Platform Specialty Products Corporation
Platform Specialty Products Corp (Form: 10-Q, Received: 11/02/2017 16:13:49)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM 10-Q
_______________

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
 
OR
 
o 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: 001-36272
_______________

PLATFORMSPECIALTYLOGOA15.JPG

(Exact name of Registrant as specified in its charter)
_______________
Delaware
37-1744899
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
1450 Centrepark Boulevard, Suite 210
West Palm Beach, Florida
33401
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (561) 207-9600
_______________
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.    Yes   ý      No   o
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).    Yes   ý       No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.    
Large accelerated filer ý
Accelerated filer o  
Non-Accelerated filer o    
Smaller reporting company o  
 
 
 
Emerging growth company o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o   No ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
Class
October 27, 2017
Common Stock, par value $0.01 per share
287,097,154 shares



TABLE OF CONTENTS



 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Operations
 
 
Three and Nine Months Ended September 30, 2017 and 2016
 
Condensed Consolidated Statements of Comprehensive Income (Loss)
 
 
Three and Nine Months Ended September 30, 2017 and 2016
 
Condensed Consolidated Balance Sheets
 
 
September 30, 2017 and December 31, 2016
 
Condensed Consolidated Statements of Cash Flows
 
 
Nine Months Ended September 30, 2017 and 2016
 
Condensed Consolidated Statements of Changes in Stockholders' Equity
 
 
Nine Months Ended September 30, 2017 and 2016
 
 
 
 
 
 
 
 
 
 
 



GLOSSARY OF DEFINED TERMS


Terms     
 
Definitions
Platform; We; Us; Our; the Company; PSP
 
Platform Specialty Products Corporation, a Delaware corporation, and its subsidiaries, collectively.
Acquisitions
 
Agriphar Acquisition, Alent Acquisition, Arysta Acquisition, CAS Acquisition, MacDermid Acquisition, OMG Acquisition and OMG Malaysia Acquisition, collectively.
Agriphar Acquisition
 
Acquisition of a 100% interest in Percival S.A., a formerly Belgium société anonyme, including its agrochemical business, Agriphar, completed on October 1, 2014.
AIs
 
Active ingredients.
Alent Acquisition
 
Acquisition of a 100% interest in Alent plc, a formerly public limited company registered in England and Wales, completed on December 1, 2015 under the U.K. Companies Act 2006, as amended.
Amended and Restated Credit Agreement
 
Platform’s Second Amended and Restated Credit Agreement, dated as of August 6, 2014, among, inter alia, Platform, MacDermid Holdings, LLC, MacDermid, the subsidiaries of Platform and MacDermid Holdings, LLC from time to time parties thereto, the lenders from time to time parties thereto and Barclays Bank PLC, as administrative agent and collateral agent, as amended and restated from time to time.
AROs
 
Asset retirement obligations.
Arysta
 
Arysta LifeScience Limited, a formerly Irish private limited company.
Arysta Acquisition
 
Acquisition of a 100% interest in Arysta, completed on February 13, 2015.
Arysta Seller
 
Nalozo, L.P., an affiliate of Nalozo S.à.r.l., a Luxembourg limited liability company and the original seller in the Arysta Acquisition, who became the seller in the Arysta Acquisition pursuant to an amendment to the share purchase agreement dated February 11, 2015.
Asset-Lite, High-Touch
 
Platform’s philosophy and business model focused on dedicating extensive resources to research and development and highly technical customer service teams, while limiting investments in fixed assets and capital expenditures.
ASU
 
Accounting Standards Update.
Board
 
Platform’s board of directors.
CAS Acquisition
 
Acquisition of a 100% interest in the Chemtura AgroSolutions business of Chemtura Corporation, a Delaware corporation, completed on November 3, 2014.
CODM
 
Chief operating decision maker.
Cortron
 
Cortron Corporation.
Credit Facilities
 
The First Lien Credit Facility and the Revolving Credit Facility, collectively, available under the Amended and Restated Credit Agreement.
DuPont
 
E.I. du Pont de Nemours and Company, now known as DowDuPont, Inc.
EBITDA
 
Earnings before interest, taxes, depreciation and amortization.
EPS
 
Earnings per share.
ESPP
 
Platform Specialty Products Corporation 2014 Employee Stock Purchase Plan, adopted by the Board on March 6, 2014 and approved by Platform’s stockholders at the annual meeting held on June 12, 2014.
Exchange Act
 
Securities Exchange Act of 1934, as amended.
FASB
 
Financial Accounting Standard Board.
February 2015 Notes Offering
 
Platform's private offering of $1.10 billion aggregate principal amount of 6.50% USD Senior Notes due 2022 and €350 million aggregate principal amount of 6.00% EUR Senior Notes due 2023, completed on February 2, 2015.
First Lien Credit Facility
 
First lien credit facility available under the Amended and Restated Credit Agreement.
Founder Entities
 
Mariposa Acquisition, LLC and Berggruen Holdings Ltd. and its affiliates, collectively.
GAAP
 
Generally accepted accounting principles in the United States.
GBP
 
Platform's Global Biosolutions Portfolio within its Agricultural Solutions segment, which includes biostimulants, innovative nutrition and biocontrol products.


G-1


GLOSSARY OF DEFINED TERMS


Terms     
 
Definitions
GVAP
 
Platform’s Global Value Added Portfolio within its Agricultural Solutions segment, which includes products in the herbicides, insecticides, fungicides and seed treatment categories, based on patented or proprietary off-patent AIs.
H 3  Priority Segments
 
Agricultural Solutions' five priority product offerings selected for their high growth, high value and high differentiation potential, namely Crop Establishment, Plant Stress and Stimulation, Resistant Weed Management, Specialty Protection Niches and Crop Residue Management.
MacDermid
 
MacDermid, Incorporated, a Connecticut corporation.
MacDermid Acquisition
 
Platform’s acquisition on October 31, 2013 of substantially all of the equity of MacDermid Holdings, LLC, which, at the time, owned approximately 97% of MacDermid. As a result, Platform became a holding company for the MacDermid business. Platform acquired the remaining 3% of MacDermid on March 4, 2014, pursuant to the terms of the Exchange Agreement, dated October 25, 2013, between Platform and the fiduciaries of the MacDermid, Incorporated Profit Sharing and Employee Savings Plan.
MacDermid Printing
 
MacDermid Printing Solutions LLC, now known as MacDermid Graphics Solutions LLC.
November 2015 Notes Offering
 
Platform's private offering of $500 million aggregate principal amount of 10.375% USD Senior Notes due 2021, completed on November 10, 2015.
NYSE
 
New York Stock Exchange.
OMG
 
OM Group, Inc., a Delaware corporation.
OMG Malaysia
 
OMG Electronic Chemicals (M) Sdn Bhd, a subsidiary of OMG located in Malaysia, acquired separately by Platform in the OMG Malaysia Acquisition.
OMG Acquisition
 
Platform's acquisition of 100% interest in OMG's Electronic Chemicals and Photomasks businesses, collectively, other than OMG Malaysia, completed on October 28, 2015.
OMG Malaysia Acquisition
 
Platform's acquisition of 100% interest in OMG Malaysia completed on January 31, 2016.
PDH Common Stock
 
Shares of common stock of Platform Delaware Holdings, Inc., a subsidiary of Platform.
Proposed Separation
 
Platform's proposed separation of its Agricultural Solutions business into an independent company announced on August 24, 2017 and expected to be completed in 2018.
Quarterly Report
 
This quarterly report on Form 10-Q for the three and nine months ended September 30, 2017.
Retaining Holder
 
Each Holder of an equity interest of MacDermid Holdings, LLC immediately prior to the closing of the MacDermid Acquisition, not owned by Platform, who executed a RHSA.
Revolving Credit Facility
 
Revolving credit facility (in U.S. Dollars or multicurrency) available under the Amended and Restated Credit Agreement.
RHSA
 
Retaining Holder Securityholders’ Agreement, dated as of October 31, 2013, entered into by and between Platform and each Retaining Holder pursuant to which they agreed to exchange their respective interests in MacDermid Holdings, LLC for shares of PDH Common Stock, at an exchange rate of $11.00 per share plus (i) a proportionate share of the $100 million contingent consideration and (ii) an interest in certain MacDermid pending litigation.
ROIC
 
Return on invested capital.
RSUs
 
Restricted stock units issued by Platform from time to time under the 2013 Plan.
SEC
 
Securities and Exchange Commission.
Senior Notes
 
Platform's 6.00% EUR Senior Notes due 2023, 6.50% USD Senior Notes due 2022 and 10.375% USD Senior Notes due 2021, collectively.
Series A Preferred Stock
 
2,000,000 shares of Platform’s Series A convertible preferred stock held by the Founder Entities and convertible into shares of Platform’s common stock, on a one-for-one basis, at any time at the option of the Founder Entities.
Series B Convertible Preferred Stock
 
600,000 shares of Platform’s Series B convertible preferred stock issued to the Arysta Seller in connection with the Arysta Acquisition on February 13, 2015. At December 31, 2016, none of the Series B Convertible Preferred Stock remained outstanding.
SERP
 
Supplemental Executive Retirement Plan for executive officers of Platform.


G-2


GLOSSARY OF DEFINED TERMS


Terms     
 
Definitions
Tartan
 
Tartan Holdings, LLC, a Delaware limited liability company, formed at the time of the MacDermid Acquisition to hold the PDH Common Stock received in exchange of the equity interests of MacDermid Holdings, LLC held by certain Retaining Holders, members of Tartan.
TSR
 
Total stockholder return.
2013 Plan
 
Platform Specialty Products Corporation Amended and Restated 2013 Incentive Compensation Plan adopted by the Board on October 31, 2013, as amended on December 16, 2013 and approved by Platform’s stockholders at the annual meeting held on June 12, 2014.
2015 Annual Report
 
Platform's annual report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 11, 2016.
2016 Annual Report
 
Platform's annual report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 13, 2017.
2016 Q1 Form 10-Q
 
Platform's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2016, as filed with the SEC on May 10, 2016.
6.00% EUR Senior Notes due 2023
 
Platform’s 6.00% senior notes due 2023 denominated in Euros issued in the February 2015 Notes Offering.
6.50% USD Senior Notes due 2022
 
Platform’s 6.50% senior notes due 2022 denominated in U.S. Dollars issued in the February 2015 Notes Offering.
10.375% USD Senior Notes due 2021
 
Platform's 10.375% senior notes due 2021 denominated in U.S. Dollars issued in the November 2015 Notes Offering.


G-3


PART I. FINANCIAL INFORMATION



Item 1. Condensed Consolidated Financial Statements
 
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net sales
$
904.3

 
$
890.5

 
$
2,707.2

 
$
2,635.9

Cost of sales
533.2

 
515.4

 
1,557.8

 
1,524.1

Gross profit
371.1

 
375.1

 
1,149.4

 
1,111.8

Operating expenses:
 

 
 
 
 

 
 

Selling, technical, general and administrative
264.2

 
274.3

 
806.1

 
823.5

Research and development
23.4

 
20.9

 
70.1

 
61.3

Total operating expenses
287.6

 
295.2

 
876.2

 
884.8

Operating profit
83.5

 
79.9

 
273.2

 
227.0

Other (expense) income:
 

 
 

 
 

 
 

Interest expense, net
(85.6
)
 
(98.5
)
 
(260.0
)
 
(289.7
)
Foreign exchange loss
(24.9
)
 
(10.3
)
 
(97.4
)
 
(56.5
)
Other (expense) income, net
(1.8
)
 
115.2

 
1.6

 
108.3

Total other (expense) income
(112.3
)
 
6.4

 
(355.8
)
 
(237.9
)
(Loss) income before income taxes and non-controlling interests
(28.8
)
 
86.3

 
(82.6
)
 
(10.9
)
Income tax expense
(37.5
)
 
(20.4
)
 
(67.3
)
 
(65.7
)
Net (loss) income
(66.3
)
 
65.9

 
(149.9
)
 
(76.6
)
Net (income) loss attributable to the non-controlling interests
(2.9
)
 
5.9

 
(4.8
)
 
4.7

Net (loss) income attributable to stockholders
(69.2
)
 
71.8

 
(154.7
)
 
(71.9
)
Gain on amendment of Series B Convertible Preferred Stock

 
32.9

 

 
32.9

Net (loss) income attributable to common stockholders
$
(69.2
)
 
$
104.7

 
$
(154.7
)
 
$
(39.0
)
(Loss) earnings per share
 

 
 

 
 

 
 

Basic
$
(0.24
)
 
$
0.45

 
$
(0.54
)
 
$
(0.17
)
Diluted
$
(0.24
)
 
$
(0.15
)
 
$
(0.54
)
 
$
(0.71
)
Weighted average common shares outstanding
 

 
 
 
 

 
 

Basic
286.7

 
234.4

 
285.8

 
231.2

Diluted
286.7

 
264.5

 
285.8

 
253.3

 
See accompanying notes to the condensed consolidated financial statements


1


PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In millions)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net (loss) income
$
(66.3
)
 
$
65.9

 
$
(149.9
)
 
$
(76.6
)
 
 

 
 

 
 

 
 

Other comprehensive income (loss)
 
 
 
 
 
 
 
Foreign currency translation adjustments
126.2

 
(0.7
)
 
269.6

 
451.8

Pension and post-retirement plans:
 
 
 
 
 
 
 
Other comprehensive loss, net of tax of $0.0 for the three and nine months ended September 30, 2017 and 2016

 

 
(0.3
)
 

Unrealized loss on available for sale securities:
 
 
 
 
 
 
 
Other comprehensive loss, net of tax of $0.0 and $0.1 for the three months ended September 30, 2017 and 2016, and $0.0 and $0.8 for the nine months ended September 30, 2017 and 2016, respectively
0.9

 
(0.1
)
 
(0.8
)
 
(1.7
)
Derivative financial instruments revaluation:
 
 
 
 
 
 
 
Other comprehensive loss before reclassifications, net of tax of $0.0 for the three and nine months ended September 30, 2017 and 2016
(0.2
)
 
(1.6
)
 
(6.4
)
 
(24.3
)
Reclassifications, net of tax of $0.0 for the three and nine months ended September 30, 2017 and 2016
2.3

 
3.0

 
8.2

 
8.9

Total unrealized loss arising on qualified hedging derivatives
2.1

 
1.4

 
1.8

 
(15.4
)
Other comprehensive income
129.2

 
0.6

 
270.3

 
434.7

Comprehensive income
62.9

 
66.5

 
120.4

 
358.1

Comprehensive loss (income) attributable to the non-controlling interests
(8.3
)
 
14.9

 
(10.6
)
 
(8.0
)
Comprehensive income attributable to stockholders
$
54.6

 
$
81.4

 
$
109.8

 
$
350.1

 

See accompanying notes to the condensed consolidated financial statements


2


PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
 
September 30,
 
December 31,
 
2017
 
2016
Assets
 
 
 
Cash and cash equivalents
$
390.9

 
$
422.6

Accounts receivable, net
1,133.9

 
1,054.8

Inventories
556.7

 
416.4

Prepaid expenses
54.6

 
71.3

Other current assets
160.5

 
106.1

Total current assets
2,296.6

 
2,071.2

Property, plant and equipment, net
452.4

 
460.5

Goodwill
4,367.5

 
4,178.9

Intangible assets, net
3,193.6

 
3,233.3

Other assets
128.5

 
110.2

Total assets
$
10,438.6

 
$
10,054.1

Liabilities and Stockholders' Equity
 

 
 

Accounts payable
$
427.4

 
$
383.6

Current installments of long-term debt and revolving credit facilities
90.0

 
116.1

Accrued salaries, wages and employee benefits
89.2

 
103.5

Accrued income taxes payable
73.7

 
82.5

Accrued expenses and other current liabilities
440.1

 
397.0

Total current liabilities
1,120.4

 
1,082.7

Debt and capital lease obligations
5,332.7

 
5,122.9

Pension and post-retirement benefits
71.5

 
73.8

Deferred income taxes
671.1

 
663.2

Contingent consideration
79.0

 
75.8

Other liabilities
145.0

 
145.9

Total liabilities
7,419.7

 
7,164.3

Commitments and contingencies (Note 14)


 


Stockholders' Equity
 

 
 

Preferred stock - Series A

 

Common stock: 400.0 shares authorized (2017: 287.1 shares issued; 2016: 284.2 shares issued)
2.9

 
2.8

Additional paid-in capital
4,025.9

 
3,981.3

Treasury stock (2017: 0.0 shares)
(0.1
)
 

Accumulated deficit
(728.2
)
 
(573.5
)
Accumulated other comprehensive loss
(410.0
)
 
(674.5
)
Total stockholders' equity
2,890.5

 
2,736.1

Non-controlling interests
128.4

 
153.7

Total equity
3,018.9

 
2,889.8

Total liabilities and stockholders' equity
$
10,438.6

 
$
10,054.1


See accompanying notes to the condensed consolidated financial statements


3


PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 
Nine Months Ended September 30,
 
2017
 
2016
Cash flows from operating activities:
 

 
Net loss
$
(149.9
)
 
$
(76.6
)
Reconciliation of net loss to net cash flows provided by (used in) operating activities:
 

 
 

Depreciation and amortization
265.4

 
254.9

Deferred income taxes
(37.2
)
 
(57.8
)
Amortization of inventory step-up

 
11.7

Foreign exchange loss
109.5

 
51.7

Gain on settlement agreement related to Series B Convertible Preferred Stock

 
(103.0
)
Other, net
51.9

 
49.1

Changes in assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(34.6
)
 
(61.9
)
Inventories
(99.7
)
 
(34.1
)
Accounts payable
30.2

 
(66.3
)
Accrued expenses
4.7

 
9.5

Prepaid expenses and other current assets
(15.1
)
 
1.8

Other assets and liabilities
(41.7
)
 
(3.0
)
Net cash flows provided by (used in) operating activities
83.5

 
(24.0
)
Cash flows from investing activities:
 

 
 

Capital expenditures
(41.4
)
 
(32.8
)
Investment in registrations of products
(25.8
)
 
(22.4
)
Proceeds from disposal of property, plant and equipment
14.3

 
12.5

Other, net
(20.4
)
 
5.2

Net cash flows used in investing activities
(73.3
)
 
(37.5
)
Cash flows from financing activities:
 

 
 

Change in lines of credit, net
(30.3
)
 
18.9

Debt proceeds, net of discount and premium
1,927.3

 

Repayments of borrowings
(1,955.5
)
 
(26.0
)
Proceeds from issuance of common stock, net
0.9

 
391.5

Change in on-balance sheet factoring arrangements
(1.9
)
 
(45.5
)
Other, net
(9.8
)
 
(1.5
)
Net cash flows (used in) provided by financing activities
(69.3
)
 
337.4

Effect of exchange rate changes on cash and cash equivalents
27.4

 
6.0

Net (decrease) increase in cash and cash equivalents
(31.7
)
 
281.9

Cash and cash equivalents at beginning of period
422.6

 
432.2

Cash and cash equivalents at end of period
$
390.9

 
$
714.1


  See accompanying notes to the condensed consolidated financial statements


4


PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In millions, except share amounts)
 
Preferred Stock
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Accumulated
Deficit
 
Accumulated Other Comprehensive (Loss) Income
 
Total
Stockholders'
Equity
 
Non-
controlling Interests
 
Total Equity
 
Shares
 
Amount
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2016
2,000,000

 
$

 
284,221,168

 
$
2.8

 
$
3,981.3

 

 
$

 
$
(573.5
)
 
$
(674.5
)
 
$
2,736.1

 
$
153.7

 
$
2,889.8

Net (loss) income

 

 

 

 

 

 

 
(154.7
)
 

 
(154.7
)
 
4.8

 
(149.9
)
Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 
264.5

 
264.5

 
5.8

 
270.3

Exercise/ vesting of share based compensation

 

 
104,625

 

 

 
6,618

 
(0.1
)
 

 

 
(0.1
)
 

 
(0.1
)
Conversion of PDH Common Stock into common stock

 

 
2,674,205

 
0.1

 
32.6

 

 

 

 

 
32.7

 
(32.7
)
 

Issuance of common stock under ESPP

 

 
100,949

 

 
0.9

 

 

 

 

 
0.9

 

 
0.9

Equity compensation expense

 

 

 

 
9.1

 

 

 

 

 
9.1

 

 
9.1

Changes in non-controlling interests

 

 

 

 
2.0

 

 

 

 

 
2.0

 
(3.2
)
 
(1.2
)
Balance at September 30, 2017
2,000,000

 
$

 
287,100,947

 
$
2.9

 
$
4,025.9

 
6,618

 
$
(0.1
)
 
$
(728.2
)
 
$
(410.0
)
 
$
2,890.5

 
$
128.4

 
$
3,018.9


 
Preferred Stock
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Accumulated
Deficit
 
Accumulated Other Comprehensive (Loss) Income
 
Total
Stockholders'
Equity
 
Non-
controlling Interests
 
Total Equity
 
Shares
 
Amount
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2015
2,000,000

 
$

 
229,464,157

 
$
2.3

 
$
3,520.4

 

 
$

 
$
(532.7
)
 
$
(886.1
)
 
$
2,103.9

 
$
169.4

 
$
2,273.3

Net loss

 

 

 

 

 

 

 
(71.9
)
 

 
(71.9
)
 
(4.7
)
 
(76.6
)
Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 
422.0

 
422.0

 
12.7

 
434.7

Issuance of common stock at $8.25 per share in the September 2016 Equity Offering

 

 
48,787,878

 
0.5

 
402.0

 

 

 

 

 
402.5

 

 
402.5

Issuance costs in connection with the September 2016 Equity Offering

 

 

 

 
(11.6
)
 

 

 

 

 
(11.6
)
 

 
(11.6
)
Issuance of common stock to former non-founder director for exercise of stock options

 

 
7,642

 

 

 

 

 

 

 

 

 

Conversion of PDH Common Stock into common stock

 

 
63,944

 

 
0.7

 

 

 

 

 
0.7

 
(0.7
)
 

Issuance of common stock under ESPP

 

 
97,165

 

 
0.6

 

 

 

 

 
0.6

 

 
0.6

Equity compensation expense

 

 

 

 
5.3

 

 

 

 

 
5.3

 

 
5.3

Gain on extinguishment of Series B Convertible Preferred Stock

 

 

 

 

 

 

 
32.9

 

 
32.9

 

 
32.9

Changes in non-controlling interests

 

 

 

 
3.7

 

 

 

 

 
3.7

 
(4.5
)
 
(0.8
)
Balance at September 30, 2016
2,000,000

 
$

 
278,420,786

 
$
2.8

 
$
3,921.1

 

 
$

 
$
(571.7
)
 
$
(464.1
)
 
$
2,888.1

 
$
172.2

 
$
3,060.3


See accompanying notes to the condensed consolidated financial statements


5


PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)


1. BACKGROUND AND BASIS OF PRESENTATION
Background
Platform Specialty Products Corporation is a global diversified producer of high-technology specialty chemical products incorporated in Delaware in January 2014 with shares of common stock, par value $0.01 per share, trading on the NYSE under the ticker symbol “PAH.” Platform's business involves the blending of a number of key ingredients to produce proprietary formulations. The Company operates in a wide variety of niche markets across multiple industries, including automotive, agricultural, animal health, electronics, graphic arts, and offshore oil and gas production and drilling. Platform delivers its products to customers through its sales and service workforce, regional distributors, and manufacturing representatives.
Platform has leading positions in niche segments of high-growth markets. The Company continually seeks opportunities to act as an acquirer and consolidator of specialty chemical businesses on a global basis, particularly those meeting its “Asset-Lite, High-Touch” philosophy, which involves prioritizing resources to research and development, offering highly technical sales and customer service, and managing conservatively its investments in fixed assets and capital expenditures.
Basis of Presentation
The accompanying unaudited interim Condensed Consolidated Financial Statements and related information in this Quarterly Report include the accounts of Platform and all of its controlled subsidiaries, and have been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s 2016 Annual Report. On August 24, 2017, the Company announced its intention to separate the Agricultural Solutions business into an independent company. In this Quarterly Report, the Agricultural Solutions business continues to be reported as part of the Company's continuing operations as the criteria for discontinued operations were not met as of September 30, 2017. In the opinion of management, these unaudited interim Condensed Consolidated Financial Statements reflect all adjustments that are normal, recurring, and necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for interim periods, but are not necessarily indicative of the results of operations that may be expected for the fiscal year ended December 31, 2017 due to seasonal and other factors. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the related notes thereto included in the Company’s 2016 Annual Report.
The process of preparing the Company’s unaudited interim Condensed Consolidated Financial Statements requires the use of estimates and judgments that affect the reported amount of assets, liabilities, net sales, and expenses. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and revised as necessary. Actual amounts may differ materially from these estimates.
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements Not Yet Adopted
Derivatives and Hedging (Topic 815) - In August 2017, the FASB issued ASU No. 2017-12, “ Targeted Improvements to Accounting for Hedging Activities.” This ASU improves the financial reporting of hedge relationships by updating hedging designation and measurement guidance. The update also simplifies the application of existing hedge accounting guidance related to assessing hedge effectiveness. The guidance is effective prospectively as of January 1, 2019, and is applied to contracts in existence at the date of adoption, with the effects of which reflected as of January 1 of the year of adoption. Early adoption is permitted. The Company is evaluating the impact of this ASU.


6

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



Intangibles - Goodwill and Other (Topic 350) - In January 2017, the FASB issued ASU No. 2017-04, “ Simplifying the Test for Goodwill Impairment.” This ASU simplifies the testing for goodwill impairments by eliminating "Step 2" from the goodwill impairment test. Under the new guidance, goodwill impairment losses are calculated based on the "Step 1" computation with the impairment loss being equal to the amount by which a reporting unit's carrying amount exceeds its implied fair value, limited to the amount of goodwill allocated to the reporting unit. The guidance is effective prospectively as of January 1, 2020, with early adoption permitted. This ASU may impact the conclusion about whether there is an impairment of goodwill and the amount of the impairment may be different than current guidance once this standard is adopted.
Income Taxes (Topic 740) - In October 2016, the FASB issued ASU No. 2016-16, " Intra-Entity Transfers of Assets Other than Inventory. " This ASU requires the recognition of income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs and removes the exception to postpone recognition until the asset has been sold to an outside party.  The guidance is effective on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of January 1, 2018. The Company does not expect this ASU to have a material impact on its financial statements.
Statement of Cash Flows (Topic 230) - In August 2016, the FASB issued ASU No. 2016-15, " Classification of Certain Cash Receipts and Cash Payments. " This ASU was issued to reduce diversity in practice for how certain cash receipts and cash payments are classified and presented in the statement of cash flows. The eight specific cash flow issues addressed include: debt prepayment and extinguishment costs, zero coupon bond settlement, contingent consideration payments, insurance claim settlements, company-owned life insurance receipts/payments, distributions from equity method investments, beneficial interests in securitization transactions, and separately identifiable cash flows. The guidance is effective on a retrospective basis as of January 1, 2018, including interim periods within those annual periods. The Company has arrangements to sell trade receivables to third parties without recourse and receives beneficial interests for a portion of these receivables; the proceeds of which are currently included in “Operating Activities” in the Condensed Consolidated Statements of Cash Flows. Under the new guidance, beneficial interests should be disclosed as a non-cash activity, with cash receipts classified as cash inflows from "Investing Activities” in the Condensed Consolidated Statements of Cash Flows. The Company is continuing to evaluate the impact of this ASU for these arrangements and intends to adopt the new guidance effective January 1, 2018.
Leases (Topic 842) - In February 2016, the FASB issued ASU No. 2016-02, “Leases.” This ASU requires lessees to recognize most leases on their balance sheets, but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective on a modified retrospective basis as of January 1, 2019, with early adoption permitted. The Company continues to evaluate the impact of this ASU.
Revenue from Contracts with Customers (Topic 606) - In May 2014, the FASB issued ASU 2014-09, " Revenue from Contracts with Customers, " as a new Topic, ASC Topic 606. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance will require expanded disclosures of qualitative and quantitative information about the Company's revenues from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the Effective Date,” which deferred the effective date to January 1, 2018. This standard can be adopted either retrospectively or as a cumulative-effect adjustment as of the date of adoption.
The Company assembled a project implementation team and is assessing the impact of the guidance by reviewing its current accounting policies and practices to identify potential differences that would result from applying the new requirements to its revenue contracts, including evaluating its performance obligations, principal versus agent considerations, contract costs, and variable consideration. The Company continues to make significant progress on its contract reviews and is also in the process of evaluating the impact, if any, on changes to its business processes, systems, and controls to support recognition and disclosure under the new guidance. Based on the foregoing, the Company currently does not expect this guidance to have a material impact on its financial statements as the timing and pattern of revenue recognition will predominantly continue to be recognized as the Company’s performance obligation to ship or deliver its products is completed and the transfer of control has passed to the customer in accordance with the new standard. The Company is continuing with its implementation plan and intends to adopt the new guidance effective January 1, 2018 using the modified retrospective method. Under this method, companies would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application.


7

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



3.  ACQUISITIONS OF BUSINESSES
OMG Malaysia Acquisition
On January 31, 2016, the Company completed the OMG Malaysia Acquisition for approximately $124 million , net of acquired cash and closing working capital adjustments. The Company acquired OMG Malaysia by issuing a note payable for $125 million , which was offset against a note receivable from the seller of the same amount. The Company acquired OMG Malaysia to further enhance its Performance Solutions segment in which OMG Malaysia is included. The impact of this acquisition on the Company's results of operations was not material.
4. ACCOUNTS RECEIVABLE
 (amounts in millions)
September 30,
2017
 
December 31,
2016
Total accounts receivable, net
$
1,146.9

 
$
1,058.0

Non-current accounts receivable, net
(13.0
)
 
(3.2
)
Current accounts receivable, net
$
1,133.9

 
$
1,054.8

Total accounts receivable are net of an allowance for doubtful accounts of $50.1 million and $36.7 million at September 30, 2017 and December 31, 2016 , respectively. Accounts receivable classified as non-current at September 30, 2017 and December 31, 2016 were recorded in "Other assets" in the Condensed Consolidated Balance Sheets.
5. INVENTORIES
The major components of inventory, on a net basis, were as follows: 
 (amounts in millions)
September 30,
2017
 
December 31,
2016
Finished goods
$
391.4

 
$
273.8

Work in process
29.9

 
37.1

Raw materials and supplies
156.2

 
135.9

Total inventory, net
577.5

 
446.8

Non-current inventory, net
(20.8
)
 
(30.4
)
Current inventory, net
$
556.7

 
$
416.4

Inventory classified as non-current at September 30, 2017 and December 31, 2016 was recorded in "Other assets" in the Condensed Consolidated Balance Sheets.
In connection with the Alent and OMG Malaysia Acquisitions, the value of finished goods inventory was increased at their respective dates of acquisition to reflect fair value. For the nine months ended September 30, 2016 , $11.7 million of the inventory step-up was amortized to "Cost of sales" in the Condensed Consolidated Statements of Operations based on inventory turnover.


8

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



6. PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment were as follows:
 (amounts in millions)
September 30,
2017
 
December 31,
2016
Land and leasehold improvements
$
110.4

 
$
103.4

Buildings and improvements
153.5

 
147.5

Machinery, equipment, fixtures and software
326.6

 
293.3

Construction in process
35.5

 
36.7

Total property, plant and equipment
626.0

 
580.9

Accumulated depreciation
(173.6
)
 
(120.4
)
Property, plant and equipment, net
$
452.4

 
$
460.5

For the three months ended September 30, 2017 and 2016 , the Company recorded depreciation expense of $21.3 million and $18.9 million , respectively. For the nine months ended September 30, 2017 and 2016 , the Company recorded depreciation expense of $58.4 million and $55.8 million , respectively.
7. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill by segment were as follows:
   (amounts in millions)
 
 
Performance
Solutions
 
Agricultural
Solutions
 
Total
December 31, 2016
(*)  
 
$
2,132.4

 
$
2,046.5

 
$
4,178.9

Foreign currency translation and other
 
 
94.5

 
94.1

 
188.6

September 30, 2017
(*)  
 
$
2,226.9

 
$
2,140.6

 
$
4,367.5

(*)     Includes accumulated impairment losses totaling $46.6 million associated with the Company's Performance Solutions segment.
The carrying value of indefinite-lived intangible assets other than goodwill, which consists solely of tradenames, was $390 million and $377 million at September 30, 2017 and December 31, 2016 , respectively.
Intangible assets subject to amortization were as follows:
 
September 30, 2017
 
December 31, 2016
 (amounts in millions)
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
Customer lists
$
1,298.6

 
$
(240.6
)
 
$
1,058.0

 
$
1,245.9

 
$
(174.5
)
 
$
1,071.4

Developed technology
2,236.9

 
(512.4
)
 
1,724.5

 
2,022.1

 
(254.9
)
 
1,767.2

Tradenames
29.6

 
(12.5
)
 
17.1

 
25.1

 
(8.2
)
 
16.9

Non-compete agreements
5.7

 
(1.8
)
 
3.9

 
1.9

 
(1.1
)
 
0.8

Total
$
3,570.8

 
$
(767.3
)
 
$
2,803.5

 
$
3,295.0

 
$
(438.7
)
 
$
2,856.3

For the three months ended September 30, 2017 and 2016 , the Company recorded amortization expense on intangible assets of $71.2 million and $68.0 million , respectively. For the nine months ended September 30, 2017 and 2016 , the Company recorded amortization expense on intangible assets of $207 million and $199 million , respectively.


9

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



8. LONG-TERM COMPENSATION PLANS
At September 30, 2017 , a total of 466,734 shares of common stock had been issued and 3,686,933 awarded RSUs and stock options were outstanding under the 2013 Plan.
 
Nine Months Ended September 30, 2017
 
Total
 
RSUs
 
Stock Options
 
 
Equity
Classified
 
Liability
Classified
 
Outstanding at December 31, 2016
3,003,003

 
2,117,493

 
320,312

 
565,198

Granted
1,356,683

 
1,100,481

 

 
256,202

Exercised/Issued
(104,625
)
 
(104,625
)
 

 

Forfeited
(393,128
)
 
(318,610
)
 
(634
)
 
(73,884
)
Outstanding at September 30, 2017
3,861,933

 
2,794,739

 
319,678

 
747,516

Equity Classified RSUs
During the nine months ended September 30, 2017 , the Company granted RSUs under the 2013 Plan as follows:
 
RSUs
 
Weighted average grant date fair value
 
Weighted average vesting period (months)
RSUs granted
1,100,481

 
$
16.18

 
31.7
Certain of the RSUs granted during the period contain performance or market vesting conditions in addition to a service vesting condition. RSUs granted with service or performance vesting conditions were valued at the grant date stock price. The grant date fair value of RSUs containing a market vesting condition were estimated using a Monte Carlo simulation of the performance of the Company's common stock relative to the S&P MidCap 400. Certain of the RSUs with performance or market vesting conditions also contain provisions for additional share awards in the event certain performance or market conditions are met at the end of certain applicable measurement periods. These conditions are generally based on ROIC or TSR targets.
The following assumptions were used to estimate the grant date fair value of RSUs containing a market vesting condition:
 
Monte Carlo input assumptions
Weighted average expected term (years) (1)
3.00
Expected volatility (2)
52.1%
Risk-free rate (3)
1.50%
(1)  
Weighted average expected term is calculated based on the award service period.
(2)  
Expected volatility is calculated based on a blend of the implied and historical equity volatility of an index of comparable companies over a period equal to the expected term.
(3)  
Risk-free rate of return is based on an interpolation of U.S. Treasury rates to reflect an expected term of three years at the date of grant.


10

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



At September 30, 2017 , the following equity classified RSUs were outstanding:
 
September 30, 2017
Vesting Conditions:
Outstanding
 
Weighted average remaining service period (months)
 
Potential additional awards
Service-based
972,580

 
20.2
 

Performance-based
998,045

 
21.7
 
672,886

Market-based
824,114

 
23.6
 
1,554,968

Total
2,794,739

 
21.7
 
2,227,854

In addition, the Board has approved 83,333 RSUs under the 2013 Plan which vesting is conditioned upon the achievement of a certain 2018 adjusted EBITDA performance target, with a maximum payoff of 100% . This performance target will be established as a part of the 2018 planning process. As a result, these RSUs are and will be excluded from the above grant activity until the performance target is set.
For the three months ended September 30, 2017 and 2016 , total compensation expense associated with equity classified RSUs totaled $3.0 million and $2.0 million , respectively. For the nine months ended September 30, 2017 and 2016 , total compensation expense associated with RSUs classified as equity totaled $8.2 million and $4.6 million , respectively.
Stock Options
During the nine months ended September 30, 2017 , the Company granted non-qualified stock options under the 2013 Plan as follows:
 
Stock Options
 
Weighted average strike price per share
 
Weighted average grant date fair value per share
Stock options granted
256,202

 
$
13.30

 
$
6.05

Stock options are subject to graded vesting over a three -year period and have contractual lives of ten years from the grant date. Fair value of the grants is calculated using the Black-Scholes option pricing model at the grant date.
The following table provides the range of assumptions used in valuing stock option grants using the Black-Scholes option pricing method:
 
Black-Scholes input assumptions
Weighted average expected term (years) (1)
6.0
Expected volatility (2)
45.0%
Risk-free rate (3)
2.09%
Expected dividend rate
—%
(1)  
Weighted average expected term is calculated based on the simplified method for plain vanilla options as the Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term and certain alternative information to assist with estimating it is not easily obtainable.
(2)  
Expected volatility is calculated based on a blend of the implied and historical equity volatility of an index of comparable companies over a period equal to the expected term.
(3)  
Risk-free rate of return is based on an interpolation of U.S. Treasury rates to reflect an expected term of six years at the date of grant.


11

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



For the three months ended September 30, 2017 and 2016 , compensation expense associated with stock options was $0.2 million and $0.1 million , respectively. For the nine months ended September 30, 2017 and 2016 , compensation expense associated with stock options was $0.6 million and $0.3 million , respectively.
9. PENSION AND POST-RETIREMENT PLANS
The components of net periodic pension and post-retirement benefit costs 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,
 (amounts in millions)
2017
 
2016
 
2017
 
2016
Pension & SERP Benefits
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
Service cost
$

 
$
0.5

 
$

 
$
0.4

 
$

 
$
1.4

 
$

 
$
1.3

Interest cost on the projected benefit obligation
2.2

 
0.6

 
2.5

 
0.8

 
6.6

 
1.8

 
7.6

 
2.3

Expected return on plan assets
(2.5
)
 
(0.5
)
 
(2.9
)
 
(0.6
)
 
(7.6
)
 
(1.5
)
 
(8.7
)
 
(1.9
)
Amortization of prior service cost

 

 

 
0.1

 

 
0.1

 

 
0.4

Amortization of actuarial net loss

 

 

 

 

 
0.1

 

 

Net periodic (benefit) cost
$
(0.3
)
 
$
0.6

 
$
(0.4
)
 
$
0.7

 
$
(1.0
)
 
$
1.9

 
$
(1.1
)
 
$
2.1

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 (amounts in millions)
2017
 
2016
 
2017
 
2016
Post-retirement Benefits
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
Service cost
$

 
$

 
$

 
$

 
$

 
$
0.1

 
$

 
$

Interest cost on the projected benefit obligation
0.1

 
0.1

 
0.1

 
0.1

 
0.3

 
0.3

 
0.3

 
0.2

Net periodic cost
$
0.1

 
$
0.1

 
$
0.1

 
$
0.1

 
$
0.3

 
$
0.4

 
$
0.3

 
$
0.2

The Company expects to make contributions totaling approximately $6.5 million to its pension and other post-retirement benefit plans during 2017, of which approximately $4.6 million was contributed during the nine months ended September 30, 2017 .


12

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



10.  DEBT, FACTORING AND CUSTOMER FINANCING ARRANGEMENTS
The Company’s debt and capital lease obligations consisted of the following:
   (amounts in millions)
Maturity Date
 
Interest Rate
 
September 30,
2017
 
December 31,
2016
USD Senior Notes (1)
2022
 
6.50%
 
$
1,085.4

 
$
1,083.2

EUR Senior Notes (1)
2023
 
6.00%
 
408.4

 
362.4

USD Senior Notes (1)
2021
 
10.375%
 
490.6

 
489.0

First Lien Credit Facility - USD Term Loans (2)
2020
 
> of 4.50% or
LIBOR plus 3.50%
 
583.2

 
582.5

First Lien Credit Facility - USD Term Loans (2) (3)
2021
 
> of 5.00% or
LIBOR plus 4.00%
 

 
1,444.2

First Lien Credit Facility - USD Term Loans (2) (3)
2021
 
> of 4.00% or
LIBOR plus 3.00%
 
1,208.8

 

First Lien Credit Facility - Euro Term Loans (2)
2020
 
> of 4.25% or EURIBOR plus 3.25%
 
811.9

 
726.5

First Lien Credit Facility - Euro Term Loans (2) (3)
2021
 
> of 4.75% or EURIBOR plus 3.75%
 

 
450.7

First Lien Credit Facility - Euro Term Loans (2) (3)
2021
 
> of 3.50% or EURIBOR plus 2.75%
 
760.4

 

Borrowings under the Revolving Credit Facility
 
 
LIBOR plus 3.00%
 
25.0

 

Borrowings under lines of credit (4)
 
 
 
 
32.4

 
86.0

Other
 
 
 
 
16.6

 
14.5

Total debt and capital lease obligations
 
 
 
 
5,422.7

 
5,239.0

Less: current installments of long-term debt and revolving credit facilities
 
 
 
 
(90.0
)
 
(116.1
)
Total long-term debt and capital lease obligations
 
 
 
 
$
5,332.7

 
$
5,122.9

(1)  
Net of unamortized premium, discounts, and debt issuance costs of $29.0 million and $33.4 million at September 30, 2017 and December 31, 2016 , respectively. Weighted average effective interest rate of 7.77% and 7.81% at September 30, 2017 and December 31, 2016 , respectively.
(2)
First Lien Credit Facility term loans net of unamortized discounts and debt issuance costs of $47.0 million and $64.0 million at September 30, 2017 and December 31, 2016 , respectively. Weighted average effective interest rate of 5.04% and 5.64% at September 30, 2017 and December 31, 2016 , respectively, including the effects of interest rate swaps. See Note 11, Financial Instruments, to the Company's unaudited interim Condensed Consolidated Financial Statements included in this Quarterly Report for further information regarding the Company's interest rate swaps.
(3)
The maturity date will extend to June 7, 2023, provided that the Company is able to prepay, redeem or otherwise retire and/or refinance in full its $1.10 billion 6.50% USD Senior Notes due 2022, as permitted under the Amended and Restated Credit Agreement, on or prior to November 2, 2021.
(4)
Weighted average interest rate of 5.57% and 4.48% at September 30, 2017 and December 31, 2016 , respectively.
Amended and Restated Credit Agreement
The Company is party to the Amended and Restated Credit Agreement, which governs the First Lien Credit Facility and the Revolving Credit Facility (in U.S. Dollar or multicurrency). A portion of the Revolving Credit Facility not in excess of $30.0 million is available for the issuance of letters of credit. At September 30, 2017 , the maximum borrowing capacity under the Amended and Restated Credit Agreement totaled $500 million , which consisted of (i) an aggregate principal amount of up to $250 million under the Revolving Credit Facility to be denominated in U.S. Dollars, and (ii) an aggregate principal amount of up to $250 million under the Revolving Credit Facility to be denominated in multicurrency. Loans under the Revolving Credit Facility bear interest at a rate per annum equal to 3.00% plus an adjusted eurocurrency rate, or 2.00% plus an adjusted base rate, each as calculated as set forth in the Amended and Restated Credit Agreement. The Revolving Credit Facility will mature on June 7, 2018, and for lenders that consented to an extension, June 7, 2019. The Company is required to pay a quarterly commitment fee of 0.50% on the unused balance of the Revolving Credit Facility.


13

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



The Amended and Restated Credit Agreement also provides the Company with the ability to incur certain amounts of additional incremental term loans in the future, subject to pro-forma compliance with a financial maintenance covenant and certain other requirements.
On April 18, 2017, the Company entered into Amendment No. 7 to the Second Amended and Restated Credit Agreement, which provided for the prepayment in full of previously existing tranche B-4 term loans denominated in U.S. Dollars and tranche C-3 term loans denominated in Euros with the aggregate proceeds of newly created tranche B-6 term loans denominated in U.S. Dollars in an aggregate principal amount of $1.23 billion and tranche C-5 term loans denominated in Euros in an aggregate principal amount of €650 million . The refinanced term loans were created in connection with the Company's repricing, extension and amendment closed on October 14, 2016. The amendment effectively reduced interest rates by 100 basis points for each of the new U.S. Dollar denominated term loans and the new Euro denominated term loans. In addition, the EURIBOR floor was reduced from 1.00% to 0.75% on the new Euro denominated term loans. The new tranche B-6 term loans bear interest at 3.0% per annum, plus an applicable eurocurrency rate, or 2.0% plus and applicable base rate, and the new Euro tranche C-5 term loans bear interest at 2.75% per annum, plus an applicable eurocurrency rate, in each case as calculated in the Amended and Restated Credit Agreement. In the event the Company is able to prepay, redeem or otherwise retire and/or refinance in full its $1.10 billion , 6.50% USD Senior Notes due 2022, as permitted under the Amended and Restated Credit Agreement, on or prior to November 2, 2021, the maturity date of the new term loans will be extended to June 7, 2023 from November 2, 2021. In connection with this term loan refinancing, the Company wrote-off $8.5 million , consisting primarily of deferred financing fees and original issuance discounts on the modification of the existing debt, which was recorded in "Other (expense) income net" in the Condensed Consolidated Statement of Operations, and expensed $5.3 million of debt issuance costs, which was recorded in "Selling, technical, general and administrative" expenses in the Condensed Consolidated Statement of Operations.
Except as set forth in Amendment No. 7 and above, the USD tranche B-6 term loans have identical terms as the U.S. Dollar denominated tranche B-5 term loans and the Euro tranche C-5 term loans have identical terms as the Euro denominated tranche C-4 term loans and are, in each case, otherwise subject to the provisions of the Amended and Restated Credit Agreement.
The obligations incurred under the Amended and Restated Credit Agreement are guaranteed by substantially all of the Company’s domestic subsidiaries and, with respect to the obligations denominated in Euros, the Company and certain of its international subsidiaries. Substantially all of the Company’s domestic subsidiaries, and certain of its international subsidiaries, have also granted security interests in substantially all of their assets in connection with such guarantees, including, but not limited to, the equity interests and personal property of such subsidiaries.
Covenants and Events of Default
The Amended and Restated Credit Agreement contains customary representations and warranties, and affirmative and negative covenants, including limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions, and dispositions. . In particular, the Revolving Credit Facility imposes a financial covenant to maintain a first lien net leverage ratio of 6.25 to 1.0 , subject to a right to cure. A violation of this financial covenant can become an event of default under the Credit Facilities and result in the acceleration of all of the Company's indebtedness. Borrowings under the Amended and Restated Credit Agreement are subject to mandatory prepayment from the proceeds of certain dispositions of assets and from certain insurance and condemnation proceeds, excess cash flow and debt incurrences, in each case, subject to customary carve-outs and exceptions. Borrowings under the Amended and Restated Credit Agreement are also subject to mandatory prepayment provisions in the case of excess cash flow, calculated as set forth in the Amended and Restated Credit Agreement, of 75% with step-downs to 50% , 25% and 0% based on the applicable first lien net leverage ratio on the prepayment date.
The Amended and Restated Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of certain covenants, inaccuracy of representations and warranties, failure to make payment on, or defaults with respect to, certain other material indebtedness, bankruptcy and insolvency events, material judgments, and change of control provisions. Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the Amended and Restated Credit Agreement may be accelerated and the Company's lenders could foreclose on their security interests in the Company's assets, which may have a material adverse effect on the consolidated financial condition, results of operation or cash flows of the Company.


14

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



In addition, the Amended and Restated Credit Agreement contains a yield protection provision wherein the yield on any current indebtedness issued under the Amended and Restated Credit Agreement would be increased to within 50 basis points of the yield on any additional incremental term loan(s), in the event the incremental term loan(s) provided an initial yield, including original issue discount (OID), subject to the yield calculation provisions, as defined, is in excess of 50 basis points of the yield on existing term loan indebtedness.
At September 30, 2017 , the Company was in compliance with the debt covenants contained in the Credit Facilities and, in accordance with such debt covenants, had full availability of its unused borrowing capacity of $456 million , net of letters of credit, under the Revolving Credit Facility.
Subsequent Event
On October 3, 2017, the Company entered into and closed the transactions contemplated by Amendment No. 8 to the Second Amended and Restated Credit Agreement. Amendment No. 8 provided for the prepayment in full of previously existing tranche B-5 term loans denominated in U.S. Dollars and tranche C-4 term loans denominated in Euros with the aggregate proceeds of newly created tranche B-7 term loans denominated in U.S. Dollars in an aggregate principal amount of $680 million and tranche C-6 term loans denominated in Euros in an aggregate principal amount of €630 million . The refinanced term loans were created in connection with the Company's repricing closed on December 6, 2016. The amendment effectively reduced interest rates by 100 basis points for each of the new U.S. Dollar denominated term loans and the new Euro denominated term loans from a combination of reduced spread and reduced EURIBOR floor from 1.00% to 0.75% on the new Euro denominated term loans. The new tranche B-7 term loans bear interest at 2.5% per annum, plus an applicable eurocurrency rate, or 1.5% plus and applicable base rate, and the new Euro tranche C-6 term loans bear interest at 2.50% per annum, plus an applicable eurocurrency rate, in each case as calculated in the Amended and Restated Credit Agreement. The new term loans mature in June 2020, which is unchanged from the refinanced USD B-5 and Euro C-4 tranches.
Except as set forth in Amendment No. 8 and above, the new USD tranche B-7 term loans have identical terms as the existing U.S. Dollar denominated tranche B-6 term loans and the new Euro tranche C-6 term loans have identical terms as the existing Euro denominated tranche C-5 term loans and, in each case, are otherwise subject to the provisions of the Amended and Restated Credit Agreement.
Senior Notes
The Senior Notes are governed by indentures which provide, among other things, for customary affirmative and negative covenants, events of default, and other customary provisions. The Company also has the option to redeem the Senior Notes prior to their maturity, subject to, in certain cases, the payment of an applicable make-whole premium. The Senior Notes are unsecured and fully and unconditionally guaranteed on a senior unsecured basis by generally all of the Company’s domestic subsidiaries that guarantee the obligations of the Company under the Amended and Restated Credit Agreement.
Lines of Credit and Other Debt Facilities
The Company has access to various revolving lines of credit, short-term debt facilities, and overdraft facilities worldwide which are used to fund short-term cash needs. At September 30, 2017 and December 31, 2016 , the aggregate principal amount outstanding under such facilities totaled $57.4 million and $86.0 million , respectively. The Company also had letters of credit outstanding of $28.9 million and $32.6 million at September 30, 2017 and December 31, 2016 , respectively, of which $18.8 million and $11.8 million at September 30, 2017 and December 31, 2016 , respectively, reduced the borrowings available under the various facilities. At September 30, 2017 and December 31, 2016 , the availability under these facilities was approximately $573 million and $561 million , respectively, net of outstanding letters of credit.
Accounts Receivable Factoring Arrangements
Off-balance sheet arrangements
The Company has arrangements to sell trade receivables to third parties without recourse to the Company. Under these arrangements, the Company had capacity to sell approximately $329 million and $256 million of eligible trade receivables at September 30, 2017 and December 31, 2016 , respectively. The Company had utilized approximately $107 million and $167 million of these


15

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



arrangements at September 30, 2017 and December 31, 2016 , respectively. The receivables under these arrangements are excluded from the Consolidated Balance Sheets and the proceeds are included in "Operating Activities" in the Condensed Consolidated Statements of Cash Flows. Costs associated with these programs are included in "Selling, technical, general and administrative" expenses in the Condensed Consolidated Statements of Operations.
On-balance sheet arrangements
The Company has arrangements to sell trade receivables to a third party with recourse to the Company. Under these arrangements, the Company had capacity to sell approximately $67.6 million and $65.3 million of eligible trade receivables at September 30, 2017 and December 31, 2016 , respectively. The Company had utilized approximately $37.5 million and $38.3 million at September 30, 2017 and December 31, 2016 , respectively. The proceeds from these arrangements are accounted for as "Financing activities" in the Condensed Consolidated Statements of Cash Flows. Costs associated with these programs are included in "Interest expense, net" in the Condensed Consolidated Statements of Operations.
Certain subsidiaries of the Company in the United States and the Netherlands periodically enter into arrangements with financial institutions for consignment and/or purchase of precious metals. The present and future indebtedness and liability relating to such arrangements are guaranteed by the Company. The Company’s maximum guarantee liability under these arrangements is limited to an aggregate of $18.0 million .
11. FINANCIAL INSTRUMENTS
Derivatives and Hedging
In the normal course of business, the Company is exposed to risks relating to changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as foreign currency exchange forward contracts, interest rate swaps, and commodities futures contracts are used to manage the risks associated with changes in foreign markets conditions. All derivatives are recognized in the Condensed Consolidated Balance Sheets at fair value at the end of each period. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company continually monitors its positions and the credit ratings of its counterparties, and currently does not anticipate nonperformance by any counterparties.
Foreign Currency
The Company conducts a significant portion of its business in currencies other than the U.S. Dollar and a portion of its business in currencies other than the functional currencies of its subsidiaries. As a result, the Company’s operating results are impacted by foreign currency exchange rate volatility.
At September 30, 2017 , the Company held foreign currency forward contracts to purchase and sell various currencies to mitigate foreign currency exposure primarily with the U.S. Dollar and Euro. The Company has not designated any foreign currency exchange forward contracts as eligible for hedge accounting, and, as a result, changes in the fair value of foreign currency forward contracts are recorded in "Other (expense) income, net" in the Condensed Consolidated Statements of Operations. The total notional value of foreign currency exchange forward contracts held at September 30, 2017 and December 31, 2016 was approximately $627 million and $552 million , respectively, and generally have settlement dates within one year .
Commodities
As part of its risk management policy, the Company enters into commodities futures contracts for the purpose of mitigating its exposure to fluctuations in prices of certain metals it uses in the production of its finished goods.  The Company held futures contracts to purchase and sell various metals, primarily tin and silver, with a notional value of $42.7 million and $42.0 million at September 30, 2017 and December 31, 2016 , respectively. Substantially all contracts outstanding at September 30, 2017 have delivery dates within one year . Changes in the fair value of commodities futures contracts are recorded in "Other (expense) income, net" in the Condensed Consolidated Statements of Operations.
Certain subsidiaries of the Company have entered into supply agreements with a third party that have been deemed to constitute financing agreements with an embedded derivative feature whose fair value is determined by the change in the market value of


16

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



the underlying metals between delivery date and measurement date.  Amounts associated with these supply agreements, which serve as the notional value of the embedded derivative, have been recorded in "Inventories" and "Current installments of long-term debt and revolving credit facilities" in the Condensed Consolidated Balance Sheets and totaled $11.9 million and $9.9 million at September 30, 2017 and December 31, 2016 , respectively, and primarily relate to gold and palladium purchases. The fair value of these contracts has been bifurcated and recorded as a derivative liability in "Accrued expenses and other current liabilities" in the Condensed Consolidated Balance Sheets and was immaterial at September 30, 2017 and December 31, 2016 .
For the three and nine months ended September 30, 2017 and 2016 , the Company recorded the following realized and unrealized losses associated with derivative contracts not designated as hedging instruments:
 (amounts in millions)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
Derivatives not designated as hedging instruments:
Location on Condensed Consolidated Statement of Operations:
 
2017
 
2016
 
2017
 
2016
Foreign exchange and metals contracts
Other (expense) income, net
 
$
3.3

 
$
1.4

 
$
5.8

 
$
12.1

Interest Rates
The Company entered into interest rate swaps to effectively fix the floating base rate portion of its interest payments on approximately $1.14 billion of U.S. Dollar denominated debt and €280 million of Euro denominated debt at 1.96% and 1.20% , respectively, through June 2020.
Changes in the fair value of a derivative that is designated as, and meets all the required criteria of, a cash flow hedge are recorded in "Other comprehensive income (loss)" and reclassified from "Accumulated other comprehensive loss" into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to the interest rate swaps are included in "Interest expense, net" in the Condensed Consolidated Statements of Operations.
For the three and nine months ended September 30, 2017 , the interest rate swaps were deemed highly effective, with no ineffectiveness recorded in the Condensed Consolidated Statement of Operations. During the next twelve months, the Company expects to reclassify $6.3 million from "Accumulated other comprehensive loss" to "Interest expense, net" in the Condensed Consolidated Statements of Operations.
Master Netting Arrangements
In the normal course of business, the Company enters into contracts with certain counterparties to purchase and sell foreign currency exchange forwards and metal futures that contain master netting arrangements, typically in the form of an International Swaps and Derivatives Association (ISDA) or similar agreements. The right to set-off within these agreements is limited to certain termination events, such as bankruptcy or default of either party to the agreement. The Company has made an accounting policy decision not to offset and recognizes gross derivative asset and liability balances in the Condensed Consolidated Balance Sheets.
The following table provides information on the Company's derivative positions at September 30, 2017 and December 31, 2016 , subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral:
 
September 30, 2017
 
December 31, 2016
 (amounts in millions)
Asset
 
Liability
 
Asset
 
Liability
Gross amounts
7.2

 
7.3

 
6.3

 
8.9

Gross amount subject to offset in master netting arrangements that are not offset
(3.2
)
 
(1.2
)
 
(2.5
)
 
(2.6
)
Cash collateral paid

 
(0.4
)
 

 
(1.0
)
Net
$
4.0

 
$
5.7

 
$
3.8

 
$
5.3

Collateral paid to counterparties is recorded in "Other current assets" in the Condensed Consolidated Balance Sheets.


17

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



Fair Value Measurements
Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. The basis for fair value measurements for each level within the hierarchy is described below, with Level 1 having the highest priority, and Level 3 having the lowest. The three levels of the fair value hierarchy are as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model-derived valuations whose inputs are observable or whose significant valuation drivers are observable.
Level 3 – significant inputs to the valuation model are unobservable and/or reflect the Company’s market assumptions.
The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
 (amounts in millions)
Balance sheet location
 
Classification
 
September 30, 2017
 
December 31, 2016
Asset Category
 
 
 
 
 
 
 
Cash equivalents
Cash and cash equivalents
 
Level 2
 
$
79.7

 
$
48.2

Foreign exchange and metals contracts not designated as hedging instruments
Other current assets
 
Level 2
 
7.4

 
8.5

Available for sale equity securities
Other assets
 
Level 1
 
5.9

 
5.1

Available for sale equity securities
Other assets
 
Level 2
 
0.6

 
0.6

Total
 
 
 
 
$
93.6

 
$
62.4

 
 
 
 
 
 
 
 
Liability Category
 
 
 
 
 
 
 
Interest rate swaps designated as cash flow hedging instruments
Accrued expenses and other liabilities
 
Level 2
 
$
6.3

 
$
10.2

Foreign exchange and metals contracts not designated as hedging instruments
Accrued expenses and other liabilities
 
Level 2
 
8.7

 
10.7

Interest rate swaps designated as cash flow hedging instruments
Other liabilities
 
Level 2
 
2.1

 

Long-term contingent consideration
Contingent consideration
 
Level 3
 
79.0

 
75.8

Total
 
 
 
 
$
96.1

 
$
96.7

The following methods and assumptions were used to estimate the fair value of each class of the Company’s financial assets and liabilities:
Cash equivalents - Cash equivalents primarily comprise certificates of deposits issued by financial institutions. These funds are not publicly traded, but historically have been highly liquid. The Company records certificates of deposit at amortized cost in the Condensed Consolidated Balance Sheets. Given the relatively short maturities of these instruments, the Company believes amortized cost approximates fair value.
Available for sale equity securities - Available for sale equity securities classified as Level 1 assets and are measured using quoted market prices at the reporting date multiplied by the quantity held. Available for sales equity securities classified as Level 2 assets are measured using quoted prices for similar instruments in active markets.
Derivatives - Derivative assets and liabilities include foreign currency, metals, and interest rate derivatives. The values are determined using pricing models based upon observable market inputs, such as market spot and futures prices on over-the-counter derivative instruments, market interest rates, and consideration of counterparty credit risk.
Long-term contingent consideration - The long-term contingent consideration represents a potential liability of up to $100 million tied to the achievement of certain adjusted EBITDA and common stock trading price performance metrics over a seven -year period ending December 2020 which was agreed upon in connection with the MacDermid Acquisition. The estimated fair value of the adjusted EBITDA performance metric is derived using the income approach with unobservable inputs, based on future forecasts and present value assumptions which include a discount rate of approximately 9.50% and expected future value of payments of $60.0 million calculated using a probability weighted adjusted EBITDA assessment


18

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



with higher probability associated with the Company achieving the maximum adjusted EBITDA targets. The common stock performance metric has been satisfied. Changes in the estimated fair value of the long-term contingent consideration are recorded in "Selling, technical, general and administrative expenses" in the Condensed Consolidated Statements of Operations. Relative to the share price metric, an increase or decrease in the discount rate of 1% changes the fair value measure of the metric by approximately $1.3 million . Relative to the adjusted EBITDA metric, an increase or a decrease in the discount rate of 1% , within a range of probability between 80% and 100% , changes the estimated fair value measure of the metric by approximately $1.6 million . During the nine months ended September 30, 2017 , the only change to the long-term contingent consideration liability was to adjust the instrument to its estimated fair value.
There were no significant transfers between the fair value hierarchy levels for the nine months ended September 30, 2017 .
The carrying value and estimated fair value of the Company’s long-term debt and capital lease obligations totaled $5.35 billion and $5.55 billion , respectively, at September 30, 2017 , and $5.14 billion and $5.35 billion , respectively, at December 31, 2016 . The carrying values noted above include unamortized premiums, discounts and debt issuance costs. The estimated fair value of long-term debt and capital lease obligations is measured using quoted market prices at the reporting date multiplied by the gross carrying amount of the related debt, which excludes unamortized premiums, discounts and debt issuance costs. Such instruments are valued using Level 2 inputs.
12. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock. The Board has designated 2,000,000 of those shares as "Series A Preferred Stock." At September 30, 2017 and December 31, 2016 , a total of 2,000,000 shares of Series A Preferred Stock were issued and outstanding. Shares of preferred stock have no voting rights, except in respect of any amendment to the Company's Certificate of Incorporation, as amended, that would alter or change their rights or privileges. Each share of Series A Preferred Stock is convertible into one share of the Company's common stock at the option of the holders until December 31, 2020. All outstanding shares of Series A Preferred Stock will be automatically converted into shares of common stock on a one -for-one basis (i) in the event of a change of control of the Company following an acquisition or (ii) on December 31, 2020 (which may be extended by the Board for three additional years).
As holders of the Series A Preferred Stock, the Founder Entities are entitled to receive dividends in the form of shares of the Company's common stock. The dividend amount is calculated based on the appreciated stock price compared to the highest dividend price previously used in calculating the Series A Preferred Stock dividends, which is currently $22.85 per share.
Non-Controlling Interest
In connection with the MacDermid Acquisition, approximately $97.5 million was raised in new equity consisting of approximately 8.8 million shares of PDH Common Stock. Since October 31, 2014, all shares of PDH Common Stock were convertible, at the option of the holder, into a like number of shares of the Company's common stock, the sale of which was subject to a contractual lock-up of 25% per year over a four -year period, which started on October 31, 2013. Since October 31, 2017, which corresponded to the fourth anniversary of the MacDermid Acquisition, no contractual lock-up remains applicable and all shares of PDH Common Stock are convertible at any time. However, until the earlier of (i) the seventh anniversary of the MacDermid Acquisition (that is October 31, 2020), and (ii) such date on which all shares of PDH Common Stock have been exchanged for common stock, PDH has agreed, among certain other covenants, to obtain written consent from Tartan prior to issuing additional PDH securities, or instruments convertible, exchangeable or exercisable for PDH Common Stock.
The PDH Common Stock is classified as "Non-controlling interests" on the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016 and will continue to be classified as such until it is fully converted into shares of the Company's common stock. Out of the 8.8 million shares of PDH Common Stock initially issued, 3.7 million shares have been converted and a like number of shares of the Company's common stock have been issued through September 30, 2017 . Non-controlling interest at September 30, 2017 and 2016 , totaled 4.02% and 6.20% , respectively.


19

PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)



For the three months ended September 30, 2017 and 2016 , approximately $0.7 million and $(1.5) million , respectively, of net income (loss) has been allocated to the Retaining Holders, as included in the Condensed Consolidated Statements of Operations.
For the nine months ended September 30, 2017 and 2016 , approximately $2.6 million and $(4.2) million , respectively, of net income (loss) has been allocated to the Retaining Holders, as included in the Condensed Consolidated Statements of Operations.
13.  (LOSS) EARNINGS PER SHARE
A computation of (loss) earnings per share and weighted average shares of the Company's common stock outstanding for the three and nine months ended September 30, 2017 and 2016 follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 (amounts in millions, except per share amounts)
2017
 
2016
 
2017
 
2016
Net (loss) income attributable to common stockholders
$
(69.2
)
 
$
104.7

 
$
(154.7
)
 
$
(39.0
)
Numerator adjustments for diluted EPS:
 
 
 
 
 
 
 
Gain on settlement agreement related to Series B Convertible Preferred Stock

 
(103.0
)
 

 
(103.0
)
Gain on amendment of Series B Convertible Preferred Stock

 
(32.9
)
 

 
(32.9
)
Remeasurement adjustment associated with the Preferred Series B redemption liability

 
(6.0
)
 

 
(6.0
)
Income allocated to PDH non-controlling interest