Annual report pursuant to Section 13 and 15(d)

Schedule I - Condensed Financial Information of Parent

v3.10.0.1
Schedule I - Condensed Financial Information of Parent
 12 Months Ended
Dec. 31, 2018
Condensed Financial Information Disclosure [Abstract]  
Condensed Financial Information
SCHEDULE I
PQ GROUP HOLDINGS INC. AND SUBSIDIARIES (PARENT)
CONDENSED FINANCIAL INFORMATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands)

 
Years ended
December 31,
 
2018
 
2017
 
2016
Stock compensation expense
$
19,464

 
$
8,799

 
$
7,029

Equity in net (income) loss from subsidiaries
(77,764
)
 
(66,402
)
 
72,717

Net income (loss)
58,300

 
57,603

 
(79,746
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Pension and postretirement benefits
(7,958
)
 
(101
)
 
6,865

Net (loss) gain from hedging activities
(330
)
 
(3,590
)
 
4,557

Foreign currency translation
(35,127
)
 
61,713

 
(65,781
)
Total other comprehensive income (loss)
(43,415
)
 
58,022

 
(54,359
)
Comprehensive income (loss)
$
14,885

 
$
115,625

 
$
(134,105
)
 
 
 
 
 
 
SCHEDULE I
PQ GROUP HOLDINGS INC. AND SUBSIDIARIES (PARENT)
CONDENSED FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
(in thousands, except share and per share amounts)

 
December 31,
2018
 
December 31,
2017
ASSETS
 
 
 
Total current assets
$
—

 
$
—

Investment in subsidiaries
1,659,560

 
1,628,000

Total assets
$
1,659,560

 
$
1,628,000

LIABILITIES
 
 
 
Total current liabilities
$
—

 
$
—

Total liabilities
—

 
—

STOCKHOLDERS' EQUITY
 
 
 
Common stock ($0.01 par); authorized shares 450,000,000; issued shares 135,758,269 and 135,244,379 on December 31, 2018 and December 31, 2017, respectively; outstanding shares 135,592,045 and 135,244,379 on December 31, 2018 and December 31, 2017, respectively
1,358

 
1,352

Preferred stock ($0.01 par); authorized shares 50,000,000; no shares issued or outstanding on December 31, 2018 and December 31, 2017
—

 
—

Additional paid-in capital
1,674,703

 
1,655,114

Retained earnings (accumulated deficit)
25,523

 
(32,777
)
Treasury stock, at cost; shares 166,224 and 0 on December 31, 2018 and 2017, respectively
(2,920
)
 
—

Accumulated other comprehensive (loss) income
(39,104
)
 
4,311

Total PQ Group Holdings Inc. equity
1,659,560

 
1,628,000

Total liabilities and equity
$
1,659,560

 
$
1,628,000

 
 
 
 
SCHEDULE I
PQ GROUP HOLDINGS INC. AND SUBSIDIARIES (PARENT)
CONDENSED FINANCIAL INFORMATION
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)

 
Years ended
December 31,
 
2018
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
 
Net income (loss)
$
58,300

 
$
57,603

 
$
(79,746
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Equity in net (income) loss from subsidiaries
(77,764
)
 
(66,402
)
 
72,717

Stock compensation expense
19,464

 
8,799

 
7,029

Net cash provided by operating activities
—

 
—

 
—

Cash flows from investing activities:
 
 
 
 
 
Investment in subsidiaries
—

 
(480,696
)
 
—

Net cash used in investing activities
—

 
(480,696
)
 
—

Cash flows from financing activities:
 
 
 
 
 
IPO proceeds
—

 
507,500

 
—

IPO costs
—

 
(26,804
)
 
—

Net cash provided by financing activities
—

 
480,696

 
—

Effect of exchange rate changes on cash, cash equivalents and restricted cash
—

 
—

 
—

Net change in cash, cash equivalents and restricted cash
—

 
—

 
—

Cash, cash equivalents and restricted cash at beginning of period
—

 
—

 
—

Cash, cash equivalents and restricted cash at end of period
$
—

 
$
—

 
$
—

 
 
 
 
 
 
SCHEDULE I
PQ GROUP HOLDINGS INC. AND SUBSIDIARIES (PARENT)
CONDENSED FINANCIAL INFORMATION
NOTES TO CONDENSED SCHEDULE I

1. Description of PQ Group Holdings Inc. and Subsidiaries
On August 17, 2015, PQ Holdings Inc. (“PQ Holdings”), Eco Services Operations LLC (“Eco Services”), certain investment funds affiliated with CCMP Capital Advisors, LLC (now known as CCMP Capital Advisors, LP; “CCMP”), and stockholders of PQ Holdings and Eco Services entered into a reorganization and transaction agreement pursuant to which the companies consummated a series of transactions to reorganize and combine the businesses of PQ Holdings and Eco Services (the “Business Combination”), under a new holding company, PQ Group Holdings Inc. (“PQ Group Holdings” or the “Parent Company”). The Business Combination was consummated on May 4, 2016.
In accordance with accounting principles generally accepted in the United States (“GAAP”), Eco Services is the accounting predecessor to PQ Group Holdings. Certain investment funds affiliated with CCMP held a controlling interest position in Eco Services prior to the Business Combination. In addition, certain investment funds affiliated with CCMP owned a non-controlling interest in PQ Holdings prior to the Business Combination and the merger with Eco Services constituted a change in control under the PQ Holdings credit agreements and bond indenture that were in place at the time of the Business Combination. Therefore, Eco Services is deemed to be the accounting acquirer. These Parent Company condensed financial statements are the continuation of Eco Services’ business prior to the Business Combination.
PQ Group Holdings is a holding company that conducts substantially all of its business operations through its wholly owned subsidiary, PQ Corporation. As specified in certain of PQ Corporation’s debt agreements entered into concurrently with the Business Combination, there are restrictions on the ability of PQ Corporation to make payments to its stockholder, PQ Group Holdings, on behalf of their equity interests (refer to Note 16 to the PQ Group Holdings consolidated financial statements for further information regarding PQ Corporation debt).
2. Basis of Presentation
The accompanying condensed Parent Company financial statements are required in accordance with Rule 4-08(e)(3) of Regulation S-X. These condensed financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investment in its consolidated subsidiary is presented under the equity method of accounting. Under the equity method, the investment in subsidiary is stated at cost plus contributions and equity in undistributed income (loss) of the subsidiary, less distributions received since the date of acquisition. For purposes of presenting net income, this presentation assumes that the Parent Company was in existence for the full year ended December 31, 2016, the year of the Business Combination. These parent-only financial statements should be read in conjunction with PQ Group Holdings’ audited consolidated financial statements.
3. Stock-Based Compensation
Refer to Note 22 of the notes to the PQ Group Holdings consolidated financial statements for a description of stock-based compensation.
4. Common Stock
Refer to Note 21 of the notes to the PQ Group Holdings consolidated financial statements for a description of common stock.