on August 31, 2016.~~the "Summary" above. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, net, inventories, prepaid expenses and other current assets, less accounts and notes payable and accrued and other liabilities, ~~used~~provided cash of ~~$26.2~~$41 million in the first nine months of ~~2017,~~2019, compared to ~~$10.5~~$252 million of cash ~~provided~~used in the first nine months of ~~2016, an unfavorable~~2018, a favorable change of ~~$36.7~~$293 million. The ~~change was mainly driven by an unfavorable change~~favorable changes were primarily due to changes in accounts receivable ~~partially offset by favorable~~and inventories. The changes in accounts receivable and inventories were primarily the result of lower sales prices and lower inventory ~~prepaid and other current assets and accounts payable.~~

~~Table~~costs in the first nine months of ~~Contents~~

2019, as compared to the first nine months of 2018.

Investing Activities

Net cash used for investing activities during the first nine months of ~~2017~~2019 was ~~$459.4~~$948 million as compared to net cash used for investing activities of ~~$2,389.1~~$561 million in the first nine months of ~~2016. In the first nine months of 2016 we used $2,437.8~~2018. Higher investing activities were primarily due to acquisitions for $314 million, net of cash ~~acquired, for the acquisition of Axiall.~~acquired. Capital expenditures were ~~$414.3~~$604 million in the first nine months of ~~2017~~2019 compared to ~~$467.3~~$507 million in the first nine months of ~~2016.~~2018. Capital expenditures in the first nine months of ~~2017~~2019 were ~~primarily incurred on~~related to our ongoing PVC and VCM expansions at the ~~upgrade~~plants in Burghausen and ~~expansion of OpCo's Calvert City ethylene~~Gendorf, Germany and at the plant ~~at our Calvert City site. Capital expenditures~~located in ~~the first nine months of 2016 were primarily incurred on the upgrade and expansion of OpCo's Petro 1 ethylene unit at our Lake Charles site.~~Geismar, Louisiana. The remaining capital expenditures in the first nine months of ~~2017~~2019 and ~~2016~~2018 primarily related to projects to improve production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities. ~~In addition, we~~We spent ~~$47.0~~$45 million and $53 million in the first nine months of ~~2017 related to our contribution to Lotte Chemical USA Corporation~~2019 and 2018, respectively, to fund the construction costs of the ethylene ~~plant. Please see "Liquidity and Capital Resources—Liquidity and Financing Arrangements" below for further discussion. Investing activities~~plant of our joint venture LACC, LLC. Additionally, we invested $10 million in other unconsolidated subsidiaries in the first nine months of ~~2016 included purchases~~2018.

Table of ~~securities totaling $138.4 million. We also received aggregate proceeds of $662.9 million from the sales and maturities of our investments in the first nine months of 2016.~~Contents

Financing Activities

Net cash ~~used~~provided for financing activities during the first nine months of ~~2017~~2019 was ~~$306.4~~$669 million as compared to net cash ~~provided~~used by financing activities of ~~$1,560.5~~$1,331 million in the first nine months of ~~2016. We used $150.0 million and $550.0 million, respectively, for the full repayment of our term loan and the partial repayment of the Credit Agreement in~~2018. In the first nine months of ~~2017. These uses were partially offset by a drawdown under the Credit Agreement of $225.0 million in the first nine months of 2017 and net~~2019, we received proceeds of ~~$110.7~~$784 million from the issuance of the 1.625% 2029 Senior Notes and $63 million from the issuance of WLKP common units as a result of its secondary offering in September 2017. During the first nine months of 2017, the restriction on $154.0 million of cash was also removed as a result of the repayment of our term loan.units. The remaining activities during the first nine months of ~~2017~~2019 were primarily related to the ~~$76.5~~$98 million payment of cash dividends, the ~~$20.8~~$40 million payment of cash distributions to noncontrolling interests, ~~and~~repurchases of our common stock (under the ~~$0.4~~2014 Program) of $30 million, ~~payment~~proceeds of ~~debt issuance costs. In addition, we repaid $6.7~~$13 million ~~of Huasu's short-term notes payable to banks in connection with the payment of suppliers through letters of credit, partially offset by $5.9 million of proceeds~~ from the issuance of ~~such~~short-term notes payable and $19 million for the repayment of short-term notes payable. The financing activities during the first nine months of ~~2016~~2018 were mainly related to the ~~net proceeds from~~repayment of notes payable of $1,177 million, of which $704 million was used for the ~~issuance~~redemption of ~~our senior notes~~the 2021 Notes in February 2018, $461 million was used for the redemption of the 2023 Notes in May 2018 and the ~~proceeds from our term loan of $1,428.5 in~~remaining balance was used for the ~~aggregate and the drawdown under the Credit Agreement of $600.0 million, partially offset by the $125.0 million partial~~ repayment of ~~the Credit Agreement in the first nine months of 2016.~~short-term notes payable. The remaining ~~activity~~activities during the first nine months of ~~2016 was~~2018 were primarily related to the ~~$71.9~~$87 million payment of cash dividends, the ~~$12.3~~$37 million payment of cash distributions to noncontrolling interests ~~the $35.2 million payment~~and proceeds from issuance of ~~debt issuance costs and the $67.4 million of cash used for repurchases of shares of our common stock. In addition, we repaid $10.6 million of Huasu's~~ short-term notes payable to ~~banks in connection with the payment of suppliers through letters of credit, partially offset by $5.6 million of proceeds from the issuance of such notes payable in the first nine months of 2016.~~banks.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash from operations, short-term borrowings under the Credit Agreement and our long-term financing.

In November 2014, our Board of Directors authorized a ~~$250.0~~$250 million ~~share~~stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional ~~$150.0~~$150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. As of September 30, ~~2017,~~2019, we had repurchased ~~4,193,598~~6,080,191 shares of our common stock for an aggregate purchase price of approximately ~~$228.7~~$365 million under the 2014 Program. During the nine months ended September 30, 2019, 517,712 shares of our common stock were repurchased under the 2014 Program. Purchases under the 2014 Program may be made either through the open market or in privately negotiated transactions. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flow from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.

In ~~connection with~~July 2019, we completed the ~~Merger, we became party~~registered public offering of €700 million aggregate principal amount of the 1.625% 2029 Senior Notes. We intend to use the net proceeds from this offering for general corporate purposes.

In 2015, Eagle, a wholly-owned subsidiary of the Company, and Lotte formed a joint venture, ~~investment with Lotte Chemical USA Corporation~~LACC, to design, build and operate an ethylene facility ~~LACC, LLC ("LACC"). The~~with 2.2 billion pounds per year of ethylene ~~facility is located adjacent to our vinyls facility in Lake Charles.~~production capacity. Pursuant to ~~the~~a contribution and subscription agreement ~~we agreed to make a maximum capital commitment~~between Eagle and LACC, Eagle contributed $225 million to LACC ~~of up to $225.0 million~~ to fund ~~the~~ construction costs of the ethylene plant, ~~which represents~~representing approximately ~~10.0%~~12% of the membership interests in LACC. ~~The construction~~As discussed above under "Recent Developments," Eagle recently entered into a securities purchase agreement with Lotte to purchase at least an additional 34.787% of the ~~ethylene plant commenced~~membership interests in ~~January 2016,~~LACC from Lotte for approximately $817 million. We currently expect to fund the purchase price for the transaction with ~~an anticipated start-up in 2019. As of September 30, 2017, we had funded approximately $106.4 million of our portion of the construction costs of the ethylene plant.~~

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cash on hand.

We believe that our sources of liquidity as described above ~~will be~~are adequate to fund our normal operations and ongoing capital expenditures. Funding of any potential large expansions or any other potential acquisitions would likely necessitate and therefore depend on our ability to obtain additional financing in the future. We may not be able to access additional liquidity at cost effective interest rates due to the volatility of the commercial credit markets.

Cash and Cash Equivalents

As of September 30, ~~2017~~2019, our cash and cash equivalents totaled ~~$678.2~~$1,437 million. In addition, we have the Credit Agreement available to supplement cash if needed, as described under "Debt" below.

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Debt

As of September 30, ~~2017~~,2019, our indebtedness ~~including current maturities,~~ totaled $3.3 billion, consisting of $100.0 million of 6 ½% senior notes due 2029, $250.0 million of 6 ¾% senior notes due 2032, $89.0 million of 6 ½% senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes"), $65.0 million of 6 ½% senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes") (collectively, the "Senior Notes"), $624.8 million aggregate principal amount of 4.625% senior notes due 2021 (the "4.625% 2021 Senior Notes"), $63.2 million aggregate principal amount of the 4.625% senior notes due 2021 (the "4.625% Subsidiary 2021 Senior Notes"), $250.0 million principal amount of 3.60% senior notes due 2022 (the "3.6% senior notes due 2022"), $433.8 million aggregate principal amount of 4.875% senior notes due 2023 (the "4.875% 2023 Senior Notes"), $16.2 million aggregate principal amount of the 4.875% senior notes due 2023 (the "4.875% Subsidiary 2023 Senior Notes"), $750.0 million aggregate principal amount of 3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes"), $700.0 million aggregate principal amount of 5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes") and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit), plus unamortized premium net of unamortized discount and debt issuance costs of $3.5 million. The 6 ½% senior notes due 2029, the 6 ¾% senior notes due 2032, the 6 ½% 2035 GO Zone Senior Notes and the 6 ½% 2035 IKE Zone Senior Notes evidence and secure our obligations$3.4 billion. See Note 9 to the ~~Louisiana Local Government Environmental Facility and Development Authority (the "Authority"),~~consolidated financial statements appearing elsewhere in this Form 10-Q for a ~~political subdivision~~discussion of our long-term indebtedness. Defined terms used in this section have the ~~State of Louisiana, under four loan agreements relating~~definitions assigned to such terms in Note 9 to the ~~issuance~~consolidated financial statements included in Item 1 of ~~$100.0 million, $250.0 million, $89.0 million and $65.0 million aggregate principal amount of the Authority's tax-exempt revenue bonds, respectively. As of~~ ~~September 30, 2017, debt outstanding under the tax-exempt waste disposal revenue bonds bore interest at a variable rate. As of~~ ~~September 30, 2017~~, we were in compliance with all of the covenants with respect to the Senior Notes, the 4,625% 2021 Senior Notes, the 4.625% Subsidiary 2021 Senior Notes, the 3.60% senior notes due 2022, the 4.875% 2023 Senior Notes, the 4.875% Subsidiary 2023 Senior Notes, the 3.60% 2026 Senior Notes, the 5.0% 2046 Senior Notes, the Credit Agreement and our waste disposal revenue bonds.this Form 10-Q.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations and unless we were to undertake a new expansion or large acquisition, we believe our cash ~~flow~~flows from operations, available cash and available borrowings under the Credit Agreement will be adequate to meet our normal operating needs for the foreseeable future.

~~Term Loan~~Credit Agreement

On ~~August 10, 2016, our indirect subsidiary, Westlake International Holdings II C.V., a limited partnership organized under the laws of the Netherlands (the "CV Borrower"),~~July 24, 2018, we entered into a new $1 billion revolving credit ~~agreement with Bank of America, N.A., as agent~~facility that is scheduled to mature on July 24, 2023 (the "Credit Agreement") and, ~~lender, providing~~in connection therewith, terminated the ~~CV Borrower with a $150.0 million term loan facility.~~existing $1 billion revolving credit facility that was scheduled to mature on August 23, 2021 (the "Prior Credit Agreement"). The ~~term loan facility had a maturity date of March 31, 2017. The term loan was fully repaid in January 2017. The loans thereunder bore~~Credit Agreement bears interest at ~~a floating interest rate equal to~~either (a) LIBOR plus ~~2.0% per annum, payable~~a spread ranging from 1.00% to 1.75% or (b) Alternate Base Rate plus a spread ranging from 0.00% to 0.75% in ~~arrears~~each case depending on the ~~last day~~credit rating of ~~each three-month period following~~ the ~~date~~Company. At September 30, 2019, we had no borrowings outstanding under the Credit Agreement. As of ~~funding~~September 30, 2019, we had no outstanding letters of credit and ~~at maturity.~~

~~Table~~had borrowing availability of ~~Contents~~

$1 billion under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of September 30, 2019, we were in compliance with the total leverage ratio financial maintenance covenant.

~~On August 23, 2016, we~~The Credit Agreement also contains certain events of default and if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the lenders. None of our subsidiaries ~~entered into an unsecured revolving credit facility (the "Credit Agreement"), by and among us, the other borrowers and guarantors referred~~are required to ~~therein, the lenders from time to time party thereto (collectively, the "Lenders"), the issuing banks party thereto and JPMorgan Chase Bank, National Association, as Administrative Agent. Under~~guarantee our obligations under the Credit Agreement, the Lenders have committed to provide an unsecured five-year revolving credit facility in an aggregate principal amount of up to $1.0 billion. The Credit Agreement replaced our $400.0 million senior secured third amended and restated credit facility, dated as of July 17, 2014 (the "Prior ABL Credit Agreement"), by and among us, the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, and us and certain of our subsidiaries, as borrowers. Agreement.

The Credit Agreement includes a ~~$150.0~~$150 million sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The Credit Agreement also provides for a discretionary ~~$50.0~~$50 million commitment for ~~swing-line~~swingline loans to be provided on a same-day basis. We may also increase the size of the facility, in increments of at least ~~$25.0~~$25 million, up to a maximum of ~~$500.0~~$500 million, subject to certain conditions and if certain ~~Lenders~~lenders agree to commit to such an increase. ~~On October 14, 2016, certain domestic subsidiaries of Axiall and Lagoon LLC were added as subsidiary guarantors to the Credit Agreement.~~

~~At September 30, 2017, we had no borrowings outstanding under the Credit Agreement. Borrowings under~~In connection with our entry into the Credit Agreement will bear interest, at our option, at either (a) LIBOR plus a spread ranging from 1.0% to 1.75% that will vary depending on our credit rating or (b) Alternate Base Rate plus a spread ranging from 0.0% to 0.75% that will vary depending on our credit rating. Theand termination of the Prior Credit Agreement ~~also requires an undrawn commitment fee ranging from 0.10% to 0.25% that will vary depending~~ on July 24, 2018, all guarantees by our ~~credit rating. The Credit Agreement matures on August 23, 2021. As~~subsidiaries of ~~September 30, 2017, we had outstanding letters of credit totaling $45.4 million and borrowing availability of $954.6 million under the Credit Agreement.~~

~~Our~~our payment obligations under the ~~Credit Agreement are guaranteed by our current~~4.375% 2047 Senior Notes, the 3.60% 2022 Senior Notes, the 3.60% 2026 Senior Notes and future material domestic subsidiaries, subject to customary exceptions. The Credit Agreement contains customary affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. The Credit Agreement also contains customary events of default and if and for so long as an event of default has occurred and is continuing, any amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the Lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the Lenders. As of September 30, 2017, we5.0% 2046 Senior Notes were ~~in compliance with the total leverage ratio financial maintenance covenant.~~released.

GO Zone Bonds and IKE Zone Bonds

AsIn November 2017, the Louisiana Local Government Environmental Facility and Development Authority (the "Authority") completed the offering of ~~September 30, 2017, we had drawn all~~$250 million aggregate principal amount of 3.50% tax-exempt revenue refunding bonds due November 1, 2032 (the "Refunding Bonds"), the net proceeds ~~from~~of which were used to redeem $250 million aggregate principal amount of the Authority's 6 ¾% tax-exempt revenue bonds due November 1, 2032 issued by the Authority under the Gulf Opportunity Zone Act of 2005 (the "GO Zone Act") in December 2007. In connection with the issuance of the ~~6 ½% senior notes due 2029, 6 ¾% senior notes due~~Refunding Bonds, we issued $250 million of the 3.5% 2032 ~~6 ½% 2035~~ GO Zone ~~Senior Notes and 6 ½% 2035 IKE Zone~~Refunding Senior Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt" in the 2016 Form 10-K and below for more information on the 6 ½% senior notes due 2029, the 6 ¾% senior notes due 2032, the 6 ½% 2035 GO Zone Senior Notes and the 6 ½% 2035 IKE Zone Senior Notes. All domestic restricted subsidiaries that guarantee other debt of ours or of another guarantor of the Senior Notes in excess of $5.0 millionThe Refunding Bonds are ~~guarantors of these notes.~~

~~The $250.0 million of 6 ¾% senior notes due November 1, 2032 under the GO Zone Act was issued by the Authority in December 2007. The bonds were~~ subject to optional redemption by the Authority upon the direction of the Company at any time on or after November 1, ~~2017~~2027, for ~~100.0%~~100% of the principal plus accrued interest. ~~During September 2017, we directed~~

In July 2010, the Authority ~~to optionally redeem in full $250.0~~completed the reoffering of $100 million of the 6 ~~¾% senior notes on November 1, 2017 at a redemption price~~½% 2029 GO Zone Bonds. In connection with the reoffering of ~~par, plus accrued and unpaid interest, if any, to~~ the ~~redemption date. The Authority is required to cause the~~6 ½% 2029 GO Zone Bonds, ~~trustee to surrender~~we issued $100 million of the 6 ~~¾% senior notes due November 2032 of $250.0~~½% 2029 GO Zone Senior Notes. In December 2010, the Authority issued $89 million ~~to the Senior Notes trustee for cancellation. We used cash on hand to fund the redemption~~ of the 6 ½% 2035 GO Zone Bonds. In connection with the issuance of the 6 ½% 2035 GO Zone Bonds, we issued $89 million of the 6 ½% 2035 GO Zone Senior Notes. In December 2010, the Authority completed the offering of $65 million of the 6 ½% 2035 IKE Zone Bonds under Section 704 of the Emergency Economic Stabilization Act of 2008 (the "IKE Zone Act"). In connection with the issuance of the 6 ½% 2035 IKE Zone Bonds, we issued $65 million of the 6 ½% 2035 IKE Zone Senior Notes.

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The indentures governing the Senior Notes contain customary covenants and events of default. Accordingly, these agreements generally impose significant operating and financial restrictions on us. These restrictions, among other things, provide limitations on incurrence of additional indebtedness, the payment of dividends, certain investments and acquisitions and sales of assets. However, the effectiveness of certain of these restrictions is currently suspended because the Senior Notes are currently rated investment grade by at least two nationally recognized credit rating agencies. The most significant of these provisions, if it were currently effective, would restrict us from incurring additional debt, except specified permitted debt (including borrowings under our credit facility), when our fixed charge coverage ratio is below 2.0:1. These limitations6 ½% 2029 GO Zone Bonds are subject to ~~a number of important qualifications and exceptions, including, without limitation, an exception for~~optional redemption by the ~~payment of our regular quarterly dividend of up to $0.10 per share. If~~Authority upon the restrictions were currently effective, distributions in excess of $100.0 million would not be allowed unless, after giving pro forma effect to the distribution, our fixed charge coverage ratio is at least 2.0:1 and such payment, together with the aggregate amount of all other distributions after January 13, 2006, is less than the sum of 50.0% of our consolidated net income for the period from October 1, 2003 to the enddirection of the ~~most recent quarter~~Company at any time prior to August 1, 2020 for which consolidated financial statements have been filed, plus 100.0% of net cash proceeds received after October 1, 2003 as a contribution to our common equity capital or from the issuance or sale of certain securities, plus several other adjustments.

~~3.60% Senior Notes due 2022~~

~~The 3.60% senior notes due 2022 are unsecured and were issued with an original issue discount of $1.2 million. There is no sinking fund and no scheduled amortization~~100% of the ~~3.60% senior notes due 2022~~principal plus accrued interest and a discounted "make whole" payment. On or after August 1, 2020, the 6 ½% 2029 GO Zone Bonds are subject to optional redemption by the Authority upon the direction of the Company for 100% of the principal plus accrued interest. The 6 ½% 2035 GO Zone Bonds and the 6 ½% 2035 IKE Zone Bonds are subject to optional redemption by the Authority upon the direction of the Company at any time prior to ~~maturity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt" in the~~ ~~2016~~ ~~Form 10-K~~November 1, 2020 for ~~more information on the 3.60% senior notes due 2022. All of our domestic subsidiaries that guarantee other indebtedness of ours or of another guarantor~~100% of the ~~3.60% senior notes due 2022 in excess of $5.0 million~~principal plus accrued interest and a discounted "make whole" payment. On or after November 1, 2020, the 6 ½% 2035 GO Zone Bonds and the 6 ½% 2035 IKE Zone Bonds are ~~guarantors~~subject to optional redemption by the Authority upon the direction of the ~~3.60% senior notes due 2022.~~

~~The indenture governing~~Company for 100% of the 3.60% senior notes due 2022 contains customary events of default and covenants that will restrict our and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our or their assets.principal plus accrued interest.

3.60% Senior Notes due 2026 and 5.0% Senior Notes due 2046

In August 2016, we ~~issued $750.0~~completed the private offering of $750 million aggregate principal amount of ~~the~~our 3.60% 2026 Senior Notes and ~~$700.0~~$700 million aggregate principal amount of ~~the~~our 5.0% 2046 Senior Notes. In ~~connection with~~March 2017, the private offering and issuance of the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes, we entered into a registration rights agreement pursuant to which, among other things, we agreed to file with the SEC a registration statement relating to an offer to exchange the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes for the 2026 and 2046 Exchange Notes containing terms substantially identical to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes (except that the transfer restrictions on the 2026 and 2046 Exchange Notes will be modified or eliminated and there will be no registration rights). On March 27, 2017, weCompany commenced registered exchange offers to exchange the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes for new notes that are identical in all material respects to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes, except that the offer and issuance of the new Securities and Exchange Commission ("SEC")-registered notes have been registered under the Securities ~~Act.~~Act of 1933, as amended (the "Securities Act"). The exchange offers expired on April 24, 2017, and approximately 99.97% of the 3.60% 2026 Senior Notes and ~~100.00%~~100% of the 5.0% 2046 Senior Notes were exchanged. The ~~3.60% 2026 Senior Notes~~notes that were not exchanged ~~pursuant to~~in the exchange offers have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the ~~United States~~U.S. absent registration or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities law.

~~All of our domestic subsidiaries that guarantee other indebtedness of ours or of another guarantor of the~~ 3.60% 2026 Senior Notes or the 5.0% 2046 Senior Notes in excess of $40.0 million are guarantors of the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes. The indenture governing the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes contains customary events of default and covenants that will restrict our and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our or their assets. References to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes in this paragraph refer to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes that were exchanged in the exchange offers described in the preceding paragraph as well as the 3.60% 2026 Senior Notes that were not exchanged in such exchange offers.

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~~4.625%~~ Senior Notes due ~~2021 and 4.875% Senior Notes due 2023~~2022

In ~~September 2016,~~July 2012, we issued ~~$624.8~~$250 million aggregate principal amount of the ~~4.625% 2021~~3.60% 2022 Senior Notes. We may optionally redeem the 3.60% 2022 Senior Notes at any time and ~~$433.8~~from time to time prior to April 15, 2022 (three months prior to the maturity date) for 100% of the principal plus accrued interest and a discounted "make whole" payment. On or after April 15, 2022, we may optionally redeem the 3.60% 2022 Senior Notes for 100% of the principal plus accrued interest. The holders of the 3.60% 2022 Senior Notes may require us to repurchase the 3.60% 2022 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 3.60% 2022 Senior Notes).

4.375% Senior Notes due 2047

In November 2017, we completed the registered public offering of $500 million aggregate principal amount of ~~the 4.875% 2023~~4.375% Senior Notes ~~upon~~due November 15, 2047. We may optionally redeem the ~~closing of our offers~~4.375% 2047 Senior Notes at any time and from time to ~~exchange any and all~~time prior to May 15, 2047 (six months prior to the maturity date) for 100% of the ~~$688.0 million aggregate~~ principal ~~amount of~~plus accrued interest and a discounted "make whole" payment. On or after May 15, 2047, we may optionally redeem the outstanding 4.625% senior notes due 2021 issued by Eagle Spinco Inc., a wholly owned subsidiary of Axiall, and the $450.0 million aggregate principal amount of the outstanding 4.875% senior notes due 2023 issued by Axiall. In connection with the private offering and issuance of the 4.625% 2021 Senior Notes and the 4.875% Senior Notes, we entered into a registration rights agreement pursuant to which, among other things, we agreed to file with the SEC a registration statement relating to an offer to exchange the 4.625% 2021 Senior Notes and the 4.875% 20234.375% 2047 Senior Notes for ~~new SEC registered notes (the "2021 and 2023 Exchange Notes") containing terms substantially identical to~~100% of the ~~4.625% 2021~~principal amount plus accrued interest. The holders of the 4.375% 2047 Senior Notes ~~and~~may require us to repurchase the ~~4.875% 2023~~4.375% 2047 Senior Notes ~~except that~~at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the ~~transfer restrictions on~~date of repurchase, upon the ~~2021~~occurrence of both a "change of control" and, ~~2023 Exchange Notes will be modified or eliminated and there will be no registration rights). On March 27, 2017, we commenced registered exchange offers to exchange~~within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the 4.625% 2021 Senior Notes and the 4.875% 2023 Senior Notes for new notes that are identical in all material respects to the 4.625% 2021 Senior Notes and the 4.875% 2023 Senior Notes, except that the offer and issuance of the new notes have been registered under the Securities Act. The exchange offers expired on April 24, 2017, and 100.0% of the 4.625% 2021 Senior Notes and 100.0% of the 4.875% 2023 Senior Notes were exchanged.

All of our domestic subsidiaries that guarantee other indebtedness of ours or of another guarantor of the 4.625% 2021 Senior Notes or the 4.875% 2023 Senior Notes in excess of $40.0 million are guarantors of the 4.625% 2021 Senior Notes and the 4.875% 2023 Senior Notes. The indenture governing the ~~4.625% 2021~~4.375% 2047 Senior Notes and the 4.875% 2023 Senior Notes contains customary events of default and covenants that will restrict our and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our or their assets. References to the 4.625% 2021 Senior Notes and the 4.875% 2023 Senior Notes in this paragraph refer to the 4.625% 2021 Senior Notes and the 4.875% 2023 Senior Notes that were exchanged in the exchange offers described in the preceding paragraph.Notes).

Revenue Bonds

In December 1997, we entered into a loan agreement with a public trust established for public purposes for the benefit of the Parish of Calcasieu, Louisiana. The public trust issued ~~$10.9~~$11 million principal amount of tax-exempt waste disposal revenue bonds in order to finance our construction of waste disposal facilities for an ethylene plant. The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the waste disposal revenue bonds at September 30, 2019 was 1.70% and at December 31, 2018 was 1.85%.

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1.625% Senior Notes due 2029

In July 2019, we completed the registered public offering of €700 million aggregate principal amount of the 1.625% Senior Notes due July 17, 2029. The Company received approximately $779 million of net proceeds from the offering. We may optionally redeem the 1.625% 2029 Senior Notes at any time and from time to time prior to April 17, 2029 (three months prior to the maturity date) for 100% of the principal plus accrued interest and a discounted "make whole" payment. On or after April 17, 2029, we may optionally redeem the 1.625% 2029 Senior Notes for 100% of the principal amount plus accrued interest. The holders of the 1.625% 2029 Senior Notes may require us to repurchase the 2029 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture and supplemental indenture governing the 1.625% 2029 Senior Notes).

The indenture and supplemental indebtedness governing the 3.60% 2026 Senior Notes, the 5.0% 2046 Senior Notes, the 3.60% 2022 Senior Notes, the 4.375% 2047 Senior Notes and the 1.625% 2029 Senior Notes contain customary events of default and covenants that will restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale-leaseback transactions and (3) consolidate, merge or transfer all or substantially all of its assets.

As of September 30, 2019, we were in compliance with all of our long-term debt covenants.

Westlake Chemical Partners LP Credit Arrangements

Our subsidiary, Westlake Chemical Finance Corporation, is the lender party to a ~~$300.0~~$600 million revolving credit facility with ~~Westlake Chemical Partners LP ("WLKP"). On August 1, 2017, the~~WLKP, originally entered into on April 29, 2015. The revolving credit facility ~~was amended~~is scheduled to ~~extend the maturity from 2018 to~~mature on April 29, 2021. Borrowings under the revolver bear interest at LIBOR plus a spread ranging from 2.0% to 3.0% (depending on WLKP's consolidated leverage ratio), payable quarterly. WLKP may pay all or a portion of the interest on any borrowings in kind, in which case any such amounts would be added to the principal amount of the loan. As of September 30, ~~2017,~~2019, outstanding borrowings under the credit facility totaled ~~$253.5~~$377 million and bore interest at the LIBOR rate plus 2.0%.

Our subsidiary, Westlake ~~Development Corporation,~~Polymers LLC, is the ~~lender party~~administrative agent to a ~~$600.0~~$600 million revolving credit facility with OpCo. ~~The revolving credit facility matures in 2019.~~ As of September 30, ~~2017,~~2019, outstanding borrowings under the credit facility totaled ~~$223.6~~$23 million and bore interest at the LIBOR rate plus ~~3.0%~~2.0%, which is accrued in arrears quarterly.

We consolidate WLKP and OpCo for financial reporting purposes as we have a controlling financial interest. As such, the revolving credit facilities described above between our subsidiaries and WLKP and OpCo are eliminated upon consolidation.

Off-Balance Sheet Arrangements

None.

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FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Certain of the statements contained in this report are forward-looking statements. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements can be identified by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expected" or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Forward-looking statements relate to matters such as:

future operating rates, margins, cash flows and demand for our ~~products (including any changes as a result of economic growth or North American producers' competitive position);~~products;

industry market outlook, including the price of crude oil;

production capacities;

currency devaluation;

our ability to borrow additional funds under ~~the Credit Agreement;~~our credit agreement;

our ability to meet our liquidity needs;

our ability to meet debt obligations under our debt instruments;

our intended quarterly dividends;

future capacity additions and expansions in the ~~industry;~~industries in which we compete;

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results of acquisitions, including our acquisition of NAKAN;

timing, funding and results of capital projects, such as the construction of the LACC plant and associated facilities;

~~results of acquisitions, including our acquisition of Axiall (including the benefits, results and effects thereof);~~

pension plan obligations, funding requirements and investment policies;

compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties that may come into force to limit or control carbon dioxide and other greenhouse ~~gases~~gas emissions or to address other issues of climate change;

effects of pending legal proceedings; and

timing of and amount of capital expenditures.

We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such statements. While it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed under "Risk Factors" in the ~~2016~~2018 Form 10-K and those described from time to time in our other filings with the SEC including, but not limited to, the following:

general economic and business conditions;

the cyclical nature of the chemical ~~industry;~~and building products industries;

the availability, cost and volatility of raw materials and energy;

uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East ~~the Commonwealth of Independent States (including Ukraine)~~ and elsewhere;

current and potential governmental regulatory actions in the United States and other countries and political unrest in other areas;

industry production capacity and operating rates;

the supply/demand balance for our products;

competitive products and pricing pressures;

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instability in the credit and financial markets;

access to capital markets;

terrorist acts;

operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);

changes in laws or ~~regulations;~~regulations, including trade policies;

technological developments;

~~our ability to realize anticipated benefits of the Merger and to integrate Axiall's business;~~

~~charges or other liabilities relating to the Merger;~~

~~the significant indebtedness that we have incurred in connection with the Merger;~~

~~our ability to integrate acquired businesses other than Axiall;~~

foreign currency exchange risks;

our ability to implement our business strategies; and

creditworthiness of our customers.

Many of such factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

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~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Our strategies include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. We use derivative instruments in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions on ethane at September 30, ~~2017,~~2019, a hypothetical $0.10 increase in the price of a gallon of ethane would have increased our income before income taxes by ~~$6.9 million and~~$16 million. Based on our open derivative positions at September 30, 2019, on ethylene (which are related to OpCo's third party sales), a hypothetical $0.10 ~~increase~~decrease in the price of a ~~gallon~~pound of ~~propane~~ethylene would have increased our income before income taxes by ~~$3.8~~$12 million. ~~Additional information concerning derivative commodity instruments appears in Notes 13 and 14 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q.~~

Interest Rate Risk

We are exposed to interest rate risk with respect to fixed and variable rate debt. At September 30, ~~2017~~,2019, we had ~~$10.9~~$3,468 million principal amount of variable rate debt outstanding. The debt outstanding under the tax-exempt waste disposal revenue bonds is at a variable rate. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of $10.9 million as of ~~September 30, 2017~~ ~~was 1.0%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would increase our annual interest expense by approximately $0.1 million. Also, at~~ ~~September 30, 2017, we had $3.3 billion~~ aggregate principal amount of fixed rate debt. We are subject to the risk of higher interest cost if and when this debt is refinanced. If interest rates were 1.0% higher at the time of refinancing, our annual interest expense would increase by approximately ~~$33.4~~$35 million. Also, at September 30, 2019, we had $11 million principal amount of variable rate debt outstanding, which represents the tax-exempt waste disposal revenue bonds. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of $11 million as of September 30, 2019 was 1.70%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would not result in a material change in the interest expense.

LIBOR is used as a reference rate for borrowings under our revolving line of credit, which is currently undrawn. LIBOR is set to be phased out at the end of 2021. We are currently reviewing how the LIBOR phase-out will affect the Company, but we do not expect the impact to be material.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk associated with our international operations. However, the effect of fluctuations in foreign currency exchange rates caused by our international operations has not had a material impact on our overall operating results. We may engage in activities to mitigate our exposure to foreign currency exchange risk in certain instances through the use of currency exchange derivative instruments, including forward exchange contracts, cross-currency swaps or spot purchases. A forward exchange contract obligates us to exchange predetermined amounts of specified currencies at a stated

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exchange rate on a stated date. A cross-currency swap obligates us to make periodic payments in the local currency and receive periodic payments in our functional currency based on the notional amount of the instrument. In January 2018, we entered into foreign exchange hedging contracts designated as net investment hedges with an aggregate notional value of €220 million designed to reduce the volatility in stockholders' equity from changes in currency exchange rates associated with our net investments in foreign operations. In July 2019, we terminated a portion of the foreign exchange hedging contract amounting to a notional value of €70 million. The notional value of the net investment hedges was €150 million at September 30, 2019. The arrangement is scheduled to mature in 2026.

In July 2019, we completed the registered public offering of €700 million aggregate principal amount of the 1.625% Senior Notes due July 17, 2029. We designated this euro-denominated debt as a non-derivative net investment hedge of a portion of our net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

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~~Item 4.~~	~~Controls and Procedures~~

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures are effective with respect to (i) the accumulation and communication to our management, including our Chief Executive Officer and our Chief Financial Officer, of information required to be disclosed by us in the reports that we submit under the Exchange Act, and (ii) the recording, processing, summarizing and reporting of such information within the time periods specified in the SEC's rules and forms.

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There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2017~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION



~~Item 1.~~	Item 1. Legal Proceedings

The ~~2016~~2018 Form 10-K, filed on February ~~22, 2017,~~20, 2019, contained a description of various legal proceedings in which we are involved. See below and Note 1816 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q for a description of certain of those proceedings, which information is incorporated by reference herein.

We and other caustic soda producers were named as defendants in multiple purported class action civil lawsuits filed since March 2019 in the U.S. District Court for the Western District of New York. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. The other defendants named in the lawsuits are Olin Corporation, K.A. Steel Chemicals (a wholly owned subsidiary of Olin), Occidental Petroleum Corporation, Occidental Chemical Corporation d/b/a OxyChem, Shin-Etsu Chemical Co., Ltd., Shintech Incorporated, Formosa Plastics Corporation, and Formosa Plastics Corporation, U.S.A. Each of the lawsuits is filed on behalf of the respective named plaintiff or plaintiffs and a putative class comprised of either direct purchasers or indirect purchasers of caustic soda in the U.S. Plaintiffs seek an unspecified amount of damages and injunctive relief. We have already moved to dismiss the majority of the lawsuits filed and plan to file similar motions with respect to the remaining lawsuits. At this time, we are not able to estimate the impact, if any, that these lawsuits could have on our consolidated financial statements either in the current period or in future periods.

From time to time, we receive notices or inquiries from government entities regarding alleged violations of environmental laws and regulations pertaining to, among other things, the disposal, emission and storage of chemical substances, including hazardous wastes. Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions, unless we reasonably believe such sanctions would not exceed $100,000.

In May 2013, an amendment to an existing consent order agreed to by the West Virginia Department of Environmental Protection and a predecessor of Axiall required that it, among other things, pay a penalty in the amount of $449,000 and continue certain corrective actions associated with discharges of hexachlorocyclohexane (commonly referred to as BHC) from the Natrium facility's effluent discharge outfalls. The penalty was paid and corrective actions required are on-going per a December 2018 agreement to extend the compliance date under the amended consent order. The amended consent order also imposes stipulated penalties for exceedances of the facility's interim effluent discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.

During September 2010, our vinyls facilities in Lake Charles and Plaquemine each received a Consolidated Compliance Order and Notice of Potential Penalty, alleging violations of various requirements of those facilities' air permits, based largely on self-reported permit deviations related to record-keeping violations. We have been negotiating a possible global settlement of these and several other matters with the Louisiana Department of Environmental Quality ("LDEQ"). In May 2018, we reached an agreement in principal with the LDEQ to resolve these consolidated enforcement matters for a penalty of $162,500. The settlement agreement is being prepared and when finalized will be subject to public comment and approval by the Louisiana Attorney General.

For several years, the Environmental Protection Agency (the "EPA") has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares. On April 21, 2014, we received a Clean Air Act Section 114 Information Request from the EPA which sought information regarding flares at the Calvert City facility and certain Lake Charles facilities. The EPA has informed us that the information provided leads the EPA to believe that some of the flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate us to take corrective actions relating to the alleged noncompliance. We believe the resolution of these matters may require the payment of a monetary sanction in excess of $100,000.

Region Six of the EPA has investigated and inspected our compliance with Risk Management Program requirements under the Clean Air Act at our Geismar, Louisiana facility. We believe resolution of the matter may require the payment of a monetary sanction in excess of $100,000.

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On November 24, 2014, we entered into an agreed order with the Kentucky Energy and Environmental Cabinet ("KEEC") regarding our Kentucky Pollutant Discharge Elimination System permit limits for hexachlorobenzene and mercury at our Calvert City, Kentucky facility. We and the KEEC entered into a new agreed order under which we will be subject to new interim discharge limits for hexachlorobenzene in addition to accompanying stipulated penalties for exceedances of those interim discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.

We do not believe that the resolution of any or all of these matters will have a material adverse effect on our financial condition, results of operations or cash flows.



~~Item 1A.~~	Item 1A. Risk Factors

For a discussion of risk factors, please read Item 1A, "Risk Factors" in the ~~2016~~2018 Form 10-K. There have been no material changes from those risk factors.



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

The following table provides information on our purchase of equity securities during the quarter ended September 30, ~~2017~~2019.

Period
Total Number
of Shares
Purchased ⁽¹⁾

Average Price
Paid Per
Share

Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs ⁽²⁾

Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased Under the
Plans or Programs ⁽²⁾
July 2017 —
$ —
—
$ 171,285,000
August 2017 —
$ —
—
$ 171,285,000
September 2017 1,142
$ 77.67
—
$ 171,285,000
1,142
$ 77.67
—



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
July 2019	—	$	—	—	$	194,872,000
August 2019	177,323	$	57.23	174,972	$	184,872,000
September 2019	2,855	$	63.22	—	$	184,872,000
	180,178	$	57.33	174,972

_____________


(1)	~~Represents~~Includes 2,351 and 2,855 shares withheld in August 2019 and September 2019, respectively, in satisfaction of withholding taxes due upon the vesting of restricted stock units granted to our employees under the 2013 Plan.

(2)

In November 2014, our Board of Directors authorized a ~~$250.0~~$250 million ~~share~~stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional ~~$150.0~~$150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. As of September 30, ~~2017, 4,193,598~~2019, 6,080,191 shares of our common stock had been acquired at an aggregate purchase price of approximately ~~$228.7~~$365 million under the 2014 Program. Transaction fees and commissions are not reported in the average price paid per share in the table above. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash ~~flow~~flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.

5641

Table of Contents



~~Item 6.~~	Item 6. Exhibits



Exhibit No.		Exhibit Index

4.1		~~EXHIBIT INDEX~~ Twelfth Supplemental Indenture (including the form of the Notes), dated as of July 17, 2019, between Westlake Chemical Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to Westlake's Current Report on Form 8-K filed on July 17, 2019, File No. 1-32260).

~~10.1†~~4.2		~~Investment Management~~Paying Agency Agreement ~~among~~dated as of July 17, 2019, between Westlake Chemical Corporation ~~Westlake Chemical OpCo LP~~ and ~~Westlake Chemical Partners LP, dated~~The Bank of New York Mellon, London Branch, as ~~of August 1, 2017~~paying agent (incorporated by reference to Exhibit 4.4 to Westlake's Current Report on Form 8-K, filed on July 17, 2019, File No. 1-32260).

31.1†		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer)

31.2†		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer)

32.1#		Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)

101.INS†		XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†		XBRL Taxonomy Extension Schema Document

101.CAL†		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†		XBRL Taxonomy Extension Label Linkbase Document

101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


†	Filed herewith.


#	Furnished herewith.

5742

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		WESTLAKE CHEMICAL CORPORATION

Date:	November ~~7, 2017~~6, 2019	By:	/S/ ALBERT CHAO
			Albert Chao
			President and Chief Executive Officer (Principal Executive Officer)

Date:	November ~~7, 2017~~6, 2019	By:	/S/ M. STEVEN BENDER
			M. Steven Bender
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)

5843




Item	Page
PART I. FINANCIAL INFORMATION
1) Financial Statements	1
2) Management's Discussion and Analysis of Financial Condition and Results of Operations	24
3) Quantitative and Qualitative Disclosures about Market Risk	39
~~3) Quantitative and Qualitative Disclosures about Market Risk~~	53
4) Controls and Procedures	5539

PART II. OTHER INFORMATION
1) Legal Proceedings	5640
1A) Risk Factors	5641
2) Unregistered Sales of Equity Securities and Use of Proceeds	5641
6) Exhibits	5742



	September 30, 2017			December 31, 2016

	(in thousands of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	678,233		$	459,453
Accounts receivable, net	1,142,979			938,743
Inventories	834,835			801,100
Prepaid expenses and other current assets	34,860			48,493
Restricted cash	8,626			160,527
Total current assets	2,699,533			2,408,316
Property, plant and equipment, net	6,343,637			6,420,062
Other assets, net
Goodwill	1,011,342			946,553
Customer relationships, net	635,884			611,615
Other intangible assets, net	166,166			175,839
Deferred charges and other assets, net	387,563			327,868
Total other assets, net	2,200,955			2,061,875
Total assets	$	11,244,125		$	10,890,253
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	560,804		$	496,259
Accrued liabilities	609,472			537,483
Term loan	—			149,341
Total current liabilities	1,170,276			1,183,083
Long-term debt, net	3,349,402			3,678,654
Deferred income taxes	1,660,914			1,650,575
Pension and other post-retirement benefits	367,705			364,819
Other liabilities	144,329			121,077
Total liabilities	6,692,626			6,998,208
Commitments and contingencies (Note 18)
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; 134,651,380 and 134,651,380 shares issued at September 30, 2017 and December 31, 2016, respectively	1,347			1,347
Common stock, held in treasury, at cost; 5,551,693 and 5,726,377 shares at September 30, 2017 and December 31, 2016, respectively	(314,694		)	(319,339		)
Additional paid-in capital	558,423			550,641
Retained earnings	3,837,644			3,412,286
Accumulated other comprehensive loss	(13,946		)	(121,306		)
Total Westlake Chemical Corporation stockholders' equity	4,068,774			3,523,629
Noncontrolling interests	482,725			368,416
Total equity	4,551,499			3,892,045
Total liabilities and equity	$	11,244,125		$	10,890,253



	Final Purchase Consideration as of August 31, 2016
Closing stock purchase:
Offer per share	$	33.00
Multiplied by number of shares outstanding at acquisition (in thousands of shares)	67,277
Fair value of Axiall shares outstanding purchased by the Company	2,220,141
Plus:
Axiall debt repaid at acquisition	247,135
Seller's transaction costs paid by the Company ⁽¹⁾	47,458
Total fair value of consideration transferred	2,514,734

Fair value of Axiall share-based awards attributed to pre-combination service ⁽²⁾	11,346
Additional settlement value of shares acquired	13,280
Purchase consideration	2,539,360

Fair value of previously held equity interest in Axiall ⁽³⁾	102,300
Total fair value allocated to net assets acquired	$	2,641,660



	Net Assets Acquired as of August 31, 2016
Cash	$	88,251
Accounts receivable ⁽¹⁾	422,274
Income tax receivable	50,980
Inventories ⁽²⁾	349,205
Prepaid expenses and other current assets	55,462
Property, plant and equipment ⁽²⁾	2,942,162
Customer relationships (weighted average lives of 9.8 years) ⁽³⁾	670,000
Other intangible assets:
Trade name (weighted average lives of 6.8 years)	50,000
Technology (weighted average lives of 5.4 years)	41,500
Supply contracts and leases (weighted average lives of 6.3 years)	27,288
Other assets	93,875
Total assets acquired	4,790,997
Accounts and notes payable	254,041
Interest payable	8,154
Income tax payable	1,607
Accrued compensation	44,186
Accrued liabilities	154,290
Deferred income taxes ⁽⁴⁾	958,304
Tax reserve non-current	3,130
Pension and other post-retirement obligations	311,106
Other liabilities	101,325
Long-term debt	1,187,290
Total liabilities assumed	3,023,433
Total identifiable net assets acquired	1,767,564
Noncontrolling interest	(68,000		)
Goodwill	942,096
Total fair value allocated to net assets acquired	$	2,641,660



	Pro Forma Nine Months Ended September 30, 2016
Net sales	$	5,345,365
Net income ⁽¹⁾	$	277,567
Net income attributable to noncontrolling interest	16,404
Net income attributable to Westlake Chemical Corporation ⁽¹⁾	$	261,163
Earnings per common share attributable to Westlake Chemical Corporation
Basic	$	2.01
Diluted	$	2.00



	September 30, 2017							December 31, 2016
	Principal Amount		Unamortized Premium, Discount and Debt Issuance Costs			Net Long-term Debt		Principal Amount		Unamortized Premium, Discount and Debt Issuance Costs			Net Long-term Debt
Revolving credit facility	$	—	$	—		$	—	$	325,000	$	—		$	325,000
4.625% senior notes due 2021 (the "4.625% Westlake 2021 Senior Notes")	624,793		21,881			646,674		624,793		26,837			651,630
4.625% senior notes due 2021 (the "4.625% Subsidiary 2021 Senior Notes")	63,207		2,343			65,550		63,207		2,862			66,069
3.60% senior notes due 2022	250,000		(1,635		)	248,365		250,000		(1,891		)	248,109
4.875% senior notes due 2023 (the "4.875% Westlake 2023 Senior Notes")	433,793		11,791			445,584		433,793		13,431			447,224
4.875% senior notes due 2023 (the "4.875% Subsidiary 2023 Senior Notes")	16,207		477			16,684		16,207		540			16,747
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")	750,000		(10,031		)	739,969		750,000		(10,757		)	739,243
Loan related to tax-exempt waste disposal revenue bonds due 2027	10,889		—			10,889		10,889		—			10,889
6 ½% tax-exempt senior notes due 2029	100,000		(861		)	99,139		100,000		(916		)	99,084
6 ¾% tax-exempt senior notes due 2032	250,000		(605		)	249,395		250,000		(1,883		)	248,117
6 ½% tax-exempt senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes")	89,000		(806		)	88,194		89,000		(839		)	88,161
6 ½% tax-exempt senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes")	65,000		(578		)	64,422		65,000		(602		)	64,398
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")	700,000		(25,463		)	674,537		700,000		(26,017		)	673,983
Long-term debt, net	$	3,352,889	$	(3,487	)	$	3,349,402	$	3,677,889	$	765		$	3,678,654



	Common Stock		Common Stock, Held in Treasury			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
Balances at December 31, 2016	$	1,347	$	(319,339	)	$	550,641		$	3,412,286		$	(121,306	)	$	368,416		$	3,892,045
Net income	—		—			—			501,849			—			21,429			523,278
Other comprehensive income (loss), net of income taxes:
Pension and other post- retirement benefits liability	—		—			—			—			1,057			(44		)	1,013
Foreign currency translation adjustments	—		—			—			—			106,563			2,952			109,515
Other	—		—			—			—			(260		)	—			(260		)
Shares issued—stock- based compensation	—		4,645			(2,441		)	—			—			—			2,204
Stock-based compensation, net of tax on stock options exercised	—		—			10,223			—			—			—			10,223
Dividends declared	—		—			—			(76,491		)	—			—			(76,491		)
Distributions to noncontrolling interests	—		—			—			—			—			(20,767		)	(20,767		)
Issuance of Westlake Chemical Partners LP common units	—		—			—			—			—			110,739			110,739
Balances at September 30, 2017	$	1,347	$	(314,694	)	$	558,423		$	3,837,644		$	(13,946	)	$	482,725		$	4,551,499



	Benefits Liability, Net of Tax		Cumulative Foreign Currency Exchange, Net of Tax			Net Unrealized Holding Gains (Losses) on Investments, Net of Tax			Total
Balances at December 31, 2016	$	28,945	$	(150,202	)	$	(49	)	$	(121,306	)
Other comprehensive income (loss) before reclassifications	—		106,563			(260		)	106,303
Amounts reclassified from accumulated other comprehensive loss	1,057		—			—			1,057
Net other comprehensive income (loss) for the period	1,057		106,563			(260		)	107,360
Balances at September 30, 2017	$	30,002	$	(43,639	)	$	(309	)	$	(13,946	)



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,
		2017			2016			2017			2016
Amortization of pension and other post-retirement items
Net loss	(1)	$	(529	)	$	(369	)	$	(1,600	)	$	(1,072	)
	Benefit from income taxes	193			141			543			411
		(336		)	(228		)	(1,057		)	(661		)
Net unrealized gains on available-for-sale investments
Realized gain on available-for-sale investments	Other income, net	—			52,401			—			53,720
	Provision for income taxes	—			(696		)	—			(1,169		)
		—			51,705			—			52,551
Total reclassifications for the period		$	(336	)	$	51,477		$	(1,057	)	$	51,890



	September 30, 2017
	Net Presentation			Gross Presentation
	Net Assets (Liabilities) Presented in the Consolidated Balance Sheets			Risk management assets—Commodity forward contracts		Risk management liabilities—Commodity forward contracts
Accounts receivable, net
Derivative positions subject to enforceable master netting arrangements	$	793		$	2,778	$	(1,985	)
Derivative positions not subject to enforceable master netting arrangements	4,557			4,557		—
	5,350			7,335		(1,985		)
Deferred charges and other assets, net
Derivative positions subject to enforceable master netting arrangements	—			—		—
Derivative positions not subject to enforceable master netting arrangements	4,336			4,336		—
	4,336			4,336		—
Accrued liabilities
Derivative positions subject to enforceable master netting arrangements	—			—		—
Derivative positions not subject to enforceable master netting arrangements	(704		)	—		(704		)
	(704		)	—		(704		)
Other liabilities
Derivative positions subject to enforceable master netting arrangements	(1,410		)	745		(2,155		)
Derivative positions not subject to enforceable master netting arrangements	(2,774		)	—		(2,774		)
	(4,184		)	745		(4,929		)
Risk management assets (liabilities)—Commodity forward contracts				$	12,416	$	(7,618	)



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,
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	2017		2016			2017			2016
Commodity forward contracts	Cost of sales	$	6,846	$	(7,840	)	$	(2,756	)	$	7,784



	September 30, 2017
	Level 1			Level 2			Total
Derivative instruments
Risk management assets—Commodity forward contracts	$	233		$	12,183		$	12,416
Risk management liabilities—Commodity forward contracts	(6,183		)	(1,435		)	(7,618		)

	December 31, 2016
	Level 1			Level 2			Total
Derivative instruments
Risk management assets—Commodity forward contracts	$	878		$	14,108		$	14,986
Risk management liabilities—Commodity forward contracts	(6,854		)	(367		)	(7,221		)



	Westlake Chemical Corporation		100% Owned Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets
Cash and cash equivalents	$	334,111	$	33,089	$	311,033	$	—		$	678,233
Accounts receivable, net	3,060,591		4,048,824		432,238		(6,398,674		)	1,142,979
Inventories	—		631,322		203,513		—			834,835
Prepaid expenses and other current assets	16,616		31,785		22,365		(35,906		)	34,860
Restricted cash	—		1,275		7,351		—			8,626
Total current assets	3,411,318		4,746,295		976,500		(6,434,580		)	2,699,533
Property, plant and equipment, net	—		4,330,104		2,013,533		—			6,343,637
Other assets, net
Goodwill	—		854,896		156,446		—			1,011,342
Customer relationships, net	—		493,960		141,924		—			635,884
Other intangible assets, net	—		92,155		74,011		—			166,166
Deferred charges and other assets, net	9,890,164		551,732		1,372,070		(11,426,403		)	387,563
Total other assets, net	9,890,164		1,992,743		1,744,451		(11,426,403		)	2,200,955
Total assets	$	13,301,482	$	11,069,142	$	4,734,484	$	(17,860,983	)	$	11,244,125
Current liabilities
Accounts payable	$	5,821,323	$	830,824	$	128,673	$	(6,220,016	)	$	560,804
Accrued liabilities	155,106		436,816		232,114		(214,564		)	609,472
Total current liabilities	5,976,429		1,267,640		360,787		(6,434,580		)	1,170,276
Long-term debt, net	3,256,280		4,334,142		223,578		(4,464,598		)	3,349,402
Deferred income taxes	—		1,577,209		106,587		(22,882		)	1,660,914
Pension and other liabilities	—		364,011		148,023		—			512,034
Total liabilities	9,232,709		7,543,002		838,975		(10,922,060		)	6,692,626
Total Westlake Chemical Corporation stockholders' equity	4,068,773		3,526,140		3,412,784		(6,938,923		)	4,068,774
Noncontrolling interests	—		—		482,725		—			482,725
Total equity	4,068,773		3,526,140		3,895,509		(6,938,923		)	4,551,499
Total liabilities and equity	$	13,301,482	$	11,069,142	$	4,734,484	$	(17,860,983	)	$	11,244,125



	Westlake Chemical Corporation		100% Owned Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets
Cash and cash equivalents	$	146,990	$	53,006	$	259,457	$	—		$	459,453
Accounts receivable, net	2,117,540		3,329,871		323,931		(4,832,599		)	938,743
Inventories	—		597,819		203,281		—			801,100
Prepaid expenses and other current assets	30,748		41,755		12,494		(36,504		)	48,493
Restricted cash	—		—		160,527		—			160,527
Total current assets	2,295,278		4,022,451		959,690		(4,869,103		)	2,408,316
Property, plant and equipment, net	—		4,475,943		1,944,119		—			6,420,062
Other assets, net
Goodwill	—		791,706		154,847		—			946,553
Customer relationships, net	—		468,645		142,970		—			611,615
Other intangible assets, net	—		130,243		71,177		(25,581		)	175,839
Deferred charges and other assets, net	9,170,042		874,003		1,115,877		(10,832,054		)	327,868
Total other assets, net	9,170,042		2,264,597		1,484,871		(10,857,635		)	2,061,875
Total assets	$	11,465,320	$	10,762,991	$	4,388,680	$	(15,726,738	)	$	10,890,253
Current liabilities
Accounts payable	$	4,330,375	$	748,364	$	225,300	$	(4,807,780	)	$	496,259
Accrued liabilities	26,367		389,216		183,223		(61,323		)	537,483
Term loan	—		—		149,341		—			149,341
Total current liabilities	4,356,742		1,137,580		557,864		(4,869,103		)	1,183,083
Long-term debt, net	3,584,949		4,090,775		—		(3,997,070		)	3,678,654
Deferred income taxes	—		1,581,260		91,809		(22,494		)	1,650,575
Pension and other liabilities	—		360,622		125,274		—			485,896
Total liabilities	7,941,691		7,170,237		774,947		(8,888,667		)	6,998,208
Total Westlake Chemical Corporation stockholders' equity	3,523,629		3,592,754		3,245,317		(6,838,071		)	3,523,629
Noncontrolling interests	—		—		368,416		—			368,416
Total equity	3,523,629		3,592,754		3,613,733		(6,838,071		)	3,892,045
Total liabilities and equity	$	11,465,320	$	10,762,991	$	4,388,680	$	(15,726,738	)	$	10,890,253



	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
	Average Sales Price		Volume		Average Sales Price		Volume
Product sales price and volume percentage change from prior-year period
Olefins	+1.8	%	-0.8	%	+9.2	%	-1.3	%
Vinyls	+18.7	%	+86.8	%	+17.8	%	+116.7	%
Company average	+12.1	%	+52.8	%	+14.1	%	+66.4	%

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Average industry prices ⁽¹⁾
Ethane (cents/lb)	8.8		6.3		8.3		6.2
Propane (cents/lb)	18.2		11.2		16.6		10.7
Ethylene (cents/lb) ⁽²⁾	24.7		32.5		27.8		26.5
Polyethylene (cents/lb) ⁽³⁾	70.7		68.7		69.0		65.3
Styrene (cents/lb) ⁽⁴⁾	85.1		66.8		85.0		63.3
Caustic soda ($/short ton) ⁽⁵⁾	811.7		660.8		777.8		618.3
Chlorine ($/short ton) ⁽⁶⁾	332.5		304.2		320.8		295.3
PVC (cents/lb) ⁽⁷⁾	62.5		56.5		61.7		53.9

Large accelerated filer

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Non-accelerated filer

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Smaller reporting company

Emerging growth company