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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021 

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission file number 1-31763

 

KRONOS WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

76-0294959

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

5430 LBJ Freeway, Suite 1700

Dallas, Texas 75240-2620

(Address of principal executive offices)

Registrant’s telephone number, including area code: (972233-1700

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

 

KRO

 

NYSE

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 and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer          

Accelerated filer

Non-accelerated filer

  Smaller reporting company  

Emerging growth company  

 

 

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 Act).    Yes      No  

Number of shares of the registrant’s common stock, $.01 par value per share, outstanding on April 30, 2021:  115,542,717.

 

 

 


 

 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

INDEX

 

 

  

 

  

Page
number

 

Part I.

  

FINANCIAL INFORMATION

  

 

 

Item 1.

  

Financial Statements

  

 

 

  

 

Condensed Consolidated Balance Sheets -
   December 31, 2020; March 31, 2021 (unaudited)

  

3

 

  

 

Condensed Consolidated Statements of Income (unaudited) -
   Three months ended March 31, 2020 and 2021

  

5

 

  

 

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) -
   Three months ended March 31, 2020 and 2021

  

6

 

  

 

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) -
   Three months ended March 31, 2020 and 2021

  

7

 

  

 

Condensed Consolidated Statements of Cash Flows (unaudited) -
   Three months ended March 31, 2020 and 2021

  

8

 

  

 

Notes to Condensed Consolidated Financial Statements (unaudited)

  

9

Item 2.

  

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

16

Item 3.

  

 

Quantitative and Qualitative Disclosure About Market Risk

  

23

Item 4.

  

 

Controls and Procedures

  

23

 

Part II.

  

OTHER INFORMATION

  

 

 

Item 1.

  

Legal Proceedings

  

25

Item 1A.

  

 

Risk Factors

  

25

Item 6.

  

 

Exhibits

  

25

 

Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

  

 

 

 

 

 

- 2 -


 

 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 

 

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

 

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

355.3

 

 

$

373.6

 

Restricted cash

 

2.0

 

 

 

1.7

 

Accounts and other receivables, net

 

323.0

 

 

 

338.3

 

Inventories, net

 

519.0

 

 

 

473.0

 

Prepaid expenses and other

 

19.0

 

 

 

13.6

 

 

 

 

 

 

 

 

 

Total current assets

 

1,218.3

 

 

 

1,200.2

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

Investment in TiO2 manufacturing joint venture

 

103.3

 

 

 

106.7

 

Restricted cash

 

4.7

 

 

 

4.6

 

Marketable securities

 

2.2

 

 

 

3.0

 

Operating lease right-of-use assets

 

26.1

 

 

 

24.6

 

Deferred income taxes

 

151.0

 

 

 

143.3

 

Other

 

6.5

 

 

 

7.1

 

 

 

 

 

 

 

 

 

Total other assets

 

293.8

 

 

 

289.3

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

Land

 

44.1

 

 

 

42.7

 

Buildings

 

233.9

 

 

 

228.0

 

Equipment

 

1,173.7

 

 

 

1,141.1

 

Mining properties

 

127.8

 

 

 

128.5

 

Construction in progress

 

56.1

 

 

 

59.5

 

 

 

1,635.6

 

 

 

1,599.8

 

Less accumulated depreciation and amortization

 

1,111.0

 

 

 

1,092.7

 

 

 

 

 

 

 

 

 

Net property and equipment

 

524.6

 

 

 

507.1

 

 

 

 

 

 

 

 

 

Total assets

$

2,036.7

 

 

$

1,996.6

 

 

- 3 -


 

 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In millions)

 

 

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

 

 

 

 

(unaudited)

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities of long-term debt

$

.7

 

 

$

.7

 

Accounts payable and accrued liabilities

 

243.8

 

 

 

238.0

 

Income taxes

 

15.7

 

 

 

16.5

 

 

 

 

 

 

 

 

 

Total current liabilities

 

260.2

 

 

 

255.2

 

 

 

 

 

 

 

 

 

Noncurrent liabilities:

 

 

 

 

 

 

 

Long-term debt

 

486.7

 

 

 

465.9

 

Accrued pension costs

 

372.6

 

 

 

355.8

 

Payable to affiliate - income taxes

 

50.6

 

 

 

50.6

 

Operating lease liabilities

 

18.8

 

 

 

17.6

 

Deferred income taxes

 

24.6

 

 

 

24.1

 

Other

 

26.7

 

 

 

26.5

 

 

 

 

 

 

 

 

 

Total noncurrent liabilities

 

980.0

 

 

 

940.5

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

1.2

 

 

 

1.2

 

Additional paid-in capital

 

1,395.3

 

 

 

1,395.3

 

Retained deficit

 

(151.8

)

 

 

(153.0

)

Accumulated other comprehensive loss

 

(448.2

)

 

 

(442.6

)

 

 

 

 

 

 

 

 

Total stockholders' equity

 

796.5

 

 

 

800.9

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

$

2,036.7

 

 

$

1,996.6

 

Commitments and contingencies (Notes 10 and 12)

See accompanying notes to Condensed Consolidated Financial Statements.  

 

- 4 -


 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

 

2021

 

 

(unaudited)

 

Net sales

$

421.0

 

 

$

465.0

 

Cost of sales

 

332.9

 

 

 

369.3

 

 

 

 

 

 

 

 

 

Gross margin

 

88.1

 

 

 

95.7

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

53.5

 

 

 

58.0

 

Other operating income (expense):

 

 

 

 

 

 

 

Currency transactions, net

 

12.2

 

 

 

(.5

)

Other operating expense, net

 

(3.3

)

 

 

(3.2

)

 

 

 

 

 

 

 

 

Income from operations

 

43.5

 

 

 

34.0

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest and dividend income

 

1.2

 

 

 

.1

 

Insurance settlement gain

 

1.5

 

 

 

-

 

Marketable equity securities

 

(1.5

)

 

 

.8

 

Other components of net periodic pension and OPEB cost

 

(4.7

)

 

 

(4.3

)

Interest expense

 

(4.6

)

 

 

(5.0

)

 

 

 

 

 

 

 

 

Income before income taxes

 

35.4

 

 

 

25.6

 

 

 

 

 

 

 

 

 

Income tax expense

 

8.4

 

 

 

6.0

 

 

 

 

 

 

 

 

 

Net income

$

27.0

 

 

$

19.6

 

 

 

 

 

 

 

 

 

Net income per basic and diluted share

$

.23

 

 

$

.17

 

 

 

 

 

 

 

 

 

Weighted average shares used in the calculation

  of net income per share

 

115.6

 

 

 

115.5

 

 

See accompanying notes to Condensed Consolidated Financial Statements.  

 

- 5 -


 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

 

2021

 

 

(unaudited)

 

Net income

$

27.0

 

 

$

19.6

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

Currency translation

 

(41.9

)

 

 

2.2

 

Defined benefit pension plans

 

3.0

 

 

 

3.5

 

Other postretirement benefit plans

 

(.1

)

 

 

(.1

)

 

 

 

 

 

 

 

 

Total other comprehensive income (loss), net

 

(39.0

)

 

 

5.6

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

$

(12.0

)

 

$

25.2

 

 

See accompanying notes to Condensed Consolidated Financial Statements.

 

- 6 -


 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

 

 

Three months ended March 31, 2020 and 2021 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

 

 

 

 

 

 

 

 

Common

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

Treasury

 

 

 

 

 

 

stock

 

 

capital

 

 

deficit

 

 

loss

 

 

stock

 

 

Total

 

 

 

 

Balance at December 31, 2019

$

1.2

 

 

$

1,396.2

 

 

$

(132.5

)

 

$

(448.8

)

 

$

-

 

 

$

816.1

 

Net income

 

-

 

 

 

-

 

 

 

27.0

 

 

 

-

 

 

 

-

 

 

 

27.0

 

Other comprehensive loss, net of tax

 

-

 

 

 

-

 

 

 

-

 

 

 

(39.0

)

 

 

-

 

 

 

(39.0

)

Dividends paid - $.18 per share

 

-

 

 

 

-

 

 

 

(20.8

)

 

 

-

 

 

 

-

 

 

 

(20.8

)

Treasury stock acquired

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1.0

)

 

 

(1.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

$

1.2

 

 

$

1,396.2

 

 

$

(126.3

)

 

$

(487.8

)

 

$

(1.0

)

 

$

782.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

$

1.2

 

 

$

1,395.3

 

 

$

(151.8

)

 

$

(448.2

)

 

$

-

 

 

$

796.5

 

Net income

 

-

 

 

 

-

 

 

 

19.6

 

 

 

-

 

 

 

-

 

 

 

19.6

 

Other comprehensive income, net of tax

 

-

 

 

 

-

 

 

 

-

 

 

 

5.6

 

 

 

-

 

 

 

5.6

 

Dividends paid - $.18 per share

 

-

 

 

 

-

 

 

 

(20.8

)

 

 

-

 

 

 

-

 

 

 

(20.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

$

1.2

 

 

$

1,395.3

 

 

$

(153.0

)

 

$

(442.6

)

 

$

-

 

 

$

800.9

 

 

 

See accompanying notes to Condensed Consolidated Financial Statements.

 

- 7 -


 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

 

Three months ended

 

 

March 31,

 

 

2020

 

 

2021

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

27.0

 

 

$

19.6

 

Depreciation

 

14.9

 

 

 

12.7

 

Amortization of operating lease right-of-use assets

 

1.6

 

 

 

1.7

 

Deferred income taxes

 

(.9

)

 

 

.2

 

Benefit plan expense greater than cash funding

 

3.0

 

 

 

3.7

 

Marketable equity securities

 

1.5

 

 

 

(.8

)

Contributions to TiO2 manufacturing joint venture, net

 

(2.2

)

 

 

(3.4

)

Other, net

 

(1.1

)

 

 

.1

 

Change in assets and liabilities:

 

 

 

 

 

 

 

Accounts and other receivables, net

 

(38.7

)

 

 

(23.5

)

Inventories, net

 

3.3

 

 

 

35.6

 

Prepaid expenses

 

3.6

 

 

 

5.0

 

Accounts payable and accrued liabilities

 

(30.5

)

 

 

.5

 

Income taxes

 

9.4

 

 

 

.9

 

Accounts with affiliates

 

(1.5

)

 

 

4.2

 

Other, net

 

.8

 

 

 

.2

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

(9.8

)

 

 

56.7

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(15.3

)

 

 

(10.8

)

Proceeds from insurance settlement

 

1.5

 

 

 

-

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(13.8

)

 

 

(10.8

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Payments on long-term debt

 

(.1

)

 

 

(.2

)

Dividends paid

 

(20.8

)

 

 

(20.8

)

Treasury stock acquired

 

(1.0

)

 

 

-

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

(21.9

)

 

 

(21.0

)

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash - net change from:

 

 

 

 

 

 

 

Operating, investing and financing activities

 

(45.5

)

 

 

24.9

 

Currency translation

 

(3.9

)

 

 

(7.0

)

Balance at beginning of period

 

392.3

 

 

 

362.0

 

 

 

 

 

 

 

 

 

Balance at end of period

$

342.9

 

 

$

379.9

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

Interest, net of amount capitalized

$

8.5

 

 

$

9.2

 

Income taxes

 

(.1

)

 

 

3.9

 

Accrual for capital expenditures

 

2.3

 

 

 

2.5

 

 

See accompanying notes to Condensed Consolidated Financial Statements.

 

 

- 8 -


 

 

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(unaudited)

 

Note 1 - Organization and basis of presentation:

Organization - At March 31, 2021, Valhi, Inc. (NYSE: VHI) held approximately 50% of our outstanding common stock and a wholly-owned subsidiary of NL Industries, Inc. (NYSE: NL) held approximately 30% of our common stock.  Valhi owned approximately 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation held approximately 92% of Valhi’s outstanding common stock. A majority of Contran's outstanding voting stock is held directly by Lisa K. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serve as trustee (collectively, the “Other Trusts”).  With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held in such trusts in the same manner as Ms. Simmons. Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons.  The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at March 31, 2021 Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

Basis of presentation - The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020 that we filed with the Securities and Exchange Commission (SEC) on March 10, 2021 (2020 Annual Report).  In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments), in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented.  We have condensed the Consolidated Balance Sheet at December 31, 2020 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, 2020) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).  Our results of operations for the interim period ended March 31, 2021 may not be indicative of our operating results for the full year.  The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our 2020 Consolidated Financial Statements contained in our 2020 Annual Report.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Kronos Worldwide, Inc. and its subsidiaries (NYSE: KRO) taken as a whole.

Note 2 - Accounts and other receivables, net:

 

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

(In millions)

 

Trade receivables

$

294.8

 

 

$

314.7

 

Recoverable VAT and other receivables

 

21.3

 

 

 

17.5

 

Receivables from affiliates

 

3.5

 

 

 

2.7

 

Refundable income taxes

 

5.3

 

 

 

5.4

 

Allowance for doubtful accounts

 

(1.9

)

 

 

(2.0

)

Total

$

323.0

 

 

$

338.3

 

 

 

- 9 -


 

 

Note 3 - Inventories, net:

 

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

(In millions)

 

Raw materials

$

133.2

 

 

$

134.7

 

Work in process

 

36.8

 

 

 

30.5

 

Finished products

 

269.2

 

 

 

229.4

 

Supplies

 

79.8

 

 

 

78.4

 

Total

$

519.0

 

 

$

473.0

 

 

Note 4 - Marketable securities:

Our marketable securities consist of investments in the publicly-traded shares of related parties: Valhi, NL and CompX International Inc.  NL owns the majority of CompX’s outstanding common stock.  All of our marketable securities are accounted for as available-for-sale securities, which are carried at fair value using quoted market prices in active markets for each marketable security and represent a Level 1 input within the fair value hierarchy.  Any unrealized gains or losses on the securities are recognized in Other income (expense) - Marketable equity securities on our Condensed Consolidated Statements of Income.  

 

 

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

measurement

 

Market

 

 

Cost

 

 

 

 

 

Marketable security

 

level

 

value

 

 

basis

 

 

Unrealized loss

 

 

 

 

 

(In millions)

 

December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valhi common stock

 

1

 

$

2.1

 

 

$

3.2

 

 

$

(1.1

)

NL and CompX common stocks

 

1

 

 

.1

 

 

 

.1

 

 

 

-

 

Total

 

 

 

$

2.2

 

 

$

3.3

 

 

$

(1.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valhi common stock

 

1

 

$

2.9

 

 

$

3.2

 

 

$

(.3

)

NL and CompX common stocks

 

1

 

 

.1

 

 

 

.1

 

 

 

-

 

Total

 

 

 

$

3.0

 

 

$

3.3

 

 

$

(.3

)

 

At December 31, 2020 and March 31, 2021, we held approximately 144,000 shares of Valhi’s common stock. We also held a nominal number of shares of NL and CompX common stocks.  At December 31, 2020 and March 31, 2021, the per share quoted market price of Valhi’s common stock was $15.20 and $20.51, respectively.

The Valhi, CompX and NL common stocks we own are subject to restrictions on resale pursuant to certain provisions of SEC Rule 144.  In addition, as a majority-owned subsidiary of Valhi we cannot vote our shares of Valhi common stock under Delaware General Corporation law, but we receive dividends from Valhi on these shares when declared and paid.

 

Note 5 - Long-term debt:

 

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

(In millions)

 

Kronos International, Inc. 3.75% Senior Notes

$

485.7

 

 

$

465.0

 

Other

 

1.7

 

 

 

1.6

 

Total debt

 

487.4

 

 

 

466.6

 

Less current maturities

 

.7

 

 

 

.7

 

Total long-term debt

$

486.7

 

 

$

465.9

 

 

Senior Notes - At March 31, 2021, the carrying value of our 3.75% Senior Secured Notes due September 15, 2025 (€400 million aggregate principal amount outstanding) is stated net of unamortized debt issuance costs of $4.3 million.

Revolving credit facilities - On April 20, 2021, we entered into a new global $225 million revolving credit facility (Global Revolver) which matures in April 2026.   The Global Revolver replaces our previously existing North American and European revolving credit facilities and there were no borrowings on either facility in 2021 through their termination concurrent with entering into the Global Revolver.  The full $225 million was available for borrowing upon the commencement of the Global Revolver.  Borrowings under the Global Revolver are available for our general corporate purposes. Available borrowings are based on formula-determined amounts of eligible trade receivables and inventories, as defined in the agreement, less any outstanding letters of credit issued under the Global Revolver.   Borrowings by our Canadian, Belgian and German subsidiaries are limited to $25 million, 30 million and €60 million, respectively.  Any amounts outstanding under the Global Revolver bear interest, at our option, at the applicable non-base rate (LIBOR, CDOR or EURIBOR, dependent on the currency of the borrowing) plus a margin ranging from 1.5% to 2.0%, or at the applicable base rate, as defined in the agreement, plus a margin ranging from .5% to 2.0%.  The Global Revolver is collateralized by, among other things, a first priority lien on the borrowers’ trade receivables and inventories. The facility contains a number of covenants and restrictions customary in lending transactions of this type which, among other things, restrict the borrowers’ ability to incur additional debt, incur liens, pay additional dividends or merge or consolidate with, or sell or transfer all or substantially all of their assets to another entity and, under certain conditions, requires the maintenance of a fixed charge coverage ratio, as defined in the agreement, of at least 1.0 to 1.0.

 

- 10 -


 

Other - We are in compliance with all of our debt covenants at March 31, 2021.

 

Note 6 - Accounts payable and accrued liabilities:

 

December 31,

 

 

March 31,

 

 

2020

 

 

2021

 

 

(In millions)

 

Accounts payable

$

111.0

 

 

$

132.0

 

Employee benefits

 

27.8

 

 

 

30.3

 

Accrued sales discounts and rebates

 

29.1

 

 

 

14.6

 

Payables to affiliates:

 

 

 

 

 

 

 

Louisiana Pigment Company, L.P.

 

19.3