Annual report pursuant to Section 13 and 15(d)

Investments in Affiliated Companies

v3.20.4
Investments in Affiliated Companies
 12 Months Ended
Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Affiliated Companies
11. Investments in Affiliated Companies:
The Company accounts for investments in affiliated companies under the equity method. Affiliated companies accounted for on the equity method as of December 31, 2020 are as follows:
Company  Country  Percent
Ownership 
PQ Silicates Ltd. Taiwan 50%
Zeolyst International USA 50%
Zeolyst C.V. Netherlands 50%
Following is summarized information of the combined investments(1):
  December 31,
  2020 2019
Current assets $ 219,002  $ 248,685 
Noncurrent assets 254,416  256,104 
Current liabilities 66,423  52,638 
Noncurrent liabilities 36,788  5,950 

Years ended
December 31,
2020 2019 2018
Sales $ 278,414  $ 380,381  $ 351,839 
Gross profit 89,471  144,828  126,505 
Operating income 54,010  106,195  88,294 
Net income 55,722  107,112  88,411 
(1)    Summarized information of the combined investments is presented at 100%; the Company’s share of the net assets and net income of affiliates is calculated based on the percent ownership specified in the table above.
In March 2020, the Company sold its 49% interest in the Quaker Holdings joint venture to a third party. Prior to the Company’s disposition of its shares in the joint venture, the Company received a liquidating dividend of $729 as well as $1,032 for the sale of the joint venture shares, which was included in the proceeds from sale of investment within the investing activities section of the Company’s consolidated statement of cash flows.
The Company’s investments in affiliated companies balance as of December 31, 2020 and 2019 includes net purchase accounting fair value adjustments of $243,899 and $250,532, respectively, related a prior business combination, consisting primarily of goodwill and intangible assets such as customer relationships, technical know-how and trade names. Consolidated equity in net income from affiliates is net of $6,634, $7,534 and $6,634 of amortization expense related to purchase accounting fair value adjustments for the years ended December 31, 2020, 2019 and 2018, respectively.
The following table summarizes the activity related to the Company’s investments in affiliated companies balance on the consolidated balance sheets:
Years ended
December 31,
2020 2019
Balance at beginning of period $ 472,814  $ 468,055 
Equity in net income of affiliated companies 27,871  53,556 
Charges related to purchase accounting fair value adjustments (6,634) (7,534)
Dividends received (40,989) (40,073)
Foreign currency translation adjustments 5,390  (1,190)
Balance at end of period $ 458,452  $ 472,814 

The Company had net receivables due from affiliates of $3,814 and $3,586 as of December 31, 2020 and 2019, respectively, which are included in prepaid and other current assets. Net receivables due from affiliates are generally non-trade receivables. Sales to affiliates were $9,144, $4,181 and $2,823 for the years ended December 31, 2020, 2019 and 2018, respectively. The Company did not purchase goods from affiliates during the years ended December 31, 2020, 2019 and 2018.
On December 18, 2013, PQ Holdings and its joint venture, Zeolyst International, entered into a ten year real estate tax abatement agreement with the Unified Government of Wyandotte County, Kansas. The agreement utilizes an Industrial Revenue Bond (“IRB”) financing structure to achieve a 75% real estate tax abatement on the value of the improvements that were constructed during the expansion of PQ Holdings and Zeolyst International’s facilities at the jointly-operated Kansas City, Kansas plant. A similar tax abatement agreement has been executed on an annual basis since December 18, 2013 with respect to additional plant expansions during those years.
During the year ended December 31, 2019, the original IRB financing structure from December 2013 was exhausted. In order to fund future plant expansions, the Company entered into an additional IRB financing structure on December 19, 2019 with similar terms and conditions, which also provides for 75% real estate tax abatement on the value of future improvements. The financing obligations and the industrial bonds receivable have been presented net, as the financing obligations and the industrial bonds meet the criteria for right of set off conditions under GAAP.