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~~	March 31, 2020



¨☐	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, $0.01 par value	WLK	The New York Stock Exchange
1.625% Senior Notes due 2029	WLK29	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):~~Act:

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~~April 29, 2020 was ~~129,107,447.~~127,672,480.

INDEX




Item	Page
PART I. FINANCIAL INFORMATION
1) Financial Statements	1
2) Management's Discussion and Analysis of Financial Condition and Results of Operations	3918
3) Quantitative and Qualitative Disclosures about Market Risk	5331
4) Controls and Procedures	5532

PART II. OTHER INFORMATION
1) Legal Proceedings	5632
1A) Risk Factors	5634
2) Unregistered Sales of Equity Securities and Use of Proceeds	5635
6) Exhibits	5736

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	March 31, 2020			December 31, 2019

	(in millions of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	1,537		$	728
Accounts receivable, net	1,265			1,036
Inventories	934			936
Prepaid expenses and other current assets	32			42
Total current assets	3,768			2,742
Property, plant and equipment, net	6,883			6,912
Operating lease right-of-use assets	432			443
Goodwill	1,065			1,074
Customer relationships, net	497			523
Other intangible assets, net	180			187
Equity method investments	1,065			1,112
Other assets, net	273			268
Total assets	$	14,163		$	13,261
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	431		$	473
Accrued and other liabilities	593			768
Total current liabilities	1,024			1,241
Long-term debt, net	4,432			3,445
Deferred income taxes	1,386			1,255
Pension and other post-retirement benefits	352			360
Operating lease liabilities	346			355
Other liabilities	185			202
Total liabilities	7,725			6,858
Commitments and contingencies (Note 13)
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 March 31, 2020 and December 31, 2019, respectively	1			1
Common stock, held in treasury, at cost; 6,979,662 and 6,266,609 shares at March 31, 2020 and December 31, 2019, respectively	(413		)	(377		)
Additional paid-in capital	551			553
Retained earnings	5,860			5,757
Accumulated other comprehensive loss	(106		)	(74		)
Total Westlake Chemical Corporation stockholders' equity	5,893			5,860
Noncontrolling interests	545			543
Total equity	6,438			6,403
Total liabilities and equity	$	14,163		$	13,261

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 March 31,
	2017			2016			2017			2016			2020			2019

	(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		$	1,932		$	2,025
Cost of sales	1,610,837			1,076,895			4,759,637			2,641,192			1,649			1,726
Gross profit	498,052			202,133			1,271,029			699,084			283			299
Selling, general and administrative expenses	125,642			72,729			379,919			179,757			120			116
Transaction and integration-related costs	6,663			82,841			22,949			90,550
Amortization of intangibles													27			27
Restructuring, transaction and integration-related costs													—			22
Income from operations	365,747			46,563			868,161			428,777			136			134
Other income (expense)
Interest expense	(40,036		)	(24,366		)	(118,784		)	(36,966		)	(31		)	(30		)
Other income, net	2,058			41,265			6,591			52,091			11			9
Income before income taxes	327,769			63,462			755,968			443,902			116			113
Provision for (benefit from) income taxes	108,619			(6,552		)	232,690			129,332			(41		)	31
Net income	219,150			70,014			523,278			314,570			157			82
Net income attributable to noncontrolling interests	8,318			4,352			21,429			14,656			12			10
Net income attributable to Westlake Chemical Corporation	$	210,832		$	65,662		$	501,849		$	299,914		$	145		$	72
Earnings per common share attributable to Westlake Chemical Corporation:
Basic	$	1.62		$	0.51		$	3.87		$	2.31		$	1.13		$	0.56
Diluted	$	1.61		$	0.51		$	3.85		$	2.29		$	1.13		$	0.55
Weighted average common shares outstanding:
Basic	129,069,186			128,793,661			129,033,597			129,519,577			128,237,364			128,528,480
Diluted	129,888,968			129,379,956			129,789,965			130,103,897			128,442,972			128,913,921
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 March 31,
	2020			2019

	(in millions of dollars)
Net income	$	157		$	82
Other comprehensive loss, net of income taxes
Foreign currency translation adjustments
Foreign currency translation	(25		)	(2		)
Income tax provision on foreign currency translation	(7		)	—
Other comprehensive loss, net of income taxes	(32		)	(2		)
Comprehensive income	125			80
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended March 31, 2020 and 2019, respectively	12			10
Comprehensive income attributable to Westlake Chemical Corporation	$	113		$	70

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, 2019	134,651,380	$	1	6,266,609		$	(377	)	$	553		$	5,757		$	(74	)	$	543		$	6,403
Net income	—	—		—		—			—			145			—			12			157
Other comprehensive loss	—	—		—		—			—			—			(32		)	—			(32		)
Common stock repurchased	—	—		995,529		(54		)	—			—			—			—			(54		)
Shares issued—stock-based compensation	—	—		(282,476	)	18			(8		)	(8		)	—			—			2
Stock-based compensation	—	—		—		—			6			—			—			—			6
Dividends declared	—	—		—		—			—			(34		)	—			—			(34		)
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(10		)	(10		)
Balances at March 31, 2020	134,651,380	$	1	6,979,662		$	(413	)	$	551		$	5,860		$	(106	)	$	545		$	6,438

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

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



	Three Months Ended March 31,
	2020			2019

	(in millions of dollars)
Cash flows from operating activities
Net income	$	157		$	82
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	190			171
Stock-based compensation expense	6			7
Loss from disposition and write-off of property, plant and equipment	5			20
Deferred income taxes	126			15
Other losses (gains), net	(2		)	9
Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable	(240		)	(41		)
Inventories	(8		)	19
Prepaid expenses and other current assets	7			4
Accounts payable	(2		)	(7		)
Accrued and other liabilities	(146		)	(110		)
Other, net	(32		)	(22		)
Net cash provided by operating activities	61			147
Cash flows from investing activities
Acquisition of businesses, net of cash acquired	—			(236		)
Additions to property, plant and equipment	(164		)	(203		)
Additions to investments in unconsolidated subsidiaries	—			(42		)
Return of investment from an equity investee	39			—
Other, net	(7		)	6
Net cash used for investing activities	(132		)	(475		)
Cash flows from financing activities
Dividends paid	(34		)	(33		)
Distributions to noncontrolling interests	(10		)	(8		)
Net proceeds from issuance of Westlake Chemical Partners LP common units	—			63
Proceeds from drawdown of revolver	1,000			—
Repayment of notes payable	(27		)	(4		)
Repurchase of common stock for treasury	(54		)	—
Other	8			3
Net cash provided by financing activities	883			21
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3		)	(1		)
Net increase (decrease) in cash, cash equivalents and restricted cash	809			(308		)
Cash, cash equivalents and restricted cash at beginning of period	750			775
Cash, cash equivalents and restricted cash at end of period	$	1,559		$	467

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~~2019 (the "~~2016~~2019 Form 10-K"), filed with the SEC on February ~~22, 2017.~~19, 2020. 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.~~2019 with the exception of those accounting standards adopted in 2020 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~~March 31, 2020, its results of operations for the three ~~and~~ ~~nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, and the changes in its cash position for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019.

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~~2020 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~~Income Taxes (ASU No. ~~2014-09)~~2019-12)

In ~~May 2014,~~December 2019, 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~~removing certain exceptions for investments, intraperiod allocations and interim calculations and adding guidance to reduce complexity in 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.income taxes. 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 that2020. Early 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~~this 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.permitted. 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.

Reference Rate Reform (ASU No. 2020-04)

In March 2020, the FASB issued an accounting standards update to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform, if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. 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.

Recently Adopted Accounting Standards

Credit Losses (ASU No. 2016-13)

In June 2016, the 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 trade receivables, debt securities and 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. In November 2019, the FASB issued an additional authoritative guidance related to credit losses. The accounting standard ~~will be~~became effective for reporting periods beginning after December 15, ~~2019~~2019. The Company adopted this accounting standard effective January 1, 2020 and isthe adoption did 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~~millions 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 (ASU No. 2017-05)~~

~~In February 2017, the FASB issued an accounting standards update to clarify 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 the fair value consists of nonfinancial assets and the group or subsidiary is not a business. 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 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.

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

In March 2017, 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. The amendments also allow only the service cost component to be eligible for capitalization when applicable. 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.

~~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) the fair value of the modified award 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 either 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.~~2019. The Company adopted this accounting standard effective January 1, ~~2017~~2020 and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Stock Compensation~~Fair Value Measurement (ASU No. ~~2016-09)~~2018-13)

In ~~March 2016,~~August 2018, the FASB issued an accounting standards update to ~~simplify several aspects of~~modify the ~~accounting for share-based payment transactions, including income tax consequences, classifications of awards as either equity~~disclosure requirements on fair value measurements. An entity is permitted to early adopt any removed or ~~liabilities~~modified disclosures 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 todelay adoption of the ~~accounting standards update, or recognized when they occur.~~additional disclosures until the effective date. Most amendments should be applied retrospectively, but certain amendments will be applied prospectively. The accounting standard became effective for reporting periods beginning after December 15, ~~2016.~~2019. 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, 2017,2020 and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

2. Financial Instruments

~~WESTLAKE CHEMICAL CORPORATION~~Cash Equivalents

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands~~The Company had $50 and $240 of ~~dollars, except share amounts~~held-to-maturity securities with original maturities of three months or less, primarily consisting of corporate debt securities, classified as cash equivalents at March 31, 2020 and ~~per share data)~~

~~2. Acquisition~~

~~On August~~December 31, 2016, the Company completed its acquisition of, and acquired all the remaining equity interest in, Axiall Corporation ("Axiall"), a Delaware corporation. Prior to the acquisition, the Company held 3.1 million shares in Axiall. Pursuant to the terms 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.2019, respectively. The Company's ~~management believes that this strategic acquisition will enhance its strategy of integration and will further strengthen its role~~investments 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.

~~The following table summarizes the consideration transferred and the estimated~~held-to-maturity securities were held at amortized cost, which approximates 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 occurred 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.

~~3. Financial Instruments~~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~~March 31, 2020 and December 31, 2019, respectively. 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~~

~~The Company had no available-for-sale securities at September 30, 2017 or at December 31, 2016.~~

There were no sales or maturities of available-for-sale securities during the three and nine months ended September 30, 2017. The proceeds from sales and maturities of available-for-sale securities included in the consolidated statement of cash flows and the gross realized gains and losses included in the consolidated statement of operations for the three and nine months ended September 30, 2016 are reflected in the table below. The cost of securities sold was determined using the specific identification method.

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 )

4.3. Accounts Receivable

Accounts receivable consist of the following:



	March 31, 2020			December 31, 2019
Trade customers	$	1,007		$	948
Related parties	5			12
Allowance for credit losses	(23		)	(22		)
	989			938
Federal and state taxes	233			59
Other	43			39
Accounts receivable, net	$	1,265		$	1,036

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

5.4. Inventories

Inventories consist of the following:



	March 31, 2020		December 31, 2019
Finished products	$	566	$	568
Feedstock, additives, chemicals and other raw materials	207		210
Materials and supplies	161		158
Inventories	$	934	$	936

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.

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 of~~ ~~$116,160~~ ~~and~~ ~~$75,143~~ ~~is primarily included in cost of sales in the consolidated statements of operations for the~~ ~~three months ended September 30, 2017 and 2016~~, respectively. Depreciation expense on property, plant and equipment 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 and 2016, respectively.

~~7. Other Assets~~

Amortization expense on intangible and other assets included in cost of sales and selling, general and administrative expenses in the consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016 were as follows:

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

5. Goodwill

The gross carrying amounts ~~of goodwill~~ and ~~the~~ changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 were as follows:



	Olefins Segment		Vinyls Segment			Total
Balances at December 31, 2019	$	30	$	1,044		$	1,074
Effects of changes in foreign exchange rates	—		(9		)	(9		)
Balances at March 31, 2020	$	30	$	1,035		$	1,065

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

Goodwill is evaluated for impairment at least annually, or when events or changes in circumstances indicate the fair value of a reporting unit with goodwill has been reduced below its carrying value. The Company ~~performed~~performs its annual impairment ~~tests~~assessment for the Olefins and Vinyls reporting units in October and April, respectively. The fair values of the ~~second quarter~~reporting units are assessed generally using both a discounted cash flow methodology and a market value methodology. The discounted cash flow projections are based on a long-term forecast over multiple years. The forecast is based on prices and margins projected, historical results and estimates by management, including its strategic and operational plans among other assumptions. The significant assumptions used in determining the fair values of ~~2017~~the reporting units are the market value methodology including the determination of appropriate market comparables and ~~did~~the estimated multiples of EBITDA a willing buyer was likely to pay.

During the three months ended March 31, 2020, the Company evaluated various events resulting from the coronavirus ("COVID-19") pandemic including the decline in the Company's stock price during the month of March 2020. Based on the evaluation, the Company does not ~~identify any impairment.~~believe that these events indicate that the fair values of the Company's reporting units have more likely than not fallen below their carrying values as of March 31, 2020. While the Company expects these events to negatively impact its operations in the short-term, given the dynamic and evolving nature of this situation, the Company cannot reasonably estimate with certainty the long-term impacts of COVID-19. As events and changes in circumstances evolve after March 31, 2020, such events will be considered in the Company's estimates for future periods.

~~8. Term Loan~~6. Accounts Payable

~~On August 10, 2016, an indirect subsidiary~~Accounts payable consist 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.

following:



	March 31, 2020		December 31, 2019
Accounts payable—third parties	$	408	$	435
Accounts payable to related parties	22		12
Notes payable	1		26
Accounts payable	$	431	$	473

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

9.7. 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



	March 31, 2020							December 31, 2019
	Principal Amount		Unamortized Discount and Debt Issuance Costs			Net Long-term Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs			Net Long-term Debt
Revolving credit facility	$	1,000	$	—		$	1,000	$	—	$	—		$	—
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		(7		)	743		750		(8		)	742
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		(23		)	677		700		(23		)	677
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		(1		)	249
1.625% senior notes due 2029 (the "1.625% 2029 Senior Notes")	770		(10		)	760		785		(11		)	774
Total Long-term debt	$	4,485	$	(53	)	$	4,432	$	3,500	$	(55	)	$	3,445

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"). On March 20, 2020, the Company borrowed $1,000 under 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,~~As of March 31, 2020, the Company had no$1,000 of borrowings outstanding under the Credit Agreement. The interest rate on the outstanding revolving credit facility was 2.25% at March 31, 2020. As of ~~September 30, 2017,~~March 31, 2020, the Company had 0 outstanding letters of credit ~~totaling $45,414~~ and 0 borrowing availability (absent an exercise of ~~$954,586~~the accordion feature) 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,~~March 31, 2020, 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.

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.

1410

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,~~March 31, 2020, 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.its long-term debt covenants.

Unamortized debt issuance costs on ~~Long-term~~long-term debt were ~~$21,547~~$29 and ~~$24,113~~$30 at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, 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

8. Accumulated Other Comprehensive Income (Loss)

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

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~~March 31, 2020 and ~~2016,respectively, and $16,740 and $6,588 for the nine months ended September 30, 2017 and 2016, respectively.~~

2019 were as follows:



	Pension and Other Post-Retirement Benefits Liability, Net of Tax		Cumulative Foreign Currency Exchange, Net of Tax			Total
Balances at December 31, 2019	$	3	$	(77	)	$	(74	)
Other comprehensive loss before reclassifications	—		(32		)	(32		)
Net other comprehensive loss attributable to Westlake Chemical Corporation	—		(32		)	(32		)
Balances at March 31, 2020	$	3	$	(109	)	$	(106	)

Balances at December 31, 2018	$	27	$	(89	)	$	(62	)
Other comprehensive loss before reclassifications	—		(2		)	(2		)
Net other comprehensive loss attributable to Westlake Chemical Corporation	—		(2		)	(2		)
Balances at March 31, 2019	$	27	$	(91	)	$	(64	)

~~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.~~9. 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~~except for the revolving credit facility, 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

2311

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

~~15.~~



	March 31, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility	$	1,000	$	1,000	$	—	$	—
3.60% 2022 Senior Notes	249		244		249		255
3.60% 2026 Senior Notes	743		687		742		777
Loan related to tax-exempt waste disposal revenue bonds due 2027	11		11		11		11
6 ½% 2029 GO Zone Senior Notes	99		98		99		103
6 ½% 2035 GO Zone Senior Notes	88		92		88		92
6 ½% 2035 IKE Zone Senior Notes	65		65		65		68
5.0% 2046 Senior Notes	677		651		677		761
4.375% 2047 Senior Notes	491		395		491		505
3.50% 2032 GO Zone Refunding Senior Notes	249		239		249		267
1.625% 2029 Senior Notes	760		688		774		785

10. Income Taxes

The effective income tax rate was ~~33.1%~~a benefit of 35.3% for the ~~third quarter~~three months ended March 31, 2020 as compared to an expense of ~~2017.~~27.4% for the three months ended March 31, 2019. The effective income tax rate for the ~~third quarter of 2017~~three months ended March 31, 2020 was a benefit and below the ~~U.S. federal~~ statutory rate of ~~35.0%~~21.0% primarily due to ~~a higher~~the income tax rate benefit resulting from the carryback of federal net operating loss ("NOL") to taxable years that were taxed at the U.S. corporate tax rate of 35.0% as permitted under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), partially offset by the reduction in the Internal Revenue Code Section 199 ("Section 199") domestic manufacturing deduction, ~~depletion deductions, income attributable to noncontrolling interests, research and development credits and~~as a result of the ~~foreign earnings rate differential, partially offset by state income taxes. The effective income tax rate, which was a benefit, was (10.3)% for three months ended September 30, 2016.~~NOL carryback. The effective income tax rate for the ~~third quarter of 2016~~three months ended March 31, 2019 was ~~below~~above the U.S. federal statutory rate of ~~35.0%~~21.0% primarily due to state taxes, foreign taxes and the ~~benefit of state~~ tax ~~credits, the domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, the non-recognition of tax~~effect related to the ~~gain recognized on~~charges associated with the write-off of certain assets.

On March 27, 2020, the CARES Act was enacted and signed into law. The CARES Act, among other things, permits any federal NOL generated in 2018, 2019 and 2020 to be carried back to each of the five tax years preceding the tax year of the federal NOL to fully offset taxable income to generate a refund of previously ~~held outstanding shares~~paid income taxes. However, any such federal NOL not carried back can be carried forward to fully offset taxable income, but only for the taxable years beginning before January 1, 2021, after which, the federal NOL deduction limitation not to exceed 80.0% of ~~common stock~~taxable income under the U.S. Tax Cuts and Jobs Act (the "Tax Act") will be reinstated. Federal NOLs generated in 2018, 2019 and 2020 measured at the current U.S. corporate tax rate of ~~Axiall,~~21.0% that are carried back to taxable years prior to the Tax Act to fully offset taxable income taxed at the U.S. corporate tax rate of 35.0% result in an income tax rate benefit. At the end of 2019, the Company generated a federal NOL primarily due to bonus tax depreciation from the Company's investment in LACC, LLC ("LACC"), which is accounted for as an equity method investment. This federal NOL was increased to account for the disallowed interest deduction which originated in 2019 that is no longer disallowed due to the increase in the business interest expense deduction limitation from 30.0% to 50.0% of adjusted taxable income for tax years 2019 and 2020 as permitted under the CARES Act. For the three months ended March 31, 2020, the carryback of the federal NOL resulted in a net tax benefit ~~in prior years' and current-year~~of $62 for the Company, primarily from the tax ~~credits for increased research and development expenditures and adjustments related to prior years' tax returns as filed and the foreign earnings~~ rate ~~differential,~~difference, partially offset by ~~state income taxes and nondeductible transaction costs related to~~ the ~~Merger.~~

~~The effective income tax rate was 30.8% for~~reduction in 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 higherSection 199 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 2016 period 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 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.deduction.

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.

~~16.~~

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

11. 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 earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during ~~the periods.~~each period. Diluted earnings per share include the ~~effect~~effects of certain stock ~~options.~~options and performance stock units.



	Three Months Ended March 31,
	2020		2019
Net income attributable to Westlake Chemical Corporation	$	145	$	72
Less:
Net income attributable to participating securities	—		(1		)
Net income attributable to common shareholders	$	145	$	71

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

~~WESTLAKE CHEMICAL CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in thousands 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 March 31,
	2020		2019
Weighted average common shares—basic	128,237,364		128,528,480
Plus incremental shares from:
Assumed exercise of options and vesting of performance stock units	205,608		385,441
Weighted average common shares—diluted	128,442,972		128,913,921

Earnings per common share attributable to Westlake Chemical Corporation:
Basic	$	1.13	$	0.56
Diluted	$	1.13	$	0.55

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~~1,099,638 and ~~620,010~~320,473 shares of common stock for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and 291,888 and 577,254 shares of common stock for the nine months ended September 30, 2017 and 2016,~~2019, 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 months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,
	2020		2019
Dividends per common share	$	0.2625	$	0.2500

~~17.~~12. Supplemental Information

Equity Method Investments

The Company's investment in LACC, a related party, was $990 and $1,038 at March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, the Company received $39 from LACC representing return of investment.

Accrued and Other Liabilities

Accrued and other liabilities were ~~$609,472~~$593 and ~~$537,483~~$768 at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. Accrued rebates and ~~accrued income taxes,~~operating lease liability, which are components of accrued and other liabilities, were ~~$110,862~~$66 and ~~$72,187, respectively,~~$92 at ~~September 30, 2017~~March 31, 2020, respectively; and ~~$77,985~~$115 and ~~$10,891, respectively,~~$93 at December 31, ~~2016.~~2019, respectively. 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~~$23 and ~~$10,551~~$41 at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

~~Non-cash Investing Activity~~

The change in capital expenditure accrual increasing additions to property, plant and equipment was $8,082 for the nine months ended September 30, 2017. The change in capital expenditure accrual increasing additions to property, plant and equipment was $23,878 for the nine months ended September 30, 2016.

~~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

2513

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

~~18.~~Non-cash Investing Activity

The non-cash investing activities related to accruals for capital expenditures were $27 and $10, for the three months ended March 31, 2020 and 2019, respectively.

Operating Lease Supplemental Cash Flow

Supplemental cash flow information related to leases was as follows:



	Three Months Ended March 31,
	2020			2019
Operating cash flows used for operating leases ⁽¹⁾	$	(28	)	$	(28	)
Right-of-use assets obtained in exchange for operating lease obligations	17			3

_____________


(1)	Includes cash paid for amounts included in the measurement of operating lease liabilities recorded in the consolidated balance sheets. For the three months ended March 31, 2020 and 2019, finance lease related cash flows used for operating and financing activities were not material to the consolidated statements of cash flows.

13. 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.

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. The plaintiffs seek an unspecified amount of damages and injunctive relief. The defendants' joint motion to dismiss the direct purchaser lawsuits was denied, so those cases will proceed with discovery. 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~~March 31, 2020 and December 31, ~~2016,~~2019, the Company had reserves for environmental contingencies totaling approximately ~~$47,409~~$46 and ~~$48,817,~~$47, 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, the Environmental Protection Agency (the "EPA") conducted inspections at the Company's Plaquemine, Louisiana facility pursuant to requirements of the federal Clean Air Act Section 112(r) Risk Management Program and Title V. As a result of the inspections, the EPA identified areas of concern and the Company subsequently engaged in negotiations to resolve alleged violations. A Consent Agreement and Final Order (“CAFO”) was filed in October 2016, pursuant to which 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 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 the subject of any specific NOV in two separate settlement agreements, pursuant to which the Company paid $192 in civil penalties.

During September 2010, the Company's vinyls facilities in north 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. 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 from the EPA related to, among other things, the EPA's investigation 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.

2614

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

Calvert City Proceedings. For several years, the ~~EPA~~Environmental Protection Agency (the "EPA") has been conducting ~~an enforcement initiative against petroleum refineries~~remedial investigation and ~~petrochemical plants with respect~~feasibility studies at the Company's Calvert City, Kentucky facility pursuant to ~~emissions from flares. On April 21, 2014,~~the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). As the current owner of the Calvert City facility, the Company ~~received a Clean Air Act Section 114 Information Request from~~was named by the EPA as a potentially responsible party ("PRP") along with Goodrich Corporation ("Goodrich") and its successor-in-interest, PolyOne Corporation ("PolyOne"). On November 30, 2017, the EPA published a 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 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 published the Record of 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 EPA entered into an administrative settlement agreement and order on consent for remedial design. In October 2019, the PRPs received special notice letters for the remedial action phase of work at the site. The Company, jointly with the other PRPs, submitted a good faith offer response in December 2019. The PRPs signed a consent decree for remedial action in March 2020, which ~~sought information regarding flares~~is subject to approval by the EPA and the Department of Justice before it is filed with the court. 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, Goodrich and PolyOne. These agreements are the subject of further litigation as described below.

In connection with the 1990 and 1997 acquisitions of the Goodrich chemical manufacturing complex in Calvert City, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company's operations. The soil and groundwater at the complex, which does not include the Company's nearby 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 December 2007 and the case was dismissed. In the settlement, the parties agreed that, among other things: (1) PolyOne would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; 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 demand for arbitration. In this proceeding, PolyOne sought to readjust the percentage allocation of future costs and to recover approximately $11 from the Company in reimbursement of previously paid remediation costs. The Company's cross demand for arbitration seeking unreimbursed remediation costs incurred during the relevant period was dismissed from the proceedings when PolyOne paid such costs in full at the beginning of the arbitration hearing.

On July 10, 2018, PolyOne sued the Company in the U.S. District Court for the Western District of Kentucky, and ~~certain Lake Charles facilities.~~sought 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 ~~EPA has informed~~court of appeals issued an opinion and final order on September 6, 2019, affirming the district court.

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

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

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, seeking to invalidate the final award under the Federal Arbitration Act. On February 11, 2020, the U.S. District Court for the Western District of Kentucky denied PolyOne's motion to vacate and affirmed the arbitration final award. PolyOne did not file a notice of appeal before the March 10, 2020 deadline to contest the court's decision. Accordingly, the final award was affirmed and the arbitration proceeding is fully and finally resolved. 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 of the flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate 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~~ any subsequent arbitration or ~~all of these matters will~~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~~$70 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.~~14. 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 March 31,
	2017		2016		2017		2016		2020		2019
Net external sales
Olefins
Polyethylene	$	377,269	$	380,810	$	1,121,603	$	1,098,500	$	310	$	337
Styrene, feedstock and other	124,974		116,555		412,869		324,369		117		122
Total Olefins	502,243		497,365		1,534,472		1,422,869		427		459
Vinyls
PVC, caustic soda and other	1,252,963		599,276		3,541,409		1,492,650		1,213		1,307
Building products	353,683		182,387		954,785		424,757		292		259
Total Vinyls	1,606,646		781,663		4,496,194		1,917,407		1,505		1,566
	$	2,108,889	$	1,279,028	$	6,030,666	$	3,340,276	$	1,932	$	2,025

Intersegment sales
Olefins	$	106,722	$	30,614	$	290,658	$	85,856	$	68	$	92
Vinyls	260		2,130		871		2,719		—		—
	$	106,982	$	32,744	$	291,529	$	88,575	$	68	$	92

2716

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 March 31,
	2017			2016			2017			2016			2020			2019
Income (loss) from operations
Olefins	$	165,438		$	118,475		$	488,532		$	408,274		$	62		$	37
Vinyls	216,515			22,235			431,276			136,559			73			101
Corporate and other	(16,206		)	(94,147		)	(51,647		)	(116,056		)	1			(4		)
	$	365,747		$	46,563		$	868,161		$	428,777		$	136		$	134

Depreciation and amortization
Olefins	$	35,029		$	36,649		$	111,244		$	95,582		$	35		$	35
Vinyls	117,490			56,136			331,585			128,691			153			134
Corporate and other	1,115			1,444			5,704			2,920			2			2
	$	153,634		$	94,229		$	448,533		$	227,193		$	190		$	171

Other income (expense), net
Other income, net
Olefins	$	(184	)	$	1,101		$	1,555		$	3,706		$	1		$	2
Vinyls	(970		)	(1,226		)	1,087			1,722			6			4
Corporate and other	3,212			41,390			3,949			46,663			4			3
	$	2,058		$	41,265		$	6,591		$	52,091		$	11		$	9

Provision for (benefit from) income taxes
Olefins	$	58,218		$	31,956		$	152,482		$	136,429		$	41		$	9
Vinyls	60,784			(3,912		)	114,979			29,655			(78		)	23
Corporate and other	(10,383		)	(34,596		)	(34,771		)	(36,752		)	(4		)	(1		)
	$	108,619		$	(6,552	)	$	232,690		$	129,332		$	(41	)	$	31

Capital expenditures
Olefins	$	20,960		$	96,469		$	70,043		$	285,359		$	27		$	25
Vinyls	107,515			83,523			329,968			180,392			136			177
Corporate and other	4,894			178			14,260			1,579			1			1
	$	133,369		$	180,170		$	414,271		$	467,330		$	164		$	203

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



	Three Months Ended March 31,
	2020			2019
Income from operations	$	136		$	134
Interest expense	(31		)	(30		)
Other income, net	11			9
Income before income taxes	$	116		$	113

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



	March 31, 2020		December 31, 2019
Total assets
Olefins	$	1,978	$	1,991
Vinyls	10,434		10,597
Corporate and other	1,751		673
	$	14,163	$	13,261

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.~~15. 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.

On March 29, 2019, WLKP purchased an additional 4.5% newly issued limited partner interests in Westlake Chemical OpCo LP ("OpCo") for approximately $201 and completed a private placement of 2,940,818 common units at a price of ~~$24.00~~$21.40 per ~~unit. Net~~common unit for total proceeds ~~to WLKP from~~of approximately $63. TTWF LP, the ~~sale~~Company's principal stockholder and a related party, acquired 1,401,869 units out of the 2,940,818 common units ~~was approximately $286,100, net of underwriting discounts, structuring fees and estimated offering expenses of approximately $24,400.~~ issued in the private placement.

At ~~the consummation of the IPO, WLKP's assets consisted of~~March 31, 2020, WLKP had a ~~10.6%~~22.8% limited partner interest in ~~Westlake Chemical~~ OpCo, ~~LP ("OpCo"), as well as the general partner interest in OpCo. Immediately after the IPO,~~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 limited partner interests (consisting of 14,122,230 common units) and incentive distribution rights.

On October 4, 2018, WLKP and Westlake Partners GP, the general partner of WLKP, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell WLKP's common units, ~~in WLKP.~~

~~On April 29, 2015, WLKP purchased~~from time to time, up to 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~~aggregate offering amount of $50. This Equity Distribution Agreement was amended on February 28, 2020 to reference a ~~secondary offering of 5,175,000~~new shelf registration for utilization under this agreement. No common units ~~at a price~~were issued under this program as of $22.00 per unit. Net proceeds to WLKP from the sale of the units was $110,739, net of underwriting discounts, structuring fees 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.March 31, 2020.

~~21.~~16. Subsequent ~~Events~~Event

~~Subsequent events were evaluated~~On March 11, 2020, the World Health Organization declared the ongoing COVID-19 outbreak a pandemic and recommended containment and mitigation measures worldwide. The pandemic has resulted in widespread adverse impacts on the global economy. Though the Company did not experience significant disruptions in the first quarter of 2020, it has seen disruptions in the month of April such as some customer order cancellations and expected lower demand for certain of the Company's products which has led the Company to proactively temporarily idle production at several of the Company's smaller non-integrated plants and reduce operating rates at others. The Company expects a negative resulting impact to the Company's business operations in the near future, as the pandemic and its impacts on the global economy continue to spread through ~~the date on which the consolidated financial statements were issued.~~

~~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 eachmost of its ~~current and future domestic subsidiaries~~markets. However, the effect 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 presentsCOVID-19 will have on the financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the ultimate duration, geographic spread and severity of ~~Westlake Chemical Corporation,~~ the ~~100% owned Guarantor Subsidiaries,~~virus, the actions to contain the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments, actions taken by customers, suppliers and other third parties, workforce availability, 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~~timing and ~~the 4.875% Westlake 2023 Senior Notes (the "Non-Guarantor Subsidiaries"), together with consolidating eliminations necessary~~extent 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,~~normal economic 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.operating conditions resume.

~~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~~2019 (the "~~2016~~2019 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,~~basic chemicals, vinyls, 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, polymers and building products.

~~Since 2009~~

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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. Chlor-alkali and petrochemicals are typically manufactured in large volume by a number of different producers using widely available technologies. The chlor-alkali and petrochemical industries exhibit 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.

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~~first quarter of ~~2017.~~2020, 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 of ethylene and polyethylene. In recent months, we have seen volatility in ethane and ethylene prices, primarily due to changes in the demand resulting from COVID-19, anticipated timing for some of the new ethylene capacity additions and availability of natural gas liquids as well as fluctuation in the price of crude oil. 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., primarily due to higher crude oil prices during portions of that period. 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~~Westlake is the second-largest chlor-alkali producer and ~~its subsidiary companies ("Vinnolit"), an integrated global leader~~the second-largest PVC producer in ~~specialty PVC resins, has contributed to improved operating margins and cash flows for our Vinyls segment.~~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 resulted in improved operating rates and caustic soda pricing. Since the second half of 2018, the uncertainties surrounding international trade have impacted both domestic and export prices for our products.

Recent Developments

Recent Developments Affecting Industry Conditions and Our Business

On ~~August 31, 2016,~~March 11, 2020, the World Health Organization declared the ongoing coronavirus ("COVID-19") outbreak a pandemic and recommended containment and mitigation measures worldwide. The pandemic has resulted in widespread adverse impacts on the global economy. Though we completed the acquisition of Axiall Corporation ("Axiall") 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 producerdid not experience significant disruptions in the ~~world. Westlake is the second-largest purchaser~~first quarter of ~~ethylene~~2020, we expect significant resulting disruptions to our business operations in the ~~U.S.~~near future, as the pandemic and ~~lower prices could positively~~its impact ~~our Vinyls segment.~~

~~The economic environment in the U. S. and globally appears to be improving. However, depending~~ on ~~the performance of~~ the global economy continue to spread through most of our markets. While demand for some of our products used in cleaning, packaging and medical applications and manufacturing continues to be firm, expected lower demand for certain of our other products has led us to proactively temporarily idle production at several of our smaller non-integrated plants and reduce operating rates at others. We may idle further production and may further reduce operating rates if the pandemic and its financial impacts persist or worsen.

Our first priority in our response to this crisis has been the health and safety of our employees and those of our customers and vendors. We have implemented preventative measures and developed corporate and regional response plans to minimize unnecessary risk of exposure. We have modified certain business practices (including those related to employee travel, employee work locations and cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by the Center for Disease Control and Prevention, the World Health Organization and other governmental and regulatory authorities.

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There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. Restrictions of this nature have caused, and may continue to cause us and our customers to experience reduced demand and operational delays. Lockdowns across the world and curtailed business activities specifically in transportation, construction, automotive and oil and gas related activities have resulted in and may continue to result in an oversupplied market. We have received and expect to continue to receive order cancellations and force majeure declarations from some customers. We have provided notices to some customers regarding delivery or performance delays resulting from the pandemic.

Due to the sudden collapse of crude oil prices in early March 2020, the cost advantage of North American ethane-based ethylene producers over naphtha-based ethylene producers has been significantly eroded. We started seeing impact from this erosion towards the end of the first quarter of 2020. If this situation persists or worsens in the ~~remainder~~future, it could result in reduced prices and lower margins for our Olefins segment and some of ~~2017~~our products in the Vinyls segment. In addition, our Olefins segment is already being impacted by new addition of ethylene production capacity in the recent months.

We have taken proactive actions to respond to the challenges presented by the conditions described above and ~~beyond,~~minimize the impact to our business. As already mentioned, due to lower demand for certain of our products, we have temporarily idled a few of our plants and have reduced operating rates at others. We are implementing strategies to reduce costs, increase operational efficiencies and lower our capital spending. We expect to reduce our capital spending in 2020 to be in the range of $500 million to $550 million. Additionally, we also expect to defer the planned turnaround at our Petro 2 ethylene unit and associated maintenance cost into the first half of 2021. The turnaround is expected to last 60 days.

In addition, as of March 31, 2020, we had $1,537 million of cash and cash equivalents on our consolidated balance sheet, which remains available to support our operations. On March 20, 2020, we borrowed $1 billion under our revolving credit facility that is scheduled to mature on July 24, 2023 to maintain financial flexibility in light of current uncertainty in the global markets caused by the pandemic. While we do not currently expect to use the proceeds from these borrowings for any liquidity needs, we may use the proceeds in the future for general corporate purposes.

The impact that COVID-19 will have on our business, cash flows, liquidity, financial condition and results of operations ~~or cash flows could~~will depend on future developments, including, among others, the ultimate geographic spread and severity of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments, the duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume. For additional discussion regarding risks associated with the COVID-19 pandemic, see Item 1A "Risk Factors" in this report.

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted and signed into law. The CARES Act, among other things, permits any federal net operating loss ("NOL") generated in 2018, 2019 and 2020 to be ~~negatively impacted.~~carried back to each of the five tax years preceding the tax year of the federal NOL to fully offset taxable income to generate a refund of previously paid income taxes. However, any such federal NOL not carried back can be carried forward to fully offset taxable income, but only for the taxable years beginning before January 1, 2021, after which, the federal NOL deduction limitation not to exceed 80% of taxable income under the U.S. Tax Cuts and Jobs Act (the "Tax Act") will be reinstated. Federal NOLs generated in 2018, 2019 and 2020 measured at the current U.S. corporate tax rate of 21% that are carried back to taxable years prior to the Tax Act to fully offset taxable income taxed at the U.S. corporate tax rate of 35% result in an income tax rate benefit. At the end of 2019, we generated a federal NOL primarily due to bonus tax depreciation from the Company's investment in LACC, LLC ("LACC"), which is accounted for as an equity method investment. This federal NOL was increased to account for the disallowed interest deduction which originated in 2019 that is no longer disallowed due to the increase in the business interest expense deduction limitation from 30% to 50% of adjusted taxable income for tax years 2019 and 2020 as permitted under the CARES Act. For the three months ended March 31, 2020, the carryback of the federal NOL resulted in a net tax benefit of $62 million for the Company primarily from the tax rate difference, partially offset by the reduction in the Internal Revenue Code Section 199 ("Section 199") domestic manufacturing deduction. We expect to carry back all of the federal NOL to the preceding taxable years to fully offset taxable income.

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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.~~

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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.

~~Recent Developments~~

~~On September 29, 2017, Westlake Chemical Partners, LP ("WLKP") completed a secondary offering~~A reconciliation of ~~5,175,000 common units at a price of $22.00 per unit~~EBITDA to net income, income from operations 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 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 and unpaid interest, if any, to the redemption date. The GO Zone Bonds were issuedcash provided 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 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 Authorityoperating activities 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.

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~~included in the ~~extension~~"Results of ~~the credit facility's maturity date from April 29, 2018 to April 29, 2021.~~Operations" section below.

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Results of Operations


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019

	(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		$	310		$	337
Styrene, feedstock and other	124,974			116,555			412,869			324,369			117			122
Total Olefins	502,243			497,365			1,534,472			1,422,869			427			459
Vinyls
PVC, caustic soda and other	1,252,963			599,276			3,541,409			1,492,650			1,213			1,307
Building products	353,683			182,387			954,785			424,757			292			259
Total Vinyls	1,606,646			781,663			4,496,194			1,917,407			1,505			1,566
Total	$	2,108,889		$	1,279,028		$	6,030,666		$	3,340,276		$	1,932		$	2,025

Income (loss) from operations
Olefins	$	165,438		$	118,475		$	488,532		$	408,274		$	62		$	37
Vinyls	216,515			22,235			431,276			136,559			73			101
Corporate and other	(16,206		)	(94,147		)	(51,647		)	(116,056		)	1			(4		)
Total income from operations	365,747			46,563			868,161			428,777			136			134
Interest expense	(40,036		)	(24,366		)	(118,784		)	(36,966		)	(31		)	(30		)
Other income, net	2,058			41,265			6,591			52,091			11			9
Provision for (benefit from) income taxes	108,619			(6,552		)	232,690			129,332			(41		)	31
Net income	219,150			70,014			523,278			314,570			157			82
Net income attributable to noncontrolling interests	8,318			4,352			21,429			14,656			12			10
Net income attributable to Westlake Chemical Corporation	$	210,832		$	65,662		$	501,849		$	299,914		$	145		$	72
Diluted earnings per share	$	1.61		$	0.51		$	3.85		$	2.29		$	1.13		$	0.55
EBITDA ⁽¹⁾	$	521,439		$	182,057		$	1,323,285		$	708,061		$	337		$	314

_____________


(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 March 31, 2020
	Average Sales Price		Volume
Product sales price and volume percentage change from prior-year period
Olefins	-10.8	%	+3.9	%
Vinyls	-8.8	%	+4.9	%
Company	-9.3	%	+4.7	%

Average Industry Prices ⁽¹⁾
	Three Months Ended March 31,
	2020		2019
Average domestic prices
Ethane (cents/lb) ⁽²⁾	4.7		10.0
Propane (cents/lb) ⁽³⁾	8.8		15.7
Ethylene (cents/lb) ⁽⁴⁾	15.8		17.0
Polyethylene (cents/lb) ⁽⁵⁾	52.3		60.0
Styrene (cents/lb) ⁽⁶⁾	62.3		78.8
Caustic soda ($/short ton) ⁽⁷⁾	648		717
Chlorine ($/short ton) ⁽⁸⁾	176		175
PVC (cents/lb) ⁽⁹⁾	71.8		68.8

Average export prices
Polyethylene (cents/lb) ⁽¹⁰⁾	38.9		44.0
Caustic soda ($/short ton) ⁽¹¹⁾	203		314
PVC (cents/lb) ⁽¹²⁾	36.9		36.0

_____________


(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 chlorine over the period.


(9)	Average North American contract prices of pipe grade polyvinyl chloride ~~(PVC)~~("PVC") over the ~~period as reported~~period. As stated by IHS, ~~Chemical. Effective January 1, 2017, IHS Chemical made a non-market downward adjustment~~"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 ~~15 cents per pound to~~caustic soda over the period.


(12)	Average North American spot export prices of PVC ~~prices. For comparability, we adjusted each prior-year period's PVC price downward by 15 cents per pound consistent with~~over the ~~IHS Chemical non-market adjustment.~~period.

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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 March 31,
	2017			2016			2017			2016			2020			2019

	(dollars in thousands)												(dollars in millions)
Net cash provided by operating activities	$	482,950		$	174,268		$	962,664		$	544,160		$	61		$	147
Changes in operating assets and liabilities and other	(255,468		)	(101,334		)	(416,092		)	(123,680		)	222			(50		)
Deferred income taxes	(8,332		)	(2,920		)	(23,294		)	(105,910		)	(126		)	(15		)
Net income	219,150			70,014			523,278			314,570			157			82
Less:
Other income, net													11			9
Interest expense													(31		)	(30		)
Benefit from (provision for) income taxes													41			(31		)
Income from operations													136			134
Add:
Depreciation and amortization	153,634			94,229			448,533			227,193			190			171
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													11			9
EBITDA	$	521,439		$	182,057		$	1,323,285		$	708,061		$	337		$	314

4224

Table of Contents

Summary

For the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2020, net income attributable to Westlake ~~Chemical Corporation~~ was ~~$210.8~~$145 million, or ~~$1.61~~$1.13 per diluted share, on net sales of ~~$2,108.9~~$1,932 million. This represents an increase in net income attributable to Westlake ~~Chemical Corporation~~ of ~~$145.1~~$73 million, or ~~$1.10~~$0.58 per diluted share, compared to the ~~third quarter of 2016~~three months ended March 31, 2019 net income attributable to Westlake ~~Chemical Corporation~~ of ~~$65.7~~$72 million, or ~~$0.51~~$0.55 per diluted share, on net sales of ~~$1,279.0~~$2,025 million. ~~Net~~The increase in net income ~~for the third quarter of 2017 increased versus the prior-year period~~was primarily due to ~~(1) earnings contributed~~the income tax rate benefit of $62 million, or $0.48 per diluted share, resulting from the carryback of federal net operating losses permitted by ~~Axiall, which~~the CARES Act. Net income was ~~acquired on August 31, 2016; (2)~~also impacted by higher polyethylene and PVC resin sales volumes and lower ethane feedstock, fuel costs and restructuring, transaction and integration-related costs, ~~associated with the acquisition; and (3) higher sales prices for major products resulting in improved margins. These increases, as compared to the third quarter of 2016, were~~ 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; and (3) a higher effective tax rate. Net sales for the third quarter of 2017 increased by $829.9 million compared to net sales for the third quarter of 2016, mainly due to higher sales contributed by Axiall and higherlower sales prices for our major products. Income from operations for the three months ended March 31, 2020 was ~~$365.7~~$136 million, a $2 million increase from income from operations of $134 million for the third quarter of 2017 as compared to $46.6 million for the third quarter of 2016. The increase in income from operations for the third quarter of 2017 was mainly a result of earnings contributed by Axiall, lower 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 were $6.7 million, or $0.03 per diluted share.

~~For the nine~~three months ended September 30, 2017, net income attributable to Westlake Chemical Corporation was $501.8 million, or $3.85 per diluted share, on net sales of $6,030.7 million. This represents an increase in net income attributable to Westlake Chemical Corporation of $201.9 million, or $1.56 per diluted share, compared to the nine months ended September 30, 2016 net income attributable to Westlake Chemical Corporation of $299.9 million, or $2.29 per diluted share, on net sales of $3,340.3 million. Net income for the nine months ended September 30, 2017 increased versus the prior-year period primarily due to (1) earnings contributed by Axiall; (2) higher 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 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. Net sales for the nine months ended September 30, 2017 increased by $2,690.4 million compared to net sales for the nine months ended September 30, 2016, mainly due to higher sales contributed by Axiall, which was acquired on AugustMarch 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, 2016.2019. The increase in income from operations was mainly a result of earnings contributed by Axiall, higher sales prices for our major products and lower transaction and integration-related costs. Transaction and integration-related costs in the nine months ended September 30, 2017 were $22.9 million, or $0.12 per diluted share.

~~RESULTS OF OPERATIONS~~

~~Third Quarter 2017~~ ~~Compared with~~ ~~Third Quarter 2016~~

~~Net Sales~~. Net sales increased by $829.9 million, or 64.9%, to $2,108.9 million in the third quarter of 2017 from $1,279.0 million in the third quarter of 2016, primarily attributable to sales contributed by Axiall, which was acquired on August 31, 2016, and higher sales prices. Average sales prices for the third quarter of 2017 increased by 12.1% as compared to the third quarter of 2016. Overall sales volumes increased by 52.8% as compared to the third quarter of 2016, primarily attributable to sales contributed by Axiall, as compared to the prior-year period.

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

~~Selling, General and Administrative Expenses~~. Selling, general and administrative expenses increased by $52.9 million to $125.6 million in the third quarter of 2017 as compared to $72.7 million in the third quarter of 2016. This increase was mainly due to selling, general and administrative expenses 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 million in the third quarter of 2017 as compared to $82.8 million in the third quarter of 2016. Transaction and integration-related costs were lower by $76.1 million in the third quarter of 2017 as compared to the third quarter of 2016 predominantly because significantrestructuring, transaction and integration-related costs, were incurred at the time of the Merger in the third quarter of 2016. 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. The transaction and integration-related costs for the third quarter of 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 $15.6 million to $40.0 million in the third quarter of 2017 from $24.4 million in the third quarter of 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 third quarter of 2017 as compared to the third quarter of 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 (Expense), Net~~. Other income, net decreased by $39.2 million to income of $2.1 million in the third quarter of 2017 from income of $41.3 million in the third quarter of 2016. The decrease was primarily attributable to the realized gain in the third quarter of 2016 of $49.1 million from the previously held common stock of Axiall.

~~Income Taxes.~~ The effective income tax rate was 33.1% for the third quarter of 2017. The effective income tax rate 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, partiallymostly offset by state income taxes. 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 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' 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.

~~Olefins Segment~~

~~Net Sales~~. Net sales for the Olefins segment increased by $4.8 million, or 1.0%, to $502.2 million in the third quarter of 2017 from $497.4 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 higherlower sales prices for our major products. Net sales for the three months ended ~~September 30, 2017 were~~March 31, 2020 decreased by $93 million compared to net sales for the three months ended March 31, 2019, mainly due to lower sales prices for our major products, partially offset by higher sales volumes for polyethylene, PVC resin and building products.

RESULTS OF OPERATIONS

First Quarter 2020 Compared with First Quarter 2019

Net Sales. Net sales decreased by $93 million, or 5%, to $1,932 million in the first quarter of 2020 from $2,025 million in the first quarter of 2019, primarily attributable to lower sales prices for our major products, partially offset by higher sales volumes for polyethylene, PVC resin and building products. Average sales prices for the first quarter of 2020 decreased by 9% as compared to the ~~prior-year period primarily because a full three months~~first quarter of ~~Axiall's operations were included~~2019. Sales volumes increased by 5% for the first quarter of 2020 as compared to ~~only one month~~the first quarter of ~~Axiall's~~2019.

Gross Profit. Gross profit margin percentage of 15% in the first quarter of 2020 was comparable to 15% in the first quarter of 2019.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $4 million to $120 million in the first quarter of 2020 as compared to $116 million in the first quarter of 2019. This increase was mainly due to higher selling expenses.

Amortization of Intangibles. Amortization expense was $27 million in the first quarter of 2020, which was comparable to the first quarter of 2019.

Restructuring, Transaction and Integration-related Costs. There were no restructuring, transaction and integration-related costs in the first quarter of 2020 as compared to $22 million in the first quarter of 2019. The restructuring, transaction and integration-related costs for the 2019 period primarily consisted of restructuring expenses of $19 million and acquisition and integration-related costs of $3 million.

Interest Expense. Interest expense increased by $1 million to $31 million in the first quarter of 2020 from $30 million in the first quarter of 2019, primarily as a result of higher average debt outstanding in the first quarter of 2020 as compared to the first quarter of 2019. The higher average debt balance in the first quarter of 2020 was primarily due to the issuance of the 1.625% 2029 Senior Notes in July 2019 and the borrowing under our revolving credit facility in March 2020. See "Liquidity and Capital Resources—Debt" below and Note 7 to the consolidated financial statements included in this Form 10-Q for further discussion of our indebtedness.

Other Income, Net. Other income, net was $11 million in the first quarter of 2020, which was comparable to the first quarter of 2019.

Income Taxes. The effective income tax rate was a benefit of 35.3% for the first quarter of 2020 as compared to an expense of 27.4% for the first quarter of 2019. The effective tax rate in the first quarter of 2020 was lower as compared to the first quarter of 2019 primarily due to the income tax rate benefit resulting from the carryback of federal net operating loss as permitted under the CARES Act, partially offset by the reduction in the Section 199 domestic manufacturing deduction and a decrease in state and foreign taxes.

Table of Contents

Olefins Segment

Net Sales. Net sales for the Olefins segment decreased by $32 million, or 7%, to $427 million in the first quarter of 2020 from $459 million in the first quarter of 2019. The decrease was mainly due to lower sales price for polyethylene, partially offset by higher sales volumes for polyethylene. Average sales prices for the Olefins segment decreased by 11% in the first quarter of 2020 as compared to the first quarter of 2019, primarily due to increased olefins production from new industry capacity. Sales volumes for the Olefins segment increased by 4% in the first quarter of 2020 as compared to the first quarter of 2019.

Income from Operations. Income from operations ~~included~~for the Olefins segment increased by $25 million to $62 million in the first quarter of 2020 from $37 million in the first quarter of 2019. This increase in income from operations was primarily due to higher polyethylene sales volumes and lower feedstock and fuel costs, partially offset by lower polyethylene sales price, primarily as a result of increased olefins production from new industry capacity. Trading activity for the first quarter of 2020 resulted in a loss of approximately $2 million as compared to a loss of $4 million for the first quarter of 2019.

Vinyls Segment

Net Sales. Net sales for the Vinyls segment decreased by $61 million, or 4%, in the first quarter of 2020 due to lower sales prices for our major products, partially offset by higher sales volumes for PVC resins and building products, as compared to the prior-year period. Average sales prices for the Vinyls segment ~~increased~~decreased by ~~18.7%~~9% in the ~~third~~first quarter of ~~2017~~2020, as compared to the ~~third~~first quarter of ~~2016. Average sales~~2019. Sales volumes for the Vinyls segment increased by ~~86.8%~~5% in the ~~third~~first quarter of ~~2017~~2020 as compared to the ~~third~~first quarter of ~~2016, primarily attributable to sales contributed by Axiall, as compared to the prior-year period.~~2019.

Income from Operations. Income from operations for the Vinyls segment ~~increased~~decreased by ~~$194.3~~$28 million to ~~$216.5~~$73 million in the ~~third~~first quarter of ~~2017~~2020 from ~~$22.2~~$101 million in the ~~third~~first quarter of ~~2016.~~2019. This ~~increase~~decrease in income from operations 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. The gross profit margin for the nine months ended September 30, 2017 was slightly higher primarily due to ~~higher~~lower global sales ~~volumes~~prices 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, 2017resins resulting from slower global economic growth and the ~~nine months ended September 30, 2016.~~

~~Selling, General~~initial impact of COVID-19 in Asia 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 increase 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.~~Europe. 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.

~~Table of Contents~~

~~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 by 9.2% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. Average sales volumes for the Olefins segment decreased by 1.3% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

~~Income from Operations~~. Income from operations for the Olefins segment increased by $80.2 million to $488.5 million in the nine months ended September 30, 2017 from $408.3 million in the nine months ended September 30, 2016. This increase was mainly attributable to higher olefins integrated product margins, primarily due to higher 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 partially offset by higher ~~energy prices. The nine months ended September 30, 2016 were negatively impacted by~~sales volume for PVC resins, lower ethane feedstock and fuel costs and the ~~planned turnaround and expansion of the~~contribution from our ethylene joint venture with Lotte Chemical in Lake Charles, ~~Petro 1 ethylene unit along with other unplanned outages. Trading activity~~Louisiana, which began commercial operations in the ~~nine months ended September 30, 2017 resulted in a loss~~second half of ~~$2.8 million as compared to a gain of $7.8 million in the nine months ended September 30, 2016.~~

~~Vinyls Segment~~

~~Net Sales~~. Net sales for the Vinyls segment increased by $2,578.8 million, or 134.5%, 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 to sales contributed by Axiall and higher sales prices and volumes for our major products. The net sales for the nine months ended September 30, 2017 was higher 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 increased by 17.8% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. Average sales volumes for the Vinyls segment increased by 116.7% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 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 $294.7 million to $431.3 million in the nine months ended September 30, 2017 from $136.6 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 during the nine months ended September 30, 2017, as compared to the prior-year period.2019.

CASH FLOW DISCUSSION FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020 AND ~~2016~~2019

Cash Flows

Operating Activities

Operating activities provided cash of ~~$962.7~~$61 million in the first ~~nine~~three months of ~~2017~~2020 compared to cash provided by operating activities of ~~$544.2~~$147 million in the first ~~nine~~three months of ~~2016.~~2019. The ~~$418.5~~$86 million ~~increase~~decrease in cash flows from operating activities was mainly due to an increase in working capital requirements, changes in deferred income taxes resulting in income tax refund generated from the carryback of federal NOL as permitted under the CARES Act and an increase in income from operations ~~and lower turnaround related expenditures during the nine months ended September 30, 2017~~due to factors as ~~compared to the first nine months of 2016, partially offset by an increase~~discussed in working capital requirements. The increase in net income from operations for the first nine months of 2017 was mainly as a result of higher sales prices and volumes, resulting in a higher margin, and earnings contributed by Axiall, which was acquired on August 31, 2016."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 payable and accrued and other liabilities, used cash of ~~$26.2~~$389 million in the first ~~nine~~three months of ~~2017,~~2020, compared to ~~$10.5~~$135 million of cash ~~provided~~used in the first ~~nine~~three months of ~~2016,~~2019, an unfavorable change of ~~$36.7~~$254 million. The ~~change was mainly driven by an~~majority of the unfavorable changes were due to the change in accounts receivable ~~partially offset~~which was driven by ~~favorable~~the expected income tax refund discussed above. To a lesser extent, other unfavorable changes were related to inventories and accrued liabilities primarily due to changes in inventory ~~prepaid~~levels and ~~other current assets and accounts payable.~~

~~Table~~timing of ~~Contents~~

payments.

Investing Activities

Net cash used for investing activities ~~during~~in the first ~~nine~~three months of ~~2017~~2020 was ~~$459.4~~$132 million as compared to net cash used for investing activities of ~~$2,389.1~~$475 million in the first ~~nine~~three months of ~~2016. In the first nine months of 2016 we used $2,437.8 million, net of cash acquired, for the acquisition of Axiall.~~2019. Capital expenditures were ~~$414.3~~$164 million in the first ~~nine~~three months of ~~2017~~2020, compared to ~~$467.3~~$203 million in the first ~~nine~~three months of ~~2016.~~2019. Capital expenditures in the first ~~nine~~three months of ~~2017~~2020 and 2019 were primarily incurred on the upgrade and expansion of OpCo's Calvert City ethylene plant at our Calvert City site. Capital expenditures 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. The remaining capital expenditures in the first nine months of 2017 and 2016 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 spent $47.0 million in~~ the ~~nine~~first three months of ~~2017 related to~~2020, we received $39 million from our ~~contribution to Lotte Chemical USA Corporation to fund the construction costs~~joint venture, LACC, representing a return of ~~the ethylene plant. Please see "Liquidity and Capital Resources—Liquidity and Financing Arrangements" below for further discussion. Investing~~investment. The other investing activities in the first ~~nine~~three months of ~~2016 included purchases~~2019 were the acquisition of ~~securities totaling $138.4 million. We also received aggregate proceeds~~NAKAN for $236 million, net of ~~$662.9~~its cash balance, and funding of $42 million ~~from the sales and maturities~~for LACC.

Table of ~~our investments in the first nine months of 2016.~~Contents

Financing Activities

Net cash ~~used~~provided for financing activities during the first ~~nine~~three months of ~~2017~~2020 was ~~$306.4~~$883 million as compared to net cash provided by financing activities of ~~$1,560.5~~$21 million in the first ~~nine~~three 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~~2019. In the first ~~nine~~three months of ~~2017. These uses were partially offset by a drawdown~~2020, we borrowed $1,000 million under ~~the Credit Agreement of $225.0 million in the first nine months of 2017~~our revolving credit facility. Please see "Liquidity and net proceeds of $110.7 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.Capital Resources—Liquidity and Financing Arrangements" below for further discussion. The remaining activities during the first ~~nine~~three months of ~~2017~~2020 were primarily related to the ~~$76.5~~$34 million payment of cash dividends, the ~~$20.8~~$10 million payment of cash distributions to noncontrolling interests, repurchases of our common stock of $54 million and ~~the $0.4~~$27 million ~~payment~~representing repayment of ~~debt issuance costs. In addition, we repaid $6.7 million of Huasu's~~ short-term notes ~~payable to banks in connection with~~payable. In the ~~payment~~first three months of ~~suppliers through letters~~2019, we received proceeds of ~~credit, partially offset by $5.9~~$63 million ~~of proceeds~~ from the issuance of ~~such notes payable.~~WLKP common units. The ~~financing~~remaining activities during the first ~~nine~~three months of ~~2016~~2019 were mainly related to the net proceeds from the issuance of our senior notes and the proceeds from our term loan of $1,428.5 in 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. The remaining activity during the first nine months of 2016 was primarily related to the ~~$71.9~~$33 million payment of cash dividends and the ~~$12.3~~$8 million payment of cash distributions to noncontrolling interests, the $35.2 million payment 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.interests.

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,~~March 31, 2020, we had repurchased ~~4,193,598~~6,793,244 shares of our common stock for an aggregate purchase price of approximately ~~$228.7~~$401 million under the 2014 Program. During the three months ended March 31, 2020, we repurchased 995,529 shares of our common stock 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~~On March 20, 2020, out of an abundance of caution, we borrowed $1 billion under our $1 billion revolving credit facility that is scheduled to mature on July 24, 2023 (the "Credit Agreement") to maintain financial flexibility in light of current uncertainty in the ~~Merger,~~global markets caused by COVID-19. While we ~~became party~~do not currently expect 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 our vinyls facility~~use the proceeds from these borrowings for any liquidity needs, we may use the proceeds in ~~Lake Charles. Pursuant to~~ the contribution and subscription agreement, we agreed to make a maximum capital commitment to LACC of up to $225.0 million 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, we had funded approximately $106.4 million of our portion of the construction costs of the ethylene plant.

~~Table of Contents~~

future for general corporate purposes.

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~~ 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~~March 31, 2020, our cash and cash equivalents totaled ~~$678.2~~$1,537 million. ~~In addition, we~~

Debt

As of March 31, 2020, our indebtedness totaled $4.4 billion. See Note 7 to the consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our long-term indebtedness. Defined terms used in this section have the ~~Credit Agreement available~~definitions assigned to ~~supplement cash if needed, as described under "Debt" below.~~

~~Debt~~

~~As of~~ ~~September 30, 2017~~, 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 obligationssuch terms in Note 7 to the ~~Louisiana Local Government Environmental Facility and Development Authority (the "Authority"), a political subdivision~~consolidated financial statements included in Item 1 of the State of Louisiana, under four loan agreements relating to the issuance 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 Credit Agreement and, in connection therewith, terminated the existing $1 billion revolving credit ~~agreement with Bank~~facility that was scheduled to mature on August 23, 2021 (the "Prior 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 ~~America, N.A., as agent and lender, providing~~ the ~~CV Borrower with a $150.0 million term loan facility. The term loan facility~~Company. At March 31, 2020, we had ~~a maturity date~~$1 billion borrowings outstanding under the Credit Agreement. As 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 2.0% per annum, payable in arrears on the last day~~2020, we had no outstanding letters of ~~each three-month period following the date of funding and at maturity.~~

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credit and had no borrowing availability (absent an exercise of the accordion feature) under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of March 31, 2020, 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 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. The Credit Agreement also requires an undrawn commitment fee ranging from 0.10% to 0.25% that will vary depending on our credit rating. The Credit Agreement matures on August 23, 2021. As 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 obligations under the Credit Agreement are guaranteed by our current 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, we were in compliance with the total leverage ratio financial maintenance covenant.

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.

~~Table~~ In connection with the issuance of ~~Contents~~

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.

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%~~3.60% 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 March 31, 2020 was 5.05% and at December 31, 2019 was 1.78%.

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 indentures governing the 3.60% 2026 Senior Notes, 5.0% 2046 Senior Notes, 3.60% 2022 Senior Notes, 4.375% 2047 Senior Notes and 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 March 31, 2020, 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").~~WLKP, originally entered into on April 29, 2015. On ~~August 1, 2017,~~March 19, 2020, the revolving credit facility was amended to extend the maturity ~~from 2018~~ to ~~2021.~~March 2023 and add a phase-out provision for LIBOR, which is to be replaced by an alternate benchmark rate. Borrowings under the revolver bear interest, payable quarterly, at a variable rate of either (a) LIBOR plus ~~a spread ranging from~~ 2.0% ~~to 3.0% (depending on WLKP's consolidated leverage ratio), payable quarterly.~~or (b) Alternate Base Rate plus 1.0%. 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,~~March 31, 2020, outstanding borrowings under the credit facility totaled ~~$253.5~~$377 million and bore interest at the LIBOR rate plus 2.0%.

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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~~is scheduled to mature in ~~2019.~~September 2023. As of ~~September 30, 2017,~~March 31, 2020, 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;

widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the COVID-19 pandemic;

our plans to respond to the challenges presented by the COVID-19 pandemic, including planned reductions of costs, increases of operating efficiencies and lowering of our capital spending, as well as the timing and deferral of the planned turnaround at our Petro 2 ethylene unit;

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;

results of acquisitions;

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);~~projects;

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.

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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~~2019 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;

uncertainties associated with pandemic infectious diseases, particularly COVID-19;

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

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.


~~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 (such as ethane, natural gas and propane) 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,~~March 31, 2020, 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~~$8 million. Based on our open derivative positions at March 31, 2020, 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~~$5 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.~~

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Interest Rate Risk

We are exposed to interest rate risk with respect to fixed and variable rate debt. At ~~September 30, 2017~~,March 31, 2020, we had ~~$10.9~~$3,474 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 March 31, 2020, we had $1,011 million principal amount of variable rate debt outstanding. All of the debt outstanding under the Credit Agreement and our loan relating to the tax-exempt waste disposal revenue bonds are at variable rates. 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 $1,011 million as of March 31, 2020 was 2.28%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would increase our annual interest expense by $10 million.

LIBOR is used as a reference rate for borrowings under our revolving line of credit. LIBOR is set to be phased out at the end of 2021 and replaced by an alternate benchmark rate. We do not expect the impact of the LIBOR phase out 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 to reduce the volatility in stockholders' equity from changes in currency exchange rates associated with our net investments in foreign operations. The notional value of the net investment hedges was €150 million at March 31, 2020. 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 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.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~September 30, 2017~~March 31, 2020 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~~2019 Form 10-K, filed on February ~~22, 2017,~~19, 2020, contained a description of various legal proceedings in which we are involved. See below and Note 1813 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.

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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. The plaintiffs seek an unspecified amount of damages and injunctive relief. The defendant's joint motion to dismiss the direct purchaser lawsuits was denied, so those cases will proceed with discovery. 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. In May 2018, we reached an agreement in principal with the Louisiana Department of Environmental Quality to resolve these consolidated enforcement matters for a penalty of $162,500. The settlement agreement was issued for public comment, which concluded in March 2020. After approval by the Louisiana Attorney General, the settlement agreement will be finalized.

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 facility. We entered into a consent agreement and final order with EPA in February 2020 to resolve this matter. Under that consent agreement and final order, we paid a penalty in the amount of $132,000 in March 2020. In addition, the consent agreement and final order requires us to complete a supplemental environmental project with a cost to us of $116,200.

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.

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In August 2019, the Ohio Valley Environmental Coalition and the Sierra Club filed suit against the Company in the U.S. District Court for the Northern District of West Virginia alleging violations since May 2014 of discharge limits under a state issued permit at our Natrium, West Virginia facility and seeking damages and injunctive relief. The Natrium facility's National Pollutant Discharge Elimination System ("NPDES") permit is subject to a consent order entered into with the West Virginia Department of Environmental Protection ("WVDEP"). Under the consent order and NPDES permit, the Natrium facility is subject to interim discharge limits for hexachlorocyclohexane (commonly referred to as "BHC") and mercury, any exceedances of which are subject to stipulated penalties outlined in the consent order. In March 2020, the court granted the Company's motion for summary judgment as to the plaintiffs' claims related to discharges of BHC, but denied summary judgment on plaintiffs' mercury claims. The Company disputes these claims and is actively pursuing all defenses in the matter. At this time, we are not able to estimate the impact, if any, that this lawsuit could have on our consolidated financial statements either in the current period or in future periods, but the resolution of these matters may require the payment of monetary sanctions in excess of $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~~2019 Form 10-K. The information below includes additional risk relating to COVID-19. The risks described below and in other documents that we file from time to time with the Securities and Exchange Commission could materially and adversely affect our business, results of operations, cash flow, liquidity or financial condition.

The ongoing coronavirus ("COVID-19") pandemic could materially adversely affect our business, financial condition and results of operations.

The ongoing COVID-19 outbreak, which the World Health Organization declared as a pandemic on March 11, 2020, has continued to be a rapidly evolving situation. It has resulted in authorities implementing numerous measures to try to contain the disease, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns, among others. There have been widespread adverse impacts on the global economy, many of our facilities and on our employees, customers and suppliers.

We have modified certain business and workforce practices (including those related to employee travel, employee work locations and cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to access our facilities could adversely affect our operations. We may take further actions as required by government authorities or that we determine are in the best interests of our employees, customers, partners and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the disease, and our ability to perform certain functions could be harmed.

We have received various notices from some of our customers and suppliers regarding performance delays, force majeure declarations and cancellation of orders. These actions may result in some disputes and could strain our relations with certain customers and suppliers.

In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce our ability to access capital or our customers' ability to pay us for past or future purchases, which could negatively affect our liquidity. We may need to consider alternative sources of funding for some of our operations and for working capital, which may increase our cost of capital. The COVID-19 pandemic could also reduce the demand for our products, and we have already temporarily idled some plants and reduced operating rates for others. These impacts could adversely affect our results in the near future. In addition, a recession or a financial market correction resulting from the spread of COVID-19 could adversely affect demand for our products.

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The global pandemic of COVID-19 continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is considerably uncertain and subject to change. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the disease or treat its impact, related restrictions on travel and the duration, timing and severity of the impact on customer spending, including any recession resulting from the pandemic, all of which are uncertain and cannot be predicted. An extended period of global supply chain and economic disruption as a result of the COVID-19 pandemic could have a material ~~changes from those~~negative impact on our business, results of operations, access to sources of liquidity and financial condition, though the full extent and duration is uncertain. To the extent that the COVID-19 pandemic adversely impacts our business, results of operations, liquidity or financial condition, it may also have the effect of increasing many of the other risks described in the risk ~~factors.~~factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.



~~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~~March 31, 2020.

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⁾
January 2020	—	$	—	—	$	184,872,000
February 2020	179,183	56.02		—	177,872,000
March 2020	866,528	53.93		—	131,155,000
	1,045,711	$	54.29	—

_____________


(1)	~~Represents~~Includes 49,926 and 256 shares withheld in February 2020 and March 2020, 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~~March 31, 2020, 6,793,244 shares of our common stock had been acquired at an aggregate purchase price of approximately ~~$228.7~~$401 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.

5635

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~~Item 6.~~	Item 6. Exhibits



Exhibit No.		~~EXHIBIT INDEX~~

~~10.1†~~		~~Investment Management Agreement among Westlake Chemical Corporation, Westlake Chemical OpCo LP and Westlake Chemical Partners LP, dated as of August 1, 2017~~ Exhibit Index

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 and contained in Exhibit 101


†	Filed herewith.


#	Furnished herewith.

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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~~May 6, 2020	By:	/S/ ALBERT CHAO
			Albert Chao
			President and Chief Executive Officer (Principal Executive Officer)

Date:	~~November 7, 2017~~May 6, 2020	By:	/S/ M. STEVEN BENDER
			M. Steven Bender
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)

5837



	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