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Table of Contents

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 Quarterly Period Ended September 30, 2019
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 1-12658
_________________________________________________ 
ALBEMARLE CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________ 
Virginia
 
54-1692118
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
4250 Congress Street, Suite 900
Charlotte, North Carolina 28209
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code - (980) 299-5700
_________________________________________________ 
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      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. (Check one):
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 Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
COMMON STOCK, $.01 Par Value
 
ALB
 
New York Stock Exchange
Number of shares of common stock, $.01 par value, outstanding as of October 31, 2019: 106,033,033


Table of Contents

ALBEMARLE CORPORATION
INDEX – FORM 10-Q
 
 
 
 
 
 
Page
Number(s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8-25
 
 
 
25-42
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXHIBITS
 
 

2

Table of Contents

PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements (Unaudited).
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net sales
$
879,747

 
$
777,748

 
$
2,596,863

 
$
2,453,251

Cost of goods sold
569,880

 
497,211

 
1,677,596

 
1,556,379

Gross profit
309,867

 
280,537

 
919,267

 
896,872

Selling, general and administrative expenses
108,135

 
100,167

 
348,205

 
325,174

Research and development expenses
15,585

 
16,610

 
44,024

 
53,670

Gain on sale of business

 

 

 
(218,705
)
Operating profit
186,147

 
163,760

 
527,038

 
736,733

Interest and financing expenses
(11,108
)
 
(12,988
)
 
(35,295
)
 
(39,834
)
Other (expenses) income, net
(11,316
)
 
3,793

 
(7,090
)
 
(31,906
)
Income before income taxes and equity in net income of unconsolidated investments
163,723

 
154,565

 
484,653

 
664,993

Income tax expense
25,341

 
33,167

 
93,266

 
133,630

Income before equity in net income of unconsolidated investments
138,382

 
121,398

 
391,387

 
531,363

Equity in net income of unconsolidated investments (net of tax)
33,236

 
22,081

 
106,727

 
61,727

Net income
171,618

 
143,479

 
498,114

 
593,090

Net income attributable to noncontrolling interests
(16,548
)
 
(13,734
)
 
(55,277
)
 
(29,124
)
Net income attributable to Albemarle Corporation
$
155,070

 
$
129,745

 
$
442,837

 
$
563,966

Basic earnings per share
$
1.46

 
$
1.21

 
$
4.18

 
$
5.16

Diluted earnings per share
$
1.46

 
$
1.20

 
$
4.16

 
$
5.11

Weighted-average common shares outstanding – basic
105,999

 
107,315

 
105,920

 
109,223

Weighted-average common shares outstanding – diluted
106,299

 
108,302

 
106,324

 
110,276

See accompanying Notes to the Condensed Consolidated Financial Statements.

3

Table of Contents

ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
171,618

 
$
143,479

 
$
498,114

 
$
593,090

Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
Foreign currency translation
(100,069
)
 
(9,549
)
 
(100,380
)
 
(95,515
)
Pension and postretirement benefits
(5
)
 
11

 
8

 
37

Net investment hedge
12,745

 
(3,621
)
 
13,012

 
4,947

Interest rate swap
641

 
642

 
1,923

 
1,926

Total other comprehensive loss, net of tax
(86,688
)
 
(12,517
)
 
(85,437
)
 
(88,605
)
Comprehensive income
84,930

 
130,962

 
412,677

 
504,485

Comprehensive income attributable to noncontrolling interests
(16,426
)
 
(13,729
)
 
(55,135
)
 
(29,042
)
Comprehensive income attributable to Albemarle Corporation
$
68,504

 
$
117,233

 
$
357,542

 
$
475,443

See accompanying Notes to the Condensed Consolidated Financial Statements.

4

Table of Contents

ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
 
September 30,
 
December 31,
 
2019
 
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
317,823

 
$
555,320

Trade accounts receivable, less allowance for doubtful accounts (2019 – $4,391; 2018 – $4,460)
637,037

 
605,712

Other accounts receivable
86,556

 
52,059

Inventories
802,434

 
700,540

Other current assets
125,902

 
84,790

Total current assets
1,969,752

 
1,998,421

Property, plant and equipment, at cost
5,406,123

 
4,799,063

Less accumulated depreciation and amortization
1,882,086

 
1,777,979

Net property, plant and equipment
3,524,037

 
3,021,084

Investments
551,657

 
528,722

Other assets
200,858

 
80,135

Goodwill
1,534,241

 
1,567,169

Other intangibles, net of amortization
361,058

 
386,143

Total assets
$
8,141,603

 
$
7,581,674

Liabilities And Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
527,052

 
$
522,516

Accrued expenses
273,709

 
257,323

Current portion of long-term debt
539,960

 
307,294

Dividends payable
38,678

 
35,169

Current operating lease liability
24,606

 

Income taxes payable
17,238

 
60,871

Total current liabilities
1,421,243

 
1,183,173

Long-term debt
1,381,984

 
1,397,916

Postretirement benefits
45,752

 
46,157

Pension benefits
272,345

 
285,396

Other noncurrent liabilities
618,822

 
526,942

Deferred income taxes
393,120

 
382,982

Commitments and contingencies (Note 9)

 

Equity:
 
 
 
Albemarle Corporation shareholders’ equity:
 
 
 
Common stock, $.01 par value, issued and outstanding – 106,031 in 2019 and 105,616 in 2018
1,060

 
1,056

Additional paid-in capital
1,379,419

 
1,368,897

Accumulated other comprehensive loss
(435,977
)
 
(350,682
)
Retained earnings
2,892,057

 
2,566,050

Total Albemarle Corporation shareholders’ equity
3,836,559

 
3,585,321

Noncontrolling interests
171,778

 
173,787

Total equity
4,008,337

 
3,759,108

Total liabilities and equity
$
8,141,603

 
$
7,581,674

See accompanying Notes to the Condensed Consolidated Financial Statements.

5

Table of Contents

ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In Thousands, Except Share Data)
 
 
 
 
Additional
Paid-in Capital
 
Accumulated Other
Comprehensive (Loss) Income
 
Retained Earnings
 
Total Albemarle
Shareholders’ Equity
 
Noncontrolling
Interests
 
Total Equity
Common Stock
 
Shares
 
Amounts
 
 
 
 
 
 
Balance at June 30, 2019
105,971,464

 
$
1,059

 
$
1,373,213

 
$
(349,411
)
 
$
2,775,940

 
$
3,800,801

 
$
173,602

 
$
3,974,403

Net income
 
 
 
 
 
 
 
 
155,070

 
155,070

 
16,548

 
171,618

Other comprehensive loss
 
 
 
 
 
 
(86,566
)
 
 
 
(86,566
)
 
(122
)
 
(86,688
)
Cash dividends declared, $0.3675 per common share
 
 
 
 
 
 
 
 
(38,953
)
 
(38,953
)
 
(18,250
)
 
(57,203
)
Stock-based compensation
 
 
 
 
4,802

 
 
 
 
 
4,802

 
 
 
4,802

Exercise of stock options
36,000

 
1

 
1,608

 
 
 
 
 
1,609

 
 
 
1,609

Issuance of common stock, net
26,489

 

 

 
 
 
 
 

 
 
 

Shares withheld for withholding taxes associated with common stock issuances
(2,865
)
 

 
(204
)
 
 
 
 
 
(204
)
 
 
 
(204
)
Balance at September 30, 2019
106,031,088

 
$
1,060

 
$
1,379,419

 
$
(435,977
)
 
$
2,892,057

 
$
3,836,559

 
$
171,778

 
$
4,008,337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2018
108,441,363

 
$
1,084

 
$
1,609,526

 
$
(301,679
)
 
$
2,384,645

 
$
3,693,576

 
$
143,704

 
$
3,837,280

Net income
 
 
 
 
 
 
 
 
129,745

 
129,745

 
13,734

 
143,479

Other comprehensive loss
 
 
 
 
 
 
(12,512
)
 
 
 
(12,512
)
 
(5
)
 
(12,517
)
Cash dividends declared, $0.335 per common share
 
 
 
 
 
 
 
 
(35,679
)
 
(35,679
)
 


 
(35,679
)
Stock-based compensation
 
 
 
 
3,287

 
 
 
 
 
3,287

 
 
 
3,287

Exercise of stock options
42,683

 
1

 
1,013

 
 
 
 
 
1,014

 
 
 
1,014

Shares repurchased
(2,311,485
)
 
(23
)
 
(249,977
)
 
 
 
 
 
(250,000
)
 
 
 
(250,000
)
Issuance of common stock, net
20,079

 

 

 
 
 
 
 

 
 
 

Shares withheld for withholding taxes associated with common stock issuances
(6,137
)
 

 
(587
)
 
 
 
 
 
(587
)
 
 
 
(587
)
Balance at September 30, 2018
106,186,503

 
$
1,062

 
$
1,363,262

 
$
(314,191
)
 
$
2,478,711

 
$
3,528,844

 
$
157,433

 
$
3,686,277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2019
105,616,028

 
$
1,056

 
$
1,368,897

 
$
(350,682
)
 
$
2,566,050

 
$
3,585,321

 
$
173,787

 
$
3,759,108

Net income
 
 
 
 
 
 
 
 
442,837

 
442,837

 
55,277

 
498,114

Other comprehensive loss
 
 
 
 
 
 
(85,295
)
 
 
 
(85,295
)
 
(142
)
 
(85,437
)
Cash dividends declared, $1.1025 per common share
 
 
 
 
 
 
 
 
(116,830
)
 
(116,830
)
 
(57,212
)
 
(174,042
)
Stock-based compensation
 
 
 
 
16,999

 
 
 
 
 
16,999

 
 
 
16,999

Exercise of stock options
161,909

 
2

 
4,812

 
 
 
 
 
4,814

 
 
 
4,814

Issuance of common stock, net
383,313

 
3

 
(3
)
 
 
 
 
 

 
 
 

Increase in ownership interest of noncontrolling interest
 
 
 
 
(513
)
 
 
 
 
 
(513
)
 
68

 
(445
)
Shares withheld for withholding taxes associated with common stock issuances
(130,162
)
 
(1
)
 
(10,773
)
 
 
 
 
 
(10,774
)
 
 
 
(10,774
)
Balance at September 30, 2019
106,031,088

 
$
1,060

 
$
1,379,419

 
$
(435,977
)
 
$
2,892,057

 
$
3,836,559

 
$
171,778

 
$
4,008,337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
110,546,674

 
$
1,105

 
$
1,863,949

 
$
(225,668
)
 
$
2,035,163

 
$
3,674,549

 
$
143,147

 
$
3,817,696

Net income
 
 
 
 
 
 
 
 
563,966

 
563,966

 
29,124

 
593,090

Other comprehensive loss
 
 
 
 
 
 
(88,523
)
 
 
 
(88,523
)
 
(82
)
 
(88,605
)
Cash dividends declared, $1.005 per common share
 
 
 
 
 
 
 
 
(109,219
)
 
(109,219
)
 
(14,756
)
 
(123,975
)
Cumulative adjustment from adoption of income tax standard update (Note 1)
 
 
 
 
 
 
 
 
(11,199
)
 
(11,199
)
 
 
 
(11,199
)
Stock-based compensation
 
 
 
 
14,015

 
 
 
 
 
14,015

 
 
 
14,015

Exercise of stock options
71,649

 
1

 
2,301

 
 
 
 
 
2,302

 
 
 
2,302

Shares repurchased
(4,665,618
)
 
(47
)
 
(499,953
)
 
 
 
 
 
(500,000
)
 
 
 
(500,000
)
Issuance of common stock, net
378,006

 
4

 
(4
)
 
 
 
 
 

 
 
 

Shares withheld for withholding taxes associated with common stock issuances
(144,208
)
 
(1
)
 
(17,046
)
 
 
 
 
 
(17,047
)
 
 
 
(17,047
)
Balance at September 30, 2018
106,186,503

 
$
1,062

 
$
1,363,262

 
$
(314,191
)
 
$
2,478,711

 
$
3,528,844

 
$
157,433

 
$
3,686,277

See accompanying Notes to the Condensed Consolidated Financial Statements.

6

Table of Contents

ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
Nine Months Ended
September 30,
 
2019
 
2018
Cash and cash equivalents at beginning of year
$
555,320

 
$
1,137,303

Cash flows from operating activities:
 
 
 
Net income
498,114

 
593,090

Adjustments to reconcile net income to cash flows from operating activities:
 
 
 
Depreciation and amortization
156,718

 
150,511

Gain on sale of business

 
(218,705
)
Gain on sale of property
(11,079
)
 

Stock-based compensation and other
15,169

 
11,785

Equity in net income of unconsolidated investments (net of tax)
(106,727
)
 
(61,727
)
Dividends received from unconsolidated investments and nonmarketable securities
62,982

 
32,794

Pension and postretirement expense (benefit)
1,641

 
(2,708
)
Pension and postretirement contributions
(10,728
)
 
(11,068
)
Unrealized gain on investments in marketable securities
(1,701
)
 
(1,615
)
Deferred income taxes
7,726

 
43,400

Working capital changes
(289,587
)
 
(131,813
)
Other, net
23,110

 
(27,003
)
Net cash provided by operating activities
345,638

 
376,941

Cash flows from investing activities:
 
 
 
Acquisitions, net of cash acquired

 
(11,403
)
Capital expenditures
(608,456
)
 
(471,675
)
Cash proceeds from divestitures, net

 
413,479

Proceeds from sale of property and equipment
10,356

 

Sales of (investments in) marketable securities, net
1,177

 
(761
)
Investments in equity and other corporate investments
(2,569
)
 
(5,346
)
Net cash used in investing activities
(599,492
)
 
(75,706
)
Cash flows from financing activities:
 
 
 
Other borrowings (repayments), net
232,183

 
(134,505
)
Dividends paid to shareholders
(113,321
)
 
(108,922
)
Dividends paid to noncontrolling interests
(57,212
)
 
(14,756
)
Repurchases of common stock

 
(500,000
)
Proceeds from exercise of stock options
4,814

 
2,302

Withholding taxes paid on stock-based compensation award distributions
(10,774
)
 
(17,047
)
Other
(445
)
 

Net cash provided by (used in) financing activities
55,245

 
(772,928
)
Net effect of foreign exchange on cash and cash equivalents
(38,888
)
 
(24,384
)
Decrease in cash and cash equivalents
(237,497
)
 
(496,077
)
Cash and cash equivalents at end of period
$
317,823

 
$
641,226

See accompanying Notes to the Condensed Consolidated Financial Statements.

7

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)


NOTE 1—Basis of Presentation:
In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Albemarle Corporation and our wholly-owned, majority-owned and controlled subsidiaries (collectively, “Albemarle,” “we,” “us,” “our” or “the Company”) contain all adjustments necessary for a fair statement, in all material respects, of our condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, our consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of changes in equity for the three-month and nine-month periods ended September 30, 2019 and 2018 and our condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2019 and 2018. Cost of goods sold for the three-month period ended September 30, 2019 includes expense of $7.0 million due to the correction of an out-of-period error regarding carbonate inventory values related to the three-month period ended June 30, 2019. The Company does not believe this adjustment is material to the consolidated financial statements for the three- or nine-month periods ended September 30, 2019, or the three- or six-month periods ended June 30, 2019. All other adjustments are of a normal and recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission (“SEC”) on February 27, 2019. The December 31, 2018 condensed consolidated balance sheet data herein was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). The results of operations for the three-month and nine-month periods ended September 30, 2019 are not necessarily indicative of the results to be expected for the full year. The nine-month period ended September 30, 2018 includes an $11.2 million cumulative adjustment to decrease Retained earnings due to the adoption of accounting guidance that eliminated the deferral of tax effects of intra-entity asset transfers other than inventory.
Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” and all related amendments using the modified retrospective method. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $139.1 million as of January 1, 2019. Comparative periods have not been restated and are reported in accordance with our historical accounting. The standard did not have an impact on our consolidated Net income or cash flows. In addition, as a result of the adoption of this new standard, we have implemented internal controls and system changes to prepare the financial information.
As part of this adoption, we have elected the practical expedient relief package allowed by the new standard, which does not require the reassessment of (1) whether existing contracts contain a lease, (2) the lease classification or (3) unamortized initial direct costs for existing leases; and have elected to apply hindsight to the existing leases. Additionally, we have made accounting policy elections such as exclusion of short-term leases (leases with a term of 12 months or less and which do not include a purchase option that we are reasonably certain to exercise) from the balance sheet presentation, use of portfolio approach in determination of discount rate and accounting for non-lease components in a contract as part of a single lease component for all asset classes.
See Note 2, “Leases” and Note 17, “Recently Issued Accounting Pronouncements,” for additional information. In addition, see below for a description of our updated lease accounting policy.
Leases
We determine if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As an implicit rate for most of our leases is not determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease payments for the initial measurement of lease ROU assets and lease liabilities include fixed and variable payments based on an index or a rate. Variable lease payments that are not index or rate based are recorded as expenses when incurred. Our variable lease payments typically include real estate taxes, insurance costs and common-area maintenance. The operating lease ROU asset also includes any lease payments made, net of lease incentives. The lease term is the non-cancelable period of the lease, including any options to extend, purchase or terminate the lease when it is reasonably certain that we will exercise that option. We amortize the operating lease ROU assets on a straight-line basis over the period of the lease and the finance lease ROU assets on a straight-line basis over the shorter of their estimated useful lives or the lease terms. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term.


8

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

NOTE 2—Leases:
We lease certain office space, buildings, transportation and equipment in various countries. The initial lease terms generally range from 1 to 30 years for real estate leases, and from 2 to 15 years for non-real estate leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term.
Many leases include options to terminate or renew, with renewal terms that can extend the lease term from 1 to 50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table provides details of our lease contracts for the three-month and nine-month periods ended September 30, 2019 (in thousands):
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
Operating lease cost
$
7,939

 
$
25,741

Finance lease cost:
 
 
 
Amortization of right of use assets
157

 
471

Interest on lease liabilities
31

 
96

Total finance lease cost
188

 
567

 
 
 
 
Short-term lease cost
2,587

 
6,422

Variable lease cost
1,541

 
4,059

Total lease cost
$
12,255

 
$
36,789

Supplemental cash flow information related to our lease contracts for the nine months ended September 30, 2019 is as follows (in thousands):
 
Nine Months Ended
 
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
22,486

Operating cash flows from finance leases
96

Financing cash flows from finance leases
509

Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
21,578



9

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Supplemental balance sheet information related to our lease contracts, including the location on balance sheet, at September 30, 2019 is as follows (in thousands, except as noted):
 
September 30, 2019
Operating leases:
 
Other assets
$
138,222

 
 
Current operating lease liability
24,606

Other noncurrent liabilities
116,590

Total operating lease liabilities
141,196

Finance leases:
 
Net property, plant and equipment
3,793

 
 
Current portion of long-term debt
660

Long-term debt
3,174

Total finance lease liabilities
3,834

Weighted average remaining lease term (in years):
 
Operating leases
11.4

Finance leases
6.0

Weighted average discount rate (%):
 
Operating leases
3.85
%
Finance leases
2.88
%

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):
 
Operating Leases
 
Finance Leases
Remainder of 2019
$
7,318

 
$
197

2020
25,982

 
745

2021
14,843

 
657

2022
12,870

 
657

2023
12,349

 
657

Thereafter
105,536

 
1,313

Total lease payments
178,898

 
4,226

Less imputed interest
37,702

 
392

Total
$
141,196

 
$
3,834


As of December 31, 2018, future non-cancelable minimum lease payments were $25.6 million in 2019; $17.9 million in 2020; $12.5 million in 2021; $10.8 million in 2022; $10.1 million in 2023; and $87.1 million thereafter.

NOTE 3—Goodwill and Other Intangibles:

The following table summarizes the changes in goodwill by reportable segment for the nine months ended September 30, 2019 (in thousands):
 
Lithium
 
Bromine Specialties
 
Catalysts
 
All Other
 
Total
Balance at December 31, 2018
$
1,354,779

 
$
20,319

 
$
185,485

 
$
6,586

 
$
1,567,169

   Foreign currency translation adjustments
(25,992
)
 

 
(6,936
)
 

 
(32,928
)
Balance at September 30, 2019
$
1,328,787

 
$
20,319

 
$
178,549

 
$
6,586

 
$
1,534,241



10

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)


The following table summarizes the changes in other intangibles and related accumulated amortization for the nine months ended September 30, 2019 (in thousands):
 
Customer Lists and Relationships
 
Trade Names and Trademarks(a)
 
Patents and Technology
 
Other
 
Total
Gross Asset Value
 
 
 
 
 
 
 
 
 
  Balance at December 31, 2018
$
428,372

 
$
18,453

 
$
55,801

 
$
43,708

 
$
546,334

Foreign currency translation adjustments and other
(8,094
)
 
(304
)
 
(1,217
)
 
1,807

 
(7,808
)
  Balance at September 30, 2019
$
420,278

 
$
18,149

 
$
54,584

 
$
45,515

 
$
538,526

Accumulated Amortization
 
 
 
 
 
 
 
 
 
  Balance at December 31, 2018
$
(95,797
)
 
$
(8,176
)
 
$
(35,248
)
 
$
(20,970
)
 
$
(160,191
)
    Amortization
(17,453
)
 

 
(1,091
)
 
(1,965
)
 
(20,509
)
Foreign currency translation adjustments and other
1,994

 
104

 
686

 
448

 
3,232

  Balance at September 30, 2019
$
(111,256
)
 
$
(8,072
)
 
$
(35,653
)
 
$
(22,487
)
 
$
(177,468
)
Net Book Value at December 31, 2018
$
332,575

 
$
10,277

 
$
20,553

 
$
22,738

 
$
386,143

Net Book Value at September 30, 2019
$
309,022

 
$
10,077

 
$
18,931

 
$
23,028

 
$
361,058


(a)
Net Book Value includes only indefinite-lived intangible assets.

NOTE 4—Income Taxes:
The effective income tax rate for the three-month and nine-month periods ended September 30, 2019 was 15.5% and 19.2%, respectively, compared to 21.5% and 20.1% for the three-month and nine-month periods ended September 30, 2018, respectively. The Company’s effective income tax rate fluctuates based on, among other factors, its level and location of income. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three-month and nine-month periods ended September 30, 2019 and 2018 was impacted by a variety of factors, primarily stemming from the location in which income was earned. For the three-month and nine-month periods ended September 30, 2019, this was mainly attributable to our share of the income of our Jordan Bromine Company Limited (“JBC”) joint venture, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. Income tax expense for the three-month period ended September 30, 2018 included discrete tax expenses of $1.9 million from stock-based compensation arrangements and $1.7 million related to the accounting for the U.S. Tax Cuts and Jobs Act (“TCJA”), partially offset by discrete tax benefits of $2.0 million from foreign accrual to return adjustments and $1.2 million from the release of foreign valuation allowances. Income tax expense for the nine-month period ended September 30, 2018 included discrete tax expenses of $42.0 million for the disposition of the polyolefin catalysts and components portion of our Performance Catalyst Solutions (“PCS”) business (“Polyolefin Catalysts Divestiture”) and $7.3 million for adjustments to foreign valuation allowances, partially offset by discrete tax benefits of $8.0 million for tax accounting method changes, $4.8 million for adjustments related to accounting for the TCJA, $5.4 million from stock-based compensation arrangements and $2.0 million from foreign accrual to return adjustments.


11

Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

NOTE 5—Earnings Per Share:
Basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2019 and 2018 are calculated as follows (in thousands, except per share amounts):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Basic earnings per share
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
Net income attributable to Albemarle Corporation
$
155,070

 
$
129,745

 
$
442,837

 
$
563,966

Denominator:
 
 
 
 
 
 
 
Weighted-average common shares for basic earnings per share
105,999

 
107,315

 
105,920

 
109,223

Basic earnings per share
$
1.46

 
$
1.21

 
$
4.18

 
$
5.16

 
 
 
 
 
 
 
 
Diluted earnings per share
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
Net income attributable to Albemarle Corporation
$
155,070

 
$
129,745

 
$
442,837

 
$
563,966

Denominator:
 
 
 
 
 
 
 
Weighted-average common shares for basic earnings per share
105,999

 
107,315

 
105,920

 
109,223

Incremental shares under stock compensation plans
300

 
987

 
404

 
1,053

Weighted-average common shares for diluted earnings per share
106,299

 
108,302

 
106,324

 
110,276

Diluted earnings per share
$
1.46

 
$
1.20

 
$
4.16

 
$
5.11


At September 30, 20