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, 2015
 
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: 001-36272
_______________


(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  ¨
 
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  ¨

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 ¨
Accelerated filer ¨
Non-Accelerated filer ý 
Smaller reporting company ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨  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
November 10, 2015
Common Stock, par value $0.01 per share
210,879,597 shares







Table of Contents
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 







Glossary of Defined Terms

Terms    
 
Definitions
Platform; We; Us; Our; the Company
 
Platform Specialty Products Corporation, a Delaware corporation, and its subsidiaries, collectively, for all periods subsequent to the MacDermid Acquisition.
Acquisitions
 
The Agriphar Acquisition, Arysta Acquisition, CAS Acquisition, and MacDermid Acquisition, collectively.
Agriphar
 
Percival and its agrochemical business, Agriphar.
Agriphar Acquisition
 
Acquisition of a 100% interest in Agriphar, completed on October 1, 2014.
AIs
 
Active ingredients.
Alent
 
Alent plc (LSE:ALNT), a public limited company registered in England and Wales.
Alent Acquisition
 
The proposed acquisition of Alent announced on July 13, 2015, which is expected to close in early December 2015, subject to the satisfaction or waiver of all applicable closing conditions.
Amended and Restated Credit Agreement
 
Platform’s credit agreement dated April 12, 2007, as amended and/or restated on June 7, 2013, October 31, 2013 (Amendment No. 1), August 6, 2014 (Second Amended and Restated Credit Agreement and the Further Amendments pursuant to Amendment No. 2), October 1, 2014 (Incremental Amendment No. 1) and February 13, 2015 (Amendment No. 3).
Amendment No. 2
 
Amendment No. 2, dated as of August 6, 2014, entered into among, inter alia, Platform, MacDermid Holdings, MacDermid, the subsidiaries of the borrowers from time to time parties thereto, the lenders from time to time parties thereto and Barclays Bank PLC, as administrative agent and collateral agent, including the Further Amendments to the Second Amended and Restated Credit Agreement, entered into in connection with the CAS Acquisition.
Amendment No. 3
 
Amendment No. 3, dated as of February 13, 2015, entered into among, Platform, MacDermid Holdings, MAS Holdings, NAIP and certain subsidiaries of Platform and MacDermid Holdings, the lenders from time to time parties thereto and Barclays Bank PLC, entered into in connection with the Arysta Acquisition.
Annual Report
 
Platform's annual report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on March 30, 2015.
Apollo
 
Affiliates of Apollo Global Management, LLC, collectively and each individually.
Arysta
 
Arysta LifeScience Limited, an Irish private limited company.
Arysta Acquisition
 
Acquisition of a 100% interest in Arysta, completed on February 13, 2015.
ASC
 
Accounting Standards Codification.
ASU
 
Accounting Standards Update.
Board
 
Platform’s board of directors.
CAS
 
The Chemtura AgroSolutions business of Chemtura.
CAS Acquisition
 
Acquisition of a 100% interest in CAS, completed on November 3, 2014.
Chemtura
 
Chemtura Corporation, a Delaware corporation.
Credit Facilities
 
The First Lien Credit Facility and the Revolving Credit Facility, collectively, available under the Amended and Restated Credit Agreement.
Dodd-Frank
 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Domestic Pension Plan
 
MacDermid, Incorporated Employees’ Pension Plan (as amended and restated, effective January 1, 2009), a non-contributory domestic defined benefit pension plan.
Domestication
 
Platform’s change of jurisdiction of incorporation from the British Virgin Islands to Delaware on January 22, 2014.
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.
Euro Tranche Term Loan
 
Term loans denominated in Euros in an aggregate amount of €205 million borrowed in connection with the CAS Acquisition.
Exchange Act
 
Securities Exchange Act of 1934, as amended.
Exchange Agreement
 
Exchange Agreement, dated October 25, 2013, between Platform and the fiduciaries of the 401K Plan.


G-1






Terms    
 
Definitions
FASB
 
Financial Accounting Standard Board.
FCPA
 
Foreign Corrupt Practices Act of 1977.
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.
Further Amendments
 
Further amendments to our Second Amended and Restated Credit Agreement pursuant to the Amendment No. 2 entered on August 6, 2014 by and among Platform, Barclays Bank PLC, the several lenders from time to time party thereto and the other parties thereto, which became effective upon the consummation of the CAS Acquisition on November 3, 2014.
HSRA Act
 
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Incremental Amendment
 
Incremental amendment No. 1 to the Amended and Restated Credit Agreement entered into on October 1, 2014 by and among Platform and MacDermid, as borrowers, MacDermid Holdings, certain subsidiaries of MacDermid Holdings and Platform, Barclays Bank PLC, as collateral agent and administrative agent, and the incremental lender party thereto.
Initial Public Offering
 
Initial public offering of Platform (formerly named “Platform Acquisition Holdings Limited”) completed on the London Stock Exchange on May 22, 2013, raising net proceeds of approximately $881 million.
January Notes Offering
 
Private offering of $1.10 billion aggregate principal amount of 6.50% USD Notes due 2022 and €350 million aggregate principal amount of 6.00% EUR Notes due 2023 to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to non-U.S. persons in accordance with Regulation S under the Securities Act, completed on February 2, 2015.
June 2015 Equity Offering
 
Underwritten public offering of 18,226,414 shares of its common stock at a public offering price of $26.50 per share, which closed on June 29, 2015, raising gross proceeds of approximately $483 million.
LTCB
 
Platform's Long Term Cash Bonus plan.
MacDermid
 
MacDermid, Incorporated, a Connecticut corporation.
MacDermid Acquisition
 
Platform’s acquisition on October 31, 2013 of substantially all of the equity of MacDermid Holdings, 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.
MacDermid Holdings
 
MacDermid Holdings, LLC which, at the time of the MacDermid Acquisition, owned approximately 97% of MacDermid, a subsidiary of MacDermid Holdings.
MAS Holdings
 
MacDermid Agricultural Solutions Holdings B.V., a company organized under the laws of the Netherlands and a subsidiary of Platform.
NAIP
 
Netherlands Agricultural Investment Partners, LLC, a company organized under the laws of the Netherlands and a subsidiary of Platform.
New Euro Tranche Term Loan
 
New term loans denominated in Euros in an aggregate amount of €83 million borrowed in connection with the Arysta Acquisition.
New Tranche B Term Loan
 
New Tranche B term loans denominated in U.S. dollars in an aggregate principal amount of $130 million, borrowed in connection with the CAS Acquisition through an increase in Platform’s existing tranche B term loan facility.
New Tranche B-2 Term Loan
 
New Tranche B-2 term loans denominated in U.S. dollars in an aggregate principal amount of $500 million, borrowed in connection with the Arysta Acquisition through an increase in Platform’s existing tranche B term loan facility.
November Notes Offering
 
Private offering of $500 million aggregate principal amount of 10.375% senior notes due 2021 to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to non-U.S. persons in accordance with Regulation S under the Securities Act, completed on November 10, 2015.
NYSE
 
New York Stock Exchange.
OMG
 
OM Group, Inc. (NYSE:OMG), a Delaware corporation.
OMG Businesses
 
The OMG's Electronic Chemicals and Photomasks businesses, collectively.
OMG Acquisition
 
Platform's acquisition of the OMG Businesses completed on October 28, 2015 (other than their Malaysian subsidiary, which acquisition is expected to close during the first quarter of 2016).
Original Seller
 
Nalozo S.à.r.l., a Luxembourg limited liability company and the original seller in the Arysta Acquisition.


G-2






Terms    
 
Definitions
PDH
 
Platform Delaware Holdings, Inc., a subsidiary of Platform.
PDH Common Stock
 
Shares of common stock of PDH.
Percival
 
Percival S.A., a société anonyme incorporated and organized under the laws of Belgium, acquired by Platform on October 1, 2014.
Pershing Square
 
Pershing Square Capital Management, L.P.
Private Placement Offering
 
Private placement of an aggregate of 15,800,000 shares of common stock completed on May 20, 2014 at a purchase price of $19.00 per share, raising net proceeds of approximately $287 million.
Quarterly Report
 
This quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2015.
Retaining Holder
 
Each Holder of an equity interest of MacDermid Holdings immediately prior to the closing of the MacDermid Acquisition, who executed a RHSA.
Revolving Credit Facility
 
Revolving Credit Facility (in U.S. dollars or multicurrency) available under the Amended and Restated Credit Agreement.
RSUs
 
Restricted stock units issued by Platform from time to time under the 2013 Plan.
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 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.
Sarbanes-Oxley
 
Sarbanes-Oxley Act of 2002.
Scheme
 
In connection with the proposed Alent Acquisition, the scheme of arrangement governed by the U.K. Companies Act, which terms are set forth in the scheme document sent to Alent shareholders on August 17, 2015.
SEC
 
Securities and Exchange Commission.
Security Agreement
 
Amended and Restated Pledge and Security Agreement, amended and restated as of October 31, 2013, as amended, supplemented and modified from time to time, entered into by Platform, MacDermid and the guarantors listed therein.
Second Amended and Restated Credit Agreement
 
Second Amended and Restated Credit Agreement, dated as of August 6, 2014, among, inter alia, Platform, MacDermid Holdings, MacDermid, the subsidiaries of the borrowers from time to time parties thereto, the lenders from time to time parties thereto and Barclays Bank PLC, as administrative agent and collateral agent.
Securities Act
 
Securities Act of 1933, as amended.
Seller
 
Nalozo, L.P., an affiliate of the Original Seller who became the seller in the Arysta Acquisition pursuant to an amendment to the share purchase agreement dated February 11, 2015.
Seller Resale Registration Statement
 
Registration statement on Form S-3 (File No. 333-202287) initially filed on February 25, 2015 to register the resale of a maximum of 22,107,590 shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock pursuant to a registration rights agreement entered into with the Seller dated February 13, 2015. The Seller Registration Statement was amended on March 20, 2015 and April 29, 2015, and declared effective by the SEC on May 6, 2015.
Series A Preferred Stock
 
2,000,000 shares of Platform’s Series A preferred stock which were automatically converted from ordinary shares held by the Founder Entities upon the Domestication, and which are 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 Seller in connection with the Arysta Acquisition on February 13, 2015, which are convertible into a maximum of 22,107,590 shares of Platform's common stock at the option of the Seller.
SERP
 
Supplemental Executive Retirement Plan for executive officers of Platform.
Tartan
 
Tartan Holdings, LLC, a Delaware limited liability company and subsidiary of Platform, formed at the time of the MacDermid Acquisition to hold the PDH Common Stock in exchange of MacDermid Holdings equity interests.
U.K. Companies Act
 
The U.K. Companies Act 2006, as amended.
U.K. Takeover Code
 
The U.K. City Code on Takeovers and Mergers.


G-3






Terms    
 
Definitions
USD Incremental Loan
 
Incremental term loans under the Incremental Amendment to the Second Amended and Restated Credit Agreement in an aggregate principal amount of $300 million used to finance the Agriphar Acquisition.
U.S. GAAP
 
Generally accepted accounting principles in the United States.
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.
401K Plan
 
MacDermid, Incorporated Profit Sharing and Employee Savings Plan.
6.00% EUR Notes due 2023
 
Platform’s 6.00% senior notes due 2023 denominated in Euros issued in the January Notes Offering.
6.50% USD Notes due 2022
 
Platform’s 6.50% senior notes due 2022 denominated in U.S. dollars issued in the January Notes Offering.



G-4






Part I. Financial Information
 
Item 1. Financial Statements
 
PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except loss per share)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
597.3

 
$
196.8

 
$
1,807.3

 
$
569.6

Cost of sales
354.6

 
93.6

 
1,088.8

 
285.5

Gross profit
242.7

 
103.2

 
718.5

 
284.1

Operating expenses:
 

 
 
 
 

 
 

Selling, technical, general and administrative
194.8

 
73.5

 
593.2

 
232.7

Research and development
16.6

 
6.4

 
47.8

 
18.5

Total operating expenses
211.4

 
79.9

 
641.0

 
251.2

Operating profit
31.3

 
23.3

 
77.5

 
32.9

Other (expense) income:
 

 
 

 
 

 
 

Interest expense, net
(52.7
)
 
(8.0
)
 
(143.2
)
 
(23.4
)
Loss on derivative contracts
(47.3
)
 
(2.6
)
 
(49.9
)
 
(2.2
)
Foreign exchange loss
(36.9
)
 
(0.4
)
 
(19.3
)
 
(1.4
)
Other income, net
1.4

 

 
19.8

 

Total other expense
(135.5
)
 
(11.0
)
 
(192.6
)
 
(27.0
)
(Loss) income before income taxes and non-controlling interests
(104.2
)
 
12.3

 
(115.1
)
 
5.9

Income tax (expense) benefit
(17.6
)
 
1.6

 
(42.0
)
 
3.6

Net (loss) income
(121.8
)
 
13.9

 
(157.1
)
 
9.5

Net income attributable to the non-controlling interests
(0.5
)
 
(2.0
)
 
(4.0
)
 
(5.4
)
Net (loss) income attributable to common stockholders
$
(122.3
)
 
$
11.9

 
$
(161.1
)
 
$
4.1

(Loss) earnings per share
 

 
 

 
 

 
 

Basic
$
(0.58
)
 
$
0.09

 
$
(0.81
)
 
$
0.03

Diluted
$
(0.58
)
 
$
0.08

 
$
(0.81
)
 
$
0.03

Weighted average shares outstanding
 

 
 
 
 

 
 

Basic
210.9

 
137.3

 
198.6

 
124.5

Diluted
210.9

 
152.7

 
198.6

 
140.5

 
See accompanying notes to 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,
 
2015
 
2014
 
2015
 
2014
Net (loss) income
$
(121.8
)
 
$
13.9

 
$
(157.1
)
 
$
9.5

Other comprehensive income (loss), before tax
 

 
 

 
 

 
 

Foreign currency translation adjustments
(350.2
)
 
(60.3
)
 
(614.0
)
 
(37.3
)
 
 
 
 
 
 
 
 
Pension and post-retirement plans
 
 
 
 
 
 
 
Net income recognized during the year

 

 

 
0.2

Pension and post-retirement plans

 

 

 
0.2

Tax expense

 

 
(0.5
)
 

Pension and post-retirement plan, net of tax

 

 
(0.5
)
 
0.2

 
 
 
 
 
 
 
 
Unrealized gain (loss) on available for sale securities
 
 
 
 
 
 
 
Unrealized holding gain (loss) on available for sale securities
1.0

 
(0.1
)
 
1.2

 
(0.1
)
Unrealized gain (loss) on available for sale securities
1.0

 
(0.1
)
 
1.2

 
(0.1
)
Tax expense

 

 

 

Unrealized gain (loss) on available for sale securities, net of tax
1.0

 
(0.1
)
 
1.2

 
(0.1
)
 
 
 
 
 
 
 
 
Derivative financial instruments revaluation
 
 
 
 
 
 
 
Unrealized hedging loss arising during the period
(18.1
)
 

 
(18.1
)
 
(0.2
)
Derivative financial instruments revaluation
(18.1
)
 

 
(18.1
)
 
(0.2
)
Tax benefit
6.3

 

 
6.3

 
0.1

Derivative financial instruments revaluation, net of tax
(11.8
)
 

 
(11.8
)
 
(0.1
)
 
 
 
 
 
 
 
 
Total other comprehensive loss, net of tax
(361.0
)
 
(60.4
)
 
(625.1
)
 
(37.3
)
Comprehensive loss
(482.8
)
 
(46.5
)
 
(782.2
)
 
(27.8
)
Comprehensive loss (income) attributable to the non-controlling interests
6.7

 
1.8

 
10.3

 
(2.9
)
Comprehensive loss attributable to common stockholders
$
(476.1
)
 
$
(44.7
)
 
$
(771.9
)
 
$
(30.7
)
 
See accompanying notes to condensed consolidated financial statements


2






PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share and per share amounts)
 
September 30,
 
December 31,
 
2015
 
2014
Assets
 
 
 
Cash and cash equivalents
$
682.0

 
$
397.3

Restricted cash
0.3

 
600.0

Accounts receivable, net of allowance for doubtful accounts of $14.0
and $9.6 at September 30, 2015 and December 31, 2014, respectively
943.4

 
327.3

Inventories
466.9

 
205.8

Prepaid expenses and other current assets
220.1

 
46.1

Total current assets
2,312.7

 
1,576.5

Property, plant and equipment, net
266.9

 
178.6

Goodwill
2,842.0

 
1,405.3

Intangible assets, net
2,577.9

 
1,341.5

Other assets
76.3

 
45.4

Total assets
$
8,075.8

 
$
4,547.3

Liabilities & Stockholders' Equity
 

 
 

Accounts payable
386.1

 
106.7

Current installments of long-term debt and revolving credit facilities
36.1

 
13.2

Accrued income taxes payable
102.7

 
16.7

Accrued customer rebates and sales incentives
129.0

 
9.9

Financial guarantees and factoring
59.0

 

Other current liabilities
252.2

 
94.2

Total current liabilities
965.1

 
240.7

Long-term debt and capital lease obligations
3,401.4

 
1,392.4

Long-term retirement benefits, less current portion
44.2

 
38.8

Long-term deferred income taxes
567.1

 
202.3

Long-term contingent consideration
70.2

 
63.9

Other long-term liabilities
113.6

 
56.6

Total liabilities
5,161.6

 
1,994.7

Commitments and contingencies (Note 15)


 


Redeemable preferred stock - Series B
645.9

 

Stockholders' Equity
 

 
 

Preferred stock - Series A

 

Common stock, $0.01 par value per share (effective January 23, 2014), 400,000,000 shares authorized, 210,879,597 and 182,066,980 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
2.1

 
1.9

Additional paid-in capital
3,287.3

 
2,812.4

Accumulated deficit
(385.2
)
 
(224.1
)
Accumulated other comprehensive loss
(741.4
)
 
(130.6
)
Total stockholders' equity
2,162.8

 
2,459.6

Non-controlling interests
105.5

 
93.0

Total equity
2,268.3

 
2,552.6

Total liabilities, redeemable preferred shares and equity
$
8,075.8

 
$
4,547.3

See accompanying notes to 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,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net cash flows provided by operating activities
$
131.1

 
$
79.5

Cash flows from investing activities:
 

 
 

Change in restricted cash
599.7

 
(315.0
)
Capital expenditures
(32.1
)
 
(7.3
)
Investment in registrations of products
(26.2
)
 

Proceeds from disposal of property, plant and equipment
12.1

 
0.5

Acquisition of businesses, net
(2,857.9
)
 
(59.0
)
Other, net
(1.4
)
 

Net cash flows used in investing activities
(2,305.8
)
 
(380.8
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of debt, net of discount and premium
2,085.6

 

Change in revolving credit facilities, net
4.7

 

Repayments of borrowings
(15.5
)
 
(5.8
)
Proceeds from issuance of common stock, net
469.5

 
473.4

Payment of debt financing fees
(45.5
)
 
(4.1
)
Change in factored liabilities
(16.8
)
 

Other, net
(1.0
)
 
0.1

Net cash flows provided by financing activities
2,481.0

 
463.6

Effect of exchange rate changes on cash and cash equivalents
(21.6
)
 
(3.6
)
Net increase in cash and cash equivalents
284.7

 
158.7

Cash and cash equivalents at beginning of period
397.3

 
123.0

Cash and cash equivalents at end of period
$
682.0

 
$
281.7

Noncash Investing Activities
 

 
 

Unpaid capital expenditures included in accounts payable and accrued expenses
$
3.5

 
$
5.8


 See accompanying notes to condensed consolidated financial statements


4






PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In millions, except share and per share amounts)
 
Preferred Stock
 
Common Stock
 
 
 
 
 
Accumulated
other
comprehensive
income (loss)
 
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
 
Total
Stockholders'
Equity
 
Non-
controlling
interest
 
Total equity
Balance at December 31, 2014
2,000,000

 
$

 
182,066,980

 
$
1.9

 
$
2,812.4

 
$
(224.1
)
 
$
(130.6
)
 
$
2,459.6

 
$
93.0

 
$
2,552.6

Net loss

 

 

 

 

 
(26.6
)
 

 
(26.6
)
 
0.4

 
(26.2
)
Other comprehensive loss, net of taxes

 

 

 

 

 

 
(417.2
)
 
(417.2
)
 
(8.7
)
 
(425.9
)
Issuance of common stock to Founder Entities as stock dividend to Series A Preferred Stock declared on 12/31/14

 

 
10,050,290

 

 

 

 

 

 

 

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

 

 
75,000

 

 
0.9

 

 

 
0.9

 

 
0.9

Conversion of PDH Common Stock into common stock

 

 
21,316

 

 
0.2

 

 

 
0.2

 
(0.2
)
 

Issuance of common stock under ESPP

 

 
7,986

 

 
0.1

 

 

 
0.1

 

 
0.1

Equity compensation expense

 

 

 

 
0.7

 

 

 
0.7

 

 
0.7

Acquisition of non-controlling interest with Arysta Acquisition

 

 

 

 

 

 

 

 
24.6

 
24.6

Balance at March 31, 2015
2,000,000

 

 
192,221,572

 
1.9

 
2,814.3

 
(250.7
)
 
(547.8
)
 
2,017.7

 
109.1

 
2,126.8

Net loss

 

 

 

 

 
(12.2
)
 

 
(12.2
)
 
3.1

 
(9.1
)
Other comprehensive income, net of taxes

 

 

 

 

 

 
160.2

 
160.2

 
1.6

 
161.8

Issuance of common stock at $26.50 per share in June 2015 Equity Offering

 

 
18,226,414

 
0.2

 
482.8

 

 

 
483.0

 

 
483.0

Issuance costs in connection with June 2015 Equity Offering

 

 

 

 
(14.8
)
 

 

 
(14.8
)
 

 
(14.8
)
Conversion of PDH Common Stock into common stock

 

 
406,217

 

 
4.7

 

 

 
4.7

 
(4.7
)
 

Issuance of common stock under ESPP

 

 
6,841

 

 
0.3

 

 

 
0.3

 

 
0.3

Equity compensation expense

 

 

 

 
0.6

 

 

 
0.6

 

 
0.6

Balance at June 30, 2015
2,000,000

 

 
210,861,044

 
2.1

 
3,287.9

 
(262.9
)
 
(387.6
)
 
2,639.5

 
109.1

 
2,748.6

Net loss

 

 

 

 

 
(122.3
)
 

 
(122.3
)
 
0.5

 
(121.8
)
Other comprehensive loss, net of taxes

 

 

 

 

 

 
(353.8
)
 
(353.8
)
 
(7.2
)
 
(361.0
)
Issuance of common shares to non-employee

 

 
2,500

 

 

 

 

 

 

 

Conversion of PDH Common Stock into common stock

 

 
6,343

 

 

 

 

 

 

 

Issuance of common stock under ESPP

 

 
9,710

 

 
0.1

 

 

 
0.1

 

 
0.1

Purchase accounting adjustment to non-controlling interest for Arysta Acquisition

 

 

 

 

 

 

 

 
6.4

 
6.4

Acquisition of remaining interest in Arysta Colombia

 

 

 

 

 

 

 

 
(3.3
)
 
(3.3
)
Equity compensation expense

 

 

 

 
(0.7
)
 

 

 
(0.7
)
 

 
(0.7
)
Balance at September 30, 2015
2,000,000

 
$

 
210,879,597

 
$
2.1

 
$
3,287.3

 
$
(385.2
)
 
$
(741.4
)
 
$
2,162.8

 
$
105.5

 
$
2,268.3

See accompanying notes to condensed consolidated financial statements


5






PLATFORM SPECIALTY PRODUCTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In millions, except share and per share amounts)
 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
other
comprehensive
income (loss)
 
Total
Stockholders'
Equity
 
Non-
controlling
interest
 
Total equity
Balance at December 31, 2013
2,000,000

 
$

 
103,571,941

 
$

 
$
1,212.0

 
$
(194.2
)
 
$
1.3

 
$
1,019.1

 
$
96.0

 
$
1,115.1

Net loss

 

 

 

 

 
(7.4
)
 

 
(7.4
)
 
1.5

 
(5.9
)
Other comprehensive income, net of taxes

 

 

 

 

 

 
3.4

 
3.4

 

 
3.4

Impact of Domestication

 

 

 
1.0

 
(1.0
)
 

 

 

 

 

Issuance of common stock at $11.00 per share on January 5, 2014

 

 
3,959

 

 

 

 

 

 

 

Exercise of warrants for common stock at $11.50 per share

 

 
14,992,950

 
0.2

 
172.3

 

 

 
172.5

 

 
172.5

Issuance of common stock at $11.00 per share in connection with Exchange Agreement

 

 
1,670,386

 

 
18.4

 

 

 
18.4

 

 
18.4

Distribution to non-controlling interest

 

 

 

 

 

 

 

 
(0.2
)
 
(0.2
)
Balance at March 31, 2014
2,000,000

 

 
120,239,236

 
1.2

 
1,401.7

 
(201.6
)
 
4.7

 
1,206.0

 
97.3

 
1,303.3

Net loss

 

 

 

 

 
(0.4
)
 

 
(0.4
)
 
1.9

 
1.5

Other comprehensive income, net of taxes

 

 

 

 

 

 
18.4

 
18.4

 
1.3

 
19.7

Exercise of warrants for common stock at $11.50 per share

 

 
1,251,744

 

 
14.4

 

 

 
14.4

 

 
14.4

Issuance of common stock at $19.00 per share in connection with Private Placement Offering

 

 
15,800,000

 
0.2

 
300.0

 

 

 
300.2

 

 
300.2

Issuance costs in connection with Private Placement Offering

 

 

 

 
(13.4
)
 

 

 
(13.4
)
 

 
(13.4
)
Recovery of short swing profits, net

 

 

 

 
0.5

 

 

 
0.5

 

 
0.5

Equity compensation expense

 

 

 

 
0.3

 

 

 
0.3

 

 
0.3

Distribution to non-controlling interest

 

 

 

 

 

 

 

 
(0.2
)
 
(0.2
)
Balance at June 30, 2014
2,000,000

 

 
137,290,980

 
1.4

 
1,703.5

 
(202.0
)
 
23.1

 
1,526.0

 
100.3

 
1,626.3

Net income

 

 

 

 

 
11.9

 

 
11.9

 
2.0

 
13.9

Other comprehensive loss, net of taxes

 

 

 

 

 

 
(56.6
)
 
(56.6
)
 
(3.8
)
 
(60.4
)
Issuance of common stock to directors

 

 
9,242

 

 

 

 

 

 

 

Issuance of common stock under ESPP

 

 
4,108

 

 
0.1

 

 

 
0.1

 

 
0.1

Issuance costs in connection with Private Placement Offering

 

 

 

 
(0.4
)
 

 

 
(0.4
)
 

 
(0.4
)
Equity compensation expense

 

 

 

 
0.2

 

 

 
0.2

 

 
0.2

Distribution to non-controlling interest

 

 

 

 

 

 

 

 
(0.1
)
 
(0.1
)
Balance at September 30, 2014
2,000,000

 
$

 
137,304,330

 
$
1.4

 
$
1,703.4

 
$
(190.1
)
 
$
(33.5
)
 
$
1,481.2

 
$
98.4

 
$
1,579.6


See accompanying notes to condensed consolidated financial statements


6






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


1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Platform Specialty Products Corporation is a global, diversified producer of high-technology specialty chemical products. The Company's business involves the formulation of a broad range of solutions-oriented specialty chemicals, which are sold into multiple industries, including agrochemical, animal health, electronics, graphic arts, plating, and offshore oil production and drilling. The Company refers to its products as “dynamic chemistries” due to their intricate chemical compositions. As further described in Note 20, Segment Information, the Company operates in two segments: Performance Applications and Agricultural Solutions.
Platform was originally incorporated with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on April 23, 2013. Until the MacDermid Acquisition on October 31, 2013, as described below, the Company had neither engaged in any operations nor generated any income.
On October 31, 2013, the Company completed the MacDermid Acquisition pursuant to which it indirectly acquired substantially all of the equity of MacDermid Holdings, which, at the time, owned approximately 97% of MacDermid. The Company acquired the remaining 3% of MacDermid on March 4, 2014, pursuant to the terms of the Exchange Agreement.  On January 22, 2014, the Company completed its Domestication and on January 23, 2014, the Company's common stock, par value $0.01 per share, began trading on the NYSE under the ticker symbol “PAH.”
Basis of Presentation
These unaudited interim Condensed Consolidated Financial Statements and related information have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the applicable rules and regulations of the SEC. Accordingly, they do not include all of the disclosures required in connection with annual financial statements. These unaudited interim Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, normal, recurring and necessary for a fair statement of the results of operations. 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 Annual Report.
The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all footnote disclosures from the annual financial statements.
Principles of Consolidation
The accompanying unaudited interim Condensed Consolidated Financial Statements include Platform's accounts and all of its controlled subsidiaries. All subsidiaries are included in the unaudited interim Condensed Consolidated Financial Statements for the entire period or, if acquired, from the date that the Company obtains control. The Company fully consolidates the income, expenses, assets, liabilities and cash flows of subsidiaries from the date it acquires control up to the date control ceases. All intercompany accounts and transactions were eliminated in consolidation.
Significant Accounting Policies
Equity Securities
Equity securities that have a readily determinable fair value are classified as available for sale and are carried at fair value. Unrealized holding gains and losses are recorded in other comprehensive income. Equity securities which do not have readily determinable fair values are recorded at cost and are evaluated whenever events or changes in circumstances indicate that the carrying values of such investments may be impaired.


7

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



Financial Guarantees and Factoring of Accounts Receivable
Guarantees provided to financial institutions on vendor and customer loans used to settle outstanding accounts receivable balances are recorded as liabilities until such time when the guarantee periods have elapsed, at which time the accounts receivable balances and the related financial guarantees are reversed.
Factoring arrangements, where substantially all economic risks and rewards associated with trade receivables are transferred to a third party, are accounted for by derecognizing the trade receivables upon receipt of cash proceeds from the factoring arrangement. Factoring arrangements, whereby some, but not substantially all, economic risks and rewards are transfered to a third party and the assets subject to the factoring arrangement remain under the Company's control are accounted for by not derecognizing the trade receivables and recognizing any related obligations to the third party.
Product Registrations
Product registrations represent external costs incurred to obtain distribution rights from regulatory bodies for certain products in our Agricultural Solutions segment. These costs include laboratory testing, legal, regulatory filing and other costs. Only costs associated with products that are probable of generating future cash flows are capitalized. The capitalized costs are amortized over the useful life of the registrations and are included in "Selling, technical, general and administrative" expenses in the Condensed Consolidated Statement of Operations and are evaluated for impairment in the same manner as other finite-lived intangible assets.
Equity Method Investments
Investments over which the Company has the ability to exercise significant influence, but which the Company does not control, are accounted for under the equity method of accounting and are included in "other assets" on the Condensed Consolidated Balance Sheet. Significant influence generally exists when the Company holds between 20% and 50% of the voting power of another entity. Investments are initially recognized at cost. The Condensed Consolidated Financial Statements include the Company's share of net earnings or losses from the date that significant influence commences until the date that significant influence ceases. When the Company's share of losses exceeds its interest in an equity investment, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued, except to the extent that the Company has an obligation or has made payments on behalf of the investee.
Revenue Recognition
The Company recognizes revenue, including freight charged to customers, net of applicable rebates, estimates for sales returns and allowances and discounts, when the earnings process is complete. This occurs when products have been shipped to or received by the customer, in accordance with the terms of the agreement by and between the Company and such customer, title and risk of loss has been transferred, pricing is fixed or determinable and collectability is reasonably assured.
The Company allows certain distributors within the Agricultural Solutions segment one-time, non-repeatable extensions of credit on a limited portion of purchases made during a purchasing cycle, which remain in the distributor’s inventory. The extension of credit is not a right to return, and distributors must pay unconditionally when the extended credit period expires.
Accounting Policies Recently Adopted and Pending Pronouncements
Business Combinations (Topic 805) - In September 2015, the FASB issued ASU No. 2015-16 “Simplifying the Accounting for Measurement-Period Adjustments.” Under the updated guidance, an entity is no longer required to retrospectively apply adjustments to provisional amounts recorded as a part of a business combination. Adjustments to provisional amounts identified during the measurement period continue to be calculated as of the acquisition date but are recognized in the period in which they are determined, including the effects of such adjustments on earnings. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this ASU as of September 30, 2015. This ASU may have a material impact on the Company's future financial statements if material measurement period adjustments are recorded.
Revenue from Contracts with Customers (Topic 606) - In August 2015, the FASB issued ASU No. 2015-14 “Deferral of the Effective Date,” which defers the effective date of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)," for all entities by one year. As a result, the provisions of ASU No. 2014-09 will be effective prospectively for fiscal years and interim


8

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



periods beginning after December 15, 2017. ASU No. 2014-09 (1) removes inconsistencies and weaknesses in revenue requirements, (2) provides a more robust framework for addressing revenue issues, (3) improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (4) provides more useful information to users of financial statements through improved disclosure requirements, and (5) simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company continues to evaluate the impact of ASU 2014-09.
Inventory (Topic 330) - In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” Under the updated guidance, an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less predictable costs of completion, disposal, and transportation. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. The Company adopted this ASU as of October 1, 2015 by replacing its lower of cost or market test with a lower of cost and net realizable value test. This ASU did not have a material impact on the Company's financial statements.
Fair Value Measurement (Topic 820) - In May 2015, the FASB issued ASU No. 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” This update eliminates diversity in practice related to investments whose fair value is measured using net asset values as a practical expedient, and removes the requirement to categorize such investments within the fair value hierarchy. The guidance is effective retrospectively for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. The Company continues to evaluate the impact of this new ASU, which is not expected to have a material impact on its financial statements.
Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - In April 2015, the FASB issued ASU No. 2015-05, “Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” This update provides explicit guidance to customers utilizing a cloud computing solution to help determine whether such an arrangement includes a software license, in which case the accounting applied would be similar to that of other software license arrangements. Otherwise, the arrangement would be accounted for as a service contract. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. The Company does not expect this ASU to have a material impact on its financial statements.
Interest - Imputation of Interest (Subtopic 835-30) - In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This update eliminates the difference in the presentation of debt issuance costs and debt discount and premiums by requiring that debt issuance costs be presented as deductions from the carrying value of the related debt, in a manner similar to debt discounts. The guidance is effective retroactively for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. The Company early adopted this ASU, and reclassified approximately $10.3 million of debt issuance costs related to term debt from assets to contra-liabilities as of December 31, 2014.
Derivatives and Hedging (Topic 815) - In November 2014, the FASB issued ASU No. 2014-16, “ Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force).” Under current practice, there were predominantly two methods used to evaluate whether the nature of the host contract in a hybrid financial instrument is more akin to debt or equity: one considered all the features including the embedded and the other excluded the embedded derivative in the consideration. This update eliminates the difference in practice by clarifying that the evaluation should be based on all the instrument’s features, including the embedded derivative, and that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. The guidance is effective for fiscal years and interim periods beginning after December 15, 2015 and is applied in a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of our fiscal year 2016. Early adoption, including in an interim period, is permitted. The Company adopted the provision of this ASU during the first quarter of 2015, with the issuance of the Series B Convertible Preferred Stock. This ASU did not have a material impact on the Company's financial statements, as there were no hybrid financial instruments requiring retrospective application.
Out of Period Adjustment
In connection with the preparation of the Company's unaudited interim Condensed Consolidated Financial Statements for the period ended June 30, 2015, the Company identified a prior period error related to foreign currency accounting within Arysta and purchase accounting for the Arysta Acquisition in accordance with ASC 805 - Business Combinations for the period ended March


9

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



31, 2015. The Company determined that goodwill was understated and foreign currency translation adjustment loss was overstated by approximately $73.0 million. Based on an analysis of qualitative and quantitative factors, management has concluded that this error was not material to the Company's unaudited interim Condensed Consolidated Financial Statements for the period ended March 31, 2015 or June 30, 2015. As a result, the affected balances were corrected in the unaudited interim Condensed Consolidated Financial Statements for the period ended June 30, 2015.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current period’s presentation, including approximately $10.3 million of debt issuance costs related to term debt from assets to contra-liabilities as of December 31, 2014 as a result of early adopting ASU 2015-15, “Simplifying the Presentation of Debt Issuance Costs."
2.  ACQUISITIONS OF BUSINESSES
Arysta Acquisition
On February 13, 2015, Platform completed the Arysta Acquisition for approximately $3.50 billion, consisting of $2.86 billion in cash (net of acquired cash, closing adjustments and including Seller transaction expenses paid by Platform) and the issuance to the Seller of $600 million of Platform’s Series B Convertible Preferred Stock with a fair market value of $646 million.
The Company acquired Arysta to expand its presence in the agrochemical business, complementing our acquisitions of Agriphar and CAS. Arysta provides products and solutions utilizing globally managed patented, proprietary off-patent agrochemical AIs and biological solutions, or biosolutions, and off-patent agrochemical offerings. Biosolutions includes biological stimulants, or biostimulants, innovative nutrition and biological control, or biocontrol, products. Arysta is included in the Company's Agricultural Solutions business segment.
In connection with the Arysta Acquisition, the Company incurred $4.4 million and $32.2 million in related expenses for the three and nine months ended September 30, 2015, respectively, which are included in “Selling, technical, general and administrative expenses” in the Condensed Consolidated Statement of Operations and $6.4 million in related expenses through December 31, 2014.
CAS Acquisition
On November 3, 2014, Platform completed the CAS Acquisition for approximately $1.04 billion, consisting of $983 million in cash, net of acquired cash and certain post-closing working capital and other adjustments, and 2,000,000 shares of Platform common stock. Due to regulatory constraints, title to certain CAS businesses located in Russia was not transferred to Platform until the first quarter of 2015. In connection with the CAS Acquisition, the Company entered into six supply agreements with Chemtura to supply certain products to the Company, on an exclusive basis. These arrangements included capital leases for certain equipment totaling $13.2 million, which were recorded as of June 30, 2015. This measurement period adjustment had a cumulative impact to depreciation of $2.2 million, which was recorded in the three months ended June 30, 2015 as the impact on the three months ended March 31, 2015 and the year ended December 31, 2014 was not material. In addition, the Company has agreed to fund the asset retirement obligations associated with the related equipment and accordingly, the Company has recognized an asset retirement obligation of $13.2 million. The supply agreements, which will remain in force until either party provides advance termination notice, have a minimum term of four years from the date of the CAS Acquisition.
In line with Platform's business strategy of growing into niche markets and applications, the Company acquired CAS to enter the agrochemical industry. CAS is a niche provider of seed treatments and crop protection applications in numerous geographies across seven major product lines - adjuvants, fungicides, herbicides, insecticide, miticides, plant growth regulators and seed treatments. CAS is included in the Company's Agricultural Solutions business segment.
In connection with the CAS Acquisition, the Company incurred $1.7 million and $11.5 million in related expenses for the three and nine months ended September 30, 2015, respectively, which are included in “Selling, technical, general and administrative expenses” in the Condensed Consolidated Statement of Operations and $33.9 million in related expenses through December 31, 2014.


10

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



Agriphar Acquisition
On October 1, 2014, Platform completed the Agriphar Acquisition for a purchase price of approximately €300 million ($370 million), consisting of $350 million in cash, net of acquired cash and certain post-closing working capital and other adjustments, and 711,551 restricted shares of our common stock. Such restricted shares will become unrestricted beginning January 2, 2018, unless agreed otherwise in accordance with the terms of the acquisition agreement. The agreement also stipulates that prior to January 2, 2018, the seller may transfer (i) a maximum of 1/3 of its shares as of January 2, 2016, (ii) 1/3 of its shares as of January 2, 2017 and (iii) 1/3 of its shares as of January 2, 2018, in each case subject to the terms and provisions of a solvency letter described in the acquisition agreement. Additionally, the seller was granted a put option to sell and transfer all (but not part) of its shares, on (but not prior to) the date that is six months from the closing of the Agriphar Acquisition, which option was not exercised. As a result, for the period ended March 31, 2015, the value of the option totaling $3.0 million was reversed and included in "Other income (expense), net" in the Condensed Consolidated Statement of Operations.
The Company acquired Agriphar in its crop protection vertical as it believes Agriphar’s and CAS’ businesses are very complementary in terms of product range and distribution capabilities. Agriphar is a European crop protection group supported by a team of researchers and regulatory experts which provides a wide range of fungicides, herbicides and insecticides with end markets primarily across Europe. Agriphar is included in the Company's Agricultural Solutions business segment.
In connection with the Agriphar Acquisition, the Company incurred $0.1 million and $0.9 million in related expenses for the three and nine months ended September 30, 2015, respectively, which are included in “Selling, technical, general and administrative expenses” in the Condensed Consolidated Statement of Operations and $4.2 million in related expenses through December 31, 2014.
Acquisition Revenues and Net Income (Loss)
Revenues contributed by the Arysta, CAS and Agriphar Acquisitions for the three and nine months ended September 30, 2015 were as follows:
 (amounts in millions)
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Arysta
$
318.2

 
$
837.6

CAS
73.8

 
282.4

Agriphar
25.6

 
145.6

Total
$
417.6

 
$
1,265.6

As the integration of the Arysta, CAS and Agriphar Acquisitions continues, discrete revenues reported by our existing businesses are being effected by the integration process and are becoming less comparable to prior periods.
The Arysta, CAS and Agriphar Acquisitions had net (loss) income for the three and nine months ended September 30, 2015 as follows:
 (amounts in millions)
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Arysta
$
(34.8
)
 
$
(100.6
)
CAS
(25.0
)
 
(52.5
)
Agriphar
3.3

 
25.7

Total
$
(56.5
)
 
$
(127.4
)


11

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



Purchase Price Allocation
The following table summarizes the consideration transferred and transaction related costs incurred to acquire Arysta, CAS and Agriphar and the applicable amounts of identified assets acquired and liabilities assumed at the acquisition date:
 (amounts in millions)
Arysta
 
CAS
 
Agriphar
Consideration
 
 
 
 
 
Cash, net
$
2,856.2

 
$
983.1

 
$
350.2

Equity Instruments
645.9

 
52.0

 
16.6

Derivative liability

 

 
3.5

Total Consideration
$
3,502.1

 
$
1,035.1

 
$
370.3

 
 
 
 
 
 
Transaction related costs
$
38.6

 
$
45.4

 
$
5.1

 
 
 
 
 
 
Identifiable Assets acquired and Liabilities Assumed
 
 
 
 
 
Accounts receivable
$
674.5

 
$
154.2

 
$
60.1

Inventories
295.7

 
132.1

 
42.7

Other current assets
132.2

 
19.1

 
0.4

Property, plant and equipment
110.0

 
24.8

 
31.7

Identifiable intangible assets
1,638.9

   
534.0

  
183.0

Other assets
38.2

 
11.4

 
4.5

Current Liabilities
(574.0
)
 
(69.7
)
 
(47.5
)
Non-current deferred tax liability
(488.5
)
 
(26.7
)
 
(64.9
)
Other long term liabilities
(74.2
)
 
(13.4
)
 
(9.0
)
Non-controlling interest
(31.0
)
 

 

Total identifiable net assets
1,721.8

 
765.8

 
201.0

 
 
 
 
 
 
Goodwill
1,780.3

 
269.3

 
169.3

 
 
 
 
 
 
Total purchase price
$
3,502.1

   
$
1,035.1

  
$
370.3

The purchase accounting and purchase price allocation for the Arysta Acquisition has not been finalized as of the date of this filing pending finalization of fair values assigned to identifiable intangible assets and non-controlling interest, as well as accounts receivable, inventory and reserves related to legal matters and environmental exposure. The purchase price allocation was updated to reflect current estimated fair values at the acquisition date of accounts receivable, inventories, sales allowances and non-controlling interest, with corresponding adjustments reflected in goodwill.
Purchase accounting and purchase price allocation is complete for the Agriphar Acquisition, and substantially complete for the CAS Acquisition, with the exception of valuations related to the supply agreements with Chemtura described above. As a part of the CAS Acquisition, the Company paid for a 15% equity interest in Certis Europe B.V. that was transferred during the second quarter of 2015 after receiving approval from the shareholders of Certis Europe B.V., who had certain rights of first refusal with respect to such transfer of shares. The Company completed the valuation of Certis Europe B.V. during the quarter ended September, 30, 2015, and accordingly reduced the preliminary estimate of its equity interest by $10.1 million to $5.0 million, with a corresponding adjustment reflected in goodwill. The value of this equity interest is classified in other assets.
The excess of the respective cost of the Acquisitions over the net of amounts assigned to the fair values of the assets acquired and the liabilities assumed is recorded as goodwill and represents the value of estimated synergies and the assembled workforces resulting from the Acquisitions. Of the $2.22 billion of goodwill recorded in connection with the Arysta, CAS and Agriphar Acquisitions, $185 million is expected to be deductible for tax purposes as result of the CAS Acquisition.


12

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



Identifiable intangible assets recorded in conjunction with the Arysta Acquisition have been assigned the following estimated useful lives: 20 years for customer lists, average of 12 years for developed technology and indefinite for tradenames.
Pro Forma Revenue and Earnings
The following unaudited pro forma summary presents consolidated information of the Company for the three and nine months ended September 30, 2015 and 2014, as if the Arysta Acquisition had occurred on January 1, 2014, excluding CAS and Agriphar from the 2014 results as these Acquisitions closed prior to 2015:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 (amounts in millions)
2015
 
2014
 
2015
 
2014
Revenue
$
597.3

 
$
557.9

 
$
1,894.7

 
$
1,638.5

Net loss attributable to stockholders
$
(118.6
)
 
$
(18.5
)
 
$
(160.1
)
 
$
(130.5
)
For the three and nine months ended September 30, 2015, the Company incurred $4.4 million and $32.2 million, respectively, of acquisition-related expenses which have been reflected in the pro forma earnings above, net of tax, as if they had been incurred in 2014. These pro forma amounts have been prepared to reflect fair value adjustments to intangible assets and the related amortization expense, net of tax, from January 1, 2014, as well as the effect of the debt instruments used to fund the Arysta Acquisition.
First Closing of OMG Acquisition
On May 31, 2015, the Company entered into a merger agreement with OMG and Apollo and a purchase and separation agreement with Apollo pursuant to which Apollo agreed to first acquire OMG in its entirety, and then subsequently sell to Platform the OMG Businesses.
On October 28, 2015, the Company completed the acquisition of the OMG Businesses, other than their Malaysian subsidiary, pursuant to the terms and conditions set forth in the merger agreement. This transaction is the first closing of the Company's two-stage acquisition of the OMG Businesses for a total purchase price of approximately $367 million, subject to purchase price adjustments. The Company expects to complete its acquisition of the Malaysian subsidiary during the first quarter of 2016, subject to customary closing conditions, including the absence of a material adverse effect with respect to the Malaysian subsidiary.
Platform believes the OMG Acquisition is in line with its business strategy of growing into niche markets. The OMG Businesses will be included in the Company's Performance Applications business segment. OMG’s Electronic Chemicals business is similar to Platform's legacy MacDermid electronic chemical and surface treatment businesses by developing, producing and supplying chemicals for electronic and industrial applications. OMG’s Photomasks products are used by customers to produce semiconductors and related products.
Proposed Alent Acquisition
On July 13, 2015, Platform and Alent issued an announcement, pursuant to Rule 2.7 of the U.K. Takeover Code, disclosing the terms of a recommended offer by MacDermid Performance Acquisitions Ltd., a private limited company registered in England and Wales, and an indirect subsidiary of Platform, to acquire all of the shares of Alent. The Alent Acquisition will be completed pursuant to the Scheme. In connection with the Alent Acquisition, on July 13, 2015, (i) Platform, MacDermid Performance Acquisitions Ltd., and Alent entered into a co-operation agreement and (ii) Platform, certain subsidiary guarantors, Credit Suisse AG and certain other Credit Suisse AG affiliates entered into a $1.88 billion interim facility letter.
Pursuant to the terms of the Alent Acquisition, each shareholder of Alent is entitled to receive 503 pence in cash for each ordinary share of Alent. The Scheme includes a partial share alternative under which eligible shareholders of Alent can elect to receive Platform common stock in lieu of part or all of the cash consideration that they would otherwise be entitled to receive in exchange for their Alent Shares on the basis of 0.31523 new Platform shares for every Alent share. Such alternative is to be limited to the issue of new Platform shares in respect of approximately 21.9% of Alent’s issued share capital at close of business on July 10, 2015. The Alent Acquisition values Alent’s entire share capital at approximately £1.35 billion ($2.10 billion, based on the GBP/USD exchange rate of 1.5517 on July 10, 2015).


13

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



On the date of the Rule 2.7 announcement, and as provided for therein, Platform and MacDermid Performance Acquisitions Ltd. received an irrevocable undertaking (as amended on September 8, 2015) from Cevian Capital II Master Fund LP, the largest shareholder of Alent, to vote in favor of the Scheme and elect for the partial share alternative in respect of its entire beneficial ownership of 58,432,694 of Alent's shares. If no shareholders of Alent apart from Cevian Capital II Master Fund LP elect to receive new Platform shares, Cevian Capital II Master Fund LP will be issued the full amount of new Platform shares available under the partial share alternative.
On July 13, 2015, in connection with the Alent Acquisition, Platform and certain subsidiary guarantors entered into an interim facility letter with Credit Suisse AG and certain of its affiliates pursuant to which they committed, subject to the terms therein, to provide Platform with a $1.88 billion interim senior unsecured term loan facility. Platform expects to replace this term loan facility with more permanent financing before or after the closing of the Alent Acquisition. The commitments under the interim facility letter, unless previously terminated, will terminate on the earlier of (i) the date on which the consummation of the Alent Acquisition is announced without the making of any advances under the term loan facility and (ii) July 13, 2016. The facility amount of $1.88 billion will be reduced by the net proceeds of any securities or other borrowings raised or issued in connection with the Alent Acquisition. The interim facility letter is subject to other terms and conditions customary for commitments and facilities of this type including certain affirmative covenants, negative covenants, conditions precedent and events of default.
On August 28, 2015, the Company received notice of the early termination of the antitrust waiting period under the HSRA Act, and on September 9, 2015, the shareholders of Alent approved Platform's offer. In addition, the Company has received all necessary foreign antitrust clearances. The Scheme remains subject to the sanction of the High Court of England and Wales and certain other conditions, as set out in the Scheme sent to Alent shareholders on August 17, 2015. It is expected that, subject to the satisfaction or waiver of all relevant conditions, the Alent Acquisition will be completed in early December 2015.
If the Alent Acquisition is not consummated, we may be required to pay to Alent certain costs and expenses relating to the Alent Acquisition, including a break-up fee of £27 million in the event we invoke a regulatory approvals condition on or prior to July 13, 2016 or where certain regulatory approvals conditions are not satisfied or waived on July 13, 2016, as further provided in the co-operation agreement with Alent.
MacDermid Performance Acquisitions Ltd. reserves the right, subject to the prior consent of the U.K. Panel on Takeovers and Mergers and the terms of the co-operation agreement, to elect to implement the Alent Acquisition by way of a takeover offer (as such term is defined in the U.K. Companies Act). Following closing of the transaction, Platform will remain a NYSE listed company domiciled in the United States. There can be no assurances that the Alent Acquisition will be consummated. Please see the risk factors included in Platform's Annual Report, as revised and updated in Platform's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2015 for risks regarding the proposed Alent Acquisition.
In connection with the Alent Acquisition, during July 2015, the Company entered into no-cost, deal contingent forward purchases of £1.06 billion ($1.64 billion, based on the GBP/USD exchange rate of 1.5487 on July 13, 2015). The price for 50% of the forward purchases is set; however, it is dependent upon the timing of the closing of the proposed Alent Acquisition. The price for the remaining 50% allows for the Company to benefit from a weakening of the GBP relative to the USD while being protected against price movements above a maximum average of GBP/USD exchange rate of 1.6244.
3. INVENTORIES
The major components of inventory were as follows: 
 (amounts in millions)
September 30,
2015
 
December 31, 2014
Finished goods
$
321.4

 
$
156.3

Work in process
16.8

 

Raw materials and supplies
128.7

 
49.5

Total inventory, net
$
466.9

 
$
205.8



14






In connection with the Arysta Acquisition, finished goods inventory was increased to reflect fair value. The step-up became fully amortized during the three months ended September 30, 2015. For the three and nine months ended September 30, 2015, $1.3 million and $37.8 million, respectively, was charged to cost of sales in the Condensed Consolidated Statement of Operations.
The CAS inventory step-up became fully amortized during the three months ended March 31, 2015. For the nine months ended September 30, 2015, $20.2 million was charged to cost of sales in the Condensed Consolidated Statement of Operations in connection with the CAS Acquisition.
The MacDermid inventory step-up became fully amortized during the three months ended March 31, 2014. For the nine months ended September 30, 2014, $12.0 million was charged to cost of sales in the Condensed Consolidated Statement of Operations in connection with the MacDermid Acquisition.
4. PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment, including equipment under capital leases, were as follows:
 (amounts in millions)
 
September 30,
2015
 
December 31, 2014
Land and leasehold improvements
 
$
44.2

 
$
36.6

Buildings and improvements
 
83.0

 
47.9

Machinery, equipment, fixtures and software
 
180.1

 
109.7

Assets under capital leases
 
8.5

 
5.4

 
 
315.8

 
199.6

Less: accumulated depreciation
 
(57.9
)
 
(25.2
)
 
 
257.9

 
174.4

Construction in process
 
9.0

 
4.2

Property, plant and equipment, net
 
$
266.9

 
$
178.6

For the three months ended September 30, 2015 and 2014, the Company recorded depreciation expense of $11.6 million and $4.7 million, respectively. For the nine months ended September 30, 2015 and 2014, the Company recorded depreciation expense of $33.7 million and $14.0 million, respectively.
The net book value of assets acquired under capital leases was $4.3 million and $2.6 million at September 30, 2015 and December 31, 2014, respectively.
As of June 30, 2015, the Company designated Performance Application's San Marcos, CA facility, with a book value of $10.9 million, as an asset held-for-sale, in accordance with a restructuring plan to streamline the newspaper printing plate operations. The facility was sold during the third quarter of 2015 and the Company recognized a net loss on the sale of the land and building totaling $2.3 million.
5 . GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill by segment were as follows:
  (amounts in millions)
Performance
Applications
 
Agricultural Solutions
 
Total
December 31, 2014
$
961.2

 
$
444.1

 
$
1,405.3

Addition from acquisitions

 
1,697.1

 
1,697.1

Purchase accounting adjustments

 
62.1

 
62.1

Foreign currency translation
(58.5
)
 
(264.0
)
 
(322.5
)
September 30, 2015
$
902.7

 
$
1,939.3

 
$
2,842.0



15

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



The carrying value of indefinite-lived intangible assets other than goodwill, which consist solely of tradenames, was $226 million and $69.3 million at September 30, 2015 and December 31, 2014, respectively.
During the second quarter of 2015, as a result of a decline of forecasted cash flows, the Company performed an impairment analysis of the $73.2 million of goodwill assigned to the ASF Americas reporting unit. In performing the impairment test, the Company estimated the fair value of ASF Americas pursuant to an income approach based upon discounted cash flows. For the estimate of fair value, the Company estimated annual revenue growth rates for the initial five year forecast period to range from 4.2% to 5.6% and estimated a long term growth rate in determining the terminal value of the reporting unit of 3.0%. The discount rate for the estimate of fair value was based on a Weighted Average Cost of Capital, or WACC.  The WACC combines the required return on equity, based on a Modified Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, small stock risk premium and a company specific risk premium, with the cost of debt, based on BBB rated corporate bonds, adjusted using an income tax factor.  The calculation resulted in a WACC rate of 10.0%.  The estimated fair value of ASF Americas exceeded its carrying value by 11.8%.  As a result, there was no impairment of goodwill assigned to ASF Americas.
Intangible assets subject to amortization were as follows:
 
September 30, 2015
 
December 31, 2014
 (amounts in millions)
Gross Carrying
Amount
 
Accumulated
Amortization and
Foreign Exchange
 
Net Book
Value
 
Gross Carrying
Amount
 
Accumulated
Amortization and
Foreign Exchange
 
Net Book
Value
Customer lists
$
946.8

 
$
(157.2
)
 
$
789.6

 
$
613.6

 
$
(71.6
)
 
$
542.0

Developed technology
1,867.1

 
(322.9
)
 
1,544.2

 
760.5

 
(50.8
)
 
709.7

Tradenames
19.0

 
(2.4
)
 
16.6

 
19.7

 
(1.0
)
 
18.7

Non-compete agreements
1.9

 
(0.4
)
 
1.5

 
1.9

 
(0.1
)
 
1.8

Total
$
2,834.8

 
$
(482.9
)
 
$
2,351.9

 
$
1,395.7

 
$
(123.5
)
 
$
1,272.2

Useful lives range from 8 to 30 years for customer lists, 5 to 14 years for developed technology, 5 to 20 years for tradenames and 5 years for non-compete agreements, which results in weighted average useful lives of 20 years, 12 years, 20 years and 5 years, respectively, for an aggregate weighted average useful life of approximately 15 years at September 30, 2015.
For the three months ended September 30, 2015 and 2014, the Company recorded amortization expense on intangible assets of $50.4 million and $14.3 million, respectively. For the nine months ended September 30, 2015, and 2014, the Company recorded amortization expense on intangible assets of $143 million and $43.6 million, respectively.
Annual amortization expense on the Company's intangible assets is estimated to total $195 million in 2015, $208 million in each of the years 2016 through 2019, and $206 million in 2020.
6. EQUITY COMPENSATION PLANS
In June 2014, the Company’s stockholders approved the 2013 Plan. The 2013 Plan is administered by the compensation committee; provided, however, that except as otherwise expressly provided in the 2013 Plan, the Board may exercise any power or authority granted to the compensation committee under the 2013 Plan. As of September 30, 2015, the total number of shares of common stock that may be granted as awards under the 2013 Plan is equal to 15,500,000 shares (subject to increase in accordance with the terms of the 2013 Plan). As of September 30, 2015, a total of 440,792 shares of common stock had been issued under the 2013 Plan.


16

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



 
Nine Months Ended September 30, 2015
 
Total
 
RSUs
 
Stock Options
 
 
Equity
Classified
 
Liability Classified
 
December 31, 2014
721,933

 
142,110

 
329,823

 
250,000

Granted
511,294

 
297,892

 
213,402

 

Exercised/Issued
(77,500
)
 
(2,500
)
 

 
(75,000
)
Forfeited
(282,545
)
 
(69,143
)
 
(213,402
)
 

September 30, 2015
873,182

 
368,359

 
329,823

 
175,000

Equity Classified Share Based Payments
During the nine months ended September 30, 2015, the Board approved grants totaling of 290,250 RSUs under the 2013 Plan to certain employees of the Company, with grant-date fair values ranging from $17.08 to $27.05 per unit and vesting periods ranging from 36 months to 63.5 months. In addition, 209,290 RSUs are subject to performance conditions that must be achieved in the applicable final vesting year and 74,514 RSUs are subject to market conditions, of which 40,824 include a multiplier from zero to three times depending upon the cumulative average growth rate during a five year performance measurement period. During the nine months ended September 30, 2015, 69,143 RSU's were forfeited, and 2,500 shares were issued.
On March 17, 2015, the Board approved grants to certain directors of Platform totaling 7,642 RSUs, effective March 25, 2015, with a grant-date fair value of $27.05. The RSUs will vest on March 17, 2016, provided that such directors continue to serve as directors of Platform through the vesting date. Each RSU represents a contingent right to receive one share of our common stock.
For the three months ended September 30, 2015 and 2014, total compensation expense associated with RSUs classified as equity totaled $0.2 million and $0.1 million, respectively. For the nine months ended September 30, 2015 and 2014, total compensation expense associated with such RSUs totaled $0.6 million and $0.5 million, respectively.
Liability Classified Share Based Payments
On March 6, 2014, the Board approved a grant of 329,823 RSUs, effective on June 12, 2014 with approval of the 2013 Plan, to certain employees that cliff vest on December 31, 2020. The RSUs are subject to an EBITDA performance condition and a share price market condition. Additionally, the number of shares of common stock to be issued is limited to a maximum cash value, requiring these awards to be classified as liabilities. The combined undiscounted maximum cash value of all RSUs issued is approximately $7.1 million which is being recognized as compensation expense over the period from grant to the vesting date.
During the nine months ended September 30, 2015, the Board approved a grant of 213,402 RSUs with a grant-date fair value of $23.43 per unit that cliff vest at the end of a 24 month period, and are subject to certain performance conditions. The awards have been classified as liabilities. The undiscounted maximum cash value of all RSUs issued is approximately $5.0 million which is being recognized as compensation expense over the period from grant to the vesting date. As of September 30, 2015 all RSUs under this award were forfeited.
For the three months ended September 30, 2015 and 2014, compensation (income) expense associated with these awards totaled $(0.6) million and $0.3 million, respectively. For the nine months ended September 30, 2015 and 2014, compensation expense associated with these awards totaled $0.8 million and $0.4 million, respectively.
Stock Options
On April 23, 2013, a former non-founder director was granted a five-year option to acquire 75,000 ordinary shares. This option was fully vested and, upon our Domestication, became an option to acquire shares of our common stock. On March 16, 2015, the option was exercised and 75,000 shares of our common stock were issued on March 19, 2015.
Long Term Cash Bonus Plan
During the three months ended March 31, 2015, the Company established the LTCB. As of September 30, 2015, the plan provides participants the right to receive bonuses totaling $17.0 million, a decrease of $29.5 million from the second quarter of 2015 due


17

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



to forfeitures. Benefits under the plan vest over periods ranging from 31 to 60 months and include EBITDA performance targets, subject to appropriate and equitable adjustments by the Board's compensation committee to reflect any subsequent acquisition, divestiture or other corporate reorganizations, as necessary. For the three and nine months ended September 30, 2015, compensation (income) expense associated with the LTCB totaled $(0.6) million and $0.2 million, respectively.
Employee Stock Purchase Plan
Effective March 6, 2014, the Board adopted the ESPP, which was approved by the Company’s stockholders on June 12, 2014. The Board approved a maximum of 5,178,815 shares of common stock, which were reserved and made available for issuance under the ESPP. As of September 30, 2015, a total of 35,676 shares had been issued under the ESPP, and approximately 700 persons were eligible to participate in the ESPP.

7. 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, 2015 and 2014 were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 (amounts in millions)
2015
 
2014
 
2015
 
2014
Pension & SERP Benefits:
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
 
Domestic
 
Foreign
Net periodic (benefit) cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$

 
$
0.2

 
$

 
$
0.2

 
$

 
$
0.6

 
$

 
$
0.6

Interest cost on the projected benefit obligation
1.6

 
0.5

 
1.7

 
0.8

 
4.8

 
1.5

 
5.2

 
2.3

Expected return on plan assets
(2.4
)
 
(0.5
)
 
(2.4
)
 
(0.9
)
 
(7.2
)
 
(1.5
)
 
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